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U.S. 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 ss.240.14a-12
DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.
(Name of Registrant as Specified in its Charter)
N/A
(Name of Persons(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:____________________________________________________________
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<PAGE>
(COLOR LOGO OF DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.)
March 29, 2000
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
the Company which will be held at 11:00 a.m., C.D.T., Thursday, May 25, 2000, at
the Williams Presentation Center Theatre, 2 East First Street, Tulsa, Oklahoma
74172.
The formal Notice of Annual Meeting of Stockholders and Proxy Statement
accompanying this letter provide detailed information concerning matters to be
considered and acted upon at the meeting.
Whether or not you plan to attend the Annual Meeting, please execute and
return the enclosed proxy at your earliest convenience. Your shares will then be
represented at the meeting, and the Company will avoid the expense of further
solicitation to assure a quorum and a representative vote. If you later attend
the meeting and wish to vote in person, you may withdraw your proxy and so vote
at that time.
Sincerely,
/S/ JOSEPH E. CAPPY
-------------------
Joseph E. Cappy
Chairman of the Board, Chief Executive Officer
and President
<PAGE>
(BLACK AND WHITE LOGO OF DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.)
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------------------------------
March 29, 2000
TO THE STOCKHOLDERS OF DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.:
The Annual Meeting of Stockholders of Dollar Thrifty Automotive Group, Inc.
will be held at 11:00 a.m., C.D.T., Thursday, May 25, 2000, at the Williams
Presentation Center Theatre, 2 East First Street, Tulsa, Oklahoma 74172, for the
following purposes:
1. To elect nine (9) directors to serve until the next annual meeting of
stockholders or until their successors shall have been elected and
shall qualify;
2. To ratify and approve the appointment of Deloitte & Touche LLP, as
independent auditors of the Company for the 2000 year;
3. To approve the addition of 2,400,000 shares to the Long-Term Incentive
Plan of Dollar Thrifty Automotive Group, Inc.; and
4. To conduct any other business properly brought before the meeting.
Only stockholders of record at the close of business on March 27, 2000 are
entitled to notice of and to vote at the Annual Meeting of Stockholders.
A list of stockholders entitled to vote at the meeting will be available
for examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, at least ten days before the meeting in the
Office of the Director of Investor Relations, Dollar Thrifty Automotive Group,
Inc., 5330 East 31st Street, Tulsa, Oklahoma 74135.
Your vote is important. Please vote now by proxy even if you plan to attend
the meeting. You may vote by marking, signing and dating your proxy card on the
reverse side and returning it promptly in the accompanying envelope. The return
of the enclosed proxy will not affect your right to vote if you attend the
meeting in person.
By Order of the Board of Directors
/S/ STEPHEN W. RAY
------------------
Stephen W. Ray
Secretary
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Your vote is important. Please vote by marking, signing and dating your proxy
card on the reverse side and returning it promptly
in the accompanying envelope.
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<PAGE>
DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.
5330 East 31st Street
Tulsa, Oklahoma 74135
PROXY STATEMENT
INFORMATION ABOUT THE MEETING
This Proxy Statement is solicited by the Dollar Thrifty Automotive Group,
Inc., a Delaware corporation ("DTG"), Board of Directors and is furnished in
connection with the Annual Meeting of Stockholders to be held at 11:00 a.m.,
C.D.T., Thursday, May 25, 2000, at the Williams Presentation Center Theatre, 2
East First Street, Tulsa, Oklahoma 74172. DTG began mailing this Proxy Statement
and the accompanying proxy card on or about March 29, 2000.
As used in this Proxy Statement, "Dollar" means Dollar Rent A Car Systems,
Inc., an Oklahoma corporation, and its subsidiaries, "Thrifty" means Thrifty,
Inc., an Oklahoma corporation, and its subsidiaries, and "Company" means
collectively, DTG, Dollar and Thrifty.
Quorum
The record date for the meeting is March 27, 2000. DTG has outstanding one
class of voting securities, common stock, $0.01 par value ("Common Stock" or
"Shares"), of which 24,162,365 Shares were outstanding as of the close of
business on the record date. A majority of those Shares (a quorum) must be
present, in person or by proxy, to conduct business at the meeting. Abstentions
and broker non-votes are counted as present in determining whether there is a
quorum.
Vote Required
Each stockholder is entitled to one vote for each Share held of record at
the close of business on the record date. Directors are elected by a plurality
vote, which means that if there are more nominees than positions to be filled,
the nominees for whom the most affirmative votes are cast will be elected. Each
other matter voted on at the meeting will be approved if a majority of the votes
cast are in favor of such matter, except that Proposal No. 3 - Long-Term
Incentive Plan Share Increase requires for approval the vote of a majority of
the outstanding Shares in favor of such proposal. Abstentions and broker
non-votes are not votes cast and are not counted in determining whether a
nominee is elected or a matter approved. Inspectors of election appointed by the
Board will tabulate the votes cast.
Proxy Voting
The proxy card represents the Shares held of record by each stockholder.
Each stockholder can authorize the individuals named in the proxy card to vote
Shares by signing, dating and mailing the proxy card. Each stockholder's Shares
will then be voted at the meeting as the stockholder specifies or, if the
stockholder does not specify a choice, as recommended by the Board. Each
stockholder may revoke the proxy by voting in person at the meeting, or by
submitting a written revocation or a later dated proxy that is received by DTG
before the meeting. If you hold your Shares through a brokerage firm or other
nominee, you may elect to vote your Shares by a toll-free phone number or over
the Internet by following the instructions on the proxy materials forwarded to
you.
1
<PAGE>
Proxy Solicitation
Execution and return of the enclosed proxy is being solicited by and on
behalf of the Board of Directors of DTG for the purposes set forth in the Notice
of Annual Meeting. Solicitation other than by mail may be made personally, by
telephone or otherwise, by employee officers and employees of the Company who
will not be additionally compensated for such services. Brokerage firms, banks,
fiduciaries, voting trustees or other nominees will be requested to forward the
soliciting material to each beneficial owner of Shares held of record by them.
Georgeson Shareholder Communications Inc. has been retained to assist in the
solicitation of proxies at a cost of approximately $6,000. The total cost of
soliciting proxies will be borne by DTG.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
DTG has nominated for re-election to the Board seven candidates who
currently serve on DTG's Board, namely, Thomas P. Capo, Joseph E. Cappy, Edward
J. Hogan, The Honorable Edward C. Lumley, John C. Pope, John P. Tierney and
Edward L. Wax. Upon recommendation of the Governance Committee (hereinafter
defined), DTG has also nominated for election to the Board two new candidates,
Molly Shi Boren and Maryann N. Keller. In order to further increase the
independence of the DTG Board and consistent with corporate governance trends,
incumbent inside directors, Donald M. Himelfarb and Gary L. Paxton, the
Presidents of Thrifty, Inc. and Dollar Rent A Car Systems, Inc., respectively,
will not stand for re-election at the Annual Meeting of Stockholders.
If elected, each candidate will serve for a one-year term ending at the
2001 Annual Meeting of Stockholders or when their successors are duly elected
and qualified. For more information concerning these director nominees, see
"Biographical Information Regarding Director Nominees and Named Executive
Officers - Director Nominees" below. Unless otherwise designated, the enclosed
proxy card will be voted FOR the election of the foregoing nominees as
directors. The Board does not contemplate that any of these nominees will be
unable to stand for election, but should any nominee unexpectedly become
unavailable for election, the stockholder's proxy will be voted for a new
nominee designated by the Board unless the Board reduces the number of directors
to be elected.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION OF THE
NOMINEES DESCRIBED HEREIN AS DIRECTORS OF DTG.
PROPOSAL NO. 2 - APPOINTMENT OF INDEPENDENT AUDITORS
Upon recommendation of the Audit Committee (hereinafter defined), the Board
has appointed, subject to stockholder approval, the firm of Deloitte & Touche
LLP, independent public accountants, as the independent auditors of DTG for the
calendar year 2000. This firm has served DTG in this capacity since its
inception in November 1997.
A representative of Deloitte & Touche LLP will be present at the Annual
Meeting of Stockholders and will be available to respond to appropriate
questions. Although the audit firm has indicated that no statement will be made,
an opportunity for a statement will be provided.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF
DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS FOR 2000.
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PROPOSAL NO. 3 - LONG-TERM INCENTIVE PLAN SHARE INCREASE
Proposed Share Increase
Upon recommendation of the Human Resources and Compensation Committee (the
"HR&C Committee"), the Board has approved and recommends to the stockholders
that they approve a proposal to amend DTG's Long-Term Incentive Plan (the
"LTIP") to increase the maximum number of Shares of Common Stock available for
issuance under the LTIP by 2,400,000 Shares (the "Share Increase"). The
description of the Share Increase is qualified in its entirety by the terms of
the Second Amendment to Long-Term Incentive Plan, which is attached hereto as
Exhibit A (the "Amendment").
Prohibition on Repricing of Stock Options
Until effectiveness of the Amendment, the HR&C Committee is not prohibited
under the LTIP from reducing the exercise price of any stock option granted
under the LTIP. Upon obtaining the requisite stockholder approval, the Amendment
will prohibit any such repricing of stock options without approval by a majority
vote of the outstanding Shares.
Reason for Share Increase
Under the LTIP, as presently in effect, ten percent (10%) of the total
number of Shares of Common Stock outstanding (as of March 23, 2000, 2,416,237
Shares) are authorized for issuance in connection with the grant of awards under
the LTIP. As of March 23, 2000, (i) NQSOs (hereinafter defined) which have not
been forfeited for 2,062,922 Shares have been granted under the LTIP to
approximately 225 employees, and (ii) 129,703 Performance Awards (hereinafter
defined) in the form of Common Stock ("Performance Shares") have been approved
for granting to Company officers and certain key employees. Of the Shares
authorized for issuance pursuant to the LTIP, only 223,612 Shares remain
available to grant. On March 23, 2000, the closing sales price of the Common
Stock on the New York Stock Exchange was $16.50 per Share.
The Board has determined that the Share Increase is in the best interests
of DTG and its stockholders. The Board believes that grants of awards under the
LTIP are necessary in order to attract and retain key employees and non-
employee directors and to provide incentives to existing and future officers,
employees and non-employee directors. In addition, the Board believes that the
availability of Shares for future grants under the LTIP is important to further
align the interests of officers, employee and non-employee directors with the
interests of stockholders.
If the Share Increase is not approved by the stockholders, (i) the
Amendment (including all other provisions not subject to approval by
stockholders) shall not become effective, and (ii) the LTIP shall remain in full
force and effect without giving any effect to the Amendment.
For more information regarding the LTIP, see "Additional Information for
Share Increase Proposal" below.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE SHARE INCREASE
DESCRIBED HEREIN AND IN THE AMENDMENT ATTACHED HERETO AS EXHIBIT A.
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<PAGE>
BIOGRAPHICAL INFORMATION REGARDING
DIRECTOR NOMINEES AND NAMED EXECUTIVE OFFICERS
Director Nominees
Below is information concerning each of the nominees for election to the
Board, including their name, age, principal occupation or employment during at
least the past five years and the period during which such person has served as
a director of DTG.
Molly Shi Boren, age 56, is a new nominee to the DTG Board. During the last
five years, she has been active in Oklahoma and national civic affairs, serving
on the boards of the Oklahoma Foundation for Excellence, the Nature Conservancy
and the Oklahoma Arts Institute. Ms. Boren is a lawyer and former judge, and
currently serves as a director of Central and South West Corporation.
Thomas P. Capo, age 49, has served as a director since November 1997. Mr.
Capo has been Senior Vice President and Treasurer of DaimlerChrysler Corporation
("DaimlerChrysler") since November 1998. He was first elected Vice President of
DaimlerChrysler in May 1993. Mr. Capo was elected Treasurer of DaimlerChrysler
in November 1991. He is also a director of Chrysler Financial Corporation,
DaimlerChrysler Canada Inc., DaimlerChrysler North America Holdings and
DaimlerChrysler Mexico Holdings.
Joseph E. Cappy, age 65, has served as a director since November 1997. Mr.
Cappy served as a Vice President of Chrysler Corporation, now DaimlerChrysler,
since August 1987, with responsibility for rental car operations from June 1993
to December 1997, international operations from May 1990 to June 1993, brand
development from November 1989 to May 1990, and DaimlerChrysler's Jeep/Eagle
Division from August 1987 to November 1989. Mr. Cappy was previously President,
Chief Executive Officer and a director of American Motors Corporation ("AMC"),
and General Marketing Manager of Ford Motor Company's Lincoln-Mercury Division.
Edward J. Hogan, age 72, has served as a director since December 1997. Mr.
Hogan has been Chairman and Chief Executive Officer of Pleasant Travel Service,
a tour operator specializing in Hawaiian vacations, since April 1959. Mr. Hogan
has also served as a director of Castle & Cooke, which has large holdings of
real estate in Hawaii, since October 1993. Mr. Hogan has been a member of the
Board of Trustees of Loyola Marymount University since May 1990 and is a member
of the National Advisory Board of the National Academy of Travel and Tourism,
the United States Tour Operators, the American Society of Travel Agents and the
Hawaii Visitors Bureau.
Maryann N. Keller, age 56, is a new nominee to the DTG Board. Ms. Keller
has been President of the Automotive Services unit of priceline.com since July
1999. She joined priceline.com from Furman Selz (now part of ING Barings), where
she served as a managing director of the firm since 1986. Prior to Furman Selz,
she was portfolio manager with Vilas-Fischer Associates from 1983 to 1986, and
served as automotive analyst with Kidder Peabody & Co. Inc. and Paine Webber
from 1972 to 1983. Ms. Keller has also served as Chairman of the Society of
Automotive Analysts from 1994 to 1999.
The Honorable Edward C. Lumley, age 60, has served as a director since
December 1997. Mr. Lumley has been Vice Chairman of the investment banking firm
BMO Nesbitt Burns since August 1994. From January 1992 to August 1994, Mr.
Lumley served as Vice Chairman of the investment banking firm Burns Fry,
Limited. Mr. Lumley previously served as a Member of the Canadian Parliament and
as Minister of International Trade, Industry, Trade and Commerce,
Communications, and Science and Technology. Mr. Lumley is also a director of Air
Canada, Canadian National, Magna International, DY4 Systems, AIT Corporation,
Dynasty Components and C-MAC.
John C. Pope, age 50, has served as a director since December 1997. Mr.
Pope has been Chairman of PFI Group, an investment firm, since July 1994. Mr.
Pope was the Chairman of the Board of MotivePower Industries, Inc. from January
1996 to November 1999 and a director from May 1995 to November 1999. Mr. Pope
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<PAGE>
has served in various executive positions with UAL Corporation ("UAL") and
United Airlines, Inc. ("United") since January 1988, including director,
President and Chief Operating Officer of UAL and United from May 1992 to July
1994, Executive Vice President, Chief Financial Officer and Treasurer of UAL and
Chief Financial Officer of United from November 1990 to April 1992 and Executive
Vice President, Marketing and Planning of United from May 1989 to October 1990.
Prior thereto, Mr. Pope served as Chief Financial Officer of AMR Corporation and
American Airlines, Inc. Mr. Pope is also a director of Air Canada, Federal Mogul
Corporation, Per-Se Technologies, Inc., Wallace Computer Services, Inc. and
Waste Management, Inc.
John P. Tierney, age 68, has served as a director since December 1997. Mr.
Tierney was the Chairman and Chief Executive Officer of Chrysler Financial
Corporation, the financial services subsidiary of DaimlerChrysler, from August
1987 until his retirement in December 1994. Prior to joining DaimlerChrysler in
1987, he was the Chief Financial Officer of AMC. Mr. Tierney is also a director
of Charter One Financial, Inc.
Edward L. Wax, age 63, has served as a director since December 1997. Mr.
Wax has been Chairman Emeritus of Saatchi & Saatchi Advertising Worldwide, an
advertising firm with substantial experience in the travel industry, since
January 1998 and was Chairman from May 1997 to January 1998. Mr. Wax was Chief
Executive Officer of Saatchi & Saatchi Advertising Worldwide from February 1992
to May 1997. From June 1989 to February 1992, Mr. Wax served as Chairman and
Chief Executive Officer of Saatchi & Saatchi North America. Mr. Wax is also a
director of Golf Trust of America, Inc.
Named Executive Officers
The following sets forth information concerning the executive officers of
the Company identified under "Executive Compensation".
Peter G. Guptill, age 57, has been the Executive Vice President of
Dollar-Florida Region since January 1994. Prior to joining Dollar, Mr. Guptill
was Executive Vice President, General Operations Manager of Southeast Toyota
Distributions, Inc. from 1992 to 1993. Previously, he had served as Group Vice
President, Sales and Marketing at AMC. Mr. Guptill has also held various senior
executive positions within the automotive wholesale and retail field, as well as
serving as a consultant in the same sector.
Steven B. Hildebrand, age 45, has been the Vice President and Chief
Financial Officer of DTG since November 1997. Prior to his election as a DTG
officer, Mr. Hildebrand was Executive Vice President and Chief Financial Officer
of Thrifty Rent-A-Car System, Inc. since August 1995. He has served in various
senior management positions with Thrifty Rent-A-Car System, Inc. and Pentastar
Transportation Group, Inc., the predecessor of DTG ("Pentastar") since 1987,
including Vice President of Finance and Treasurer for Pentastar, a director of
Thrifty Rent-A- Car System, Inc. and a director of Thrifty Canada, Ltd. ("TCL").
Donald M. Himelfarb, age 54, has been an Executive Vice President of DTG
since November 1997 and has also served as a director of DTG since November
1997. Mr. Himelfarb has been President of Thrifty Rent-A-Car System, Inc. since
July 1992 and Thrifty since December 1998. Mr. Himelfarb has served as a
director of TCL since August 1990, and served as President of TCL from August
1990 to June 1992. He previously served as President of Car Rental and Leasing
for Marks Rentals, a holding company that owned a Thrifty Car Rental franchise
and other properties. Mr. Himelfarb is a director and President of the American
Car Rental Association.
Gary L. Paxton, age 53, has been an Executive Vice President of DTG since
November 1997 and has also served as a director of DTG since November 1997. Mr.
Paxton has been President of Dollar since December 1990. He has served in
several senior management positions with Dollar since 1972, including Senior
Vice President of Operations and Properties and Vice President of Properties and
Facilities. Mr. Paxton is also a director of the American Car Rental
Association.
5
<PAGE>
ADDITIONAL INFORMATION FOR SHARE INCREASE PROPOSAL
General Information Regarding Long-Term Incentive Plan
Qualification
The following description of the LTIP, giving effect to the Share Increase,
is a summary and is qualified in its entirety by reference to (i) the LTIP, a
copy of which was previously filed with the Securities and Exchange Commission
(the "SEC") as Exhibit 10.10 to DTG's Registration Statement on Form S-1, as
amended, Registration No. 333-39661, which became effective December 16, 1997,
and (ii) the Amendment to Long-Term Incentive Plan dated as of September 29,
1998, a copy of which was previously filed with the SEC on May 28, 1999 as
Exhibit 10.13 to DTG's Registration Statement on Form S-8, both of which are
incorporated herein by this reference.
Adoption of LTIP
The LTIP was duly adopted on December 11, 1997. The LTIP was subsequently
amended on September 29, 1998 to amend certain definitions.
Purpose of LTIP
The LTIP is intended to provide equity-based incentives to officers and
other key employees of the Company that serve to align their interests with
those of stockholders.
Duration of LTIP
Pursuant to the LTIP, no award may be granted under the LTIP on or after
December 11, 2007. However, awards previously granted may be exercised in
accordance with their terms.
Amendment and Termination of LTIP
The LTIP may, at any time, be modified, amended, suspended or terminated.
Pursuant to the LTIP, any such modification, amendment, suspension or
termination shall not adversely affect any awards previously granted without the
consent of the holder of the award. Further, no amendment (unless pursuant to
the terms of a properly approved merger, consolidation, reclassification, stock
split, combination of Shares or separation) may be made that would (i) increase
the number of Shares of Common Stock with respect to which ISOs (hereinafter
defined) may be granted, or (ii) change the class of employees eligible to
receive ISOs under the LTIP, without the approval of the holders of a majority
of the outstanding voting Shares of Common Stock of DTG. Also, the addition of
Shares pursuant to the Share Increase requires approval of a majority of the
Shares under the New York Stock Exchange shareholder approval policy.
Not Subject to ERISA or Qualified Under the Code
The LTIP is not subject to the provisions of the Employee Retirement Income
Security Act of 1974, as amended. The LTIP is not, nor is it intended to be
"qualified" under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code").
Administration of LTIP
The LTIP may be administered by the Board or any committee of the Board
comprised of two (2) or more Outside Directors, as such term is defined in
Section 162(m) of the Code, that may be designated by the Board to administer
the LTIP. Currently, the LTIP is administered by the HR&C Committee which is
comprised solely of Outside Directors. In accordance with the Bylaws of DTG, the
Board annually selects the members and chairman of the HR&C Committee, which
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reports its actions to the Board. The HR&C Committee has discretion and power
to: (i) select employees who will participate in the LTIP and make awards to
such employees, (ii) determine the time that the awards are granted and any
terms and conditions with respect to such awards, and (iii) resolve all
questions relating to the administration of the LTIP and applicable law. In
addition, the HR&C Committee may establish such rules and guidelines relating to
the LTIP as it may deem appropriate. The HR&C Committee may also engage legal
counsel, consultants and agents as it may deem desirable for the administration
of the LTIP.
Eligibility
The individuals who are eligible to participate in the LTIP are (the
"Eligible Participants"): (i) directors of DTG, (ii) officers of the Company,
(iii) management of the Company, and (iv) such other full-time employees of the
Company (including directors of DTG who are otherwise employed on a full-time
basis by the Company) as the HR&C Committee may determine from time to time.
Share Addition Provisions
The LTIP provides that if the number of Shares of Common Stock outstanding
increase from time to time, the number of Shares of Common Stock available for
issuance under the LTIP would also automatically increase by ten percent (10%)
of the amount of such newly issued Shares. For example, if the outstanding
Shares of Common Stock were increased by 100 Shares, then the amount of Shares
of Common Stock added to the LTIP would increase by ten Shares (10% of 100). DTG
is not proposing any amendment to increase the Share addition provisions.
Awards Under LTIP
The LTIP is an incentive based plan whereby certain awards in Shares (or by
reference to Shares) of Common Stock of DTG may be granted to Eligible
Participants. The LTIP permits the granting of any or all of the following type
of awards: (i) stock options, including incentive stock options ("ISOs") and
non-qualified stock options ("NQSOs"), (ii) stock appreciation rights ("SARs"),
(iii) restricted stock awards ("Restricted Stock"), (iv) performance awards
("Performance Awards"), and (v) other forms of stock-based incentive awards. To
date, only NQSOs and Performance Awards have been granted under the LTIP, and no
ISOs, SARs, Restricted Stock or other forms of stock-based incentive awards have
been granted.
Non-Qualified Stock Options
The HR&C Committee is authorized to grant to Eligible Participants NQSOs,
which entitle Eligible Participants to purchase a specified number of Shares of
Common Stock of DTG during such time as the HR&C Committee may determine, not to
exceed ten (10) years, at a price determined by the HR&C Committee that is not
less than the Fair Market Value (hereinafter defined) of the Shares of Common
Stock on the date the option is granted.
The purchase price for Shares of Common Stock subject to the NQSO may be
paid in cash. At the HR&C Committee's discretion, the purchase price may also be
paid by the tender of Shares of Common Stock or through a combination of Shares
of Common Stock and cash or through such other means as the HR&C Committee
determines are consistent with the LTIP's purpose and applicable law. No
fractional Shares of Common Stock will be issued or accepted. In addition, to
the extent permitted by law, as provided in the LTIP, the HR&C Committee may (i)
accept a promissory note from the person exercising the NQSO, and (ii) permit a
person exercising the NQSO to simultaneously exercise the NQSO and sell the
Shares of Common Stock acquired and use the sale proceeds as payment of the
exercise price of the NQSO.
Grants for NQSOs under the LTIP were generally made in January and
September 1998 and September 1999, with some grants made at other times based on
hire or promotion dates (shown under "Various Dates" in the table below). The
following table provides the number of NQSOs as of March 23, 2000 granted to (i)
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each of the named executive officers, (ii) all current executive officers as a
group, (iii) all current directors who are not executive officers as a group,
and (iv) all current employees, including all current officers who are not
executive officers, as a group:
<TABLE>
<CAPTION>
Number of
Name and Principal Position Date of Grant Exercise Price ($) Options Granted (#)
- --------------------------- ------------- ------------------ -------------------
<S> <C> <C> <C>
Joseph E. Cappy, January 1998 20.50 139,800
Chairman of the Board, Chief Executive September 1998 10.50 54,700
Officer and President September 1999 19.1875 50,700
Gary L. Paxton, Executive Vice President January 1998 20.50 75,800
and President - Dollar September 1998 10.50 30,000
September 1999 19.1875 28,000
Donald M. Himelfarb, Executive Vice January 1998 20.50 69,600
President and President - Thrifty September 1998 10.50 27,200
September 1999 19.1875 25,200
Steven B. Hildebrand, Vice President and January 1998 20.50 59,300
Chief Financial Officer September 1998 10.50 23,200
September 1999 19.1875 21,500
Peter G. Guptill, Executive Vice January 1998 20.50 43,100
President - Dollar-Florida Region September 1998 10.50 16,000
September 1999 19.1875 15,300
All current executive officers as a group January 1998 20.50 387,600
September 1998 10.50 151,100
September 1999 19.1875 140,700
All current directors who are not January 1998 20.50 15,000
executive officers as a group May 1999 21.1875 25,000
All current employees, including all January 1998 20.50 687,700
current officers who are not executive September 1998 10.50 287,500
officers, as a group September 1999 19.1875 307,700
Various Dates 16.4957 36,120
</TABLE>
The NQSOs granted in January 1998 became exercisable in three equal annual
installments commencing on December 31, 1998 and expire on December 31, 2007.
The NQSOs granted in September 1998 became exercisable in three equal annual
installments commencing on September 30, 1999 and expire on September 23, 2008.
The NQSOs granted in May 1999 become exercisable on May 31, 2000 and expire on
May 26, 2009. The NQSOs granted in September 1999 become exercisable in three
equal annual installments commencing on September 30, 2000 and expire on
September 22, 2009. Under certain circumstances, including a Change in Control
(as defined in the LTIP) of DTG, the NQSOs would be exercisable immediately.
The number of NQSOs that will be granted under the LTIP in the future is
not known at this time.
Performance Awards
Performance Awards are payable in cash, Common Stock, other securities or
other awards. Performance Awards confer on the holder the right to receive
payments upon the achievement of such performance goals during such performance
periods as established by the HR&C Committee. The performance goals that may be
selected by the HR&C Committee are: earnings before interest and taxes, net
income, gross sales, earnings per share, return on equity, return on investment,
economic value added, performance against business plan and stock price
appreciation.
8
<PAGE>
In January 1998, 142,000 target Performance Awards in the form of Common
Stock were approved for granting to officers and certain key employees of the
Company. Such awards established a target number of Shares that may be earned in
three equal annual installments commencing on the first anniversary of the grant
date. The number of Performance Awards ultimately earned by a grantee would be
expected to range from zero to 200% of the grantee's target award, depending on
the level of corporate performance each year against established profit and
stock price appreciation targets. Any Performance Award installments not earned
in relation to the annual fiscal period are forfeited. Performance Awards earned
would be delivered to the grantee on January 31, 2001, provided the grantee is
then employed by the Company. Current reservations relating to the initial grant
of Performance Awards for 1998 and 1999 total 34,527 and 95,176 Shares of Common
Stock, respectively.
Under certain circumstances, including a Change in Control of DTG, the
Performance Awards in the form of Common Stock earned would be delivered
immediately.
The number of Performance Awards to be granted in the future is not known
at this time.
As used herein, the term "Fair Market Value" shall be based upon either (i)
if the Common Stock is listed on a national securities exchange or quoted in an
interdealer quotation system, the last sales price or, if unavailable, the
average of the closing bid and asked prices per Share of the Common Stock on
such date (or, if there was no trading or quotation in the Common Stock on such
date, on the next preceding date on which there was trading or quotation) as
provided by one of such organizations, or (ii) if the Common Stock is not listed
on a national securities exchange or quoted in an interdealer quotation system,
the price will be equal to the Company's fair market value, as determined by the
HR&C Committee in good faith based upon the best available facts and
circumstances at the time.
Restrictions on Awards Under LTIP
Transferability
Except for a NQSO, no award may be sold, pledged, assigned, transferred or
encumbered by the Eligible Participant other than by will or by the laws of
descent and distribution.
Resale
Eligible Participants reselling Shares of Common Stock acquired under the
LTIP who are reporting persons may only resell during DTG-imposed window periods
and only in compliance with the limitations of SEC Rule 144 (other than the
holding period requirements which are not applicable because the Shares have
been registered).
Forfeitures
Pursuant to the LTIP, any award agreement may provide that the Shares of
Common Stock issued upon the exercise of any awards may be subject to
restrictions constituting substantial risks of forfeiture as the HR&C Committee
may determine at the time the award is granted.
Incentive Stock Options
Pursuant to the LTIP, except in the event of a change in capitalization,
the aggregate number of Shares of Common Stock to be issued pursuant to ISOs
shall not exceed five percent (5%) of DTG's total number of Shares of Common
Stock outstanding from time to time.
9
<PAGE>
Death or Disability of Eligible Participants
An award agreement may provide that if an Eligible Participant dies or
becomes subject to a disability (as determined by the HR&C Committee) before his
or her right to exercise a NQSO, ISO or SAR terminates, and without totally
exercising the same, the NQSO, ISO or SAR may be exercised, to the extent that
the Shares of Common Stock with respect to the NQSO, ISO or SAR could have been
exercised by the Eligible Participant on the date of his or her death or
disability. Further, in the event of any such death or disability, a NQSO or ISO
cannot be exercisable (i) after the date of their expiration, or (ii) more than
six (6) months from the date of death or disability, whichever occurs first.
Termination of Employment or Directorship of Eligible Participants
The HR&C Committee may provide for termination of a NQSO or ISO in the
event of termination of employment or directorship or any other reason. Pursuant
to the LTIP, a bona fide leave of absence that is approved by a duly constituted
officer of DTG is not considered an interruption or termination of service of
any Eligible Participant; provided, however, no awards may be granted to an
Eligible Participant while he or she is on a bona fide leave of absence.
Tax Effects of LTIP Participation
General
DTG believes that under current law the following are the federal income
tax consequences generally arising with respect to awards granted under the
LTIP. The following summary provides only a general description of the
application of federal income tax laws to certain types of awards under the
LTIP, but does not address the effects of foreign, state and local tax laws.
Non-Qualified Stock Options
The grant of a NQSO will create no tax consequences for an Eligible
Participant or the Company. Upon exercising a NQSO, the Eligible Participant
must generally recognize ordinary income equal to the difference between the
exercise price and the Fair Market Value of the underlying Common Stock on the
date of exercise, and the Company will be entitled to a deduction for the amount
recognized as ordinary income by the Eligible Participant. The treatment to an
Eligible Participant of the disposition of Shares of Common Stock acquired upon
the exercise of a NQSO depends on how long the Shares have been held after the
acquisition and on whether such Shares are acquired by exercising a NQSO.
Incentive Stock Options
An Eligible Participant will generally have no taxable income upon
exercising an ISO (except that the alternative minimum tax may apply), and the
Company will receive no deduction at that time. In the case of ISOs, any sale or
exchange of Shares acquired more than two (2) years after the date of grant of
the ISO and more than one (1) year after the date of exercise of the ISO will be
treated as long-term gain or loss.
Registration of Shares
On May 28, 1999, DTG filed a Registration Statement on Form S-8 to register
2,412,594 Shares of Common Stock authorized for issuance under the LTIP. Upon
approval by the requisite number of stockholders of the Share Increase, DTG will
thereafter register the additional Shares issuable under the LTIP with the SEC
on Form S-8.
10
<PAGE>
MEETINGS, COMMITTEES AND COMPENSATION OF THE BOARD OF DIRECTORS
Meetings and Committees
The Board held eight meetings in 1999. Each director attended 75% or more
of the total of all meetings held by the Board and the Committees on which he
served, and the average attendance level for all Board and Committee meetings
was approximately 94%. The Board has established certain standing Committees,
which are comprised solely of non-employee directors, to consider designated
matters. These Committees of the Board are: the Governance Committee, the Audit
Committee and the HR&C Committee. In accordance with the Bylaws of DTG, the
Board annually elects from its members the members and chairman of each
Committee.
Governance Committee
The members of the Governance Committee (the "Governance Committee") are:
Edward J. Hogan, Chairman, The Hon. Edward C. Lumley, John P. Tierney and Edward
L. Wax.
The Governance Committee evaluates the organization, function and
performance of the Board and its Committees, the qualifications for director
nominees and matters involving corporate governance and compliance. The
Governance Committee held two meetings in 1999. Director nominations by
stockholders may be submitted in the same manner as stockholder proposals. See
"Stockholder Proposals for Next Annual Meeting" below.
Audit Committee
The members of the Audit Committee (the "Audit Committee") are: John P.
Tierney, Chairman, Thomas P. Capo, Edward J. Hogan and John C. Pope.
The Audit Committee recommends the appointment of independent auditors and
reviews their fees for audit and non-audit services and the scope and results of
audits performed by them and by the Company's internal auditors. It also reviews
the Company's system of internal accounting controls, its significant accounting
policies and its financial statements and related disclosures. The Audit
Committee held six meetings in 1999.
Pursuant to newly adopted New York Stock Exchange rules regarding director
independence on audit committees (the "NYSE Rules"), any member of the Audit
Committee who is an employee of DTG or any of its affiliates may not serve on
the Audit Committee until three years following the termination of his or her
employment. In the event the employment relationship is with a former parent or
predecessor of DTG, the director could serve on the Audit Committee after three
years following the termination of the relationship between DTG and the former
parent or predecessor. Thomas P. Capo is a Senior Vice President and Treasurer
of DaimlerChrysler, which was the parent of DTG until December 23, 1997.
Although Mr. Capo does not meet the requirements of the new NYSE Rules because
of his employment with DaimlerChrysler, the new NYSE Rules do allow DTG's Board,
in its business judgment, to appoint Mr. Capo as a member of the Audit
Committee. The Board appointed Mr. Capo to the Audit Committee based on several
factors, including his (i) expertise in accounting and financial reporting
matters, (ii) knowledge of the vehicle rental industry, (iii) experience in
relationships with internal and external auditors, and (iv) expertise in
financing arrangements. Based on these factors, the Board determined in its
business judgment that Mr. Capo's membership on the Audit Committee was in the
best interests of DTG and its stockholders.
11
<PAGE>
Human Resources and Compensation Committee
The members of the HR&C Committee are: The Hon. Edward C. Lumley, Chairman,
John C. Pope and Edward L. Wax.
The HR&C Committee makes recommendations to the Board regarding DTG's
executive compensation program, as well as generally reviewing the human
resources area for the Company, including its management development and
succession. As a part of its compensation function, it determines salaries,
executive retirement benefits, incentive compensation awards and stock option
grants for officers and senior executives and establishes corporate goals under
performance based compensation plans. The HR&C Committee held six meetings in
1999. See "Executive Compensation - Report of Human Resources and Compensation
Committee on Executive Compensation" below.
Compensation
Fees
Directors who are not officers or employees of DTG are paid an annual board
retainer of $20,000, payable in Common Stock. They are also paid an attendance
fee of $1,000 for each meeting of the Board of Directors and $1,000 for each
meeting of a Committee thereof ($1,500 in the case of a Committee Chairman), in
each case payable in cash or Common Stock, as desired by the non-employee
director. Non-employee directors may elect in advance to defer their fees.
Stock Options
In May 1999, non-employee directors were granted NQSOs to purchase 5,000
Shares at the exercise price of $21.1875 per Share. Such NQSOs become
exercisable on May 31, 2000 and expire on May 26, 2009. For more information
regarding these NQSOs, see "Additional Information for Share Increase Proposal -
Awards Under LTIP - Non-Qualified Stock Options" above.
Other
In 1999, DTG made available to each non-employee director the personal use
of two vehicles while serving as a director, together with insurance coverage.
No Compensation or Benefits
DTG does not pay compensation or provide benefits for service to any
director solely in such capacity who is also an officer or employee of the
Company. In addition, because of DaimlerChrysler policy, Thomas P. Capo does not
receive compensation or benefits for services as a director.
Stock Ownership Guidelines
All current non-employee directors of DTG are required to own
Shares valued at not less than five times the annual retainer of $20,000, for a
total of $100,000, by January 2003.
12
<PAGE>
Certain Understandings
In connection with continuing credit support to the Company for vehicle
fleet financing, DTG agreed to nominate and support a DaimlerChrysler designee
to its Board. Thomas P. Capo, who is a DaimlerChrysler Senior Vice President and
its Treasurer, currently holds this directorship. The Company's agreements
relating to this position expire upon termination of DaimlerChrysler credit
support and repayment of any sums due in connection therewith. See "Certain
Relationships and Related Transactions" below.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS, DIRECTOR NOMINEES AND EXECUTIVE OFFICERS
Certain Beneficial Owners
The following table sets forth certain information from Schedule 13D or
Schedule 13G filings as of March 23, 2000 with respect to each person known by
DTG to beneficially own more than 5% of the outstanding Shares:
<TABLE>
<CAPTION>
Name and Address Amount and Nature
of Beneficial Owner of Beneficial Ownership Percent of Class (1)
- ------------------- ----------------------- --------------------
<S> <C> <C>
The Equitable Companies 3,254,901 13.5%
Incorporated (2)
1290 Avenue of the Americas
New York, New York 10104
Tweedy, Browne Company LLC (3) 2,105,856 8.7%
TBK Partners, L.P.
Vanderbilt Partners, L.P.
52 Vanderbilt Avenue
New York, New York 10017
Capital Group International, Inc. (4) 1,910,300 7.9%
Capital Guardian Trust Company
11100 Santa Monica Boulevard
Los Angeles, California 90025
- -----------
</TABLE>
(1) Based on 24,162,365 Shares outstanding.
(2) The Equitable Companies Incorporated ("Equitable") owns Alliance Capital
Management L.P. and the Equitable Life Assurance Society of the United
States which own 1,631,700 and 780,000 Shares, respectively. AXA ("AXA")
beneficially owns a majority interest in Equitable. As a group, The
Mutuelles AXA controls AXA in AXA's capacity as a parent holding company
with respect to AXA Rosenberg (U.S.) ("AXA Rosenberg") and AXA Colonia
Konzern AG (Germany) ("AXA Colonia"). AXA Rosenberg and AXA Colonia own
821,301 and 21,900 Shares, respectively.
(3) As a group, Tweedy, Browne Company LLC owns 1,909,156 Shares, TBK Partners,
L.P. owns 166,700 Shares and Vanderbilt Partners, L.P. owns 30,000 Shares.
Each of such entities disclaims beneficial ownership of the Shares held by
the others.
13
<PAGE>
(4) Capital Guardian Trust Company is deemed to be the beneficial owner of the
1,910,300 Shares. Both Capital Group International, Inc. and Capital
Guardian Trust Company disclaim beneficial ownership, as such Shares are
owned by accounts managed by their affiliated investment management
companies.
Directors, Director Nominees and Executive Officers
The following table sets forth certain information as of March 23, 2000,
with respect to the number of Shares owned by (i) each director of DTG (with the
exception of Thomas P. Capo who owns no Common Stock), (ii) each named executive
officer of the Company, and (iii) all directors and named executive officers of
the Company as a group. The director nominees, Molly Shi Boren and Maryann N.
Keller, do not presently own any Common Stock of the Company.
<TABLE>
<CAPTION>
Amount and Nature
Name of Beneficial Owner of Beneficial Ownership (1) Percent of Class (2)
- ------------------------ --------------------------- --------------------
<S> <C> <C>
Joseph E. Cappy 244,580 (3) 1.0%
Edward J. Hogan 9,374 (4) Less than 1%
The Hon. Edward C. Lumley 13,374 (5) Less than 1%
John C. Pope 13,600 (6) Less than 1%
John P. Tierney 13,031 (7) Less than 1%
Edward L. Wax 10,289 (8) Less than 1%
Peter G. Guptill 40,484 (9) Less than 1%
Steven B. Hildebrand 61,602 (10) Less than 1%
Donald M. Himelfarb 75,068 (11) Less than 1%
Gary L. Paxton 86,216 (12) Less than 1%
All directors and executive 567,618 2.3%
officers as a group
- -----------
</TABLE>
(1) The SEC deems a person to have beneficial ownership of all shares which
that person has the right to acquire within sixty (60) days. Accordingly,
Shares subject to options exercisable within sixty (60) days are included
in this column.
(2) Based on 24,162,365 Shares outstanding.
(3) Consists of (i) 64,400 Shares owned of record by Mr. Cappy's trust, (ii)
37,446 Performance Shares awarded which will be forfeited if Mr. Cappy does
not remain employed by the Company through January 31, 2001, the date of
vesting, (iii) 111,434 Shares subject to options, and (iv) 31,300 Shares
owned of record by the trust of Mr. Cappy's spouse.
14
<PAGE>
(4) Consists of (i) 2,374 Shares owned of record by Mr. Hogan,(ii) 2,000 Shares
subject to options, and (iii) 5,000 Shares owned of record by the trust of
Mr. Hogan and his spouse.
(5) Consists of (i) 11,374 Shares owned of record by Mr. Lumley, and (ii) 2,000
Shares subject to options.
(6) Consists of (i) 6,000 Shares owned of record by Mr. Pope, (ii) 5,600 Shares
subject to a deferral agreement between DTG and Mr. Pope, and (iii) 2,000
Shares subject to options.
(7) Consists of (i) 6,000 Shares owned of record by Mr. Tierney, (ii) 5,031
Shares subject to a deferral agreement between DTG and Mr. Tierney, and
(iii) 2,000 Shares subject to options.
(8) Consists of (i) 3,200 Shares owned of record by Mr. Wax, (ii) 5,089 Shares
subject to a deferral agreement between DTG and Mr. Wax, and (iii) 2,000
Shares subject to options.
(9) Consists of (i) 1,000 Shares owned of record by Mr. Guptill, (ii) 5,416
Performance Shares awarded which will be forfeited if Mr. Guptill does not
remain employed by the Company through January 31, 2001, the date of
vesting, and (iii) 34,068 Shares subject to options.
(10) Consists of (i) 3,000 Shares owned of record by Mr. Hildebrand, (ii)
11,334 Performance Shares awarded which will be forfeited if Mr. Hildebrand
does not remain employed by the Company through January 31, 2001, the date
of vesting, and (iii) 47,268 Shares subject to options.
(11) Consists of (i) 16,101 Performance Shares awarded which will be forfeited
if Mr. Himelfarb does not remain employed by the Company through January
31, 2001, the date of vesting, (ii) 55,467 Shares subject to options, and
(iii) 3,500 Shares owned of record by the trust of Mr. Himelfarb's spouse.
(12) Consists of (i) 7,500 Shares owned of record by Mr. Paxton's trust, (ii)
16,682 Performance Shares awarded which will be forfeited if Mr. Paxton
does not remain employed by the Company through January 31, 2001, the date
of vesting, (iii) 60,534 Shares subject to options, and (iv) 1,500 Shares
owned of record by the trust of Mr. Paxton's spouse.
EXECUTIVE COMPENSATION
Report of Human Resources and Compensation Committee on Executive Compensation
This report explains DTG's executive compensation program for 1999. The
HR&C Committee, which is comprised solely of non-employee directors, determines
the compensation of senior executives of the Company.
Compensation Philosophy
DTG's executive compensation program is a critical part of the effective
management of its key executives. The program rewards senior management for
building long-term stockholder value. It is designed to: (i) establish a
comparative framework of companies for pay/performance analysis, (ii) maintain a
strong relationship between performance and awards, (iii) communicate a link
between pay and performance, (iv) encourage stock ownership and focus on the use
of equity-based incentives, and (v) balance all compensation components to
create a total pay program based on specific performance goals.
15
<PAGE>
Stock Ownership Guidelines
DTG maintains stock ownership guidelines to more closely align the
interests of executives with those of stockholders ranging from one half of
annual base salary to four times annual base salary.
Components of Executive Compensation Program
The Company's executive compensation program has three principal
components: base salary, incentive compensation cash bonuses and long-term Share
incentive compensation. The following is a summary of the considerations
underlying each component.
Base Salary
The HR&C Committee establishes base salaries for executive officers in
relation to base salaries paid by a group of companies which were compared to
the Company because they were similarly sized service companies in terms of
corporate revenues, or had operations in the local geographic job market, or
were vehicle rental industry peers. Base salaries may vary depending on factors
such as responsibility, current performance and tenure.
Incentive Compensation Cash Bonuses
The Company's annual incentive compensation plan is a cash bonus plan
designed to provide performance based compensation awards to executives for
achievement during the past year. Pretax profit objectives are established for
Dollar, Thrifty and DTG. These objectives range from a minimum threshold to earn
a partial award to a maximum award. Annual awards to senior executives are based
upon individual operating company performance, except for DTG executives whose
awards are based on consolidated performance.
Long-Term Incentive Compensation
Nationally recognized compensation consultants were retained to
analyze incentive practices of the publicly traded car rental companies and
other organizations that have recently completed an initial public offering.
Their recommendations were considered in setting the design and size of the NQSO
and Performance Share grants under DTG's LTIP discussed earlier in this Proxy
Statement. As is typical for executive compensation practices, the Chief
Executive Officer was made eligible for the largest award, and the remaining
employees were tiered downward. See "Additional Information for Share Increase
Proposal - Awards Under LTIP" above.
Compensation for the Chief Executive Officer
Under Joseph E. Cappy's leadership in 1999, the Company again achieved
record results in revenues and profits. Total revenue for 1999 was $998.8
million, compared to $899.0 million in 1998, an 11.1% increase. Further, net
income for 1999 was $59.6 million, or $2.43 per Share, an increase of 58% and
56%, respectively, over 1998 results. In addition, the HR&C Committee was again
pleased with Mr. Cappy's leading the Dollar and Thrifty organizations to find
synergies and cost savings realizable by working together.
In establishing each of the components of Mr. Cappy's compensation, the
HR&C Committee relied on information developed from compensation surveys with
the assistance of a nationally recognized compensation consulting firm, and
comparative industry data.
Compensation Committee Interlocks and Insider Participation
The Hon. Edward C. Lumley, HR&C Committee Chairman and a director of DTG,
is the Vice Chairman of BMO Nesbitt Burns. In February 1999, BMO Nesbitt Burns
assisted TCL in a fleet securitization for its Canadian vehicles. A one-time
16
<PAGE>
structuring fee was paid to BMO Nesbitt Burns at closing. Additional program
fees will be paid to BMO Nesbitt Burns to cover placement, liquidity and
administration fees during the five-year term of the arrangement.
Federal Income Tax Liability
Section 162(m) of the Code limits the amount the Company can deduct for
compensation paid to the Chief Executive Officer and the other four most
highly-compensated executive officers of the Company. However, performance based
compensation that meets certain requirements of the Code is not subject to this
limit. The LTIP is a performance based plan. It is the intention of the HR&C
Committee to continue to preserve the deductibility of executive compensation to
the extent reasonably practicable and comply to the extent practicable. However,
there may be occasions when the payment of non-deductible compensation might be
appropriate.
THE HUMAN RESOURCES AND
COMPENSATION COMMITTEE
The Hon. Edward C. Lumley, Chairman
John C. Pope
Edward L. Wax
March 7, 2000
17
<PAGE>
Summary Compensation Table
The following table provides certain summary information concerning
compensation of DTG's Chief Executive Officer and each of the named executive
officers of the Company for the three fiscal years ended December 31, 1999, 1998
and 1997:
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------------ ----------------------
Securities All Other
Name and Principal Underlying Compensation
Position Year Salary ($) Bonus ($) Options (#) ($) (1)
- ------------------ ---- ---------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Joseph E. Cappy, 1999 481,500 963,000 50,700 71,616
Chairman of the 1998 450,000 499,500 194,500 33,836
Board, Chief Executive Officer 1997 -- -- -- --
and President (2)
Gary L. Paxton, 1999 286,965 430,448 28,000 282,197
Executive Vice President and 1998 273,300 217,274 105,800 318,313
President - Dollar 1997 260,300 244,031 -- 273,839
Donald M. Himelfarb, 1999 255,360 383,040 25,200 177,121
Executive Vice President and 1998 243,200 228,000 96,800 188,248
President - Thrifty 1997 233,700 -- -- 80,561
Steven B. Hildebrand, 1999 234,000 351,000 21,500 111,836
Vice President and Chief 1998 225,000 187,313 82,500 118,650
Financial Officer 1997 169,500 30,510 -- 69,643
Peter G. Guptill, 1999 216,776 260,131 15,300 167,078
Executive Vice President - Dollar 1998 211,276 134,372 59,100 203,811
Florida Region 1997 201,200 88,025 -- 75,687
- -----------
</TABLE>
(1) Represents (i) the amounts distributed under the discontinued executive
retention plans of Dollar Rent A Car Systems, Inc. and Thrifty Rent-A-Car
System, Inc., the final portion of which is payable in 2000, (ii) the
Company's contributions to its qualified and non-qualified defined
contribution plans, including supplemental retirement plans, and (iii)
life and disability insurance premiums.
(2) During 1997 Mr. Cappy served as an officer of DTG and DaimlerChrysler but
received all of his compensation from DaimlerChrysler.
18
<PAGE>
Option Grants in Last Fiscal Year
The following table provides certain summary information concerning stock
option grants made to DTG's Chief Executive Officer and each of the named
executive officers of the Company for the fiscal year ended December 31, 1999:
<TABLE>
<CAPTION>
% of Total
Number of Securities Options Granted Exercise or
Underlying Options to Employees Base Price Expiration Grant Date
Name Granted in Fiscal Year ($/Sh) Date Present Value ($) (1)
- -------------------- -------------------- --------------- ----------- ---------- ---------------------
<S> <C> <C> <C> <C> <C>
Joseph E. Cappy 50,700 10.6% 19.1875 9/22/2009 409,756
Gary L. Paxton 28,000 5.8% 19.1875 9/22/2009 226,294
Donald M. Himelfarb 25,200 5.2% 19.1875 9/22/2009 203,228
Steven B. Hildebrand 21,500 4.5% 19.1875 9/22/2009 173,388
Peter G. Guptill 15,300 3.2% 19.1875 9/22/2009 123,388
- -----------
</TABLE>
(1) All options are granted at an exercise price equal to the market value
of DTG's Common Stock on the date of grant. Accordingly, if there is no
appreciation in market value, no value will be realizable. In accordance
with SEC rules, the Black-Scholes option valuation model was used to
estimate the fair value of the options at the date of grant, using the
following assumptions: weighted-average expected life of the awards of five
years, volatility factor of 37.5%, risk-free interest rate of 5.75% and no
payment of dividends. The Black-Scholes option valuation model was
developed for use in estimating the fair value of traded options, which
have no vesting restrictions and are fully transferable. In addition,
option valuation models require the input of highly subjective assumptions,
including the expected stock volatility. DTG does not believe that the
Black-Scholes model, or any other valuation model, is a reliable method of
computing the present value of the employee stock options. The value
ultimately realized, if any, will depend on the amount that the market
price of the stock underlying the option exceeds the exercise price on the
date of exercise.
Long-Term Incentive Plans - Awards in Last Fiscal Year
The following table provides certain summary information concerning awards
made under DTG's LTIP to DTG's Chief Executive Officer and each of the named
executive officers of the Company with respect to the fiscal year ended December
31, 1999:
<TABLE>
<CAPTION>
Number of Shares, Units Performance or Other Period Until
Name or Other Rights (#) Maturation or Payout (1)
- -------------------- ----------------------- ---------------------------------
<S> <C> <C>
Joseph E. Cappy 27,534 1 year maximum
Gary L. Paxton 12,734 1 year maximum
Donald M. Himelfarb 10,734 1 year maximum
Steven B. Hildebrand 8,334 1 year maximum
Peter G. Guptill 4,134 1 year maximum
- -----------
</TABLE>
19
<PAGE>
(1) The Performance Shares will be earned over a three year period from the
original grant of the target award in January 1998 contingent upon profit
performance and appreciation in stock price in each of the three years
(with a reset each year to then current stock price). The Performance
Shares will vest on January 31, 2001. The following schedule describes
the Performance Share plan:
Performance Period Shares Earned/Granted Shares Vest
------------------ --------------------- -----------
Jan-December 1998 January 1999 January 2001
Jan-December 1999 January 2000 January 2001
Jan-December 2000 January 2001 January 2001
Employment Continuation Agreement and Plan
In September 1998, DTG entered into an Employment Continuation Agreement
with Mr. Cappy. The agreement provides for benefits to be paid to Mr. Cappy upon
termination of his employment following a change in control of DTG subject to
certain requirements contained in the agreement. The agreement was filed as
Exhibit 10.3 to DTG's Quarterly Report on Form 10-Q for the period ended
September 30, 1998.
In September 1998, DTG also established the Employment Continuation Plan
for Key Employees. The plan provides for benefits to be paid to certain
employees upon termination of their employment following a change in control of
DTG subject to certain requirements contained in the plan. The plan currently
covers 43 employees of the Company. The plan was filed as Exhibit 10.4 to DTG's
Quarterly Report on Form 10-Q for the period ended September 30, 1998.
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The following graph compares the cumulative total stockholder return on DTG
Common Stock with the cumulative total return on the Russell 2000 Index and
DTG's Peer Group Index. DTG's Peer Group includes Hertz, Avis, Budget and
AutoNation.
The results are based on an assumed $100 invested on December 17, 1997, and
reinvestment of dividends through December 31, 1999.
<TABLE>
<CAPTION>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
Dollar Thrifty Automotive Group, Peer Group Index and Russell 2000 Index
(Graph Omitted)
12/17/97 12/31/97 3/31/98 6/30/98 9/30/98 12/31/98 3/31/99 6/30/99 9/30/99 12/31/99
-------- -------- ------- ------- ------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dollar Thrifty 100.00 100.00 109.76 64.63 56.73 62.83 84.15 113.41 100.93 116.78
Automotive
Peer Group Index 100.00 101.82 113.05 107.54 75.50 78.31 77.04 97.81 68.83 65.50
Russell 2000 Index 100.00 100.00 110.06 104.93 83.79 97.20 91.61 105.50 98.50 116.24
</TABLE>
20
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
DaimlerChrysler has certain material continuing financial and commercial
arrangements with the Company. Thomas P. Capo, a director of DTG, is a Senior
Vice President and Treasurer of DaimlerChrysler.
In December 1997, in connection with DTG's separation from DaimlerChrysler
and closing of the initial public offering, DaimlerChrysler provided $38.2
million of credit support for the Company's vehicle fleet financing in the form
of a letter of credit facility. The credit support was reduced to $28.6 million
(the "Initial Support Amount") upon receipt of Share proceeds due to the sale of
additional Shares by the Company and was further reduced to $22.8 million on
September 30, 1999. The credit support declines annually over five years which
began September 30, 1999, by the greater of $5.7 million or 50% of the Company's
excess cash flow, as defined. To secure reimbursement obligations under the
DaimlerChrysler credit support agreement, DaimlerChrysler has liens and security
interests on certain assets of the Company.
In addition, DaimlerChrysler has been the Company's principal supplier of
vehicles. In 1996, DaimlerChrysler began operating under separate five-year
vehicle supply arrangements that were formalized in 1996 and 1997 in separate
U.S. vehicle supply agreements with Dollar Rent A Car Systems, Inc. and Thrifty
Rent-A-Car System, Inc. ("VSAs"). DaimlerChrysler has agreed to make specified
volumes of DaimlerChrysler vehicles available through July 2001. Negotiations
are underway to extend the VSAs. DaimlerChrysler has agreed to make various
promotional payments under the VSAs, some of which may vary based on the volume
of vehicles purchased. These payments are material to the Company's results of
operations.
The Hon. Edward C. Lumley, HR&C Committee Chairman and a director of DTG,
is the Vice Chairman of BMO Nesbitt Burns. In February 1999, BMO Nesbitt Burns
assisted TCL in a fleet securitization for its Canadian vehicles. A one-time
structuring fee was paid to BMO Nesbitt Burns at closing. Additional program
fees will be paid to BMO Nesbitt Burns to cover placement, liquidity and
administration fees during the five-year term of the arrangement.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons who own more than 10% of the Common
Stock to file with the SEC initial reports of ownership and statements of
changes in ownership of Common Stock, as well as annual statements of ownership.
Based solely upon a review of forms furnished to the Company, during the fiscal
year ended December 31, 1999, the Company believes that all SEC filing
requirements applicable to the Company's directors, executive officers and
persons owning more than 10% of the Common Stock were met.
REPORT ON FORM 10-K
A copy of DTG's Report on Form 10-K for the period ended December 31, 1999,
filed with the SEC (including related financial statements and schedules) is
available to stockholders without charge, upon written request to the Director
of Investor Relations, Dollar Thrifty Automotive Group, Inc., 5330 East 31st
Street, Tulsa, Oklahoma 74135.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
The deadline for submitting proposals for the possible inclusion in next
year's proxy statement is no less than 90 nor more than 120 days before the
Annual Meeting of Stockholders to be held in 2001, and a proposal received
outside of this time frame will be untimely and not considered for the Annual
Meeting of Stockholders to be held in 2001; provided, however, that in the event
that less than 100 days notice or prior public disclosure of the date of the
21
<PAGE>
Annual Meeting of Stockholders is given or made to stockholders, then such
proposals will be considered if received not later than the tenth day following
the day on which the meeting date is disclosed. Proposals, including any
accompanying supporting statement, may not exceed 500 words and should be
addressed to: Secretary, Dollar Thrifty Automotive Group, Inc., 5330 East 31st
Street, Tulsa, Oklahoma 74135.
OTHER MATTERS
As of the date of this Proxy Statement, the Board does not intend to
present any matter for action at the Annual Meeting of Stockholders other than
those set forth in the Notice of Annual Meeting. If any other matters properly
come before the meeting, the holders of the proxies will act in accordance with
their best judgment.
By Order of the Board of Directors
/S/ STEPHEN W. RAY
------------------
Stephen W. Ray
Secretary
Tulsa, Oklahoma
March 29, 2000
22
<PAGE>
EXHIBIT A
---------
Proposed Amendment to LTIP
SECOND AMENDMENT TO LONG-TERM INCENTIVE PLAN
--------------------------------------------
The Long-Term Incentive Plan adopted by Dollar Thrifty Automotive Group,
Inc. ("DTG") on December 11, 1997, as amended by Amendment to Long-Term
Incentive Plan adopted by DTG on September 29, 1998 (the "LTIP"), is hereby
amended on the Second Amendment Effective Date (hereinafter defined), if the
condition precedent to effectiveness set forth in Section 7 below occurs:
1. Section 2.1 p) of the LTIP is hereby deleted in its entirety.
2. Section 2.1 of the LTIP is hereby amended by adding the following new
subparagraph dd):
"dd) "Second Amendment Effective Date" shall mean the date on which
a majority of the outstanding voting shares of the Company are
voted in favor of the proposal to amend Section 6.3 of the Plan,
which such proposal is to be considered at the Annual Meeting of
Stockholders of the Company to be held on May 25, 2000 (or any
adjournment or adjournments thereof) or at any other duly held meeting
or meetings within twelve (12) months after January 26, 2000."
3. The first two sentences before the proviso in Section 6.3 of the LTIP
are hereby deleted in their entirety and replaced with the following:
"6.3 Subject to the provisions of Section 17, the maximum number of
shares available for issuance under the Plan shall be (i) ten percent
(10%) of the outstanding shares of Common Stock as of the Second
Amendment Effective Date, plus (ii) 2,400,000 shares. As the
outstanding shares of Common Stock increase from time to time (which
limit shall be determined without considering as outstanding any
shares that are the subject of any unexercised options under the Plan
or any other option plan of the Company or any shares owned by the
Company (other than in a rabbi trust) or any of its Subsidiaries) such
shares available for issuance under the Plan shall increase by
ten percent (10%);"
4. Section 7.1(a)(i) of the LTIP is hereby amended as follows:
(a) By placing a period after the word "granted" in the fifth line
thereof; and
(b) By deleting the phrase "except that the price of an option
granted upon completion of the initial public offering of the Common Stock may
be the initial public offering price" in its entirety.
5. Section 7.3 of the LTIP is hereby amended by deleting the phrase "as
of the IPO Date" in the second and third lines thereof and replacing it with "of
Common Stock from time to time".
6. Section 19.1 of the LTIP is hereby amended as follows:
(a) By adding the following phrase to the beginning of subparagraph
(a):
"except as provided in subparagraph (c) below,"
<PAGE>
(b) By deleting the period at the end of subparagraph (b) and
replacing it with ";and".
(c) By adding the following new subparagraph (c):
"c) such modification, amendment, suspension or termination
shall not effect a reduction in the exercise price of any Option
granted by the Committee pursuant to the Plan; and"
(d) By adding the following new subparagraph (d):
"d) Section 19.1(c) of the Plan shall not be amended without
the approval of the holders of a majority of the outstanding
voting shares of the Company."
7. This Second Amendment to Long-Term Incentive Plan shall become
effective and operative if, and only if, a majority of the outstanding voting
shares of DTG are voted in favor of the proposal described in Section 3 above,
which such proposal is to be considered at the Annual Meeting of Stockholders of
DTG to be held on May 25, 2000 (or any adjournment or adjournments thereof) or
at any other duly held meeting or meetings within twelve (12) months after
January 26, 2000 (the "Second Amendment Effective Date"). A failure to obtain
such a vote within such time shall make all the provisions hereof null and void
from inception.
<PAGE>
APPENDIX A
----------
(FRONT SIDE OF PROXY)
DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Stockholders
May 25, 2000
The undersigned stockholder of Dollar Thrifty Automotive Group, Inc., a
Delaware corporation, hereby appoints Pamela S. Peck or Paula A. Kuykendall, or
either of them voting singly in the absence of the other, attorneys and proxies
with full power of substitution and revocation, to vote all shares of Common
Stock of Dollar Thrifty Automotive Group, Inc. which the undersigned is entitled
to vote at the Annual Meeting of Stockholders of said corporation to be held at
the Williams Presentation Center Theatre, 2 East First Street, Tulsa, Oklahoma
74172, on May 25, 2000, at 11:00 a.m., C.D.T., or any adjournment thereof, in
accordance with the following instructions.
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 herein by the undersigned
stockholder. If no direction is made, the proxy will be voted "FOR" all nominees
in Proposal No. 1, "FOR" Proposal No. 2 and "FOR" Proposal No. 3.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION OF THE
NOMINEES, "FOR" PROPOSAL NO. 2 AND "FOR" PROPOSAL NO. 3.
YOUR VOTE IS IMPORTANT. PLEASE VOTE BY MARKING, SIGNING AND DATING THIS
PROXY ON THE REVERSE SIDE AND RETURNING IT PROMPTLY IN THE ACCOMPANYING
ENVELOPE.
(Continued and to be signed on reverse side)
----------------------------------------------------------
(REVERSE SIDE OF PROXY)
DOLLAR THRIFTY AUTOMOTIVE GROUP, INC.
Please mark vote in box using dark ink only: / /
1. ELECTION OF DIRECTORS:
Nominees: Molly Shi Boren, Thomas P.Capo, Joseph E. Cappy, Edward J. Hogan,
Maryann N. Keller, The Hon. Edward C. Lumley, John C. Pope, John P. Tierney
and Edward L. Wax.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
FOR WITHHOLD INSTRUCTION: To withhold authority
all nominees listed Authority to vote to vote for any individual nominee,
above (except as indicated for all nominees write that nominee's name in the space
in the space provided) / / listed above / / provided below.
-----------------------------------
Name(s) of Nominee(s)
</TABLE>
2. Ratification of Deloitte & Touche LLP as independent auditors for 2000.
FOR / / AGAINST / / ABSTAIN / /
3. Approval of the addition of 2,400,000 shares to the Long-Term Incentive
Plan of Dollar Thrifty Automotive Group, Inc.
FOR / / AGAINST / / ABSTAIN / /
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders and of the Proxy Statement.
Dated: ________________________, 2000
_____________________________________
Signature
_____________________________________
Signature, if held jointly
Please sign exactly as your name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by an authorized officer. If a partnership, please
sign in partnership name by an authorized person.
