<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. 1)
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
CHRYSLER CORPORATION
(Name of Registrant as Specified in Its Charter)
TRACINDA CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a) (2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:_____________
(2) Aggregate number of securities to which transaction
applies:_____________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which
the filing fee is calculated and state how it was
determined):_________________
(4) Proposed maximum aggregate value of transaction:_____________________
(5) Total fee paid:___________
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:_______________
(2) Form, Schedule or Registration Statement No.:________________
(3) Filing Party:____________
(4) Date Filed:_____________
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PRELIMINARY COPIES
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SUBJECT TO COMPLETION--DECEMBER 11, 1995
----------------------------------------
1996 ANNUAL MEETING OF STOCKHOLDERS
OF
CHRYSLER CORPORATION
PRELIMINARY PROXY STATEMENT
OF
TRACINDA CORPORATION
This Preliminary Proxy Statement (this "Proxy Statement") is being
furnished in connection with a possible solicitation of proxies by Tracinda
Corporation, a Nevada corporation ("Tracinda"), at the 1996 Annual Meeting of
Stockholders of Chrysler Corporation, a Delaware corporation (the "Company" or
"Chrysler"), and at any adjournments or postponements thereof (the "Annual
Meeting").
As of the date of this Proxy Statement, Chrysler has not announced the
date, time or place of the Annual Meeting or fixed the date for the
determination of shareholders of record entitled to vote at the Annual Meeting.
Tracinda intends to furnish this Proxy Statement to shareholders of Chrysler
with whom Tracinda communicates directly in person or by telephone and will
furnish this Proxy Statement, upon request, to any other Chrysler shareholder,
without charge. This Proxy Statement is first being furnished to Chrysler
shareholders on or about December [ ], 1995.
As described in more detail below, Chrysler has announced that its Board of
Directors (the "Board" or "Board of Directors") is conducting a 90-day review of
Chrysler's corporate governance procedures and Board membership. Tracinda
believes that, in order for this review process to be objective and to ensure a
balanced presentation of the issues, it is important that Tracinda be able to
participate actively in this process, by communicating directly with
shareholders of Chrysler through meetings in person and by telephone.
Accordingly, Tracinda is filing this Proxy Statement in order to assure that
Tracinda will be free to communicate directly with Chrysler shareholders while
the Board of Directors is conducting its review. Depending upon the results of
Chrysler's review and Tracinda's discussions with other Chrysler shareholders,
Tracinda reserves the right to solicit proxies or consents for use at the Annual
Meeting or otherwise with respect to one or more proposals, including one or
more of the proposals described below. Alternatively, Tracinda may determine
not to pursue any of such proposals and may withdraw this Proxy Statement.
According to the Company's filings with the Securities and Exchange
Commission (the "SEC"), as of September 30, 1995, there were 382,560,840 shares
of common stock,
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par value $1.00 per share, of the Company (the "Common Stock") issued and
outstanding, each of which is entitled to one vote. As of such date, Tracinda
and Mr. Kirk Kerkorian, the sole shareholder of Tracinda, were the beneficial
owners of 51,900,000 shares of Common Stock in the aggregate, or approximately
13.6% of the number of shares of Common Stock reported by the Company to be
outstanding.
______________________
If Tracinda determines to solicit proxies for use at the Annual Meeting,
Tracinda intends to amend this Proxy Statement and to furnish such amended Proxy
Statement in definitive form, together with a form of proxy, to Chrysler
shareholders on or about [ ], 1996. Any such proxy solicited may be
revoked as to all matters at any time prior to the time a vote is taken at the
Annual Meeting by filing a later dated written revocation, by submitting a duly
executed proxy bearing a later date, or by attending and voting at the Annual
Meeting in person. The principal executive offices of Chrysler are located at
12000 Chrysler Drive, Highland Park, Michigan 48288-0001.
IMPORTANT: TRACINDA IS NOT CURRENTLY ASKING YOU FOR A PROXY AND YOU ARE
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REQUESTED NOT TO SEND US A PROXY.
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BACKGROUND
During the fall of 1994, Tracinda reviewed its investment in Chrysler,
which then consisted of 32 million shares of Common Stock, and considered
various alternatives to enhance stockholder value. On September 19, 1994, Mr.
Kerkorian met with Mr. Robert Eaton, the Chairman of the Board of Directors of
Chrysler, and other members of Chrysler's management to discuss various means by
which Chrysler could enhance stockholder value, including a share repurchase, a
stock split and dividend increases. Subsequent to that meeting, various
discussions were held between representatives of Tracinda and Chrysler
concerning alternatives to enhance stockholder value and a possible "standstill"
agreement between Chrysler and Tracinda.
On October 10, 1994, Tracinda was approached by a third party seeking to
act as intermediary with respect to participation by Tracinda in a management-
led buyout of Chrysler. Tracinda was subsequently advised that the third party
had also contacted Chrysler.
On November 14, 1994, the following letter was sent to Chrysler's Board of
Directors:
Board of Directors
Chrysler Corporation
12000 Chrysler Drive
Highland Park, MI 48288-1919
To the Directors:
As you know, I have been a long-term investor in Chrysler Corporation
and the company's largest shareholder since 1990. At the present time I own
32 million shares, or approximately 30 times as many shares as the entire
Board of Directors, taken together. I have stated publicly on a number of
occasions, and I wish to state again in this letter, that I have a very
high regard for the company's management, and I continue to believe that
the company's common stock is an attractive investment. However, despite
the company's excellent operating performance in recent years, the
company's stock price performance has been very disappointing.
Like any other shareholder, my aim is to enhance the value of my
investment in the company. From time to time I have sought to encourage
management of the company to take steps which would benefit all
shareholders of the company. However, these efforts have been summarily
rebuffed. While other
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companies, for example, McDonnell Douglas Corporation, Ford Motor Company
and others, have taken actions which provided substantial value to
shareholders, Chrysler has not taken any such actions and has continued to
accumulate significant amounts of cash.
Although, as described below, I believe that it is imperative that the
Board of Directors of the company act promptly to invest its surplus cash
for the benefit of all shareholders, thereby increasing shareholder value,
I remain a committed long-term investor in the company. In that regard, I
am today filing a Hart-Scott notification seeking expedited clearance to
acquire additional shares of common stock, and I intend to significantly
raise my investment in the company from its current 9.0% level as soon as
clearance is obtained. However, the ability of shareholders to acquire
shares of the company in excess of 9.99% of the Common Stock and to
influence the company and its Board of Directors is severely inhibited by
the company's poison pill.
In view of the company's market capitalization of approximately $18
billion, there is no justification for a poison pill. The majority of
companies with market capitalization in excess of $10 billion do not have
poison pills, and neither of the other U.S. auto makers has a pill.
Furthermore, Chrysler's poison pill is unusually extreme compared to those
of other companies. In the first place, the pill reserves to the CURRENT
directors and their management hand-picked successors the absolute and
exclusive right to amend or redeem the pill, thereby denying this right to
a board comprised of directors approved by shareholders but not by
management. Secondly, the pill literally appears to prohibit significant
shareholders from being represented on the Board of Directors, since their
shares would arguably be aggregated with those of other directors and
officers and the company's employee benefit plans. And thirdly, the poison
pill is triggered by the acquisition of only 10% of the common stock. In
this connection, I would direct your attention to those public companies of
which Chrysler's outside directors are senior executives. Several of those
companies do not have a poison pill and, of those that do--Northrop-Grumman
Corporation, The Boeing Company and K mart Corporation--none has a poison
pill as extreme as Chrysler's. Indeed, I note that the K mart pill will be
redeemed unless ratified by shareholders at its 1995 annual meeting.
Accordingly, I believe that the company's poison pill is unlawful,
inappropriate and contrary to the shareholders' best interests and, in view
of the foregoing and in view of my intention to acquire additional shares
of the company's common stock, I request that the Board of Directors take
prompt action to redeem the pill.
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<PAGE>
In addition to redeeming the poison pill, I think that the Board of
Directors needs to take the following specific steps in the interests of
all shareholders: (a) undertake a meaningful share repurchase program, to
be completed within 12 months; (b) effect a 2 for 1 stock split; and (c)
raise the quarterly common stock dividend. This program should deliver
substantial value to all of the company's shareholders.
I have a high degree of confidence in Chrysler, in its management and
in this program. Accordingly, if Chrysler undertakes a meaningful share
repurchase program to be completed within 12 months, I am willing to commit
that I will not sell any of my stock while that share repurchase program is
in effect.
As I have emphasized in this letter, my objective is to enhance value
for all shareholders of the company. I believe the steps that I have
outlined here will help to accomplish that objective and, in the interests
of all shareholders, I expect the Board to move expeditiously to that end.
If, by December 15, the Board has not taken action to redeem the poison
pill and to initiate a stock buyback, a stock split and a dividend increase
as proposed in this letter, I intend to take all appropriate steps to
pursue these proposals, including legal action to invalidate the poison
pill.
I look forward to your response to the proposals contained in this
letter.
Sincerely,
Kirk Kerkorian
On December 1, 1994, Chrysler issued the following press release:
HIGHLAND PARK, MI,--December 1, 1994--Chrysler Corporation (NYSE: C)
announced today that it expects to achieve its primary financial targets by
the end of this year of $7.5 billion in cash and a fully-funded pension
plan, and is on track to achieving an improved credit rating.
After a review of the Company's performance against these objectives
and the financial resources required to support the Company's Business
Plans, the following actions were approved by the Chrysler Board of
Directors:
-- An increase in its projected five-year program spending from the
current level of $20.8 billion to $22.9 billion
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-- An increase in the common stock dividend from the current annual
level of $1.00 per share to $1.60 per share (or $0.40 per
quarter), a 60 percent increase
-- A $1 billion share repurchase program commencing in the first
quarter of 1995 subject to market conditions
"The Board's view is that the Company should continue on its current
path with the objectives of maintaining cash reserves adequate to fund its
business going forward, regardless of business cycles, maintain fully-
funded pension plans and continue to reduce overall financial leverage,"
Chrysler Chairman and CEO Robert J. Eaton said.
The increased quarterly dividend of $0.25 to $0.40 per share on the
Company's common stock is payable January 13, 1995, to shareholders of
record on December 15, 1994.
"We fully expect that this dividend level is sustainable over the
course of the business cycle," Eaton said.
The Board also declared a dividend of $1.15625 per depositary share,
each representing 1/10 of a share of the Company's Series A Convertible
Preferred Stock, payable January 13, 1995, to shareholders of record on
December 15, 1994.
Prior to today's announcement, a quarterly dividend increase from
$0.15 to $0.20 was announced on December 2, 1993. A second increase--from
$0.20 to $0.25--was announced on May 19. In total, the dividend has been
increased 167 percent since December 1993. The Board is not likely to
review the dividend level again until late 1995.
The $1 billion share repurchase program is expected to begin in the
first quarter of 1995 depending on market conditions. In addition, the
Board will consider further actions to enhance shareholder value in the
future, depending on the Company's financial situation and the market
outlook at that time.
"This share repurchase program is a reflection of our confidence in
the long term growth of our business," Eaton said. "We remain committed to
enhancing shareholder value and this is a very effective method for doing
so."
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Eaton concluded: "The capital spending increase, the dividend increase
and share repurchase have been under consideration by the Board for some
time. The Company's success in 1994 and the Board's view of its future
prospects now indicate the time is right to take such actions.
"The outlook for continued market strength remains robust for 1995 and
beyond. The increase in our program spending to nearly $23 billion will
give us additional growth opportunities through the development of more new
and innovative products as well as anticipated international actions. We
are confident that our plan is the correct one and that our financial
position will continue to strengthen."
The Board also amended the Company's shareholder rights plan by
increasing from 10 percent to 15 percent the threshold of stock ownership
that triggers other holders' rights to acquire Chrysler common stock at a
reduced price. The Company's action was responsive to its largest
shareholder's stated interest in significantly increasing his holdings from
his current level of approximately 9.2 percent. The Company continues to
believe that the shareholder rights plan provides important protection for
all shareholders.
Other amendments to the shareholder rights plan provide that the
rights may not be redeemed once the threshold is exceeded, but someone who
inadvertently crosses the threshold and promptly sells down below the
threshold would not trigger the rights. The amendments clarify that rights
can be redeemed by directors who are elected before the 15 percent
threshold is reached.
On December 9, 1994, Mr. Kerkorian met again with Mr. Eaton and assured Mr.
Eaton of his continuing support of Chrysler's management. However, Mr. Kerkorian
reiterated his desire that Chrysler take steps to enhance stockholder value.
From December 19 through December 30, Tracinda purchased an additional 4,000,000
shares of Common Stock in open market purchases at an average price of $47.82
per share, thereby increasing its ownership to 36,000,000 shares of Common
Stock.
During the period from December 1994 through March 1995, Tracinda continued
to review its investment in Chrysler and representatives of Tracinda, from time
to time, held telephone conversations with representatives of Chrysler. On March
30, 1995, Mr. Alfred Boyer and a third party met with Messrs. Gary Valade and
Thomas Denomme, Chief Financial Officer and Chief Administrative Officer,
respectively, of Chrysler, to discuss a proposed management buy-out of Chrysler.
Additional telephone conversations were subsequently held between
representatives of Tracinda and Chrysler. On April 10,
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representatives of Tracinda met with Messrs. Valade and Denomme to discuss a
proposed acquisition of Chrysler by Tracinda (the "Proposed Buy-Out").
On April 11, Mr. Kerkorian telephoned Mr. Eaton to discuss the impending
announcement of the Proposed Buy-Out. On the same day, a representative of
Tracinda had a telephone conversation with a representative of Chrysler to
discuss the possible response of Chrysler to the Proposed Buy-Out.
Tracinda issued the following press release on April 12, 1995:
TRACINDA INTENDS TO ACQUIRE 100 PERCENT OF CHRYSLER
Las Vegas, Nevada--April 12, 1995--Tracinda Corporation, which owns
approximately 10% of the outstanding common stock of Chrysler Corporation
(NYSE:C), announced today that it intends to acquire the remaining 90% of
Chrysler's equity through an entity organized by Tracinda. Holders of
Chrysler's common stock would receive $55.00 per share in cash, a premium
of approximately 40% over the closing price of common stock on April 11,
1995. Tracinda's approximately $2 billion investment will remain as equity
after the transaction. Based upon the 415 million fully diluted outstanding
shares of Chrysler common stock, the total value of Chrysler's equity would
be more than $22.8 billion.
Alex Yemenidjian, an executive of Tracinda, said: "As Chrysler's
largest shareholder, our goal over the last 5 years has been to seek to
enhance value for all Chrysler shareholders. We continue to believe that
Chrysler's Board of Directors and Bob Eaton and his management team have
done an excellent job of managing the Company's operations. However,
despite the efforts of Chrysler's Board and management to enhance the
market value of the Company, the market continues to undervalue Chrysler
stock. We think that Chrysler shareholders will welcome our offer which
enables them to realize significantly increased value for their stock."
Mr. Yemenidjian continued: "We believe this value can be achieved in a
transaction which involves no fundamental changes in Chrysler, its business
prospects, its management, and its relationships with its various
constituencies; there would be no planned workforce reductions and no
concessions would be sought from Chrysler employees. We are eager to work
with the leaders of Chrysler's union workers and with management to ensure
that all employees see tangible benefits from this transaction. The only
proposed change would be to provide Chrysler's shareholders with a
substantial premium for their shares."
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Former Chrysler Chairman and CEO, Lee Iacocca, who is also a director
of MGM Grand, will join Tracinda as a substantial investor in this
transaction.
Mr. Iacocca said, "Kirk Kerkorian has been a friend of both Chrysler
and of mine for years. Since his initial investment in 1990, he has been a
loyal shareholder and a strong supporter of the company, its management and
its employees.
"I have invested 17 years in this company. I have no interest in
actively participating in management. I view this transaction as an
opportunity to continue my investment in Chrysler as a show of support for
its first rate management, its excellent labor force, its strong dealer
network, and its investors."
Mr. Yemenidjian stressed that this will not be a highly leveraged
transaction. "This is not a leveraged buyout, where assets need to be sold
to help finance the transaction. The buyers are principals who are
investing their own money. In fact, after the proposed transaction is
completed, Chrysler will have a lower debt-to-capital ratio than either
General Motors or Ford, and its free cash flow will remain virtually
unchanged without any reduction in the company's capital expenditures
program."
Mr. Yemenidjian added: "Given the strong financial position of
Chrysler and the significant equity component of this transaction, which
would include Tracinda's entire investment in Chrysler, it is apparent to
us that this transaction is readily financeable. We anticipate that
Chrysler would continue to have a conservative balance sheet after the
transaction. We also expect to consider foreign strategic alliances or
partnerships in order to maximize Chrysler's global business
opportunities."
Also on April 12, 1995, Chrysler issued the following press release:
CHRYSLER BOARD STATES
COMPANY IS NOT FOR SALE
HIGHLAND PARK, Mich.--In a meeting today, the Board of Directors of
Chrysler Corporation discussed an unsolicited letter received from Tracinda
Corporation, a company owned by Kirk Kerkorian, outlining a possible
acquisition of the equity interest in Chrysler not owned by Tracinda.
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The Chrysler Board of Directors stated that the Company is not for
sale.
Chrysler said that its Board would review in due course Tracinda's
letter with the Company's financial and legal advisors. The Board noted
that the suggested transaction, based on information thus far provided by
Tracinda, amounts to a request to discuss a leveraged buyout. Moreover, it:
-- Contemplates at least $11 billion in new debt financing, none of
which has been lined up.
-- Contemplates $3 billion in equity financing, beyond the shares
owned by Tracinda and by Lee Iacocca, none of which has been
lined up.
-- Assumes the Company's credit lines would remain in place, despite
the changes in the Company's financial position that would result
if Tracinda's proposal was implemented.
-- Contemplates reducing Chrysler's cash reserves by more than 70%
to $2 billion. Chrysler noted its need to maintain adequate cash
reserves to weather downturns in the business cycle, as well as
to maintain its ability to develop new products and to compete.
Robert J. Eaton, Chairman and Chief Executive Officer of Chrysler,
stated: "I want to make absolutely clear that Chrysler management is in no
way involved in Tracinda's proposal. I told Mr. Kerkorian that last night
when he informed me by telephone of his intention to make an announcement.
"We don't want to put Chrysler at risk," Eaton added. "We've worked
hard to build this Company's financial strength, to increase shareholder
value and to build the confidence of customers, employees, dealers and
suppliers. We have no desire to reverse the process."
On April 12, 1995, Tracinda also sent the following letter to Mr. Eaton:
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<PAGE>
Mr. Robert J. Eaton
Chairman of the Board and
Chief Executive Officer
Chrysler Corporation
12000 Chrysler Drive
Highland Park, Michigan 48288
Dear Mr. Eaton:
Tracinda Corporation ("Tracinda") is pleased to make an offer to
purchase all outstanding shares of Common Stock of Chrysler Corporation
("Chrysler" or the "Company"), at a purchase price of $55 per share in
cash. The purchase price represents a premium of approximately 40% over the
closing price of the Common Stock on April 11, 1995, the last trading day
prior to the date of this letter, and, based upon the approximately 415
million fully diluted outstanding shares of Chrysler Common Stock, values
the equity of the Company at more than $22.8 billion.
The transaction we are proposing involves no fundamental changes in
the Company, its business prospects, its management and its relationships
with its various constituencies. As we have stated previously, we recognize
the role the Company's management has performed. We believe management's
continued efforts are crucial to the future operational success of the
Company, and our proposal contemplates no change in senior management of
the Company. Importantly, there are no planned workforce reductions and no
concessions would be sought from employees. We are eager to work with the
leaders of Chrysler's union workers and with management to ensure that all
employees see tangible benefits from this transaction. The only change we
propose is to provide the Company's shareholders with a substantial premium
for their shares.
Our proposal is subject to the execution and delivery of a definitive
agreement relating to this transaction. The agreement would contain
customary terms and conditions, including conditions with respect to the
receipt of all necessary corporate approvals by the Company, the obtaining
of all required governmental and regulatory approvals, and the obtaining of
financing. Given the strong financial position of Chrysler and the
significant equity component of the transaction, which will include
Tracinda's entire equity investment in the Company, it is apparent to us
that this transaction is readily financeable. Now that information
regarding our proposal is publicly available, we will promptly contact
potential sources of financing so that our financing arrangements can be
completed
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as soon as possible. We anticipate that Chrysler will continue to have a
conservative balance sheet following the transaction. In fact, after the
transaction is completed, Chrysler will have a lower debt-to-capital ratio
than either General Motors or Ford, and its free cash flow will remain
virtually unchanged without any reduction in the Company's capital
expenditures program.
We recognize that the Board of Directors has the fiduciary duty to
maximize value for all shareholders. Accordingly, we will not request any
lock up or no shop provisions that could in any way curtail the ability of
the Board to discharge its duties. We believe that, if the Company responds
promptly to our proposal, this transaction can be completed by year end.
This transaction affords Chrysler shareholders the opportunity to
receive a significant premium for their Chrysler stock, without adversely
impacting the Company's employees and retirees, labor organizations,
creditors, customers, suppliers, dealers and the communities in which
Chrysler does business. Under these circumstances, we believe that this
transaction is in the best interests of Chrysler, its shareholders and all
other constituencies.
We look forward to meeting with you to discuss this proposal further.
We are eager to proceed promptly and, accordingly, would appreciate hearing
from you at your earliest convenience.
Sincerely,
TRACINDA CORPORATION
By: Anthony Mandekic
Secretary/Treasurer
Also on April 12, 1995, a telephone conversation was held among
representatives of Tracinda and Chrysler concerning Chrysler's initial response
to the Proposed Buy-Out. Between April 12, 1995 and April 24, 1995, discussions
were held between representatives of Chrysler and Tracinda regarding possible
financial alternatives to the Proposed Buy-Out and a related standstill
agreement.
On April 24, 1995, Chrysler issued the following press release:
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CHRYSLER BOARD REJECTS TRACINDA PROPOSAL;
CONFIRMS CASH RESERVE POSITION
AUBURN HILLS, Mich.--Chrysler Corporation announced today that its
Board of Directors, after a thorough and careful review, has unanimously
rejected the leveraged buy-out proposal announced on April 12 by Tracinda
Corporation, a company owned by Mr. Kirk Kerkorian.
The Board concluded that pursuing the proposal would not be in the
best interests of the Company, its shareholders, employees, dealers,
suppliers or customers and reiterated its support of the management team
and its long term strategic vision for the company.
Also at today's meeting, the Board took the opportunity to confirm
Chrysler's cash reserve policy. Robert J. Eaton, Chairman and Chief
Executive Officer of Chrysler said:
"Chrysler does not accumulate cash needlessly. Our current cash
reserve was set after careful study of what is necessary to remain globally
competitive, especially during the cyclical downturns that affect our
business from time to time.
"We review our needs and our target periodically in light of changing
business conditions. Our current cash reserve target is $7.5 billion. To
the extent that the Company generates cash in excess of the target, and
after taking into account opportunities for investment in our core
businesses and changes in business conditions, Chrysler plans to use the
excess to create additional shareholder value, through share repurchases or
increased dividends."
Chrysler confirmed that it intends to complete its previously
announced $1 billion share repurchase program. To date the Company has
purchased $403 million of its stock under this program.
Chrysler's directors noted that speculation and uncertainty about the
Tracinda proposal had led to concerns on the part of credit rating
agencies, lenders, employees and dealers. To address these concerns and the
harm to the Company that could result, Chrysler's directors reaffirmed that
the Company is not for sale.
The Board stated that it is Chrysler's policy to be open to
communications with all shareholders, and to consider shareholder
suggestions carefully. However,
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the Board believes unsolicited publicly announced proposals such as
Tracinda's are disruptive and do not serve the best interests of our
shareholders.
"The primary objective of the directors and management of Chrysler is
to build value for shareholders. The Board is convinced that the Company's
current policies and strategies will achieve that goal," Mr. Eaton said.
The complete text of the letter outlining the Board's position, sent
today to Mr. Kerkorian by Mr. Eaton, follows:
Dear Mr. Kerkorian:
Chrysler's Board of Directors and our entire senior management team
are committed to achieving increased profitability for Chrysler and
increased value for Chrysler shareholders. We regularly consider how best
to achieve these goals. In this context, the Board of Directors has
reviewed your April 12 letter. The Board has unanimously determined to
reject the proposal outlined in your letter.
Now and always, Chrysler is focused on the long-term. We are committed
to a sound business strategy that will allow Chrysler to continue to
produce innovative, quality products throughout the business cycle. And
that means ensuring the financial strength that will enable Chrysler to
fulfill that commitment. Today, Chrysler is more financially stable than it
has ever been and once more stands proudly among the top automakers in the
U.S. and in the world, producing exceptional products and profitability.
In the directors' judgment, pursuing your proposal is not in the best
interests of the Company, its shareholders, its employees, its dealers or
its customers. Here are several of the reasons that underlie this
conclusion:
Your letter speaks of an "offer," but it only amounts to an invitation
to Chrysler to join you in a search to see if financing might be available
for a transaction. When you add up what would be required to pay
shareholders and to refinance debt facilities, more than $30 billion would
be needed. Not a single non-Chrysler dollar of that financing--according to
Tracinda's announcements--has been lined up. We have grave doubts that such
a financing is feasible.
Your letter contains no information whatsoever as to where you would
look for the needed funds. Your representatives have publicly stated that
you would use $5.5 billion of Chrysler's cash reserves, seek $12-13 billion
of debt financing, and
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seek $3 billion in equity. Beyond these amounts, we believe your proposal
would most likely also require refinancing approximately $10 billion of
bank facilities at Chrysler and at Chrysler Financial.
Even if this immense financing could be accomplished, the result would
be a crippled company:
-- Given the cyclicality of the automotive business, we think it
would be rash to strip Chrysler of over 70% of its cash reserves,
and leave it vulnerable to the next downturn in the business
cycle.
-- Chrysler's financial strength is also essential to developing new
products and maintaining a leadership position in the intensely
competitive world automotive marketplace. Our planned product
spending alone over the next five years is $23 billion. Without
the new products from the investment, Chrysler simply couldn't
compete.
To explore an LBO this big would be a long and deeply disruptive
process. Tracinda has acknowledged that close to eight months would be
needed. The risks of failing to complete a transaction, and of major harm
to the Company in the process, are very high.
Since Tracinda announced its letter, Chrysler's relations with lenders
have suffered. In addition, credit rating agencies have placed Chrysler's
debt on credit watch with negative implications. Key partners in
Chrysler's ongoing success--our employees, our dealers, our suppliers--have
also voiced their alarm and concern about the prospects of a leveraged
transaction.
Our directors believe it would be a serious mistake to subject
Chrysler to the kind of leveraged transaction your proposal contemplates.
Your representatives have said that you are willing to bet your stake in
Chrysler on such a transaction. Our directors do not have any interest in
gambling with Chrysler's future.
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<PAGE>
We believe strongly in Chrysler's future. We also believe that the
benefits from that bright future should be and will be realized by all of
Chrysler's shareholders.
Yours sincerely,
Robert J. Eaton
Chairman and Chief Executive Officer
On April 25, 1995, the following letter was sent to Mr. Eaton:
Mr. Robert J. Eaton
Chairman and Chief Executive Officer
Chrysler Corporation
12000 Chrysler Drive
Highland Park, Michigan 48288
Dear Bob:
Tracinda Corporation has been a loyal and supportive shareholder of
Chrysler since 1990, and has always given its financial support to the
company when asked to do so. Specifically, in connection with the March,
1991 offering of 60 million shares, your predecessor made a personal appeal
to us to purchase 6 million shares and to issue a press release to show our
support for the offering. We were told that Tracinda's participation was
vital to the successful completion of the offering. Subsequently, you
personally visited me to secure my commitment to purchase 4 million shares
in the 1993 public offering. In addition, every time that Tracinda has
requested something from the company, it has never been for Tracinda alone
--it has always been for all the shareholders.
In light of the events that have transpired during the past two weeks,
it is clear to us that the shareholders, who are the true owners of the
company, are not being given the consideration they deserve and are not
being given an accurate picture of the facts.
The facts are indisputable: Your management team was first provided
with a detailed written presentation regarding the economics of an
acquisition transaction in December, 1994. On March 14, 1995, a member of
Chrysler's management informed us that a buyout scenario was included on a
list of strategic alternatives approved for further study by you.
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<PAGE>
On March 30, 1995, members of your top management team were again
given a detailed written presentation of the transaction and, based on
their review, described the transaction as "doable" and "intriguing." On
April 6, 1995, you personally discussed the proposed transaction with the
independent directors of the Board's executive committee, who suggested
that you not discuss the matter with the entire Board ostensibly to prevent
leaks.
On Monday, April 10, 1995, two members of Chrysler's top management
met with representatives of Tracinda. By that time, Chrysler's management
was sufficiently knowledgeable about the economic aspects of the
transaction that the discussions had progressed beyond the numbers to
addressing the cultural issues and the needs of the various constituencies,
which both we and your management team considered very important to the
success of the transaction. During the April 10th meeting, it was clearly
communicated to Chrysler management, and they understood, that time was of
the essence.
In order to address the needs of labor, one of the most important
constituencies, our proposal included the following features:
. Twenty-percent ownership of the company to be given to the
employees at no cost.
. No concessions from the employees. In fact, we discussed
improving long-term security for the employees by guaranteeing
pension contributions and providing other assurances.
. Five-percent ownership of the company to be given to management
at no cost.
On Tuesday, April 11, 1995, immediately after reaching our decision to
extend the offer, I called you to notify you of our intention to proceed.
At this time, we discussed the form of the response you would make.
We were and continue to be shocked by your "surprise" reaction to our
announcement. As the foregoing chronology indicates, your management team
was kept fully informed at all times. As you know, we never intended, and
still don't intend, for this transaction to be hostile. You turned it into
---
a hostile transaction.
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<PAGE>
Yesterday, you sent me a letter accompanied by a press release. Both
your letter and the press release are so replete with contradictions and
omissions that I feel compelled to set the record straight:
. Nowhere in the letter is there a statement regarding the adequacy
of our price. We believe that it is unprecedented that a Board
rejects an acquisition proposal without dealing with what is
clearly its most important aspect--price. Is this because none of
the three investment banking firms (First Boston, Salomon
Brothers and Morgan Stanley) being used by Chrysler concluded
that our offer was inadequate?
. The reason why the financing has not yet been arranged is because
Chrysler, presumably at your direction, and even before the
-------------------
Board's rejection of our proposal, has openly intimidated
---------------------------------
commercial and investment banks into refusing to discuss the
financing of the transaction with us with threats of both
commercial retaliation and legal action. Aside from the
questionable legality of this financial interference, I fail to
see how this is in the best interest of all shareholders. So I
find it very hypocritical on your part when you say you ". . .
have grave doubts that such a financing is feasible."
. You state that ". . . it would be rash to strip Chrysler of over
70% of its cash reserves, and leave it vulnerable to the next
downturn in the business cycle." Again, this statement is
incorrect. By the time our proposed transaction would close,
Chrysler would have over $4 billion in cash reserves after using
-----
$5.5 billion to help finance the acquisition. As you must surely
know, during its worst downturn at the time of the Gulf War,
Chrysler used $4 billion over a 3-year period. Our financing plan
has prudently taken this into account; even our worst-case
scenario does not show nearly this level of cash requirement to
weather a downturn. This is because Chrysler is a different
company today. With 70% of its costs outsourced, it is much more
nimble and cost effective. Your letter contains no explanation
whatsoever of how your $7.5 billion was arrived at. Why not $5
billion? Why not $10 billion?
. You state that "Chrysler's financial strength is also essential
to developing new products . . ." and ". . . planned product
spending alone over the next five years is $23 billion." As you
and your management team have known for months, our financing
plan did
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not cut capital expenditures for new products by one penny. In
fact, our proposal includes $500 million more in capital
expenditures than Chrysler's own plan. Knowing this, for you to
suggest that we are trying to finance the acquisition by
sacrificing future product development is simply incorrect. Why
would we want to make a $2 billion investment in a "crippled
company" that could not compete?
. You continue to call our proposal an "LBO" in order to taint a
proposal with a pejorative label that simply doesn't apply. One
reason why members of your top management team found our proposal
"intriguing" (their word, not ours) as recently as two days prior
to our announcement is undoubtedly because they clearly saw that,
after our proposed transactions, Chrysler would have less
leverage than either Ford or GM. In addition, it must have been
clear to them that the transaction was self financing; that it,
the company would be paying interest instead of dividends and the
free cash flow would remain virtually unchanged. Frankly, we fail
to see how this puts Chrysler in harm's way, particularly since
our projections were significantly more conservative than those
of Wall Street analysts.
. You state that "the primary objective of the directors and
management of Chrysler is to build value for shareholders." Yet
you have never made a specific proposal to enhance shareholder
value, except in response to my letter to the Board on November
14, 1994. Your new "plans" (obviously in response to our offer)
for share repurchases or increased dividends are hopelessly vague
and noncommittal. Many great companies (GM, IBM, Eastman Kodak,
American Express, Borden) have learned that it is wise to listen
to their shareholders. Why hasn't Chrysler learned that lesson?
The key decisions regarding the future of Chrysler are being made by a
group of people who own less than 1% of the stock of the company. Many of
those people are not even employees. We have been the largest shareholder
of the company much longer than you have been the CEO. Accordingly, we
challenge you and Board of Directors to permit the shareholders of the
company to vote on the following matters:
1. Do they favor the sale of the company at $55 per share? If the
shareholders do not support the buyout, we would withdraw our offer.
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<PAGE>
2. Alternatively, if it is not believed to be desirable to sell the
Company for $55 per share, do the shareholders favor an increase in the
annual common stock dividend to $5 per share? In presenting this
alternative, it is worthy of note that, according to our projections, which
are more conservative than the consensus of Wall Street analysts, a $5 per
share dividend would only utilize approximately 50% of Chrysler's projected
free cash flow. Clearly, based on these figures, you would not have to dip
into Chrysler's $7.5 billion cash reserve to maintain this level of
dividend payout.
Very Truly Yours,
Kirk Kerkorian
On May 18, 1995, Chrysler issued the following press release:
CHRYSLER BOARD INCREASES DIVIDEND;
REITERATES STOCK BUYBACK PLANS
ST. LOUIS, MO, MAY 18, 1995--Chrysler Corporation (NYSE: C) announced
today that its Board of Directors has voted to increase its dividend by 25
percent, boosting the quarterly dividend from $0.40 to $0.50 per share on
the Company's common stock. The dividend is payable July 14, 1995, to
shareholders of record on June 15, 1995.
Today's announcement marked the fourth dividend increase in the last
17 months. From a level of $0.15 per share on December 1, 1993, the
dividend has now been increased 233 percent.
"The Board's primary goal in establishing our dividend rate is to
reward shareholders for their investment and confidence in the Company and
to fix a rate that it believes is sustainable throughout the business
cycle," said Chrysler Chairman and Chief Executive Officer Robert J. Eaton.
"While last year was spectacular in every way for Chrysler, we didn't have
to go too far into 1995 to be reminded about the unpredictability of the
auto industry. It is important for the Company to be able to maintain its
dividend in good times and bad, and the Board believes, given the current
economic outlook, that it will be able to do so at the $2.00 per share
annual rate."
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<PAGE>
The Board also declared a dividend of $1.15625 per depositary share,
each representing 1/10 of a share of the Company's Series A Convertible
Preferred Stock, payable July 14, 1995, to shareholders of record on June
15, 1995.
Eaton also reported that Chrysler has repurchased $490 million worth
of common stock since the beginning of the year and, subject to market
conditions, expects to complete the $1 billion repurchase plan announced in
December of 1994 within the next several months.
"As we have previously stated, once we have completed the $1 billion
repurchase program, the Board will consider additional levels of stock
repurchase in light of the existing cash needs and prevailing business and
market conditions," Eaton said. "We are very cognizant of our shareholders'
desire for increased share value in the near term but we are equally
committed to building long term shareholder value.
"Sales to date in 1995 have been weaker that expected. As a result we
have lowered our U.S. auto industry forecast to 15.2 million cars and
trucks," Eaton said. "But we remain confident that 1995 and much of the
remainder of the decade will be good for the industry and that the long
term performance of our Company will be strong."
On May 31, 1995, Tracinda decided to withdraw the Proposed Buy-Out and
issued the following press release:
TRACINDA WITHDRAWS OFFER FOR CHRYSLER;
SAYS ITS CHRYSLER STOCK IS NOT FOR SALE
WASSERSTEIN PERELLA RETAINED AS
STRATEGIC ADVISOR TO TRACINDA
LAS VEGAS, NV, MAY 31, 1995--Tracinda Corporation announced today that
it is withdrawing its $55 per share offer for Chrysler Corporation and will
evaluate the full range of available options. Tracinda reiterated that its
Chrysler shares are not for sale and that its goal of maximizing value for
all Chrysler shareholders remains unchanged.
"We have been Chrysler's largest shareholder for nearly five years and
remain committed to maximizing value for all shareholders while keeping the
company well-managed, conservatively financed and fully competitive in the
U.S.
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<PAGE>
and abroad," said Alex Yemenidjian, an executive at Tracinda. "Tracinda's
36 million shares of Chrysler stock are not for sale. Withdrawing our offer
will permit us to take a fresh look at the situation and evaluate our
alternatives."
Tracinda also announced that it has retained the investment banking
firm Wasserstein Perella & Co. as a general strategic advisor. Wasserstein
Perella will provide financial advisory services as to Tracinda's
investments and will assist Tracinda in evaluating alternatives with
respect to its stake in Chrysler.
"Kirk Kerkorian is a serious long-term investor whose track record
speaks for itself," said Bruce Wasserstein, chairman of Wasserstein
Perella. "We hope to provide a new perspective and play a constructive role
in achieving Tracinda's objectives."
Wasserstein Perella & Co. is a leading international investment bank,
with an emphasis on merger and acquisition advisory work, underwriting of
equity and high yield debt securities and asset management services.
Headquartered in New York, Wasserstein Perella has U.S. offices in Chicago,
Dallas and Los Angeles, and international offices in London, Paris,
Frankfurt and Tokyo. Recently, Wasserstein Perella has advised on advisory
transactions in excess of $14 billion, including acting as the mutually-
designated appraiser in conjunction with AT&T's proposed merger with LIN
Broadcasting, advisor to the General Motors Special Hourly Employees'
Pension Trust in connection with the sale of a portion of the Trust's $8
billion holding of GM Class E common stock and advisor on a series of
healthcare transactions for SmithKline Beecham.
Both during and after the events described above, Tracinda held discussions
with individuals and institutions regarding possible participation with Tracinda
in its activities with respect to Chrysler, including participation in an offer
by Tracinda to purchase up to 14,000,000 shares of Common Stock, at a purchase
price of $50 per share, upon the terms and subject to the conditions set forth
in an Offer to Purchase and related Letter of Transmittal (the "Offer"), filed
with the Commission on June 26, 1995.
On the morning of June 26, 1995, Mr. Kerkorian spoke with Mr. Eaton by
telephone to advise him of the announcement of the Offer.
Also on June 26, 1995, Tracinda announced the Offer by issuing the
following press release:
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<PAGE>
TRACINDA TO COMMENCE CASH TENDER OFFER FOR
14 MILLION CHRYSLER SHARES AT $50.00 PER SHARE
LAS VEGAS, NV, June 26, 1995 -- Tracinda Corporation announced today
that it will commence a cash tender offer for up to 14 million shares of
common stock of Chrysler Corporation (NYSE: C) at a price of $50.00 per
share. The tender offer, which will commence this week, will not be
subject to financing.
Tracinda has been Chrysler's largest shareholder for five years.
Increasing its position in Chrysler reflects Tracinda's continuing belief
that Chrysler is a good investment and its ongoing commitment to enhancing
value for all Chrysler shareholders.
The tender offer will be conditioned on, among other things, exemption
from or the non-applicability of a Michigan insurance statute. This
statute is presumed to apply to an owner of 10% or more of Chrysler's
outstanding common shares because Chrysler has insurance operations in
Michigan. These operations represent an immaterial percentage of
Chrysler's total assets.
In addition to seeking an exemption from the Michigan insurance
statute, Tracinda also said that it has filed suit in Federal Court in
Michigan seeking a determination that the Michigan Insurance Bureau has no
authority to regulate Tracinda's purchase of additional Chrysler shares
pursuant to the offer.
Tracinda is currently blocked from purchasing more than 15% of
Chrysler's total outstanding shares under the terms of Chrysler's poison
pill.
Wasserstein Perella & Co., Inc. will be dealer-manager for the tender
offer.
Tracinda currently owns 36 million shares of the approximately 369
million outstanding shares of Chrysler common stock.
On June 27, 1995, Tracinda issued the following press release:
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<PAGE>
TRACINDA COMMENCES PREVIOUSLY ANNOUNCED
CASH TENDER OFFER FOR 14 MILLION CHRYSLER
SHARES AT $50.00 PER SHARE
LAS VEGAS, NV, June 27, 1995 -- Tracinda Corporation announced today
that it has commenced its previously announced cash tender offer for up to
14 million shares of common stock of Chrysler Corporation (NYSE: C) at a
price of $50.00 per share. The tender offer is not subject to financing.
In addition to customary conditions, the tender offer is conditioned
on exemption from or the non-applicability of a Michigan insurance statute.
The statute is presumed to apply to an owner of 10% or more of Chrysler's
outstanding common shares because Chrysler has insurance operations in
Michigan. These operations represent an insignificant amount of Chrysler's
total assets.
The tender offer and withdrawal rights will expire at 12:00 midnight,
New York City time, on July 25, 1995, unless extended.
Wasserstein Perella & Co., Inc. is the dealer-manager for the tender
offer. D.F. King is the information agent.
The tender offer materials are being filed with the Securities and
Exchange Commission. Copies of these materials may be obtained by calling
D.F. King at 1-800-290-6424.
Also on June 27, 1995, Tracinda issued the following press release:
TRACINDA RECEIVES EXEMPTION FROM MICHIGAN
INSURANCE STATUTE
LAS VEGAS, NV, June 27, 1995 -- Tracinda Corporation announced today
that the Commissioner of Insurance of the State of Michigan has granted it
a "disclaimer of affiliation" which will permit Tracinda to complete its
tender offer for up to 14 million shares of common stock of Chrysler
Corporation (NYSE: C) at a price of $50 per share.
The disclaimer would satisfy the condition to Tracinda's tender offer
relating to the Michigan Insurance law. Accordingly, Tracinda will
withdraw its lawsuit seeking to invalidate the insurance statute. The
tender offer is scheduled to be completed on July 25, 1995.
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<PAGE>
On July 25, 1995, Tracinda issued the following press release:
TRACINDA SAYS CHRYSLER OFFER IS OVERSUBSCRIBED
LAS VEGAS, NV, July 25, 1995 -- Tracinda Corporation announced today
that its $50 per share tender offer for up to 14 million shares of Chrysler
Corporation (NYSE: C) common stock is oversubscribed.
Tracinda said more than 50 million Chrysler shares had been tendered
as of 6 p.m. EDT.
The tender offer expires tonight at 12 midnight EDT and Chrysler
shares may be tendered or withdrawn until that time. Pursuant to the
offer, Tracinda will purchase 14 million Chrysler shares on a pro rata
basis. After purchasing 14 million shares, Tracinda will hold 50 million
Chrysler shares, or approximately 13.1% of its outstanding shares (based on
382.4 million shares outstanding as of June 30, 1995).
"We are obviously very pleased with the results of the tender offer.
Tracinda has been Chrysler's largest shareholder for nearly five years, and
it has never sold a share of its stock. We continue to believe Chrysler is
a good investment, and we remain committed to enhancing value for all
Chrysler shareholders," said Stephen D. Silbert, a Tracinda representative.
On July 26, 1995, Tracinda issued the following press release:
TRACINDA COMPLETES TENDER OFFER FOR 14 MILLION
CHRYSLER SHARES AT $50.00 PER SHARE
LAS VEGAS, NV, July 26, 1995 -- Tracinda Corporation announced today
that it has successfully completed its tender offer for 14 million shares
of common stock of Chrysler Corporation (NYSE: C) at a price of $50.00 per
share.
The tender offer expired at 12:00 midnight, New York City time, last
night. According to a preliminary count by the depository for the tender
offer, approximately 58,515,981 Chrysler shares were tendered (including
approximately between 13 to 14 million shares tendered by guaranteed
delivery). Pursuant to the terms of the offer, Tracinda will purchase 14
million validly tendered Chrysler shares on a pro rata basis. Tracinda
expects to announce the results of proration and to commence paying for
accepted shares on or about August 3, 1995. After
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<PAGE>
purchasing 14 million shares, Tracinda will hold 50 million Chrysler
shares, or approximately 13.1% of its outstanding shares (based on 382.4
million shares outstanding as of June 30, 1995).
"We are obviously very pleased with the results of the tender offer.
Tracinda has been Chrysler's largest shareholder for nearly five years, and
it has never sold a share of its stock. We continue to believe Chrysler is
a good investment, and we remain committed to enhancing value for all
Chrysler shareholders," said Stephen D. Silbert, a Tracinda representative.
On August 2, 1995, Tracinda issued the following press release:
TRACINDA CLOSES ITS TENDER OFFER FOR 14 MILLION
CHRYSLER SHARES AT $50.00 PER SHARE
LAS VEGAS, NV, August 2, 1995 -- Tracinda Corporation announced today
that 58,382,901 shares of Chrysler Corporation (NYSE: C) common stock were
validly tendered and not withdrawn pursuant to Tracinda's tender offer,
resulting in a proration factor of 23.98214%. Tracinda's $50.00 per share
cash tender offer for 14 million shares of Chrysler common stock expired at
12:00 midnight, New York City time, on Tuesday, July 25, 1995.
Tracinda will commence payment for 14 million Chrysler shares on
August 3, 1995. The other 44,382,901 Chrysler shares tendered will be
returned to shareholders.
"Successfully completing our tender offer increases our Chrysler
investment to 50 million shares. As Chrysler's largest shareholder for
nearly five years, Tracinda continues to believe Chrysler is a good
investment, and we remain committed to enhancing value for all Chrysler
shareholders," said Stephen D. Silbert, a Tracinda representative.
Subsequent to the closing of Tracinda's tender offer, Mr. Kerkorian
purchased 1.9 million shares of Common Stock in August 1995.
On October 25, 1995, Tracinda delivered the following letter to Mr. Robert
J. Eaton, Chairman of the Board and Chief Executive Officer of Chrysler:
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<PAGE>
Mr. Robert J. Eaton
Chairman and Chief Executive Officer
Chrysler Corporation
12000 Chrysler Drive
Highland Park, Michigan 48288
Dear Bob:
Tracinda Corporation has been an owner and supporter of Chrysler for
more than five years. During this period, Tracinda has raised its
ownership to almost 52 million shares, a significant number of which were
purchased at Chrysler's request. As we have told you in the past, our
interests and those of other shareholders are identical -- we want Chrysler
to grow and prosper, thereby increasing value for all shareholders.
Tracinda has always viewed, and continues to view, its investment in
Chrysler as a long-term investment. Given the magnitude of our position
and our long-term focus, we will continue to actively manage our
investment. As you know, we currently have no intention to acquire
Chrysler. We intend to remain focused on enhancing long-term value for all
Chrysler shareholders; we will not be deterred from that objective.
Among the key areas that we believe are important to Chrysler and all
of its shareholders are the following:
. Changes to ensure appropriate shareholder participation in
corporate governance, including representation on the Board of Directors
and providing shareholders with voting rights on significant corporate
transactions;
. Consideration of additional stock buybacks and other value
enhancement strategies; and
. Continued emphasis on product quality and cost containment.
We have formulated the following proposal based on the premise that
you are working with us in good faith to achieve a mutually satisfactory
resolution which benefits all of Chrysler's constituencies. Our proposal
is offered in a spirit of compromise, in the hope of creating an atmosphere
of mutual support:
First and foremost, Jerry York and two other persons to be mutually
agreed upon by Chrysler and Tracinda should join the Board of Directors of
Chrysler.
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<PAGE>
These new Board members would, of course, represent the interests of all
shareholders and would be voted on annually by the shareholders.
Second, while Chrysler and we share the objective of long-term growth
for the company, it is apparent that we do not appear to agree on
Chrysler's cash retention policy. We believe that a committee of outside
directors should be appointed to review the appropriate size of Chrysler's
cash cushion. We suggest that Chrysler designate one of its investment
bankers to work with Wasserstein Perella to study these issues. The two
bankers would then report jointly to the committee.
Third, we request that Chrysler review its corporate governance
policies and, at a minimum, make the following specific modifications:
. Adopt an anti-greenmail bylaw or charter amendment;
. Require shareholder approval of issuances of significant
amounts of Chrysler's blank check preferred stock and other
block placements of voting stock; and
. Raise the threshold under the company's poison pill rights
plan from 15% to 20%.
We believe that all of the elements of this program should be
implemented. We further believe that a majority of Chrysler shareholders
will share our view. We would like to see a prompt and amicable resolution
to these issues, as we believe this would be in the best interests of all
involved. In any event, Tracinda will continue to act in a prudent and
determined manner.
If it would be helpful in resolving these issues, we would welcome the
opportunity to meet in person with the Executive Committee of the Board of
Directors or the complete Board to discuss these matters.
Sincerely,
Jerome B. York
Vice Chairman
On November 2, 1995, Mr. Eaton delivered the following letter to Mr.
Kerkorian:
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<PAGE>
Mr. Kirk Kerkorian
Chief Executive Officer and President
Tracinda Corporation
4835 Koval Lane
Las Vegas, Nevada 89109
Dear Kirk:
We are sending the attached letter and press release to our major
shareholders today. As we discussed by phone, the Chrysler Board of
Directors will consider all of your proposals as part of its overall
governance review. It will take all of them seriously, but precisely
because it is serious business, the Board believes the review must be
thorough and involve direct discussions with other major shareholders. I
hope you agree that this makes sense given the importance of your proposals
and their potential impact on the Company.
As I mentioned to you, I plan to visit with you soon to seek your
personal input on the Board's governance review.
I look forward to seeing you.
Sincerely,
Bob
The text of the form of letter sent to major shareholders of Chrysler on
November 2, 1995 and the press release issued by Chrysler on November 2, 1995
are set forth below:
Dear __________:
As we promised during our meetings and conversations in recent months, we
want to keep you informed of events at Chrysler. The attached press
release outlines initiatives approved by the Chrysler Board of Directors at
its meeting today. I hope you will agree that the steps outlined represent
a significant commitment on the part of Chrysler to ensure that the Company
continues to hear and respond to shareholders on important matters of
corporate governance and corporate policy.
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<PAGE>
Chrysler's Board, its management team and I are all dedicated to building
the world's top-performing car company and thereby maximizing long-term
value for all Chrysler shareholders. The cornerstone of the value creation
process is a long-term strategic plan and a management team that together
can best utilize the Company's assets to create the most exciting and
satisfying products for our customers and to manufacture and sell those
products competitively.
I believe that we have a management team and a long-term strategy that will
accomplish these goals. Indeed, I think you will agree that the progress
Chrysler has made in both the product and financial markets in the past
five years has been outstanding.
Chrysler's Board believes, as do I, that a critical part of the value
creation process lies in an effective corporate governance process. The
Board must be strong and reflective of shareholder interests. In addition,
consultation with shareholders is important. We must understand how our
shareholders feel about the Company, and we must seek to respond to any
concerns that they may have.
In recent weeks we have visited with many of our largest shareholders. As
you know, during that period, we have also received a series of proposals
from Kirk Kerkorian. The Board regularly reviews Chrysler's governance
structure, financial policies, and Board membership. Overall, we believe
that Chrysler's current corporate governance and financial policies are
sound.
We also believe, however, that it is possible that some changes could
benefit the Company and its shareholders. We are open to suggestions for
change - if they genuinely enhance value and strengthen the Company for all
Chrysler shareholders.
In this regard, let me emphasize that in conducting the review outlined in
the attached press release, the Board and management will weigh, and
separate, issues that benefit particular parties from those that benefit
all Chrysler holders. Our Board has a responsibility to ensure that
Chrysler's decisions do not provide differential benefits to any specific
shareholder.
The Board anticipates completing this review and announcing its decisions
on these matters within approximately 90 days.
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<PAGE>
We believe in a strong governance process and are committed to a
continuing, constructive dialogue with Chrysler's major holders. You will
be hearing from us in the near future to schedule a time when we can speak
directly to you and get your input on these issues.
Sincerely yours,
Robert J. Eaton
CHRYSLER BOARD OF DIRECTORS ANNOUNCES
IT WILL INITIATE A CORPORATE GOVERNANCE REVIEW
HIGHLAND PARK, Mich. - Chrysler Corporation announced today that its Board
of Directors will review the Company's corporate governance procedures and
Board membership to evaluate whether incremental changes would be in the
long term best interests of the Company and all of its shareholders. The
review, to be conducted jointly by the Board and Chrysler's senior
management, will involve direct consultation with Chrysler shareholders.
Chrysler Chairman Robert J. Eaton cited two factors that influenced the
Board's decision to conduct this review -- the recently received proposals
from Kirk Kerkorian on corporate governance and Board membership and recent
meetings between senior Chrysler executives and a number of Chrysler
shareholders.
"The meetings with our shareholders have convinced us that, while they are
quite satisfied with Chrysler's performance and with our approach to
corporate governance, we must remain committed to an ongoing dialogue and
continuous self-examination," Eaton said. He indicated that the review
represents an effort to ensure that Chrysler remains responsive to
suggestions from its holders, while concurrently ensuring that no single
shareholder has undue influence and that the Company's actions do not
provide differential benefits to any individual.
With respect to Mr. Kerkorian's proposals, Eaton said Kerkorian's
suggestions regarding Board composition will be reviewed by the Board in
light of its continuing belief that all directors should represent the
interests of all shareholders. Eaton also noted that the 15 percent
threshold in the Company's shareholder rights plan "is important in
protecting shareholders against abusive takeover tactics, such as the
acquisition of effective control of the Company without paying a premium."
With respect to Kerkorian's governance proposals, Eaton said that the
Company already has in place a formal policy adopted by its Board last
April that restricts
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the Company's ability to issue preferred stock. In keeping with the
Company's previously announced intention not to pay greenmail to anyone,
Eaton said the Board also will consider adopting an anti-greenmail bylaw.
Concerning Kerkorian's proposal for a special committee to review
Chrysler's cash targets, Eaton noted that the full Chrysler Board regularly
reviews this issue, together with other financial and operating policies,
as part of its strategic planning process. Eaton added that the
determination of the appropriate level of cash reserves is "an integral and
vital part of this strategic planning process, and is best addressed by the
full Board of Directors."
Eaton indicated that Chrysler would discuss its policies in all of these
areas with major shareholders as part of its governance review initiative,
which the Company expects to complete within approximately 90 days.
On November 20, 1995, Tracinda delivered the following letter to Mr. Eaton:
Mr. Robert J. Eaton
Chairman of the Board and
Chief Executive Officer
Chrysler Corporation
12000 Chrysler Drive
Highland Park, MI 48288-0001
Dear Bob:
We appreciate having had the opportunity to meet with you today to
discuss Chrysler's 90-day corporate governance review process. We continue
to believe that our discussions together have been helpful and have the
potential for resolving issues.
As we have discussed with you, it is extremely important that this
process be objective. We believe this process should involve each of the
following elements: (1) procedural fairness, including active
-------------------
participation by your outside directors, the opportunity for Tracinda to
communicate directly with other Chrysler shareholders regarding our
proposals and this process, and an understanding of your schedule for
meeting with Chrysler shareholders; (2) a balanced presentation of all of
---------------------
the proposals contained in Tracinda's letter of October 25, 1995; and (3)
impartial reporting on the results of this process, including interim
-------------------
status reports, and the involvement of a neutral party or
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independent expert to explain all sides and to report to shareholders. We
also would like to have the opportunity to express our views directly to
the Board.
As you know, in order to communicate our views directly to other
Chrysler shareholders, it is required that we make appropriate filings with
the SEC since the Chrysler Board does not include a person affiliated with
Tracinda. Accordingly, we plan to file preliminary proxy soliciting
materials promptly with the SEC. The materials will relate to Chrysler's
1996 Annual Meeting of Shareholders. We will not currently solicit or
accept proxies for use at that meeting, but reserve the right to do so in
the future depending upon a number of factors, including the response of
Chrysler shareholders to the process to be conducted over the next two and
a half months. This filing is being made solely so that we can take part
in the very process that you have designed and is of course not a hostile
act.
Bob Lanigan's and your statements at our meeting today that none of
our proposals have been prejudged by the Board, that the Board would
control and monitor this process and that management would take a neutral
position regarding our program during this process were encouraging. The
skepticism of the financial media regarding your process might well be
eliminated if Chrysler would issue a press release to that effect. This is
particularly true, since certain recent statements attributed to Chrysler
representatives reflect an apparent rush to judgment regarding certain
elements of our program. In your letter to Tracinda of November 2, 1995,
you stated that "the Chrysler Board of Directors will consider all of
[Tracinda's] proposals as part of its overall governance review [and] ...
will take all of them seriously". However, the response attributed to
Chrysler with regard to my inclusion on its Board of Directors appears to
suggest either that I would not be cognizant of my fiduciary duties to all
Chrysler shareholders or that it is contrary to the interests of all
shareholders that any Board member be affiliated with a significant
shareholder. As you are aware, all directors have a fiduciary duty to all
--- ---
shareholders. As a former Chrysler and IBM director, I fully appreciate my
fiduciary responsibilities. Your Board members, in the aggregate, own less
than 0.1% of Chrysler's outstanding shares; we own 51,900,000 shares or
13.6% of Chrysler's outstanding shares. We purchased our shares for cash,
the way other shareholders do -- we received no grants of shares and
exercised no stock options. Unlike management, we have sold no shares in
the past five years. It should be self-evident that shareholders are
better served by a Board which has substantial equity ownership than by a
Board comprised of members having little or no stock ownership. Moreover,
the inclusion on the Chrysler Board of an
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outside director with substantial and broad experience in the automotive
industry can only benefit all Chrysler shareholders and other Chrysler
stakeholders.
Our preliminary proxy materials will indicate that we propose
replacing Joseph Antonini as a director. While we can imagine that Mr.
Antonini's perspective has been valuable to Chrysler, Tracinda believes
that my broad background and experience in both the automotive industry and
at Chrysler, including as CFO, would enable me to make a substantial
contribution to the Chrysler Board.
We were perplexed by the disclosure in your November 2, 1995 press
release that the Chrysler Board in April of this year adopted a policy
restricting certain issuances of preferred stock. We do not understand why
this policy was not previously disclosed or your reluctance to provide us
with a copy of the policy.
We also noted your apparent immediate rejection of our proposal for a
review of Chrysler's cash retention policies by a committee of outside
directors. Of course, the establishment of such a committee would not
diminish the ultimate authority and responsibility of the full Chrysler
Board to act on the committee's recommendations. In our view, having an
independent committee review this issue with its own independent advisers
can only be beneficial to Chrysler, and we are disturbed that an issue of
this significance to all Chrysler shareholders appears to have been
prejudged.
Tracinda has been an owner and supporter of Chrysler for more than
five years. No element of our program would benefit Tracinda at the
expense of other shareholders. We believe that these proposals are
important to all shareholders, will strengthen Chrysler and should not be
inconsistent with the interests of Chrysler's management.
Sincerely,
Jerome B. York
Vice Chairman
The foregoing material in this section has been included as background
information in respect of the proposals described below under "The Proposals".
Statements by Tracinda in the correspondence reproduced above, including
Tracinda's October 25, 1995 letter to Mr. Eaton, as to Tracinda's belief that
a majority of Chrysler's
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shareholders will share Tracinda's views should not be construed as predictions
of the outcome of any possible proxy solicitation, but represent Tracinda's
opinion in light of the fact that Tracinda's proposals address issues which
Tracinda believes are of concern to all Chrysler shareholders and are designed
to benefit all Chrysler shareholders.
PURPOSE OF THIS PROXY STATEMENT
Tracinda believes that, in order for Chrysler's 90-day corporate governance
and Board membership review process to be objective and to ensure a balanced
presentation of the issues, it is important that Tracinda be able to participate
actively in this process, by communicating directly with shareholders of
Chrysler through meetings in person and by telephone. Tracinda intends to urge
Chrysler shareholders to support the proposals described below under "The
Proposals" in order to convince the Board of Directors to adopt them. While
Tracinda believes that such participation should not be deemed to constitute a
solicitation of proxies or consents, Tracinda is filing this Proxy Statement in
order to ensure that Tracinda will be free to engage in discussions with
Chrysler shareholders while the Board of Directors is conducting its review.
Depending upon the results of Chrysler's review and Tracinda's discussions with
Chrysler shareholders, Tracinda reserves the right to solicit proxies or
consents for use at the Annual Meeting or otherwise with respect to one or more
proposals, including one or more of the proposals described below under "The
Proposals". Alternatively, Tracinda may determine not to pursue any of these
proposals and may withdraw this Proxy Statement.
THE PROPOSALS
At the Annual Meeting, Tracinda may present one or more of the following
proposals for approval by Chrysler shareholders:
(1) A proposal for the election of Jerome B. York as a director of
Chrysler.
Jerome B. York is Vice Chairman of Tracinda, Chrysler's second largest
shareholder at September 30, 1995. Tracinda believes that Mr. York's extensive
background and experience in the automotive industry and at Chrysler, including
as Chief Financial Officer and director, as well as his experience as Chief
Financial Officer and director of IBM, would enable him to make a substantial
contribution to the Board of Directors. Moreover, Tracinda believes that it is
in the interests of all shareholders that the Board of Directors include members
with substantial equity ownership.
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(2) A proposal for the adoption of the following non-binding resolution to
increase the size of the Board of Directors to add two additional
directors:
WHEREAS, the shareholders of Chrysler Corporation (the "Company")
believe that it is in the best interests of the Company and its
shareholders to increase the number of independent, non-officer directors
of the Company;
RESOLVED, that the shareholders of the Company hereby urge the Board
of Directors of the Company to increase the size of the Board of Directors
to add two additional directors who (a) are eligible to be classified as
"Independent Directors", as defined in Article II, Section 7(c) of the By-
Laws of the Company (such eligibility to be determined by the Board of
Directors), and (b) in the opinion of the Nominating Committee of the Board
of Directors of Chrysler, taking into consideration the suggestions of
Chrysler's major shareholders, are otherwise qualified to serve as
directors of Chrysler.
This Proposal (2) contemplates that the Nominating Committee of the Board
of Directors would nominate the two additional directors, after taking into
consideration the suggestions of Chrysler's major shareholders. As a major
shareholder of Chrysler, Tracinda under this Proposal (2) would be able to
suggest to the Nominating Committee the names of potential candidates to fill
the two newly created directorships.
Tracinda believes that it would be in the best interests of Chrysler and
its shareholders to add two additional independent directors to the Board of
Directors in order to bring a fresh perspective to the Board of Directors.
These two additional board members would represent the interests of all
shareholders and would be elected annually with the other members of the Board
of Directors. The purpose of this resolution is to provide all Chrysler
shareholders with the opportunity to express their views regarding the expansion
of the Board of Directors to include additional independent directors.
According to Chrysler's 1995 Notice of Annual Meeting and Proxy Statement,
the Board of Directors of the Company consists of 13 members. There currently
exists one vacancy as the result of the recent resignation of Mr. Joseph
Antonini. Under Article II, Section 7(a) of the By-Laws of Chrysler (the "By-
Laws"), a majority of the persons nominated by the Board of Directors or any
stockholder for election as directors must be, on the earlier of the date of
their nomination or designation as nominees, eligible to be classified as
"Independent Directors", as defined in Article II, Section 7(c) of the By-Laws.
Based upon its review of publicly available documents, Tracinda believes that
Messrs. Denomme, Eaton and Lutz are not "Independent Directors". Tracinda has
insufficient knowledge to determine whether or not the other directors could be
classified as "Independent Directors".
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(3) A proposal for the adoption of the following non-binding resolutions
seeking the formation of a Shareholder Value Committee of the Board of
Directors:
WHEREAS, the shareholders of Chrysler Corporation (the "Company")
believe that a comprehensive, independent review of the Company's financial
policies is in the best interests of the Company and its shareholders;
RESOLVED, that the shareholders hereby urge the Board of Directors to:
(a) designate a committee of directors who are not officers of the
Company (the "Shareholder Value Committee") to undertake a comprehensive
review of the Company's financial policies, including, but not limited to,
its policies with respect to cash retention, capitalization, cost
containment, international expansion and disposition of non-core
assets;
(b) designate, at the Company's option, either (i) a nationally
recognized investment banking firm which does not have a material
relationship with the Company, or (ii) one of the Company's current
investment banking firms and Wasserstein, Perella & Co., Inc. (such firm or
firms, as the case may be, hereinafter called the "Financial Adviser"), to
undertake, subject to the supervision and direction of the Shareholder
Value Committee, a detailed analysis of the Company's financial policies,
and provide to the Financial Adviser all information in the Company's
possession relevant to such analysis;
(c) cause the Financial Adviser to report to the Shareholder Value
Committee the results of its analysis and any recommendations of the
Financial Adviser; and
(d) cause the Shareholder Value Committee to report to the Board of
Directors its conclusions as to the appropriateness of the Company's
current financial policies and any recommendations of the Committee with
respect to changes to such policies to enhance value for all Chrysler
shareholders.
RESOLVED, that, for purposes of these resolutions, an investment
banking firm shall be deemed to have a material relationship with the
Company if it has performed services for the Company or any of its
subsidiaries, other than as a non-managing participating underwriter in a
syndicate, during the last five fiscal years of the Company or if the
Company has proposed to have such firm perform services for the Company or
any of its subsidiaries during the current or next fiscal year of the
Company, which services involved or will involve compensation of in excess
of $250,000 per annum; and that the Board of Directors shall determine
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<PAGE>
whether an investment banking firm shall be deemed to have a material
relationship with the Company.
Tracinda previously has urged the Board of Directors to form a committee of
outside directors to review Chrysler's cash retention policies. In Tracinda's
view, having an independent committee review Chrysler's financial policies with
its own advisers can only be beneficial to Chrysler. The purpose of this
Proposal (3) is to permit all Chrysler shareholders to communicate to the Board
of Directors the importance of a serious and independent review of Chrysler's
financial policies.
Tracinda believes that the particular financial policies of Chrysler
relating to cash retention, capitalization, cost containment, international
expansion and disposition of non-core assets may significantly impact the future
performance of Chrysler and future returns to all Chrysler shareholders.
Moreover, Chrysler management previously has identified these particular
financial policies as being important to Chrysler. However, there may be other
financial policies which would be appropriate for the Shareholder Value
Committee to review; accordingly, the review contemplated by this Proposal (3)
would not be limited to these particular financial policies.
Wasserstein, Perella & Co., Inc. ("WP&Co.") has been retained to advise
Tracinda in connection with Tracinda's investment in Chrysler. A summary of the
material terms of WP&Co.'s engagement is included below under "Solicitation of
Proxies". If under this Proposal (3) the Board of Directors designates one of
Chrysler's current investment banking firms to undertake the detailed analysis
of Chrysler's financial policies (as opposed to a firm not having a material
relationship with Chrysler), Tracinda believes it would be appropriate for that
firm to work together with WP&Co. in order to provide for a balanced
analysis.
Tracinda believes that it does not have any interest in the subject matter
of this Proposal (3) that differs from the interests of other Chrysler
shareholders. In making this Proposal (3), Tracinda is not proposing specific
modifications to Chrysler's financial policies; rather, Tracinda is suggesting
that such financial policies should be the subject of a serious and independent
review by a committee of independent directors.
Currently, no representative of Tracinda is a member of the Board of
Directors. If a representative of Tracinda were to become a member of the Board
of Directors and the Board of Directors thereafter establishes a Shareholder
Value Committee, the Board of Directors could select that representative as a
member of the Shareholder Value Committee.
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<PAGE>
(4) A proposal for the adoption of the following resolution in order to
amend the By-Laws to prohibit the practice of "greenmail":
WHEREAS, the Board of Directors of Chrysler Corporation (the
"Company") has previously announced its opposition to the practice of
"greenmail"; and
WHEREAS, the shareholders of the Company believe it is in the best
interests of the Company and its shareholders that the Board of Directors'
position be reflected by an amendment to the By-Laws of the Company
prohibiting the payment of "greenmail";
RESOLVED, that the By-Laws of the Company shall be amended to add the
following provisions:
Anti-Greenmail. (a) Except as set forth in subsection (b) hereof, in
--------------
addition to any affirmative vote of stockholders required by any provision
of law, the Certificate of Incorporation or By-Laws of the Corporation, or
any policy adopted by the Board of Directors, neither the Corporation nor
any subsidiary shall knowingly effect any direct or indirect purchase or
other acquisition of any shares of any class or classes of capital stock
issued by the Corporation from any Interested Person (i.e., any person who
----
is the direct or indirect beneficial owner of more than one percent (1%) of
the aggregate voting power of the shares of capital stock of the
Corporation), without the affirmative vote of the majority of shares
present in person or represented by proxy at a meeting of the Corporation's
stockholders and entitled to vote on the matter, excluding shares of
capital stock beneficially owned by such Interested Person, voting together
as a single class. Such affirmative vote shall be required notwithstanding
the fact that no vote may be required, or that a lesser percentage may be
specified, by law or any agreement with any national securities exchange,
or otherwise.
(b) The provisions of subsection (a) hereof shall not be applicable
with respect to:
(i) any purchase, acquisition, redemption or exchange of shares of
capital stock, the purchase, acquisition, redemption or exchange of
which, at the time any such transaction is entered into, is provided
for in the Certificate of Incorporation (including any resolution or
resolutions of the Board of Directors providing for the issuance of
Preferred Stock by the Corporation);
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<PAGE>
(ii) any purchase or other acquisition of shares of any class of
capital stock made as part of a tender or exchange offer by the
Corporation to purchase shares of the same class made on the same
terms to all holders of such shares and complying with the
applicable requirements of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder (or any successor
provisions to such Act, rules or regulations);
(iii) any purchase or acquisition of shares of capital stock made
pursuant to an open market purchase program which has been approved
by the Board of Directors; or
(iv) any purchase or acquisition of shares of capital stock made
from, or any purchase or acquisition of shares of capital stock made
pursuant to or on behalf of, an employee benefit plan maintained by
the Corporation or any subsidiary or any trustee of, or fiduciary
with respect to, any such plan when acting in such capacity.
(c) The Board of Directors shall have the exclusive right and power to
interpret the provisions of this By-Law, including, without limitation, the
adoption of written definitions of terms used in this By-Law (any such
definitions shall be filed with the Secretary, and such definitions as may
prevail shall be made available to any stockholder upon written request);
any such interpretation made in good faith shall be binding and conclusive
upon all holders of shares of capital stock.
(d) This By-Law may not be amended without the affirmative vote of the
majority of shares present in person or represented by proxy at a meeting
of the Corporation's stockholders and entitled to vote on the matter.
Tracinda believes that the practice of "greenmail" can result in unfair
treatment of shareholders and corporate disruption that is detrimental to the
interests of a company and its shareholders. This By-Law amendment is designed
to deter persons from accumulating a significant position in Chrysler's stock
with a view to forcing Chrysler to repurchase their stock and to provide
assurance to Chrysler shareholders that no 1% or greater shareholder will be
able to effect any sale of capital stock to Chrysler or its subsidiaries other
than in a transaction open to all shareholders. Under the proposed By-Law,
shareholder approval (subject to the exceptions described above in subsection
(b) of the proposed By-Law) would be required for any repurchase of capital
stock from a 1% or greater shareholder. Since this Proposal (4) is designed to
prevent any significant shareholder from receiving a benefit from Chrysler which
is not offered to all
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<PAGE>
shareholders, the proposed By-Law would apply to a transaction with any such
significant shareholder, regardless of whether or not the transaction were at a
premium to current market prices.
The purpose of the exception set forth in subsection (b)(i) of the proposed
By-Law, is to permit purchases, acquisitions, redemptions and exchanges of
capital stock where the shareholders have authorized the same in Chrysler's
Certificate of Incorporation or the directors have provided for the same in
resolutions designating the preferences and rights of a class or series of
Preferred Stock. For instance, the exception would apply to redemptions by the
Company of its outstanding Series A Convertible Preferred Stock. The exception
set forth in subsection (b)(i), however, is not limited to redemptions of the
Series A Convertible Preferred Stock.
(5) A proposal for the adoption of the following resolution in order to
amend the By-Laws to require shareholder approval of issuances of Chrysler's
"blank check" Preferred Stock and block placements of Common Stock:
WHEREAS, the Certificate of Incorporation of Chrysler corporation
authorizes the issuance, in one or more series, of "blank check" Preferred
Stock, or of Common Stock, without shareholder approval; and
WHEREAS, such Preferred Stock or Common Stock may be issued on terms
which may unfairly impact the rights of existing shareholders;
RESOLVED, that the By-Laws of the Company shall be amended to add the
following provisions:
Certain Issuances of Capital Stock. (a) In addition to any
----------------------------------
affirmative vote of stockholders required by any provision of law, the
Certificate of Incorporation or By-Laws of the Corporation, the Corporation
shall not (i) issue or sell any shares of any class or series of Preferred
Stock or (ii) issue or sell, in one transaction or series of related
transactions with the same person or any affiliate (as defined in Rule 405
under the Securities Act of 1933, as amended) of such person, a number of
shares of Common Stock, or other securities convertible into or exercisable
for Common Stock, representing 10% or more of the then outstanding shares
of Common Stock, without the affirmative vote of the majority of shares
present in person or represented by proxy at a meeting of the Corporation's
stockholders and entitled to vote on the matter.
(b) The provisions of subsection (a) hereof shall not be applicable
with respect to:
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(i) any issuance of shares of the Corporation's Junior
Participating Cumulative Preferred Stock in accordance with the
Amended and Restated Rights Agreement dated as of December 14, 1990,
as amended, between the Corporation and First Chicago Trust Company
of New York; or
(ii) any issuance or sale of shares of any series of Preferred
Stock or Common Stock pursuant to a transaction (whether by way of
stock dividend, stock split, recapitalization, corporate
restructuring, reorganization, merger, exchange offer, rights
offering or similar transaction) made on the same terms to all
holders of Common Stock and in compliance with the applicable
requirements of federal and state laws.
(c) This By-Law may not be amended without the affirmative vote of the
majority of shares present in person or represented by proxy at a meeting
of the Corporation's stockholders and entitled to vote on the matter.
Tracinda believes that the ability to place a block of Common Stock or to
issue "blank check" Preferred Stock may have the effect of unfairly diluting the
economic or voting rights of existing shareholders and may have certain "anti-
takeover" effects. Under the rules of the New York Stock Exchange (the "NYSE"),
shareholder approval is required for any issuance (other than in a public
offering for cash) by Chrysler of Common Stock or other securities convertible
into or exercisable for Common Stock if (i) the Common Stock has or will have
upon issuance voting power equal to or in excess of 20% of the voting power
outstanding before the issuance of such stock or other securities, or (ii) the
Common Stock to be issued is or will be equal to or in excess of 20% of the
number of shares of Common Stock outstanding before the issuance of the stock.
Tracinda believes that the above-described rules of the NYSE do not provide
adequate protection to Chrysler's shareholders against the effects described
above. Moreover, based on current market prices, Chrysler could place in excess
of $3.5 billion of Common Stock with a single purchaser without shareholder
approval. Under the proposed By-Law, shareholder approval (subject to the
exceptions described above in subsection (b) of the proposed By-Law) would be
required (i) for any issuance of Common Stock, or other securities convertible
into or exercisable for Common Stock, representing 10% or more of the then
outstanding shares of Common Stock, or (ii) for any issuance of "blank check"
Preferred Stock.
(6) A proposal for the adoption of the following resolution in order to
amend the By-Laws to require shareholder approval of certain poison pill rights
plans:
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WHEREAS, Chrysler Corporation (the "Company") is a party to the
Amended and Restated Rights Agreement dated as of December 14, 1990, as
amended (the "Existing Rights Agreement"), between the Company and First
Chicago Trust Company of New York; and
WHEREAS, the Company hereafter may become a party to another agreement
or instrument similar to the Existing Rights Agreement (all such other
agreements and instruments hereinafter called "Future Rights Agreements");
and
WHEREAS, certain provisions of the Existing Rights Agreement or any
Future Rights Agreements may be unduly restrictive and adversely impact the
market for the Company's Common Stock;
RESOLVED, that the By-Laws of the Company shall be amended to add the
following provisions:
Rights Plans (a) In addition to any affirmative vote of stockholders
------------
required by any provision of law, the Certificate of Incorporation or By-
Laws of the Corporation, the Corporation shall not maintain any Rights
Agreement (as hereinafter defined) that triggers dilution of the stock
ownership interest of any beneficial owner of Common Stock by reason of the
beneficial ownership by such stockholder of less than 20% of the
outstanding shares of Common Stock, without the affirmative vote of the
majority of shares present in person or represented by proxy at a meeting
of the Corporation's stockholders and entitled to vote on the matter (the
"Requisite Stockholder Vote"). The term "Rights Agreement" means (i) the
Amended and Restated Rights Agreement dated as of December 14, 1990, as
amended, between the Corporation and First Chicago Trust Company of New
York (the "Existing Rights Agreement"), or (ii) any similar agreement or
instrument entered into by the Corporation.
(b) Within 60 days of the effective date of this By-Law, the
Corporation shall either amend the Existing Rights Agreement so as to bring
the Existing Rights Agreement into compliance with this By-Law, or redeem
all the Preferred Share Purchase Rights issued under the Existing Rights
Agreement.
(c) This By-Law may not be amended without the affirmative vote of
the majority of shares present in person or represented by proxy at a
meeting of the Corporation's stockholders and entitled to vote on the
matter.
Under Chrysler's original rights agreement, adopted on February 4, 1988,
the threshold of beneficial ownership at which the Preferred Share Purchase
Rights (the
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"Rights") "flip-in" (i.e., become exercisable to buy Common Stock at
----
a reduced price) was 30%. On September 7, 1989, Chrysler amended its original
rights agreement to reduce such 30% trigger to 20% and to add an additional
flip-in event trigger of at least 10% for a person declared to be an "Adverse
Person" (as defined in the amendment) by the Board of Directors (with the
concurrence of a majority of the outside directors). On December 14, 1990,
after Tracinda purchased 23 million shares of Common Stock, which then
represented approximately 9.8% of the outstanding Common Stock, Chrysler reduced
the basic "flip-in" trigger to 10% and eliminated the "Adverse Person"
provisions. Following a request by Tracinda in November 1994 that Chrysler
redeem all the Rights issued under the Existing Rights Agreement, on December 1,
1994, Chrysler increased the trigger under the Existing Rights Agreement from
10% to 15%.
Tracinda believes that the present 15% ownership limitation in the Existing
Rights Agreement may adversely affect the market for the Common Stock by
limiting the ability of certain persons, including Tracinda, to act as
purchasers of Common Stock, and thereby lessening potential demand for the
Common Stock. Tracinda further believes that raising the trigger under the
Existing Rights Agreement to 20% would lessen such adverse impact on Chrysler
and may increase liquidity for potential sellers of Common Stock. As noted
above, Chrysler's basic flip-in trigger, at the time of Tracinda's original
investment in Chrysler, was 20%. Moreover, of those Fortune 100 companies that
have poison pills, approximately 70% have a trigger of 20%; only approximately
19% of those companies have a trigger of 15%. Accordingly, Tracinda has
concluded that the 20% threshold for the "flip-in" trigger in this Proposal (6)
would be more appropriate than the 15% trigger in the Existing Rights
Agreement.
Adoption of the proposed By-Law would shift from the Board of Directors to
the shareholders the power to determine whether restricting ownership at a level
below 20% is in the interests of Chrysler and its shareholders. Under the
proposed By-Law, (i) Chrysler would have to obtain shareholder approval for the
15% trigger in the Existing Rights Agreement or would have to either increase
the trigger to 20% or redeem the Rights, and (ii) Chrysler could not adopt a
Future Rights Agreement with a trigger of less than 20% without shareholder
approval.
Depending on market conditions, if the "flip-in" trigger of the Existing
Rights Agreement were raised to 20%, Tracinda would consider increasing its
investment in Chrysler to above 15% of the outstanding Common Stock.
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________________________
A vote of the shareholders approving the adoption of the non-binding
resolutions in Proposal (2) or Proposal (3) above would not be legally binding
on the Company or the Board of Directors. However, the approval of these
proposals would serve to communicate to the Company and the Board of Directors
that the shareholders support their adoption.
IMPORTANT: TRACINDA IS NOT CURRENTLY ASKING YOU FOR A PROXY WITH RESPECT TO THE
- ---------
FOREGOING PROPOSALS AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
Following the conclusion of Chrysler's review of its corporate governance
policies and Board membership, Tracinda will make a determination as to whether
to submit one or more of the foregoing proposals for approval by shareholders of
Chrysler at the Annual Meeting. Tracinda also reserves the right to make one or
more additional proposals, including proposals for the election of additional
nominees of Tracinda as directors of Chrysler.
VOTING PROCEDURES
The shares of Common Stock are the only class of capital stock of Chrysler
entitled to vote on any of the proposals set forth under "The Proposals" above.
Every holder of Common Stock is entitled to one vote for each share of Common
Stock held. In accordance with the By-Laws, at the Annual Meeting, the holders
of a majority of all the shares of Common Stock issued and outstanding and
entitled to vote, present in person or represented by proxy, shall constitute a
quorum of the shareholders for all purposes, unless the representation of a
larger number shall be required by law, Chrysler's Certificate of Incorporation
or the By-Laws for the purpose of a quorum, and in that case the representation
of the number so required shall constitute a quorum. In accordance with the By-
Laws, the election of directors and all other matters before the Annual Meeting
will be decided by a plurality vote, except as otherwise provided by law,
Chrysler's Certificate of Incorporation or the By-Laws. If Tracinda determines
to submit any of the proposals set forth under "The Proposals" above for
approval by shareholders of Chrysler at the Annual Meeting, such proposal will
be decided by plurality vote. Abstentions and broker non-votes are not votes
cast and therefore will not be counted in determining voting results, although
abstentions and broker non-votes will be counted in the determination of a
quorum. Inspectors of election that are appointed by the Board of Directors or,
if no such appointment is made, by the presiding officer at the Annual Meeting,
will tabulate the votes cast.
-45-
<PAGE>
Under Article I, Section 9 and Article I, Section 10 of the By-Laws, a
shareholder's notice of business to be brought at an annual meeting or of
nominations for director must be delivered to or mailed and received at the
principal executive offices of Chrysler not less than 60 days nor more than 90
days prior to the annual meeting; provided, however, that if less than 70 days'
-------- -------
notice or prior public disclosure of the date of the annual meeting is given or
made to shareholders, notice by the shareholder to be timely must be so received
not later than the close of business on the 10th day following the day on which
notice of the date of the meeting was mailed or such public disclosure was
made.
As of the date of this Proxy Statement, Chrysler has not announced the
date, time or place of the Annual Meeting or fixed the date for the
determination of shareholders of record entitled to vote at the Annual Meeting.
If Tracinda determines to submit one or more proposals for approval by Chrysler
shareholders at the Annual Meeting, including one or more of the proposals
described above under "The Proposals", it will comply with the advance notice
requirements described above.
INFORMATION ABOUT PROPOSED NOMINEE
Jerome B. York (age 57) has served in a number of executive positions at
Chrysler, including Executive Vice President-Finance and Chief Financial Officer
from 1990 to 1993. He also served as a director of Chrysler from 1992 to 1993.
In 1993, he joined International Business Machines Corporation, an integrated
provider of information technology, as Senior Vice President and Chief Financial
Officer, and he served as a director of IBM from January 1995 to August 1995.
He has served as Vice Chairman of Tracinda since September 1, 1995. Mr. York's
business address is 4835 Koval Lane, Las Vegas, NV 89109. Mr. York also is a
director of MGM Grand, Inc. (an affiliate of Tracinda).
The preceding information concerning the age, principal occupation and
business experience during the last five years has been furnished to Tracinda by
Mr. York. Mr. York has expressed his willingness to serve on the Board of
Directors. Tracinda has agreed to bear all costs and expenses of Mr. York in
connection with his candidacy and his participation in this solicitation.
Tracinda anticipates that, if elected, Mr. York will receive the usual and
customary compensation from Chrysler for his services as director.
According to Chrysler's 1995 Notice of Annual Meeting and Proxy Statement,
the fees being paid to directors who are not officers of Chrysler or its
subsidiaries are as follows: annual fee for serving as a director, $21,000; fee
for each Board meeting attended, $500; fee for each other day of service,
$2,000; annual fee for serving on a Board committee (Management Resources and
Compensation Committees considered as
-46-
<PAGE>
one), $4,000; additional annual fee for serving as chairperson of a committee,
$2,000; and fee for attending one or more committee meetings held on the same
day, $500.
According to Chrysler's 1995 Notice of Annual Meeting and Proxy Statement,
under the Chrysler Corporation 1991 Stock Compensation Plan approved by the
shareholders, nonemployee directors receive options with related stock
appreciation rights ("SARs") for 1,500 shares of Common Stock as of the date of
their election or reelection as a director at any annual or special meeting of
shareholders. The Company also provides business travel accident insurance
coverage in the amount of $250,000 to each nonemployee director. In addition,
the Company provides an annual retirement benefit payable for life to
nonemployee directors with five or more years of service equal to one hundred
percent of the annual retainer for directors in effect at the time of the
individual's retirement from the Board of Directors. A director retiring from
the Board of Directors with less than five years service receives an annual
retirement benefit in the same amount, but only for a period equal to the time
served as a director.
According to Chrysler's 1995 Notice of Annual Meeting and Proxy Statement,
under the Chrysler Salaried Employees' Supplemental Savings Plan, nonemployee
directors may elect in advance to defer all or a portion of the above fees and
proceeds in connection with the exercise of options or SARs, whether payable in
the form of cash or Common Stock. Such directors may self-direct assets in
their deferral accounts among a variety of investments. Directors may elect to
receive payment of their deferred compensation in a lump sum or in annual
installments not to exceed ten years.
OTHER MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
Tracinda anticipates that at the Annual Meeting shareholders will be asked
(1) to elect a slate of directors who will serve until the 1997 Annual Meeting
of Stockholders, (2) to ratify the selection of Chrysler's independent public
accountants to audit the books, records and accounts of Chrysler for the year
1996, and (3) to act upon other shareholder proposals, if such proposals are
presented at the meeting. Tracinda is not making any recommendation on these
matters at this time and is not soliciting your proxy on these matters at this
time.
SOLICITATION OF PROXIES
If Tracinda determines to solicit proxies for use at the Annual Meeting,
such proxies may be solicited by mail, advertisement, telephone or facsimile and
in person. Solicitations may be made by officers and other employees of
Tracinda, none of whom will receive additional compensation for such
solicitation. Tracinda may request banks, brokerage houses and other custodians,
nominees and fiduciaries to forward all
-47-
<PAGE>
solicitation materials to the beneficial owners of Common Stock they hold of
record. If Tracinda determines to solicit proxies for use at the Annual Meeting,
Tracinda will reimburse these record holders for customary clerical and mailing
expenses incurred by them in forwarding these materials to their customers.
Tracinda has retained D.F. King & Co., Inc. ("D.F. King") for solicitation
and advisory services. Tracinda has agreed to pay D.F. King a fee of $[ ]
and to reimburse D.F. King for its reasonable out-of-pocket expenses. Tracinda
has also agreed to indemnify D.F. King against certain liabilities and expenses.
If Tracinda determines to solicit proxies for use at the Annual Meeting, D.F.
King will solicit proxies from individuals, brokers, banks, bank nominees and
other institutional holders. D.F. King has informed Tracinda that it anticipates
that it would employ up to approximately 350 persons to solicit proxies for use
at the Annual Meeting.
The following describes the arrangements entered into between Tracinda and
WP&Co. under the terms of an engagement letter, dated May 28, 1995; revisions to
these arrangements between Tracinda and WP&Co. currently are being discussed.
Tracinda has engaged WP&Co. to act as its financial adviser. Under the terms of
its engagement letter, Tracinda has paid WP&Co. an initial fee of $7.5 million
and also has agreed to pay WP&Co.: (i) an additional fee of $7.5 million if,
during the period of WP&Co.'s engagement and the 18 months following the
termination thereof, (a) Chrysler implements a transaction the stated purpose of
which is to repurchase or exchange not less than $5 billion of Chrysler's then
outstanding Common Stock within no more than 12 months of such announcement by
Chrysler of such transaction (but excluding the $1 billion share repurchase
program announced by Chrysler on December 1, 1994), or (b) Chrysler declares a
dividend of not less than $5.00 per share of Common Stock payable on an
annualized basis for no less than eight consecutive quarters; (ii) an additional
fee of $12.5 million (against which any fees paid under clause (i) above shall
be credited) upon the consummation of certain transactions at any time during
the period of WP&Co.'s engagement and the 18 months following the termination
thereof, including (a) a purchase by Tracinda or any of its affiliates of a
majority of the then outstanding voting securities of Chrysler on a fully
diluted basis, (b) a merger or consolidation involving Tracinda or any of its
affiliates and Chrysler, (c) an asset transfer by Chrysler of all or a
substantial portion of its assets to Tracinda or any of its affiliates, or (d)
the election of, or the acquisition of the right to elect, such number of
nominees, representatives or any affiliates to the Board of Directors
representing in the aggregate at least a majority of the directors of Chrysler,
without the vote of any other shareholder, whether or not such an election
occurs; (iii) a fee of $5 million (which fee shall be credited against the fees
paid or payable under clauses (i) and (ii) above) in the event Tracinda or any
of its affiliates should sell more than 50% of the shares of Common
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<PAGE>
Stock now owned or subsequently acquired at any time during the period of
WP&Co.'s engagement and the 12 months following the termination thereof; (iv)
customary fees (a) if WP&Co. acts as lead or co-lead managing underwriter or
managing placement agent or renders any other service with respect to obtaining
private or public financing for Tracinda in connection with any transaction
covered by clause (ii) above, and (b) if WP&Co. performs any other service for
which compensation has not previously been provided; and (v) a fee of $5 million
(credited against the fees paid or payable under clause (iii) above) if a
definitive agreement with respect to any of the transactions described in clause
(ii) above has been executed and then subsequently abandoned by Tracinda for
reasons reasonably deemed to be within its control. Tracinda also has given
WP&Co. the right to act as exclusive financial adviser, if a financial adviser
is used by Tracinda, with respect to any sales of subsidiaries, divisions or
assets of Chrysler initiated in connection with or within 36 months following an
event listed in clause (ii) above, for which services WP&Co. would receive
customary fees.
Tracinda also has agreed to reimburse WP&Co. for all reasonable out-of-
pocket expenses, including reasonable fees and expenses of its counsel and any
other consultants or advisers retained by WP&Co. in connection with the
performance of its engagement and to indemnify WP&Co. and certain related
persons against certain liabilities and expenses. If Tracinda determines to
solicit proxies for use at the Annual Meeting, WP&Co. has informed Tracinda that
approximately 20 employees of WP&Co. may communicate in person, by telephone or
otherwise with institutions, brokers or other persons who are shareholders of
Chrysler for the purpose of assisting in the solicitation of proxies for the
Annual Meeting.
Tracinda has engaged Whitworth and Associates ("Whitworth") to act as an
adviser with respect to Tracinda's investment in Chrysler. Under the terms of
such engagement, Tracinda has paid Whitworth a base fee of $1.5 million and has
also agreed to pay Whitworth: (i) an additional single fee of $3.5 million, in
the event that prior to the termination of Whitworth's engagement (a) Chrysler
enters into a "Value Enhancing Transaction" as defined below; (b) Tracinda
and/or any partnership, affiliate or joint venture to which Tracinda is a party
(singly or collectively, "Acquiror") is successful in obtaining minority
representation on the Board of Directors; or (c) Acquiror enters into an
agreement with Chrysler pursuant to which (1) Chrysler effects a Value Enhancing
Transaction, (2) Tracinda obtains minority representation on the Board of
Directors, or (3) Acquiror ceases in whole or in part its efforts to influence
Chrysler; and (ii) an additional single fee of $6 million, less any amount paid
pursuant to clause (i) above, in the event that prior to the termination of
Whitworth's engagement Acquiror is successful in (a) effecting an acquisition,
directly or indirectly, of a majority of the Common Stock or of a material
portion of the assets of Chrysler and its subsidiaries taken as a whole by
-49-
<PAGE>
way of tender offer, merger, negotiated business combination or otherwise, or
(b) replacing a majority of the Board of Directors with nominees of Acquiror's
choosing, in one transaction or a series of transactions. A "Value Enhancing
Transaction" shall mean with respect to Chrysler (A) any increase or increases
in Chrysler's annual dividend (whether paid in cash, securities (other than
Common Stock) or assets) of more than 20% in the aggregate from the amount of
Chrysler's regular dividend as of the date of Whitworth's engagement (i.e.,
----
$2.00 per share per year), (B) the consummation of stock repurchases by Chrysler
exceeding $1 billion in the aggregate (but not including any repurchases
pursuant to the stock repurchase programs of $2 billion in the aggregate
previously announced by Chrysler for 1995 and 1996), or (C) any spin-off of
material assets or securities by Chrysler to shareholders, any recapitalization,
reorganization, capital restructuring or partial or complete liquidation of
Chrysler, any sale, merger or combination of Chrysler or any significant
subsidiary to or with any party not affiliated with Tracinda, or any similar
transaction.
In addition, if within 18 months after termination of Whitworth's
engagement an event occurs which would have entitled Whitworth to a fee pursuant
to clause (i) or (ii) of the preceding paragraph, Whitworth will be entitled to
compensation to the same extent as if Whitworth's services had not been
terminated (unless Whitworth's engagement is terminated by reason of (x) a
breach of Whitworth's obligations under its engagement or violation of law by
Whitworth arising out of or relating to the services contemplated by its
engagement, as determined by a final judgment of a court of competent
jurisdiction, or (y) any action taken by Whitworth which Tracinda specifically
instructed Whitworth in writing not to take). Whitworth's engagement is
scheduled to terminate on the day following the Annual Meeting, unless renewed
by Tracinda, in which case an additional base fee of $1.5 million will then be
due and payable by Tracinda to Whitworth and the engagement will continue until
the day following the 1997 Annual Meeting of Stockholders of Chrysler. If
Tracinda renews the engagement and prior to the renewal a fee was triggered
under clause (i) and/or (ii) of the preceding paragraph, then Whitworth is
entitled to an additional fee of $3.5 million or $6 million in accordance with
the terms of such clause (i) and/or (ii), as the case may be, if an additional
event specified in such clause (i) and/or (ii) occurs during the renewal term or
within 18 months following termination of the engagement (other than a
termination under clause (x) or (y) above).
Tracinda also has agreed to reimburse Whitworth for its reasonable out-of-
pocket expenses and to indemnify Whitworth and certain related persons against
certain liabilities and expenses. If Tracinda determines to solicit proxies for
use at the Annual Meeting, Tracinda anticipates that Mr. Ralph Whitworth, the
principal of Whitworth, may communicate in person, by telephone or otherwise
with institutions, brokers or other
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<PAGE>
persons who are shareholders of Chrysler for the purpose of assisting in
the solicitation of proxies for the Annual Meeting.
Whitworth has advised Tracinda that Whitworth has retained, at its own
expense, Batchelder & Partners, Inc. to act as a consultant in connection with
Whitworth's engagement. Under the terms of Whitworth's engagement, the
retention by Whitworth of any consultant must be approved by Tracinda, and this
retention has been approved.
The entire expense of any solicitation by Tracinda of proxies for the
Annual Meeting would be borne by Tracinda. At present, Tracinda does not intend
to seek reimbursement for such expenses from Chrysler. Tracinda estimates that,
if it determines to solicit proxies for use at the Annual Meeting, the costs
incidental to such solicitation, including expenditures for advertising,
printing, postage, legal and related expenses, would be in the range of $15-25
million. Total costs incurred to date in furtherance of or in connection with
the possible solicitation of proxies by Tracinda are approximately $2
million.
CERTAIN INFORMATION ABOUT CHRYSLER
Chrysler is a Delaware corporation with its principal executive offices
located at 12000 Chrysler Drive, Highland Park, Michigan 48288-0001. The
telephone number of Chrysler is (313) 956-5741.
Chrysler is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and, in accordance therewith, files reports
and other information with the SEC. Reports, proxy statements and other
information filed by Chrysler may be inspected and copied at the public
reference facilities maintained by the SEC in Washington, D.C. at 450 Fifth
Street, N.W., Room 1024, and at the following Regional Offices of the SEC: New
York Regional Office, 7 World Trade Center, Suite 1300, New York, New York
10048, and Chicago Regional Office, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Requests should be directed to the SEC's Public
Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549; copies can be
obtained at prescribed rates. Such material may also be inspected at the
library of the New York Stock Exchange, 20 Broad Street, New York, New York
10005.
Schedule III sets forth certain information, as made available in public
documents, regarding shares of Common Stock held by Chrysler management and
persons who own more than five percent of the Common Stock.
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<PAGE>
1996 AND 1997 SHAREHOLDER PROPOSALS
Chrysler's 1995 Notice of Annual Meeting and Proxy Statement indicates that
any shareholder proposal to be considered for inclusion in the proxy soliciting
material distributed by Chrysler prior to the 1996 Annual Meeting of
Stockholders of Chrysler must have been received by Chrysler not later than
December 3, 1995, and should have been addressed to Mr. William J. O'Brien, Vice
President, General Counsel and Secretary of Chrysler, at the address given
above.
A shareholder proposal to be presented at, and to be considered for
inclusion in the proxy soliciting material distributed by Chrysler prior to, the
1997 Annual Meeting of Stockholders of Chrysler must be received at Chrysler's
principal executive offices not less than 120 calendar days in advance of the
date of Chrysler's proxy statement released to shareholders in connection with
the 1996 Annual Meeting of Stockholders of Chrysler.
INFORMATION ABOUT TRACINDA
Tracinda is a Nevada corporation and an investment company wholly owned by
Mr. Kerkorian with its executive offices at 4835 Koval Lane, Las Vegas, NV
89109. Schedule I sets forth certain information about the director and the
executive officers of Tracinda, as well as information about certain employees
and other representatives of Tracinda who also may assist in any solicitation of
proxies. Schedule II sets forth certain information relating to (i) securities
owned by Tracinda, its director, executive officers and employees, and by other
participants, and (ii) transactions between any of them and Chrysler.
OTHER MATTERS
Chrysler owns two Michigan domiciled insurance companies, Chrysler
Insurance Company and Chrysler Life Insurance Company. The Michigan Insurance
Code provides that a person shall not enter into an agreement to merge with or
otherwise to acquire control of a Michigan domestic insurer or any person
controlling a Michigan domestic insurer unless, at the time an offer, request or
invitation is made or an agreement is entered into, or prior to the acquisition
of the securities if no offer or agreement is involved, the offer, request,
invitation, agreement, or acquisition has been approved by the Michigan
Commissioner of Insurance. Under the Michigan Insurance Code, it is presumed
that any person owning 10% or more of an insurance holding company controls that
company. The Michigan Commissioner of Insurance has entered orders entitled In
--
the matter of a disclaimer by Tracinda Corporation with respect to its
- ----------------------------------------------------------------------
acquisition of an additional 14 million shares of the common stock of Chrysler
- -------------------------------------------------------------------------
Corporation, Order No. 95-
- --------------------------
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<PAGE>
368-M (collectively, the "Orders"), approving Tracinda's petition for disclaimer
- -----
of affiliation with Chrysler and the two Michigan insurance companies. The
Orders provide that the scope of the commissioner's approval applies to
Tracinda's ownership of up to 14.99% of the outstanding Common Stock, as well as
to all shares of Common Stock held by Mr. Kerkorian either individually or
collectively with Tracinda. The Orders were subject to certain conditions, among
them that Tracinda would not take any of the following actions with respect to
Chrysler's insurance companies without first obtaining the consent of the
commissioner: (i) change management personnel or otherwise be involved with
either of the insurance companies; (ii) seek any extraordinary dividends or
distributions; or (iii) pledge the assets or stock. The approval of Tracinda's
disclaimer of affiliation under the Orders does not apply to any other future
activity Tracinda may choose to pursue with respect to Chrysler, including the
purchase of additional Common Stock or the undertaking of a proxy or consent
solicitation in which Tracinda would name a slate of candidates for the Board of
Directors.
Tracinda believes that the Michigan Insurance Code is not applicable to
this Proxy Statement because Tracinda is not, at this time, soliciting proxies
for use at the Annual Meeting. As noted above, the approval of Tracinda's
disclaimer of affiliation under the Orders does not apply to the undertaking of
a proxy or consent solicitation in which Tracinda would name a slate of
candidates for the Board of Directors. The Michigan Commissioner of Insurance
could take the position that, under the Michigan Insurance Code, the prior
approval of the commissioner is required for the adoption of one or more of the
proposals described above. While Tracinda believes that no such approval is
required for the adoption of the proposals set forth in this Proxy Statement, if
Tracinda determines to solicit proxies or consents, before commencing a proxy or
consent solicitation, Tracinda will undertake such additional steps as it deems
necessary to ascertain the applicability of the Michigan Insurance Code to that
solicitation and/or to comply with, modify or amend the Orders.
TRACINDA CORPORATION
December [ ], 1995
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<PAGE>
______________________
Questions, or requests for additional copies of materials, should be
directed to:
D.F. KING & CO., INC.
77 WATER STREET
NEW YORK, NY 10005
CALL TOLL-FREE:
1-800-290-6424
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<PAGE>
SCHEDULE I
INFORMATION CONCERNING THE PARTICIPANTS
The following tables set forth the name and the present principal
occupation or employment, and the name, principal business and address of any
corporation or other organization in which such employment is carried on, of
each of the persons who may be deemed to be participants on behalf of Tracinda,
including the director and the executive officers of Tracinda, as well as
certain employees and other representatives of Tracinda who also may solicit
proxies from shareholders of the Company. The principal business address of the
director and each such executive officer and employee of Tracinda is 4835 Koval
Lane, Las Vegas, NV 89109.
DIRECTOR, EXECUTIVE OFFICERS,
AND EMPLOYEES OF TRACINDA
<TABLE>
<CAPTION>
Present Office or Other Principal
Name Occupation or Employment with Tracinda
- ---- --------------------------------------
<S> <C>
Kirk Kerkorian Director, Chief Executive Officer,
Chairman and President
Jerome B. York Vice Chairman
Anthony L. Mandekic Secretary and Treasurer
James D. Aljian Executive
Richard E. Sobelle Executive
Daniel J. Taylor Executive
</TABLE>
OTHER PARTICIPANTS
<TABLE>
<CAPTION>
Present Office or Other Principal
Name and Principal Business Address Occupation or Employment
- ----------------------------------- ---------------------------------
<S> <C>
Alfred Boyer Private investor and sole partner of Boyer
9665 Wilshire Blvd., Suite 200 Capital Management, an investment firm
Beverly Hills, CA 90212
</TABLE>
I-1
<PAGE>
<TABLE>
<S> <C>
Lee Iacocca Private investor and consultant to Tracinda;
1440 South Sepulveda Boulevard former President, Chairman of the Board and Chief
Los Angeles, CA 90025 Executive Officer of Chrysler
Alex Yemenidjian President and Chief Operating Officer of MGM
3799 Las Vegas Boulevard South Grand, Inc., which is engaged in the hotel and
Las Vegas, NV 89109 gaming business
</TABLE>
I-2
<PAGE>
SCHEDULE II
SHARES OF COMMON STOCK OWNED BY TRACINDA, ITS DIRECTOR,
OFFICERS AND EMPLOYEES, AND BY OTHER PARTICIPANTS
The following persons beneficially own the shares of Common Stock indicated
below:
<TABLE>
<CAPTION>
Percentage of
Name Number of Shares Outstanding Shares/(1)/
- ---- ---------------- ------------------
<S> <C> <C>
Tracinda Corporation 50,000,000 /(2)/ 13.1%
Kirk Kerkorian 51,900,000 /(2) (3)/ 13.6%
James D. Aljian 5,000 less than 0.1%
Daniel J. Taylor 1,000 /(4)/ less than 0.1%
Alfred Boyer 5,000 /(2) (5)/ less than 0.1%
Lee A. Iacocca 2,053,826 /(2) (6)/ 0.5%
</TABLE>
- ----------
(1) Based upon 382,560,840 shares of Common Stock outstanding, as listed in
Chrysler's Form 10-Q for the quarter ended September 30, 1995 filed with
the SEC.
(2) Included in the Schedule 13D previously filed by Kirk Kerkorian, Tracinda,
Lee Iacocca and Alfred Boyer with the SEC.
(3) Includes the 50,000,000 shares of Common Stock owned by Tracinda.
(4) All 1,000 shares were purchased at $49.00 per share on December 29, 1994.
(5) Represents 5,000 Long Term Equity Anticipation options at an exercise price
of $40 per share. The options expire January 20, 1996.
(6) Includes 388,986 shares of Common Stock held in a revocable grantor trust,
options to purchase 1,549,090 shares of Common Stock, and 115,750 shares of
Common Stock held by the Iacocca Foundation, a registered charitable
foundation, over which Mr. Iacocca may be deemed to share dispositive and
voting power through a board membership position. The Iacocca Foundation
is located at 17 Arlington Street, Boston, MA 02116.
II-1
<PAGE>
TRANSACTIONS IN THE SECURITIES OF CHRYSLER
WITHIN THE PAST TWO YEARS BY PARTICIPANTS
<TABLE>
<CAPTION>
TRACINDA
- --------
Number of Shares Purchased (Sold) Price per Share Date
- --------------------------------- --------------- ----
<S> <C> <C>
279,500 $46.05 December 19, 1994
21,000 $45.925 December 20, 1994
738,800 $46.05 December 20, 1994
20,000 $46.175 December 20, 1994
22,200 $45.925 December 21, 1994
134,800 $46.05 December 21, 1994
41,000 $46.30 December 21, 1994
135,700 $46.425 December 21, 1994
42,800 $46.55 December 21, 1994
55,600 $46.80 December 21, 1994
7,800 $47.30 December 22, 1994
30,600 $47.425 December 22, 1994
5,500 $47.55 December 22, 1994
249,600 $47.925 December 22, 1994
344,400 $48.05 December 22, 1994
25,000 $48.55 December 23, 1994
28,000 $48.675 December 23, 1994
11,000 $48.80 December 23, 1994
69,100 $48.925 December 23, 1994
152,700 $49.05 December 23, 1994
5,500 $49.05 December 27, 1994
107,100 $49.175 December 27, 1994
150,500 $48.925 December 28, 1994
821,800 $49.05 December 28, 1994
5,000 $48.55 December 29, 1994
39,000 $48.80 December 29, 1994
80,000 $48.925 December 29, 1994
72,600 $49.05 December 29, 1994
50,000 $49.175 December 29, 1994
42,000 $49.30 December 29, 1994
85,400 $49.675 December 29, 1994
10,500 $49.675 December 30, 1994
115,500 $50.05 December 30, 1994
14,000,000 $50.00 August 6, 1995
</TABLE>
II-2
<PAGE>
These shares of Common Stock owned by Tracinda were purchased, in part, by
funds borrowed under, and are pledged to Bank of America National Trust and
Savings Association pursuant to, a Credit Agreement dated as of June, 1991, as
amended (the "Tracinda Credit Agreement"). As of December [ ], 1995, the total
amount of outstanding indebtedness under the Tracinda Credit Agreement was
approximately $[ ].
On November 20, 1995, Tracinda decided to donate (the "Donation") 10
million shares of Common Stock (the "Donation Shares") to the Lincy Foundation,
a California non-profit public benefit corporation (the "Lincy Foundation").
The Lincy Foundation is a charitable foundation formed in 1989 by Tracinda and
is funded by Tracinda. Pursuant to the terms of the Donation, Tracinda will
deliver to the Lincy Foundation 25% of the Donation Shares on November 20, 1997,
25% on November 20, 1998, and 50% on November 20, 1999 (each such date herein
called a "Donation Date"). The Donation is subject to the satisfaction of
certain conditions, including any required consent of any lender that is a party
to a credit agreement with Tracinda. Currently, the consent of the lender under
the Tracinda Credit Agreement would be required because the Donation Shares
constitute a portion of the collateral pledged to the lender pursuant to the
Tracinda Credit Agreement. The Lincy Foundation will not assume any of
Tracinda's obligations under the Tracinda Credit Agreement. Until each Donation
Date, Tracinda will retain sole voting power and sole dispositive power in
respect of the Donation Shares required to be delivered on such Donation Date.
If, prior to a Donation Date, Tracinda has disposed of all or a portion of the
Donation Shares that are required to be delivered on such Donation Date, then
Tracinda shall deliver, in lieu of such Donation Shares, the proceeds received
by Tracinda from the disposition thereof (net of income taxes and other expenses
incurred or payable by Tracinda in connection therewith). Kirk Kerkorian is a
member of the board of directors of the Lincy Foundation. The other members of
the board of directors of the Lincy Foundation are James D. Aljian, Walter
Sharp, Anthony L. Mandekic and Alex Yemenidjian. Messrs. Aljian, Mandekic and
Yemenidjian also comprise all the executive officers of the Lincy Foundation.
Each of Messrs. Aljian, Sharp, Mandekic and Yemenidjian also is a director,
executive officer or executive of Tracinda or MGM Grand, Inc. (an affiliate of
Tracinda) or both.
II-3
<PAGE>
<TABLE>
<CAPTION>
MR. KERKORIAN
- -------------
Number of Shares Purchased (Sold) Price per Share Date
- --------------------------------- --------------- ----
<S> <C> <C>
58,000 $51 August 11, 1995
142,000 $50.875 August 11, 1995
50,000 $50.875 August 18, 1995
32,500 $50.75 August 18, 1995
50,000 $50.75 August 21, 1995
50,000 $50.625 August 21, 1995
50,000 $50.5 August 21, 1995
50,000 $50.375 August 21, 1995
20,000 $50 August 22, 1995
60,000 $50.125 August 22, 1995
102,500 $50.25 August 22, 1995
26,000 $50.375 August 22, 1995
50,000 $50.5 August 22, 1995
2,000 $50.625 August 23, 1995
98,000 $50.75 August 23, 1995
15,700 $50.875 August 23, 1995
129,000 $51 August 23, 1995
57,000 $51.125 August 23, 1995
450,000 $51.25 August 23, 1995
73,500 $51.25 August 24, 1995
14,000 $51.375 August 24, 1995
70,500 $51.5 August 24, 1995
28,000 $51.625 August 24, 1995
135,600 $51.75 August 24, 1995
55,700 $51.875 August 24, 1995
30,000 $52 August 25, 1995
</TABLE>
These shares of Common Stock owned by Mr. Kerkorian were purchased, in
part, by funds borrowed under, and are subject to a pledge in favor of Swiss
Bank Corporation pursuant to, a Credit Agreement dated as of August 4, 1995,
between Mr. Kerkorian and Swiss Bank Corporation, New York Branch. As of
December [ ], 1995, the total amount of outstanding indebtedness under this
Credit Agreement was approximately $ [ ].
II-4
<PAGE>
<TABLE>
<CAPTION>
MR. YORK
- --------
Number of Shares Purchased (Sold) Price per Share Date
- --------------------------------- --------------- ----
<S> <C> <C>
(65) /(1)/ -- December 7, 1993
(100) /(1)/ -- December 23, 1993
(100) /(1)/ -- December 30, 1993
(7,000) $54.75 January 4, 1994
(2,400) $56.00 January 6, 1994
(3,206) $56.25 January 6, 1994
(403) /(2)/ $49.00 July 18, 1995
</TABLE>
- ---------
(1) Indicates shares donated by Mr. York as a charitable contribution.
(2) Indicates shares which were sold by Mr. York's Individual Retirement
Account.
In September 1995, Tracinda entered into a Value Sharing Agreement with Mr.
York, pursuant to which Tracinda has agreed to share certain incremental value
with respect to 32,000,000 of the shares of Common Stock held by Tracinda. Mr.
York will receive in September 2000 (or earlier at Mr. York's election, subject
to certain limits) 6% of the amount by which the market value of a share of
Common Stock exceeds $47.00 but does not exceed $65.00 and 3% of the amount by
which the market value of a share of Common Stock exceeds $65.00 (or, in the
case of the sale of shares of Common Stock for cash prior to that time, of the
amount by which the cash proceeds of the sale exceed $47.00 per share, subject
to adjustment under certain circumstances).
<TABLE>
<CAPTION>
MR. IACOCCA
- -----------
Number of Shares Purchased (Sold) Price per Share Date
- --------------------------------- --------------- ----
<S> <C> <C>
29,783 /(1)/ -- December 2, 1993
(50,000) /(2)/ $60.228 January 21, 1994
(38,087) /(3)/ -- July 6, 1994
15,560 /(1)/ -- December 1, 1994
(123,750) /(4)/ -- December 28, 1994
(58,000) /(2)/ $50.00 August 10, 1995
</TABLE>
- ---------
(1) Indicates shares (net of shares withheld for payment of taxes) which were
granted to Mr. Iacocca by Chrysler as incentive compensation.
(footnotes continued on the following page)
II-5
<PAGE>
(2) Indicates shares which were sold by the Iacocca Foundation.
(3) Indicates shares donated by Mr. Iacocca directly to a charitable trust
which pays 8% of its value to the Iacocca Foundation annually for 20 years.
(4) Indicates shares donated by Mr. Iacocca directly to the Iacocca Foundation.
In June 1995, Tracinda entered into a Value Sharing Agreement with Mr.
Iacocca (the "Iacocca Value Sharing Agreement"), pursuant to which Tracinda has
agreed to share certain incremental value with respect to 32,000,000 of the
shares of Common Stock held by Tracinda. Mr. Iacocca will receive 4% of the
amount by which the market value of a share of Common Stock exceeds $47.00 per
share in June 1999 (or, in the case of the sale of shares of Common Stock for
cash prior to that time, of the amount by which the cash proceeds of the sale
exceed $47.00 per share, subject to adjustment under certain circumstances).
The amount payable to Mr. Iacocca under the Iacocca Value Sharing Agreement also
may be limited by the terms of the November 1995 Agreement (as defined
below).
During his tenure with Chrysler, Mr. Iacocca received equity-based
incentive compensation, comprised largely of options to purchase Common Stock.
These stock options were granted over the years under stock option plans
maintained by Chrysler, pursuant to stock option agreements (the "Stock Option
Agreements") between Mr. Iacocca and Chrysler. During the period of Mr.
Iacocca's service to Chrysler, he earned compensation in the form of options to
purchase over 2.5 million shares of Common Stock. Of these stock options, (i)
Mr. Iacocca owns options to purchase 1,436,590 shares of Common Stock as of
November 21, 1995, all of which are fully vested and currently exercisable, and
(ii) Mr. Iacocca previously has attempted to exercise options to purchase
112,500 shares of Common Stock, the exercisability of which is the subject of a
dispute between Mr. Iacocca and Chrysler, as discussed below (such options,
together with the options referred to in clause (i) above, are herein called the
"Iacocca Options"). The Iacocca Options are exercisable at prices ranging from
$11.75 to $44.07 per share.
In addition to stock options, under certain of the Stock Option Agreements,
Mr. Iacocca also was granted related Limited Stock Appreciation Rights ("Limited
Stock Appreciation Rights"). As of November 21, 1995, Mr. Iacocca holds Limited
Stock Appreciation Rights with respect to 286,590 shares of Common Stock.
Limited Stock Appreciation Rights are exercisable only during the 60-day period
following a "change of control" (as defined in Chrysler's stock option plans) of
Chrysler. Upon the occurrence of a change of control of Chrysler, Mr. Iacocca
may elect to exercise all or some of his Limited Stock Appreciation Rights, and
to receive in cash, with respect to each share of Common Stock underlying such
Limited Stock Appreciation Rights, the amount equal to the excess, if any, of
(i) the higher of (x) the market value of a share of Common Stock on the date of
exercise or (y) the highest per share price paid for shares of Common Stock in
the transaction constituting the "change of control", or, in the case of a
"change of
II-6
<PAGE>
control" resulting from certain changes in the membership of the Board of
Directors, the average of the closing price of Common Stock for the 30-day
period prior to such change in the membership of the Board of Directors that
constitutes a "change of control", over (ii) the exercise price of the related
stock option, as set forth in the applicable Stock Option Agreement. Upon the
exercise of a Limited Stock Appreciation Right, the related stock option, or the
portion thereof with respect to which such Limited Stock Appreciation Right is
exercised, terminates and, similarly, upon the exercise of a stock option
related to a Limited Stock Appreciation Right, such Limited Stock Appreciation
Right, or the portion thereof with respect to which such stock option is
exercised, terminates.
The Stock Option Agreements generally provide, among other things, the
number of stock options granted, exercise prices, expiration dates, vesting
schedule, if any, reload features, if any, procedures for exercising the stock
options, Limited Stock Appreciation Rights, if any, and the plan under which the
terms of the stock options are granted. By the terms of the Stock Option
Agreements and the plans under which the stock options were granted, the Iacocca
Options and Limited Stock Appreciation Rights will expire on or before December
31, 1997.
Mr. Iacocca also was granted stock appreciation rights by Chrysler under a
letter agreement, dated July 12, 1990, as amended on June 22, 1992 (the "SAR
Agreement"). Of the stock appreciation rights granted under the SAR Agreement,
stock appreciation rights relating to 187,500 shares of Common Stock remain
outstanding (the "Iacocca Stock Appreciation Rights"), all of which are fully
vested and currently exercisable. Pursuant to the SAR Agreement, Mr. Iacocca
will be entitled to receive with respect to the Iacocca Stock Appreciation
Rights, upon exercise, an amount equal to all or any part of 187,500 multiplied
by the difference between $15.50 (the market value of a share of Common Stock on
July 12, 1990) and the market value of a share of Common Stock on the date of
exercise. The Iacocca Stock Appreciation Rights will expire on December 31,
1997.
On June 11, 1992, Chrysler and Mr. Iacocca entered into a two-year
agreement (the "Chrysler Consulting Agreement") commencing upon his retirement
as Chairman of the Board and Chief Executive Officer of Chrysler effective
December 31, 1992, pursuant to which Mr. Iacocca was required to be available to
devote up to 50% of his time to perform consulting and other services at
Chrysler's request. Pursuant to the Chrysler Consulting Agreement, Mr. Iacocca
received (a) $500,000 per year, (b) certain perquisites made available to
Chrysler's executive officers, and (c) use of an office facility, staff support
and certain related services, including the use of Chrysler's company aircraft
by Mr. Iacocca in connection with the performance of his consulting services.
The Chrysler Consulting Agreement further contemplated that Mr. Iacocca would
be nominated for election to the Board of Directors during the term of the
Chrysler Consulting Agreement
II-7
<PAGE>
and, if elected to the Board of Directors, that Mr. Iacocca would serve as a
director and as Chairman of the Executive Committee of the Board without any
additional compensation.
On November 3, 1995, Tracinda entered into an agreement with Mr. Iacocca
(the "November 1995 Agreement"), pursuant to which Mr. Iacocca will receive at
least $42 million in the aggregate, whether from Chrysler, Tracinda or both, in
respect of his interest in the Iacocca Options, the Iacocca Stock Appreciation
Rights and his rights under the Iacocca Value Sharing Agreement. If, with
respect to the Iacocca Options and the Iacocca Stock Appreciation Rights, Mr.
Iacocca receives at least $42 million upon their exercise or sale or pursuant to
a judgment against or a settlement with Chrysler, then Mr. Iacocca will receive
all amounts to which he is entitled under the Iacocca Value Sharing Agreement.
If Mr. Iacocca does not so receive $42 million in the aggregate with respect to
the Iacocca Options and the Iacocca Stock Appreciation Rights, then Mr. Iacocca
will receive payments under the Iacocca Value Sharing Agreement and the November
1995 Agreement equal to the excess of $42 million over all amounts received by
Mr. Iacocca in respect of the Iacocca Options and the Iacocca Stock Appreciation
Rights upon their exercise or sale and/or pursuant to a judgment or settlement
with Chrysler, and will not be entitled to any other value sharing payment under
the Iacocca Value Sharing Agreement. Under the November 1995 Agreement,
Tracinda also has agreed to pay Mr. Iacocca's legal fees in respect of
litigation relating to the Iacocca Options up to a maximum of $2 million,
subject to reimbursement by Mr. Iacocca to the extent Mr. Iacocca receives
amounts in respect of the Iacocca Options and the Iacocca Stock Appreciation
Rights in excess of $42 million.
On November 6, 1995, Mr. Iacocca commenced a lawsuit in the Superior Court
of California, Los Angeles County, against Chrysler. The lawsuit arises out of
Chrysler's refusal to honor the exercise of certain of the Iacocca Options
granted to Mr. Iacocca as compensation during his years of service as Chrysler's
President, Chairman of the Board and Chief Executive Officer. Chrysler has
taken the position that the conditions to the exercise of such Iacocca Options
have not been satisfied, which position is disputed by Mr. Iacocca. Mr.
Iacocca's complaint alleges that Chrysler's management and the Board of
Directors have sought to impose a forfeiture of some or all of those Iacocca
Options in retaliation against Mr. Iacocca's affiliation with Tracinda. The
complaint asserts causes of action for breach of contract, specific performance,
omissions of material facts, breach of fiduciary duty, equitable estoppel and
declaratory relief, and seeks, among other things, compensatory and punitive
damages.
On or about December 4, 1995, Chrysler commenced an action against Mr.
Iacocca in the Michigan Circuit Court for Oakland County. The complaint alleges
that Mr. Iacocca, through his association with Mr. Kerkorian and Tracinda,
breached purported fiduciary duties to Chrysler, violated his consulting
agreement with Chrysler dated June 11, 1992, and failed to satisfy certain
purported preconditions to exercising
II-8
<PAGE>
certain of the Iacocca Options granted to him by Chrysler. The complaint arises,
in part, out of transactions and occurrences alleged in Mr. Iacocca's California
action versus Chrysler. In its lawsuit, Chrysler seeks compensatory and
exemplary damages, preliminary and permanent injunctive relief enjoining Mr.
Iacocca from continuing his alleged use and disclosure of Chrysler's non-public
information, an accounting for all profits and other compensation earned by Mr.
Iacocca from Mr. Kerkorian and Tracinda, and a declaratory judgment that
Chrysler and the Board of Directors were legally justified in refusing to permit
Mr. Iacocca to exercise certain of the Iacocca Options.
MR. BOYER
- ---------
In June 1995, Tracinda entered into a Value Sharing Agreement with Mr.
Boyer, pursuant to which Tracinda has agreed to share certain incremental value
with respect to 32,000,000 of the shares of Common Stock held by Tracinda. Mr.
Boyer will receive 1% of the amount by which the market value of a share of
Common Stock exceeds $47.00 in June 1999 (or, in the case of the sale of shares
of Common Stock for cash prior to that time, of the amount by which the cash
proceeds of the sale exceed $47.00 per share, subject to adjustment under
certain circumstances).
II-9
<PAGE>
SCHEDULE III
BENEFICIAL OWNERSHIP OF CHRYSLER COMMON STOCK
The following information is derived from publicly available information on
file with the SEC, and sets forth the number of shares of Common Stock
beneficially owned by the directors and executive officers of Chrysler as of
July 6, 1995 (unless otherwise noted):
<TABLE>
<CAPTION>
Number of Shares Total Number
Which May Be of Shares
Name of Number of Acquired Within Beneficially
Beneficial Owner (1) Shares Owned 60 Days (2) Owned (3)(4)
- ------------------------- ------------ ---------------- --------------
<S> <C> <C> <C>
Lilyan H. Affinito 3,466 6,600 10,066
Robert E. Allen 1,000 600 1,600
Joseph E. Antonini 6,130 2,100 8,230
Joseph A. Califano, Jr. 3,466 5,100 8,566
Theodor R. Cunningham 27,176 241,699 268,875
Thomas G. Denomme 23,044 92,698 115,742
Robert J. Eaton 103,872 549,410 653,282
Earl G. Graves 1,980 6,150 8,130
Kent Kresa 2,180 6,150 8,330
Robert J. Lanigan 3,337 3,000 6,337
Robert A. Lutz 58,381 493,034 582,066
Peter A. Magowan 15,430 3,000 18,430
Malcolm T. Stamper 4,577 2,100 6,677
Gary C. Valade 12,887 125,298 138,185
Lynton R. Wilson 1,500 600 2,100
All Directors and Executive
Officers, including those
named above, as a Group 672,480 3,158,841 3,861,972(5)
</TABLE>
- ------------------
(1) No director or executive officer is the beneficial owner of other equity
securities of Chrysler or any of its subsidiaries. No director or
executive officer beneficially owns more than 1.0% of the shares of Common
Stock outstanding.
(2) This column lists the number of shares which the directors and executive
officers have the right to acquire within 60 days after July 6, 1995
through the exercise of stock options. The shares shown in this column are
included in the Total Number of Shares Beneficially Owned column.
(footnotes continued on the following page)
III-1
<PAGE>
(3) Unless otherwise indicated, each person included in the group has sole
investment power and sole voting power with respect to the shares of Common
Stock beneficially owned by such person.
(4) Does not include shares of Common Stock held by the dividend reinvestment
plan and the trustees under the Chrysler savings plans.
(5) Includes 13,497 shares of Common Stock held by family members of executive
officers, the beneficial ownership of which has been disclaimed by such
officers in reports filed with the SEC.
According to public documents filed with the SEC, the following person (in
addition to Kirk Kerkorian and Tracinda) beneficially owned more than 5% of the
shares of Common Stock as of July 31, 1995:
<TABLE>
<CAPTION>
Voting Power Disposition Power Percent of
-------------- -----------------
Name and Address Sole Shared Sole Shared Total(2) class (2)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FMR Corp. (1) 1,257,073 0 48,338,267 0 48,338,267 13.04%
82 Devonshire Street
Boston, MA 02109
- ---------------------------------------------------------------------------------------
</TABLE>
(1) Based on the Schedule 13G filed by FMR Corp. with the SEC on August 7, 1995
(the "Fidelity Schedule 13G"). The Fidelity Schedule 13G indicates that
beneficial ownership of substantially all of these shares arises through the
investment advisory activities of Fidelity Management and Research Company
("Fidelity Management") and the investment management activities of Fidelity
Management Trust Company, each a wholly owned subsidiary of FMR Corp., and
Fidelity International Limited, an investment adviser to various investment
companies.
(2) The Fidelity Schedule 13G additionally reports that Mr. Edward C. Johnson
3rd, chairman of FMR Corp., together with other family members part of a
controlling group of FMR Corp., is the beneficial owner of the same
shares.
Subsequent to July 31, 1995, a Form 13F-E, dated November 15, 1995, for the
quarter ended September 30, 1995, (the "Fidelity Form 13F-E"), was filed with
the SEC by Fidelity Management, on behalf of itself and other affiliated
institutional investment managers, and indicated holdings of 55,082,374 shares
of Common Stock (or approximately 14.4% of the number of shares of Common Stock
reported by the Company to be outstanding as of September 30, 1995). The
Fidelity Form 13F-E indicates that there was (i) sole voting authority as to
1,125,997 shares of Common Stock, (ii) shared voting authority as to 0 shares of
Common Stock, and (iii) no voting authority as to 53,956,377 shares of Common
Stock.
III-2
<PAGE>
______________________
Although Tracinda does not have any information that would indicate that
any information contained in this Schedule III, which has been taken from
documents on file with the SEC, is inaccurate or incomplete, Tracinda assumes no
responsibility for the accuracy or completeness of such information.
[91005.02]
III-3
