<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.
</TABLE>
GOODYEAR TIRE AND RUBBER COMPANY
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
GOODYEAR TIRE AND RUBBER COMPANY
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
================================================================================
<PAGE> 2
[Logo Goodyear]
NOTICE OF
2000 ANNUAL MEETING OF SHAREHOLDERS
AND
PROXY STATEMENT
THE GOODYEAR TIRE & RUBBER COMPANY
1144 East Market Street
Akron, Ohio 44316-0001
DATE: Monday, April 10, 2000
TIME: 10:00 A.M., Akron Time
PLACE: Offices Of The Company
Goodyear Theater
1201 East Market Street
Akron, Ohio
YOUR VOTE IS IMPORTANT
----------------------
PLEASE COMPLETE, DATE AND SIGN YOUR PROXY AND PROMPTLY RETURN IT IN THE ENCLOSED
ENVELOPE.
<PAGE> 3
The Goodyear Tire & Rubber Company
SAM GIBARA
CHAIRMAN OF THE BOARD
CHIEF EXECUTIVE OFFICER AND PRESIDENT
February 25, 2000
Dear Shareholders:
You are cordially invited to attend your Company's 2000 Annual Meeting of
Shareholders, which will be held at the Goodyear Theater, 1201 East Market
Street, Akron, Ohio, at 10:00 A.M., Akron Time, on Monday, April 10, 2000. We
hope you will be able to attend and participate. The Notice of, and Proxy
Statement for, the 2000 Annual Meeting of Shareholders follow. The 1999 Annual
Report is enclosed.
At the Annual Meeting, shareholders will elect four persons to serve as
directors for three year terms (Item 1 on your Proxy). Each nominee is an
incumbent. The Proxy Statement contains information regarding each nominee for
director and the seven continuing directors.
Your Board of Directors is presenting for action by the shareholders its
proposal that shareholders ratify the Board's appointment of
PricewaterhouseCoopers LLP as independent accountants for the Company for 2000
(Item 2 on your Proxy). Your Board of Directors recommends that you vote for
the ratification of the appointment of PricewaterhouseCoopers LLP.
If you plan to attend the Annual Meeting, please mark the indicated box on
the reverse side of your Proxy. You are cordially invited to join us for
refreshments from 9:30 to 9:55 A.M. in the Lobby at the entrance to the
Goodyear Theater. You do not need a ticket to attend the Annual Meeting or the
reception.
Whether or not you plan to attend, it is important that you complete, date,
sign and promptly return your Proxy. This will ensure that your shares will be
represented at the meeting. If you attend and decide to vote in person, you
may revoke your Proxy. Remember, your vote is important!
Sincerely,
/s/ Samir G. Gibara
SAMIR G. GIBARA
Chairman of the Board,
Chief Executive Officer and President
<PAGE> 4
CONTENTS
Page
NOTICE OF THE 2000 ANNUAL MEETING OF SHAREHOLDERS ....................... 1
PROXY STATEMENT
General Information ................................................... 1
Shares Voting ...................................................... 1
Vote Required ...................................................... 1
Cumulative Voting For Directors .................................... 1
Voting of Proxy .................................................... 1
Confidentiality .................................................... 1
Revocability of Proxy .............................................. 2
The Board of Directors and Its Committees ............................. 2
Audit Committee .................................................... 2
Compensation Committee ............................................. 2
Nominating and Board Governance Committee .......................... 3
Committee on Corporate Responsibility .............................. 3
Election of Directors (Proxy Item 1) .................................. 3
Ratification of Appointment of Independent Accountants (Proxy Item 2) . 6
Other Business ........................................................ 7
Beneficial Ownership of Common Stock .................................. 7
Executive Officer Compensation ........................................ 9
Summary of Compensation ............................................ 9
Option/SAR Grants in 1999 .......................................... 11
Option/SAR 1999 Exercises and Year-End Values ...................... 12
Long Term Incentive Awards ......................................... 12
Other Compensation Plan Information ................................ 12
Retirement Benefits ................................................ 14
Directors' Compensation ............................................ 14
Other Matters ...................................................... 15
Section 16(a) Beneficial Ownership Reporting Compliance ............... 16
Compensation Committee Report on Executive Compensation ............... 16
Performance Graph ..................................................... 20
Miscellaneous ......................................................... 21
Submission of Shareholder Proposals ................................ 21
10-K Report ........................................................ 21
Savings Plan Shares ................................................ 21
Costs of Solicitation .............................................. 21
<PAGE> 5
THE GOODYEAR TIRE & RUBBER COMPANY
NOTICE OF THE
2000 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 10, 2000
TO THE SHAREHOLDERS:
The 2000 Annual Meeting of Shareholders of The Goodyear Tire & Rubber
Company (the "Company"), an Ohio corporation, will be held at the Goodyear
Theater (in the Company's Principal Office Complex), 1201 East Market Street,
Akron, Ohio, on Monday, April 10, 2000, at 10:00 A.M., Akron Time, for the
following purposes:
1. To elect four directors, each to serve for a term of three years (Proxy
Item 1);
2. To consider and vote upon a proposal to ratify the appointment of
PricewaterhouseCoopers LLP as independent accountants for the Company
for 2000 (Proxy Item 2); and
3. To act upon such other matters and to transact such other business as
may properly come before the meeting or any adjournments thereof.
The Board of Directors fixed the close of business on February 16, 2000 as
the record date for determining shareholders entitled to notice of, and to vote
at, the 2000 Annual Meeting. Only holders of record of the Common Stock of the
Company at the close of business February 16, 2000 will be entitled to vote at
the 2000 Annual Meeting and adjournments, if any, thereof.
February 25, 2000 By order of the Board of Directors:
/s/ James Boyazis
James Boyazis, Secretary
- --------------------------------------------------------------------------------
Please complete, date and sign your proxy and return it promptly in
the enclosed envelope.
1
<PAGE> 6
PROXY STATEMENT
THE GOODYEAR TIRE & RUBBER COMPANY
---------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of The Goodyear Tire & Rubber Company, an Ohio
corporation (the "Company"), to be voted at the Annual Meeting of Shareholders
to be held April 10, 2000 (the "Annual Meeting"), and at any adjournments
thereof, for the purposes set forth in the accompanying notice.
The principal executive offices of the Company are located at 1144 East Market
Street, Akron, Ohio 44316-0001. The Company's telephone number is 330-796-2121.
The Company's Annual Report to Shareholders for the year ended December 31,
1999 is enclosed with this Proxy Statement. The Annual Report is not considered
part of the proxy solicitation materials. The approximate date on which this
Proxy Statement and the related form of Proxy are first being sent to
shareholders is February 29, 2000.
SHARES VOTING
Holders of shares of the Common Stock, without par value, of the Company (the
"Common Stock") at the close of business on February 16, 2000 (the "record
date") are entitled to notice of, and to vote shares of Common Stock held on the
record date at, the Annual Meeting. As of the close of business on the record
date, there were 156,353,770 shares of Common Stock outstanding and entitled to
vote at the Annual Meeting. Each share of Common Stock is entitled to one vote.
VOTE REQUIRED
Except for the election of directors, the affirmative vote of at least a
majority of the shares of Common Stock outstanding on the record date is
required for a resolution to be adopted at the Annual Meeting. In the election
of directors, the four candidates receiving the most votes will be elected.
CUMULATIVE VOTING FOR DIRECTORS
In the voting for directors, you have the right to vote cumulatively for
candidates nominated prior to the voting. In voting cumulatively, you may (a)
give one candidate a number of votes equal to the number of directors to be
elected multiplied by the number of shares of Common Stock you are entitled to
vote, or (b) distribute your votes on the same principle among two or more
candidates as desired.
VOTING OF PROXY
The accompanying Proxy is designed to permit you to vote on the election of
directors and on the resolution proposed by the Board of Directors described in
this Proxy Statement. Three directors of the Company, Messrs. Breen, Butler and
Gibara, have been designated as proxies to vote (or withhold from voting) shares
of Common Stock in accordance with your instructions given in your Proxy.
In the absence of specific instructions in your Proxy, your shares will be
voted for the four nominees whose names are set forth at page 3. You may
indicate in your Proxy that you withhold your vote from any one or more of the
nominees. The proxies designated by your Board of Directors may cumulatively
vote your Proxy if such action is deemed by them to be appropriate, except to
the extent you expressly withhold authority to so cumulate votes as to any
nominee. Your Board of Directors does not presently anticipate that any of the
nominees named will be unavailable for election. In the event an unexpected
vacancy occurs, your Proxy received may be voted for the election of a new
nominee designated by the Board of Directors.
If no specific instructions are given in your Proxy, shares will be voted in
favor of the proposal by the Board of Directors to ratify the appointment of
PricewaterhouseCoopers LLP as independent accountants for the Company for 2000.
CONFIDENTIALITY
Your vote, whether by Proxy or ballot, will be treated as confidential, except
(a) as may be required by law, (b) as may be necessary to assert or defend
claims for or against the Company, (c) in the case of a contested election of
director(s), or (d) at your express request. The inspectors of election and
persons processing proxy cards and ballots and tabulating the vote will not be
employees of the Company. Representatives of First Chicago Trust Company of New
York have been appointed to serve as the inspectors of election for the 2000
Annual Meeting.
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<PAGE> 7
REVOCABILITY OF PROXY
You may revoke or revise any Proxy you give to the Board of Directors by the
execution of a later proxy or by giving notice to the Company in writing or in
open meeting. No revocation or revision of any Proxy shall affect any vote
previously taken.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
In accordance with the Ohio General Corporation Law and the Articles of
Incorporation and Code of Regulations of the Company, the Company is managed
under the direction of the Board of Directors by the chief executive officer and
other officers to whom authority has been delegated by the Board.
The Board:
- selects and evaluates management.
- considers and acts on other fundamental corporate matters, including the
declaration of dividends, the issuance of stock and the authorization of
significant business transactions.
- reviews the Company's operating results and financial statements.
- approves capital expenditures.
- works with senior management in planning the Company's business strategy and
establishing its long term and short term business objectives.
Historically, a majority of the members of the Board have been neither
officers nor employees of the Company. Ten of the eleven directors currently
serving are neither present nor past officers or employees of the Company or
any of its subsidiaries. The four nominees (each currently serving as a
director) are neither present nor past officers or employees of the Company or
any of its subsidiaries.
The Board meets on a regularly scheduled basis at least six times during the
year. The average attendance of all directors at the six Board meetings held
during 1999 was 96.1%. The average attendance of all directors at all meetings
of the Board and its standing committees held during 1999 was 97.5%. During
1999, each director attended at least 75% of all meetings of the Board and the
standing committees of the Board on which he or she served.
The Board of Directors has four standing committees to assist it in the
discharge of its responsibilities.
AUDIT COMMITTEE
Established in 1967, the Audit Committee is comprised of six directors who
are not present or past employees of the Company or any of its subsidiaries. The
Audit Committee held four formal meetings during 1999. The current members are
J.G. Breen, W.E. Butler, T.H. Cruikshank, K.G. Farley, W.J. Hudson, Jr. and
G.H. Schofield (Chairman).
The Audit Committee, among other things, regularly:
- reviews for the Board the activities of the Company's internal auditors and
its independent accountants.
- evaluates the Company's organization, internal controls, policies,
procedures and practices to determine whether they are reasonably designed to
- assure the accuracy and adequacy of the Company's records and financial
statements;and
- provide for the safekeeping of the Company's assets.
- reviews the Company's financial statements and reports.
- monitors compliance with the Company's internal controls, policies,
procedures and practices.
- receives direct compliance reports from the Company's internal auditors and
General Counsel and from the independent accountants.
- undertakes such other activities as the Board from time to time may
delegate to it.
The Audit Committee annually:
- considers the qualifications of the independent accountants of the Company
and makes recommendations to the Board as to their selection.
- reviews and approves audit fees and fees for non-audit services rendered or
to be rendered by the independent accountants, and reviews the audit plan and
the services rendered or to be rendered by the independent accountants for each
year and the results of their audit for the previous year.
COMPENSATION COMMITTEE
Established in 1979, the Compensation Committee is comprised of six directors
who are not present or past employees of the Company or any of its
subsidiaries. The Compensation Committee held two formal meetings during 1999.
The current members are J. G. Breen (Chairman), K. G. Farley, W. J. Hudson, Jr.,
S.A. Minter, A. Pytte and M.D. Walker.
The Compensation Committee, after consulting with the chief executive officer,
establishes, authorizes and administers the Company's compensation policies,
practices and plans for the Company's directors, executive officers and other
key personnel. The Compensation Committee also advises the Board of Directors in
establishing directors' and officers' compensation and regarding management
development and succession plans and
-2-
<PAGE> 8
undertakes such other activities as may be delegated to it from time to time by
the Board of Directors.
The Compensation Committee administers the Company's 1997 Performance
Incentive Plan, the 1989 Goodyear Performance and Equity Incentive Plan, the
Company's Performance Recognition Plan, the Company's Deferred Compensation Plan
For Executives and the Company's Outside Directors' Equity Participation Plan.
NOMINATING AND BOARD GOVERNANCE COMMITTEE
The Nominating and Board Governance Committee was established in 1998 and is
the successor of the Nominating Committee established in 1978. The Nominating
and Board Governance Committee is comprised of the Chairman of the Board and six
directors who are not present or past employees of the Company or any of its
subsidiaries. The Nominating and Board Governance Committee held four formal
meetings during 1999. The current members are S.G. Gibara, W.J. Hudson, Jr.,
S.A. Minter, A. Pytte, G.H. Schofield, W.C. Turner and M. D. Walker (Chairman).
The principal function of the Nominating and Board Governance Committee is to
identify, evaluate, and recommend to the Board of Directors candidates for
election to the Board of Directors. The Nominating and Board Governance
Committee is also responsible for recommending to the Board of Directors
policies and standards for evaluating the overall effectiveness of the Board of
Directors in the governance of the Company and for undertaking such other
activities as may be delegated to it from time to time by the Board of
Directors.
Any shareholder desiring to submit a candidate for consideration by the
Nominating and Board Governance Committee should send the name of such proposed
candidate, together with such biographical data and background information
concerning the candidate as the shareholder may desire, to: The Office of the
Secretary, The Goodyear Tire & Rubber Company, Akron, Ohio 44316-0001.
COMMITTEE ON CORPORATE RESPONSIBILITY
The Committee on Corporate Responsibility was established in 1976 and is
comprised of six directors who are not present or past officers or employees of
the Company or any of its subsidiaries. The Committee held two formal meetings
during 1999. The current members are W. E. Butler, T. H. Cruikshank, S. A.
Minter, A. Pytte, W. C. Turner (Chairman) and M.D. Walker.
The Committee on Corporate Responsibility:
- reviews at least annually the Company's legal compliance programs.
- reviews periodically the Company's policies and practices relating to the
manner in which the Company and its subsidiaries conduct their business.
- reviews the Company's policies and practices regarding its relationships
with shareholders, employees, customers, governmental agencies and the general
public.
- reviews the need for, and develops and recommends to the Board, new policies
relating to such matters.
- undertakes such other activities as the Board may from time to time delegate
to it.
ELECTION OF DIRECTORS
(ITEM 1 ON THE PROXY)
The Board of Directors is comprised of eleven directors and is classified into
three classes of directors. At each annual meeting directors of one of the
classes, on a rotating basis, are elected to three year terms, to serve as the
successors to the directors of the same class whose terms expire at that annual
meeting. Classes I and III are each currently comprised of four directors. Class
II is currently comprised of three directors. The current terms of the four
Class III Directors will expire at the Annual Meeting. The current terms of the
four Class II Directors and the three Class I Directors will expire at the 2001
and 2002 annual meetings, respectively.
At the Annual Meeting four persons are to be elected to serve as Class III
Directors, each to a three year term. The Board of Directors has selected the
following nominees recommended by the Nominating and Board Governance Committee
for election to the Board of Directors, each to hold office for a three year
term expiring at the 2003 annual meeting and until his or her successor shall
have been duly elected and qualified:
Thomas H. Cruikshank
Katherine G. Farley
Steven A. Minter
Agnar Pytte
Each nominee is an incumbent director whose term of office expires at the
Annual Meeting. The following page contains certain information concerning the
four nominees, which information was furnished by them.
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<PAGE> 9
NOMINEES FOR DIRECTOR--CLASS III, Three Year Terms Expiring in 2003
- --------------------------------------------------------------------------------
THOMAS H. CRUIKSHANK
Retired. Formerly Chairman of the Board and Chief Executive Officer of
Halliburton Company, a supplier of oil field equipment and services and
engineering and construction services.
Mr. Cruikshank was Chairman of the Board and Chief Executive Officer of
Halliburton Company from June of 1989 through October 31, 1995, when he retired
as Chief Executive Officer. He retired as Chairman of the Board of Halliburton
Company on January 2, 1996. Mr. Cruikshank is a director of The Williams
Companies, Inc. and Lehman Brothers Holding Company Inc. He is also Chairman of
the Board of Directors of Up With People.
Member of Audit and Corporate Responsibility Committees.
Age: 68
Director since: October 7, 1986
- --------------------------------------------------------------------------------
KATHERINE G. FARLEY
Senior Managing Director of Tishman Speyer Properties, an international real
estate developer, owner, and property management firm.
Ms. Farley joined Tishman Speyer Properties in 1984. She was Managing Director -
International from 1984 to 1993, when she became Managing Director. Ms. Farley
has been Senior Managing Director of Tishman Speyer Properties since January
1998. Ms. Farley is the Chairperson of the Board of Directors of Women in Need
and a member of the Board of Directors and the Executive Committee of the
International Rescue Committee.
Member of Audit and Compensation Committees.
Age: 50
Director since: February 3, 1998
- --------------------------------------------------------------------------------
STEVEN A. MINTER
President and Executive Director of The Cleveland Foundation, a community trust
devoted to health, education, social services and civic and cultural affairs.
Mr. Minter has been the President and Executive Director of The Cleveland
Foundation, Cleveland, Ohio, since January 1, 1984. Mr. Minter is a director of
Consolidated Natural Gas Company and KeyCorp and a trustee of The College of
Wooster.
Member of Compensation, Corporate Responsibility, and Nominating and Board
Governance Committees.
Age: 61
Director since: February 12, 1985
- --------------------------------------------------------------------------------
AGNAR PYTTE
Retired. Formerly President and Chief Executive Officer of Case Western Reserve
University.
Dr. Pytte was the President and Chief Executive Officer of Case Western Reserve
University from July 1, 1987 to June 30, 1999, when he retired. He is President
Emeritus of Case Western Reserve University and an Adjunct Professor at
Dartmouth College. Dr. Pytte is a director of A.O. Smith Corporation and the
Sherman Fairchild Foundation Inc.
Member of Compensation, Corporate Responsibility, and Nominating and Board
Governance Committees.
Age: 67
Director since: January 5, 1988
- --------------------------------------------------------------------------------
The following two pages contain certain information concerning the seven
directors whose terms of office continue after the Annual Meeting, which
information was provided by the continuing directors.
-4-
<PAGE> 10
CONTINUING DIRECTORS--CLASS I,TERMS EXPIRING IN 2002
- --------------------------------------------------------------------------------
SAMIR G. GIBARA
Chairman of the Board, Chief Executive Officer and President
Mr. Gibara joined the Company in 1966, serving in various managerial posts prior
to being elected Vice President for Strategic Planning and Business Development
and as the acting Vice President of Finance and Chief Financial Officer of the
Company on October 6, 1992. Mr. Gibara was elected Executive Vice President for
North American Tire Operations on May 3, 1994. Mr. Gibara was elected President
and Chief Operating Officer, and as a director, effective April 15, 1995. Mr
Gibara was elected President and Chief Executive Officer effective January 1,
1996 and Chairman of the Board, Chief Executive Officer and President effective
July 1, 1996. Mr. Gibara is a director of International Paper Company.
Member of Nominating and Board Governance Committee.
Age: 60
Director since: April 15, 1995
- --------------------------------------------------------------------------------
WILLIAM J. HUDSON, JR.
Retired. Formerly President and Chief Executive Officer and a Director of
AMP,Incorporated, a global manufacturer of electrical and electronic components
and assemblies.
Mr. Hudson was the President and Chief Executive Officer of AMP, Incorporated
from January 1, 1993 to August 10, 1998. Mr. Hudson served as the Vice Chairman
of AMP, Incorporated from August 10, 1998 to April 30, 1999. Mr. Hudson is a
director of Carpenter Technology Company and Keithley Instruments Company and a
member of the Board of Trustees and the Executive Committee of the United States
Council for International Business.
Member of Audit, Compensation, and Nominating and Board Governance Committees.
Age: 65
Director since: November 7, 1995
- --------------------------------------------------------------------------------
WILLIAM C. TURNER
Chairman of the Board, Chief Executive Officer and President of Argyle Atlantic
Corporation, a consulting firm to multinational corporations on international
economic and political affairs, strategy, investments, joint ventures and
strategic alliances.
Mr. Turner has served as Chairman of the Board, Chief Executive Officer and
President of Argyle Atlantic Corporation since 1977. He is a director of
Rural/Metro Corporation and Microtest, Inc. Mr. Turner is also a member of the
Board of Governors of the Lauder Institute of Management and International
Studies of the University of Pennsylvania, a trustee and former Chairman of the
Board of the American Graduate School of International Management, a trustee of
the United States Council for International Business and a member of the Council
of American Ambassadors and the Council on Foreign Relations.
Chairman of Committee on Corporate Responsibility and member of Nominating and
Board Governance Committee.
Age: 70
Director since: October 3, 1978
- --------------------------------------------------------------------------------
MARTIN D. WALKER
Retired. Formerly Chairman of the Board and Chief Executive Officer of M. A.
Hanna Company, an international processor and distributor of polymers to the
plastics and rubber industries.
Mr. Walker was Chairman of the Board and Chief Executive Officer of M. A. Hanna
Company from September 1, 1986 through December 31, 1996, when he retired as
Chief Executive Officer. He retired as Chairman of the Board of M. A. Hanna
Company on June 30, 1997. On October 7, 1998, Mr. Walker was again elected
Chairman of the Board and Chief Executive officer of M. A. Hanna Company,
serving until June 13, 1999 when he retired as Chief Executive Officer. He again
retired as Chairman of the Board on December 31, 1999. Mr. Walker is a principal
in MORWAL Investments and a director of Comerica, Inc., Lexmark International,
M. A. Hanna Company, The Timken Company and Textron, Inc.
Chairman of Nominating and Board Governance Committee and member of Compensation
and Corporate Responsibility Committees.
Age: 67
Director since: February 4, 1997
- --------------------------------------------------------------------------------
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<PAGE> 11
CONTINUING DIRECTORS--CLASS II, TERMS EXPIRING IN 2001
- --------------------------------------------------------------------------------
JOHN G. BREEN
Chairman of the Board of The Sherwin-Williams Company, a manufacturer of paints,
coatings and related products.
Mr. Breen was the Chairman of the Board and Chief Executive Officer of The
Sherwin-Williams Company from January 15, 1979 to October 25, 1999, when he
retired as Chief Executive Officer. He has served as Chairman of the Board of
the Company since October 25, 1999. He is a director of Mead Corporation,
National City Corporation and Parker-Hannifin Corporation.
Chairman of Compensation Committee and member of Audit Committee.
Age:65
Director since:January 7, 1992
- --------------------------------------------------------------------------------
WILLIAM E. BUTLER
Retired. Formerly Chairman of the Board and Chief Executive Officer of Eaton
Corporation, a global manufacturer of highly engineered products for the
automotive, industrial, construction, commercial and aerospace markets.
Mr. Butler was Chairman of the Board and Chief Executive Officer of Eaton
Corporation from January of 1992 to December 31, 1995, when he retired. Mr.
Butler is a director of Applied Industrial Technologies, Inc., Ferro
Corporation, Pitney Bowes Inc., Borg Warner Corporation and U.S. Industries,
Inc.
Member of Audit and Corporate Responsibility Committees.
Age: 68
Director since: February 8, 1995
- --------------------------------------------------------------------------------
GEORGE H. SCHOFIELD
Retired. Formerly Chairman of the Board and Chief Executive Officer of Zurn
Industries, Inc., a manufacturer of plumbing products and power systems
equipment.
Mr. Schofield served as the Chairman of the Board and Chief Executive Officer of
Zurn Industries, Inc. from 1986 until October 17, 1994, when he retired as Chief
Executive Officer. He retired as Chairman of the Board of Zurn Industries, Inc.
on March 31, 1995.
Chairman of Audit Committee and member of Nominating and Board Governance
Committee.
Age: 70
Director since: December 3, 1991
- --------------------------------------------------------------------------------
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
(ITEM 2 ON THE PROXY)
PricewaterhouseCoopers LLP ("PwC") served as the Company's independent
accountants for the year ended December 31, 1999. In addition to rendering audit
services during 1999, PwC performed various non-audit services for the Company
and its subsidiaries. The Audit Committee has determined that the performance of
such non-audit services did not impair the independence of PwC.
The Board of Directors, on the recommendation of the Audit Committee, has
appointed PwC as independent accountants for the Company for the year ending
December 31, 2000. In making its recommendation, the Audit Committee reviewed
past audit results and the non-audit services performed during 1999 and proposed
to be performed during 2000. In selecting PwC, the Audit Committee and the Board
of Directors carefully considered their independence.
PwC have confirmed to the Company that they are in compliance with all rules,
standards and policies of the American Institute of Certified Public Accountants
and the Securities and Exchange Commission governing auditor independence.
-6-
<PAGE> 12
Representatives of PwC will attend the Annual Meeting. They will have the
opportunity to make a statement, if they so desire, and have advised the Company
that they will be available to respond to appropriate questions of shareholders.
The following resolution will be presented by your Board of Directors at the
Annual Meeting:
"Resolved, that the appointment of PricewaterhouseCoopers LLP as
independent accountants for the Company for the year ending December
31, 2000 is hereby ratified."
In the event the appointment of PwC is not ratified by the shareholders, the
adverse vote will be deemed to be an indication to the Board of Directors that
it should consider selecting other independent accountants for 2001.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR RATIFICATION
(PROXY ITEM 2).
OTHER BUSINESS
In addition to the matters described above, there will be an address by the
Chairman of the Board, Chief Executive Officer and President of the Company. A
discussion period will follow during which shareholders will have an opportunity
to ask appropriate questions regarding the Company and its operations.
The Board of Directors does not intend to bring any other business before the
Annual Meeting and is not aware of any other business intended to be presented
by any other person.
If any other matters properly come before the Annual Meeting, the persons
whose names appear in the enclosed Proxy intend to vote all Proxies received by
the Board of Directors in such manner as they, in their discretion, deem
appropriate.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The firms identified in the table below have reported that they beneficially
owned at December 31, 1999 more than 5% of outstanding shares of the Common
Stock as follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS Sanford C. Bernstein & Co., Inc. Merrill Lynch, Pierce, Fenner Morgan Stanley Dean
OF BENEFICIAL OWNER: 767 Fifth Avenue & Smith Incorporated Witter & Co.
New York, New York 10153 World Financial Center - 1585 Broadway
North Tower New York, New York 10036
250 Vesey Street
New York, New York 10281
<S> <C> <C> <C>
SHARES OF COMMON
STOCK BENEFICIALLY
OWNED: 17,691,408(1) 21,164,732(2) 12,846,304(3)
PERCENT OF COMMON
STOCK OUTSTANDING
BENEFICIALLY OWNED: 11.3% 13.5% 8.2%
</TABLE>
NOTES:
(1) Sole dispositive power in respect of all shares, and sole and shared voting
power in respect of 9,983,629 and 1,830,268 shares, respectively, as stated
in a Schedule 13G dated February 8, 2000.
(2) Shared dispositive and voting power in respect of all shares, as stated in a
Schedule 13G dated January 14, 2000.
(3) Shared dispositive power in respect of all shares and shared voting power in
respect of 12,793,154 shares, as stated in a Schedule 13G dated February 1,
2000.
In addition, The Northern Trust Company, 50 South LaSalle Street, Chicago,
Illinois 60675, has indicated that at the record date it held 14,286,557 shares,
or approximately 9.1% of the outstanding shares, of Common Stock, including
8,791,862 shares, or approximately 5.6% of the outstanding shares, of Common
Stock held as the trustee of four employee savings plans sponsored by the
Company.
On the record date, each director and nominee, each person named in the
Summary Compensation Table on page 9, and all directors and officers as a group,
beneficially owned the number of shares of Common Stock set forth in the
Beneficial Ownership of Management table on the next page.
-7-
<PAGE> 13
BENEFICIAL OWNERSHIP OF MANAGEMENT
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP AT FEBRUARY 16,2000 (1)
-----------------------------------------------------------------
SHARES OF
SHARES OF COMMON STOCK SHARES OF COMMON
COMMON STOCK HELD IN STOCK SUBJECT TO DEFERRED SHARE
NAME OWNED DIRECTLY (2) SAVINGS PLAN (3) EXERCISABLE OPTIONS (4) EQUIVALENT UNITS
------------------- ------------------ ---------------- ----------------------- ----------------
<S> <C> <C> <C> <C>
John G.Breen ............................ 5,200(5)(6) 0 0 3,262(9)
William E.Butler ........................ 1,405(7) 0 0 5,812(9)
Thomas H.Cruikshank ..................... 1,800(6) 0 0 5,510(9)
Katherine G.Farley ...................... 2,000 0 0 1,944(9)
Samir G.Gibara .......................... 17,220 883 165,150 28,162(10)
C.Thomas Harvie ......................... 6,510 417 39,000 5,570(10)
William J.Hudson, Jr .................... 3,000 0 0 3,480(9)
Steven A.Minter ......................... 1,580(6) 0 0 1,845(9)
Agnar Pytte ............................. 1,200(6) 0 0 5,446(9)
George H.Schofield ...................... 2,200(6) 0 0 6,261(9)
William J.Sharp ......................... 13,987 2,204 54,575 12,377(10)
Robert W.Tieken ......................... 2,000 550 58,875 9,552(10)
William C.Turner ........................ 1,600(6) 0 0 2,818(9)
Sylvain G.Valensi ....................... 0 329 23,375 2,670(10)
Martin D.Walker ......................... 1,000 0 0 2,556(9)
All directors, the Named Officers
and all other Executive Officers
as a group (33 persons) ............... 120,220(8) 21,174 752,854 132,984(9)(10)
</TABLE>
NOTES:
(1) The number of shares indicated as beneficially owned by each of the
directors and named executive officers, and the 894,248 shares of Common
Stock indicated as beneficially owned by all directors and officers as a
group, and the percentage of Common Stock outstanding beneficially owned
by each person and the group, has been determined in accordance with
Rule 13d-3(d)(1) promulgated under the Securities Exchange Act of
1934. In each case, beneficial ownership is less than one percent of all
outstanding shares of Common Stock.
(2) Unless otherwise indicated in a subsequent note, each person named and
each member of the group has sole voting and investment power with
respect to the shares of Common Stock shown.
(3) Consists of full shares held in trust under the Company's Employee
Savings Plan for Salaried Employees (the "Savings Plan").
(4) Consists of shares which may be acquired upon the exercise of options
which are exercisable prior to April 16, 2000 under the Company's 1997
Performance Incentive Plan (the "1997 Plan") and the 1989 Goodyear
Performance and Equity Incentive Plan (the "1989 Plan"). The Company
granted stock options to the named executive officers under the 1997
Plan and the 1989 Plan which are not exercisable prior to April 16, 2000
as follows: Mr. Gibara, 358,750 shares; Mr. Sharp, 82,250 shares; Mr.
Tieken, 69,125 shares; Mr. Harvie, 58,000 shares; Mr. Valensi, 51,500
shares; and all other executive officers, 1,097,038 shares.
(5) Includes 5,000 shares jointly owned by Mr. Breen and his spouse.
(6) Includes 200 shares acquired pursuant to the Company's 1994 Restricted
Stock Award Plan for Non-employee Directors which are subject to
certain restrictions.
(7) Shares owned jointly by Mr. Butler and his spouse.
(8) Includes 110,985 shares owned of record and beneficially or owned
beneficially through a nominee, and 9,235 shares held by or jointly with
family members of certain directors and officers.
(9) Deferred units, each equivalent to a hypothetical share of Common Stock,
accrued to accounts of the director under the Company's Outside
Directors' Equity Participation Plan, payable in cash following
retirement from the Board of Directors. See "Directors' Compensation" at
page 14.
(10) Units, each equivalent to a hypothetical share of Common Stock, deferred
pursuant to awards made under the 1997 Plan and the 1989 Plan and
receivable in cash, shares of Common Stock, or any combination thereof,
at the election of the executive officer. See Note (4) to the Summary
Compensation Table at page 10.
-8-
<PAGE> 14
EXECUTIVE OFFICER COMPENSATION
SUMMARY OF COMPENSATION
The Summary Compensation Table below sets forth information in respect of the
compensation of the Chief Executive Officer of the Company during 1999 and the
persons who were, at December 31, 1999, the other four most highly compensated
executive officers of the Company (the "Named Officers") for services in all
capacities to the Company and its subsidiaries during 1997, 1998 and 1999.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
---------------------------------------- ---------------------- ----------
Securities
Other Underlying Long Term All
Annual Restricted Options/ Incentive Other
Compen- Stock SARs Plan Compen-
Bonus sation Award(s) (Number Payouts sation
Salary (Dollars) (Dollars) (Dollars) of (Dollars) (Dollars)
Name and Principal Position Year (Dollars) (1) (2) (3) Shares) (4) (5)
- --------------------------- ---- --------- --------- --------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SAMIR G. GIBARA 1999 $1,066,667 $ 159,990 $ 9,000 -0- 250,000 $ 387,538 $ 11,075
Chairman of the Board 1998 982,267 589,032 9,000 -0- 90,000 1,153,562 14,139
Chief Executive Officer 1997 935,100 961,875 9,000 -0- 55,000 674,843 9,023
and President
WILLIAM J. SHARP 1999 525,000 62,268 9,000 -0- 50,000 127,008 7,790
President, 1998 491,667 204,501 9,000 -0- 21,500 443,678 10,317
North American Tire (6) 1997 472,917 391,875 9,000 -0- 21,500 283,434 8,340
ROBERT W. TIEKEN 1999 425,000 49,500 -0- -0- 45,000 81,416 7,197
Executive Vice President 1998 416,250 163,601 17,000 -0- 18,000 259,868 10,185
and Chief Financial Officer 1997 401,667 313,500 8,000 -0- 15,000 276,685 8,254
SYLVAIN G. VALENSI 1999 325,000 67,200 7,000 -0- 35,000 58,619 5,277
President, 1998 296,667 131,846 4,000 -0- 13,000 158,456 -0-
European Union Tire (7) 1997 277,083 204,750 4,000 -0- 9,000 -0- -0-
C. THOMAS HARVIE 1999 346,667 39,000 2,880 -0- 35,000 68,389 6,085
Senior Vice President and 1998 328,333 151,919 6,000 -0- 13,000 228,177 6,795
General Counsel 1997 310,000 242,250 6,570 -0- 11,000 242,943 4,750
</TABLE>
NOTES TO SUMMARY COMPENSATION TABLE:
(1) Amounts awarded in respect of 1999, 1998 and 1997 and paid in February
of 2000, 1999 and 1998, respectively, pursuant to the Company's
Performance Recognition Plan; except that payment of all of the awards
to Mr. Gibara in respect of 1999, 1998 and 1997, and a portion of the
awards to Mr. Harvie in respect of 1998 and 1997, were deferred
pursuant to the Company's Deferred Compensation Plan for Executives. The
payout in respect of plan year 1999 was determined by the Compensation
Committee based on performance relative to specified operating
criteria. Deferred amounts are included in the amounts shown in the
Table.
(2) Amounts shown represent the cost to the Company of tax and financial
planning assistance provided by third parties, plus: (a) in respect of
Mr. Valensi, payment of $3,000 in 1999 for foreign service premium; and
(b) in respect of Mr. Harvie, payments of $576 in 1997 for costs in
connection with his relocation.
(3) No restricted stock was awarded or issued by the Company to any Named
Officer during 1999. On July 17, 1995, Mr. Harvie purchased, pursuant to
the 1989 Plan and a related Restricted Stock Purchase Agreement, 10,000
shares of Common Stock for a purchase price of $.10 per share, which
shares were subject to various restrictions and to the Company's option
to repurchase under specified circumstances at a price of $.10 per share
through at least June 30, 1998. The per share closing price of the
Common Stock on the date of grant (July 17, 1995) was $43.50. Mr. Harvie
received all dividends paid on said shares of Common Stock. On June 30,
1998, the Company's option and all other restrictions lapsed in respect
of 7,101 of the shares. On January 29, 1999, the Company's option and
all other restrictions lapsed in respect of the remaining 2,899
shares. No other shares of restricted stock have been awarded or issued
to the Named Officers of the Company.
-9-
<PAGE> 15
(4) The payouts indicated in respect of 1999 relate to amounts earned
pursuant to Performance Equity Grants granted on December 3, 1996 under
the 1989 Plan in respect of the three year performance period ended
December 31, 1999, whereunder participants were granted a specified
number of performance units (the "1999 Performance Units") payable 50%
in shares and 50% in cash. The aggregate earnings per share of Common
Stock during the performance period were $11.41, after adjustments by
the Compensation Committee to eliminate the $436.8 million of
rationalization and other charges in 1997 and 1999. Each participant
earned 59% of the 1999 Performance Units granted. The value of each 1999
Performance Unit was $27.59, which was the average of the high and low
sale prices of the Common Stock on December 31, 1999, as reported on the
New York Stock Exchange Composite Transactions tape. The payouts
indicated in respect of 1998 relate to amounts earned pursuant to
Performance Equity Grants granted on January 9, 1996 (as amended
December 3, 1996) pursuant to the 1989 Plan in respect of the three year
performance period ended December 31, 1998, whereunder participants were
granted a specified number of performance units ("1998 Performance
Units"), payable 50% in shares of Common Stock and 50% in cash. The
aggregate earnings per share of Common Stock during the performance
period were $13.63, after adjustments by the Committee. Each participant
earned 125.2% of the 1998 Performance Units granted. The value of each
1998 Performance Unit was $50.625, which was the average of the high and
the low sale prices of the Common Stock on December 31, 1998, as
reported on the New York Stock Exchange Composite Transactions tape. The
payouts indicated in respect of 1997 relate to amounts earned pursuant
to Performance Equity Grants granted on December 6, 1994 (as amended
December 3, 1996) pursuant to the 1989 Plan in respect of the three year
performance period ended December 31, 1997, whereunder participants were
granted a specified number of performance units ("1997 Performance
Units"), payable 50% in shares of Common Stock and 50% in cash. The
aggregate earnings per share of Common Stock during the performance
period were $13.07, after adjustments by the Compensation Committee.
Each participant earned 106.8% of the 1997 Performance Units granted.
The value of each 1997 Performance Unit was $63.19, which was the
average of the high and the low sale prices of the Common Stock on
December 31, 1997, as reported on the New York Stock Exchange Composite
Transactions tape. Payment of the Common Stock portion of the 1999
Performance Units, the 1998 Performance Units and the 1997 Performance
Units earned was automatically deferred in the form of Common Stock
equivalent units (which earn dividend equivalents) for at least five
years from the payment date (or following earlier retirement) and will
be payable at the election of each participant in shares of Common
Stock, cash, or any combination thereof. The cash portions of the 1999
Performance Units, the 1998 Performance Units and the 1997 Performance
Units earned were paid (unless deferred as Common Stock equivalent units
by the participant) in February 2000, 1999 and 1998, respectively. All
deferred amounts are included in the Table.
(5) All Other Compensation consists of: (a) for 1999 (i) the value of
deferred Common Stock equivalent units ("Units") accrued as dividend
equivalents during 1999 to the accounts of the Named Officers in respect
of Units awarded and deferred in February of 1999, 1998 and 1997, each
Unit valued at $28.1875, the closing price of the Common Stock on
December 31, 1999, and (ii) $4,800 of matching contributions to each
Named Officer under the Company's Savings Plan;(b) for 1998 (i) the
value of deferred Common Stock equivalent units accrued as dividend
equivalents during 1998 to the accounts of the Named Officers in respect
of Units awarded and deferred in February of 1998 and 1997, each Unit or
portion thereof valued at $50.4375, the closing price of the Common
Stock on December 31, 1998, and (ii) $4,800 of matching contributions to
each Named Officer under the Company's Savings Plan; and (c) for 1997
(i) the value of Units accrued as dividend equivalents during 1997 to
the accounts of the Named Officers in respect of Units awarded and
deferred in February of 1997, each Unit or portion thereof valued at
$63.625, the closing price of the Common Stock on December 31, 1997, and
(ii) $4,750 of matching contributions to each Named Officer under the
Company's Savings Plan. See "Savings Plan" at page 13.
(6) Mr. Sharp has served as President, North American Tire since July 1,
1999. He served as President, Global Support Operations, from January 1,
1996, to June 30, 1999.
(7) Mr. Valensi has served as President, European Union Tire, since July 1,
1999. He served as Vice President - Europe from November 5, 1996 to June
30, 1999.
-10-
<PAGE> 16
OPTION/SAR GRANTS IN 1999
The Option/SAR Grants Table below shows all grants of stock options and stock
appreciation rights ("SARs") during 1999 to the Named Officers. Stock Options
are ordinarily granted on an annual basis, usually in December of each year.
<TABLE>
<CAPTION>
OPTION/ SAR GRANTS TABLE
OPTION/SAR GRANTS IN 1999
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE
--------------------------------------------------------------- AT ASSUMED
NUMBER OF % OF ANNUAL RATES OF
SECURITIES TOTAL STOCK PRICE
UNDERLYING OPTIONS/ EXERCISE APPRECIATION FOR
OPTIONS/SARS SARS OR OPTION TERM
GRANTED GRANTED TO BASE PRICE (DOLLARS)(3)
(NUMBER OF EMPLOYEES (DOLLARS PER EXPIRATION ----------------------------
NAME SHARES)(1) IN 1999 SHARE)(2) DATE 5%(4) 10%(4)
- ----- ------------ ---------- ------------ ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Samir G.Gibara 250,000 7.6% $32.00 12-06-09 $5,030,000 $12,750,000
William J.Sharp 50,000 1.5 32.00 12-06-09 1,006,000 2,550,000
Robert W.Tieken 45,000 1.4 32.00 12-06-09 905,400 2,295,000
Sylvain G.Valensi 35,000 1.1 32.00 12-06-09 704,200 1,785,000
C.Thomas Harvie 35,000 1.1 32.00 12-06-09 704,200 1,785,000
</TABLE>
NOTES TO OPTION/SAR GRANTS TABLE:
(1) On December 6, 1999, non-qualified stock options in respect of an
aggregate of 3,296,386 shares of Common Stock were granted to 873
persons, including the Named Officers. In the case of each Named
Officer, incentive stock options were granted in respect of 2,500
shares. The other shares indicated in respect of each Named Officer are
the subject of non-qualified stock options. Each stock option is
exercisable in respect of 25% of the shares covered thereby beginning
December 6, 2000, in respect of 50% of the shares covered thereby
beginning December 6, 2001, and in respect of 75% of the shares covered
thereby beginning December 6, 2002, and is fully exercisable beginning
December 6, 2003. Each unexercised stock option terminates automatically
if the optionee ceases to be an employee of the Company or one of its
subsidiaries for any reason, except that (a) upon retirement or
disability (as such terms are defined in the 1997 Plan) of the optionee
more than six months after the date of the grant thereof, such stock
option will become immediately exercisable and remain exercisable until
December 6, 2009, and (b) in the event of the death of the optionee more
than six months after the grant thereof, each stock option shall be
exercisable up to three years after the date of death of the optionee by
the person or persons to whom the rights passed by his or her will or
according to the laws of descent and distribution. Each option also
includes the right to the automatic grant of a new option (a
"reinvestment option") for that number of shares tendered in the
exercise of the original stock option. The reinvestment option will have
an exercise price equal to the fair market value of the Common Stock on
the date of the exercise of the original stock option (which will also
be the grant date of the reinvestment option) and will be subject to the
same terms and conditions as the original stock option (except for the
reinvestment option feature).
(2) The exercise price of each stock option is equal to 100% of the per
share fair market value of the Common Stock on the date granted. Each
optionee may, subject to certain conditions, pay the option exercise
price, and/or may satisfy withholding tax obligations, by delivery of
owned shares of Common Stock valued at the market value on the date of
exercise. Withholding tax obligations may also be satisfied by using
shares of Common Stock acquired upon the exercise of the stock option.
(3) The dollar amounts under these columns are the result of calculations at
the 5% and 10% rates set by the Securities and Exchange Commission and,
therefore, are not intended to forecast possible future appreciation, if
any, of the price of the Common Stock. No economic benefit to the
optionees is possible without an increase in price of the Common Stock,
which will benefit all shareholders commensurately.
(4) In order to realize the potential values set forth in the 5% and 10%
columns of the Table, the per share price of the Common Stock would be
$52.12 and $83.00, respectively.
-11-
<PAGE> 17
OPTION/SAR 1999 EXERCISES AND YEAR-END VALUES
The Option/SAR Exercises and Year-End Values Table below sets forth certain
information regarding options and SARs exercised by the Named Officers during
1999 and the value of options/SARs held by the Named Officers at December 31,
1999.
OPTION/SAR EXERCISES AND YEAR-END VALUES TABLE
AGGREGATED OPTION/SAR EXERCISES IN 1999 AND
DECEMBER 31,1999 OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS
ACQUIRED DECEMBER 31, 1999 AT DECEMBER 31, 1999
ON EXERCISE VALUE (NUMBER OF SHARES)(1) (DOLLARS)(2)
(NUMBER OF REALIZED ------------------------------- ---------------------------
NAME SHARES)(1) (DOLLARS) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Samir G. Gibara 9,700 $216,250 151,400 372,500 -0- -0-
William J. Sharp -0- -0- 49,200 87,625 -0- -0-
Robert W. Tieken 12,500 389,843 55,750 72,250 -0- -0-
Sylvain G. Valensi -0- -0- 21,500 53,375 -0- -0-
C. Thomas Harvie -0- -0- 36,250 55,750 -0- -0-
</TABLE>
NOTES TO OPTION/SAR EXERCISES AND YEAR-END VALUES TABLE:
(1) All shares were acquired pursuant to, and all exercisable and
unexercised shares are the subject of, options to acquire Common Stock.
(2) Determined using $28.1875 per share, the closing price of the Common
Stock of the Company on December 31, 1999, as reported on the New York
Stock Exchange Composite Transactions tape.
LONG TERM INCENTIVE AWARDS
The 1997 Performance Incentive Plan of the Company (the "1997 Plan") empowers
the Committee to make grants and awards from time to time until December 31,
2001. Such grants and awards may be incentive or non-qualified stock options,
stock appreciation rights, restricted stock grants, performance grants, any
other stock-based grants and awards authorized by the Committee, or any
combination of any or all of such grants and awards, whether in tandem with each
other or otherwise, to officers and other key employees of the Company and its
subsidiaries.
During 1999, the Company did not make any long term grants or awards to any
Named Officer or any other person. Accordingly, the long term incentive plan
awards table is omitted.
OTHER COMPENSATION PLAN INFORMATION
STOCK OPTIONS AND APPRECIATION RIGHTS
The 1997 Plan provides, among other things, for the granting of incentive and
non-qualified stock options and Stock Appreciation Rights ("SARs"). The 1989
Plan, which provided for the granting of stock options and SARs, terminated on
April 14, 1997 except with respect to stock options, SARs and other grants and
awards then outstanding. At February 16, 2000, there were outstanding under the
1997 Plan and the 1989 Plan stock options in respect of 11,990,005 shares and
SARs in respect of 37,800 shares.
PERFORMANCE RECOGNITION PLAN
On December 6, 1999, the Board of Directors of the Company approved the
participation of approximately 979 key employees, including all executive
officers of the Company, in Plan Year 2000 of the Performance Recognition Plan
of the Company (the "Performance Plan"). The Committee determined the
participants, established their respective target bonuses, and approved the
performance criteria and goals established for each participant. Each
participant may earn between zero and 180% of his or her target bonus, depending
upon achievement measured relative to the performance goals established for such
participant. Payment of awards in respect of Plan Year 2000 under the
Performance Plan will be made in February of 2001 (except to the extent deferred
by the Committee or by an eligible participant pursuant to the Company's
Deferred Compensation Plan for Executives)
-12-
<PAGE> 18
contingent upon the level of achievement of the goals for each participant and
the Committee's determination that payment would be appropriate. Awards, if
any, will be paid in cash. Target bonuses under the Performance Plan have been
established for calendar year 2000 as follows: Mr. Gibara, $1,066,600; Mr.
Sharp, $450,000; Mr. Tieken, $330,000; Mr. Valensi, $260,000; Mr. Harvie,
$260,000; and all participants (979 persons) as a group, $28,217,885.
SAVINGS PLAN
The Company sponsors the Employee Savings Plan for Salaried Employees (the
"Savings Plan"). An eligible employee may contribute 1% to 16% of his or her
compensation to the Savings Plan, subject to an annual contribution ceiling
($10,500 in 2000). Such contributions to the Savings Plan are not included in
the current taxable income of the employee pursuant to Section 401(k) of the
Internal Revenue Code of 1986, as amended (the "Code"). Employee contributions
are, at the direction of the participant, invested by the Savings Plan Trustee
in the following eight funds: The Stable Value Fund, the S&P 500 Index Stock
Equity Fund, the Large Capitalization Stock Equity Fund, the Small
Capitalization Stock Equity Fund, the International Stock Equity Fund, the
Conservative Asset Allocation Fund, the Moderate Asset Allocation Fund and the
Aggressive Asset Allocation Fund.
During 2000, the Company is matching each dollar contributed by a
participating employee (up to a maximum of the lesser of $10,200 or 6% of such
participant's compensation during 2000) with 50 cents. Company contributions are
made in cash and are invested by the Savings Plan Trustee in shares of Common
Stock and held in the Goodyear Stock Fund of the Plan. Participants who are age
52 or older may transfer all or any whole percentage of their employer match
funds from the Goodyear Stock Fund to any one or more of the eight investment
funds listed above.
SEVERANCE PLAN
The Goodyear Employee Severance Plan (the "Severance Plan") was adopted by the
Company on February 14, 1989 pursuant to the authorization of the Board of
Directors and upon the recommendation of the Compensation Committee. The
Severance Plan provides that, if the employment of an eligible employee is
involuntarily terminated (as defined in the Severance Plan) within two years
following a Change in Control, such employee is entitled to receive severance
pay, either in a lump sum or, at the employee's election, on a regular salary
payroll interval basis, in an amount equal to the sum of (a) two weeks' pay for
each full year of service with the Company and its subsidiaries completed by
such employee and (b) one month's pay for each $12,000 of such employee's total
annual compensation (which includes such employee's base salary rate in effect
at the date of termination, plus all bonus, profit sharing and incentive
compensation paid to such employee during the twelve months prior to his or her
separation); provided, that such severance pay shall not exceed two times the
total annual compensation of such employee. In addition, each such person shall
receive medical benefits and basic life insurance coverage on the same basis as
in effect prior to his or her separation for a period of weeks equal to the
number of weeks of severance pay. Any full-time salaried employee of the Company
or any of its domestic subsidiaries having at least one year of service and
participating in the Retirement Plan (defined below) is eligible for benefits
under the Severance Plan. Under the Severance Plan, a Change in Control is
deemed to occur upon the acquisition of 35% or more of the Common Stock by any
"Acquiring Person" or any change in the composition of the Board of Directors of
the Company with the effect that a majority of the directors are not "continuing
directors."
If it is assumed that the Named Officers had been involuntarily terminated as
of December 31, 1999 following within two years of a Change in Control, the
amount of severance pay due under the Severance Plan to the Named Officers in
such event would have been: Mr. Gibara, $3,378,064; Mr. Sharp, $1,509,002; Mr.
Tieken, $1,177,202; Mr. Valensi, $923,693; and Mr. Harvie, $1,023,838.
DEFERRED COMPENSATION PLAN
The Company's Deferred Compensation Plan for Executives provides that an
eligible employee may elect to defer all or a portion of his or her Performance
Plan award and/or all or a portion of his or her annual salary in excess of
$170,000 by making a timely deferral election. The deferral period options are
five years, the year following retirement or in five to fifteen annual
installments commencing the year following retirement. In addition, unless
payment is authorized by the Compensation Committee, any cash compensation
earned by any officer of the Company which, if paid as and when due, would not
be deductible by the Company for Federal income tax purposes by reason of the
limitations of Section 162(m) of the Code shall automatically be deferred under
the Deferred Compensation Plan. Amounts deferred earn amounts equivalent to the
returns on one or more of five reference investment funds, as selected by the
participant.
-13-
<PAGE> 19
RETIREMENT BENEFITS
The Company maintains a Salaried Pension Plan (the "Pension Plan"), a defined
benefit plan qualified under the Code, in which most salaried employees (other
than employees assigned to retail store locations) of the Company, including all
executive officers, are eligible to participate. The Pension Plan permits any
eligible employee to make monthly optional contributions at an annual rate equal
to (a) 1% of his or her annual earnings up to a maximum of $38,100, or a maximum
2000 contribution of $381.00, and (b) at an annual rate equal to 2% of such
annual earnings in excess of $38,100, up to a maximum 2000 contribution of
$2,638. The Pension Plan also permits the option of making contributions only on
2% of annual earnings in excess of $38,100. The Code limits the maximum amount
of earnings that may be used in calculating benefits under the Pension Plan,
which limit is $170,000 for 2000. The Pension Plan provides benefits to
participants who have at least five years of service, including a lump sum
settlement of the benefits payable under the Pension Plan upon any termination
of employment.
A non-qualified, unfunded Excess Benefits Plan which provides additional
benefits to a select group of highly compensated employees is also maintained by
the Company. The Excess Benefits Plan will pay benefits equal to the difference
between the monthly amount paid under the Pension Plan and the monthly amount
which would have been paid under the Pension Plan if calculated without the Code
limitation on annual compensation in respect of which benefits may be
calculated.
The Company also maintains a Supplementary Pension Plan (the "Supplementary
Plan"), a non-qualified, unfunded plan which provides additional retirement
benefits to certain officers and other key employees of the Company.
Participants in the Supplementary Plan do not participate in the Excess Benefits
Plan. The Supplementary Plan provides pension benefits to participants who have
at least 30 years of service or have at least ten years of service and have
attained the age of 55. Benefits payable to a participant who retires between
ages 55 and 62 are subject to a reduction of 4.8% for each full year of
retirement before age 62. Prior to retirement, a participant may elect to
receive, subject to approval of the Pension Committee, a lump sum settlement of
the benefits payable under the Supplementary Plan.
The Pension Plan Table on the next page shows estimated annual benefits
payable at selected earnings levels under the Pension Plan, as supplemented
by the Supplementary Plan (the "Pension Plans"), assuming retirement on July 1,
2000 at age 65 after selected periods of service.
The pension benefit amounts shown in the Pension Plan Table include the
maximum benefits obtainable under the formula for the optional contributory
portion of the Pension Plan and under the Supplementary Plan and assume payments
are made on a five year certain and life annuity basis (and not under any of the
various survivor options or the lump sum option) and are not subject to any
deduction for social security or any other offsets. Pension benefits are based
on the participant's highest average monthly earnings, consisting of salary and
cash payments under the Performance Recognition Plan for any period of 60
consecutive months within the 120 months immediately preceding his or her
retirement (assuming full participation in the contributory feature of the
Pension Plan), with monthly benefits ranging from as low as 21% of such earnings
in the case of a participant who retires after 10 years of service to as high as
62% of such earnings in the case of a participant who retires after 45 years of
service.
Earnings covered by the Pension Plans are substantially equivalent to the sum
of the amounts set forth under the "Salary" and "Bonus" columns of the Summary
Compensation Table in respect of each of the Named Officers. The years of
credited service under the Plans for each of the Named Officers are: Mr. Gibara,
33 years; Mr. Sharp, 35 years; Mr. Tieken, 6 years; Mr. Valensi, 34 years; and
Mr. Harvie, 5 years.
DIRECTORS' COMPENSATION
Directors of the Company who are not officers or employees of, or consultants
to, the Company or any of its subsidiaries receive, as compensation for their
services to the Company as a director, $8,750 per calendar quarter, plus $1,700
for each Board and committee meeting attended. Travel and lodging expenses
incurred in attending Board and committee meetings are paid by the Company. A
director who is also an officer or an employee of, or a consultant to, the
Company or any of its subsidiaries does not receive additional compensation
for his or her services as a director.
On February 2, 1996, the Company adopted the Outside Directors' Equity
Participation Plan (the "Directors' Equity Plan") for directors who are not
current or former employees of the Company or a subsidiary. The Directors'
Equity Plan replaced the Retirement Plan for Outside Directors, which was
terminated except with respect to former directors receiving benefits.
Under the Directors' Equity Plan, on the first business day of each calendar
quarter each eligible director who has been a director for the entire pre-
<PAGE> 20
PENSION PLAN TABLE
Estimated annual benefits upon retirement at July 1,2000,
for years of service indicated.
<TABLE>
<CAPTION>
5 Year Average
Annual
Remuneration 15 Years 20 Years 25 Years 30 Years 35 Years 40 Years 45 Years
- -------------- -------- -------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 500,000 $ 151,180 $ 192,789 $ 220,570 $ 248,066 $261,763 $ 275,292 $ 288,805
750,000 233,680 297,789 340,570 383,066 404,263 425,292 446,305
1,000,000 316,180 402,789 460,570 518,066 546,763 575,292 603,805
1,250,000 398,680 507,789 580,570 653,066 689,263 725,292 761,305
1,500,000 481,180 612,789 700,570 788,066 831,763 875,292 918,805
1,750,000 563,680 717,789 820,570 923,066 974,263 1,025,292 1,076,305
2,000,000 646,180 822,789 940,570 1,058,066 1,116,763 1,175,292 1,233,805
2,250,000 728,680 927,789 1,060,570 1,193,066 1,259,263 1,325,292 1,391,305
2,500,000 811,180 1,032,789 1,180,570 1,328,066 1,401,763 1,475,292 1,548,805
</TABLE>
ceding calendar quarter will have $2,500 accrued to his or her plan account,
which amount will be converted into units equivalent in value to shares of
Common Stock ("share equivalents") at the fair market value of the Common Stock
on the accrual date. Each eligible director on February 2, 1996 was awarded a
special accrual in accordance with a formula designed to reflect prior
service. The share equivalents in each participant's Plan account will be deemed
to receive dividends at the same rate as the Common Stock, which dividends will
also be converted into share equivalents in the same manner.
A director is entitled to benefits under the Directors' Equity Plan after
leaving the Board of Directors unless the Board of Directors elects to deny or
reduce benefits, except that benefits may not be denied or reduced if prior to
leaving the Board of Directors the participant either (i) attained the age of 70
with at least five years of Board service or (ii) attained the age of 65 with at
least ten years of Board service. The share equivalents will be converted to a
dollar value at the price of the Company's Common Stock on the later of the
first business day of the seventh month following the month during which the
participant ceases to be a director or the fifth business day of the year next
following the year during which the participant ceased to be a director. Such
amount will be paid in ten annual installments or, at the discretion of the
Compensation Committee, in a lump sum or in fewer than ten installments
beginning on the tenth day following the aforesaid conversion from share
equivalents to a dollar value. The amount in the participant's Plan account will
earn interest from the date converted to a dollar value until paid at a rate one
percent higher than the prevailing yield on United States Treasury securities
having a ten year maturity on the conversion date.
The Directors' Equity Plan also permits each participant to annually elect
to have 25%, 50%, 75% or 100% of his or her retainer and meeting fees deferred
and converted into share equivalents on substantially the same basis. The board
of Directors believes the Directors' Equity Plan further aligns the interests of
directors with the interests of shareholders by making part of each director's
compensation dependent on the value and appreciation over time of the Common
Stock.
The share equivalent units accrued to the accounts of the participating
directors under the Directors' Equity Plan at February 16, 2000 are set forth in
the "Deferred Share Equivalent Units" column of the Beneficial Ownership of
Management table on page 8.
The Company also sponsors a directors' Charitable Award Program funded by
Company purchased and owned life insurance policies on the lives of pairs of
directors. The Company will donate $1 million per director to one or more
qualifying charitable organizations recommended by the paired directors after
both of the paired directors are deceased. Assuming current tax laws remain in
effect, the Company will recover the cost of the program over time with the
proceeds of the insurance policies purchased. Individual directors will derive
no financial benefit from the program.
OTHER MATTERS
During 1999, the Company and its subsidiaries in the ordinary course of their
business and at competitive prices and terms made sales to or purchases from,
or engaged in other transactions with, corporations of which certain of the
Company's non-employee directors are executive officers. The Company does not
consider the amounts involved in such transactions or the transactions
themselves to be material to its business and believes such amounts and
transactions were not material in relation to the business of such other
corporations or the interests of the directors concerned.
-15-
<PAGE> 21
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
officers to file reports of ownership and changes in ownership in the Company's
equity securities with the Securities and Exchange Commission, the New York
Stock Exchange and the Company. Based solely on a review of the copies of Forms
3, 4 and 5 received by the Company, or on written representations from certain
directors and officers that no updating Section 16(a) forms were required to be
filed by them, the Company believes that no director or officer of the Company
filed a late report or failed to file a required report under Section 16(a) of
the Exchange Act during or in respect of the year ended December 31, 1999. To
the knowledge of the Company, during 1999 there was no person required to file
reports under Section 16(a) of the Exchange Act as the owner of 10% or more of
the Common Stock or any other class of the Company's equity securities and,
accordingly, the Company is not aware of any such owner's failure to file a
required report on a timely basis during 1999.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE POLICIES AND PRACTICES
The Board of Directors of the Company (the "Board") has delegated to the
Compensation Committee of the Board (the "Committee") primary responsibility
for establishing and administering the compensation programs of the Company for
its executive officers and other key personnel.
In performing its duties, the Committee meets with the Chief Executive Officer
to review compensation policy and specific levels of compensation paid to the
executive officers and other key personnel, administers the Company's annual,
intermediate term and long term compensation plans for its executive officers
and certain other key personnel and reports and makes recommendations to the
Board regarding executive compensation policies and programs.
The Compensation Committee is comprised of six directors who are not former
or current employees of the Company. Members of the Committee are not eligible
to participate in any of the Company's compensation programs for its executive
officers and other key personnel.
The Committee annually reviews the compensation of the Company's executive
officers and other key personnel to determine whether (a) the Company can
attract and retain qualified and experienced executive officers and other key
personnel, and (b) the executive officers and other key personnel employed by
the Company are appropriately motivated to seek to attain short term and
intermediate term performance goals and to manage the Company for sustained long
term growth.
The Company's compensation programs have been designed to retain and motivate
its executive officers and other key personnel and align their interests with
the interests of the shareholders. The Company provides compensation in the form
of: (1) competitive salaries; (2) annual cash bonuses based on performance
measured against specific goals; (3) intermediate term compensation in the form
of the Common Stock of the Company and cash pursuant to performance unit grants
having three year performance periods, where payout is dependent on the Company
achieving predetermined levels of cumulative net income per share of Common
Stock during the performance period; and (4) long term compensation in the form
of stock options granted at the fair market value of the Common Stock on the
date of grant.
For 2000, the Committee determined that the intermediate term compensation in
the form of performance unit grants would not be the most effective form of
performance based incentive compensation. In place of performance unit grants,
the Committee increased the number of shares subject to stock options granted to
the executives who had received performance unit grants in prior years.
Other elements of compensation, such as retirement, health and life insurance
benefits, are also considered by the Committee in its evaluation of the
compensation package provided to the Company's executive officers.
The Company's executive compensation programs are designed so that a
substantial percentage of each executive officer's compensation is dependent
upon corporate performance and appreciation in the value of the Company's Common
Stock.
In addition, the Committee desires to encourage ownership of Common Stock by
the executive officers of the Company by providing forms of
-16-
<PAGE> 22
performance based incentive compensation that give executive officers the
opportunity to acquire shares of Common Stock. In furtherance of this objective,
the Chief Executive Officer reviews ownership levels among the executive
officers and reports them to the Committee. Although the Committee has elected
not to require specific levels of ownership, the Committee increased the
connection between the performance of the Common Stock over time with the
compensation of executive officers and other key employees of the Company by
requiring the deferral of 50% of payouts earned pursuant to performance unit
grants for at least five years (or, if earlier, upon retirement) in the form of
Common Stock equivalent units.
Section 162(m) of the Internal Revenue Code (the "Code") provides that
compensation paid to a public company's chief executive officer and its four
other highest paid executive officers in tax years 1994 and thereafter in excess
of $1 million is not deductible unless such compensation is paid only upon the
achievement of objective performance goals where certain procedural requirements
have been satisfied. Alternatively, such compensation may be deferred until the
executive officer is no longer a covered person under Section 162(m) of the
Code. In the past, compensation which would be subject to the Section 162(m)
limitations has been automatically deferred until the payment of such
compensation would be deductible by the Company. However, in respect of 1997 and
1998, the Committee determined that it would be appropriate to authorize the
payment of certain compensation that was not fully deductible because it was
determined that such payments would be consistent with the Company's
compensation philosophy and goals and in the best interests of the Company and
its shareholders.
COMPENSATION OF EXECUTIVE OFFICERS
The Committee met with the Chief Executive Officer to receive his
recommendations regarding 1999 adjustments to the salary and Performance Plan
participation guidelines for each executive officer position and certain other
key positions. The guidelines for each position were based primarily on market
data from three generally available surveys of the salary and annual bonus
practices of other companies. Each of the surveys included compensation data
compiled from at least 300 companies, with one survey using data compiled from
more than 700 companies. The Committee generally seeks to establish salary and
annual performance plan guidelines at levels that approximate the median (the
50th percentile) of such kinds of compensation paid by companies included in
said surveys. The median survey compensation for each position was determined
utilizing regression analysis based on revenues. The results of the surveys were
weighted to emphasize manufacturing companies, especially producers of
nondurable goods. In addition to the individual position data surveys, eight
other general surveys indicating past, present and projected salary structures
and increases for executive positions were reviewed.
The compensation levels indicated by the surveys were the principal basis
used by the Committee for establishing the combined salary and annual bonus
compensation. The Committee also considered the Chief Executive Officer's
recommendations, which were based in substantial part on the aforesaid
guidelines as well as on certain subjective factors, including his evaluation of
the performance of each executive officer, the performance of the Company and
general economic and competitive conditions.
In 1999, salaries of the executive officers named in the Summary Compensation
Table (the "Named Officers") were an average of 3.0% higher than the median
indicated by the guidelines and 6.9% higher than in 1998. The aggregate salaries
paid to all executive officers during 1999, which included promotional and
merit increases, were 7.3% higher than in 1998. Salaries averaged approximately
89% of total annual cash compensation paid to all executive officers, and 88% of
total annual cash compensation paid to the Named Officers, in respect of 1999.
Pursuant to the Company's Performance Recognition Plan (the "Performance
Plan"), the Committee established, based on the recommendations of the Chief
Executive Officer, the target amount of the bonus for each executive officer and
reviewed and adopted performance goals (EBIT and cash flow targets and, in some
instances, other goals) for plan year 1999. Payouts could have ranged from zero
to 120% of the target amounts depending on the performance level achieved with
respect to the EBIT, cash flow and other goals. The target annual incentive
compensation levels (assuming payout at 100% of target) for 1999 represented
approximately 40% of total 1999 annual cash (salary and Performance Plan bonus)
compensation, which was substantially the same proportion as the median level
established by the aforesaid surveys.
The EBIT and cash flow goals for 1999 were not met by the Company and were
achieved by most operating units at minimal levels. Individual goals for
corporate executive officers represented 20% of the target amount. Payouts for
1999 averaged approximately 24% of the target levels for the
-17-
<PAGE> 23
various operating units and were 15% of the target level for the Company which
reflected attainment of individual goals. The Performance Plan payments
represented an average of approximately 12% of annual cash compensation of the
Named Officers and 28% of the total 1999 annual cash compensation of the
Company's executive officers.
A significant portion of the total compensation package of each executive
officer has been (until 2000) contingent upon the performance of the Company
over the intermediate term, where performance is measured over a three year
performance period by the Company's cumulative net income per share or other
appropriate standard. Performance grants were made annually to executive
officers (and certain other key employees) of the Company from 1992 through
1999. In respect of grants made in respect of 1999, the Committee (after
consultation with, and based on the recommendations of, the Chief Executive
Officer) established the terms and conditions of all grants (including the
performance criteria, the target levels for payout and the aggregate amount of
grants), designated the persons to whom grants were made and fixed the size of
each such person's grant. Performance equity grants were designed to comprise
approximately 50% of target medium and long term compensation.
The Committee awarded payouts in respect of the performance grants made in
January 1997 pursuant to the 1989 Plan for the three year Performance Period
ended December 31, 1999, at 59% of the units granted. The payment of 50% of the
units awarded was automatically deferred for at least five years in the form of
Common Stock equivalent units. The other 50% was paid in cash in February 2000
(except to the extent the participant elected to have the cash portion of the
payout deferred in Common Stock equivalent units). The awards were made based on
aggregate earnings per share of $11.41, determined by the Committee after
adjusting 1997 earnings per share to eliminate the effects of $265.2 million of
rationalization charges and adjusting 1999 earnings per share to eliminate the
effects of $171.6 million of net rationalization charges. The Committee deemed
the adjustments to 1997 and 1999 earnings to be appropriate.
Performance unit grants for 1999 were granted by the Committee under the 1997
Plan on November 30, 1998, based on guidelines established using the median of
medium and long term compensation awards by 43 manufacturing companies (having
median annual sales of approximately $19.0 billion) included in a 1998 survey
acquired by the Company. The performance unit grants were granted to each Named
Officer in respect of substantially the same number of units as were granted in
respect of 1998. Payouts in respect of the performance unit grants may range
from zero to 150% of the target amounts, depending on the Cumulative Net Income
Per Share (as defined in the 1997 Plan) during the three year performance period
ending December 31, 2001, which must equal or exceed $10.40 per share in order
for any payout to be made. If total Cumulative Net Income Per Share during the
performance period is $16.64 or more, 150% of the targeted amount may be paid.
The Cumulative Net Income Per Share of Common Stock targets for the
performance unit grants for the three year performance periods ending on
December 31, 1999 and December 31, 2000 were amended by the Committee in
February 1999 to be consistent with the targets for the performance unit grants
for the three year performance period ending on December 31, 2001. The
Cumulative Net Income Per Share of Common Stock during the three year
performance period ended on December 31, 1999 had to equal or exceed $10.77 per
share in order for any payout to be made and had to exceed $17.23 for 150% of
the units granted to be paid. The Cumulative Net Income Per Share of Common
Stock during the three year performance period ending December 31, 2000 must
equal or exceed $11.69 per share in order for any payout to be made and must
exceed $18.71 for 150% of the units granted to be paid. The performance unit
grants were also amended to reduce the payment threshold to 50% of the target
and to reduce the amount of cumulative net income per share required to receive
the minimum payout.
No performance unit grants were granted for 2000. In lieu of performance
unit grants, the committee determined that it would be appropriate to grant
additional stock options.
The Committee annually grants stock options to officers and other key
employees of the Company. The Committee believes that annual grants of stock
options provide an additional long term incentive for key personnel to remain
with the Company and improve future Company performance and confirm the
mutuality of interests shared by the Company's management and its other
shareholders with compensation dependent upon the appreciation of the Common
Stock of the Company. All options are granted at a per share exercise price
equal to the market value of the Common Stock on the date of grant.
The Committee is provided survey information regarding the option granting
practices of other manufacturing companies of a similar size in order to
determine if the Company's grants are
-18-
<PAGE> 24
competitive in size and terms and conditions. The Committee believes that
options should be granted once each year, and that, under ordinary
circumstances, each year each executive officer should be granted options in
respect of shares having approximately the same dollar value, determined using
the standard growth methodology applied in a survey used by the Company for
determining performance equity grant levels, subject to variation to reflect
changes in the responsibility or performance of the executive officer or changes
in the performance or circumstances of the Company.
Stock options have been granted to all executive officers and other key
employees annually, ordinarily at the end of each year. Within the guideline
ranges established using the aforesaid survey, the size of individual stock
option grants were determined primarily on the basis of the responsibilities
of each executive officer. Recent Company performance, prior grants and the
prior performance of the grantee were also considered in determining the size of
the grant to each optionee.
On December 6, 1999, stock options in respect of 3,296,386 shares of Common
Stock were granted pursuant to the 1997 Plan at $32.00 per share (the fair
market value of the Common Stock on that day) to 873 key employees (including
all executive officers), which options expire on December 6, 2009. The options
provide for the automatic grant of new "reinvestment options" for that number of
shares of Common Stock tendered as payment of the exercise price. The
reinvestment option will be granted at an exercise price equal to the fair
market value of the Common Stock on the date the original option is exercised.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Gibara is the Chairman of the Board, Chief Executive Officer and
President of the Company. The Committee reviewed Mr. Gibara's compensation in
the same manner as described above for the other executive officers. In light of
Mr. Gibara's responsibilities and in recognition of his outstanding performance,
the Committee increased his annual salary effective May 1, 1999 to an annual
rate of $1,100,000.
Pursuant to the Performance Plan for 1999, the Committee established a target
bonus of $1,066,600 for Mr. Gibara, the payout of which was subject to
adjustment from zero to 120% of the target amount depending on the extent to
which total Company EBIT, cash flow and other goals were achieved. The Company
did not exceed the EBIT and cash flow goals for 1999 and, accordingly, Mr.
Gibara earned 15% of his target bonus. Mr.Gibara elected to defer his
Performance Plan payout earned in respect of 1999 pursuant to the Company's
Deferred Compensation Plan for Executives. As a result, the award was not
subject to the deduction limitation of Section 162(m) of the Code.
In 1999 Mr. Gibara received payment of the performance grants made in
December 1996 in respect of the three year performance period ended December 31,
1999. The award was subject to Section 162(m). As a result, a portion of his
total compensation received during 1999 which was not exempt from Section 162(m)
exceeded the $1 million limitation of Section 162(m) and, therefore, was not
deductible by the Company. The Committee considered all relevant factors,
including the cost to the Company, and determined that it was in the best
interest of the Company to authorize payment of the non-deductible amount.
Mr. Gibara was granted stock options as long term incentive compensation
based on the same guidelines applied by the Committee in respect of the stock
option grants to the other executive officers. The option granted in respect of
1999 was made on November 30, 1998, consisting of a non-qualified stock option
in respect of 90,000 shares of Common Stock. He was granted stock options in
respect of 250,000 shares of Common Stock in respect of 2000 on December 6,
1999. All options provide for the automatic grant of reinvestment options.
February 8, 2000
THE COMPENSATION COMMITTEE
John G. Breen, Chairman
Katherine G. Farley Steven A. Minter
William J. Hudson, Jr. Agnar Pytte
Martin D. Walker
-19-
<PAGE> 25
PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder returns of the
Common Stock of the Company ("Goodyear Common"), the Standard & Poor's 500
Composite Stock Index (the "S&P 500") and the Dow Jones Auto Parts Index (the
"Dow Auto Parts") at each December 31 during the period beginning December 31,
1994 and ending December 31, 1999. The graph assumes the investment of $100 on
December 31, 1994 in Goodyear Common Stock, in the S&P 500 and in the Dow Auto
Parts. Total shareholder return was calculated on the basis that in each case
all dividends were reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
GOODYEAR COMMON, S&P 500 AND DOW AUTO PARTS
[ ] GOODYEAR COMMON
[ ] S&P 500
[ ] DOW AUTO PARTS
[GRAPH]
<TABLE>
<CAPTION>
December 31, 1994 1995 1996 1997 1998 1999
------------ ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
GOODYEAR COMMON 100.00 138.20 159.83 201.86 163.22 93.03
S&P 500 100.00 137.58 169.17 225.61 290.09 351.13
DOW AUTO PARTS 100.00 122.04 140.62 180.39 178.25 138.92
</TABLE>
-20-
<PAGE> 26
MISCELLANEOUS
SUBMISSION OF SHAREHOLDER PROPOSALS
If a shareholder desires to have a proposal included in the Proxy Statement
and Proxy of the Board of Directors for the 2001 annual meeting of shareholders,
such proposal shall conform to the applicable proxy rules of the Securities and
Exchange Commission concerning the submission and content of proposals and
must be received by the Company prior to the close of business on October 28,
2000. In addition, if a shareholder intends to present a proposal at the
Company's 2001 annual meeting without the inclusion of such proposal in the
Company's proxy materials and written notice of such proposal is not received by
the Company on or before January 10, 2001, proxies solicited by the Board of
Directors for the 2001 annual meeting will confer discretionary authority to
vote on such proposal if presented at the meeting. Shareholders proposals should
be sent to the executive offices of the Company, 1144 East Market Street, Akron,
Ohio 44316-0001, Attention: Office of the Secretary. The Company reserves the
right to reject, rule out of order, or take other appropriate action with
respect to any proposal that does not comply with these and other applicable
requirements.
10-K REPORT
Interested shareholders may obtain a copy of the Company's Annual Report on
Form 10-K for 1999 to the Securities and Exchange Commission, including all
financial statements, schedules and exhibits, without charge by writing to:
Investor Relations
The Goodyear Tire & Rubber Company
1144 East Market Street
Akron, Ohio 44316-0001
or by a telephone call to: 515-263-6408.
SAVINGS PLAN SHARES
A separate "Confidential Voting Instructions" card is being sent to each
employee or former employee of the Company participating in one or more of the
Employee Savings Plans in which shares of Common Stock are held in a Savings
Plan trust for the account of such participant. Shares of Common Stock held in a
Savings Plan trust will be voted by the Plan trustee as instructed by Plan
participants. Shares held in a Savings Plan trust for which voting instructions
are not received will be voted by the Plan trustee in the same proportion as it
votes shares for which voting instructions were received from participants in
that Savings Plan.
COSTS OF SOLICITATION
The costs of solicitation of proxies will be borne by the Company. The
Company has retained Georgeson Shareholder Communications Inc., 17 State Street,
New York, New York 10004, to assist the Company in the distribution of the proxy
materials and the solicitation of proxies for an estimated fee of $12,000 plus
reimbursement of reasonable out-of-pocket expenses. Georgeson Shareholder
Communications Inc. may solicit proxies from shareholders by mail, telephone,
telex, telegram or personal call or visit. In addition, officers or other
employees of the Company may, without additional compensation therefor, solicit
proxies in person or by telephone.
February 25, 2000
By Order of the Board of Directors
/s/ James Boyazis
JAMES BOYAZIS, Secretary
<PAGE> 27
[GOODYEAR LOGO]
<PAGE> 28
- --------------------------------------------------------------------------------
CONFIDENTIAL VOTING INSTRUCTIONS -- 2000 ANNUAL MEETING OF SHAREHOLDERS
THE GOODYEAR TIRE & RUBBER COMPANY EMPLOYEE SAVINGS PLANS
Solicited on Behalf of the Board of Directors of Goodyear
The proxy soliciting materials furnished by the Board of Directors of The
Goodyear Tire & Rubber Company in connection with the Annual Meeting of
Shareholders to be held on Monday, April 10, 2000, are delivered herewith.
Under each Employee Savings Plan in which you participate ("Plan"), you
have the right to give written instructions to the Trustee for such Plan to vote
as you specify the number of full shares of Common Stock of The Goodyear Tire &
Rubber Company representing your proportionate interest in each such Plan on
February 16, 2000.
If you wish to have such shares voted by the Trustee, please sign the
authorization on the reverse side of this card and return it in the accompanying
envelope. If you do not sign and return this Confidential Voting Instructions
Card in the envelope provided, shares of the Common Stock held for your account
in each Plan will be voted by the Trustee in the same proportion as it votes
shares for which Confidential Voting Instructions are received by the Trustee
from other participants in that Plan.
I hereby instruct the Trustee to vote (or cause to be voted) all shares of
Common Stock of The Goodyear Tire & Rubber Company credited to my account under
each Plan at February 16, 2000 at the Annual Meeting of Shareholders to be held
on April 10, 2000 and at any adjournment thereof as indicated on the reverse
side hereof or, if not so indicated, as recommended by the Board of Directors.
UNLESS OTHERWISE SPECIFIED ON THE REVERSE SIDE, IF YOU SIGN AND RETURN THIS
CONFIDENTIAL VOTING INSTRUCTIONS CARD THE TRUSTEE WILL VOTE FOR THE ELECTION OF
THE FOUR NOMINEES FOR DIRECTOR, WITH DISCRETIONARY AUTHORITY TO CUMULATE VOTES
(ITEM 1 ON REVERSE SIDE), AND FOR RATIFICATION OF APPOINTMENT OF INDEPENDENT
ACCOUNTANTS (ITEM 2 ON REVERSE SIDE).
IF YOU PLAN TO ATTEND THE 2000 ANNUAL MEETING, PLEASE MARK THE BOX
INDICATED ON THE REVERSE SIDE.
THIS CONFIDENTIAL VOTING INSTRUCTIONS CARD IS CONTINUED ON THE
REVERSE SIDE. PLEASE MARK, DATE AND SIGN ON THE REVERSE SIDE AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
ANNUAL MEETING OF SHAREHOLDERS
THE GOODYEAR TIRE & RUBBER COMPANY
APRIL 10, 2000
10:00 A.M.
OFFICE OF THE COMPANY
GOODYEAR THEATER
1201 EAST MARKET STREET
AKRON, OHIO
REFRESHMENTS WILL BE SERVED FROM 9:30 TO 9:55 A.M. IN THE LOBBY
AT THE ENTRANCE TO THE THEATER IN GOODYEAR HALL.
WE INVITE YOU TO JOIN US.
Y O U R V O T E I S I M P O R T A N T
----------------------------------------------
----------------------------------------------
PLEASE COMPLETE, DATE AND SIGN YOUR PROXY AND PROMPTLY RETURN
IT IN THE ENCLOSED ENVELOPE.
<PAGE> 29
- --------------------------------------------------------------------------------
|
PLEASE MARK YOUR | 8 3 9 6
X VOTES IN BLUE OR -----
BLACK INK AS IN
THIS EXAMPLE.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF ALL NOMINEES AND FOR
ITEM 2.
- --------------------------------------------------------------------------------
ITEM 1. ELECTION OF DIRECTORS.
NOMINEES: Thomas H. Cruikshank
WITHHOLD Class III Directors-- Katherine G. Farley
FOR ALL AUTHORITY Each to serve a Steven A. Minter
NOMINEES AS TO ALL 3-year term: Agnar Pytte
NOMINEES
(TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE BELOW.)
--------------------------------------------------------------------
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
ITEM 2. Ratification of appointment of PricewaterhouseCoopers LLP as
Independent Accountants.
--------------------------------------------------------------------
I plan to attend the Annual Meeting of Shareholders.
- --------------------------------------------------------------------------------
AUTHORIZATION: I ACKNOWLEDGE RECEIPT OF THE NOTICE OF 2000 ANNUAL MEETING AND
PROXY STATEMENT. I HEREBY INSTRUCT THE TRUSTEE TO VOTE BY PROXY, IN THE FORM
SOLICITED BY THE BOARD OF DIRECTORS, THE NUMBER OF FULL SHARES IN MY PLAN
ACCOUNT(S) AS SPECIFIED ABOVE, OR, IF NOT SPECIFIED ABOVE, AS RECOMMENDED BY THE
BOARD OF DIRECTORS.
- ------------------------------------------------------------ ---------------
SIGNATURE DATE
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
[GOODYEAR LOGO]
[GEMINI AUTOMOTIVE CARS LOGO] [GOODYEAR LOGO]
S P E C I A L S A V I N G S
CALL 1-888-GDYR-STORES FOR STORE LOCATIONS.
- --------------------------------------------------------------------------------
O I L L U B E
& F I L T E R
$5.00 O F F
WITH THIS
COUPON
INCLUDES:
- Lube (where applicable)
- New oil filter installed
- Includes premium brand oil
[GOODYEAR LOGO] VALID ONLY AT GOODYEAR OWNED
[GEMINI AUTOMOTIVE CARS LOGO] OR JUST TIRES LOCATIONS
[GOODYEAR LOGO]
DIRECT MAIL I.D. GAR
Environmental disposal fee may apply in some areas. No other discounts apply.
Offer ends 12/31/00.
- --------------------------------------------------------------------------------
10% SHAREHOLDER
DISCOUNT
PURCHASE ANY GOODYEAR PASSENGER OR LIGHT TRUCK TIRE AT A GOODYEAR OWNED OR JUST
TIRES LOCATION AND RECEIVE A 10% DISCOUNT OFF THE REGULAR SELLING PRICE.
[GOODYEAR LOGO] VALID ONLY AT GOODYEAR OWNED
[GEMINI AUTOMOTIVE CARS LOGO] OR JUST TIRES LOCATIONS
[GOODYEAR LOGO]
DIRECT MAIL I.D. GAR
No other discounts apply. Offer ends 12/31/00.
- --------------------------------------------------------------------------------
<PAGE> 30
[GOODYEAR LOGO]
THE GOODYEAR TIRE & RUBBER COMPANY
PROXY FOR 2000 ANNUAL MEETING OF SHAREHOLDERS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P
R The undersigned, a holder (or designated proxy) of shares of the Common
Stock of The Goodyear Tire & Rubber Company, hereby appoints JOHN G. BREEN,
O WILLIAM E. BUTLER and SAMIR G. GIBARA, and each or any of them, the proxies
or proxy of the undersigned, with full power of substitution, to represent
X the undersigned, and to vote all of the shares of Common Stock that the
undersigned is entitled to vote, at the Annual Meeting of Shareholders of
Y the Company to be held at its offices in Akron, Ohio, on Monday, April 10,
2000, at 10:00 A.M., Akron time, and at any and all adjournments thereof;
with the power to vote said shares FOR the election of four Directors of
the Company (with discretionary authority to cumulate votes), and with the
power to vote said shares FOR the ratification of appointment of
Independent Accountants and upon all other matters as may properly come
before the meeting or any adjournment thereof. This Proxy is given and is
to be construed according to the laws of the State of Ohio.
UNLESS OTHERWISE SPECIFIED ON THE REVERSE SIDE, THE PROXY WILL BE VOTED:
FOR ELECTION OF THE FOUR NOMINEES FOR DIRECTOR NAMED ON THE REVERSE SIDE,
WITH DISCRETIONARY AUTHORITY TO CUMULATE VOTES (ITEM 1 ON THE REVERSE SIDE),
AND FOR RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS (ITEM 2 ON
THE REVERSE SIDE).
IF YOU PLAN TO ATTEND THE 2000 ANNUAL MEETING, PLEASE MARK THE BOX
INDICATED ON THE REVERSE SIDE.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE MARK, DATE AND SIGN ON THE REVERSE SIDE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
ANNUAL MEETING OF SHAREHOLDERS
THE GOODYEAR TIRE & RUBBER COMPANY
APRIL 10, 2000
10:00 A.M.
OFFICE OF THE COMPANY
GOODYEAR THEATER
1201 EAST MARKET STREET
AKRON, OHIO
REFRESHMENTS WILL BE SERVED FROM 9:30 TO 9:55 A.M. IN THE LOBBY
AT THE ENTRANCE TO THE THEATER IN GOODYEAR HALL.
WE INVITE YOU TO JOIN US.
Y O U R V O T E I S I M P O R T A N T
----------------------------------------------
----------------------------------------------
PLEASE COMPLETE, DATE AND SIGN YOUR PROXY AND PROMPTLY RETURN
IT IN THE ENCLOSED ENVELOPE.
<PAGE> 31
- --------------------------------------------------------------------------------
|
PLEASE MARK YOUR | 5 7 2 2
X VOTES IN BLUE OR -----
BLACK INK AS IN
THIS EXAMPLE.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF NOTICE OF 2000 ANNUAL MEETING OF
SHAREHOLDERS AND PROXY STATEMENT.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF ALL NOMINEES AND FOR
ITEM 2.
- --------------------------------------------------------------------------------
ITEM 1. ELECTION OF DIRECTORS.
NOMINEES: Thomas H. Cruikshank
WITHHOLD Class III Directors-- Katherine G. Farley
FOR ALL AUTHORITY Each to serve a Steven A. Minter
NOMINEES AS TO ALL 3-year term: Agnar Pytte
NOMINEES
(TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE BELOW.)
--------------------------------------------------------------------
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
ITEM 2. Ratification of appointment of PricewaterhouseCoopers LLP as
Independent Accountants.
--------------------------------------------------------------------
I plan to attend the Annual Meeting of Shareholders.
- --------------------------------------------------------------------------------
PLEASE SIGN NAME EXACTLY AS IT APPEARS ABOVE. EACH JOINT OWNER SHOULD SIGN.
PLEASE INDICATE TITLE IF YOU ARE SIGNING AS EXECUTOR, ADMINISTRATOR, TRUSTEE,
CUSTODIAN, GUARDIAN OR CORPORATE OFFICER.
- ------------------------------------------------------------ ---------------
SIGNATURE DATE
- ------------------------------------------------------------ ---------------
SIGNATURE DATE
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
[GOODYEAR LOGO]
[GEMINI AUTOMOTIVE CARS LOGO] [GOODYEAR LOGO]
S P E C I A L S A V I N G S
CALL 1-888-GDYR-STORES FOR STORE LOCATIONS.
- --------------------------------------------------------------------------------
O I L L U B E
& F I L T E R
$5.00 O F F
WITH THIS
COUPON
INCLUDES:
- Lube (where applicable)
- New oil filter installed
- Includes premium brand oil
[GOODYEAR LOGO] VALID ONLY AT GOODYEAR OWNED
[GEMINI AUTOMOTIVE CARS LOGO] OR JUST TIRES LOCATIONS
[GOODYEAR LOGO]
DIRECT MAIL I.D. GAR
Environmental disposal fee may apply in some areas. No other discounts apply.
Offer ends 12/31/00.
- --------------------------------------------------------------------------------
10% SHAREHOLDER
DISCOUNT
PURCHASE ANY GOODYEAR PASSENGER OR LIGHT TRUCK TIRE AT A GOODYEAR OWNED OR JUST
TIRES LOCATION AND RECEIVE A 10% DISCOUNT OFF THE REGULAR SELLING PRICE.
[GOODYEAR LOGO] VALID ONLY AT GOODYEAR OWNED
[GEMINI AUTOMOTIVE CARS LOGO] OR JUST TIRES LOCATIONS
[GOODYEAR LOGO]
DIRECT MAIL I.D. GAR
No other discounts apply. Offer ends 12/31/00.
- --------------------------------------------------------------------------------
