Champion International Corporation increases focus on enhancing shareholder value.

STAMFORD, CT--(BUSINESS WIRE)--March 20, 1997--Champion International Corporation is focusing the entire company on enhancing shareholder value by improving profitability, increasing free cash flow, and greater utilization of its assets. Several changes are being made to help accomplish this objective.

Richard E. Olson, the company's new chairman and chief executive officer, announced today that these changes include the following:

-- Return on Capital Employed (ROCE) will be a significant factor in determining annual incentive compensation for all managers of the company;

-- Longer-term executive compensation will be linked to a goal of increasing total shareholder return (stock price appreciation plus dividend yield) to a value equivalent to 15% per annum compounded for three years;

-- Key managers in the company will be required to attain designated levels of common stock ownership within a specific period of time;

-- Directors' compensation has been changed so that effective January 1, 1997, a significant portion of their compensation will be paid in company stock units, and pensions for current and future Directors of the company have been eliminated;

-- Marakon Associates, a leading firm dedicated to helping clients improve shareholder value, has been retained by management to help establish a value improvement program.

Annual Incentive Compensation

Annual incentive compensation for executive officers will be influenced significantly by ROCE. Return on Capital Employed will also be a significant factor in determining annual incentive awards for all other managers in the program. This key measurement is designed to reward more profitable asset utilization throughout the company. The plan being replaced was heavily dependent on operational results to determine incentive compensation.

Performance Share Plan

A new plan has been implemented under which performance share units have been awarded to a number of key managers. The sole criterion for the plan is total shareholder return (TSR). No shares will be earned out unless, at any time within three years, TSR has increased to a value equivalent to 15% per annum compounded for three years. Once this threshold level is reached, the company's TSR will be measured against that of its industry peer group to determine the number of shares earned out.

Stock Ownership Requirements

The stock ownership policy requires a significant number of managers to attain designated levels of common stock ownership within a specific time. The chairman and vice chairman of the company will acquire and maintain share ownership equivalent to three times their annual salary within three years. Others will be required to attain lesser multiples of their annual salaries depending on their position.

Board Compensation Changed

The Board changed Directors' compensation so that a significant portion of their compensation will be paid in common stock units. In addition, the Board approved the elimination of pensions for future Directors and the termination of the accrual of pension benefits for incumbent Directors. Both actions are effective as of January 1, 1997.

Marakon Associates Retained

Marakon Associates has been retained by management to help establish a value-improvement program to significantly increase shareholder value. This will include an assessment of the value-creation potential of all the company's businesses, and a review of markets in which the company participates, current facilities, organizational structure, and management processes. Marakon has been very successful in helping their clients develop value-improvement programs that are explicitly focused on maximizing shareholder value.

Chairman and chief executive officer Richard E. Olson said that the steps announced today are further evidence of the company's determination to improve Champion's total return to shareholders. "We have a big task before us and we are moving ahead. It is essential that management compensation be linked to improving shareholder value and to the profitable utilization of our assets. It also is essential that our key managers own meaningful levels of company stock and think like shareholders. We must demonstrate to our shareholders that everything we do is intended to increase the value of the company," Olson said. "The key to sustained, superior performance is to continually work to maximize the value creation of our assets and to eliminate any barriers that detract from that goal."

Champion International Corporation is an integrated forest products company with significant operations in the United States, Brazil, and Canada. The company's products -- coated and uncoated papers, newsprint, pulp, and selected papers for packaging, as well as lumber, plywood, and wood chips -- are sold throughout the world. Champion currently has responsibility for the sustainable management of over ten million acres of forest land supporting its manufacturing facilities.

CONTACT: Bob Turner (Media) 203/358-6707

Frank Kneisel (Investor Relations) 203/358-7402