<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
US RENTALS, INC.
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF U.S. RENTALS, INC.]
1581 CUMMINS DRIVE, SUITE 155
MODESTO, CALIFORNIA 95358
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
U.S. Rentals, Inc., which will be held at the Century Plaza Hotel and Tower,
2025 Avenue of the Stars, Los Angeles, California 90067 on Thursday, May 7,
1998, at 9:00 AM (local time).
At the Annual Meeting, holders of Common Stock will be asked to elect seven
Directors. In addition, holders of Common Stock will be asked to ratify the
appointment of Price Waterhouse LLP as the Company's independent accountants
for the 1998 calendar year. The attached Proxy Statement contains information
about these matters.
The Company's management would like you to attend. HOWEVER, WHETHER OR NOT
YOU PLAN TO ATTEND THE ANNUAL MEETING, IT IS IMPORTANT THAT YOUR SHARES BE
REPRESENTED. Accordingly, please sign, date and return the enclosed proxy card
which will indicate your vote upon the matters to be considered. If you do
attend the meeting and desire to vote in person, you may do so by withdrawing
your proxy at that time.
I hope you will be able to attend the Annual Meeting and look forward to
seeing you on May 7, 1998.
Sincerely,
/s/ Richard D. Colburn
Richard D. Colburn
Chairman of the Board
March 31, 1998
<PAGE>
[LOGO OF U.S. RENTALS, INC.]
1581 CUMMINS DRIVE, SUITE 155
MODESTO, CALIFORNIA 95358
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 7, 1998
The Annual Meeting of Stockholders of U.S. Rentals, Inc. (the "Company")
will be held on Thursday, May 7, 1998, at 9:00 AM (local time) at the Century
Plaza Hotel and Tower, 2025 Avenue of the Stars, Los Angeles, California for
the following purposes:
(1) To elect seven Directors for a one-year term;
(2) To ratify the appointment of Price Waterhouse LLP as the Company's
independent accountants for the 1998 fiscal year; and
(3) To transact any other business that properly comes before the Annual
Meeting.
Only stockholders of record at the close of business on March 12, 1998, will
be entitled to notice of, and to vote at, the Annual Meeting or at any
adjournment thereof. Each stockholder, even though he or she may presently
intend to attend the Annual Meeting, is requested to sign and date the
enclosed proxy card and return it without delay in the enclosed postage-paid
envelope. Any stockholder present at the Annual Meeting may withdraw his or
her proxy card and vote in person on each matter properly brought before the
Annual Meeting.
Please sign, date and mail the enclosed proxy card promptly in the enclosed
envelope so that your shares of stock may be represented at the meeting.
By Order of the Board of Directors,
/s/ John S. McKinney
John S. McKinney
Chief Financial Officer,
Vice President and
Assistant Secretary
March 31, 1998
<PAGE>
[LOGO OF U.S. RENTALS, INC.]
1581 CUMMINS DRIVE, SUITE 155
MODESTO, CALIFORNIA 95358
PROXY STATEMENT
GENERAL
U.S. Rentals, Inc. (the "Company") is furnishing this Proxy Statement to the
holders of Common Stock of the Company (the "Stockholders") in connection with
the solicitation of proxies for use at the Company's Annual Meeting of
Stockholders to be held on Thursday, May 7, 1998, at 9:00 AM (local time) and
at any adjournment thereof. The Annual Meeting of Stockholders will be held at
the Century Plaza Hotel and Tower, 2025 Avenue of the Stars, Los Angeles,
California.
The Board of Directors of the Company is making this solicitation. The
Company's principal executive offices are located at 1581 Cummins Drive, Suite
155, Modesto, California 95358, telephone (209) 544-9000. This Proxy
Statement, proxy card and Notice of Annual Meeting of Stockholders are being
mailed to Stockholders on or about March 31, 1998.
The shares represented by any proxy in the enclosed form, if such proxy is
properly executed and is received by the Company prior to or at the Annual
Meeting, will be voted in accordance with the specifications made thereon.
Proxies received by the Company on which no specification has been made by the
Stockholder will be voted in favor of the nominees to the Board of Directors
listed in this Proxy Statement and for the ratification of Price Waterhouse
LLP as the Company's independent public accountants for the 1998 fiscal year.
Any Stockholder may revoke his or her proxy at any time before it is voted
at the Annual Meeting by giving written notice of such revocation to the
Assistant Secretary of the Company at the address of the Company indicated
above. A Stockholder may give notice by filing a properly executed proxy
bearing a later date or by attending the Annual Meeting and voting in person.
Stockholders of record at the close of business on March 12, 1998, are
entitled to notice of, and to vote at, the Annual Meeting. On March 12, 1998,
the issued and outstanding voting securities of the Company consisted of
30,759,975 shares of Common Stock.
The Company will pay the cost of this proxy solicitation. Brokers and
nominees should forward soliciting materials to the beneficial owners of the
stock held of record by such persons. The Company will reimburse such persons
for their reasonable forwarding expenses. In addition to the use of the mails,
Directors, officers and regular employees of the Company may solicit proxies
by personal contact, telephone or other means of communication, but they will
not receive additional compensation for such efforts.
VOTING SECURITIES
The Stockholders have one vote per share on all matters on which they are
entitled to vote. The Stockholders will elect seven Directors, each of whom
will be elected for a one-year term.
The presence at the Annual Meeting, in person or by proxy, of the holders of
a majority of the outstanding shares of the Company's Common Stock will
constitute a quorum for the meeting. Assuming the presence of such a quorum,
the Directors will be elected by a majority of the votes cast by the holders
of the Common Stock. Richard D. Colburn, the Chairman of the Board of
Directors, is the beneficial owner of over 50% of the Common Stock, and thus
has the power to elect the entire board and pass any other matters presented
to the Stockholders.
<PAGE>
The affirmative vote of a majority of the outstanding shares of all shares
of Common Stock, present in person or by proxy at a properly held meeting, is
required to ratify the appointment of Price Waterhouse LLP as independent
public accountants for the Company for the 1998 fiscal year.
The inspector of elections appointed by the Company will count all votes
cast in person or by proxy at the Annual Meeting. Abstentions will be treated
as shares that are present and entitled to vote for purposes of determining
the presence of a quorum, but they will not be treated as votes cast for
purposes of determining the approval of any matter submitted for a vote of the
Stockholders. If a broker or nominee indicates on its proxy that it does not
have discretionary authority to vote on a particular matter as to certain
shares, those shares will be counted for general quorum purposes but will not
be counted in determining the number of shares necessary for approval.
BOARD OF DIRECTORS
ELECTION OF DIRECTORS
The seven nominees proposed for election as Directors at the Annual Meeting
are Richard D. Colburn, William F. Berry, John S. McKinney, James P. Miscoll,
Robert D. Paulson, Keith W. Renken and Jeremiah H. B. Kean. Each Director will
serve until the next annual meeting of Stockholders or until his or her
successor is elected and qualified, or until the earlier of a Director's
death, resignation or removal.
PROXIES IN THE ENCLOSED FORM WILL BE VOTED, UNLESS AUTHORITY IS WITHHELD,
FOR THE SEVEN NOMINEES FOR DIRECTOR NAMED BELOW. Each nominee has indicated
his willingness to serve if elected, but if any nominee should become unable
to serve, the proxies solicited hereby will be voted for the election of such
other person as the Company's Directors shall select. The information below
concerning each nominee has been furnished to the Company by such nominee.
NOMINEES FOR ELECTION AS DIRECTORS
The nominees for election to the Board of Directors to represent the
Stockholders are:
<TABLE>
<CAPTION>
FIRST
YEAR
NAME OF NOMINEE AGE* PRINCIPAL OCCUPATION ELECTED
--------------- ---- ------------------------------------------- -------
<C> <C> <S> <C>
Richard D. Colburn 86 Chairman of the Board of Directors 1975
William F. Berry 45 President and Chief Executive Officer 1996
John S. McKinney 43 Vice President-Finance, Chief Financial
Officer, and Assistant Secretary 1996
James P. Miscoll 63 Director of AdAstra Resource Corporation,
Chela Financial, Coast Federal Financial,
Inc., Motive Power Industries, Inc.,
Rykoff-Sexton, Inc., and Senior Advisor to
America International Group, Inc. 1997
Robert D. Paulson 52 Chief Executive Officer of Aerostar Capital
L.L.C., a private equity investment company 1997
Keith W. Renken 63 Professor at University of Southern
California School of Accounting 1997
Jeremiah H. B. Kean 61 Independent Business Consultant --
</TABLE>
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* As of March 31, 1998.
RICHARD D. COLBURN purchased the Company (under its previous name of Leasing
Enterprises, Inc.) on December 31, 1975, and has been Chairman of the Board of
Directors since that date. Mr. Colburn, a private investor, owned 100% of the
Company prior to the Company's initial public offering in February 1997 (the
"IPO").
2
<PAGE>
WILLIAM F. BERRY has been an employee of the Company and its predecessor
since 1966, became the Company's President and Chief Executive Officer in
January 1987 and became a Director in 1996. In his more than 30 years with the
Company and its predecessor (the "Predecessor"), Mr. Berry has held numerous
operational and managerial positions, including Profit Center Manager,
Division Manager and Regional Vice President.
JOHN S. MCKINNEY has been the Vice President-Finance and Chief Financial
Officer of the Company since 1990 and became a Director in 1996. Mr. McKinney
joined the Company in 1988 as Controller, and held that position until being
promoted to his current positions. Prior to joining the Company, Mr. McKinney
served as the controller of an electrical wholesale company, held various
financial positions with Iomega Corporation and spent several years as a
certified public accountant with Arthur Andersen LLP.
JAMES P. MISCOLL, who became a Director in 1997, was the Vice
Chairman/Executive Officer, Southern California, for Bank of America from 1985
through 1992. Mr. Miscoll was also a member of Bank of America's Managing
Committee from 1981 through 1992 and the Social Policy Committee from 1980
through 1992. Mr. Miscoll retired from Bank of America in July 1992 and is
currently a member of the board of directors of AdAstra Resource Corporation,
Chela Financial, Coast Federal Financial, Inc., Motive Power Industries, Inc.,
Rykoff-Sexton, Inc., and Senior Advisor to America International Group, Inc.
ROBERT D. PAULSON, who became a Director in 1997, is currently the Chief
Executive Officer of Aerostar Capital, L.L.C., a private equity investment
company focused on the aerospace industry. In 1997, Mr. Paulson retired as a
Director of McKinsey & Company, after 26 years of service.
KEITH W. RENKEN, who became a Director in 1997, was a Senior Partner of
Deloitte & Touche from 1983 to 1992. Mr. Renken currently serves as a
consultant and professor at the University of Southern California (Executive
in Residence). Mr. Renken is currently a member of the board of directors of
Coast Federal Financial, Inc., Pacific Golf Properties, Inc. and Aon Risk
Services, Inc. (Advisory Board).
JEREMIAH H. B. KEAN, who is being nominated to become a Director at the
Annual Meeting, currently serves as an independent consultant to various
businesses, advising clients on acquisition activities and various operating
matters. From 1975 to 1997, Mr. Kean served as an executive of Rolled Alloys
Management Services, Inc., a provider of management and consulting services.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
DIRECTORS LISTED ABOVE.
COMPENSATION OF DIRECTORS
In consideration for acting as a Director of the Company, each non-employee
Director is paid $25,000 for each year of service, as well as a per diem fee
of $1,000 for each Board of Directors, Compensation Committee and Audit
Committee meeting they attend. In addition, each chairman of a committee of
the Board of Directors is paid $5,000 for each year of service. The Chairman
of the Board of Directors receives $60,000 for each year of service. The
Company's non-employee Directors have also received, and will continue to
receive, options to purchase shares of the Common Stock in accordance with the
1997 Performance Award Plan (the "1997 Plan").
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held five meetings during 1997. All directors
attended at least 75% of the meetings held while they were on the Board except
for Mr. Colburn who attended two meetings.
3
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS
Audit Committee
The Company's Audit Committee, comprised of Messrs. Renken (Chairman),
Miscoll and Paulson, makes recommendations concerning the engagement of
independent public accountants, reviews with the independent public
accountants the plans and results of such audit engagement, approves
professional services provided by the independent public accountants, reviews
independence of the independent public accountants, considers the range of
audit and non-audit fees and reviews the adequacy of the Company's internal
accounting controls. The Audit Committee, which was established in April 1997,
met one time in 1997 and such meeting was attended by all members.
Compensation Committee
The Company's Compensation Committee, comprised of Messrs. Miscoll
(Chairman), Renken and Paulson, determines compensation of the Company's
executive officers and administers (the 1997 Plan). The current executive
officers' salaries were set for 1997 by the Board of Directors prior to the
establishment of the Compensation Committee, but the Compensation Committee,
subject to existing employment agreements, has set the 1998 salaries. See
"Compensation Committee Report." The Compensation Committee, which was
established in April 1997, met one time in 1997 and such meeting was attended
by all members.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's outstanding Common Stock as of March 15, 1998, by
(i) all those known by the Company to be beneficial owners of more than 5% of
the Company's outstanding Common Stock, (ii) each Director of the Company and
executive officer of the Company and (iii) all Directors and executive
officers of the Company as a group. The address of each person listed is in
care of the Company, 1581 Cummins Drive, Suite 155, Modesto, California 95358,
unless otherwise indicated.
<TABLE>
<CAPTION>
SHARES PERCENTAGE
BENEFICIALLY OF ALL
OWNED COMMON
------------ STOCK
NAME OF BENEFICIAL OWNER NUMBER(1) OUTSTANDING
------------------------ ------------ -----------
<S> <C> <C>
Richard D. Colburn................................. 20,748,975 67.5%
William F. Berry................................... 225,593 *
John S. McKinney................................... 115,746 *
Grace M. Crickette................................. 5,000 *
William F. Locklin................................. 16,000 *
Steven E. Nadelman................................. 16,000 *
James P. Miscoll(2)................................ 5,500 *
Robert D. Paulson(3)............................... 5,500 *
Keith W. Renken(4)................................. 2,000 *
All executive officers and Directors as a group (9
persons).......................................... 21,140,314 68.0%
</TABLE>
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(1) Gives effect to options exercisable within 60 days of March 15, 1998.
(2) The address for Mr. Miscoll is c/o Bank of America, 555 California Street,
11th Floor, San Francisco, California 94104.
(3) The address for Mr. Paulson is c/o Aerostar Capital, LLC, 590 South
Sandhill Crane Road, P.O. Box 1106, Wilson, Wyoming 83014-1106.
(4) The address for Mr. Renken is c/o Deloitte & Touche, 1000 Wilshire
Boulevard, Los Angeles, California 90017.
* Less than 1 percent.
4
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION*
In February 1997 the Company consummated its initial public offering of its
Common Stock (the "IPO"), and shortly thereafter the Board of Directors
established the Compensation Committee. The Compensation Committee currently
consists of Messrs. Miscoll (Chairman), Paulson, and Renken, all of whom are
independent, non-employee Directors. The Compensation Committee is responsible
for determining the compensation levels of the senior officers of the Company.
The Compensation Committee also administers the Company's 1997 Plan and
determines awards to be made under such plan to the Company's officers as well
as all other eligible individuals.
The Compensation Committee may consider other forms of compensation, both
short and long-term, in addition to those described below, designed to link
compensation with achieving financial targets.
Base Salary. Basic compensation paid to Messrs. Berry and McKinney during
1997 was established, subject to modification by the Compensation Committee,
pursuant to pre-existing multi-year employment contracts between the
executives and the Company. The Compensation Committee intends to modify the
base salaries of Messrs. Berry and McKinney, as well as set base salaries of
the Company's other executives, at levels designed to attract and retain
highly qualified individuals by offering a competitive salary.
Bonus Compensation. Bonuses for 1997 were approved by the Compensation
Committee, based upon the recommendation of the Chairman of the Board. The
bonuses were based on the Company's profit sharing program. See the "Profit
Sharing Plan" section of this Proxy Statement.
Equity Based Compensation. The Compensation Committee will provide long-term
incentives linked to an increase in stock value by awarding, in amounts, to
persons, and at times it believes appropriate, stock options at the fair
market value on the date of grant.
The Deductibility of Executive Compensation. Section 162(m) of the Internal
Revenue Code limits the deductibility to the Company of cash compensation in
excess of $1 million paid to the chief executive officer and the four highest
compensated executive officers during any taxable year, unless such
compensation meets certain requirements. The Company believes its bonus plan
complies with the rules under Section 162(m) for treatment as performance-
based compensation, allowing the Company to fully deduct compensation paid to
executives under its plans.
THE COMPENSATION COMMITTEE
James P. Miscoll Robert D. Paulson Keith W. Renken
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* This section of the Proxy Statement shall not be deemed to be incorporated
by reference by any general statement incorporating by reference this Proxy
Statement into any filings of the Company pursuant to the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended,
except to the extent the Company specifically incorporates the section by
reference therein, and shall not be deemed soliciting material or otherwise
deemed filed under either such Acts.
5
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION
The following table sets forth, for 1997, 1996 and 1995, a summary of
compensation awarded to, earned by or paid to the Chief Executive Officer of
the Company and each of the four other most highly compensated executive
officers (the "Named Executive Officers") of the Company:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL ------------
COMPENSATION OPTIONS TO
NAME AND PRINCIPAL ----------------- PURCHASE ALL OTHER
POSITION YEAR SALARY BONUS(1) COMMON STOCK COMPENSATION
------------------ ---- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
William F. Berry 1997 $169,232 $562,500 2,254,925 $13,610,201(2)
President and Chief 1996 145,000 400,000 -- 260,418(3)
Executive Officer 1995 120,000 330,000 -- --
John S. McKinney 1997 169,232 150,000 1,127,462 6,825,201(4)
Vice President - Finance
and 1996 104,167 120,000 -- 159,893(5)
Chief Financial Officer 1995 100,000 110,000 -- --
William F. Locklin 1997 129,900 150,000 80,000 *
Vice President and Region
Manager 1996 104,167 120,000 -- *
1995 100,000 110,000 -- *
Steven E. Nadelman 1997 129,900 150,000 80,000 *
Vice President and Region
Manager 1996 104,167 120,000 -- *
1995 100,000 110,000 -- *
Grace M. Crickette 1997 90,000 50,000 20,000 *
Vice President - Risk
Management 1996 72,500 35,000 -- *
1995 60,000 25,000 -- *
</TABLE>
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* Less than $50,000 or 10% of the total salary and bonus for said year.
(1) Shown in year earned, but paid in subsequent year.
(2) Includes (i) $13,333,333 one-time compensation payment made prior to the
Company's IPO in 1997; (ii) $266,668 of vested but not paid deferred
compensation earned pursuant to Mr. Berry's employment agreement, (iii)
$10,000 of director and executive committee fees paid for the first two
months of 1997, and (iv) $200 of 401(k) matching contributions by the
Company.
(3) Includes (i) $200,218 of vested but not paid deferred compensation earned
pursuant to Mr. Berry's employment, (ii) $60,000 of director and executive
committee fees, and (iii) $200 of 401(k) matching contributions by the
Company.
(4) Includes (i) $6,681,667 one-time compensation payment made prior to the
Company's IPO in 1997; (ii) $133,334 of vested but not paid deferred
compensation earned pursuant to Mr. McKinney's employment agreement, (iii)
$10,000 of director and executive committee fees paid for the first two
months of 1997, and (iv) $200 of 401(k) matching contributions by the
Company.
(5) Includes (i) $99,693 of vested but not paid deferred compensation earned
pursuant to Mr. McKinney's employment, (ii) $60,000 of director and
executive committee fees, and (iii) $200 of 401(k) matching contributions
by the Company.
6
<PAGE>
EMPLOYMENT AGREEMENTS AND OTHER COMPENSATION ARRANGEMENTS
EMPLOYMENT AGREEMENTS
Effective upon consummation of the IPO, the Company entered into seven-year
employment agreements with each of William F. Berry and John S. McKinney.
Messrs. Berry and McKinney have the option to extend their respective
agreements for up to three years. During the term of Mr. Berry's employment
agreement, his compensation will consist of a minimum annual base salary of
$150,000, participation in the Company's profit sharing program, deferred
compensation (as described below), and fringe benefits similar to those of
other senior executives of the Company. If Mr. Berry's employment is
terminated, he will also be subject to a two-year restriction on competition
with the Company. Under Mr. Berry's agreement, he will be entitled to receive
deferred compensation of approximately $2.7 million on the earliest of
December 31, 2006, death, disability, a Change in Control Event (as defined in
the 1997 Plan) or termination without cause. If Mr. Berry voluntarily
terminates his employment with the Company or if his employment is terminated
for cause, he will be entitled to an amount equal to the vested portion of
such deferred compensation, initially equal to 10% and increasing 10% per
year. Mr. McKinney's employment agreement is substantially identical to Mr.
Berry's except that Mr. McKinney's minimum annual base salary will be $105,000
and his deferred compensation will be approximately $1.3 million.
In February 1997, Messrs. Berry and McKinney were issued options to purchase
2,254,925 and 1,127,462 shares, respectively, of Common Stock under the 1997
Plan with an exercise price per share equal to the IPO price of $20.00. The
options will vest in ten equal installments over a 9.5 year period commencing
upon the first anniversary of the date in which the options were granted.
PROFIT SHARING PLAN
An integral part of the Company's operating philosophy is an innovative
profit sharing program applicable to all levels of employees. Profit sharing
is earned at each Profit Center based on each Profit Center's operating income
in excess of a pre-determined return on net assets (as set by the Board each
year) at such location. Profit sharing is accrued throughout the year and paid
in cash in March of the following year. The program does not limit the amount
of profit sharing compensation an employee may earn.
Profit sharing is paid to locations that are profitable, with discretionary
exceptions in some cases for start-up locations that generally are not
profitable until after their first year of operations. Unprofitable locations
generally must make up cumulative losses for the prior two years before
becoming eligible for profit sharing. In addition, a portion of the profit
sharing funds earned by all Profit Centers is distributed to the Company's
officers, region managers, employees of the credit offices, region offices,
service centers, and corporate headquarters staff, and to other personnel
deserving of special recognition, as recommended by the President and approved
by the Compensation Committee.
401(k) SAVINGS AND THRIFT PLAN
The Company has a defined contribution 401(k) plan that covers substantially
all full-time employees who have been employed by the Company for over one
year and have worked at least 1,000 hours. The 401(k) plan allows all
employees to defer amounts up to the statutory limit each year. The Company
has a discretionary matching program under which, in 1997, the Company matched
50% of employee contributions up to a maximum contribution by the Company of
$200 per employee.
1997 PERFORMANCE AWARD PLAN
The Company established the 1997 Plan to attract, reward and retain talented
and experienced officers, other key employees and certain other eligible
persons (collectively, "Eligible Persons") who may be granted awards from time
to time by the Company's Board of Directors or the Company's Compensation
Committee (the "Committee").
7
<PAGE>
Awards under the 1997 Plan may be in the form of nonqualified stock options,
incentive stock options, stock appreciation rights ("SARs"), restricted stock,
performance shares, stock bonuses, or cash bonuses based on performance.
Awards may be granted singly or in combination with other awards. Any cash
bonuses would be paid based upon the extent to which performance goals set by
the Committee are met during the performance period. Awards under the 1997
Plan generally are nontransferable by a holder (other than by will or the laws
of descent and distribution) and rights thereunder generally are exercisable,
during the holder's lifetime, only by the holder, subject to such exceptions
as may be authorized by the Committee.
The 1997 Plan is administered by the Committee. The Committee has the
authority to (i) designate recipients of awards, (ii) determine or modify the
provisions of awards, including vesting provisions, terms of exercise of an
award and expiration dates, (iii) approve the form of award agreements, and
(iv) construe and interpret the 1997 Plan. The Committee has the discretion to
accelerate and extend the exercisability or term and establish the events of
termination or reversion of outstanding awards. Upon a Change in Control Event
(as defined in the Plan, each option and SAR will become immediately
exercisable, restricted stock will immediately vest free of restrictions and
the number of shares, cash or other property covered by each performance share
award will be issued to the grantee of such award, unless the Committee
determines to the contrary.
The Company's Board of Directors has the authority to amend, suspend or
discontinue the 1997 Plan at any time, but no such action will affect any
outstanding award in any manner adverse to the participant without the consent
of the participant. The 1997 Plan may be amended by the Board of Directors
without stockholder approval unless such approval is required by the
applicable law. The 1997 Plan will remain in existence as to all outstanding
awards until such awards are exercised or terminated. The maximum term of
unvested or unexercised options, SARs and other rights to acquire Common Stock
under the 1997 Plan is 10 years after the initial date of award. No award can
be made after the tenth anniversary of the date on which the Board of
Directors approved the 1997 Plan.
The maximum number of shares of Common Stock that may be issued in respect
of awards under the 1997 Plan is 4,600,000 shares. The number of shares of
Common Stock subject to awards granted to any individual in any calendar year
is limited to 2,500,000. The number and kind of shares available for grant and
the shares subject to outstanding awards will be adjusted to reflect the
effect of a stock dividend, stock split, recapitalization, merger,
consolidation, reorganization, combination or exchange of shares,
extraordinary dividend or other distribution or other similar transaction. If
any award expires or is cancelled or terminated without having been exercised
or paid in full, or if any Common Stock subject to a restricted stock award
does not vest or is not delivered, the unpurchased, unvested or undelivered
shares will again be available for award under the 1997 Plan. No incentive
stock option may be granted at a price that is less than fair market value of
the Common Stock (less than 110% of fair market value of the Common Stock on
the date of grant for certain participants) on the date of grant.
Under the 1997 Plan, each Director who is not an employee (except for the
Principal Stockholder) (each a "Non-Employee Director") is granted stock
options to purchase 2,500 shares of Common Stock upon becoming a Director at
an exercise price equal to the market price of the Common Stock on that date.
In addition, at the close of trading on the day of the annual stockholders
meeting in each calendar year during the term of the 1997 Plan, each person
who is a Non-Employee Director as of such date will be granted stock options
to purchase 1,000 shares of Common Stock at an exercise price equal to the
market price of the Common Stock on that date. No Non-Employee Director may
receive options to purchase more than 10,000 shares of Common Stock under the
1997 Plan. All Non-Employee Director stock options have a 10-year term and
vest in equal annual installments over a five-year period commencing on the
first anniversary of the grant date. If a Non-Employee Director's services are
terminated for any reason other than the Director's death, disability or
retirement, any portion of stock options held by such Director that are
exercisable remain exercisable for six months after such termination of
services or until the expiration of the term of such option, whichever occurs
first. If the Non-Employee Director dies, becomes disabled or retires, stock
options held by such Director become exercisable immediately and remain
exercisable for two years after the date of such termination of services.
8
<PAGE>
The current federal income tax consequences of awards authorized under the
1997 Plan follow certain basic patterns. Generally, awards under the 1997 Plan
that are includable in income of the recipient at the time of award or
exercise (such as nonqualified stock options, SARs, restricted stock and
performance awards) are deductible by the Company, and awards that are not
required to be included in income of the recipient at such times (such as
incentive stock options) are not deductible by the Company.
OPTION GRANTS IN FISCAL YEAR 1997
The following table provides details regarding stock options granted to the
Named Executive Officers in 1997.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------
PERCENT OF
NUMBER OF TOTAL OPTIONS
SECURITIES GRANTED TO GRANT DATE
UNDERLYING EMPLOYEES EXERCISE PRESENT
OPTIONS IN LAST PRICE EXPIRATION VALUE
NAME GRANTED(1) FISCAL YEAR PER SHARE DATE ($)(2)
- ---- ---------- ------------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
William F. Berry..... 2,254,925 55.4% $20.00 2/19/07 $18,225,700
John S. McKinney..... 1,127,462 27.7% $20.00 2/19/07 $ 9,112,846
William F. Locklin... 80,000 2.0% $20.00 2/19/07 $ 465,588
Steven E. Nadelman... 80,000 2.0% $20.00 2/19/07 $ 465,588
Grace M. Crickette... 20,000 0.5% $20.00 2/19/07 $ 116,397
</TABLE>
- --------
(1) Other than Messrs. Berry and McKinney's options, which vest over a 9.5
year period in ten equal installments, the options listed vest in equal
20% annual installments over a period of five years commencing on the
first anniversary of the grant date.
(2) The estimate of the value was developed solely for the purposes of
comparative disclosure in accordance with the rules and regulations of the
SEC and is not intended to predict future prices of the Common Stock. The
estimate was developed using the Black-Scholes option pricing model
incorporating the following weighted-average assumptions: dividend yield
of 0%; expected volatility of 32%; risk-free interest rate ranging from
5.84% to 6.61%, and expected lives ranging from 3 to 5.25 years. The
actual value of the options will vary in accordance with the market price
of the Common Stock.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1997 AND FISCAL YEAR-END OPTION
VALUE
The following table reflects stock option exercises by the Named Executive
Officers during 1997. In addition, this table reflects the number of shares
underlying both exercisable and non-exercisable stock options as of December
31, 1997. Also reflected are the values for "in-the-money" options.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END(1) FY-END(2)
SHARES ------------- -------------
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ------------- -------------
<S> <C> <C> <C> <C>
William F. Berry............... 0 0 0/2,254,925 0/$7,892,238
John S. McKinney............... 0 0 0/1,127,462 0/$3,946,117
William F. Locklin............. 0 0 0/80,000 0/$ 280,000
Steven E. Nadelman............. 0 0 0/80,000 0/$ 280,000
Grace M. Crickette............. 0 0 0/20,000 0/$ 70,000
</TABLE>
- --------
(1) The stock options listed were granted on February 20, 1997 pursuant to the
Company's 1997 Plan. The options, except for the options of Messrs. Berry
and McKinney, become exercisable beginning on the first anniversary after
the grant, at a rate of 20% in each year for five years as long as the
optionee remains an employee of the Company. The options of Messrs. Berry
and McKinney become exercisable in 10 equal installments over a 9.5 year
period from the date of the grant, with the first portion becoming
exercisable on the one-year anniversary of the grant date. The maximum
term of each option granted is 10 years from the date of grant.
(2) This amount represents solely the difference in the market price ($23.50)
on the last trading day of the fiscal year, December 31, 1997, of those
unexercised options which had an exercise price below such market price
(i.e., "in-the-money options") and the respective exercise prices of the
options. No assumptions or representations regarding the value of such
options are made or intended.
9
<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURNS
The following is a comparison of the cumulative total stockholder return on
a $100 investment in the Common Stock with the cumulative total return of a
$100 investment in the S&P 500 and in the Russell 2000 Index for the period
from February 21, 1997 (the day the Common Stock commenced trading) through
December 31, 1997. The total return on the Common Stock is measured by
dividing the difference between the Common Stock price at the end and the
beginning of the measurement period by the Common Stock price at the beginning
of the measurement period.
The two comparison indexes are intended to provide a relevant comparison of
total annual return in the time period (through December 31, 1997) in which
the Company's Common Stock has been publicly traded.
U.S. RENTALS, INC.
COMPARISON OF CUMULATIVE TOTAL RETURN
FEBRUARY 21, 1997 TO DECEMBER 31, 1997*
<TABLE>
<CAPTION>
Measurement Period S&P RUSSELL
(Fiscal Year Covered) USR 500 INDEX 2000
- ------------------- ---------- --------- ----------
<S> <C> <C> <C>
Measurement Pt-
02/21/97 $100 $100 $100
03/31/97 $ 90.06 $ 94.43 $ 93.5
06/30/97 $125.78 $110.4 $108.19
09/30/97 $130.75 $118.15 $123.87
12/31/97 $116.77 $121.04 $119.28
</TABLE>
- --------
* This section of the Proxy Statement shall not be deemed to be incorporated
by reference by any general statement incorporating by reference this Proxy
Statement into any filings of the Company pursuant to the Securities Act of
1933 (the "Securities Act") or the Securities Exchange Act of 1934, as
amended, except to the extent the Company specifically incorporates the
section by reference therein, and shall not be deemed soliciting material
or otherwise deemed filed under either such Acts.
10
<PAGE>
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's officers and
Directors, and persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the SEC and NYSE. These persons are required by regulation of
the SEC to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no forms were
required for those persons, the Company believes that during the fiscal year
ended December 31, 1997, the Company's officers, Directors and greater than
10% beneficial owners complied with all applicable Section 16(a) filing
requirements, except for Mr. Renken who inadvertently failed to make a
required filing.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to the IPO, the Company had no Compensation Committee or other
committee of the Board of Directors performing similar functions. Decisions
concerning compensation of executive officers were made by the Company's Board
of Directors, except that Messrs. Berry and McKinney did not participate as
board members in decisions concerning their own compensation. No officers or
employees of the Company, other than William F. Berry and John S. McKinney,
participated in deliberations concerning such compensation matters. After the
IPO, the Company appointed a Compensation Committee consisting of Messrs.
Miscoll (Chairman), Paulson, and Renken.
CERTAIN TRANSACTIONS
REGISTRATION RIGHTS AGREEMENT
In February 1997, the Predecessor and the Company entered into a
Registration Rights Agreement under which the Predecessor (and certain
permitted transferees) is entitled to certain rights with respect to the
registration of its shares of Common Stock under the Securities Act. Under
this agreement, the Predecessor has the right to cause the Company to file a
registration statement on Form S-1 with respect to its Common Stock on two
separate occasions. Additionally, if the Company proposes to register any of
its securities under the Securities Act, either for its own account or for the
account of others, the Predecessor is entitled, subject to certain limitations
and exceptions, to notice of such registration and is entitled to include
shares of Common Stock therein. Finally, at any time after the Company becomes
eligible to file registration statements on Form S-3 under the Securities Act,
the Predecessor may require from time to time that the Company file such
registration statement with respect to its shares of Common Stock. All fees,
costs and expenses of any such registration (other than underwriting fees and
commissions) will be borne by the Company.
IPO RELATED AGREEMENTS
In February 1997, the Company and the Predecessor entered into an asset
contribution agreement (the "Asset Contribution Agreement") effective
immediately prior to the consummation of the IPO. Under this agreement, the
Predecessor transferred substantially all of its operating assets and
associated liabilities to the Company in exchange for 20,748,975 shares of
Common Stock of the Company, representing all of the outstanding capital stock
of the Company prior to the consummation of the IPO. The Predecessor retained
only non-operating assets and liabilities, including approximately $25.7
million of notes receivable from related parties and approximately $24.4
million of notes payable to related parties. For a period of five years from
the consummation of the IPO, the Predecessor has agreed to indemnify the
Company and any of its Directors, officers, employees and agents against any
losses incurred by any of them arising from any of the assets and liabilities
not transferred from the Predecessor in the Company's recapitalization done
immediately prior to its IPO. For the same period, or the expiration of the
applicable statute of limitations in the case of taxes and environmental
liabilities, the Company has agreed to indemnify the Predecessor and its
Directors, officers, employees and agents against any losses incurred by any
of them arising from the operating business and any of the assets and
liabilities transferred to the Company in the IPO Related Transactions. The
Predecessor will indemnify the Company against any liability for taxes
relating to any of the assets and liabilities not transferred as part of the
IPO Related Transactions.
11
<PAGE>
In January 1997 the Predecessor entered into a Cancellation of Deferred
Compensation Agreement with each of William F. Berry and John S. McKinney.
Pursuant to such agreements, the Predecessor paid Messrs. Berry and McKinney
approximately $13.3 million and $6.7 million, respectively, and the
Predecessor's prior deferred incentive compensation agreements were
terminated. The cost of the cancellation was expensed in the income statement
of the Company in the first quarter of 1997.
REVOLVING LINE OF CREDIT
On April 15, 1997, the Company entered into a revolving line of credit
agreement with Mr. Colburn. The note accrues interest at a rate equal to the
rate charged by Bank of America on loans to the Company with changes in the
rate on the first business day of each month. Interest is payable monthly. As
of December 31, 1997, the outstanding balance was approximately $17 million at
a rate of 5.9%.
REAL PROPERTY
The Company leases two pieces of property from each of Mr. Berry, the
Company's President and Chief Executive Officer, and a member of his immediate
family. The total annual lease payments for 1997 to Mr. Berry and to such
family member were $103,000 and $89,000, respectively. Further, Mr. Berry
purchased one of the aforementioned properties from the Predecessor in March
1996 for $640,000, a price the Predecessor believed to be the fair market
value. The Company leases two pieces of property from an immediate family
member of the Principal Stockholder. The total annual lease payments made to
such family member in 1997 were $63,000. The Company believes that these
leases are on commercially fair and reasonable terms.
MISCELLANEOUS
Prior to the consummation of the IPO, the Predecessor had a $2.5 million
revolving credit arrangement (which provided for interest at a bank reference
rate plus 0.5%) with USR Leasing Company ("USRL"), an entity owned by the
Principal Stockholder. The Predecessor leased non-rental vehicles from USRL
under operating leases and agreed with USRL's lender to guarantee up to $7.0
million of USRL's indebtedness. Lease charges from USRL amounted to
approximately $441,000 for 1997. Prior to the consummation of the IPO, the
Principal Stockholder contributed all of the stock of USRL to the Predecessor
and the Predecessor contributed such stock to the Company as part of the IPO
Related Transactions. USRL's accounts have been combined with those of the
Predecessor in the Company's Combined Financial Statements.
The Predecessor made various investments in unrelated businesses through
entities controlled by the Principal Stockholder. Such investments were not
transferred by the Predecessor to the Company.
The Company has implemented a policy requiring that any material transaction
with an affiliated party is subject to approval by a majority of the Directors
not interested in such transaction, who must determine that the terms of any
such transaction are no less favorable to the Company than those that could be
obtained from an unaffiliated third party.
12
<PAGE>
FINANCIAL AND OTHER INFORMATION
The Company's Annual Report for the fiscal year ended December 31, 1997,
including financial statements, is being sent to Stockholders of record as of
the close of business on March 12, 1998, together with this Proxy Statement.
The Company will furnish, without charge, a copy of its Annual Report on Form
10-K for the fiscal year ended December 31, 1997, as filed with the Commission
to any Stockholder who submits a written request to the Assistant Secretary at
the Company's offices at 1581 Cummins Drive, Suite 155, Modesto, California
95358.
INDEPENDENT PUBLIC ACCOUNTANTS
Upon recommendation of the Audit Committee, the Board of Directors of the
Company has appointed Price Waterhouse LLP as the Company's independent public
accountants for the 1998 fiscal year. Price Waterhouse LLP has served as the
Company's independent public accountants for the past 15 years. Services
provided to the Company and its subsidiaries by Price Waterhouse LLP in fiscal
1997 included the examination of the Company's financial statements for the
fiscal year ended December 31, 1997, limited reviews of quarterly reports,
services related to filings with the Securities and Exchange Commission and
consultations on various tax matters.
The Company expects representatives of Price Waterhouse LLP to be present at
the Annual Meeting and to be available to respond to appropriate questions
from Stockholders. The Price Waterhouse LLP representatives will be given an
opportunity to make a statement if they desire.
Ratification of appointment of Price Waterhouse LLP as the Company's
independent public accountants for fiscal 1998 will require the affirmative
vote of a majority in voting shares of the Common Stock represented in person
or by proxy at the Annual Meeting. If the Stockholders do not make such
ratification, the appointment will be reconsidered by the Audit Committee and
the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT
OF PRICE WATERHOUSE LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR FISCAL
1998.
STOCKHOLDER PROPOSALS
Proposals of Stockholders intended to be presented at the 1999 annual
meeting of Stockholders must be received by the Company at its principal
executive offices not later than December 1, 1998, for inclusion in the
Company's proxy statement and form of proxy relating to the meeting.
OTHER MATTERS
The Board of Directors knows of no matters to be presented for action by the
Stockholders at the Annual Meeting other than those described in this Proxy
Statement. Unless otherwise indicated, if any other matter is properly brought
before the meeting and may be properly acted upon, the persons named in the
accompanying form of proxy will be authorized by such proxy to vote the
proxies thereon in accordance with their best judgment.
For the Board of Directors
/s/ John McKinney
March 31, 1998 John McKinney
Chief Financial Officer,
Vice President and
Assistant Secretary
13
<PAGE>
U.S. RENTALS, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
I/we hereby appoint the President and Chief Executive Officer, William F.
Berry, and the Chief Financial Officer, John S. McKinney, as proxies (each with
the power to act alone and with the power of substitution and revocation) to
represent me/us and to vote, as designated on the reverse, all common shares of
U.S. Rentals, Inc. held of record by me/us on March 12, 1998, at the Annual
Meeting of Stockholders on Friday, May 7, 1998, in the Century Plaza Hotel,
located at 2025 Avenue of the Stars, Los Angeles, California at 9:00 a.m. Los
Angeles Time, and at any adjournment thereof.
(CONTINUED ON OTHER SIDE)
<PAGE>
Please Detach and Mail in the Envelope Provided
[X] Please mark your |
votes as indicated |___
in this example.
WITHHOLD
FOR AUTHORITY
1. Election of [_] [_]
Directors
For, except vote withheld for the following nominees:
_____________________________________________________
Nominees: Richard D. Colburn
William F. Berry
John S. McKinney
James P. Miscoll
Robert D. Paulson
Keith W. Renken
Jeremiah H.B. Kean
FOR AGAINST ABSTAIN
2. Proposal to ratify the Appointment of [_] [_] [_]
Price Waterhouse LLP as the Independent
Auditors for the Company.
3. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the meeting.
This Proxy, when properly executed, will be voted in the manner
directed on the Proxy by the undersigned stockholder. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF EACH OF THE
NOMINEES TO THE BOARD LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED RETURN ENVELOPE.
___________________________ ______________________________ Dated: ______,1998
(SIGNATURE) (SIGNATURE IF HELD JOINTLY)
NOTED: Please sign exactly as your name appears on this card. When shares are
held by joint tenants, both should sign. If signing as attorney,
guardian, executor, administrator or trustee, please give full title as
such. If a corporation, please sign in the corporate name by the
president or other authorized office. If a partnership, please sign in
the partnership name by an authorized person.
