<PAGE>
--------------------------------
\ OMB APPROVAL \
\------------------------------\
\ OMB Number: 3235-0059 \
\ Expires: January 31, 2002 \
\ Estimated average burden \
\ hours per response....13.12 \
--------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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 (S) 240.14a-12
Genessee & 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)(1) 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:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
[LOGO GENESEE & WYOMING INC.]
GENESEE & WYOMING INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 23, 2000
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 23, 2000 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 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
850,000 to 1,050,000.
3. To consider and act upon a proposal to approve and ratify a further
amendment to the Genesee & Wyoming Inc. 1996 Stock Option Plan which
sets a 200,000-share limit on option grants to any employee in any year.
4. 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, 2000.
5. 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 April 17, 2000 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
Mark W. Hastings
Secretary
Dated: April 21, 2000
<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 23, 2000, and any adjournments
thereof (the "Meeting"). This proxy statement and accompanying form of proxy
are being first mailed to stockholders on or about April 21, 2000. 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 April 17, 2000, the record date for the Meeting (the "Record Date"),
there were issued and outstanding (i) 3,455,856 shares of the Company's Class
A Common Stock, par value $.01 per share (the "Class A Common Stock"), and
(ii) 845,447 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.
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 a majority in the
affirmative of the votes cast, in person or by proxy, at the Meeting, without
regard to broker non-votes, will be required for approval of each of the other
three proposals described in this proxy statement and the accompanying notice
of meeting. Shares as to which "Abstain" has been selected on the accompanying
proxy will be counted as shares present and entitled to vote for purposes of
establishing a quorum, and will have the same effect as a vote against the
matter. Stockholders are not entitled to cumulate votes in the election of
directors.
1
<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" below), 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)....... 312,086 8.8% 658,283 77.9% 57.4%
James M. Fuller (4)............... 65,530 1.9 11,100 1.3 1.5
Louis S. Fuller (5)............... 109,144 3.2 133,144 15.7 12.1
Robert M. Melzer (6).............. 5,970 0.2 - - -
John M. Randolph (7).............. 30,600 0.9 7,400 0.9 0.9
Philip J. Ringo (8)............... 12,352 0.4 - - 0.1
M. Douglas Young (9).............. 1,194 - - - -
Charles N. Marshall (10).......... 77,500 2.2 - - 0.6
Charles W. Chabot (11)............ 24,590 0.7 - - 0.2
Mark W. Hastings (12)............. 50,925 1.5 7,400 0.9 1.0
Paul M. Victor (13)............... 5,625 0.2 - - -
FMR Corp. (14).................... 345,300 10.0 - - 2.9
82 Devonshire Street
Boston, Massachusetts 02109
Brandywine Asset Management, Inc.
(15)............................. 210,552 6.1 - - 1.8
Three Christina Centre
201 North Market Street
Suite 1200
Wilmington, Delaware 19801
All Directors and Executive
Officers
as a Group (19 persons) (16)...... 828,340 21.8 817,327 96.7 73.4
</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 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" above.
(3) The amounts shown include: (i) 27,481 shares of Class A Common Stock and
277,505 shares of Class B Common Stock owned by Mr. Fuller individually;
(ii) an aggregate of 106,357 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; (iii) 58,000 shares of Class A Common Stock and 82,171
shares of Class B Common Stock held by the Estate of Frances A. Fuller,
of which Mr. Fuller is co-executor (which shares are subject to a Voting
Agreement pursuant to which Mr. Fuller has been granted an irrevocable
proxy through March 20, 2008); (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 98,750 shares of Class A Common Stock.
(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 47,930 shares of Class A Common
2
<PAGE>
Stock held by family trusts for the benefit of Mr. Fuller and others, of
which Mr. Fuller is co-trustee; (iii) 500 shares of Class A Common Stock
owned by Mr. Fuller's wife, as to which shares he disclaims beneficial
ownership; and (iv) a presently exercisable option to purchase 8,000 shares
of Class A Common Stock.
(5) The amounts shown include: (i) 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) 60,000 shares of
Class A Common Stock owned by Mr. Fuller's wife, as to which shares he
disclaims beneficial ownership; and (iv) a presently exercisable option
to purchase 8,000 shares of Class A Common Stock.
(6) The amount shown includes: (i) 3,000 shares of Class A Common Stock owned
by Mr. Melzer individually; (ii) presently exercisable options to
purchase an aggregate of 1,666 shares of Class A Common Stock; and (iii)
units under the Company's Deferred Stock Plan for Non-Employee Directors
(the "Deferred Stock Plan") representing 1,304 shares of Class A Common
Stock.
(7) The amounts shown include: (i) 21,600 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 8,000
shares of Class A Common Stock.
(8) 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; (ii) a presently exercisable option to purchase 8,000 shares
of Class A Common Stock; and (iii) units under the Deferred Stock Plan
representing 652 shares of Class A Common Stock.
(9) The amount shown consists of units under the Deferred Stock Plan
representing shares of Class A Common Stock.
(10) The amount shown includes: (i) 60,000 shares of Class A Common Stock
owned by Mr. Marshall individually; and (ii) presently exercisable
options to purchase an aggregate of 17,500 shares of Class A Common
Stock.
(11) The amount shown includes: (i) 2,715 shares of Class A Common Stock owned
by Mr. Chabot individually; and (ii) presently exercisable options to
purchase an aggregate of 21,875 shares of Class A Common Stock.
(12) 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 43,125 shares of Class A Common Stock.
(13) The amount shown consists of presently exercisable options to purchase
shares of Class A Common Stock.
(14) The amount shown and the following information is derived from a Schedule
13G dated February 14, 2000: The amount shown includes: (i) 334,200
shares beneficially owned by Fidelity Management & Research Company, a
wholly-owned subsidiary of FMR Corp., as a result of its acting as
investment advisor to various investment companies (the "Funds")
registered under Section 8 of the Investment Company Act of 1940
(including Fidelity Low-Priced Stock Fund, which owns 194,800 shares);
and (ii) 11,100 shares beneficially owned by Fidelity Management Trust
Company, a wholly-owned subsidiary of FMR Corp., as a result of its
serving as an investment manager of certain institutional accounts. FMR
Corp., through its control of Fidelity Management & Research Company, has
sole dispositive power with respect to all 334,200 shares owned by the
Funds. Sole power to vote or direct the voting of these shares resides
with the Funds' Boards of Trustees. FMR Corp., through its control of
Fidelity Management Trust Company, has sole voting power and sole
dispositive power with respect to all 11,100 of such shares. Strategic
Advisers, Inc., a wholly-owned subsidiary of FMR Corp. and an investment
advisor registered under the Investment Advisors Act of 1940, provides
investment advisory services to individuals. It does not have sole power
to
3
<PAGE>
vote or direct the voting of shares of certain securities held for clients
and has sole dispositive power over such securities. As such, FMR Corp.'s
beneficial ownership may include shares beneficially owned through Strategic
Advisers, Inc.
(15) The amount shown and the following information has been provided by
Brandywine Asset Management, Inc.: Brandywine Asset Management, Inc. has
sole power to vote 185,977 of such shares, shared power to vote 560 of
such shares, and sole power to dispose of all of such shares.
(16) See footnotes (3) through (13) to this table. The amounts shown include:
(i) presently exercisable options to purchase an aggregate of 342,290
shares of Class A Common Stock; and (ii) units under the Deferred Stock
Plan representing an aggregate of 3,150 shares of Class A Common Stock.
4
<PAGE>
ELECTION OF DIRECTORS
Three of the Company's seven directors are to be elected by the stockholders
at the Meeting, each to hold office for a three-year term expiring in 2003 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, may determine.
Proposed for Election as Directors
for a Three-Year Term Expiring in 2003
<TABLE>
<CAPTION>
Director
Name and Background Since
------------------- --------
<S> <C>
James M. Fuller, age 59, retired in 1999 as Regional Sales Manager of 1974
the Harvey Salt Co., a distributor of salt and water purification
chemicals, a position he had held 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 74, has been a financial consultant and private 1986
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.
Hon. M. Douglas Young, P.C., age 59, has been Chairman of Summa 1999
Strategies Canada Inc., a firm that provides strategic counsel and
business advice in matters relating to international trade and
investment, public policy and relationships with government, since
1997. Between 1993 and 1997, he served as Canada's Minister of
Transport, Minister of Human Resources Development and Minister of
National Defence. Mr. Young is Counsel to the law firm of Patterson
Palmer Hunt Murphy, and also serves on the Boards of Directors of
Magellan Aerospace Corporation and CPCS Transcom Ltd.
</TABLE>
5
<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 57, has served as Chairman of 1973 2002
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.
Louis S. Fuller, age 58, retired in 1999 from Courtright and 1974 2001
Associates, an executive search firm, of which he had been a
member since 1992. Mr. Fuller also serves on the Board of
Directors of Cherry Ridge Corp. He is a first cousin of
Mortimer B. Fuller, III and James M. Fuller.
Robert M. Melzer, age 59, was President and Chief Executive 1997 2002
Officer of Property Capital Trust, a real estate investment
trust, from 1992 to 1999, when he retired. Through November
1996, he was also the Chief Financial Officer of Property
Capital Trust. Mr. Melzer serves as a trustee of MGI
Properties, and a director of Beacon Capital Partners, Inc.
and The Cronos Group. He is also Chair of the Board of
Trustees of Beth Israel Deaconess Medical Center in Boston.
Philip J. Ringo, age 58, has been President and Chief 1978 2001
Operating Officer of ChemConnect, Inc., an electronic
commerce company, since March 1999. He was President and CEO
of Chemical Leaman Tank Lines Inc., a trucking firm, from
1995 to 1998. 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 Quality Distribution Inc.
</TABLE>
Board Meetings and Committees of the Board
The Board of Directors held nine meetings during the year ended December 31,
1999 ("1999"). Each director then in office 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 Chairman of the Board.
The current members of the Audit Committee are Robert M. Melzer (Chairman),
James M. Fuller, John M. Randolph 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 three meetings during 1999.
The current members of the Compensation and Stock Option Committee (the
"Compensation Committee") are John M. Randolph (Chairman), Louis S. Fuller and
Philip J. Ringo. The Compensation Committee makes
6
<PAGE>
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 "Executive Compensation--Report of Compensation Committee
with respect to Executive Compensation" below. The Compensation Committee held
two meetings during 1999.
Directors' Compensation
During 1999, the Company paid to or deferred for its non-employee directors
cash directors' fees aggregating $103,889. Such fees consisted (effective May
25, 1999) of $10,000 annually (payable quarterly), $1,250 per Board meeting
attended, $500 per Board Committee meeting attended, 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 or deferral. The
Company also reimburses its directors for travel expenses in connection with
attendance at Board meetings.
Under the Company's Deferred Stock Plan for Non-Employee Directors (the
"Deferred Stock Plan"), each non-employee director may elect to be paid all or
a portion of his cash directors' compensation instead in units representing
shares of Class A Common Stock. Each participating director's Deferred Stock
Plan account is credited with 125% of the cash compensation he elects to defer
under the Deferred Stock Plan. Dividends (if any) payable on the Class A
Common Stock are likewise credited as additional units in the Deferred Stock
Plan accounts, and the number of units in the Deferred Stock Plan accounts are
subject to customary anti-dilution adjustments. A non-employee director is not
entitled to vote, and does not have any other indicia of ownership of, the
Class A Common Stock represented by the units in his Deferred Stock Plan
account until those units are paid out to him in shares. Such shares will be
paid out to the participating director or his designated beneficiaries (i) on
the deferred payment date previously elected by him or (ii) if earlier, upon
his death, long-term disability or cessation of service as a director of the
Company. An aggregate of 50,000 shares of Class A Common Stock are available
for issuance under the Deferred Stock Plan.
Directors' Options
The Company's Stock Option Plan for Outside Directors (the "Directors'
Plan") provides for formula grants to each non-employee 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 three equal annual installments
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 1999, M. Douglas Young was granted an option under the Directors'
Plan, expiring on July 29, 2009, to purchase 2,000 shares of Class A Common
Stock at an exercise price of $11.00 per share (that being the market value of
the Class A Common Stock on the option grant date), and Robert M. Melzer was
granted an option under the Directors' Plan, expiring on October 26, 2009, to
purchase 1,000 shares of Class A Common Stock at an exercise price of $11.75
per share (that being the market value of the Class A Common Stock on the
option grant date).
7
<PAGE>
EXECUTIVE OFFICERS
The Company is currently served by 13 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 57, has been Chairman of the Board and Chief
Executive Officer of the Company since 1977. Further information about Mr.
Fuller is set forth under "Election of Directors" above.
Charles N. Marshall, age 58, has been President and Chief Operating Officer
of the Company since October 1997. He has 39 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 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 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.
Mark W. Hastings, age 50, has been Executive Vice President, Corporate
Development since January 2000 and Secretary since April 2000. Prior to that,
he served as Senior Vice President, Chief Financial Officer and Treasurer, and
had 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 (now HSBC Bank USA). 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.
John C. Hellmann, age 30, Chief Financial Officer, joined the Company in
January 2000. From 1999 until January 2000, Mr. Hellmann was an investment
banker at Lehman Brothers Inc. in the Emerging Communications Group, and from
1997 to 1999, he was an investment banker at Schroder & Co. Inc. in the
Transportation Group. From 1992 to 1994, Mr. Hellmann worked for Weyerhaeuser
Company in Japan and the People's Republic of China.
Forrest L. Becht, age 56, 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 31-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.
James W. Benz, age 51, 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 53, 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 was President of Buffalo & Pittsburgh Railroad, Inc. from 1992 to
1997. 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 42, 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.
8
<PAGE>
Alan R. Harris, age 51, 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.
Martin D. Lacombe, age 58, Senior Vice President-Canada, joined the Company
in April 1999. Prior to that, he was Senior Vice President of Rail-Term Inc.,
an affiliate of the Company's then joint venture partner in Canada, which he
joined in 1998. From 1995 to 1997, Mr. Lacombe worked as a consultant to short
line and rail services companies. Mr. Lacombe has extensive operating
experience in various facets of the industry, having worked for CN Rail, the
Canadian Transport Commission, VIA Rail and the Railway Association of Canada
in a variety of positions from front-line supervision to Vice President.
Robert I. Melbo, age 57, Senior Vice President-Oregon, is President of
Willamette & Pacific Railroad, Inc. and Portland & Western 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.
Paul M. Victor, age 50, became Senior Vice President-Mexico in May 1999. He
joined the Company in 1997 as Vice President-Mexico. During 1997, he acted as
an independent consultant to Ferrovia Sur Atlantico in Southern Brazil, Placer
Dome Latin America, Mina Zaldevar and various projects in northern Chile. From
1994 to 1997 he served as Chief Operating Officer for Ferrocarril del
Pacifico, S.A. in Chile. Mr. Victor has over 30 years' experience in the
railroad industry in the United States and South America.
Spencer D. White, age 39, 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.
Section 16(a) Beneficial Ownership Reporting Compliance
Since the 1999 Annual Meeting of Stockholders, James M. Fuller, a director,
and Robert I. Melbo, an executive officer, each inadvertently filed late with
the Securities and Exchange Commission (the "SEC") one report disclosing two
transactions in Class A Common Stock beneficially owned by him. Both 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.
9
<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, 1999, 1998 and 1997, paid by the Company to those
persons who were, at December 31, 1999, the Chief Executive Officer and the
four most highly compensated other executive officers of the Company
(collectively, the "Named Executives").
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
--------------------------------------- ----------------------
Awards
----------------------
Other Annual All Other
Salary Bonus Compensation Compensation
Name and Principal Position Year ($) (1) ($) (2) ($) (3) Options (#) ($) (4)
- --------------------------- ---- --------- --------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Mortimer B. Fuller, III. 1999 $391,600 $192,900 - 25,000 $147,399
Chairman and Chief 1998 372,127 121,950 - 50,000 132,432
Executive Officer 1997 353,792 171,400 - - 28,884
Charles N. Marshall (5). 1999 266,923 135,400 - 10,000 85,037
President and Chief 1998 251,035 80,400 - 30,000 73,836
Operating Officer 1997 121,373 - - - -
Charles W. Chabot....... 1999 203,089 90,000 $53,436 (6) 2,500 55,155
Senior Vice President- 1998 222,424 100,000 53,091 (6) 5,000 50,246
Australia 1997 176,923 70,000 - - 31,575
Mark W. Hastings........ 1999 215,042 68,400 - 7,500 55,883
Senior Vice President, 1998 207,815 73,400 - 15,000 51,372
Chief Financial Officer 1997 182,759 65,400 - - 22,508
and Treasurer
Paul M. Victor (7)...... 1999 146,217 52,000 70,257 (8) 2,500 -
Senior Vice President-
Mexico
</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) Except for those described in footnotes (6) and (8) to the table, 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 the lesser of $50,000 or 10% of the Named
Executive's annual salary and bonus for that year.
(4) The amounts shown for 1999 reflect: (i) Company contributions of $2,400
each to the Company's 401(k) Savings Plan on behalf of Messrs. Fuller,
Marshall, Chabot and Hastings; and (ii) the value of insurance premiums
paid by the Company, and the economic benefit (projected on an actuarial
basis) to certain Named Executives, under split dollar life insurance
arrangements as follows: Mr. Fuller-$144,999, Mr. Marshall- $82,636, Mr.
Chabot-$52,755, and Mr. Hastings-$53,483.
(5) Mr. Marshall was first employed by the Company in October 1997.
Accordingly, the amounts shown for 1997 reflect less than a full year's
service as an employee, but include (i) $80,000 in consulting fees and
(ii) $5,750 in outside directors' fees paid to him prior to his employment
by the Company.
(6) The amounts shown primarily reflect allowances, expense reimbursement and
similar payments made to or on behalf of Mr. Chabot in connection with his
overseas assignment, including, in the case of 1999, U.S. income tax
payments ($40,589). See "Executive Compensation--Severance and Other
Agreements" below.
(7) Mr. Victor first became an executive officer in May 1999, but the amounts
shown reflect his compensation for the full year.
(8) The amount shown primarily reflects allowances, expense reimbursement and
similar payments made to or on behalf of Mr. Victor in connection with his
overseas assignment, including housing expenses ($64,778).
10
<PAGE>
Stock Options
Shown below is further information on grants of stock options to the Named
Executives during 1999. All such options were granted under the Option Plan.
See "Two Proposals to Amend the 1996 Stock Option Plan" below. The Company has
no provision for stock appreciation rights.
Option Grants in 1999
<TABLE>
<CAPTION>
Individual Grants Grant Date Value
- ---------------------------------------------------------------------- ----------------
Percent of
Total Options
Granted to Exercise Grant Date
Options Employees in Price Expiration Present Value
Name Granted(#) Fiscal Year ($/Sh) Date ($)(1)
- ------------------------ ---------- ------------- -------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Mortimer B. Fuller, III. 18,750 15.4% $9.2125 4/8/04 $78,000
6,250 5.1 8.375 4/8/04 26,000
Charles N. Marshall..... 10,000 8.2 8.375 4/8/04 41,600
Charles W. Chabot....... 2,500 2.1 8.375 4/8/04 10,400
Mark W. Hastings........ 7,500 6.2 8.375 4/8/04 31,200
Paul M. Victor.......... 2,500 2.1 8.375 4/8/04 10,400
</TABLE>
- --------
(1) The hypothetical grant date present values are presented pursuant to the
rules of the SEC and are calculated under the modified Black-Scholes Model
for pricing options, a mathematical formula used to value options traded
on stock exchanges. This formula considers a number of factors in
estimating an option's present value. Factors used to value the options
shown on the table include the expected volatility rate of the shares
underlying the option (39.50%), the risk-free interest rate (5.40%), the
expected dividend yield (0%) and the expected life (5 years). The actual
before-tax amount, if any, realized upon the exercise of stock options
will depend upon the excess, if any, of the market price of the Class A
Common Stock over the option exercise price per share at the time the
option is exercised. There is no assurance that the hypothetical grant
date present values of the options reflected on the table will be
realized.
Shown below is information with respect to all unexercised options to
purchase Class A Common Stock held by the Named Executives at December 31,
1999. No options were exercised by the Named Executives during 1999.
Aggregated Option Exercises in 1999 and
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Value of All Unexercised
Unexercised Options Held In-the-Money Options at
Shares at FY-End(#) FY-End($)(1)
Acquired on Value ------------------------- -------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------ ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mortimer B. Fuller, III. - - 80,000 85,000 0 $96,797
Charles N. Marshall..... - - 7,500 32,500 0 45,000
Charles W. Chabot....... - - 20,000 12,500 0 11,250
Mark W. Hastings........ - - 37,500 30,000 0 33,750
Paul M. Victor.......... - - 2,500 10,000 0 11,250
</TABLE>
- --------
(1) Expressed as the excess, if any, of the market value of the Class A Common
Stock at December 31, 1999 ($12.875 per share) over the exercise price of
each option.
11
<PAGE>
Severance and Other Agreements
The Company is a party to agreements with each of its 13 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").
In addition, pursuant to an Assignment Letter effective November 1, 1998
executed by the Company and Charles W. Chabot in connection with his
assignment to Australia, the Company has agreed that if Mr. Chabot is still
employed by the Company when his foreign assignment ends, he will, at the
Company's discretion, be placed in a comparable position with the Company or
given two years' salary continuation. The Assignment Letter also provides Mr.
Chabot with a base salary of at least $200,000 per year, housing, a foreign
living allowance, travel expenses, relocation expenses and tax equalization
payments in connection with his foreign assignment.
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 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.
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 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.
12
<PAGE>
Salaries. 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 in the Company.
Bonuses. 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 13 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 or the Chief Operating 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
or the Chief Operating 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 or the Chief Operating
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, (ii) in the
case of an executive who is a regional manager, his region's financial
performance for the year, and (iii) 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 he 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 1999 and their respective individual performances, the Chief
Executive Officer and all of the other 1999 executive officers were awarded
bonuses for 1999 aggregating $706,825.
The Option Plan. Long-term incentives are provided through the grant of
stock options under the Option Plan. For a description of the Option Plan, see
"Two Proposals to Amend the 1996 Stock Option Plan" below.
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. In 1999, the Compensation Committee granted to an aggregate of 145
employees (including all of the 1999 executive officers) options to purchase
an aggregate of 121,400 shares of Class A Common Stock. See "Executive
Compensation--Stock Options" above.
401(k) Savings Plan. 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 1999 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.
13
<PAGE>
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 1999
at $391,600. The Compensation Committee believes that Mr. Fuller's salary is
fixed at a level that 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 that 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 noted
several accomplishments in 1999. Specifically, the Company expanded its
operations in Mexico, took over ownership and control of its Canadian joint
venture and realized significant improvement in the operations of its
industrial rail switching subsidiary. Additionally, the Compensation Committee
acknowledged the following key indicators of the Company's performance in
1999: operating revenues increased 19.1% to $175.6 million in 1999 from $147.5
million in 1998, and net income increased 9.6% to $12.5 million in 1999 from
$11.4 million in 1998.
The Compensation Committee views these accomplishments as 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 1999
included a cash bonus in the amount of $192,900 and the grant of options to
purchase an aggregate of 25,000 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
John M. Randolph, Chairman
Louis S. Fuller
Philip J. Ringo
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.
14
<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); (ii) the industry peer group which the Company has used for this
purpose since 1997, comprised of the following companies: Emons Transportation
Group Inc., Pioneer RailCorp, Providence and Worcester Railroad Co.,
Railamerica Inc. and RailTex Inc. (collectively, the "Prior Peer Group"); and
(iii) a new industry peer group which the Company has selected for this
purpose, comprised of the following companies: Emons Transportation Group
Inc., Providence and Worcester Railroad Co., Railamerica Inc. and Wisconsin
Central Transportation Corporation (collectively, the "Current Peer Group").
The Company has selected this different index because the Company's growth
since 1996 makes it more comparable to Wisconsin Central Transportation
Corporation and less comparable to Pioneer RailCorp, and because RailTex Inc.
ceased being publicly traded in February 2000 and will no longer be available
as a comparable.
COMPARISON OF CUMULATIVE TOTAL RETURN
[LINE GRAPH]
NASDAQ COMPOSITE
YEARS GENESEE & WYOMING TOTAL RETURN CURRENT PRIOR
ENDING INC -CLASS A INDEX (US) PEER GROUP PEER GROUP
- -------- ----------------- ---------------- ---------- ----------
Jun 24, 96 100.00 100.00 100.00 100.00
Dec 96 204.41 108.96 125.76 105.68
Dec 97 137.50 133.51 77.62 80.23
Dec 98 75.00 188.13 59.02 71.69
Dec 99 75.73 339.87 46.79 82.66
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),
the companies comprising the Current Peer Group, and the companies comprising
the Prior 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.
15
<PAGE>
RELATED TRANSACTIONS
The Company, Mortimer B. Fuller, III, the other 12 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" above.
Mortimer B. Fuller, III, the Chairman and Chief Executive Officer of the
Company, is indebted to the Company under a promissory note executed in May
1998 which bears interest at the rate of 5.69% per annum. The largest amount
of principal and unpaid interest outstanding since January 1, 1999 was
$531,295, and the amount of principal and unpaid interest outstanding on March
31, 2000 was $507,192.
C. Murray Benz, the wife of James W. Benz, an executive officer, is Vice
President-Sales and Marketing of the Company's Rail Link, Inc. subsidiary. As
such, in 1999 she received cash compensation of $138,698, and was granted a
five-year option to purchase 500 shares of Class A Common Stock at $8.375 per
share.
16
<PAGE>
TWO PROPOSALS TO AMEND THE 1996 STOCK OPTION PLAN
Background of Plan and Description of Proposed Amendments
The Genesee & Wyoming Inc. 1996 Stock Option Plan (the "Option Plan") was
approved by the stockholders at the 1996 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.
A. Proposal to Approve and Ratify an Amendment That Increasesthe Number of
Shares Available for Option Grants from 850,000 to 1,050,000:
The Option Plan originally provided for the grant of options to purchase up
to 450,000 shares of Class A Common Stock. That maximum was increased to
650,000 shares by the stockholders at the 1997 Annual Meeting, and increased
again to 850,000 shares by the stockholders (coupled with a 200,000-share
reduction in the shares available under the Genesee & Wyoming Inc. Employee
Stock Purchase Plan) at the 1998 Annual 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 revenues and earnings success is 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 180
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 849,950 of the
850,000 shares of Class A Common Stock currently available under the Option
Plan. This currently leaves only 50 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.
Therefore, on April 14, 2000, the Board of Directors approved and adopted
Amendment No. 4 to the Option Plan, which amends Section 4 of the Option Plan
to increase the number of shares available for option grants thereunder from
850,000 to 1,050,000 (the "Proposed Share Increase Amendment"). The Proposed
Share Increase Amendment was approved and adopted by the Board of Directors
subject to approval and ratification by the stockholders at the Meeting. The
Board of Directors believes that the Proposed Share Increase Amendment is in
the best interests of the Company and its stockholders because it will permit
the Company to continue to receive the benefits of the Option Plan described
above.
B. Proposal to Approve and Ratify an Amendment That Sets a 200,000-Share Limit
on Option Grants to Any Employee in Any Year:
Under Section 162(m) of the Code and the regulations promulgated thereunder,
the Company may be denied a federal income tax deduction for compensation in
excess of $1 million annually paid to its Chief Executive Officer and its four
most highly compensated other executive officers, unless the requirements of
the regulations are met. Although the Company is not ordinarily entitled to an
income tax deduction with respect to Incentive Stock Options (as defined
below), both the exercise of Nonstatutory Stock Options (as defined below) and
a "disqualifying disposition" of Incentive Stock Option stock can create an
income tax deduction to the Company
17
<PAGE>
(see "Two Proposals to Amend the 1996 Stock Option Plan--Description of Option
Plan as Proposed to be Amended--Federal Income Tax Consequences" below). In
order to meet the regulations under Section 162(m) and to ensure that any
potential federal income tax deduction is not denied, the Option Plan must
contain an overall per person limitation on option grants.
Therefore, on April 14, 2000, the Board of Directors also approved and
adopted Amendment No. 5 to the Option Plan, which adds a new Section 24 to the
Option Plan to set a 200,000-share limit (subject to anti-dilution adjustment
as described below) on the number of options that may be granted to any one
employee in any calendar year (the "Proposed Limitation Amendment"). The
Proposed Limitation Amendment was approved and adopted by the Board of
Directors subject to approval and ratification by the stockholders at the
Meeting. The Board of Directors believes that the Proposed Limitation
Amendment is in the best interests of the Company and its stockholders because
it will operate to preserve potential federal income tax deductions for the
Company in the circumstances described above.
Description of Option Plan as Proposed to be Amended
The following is a summary of the principal features of the Option Plan, the
Proposed Share Increase Amendment and the Proposed Limitation Amendment.
Increase of Shares Available. The Option Plan currently provides for the
granting of stock options to purchase up to an aggregate of 850,000 shares of
Class A Common Stock (subject to anti-dilution adjustment as described below).
The Proposed Share Increase Amendment, if approved by the stockholders, would
increase the number of shares of Class A Common Stock available for option
grants thereunder from 850,000 to 1,050,000 (subject to anti-dilution
adjustment as described 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.
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"). If any
Incentive Stock Option is for any reason disqualified as an incentive stock
option within the meaning of Section 422 of the Code, it will instead remain
in full force and effect, in accordance with its terms, as a Nonstatutory
Stock Option. 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 "Non-Employee
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;
(iii) to modify unilaterally the terms of any option grant or exercise so as
to avoid variable accounting treatment under Accounting Principles Board
Opinion No. 25 or any Financial Accounting Standards Board interpretation; and
(iv) 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 31, 2000, the Company
had approximately 1,550 full-time employees.
18
<PAGE>
Terms and Conditions of Options; Option Price. 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; 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.
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 31, 2000 was
$15.50 per share.
Upon exercise, 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 as of 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 and held for any holding period required by law
or regulation.
Imposition of Annual Per Person Limitation on Option Grants. The Option Plan
currently sets no limit on the number of options that may be granted to any
employee. The Proposed Limitation Amendment, if approved by the stockholders,
would impose a 200,000-share limit (subject to anti-dilution adjustment as
described below) on the number of options that could be granted under the
Option Plan to any one employee in any calendar year.
Effect of Death or Termination of Employment. During the lifetime of an
optionee, an option may be exercised only while he is an employee of the
Company or its subsidiaries and has been an employee continuously since the
option grant, except that 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.
Non-Transferability in Most Circumstances. During the lifetime of an
optionee, options issued under the Option Plan may not be transferred, whether
voluntarily or otherwise, except if and to the extent that a transfer of a
Nonstatutory Stock Option is permitted by the Compensation Committee, in its
discretion, pursuant to the express terms of a stock option agreement, and
subject to any terms and conditions which the Compensation Committee may
impose.
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.
Anti-Dilution 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, 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. The
Proposed Limitation Amendment, if approved by the stockholders, would subject
the new 200,000-share per person annual option limit to the same anti-dilution
adjustments.
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 anti-dilution 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,
19
<PAGE>
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 850,000 shares currently issuable upon
exercise of options granted and to be granted under the Option Plan. If the
Proposed Share Increase Amendment is approved and ratified by the stockholders
at the Meeting, the Company intends to register the 200,000 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.
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, 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 one year. 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.
20
<PAGE>
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 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.
New Plan Benefits
If the Proposed Share Increase 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. If the
Proposed Limitation Amendment is approved by the stockholders, those options
could not exceed 200,000 per person per calendar year (subject to anti-
dilution adjustment as described above).
The following table sets forth the amount and dollar value of all options
actually granted during 1999 under the Option Plan to the Named Executives and
to certain groups of individuals (including options that have subsequently
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
Option Grants in 1999
<TABLE>
<CAPTION>
Dollar Value Number
Name and Position ($) (1) of Units
----------------- ------------ --------
<S> <C> <C>
Mortimer B. Fuller, III............................ $162,422 25,000
Chairman and Chief Executive Officer
Charles N. Marshall................................ 71,250 10,000
President and Chief Operating Officer
Charles W. Chabot.................................. 17,813 2,500
Senior Vice President-Australia
Mark W. Hastings................................... 53,438 7,500
Senior Vice President, Chief Financial Officer and
Treasurer
Paul M. Victor..................................... 17,813 2,500
Senior Vice President-Mexico
All Executive Officers (2)......................... 515,109 74,500
All Directors Who Are Not Executive Officers....... 0 0
All Employees Who Are Not Executive Officers or
Directors.......................................... 334,163 46,900
</TABLE>
- --------
(1) Expressed as the excess of the market value of the Class A Common Stock on
March 31, 2000 ($15.50 per share) over the exercise price of each option.
All of the options shown on the table were granted on April 9,
21
<PAGE>
1999 and have an exercise price of $8.375 per share, except that certain
options granted to Mortimer B. Fuller, III have an exercise price of
$9.2125 per share. See "Executive Compensation--Stock Options" above.
(2) Includes options granted to an employee who is the wife of an executive
officer. See "Related Transactions" above.
Required Votes and Board Recommendations
A majority in the affirmative 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 Proposed Share Increase Amendment. In
addition, a majority in the affirmative 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 Proposed Limitation
Amendment. The Board of Directors recommends votes in favor of both the
Proposed Share Increase Amendment and the Proposed Limitation Amendment, and
the persons named in the enclosed proxy (unless otherwise instructed therein)
will vote such proxies FOR the Proposed Share Increase Amendment and FOR the
Proposed Limitation Amendment.
SELECTION OF INDEPENDENT AUDITORS
The firm of Arthur Andersen LLP, certified public accountants, served as the
independent auditors of the Company for 1999. In addition to the audit of the
1999 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, 2000. 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 2001 ANNUAL MEETING
In order for any stockholder proposal to be included in the Company's proxy
statement to be issued in connection with the 2001 Annual Meeting of
Stockholders, such proposal must be received at the principal executive
offices of the Company, 71 Lewis Street, Greenwich, Connecticut 06830
(Attention: Mark W. Hastings, Secretary) no later than December 22, 2000. If
such proposal is in compliance with all of the requirements of Rule 14a-8
under the Exchange Act, it will be included in the proxy statement and set
forth on the form of proxy issued for such Annual Meeting. Stockholder
proposals that are not submitted for inclusion in the Company's proxy
materials pursuant to Rule 14a-8 under the Exchange Act may be brought before
the 2001 Annual Meeting of Stockholders if notice thereof is received by the
Company, as described immediately above, no later than March 7, 2001.
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.
22
<PAGE>
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, 1999 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, Secretary).
BY ORDER OF THE BOARD OF DIRECTORS
Mark W. Hastings
Secretary
Dated: April 21, 2000
23
<PAGE>
1537-PS-00
<PAGE>
PROXY
GENESEE & WYOMING INC.
The undersigned hereby appoints MORTIMER B. FULLER, III and MARK W.
HASTINGS, 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 23, 2000 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 21, 2000, 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: (01) James M. Fuller; (02)John M. Randolph;(03)Hon. M. Douglas
Young, P.C.
[_] FOR [_] WITHHELD
[_] --------------------------------------------------------------
Instruction: To withhold authority to vote for any individual
nominee, write the nominee's name on the line above.
2. 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 850,000 to 1,050,000.
[_] FOR [_] AGAINST [_] ABSTAIN
3. Proposal to approve and ratify a further amendment to the Genessee & Wyoming
Inc. 1996 Stock Option Plan which sets a 200,000-share limit on option grants
to any employee in any year.
[_] FOR [_] AGAINST [_] ABSTAIN
4. Proposal to approve and ratify the selection of Arthur Andersen LLP as the
Company's independent auditors for the year ending December 31, 2000.
[_] FOR [_] AGAINST [_] ABSTAIN
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
MARK HERE FOR ADDRESS
CHANGE AND NOTE AT LEFT [_]
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:_________
