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2022
Annual Report and
2023 Proxy Statement
Innovate
Boldly.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TIME AND DATE:
9:00 a.m., Eastern Time, on
Friday, January 27, 2023
PLACE:
Online via webcast at
www...virtualshareholdermeeting.com/WRK2023*
*There will not be a physical location for the 2023 annual meeting
ITEMS OF BUSINESS:
Proposals
(1) To elect 12 directors named in this Proxy Statement
(2) To hold an advisory vote to approve executive compensation
(3) To hold an advisory vote on the frequency of future advisory votes on executive
compensation
(4) To ratify the appointment of Ernst & Young LLP to serve as our independent registered
public accounting firm for fiscal 2023
Board Recommendation
FOR EACH NOMINEE
FOR
FOR EVERY 1 YEAR
FOR
In addition, we will transact any other business that properly comes before the meeting or any adjournment or
postponement of the meeting.
WHO MAY VOTE:
You may vote if you were a holder of our common stock on December 5, 2022.
HOW TO VOTE IN ADVANCE OF THE MEETING:
There are three ways for registered stockholders to vote in advance of the meeting:
(1) By Internet: Go to www..proxyvote.com and follow the instructions.
(2) By Phone: Call 1-800-690-6903.
(3) By Mail: Complete, sign and return the proxy card by mail.
Beneficial holders of our stock should review the information provided by their bank, broker or other nominee in order to
provide voting instructions.
To vote during the meeting, go to www..virtualshareholdermeeting.com/WRK2023 and follow the instructions.
DATE THESE PROXY MATERIALS WERE FIRST MADE AVAILABLE:
December 15, 2022
[THIS PAGE INTENTIONALLY LEFT BLANK]
MESSAGE FROM OUR PRESIDENT AND CEO
Dear Fellow Shareholders:
Fiscal 2022 was a tremendous year for WestRock. We achieved record financial results
and effectively partnered with our customers to navigate continually changing conditions,
even as we were faced with uncertainty in the global economy. And importantly, while
achieving record financial results, we initiated self-help cost improvements and set the
foundation for a transformation agenda that is poised to carry us successfully into the future.
Fiscal 2022 Highlights
In fiscal 2022, WestRock’s business remained strong. On a year-over-year basis, net sales
increased 13% to $21.3 billion, net income increased 13% to $945 million, Consolidated
Adjusted EBITDA increased 15% to $3.5 billion, earnings per diluted share increased 15%
to $3.61 and Adjusted Earnings Per Diluted Share increased 40% to $4.76.
For the fiscal year, WestRock generated $2.0 billion in net cash from operating activities, reduced our total debt by
$407 million to $7.8 billion and reduced our net leverage to 2.05 times, compared to 2.38 times at the end of fiscal 2021.
As we look ahead, we plan to continue to use our strong free cash flow to invest in our business and return capital to our
shareholders through our dividend and opportunistic share repurchases as well as pursue tuck-in acquisitions that meet our
return requirements. To that end, we repurchased $600 million of WestRock’s shares in fiscal 2022 and increased our
dividend by 4%. And in October, we announced an additional 10% increase to our dividend, bringing our dividend increases
to 37.5% since February 2021.
Portfolio Actions
During our Investor Day in 2022, we outlined our plans to transform our Company and focus our business to maximize
return on invested capital. We continue to make choices about our market participation that are designed to drive greater
value for our shareholders. Earlier this month, we completed our acquisition of the remaining stake in Grupo Gondi in
Mexico. This strategic acquisition positions us to take advantage of onshoring trends and capture growth in the attractive
Latin American market.
Additionally, we announced our plans to build a greenfield box plant adjacent to our containerboard mill in Longview,
Washington. We expect this project to be completed by the end of 2023, which we anticipate to help us better meet the
growing demand from regional customers in the Pacific Northwest.
In April and October respectively, we announced the closure of our Panama City, Florida mill and corrugated medium
production in our St. Paul, Minnesota mill. These assets would have required significant capital investment to maintain and
improve, and we did not see a path to achieving our return hurdles.
Lastly, we recently announced the planned divestiture of our 65% stake in the RTS joint venture and three uncoated
recycled paperboard mills and closed the sale of two of those mills earlier in December. With these sales, we will essentially
exit the uncoated recycled paperboard business. We plan to use the proceeds from these dispositions to pay down debt
and reinvest for growth in our strategic key markets.
Leading in Sustainability and Innovation
During 2022, WestRock made substantial progress in defining and executing against our sustainability goals, creating
ambitious targets for our performance by 2030. These goals focus on improvements in our carbon emissions, water usage,
safety and the ongoing certification of sustainable forestry practices, in addition to specific goals for improvements in
diversity across our Company. At WestRock, that commitment starts at the top: 50% of our board of directors is now diverse
on the basis of gender or race. We’ve also been recognized externally for our efforts to advance diversity, inclusion, equity
and belonging, earning top marks in the Human Rights Campaign’s Corporate Equality Index as a 2022 “Best Place to Work
for LGBTQ Equality.” And I’m proud to report that our work across the environmental, social and governance areas has
garnered WestRock a spot on the Dow Jones Sustainability Index for North America for two consecutive years.
* Reconciliations for non-GAAP financial measures are available in Appendix A.
Reduction of greenhouse gas emissions is a key area where we made important progress this year as we developed,
validated and published a science-based target to reduce Scope 1, Scope 2 and certain Scope 3 emissions. This new target
continues our longstanding focus on reducing greenhouse gas emissions.
Innovation linked to sustainability continues to be a focus for WestRock, and it is an area of great opportunity for our
Company. Like us, many of our customers have set aggressive goals to improve their packaging sustainability, and we are
partnering with them to reduce or replace plastics with fiber-based solutions. We have helped our customers eliminate
thousands of tons of plastic from their portfolios by using innovative, fiber-based packaging alternatives, including major
brands such as Grupo Modelo, Swiss Chalet and Kraft Heinz.
Looking Forward
During the past fiscal year, we defined WestRock’s purpose: Innovate Boldly, Package Sustainably – and that defines our
path forward. Given our broad portfolio, the breadth of paper and packaging solutions we offer, and our continued
investment in product innovations, WestRock is well positioned to continue capturing a growing share of the packaging
market as we seek to advance the circular economy. And we will do so boldly, taking on today’s marketplace challenges
and driving productivity and growth throughout our Company.
Looking forward, WestRock is well positioned to steer through any weakening in the economy given our strong balance sheet,
robust cash flows and diverse revenue streams given the broad range of end markets we serve. We stand ready to continue
addressing our customers’ changing packaging needs while also helping them to achieve their sustainability goals. We have a
clear roadmap for long-term growth and a transformation agenda that will drive our Company forward in fiscal 2023.
On behalf of the board of directors and my WestRock team members, I want to thank you for your interest and investment in
WestRock. The future remains bright at WestRock, and I am looking forward to the great things ahead.
Sincerely,
David B. Sewell
President and Chief Executive Officer
TABLE OF CONTENTS
PROXY STATEMENT SUMMARY AND
RELATED MATTERS
Our Business and Our Vision
Annual Meeting Information
Annual Meeting Agenda
Director Nominees
Governance Highlights
Compensation Highlights
Sustainability Highlights
BOARD AND GOVERNANCE MATTERS
Item 1. Election of Directors
Governance Framework
Board Composition
Board Operations
Director Compensation
Certain Relationships and Related Transactions
Communicating with the Board
COMPENSATION MATTERS
Item 2. Advisory Vote to Approve Executive
Compensation
Item 3. Advisory Vote on Frequency of Future
Advisory Votes on Executive Compensation
COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
Financial Performance Highlights and Key
Accomplishments – Fiscal 2022
Compensation Decision-Making Framework
Compensation Elements
Offer Letters with Recently Hired NEOs
Severance and Change in Control Arrangements
Other Compensation Practices and Policies
Compensation Committee Report
Compensation Committee Interlocks and Insider
Participation
1
1
2
2
3
4
5
7
9
9
9
10
17
21
22
22
23
23
24
25
25
26
28
31
38
38
39
40
40
EXECUTIVE COMPENSATION TABLES
Summary Compensation Table
All Other Compensation Table for Fiscal 2022
Grants of Plan-Based Awards
Outstanding Equity Awards at Fiscal Year-End
Value Realized from Stock Options and Stock Awards
Retirement Plans
Nonqualified Deferred Compensation
Potential Payments Upon Termination or Change in
Control
CEO PAY RATIO
AUDIT MATTERS
Item 4. Ratification of Appointment of Ernst &
Young LLP for Fiscal 2023
Report of the Audit Committee
Fees of the Independent Registered Public Accounting
Firm
Pre-Approval Policies and Procedures
Other Information
OTHER IMPORTANT INFORMATION
Beneficial Ownership of Common Stock
Stockholder Proposals or Director Nominations for
2024 Annual Meeting
Annual Report on Form 10-K
Delinquent Section 16(a) Reports
Frequently Asked Questions
Cautionary Language Regarding Forward-Looking
Statements
APPENDIX: NON-GAAP FINANCIAL
MEASURES
41
41
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[THIS PAGE INTENTIONALLY LEFT BLANK]
Proxy Statement Summary and Related Matters
PROXY STATEMENT SUMMARY AND RELATED MATTERS
This summary highlights information contained elsewhere in this Proxy Statement as well as certain other information that
our stockholders may wish to consider prior to making a voting decision. You should read this entire Proxy Statement
carefully before voting.
OUR BUSINESS AND OUR VISION
WestRock Company (the “Company” or “we”) provides innovative, sustainable, fiber-based packaging solutions for
consumer and corrugated packaging markets. Our community of more than 50,000 team members supports customers
around the world from locations in North America, South America, Europe, Asia and Australia. Our extensive network of
mills, converting and recycling facilities, our capabilities in automation technology and materials science, and our legacy in
sustainable forestry position us to imagine and deliver on the promise of a sustainable future.
We believe fiber-based packaging, the core of our business and sustainability platform, plays a central role in replacing
plastic and advancing a more circular economy. We partner with customers to deliver real value. We’re a partner that strives
to provide competitive advantages, deliver consistent quality and superior service, and fuel innovation to foster sustainable
growth. Our vision is to be the world’s best paper and packaging company. We are building on our long history of
sustainability leadership and innovation, including breakthroughs that have revolutionized packaging design and retail
solutions. We are also increasing our commitment to innovation to support future growth and sustainability for our business
and our customers.
Our fiscal 2022 performance highlights include:
$21.3 billion
Net Sales
$2.0 billion
Net Cash Provided by
Operating Activities
$0.9 billion
Net Income
$3.5 billion
Consolidated Adjusted EBITDA*
*
Non-GAAP Financial Measure. See the Appendix for a reconciliation to the most directly comparable GAAP measure.
Advanced Capital Allocation Strategy
DISCIPLINED
M&A
ONGOING
CAPITAL
INVESTMENT
STRATEGIC
CAPITAL
INVESTMENTS
CAPITAL
ALLOCATION
FOUNDATION BUILT ON:
ROIC & Margin Improvement
Strong Cash Flow Generation
Flexibility
OPPORTUNISTIC
SHARE
REPURCHASES
SUSTAINABLE
AND GROWING
DIVIDEND
COMMITMENT TO
INVESTMENT GRADE
CREDIT PROFILE
At our 2022 Investor Day, we outlined our plans to transform our Company and focus our business to maximize return on
invested capital. Throughout the year, we refined our disciplined capital allocation strategy and took swift action to advance
it. In addition to returning $260 million to stockholders through our quarterly dividend, we completed $600 million in share
repurchases. We also announced a new repurchase program of up to an incremental 25.0 million shares of our common
stock, representing an additional authorization of approximately 10% of our outstanding common stock. Following a portfolio
review, we announced the closure of our Panama City mill and of the corrugated medium manufacturing operations at our
St. Paul mill. Closing these operations allows us to redirect significant capital that would otherwise have been required to
keep these mills competitive in the future to improve other key assets. During fiscal 2022, we made $863 million in capital
investments, including numerous projects to modernize our mill and converting assets.
Westrock Company 2023 Proxy Statement 1
Proxy Statement Summary and Related Matters
We also announced our entry into an agreement to acquire the remaining 67.7% interest in Grupo Gondi for $970 million,
plus the assumption of debt. The transaction, which closed in December 2022, aligns with the disciplined acquisition
framework announced at Investor Day and is expected to provide significant financial and strategic benefits to our business.
In addition, we undertook numerous initiatives in fiscal 2022 beyond portfolio actions to improve productivity and drive long-
term profitability. We believe these projects will drive significant cost savings across our business in fiscal 2023 and beyond.
ANNUAL MEETING INFORMATION
Time and Date
Location
Record Date
9:00 a.m., Eastern Time, on Friday, January 27, 2023
Online via webcast at www...virtualshareholdermeeting.com/WRK2023
December 5, 2022
ANNUAL MEETING AGENDA
Proposals
Board Recommendation
Page
(1) Election of 12 Directors named in this Proxy Statement
(2) Advisory Vote to Approve Executive Compensation
(3) Advisory Vote on Frequency of Future Advisory Votes to Approve Executive
Compensation
(4) Ratification of Appointment of Ernst & Young LLP for fiscal 2023
FOR EACH NOMINEE
FOR
FOR EVERY “1 YEAR”
FOR
9
23
24
49
2 Westrock Company 2023 Proxy Statement
Proxy Statement Summary and Related Matters
Age
Director
Since
Other
Public
Boards
Committees
DIRECTOR NOMINEES
Name and Primary Occupation
COLLEEN F. ARNOLD
Independent Director
Former Senior Vice President, Sales and Distribution,
International Business Machines Corporation
TIMOTHY J. BERNLOHR
Independent Director
Managing Member,
TJB Management Consulting, LLC
J. POWELL BROWN
Independent Director
President and CEO, Brown & Brown, Inc.
TERRELL K. CREWS
Independent Director
Former Executive Vice President, CFO,
Monsanto Corporation
RUSSELL M. CURREY
Independent Director
President, Boxwood Capital, LLC
SUZAN F. HARRISON
Independent Director
Former President, Global Oral Care,
Colgate-Palmolive Company
GRACIA C. MARTORE
Independent Director
Former President and CEO, TEGNA Inc.
JAMES E. NEVELS
Independent Director
Former Chairman, The Swarthmore Group
E. JEAN SAVAGE
Independent Director
President and CEO, Trinity Industries, Inc.
65
2018
63
2015
55
2015
67
2015
61
2015
65
2020
71
2015
70
2015
58
2022
DAVID B. SEWELL
President and CEO, WestRock Company
54
2021
DMITRI L. STOCKTON
Independent Director
Former Senior Vice President and Special Advisor
to the Chairman, General Electric Company
ALAN D. WILSON
Independent Chair
Former Chairman and CEO,
McCormick & Company, Inc.
58
2022
65
2015
0
2
1
2
0
2
2
0
1
1
3
1
(cid:129) Compensation
(cid:129) Finance (Chair)
(cid:129) Audit
(cid:129) Compensation (Chair)
(cid:129) Executive
(cid:129) Compensation
(cid:129) Governance
(cid:129) Audit (Chair)
(cid:129) Executive
(cid:129) Finance
(cid:129) Audit
(cid:129) Finance
(cid:129) Audit
(cid:129) Governance
(cid:129) Audit
(cid:129) Finance
(cid:129) Compensation
(cid:129) Executive
(cid:129) Governance (Chair)
(cid:129) Audit
(cid:129) Compensation
(cid:129) Executive
(cid:129) Audit
(cid:129) Finance
(cid:129) Executive (Chair)
(cid:129) Finance
(cid:129) Governance
Westrock Company 2023 Proxy Statement 3
Proxy Statement Summary and Related Matters
GOVERNANCE HIGHLIGHTS
We believe good corporate governance supports long-term value creation for our stockholders, and our corporate
governance framework supports independent oversight and accountability. In 2022, following the retirement of John A.
Luke, Jr., Alan D. Wilson, who previously served as Lead Independent Director, was elected as non-executive Chair of the
Board of Directors (the “Board”).
Independent Oversight
Accountability
(cid:129) Eleven of 12 director nominees are independent
(cid:129) Annual election of all directors
(cid:129)
Independent Chair with clearly delineated responsibilities
(cid:129) Majority voting in uncontested elections
(cid:129) All independent committees (other than Executive Committee)
(cid:129) Annual Board and committee self-evaluations
(cid:129) Mandatory director retirement age
(cid:129) Annual advisory vote on executive compensation
(cid:129) Regular executive sessions for Board and committee meetings
(cid:129) Robust stock ownership and retention guidelines for Board
and designated executive officers
(cid:129) Over-boarding policy
Board Refreshment and Diversity
The Board is composed of experienced members who are diverse with respect to background, skills, experiences, gender,
race and ethnicity, which facilitates the effective oversight of our strategy and management.
Global Business Experience
Capital Allocation Experience
M&A Experience
Financial Expertise
10
11
9
Paper & Packaging Experience
Enterprise Risk
Management Experience
Manufacturing Experience
Consumer Packaged
Goods Experience
11
Experience with Scale
4
8
6
5
5
9
6
Public Company CEO Experience
Sustainability Experience
Public Company Board Experience
Innovation Experience
5
11
We recognize the importance of board refreshment, and it remains an area of focus for the Board. We have added five new
directors since the middle of 2018, including the addition of E. Jean Savage and Dmitri L. Stockton as directors in the last
12 months. These changes demonstrate the Board’s commitment to refreshment with independent nominees who provide
perspectives and experience to advance our business strategy. We also recognize and value the importance of board
diversity. In 2020, the Board adopted the WestRock Company Diversity Search Policy, pursuant to which we include
qualified female and racially or ethnically diverse candidates on the initial lists of candidates from which new management-
supported director nominees recruited from outside the Company are chosen by the Board. We are proud of the fact that
four of the last five directors to join the Board reflect diversity on the basis of gender or race.
Human Capital Management and Continued Leadership Transition
The Board believes that effective talent development and human capital management are important to our success, and we
recently revised our Corporate Governance Guidelines (the “Guidelines”) to expressly identify the Board’s oversight role
with respect to our strategies related to human capital management. The Board is actively engaged and involved in
management succession planning and talent management. Following the election of David B. Sewell as our President and
Chief Executive Officer (“CEO”) in 2021, the Board remained actively engaged in the executive leadership transition
throughout fiscal 2022 as we welcomed three new executive officers: Alexander W. Pease, Executive Vice President and
Chief Financial Officer, Denise R. Singleton, Executive Vice President, General Counsel and Secretary, and Samuel M.
Shoemaker, President, Consumer Packaging, and as Patrick M. Kivits transitioned to a new role as President, Corrugated
Packaging.
4 Westrock Company 2023 Proxy Statement
Proxy Statement Summary and Related Matters
Environment, Social and Governance Oversight
The charter of the Nominating and Corporate Governance Committee (the “Governance Committee”) provides that one of
its principal duties and responsibilities is to oversee our policies, strategies and programs related to environment, social and
governance (“ESG”) matters, including sustainability. The Governance Committee recently determined to increase the
cadence of its meetings to four times per year beginning in fiscal 2023, which is expected to, among other things, expand
the frequency with which ESG and sustainability topics are discussed with the Governance Committee. In addition, the
Governance Committee has identified sustainability experience as one of the important areas of experience for directors to
possess collectively in light of our business strategy.
6/12 directors have
sustainability experience
In addition to Board-level oversight, we augmented our management-level oversight of sustainability matters during fiscal
2022. WestRock’s executive leadership team is responsible for establishing our sustainability strategy, including with
respect to climate-related issues. In 2022, we hired a new Senior Vice President of Strategy and Sustainability, who reports
to our President, Global Paper. This role has responsibility for providing guidance on our sustainability strategy and driving
implementation of our sustainability strategy throughout the organization in collaboration with other executives. Our Vice
President, Sustainability, manages day-to-day implementation of this strategy. In addition to our sustainability executives,
the Company has established cross-functional groups within the organization to provide input on our sustainability strategy,
develop plans to achieve our sustainability targets and embed our sustainability goals into our operations. These groups
include representatives from our product stewardship, environmental, innovation, engineering, manufacturing, finance, legal
and communication groups.
Stockholder Engagement
Stockholder engagement is a key pillar of our corporate governance framework. We conduct year-round, proactive
stockholder engagement to ensure that management and the Board understand and consider the issues that matter most to
our stockholders. We provide regular updates regarding our financial performance and strategic actions to the investor
community through our participation in investor conferences, one-on-one meetings, earnings calls, and educational investor
and analyst conversations. We also communicate with stockholders and other stakeholders through our filings with the
Securities and Exchange Commission (the “SEC”), press releases, website and sustainability report.
In addition to our regular engagement initiatives, we conducted an outreach program in the fall of 2022. As part of this
process, we met virtually or initiated contact with stockholders representing approximately 50% of our outstanding shares.
These discussions included various members of our senior management team as well as, where appropriate, one of our
independent directors. The topics discussed included our approach to human capital management, including diversity,
inclusion, equity and belonging, and compensation, corporate governance, sustainability and various related goals that we
have set and initiatives we have launched.
COMPENSATION HIGHLIGHTS
Our executive compensation policies and programs are a strategic tool designed to drive stockholder value creation by
attracting, retaining and motivating superior talent committed to the successful execution of our business strategy. We
believe our short-term and long-term incentive programs for leaders and other employees are appropriately balanced,
reinforcing both near and longer-term results, while also encouraging prudent decision-making, effective risk management,
and consideration of market practices.
Pay for Performance
Our executive compensation program is based on a pay-for-performance model. In fiscal 2022:
100% of our named executive officers’ (“NEOs”) short-term incentive program (“STIP”) goals were tied to
Company performance, as measured by Consolidated Adjusted EBITDA (“EBITDA”), Adjusted Net Sales
(“Revenue”) and Adjusted Free Cash Flow Per Share (“Free Cash Flow Per Share”) metrics; and
75% of our NEOs’ long-term incentive program (“LTIP”) award value was tied to overall Company
performance, as measured by Free Cash Flow Per Share, Return on Invested Capital (“ROIC”) and relative
Total Shareholder Return (“TSR”) metrics over a three-year performance period.
Westrock Company 2023 Proxy Statement 5
Proxy Statement Summary and Related Matters
Pay at Risk
The Compensation Committee structures our NEOs’ compensation such that a significant portion is at-risk. We believe this
allocation of variable target compensation aligns with our pay-for-performance philosophy and motivates our executive
officers to focus on business growth, short-term plans and commitments, and the creation of long-term value for our
stockholders. As noted below, in fiscal 2022, 88% of target total compensation for Mr. Sewell was at-risk, and only 12% of
his compensation was fixed, providing a strong link between his target total compensation and our financial and operating
results. An average of 74% of target total compensation for the other NEOs was at-risk in fiscal 2022.
2022 CEO COMPENSATION MIX
12%
Base Salary
88%
Pay at
Risk
18%
STIP
17%
RSUs
53%
PSUs
2022 AVERAGE OTHER NEO COMPENSATION MIX*
13%
RSUs
37%
PSUs
74%
Pay at
Risk
26%
Base Salary
24%
STIP
*
Does not include one-time sign-on equity awards granted to Alexander W. Pease in November 2021 and Denise R. Singleton in February 2022
upon hire to compensate them for outstanding equity awards forfeited at their prior employers when they joined the Company.
6 Westrock Company 2023 Proxy Statement
Enhancements
We made enhancements to our executive compensation program in fiscal 2022 to further align the program with our
business strategy and the long-term interests of our stockholders.
What We Did
Why We Did It
Proxy Statement Summary and Related Matters
Short -Term Incentive Program
(cid:129) Added metrics of Revenue and Free Cash Flow
Per Share to the fiscal 2022 STIP
(cid:129) Retained EBITDA as a STIP metric
(cid:129) Retained safety and diversity modifiers
Long-Term Incentive Program
(cid:129) Added ROIC as an LTIP metric to complement
Free Cash Flow Per Share and relative TSR
metrics
(cid:129) Shifted the relative TSR peer group from the
S&P 500 Materials Index to a custom peer
group
Change in Control Arrangements
(cid:129) Entered into change in control agreements with
NEOs and select executive officers
Executive Severance Plan
(cid:129) Adopted a revised plan that better aligns with
competitive market practices
(cid:129) To motivate and reward top-line profitable
growth, while focusing on margin improvement
and consistent cash flow generation
(cid:129) To further enhance correlation with key drivers
of stockholder value
(cid:129) To focus on the effective and disciplined use of
capital and the return generated for
stockholders, while reinforcing cash
management and relative TSR performance
(cid:129) To utilize a peer group more closely aligned
with our key business characteristics (capital
intensity, market capitalization, stock price
correlation, and P/E ratio) and similarly
impacted by macroeconomic influences
(cid:129) To align with market competitive practices,
reinforce optimal decisions for the benefit of
stockholders, and provide NEOs incentive to
remain with the Company through a transaction
for the benefit of stockholders
(cid:129) To provide a market-based severance program
to recruit and retain executives on competitive
terms, consolidate and standardize our
severance practices for existing executives,
and enhance protections for the Company in
connection with executive transitions
SUSTAINABILITY HIGHLIGHTS
Sustainability has long been an important aspect of our business, and we have recently increased our sustainability
ambitions in response to customer and market demands. We organize our efforts around three sustainability pillars:
Innovating for Our Customers and Their Customers, Bettering the Planet and Supporting People and Communities. In fiscal
2022, we took the important step of building on our legacy of sustainability by announcing new, more ambitious targets tied
to each of these pillars.
(cid:129)
Innovating for Our Customers and Their Customers – We root our innovation efforts in megatrends and key forces
that will shape our industry and business over the next decade, including replacing plastic with fiber-based solutions,
driving more efficient use of materials through automation and design, and increasing recyclability, compostability
and reusability of common packaging formats.
Target: 100% of our products to be recyclable, compostable or reusable by 2025
(cid:129) Bettering the Planet – We aim to champion sustainable forestry and act as responsible stewards of the environment.
We seek to execute on this vision in many aspects of our business including greenhouse gas emissions reduction,
responsible fiber sourcing, and water stewardship.
Target: Achieve a validated science-based target* to reduce our Scope 1, Scope 2 and certain
Scope 3 greenhouse gas emissions by 27.5% by 2030 against a 2019 baseline
* Target aligns with the goal of the Paris Agreement to limit global average temperature increase to well below two degrees Celsius above
pre-industrial levels.
Westrock Company 2023 Proxy Statement 7
Proxy Statement Summary and Related Matters
Target: Lead in water stewardship by (i) committing $15 million to community projects that
protect and benefit freshwater resources, working forests and biodiversity through 2030, (ii)
enhancing water management systems at all mills by the end of 2030, as part of an effort to
reduce our water intake by 15% by 2030 from a 2019 baseline, and (iii) launching a global
employee education campaign in 2023 emphasizing the importance of responsible water use
Target: Promote sustainable forestry, as measured by (i) sourcing 100% of virgin fiber from
responsibly managed forests, (ii) investing in the future of sustainable forestry by supporting
certification of 1.5 million acres of forestland to recognized forest management standards by
2030, and (iii) engaging with 10,000 private landowners and their stakeholders to provide
education, guidance and support for sustainable management of their forestlands by 2030
(cid:129) Supporting People and Communities – Our community of more than 50,000 team members lives and works in more
than 300 locations in 30 countries around the world. We seek to be the employer of choice and a clear leader in
safety, with a culture that puts people first and fosters a diverse, inclusive and engaged workplace. We strive to
create an environment where all team members feel a sense of belonging and can do their best work. Our focus on
safety, diversity and belonging contributes to collaborative, engaged and productive teams.
Target: Strive for a 100% safe culture by driving continuous improvement through elimination
of life-changing events and reduction of other safety risks in the workplace, with a goal of year-
over-year reduction in severe injuries as measured by lost workday rate, as we continue to
implement HOP — our Human and Organizational Performance program that focuses on
continuous learning and improvement in our safety efforts
Target: Invest in programs and systems to advance our leadership in diversity, inclusion and
belonging for our teammates, customers, industry and communities, as measured by
(i) focusing on critical recruitment and retention programs to target year-over-year
improvement at all levels for women, people of color and military veterans working at
WestRock, (ii) tracking diversity in succession planning, with the goal of making succession
representative of company demographics, (iii) targeting high levels of employee engagement
(85% or better) and/or year-over-year improvement across WestRock operations, sites and
functions, and (iv) targeting more than $975 million per year of spending with diverse-owned
businesses
Target: Invest to reduce barriers to technical education and skills, inspiring careers in modern
manufacturing by providing access to training for one million individuals by 2030
These targets and our work to advance them are described in more detail in our
2021 Sustainability Report, published in May 2022, which we prepared in
accordance with the Global Reporting Initiative (“GRI”) Standards Core Option.
The report includes a crosswalk to relevant Sustainability Accounting Standards
Board (“SASB”) disclosure topics and is available through our website at
http .s:://www..westrock.com/sustainability. We expect future reports to be informed
by the framework of the Task Force on Climate-Related Financial Disclosures
(“TCFD”). Neither the report nor any portion of our website, including our latest
consolidated EEO-1 Report, is part of, or incorporated by reference into, this
Proxy Statement.
As part of our commitment to
transparency, and based on
feedback from external stakeholders,
we have begun publishing in the
sustainability section of our website
our latest consolidated EEO-1
Report as submitted to the U.S.
Equal Employment Opportunity
Commission.
8 Westrock Company 2023 Proxy Statement
BOARD AND GOVERNANCE MATTERS
Board and Governance Matters
ITEM 1. ELECTION OF DIRECTORS
What am I voting on? Stockholders are being asked to elect each of the 12 director nominees named in this Proxy
Statement to hold office until the annual meeting of stockholders in 2024 and until his or her successor is elected and
qualified
Voting Recommendation: FOR the election of each of the 12 director nominees named in the Proxy Statement
Vote Required: A director will be elected if the number of shares voted FOR that director nominee exceeds the
number of shares voted AGAINST that director nominee
Broker Discretionary Voting Allowed? No, broker non-votes have no effect
Abstentions: No effect
GOVERNANCE FRAMEWORK
Our governance framework facilitates independent oversight and accountability. All of our corporate powers are exercised
by or under the authority of the Board, and our business and affairs are managed under the direction of the Board, subject
to limitations and other requirements in our charter documents or in applicable statutes, rules and regulations, including
those of the SEC and the New York Stock Exchange (the “NYSE”).
Independent Oversight
Accountability
(cid:129) Eleven of 12 director nominees are independent
(cid:129) Annual election of all directors
(cid:129)
Independent Chair with clearly delineated responsibilities
(cid:129) Majority voting in uncontested elections
(cid:129) All independent committees (other than Executive Committee)
(cid:129) Annual Board and committee self-evaluations
(cid:129) Mandatory director retirement age
(cid:129) Annual advisory vote on executive compensation
(cid:129) Regular executive sessions for Board and committee meetings
(cid:129) Robust stock ownership and retention guidelines for Board
and designated executive officers
(cid:129) Over-boarding policy
Our governance framework is described in the key governance documents listed below, each of which is reviewed by the
Board at least annually, except for our Bylaws (as defined below) and certificate of incorporation, which are reviewed
periodically:
(cid:129) Amended and Restated Certificate of Incorporation
(cid:129) Second Amended and Restated Bylaws (our “Bylaws”)
(cid:129)
the Guidelines
(cid:129) Charters of the Audit Committee, Compensation Committee, Governance Committee and Finance Committee
(cid:129) Code of Conduct
(cid:129) Code of Business Conduct and Ethics for Directors
(cid:129) Code of Ethical Conduct for CEO and Senior Financial Officers.
As described in further detail below and in light of the retirement of Mr. Luke at our annual meeting of stockholders in
January 2022 (the “2022 Annual Meeting”), we recently revised our governance documents to provide flexibility for the
Board to modify or continue its leadership structure in the future, as it deems appropriate in its business judgment, and to
eliminate the separation of the Chair and Lead Independent Director roles when the Chair is independent. Copies of these
documents are available on our website, www..westrock.com, or upon written request sent to our Corporate Secretary. The
information on our website is not part of, or incorporated by reference into, this Proxy Statement.
Westrock Company 2023 Proxy Statement 9
Board and Governance Matters
BOARD COMPOSITION
The Board currently consists of 12 directors, each of whom is a nominee for election at our annual meeting of stockholders
scheduled for January 27, 2023 (the “2023 Annual Meeting”). Ms. Savage and Mr. Stockton joined the Board during 2022
following the retirement of Mr. Luke and Bettina Whyte after many years of distinguished service. Ms. Savage and
Mr. Stockton were first identified as director candidates by a third-party search firm and were appointed to the Board
effective January 28, 2022 and July 29, 2022, respectively.
Director Nomination Process
The Governance Committee is responsible for evaluating and recommending director nominees to the Board for
consideration and approval.
Candidates
recommended to
Governance Committee
→ Governance Committee
considers candidates’
qualifications
→ Governance Committee
recommends candidates
to Board
→
Board determines
nominees for election
The Governance Committee periodically assesses the Board to ensure that it has the right mix of experience, qualifications
and skills. A list of the skills and experiences that the Governance Committee considers important in light of our current
business strategy and structure, along with an indication of the director nominees that possess each category of skill or
experience, appears on page 11. The director nominees’ biographies beginning on page 13 include each director nominee’s
relevant experience, qualifications and skills.
The Governance Committee also periodically assesses the appropriate size of the Board and any vacancies that are
expected due to retirement or otherwise. If no vacancies are anticipated, the Governance Committee considers the
qualifications of incumbent directors. If vacancies arise or are anticipated, it considers potential director candidates who
may come to the attention of the Governance Committee through current directors, professional search firms and advisors
or other individuals, including stockholders. The Governance Committee’s evaluation of potential director candidates does
not vary based on the source of the recommendation. To nominate a candidate for next year’s annual meeting of
stockholders, a stockholder must deliver or mail its nomination submission to WestRock Company, 1000 Abernathy Road
NE, Atlanta, Georgia 30328, Attention: Corporate Secretary, in accordance with the timing and other requirements included
in our Bylaws as specified in “Other Important Information — Stockholder Proposals or Director Nominations for 2024
Annual Meeting.”
The Governance Committee evaluates potential candidates against the standards and qualifications set forth in the
Guidelines, as well as other relevant factors it deems appropriate. In addition, each candidate must:
(cid:129) Be free of conflicts of interest and other legal and ethical issues that would interfere with the proper performance of
the responsibilities of a director (recognizing that a director may also be an executive officer of the Company).
(cid:129) Be committed to discharging directors’ duties in accordance with the Guidelines and applicable law.
(cid:129) Be willing and able to devote sufficient time and energy to carrying out the director’s duties effectively and be
committed to serving on the Board for an extended period of time.
(cid:129) Have sufficient experience to enable the director to meaningfully participate in deliberations of the Board and one or
more of its committees, and to otherwise fulfill the director’s duties.
The Board strives to select candidates for Board membership who represent a mix of diverse experience, background and
thought at policy-making levels that are relevant to our strategy, as well as other characteristics that will contribute to the
overall ability of the Board to perform its duties and meet changing conditions. In 2020, the Board adopted the WestRock
Company Diversity Search Policy, pursuant to which we include qualified female and racially or ethnically diverse
candidates on the initial lists of candidates from which new management-supported director nominees recruited from
outside WestRock are chosen by the Board.
To ensure that the Board continues to evolve in a manner that serves our changing business and strategic needs, the
Governance Committee evaluates whether incumbent directors collectively possess the requisite skills and perspective
before recommending a slate of incumbent directors to the Board for re-nomination.
10 Westrock Company 2023 Proxy Statement
The table below identifies the skills and experiences that the Board and the Governance Committee consider important for
directors collectively to possess for effective governance of WestRock in the current business environment. It also provides a
high-level summary of the diverse skills and experience of our nominees to the Board, which contribute to the sound
governance of WestRock, although it is not an exhaustive list of each nominee’s contributions to the Board.
Board and Governance Matters
Global Business Experience to help oversee the management of global operations
Mergers and Acquisitions Experience to provide insight into developing and implementing strategies
for growing our businesses
Financial Expertise to help drive our operating and financial performance
Public Company CEO Experience to help us drive business strategy, growth and performance
Public Company Board Experience to help us oversee an ever-changing mix of strategic, operational
and compliance related matters
Capital Allocation Experience to help us allocate capital efficiently
Paper and Packaging Experience to help us deepen our understanding of the markets within which we
compete
Manufacturing Experience to help us drive operating performance
Sustainability Experience to assist us in delivering sustainable packaging solutions for our customers
and achieving our sustainability goals
Innovation Experience to assist us in building our global innovation capabilities, in particular with
respect to packaging design, machinery and automation, materials science and digitalization of
packaging
Consumer Packaged Goods Experience to assist us to better understand and anticipate our
customers’ needs and the changing dynamics of our industry
Enterprise Risk Management Experience to assist us in our oversight and understanding of significant
areas of risk to the enterprise and in implementing appropriate policies and procedures to effectively
manage risk
Experience with Scale to help us drive transformation, performance and culture in a large organization
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The Board is committed to having a membership that reflects diversity, including with respect to gender, race, ethnicity and
other personal attributes. This commitment is illustrated by the fact that the Board currently includes four directors who are
women, two directors who are racially diverse and two directors who have served in the military. The table below reflects self-
identified diversity characteristics of the Board.
Gender
Male
Female
Race/Ethnicity
Hispanic or Latino
White
Asian
Black or African American
Native Hawaiian or Other Pacific Islander
American Indian or Alaska Native
Two or More Races
Openly LGBTQIA+
Disability
Military Service
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Westrock Company 2023 Proxy Statement 11
Board and Governance Matters
Board Refreshment
We recognize the importance of Board refreshment, and it remains an area of focus for the Board. The Governance
Committee regularly considers Board composition and how Board composition changes over time. We have added five new
directors since the middle of 2018, including the addition of Ms. Savage and Mr. Stockton as directors in the last 12 months.
These changes demonstrate the Board’s commitment to refreshment with independent nominees who provide important
perspectives and experience to oversee our business strategy.
Pursuant to the Guidelines, directors must retire when they reach age 72, provided that they may continue to serve
thereafter until the next annual or special meeting of stockholders at which directors are to be elected. Mr. Luke and
Ms. Whyte each retired effective at the 2022 Annual Meeting because they had reached age 72. Mr. Luke reached age 72
in 2020, but the Board requested that he continue to serve as a director and as the non-executive Chair of the Board given
the exceptional circumstances surrounding the COVID-19 pandemic.
The Board has not established term limits because it believes that, on balance, term limits would sacrifice the contribution of
directors who have developed deep insight into our industry, strategy and operations. However, the Governance Committee
evaluates the qualifications, skills and performance of each incumbent director before recommending his or her nomination for
an additional term. A director who has a significant change in full-time job responsibilities must submit a letter of resignation to
the Board, which allows the Board to review the continued appropriateness of the director’s membership on the Board. In 2022,
following Mr. Nevels’ decision to step down as Chairman of the Swarthmore Group and upon the recommendation of the
Governance Committee (from which Mr. Nevels recused himself), the Board determined to reject Mr. Nevels’ resignation from
the Board and applicable committees based on the important skills and experience he brings to the Board, as highlighted above.
Majority Voting Standard in Uncontested Elections
Our directors are elected by a majority of the votes cast for them in uncontested elections. If a director does not receive a greater
number of “for” votes than “against” votes, then the director must tender his or her resignation to the Board. The Board then
determines whether to accept the resignation. Our directors are elected by a plurality vote standard in contested elections.
Over-Boarding Policy
Our directors may not serve on more than four other public company boards, and a director who is actively employed as a
public company executive officer is expected to limit his or her public company directorships to two in the aggregate.
Messrs. Sewell and Brown and Ms. Savage each serve on one other public company board, and none of our remaining
director nominees serves on more than three other public company boards.
Director Independence
Under the Guidelines and the NYSE corporate governance listing standards (the “NYSE Standards”), the Board must
consist of a majority of independent directors. The Board annually reviews director independence under standards set forth
in the Guidelines. The Board has affirmatively determined that all director nominees, other than Mr. Sewell, our President
and CEO, are independent. In addition, the Board had previously determined that Mr. Luke and Ms. Whyte, who retired from
the Board at the 2022 Annual Meeting, were independent during their tenure.
In the normal course of business, we purchase products and services from many suppliers, and we sell products and
services to many customers. In some cases, these transactions have occurred with companies with which our directors
have relationships as directors or executive officers. Board members may also have relationships as directors with
companies that hold or held our securities. See “Board and Governance Matters - Certain Relationships and Related
Transactions” for additional information regarding our process for reviewing such arrangements.
Director Orientation and Continuing Education
New directors participate in an orientation program and receive materials and briefings to become familiar with our
business, strategies and governance policies and other documents. Continuing education is provided for all directors
through board materials and presentations (including by outside speakers), discussions with management, visits to our
facilities and other sources, including access to external resources. During fiscal 2022, we reinitiated visits to our facilities as
part of our continuing education program after pausing such visits during fiscal 2021 due to COVlD-19-related concerns.
Director Nominees
After evaluating each director nominee and the composition of the Board, the Governance Committee recommended all the
current directors for election at the 2023 Annual Meeting. lf elected, each of the 12 nominees will hold office until the next
annual meeting of stockholders and until his or her successor is elected and qualified. Each nominee has agreed to serve
as a director if elected. lf for some unforeseen reason a nominee becomes unwilling or unable to serve, proxies may be
voted as recommended by the Board to elect substitute nominees recommended by the Board to the extent permitted by
applicable law. The Board may allow the vacancy created to remain open until such time as it is filled by the Board, or the
Board may determine not to elect substitute nominees and may instead determine to reduce the size of the Board.
12 Westrock Company 2023 Proxy Statement
lnformation about the director nominees, including additional information concerning their qualifications for office, is set forth
below.
Board and Governance Matters
COLLEEN F. ARNOLD
BACKGROUND:
Ms. Arnold has served as a director of the Company since 2018. She served as senior vice president, sales
and distribution for lnternational Business Machines Corporation (“lBM”) from 2014 to 2016. Prior to that,
Ms. Arnold held a number of senior positions with lBM from 1998 to 2014, including senior vice president,
application management services, lBM Global Business Services; general manager of GBS Strategy, Global
Consulting Services, Global lndustries and Global Application Services; general manager, Europe; general
manager, Australia and New Zealand Global Services; and CEO of Global Services Australia.
KEY QUALIFICATIONS, EXPERIENCE AND SKILLS:
Ms. Arnold’s experience serving in a number of senior roles with a large, global technology company
provides her with global business experience, senior executive experience, consumer markets and sales
experience, technology experience and experience working for a company with significant scale.
CURRENT PUBLIC BOARDS:
None
OTHER PUBLIC BOARDS WITHIN 5 YEARS:
Cardinal Health, lnc.
Age: 65
Director Since: 2018
Independent
Board Committees:
(cid:129) Compensation
(cid:129) Finance (Chair)
TIMOTHY J. BERNLOHR
the effective date of
BACKGROUND:
Mr. Bernlohr served as a director of Smurfit-Stone Container Corporation (“Smurfit-Stone”) from 2010 until it
was acquired by RockTenn Company (“RockTenn”) in 2011, and he served as a director of RockTenn from
2011 until
the 2015 merger of RockTenn and MeadWestvaco Corporation
(“MeadWestvaco,” and such merger, the “Combination”) when he became a director of the Company.
Mr. Bernlohr currently serves as the managing member of TJB Management Consulting, LLC, a consultant to
interim executive management and strategic planning
businesses in transformation and a provider of
services. From 1997 to 2005, he served in various executive capacities, including as president and CEO, at
RBX Industries, Inc. Prior to joining RBX Industries, Mr. Bernlohr spent 16 years in various management
positions with Armstrong World Industries, Inc.
KEY QUALIFICATIONS, EXPERIENCE AND SKILLS:
Mr. Bernlohr’s experience as a strategic consultant, a director of various publicly traded companies, and the
CEO of an international manufacturing company provides him with broad corporate strategy and global
business experience. In addition, Mr. Bernlohr has deep experience in the paper and packaging industry.
CURRENT PUBLIC BOARDS:
International Seaways, Inc.
Skyline Champion Corp.
OTHER PUBLIC BOARDS WITHIN 5 YEARS:
Atlas Air Worldwide Holdings, Inc.
Overseas Shipholding Group, Inc.
BACKGROUND:
Mr. Brown served as a director of RockTenn from 2010 until the effective date of the Combination when he
became a director of the Company. He has served as president of Brown & Brown, Inc. since 2007 and as
CEO since 2009. Mr. Brown previously served as a regional executive vice president of Brown & Brown.
From 2006 to 2009, he served on the board of directors of SunTrust Bank/Central Florida, a commercial
bank and subsidiary of SunTrust Banks, Inc.
KEY QUALIFICATIONS, EXPERIENCE AND SKILLS:
Mr. Brown’s experience as a CEO of a publicly traded insurance services company provides him with broad
experience and knowledge of risk management and loss minimization and mitigation, as well as capital
allocation experience and perspective on leadership of publicly traded companies.
CURRENT PUBLIC BOARDS:
Brown & Brown, Inc.
OTHER PUBLIC BOARDS WITHIN 5 YEARS:
None
Age: 63
Director Since: 2015
Independent
Board Committees:
(cid:129) Audit
(cid:129) Compensation (Chair)
(cid:129) Executive
J. POWELL BROWN
Age: 55
Director Since: 2015
Independent
Board Committees:
(cid:129) Compensation
(cid:129) Governance
Westrock Company 2023 Proxy Statement 13
Board and Governance Matters
TERRELL K. CREWS
BACKGROUND:
Mr. Crews served as a director of Smurfit-Stone from 2010 until it was acquired by RockTenn in 2011, and
he served as a director of RockTenn from 2011 until the effective date of the Combination when he became
a director of the Company. Mr. Crews served as executive vice president and CFO of Monsanto Company
from 2000 to 2009, and as the CEO of Monsanto’s vegetable business from 2008 to 2009.
KEY QUALIFICATIONS, EXPERIENCE AND SKILLS:
Mr. Crews’ experience as a CFO and executive of a publicly traded company and as a director of other public
companies provides him with broad business knowledge and in-depth experience in complex financial
matters. He also has experience working for a company with significant scale.
CURRENT PUBLIC BOARDS:
Archer Daniels Midland Company
Hormel Foods Corporation
OTHER PUBLIC BOARDS WITHIN 5 YEARS:
None
Age: 67
Director Since: 2015
Independent
Board Committees:
(cid:129) Audit (Chair)
(cid:129) Executive
(cid:129) Finance
RUSSELL M. CURREY
BACKGROUND:
Mr. Currey served as a director of RockTenn from 2003 until the effective date of the Combination when he
became a director of the Company. He has served as the president of Boxwood Capital, LLC, a private
investment company, since 2013. Mr. Currey worked for RockTenn from 1983 to 2008 and served as
executive vice president and general manager of its corrugated packaging division from 2003 to 2008.
KEY QUALIFICATIONS, EXPERIENCE AND SKILLS:
Mr. Currey’s experience with RockTenn in a number of leadership roles over a period of 25 years provides
him with valuable manufacturing experience as well as substantial knowledge of our industry, business and
customers. Mr. Currey’s background has also provided him with capital allocation experience and financial
expertise.
CURRENT PUBLIC BOARDS:
None
OTHER PUBLIC BOARDS WITHIN 5 YEARS:
None
Age: 61
Director Since: 2015
Independent
Board Committees:
(cid:129) Audit
(cid:129) Finance
SUZAN F. HARRISON
BACKGROUND:
Ms. Harrison has served as a director of the Company since January 2020. She served as President of
Global Oral Care at Colgate-Palmolive Company (“Colgate”), a worldwide consumer products company
focused on the production, distribution, and provision of household, health care, and personal products, from
2012 to 2019. Previously, Ms. Harrison served as President of Hill’s Pet Nutrition Inc. North America from
2009 to 2011, Vice President, Marketing for Colgate U.S. from 2006 to 2009 and Vice President and General
Manager of Colgate Oral Pharmaceuticals, North America and Europe from 2005 to 2006. She held a
number of other leadership roles at Colgate beginning in 1983.
KEY QUALIFICATIONS, EXPERIENCE AND SKILLS:
Ms. Harrison’s experience serving in a number of senior roles with a large, global consumer products
company provides her with global business experience, senior executive experience, consumer markets
experience and experience working for a company with significant scale.
CURRENT PUBLIC BOARDS:
Archer Daniels Midland Company
Ashland Inc.
OTHER PUBLIC BOARDS WITHIN 5 YEARS:
None
Age: 65
Director Since: 2020
Independent
Board Committees:
(cid:129) Audit
(cid:129) Governance
14 Westrock Company 2023 Proxy Statement
Board and Governance Matters
GRACIA C. MARTORE
BACKGROUND:
Ms. Martore served as a director of MeadWestvaco from 2012 until the effective date of the Combination
when she became a director of the Company. She served as the president and CEO and as a director of
TEGNA Inc. (formerly Gannett Co., Inc.), a broadcast, digital media and marketing services company, from
2011 to 2017, and she served as president and COO of Gannett from 2010 to 2011. Ms. Martore also served
as Gannett’s executive vice president and CFO from 2006 to 2010, its senior vice president and CFO from
2003 to 2006 and in various other executive capacities beginning in 1985. She has served as a director of
FM Global since 2005 and of The Associated Press since 2013.
Age: 71
KEY QUALIFICATIONS, EXPERIENCE AND SKILLS:
Director Since: 2015
Independent
Board Committees:
(cid:129) Audit
(cid:129) Finance
JAMES E. NEVELS
Ms. Martore’s background, experience and judgment as CEO and CFO of a publicly traded company provide her
with leadership, business, financial and governance skills. She also has experience working for a company with
significant scale.
CURRENT PUBLIC BOARDS:
OTHER PUBLIC BOARDS WITHIN 5 YEARS:
Omnicom Group Inc.
United Rentals, Inc.
None
BACKGROUND:
Mr. Nevels served as a director of MeadWestvaco from 2014 until the effective date of the Combination
when he became a director of the Company. He served as chairman of The Swarthmore Group, an
investment advisory firm, from 1991 until 2022*. Since 2020, Mr. Nevels has served on the board of Renew
Financial, a private company that provides financing for solar energy. Mr. Nevels also served as a director of
The Hershey Company from 2007 to 2017, including as lead independent director from 2015 to 2017, and he
served as chairman of the company from 2009 to 2015. Mr. Nevels also served as a director of the Federal
Reserve Bank of Philadelphia from 2010 to 2015 (and as its chairman from 2014 to 2015) and of MMG
Insurance Company, a privately-held provider of insurance services. He served as our Lead Independent
Director from September 2017 through February 2019.
KEY QUALIFICATIONS, EXPERIENCE AND SKILLS:
Mr. Nevels’ background and experience as an investment advisor and board member, chairman and lead
(cid:129)
independent director of public companies provide him with broad knowledge and perspective on the
(cid:129)
governance and leadership of publicly traded companies as well as financial expertise and capital allocation
experience.
CURRENT PUBLIC BOARDS:
OTHER PUBLIC BOARDS WITHIN 5 YEARS:
Age: 70
Director Since: 2015
Independent
Board Committees:
(cid:129) Compensation
(cid:129) Executive
(cid:129) Governance (Chair)
None
Alcoa Corp.
The Hershey Company
XL Group Ltd.
First Data Corp.
E. JEAN SAVAGE
*The Swarthmore Group filed a petition in Federal Bankruptcy Court under Chapter 7 of the Bankruptcy Code in
August 2022.
BACKGROUND:
Ms. Savage has served as a director of the Company since January 2022. She has served as president and
CEO of Trinity Industries, Inc. (“Trinity”), a company providing railcar products and services, since February
2020 and as a director on the Trinity board since 2018. Ms. Savage previously served in a variety of
turbines and locomotives
leadership roles at Caterpillar,
manufacturing company, including as the vice president of the Surface Mining & Technology division of
Caterpillar from 2017 through 2020. Ms. Savage also held numerous leadership roles at Progress Rail,
including as vice president of Quality and Continuous Improvement before its acquisition by Caterpillar in
2006, and in a variety of manufacturing and engineering positions for 14 years at Parker Hannifin
Corporation. She began her career as an intelligence officer in the U.S. Army Reserves.
Inc., a construction and mining, engines,
KEY QUALIFICATIONS, EXPERIENCE AND SKILLS:
Ms. Savage’s experience in multiple executive roles at large, public companies, including as CEO of Trinity,
provides her with global business experience and financial expertise as well as significant experience
transforming industrial enterprises, including through optimization of business operations and corporate
infrastructure.
CURRENT PUBLIC BOARDS:
Trinity Industries, Inc.
OTHER PUBLIC BOARDS WITHIN 5 YEARS:
None
Age: 58
Director Since: 2022
Independent
Board Committees:
(cid:129) Audit
(cid:129) Compensation
Westrock Company 2023 Proxy Statement 15
Board and Governance Matters
DAVID B. SEWELL
BACKGROUND:
Mr. Sewell has served as a director of the Company since March 2021 when he also became our president
and CEO. From March 2019 until joining the Company, he served as president and chief operating officer of
The Sherwin-Williams Company, a company in the paint and coating manufacturing industry. From August
2014 to March 2019, Mr. Sewell served as president of the performance coatings group at Sherwin-Williams.
Prior to joining Sherwin-Williams in February 2007, Mr. Sewell spent 15 years working for General Electric
Company (“GE”).
Age: 54
KEY QUALIFICATIONS, EXPERIENCE AND SKILLS:
Director Since: 2021
Non-Independent
(President and CEO)
Mr. Sewell’s service as our president and CEO provides him with knowledge of our business, strategy and
capabilities. His presence on the Board also helps provide a unified focus for management to execute our
strategy and business plans, and his in-depth knowledge of and experience in manufacturing and operations
helps supports these initiatives.
Board Committees:
(cid:129) Executive
CURRENT PUBLIC BOARDS:
Huntsman Corp.
OTHER PUBLIC BOARDS WITHIN 5 YEARS:
None
DMITRI L. STOCKTON
BACKGROUND:
Mr. Stockton has served as a director of the Company since July 2022. He most recently served as Senior Vice
President and Special Advisor to the Chairman of GE from 2016 until his retirement in 2017. Mr. Stockton joined
GE in 1987 and held various positions of increasing responsibility during his 30-year tenure. From 2011 to 2016,
Mr. Stockton served as Chairman, President and CEO of GE Asset Management, a global asset management
company affiliated with GE, and as Senior Vice President of GE. From 2008 to 2011, he served as President and
CEO for GE Capital Global Banking and Senior Vice President of GE based in London, UK. He previously also
served as President and CEO for GE Consumer Finance for Central and Eastern Europe.
Age: 58
Director Since: 2022
Independent
KEY QUALIFICATIONS, EXPERIENCE AND SKILLS:
Mr. Stockton’s background and experience as a senior executive in various roles at GE and as a public
company director provide him with leadership experience and expertise in risk management, governance,
finance and asset management.
Board Committees:
CURRENT PUBLIC BOARDS:
(cid:129) Audit
(cid:129) Finance
Deere & Co.
Ryder System, Inc.
Target Corp.
ALAN D. WILSON
BACKGROUND:
OTHER PUBLIC BOARDS WITHIN 5 YEARS:
Stanley Black & Decker, Inc.
Mr. Wilson served as a director of MeadWestvaco from 2011 until the effective date of the Combination when
he became a director of the Company. He served as chairman of the board of McCormick & Company, Inc.,
a consumer food company, from 2009 to 2017 and he served as its CEO from 2008 to 2016. Mr. Wilson
joined McCormick & Company in 1993 and served in a variety of other positions, including as president from
2007 to 2015, president of North American Consumer Products from 2005 to 2006, president of the U.S.
Consumer Foods Group from 2003 to 2005 and vice president—sales and marketing for the U.S. Consumer
Foods Group from 2001 to 2003.
Age: 65
Director Since: 2015
Independent Chair
KEY QUALIFICATIONS, EXPERIENCE AND SKILLS:
Mr. Wilson’s background, experience and demonstrated judgment as chairman and CEO of a publicly traded
multinational consumer food company provides him with leadership, market expertise, and business and
governance skills. He also has experience working for a company with significant scale.
Board Committees:
CURRENT PUBLIC BOARDS:
(cid:129) Executive (Chair)
T. Rowe Price Group, Inc.
OTHER PUBLIC BOARDS WITHIN 5 YEARS:
McCormick & Company, Inc.
(cid:129) Finance
(cid:129) Governance
16 Westrock Company 2023 Proxy Statement
Board and Governance Matters
BOARD OPERATIONS
Board Leadership Structure
The Board regularly evaluates the effectiveness of its leadership structure. Following Mr. Luke’s retirement at our 2022
Annual Meeting, the Board elected Mr. Wilson, formerly our Lead Independent Director, to serve as non-executive Chair
and determined not to appoint another independent director to fill the then-vacant Lead Independent Director role. In doing
so, the Board concluded that continued separation of the Chair and Lead Independent Director roles was unnecessary
when the Chair is independent. The Board also determined at that time that separation of the roles of CEO and Chair
remained in the best interests of the Company and our stockholders because it enhances the accountability of the CEO to
the Board, strengthens the Board’s independence from management, and ensures a greater role for the independent
directors in the oversight of the Company. In addition, this separation allows our CEO to focus efforts on running our
business and managing the Company in the best interests of our stockholders, while the Chair provides guidance to the
CEO and, in consultation with management, helps to set the agenda for Board meetings and establishes priorities and
procedures for the work of the full Board. The Chair presides over meetings of the full Board as well as executive sessions
(without management), which the Board holds at least at every regularly scheduled Board meeting.
The Board recognizes that no single leadership model is right for all companies at all times and that, depending on the
circumstances, other leadership models, such as combining the Chair and CEO roles, might be appropriate. Accordingly,
the Board expects to continue to periodically review its leadership structure, and our governance documents provide
flexibility for the Board to modify or continue its leadership structure in the future, as it deems appropriate in its business
judgment. Our governance documents further provide that if the Chair position is held by the CEO or another
non-independent director in the future, the independent directors of the Board would elect on an annual basis an
independent director to serve as Lead Independent Director and that this role would have clearly delineated oversight
responsibilities.
Board Committees
The Board assigns responsibilities and delegates authority to its committees, which regularly report on their activities and
actions to the Board. The Board has determined that each current member of each committee (other than the Executive
Committee) is “independent” within the meaning of the NYSE Standards and the Guidelines, including any applicable
additional committee-specific independence requirements. The principal responsibilities of each committee are summarized
below and set forth in more detail in each committee’s written charter (other than the Executive Committee, which does not
have a charter), which can be found on our website.
AUDIT COMMITTEE
Members:
Terrell K. Crews (Chair)
Timothy J. Bernlohr
Russell M. Currey
Suzan F. Harrison
Gracia C. Martore
E. Jean Savage
Dmitri L. Stockton
Meetings in Fiscal 2022: 8
*
All members meet the independence requirements of Rule 10A-3 of
the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), the NYSE Standards and the Guidelines, and are “financially
literate” within the meaning of the NYSE Standards. Each of
Mses. Martore and Savage and Messrs. Bernlohr, Crews and
Stockton is an “audit committee financial expert” within the meaning
of SEC regulations.
Principal Responsibilities:
(cid:129) Provide oversight of our financial reporting process and our
system of internal control over financial reporting.
(cid:129) Oversee the independence, qualifications and performance
of our independent auditor and performance of the internal
audit function.
(cid:129) Discuss with management policies with respect to risk
assessment and risk management.
(cid:129) Discuss our major information technology and cybersecurity
risk exposures and the steps that management has taken to
monitor and control such exposures.
(cid:129) Oversee compliance with legal and regulatory requirements,
including through discussion of compliance with WestRock’s
Code of Business Conduct and Ethics.
Westrock Company 2023 Proxy Statement 17
Board and Governance Matters
COMPENSATION COMMITTEE
Principal Responsibilities:
Members:
Timothy J. Bernlohr (Chair)
Colleen F. Arnold
J. Powell Brown
James E. Nevels
E. Jean Savage
Meetings in Fiscal 2022: 4
*
All members meet the independence requirements of the NYSE
Standards and the Guidelines and qualify as “non-employee
directors” for purposes of Rule 16b-3(b)(3)(i) of the Exchange Act.
(cid:129) Set the overall compensation strategy and compensation
policies for our executives and non-employee directors.
(cid:129) Oversee the performance evaluation of our CEO and other
senior executives, including assessment of performance
relative to goals and objectives.
(cid:129) Review and approve compensation levels of our CEO and
other NEOs.
(cid:129) Make recommendations to the Board regarding
non-employee director compensation.
(cid:129) Review our incentive compensation arrangements to confirm
that incentive pay does not encourage inappropriate risk
taking.
GOVERNANCE COMMITTEE
Principal Responsibilities:
Members:
James E. Nevels (Chair)
J. Powell Brown
Suzan F. Harrison
Alan D. Wilson
Meetings in Fiscal 2022: 3
*
All members meet the independence requirements of the NYSE
Standards and the Guidelines.
FINANCE COMMITTEE
Members:
Colleen F. Arnold (Chair)
Terrell K. Crews
Russell M. Currey
Gracia C. Martore
Dmitri L. Stockton
Alan D. Wilson
Meetings in Fiscal 2022: 4
(cid:129) Maintain an active Board refreshment and director
succession planning process and lead the search for
potential director candidates.
(cid:129) Evaluate and recommend changes to the size, composition
and structure of the Board and its committees.
(cid:129) Oversee the annual Board and committee evaluation
process.
(cid:129) Oversee and provide input to management on the
Company’s policies, strategies and programs related to ESG
matters, including sustainability matters.
(cid:129) Assist the Board in fulfilling its responsibility for CEO
succession.
Principal Responsibilities:
(cid:129) Review and recommend capital budgets to the Board for
approval.
(cid:129) Review management’s assessment of our capital structure,
including dividend policies and stock repurchase programs,
debt capacity and liquidity.
(cid:129) Review financing and liquidity initiatives proposed by
management.
EXECUTIVE COMMITTEE
Principal Responsibilities:
Members:
Alan D. Wilson (Chair)
Timothy J. Bernlohr
Terrell K. Crews
James E. Nevels
David B. Sewell
Meetings in Fiscal 2022: 0
(cid:129) Exercise the authority of the Board in managing our
business and affairs; however, it does not have the power to
(i) approve, adopt or recommend to our stockholders any
action or matter (other than the election or removal of
directors) that Delaware law requires to be approved by
stockholders or (ii) adopt, amend or repeal our Bylaws.
18 Westrock Company 2023 Proxy Statement
Board and Governance Matters
Meeting Attendance in Fiscal 2022
ln fiscal 2022, the Board held seven meetings and its committees held a total of 19 meetings. Each director attended 75%
or more of the aggregate of all meetings of the Board and the committees on which he or she served. The Company does
not have a policy with regard to director attendance at annual meetings of stockholders. Each director attended our 2022
Annual Meeting.
Meetings of Non-Management Directors and Independent Directors
Our non-management directors meet in regularly scheduled executive sessions conducted outside the presence of officers
or management directors, unless non-management directors request management to attend. All of our non-management
directors are independent and, during fiscal 2022, they met separately from management in executive session at least at
every regularly scheduled Board meeting.
Human Capital Management and Continued Leadership Transition
The Board believes that effective talent development and human capital management are
important to our success. The Board is actively engaged and involved in management
succession planning and talent management – it oversees and annually reviews leadership
development and assessment initiatives, as well as short- and long-term succession plans
for our CEO and other members of senior management. For example, as part of an ongoing
leadership succession planning process and working closely with our CEO and Chief
Human Resources Officer, the Board regularly reviews our talent strategy to ensure that it
supports our business strategy. Succession plans for executive officers are reviewed by the
Board at least annually, and successor candidates are identified with input from our CEO.
Our CEO also meets annually in executive session with the Board to review our internal
talent pipeline. High-potential leaders are given exposure to directors through formal
presentations and informal events.
We recently
revised our
Guidelines to expressly
identify the Board’s
oversight role with
respect to our strategies
related to human capital
management matters
such as diversity,
inclusion, equity and
belonging.
Following the election of David B. Sewell as our President and CEO in 2021, the Board remained actively engaged in the
executive leadership transition throughout fiscal 2022 as we welcomed three new executive officers: Mr. Pease, Executive
Vice President and Chief Financial Officer, Ms. Singleton, Executive Vice President, General Counsel and Secretary, and
Mr. Shoemaker, President, Consumer Packaging, and as Mr. Kivits transitioned to a new role as President, Corrugated
Packaging.
Self-Evaluations
Each year, the directors participate in a self-evaluation of the Board and its committees (other than the Executive
Committee). The Governance Committee, which oversees the process and implementation of the self-evaluations,
assesses the process of conducting self-evaluations annually and has used a variety of methods over the years to conduct
the self-evaluations, including written questionnaires, interviews and discussions conducted by internal and external parties.
For fiscal year 2022, the self-evaluation process was as follows:
Step 1. Process Review
Step 2. Self-Evaluation Questionnaires
In October 2021, the Governance Committee reviewed the self-
evaluation process to ensure that it would facilitate a candid
assessment and discussion of the effectiveness of the Board
and each committee.
→
In November and December 2021, directors completed
written questionnaires, anonymized versions of which were
reviewed with the Governance Committee.
Step 3. Evaluation Interviews
Step 4. Board and Committee Review
In early 2022, our Chair used the results of the written
questionnaires to conduct one-on-one interviews with each
director.
→
In April 2022, the Board discussed the results of the self-
evaluation process, including four common themes that
directors suggested the Board continue to focus on:
(cid:129) Succession planning
(cid:129) Capital allocation
(cid:129) Strategy
(cid:129) ESG
Among other things, the results suggested that the Board and
its committees are functioning effectively and Board dynamics
are healthy.
Westrock Company 2023 Proxy Statement 19
Board and Governance Matters
Risk Oversight
The Board provides oversight of our risk management processes. The Board
performs this function as a whole and by delegating to its committees (other than
Executive Committee), each of which meets regularly and reports back to the
Board. The risk oversight responsibilities of these committees are summarized
below. While the Board and its committees oversee risk management,
management is charged with managing enterprise risks. The Board recognizes
that it is neither possible nor desirable to eliminate all risk; rather, the Board views
appropriate risk taking as essential to our long-term success and seeks to
understand and oversee critical business risks in the context of our business
strategy, the magnitude of the particular risks and the proper allocation of our risk
management and mitigation resources.
Our enterprise risk management (“ERM”) program facilitates the identification and
management of risks and regular communications with the Board and is overseen
at the management level by our Enterprise Risk Steering Committee. Our internal
audit department conducts a companywide risk assessment annually that includes
interviews with more than 50 leaders to identify and assess our highest impact
risks. In fiscal 2022, these risks were presented to and discussed with the
Enterprise Risk Steering Committee as well as the Board.
In fiscal 2022, the Audit
Committee reviewed
cybersecurity and resiliency matters
on a quarterly basis, with results of
these discussions reported out to
the Board. The Audit Committee and
the Board have and continue to gain
knowledge about these evolving
areas through, among other things,
regular briefings and discussions
with internal subject-matter experts,
including our Chief Information and
Digital Officer, and external subject-
matter experts. They also have
access to external resources and
education on these issues.
The Enterprise Risk Steering
Committee is comprised of
key functional leaders and operating
leaders from across the organization
and meets regularly to discuss ERM
program activities, risk assessment
results and risk treatment actions to
ensure alignment with WestRock’s
strategy.
The Board and its committees receive regular reports from senior managers on
areas of material risk, including operational, financial, strategic, competitive,
reputational, legal and regulatory risks evaluated by the Enterprise Risk Steering
Committee, and management of these risks. Our General Counsel also informs
the Board and its committees, as applicable, of significant and relevant legal and
compliance issues. Each committee has access to internal counsel and may
engage its own independent counsel as well.
AUDIT COMMITTEE
COMPENSATION COMMITTEE
(cid:129) Oversees risk management related to
– financial statements
– financial reporting and disclosure processes
– financial and other internal controls
– accounting
– legal/compliance matters, including
environmental compliance
– information technology
– cybersecurity
(cid:129) Oversees the internal audit function.
(cid:129) Oversees risk management related to our
compensation philosophy and programs.
(cid:129) Reviews our incentive compensation arrangements to
confirm incentive pay does not encourage inappropriate
risk taking.
GOVERNANCE COMMITTEE
(cid:129) Oversees risk management related to governance
policies and procedures and board organization and
membership.
(cid:129) Meets separately on a regular basis with
(cid:129) Oversees risk management of policies, strategies and
representatives of our independent auditing firm and
the head of our internal audit department.
programs related to ESG matters, including
sustainability.
(cid:129) The Chair of the Audit Committee communicates
directly with our chief compliance officer on at least a
quarterly basis.
FINANCE COMMITTEE
(cid:129) Oversees risk management related to our annual
capital budget plans and capital structure and reviews
financing and liquidity initiatives.
20 Westrock Company 2023 Proxy Statement
Board and Governance Matters
DIRECTOR COMPENSATION
The Compensation Committee is responsible for setting the overall compensation strategy and policies for our
non-employee directors and approving or making recommendations to the Board with respect to the approval of the
compensation of non-employee directors. Directors who also serve as employees do not receive payment for service as
directors.
In assessing compensation for non-employee directors, the Compensation Committee considers the director compensation
practices of peer companies and whether compensation recommendations align with the interests of our stockholders. We seek
to align total non-employee director compensation with the approximate median of peer group total director compensation. In
fiscal 2022, the Compensation Committee assessed the non-employee director compensation program and, following
deliberation, increased the incremental cash compensation for the Chair role to $100,000 per year and implemented an annual
equity grant of $25,000 for the non-employee director holding that role. The Compensation Committee concluded all other
non-employee director compensation would remain at the same levels as in fiscal 2021.
Our non-employee director compensation in fiscal 2022 consisted of the following:
Component
Annual cash retainer
Annual equity award for all non-employee directors (approximate value)
Annual cash fee for Chair
Annual equity award for Chair (approximate value)
Annual committee chair cash fees
Audit Committee; Compensation Committee
Finance Committee; Governance Committee
Compensation ($)
115,000
160,000
100,000
25,000
20,000
17,500
Director Compensation for Fiscal 2022
Name
Colleen F. Arnold
Timothy J. Bernlohr
J. Powell Brown
Terrell K. Crews
Russell M. Currey
Suzan F. Harrison
John A. Luke, Jr. (1)
Gracia C. Martore
James E. Nevels
E. Jean Savage
Dmitri L. Stockton
Bettina M. Whyte (1)
Alan D. Wilson
Fees Earned or Paid
in Cash ($)
Stock Awards ($)
AII Other
Compensation ($)
132,500
135,000
115,000
135,000
115,000
115,000
38,333
115,000
132,500
77,625
20,000
38,333
215,000
160,010
160,010
160,010
160,010
160,010
160,010
-
160,010
160,010
160,010
80,018
-
185,010
-
-
-
-
-
-
-
-
-
-
-
-
-
TotaI ($)
292,510
295,010
275,010
295,010
275,010
275,010
38,333
275,010
292,510
237,635
100,018
38,333
400,010
(1) Mr. Luke and Ms. Whyte retired from the Board following the 2022 Annual Meeting after reaching the mandatory retirement age of 72.
The amounts reported in the Fees Earned or Paid in Cash column reflect the cash fees earned by each non-employee
director in fiscal 2022, whether or not such fees were deferred. These fees represent the annual cash retainer and, where
applicable, the annual fee for the Chair and committee chair roles.
The amounts reported in the Stock Awards column reflect the grant date fair value associated with stock awards made in
fiscal 2022, calculated in accordance with the provisions of Accounting Standards Codification (“ASC”) 718. On February 7,
2022, each non-employee director then serving on the Board other than Mr. Wilson received a grant of 3,533 time-based
restricted stock units (“RSUs”); Mr. Wilson received a grant of 4,085 RSUs due to his service as Chair. When Mr. Stockton
joined the Board on July 29, 2022, he received a grant of 1,889 RSUs, prorated to reflect a partial year of service on the
Board. In each case, the number of RSUs associated with the award was determined by dividing the value of the annual
stock award by the closing price of our common stock as reported on the NYSE on the grant date and rounding up to the
nearest whole share. These awards will vest on the first anniversary of the respective grant date.
Westrock Company 2023 Proxy Statement 21
Board and Governance Matters
Deferred Compensation
Non-employee directors may elect annually to defer all of their cash compensation and/or equity award pursuant to the
terms of the WestRock Company 2016 Deferred Compensation Plan for Non-Employee Directors (the “Non-Employee
Director Deferred Compensation Plan”). At the director’s option, we credit his or her (i) cash deferred account with the cash
compensation he or she elected to defer and (ii) stock unit account for each RSU that he or she elected to defer. The rights
of the director in the balance credited to his or her deferred cash account are vested at all times, whereas rights in the
balance of the stock unit account vest in accordance with the vesting schedule for the related RSUs. During 2022,
Messrs. Stockton and Wilson deferred both their cash compensation and equity awards, Ms. Harrison deferred only her
cash award and Mses. Arnold and Martore deferred only their equity awards.
Director Stock Ownership and Retention Requirements
Each non-employee director is required to own at least the greater of (i) 5,000 shares of our common stock or (ii) a number
of shares of our common stock having a value of not less than five times the annual cash retainer. In determining
compliance with these guidelines, stock ownership includes unvested RSUs. Directors have five years from the date of their
initial election to achieve the targeted level of ownership. Once determined to be in compliance with these guidelines, an
individual is not considered to be out of compliance at a future date due solely to a decrease in the price of our common
stock since the last compliance measurement date. All non-employee directors who have served on the Board for at least
five years are in compliance with these guidelines.
Any non-employee director who does not hold the requisite number of shares, including as a result of a decline in stock
price, is required to retain 50% of the net shares received from vesting of RSUs. For these purposes, “net shares” are those
shares remaining after shares are sold or withheld to satisfy, among other things, tax obligations arising from the vesting of
RSUs.
Anti-Hedging/Anti-Pledging Policy
We maintain a policy that prohibits our directors and officers, members of our leadership team and other designated
employees from entering into derivative or hedging transactions in our securities, pledging our securities as collateral for a
loan or short-selling our securities.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Our codes of conduct require directors and employees, including executive officers, to disclose any material transaction or
relationship that could reasonably be expected to be or give rise to a conflict of interest. For any such transactions involving
directors or executive officers, if the General Counsel determines that a conflict exists or potentially could arise from such a
transaction or relationship, the transaction is submitted to the Governance Committee for review.
In addition, we require that each executive officer, director and director nominee complete an annual questionnaire and
report all transactions since the beginning of the last fiscal year that exceed $120,000 in value and in which we were a
participant and those persons (or their associates or immediate family members) had or will have a direct or indirect material
interest. Management reviews responses to the questionnaires and, if any such transactions are disclosed that have not
been previously reviewed and approved, the Governance Committee then makes recommendations to the Board with
respect to the appropriateness of such transactions. We do not have a formal written policy for approval or ratification of
these transactions. Information included in directors’ responses to the questionnaires is reviewed by the Board for the
purpose of assessing independence under the Guidelines, applicable rules and regulations of the SEC and the NYSE
Standards, and we review all responses to ensure that any such transactions adhere to the standards set forth above.
There was no transaction during fiscal 2022 or through the date of this Proxy Statement, and there are no currently
proposed transactions, in which we were or are to be a participant, the amount involved exceeds $120,000 and an
executive officer, director, director nominee, a beneficial owner of five percent or more of our common stock or any
immediate family members of such persons had or will have a direct or indirect material interest.
COMMUNICATING WITH THE BOARD
Stockholders and other interested parties may communicate with directors (i) by mail at WestRock Company, 1000
Abernathy Road NE, Atlanta, Georgia 30328, Attention: Corporate Secretary, (ii) by facsimile at 678-291-7552 or (iii) by
using our website contact form. Communications intended specifically for our Chair and other non-management directors
should be marked “Independent Director Communications,” while all other director communications should be marked
“Director Communications.” Communications regarding accounting, internal accounting controls or auditing matters may be
reported to the Audit Committee using the above address and marking the communication “Audit Committee
Communications.”
22 Westrock Company 2023 Proxy Statement
COMPENSATION MATTERS
Compensation Matters
ITEM 2. ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
What am I voting on? The Board is asking our stockholders to approve, on an advisory basis, the compensation of the
NEOs as disclosed in this Proxy Statement
Voting Recommendation: FOR the proposal
Vote Required: An affirmative vote requires the majority of those shares present in person or represented by proxy and
entitled to vote
Broker Discretionary Voting Allowed: No, broker non-votes have no effect
Abstentions: Vote against
In accordance with SEC rules, our stockholders are being asked to approve, on an advisory basis, the compensation of our
NEOs as disclosed in this Proxy Statement. For the past four fiscal years, we have received an average of 92% support
from our stockholders on advisory votes to approve executive compensation.
As described in detail in the Compensation Discussion and Analysis section beginning on page 25, we believe our
compensation policies and procedures are competitive, focused on pay-for-performance principles and strongly aligned with
the long-term interests of our stockholders. Our executive compensation program is designed to attract, retain and motivate
highly effective leaders, reward sustained corporate and individual performance and drive the achievement of our strategic
objectives and the delivery of long-term stockholder value. Our core program objectives include strategically aligned metrics
and goals, reflect variable and at-risk performance orientation and long-term focus, and are market competitive.
The advisory vote on this resolution is not intended to address any specific element of compensation; rather, it relates to the
overall compensation of our NEOs, as well as the compensation philosophy, policies and practices described in this Proxy
Statement. Our stockholders have the opportunity to vote for or against, or to abstain from voting on, the following
resolution:
RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of our named
executive officers determined by the Compensation Committee, as described in the Compensation Discussion and
Analysis section and the tabular disclosure regarding named executive officer compensation (together with the
accompanying narrative disclosure) in this Proxy Statement.
Because the vote is advisory in nature, it will not be binding on the Board. The Compensation Committee will, however, take
into account the outcome of the vote when considering future executive compensation decisions.
Westrock Company 2023 Proxy Statement 23
Compensation Matters
ITEM 3. ADVISORY VOTE ON FREQUENCY OF FUTURE ADVISORY VOTES ON
EXECUTIVE COMPENSATION
What am I voting on? The Board is asking our stockholders to approve, on an advisory basis, the frequency of future
advisory votes on executive compensation
Voting Recommendation: FOR EVERY “1 YEAR”
Vote Required: The option of every “1 year,” “2 years” or “3 years” that receives the highest number of affirmative votes
by those shares present in person or represented by proxy and entitled to vote will be considered the preferred frequency
Broker Discretionary Voting Allowed: No, broker non-votes have no effect
Abstentions: No effect
In accordance with SEC rules, our stockholders may vote, on an advisory basis, on how frequently they would like to cast
an advisory vote on the compensation of our NEOs. The Board believes conducting an advisory vote on executive
compensation on an annual basis is currently appropriate for us and our stockholders.
Our stockholders may cast a vote on the preferred voting frequency by selecting the option of every 1 year, 2 years or 3
years, or they may abstain from voting.
Because the vote is advisory in nature, it will not be binding upon the Board. The Board will, however, take into account the
outcome of the vote when considering the frequency with which we will provide our stockholders the opportunity to vote, on
an advisory basis, to approve the compensation of our NEOs.
24 Westrock Company 2023 Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis describes our executive compensation philosophy and programs, as well as
the compensation decision-making process of our Compensation Committee for the following NEOs:
Compensation Discussion and Analysis
Named Executive Officer
David B. Sewell
Title
President and CEO
Alexander W. Pease (1)
Executive Vice President and CFO
Patrick M. Kivits
Thomas M. Stigers
President, Corrugated Packaging
President, Mill Operations
Denise R. Singleton (2)
Executive Vice President, General Counsel and Secretary
Ward H. Dickson (3)
Former Executive Vice President and CFO
(1) Mr. Pease commenced employment with the Company on November 8, 2021 and was appointed Executive Vice President and CFO, effective
November 10, 2021.
(2) Ms. Singleton commenced employment with the Company on February 28, 2022 and was appointed Executive Vice President, General
Counsel and Secretary, effective March 4, 2022.
(3) Mr. Dickson stepped down as Executive Vice President and CFO, effective November 10, 2021, and retired from the Company, effective
December 2, 2021. Except where otherwise indicated, the discussion of compensation arrangements, policies, procedures and decisions in
this section are applicable only to NEOs serving at the end of fiscal 2022. For information regarding the material elements of Mr. Dickson’s
fiscal 2022 compensation see “Long-Term Incentive Program – LTIP Awards – Retirement of Ward Dickson.”
EXECUTIVE SUMMARY
Our executive compensation policies and programs are a strategic tool designed to drive stockholder value creation by
attracting, retaining and motivating superior talent committed to the successful execution of our business strategy. We
believe our short-term and long-term incentive programs for leaders and other employees are appropriately balanced,
reinforcing both near and longer-term results, while also encouraging prudent decision-making, effective risk management,
and consideration of market practices.
The core features of our executive compensation program design consist of base salary and short- and long-term incentives
that are structured to be competitive with comparable organizations, directly linked to performance metrics tied to both
annual goals and the long-term strategy of the Company, and aligned with the interests of stockholders.
The Compensation Committee has primary oversight over the design and execution of our executive compensation
program. Each year, the Compensation Committee conducts a review of our compensation programs to assess alignment
and the overall competitiveness of the pay levels of our executive officers. The pay-for-performance focus of our programs
is designed to provide more value when performance is strong, and less value when performance is weak.
Westrock Company 2023 Proxy Statement 25
Compensation Discussion and Analysis
FINANCIAL PERFORMANCE HIGHLIGHTS AND KEY ACCOMPLISHMENTS – FISCAL 2022
Our fiscal 2022 performance highlights include:
$21.3 billion
Net Sales
$2.0 billion
Net Cash Provided by
Operating Activities
$0.9 billion
Net Income
$3.5 billion
Consolidated Adjusted EBITDA*
*
Non-GAAP Financial Measure. See the Appendix for a reconciliation to the most directly comparable GAAP measure.
Advanced Capital Allocation Strategy
DISCIPLINED
M&A
ONGOING
CAPITAL
INVESTMENT
STRATEGIC
CAPITAL
INVESTMENTS
CAPITAL
ALLOCATION
FOUNDATION BUILT ON:
ROIC & Margin Improvement
Strong Cash Flow Generation
Flexibility
OPPORTUNISTIC
SHARE
REPURCHASES
SUSTAINABLE
AND GROWING
DIVIDEND
COMMITMENT TO
INVESTMENT GRADE
CREDIT PROFILE
At our 2022 Investor Day, we outlined our plans to transform our Company and focus our business to maximize return on
invested capital. Throughout the year, we refined our disciplined capital allocation strategy and took swift action to advance
it. In addition to returning $260 million to stockholders through our quarterly dividend, we completed $600 million in share
repurchases. We also announced a new repurchase program of up to an incremental 25.0 million shares of our common
stock, representing an additional authorization of approximately 10% of our outstanding common stock. Following a portfolio
review, we announced the closure of our Panama City mill and of the corrugated medium manufacturing operations at our
St. Paul mill. Closing these operations allows us to redirect significant capital that would otherwise have been required to
keep these mills competitive in the future to improve other key assets. During fiscal 2022, we made $863 million in capital
investments, including numerous projects to modernize our mill and converting assets.
We also announced our entry into an agreement to acquire the remaining 67.7% interest in Grupo Gondi for $970 million,
plus the assumption of debt. The transaction, which closed in December 2022, aligns with the disciplined acquisition
framework announced at Investor Day and is expected to provide significant financial and strategic benefits to our business.
In addition, we undertook numerous initiatives in fiscal 2022 beyond portfolio actions to improve productivity and drive long-
term profitability. We believe these projects will drive significant cost savings across our business in fiscal 2023 and beyond.
Fiscal 2022 Executive Compensation Highlights
Business Strategy Alignment
In fiscal 2022, we focused on driving top-line growth, margin improvement and increased efficiency in order to advance our
strategy. The Compensation Committee approved the design of our executive compensation program to align with this
strategy by modifying our STIP and LTIP metrics in fiscal 2022 to place additional weight on achieving goals linked to the
execution of our business strategy.
For fiscal 2022, our STIP consisted of three financial performance goals for our NEOs: EBITDA, Revenue and Free Cash
Flow Per Share, with weightings of 50%, 25% and 25%, respectively. For 2022 LTIP awards, 75% of the value consisted of
performance-based restricted stock units (“PSUs”), of which we allocated 40% of the total LTIP award value to Free Cash
Flow Per Share over a three-year period, 25% of the award value to three-year ROIC and 10% of the award value to three-
year relative TSR. The remaining 25% of the 2022 LTIP award value consisted of RSUs that vest ratably over three years.
26 Westrock Company 2023 Proxy Statement
Modifications to Executive Compensation Program
We made enhancements to our executive compensation program in fiscal 2022 to further align the program with our
business strategy and the long-term interests of our stockholders.
What We Did
Why We Did It
Compensation Discussion and Analysis
Short -Term Incentive Program
(cid:129) Added metrics of Revenue and Free Cash Flow
Per Share to the fiscal 2022 STIP
(cid:129) Retained EBITDA as a STIP metric
(cid:129) Retained safety and diversity modifiers
Long-Term Incentive Program
(cid:129) Added ROIC as an LTIP metric to complement
Free Cash Flow Per Share and relative TSR
metrics
(cid:129) Shifted the relative TSR peer group from the
S&P 500 Materials Index to a custom peer
group
Change in Control Arrangements
(cid:129) Entered into change in control agreements with
NEOs and select executive officers
Executive Severance Plan
(cid:129) Adopted a revised plan that better aligns with
competitive market practices
(cid:129) To motivate and reward top-line profitable
growth, while focusing on margin improvement
and consistent cash flow generation
(cid:129) To further enhance correlation with key drivers
of stockholder value
(cid:129) To focus on the effective and disciplined use of
capital and the return generated for
stockholders, while reinforcing cash
management and relative TSR performance
(cid:129) To utilize a peer group more closely aligned
with our key business characteristics (capital
intensity, market capitalization, stock price
correlation, and P/E ratio) and similarly
impacted by macroeconomic influences
(cid:129) To align with market competitive practices,
reinforce optimal decisions for the benefit of
stockholders, and provide NEOs incentive to
remain with the Company through a transaction
for the benefit of stockholders
(cid:129) To provide a market-based severance program
to recruit and retain executives on competitive
terms, consolidate and standardize our
severance practices for existing executives,
and enhance protections for the Company in
connection with executive transitions
Say-on-Pay Results
At our 2022 Annual Meeting, approximately 88% of the votes cast approved the Company’s annual Say-on-Pay proposal in
support of our executive compensation program. The Compensation Committee takes these results into account when
making compensation decisions, including through ongoing reinforcement of our variable, pay-for-performance philosophy
and the utilization of performance metrics that are designed to deliver near- and long-term value to our stockholders. See
“—Modifications to Executive Compensation Program” above for additional information regarding recent enhancements to
our executive compensation program. The Compensation Committee will continue to review annual Say-on-Pay vote results
and determine whether any future changes are warranted in light of the results.
Westrock Company 2023 Proxy Statement 27
Compensation Discussion and Analysis
Compensation Governance Best Practices
We maintain the following governance and compensation best practices, which we believe serve the long-term interests of
stockholders:
What We Do
What We Don’t Do
Structure Meaningful Portion of Pay to be At-Risk:
In fiscal 2022, 88% of our CEO’s total target
compensation was at-risk; an average of 74% was
at-risk for our other NEOs*
Maintain Robust Stock Ownership and Retention
Guidelines: Our CEO is required to hold 6x salary and
other NEOs are required to hold 3x salary. We also
have an equity retention requirement of 50% of net
shares received until ownership guidelines are met
Utilize Performance-Based Incentives: 100% of
fiscal 2022 STIP goals were tied to Company
performance, and 75% of long-term incentives are
earned based on achievement of multi-year Company
performance goals
No Hedging or Pledging: NEOs are prohibited from
hedging their ownership or pledging common stock as
collateral
No Excise Tax Gross-Ups: We do not provide excise
tax gross-ups for any payments in connection with a
change in control
No Single-Trigger Vesting in the Event of a Change
in Control: We do not have “single-trigger” vesting of
equity upon a change in control
Select Challenging Performance Goals: We set
performance goals for short- and long-term incentives
that are designed to be challenging
Limited Perquisites: We do not provide excessive
perquisites and believe our limited perquisites are
reasonable and competitive
Maintain Incentive Plan Clawbacks: Our STIP and
LTIP arrangements contain clawback provisions
applicable in the event of a financial restatement due to
misconduct
Engage an Independent Compensation Consultant:
The Compensation Committee retains an independent
compensation consultant that performs no other
services for the Company and has no conflicts of
interest
Perform an Annual Compensation Risk Review: We
annually assess risk in our compensation programs
Participate in Stockholder Engagement: We engage
with institutional investors regarding our executive
compensation program and apprise the Compensation
Committee regarding relevant feedback received
No Employment Agreements: We do not have
employment agreements or guaranteed bonuses
No Re-Pricing of Stock Options: Our equity plan
prohibits repricing of underwater options without
stockholder approval
No Dividends Paid on Unvested Equity: Dividend
equivalents accrue on our RSUs and PSUs, but are
paid out in shares of our common stock only to the
extent the underlying award vests
*
Does not include one-time sign-on equity awards granted to Mr. Pease in November 2021 and Ms. Singleton in February 2022 upon hire to
compensate them for outstanding equity awards forfeited at their prior employers when they joined the Company.
COMPENSATION DECISION-MAKING FRAMEWORK
Compensation Philosophy and Objectives
Our executive compensation program is designed to attract, retain, and motivate highly effective leaders, reward sustained
corporate and individual performance, and drive the achievement of our strategic objectives and the delivery of long-term
stockholder value. Core principles of our executive compensation program include:
(cid:129) Strategically Aligned Metrics and Goals – Utilize metrics that align with execution and achievement of the
Company’s short- and long-term strategic plans.
(cid:129) Variable and At-Risk Performance Orientation – Incorporate a substantial portion of target total compensation that
is linked to the achievement of performance metrics and goals. The greater the responsibility, the greater the share of
an executive’s compensation should be at-risk with respect to performance.
28 Westrock Company 2023 Proxy Statement
Compensation Discussion and Analysis
(cid:129) Long-Term Focused – Use of multi-year metrics and equity vehicles in our LTIP are designed to focus on the
execution and delivery of long-term strategic plans that align the interests of our executives and stockholders.
(cid:129) Market Competitive – Design and implement executive compensation program that is competitive relative to other
comparable organizations to attract and retain superior executive talent.
Pay-for-Performance
The Compensation Committee structures our NEOs’ compensation such that a significant portion is at-risk. We believe this
allocation of variable target compensation aligns with our pay-for-performance philosophy and motivates our executive
officers to focus on business growth, short-term plans and commitments, and the creation of long-term value for our
stockholders. As noted below, in fiscal 2022, 88% of target total compensation for Mr. Sewell was at-risk, and only 12% of
his compensation was fixed, providing a strong link between his target total compensation and our financial and operating
results. An average of 74% of target total compensation for the other NEOs was at-risk in fiscal 2022.
2022 CEO COMPENSATION MIX
12%
Base Salary
88%
Pay at
Risk
18%
STIP
17%
RSUs
53%
PSUs
2022 AVERAGE OTHER NEO COMPENSATION MIX*
13%
RSUs
37%
PSUs
74%
Pay at
Risk
26%
Base Salary
24%
STIP
*
Does not include one-time sign-on equity awards granted to Mr. Pease in November 2021 and Ms. Singleton in February 2022 upon hire to
compensate them for outstanding equity awards forfeited at their prior employers when they joined the Company.
Roles and Responsibilities
The Compensation Committee, which is comprised of five independent directors, is responsible for overseeing, reviewing
and approving our executive compensation program. In fulfilling its responsibilities, the Compensation Committee receives
input from the CEO, other members of the management team and our independent compensation consultant, Meridian
Compensation Partners, LLC (“Meridian”). The table below summarizes the roles and responsibilities of each participant in
the executive compensation decision-making process:
Participant
Roles and Responsibilities
Compensation Committee
Independent Compensation
Consultant
(cid:129) Uses market benchmarking and competitive data to evaluate overall compensation levels and
programs
(cid:129) Sets the executive compensation strategy and compensation policies
(cid:129) Oversees the performance evaluation of our CEO and other senior executives, including
assessment of performance relative to goals and objectives
(cid:129) Reviews and approves compensation levels of our CEO and other NEOs
(cid:129) Reviews and approves our short- and long-term incentive plan designs, including performance
metric selection and assessment of performance goals
(cid:129) Approves our short- and long-term incentive performance results and payouts
(cid:129) Provides updates on market trends and regulatory developments and assesses the impact on
the executive compensation program
(cid:129) Reviews and recommends peer group companies used for benchmarking compensation levels,
plan designs and pay practices
(cid:129) Conducts a competitive market analysis of our compensation program for the CEO and other
executives, and advises the Compensation Committee on establishing pay levels
(cid:129) Advises the Compensation Committee on short- and long-term incentive plan designs, including
performance metric selection and assessment of performance goals
(cid:129) Advises the Compensation Committee on the non-employee director compensation program
(cid:129) Attends Compensation Committee meetings, including meeting with the Compensation
Committee in executive session without management
(cid:129) Reports to the Compensation Committee Chair and has direct access to other Compensation
Committee members
Westrock Company 2023 Proxy Statement 29
Compensation Discussion and Analysis
Participant
Roles and Responsibilities
CEO/Management
(cid:129) Provides input to the Compensation Committee on overall executive compensation program
(cid:129) CEO provides the Compensation Committee with performance assessments for other NEOs
(cid:129) Develops compensation recommendations (base salary and STIP and LTIP targets) for each
NEO (other than the CEO) for the Compensation Committee’s review and approval
Independence of Compensation Consultant
The Compensation Committee retained Meridian as its independent compensation consultant in fiscal 2022 to provide
objective analysis, advice and information (including competitive market data and compensation recommendations). In
connection with Meridian’s engagement, the Compensation Committee annually requests and receives a letter from
Meridian addressing its independence in light of the standards embodied in SEC rules and NYSE Standards. For fiscal
2022, the Compensation Committee considered this letter and other factors relevant to Meridian’s independence and
concluded that Meridian was independent and that the engagement did not raise any conflicts of interest.
Compensation Evaluation
The Compensation Committee uses competitive market data for base salary, short-term and long-term incentive pay to
evaluate compensation levels in light of practices at companies with which we compete for talent. The Compensation
Committee also intends that pay opportunities not deviate significantly from the market median but does not target a specific
level of compensation. Individual pay levels are determined based on a review of each executive’s responsibilities,
performance and experience, as well as the Compensation Committee’s judgment regarding competitive requirements and
internal pay equity.
Peer Group
In July 2021, with the assistance of Meridian, the Compensation Committee reviewed the then-current compensation peer
group to evaluate whether it reflected (i) companies in our industry and adjacent/similar industries, (ii) companies with which
we compete for talent, and/or (iii) companies with a similar revenue scope and scale of organization, including consideration
of market capitalization. The Compensation Committee also considered companies in our relative TSR peer group, as well
as peer groups selected by ISS and Glass Lewis. Based on this analysis and with the recommendation of Meridian, the
Compensation Committee made one change to the compensation peer group for fiscal 2022, adding DuPont de Nemours,
Inc. based on its industry and size following its recent divestiture activity.
The companies in our 2022 compensation peer group are listed below:
2022 Peer Group
3M Company
Amcor plc
Avery Dennison Corp.
Ball Corporation
Crown Holdings, Inc.
Dupont de Nemours, Inc.
Freeport McMoRan Inc.
The Goodyear Tire & Rubber Company
Honeywell International, Inc.
International Paper Company
Kimberly-Clark Corporation
LyondellBasell Industries NV
Nucor Corporation
Packaging Corporation of America
PPG Industries, Inc.
The Sherwin-Williams Company
United States Steel Corporation
Weyerhaeuser Company
2022 Peer Group Company Revenue (in millions) (1)
75th Percentile
Median
25th Percentile
WestRock Company
WestRock Company Percentile Rank
(1) Trailing twelve months revenue as of October 1, 2021.
$21,879
$18,421
$14,085
$18,746
51st
After a review in July 2022, the Compensation Committee determined not to make any changes to the compensation peer
group for fiscal 2023.
30 Westrock Company 2023 Proxy Statement
COMPENSATION ELEMENTS
Our fiscal 2022 executive compensation program consisted of the following three principal pay elements designed to
accomplish our program objectives:
Pay Element*
Form
Performance /
Vesting Period
Metrics & Weighting
Purpose
Compensation Discussion and Analysis
Base Salary
Cash
N/A
N/A
STIP
Cash
One-year
performance
period
PSUs
(75%)
Three-year
performance
period
LTIP
EBITDA (50%)
Revenue (25%)
Free Cash Flow Per Share
(25%)
Safety Modifier (+/-5%)
Diversity Modifier (+/-5%)
Free Cash Flow Per Share
(40%)
ROIC (25%)
Relative TSR (10%)
RSUs
(25%)
Three-year
ratable vesting
25%
(cid:129) Provides fixed
compensation to
attract and retain
highly effective leaders
(cid:129) Set at market
competitive levels and
adjusted based on
individual capabilities
and experience,
responsibilities and
impact, and performance
(cid:129) Focuses executives on
achieving annual
financial goals and
strategic initiatives that
drive stockholder
value
(cid:129) Focuses executives on
the long-term goals of
the Company
(cid:129) Aligns executive and
stockholder interests
(cid:129) Promotes stock
ownership
(cid:129) Focuses executives on
the achievement of
long-term financial
goals and stock price
performance
(cid:129) Promotes stock
ownership
(cid:129) Provides a mechanism
for retention
*
For details on other benefits provided to our NEOs, see “Other Compensation Elements” below.
Compensation Decisions
Base Salary
Base salary is designed to provide a competitive level of pay to executives based on their capabilities and experience,
responsibilities and impact, and performance. No specific formula is applied to determine the weight of each of these
factors. At more senior executive levels, a greater portion of overall compensation is progressively replaced with variable
compensation opportunities.
Westrock Company 2023 Proxy Statement 31
Compensation Discussion and Analysis
The Compensation Committee approved the base salary increases noted below for fiscal 2022 following a review of
competitive market data for similarly situated positions, as well as performance delivered and internal pay equity
considerations. For Mr. Pease and Ms. Singleton, the Compensation Committee considered several factors in determining
their base salaries, including their experience and qualifications, as well as competitive market data and internal pay equity.
Named Executive Officer
Fiscal 2021 Base Salary (1)
Percentage Increase
Fiscal 2022 Base Salary (2)
David B. Sewell
Alexander W. Pease
Patrick M. Kivits
Thomas M. Stigers
Denise R. Singleton
$1,200,000
N/A
$ 660,000
$ 685,000
N/A
2.25%
N/A
8.33% (3)
2.00%
N/A
$1,227,000
$ 750,000
$ 715,000
$ 698,700
$ 680,000
(1) Reflects the base salaries of NEOs employed by the Company on September 30, 2021.
(2) Reflects the base salaries of our NEOs on September 30, 2022. See “Executive Compensation Tables – Fiscal 2022 Summary Compensation Table” for
information related to the salaries paid to our NEOs during fiscal 2022.
(3) Reflects an increase of 4.00% effective January 1, 2022 to $686,400, based on the Compensation Committee’s annual review of our executives’
performance and base salaries, and an increase of 4.17% effective August 15, 2022 to $715,000, reflecting the increase in scope and responsibilities
upon Mr. Kivits’ transition to President, Corrugated Packaging.
Short-Term Incentive Program
Our STIP is designed to motivate senior executives and reward the achievement of specific annual financial goals and
strategic initiatives which drive stockholder value. Consistent with our pay-for-performance philosophy, STIP payout levels
rise and fall with our overall achievement of performance goals, determined using a formulaic approach as follows:
Base
Salary
Target
Award %
Company
Performance
Factor
(0% - 200%)
1+
Performance
Modifiers
(+/- 10%)
Final
Award
Payout
(0% - 200%)
EBITDA
(50%)
Revenue
(25%)
Free Cash
Flow / Share
(25%)
Safety
(+/-5%)
Diversity
(+/-5%)
Target STIP Opportunities
Each year, the Compensation Committee establishes target STIP opportunities for each NEO, which are reflected as a
percentage of the NEO’s base salary. The Compensation Committee determines target STIP opportunities after taking into
consideration competitive market data from the peer group, the executive’s capabilities and experience, responsibilities and
impact, and performance. Actual STIP payouts may range from 0% to 200% of target based on actual performance and
results delivered relative to performance goals and modifiers.
The Compensation Committee made no adjustments to target STIP opportunities for NEOs employed at the start of fiscal
2022. For Mr. Pease and Ms. Singleton, the Compensation Committee considered several factors in determining their STIP
targets, including their experience and qualifications as well as competitive market data and internal equity considerations.
The table below provides the fiscal 2022 STIP targets, which are determined by multiplying each NEO’s respective target
STIP percentage by his or her base salary.
Named Executive Officer
David B. Sewell
Alexander W. Pease
Patrick M. Kivits
Thomas M. Stigers
Denise R. Singleton
Fiscal 2022 STIP Target
(as % of Base Salary)
Fiscal 2022 STIP Target
150%
100%
90%
90%
85%
$1,840,500
$ 671,918 (1)
$ 621,074 (2)
$ 628,830
$ 340,466 (3)
(1) Reflects Mr. Pease’s pro-rated STIP target based on his hire date.
(2) Reflects Mr. Kivits’ pro-rated STIP target based on the number of days with a base salary rate of $686,400 from October 1, 2021 to August 14, 2022 and
a base salary rate of $715,000 from August 15, 2022 to September 30, 2022.
(3) Reflects Ms. Singleton’s pro-rated STIP target based on her hire date.
32 Westrock Company 2023 Proxy Statement
Compensation Discussion and Analysis
STIP Performance Metrics and Weighting
At the beginning of fiscal 2022, the Compensation Committee established STIP performance metrics and goals. In addition
to EBITDA, which had been the sole STIP financial metric in fiscal 2021, the Compensation Committee concluded it was
appropriate to add Revenue and Free Cash Flow Per Share metrics for fiscal 2022. In making this decision, the
Compensation Committee evaluated a range of performance metrics and considered input from management and Meridian.
The Compensation Committee believed the combination of these three metrics strengthened the alignment of STIP with the
strategic initiatives of the Company. In recognition of the Company’s use of a cash flow metric in the short- and long-term
incentive programs, the Compensation Committee supplemented both programs with additional performance metrics to
strike a balance that incentivizes top-line growth, margin improvement and stockholder value creation over both the short-
term and long-term. Consistent with fiscal 2021, safety and diversity modifiers were included in the STIP design as they
continue to be top priorities for the Company.
The table below summarizes the STIP performance metrics, relative weightings and the Compensation Committee’s
rationale for selecting each metric.
Metric
Weighting
Metric Selection Rationale
Description of Metric
EBITDA
50%
Revenue
25%
Free Cash Flow
Per Share
25%
(cid:129) Reflects the Company’s operational
performance
(cid:129) Focuses management on profitable
growth, margin improvement and
efficiency
Focuses management on top-line
growth through new customers, new
opportunities and solutions, and
innovation
Focuses management on the
generation of cash to reinforce capital
efficiency, reinvest in the business to
deliver stockholder value and fund
operations
Safety (Modifier)
+/-5%
Focuses management on our goal of
creating a 100% safe environment for
all employees
Diversity and
Inclusion
(Modifier)
+/-5%
Focuses management on fostering an
environment and culture that is diverse
and one where employees feel
welcomed, valued and supported
Aggregation of each segment’s
Adjusted EBITDA plus non-allocated
expenses as reflected in the segment
footnote in our 2022 Form 10-K(1), as
further adjusted to exclude the impact
of certain (i) portfolio actions and (ii)
unusual or non-recurring items
Net Sales as reported on the
consolidated statements of operations
in our 2022 Form 10-K, as adjusted to
exclude the impact of certain (i)
portfolio actions and (ii) unusual or
non-recurring items
Net cash provided by operating
activities, adjusted for certain
unusual, nonrecurring or other items(2)
and less capital expenditures, then
divided by diluted weighted average
shares outstanding
Safety assessment based on
historical and forward-looking
measures, such as occurrence of life-
changing events and peer
comparisons, corrective actions
implemented and completion of
training and development
Assessment based on historical
measures to improve diverse
representation and forward-looking
measures related to acquisition and
development of diverse talent
(1) Refers to our Annual Report on Form 10-K for the fiscal year ended September 30, 2022. For additional information regarding this non-GAAP
financial measure, see the Appendix.
(2) These items consist primarily of cash business systems transformation costs and cash restructuring and other costs, each net of tax.
Westrock Company 2023 Proxy Statement 33
Compensation Discussion and Analysis
Company Performance Factor
At the beginning of the fiscal year and after considering management’s recommendations, the Compensation Committee
sets performance goals aligned with the Company’s business plan. At the end of the fiscal year, the Compensation
Committee assesses actual performance results against the goals and determines final award levels and payouts.
Awards earned under the STIP are contingent upon continued employment through the end of the fiscal year (which is the
performance period) and are subject to safety and diversity and inclusion performance modifiers described below. Results
for the three financial performance metrics for fiscal 2022 (i.e., the “Company Performance Factor”) are provided in the table
below.
Metric
EBITDA
Revenue
Free Cash Flow Per Share
Weighting
Threshold
(50%
Payout)
Target
(100%
Payout)
Maximum
(200%
Payout)
Actual
Achievement*
Metric
Payout %
50%
25%
25%
$ 3,000M
$ 3,550M
$ 3,900M
$19,000M
$20,300M
$21,300M
$
3.88
$
4.80
$
5.45
$ 3,470M
$21,325M
$
4.61
92.7%
200.0%
89.7%
Weighted
Average
Payout
46.4%
50.0%
22.4%
Company Performance Factor
118.8%
*
Awards for performance between goal levels are interpolated on a linear basis, provided that performance in excess of the maximum goal level does not
result in vesting in excess of 200%.
Safety and Diversity and Inclusion Modifiers
The STIP payouts for Company executives, including NEOs, are subject to adjustment based on the achievement of safety
and diversity and inclusion outcomes through two STIP modifiers. For each modifier, the Compensation Committee has
discretion to reduce STIP payouts by up to 5% if results do not meet predetermined metrics and to increase STIP payouts
by up to 5% if the results meet or exceed the predetermined metrics.
Safety Modifier
Safety results were evaluated by the Compensation Committee based on year-over-year performance of three metrics:
recordable incident rate, lost workday rate, and life-changing events. To address behavioral changes intended to drive
future improvements in safety, the Compensation Committee also considered the number of safety exposures identified and
resolved, and employees that completed training, as well as the Company’s safety performance compared to the American
Forest and Paper Association (“AF&PA”) industry performance and the Bureau of Labor Statistics (“BLS”) Pulp and Paper
industry performance.
In fiscal 2022, we made significant progress in reducing life-changing events, while lost workday rate and recordable
incident rate slightly increased over the prior year. In addition, the Company’s safety results measured favorably versus
both the AF&PA industry and BLS Pulp and Paper industry performance and a substantial majority of safety concerns
identified were mitigated. Based on the totality of our safety results, the Compensation Committee approved a 2.5% positive
adjustment to STIP payouts.
Diversity and Inclusion Modifier
Diversity and Inclusion results were evaluated by the Compensation Committee based on performance on three metrics:
year-over-year improvement in diverse representation, including women and people of color, acquisition of diverse talent
and development of diverse talent. In fiscal 2022, diversity representation improved over the prior year despite attrition
challenges. We also made important progress in acquiring and developing diverse talent. Based on the totality of the
diversity and inclusion results, the Compensation Committee approved a 4.0% positive adjustment to STIP payouts.
34 Westrock Company 2023 Proxy Statement
STIP Payouts
The Compensation Committee is responsible for assessing actual performance relative to performance goals and, in doing so,
determines and certifies the amount of any STIP payout. As described above, for fiscal 2022, the Compensation Committee
assessed actual performance relative to the financial performance goals and safety and diversity and inclusion objectives.
Based on the assessment, the Compensation Committee determined and certified the STIP payouts as set forth below.
Compensation Discussion and Analysis
Named Executive Officer
David B. Sewell
Alexander W. Pease
Patrick M. Kivits
Thomas M. Stigers
Denise R. Singleton
Fiscal 2022
STIP Target X
Company
Performance
Factor
X
1+
(Safety +
Diversity
Modifiers)
=
STIP
Payout
STIP
Payout
(% of
Target)
$1,840,500
$ 671,918
$ 621,074
$ 628,830
$ 340,466
118.8%
118.8%
118.8%
118.8%
118.8%
1.065
1.065
1.065
1.065
1.065
$2,328,123
126.5%
$ 849,936
126.5%
$ 785,622
126.5%
$ 795,433
126.5%
$ 430,669
126.5%
Long-Term Incentive Program
Long-term incentive awards are designed to focus on achievement of our long-term business strategy and goals while
aligning the interests of executives with those of our stockholders and providing a retention mechanism. For 2022, LTIP
awards consisted of:
(cid:129) PSUs, representing 75% of the award value, of which we allocated 40% of the total LTIP award value to Free Cash
Flow Per Share, 25% to ROIC and 10% to relative TSR; and
(cid:129) RSUs, representing 25% of the total LTIP award value.
We believe that the combination of PSUs and RSUs creates a strong at-risk LTIP portfolio that provides optimal alignment
among our performance, management’s execution of our long-term strategic plan and goals, and value actually realized by
our executives.
LTIP Program Awards – 2022
The Compensation Committee granted annual LTIP awards on February 7, 2022 to our NEOs (other than Ms. Singleton,
who received her award on February 28, 2022 upon joining the Company). The awards will vest subject to satisfaction of
the applicable time-based and/or performance-based criteria and provide for dividend equivalent units to be paid only to the
extent the underlying awards vest.
Performance-Based Restricted Stock Units
For 2022, 75% of target LTIP compensation value was awarded in the form of PSUs to incentivize and retain our NEOs by
offering them the opportunity to receive shares of our common stock upon achieving specified performance criteria following
a three-year performance period. The PSUs granted on February 7, 2022 included a service condition and three
performance metrics: Free Cash Flow Per Share, ROIC and relative TSR. Each performance metric will be assessed for the
period from January 1, 2022 to December 31, 2024.
For the portion of the award allocated to the Free Cash Flow Per Share metric, the Compensation Committee set the target
goal following consideration of expectations over the performance period related to volume, pricing, capacity, raw material
and other cost inflation, expected higher tax rates, and the macroeconomic environment. This resulted in a target that was
7.6% higher than the target level used for 2021 grants. The actual number of shares that will vest pursuant to the grants will
be a percentage of the respective allocated target awards based on our three-year Free Cash Flow Per Share performance
as follows:
Free Cash Flow Per Share+
≥ $5.95
$4.95
$4.50
< $4.50
Vesting % of Target Award Allocated to Free Cash Flow
Per Share Metric*
200%
100%
50%
0%
+
*
Free Cash Flow Per Share will be calculated in a manner generally consistent with the Free Cash Flow Per Share metric in our STIP, except this metric is
divided by three and evaluated over a three-year performance period and subject to specified other adjustments, such as adjustments related to certain
investing activities.
Awards for performance between these goal levels will be interpolated on a linear basis, provided that performance in excess of the maximum goal level
will not result in vesting in excess of 200%.
Westrock Company 2023 Proxy Statement 35
Compensation Discussion and Analysis
The Compensation Committee included ROIC as a performance metric in fiscal 2022 to focus on the effective and
disciplined use of capital and the return generated for stockholders. We calculate ROIC by dividing adjusted net operating
profit after tax by the sum of invested capital at the end of each calendar year in the three-year performance period. We
define adjusted net operating profit after tax as the after-tax impact of EBITDA less depreciation and amortization, other
than amortization expense related to purchased intangibles and subject to certain adjustments related to non-recurring and
specified other items. We define invested capital as total equity and total debt less cash and cash equivalents, subject to
certain adjustments related to non-recurring and specified other items. The Company does not disclose specific details on
these goals because it believes such disclosure could cause competitive harm. Given the economic and market conditions
at the time the target goal was set, the target payout level was designed to be challenging but achievable, while a payout at
maximum was designed to be a stretch goal.
For the portion of the award allocated to the relative TSR metric, the number of shares that will vest will be a percentage of
the respective target shares based on our TSR performance relative to a 20-company custom peer group as follows:
Relative Total Shareholder Return
≥ 75th percentile
50th percentile
30th percentile
< 30th percentile
Vesting % of Target Award Allocated to Relative TSR
Metric*
200%
100%
50%
0%
*
Awards for performance between these goal levels will be interpolated on a linear basis, provided that performance in excess of the maximum goal level
will not result in vesting in excess of 200% of the target award.
Relative TSR is calculated using the average price of our common stock for the 20 trading days prior to the start and end of
the January 1, 2022 through December 31, 2024 performance period compared to companies in our custom peer group
using an identical calculation, provided that, in all cases, dividends paid to stockholders during the performance period will
be calculated in the results as a reinvestment on the ex-dividend date closing price. Payouts under this performance metric
are capped at target if our TSR is negative over the performance period regardless of performance against the custom peer
group.
Prior to 2022, the Compensation Committee assessed our TSR performance relative to companies in the S&P 500
Materials Index. For 2022 awards, with the assistance of Meridian, the Compensation Committee shifted to a custom peer
group of companies deemed to align more closely with the Company in terms of (i) key business characteristics (capital
intensity, market capitalization, stock price correlation, and P/E ratio), (ii) impact of macroeconomic influences, and
(iii) competition for investment dollars. As a result, the Compensation Committee approved the following 20-company
custom peer group to be used for relative TSR performance comparison:
Alcoa Corporation
Berry Global Group, Inc.
Celanese Corporation
Cleveland-Cliffs, Inc.
Eagle Materials, Inc.
Eastman Chemical Company
Graphic Packaging Holding Company
International Paper Company
LyondellBasell Industries
Minerals Technologies, Inc.
2022 Custom Peer Group
Nucor Corporation
Olin Corporation
Packaging Corporation of America
Sealed Air Corporation
Sonoco Products Company
The Chemours Company
The Goodyear Tire & Rubber Company
The Mosaic Company
United States Steel Corporation
Weyerhaeuser Company
Time-Based Restricted Stock Units
For 2022, 25% of the target LTIP compensation value was awarded in the form of RSUs to focus executives on the
achievement of long-term financial goals and stock price performance, promote stock ownership and provide a mechanism
for retention. The awards vest in equal installments on the first, second and third anniversaries of the grant date, subject to
continued service through each applicable vesting date. The Compensation Committee approves a dollar value for these
awards, and the number of underlying shares is calculated based on the grant date fair value.
36 Westrock Company 2023 Proxy Statement
Compensation Discussion and Analysis
2022 LTIP Grants
The Compensation Committee determines target LTIP opportunities after taking into consideration competitive market data
from the compensation peer group, the executive’s capabilities and experience, responsibilities and impact, and
performance. For Mr. Pease and Ms. Singleton, the Compensation Committee considered several factors in determining
their target LTIP opportunities, including their experience and qualifications as well as competitive market data and internal
equity considerations. Based on these considerations, the Compensation Committee approved the following awards for
2022:
Named Executive Officer
David B. Sewell
Alexander W. Pease (2)
Patrick M. Kivits
Thomas M. Stigers
Denise R. Singleton (2)
Performance-Based
Restricted Stock Units
(at Target) (1)
Time-Based
Restricted Stock Units (1)
Total Target LTIP Award
$5,521,500
$1,321,875
$ 900,900
$ 943,245
$ 892,500
$1,840,500
$ 440,625
$ 300,300
$ 314,415
$ 297,500
$7,362,000
$1,762,500
$1,201,200
$1,257,660
$1,190,000
(1) Reflects annual LTIP awards made on February 7, 2022, other than the annual LTIP award made to Ms. Singleton pursuant to the commencement of her
employment on February 28, 2022.
(2) For information regarding one-time sign-on awards made to Mr. Pease and Ms. Singleton, see “Offer Letters with Recently Hired NEOs”.
2019 Performance-Based Restricted Stock Unit Payout
On February 1, 2019, we granted PSUs that could be earned based on an assessment of three-year Free Cash Flow Per
Share and relative TSR, each measured over the January 1, 2019 through December 31, 2021 performance period. In
February 2022, the Compensation Committee approved an aggregate payout of 94.5%, reflecting a payout of 151.3% on
the Free Cash Flow Per Share metric, as we generated $5.01 of Free Cash Flow Per Share during the performance period,
and a payout of 0% on the relative TSR metric, as we generated a TSR of 16.2% (ranking us at the 4th percentile relative to
the S&P 500 Materials Index) during the performance period.
Metric*
Free Cash Flow Per Share
Relative Total Shareholder Return
Weighting
Target
(100% Payout)
Actual
Achievement
Metric
Payout %
Weighted
Average Payout
62.5%
$4.50
$5.01
151.3%
37.5% 50th Percentile
4th Percentile
0.0%
2019 PSU Payout
94.5%
0.0%
94.5%
* Metrics are described in the proxy statement filed in connection with our annual meeting held on January 31, 2020.
LTIP Awards – Retirement of Ward Dickson
In connection with Mr. Dickson’s retirement in December 2021, the Compensation Committee determined it was appropriate
to permit his 2019 and 2020 LTIP awards to vest on a pro-rata basis. Accordingly, a pro-rata portion of Mr. Dickson’s 2019
and 2020 RSUs vested upon his retirement. In addition, a pro-rata portion of Mr. Dickson’s 2019 PSUs vested in February
2022 and, subject to achievement of the applicable performance criteria, a pro-rata portion of his 2020 PSUs will vest in
February 2023. However, upon his retirement, Mr. Dickson forfeited his annual 2021 LTIP awards and the retention award
he received in March 2021.
Other Compensation Elements
Retirement Benefits
We provide certain retirement benefits to our NEOs in order to provide a fundamental component of compensation and to
attract and retain high quality senior executives. See “– Executive Compensation Tables – Retirement Plans” for more
information.
Other Benefits and Perquisites
We provide a limited number of perquisites and other personal benefits to our NEOs. We do not reimburse our NEOs for
club memberships or provide tax gross-up payments except in limited business-related circumstances such as relocation at
the Company’s request. The Company has provided relocation and related benefits to new hire NEOs as part of a
competitive offer of employment in order to induce the NEOs to join the Company and to place them in the same financial
position as if they had not relocated.
Certain perquisites are provided that are intended to enable our NEOs to perform their responsibilities more efficiently. We
provide our NEOs with an annual executive physical to promote their health and well-being and to provide them access to
Westrock Company 2023 Proxy Statement 37
Compensation Discussion and Analysis
comprehensive and convenient preventative care. In addition, we provide a financial planning benefit that assists executives
with the complexity of their personal financial matters and assures compliance support in all reporting. The benefit consists
of annual reimbursement of costs incurred for qualifying financial planning services of up to $7,500 for each NEO. Our CEO
is also permitted to use our corporate aircraft for limited personal use and may approve limited personal use for other NEOs.
This perquisite helps increase their availability for Company matters and permits them to work on Company business
without distractions. We believe that the benefit to us of providing this perquisite outweighs the costs to the Company. In
fiscal 2022, a substantial portion of the personal use of our corporate aircraft by Messrs. Sewell and Pease and
Ms. Singleton was in connection with their relocations to Atlanta. For additional information regarding benefits provided to
our NEOs, see “Executive Compensation Tables - All Other Compensation Table for Fiscal 2022.”
OFFER LETTERS WITH RECENTLY HIRED NEOS
During fiscal 2022, we extended offer letters to Mr. Pease and Ms. Singleton in connection with their commencement of
employment. Pursuant to the offer letter with Mr. Pease, his annual compensation package consisted of an annual base
salary of $750,000, a target annual STIP award of 100% of base salary and a target annual LTIP award of 235% of base
salary. In addition, the offer letter provided for a one-time make-whole cash award of $585,000 and a one-time make-whole
equity award of approximately $4,300,000 in the form of RSUs that vest ratably over a three-year period, subject to
Mr. Pease’s continued service. Pursuant to the offer letter with Ms. Singleton, her annual compensation package consisted
of an annual base salary of $680,000, a target annual STIP award of 85% of base salary and a target annual LTIP award of
175% of base salary. In addition, the offer letter provided for a one-time make-whole cash award of $100,000 and a
one-time make-whole equity award of approximately $3,650,000 in the form of RSUs that vest ratably over a three-year
period, subject to Ms. Singleton’s continued service. In each case, the Compensation Committee concluded that to attract
proven and experienced leaders like Mr. Pease and Ms. Singleton, it was appropriate to compensate them for equity
forfeited at a prior employer when they joined the Company. If Mr. Pease or Ms. Singleton’s employment voluntarily
terminates within 24 months of their respective start dates, the make-whole cash award must be repaid on a pro-rata basis
and any unvested RSUs will be forfeited in their entirety. The offer letters also provided certain relocation benefits to
Mr. Pease and Ms. Singleton, as described further in Executive Compensation Tables – All Other Compensation Table.
SEVERANCE AND CHANGE IN CONTROL ARRANGEMENTS
Executive Severance Plan
During fiscal 2022, with the approval of the Compensation Committee following a competitive benchmarking review, the
Company adopted the WestRock Company Executive Severance Plan (the “Revised Plan”), which amends and restates the
Company’s Executive Severance Plan, dated April 5, 2019. The Revised Plan is intended to (i) provide a market-based
severance program to recruit and retain executives on competitive terms, (ii) consolidate and standardize the Company’s
current severance practices for existing executives, and (iii) enhance protections for the Company in connection with
executive transitions. Each of our NEOs is eligible to participate in the Revised Plan, provided they have entered into a
restrictive covenant agreement with the Company and, where applicable, waived all severance benefits under any other
agreement with the Company (each, a “plan participant”). In connection with Mr. Sewell becoming our President and CEO in
March 2021, we agreed to make a severance payment to him consistent with the terms of the Revised Plan if we terminate
his employment without cause during his first three years with the Company.
A plan participant would receive benefits under the Revised Plan only if the plan participant’s employment is involuntarily
terminated by the Company for a reason other than (i) Cause (as defined in the Revised Plan), (ii) termination of
employment after the plan participant has qualified to receive long-term disability benefits under a Company plan, or
(iii) termination of employment after the plan participant’s extended absence from which such participant has failed to return
in accordance with the terms of any Company leave policy. A plan participant’s retirement, death or voluntary termination
would not result in payment of any benefits thereunder. In addition, the Revised Plan provides that if a plan participant
becomes entitled to benefits under a change in control severance agreement, as described below, such benefits would be
in lieu of, and not in addition to, benefits under the Revised Plan.
The Revised Plan includes the severance benefits described below for our NEOs following an eligible termination:
(cid:129) Severance pay equal to base salary and target STIP for 24 months in the case of the CEO and 18 months in the
case of executives reporting directly to the CEO (each such period, a “Severance Period”), paid ratably over the
course of the Severance Period; and
(cid:129) Subsidized group health benefits during the Severance Period if the plan participant or such participant’s dependents
maintained coverage under the Company’s group health benefits for at least 60 days immediately preceding an
eligible termination.
38 Westrock Company 2023 Proxy Statement
Compensation Discussion and Analysis
Benefits under the Revised Plan are expressly conditioned upon a plan participant’s execution of a separation agreement
and release and compliance with restrictive covenants. Plan participants would be eligible to receive other benefits on
account of termination of their employment solely to the extent provided under other applicable Company employee benefit
plans and policies.
Change in Control Agreements
During fiscal 2022, with the approval of the Compensation Committee following a competitive benchmarking review, the
Company entered into change in control agreements with our NEOs and certain other senior executive officers (the “CIC
Agreements”). The CIC Agreements are intended to provide NEOs with an incentive to remain with the Company and focus
on a transaction that may benefit stockholders despite potentially resulting in a loss of their job.
The CIC Agreements provide each NEO with severance payments and certain benefits only in the event of the NEO’s
termination by the Company without “Cause” or by the NEO for “Good Reason” (each as defined in the CIC Agreements)
during the two years following a change in control, provided that the NEO delivers an effective release of claims in favor of
the Company and its affiliates. These payments and benefits include: (i) in the case of Mr. Sewell, a lump sum payment
equal to three times the sum of Mr. Sewell’s base salary and his target STIP for the fiscal year in which the termination
occurs (the “Annual Target Bonus”), and in the case of our other participating NEOs, a lump sum payment equal to two
times the sum of their base salary and Annual Target Bonus; (ii) a lump sum payment equal to the product of (x) the greater
of (A) the Annual Target Bonus and (B) the average of the annual bonuses paid or payable to the NEO in respect of the
three fiscal years immediately preceding the termination date (or, if the NEO has not been employed for three full fiscal
years, the average of the annualized annual bonuses paid or payable to the NEO for the number of fiscal years immediately
preceding the termination date that they have been employed) and (y) a fraction, the numerator of which is the number of
days the NEO was employed in the fiscal year in which the termination occurs through, and including, the date of
termination and the denominator of which is 365; (iii) continued group health benefits (including for the NEO’s dependents)
for 36 months for Mr. Sewell and, in the case of our other participating NEOs, 24 months following the NEO’s termination
date, at the rate then applicable to similarly-situated active employees; (iv) up to one year of reasonable outplacement
assistance; and (v) immediate vesting of unvested equity awards, with outstanding PSUs vesting at the greater of (A) the
target level of performance and (B) the average level of performance (based on actual results) of the Company and its
affiliates over the three LTIP plan years immediately preceding the change in control.
Any amounts paid to the NEOs under the CIC Agreements would be reduced to the maximum amount that could be paid
without being subject to the excise tax imposed under Sections 280G and 4999 of the Internal Revenue Code, but only if
the after-tax benefit of the reduced amount was higher than the after-tax benefit of the unreduced amount. In consideration
for the benefits under the CIC agreements, each NEO has agreed to continue to comply, in accordance with their terms,
with any covenant restricting their ability to compete with the Company to which such NEO is subject under any agreement
with the Company or any of its subsidiaries.
OTHER COMPENSATION PRACTICES AND POLICIES
Consideration of Risk in Compensation Policies
Our compensation plans, policies and practices are designed to implement our compensation philosophy of motivating our
executive officers to achieve our business objectives in the short-term and to grow our business to create long-term value
for our stockholders. As part of our annual review of our compensation plans, policies and practices, we conduct a risk
assessment to assess whether such plans, policies and practices are not encouraging undue risk taking. Based on this
review in fiscal 2022, the Compensation Committee has concluded that the risks arising from its compensation programs
are not reasonably likely to have a material adverse effect on the Company.
Officer Stock Ownership and Retention Requirements
The Company’s stock ownership guidelines require our executive officers to own common stock with a value equal to a
specified multiple of their respective base salaries as follows:
Position
CEO
Other NEOs
Required Ownership
6 times base salary
3 times base salary
Designated executives are expected to meet the targeted ownership levels within five years of becoming subject to the
guidelines. In determining compliance with these guidelines, stock ownership includes unvested RSUs, but does not include
unexercised stock options. Once determined to be in compliance with the guidelines, an individual is not considered to be
Westrock Company 2023 Proxy Statement 39
Compensation Discussion and Analysis
out of compliance with these guidelines at a future date due solely to a decrease in the price of our common stock since the
last compliance measurement date. All NEOs, other than Mr. Kivits, are currently in compliance with these guidelines. Mr.
Kivits became subject to the ownership guidelines in fiscal 2020 and is making progress towards meeting them within five
years.
Designated executives who do not satisfy the ownership guidelines above are required to retain 50% of the net shares
received from vesting of RSUs, until the stock ownership requirements are met. For these purposes, “net shares” are those
shares remaining after shares are sold or withheld to satisfy, among other things, tax obligations arising from the vesting of
RSUs.
Anti-Hedging/Anti-Pledging Policy
We maintain a policy that prohibits our directors and officers, members of our leadership team and other designated
employees from entering into derivative or hedging transactions in our securities, pledging our securities as collateral for a
loan or short-selling our securities.
Clawback Provisions
The Compensation Committee has adopted clawback provisions that apply to awards made to our NEOs pursuant to our
short- and long-term incentive programs, which allow us to recapture amounts paid or stock granted to NEOs that vest
based on financial results that we are required to restate at a future date if the Compensation Committee determines that
the restatement is based in whole or in part upon any applicable misconduct by an applicable NEO. These provisions
require an applicable NEO to pay us an amount of cash or deliver an amount of shares of our common stock equal to the
benefit received by the NEO because of the misstatement of financial results. These provisions apply to misstatements of
financial results that are discovered within 24 months after vesting of an applicable equity award or payment of an
applicable bonus. We intend to revise our clawback provisions in light of the recently finalized SEC rules related to these
matters.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management.
Based on this review and discussion, the Compensation Committee recommended to the Board that the Compensation
Discussion and Analysis be included in this Proxy Statement and incorporated by reference into our 2022 Form 10-K.
Compensation Committee: Timothy J. Bernlohr, Chair; Colleen F. Arnold; J. Powell Brown; James E. Nevels and E. Jean
Savage
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised entirely of the five independent directors listed above. No member of the
Compensation Committee (a) was, during fiscal 2022, an officer or employee of ours or any of our subsidiaries, (b) was
formerly an officer of ours or (c) had any relationship requiring disclosure by us pursuant to Item 404 of Regulation S-K. ln
fiscal 2022, none of our executive officers served on the board of directors or compensation committee of any entity that
had one or more of its executive officers serving on the Board or the Compensation Committee.
40 Westrock Company 2023 Proxy Statement
EXECUTIVE COMPENSATION TABLES
Executive Compensation Tables
The tables below contain information about our NEOs during fiscal 2022. Certain numbers in the tables may not add due to
rounding.
SUMMARY COMPENSATION TABLE
The amounts reported in the following table, including base salary, short- and long-term incentive amounts, benefits and
perquisites, are described more fully under “Compensation Matters – Compensation Discussion and Analysis”.
Fiscal
Year
Salary
($) (1)
Bonus
($) (2)
Stock
Awards
($) (3)
Non-Equity
Incentive Plan
Compensation
($) (4)
Change in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
2022
1,220,250
654,545
-
-
7,591,297
18,896,377
673,295
585,000
6,021,728
2,328,123
1,536,391
849,936
132,424
724,063
657,520
683,375
632,751
695,275
-
-
-
-
-
2,993,542 (8)
-
2,651,548
2,240,074
1,238,571
1,577,749
1,296,899
1,183,876
-
785,622
876,083
795,433
2022
399,815
100,000
4,857,651
430,669
All Other
Compensation
($) (5)
Total ($)
436,600
11,576,270
101,773
21,189,086
414,558
8,544,517
13,242
3,139,209
126,902
4,686,389
90,908
2,988,502
426,573
3,134,141
135,007
3,221,590
145,717
2,933,324
203,934
5,992,069
-
-
-
-
-
-
-
-
-
-
Name and
Principal Positions
David B. Sewell (6)
CEO
Alexander W. Pease (6)
Executive Vice President and
CFO
Ward H. Dickson (7)
Former Executive Vice
President and CFO
Patrick M. Kivits (6)
President, Corrugated
Packaging
Thomas M. Stigers (6)
President, Mill Operations
Denise R. Singleton (6)
Executive Vice President,
General Counsel and Secretary
2021
2022
2022
2021
2020
2022
2021
2022
(1) The salary amounts for fiscal 2022 reflect three months of salary at the calendar year 2021 rate in effect on October 1, 2021 and nine months of salary at
the calendar year 2022 rate (including adjustments implemented during fiscal 2022) for Messrs. Sewell, Kivits and Stigers; Mr. Pease and Ms. Singleton
began receiving salary on November 8, 2021 and February 28, 2022, respectively, and Mr. Dickson retired on December 2, 2021.
(2) Amounts represent one-time make-whole cash awards provided to Mr. Pease and Ms. Singleton upon hire to compensate them for outstanding equity
awards forfeited at their prior employers when they joined the Company.
(3) SEC regulations require us to disclose the aggregate grant date fair value of the award of stock in accordance with ASC 718. For grants of PSUs with
cash flow per share and ROIC metrics and RSUs, the grant date fair value per share is equal to the closing price of our common stock on the NYSE on
the dates of the applicable grants ($49.12 on November 8, 2021, $45.29 on February 7, 2022, and $45.27 on February 28, 2022). For grants of PSUs
with a relative total shareholder return metric, the grant date fair value was determined using a Monte Carlo simulation ($60.83 on February 7, 2022 and
February 28, 2022). PSU grants made on February 7, 2022 and February 28, 2022 contain a performance condition that may be adjusted from 0-200%
of target subject to the level of performance attained. SEC regulations require us to disclose the aggregate grant date fair value based upon the probable
outcome of these conditions at the time of grant. The amounts shown for the PSU grants made in fiscal 2022 are calculated at 100% of target, which was
the expected probable outcome of the performance condition at the respective grant dates. Assuming maximum performance, the aggregate grant date
fair value of these awards would be as follows: Mr. Sewell, $12,361,919; Mr. Pease, $7,163,942; Mr. Kivits, $2,016,880; Mr. Stigers, $2,111,893 and
Ms. Singleton, $5,631,089. We disclose the aggregate amount without reduction for assumed forfeitures (as we do for financial reporting purposes).
(4) Amounts shown include payments made to our NEOs under our STIP. Awards paid under this program for fiscal 2022 were earned in fiscal 2022 and
paid in fiscal 2023. Due to Mr. Dickson’s announced retirement in October 2021, he was not eligible to receive a STIP award in fiscal 2022.
Westrock Company 2023 Proxy Statement 41
Executive Compensation Tables
(5) The amounts shown as “All Other Compensation” include the following items:
ALL OTHER COMPENSATION TABLE FOR FISCAL 2022
Company
Contributions
to 401(k) Plan
and Deferred
Compensation
Plan ($) (A)
Aircraft Usage
($) (B)
Relocation
Benefits
$ (C)
Tax
Reimbursement
and Preparation
($) (D)
David B. Sewell
Alexander W. Pease
Ward H. Dickson
Patrick M. Kivits
Thomas M. Stigers
Denise R. Singleton
266,128
115,960
26,295
69,831
13,242
51,978
111,803
44,562
89,700
244,755
-
22,360
18,200
63,180
-
-
-
96,192
Other
($) (E)
Total ($)
28,217
436,600
10,272
414,558
-
-
13,242
426,573
-
-
-
352,235
-
-
15,714
145,717
-
203,934
(A) The WestRock Company 401(k) Retirement Savings Plan (the “401(k) Plan”) provides eligible employees with a matching contribution of 100% of
(B)
the first 5% of eligible pay they contribute to the plan. In addition, for eligible employees, we contribute 2.5% of their eligible pay following the end of
the calendar year. For purposes of the 401(k) Plan, eligible pay is limited by IRS regulation to $305,000 in 2022. Under the WestRock Deferred
Compensation Plan, executives receive a match of 100% of the first 5% of their contributions in excess of the lRS limit of $305,000 and an additional
2.5% of eligible pay in excess of $305,000. Eligible pay includes salary and non-equity incentive compensation. Certain amounts disclosed in this
column are also disclosed in the table below titled “Nonqualified Deferred Compensation Table for Fiscal 2022.” All amounts disclosed in this column
assume that the NEO remains employed as of December 31 or is eligible for retirement under the terms of the applicable plan.
In accordance with SEC regulations, we report the use of corporate aircraft by our executive officers as a perquisite unless it is “integrally and
directly related” to the performance of the executive’s duties. SEC rules require us to report this and other perquisites at our aggregate incremental
cost. We estimate our aggregate incremental cost for aircraft use based on our average variable operating costs, which includes items such as fuel;
maintenance; landing fees; trip-related permits; trip-related hangar costs; trip-related meals and supplies; crew expenses during layovers; and any
other expenses incurred or accrued based on the number of hours flown. The values reported in this column include aggregate incremental cost for
repositioning flights. A substantial portion of the personal use of corporate aircraft by Messrs. Sewell and Pease and Ms. Singleton during fiscal 2022
was in connection with their relocations to Atlanta.
(C) Represents relocation assistance, including costs of shipment of personal goods, closing costs, temporary living costs, and reimbursement of
imputed income associated with relocation-related benefits of $11,724 for Mr. Sewell, $107,940 for Mr. Pease, and $43,247 for Ms. Singleton.
(D) Represents tax equalization of $305,067 related to relocation from Switzerland and related costs associated with tax return preparation of $47,168.
These benefits are intended to avoid the financial burden of being subject to multiple tax regimes in connection with an international relocation and
to place Mr. Kivits in the same financial position as if he had not relocated.
(E) Represents payments for expenses relating to personal residential security for Mr. Sewell, executive physicals for Messrs. Sewell and Pease,
reimbursement for qualified financial planning services for Mr. Pease, and a charitable contribution through our Matching Gift Program and a car
allowance benefit which ended at the close of fiscal 2022 for Mr. Stigers.
(6) Compensation information for Messrs. Pease and Stigers and Ms. Singleton is only provided for fiscal 2022 because they were not NEOs in fiscal 2021
or fiscal 2020. Compensation information for Messrs. Sewell and Kivits is only provided for fiscal 2022 and fiscal 2021 because they were not NEOs in
fiscal 2020.
(7) Mr. Dickson stepped down as Executive Vice President and CFO on November 10, 2021 and retired from the Company on December 2, 2021.
(8) Due to Mr. Dickson’s announced retirement in October 2021, he did not receive an LTIP award in fiscal 2022. This value represents the incremental fair
value attributable to the modification of 68,240 PSUs (at target) and 19,960 RSUs as described further in “Compensation Matters — Compensation
Discussion and Analysis — Compensation Elements — Long-Term Incentive Program — LTIP Awards — Retirement of Ward Dickson.”
42 Westrock Company 2023 Proxy Statement
GRANTS OF PLAN-BASED AWARDS
The following table provides information as to the grants of plan-based awards to each NEO during fiscal 2022. This
includes annual non-equity incentive awards under our STIP – see “Compensation Matters — Compensation Discussion
and Analysis — Compensation Elements — Short-Term Incentive Program” and equity awards under our LTIP - see
“Compensation Matters — Compensation Discussion and Analysis — Compensation Elements — Long-Term Incentive
Program.”
Executive Compensation Tables
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards (1)
Estimated Future Payouts Under
Equity Incentive Plan Awards (2)
Name
David B. Sewell
Grant
Date
Threshold
($)
Target
($)
Maximum
($)
Threshold
(#)
Target
(#)
Maximum
(#)
920,250
1,840,500
3,681,000
2/7/2022
2/7/2022
Alexander W. Pease
335,959
671,918
1,343,835
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#) (3)
Grant Date
Fair Value of
Stock-based
Awards ($)
40,515
1,834,924
60,770
121,540
243,080
5,756,372
85,590 (4)
4,204,181
9,700
439,313
-
-
-
-
-
-
-
2,993,542
14,550
29,100
58,200
1,378,234
Ward H. Dickson (5)
Patrick M. Kivits
Thomas M. Stigers
11/8/2021
2/7/2022
2/7/2022
12/2/2021
2/7/2022
2/7/2022
2/7/2022
2/7/2022
310,537
621,074
1,242,149
314,415
628,830
1,257,660
Denise R. Singleton
170,233
340,466
680,931
2/28/2022
2/28/2022
2/28/2022
9,915
19,830
39,660
10,383
20,765
41,530
9,858
19,715
39,430
6,610
6,920
299,367
939,204
313,407
983,493
80,115 (4)
3,626,806
6,570
297,424
933,421
(1) These columns represent the threshold, target and maximum award opportunities under our STIP, prior to the application of modifiers, which is described
in greater detail under “Compensation Matters — Compensation Discussion and Analysis — Compensation Elements — Short-Term Incentive Program.”
(2) These columns represent PSU grants made to Messrs. Sewell, Pease, Kivits and Stigers on February 7, 2022, and Ms. Singleton on February 28, 2022.
All such grants will vest, if at all, based on the achievement of applicable performance conditions during the January 1, 2022 through December 31, 2024
performance period and service through February 7, 2025, as described under “Compensation Matters — Compensation Discussion and Analysis —
Compensation Elements — Long-Term Incentive Program.” During the vesting period, the PSUs will be adjusted to reflect the accrual of dividend
equivalents, which will be distributed in additional shares only to the extent the underlying PSUs vest.
(3) This column represents RSU grants made to Mr. Pease on November 8, 2021, Messrs. Sewell, Pease, Kivits and Stigers on February 7, 2022, and
Ms. Singleton on February 28, 2022. All such grants will vest in equal installments based on continued service through the first, second and third
anniversaries of the grant date. During the vesting period, the RSUs will be adjusted to reflect the accrual of dividend equivalents, which will be
distributed in additional shares at the same time as the underlying RSUs.
(4) Represents a one-time make-whole equity award granted to each of Mr. Pease and Ms. Singleton upon hire to compensate them for outstanding equity
awards forfeited at their prior employers when they joined the Company. The offer letter for each of Mr. Pease and Ms. Singleton provided for the number
of RSUs to be calculated using the 20-day average closing stock price for the 20 trading days immediately preceding execution of the offer letter ($50.24
in the case of Mr. Pease and $45.56 in the case of Ms. Singleton). See “Compensation Matters — Compensation Discussion and Analysis — Offer
Letters with Recently Hired NEOs” for more information.
(5) Due to Mr. Dickson’s announced retirement in October 2021, he was not eligible to receive a STIP award or LTIP award in fiscal 2022. The amount in
this row represents the incremental fair value attributable to the modification of 68,240 PSUs (at target) and 19,960 RSUs as described further in
“Compensation Matters — Compensation Discussion and Analysis — Compensation Elements — Long-Term Incentive Program — LTIP Awards —
Retirement of Ward Dickson.”
Westrock Company 2023 Proxy Statement 43
Executive Compensation Tables
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table summarizes stock-based compensation awards outstanding as of September 30, 2022 and provides
information concerning outstanding equity incentive plan awards for each NEO as of the end of fiscal 2022. Each
outstanding award is represented by a separate row that indicates the number of securities underlying the award. For option
awards, the table discloses the exercise price and the expiration date. For equity awards, the table provides the total
number of shares of stock underlying awards that have not vested, including dividend equivalent units, and the aggregate
market value of those shares. We computed the market value of stock awards by multiplying the closing price of our
common stock at the end of fiscal 2022 by the number of shares of stock underlying the applicable award.
Option Awards
Stock Awards
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
Option
Exercise
Price ($)
Option
Expiration
Date
Number of
Shares of
Stock That
Have Not
Vested (#)
Market
Value of
Shares of
Stock That
Have Not
Vested ($) (1)
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares That
Have Not
Vested (#)
Equity
Incentive
Awards:
Market or
Payout Value
of Unearned
Shares That
Have Not
Vested ($) (1)(11)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,151
7,014
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
57.97
1/30/2025
56.05
1/30/2025
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
128,072
3,956,137
43,224
41,212
1,335,189
1,273,039
-
-
-
-
-
-
-
-
-
-
129,673
247,264
4,005,599
7,637,985
87,514
2,703,307
9,867
304,792
-
-
-
-
-
-
-
-
-
-
59,202
1,828,750
43,884
1,594
1,355,577
49,239
7,193
5,798
8,253
6,724
222,192
179,100
254,935
207,704
-
-
-
-
-
-
-
-
-
-
-
-
-
5,787
253
6,684
5,158
7,039
-
-
-
-
-
-
-
-
-
178,760
7,815
206,469
159,331
217,435
-
-
-
-
81,052
2,503,696
6,647
205,326
14,386
17,398
40,342
444,384
537,424
1,246,164
-
-
-
-
-
-
-
34,724
1,498
20,051
42,244
-
-
-
-
-
-
-
-
-
1,072,624
46,273
619,375
1,304,917
-
-
-
-
39,892
1,232,264
Name / Type of
Award
David B. Sewell
Make-Whole
Sign-On RSU
2021 RSU
2022 RSU
2021 PSU
2022 PSU
Alexander W. Pease
Make-Whole
Sign-On RSU
2022 RSU
2022 PSU
Ward H. Dickson (7)
2020-1 PSU
2020-2 PSU
Patrick M. Kivits
2020 RSU
2021-1 RSU
2021-2 RSU
2022 RSU
2020 PSU
2021 PSU
2022 PSU
Thomas M. Stigers
2015 Stock
Options
2015 Stock
Options
2020-1 RSU
2020-2 RSU
2021-1 RSU
2021-2 RSU
2022 RSU
2020-1 PSU
2020-2 PSU
2021 PSU
2022 PSU
Denise R. Singleton
Make-Whole
Sign-On RSU
2022 RSU
2022 PSU
Grant Date
3/15/2021 (2)
3/15/2021 (3)
2/7/2022 (4)
3/15/2021 (5)
2/7/2022 (6)
11/8/2021 (2)
2/7/2022 (4)
2/7/2022 (6)
2/3/2020 (8)
3/30/2020 (8)
2/3/2020 (9)
2/5/2021 (10)
3/1/2021 (4)
2/7/2022 (4)
2/3/2020 (8)
2/5/2021 (5)
2/7/2022 (6)
3/9/2015
8/5/2015
2/3/2020 (9)
3/30/2020 (9)
2/5/2021 (10)
3/1/2021 (4)
2/7/2022 (4)
2/3/2020 (8)
3/30/2020 (8)
2/5/2021 (5)
2/7/2022 (6)
2/28/2022 (2)
2/28/2022 (4)
2/28/2022 (6)
(1) Based on the closing price of $30.89 for our common stock on September 30, 2022, the last trading date of our fiscal year, as reported on the NYSE.
44 Westrock Company 2023 Proxy Statement
Executive Compensation Tables
(2) Represents a one-time make-whole equity award granted to each of Messrs. Sewell and Pease and Ms. Singleton upon hire to compensate them for
outstanding equity awards forfeited at their prior employers when they joined the Company, which vests in equal installments on the first, second and
third anniversaries of the respective grant date.
(3) Vests on March 15, 2024.
(4) Vests in equal installments on the first, second and third anniversary of the grant date.
(5) Vests, if at all, on February 5, 2024 based on the achievement of applicable performance conditions during the February 5, 2021 through February 4,
2024 performance period and service through February 5, 2024.
(6) Vests, if at all, on February 7, 2025 based on the achievement of applicable performance conditions during the January 1, 2022 through December 31,
2024 performance period and service through February 7, 2025, as described under “Compensation Matters — Compensation Discussion and Analysis
— Compensation Elements — Long-Term Incentive Program.”
(7) The outstanding awards reflect a pro-rated number of shares underlying the 2020 PSUs that were retained upon Mr. Dickson’s retirement pursuant to
Compensation Committee approval and which will vest on February 3, 2023, subject to the achievement of the applicable performance conditions.
(8) Vests, if at all, on February 3, 2023 based on the achievement of applicable performance conditions during the February 3, 2020 through February 2,
2023 performance period and, other than with respect to Mr. Dickson, service through February 3, 2023.
(9) Vests on February 3, 2023.
(10) Vests on February 5, 2024.
(11) Consistent with SEC regulations and assuming the applicable performance period had ended on September 30, 2022, the values in this column reflect
maximum payout with respect to outstanding 2020 and 2022 PSUs and target payout with respect to 2021 PSUs.
VALUE REALIZED FROM STOCK OPTIONS AND STOCK AWARDS
The following table provides information concerning exercises of stock options and vesting of stock awards, including RSUs
and PSUs, during fiscal 2022 for each NEO on an aggregated basis.
Name
David B. Sewell
Alexander W. Pease
Ward H. Dickson
Patrick M. Kivits
Thomas M. Stigers
Denise R. Singleton
Option Awards
Stock Awards
Number of Shares
Acquired on Exercise (#)
Value Realized
on Exercise ($) (1)
Number of Shares
Acquired on Vesting (#) (2)
Value Realized
on Vesting ($) (3)
-
-
-
-
47,402
785,759
-
-
-
-
-
-
63,296
-
50,484
4,079
24,714
-
2,914,139
-
2,358,015
176,976
1,116,249
-
(1) Calculated by multiplying the number of options exercised by the difference between the price of our common stock upon exercise and the exercise
price.
Includes dividend equivalent units credited during the vesting period.
(2)
(3) Calculated by multiplying the number of shares vested by the closing price of our common stock on the vesting date.
RETIREMENT PLANS
In addition to the short- and long-term incentive components of our executive compensation program, each NEO
participates in Company-sponsored U.S.-based retirement plans. We primarily provide retirement benefits to our NEOs
through the 401(k) Plan and the WestRock Company Deferred Compensation Plan. No employee’s compensation for
purposes of the 401(k) Plan includes amounts in excess of the Internal Revenue Code’s compensation limit, which is
adjusted periodically for inflation. The limit was $290,000 for 2021 and $305,000 for 2022.
The following table includes information about each of our retirement plans in which NEOs participate and indicates which
NEOs participate in the plans.
Plan Name
WestRock Company
401(k) Retirement
Savings Plan
Plan Type
Savings
WestRock Company
Deferred Compensation
Plan
Savings
Description
Who Participates
This qualified plan provides a matching contribution of 100% of the
first 5% of an employee’s contributions. Following the end of the
calendar year, we contribute 2.5% of the participant’s calendar
year compensation, subject to certain restrictions.
All salaried and non-union hourly
employees, including our NEOs, may
participate in this plan.
This non-qualified, unfunded plan allows employees to make
elective deferrals or additional deferrals of base salary and STIP
above the qualified plan limit. We provide a matching contribution
of 100% of the first 5% of the participant’s deferred compensation
in excess of such limit. Following the end of the calendar year, we
contribute 2.5% of the participant’s calendar year compensation in
excess of the qualified compensation limits, subject to certain
restrictions.
Certain highly compensated employees,
as determined by us, including each of
our NEOs, may participate in this plan.
Westrock Company 2023 Proxy Statement 45
Executive Compensation Tables
NONQUALIFIED DEFERRED COMPENSATION
The following table provides information with respect to the WestRock Company Deferred Compensation Plan for fiscal
2022 and, with respect to Mr. Stigers, a predecessor company plan that is closed to contributions. The amounts shown
include compensation earned and deferred in prior years, and earnings on, or distributions of, such amounts. We also make
matching contributions or profit-sharing contributions to the WestRock Company 401(k) Retirement Savings Plan, but this
plan is tax qualified and, therefore, not included in this table. We include our matches to all defined contribution plans in the
“All Other Compensation Table for Fiscal 2022” included in footnote 5 of the “Summary Compensation Table” above.
Name
David B. Sewell
Alexander W. Pease
Ward H. Dickson
Patrick M. Kivits
Thomas M. Stigers
Denise R. Singleton
Executive
Contributions
in Last Fiscal
Year ($) (1)(2)
Registrant
Contributions
in Last Fiscal
Year ($) (2)(3)
Aggregate
Earnings
in Last
Fiscal
Year ($) (4)
Aggregate
Withdrawals /
Distributions ($)
Aggregate
Balance at Last
Fiscal
Year-End ($) (5)(6)
177,419
243,253
(36,882)
-
37,831
(2,066)
-
-
13,242
13,242
(251,560)
(2,322,190)
-
29,103
(5,979)
77,960
23,800
88,928
(556,739) (7)
36,937
(2,300)
-
-
-
496,281
35,765
37,405
49,973
2,498,724
58,437
(1) For fiscal 2022, each NEO employed at the beginning of the fiscal year was eligible to defer up to 75% of salary and 75% of the relevant STIP award.
Each NEO who began employment after the beginning of fiscal 2022 was only eligible to defer up to 75% of salary for fiscal 2022.
(2) These amounts represent contributions earned in respect of fiscal 2022 by the applicable NEO.
(3) Effective January 1, 2016, we began matching an amount equal to 100% of the first 5% of the executive’s contribution. All of the NEOs receive an
additional employer contribution of 2.5% of pay in excess of the qualified plan limit, if the participant is employed on the last day of the plan year
(December 31) or terminates due to retirement after age 55 with 10 years of service, death or disability. All amounts in this column assume that the NEO
remains employed as of December 31 or is eligible for retirement under the terms of the WestRock Company Deferred Compensation Plan.
(4) This column reflects the total dollar amount of interest or other earnings (losses) accrued during fiscal 2022, including interest and dividends paid at
market rates. We do not consider the payment of interest and other earnings at market rates to be compensation. During fiscal 2022, market declines
resulted in aggregate losses on these deferred compensation account balances.
(5) The amount in this column for Mr. Dickson includes an adjustment of ($43,153) for employer contributions forfeited due to his employment ending in
December 2021.
(6) Amounts reflected in the “Executive Contributions” and “Registrant Contributions” columns are reflected in the “Summary Compensation Table” above.
With respect to the “Aggregate Balance” column, $112,523 of Mr. Sewell’s balance and $26,850 of Mr. Kivits’ balance, each as of September 30, 2022,
was included in the Summary Compensation Table in fiscal 2021. With respect to Mr. Dickson, due to withdrawals and forfeitures during the year, an
amount in excess of his aggregate balance as of September 30, 2022 was reflected in the Summary Compensation Table in fiscal 2021.
In addition to the WestRock Company Deferred Compensation Plan, Mr. Stigers has a balance in the Rock-Tenn Supplemental Retirement Savings Plan
(“SRSP”). The SRSP is a predecessor company deferred compensation plan that is closed to contributions. These amounts reflect earnings/losses in
both of these plans during fiscal 2022.
(7)
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The following table summarizes the estimated payments to be made under each agreement, plan or arrangement that
provides for payments to an NEO at, following or in connection with a termination of employment, including by involuntary
termination without cause absent a change in control, voluntary or for cause termination, death or disability, retirement or an
involuntary or good reason termination following a change in control, assuming such an event occurred on September 30,
2022. However, in accordance with SEC regulations, we do not report any amount to be provided to an NEO under any
arrangement which does not discriminate in scope, terms, or operation in favor of our NEOs and which is available generally
to all salaried employees.
Severance and Change in Control
See “Compensation Matters — Compensation Discussion and Analysis — Severance and Change in Control
Arrangements” for a narrative description of severance and change in control arrangements applicable to our NEOs.
46 Westrock Company 2023 Proxy Statement
Name (1)
David B. Sewell
Benefit
Severance
STIP (5)
Vesting of Equity Awards (6)
Health & Welfare
Outplacement
Total Value:
Alexander W. Pease
Severance
Patrick M. Kivits
Thomas M. Stigers
STIP (5)
Vesting of Equity Awards (6)
Health & Welfare
Outplacement
Total Value:
Severance
STIP (5)
Vesting of Equity Awards (6)
Health & Welfare
Outplacement
Total Value:
Severance
STIP (5)
Vesting of Equity Awards (6)
Health & Welfare
Outplacement
Total Value:
Denise R. Singleton
Severance
STIP (5)
Vesting of Equity Awards (6)
Health & Welfare
Outplacement
Total Value:
Involuntary
Termination
Without Cause
Absent Change
in Control ($) (2)
6,135,000
-
-
38,616
4,295
6,177,911
2,250,000
-
-
15,233
4,295
2,269,528
2,037,750
-
-
8,151
4,295
2,050,196
1,991,295
-
-
28,962
4,295
2,024,552
1,887,000
-
-
20,401
4,295
1,911,696
Executive Compensation Tables
Voluntary
Termination/
For Cause
Termination ($)
Death or
Disability ($) Retirement ($) (3)
Involuntary/
Good Reason
Termination
Following
Change in
Control ($) (4)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,328,123
14,388,964
-
-
16,717,087
-
849,936
3,922,465
-
-
4,772,401
-
785,622
2,246,611
-
-
3,032,233
-
795,433
2,601,111
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
795,433
2,075,938
-
-
3,396,544
2,871,371
-
430,669
3,325,125
-
-
3,755,794
-
-
-
-
-
-
9,202,500
2,803,913
14,388,964
57,924
4,295
26,457,597
3,000,000
750,000
3,922,465
20,311
4,295
7,697,071
2,717,000
643,500
2,246,611
10,868
4,295
5,622,274
2,655,060
628,830
2,601,111
38,616
4,295
5,927,913
2,516,000
578,000
3,325,125
27,201
4,295
6,450,622
(1) Mr. Dickson is excluded from the table because he retired in December 2021. In connection with Mr. Dickson’s retirement, a pro-rata portion of his 2019
and 2020 RSUs vested. In addition, a pro-rata portion of Mr. Dickson’s 2019 PSUs vested in February 2022 and, subject to achievement of the
applicable performance criteria, a pro-rata portion of his 2020 PSUs will vest in February 2023. The incremental fair value attributable to the modification
of 68,240 PSUs (at target) and 19,960 RSUs was $2,993,542. For additional information regarding the treatment of Mr. Dickson’s outstanding LTIP
awards in connection with his retirement, see “Compensation Matters — Compensation Discussion and Analysis — Compensation Elements — Long-
Term Incentive Program — LTIP Awards — Retirement of Ward Dickson,” the “Summary Compensation Table” and the “Grants of Plan-Based Awards
Table.”
(2) Severance amounts for NEOs listed above assume an involuntary termination under the Revised Plan. ln connection with Mr. Sewell becoming our
President and CEO in March 2021, we agreed to make a severance payment to him consistent with the terms of the Revised Plan if we terminate his
employment without cause during his first three years with the Company. See “Compensation Matters — Compensation Discussion and Analysis —
Severance and Change in Control Arrangements — Executive Severance Plan” for additional information.
(3) At September 30, 2022, only Mr. Stigers would have been eligible to receive retirement benefits from the Company. Mr. Stigers’ retirement benefits
would include (i) a pro-rated STIP award based on the number of days employed during the fiscal year and actual performance results, (ii) a pro-rated
number of RSUs granted in 2020 and 2021 based on the number of full months employed from the grant date, and 100% of RSUs granted in 2022, and
(iii) a pro-rated number of PSUs granted in 2020 and 2021 based on the number of full months employed from the grant date and 100% of PSUs granted
in 2022, which will all vest based on actual performance at the end of the applicable performance periods. For purposes of this table, as noted in
footnote (6), we have assumed target performance for PSUs.
(4) Any amounts paid to the NEOs under the CIC Agreements will be reduced to the maximum amount that could be paid without being subject to the excise
tax imposed under Sections 280G and 4999 of the Internal Revenue Code, but only if the after-tax benefit of the reduced amount is higher than the after-
tax benefit of the unreduced amount. The amounts reflected in this table do not reflect the application of any reduction in compensation or benefits
pursuant to the terms of the CIC Agreements.
(5) For death and disability, STIP values are prorated based on actual performance. Following an involuntary termination upon a change in control, STIP
values are based on the greater of (i) STIP target and (ii) the average of the annual STIP payouts for the three fiscal years immediately preceding the
date of termination.
(6) The calculation of the value of vesting of equity awards is based on $30.89, reflecting the closing price of our common stock on September 30, 2022, the
last trading day of our fiscal year, as reported on the NYSE, multiplied by the number of shares that would have vested on September 30, 2022
(assuming target performance for PSUs) upon satisfaction of applicable conditions.
Westrock Company 2023 Proxy Statement 47
Executive Compensation Tables
CEO PAY RATIO
Fiscal Year
2022
Median Employee
Compensation ($)
CEO Compensation ($) (1)
Ratio
68,878
11,576,270
168:1
(1) As reported in the Summary Compensation Table of this Proxy Statement.
Consistent with Item 402(u) of Regulation S-K, we may identify our median employee for purposes of providing pay ratio
disclosure once every three years and calculate and disclose total compensation for that employee each year, provided
that, during the last completed fiscal year, there has been no change in our employee population or employee
compensation arrangements that we reasonably believe would result in a significant change to the pay ratio disclosure.
Since we last identified our median employee in fiscal 2019, we identified a new median employee for fiscal 2022. Our
process began by taking our total employee population as of August 31, 2022 and, in accordance with SEC rules, we
excluded the CEO and all employees from certain countries representing in aggregate less than 5% of our employee
base to arrive at the median employee consideration pool.(1) We used the consistently applied compensation measure of
base salary rate as of August 31, 2022 with foreign exchange rates translated to the U.S. dollar equivalent where
applicable. Our median employee is located in the U.S.
(1) These countries and their headcounts as of the sample date were: India (424), Belgium (378), Czech Republic (300), Australia (241), Dominican
Republic (189), Netherlands (165), Spain (142), Chile (74), Japan (57), Argentina (51), Hungary (35), Austria (27), Korea (22), Thailand (13), Malaysia
(5), Taiwan (5), New Zealand (4), Singapore (4), Switzerland (4), Hong Kong (3), Italy (3), and South Africa (1), for a total of 2,147 employees. As of
August 31, 2022, using the methodology required by the rule governing this disclosure, we had approximately 36,300 U.S. employees and approximately
14,300 employees in other countries, for a total of approximately 50,600 employees globally factored into the sample before the country exclusions listed
above.
The pay ratio disclosure presented above is a reasonable estimate. Because SEC rules for identifying the median employee
and calculating the pay ratio allow companies to use different methodologies, exemptions, estimates and assumptions, our
CEO pay ratio disclosure may not be comparable to the pay ratio reported by other companies.
48 Westrock Company 2023 Proxy Statement
AUDIT MATTERS
Audit Matters
ITEM 4. RATIFICATION OF APPOINTMENT OF ERNST & YOUNG LLP FOR FISCAL
2023
What am I voting on? The Board is asking our stockholders to ratify the Audit Committee’s selection of Ernst & Young
LLP as our independent registered public accounting firm for fiscal 2023
Voting Recommendation: FOR the ratification of our independent registered public accounting firm for fiscal 2023
Vote Required: An affirmative vote requires the majority of shares present in person or represented by proxy and
entitled to vote
Broker Discretionary Voting Allowed: Yes, organizations holding shares of beneficial owners may vote in their
discretion absent voting instructions from those owners
Abstentions: Vote against
REPORT OF THE AUDIT COMMITTEE
The Audit Committee is comprised of seven independent directors. The Board has determined that all Audit Committee
members are “financially literate” within the meaning of the NYSE Standards and that each of Mses. Martore and Savage
and Messrs. Crews, Bernlohr and Stockton qualifies as an “audit committee financial expert” within the meaning of SEC
regulations.
The Audit Committee met eight times during fiscal 2022. These meetings included executive sessions at least quarterly with
our independent registered public accounting firm, our internal auditor and management. During fiscal 2022, the Audit
Committee was updated no less than quarterly on management’s process to assess the adequacy of our system of internal
control over financial reporting, the framework used to make the assessment and management’s conclusions on the
effectiveness of our internal control over financial reporting.
The Audit Committee is responsible for appointing, compensating, retaining and overseeing our independent auditor. The
Audit Committee evaluates the independence, qualifications and performance of our independent auditor each year, and
determines whether to re-engage the current independent auditor. ln doing so, the Audit Committee considers, among other
factors, the quality and efficiency of the services provided by the auditor and its capabilities, technical expertise and
knowledge of our operations. Based on this evaluation, the Audit Committee has retained Ernst & Young LLP (“EY”) as our
independent auditor for fiscal 2023, and the Board is recommending that our stockholders ratify this appointment.
EY has served as the Company’s or its predecessor’s independent auditors since at least 1975, but it is unable to determine
the specific year during which it was originally engaged. We believe that EY’s global capabilities, technical expertise,
significant institutional knowledge of our business, quality, candor of communications with the Audit Committee and
management, and independence enhance audit quality. The Audit Committee oversees our financial reporting process on
behalf of the Board. Management has primary responsibility for establishing and maintaining adequate internal financial
controls over financial reporting, for preparing our financial statements and for the public reporting process. EY, our
independent registered public accounting firm for fiscal 2022, is responsible for expressing opinions that (a) our
consolidated financial statements present fairly, in all material respects, the financial position, results of operations and cash
flows in conformity with generally accepted accounting principles and (b) we maintained, in all material respects, effective
internal control over financial reporting as of September 30, 2022.
ln this context, the Audit Committee has
(cid:129)
(cid:129)
(cid:129)
reviewed and discussed the audited consolidated financial statements for the year ended September 30, 2022 with
management;
discussed with the independent auditor those matters required to be discussed by auditors with the Audit Committee
under the rules adopted by the Public Company Accounting Oversight Board (“PCAOB”) and the SEC; and
received the written disclosures and the letter from the independent auditor as required by applicable requirements of
the PCAOB regarding the independent auditor’s communication with the Audit Committee concerning independence
and has discussed with the independent auditor its independence.
Westrock Company 2023 Proxy Statement 49
Audit Matters
Based on the reviews and discussion described in this report, the Audit Committee recommended to the Board (and the
Board approved) that the audited consolidated financial statements be included in the 2022 Form 10-K for filing with the
SEC.
Audit Committee: Terrell K. Crews, Chair; Timothy J. Bernlohr; Russell M. Currey; Suzan F. Harrison; Gracia C. Martore; E.
Jean Savage; Dmitri L. Stockton
FEES OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The following table presents (in thousands of dollars) the aggregate fees billed for (in the case of audit fees) and the
aggregate fees billed in (in the case of audit-related fees, tax fees and all other fees) each of the last two fiscal years for
professional services rendered by our independent registered public accounting firm, EY, and its affiliates.
Audit fees (1)
Audit-related fees (2)
Tax fees (3)
All other fees
Total fees paid to auditor
2022 ($) (4)
2021 ($) (4)
13,163
2,363
3,750
—
19,276
13,528
320
3,570
—
17,418
(1) Audit fees consist primarily of fees related to professional services rendered for the audit of our annual financial statements included in our
Form 10-K and the review of interim financial statements included in our quarterly reports on Form 10-Q, accounting consultations to the extent
necessary for EY to fulfill its responsibility under generally accepted auditing standards, as well as services in connection with other statutory
and regulatory filings.
(2) Audit-related fees consist of fees related to professional services rendered for assurance and related services that are reasonably related to the
performance of the audit or review of our annual financial statements that are not included in the amounts disclosed as audit fees.
(3) Tax fees consist primarily of fees related to professional services rendered for tax compliance, tax advice and transfer pricing services.
(4) All such audit fees, audit-related fees and tax fees were approved by the Audit Committee as described below in “Audit Matters – Pre-Approval
Policies and Procedures”.
PRE-APPROVAL POLICIES AND PROCEDURES
The Audit Committee has established a policy requiring pre-approval of audit and permissible audit-related and non-audit
services to be provided by the independent registered public accounting firm. Each year, management requests Audit
Committee approval of the annual audits, statutory audits, and quarterly reviews and pre-approval of certain other
engagements of the independent registered public accounting firm known at that time. In connection with these requests,
the Audit Committee may consider information about each engagement, including the budgeted fees; the reasons
management is requesting the services to be provided by the independent auditors; and any potential impact on the
auditors’ independence.
As additional proposed audit and non-audit engagements of the independent registered public accounting firm are
identified, or if pre-approved services exceed the pre-approved budgeted amount for those services, the Audit Committee
will consider similar information in connection with the pre-approval of such engagements or services. If Audit Committee
pre-approvals are required between regularly scheduled Audit Committee meetings, the Audit Committee has delegated to
the Chair of the Audit Committee the authority to grant pre-approvals. Pre-approvals by the Chair are reviewed with the
Audit Committee at its next regularly scheduled meeting.
The independent registered public accounting firm and management report to the Audit Committee periodically regarding
the services rendered by, and actual fees paid to, the independent registered public accounting firm to ensure that the
services are within the limits approved by the Audit Committee.
OTHER INFORMATION
One or more representatives of EY will be present at the 2023 Annual Meeting. The representatives will have an opportunity
to make a statement if they desire to do so and will be available to respond to appropriate questions.
50 Westrock Company 2023 Proxy Statement
OTHER IMPORTANT INFORMATION
Other Important Information
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table lists information, as of December 9, 2022, about the number of shares of our common stock beneficially
owned by (i) each NEO (other than Mr. Dickson1), (ii) each director and director nominee, (iii) directors and executive
officers as a group, and (iv) any person known to us to be the beneficial owner of more than 5% of our common stock as of
such date. Unless otherwise noted, voting power and investment power in our common stock are exercisable solely by the
named person.
Name of Beneficial Owner
David B. Sewell
Alexander W. Pease
Denise R. Singleton
Patrick M. Kivits
Thomas M. Stigers
Colleen F. Arnold
Timothy J. Bernlohr
J. Powell Brown
Terrell K. Crews
Russell M. Currey
Suzan F. Harrison
Gracia C. Martore
James E. Nevels
E. Jean Savage
Dmitri L. Stockton
Alan D. Wilson
All current directors and executive officers as a group
The Vanguard Group, 100 Vanguard Blvd., Malvern, PA 19355
BlackRock, Inc., 55 East 52nd Street, New York, NY 10055
State Street Corp., 1 Lincoln Street, Boston, MA 02111
Total Number of
Shares of Common
Stock Beneficially
Owned (#) (2)
Percent of
Outstanding
Common
Stock (%) (3)
51,845
32,484
-
12,872
78,551 (4)
17,016 (5)
40,915
58,220 (6)
40,772 (7)
652,798 (8)
11,585
39,927 (9)
14,447 (10)
3,620
1,914 (11)
42,725 (12)
1,212,922 (13)
30,367,382 (14)
20,873,962 (15)
14,838,460 (16)
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
11.9%
8.2%
5.8%
Less than 1%.
*
(1) Mr. Dickson, who stepped down as Executive Vice President and CFO effective November 10, 2021, and retired from the Company on
December 2, 2021, beneficially owned 191,542 shares at his retirement, including 13,388 shares issuable upon exercise of stock options then
held by Mr. Dickson. For additional information regarding the modification of certain of Mr. Dickson’s outstanding equity awards in connection
with his retirement, see “Compensation Matters — Compensation Discussion and Analysis — Compensation Elements — Long-Term
Incentive Program — LTIP Awards — Retirement of Ward Dickson.
(2) Under SEC rules, a person “beneficially owns” securities if that person has or shares the power to vote or dispose of the securities. The person
also “beneficially owns” securities that the person has the right to acquire within 60 days. Under these rules, PSUs as well as RSUs that vest
more than 60 days after December 9, 2022 are not included. In addition, more than one person may be deemed to beneficially own the same
securities, and a person may be deemed to beneficially own securities in which he or she has no financial interest. Except as shown in the
footnotes to the table, the stockholders named below have the sole power to vote or dispose of the shares shown as beneficially owned by
them. See “Compensation Matters — Executive Compensation Tables — Outstanding Equity Awards at Fiscal Year-End” for more information
concerning outstanding equity awards to our NEOs and “Board and Governance Matters – Director Compensation” for more information
concerning outstanding equity awards to our non-employee directors.
(3) Each of the individuals as well as the group marked with an asterisk held less than 1% of our outstanding common stock as of December 9,
2022 (including shares such individual had the right to acquire within 60 days after December 9, 2022).
(4) Share balance includes (i) 8,165 shares issuable upon exercise of stock options owned by Mr. Stigers, (ii) 5,500 shares beneficially owned by
Mr. Stigers through the WestRock Company Deferred Compensation Plan and (iii) 56,076 shares held jointly with Mr. Stigers’ spouse.
(5) Share balance includes 15,819 shares beneficially owned by Ms. Arnold through the Non-Employee Director Deferred Compensation Plan.
Westrock Company 2023 Proxy Statement 51
Other Important Information
(6) Share balance includes (i) 43,834 shares held jointly with Mr. Brown’s spouse, (ii) 1,323 shares held by a son, (iii) 857 shares held by a
daughter, (iv) 681 shares held by a daughter, and (v) 591 shares held by a daughter.
(7) Share balance includes 22,635 shares held in a revocable trust of which Mr. Crews and his spouse are trustees.
(8) Share balance includes (i) 185,932 shares beneficially owned by Boxwood Capital, LLC, a limited liability company of which Mr. Currey is the
controlling member and president, (ii) 300,271 shares owned by a trust for Mr. Currey’s father for which Mr. Currey is the trustee, and (iii)
32,657 shares in a second trust.
(9) Share balance includes 38,892 shares beneficially owned by Ms. Martore through the Non-Employee Director Deferred Compensation Plan.
(10) Share balance includes (i) 2,530 shares beneficially owned by Mr. Nevels through the Non-Employee Director Deferred Compensation Plan
and (ii) 8,297 shares held jointly with his spouse.
(11) Share balance reflects 1,914 shares beneficially owned by Mr. Stockton through the Non-Employee Director Deferred Compensation Plan.
(12) Share balance includes 41,690 shares beneficially owned by Mr. Wilson through the Non-Employee Director Deferred Compensation Plan.
(13) Share balance reflects ownership by 20 persons. In addition to the named executive officers listed in this table (other than Mr. Dickson), this
number includes shares beneficially owned by John L. O’Neal, Samuel W. Shoemaker, Vicki L. Lostetter and Julia A. McConnell, each of
whom is also an executive officer of WestRock. It also includes 22,374 shares issuable upon exercise of vested stock options held by our
executive officers.
(14) Based on a Schedule 13G/A filed on February 9, 2022, The Vanguard Group has sole dispositive power over 29,260,389 of these shares,
shared voting power over 436,757 of these shares and shared dispositive power over 1,106,993 of these shares.
(15) Based on a Schedule 13G/A filed on March 11, 2022, BlackRock, Inc. has sole voting power over 18,341,163 of these shares and sole
dispositive power over 20,873,962 of these shares.
(16) Based on a Schedule 13G filed on February 14, 2022, State Street Corporation has shared voting power over 10,389,273 of these shares and
shared dispositive power over 14,814,040 of these shares.
STOCKHOLDER PROPOSALS OR DIRECTOR NOMINATIONS FOR 2024 ANNUAL
MEETING
SEC rules permit stockholders to submit proposals for inclusion in our Proxy Statement and form of proxy if the stockholder
and the proposal meet the requirements specified in Rule 14a-8 under the Exchange Act. To be considered for inclusion in
next year’s Proxy Statement, a stockholder proposal submitted in accordance with Rule 14a-8 must be received by us at
our principal executive offices by no later than August 17, 2023.
Stockholders will vote at the 2023 Annual Meeting on only the matters summarized in this Proxy Statement. Our Bylaws
provide that any stockholder proposal (including director nominations) that is not submitted for inclusion in next year’s Proxy
Statement under Rule 14a-8, but is instead sought to be presented directly at next year’s annual meeting of stockholders
must be delivered to our principal executive offices not later than the close of business on the 90th day nor earlier than the
close of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting. In each case, the
notice must include the information specified in our Bylaws. If next year’s annual meeting is held more than 30 days before
or more than 60 days after the anniversary date of the 2023 Annual Meeting, notice must be delivered not earlier than the
close of business on the 120th day prior to the annual meeting and not later than the close of business on the later of the
90th day prior to the annual meeting or the seventh day following the day on which public announcement of the date of such
meeting is first made by us. Accordingly, to submit any such proposal, stockholders must submit the required notice no
earlier than the close of business on September 29, 2023 and no later than the close of business on October 29, 2023,
except as described above. In addition, stockholders that intend to solicit proxies in support of director nominees other than
our nominees for future stockholder meetings must comply with the additional requirements of Rule 14a-19(b) of the
Exchange Act.
The mailing address of our principal executive offices to which proposals may be delivered is 1000 Abernathy Road NE,
Atlanta, GA 30328. Proposals should be addressed to the attention of the Corporate Secretary. Delivery by email does not
constitute delivery to our principal executive offices.
ANNUAL REPORT ON FORM 10-K
We will provide without charge, at the written request of any stockholder of record as of the record date, a copy of our 2022
Form 10-K, including the financial statements, as filed with the SEC, excluding exhibits. Requests for copies of our 2022
Form 10-K should be mailed to: WestRock Company, 1000 Abernathy Road NE, Atlanta, Georgia 30328, Attention:
Corporate Secretary. You may also access a copy of our 2022 10-K at www..westrock.com.
52 Westrock Company 2023 Proxy Statement
Other Important Information
DELINQUENT SECTION 16(A) REPORTS
Section 16(a) of the Exchange Act and related regulations require our directors, executive officers, and persons who own
more than 10% of a registered class of our equity securities to file reports of ownership and changes in ownership with the
SEC. To assist with these required reports, we have established procedures whereby we receive relevant information
regarding the transactions of our directors and executive officers in our equity securities and we prepare and file the
ownership reports on their behalf.
We have reviewed all ownership reports filed electronically with the SEC since October 1, 2021. Based on this review and
on written information given to us by our directors and executive officers, we believe that all such required reports for our
directors and executive officers were filed on a timely basis under Section 16(a), except with respect to (i) a Form 4 related
to an award of 8,000 RSUs to Ms. McConnell on October 27, 2021, which were reflected in her beneficial ownership
beginning with a Form 4 filed on February 9, 2022, and (ii) a Form 3 and Form 4 for Ms. Savage related to her election to
the Board and fiscal 2022 equity grant, both of which were filed on February 10, 2022.
FREQUENTLY ASKED QUESTIONS
What is the purpose of the 2023 Annual Meeting?
Stockholders will vote at the 2023 Annual Meeting on the matters summarized in this Proxy Statement.
Why did I receive these proxy materials?
You received these proxy materials because you are a Company stockholder and the Board is soliciting your proxy to vote
your shares at the 2023 Annual Meeting. This Proxy Statement includes information that we are required to provide to you
under SEC rules and is designed to assist you in voting your shares.
What is included in these proxy materials? What is a proxy statement and what is a proxy?
The proxy materials for the 2023 Annual Meeting include the Notice of Annual Meeting, this Proxy Statement and our 2022
Form 10-K. If you received a paper copy of these materials, the proxy materials also include a proxy card or voting
instruction form.
A proxy statement is a document that SEC regulations require us to give you when we ask you to sign a proxy designating
individuals to vote on your behalf. A proxy is your legal designation of another person to vote your shares, and that other
person is called a proxy. If you designate someone as your proxy in a written document, that document is also called a
proxy or a proxy card. We have designated Messrs. Wilson and Sewell and Ms. Singleton as proxies for the 2023 Annual
Meeting.
What does it mean if I receive more than one notice, proxy materials email or proxy card?
If you receive more than one notice, proxy materials email or proxy card, you have multiple accounts with brokers and/or our
transfer agent and will need to vote separately with respect to each notice, proxy materials email or proxy card you receive.
Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials
instead of a full set of proxy materials?
The SEC permits us to furnish proxy materials by providing access to those documents on the Internet. Stockholders will
not receive printed copies of the proxy materials unless they request them. The notice instructs you as to how to submit
your proxy on the Internet. If you would like to receive a paper or email copy of the proxy materials, you should follow the
instructions in the notice for requesting those materials.
Who may vote?
You may vote if you owned our common stock as of the close of business on December 5, 2022, the record date for the
2023 Annual Meeting.
How may I vote?
You may vote by any of the following methods:
(cid:129)
Internet – follow the instructions on your notice, proxy and/or voting instruction card or email notice.
(cid:129) Phone – follow the instructions on your notice, proxy and/or voting instruction card or email notice.
(cid:129) Mail – complete sign and return the proxy and/or voting instruction card provided.
(cid:129) Virtually – attend the 2023 Annual Meeting virtually and follow the instructions on the website.
Westrock Company 2023 Proxy Statement 53
Other Important Information
When voting on proposals, you may vote “for” or “against” the item (or, in the case of Item 3, the advisory vote on frequency
of future advisory votes on executive compensation, for every “1 year,” “2 years” or “3 years”) or you may abstain from
voting. You are not entitled to appraisal or dissenters’ rights for any matter being voted on at the 2023 Annual Meeting.
We encourage you to vote your proxy by Internet, telephone or mail prior to the 2023 Annual Meeting, even if you plan to
attend the meeting virtually.
What constitutes a quorum at the 2023 Annual Meeting, and why is a quorum required?
The presence at the 2023 Annual Meeting, in person or by proxy, of the holders of a majority of the shares entitled to vote
on the record date will constitute a quorum. A quorum of stockholders is necessary to hold a valid meeting.
What is the vote required to approve each of the proposals to be presented at the 2023 Annual Meeting?
Assuming the existence of a quorum at the 2023 Annual Meeting:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
Item 1: Election of 12 Directors named in this Proxy Statement: A director will be elected if the number of shares
voted FOR that director nominee exceeds the number of shares voted AGAINST that director nominee.
Item 2: Advisory Vote to Approve Executive Compensation: An affirmative vote requires the majority of those shares
present in person or represented by proxy and entitled to vote.
Item 3: Advisory Vote on Frequency of Future Advisory Votes to Approve Executive Compensation: The option of
every “1 year,” “2 years” or “3 years” that receives the highest number of affirmative votes by those shares present in
person or represented by proxy and entitled to vote will be considered the preferred frequency.
Item 4: Ratification of Appointment of Ernst & Young LLP for fiscal 2023: An affirmative vote requires the majority of
shares present in person or represented by proxy and entitled to vote.
What is the effect of abstentions and broker non-votes?
Proposal
Election of 12 Directors Named in the Proxy Statement
Advisory Vote to Approve Executive Compensation
Advisory Vote on Frequency of Future Advisory Votes to Approve Executive Compensation
Effect of Broker
Non-Vote
Effect of
Abstention
No effect
No effect
No effect Vote against
No effect
No effect
Ratification of Appointment of Ernst & Young LLP for Fiscal 2023
Not applicable Vote against
Will There Be A Physical Location for the 2023 Annual Meeting?
No, we plan to hold our 2023 Annual Meeting virtually in an effort to enhance the ability of our stockholders to attend and
participate. To attend the virtual meeting, visit www..virtualshareholdermeeting.com/WRK2023 and use your 16-digit control
number provided in the notice or proxy card to log into the meeting. Any stockholders holding shares in street name that do
not receive a 16-digit control number should contact their bank, broker or other nominee (preferably at least five days before
the 2023 Annual Meeting) in order to request a control number and be able to attend, participate in or vote at the 2023
Annual Meeting. If you do not have a 16-digit control number at the time of the 2023 Annual Meeting, you may still attend
the meeting as a guest in listen-only mode, although guests will be unable to vote or submit questions. We encourage
stockholders to log in to the website and access the webcast early, beginning approximately 15 minutes before the 2023
Annual Meeting’s 9:00 a.m. Eastern Time start time. If you experience technical difficulties, please contact the technical
support telephone number posted on the virtual stockholder meeting login page.
Will I be able to ask questions and participate in the virtual Annual Meeting?
Stockholders of record and proxy holders who provide their valid 16-digit control number will be able to participate in the
2023 Annual Meeting. To submit questions during the meeting, stockholders may log into the virtual meeting website with
their 16-digit control number, type the question into the “Ask a Question” field, and click “Submit.”
Questions and comments pertinent to meeting matters will be answered and addressed during the 2023 Annual Meeting as
time allows. If we receive substantially similar written questions, we may group these questions together and provide a
single response to avoid repetition and allow time for additional question topics. If we are unable to respond to a
stockholder’s properly submitted question due to time constraints, we intend to post answers to those questions on our
investor relations website following the meeting.
Additional information regarding the rules and procedures for participating in the virtual annual meeting will be provided in
our meeting rules of conduct, which stockholders may view shortly prior to and during the 2023 Annual Meeting at the
meeting website.
54 Westrock Company 2023 Proxy Statement
Other Important Information
How many shares of our common stock were outstanding and entitled to vote on the record date?
254,518,055 shares. Each share of our common stock is entitled to one vote.
Can I change my vote or revoke my proxy after I vote?
You may change your vote at any time before the polls close at the 2023 Annual Meeting by (i) voting again by telephone or
over the Internet prior to 11:59 p.m., Eastern Time, on January 26, 2023, (ii) giving written notice to our Corporate
Secretary, (iii) delivering a later-dated proxy, or (iv) voting at the 2023 Annual Meeting. You may also revoke your proxy
before it is voted at the 2023 Annual Meeting by using one of the methods listed above.
What is householding?
Beneficial holders who share a single address may receive only one copy of the notice or the proxy materials, as the case may
be, unless their broker, bank or other nominee has received contrary instructions from any beneficial holder at that address. This
is known as householding. If any beneficial holder(s) sharing a single address wishes to discontinue householding and/or
receive a separate copy of the notice or the proxy materials, or wishes to enroll in householding, the beneficial holder(s) should
contact its broker, bank or other nominee directly. Alternatively, if any such beneficial holder wishes to receive a separate copy
of the proxy materials, we will deliver them promptly upon request either by phone (by dialing 678-291-7900) or in writing (by
mailing a request to WestRock Company, 1000 Abernathy Road NE, Atlanta, Georgia 30328, Attention: Corporate Secretary).
Will any other business be conducted at the 2023 Annual Meeting?
We are not aware of any items, other than those described in this Proxy Statement, that may properly come before the 2023
Annual Meeting. If other matters are properly brought before the 2023 Annual Meeting, the accompanying proxy will be
voted at the discretion of the proxy holders.
What is the difference between holding shares as a “registered holder” and as a “beneficial holder”?
If your shares are registered directly in your name with our transfer agent, you are a registered holder. If your shares are
held in the name of a bank, brokerage or other nominee as custodian on your behalf, you are a beneficial holder.
What if I am a beneficial holder and do not give voting instructions to my broker?
As a beneficial holder, you must provide voting instructions to your bank, broker or other nominee by the deadline provided
in the materials you receive from your bank, broker or other nominee in order to ensure your shares are voted in the way
you would like. If you do not provide voting instructions to your bank, broker or other nominee, whether your shares can be
voted by such person will depend on the type of item being considered for vote. Items 1, 2 and 3 are “non-routine” matters
under NYSE rules and therefore they may not be voted on by brokers, banks or other nominees who have not received
specific voting instructions from beneficial holders (so called “broker non-votes”). Item 4 is a “routine” matter under NYSE
rules and therefore a matter on which banks, brokers and other nominees that do not receive voting instructions from
beneficial holders may generally vote on this proposal in their discretion.
Who pays for this proxy solicitation?
We bear the costs of soliciting proxies. We have retained Innisfree to solicit proxies, by telephone, in person or by mail, for a
fee of $20,000 plus certain expenses. In addition, certain Company officers and employees, who will receive no
compensation for their services other than their regular salaries, may solicit proxies. We will reimburse brokers, fiduciaries
and custodians for their costs in forwarding proxy materials to beneficial owners of our common stock.
When will the Company announce the voting results?
We will announce preliminary voting results at the 2023 Annual Meeting and report the final results on our website and in a
current report on Form 8-K filed with the SEC.
CAUTIONARY LANGUAGE REGARDING FORWARD-LOOKING STATEMENTS
This Proxy Statement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements are based on our current expectations, beliefs, plans or forecasts and use words such
as “may”, “will”, “could”, “would”, “anticipate”, “intend”, “estimate”, “project”, “plan”, “believe”, “expect”, “target”, “prospects”,
“potential” and “forecast”, or words of similar import or meaning or refer to future time periods. Forward-looking statements
involve estimates, expectations, projections, goals, targets, forecasts, assumptions, risks and uncertainties. A forward-
looking statement is not a guarantee of future performance, and actual results could differ materially from those contained in
the forward-looking statement.
Forward-looking statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond our
control, such as developments related to pricing cycles and volumes; economic, competitive and market conditions
Westrock Company 2023 Proxy Statement 55
Other Important Information
generally, including macroeconomic uncertainty, customer inventory rebalancing, the impact of inflation and increases in
energy, raw materials, shipping, labor and capital equipment costs; reduced supply of raw materials, energy and
transportation, including from supply chain disruptions and labor shortages; intense competition; results and impacts of
acquisitions, including timing and operational and financial effects from the acquisition of Grupo Gondi and planned
divestitures as well as risks related to our joint ventures; business disruptions, including from public health crises such as a
resurgence of COVID, the occurrence of severe weather or a natural disaster or other unanticipated problems, such as
labor difficulties, equipment failure or unscheduled maintenance and repair; failure to respond to changing customer
preferences; the amount and timing of capital expenditures, including installation costs, project development and
implementation costs, and costs related to resolving disputes with third parties with which we work to manage and
implement capital projects; risks related to international sales and operations; the production of faulty or contaminated
products; the loss of certain customers; adverse legal, reputational, operational and financial effects resulting from cyber
incidents and the effectiveness of business continuity plans during a ransomware or other cyber incident; work stoppages
and other labor relations difficulties; inability to attract, motivate, train and retain qualified personnel; risks associated with
sustainability and climate change, including our ability to achieve ESG targets and goals on announced timelines or at all;
our inability to successfully identify and make performance and productivity improvements and risks associated with
completing strategic projects on the anticipated timelines and realizing anticipated financial or operational improvements
on announced timelines or at all, including with respect to our business systems transformation; risks related to our
indebtedness; the scope, costs, timing and impact of any restructuring of our operations and corporate and tax structure;
our desire or ability to repurchase company stock; and the scope, timing and outcome of any litigation, claims or other
proceedings or dispute resolutions and the impact of any such litigation (including with respect to the Brazil tax liability
matter). Such risks and other factors that may impact forward-looking statements are discussed in our filings with the SEC,
including in Item 1A under the caption “Risk Factors” in our 2022 Form 10-K and the risks and uncertainties discussed in
any subsequent reports that we file or furnish with the SEC from time to time. The information contained herein speaks as of
the date hereof, and we do not have or undertake any obligation to update or revise our forward-looking statements,
whether as a result of new information, future events or otherwise, except to the extent required by law.
56 Westrock Company 2023 Proxy Statement
APPENDIX: NON-GAAP FINANCIAL MEASURES
We report our financial results in accordance with generally accepted accounting principles in the U.S. (“GAAP”). However,
management believes certain non-GAAP financial measures provide our management, Board, investors, potential investors,
securities analysts and others with additional meaningful financial information that should be considered when assessing
our ongoing performance. Management also uses these non-GAAP financial measures in making financial, operating and
planning decisions, and in evaluating our performance. Non-GAAP financial measures should be viewed in addition to, and
not as an alternative for, our GAAP results. The non-GAAP financial measures we present may differ from similarly
captioned measures presented by other companies.
Below, we define the non-GAAP financial measures we use, discuss the reasons that we believe this information is useful to
management and may be useful to investors and provide reconciliations of the non-GAAP financial measures to the most
directly comparable financial measures calculated in accordance with GAAP.
Consolidated Adjusted EBITDA
We use the non-GAAP financial measure “Consolidated Adjusted EBITDA”, along with other factors such as “Adjusted
EBITDA” (a GAAP measure of segment performance used to evaluate our segment results), to evaluate our overall
performance. Management believes that the most directly comparable GAAP measure to Consolidated Adjusted EBITDA is
“Net income (loss) attributable to common stockholders.” Management believes this measure provides our management,
Board, investors, potential investors, securities analysts and others with useful information to evaluate our performance
because it excludes restructuring and other costs, business systems transformation costs and other specific items that
management believes are not indicative of the ongoing operating results of the business. We and our Board use this
information to evaluate our performance relative to other periods.
Set forth below is a reconciliation of the non-GAAP financial measure Consolidated Adjusted EBITDA to Net income (loss)
attributable to common stockholders for the fiscal years indicated (in millions):
Net Income attributable to common stockholders
Adjustments: (1)
Less: Net Income attributable to noncontrolling interests
Income tax expense
Other expense (income), net
Loss on extinguishment of debt
Interest expense, net
Restructuring and other costs
Mineral rights impairment
Multiemployer pension withdrawal expense (income)
Gain on sale of certain closed facilities
Depreciation, depletion and amortization
Other adjustments
Consolidated Adjusted EBITDA
Fiscal 2022
Fiscal 2021
$ 944.6
$ 838.3
4.6
269.6
11.0
8.5
318.8
401.6
26.0
0.2
(18.6)
1,488.6
4.5
4.2
243.4
(10.9)
9.7
372.3
31.5
-
(2.9)
(0.9)
1,460.0
54.5
$3,459.4
$2,999.2
(1) Schedule adds back expense or subtracts income for certain financial statement and segment footnote items to compute Consolidated Adjusted EBITDA.
Adjusted Net Income and Adjusted Earnings Per Diluted Share
We also use the non-GAAP financial measures “Adjusted Net Income” and “Adjusted Earnings Per Diluted Share”.
Management believes these measures provide our management, Board, investors, potential investors, securities analysts
and others with useful information to evaluate our performance because they exclude restructuring and other costs,
business systems transformation costs and other specific items that management believes are not indicative of the ongoing
operating results of the business. We and our Board use this information to evaluate our performance relative to other
periods. We believe that the most directly comparable GAAP measures to Adjusted Net Income and Adjusted Earnings Per
Diluted Share are Net income (loss) attributable to common stockholders and Earnings (loss) per diluted share,
respectively.
Westrock Company 2023 Proxy Statement 57
Set forth below are reconciliations of Adjusted Net Income to the most directly comparable GAAP measure, Net income
(loss) attributable to common stockholders (represented in the table below as the GAAP results for Consolidated net income
(loss) (i.e., Net of Tax) less net income attributable to Noncontrolling interests), for the fiscal years indicated (in millions):
As reported (1)
Restructuring and other costs
Mineral rights impairment
Loss on extinguishment of debt
Accelerated depreciation on certain facility closures
Business systems transformation costs
Multiemployer pension withdrawal expense
Losses at closed facilities, transition and start-up costs
MEPP liability adjustment due to interest rates
Gain on sale of certain closed facilities
Ransomware recovery costs insurance proceeds
Other
Adjusted Results
Noncontrolling interests
Adjusted Net Income
Fiscal 2022
Consolidated Results
Pre-Tax
Tax
Net of Tax
$1,218.8
$(269.6)
$ 949.2
401.6
26.0
8.5
7.5
7.4
3.5
3.5
(36.2)
(18.6)
(6.6)
0.5
(98.1)
(6.4)
(2.1)
(1.9)
(1.8)
(0.8)
(0.9)
8.9
5.0
1.6
(0.1)
303.5
19.6
6.4
5.6
5.6
2.7
2.6
(27.3)
(13.6)
(5.0)
0.4
$1,615.9
$(366.2)
$1,249.7
(4.6)
$1,245.1
(1) The as reported results for Pre-Tax, Tax and Net of Tax are equivalent to the line items “Income (loss) before income taxes”, “Income tax expense” and
“Consolidated net income (loss)”, respectively, as reported on the Consolidated Statements of Operations.
As reported (1)
Restructuring and other costs
COVID employee payments
Grupo Gondi option
Ransomware recovery costs, net of insurance proceeds
Accelerated compensation — former CEO
Loss on extinguishment of debt
Losses at closed facilities, transition and start-up costs
Accelerated depreciation on certain facility closures
Gain on sale of investment
Gain on sale of sawmill
Gain on sale of certain closed facilities
Brazil indirect tax claim
MEPP liability adjustment due to interest rates
Adjusted Results
Noncontrolling interests
Adjusted Net Income
Fiscal 2021
Consolidated Results
Pre-Tax
Tax
Net of Tax
$1,085.9
$(243.4)
$842.5
31.5
22.0
22.5
18.9
11.7
9.7
3.0
0.7
(16.0)
(16.5)
(0.9)
(0.9)
(0.4)
(7.7)
(5.4)
(6.7)
(4.7)
-
(2.4)
(0.6)
(0.2)
2.4
8.3
0.2
0.3
0.1
23.8
16.6
15.8
14.2
11.7
7.3
2.4
0.5
(13.6)
(8.2)
(0.7)
(0.6)
(0.3)
$1,171.2
$(259.8)
$911.4
(4.2)
$907.2
(1) The as reported results for Pre-Tax, Tax and Net of Tax are equivalent to the line items “Income (loss) before income taxes”, “Income tax expense” and
“Consolidated net income (loss)”, respectively, as reported on the Consolidated Statements of Operations.
58 Westrock Company 2023 Proxy Statement
Set forth below is a reconciliation of the non-GAAP financial measure Adjusted Earnings Per Diluted Share to Earnings
(loss) per diluted share, the most directly comparable GAAP measure (in dollars per share) for the fiscal years indicated:
Earnings per diluted share
Restructuring and other costs
Mineral rights impairment
Loss on extinguishment of debt
Accelerated depreciation on certain facility closures
Business systems transformation costs
Multiemployer pension withdrawal expense
Losses at closed facilities, transition and start-up costs
COVID employee payments
Grupo Gondi option
MEPP liability adjustment due to interest rates
Gain on sale of certain closed facilities
Ransomware insurance proceeds, net of recovery costs
Accelerated compensation — former CEO
Gain on sale of investment
Gain on sale of sawmill
Adjusted Earnings Per Diluted Share
Fiscal 2022
Fiscal 2021
$ 3.61
1.16
0.08
0.02
0.02
0.02
0.01
0.01
-
-
(0.10)
(0.05)
(0.02)
-
-
-
$ 3.13
0.09
-
0.03
-
-
-
0.01
0.06
0.06
-
-
0.05
0.04
(0.05)
(0.03)
$ 4.76
$ 3.39
Westrock Company 2023 Proxy Statement 59
Leverage Ratio, Net Leverage Ratio, Total Funded Debt and Adjusted Total Funded Debt
We use the non-GAAP financial measures “Leverage Ratio” and “Net Leverage Ratio” as measurements of our operating
performance and to compare to our publicly disclosed target leverage ratio. We believe our management, Board, investors,
potential investors, securities analysts and others use each measure to evaluate our available borrowing capacity – in the
case of “Net Leverage Ratio”, adjusted for cash and cash equivalents. We define Leverage Ratio as our Total Funded Debt
divided by our Credit Agreement EBITDA, each of which term is defined in our revolving credit agreement, dated July 7,
2022. While the Leverage Ratio under our credit agreement determines the credit spread on our debt, we are not subject to
a leverage ratio cap. Our credit agreement is subject to a Debt to Capitalization Ratio, as defined therein. We define
“Adjusted Total Funded Debt” as our Total Funded Debt less cash and cash equivalents. Net Leverage Ratio represents
Adjusted Total Funded Debt divided by our Credit Agreement EBITDA. Set forth below are reconciliations for the fiscal
years indicated (in millions):
Net Income attributable to common stockholders
Interest expense, net
Income tax expense
Depreciation, depletion and amortization
Additional permitted charges (1)
Credit Agreement EBITDA
Current portion of debt
Long-term debt due after one year
Total debt
Less: FV step up and deferred financing fees
Less: short-term and long-term chip mill obligation
Less: other adjustments to funded debt
Total Funded Debt
LTM Credit Agreement EBITDA
Leverage Ratio
Total Funded Debt
Less: cash and cash equivalents
Adjusted Total Funded Debt
Net Leverage Ratio
Fiscal 2022
Fiscal 2021
$ 944.6
$ 838.3
303.1
269.6
1,488.6
477.9
349.0
243.4
1,460.0
276.8
$3,483.8
$3,167.5
$ 212.2
$ 168.8
7,575.0
7,787.2
(147.5)
(88.7)
(141.2)
8,025.3
8,194.1
(159.8)
(93.1)
(123.7)
$7,409.8
$7,817.5
$3,483.8
$3,167.5
2.13x
2.47x
$7,409.8
$7,817.5
(260.2)
(290.9)
$7,149.6
$7,526.6
2.05x
2.38x
(1) Additional Permitted Charges primarily include restructuring and other costs, and certain non-cash and other items as allowed under the credit
agreement.
60 Westrock Company 2023 Proxy Statement
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2022
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission file number 001-38736
WESTROCK COMPANY
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
1000 Abernathy Road NE, Atlanta, Georgia
(Address of Principal Executive Offices)
37-1880617
(I.R.S. Employer
Identification No.)
30328
(Zip Code)
Registrant’s Telephone Number, Including Area Code: (770) 448-2193
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.01 per share
WRK
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required
to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and
“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒
Non-accelerated filer ☐
Emerging growth company ☐
Accelerated filer ☐
Smaller reporting company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes ☐ No ☒
The aggregate market value of the common equity held by non-affiliates of the registrant as of March 31, 2022 (based on the closing price
per share as reported on the New York Stock Exchange on such date), was approximately $12,163 million.
As of November 4, 2022, the registrant had 254,463,987 shares of Common Stock, par value $0.01 per share, outstanding.
Portions of the definitive Proxy Statement for the Annual Meeting of Stockholders to be held on January 27, 2023 are incorporated by
reference in Part III.
DOCUMENTS INCORPORATED BY REFERENCE
WESTROCK COMPANY
INDEX TO FORM 10-K
PART I
Page
Reference
Item 1.
Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Properties
Item 3.
Legal Proceedings
Item 4.
Mine Safety Disclosures
PART II
Item 5.
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
Item 6.
[Reserved]
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Financial Statements and Supplementary Data
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Item 10. Directors, Executive Officers and Corporate Governance
Item 11.
Executive Compensation
PART III
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14.
Principal Accounting Fees and Services
PART IV
Item 15.
Exhibits and Financial Statement Schedules
Item 16.
Form 10-K Summary
2
3
14
26
26
28
28
29
30
31
58
61
133
133
134
134
135
136
136
137
137
138
138
Item 1.
BUSINESS
PART I
Unless the context otherwise requires, “we”, “us”, “our”, “WestRock” and “the Company” refer to the business
of WestRock Company, its wholly-owned subsidiaries and its partially-owned consolidated subsidiaries.
General
WestRock is a multinational provider of sustainable fiber-based paper and packaging solutions. We partner with
our customers to provide differentiated, sustainable paper and packaging solutions that help our customers win in
the marketplace. Our team members support customers around the world from our operating and business locations
in North America, South America, Europe, Asia and Australia.
Effective October 1, 2021, we reorganized our segment reporting to four reportable segments: Corrugated
Packaging, Consumer Packaging, Global Paper and Distribution. We reorganized our reportable segments due to
changes in our organizational structure and how our chief operating decision maker (“CODM”) makes key operating
decisions, allocates resources and assesses the performance of our business. Prior period amounts have been
recast throughout the Notes to Consolidated Financial Statements, as applicable, to conform to the new segment
structure. These changes did not
impact our consolidated financial statements. See “Note 7. Segment
Information” of the Notes to Consolidated Financial Statements for additional information.
Products
We are one of the largest integrated producers of linerboard, white-top linerboard and corrugating medium
(“containerboard”) in North America, and we serve primarily corrugated packaging markets. We believe we are
the largest producer of kraft paper and saturating kraft in North America. We are one of the largest producers of
paperboard in North America, and we operate both integrated virgin and recycled fiber mills. Our mill system
manufactures for the benefit of each reportable segment that ultimately sells the associated paper and packaging
products to our external customers. Additionally, our recycling operations are conducted as a procurement function,
focusing on the procurement of low cost, high quality recycled fiber for our mill system. See “Item 2. Properties”
information on our annual production capacity and types of containerboard and paperboard we
for additional
manufacture, and Item 1. “Business — Sales and Marketing” for additional information on our vertical integration.
Corrugated Packaging Segment
Our Corrugated Packaging segment consists of our integrated corrugated converting operations and generates
its revenues primarily from the sale of corrugated containers and other corrugated products including displays. Our
integrated corrugated packaging system manufactures primarily containerboard, corrugated sheets, corrugated
packaging and preprinted linerboard for sale to consumer and industrial products manufacturers and corrugated
box manufacturers. We produce a full range of high-quality corrugated containers designed to protect, ship, store,
promote and display products made to our customers’ specifications. We convert corrugated sheets into corrugated
products ranging from one-color protective cartons to graphically brilliant point-of-purchase packaging. Our
corrugated container plants serve local customers and regional and large national accounts. Corrugated packaging
is used to provide protective packaging for shipment and distribution of food, paper, health and beauty, and other
household, consumer, commercial and industrial products. Corrugated packaging may also be graphically
enhanced for retail sale, particularly in club store locations. We provide customers with innovative packaging
solutions to help them promote and sell their products. We provide structural and graphic design, engineering
services and custom, proprietary and standard automated packaging machines, offering customers turn-key
installation, automation, line integration and packaging solutions. We offer a machinery solution that creates
pouches that replace single-use plastics, including bubble mailers. To make corrugated sheet stock, we feed
linerboard and corrugating medium into a corrugator that flutes the medium to specified sizes, glues the linerboard
and fluted medium together, and slits and cuts the resulting corrugated paperboard into sheets to customer
specifications.
We design, manufacture and, in certain cases, pack temporary displays for sale to consumer products
companies and retailers. These displays are used as marketing tools to support new product introductions and
specific product promotions in mass merchandising stores, supermarkets, convenience stores, home improvement
3
stores and other retail
locations. We also design, manufacture and, in some cases, pre-assemble permanent
displays for these customers. We make temporary displays primarily from corrugated paperboard. Unlike temporary
displays, permanent displays are restocked with our customers’ product; therefore, they are constructed primarily
from metal, plastic, wood and other durable materials. We manufacture and distribute point of sale material utilizing
litho, screen and digital printing technologies. We manufacture lithographic laminated packaging for sale to our
customers that require packaging with high quality graphics and strength characteristics.
Sales of corrugated packaging products to external customers accounted for 42.3%, 43.2% and 42.9% of our
net sales in fiscal 2022, 2021 and 2020, respectively. See “Note 7. Segment Information” of the Notes to
Consolidated Financial Statements, as well as Item 7. “Management’s Discussion and Analysis of Financial
Condition and Results of Operations”, for additional information.
Consumer Packaging Segment
Our Consumer Packaging segment consists of our integrated consumer converting operations and generates
its revenues primarily from the sale of consumer packaging products such as folding cartons, interior partitions,
inserts and labels. We are one of the largest manufacturers of folding cartons in North America. We believe we are
the largest manufacturer of solid fiber partitions in North America measured by net sales. Our folding cartons are
used to package items such as food, paper, beverages, dairy products, tobacco, confectionery, health and beauty
and other household consumer, commercial and industrial products, primarily for retail sale. Our folding cartons are
also used by our customers to attract consumer attention at the point-of-sale. We manufacture express mail
packages for the overnight courier industry, provide inserts and labels, as well as rigid packaging and other printed
packaging products, such as transaction cards (e.g., credit, debit, etc.), brochures, product literature, marketing
materials (such as booklets, folders, inserts, cover sheets and slipcases) and grower tags and plant stakes for the
horticultural market. For the global healthcare market, we manufacture paperboard packaging for over-the-counter
and prescription drugs. Our customers generally use our inserts and labels to provide customer product information
either inside a secondary package (e.g., a folding carton) or affixed to the outside of a primary package (e.g., a
bottle). Folding cartons typically protect customers’ products during shipment and distribution, and employ graphics
to promote them at retail. We manufacture folding cartons from recycled and virgin paperboard, laminated
paperboard and various substrates with specialty characteristics, such as grease masking and microwaveability.
We print, coat, die-cut and glue the cartons to customer specifications and ship finished cartons to customers for
assembling, filling and sealing. We employ a broad range of offset, flexographic, gravure, backside printing, coating
textured and dimensional effects to provide
and finishing technologies, as well as iridescent, holographic,
differentiated packaging products, and support our customers with new package development, innovation and
design services and package testing services. We manufacture and sell our solid fiber and corrugated partitions
and die-cut paperboard components principally to glass container manufacturers, producers of beer, food, wine,
spirits, cosmetics and pharmaceuticals, and the automotive industry.
Sales of consumer packaging products to external customers accounted for 23.2%, 23.5% and 23.7% of our
net sales in fiscal 2022, 2021 and 2020, respectively. See “Note 7. Segment Information” of the Notes to
Consolidated Financial Statements, as well as Item 7. “Management’s Discussion and Analysis of Financial
Condition and Results of Operations”, for additional information.
Global Paper Segment
Our Global Paper segment consists of our commercial paper operations and generates its revenues primarily
from the sale of containerboard, paperboard and specialty grades to external customers, and we serve primarily
corrugated packaging, folding carton, food service, liquid packaging, tobacco and commercial print markets. We
sell our products globally to customers who value our scale, wide range of products, and service. Sales of global
paper products to external customers accounted for 27.9%, 26.6% and 27.0% of our net sales in fiscal 2022, 2021
and 2020, respectively. See “Note 7. Segment Information” of the Notes to Consolidated Financial Statements,
as well as Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of
Operations”, for additional information.
Distribution Segment
Our Distribution segment consists of our distribution and display assembly operations and generates its
revenues primarily from the distribution of packaging products and assembly of display products. We distribute
4
corrugated packaging materials and other specialty packaging products, including stretch film, void fill, carton
sealing tape and other specialty tapes, through our network of warehouses and distribution facilities. We also
provide contract packing services, such as multi-product promotional packing and product manipulation, such as
multipacks and onpacks. Sales in our Distribution segment to external customers accounted for 6.6%, 6.7% and
6.3% of our net sales in fiscal 2022, 2021 and 2020, respectively. See “Note 7. Segment Information” of the Notes
to Consolidated Financial Statements, as well as Item 7. “Management’s Discussion and Analysis of Financial
Condition and Results of Operations”, for additional information.
Land and Development Segment
During fiscal 2020, we completed the monetization of the various real estate holdings that we owned that were
concentrated in the Charleston, SC region. Sales in our Land and Development segment to external customers
accounted for 0.1% of our net sales in fiscal 2020. Following completion of the monetization of these assets, we
ceased reporting the results of the Land and Development segment as a separate segment. See “Note 7. Segment
Information” for additional information.
Seasonality
While our businesses are not materially impacted by seasonality, there is some variability in demand that occurs
from quarter to quarter, with net sales in the first quarter of each fiscal year typically being the lowest. As such, we
disclose net sales, Adjusted EBITDA (as hereinafter defined) and shipment data by segment by quarter in Item 7.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations”. Generally, we
expect more of our earnings and cash flows to be generated in the second half of the fiscal year than in the first half
of the fiscal year due to these variations and other factors, including the timing of scheduled mill maintenance
outages.
Raw Materials
The primary raw materials used by our mill operations are recycled fiber at our recycled containerboard and
paperboard mills and virgin fiber from hardwoods and softwoods at our virgin containerboard and paperboard mills.
Certain of our virgin containerboard is manufactured with some recycled fiber content. Our overall fiber sourcing for
all of our mills is approximately 65% virgin and 35% recycled. See “Item 2. Properties” for additional information.
Recycled fiber prices and virgin fiber prices can fluctuate significantly. Recycled fiber and virgin fiber costs increased
significantly in fiscal 2022 compared to fiscal 2021.
Containerboard and paperboard are the primary raw materials used by our converting operations. Our
converting operations use many different grades of containerboard and paperboard. We supply substantially all of
our converting operations' needs for containerboard and paperboard from our own mills and through the use of
trade swaps with other manufacturers. These arrangements allow us to optimize our mill system and reduce freight
costs. Because there are other suppliers that produce the necessary grades of containerboard and paperboard
used in our converting operations, we believe we would be able to source significant replacement quantities from
other suppliers in the event
that we incur production disruptions for recycled or virgin containerboard and
paperboard. See Item 1A. “Risk Factors — We May Face Increased Costs For, or Inadequate Availability of,
Raw Materials, Energy and Transportation”.
Energy
Energy is one of the most significant costs of our mill operations. The cost of natural gas, coal, oil, electricity
and wood by-products (biomass) at times has fluctuated significantly. In our coated and uncoated recycled
paperboard mills, we use primarily natural gas and electricity to generate steam used in the paper making process.
In our integrated kraft paper mills, we use natural gas, biomass, fuel oil and some coal to generate steam used in
the pulping and paper making processes and to generate some or all of the electricity used on site. We primarily
use electricity and natural gas to operate our converting facilities. We generally purchase these products from
suppliers at market or tariff rates. Energy costs increased significantly in fiscal 2022 compared to fiscal 2021. See
Item 1. “Business — Governmental Regulation — Environmental” for additional information. See also Item 1A.
“Risk Factors — We May Face Increased Costs For, or Inadequate Availability of, Raw Materials, Energy
and Transportation”. See also Item 7A. “Quantitative and Qualitative Disclosures About Market Risk —
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“Energy” and “Derivative Instruments / Forward Contracts” for additional information regarding our energy
consumption.
Transportation
Inbound and outbound freight is a significant cost for us. Factors that influence our freight expense are distance
between our shipping and delivery locations, distance from our facilities to our customers and suppliers, mode of
transportation (rail, truck, intermodal and ocean) and freight rates, which are influenced by supply and demand and
fuel costs. We experienced higher freight costs and some distribution delays in both fiscal 2022 and 2021. The
principal markets for our products are in North America, South America, Europe, Asia and Australia. See Item 1A.
“Risk Factors — We May Face Increased Costs For, or Inadequate Availability of, Raw Materials, Energy
and Transportation”.
Sales and Marketing
None of our external customers individually accounted for more than 10% of our consolidated net sales in fiscal
2022. We generally manufacture our products pursuant to our customers’ orders. We believe that we have good
relationships with our customers. See Item 1A. “Risk Factors — We Depend on Certain Large Customers”.
As a result of our vertical integration, our mills’ sales volumes may be directly impacted by changes in demand
for our packaging products. During fiscal 2022, approximately two-thirds of our coated natural kraft tons shipped,
approximately three-fifths of our coated recycled paperboard tons shipped and approximately one-fifth of our
bleached paperboard tons shipped were delivered to our converting operations, primarily to manufacture folding
cartons, and approximately four-fifths of our containerboard tons shipped, including trade swaps and buy/sell
transactions, were delivered to our converting operations to manufacture corrugated products. The mill owned by
our Seven Hills Paperboard LLC (“Seven Hills”) joint venture in Lynchburg, VA manufactures gypsum paperboard
liner for sale to our joint venture partner. Under the terms of our Seven Hills joint venture arrangement, our joint
venture partner is required to purchase all of the qualifying gypsum paperboard liner produced by Seven Hills.
Excluding the production from Seven Hills and from our Aurora, IL mill, which is converted into book covers and
other products, approximately one-third of our specialty recycled paperboard tons shipped in fiscal 2022 were
delivered to our converting operations, primarily to manufacture interior partitions. We have the ability to move our
internal sourcing among certain of our mills to optimize the efficiency of our operations. We believe that our ability
to leverage our full portfolio of differentiated solutions and capabilities enables us to set ourselves apart from our
competitors.
We market our products primarily through our own sales force. We also market a number of our products
through independent sales representatives and independent distributors. We generally pay our sales personnel a
combination of base salary, commissions and annual bonus. We pay our independent sales representatives on a
commission basis. Orders from our customers generally do not have significant lead times. We discuss foreign net
sales to unaffiliated customers and other non-U.S. operations’ financial and other segment information in “Note 7.
Segment Information” of the Notes to Consolidated Financial Statements.
Competition
We operate in a competitive global marketplace and compete with many large, well established and highly
competitive manufacturers and service providers. Our business is affected by a range of macroeconomic conditions,
including industry capacity changes, global competition, economic conditions in the United States (“U.S.”) and
abroad, as well as fluctuations in currency exchange rates.
The industries in which we operate are highly competitive, and no single company dominates any of those
industries. Our containerboard and paperboard operations compete with integrated and non-integrated national and
regional companies operating primarily in North America, and to a limited extent, manufacturers outside of North
America. Our competitors include large and small, vertically integrated companies and numerous smaller non-
integrated companies. In the corrugated packaging and folding carton markets, we compete with a significant
number of national, regional and local packaging suppliers in North America and abroad. In the solid fiber interior
packaging, promotional point-of-purchase display and converted paperboard products markets, we primarily
compete with a smaller number of national, regional and local companies offering highly specialized products.
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Since all of our businesses operate in highly competitive industry segments, we regularly discuss sales
opportunities for new business or for renewal of existing business with customers. Our packaging products compete
with packaging made from other materials, including plastics. The primary competitive factors we face include price,
design, product innovation, quality, service and sustainability, with varying emphasis on these factors depending
on the product line and customer preferences. Our machinery solutions represent one example of how we compete
by providing differentiated solutions that create value for our customers. We believe that we compete effectively
with respect to each of these factors and we obtain feedback on our performance with periodic customer surveys,
among other means.
The industries in which we operate have undergone consolidation. Within the packaging products industry,
larger customers, with an expanded geographic presence, have tended to seek suppliers that can, because of their
broad geographic presence, efficiently and economically supply all or a range of their packaging needs. In addition,
our customers continue to demand higher quality products meeting stricter quality control requirements. Increasing
demand for more sustainable products is also impacting our industry. See Item 1. “Business — Sustainability” for
additional information.
See Item 1A. “Risk Factors — We Face Intense Competition” and “Risk Factors — We Have Been, And
May Be In the Future, Adversely Affected by Factors That Are Beyond Our Control, Such as U.S. and
Worldwide Economic and Financial Market Conditions, and Social and Political Change”.
Governmental Regulation
Health and Safety
Our business involves the use of heavy equipment, machinery and chemicals and requires the performance of
activities that create safety exposures. The health and safety of our team members is our most important
responsibility, and our goal is to create a 100% safe work environment for our team members. Our safety strategy
focuses on People, Process, Prevention and Performance. We seek to reduce exposures and eliminate life
changing events through engagement, execution of targeted, results-driven activities, and implementation of
systems that promote continuous improvement. Our commitment to safety is reinforced by our use of the WestRock
Safety Excellence Management System, a robust safety program and training curriculum.
We are subject to a broad range of foreign, federal, state and local laws and regulations relating to occupational
health and safety, and our safety program includes measures required for compliance. We have incurred, and will
continue to incur, capital expenditures to meet our health and safety compliance requirements, as well as to
continually improve our safety systems. We believe that future compliance with occupational health and safety laws
and regulations will not have a material adverse effect on our results of operations, financial condition or cash flows.
The global impact of the COVID-19 pandemic (“COVID”) has affected our operational and financial performance
to varying degrees. The extent of the effects of future public health crises, including a resurgence of COVID, or
related containment measures and government responses are highly uncertain and cannot be predicted.
Certain governmental authorities in locations where we do business have established asbestos standards for
the workplace. Although we do not use asbestos in manufacturing our products, asbestos containing material
(“ACM”) is present in some of the facilities we own or lease. For those facilities where ACM is present and ACM is
subject to regulation, we have established procedures for properly managing it.
Environmental
Environmental compliance requirements are a significant factor affecting our business. Our manufacturing
processes involve discharges to water, air emissions, water intake and waste handling and disposal activities.
These processes are subject to numerous federal, state, local and international environmental laws and regulations,
as well as the requirements of environmental permits and similar authorizations issued by various governmental
authorities.
We estimate that we will
invest approximately $36 million for capital expenditures during fiscal 2023 in
connection with matters relating to environmental compliance. It is possible that our capital expenditure assumptions
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and project completion dates may change, and our projections are subject to change due to items such as the
finalization of ongoing engineering projects or changes in environmental laws and regulations.
See “Note 17. Commitments and Contingencies — Environmental” of the Notes to Consolidated Financial
Statements for additional information. See Item 1A. “Risk Factors — We Are Subject to a Wide Variety of Laws,
Regulations and Other Requirements That are Subject to Change and May Impose Substantial Compliance
Costs”.
Sustainability
At WestRock, we say sustainability is in every fiber of our company. Our vision, Imagining and Delivering on
the Promise of a Sustainable Future, is represented by three pillars:
Supporting People and Communities
Bettering the Planet
Innovating for Our Customers and Their Customers
Our recycling operations bring the process full circle by collecting recovered fiber that is used by our own paper
mills and by others to produce new paper products. We have a long history of recycling and are one of the largest
recyclers in the paper industry.
All of our North American virgin fiber sourcing regions are certified to the Sustainable Forestry Initiative (SFI®)
Fiber Sourcing standard. Our forestland in Brazil
is certified to the Brazilian Forest Certification Programme
(CERFLOR®), the Programme for the Endorsement of Forest Certification (PEFC®) and the Forest Stewardship
Council (FSC®). To provide traceability for the virgin fiber used in our operations, we have certified more than 95
percent of our wholly owned, fiber-based manufacturing facilities to three, internationally recognized chain-of-
custody standards: SFI®, PEFC® and FSC®.
Climate Change
Sustainability and innovation are fundamental to our vision to become the world’s best paper and packaging
company, and we are working to improve the carbon footprint of our manufacturing operations by setting targets to
reduce greenhouse gas (“GHG”) emissions and developing projects to become more energy efficient. Our
integrated kraft paper mills, our most energy-intensive manufacturing facilities, currently burn renewable biomass
to generate more than 60 percent of their energy needs. Most of these facilities also self-generate the steam and
electricity needed for their manufacturing processes using efficient combined heat and power or “cogeneration”
systems. During fiscal 2022, our recycling operations helped to divert approximately seven million tons of paper
and packaging that might otherwise go into landfills where it might otherwise degrade and release GHGs. Our fiber
procurement activities create economic incentives for landowners and family tree farmers to maintain their holdings
as working forests that sequester carbon and provide many other environmental benefits, including protection for
fresh water supplies and habitats for diverse species of plants and animals.
Governance
Board-level oversight of climate and other sustainability matters resides with the Nominating and Corporate
Governance Committee of the board of directors, and six members of the board of directors have sustainability
experience.
In addition to Board-level oversight, we augmented our management-level oversight of sustainability matters
during fiscal 2022. WestRock’s executive leadership team has responsibility for establishing our sustainability
strategy, including with respect to climate-related issues. In fiscal 2022, we hired a new Senior Vice President of
Strategy and Sustainability who reports to our President, Global Paper and is responsible for providing guidance
on our sustainability strategy and driving implementation of our sustainability strategy throughout the organization
in collaboration with other executives. Our Vice President, Sustainability, manages day-to-day implementation of
this strategy. In addition to our sustainability executives, we have established cross-functional groups within the
organization to provide input on our sustainability strategy, develop plans to achieve our sustainability targets and
embed our sustainability goals into our operations. These groups include representatives from our product
stewardship, environmental, innovation, engineering, manufacturing, finance, legal and communication groups.
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Targets and Metrics
In 2015, we established a goal to reduce our Scope 1 and Scope 2 GHG emissions per ton of production by
20% from a 2015 baseline by 2025. As of our September 30, 2021 reporting, we achieved a reduction of 15% of
GHG per ton of production and an absolute reduction of 22% from our baseline. We have accomplished GHG
reductions in our business primarily by displacing coal with natural gas and investing in new biomass boilers.
In 2021, we increased the ambition of our GHG emissions-reduction efforts by setting a science-based target
("SBT") for GHG emissions reduction. Our SBT involves reducing absolute Scope 1 and 2 GHG emissions 27.5%
by 2030 from a 2019 baseline year. The SBT also includes a reduction in absolute Scope 3 GHG emissions from
purchased goods and services, fuel and energy activities, upstream and downstream transportation and distribution,
and end-of-life treatment of sold products by 27.5% within the same timeframe. We validated the SBT with the
Science-Based Targets Initiative and announced our target in the first half of 2022.
Strategy
We expect our SBT to guide our work as we plan, invest in, organize, and develop projects to reduce our GHG
emissions. Our current strategy to achieve our SBT includes projects to displace fossil fuels, improve energy
efficiency, use virtual power purchase agreements, and re-evaluate our renewable energy credits ("RECs")
strategy. We expect to invest more than $160 million through 2030 to achieve our SBT, although this estimate is
subject to change for a variety of reasons, including the timing of project completion. We plan to regularly review
our SBT strategy to consider the impacts of developing carbon reduction technologies, optimize the mix of carbon
reduction projects to achieve our targets, and assess opportunities to achieve our SBT more quickly.
We also have embedded carbon considerations into our capital planning processes. Our capital request form
includes a tool that provides project developers, reviewers, and approvers with information on whether their
proposed initiative will add to or reduce carbon from the affected facility. The tool also can be used to assess
potential project impacts on water intake and solid waste generation. This process is designed to increase
awareness of GHG emissions and other environmental impacts within the organization and to provide us with
information to use in optimizing our SBT and sustainability strategies.
Opportunities and Risks
Climate change presents certain opportunities and risks for our business.
With respect to opportunities, for example, we produce renewable energy and generate RECs at our integrated
kraft mills. We have sold RECs in the past and may sell them in the future. The RECs we generate are flexible,
market-based tools that support the renewable energy market. As part of our SBT strategy work, we plan to consider
whether modifying our use of RECs may help us advance our progress against this target. Our recycling activities
also may present the opportunity to generate offsets that could be used to meet climate-related obligations for
ourselves or others.
Our business has been and may continue to be impacted by changing customer preferences for products
perceived to be sustainable due to their carbon footprint. We proactively engage in dialogue with customers that
have expressed a desire to track or qualify their suppliers based on their carbon footprint. We do not believe that
our product offerings and operations have been materially impacted by climate change to date, and we believe we
are well positioned to meet customer requirements for fiber-based, recyclable products that may replace plastic and
minimize product end-of-life GHG emissions.
Climate change also presents risks and uncertainties for us. With respect to physical risks, our physical assets
and infrastructure, including our manufacturing operations, have been and may in future periods be impacted by
severe weather-related events, such as hurricanes, tornados, other extreme storms, wildfires and floods, potentially
resulting in items such as physical damage to our facilities and lost production. Unpredictable weather patterns also
may result in supply chain disruptions and increased material costs, such as through impacts to virgin fiber supplies
and prices, which may fluctuate during prolonged periods of heavy rain or drought or during tree disease or insect
9
epidemics that may be caused by variations in climate conditions. On the other hand, changes in climate also could
result in more accommodating weather patterns for greater periods of time in certain areas, which may create
favorable fiber market conditions. We incorporate a review of meteorological
forecast data into our fiber
procurement decisions and strategies. To the extent that severe weather-related risks materialize, and we are
unprepared for them, we may incur unexpected costs, which could have a material effect on our results of
operations, cash flows and financial condition, and the trading price of our Common Stock (as hereinafter defined)
may be adversely impacted.
Responses to climate change may result in regulatory risks as new laws and regulations aimed at reducing
GHG emissions come into effect. These rules and regulations could take the form of cap-and-trade, carbon taxes,
or GHG reduction mandates for utilities that could increase the cost of purchased electricity. New climate rules and
regulations also may result in higher fossil fuel prices or fuel efficiency standards that could increase transportation
costs. Certain jurisdictions in which we have manufacturing facilities or other investments have already taken
actions to address climate change. In the U.S., the EPA has issued the Clean Air Act permitting regulations
applicable to certain facilities that emit GHG. The EPA also has promulgated a rule requiring certain industrial
facilities that emit 25,000 metric tons or more of carbon dioxide equivalent per year to file an annual report of their
emissions. While we have U.S. facilities subject to existing GHG permitting and reporting requirements, the impact
of these requirements has not been material to date. In addition to these national efforts, some U.S. states in which
we have manufacturing operations, including Washington, New York, and Virginia, are taking measures to reduce
GHG emissions, such as requiring GHG emissions reporting or developing regional cap-and-trade programs.
Several of our international facilities are in countries that have already adopted GHG emissions trading or other
regulatory programs. Other countries in which we conduct business, including China, European Union member
states and India, have set GHG reduction targets in accordance with the agreement among over 170 countries that
established a framework for reducing global GHG emissions (also known as the “Paris Agreement”), which became
effective in November 2016 and which the United States formally rejoined in February 2021.
We have systems in place for tracking the GHG emissions from our energy-intensive facilities, and we monitor
developments in climate related laws, regulations, and policies to assess the potential impact of such developments
on our results of operations, financial condition, cash flows and disclosure obligations. Compliance with climate
programs may require future expenditures to meet GHG emission reduction obligations. These obligations may
include carbon taxes, the requirement to purchase GHG credits, or the need to acquire carbon offsets. Also, we
may be required to make capital and other investments to displace traditional fossil fuels, such as fuel oil and coal,
with lower carbon alternatives, such as biomass and natural gas.
Additional information regarding our GHG targets and strategy are available in our 2021 Sustainability Report,
which we prepared in accordance with the Global Reporting Initiative (GRI) Standards Core Option. Our
sustainability reports are available on our website at www.westrock.com/sustainability. The information contained
in these sustainability reports is not incorporated by reference into this Form 10-K and should not be considered
part of this or any other report that we file with or furnish to the SEC.
Patents and Other Intellectual Property
We hold a substantial number of foreign and domestic trademarks, trademark applications, trade names,
patents, patent applications and licenses relating to our business, our products and our production processes. Our
patent portfolio consists primarily of utility and design patents relating to our products and manufacturing operations.
Our portfolio also includes exclusive rights to substantial proprietary packaging system technology in the U.S. and
other licenses obtained from a third-party. Our brand name and logo, and certain of our products and services, are
protected by domestic and foreign trademark rights. Our patents, trademarks and other intellectual property rights,
particularly those relating to our converting operations, are important to our operations as a whole. Our intellectual
property has various expiration dates.
Human Capital
Overview
WestRock aims to recruit, develop, and retain diverse, best-in-class talent. To foster their and our success, we
seek to create an environment where people can do their best work – a place where they can be their authentic
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selves, guided by our values. We strive to maximize the potential of our human capital resources by creating a
respectful, rewarding, and inclusive work environment that enables our global team members to create products
and services that further our mission to be the best paper and packaging company.
At September 30, 2022, we employed approximately 50,500 people, approximately 92% were in sales and
operations, including manufacturing, distribution, product and services support; and approximately 8% were in
general and administration, including groups such as finance, human resources, information technology, legal and
supply chain. Approximately 78% were located in the U.S. and Canada and 22% were located in Europe, South
America, Mexico and Asia Pacific. Of the approximately 50,500 employees, approximately 70% were hourly and
30% were salaried. Approximately 55% of our hourly employees in the U.S. and Canada are covered by collective
those
bargaining agreements (“CBAs”), which typically have four to six-year terms. Approximately 32% of
employees covered under CBAs are operating under agreements that expire within one year and approximately
27% of those employees are working under expired contracts.
While we have experienced isolated work stoppages from time to time, we believe that working relationships
with our employees are generally good. We are presently engaged with a labor dispute and resulting work stoppage
at our Mahrt mill in Cottonton, AL. We have effectuated a contingency plan, and the mill is continuing to operate
and produce paper for our customers.
In December 2019, the United Steelworkers Union (“USW”) ratified a master agreement that applies to
substantially all of our U.S. facilities represented by the USW. The agreement has a four-year term and covers a
number of specific items, including wages, medical coverage and certain other benefit programs, substance abuse
testing, and safety. Individual facilities will continue to have local agreements for subjects not covered by the master
agreement and those agreements will continue to have staggered terms. The master agreement permits us to apply
its terms to USW employees who work at facilities we acquire during the term of the agreement. The master
agreement covers approximately 62 of our U.S. operating locations and approximately 8,800 of our employees.
While the terms of our CBAs vary, we believe the material terms of the agreements are customary for the industry,
the type of facility, the classification of the employees and the geographic location covered.
See Item 1A. “Risk Factors — We May Be Adversely Impacted By Work Stoppages and Other Labor
Relations Matters”.
Culture
WestRock’s culture is grounded in our values:
Integrity – being honest and ethical, doing the right thing
Respect – treating one another with respect, and earning the respect of team members, customers,
suppliers through our actions
Accountability – being responsible for our work and to our team. Collectively contributing to the success of
our company and our customers
Excellence – striving to perform at the highest levels – for ourselves, our customers, investors and
communities
At the core of our employee listening systems is our bi-annual engagement survey, which is augmented with
employee pulse checks after hire and promotion, and exit interviews/surveys. These pulse checks/surveys enable
us to gather feedback directly from our workforce to inform our employee programs. In 2022, 77% of selected team
members participated in the pulse survey and 86% of global team members participated in the 2021 engagement
survey. The 2022 pulse survey showed a slight decrease in engagement when compared to the 2021 full
engagement survey. The survey and pulse covered topics such as company strategy and direction, leadership,
inclusion, safety, culture, pay and benefits, and learning and development. We use external benchmarks, including
one specific to manufacturing companies, as points of comparison, and monitor how we perform against these
benchmarks for many of the items we survey.
Diversity, Inclusion, Equity and Belonging
Our Diversity, Inclusion, Equity and Belonging objective is to be a company where each of us genuinely belongs,
is respected and valued, and can do our best work.
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At September 30, 2022, 22% of our global workforce was comprised of women and 35% of our U.S. based
workforce was comprised of people of color. Our board of directors includes four women (representing 33% of
directors) and two people of color (representing 17% of directors). We have implemented a multi-year plan designed
to increase our workforce diversity, advance inclusion, equity and belonging, accelerate the development and career
movement of diverse talent and ensure diverse succession plans such that we continue to create future
opportunities for all of our team members.
In fiscal 2021, the annual short-term incentive plan for our CEO and for the senior leadership team reporting to
the CEO included an evaluation and measurement of progress in the metrics and programs that directly support
diversity and inclusion, such as:
Talent acquisition and retention metrics
Learning and development programs for leaders and managers, commercial and operations talent
Representation progress within and across career streams
We expanded the application of the evaluation and measurement of our diversity and inclusion progress in our
fiscal 2022 short-term incentive plan to include approximately 100 of our senior leaders.
In fiscal 2022, we also partnered with external experts and developed a learning experience focused on
unconscious bias and provided tailored workshops to 62% of our hourly workforce and 81% of our salaried
workforce. This experience is one example of how we are seeking to expand awareness and build the skill set and
mindset to create a truly inclusive environment.
In collaboration with organizations such as the Executive Leadership Council, Calibr, Harvard Program for
Women, Pathways and Signature, we are providing external development opportunities for our diverse talent. To
connect and develop team members within WestRock, we support highly engaged resource groups for early in
career, women, racial and ethnic minorities, military, people with different abilities, or who identify as LGBTQIA+,
where team members can go for support, networking, and community-building.
WestRock conducts pay equity analyses annually in the U.S., Great Britain and France to help identify any
unsupported distinctions in pay between team members of different races, gender and/or age, as permitted by local
law. We make adjustments to base pay, where appropriate.
Safety and Wellness
We are committed to supporting our team members’ safety and well-being. We have an extensive safety
program that is implemented at our sites and includes a focus on eliminating exposures, reducing recordable
incidents, lost workdays and life changing events. With strong reporting capabilities we have demonstrated year-
over year improvements, as well as favorable results compared to our industry. In fiscal 2022, we made significant
progress in reducing life-changing events, while lost workdays and recordable incident rates slightly increased over
the prior year. In addition, our safety results measured favorably compared to industry performance.
In fiscal 2022, we deployed broad human and organizational performance training in the U.S. and internationally
focused on continuous safety improvement and the relationships that exist between systems, processes, equipment
and people to drive better safety practices.
Talent Attraction, Retention and Development
The attraction, retention and development of exceptional team members is critical to our success. We
accomplish this, in part, by seeking to develop the capabilities of our team members through our continuous
learning, development and performance management programs. These programs include our safety, six sigma,
supply chain, leadership, commercial and operational development programs.
We invest in our senior leadership through the Leadership Excellence, Elevate and Essentials programs; and
we invest in our commercial teams through quarterly product training, best practice sharing, and development
workshops that focus on the capabilities needed today and tomorrow to anticipate and meet our customers’
changing requirements.
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In fiscal 2022, we initiated the deployment of common equipment and reliability operations/technical training
across our sites with a focus on our newest hires. We continue to invest in technical development curriculum with
a focus on building the best technical, engineering, operational talent. We continue to leverage our online learning
library, which has over 8,500 courses and 200 playlists by topic area or experience/skill set.
We sponsor early in career rotations and college hire programs that support our functions and local operations.
We build partnerships with schools, universities and associations to promote future careers in manufacturing. During
fiscal 2022, we also expanded our relationships with historically black colleges and universities, the National
Association of Manufacturers and other partners and associations, and established a new multi-year scholarship
and engagement program with the Thurgood Marshall College Fund.
Total Rewards
Our total rewards programs are designed to offer competitive compensation, comprehensive benefits and other
programs to support employees’ growth, both personally and professionally, and the diverse needs and well-being
of our employees worldwide. We believe the structure of our compensation and benefit programs provide the
appropriate incentives to attract, retain and motivate our employees. We provide base pay that is competitive and
that aligns with employee positions, skill levels, experience and geographic location. In addition to base pay, we
seek to reward employees with annual incentive awards, recognition programs, and equity awards for employees
at certain job levels.
Employee benefits packages may include: 401(k) plan, pension plan, core and supplemental life insurance,
financial courses and advisors, employee assistance programs, tuition assistance, family planning and adoption
assistance, medical and dental insurance, vision insurance, health savings accounts, health reimbursement and
flexible spending accounts, well-being rewards programs, vacation pay, holiday pay, and parental and adoption
leave.
Over the past two years, we enhanced certain of the Company’s benefits and practices to support the health
and well-being of our employees through the challenges of the pandemic and significant supply chain disruptions
caused by winter storms and natural disasters. In the fall of 2022, we announced the opportunity for part time work
and benefits effective January 2023 for employees who work 20 hours or greater each week. We believe this added
work and schedule flexibility will position us to better meet the needs of employees, customers, and manufacturing
sites and leverage new sources of talent.
International Operations
Our operations outside the U.S. are conducted through subsidiaries located in Canada, Latin America, Asia
Pacific, and Europe, Middle East and Africa ("EMEA"). Sales attributable to non-U.S. operations were 18.3%, 18.3%
and 17.5% of our net sales in fiscal 2022, 2021 and 2020, respectively, some of which were transacted in U.S.
dollars. See “Note 7. Segment Information” of the Notes to Consolidated Financial Statements for additional
information. See also Item 1A. “Risk Factors — We are Exposed to Risks Related to International Sales and
Operations”.
Available Information
including our 2021 Sustainability Report,
Our Internet address is www.westrock.com. Our Internet address is included herein as an inactive textual
reference only. The information contained on our website,
is not
incorporated by reference herein and should not be considered part of this report. We file annual, quarterly and
current reports, proxy statements (and any amendments thereto) and other information with the Securities and
Exchange Commission (“SEC”) and we make available free of charge most of our SEC filings through our Internet
website as soon as reasonably practicable after filing with the SEC. You may access these SEC filings via the
hyperlink that we provide on our website to a third-party SEC filings website. We also make available on our website
our board committee charters, as well as the corporate governance guidelines adopted by our board of directors,
our Code of Conduct for employees, our Code of Conduct and Ethics for the Board of Directors and our Code of
Ethical Conduct for Chief Executive Officer (“CEO”) and Senior Financial Officers. Any amendments to, or waiver
from, any provision of these codes that are required to be disclosed will be posted on our website. We will also
provide copies of these documents, without charge, at the written request of any stockholder of record. Requests
for copies should be mailed to: WestRock Company, 1000 Abernathy Road NE, Atlanta, Georgia 30328, Attention:
Corporate Secretary.
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Forward-Looking Statements
Statements in this report that do not relate strictly to historical facts, including those related to sustainability or
Environmental, Social or Governance (“ESG”) matters, are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the Company’s current
expectations, beliefs, plans or forecasts and use words such as “may”, “will”, “could”, “would”, “anticipate”, “intend”,
“estimate”, “project”, “plan”, “believe”, “expect”, “target”, "prospects", “potential” and "forecast", or words of similar
import or meaning or refer to future time periods. Forward-looking statements involve estimates, expectations,
projections, goals, targets, forecasts, assumptions, risks and uncertainties. A forward-looking statement is not a
guarantee of future performance, and actual results could differ materially from those contained in the forward-
looking statement.
including from supply chain disruptions and labor shortages;
Forward-looking statements are subject to a number of assumptions, risks and uncertainties, many of which
are beyond our control, such as developments related to pricing cycles and volumes; economic, competitive and
market conditions generally, including macroeconomic uncertainty, customer inventory rebalancing, the impact of
inflation and increases in energy, raw materials, shipping, labor and capital equipment costs; reduced supply of raw
materials, energy and transportation,
intense
competition; results and impacts of acquisitions, including timing and operational and financial effects from the
planned acquisition of Gondi, S.A. de C.V. (“Grupo Gondi”), and divestitures as well as risks related to our joint
ventures; business disruptions, including from public health crises such as a resurgence of COVID, the occurrence
of severe weather or a natural disaster or other unanticipated problems, such as labor difficulties, equipment failure
or unscheduled maintenance and repair; failure to respond to changing customer preferences; the amount and
timing of capital expenditures, including installation costs, project development and implementation costs, and costs
related to resolving disputes with third parties with which we work to manage and implement capital projects; risks
related to international sales and operations; the production of faulty or contaminated products; the loss of certain
customers; adverse legal, reputational, operational and financial effects resulting from cyber incidents and the
effectiveness of business continuity plans during a ransomware or other cyber incident; work stoppages and other
labor relations difficulties; inability to attract, motivate, train and retain qualified personnel; risks associated with
sustainability and climate change, including our ability to achieve ESG targets and goals on announced timelines
or at all; our inability to successfully identify and make performance and productivity improvements and risks
associated with completing strategic projects on the anticipated timelines and realizing anticipated financial or
improvements on announced timelines or at all, including with respect to our business systems
operational
transformation; risks related to our indebtedness; the scope, costs, timing and impact of any restructuring of our
operations and corporate and tax structure; our desire or ability to repurchase company stock; and the scope, timing
and outcome of any litigation, claims or other proceedings or dispute resolutions and the impact of any such litigation
(including with respect to the Brazil tax liability matter). Such risks and other factors that may impact forward-looking
statements are discussed in Item 1A “Risk Factors”. The information contained herein speaks as of the date hereof,
and the Company does not have or undertake any obligation to update or revise its forward-looking statements,
whether as a result of new information, future events or otherwise, except to the extent required by law.
Item 1A. RISK FACTORS
We are subject to certain risks and events that have adversely affected and/or may in the future adversely
affect our results of operations, cash flows and financial condition, and the trading price of our common stock, par
value $0.01 per share (“Common Stock”). In evaluating our business and any investment in our securities, you
should consider the following risk factors and the other information presented in this report, as well as the other
reports and registration statements we file from time to time with the SEC. The risks addressed below are not the
only ones we face. Additional risks not currently known to us or that we currently believe to be immaterial could also
adversely impact our business.
Industry Risks
We Are Subject to Pricing Cycles, Which Could Materially Adversely Affect Our Businesses
Our businesses have experienced, and are likely to continue experiencing, pricing cycles relating to industry
capacity and general economic conditions. The length and magnitude of these cycles have varied over time and by
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product. Prices for our products are driven by many factors, including general economic conditions, demand for our
products and competitive conditions in the industries in which we serve, and we have little influence over the timing
and extent of price changes, which may be unpredictable and volatile. Where supply exceeds demand, prices for
our products could decline, and our results of operations, cash flows and financial condition, and the trading price
of our Common Stock could be adversely affected. For example, we believe that the trading price of our Common
Stock has been adversely affected in part due to concerns about the impact of macroeconomic conditions on pricing
and demand and announcements by certain of our competitors of planned additional capacity in the North American
containerboard market, as well as the subsequent implementation of certain of those plans and the impact it will
have on future supply and demand dynamics and pricing.
Certain published indices (including those published by Pulp and Paper Week (“PPW”)) contribute to the setting
of selling prices for some of our products. PPW is a limited survey that may not accurately reflect changes in market
conditions for our products. Changes in how the indices in PPW are determined or maintained, or other indices are
established or maintained, could adversely impact the selling prices for these products.
Our Earnings Are Highly Dependent on Volumes
Because our operations generally have high fixed operating costs, our earnings are highly dependent on
volumes, which tend to fluctuate due to general economic conditions, supply and demand dynamics in the markets
we serve, and due to company and customer specific issues. We are presently experiencing lower demand for
certain products due to macroeconomic conditions and customer inventory rebalancing. These fluctuations at times
lead to significant variability in our sales, results of operations, cash flow and financial condition, making it difficult
to predict our financial results with any degree of certainty. This variability in performance due to fluctuations in
volumes may also cause the trading price of our Common Stock to be adversely affected.
The COVID pandemic has affected our operational and financial performance to varying degrees. The extent
of the effects of future public health crises, including a resurgence of COVID, or related containment measures and
government responses, which result in reduced volumes are highly uncertain and cannot be predicted. Any failure
to maintain volumes may materially adversely affect our results of operations, cash flows and financial condition,
and the trading price of our Common Stock.
We May Face Increased Costs For, or Inadequate Availability of, Raw Materials, Energy and Transportation
We rely heavily on the use of certain raw materials, energy sources and third-party companies to transport our
goods.
The costs of recycled fiber and virgin fiber, the principal externally sourced raw materials for our paper mills,
are subject to pricing variability due to market and industry conditions. Demand for recycled fiber has fluctuated and
may increase due to, among other factors, increased consumption of recycled fiber, including through additions of
new recycled paper mill capacity, increasing demand for products packaged in packaging made with paper
manufactured from 100% recycled fiber and the shift by manufacturers of virgin paperboard, tissue, newsprint and
corrugated packaging to the production of products with some recycled fiber content. In fiscal 2022, we experienced
periods of increased recycled fiber costs primarily due to market demand and availability, before seeing prices
decline in the fourth quarter.
The market price of virgin fiber varies based on availability and source of virgin fiber, and the availability of
virgin fiber may be impacted by, among other factors, wet weather conditions. In addition, costs for key chemicals
used in our manufacturing operations fluctuate, which impacts our manufacturing costs. Certain published indices
contribute to price setting for some of our raw materials and future changes in how these indices are established or
maintained could adversely impact the pricing of these raw materials.
The cost of natural gas, which we use in many of our manufacturing operations, including many of our mills,
and other energy costs (including energy generated by burning natural gas, fuel oil, biomass and coal) has at times
fluctuated significantly. In fiscal 2022, the price of the natural gas consumed in our manufacturing operations
increased significantly compared to the prior year period. Energy costs have increased, and in the future could
continue to increase our operating costs and make our products less competitive compared to similar or alternative
products offered by competitors.
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We distribute our products primarily by truck and rail, although we also distribute some of our products by cargo
ship. The reduced availability of trucks, rail cars or cargo ships, including as a result of labor shortages in the
transportation industry, could adversely impact our ability to distribute our products in a timely or cost-effective
manner. We experienced higher freight costs and some distribution delays in both fiscal 2022 and 2021. High
transportation costs could make our products less competitive compared to similar or alternative products offered
by competitors.
Because our businesses operate in highly competitive industry segments, we may not be able to recoup past
or future increases in the cost of raw materials, energy or transportation through price increases for our products.
The failure to obtain raw materials, energy or transportation services at reasonable market prices (or the failure to
pass on price increases to our customers) or a reduction in the availability of raw materials, energy or transportation
services due to increased demand, significant changes in climate or weather conditions, or other factors could
adversely affect our results of operations, cash flows and financial condition, and the trading price of our Common
Stock.
We Face Intense Competition
We compete in industries that are highly competitive. Our competitors include large and small, vertically
integrated companies and numerous smaller non-integrated companies. We generally compete with companies
operating in North America, although we have operations spanning North America, South America, Europe, Asia
and Australia. Factors affecting our ability to compete include the entry of new competitors into the markets we
serve, increased competition from overseas producers, our competitors’ pricing strategies, the introduction by our
competitors of new products, technologies and equipment, our ability to innovate and to anticipate and respond to
changing customer preferences and our ability to maintain the cost-efficiency of our operations, including our
facilities. In addition, changes within these industries, including the consolidation of our competitors and customers,
may impact competitive dynamics. If our competitors are more successful than us with respect to any key
competitive factor, our results of operations, cash flows and financial condition, and the trading price of our Common
Stock, could be adversely affected.
Our products also compete, to some extent, with various other packaging materials, including products made
of paper, plastics, wood and various types of metal. Customer shifts away from containerboard and paperboard
packaging to packaging made from other materials could adversely affect our results of operations, cash flows and
financial condition, and the trading price of our Common Stock.
Operating Risks
We May Be Unsuccessful
Completing Divestitures
in Making and Integrating Mergers, Acquisitions and Investments, and
We have completed a number of mergers, acquisitions, investments and divestitures in the past and we may
acquire, invest in or sell, or enter into transactions with additional companies, such as our planned acquisition of
the remaining ownership interest in Grupo Gondi and the pending divestiture of our interior partition operations and
three uncoated recycled paperboard mills. We may not be able to identify suitable targets or purchasers or
successfully complete suitable transactions in the future, and completed transactions may not be successful. These
transactions create risks, including, but not limited to, risks associated with:
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disrupting our ongoing business, including distracting management from our existing businesses;
integrating acquired businesses and personnel
including integrating personnel,
information technology systems and operations across different cultures and languages, and addressing
the operational risks associated with these integration activities as well as the economic, political and
regulatory risks associated with specific countries;
into our business,
working with partners or other ownership structures with shared decision-making authority;
obtaining and verifying relevant information regarding a business prior to the consummation of the
transaction, including the identification and assessment of liabilities, claims or other circumstances that
could result in litigation or regulatory risk exposure;
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obtaining required regulatory approvals and/or financing on favorable terms;
retaining key employees, contractual relationships or customers;
the potential impairment of assets and goodwill;
the additional operating losses and expenses of businesses we acquire or in which we invest;
incurring substantial indebtedness to finance an acquisition or investment;
implementing controls, procedures and policies at companies we acquire; and
the dilution of interests of holders of our Common Stock through the issuance of equity securities.
These transactions may not be successful and may adversely affect our results of operations, cash flows and
financial condition, and the trading price of our Common Stock. Among the benefits we expect from potential, as
well as completed, acquisitions and joint ventures are synergies, cost savings, growth opportunities or access to
new markets (or a combination thereof), and in the case of divestitures, the realization of proceeds from the sale of
businesses and assets to purchasers that place higher strategic value on these businesses and assets than we do.
For acquisitions, our success in realizing these benefits and the timing of realizing them depend on the successful
integration of the acquired businesses and operations with our business and operations. Even if we integrate these
businesses and operations successfully, we may not realize the full benefits we expected within the anticipated
timeframe, or at all, and the benefits may be offset by unanticipated costs or delays.
We May Incur Business Disruptions That Adversely Affect Our Businesses
Our businesses depend on continuous operation of our facilities to be efficient. The operations at our facilities
have in the past and may in the future be interrupted or impaired by various operating risks, including, but not limited
to, risks associated with:
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catastrophic events, such as fires, floods, earthquakes, explosions, natural disasters, severe weather,
including hurricanes, tornados and droughts, and pandemics, including COVID, or other health crises or
similar occurrences;
interruptions in the delivery of raw materials or other manufacturing inputs;
failure of third-party service providers and/or business partners to fulfill their commitments and
responsibilities in a timely manner and in accordance with agreed upon terms;
adverse government regulations;
equipment breakdowns or failures;
prolonged power failures;
unscheduled maintenance outages;
information system disruptions or failures due to any number of causes, including cyber-attacks;
violations of our permit requirements or revocation of permits;
releases of pollutants and hazardous substances to air, soil, surface water or ground water;
disruptions in transportation infrastructure, including roads, bridges, railroad tracks and tunnels;
shortages of equipment or spare parts; and
labor disputes and shortages.
For example, operations at several of our facilities located in the south and southeastern U.S. have been
interrupted in recent years by hurricanes and severe winter weather, resulting in, among other things, lost mill
production. In addition, COVID has impacted our operations and financial performance to varying degrees. The
extent of the effects of future public health crises, including the impact of a resurgence of COVID, or other business
disruptions, on our operational and financial performance in future periods will depend on future developments,
which are highly uncertain and cannot be predicted. During the COVID pandemic, we experienced, and may
experience in the future, lower demand for certain of our products, supply chain and labor disruptions and higher
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costs. In addition, our production capabilities may be disrupted if we are unable to secure sufficient supplies of raw
materials or if significant portions of our workforce are unable to work effectively as a result of a business disruption.
Business disruptions have impaired, and may in the future impair, our production capabilities and adversely
affect our results of operations, cash flows and financial condition, and the trading price of our Common Stock.
We May Fail to Anticipate Trends That Would Enable Us to Offer Products That Respond to Changing
Customer Preferences
Our success depends, in part, on our ability to offer differentiated solutions, and we must continually develop
and introduce new products and services to keep pace with technological and regulatory developments and
changing customer preferences. The services and products that we offer customers may not meet their needs as
their business models evolve. Also, our customers may decide to decrease their use of our products, use alternative
materials for their product packaging or forego the packaging of certain products entirely. Regulatory developments
can also significantly alter the market for our products. For example, a move to electronic distribution of disclaimers
and other paperless regimes could adversely impact our healthcare inserts and labels businesses. Similarly, certain
states and local governments have adopted laws banning single-use paper bags or charging businesses or
customers fees to use paper bags. These and similar developments could adversely impact demand for certain of
our products.
Customer preferences for products and packaging formats are constantly changing based on, among other
factors, cost, convenience, and health, environmental and social concerns and perceptions. For example, changing
consumer dietary habits and preferences have slowed the sales growth for certain of the food and beverage
products that we package. Also, there is an increasing focus among consumers to ensure that products delivered
through e-commerce are packaged efficiently. In addition, customers are increasingly interested in the carbon
footprint of our products. For instance, in 2019 Amazon began requiring all items sold through Amazon that are
larger than a specified size to be designed and certified as ready-to-ship. Our results of operations, cash flows and
financial condition, and the trading price of our Common Stock, could be adversely affected if we fail to anticipate
trends that would enable us to offer products that respond to changing customer preferences.
Our Capital Expenditures May Not Achieve the Desired Outcomes or May Be Achieved at a Higher Cost
than Anticipated
We regularly make capital expenditures, and many of our capital projects are complex, costly and/or
implemented over an extended period of time. Our capital expenditures for particular capital projects could be higher
than we anticipated, we may experience unanticipated business disruptions or delays in completing the projects
and/or we may not achieve the desired benefits from the capital projects, any of which could adversely affect our
results of operations, cash flows and financial condition, and the trading price of our Common Stock. In addition,
disputes between us and contractors who are involved with implementing capital projects could lead to time-
consuming and costly litigation.
We Are Exposed to Risks Related to International Sales and Operations
We derived 18.3% of our net sales in fiscal 2022 from outside the U.S. through international operations, some
of which were transacted in U.S. dollars. We expect net sales from international operations to increase in fiscal
2023 in connection with our acquisition of Grupo Gondi. In addition, certain of our domestic operations have sales
to foreign customers. Our operating results and business prospects could be adversely affected by risks related to
the countries outside the U.S. in which we have manufacturing facilities or sell our products. Countries are exposed
to varying degrees of economic, political and social instability. In addition, economies and operating environments
have been, and may continue to be, adversely impacted to varying degrees by COVID. We are exposed to risks of
operating in various countries, including, but not limited to, risks associated with:
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the difficulties with and costs of complying with a wide variety of complex laws, treaties and regulations;
unexpected changes in political or regulatory environments; earnings and cash flows that may be subject
to tax withholding requirements or the imposition of tariffs, exchange controls or other restrictions;
repatriating cash from foreign countries to the U.S.;
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political, economic and social instability, including downturns or changes in economic activity due to, among
other things, commodity inflation or regional conflicts;
import and export restrictions and other trade barriers;
responding to disruptions in existing trade agreements or increased trade tensions between countries or
political and economic unions;
• maintaining overseas subsidiaries and managing international operations;
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obtaining regulatory approval for significant transactions;
government limitations on foreign ownership or takeovers, nationalizations of business or mandated price
controls;
fluctuations in foreign currency exchange rates; and
transfer pricing.
We are also subject to taxation in the U.S. and numerous non-U.S. jurisdictions and have several ongoing
audit examinations covering multiple years with various tax authorities. We base our tax returns on our interpretation
of tax laws and regulations in effect; however, governing tax bodies have in the past and may in the future disagree
with certain of our tax positions, which could result in a higher tax liability. For instance, we are challenging claims
by the Brazil Federal Revenue Department that we underpaid tax, penalties and interest associated with a claim
that a subsidiary of MeadWestvaco Corporation (the predecessor of WestRock MWV, LLC) had reduced its tax
liability related to the goodwill generated by the 2002 merger of two of its Brazilian subsidiaries. See Item 8 –
“Financial Statements and Supplemental Data — Note 17. Commitments and Contingencies — Brazil Tax
Liability” for additional information.
Any one or more of these risks could adversely affect our international operations and our results of operations,
cash flows and financial condition, and the trading price of our Common Stock.
We Cannot Operate Our Joint Ventures Solely For Our Benefit, Which Subjects Us to Risks
We have invested in joint ventures and may form additional joint ventures in the future. Our participation in
joint ventures is subject to risks, including, but not limited to, risks associated with:
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shared decision-making, which could require us to expend additional resources to resolve impasses or
potential disputes;
• maintaining good relationships with our partners, which could limit our future growth potential;
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conflict of interest issues if our partners have competing interests;
investment or operational goals that conflict with our partners’ goals, including the timing, terms and
strategies for investments or future growth opportunities;
our partners’ ability to fund their share of required capital contributions or to otherwise fulfill their obligations
as partners; and
obtaining consents from our partners for any sale or other disposition of our interest in a joint venture or
underlying assets of the joint venture.
We May Produce Faulty or Contaminated Products Due to Failures in Quality Control Measures and
Systems
Our failure to produce products that meet safety and quality standards could result in adverse effects on
consumer health, litigation exposure, loss of market share and adverse reputational and financial impacts, among
other potential consequences, and we may incur substantial costs in taking appropriate corrective action (up to and
including recalling products from end consumers) and reimbursing customers and/or end consumers for losses that
they suffer as a result of these failures. Our actions or omissions with respect to product safety and quality could
lead to regulatory investigations, enforcement actions and/or prosecutions, and result in adverse publicity, which
may damage our reputation. Any of these results could adversely affect our results of operations, cash flows and
financial condition, and the trading price of our Common Stock.
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We provide representations in certain of our contracts that our products are produced in accordance with
customer specifications. If the product contained in packaging manufactured by us is faulty or contaminated, the
manufacturer of the product may allege that the packaging we provided caused the fault or contamination, even if
the packaging complies with contractual specifications. If our packaging fails to function properly or to preserve the
integrity of its contents, we could face liability from our customers and third parties for bodily injury or other damages.
These liabilities could adversely affect our results of operations, cash flows and financial condition, and the trading
price of our Common Stock.
We Are Subject to Cyber-Security Risks, Including Related to Customer, Employee, Vendor or Other
Company Data
We use information technologies to securely manage operations and various business functions. We rely on
various technologies, some of which are managed by third parties, to process, transmit and store electronic
information. In addition, we facilitate a variety of business processes and activities, including reporting on our
business and interacting with customers, vendors and employees. We also collect and store data, including
proprietary business information, and may have access to confidential or personal information that is subject to
privacy and security laws, regulations and customer-imposed controls. Our systems are subject to recurring
attempts by third parties to access information, manipulate data or disrupt our operations. Despite our security
design and controls, and those of our third-party providers, we have in the past experienced, and may in the future
become subject to, system damage, disruptions or shutdowns. These incidents may be due to any number of
causes, including cyber-attacks, data breaches, employee error or malfeasance, such as ransomware and data
theft by common hackers, criminal groups or nation-state organizations or social activist organizations (which efforts
may increase as a result of geopolitical events and political unrest around the world), power outages,
telecommunication or utility failures, systems failures, service provider failures, natural disasters or other
catastrophic events. Misuse of internal applications, theft of intellectual property, trade secrets or other corporate
assets, and inappropriate disclosure of confidential information could result from such incidents.
In January 2021, we detected a ransomware attack impacting certain of our systems (the “Ransomware
Incident”). In response, we proactively shut-down a number of our systems, which impacted certain of our
operations, including our ability to produce and ship paper and packaging. Due to these actions, our mill system
production was approximately 115,000 tons lower than planned for the quarter ended March 31, 2021 and we
estimated the pre-tax income impact of the lost sales and operational disruption of this incident, as well as
ransomware recovery costs, at approximately $80 million. In response to the Ransomware Incident, we accelerated
information technology investments that we had previously planned to make in future periods in order to further
strengthen our information security and technology infrastructure. As a result, we have incurred and expect to
continue to incur, significant costs as we enhance our data security and take further steps to prevent unauthorized
access to, or manipulation of, our systems and data. Despite these efforts, similar incidents may occur in the future.
In particular, the Ransomware Incident may embolden individuals or groups to target our systems. Additionally,
while we have insurance coverage in place to address various cyber risks, this insurance coverage is subject to a
deductible and may not be sufficient to cover all losses or types of claims that may arise in connection with such
incidents.
The cyber-security-related vulnerabilities that we face may also remain undetected for an extended period of
time. We may face other challenges and risks during our integration of acquired businesses and operations as we
upgrade and standardize our information technology systems. We maintain contingency plans and processes to
prevent or mitigate the impact of these events; however, these events could result in operational disruptions like
those we suffered in connection with the Ransomware Incident or the misappropriation of sensitive data, and
depending on their nature and scope, could lead to the compromise of confidential information, improper use of our
systems and networks, manipulation and destruction of data, defective products, production downtimes, operational
disruptions and exposure to liability. Such disruptions or misappropriations and the resulting repercussions,
including reputational damage and legal claims or proceedings, may adversely affect our results of operations, cash
flows and financial condition, and the trading price of our Common Stock.
We May Be Adversely Impacted By Work Stoppages and Other Labor Relations Matters
A significant number of our union employees are governed by CBAs. Expired contracts are in the process of
renegotiation and others expire within one year. We may not be able to successfully negotiate new union contracts
without work stoppages or labor difficulties or renegotiate them on favorable terms. We have experienced isolated
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work stoppages from time to time. We are presently engaged with a labor dispute and resulting work stoppage at
our Mahrt mill in Cottonton, AL. We have effectuated a contingency plan, and the mill is continuing to operate and
produce paper for our customers. If we experience any extended interruption of operations at any of our facilities
as a result of strikes or other work stoppages or if we are unable to successfully renegotiate the terms of any of
these agreements, our results of operations, cash flows and financial condition, and the trading price of our Common
Stock, could be adversely affected. In addition, our businesses rely on vendors, suppliers and other third parties
that have union employees. Strikes or work stoppages affecting these vendors, suppliers and other third parties
could adversely affect our results of operations, cash flows and financial condition, and the trading price of our
Common Stock.
We Operate in a Challenging Market for Talent and May Not Attract, Motivate, Train and Retain Qualified
Personnel, Including Key Personnel
Our success depends on our ability to attract, motivate, train and retain employees with the skills necessary to
understand and adapt to the continuously developing needs of our customers. The increasing demand for qualified
personnel makes it more difficult for us to attract and retain employees with requisite skill sets, particularly
employees with specialized technical and trade experience. Changing demographics and labor work force trends
also may result in a loss of knowledge and skills as more tenured and experienced workers retire. If we are unable
to attract, motivate, train and retain qualified personnel, or if we experience excessive turnover, particularly among
hourly workers, we may experience declining sales, manufacturing delays or other inefficiencies, increased
recruiting, training and relocation costs and other difficulties, and our results of operations, cash flows and financial
condition, and the trading price of our Common Stock may be adversely impacted.
The market for both hourly workers and professional workers remained challenging in fiscal 2022. The market
and labor environment for hourly workers is increasingly competitive and experiencing higher levels of labor unrest.
In certain locations where we operate, the demand for labor continues to exceed the supply of labor, resulting in
higher costs for employers. Despite our focused efforts to attract and retain employees, including by offering higher
levels of compensation in certain instances and retention bonuses in select locations, we experienced attrition rates
within our hourly workforce in fiscal 2022 that exceeded pre-2021 levels and we incurred higher operating costs at
certain of our facilities in the form of higher levels of overtime pay due to shift requirements and staffing challenges.
The market for professional workers remains challenging. Many professional workers desire a fully remote
work setting. We offer flexible working arrangements in the majority of instances; however, we may experience
higher levels of attrition within our professional workforce if employees do not perceive the purpose and impact of
their work to be rewarding or work-life balance to be satisfactory.
We rely on key executive and management personnel to manage our business efficiently and effectively. The
loss of these employees, combined with a challenging market for attracting and retaining employees could adversely
affect our results of operations, cash flows and financial condition, and the trading price of our Common Stock may
be adversely impacted.
We Face Physical, Operational, Financial and Reputational Risks Associated with Climate Change
Our physical assets and infrastructure, including our manufacturing operations, have been and remain subject
to risks from volatile and damaging weather patterns. For example, severe weather-related events, such as
hurricanes, tornados, other extreme storms, wildfires, and floods, have resulted in and could in future periods result
in lost production and/or physical damage to our facilities. Unpredictable weather patterns also may result in supply
chain disruptions and increased material costs. The ability to harvest the virgin fiber used in our manufacturing
operations may be limited, and prices for this raw material may fluctuate, during prolonged periods of heavy rain or
drought or during tree disease or insect epidemics that may be caused by variations in climate conditions. Such
events could also impact the premiums we pay for insurance. Other climate-related business risks that we face
include risks related to the transition to a lower-carbon economy, such as increased prices for certain fuels, including
natural gas; the introduction of a carbon tax or government mandates to reduce GHG emissions; and more stringent
and/or complex environmental and other permitting requirements. To the extent that severe weather-related risks
materialize, and we are unprepared for them, we may incur unexpected costs, which could have a material effect
on our results of operations, cash flows and financial condition, and the trading price of our Common Stock may be
adversely impacted.
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There has been an increased focus, including from investors, customers, the general public and U.S. and
foreign governmental and nongovernmental authorities on climate change and GHG emissions. We have voluntarily
established targets to reduce GHG emissions by 2030. For example, we have established a SBT to reduce absolute
Scope 1 and 2 GHG emissions 27.5% by 2030 from a 2019 baseline year. The SBT also includes a targeted
reduction in absolute Scope 3 GHG emissions from purchased goods and services, fuel and energy activities,
upstream and downstream transportation and distribution, and end-of-life treatment of sold products by 27.5% within
the same timeframe. Meeting our SBT is expected to increase our capital expenditures and may increase our
operational costs. The anticipated capital and operational costs to achieve our SBT could deviate materially from
our initial estimates. Further, the achievement of our SBT is subject to various risks and uncertainties, some of
which are outside our control.
We have also established and publicly disclosed other ESG targets and goals and other sustainability
commitments that are subject to a variety of assumptions, risks and uncertainties. If we are unable to meet these
targets, goals or commitments on our projected timelines or at all, or if they are not perceived to be sufficiently
robust, our reputation as well as our relationships with investors, customers and other stakeholders could be
harmed, which could in turn adversely impact our business and results of operations. In addition, not all of our
competitors may seek to establish climate or other ESG targets and goals, or at a comparable level to ours, which
could result in our competitors achieving competitive advantages through lower supply chain or operating costs.
We May Not Be Able To Successfully Implement Our Strategic Transformation Initiatives, Including Our
New Business Systems Transformation
We have undertaken several projects to enhance productivity and increase efficiency throughout our
businesses, which may not be achieved on the anticipated timelines or at all. In the fourth quarter of fiscal 2022, we
launched a multi-year phased business systems transformation project. The investment will replace much of our
existing disparate systems and transition them to a standardized enterprise resource planning (“ERP”) system on
a cloud-based platform, as well as a suite of other complementing technologies, across our global organization.
The new systems are intended to transform areas such as manufacturing, supply chain, procurement, quote to
cash, financials and analytics, and position us to better leverage automation and process efficiency and enable
productivity enhancements. An implementation of this scale is a major financial undertaking and will require
substantial time and attention of management and key employees. We may not be able to successfully implement
our ERP system without delays related to resource constraints or challenges with the critical design phases of the
implementation, or we may experience unanticipated business disruptions and/or we may not achieve the desired
benefits from the project. Project completion dates and anticipated costs may also change. Additionally, the
effectiveness of our internal control over financial reporting could be adversely affected if the new ERP is not
successfully implemented. Any of these items could adversely affect our results of operations, cash flows and
financial condition, and the trading price of our Common Stock.
Financial Risks
We Have Been, And May Be In the Future, Adversely Affected by Factors That Are Beyond Our Control,
Such as U.S. and Worldwide Economic and Financial Market Conditions, and Social and Political
Change
Our businesses have been, and may be, adversely affected by a number of factors that are beyond our control,
including, but not limited to:
•
•
•
•
•
general economic and business conditions,
macroeconomic conditions and related supply and demand dynamics;
including inflation and deflation and deteriorating
changes in tax laws or tax rates;
conditions in the financial services markets, including counterparty risk, insurance carrier risk, rising interest
rates, rising commodity prices, fluctuations in the value of local currency versus the U.S. dollar and the
impact of a stronger U.S. dollar, which may impact price and demand for our products;
financial uncertainties in our major international markets;
social and political change impacting matters such as tax policy, sustainability, environmental regulations
and trade policies and agreements; or
22
•
government deficit reduction and other austerity measures in specific countries or regions, or in the various
industries in which we operate.
For instance, we are presently experiencing lower demand for certain products due to macroeconomic
conditions and customer inventory rebalancing. This circumstance may be exacerbated if these conditions lead to
higher unemployment rates, lower family income, unfavorable currency exchange rates, lower corporate earnings,
lower business investment and/or lower consumer spending. The global economy is also experiencing the highest
levels of inflation in decades, and we are experiencing cost inflation across our business. Persistent inflation results
in continued higher production and transportation costs, which we may not be able to recover through higher prices
charged to our customers. These conditions and other macroeconomic uncertainties could result in higher operating
and distribution costs driven by economic downtime, as we experienced in the fourth quarter of fiscal 2022.
In addition, changes in trade policy, including renegotiating or potentially terminating, existing bilateral or
multilateral agreements, as well as the imposition of tariffs, could impact demand for our products and the costs
associated with certain of our capital investments. Macroeconomic challenges may also lead to changes in tax laws
or tax rates that may have a material impact on our future cash taxes, effective tax rate or deferred tax assets and
liabilities. For example, the Biden Administration has proposed significant changes to the U.S. tax laws, including
an increase to the federal corporate tax rate, limiting deductions where certain conditions exist, and several
proposals that would have the combined effect of increasing the U.S. taxation on profits earned outside the U.S.
On August 16, 2022, the Inflation Reduction Act of 2022 ("Inflation Reduction Act") was signed into law, with tax
provisions primarily focused on implementing a 15% minimum tax on global adjusted financial statement income
and a 1% excise tax on share repurchases. While we are still evaluating the impact that the Inflation Reduction Act
will have on our financial results, we do not believe the impact will be material.
We are not able to predict or control adverse changes in economic and financial market conditions, and adverse
social and political change, and our results of operations, cash flows and financial condition, and the trading price
of our Common Stock could be adversely affected by these matters.
We Depend on Certain Large Customers
We have large customers, none of which individually accounted for more than 10% of our consolidated net
sales in fiscal 2022. The loss of large customers could adversely affect our sales and, depending on the magnitude
of the loss, our results of operations, cash flows and financial condition, and the trading price of our Common Stock.
In particular, because our businesses operate in highly competitive industry segments, we regularly bid for new
business or for the renewal of existing business. The loss of business from our larger customers, or the renewal of
business on less favorable terms, may adversely impact our financial results.
We Have Had Significant Levels of Indebtedness in the Past and May Incur Significant Levels of
Indebtedness in the Future, Which Could Adversely Affect Our Financial Condition and Impair Our
Ability to Operate Our Business
At September 30, 2022, we had $7.8 billion of debt outstanding compared to $8.2 billion at September 30,
2021. We expect to incur additional debt in connection with the acquisition of the remaining interest in Grupo Gondi.
The level of our indebtedness has important consequences, including:
•
•
•
•
a portion of our cash flows from operations will be dedicated to payments on indebtedness and will not be
available for other purposes, including operations, capital expenditures and future business opportunities,
including acquisitions;
we may be limited in our ability to obtain additional financing for working capital, capital expenditures, future
business opportunities, acquisitions, general corporate and other purposes;
our exposure to rising interest rates subjects us to increased debt service obligations, both with respect to
existing floating rate indebtedness and the incurrence of additional fixed or floating indebtedness during
periods where such rates are in effect, particularly in light of the significant increase in interest rates during
the course of fiscal 2022;
we may be limited in our ability to adjust to changing market conditions, which would place us at a
competitive disadvantage compared to competitors that have less debt; and
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•
our vulnerability to a downturn in general economic conditions or in our business may increase, and we
may be unable to carry out important capital spending.
Our credit facilities contain certain restrictive covenants, including a covenant to satisfy a debt to capitalization
ratio. These restrictions may limit our flexibility to respond to changing market conditions and competitive pressures.
Credit Rating Downgrades Could Increase Our Borrowing Costs or Otherwise Adversely Affect Us
Some of our outstanding indebtedness has received credit ratings from rating agencies. Our credit ratings
could change based on, among other things, our results of operations and financial condition. Credit ratings are
subject to ongoing evaluation by credit rating agencies and may be lowered, suspended or withdrawn entirely by a
rating agency or placed on a “watch list” for a possible downgrade or assigned a “negative outlook”. Actual or
anticipated changes or downgrades in our credit ratings, including any announcement that our ratings are under
review for a downgrade or have been assigned a negative outlook, could increase our borrowing costs, which could
in turn adversely affect our results of operations, cash flows and financial condition, and the trading price of our
Common Stock. If a downgrade were to occur or a negative outlook were to be assigned, it could impact our ability
to access the capital markets to raise debt and/or increase the associated costs. In addition, while our credit ratings
are important to us, we may take actions and otherwise operate our business in a manner that adversely affects
our credit ratings.
We sell short-term receivables from certain customer trade accounts on a revolving basis. Any downgrade of
the credit rating or deterioration of the financial condition of these customers may make it more costly or difficult for
us to engage in these activities, which could adversely affect our cash flows and liquidity.
We Have a Significant Amount of Goodwill and Other Intangible Assets and a Write-Down Could Materially
Adversely Impact Our Operating Results and Stockholders’ Equity
At September 30, 2022, the carrying value of our goodwill and intangible assets was $8.8 billion. We review
the carrying value of our goodwill for impairment annually, or more frequently when impairment indicators exist. The
impairment test requires us to analyze a number of factors and make estimates that require judgment. In fiscal
2022, each of our reporting units had fair values that exceeded their carrying values by more than 15%. Future
changes in the cost of capital, expected cash flows, changes in our business strategy and external market
conditions, among other factors, could require us to record an impairment charge for goodwill, which could lead to
decreased assets and reduced net income. If a significant write down were required, the charge could have a
material adverse effect on our operating results and stockholders’ equity and could impact the trading price of our
Common Stock. In fiscal 2020, we recorded a pre-tax non-cash goodwill impairment of approximately $1.3 billion
in our legacy Consumer Packaging reporting unit.
We May Incur Additional Restructuring Costs and May Not Realize Expected Benefits from Restructuring
We have previously restructured portions of our operations and likely will engage in future restructuring
initiatives. For instance, during fiscal 2022, we recorded various impairments and other charges associated with
our decision to permanently cease operations at our Panama City, FL mill and to permanently close the corrugated
medium manufacturing operations at our St. Paul, MN mill. Because we are not able to predict or control market
conditions, including changes in the supply and demand for our products, the loss of large customers, the selling
prices for our products or our manufacturing costs, we may not be able to predict the appropriate time to undertake
restructurings. The cash and non-cash costs associated with these activities vary depending on the type of facility
impacted, with the non-cash cost of a mill closure generally being more significant than that of a converting facility
due to the higher level of investment. Restructuring activities may divert the attention of management, disrupt our
operations and fail to achieve the intended cost and operations benefits. In addition, significant judgment is required
to estimate restructuring costs, and these estimates, and the assumptions underlying them, may change as
additional information becomes available or facts or circumstances related to the restructuring initiative change.
We May Incur Withdrawal Liability and/or
Increased Funding Requirements in Connection with
Multiemployer Pension Plans
We participate in several multiemployer pension plans (“MEPP” or “MEPPs”). Our contributions to any
particular MEPP may increase based on the declining funded status of a MEPP and legal requirements, such as
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those of the Pension Protection Act of 2006 (“Pension Act”), which require substantially underfunded MEPPs to
implement a funding improvement plan (“FIP”) or a rehabilitation plan (“RP”) to improve their funded status. The
funded status of a MEPP may be impacted by, among other items, a shrinking contribution base as a result of the
insolvency or withdrawal of other companies that currently contribute to these plans, the inability or failure of
companies withdrawing from the plan to pay their withdrawal
liability, low interest rates, changes in actuarial
assumptions and/or lower than expected returns on pension fund assets.
We believe that certain of the MEPPs in which we participate or have participated, including the Pace Industry
Union-Management Pension Fund (“PIUMPF”), have material unfunded vested benefits. We submitted formal
notification to withdraw from MEPPs in the past and have recorded withdrawal liabilities, including an estimate of
our portion of PIUMPF’s accumulated funding deficiency. We may withdraw from other MEPPs in the future. At
September 30, 2022, we had $214.7 million of withdrawal liabilities, including liabilities associated with PIUMPF’s
accumulated funding deficiency demands. In July 2021, PIUMPF filed suit against us in the U.S. District Court for
the Northern District of Georgia claiming the right to recover our pro rata share of the pension fund’s accumulated
increased
funding deficiency, along with interest,
contributions, future funding obligations or future withdrawal liabilities may adversely affect our results of operations,
cash flows and financial condition, and the trading price of our Common Stock. See “Note 5. Retirement Plans —
Multiemployer Plans” and “Note 17. Commitments and Contingencies — Litigation” of
the Notes to
Consolidated Financial Statements for additional information.
liquidated damages and attorney’s fees. The impact of
Legal and Regulatory Risks
We Are Subject to a Wide Variety of Laws, Regulations and Other Requirements That are Subject to Change
and May Impose Substantial Compliance Costs
We are subject to a wide variety of federal, state, local and foreign laws, regulations and other requirements,
including those relating to the environment, product safety, competition, corruption, occupational health and safety,
labor and employment, data privacy, tax and health care. These laws, regulations and other requirements may
change or be applied or interpreted in ways that will require us to modify our equipment and/or operations, subject
us to enforcement risk, expose us to reputational harm or impose on or require us to incur additional costs, including
substantial compliance costs, which may adversely affect our results of operations, cash flows and financial
condition, and the trading price of our Common Stock.
We have incurred, and expect to continue to incur, significant capital, operating and other expenditures to
comply with applicable environmental laws and regulations. Our environmental expenditures include those related
to compliance with air and water permits and regulatory requirements, waste disposal and the cleanup of
contaminated soil and groundwater, including situations where we have been identified as a potentially responsible
party (“PRP”). Because environmental laws and regulations are constantly evolving, we will continue to incur costs
to maintain compliance and our compliance costs could increase materially. Future compliance with existing and
new laws and requirements has the potential to disrupt our business operations and may require significant
expenditures, and our existing reserves for specific matters may not be adequate to cover future costs. In particular,
our manufacturing operations consume significant amounts of energy, and we may in the future incur additional or
increased capital, operating and other expenditures from changes due to new or increased climate-related and
other environmental requirements. We could also incur substantial
including fines or sanctions,
enforcement actions, natural resource damages claims, cleanup and closure costs, and third-party claims for
property damage and personal injury under environmental and common laws.
liabilities,
The Foreign Corrupt Practices Act of 1977 and local anti-bribery laws, including those in Brazil, China, Mexico,
India and the United Kingdom (where we maintain operations directly or through a joint venture), prohibit companies
and their intermediaries from making improper payments to government officials for the purpose of influencing
official decisions. Our internal control policies and procedures, or those of our vendors, may not adequately protect
us from reckless or criminal acts committed or alleged to have been committed by our employees, agents or
vendors. Any such violations could lead to civil or criminal monetary and non-monetary penalties and/or could
damage our reputation.
We are subject to a number of labor and employment and occupational health and safety laws and regulations
that could significantly increase our operating costs and reduce our operational flexibility. Additionally, changing
privacy laws in the United States (where, among others, the California Consumer Privacy Act became effective in
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2020 and its successor, the California Privacy Rights Act, which will be effective January 1, 2023), Europe (where
the General Data Protection Regulation became effective in 2018), Brazil (where the Lei Geral de Proteção de
Dados became effective in 2020), China (where the Personal Information Protection Law became effective on
November 1, 2021) and elsewhere have created new individual privacy rights, imposed increased obligations on
companies handling personal data and increased potential exposure to fines and penalties.
Our Bylaws Contain an Exclusive Forum Provision That Could Limit Our Stockholders’ Ability To Choose
Their Preferred Judicial Forum for Disputes With Us Or Our Directors, Officers Or Employees
For many years, our bylaws have provided that a state court in Delaware (or, if such a court does not have
jurisdiction, the federal district court for the District of Delaware) is the exclusive forum for any derivative action or
proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim
against us or our directors, officers or employees arising pursuant to the Delaware General Corporation Law, our
certificate of incorporation or our bylaws, or any action asserting a claim against us that is governed by the internal
affairs doctrine. This provision of the bylaws is not a waiver of, and does not relieve anyone of, duties to comply
with, federal securities laws, including those specifying the exclusive jurisdiction of federal courts under the
Securities Exchange Act of 1934, as amended, and concurrent jurisdiction of federal and state courts under the
Securities Act of 1933, as amended.
This provision of the bylaws may limit a stockholder’s ability to bring a claim in a judicial forum that it finds
favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits
against us and our directors, officers and other employees. Alternatively, if a court were to find this provision in our
bylaws to be inapplicable or unenforceable in any action, we may incur additional costs associated with resolving
such action in other jurisdictions, which could adversely affect our business, financial condition and results of
operations, and the action may result in outcomes unfavorable to us, which could have a materially adverse impact
on our reputation, our business operations, and our financial position or results of operations.
Item 1B. UNRESOLVED STAFF COMMENTS
There are no unresolved SEC staff comments.
Item 2.
PROPERTIES
We operate locations in North America, including the majority of U.S. states, South America, Europe, Asia and
Australia. We lease our principal offices in Atlanta, GA. We believe that our existing production capacity is adequate
to serve existing demand for our products and consider our plants and equipment to be in good condition.
Our corporate offices, significant
September 30, 2022 are summarized below:
regional offices and operating facilities (including our mills) as of
Segment
Corrugated Packaging
Consumer Packaging
Global Paper
Distribution (1)
Corporate and significant regional offices
Total
Number of Facilities
Leased
Owned
Total
76
63
49
—
—
188
56
44
4
70
12
186
132
107
53
70
12
374
(1) We began including our distribution segment facilities in fiscal 2022 with the formation of the segment.
The tables that
follow show our estimated annual production capacity in thousands of
tons by mill at
September 30, 2022, unless stated otherwise. The capacity reflects our current expectations, including assumptions
such as product mix and basis weight. Our mill system production levels and operating rates may vary from year to
year due to changes in market and other factors, including weather-related events. Our simple average mill system
operating rates for the last three years averaged 91%. We own all of our mills. At September 30, 2022, we also own
approximately 135,000 acres of forestlands in Brazil.
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Containerboard Mills - annual production capacity in thousands of tons
Location of Mill
Longview, WA
Fernandina Beach, FL
West Point, VA
Stevenson, AL
Solvay, NY
Hodge, LA
Tres Barras, Brazil
Florence, SC
Dublin, GA
Seminole, FL
North Charleston, SC
Hopewell, VA
Tacoma, WA
Roanoke Rapids, NC
La Tuque, Quebec
Cowpens, SC
Morai, India
Total Capacity (1)
Linerboard Medium
240
465
950
White Top
Linerboard
Kraft
Paper/Bag
345
Saturating
Kraft /
Folding
Carton
Bleached
Paperboard
Market
Pulp
200
885
270
230
135
200
550
775
520
710
135
400
280
527
105
290
45
155
5,907
185
25
2,370
750
275
345
345
60
210
270
70
131
1,370
960
270
131
70
Total
Capacity
1,050
950
950
885
820
775
750
710
615
600
550
527
510
500
476
230
180
11,078
(1) Reflects the permanent closure of the corrugated medium manufacturing operations at the St. Paul, MN mill announced in
October 2022. Our fiber sourcing for our containerboard mills is approximately 61% virgin and 39% recycled.
Paperboard Mills - annual production capacity in thousands of tons
Location of Mill
Mahrt, AL
Covington, VA
Evadale, TX
Demopolis, AL
St. Paul, MN
Battle Creek, MI
Chattanooga, TN
Dallas, TX
Lynchburg, VA
Sheldon Springs, VT
(Missisquoi Mill)
Stroudsburg, PA
Eaton, IN
Aurora, IL
Total Capacity (1)
Bleached
Paperboard
Coated
Natural
Kraft
Coated
Recycled
Paperboard
Specialty
Recycled
Paperboard
Linerboard
Market
Pulp
1,035
95
950
385
360
1,695
1,130
170
160
127
111
80
648
140
121
64
32
357
180
110
180
110
Total
Capacity
1,035
950
660
470
170
160
140
127
121
111
80
64
32
4,120
(1) Our fiber sourcing for our paperboard mills is approximately 74% virgin and 26% recycled.
The production at our Lynchburg, VA mill is gypsum paperboard liner and the paper machine at this mill is
owned by our Seven Hills joint venture. Our overall fiber sourcing for all of our mills is approximately 65% virgin and
35% recycled.
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Item 3.
LEGAL PROCEEDINGS
We are a defendant in a number of lawsuits and claims arising out of the conduct of our business. See “Note
the Notes to Consolidated Financial Statements for additional
17. Commitments and Contingencies” of
information.
Item 4.
MINE SAFETY DISCLOSURES
Not applicable.
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PART II: FINANCIAL INFORMATION
Item 5.
MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
Common Stock
Our Common Stock trades on the New York Stock Exchange (“NYSE”) under the symbol “WRK”. As of
November 4, 2022, there were approximately 5,783 stockholders of record of our Common Stock. The number of
stockholders of record includes one single stockholder, Cede & Co., for all of the shares of our Common Stock held
by our stockholders in individual brokerage accounts maintained at banks, brokers and institutions.
Dividends
In October 2022, our board of directors declared a quarterly dividend of $0.275 per share, representing a $1.10
per share annualized dividend or an increase of 10%. In fiscal 2022, 2021 and 2020 we paid an annual dividend of
$1.00 per share, $0.88 per share and $1.33 per share, respectively. In May 2020, we reduced our dividend given
the uncertain market conditions driven by COVID, and we subsequently increased our dividend in May 2021 and
October 2021.
Our goal has been to reduce debt and leverage and return capital to stockholders through a competitive annual
dividend and share repurchases. Going forward, our capital allocation strategy includes a sustainable and growing
dividend.
Stock Performance Graph
The graph below reflects the cumulative stockholder return on an investment of $100 on September 30, 2017,
in our Common Stock (assuming the reinvestment of dividends) as of each fiscal year end through September 30,
2022, compared to the return on the same investment in the S&P 500 Index and our industry peer group. Our
industry peer group consists of (i) companies in our industry and adjacent/similar industries, (ii) companies with
which we compete for talent and/or (iii) companies with a similar revenue scope and scale of our organization(1).
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(1) Prior to fiscal 2022, our peer group included 3M Company, Amcor plc, Avery Dennison Corporation, Ball Corporation, Crown
Holdings, Inc., Freeport McMoRan Inc., The Goodyear Tire & Rubber Company, Honeywell International, Inc., International
Paper Company, Kimberly-Clark Corporation, LyondellBasell Industries N.V., Nucor Corporation, Packaging Corporation of
America, PPG Industries Inc., The Sherwin-Williams Company, United States Steel Corporation and Weyerhaeuser
Company (collectively referred to as the “Old Peer Group”). For fiscal 2022, the peer group also reflects the addition of
DuPont de Nemours, Inc. (the “New Peer Group”).
The information in the graph above is not deemed “filed” with the Securities and Exchange Commission and is
not to be incorporated by reference in any of WestRock's filings under the Securities Act of 1933 or the Securities
Exchange Act of 1934, whether made before or after the date of this Annual Report on Form 10-K, except to the
extent that we specifically incorporate such information by reference.
Securities Authorized for Issuance Under Equity Compensation Plans
See Part III, Item 12 of this Form 10-K and “Note 19. Stockholders’ Equity” of the Notes to Consolidated
Financial Statements for additional information.
Stock Repurchase Plan
See “Note 19. Stockholders’ Equity” of the Notes to Consolidated Financial Statements for additional
information.
Item 6.
[RESERVED]
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Item 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OVERVIEW
We are a multinational provider of sustainable fiber-based paper and packaging solutions. We partner with our
customers to provide differentiated, sustainable paper and packaging solutions that help our customers win in the
marketplace. Our team members support customers around the world from our operating and business locations in
North America, South America, Europe, Asia and Australia.
Presentation
Effective October 1, 2021, we reorganized our segment reporting to four reportable segments: Corrugated
Packaging, Consumer Packaging, Global Paper and Distribution. We reorganized our reportable segments due to
changes in our organizational structure and how our CODM makes key operating decisions, allocates resources
and assesses the performance of our business. Effective October 1, 2021, Adjusted EBITDA (as hereinafter
defined) is our measure of segment profitability in accordance with ASC 280, “Segment Reporting” because it is
used by our CODM to make decisions regarding allocation of resources and to assess segment performance. Prior
period amounts have been recast to conform to the new segment structure. These changes did not impact our
consolidated financial statements. See “Note 7. Segment Information” of the Notes to Consolidated Financial
Statements for additional information.
During fiscal 2020, we completed the monetization of the various real estate holdings that we owned that were
concentrated in the Charleston, SC region. Following completion of the monetization of these assets, we ceased
reporting the results of the Land and Development segment as a separate segment.
Certain items are not allocated to our operating segments and, thus, the information that our CODM uses to
make operating decisions and assess performance does not reflect such amounts. Adjusted EBITDA is defined as
pre-tax earnings of a reportable segment before depreciation, depletion and amortization, and excludes the
following items our CODM does not consider part of our segment performance: gain on sale of certain closed
facilities, multiemployer pension withdrawal expense (income), mineral rights impairment, restructuring and other
costs, goodwill impairment, non-allocated expenses, interest expense, net, loss on extinguishment of debt, other
(expense) income, net, and other adjustments ("Adjusted EBITDA") — each as outlined in “Note 7. Segment
Information” of the Notes to Consolidated Financial Statements.
A detailed discussion of the fiscal 2022 year-over-year changes can be found below, as well as a detailed
discussion of fiscal 2021 year-over-year changes due to the segment reorganization noted above.
Strategic Acquisitions and Other Portfolio Actions
We are committed to improving our return on invested capital as well as maximizing the performance of our
assets. From time to time, we have completed acquisitions that have expanded our product and geographic scope,
allowed us to increase our integration levels and impacted our comparative financials. We expect to continue to
evaluate potential acquisitions in the future, although the size of individual acquisitions may vary. There were no
significant acquisitions in the last three years. See also Item 1A. “Risk Factors — We May Be Unsuccessful in
Making and Integrating Mergers, Acquisitions and Investments, and Completing Divestitures”.
On July 27, 2022, we announced our entry into an agreement to acquire the remaining 67.7% interest in Grupo
Gondi. See “Note 3. Acquisitions and Investments” of the Notes to Consolidated Financial Statements for more
information regarding the announcement.
In fiscal 2022, we completed the following portfolio actions: (i) we permanently ceased operations at our
Panama City, FL mill, and (ii) we permanently closed the corrugated medium manufacturing operations at our St.
Paul, MN mill. Both operations were expected to require significant capital investment to maintain and improve
going forward, and the production of fluff pulp (at Panama City) was not a priority in our strategy to focus on higher
value markets. Closing these operations allows us to redirect significant capital that would have been required to
keep them competitive in the future to improve other key assets. In connection with these actions, we recorded
various impairments and other charges, and we expect to record future restructuring charges, primarily associated
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with future carrying costs. See “Note 4. Restructuring and Other Costs” of the Notes to Consolidated Financial
Statements for additional information.
In November 2022, we announced the planned sale of our interior partitions converting operations and three
uncoated recycled paperboard mills (Chattanooga, TN, Eaton, IN, and Aurora, IL) in two transactions for a combined
$380 million, subject to working capital adjustments. These divestitures align with our commitment to optimize our
portfolio and focus our strategy on key end markets. See “Note 22. Subsequent Events” of the Notes to
Consolidated Financial Statements for additional information.
Business Systems Transformation
In the fourth quarter of fiscal 2022, we launched a multi-year phased business systems transformation project.
The investment will replace much of our existing disparate systems and transition them to a standardized ERP
system on a cloud-based platform, as well as a suite of other complementing technologies, across approximately
90% of our footprint based on net sales.
The new systems are intended to transform areas such as manufacturing, supply chain, procurement, quote to
cash, financials and analytics, and position us to better leverage automation and process efficiency and enable
productivity enhancements. An implementation of this scale is a major financial undertaking and will require
substantial time and attention of management and key employees. Project completion dates and anticipated costs
may also change. As the systems are phased in, they will become a significant component of our internal control
over financial reporting. See also Item 1A. “Risk Factors — We May Not Be Able To Successfully Implement
Our Strategic Transformation Initiatives, Including Our New Business Systems Transformation”.
Due to the nature, scope and magnitude of
this investment, management believes these incremental
transformation costs are above the normal, recurring level of spending for information technology to support
operations. These strategic investments are not expected to recur in the foreseeable future, and are not considered
representative of our underlying operating performance. As such, management believes presenting these costs as
an adjustment in the non-GAAP results provides additional information to investors about trends in our operations
and is useful for period-over-period comparisons. This presentation also allows investors to view our underlying
operating results in the same manner as they are viewed by management.
The expenses expected to be adjusted from Net income (loss) attributable to common stockholders ("Net
Income") are expensed as incurred during the implementation of software applications and other enabling
technologies, and do not include deferred or capitalized costs, depreciation and/or amortization, and costs to
support or maintain these software applications or systems once they are in productive use. During the investment
period, the normal level of spend associated with non-transformative programs is expected to be maintained and
these expenses will not be adjusted in our non-GAAP measures. The items adjusted from Net Income will also be
adjusted in our presentation of Consolidated Adjusted EBITDA.
EXECUTIVE SUMMARY
Net sales of $21,256.5 million for fiscal 2022 increased $2,510.4 million, or 13.4%, compared to fiscal 2021
primarily due to higher selling price/mix that was partially offset by lower volumes and the unfavorable impact of
foreign currency. In the second quarter of fiscal 2021, we experienced lost sales associated with the Ransomware
Incident and winter weather events (the “Events”) and we estimate these Events decreased net sales by
approximately $189.1 million.
Net income attributable to common stockholders of $944.6 million in fiscal 2022 increased 12.7%, compared to
fiscal 2021. The impact of higher selling price/mix and ransomware recoveries was largely offset by increased cost
inflation, higher operating costs and lower volumes. Consolidated Adjusted EBITDA of $3,459.4 million in fiscal
2022 increased $460.2 million, or 15.3%. A detailed review of our performance appears below under “Results of
Operations”.
Earnings per diluted share was $3.61 in fiscal 2022 compared to $3.13 in fiscal 2021. Adjusted Earnings Per
Diluted Share were $4.76 and $3.39 in fiscal 2022 and 2021, respectively. See the discussion and tables under
"Non-GAAP Financial Measures" below with respect to Consolidated Adjusted EBITDA and Adjusted Earnings
Per Diluted Share.
32
We generated $2,020.4 million of net cash provided by operating activities in fiscal 2022, compared to $2,279.9
million in fiscal 2021. The decline was primarily due to $511.3 million of greater working capital usage compared to
the prior year period that was partially offset by higher earnings excluding non-cash impairments primarily
associated with restructuring activities. The greater working capital usage in fiscal 2022 was primarily due to actions
taken in the prior year to preserve cash due to uncertainty during the COVID pandemic, such as the payment of
certain bonuses and 401(k) match in stock in fiscal 2021, that were paid in cash in fiscal 2022, and the payment in
fiscal 2022 of certain previously deferred payroll taxes that relate to relief offered under the Coronavirus Aid, Relief
and Economic Security Act (“CARES Act”) from prior years. See “WestRock Pandemic Action Plan” for more
information. We invested $862.6 million in capital expenditures in fiscal 2022 while returning $259.5 million in
dividends to our stockholders and repurchasing $600.0 million of Common Stock. We believe our strong balance
sheet and cash flow provide us the flexibility to continue to invest to sustain and improve our operating performance.
See “Liquidity and Capital Resources” for more information.
A detailed review of our fiscal 2022, 2021 and 2020 performance appears below under “Results of
Operations”.
Expectations for the First Quarter of Fiscal 2023 and Fiscal 2023
In the first quarter of fiscal 2023, we expect a sequential decline in net sales and earnings from the fourth
quarter of fiscal 2022, reflecting the normal seasonal sequential volume declines in many of our businesses and
scheduled mill maintenance outages, resulting in approximately 150,000 tons of maintenance downtime, along with
customer inventory rebalancing and macroeconomic uncertainty. We expect lower volume with four fewer shipping
days during the first quarter of fiscal 2023, and one fewer shipping day than in the first quarter of fiscal 2022. We
expect unfavorable non-cash pension expense of approximately $40 million driven by higher interest rates and
market volatility and sequential natural gas and recycled fiber deflation, down approximately 20% and 70%,
respectively. We also expect increased health insurance costs prior to the annual reset of employee deductibles.
We further expect the continued flow through of previously published price increases and to continue balancing our
supply with our customers’ demand. We plan to draw upon our $1.0 billion Delayed Draw Term Loan to acquire the
remaining 67.7% interest in Grupo Gondi, and our results will include the corresponding increased interest expense.
In fiscal 2023, we expect our results to be significantly impacted by planned portfolio actions, non-cash pension
expense and currency headwinds. We also expect our results to be negatively impacted by customer inventory
rebalancing, primarily in our first
fiscal quarter, and macroeconomic uncertainty as well as scheduled mill
maintenance outages. We further expect the continued flow through of previously published price increases and to
continue balancing our supply with our customers' demand. We expect the planned portfolio actions (Grupo Gondi
and announced divestitures) to add an estimated net $85 million of Adjusted EBITDA. We expect unfavorable non-
cash pension expense of approximately $160 million driven by higher interest rates and market volatility and an
estimated $50 million unfavorable impact from foreign exchange rates. We expect approximately 465,000 tons of
maintenance downtime compared to approximately 409,000 tons in fiscal 2022. We are also targeting over $250
million in net cost savings in fiscal 2023 related to execution on our transformation initiatives, including items such
as increased mill and converting network efficiencies, indirect spend savings and selling, general and administrative
("SG&A") expense reductions. For additional
information on our planned portfolio actions see “Note 3.
Acquisitions and Investments” and “Note 22. Subsequent Events” of the Notes to Consolidated Financial
Statements. For more information on our business systems transformation, see Item 7. “Management’s
Discussion and Analysis of Financial Condition and Results of Operations — Business Systems
Transformation”.
WestRock Pandemic Action Plan
In May 2020, given the uncertainties associated with the severity and duration of the pandemic, we announced,
and began implementing, the WestRock Pandemic Action Plan. We focused and continue to focus on the protection,
safety and well-being of our team members and continuing to match our supply with our customers’ demand. We
modified the WestRock Pandemic Action Plan as the impact of COVID evolved. The actions that we took pursuant
to the plan targeted approximately $1 billion in additional cash through the end of calendar 2021, which was
available for use to reduce our outstanding indebtedness. In fiscal 2020, we achieved more than $350 million of the
approximately $1 billion goal set forth in the WestRock Pandemic Action Plan, as modified. As of September 30,
2021, we had achieved more than $975 million of the approximately $1 billion goal and discontinued measurement.
33
We committed to (i) reducing discretionary expenses, (ii) using Common Stock to make Company funded 401(k)
match and annual contribution (i.e. up to 5% and 2.5%, respectively) from July 1, 2020 through September 30, 2021
(final period funded in October 2021), (iii) targeting a reduction of fiscal 2021 capital investments to a range of $800
million to $900 million, up from an initial range of $600 to $800 million (we invested $815.5 million in fiscal 2021),
and (iv) resetting our quarterly dividend to $0.20 per share for an annual rate of $0.80 per share, which we did in
May 2020. See “Liquidity and Capital Resources — Cash Flow Activity” for information regarding subsequent
increases to our dividend.
In addition to the items addressed above, we (i) decreased the salaries of our senior executive team by up to
25% from May 1, 2020 through December 31, 2020 and decreased the retainer for members of our board of
directors by 25% for the third and fourth calendar quarters of 2020, (ii) used Common Stock to pay our annual
incentive for fiscal 2020 for nearly all participants and set the payout level at 50% of the target opportunity subject
to a safety modifier, as well as for Company funded 401(k) match and our annual contribution as noted above, and
(iii) postponed $116.5 million of employment taxes incurred through the end of calendar year 2020, pursuant to
relief offered under the CARES Act. We also reduced fiscal 2020 capital investments to $978.1 million after targeting
to reduce them by approximately $150 million to approximately $950 million. We paid the first 50% of employment
taxes deferred under the CARES Act as required in December 2021 and expect to pay the remaining 50% by
December 2022.
We began tracking the impact of costs associated with safety, cleaning and other items related to COVID in the
third quarter of fiscal 2020 and discontinued doing so during fiscal 2022 due to their continuing nature at relatively
consistent levels. We expect to continue to incur expenses for these items as needed in the future. During fiscal
2021, we recorded $38.4 million of expense related to COVID, including $22.0 million of relief payments to
employees in the first quarter of fiscal 2021. The balance was for increased costs for safety, cleaning and other
items related to COVID. During fiscal 2020, we provided one-time COVID recognition awards to our team members
who work in manufacturing and operations and recognized expense of $31.6 million for those awards. During fiscal
2020, we also incurred an additional expense of $32.4 million for cleaning, safety supplies and equipment, screening
resources and other items. We did not have any relief payments paid to employees in fiscal 2022.
RANSOMWARE INCIDENT
As previously disclosed, on January 23, 2021, we detected a ransomware incident impacting certain of our
systems. Promptly upon our detection of this incident, we initiated response and containment protocols and our
security teams, supplemented by leading cyber defense firms, worked to remediate this incident. We undertook
extensive efforts to identify, contain and recover from this incident quickly and securely. Our teams worked to
maintain our business operations and minimize the impact on our customers and team members. In our Form 10-
Q for the second quarter fiscal 2021, we announced that all systems were back in service. All of our mills and
converting locations began producing and shipping paper and packaging at pre-ransomware levels in March 2021
or earlier. For more information on the ransomware incident,
impact, see “Note 1.
Description of Business and Summary of Significant Accounting Policies — Ransomware Incident” of the
Notes to Consolidated Financial Statements. See Item 1A. “Risk Factors — We are Subject to Cyber-Security
Risks, Including Related to Customer, Employee, Vendor or Other Company Data”.
including the financial
34
The following table summarizes our consolidated results for the three years ended September 30, 2022 (in
millions):
RESULTS OF OPERATIONS
Net sales
Cost of goods sold
Gross profit
Selling, general and administrative excluding intangible
amortization
Selling, general and administrative intangible amortization
(Gain) loss on disposal of assets
Multiemployer pension withdrawal expense (income)
Mineral rights impairment
Restructuring and other costs
Goodwill impairment
Operating profit (loss)
Interest expense, net
Loss on extinguishment of debt
Pension and other postretirement non-service income
Other (expense) income, net
Equity in income of unconsolidated entities
Income (loss) before income taxes
Income tax expense
Consolidated net income (loss)
Less: Net income attributable to noncontrolling interests
Net income (loss) attributable to common stockholders
Net Sales (Unaffiliated Customers)
$
$
Year Ended September 30,
2021
18,746.1
15,315.8
3,430.3
2022
21,256.5
17,235.8
4,020.7
$
$
1,932.6
350.4
(16.9)
0.2
26.0
401.6
—
1,326.8
(318.8)
(8.5)
157.4
(11.0)
72.9
1,218.8
(269.6)
949.2
(4.6)
944.6
$
1,759.3
357.1
4.1
(2.9)
—
31.5
—
1,281.2
(372.3)
(9.7)
134.9
10.9
40.9
1,085.9
(243.4)
842.5
(4.2)
838.3
$
2020
17,578.8
14,381.6
3,197.2
1,624.4
400.5
(16.3)
(1.1)
—
112.7
1,333.2
(256.2)
(393.5)
(1.5)
103.3
9.5
15.8
(522.6)
(163.5)
(686.1)
(4.8)
(690.9)
Net sales in fiscal 2022 increased $2,510.4 million, or 13.4%, compared to fiscal 2021 primarily due to the
impact of higher selling price/mix that was partially offset by lower volumes and the unfavorable impact of foreign
currency. In fiscal 2021, we lost an estimated $189.1 million of net sales associated with the Events, all in the
second quarter.
Net sales in fiscal 2021 increased $1,167.3 million, or 6.6%, compared to fiscal 2020 primarily due to higher
selling price/mix and higher volumes, partially offset by lost sales associated with the Events. Additionally, we
experienced a net favorable impact of foreign currency across our segments. Volumes in fiscal 2020 were negatively
impacted by COVID, primarily in the last half of the fiscal year.
See “Segment Information” below for the change in net sales before intersegment eliminations by segment.
Cost of Goods Sold
Cost of goods sold increased to $17,235.8 million in fiscal 2022 compared to $15,315.8 million in fiscal 2021.
Cost of goods sold as a percentage of net sales was 81.1% in fiscal 2022 compared to 81.7% in fiscal 2021. The
decrease was primarily due to higher selling prices and ransomware recoveries in fiscal 2022, which were largely
offset by increased cost inflation, higher operating costs and increased planned downtime including maintenance
outages. Fiscal 2021 included the negative impact of the Events versus insurance recoveries in fiscal 2022. In fiscal
2022 we received $50.6 million of business interruption recoveries recorded as a reduction of Cost of goods sold.
See “Note 1. Description of Business and Summary of Significant Accounting Policies — Ransomware
Incident” for additional information. Cost inflation consisted primarily of higher energy, wage and benefit costs,
recycled fiber, freight, virgin fiber and chemical costs. In fiscal 2021, we recorded $19.7 million of one-time
recognition awards to our team members who work in manufacturing and operations. While costs increased in fiscal
2022 compared to fiscal 2021, driven by the factors noted above, we sought to mitigate their impact. Our mitigation
strategies, such as through price increases and productivity and other cost control efforts, provided us some
35
flexibility to respond to these circumstances, but we may be unsuccessful in doing so in future periods. In fiscal
2022, we entered into various natural gas commodity derivatives that were designated as cash flow hedges for
accounting purposes and are scheduled to be settled over the next twelve months. These positions were entered
into to help us mitigate commodity pricing risk. See “Note 18. Accumulated Other Comprehensive Loss and
Other Comprehensive Income (Loss)” of
the Notes to Consolidated Financial Statements for additional
information regarding our natural gas commodity derivatives.
Cost of goods sold increased to $15,315.8 million in fiscal 2021 compared to $14,381.6 million in fiscal 2020.
Cost of goods sold as a percentage of net sales was 81.7% in fiscal 2021 compared to 81.8% in fiscal 2020. The
increase in cost of goods sold in fiscal 2021 compared to fiscal 2020 was primarily due to higher volumes, increased
cost inflation and other items, including operational disruption associated with the Events. These items were partially
offset by productivity improvements and other items. In fiscal 2020, we incurred approximately $4.5 million of direct
costs and property damage associated with Hurricane Michael and received Hurricane Michael-related insurance
proceeds of $32.3 million and recorded a reduction of cost of goods sold of $32.1 million in connection with an
indirect tax claim in Brazil. The Hurricane Michael-related insurance proceeds were for $20.6 million of direct costs
and property damage and for $11.7 million for business interruption recoveries. In fiscal 2021, we recorded costs
of goods sold of $35.4 million related to COVID primarily for relief payments to employees and increased costs for
safety, cleaning and other items related to COVID. Fiscal 2020 includes costs of goods sold of $56.5 million
associated with COVID, including one-time recognition awards to our team members who work in manufacturing
and operations, increased costs for safety, cleaning and other items related to COVID. We began to track and report
the impact of COVID on fiscal 2020 in the third fiscal quarter. Cost inflation consisted primarily of higher recycled
fiber, wage and benefit costs, energy, freight, chemical and virgin fiber costs.
Selling, General and Administrative Excluding Intangible Amortization
SG&A excluding intangible amortization increased $173.3 million to $1,932.6 million in fiscal 2022 compared to
fiscal 2021. SG&A excluding intangible amortization as a percentage of net sales decreased in fiscal 2022 to 9.1%
from 9.4% in fiscal 2021, primarily due to higher selling prices. The SG&A increase in fiscal 2022 was primarily due
to $76.3 million of increased compensation and benefits. In addition, we incurred $22.7 million of increased travel
and entertainment costs, $19.1 million of increased software/computer expenses, $14.0 million of increased bad
debt expense and $10.6 million of higher consulting, professional and legal fees. The increased travel and
entertainment costs are still well below pre-pandemic levels. In fiscal 2022, we recorded $6.6 million of ransomware
recoveries of direct costs compared to expense, net of initial recoveries of approximately $19 million in fiscal 2021.
SG&A excluding intangible amortization increased $134.9 million to $1,759.3 million in fiscal 2021 compared to
fiscal 2020 primarily due to a $119.8 million increase in bonus and stock-based compensation expense, including
a $9.6 million acceleration of stock-based compensation in connection with the departure of our former CEO in the
second quarter of fiscal 2021. In addition, we incurred increased aggregate costs for consulting, professional and
legal fees of $21.2 million compared to the prior year period, primarily associated with the Ransomware Incident.
These increases were partially offset by a $29.4 million decrease in bad debt expense compared to the prior year
period, as well as a $18.4 million reduction in travel and entertainment associated with prolonged shelter-in-place
orders in response to the ongoing effects of COVID. SG&A excluding intangible amortization as a percentage of
net sales increased in fiscal 2021 to 9.4% from 9.2% in fiscal 2020.
Selling, General and Administrative Intangible Amortization
SG&A intangible amortization was $350.4 million, $357.1 million and $400.5 million in fiscal 2022, 2021 and
2020, respectively. The expense primarily represents the amortization of customer relationship intangibles acquired
in business combinations. The decline in fiscal 2021 was primarily attributable to certain intangibles from prior
acquisitions reaching full amortization.
Mineral Rights Impairment
In fiscal 2022, we recorded a $26.0 million pre-tax non-cash impairment of certain mineral rights as a result of
the lack of new leasing or development activity on the related properties for an extended period of time. With the
impairment in the third quarter of fiscal 2022, we have no remaining mineral rights.
36
Restructuring and Other Costs
We recorded pre-tax restructuring and other costs of $401.6 million, $31.5 million and $112.7 million for fiscal
2022, 2021 and 2020, respectively. These amounts are not comparable since the timing and scope of the individual
actions associated with each restructuring, acquisition, integration or divestiture vary. The increase in fiscal 2022
was primarily driven by the closure of our Panama City, FL mill and the permanent closure of the corrugated medium
manufacturing operations at the St. Paul, MN mill.
We generally expect the integration of a closed facility’s production with other facilities to enable the receiving
facilities to better leverage their fixed costs while eliminating fixed costs from the closed facility. See “Note 4.
Restructuring and Other Costs” of the Notes to Consolidated Financial Statements for additional information,
including a description of the type of costs incurred. We have restructured portions of our operations from time to
time and it is likely that we will engage in additional restructuring initiatives in the future. See also Item 1A. “Risk
Factors — We May Incur Additional Restructuring Costs and May Not Realize Expected Benefits from
Restructuring”.
Goodwill Impairment
No goodwill impairments were recorded in fiscal 2022 or 2021. In fiscal 2020, we recorded a pre-tax non-cash
goodwill impairment of $1,333.2 million in our legacy Consumer Packaging reportable segment. The impairment
was primarily the result of expected lower volumes and cash flows related to certain external bleached paperboard
end markets, including commercial print, tobacco and plate and cup stock markets. See Item 7. “Management’s
Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies
and Estimates — Goodwill” for more information on our goodwill impairment testing.
Interest Expense, net
Interest expense, net was $318.8 million and $372.3 million for fiscal 2022 and 2021, respectively. The decrease
was primarily due to a net $35.8 million reduction in interest expense associated with the remeasurement of our
multiemployer pension liabilities for the increase in interest rates in fiscal 2022 compared to fiscal 2021. In addition,
interest expense, net declined due to lower debt levels compared to the prior year period. These declines were
partially offset by higher interest rates on debt in the fiscal year ended September 30, 2022.
Interest expense, net was $372.3 million and $393.5 million for fiscal 2021 and 2020, respectively. The decrease
was primarily due to lower debt levels that was partially offset by higher interest rates in fiscal 2021 compared to
fiscal 2020. Additionally, fiscal 2020 was impacted by $20.5 million of interest income recorded in connection with
an indirect tax claim in Brazil partially offset by a $15.0 million increase in interest expense associated with the
remeasurement of our multiemployer pension liabilities. See “Note 17. Commitments and Contingencies —
Indirect Tax Claim” of the Notes to Consolidated Financial Statements for additional information. See Item 1A.
“Risk Factors — We Have Had Significant Levels of Indebtedness in the Past and May Incur Significant
Levels of Indebtedness in the Future, Which Could Adversely Affect Our Financial Condition and Impair
Our Ability to Operate Our Business”.
Pension and Other Postretirement Non-Service Income
Pension and other postretirement non-service income was $157.4 million and $134.9 million in fiscal 2022 and
2021, respectively. The increase was primarily due to the increase in plan asset balances used to determine the
expected return on plan assets for fiscal 2022. Customary pension and other postretirement (income) costs are
included in our segment results.
Pension and other postretirement non-service income was $134.9 million and $103.3 million in fiscal 2021 and
2020, respectively. The increase was primarily due to the increase in plan asset balances used to determine the
expected return on plan assets for fiscal 2021. See “Note 5. Retirement Plans” of the Notes to Consolidated
Financial Statements for more information.
37
Other (Expense) Income, net
Other (expense) income, net was expense of $11.0 million and income of $10.9 million and $9.5 million in fiscal
2022, 2021 and 2020, respectively. The increase in expense in fiscal 2022 was primarily due to a $9.3 million
increase in fees associated with the sale of receivables and a $5.7 million less favorable impact of exchange rates
compared to fiscal 2021.
Fiscal 2021 primarily included a $16.5 million gain on sale of the Summerville, SC sawmill and a $16.0 million
gain on sale of our Rosenbloom legacy cost method investment, which were partially offset by a $22.5 million charge
associated with not exercising an option to purchase an additional equity interest in Grupo Gondi at that time.
Equity in Income of Unconsolidated Entities
We recorded equity in income of unconsolidated entities of $72.9 million in fiscal 2022 compared to $40.9 million
in fiscal 2021. The increase was driven by earnings improvement across the portfolio, most notably, in a displays
joint venture and our joint venture with Grupo Gondi. On July 27, 2022, we announced our entry into an agreement
to acquire the remaining 67.7% interest in Grupo Gondi. See “Note 3. Acquisitions and Investments” of the Notes
to Consolidated Financial Statements for more information regarding the announcement.
We recorded equity in income of unconsolidated entities of $40.9 million in fiscal 2021 compared to $15.8 million
in fiscal 2020. The increase was driven by earnings improvement across the portfolio, most notably, our joint venture
with Grupo Gondi.
Provision for Income Taxes
We recorded income tax expense of $269.6 million for fiscal 2022 at an effective tax rate of 22.1%, compared
to an income tax expense of $243.4 million at an effective tax rate of 22.4% in fiscal 2021 and income tax expense
of $163.5 million at an effective tax rate of (31.3)% in fiscal 2020, due to the loss before income tax. See “Note 6.
Income Taxes” of the Notes to Consolidated Financial Statements for additional information, including a table
reconciling the statutory federal tax rate to our effective tax rate. Excluding the effect of the goodwill impairment,
which was largely not tax deductible, our effective tax rate was 22.5% in fiscal 2020.
On August 16, 2022, the Inflation Reduction Act was signed into law, with tax provisions primarily focused on
implementing a 15% minimum tax on global adjusted financial statement income and a 1% excise tax on share
repurchases. While we are still evaluating the impact that the Inflation Reduction Act will have on our financial
results, we do not believe the impact will be material.
Hurricane Michael
In fiscal 2020, we received the remaining $32.3 million of insurance proceeds related to the extensive damage
sustained at our containerboard and pulp mill located in Panama City, FL, in October 2018 due to Hurricane Michael.
The insurance proceeds received in fiscal 2020 consisted of $11.7 million of business interruption recoveries and
$20.6 million for direct costs and property damage. The insurance proceeds were recorded as a reduction of cost
of goods sold - $20.0 million in our Corrugated Packaging segment and $12.3 million in our Global Paper segment.
See Item 1A. “Risk Factors — We Face Physical, Operational, Financial and Reputational Risks Associated
with Climate Change”.
SEGMENT INFORMATION
Corrugated Packaging Segment
Corrugated Packaging Shipments
Corrugated Packaging shipments are expressed as a tons equivalent in thousands of tons, which includes
external and intersegment shipments from our corrugated converting operations, principally for the sale of
corrugated containers and other corrugated products. Tons sold from period to period may be impacted by customer
conversions to lower basis weight products. In addition, we disclose North American Corrugated Packaging
38
shipments in billion square feet ("BSF") and millions of square feet ("MMSF") per shipping day. We have presented
the Corrugated Packaging shipments in this manner because we believe investors, potential investors, securities
analysts and others find this breakout useful when evaluating our operating performance. Quantities in the table
may not sum across due to trailing decimals.
Fiscal 2020
Corrugated Packaging Shipments -
thousands of tons
North American Corrugated Packaging
Shipments - BSF
North American Corrugated Packaging Per
Shipping Day - MMSF
Fiscal 2021
Corrugated Packaging Shipments -
thousands of tons
North American Corrugated Packaging
Shipments - BSF
North American Corrugated Packaging Per
Shipping Day - MMSF
Fiscal 2022
Corrugated Packaging Shipments -
thousands of tons
North American Corrugated Packaging
Shipments - BSF
North American Corrugated Packaging Per
Shipping Day - MMSF
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Fiscal
Year
1,600.2
1,642.0
1,591.8
1,697.3
6,531.3
23.9
23.7
23.2
24.8
95.7
385.4
370.9
369.0
387.7
378.3
1,729.4
1,662.7
1,709.6
1,678.7
6,780.4
25.3
24.6
25.3
24.5
99.8
415.3
391.2
401.7
383.2
397.6
1,634.5
1,662.1
1,648.7
1,580.5
6,525.8
24.5
24.7
24.5
23.4
97.1
401.0
385.8
389.3
365.5
385.2
Corrugated Packaging Segment – Net Sales and Adjusted EBITDA
(In millions, except percentages)
Net Sales (1)
Adjusted EBITDA
Adjusted EBITDA
Margin
Fiscal 2020
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Total
Fiscal 2021
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Total
Fiscal 2022
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Total
(1) Net Sales before intersegment eliminations
39
$
$
$
$
$
$
1,979.3
1,973.0
1,850.2
1,987.7
7,790.2
2,019.5
2,022.4
2,154.7
2,203.9
8,400.5
2,220.0
2,319.0
2,382.5
2,386.1
9,307.6
$
$
$
$
$
$
358.5
392.3
361.0
362.4
1,474.2
347.6
321.1
363.9
361.4
1,394.0
288.9
328.7
385.2
383.9
1,386.7
18.1%
19.9
19.5
18.2
18.9%
17.2%
15.9
16.9
16.4
16.6%
13.0%
14.2
16.2
16.1
14.9%
Net Sales (Aggregate) — Corrugated Packaging Segment
Net sales before intersegment eliminations for the Corrugated Packaging segment increased $907.1 million in
fiscal 2022 compared to fiscal 2021. The increase primarily consisted of $1,137.0 million of higher selling price/mix
that was partially offset by $265.7 million of lower volumes. The lower volumes were largely due to market softness
and customer inventory rebalancing in the fourth quarter of fiscal 2022. The volume comparison in fiscal 2022
reflects the $39.2 million negative impact in the prior year period from the Events, with an estimated $16.2 million
and $23.0 million due to the Ransomware Incident and winter weather, respectively.
Net sales before intersegment eliminations for the Corrugated Packaging segment increased $610.3 million in
fiscal 2021 compared to fiscal 2020 primarily due to $375.7 million of higher selling price/mix and $241.0 million of
higher volumes. Volumes in fiscal 2021 were negatively impacted by an estimated $39.2 million from the Events.
Volumes in fiscal 2020 were negatively impacted by COVID, primarily in the last half of the fiscal year.
Adjusted EBITDA — Corrugated Packaging Segment
Corrugated Packaging segment Adjusted EBITDA in fiscal 2022 decreased $7.3 million compared to fiscal
2021, primarily due to an estimated $815.6 million of increased cost inflation, $249.1 million higher operating costs,
including an estimated $29.8 million from economic downtime in the fourth quarter of fiscal 2022, $111.3 million of
lower volumes excluding the Events in the prior year period and a $12.9 million increase from planned downtime
including maintenance outages. These items were largely offset by a $1,136.0 million margin impact from higher
selling price/mix and the $46.0 million favorable impact on the current period of the Events due to recoveries in the
current year period compared to the expense from the Events in the prior year period. Productivity was negatively
impacted by higher supply chain costs and labor shortages, in part due to the impacts of COVID and higher rates
of attrition, as well as heavy planned mill maintenance in the first half of fiscal 2022 and COVID-related absenteeism
primarily in the second quarter of fiscal 2022.
Corrugated Packaging segment Adjusted EBITDA in fiscal 2021 decreased $80.2 million compared to fiscal
2020, primarily due to an estimated $358.6 million of increased cost inflation, $181.9 million higher operating costs,
$18.1 million of impact from the Events and $7.2 million of Hurricane Michael insurance recoveries in fiscal 2020.
These items were largely offset by a $378.8 million margin impact from higher selling price/mix, $95.1 million of
higher volumes excluding the Events and an estimated $11.7 million from lower economic downtime.
Consumer Packaging Segment
Consumer Packaging Shipments
Consumer Packaging shipments are expressed as a tons equivalent in thousands of tons, which includes
external and intersegment shipments from our consumer converting operations, principally for the sale of folding
cartons, interior partitions and other consumer products. We have presented the Consumer Packaging shipments
in this manner because we believe investors, potential investors, securities analysts and others find this breakout
useful when evaluating our operating performance. Quantities in the table may not sum across due to trailing
decimals.
Fiscal 2020
Consumer Packaging Shipments - thousands
of tons
Fiscal 2021
Consumer Packaging Shipments - thousands
of tons
Fiscal 2022
Consumer Packaging Shipments - thousands
of tons
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Fiscal
Year
366.0
384.1
391.1
401.7
1,542.8
374.9
379.1
386.4
389.5
1,529.9
374.2
401.3
399.3
391.4
1,566.2
40
Consumer Packaging Segment – Net Sales and Adjusted EBITDA
(In millions, except percentages)
Net Sales (1)
Adjusted EBITDA
Adjusted EBITDA
Margin
Fiscal 2020
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Total
Fiscal 2021
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Total
Fiscal 2022
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Total
$
$
$
$
$
$
1,015.4
1,049.8
1,024.1
1,101.1
4,190.4
1,062.5
1,080.6
1,132.2
1,158.6
4,433.9
1,138.7
1,250.6
1,270.2
1,305.7
4,965.2
$
$
$
$
$
$
133.2
159.7
186.0
181.8
660.7
175.3
164.1
183.3
198.1
720.8
169.3
205.8
234.9
219.2
829.2
13.1%
15.2
18.2
16.5
15.8%
16.5%
15.2
16.2
17.1
16.3%
14.9%
16.5
18.5
16.8
16.7%
(1) Net Sales before intersegment eliminations
Net Sales (Aggregate) — Consumer Packaging Segment
Net sales before intersegment eliminations for the Consumer Packaging segment increased $531.3 million in
fiscal 2022 compared to fiscal 2021 primarily due to $425.7 million of higher selling price/mix and $258.7 million
impact of higher volumes, including the $12.1 million negative impact from the Events in the prior year period. These
increases were partially offset by $149.6 million of unfavorable foreign currency impacts.
The $243.5 million increase in net sales before intersegment eliminations for the Consumer Packaging segment
in fiscal 2021 compared to fiscal 2020 was primarily due to $101.5 million of higher volumes, $88.5 million of
favorable foreign currency impacts and $53.4 million of higher selling price/mix. Volumes were negatively impacted
by an estimated $12.1 million from the Events. Volumes in fiscal 2020 were negatively impacted by COVID, primarily
in the last half of the fiscal year.
Adjusted EBITDA — Consumer Packaging Segment
Consumer Packaging segment Adjusted EBITDA in fiscal 2022 increased $108.4 million compared to the prior
year. Adjusted EBITDA in the period increased primarily due to an estimated $409.0 million margin impact from
higher selling price/mix, $59.2 million of higher volumes excluding the Events and a $9.9 million favorable impact
from the Events due to recoveries in the current year period compared to the expense from the Events in the prior
year period. These items were partially offset by an estimated $329.4 million of increased cost inflation, $25.6 million
of unfavorable foreign currency impacts, $8.0 million of higher operating costs and a $6.4 million increase from
planned downtime including maintenance outages.
Consumer Packaging segment Adjusted EBITDA in fiscal 2021 increased $60.1 million compared to the prior
year primarily due to $138.0 million of increased productivity and other operational items, an estimated $29.9 million
margin impact from higher selling price/mix, an estimated $20.9 million from lower economic downtime and $11.1
million of higher volumes excluding the Events. These items were partially offset by an estimated $136.6 million of
increased cost inflation.
41
Global Paper Segment
Global Paper Shipments
Global Paper shipments in thousands of tons include the sale of containerboard, paperboard, market pulp and
specialty papers (including kraft papers and saturating kraft) to external customers. The shipment data table
excludes gypsum paperboard liner tons produced by our Seven Hills Paperboard LLC joint venture in Lynchburg,
VA since it is not consolidated. We have presented the Global Paper shipments in this manner because we believe
investors, potential investors, securities analysts and others find this breakout useful when evaluating our operating
performance. Quantities in the table may not sum across due to trailing decimals.
Fiscal 2020
Global Paper Shipments - thousands
of tons
Fiscal 2021
Global Paper Shipments - thousands
of tons
Fiscal 2022
Global Paper Shipments - thousands
of tons
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Fiscal
Year
1,619.0
1,719.6
1,651.2
1,528.0
6,517.8
1,461.7
1,482.7
1,588.6
1,738.7
6,271.6
1,515.9
1,658.2
1,632.7
1,377.4
6,184.3
Global Paper Segment – Net Sales and Adjusted EBITDA
(In millions, except percentages)
Net Sales (1)
Adjusted EBITDA
Adjusted EBITDA
Margin
Fiscal 2020
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Total
Fiscal 2021
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Total
Fiscal 2022
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Total
$
$
$
$
$
$
1,206.9
1,246.5
1,166.2
1,130.0
4,749.6
1,090.9
1,130.6
1,299.2
1,462.3
4,983.0
1,352.6
1,538.1
1,610.3
1,429.2
5,930.2
$
$
$
$
$
$
190.3
173.6
167.1
170.9
701.9
151.7
159.6
265.2
307.2
883.7
232.4
308.6
399.0
306.4
1,246.4
15.8%
13.9
14.3
15.1
14.8%
13.9%
14.1
20.4
21.0
17.7%
17.2%
20.1
24.8
21.4
21.0%
(1) Net Sales before intersegment eliminations
Net Sales (Aggregate) — Global Paper Segment
Net sales before intersegment eliminations for the Global Paper segment increased $947.2 million in fiscal 2022
compared to fiscal 2021 primarily due to $1,101.8 million of higher selling price/mix that was partially offset by $63.0
million of lower volumes including the $134.8 million negative impact on volumes in fiscal 2021 from the Events.
42
The lower volumes were due to market softness in the fourth quarter of fiscal 2022. This aggregate increase was
also partially offset by the absence of $33.7 million of sales from the sawmill we sold in the second quarter fiscal
2021.
The $233.4 million increase in net sales before intersegment eliminations for the Global Paper segment in fiscal
2021 compared to fiscal 2020 was primarily due to $438.3 million of higher selling price/mix that was partially offset
by $160.7 million of lower volumes, $21.0 million of lower sales due to the second quarter of fiscal 2021 sawmill
sale, and $18.9 million of unfavorable foreign currency impacts. Volumes were negatively impacted by an estimated
$91.7 million and $43.1 million due to the Ransomware Incident and winter weather, respectively. Volumes in fiscal
2020 were negatively impacted by COVID, primarily in the last half of the fiscal year.
Adjusted EBITDA — Global Paper Segment
Global Paper segment Adjusted EBITDA in fiscal 2022 increased $362.7 million compared to the prior year.
Adjusted EBITDA in the period increased primarily due to a $1,101.8 million margin impact from higher selling
price/mix and a $79.4 million favorable impact from the Events due to recoveries in the current year period and
expense from the Events in the prior year period. These items were partially offset by an estimated $659.4 million
of increased cost inflation, $72.8 million of lower volumes excluding the Events, $72.1 million higher operating costs
including an estimated $15.7 million from economic downtime in the fourth quarter of fiscal 2022, and a $16.1 million
increase from planned downtime including maintenance outages.
Global Paper segment Adjusted EBITDA in fiscal 2021 increased $181.8 million compared to fiscal 2020
primarily due to an estimated $436.2 million of margin impact from higher selling price/mix, $64.1 million of increased
productivity and other operational items and an estimated $18.3 million from lower economic downtime. These
items were partially offset by an estimated $273.2 million of increased cost inflation, $53.1 million of impact from
the Events, $4.5 million of Hurricane Michael insurance recoveries in fiscal 2020 and $6.0 million of lower volumes
excluding the Events.
Distribution Segment
Distribution Shipments
Distribution shipments are expressed as a tons equivalent in thousands of tons, which includes external and
intersegment shipments from our distribution and display assembly operations. We have presented the Distribution
shipments in this manner because we believe investors, potential investors, securities analysts and others find this
breakout useful when evaluating our operating performance. Quantities in the table may not sum across due to
trailing decimals.
Fiscal 2020
Distribution Shipments - thousands of tons
Fiscal 2021
Distribution Shipments - thousands of tons
Fiscal 2022
Distribution Shipments - thousands of tons
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Fiscal
Year
43.9
44.7
47.4
56.8
192.7
56.4
53.6
64.5
53.1
227.6
48.5
50.8
59.8
46.8
205.9
43
Distribution Segment – Net Sales and Adjusted EBITDA
(In millions, except percentages)
Net Sales (1)
Adjusted EBITDA
Adjusted EBITDA
Margin
Fiscal 2020
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Total
Fiscal 2021
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Total
Fiscal 2022
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Total
$
$
$
$
$
$
265.0
245.4
261.9
330.1
1,102.4
303.8
280.3
322.3
348.4
1,254.8
324.8
362.3
357.7
374.1
1,418.9
$
$
$
$
$
$
11.4
6.8
8.3
22.2
48.7
16.4
11.0
18.0
23.4
68.8
6.5
28.0
19.2
26.0
79.7
4.3%
2.8
3.2
6.7
4.4%
5.4%
3.9
5.6
6.7
5.5%
2.0%
7.7
5.4
7.0
5.6%
(1) Net Sales before intersegment eliminations
Net Sales (Aggregate) — Distribution Segment
Net sales before intersegment eliminations for the Distribution segment increased $164.1 million in fiscal 2022
compared to fiscal 2021 primarily due to $139.9 million of higher selling price/mix and $19.5 million of higher
volumes, primarily related to fulfillment of a large healthcare order in the second quarter of fiscal 2022 that was
partially offset by market softness in the fourth quarter of fiscal 2022.
The $152.4 million increase in net sales before intersegment eliminations for the Distribution segment in fiscal
2021 compared to fiscal 2020 was primarily due to $139.5 million of higher volumes and $10.7 million of higher
selling price/mix.
Adjusted EBITDA — Distribution Segment
Distribution segment Adjusted EBITDA in fiscal 2022 increased $10.9 million compared to the prior year
primarily due to a $139.9 million margin impact from higher selling price/mix, $15.5 million from higher volumes and
$5.2 million of increased productivity and other operational items. These items were largely offset by an estimated
$149.5 million of increased cost inflation.
Distribution segment Adjusted EBITDA in fiscal 2021 increased $20.1 million compared to fiscal 2020 primarily
due to $28.5 million of higher volumes and an estimated $13.7 million margin impact from higher selling price/mix.
These increases were partially offset by $11.2 million of higher operating costs and an estimated $10.2 million of
increased cost inflation.
LIQUIDITY AND CAPITAL RESOURCES
We fund our working capital requirements, capital expenditures, mergers, acquisitions and investments,
restructuring activities, dividends and stock repurchases from net cash provided by operating activities, borrowings
under our credit facilities, proceeds from our accounts receivable sales agreements, proceeds from the sale of
property, plant and equipment removed from service and proceeds received in connection with the issuance of debt
and equity securities. See “Note 13. Debt” of the Notes to Consolidated Financial Statements for detailed
information regarding our debt. Funding for our domestic operations in the foreseeable future is expected to come
44
from sources of liquidity within our domestic operations, including cash and cash equivalents, and available
borrowings under our credit facilities. As such, our foreign cash and cash equivalents are not expected to be a key
source of liquidity to our domestic operations.
We are a party to enforceable and legally binding contractual obligations involving commitments to make
payments to third parties. These obligations impact our short-term and long-term liquidity and capital resource
needs. Certain contractual obligations are reflected on the consolidated balance sheet as of September 30, 2022,
while others are considered future obligations. Our contractual obligations primarily consist of items such as long-
term debt, including current portion, lease obligations, purchase obligations and other obligations. See Item 7.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Contractual
Obligations”, for additional information.
Cash and cash equivalents were $260.2 million at September 30, 2022 and $290.9 million at September 30,
2021. Approximately two-thirds of the cash and cash equivalents at September 30, 2022 were held outside of the
U.S. The proportion of cash and cash equivalents held outside of the U.S. generally varies from period to period.
At September 30, 2022, total debt was $7,787.2 million, $212.2 million of which was current. At September 30,
2021,
Included in our total debt at
September 30, 2022 was $175.1 million of non-cash acquisition related step-up. During fiscal 2022, debt decreased
$406.9 million due to repayments primarily using net cash provided by operating activities that exceeded aggregate
capital expenditures and capital returned to stockholders in the form of dividends and share repurchases.
total debt was $8,194.1 million, $168.8 million of which was current.
At September 30, 2022, we had approximately $3.7 billion of availability under our long-term committed credit
facilities and cash and cash equivalents, excluding the $1.0 billion Delayed Draw Term Loan that we plan to use to
acquire the remaining 67.7% interest in Grupo Gondi. Our primary availability is under our revolving credit facilities
and receivables securitization facility, the majority of which matures on July 7, 2027. This liquidity may be used to
provide for ongoing working capital needs and for other general corporate purposes, including acquisitions,
dividends and stock repurchases. On March 22, 2022, we redeemed $350 million aggregate principal amount of
our 4.00% senior notes due March 2023 primarily using borrowings under our receivables securitization facility and
recorded an $8.2 million loss on extinguishment of debt. On September 10, 2021, we redeemed $400 million
aggregate principal amount of our 4.900% senior notes due March 2022 using cash and cash equivalents and
recorded a loss on extinguishment of debt of $8.6 million.
Our credit facilities contain certain restrictive covenants, including a covenant to satisfy a debt to capitalization
ratio. We test and report our compliance with all of these covenants as required by these facilities and were in
compliance with them at September 30, 2022.
At September 30, 2022, we had $57.1 million of outstanding letters of credit not drawn upon.
We use a variety of working capital management strategies including supply chain financing ("SCF") programs,
vendor financing and commercial card programs, monetization facilities where we sell short-term receivables to a
group of third-party financial institutions and receivables securitization facilities. We describe these programs below.
We engage in certain customer-based SCF programs to accelerate the receipt of payment for outstanding
accounts receivables from certain customers. Certain costs of these programs are borne by the customer or us.
Receivables transferred under these customer-based SCF programs generally meet the requirements to be
accounted for as sales in accordance with guidance under Financial Accounting Standards Board’s (“FASB”)
Accounting Standards Codification (“ASC”) 860, “Transfers and Servicing” (“ASC 860”), resulting in derecognition
of such receivables from our consolidated balance sheets. Receivables involved with these customer-based SCF
programs constitute approximately 2% of our annual net sales. In addition, we have monetization facilities that sell
to third-party financial institutions all of the short-term receivables generated from certain customer trade accounts.
See “Note 12. Fair Value — Accounts Receivable Sales Agreements” for a discussion of our monetization
facilities.
Our working capital management strategy includes working with our suppliers to revisit terms and conditions,
including the extension of payment terms. Our current payment terms with the majority of our suppliers generally
range from payable upon receipt to 120 days and vary for items such as the availability of cash discounts. We do
not believe our payment terms will be shortened significantly in the near future, and we do not expect our net cash
provided by operating activities to be significantly impacted by additional extensions of payment terms. Certain
45
financial institutions offer voluntary SCF programs that enable our suppliers, at their sole discretion, to sell their
receivables from us to the financial institutions on a non-recourse basis at a rate that leverages our credit rating
and thus might be more beneficial to our suppliers. We and our suppliers agree on commercial terms for the goods
and services we procure, including prices, quantities and payment terms, regardless of whether the supplier elects
to participate in SCF programs. The suppliers sell us goods or services and issue the associated invoices to us
based on the agreed-upon contractual terms. The due dates of the invoices are not extended due to the supplier’s
participation in SCF programs. Our suppliers, at their sole discretion if they choose to participate in a SCF program,
determine which invoices, if any, they want to sell to the financial institutions. No guarantees are provided by us
under SCF programs and we have no economic interest in a supplier’s decision to participate in the SCF program.
Therefore, amounts due to our suppliers that elect to participate in SCF programs are included in the line items
Accounts payable and Other current liabilities in our consolidated balance sheets and the activity is reflected in net
cash provided by operating activities in our consolidated statements of cash flows. Based on correspondence with
the financial institutions that are involved with our two primary SCF programs, while the amount suppliers elect to
sell to the financial institutions varies from period to period, the amount generally averages approximately 17% to
19% of our Accounts payable balance on our consolidated balance sheets.
We also participate in certain vendor financing and commercial card programs to support our travel and
entertainment expenses and smaller vendor purchases. Amounts outstanding under these programs are classified
as debt primarily because we receive the benefit of extended payment terms and a rebate from the financial
institution that we would not have otherwise received without the financial institutions’ involvement. We also have
a receivables securitization facility that allows for borrowing availability based on the eligible underlying accounts
receivable and compliance with certain covenants. See “Note 13. Debt” of the Notes to Consolidated Financial
Statements for a discussion of our receivables securitization facility and the amount outstanding under our vendor
financing and commercial card programs.
Cash Flow Activity
(In millions)
Year Ended September 30,
2021
2020
2022
Net cash provided by operating activities
Net cash used for investing activities
Net cash used for financing activities
$
$
$
2,020.4
$
(776.0) $
(1,281.3) $
2,279.9
$
(676.0) $
(1,580.4) $
2,070.7
(921.5)
(1,021.1)
Net cash provided by operating activities during fiscal 2022 decreased $259.5 million from fiscal 2021 primarily
due to $511.3 million of greater working capital usage compared to the prior year period that was partially offset by
higher earnings excluding non-cash impairments primarily associated with restructuring activities. The greater
working capital usage in fiscal 2022 was primarily due to actions taken in the prior year to preserve cash due to
uncertainty during the COVID pandemic, such as the payment of certain bonuses and 401(k) match in stock in fiscal
2021, that were paid in cash in fiscal 2022, and the payment in fiscal 2022 of certain previously deferred payroll
taxes that relate to relief offered under the CARES Act from prior years. Net cash provided by operating activities
during fiscal 2021 increased $209.2 million from fiscal 2020 primarily due to higher consolidated net income and a
$141.0 million net decrease in the use of working capital compared to the prior year. The changes in working capital
in fiscal 2022 and 2021 included a source of cash resulting from the sale of $58.8 million and $76.6 million,
respectively, of accounts receivables in connection with the A/R Sales Agreement (as defined in Note 12. Fair
Value) as well as a similar use of cash of $3.2 million in fiscal 2020.
Net cash used for investing activities of $776.0 million in fiscal 2022 consisted primarily of $862.6 million for
capital expenditures that was partially offset by $60.8 million of proceeds from corporate owned life insurance and
$28.2 million of proceeds from the sale of property, plant and equipment, primarily for the sale of a previously closed
facility. Net cash used for investing activities of $676.0 million in fiscal 2021 consisted primarily of $815.5 million for
capital expenditures that were partially offset by $58.5 million of proceeds from the sale of the Summerville, SC
sawmill, $44.9 million of proceeds from corporate owned life insurance and $29.5 million of proceeds from the sale
of investments. Net cash used for investing activities of $921.5 million in fiscal 2020 consisted primarily of $978.1
million for capital expenditures that were partially offset by $35.0 million of proceeds from the sale of property, plant
and equipment and $16.9 million of proceeds from corporate owned life insurance.
46
We invested $862.6 million in capital expenditures in fiscal 2022, which is below the $1.0 billion we expected
to invest heading into the year, but in line with our revised guidance due to supply chain and other delays. We
expect capital expenditures of approximately $1.0 to $1.1 billion in fiscal 2023. At this level of capital investment,
we expect that we will continue to invest in safety, environmental and maintenance projects while also making
investments to support productivity and growth in our business. However, our capital expenditure assumptions may
change, project completion dates may change, or we may decide to invest a different amount depending upon
opportunities we identify, or changes in market conditions or to comply with changes in environmental laws and
regulations.
In fiscal 2022, net cash used for financing activities of $1,281.3 million consisted primarily of share repurchases
of $600.0 million, a net decrease in debt of $452.7 million and cash dividends paid to stockholders of $259.5 million.
In fiscal 2021, net cash used for financing activities of $1,580.4 million consisted primarily of a net decrease in debt
of $1,241.3 million and cash dividends paid to stockholders of $233.8 million and stock repurchases of $122.4
million. In fiscal 2020, net cash used for financing activities of $1,021.1 million consisted primarily of a net decrease
in debt of $673.9 million and cash dividends paid to stockholders of $344.5 million.
We estimate that we will
invest approximately $36 million for capital expenditures during fiscal 2023 in
connection with matters relating to environmental compliance. We were obligated to purchase approximately $371
million of fixed assets at September 30, 2022 for various capital projects. See Item 1A. “Risk Factors — Our
Capital Expenditures May Not Achieve the Desired Outcomes or May Be Achieved at a Higher Cost than
Anticipated”.
At September 30, 2022, the U.S. federal, state and foreign net operating losses and other U.S. federal and
state tax credits available to us aggregated approximately $51 million in future potential reductions of U.S. federal,
state and foreign cash taxes. These items are primarily for foreign and state net operating losses and credits that
generally will be utilized between fiscal 2023 and 2040. Our cash tax rate is highly dependent on our taxable income,
utilization of net operating losses and credits, changes in tax laws or tax rates, capital expenditures and other
factors. Barring significant changes in our current assumptions, including changes in tax laws or tax rates,
forecasted taxable income, levels of capital expenditures and other items, we expect our fiscal 2023, 2024 and
2025 cash tax rate will be at or driven slightly higher than our income tax rate primarily due the timing of depreciation
on our qualifying capital investments as allowed under the Tax Cuts and Jobs Act.
During fiscal 2022 and 2021, we made contributions of $21.2 million and $23.2 million, respectively, to our U.S.
and non-U.S. pension plans. Based on current facts and assumptions, we expect to contribute approximately $21
million to our U.S. and non-U.S. pension plans in fiscal 2023. Based on current assumptions, including future
interest rates, we estimate that minimum pension contributions to our U.S. and non-U.S. pension plans will be
approximately $21 million to $23 million annually in fiscal 2024 through 2027. We have made contributions and
expect to continue to make contributions in the coming years to our pension plans in order to ensure that our funding
levels remain adequate in light of projected liabilities and to meet the requirements of the Pension Act and other
regulations. The net overfunded status of our U.S. and non-U.S. pension plans at September 30, 2022 was $237.8
million. See “Note 5. Retirement Plans” of the Notes to Consolidated Financial Statements.
In the normal course of business, we evaluate our potential exposure to MEPPs, including with respect to
potential withdrawal liabilities. In fiscal 2018, we submitted formal notification to withdraw from PIUMPF and Central
States, Southeast and Southwest Areas Pension Plan (“Central States”), and recorded estimated withdrawal
liabilities for each. We also have liabilities associated with other MEPPs from which we, or legacy companies, have
withdrawn from in the past. In fiscal 2023, we expect to pay approximately $12 million a year in withdrawal liabilities,
excluding accumulated funding deficiency demands. With respect to certain other MEPPs, in the event we withdraw
from one or more of the MEPPs in the future, it is reasonably possible that we may incur withdrawal liabilities in
liability, both individually and in the
connection with such withdrawals. Our estimate of any such withdrawal
for the remaining plans in which we participate. At September 30, 2022 and
aggregate,
is not material
September 30, 2021, we had withdrawal
liabilities recorded of $214.7 million and $247.1 million, respectively,
including liabilities associated with PIUMPF’s accumulated funding deficiency demands. The decrease in
withdrawal liabilities in fiscal 2022 as compared to the end of fiscal 2021 was primarily due to an increase in interest
rates. See “Note 5. Retirement Plans — Multiemployer Plans” of the Notes to Consolidated Financial Statements
for additional
information. See also Item 1A. “Risk Factors — We May Incur Withdrawal Liability and/or
Increased Funding Requirements in Connection with Multiemployer Pension Plans”.
47
In October 2022, our board of directors declared a quarterly dividend of $0.275 per share, representing a $1.10
per share annualized dividend or an increase of 10%. In fiscal 2022, 2021 and 2020 we paid an annual dividend of
$1.00 per share, $0.88 per share and $1.33 per share, respectively. In May 2020, we reduced our dividend given
the uncertain market conditions at the time driven by COVID, and we subsequently increased our dividend in May
2021 and October 2021. Our goal has been to reduce debt and leverage and return capital to stockholders through
a competitive annual dividend and share repurchases. Going forward, our capital allocation strategy includes a
sustainable and growing dividend.
In July 2015, our board of directors authorized a repurchase program of up to 40.0 million shares of our Common
Stock, representing approximately 15% of our outstanding Common Stock as of July 1, 2015. On May 4, 2022, our
board of directors authorized a new repurchase program of up to 25.0 million shares of our Common Stock, plus
any unutilized shares left from the July 2015 authorization. The 25.0 million shares represent an additional
authorization of approximately 10% of our outstanding Common Stock. Shares of our Common Stock may be
purchased from time to time in open market or privately negotiated transactions. The timing, manner, price and
amount of repurchases will be determined by management at its discretion based on factors, including the market
price of our Common Stock, general economic and market conditions and applicable legal requirements. The
repurchase program may be commenced, suspended or discontinued at any time. In fiscal 2022, we repurchased
approximately 12.6 million shares of our Common Stock for an aggregate cost of $597.5 million. In fiscal 2021, we
repurchased approximately 2.5 million shares of our Common Stock for an aggregate cost of $125.1 million. In
fiscal 2020, we repurchased no shares of our Common Stock. The amount reflected as purchased in the
consolidated statements of cash flows varies due to the timing of share settlement. As of September 30, 2022, we
had approximately 29.0 million shares of Common Stock available for repurchase under the program.
We anticipate that we will be able to fund our capital expenditures, interest payments, dividends and stock
repurchases, pension payments, working capital needs, note repurchases, restructuring activities, repayments of
current portion of long-term debt, business acquisitions and other corporate actions for the foreseeable future from
cash generated from operations, borrowings under our credit facilities, proceeds from our accounts receivable sales
agreements, proceeds from the issuance of debt or equity securities or other additional long-term debt financing,
including new or amended facilities. In addition, we continually review our capital structure and conditions in the
private and public debt markets in order to optimize our mix of indebtedness. In connection with these reviews, we
may seek to refinance existing indebtedness to extend maturities, reduce borrowing costs or otherwise improve the
terms and composition of our indebtedness.
Contractual Obligations
We summarize our enforceable and legally binding contractual obligations at September 30, 2022, and the
effect these obligations are expected to have on our liquidity and cash flow in future periods in the following table.
Certain amounts in this table are based on management’s estimates and assumptions about these obligations,
including their duration, the possibility of renewal, anticipated actions by third parties and other factors, including
estimated minimum pension plan contributions and estimated benefit payments related to postretirement
obligations, supplemental retirement plans and deferred compensation plans. Because these estimates and
assumptions are subjective, the enforceable and legally binding obligations we actually pay in future periods may
vary from those presented in the table (in millions).
Payments Due by Period
Fiscal
2024
and 2025
Fiscal
2026
and 2027
Fiscal
2023
Thereafter
Total
Long-Term Debt, including current portion,
excluding finance lease obligations (1)
Lease obligations (2)
Purchase obligations and other (3) (4) (5)
Total
$ 7,366.1 $
1,162.1
1,919.4
178.6 $ 1,422.8 $ 1,266.2 $ 4,498.5
295.6
230.6
310.7
1,155.8
$10,447.6 $ 1,565.0 $ 2,068.7 $ 1,709.1 $ 5,104.8
286.2
156.7
349.7
296.2
(1)
Includes only principal payments owed on our debt assuming that all of our long-term debt will be held to maturity, excluding
scheduled payments. We have excluded $133.6 million of fair value of debt step-up, deferred financing costs and
unamortized bond discounts from the table to arrive at actual debt obligations. See “Note 13. Debt” of the Notes to
Consolidated Financial Statements for information on the interest rates that apply to our various debt instruments.
48
(2) See “Note 14. Leases” of the Notes to Consolidated Financial Statements for additional information.
(3) Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding and that
specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price
provision; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable
without penalty.
(4) We have included future estimated minimum pension plan contributions, MEPP withdrawal payments with definite payout
terms and estimated benefit payments related to postretirement obligations, supplemental retirement plans and deferred
compensation plans. Our estimates are based on various factors, such as discount rates and expected returns on plan
assets. Future contributions are subject to changes in our funded status based on factors such as investment performance,
discount rates, returns on plan assets and changes in legislation. It is possible that our assumptions may change, actual
market performance may vary or we may decide to contribute different amounts. We have excluded $89.8 million of MEPP
withdrawal liabilities recorded as of September 30, 2022, including our estimate of the accumulated funding deficiency, due
to lack of definite payout terms for certain of the obligations. See “Note 5. Retirement Plans – Multiemployer Plans” of
the Notes to Consolidated Financial Statements for additional information.
(5) We have not included the following items in the table:
An item labeled “other long-term liabilities” reflected on our consolidated balance sheet because these liabilities do not
have a defined pay-out schedule.
$253.4 million for certain provisions of ASC 740, “Income Taxes” associated with liabilities, primarily for uncertain tax
positions due to the uncertainty as to the amount and timing of payment, if any.
In addition to the enforceable and legally binding obligations presented in the table above, we have other
obligations for goods and services and raw materials entered into in the normal course of business. These contracts,
however, are subject to change based on our business decisions. On July 27, 2022, we announced our entry into
an agreement to acquire the remaining 67.7% interest in Grupo Gondi for $970 million, plus the assumption of debt.
This purchase agreement is not reflected in the table above.
Guarantor Summarized Financial Information
WRKCo, Inc. (the “Issuer”), a wholly owned subsidiary of WestRock Company ("Parent"), has issued the
following debt securities pursuant to offerings registered under the Securities Act of 1933, as amended (collectively
for purposes of this subsection, the “Notes”)(in millions, except percentages):
Aggregate Principal
Amount
Stated Coupon
Rate
Maturity Date
$
$
$
$
$
$
$
$
$
500
600
750
500
600
500
750
500
600
3.000%
3.750%
4.650%
3.375%
4.000%
3.900%
4.900%
4.200%
3.000%
September 2024
March 2025
March 2026
September 2027
March 2028
June 2028
March 2029
June 2032
June 2033
Upon issuance, the Notes maturing in 2024, 2025, 2027 and March 2028 were fully and unconditionally
guaranteed by two other wholly owned subsidiaries of WestRock Company: WestRock RKT, LLC (“RKT”) and
WestRock MWV, LLC (“MWV”, and together with RKT, the “Guarantor Subsidiaries”). WestRock Company has
also fully and unconditionally guaranteed these Notes. The remaining Notes were issued by the Issuer subsequent
to the consummation of the acquisition of KapStone Paper and Packaging Corporation in November 2018 and were
fully and unconditionally guaranteed at the time of issuance by the Parent and the Guarantor Subsidiaries.
Accordingly, each series of the Notes is fully and unconditionally guaranteed on a joint and several basis by the
Parent and the Guarantor Subsidiaries (together, the “Guarantors”). Collectively, the Issuer and the Guarantors
are the “Obligor Group”.
Each series of Notes and the related guarantees constitute unsecured unsubordinated obligations of the
applicable obligor. Each series of Notes and the related guarantees ranks equally in right of payment with all of the
applicable obligor’s existing and future unsecured and unsubordinated debt; ranks senior in right of payment to all
of the applicable obligor’s existing and future subordinated debt; is effectively junior to the applicable obligor’s
49
existing and future secured debt to the extent of the value of the assets securing such debt; and is structurally
subordinated to all of the existing and future liabilities of each subsidiary of the applicable obligor (that is not itself
an obligor) that does not guarantee such Notes.
The indentures governing each series of Notes contain covenants that, among other things, limit our ability and
the ability of our subsidiaries to grant liens on our assets and enter into sale and leaseback transactions. In addition,
the indentures limit, as applicable, the ability of the Issuer and Guarantors to merge, consolidate or sell, convey,
transfer or lease our or their properties and assets substantially as an entirety. The covenants contained in the
indentures do not restrict the Company’s ability to pay dividends or distributions to stockholders.
The guarantee obligations of the Guarantors under the Notes are also subject to certain limitations and terms
similar to those applicable to other guarantees of similar instruments, including that (i) the guarantees are subject
to fraudulent transfer and conveyance laws and (ii) the obligations of each Guarantor under its guarantee of each
series of Notes will be limited to the maximum amount as will result in the obligations of such Guarantor under its
guarantee of such Notes not to be deemed to constitute a fraudulent conveyance or fraudulent transfer under federal
or state law.
Under each indenture governing one or more series of the Notes, a Guarantor Subsidiary will be automatically
and unconditionally released from its guarantee upon consummation of any transaction permitted under the
applicable indenture resulting in such Guarantor Subsidiary ceasing to be an obligor (either as issuer or guarantor).
Under the indentures, the guarantee of the Parent will be automatically released and will terminate upon the merger
of the Parent with or into the Issuer or another guarantor, the consolidation of the Parent with the Issuer or another
guarantor or the transfer of all or substantially all of the assets of the Parent to the Issuer or a guarantor. In addition,
if the Issuer exercises its defeasance or covenant defeasance option with respect to the Notes of a series in
accordance with the terms of the applicable indenture, each guarantor will be automatically and unconditionally
released from its guarantee of the Notes of such series and all its obligations under the applicable indenture.
The Issuer and each Guarantor are holding companies that conduct substantially all of their business through
subsidiaries. Accordingly, repayment of the Issuer’s indebtedness, including the Notes, is dependent on the
generation of cash flow by the Issuer’s and each Guarantor’s subsidiaries, as applicable, and their ability to make
such cash available to the Issuer and the Guarantors, as applicable, by dividend, debt repayment or otherwise. The
Issuer’s and the Guarantors’ subsidiaries may not be able to, or be permitted to, make distributions to enable them
to make payments in respect of their obligations, including with respect to the Notes in the case of the Issuer and
the guarantees in the case of the Guarantors. Each of the Issuer’s and the Guarantors’ subsidiaries is a distinct
legal entity and, under certain circumstances, legal and contractual restrictions may limit the Issuer’s and the
Guarantors’ ability to obtain cash from their subsidiaries. In the event that the Issuer and the Guarantors do not
receive distributions from their subsidiaries, the Issuer and the Guarantors may be unable to make required principal
and interest payments on their obligations, including with respect to the Notes and the guarantees.
Pursuant to amended Rule 3-10 of Regulation S-X, the summarized financial information below is presented
for the Obligor Group on a combined basis after the elimination of intercompany balances and transactions among
the Obligor Group and equity in earnings from and investments in the non-Guarantor Subsidiaries. The summarized
financial information below should be read in conjunction with the Company’s consolidated financial statements
contained herein, as the summarized financial information may not necessarily be indicative of results of operations
or financial position had the subsidiaries operated as independent entities (in millions).
SUMMARIZED STATEMENT OF OPERATIONS
Net sales to unrelated parties
Net sales to non-Guarantor Subsidiaries
Gross profit
Interest expense, net with non-Guarantor Subsidiaries
Net income and net income attributable to the Obligor Group
$
$
$
$
$
Year Ended
September 30,
2022
1,813.4
1,162.8
949.1
(98.2)
33.6
50
SUMMARIZED BALANCE SHEETS
ASSETS
Total current assets
Noncurrent amounts due from non-
Guarantor Subsidiaries
Other noncurrent assets (1)
Total noncurrent assets
LIABILITIES
Current amounts due to non-
Guarantor Subsidiaries
Other current liabilities
Total current liabilities
Noncurrent amounts due to non-
Guarantor Subsidiaries
Other noncurrent liabilities
Total noncurrent liabilities
September 30,
2022
2021
227.4
370.1
1,812.8
2,182.9
2,253.5
144.5
2,398.0
3,097.5
6,872.7
9,970.2
$
$
$
$
$
$
$
310.4
306.1
1,980.5
2,286.6
2,281.4
130.4
2,411.8
3,437.4
7,296.6
10,734.0
$
$
$
$
$
$
$
(1) Other noncurrent assets includes aggregate goodwill and intangibles, net of $1,601.2 million and
$1,699.2 million as of September 30, 2022 and September 30, 2021, respectively.
NON-GAAP FINANCIAL MEASURES
We report our financial results in accordance with generally accepted accounting principles in the U.S.
(“GAAP”). However, management believes certain non-GAAP financial measures provide our management, board
of directors, investors, potential
investors, securities analysts and others with additional meaningful financial
information that should be considered when assessing our ongoing performance. Management also uses these
non-GAAP financial measures in making financial, operating and planning decisions, and in evaluating our
performance. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, our
GAAP results. The non-GAAP financial measures we present may differ from similarly captioned measures
presented by other companies.
We use the non-GAAP financial measures “Adjusted Net Income” and “Adjusted Earnings Per Diluted Share”.
Management believes these measures provide our management, board of directors, investors, potential investors,
securities analysts and others with useful
information to evaluate our performance because they exclude
restructuring and other costs, business systems transformation costs and other specific items that management
believes are not indicative of the ongoing operating results of the business. We and our board of directors use this
information to evaluate our performance relative to other periods. We believe that the most directly comparable
GAAP measures to Adjusted Net Income and Adjusted Earnings Per Diluted Share are Net income (loss)
attributable to common stockholders and Earnings (loss) per diluted share, respectively. For additional information
regarding our business systems transformation see Item 7. “Management’s Discussion and Analysis of
Financial Condition and Results of Operations — Overview — Business Systems Transformation”.
51
Set forth below is a reconciliation of the non-GAAP financial measure Adjusted Earnings Per Diluted Share to
Earnings (loss) per diluted share, the most directly comparable GAAP measure (in dollars per share) for the periods
indicated.
Years Ended September 30,
2021
2020
2022
Earnings (loss) per diluted share
Restructuring and other costs
Mineral rights impairment
Loss on extinguishment of debt
Accelerated depreciation on major capital projects and
certain facility closures
Business systems transformation costs
Multiemployer pension withdrawal expense
Losses at closed facilities, transition and start-up costs
COVID employee payments
Grupo Gondi option
Accelerated compensation ‒ former CEO
Goodwill impairment
North Charleston and Florence transition and
reconfiguration costs
MEPP liability adjustment due to interest rates
Gain on sale of certain closed facilities
Ransomware recovery costs, net of insurance proceeds
Gain on sale of investment
Gain on sale of sawmill
Brazil indirect tax claim
Litigation recovery
Adjustment related to Tax Cuts and Jobs Act
Direct recoveries from Hurricane Michael, net of
related costs
Other
Adjustment to reflect adjusted earnings on a fully diluted
basis
Adjusted Earnings Per Diluted Share
$
3.61 $
1.16
0.08
0.02
3.13 $
0.09
—
0.03
0.02
0.02
0.01
0.01
—
—
—
—
—
(0.10)
(0.05)
(0.02)
—
—
—
—
—
—
—
—
—
—
0.01
0.06
0.06
0.04
—
—
—
—
0.05
(0.05)
(0.03)
—
—
—
—
—
—
4.76 $
—
3.39 $
$
(2.67)
0.33
—
—
0.05
—
—
0.07
0.09
—
—
5.07
0.13
0.05
(0.05)
—
—
—
(0.14)
(0.07)
(0.06)
(0.05)
0.02
(0.02)
2.75
52
The GAAP results in the tables below for Pre-Tax, Tax and Net of Tax are equivalent to the line items “Income
(loss) before income taxes”, “Income tax expense” and “Consolidated net income (loss)”, respectively, as reported
on the consolidated statements of operations. Set forth below are reconciliations of Adjusted Net Income to the
most directly comparable GAAP measure, Net income (loss) attributable to common stockholders (represented in
the table below as the GAAP Results for Consolidated net income (loss) (i.e., Net of Tax) less net income
attributable to Noncontrolling interests), for the periods indicated (in millions):
Year ended September 30, 2022
Tax
Pre-Tax
Year ended September 30, 2021
Tax
Pre-Tax
$
1,218.8
401.6
26.0
8.5
7.5
7.4
3.5
3.5
(36.2)
(18.6)
(6.6)
0.5
1,615.9
$
$
1,085.9
31.5
22.0
22.5
18.9
11.7
9.7
3.0
0.7
(16.0)
(16.5)
(0.9)
(0.9)
(0.4)
1,171.2
$
(269.6) $
(98.1)
(6.4)
(2.1)
Net of Tax
949.2
303.5
19.6
6.4
(1.9)
(1.8)
(0.8)
(0.9)
8.9
5.0
1.6
(0.1)
(366.2) $
$
5.6
5.6
2.7
2.6
(27.3)
(13.6)
(5.0)
0.4
1,249.7
(4.6)
1,245.1
(243.4) $
(7.7)
(5.4)
(6.7)
Net of Tax
842.5
23.8
16.6
15.8
(4.7)
—
(2.4)
(0.6)
(0.2)
2.4
8.3
0.2
0.3
0.1
(259.8) $
$
14.2
11.7
7.3
2.4
0.5
(13.6)
(8.2)
(0.7)
(0.6)
(0.3)
911.4
(4.2)
907.2
As reported
Restructuring and other costs
Mineral rights impairment
Loss on extinguishment of debt
Accelerated depreciation on certain facility
closures
Business systems transformation costs
Multiemployer pension withdrawal expense
Losses at closed facilities, transition and
start-up costs
MEPP liability adjustment due to interest rates
Gain on sale of certain closed facilities
Ransomware recovery costs insurance proceeds
Other
Adjusted Results
Noncontrolling interests
Adjusted Net Income
As reported
Restructuring and other costs
COVID employee payments
Grupo Gondi option
Ransomware recovery costs, net of insurance
proceeds
Accelerated compensation ‒ former CEO
Loss on extinguishment of debt
Losses at closed facilities, transition and
start-up costs
Accelerated depreciation on certain facility
closures
Gain on sale of investment
Gain on sale of sawmill
Gain on sale of certain closed facilities
Brazil indirect tax claim
MEPP liability adjustment due to interest rates
Adjusted Results
Noncontrolling interests
Adjusted Net Income
$
$
$
$
53
Year ended September 30, 2020
Tax
Pre-Tax
Net of Tax
As reported
Goodwill impairment
Restructuring and other costs
North Charleston and Florence transition and
reconfiguration costs
COVID employee payments
Losses at closed plants, transition and
start-up costs
Accelerated depreciation on major capital
projects and certain plant closures
MEPP liability adjustment due to interest rates
Loss on extinguishment of debt
Multiemployer pension withdrawal expense
Brazil indirect tax claim
Litigation recovery
Adjustment related to Tax Cuts and Jobs Act
Direct recoveries from Hurricane Michael, net
of related costs
Gain on sale of certain closed facilities
Land and Development operating results
Other
Adjusted Results
Noncontrolling interests
Adjusted Net Income
$
(522.6) $
1,333.2
112.7
(163.5) $
(18.9)
(28.2)
(686.1)
1,314.3
84.5
43.4
31.6
21.9
17.3
15.0
1.5
0.9
(51.9)
(23.9)
—
(16.1)
(15.6)
(1.3)
6.0
952.1
$
(10.6)
(7.7)
(5.4)
(4.2)
(3.7)
(0.4)
(0.2)
16.0
5.9
(16.4)
4.0
3.8
0.3
(1.5)
(230.7) $
$
$
32.8
23.9
16.5
13.1
11.3
1.1
0.7
(35.9)
(18.0)
(16.4)
(12.1)
(11.8)
(1.0)
4.5
721.4
(4.8)
716.6
We discuss certain of these charges in more detail in “Note 4. Restructuring and Other Costs”, “Note 7.
Segment Information” and “Note 17. Commitments and Contingencies — Indirect Tax Claim”. For more
information on our business systems transformation see Item 7. “Management’s Discussion and Analysis of
Financial Condition and Results of Operations — Overview — Business Systems Transformation”. See Item
1A. “Risk Factors — We May Not Be Able To Successfully Implement Our Strategic Transformation
Initiatives, Including Our New Business Systems Transformation”.
We also use the non-GAAP financial measure “Consolidated Adjusted EBITDA”, along with other factors such
as "Adjusted EBITDA" (a GAAP measure of segment performance our CODM uses to evaluate our segment
results), to evaluate our overall performance. Management believes that the most directly comparable GAAP
measure to Consolidated Adjusted EBITDA is "Net
income (loss) attributable to common stockholders".
Management believes this measure provides our management, board of directors, investors, potential investors,
securities analysts and others with useful information to evaluate our performance because it excludes restructuring
and other costs, business systems transformation costs and other specific items that management believes are not
indicative of the ongoing operating results of the business. We and our board of directors use this information to
evaluate our performance relative to other periods.
54
Set forth below is a reconciliation of the non-GAAP financial measure Consolidated Adjusted EBITDA to Net
income (loss) attributable to common stockholders periods indicated (in millions).
Year Ended September 30,
2021
2020
2022
Net income (loss) attributable to common stockholders
Adjustments: (1)
Less: Net income attributable to noncontrolling interests
Income tax expense
Other expense (income), net
Loss on extinguishment of debt
Interest expense, net
Restructuring and other costs
Mineral rights impairment
Goodwill impairment
Multiemployer pension withdrawal expense (income)
Gain on sale of certain closed facilities
Depreciation, depletion and amortization
Other adjustments
Consolidated Adjusted EBITDA
$
944.6
$
838.3
$
(690.9)
4.6
269.6
11.0
8.5
318.8
401.6
26.0
—
0.2
(18.6)
1,488.6
4.5
3,459.4
$
4.2
243.4
(10.9)
9.7
372.3
31.5
—
—
(2.9)
(0.9)
1,460.0
54.5
2,999.2
$
4.8
163.5
(9.5)
1.5
393.5
112.7
—
1,333.2
(1.1)
(15.6)
1,487.0
33.1
2,812.2
$
(1) The table above adds back expense or subtracts income for certain financial statement and segment footnote items to
compute Consolidated Adjusted EBITDA.
The non-GAAP measure Consolidated Adjusted EBITDA can also be derived by adding together each
segment's "Adjusted EBITDA" plus "Non-allocated expenses" from our segment footnote. See “Note 7. Segment
Information” of the Notes to Consolidated Financial Statements.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
We have prepared our accompanying consolidated financial statements in conformity with GAAP, which
requires management to make estimates that affect the amounts of revenues, expenses, assets and liabilities
reported. Certain significant accounting policies are described in “Note 1. Description of Business and Summary
of Significant Accounting Policies” of the Notes to Consolidated Financial Statements.
These critical accounting policies are both important to the portrayal of our financial condition and results of
operations and require some of management’s most subjective and complex judgments. The accounting for these
matters involves the making of estimates based on current
in
management’s judgment, could change in a manner that would materially affect management’s future estimates
with respect to such matters and, accordingly, could cause our future reported financial condition and results of
operations to differ materially from those that we are currently reporting based on management’s current estimates.
facts, circumstances and assumptions that,
Goodwill
We review the carrying value of our goodwill annually at the beginning of the fourth quarter of each fiscal year,
or more often if events or changes in circumstances indicate that the carrying amount may exceed fair value as set
forth in ASC 350, “Intangibles — Goodwill and Other” ("ASC 350"). We test goodwill for impairment at the reporting
unit level, which is an operating segment or one level below an operating segment, referred to as a component.
ASC 350 allows an optional qualitative assessment, prior to a quantitative assessment test, to determine
whether it is “more likely than not” that the fair value of a reporting unit exceeds its carrying amount. We generally
do not attempt a qualitative assessment and move directly to the quantitative test. As part of the quantitative test,
we utilize the present value of expected cash flows or, as appropriate, a combination of the present value of
expected cash flows and the guideline public company method to determine the estimated fair value of our reporting
units. This present value model requires management to estimate future cash flows, the timing of these cash flows,
and a discount rate (based on a weighted average cost of capital), which represents the time value of money and
the inherent risk and uncertainty of the future cash flows. The assumptions we use to estimate future cash flows
are consistent with the assumptions that the reporting units use for internal planning purposes, which we believe
would be generally consistent with that of a market participant. If we determine that the estimated fair value of the
55
reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired. If we determine that the
carrying amount of the reporting unit exceeds its estimated fair value, we measure the goodwill impairment charge
based on the excess of a reporting unit’s carrying amount over its fair value as required under Accounting Standards
Update (“ASU”) 2017-04, “Simplifying the Test for Goodwill Impairment”, which we early adopted starting with our
fiscal 2020 annual goodwill impairment test on July 1, 2020. We describe our accounting policy for goodwill further
in “Note 1. Description of Business and Summary of Significant Accounting Policies — Goodwill and Long-
Lived Assets” of the Notes to Consolidated Financial Statements.
During the fourth quarter of fiscal 2022, we completed our annual goodwill impairment testing. We considered
factors such as, but not
limited to, our expectations for the short-term and long-term impacts of COVID,
macroeconomic conditions, industry and market considerations, and financial performance, including planned
revenue, earnings and capital investments of each reporting unit. The discount rate used for each reporting unit
ranged from 9.5% to 13.0%. We used perpetual growth rates ranging from 0.0% to 1.0%. All reporting units that
have goodwill were noted to have a fair value that exceeded their carrying values by more than 15% each. If we
had concluded that it was appropriate to increase the discount rate we used by 100 basis points, the fair value of
each of our reporting units would have continued to exceed its carrying value. No reporting unit failed the annual
impairment test; however, the fair value of the Corrugated Packaging reporting unit only exceeded its carrying value
by 15% at July 1, 2022. In our fiscal 2022 annual goodwill impairment analysis, projected future cash flows for the
Corrugated Packaging reporting unit were discounted at 10.0%. Based on the discounted cash flow model and
holding other valuation assumptions constant, the discount rate would have to be increased to 11.9%, in order for
the estimated fair value of the reporting unit to fall below its carrying value.
At September 30, 2022, the Corrugated Packaging, Consumer Packaging, Global Paper and Distribution
reporting units had $2,802.8 million, $1,588.4 million, $1,366.5 million and $137.5 million of goodwill, respectively.
Our long-lived assets, including intangible assets, remain recoverable. Subsequent to our annual test, we monitored
industry economic trends until the end of our fiscal year and determined no additional testing for goodwill impairment
was warranted. We have not made any material changes to our impairment loss assessment methodology during
the past three fiscal years. Currently, we do not believe there is a reasonable likelihood that there will be a material
change in future assumptions or estimates we use to calculate impairment losses. However, we cannot predict or
control market factors, including the impact of macroeconomic conditions, and there are certain risks inherent to
our operations, as described in Item 1A. “Risk Factors”. If actual results are not consistent with our assumptions
and estimates, we may be exposed to additional impairment losses that could be material.
See Item 1A. “Risk Factors — We Have a Significant Amount of Goodwill and Other Intangible Assets
and a Write-Down Could Materially Adversely Impact Our Operating Results and Stockholders' Equity”.
Long-Lived Assets
We follow the provisions included in ASC 360, “Property, Plant, and Equipment” in determining whether the
carrying value of any of our long-lived assets, including right-of-use assets (“ROU”) and amortizable intangibles
is impaired. We review long-lived assets for impairment when events or changes in
other than goodwill,
circumstances indicate that the carrying amount of the long-lived asset might not be recoverable. If we determine
that indicators of impairment are present, we determine whether the estimated undiscounted cash flows for the
potentially impaired assets are less than the carrying value. This requires management to estimate future cash
flows through operations over the remaining useful life of the asset and its ultimate disposition. The assumptions
we use to estimate future cash flows are consistent with the assumptions we use for internal planning purposes,
updated to reflect current expectations. If our estimated undiscounted cash flows do not exceed the carrying value,
we estimate the fair value of the asset and record an impairment charge if the carrying value is greater than the fair
value of the asset. We estimate fair value using discounted cash flows, observable prices for similar assets, or other
valuation techniques.
Our judgments regarding the existence of impairment indicators are based on legal factors, market conditions
and operational performance. Future events could cause us to conclude that impairment indicators exist and that
assets associated with a particular operation are impaired. Evaluating impairment also requires us to estimate future
operating results and cash flows, which also require judgment by management.
56
Accounting for Income Taxes
Our income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits, reflect
management’s best assessment of estimated current and future taxes to be paid. Significant judgments and
estimates are required in determining the consolidated income tax expense. In evaluating our ability to recover our
deferred tax assets within the jurisdiction from which they arise, we consider all available positive and negative
evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax
planning strategies, recent financial operations and their associated valuation allowances, if any. We use significant
judgment in (i) determining whether a tax position, based solely on its technical merits, is “more likely than not” to
be sustained upon examination and (ii) measuring the tax benefit as the largest amount of benefit that is “more
likely than not” to be realized upon ultimate settlement. We do not record any benefit for the tax positions where we
do not meet the “more likely than not” initial recognition threshold. Income tax positions must meet a “more likely
than not” recognition threshold at the effective date to be recognized. We generally recognize interest and penalties
related to unrecognized tax benefits in income tax expense in the consolidated statements of operations. Resolution
of the uncertain tax positions could have a material adverse effect on our cash flows or materially benefit our results
of operations in future periods depending upon their ultimate resolution. A 1% change in our effective tax rate would
have increased or decreased tax expense by approximately $12 million for fiscal 2022. A 1% change in our effective
tax rate used to compute deferred tax liabilities and assets, as recorded on the September 30, 2022 consolidated
balance sheet, would have increased or decreased tax expense by approximately $117 million for fiscal 2022.
Pension
The funded status of our qualified and non-qualified U.S. and non-U.S. pension plans decreased $167.3 million
in fiscal 2022. Our U.S. qualified and non-qualified pension plans were overfunded by $243.4 million as of
September 30, 2022. Our non-U.S. pension plans were under funded by $5.6 million as of September 30, 2022.
Our U.S. pension plan benefit obligations were positively impacted in fiscal 2022 primarily by a 264-basis point
increase in the discount rate compared to the prior measurement date. The non-U.S. pension plan obligations were
positively impacted in fiscal 2022 by a 249-basis point increase in the discount rate compared to the prior
measurement date.
The determination of pension obligations and pension expense requires various assumptions that can
significantly affect liability and expense amounts, such as the expected long-term rate of return on plan assets,
discount rates, projected future compensation increases and mortality rates for each of our plans. These
assumptions are determined annually in conjunction with our actuary. The accounting for these matters involves
the making of estimates based on current facts, circumstances and assumptions that, in management’s judgment,
could change in a manner that would materially affect management’s future estimates with respect to such matters
and, accordingly, could cause our future reported financial condition and results of operations to differ materially
from those that we are currently reporting based on management’s current estimates.
A 25-basis point change in the discount rate, compensation level, expected long-term rate of return on plan
assets and interest crediting rate, factoring in our corridor (as defined herein) as appropriate, would have had the
following effect on fiscal 2022 pension expense (amounts in the table in parentheses reflect additional income, in
millions):
Discount rate
Compensation level
Expected long-term rate of return on plan assets
Interest crediting rate
New Accounting Standards
Pension Plans
25 Basis
Point
Increase
25 Basis
Point
Decrease
$
$
$
$
4.6 $
0.1 $
(17.1) $
0.1 $
7.6
(0.1)
17.1
(0.1)
See “Note 1. Description of Business and Summary of Significant Accounting Policies” of the Notes to
Consolidated Financial Statements for a full description of recent accounting pronouncements, including the
respective expected dates of adoption and expected effects on our results of operations and financial condition.
57
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk from changes in, among other things, interest rates, foreign currencies and
commodity prices. We aim to identify and understand these risks and then implement strategies to manage them.
When evaluating these strategies, we evaluate the fundamentals of each market, our sensitivity to movements in
pricing, and underlying accounting and business implications. Our chief executive officer or chief financial officer
must approve the execution of all transactions contemplated in accordance with our Financial and Commodity Risk
Management Corporate Policy. The sensitivity analyses we present below do not consider the effect of possible
adverse changes in the general economy, nor do they consider additional actions we may take to mitigate our
exposure to such changes. We may not be successful in managing these risks.
Containerboard and Paperboard Shipments
We are exposed to market risk related to our sales of containerboard and paperboard. We sell a significant
portion of our mill production and converted products pursuant to contracts that provide that prices are either fixed
for specified terms or provide for price adjustments based on negotiated terms, including changes in specified index
prices. We have the capacity to annually ship approximately 11.1 million tons from our containerboard mills and
approximately 4.1 million tons from our paperboard mills. Although our mill system operating rates may vary from
year to year due to changes in market and other factors, our simple average mill system operating rates for the last
three years averaged 91%. A hypothetical $10 per ton change in the price of containerboard and paperboard
throughout the year based on our capacity would impact our sales by approximately $111 million and $41 million,
respectively. See Item 1A. “Risk Factors — Our Earnings Are Highly Dependent on Volumes”.
Energy
Energy is one of the most significant costs of our mill operations. The cost of natural gas (typically measured in
one million British Thermal Units ("MMBtu"), coal, oil, electricity, diesel and wood by-products (biomass) at times
has fluctuated significantly.
In our recycled paperboard mills, we use primarily natural gas and electricity,
supplemented with coal and fuel oil to generate steam used in the paper making process and, at a few mills, to
generate electricity used on site. In our virgin fiber mills, we use biomass, natural gas and coal to generate steam
used in the pulping and paper making processes and to generate some or all of the electricity used on site. We
primarily use electricity and natural gas to operate our converting facilities. We generally purchase these products
from suppliers at market or tariff rates. From time to time, we use commodity contracts to hedge energy exposures,
as discussed in more detail below.
We spent approximately $1,263 million and $903 million on all energy sources in fiscal 2022 and 2021,
respectively to operate our facilities. The increase in energy costs in fiscal 2022 was primarily due to inflation.
Natural gas and electricity each account for approximately 30% to 50% of our energy purchases depending upon
pricing. We consumed approximately 86 million MMBtu of natural gas in fiscal 2022, although the amount of energy
we consume may vary from year to year due to production levels and other factors. A hypothetical 10% change in
the price of energy throughout the year would impact our cost of energy by approximately $126 million based on
fiscal 2022 pricing and consumption.
Recycled Fiber
Recycled fiber is the principal raw material we use in the production of recycled paperboard and a portion of
our containerboard. In fiscal 2022 and 2021, we consumed approximately 5.7 million and 5.8 million tons of recycled
fiber, respectively. Recycled fiber prices can fluctuate significantly. Our purchases of old corrugated containers and
double-lined kraft clippings account for our largest recycled fiber costs and made up approximately 85% to 90% of
our recycled fiber purchases in fiscal 2022. The remaining 10% to 15% of our recycled fiber purchases consisted
of a number of other grades of recycled paper. The mix of recycled fiber may vary due to factors such as market
demand, availability and pricing. Recycled fiber prices increased in fiscal 2022 from prior year levels. While the
amount of recycled fiber we consume may vary from year to year due to production levels and other factors, in fiscal
2023 we expect to consume approximately 5.1 million tons of recycled fiber. The reduction in fiscal 2023 represents
the mill actions taken in the last six months and other factors. Based on our estimated consumption, a hypothetical
$10 per ton change in recycled fiber prices for a fiscal year would impact our costs by approximately $51 million.
58
Virgin Fiber
Virgin fiber is the principal raw material we use in the production of a portion of our containerboard, bleached
paperboard and market pulp. While virgin fiber prices have generally been more stable than recycled fiber prices,
they also fluctuate, particularly due to significant changes in weather, such as during prolonged periods of heavy
rain or drought, or during housing construction slowdowns or accelerations. Virgin fiber prices increased in fiscal
2022 from prior year levels. A hypothetical 10% change in virgin fiber prices in our mills for a fiscal year would
impact our costs by approximately $155 million.
Freight
Inbound and outbound freight is a significant expenditure for us. Factors that influence our freight expense
include distance between our shipping and delivery locations, distance from customers and suppliers, mode of
transportation (rail, truck, intermodal and ocean) and freight rates, which are influenced by supply and demand and
fuel costs, primarily diesel. We experienced higher freight costs and some distribution delays in both fiscal 2022
and 2021. A hypothetical 10% change in freight costs for fiscal 2022 and 2021 would impact our costs by
approximately $220 million and $190 million, respectively. In fiscal 2023, we expect to consume approximately 85
million gallons of diesel. See Item 1A. “Risk Factors — We May Face Increased Costs For, or Inadequate
Availability of, Raw Materials, Energy and Transportation”.
Interest Rates
We are exposed to changes in interest rates, primarily as a result of our short-term and long-term debt. As
discussed below, we may from time to time use interest rate swap agreements to manage the interest rate
characteristics of a portion of our outstanding debt. Based on the amounts and mix of our fixed and floating rate
debt at September 30, 2022 and 2021, including the impact of any interest rate swaps, if market interest rates
change an average of 100 basis points, our annual interest expense would be impacted by approximately $10
million and $11 million, respectively. We determined these amounts by considering the impact of the hypothetical
interest rates on our borrowing costs. This analysis does not consider the effects of changes in the level of overall
economic activity that could exist in such an environment. See Item 1A. “Risk Factors — We Have Had Significant
Levels of Indebtedness in the Past and May Incur Significant Levels of Indebtedness in the Future, Which
Could Adversely Affect Our Financial Condition and Impair Our Ability to Operate Our Business”.
Derivative Instruments / Forward Contracts
We periodically may issue and settle foreign currency denominated debt, exposing us to the effect of changes
in spot exchange rates between loan issue and loan repayment dates and changes in spot exchange rates on open
balances at each balance sheet date. From time to time, we may use foreign exchange contracts to hedge these
exposures with terms of generally one to three months. At September 30, 2022, the notional amount of our foreign
currency exchange contract derivative was 8.0 billion Mexican pesos ($389.9 million). At September 30, 2021, the
notional amount of our foreign currency exchange contract derivative was $270.2 million. Based on our open foreign
exchange contracts as of September 30, 2022 and September 30, 2021, the effect of a 1% change in exchange
rates would impact Other (expense) income, net by approximately $4 million and $3 million, respectively. Although
these foreign currency sensitive instruments expose us to market risk, fluctuations in the value of these instruments
are mitigated by expected offsetting fluctuations in the foreign currency denominated debt exposures. The
fluctuation of these instruments may cause future cash settlement of the hedge.
We periodically may also enter into interest rate swaps to manage the interest rate risk associated with a portion
of our outstanding debt but currently have no active interest rate swaps. Interest rate swaps are either designated
for accounting purposes as cash flow hedges of forecasted floating interest payments on variable rate debt or fair
value hedges of fixed rate debt, or we may elect not to treat them as accounting hedges. We may enter into swaps
or forward contracts on certain commodities to manage the price risk associated with forecasted purchases or sales
of those commodities.
In fiscal 2022, we entered into various natural gas commodity derivatives that were designated as cash flow
hedges for accounting purposes. Therefore, the entire change in fair value of the financial derivative instrument is
reported as a component of other comprehensive income and reclassified into earnings in the same line item
associated with the forecasted transaction, and in the same period or periods during which the forecasted
59
transaction affects earnings. At September 30, 2022, the notional amount of our natural gas commodity derivatives
was 18.3 million MMBtu. Based on our open contracts as of September 30, 2022, the effect of a 10% change in the
price per MMBtu would impact Cost of goods sold by approximately $1 million. See “Note 18. Accumulated Other
Comprehensive Loss and Other Comprehensive Income (Loss)” of the Notes to Consolidated Financial
Statements for additional information regarding our natural gas commodity derivatives.
Pension Plans
Our pension plans are influenced by trends in the financial markets and the regulatory environment, among
other factors. Adverse general stock market trends and falling interest rates increase plan costs and liabilities.
During fiscal 2022 and 2021, factoring in our corridor as appropriate, the effect of a 0.25% decrease in the discount
rate would have reduced pre-tax income by approximately $8 million and $15 million, respectively. During fiscal
2022 and 2021, the effect of a 0.25% increase in the discount rate would have decreased pre-tax income by $5
million and increased pre-tax income by $15 million, respectively. Similarly, MEPPs in which we participate could
experience similar circumstances which could impact our funding requirements and therefore expenses. See “Note
5. Retirement Plans — Multiemployer Plans” of the Notes to Consolidated Financial Statements. See also Item
1A. “Risk Factors — We May Incur Withdrawal Liability and/or Increased Funding Requirements in
Connection with Multiemployer Pension Plans”.
Foreign Currency
We predominately operate in markets in the U.S. but derived 18.3% of our net sales in fiscal 2022 from outside
the U.S. through international operations, some of which were transacted in U.S. dollars. In addition, certain of our
domestic operations have sales to foreign customers. Although we are impacted by the exchange rates of a number
of currencies, our largest exposures are generally to the Brazilian Real, British Pound, Canadian dollar, Euro and
Mexican Peso. In fiscal 2022, our largest exposures also included the Polish Zloty, Chinese Yuan and Japanese
Yen.
In conducting our foreign operations, we also make intercompany sales and receive royalties and dividends
denominated in different currencies. These activities expose us to the effect of changes in foreign currency
exchange rates. Flows of foreign currencies into and out of our operations are generally stable and regularly
occurring and are recorded at fair market value in our financial statements.
At times, certain of our foreign subsidiaries have U.S. dollar-denominated external debt. In these instances, we
may hedge the non-functional currency exposure with derivatives. We issue intercompany loans to and receive
foreign cash deposits from our foreign subsidiaries in their local currencies, exposing us to the effect of changes in
spot exchange rates between loan issue and loan repayment dates and changes in spot exchange rates from
deposits. From time to time, we may use foreign-exchange hedge contracts with terms of generally less than one
year to hedge these exposures. Although our derivative and other foreign currency sensitive instruments expose
us to market risk, fluctuations in the value of these instruments are mitigated by expected offsetting fluctuations in
the matched exposures.
During fiscal 2022 and 2021, the effect of a hypothetical 10% change in foreign currencies to which we have
exposure compared to the U.S. dollar would have impacted our income before income taxes by approximately $36
million and $26 million, respectively.
During fiscal 2022 and 2021, the effect of a hypothetical 1% change in exchange rates would have impacted
accumulated other comprehensive income by approximately $32 million and $30 million, respectively. This impact
does not consider the effects of a stronger or weaker U.S. dollar on our ability to compete for export business or
the overall economic activity that could exist in such an environment. Changes in foreign exchange rates could
impact the price and the demand for our products; for instance, a strengthening U.S. dollar may cause exports to
become more expensive to foreign customers and business that have to pay for them in other currencies. See Item
1A. “Risk Factors — We Have Been, And May Be In the Future, Adversely Affected by Factors That Are
Beyond Our Control, Such as U.S. and Worldwide Economic and Financial Market Conditions, and Social
and Political Change”.
60
Item 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements
Description
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income (Loss)
Consolidated Balance Sheets
Consolidated Statements of Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Note 1.
Note 2.
Note 3.
Note 4.
Note 5.
Note 6.
Note 7.
Note 8.
Note 9.
Note 10.
Note 11.
Note 12.
Note 13.
Note 14.
Note 15.
Note 16.
Note 17.
Note 18.
Note 19.
Note 20.
Note 21.
Note 22.
Description of Business and Summary of Significant Accounting Policies
Revenue Recognition
Acquisitions and Investments
Restructuring and Other Costs
Retirement Plans
Income Taxes
Segment Information
Interest
Inventories
Property, Plant and Equipment
Other Intangible Assets
Fair Value
Debt
Leases
Special Purpose Entities
Related Party Transactions
Commitments and Contingencies
Accumulated Other Comprehensive Loss and Other Comprehensive Income (Loss)
Stockholders’ Equity
Share-Based Compensation
Earnings Per Share
Subsequent Events
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial
Reporting
Management’s Annual Report on Internal Control Over Financial Reporting
Page
Reference
62
63
64
65
66
67
67
80
81
81
84
95
99
104
105
105
106
106
108
113
114
115
115
119
121
122
125
126
127
130
132
61
WESTROCK COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
Net sales
Cost of goods sold
Gross profit
Selling, general and administrative excluding intangible
amortization
Selling, general and administrative intangible amortization
(Gain) loss on disposal of assets
Multiemployer pension withdrawal expense (income)
Mineral rights impairment
Restructuring and other costs
Goodwill impairment
Operating profit (loss)
Interest expense, net
Loss on extinguishment of debt
Pension and other postretirement non-service income
Other (expense) income, net
Equity in income of unconsolidated entities
Income (loss) before income taxes
Income tax expense
Consolidated net income (loss)
Less: Net income attributable to noncontrolling interests
Net income (loss) attributable to common stockholders
Basic earnings (loss) per share attributable to common
stockholders
Diluted earnings (loss) per share attributable to common
stockholders
Year Ended September 30,
2021
2020
2022
$
$
21,256.5
17,235.8
4,020.7
18,746.1
15,315.8
3,430.3
$
17,578.8
14,381.6
3,197.2
1,932.6
350.4
(16.9)
0.2
26.0
401.6
—
1,326.8
(318.8)
(8.5)
157.4
(11.0)
72.9
1,218.8
(269.6)
949.2
(4.6)
944.6
$
1,759.3
357.1
4.1
(2.9)
—
31.5
—
1,281.2
(372.3)
(9.7)
134.9
10.9
40.9
1,085.9
(243.4)
842.5
(4.2)
838.3
$
1,624.4
400.5
(16.3)
(1.1)
—
112.7
1,333.2
(256.2)
(393.5)
(1.5)
103.3
9.5
15.8
(522.6)
(163.5)
(686.1)
(4.8)
(690.9)
3.64
$
3.16
$
(2.67)
3.61
$
3.13
$
(2.67)
$
$
$
See Accompanying Notes
62
WESTROCK COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In millions)
Consolidated net income (loss)
Other comprehensive (loss) income, net of tax:
Foreign currency:
Year Ended September 30,
2021
2020
2022
$
949.2
$
842.5
$
(686.1)
Foreign currency translation (loss) gain
(241.5)
124.3
(215.0)
Derivatives:
Deferred loss on cash flow hedges
Reclassification adjustment of net loss on cash
flow hedges included in earnings
Defined benefit pension and other postretirement benefit
plans:
Net actuarial (loss) gain arising during period
Amortization and settlement recognition of net
actuarial loss, included in pension and
postretirement cost
Prior service cost arising during period
Amortization and curtailment recognition of prior
service cost, included in pension and
postretirement cost
Other comprehensive (loss) income, net of tax
Comprehensive income (loss)
Less: Comprehensive income attributable to
noncontrolling interests
Comprehensive income (loss) attributable to common
stockholders
(10.3)
1.4
(0.1)
5.5
(10.0)
3.6
(216.3)
165.6
24.2
6.4
(0.2)
6.1
(454.4)
494.8
25.5
(4.2)
4.5
321.1
1,163.6
35.4
(19.6)
3.8
(177.6)
(863.7)
(5.4)
(4.5)
(4.5)
$
489.4
$
1,159.1
$
(868.2)
See Accompanying Notes
63
WESTROCK COMPANY
CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable (net of allowances of $66.3 and $68.1)
Inventories
Other current assets
Assets held for sale
Total current assets
Property, plant and equipment, net
Goodwill
Intangibles, net
Restricted assets held by special purpose entities
Prepaid pension asset
Other assets
Total assets
LIABILITIES AND EQUITY
Current liabilities:
Current portion of debt
Accounts payable
Accrued compensation and benefits
Other current liabilities
Total current liabilities
Long-term debt due after one year
Pension liabilities, net of current portion
Postretirement benefit liabilities, net of current portion
Non-recourse liabilities held by special purpose entities
Deferred income taxes
Other long-term liabilities
Commitments and contingencies (Note 17)
Redeemable noncontrolling interests
Equity:
Preferred stock, $0.01 par value; 30.0 million shares authorized; no
shares outstanding
Common stock, $0.01 par value; 600.0 million shares authorized;
254.4 million and 265.0 million shares outstanding at
September 30, 2022 and September 30, 2021, respectively
Capital in excess of par value
Retained earnings
Accumulated other comprehensive loss
Total stockholders’ equity
Noncontrolling interests
Total equity
Total liabilities and equity
September 30,
2022
2021
$
$
$
$
260.2
2,683.9
2,317.1
689.8
34.4
5,985.4
10,081.4
5,895.2
2,920.6
1,253.0
440.3
1,829.6
28,405.5
212.2
2,252.1
627.9
810.6
3,902.8
7,575.0
189.4
105.4
1,117.8
2,761.9
1,328.0
5.5
—
2.5
10,639.4
2,214.4
(1,454.3)
11,402.0
17.7
11,419.7
28,405.5
$
$
$
$
290.9
2,586.9
2,173.3
597.6
10.9
5,659.6
10,570.1
5,959.2
3,318.8
1,260.5
674.3
1,811.8
29,254.3
168.8
2,123.7
656.8
694.8
3,644.1
8,025.3
254.7
133.7
1,127.3
2,944.4
1,433.1
1.7
—
2.7
11,058.8
1,607.9
(999.1)
11,670.3
19.7
11,690.0
29,254.3
See Accompanying Notes
64
WESTROCK COMPANY
CONSOLIDATED STATEMENTS OF EQUITY
(In millions, except per share data)
Number of Shares of Common Stock Outstanding:
Balance at beginning of fiscal year
Issuance of common stock, net of stock received for tax
withholdings
Purchases of common stock (1)
Balance at end of fiscal year
Common Stock:
Balance at beginning of fiscal year
Issuance of common stock, net of stock received for tax
withholdings
Purchases of common stock (1)
Balance at end of fiscal year
Capital in Excess of Par Value:
Balance at beginning of fiscal year
Compensation expense under share-based plans
Issuance of common stock, net of stock received for tax
withholdings
Purchases of common stock (1)
Other
Balance at end of fiscal year
Retained Earnings:
Balance at beginning of fiscal year
Adoption of accounting standards (2)
Net income (loss) attributable to common stockholders
Dividends declared (per share - $1.00, $0.88 and $1.33) (3)
Issuance of common stock, net of stock received for tax
withholdings
Purchases of common stock (1)
Balance at end of fiscal year
Accumulated Other Comprehensive Loss:
Balance at beginning of fiscal year
Adoption of ASU 2018-02 reclassification of stranded
tax effects resulting from Tax Reform
Other comprehensive (loss) income, net of tax
Balance at end of fiscal year
Total Stockholders’ equity
Noncontrolling Interests: (4)
Balance at beginning of fiscal year
Net (loss) income
Distributions and adjustments to noncontrolling interests
Balance at end of fiscal year
Total Equity
Year Ended September 30,
2021
2020
2022
265.0
2.0
(12.6)
254.4
260.4
7.1
(2.5)
265.0
$
2.7
$
2.6
$
—
(0.2)
2.5
11,058.8
93.4
11.9
(524.3)
(0.4)
10,639.4
1,607.9
—
944.6
(263.0)
(2.1)
(73.0)
2,214.4
0.1
—
2.7
10,916.3
88.5
158.8
(103.7)
(1.1)
11,058.8
1,031.6
(3.8)
838.3
(236.3)
(0.5)
(21.4)
1,607.9
257.8
2.6
—
260.4
2.6
—
—
2.6
10,739.4
130.3
46.6
—
—
10,916.3
1,997.1
73.5
(690.9)
(348.1)
—
—
1,031.6
(999.1)
(1,319.9)
(1,069.2)
—
(455.2)
(1,454.3)
11,402.0
19.7
(1.5)
(0.5)
17.7
11,419.7
$
—
320.8
(999.1)
11,670.3
16.9
1.7
1.1
19.7
11,690.0
$
(73.4)
(177.3)
(1,319.9)
10,630.6
14.3
2.7
(0.1)
16.9
10,647.5
$
(1)
(2)
(3)
(4)
In fiscal 2022, we repurchased approximately 12.6 million shares of our Common Stock for an aggregate cost of $597.5 million. In fiscal
2021, we repurchased approximately 2.5 million shares of our Common Stock for an aggregate cost of $125.1 million (a portion of which
settled after September 30, 2021).
For fiscal 2021, the amount relates to the adoption of ASU 2016-13, “Financial Instruments – Credit Losses: Measurement of Credit Losses
on Financial Instruments”. For fiscal 2020, the amount primarily relates to the adoption of ASU 2018-02, “Income Statement – Reporting
Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”.
Includes cash dividends paid and dividend equivalent units on certain restricted stock units and restricted stock.
Excludes amounts related to contingently redeemable noncontrolling interests, which are separately classified outside of permanent equity
in the consolidated balance sheets.
See Accompanying Notes
65
WESTROCK COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
2022
Year Ended September 30,
2021
2020
$
949.2
$
842.5
$
(686.1)
(In millions)
Operating activities:
Consolidated net income (loss)
Adjustments to reconcile consolidated net income (loss) to net
cash provided by operating activities:
Depreciation, depletion and amortization
Cost of real estate sold
Deferred income tax (benefit) expense
Share-based compensation expense
401(k) match and company contribution in common stock
Pension and other postretirement funding more than expense (income)
Cash surrender value increase in excess of premiums paid
Equity in income of unconsolidated entities
Gain on sale of sawmill
Gain on sale of investment
Goodwill impairment
Other impairment adjustments
Mineral rights impairment
(Gain) loss on disposal of plant, equipment and other, net
Other
Change in operating assets and liabilities, net of acquisitions and
divestitures:
Accounts receivable
Inventories
Other assets
Accounts payable
Income taxes
Accrued liabilities and other
Net cash provided by operating activities
Investing activities:
Capital expenditures
Cash paid for purchase of businesses, net of cash acquired
Proceeds from corporate owned life insurance
Proceeds from sale of sawmill
Proceeds from sale of investment
Proceeds from sale of property, plant and equipment
Proceeds from property, plant and equipment insurance settlement
Other
Net cash used for investing activities
Financing activities:
Proceeds from issuance of notes
Additions to revolving credit facilities
Repayments of revolving credit facilities
Additions to debt
Repayments of debt
Changes in commercial paper, net
Other debt additions (repayments), net
Issuances of common stock, net of related tax withholdings
Purchases of common stock
Cash dividends paid to stockholders
Other
Net cash used for financing activities
Effect of exchange rate changes on cash, cash equivalents and restricted cash
(Decrease) increase in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of period
Cash, cash equivalents and restricted cash at end of period
$
See Accompanying Notes
66
1,488.6
—
(98.2)
93.3
2.5
(135.6)
(2.0)
(72.9)
—
—
—
325.5
26.0
(17.5)
(2.5)
(161.5)
(310.4)
79.1
79.5
16.9
(239.6)
2,020.4
(862.6)
(7.0)
60.8
—
—
28.2
1.7
2.9
(776.0)
—
377.4
(373.3)
503.2
(991.5)
—
31.5
5.0
(600.0)
(259.5)
25.9
(1,281.3)
6.2
(30.7)
290.9
260.2
$
1,460.0
—
(38.3)
88.6
136.1
(111.5)
(49.4)
(40.9)
(16.5)
(16.0)
—
34.6
—
3.7
11.7
(428.9)
(200.0)
(379.6)
430.3
0.7
552.8
2,279.9
(815.5)
—
44.9
58.5
29.5
6.3
3.2
(2.9)
(676.0)
—
435.0
(415.0)
259.9
(1,544.3)
—
23.1
18.2
(122.4)
(233.8)
(1.1)
(1,580.4)
16.3
39.8
251.1
290.9
$
1,487.0
16.1
43.0
130.3
20.8
(80.1)
(25.2)
(15.8)
—
—
1,333.2
25.8
—
(13.2)
0.6
30.5
21.8
(202.4)
(86.4)
(27.6)
98.4
2,070.7
(978.1)
—
16.9
—
—
35.0
6.5
(1.8)
(921.5)
598.6
428.0
(528.2)
696.4
(1,449.2)
(339.2)
(80.3)
22.2
—
(344.5)
(24.9)
(1,021.1)
(28.6)
99.5
151.6
251.1
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1.
Description of Business and Summary of Significant Accounting Policies
Description of Business
Unless the context otherwise requires, “we”, “us”, “our”, “WestRock” and “the Company” refer to the business
of WestRock Company, its wholly-owned subsidiaries and its partially-owned consolidated subsidiaries.
WestRock is a multinational provider of sustainable fiber-based paper and packaging solutions. We partner with
our customers to provide differentiated, sustainable paper and packaging solutions that help our customers win in
the marketplace. Our team members support customers around the world from our operating and business locations
in North America, South America, Europe, Asia and Australia.
Basis of Presentation and Principles of Consolidation
The preparation of financial statements in accordance with GAAP requires management to use judgment in the
application of accounting policies, including making estimates and assumptions. Actual results may differ from these
estimates.
The consolidated financial statements include the accounts of WestRock and our partially owned subsidiaries
for which we have a controlling financial interest, including variable interest entities for which we are the primary
beneficiary.
Equity investments in which we exercise significant influence but do not control and are not the primary
beneficiary are accounted for using the equity method. Investments without a readily determinable value in which
we are not able to exercise significant influence over the investee are accounted under the measurement alternative
(i.e., cost less impairment, adjusted for any qualifying observable price changes). Our investments accounted for
under the equity method or the measurement alternative method are not material either individually or in the
aggregate. We have eliminated all significant intercompany accounts and transactions. See “Note 7. Segment
Information” for our equity method investments.
Reclassifications and Adjustments
Effective October 1, 2021, we reorganized our segment reporting to four reportable segments: Corrugated
Packaging, Consumer Packaging, Global Paper and Distribution. Prior period amounts have been recast throughout
the Notes to Consolidated Financial Statements, as applicable, to conform to the new segment structure. These
changes did not impact our consolidated financial statements. See “Note 7 Segment Information” for additional
information.
Certain amounts in prior periods have been reclassified to conform with the current year presentation.
COVID Pandemic
The global impact of the COVID has affected our operational and financial performance to varying degrees.
The extent of the effects of future public health crises, including a resurgence of COVID, or related containment
measures and government responses are highly uncertain and cannot be predicted. Our net sales, primarily in the
last half of fiscal 2020, were negatively impacted by COVID, and we have experienced and are currently
experiencing higher supply chain costs and tight labor markets in part due to the impacts of COVID.
Ransomware Incident
As previously disclosed, on January 23, 2021 we detected a ransomware incident impacting certain of our
systems. Promptly upon our detection of this incident, we initiated response and containment protocols and our
security teams, supplemented by leading cyber defense firms, worked to remediate this incident. These actions
included taking preventative measures, including shutting down certain systems out of an abundance of caution, as
67
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
well as taking steps to supplement existing security monitoring, scanning and protective measures. We notified law
enforcement and contacted our customers to apprise them of the situation.
We undertook extensive efforts to identify, contain and recover from this incident quickly and securely. Our
teams worked to maintain our business operations and minimize the impact on our customers and team members.
In our Form 10-Q for the second quarter of fiscal 2021, we announced that all systems were back in service. All of
our mills and converting locations began producing and shipping paper and packaging at pre-ransomware levels in
March 2021 or earlier. Our mill system production was approximately 115,000 tons lower than planned for the
quarter ended March 31, 2021 as a result of this incident. While shipments from some of our facilities initially lagged
behind production levels, this gap closed as systems were restored during the second quarter of fiscal 2021. In
locations where technology issues were identified, we used alternative methods, in many cases manual methods,
to process and ship orders. We systematically brought our information systems back online in a controlled, phased
approach.
We estimated the pre-tax income impact of the lost sales and operational disruption of this incident on our
operations in the second quarter of fiscal 2021 was approximately $50 million, as well as approximately $20 million
of ransomware recovery costs, primarily professional fees. In addition, we incurred approximately $9 million of
ransomware recovery costs in the third quarter of fiscal 2021. In the fourth quarter of fiscal 2021, we recorded a
$15 million credit for preliminary recoveries – approximately $10 million as a reduction of SG&A excluding intangible
amortization and approximately $5 million as a reduction of Cost of goods sold. In fiscal 2022, we recorded a $57.2
million credit for ransomware insurance recoveries. We recorded $50.6 million of business interruption recoveries
as a reduction of Cost of goods sold and $6.6 million of direct cost recoveries as a reduction of SG&A excluding
intangible amortization. We present ransomware recoveries received as Net cash provided by operating activities
in our consolidated statements of cash flows. While we expect to recover substantially all of the remaining
ransomware losses from cyber and business interruption insurance from various carriers in future periods, the
recovery process proceeds from carrier to carrier up the coverage layers after the preceding layer is resolved, which
lends itself to a lengthy process. Additionally, discussions and/or disputes over the extent of insurance coverage
for claims are not uncommon and generally take time to be resolved.
In order to contain and remediate the cybersecurity incident, we engaged a leading cybersecurity defense firm
to complete a forensics investigation and performed short-term mitigation actions in the latter half of 2021.
Mitigations performed included the execution of a company-wide password reset and the deployment of security
tooling across all our servers and workstations. Additionally, to address longer term security objectives, we
developed a multi-year security and resiliency roadmap, aimed to strengthen the company’s ability to detect,
respond, and recover from security incidents. This roadmap included initiatives to bolster our information security
posture across the enterprise, and to deploy technology and process improvements to allow for faster and more
effective incident response and recovery. More specifically, key areas of focus for the resiliency roadmap included:
strengthening security monitoring controls, improving security at our operating locations, automating identity and
access management, expanding third-party security, modernizing the network and file and print infrastructure, and
updating backup capabilities.
In fiscal 2022, we realized incremental progress against our resiliency objectives. We improved our mean-time-
to-resolve security incidents, deployed endpoint detection and response technology across all of our workstation
and server population, transitioned all of our local drives to cloud-based storage, and progressed against key goals
to modernize the security and infrastructure of our operating locations. In fiscal 2023, we expect to continue our
resiliency roadmap efforts. Quarterly progress, as well as key risks and issues, are reported to the Audit Committee
for oversight and monitoring.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates
and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial
68
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
statements and the reported amounts of revenues and expenses during the reporting period. Actual results may
differ from those estimates, and the differences could be material.
We base our estimates on the current information available, our experiences and various other assumptions
believed to be reasonable under the circumstances. The process of determining significant estimates is fact specific
and takes into account factors such as historical experience, current and expected economic conditions, product
mix, and in some cases, actuarial techniques. The global impact of the COVID pandemic may also affect our
accounting estimates, which may materially change from period to period due to changing market factors. We
regularly evaluate these significant factors and make adjustments where facts and circumstances dictate.
Revenue Recognition
We generally recognize revenue on a point-in-time basis when the customer takes title to the goods and
assumes the risks and rewards for the goods, which coincide with the transfer of control of our goods to the
customer. Additionally, we manufacture certain customized products that have no alternative use to us (since they
are made to specific customer specifications), and we believe that for certain customers we have a legally
enforceable right to payment for performance completed to date on these products, including a reasonable profit.
For products that meet these two criteria, we recognize revenue “over time”. This results in revenue recognition
prior to the date of shipment or title transfer for these products and results in the recognition of a contract asset
(unbilled receivables) with a corresponding reduction in finished goods inventory on our balance sheet.
We net provisions for discounts, returns, allowances, customer rebates and other adjustments against our gross
sales. Such adjustments are based on historical experience which is consistent with the most likely method as
provided in ASC 606 “Revenue from Contracts with Customers” (“ASC 606”).
As permitted by ASC 606, we have elected to treat costs associated with obtaining new contracts as expenses
when incurred if the amortization period of the asset we would recognize is one year or less. We do not record
interest income when the difference in timing of control transfer and customer payment is one year or less. We also
account
for sales and other taxes that are imposed on and concurrent with individual revenue-producing
transactions between a customer and us on a net basis which excludes the taxes from our net sales.
Shipping and Handling Costs
We classify shipping and handling costs, such as freight to our customers’ destinations, as a component of cost
of goods sold. When shipping and handling costs are included in the sales price charged for our products, they are
recognized in net sales since we treat shipping and handling as fulfilment activities.
Cash Equivalents
We consider all highly liquid investments that mature three months or less from the date of purchase to be cash
equivalents. The carrying amounts of our cash and cash equivalents approximate fair market values. We place our
cash and cash equivalents primarily with large credit worthy banks, which limits the amount of our credit exposure.
Accounts Receivable and Allowances
We derive our accounts receivable from revenue earned from customers located primarily in North America,
South America, Europe, Asia and Australia. Given our diverse customer base, we have limited exposure to credit
loss from any particular customer or industry segment, and hence we generally do not require collateral. We perform
an evaluation of lifetime expected credit losses inherent in our accounts receivable at each balance sheet date.
Such an evaluation includes consideration of historical loss experience, trends in customer payment frequency,
present economic conditions, and judgment about the future financial health of our customers and industry sector.
The average of our receivables collection is within 30 to 60 days. We are a party to accounts receivable sales
agreements to sell to third-party financial
institutions all of the short-term receivables generated from certain
customer trade accounts. See “Note 12. Fair Value — Accounts Receivable Sales Agreements”.
69
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
We state accounts receivable at the amount owed by the customer, net of an allowance for estimated credit
impairment losses, returns and allowances, cash discounts and other adjustments. We do not discount accounts
receivable because we generally collect accounts receivable over a relatively short time. We charge off receivables
when they are determined to be no longer collectible. We recorded bad debt expense of $4.6 million and $19.9
million in fiscal 2022 and 2020, respectively, and a credit of $9.4 million in fiscal 2021.
The following table represents a summary of the changes in the reserve for allowance for doubtful accounts,
returns and allowances and cash discounts for fiscal 2022, 2021 and 2020 (in millions):
Balance at beginning of fiscal year
Reduction in sales and charges to costs and expenses
Deductions
Balance at end of fiscal year
2022
2021
2020
$
$
68.1
261.9
(263.7)
66.3
$
$
66.3
236.5
(234.7)
68.1
$
$
53.2
270.8
(257.7)
66.3
Inventories
We value our U.S. inventories at the lower of cost or market, with cost for the majority of our U.S. inventories
determined on the last-in first-out (“LIFO”) basis. We value all other inventories at the lower of cost and net realizable
value, with cost determined using methods that approximate cost computed on a first-in first-out inventory valuation
method (“FIFO”) basis. These other inventories are primarily foreign inventories, distribution business inventories,
spare parts inventories and certain inventoried supplies and aggregate to approximately 35% and 36% of FIFO cost
of all inventory at September 30, 2022 and 2021, respectively. See “Note 9. Inventories” for additional information.
Prior to the application of the LIFO method, our U.S. operating divisions use a variety of methods to estimate
the FIFO cost of their finished goods inventories. Such methods include standard costs, or average costs computed
by dividing the actual cost of goods manufactured by the tons produced and multiplying this amount by the tons of
inventory on hand. Lastly, certain operations calculate a ratio, on a plant-by-plant basis, the numerator of which is
the cost of goods sold and the denominator is net sales. This ratio is applied to the estimated sales value of the
finished goods inventory. Variances and other unusual items are analyzed to determine whether it is appropriate to
include those items in the value of inventory. Examples of variances and unusual items that are considered to be
current period charges include, but are not limited to, production levels, freight, handling costs, and wasted materials
(spoilage) that are determined to be abnormal. Costs include raw materials and supplies, direct labor, indirect labor
related to the manufacturing process and depreciation and other factory overheads. Our inventoried spare parts
are measured at average cost.
Leased Assets
We adopted the provisions of ASC 842, “Leases” on October 1, 2019 using the modified retrospective approach
and, as a result, did not restate prior periods. We elected the package of three practical expedients permitted within
the standard pursuant to which we did not reassess initial direct costs, lease classification or whether our contracts
contain or are leases. We lease various real estate, including certain operating facilities, warehouses, office space
and land. We also lease material handling equipment, vehicles and certain other equipment. We record our
operating lease ROU assets and liabilities at the commencement date of the lease based on the present value of
lease payments over the lease term.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our
obligation to make lease payments arising from the lease. Our leases may include options to extend or terminate
the lease. These options to extend are included in the lease term when it is reasonably certain that we will exercise
that option. While some leases provide for variable payments, they are not included in the ROU assets and liabilities
because they are not based on an index or rate. Variable payments for real estate leases primarily relate to common
area maintenance, insurance, taxes and utilities. Variable payments for equipment, vehicles and leases within
supply agreements primarily relate to usage, repairs, and maintenance. As the implicit rate is not readily
determinable for our leases, we apply a portfolio approach using an estimated incremental borrowing rate to
determine the initial present value of lease payments over the lease terms on a collateralized basis over a similar
term, which is based on market and company specific information. We use the unsecured borrowing rate and risk-
70
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
adjust that rate to approximate a collateralized rate, and apply the rate based on the currency of the lease, which
is updated on a monthly basis for measurement of new lease liabilities.
We have made an accounting policy election to not recognize an ROU asset and liability for leases with a term
of 12 months or less unless the lease includes an option to renew or purchase the underlying asset that we are
reasonably certain to exercise. In addition, the Company has applied the practical expedient to account for the lease
and non-lease components as a single lease component for all of the Company's leases. See “Note 14. Leases”
for additional information.
Property, Plant and Equipment
We record property, plant and equipment at cost
includes major
expenditures for improvements and replacements that extend useful lives, increase capacity, increase revenues or
reduce costs, while normal maintenance and repairs are expensed as incurred. For financial reporting purposes,
we provide depreciation and amortization primarily on a straight-line method generally over the estimated useful
lives of the assets as follows:
less accumulated depreciation. Cost
Buildings and building improvements
Machinery and equipment
Transportation equipment
15-40 years
3-25 years
3-8 years
Generally, our machinery and equipment have estimated useful lives between 3 and 25 years; however, select
portions of machinery and equipment primarily at our mills have estimated useful lives up to 44 years. Greater than
90% of the cost of our mill assets have useful lives of 25 years or less. Leasehold improvements are depreciated
over the shorter of the asset life or the lease term, generally between 3 and 10 years.
Goodwill and Long-Lived Assets
In accordance with ASC 350, we review the carrying value of our goodwill annually at the beginning of the fourth
quarter of each fiscal year, or more often if events or changes in circumstances indicate that the carrying amount
may exceed fair value. We test goodwill for impairment at the reporting unit level, which is an operating segment or
one level below an operating segment, referred to as a component. A component of an operating segment is a
reporting unit if the component constitutes a business for which discrete financial information is available and
two or more
segment management regularly reviews the operating results of
components of an operating segment are aggregated and deemed a single reporting unit if the components have
similar economic characteristics. The amount of goodwill acquired in a business combination that is assigned to
one or more reporting units as of the acquisition date is the excess of the purchase price of the acquired businesses
(or portion thereof) included in the reporting unit, over the fair value assigned to the individual assets acquired or
liabilities assumed from a market participant perspective. Goodwill is assigned to the reporting unit(s) expected to
benefit from the synergies of the combination even though other assets or liabilities of the acquired entity may not
be assigned to that reporting unit. We determine recoverability by comparing the estimated fair value of the reporting
unit to which the goodwill applies to the carrying value, including goodwill, of that reporting unit. We determine the
fair value of each reporting unit using the discounted cash flow method or, as appropriate, a combination of the
discounted cash flow method and the guideline public company method.
that component. However,
ASC 350 allows an optional qualitative assessment, prior to a quantitative assessment test, to determine
whether it is “more likely than not” that the fair value of a reporting unit exceeds its carrying amount. We generally
do not attempt a qualitative assessment and move directly to the quantitative test. As part of the quantitative test,
we utilize the present value of expected cash flows or, as appropriate, a combination of the present value of
expected cash flows and the guideline public company method to determine the estimated fair value of our reporting
units. This present value model requires management to estimate future cash flows, the timing of these cash flows,
and a discount rate (based on a weighted average cost of capital), which represents the time value of money and
the inherent risk and uncertainty of the future cash flows. Factors that management must estimate when performing
this step in the process include, among other items, sales volume, prices, inflation, discount rates, exchange rates,
tax rates, anticipated synergies and productivity improvements resulting from past acquisitions, capital expenditures
and continuous improvement projects. The assumptions we use to estimate future cash flows are consistent with
71
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
the assumptions that the reporting units use for internal planning purposes, which we believe would be generally
consistent with that of a market participant. Under the guideline public company method, we estimate the fair value
of the reporting unit based on published EBITDA multiples of comparable public companies with similar operations
and economic characteristics. The fair values determined by the discounted cash flow and guideline public company
methods are weighted to arrive at the concluded fair value of the reporting unit. However, in instances where
comparisons to our peers is less meaningful, no weight is placed on the guideline public company method to arrive
at the concluded fair value of the reporting unit. If we determine that the estimated fair value of the reporting unit
exceeds its carrying amount, goodwill of the reporting unit is not impaired. If we determine that the carrying amount
of the reporting unit exceeds its estimated fair value, we measure the goodwill impairment charge based on the
excess of a reporting unit’s carrying amount over its fair value as required under ASU 2017-04 “Simplifying the Test
for Goodwill Impairment”, which we early adopted starting with our fiscal 2020 annual goodwill impairment test on
July 1, 2020.
During the fourth quarter of fiscal 2022, we completed our annual goodwill impairment testing. We considered
factors such as, but not
limited to, our expectations for the short-term and long-term impacts of COVID,
macroeconomic conditions, industry and market considerations, and financial performance, including planned
revenue, earnings and capital investments of each reporting unit. The discount rate used for each reporting unit
ranged from 9.5% to 13.0%. We used perpetual growth rates ranging from 0.0% to 1.0%. All reporting units that
have goodwill were noted to have a fair value that exceeded their carrying values by more than 15% each. If we
had concluded that it was appropriate to increase the discount rate we used by 100 basis points, the fair value of
each of our reporting units would have continued to exceed its carrying value. No reporting unit failed the annual
impairment test; however, the fair value of the Corrugated Packaging reporting unit only exceeded its carrying value
by 15% at July 1, 2022. In our fiscal 2022 annual goodwill impairment analysis, projected future cash flows for the
Corrugated Packaging reporting unit were discounted at 10.0%. Based on the discounted cash flow model and
holding other valuation assumptions constant, the discount rate would have to be increased to 11.9%, in order for
the estimated fair value of the reporting unit to fall below its carrying value.
At September 30, 2022, the Corrugated Packaging, Consumer Packaging, Global Paper and Distribution
reporting units had $2,802.8 million, $1,588.4 million, $1,366.5 million and $137.5 million of goodwill, respectively,
which remained recoverable at the current year-end. Subsequent to our annual test, we monitored industry
economic trends until the end of our fiscal year and determined no additional testing for goodwill impairment was
warranted. We have not made any material changes to our impairment loss assessment methodology during the
past three fiscal years. Currently, we do not believe there is a reasonable likelihood that there will be a material
change in future assumptions or estimates we use to calculate impairment losses. However, we cannot predict or
control market factors, including the impact of macroeconomic conditions, and there are certain risks inherent to
our operations, as described in Item 1A. “Risk Factors”. If actual results are not consistent with our assumptions
and estimates, we may be exposed to additional impairment losses that could be material.
We follow the provisions included in ASC 360, “Property, Plant, and Equipment” in determining whether the
carrying value of any of our long-lived assets, including ROU assets and amortizable intangibles other than goodwill,
is impaired. The ASC 360 test is a three-step test for assets that are “held and used” as that term is defined by ASC
360. We determine whether indicators of impairment are present. We review long-lived assets for impairment when
events or changes in circumstances indicate that the carrying amount of the long-lived asset might not be
recoverable. If we determine that indicators of impairment are present, we determine whether the estimated
undiscounted cash flows for the potentially impaired assets are less than the carrying value. This requires
management to estimate future cash flows through operations over the remaining useful life of the asset and its
ultimate disposition. The assumptions we use to estimate future cash flows are consistent with the assumptions we
use for internal planning purposes, updated to reflect current expectations. If our estimated undiscounted cash flows
do not exceed the carrying value, we estimate the fair value of the asset and record an impairment charge if the
carrying value is greater than the fair value of the asset. We estimate fair value using discounted cash flows,
observable prices for similar assets, or other valuation techniques. We record assets classified as “held for sale” at
the lower of their carrying value or estimated fair value less anticipated costs to sell. Our long-lived assets, including
intangible assets remain recoverable.
Included in our long-lived assets are certain identifiable intangible assets. These intangible assets are amortized
based on the approximate pattern in which the economic benefits are consumed or straight-line if the pattern was
72
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
not reliably determinable. Estimated useful lives range from 1 to 40 years and have a weighted average life of
approximately 15.7 years.
Our judgments regarding the existence of impairment indicators are based on legal factors, market conditions
and operational performance. Future events could cause us to conclude that impairment indicators exist and that
assets associated with a particular operation are impaired. Evaluating impairment also requires us to estimate future
operating results and cash flows, which also require judgment by management. Any resulting impairment loss could
have a material adverse impact on our financial condition and results of operations.
Cloud Computing Arrangements
We utilize cloud computing arrangements such as hosting arrangements which are service contracts, whereby
we gain remote access to use software hosted by the vendor or another third party on an as-needed basis for a
period of time in exchange for a subscription fee. Subscription fees are usually prepaid and recorded in operating
expense over the related subscription period.
Implementation costs for cloud computing arrangements are
capitalized within Other current assets or Other assets if certain criteria are met and consist of internal and external
costs directly attributable to developing and configuring cloud computing software for its intended use. Amortization
of capitalized implementation costs is recorded as operating expense on a straight-line basis over the term of the
cloud computing arrangement, which is the non-cancellable period of the agreement, together with periods covered
by renewal options which we are reasonably certain to exercise. The unamortized implementation costs related to
our cloud computing arrangements were $4.1 million and $1.1 million at September 30, 2022 and 2021,
respectively.
Restructuring and Other Costs
Our restructuring and other costs include primarily items such as restructuring portions of our operations,
acquisition costs, integration costs and divestiture costs. We have restructured portions of our operations from time
to time, have current restructuring initiatives taking place, and it is likely that we will engage in future restructuring
activities.
When we close a facility, if necessary, we recognize a write-down to reduce the carrying value of related
property, plant and equipment and lease ROU assets to their fair value and record charges for severance and other
employee-related costs. We reduce the carrying value of the assets classified as held for sale to their estimated fair
value less cost to sell. Any subsequent change in fair value less cost to sell prior to disposition is recognized as it
is identified; however, no gain is recognized in excess of the cumulative loss previously recorded unless the actual
selling price exceeds the original carrying value upon its ultimate sale. For facility closures, we also generally expect
to record costs for equipment relocation, facility carrying costs and costs to terminate a lease or contract before the
end of its term.
Although specific circumstances vary, our strategy has generally been to consolidate our sales and operations
into large well-equipped facilities that operate at high utilization rates and take advantage of available capacity
created by operational excellence initiatives and/or further optimize our system following mergers and acquisitions
or a changing business environment. Therefore, we generally transfer a substantial portion of each closed facility's
production to our other facilities. We believe these actions have allowed us to more effectively manage our business.
Identifying and calculating the cost to exit operations requires certain assumptions to be made, the most
significant of which are anticipated future liabilities, including severance costs, contractual obligations, and the
adjustments of property, plant and equipment and lease ROU assets to their fair value. We believe our estimates
are reasonable, considering our knowledge of the industries we operate in, previous experience in exiting activities
and valuations we may obtain from independent third parties. Although our estimates have been reasonably
accurate in the past, significant judgment is required, and these estimates and assumptions may change as
additional information becomes available and facts or circumstances change. See “Note 4. Restructuring and
Other Costs” for additional information, including a description of the type of costs incurred.
73
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Business Combinations
From time to time, we may enter into business combinations. In accordance with ASC 805, “Business
Combinations”, we generally recognize the identifiable assets acquired,
the liabilities assumed, and any
noncontrolling interests in an acquiree at their fair values as of the date of acquisition. We measure goodwill as the
excess of consideration transferred, which we also measure at fair value, over the net of the acquisition date fair
values of the identifiable assets acquired and liabilities assumed. The acquisition method of accounting requires us
to make significant estimates and assumptions regarding the fair values of the elements of a business combination
as of the date of acquisition, including the fair values of identifiable intangible assets, deferred tax asset valuation
allowances, liabilities including those related to debt, pensions and other postretirement plans, uncertain tax
positions, contingent consideration and contingencies. Significant estimates and assumptions include subjective
and/or complex judgments regarding items such as discount rates, customer attrition rates, economic lives and
other factors, including estimating future cash flows that we expect to generate from the acquired assets.
The acquisition method of accounting also requires us to refine these estimates over a measurement period
not to exceed one year to reflect new information obtained about facts and circumstances that existed as of the
acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. If
we are required to adjust provisional amounts that we have recorded for the fair values of assets and liabilities in
connection with acquisitions, these adjustments could have a material impact on our financial condition and results
of operations. If the subsequent actual results and updated projections of the underlying business activity change
compared with the assumptions and projections used to develop these values, we could record future impairment
charges. In addition, we have estimated the economic lives of certain acquired assets and these lives are used to
calculate depreciation and amortization expense. If our estimates of the economic lives change, depreciation or
amortization expenses could be increased or decreased, or the acquired asset could be impaired.
Fair Value of Financial Instruments and Nonfinancial Assets and Liabilities
We estimate fair values in accordance with ASC 820 “Fair Value Measurement”. ASC 820 provides a framework
for measuring fair value and expands disclosures required about fair value measurements. Specifically, ASC 820
sets forth a definition of fair value and a hierarchy prioritizing the inputs to valuation techniques. ASC 820 defines
fair value as the price that would be received from the sale of an asset or paid to transfer a liability in the principal
or most advantageous market for the asset or liability in an orderly transaction between market participants on the
measurement date. Additionally, ASC 820 defines levels within the hierarchy based on the availability of quoted
prices for identical items in active markets, similar items in active or inactive markets and valuation techniques using
observable and unobservable inputs. We incorporate credit valuation adjustments to reflect both our own
nonperformance risk and the respective counterparty’s nonperformance risk in our fair value measurements.
Financial instruments not recognized at fair value on a recurring or nonrecurring basis include cash and cash
equivalents, accounts receivables, certain other current assets, short-term debt, accounts payable, certain other
current liabilities and long-term debt. With the exception of long-term debt, the carrying amounts of these financial
instruments approximate their fair values due to their short maturities. The fair values of our long-term debt are
estimated using quoted market prices or are based on the discounted value of future cash flows. We disclose the
fair value of long-term debt in “Note 13. Debt” and our pension and postretirement assets and liabilities in “Note 5.
Retirement Plans”. We have, or from time to time may have, financial instruments recognized at fair value including
supplemental retirement savings plans (“Supplemental Plans”) that are nonqualified deferred compensation plans
pursuant to which assets are invested primarily in mutual funds, interest rate derivatives, commodity derivatives or
other similar class of assets or liabilities, the fair value of which are not significant. We measure the fair value of our
mutual fund investments based on quoted prices in active markets, and our derivative contracts, if any, based on
discounted cash flows.
We measure certain nonfinancial assets and nonfinancial liabilities at fair value on a nonrecurring basis. These
assets and liabilities include equity method investments when they are deemed to be other-than-temporarily
impaired, investments for which the fair value measurement alternative is elected, assets acquired and liabilities
assumed when they are deemed to be other-than-temporarily impaired, assets acquired and liabilities assumed in
a merger or an acquisition or in a nonmonetary exchange, property, plant and equipment, ROU assets related to
operating leases, goodwill and other intangible assets that are written down to fair value when they are held for sale
74
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
or determined to be impaired. See “Note 4. Restructuring and Other Costs” for impairments associated with
restructuring activities. Given the nature of nonfinancial assets and liabilities, evaluating their fair value from the
perspective of a market participant is inherently complex. Assumptions and estimates about future values can be
affected by a variety of internal and external factors. Changes in these factors may require us to revise our estimates
and could result in future impairment charges for goodwill and acquired intangible assets, or retroactively adjust
provisional amounts that we have recorded for the fair values of assets and liabilities in connection with business
combinations. These adjustments could have a material impact on our financial condition and results of operations.
We discuss fair values in more detail in “Note 12. Fair Value”.
Derivatives
We are exposed to interest rate risk, commodity price risk and foreign currency exchange risk. To manage
these risks, from time to time and to varying degrees, we may enter into a variety of financial derivative transactions
and certain physical commodity transactions that are determined to be derivatives. Interest rate swaps may be
entered into to manage the interest rate risk associated with a portion of our outstanding debt. Interest rate swaps
are either designated for accounting purposes as cash flow hedges of forecasted floating interest payments on
variable rate debt or fair value hedges of fixed rate debt, or we may elect not to treat them as accounting hedges.
Swaps or forward contracts on certain commodities may be entered into to manage the price risk associated with
forecasted purchases or sales of those commodities. In addition, certain commodity financial derivative contracts
and physical commodity contracts that are determined to be derivatives may not be designated as accounting
hedges because either they do not meet the criteria for treatment as accounting hedges under ASC 815,
“Derivatives and Hedging”, or we elect not to treat them as accounting hedges under ASC 815. Generally, we elect
the normal purchase, normal sale scope exception for physical commodity contracts that are determined to be
derivatives. We may also enter into forward contracts to manage our exposure to fluctuations in foreign currency
rates with respect to transactions denominated in foreign currencies. These also can either be designated for
accounting purposes as cash flow hedges or not so designated. Derivative financial instruments are not used for
trading or other speculative purposes.
Outstanding financial derivative instruments expose us to credit loss in the event of nonperformance by the
instruments is
counterparties to the derivative agreements. Our credit exposure related to these financial
represented by the fair value of contracts reported as assets. We manage our exposure to counterparty credit risk
through minimum credit standards, diversification of counterparties and procedures to monitor concentrations of
credit risk. We may enter into financial derivative contracts that may contain credit-risk-related contingent features
which could result in a counterparty requesting immediate payment or demanding immediate and ongoing full
overnight collateralization on derivative instruments in net liability positions.
For financial derivative instruments that are designated as a cash flow hedge for accounting purposes, the
entire change in fair value of the financial derivative instrument is reported as a component of other comprehensive
income and reclassified into earnings in the same line item associated with the forecasted transaction, and in the
same period or periods during which the forecasted transaction affects earnings. For financial derivative instruments
that are not designated as accounting hedges, the entire change in fair value of the financial instrument is reported
immediately in current period earnings.
We have at times entered into interest rate swap agreements that effectively modified our exposure to interest
rate risk by converting a portion of our interest payments on floating rate debt to a fixed rate basis, thus reducing
the impact of interest rate changes on future interest expense. These agreements typically involved the receipt of
floating rate amounts in exchange for fixed interest rate payments over the life of the agreements without an
exchange of the underlying principal amount.
At September 30, 2022, the notional amount of foreign currency exchange contract derivative was 8.0 billion
Mexican pesos ($389.9 million), with the fair value of $3.4 million presented within Other current assets. At
September 30, 2021, the notional amount of foreign currency exchange contract derivative was $270.2 million. The
fair value of this derivative instrument was not significant as of September 30, 2021. We did not designate our
foreign currency exchange contract derivatives as accounting hedges.
75
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
At September 30, 2022, the notional amount of natural gas commodity derivatives was 18.3 million MMBtu,
which are designated as cash flow hedges. The fair value of these derivatives was $12.0 million, which is presented
within Other current liabilities. No natural gas commodity derivatives were outstanding at September 30, 2021. See
“Note 18. Accumulated Other Comprehensive Loss and Other Comprehensive Income (Loss)” for additional
information regarding our foreign currency and natural gas commodity derivatives.
Health Insurance
We are self-insured for the majority of our group health insurance costs. However, we seek to limit our health
insurance costs by entering into certain stop loss insurance coverage. Due to mergers, acquisitions and other
factors, we may have plans that do not include stop loss insurance. We calculate our group health insurance reserve
on an undiscounted basis based on estimated reserve rates. We utilize claims lag data provided by our claims
administrators to compute the required estimated reserve rate. We calculate our average monthly claims paid using
the actual monthly payments during the trailing 12-month period. At that time, we also calculate our required reserve
using the reserve rates discussed above. While we believe that our assumptions are appropriate, significant
differences in our actual experience or significant changes in our assumptions may materially affect our group health
insurance costs.
Workers’ Compensation
We purchase large risk deductible workers’ compensation policies for the majority of our workers’ compensation
liabilities that are subject to various deductibles to limit our exposure. We calculate our workers’ compensation
reserves on an undiscounted basis based on estimated actuarially calculated development factors. While we believe
that our assumptions are appropriate, significant differences in our actual experience or significant changes in our
assumptions may materially affect our workers' compensation costs.
Income Taxes
We account for income taxes under the asset and liability method, which requires the recognition of deferred
tax assets and liabilities for the expected future tax consequences of events that have been included in the financial
statements. Under this method, deferred tax assets and liabilities are determined based on the differences between
the financial statement carrying amount and the tax basis of assets and liabilities using enacted tax rates in effect
for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax
assets and liabilities is recognized in income in the period that includes the enactment date. All deferred tax assets
and liabilities are classified as noncurrent in our consolidated balance sheet.
We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In
making such determination, we consider all available positive and negative evidence, including future reversals of
existing taxable temporary differences, projected future taxable income, tax planning strategies, recent financial
operations and their associated valuation allowances, if any. In the event we were to determine that we would be
able to realize or not realize our deferred income tax assets in the future in their net recorded amount, we would
make an adjustment to the valuation allowance, which would reduce or increase the provision for income taxes,
respectively.
Certain provisions of ASC 740, “Income Taxes” provide that a tax benefit from an uncertain tax position may be
recognized when it is “more likely than not” that the position will be sustained upon examination, including
resolutions of any related appeals or litigation processes, based on the technical merits. We use significant
judgment in (i) determining whether a tax position, based solely on its technical merits, is “more likely than not” to
be sustained upon examination and (ii) measuring the tax benefit as the largest amount of benefit that is “more
likely than not” to be realized upon ultimate settlement. We do not record any benefit for the tax positions where we
do not meet the “more likely than not” initial recognition threshold. Income tax positions must meet a “more likely
than not” recognition threshold at the effective date to be recognized. We recognize interest and penalties related
to unrecognized tax benefits in income tax expense in the consolidated statements of operations. Resolution of the
uncertain tax positions could have a material adverse effect on our cash flows or materially benefit our results of
operations in future periods depending upon their ultimate resolution.
76
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
On December 22, 2017, the U.S. enacted comprehensive tax legislation, commonly referred to as the Tax Act.
As part of the enacted Tax Act, Global Intangible Low Taxed Income (“GILTI”) provisions were introduced that would
impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. We have
elected to treat any potential GILTI inclusions as a period cost during the year incurred.
On August 16, 2022, the Inflation Reduction Act was signed into law, with tax provisions primarily focused on
implementing a 15% minimum tax on global adjusted financial statement income and a 1% excise tax on share
repurchases. While we are still evaluating the impact that the Inflation Reduction Act will have on our financial
results, we do not believe the impact will be material.
Pension and Other Postretirement Benefits
We account for pension and other postretirement benefits in accordance with ASC 715, “Compensation –
Retirement Benefits”. Accordingly, we recognize the funded status of our pension plans as assets or liabilities in
our consolidated balance sheets. The funded status is the difference between our projected benefit obligations and
fair value of plan assets. The determination of our obligation and expense for pension and other postretirement
benefits is dependent on our selection of certain assumptions used by actuaries in calculating such amounts. We
describe these assumptions in “Note 5. Retirement Plans”, which include, among others, the discount rate,
expected long-term rates of return on plan assets and rates of increase in compensation levels. We defer actual
results that differ from our assumptions, i.e., actuarial gains and losses, and amortize the difference over future
periods. Therefore, these differences generally affect our recognized expense and funding requirements in future
periods. Actuarial gains and losses occur when actual experience differs from the estimates used to determine the
components of net periodic pension cost and when certain assumptions used to determine the fair value of the plan
assets or projected benefit obligation are updated, such as but not limited to, changes in the discount rate, plan
amendments, differences between actual and expected returns on plan assets, mortality assumptions and plan
remeasurement.
The amount of unrecognized actuarial gains and losses recognized in the current year’s operations is based
on amortizing the unrecognized gains or losses for each plan that exceed the larger of 10% of the projected benefit
obligation or the fair value of plan assets, also known as “the corridor”. The amount of unrecognized gain or loss
that exceeds the corridor is amortized over the average future service of the plan participants or the average life
expectancy of inactive plan participants for plans where all or almost all of the plan participants are inactive. While
we believe that our assumptions are appropriate, significant differences in our actual experience or significant
changes in our assumptions may materially affect our pension and other postretirement benefit obligations and our
future expense.
Share-Based Compensation
We recognize expense for share-based compensation plans based on the estimated fair value of the related
awards in accordance with ASC 718, “Compensation – Stock Compensation”. Pursuant to our incentive stock plans,
we can grant options, restricted stock, restricted stock units and stock appreciation rights (“SAR” or “SARs”) to
employees and our non-employee directors. The grants generally vest over a period of up to three years depending
on the nature of the award, except for non-employee director grants, which typically vest over a period of up to one
year. The majority of our awards are restricted stock units granted to employees and generally contain performance
or market conditions that must be met in conjunction with a service requirement for the shares to vest, others contain
only a service requirement. We charge compensation expense under the plan to earnings over each award’s
individual vesting period. Forfeitures are estimated based on historical experience. In fiscal 2020, in connection with
our WestRock Pandemic Action Plan we issued restricted stock units to the majority of our employees to replace
their annual cash bonus. See “Note 20. Share-Based Compensation” for additional information.
Asset Retirement Obligations
We account for asset retirement obligations in accordance with ASC 410, “Asset Retirement and Environmental
Obligations”. A liability and an asset are recorded equal to the present value of the estimated costs associated with
the retirement of long-lived assets where a legal or contractual obligation exists and the liability can be reasonably
estimated. The liability is accreted over time and the asset is depreciated over the remaining life of the related asset.
77
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Upon settlement of the liability, we recognize a gain or loss for any difference between the settlement amount and
the liability recorded. Asset retirement obligations with indeterminate settlement dates are not recorded until such
time that a reasonable estimate may be made. Our asset retirement obligations consist primarily of landfill closure
and post-closure costs at certain of our mills. At September 30, 2022, we had recorded liabilities of $96.0 million,
$79.6 million in Other long-term liabilities and $16.4 million in Other current liabilities. At September 30, 2021, we
had recorded $73.6 million, $73.1 million in Other long-term liabilities and the balance in Other current liabilities.
Repair and Maintenance Costs
We expense routine repair and maintenance costs as we incur them. We defer certain expenses we incur during
planned major maintenance activities and recognize the expenses ratably over the shorter of the estimated interval
until the next major maintenance activity or the life of the deferred item. This maintenance is generally performed
every 12 to 24 months and has a significant impact on our results of operations in the period performed primarily
due to lost production during the maintenance period. Planned major maintenance costs deferred at September 30,
2022 and 2021 were $121.8 million and $110.7 million, respectively. The assets are recorded as Other assets on
the consolidated balance sheets.
Foreign Currency
We translate the assets and liabilities of our foreign operations from their functional currency into U.S. dollars
at the rate of exchange in effect as of the balance sheet date. We reflect the resulting translation adjustments in
equity. We translate the revenues and expenses of our foreign operations at a daily average rate prevailing for each
month during the fiscal year. We include gains or losses from foreign currency transactions, such as those resulting
from the settlement of foreign receivables or payables, in the consolidated statements of operations. We recorded
a loss on foreign currency transactions of $5.0 million and $0.7 million in fiscal 2022 and 2021, respectively, and a
gain on foreign currency transactions of $6.6 million in fiscal 2020.
Environmental Remediation Costs
We accrue for losses associated with our environmental remediation obligations when it is probable that we
have incurred a liability and the amount of the loss can be reasonably estimated. We generally recognize accruals
for estimated losses from our environmental remediation obligations no later than completion of a remedial feasibility
study and clear indication of remedial options. We adjust such accruals as further information develops or
circumstances change. We recognize recoveries of our environmental remediation costs from other parties as
receipt probable. See “Note 17. Commitments and Contingencies —
assets when we deem their
Environmental.”
New Accounting Standards — Adopted in fiscal 2022
In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for
Income Taxes”. This ASU removes certain exceptions from recognizing deferred taxes for investments, performing
intraperiod allocation and calculating income taxes in interim periods. It also reduces complexity in certain areas,
including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. This
ASU is effective for fiscal years beginning after December 15, 2020 (fiscal 2022 for us) and interim periods within
those fiscal years. We adopted the provisions of ASU 2019-12 beginning October 1, 2021. The adoption of this
ASU did not have a material impact on our consolidated financial statements.
In July 2021, the FASB issued ASU 2021-05, “Leases (Topic 842): Lessors – Certain Leases with Variable
Lease Payments”. This ASU requires lessors to classify leases as operating leases if they have variable lease
payments that do not depend on an index or rate and would have selling losses at lease commencement if they
were classified as sales-type or direct financing leases. For lessors that had adopted ASC 842, "Leases" as of July
the amendments can be applied either retrospectively or
19, 2021, when the amendments were issued,
prospectively and are effective for annual periods beginning after December 15, 2021 (fiscal 2023 for us) and interim
periods within those annual periods. Early adoption is permitted. We early adopted this ASU using the prospective
transition approach beginning October 1, 2021. The adoption of this ASU did not have a material impact on our
consolidated financial statements.
78
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
New Accounting Standards — Pending to be Adopted in Fiscal 2023
In November 2021, the FASB issued ASU 2021-10, “Government Assistance (Topic 832) – Disclosures by
Business Entities about Government Assistance”. This ASU aims to increase the transparency of government
assistance through the annual disclosure of the types of assistance, an entity’s accounting for the assistance and
the effect of the assistance on an entity’s financial statements. This ASU is effective for annual periods beginning
after December 15, 2021 (fiscal 2023 for us), with early adoption permitted. The adoption of this ASU is not expected
to have a material impact on our consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects
of Reference Rate Reform on Financial Reporting”. This ASU provides temporary optional expedients and
exceptions for applying GAAP guidance on contract modifications and hedge accounting to ease the financial
reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative
reference rates, such as the Secured Overnight Financing Rate. In January 2021, the FASB issued ASU 2021-01,
which adds implementation guidance to clarify certain optional expedients in Topic 848. The ASUs can be adopted
after their respective issuance dates through December 31, 2022. We are in process of reviewing and updating our
contracts to a new reference rate. We have been addressing the LIBOR transition in our applicable debt facilities
and have completed the transition on all of our significant facilities. See “Note 13. Debt” for additional information
on our recent credit facility changes. We expect to adopt the provisions of this optional guidance in fiscal 2023. The
adoption of this ASU is not expected to have a material impact on our consolidated financial statements.
New Accounting Standards — Recently Issued
In September 2022, the FASB issued ASU 2022-04, “Liabilities-Supplier Finance Programs (Subtopic 405-50):
Disclosure of Supplier Finance Program Obligations”. This ASU requires that a buyer in a supplier finance program
disclose sufficient information about the program to allow a user of financial statements to understand the program’s
nature, activity during the period, changes from period to period, and potential magnitude. This ASU is effective for
fiscal years beginning after December 15, 2022 (fiscal 2024 for us), except for the amendment on roll forward
information which is effective for fiscal years beginning after December 15, 2023 (fiscal 2025 for us). We are
evaluating the impact of this ASU.
In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement
of Equity Securities Subject to Contractual Sale Restrictions”. This ASU clarifies that contractual sale restrictions
should not be considered in measuring the fair value of equity securities. This ASU is effective for fiscal years
beginning after December 15, 2023 (fiscal 2025 for us), including interim periods therein, with early adoption
permitted. We are evaluating the impact of this ASU.
In March 2022, the FASB issued ASU 2022-01, “Derivatives and Hedging (Topic 815): Fair Value Hedging –
Portfolio Layer Method”. This ASU expands and clarifies the portfolio layer method for fair value hedges of interest
rate risk. This ASU is effective for fiscal years beginning after December 15, 2022 (fiscal 2024 for us), including
interim periods therein, with early adoption permitted. We are evaluating the impact of this ASU.
In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805) – Accounting for
Contract Assets and Contract Liabilities from Contracts with Customers”. This ASU requires an entity to recognize
and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC
606. This ASU is intended to reduce diversity in practice and increase comparability for both the recognition and
measurement of acquired revenue contracts with customers at the date of and after a business combination. This
ASU is effective for fiscal years beginning after December 15, 2022 (fiscal 2024 for us), including interim periods
therein, with early adoption permitted. We are evaluating the impact of this ASU.
79
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Note 2.
Revenue Recognition
Disaggregated Revenue
ASC 606 requires that we disaggregate revenue from contracts with customers into categories that depict how
the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The tables
below disaggregate our revenue by geographical market and product type (segment). Net sales are attributed to
geographical markets based on our selling location. As discussed above, effective October 1, 2021, we reorganized
our segment reporting to four reportable segments and have recast prior period disclosures to conform to the new
segment structure and modified the geographical markets presented. In fiscal 2020, we completed our real estate
monetization and ceased reporting the results of the Land and Development segment as a separate segment.
Therefore, we did not have any Land and Development sales in fiscal 2022 or 2021.
The following tables summarize our disaggregated revenue by primary geographical markets for fiscal 2022,
2021 and 2020 (in millions):
U.S.
Canada
Latin America
EMEA
Asia Pacific
Total
U.S.
Canada
Latin America
EMEA
Asia Pacific
Total
U.S.
Canada
Latin America
EMEA
Asia Pacific
Total
Corrugated
Packaging
Consumer
Packaging
Year Ended September 30, 2022
Global Paper
5,344.8
$
227.7
230.7
63.2
63.8
5,930.2
$
Distribution
1,238.3
$
16.1
164.5
—
—
1,418.9
$
Intersegment
Sales
Total
$
$
(357.2) $ 17,361.5
1,325.1
1,045.6
1,150.5
373.8
(365.4) $ 21,256.5
(7.5)
(0.4)
(0.3)
—
2,870.9
510.0
194.4
1,079.9
310.0
4,965.2
Consumer
Packaging
2,463.7
473.0
159.1
1,038.2
299.9
4,433.9
Year Ended September 30, 2021
Global Paper
4,547.7
$
205.2
100.1
62.7
67.3
4,983.0
$
Distribution
1,105.9
$
19.7
129.2
—
—
1,254.8
$
Intersegment
Sales
Total
$
$
(318.9) $ 15,317.2
1,210.4
745.4
1,106.0
367.1
(326.1) $ 18,746.1
(6.8)
(0.3)
—
(0.1)
$
$
8,264.7
578.8
456.4
7.7
—
9,307.6
Corrugated
Packaging
$
$
7,518.8
519.3
357.3
5.1
—
8,400.5
$
$
$
$
Year Ended September 30, 2020
Corrugated
Packaging
Consumer
Packaging
$
$
7,054.6
452.6
275.1
7.9
—
7,790.2
$
$
2,416.5
436.0
120.3
939.6
278.0
4,190.4
Global Paper
4,300.4
$
222.3
118.0
66.5
42.4
4,749.6
$
Distribution
987.1
$
17.3
98.0
—
—
1,102.4
$
Land and
Development
18.9
$
—
—
—
—
18.9
$
Intersegment
Sales
Total
$
$
(268.6) $ 14,508.9
1,124.7
611.1
1,014.0
320.1
(272.7) $ 17,578.8
(3.5)
(0.3)
—
(0.3)
Revenue Contract Balances
Contract assets are rights to consideration in exchange for goods that we have transferred to a customer when
that right is conditional on something other than the passage of time. Contract assets are reduced when the control
of the goods passes to the customer. Contract liabilities represent obligations to transfer goods or services to a
customer for which we have received consideration. Contract liabilities are reduced once control of the goods is
transferred to the customer.
The opening and closing balances of our contract assets and contract liabilities are as follows. Contract assets
and contract liabilities are reported within Other current assets and Other current liabilities, respectively, on the
consolidated balance sheets (in millions).
80
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Beginning balance - October 1, 2021
Ending balance - September 30, 2022
Increase
Performance Obligations and Significant Judgments
Contract Assets
(Short-Term)
Contract Liabilities
(Short-Term)
$
$
199.1
244.0
44.9
$
$
12.8
13.9
1.1
We primarily derive revenue from fixed consideration. Certain contracts may also include variable consideration,
typically in the form of cash discounts and volume rebates. If a contract with a customer includes variable
consideration, we estimate the expected cash discounts and other customer refunds based on historical experience.
We concluded this method is consistent with the most likely amount method under ASC 606 and allows us to make
the best estimate of the consideration we will be entitled to from customers.
Contracts or purchase orders with customers could include a single type of product or multiple types and grades
of products. Regardless, the contract price with the customer is agreed to at the individual product level outlined in
the customer contracts or purchase orders. Management has concluded that the prices negotiated with each
individual customer are representative of the stand-alone selling price of the product.
Note 3.
Acquisitions and Investments
We account for acquisitions in accordance with ASC 805, “Business Combinations”. The estimated fair values
of all assets acquired and liabilities assumed in acquisitions are provisional and may be revised as a result of
additional information obtained during the measurement period of up to one year from the acquisition date. There
have been no significant acquisitions in the last three fiscal years.
Grupo Gondi Acquisition
On July 27, 2022, we announced our entry into an agreement to acquire the remaining 67.7% interest in Grupo
Gondi for $970 million, plus the assumption of debt, representing an estimated implied enterprise value of $1.763
billion. Grupo Gondi is a leading integrated producer of corrugated and consumer packaging that operates four
paper mills, nine corrugated packaging plants and six high graphic plants throughout Mexico, producing sustainable
packaging for a wide range of end markets in the region. This tuck-in acquisition will provide us with further
geographic and end market diversification as well as position us to continue to grow in the attractive Latin American
market. The acquisition, which is subject to a number of customary closing conditions, including approval by
regulatory authorities in Mexico, is expected to close by the end of this calendar year, after which we will consolidate
Grupo Gondi into our financial statements.
Note 4.
Restructuring and Other Costs
Summary of Restructuring and Other Initiatives
We recorded pre-tax restructuring and other costs of $401.6 million, $31.5 million and $112.7 million for fiscal
2022, 2021 and 2020, respectively. Of these costs, $325.5 million, $12.6 million and $29.8 million were non-cash
for fiscal 2022, 2021 and 2020, respectively. These amounts are not comparable since the timing and scope of the
individual actions associated with each restructuring, acquisition, integration or divestiture vary. We present our
restructuring and other costs in more detail below.
The following table summarizes our Restructuring and other costs for fiscal 2022, 2021 and 2020 (in millions):
Restructuring
Other
Restructuring and Other Costs
2022
2021
2020
$
$
392.1
9.5
401.6
$
$
28.5
3.0
31.5
$
$
93.7
19.0
112.7
81
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Restructuring
Our restructuring charges are primarily associated with restructuring portions of our operations (i.e., partial or
complete plant closures). A partial plant closure may consist of shutting down a machine and/or a workforce
reduction. We have incurred various reduction in workforce actions, plant closure activities, impairment costs and
certain lease terminations from time to time.
We are committed to improving our return on invested capital as well as maximizing the performance of our
assets. In fiscal 2022, we recorded various impairments and other charges associated with our decision to
permanently cease operations at our Panama City, FL mill and to permanently close the corrugated medium
manufacturing operations at the St. Paul, MN mill, as reflected in the table below in the Global Paper segment. Both
operations were expected to require significant capital investment to maintain and improve going forward, and the
production of fluff pulp (at Panama City) was not a priority in our strategy to focus on higher value markets. Closing
these operations allows us to redirect significant capital that would have been required to keep them competitive in
the future to improve other key assets. We expect to record future restructuring charges, primarily associated with
future carrying costs. The Panama City, FL mill had produced containerboard, primarily heavyweight kraft and fluff
pulp, with a combined annual capacity of 645,000 tons of which approximately two-thirds was shipped to external
customers. Select grades of containerboard previously produced at the mill are expected to be manufactured at
other WestRock facilities. The corrugated medium manufacturing operations at St. Paul, MN had annual capacity
of 200,000 tons of which approximately two-fifths was shipped to external customers.
In fiscal 2021, our restructuring charges included an impairment of assets and a gain on lease termination
associated with our Richmond, VA regional office (in Corporate). In fiscal 2020, our restructuring charges included
those associated with the announced shutdown of a bleached paperboard machine at our Evadale, TX mill,
employee costs due to merger and acquisition-related workforce reductions and a voluntary retirement program.
Due to market factors in fiscal 2021, we decided to delay the machine shutdown at our Evadale, TX mill, and in
fiscal 2022, we decided to cancel our plans to shut down the machine and reversed certain employee and other
accrued restructuring charges. The machine is capable of swinging between selected grades (e.g., linerboard,
bleached paperboard and pulp), and we intend to utilize the machine to produce selected grades based on demand.
While restructuring costs are not charged to our segments and, therefore, do not reduce each segment's
Adjusted EBITDA, we highlight the segment to which the charges relate. As discussed in “Note 1. Description of
Business and Summary of Significant Accounting Policies — Reclassifications and Adjustments”, effective
October 1, 2021, we reorganized our segment reporting to four reportable segments and have recast the prior year
disclosure. Since we do not allocate restructuring costs to our segments, charges incurred in the Global Paper
segment will represent all charges associated with our vertically integrated mills and recycling operations. These
operations manufacture for the benefit of each reportable segment that ultimately sells the associated paper and
packaging products to our external customers. Prior to the completion of our Land and Development monetization
program in fiscal 2020, we had an additional reportable segment which previously sold real estate, primarily in the
Charleston, SC region.
82
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following table presents a summary of restructuring charges related to active restructuring initiatives that
we incurred during the last three fiscal years, the cumulative recorded amount since we started the initiatives, and
our estimate of the total we expect to incur (in millions):
Corrugated Packaging
PP&E and related costs
Severance and other employee costs
Other restructuring costs
Restructuring total
Consumer Packaging
PP&E and related costs
Severance and other employee costs
Other restructuring costs
Restructuring total
Global Paper
PP&E and related costs
Severance and other employee costs
Other restructuring costs
Restructuring total
Distribution
Severance and other employee costs
Other restructuring costs
Restructuring total
Land and Development
Severance and other employee costs
Other restructuring costs
Restructuring total
Corporate
PP&E and related costs
Severance and other employee costs
Other restructuring costs
Restructuring total
Total
PP&E and related costs
Severance and other employee costs
Other restructuring costs
Restructuring total
2022
2021
2020
Cumulative
Total
Expected
0.3 $
0.5
2.6
3.4 $
— $
6.2
2.7
8.9 $
2.6 $
4.7
2.9
0.4 $
7.5
5.2
10.2 $
13.1 $
0.5 $
9.7
3.1
1.0 $
19.4
4.1
13.3 $
24.5 $
3.9 $
29.2
12.8
45.9 $
3.3 $
36.5
13.1
52.9 $
3.9
29.2
19.2
52.3
3.3
36.5
13.1
52.9
349.3 $
11.2
8.0
368.5 $
0.2 $
—
0.1
0.3 $
24.3 $
400.6 $
1.4
5.5
17.8
28.9
31.2 $
447.3 $
400.6
20.0
115.0
535.6
— $
1.0
1.0 $
— $
—
— $
— $
—
— $
— $
—
— $
0.2 $
—
0.2 $
— $
2.0
2.0 $
0.2 $
1.0
1.2 $
0.1 $
2.0
2.1 $
0.2
1.0
1.2
0.1
2.0
2.1
2.0 $
3.0
5.3
10.3 $
8.8 $
0.9
(5.0)
4.7 $
— $
21.1
1.6
22.7 $
10.8 $
62.5
4.5
77.8 $
10.8
62.5
4.5
77.8
351.6 $
20.9
19.6
392.1 $
12.1 $
15.3
1.1
28.5 $
25.7 $
49.6
18.4
93.7 $
418.6 $
146.3
62.3
627.2 $
418.6
148.5
154.8
721.9
$
$
$
$
$
$
$
$
$
$
$
$
$
$
We have defined “PP&E and related costs” as used in this Note 4 primarily as property, plant and equipment
write-downs, subsequent adjustments to fair value for assets classified as held for sale, subsequent (gains) or
losses on sales of property, plant and equipment, related parts and supplies on such assets, and deferred major
maintenance costs, if any. We define "Other restructuring costs" as facility carrying costs, equipment and
inventory relocation costs, lease or other contract termination costs, and other items.
Other Costs
Our other costs consist of acquisition, integration and divestiture costs. We incur costs when we acquire or
divest businesses. Acquisition costs include costs associated with transactions, whether consummated or not, such
83
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
as advisory, legal, accounting, valuation and other professional or consulting fees, as well as potential litigation
costs associated with those activities. We incur integration costs pre- and post-acquisition that reflect work
performed to facilitate merger and acquisition integration, such as work associated with information systems and
other projects including spending to support future acquisitions, and primarily consist of professional services and
labor. Divestiture costs consist primarily of similar professional fees. We consider acquisition, integration and
divestiture costs to be corporate costs regardless of the segment or segments involved in the transaction.
The following table presents acquisition, integration and divestiture costs that we incurred during the last three
fiscal years (in millions):
Acquisition costs
Integration costs
Divestiture costs
Other total
2022
2021
2020
$
$
4.4
0.7
4.4
9.5
$
$
0.5
1.7
0.8
3.0
$
$
0.2
18.7
0.1
19.0
The following table summarizes the changes in the restructuring accrual, which is primarily composed of
accrued severance and other employee costs, and a reconciliation of the restructuring accrual charges to the line
item “Restructuring and other costs” on our consolidated statements of operations for the last three fiscal years
(in millions):
2022
2021
2020
Accrual at beginning of fiscal year
Additional accruals
Payments
Adjustment to accruals
Foreign currency rate changes and other
Accrual at end of fiscal year
$
$
13.4
33.4
(15.9)
(5.6)
(0.1)
25.2
$
$
17.2
17.4
(17.2)
(2.1)
(1.9)
13.4
Reconciliation of accruals and charges to restructuring and other costs (in millions):
Additional accruals and adjustments to accruals
(see table above)
PP&E and related costs
Severance and other employee costs
Acquisition costs
Integration costs
Divestiture costs
Other restructuring costs
Total restructuring and other costs, net
Note 5.
Retirement Plans
2022
2021
$
$
27.8
351.6
0.5
4.4
0.7
4.4
12.2
401.6
$
$
15.3
12.1
0.3
0.5
1.7
0.8
0.8
31.5
$
$
$
$
32.3
51.3
(56.6)
(6.2)
(3.6)
17.2
2020
45.1
25.7
1.6
0.2
18.7
0.1
21.3
112.7
We have defined benefit pension plans and other postretirement benefit plans for certain U.S. and non-U.S.
employees. We use a September 30 measurement date for our plans. Certain plans were frozen for salaried and
non-union hourly employees at various times in the past, and nearly all of our remaining salaried and non-union
hourly employees accruing benefits ceased accruing benefits as of December 31, 2020. In addition, we participate
in several MEPPs that provide retirement benefits to certain union employees in accordance with various CBAs.
We also have supplemental executive retirement plans and other non-qualified defined benefit pension plans that
provide unfunded supplemental retirement benefits to certain of our current and former executives. The
supplemental executive retirement plans provide for incremental pension benefits in excess of those offered in the
plan. The other postretirement benefit plans provide certain health care and life insurance benefits for certain
salaried and hourly employees who meet specified age and service requirements as defined by the plans.
84
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The benefits under our defined benefit pension plans are based on either compensation or a combination of
years of service and negotiated benefit levels, depending upon the plan. We allocate our pension assets to several
investment management firms across a variety of investment styles. Our defined benefit Investment Committee
meets at least four times a year with our investment advisors to review each management firm’s performance and
monitors its compliance with its stated goals, our investment policy and applicable regulatory requirements in the
U.S., Canada, and other jurisdictions.
Investment returns vary. We believe that, by investing in a variety of asset classes and utilizing multiple
investment management firms, we can create a portfolio that yields adequate returns with reduced volatility. Our
qualified U.S. plans employ a liability matching strategy augmented with Treasury futures to materially hedge
against interest rate risk. After consultation with our actuary and investment advisors, we adopted the target
allocations in the table below for our pension plans in an effort to produce the desired performance. These target
allocations are guidelines, not limitations, and occasionally plan fiduciaries will approve allocations above or below
target ranges or modify the allocations.
Our target asset allocations by asset category at September 30 were as follows:
Equity investments
Fixed income investments
Short-term investments
Other investments
Total
Pension Plans
2022
2021
U.S. Plans
Non-U.S.
Plans
U.S. Plans
Non-U.S.
Plans
18%
73%
1%
8%
100%
23%
73%
1%
3%
100%
19%
73%
1%
7%
100%
21%
74%
1%
4%
100%
Our asset allocations by asset category at September 30 were as follows:
Equity investments
Fixed income investments
Short-term investments
Other investments
Total
Pension Plans
2022
2021
U.S. Plans
Non-U.S.
Plans
U.S. Plans
Non-U.S.
Plans
18%
70%
4%
8%
100%
21%
73%
2%
4%
100%
21%
71%
3%
5%
100%
21%
72%
2%
5%
100%
We manage our retirement plans in accordance with the provisions of the Employee Retirement Income
Security Act of 1974, as amended, and the rules and regulations thereunder as well as applicable legislation in
Canada and other foreign countries. Our investment policy objectives include maximizing long-term returns at
acceptable risk levels, diversifying among asset classes, as applicable, and among investment managers, as well
as establishing certain risk parameters within asset classes. We have allocated our investments within the equity
and fixed income asset classes to sub-asset classes designed to meet these objectives. In addition, our other
investments support multi-strategy objectives.
In developing our weighted average expected rate of return on plan assets, we consulted with our investment
advisors and evaluated criteria based on historical returns by asset class and long-term return expectations by
asset class. We expect to contribute approximately $21 million to our U.S. and non-U.S. pension plans in fiscal
2023. However, it is possible that our assumptions or legislation may change, actual market performance may vary
or we may decide to contribute a different amount. Therefore, the amount we contribute may vary materially. The
expense for MEPPs for collective bargaining employees generally equals the contributions for these plans,
excluding estimated accruals for withdrawal liabilities or adjustments to those accruals.
85
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The weighted average assumptions used to measure the benefit plan obligations at September 30, were:
Discount rate
Interest crediting rate
Rate of compensation increase
Pension Plans
2022
2021
U.S. Plans
Non-U.S.
Plans
U.S. Plans
Non-U.S.
Plans
5.63%
3.08%
2.50%
5.12%
N/A
2.97%
2.99%
3.48%
2.50%
2.63%
N/A
2.65%
At September 30, 2022, the discount rate for the U.S. pension plans was determined based on the yield on a
theoretical portfolio of high-grade corporate bonds, and the discount rate for the non-U.S. plans was determined
based on a yield curve developed by our actuary. The theoretical portfolio of high-grade corporate bonds used to
select the September 30, 2022 discount rate for the U.S. pension plans includes bonds generally rated Aa- or better
with at least $100 million outstanding par value and bonds that are non-callable (unless the bonds possess a “make
whole” feature). The theoretical portfolio of bonds has cash flows that generally match our expected benefit
payments in future years.
Our assumption regarding the future rate of compensation increases is reviewed periodically and is based on
both our internal planning projections and recent history of actual compensation increases.
We typically review our expected long-term rate of return on plan assets periodically through an asset allocation
study with either our actuary or investment advisor. In fiscal 2023, our expected rate of return used to determine
net periodic benefit cost is 6.5% for our U.S. plans and 5.1% for our non-U.S. plans. Our expected rates of return
in fiscal 2023 are based on an analysis of our long-term expected rate of return and our current asset allocation.
In December 2019, the USW ratified a new master agreement that applies to substantially all of our U.S.
facilities represented by the USW. The agreement has a four-year term and covers a number of specific items,
including wages, medical coverage and certain other benefit programs, substance abuse testing, and safety.
Individual facilities will continue to have local agreements for subjects not covered by the master agreement and
those agreements will continue to have staggered terms. The master agreement permits us to apply its terms to
USW employees who work at facilities we acquire during the term of the agreement.
86
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following table shows the changes in benefit obligation, plan assets and funded status for the years ended
September 30 (in millions):
Change in projected benefit obligation:
Benefit obligation at beginning of fiscal year
Service cost
Interest cost
Amendments
Actuarial (gain) loss
Plan participant contributions
Benefits paid
Curtailments
Settlements
Foreign currency rate changes
Benefit obligation at end of fiscal year
Change in plan assets:
Fair value of plan assets at beginning of fiscal year
Actual (loss) gain on plan assets
Employer contributions
Plan participant contributions
Benefits paid
Settlements
Foreign currency rate changes
Fair value of plan assets at end of fiscal year
Funded (unfunded) status
Amounts recognized in the Consolidated Balance
Sheets:
Prepaid pension asset
Other current liabilities
Pension liabilities, net of current portion
Over (under) funded status at end of fiscal year
Pension Plans
2022
2021
U.S. Plans
Non-U.S.
Plans
U.S. Plans
Non-U.S.
Plans
$
$
$
$
$
$
$
5,239.1 $
40.8
152.1
0.3
(1,317.1)
—
(246.9)
—
(1.8)
—
3,866.5 $
5,627.0 $
(1,281.4)
13.0
—
(246.9)
(1.8)
—
4,109.9 $
243.4 $
1,438.5 $
7.0
36.1
—
(340.1)
1.7
(77.6)
0.2
(2.4)
(128.1)
935.3 $
1,455.7 $
(322.1)
8.2
1.7
(77.6)
(2.5)
(133.7)
929.7 $
(5.6) $
5,264.5 $
42.5
154.6
5.0
20.7
—
(248.2)
—
—
—
5,239.1 $
5,369.7 $
491.9
13.6
—
(248.2)
—
—
5,627.0 $
387.9 $
1,471.5
8.6
32.7
0.6
(66.1)
1.9
(78.0)
—
(1.4)
68.7
1,438.5
1,418.0
38.7
9.6
1.9
(78.0)
(1.4)
66.9
1,455.7
17.2
379.1 $
(11.7)
(124.0)
243.4 $
61.2 $
(1.4)
(65.4)
(5.6) $
566.8 $
(13.5)
(165.4)
387.9 $
107.5
(1.0)
(89.3)
17.2
The actuarial (gain) loss in benefit obligation for the U.S. Plans and Non-U.S. Plans is generally driven by a
change in discount rates and to a lesser degree the rate of compensation change in the Non-U.S. Plans.
Certain U.S. plans have benefit obligations in excess of plan assets. These plans, which consist primarily of
non-qualified plans, have aggregate projected benefit obligations of $164.5 million, aggregate accumulated benefit
obligations of $164.5 million, and aggregate fair value of plan assets of $28.8 million at September 30, 2022. Our
qualified U.S. plans were in a net overfunded position at September 30, 2022.
The accumulated benefit obligation of U.S. and non-U.S. pension plans was $4,779.1 million and $6,627.1
million at September 30, 2022 and 2021, respectively.
87
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The pre-tax amounts in accumulated other comprehensive loss at September 30 not yet recognized as
components of net periodic pension cost, including noncontrolling interest, consist of (in millions):
Pension Plans
2022
2021
Net actuarial loss
Prior service cost
Total accumulated other comprehensive loss
U.S. Plans
$
849.8 $
34.6
$
884.4 $
Non-U.S.
Plans
U.S. Plans
Non-U.S.
Plans
155.6 $
1.8
157.4 $
573.1 $
42.4
615.5 $
125.9
2.6
128.5
The pre-tax amounts recognized in other comprehensive loss (income), including noncontrolling interest, are
as follows at September 30 (in millions):
Net actuarial loss (gain) arising during period
Amortization and settlement recognition of net actuarial loss
Prior service cost arising during period
Amortization of prior service cost
Net other comprehensive loss (income) recognized
$
$
315.3
(8.9)
0.2
(8.9)
297.7
$
$
(208.0) $
(34.5)
5.6
(8.4)
(245.3) $
(26.2)
(48.2)
25.0
(7.8)
(57.2)
2022
Pension Plans
2021
2020
The net periodic pension income recognized in the consolidated statements of operations is comprised of the
following for fiscal years ended (in millions):
Service cost
Interest cost
Expected return on plan assets
Amortization of net actuarial loss
Amortization of prior service cost
Curtailment loss
Settlement loss
Company defined benefit plan income
Multiemployer and other plans
Net pension income
2022
Pension Plans
2021
2020
$
$
$
47.8
188.2
(368.6)
8.8
8.4
0.5
0.1
(114.8)
1.5
(113.3) $
$
51.1
187.3
(368.1)
34.2
8.4
—
0.4
(86.7)
1.6
(85.1) $
52.6
198.6
(362.3)
46.8
7.5
0.4
1.4
(55.0)
2.0
(53.0)
The Multiemployer and other plans line in the table above excludes the estimated withdrawal liabilities recorded.
See “Note 5. Retirement Plans — Multiemployer Plans” for additional information.
The consolidated statements of operations line item “Pension and other postretirement non-service income” is
equal to the non-service elements of our “Company defined benefit plan income” and our “Net postretirement cost”
outlined in this note.
88
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Weighted-average assumptions used in the calculation of benefit plan expense for fiscal years ended:
Discount rate
Interest crediting rate
Rate of compensation increase
Expected long-term rate of return on
plan assets
2022
Pension Plans
2021
2020
U.S.
Plans
Non-U.S.
Plans
U.S.
Plans
Non-U.S.
Plans
U.S.
Plans
Non-U.S.
Plans
2.99%
3.48%
2.50%
2.63%
N/A
2.65%
3.01%
3.47%
2.50%
2.16%
N/A
2.68%
3.35%
4.22%
3.00%
2.42%
N/A
2.65%
5.75%
3.81%
6.00%
3.73%
6.25%
4.26%
For our U.S. pension and postretirement plans, we considered the mortality tables and improvement scales
published by the Society of Actuaries and evaluated our specific mortality experience to establish mortality
assumptions. Based on our experience and in consultation with our actuaries, for fiscal 2022, 2021 and 2020 we
utilized the base Pri-2012 mortality tables with specific gender and job classification increases applied for fiscal
2022 ranging from 7% to 14%, fiscal 2021 ranging from 6% to 13% and for fiscal 2020 ranging from 5% to 12%.
For our Canadian pension and postretirement plans, we utilized the 2014 Private Sector Canadian Pensioners
Mortality Table adjusted to reflect industry and our mortality experience for fiscal 2022, 2021 and 2020. As of
September 30, 2022, these adjustment factors were updated to reflect the most recent mortality experience.
Our projected estimated benefit payments (unaudited), which reflect expected future service, as appropriate,
are as follows (in millions):
Fiscal 2023
Fiscal 2024
Fiscal 2025
Fiscal 2026
Fiscal 2027
Fiscal Years 2028 – 2032
Pension Plans
U.S. Plans
275.9
279.9
287.0
290.0
281.8
1,436.1
$
$
$
$
$
$
Non-U.S. Plans
90.9
$
68.8
$
68.7
$
68.3
$
68.2
$
338.0
$
The following table summarizes our pension plan assets measured at fair value on a recurring basis (at least
annually) as of September 30, 2022 (in millions):
Equity securities:
U.S. equities (1)
Non-U.S. equities (1)
Fixed income securities:
U.S. government securities (2)
Non-U.S. government securities (3)
U.S. corporate bonds (3)
Non-U.S. corporate bonds (3)
Other fixed income (4)
Short-term investments (5)
Benefit plan assets measured in the fair value hierarchy
Assets measured at NAV (6)
Total benefit plan assets
89
Quoted Prices
in Active
Markets for
Identical
Assets (Level 1)
Significant
Other
Observable
Inputs (Level 2)
Total
$
$
$
150.7
85.9
$
150.7
85.9
$
164.3
74.5
2,173.7
545.0
223.1
181.9
3,599.1
1,440.5
5,039.6
$
—
—
95.4
—
—
181.9
513.9
$
—
—
164.3
74.5
2,078.3
545.0
223.1
—
3,085.2
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following table summarizes our pension plan assets measured at fair value on a recurring basis (at least
annually) as of September 30, 2021 (in millions):
Equity securities:
U.S. equities (1)
Non-U.S. equities (1)
Fixed income securities:
U.S. government securities (2)
Non-U.S. government securities (3)
U.S. corporate bonds (3)
Non-U.S. corporate bonds (3)
Other fixed income (4)
Short-term investments (5)
Benefit plan assets measured in the fair value hierarchy
Assets measured at NAV (6)
Total benefit plan assets
Quoted Prices
in Active
Markets for
Identical
Assets (Level 1)
Significant
Other
Observable
Inputs (Level 2)
Total
$
$
$
275.1
9.4
$
275.1
9.4
$
292.4
113.2
2,987.8
511.1
435.5
195.5
4,820.0
2,262.7
7,082.7
$
—
—
137.6
—
—
195.5
617.6
$
—
—
292.4
113.2
2,850.2
511.1
435.5
—
4,202.4
(1) Equity securities are comprised of the following investment types: (i) common stock, (ii) preferred stock, and (iii) equity
exchange traded funds. Level 1 investments in common and preferred stocks and exchange traded funds are valued using
quoted market prices multiplied by the number of shares owned.
(2) U.S. government securities include treasury and agency debt. These investments are valued using broker quotes in an
active market.
(3) The level 1 non-U.S. government securities investment is an exchange cleared swap valued using quoted market prices.
The level 1 U.S. corporate bonds category is primarily comprised of U.S. dollar denominated investment grade securities
and valued using quoted market prices. Level 2 investments are valued utilizing a market approach that includes various
valuation techniques and sources such as value generation models, broker quotes in active and non-active markets,
benchmark yields and securities, reported trades, issuer spreads, and/or other applicable reference data.
(4) Other fixed income is comprised of municipal and asset-backed securities. Investments are valued utilizing a market
approach that includes various valuation techniques and sources, such as broker quotes in active and non-active markets,
benchmark yields and securities, reported trades, issuer spreads and/or other applicable reference data.
(5) Short-term investments are valued at $1.00/unit, which approximates fair value. Amounts are generally invested in interest-
bearing accounts.
(6)
Investments that are measured at net asset value (“NAV”) (or its equivalent) as a practical expedient have not been
classified in the fair value hierarchy.
90
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following table summarizes assets measured at fair value based on NAV per share as a practical expedient
as of September 30, 2022 and 2021 (in millions):
September 30, 2022
Hedge funds (1)
Commingled funds, private equity, private real
estate investments, and equity related
investments (2)
Fixed income and fixed income related
instruments (3)
September 30, 2021
Hedge funds (1)
Commingled funds, private equity, private real
estate investments, and equity related
investments (2)
Fixed income and fixed income related
instruments (3)
Fair value
Redemption
Frequency
Redemption
Notice Period
Unfunded
Commitments
$
26.4
Monthly
Up to 30 days $
—
1,031.9
Monthly
Up to 60 days
382.2
$ 1,440.5
Monthly
Up to 10 days
$
199.7
—
199.7
$
38.9
Monthly
Up to 30 days $
—
1,498.2
Monthly
Up to 60 days
725.6
$ 2,262.7
Monthly
Up to 10 days
$
171.7
—
171.7
(1) Hedge fund investments are primarily made through shares of limited partnerships or similar structures. Hedge funds are
typically valued monthly by third-party administrators that have been appointed by the funds’ general partners.
(2) Commingled fund investments are valued at the NAV per share multiplied by the number of shares held. The determination
of NAV for the commingled funds includes market pricing of the underlying assets as well as broker quotes and other
valuation techniques.
(3) Fixed income and fixed income related instruments consist of commingled debt funds, which are valued at their NAV per
share multiplied by the number of shares held. The determination of NAV for the commingled funds includes market pricing
of the underlying assets as well as broker quotes and other valuation techniques.
We maintain holdings in certain private equity partnerships and private real estate investments for which a liquid
secondary market does not exist. The private equity partnerships are commingled investments. Valuation
techniques, such as discounted cash flow and market based comparable analyses, are used to determine fair value
of the private equity investments. Unobservable inputs used for the discounted cash flow technique include
projected future cash flows and the discount rate used to calculate present value. Unobservable inputs used for the
market-based comparisons technique include earnings before interest,
taxes, depreciation and amortization
multiples in other comparable third-party transactions, price to earnings ratios, liquidity, current operating results,
as well as input from general partners and other pertinent information. Private equity investments have been valued
using NAV as a practical expedient.
Private real estate investments are commingled investments. Valuation techniques, such as discounted cash
flow and market based comparable analyses, are used to determine fair value of the private equity investments.
Unobservable inputs used for the discounted cash flow technique include projected future cash flows and the
discount rate used to calculate present value. Unobservable inputs used for the market-based comparison
technique include a combination of third-party appraisals, replacement cost, and comparable market prices. Private
real estate investments have been valued using NAV as a practical expedient.
Equity-related investments are hedged equity investments in a commingled fund that consist primarily of equity
in the form of short-term treasury
indexed investments which are hedged by options and also hold collateral
securities. Equity related investments have been valued using NAV as a practical expedient.
91
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Postretirement Plans
The postretirement benefit plans provide certain health care and life insurance benefits for certain salaried and
hourly employees who meet specified age and service requirements as defined by the plans.
The weighted average assumptions used to measure the benefit plan obligations at September 30 were:
Discount rate
Postretirement plans
2022
2021
U.S.
Plans
Non-U.S.
Plans
U.S.
Plans
Non-U.S.
Plans
5.57%
7.56%
2.98%
6.45%
The following table shows the changes in benefit obligation, plan assets and funded status for the fiscal years
ended September 30 (in millions):
Change in projected benefit obligation:
Benefit obligation at beginning of fiscal year
Service cost
Interest cost
Actuarial gain
Benefits paid
Foreign currency rate changes
Benefit obligation at end of fiscal year
Change in plan assets:
Fair value of plan assets at beginning of fiscal year
Employer contributions
Benefits paid
Fair value of plan assets at end of fiscal year
Underfunded Status
Amounts recognized in the Consolidated Balance
Sheets:
Other current liabilities
Postretirement benefit liabilities, net of current portion
Underfunded status at end of fiscal year
Postretirement Plans
2022
2021
U.S.
Plans
Non-U.S.
Plans
U.S.
Plans
Non-U.S.
Plans
$
$
$
$
$
$
$
86.4
0.6
2.6
(16.3)
(4.8)
—
68.5
$
$
— $
4.8
(4.8)
— $
(68.5) $
58.3
0.4
3.8
(9.8)
(2.8)
(1.6)
48.3
$
$
93.6
0.6
2.8
(6.1)
(4.5)
—
86.4
$
$
— $
2.8
(2.8)
— $
(48.3) $
— $
4.5
(4.5)
— $
(86.4) $
(8.7) $
(59.8)
(68.5) $
(2.7) $
(45.6)
(48.3) $
(8.2) $
(78.2)
(86.4) $
62.5
0.6
3.1
(8.1)
(2.8)
3.0
58.3
—
2.8
(2.8)
—
(58.3)
(2.8)
(55.5)
(58.3)
The pre-tax amounts in accumulated other comprehensive loss at September 30 not yet recognized as
components of net periodic postretirement cost, including noncontrolling interest, consist of (in millions):
Net actuarial (gain) loss
Prior service (credit) cost
Total accumulated other comprehensive (income) loss
$
$
(32.2) $
(2.3)
(34.5) $
(4.8) $
1.0
(3.8) $
(16.1) $
(3.2)
(19.3) $
4.8
1.1
5.9
Postretirement Plans
2022
2021
U.S.
Plans
Non-U.S.
Plans
U.S.
Plans
Non-U.S.
Plans
92
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The pre-tax amounts recognized in other comprehensive loss (income), including noncontrolling interest, are
as follows at September 30 (in millions):
Net actuarial gain arising during period
Amortization and settlement recognition of net actuarial
gain (loss)
Prior service cost arising during period
Amortization or curtailment recognition of prior service credit
Net other comprehensive income recognized
$
$
2022
Postretirement Plans
2021
2020
(26.2) $
(14.2) $
0.5
—
0.7
(25.0) $
0.6
—
2.4
(11.2) $
(8.4)
(0.1)
1.9
2.7
(3.9)
The net periodic postretirement cost recognized in the consolidated statements of operations is comprised of
the following for fiscal years ended (in millions):
Service cost
Interest cost
Amortization of net actuarial (gain) loss
Amortization of prior service credit
Net postretirement cost
2022
Postretirement Plans
2021
2020
$
$
1.0
6.4
(0.5)
(0.7)
6.2
$
$
1.2
5.9
(0.6)
(2.4)
4.1
$
$
1.3
6.9
0.1
(2.7)
5.6
The assumed health care cost trend rates used in measuring the accumulated postretirement benefit obligation
(“APBO”) are as follows at September 30, 2022:
U.S. Plans
Health care cost trend rate assumed for next year
Rate to which the cost trend rate is assumed to decline (the ultimate
trend rate)
Year the rate reaches the ultimate trend rate
Non-U.S. Plans
Health care cost trend rate assumed for next year
Rate to which the cost trend rate is assumed to decline (the ultimate
trend rate)
Year the rate reaches the ultimate trend rate
4.90%
4.00%
2047
5.68%
5.68%
2022
Weighted-average assumptions used in the calculation of benefit plan expense for fiscal years ended:
2022
U.S.
Plans
Non-U.S.
Plans
Postretirement Plans
2021
U.S.
Plans
Non-U.S.
Plans
2020
U.S.
Plans
Non-U.S.
Plans
Discount rate
Rate of compensation increase
2.98%
N/A
6.45%
N/A
3.00%
N/A
4.84%
N/A
3.34%
N/A
5.64%
N/A
93
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Our projected estimated benefit payments (unaudited), which reflect expected future service, as appropriate,
are as follows (in millions):
Fiscal 2023
Fiscal 2024
Fiscal 2025
Fiscal 2026
Fiscal 2027
Fiscal Years 2028 – 2032
Multiemployer Plans
Postretirement Plans
U.S. Plans
8.7
7.5
6.9
6.5
6.1
26.6
$
$
$
$
$
$
Non-U.S. Plans
2.7
$
2.8
$
2.9
$
3.0
$
3.1
$
17.6
$
We participate in several MEPPs that provide retirement benefits to certain union employees in accordance
with various CBAs. The risks of participating in MEPPs are different from the risks of participating in single-employer
pension plans. These risks include (i) assets contributed to a MEPP by one employer are used to provide benefits
to employees of all participating employers, (ii) if a participating employer withdraws from a MEPP, the unfunded
obligations of the MEPP allocable to such withdrawing employer may be borne by the remaining participating
employers, and (iii) if we withdraw from a MEPP, we may be required to pay that plan an amount based on our
allocable share of the unfunded vested benefits of the plan, referred to as a withdrawal liability, as well as a share
of the MEPP’s accumulated funding deficiency.
Contributions to MEPPs are established by the applicable CBAs; however, our required contributions may
increase based on the funded status of a MEPP and legal requirements, such as those set forth in the Pension Act,
which requires substantially underfunded MEPPs to implement a FIP or a RP to improve their funded status.
Contributions to MEPPs are individually and in the aggregate not material.
In the normal course of business, we evaluate our potential exposure to MEPPs, including with respect to
potential withdrawal liabilities. In fiscal 2018, we submitted formal notification to withdraw from PIUMPF and Central
States, and recorded estimated withdrawal liabilities for each. The PIUMPF estimated withdrawal liability assumed
both a payment for withdrawal liability and for our proportionate share of PIUMPF’s accumulated funding deficiency.
The estimated withdrawal liability excludes the potential impact of a future mass withdrawal of other employers from
PIUMPF, which was not considered probable or reasonably estimable and was discounted at a credit adjusted risk
free rate. Subsequently, we continued to refine the estimate of the withdrawal liability, the impact of which was not
significant. It is reasonably possible that we may incur withdrawal liabilities with respect to certain other MEPPs in
connection with such withdrawals. Our estimate of any such withdrawal
liability, both individually and in the
aggregate, is not material for the remaining plans in which we participate.
In September 2019, we received a demand from PIUMPF asserting that we owe $170.3 million on an
undiscounted basis (approximately $0.7 million per month for the next 20 years) with respect to our withdrawal
liability. The initial demand did not address any assertion of liability for PIUMPF’s accumulated funding deficiency.
In October 2019, we received two additional demand letters from PIUMPF related to a subsidiary of ours asserting
that we owe $2.3 million on an undiscounted basis to be paid over 20 years with respect to the subsidiary’s
withdrawal liability and $2.0 million for its accumulated funding deficiency. We received an updated demand letter
decreasing the accumulated funding deficiency demand from $2.0 million to $1.3 million in April 2020. In February
2020, we received a demand letter from PIUMPF asserting that we owe $51.2 million for our pro-rata share of
PIUMPF’s accumulated funding deficiency, including interest. We dispute the PIUMPF accumulated funding
deficiency demands. We began making monthly payments (approximately $0.7 million per month for 20 years) for
these withdrawal liabilities in fiscal 2020, excluding the accumulated funding deficiency demands.
In July 2021, PIUMPF filed suit against us in the U.S. District Court for the Northern District of Georgia claiming
the right to recover our pro rata share of the pension fund’s accumulated funding deficiency, along with interest,
liquidated damages and attorney’s fees. We believe we are adequately reserved for this matter.
94
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
At September 30, 2022 and September 30, 2021, we had withdrawal liabilities recorded of $214.7 million and
$247.1 million, respectively including liabilities associated with PIUMPF’s accumulated funding deficiency demands.
The decrease in withdrawal liabilities in fiscal 2022 as compared to the end of fiscal 2021 was primarily due to an
increase in interest rates.
With respect to certain other MEPPs, in the event we withdraw from one or more of the MEPPs in the future, it
is reasonably possible that we may incur withdrawal liabilities in connection with such withdrawals. Our estimate of
any such withdrawal liabilities, both individually and in the aggregate, are not material for the remaining plans in
which we participate.
Approximately 55% of our hourly employees are covered by CBAs in the U.S. and Canada, of which
approximately 32% are covered by CBAs that expire within one year and another 27% are covered by CBAs that
have expired.
Defined Contribution Plans
We have 401(k) and other defined contribution plans that cover certain of our U.S., Canadian and other non-
U.S. salaried union and nonunion hourly employees, generally subject to an initial waiting period. The 401(k) and
other defined contribution plans permit participants to make contributions by salary reduction pursuant to Section
401(k) of the Internal Revenue Code, or the taxing authority in the jurisdiction in which they operate. Due primarily
to acquisitions, CBAs, and other non-U.S. defined contribution programs, we have plans with varied terms. At
September 30, 2022, our contributions may be up to 7.5% for U.S. salaried and non-union hourly employees,
consisting of a match of up to 5% and an automatic employer contribution of 2.5%. Certain other employees who
receive accruals under a defined benefit pension plan, as well as certain employees covered by CBAs and non-
U.S. defined contribution programs generally receive up to a 3.0% to 4.0% contribution to their 401(k) plan or
defined contribution plan. During fiscal 2022, 2021 and 2020, we recorded expense of $169.5 million, $164.7 million
and $150.1 million, respectively, related to employer contributions to the 401(k) plans and other defined contribution
plans, including the automatic employer contribution. In connection with the WestRock Pandemic Action Plan, we
funded our matching contributions to the WestRock Company 401(k) Retirement Savings Plan in Common Stock
effective July 1, 2020 and ending September 30, 2021 (final period funded in October 2021).
Supplemental Retirement Plans
We have Supplemental Plans that are nonqualified deferred compensation plans. We intend to provide
participants with an opportunity to supplement their retirement income through deferral of current compensation.
Amounts deferred and payable under the Supplemental Plans are our unsecured obligations and rank equally with
our other unsecured and unsubordinated indebtedness outstanding. Participants’ accounts are credited with
investment gains and losses under the Supplemental Plans in accordance with the participant’s investment election
or elections (or default election or elections) as in effect from time to time. At September 30, 2022, the Supplemental
Plans had assets totaling $140.9 million that are recorded at market value, and liabilities of $138.7 million. The
investment alternatives available under the Supplemental Plans are generally similar to investment alternatives
available under 401(k) plans. The amount of expense we recorded for the current fiscal year and the preceding two
fiscal years was not significant.
Note 6.
Income Taxes
The components of income (loss) before income taxes are as follows (in millions):
United States
Foreign
Income (loss) before income taxes
Year Ended September 30,
2021
2020
2022
$
$
860.4
358.4
1,218.8
$
$
822.4
263.5
1,085.9
$
$
(440.7)
(81.9)
(522.6)
95
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Income tax expense consists of the following components (in millions):
Current income taxes:
Federal
State
Foreign
Total current expense
Deferred income taxes:
Federal
State
Foreign
Total deferred (benefit) expense
Total income tax expense
Year Ended September 30,
2021
2020
2022
$
$
205.2
44.9
116.1
366.2
(67.3)
(16.2)
(13.1)
(96.6)
269.6
$
$
171.2
27.2
78.4
276.8
(39.0)
(10.2)
15.8
(33.4)
243.4
$
$
31.6
23.5
66.8
121.9
42.4
6.2
(7.0)
41.6
163.5
During fiscal 2022, 2021 and 2020, cash paid for income taxes, net of refunds, was $335.2 million, $271.9
million and $147.2 million, respectively.
The differences between the statutory federal income tax rate and our effective income tax rate are as follows:
Statutory federal tax rate
Foreign rate differential
Adjustment and resolution of federal, state and foreign tax
uncertainties
State taxes, net of federal benefit
Excess tax benefit related to stock compensation
Research and development and other tax credits, net of
reserves
(Loss) income attributable to noncontrolling interest
Change in valuation allowance
Goodwill impairment
Nontaxable increased cash surrender value
Withholding taxes
Foreign derived intangible income
Deferred rate change
Brazilian net worth deduction
Other, net
Effective tax rate
Year Ended September 30,
2021
2020 (1)
2022
21.0%
2.1
(0.4)
1.6
0.1
(1.2)
(0.1)
0.7
—
—
0.5
(1.0)
(0.6)
(1.1)
0.5
22.1%
21.0%
0.9
0.1
2.0
0.2
(0.5)
0.1
2.8
—
(1.1)
0.2
(1.2)
(1.0)
(0.7)
(0.4)
22.4%
21.0%
(1.1)
2.7
(0.3)
(0.5)
3.7
0.1
(4.1)
(51.2)
1.3
(0.7)
1.3
(1.8)
1.7
(3.4)
(31.3)%
(1) The negative tax rate for fiscal year 2020 is the result of applying total income tax expense to the loss before income taxes.
The signs within the table are consequently the opposite compared to fiscal 2022 and 2021.
96
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The tax effects of temporary differences that give rise to deferred income tax assets and liabilities consist of the
following (in millions):
Deferred income tax assets:
Accruals and allowances
Employee related accruals and allowances
State net operating loss carryforwards, net of federal benefit
State credit carryforwards, net of federal benefit
Federal and foreign net operating loss carryforwards
Restricted stock and options
Lease liabilities
Other
Total
Deferred income tax liabilities:
Accruals and allowances
Property, plant and equipment
Deductible intangibles and goodwill
Inventory reserves
Deferred gain
Basis difference in joint ventures
Pension
Right-of-use assets
Total
Valuation allowances
Net deferred income tax liability
September 30,
2022
2021
$
— $
107.6
43.6
89.7
165.8
26.7
177.4
44.6
655.4
9.0
1,669.5
724.1
261.4
272.8
35.9
2.7
166.1
3,141.5
248.8
2,734.9
$
$
6.7
119.0
57.5
84.9
193.6
30.2
177.1
42.1
711.1
—
1,805.2
796.6
243.5
272.8
32.9
36.3
164.9
3,352.2
277.5
2,918.6
Deferred taxes are recorded as follows in the consolidated balance sheets (in millions):
Long-term deferred tax asset (1)
Long-term deferred tax liability
Net deferred income tax liability
September 30,
2022
2021
$
$
27.0
2,761.9
2,734.9
$
$
25.8
2,944.4
2,918.6
(1) The long-term deferred tax asset is presented in Other assets on the consolidated balance sheets.
At September 30, 2022 and 2021, we had gross U.S. federal net operating losses of approximately $1.2 million
and $2.7 million, respectively. These loss carryforwards expire in fiscal 2031.
At September 30, 2022 and 2021, we had gross state and local net operating losses, of approximately $969
million and $1,190 million, respectively. These loss carryforwards generally expire between fiscal 2023 and 2041.
The tax effected values of these net operating losses are $43.6 million and $57.5 million at September 30, 2022
and 2021, respectively, exclusive of valuation allowances of $17.7 million and $20.4 million at September 30, 2022
and 2021, respectively.
At September 30, 2022 and 2021, gross net operating losses for foreign reporting purposes of approximately
$667.2 million and $779.1 million, respectively, were available for carryforward. A majority of
these loss
carryforwards generally expire between fiscal 2023 and 2041, while a portion have an indefinite carryforward. The
tax effected values of these net operating losses are $165.5 million and $193.0 million at September 30, 2022 and
2021, respectively, exclusive of valuation allowances of $143.8 million and $177.6 million at September 30, 2022
and 2021, respectively.
At September 30, 2022 and 2021, we had state tax credit carryforwards of $89.7 million and $84.9 million,
respectively. These state tax credit carryforwards generally expire within 5 to 10 years; however, certain state
97
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
credits can be carried forward indefinitely. Valuation allowances of $81.1 million and $76.3 million at September 30,
2022 and 2021, respectively, have been provided on these assets. These valuation allowances have been recorded
due to uncertainty regarding our ability to generate sufficient taxable income in the appropriate taxing jurisdiction.
The following table represents a summary of the valuation allowances against deferred tax assets for fiscal
2022, 2021 and 2020 (in millions):
Balance at beginning of fiscal year
Increases
Reductions
Balance at end of fiscal year
2022
2021
2020
$
$
277.5
12.3
(41.0)
248.8
$
$
257.5
22.2
(2.2)
277.5
$
$
218.0
46.2
(6.7)
257.5
Consistent with prior years, we consider a portion of our earnings from certain foreign subsidiaries as subject
to repatriation and we provide for taxes accordingly. However, we consider the unremitted earnings and all other
outside basis differences from all other foreign subsidiaries to be indefinitely reinvested. Accordingly, we have not
provided for any taxes that would be due.
As of September 30, 2022, we estimate our outside basis difference in foreign subsidiaries that are considered
indefinitely reinvested to be approximately $1.2 billion. The components of the outside basis difference are
comprised of acquisition accounting adjustments, undistributed earnings, and equity components. In the event of a
distribution in the form of dividends or dispositions of the subsidiaries, we may be subject to incremental U.S. income
taxes, subject to an adjustment for foreign tax credits, and withholding taxes or income taxes payable to the foreign
jurisdictions. As of September 30, 2022, the determination of the amount of unrecognized deferred tax liability
related to any remaining undistributed foreign earnings not subject to the transition tax and additional outside basis
differences is not practicable.
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in
millions):
2022
2021
2020
Balance at beginning of fiscal year
Additions for tax positions taken in current year (1)
Additions for tax positions taken in prior fiscal years
Reductions for tax positions taken in prior fiscal years (1)
Reductions due to settlement
(Reductions) additions for currency translation adjustments
Reductions as a result of a lapse of the applicable statute of
limitations
$
$
199.5
1.8
27.6
—
(0.8)
(1.1)
(31.5)
195.5
$
206.7
2.7
10.8
—
—
1.5
(22.2)
199.5
$
224.3
5.0
11.7
(16.7)
—
(8.8)
(8.8)
206.7
Balance at end of fiscal year
(1) Reductions taken in fiscal 2020 include primarily positions taken related to foreign subsidiaries.
$
$
As of September 30, 2022 and 2021, the total amount of unrecognized tax benefits was approximately $195.5
million and $199.5 million, respectively, exclusive of interest and penalties. Of these balances, as of September 30,
2022 and 2021, if we were to prevail on all unrecognized tax benefits recorded, approximately $188.1 million and
$188.7 million, respectively, would benefit the effective tax rate. We regularly evaluate, assess and adjust the
related liabilities in light of changing facts and circumstances, which could cause the effective tax rate to fluctuate
from period to period. Resolution of the uncertain tax positions could have a material adverse effect on our cash
flows or materially benefit our results of operations in future periods depending upon their ultimate resolution. See
“Note 17. Commitments and Contingencies — Brazil Tax Liability”.
As of September 30, 2022 and 2021, we had liabilities of $85.0 million and $79.7 million, respectively, related
to estimated interest and penalties for unrecognized tax benefits. Our results of operations for fiscal 2022, 2021
and 2020 include expense of $3.8 million, $4.4 million and $6.6 million, respectively, net of indirect benefits, related
to estimated interest and penalties with respect to the liability for unrecognized tax benefits. As of September 30,
98
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
2022, it is reasonably possible that our unrecognized tax benefits will decrease by up to $30.1 million in the next 12
months due to expiration of various statutes of limitations and settlement of issues.
We file federal, state and local
income tax returns in the U.S. and various foreign jurisdictions. With few
exceptions, we are no longer subject to U.S. federal income tax examinations by tax authorities for years prior to
fiscal 2018 and state and local income tax examinations by tax authorities for years prior to fiscal 2011. We are no
longer subject to non-U.S. income tax examinations by tax authorities for years prior to fiscal 2009, except for Brazil
for which we are not subject to tax examinations for years prior to 2006. While we believe our tax positions are
appropriate, they are subject to audit or other modifications and there can be no assurance that any modifications
will not materially and adversely affect our results of operations, financial condition or cash flows.
Note 7.
Segment Information
Effective October 1, 2021, we reorganized our reportable segments due to changes in our organizational
structure and how our CODM makes key operating decisions, allocates resources and assesses the performance
of our business. We believe the new segments provide greater visibility into the vertical integration between our
mills and converting operations as well as the value of a diversified portfolio of assets, and helps us highlight the
performance of our portfolio. Our reportable segments now are:
Corrugated Packaging, which consists of our integrated corrugated converting operations and generates
its revenues primarily from the sale of corrugated containers and other corrugated products;
Consumer Packaging, which consists of our integrated consumer converting operations and generates
its revenues primarily from the sale of consumer packaging products such as folding cartons and interior
partitions;
Global Paper, which consists of our commercial paper operations and generates its revenues primarily
from the sale of containerboard and paperboard to external customers; and
Distribution, which consists of our distribution and display assembly operations and generates its
revenues primarily from the distribution of packaging products and assembly of display products.
We determined our operating segments based on the products and services we offer. Our operating segments
are consistent with our internal management structure, and we do not aggregate operating segments. We report
the benefit of vertical integration with our mills in each reportable segment that ultimately sells the associated paper
and packaging products to our external customers. We account for intersegment sales at prices that approximate
market prices.
Effective October 1, 2021, Adjusted EBITDA is our measure of segment profitability in accordance with ASC
280, “Segment Reporting” because it is used by our CODM to make decisions regarding allocation of resources
and to assess segment performance. Certain items are not allocated to our operating segments and, thus, the
information that our CODM uses to make operating decisions and assess performance does not reflect such
amounts. These items can be found in the selected operating data table below after Adjusted EBITDA. Management
believes excluding these items is useful in the evaluation of operating performance from period to period because
they are not representative of our ongoing operations or are items our CODM does not consider part of our
reportable segments. We have recast prior periods presented to conform with the new segment structure. These
changes did not impact our consolidated financial statements. In connection with the reorganization of our
reportable segments, we changed the amount of previously non-allocated expenses.
Prior to the reorganization, the Company had two reportable segments: Corrugated Packaging and Consumer
Packaging. Prior to the completion of our monetization program in fiscal 2020, we had a third reportable segment,
Land and Development, which previously sold real estate, primarily in the Charleston, SC region.
99
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Some of our operations are located in locations such as Canada, Latin America, EMEA and Asia Pacific. The
table below reflects financial data of our foreign operations for each of the past three fiscal years, some of which
were transacted in U.S. dollars (in millions):
Net sales (unaffiliated customers):
U.S.
Canada
Latin America
EMEA
Asia Pacific
Total
Long-lived assets:
U.S.
Canada
Latin America
EMEA
Asia Pacific
Total
Years Ended September 30,
2021
2020
2022
17,361.5
1,325.1
1,045.6
1,150.5
373.8
21,256.5
$
$
15,317.2
1,210.4
745.4
1,106.0
367.1
18,746.1
$
$
14,508.9
1,124.7
611.1
1,014.0
320.1
17,578.8
Years Ended September 30,
2021
2020
2022
9,278.2
391.4
719.0
320.4
72.0
10,781.0
$
$
9,654.6
413.0
725.8
364.9
87.8
11,246.1
$
$
9,962.5
382.1
639.9
362.8
90.2
11,437.5
$
$
$
$
The accounting policies of the reportable segments are the same as those described in “Note 1. Description
of Business and Summary of Significant Accounting Policies”. We account for intersegment sales at prices
that approximate market prices. For segment reporting purposes, we include our equity in income of unconsolidated
entities in Adjusted EBITDA, as well the related investments in segment identifiable assets. These amounts are
included in the segment tables that follow.
100
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following tables show selected financial data for our segments (in millions):
Years Ended September 30,
2021
2020
2022
Net sales (aggregate):
Corrugated Packaging
Consumer Packaging
Global Paper
Distribution
Land and Development
Total
Less net sales (intersegment):
Corrugated Packaging
Consumer Packaging
Distribution
Total
Net sales (unaffiliated customers):
Corrugated Packaging
Consumer Packaging
Global Paper
Distribution
Land and Development
Total
Adjusted EBITDA:
Corrugated Packaging
Consumer Packaging
Global Paper
Distribution
Total
Depreciation, depletion and amortization
Gain on sale of certain closed facilities
Multiemployer pension withdrawal (expense) income
Mineral rights impairment
Restructuring and other costs
Goodwill impairment
Non-allocated expenses
Interest expense, net
Loss on extinguishment of debt
Other (expense) income, net
Other adjustments
Income (loss) before income taxes
$
$
$
$
$
$
$
$
9,307.6
4,965.2
5,930.2
1,418.9
—
21,621.9
328.0
27.8
9.6
365.4
8,979.6
4,937.4
5,930.2
1,409.3
—
21,256.5
1,386.7
829.2
1,246.4
79.7
3,542.0
(1,488.6)
18.6
(0.2)
(26.0)
(401.6)
—
(82.6)
(318.8)
(8.5)
(11.0)
(4.5)
1,218.8
$
$
$
$
$
$
$
$
8,400.5
4,433.9
4,983.0
1,254.8
—
19,072.2
305.3
20.3
0.5
326.1
8,095.2
4,413.6
4,983.0
1,254.3
—
18,746.1
1,394.0
720.8
883.7
68.8
3,067.3
(1,460.0)
0.9
2.9
—
(31.5)
—
(68.1)
(372.3)
(9.7)
10.9
(54.5)
1,085.9
$
$
$
$
$
$
$
$
7,790.2
4,190.4
4,749.6
1,102.4
18.9
17,851.5
250.0
20.2
2.5
272.7
7,540.2
4,170.2
4,749.6
1,099.9
18.9
17,578.8
1,474.2
660.7
701.9
48.7
2,885.5
(1,487.0)
15.6
1.1
—
(112.7)
(1,333.2)
(73.3)
(393.5)
(1.5)
9.5
(33.1)
(522.6)
101
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Years Ended September 30,
2021
2020
2022
Depreciation, depletion and amortization:
Corrugated Packaging
Consumer Packaging
Global Paper
Distribution
Corporate
Total
Other adjustments:
Corrugated Packaging
Consumer Packaging
Global Paper
Distribution
Land and Development
Corporate
Total
Equity in income (loss) of unconsolidated entities:
Corrugated Packaging
Consumer Packaging
Global Paper
Total
$
$
$
$
$
$
683.0
349.5
425.1
27.3
3.7
1,488.6
$
$
674.5
352.2
405.9
23.6
3.8
1,460.0
(4.8) $
7.7
(0.6)
—
—
2.2
4.5
$
70.3
3.4
(0.8)
72.9
$
$
13.3
11.7
3.3
0.6
—
25.6
54.5
36.7
4.0
0.2
40.9
$
$
$
$
$
$
674.8
345.4
439.1
23.5
4.2
1,487.0
6.3
16.3
11.9
—
(1.4)
—
33.1
12.6
2.8
0.4
15.8
In fiscal 2020, we received the remaining $32.3 million of insurance proceeds related to the extensive damage
sustained at our containerboard and pulp mill located in Panama City, FL in October 2018 due to Hurricane Michael.
The insurance proceeds were recorded as a reduction of cost of goods sold - $20.0 million in our Corrugated
Packaging segment and $12.3 million in our Global Paper segment. The insurance proceeds received consisted of
$11.7 million of business interruption recoveries and $20.6 million for direct costs and property damage. Our
consolidated statements of cash flow for fiscal 2020 included $30.9 million in net cash provided by operating
activities and $1.4 million of cash proceeds included in net cash used for investing activities related to Hurricane
Michael. In addition, we had other minor amounts for various claims that were recorded as a reduction of cost of
goods sold across our segments.
102
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following table shows selected financial data for our segments (in millions):
Years Ended September 30,
2021
2020
2022
Assets:
Corrugated Packaging
Consumer Packaging
Global Paper
Distribution
Assets held for sale
Corporate
Total
Intangibles, net:
Corrugated Packaging
Consumer Packaging
Global Paper
Distribution
Total
Capital expenditures:
Corrugated Packaging
Consumer Packaging
Global Paper
Distribution
Corporate
Total
Equity method investments:
Corrugated Packaging
Consumer Packaging
Global Paper
Corporate
Total
$
$
$
$
$
$
$
$
11,382.5
6,704.5
7,039.2
863.0
34.4
2,381.9
28,405.5
648.4
1,523.5
612.6
136.1
2,920.6
370.4
202.1
238.6
6.1
45.4
862.6
479.3
0.5
0.5
0.1
480.4
$
$
$
$
$
$
$
$
11,557.6
6,757.3
7,527.6
800.1
10.9
2,600.8
29,254.3
765.9
1,719.2
677.7
156.0
3,318.8
331.4
192.7
259.4
1.3
30.7
815.5
434.4
17.7
0.8
0.4
453.3
$
$
$
$
$
$
$
$
11,623.4
6,535.8
7,549.5
718.9
7.0
2,345.1
28,779.7
889.1
1,857.6
744.6
175.9
3,667.2
389.9
140.2
417.8
0.3
29.9
978.1
414.2
13.7
1.3
0.4
429.6
in Grupo Gondi exceeded our proportionate share of
The Corrugated Packaging segment’s equity method investments primarily relate to our Grupo Gondi
investment. Equity method investments are included in the consolidated balance sheets in Other assets. The
the underlying equity in net assets by
investment
approximately $101.8 million and $105.7 million in fiscal 2022 and 2021, respectively. Approximately $35.2 million
and $40.2 million remains amortizable to expense in Equity in income of unconsolidated entities over the estimated
life of the underlying assets ranging from 10 to 15 years beginning with our investment in fiscal 2016. The Gondi
investment is denominated in Mexican Pesos. See “Note 3. Acquisitions and Investments” for our announcement
to acquire the remaining interest in Grupo Gondi.
Effective October 1, 2021, in connection with our segment reorganization and in accordance with ASC 350, we
determined our new reporting units to be the same as our operating segments: Corrugated Packaging, Consumer
Packaging, Global Paper and Distribution. We performed an interim quantitative goodwill impairment test for our
new reporting units using procedures consistent with those described for our annual goodwill impairment testing.
Each of our reporting units had a fair value that exceeded its carrying value by more than 10%. If we had concluded
that it was appropriate to increase the discount rate we used by 100 basis points, the fair value of each of our
reporting units would have continued to exceed its carrying value.
103
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The changes in the carrying amount of goodwill for the fiscal years ended September 30, 2022, 2021 and 2020
are as follows (in millions):
Balance as of Sep. 30, 2019
Goodwill
Accumulated impairment
losses
Goodwill impairment
Goodwill disposed of
Purchase price allocation
adjustments
Translation adjustments
Balance as of Sep. 30, 2020
Goodwill
Accumulated impairment
losses
Goodwill disposed of
Translation adjustments
Balance as of Sep. 30, 2021
Goodwill
Accumulated impairment
losses
Segment recasting (1)
Goodwill acquired
Translation adjustments
Balance as of Sep. 30, 2022
Legacy Reportable Segments
Consumer
Corrugated
Packaging
Packaging
Corrugated
Packaging
New Reportable Segments
Consumer
Packaging
Global
Paper
Distribution
Total
$
3,695.1
$
3,633.3
$
— $
— $
— $
— $ 7,328.4
(0.1)
3,695.0
—
—
14.3
(35.8)
(42.7)
3,590.6
(1,333.2)
(0.3)
(0.6)
32.2
3,673.6
3,664.6
(0.1)
3,673.5
(16.4)
6.2
(1,375.9)
2,288.7
—
7.2
3,663.4
3,671.8
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(0.1)
3,663.3
(3,663.3)
—
—
(1,375.9)
2,295.9
(2,295.9)
—
—
—
—
2,834.8
3.2
(35.2)
—
—
1,603.3
—
(14.9)
—
—
1,382.0
—
(15.5)
—
—
139.1
—
(1.6)
(42.8)
7,285.6
(1,333.2)
(0.3)
13.7
(3.6)
7,338.2
(1,376.0)
5,962.2
(16.4)
13.4
7,335.2
(1,376.0)
5,959.2
—
3.2
(67.2)
Goodwill
$
— $
— $
2,802.8
$
1,588.4
$ 1,366.5
$
137.5
$ 5,895.2
(1) Represents the reallocation of goodwill as a result of our October 1, 2021 segment change.
During the fourth quarter of fiscal 2022, we completed our annual goodwill impairment testing. Each of our
reporting units had fair values that exceeded their respective carrying values by more than 15%. See “Note 1.
Description of Business and Summary of Significant Accounting Policies — Goodwill and Long-Lived
Assets” for a discussion of our fiscal 2022 impairment test.
In fiscal 2020, we recorded a $1,333.2 million pre-tax non-cash goodwill impairment in our legacy Consumer
Packaging reportable segment. The impairment was primarily the result of expected lower volumes and cash flows
related to certain external bleached paperboard end markets, including commercial print, tobacco and plate and
cup stock markets. We had experienced significant declines in demand for those products that we believed were
more systemic and our view of related growth and earnings opportunities had been diminished.
Note 8.
Interest
The components of interest expense, net is as follows (in millions):
Interest expense
Interest income
Interest expense, net
Years Ended September 30,
2021
2020
2022
$
$
(375.6) $
56.8
(318.8) $
(418.9) $
46.6
(372.3) $
(465.5)
72.0
(393.5)
104
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Cash paid for interest, net of amounts capitalized, of $363.9 million, $384.7 million and $423.4 million were
made during fiscal 2022, 2021 and 2020, respectively.
During fiscal 2022, 2021 and 2020, we capitalized interest of $11.1 million, $14.0 million and $24.6 million,
respectively.
Note 9.
Inventories
Inventories are as follows (in millions):
Finished goods and work in process
Raw materials
Supplies and spare parts
Inventories at FIFO cost
LIFO reserve
Net inventories
September 30,
2022
2021
$
$
1,102.4
1,135.9
529.6
2,767.9
(450.8)
2,317.1
$
$
972.7
888.1
536.4
2,397.2
(223.9)
2,173.3
It is impracticable to segregate the LIFO reserve between raw materials, finished goods and work in process.
In fiscal 2022, 2021 and 2020, we reduced inventory quantities in some of our LIFO pools. These reductions result
in liquidations of LIFO inventory quantities generally carried at lower costs prevailing in prior years as compared
with the cost of the purchases in the respective fiscal years, the effect of which typically decreases cost of goods
sold. Alternatively, higher costs prevailing in prior years increases costs of goods sold. The impact of the liquidations
in fiscal 2022, 2021 and 2020 was not significant.
In fiscal 2022, we experienced higher inventory costs primarily due to inflation, the effect of which increased
cost of goods sold and our LIFO reserve by $226.9 million.
Note 10. Property, Plant and Equipment
Property, plant and equipment consists of the following (in millions):
Property, plant and equipment at cost:
Land and buildings
Machinery and equipment
Forestlands and mineral rights (1)
Transportation equipment
Leasehold improvements
Less: accumulated depreciation, depletion and amortization
Property, plant and equipment, net
September 30,
2022
2021
$
$
2,646.4
16,592.5
95.7
24.2
103.4
19,462.2
(9,380.8)
10,081.4
$
$
2,626.0
15,853.1
120.0
26.1
93.9
18,719.1
(8,149.0)
10,570.1
(1)
In fiscal 2022, we recorded a $26.0 million pre-tax non-cash impairment of certain mineral rights. With the impairment,
we have no remaining mineral rights.
Depreciation expense for fiscal 2022, 2021 and 2020 was $1,108.1 million, $1,069.7 million and $1,054.9
million, respectively. Accrued additions to property, plant and equipment at September 30, 2022, 2021 and 2020
were $223.2 million, $108.5 million and $85.0 million, respectively.
105
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Note 11. Other Intangible Assets
The gross carrying amount and accumulated amortization relating to intangible assets, excluding goodwill, are
as follows and reflect the removal of fully amortized intangible assets in the period fully amortized (in millions, except
weighted avg. life):
September 30,
2022
2021
Customer relationships
Trademarks and tradenames
Technology and patents
License costs
Non-compete agreements
Other
Total
Weighted
Avg. Life
(in years)
Gross
Carrying
Amount
15.6
22.5
11.8
15.8
2.0
29.5
15.7
$
$
4,888.5
80.7
24.4
0.3
1.9
3.5
4,999.3
Accumulated
Amortization
$
(2,038.1)
(26.2)
(12.9)
(0.1)
(1.1)
(0.3)
(2,078.7)
$
Gross
Carrying
Amount
$
$
4,963.0
80.4
23.5
16.2
1.9
4.0
5,089.0
Accumulated
Amortization
$
(1,724.3)
(20.9)
(9.4)
(15.1)
(0.2)
(0.3)
(1,770.2)
$
Estimated intangible asset amortization expense for the succeeding five fiscal years is as follows (in millions):
Fiscal 2023
Fiscal 2024
Fiscal 2025
Fiscal 2026
Fiscal 2027
$
$
$
$
$
340.2
318.8
304.1
296.7
292.9
Intangible amortization expense was $351.1 million, $360.6 million and $405.4 million during fiscal 2022, 2021
and 2020, respectively. We had other intangible amortization expense, primarily for packaging equipment leased
to customers of $29.4 million, $29.7 million and $26.7 million during fiscal 2022, 2021 and 2020, respectively.
Note 12. Fair Value
Assets and Liabilities Measured or Disclosed at Fair Value
We disclose the fair value of our long-term debt in “Note 13. Debt” and the fair value of our pension and
postretirement assets and liabilities in “Note 5. Retirement Plans”. We have, or from time to time may have,
financial instruments recognized at fair value including Supplemental Plans, interest rate derivatives, commodity
derivatives or other similar classes of assets or liabilities, the fair value of which are not significant. See “Note 1 —
Description of Business and Summary of Significant Accounting Policies — Fair Value of Financial
Instruments and Nonfinancial Assets and Liabilities” for additional information.
Fiscal 2021 reflects a charge of $22.5 million associated with not exercising an option to purchase an additional
equity interest in Grupo Gondi that was recorded in Other (expense) income, net.
Financial Instruments Not Recognized at Fair Value
Financial instruments not recognized at fair value on a recurring or nonrecurring basis include cash and cash
equivalents, accounts receivable, certain other current assets, short-term debt, accounts payable, certain other
current liabilities and long-term debt. With the exception of long-term debt, the carrying amounts of these financial
instruments approximate their fair values due to their short maturities.
Fair Value of Nonfinancial Assets and Nonfinancial Liabilities
As discussed in “Note 1. Description of Business and Summary of Significant Accounting Policies”, we
measure certain nonfinancial assets and nonfinancial liabilities at fair value on a nonrecurring basis. See “Note 7.
106
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Segment Information” for a discussion of a $1,333.2 million pre-tax non-cash goodwill impairment of our legacy
Consumer Packaging reportable segment recorded in fiscal 2020. See “Note 4. Restructuring and Other Costs”
for impairments associated with restructuring activities labeled as "PP&E and related costs". In fiscal 2022, we
recorded impairments associated with the closure of our Panama City, FL mill and the permanent closure of the
corrugated medium manufacturing operations at the St. Paul, MN mill, and the impairment of a paper machine at
our Evadale, TX mill in fiscal 2020. Fair value of the remaining Panama City, FL land, building and improvements
was determined based on a third party appraisal. During fiscal 2022, 2021 and 2020, we did not have any significant
non-goodwill or non-restructuring nonfinancial assets or nonfinancial liabilities that were measured at fair value on
a nonrecurring basis in periods subsequent to initial recognition other than the $26.0 million pre-tax non-cash
impairment of certain mineral rights in fiscal 2022 that was driven by a lack of new leasing or development activity
on our properties for an extended period of time, including pipeline delays. With the impairment, we have no
remaining mineral rights.
Accounts Receivable Sales Agreements
We are a party to an accounts receivable sales agreement to sell to a third-party financial institution all of the
short-term receivables generated from certain customer trade accounts. On September 16, 2022, we amended the
then-existing $700.0 million facility to extend the maturity to September 15, 2023 (the “A/R Sales Agreement”) and
addressed the transition from LIBOR to the Secure Overnight Funding Rate ("SOFR"). The terms of the A/R Sales
Agreement limit the balance of receivables sold to the amount available to fund such receivables sold, thereby
eliminating the receivable for proceeds from the financial institution at any transfer date. Transfers under the A/R
Sales Agreement meet the requirements to be accounted for as sales in accordance with guidance in ASC 860.
We also have a similar facility that was amended on December 2, 2021 to increase the $88.5 million purchase
limit to $110.0 million, establish the transition from LIBOR to SOFR at a future date and revise certain fees. The
facility remains uncommitted and has a one-year term ending December 4, 2022. We expect to renew this facility
prior to its maturity.
The customers from these facilities are not included in the Receivables Securitization Facility that is discussed
in “Note 13. Debt”.
The following table represents a summary of these accounts receivable sales agreements for fiscal 2022 and
2021 (in millions):
Receivable from financial institutions at beginning of fiscal year
Receivables sold to the financial institutions and derecognized
Receivables collected by financial institutions
Cash proceeds from financial institutions
Receivable from financial institutions at September 30,
2022
2021
$
$
— $
(2,954.8)
2,896.0
58.8
— $
—
(2,732.2)
2,655.6
76.6
—
Receivables sold under these accounts receivable sales agreements as of the respective balance sheet dates
were approximately $724.7 million and $665.9 million as of September 30, 2022 and September 30, 2021,
respectively.
Cash proceeds related to the receivables sold are included in Net cash provided by operating activities in the
consolidated statements of cash flow in the accounts receivable line item. While the expense recorded in connection
with the sale of receivables may vary based on current rates and levels of receivables sold, the expense recorded
in connection with the sale of receivables was $20.4 million, $11.1 million and $12.7 million in fiscal 2022, 2021 and
2020, respectively, and is recorded in Other (expense) income, net in the consolidated statements of operations.
Although the sales are made without recourse, we maintain continuing involvement with the sold receivables as we
provide collections services related to the transferred assets. The associated servicing liability is not material given
the high credit quality of the customers underlying the receivables and the anticipated short collection period.
107
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Note 13. Debt
The public bonds issued by WRKCo, RKT and MWV are guaranteed by WestRock and have cross-guarantees
between the three companies. The public bonds are unsecured, unsubordinated obligations that rank equally in
right of payment with all of our existing and future unsecured, unsubordinated obligations. The bonds are effectively
subordinated to any of our existing and future secured debt to the extent of the value of the assets securing such
debt and to the obligations of our non-debtor/guarantor subsidiaries. The industrial development bonds associated
with the finance lease obligations of MWV are guaranteed by the Company and certain of its subsidiaries. At
September 30, 2022, all of our debt was unsecured with the exception of our Receivables Securitization Facility (as
defined below) and finance lease obligations.
As noted below, we have been addressing the LIBOR transition in our applicable debt facilities and have
completed the transition on all of our significant facilities. We expect to complete the last facility prior to the June
30, 2023 deadline when the remaining rates cease publication. See below for additional information regarding
changes to certain facilities.
The following were individual components of debt (in millions, except percentages):
September 30, 2022
Carrying
Value
Weighted Avg
Interest Rate
September 30, 2021
Carrying
Value
Weighted Avg
Interest Rate
Public bonds due fiscal 2023 to 2028
Public bonds due fiscal 2029 to 2033
Public bonds due fiscal 2037 to 2047
Revolving credit and swing facilities
Term loan facilities
International and other debt
Finance lease obligations
Vendor financing and commercial card
programs
Total debt
Less: current portion of debt
Long-term debt due after one year
$
$
3,433.4
2,753.3
177.8
286.3
598.2
127.6
287.5
123.1
7,787.2
212.2
7,575.0
4.0% $
4.5%
6.2%
1.9%
3.1%
12.8%
4.2%
N/A
4.2%
$
3,778.2
2,766.5
178.2
270.0
598.9
225.1
264.1
113.1
8,194.1
168.8
8,025.3
4.0%
4.5%
6.2%
1.1%
3.0%
4.8%
4.1%
N/A
4.0%
On March 22, 2022, we redeemed $350 million aggregate principal amount of our 4.00% senior notes due
March 2023 primarily using borrowings under our Receivables Securitization Facility (as hereinafter defined) and
recorded an $8.2 million loss on extinguishment of debt.
On September 10, 2021, we redeemed $400 million aggregate principal amount of our 4.900% senior notes
due March 2022 using cash and cash equivalents and recorded a $8.6 million loss on extinguishment of debt.
A portion of the debt classified as long-term may be paid down earlier than scheduled at our discretion without
penalty. Our credit facilities contain certain restrictive covenants, including a covenant to satisfy a debt to
capitalization ratio. We test and report our compliance with all of these covenants as required by these facilities and
were in compliance with them at September 30, 2022. The carrying value of our debt includes the fair value step-
up of debt acquired in mergers and acquisitions, and the weighted average interest rate includes the fair value step
up. At September 30, 2022, excluding the step-up, the weighted average interest rate on total debt was 4.5%. At
September 30, 2022, the unamortized fair market value step-up was $175.1 million, which will be amortized over a
weighted average remaining life of 9.8 years. At September 30, 2022, we had $57.1 million of outstanding letters
of credit not drawn upon. At September 30, 2022, we had approximately $3.7 billion of availability under long-term
committed credit facilities and cash and cash equivalents, excluding the $1.0 billion Delayed Draw Term Loan that
we plan to use to acquire the remaining 67.7% interest in Grupo Gondi. This liquidity may be used to provide for
ongoing working capital needs and for other general corporate purposes including acquisitions, dividends and stock
repurchases.
108
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The estimated fair value of our debt was approximately $7.3 billion and $9.0 billion as of September 30, 2022
and September 30, 2021, respectively. The fair value of our long-term debt is categorized as level 2 within the fair
value hierarchy and is primarily either based on quoted prices for those or similar instruments, or approximate their
carrying amount, as the variable interest rates reprice frequently at observable current market rates.
During fiscal 2022, 2021 and 2020, amortization of debt issuance costs charged to interest expense were $7.3
million, $8.3 million and $8.2 million, respectively.
Public Bonds / Notes Issued
At September 30, 2022 and September 30, 2021, the face value of our public bond obligations outstanding
were $6.2 billion and $6.6 billion, respectively.
In June 2020, WRKCo issued $600.0 million aggregate principal amount of its 3.00% Senior Notes due 2033
(the “June 2033 Notes”) in a registered offering pursuant to the Company’s automatic shelf registration statement
on Form S-3 under the Securities Act of 1933, as amended, (the “Securities Act”). The June 2033 Notes are the
unsecured unsubordinated obligations of WRKCo, ranking equally with all of WRKCo’s other existing and future
unsecured, unsubordinated obligations. The June 2033 Notes will be effectively subordinated to any of WRKCo’s
existing and future secured obligations to the extent of the value of the assets securing such obligations and to the
obligations of the non-debtor/guarantor subsidiaries of WRKCo. The Guarantor Subsidiaries guaranteed WRKCo’s
obligations under the June 2033 Notes. We may redeem the June 2033 Notes, in whole or in part, at any time at
specified redemption prices, plus accrued and unpaid interest, if any. The proceeds from the issuance of the June
2033 Notes were primarily used to repay the $100.0 million principal amount of MWV’s 9.75% notes due June 2020
and reduce outstanding indebtedness under our then existing receivables securitization facility and revolving credit
facility.
Revolving Credit Facilities
Revolving Credit Facility
On July 7, 2022, we terminated our then-existing $2.3 billion unsecured revolving credit facility entered into on
July 1, 2015 and as subsequently amended as well as the commitments thereunder (the “Prior Revolving Credit
Facility”). At September 30, 2021, there were no amounts outstanding under the Prior Revolving Credit Facility.
On the same date, we entered into a credit agreement (the "Revolving Credit Agreement") that included a
five-year senior unsecured revolving credit facility in an aggregate amount of $2.3 billion, consisting of a $1.8 billion
U.S. revolving facility and a $500 million multicurrency revolving facility (collectively, the “Revolving Credit
Facility”) with Wells Fargo Bank, National Association, as administrative agent and multicurrency agent. The
Revolving Credit Facility is guaranteed by WestRock Company and certain of its subsidiaries as set forth in the
credit agreement. At September 30, 2022, there were no amounts outstanding under the facility.
Loans under the Revolving Credit Facility may be drawn in U.S. dollars, Canadian dollars, Euro and Pounds
Sterling. At our option, loans under the Revolving Credit Facility will bear interest at (a) in the case of loans
denominated in U.S. dollars, either Term SOFR or an alternate base rate, (b) in the case of loans denominated in
Canadian dollars, one of CDOR, the U.S. Base Rate or the Canadian Prime Rate, (c) in the case of loans
denominated in Euro, EURIBOR and (d) in the case of loans denominated in Pounds Sterling, SONIA, in each case
plus an applicable interest rate margin that will fluctuate between 0.875% per annum and 1.500% per annum (for
Term SOFR loans, CDOR loans, EURIBOR loans and SONIA loans) or between 0.000% per annum and 0.500%
per annum (for alternate base rate loans, U.S. Base Rate loans and Canadian Prime Rate loans), based upon the
Company’s corporate credit ratings or the Leverage Ratio (as each of these terms is defined in the Revolving Credit
Agreement) whichever yields a lower applicable interest rate margin at such time. Term SOFR loans will be subject
to a credit spread adjustment equal to 0.100% per annum. In addition, unused revolving commitments under the
Revolving Credit Facility will accrue a commitment fee that will fluctuate between 0.080% per annum and 0.225%
per annum, based upon the Company’s corporate credit ratings or the Leverage Ratio (whichever yields a lower
applicable commitment fee rate) at such time.
109
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
European Revolving Credit Facilities
On July 7, 2022, we terminated our then-existing three-year unsecured €600.0 million European revolving credit
facility with Coöperatieve Rabobank U.A., New York Branch, as administrative agent, entered into on February 26,
2021 and as subsequently amended as well as the commitments thereunder. At September 30, 2021, we had
borrowed $270.0 million under the then-existing facility.
On the same date, we entered into a credit agreement (the "European Revolving Credit Agreement") with
Coöperatieve Rabobank U.A., New York Branch, as administrative agent. The European Revolving Credit
Agreement provides for a three-year senior unsecured revolving credit facility in an aggregate amount of €700.0
million and includes an incremental €100.0 million accordion feature (the “European Revolving Credit Facility”).
The European Revolving Credit Facility is guaranteed by WestRock Company and certain of its subsidiaries as set
forth in the credit agreement. At September 30, 2022, we had borrowed $265.0 million under the facility.
Loans under the European Revolving Credit Facility may be drawn in U.S. dollars, Euro and Pounds Sterling.
At our option, loans under the European Revolving Credit Facility will bear interest at (a) in the case of loans
denominated in U.S. dollars, either Term SOFR or an alternate base rate, (b) in the case of loans denominated in
Euro, EURIBOR and (c) in the case of loans denominated in Pounds Sterling, SONIA, in each case plus an
applicable interest rate margin that will fluctuate between 0.875% per annum and 1.625% per annum (for Term
SOFR loans, EURIBOR loans and SONIA loans) or between 0.000% per annum and 0.625% per annum (for
alternate base rate loans), based upon the Company’s corporate credit ratings at such time. Term SOFR loans will
be subject to a credit spread adjustment equal to 0.100% per annum. In addition, unused revolving commitments
under the European Revolving Credit Facility will accrue a commitment fee that will fluctuate between 0.100% per
annum and 0.275% per annum, based upon the Company’s corporate credit ratings at such time. Loans under the
European Revolving Credit Facility may be prepaid at any time without premium.
Term Loan Facilities
Farm Loan Credit Facilities
On September 27, 2019, we entered into a credit agreement (and as subsequently amended) with CoBank
ACB, as administrative agent, that replaced our then-existing facility. The facility provided for a seven-year senior
unsecured term loan in an aggregate principal amount of $600 million (the “Prior Farm Loan Credit Facility”). The
carrying value of this facility at September 30, 2021 was $598.9 million.
On July 7, 2022, we entered into an amended and restated credit agreement that amends and restates the
Prior Farm Loan Credit Agreement (the “Farm Credit Facility Agreement”) with CoBank, ACB, as administrative
agent. The Farm Credit Facility Agreement provides for a seven-year senior unsecured term loan facility in an
aggregate principal amount of $600 million (the “Farm Credit Facility”). At any time, we have the ability to request
an increase in the principal amount by up to $400 million by written notice. The Farm Credit Facility is guaranteed
by WestRock Company and certain of its subsidiaries as set forth in the credit agreement. The carrying value of
this facility at September 30, 2022 was $598.2 million.
At our option, loans issued under the Farm Credit Facility will bear interest at either Term SOFR or an alternate
base rate, in each case plus an applicable interest rate margin that will fluctuate between 1.650% per annum and
2.275% per annum (for Term SOFR loans) or between 0.650% per annum and 1.275% per annum (for alternate
base rate loans), based upon the Company’s corporate credit ratings or the Leverage Ratio (as each of these terms
is defined in the Farm Credit Facility Agreement) whichever yields a lower applicable interest rate margin at such
time. In addition, Term SOFR loans will be subject to a credit spread adjustment equal to 0.100% per annum.
Delayed Draw Term Facility
On August 18, 2022, we amended the Revolving Credit Agreement (the "Amended Credit Agreement") to add
an unsecured delayed draw term loan facility with an aggregate principal amount of up to $1.0 billion (the "Delayed
Draw Term Facility") that may be drawn in a single draw through May 31, 2023. Proceeds drawn under the Delayed
Draw Term Facility are planned to be used to acquire the remaining 67.7% interest in Grupo Gondi. The Delayed
110
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Draw Term Facility is guaranteed by WestRock Company and certain of its subsidiaries as set forth in the Amended
Credit Agreement. At September 30, 2022, there were no amounts outstanding under the facility.
At our option, a loan under the Delayed Draw Term Facility will bear interest at either Term SOFR or an alternate
base rate, in each case plus an applicable interest rate margin that will fluctuate between 0.875% per annum and
1.500% per annum for a Term SOFR loan or between 0.000% per annum and 0.500% per annum for an alternate
base rate loan based upon the Company’s corporate credit ratings or the Leverage Ratio (as defined in the
Amended Credit Agreement), whichever yields a lower applicable interest rate margin, at such time. A Term SOFR
loan will be subject to a credit spread adjustment equal to 0.100% per annum. Any loan under the Delayed Draw
Term Facility may be prepaid at any time without premium, and it may not be reborrowed.
Other Term Loans
At September 30, 2020, there was $648.9 million outstanding on the five-year unsecured term loan we entered
into with Wells Fargo, as administrative agent, on March 7, 2018. During the first quarter of fiscal 2021, we paid off
the term loan primarily using cash on hand.
On June 7, 2019, we entered into a $300.0 million credit agreement providing for a five-year unsecured term
loan with Bank of America, N.A., as administrative agent. The facility was scheduled to mature on June 7, 2024. In
fiscal 2021, we repaid the $300.0 million outstanding at September 30, 2020 using cash and cash equivalents which
resulted in the facility being terminated.
Receivables Securitization Facility
On March 12, 2021, we amended our existing $700.0 million receivables securitization agreement (the
“Receivables Securitization Facility”), extended the maturity to March 11, 2024 and established the transition to
SOFR at a future date from a blend of the market rate for asset-backed commercial paper and the one-month
LIBOR rate plus a credit spread, and revised certain fees. The current borrowing rate consists of a blend of the
market rate for asset-backed commercial paper and the one-month LIBOR rate plus a credit spread of 0.90%. The
commitment fee was 0.35% and 0.35% as of September 30, 2022 and September 30, 2021, respectively. At
September 30, 2022 and September 30, 2021, maximum available borrowings, excluding amounts outstanding
under the Receivables Securitization Facility, were $700.0 million and $690.3 million, respectively. The carrying
amount of accounts receivable collateralizing the maximum available borrowings at September 30, 2022 and
September 30, 2021 were approximately $1,390.5 million and $1,318.4 million, respectively. We have continuing
to the
involvement with the underlying receivables as we provide credit and collections services pursuant
Receivables Securitization Facility. At September 30, 2022 and September 30, 2021 there were no amounts
outstanding under this facility.
Borrowing availability under this facility is based on the eligible underlying accounts receivable and compliance
with certain covenants. The agreement governing the Receivables Securitization Facility contains restrictions,
including, among others, on the creation of certain liens on the underlying collateral. We test and report our
compliance with these covenants monthly; we were in compliance with all of these covenants at September 30,
2022. The Receivables Securitization Facility includes certain restrictions on what constitutes eligible receivables
under the facility and allows for the exclusion of eligible receivables of specific obligors each calendar year subject
to the following restrictions: (i) the aggregate of excluded receivables may not exceed 7.5% of eligible receivables
under the Receivables Securitization Facility and (ii) the excluded receivables of each obligor may not exceed 2.5%
of the aggregate outstanding balance.
Commercial Paper Program
On December 7, 2018, we established an unsecured commercial paper program with WRKCo as the issuer.
Under the program, we may issue short-term unsecured commercial paper notes in an aggregate principal amount
at any time not to exceed $1.0 billion with up to 397-day maturities. The program has no expiration date and can
be terminated by either the agent or us with not less than 30 days’ notice. Our Revolving Credit Facility is (and,
prior to July 7, 2022, the Prior Revolving Credit Facility was) intended to backstop the commercial paper program.
111
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Amounts available under the program may be borrowed, repaid and re-borrowed from time to time. At
September 30, 2022 and 2021, there was no amount outstanding.
International and Other Debt
Brazil Export Credit Note
On January 18, 2021, we entered into a credit agreement to provide for R$500.0 million of a senior unsecured
term loan of WestRock Celulose, Papel E Embalagens Ltda. (a subsidiary of the Company), as borrower, and the
Company, as guarantor. The outstanding amount of the principal will be repaid in equal, semiannual installments
beginning on January 19, 2023 until the facility matures on January 19, 2026. The proceeds borrowed are to be
used to support the production of goods or acquisition of inputs that are essential or ancillary to export activities.
Loans issued under the facility will bear interest at a floating rate based on Brazil’s Certificate of Interbank Deposit
rate plus a spread of 2.50%. At September 30, 2022 and 2021, there was R$500.0 million ($92.7 million)
outstanding and R$500.0 million ($92.3 million) outstanding, respectively.
Brazil Delayed Draw Credit Facilities
On April 10, 2019, we entered into a credit agreement to provide for R$750.0 million of senior unsecured term
loans with an incremental R$250.0 million accordion feature to be repaid in equal, semiannual
installments
beginning on April 10, 2021 until maturity on April 10, 2024 (the “Brazil Delayed Draw Credit Facilities”). The
proceeds of the Brazil Delayed Draw Credit Facilities were used to support the production of goods or acquisition
of inputs essential or ancillary to export activities. On September 16, 2022, we repaid the facility in full, which
resulted in the facility being terminated. The Brazil Delayed Draw Credit Facilities were senior unsecured obligations
of Rigesa Celulose, Papel E Embalagens Ltda. (a subsidiary of the Company), as borrower, and the Company, as
guarantor. Loans issued under the Brazil Delayed Draw Credit Facilities bore interest at a floating rate based on
Brazil’s Certificate of Interbank Deposit rate plus a spread of 1.50%. At September 30, 2021, the carrying value of
the facility was R$639.2 million ($118.0 million).
Aggregate Maturities of Debt
As of September 30, 2022, the aggregate maturities of debt, excluding finance lease obligations, for the
succeeding five fiscal years and thereafter are as follows (in millions):
Fiscal 2023
Fiscal 2024
Fiscal 2025
Fiscal 2026
Fiscal 2027
Thereafter
Fair value of debt step-up, deferred financing costs and unamortized
bond discounts
Total
$
$
178.6
529.0
893.8
765.1
501.1
4,498.5
133.6
7,499.7
See “Note 14. Leases” of the Notes to Consolidated Financial Statements for the aggregate maturities of
finance lease obligations for the succeeding five fiscal years and thereafter.
112
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Note 14. Leases
Components of Lease Costs
The following table presents certain information related to the lease costs for finance and operating leases (in
millions):
Operating lease costs
Variable and short-term lease costs
Sublease income
Finance lease cost:
Amortization of lease assets
Interest on lease liabilities
Total lease cost, net
2022
Years Ended September 30,
2021
2020
$
$
218.1
122.8
(6.1)
15.1
7.9
357.8
$
$
211.0
104.6
(8.9)
9.6
7.2
323.5
$
$
201.2
105.5
(6.7)
10.5
7.9
318.4
Supplemental Balance Sheet Information Related to Leases
The table below presents the lease-related assets and liabilities recorded on the balance sheet (in millions):
Consolidated Balance Sheet Caption
September 30,
2022
2021
Operating leases:
Operating lease right-of-use asset
Other assets
Current operating lease liabilities
Noncurrent operating lease liabilities
Total operating lease liabilities
Other current liabilities
Other long-term liabilities
Finance leases:
Property, plant and equipment
Accumulated depreciation
Property, plant and equipment, net
Current finance lease liabilities
Noncurrent finance lease liabilities
Total finance lease liabilities
Current portion of debt
Long-term debt due after one year
$
$
$
$
$
$
$
699.6
191.9
551.1
743.0
177.4
(37.3)
140.1
14.5
273.0
287.5
$
$
$
$
$
$
$
676.0
177.9
537.9
715.8
143.2
(28.3)
114.9
8.7
255.4
264.1
Our finance lease portfolio includes certain assets that are either fully depreciated or transferred for which the
lease arrangement requires a one-time principal repayment on the maturity date of the lease obligation.
Lease Term and Discount Rate
Weighted average remaining lease term:
Operating leases
Finance leases
Weighted average discount rate:
Operating leases
Finance leases
September 30,
2022
2021
5.0 years
7.3 years
5.4 years
8.3 years
2.7%
4.2%
2.4%
4.1%
113
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Supplemental Cash Flow Information Related to Leases
The table below presents supplemental cash flow information related to leases (in millions):
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows related to operating leases
Operating cash flows related to finance leases
Financing cash flows related to finance leases
ROU assets obtained in exchange for lease liabilities:
Operating leases
Maturity of Lease Liabilities
Years Ended September 30,
2022
2021
$
$
$
$
214.8
8.8
14.8
184.6
$
$
$
$
227.0
8.3
9.1
160.9
The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining
years to the operating lease liabilities and finance lease liabilities recorded on the balance sheet (in millions):
Operating
Leases
208.9
174.8
134.3
101.2
72.4
109.3
800.9
(57.9)
743.0
September 30, 2022
Finance Leases
21.7
$
20.9
19.7
16.8
95.8
186.3
361.2
(73.7)
287.5
$
$
$
Total
230.6
195.7
154.0
118.0
168.2
295.6
1,162.1
(131.6)
1,030.5
$
$
Fiscal 2023
Fiscal 2024
Fiscal 2025
Fiscal 2026
Fiscal 2027
Thereafter
Total lease payments
Less: Interest (1)
Present value of future lease payments
(1) Calculated using the interest rate for each lease.
Note 15. Special Purpose Entities
Pursuant to a sale of certain large-tract forestlands in 2007, a special purpose entity MWV Timber Notes
Holding, LLC (“MWV TN”) received, and WestRock assumed upon the strategic combination of Rock-Tenn
Company and MeadWestvaco Corporation’s respective businesses (the “Combination”), an installment note
receivable in the amount of $398.0 million (“Timber Note”). The Timber Note does not require any principal
payments until its maturity in October 2027 and bears interest at a rate approximating LIBOR. In addition, the Timber
Note is supported by a bank-issued irrevocable letter of credit obtained by the buyer of the forestlands. The Timber
Note is not subject to prepayment in whole or in part prior to maturity. The bank’s credit rating as of October 2022
was investment grade. We expect to complete the LIBOR transition for this installment note by the June 30, 2023
deadline when the rates cease publication.
Using the Timber Note as collateral, MWV TN received $338.3 million in proceeds under a secured financing
agreement with a bank. Under the terms of the agreement, the liability from this transaction is non-recourse to the
Company and is payable from the Timber Note proceeds upon its maturity in October 2027. As a result, the Timber
Note is not available to satisfy any obligations of WestRock. MWV TN can elect to prepay at any time the liability in
whole or in part, however, given that the Timber Note is not prepayable, MWV TN expects to only repay the liability
at maturity from the Timber Note proceeds.
114
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The Timber Note and the secured financing liability were fair valued on the opening balance sheet in connection
with the Combination. As of September 30, 2022, the Timber Note was $379.4 million and is included within
Restricted assets held by special purpose entities on the consolidated balance sheets and the secured financing
liability was $329.5 million and is included within Non-recourse liabilities held by special purpose entities on the
consolidated balance sheets.
Pursuant to the sale of MWV’s remaining U.S. forestlands, which occurred on December 6, 2013, another
special purpose entity MWV Timber Notes Holding Company II, LLC (“MWV TN II”) received, and WestRock
assumed upon the Combination, an installment note receivable in the amount of $860.0 million (the “Installment
Note”). The Installment Note does not require any principal payments until its maturity in December 2023 and bears
interest at a fixed rate of 5.207%. However, at any time during a 180-day period following receipt by the borrower
of notice from us that we intend to withhold our consent to any amendment or waiver of this Installment Note that
was requested by the borrower and approved by any eligible assignees, the borrower may prepay the Installment
Note in whole but not in part for cash at 100% of the principal, plus accrued but unpaid interest, breakage, or other
similar amount if any. As of September 30, 2022, no event had occurred that would allow for the prepayment of the
Installment Note. We monitor the credit quality of the borrower and receive quarterly compliance certificates. The
borrower’s credit rating as of October 2022 was investment grade.
Using the Installment Note as collateral, MWV TN II received $774.0 million in proceeds under a secured
financing agreement with a bank. Under the terms of the agreement, the liability from this transaction is non-
recourse to WestRock and is payable from the Installment Note proceeds upon its maturity in December 2023. As
a result, the Installment Note is not available to satisfy any obligations of WestRock. MWV TN II can elect to prepay,
at any time, the liability in whole or in part, with sufficient notice, but would avail itself of this provision only in the
event the Installment Note was prepaid in whole or in part. The secured financing agreement however requires a
mandatory repayment, up to the amount of cash received, if the Installment Note is prepaid in whole or in part.
The Installment Note and the secured financing liability were fair valued on the opening balance sheet in
connection with the Combination. As of September 30, 2022, the Installment Note was $873.6 million and is
included within Restricted assets held by special purpose entities on the consolidated balance sheets and the
secured financing liability was $788.3 million and is included within Non-recourse liabilities held by special purpose
entities on the consolidated balance sheets.
Note 16. Related Party Transactions
We sell products to affiliated companies. Net sales to the affiliated companies for the fiscal years ended
September 30, 2022, 2021 and 2020 were approximately $238.5 million, $237.7 million and $311.5 million,
respectively. Accounts receivable due from the affiliated companies at September 30, 2022 and 2021 was $27.2
million and $33.5 million, respectively, and was included in Accounts receivable on our consolidated balance sheets.
Note 17. Commitments and Contingencies
Capital Additions
Estimated costs for future purchases of fixed assets that we are obligated to purchase as of September 30,
2022 total approximately $371 million.
Environmental
Environmental compliance requirements are a significant factor affecting our business. Our manufacturing
processes involve discharges to water, air emissions, water intake and waste handling and disposal activities.
These processes are subject to numerous federal, state, local and international environmental laws and regulations,
as well as the requirements of environmental permits and similar authorizations issued by various governmental
authorities. Complex and lengthy processes may be required to obtain and renew approvals, permits, and licenses
for new, existing or modified facilities. Additionally, the use and handling of various chemicals or hazardous
materials require release prevention plans and emergency response procedures. Our integrated chemical pulping
mills in the U.S. and Brazil are subject to numerous and more complex environmental programs and regulations,
115
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
but all of WestRock’s manufacturing facilities have environmental compliance obligations. We have incurred, and
expect that we will continue to incur, significant capital, operating and other expenditures complying with applicable
environmental laws and regulations including, for example, projects to replace and/or upgrade our air pollution
control devices, wastewater treatment systems, and other environmental infrastructure. Changes in these laws, as
well as litigation relating to these laws, could result in more stringent or additional environmental compliance
obligations for the Company that may require additional capital investments or increase our operating costs.
We are involved in various administrative and other proceedings relating to environmental matters that arise in
the normal course of business, and we may become involved in similar matters in the future. Although the ultimate
outcome of these proceedings cannot be predicted and we cannot at this time estimate any reasonably possible
losses based on available information, we do not believe that the currently expected outcome of any environmental
proceedings and claims that are pending or threatened against us will have a material adverse effect on our results
of operations, financial condition or cash flows.
We face potential liability under federal, state, local and international laws as a result of releases, or threatened
releases, of hazardous substances into the environment from various sites owned and operated by third parties at
which Company-generated wastes have allegedly been deposited. Generators of hazardous substances sent to
off-site disposal locations at which environmental contamination exists, as well as the owners of those sites and
certain other classes of persons, are liable for response costs for the investigation and remediation of such sites
under Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”) and
analogous laws. While joint and several liability is authorized under CERCLA, liability is typically shared with other
potentially responsible parties (“PRPs”) and costs are commonly allocated according to relative amounts of waste
deposited and other factors.
In addition, certain of our current or former locations are being investigated or remediated under various
environmental laws, including CERCLA. Based on information known to us and assumptions, we do not believe
that the costs of these investigation and remediation projects will have a material adverse effect on our results of
operations, financial condition or cash flows. However, the discovery of contamination or the imposition of additional
obligations, including natural resources damages at these or other sites in the future, could impact our results of
operations, financial condition or cash flows.
We believe that we can assert claims for indemnification pursuant to existing rights we have under certain
purchase and other agreements in connection with certain remediation sites. In addition, we believe that we have
insurance coverage, subject to applicable deductibles or retentions, policy limits and other conditions, for certain
environmental matters. However, there can be no assurance that we will be successful with respect to any claim
regarding these insurance or indemnification rights or that, if we are successful, any amounts paid pursuant to the
insurance or indemnification rights will be sufficient to cover all our costs and expenses. We also cannot predict
whether we will be required to perform remediation projects at other locations, and it is possible that our remediation
requirements and costs could increase materially in the future and exceed current reserves. In addition, we cannot
currently determine the impact that future changes in cleanup standards or federal, state or other environmental
laws, regulations or enforcement practices will have on our results of operations, financial condition or cash flows.
As of September 30, 2022, we had $7.4 million reserved for environmental liabilities on an undiscounted basis,
of which $1.5 million is included in Other long-term liabilities and $5.9 million is included in Other current liabilities
on the consolidated balance sheets, including amounts accrued in connection with environmental obligations
relating to manufacturing facilities that we have closed. We believe the liability for these matters was adequately
reserved at September 30, 2022.
Climate Change
Climate change presents risks and uncertainties for us. With respect to physical risks, our physical assets and
infrastructure, including our manufacturing operations, have been, and may be in future periods impacted by
weather-related events such as hurricanes and floods, potentially resulting in items such as physical damage to our
facilities and lost production. Unpredictable weather patterns also may result in supply chain disruptions and
increased material costs, such as through impacts to virgin fiber supplies and prices, which may fluctuate during
prolonged periods of heavy rain or drought or during tree disease or insect epidemics that may be caused by
116
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
variations in climate conditions. On the other hand, changes in climate also could result in more accommodating
weather patterns for greater periods of time in certain areas, which may create favorable fiber market conditions.
We incorporate a review of meteorological forecast data into our fiber procurement decisions and strategies. To the
extent that severe weather-related risks materialize, and we are unprepared for them, we may incur unexpected
costs, which could have a material effect on our results of operations, cash flows and financial condition, and the
trading price of our Common Stock may be adversely impacted.
Responses to climate change may result in regulatory risks as new laws and regulations aimed at reducing
GHG emissions come into effect. These rules and regulations could take the form of cap-and-trade, carbon taxes,
or GHG reductions mandates for utilities that could increase the cost of purchased electricity. New climate rules
and regulations also may result in higher fossil fuel prices or fuel efficiency standards that could increase
transportation costs. Certain jurisdictions in which we have manufacturing facilities or other investments have
already taken actions to address climate change. In addition to these national efforts, some U.S. states in which we
have manufacturing operations, including Washington, New York and Virginia, are taking measures to reduce GHG
emissions, such as requiring GHG emissions reporting or developing regional cap-and-trade programs.
Several of our international facilities are located in countries that have already adopted GHG emissions trading
programs. Other countries in which we conduct business, including China, European Union member states and
India, have set GHG reduction targets in accordance with the agreement among over 170 countries that established
the Paris Agreement, which became effective in November 2016 and which the United States formally rejoined in
February 2021.
We have systems in place for tracking the GHG emissions from our energy-intensive facilities, and we monitor
developments in climate related laws, regulations and policies to assess the potential impact of such developments
on our results of operations, financial condition, cash flows and disclosure obligations. Compliance with climate
programs may require future expenditures to meet GHG emission reduction obligations in future years. These
obligations may include carbon taxes, the requirement to purchase GHG credits, or the need to acquire carbon
offsets. Also, we may be required to make capital and other investments to displace traditional fossil fuels, such as
fuel oil and coal, with lower carbon alternatives, such as biomass and natural gas.
Brazil Tax Liability
We are challenging claims by the Brazil Federal Revenue Department that we underpaid tax, penalties and
interest associated with a claim that a subsidiary of MeadWestvaco Corporation (the predecessor of WestRock
MWV, LLC) had reduced its tax liability related to the goodwill generated by the 2002 merger of two of its Brazilian
subsidiaries. The matter has proceeded through the Brazil Administrative Council of Tax Appeals (“CARF”)
principally in two proceedings, covering tax years 2003 to 2008 and 2009 to 2012. The tax and interest claim relating
to tax years 2009 to 2012 was finalized and is now the subject of an annulment action we filed in the Brazil federal
court. CARF notified us of its final decision regarding the tax, penalties and interest claims relating to tax years 2003
to 2008 in June 2020. We have filed an annulment action in Brazil federal court with respect to that decision as well.
The dispute related to penalties for tax years 2009 to 2012 remains before CARF.
We assert that we have no liability in these matters. The total amount in dispute before CARF and in the
annulment actions relating to the claimed tax deficiency was R$732 million ($136 million) as of September 30, 2022,
including various penalties and interest. The U.S. dollar equivalent has fluctuated significantly due to changes in
exchange rates. The amount of our uncertain tax position reserve for this matter, which excludes certain penalties,
is included in the unrecognized tax benefits table. See “Note 6. Income Taxes”. Resolution of the uncertain tax
positions could have a material adverse effect on our cash flows and results of operations or materially benefit our
results of operations in future periods depending upon their ultimate resolution.
Other Litigation
During fiscal 2018, we submitted formal notification to withdraw from the PIUMPF and recorded a liability
associated with the withdrawal. Subsequently, in fiscal 2019 and 2020, we received demand letters from PIUMPF,
including a demand for withdrawal liabilities and for our proportionate share of PIUMPF’s accumulated funding
deficiency, and we refined our liability, the impact of which was not significant. We began making monthly payments
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WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
for the PIUMPF withdrawal liabilities in fiscal 2020, excluding the accumulated funding deficiency demands. We
dispute the PIUMPF accumulated funding deficiency demands. In February 2020, we received a demand letter from
PIUMPF asserting that we owe $51.2 million for our pro-rata share of PIUMPF’s accumulated funding deficiency,
including interest. Similarly, in April 2020, we received an updated demand letter related to a subsidiary of ours
asserting that we owe $1.3 million of additional accumulated funding deficiency, including interest. In July 2021, the
PIUMPF filed suit against us in the U.S. District Court for the Northern District of Georgia claiming the right to
recover our pro rata share of the pension fund’s accumulated funding deficiency, along with interest, liquidated
damages and attorney’s fees. We believe we are adequately reserved for this matter. See “Note 5. Retirement
Plans — Multiemployer Plans” of the Notes to Consolidated Financial Statements for more information regarding
our withdrawal liabilities.
We have been named a defendant in asbestos-related personal injury litigation. To date, the costs resulting
from the litigation, including settlement costs, have not been significant. As of September 30, 2022, there were
approximately 2,075 such lawsuits. We believe that we have substantial insurance coverage, subject to applicable
deductibles and policy limits, with respect to asbestos claims. We also have valid defenses to these asbestos-
related personal injury claims and intend to continue to defend them vigorously. Should the volume of litigation grow
substantially, it is possible that we could incur significant costs resolving these cases. We do not expect the
resolution of pending asbestos litigation and proceedings to have a material adverse effect on our results of
operations, financial condition or cash flows. In any given period or periods, however, it is possible such proceedings
or matters could have an adverse effect on our results of operations, financial condition or cash flows. At
September 30, 2022, we had $12.9 million reserved for these matters.
We are a defendant in a number of other lawsuits and claims arising out of the conduct of our business. While
the ultimate results of such suits or other proceedings against us cannot be predicted, we believe the resolution of
these other matters will not have a material adverse effect on our results of operations, financial condition or cash
flows.
Indirect Tax Claim
In March 2017, the Supreme Court of Brazil issued a decision concluding that certain state value added tax
should not be included in the calculation of federal gross receipts taxes. Subsequently, in fiscal 2019 and 2020, the
Supreme Court of Brazil rendered favorable decisions on eight of our cases granting us the right to recover certain
state value added tax. The tax authorities in Brazil filed a Motion of Clarification with the Supreme Court of Brazil.
Based on our evaluation and the opinion of our tax and legal advisors, we believe the decision reduced our gross
receipts tax in Brazil prospectively and retrospectively, and will allow us to recover tax amounts collected by the
government. Due to the volume of invoices being reviewed (January 2002 to September 2019), we recorded the
estimated recoveries across several periods beginning in the fourth quarter of fiscal 2019 as we reviewed the
documents and the amount became estimable. In May 2021, the Supreme Court of Brazil judged the Motion of
Clarification and concluded on the gross methodology, which was consistent with our evaluation and that of our tax
and legal advisors. In fiscal 2021, we recorded a receivable for our expected recovery and interest that consisted
primarily of a $0.6 million reduction of Cost of goods sold and $0.3 million reduction of Interest expense, net. In
fiscal 2020, we recorded a $51.9 million receivable for our expected recovery and interest that consisted primarily
of a $32.1 million reduction of Cost of goods sold and $20.5 million reduction of Interest expense, net. We are
monitoring the status of our remaining cases, and subject to the resolution in the courts, we may record additional
amounts in future periods.
Guarantees
We make certain guarantees in the normal course of conducting our operations, for compliance with certain
laws and regulations, or in connection with certain business dispositions. The guarantees include items such as
funding of net losses in proportion to our ownership share of certain joint ventures, debt guarantees related to
certain unconsolidated entities acquired in acquisitions,
lessors in certain facilities and
equipment operating leases for items such as additional taxes being assessed due to a change in tax law and
certain other agreements. We estimate our exposure to these matters to be less than $50 million. As of
September 30, 2022 and 2021, we had recorded $0.8 million and $2.3 million, respectively, for the estimated fair
value of these guarantees. We are unable to estimate our maximum exposure under operating leases because it
indemnifications of
118
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
is dependent on potential changes in the tax laws; however, we believe our exposure related to guarantees would
not have a material impact on our results of operations, financial condition or cash flows.
Note 18. Accumulated Other Comprehensive Loss and Other Comprehensive Income (Loss)
The following table summarizes the changes in accumulated other comprehensive loss by component for the
fiscal years ended September 30, 2022 and 2021 (in millions):
Deferred
(Loss) Income
on Cash
Flow Hedges
Defined Benefit
Pension and
Postretirement
Plans
Foreign
Currency
Items
Total (1)
Balance at September 30, 2020
Other comprehensive (loss) income before
reclassifications
Amounts reclassified from accumulated
other comprehensive loss
Net current period other comprehensive
income
Balance at September 30, 2021
Other comprehensive loss before
reclassifications
Amounts reclassified from accumulated
other comprehensive loss
Net current period other comprehensive loss
Balance at September 30, 2022
$
$
$
(1) All amounts are net of tax and noncontrolling interest.
(5.6) $
(727.7) $
(586.6) $ (1,319.9)
(0.1)
5.5
161.7
29.5
124.2
—
285.8
35.0
5.4
(0.2) $
191.2
(536.5) $
124.2
(462.4) $
320.8
(999.1)
(10.3)
(217.1)
(241.2)
(468.6)
1.4
(8.9)
(9.1) $
12.0
(205.1)
(741.6) $
13.4
—
(241.2)
(455.2)
(703.6) $ (1,454.3)
The net of tax amounts were determined using the jurisdictional statutory rates, and reflect effective tax rates
averaging 25% to 26%, 25% to 26% and 28% to 29% for fiscal 2022, 2021 and 2020, respectively. Although we are
impacted by the exchange rates of a number of currencies to varying degrees by period, our foreign currency
translation adjustments recorded in accumulated other comprehensive loss primarily relate to the Brazilian Real,
British Pound, Canadian dollar, Mexican Peso, Polish Zloty, Chinese Yuan and Japanese Yen each against the
U.S. dollar.
In fiscal 2022, we entered into various natural gas commodity derivatives to hedge the pricing risk associated
with our forecasted natural gas purchases. We have designated these derivatives as cash flow hedges for
accounting purposes. Therefore, the entire change in fair value of the financial derivative instrument is reported as
a component of other comprehensive loss and reclassified into earnings in the same line item associated with the
forecasted transaction, and in the same period or periods during which the forecasted transaction affects earnings.
Fair value measurements for our natural gas commodity derivatives are classified under Level 2 because such
measurements are estimated based on observable inputs such as commodity future prices. At September 30, 2022,
the notional amount of our natural gas commodity derivatives was 18.3 million MMBtu, which are scheduled to be
settled approximately over the next year. Our natural gas hedging positions are entered in layers over multiple
months and up to 12 months in advance to achieve a targeted hedging volume of up to 80% of our anticipated
NYMEX-based natural gas purchases (which make up roughly half of the total natural gas purchases for our North
American mills). At September 30, 2022, we were in a liability position of $12.0 million recorded in Other current
liabilities on our consolidated balance sheet. We have the right of offset and disclose our positions net by
counterparty. At September 30, 2022, we have offset $2.3 million of asset positions with liability positions by
counterparty. In fiscal 2022, we recorded $1.8 million of net realized losses in Cost of goods sold related to our
natural gas commodity derivatives.
119
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following table summarizes the reclassifications out of accumulated other comprehensive loss by
component for the fiscal years ended September 30, 2022 and 2021 (in millions):
Amortization of defined benefit pension and
postretirement items: (1)
Actuarial losses (2)
Prior service costs (2)
Subtotal defined benefit plans
Derivative Instruments: (1)
Interest rate swap hedge loss (3)
Natural gas commodity hedge loss (4)
Subtotal derivative instruments
Years Ended September 30,
2022
2021
Pre-Tax
Tax
Net of
Tax
Pre-Tax
Tax
Net of
Tax
$
(7.8) $
(8.2)
(16.0)
1.9 $
2.1
4.0
(5.9) $
(6.1)
(12.0)
(33.3) $
(6.0)
(39.3)
8.3 $
1.5
9.8
(25.0)
(4.5)
(29.5)
—
(1.8)
(1.8)
—
0.4
0.4
—
(1.4)
(1.4)
(7.4)
—
(7.4)
1.9
—
1.9
(5.5)
—
(5.5)
Total reclassifications for the period
$
(17.8) $
4.4 $
(13.4) $
(46.7) $
11.7 $
(35.0)
(1) Amounts in parentheses indicate charges to earnings. Amounts pertaining to noncontrolling interests are excluded.
(2) These accumulated other comprehensive income components are included in the computation of net periodic pension cost.
See “Note 5. Retirement Plans” for additional information.
(3) These accumulated other comprehensive income components are included in Interest expense, net.
(4) These accumulated other comprehensive income components are included in Cost of goods sold.
A summary of the components of other comprehensive income (loss), including noncontrolling interest, for the
years ended September 30, 2022, 2021 and 2020, is as follows (in millions):
Fiscal 2022
Foreign currency translation loss
Deferred loss on cash flow hedges
Reclassification adjustment of net loss on cash flow hedges
included in earnings
Net actuarial loss arising during period
Amortization and settlement recognition of net actuarial loss
Prior service cost arising during the period
Amortization of prior service cost
Consolidated other comprehensive loss
Less: Other comprehensive income attributable to noncontrolling
interests
Other comprehensive loss attributable to common
stockholders
Pre-Tax
Tax
Net of Tax
$
(241.5) $
(13.8)
— $
3.5
1.8
(289.1)
8.4
(0.2)
8.2
(526.2)
(1.1)
(0.4)
72.8
(2.0)
—
(2.1)
71.8
0.3
(241.5)
(10.3)
1.4
(216.3)
6.4
(0.2)
6.1
(454.4)
(0.8)
$
(527.3) $
72.1
$
(455.2)
120
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Fiscal 2021
Foreign currency translation gain
Deferred loss on cash flow hedges
Reclassification adjustment of net loss on cash flow hedges
included in earnings
Net actuarial gain arising during period
Amortization and settlement recognition of net actuarial loss
Prior service cost arising during the period
Amortization of prior service cost
Consolidated other comprehensive income
Less: Other comprehensive income attributable to noncontrolling
interests
Other comprehensive income attributable to common
stockholders
Fiscal 2020
Foreign currency translation loss
Deferred loss on cash flow hedges
Reclassification adjustment of net loss on cash flow hedges
included in earnings
Net actuarial gain arising during period
Amortization and settlement recognition of net actuarial loss
Prior service cost arising during the period
Amortization of prior service cost
Consolidated other comprehensive loss
Less: Other comprehensive loss attributable to noncontrolling
interests
Other comprehensive loss attributable to common
stockholders
Pre-Tax
Tax
Net of Tax
$
124.3
(0.1)
$
— $
—
7.4
222.2
33.9
(5.6)
6.0
388.1
(0.3)
(1.9)
(56.6)
(8.4)
1.4
(1.5)
(67.0)
—
124.3
(0.1)
5.5
165.6
25.5
(4.2)
4.5
321.1
(0.3)
$
$
387.8
$
(67.0) $
320.8
Pre-Tax
Tax
Net of Tax
(215.0) $
(13.3)
— $
3.3
4.9
34.6
48.3
(26.9)
5.1
(162.3)
0.3
(1.3)
(10.4)
(12.9)
7.3
(1.3)
(15.3)
—
(215.0)
(10.0)
3.6
24.2
35.4
(19.6)
3.8
(177.6)
0.3
$
(162.0) $
(15.3) $
(177.3)
Note 19. Stockholders’ Equity
Capitalization
Our capital stock consists solely of Common Stock. Holders of our Common Stock are entitled to one vote per
share. Our amended and restated certificate of incorporation also authorizes preferred stock, of which no shares
have been issued. The terms and provisions of such shares will be determined by our board of directors upon any
issuance of such shares in accordance with our certificate of incorporation.
Stock Repurchase Plan
In July 2015, our board of directors authorized a repurchase program of up to 40.0 million shares of our Common
Stock, representing approximately 15% of our outstanding Common Stock as of July 1, 2015. On May 4, 2022, our
board of directors authorized a new repurchase program of up to 25.0 million shares of our Common Stock, plus
any unutilized shares left from the July 2015 authorization. The 25.0 million shares represent an additional
authorization of approximately 10% of our outstanding Common Stock. The shares of our Common Stock may be
repurchased over an indefinite period of time at the discretion of management. In fiscal 2022, we repurchased
approximately 12.6 million shares of our Common Stock for an aggregate cost of $597.5 million. In fiscal 2021, we
repurchased approximately 2.5 million shares of our Common Stock for an aggregate cost of $125.1 million. In
fiscal 2020, we repurchased no shares of our Common Stock. The amount reflected as purchased in the
consolidated statements of cash flows varies due to the timing of share settlement. As of September 30, 2022, we
had approximately 29.0 million shares of Common Stock available for repurchase under the program.
121
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Note 20. Share-Based Compensation
Share-based Compensation Plans
At our Annual Meeting of Stockholders held on January 29, 2021, our stockholders approved the WestRock
Company 2020 Incentive Stock Plan. The 2020 Incentive Stock Plan, as amended, allows for the granting of 4.95
million shares of options, restricted stock, restricted stock units and SARs to employees and our non-employee
directors. As of September 30, 2022, there were 3.1 million shares available to be granted under this plan, assuming
the performance stock units previously granted vest at maximum. At our Annual Meeting of Stockholders held on
February 2, 2016, our stockholders approved the WestRock Company 2016 Incentive Stock Plan. The 2016
Incentive Stock Plan was amended and restated on February 2, 2018 (the “Amended and Restated 2016
Incentive Stock Plan”). The Amended and Restated 2016 Incentive Stock Plan allows for the granting of 11.7
million shares of options, restricted stock, restricted stock units and SARs to employees and our non-employee
directors. As of September 30, 2022, there were 0.9 million shares available to be granted under this plan, assuming
the performance stock units previously granted vest at maximum. In addition, there were 12.4 million shares
available for grant under prior plans approved by stockholders and plans assumed upon mergers and acquisitions;
we do not expect to make any new awards under those plans.
Our results of operations for the fiscal years ended September 30, 2022, 2021 and 2020 include share-based
compensation expense of $93.3 million, $88.6 million and $130.3 million, respectively. The higher amount in fiscal
2020 was due to restricted stock units granted in fiscal 2020 to satisfy certain annual bonus incentives in connection
with the WestRock Pandemic Action Plan. The total income tax benefit in the results of operations in connection
with share-based compensation was $23.3 million, $22.3 million and $33.2 million, for the fiscal years ended
September 30, 2022, 2021 and 2020, respectively.
Cash received from share-based payment arrangements for the fiscal years ended September 30, 2022, 2021
and 2020 was $28.9 million, $57.5 million and $32.4 million, respectively.
Stock Options and Stock Appreciation Rights
We did not grant any stock options or SARs in fiscal 2022, 2021 and 2020. Outstanding stock options granted
under our plans generally have an exercise price equal to the closing market price on the date of the grant, generally
vested in three years, in either one tranche or in approximately one-third increments, and have 10-year contractual
terms. However, a portion of our grants are subject to earlier expense recognition due to retirement eligibility rules.
Presently, other than circumstances such as death, disability and retirement, grants will include a provision requiring
both a change of control and termination of employment to accelerate vesting.
When options are granted, we estimate the fair value of stock options granted using a Black-Scholes option
pricing model. We use historical data to estimate option exercises and employee terminations in determining the
expected term in years for stock options. Expected volatility is calculated based on the historical volatility of our
stock. The risk-free interest rate is based on U.S. Treasury securities in effect at the date of the grant of the stock
options. The dividend yield is estimated based on our historic annual dividend payments and current expectations
for the future.
122
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The table below summarizes the changes in all stock options during the fiscal year ended September 30, 2022:
Outstanding at September 30, 2021
Exercised
Expired
Outstanding at September 30, 2022
Exercisable at September 30, 2022
Weighted
Average
Exercise
Price
38.79
31.44
52.27
40.22
40.22
Stock
Options
1,845,672 $
(567,648)
(195,099)
1,082,925 $
1,082,925 $
Weighted
Average
Remaining
Contractual
Term
(in years)
Aggregate
Intrinsic
Value
(in millions)
1.8 $
1.8 $
1.3
1.3
The aggregate intrinsic value of options exercised during the years ended September 30, 2022, 2021 and 2020
was $8.6 million, $29.1 million and $11.8 million, respectively.
As of September 30, 2022, there was no remaining unrecognized compensation cost related to unvested stock
options.
As part of the Combination, we issued SARs to replace outstanding MWV SARs. The SARs were valued using
the Black-Scholes option pricing model. We measured compensation expense related to the SAR awards at the
end of each period. We do not expect to issue additional SARs. The aggregate intrinsic value of SARs exercised
during the years ended September 30, 2022, 2021 and 2020 was $0.1 million, $0.2 million and $0.2 million,
respectively. There were no SARs outstanding at September 30, 2022.
Restricted Stock and Restricted Stock Units
In fiscal 2022, we granted restricted stock units to non-employee directors and certain of our employees. These
grants represent the right to receive one share of Common Stock upon satisfaction of specified conditions. The
vesting provisions for our employee awards may vary from grant to grant; however, vesting generally is contingent
upon meeting various service and/or performance or market goals including, but not limited to, achievement of
various financial targets such as, with respect to fiscal 2022, Cash Flow Per Share, Return on Invested Capital and
relative Total Shareholder Return (each as defined in the award documents). Subject to the level of performance
attained, the target award for our grants with a performance or market condition generally may increase up to 200%
of target or decrease to zero depending upon the terms of the individual grant. The employee grants generally vest
in three years. Presently, other than circumstances such as death, disability and retirement, the grants generally
include a provision requiring both a change of control and termination of employment to accelerate vesting. The
grantee is entitled to receive dividend equivalent units but will generally forfeit the restricted stock unit award and
the dividend equivalents if the employee separates from us during the vesting period or if the predetermined goals
are not accomplished. Our non-employee director awards generally vest over a period of up to one year and carry
a service condition. Prior to fiscal 2022, our non-employee directors received their equity awards in the form of
restricted stock, which carried dividend and voting rights prior to vesting. As mentioned above, in fiscal 2020 in
connection with the WestRock Pandemic Action Plan, we issued restricted stock units to employees to satisfy
certain annual bonus incentives. Those awards vested in October 2020 at 105% of target.
123
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The table below summarizes the changes in restricted stock units and restricted stock during the fiscal year
ended September 30, 2022:
Outstanding at September 30, 2021 (1)
Granted
Vested and released
Forfeited
Outstanding at September 30, 2022 (1)
Weighted
Average
Grant Date Fair
Value
Units/Shares
4,977,459
2,365,554
(1,512,550)
(929,834)
4,900,629
$
$
42.02
45.24
41.07
42.77
43.73
(1) Target awards granted with a performance condition, net of subsequent forfeitures, may be increased up to 200% of the
target or decreased to zero, subject to the level of performance attained. The awards are reflected in the table at the target
award amount of 100%. Based on current facts and assumptions, we are forecasting the performance of the aggregate
outstanding grants to be attained at levels that would result in the issuance of approximately 0.8 million additional shares.
However, actual performance may vary.
There was approximately $102.5 million of unrecognized compensation cost related to all unvested restricted
units/shares as of September 30, 2022 to be recognized over a weighted average remaining vesting period of 1.5
years.
The following table represents a summary of restricted stock units and restricted stock granted in fiscal 2022,
2021 and 2020 with terms defined in the applicable grant letters (in units/shares).
Granted to non-employee directors
Granted to employees:
Granted for attainment of a performance condition at
an amount in excess of target (1)
Granted with a service condition and a Cash Flow Per
Share performance condition at target (2)
Granted with a service condition and a Return on
Invested Capital performance condition at target (2)
Granted with a service condition and a relative Total
Shareholder Return market condition at target (2)
Granted with a service condition (3)
Granted for annual bonus (4)
Total grants
2022
37,771
2021
42,482
2020
49,236
263,918
—
—
464,485
798,490
869,065
394,655
—
—
45,470
1,159,255
—
2,365,554
127,050
1,009,387
126,984
2,104,393
152,595
889,030
2,486,249
4,446,175
(1) Grants in the table above include shares subsequently issued for the level of performance attained in excess of target.
Shares issued in fiscal 2022 for the fiscal 2019 Cash Flow Per Share were at 151.3% of target. Shares issued in fiscal 2021
for the fiscal 2018 Cash Flow Per Share were at 89.3% of target, therefore, the remainder of the grant was forfeited. Shares
issued in fiscal 2020 for the fiscal 2017 Cash Flow Per Share were at 98.8% of target, therefore, the remainder of the grant
was forfeited.
(2) These employee grants vest over approximately three years and have adjustable ranges from 0 - 200% of target subject to
the level of performance attained in the respective award agreement. The employee grants with a relative Total Shareholder
Return condition were valued using a Monte Carlo simulation, the terms of which are outlined below.
(3) These grants vest over approximately three to four years.
(4) Reflects shares issued in fiscal 2021 for the fiscal 2020 restricted stock units granted for the annual bonus were at 105% of
target.
The employee grants with a relative Total Shareholder Return market condition in fiscal 2022 were valued using
a Monte Carlo simulation at $60.83 per unit. The significant assumptions used in valuing these grants included: an
expected term of 3.0 years, an expected volatility of 46.7% and a risk-free interest rate of 1.5%.
124
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The employee grants with a relative Total Shareholder Return market condition in fiscal 2021 were valued using
a Monte Carlo simulation at $53.69 per unit. The significant assumptions used in valuing these grants included: an
expected term of 3.0 years, an expected volatility of 46.2% and a risk-free interest rate of 0.2%. In addition, we had
a subsequent grant for an individual valued using a Monte Carlo simulation at $70.80 per unit, using an expected
term of 2.9 years, an expected volatility of 47.0% and a risk free rate of 0.3%.
The employee grants with a relative Total Shareholder Return market condition in fiscal 2020 were valued using
a Monte Carlo simulation at $45.14 per unit. The significant assumptions used in valuing these grants included: an
expected term of 3.0 years, an expected volatility of 27.5% and a risk-free interest rate of 1.3%.
Expense is recognized on restricted stock units and restricted stock on a straight-line basis over the explicit
service period or for performance-based grants over the explicit service period when we estimate that it is probable
the performance conditions will be satisfied. Expense recognized on grants with a performance condition that affects
how many units are ultimately awarded is based on the number of units expected to be awarded.
The following table represents a summary of restricted stock units and restricted stock vested and released as
well as the corresponding aggregate fair value in fiscal 2022, 2021 and 2020 (in millions, except units/shares):
Vested and released
Aggregate fair value
Employee Stock Purchase Plan
2022
1,512,550
68.7
$
2021
3,194,223
125.1
$
$
2020
766,431
29.6
At our Annual Meeting of Stockholders held on February 2, 2016, our stockholders approved the WestRock
Company Employee Stock Purchase Plan (“ESPP”). Under the ESPP, shares of Common Stock are reserved for
purchase by our qualifying employees. The ESPP allowed for the purchase of a total of approximately 2.5 million
shares of Common Stock. During fiscal 2022, 2021 and 2020, employees purchased approximately 0.3 million, 0.3
million and 0.4 million shares, respectively, under the ESPP. We recognized $1.8 million, $1.9 million and $2.1
million of expense for fiscal 2022, 2021 and 2020, respectively, related to the 15% discount on the purchase price
allowed to employees. As of September 30, 2022, approximately 1.0 million shares of Common Stock remained
available for purchase under the ESPP.
Note 21. Earnings Per Share
The restricted stock grants to non-employee directors prior to fiscal 2022 were considered participating
securities as they received non-forfeitable rights to dividends at the same rate as our Common Stock. As
participating securities, we included these instruments in the earnings allocation in computing earnings per share
under the two-class method described in ASC 260, “Earnings per Share”. Beginning in fiscal 2022, restricted stock
units granted to non-employee directors are not considered participating securities as the rights to dividends
accrued during the vesting period are forfeitable. The following table sets forth the computation of basic and diluted
earnings per share under the two-class method (in millions, except per share data):
125
WESTROCK COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Numerator:
Net income (loss) attributable to common stockholders
Less: Distributed and undistributed income available to
participating securities
Distributed and undistributed income (loss) available to
common stockholders
Denominator:
Basic weighted average shares outstanding
Effect of dilutive stock options and non-participating securities
Diluted weighted average shares outstanding
Basic earnings (loss) per share attributable to common
stockholders
Diluted earnings (loss) per share attributable to common
stockholders
2022
September 30,
2021
2020
944.6
$
838.3
$
(690.9)
(0.1)
(0.2)
(0.1)
944.5
$
838.1
$
(691.0)
259.5
2.0
261.5
265.2
2.3
267.5
259.2
—
259.2
3.64
$
3.16
$
(2.67)
3.61
$
3.13
$
(2.67)
$
$
$
$
An aggregate of 0.5 million, 0.5 million and 4.2 million shares underlying options, restricted stock units and
restricted stock in fiscal 2022, 2021 and 2020, respectively, were not included in computing diluted earnings per
share because the effect would have been antidilutive.
Note 22. Subsequent Events
In November 2022, we announced our entry into a definitive agreement to wholly divest our interior partitions
converting operations (our ownership interest in RTS Packaging, LLC) and to sell our Chattanooga, TN uncoated
recycled paperboard mill to our joint venture partner for $330 million, subject to a working capital adjustment. The
transaction is expected to close in the first half of 2023, subject to the satisfaction of customary closing conditions,
including regulatory approval.
In November 2022, we also announced our entry into a definitive agreement to sell our Eaton, IN, and Aurora,
IL, uncoated recycled paperboard mills for $50 million, subject to a working capital adjustment. The transaction is
expected to close in late 2022 or early 2023.
These divestitures align with our commitment to optimize our portfolio and focus our strategy on key end
markets.
126
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors of
WestRock Company
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of WestRock Company (the Company) as of
September 30, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss),
equity and cash flows for each of the three years in the period ended September 30, 2022, and the related notes
(collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company at September 30, 2022 and
2021, and the results of its operations and its cash flows for each of the three years in the period ended September
30, 2022, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company's internal control over financial reporting as of September 30, 2022, based on
criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (2013 framework), and our report dated November 18, 2022 expressed an unqualified
opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express
an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered
with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of
the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial
statements that were communicated or required to be communicated to the audit committee and that: (1) relate to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion
on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit
matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which
they relate.
127
Goodwill Impairment Assessment of the Corrugated Packaging Reporting Unit
Description of
the Matter
As discussed in Note 1 of the consolidated financial statements, goodwill is tested for impairment
at least annually at the reporting unit level. This requires management to estimate the fair value
of the reporting units with goodwill allocated to them. The Company estimates the fair value based
on a combination of the discounted cash flow method and guideline public-company method. As
of September 30, 2022, the Company’s goodwill balance totaled $5,895.2 million, of which
$2,802.8 million related to the Corrugated Packaging reporting unit.
Auditing management’s goodwill impairment tests involved especially subjective judgments due
to the significant estimation required in determining the fair value of the reporting units. In
particular, the estimates of the fair value for the Company’s Corrugated Packaging reporting unit
is sensitive to assumptions such as the discount rate, EBITDA multiples and expected future net
cash flows, including projected operating results, long term growth rate and capital expenditures,
which are affected by expectations about future market and economic conditions.
How We
Addressed the
Matter in Our
Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of
controls over the Company’s goodwill
impairment review process. For example, we tested
controls over the estimation of the fair value of the reporting unit, including the Company’s
controls over the valuation model, the mathematical accuracy of the valuation model and
development of underlying assumptions used to estimate such fair value of the reporting unit. We
also tested management’s review of the reconciliation of the aggregate estimated fair value of
the reporting units to the market capitalization of the Company.
To test the estimated fair value of the Company’s Corrugated Packaging reporting unit, our audit
procedures included, among others, assessing the valuation methodology, determination of the
guideline public companies, and the underlying data used by the Company in its analysis,
including testing the significant assumptions discussed above. We compared the significant
assumptions used by management to current industry and economic trends, changes to the
Company’s business model and other relevant factors. We assessed the historical accuracy of
management’s assumptions of future expected net cash flows and performed sensitivity analyses
of significant assumptions to evaluate the changes in the fair value of the reporting unit that would
result from changes in the assumptions. We involved valuation specialists to assist in our
evaluation of the valuation methodology and the significant assumptions, including the discount
rate used in determining the fair value of the reporting unit. We also tested the reconciliation of
the aggregate estimated fair value of the reporting units to the market capitalization of the
Company.
Uncertain Tax Positions
Description of
the Matter
As discussed in Note 6 to the consolidated financial statements, the Company has unrecognized
income tax benefits of $195.5 million related to its uncertain tax positions at September 30, 2022.
The Company uses significant judgment in (1) determining whether a tax position, based solely
on its technical merits, is more likely than not to be sustained upon examination, and (2) in
measuring the tax benefit as the largest amount of benefit which is more likely than not to be
realized upon ultimate settlement. The Company does not record any benefit for tax positions
that do not meet the more-likely-than-not initial recognition threshold.
Auditing management’s analysis of its uncertain tax positions and resulting unrecognized income
tax benefits involved especially subjective and complex judgments because each tax position
carries unique facts and circumstances that require interpretation of laws, regulations and legal
rulings, and other factors.
128
How We
Addressed the
Matter in Our
Audit
We tested the Company’s controls that address the risks of material misstatement relating to
uncertain tax positions. For example, we tested controls over management’s application of the
two-step recognition and measurement principles, including management’s review of the inputs
and resulting calculations of unrecognized income tax benefits.
To test the Company’s measurement and recording of its uncertain tax positions, our audit
procedures included, among others, inspecting the Company’s analysis and related tax opinions
to evaluate the assumptions the Company used to develop its uncertain tax positions and related
unrecognized income tax benefit amounts by jurisdiction. We also tested the completeness and
accuracy of the underlying data used by the Company to calculate its uncertain tax positions. For
example, we compared the recorded unrecognized income tax benefits to similar positions in
prior periods and assessed management’s consideration of current tax controversy and litigation
trends in similar positions challenged by tax authorities. In addition, we involved tax subject matter
tax laws in the Company’s recognition
resources to evaluate the application of relevant
determination. We also evaluated the Company’s income tax disclosures in relation to these
matters included in Note 6 to the consolidated financial statements.
/s/ Ernst & Young LLP
We have served as the Company’s or its predecessor’s auditor since at least 1975, but we are unable to determine
the specific year.
Atlanta, Georgia
November 18, 2022
129
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors of
WestRock Company
Opinion on Internal Control over Financial Reporting
We have audited WestRock Company’s internal control over financial reporting as of September 30, 2022, based
on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, WestRock
Company (the Company) maintained, in all material respects, effective internal control over financial reporting as
of September 30, 2022, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Company as of September 30, 2022 and 2021, and the
related consolidated statements of operations, comprehensive income (loss), equity and cash flows for each of the
three years in the period ended September 30, 2022, and the related notes and our report dated November 18,
2022, expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting included in the accompanying
Management’s Annual Report On Internal Control Over Financial Reporting. Our responsibility is to express an
opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting
firm registered with the PCAOB and are required to be independent with respect to the Company in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
130
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ Ernst & Young LLP
Atlanta, Georgia
November 18, 2022
131
WESTROCK COMPANY
MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management’s Responsibility for the Financial Statements
The management of WestRock Company is responsible for the preparation and integrity of the consolidated
financial statements appearing in our Annual Report on Form 10-K. The financial statements were prepared in
conformity with GAAP appropriate in the circumstances and, accordingly, include certain amounts based on our
best judgments and estimates. Financial information in this Annual Report on Form 10-K is consistent with that in
the financial statements.
Internal Control Over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over
financial reporting as such term is defined in Rule 13a-15(f) under the Exchange Act. Our internal control over
financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of the consolidated financial statements. Our internal control over financial reporting is supported
by a program of internal audits and appropriate reviews by management, written policies and guidelines, careful
selection and training of qualified personnel and a written code of conduct adopted by our board of directors that is
applicable to all officers and employees of our Company and subsidiaries, as well as a code of conduct that is
applicable to all of our directors.
limitations,
its inherent
Because of
internal control over financial reporting may not prevent or detect
misstatements and even when determined to be effective, can only provide reasonable assurance with respect to
financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of our internal control over financial reporting as of September 30,
2022. In making this assessment, management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013 framework).
The scope of our efforts to comply with Section 404 of the Sarbanes-Oxley Act with respect to fiscal 2022 included
all of our operations. Based on our assessment, management believes that we maintained effective internal control
over financial reporting as of September 30, 2022. Our independent auditors, Ernst & Young LLP, an independent
registered public accounting firm, are appointed by the Audit Committee of our board of directors. Ernst & Young
LLP has audited and reported on the consolidated financial statements of WestRock Company, and has issued an
attestation report on the effectiveness of our internal control over financial reporting. The report of the independent
registered public accounting firm is contained in this Annual Report.
Audit Committee Responsibility
The Audit Committee of our board of directors, composed solely of directors who are independent in accordance
with the requirements of the NYSE listing standards, the Exchange Act and our Corporate Governance Guidelines,
meets with the independent auditors, management and internal auditors periodically to discuss internal control over
financial reporting and auditing and financial reporting matters. The Audit Committee reviews with the independent
auditors the scope and results of the audit effort. The Audit Committee also meets periodically with the independent
auditors and the chief internal auditor without management present to ensure that the independent auditors and the
chief internal auditor have free access to the Audit Committee. Our Audit Committee’s Report will be contained in
our definitive proxy statement
issued in connection with our 2023 annual meeting of stockholders and is
incorporated herein by reference.
DAVID B. SEWELL,
Chief Executive Officer and President
ALEXANDER W. PEASE,
Executive Vice President and Chief Financial Officer
November 18, 2022
132
Item 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no changes in or disagreements with accountants on accounting and financial disclosure.
Item 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and other procedures that are designed with the objective of ensuring the
following:
that information required to be disclosed by us in the reports that we file or submit under the Exchange
Act are recorded, processed, summarized and reported, within the time periods specified in the SEC’s
rules and forms; and
that information required to be disclosed by us in the reports that we file under the Exchange Act is
accumulated and communicated to our management, including our CEO and our Chief Financial Officer
(“CFO”), as appropriate to allow timely decisions regarding required disclosure.
We have performed an evaluation of the effectiveness of the design and operation of our disclosure controls
and procedures as of September 30, 2022, under the supervision and with the participation of our management,
including our CEO and CFO. Based on that evaluation, our CEO and CFO have concluded that our disclosure
controls and procedures were effective as of September 30, 2022, to provide reasonable assurance that we record,
process, summarize and report the information we must disclose in reports that we file or submit under the
Exchange Act within the time periods specified in the SEC's rules and forms and to allow timely decisions regarding
required disclosure.
In designing and evaluating our disclosure controls and procedures, management recognized that any controls
and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving
the desired control objectives, as ours are designed to do. Management also noted that the design of any system
of controls is also based in part upon certain assumptions about the likelihood of future events, and that there can
be no assurance that any such design will succeed in achieving its stated goals under all potential future conditions,
regardless of how remote. Management necessarily was required to apply its judgment in evaluating the cost-
benefit relationship of possible controls and procedures.
Internal Control Over Financial Reporting
The report called for by Item 308(a) of Regulation S-K is incorporated herein by reference to Management’s
Annual Report on Internal Control over Financial Reporting of WestRock Company, included in Part II, Item 8 of
this report.
The attestation report called for by Item 308(b) of Regulation S-K is incorporated herein by reference to the
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting, included in
Part II, Item 8 of this report.
Management has evaluated, with the participation of our CEO and CFO, changes in our internal controls over
financial reporting during the quarter ended September 30, 2022. In connection with that evaluation, we have
determined that there has been no change in our internal control over financial reporting identified in connection
with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the
fourth quarter that has materially affected, or is reasonably likely to materially affect, our internal control over
financial reporting.
133
Item 9B. OTHER INFORMATION
Not applicable.
Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
134
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
EXECUTIVE OFFICERS
Identification of Executive Officers
The executive officers of the Company are as follows as of November 12, 2022:
Name
David B. Sewell
Alexander W. Pease
Patrick M. Kivits
John L. O’Neal
Samuel W. Shoemaker
Thomas M. Stigers
Vicki L. Lostetter
Julia A. McConnell
Denise R. Singleton
Age
54
51
55
55
60
59
63
53
60
Position Held
Chief Executive Officer and President
Executive Vice President and Chief Financial Officer
President, Corrugated Packaging
President, Global Paper
President, Consumer Packaging
President, Mill Operations
Chief Human Resources Officer
Senior Vice President and Chief Accounting Officer
Executive Vice President, General Counsel and Secretary
David B. Sewell has served as WestRock’s chief executive officer and president since March 2021. From March
2019 until joining WestRock, he served as president and chief operating officer of The Sherwin-Williams Company,
a company in the paint and coating manufacturing industry (“Sherwin-Williams”). From August 2014 to March 2019,
Mr. Sewell served as president of the performance coatings group at Sherwin-Williams. Prior to joining Sherwin-
Williams in February 2007, Mr. Sewell spent 15 years working for General Electric Company.
Alexander W. Pease has served as WestRock’s executive vice president and chief financial officer since
November 2021. From 2018 until joining WestRock, he served as executive vice president and chief financial officer
of CommScope Holding Company, Inc., a global provider of infrastructure solutions for communication and
entertainment networks. From 2016 to 2018, he served as executive vice president and chief financial officer of
Snyder’s-Lance, Inc, a snack food producer. He served as a principal at McKinsey & Company in its global corporate
finance and business functions practice from 2015 to 2016. From 2011 to 2015, he was senior vice president and
chief financial officer of EnPro Industries, Inc. Before joining EnPro, he worked at McKinsey & Company and served
in the U.S. Navy as a SEAL Platoon commander.
Patrick M. Kivits has served as WestRock’s president, corrugated packaging since August 2022. He previously
served as WestRock’s president, consumer packaging from June 2021 until August 2022, as president, Multi
Packaging Solutions from August 2020 until June 2021, and as executive vice president operations North America
for Multi Packaging Solutions from November 2019 until August 2020. Prior to joining WestRock, Mr. Kivits spent
20 years in the specialty chemical industry, working for H.B. Fuller and Henkel in adhesives for the packaging
industry.
John L. O’Neal has served as WestRock’s president, global paper since June 2021. He previously served as
our executive vice president, global food and beverage from 2016 until June 2021. From 2012 to 2016, he served
in senior leadership roles in the company’s corrugated packaging and paper solution businesses. Prior to joining
WestRock, Mr. O’Neal spent 16 years working for Mirant Corporation.
Samuel W. Shoemaker has served as WestRock’s president, consumer packaging since August 2022. Mr.
Shoemaker served as president and general manager of global packaging, coil and coatings, resins and colorants
at Sherwin-Williams from June 2017 until his retirement from Sherwin-Williams in April 2021. He previously served
as senior vice president of the global packaging coatings business unit at Valspar Corp. from 2012 until
its
acquisition by Sherwin-Williams in June 2017. Prior to that time, he held a variety of leadership roles at The Dow
Chemical Company and Rohm and Haas.
Thomas M. Stigers has served as WestRock’s president, mill operations since June 2021. He previously served
as our executive vice president, containerboard mills. Mr. Stigers joined WestRock in connection with its acquisition
135
of Southern Container Corp. in 2008, where he served as vice president of Solvay Paperboard. Mr. Stigers has
leadership roles with Champion
worked in the paper industry since 1987,
International, Simpson Paper Company, Donohue Inc., and Abitibi-Consolidated Inc.
including in various operational
Vicki L. Lostetter has served as WestRock’s chief human resources officer since February 2018. She previously
served as general manager, talent and organization capability and general manager, global talent management
with Microsoft Corporation, a large multinational technology company. Prior to joining Microsoft, Ms. Lostetter
served in various leadership roles within the human resources function with Coca-Cola Enterprises, Inc., The Coca-
Cola Company and Honeywell, Inc.
Julia A. McConnell has served as WestRock’s senior vice president and chief accounting officer since June
2020. Prior to joining WestRock, Ms. McConnell worked for Carter’s, Inc., a designer and marketer of children's
apparel, where she served as vice president, international & supply chain finance from 2018 to May 2020 and as
vice president, finance and corporate controller from 2010 to 2019. Prior to that time, Ms. McConnell served in
from 2004 to 2010, and spent 12 years with
various finance leadership roles at PepsiCo,
PricewaterhouseCoopers.
Inc.
Denise R. Singleton has served as Westrock’s executive vice president, general counsel and secretary since
March 2022. From October 2015 until joining WestRock, Ms. Singleton served as senior vice president, general
counsel and corporate secretary of IDEX Corporation, an applied solutions provider serving a variety of niche
markets. Ms. Singleton was senior vice president, general counsel, corporate secretary and chief compliance officer
for SunCoke Energy, Inc. from March 2011 to October 2015 and held various roles at PPG Industries, Inc. before
joining SunCoke.
All of our executive officers are elected annually by, and serve at the discretion of, the board of directors.
See Part I, Item 1 “Available Information” of this Form 10-K for information about our Code of Ethical Conduct
for our Chief Executive Officer and Senior Financial Officers, including that any amendments to, or waiver from, any
provision of such code required to be disclosed will be posted on our website. The remainder of the information
required by this item will be contained in our definitive proxy statement issued in connection with our 2023 annual
meeting of stockholders and is incorporated herein by reference.
Item 11. EXECUTIVE COMPENSATION
The information required by this item will be contained in our definitive proxy statement issued in connection
with our 2023 annual meeting of stockholders and is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The table below shows information with respect to all of our equity compensation plans as of September 30,
2022:
Number of Securities
to be Issued Upon
Exercise of Outstanding
Options, Warrants and
Rights
(a)(2)
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
(b)(3)
Number of Securities Remaining
Available for Future Issuance
Under Equity Compensation Plans
(Excluding Securities Reflected in
Column a)
(c)
2020 Incentive Stock Plan
2016 Incentive Stock Plan
2004 Incentive Stock Plan (1)
2005 Performance Incentive Plan (1)
KapStone Incentive Stock Plan
2016 Employee Stock Purchase Plan
5,129,021
2,613,417
174,186
564,232
131,760
$
$
$
$
$
— $
—
2.44
49.30
45.05
24.09
—
(1) We do not expect to make additional grants of awards under this plan.
3,137,731
895,701
3,328,068
9,100,265
—
1,006,724
136
(2)
Includes 1,612,774 shares for the 2020 Incentive Stock Plan and 834,394 shares for the 2016 Incentive Stock Plan that
may be issued pursuant to outstanding performance stock units as of September 30, 2022 assuming the achievement of
performance conditions at maximum.
(3) For the 2020 Incentive Stock Plan, the 2016 Incentive Stock Plan and the KapStone Incentive Stock Plan, the amounts
include restricted stock units and/or performance share stock units, which do not have exercise prices. There are no
outstanding options under the 2020 Incentive Stock Plan; therefore the weighted-average exercise price is zero. The
weighted average exercise price of outstanding options at September 30, 2022 was $29.83 for the 2016 Incentive Stock
Plan and $24.26 for the KapStone Incentive Stock Plan.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item will be contained in our definitive proxy statement issued in connection
with our 2023 annual meeting of stockholders and is incorporated herein by reference.
Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this item will be contained in our definitive proxy statement issued in connection
with our 2023 annual meeting of stockholders and is incorporated herein by reference.
137
Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) 1. Financial Statements.
PART IV
The following consolidated financial statements of our company and our consolidated subsidiaries and the
Report of the Independent Registered Public Accounting Firm are included in Part II, Item 8 of this report:
Consolidated Statements of Operations for the years ended September 30, 2022, 2021 and 2020
Consolidated Statements of Comprehensive Income (Loss) for the years ended September 30,
2022, 2021 and 2020
Consolidated Balance Sheets as of September 30, 2022 and 2021
Consolidated Statements of Equity for the years ended September 30, 2022, 2021 and 2020
Consolidated Statements of Cash Flows for the years ended September 30, 2022, 2021 and 2020
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial
Reporting
Management’s Annual Report on Internal Control Over Financial Reporting
2. Financial Statement Schedule of WestRock Company.
Page
Reference
62
63
64
65
66
67
127
130
132
All schedules are omitted because they are not applicable or not required because this information is provided
in the financial statements.
3. Exhibits.
See separate Exhibit Index attached hereto and incorporated herein.
(b) See Item 15(a)(3) and separate Exhibit Index attached hereto and incorporated herein.
(c) Not applicable.
Item 16.
FORM 10-K SUMMARY
None.
138
Exhibit
Number
3.1
3.2
3.3
4.1(a)
4.1(b)
4.1(c)
4.1(d)
4.2(a)
4.2(b)
4.2(c)
4.2(d)
INDEX TO EXHIBITS
Description of Exhibits
Amended and Restated Certificate of Incorporation of WestRock Company, effective as of November
2, 2018 (incorporated by reference to Exhibit 3.1 of WestRock’s Current Report on Form 8-K filed on
November 5, 2018).
Certificate of Correction to the Amended and Restated Certificate of Incorporation of WestRock
Company dated November 13, 2018 (incorporated by reference to Exhibit 3.2 of WestRock’s Annual
Report on Form 10-K for the year ended September 30, 2018).
Second Amended and Restated Bylaws of WestRock Company, effective October 27, 2022
(incorporated by reference to Exhibit 3.1 of WestRock’s Current Report on Form 8-K filed on
November 2, 2022).
Indenture, dated as of August 24, 2017, by and among WestRock Company, WestRock MWV LLC,
WestRock RKT Company and The Bank of New York Mellon Trust Company, N.A., as trustee
(incorporated by reference to Exhibit 4.1 of WestRock’s Current Report on Form 8-K filed on August
24, 2017).
First Supplemental Indenture, dated as of August 24, 2017, to the Indenture dated as of August 24,
2017, by and among WestRock Company, WestRock MWV LLC, WestRock RKT Company and The
Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.2
of WestRock’s Current Report on Form 8-K filed on August 24, 2017).
Second Supplemental Indenture, dated as of March 6, 2018, to the Indenture dated as of August 24,
2017, by and among WestRock Company, WestRock MWV LLC, WestRock RKT Company and The
Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.1
of WestRock’s Current Report on Form 8-K filed on March 6, 2018).
Third Supplemental Indenture, dated as of November 2, 2018, to the Indenture dated as of August
24, 2017, among WRKCo, RKT, MWV and The Bank of New York Mellon, as Trustee (incorporated
by reference to Exhibit 4.7 of WestRock’s Current Report on Form 8-K filed on November 5, 2018).
Indenture, dated as of December 3, 2018, by and among WRKCo Inc., WestRock Company,
WestRock MWV, LLC, WestRock RKT, LLC and The Bank of New York Mellon Trust Company, N.A.,
as trustee (incorporated by reference to Exhibit 4.1 of WestRock’s Current Report on Form 8-K filed
on December 3, 2018).
First Supplemental Indenture, dated as of December 3, 2018, to the Indenture dated as of December
3, 2018, by and among WRKCo Inc., WestRock Company, WestRock MWV, LLC, WestRock RKT,
LLC and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference
to Exhibit 4.2 of WestRock’s Current Report on Form 8-K filed on December 3, 2018).
Second Supplemental Indenture, dated as of May 20, 2019, by and among WRKCo Inc., WestRock
Company, WestRock MWV, LLC, WestRock RKT, LLC and The Bank of New York Mellon Trust
Company, N.A., as trustee (incorporated by reference to Exhibit 4.2 of WestRock Company’s Current
Report on Form 8-K filed on May 20, 2019).
Third Supplemental Indenture, dated as of June 3, 2020, to the Indenture dated as of December 3,
2018, by and among WRKCo Inc., WestRock Company, WestRock MWV, LLC, WestRock RKT, LLC
and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to
Exhibit 4.2 of the WestRock’s Current Report on Form 8-K filed on June 3, 2020).
WestRock Company hereby undertakes to furnish a copy of any other long-term debt instrument with
respect to which the total amount of securities authorized thereunder does not exceed 10% of its
consolidated total assets.
4.3
Description of the Registrant’s Common Stock Registered Pursuant to Section 12 of the Securities
Exchange Act of 1934 (incorporated by reference to Exhibit 4.9 of WestRock’s Annual Report on
Form 10-K for the year ended September 30, 2019).
139
*10.1
*10.2
*10.3(a)
*10.3(b)
*10.4(a)
*10.4(b)
*10.4(c)
*10.4(d)
*10.5
*10.6
WestRock Company Third Amended and Restated Annual Executive Bonus Plan, dated as of
January 31, 2019 (incorporated by reference to Exhibit 10.1 of WestRock’s Quarterly Report on Form
10-Q for the quarter ended March 31, 2019).
MeadWestvaco Corporation 2005 Performance Incentive Plan effective April 22, 2005 and as
amended February 26, 2007, January 1, 2009, February 28, 2011 and February 25, 2013
(incorporated by reference to Exhibit 10.1 of MWV’s Current Report on Form 8-K filed on April 25,
2013).
Amended and Restated Rock-Tenn Company Supplemental Retirement Savings Plan, effective
January 1, 2006 (incorporated by reference to Exhibit 10.4 of RockTenn’s Quarterly Report on Form
10-Q for the quarter ended December 31, 2005).
Amendment
to the Rock-Tenn Company Supplemental Retirement Savings Plan, effective
November 16, 2007 (incorporated by reference to Exhibit 10.2 of RockTenn’s Quarterly Report on
Form 10-Q for the quarter ended December 31, 2007).
MeadWestvaco Corporation Deferred Income Plan Restatement, effective January 1, 2007
(incorporated by reference to Exhibit 10.25 of MWV’s Annual Report on Form 10-K for the year ended
December 31, 2008).
First Amendment to the MeadWestvaco Corporation Deferred Income Plan (2007 Restatement)
effective September 1, 2013 (incorporated by reference to Exhibit 10.7(b) of WestRock’s Annual
Report on Form 10-K for the year ended September 30, 2015).
Second Amendment to the MeadWestvaco Corporation Deferred Income Plan (2007 Restatement)
effective January 1, 2015 (incorporated by reference to Exhibit 10.7(c) of WestRock’s Annual Report
on Form 10-K for the year ended September 30, 2015).
Third Amendment to the MeadWestvaco Corporation Deferred Income Plan (2007 Restatement)
effective July 1, 2015 (incorporated by reference to Exhibit 10.7(d) of WestRock’s Annual Report on
Form 10-K for the year ended September 30, 2015).
Amended and Restated Rock-Tenn Company 2004 Incentive Stock Plan effective January 27, 2012
(incorporated by reference to Exhibit 10.1 of the RockTenn’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2012).
WestRock Company 2016 Deferred Compensation Plan for Non-Employee Directors (incorporated
by reference to Exhibit 10.30 of WestRock’s Quarterly Report on Form 10-Q for the quarter ended
June 30, 2016).
*10.7
WestRock Company Deferred Compensation Plan, effective January 1, 2016.
*10.8(a)
*10.8(b)
*10.9(a)
*10.9(b)
*10.10
*10.11
WestRock Company 2016 Incentive Stock Plan (incorporated by reference to Exhibit 10.2 of
WestRock’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016).
WestRock Company Amended and Restated 2016 Incentive Stock Plan (incorporated by reference
to pages B-1 to B-14 of WestRock’s Definitive Proxy Statement for the 2018 Annual Meeting of
Shareholders filed with the SEC on December 19, 2017).
WestRock Company 2020 Incentive Stock Plan (incorporated by reference to Exhibit 10.44 of
WestRock's Annual Report on Form 10-K for the year ended September 30, 2020).
Amendment No. 1 to WestRock Company 2020 Incentive Stock Plan (incorporated by reference to
page 15 of Appendix A of WestRock’s Definitive Proxy Statement for the 2022 Annual Meeting of
Stockholders filed with the SEC on December 13, 2021).
Form of Executive Officer Change of Control Severance Agreement (incorporated by reference to
Exhibit 99.1 of WestRock’s Current Report on Form 8-K filed on March 11, 2022).
WestRock Company Executive Severance Plan, effective September 30, 2022 (incorporated by
reference to Exhibit 10.1 of WestRock’s Current Report on Form 8-K filed on October 6, 2022).
140
10.12
10.13(a)
10.13(b)
10.14
**10.15(a)
**10.15(b)
**10.15(c)
**10.15(d)
10.16(a)
Master Purchase and Sale Agreement, dated as of October 28, 2013, by and among MeadWestvaco
Corporation, MWV Community Development and Land Management, LLC and MWV Community
Development, Inc., as sellers, and Plum Creek Timberlands, L.P., Plum Creek Marketing, Inc., Plum
Creek Land Company and Highland Mineral Resources, LLC, as purchasers, and Plum Creek Timber
Company, Inc. (incorporated by reference to Exhibit 2.1 of MWV’s Current Report on Form 8-K filed
on October 29, 2013).
Sixth Amended and Restated Receivables Sale Agreement, dated as of July 22, 2016, among
WestRock Financial, Inc., as buyer, and certain other subsidiaries of WestRock Company, as
originators (incorporated by reference to Exhibit 10.20 of WestRock’s Annual Report on Form 10-K
for the year ended September 30, 2016).
Amendment No. 1, dated as of May 2, 2019, to the Sixth Amended and Restated Receivables Sale
Agreement, among WestRock Financial, Inc., as buyer, and certain other subsidiaries of Westrock
Company, as originators (incorporated by reference to Exhibit 10.2 of WestRock’s Quarterly Report
on Form 10-Q for the quarter ended June 30, 2019).
Amendment No. 3, dated as of March 12, 2021, to the Eighth Amended and Restated Credit and
Security Agreement among WestRock Financial Inc., WestRock Converting Company, the lenders
and co-agents from time to time party thereto and Coöperatieve Rabobank, U.A. (incorporated by
reference to Exhibit 10.2 of WestRock’s Quarterly Report on Form 10-Q for the quarter ended March
31, 2021).
Amended and Restated Agreement for the Purchasing and Servicing of Receivables, dated as of
September 17, 2020, among WestRock Company, various WestRock Company subsidiaries, and
Coöperatieve Rabobank, U.A.
First Amendment
for the Purchasing and Servicing of
Receivables, dated as of February 19, 2021, among WestRock Company, various WestRock
Company subsidiaries, and Coöperatieve Rabobank, U.A.
to Amended and Restated Agreement
Second Amendment to Amended and Restated Agreement for the Purchasing and Servicing of
Receivables, dated as of August 31, 2021, among WestRock Company, various WestRock Company
subsidiaries, and Coöperatieve Rabobank, U.A.
Third Amendment
for the Purchasing and Servicing of
Receivables, dated as of September 16, 2022, among WestRock Company, various WestRock
Company subsidiaries, and Coöperatieve Rabobank, U.A.
to Amended and Restated Agreement
Credit Agreement dated as of July 7, 2022, among WestRock Company, as a guarantor, WRKCo Inc.,
as a borrower, WestRock Company of Canada Corp./Compagnie WestRock du Canada Corp., as a
borrower, WRK Luxembourg S.à r.l., as a borrower, certain subsidiaries of WestRock Company, the
lenders from time to time party thereto and Wells Fargo Bank, N.A., as administrative agent and
multicurrency agent (incorporated by reference to Exhibit 10.1 of WestRock’s Current Report on Form
8-K filed on July 11, 2022).
10.16(b)
Amendment No. 1 to Credit Agreement, dated as of August 18, 2022, among WestRock Company,
certain subsidiaries of WestRock Company, the Lenders party thereto and Wells Fargo Bank, National
Association, as administrative agent (incorporated by reference to Exhibit 99.1 of WestRock’s Current
Report on Form 8-K filed on August 24, 2022).
10.17
10.18
Amended and Restated Credit Agreement dated as of July 7, 2022, among WestRock Company, as
a guarantor, WestRock Southeast, LLC, as the borrower, the subsidiaries of the Company from time
to time party thereto, as guarantors, the lenders from time to time party thereto and CoBank, ACB, as
administrative agent (incorporated by reference to Exhibit 10.2 of WestRock’s Current Report on Form
8-K filed on July 11, 2022).
Credit Agreement dated as of July 7, 2022, among WRKCo Inc., WestRock Company, WRK
Luxembourg S.à r.l., as a borrower, Multi Packaging Solutions Limited, as a borrower, certain other
subsidiaries of the WestRock Company from time to time party thereto, as borrowers, the lenders
from time to time party thereto and Coöperatieve Rabobank U.A., New York Branch, as administrative
agent (incorporated by reference to Exhibit 10.3 of WestRock’s Current Report on Form 8-K filed on
July 11, 2022).
141
10.19
10.20
21
22
23
31.1
31.2
#32.1
Ninth Amended and Restated Performance Undertaking, dated as of March 12, 2021, by WestRock
Company in favor of WestRock Financial Inc.
Form of Dealer Agreement among WestRock Company, WRKCo Inc., WestRock RKT, LLC,
WestRock MWV, LLC and the Dealer party thereto (incorporated by reference to Exhibit 10.1 of
WestRock’s Current Report on Form 8-K filed on December 10, 2018).
Subsidiaries of the Registrant.
List of Guarantor Subsidiaries and Issuers of Guaranteed Securities (incorporated by reference to
Exhibit 22 of WestRock’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2020).
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.
Certification Accompanying Periodic Report Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002, executed by David B. Sewell, Chief Executive Officer and President of WestRock Company.
Certification Accompanying Periodic Report Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002, executed by Alexander W. Pease, Executive Vice President and Chief Financial Officer of
WestRock Company.
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, executed by David B. Sewell, Chief Executive Officer and President of
WestRock Company, and by Alexander W. Pease, Executive Vice President and Chief Financial
Officer of WestRock Company.
101.INS
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File
because its XBRL tags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema.
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase.
101.DEF
Inline XBRL Taxonomy Extension Definition Label Linkbase.
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase.
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase.
104
Cover Page Interactive Data File – the cover page interactive data file does not appear in the
Interactive Data File because its XBRL tags are embedded within the Inline XBRL document (included
in Exhibit 101).
* Management contract or compensatory plan or arrangement.
** Certain identified information has been excluded from this exhibit because it is not material and is of the
type that the Company treats as private or confidential.
#
In accordance with SEC Release No. 33-8238, Exhibit 32.1 is to be treated as “accompanying” this report
rather than “filed” as part of the report.
142
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Dated: November 18, 2022
WESTROCK COMPANY
By:
/s/ DAVID B. SEWELL
David B. Sewell
Chief Executive Officer and President
143
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by
the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
Signature
Title
/s/ DAVID B. SEWELL
David B. Sewell
Chief Executive Officer and President
(Principal Executive Officer), Director
Date
November 18, 2022
/s/ ALEXANDER W. PEASE Executive Vice President and Chief Financial Officer
November 18, 2022
Alexander W. Pease
(Principal Financial Officer)
/s/ JULIA A. MCCONNELL Senior Vice President and Chief Accounting Officer
November 18, 2022
Julia A. McConnell
(Principal Accounting Officer)
/s/ ALAN D. WILSON
Alan D. Wilson
Director, Chair of the Board
November 18, 2022
/s/ COLLEEN F. ARNOLD Director
Colleen F. Arnold
/s/ TIMOTHY J. BERNLOHR Director
Timothy J. Bernlohr
/s/ J. POWELL BROWN
J. Powell Brown
Director
/s/ TERRELL K. CREWS
Terrell K. Crews
Director
/s/ RUSSELL M. CURREY Director
Russell M. Currey
/s/ SUZAN F. HARRISON Director
Suzan F. Harrison
/s/ GRACIA C. MARTORE Director
Gracia C. Martore
/s/ JAMES E. NEVELS
James E. Nevels
/s/ E. JEAN SAVAGE
E. Jean Savage
Director
Director
/s/ DMITRI L. STOCKTON Director
Dmitri L. Stockton
November 18, 2022
November 18, 2022
November 18, 2022
November 18, 2022
November 18, 2022
November 18, 2022
November 18, 2022
November 18, 2022
November 18, 2022
November 18, 2022
144
CERTIFICATION ACCOMPANYING PERIODIC REPORT
PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 31.1
I have reviewed this Annual Report on Form 10-K of WestRock Company;
I, David B. Sewell, Chief Executive Officer and President, certify that:
1.
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision,
to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and procedures, as
of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is reasonably likely to materially affect,
the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal control over financial reporting.
Date: November 18, 2022
/s/ David B. Sewell
David B. Sewell
Chief Executive Officer and President
A signed original of this written statement required by Section 302, or other document authenticating,
acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version
of this written statement required by Section 302, has been provided to WestRock Company and will be
retained by WestRock Company and furnished to the Securities and Exchange Commission or its staff
upon request.
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Exhibit 31.2
CERTIFICATION ACCOMPANYING PERIODIC REPORT
PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I have reviewed this Annual Report on Form 10-K of WestRock Company;
I, Alexander W. Pease, Executive Vice President and Chief Financial Officer, certify that:
1.
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for
the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal control over financial reporting.
Date: November 18, 2022
/s/ Alexander W. Pease
Alexander W. Pease
Executive Vice President and Chief Financial Officer
A signed original of this written statement required by Section 302, or other document authenticating,
acknowledging, or otherwise adopting the signature that appears in typed form within the electronic
version of this written statement required by Section 302, has been provided to WestRock Company and
will be retained by WestRock Company and furnished to the Securities and Exchange Commission or its
staff upon request.
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Package
Sustainably.
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