<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
GENESEE & WYOMING INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO] GENESEE & WYOMING
GENESEE & WYOMING INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1997
The Annual Meeting of Stockholders of GENESEE & WYOMING INC. (the "Company")
will be held at the Rye Town Hilton, 699 Westchester Avenue, Rye Brook, New
York 10573, on Tuesday, May 20, 1997 at 11:00 a.m., local time, for the
following purposes more fully described in the accompanying proxy statement:
1. To elect two directors of the Company.
2. To consider and act upon a proposal to approve and ratify Amendment No.
1 to the Genesee & Wyoming Inc. 1996 Stock Option Plan, which increases
the total number of shares of Class A Common Stock available for option
grants thereunder from 450,000 to 650,000.
3. To consider and act upon a proposal to approve and ratify the selection
of Arthur Andersen LLP as the Company's independent auditors for the year
ending December 31, 1997.
4. To transact such other business as may properly come before the Meeting
or any adjournments thereof.
The Board of Directors has fixed the close of business on March 31, 1997 as
the record date for the determination of stockholders entitled to notice of
and to vote at the Meeting and any adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS
James B. Gray, Jr.
Secretary
Dated: April 17, 1997
<PAGE>
GENESEE & WYOMING INC.
71 LEWIS STREET
GREENWICH, CONNECTICUT 06830
PROXY STATEMENT
GENERAL INFORMATION
This proxy statement is furnished to stockholders in connection with the
solicitation of proxies by the Board of Directors of Genesee & Wyoming Inc.
(the "Company") to be used at the Annual Meeting of Stockholders of the
Company, which will be held on Tuesday, May 20, 1997, and at any adjournments
thereof (the "Meeting"). This proxy statement and accompanying form of proxy
are being first mailed to stockholders on or about April 17, 1997. The proxy,
when properly executed and received by the Secretary of the Company prior to
the Meeting, will be voted as therein specified unless it is revoked by filing
with the Secretary prior to the Meeting a written revocation or a duly
executed proxy bearing a later date. Unless authority to vote for one or both
of the director nominees is specifically withheld according to the
instructions, a signed proxy will be voted FOR the election of the two
director nominees named herein and, unless otherwise indicated, FOR each of
the other two proposals described in this proxy statement and the accompanying
notice of meeting.
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by use of the mails, directors, officers or regular employees of
the Company, without extra compensation, may solicit proxies personally or by
telephone or other telecommunication. The Company has requested persons
holding stock for others in their names or in the names of nominees to forward
soliciting material to the beneficial owners of such shares and will, if
requested, reimburse such persons for their reasonable expenses in so doing.
VOTING
As of March 31, 1997, the record date for the Meeting (the "Record Date"),
there were issued and outstanding (i) 4,399,953 shares of the Company's Class
A Common Stock, par value $.01 per share (the "Class A Common Stock"), and
(ii) 846,556 shares of the Company's Class B Common Stock, par value $.01 per
share (the "Class B Common Stock"). Only stockholders of record on the books
of the Company at the close of business on the Record Date are entitled to
notice of and to vote at the Meeting and at any adjournments thereof.
Each stockholder of record on the Record Date is entitled to one vote for
each share of Class A Common Stock registered in his name, and ten votes for
each share of Class B Common Stock registered in his name. All actions
submitted to a vote at the Meeting will be voted on by the holders of Class A
Common Stock and Class B Common Stock (collectively, the "Common Stock")
voting together as a single class. A majority of the outstanding Common Stock,
represented in person or by proxy at the Meeting, will constitute a quorum for
the transaction of all business.
Once a quorum is present, directors will be elected by a plurality of the
votes cast, in person or by proxy, at the Meeting, and the affirmative vote of
at least a majority of the votes cast, in person or by proxy, at the Meeting
will be required for approval and ratification of each of the other two
proposals described in this proxy statement and the accompanying notice of
meeting.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth as of the Record Date certain information
concerning shares of Common Stock held by (i) each stockholder known by the
Company to own beneficially more than 5% of either class of Common Stock, (ii)
each director of the Company, (iii) each "Named Executive" (see "Executive
Compensation"), and (iv) all directors and executive officers of the Company
as a group.
<TABLE>
<CAPTION>
CLASS A CLASS B
COMMON STOCK COMMON STOCK
BENEFICIALLY BENEFICIALLY
OWNED OWNED
---------------- ----------------
NAME AND ADDRESS OF NO. OF PERCENT NO. OF PERCENT PERCENT OF
BENEFICIAL OWNER (1) SHARES OF CLASS SHARES OF CLASS VOTE (2)
-------------------- ------- -------- ------- -------- ----------
<S> <C> <C> <C> <C> <C>
Mortimer B. Fuller, III (3)....... 616,646 14.0% 658,283 77.8% 56.0%
James M. Fuller (4)............... 153,901 3.5 11,100 1.3 2.1
Louis S. Fuller (5)............... 108,519 2.5 147,019 17.4 12.3
John M. Randolph (6).............. 12,600 0.3 7,400 0.9 0.7
Philip J. Ringo (7)............... 3,700 0.1 - - -
Mark W. Hastings (8).............. 7,800 0.2 7,400 0.9 0.6
Charles W. Chabot................. 2,084 - - - -
Spencer D. White.................. 350 - - - -
David J. Collins.................. 200 - - - -
Robert I. Melbo................... 200 - - - -
J.P. Morgan & Co. Incorporated
(9)............................... 445,100 10.1 - - 3.5
60 Wall Street
New York, NY 10260
Fiduciary Trust Company
International (10)................ 391,300 8.9 - - 3.0
2 World Trade Center
New York, NY 10048
The Equitable Companies
Incorporated et al. (11).......... 327,800 7.5 - - 2.5
787 Seventh Avenue
New York, NY 10019
All Directors and Executive
Officers as a Group
(13 persons) (12)................ 906,700 20.6 831,202 98.2 71.7
</TABLE>
- --------
(1) Unless otherwise indicated, each stockholder shown on the table has sole
voting and investment power with respect to the shares beneficially owned
by him or it. The address of each of the directors and executive officers
of the Company is c/o Genesee & Wyoming Inc., 71 Lewis Street, Greenwich,
CT 06830. Percentages of less than 0.1% have been omitted from the table.
(2) Reflects the voting power of the share holdings of each stockholder shown
on the table as a result of the fact that the Class A Common Stock is
entitled to one vote per share and the Class B Common Stock is entitled
to ten votes per share. See "Voting."
(3) The amounts shown include: (i) 317,091 shares of Class A Common Stock and
386,093 shares of Class B Common Stock owned by Mr. Fuller individually;
(ii) an aggregate of 288,640 shares of Class A Common Stock and an
aggregate of 272,190 shares of Class B Common Stock held by three family
trusts for the benefit of Mr. Fuller and others, of which Mr. Fuller is
sole trustee or co-trustee; and (iii) 10,915 shares of Class A Common
Stock owned by Mr. Fuller's mother which, together with the shares held
by such family trusts of which Mr. Fuller is co-trustee, are subject to a
Voting Agreement pursuant to which Mr. Fuller has been granted
irrevocable proxies to vote all such shares through March 20, 2008.
(4) The amounts shown include: (i) 11,100 shares of Class A Common Stock and
11,100 shares of Class B Common Stock owned by Mr. Fuller individually;
and (ii) an aggregate of 142,801 shares of Class A Common Stock held by
family trusts for the benefit of Mr. Fuller and others, of which Mr.
Fuller is co-trustee.
2
<PAGE>
(5) The amounts shown include: (i) 30,000 shares of Class A Common Stock and
133,144 shares of Class B Common Stock owned by Mr. Fuller individually;
(ii) 41,144 shares of Class A Common Stock owned jointly by Mr. Fuller
and his wife; (iii) 30,000 shares of Class A Common Stock owned by Mr.
Fuller's wife, as to which shares he disclaims beneficial ownership; and
(iv) 7,375 shares of Class A Common Stock and 13,875 shares of Class B
Common Stock owned by Mr. Fuller's daughter, as to which shares he
disclaims beneficial ownership.
(6) The amounts shown include: (i) 11,600 shares of Class A Common Stock and
7,400 shares of Class B Common Stock held by a trust for the benefit of
Mr. Randolph, of which he is co-trustee; and (ii) 1,000 shares of Class A
Common Stock held by a trust for the benefit of Mr. Randolph's wife, of
which he is co-trustee and as to which shares he disclaims beneficial
ownership.
(7) Such shares are owned by Mr. Ringo's wife, and he disclaims beneficial
ownership thereof.
(8) The amounts shown include: (i) 7,400 shares of Class A Common Stock and
7,400 shares of Class B Common Stock owned jointly by Mr. Hastings and
his wife; and (ii) 400 shares of Class A Common Stock beneficially owned
by Mr. Hastings' minor children, as to which shares he disclaims
beneficial ownership.
(9) The amount shown and the following information is derived from an
Amendment No. 1 to Schedule 13G dated February 28, 1997: J. P. Morgan &
Co. Incorporated has the sole power to vote 287,800 of such shares and
the sole power to dispose of all 445,100 shares.
(10) The amount shown and the following information is derived from a Schedule
13G dated January 28, 1997: Fiduciary Trust Company International, a bank
(as defined in Section 3(a)(6) of the Securities Exchange Act of 1934, as
amended), has sole voting power with respect to 332,900 of such shares,
shared voting power with respect to 58,400 such shares and sole
dispositive power with respect to all 391,300 shares.
(11) The following information is derived from a Schedule 13G dated February
12, 1997 filed jointly on behalf of The Equitable Companies Incorporated,
AXA, five French mutual insurance companies as a group, and their
subsidiaries: The amount shown includes 4,200 shares beneficially owned
by The Equitable Life Assurance Society of the United States (a
subsidiary of The Equitable Companies Incorporated) acquired solely for
investment purposes and 323,600 shares beneficially owned by Alliance
Capital Management L.P. (a subsidiary of The Equitable Companies
Incorporated) acquired solely for investment purposes on behalf of client
discretionary investment advisory accounts. The Equitable Life Assurance
Society of the United States and Alliance Capital Management L.P. each
have sole power to vote and sole power to dispose of the respective
shares owned by them.
(12)See footnotes (3) through (8) of this table.
3
<PAGE>
ELECTION OF DIRECTORS
Two of the Company's five directors are to be elected by the stockholders at
the Meeting, each to hold office for a term expiring in 2000 or until his
successor is duly elected and qualifies.
The Board of Directors recommends the election of the two nominees named
below, both of whom are currently directors of the Company. Unless authority
to vote for one or both of the nominees is specifically withheld according to
the instructions, proxies in the enclosed form will be voted FOR the election
of each of the two nominees named below.
The Board of Directors does not contemplate that either of the nominees will
be unable to serve as a director, but if that contingency should occur prior
to the voting of the proxies, the persons named in the enclosed proxy reserve
the right to vote for such substitute nominee or nominees as they, in their
discretion, shall determine.
PROPOSED FOR ELECTION AS DIRECTORS
AT THE MEETING
<TABLE>
<CAPTION>
DIRECTOR
NAME AND BACKGROUND SINCE
------------------- --------
<S> <C>
JAMES M. FULLER, age 56, has been Regional Sales Manager of the 1974
Harvey Salt Co., a distributor of salt and water purification
chemicals, since 1995. From 1983 until 1993, Mr. Fuller was National
Account Manager-Export for Akzo Nobel Salt, Inc., where he served for
over 25 years. Mr. Fuller is a first cousin of Mortimer B. Fuller,
III and Louis S. Fuller.
JOHN M. RANDOLPH, age 71, has been a financial consultant and private 1986
investor for more than the past five years. In 1965 he founded and
was Chief Executive Officer of Randolph Computer Corporation, one of
the first computer leasing companies. He subsequently served as
Chairman and Chief Executive Officer of J.M. Randolph and Associates,
a company created to manage certain computer leasing assets acquired
by the Bank of Boston.
</TABLE>
DIRECTORS WHOSE TERMS DO NOT EXPIRE AT THE MEETING
The following table sets forth certain information with respect to each
director of the Company whose term in office does not expire at the Meeting.
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME AND BACKGROUND SINCE EXPIRES
------------------- -------- -------
<S> <C> <C>
MORTIMER B. FULLER, III, age 54, has been President and Chief 1973 1999
Executive Officer of the Company since 1977. He also serves
as Chairman of the Board and of the Board's Executive
Committee. He is a graduate of Princeton University, Boston
University School of Law and Harvard Business School. Mr.
Fuller is a director of the American Short Line Railroad
Association. He is a founding member of the Regional
Railroads of America, and serves on that Association's
executive committee. He also serves on the Board of Directors
of Detection Systems, Inc. Mr. Fuller is a first cousin of
James M. Fuller and Louis S. Fuller.
LOUIS S. FULLER, age 55, has been a member of Courtright and 1974 1998
Associates, an executive search firm, since 1992. Mr. Fuller
serves on the Advisory Board of Pioneer American Bank. He is
a first cousin of Mortimer B. Fuller, III and James M.
Fuller.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME AND BACKGROUND SINCE EXPIRES
------------------- -------- -------
<S> <C> <C>
PHILIP J. RINGO, age 55, has been President and Chief 1978 1998
Executive Officer of Chemical Leaman Tank Lines Inc., a
trucking firm, since 1995. From 1992 to 1995, he served as
President and Chief Operating Officer of The Morgan Group,
Inc. and Chairman and Chief Executive Officer of Morgan Drive
Away, Inc., a common and contract carrier for the
manufactured housing and recreational vehicle industries.
From 1988 to 1992, Mr. Ringo was Chief Executive Officer and
President of Energy Innovations, Inc., a monitoring and
communications equipment firm. Prior to that, he served as
President of ATE Management and Service Co., Inc., now known
as Ryder/ATE, Inc. (municipal transportation services). Mr.
Ringo also serves on the Board of Directors of Chemical
Leaman, Inc.
</TABLE>
BOARD MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors held eight meetings during the year ended December
31, 1996 ("1996"). Each director attended at least 75% of the total of such
Board meetings and meetings of Board Committees on which he served.
The Board of Directors has established, among other Committees, an Audit
Committee and a Compensation and Stock Option Committee of the Board. Although
the Company has no standing Nominating Committee, the Board of Directors will
consider director nominees recommended by stockholders. Such recommendations
should be sent to the Company, to the attention of the President.
The current members of the Audit Committee are John M. Randolph (Chairman),
James M. Fuller and Philip J. Ringo. The Committee reviews with Arthur
Andersen LLP, the Company's independent auditors, the Company's financial
statements and internal accounting procedures, Arthur Andersen LLP's auditing
procedures and fees, and the possible effects of professional services upon
the independence of Arthur Andersen LLP. The Audit Committee held two meetings
during 1996.
The current members of the Compensation and Stock Option Committee are
Philip J. Ringo (Chairman), Louis S. Fuller and John M. Randolph. The
Committee makes recommendations to the Board with respect to compensation paid
to the Company's management and administers the Company's 1996 Stock Option
Plan (the "Option Plan"). See "Proposal to Approve and Ratify an Amendment to
the Option Plan to Increase the Number of Shares Available for Option Grants."
The Compensation and Stock Option Committee held three meetings during 1996.
DIRECTORS' COMPENSATION
During 1996, the Company paid cash directors' fees aggregating $50,500 to
its outside (non-employee) directors, consisting of fees of $2,100 per Board
meeting attended, $500 per Board Committee meeting attended not in conjunction
with a Board meeting, $250 per Committee meeting attended in conjunction with
a Board meeting, and $250 per meeting attended by telephone. All of the
Company's directors other than Mortimer B. Fuller, III qualify for such
payments. The Company also reimburses its directors for travel expenses in
connection with attendance at Board meetings.
DIRECTORS' OPTIONS
Pursuant to the Company's Stock Option Plan for Outside Directors (the
"Directors' Plan"), during 1996 each outside director of the Company (that is,
each director other than Mortimer B. Fuller, III) was granted a non-statutory
option, expiring on June 27, 2006, to purchase 8,000 shares of Class A Common
Stock at an exercise price of $17.00 per share (the contemporaneous initial
public offering price of the Class A Common Stock). Each option becomes
exercisable in annual increments of one-third commencing June 28, 1997, is not
transferable except by will or intestacy, and lapses within stated periods
following the death of the director or
5
<PAGE>
cessation of his service as a director. Such options are subject to customary
anti-dilution provisions and acceleration of vesting upon a change in control
of the Company. The Directors' Plan covers options to purchase
up to an aggregate of 50,000 shares of Class A Common Stock and also provides
for the grant of certain options to each new outside director of the Company
upon his or her election to the Board.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
During 1996, Mortimer B. Fuller, III, a director and executive officer of
the Company, inadvertently filed late with the Securities and Exchange
Commission (the "SEC") one report disclosing six related transactions in his
Common Stock, and Alan R. Harris, an executive officer of the Company,
inadvertently filed late with the SEC one report disclosing one transaction in
his Common Stock. Both of such reports have since been filed, and all of the
Company's directors and executive officers are now current in such filings. In
making the foregoing statements, the Company has relied on the written
representations of its directors and executive officers and copies of the
reports that they have filed with the SEC.
EXECUTIVE OFFICERS
The Company is currently served by nine executive officers, who are elected
annually by the Board of Directors and serve until their successors are
elected and qualify:
MORTIMER B. FULLER, III, age 54, has been President and Chief Executive
Officer of the Company since 1977. Further information about Mr. Fuller is set
forth above under "Election of Directors."
MARK W. HASTINGS, age 47, Senior Vice President, Chief Financial Officer and
Treasurer, has been the Company's chief financial officer since he joined the
Company in 1978. Prior to joining the Company, Mr. Hastings was a credit
analyst for Marine Midland Bank. He currently represents the short line
industry on the Board of the Railroad Clearing House, which has been
established to create the administrative systems and banking functions for the
electronic settlement of all rail industry interline freight payments.
FORREST L. BECHT, age 53, Senior Vice President-Louisiana and Texas, joined
the Company in 1987 as General Manager of Louisiana & Delta Railroad, Inc.,
and now serves as its President and General Manager. His 25-year career in the
railroad industry has included service with The Atchison, Topeka and Santa Fe
Railway from 1968 to 1981 in a succession of staff and line positions in its
mechanical and operating departments. Mr. Becht is a director of the American
Short Line Railroad Association and is active in several other railroad
operating associations.
JAMES W. BENZ, age 48, became Senior Vice President-GWI Railroad Switching
Services in March 1997. Since 1987, he has been President of Rail Link, Inc.,
which the Company acquired in November 1996.
CHARLES W. CHABOT, age 50, Senior Vice President-New York and Pennsylvania,
joined the Company as Senior Vice President-Marketing and Sales in 1991. He
became President of Buffalo & Pittsburgh Railroad, Inc. in 1992. Prior to
joining the Company, Mr. Chabot was employed for over ten years by the Chessie
System Railroad (predecessor of CSX Transportation, Inc.), where he served in
various capacities in marketing and freight equipment planning. He also served
as a management consultant with Booz, Allen and Hamilton. Mr. Chabot
represents the short line railroad industry on the Board of Directors of
Operation Lifesaver, Inc.
DAVID J. COLLINS, age 39, became Senior Vice President-Marketing and
Development in January 1997. From 1992 to 1997, he was Vice President of
Marketing for the New York and Pennsylvania railroads, responsible for
marketing, safety, information systems and special projects. From 1990 to
1992, he was General Manager of Genesee and Wyoming Railroad Company and
Rochester & Southern Railroad, Inc. Mr. Collins joined the Company in 1979.
ALAN R. HARRIS, age 48, Senior Vice President and Chief Accounting Officer,
joined the Company in 1990 as its Chief Accounting Officer. Mr. Harris is a
certified public accountant and from 1985 to 1990, he was
6
<PAGE>
Director of Accounting, and subsequently Secretary and Treasurer, of Preston
Trucking Company, Inc., an interstate carrier.
ROBERT I. MELBO, age 54, Senior Vice President-Oregon, is President and
General Manager of Willamette & Pacific Railroad, Inc. He joined the Company
in 1993 as General Manager after over 25 years of service in operations with
Southern Pacific Transportation Company in various capacities, including
Manager-Field Operations, Northern Willamette Valley, and Superintendent of
the Oregon Division.
SPENCER D. WHITE, age 36, Senior Vice President-Illinois, is President and
General Manager of Illinois & Midland Railroad, Inc. He joined the Company in
1988 as Chief Engineer of Buffalo & Pittsburgh Railroad, Inc. after serving in
progressive engineering positions with CSX Transportation since 1982. He has
served the Company as Vice President-Operations of Buffalo & Pittsburgh
Railroad, Inc. and Chief Engineer of the New York and Pennsylvania railroads.
7
<PAGE>
EXECUTIVE COMPENSATION
Shown on the table below is information on the annual and long-term
compensation for services rendered to the Company in all capacities, for the
years ended December 31, 1996 and 1995, paid by the Company to those persons
who were, at December 31, 1996, (i) the Chief Executive Officer of the
Company, (ii) the four most highly compensated executive officers of the
Company other than the Chief Executive Officer, and (iii) an officer who would
have been one of the four most highly compensated other executive officers but
for the fact that he did not become an executive officer of the Company until
1997 (collectively, the "Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------- --------------------------
AWARDS PAYOUTS
------------------ -------
OTHER ALL
ANNUAL RESTRICTED OTHER
COMPEN- STOCK LTIP COMPEN-
NAME AND PRINCIPAL SALARY BONUS SATION AWARDS OPTIONS PAYOUTS SATION
POSITION YEAR ($) (1) ($) (2) ($) (3) ($) (#) ($) ($) (4)
------------------ ---- -------- -------- ------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MORTIMER B. FULLER, III
President and Chief 1996 $312,464 $156,500 - - 90,000 - $57,020
Executive Officer...... 1995 286,456 70,400 - - - - 8,933
MARK W. HASTINGS
Senior Vice President,
Chief Financial Officer 1996 177,234 80,400 - - 45,000 - 22,432
and Treasurer.......... 1995 115,375 22,700 - - - - 7,086
CHARLES W. CHABOT
Senior Vice President-
New York and 1996 154,106 55,400 - - 25,000 - 31,776
Pennsylvania........... 1995 138,116 15,400 - - - - 9,557
SPENCER D. WHITE 1996 87,892 31,350 $52,830(5) - 15,000 - 9,476
Senior Vice President-
Illinois............... 1995 72,249 7,350 - - - - 2,926
DAVID J. COLLINS (6)
Vice President of
Marketing-New York and 1996 88,709 30,350 - - 30,000 - 11,599
Pennsylvania........... 1995 88,025 26,350 - - - - 4,101
ROBERT I. MELBO
Senior Vice President- 1996 92,350 24,700 - - 20,000 - 35,481
Oregon................. 1995 87,363 6,700 - - - - 9,506
</TABLE>
- --------
(1) The amounts shown include cash compensation earned and paid during the
year indicated as well as cash compensation deferred at the election of
the Named Executive.
(2) The bonuses shown were awarded and paid in the succeeding year for
services rendered during the year indicated.
(3) Except with respect to Mr. White for 1996, the value of perquisites and
other personal benefits are not shown on the table because the aggregate
amount of such compensation (if any) for each year shown did not exceed
10% of the Named Executive's annual salary and bonus for that year.
(4) The amounts shown for 1996 reflect: (i) Company contributions to the
Company's 401(k) Savings Plan on behalf of the Named Executives as
follows: Mr. Fuller-$1,215, Mr. Hastings-$1,215, Mr. Chabot-$1,215, Mr.
White-$1,185, Mr. Collins-$899 and Mr. Melbo-$762; (ii) the value of
insurance premiums paid by the Company, and the economic benefit
(projected on an actuarial basis) to the Named Executives, under split
dollar life insurance arrangements as follows: Mr. Fuller-$55,330, Mr.
Hastings-$20,742, Mr. Chabot-$30,086, Mr. White-$7,576, Mr. Collins-
$10,225 and Mr. Melbo-$34,676; and (iii) the value of life insurance
premiums paid by the Company for the benefit of each Named Executive under
a group life insurance program as follows: Mr. Fuller-$475, Mr. Hastings-
$475, Mr. Chabot-$475, Mr. White-$715, Mr. Collins-$475 and Mr. Melbo-$43.
(5) The amount shown reflects a one-time moving expense reimbursement.
(6) Mr. Collins was elected Senior Vice President-Marketing and Development,
and became an executive officer of the Company, in January 1997. The
amounts shown on the table reflect compensation paid to him in his prior
capacity with the Company.
8
<PAGE>
STOCK OPTIONS
Shown below is further information on grants of stock options during 1996 to
the Named Executives. All such options were granted under the Option Plan. See
"Proposal to Approve and Ratify an Amendment to the Option Plan to Increase
the Number of Shares Available for Option Grants." The Company has no
provision for stock appreciation rights.
OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS GRANT DATE VALUE
- ------------------------------------------------------------------- ----------------
PERCENT OF
TOTAL OPTIONS
OPTIONS GRANTED TO EXERCISE GRANT DATE
GRANTED EMPLOYEES IN PRICE EXPIRATION PRESENT VALUE
NAME (#) FISCAL YEAR ($/SH) DATE ($) (1)
---- ------- ------------- -------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Mortimer B. Fuller, III. 63,600 16.3% $17.00 6/23/01 $589,572
............... 26,400 6.8 18.70 6/23/01 233,112
Mark W. Hastings........ 45,000 11.6 17.00 6/23/01 417,150
Charles W. Chabot....... 25,000 6.4 17.00 6/23/01 231,750
Spencer D. White........ 15,000 3.9 17.00 6/23/01 139,050
David J. Collins........ 30,000 7.7 17.00 6/23/01 278,100
Robert I. Melbo......... 20,000 5.1 17.00 6/23/01 185,400
</TABLE>
- --------
(1) The hypothetical grant date present values for options granted during 1996
are presented pursuant to the rules of the SEC and are calculated under
the modified Black-Scholes Model for pricing options, a mathematical
formula used to value options traded on stock exchanges. This formula
considers a number of factors in forecasting an option's present value.
Factors used to value the options shown on the table include the expected
volatility rate of the shares underlying the option (53.24%), the risk
free rate of return (7.08%), the projected dividend yield (none) and the
time to expiration (5 years). The actual before-tax amount, if any,
realized upon the exercise of stock options will depend upon the excess,
if any, of the market price of the Class A Common Stock over the option
exercise price per share at the time the option is exercised. There is no
assurance that the hypothetical grant date present values of the options
reflected on the table will be realized.
Shown below is information with respect to all unexercised options to
purchase Class A Common Stock held by the Named Executives at December 31,
1996. No options were exercised by the Named Executive during 1996.
AGGREGATED OPTION EXERCISES IN 1996 AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF ALL UNEXERCISED
SHARES UNEXERCISED OPTIONS HELD IN-THE-MONEY OPTIONS AT
ACQUIRED VALUE AT FY-END (#) FY-END ($) (1)
ON EXER- REALIZED ------------------------- -------------------------
NAME CISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mortimer B. Fuller, III. - - - 90,000 - $1,552,620
Mark W. Hastings........ - - - 45,000 - 798,750
Charles W. Chabot....... - - - 25,000 - 443,750
Spencer D. White........ - - - 15,000 - 266,250
David J. Collins........ - - - 30,000 - 532,500
Robert I. Melbo......... - - - 20,000 - 355,000
</TABLE>
- --------
(1) Expressed as the excess of the market value of the Class A Common Stock at
December 31, 1996 ($34.75 per share) over the exercise price of each
option.
9
<PAGE>
SEVERANCE AGREEMENTS
The Company is a party to agreements with each of its nine current executive
officers which provide that upon termination of the officer's employment with
the Company within three years after a defined change in control of the
Company, the officer will receive a cash amount equal to three times the
average annual compensation payable to him by the Company during the
immediately preceding five years. The agreements provide for reduction of the
amounts paid pursuant thereto to the extent that such amounts would otherwise
be non-deductible to the Company under Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code").
REPORT OF THE COMPENSATION COMMITTEE
WITH RESPECT TO EXECUTIVE COMPENSATION
The following report of the Compensation and Stock Option Committee (the
"Committee") required by the rules of the SEC to be included in this Proxy
Statement shall not be deemed incorporated by reference by any statement
incorporating this Proxy Statement by reference into any filing under the
Securities Act of 1933, as amended (the "Securities Act"), or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), except to the extent
that the Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under either such Act.
The following discussion applies to the compensation of all of the Company's
executive officers, including Mortimer B. Fuller, III, the Chief Executive
Officer, and the other Named Executives.
EXECUTIVE COMPENSATION PHILOSOPHY:
The goals of the Company's executive compensation program are to align
compensation with business objectives and performance, and to enable the
Company to attract, retain and reward executives who contribute to the long-
term success of the Company and its operating regions and to increasing
stockholder value. The Company attempts to compensate its executives
competitively. To ensure that compensation is competitive, the Company
periodically compares its compensation practices with those of comparable
companies and adjusts its compensation parameters, if necessary, based on this
review. More importantly, the Company's executive compensation program relies
to a great degree on incentive compensation, both annual and long-term.
Executives are rewarded based upon Company-wide performance, regional
performance (in the case of executives who are regional managers) and
individual performance. Company-wide performance and regional performance are
evaluated by reviewing the extent to which strategic and business plan
objectives are met, including such factors as achieving operating profit and
operating efficiencies. For example, pre-determined levels of profitability
must be met before any incentive compensation is paid, so that every executive
is motivated to achieve profitability for his region (or, in the case of
executives who are not regional managers, for the Company as a whole).
Individual performance is evaluated by reviewing each executive's performance
against set annual objectives.
The Company's executive compensation program currently consists of annual
salary, annual incentive compensation in the form of cash bonuses, and long-
term incentive compensation in the form of stock options.
EXECUTIVE COMPENSATION PROGRAM:
The Company's executive compensation program is structured to attract and
retain key executives capable of increasing revenues, promoting innovation,
fostering teamwork and motivating employees, all with the ultimate goal of
improving profitability and enhancing stockholder value.
The annual cash compensation paid to executives consists of base salary and
cash bonuses. Salaries are reviewed by the Committee at the end of each year
and may be changed at that time based on recommendations
10
<PAGE>
of the Chief Executive Officer. Factors considered are an executive's
performance, changes in competitive compensation levels and changes in the
executive's responsibilities within the Company.
Annual incentive compensation in the form of cash bonuses are awarded under
the Company's cash bonus plan. Under this plan, the Company awards annual
bonuses to certain key employees (including the nine current executive
officers) based on pre-tax earnings targets and the meeting of individual
performance objectives.
At the beginning of each year, each executive officer provides the Chief
Executive Officer with his individualized objectives for the year, which
include financial, business and operational goals (for example, an improved
safety program). The Chief Executive Officer reviews, modifies (if necessary)
and approves each executive's individual objectives, and during the year he
gives executives ongoing feedback on their progress in meeting those
objectives. After the end of each year, the Chief Executive Officer evaluates
each executive's accomplishment of his objectives and provides performance
appraisals to the Committee. The Chief Executive Officer also provides the
Committee with his recommendations for each executive's cash bonus for the
year just ended, which are based on (i) the Company's financial performance
for the year and, in the case of an executive who is a regional manager, his
region's financial performance for the year, and (ii) the executive's success
in meeting his objectives for the year. The performance appraisals and the
Chief Executive Officer's recommendations are considered by the Committee in
deciding the amount of each executive's bonus (if any) for the year just
ended. Similar objective-setting, feedback and evaluation with respect to the
Chief Executive Officer's performance and recommended bonus compensation is
provided by the Chairman of the Committee.
Maximum bonus percentages under the cash bonus plan currently range from 15%
to 50% of annual salary. The maximum bonus percentage assigned to each
executive depends on the degree to which such executive is responsible for
financial results. In addition, the Committee has discretion to award cash
bonuses outside the parameters of the cash bonus program in the case of
extraordinary performance by an executive. Based on the Company's financial
performance in 1996 and their respective individual performances, the six
Named Executives were awarded bonuses for 1996 aggregating $378,700.
Long-term incentives are provided through the grant of stock options under
the Option Plan. The Committee views stock options as a means of aligning the
long range interests of key employees, including executives, with those of the
stockholders by providing them with the opportunity to build a meaningful
stake in the Company. Options are granted in the discretion of the Committee
based on the Committee's evaluation of each key employee's contribution and
expected future contribution to the Company's financial success. During 1996,
the Committee granted to an aggregate of 106 employees (including the nine
current executive officers) options to purchase an aggregate of 389,500 shares
of Class A Common Stock. See "Executive Compensation--Stock Options" and
"Proposal to Approve and Ratify an Amendment to the Option Plan to Increase
the Number of Shares Available for Option Grants."
Executive and other employees are also entitled to participate in the
Company's 401(k) Savings Plan, which provides retirement, death and disability
benefits to employees and includes both employer and employee contributions.
CHIEF EXECUTIVE OFFICER COMPENSATION:
The key performance measure used to determine the 1996 compensation package
for Mortimer B. Fuller, III was the Committee's assessment of his ability and
dedication to provide the leadership and vision necessary to enhance the long-
term value of the Company.
Mr. Fuller has no employment agreement with the Company. The Committee fixes
Mr. Fuller's salary each year based on its evaluation of Mr. Fuller's
performance during the prior year and the challenges the Committee believes
the Company and its Chief Executive Officer will face in the coming year. The
Committee fixed Mr. Fuller's salary for 1996 at $302,200. The Committee
believes that Mr. Fuller's salary is fixed at a level which is comparable to
the base salaries paid to other chief executive officers with comparable
qualifications, experience, responsibilities and proven results at comparable
companies engaged in similar businesses.
11
<PAGE>
Consistent with the Company's executive compensation philosophy, Mr.
Fuller's total compensation package depends to a large degree on annual and
long-term incentive compensation. The annual incentive component is currently
made up of a cash bonus under the Company's cash bonus plan, which is paid
after the end of the year and is based on the profitability of the Company and
Mr. Fuller's individual performance. The long-term incentive component
currently takes the form of the grant of stock options under the Option Plan.
Both the annual and long-term components of Mr. Fuller's incentive
compensation are variable and closely tied to corporate performance in a
manner which encourages dedication to building profitability and stockholder
value.
In evaluating the performance and setting the compensation of Mr. Fuller as
the Company's Chief Executive Officer, the Committee has taken particular note
of the substantial increase in the Company's stockholder value over a number
of years in general and specifically from 1995 to 1996, as well as the
numerous significant accomplishments which the Company achieved in 1996.
On June 24, 1996, the Company successfully completed its initial public
offering of Class A Common Stock, with gross proceeds (net of underwriters'
compensation) of $45.8 million. From that date to December 31, 1996, the
market price of the Class A Common Stock increased 104.4%, from $17.00 per
share to $34.75 per share, substantially out-performing both the Nasdaq
Composite Total Return Index (US) and the Company's designated industry peer
group. See "Executive Compensation--Stock Price Performance Graph." In
addition, during 1996 the Company successfully completed three important
acquisitions.
Among the key indicators of the Company's performance in 1996, operating
revenue increased 45.7% from $53.4 million in 1995 to $77.8 million in 1996,
and operating income increased 112% from $6.6 million in 1995 to $14.0 million
in 1996. Fully-diluted earnings per share increased 110% from $.71 in 1995 to
$1.49 in 1996. Carloads increased 68.9% from 119,000 for 1995 to 201,000 for
1996.
The Committee views the success of the Company's initial public offering,
its successful consummation of key acquisitions in 1996 and its outstanding
financial achievements in 1996 to be attributable in large measure to Mr.
Fuller's leadership, vision and hard work. In addition, Mr. Fuller has built a
top-rate management team and has established a strong record of innovation,
quality improvement and efficiency.
Mr. Fuller's annual and long-term incentive compensation package for 1996
included a cash bonus in the amount of $156,500 and the grant of options to
purchase 90,000 shares of Class A Common Stock. Mr. Fuller's compensation
package has successfully focused on the importance of increasing profitability
and stockholder value by providing him with significant short-term and long-
term incentive compensation during periods when performance objectives have
been met or exceeded.
COMPENSATION AND STOCK OPTION
COMMITTEE
Philip J. Ringo, Chairman
Louis S. Fuller
John M. Randolph
INSIDER PARTICIPATION IN COMPENSATION COMMITTEE
The Chief Executive Officer of the Company consults with the Compensation
and Stock Option Committee. He participates in discussions of the Committee
and makes recommendations to it, but he does not vote or otherwise participate
in the Committee's ultimate determinations. The Board of Directors believes
that it is wise and prudent to have the Chief Executive Officer so participate
in the operations of the Compensation and Stock Option Committee because his
evaluations and recommendations with respect to the compensation and benefits
paid to executives other than himself are extremely valuable to the Committee.
However, the Chief Executive Officer neither participates nor is otherwise
involved in the deliberations of the Committee with respect to his own
compensation and benefits.
12
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
Set forth below is a line graph comparing, for 1996 since the Company's
initial public offering on June 24, 1996, the cumulative total stockholder
return on the Class A Common Stock, based on the market price thereof, with
the cumulative total return of (i) companies on the Nasdaq Composite Total
Return Index (US) and (ii) an industry peer group comprised of the following
companies: Delaware Otsego Corporation, Emons Transportation Group Inc.,
Pioneer RailCorp, Providence and Worcester Railroad Co., Railamerica Inc. and
RailTex Inc. (collectively, the "Peer Group").
[GRAPH APPEARS HERE]
COMPARISON OF CUMULATIVE RETURN
AMONG GENESEE & WYOMING INC - CLA, NASDAQ COMPOSITE INDEX AND PEER GROUP
Measurement period NASDAQ
(Fiscal year Covered) COMPOSITE PEER
GENESEE & WYOMING INDEX GROUP
----------------- --------- --------
Measurement PT -
06/24/96 $ 100.00 $ 100.00 $ 100.00
FYE 12/96 $ 204.41 $ 108.92 $ 105.66
ASSUMES $100 INVESTED ON JUNE 24, 1996 IN THE COMPANY'S CLASS A COMMON
STOCK, THE COMPANIES COMPRISING THE NASDAQ COMPOSITE TOTAL RETURN INDEX (US)
AND THE COMPANIES COMPRISING THE PEER GROUP.
There can be no assurance that the Company's stock performance will continue
into the future with the same or similar trends depicted in the graph above.
The Company will neither make nor endorse any predictions as to future stock
performance.
The Stock Price Performance Graph above shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act or the Exchange Act, except
to the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under either such Act.
13
<PAGE>
RELATED TRANSACTIONS
The Company, Mortimer B. Fuller, III, the other eight executive officers of
the Company (the "Other Executives") and all holders of the Class B Common
Stock are parties to a Class B Stockholders' Agreement dated as of May 20,
1996. Under that agreement, if a party proposes to transfer shares of Class B
Common Stock in a transaction that will not result in the automatic conversion
of those shares into shares of Class A Common Stock, the Other Executives have
the right to purchase up to an aggregate of 50% of those shares, and Mr.
Fuller has the right to purchase the balance, all at the then-current market
price of the Class A Common Stock. If Mr. Fuller does not purchase the entire
balance of the shares, the Other Executives have the right to purchase the
shares that remain. Such purchase rights also apply if the employment of any
of the Other Executives is terminated for any reason. The effect of this
agreement is to concentrate ownership of the Class B Common Stock, which
enjoys ten times the voting power of the Class A Common Stock, in the hands of
management of the Company, particularly Mr. Fuller. See "Security Ownership of
Certain Beneficial Owners and Management."
PROPOSAL TO APPROVE AND RATIFY AN AMENDMENT TO
THE OPTION PLAN TO INCREASE THE
NUMBER OF SHARES AVAILABLE FOR OPTION GRANTS
BACKGROUND OF PLAN AND DESCRIPTION OF AMENDMENT
At the 1996 Annual Meeting, the stockholders approved the Genesee & Wyoming
Inc. 1996 Stock Option Plan (the "Option Plan"). The Option Plan is designed
to create an incentive for executive and other employees of the Company and
its subsidiaries to remain in the employ of the Company and its subsidiaries
and to contribute to their success by providing the opportunity for stock
ownership.
On January 31, 1997, in an effort to ensure that the Company continues to
receive the benefits of the Option Plan, the Board of Directors approved and
adopted Amendment No. 1 to the Option Plan, which amends Section 4 of the
Option Plan to increase the number of shares of Class A Common Stock available
for option grants thereunder from 450,000 to 650,000, and directed that
Amendment No. 1 be submitted to stockholders for their approval and
ratification at the Meeting.
The Company has adopted a policy of granting options to purchase shares of
Class A Common Stock to a large number of key employees at various levels of
employment, and the Board of Directors believes that such grants have helped
to motivate the Company's employees to excel in their work by aligning their
prospects with those of the Company's stockholders. The Board of Directors
further believes that the Company's successful financial performance during
1996 was due, in part, to this policy and the incentives it provides to key
employees. In furtherance of this policy, the Company has to date granted to
106 key employees (including the Named Executives and the Company's other
executive officers) options to purchase an aggregate of 389,500 of the 450,000
shares of Class A Common Stock currently available under the Option Plan,
leaving only 60,500 shares remaining for future grants. Therefore, the Company
would be unable to make significant additional option grants to new key
employees, particularly those resulting from possible future acquisitions, or
as further incentive to existing key employees, including the Named Executives
and the Company's other executive officers. The Board of Directors believes
that increasing the number of shares available for options granted under the
Option Plan will assist the Company in continuing to attract, hire, retain and
motivate superior employees and thus continue to contribute to the success of
the Company.
DESCRIPTION OF OPTION PLAN AS PROPOSED TO BE AMENDED
The following is a summary of the principal features of the Option Plan.
INCREASE OF SHARES AVAILABLE. The Option Plan currently provides for the
granting of stock options to purchase up to an aggregate of 450,000 shares of
Class A Common Stock (subject to adjustment as described
14
<PAGE>
below). If any option granted under the Option Plan expires or terminates
without having been exercised in full, shares subject to the unexercised
portion of such option may again be available for other option grants under
the Option Plan. Amendment No. 1 to the Option Plan, if approved by the
stockholders, would increase the number of shares of Class A Common Stock
available for option grants thereunder from 450,000 to 650,000.
NATURE OF OPTIONS. The Company may grant under the Option Plan both
incentive stock options within the meaning of Section 422 of the Code
("Incentive Stock Options") and stock options that do not qualify for
treatment as Incentive Stock Options ("Nonstatutory Stock Options"). The
Company receives no consideration for the grant of any options under the
Option Plan.
TERM. The Option Plan will continue in effect until all shares of Class A
Common Stock subject to issuance under options granted thereunder have been
purchased or expire unexercised, provided that no options may be granted under
the Option Plan after June 23, 2006.
ADMINISTRATION. The Option Plan is administered by the Compensation and
Stock Option Committee of the Board (the "Committee"). Each member of the
Committee must be a disinterested director within the meaning of Rule 16b-3
promulgated under the Exchange Act. Subject to the express provisions of the
Option Plan, the Committee has authority in its discretion and without
limitation: (i) to determine the recipients of options, whether an option is
intended to be an Incentive Stock Option or Nonstatutory Stock Option, the
times of option grants, the number of shares subject to each option, the
exercise price of each option, the term of each option, the date(s) when each
option becomes exercisable, and the vesting schedule (if any) of each option,
(ii) to accelerate the vesting of any option, irrespective of its vesting
schedule, and (iii) to make all other determinations necessary or advisable
for administering the Option Plan, which determinations will be final and
binding on all persons.
ELIGIBILITY. Options under the Option Plan may be granted to those persons
selected from time to time by the Committee from the full-time employees of
the Company and its subsidiaries, including employees who are also officers or
directors of the Company. As of March 20, 1997, the Company had approximately
700 full-time employees.
TERMS AND CONDITIONS OF OPTIONS; OPTION PRICE. Except as described below,
the minimum option price of any option granted under the Option Plan is the
market value of the Class A Common Stock on the grant date of the option, and
the term of the option, which is determined by the Committee, may not exceed
ten years from the grant date. The market value of the Class A Common Stock
(reflected by the last sale price thereof as reported by the Nasdaq Stock
Market) on March 20, 1997 was $30.25 per share.
Notwithstanding the foregoing, in the case of an Incentive Stock Option
granted to any person owning stock possessing more than 10% of the voting
power of the Company, the option price must be at least 110% of the market
value of the Class A Common Stock on the grant date, and the term of the
option may not exceed five years from the grant date. In addition, the
aggregate fair market value (determined as of the grant date) of the shares
with respect to which Incentive Stock Options are exercisable for the first
time by any grantee during any calendar year may not exceed $100,000.
An optionee may pay for the shares subject to the option by one or any
combination of the following methods, as determined by the Committee on the
option grant date: (i) in cash, or (ii) by delivery of shares of Class A
Common Stock (valued at its then market value) already owned by the optionee.
NON-TRANSFERABILITY; EFFECT OF DEATH OR TERMINATION OF EMPLOYMENT. During
the lifetime of an optionee, an option may be exercised only by him and only
while he is an employee and has been an employee continuously since the option
grant. Options may be exercised for stated periods after termination of
employment in the case of the optionee's death, permanent and total
disability, or termination for other reason. During the lifetime of an
optionee, options issued under the Option Plan may not be transferred, whether
voluntarily or otherwise.
15
<PAGE>
VESTING ACCELERATION. Under the Option Plan, all outstanding options not
then exercisable become immediately exercisable in full upon the occurrence of
certain defined events constituting a change in control of the Company.
ADJUSTMENTS. In the event of a merger, consolidation, recapitalization,
stock split or similar event, the aggregate number and kind of shares
available for options under the Option Plan, and the number and kind of shares
covered by each outstanding option and the per share exercise price thereof,
will be appropriately adjusted by the Committee.
AMENDMENTS. The Board of Directors, without further stockholder approval,
may at any time further amend the Option Plan, provided that (except for
amendments made pursuant to the adjustment provisions described above), no
amendment may be made without the approval of the stockholders which would:
(i) increase the maximum number of shares that may be issued under the Option
Plan; (ii) reduce the minimum option exercise price; (iii) change the class of
employees eligible to be granted options; (iv) extend the period for granting
or exercising options; or (v) otherwise materially increase the benefits
accruing to participants under the Option Plan. In the event that any
amendment to the Option Plan so requires approval by the stockholders, prior
to such approval the Committee may grant conditional options, which may not be
exercised, transferred or encumbered prior to such approval, and which will be
automatically cancelled if the stockholders fail to approve such amendment at
their next meeting.
SECURITIES ACT REGISTRATION. The Company has filed with the SEC a
Registration Statement on Form S-8 registering the 450,000 shares currently
issuable upon exercise of options granted and to be granted under the Option
Plan. If Amendment No. 1 to the Option Plan is approved and ratified by the
stockholders at the Meeting, the Company intends to register the additional
shares issuable upon exercise of options granted and to be granted under the
Option Plan, pursuant to a Registration Statement on Form S-8, as soon as
practicable.
FEDERAL INCOME TAX CONSEQUENCES. The following summarizes the federal income
tax consequences to participants and the Company of the grant and exercise of
Nonstatutory Stock Options and Incentive Stock Options under the Option Plan.
This discussion is merely a summary and does not purport to be a complete
description of the federal income tax consequences of the Option Plan. This
description does not cover state and local tax treatment of participation in
the Option Plan.
Nonstatutory Stock Options: The grant of a Nonstatutory Stock Option under
the Option Plan will not result in the recognition of gross income to the
optionee or a deduction to the Company at the time of the grant. Upon the
exercise of a Nonstatutory Option, the optionee will recognize ordinary income
for federal income tax purposes in an amount equal to the excess of the fair
market value of the shares purchased over the exercise price, unless he could
be subject to liability under Section 16(b) of the Exchange Act if he were to
sell the shares at a profit at such time (in which case, unless the optionee
makes a special election under the Code within 30 days after exercise, the
optionee will recognize ordinary income for federal income tax purposes six
months after the date of the grant; if the optionee timely makes such
election, he will recognize ordinary income at the time of exercise).
The Company is required to withhold tax on the amount of income recognized
by the optionee and is entitled to a tax deduction equal to the amount of such
income for the fiscal year of the Company in which ends the taxable year of
the optionee in which such amount is included in the optionee's gross income.
Subject to certain limitations on the deductibility of capital losses, if an
optionee disposes of any shares acquired upon the exercise of a Nonstatutory
Stock Option, the optionee will recognize a capital gain or loss equal to the
difference between the fair market value of such shares at the time ordinary
income was recognized and the amount realized on disposition of such shares.
The gain or loss will be either long-term or short-term, depending on whether
the shares have been held for more than 12 months from the date of exercise.
The Company is not entitled to any tax deduction in connection with such
disposition of shares. Capital gain is taxed at ordinary income rates, except
that the maximum tax rate for long-term capital gain is currently 28%.
Incentive Stock Options: In general, no income will be recognized by the
optionee and no deduction will be allowed to the Company at the time of the
grant or exercise of an Incentive Stock Option. The difference
16
<PAGE>
between the exercise price and the fair market value of the shares on the date
the Incentive Stock Option is exercised is, however, an item of tax preference
to the optionee for purposes of the alternative minimum tax. Depending upon
the optionee's individual tax circumstances, there may be minimum tax
liability in the year of exercise as a result of the tax preference item.
Further, depending upon the optionee's individual tax circumstances, a credit
against regular tax corresponding to this minimum tax liability may be allowed
in a subsequent year. In computing alternative minimum taxable income in the
year in which the optionee disposes of shares acquired through the exercise of
an Incentive Stock Option, the basis of the shares so acquired will be
increased by the excess of the fair market value of the shares on the date of
exercise over the exercise price.
Subject to certain limitations on deductibility of capital losses, when the
shares acquired upon exercise of an Incentive Stock Option are sold, the
optionee will recognize long-term capital gain or loss equal to the difference
between the amount realized and the exercise price of the Incentive Stock
Option, provided that the sale of the shares is not made within two years from
the date of grant of the Incentive Stock Option or within one year of the date
of issuance of such shares to the optionee. If such holding period
requirements of the Code are not met, the sale of the shares acquired upon
exercise of an Incentive Stock Option is a "disqualifying disposition" and, in
general, at the time of such disposition, the optionee will recognize (i)
ordinary income in an amount equal to the difference between the exercise
price and the lesser of the fair market value of the shares on the date the
Incentive Stock Option is exercised or the amount realized on such
disqualifying disposition, and (ii) capital gain to the extent the amount
realized on such disqualifying disposition exceeds the fair market value of
the shares on the date the Incentive Stock Option is exercised. Alternatively,
if the amount realized on such disqualifying disposition is less than the
exercise price, the optionee will recognize a capital loss in the amount of
the difference. Any capital gain or loss will be long-term or short-term
depending upon the holding period of the shares sold. In the event of a
disqualifying disposition, the Company may claim a deduction in the taxable
year of the disqualifying disposition equal to the amount taxable to the
optionee as ordinary income. In the absence of any disqualifying disposition,
the Company is denied any deduction in respect of shares transferred upon the
exercise of an Incentive Stock Option.
NEW PLAN BENEFITS
Each of the Named Executives and other executive officers of the Company is
eligible to be granted additional options under the Option Plan if Amendment
No. 1 to the Option Plan is approved by the stockholders. The following table
sets forth the amount and dollar value of all option grants actually received
to date under the Option Plan by the Named Executives and by certain groups of
individuals. The benefits or amounts to be received by or allocated to the
Named Executives or such groups in the future are not determinable, because
option grants under the Option Plan are in the discretion of the Committee.
<TABLE>
<CAPTION>
DOLLAR NUMBER
VALUE OF
NAME AND POSITION ($) (1) UNITS
------------------------------------------------------ ---------- -------
<S> <C> <C>
MORTIMER B. FULLER, III............................... $1,147,620 90,000
President and Chief Executive Officer
MARK W. HASTINGS ..................................... 596,250 45,000
Senior Vice President, Chief Financial Officer and
Treasurer
CHARLES W. CHABOT..................................... 331,250 25,000
Senior Vice President-New York and Pennsylvania
SPENCER D. WHITE...................................... 198,750 15,000
Senior Vice President-Illinois
DAVID J. COLLINS ..................................... 397,500 30,000
Senior Vice President-Marketing and Development
ROBERT I. MELBO....................................... 265,000 20,000
Senior Vice President-Oregon
ALL EXECUTIVE OFFICERS................................ 3,532,620 285,000
ALL DIRECTORS WHO ARE NOT EXECUTIVE OFFICERS.......... 0 0
ALL EMPLOYEES WHO ARE NOT EXECUTIVE OFFICERS OR
DIRECTORS............................................ 1,066,625 104,500
</TABLE>
- --------
(1) Expressed as the excess of the market value of the Class A Common Stock on
March 20, 1997 ($30.25 per share) over the exercise price of each option.
Options have been granted on various dates and have exercise prices
ranging from $17.00 per share to $33.25 per share.
17
<PAGE>
REQUIRED VOTE AND BOARD RECOMMENDATION
The affirmative vote of at least a majority of the votes cast, in person or
by proxy, at the Meeting by stockholders entitled to vote at the Meeting is
required for the approval and ratification of Amendment No. 1 to the Option
Plan. The Board of Directors recommends a vote in favor of this proposal, and
the persons named in the enclosed proxy (unless otherwise instructed therein)
will vote such proxies FOR such proposal.
SELECTION OF INDEPENDENT AUDITORS
The firm of Arthur Andersen LLP, certified public accountants, served as the
independent auditors of the Company for 1996. In addition to the audit of the
1996 financial statements, the Company engaged Arthur Andersen LLP to perform
certain services for which it was paid professional fees. The Audit Committee
of the Board of Directors considered the possible effect of such professional
services on the independence of Arthur Andersen LLP and approved such services
prior to their being rendered.
The Board of Directors has selected Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending December 31, 1997. This
selection will be presented to the stockholders for their approval at the
Meeting. The Board of Directors recommends a vote in favor of the proposal to
approve and ratify this selection, and the persons named in the enclosed proxy
(unless otherwise instructed therein) will vote such proxies FOR such
proposal. If the stockholders do not approve this selection, the Board of
Directors will reconsider its choice.
The Company has been advised by Arthur Andersen LLP that a representative
will be present at the Meeting and will be available to respond to appropriate
questions. In addition, the Company intends to give such representative an
opportunity to make any statements if he should so desire.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
In order for any stockholder proposal to be included in the Company's proxy
statement to be issued in connection with the 1998 Annual Meeting of
Stockholders, such proposal must be received by the Company no later than
December 12, 1997.
OTHER MATTERS
The Board of Directors does not know of any other matters that are to be
presented for action at the Meeting. Should any other matter come before the
Meeting, however, the persons named in the enclosed proxy will have
discretionary authority to vote all proxies with respect to such matter in
accordance with their judgment.
ANNUAL REPORT ON FORM 10-K
UPON THE WRITTEN REQUEST OF ANY STOCKHOLDER, THE COMPANY WILL PROVIDE
WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED DECEMBER 31, 1996 AS FILED WITH THE SEC. SUCH WRITTEN REQUEST SHOULD BE
DIRECTED TO GENESEE & WYOMING INC., 71 LEWIS STREET, GREENWICH, CONNECTICUT
06830 (ATTENTION: MARK W. HASTINGS, SENIOR VICE PRESIDENT).
BY ORDER OF THE BOARD OF DIRECTORS
James B. Gray, Jr.
Secretary
Dated: April 17, 1997
18
<PAGE>
PROXY
GENESEE & WYOMING INC.
The undersigned hereby appoints MORTIMER B. FULLER, III and JAMES B. GRAY,
JR., and each of them, proxies for the undersigned, with full power of
substitution, to vote all shares of the Class A Common Stock, and all shares of
the Class B Common Stock (if any), of GENESEE & WYOMING INC. (the "Company")
owned by the undersigned at the Annual Meeting of Stockholders of the Company to
be held at the Rye Town Hilton, 699 Westchester Avenue, Rye Brook, New York
10573, on Tuesday, May 20, 1997 at 11:00 a.m., local time, and at any
adjournment or adjournments thereof.
This Proxy is solicited on behalf of the Board of Directors of the Company.
This Proxy will be voted as specified by the undersigned. This Proxy revokes
any prior Proxy given by the undersigned. Unless authority to vote for one or
both of the nominees is specifically withheld as indicated on the reverse, a
signed proxy will be voted FOR the election of the two nominees for directors
and, unless otherwise specified, FOR each of the other two proposals listed
herein and described in the accompanying Proxy Statement. The undersigned
acknowledges receipt with this Proxy of a copy of the Notice of Annual Meeting
and Proxy Statement dated April 17, 1997, describing more fully the proposals
set forth herein.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE
SIDE
<PAGE>
[X] Please mark votes as in this example.
1. Election of Directors.
Nominees: James M. Fuller, John M. Randolph
[ ] FOR
[ ] WITHHELD
[ ] Mark Here [ ]
--------------------------------------------------------- For Address
For both nominees except as noted above Change and
Note Below
2. Proposal to approve and ratify Amendment No. 1 to the Genesee & Wyoming Inc.
1996 Stock Option Plan, which increases the total number of shares of Class A
Common Stock available for option grants thereunder from 450,000 to 650,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to approve and ratify the selection of Arthur Andersen LLP as the
Company's independent auditors for the year ending December 31, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
Please date and sign name exactly as
it appears hereon. Executors,
administrators, trustees, etc. should
so indicate when signing. If the
stockholder is a corporation, the full
corporate name should be inserted and
the proxy signed by an officer of the
corporation, indicating his title.
Signature: Date: Signature: Date:
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