<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 Section 240.14a-11(c) or Section
240.14a-12
XTRA Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
XTRA Corporation
- --------------------------------------------------------------------------------
(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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE>
XTRA CORPORATION
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 18, 1999
To the Stockholders:
The 1999 Annual Meeting of Stockholders of XTRA Corporation will be held at
the offices of Ropes & Gray, One International Place, 36th Floor, Boston,
Massachusetts, on Thursday, February 18, 1999, at 10:00 A.M. for the following
purposes:
1. To elect a Board of Directors for the ensuing year.
2. To transact such other business as may properly come before the meeting
and any adjournments thereof.
The Board of Directors has fixed the close of business on December 31, 1998,
as the record date for the determination of the stockholders entitled to notice
of, and to vote at, the meeting and any adjournments thereof.
Whether or not you expect to attend the meeting in person, we urge you to
sign and date the enclosed proxy and return it promptly in the envelope
provided.
By order of the Board of Directors
THOMAS A. GIACCHETTO, SECRETARY
January 19, 1999
<PAGE>
XTRA CORPORATION
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors for use at the 1999 Annual Meeting
of Stockholders of XTRA Corporation, a Delaware corporation (the "Company"), on
Thursday, February 18, 1999, and at any adjournments thereof. You can ensure
that your shares are voted by signing and returning the enclosed proxy in the
envelope provided. Sending in a signed proxy will not affect your right to
attend the meeting and vote in person. You may revoke your proxy at any time
before it is voted by a written revocation received by the Secretary, by a
subsequently dated proxy or by oral revocation delivered in person to the
Secretary at the meeting. This proxy statement and the enclosed proxy will be
mailed to stockholders commencing on or about January 19, 1999.
ELECTION OF DIRECTORS
The Company's By-Laws provide for no fewer than five directors and no more
than twelve, as determined by the directors. The Board of Directors has fixed
the number of directors for the ensuing year at nine. The Board of Directors
recommends that each of the nominees for director, all of whom are now serving
as directors of the Company and are described below, be reelected as a director
of the Company. Each director to be elected will serve until the next Annual
Meeting of Stockholders or until his successor is duly elected and qualified.
The accompanying proxy will be voted for the election of the following nominees
unless authority to vote is withheld by marking the box entitled "WITHHELD" on
the enclosed proxy. Authority to vote for any individual nominee may be withheld
by writing the name of the nominee in the space provided on the enclosed proxy.
If any nominee is unable to serve, which is not anticipated, or should any
vacancy arise for whatever reason, the persons named as proxies intend to act
with respect to the filling of that office by voting the shares to which the
proxy relates for the election of such other person or persons as may be
designated by the Board of Directors or, in the absence of such designation, in
such other manner as they may in their discretion determine. Alternatively, in
any such situation, the Board of Directors may take action to fix the number of
directors for the ensuing year at the number of nominees named herein who are
then able to serve. Proxies will then be voted for the election of such
nominees, except to the extent the authority to so vote is withheld.
<PAGE>
INFORMATION WITH RESPECT TO DIRECTOR NOMINEES
MICHAEL D. BILLS Director since 1997
Tiger Management L.L.C.
101 Park Avenue
New York, NY 10178
Since 1995, Mr. Bills, age 41, has been Chief Operating Officer and Senior
Managing Director of Tiger Management L.L.C., an investment management company.
From 1991 to 1995, Mr. Bills taught at both the University of Virginia's Darden
Graduate School of Business Administration and the McIntire School of Commerce.
From 1986 to 1991, Mr. Bills was also with Tiger Management L.L.C. serving as
Managing Director. Previously, Mr. Bills was with Goldman, Sachs & Co. from 1981
to 1986. Mr. Bills currently serves as Co-Chairman of the Board of Trustees of
the Tiger Foundation, a New York based charitable foundation, and as a Director
of the India Magnum Fund, an investment fund managed by Morgan Stanley & Co.
Member of Executive Committee.
H. WILLIAM BROWN Director since 1996
4137 Jackson Drive
Lafayette Hill, PA 19444
Since May 1997, Mr. Brown, age 60, has been Chief Financial Officer of
Maritrans Inc., a shipping company engaged in petroleum transportation. From
1992 through 1996, Mr. Brown was Vice President-Finance & Administration and
Chief Financial Officer of Consolidated Rail Corporation, one of the largest
railroad companies in North America. From 1986 to 1992, Mr. Brown served as
Senior Vice President--Finance of Consolidated Rail Corporation. Previously, Mr.
Brown served in various other executive capacities with Consolidated Rail
Corporation from 1978 until 1986. Mr. Brown was a member of the Board of
Governors of The Philadelphia Stock Exchange until he retired in September 1997.
Chairman of Nominating Committee and member of Audit Committee.
MICHAEL N. CHRISTODOLOU Director since January 1998
Thomas M. Taylor & Co.
201 Main Street, Suite 3200
Fort Worth, Texas 76102
Since 1993, Mr. Christodolou, age 37, has been Director of Equity
Investments for Thomas M. Taylor & Co., an investment consulting firm providing
services to entities associated with the Bass family, including Trinity I Fund,
L.P. From 1988 to 1993, Mr. Christodolou was an investment analyst for Thomas M.
Taylor & Co.
Member of Audit Committee.
2
<PAGE>
ROBERT M. GINTEL Director since 1990
Gintel & Co.
6 Greenwich Office Park
Greenwich, CT 06831
Since 1990, Mr. Gintel, age 70, has been Vice Chairman of the Board of
Directors of the Company. He is Senior Partner of Gintel & Co. Limited
Partnership, a securities broker/dealer firm and member organization of the New
York Stock Exchange, Inc., Chairman of the Board and Chief Executive Officer of
Gintel Asset Management, Inc., a registered investment advisor, and Chairman of
the Board and Chief Executive Officer of the Gintel Fund. Mr. Gintel has held
such positions for more than the past five years.
Member of Executive Committee.
ROBERT B. GOERGEN Director since 1990
Blyth Industries, Inc.
100 Field Point Road
Greenwich, CT 06830
Since 1990, Mr. Goergen, age 60, has been Chairman of the Board of Directors
of the Company. Since 1976, he has been Chairman of the Board and Chief
Executive Officer of Blyth Industries, Inc., a manufacturer and importer of
candles and home decorating accessories. Since 1979, Mr. Goergen has been the
general partner or president of various Ropart entities whose business is
investing in securities for their own account. Mr. Goergen is a Director of Bank
of America Illinois, a subsidiary of Bank of America. Mr. Goergen serves as a
Director of Leading Edge Packaging, Inc., a packaging company. He is also
Chairman of the Board of Trustees of the University of Rochester.
Chairman of Executive Committee and member of Compensation Committee.
HERBERT C. KNORTZ Director since 1990
14 Manor Road
Ridgefield, CT 06877
Retired. From 1973 through 1991, Mr. Knortz, age 77, was a Trustee of
Corporate Property Investors, a real estate investment trust. Mr. Knortz also
served in various executive capacities with ITT Corporation, a diversified
international manufacturing and services corporation, from 1961 until his
retirement as Executive Vice President and Director in 1986. He is a former
Director of Sheraton Corporation and Hartford Insurance Group. From 1985 to
1986, Mr. Knortz was President and Chief Executive Officer of the National
Association of Accountants, and from 1986 to 1987, its Chairman.
Member of Audit and Nominating Committees.
3
<PAGE>
FRANCIS J. PALAMARA Director since 1990
3110 E. Maryland Avenue
Phoenix, AZ 85016
Since 1988, Mr. Palamara, age 73, has been a business consultant. From 1981
to 1988, he was Executive Vice President, Finance of ARA Services, Inc., now
known as Aramark, Inc., a food services corporation, and until 1992, a member of
its Board of Directors. From 1972 to 1978, Mr. Palamara served as Executive Vice
President and Chief Operating Officer of the New York Stock Exchange, Inc. and
from 1978 to 1981, Executive Vice President and Director of Pittston Company.
Mr. Palamara serves as a Director of the Gintel Fund and the Glenmede Funds.
Chairman of Audit Committee and member of Compensation Committee.
LEWIS RUBIN Director since 1990
XTRA Corporation
60 State Street
Boston, MA 02109
Since 1990, Mr. Rubin, age 61, has been Chief Executive Officer and
President of the Company. From 1988 to 1990, he was a consultant with Lewis
Rubin Associates, a consulting firm advising the transportation equipment
industry. From 1984 to 1988, Mr. Rubin served as President and Chief Executive
Officer of Gelco CTI Container Services, a subsidiary of Gelco Corporation, a
diversified international management services corporation, and as an Executive
Vice President of Gelco Corporation. From 1981 to 1983, Mr. Rubin was President
and Chief Executive Officer of Flexi-Van Corporation, a company engaged in the
leasing of intermodal transportation equipment. Mr. Rubin is a Director of
Oneita Industries, Inc, a textile and apparel company.
Member of Executive Committee.
MARTIN L. SOLOMON Director since 1990
P.O. Box 70
Coconut Grove, FL 33233
Since June 1997, Mr. Solomon, age 62, has been the Chairman and Chief
Executive Officer of American Country Holdings Inc., an insurance company
holding company. Since 1990, Mr. Solomon has been a private investor. From 1988
to 1990, he was a Managing Director and general partner of Value Equity
Associates, I, L.P., an investment partnership. From 1985 to 1987, Mr. Solomon
was an investment analyst and portfolio manager with Steinhardt Partners, an
investment partnership. From 1985 to 1996, Mr. Solomon was a Director and Vice
Chairman of the Board of Great Dane Holdings, Inc., a company engaged in the
manufacture of transportation equipment, automobile stamping and the leasing of
taxis and insurance. Since April 1996, Mr. Solomon has been a Director of Hexcel
Corp., a company engaged in the manufacture of composite materials, and since
June 1997, Mr. Solomon has been a Director of Telephone and Data Systems, Inc.,
a diversified telecommunications service company with established wireless and
wireline operations.
Chairman of Compensation Committee and member of Executive Committee.
4
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has established the following
committees to assist it in the discharge of its responsibilities.
The AUDIT COMMITTEE, none of whose members is an employee of the Company,
annually recommends to the Board of Directors the appointment of a firm of
independent auditors to audit the financial statements of the Company. In
addition, the Committee meets with such independent auditors, the Company's
internal auditor, the Chief Executive Officer and the principal financial,
accounting and legal personnel of the Company to review the scope and results of
the annual audit, the amount of audit fees, the Company's internal accounting
controls, the Company's financial statements contained in the Company's Annual
Report to Stockholders and other related matters. Messrs. Palamara (Chairman),
Brown, Christodolou and Knortz currently serve as members. The Audit Committee
held 6 meetings in fiscal year 1998.
The COMPENSATION COMMITTEE is charged with the duty of review and subsequent
recommendation to the Board on matters concerning the individual compensation of
the most highly paid employees of the Company and administers certain employee
benefit plans. Messrs. Solomon (Chairman), Goergen and Palamara currently serve
as members. The Compensation Committee held 3 meetings during fiscal year 1998.
The Board of Directors has an EXECUTIVE COMMITTEE, which has authority to
act for the full Board of Directors on most matters during intervals between
meetings of the Board of Directors. Messrs. Goergen (Chairman), Bills, Gintel,
Solomon and Rubin currently serve as members. The Executive Committee held 5
meetings in fiscal year 1998.
The Board of Directors also has a NOMINATING COMMITTEE, which held 2
meetings during fiscal 1998. The Nominating Committee has authority to recommend
potential Board members and the reelection or nonreelection of directors at the
expiration of their respective terms, to present annually a slate of officers
for the Board and to make additional nominations as vacancies occur, and to
recommend appointments to standing Committees. The Nominating Committee will
consider recommendations for director nominees submitted by stockholders by
timely written notice received by the Secretary of the Company in advance of the
applicable stockholder meeting. See "Stockholder Proposals and Director
Nominations" below. Messrs. Brown (Chairman), Bills and Knortz currently serve
as members.
The full Board held 6 meetings during fiscal year 1998.
5
<PAGE>
STOCK OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the number of shares of the Company's Common
Stock, $.50 par value, beneficially owned by each current director, director
nominee, by each of the executive officers named in the Compensation Tables, and
by all directors and executive officers as a group on December 11, 1998.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OWNERSHIP(1) OF CLASS(1)
- ------------------------------------------------------------------------------ ---------------------- ---------------
<S> <C> <C>
Michael D. Bills.............................................................. 5,000 *
H. William Brown.............................................................. 6,000 *
Michael N. Christodolou....................................................... 5,552 *
Michael K. Fox................................................................ 50,334 *
William H. Franz.............................................................. 97,500 *
Robert M. Gintel.............................................................. 24,000 *
Robert B. Goergen............................................................. 45,852(2) *
Frederick M. Gutterson........................................................ 63,750 *
Herbert C. Knortz............................................................. 10,800 *
Francis J. Palamara........................................................... 10,800 *
Lewis Rubin................................................................... 294,389 1.9%
Michael J. Soja............................................................... 93,034 *
Martin L. Solomon............................................................. 40,550 *
All Directors and Executive Officers as a group, including those named above
(17 persons)................................................................ 803,563 5.2%
</TABLE>
- ------------------------
* Less than 1%.
(1) For purposes of determining beneficial ownership of the Company's Common
Stock, $.50 par value, options exercisable within 60 days have been included
as follows: Mr. Bills--5,000, Mr. Brown--6,000, Mr. Christodolou--5,552, Mr.
Fox--50,334, Mr. Franz--97,500, Mr. Gintel--4,000, Mr. Goergen-- 4,000, Mr.
Gutterson--63,750, Mr. Knortz--4,000, Mr. Palamara--4,000, Mr.
Rubin--246,667, Mr. Soja--78,750, Mr. Solomon--10,150, all directors and
executive officers--635,705. Nature of beneficial ownership is direct and
arises from sole voting and investment power, unless otherwise noted by
footnote.
(2) Includes 2,824 shares of Common Stock owned by Mr. Goergen's wife and 700
shares held in trust for the benefit of Mr. Goergen's mother. Mr. Goergen
disclaims beneficial ownership of such shares.
6
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors is responsible for the
administration of the Company's executive compensation program. The Committee is
made up of three Directors who are not employees of the Company. It is
responsible for setting the compensation levels of the Company's Chief Executive
Officer and other senior executives, including the executives named in the
Summary Compensation Table. The Committee is also responsible for the
administration of certain compensation and benefit plans. The Committee met 3
times during the year ended September 30, 1998.
COMPENSATION PHILOSOPHY
The Committee believes that the Company's executive compensation program
should attract and retain talented executives. The Committee provides its
executives with the opportunity to earn significant compensation if the Company
and the individual meet or exceed challenging performance goals. This strategy
has helped the Company attract, retain and motivate high quality executives who
have developed and implemented a successful business strategy which has
increased earnings per share from $1.00 in fiscal 1991 to $3.88 in fiscal 1998,
an increase of 288%.
The Committee periodically reviews a number of independent compensation
surveys as guidelines to determine competitive pay practices. The survey data is
reviewed directly and is also summarized by independent compensation
consultants. Generally, the survey data used is for transportation related
companies of similar size to the Company and based in the United States.
However, since the Company's competition for executive talent is not limited to
the transportation industry, compensation data for other companies of similar
size is also considered. The survey data used to assess the Company's executive
compensation includes some companies that are part of the Dow Jones
Transportation Index as well as other transportation and non-transportation
companies.
Section 162(m) of the Internal Revenue Code of 1986 limits to $1 million the
deduction a public company may claim in any year for compensation to the chief
executive officer and the four other most highly compensated executive officers
unless the compensation is performance based. The Committee believes that it
will not be denied any tax deductions during fiscal 1999 as a result of Section
162(m). While the Committee expects that action will be taken to qualify most
compensation approaches to ensure deductibility, tax considerations do not
automatically cause the Committee to modify its executive compensation program.
The Committee believes that the total compensation provided to the Company's
executives is both prudent and competitive. Also, the Committee believes that
the program has helped to successfully focus XTRA's executive team on increasing
Company performance and stockholder value.
BASE SALARIES
Base salaries are determined at the discretion of the Committee based on a
review of competitive market pay practices, performance evaluations and expected
future individual contributions. The Committee uses the median of the range of
base salaries from independent compensation surveys to target the Company's base
salary levels. However, it also considers an individual's unique position,
responsibilities and performance in setting salary levels. In reviewing
individual performances, the Committee considers the views of the Chief
Executive Officer, Mr. Lewis Rubin, with respect to other executive officers.
7
<PAGE>
During fiscal 1998, the Committee increased the base salary levels of senior
executives, other than the CEO, on average 6.8% after the Committee considered,
but did not formally weigh, inflation, corporate performance, employee
performance and competitive conditions.
ANNUAL INCENTIVES
Annual incentives are paid primarily through the Company's Economic Profit
Incentive Plan (the "Economic Profit Plan") which was adopted by the Board of
Directors in 1996 to take effect for fiscal 1997. The Economic Profit Plan's
objectives are to enhance commitment to the long-term success of the Company by
linking personal financial rewards to the growth of value of the Company, by
increasing the Company's Economic Profit (as defined below), and to increase the
Company's ability to attract and retain key executives. Under the Economic
Profit Plan, annual incentives are determined by establishing target incentive
awards based on a percentage of base salary. Actual awards are based on
corporate performance or divisional performance depending upon the
responsibilities of the participant. Corporate and divisional performance are
measured by the growth of Economic Profit by comparing the actual Economic
Profit against a target Economic Profit as designated by the Committee. The term
"Economic Profit" is defined as after-tax operating profit (before interest
expense), less a capital charge for all capital invested in the Company or
division, as applicable. The term "capital charge" is defined as the Company's
weighted average, after-tax, cost of capital, representing a blend of the
Company's equity and debt capital cost.
Awards for corporate executives, other than the CEO, are determined based on
Company performance (weighted 100%). The annual awards for divisional presidents
are determined based on Company performance (weighted 25%), and division
performance (weighted 75%). Annual awards for other divisional staff are
determined based on division performance (weighted 100%). The Committee sets the
annual award for the CEO directly based on Company performance (weighted 100%)
and its discretionary evaluation of the CEO's individual performance.
Annual incentive target awards for the CEO and the other executives named in
the Summary Compensation Table range from 35% to 60% of salary. Actual cash
awards may be up to 1.5 times the target awards plus 33% of any positive amount
in the participant's bonus reserve account, an account maintained for each
participant which carries forward any earned but unpaid bonuses from prior
years. This bonus reserve account may also contain a negative balance from prior
years, in such cases the negative amount must be offset against any positive
bonuses earned. The Committee approved actual cash awards for the named
executives, other than the CEO, that averaged 176% of the targeted award levels.
The annual incentive for the CEO is discussed under the CEO Compensation
section.
LONG-TERM INCENTIVES
From time to time, the Committee has granted stock options to the Company's
executives in order to align their interests with the interests of stockholders.
Since stock options are granted at market price, the value of the stock options
is wholly dependent on an increase in the price of the Company's Common Stock.
Stock options are considered effective long-term incentives by the Committee
because an executive is rewarded only if the value of the Company's Common Stock
increases, thus increasing stockholder value. In determining grants of options
for executives, the Committee has reviewed competitive data of long-term
incentive practices at other transportation related companies and companies of
similar size to the Company but in other industries. The Committee has also
taken into account the level of past stock compensation grants and the value of
those grants in determining awards for the Company's executives.
8
<PAGE>
On November 12, 1997, the Committee recommended the grant of options
covering 17,000 shares of the Company's Common Stock to certain key members of
senior management. The number of options granted was based on the Committee's
review of the individual executive's position and potential within XTRA, and the
level of past stock compensation awards granted to the individual executive.
CEO COMPENSATION
The Committee awarded an annual incentive award that was 180% of Mr. Rubin's
target annual incentive, based on the Committee's discretionary evaluation of
Mr. Rubin's individual performance. In evaluating the CEO's individual
performance, the Committee considered, but did not formally weigh, the financial
progress that the Company has made as measured by the growth of Economic Profit
and earnings per share as well as the factors described above under
"Compensation Philosophy".
Martin L. Solomon, Chairman
Robert B. Goergen
Francis J. Palamara
9
<PAGE>
EXECUTIVE COMPENSATION TABLES
SUMMARY COMPENSATION TABLE
The following information is given regarding compensation earned by the
Chief Executive Officer and the four other most highly compensated executive
officers of the Company with respect to the 1998, 1997 and 1996 fiscal years, in
accordance with transitional provisions applicable to the revised rules on
executive compensation disclosure adopted by the Securities and Exchange
Commission.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -------------
----------------------------- SECURITIES
NAME AND OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION(1)
- ------------------------------------------ --------- ---------- ---------- ----------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Lewis Rubin............................... 1998 $ 550,000 $ 593,684 -- -- $ 14,249
President and Chief 1997 504,166 329,848 -- 100,000 11,250
Executive Officer 1996 500,000 174,712 -- -- 11,061
William Franz............................. 1998 283,750 232,714 -- -- 14,249
Vice President, XTRA 1997 255,000 143,903 -- 45,000 11,250
Lease 1996 221,250 85,315 -- -- 11,061
Frederick M. Gutterson.................... 1998 265,000 167,356 -- -- 14,249
Vice President, XTRA 1997 263,200 7,897 -- 26,250 11,250
International 1996 254,452 14,819 -- -- 11,061
Michael J. Soja........................... 1998 232,150 163,866 -- -- 14,249
Vice President and 1997 221,450 84,515 -- 26,250 11,250
Chief Financial Officer 1996 213,000 60,518 -- -- 11,061
Michael K. Fox............................ 1998 191,750 100,084 -- 6,000 14,249
Vice President, XTRA 1997 180,250 107,630 -- 5,000 11,250
Intermodal 1996 173,750 51,566 -- -- 11,061
</TABLE>
- ------------------------
(1) The amounts shown for each named officer for fiscal 1998 include matching
Company contributions under the Company's 401(k) plan and the Company's
contribution under the defined contribution plan, as follows: Mr. Rubin:
$4,800 and $9,449; Mr. Franz: $4,800 and $9,449 Mr. Gutterson: $4,800 and
$9,449; Mr. Soja: $4,800 and $9,449; and Mr. Fox $4,800 and $9,449.
AGREEMENT WITH MR. RUBIN. On July 1, 1994, the Company entered into an
Individual Pension Agreement with Mr. Rubin pursuant to which the Company will
pay Mr. Rubin an annual life benefit of $100,000 if he continues to serve as
Chief Executive Officer of the Company until age 65. In the event of a Change of
Control, the Company has agreed to pay Mr. Rubin a lump sum payment equal to the
present value of such annual benefit in the event his employment with the
Company is terminated within the two year period following the date of the
Change of Control. A Change of Control under the agreement generally includes
the following events: (i) a person or group becomes the beneficial owner of more
than 40% of the voting power of the Company's securities, (ii) a change of
control required to be reported under certain provisions of the Securities
Exchange Act of 1934, (iii) a consolidation, merger or other reorganization
(other than (a) in which the voting power immediately before continues to
represent more
10
<PAGE>
than 50% of the voting power thereafter, or (b) in which no person or group
would acquire more than 20% of the voting power), a sale of all or substantially
all assets or a plan of liquidation, and (iv) continuing directors cease to be a
majority of the Board of Directors. In the event Mr. Rubin dies while serving as
Chief Executive Officer or after he becomes entitled to benefits under the
agreement, his surviving spouse, if any, would be entitled to certain survivor
benefits. Mr. Rubin would forfeit all benefits in the event he joins the board
of directors or becomes an executive officer of a competitor of the Company
within two years after the date of termination of his employment with the
Company, other than termination following a Change of Control.
SEVERANCE AGREEMENTS. In December 1997, the Company entered into severance
agreements with Messrs. Rubin, Franz, Soja and Fox, providing each of them with
severance benefits upon certain terminations of their employment with the
Company. Such agreements provide that if, within twenty-four months following a
Significant Transaction, the executive's employment with the Company is
terminated either by the Company (other than for "cause", as defined in the
agreements) or by such executive for "good reason" (as defined in the
agreements), the executive would receive a severance payment equal to two times
the executive's annual base salary (at the rate in effect immediately prior to
the date of termination) and his annualized average bonus amount for the prior
two fiscal years and the portion of any year in which the termination occurs. In
addition, the agreements provide for the immediate vesting of all bonus awards,
stock options, etc. For a period of two years following any such termination of
employment, the executive would be entitled to participate in all welfare
benefit plans (other than disability) provided by the Company. In the case of
Mr. Fox, cash payments under the agreement are required to be reduced to the
extent necessary to assure that no portion of the payments under the agreement
would constitute a "parachute payment" under Section 280G of the Internal
Revenue Code. The term Significant Transaction as defined in the agreements
generally includes the following events: (i) a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (or, in the case of Mr. Franz and Mr. Fox, XTRA Lease and
XTRA Intermodal), unless (a) the voting power immediately prior to such
transaction continues to represent 50% or more of the voting power thereafter,
(b) no individual or group would acquire 30% or more of the voting power, and
(c) at least a majority of the members of the board of directors of the
corporation resulting from such transaction were members of the Board at the
time of the execution of the initial agreement or of the action of the Board,
providing for such transaction; or (ii) approval by the shareholders of the
Company of a complete liquidation or dissolution of the Company (or, in the case
of Mr. Franz and Mr. Fox, the applicable subsidiary, other than a liquidation or
dissolution of such subsidiary into the Company or any subsidiary of the
Company).
AGREEMENTS WITH MR. GUTTERSON. On June 30, 1995, the Company acquired a
marine container fleet of approximately 170,000 twenty-foot equivalent units
from Matson Leasing Company, Inc. ("Matson"). In connection with this
acquisition, the Company entered into an Agreement with Mr. Gutterson dated June
30, 1995, providing for the employment of Mr. Gutterson as a Vice President of
the Company and President of XTRA International Ltd., an indirect wholly-owned
subsidiary of the Company. The agreement provides for an annual base salary of
$250,000, certain bonus compensation tied to the long-term performance of XTRA
International Ltd. (versus a budget agreed upon at the time of the acquisition),
and such fringe benefits as are from time to time generally provided by the
Company to its senior executives. Also pursuant to the agreement, Mr. Gutterson
was granted options covering 40,000 shares of the Company's Common Stock under
the Company's 1987 Stock Incentive Plan.
At the time the Company acquired Matson, Mr. Gutterson was party to an
agreement, assumed by the Company, that provides Mr. Gutterson with certain
severance benefits upon certain terminations of his
11
<PAGE>
employment with the Company. Such agreement provides that if, prior to December
31, 1999 Mr. Gutterson's employment with the Company is terminated either by the
Company (other than for "cause", as defined in the agreement) or by Mr.
Gutterson for "good reason" (as defined in the agreement), he would receive, in
addition to salary and bonus earned in respect of the year in which such
termination occurs, a severance payment equal to two times his annual base
salary (at the highest rate in effect during the year immediately prior to the
date of termination) and his highest annual bonus compensation in respect of the
three calendar years prior to such termination. For a period of two years
following any such termination of employment, Mr. Gutterson would be entitled to
participate in all health and welfare benefit plans provided by the Company.
Payments under the agreement are required to be reduced to the extent necessary
to assure that no portion of the payments under the agreement would constitute a
"parachute payment" under Section 280G of the Internal Revenue Code.
12
<PAGE>
OPTION/SAR GRANTS TABLE
The table below includes for the individuals named in the Summary
Compensation Table certain information concerning individual grants of stock
options made during fiscal 1998.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
--------------------------------------------------------------
INDIVIDUAL GRANTS
--------------------------------------------------------------
% OF GRANT DATE
NUMBER OF TOTAL VALUE
SECURITIES OPTIONS EXERCISE -------------
UNDERLYING GRANTED TO OR BASE GRANT DATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT VALUE
NAME GRANTED FISCAL YEAR ($/SH) DATE (2)
- ------------------------- ----------- ----------------- ----------- ----------------- -------------
<S> <C> <C> <C> <C> <C>
Michael K. Fox........... 6,000(1) 7% $ 51.0625 November 11, 2002 $ 83,520
</TABLE>
- ------------------------
(1) All options were granted on November 12, 1997 and have a term of 5 years.
One-third of the shares subject to the option vest and become exercisable on
each of the first, second and third anniversaries of the date of grant. The
exercise price of each option is equal to the fair market value of the
underlying Common Stock on the date of grant, as determined by the closing
price of the Common Stock on November 12, 1997 of $51.0625.
(2) This is a hypothetical valuation as of the grant date using a modified
Black-Scholes valuation formula pursuant to Securities and Exchange
Commission regulations and does not reflect the actual value of the option
awards at any given time. The Black-Scholes model assumed (a) an option term
of five years, (b) a risk-free interest rate of 4.2% (the yield on five-year
U.S. Treasury securities), (c) a standard deviation of stock-return of 26%,
and (d) a dividend yield of 1.1%. The standard deviation of stock return
represents a statistical measure intended to reflect the anticipated
fluctuation of price movements over the life of the option.
13
<PAGE>
AGGREGATE OPTION/SAR EXERCISES AND
FISCAL YEAR END OPTION/SAR VALUE TABLE
The table below includes for the individuals named in the Summary
Compensation Table certain information concerning each exercise of stock options
during fiscal 1998 and the fiscal year-end value of unexercised options.
AGGREGATE OPTION EXERCISES AND
FISCAL YEAR END OPTION VALUE TABLE
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
SHARES AT FISCAL YEAR END(#) FISCAL YEAR END($)(1)
ACQUIRED VALUE -------------------------- --------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lewis Rubin........................... 15,000 $ 253,125 238,333 16,667 $ 48,438 $ 96,875
William H. Franz...................... -- -- 95,000 5,000 14,531 29,063
Frederick M. Gutterson................ -- -- 61,250 5,000 14,531 29,063
Michael J. Soja....................... -- -- 76,250 5,000 14,531 29,063
Michael K. Fox........................ 5,000 110,220 46,067 9,333 9,688 19,375
</TABLE>
- ------------------------
(1) Based on share price of $46.56, which was the closing price for a share of
the Company's Common Stock on September 30, 1998.
14
<PAGE>
STOCK PERFORMANCE GRAPH
The graph below compares cumulative total shareholder returns for the
Company for the preceding five fiscal years with the S&P 500 Stock Index and the
Dow Jones Transportation Index. The graph assumes the investment of $100 at the
commencement of the measurement period with dividends reinvested.
XTRA CORPORATION
COMPARISON OF CUMULATIVE TOTAL RETURN
FISCAL YEAR ENDING SEPTEMBER 30, 1998
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DOW JONES
<S> <C> <C> <C>
XTRA TRANSPORTATION
CORPORATION S &P 500 AVERAGE
9/93 $100.00 $100.00 $100.00
9/94 $108.30 $103.69 $93.19
9/95 $95.03 $134.53 $124.26
9/96 $92.18 $161.89 $133.42
9/97 $126.08 $227.37 $203.68
9/98 $104.26 $247.93 $176.11
</TABLE>
COMPENSATION OF DIRECTORS
The Company pays its directors, other than the Chairman and Vice Chairman of
the Board, a monthly retainer of $1,375. The Chairman and Vice Chairman of the
Board are paid monthly retainers of $5,000 and $1,667, respectively. All
directors are paid a fee of $1,000 for each meeting of the Board of Directors
attended in person or by telephone. In addition, Committee chairmen and members
receive $1,000 for each Committee meeting attended. A monthly retainer of $250
is also paid to Committee chairmen. Mr. Rubin, as an officer, does not receive
fees for attendance at Committee meetings. Directors may elect to defer part or
all of their director's fees pursuant to the Company's Deferred Director Fee
Option Plan.
15
<PAGE>
DEFERRED DIRECTOR FEE OPTION PLAN--The Company's Deferred Director Fee
Option Plan (the "1993 Plan") permits non-employee directors to choose between
receiving their fees from the Company in the form of cash or non-qualified stock
options. The option exercise price is 50% of the fair market value of the shares
at the time the options are awarded and the amount of shares is determined by
dividing the directors' fees by the exercise price. Mr. Bills, Mr. Christodolou
and Mr. Solomon are the only current directors who have elected to participate
in the 1993 Plan. At December 11, 1998, there were outstanding options to
purchase 6,702 shares of the Company's Common Stock at an average option
exercise price of $24.47.
During fiscal 1998, Mr. Solomon was awarded options to purchase 643 shares
of the Company's Common Stock at an option price of $29.53 on December 31, 1997
and an option to purchase 653 shares of the Company's Common Stock, an option
price of $29.875 on January 30, 1998. During fiscal 1998, Mr. Christodolou was
awarded options to purchase 552 shares of the Company's Common Stock at an
option price of $29.875 on January 30, 1998. Options granted in lieu of annual
retainer fees become exercisable as to all shares covered thereby on the first
anniversary of the date of grant and options granted in lieu of meeting fees
become exercisable six months following the date of grant.
STOCK OPTION PLAN FOR DIRECTORS--The Company has established the 1991 Stock
Option Plan for Non-Employee Directors (the "1991 Plan"), pursuant to which each
of the then current directors who was not an employee of the Company (each an
"Eligible Director") was awarded options to purchase 4,000 shares of Common
Stock upon adoption of the 1991 Plan. The Plan also provides initial grants to
newly elected directors for options covering 4,000 shares of the Company's
Common Stock. Following the initial grant, each person who is an Eligible
Director on the day immediately succeeding the day of each annual meeting of
stockholders of the Company will receive options covering 1,000 shares (subject
to the maximum number of shares available under the 1991 Plan) of Common Stock
on such date. The exercise price of each option is 100% of fair market value (as
defined in the 1991 Plan) on the date of award. At December 11, 1998 there were
outstanding options to purchase 36,000 shares of the Company's Common Stock
under the 1991 Plan at an average option exercise price of $49.68. The exercise
price of the options for 1,000 shares awarded to each such director following
the 1998 Annual Meeting of Stockholders was $59.75 per share. In addition, Mr.
Christodolou was awarded an option to purchase 4,000 shares upon his election to
the Board of Directors on January 29, 1998 at an exercise price of $59.4375 per
share. Options become exercisable on the earlier of (i) the first anniversary of
the date of grant or (ii) the date immediately prior to the date of the next
annual meeting of stockholders following the grant date provided that such date
is at least 355 days after such grant date. 100,000 shares have been authorized
for delivery upon exercise of options under the 1991 Plan. The 1991 Plan is
administered by the Compensation Committee of the Board of Directors.
16
<PAGE>
OTHER INFORMATION
AUDITORS
Representatives of Arthur Andersen LLP, the auditors for the Company's 1998
fiscal year, are expected to attend the 1999 Annual Meeting, where they will
have the opportunity to make a statement if they wish to do so and will be
available to answer appropriate questions from the stockholders.
OUTSTANDING VOTING SECURITIES
On December 11, 1998, there were outstanding and entitled to vote 15,372,903
shares of the Common Stock, $.50 par value, of the Company, constituting the
only class of outstanding voting securities.
QUORUM, VOTING OF PROXIES, REQUIRED VOTES AND METHOD OF TABULATION
Consistent with state law and under the Company's By-laws, a majority of the
shares entitled to be cast on a particular matter, present in person or
represented by proxy, constitutes a quorum as to such matter. Votes cast by
proxy or in person at the Annual Meeting will be counted by persons appointed by
the Company to act as election inspectors for the meeting.
Proxies will be voted as specified by the stockholders. If specific choices
are not indicated, proxies will be voted FOR the election of all of the nominees
for director specified above. Directors will be elected by a plurality of the
votes properly cast for the election of directors at the meeting. The election
inspectors will count shares represented by proxies that withhold authority to
vote for a nominee for election as a director or reflect abstentions and "broker
non-votes" (i.e., shares represented at the meeting held by brokers or nominees
as to which (i) instructions have not been received from the beneficial owners
or persons entitled to vote and (ii) the broker or nominee does not have the
discretionary voting power on a particular matter) only as shares that are
present and entitled to vote on the matter for purposes of determining the
presence of a quorum, but neither abstentions nor broker non-votes have any
effect on the outcome of voting on the matter.
17
<PAGE>
BENEFICIAL OWNERSHIP OF MORE THAN FIVE
PERCENT OF THE VOTING SECURITIES
The only persons or entities known to the Company to be the beneficial owner
of five percent or more of the Company's voting securities are as follows:
<TABLE>
<CAPTION>
AMOUNT
AND
NATURE OF PERCENT
NAME AND ADDRESS BENEFICIAL OF
OF BENEFICIAL OWNER TITLE OF CLASS OWNERSHIP(1) CLASS
- ---------------------------------------------------------------------- ----------------- ------------ -----------
<S> <C> <C> <C>
Tiger Management...................................................... Common Stock 5,341,400 34.7%
101 Park Avenue
New York, New York 10172
Trinity I Fund, L.P................................................... Common Stock 1,372,900 8.9%
201 Main Street, Suite 3200
Fort Worth, Texas 76102
Westport Asset Management Inc......................................... Common Stock 1,219,500 7.9%
253 Riverside Avenue
Westport, Connecticut 06880
</TABLE>
- ------------------------
(1) Nature of beneficial ownership is direct and arises from sole voting and
investment power, unless otherwise noted by footnote.
Information with respect to beneficial ownership of the Company's Common
Stock is based in part upon information contained in filings with the Securities
and Exchange Commission and in part on information obtained directly from the
holders. The percentages shown in the foregoing table have been computed on the
basis of shares outstanding on December 11, 1998. The number of shares reported
as held for each of Tiger Management and Westport Asset Management Inc. was as
of December 11, 1998 and for Trinity I Fund, L.P. was as of November 24, 1998.
ANNUAL REPORT
The Annual Report of the Company for the fiscal year ended September 30,
1998 has been mailed to all stockholders.
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
Stockholder proposals intended to be presented at the 2000 Annual Meeting
must be received by the Company on or before September 22, 1999 for inclusion in
the proxy material for that meeting. Any such proposals should be mailed to:
Secretary, XTRA Corporation, 60 State Street, Boston, Massachusetts 02109.
The Company's By-Laws also establish an advance notice procedure with
respect to stockholder nomination of candidates for election as directors and
other stockholder proposals (whether or not such
18
<PAGE>
proposals are to be included in the Company's proxy material). A notice
regarding stockholder nominations for director or other stockholder proposals
must be received by the Secretary of the Company not less than 90 days prior to
the first anniversary of the date of the last annual meeting. Accordingly, with
respect to the 2000 Annual Meeting, the notice must be received by the Secretary
of the Company by November 20, 1999. Any such notice must contain certain
specified information concerning the persons to be nominated or the proposal
being made and the stockholder submitting the nomination or proposal, all as set
forth in the By-Laws. The presiding officer of the meeting may refuse to
acknowledge any director nomination or other stockholder proposal not made in
compliance with such advance notice requirements.
SOLICITATION
Proxies may be solicited by directors, officers and a small number of
regular employees of the Company personally or by mail, telephone, facsimile or
otherwise, but such persons will not be specially compensated for such service.
Banks and brokers will be requested to solicit proxies from their customers,
where appropriate, and the Company will reimburse them for their reasonable
expenses. The cost of such solicitation will be borne by the Company. In
addition, the Company has retained Morrow & Co., Inc. to assist in the
solicitation of proxies for a fee of approximately $4,000 plus out-of-pocket
expenses.
OTHER MATTERS
The Board of Directors does not know of any matters other than those
described in this proxy statement that will be presented for action at the
meeting. If other matters come before the meeting, the persons named as proxies
intend to vote in accordance with their judgment.
19
<PAGE>
XTRA CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints as proxies, each with power of substitution,
Robert M. Gintel, Robert B. Goergen and Lewis Rubin, or any of them, and hereby
authorizes them to represent and to vote, as designated on the reverse side, all
the shares of common stock of XTRA Corporation (the "Company") held of record by
the undersigned on December 31, 1998, at the Annual Meeting of Stockholders to
be held February 18, 1999 at Ropes & Gray, One International Place, 36th Floor,
Boston, Massachusetts 02110, and at any adjournments thereof. The proxies
appointed shall act by a majority of such of them as shall be present at the
meeting, or if only one is present, by that one. The undersigned hereby revokes
any proxies heretofore given.
Please sign and date this proxy on SEE REVERSE
the reverse side where indicated SIDE
<PAGE>
[X] Please mark votes as in this example.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED, OR IF NO
DIRECTION IS MADE, FOR ITEM 1.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1 BELOW.
1. To elect a Board of Directors for the ensuing year.
NOMINEES: Michael D. Bills, H. William Brown, Michael N. Christodolou,
Robert M. Gintel, Robert B. Goergen, Herbert C. Knortz, Francis J. Palamara,
Lewis Rubin and Martin L. Solomon
FOR ALL NOMINEES WITHHELD FROM ALL NOMINEES
[ ] [ ]
[ ]
For all nominees except as noted above
2. The proxies have, in their discretion, the authority to vote upon such
other matters as may properly come before the meeting and any adjournments
thereof.
[ ] MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Please sign exactly as name appears hereon.
All joint owners should sign. When signing as attorney, executor, administrator,
trustee, guardian, or custodian for a minor, please give full title as such. If
a corporation, please sign full corporate name and indicate the signer's office.
If a partnership, sign in partnership name.
Signature Date
----------------------------------------------- ----------------
Signature Date
----------------------------------------------- ----------------
