<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_]Preliminary Proxy Statement [_]Confidential, for Use of the
Commission Only (as Permitted by
Rule 14a-6(e)(2))
[X]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
United Rentals, Inc.
-----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X]No fee required.
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange ActRule 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:
<PAGE>
[LOGO] United Rentals
UNITED RENTALS, INC.
Four Greenwich Office Park
Greenwich, Connecticut 06830
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------
TO OUR STOCKHOLDERS:
The 1999 Annual Meeting of Stockholders of United Rentals, Inc., will be
held at The Equitable Center, Tower Room, 787 7th Avenue, New York, New York
10019, on June 3, 1999, at 10:00 a.m. local time, for the following purposes:
1. election of three directors by the holders of the Company's Common
Stock;
2. election of two directors by the holders of the Company's Series A
Perpetual Convertible Preferred Stock;
3. ratification of the appointment of Ernst & Young LLP as independent
auditors for the fiscal year ending December 31, 1999; and
4. transaction of such other business as may properly be brought before the
meeting or any adjournment thereof.
The meeting may be adjourned from time to time and at any reconvened meeting
action with respect to the matters specified in this notice may be taken
without further notice to stockholders except as may be required by the By-
laws of the Company. Stockholders of record at the close of business on April
8, 1999 are entitled to notice of, and to vote on, all matters at the meeting
and any reconvened meeting following any adjournments thereof.
By Order of the Board of Directors,
JOHN N. MILNE
Corporate Secretary
April 15, 1999
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, PLEASE SIGN AND DATE
THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED RETURN ENVELOPE.
<PAGE>
UNITED RENTALS, INC.
Four Greenwich Office Park
Greenwich, Connecticut 06830
April 15, 1999
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of United Rentals, Inc., a Delaware corporation (the
"Company"), of proxies to be voted at its 1999 Annual Meeting of Stockholders
to be held at The Equitable Center, Tower Room, 787 7th Avenue, New York, New
York 10019, on June 3, 1999 at 10:00 a.m. local time and at any reconvened or
rescheduled meeting following any adjournment, continuation or postponement
thereof (the "Meeting"). This Proxy Statement and the accompanying materials
are being mailed on or about April 15, 1999.
Record Date
The record date (the "Record Date") for determining stockholders entitled to
notice of, and to vote at, the Meeting has been established as the close of
business on April 8, 1999.
Shares Outstanding on Record Date
On the Record Date, the Company had outstanding (i) 71,561,838 shares of
Common Stock and (ii) 300,000 shares of Series A Perpetual Convertible
Preferred Stock ("Series A Preferred"). Each share of Series A Preferred is
convertible into Common Stock at a rate (subject to adjustment) of 40 shares
of Common Stock for each share of Series A Preferred. On the Record Date, the
outstanding shares of Series A Preferred were convertible into an aggregate of
12,000,000 shares of Common Stock.
Right to Vote
The right of the holders of the Common Stock and the Series A Preferred to
vote at the Meeting is as follows:
Election of Class 1 Directors. One of the matters to be considered at the
Meeting is the election of three class 1 directors to serve for a term of
three years. Only the holders of the Common Stock (and not the holders of the
Series A Preferred) will have the right to vote on this matter. With respect
to this matter, each holder of record of Common Stock as of the Record Date
will be entitled to one vote for each share held.
Election of two Directors by the Series A Preferred. One of the matters to
be considered at the Meeting is the election of two directors by the holders
of the Series A Preferred. Only the holders of the Series A Preferred (and not
the holders of the Common Stock) will have the right to vote on this matter.
With respect to this matter, each holder of record of Series A Preferred as of
the Record Date will be entitled to one vote for each share held.
All Other Matters. The holders of the Common Stock and the holders of the
Series A Preferred will have the right to vote together, as a single class, on
all matters properly brought before the Meeting, other than election of
directors. With respect to these matters, (i) each holder of record of Common
Stock as of the Record Date will be entitled to one vote for each share held
and (ii) each holder of record of Series A Preferred as of the Record Date
will be entitled to 40 votes for each share
1
<PAGE>
of Series A Preferred held (representing the number of shares of Common Stock
issuable upon conversion of a single share of Series A Preferred).
Quorum
The presence at the Meeting, in person or represented by proxy, of a
majority of the outstanding shares entitled to vote thereat will constitute a
quorum for the transaction of business. If a share is deemed present at the
Meeting for any matter, it will be deemed present for all other matters.
Shares held by a nominee for a beneficial owner ("Broker Shares") that are
voted on any matter and abstentions will be included in determining the number
of shares present. Broker Shares that are not voted on any matter will not be
included in determining the number of shares present.
Right to Revoke Proxies
Any stockholder returning the accompanying proxy may revoke such proxy at
any time prior to its exercise by (a) giving written notice to the Company of
such revocation, (b) voting in person at the Meeting or (c) executing and
delivering to the Company a later-dated proxy. Written revocations and later-
dated proxies should be sent to United Rentals, Inc., Four Greenwich Office
Park, Greenwich, Connecticut 06830, Attention: Michael J. Nolan, Chief
Financial Officer.
Cost of Solicitation
All costs associated with soliciting proxies for the Meeting will be borne
by the Company. Such proxies will be solicited by mail. In addition, such
proxies may be solicited by personal interview, telephone, telex or facsimile.
The Company will, upon request and in accordance with applicable regulations,
reimburse banks, brokerage houses, other institutions, nominees, and
fiduciaries for their reasonable expenses in forwarding solicitation materials
to beneficial owners.
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PROPOSAL 1
ELECTION OF DIRECTORS
Election of Three Class 1 Directors
The directors of the Company are divided into three classes (except for any
directors that are elected by the holders of the Series A Preferred as
described below). At each annual meeting of stockholders, members of one of
the classes, on a rotating basis, are elected for a three year term.
The term of office of the first class of directors will expire at the
Meeting. The members of this class are currently Wayland R. Hicks, John S.
McKinney and Gerald Tsai, Jr. The Board has nominated each of these directors
to stand for reelection at the Meeting to hold office until the Company's
annual meeting of stockholders in 2002 and until his successor is elected and
qualified. All nominees have consented to be named and serve if elected.
Unless a stockholder requests that voting of the proxy be withheld for any
one or more of the nominees for directors by so directing on the proxy card,
the shares represented by the accompanying proxy will be voted FOR election,
as directors, of the above-mentioned three nominees. If any nominee becomes
unavailable for any reason (which event is not anticipated) to serve as a
director at the time of the Meeting, then the shares represented by such proxy
may be voted for such other person as may be determined by the holders of such
proxy. Directors will be elected at the Meeting by a plurality of the votes
cast (i.e., the three nominees receiving the greatest number of votes will be
elected as directors).
Election of Two Directors by the Series A Preferred Holders
As described under "--Right of Holders of Preferred Stock to Elect
Directors," the holders of the Series A Preferred, voting separately as a
single class, currently have the right to elect two directors. The two
directors currently serving on the Company's board that were elected by the
holders of the Series A Preferred are Leon D. Black and Michael S. Gross. All
of the outstanding shares of Series A Preferred are currently held by Apollo
Investment Fund IV, L.P. and Apollo Overseas Partners IV, L.P. (collectively,
"Apollo"). The holders of the Series A Preferred have indicated to the Company
that they expect to vote for the reelection of Messrs. Black and Gross as
directors of the Company. Messrs. Black and Gross are affiliated with Apollo.
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Information Concerning Directors and Executive Officers
The table below identifies, and provides certain information concerning, the
Company's directors (including the nominees for election at the Meeting) and
executive officers:
<TABLE>
<CAPTION>
Name Age Positions(1)
---- --- ------------
<S> <C> <C>
Bradley S. Jacobs....... 42 Chairman, Chief Executive Officer and Director
Wayland R. Hicks........ 56 Vice Chairman, Chief Operating Officer and Director
John N. Milne........... 39 Vice Chairman, Chief Acquisition Officer,
Secretary and Director
William F. Berry........ 46 President and Director(2)
Michael J. Nolan........ 38 Chief Financial Officer
Robert P. Miner......... 49 Vice President, Strategic Planning
John S. McKinney........ 44 Vice President, Finance and Director
Leon D. Black........... 47 Director(3)
Richard D. Colburn...... 87 Director
Ronald M. DeFeo......... 47 Director
Michael S. Gross........ 37 Director(3)
Richard J. Heckmann..... 55 Director
Gerald Tsai, Jr. ....... 70 Director
Christian M. Weyer...... 74 Director
</TABLE>
- --------
(1) For information concerning the term served by directors, see "--Right of
Holders of Preferred Stock to Elect Directors" and "--Classification of
Directors."
(2) Since February 1999, Mr. Berry has been on a medical leave of absence while
he undergoes treatment for melanoma skin cancer. His duties have been
assumed by Wayland Hicks, to whom Mr. Berry has been reporting since
September 1998.
(3) Messrs. Black and Gross were elected directors by the holders of the Series
A Preferred. See "--Right of Holders of Preferred Stock to Elect
Directors."
Bradley S. Jacobs has been Chairman, Chief Executive Officer and a director
of the Company since its formation in September 1997. Mr. Jacobs founded United
Waste Systems, Inc. and served as its Chairman and Chief Executive Officer from
its inception in 1989 until the sale of the company in August 1997. From 1984
to July 1989, Mr. Jacobs was Chairman and Chief Operating Officer of Hamilton
Resources Ltd., an international trading company, and from 1979 to 1983, he was
Chief Executive Officer of Amerex Oil Associates, Inc., an oil brokerage firm
that he co-founded.
Wayland R. Hicks has been Chief Operating Officer of the Company since
November 1997 and a director since June 1998. He also served as President of
the Company during the period from November 1997 until September 1998, when he
became Vice Chairman. Mr. Hicks previously held various senior executive
positions at Xerox Corporation where he worked for 28 years (1966-1994). His
positions at Xerox Corporation included Executive Vice President, Corporate
Operations (1993-1994), Executive Vice President, Corporate Marketing and
Customer Support Operations (1989-1993) and Executive Vice President,
Engineering and Manufacturing--Xerox Business Products and Systems Group (1987-
1989). Mr. Hicks also served as Vice Chairman and Chief Executive Officer of
Nextel Communications Corp. (1994-1995) and as Chief Executive Officer and
President of Indigo N.V. (1996-1997). He is also a director of Maytag
Corporation.
John N. Milne has been Vice Chairman, Chief Acquisition Officer and a
director of the Company since its formation in September 1997. Mr. Milne was
Vice Chairman and Chief Acquisition Officer of United Waste Systems, Inc. from
1993 until August 1997 and held other senior executive positions at
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<PAGE>
United Waste from 1990 until 1993. Mr. Milne had primary responsibility for
implementing United Waste's acquisition program. From September 1987 to March
1990, Mr. Milne was employed in the Corporate Finance Department of Drexel
Burnham Lambert Incorporated.
William F. Berry joined the Company as President and a director in September
1998 following the merger of the Company with U.S. Rentals. Mr. Berry served
as President and Chief Executive Officer of U.S. Rentals from 1987 until the
merger and held numerous other operational and managerial positions at U.S.
Rentals and a predecessor during the more than 30 years that he was employed
there (1966-1998).
Michael J. Nolan has been Chief Financial Officer of the Company since its
formation in September 1997. Mr. Nolan served as the Chief Financial Officer
of United Waste Systems, Inc. from February 1994 until August 1997. He served
in other finance positions at United Waste from November 1991 until February
1994, including Vice President, Finance, from October 1992 to February 1994.
From 1985 until November 1991, Mr. Nolan held various positions at the
accounting firm of Ernst & Young, including senior audit manager. Mr. Nolan is
a Certified Public Accountant.
Robert P. Miner has been an executive officer of the Company since its
formation in September 1997. He currently serves as Vice President, Strategic
Planning (a position he was appointed to in July 1998) and also heads the
Company's Risk Management and Safety Department. He previously served as Vice
President, Finance. Mr. Miner was an executive officer of United Waste
Systems, Inc. from November 1994 until August 1997, serving first as Vice
President, Finance and then Vice President, Acquisitions. Prior to joining
United Waste, he was a research analyst with PaineWebber Incorporated
(November 1988 to October 1994) and Needham & Co. (January 1987 to October
1988) and held various executive positions at General Electric Environmental
Services, Inc., Stauffer Chemical Company, and OHM Corporation.
John S. McKinney joined the Company as Vice President, Finance and a
director in September 1998 following the merger of the Company with U.S.
Rentals. Mr. McKinney served as Chief Financial Officer of U.S. Rentals from
1990 until the merger and as Controller of U.S. Rentals from 1988 until 1990.
Prior to joining U.S. Rentals, Mr. McKinney held various positions at Iomega
Corporation, including Assistant Controller, and at the accounting firm of
Arthur Andersen & Co.
Leon D. Black became a director of the Company in January 1999. Mr. Black is
one of the founding principals of (i) Apollo Advisors, L.P. (which was
established in August 1990 and which, together with its affiliates, acts as
the managing general partner of several private securities investment funds);
(ii) Apollo Real Estate Advisors, L.P. (which, together with its affiliates,
acts as the managing general partner of several real estate investment funds);
and (iii) Lion Advisors, L.P. (a financial advisor to, and representative of
institutional investors with respect to, securities investments). Mr. Black is
also a director of Converse, Inc., Samsonite Corporation, Sequa Industries,
Inc., Telemundo Group Inc. and Vail Resorts, Inc. He also serves as a trustee
of The Museum of Modern Art, Mount Sinai--NYU Medical Center, Lincoln Center
for the Performing Arts, and Vail Valley Foundation.
Richard D. Colburn became a director of the Company in September 1998
following the merger of the Company with U.S. Rentals. Mr. Colburn was
Chairman of U.S. Rentals for 22 years. Mr. Colburn is a private investor.
Ronald M. DeFeo has been a director of the Company since October 1997. Mr.
DeFeo is the Chairman, Chief Executive Officer, President and a director of
Terex Corporation, a leading global provider of equipment for the
manufacturing, mining and construction industries. Mr. DeFeo joined Terex in
1992 as President of the Terex heavy equipment group and was appointed
President and Chief Operating Officer in 1993 and Chief Executive Officer in
1995. From 1984 to 1992, Mr. DeFeo held various management positions at
Tenneco, Inc., including Senior Vice President and Managing Director of East
Europe.
5
<PAGE>
Michael S. Gross became a director of the Company in January 1999. Mr. Gross
is one of the founding principals of Apollo Advisors, L.P. (which was
established in August 1990 and which, together with its affiliates, acts as
the managing general partner of several private securities investment funds)
and of Lion Advisors, L.P. (a financial advisor to, and representative of
institutional investors with respect to, securities investments). Mr. Gross is
also a director of Alliance Imaging, Inc., Allied Waste Industries, Inc.,
Breuners Home Furnishings, Inc., Converse, Inc., Florsheim Group, Inc., and
Saks Incorporated.
Richard J. Heckmann has been a director of the Company since October 1997.
Mr. Heckmann has served since 1990 as Chairman, President and Chief Executive
Officer of United States Filter Corporation, a leading global provider of
industrial and commercial water and wastewater treatment systems and services.
Mr. Heckmann is also a director of Waste Management, Inc. and K2 Inc.
Gerald Tsai, Jr. has been a director of the Company since December 1997. Mr.
Tsai served as Chairman, Chief Executive Officer and President of Delta Life
Corporation, an insurance company, from 1993 until the sale of the company in
October 1997. Mr. Tsai was Chairman of the Executive Committee of the Board of
Directors of Primerica Corporation, a diversified financial services company,
from December 1988 until April 1991, and served as Chief Executive Officer of
Primerica Corporation from April 1986 until December 1988. Mr. Tsai is
currently a private investor and serves as a director of The Meditrust
Companies, Saks Incorporated, Rite Aid Corporation, Sequa Corporation, Triarc
Companies, Inc. and Zenith National Insurance Corp. He also serves as a
trustee of Boston University, Mount Sinai--NYU Medical Center and Health
System and NYU School of Medicine Foundation Board.
Christian M. Weyer became a director of the Company in December 1998. Mr.
Weyer has been in the international banking business for 31 years and has
served as President of Enerfin S.A., an international trade and financial
advisory firm, since 1985. From May 1988 to December 1992, Mr. Weyer was a
member of senior management at Banque Indosuez in Geneva, Switzerland, with
responsibility for matters relating to commercial banking, and from 1971 to
1985, held various senior management positions at Banque Paribas and its
affiliates (including President of Banque Paribas (Suisse) in Geneva during
1984). Prior to 1971, Mr. Weyer held senior management positions with Chase
Manhattan Bank in Paris and in Geneva.
Right of Holders of Preferred Stock to Elect Directors
In January 1999, the Company sold 300,000 shares of its Series A Perpetual
Convertible Preferred Stock ("Series A Preferred") to Apollo.
The holders of the Series A Preferred, voting separately as a single class,
have the right to elect:
. two directors, if (as of the record date for such vote) the aggregate
number of shares of Common Stock that are issuable upon conversion of
Series A Preferred then held by Apollo, Apollo Management IV, L.P., or
their affiliates (plus any shares of Common Stock then held by such
entities that were issued upon conversion of the Series A Preferred) is
at least eight million; or
. one director, if (as of the record date for such vote) the aggregate
number of shares of Common Stock that are issuable upon conversion of
Series A Preferred then held by Apollo, Apollo Management IV, L.P., or
their affiliates (plus any shares of Common Stock then held by such
entities that were issued upon conversion of the Series A Preferred) is
at least four million but less than eight million.
6
<PAGE>
Based on the number of shares of Series A Preferred that were held by Apollo
as of the Record Date for the Meeting, the holders of the Series A Preferred
have the right to elect two directors at the Meeting.
Any director that is elected by the holders of the Series A Preferred,
voting separately as a single class, holds office until the next annual
meeting of stockholders and the election and qualification of a successor (or
the earlier resignation or removal of such director).
If the holders of the Series A Preferred do not have the right, voting
separately as a single class, to elect any directors pursuant to the
provisions described above, then the holders of the Series A Preferred have
the right to vote for the election of directors of the Company together with
the holders of the Common Stock, as a single class, with each share of Series
A Preferred entitled to one vote for each share of Common Stock issuable upon
conversion of such share of Series A Preferred.
Agreement Relating to Election of Directors
Mr. Hicks' employment agreement provides that at each annual meeting of
stockholders of the Company that occurs during the term of the agreement and
at which Mr. Hicks' term as director is scheduled to expire, the Company will
nominate Mr. Hicks for re-election as director.
Classification of Directors
The directors of the Company (excluding any elected by the holders of the
Series A Preferred) are divided into three classes as follows:
Class 1. The member of this class are Messrs. Hicks, McKinney and Tsai.
The current term of office of this class will expire at the Meeting. As
described above, the Board has nominated each of these directors to stand
for reelection at the Meeting for a new term that will expire at the
Company's annual meeting of stockholders in 2002.
Class 2. The members of this class are Messrs. Berry, DeFeo and Heckmann.
The term of office of this class will expire at the Company's annual
meeting of stockholders in 2000.
Class 3. The members of this class are Messrs. Colburn, Jacobs, Milne and
Weyer. The term of office of this class will expire at the Company's annual
meeting of stockholders in 2001.
At each annual meeting of stockholders, successors to directors of the class
whose term expires at such meeting will be elected to serve for three year
terms and until their successors are elected and qualified.
Meetings of the Board of Directors
During 1998, the Board of Directors of the Company met eight times and acted
by written consent 26 times. During 1998, each member of the Board of
Directors of the Company attended in excess of 75 percent of (i) the total
number of Board of Directors meetings held during the period for which he was
a director and (ii) the total number of meetings of each committee of the
Board of Directors on which the director served during the period for which he
was a member.
Committees of the Board
The Board of Directors has three standing committees: the Audit Committee,
the Compensation/Stock Option Committee, and the Special Stock Option
Committee. The Board of Directors does not have a Nominating Committee.
The responsibilities of the Audit Committee include selecting the firm of
independent accountants to be appointed to audit the Company's financial
statements and reviewing the scope and results of the audit with the
independent accountants. The members of this committee are Messrs. DeFeo,
Heckmann and Tsai. The Audit Committee met four times during 1998.
7
<PAGE>
The responsibilities of the Compensation/Stock Option Committee include
making recommendations with respect to the compensation to be paid to officers
and directors, administering any stock option plan in which officers or
directors are eligible to participate and approving the grant of options
pursuant to any such plan. The members of this committee are Messrs. DeFeo,
Heckmann and Tsai. The Compensation/Stock Option Committee met three times
during 1998.
The responsibilities of the Special Stock Option Committee include
administering any stock option plan in which officers and directors are not
eligible to participate and approving the grant of options pursuant to any
such plan to persons who are not officers or directors. The members of this
committee are Messrs. Jacobs and Milne.
8
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
General
The table below and the notes thereto set forth as of April 7, 1999 (unless
otherwise indicated in the footnotes), certain information concerning the
beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934) of the Common Stock by (i) each director and executive officer of
the Company, (ii) all executive officers and directors of the Company as a
group and (iii) each person known to the Company to be the owner of more than
5% of the Common Stock.
<TABLE>
<CAPTION>
Number of Shares of Percent of
Common Stock Common Stock
Name and Address(1) Beneficially Owned(2)(3) Owned(3)
- ------------------- ------------------------ ------------
<S> <C> <C>
Bradley S. Jacobs........................ 20,117,006(4) 25.8%
Wayland R. Hicks......................... 517,155(5) *
John N. Milne............................ 2,392,857(6) 3.3%
William F. Berry......................... 1,632,606(7) 2.2%
Michael J. Nolan......................... 1,028,911(8) 1.4%
John S. McKinney......................... 819,544(9) 1.1%
Robert P. Miner.......................... 441,904(10) *
Leon D. Black............................ 30,000(11) *
Richard D. Colburn....................... 13,808,662(12) 19.3%
Ronald M. DeFeo.......................... 73,000(13) *
Michael S. Gross......................... 30,000(14) *
Richard J. Heckmann...................... 90,000(15) *
Gerald Tsai, Jr.......................... 590,001(16) *
Christian M. Weyer....................... 102,000(17) *
All executive officers and directors as a
group
(14 persons)............................ 37,540,074(18) 45.5%
The Equitable Companies Incorporated..... 4,660,705(19) 6.5%
Apollo Investment Fund IV, L.P. and
Apollo Overseas Partners IV L.P......... 12,000,000(20) 14.4%
</TABLE>
- --------
*Less than 1%.
(1) Unless otherwise indicated, the address is c/o the Company.
(2) Unless otherwise indicated, each person has sole investment and voting
power with respect to the shares indicated. For purposes of this table, a
person or group of persons is deemed to have "beneficial ownership" of
any shares as of a given date which such person has the right to acquire
within 60 days after such date. For purposes of computing the percentage
of outstanding shares held by each person or group of persons named above
on a given date, any security which such person or persons has the right
to acquire within 60 days after such date is deemed to be outstanding for
the purpose of computing the percentage ownership of such person or
persons, but is not deemed to be outstanding for the purpose of computing
the percentage ownership of any other person.
(3) In certain cases, includes securities owned by one or more entities
controlled by the named holder.
(4) Consists of 12,790,814 outstanding shares, 6,342,858 shares issuable upon
the exercise of currently exercisable warrants and 983,334 shares
issuable upon the exercise of currently exercisable options. Does not
include 1,966,667 shares issuable upon exercise of options which are not
currently exercisable. Mr. Jacobs has certain rights relating to the
disposition of the shares and warrants owned by certain of the other
officers of United Rentals as described under "--Certain Agreements
Relating to Securities Held by Officers." By virtue of such rights,
Mr. Jacobs is deemed to share beneficial ownership (within the meaning of
Rule 13d-3 under the Securities Exchange Act of 1934) of the shares owned
by such other officers of United Rentals. The shares that the table
indicates are owned by Mr. Jacobs include the shares with respect to
9
<PAGE>
which Mr. Jacobs is deemed to share beneficial ownership as aforesaid.
Excluding such shares, Mr. Jacobs is deemed the beneficial owner of an
aggregate of 15,983,434 shares of Common Stock (composed of 10,000,100
outstanding shares, 5,000,000 shares issuable upon the exercise of
currently exercisable warrants and 983,334 shares issuable upon the
exercise of currently exercisable options).
(5) Consists of 108,822 outstanding shares and 408,333 shares issuable upon
the exercise of currently exercisable options. Does not include unissued
shares that the Company is required to pay Mr. Hicks as part of his base
salary as described under "Executive and Director Compensation--
Employment Agreements and Change-In Control Arrangements." Also does not
include 816,667 shares issuable upon exercise of options which are not
currently exercisable.
(6) Consists of 1,428,571 outstanding shares, 714,286 shares issuable upon
the exercise of currently exercisable warrants and 250,000 shares
issuable upon the exercise of currently exercisable options. Does not
include 500,000 shares issuable upon exercise of options which are not
currently exercisable.
(7) Consists of 97 outstanding shares and 1,632,509 shares issuable upon the
exercise of currently exercisable options. Does not include 575,000
shares issuable upon exercise of options that are not currently
exercisable.
(8) Consists of 571,529 outstanding shares, 285,715 shares issuable upon the
exercise of currently exercisable warrants and 171,667 shares issuable
upon the exercise of currently exercisable options. Does not include
343,333 shares issuable upon exercise of options which are not currently
exercisable.
(9) Consists of 2,887 outstanding shares and 816,657 shares issuable upon the
exercise of currently exercisable options. Does not include 337,500
shares issuable upon exercise of options that are not currently
exercisable.
(10) Consists of 285,714 outstanding shares and 142,857 shares issuable upon
the exercise of currently exercisable warrants and 13,333 shares issuable
upon exercise of currently exercisable options. Does not include 66,667
shares issuable upon exercise of options which are not currently
exercisable.
(11) Consists of 30,000 shares issuable upon exercise of currently exercisable
options. Mr. Black disclaims beneficial ownership of certain shares as
described in footnote 20.
(12) Consists of 13,798,662 outstanding shares and 10,000 shares issuable upon
the exercise of currently exercisable options. These outstanding shares
are owned by a corporation wholly owned by Mr. Colburn. Does not include
20,000 shares issuable upon exercise of options that are not currently
exercisable. Mr. Colburn disclaims beneficial ownership of 290,000 shares
held by the Colburn Foundation which are not reflected in this table.
(13) Consists of 3,000 outstanding shares and 70,000 shares issuable upon the
exercise of currently exercisable options. Does not include 20,000 shares
issuable upon exercise of options that are not currently exercisable.
(14) Consists of 30,000 shares issuable upon exercise of currently exercisable
options. Mr. Gross disclaims beneficial ownership of certain shares as
described in footnote 20.
(15) Consists of 20,000 outstanding shares and 70,000 shares issuable upon
exercise of currently exercisable options. Does not include 20,000 shares
issuable upon exercise of options that are not currently exercisable.
(16) Consists of 270,001 outstanding shares and 320,000 shares issuable upon
exercise of currently exercisable options. Does not include 20,000 shares
issuable upon exercise of options that are not currently exercisable.
(17) Consists of 72,000 outstanding shares and 30,000 shares issuable upon
exercise of currently exercisable options.
(18) Consists of 26,561,383 outstanding shares, 6,142,858 shares issuable upon
the exercise of currently exercisable warrants and 4,835,833 shares
issuable upon the exercise of currently exercisable options. Does not
include 4,685,834 shares issuable upon exercise of options which are not
currently exercisable.
10
<PAGE>
(19) The following information is as of December 31, 1998, and is based on
information contained in a Schedule 13G filed by the indicated
shareholder. Consists of shares beneficially owned by the following
subsidiaries of The Equitable Companies Incorporated, each of which
operates under independent management and makes independent decisions:
4,337,130 shares beneficially owned by Alliance Capital Management L.P.
(of which it is deemed to have shared power to vote or direct the vote
with respect to 3,853,200 shares); 120,800 shares beneficially owned by a
separate account of The Equitable Life Assurance Society of the United
States; 46,011 shares beneficially owned by Wood Struthers & Winthrop
Management Corporation; and 156,764 shares beneficially owned by
Donaldson, Lufkin & Jenrette Securities Corporation (of which it is
deemed to have shared power to dispose or to direct the disposition with
respect to 155,802 shares). The address of the indicated stockholder is
1290 Avenue of the Americas, New York, New York 10104.
(20) Consists of shares issuable upon conversion of outstanding shares of the
Company's Series A Preferred. Of the shares indicated, (i) 11,389,040
shares are owned by Apollo Investment Fund IV, L.P. ("AIFIV") and (ii)
610,960 shares are owned by Apollo Overseas Partners IV, L.P. ("Overseas
IV"). Apollo Advisors IV, L.P. ("Advisors IV") is the general partner of
AIFIV and the managing general partner of Overseas IV. Apollo Capital
Management IV, L.P. ("Capital Management IV") is the general partner of
Advisors IV. The directors and principal executive officers of Capital
Management IV are Leon D. Black and John J. Hannan. Messrs. Black and
Hannan are also limited partners of Advisors IV. Messrs. Black, Gross and
Hannan disclaim beneficial ownership of the shares owned by AIFIV and
Overseas IV. The address of both AIFIV and Overseas IV is c/o Apollo
Advisors IV, L.P., Two Manhattanville Road, Purchase, New York 10577.
Certain Agreements Relating to Securities Held By Officers
Prior to the Company's initial public offering, certain executive officers
and other employees of the Company purchased Common Stock (and in certain
cases warrants) from the Company in private placements. (For information
concerning the securities purchased by certain executive officers of the
Company in such private placements, see "Certain Transactions--Capital
Contributions by Executive Officers and Directors.") All shares of Common
Stock and warrants purchased by the executive officers and other employees of
the Company prior to the Company's initial public offering (and any shares of
Common Stock acquired upon exercise of such warrants) are referred to as the
"Private Placement Securities."
Each holder of Private Placement Securities (other than Mr. Jacobs and Mr.
Hicks) has entered into an agreement with the Company and Mr. Jacobs that
provides that (1) if Mr. Jacobs sells any Private Placement Securities that he
beneficially owns in a commercial, non-charitable transaction, then Mr. Jacobs
is required to use his best efforts to sell (and has the right to sell subject
to certain exceptions) on behalf of such holder a pro rata portion of such
holder's Private Placement Securities at then prevailing prices, and (2)
except for sales that may be required to be made as aforesaid, the holder
shall not (without the prior written consent of the Company) sell or otherwise
dispose of the Private Placement Securities owned by such holder (subject to
certain exceptions for charitable gifts). The foregoing provisions of the
agreements terminate, depending on the individual, in either September or
October 2002.
Each holder of Private Placement Securities (other than Mr. Jacobs and Mr.
Hicks) has also agreed pursuant to such agreements that the Company, in its
sole discretion, may (1) prior to September 1, 2005, repurchase the Private
Placement Securities owned by such holder in the event that such holder
breaches any agreement with the Company or acts adversely to the interest of
the Company and (2) repurchase such Private Placement Securities without any
cause (provided that such repurchase right without cause has lapsed with
respect to one-third of the securities and will lapse with
11
<PAGE>
respect to an additional one-third on each of the second and third
anniversaries of the date of such agreements). The amount to be paid by the
Company in the event of a repurchase will be equal to (1) in the case of
Messrs. Milne, Nolan and Miner, $9.125 per share of Common Stock and $0.625
per warrant plus an amount representing a 4% annual return on such amounts
from the date on which such securities were purchased and (2) in the case of
any other holder of Private Placement Securities, the amount originally paid
by such holder for such securities plus an amount representing a 10% annual
return on such amount. See "Certain Transactions--Capital Contributions by
Executive Officers and Directors" for information concerning the amounts paid
by the executive officers of the Company for the Private Placement Securities
owned by them.
Mr. Hicks has agreed that he will not transfer any shares of Common Stock
that are issued to him as compensation pursuant to his employment agreement
for a one-year period following the date of issuance. See "Executive and
Director Compensation--Employment Agreements and Change-In-Control
Arrangements."
12
<PAGE>
EXECUTIVE AND DIRECTOR COMPENSATION
Summary Compensation Table
The following table sets forth for the periods indicated information
concerning the compensation of the chief executive officer of the Company and
the four most highly compensated executive officers of the Company (other than
the chief executive officer) during 1998.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation(1) on Awards
---------------------------- ------------
Securities
Name and Principal Underlying All Other
Position Year(2) Salary($) Bonus($) Options(#) Compensation($)
- ------------------ ------- --------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Bradley S. Jacobs....... 1998 290,000 450,000 2,950,000 1,500(4)
Chief Executive Officer 1997 97,039
Wayland R. Hicks........ 1998 400,000(3) 325,000 775,000 1,500(4)
Chief Operating Officer 1997 47,692 450,000
John N. Milne........... 1998 190,000 325,000 750,000 1,500(4)
Chief Acquisition 1997 58,558
Officer
Michael J. Nolan........ 1998 175,000 200,000 515,000 1,212(4)
Chief Financial Officer 1997 58,558
William F. Berry........ 1998 56,250 300,000 575,000
President
</TABLE>
- --------
(1) The only type of other annual compensation for each of the named officers
was in the form of perquisites and other personal benefits which were in
each case less than the level required for reporting.
(2) The Company commenced operations in 1997 and, accordingly, no data is
provided for any period prior to 1997. The officers named in the table
commenced employment with the Company as follows (i) Messrs. Jacobs, Milne
and Nolan have been employed by the Company since its formation in August
1997, (ii) Mr. Hicks commenced employment on November 14, 1997 and (iii)
Mr. Berry commenced employment on September 29, 1998.
(3) Mr. Hicks' employment agreement provides that, commencing in 1998, his
base salary is payable 50% in cash and 50% in Common Stock (valued at the
average closing sales price of the Common Stock during all trading days in
the calendar quarter preceding the quarter in which the payment is made).
Pursuant to this provision, Mr. Hicks' 1998 salary was paid in the form of
$200,000 of cash and 7,238 shares of Common Stock.
(4) Represents the Company's matching contribution under its 401(k) plan.
13
<PAGE>
Options
The following tables summarize the options granted in 1998 to the executive
officers named in the Summary Compensation Table above, the potential value of
these options at the end of the option term (assuming certain levels of
appreciation of the Company's Common Stock), and the number and value of all
options held by such executive officers at the end of 1998. No options were
exercised in 1998.
Option Grants in 1998
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Rate of Stock
Appreciation For
Individual Grants Option Term(1)
--------------------------------------------- ------------------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise
Options Employees Price Expiration
Name Granted in 1998 Per Share Date 5% 10%
- ---- ---------- ---------- --------- ---------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Bradley S. Jacobs....... 1,200,000(2) 12.7% $21.9375 03/24/2008 $ 42,880,651 $ 68,280,270
1,750,000(3) 18.5% 12.4375 10/09/2008 35,453,910 56,454,426
Wayland R. Hicks........ 225,000(2) 2.4% 21.9375 03/24/2008 8,040,122 12,802,551
550,000(3) 5.8% 12.4375 10/09/2008 11,142,657 17,742,820
John N. Milne........... 300,000(2) 3.2% 21.9375 03/24/2008 10,720,163 17,070,068
450,000(3) 4.8% 12.4375 10/09/2008 9,116,720 14,516,852
Michael J. Nolan........ 225,000(2) 2.4% 21.9375 03/24/2008 8,040,122 12,802,551
290,000(3) 3.1% 12.4375 10/09/2008 5,875,219 9,355,305
William F. Berry........ 200,000(4) 2.1% 21.3750 09/29/2008 6,963,525 11,088,249
75,000(4) 0.8% 45.0000 09/29/2008 -- 1,158,093
300,000(5) 3.2% 12.4375 10/09/2008 6,077,813 9,677,902
</TABLE>
- --------
(1) The dollar amounts under these columns are the result of calculations at
hypothetical 5% and 10% compounded annual appreciation rates prescribed by
the Securities and Exchange Commission and, therefore, are not intended to
forecast possible future appreciation, if any, of the Company's Common
Stock price.
(2) These options became exercisable with respect to one-third of the
underlying shares on March 24, 1999, and will become exercisable with
respect to an additional one-third on each of March 24, 2000 and March 24,
2001.
(3) These options were immediately exercisable with respect to one-third of
the underlying shares, and will become exercisable with respect to an
additional one-third on each of October 9, 1999 and October 9, 2000.
(4) These options will become exercisable with respect to one-third of the
underlying shares on each of September 29, 1999, September 29, 2000 and
September 29, 2001.
(5) These options will become exercisable with respect to one-third of the
underlying shares on each of October 9, 1999, October 9, 2000 and October
9, 2001.
Value Of Options at End of 1998
<TABLE>
<CAPTION>
Value of Unexercised In-
Number of Securities Underlying the-
Unexercised Options at Year end Money Options at Year End
--------------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- --------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C>
Bradley S.
Jacobs........... 583,333 2,366,667 $11,994,785 $37,264,590
Wayland R. Hicks.. 333,333 891,667 6,969,803 16,428,635
John N. Milne..... 150,000 600,000 3,084,375 9,487,500
Michael J. Nolan.. 96,667 418,333 1,987,715 6,464,472
William F. Berry.. 2,170,365 575,000 26,523,597 6,168,750
</TABLE>
14
<PAGE>
Compensation of Directors
Directors who are also employees of the Company are not paid additional
compensation for serving as directors. Each non-employee director of the
Company is paid up to $2,500 per day for each Board of Directors' meeting such
director attends, together with an expense reimbursement. In addition, non-
employee directors were granted options in 1998 as indicated in the table
below.
<TABLE>
<CAPTION>
Number of Securities
Underlying Options
Name of Director Granted in 1998 Exercise Price Per Share($)
---------------- -------------------- ---------------------------
<S> <C> <C>
Richard D. Colburn 30,000 12.4375
Ronald M. DeFeo 40,000 21.9375
30,000 12.4375
Richard J. Heckmann 40,000 21.9375
30,000 12.4375
Gerald Tsai, Jr. 40,000 21.9375
30,000 12.4375
250,000 22.2500
Christian M. Weyer 30,000 21.6900
</TABLE>
Employment Agreements and Change-in-Control Arrangements
The Company has entered into employment agreements with each of the
executive officers of the Company. Certain information with regard to these
agreements is set forth below.
Base Salary. The agreements provide for base salary to be paid at a rate per
annum as follows: Mr. Jacobs ($290,000), Mr. Hicks ($400,000), Mr. Milne
($190,000), Mr. Berry ($225,000), Mr. Nolan ($175,000), Mr. McKinney
($175,000) and Mr. Miner ($150,000). In March 1999, the base salaries for
Messrs. Jacobs and Milne were increased to $350,000 and $225,000,
respectively. The base salary payable to Mr. Hicks is payable 50% in cash and
50% in Common Stock (valued at the average closing sales price of the Common
Stock during all trading days in the calendar quarter preceding the quarter in
which the payment is made). Shares of Common Stock issued to Mr. Hicks are
subject to certain restrictions on transfer as described under "Security
Ownership of Certain Beneficial Owners and Management--Certain Agreements
Relating to Securities Held by Officers." The base salary payable to Messrs.
Jacobs, Milne, Berry and McKinney is subject to possible upward annual
adjustments based upon changes in a designated cost of living index.
Bonus. The agreements do not provide for mandatory bonuses. However, the
agreements provide that, in addition to the compensation specifically provided
for, the Company may pay such salary increases, bonuses or incentive
compensation as may be authorized by the Board of Directors.
Other Compensation and Benefits. The agreements with Messrs. Jacobs and
Milne provide for each such executive to receive an automobile allowance of at
least $700 per month. The agreements with Messrs. Berry and McKinney provide
that the employee is entitled to participate in an automobile allowance
program which is made available to other senior executives of the Company.
The agreements with Messrs. Hicks and Berry provide for the Company to
reimburse the employee for certain relocation expenses up to a maximum of
$100,000.
15
<PAGE>
Certain of the agreements provide that the employee is entitled to
participate in certain specified insurance, retirement, compensation and
benefit plans if such plans are made available to other specified executives
of the Company.
Term. The employment agreements with the following executives provide that
the term shall automatically renew so that at all times the balance of the
terms will not be less than the period hereinafter specified with respect to
such executive: Mr. Jacobs (five years), Mr. Milne (five years), Mr. Nolan
(three years) and Mr. Miner (three years). The employment agreement with Mr.
Hicks provides for a term extending until November 2000. The employment
agreements with Messrs. Berry and McKinney provide for a term of three years
commencing on September 29, 1998, subject to automatic renewal so that at all
times the balance of the term will not be less than two years.
Termination and Severance. Under each of the agreements, the Company or the
employee may at any time terminate the agreement, with or without cause,
provided that if the Company terminates the agreement, the Company is required
to make severance payments to the extent described below.
The employment agreements with Messrs. Jacobs and Milne provide that the
executive is entitled to severance benefits in the event that (i) his
employment agreement is terminated by the Company without Cause (as defined in
the employment agreement), (ii) the executive terminates his employment
agreement for Good Reason (as defined in the employment agreement) or because
of a breach by the Company of its obligations thereunder, (iii) his employment
is terminated as a result of death or (iv) the Company or the executive
terminates the employment agreement due to the disability of the executive.
The severance benefits include (a) a lump sum payment equal to five times the
sum of the executive's annual base salary at the time of termination plus the
highest annual bonus paid to the executive in the preceding three years and
(b) the continuation of the executive's benefits for the remaining term. The
employment agreements with Messrs. Jacobs and Milne also provide that if any
portion of the required severance payment to the executive constitutes an
"excess parachute payment" (as defined in Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code")), the executive is entitled to receive a
payment sufficient on an after-tax basis to offset any excise tax payable by
the executive pursuant to Section 4999 of the Code. Any payment constituting
an "excess parachute payment" would not be deductible by the Company.
The employment agreement with Mr. Hicks provides that the executive is
entitled to a severance payment in the amount of $1 million in the event that
his employment agreement is terminated by the Company without Cause (as
defined in the employment agreement) or he terminates his employment for Good
Reason (as defined in the employment agreement).
The employment agreements with Messrs. Berry and McKinney provide that if
the employment agreement is terminated by the Company without Cause (as
defined in the employment agreement), the executive is entitled to continue
receiving from the Company his then current monthly base salary and benefits
over the balance of the term.
The employment agreements with the other officers provide that the executive
is entitled to severance benefits of up to three months' base salary in the
event that the executive's employment agreement is terminated without Cause
(as defined in the employment agreement).
Options. Each of the agreements provides that all stock options at any time
to be granted to the executive will automatically vest upon a change of
control of the Company (as defined in the agreement).
16
<PAGE>
Pursuant to the employment agreement with Mr. Hicks, Mr. Hicks has been
granted (i) options to purchase an aggregate of 350,000 shares of Common Stock
at a price per share of $10.00, (ii) options to purchase an aggregate of
50,000 shares of Common Stock at a price per share of $15.00, and (iii)
options to purchase an aggregate of 50,000 shares of Common Stock at a price
per share of $20.00. One third of these options vested in November 1998. The
balance will vest one-half in November 1999 and one-half in November 2000.
Pursuant to the employment agreement with Mr. Berry, Mr. Berry has been
granted (i) options to purchase an aggregate of 200,000 shares of Common Stock
at a price per share of $21.375 and (ii) options to purchase an aggregate of
75,000 shares of Common Stock at a price per share of $45. These options will
vest one-third in September 1999, one-third in September 2000 and one-third in
September 2001.
Pursuant to the employment agreement with Mr. McKinney, Mr. McKinney has
been granted (i) options to purchase an aggregate of 100,000 shares of Common
Stock at a price per share of $21.375 and (ii) options to purchase an
aggregate of 37,500 shares of Common Stock at a price per share of $45. These
options will vest one-third in September 1999, one-third in September 2000 and
one-third in September 2001.
Other Provisions. The agreement with Mr. Hicks provides that at each annual
meeting of the stockholders of the Company which occurs during the term of the
agreement and at which Mr. Hicks' term as director would be scheduled to
expire, the Company will nominate Mr. Hicks for re-election as a director.
Compensation Committee Interlocks and Insider Participation
The members of the Company's Compensation/Stock Option committee are Messrs.
DeFeo, Heckmann and Tsai. None of these directors has ever been an officer or
employee of the Company or its subsidiaries. Except as described below, none
of these directors has had any other relationship with the Company requiring
disclosure under applicable rules of the SEC.
The Company has from time to time purchased equipment from Terex Corporation
("Terex") and may do so in the future. Mr. DeFeo is the chief executive
officer and a director of Terex. The Company purchased approximately $1.1
million of equipment from Terex in 1997 and $11.6 million in 1998.
17
<PAGE>
CERTAIN TRANSACTIONS
Capital Contributions by Executive Officers and Directors
The executive officers and directors of the Company listed below have made
capital contributions to the Company in the aggregate amount of $45.3 million
(excluding amounts paid by certain officers and directors in respect of shares
of Common Stock purchased by them in the Company's initial public offering in
December 1997). Such capital contributions were made in connection with the
sale to such officers and directors in private placements in 1997 of an
aggregate of 12,717,714 shares of Common Stock and 6,142,858 warrants
("Warrants"). Each such Warrant entitles the holder to purchase one share of
Common Stock at an exercise price of $10.00 per share at any time prior to
September 12, 2007. Such shares and Warrants were sold at a price of $3.50 per
unit consisting of one share of Common Stock and one-half of a Warrant (except
that Messrs. Tsai and Weyer purchased only Common Stock at a price of $3.50
per share and Messrs. Hicks and Heckmann purchased only Common Stock at a
price of $10.00 per share). The table below indicates (i) the number of shares
of Common Stock and the number of Warrants purchased by such officers and
directors (excluding shares purchased in the Company's initial public
offering) and (ii) the aggregate amount paid by such officers and directors
for such securities:
<TABLE>
<CAPTION>
Securities Purchased(1)
-------------------------
Common
Name Stock Warrants Purchase Price
---- ------------ --------------------------
<S> <C> <C> <C>
Bradley S. Jacobs.................. 10,000,000 5,000,000 $35,000,000
Wayland R. Hicks................... 100,000 -- 1,000,000
John N. Milne...................... 1,428,571 714,286 5,000,000
Michael J. Nolan................... 571,429 285,715 2,000,000
Robert P. Miner.................... 285,714 142,857 1,000,000
Richard J. Heckmann................ 20,000 -- 200,000
Gerald Tsai, Jr. .................. 240,000 -- 840,000
Christian M. Weyer................. 72,000 -- 252,000
</TABLE>
- --------
(1) In certain cases includes securities owned by one or more entities
controlled by the named holder.
Other Transactions
The Company has from time to time purchased equipment from Terex and may do
so in the future. Ronald M. DeFeo, a director of the Company, is the chief
executive officer, and a director of Terex. The Company purchased
approximately $1.1 million of equipment from Terex in 1997 and $11.6 million
in 1998.
In connection with the sale of the Company's Series A Preferred shares in
January 1999, the Company paid a fee of $3 million to Apollo.
In connection with the Company's merger with U.S. Rentals, the Company
assumed a demand note payable to Richard D. Colburn, who became a director of
the Company following the merger. The outstanding balance on this note was
$21.5 million as of December 31, 1998. Interest paid on this note amounted to
$1.3 million in 1998.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation/Stock Option Committee (the "Compensation Committee") of
the Board of Directors of the Company is responsible for developing, and
recommending to the Board of Directors, the Company's compensation policies
for executives of the Company. The goals of the Company's compensation policy
are to (i) offer competitive compensation that will attract and retain the
type of high caliber executives that the Company requires in order to achieve
its objectives, (ii) motivate
18
<PAGE>
executives to achieve the Company's business objectives and (iii) align the
interests of executives with the long-term interests of the Company and its
stockholders. In 1998, the Company primarily used base salary, cash bonuses
and stock options to meet these goals. The Compensation Committee believes
that there is necessarily an element of subjectivity in establishing
compensation levels for the Company's executives and to date has not followed
specific objective performance criteria when establishing such compensation
levels.
An important element of each executive officer's compensation in 1998
consisted of stock options. The Compensation Committee believes that the use
of stock options to compensate executive officers and other employees
encourages and rewards effective management that results in long-term
corporate financial success, as measured by stock price appreciation. The
Compensation Committee further believes that such use aligns the interests of
the Company's executives and other employees with those of the Company's
stockholders, since the value of a stock option bears a direct relationship to
the Company's stock price.
The compensation paid in 1998 to the Company's Chief Executive Officer and
the other executive officers named in the Summary Compensation Table above
(the "Named Executives") consisted of base salary, a cash bonus and stock
options. Each of the Named Executives has an employment agreement with the
Company which was entered into in 1997 (except that Mr. Berry's agreement was
entered into in September 1998 in connection with the Company's merger with
U.S. Rentals). The base salary paid to each of the Named Executives in 1998
was in accordance with the terms of the executive's employment agreement. In
addition, certain of the options granted to Mr. Berry were required by the
terms of his employment agreement (as described under "Executive and Director
Compensation--Employment Contracts and Change in Control Arrangements"). The
other compensation paid in 1998 to each Named Executive was based on the
Compensation Committee's evaluation of a number of factors, including the
executive's position and responsibilities, service and accomplishments and
present and future value to the Company.
In connection with its evaluation, the Compensation Committee noted the
respective contribution of each of the Named Executives to various
achievements of the Company since commencing operations in October 1997,
including: (i) the Company has grown through a combination of internal growth
and acquisitions and is currently the largest equipment rental company in
North America, (ii) the Company completed 90 acquisitions through the end of
1998, including a merger with U.S. Rentals (which at the time of the merger
was the second largest equipment rental company in the United States based on
1997 revenues), (iii) the Company's revenues increased to $1.22 billion in
1998 from $490 million in 1997 and its net income (excluding extraordinary
items and merger-related expenses) rose to $72.8 million in 1998 from $32.6
million in 1997 and (iv) the Company completed approximately $2.7 billion of
financing transactions through the end of 1998 (including the Company's $762.5
million revolving credit facility). The Compensation Committee also noted that
the cumulative total return of the Company's Common Stock exceeded the
cumulative total return of the Standard & Poor's 500 Index and the BT Alex.
Brown U.S. Equipment Rental Index.
Members of the Compensation/Stock
Option Committee
Richard J. Heckmann
Ronald M. DeFeo
Gerald Tsai, Jr.
19
<PAGE>
PERFORMANCE GRAPH
The following performance graph compares the cumulative total return, during
the period December 18, 1997 (date of the Company's initial public offering)
to December 31, 1998, of the Company's Common Stock to the cumulative total
return of (i) the Standard & Poor's 500 Index and (ii) BT Alex. Brown U.S.
Equipmental Rental Index. The comparison in the graph assumes the investment
of $100 in the Company's Common Stock and the aforementioned indexes on
December 18, 1997, and the reinvestment of all dividends.
[LINE GRAPH]
Standard & Poor's BT Alex. Brown U.S.
United Rentals 500 Index Equipmental Rental Index
-------------- ----------------- ------------------------
12/18/97 100 100 100
12/31/97 129 102 115
12/31/98 221 129 129
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission. Officers, directors and greater than ten-percent stockholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) reports that they file.
Based solely upon review of the copies of such reports furnished to the
Company and written representations from certain of the Company's executive
officers and directors that no other such reports were required, the Company
believes that during the period from January 1, 1998 through December 31, 1998
all Section 16(a) filing requirements applicable to its officers, directors
and greater than ten-percent beneficial owners were complied with on a timely
basis (except that Messrs. Berry and Heckmann each filed a Form 5 with respect
to 1998 late).
20
<PAGE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has reappointed Ernst & Young LLP as independent
auditors to audit the financial statements of the Company for 1999, subject to
ratification by the stockholders. Ernst & Young LLP has audited the financial
statements of the Company since its inception.
In the event that the stockholders fail to ratify this reappointment, other
certified public accountants will be considered upon recommendation of the
Audit Committee. Even if this reappointment is ratified, the Board of
Directors, in its discretion, may direct the appointment of a new independent
accounting firm at any time during the year, if the Board believes that such a
change would be in the best interest of the Company and its stockholders.
A representative of Ernst & Young LLP is expected to be present at the
Annual Meeting with an opportunity to make a statement if he so desires and
will be available to respond to appropriate questions.
Ratification of the reappointment of Ernst & Young LLP as independent
auditors to audit the financial statements of the Company for 1999 requires
the affirmative vote of a majority of the shares present in person or
represented by proxy at the Meeting and entitled to vote on the matter. (For
purposes of the foregoing, each share of Series A Preferred will be treated as
the equivalent of 40 shares.) Abstentions will have the same effect as a vote
against such ratification, whereas broker non-votes and shares not represented
at the Meeting will not be counted for purposes of determining whether such
ratification has been approved.
The Board of Directors recommends that the stockholders vote FOR such
ratification (designated as Proposal 2 on the enclosed proxy card).
STOCKHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING
Notice Required to Include Proposals in the Company's Proxy Statement
The Company will review for inclusion in next year's proxy statement
shareholder proposals received by December 17, 1999. All proposals must meet
the requirements set forth in the rules and regulations of the SEC in order to
be eligible for inclusion in the proxy statement. Proposals should be sent to
the Secretary of the Company, Four Greenwich Office Park, Greenwich,
Connecticut 06830.
Notice Required to Bring Business Before an Annual Meetings
The Company's By-laws establish an advance notice procedure for stockholders
to make nominations of candidates for election of director or to bring other
business before an annual meeting. Under these procedures, a stockholder that
proposes to nominate a candidate for director or propose other business at the
2000 Annual Meeting of Stockholders, must give the Company written notice of
such nomination or proposal not less than 60 days and not more than 90 days
prior to the scheduled date of the meeting (or, if less than 70 days' notice
or prior public disclosure of the date of the meeting is given, then the 15th
day following the earlier of (i) the date such notice was mailed or (ii) the
day such public disclosure was made). Such notice must provide certain
information as specified in the Company's By-laws and must be received at the
Company's principal executive offices by the deadline specified above.
If a stockholder notifies the Company after March 1, 1999, of an intention
to present a proposal at the 2000 Annual Meeting of Stockholders (and for any
reason the proposal is voted on at the meeting), the Company's proxy holders
will have the right to exercise discretionary voting authority with respect to
such proposal.
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OTHER MATTERS
The Board of Directors of the Company does not know of any matter to be
presented for action at the Meeting other than the proposals described herein.
If any other matters not described herein should properly come before the
Meeting for stockholder action, it is the intention of the persons named in
the accompanying proxy to vote, or otherwise act, in respect thereof in
accordance with the Board of Directors' recommendations.
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UNITED RENTALS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Bradley S. Jacobs, John N. Milne,
Michael J. Nolan or any of them with full power of substitution, proxies to vote
at the Annual Meeting of Stockholders of United Rentals, Inc. (the "Company") to
be held on June 3, 1999 at 10:00 a.m., local time, and at any adjournment or
adjournments thereof, hereby revoking any proxies heretofore given, all shares
of Common Stock of the Company and (subject to the following sentence) all
shares of Series A Perpetual Convertible Preferred Stock of the Company ("Series
A Preferred") held or owned by the undersigned as directed on the reverse side,
and in their discretion upon such other matters as may come before the meeting.
This proxy does not confer authority to vote any shares of Series A Preferred
with respect to the election of directors or with respect to any other matter as
to which the holders of the Series A Preferred have the right to vote as a
separate class.
(To be Signed on Reverse Side)
