Internet Availability of Proxy Materials, Annual Reports on

Form 10-K, and Other Reports and Policies

You may view a complete copy of our Proxy Statement and 2009 Annual Report on Form 10-K by visiting our website at www.boiseinc.com and selecting Investors and then Annual Meeting and Proxy Materials. We will begin mailing our Proxy Statement, 2009 Annual Report on Form 10-K, and a proxy card to shareholders of record on or about March 22, 2010.

You may view complete copies of all of our filings with the Securities and Exchange Commission (SEC), including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, financial information, and other reports and policies, by visiting our website at www.boiseinc.com and selecting Investors and then SEC Filings.

Record Date and Voting at Our 2010 Annual Shareholders’ Meeting

Shareholders owning our common stock at the close of business on March 12, 2010 (the Record Date) may vote at our 2010 Annual Shareholders’ Meeting. On the Record Date, 84,414,449 shares of our common stock were outstanding. Each share is entitled to one vote on each matter to be voted upon at our 2010 Annual Shareholders’ Meeting.

All valid proxies properly executed and received by us prior to our 2010 Annual Shareholders’ Meeting will be voted as you direct. If you do not specify how you want your shares voted, they will be voted FOR the election of both director nominees; FOR the approval of both proposals to amend the Boise Inc. Incentive and Performance Plan; and FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2010. Your shares will also be voted on any other matters presented for a

vote at the meeting in accordance with the judgment of the persons acting under the proxies. You may revoke your proxy and change your vote at any time before our 2010 Annual Shareholders’ Meeting by submitting a written notice to our corporate secretary, by mailing a later-dated and properly executed proxy, or by voting in person at our 2010 Annual Shareholders’ Meeting.

We have appointed Continental Stock Transfer & Trust Company (Continental Stock) as our independent inspector of election. Continental Stock will tabulate all votes cast at our 2010 Annual Shareholders’ Meeting and determine whether a quorum is present.

A quorum is necessary to hold a valid meeting. A quorum will exist if shareholders holding a majority of the shares of our stock issued and outstanding and entitled to vote at the meeting are present in person or by proxy. The inspector of election will treat abstentions and “broker nonvotes” as shares of stock that are present and entitled to vote for purposes of determining the presence of a quorum. A “broker nonvote” occurs when a broker does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. Brokers will not have discretionary power with respect to the election of the two director nominees or the two proposals to amend the Boise Inc. Incentive and Performance Plan. Brokers will have discretionary power with respect to the proposal to ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2010.

The two director nominees who receive the greatest number of votes at the annual meeting will be elected as directors. Abstentions and broker nonvotes will have no effect on the outcome of this proposal.

The two proposals to amend the Boise Inc. Incentive and Performance Plan will be approved if a majority of shares present at the

meeting vote in favor of the proposal. Abstentions will have the same effect as voting against these proposals. Broker nonvotes will have no effect on the outcome of these proposals.

The proposal to appoint KPMG LLP as our independent registered public accounting firm for 2010 will be ratified if a majority of shares present at the meeting vote in favor of ratification. Abstentions will have the same effect as voting against this proposal. Broker nonvotes will have no effect on the outcome of this proposal.

Proxy Solicitation

Our board of directors is soliciting your proxy. We will not retain a proxy solicitor; however, our employees and directors may solicit proxies by mail, telephone, facsimile, email, or in person. Our employees and directors will not receive additional compensation for these activities and the entire cost of this solicitation will be borne by us.

Householding of Annual Meeting Materials

Some banks, brokers, and other record holders may be participating in the practice of “householding” proxy statements and annual reports. This means that only one copy of our Proxy Statement and 2009 Annual Report on Form 10-K may have been sent to multiple shareholders in your household. We will promptly deliver a separate copy of these documents to you if you contact the Broadridge Householding Department at the following address:

Broadridge Householding Department

51 Mercedes Way

Edgewood, NY 11717

Toll-Free Number: 1-800-542-1061

If you want to receive separate copies of our proxy statements and annual reports on Form 10-K in the future, or if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your bank, broker, or other record holder, or you may contact Broadridge at the address and phone number shown.

Shareholder Proposals for Inclusion in Next Year’s Proxy Statement

According to SEC rules, to be considered for inclusion in next year’s Proxy Statement, our corporate secretary must receive shareholder proposals at the address shown below not later than November 19, 2010.

Boise Inc.

Attention: Corporate Secretary

PO Box 990050

Boise, ID 83799-0050

Additionally, our Bylaws require that our corporate secretary must receive notice of any nominations for director or other business a shareholder proposes to bring before our next annual meeting not less than 120 nor more than 150 days prior to our 2011 annual meeting of shareholders.

Please refer to Article II, Section 4 of our Bylaws for an outline of the information a shareholder’s notice must include regarding director nominees and other business to be brought before a shareholders’ meeting.

You may view a complete copy of our Bylaws by visiting our website at www.boiseinc.com and selecting Investors, Corporate Governance, and then Bylaws.

Proposal No. 1 – Election of

Directors

Our board of directors consists of three staggered classes of directors, designated as Class I, Class II, and Class III. The director members of, and the termination dates for, each class are:

At each succeeding annual shareholders’ meeting, successors to the class of directors whose term expires at that annual meeting will be elected for a three-year term. Each director will hold office for the term to which he or she is elected and until his or her successor is duly elected and qualified or until his or her earlier death, disqualification, resignation, or removal.

Nominees

Two nominees, Messrs. Berger and Goldman, are standing for election as directors at our 2010 Annual Shareholders’ Meeting to hold office for three-year terms expiring in 2013.

On March 3, 2010, Boise Cascade Holdings, L.L.C. (Boise Cascade), our then-largest shareholder, sold all of its remaining shares of Boise Inc. common stock. Prior to this sale, Mr. Stephens was one of two Boise Board Representatives (as defined in the Investor Rights Agreement) designated by Boise Cascade.

Following the sale, Boise Cascade no longer has the ability to designate any Boise Board Representatives to our board. Accordingly, Mr. Stephens, who was to stand for election to our board at this year’s Annual Shareholders’ Meeting, will not stand for election. For further information about the Investor Rights Agreement, please refer to the section of this Proxy Statement entitled TRANSACTIONS WITH RELATED PERSONS, PROMOTERS, AND CERTAIN CONTROL PERSONS, Related-Person Transactions, Investor Rights Agreement.

Your shares will be voted according to your instructions. If you return your signed proxy card but do not provide voting instructions, your shares will be voted FOR the election of the two director nominees. To be elected to our board of directors, the director nominees must receive a plurality of the votes cast by our shareholders present in person or by proxy and entitled to vote. If a director nominee who is a continuing director is not reelected, he will remain in office until a successor is elected or until his earlier resignation or removal.

The two director nominees have confirmed their availability for election. If either of the director nominees becomes unavailable to serve as a director for any reason prior to our 2010 Annual Shareholders’ Meeting, our board of directors may substitute another person as a director nominee. In that case, your shares will be voted FOR the substitute director nominee.

Additional information follows for the two director nominees and for the directors continuing in office, particularly concerning their business experience and qualifications, as well as attributes and skills that led our board to conclude that person should serve as a director for the company. During the past ten years, none of our directors have been a party to any legal or bankruptcy proceedings reportable under SEC rules.

Our board of directors recommends shareholders vote FOR the two director nominees.

Business Experience

Since April 2000, Mr. Albert has served as the chair of the board and chief executive officer of Fairchild Venture Capital Corporation, a private investment firm. From 1990 to 2000, he was the majority owner, chair of the board, and chief executive officer of Fairchild Aerospace Corporation and Fairchild Dornier Corporation and chair of the supervisory board of Dornier Luftfahrt, GmbH, all aircraft manufacturing companies. From 1989 to 1990, Mr. Albert was a private investor. After providing start-up venture capital, he served from 1981 to 1988 as chair of the board and chief executive officer of Wings West Airlines, a regional airline that was acquired by AMR Corporation, parent of American Airlines, in 1988. Following the acquisition, Mr. Albert served as president until 1989. Prior to this, he was an attorney practicing business, real estate, and corporate law.

Education

Current public company directorships, other than Boise Inc.

None

Prior directorships held during past five years at any public company or registered investment company

None

Attributes and Skills

Business Experience

Since February 2008, Mr. Bell has been the president, Building Materials Distribution, of Boise Cascade Holdings, L.L.C., a manufacturer of wood products and nationwide provider of building materials. From October 2004 to January 2008, he served as senior vice president of Boise Cascade Holdings, L.L.C., Building Materials Distribution. From 2000 to October 2004, Mr. Bell served as senior vice president and general manager, Boise Building Solutions Distribution, of Boise Cascade Corporation (now OfficeMax Incorporated).

Education

Current public company directorships, other than Boise Inc.

None

Prior directorships held during past five years at any public company or registered investment company

None

Attributes and Skills

Business Experience

Mr. Berger has been the managing partner of Tellurian Partners, LLC since August 2009. Tellurian Partners, LLC is a consulting and financial advisory business. From December 2001 to July 2009, Mr. Berger was associated with Navigant Consulting, Inc., an NYSE-listed consulting firm, and was the managing director and co-leader of that firm’s corporate finance practice. He was also president of Navigant Capital Advisors, L.L.C., Navigant Consulting, Inc.’s registered broker-dealer, from October 2003 to July 2009. From 2000 to 2001, Mr. Berger was president of DotPlanet.com, an Internet services provider. From 1983 to 1999, Mr. Berger was employed by KPMG LLP, an independent public accounting firm, and served as a partner from 1991 to 1999, where he led the corporate finance practice for three of those years.

Education

Current public company directorships, other than Boise Inc.

Prior directorships held during past five years at any public company or registered investment company

None

Attributes and Skills

Business Experience

From January 2006 through 2009, Mr. Goldman was a senior attorney in the law firm of Theodora, Oringher, Miller & Richman PC in Los Angeles and in January 2010 became of counsel to the firm. From May 2002 until January 2006, Mr. Goldman was of counsel to the law firm of Miller & Holguin, at which time it merged with his current firm. Mr. Goldman was a partner in the law firm of Arter & Hadden from 1994 through 2000 and thereafter was of counsel to that firm until 2002. During the period of April 2001 through December 2007, Mr. Goldman also served as chair and chief executive officer of Business Protection Systems International, Inc., a privately held provider of proprietary software solutions for business continuity and risk management programs for business and public sector clients. He continued to serve as a director through March 2009 when he was elected again as board chair, the position he currently holds. From 1989 until 1994, he was a partner in the law firm of Keck, Mahin & Cate. Mr. Goldman engaged in private practice through his own law firm from 1980 through 1989. Mr. Goldman was general counsel of Superscope, Inc., a multinational manufacturer and distributor of brand name consumer audio products from 1975 through 1980. While at Superscope, he also served as treasurer and vice president of administration. Mr. Goldman was admitted to practice law in California in 1966 and engaged in private practice until 1975.

Education

Current public company directorships, other than Boise Inc.

None

Prior directorships held during past five years at any public company or registered investment company

None

Attributes and Skills

Business Experience

Mr. Leight has been the senior managing member of Terrapin Partners, LLC since 1998 and the managing member and chief investment officer of Terrapin Asset Management, LLC since 2002. Terrapin Partners, LLC is a private investment management firm focused on private equity investing and recapitalization of public and private companies. Terrapin Asset Management, LLC focuses on the management of alternative investment vehicles, including hedge funds and multi-manager hedge fund portfolios. Mr. Leight was chair of the board of Aldabra Acquisition Corporation, a publicly traded blank check company, from its inception in 2004 until it merged with Great Lakes Dredge & Dock Company in 2006. From 2000 to 2002, Mr. Leight served as the interim chief executive officer of VastVideo, Inc., and from 1998 to 1999, he served as the interim chief executive officer of e-STEEL L.L.C. From 1995 to 1998, Mr. Leight was employed by hedge fund Gabriel Capital LP, where he served as chief investment officer. From 1991 to 1995, Mr. Leight served as a managing director of Dillon Read & Co., overseeing the firm’s proprietary trading department.

Education

Current public company directorships, other than Boise Inc.

Prior directorships held during past five years at any public company or registered investment company

Attributes and Skills

Business Experience

Mr. Lenz has served as president and chief executive officer of Sun Chemical Corporation, a producer of printing inks and pigments, since January 2008. From 2002 to 2007, Mr. Lenz served as Sun Chemical’s senior vice president and chief financial officer/president, Latin America. From 1997 to 2002, Mr. Lenz was employed by Fairchild Aerospace, a manufacturer of corporate jets and aircraft for regional airlines, serving first as executive vice president and chief financial officer and then as president and chief executive officer of Fairchild Aircraft Inc. From 1980 to 1997, Mr. Lenz was employed by Allied Signal Aerospace in its aerospace, automotive, specialty chemicals, plastics, and engineered materials businesses, ultimately being promoted to vice president, Finance. From 1976 to 1980, Mr. Lenz was employed by the German Internal Revenue Service.

Education

Current public company directorships, other than Boise Inc.

None

Prior directorships held during past five years at any public company or registered investment company

None

Attributes and Skills

Business Experience

From October 2004 until his retirement in November 2008, Mr. Stephens served as chief executive officer and chairman and a director of Boise Cascade Holdings, L.L.C., a manufacturer of wood products and nationwide provider of building materials. Mr. Stephens served as president and chief executive officer of MacMillan Bloedel, a Canadian forest products company, from 1997 until his retirement in 1999. From 1986 to 1996, Mr. Stephens served as the president and chief executive officer of Manville Corporation, a fiberglass and forest products company. From 1982 to 1985, he served as the chief executive officer of Riverwood Corporation, a forest products company.

Education

Current public company directorships, other than Boise Inc.

Prior directorships held during past five years at any public company or registered investment company

Attributes and Skills

Business Experience

Mr. Toeldte joined Boise Cascade Holdings, L.L.C. in early October 2005 as president of the company’s Packaging and Newsprint segment and, in late October 2005, became its executive vice president, Paper and Packaging and Newsprint segments. From 2004 to 2006, Mr. Toeldte was chair of Algonac Limited, a private management and consulting firm based in Auckland, New Zealand. Mr. Toeldte’s previous experience includes: serving as executive vice president of Fonterra Co-operative Group, Ltd., and chief executive officer of Fonterra Enterprises (Fonterra, based in New Zealand, is a global dairy company); previously, Mr. Toeldte served in various capacities with Fletcher Challenge Limited Group (formerly one of the largest companies in New Zealand with holdings in paper, forestry, building materials, and energy), including as chief executive officer of Fletcher Challenge Building and as chief executive officer of Fletcher Challenge Paper, both of which were publicly traded units of the Fletcher Challenge Limited Group; and Mr. Toeldte also served as a partner at McKinsey & Company in Toronto, Brussels, Montreal, and Stockholm.

Education

Current public company directorships, other than Boise Inc.

None

Prior directorships held during past five years at any public company or registered investment company

None

Attributes and Skills

Business Experience

Mr. Weiss has been the managing member and sole owner of Terrapin Palisades Ventures, LLC since June 2009. Terrapin Palisades Ventures, LLC is a private investment company and is also a general partner of the Terrapin-Fabbri Management Company LLC, which serves as the general partner of several almond farm-related investment partnerships. In June 2009, Mr. Weiss sold his interest in Terrapin Partners, LLC, Terrapin Asset Management, LLC, and TWF Management Company LLC, all private equity and asset management companies in which he had been a managing member and the co-founder since 1998. From 2004 to 2006, he was chief executive officer of Aldabra Acquisition Corporation, a previously publicly traded blank check company (in December 2006, Aldabra merged with Great Lakes Dredge & Dock Company). During 2004, Mr. Weiss served as a managing member of American Classic Sanitation LLC. From 1999 to 2000, he served as the chief executive officer and executive vice president of strategy of PaperExchange.com. During 1998 and 2000, Mr. Weiss served as a managing member of e-STEEL LLC.

Education

Current public company directorships, other than Boise Inc.

Prior directorships held during past five years at any public company or registered investment company

None

Attributes and Skills

Proposal No. 2 – Approval of amendments to the Boise Inc. Incentive and Performance Plan to expand the list of available performance measures and clarify how shares withheld to pay the exercise price of an award or withholding taxes are administered

We ask you to consider and approve amendments to the Boise Inc. Incentive and Performance Plan (the BIPP). These amendments, subject to your approval, would (1) expand the list of performance measures available under the BIPP and (2) clarify that shares withheld to pay the exercise price of an award or withholding taxes are not considered “issued” and are to be returned to the pool of shares available under the BIPP for future awards. A description of the BIPP, as proposed to be amended, follows and a copy is attached to this Proxy Statement as Appendix A.

History and Operation of the BIPP

We use the BIPP to tie a portion of our key employees’ total compensation to shareholder value. The BIPP also supports our ability to attract and retain highly qualified managers in key positions.

The BIPP permits grants of annual incentive awards, stock bonuses, restricted stock, restricted stock units, performance stock, performance units, stock appreciation rights (SARs), and stock options (including performance-based or indexed stock options) to our officers, key employees, and nonemployee directors who are selected as participants. The Compensation Committee of our board of directors will generally select BIPP participants.

Awards will become exercisable or otherwise vest at the times and upon the conditions that the Compensation Committee may determine at the time of grant, as reflected in the applicable award agreement. The Compensation Committee may also make any or all awards performance based. This means the awards will be paid out based on the attainment of specified performance goals, in

addition to any other conditions the Compensation Committee may establish. Awards under the BIPP are discretionary.

The BIPP restricts the number of stock options, SARs, restricted stock shares, restricted stock units, and performance shares that can be granted during any fiscal year to any participant covered by Section 162(m) of the Internal Revenue Code. In addition, the BIPP also limits the amount that may be paid to such participants for both annual incentive awards and performance units granted in a single fiscal year.

Stock Options.  Stock options entitle the holder to purchase shares of our common stock during a specified period at a purchase price set by the Compensation Committee (not less than 100% of the fair market value of our common stock on the grant date). Each option granted under the BIPP will be exercisable for a maximum period of ten years from the date of grant (or for a lesser period if the Compensation Committee so determines). Participants exercising an option may pay the exercise price by any lawful method permitted by the Compensation Committee.

Stock Appreciation Rights (SARs).  A SAR is the right, denominated in shares, to receive upon exercise, without payment to the company, an amount equal to the excess of the fair market value of a share of our common stock on the exercise date over the fair market value of a share of our common stock on the grant date, multiplied by the number of shares with respect to which the SAR is being exercised. Payment will be made in stock or cash, at the company’s option. The Compensation Committee may grant SARs to participants as either free-standing awards or awards related to stock options. For SARs related to an option, the terms and conditions of the grant will be substantially the same as the terms and conditions applicable to the related option, and exercise of either the SAR or the option will cause the cancellation of the other, unless otherwise determined by the Compensation Committee. The Compensation Committee will determine the terms and conditions applicable to awards of free-standing SARs or for awards related to stock options.

Restricted Stock.  Restricted stock is common stock the company transfers or sells to a participant that is subject to a substantial risk of forfeiture and restrictions on sale or transfer for a period of time. The Compensation Committee will determine the amounts, terms, and conditions (including the attainment of performance goals) of any restricted stock grant. Except for restrictions on transfer (and any other restrictions the Compensation Committee may impose), participants will have all the rights of a shareholder with respect to the restricted stock. Unless the Compensation Committee determines otherwise, a participant’s termination of employment during the restricted period will result in forfeiture of all shares subject to restrictions.

Restricted Stock Units.  Restricted stock units are similar to restricted stock, except (1) the shares of stock are not issued to the participant until after the end of the restriction period and any other applicable conditions are satisfied and (2) the participant does not have rights of a shareholder with respect to the restricted stock units. Restricted stock units may also be paid in cash rather than stock, or in a combination of cash and stock, at the Compensation Committee’s discretion.

Performance Units.  The Compensation Committee may also award performance units, which are the right to receive a payment upon the attainment of specified performance goals. The Compensation Committee will establish the applicable performance goals at the time the units are awarded. Payment may be made in cash, stock, or a combination of cash and stock, at the Compensation Committee’s discretion.

Performance Shares.  Performance shares represent the right to receive a payment at a future date based on the value of the common stock in accordance with the terms of the grant and upon the attainment of specified performance goals. The Compensation Committee will establish the performance goals and all other terms applicable to the grant. Payment may be made in cash, stock, or a combination of cash and stock, at the Compensation Committee’s discretion.

Annual Incentive Awards.  Annual incentive awards are payments based on the attainment of performance goals specified by the Compensation Committee. Awards are calculated as a percentage of salary, based on the extent to which the performance goals are met during the year, as determined by the Compensation Committee. Awards are paid in cash, stock, or a combination of cash and stock, at the Compensation Committee’s discretion.

Stock Bonuses.  Stock bonus awards, consisting of common stock, may be made at the Compensation Committee’s discretion upon the terms and conditions (if any) determined by the Compensation Committee.

Performance Goals.  Awards of restricted stock, performance units, performance shares, annual incentive awards, and other awards under the BIPP may be subject to the attainment of performance goals relating to one or more business criteria within the meaning of Section 162(m) of the Internal Revenue Code. These goals may include or be based upon, without limitation:

Performance goals may (1) be used to measure our performance as a whole or any Boise Inc. subsidiary, business unit, or segment, (2) be adjusted to include or exclude extraordinary items, and (3) reflect absolute entity performance or a relative comparison of entity performance to the performance of a peer group, index, or other external measure, in each case as determined by the Compensation Committee in its discretion.

Shares of common stock issued under the BIPP will again be available for issuance in the following instances:

Change in Control

The BIPP provides that in the event of a change in control (as defined in the BIPP), unless otherwise determined by the Compensation Committee, all then-outstanding stock options and SARs will become fully vested and exercisable, and all other then-outstanding awards that are subject to time-based vesting will vest in full and be free of restrictions, except to the extent another award meeting the requirements set forth in the BIPP is provided to the participant to replace such award. The BIPP provides that such a replacement award may take the form of a continuation of the award outstanding prior to the change in control.

Administration of the BIPP

The Compensation Committee administers the BIPP. The Compensation Committee (or any permitted delegee) has the discretion and responsibility to:

Our board of directors may amend the BIPP at any time and may make adjustments to the BIPP and outstanding options, without shareholder approval, to reflect a stock split, stock dividend, recapitalization, merger, consolidation, or other corporate events. Shareholders must approve amendments that:

The BIPP became effective on February 22, 2008, upon the closing of the Acquisition. It will expire on February 22, 2018, unless terminated earlier. Our board of directors may terminate the BIPP at any time before that date. Awards outstanding at the expiration or termination of the BIPP shall remain in effect according to their terms and the provisions of the BIPP.

U.S. Federal Income Tax Consequences

The following is a brief description of the principal U.S. federal income tax consequences, based on current law, of awards under the BIPP.

Incentive Stock Options.  An incentive stock option results in no taxable income to the optionee and no deduction to the company at the time it is granted or exercised. The excess of the fair market value of the shares acquired over the option price, however, is an item of adjustment in computing the alternative

minimum taxable income of the optionee. If the optionee holds the stock received as a result of an exercise of an incentive stock option for at least two years from the date of the grant and one year from the date of exercise, then the gain realized on disposition of the stock is treated as a long-term capital gain. If the shares are disposed of during this period, however (e.g., a “disqualifying disposition”), then the optionee will include in income, as compensation for the year of the disposition, an amount equal to the excess, if any, of the fair market value of the shares upon exercise of the option over the option price (or, if less, the excess of the amount realized upon disposition over the option price). The excess, if any, of the sale price over the fair market value on the date of exercise will be a short-term capital gain. In such a case, the company will be entitled to a deduction in the year of the disposition for the amount includible in the optionee’s income as compensation. The optionee’s basis in the shares acquired upon exercise of an incentive stock option is equal to the option price paid, plus any amount includible in his or her income as a result of a disqualifying disposition.

Nonqualified Stock Options.  A nonqualified stock option results in no taxable income to the optionee and no deduction to the company at the time it is granted. An optionee exercising such an option will, at that time, realize taxable compensation in the amount of the difference between the option exercise price and the then fair market value of the shares. Subject to the applicable provisions of the Internal Revenue Code, a deduction for federal income tax purposes will be allowable to the company in the year of exercise in an amount equal to the taxable compensation recognized by the optionee.

The optionee’s basis in such shares is equal to the sum of the option price plus the amount includible in his or her income as compensation upon exercise. Any gain (or loss) upon subsequent disposition of the shares will be a long-term or short-term gain (or loss), depending upon the holding period of the shares.

If a nonqualified option is exercised by tendering previously owned shares of the company’s common stock in payment of the option exercise price, then instead of the treatment described above, the following generally will apply: A number of new shares equal to the number of previously owned shares tendered will be considered to have been received in a tax-free exchange; the optionee’s basis and holding period for such number of new shares will be equal to the basis and holding period of the previously owned shares exchanged. The optionee will have compensation income equal to the fair market value on the date of exercise of the number of new shares received in excess of the number of exchanged shares. The optionee’s basis in the excess shares will be equal to the amount of the compensation income, and the holding period in the shares will begin on the date of exercise.

Stock Appreciation Rights (SARs).  Generally, the recipient of a SAR will not recognize taxable income at the time the SAR is granted. If an employee receives the appreciation inherent in the SARs in cash, the cash will be taxed as ordinary income to the employee at the time it is received. If an employee receives the appreciation inherent in the SARs in stock, the value of the stock received will be taxed as ordinary income to the employee at the time it is received. In general, there will be no federal income tax deduction allowed to the company upon the grant or termination of SARs. Upon the settlement of a SAR, however, the company will be entitled to a deduction equal to the amount of ordinary income the recipient is required to recognize as a result of the settlement.

Restricted Stock.  Restricted stock shares are generally subject to ordinary income tax at the time the restrictions lapse. The participant may, however, make an election to include in income, when the restricted stock is first transferred to him or her, an amount equal to the excess of the fair market value of the stock at that time over the amount, if any, paid for the stock. The result of this election is that appreciation in the value of the stock after the

date of transfer is then taxable as a capital gain, rather than as ordinary income.

Restricted Stock Units.  Provided the terms of the restricted stock units comply with the requirements of Internal Revenue Code Section 409A, the recipient will recognize taxable income and be subject to wage and employment tax withholding at the time a participant receives the shares or cash underlying the awards. The amount of ordinary income a participant will recognize will equal the fair market value of the shares and/or cash at the time it is received, less the amount, if any, a recipient paid for the restricted stock units.

Other Awards.  Recipients of performance units and performance shares will not recognize taxable income at the time the performance unit or performance share is granted. They will, however, be subject to ordinary income tax at the time payment is made at the completion of the performance period, equal to the amount of cash or fair market value of stock received over the amount, if any, paid for the performance unit or performance share.

In each of the foregoing cases, the company will generally be entitled to a corresponding federal income tax deduction at the same time the participant recognizes ordinary income.

Tax Withholding.  When a recipient realizes taxable compensation with respect to an award, a recipient must satisfy all applicable federal, state, or local taxes required by law to be withheld at that time. The company will, to the extent permitted by law, have the right to deduct any of the taxes from any payment of any kind otherwise due to the participant. With respect to incentive stock options, no income or employment taxes are currently required to be withheld upon the exercise of the option or upon the disposition of stock acquired upon the exercise of such option. The Internal Revenue Service, however, has issued notices indicating the withholding rules applicable to incentive stock options may be changed in the future.

Capital Gains Tax.  A recipient’s sale of any Boise Inc. common stock acquired under the BIPP may result in the recognition of capital gains or losses for the recipient. Under current law, the federal income tax rates that apply to net capital gains will depend in part upon the length of time the shares are held by the recipient following an exercise, with different tax rates applying for shares held for one year or less, for more than one year, and for more than five years. Net capital gains rates are generally lower for individuals upon satisfaction of longer holding periods. Net capital losses may generally be deducted against net capital gains and against ordinary income to a limited extent.

Tax Treatment of Awards to Nonemployee Directors and Employees Outside the United States.  The grant and exercise of options and awards under the BIPP to nonemployee directors and employees outside the United States may be taxed on a different basis.

Other Tax Considerations.  Section 162(m) of the Internal Revenue Code places a $1 million annual limit on the compensation deductible by the company paid to covered employees. The limit, however, does not apply to “qualified performance-based compensation.” We believe awards of stock options, SARs, and other awards payable upon the attainment of performance goals under the BIPP will qualify as qualified performance-based compensation. Also, awards that are granted, accelerated, or enhanced upon the occurrence of a change in control may give rise, in whole or in part, to “excess parachute payments” within the meaning of Section 280G of the Internal Revenue Code and, to such extent, will be nondeductible by the company and subject to a 20% excise tax on the participant.

The foregoing summary of the income tax consequences with respect to the BIPP is for general information only. Interested parties should consult their own advisors as to specific tax consequences, including the application and effect of foreign, state, and local tax laws.

IRS Circular 230 Disclosure.  To ensure compliance with requirements imposed by the U.S. Internal Revenue Service, we inform you that any tax advice contained in this communication was not intended or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding tax-related penalties under the Internal Revenue Code or (2) promoting, marketing, or recommending to another party any tax-related matters addressed in this communication.

Proposed Plan Amendments

The following amendments (1) expand the list of performance measures available under the BIPP and (2) clarify that shares withheld to pay the exercise price of an award or withholding taxes are not considered “issued” and are to be returned to the pool of shares available under the BIPP for future awards.

Internal Revenue Code Section 162(m) limits the compensation deductible with respect to a company’s chief executive officer and other top officers to $1 million, subject to listed exceptions. One of the exceptions is performance-based compensation. To qualify as performance-based compensation, payment must be based on the achievement of goals related to performance measures approved by shareholders. The BIPP meets the requirement of having performance measures approved by shareholders by listing a number of performance measures in the plan, from which the Compensation Committee can then choose as it designs incentive programs. This amendment expands the list of performance measures available under the BIPP to give the

Compensation Committee greater flexibility to adjust to business needs and goals in designing incentive programs. The list of performance measures available under the BIPP is being expanded to include safety and measurable objectives related to strategic plan development and implementation, tactical plans, sales plans, operating budget, cost control, products or projects, acquisitions or divestitures, or personnel.

The amendment also clarifies that shares withheld to pay the exercise price of an award or to pay withholding taxes are not considered “issued” under the BIPP and are returned to the pool of shares available under the BIPP for future awards.

Our board of directors believes these amendments are essential for keeping performance measures in alignment with company objectives and maximizing the shares approved for issuance under the BIPP.

These amendments will be approved if a majority of shares present at the meeting vote in favor of the proposal. A copy of the BIPP is on file with the SEC.

Our board of directors recommends shareholders vote FOR the approval of the amendments to the Boise Inc. Incentive and Performance Plan to expand the list of available performance measures and clarify how shares withheld to pay the exercise price of an award or withholding taxes are administered.

Proposal No. 3 – Approval of amendment to the Boise Inc. Incentive and Performance Plan to establish a bonus pool for annual incentive awards under the plan

We ask you to consider and approve an amendment to the Boise Inc. Incentive and Performance Plan (the BIPP). This amendment, subject to your approval, would establish a bonus pool feature under the BIPP for annual incentive awards to officers who are subject to (or who may become subject to) Internal Revenue Code Section 162(m). For a detailed description of the BIPP, please refer to the section of this Proxy Statement entitled PROPOSALS TO BE VOTED ON, Proposal No. 2. A description of the proposed amendment to the BIPP follows and a copy of the BIPP, as proposed to be amended, is attached to this Proxy Statement as Appendix A.

Proposed Plan Amendment

In addition to enhancing our ability to attract and retain highly qualified employees, the BIPP is intended to satisfy the requirements for “performance-based compensation” within the meaning of Section 162(m) of the Internal Revenue Code. Specifically, under Internal Revenue Code Section 162(m), compensation payable to our chief executive officer and other senior officers specified under Internal Revenue Code Section 162(m) in excess of $1 million is not deductible unless the compensation satisfies the Section 162(m) rules and regulations. There are several methods to comply with the Section 162(m) rules and regulations for performance-based compensation. This amendment employs the pool method, which allows the Compensation Committee to create an annual incentive pool each year, based on one or more performance measures specified in the BIPP, and to divide that pool among the officers subject to (or who may become subject to) Section 162(m). The

Compensation Committee retains negative discretion to reduce (but not increase) any officer’s award below the amount that would otherwise be paid, based on any factors the Compensation Committee deems appropriate or applicable in its sole discretion.

If this amendment is approved, the description of annual incentive awards under the BIPP will change as follows:

Annual Incentive Awards. Annual incentive awards are payments based on the attainment of performance goals specified by the Compensation Committee. Awards are calculated as a percentage of a bonus pool, based on the extent to which the performance goals are met during the year, as determined by the Compensation Committee, subject to the Compensation Committee’s right to reduce or eliminate the amount of any Award. Awards are paid in cash, stock, or a combination of cash and stock, at the Compensation Committee’s discretion.

Our board of directors believes this amendment is essential because it preserves the tax deductibility of annual incentive awards under the BIPP while allowing the Compensation Committee flexibility to create annual incentive awards that appropriately motivate and encourage our management team under changing business scenarios.

This amendment will be approved if a majority of shares present at the meeting vote in favor of the proposal. A copy of the BIPP is on file with the SEC.

Our board of directors recommends shareholders vote FOR the approval of the amendment to the Boise Inc. Incentive and Performance Plan to establish a bonus pool for annual incentive awards.

Proposal No. 4 – Ratification of KPMG LLP as our independent registered public accounting firm for 2010

Our Audit Committee is responsible for the engagement of the company’s independent auditor and appointed KPMG LLP (KPMG) in that capacity effective February 18, 2010.

Although ratification is not required by our Bylaws or otherwise, our board of directors is submitting the selection of KPMG to our shareholders for ratification because we value our shareholders’ views on our independent registered public accounting firm and as a matter of good corporate practice. Our Audit Committee will consider the outcome of this vote in its decision to appoint an independent registered public accounting firm but is not bound by our shareholders’ vote. Even if the selection of KPMG is ratified, our Audit Committee may change the appointment at any time during the year if it determines a change would be in the best interest of the company and our shareholders.

Representatives of KPMG will be present at the annual meeting to answer questions. They will also have the opportunity to make a statement if they desire to do so.

For information on the services KPMG has provided for us, please refer to the section of this Proxy Statement entitled AUDIT COMMITTEE MATTERS, Auditor Fees and Services.

KPMG will be ratified as our independent registered public accounting firm if a majority of shares present at the meeting vote in favor of ratification.

Our board of directors recommends shareholders vote FOR the ratification of KPMG LLP as our independent registered public accounting firm for 2010.

Corporate Governance Guidelines

Our board of directors has adopted Corporate Governance Guidelines (the Guidelines) to assist the board in exercising its responsibilities. The Guidelines reflect our board’s commitment to monitor the effectiveness of policy and decision making, both at the board and management levels. Our board of directors believes the Guidelines will enhance our ability to achieve our goals and long-term success and will assist us in increasing shareholder value. The Guidelines are in addition to and are not intended to change or interpret any federal or state law or regulation, including the Delaware General Corporation Law, or our Certificate of Incorporation or Bylaws. Our board of directors may modify the Guidelines from time to time on the recommendation of the Governance Committee and as deemed appropriate by our board of directors.

You may view a complete copy of the Guidelines by visiting our website at www.boiseinc.com and selecting Investors, Corporate Governance, and then Governance Guidelines.

Director Independence

Our directors believe board independence allows the board to provide appropriate oversight and maintain managerial accountability.

Since we list our common stock and other securities on the New York Stock Exchange (NYSE), the NYSE rules require that a majority of our board of directors must be composed of “independent directors.” This is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship that, in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director.

Our board has determined that Messrs. Albert, Berger, Goldman, Leight, Lenz, Stephens, and Weiss are independent directors as defined under the NYSE’s listing standards. These directors constitute a majority of our board of directors. In making their determination, our board considered the relationships disclosed in the section of this Proxy Statement entitled TRANSACTIONS WITH RELATED PERSONS, PROMOTERS, AND CERTAIN CONTROL PERSONS, Related-Person Transactions.

Our board of directors, as well as its committees, can retain independent financial, legal, compensation, or other advisors to represent the independent interests of our board of directors or its committees. The retention of independent advisors is at the board’s or committee’s sole discretion and is paid for by the company.

Board and Committee Matters

Communications With Our Board of Directors

You may contact our board of directors by writing to them in care of our corporate secretary at the address shown below, or by emailing them at the email address shown below. All correspondence will be referred to the chair of our board, who is not a member of management. While we do not screen these communications, copies of all complaints or concerns will be forwarded to our general counsel and corporate secretary.

Boise Inc.

Attention: Corporate Secretary

PO Box 990050

Boise, ID 83799-0050

Email: directors@BoiseInc.com

2009 Overall Meeting Attendance Rates

During 2009, our board of directors met nine times, which included attendance at our annual shareholders’ meeting. In addition to meetings of the full board and attendance at our annual shareholders’ meeting, our directors also attended 17 meetings of board committees. Our directors had an overall attendance rate of 90%. All of our directors attended at least 75% of the meetings of the board and the committees on which they served, with the exception of Messrs. Goldman and Norton, whose overall attendance rates were 70% and 71%, respectively. Mr. Goldman’s ability to attend was limited by health issues. Mr. Norton resigned from our board of directors effective January 22, 2010.

While we do not have a formal policy requiring them to do so, we encourage our directors to attend our annual shareholders’ meeting.

Board Leadership Structure

Since the company’s inception, our Corporate Governance Guidelines have provided that our chief executive officer may not serve concurrently as the chair of our board of directors. Accordingly, we separate our board chair and chief executive officer positions. Mr. Albert, a nonemployee director, serves as our independent board chair, and Mr. Toeldte serves as our chief executive officer. We believe separating the roles of board chair and chief executive officer improves the board’s oversight of the company’s management and risk.

Role of Board of Directors in Our Risk Management Processes

We have well-developed processes and structures in place to manage our key strategic, operational, financial, and compliance risks. While our entire board of directors is responsible for monitoring and evaluating the risks we face and our risk management processes, our board has delegated the oversight of this responsibility to our Audit Committee. We utilize the following risk management processes:

We also have in place a number of independent assurance activities responsible for assessing whether our risk response activities are in place and working effectively. These assurance activities include, but are not limited to, corporate legal audits, corporate security, environmental audits, and safety audits.

Executive Sessions

Our board of directors and each of our committees regularly meet in executive sessions outside the presence of management. Mr. Albert, our board chair, presides over the executive sessions of our board of directors, and each committee chair presides over the executive sessions of their respective committee.

Committees

Our board of directors has established the following five standing committees:

Executive Committee

Audit Committee

Compensation Committee

Nominating Committee

Governance Committee

The composition, duties, and responsibilities of these committees are outlined in written charters adopted by our board of directors.

You may view copies of our committee charters by visiting our website at www.boiseinc.com and selecting Investors, Corporate Governance, and then Committee Charters.

Executive Committee

Current Committee Members:*

Carl A. Albert, Committee Chair

Jonathan W. Berger

Jack Goldman

Alexander Toeldte

2009 Committee Meetings: None

2009 Committee Meeting Attendance Rate: N/A

The Executive Committee of our board of directors is responsible for:

You may view a copy of our Executive Committee charter by visiting our website at www.boiseinc.com and selecting Investors, Corporate Governance, and then Committee Charters.

Audit Committee

Current Committee Members:

Jonathan W. Berger, Committee Chair

Carl A. Albert

Jack Goldman

Heinrich R. (Rudi) Lenz

All members of the Audit Committee are independent as defined under the NYSE’s listing standards. Our board of directors has determined that Mr. Berger is an “Audit Committee Financial Expert” under the SEC’s definition.

2009 Committee Meetings: 4

2009 Committee Meeting Attendance Rate:

The Audit Committee of our board of directors is responsible for:

You may view a copy of our Audit Committee charter by visiting our website at www.boiseinc.com and selecting Investors, Corporate Governance, and then Committee Charters.

Compensation Committee

Current Committee Members:

Jonathan W. Berger, Committee Chair

Carl A. Albert

Jack Goldman

W. Thomas Stephens

All members of the Compensation Committee are independent as defined under the NYSE’s listing standards.

2009 Committee Meetings: 4

2009 Committee Meeting Attendance Rate:

The Compensation Committee of our board of directors is responsible for:

You may view a copy of our Compensation Committee charter by visiting our website at www.boiseinc.com and selecting Investors, Corporate Governance, and then Committee Charters.

Nominating Committee

Current Committee Members:

Carl A. Albert, Committee Chair

Jonathan W. Berger

Nathan D. Leight

All members of the Nominating Committee are independent as defined under the NYSE’s listing standards.

2009 Committee Meetings: 3

2009 Committee Meeting Attendance Rate:

The Nominating Committee of our board of directors is responsible for:

You may view a copy of our Nominating Committee charter by visiting our website at www.boiseinc.com and selecting Investors, Corporate Governance, and then Committee Charters.

Governance Committee

Current Committee Members:

Jack Goldman, Committee Chair

Carl A. Albert

Jonathan W. Berger

Jason G. Weiss

All members of the Governance Committee are independent as defined under the NYSE’s listing standards.

2009 Committee Meetings: 5

2009 Committee Meeting Attendance Rate:

The Governance Committee of our board of directors is responsible for:

You may view a copy of our Governance Committee charter by visiting our website at www.boiseinc.com and selecting Investors, Corporate Governance, and then Committee Charters.

Other Committees

Our board of directors may establish other committees as it deems necessary or appropriate from time to time.

Director Selection Process

Our board of directors is responsible for selecting the nominees for election to our board. The Nominating Committee, after consultation with our board chair and the receipt of any nominee recommendations from other directors and/or shareholders, is responsible for identifying and recommending to our board of directors qualified candidates to be nominated for election as directors at our annual shareholders’ meeting or to be appointed by our board to fill vacancies occurring between annual shareholders’ meetings. The invitation to join our board of directors is extended by our board of directors through our board chair.

Suitability of Candidates

In evaluating the suitability of candidates, our board of directors and Nominating Committee consider many factors, including a candidate’s:

Our board of directors and Nominating Committee also consider a candidate’s judgment, competence, anticipated participation in board activities, experience, geographic location, and special talents or personal attributes. The composition of our board of directors should encompass a broad range of skills, expertise, knowledge, and diversity. When evaluating the suitability of an incumbent director for nomination for

reelection, our board of directors and Nominating Committee also consider the director’s past performance, including attendance at meetings and participation in and contributions to the activities of our board of directors, as well as the director’s ability to make contributions after any significant change in circumstances (including changes in employment or professional status).

Consideration of Diversity in Nomination Process

Since the company’s inception, our board of directors has had limited opportunities to fill open board positions, given the rights of the Aldabra Majority Holders and Boise Majority Holders to designate members to our board. Our current board has a rich mixture of educational, professional, and experiential diversity. As opportunities to appoint new directors become available in the future, our board of directors will make gender, racial, ethnic, and global diversity a high priority for director recruitment.

Shareholder Nominations for Directors

Given our recent ownership structure and the ability of others to designate members to our board, the Nominating Committee has not yet adopted a written policy regarding shareholder nominations for directors. In accordance with our Bylaws, however, the Nominating Committee will consider shareholder nominations for directors (please refer to the section of this Proxy Statement entitled SOLICITATION OF PROXIES AND VOTING, Shareholder Proposals for Inclusion in Next Year’s Proxy Statement). We did not receive any shareholder nominations or recommendations for director in connection with our 2010 Annual Shareholders’ Meeting.

Board and Committee Evaluations

Our directors perform an annual self-evaluation of our board of directors, its committees, and each individual director. These evaluations assess the overall effectiveness of our board of directors. The Governance Committee reviews the directors’ responses and provides the full board with a summary. The purpose of the evaluation is to increase the effectiveness of our board, its committees, and its directors.

Code of Ethics for Our Board of Directors

Our board of directors adopted a Code of Ethics that applies not only to our directors but also to all of our employees, including our chief executive officer, chief financial officer, and principal accounting officer. We have a toll-free reporting service available that permits employees to confidentially report violations of our Code of Ethics or other issues of significant concern.

If we amend or grant a waiver of one or more of the provisions of our Code of Ethics, we will disclose the amendment or waiver by posting the required information on our website.

You may view a copy of our Code of Ethics by visiting our website at www.boiseinc.com and selecting Investors, Corporate Governance, and then Code of Ethics.

Director Compensation

Employee board members do not receive compensation for their service on our board of directors. Nonemployee board members are entitled to receive the following annual compensation for their board service:

The Governance Committee annually reviews our directors’ compensation and recommends changes, if any, to our board of directors. The Compensation Committee oversees the administration of the directors’ compensation plans.

2009 Director Fees

In 2009, our paid directors received the following compensation for their board service:

2009 Director Equity Awards

We believe our director compensation should encourage ownership of the company’s stock. In light of that goal, on March 16, 2009, our paid directors received service-condition vesting awards of restricted stock (2009 Director Restricted Stock) or restricted stock units (2009 Director Restricted Stock Units) as shown in the following table. Directors who received 2009 Director Restricted Stock were required by the terms of the award to include the value of the stock in their 2009 income. Those directors who preferred to include the value of their award in their 2010 income received 2009 Director Restricted Stock Units.

Directors Deferred Compensation Plan

We maintain a “nonqualified” Deferred Compensation Plan offered to our paid directors. The plan is an unfunded plan intended to help participants supplement their retirement income while providing them an opportunity to reinvest a portion of their cash compensation in the company’s overall business performance.

Under the plan, each director who receives cash compensation for board service may elect to defer all or a portion of his or her cash compensation in a calendar year. Amounts deferred are credited with imputed interest at a rate equal to 130% of Moody’s Composite Average of Yields on Corporate Bonds. Participants elect the form and timing of distributions of their deferred compensation balances. Participants may receive payment in cash in a lump sum or in annual installments following their service on our board of directors.

None of our directors elected to defer their cash compensation in 2009 or 2010 under this plan.

No changes are expected to be made to our Directors Deferred Compensation Plan in 2010.

2010 Director Compensation

Our board of directors has approved the following compensation for board service in 2010:

2010 Director Fees

In 2010, our paid directors are entitled to receive the following compensation for their board service:

2010 Director Equity Awards

Upon recommendation of the Governance Committee, our board of directors approved 2010 equity awards in the form of restricted stock for each nonemployee director valued at $100,000. Mr. Albert also received a $250,000 annual board chair equity award in addition to his $100,000 regular equity award. The number of restricted stock shares awarded to each paid director was determined by dividing $100,000 ($350,000 in the case of Mr. Albert) by our closing stock price on March 15, 2010. These restricted stock awards are service-condition vesting awards, vesting in full on March 15, 2011. Our paid directors are required by the terms of their award to include the value of the restricted stock in their 2010 income.

Nonqualified Deferred Compensation Earnings – None of our paid directors elected to participate in our Directors Deferred Compensation Plan in 2009. The amount reported for Mr. Berger reflects the above-market portion of the interest he earned on compensation he deferred in 2008.