<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 Rule 14a-11(c) or Rule 14a-12
Genesee & Wyoming Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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:
(4) Date Filed:
Notes:
<PAGE>
[LOGO] GENESEE & WYOMING
GENESEE & WYOMING INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 12, 1998
The Annual Meeting of Stockholders of GENESEE & WYOMING INC. (the "Company")
will be held at the Hyatt Regency Greenwich, 1800 East Putnam Avenue, Old
Greenwich, Connecticut 06870, on Tuesday, May 12, 1998 at 11:00 a.m., local
time, for the following purposes more fully described in the accompanying
proxy statement:
1. To elect three directors of the Company.
2. To consider and act upon two proposals which have the effect of
"transferring" 200,000 previously authorized shares from one employee
benefit plan to another. Specifically:
A. a proposal to approve and ratify an amendment to the Genesee & Wyoming
Inc. Employee Stock Purchase Plan which reduces the total number of
shares available for purchase thereunder from 450,000 to 250,000; and
B. a proposal to approve and ratify an amendment to the Genesee & Wyoming
Inc. 1996 Stock Option Plan which increases the total number of shares
available for option grants thereunder from 650,000 to 850,000.
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, 1998.
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 30, 1998 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 8, 1998
<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 12, 1998, 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 8, 1998. 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 more
of the director nominees is specifically withheld according to the
instructions, a signed proxy will be voted FOR the election of the three
director nominees named herein and, unless otherwise indicated, FOR each of
the other three 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 means of communication. 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 30, 1998, the record date for the Meeting (the "Record Date"),
there were issued and outstanding (i) 4,447,833 shares of the Company's Class
A Common Stock, par value $.01 per share (the "Class A Common Stock"), and
(ii) 845,539 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 of each of the other three 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
COMMON STOCK CLASS B
BENEFICIALLY COMMON STOCK
OWNED BENEFICIALLY 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).. 239,536 5.4% 658,283 77.9% 52.8%
James M. Fuller (4).......... 79,697 1.8 11,100 1.3 1.5
Louis S. Fuller (5).......... 111,186 2.5 147,019 17.4 12.3
Robert M. Melzer............. 2,000 - - - -
John M. Randolph (6)......... 15,267 0.3 7,400 0.9 0.7
Philip J. Ringo (7).......... 6,367 0.1 - - -
Mark W. Hastings (8)......... 19,050 0.4 7,400 0.9 0.7
Charles W. Chabot (9)........ 8,525 0.2 - - -
James W. Benz (10)........... 5,250 0.1 - - -
David J. Collins (11)........ 7,700 0.2 - - -
J.P. Morgan & Co.
Incorporated (12)............ 678,100 15.3 - - 5.3
60 Wall Street
New York, NY 10260
Putnam Investments, Inc. et
al. (13)..................... 334,700 7.5 - - 2.6
One Post Office Square
Boston, MA 02109
The Equitable Companies
Incorporated et al. (14)..... 724,100 16.3 - - 5.6
787 Seventh Avenue
New York, NY 10019
All Directors and Executive
Officers as a Group
(16 persons) (15)........... 525,828 11.6 831,202 98.3 68.1
</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) 27,481 shares of Class A Common Stock and
276,093 shares of Class B Common Stock owned by Mr. Fuller individually;
(ii) an aggregate of 110,057 shares of Class A Common Stock and an
aggregate of 298,607 shares of Class B Common Stock held by two family
trusts for the benefit of Mr. Fuller and others, of which Mr. Fuller is
sole trustee or co-trustee (subject to a Voting Agreement pursuant to
which Mr. Fuller has been granted irrevocable proxies to vote such shares
through March 20, 2008); (iii) 58,000 shares of Class A Common Stock and
83,583 shares of Class B Common Stock held by Fuller/Overlook Limited
Partnership, of which Mr. Fuller is sole general partner;
(iv) 21,498 shares of Class A Common Stock held by Overlook Estate
Foundation, Inc., of which Mr. Fuller is President; and (v) presently
exercisable options to purchase an aggregate of 22,500 shares of Class A
Common Stock.
2
<PAGE>
(4) The amounts shown include: (i) 9,100 shares of Class A Common Stock and
11,100 shares of Class B Common Stock owned by Mr. Fuller individually;
(ii) an aggregate of 67,930 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; and (iii) a presently exercisable option to purchase 2,667
shares of Class A Common Stock.
(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; (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; and (v) a presently exercisable option to purchase
2,667 shares of Class A Common Stock.
(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; (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; and (iii) a presently exercisable option to purchase 2,667
shares of Class A Common Stock.
(7) The amount shown includes: (i) 3,700 shares of Class A Common Stock owned
by Mr. Ringo's wife, as to which shares he disclaims beneficial
ownership; and (ii) a presently exercisable option to purchase
2,667 shares of Class A Common Stock.
(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; (ii) 400 shares of Class A Common Stock beneficially owned by
Mr. Hastings' minor children, as to which shares he disclaims beneficial
ownership; and (iii) presently exercisable options to purchase an
aggregate of 11,250 shares of Class A Common Stock.
(9) The amount shown includes: (i) 2,275 shares of Class A Common Stock owned
by Mr. Chabot individually; and (ii) presently exercisable options to
purchase an aggregate of 6,250 shares of Class A Common Stock.
(10) The amount shown includes: (i) 500 shares of Class A Common Stock owned
jointly by Mr. Benz and his wife; (ii) presently exercisable options held
by Mr. Benz to purchase an aggregate of 3,750 shares of Class A Common
Stock; and (iii) a presently exercisable option held by Mr. Benz's wife
to purchase 1,000 shares of Class A Common Stock, as to which shares he
disclaims beneficial ownership.
(11) The amount shown includes: (i) 200 shares of Class A Common Stock owned
jointly by Mr. Collins and his wife; and (ii) presently exercisable
options to purchase an aggregate of 7,500 shares of Class A Common Stock.
(12) The amount shown and the following information is derived from Amendment
No. 3 to Schedule 13G dated December 31, 1997: J. P. Morgan & Co.
Incorporated has sole power to vote 576,600 of such shares and sole power
to dispose of all 678,100 shares.
(13) The amount shown and the following information is derived from Amendment
No. 1 to Schedule 13G of Putnam Investments, Inc. dated January 27, 1998:
The amount shown includes 188,700 shares over which The Putnam Advisory
Company, Inc. has shared voting power as investment advisor to Putnam's
institutional clients. Putnam Investment Management, Inc., as investment
advisor to the Putnam family of mutual funds, and The Putnam Advisory
Company, Inc. have shared power to dispose of all 334,700 shares. Putnam
Investments, Inc., which is a wholly-owned subsidiary of Marsh & McLennan
Companies, wholly owns Putnam Investment Management, Inc. and The Putnam
Advisory Company, Inc.
(14) The amount shown and the following information is derived from Amendment
No. 3 to Schedule 13G dated February 10, 1998 filed jointly on behalf of
The Equitable Companies Incorporated, AXA-UAP, four French mutual
insurance companies as a group, and their subsidiaries: Such 724,100
shares are beneficially owned by Alliance Capital Management L.P. (a
subsidiary of The Equitable Companies Incorporated) and were acquired
solely for investment purposes on behalf of client discretionary
investment advisory accounts. Alliance Capital Management L.P. has sole
power to vote 440,400 of such shares, shared power to vote 280,300 of
such shares, and sole power to dispose of all 724,100 shares.
(15) See footnotes (3) through (11) of this table. The amounts shown include
presently exercisable options to purchase an aggregate of 82,918 shares
of Class A Common Stock.
3
<PAGE>
ELECTION OF DIRECTORS
Three of the Company's six directors are to be elected by the stockholders
at the Meeting: two to hold office for a three-year term expiring in 2001 or
until his successor is duly elected and qualifies, and one to hold office for
a one-year term expiring in 1999 or until his successor is duly elected and
qualifies.
The Board of Directors recommends the election of the three nominees named
below, all of whom are currently directors of the Company. Unless authority to
vote for one or more 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 three nominees named below.
The Board of Directors does not contemplate that any 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
FOR A THREE-YEAR TERM EXPIRING IN 2001
<TABLE>
<CAPTION>
DIRECTOR
NAME AND BACKGROUND SINCE
------------------- --------
<S> <C>
LOUIS S. FULLER, age 56, has been a member of Courtright and 1974
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.
PHILIP J. RINGO, age 56, has been President and Chief Executive 1978
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>
PROPOSED FOR ELECTION AS DIRECTOR
FOR A ONE-YEAR TERM EXPIRING IN 1999*
<TABLE>
<CAPTION>
DIRECTOR
NAME AND BACKGROUND SINCE
------------------- --------
<S> <C>
ROBERT M. MELZER, age 57, has been an officer of Property Capital 1997
Trust, a real estate investment trust, since 1973, and its President
and Chief Executive Officer since 1992. He also serves as a trustee
of Property Capital Trust and MGI Properties and a director of Red
Lion Properties, Inc.
</TABLE>
* Mr. Melzer was elected a director in October 1997 to fill a vacancy
on the Board. Although he was elected to the class of directors
whose term of office expires in 1999, under the Company's By-laws a
director elected to fill a vacancy only holds office until the next
annual meeting of stockholders.
4
<PAGE>
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 55, has served as Chairman of 1973 1999
the Board and Chief Executive Officer of the Company since
1977. He also served as President from 1977 until October
1997. Mr. Fuller is a graduate of Princeton University,
Boston University School of Law and Harvard Business School.
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.
JAMES M. FULLER, age 57, has been Regional Sales Manager of 1974 2000
the 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 72, has been a financial consultant and 1986 2000
private investor for more than the past five years. In 1965
he founded and became 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>
BOARD MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors held seven meetings during the year ended December
31, 1997 ("1997"). Each director attended at least 75% of the total of such
Board meetings and meetings of Board Committees on which he served held during
his term of office.
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 Chairman of the Board.
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 1997.
The current members of the Compensation and Stock Option Committee (the
"Compensation Committee") are Philip J. Ringo (Chairman), Louis S. Fuller and
John M. Randolph. The Compensation 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 "Two
Proposals Which Have the Effect of "Transferring' 200,000 Previously
Authorized Shares Between Existing Employee Benefit Plans." The Compensation
Committee held six meetings during 1997.
DIRECTORS' COMPENSATION
During 1997, the Company paid cash directors' fees aggregating $61,900 to
its outside (non-employee) directors, consisting of fees of $2,500 per Board
meeting attended, $500 per Board Committee meeting attended
5
<PAGE>
not in conjunction with a Board meeting, $250 per Committee meeting attended
in conjunction with a Board meeting, and $250 per Board or Committee 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
The Company's Stock Option Plan for Outside Directors (the "Directors'
Plan") provides for formula grants to each outside director of the Company
(that is, each director other than Mortimer B. Fuller, III) of non-statutory
10-year options to purchase shares of Class A Common Stock. Options to
purchase up to an aggregate of 50,000 shares of Class A Common Stock are
available for grant under the Directors' Plan. Each option granted under the
Directors' Plan becomes exercisable in annual increments of one-third
commencing on the first anniversary of its grant date, is not transferable
except by will or intestacy, and lapses within stated periods following the
death of the director or 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.
During 1997 Robert M. Melzer was granted an option under the Directors'
Plan, expiring on October 26, 2007, to purchase 2,000 shares of Class A Common
Stock at an exercise price of $28.50 per share (that being the market value of
the Class A Common Stock on the grant date of the option).
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
During and subsequent to 1997, the following persons inadvertently filed
late with the Securities and Exchange Commission (the "SEC") the following
reports disclosing transactions in Common Stock beneficially owned by them:
Mortimer B. Fuller, III, a director and executive officer-one report
disclosing three transactions; James M. Fuller, a director-two reports each
disclosing one transaction and one report disclosing three transactions; and
James W. Benz, an executive officer-three reports each disclosing one
transaction. All 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 11 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 55, has been Chairman of the Board and Chief
Executive Officer of the Company since 1977. He relinquished the title of
President with the appointment of Charles N. Marshall as President and Chief
Operating Officer in October 1997. Further information about Mr. Fuller is set
forth above under "Election of Directors."
CHARLES N. MARSHALL, age 56, became President and Chief Operating Officer of
the Company in October 1997. He has 35 years of railroad industry experience
with Consolidated Rail Corporation (Conrail), Southern Railway and the Chessie
System Railroad (now part of CSX Transportation, Inc.). He was Senior Vice
President-Development when he left Conrail in June 1995 and also served as
Senior Vice President-Marketing & Sales and in positions in legal, public and
government affairs. Immediately prior to joining the Company in 1997,
Mr. Marshall worked as a consultant to short line and regional railroads,
including the Company, specializing in developing acquisition opportunities
within and outside the United States. Mr. Marshall served as a director of the
Company from July 1997 to October 1997, when he resigned in accordance with
the Company's policy that all directors other than the Chairman and Chief
Executive Officer be non-employees.
6
<PAGE>
MARK W. HASTINGS, age 48, 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 54, Senior Vice President-Louisiana, 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 and Regional Railroad Association and is active in several other
railroad operating associations.
CARL P. BELKE, age 46, became Senior Vice President-Canada in October 1997.
Immediately prior to joining the Company in January 1997, he worked as a
consultant to short line and regional railroads, including the Company. From
1995 to 1996, Mr. Belke was Vice President, Transportation and Sales, of
Providence and Worcester Railroad Co., and from 1991 to 1995 he was Director
of Government Affairs for CP Rail System.
JAMES W. BENZ, age 49, 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 51, became Senior Vice President-Australia in October
1997, after having served as Senior Vice President-New York and Pennsylvania
since 1992. He joined the Company as Senior Vice President-Marketing and Sales
in 1991 and 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 (now part 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.
DAVID J. COLLINS, age 40, became Senior Vice President-New York and
Pennsylvania in October 1997, after having served as Senior Vice President-
Marketing and Development since 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 49, 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 Director of
Accounting, and subsequently Secretary and Treasurer, of Preston Trucking
Company, Inc., an interstate carrier.
ROBERT I. MELBO, age 55, 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 37, 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, Inc. 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, 1997, 1996 and 1995, paid by the Company to those
persons who were, at December 31, 1997, the Chief Executive Officer and the
four most highly compensated executive officers of the Company other than the
Chief Executive Officer (collectively, the "Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------- --------------------------
AWARDS PAYOUTS
------------------ -------
OTHER ALL
ANNUAL OTHER
COMPEN- RESTRICTED LTIP COMPEN-
NAME AND PRINCIPAL SALARY BONUS SATION STOCK OPTIONS PAYOUTS SATION
POSITION YEAR ($) (1) ($) (2) ($) (3) AWARDS ($) (#) ($) ($) (4)
------------------ ---- -------- -------- ------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MORTIMER B. FULLER, III 1997 $353,792 $171,400 - - - - $28,884
Chairman and Chief
Executive Officer...... 1996 312,464 156,500 - - 90,000 - 57,020
1995 286,456 70,400 - - - - 8,933
MARK W. HASTINGS 1997 182,759 65,400 - - - - 22,508
Senior Vice President,
Chief Financial 1996 177,234 80,400 - - 45,000 - 22,432
Officer and Treasurer.. 1995 115,375 22,700 - - - - 7,086
CHARLES W. CHABOT 1997 176,923 70,000 - - - - 31,575
Senior Vice President-
Australia.............. 1996 154,106 55,400 - - 25,000 - 31,776
1995 138,116 15,400 - - - - 9,557
JAMES W. BENZ (5)
Senior Vice President-
GWI Railroad 1997 130,143 10,000 - - - - 7,388
Switching Services..... 1996 21,952 50,000 - - 15,000 - 1,001
DAVID J. COLLINS 1997 102,025 35,400 - - - - 12,047
Senior Vice President- 1996 88,709 30,350 - - 30,000 - 11,599
New York and
Pennsylvania.......... 1995 88,025 26,350 - - - - 4,101
</TABLE>
- --------
(1) The amounts shown include cash compensation 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) 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 1997 reflect: (i) Company contributions to the
Company's 401(k) Savings Plan on behalf of the Named Executives as
follows: Mr. Fuller-$1,924, Mr. Hastings-$2,147, Mr. Chabot-$2,147, Mr.
Benz-$7,388 and Mr. Collins-$1,948; and (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-$26,961, Mr. Hastings-
$20,362, Mr. Chabot-$29,428 and Mr. Collins-$10,099.
(5) Mr. Benz first joined the Company in November 1996. Accordingly, the
amounts shown for 1996 reflect less than a full year's service and include
a one-time bonus paid in connection with his hiring.
8
<PAGE>
STOCK OPTIONS
No stock options were granted to or exercised by the Named Executives during
1997, and the Company has no provision for stock appreciation rights.
Shown below is information with respect to all unexercised options to
purchase Class A Common Stock held by the Named Executives at December 31,
1997. All of such options were granted under the Option Plan. See "Two
Proposals Which Have the Effect of "Transferring' 200,000 Previously
Authorized Shares Between Existing Employee Benefit Plans."
AGGREGATED OPTION EXERCISES IN 1997 AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF ALL UNEXERCISED
SHARES UNEXERCISED OPTIONS HELD IN-THE-MONEY OPTIONS AT
ACQUIRED VALUE AT FY-END (#) FY-END ($) (1)
ON EXERCISE REALIZED ------------------------- -------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mortimer B. Fuller, III. - - 22,500 67,500 $132,218 $396,653
Mark W. Hastings........ - - 11,250 33,750 71,719 215,156
Charles W. Chabot....... - - 6,250 18,750 39,844 119,531
James W. Benz........... - - 3,750 11,250 0 0
David J. Collins........ - - 7,500 22,500 47,813 143,438
</TABLE>
- --------
(1) Expressed as the excess of the market value of the Class A Common Stock at
December 31, 1997 ($23.375 per share) over the exercise price of each
option.
SEVERANCE AGREEMENTS
The Company is a party to agreements with each of its 11 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 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
9
<PAGE>
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 Compensation Committee at the end
of each year and may be changed at that time based on recommendations 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 11 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 Compensation Committee. The Chief Executive Officer also
provides the Compensation 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 Compensation 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 Compensation 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 Compensation 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 1997 and their respective individual performances,
the five Named Executives were awarded bonuses for 1997 aggregating $352,200.
10
<PAGE>
Long-term incentives are provided through the grant of stock options under
the Option Plan. The Compensation 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
Compensation Committee based on its evaluation of each key employee's
contribution and expected future contribution to the Company's financial
success. While no options were granted during 1997, in June and December 1996,
the Compensation Committee granted to an aggregate of 106 employees (including
all executive officers) options to purchase an aggregate of 389,500 shares of
Class A Common Stock, and options to purchase an additional 250,600 shares of
Class A Common Stock were granted in January 1998. See "Executive
Compensation--Stock Options" and "Two Proposals Which Have the Effect of
"Transferring' 200,000 Previously Authorized Shares Between Existing Employee
Benefit Plans."
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 1997 compensation package
for Mortimer B. Fuller, III was the Compensation 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 Compensation
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 Compensation
Committee believes the Company and its Chief Executive Officer will face in
the coming year. The Compensation Committee fixed Mr. Fuller's salary for 1997
at $342,000. The Compensation 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.
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 Compensation Committee has taken
particular note of the substantial increase in the Company's stockholder value
over a number of years in general and specifically since the Company's initial
public offering in June 1996, as well as the numerous significant
accomplishments which the Company achieved in 1997.
During 1997, the Company substantially increased its scope of operations and
became an international company, accomplishing significant acquisitions in
Australia and Canada and finalizing a contract for future operations in
Mexico. In addition, the market price of the Class A Common Stock has out-
performed both the Nasdaq Composite Total Return Index (US) and the Company's
designated industry peer group. See "Executive Compensation--Stock Price
Performance Graph."
Among the key indicators of the Company's performance in 1997, operating
revenues increased 33.2% from $77.8 million in 1996 to $103.6 million in 1997,
and net income increased 35.4% from $5.9 million in 1996 to $8.0 million in
1997. Carloads increased 9.1% from 201,300 for 1996 to 219,700 for 1997.
11
<PAGE>
The Compensation Committee views the Company's successful expansion and
consummation of key acquisitions in 1997 and its fine financial achievements
to be attributable in large measure to Mr. Fuller's leadership, vision and
hard work. In addition, Mr. Fuller has expanded the Company's top 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 1997
included a cash bonus in the amount of $171,400; in addition, in 1996 he had
been granted options to purchase 90,000 shares of Class A Common Stock which
began vesting in 1997. 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
Committee. He participates in discussions of the Compensation Committee and
makes recommendations to it, but he does not vote or otherwise participate in
the Compensation 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 Committee because his
evaluations and recommendations with respect to the compensation and benefits
paid to executives other than himself are extremely valuable to the
Compensation Committee. However, the Chief Executive Officer neither
participates nor is otherwise involved in the deliberations of the
Compensation Committee with respect to his own compensation and benefits.
12
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
Set forth below is a line graph comparing, 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 (prior to its acquisition on November
17, 1997), 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 TOTAL RETURN
GENESEE & WYOMING INC -CLA NASDAQ COMPOSITE INDEX PEER GROUP
-------------------------- ---------------------- ----------
Jun 24, 96 100 100 100
Dec 96 204.41 108.92 105.66
Dec 97 137.5 133.72 80.21
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 ten 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."
C. Murray Benz, the wife of James W. Benz, a Named Executive, is Vice
President-Sales and Marketing of the Company's Rail Link, Inc. subsidiary. As
such, she received compensation of $113,374 in 1997.
TWO PROPOSALS WHICH HAVE THE EFFECT OF
"TRANSFERRING" 200,000 PREVIOUSLY AUTHORIZED SHARES
BETWEEN EXISTING EMPLOYEE BENEFIT PLANS
BACKGROUND OF PLANS AND DESCRIPTION OF PROPOSED AMENDMENTS
The Genesee & Wyoming Inc. Employee Stock Purchase Plan (the "Purchase
Plan") was approved by the stockholders at the 1996 Annual Meeting. The
Purchase Plan is intended to encourage ownership of Class A Common Stock by
present and future employees of the Company at all levels of employment, and
thereby provide to employees the benefit of the incentive created by stock
ownership.
The Genesee & Wyoming Inc. 1996 Stock Option Plan (the "Option Plan") was
approved by the stockholders at the 1996 Annual Meeting and amended as
approved by the stockholders at the 1997 Annual Meeting. 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.
The stockholders have previously authorized the grant under the Option Plan
of options to purchase up to 650,000 shares of Class A Common Stock. 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 and 1997 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 over 164
key employees, including the Named Executives and the Company's other
executive officers, as well as new employees resulting from the Company's
various acquisitions, options to purchase an aggregate of 626,350 of the
650,000 shares of Class A Common Stock currently available under the Option
Plan (excluding options which have lapsed unexercised due to employment
terminations). This leaves only 23,650 shares remaining for future option
grants. Therefore, the Company will 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.
14
<PAGE>
The stockholders have previously authorized the availability under the
Purchase Plan of up to 450,000 shares of Class A Common Stock. However, since
the Purchase Plan became effective on July 30, 1996 and through March 10,
1998, only 2,568 shares of Class A Common Stock (or approximately 1,622 shares
per year) have been purchased thereunder. The Board of Directors intends to
analyze the Purchase Plan over the coming year and may recommend to the
stockholders at the 1999 Annual Meeting one or more amendments to the Purchase
Plan aimed at increasing employee participation.
The Board of Directors nevertheless believes that a substantial portion of
the shares available for purchase under the Purchase Plan would be better used
as an incentive to employees if they were instead available for option grants
under the Option Plan. Therefore, on March 28, 1998, the Board of Directors
approved and adopted (A) Amendment No. 1 to the Purchase Plan, which amends
Section 3 of the Purchase Plan to reduce the number of shares available for
purchase thereunder from 450,000 to 250,000 (the "Purchase Plan Amendment"),
and (B) Amendment No. 2 to the Option Plan, which amends Section 4 of the
Option Plan to increase the number of shares available for option grants
thereunder from 650,000 to 850,000 (the "Option Plan Amendment"). The Purchase
Plan Amendment and the Option Plan Amendment (collectively, the "Proposed
Amendments") was each approved and adopted by the Board of Directors subject
to approval and ratification of both of the Proposed Amendments by the
stockholders at the Meeting. If the stockholders fail to approve and ratify
both of the Proposed Amendments at the Meeting, neither of the Proposed
Amendments will become effective, and both of the Proposed Amendments will
instead be null and void and of no effect.
The Board of Directors believes that the two Proposed Amendments are in the
best interests of the Company and its stockholders because they permit the
Company to continue to receive the benefits of the Option Plan without
increasing the total number of shares of Class A Common Stock available under
the Company's employee benefit plans, or the dilutive effect thereof. The
Board also believes that the Purchase Plan Amendment leaves the Purchase Plan
with a sufficient number of shares available for future purchase thereunder to
accomplish the original intent and purpose of the Purchase Plan.
Further information about the Proposed Amendments, the Option Plan and the
Purchase Plan are set forth below.
A. PROPOSAL TO APPROVE AND RATIFY THE PURCHASE PLAN AMENDMENT TO REDUCE THE
NUMBER OF SHARES AVAILABLE FOR PURCHASE THEREUNDER FROM 450,000 TO 250,000
DESCRIPTION OF PURCHASE PLAN AS PROPOSED TO BE AMENDED
The following is a summary of the principal features of the Purchase Plan.
REDUCTION OF SHARES AVAILABLE. The Purchase Plan currently provides for the
purchase of up to 450,000 shares of Class A Common Stock (subject to
adjustment as described below). The Purchase Plan Amendment, if approved by
the stockholders, would reduce such aggregate number of shares to 250,000. As
of March 10, 1998, 2,568 shares of Class A Common Stock had been purchased
under the Purchase Plan since it became effective on July 30, 1996. Shares
subject to the Purchase Plan may be either authorized but unissued shares or
shares that were once issued and subsequently reacquired by the Company. In
the event of a merger, consolidation, recapitalization, stock split or similar
event, the aggregate number and kind of shares available for purchase under
the Purchase Plan will be appropriately adjusted.
ELIGIBLE EMPLOYEES. Each employee of the Company or of any subsidiary of the
Company is eligible to participate in the Purchase Plan, provided that his
customary employment is for more than 20 hours per week and he has been
employed for at least two years. As of March 10, 1998, there were
approximately 412 employees of the Company and its subsidiaries eligible to
participate in the Purchase Plan.
PURCHASE OF SHARES. Eligible employees may participate by enrolling in the
Purchase Plan and authorizing specified payroll deductions, of up to 10% of
regular earnings, for the purchase of shares of Class A Common Stock at a
purchase price that is equal to the then-current market value of the Class A
Common Stock. No
15
<PAGE>
participating employee may, during any calendar year, purchase shares through
the Purchase Plan having an aggregate fair market value in excess of $25,000.
In addition, a participating employee may not make purchases through the
Purchase Plan if such purchases would cause him to own 5% or more of the then
outstanding shares of Class A Common Stock. Upon the death or termination of
employment of any participating employee, any amount remaining in his payroll
deduction account will be refunded to him or his estate.
ADMINISTRATION AND AMENDMENT. The Purchase Plan is administered by the
Compensation Committee, or such other committee appointed by the Board of
Directors, comprised of at least two disinterested members of the Board. The
Board of Directors may amend the Purchase Plan at any time, provided that
stockholder approval is required for amendments that materially (i) increase
the benefits accruing to participating employees, (ii) increase (other than
pursuant to the adjustment provisions described above) the number of shares
that may be issued under the Purchase Plan, or (iii) modify the requirements
as to eligibility for participation. The Board of Directors may terminate the
Purchase Plan at any time.
SECURITIES ACT REGISTRATION. The Company has filed with the SEC a
Registration Statement on Form S-8 registering the shares issuable pursuant to
the Purchase Plan.
NEW PLAN BENEFITS. The following table sets forth the number of shares of
Class A Common Stock actually purchased by the Named Executives and by certain
groups of individuals pursuant to the Purchase Plan, and the dollar value of
the benefit to them from participation in the Purchase Plan, during 1997.
GENESEE & WYOMING INC. EMPLOYEE STOCK PURCHASE PLAN
<TABLE>
<CAPTION>
DOLLAR VALUE NUMBER
NAME AND POSITION ($) (1) OF SHARES
------------------------------------------------- ------------ ---------
<S> <C> <C>
MORTIMER B. FULLER, III.......................... 0 0
Chairman and Chief Executive Officer
MARK W. HASTINGS................................. 0 0
Senior Vice President, Chief Financial Officer
and Treasurer
CHARLES W. CHABOT................................ 0 158
Senior Vice President-Australia
JAMES W. BENZ.................................... 0 0
Senior Vice President-GWI Railroad Switching
Services
DAVID J. COLLINS................................. 0 0
Senior Vice President-New York and Pennsylvania
ALL EXECUTIVE OFFICERS........................... 0 158
ALL DIRECTORS WHO ARE NOT EXECUTIVE OFFICERS..... 0 0
ALL EMPLOYEES WHO ARE NOT EXECUTIVE OFFICERS OR
DIRECTORS....................................... 0 1,512
</TABLE>
- --------
(1) No dollar value has been assigned to the benefit from participation in the
Purchase Plan because shares are purchased at prices equal to the then-
current market value of the Class A Common Stock. The benefits derived
from participation in the Purchase Plan relate to the convenience of
purchasing shares by payroll deduction and the avoidance of brokerage
commissions.
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 the Purchase Plan Amendment. In
addition, approval and ratification of the Purchase Plan Amendment is subject
to the stockholders' approval and ratification of the Option Plan Amendment as
well. See Proposal "B." immediately below. 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.
16
<PAGE>
B. PROPOSAL TO APPROVE AND RATIFY THE OPTION PLAN AMENDMENT TO INCREASE THE
NUMBER OF SHARES AVAILABLE FOR OPTION GRANTS THEREUNDER FROM 650,000 TO
850,000
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 650,000 shares of
Class A Common Stock (subject to adjustment as described below). The Option
Plan Amendment, if approved by the stockholders, would increase the number of
shares of Class A Common Stock available for option grants thereunder from
650,000 to 850,000. 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.
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, provided that no options may be granted under the Option Plan after
June 23, 2006.
ADMINISTRATION. The Option Plan is administered by the Compensation
Committee. Each member of the Compensation 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 Compensation
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 Compensation 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 10, 1998, the Company
had approximately 813 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 Compensation 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 10, 1998 was $25.00 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 Compensation
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.
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<PAGE>
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.
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 Compensation 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 Compensation 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 Registration
Statements on Form S-8 registering the 650,000 shares currently issuable upon
exercise of options granted and to be granted under the Option Plan. If the
Option Plan Amendment 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.
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<PAGE>
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 optionee's tax basis in the shares
(generally the fair market value of such shares at the time ordinary income
was recognized) and the amount realized on disposition of such shares. Any
gain will be taxed as short-term capital gain at ordinary income rates if the
shares have been held for one year or less, as mid-term capital gain subject
to a maximum tax rate of 28% if held for more than one year but not more than
18 months, and as long-term capital gain subject to a maximum tax rate of
either 10% or 20% (depending upon the taxpayer's income) if held for more than
18 months. Certain other reduced rates on capital gains are scheduled to begin
to apply after December 31, 2000. Any loss will be netted against gain of a
like type and, subject to certain limitations on the deductibility of capital
losses, any net loss deducted from other income. The Company is not entitled
to any tax deduction in connection with such disposition of shares.
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 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.
When the shares acquired upon exercise of an Incentive Stock Option are
sold, the optionee will recognize 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, mid-term or short-
term, as described above, 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.
19
<PAGE>
NEW PLAN BENEFITS
If the Option Plan Amendment is approved by the stockholders, each of the
Named Executives and other executive officers of the Company is eligible to be
granted additional options under the Option Plan. The following table sets
forth the amount and dollar value of all options actually granted to date
under the Option Plan to the Named Executives and to certain groups of
individuals (excluding options which have lapsed unexercised due to employment
terminations). 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 Compensation
Committee.
GENESEE & WYOMING INC. 1996 STOCK OPTION PLAN
<TABLE>
<CAPTION>
NUMBER
DOLLAR VALUE OF
NAME AND POSITION ($) (1) UNITS
--------------------------------------------------- ------------ -------
<S> <C> <C>
MORTIMER B. FULLER, III............................ $ 862,620 140,000
Chairman and Chief Executive Officer
MARK W. HASTINGS................................... 416,250 60,000
Senior Vice President, Chief Financial Officer and
Treasurer
CHARLES W. CHABOT.................................. 218,750 30,000
Senior Vice President-Australia
JAMES W. BENZ...................................... 18,750 20,000
Senior Vice President-GWI Railroad Switching
Services
DAVID J. COLLINS................................... 268,125 37,500
Senior Vice President-New York and Pennsylvania
ALL EXECUTIVE OFFICERS............................. 2,679,495 435,500
ALL DIRECTORS WHO ARE NOT EXECUTIVE OFFICERS....... 0 0
ALL EMPLOYEES WHO ARE NOT EXECUTIVE OFFICERS OR
DIRECTORS......................................... 965,375 190,850
</TABLE>
- --------
(1) Expressed as the excess of the market value of the Class A Common Stock on
March 10, 1998 ($25.00 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.
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 the Option Plan Amendment. In
addition, approval and ratification of the Option Plan Amendment is subject to
the stockholders' approval and ratification of the Purchase Plan Amendment as
well. See Proposal "A." immediately above. 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.
20
<PAGE>
SELECTION OF INDEPENDENT AUDITORS
The firm of Arthur Andersen LLP, certified public accountants, served as the
independent auditors of the Company for 1997. In addition to the audit of the
1997 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, 1998. 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 1999 ANNUAL MEETING
In order for any stockholder proposal to be included in the Company's proxy
statement to be issued in connection with the 1999 Annual Meeting of
Stockholders, such proposal must be received by the Company no later than
December 8, 1998.
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, 1997 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 8, 1998
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1537-PS-98
<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 Hyatt Regency Greenwich, 1800 East Putnam Avenue, Old Greenwich,
Connecticut 06870, on Tuesday, May 12, 1998 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
MORE OF THE NOMINEES IS SPECIFICALLY WITHHELD ACCORDING TO THE INSTRUCTIONS, A
SIGNED PROXY WILL BE VOTED FOR THE ELECTION OF THE THREE NOMINEES FOR DIRECTORS
AND, UNLESS OTHERWISE SPECIFIED, FOR EACH OF THE OTHER THREE 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 8, 1998, DESCRIBING MORE FULLY THE PROPOSALS SET
FORTH HEREIN.
SEE REVERSE SIDE 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: Louis S. Fuller, Philip J. Ringo and Robert M. Melzer
[ ] FOR ALL NOMINEES [ ] WITHHELD FROM ALL NOMINEES
[ ] _________________________
Instruction: To withhold authority to
vote for any individual nominee, write the
nominee's name on the line above. MARK HERE FOR
CHANGE OF
ADDRESS [ ]
Two proposals which have the effect of "transferring" 200,000 previously
authorized shares from one employee benefit plan to another. Specifically:
2A. Proposal to approve and ratify an amendment to the Genesee & Wyoming
Inc. Employee Stock Purchase Plan which reduces the total number of shares
available for purchase thereunder from 450,000 to 250,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2B. Proposal to approve and ratify an amendment to the Genesee & Wyoming
Inc.1996 Stock Option Plan which increases the total number of shares
available for option grants thereunder from 650,000 to 850,000.
[ ] 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, 1998.
[ ] 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:________
