<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:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
ITEL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
ITEL CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / 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:
- --------------------------------------------------------------------------------
- -------------------------
(1)Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
[ITEL LOGO]
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 4, 1995
To the Stockholders of Itel Corporation:
The Annual Meeting of Stockholders of Itel Corporation will be held in the
Market Room, upper lobby, at 30 South Wacker Drive, Chicago, Illinois on
Thursday, May 4, 1995 at 10:00 a.m., for the purpose of:
(1) electing 11 Directors;
(2) approving the Management Incentive Plan; and
(3) transacting such other business as may properly be brought before the
meeting or any adjournment(s) thereof.
The Board of Directors has fixed the close of business on March 17, 1995 as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the meeting or any adjournment(s) thereof. A complete list of the
stockholders entitled to vote at the meeting will be open for examination by any
stockholder for any purpose germane to the meeting during ordinary business
hours for ten days prior to the meeting at the offices of Itel Corporation, Two
North Riverside Plaza, Suite 1900, Chicago, Illinois 60606, and will also be
available at the meeting.
A copy of Itel Corporation's Annual Report to Stockholders for the fiscal
year ended December 31, 1994 is being mailed to all registered holders.
Additional copies of the Annual Report may be obtained without charge by writing
to the Secretary of Itel Corporation, Two North Riverside Plaza, Suite 1900,
Chicago, Illinois 60606.
BY ORDER OF THE BOARD OF DIRECTORS
[Sig.]
James E. Knox, Secretary
Chicago, Illinois
March 31, 1995
ALL STOCKHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT YOU
EXPECT TO ATTEND, PLEASE DATE, SIGN AND COMPLETE THE ENCLOSED PROXY AND MAIL IT
PROMPTLY IN THE POSTAGE PREPAID ENVELOPE PROVIDED.
<PAGE> 3
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
OF ITEL CORPORATION
TO BE HELD MAY 4, 1995
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Itel Corporation, a Delaware corporation
("Itel" or the "Company," which as used herein shall mean together with or
without its subsidiaries, as the context may require). Itel's corporate
headquarters are located at Two North Riverside Plaza, Suite 1900, Chicago,
Illinois 60606 (telephone 312-902-1515). The Proxy Statement and form of proxy
were first mailed to stockholders on or about March 31, 1995. Proxies solicited
by the Board of Directors of Itel are to be voted at the Annual Meeting of
Stockholders of Itel to be held on Thursday, May 4, 1995, at 10:00 a.m., in the
Market Room, upper lobby, at 30 South Wacker Drive, Chicago, Illinois, or any
adjournment(s) thereof.
This solicitation is being made by mail, although directors, officers and
regular employees of Itel may solicit proxies from stockholders personally or by
telephone, telegram or letter. The costs of this solicitation will be borne by
Itel. Itel may request brokerage houses, nominees or fiduciaries and other
custodians to solicit their principals or customers for their proxies, and may
reimburse them for their reasonable expenses in so doing. In addition, Itel has
retained Morrow & Co. to assist in the solicitation for a fee of $2,500 plus
expenses.
VOTING
Shares of Common Stock, $1.00 par value, of Itel ("Common Stock")
represented by proxies in the accompanying form which are properly executed and
returned to Itel (and which are not effectively revoked) will be voted at the
meeting in accordance with the stockholders' instructions contained therein. In
the absence of contrary instructions, shares represented by such proxies will be
voted IN FAVOR OF the election as directors of the nominees listed herein, IN
FAVOR OF Proposal 1 to approve the Management Incentive Plan, and in the
discretion of the appointed proxies upon such other business as may properly be
brought before the meeting.
Each stockholder has the power to revoke his or her proxy at any time
before it is voted by (i) delivering to Itel prior to or at the meeting written
notice of revocation or a later dated proxy or (ii) attending the meeting and
voting his or her shares in person.
The Board of Directors has fixed the close of business on March 17, 1995 as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the meeting or any adjournment(s) thereof.
As of March 17, 1995, 28,558,116 shares of Common Stock were outstanding.
Each holder is entitled to one vote per share.
A majority of the outstanding shares of Common Stock will constitute a
quorum for purposes of the meeting. If a quorum is present, in person or by
proxy, the affirmative vote of the majority of the shares represented at the
meeting will be required for the election of Directors, approval of the
Management Incentive Plan, and any other matters brought before the meeting. As
a result, shares represented at the meeting and entitled to vote for Directors,
but which abstain from voting or withhold votes, will in effect be counted
against the election of Directors and, unless such abstention is by virtue of a
"broker non-vote," against the approval of Proposal 1 to approve the Management
Incentive Plan.
<PAGE> 4
ELECTION OF DIRECTORS
In the absence of contrary instructions, the proxies received will be voted
for the election as directors of the nominees listed below, all of whom, except
for Sir James Blyth, presently serve on the Board of Directors, to hold office
until the next annual meeting of stockholders or until their successors are
elected and qualified. Although the Board of Directors does not contemplate that
any nominee will decline or be unable to serve as a director, in either such
event the proxies will be voted for another person selected by the Board of
Directors, unless the Board acts to reduce the size of the Board of Directors in
accordance with the provisions of Itel's by-laws. The current number of
directors has been set by the Board at eleven.
The following table sets forth the name and age as of March 17, 1995 of
each director or nominee for director of the Company, the year each director was
first elected, his or her position with the Company, his or her principal
occupation(s) during the last five years and any other directorships held by
such person in companies which have a class of securities registered pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or subject to the requirements of Section 15(d) of the Exchange Act or
directorships of issuers registered as investment companies under the Investment
Company Act of 1940. The term of office of each director will extend until the
holding of the next annual meeting of stockholders or until his or her successor
is elected and qualified.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS HELD
NAME AND AGE DURING PAST FIVE YEARS
- ------------ -------------------------------------------------------------------
<S> <C>
Sir James Blyth, 54........ Deputy Chairman and Chief Executive Officer since 1987 of The Boots
Company, a diversified company engaged in manufacturing,
retailing and real estate; A Governor of London Business School;
Chairman of the Prime Minister's Advisory Panel on the Citizen's
Charter.
Bernard F. Brennan, 56..... Director of Itel since 1988; Chairman and Chief Executive Officer
since 1988 and President and Chief Executive Officer from 1985 to
1988 of Montgomery Ward & Co., a retailer; Director of ANTEC
Corporation.
Rod F. Dammeyer, 54........ Director and President since 1985, and Chief Executive Officer
since 1993 of Itel; President and Chief Executive Officer since
1994 and director since 1992 of Great American Management &
Investment, Inc., a diversified manufacturing company; Director
of Lomas Financial Corporation, ANTEC Corporation, The Vigoro
Corporation, Falcon Building Products, Inc., Capsure Holdings
Corp., Jacor Communications, Inc., Revco D.S., Inc., and Santa Fe
Energy Resources, Inc.; and Trustee of Van Kampen Merritt
closed-end mutual funds and series trust. Also see note below.
Robert E. Fowler, Jr., 59.. Director of Itel since February 1995; Director and President since
1993 and Chief Executive Officer since 1994 of The Vigoro
Corporation, a manufacturer and distributor of potash,
nitrogen-based fertilizer and related products; Chief Executive
Officer from 1991 to 1995 of BCC Industrial Services, Inc., an
operational consulting company; Chief Executive Officer from 1987
to 1990 of Joseph Office Products, an office products and space
planning firm; Director of Allistra Corporation and Manville
Corporation.
F. Philip Handy, 50........ Director of Itel since 1986; President of Winter Park Capital
Company, a private investment firm, since 1980; Director of Great
American Management and Investment, Inc., Banca Quadrum, S.A.,
and Jacor Communications, Inc.
Melvyn N. Klein, 53........ Director of Itel since 1985; Owner and President of JAKK Holding
Corporation, which is a General Partner of the investment
partnership GKH Partners, L.P., since 1987; Attorney and
counselor-at-law since 1968; A Principal at Questor Management
Company since January 1995; Director of Santa Fe Energy
Resources, Inc., Savoy Pictures Entertainment, Inc. and Bayou
Steel Corporation. Also see note below.
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS HELD
NAME AND AGE DURING PAST FIVE YEARS
- ---------------- -------------------------------------------------------------------
<S> <C>
John R. Petty, 64......... Director of Itel since 1988; Chairman of Czech and Slovak American
Enterprise Fund, a not-for-profit private organization established
and funded by the U.S. Government, since 1991; Chairman of Nippon
Credit Trust Company, a bank, since 1990; Private investor since
1988; Chairman and Chief Executive Officer of Marine Midland
Banks, Inc. from 1983 to 1988; Director of ANTEC Corporation.
John A. Pigott, 63........ Director of Itel since 1987; Consultant since 1994, Vice Chairman
from 1992 to 1994 and President and Chief Executive Officer from
1987 to 1992 of Anixter Inc., a subsidiary of Itel engaged in the
distribution of wiring systems products.
Sheli Z. Rosenberg, 53.... Director of Itel since 1990; President of the law firm Rosenberg &
Liebentritt, P.C.; President and Chief Executive Officer since 1994
of Equity Group Investments, Inc. and its subsidiary Equity
Financial and Management Company, both real estate investment
firms, and executive officer and director for more than the past
five years of these companies and Great American Management and
Investment, Inc., a diversified manufacturing company; Director
of Capsure Holdings Corp., Falcon Building Products, Inc., The
Vigoro Corporation, American Classic Voyages Co., Revco D.S.,
Inc. and Jacor Communications, Inc.; Co-Chairman of the Board of
Directors of CFI Industries, Inc.; Trustee of Equity Residential
Properties Trust; Executive officer and director until October 4,
1991 of Madison Management Group, Inc. which filed a petition
under the Federal bankruptcy laws in November 1991; Vice
President of First Capital Benefit Administrators, Inc. which
filed a petition under the federal bankruptcy laws in January
1995. Also see note below.
Stuart M. Sloan, 51....... Director of Itel since 1994; Chairman since 1986 and Chief
Executive Officer since 1991 of Quality Food Centers, Inc., a
supermarket chain; Chief Executive Officer from 1987 to 1991 and
Chairman from 1990 to 1992 of Egghead, Inc., a personal computer
software reseller; A Principal since 1984 of Sloan Capital
Companies, a private investment company; Director of Seafirst
Bank and Seafirst Corporation.
Samuel Zell, 53........... Director since 1984, Chairman of the Board of Directors since 1985,
and Chief Executive Officer from 1985 to 1993 of Itel; Chairman of
the Board for more than the past five years and President from
1990 to 1994 of Great American Management and Investment Inc., a
diversified manufacturing company, and Equity Group Investments,
Inc. and its subsidiary Equity Financial and Management Company,
both real estate investment firms; Chairman of the Board and
Chief Executive Officer since 1987 of Capsure Holdings Corp.;
Chairman of the Board of Directors and Chief Executive Officer
since March 1995 of Manufactured Home Communities, Inc.; Chairman
or Co-Chairman of the Board of Directors of Falcon Building
Products, Inc., Broadway Stores, Inc., Revco D.S., Inc. and
American Classic Voyages Co.; Director of Jacor Communications,
Inc., Sealey Corporation and The Vigoro Corporation; Chairman of
The Trustees of Equity Residential Properties Trust; Executive
officer and director until October 4, 1991 of Madison Management
Group, Inc. which filed a petition under the Federal bankruptcy
laws in November 1991. Also see note below.
</TABLE>
- ---------------
NOTE: Itel owns 8,064,005 shares of common stock of Santa Fe Energy
Resources, Inc. ("SFR"). According to a Schedule 13D filed by HC Associates, a
Delaware general partnership ("HC"), on January 8, 1993 ("HC 13D"), HC owns
10,211,078 shares of common stock of SFR. The HC 13D states (a) the Zell,
3
<PAGE> 6
Chilmark Fund, L.P., ("Zell/Chilmark") has a 49.044606% partnership interest in
HC, (b) the sole general partner of Zell/Chilmark is ZC Limited Partnership, an
Illinois limited partnership ("ZC Limited"), (c) the sole general partner of ZC
Limited is ZC Partnership, a Delaware general partnership ("ZC"), (d) ZC's
partners include ZC, Inc., an Illinois corporation("ZCI"), and (e) the Samuel
Zell Revocable Trust under trust agreement dated 1/17/90 is the sole shareholder
of ZCI. Samuel Zell is the sole trustee and beneficiary of the Samuel Zell
Revocable Trust. Rod Dammeyer, Sheli Rosenberg and James Knox, Senior Vice
President, General Counsel and Secretary of Itel are general partners of COP
Seniors General Partnership, an Illinois general partnership, which is a general
partner of COP General Partnership, an Illinois general partnership, which is a
limited partner of ZC Limited. The HC 13D further states (a) GKH Investments,
L.P. has a 47.257861% partnership interest in HC and GKH Partners, L.P., as
nominee for GKH Private Limited, has a 1.786745% partnership interest in HC, (b)
the sole general partner of GKH Investments, L.P., a Delaware limited
partnership, is GKH Partners, L.P., a Delaware limited partnership, ("GKH"), (c)
the general partners of GKH include JAKK Holding Corp., a Nevada corporation
("JAKK"), and HGM Associates Limited Partnership, an Illinois limited
partnership ("HGMLP"), (d) the sole director, stockholder and principal officer
of JAKK is Melvyn N. Klein, (e) the sole general partner of HGMLP is HGM
Corporation, a Nevada corporation ("HGM"), and (f) all the stock of HGM is owned
by a trust, the beneficiaries of which are lineal descendants of Nicholas J.
Pritzker (deceased) and certain of their current and former spouses. Also see
"Security Ownership of Principal Stockholders."
BOARD AND COMMITTEE MEETINGS
The Audit Committee, currently consisting of Messrs. Haynes (Chairman),
Jacobson and Petty, provides general review of the Company's accounting and
auditing procedures, meets with the Company's independent auditors to review
their recommendations and reviews related party transactions. The Audit
Committee held three meetings in 1994.
The Compensation Committee, currently consisting of Messrs. Brennan
(Chairman) and Handy and Mrs. Rosenberg, exercises all powers of the Board of
Directors in connection with compensation matters, including incentive
compensation, benefit plans and stock grants. The Compensation Committee held
one meeting in 1994.
The Executive Committee, currently consisting of Messrs. Klein, Petty and
Zell (Chairman), exercises the full powers of the Board of Directors to the
extent permitted by law in the intervals between Board meetings. The Executive
Committee held one meeting in 1994.
The Board of Directors held five meetings in 1994. Each of the directors
attended 75 percent or more of the total of all meetings held by the Board and
the committees on which the director served.
The Company does not have a committee to nominate candidates for election
to the Board of Directors.
4
<PAGE> 7
EXECUTIVE COMPENSATION
The following tables set forth information about the compensation of the
chief executive officer and the four other most highly compensated executive
officers of the Company and an individual who ceased to be an executive officer
of the Company in 1994 but whose compensation, including severance, would have
placed him in this group.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION AWARDS
---------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
--------------------------- STOCK UNDERLYING ALL OTHER
NAME & SALARY BONUS AWARDS OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
- ---------------------------------- ----- ------- -------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Rod Dammeyer...................... 1994 630,500(1) 656,250 2,520,000(3) 150,000 114,890(7)
President & Chief 1993 685,750(1) 675,000 99,324
Executive Officer 1992 655,000 491,250 200,000 97,911
Samuel Zell....................... 1994 250,000 210,000 2,520,000(3) 53,239(7)
Chairman 1993 350,000 262,500 53,042
1992 655,000 491,250 100,000 53,020
Gary Hill(2)...................... 1994 169,667(2) 72,333 777,109(7)
Sr. V.P.-Finance 1993 248,000 185,000 30,024
1992 240,000 150,000 120,000(4) 50,000 30,548
James Knox........................ 1994 320,000 30,000 56,581(7)
Sr. V.P. Gen. 1993 309,000 78,924
Counsel & Sec. 1992 325,000 200,000 225,000(4) 50,000 58,608
John McNicholas................... 1994 140,000 73,500 14,842(7)
V.P.-Controller 1993 132,000 50,000 13,856
1992 124,000 46,500 215,500(4)(5) 63,055
Don Civgin........................ 1994 140,000 73,500 171,750(6) 12,174(7)
V.P.-Treasurer 1993 119,000 48,000 67,500(4) 10,384
1992 115,000 35,000 60,075
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
1. Salary shown for 1993 and 1994 includes $10,750 and $5,500, respectively,
paid by ANTEC Corporation, during period ending May 26, 1994 it was 53% owned
by the Company, for Mr. Dammeyer's services as a director of ANTEC.
2. Mr. Hill's employment terminated on July 31, 1994. Salary shown for 1994
includes $25,000 in consulting payments.
3. Value of 70,000 shares of Common Stock on date of grant, January 25, 1995,
awarded for role in the sale of the Company's interest in Railcar Trust No.
1992-1 over the period 1993-94. The shares vest each December 31 beginning
December 31, 1995 to the extent that they can vest without causing the
application of the limitations imposed by the Omnibus Budget Reconciliation
Act of 1993 on the deductibility of executive compensation under Section
162(m) of the Internal Revenue Code provided that any shares not vested by
the third anniversary of the grant shall be vested at that time. Subject to
forfeiture for nonvesting, grantee will be entitled to any dividends declared
on the Company's stock.
4. Except as indicated in Note 5 below, this amount is not for stock of the
Company or any subsidiary. It represents stock in a corporation ("RSC") owned
entirely by certain employees or former employees to which the Company made a
net contribution of approximately $1.5 million in connection with a 1992
railcar leasing and financing transaction. Messrs. Knox, Hill, McNicholas and
Civgin received shares representing 15%, 8%, 4.5%, and 4.5%, respectively, of
RSC. These percentages have been applied to the net contribution made by the
Company and its subsidiary to determine the amounts of $225,000, $120,000,
$67,500 and $67,500 included in the above table for Messrs. Knox, Hill,
McNicholas and Civgin, respectively. It is estimated by the Company that at
December 31, 1994, the RSC stock of Messrs. Knox, Hill, McNicholas and Civgin
had a value of approximately $600,000, $320,000, $180,000, and $180,000,
respectively. These values represent amounts for which this stock was sold to
the Company in March 1995.
5. Includes $148,000 for value of 8,000 shares of Common Stock on date of grant,
September 1, 1992, which shares vested in their entirety on December 31, 1994
and had a value of $277,000 on that date. Subject to
5
<PAGE> 8
forfeiture for nonvesting, Mr. McNicholas would have been entitled to any
dividends declared on the Company's stock.
6. Value of 6,000 shares of Common Stock on date of grant, January 27, 1994,
which shares vested in their entirety on December 31, 1994 and had a value of
$207,750 on that date. Subject to forfeiture for nonvesting, Mr. Civgin would
have been entitled to any dividends declared on the Company's stock.
7. Includes contributions to Employees Capital Accumulation Plan and unfunded
accruals covering contributions which were not made because of limitations
imposed by Internal Revenue Code and the portion of the interest in excess of
4.79% accrued during 1994 on these unfunded accruals of $62,345, $16,493,
$18,843, $8,146 and $7,971 on behalf of Messrs. Dammeyer, Knox, Hill,
McNicholas and Civgin, respectively. Includes premiums (less amounts
reimbursed by insured) paid by the Company on split-dollar life insurance
policies which will be awarded to the insured upon their retirement or
earlier in certain circumstances of $53,239, $52,545, $27,326, $14,266,
$6,696 and $4,203 on behalf of Messrs. Zell, Dammeyer, Knox, Hill,
McNicholas, and Civgin respectively. Includes $12,762 for the portion of the
interest contingently accrued during 1994 on contingent severance
compensation provided for Mr. Knox due to the use of an annual rate of
interest above 6.96%, but does not include any payments to which Messrs.
Knox, McNicholas and Civgin may be entitled under the severance arrangements
described under heading "Employment Contracts and Termination of Employment
and Change-in-Control Arrangements." Includes severance payments of $744,000
for Mr. Hill.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
------------------------- ---------------------------
NUMBER OF % OF TOTAL 5%($) 10%($)
SECURITIES OPTIONS (ASSUMES (ASSUMES
UNDERLYING GRANTED TO $46.63 PRICE $74.25 PRICE
OPTIONS EMPLOYEES IN EXERCISE OR DATE AT END OF AT END OF
GRANTED FISCAL BASE PRICE OF 10 10
NAME (#)(1) YEAR(2) ($/SH) EXPIRATION YEARS(3) YEARS)(4)
- ---- ---------- ------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Rod Dammeyer.................. 150,000 82% 28.625 1/27/04 2,700,750 6,843,750
James Knox.................... 30,000 16% 28.625 1/27/04 540,150 1,368,750
</TABLE>
- ---------------
(1) One-third of options become exercisable on each anniversary of grant,
beginning January 27, 1995.
(2) Does not reflect options granted under Employee Stock Purchase Plan in which
Messrs. Dammeyer and Knox cannot participate or options to purchase their
stock granted by subsidiaries to their employees.
(3) These numbers are for presentation purposes only and are not predictions of
future stock prices. To achieve these results the aggregate market value of
the Company's common stock would have to increase by $598 million (based on
number of shares outstanding at date of grant).
(4) These numbers are for presentation purposes only and are not predictions of
future stock prices. To achieve these results the aggregate market value of
the Company's common stock would have to increase by $1.516 billion (based
on number of shares outstanding at date of grant).
6
<PAGE> 9
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR,
AND FISCAL YEAR-END OPTION VALUE
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS AT
SHARES VALUE AT FY-END(#) FY-END($)
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) ($) UNEXERCISABLE UNEXERCISABLE
- ---- ------------ ---------- -------------------- --------------------
<S> <C> <C> <C> <C>
Rod Dammeyer............... 100,000 2,186,750 109,934/216,666 1,542,234/1,993,322
Samuel Zell................ 643,000 8,403,780 33,333/33,334 546,661/546,678
Gary Hill.................. 57,700 953,481 1,000/0 16,400/0
James Knox................. 52,374 1,099,039 162,859/46,667 2,618,252/453,339
John McNicholas............ 3,334 64,805 0/0 0/0
Don Civgin................. 2,334 44,054 0/0 0/0
</TABLE>
PENSION PLAN TABLE
<TABLE>
<CAPTION>
ESTIMATED ANNUAL BENEFITS
REMUNERATION YEARS OF SERVICE
ON WHICH ---------------------------------------------------------------------------------------
BENEFITS ARE
BASED 5 10 15 20 25 30 35
- ------------ --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 400,000 $ 66,667 $133,333 $200,000 $200,000 $200,000 $200,000 $200,000
600,000 100,000 200,000 300,000 300,000 300,000 300,000 300,000
800,000 133,333 266,667 400,000 400,000 400,000 400,000 400,000
1,000,000 166,667 333,333 500,000 500,000 500,000 500,000 500,000
1,200,000 200,000 400,000 600,000 600,000 600,000 600,000 600,000
1,400,000 233,333 466,667 700,000 700,000 700,000 700,000 700,000
1,600,000 266,666 533,333 800,000 800,000 800,000 800,000 800,000
</TABLE>
Above amounts are annual straight-line annuity amounts (which are not
reduced for Social Security benefits) payable upon retirement at age 65 under
the Company's funded defined benefit pension plan and an unfunded supplementary
defined benefit pension plan for Messrs. Zell, Dammeyer, Knox and Hill. Mr. Zell
has ten years, Messrs. Dammeyer and Knox have and Mr. Hill had nine years of
service. As agreed Mr. Hill's period of service was increased by two additional
years when his position was eliminated. It has been agreed that Mr. Knox's
period of service will be similarly increased in such event or in the event of
his retirement after age 60 or in certain other limited circumstances.
Contingent severance compensation payable to Mr. Knox upon his retirement after
age 60, or earlier in certain circumstances, is not included in the above
amounts. See "Employment Contracts and Termination of Employment and
Change-in-Control Arrangements." Remuneration for purposes of the above table is
based on one-third of highest salary and bonus paid during any 36 consecutive
month period within 5 years of termination of service, except in Mr. Knox's case
it has been agreed that such compensation for any period after October 1992
shall be deemed to be at $600,000 per year and in Mr. Dammeyer case that his
remuneration shall be deemed to be $1,100,000. The determination of remuneration
is based upon payment, not accrual, and therefore the covered compensation for
1994 will be the salary shown in the summary compensation table for 1994 and the
bonus shown in that table for 1993.
Messrs. McNicholas and Civgin are covered by funded and unfunded defined
benefit plans which together provide an annual straight life annuity benefit
(not reduced for social security) payable at age 65 determined as follows: for
service prior to 1994, one percent of salary and regular annual bonus
("remuneration") during each year of service plus one percent of remuneration in
excess of maximum social security taxable wage base (the "social security base")
for each year prior to 1989 and three-fourths of one percent (which is reduced
for retirement prior to applicable social security normal retirement age) of
remuneration in excess of the employee's average social security base for each
such year after 1988; and for
7
<PAGE> 10
each year of service after 1993 (up to a maximum of 30 years), .65% of highest
annual remuneration during any consecutive 60 months of last 120 months of
employment ("final average salary") up to an amount equal to average annual
social security base and 1.3% of final average salary in excess of this base.
The estimated annual straight life annuity benefit payable under these plans at
age 65 to Mr. Civgin is $81,000, and to Mr. McNicholas is $73,000, assuming
their continued employment with the Company until age 65 at current compensation
and no change in the social security base.
COMPENSATION OF DIRECTORS
The Company pays its non-employee directors annual retainers of $18,000
plus fees of $1,750 for each board meeting attended, $1,000 for each committee
meeting attended and a $5,000 annual retainer for committee chairpersons. These
directors are also reimbursed for any expenses they incur in attending meetings.
Each non-employee director is granted each August 1 an option to purchase 5,000
shares of Common Stock for the average closing price for the ten trading days
preceding the date of grant. Directors who are also employees of Itel do not
receive annual retainers, meeting fees or option grants under this plan. Prior
to the implementation of this plan in 1991, directors were granted warrants
similar to the options granted under the plan. The Company at its discretion may
purchase, for its market value, Common Stock obtained pursuant to these
warrants.
Messrs. Brennan, Dammeyer and Petty also serve as directors of ANTEC
Corporation, which until May 26, 1994 was 53% (now 30%) owned by the Company.
They, like the other non-employee directors of ANTEC, are paid annual retainers
of $18,000 plus fees of $1,000 for each board meeting attended, $750 for each
committee meeting attended and a $2,500 annual retainer for committee
chairpersons. Pursuant to the ANTEC Director Stock Option Plan, they each are
granted each January 1, an option to purchase 2,500 shares of ANTEC Common Stock
for the average closing price for the ten trading days preceding the date of
grant.
Mr. Pigott has been retained by a subsidiary of the Company as a consultant
for the period 1994-96 at the rate of $100,000 a year.
EMPLOYMENT CONTRACTS AND TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
Mr. Dammeyer was employed through 1994 pursuant to a contract which expired
at the end of 1994. A new agreement provides for the continuation of his
employment through 2000 subject to earlier termination by either party on two
years' notice. The new agreement provides for an annual salary of $395,000,
annual incentive awards of 50% to 112.5% of salary, with a target of 75% of
salary, such long-term incentives as the Compensation Committee in its good
faith judgment shall grant, and long-term disability and life insurance coverage
based on a deemed salary of $625,000 per year. If Mr. Dammeyer's employment
should be terminated by the Company prior to the expiration of the new agreement
or should thereafter terminate for any reason, he would be vested in his pension
and life insurance policy benefits, and his stock options would be vested and
exercisable for the periods of their full terms or two years, whichever is
earlier. Mr. Dammeyer is permitted to engage in other business activities which
do not interfere with the performance of his duties for the Company or exceed
his activities for the Company.
The Company and Mr. Knox have an agreement that if his employment is
terminated by the Company he will be paid compensation equal to two years at the
rate of his target compensation at the time of the agreement ($495,000 per year)
plus an amount equivalent to interest on that sum at a rate equal to the
Company's average cost of borrowed funds, will be provided medical and term life
insurance benefits for this period, and will be vested in his pension and life
insurance policy benefits and his stock options, and will be provided an
extended period for the exercise of those options. A reduction in Mr. Knox's
salary in certain circumstances or his retirement after age 60 will trigger
these benefits as well. Mr. Knox is permitted to engage in other business
activities which do not interfere with the performance of his duties for the
Company.
8
<PAGE> 11
Mr. Hill was covered by a retention plan which provided a severance payment
of $744,000 and vested his pension and life insurance policy benefits. Messrs.
Civgin and McNicholas are covered by a severance plan which provides for
severance payments of salary and targeted bonus for a period of one month for
each $10,000 of base salary and 1/4 of one month for each year of service, the
vesting of their life insurance policy benefits and for continuation of their
medical and term life insurance benefits during this period. Each of them has
agreed to consult with the Company for a five year period about matters on which
they previously worked for $30,000 a year.
A change-in-control of the Company as defined in the Company's unfunded
supplementary defined benefit pension plan (generally the acquisition of more
than 20% of the voting power of the Company's securities by a person not
currently having such power) would vest the remainder of pensions provided by
that plan for Messrs. Zell, Dammeyer and Knox. See "Executive
Compensation--Pension Plan Table" for this and other contractual provisions
relating to pensions.
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
For 1994 the members of the Compensation Committee of the Board of
Directors were Bernard Brennan, Chairman of the Committee, Sheli Rosenberg and
F. Philip Handy.
Information about transactions between the Company and affiliates or
associates of Mrs. Rosenberg is set forth below.
In 1994, the following relationships existed: Rod Dammeyer, President of
Itel, was a member of the Compensation Committee of the Board of Directors of
Capsure Holdings Corp., Samuel Zell, Chairman of Itel, was a director of that
company, and Sheli Rosenberg was an executive officer of that company; Mr.
Dammeyer was a member of the Compensation Committee of the Board of Directors of
Eagle Industries, Inc., and a member of a special committee of the Board of
Directors of Falcon Buildings Products, Inc which acted upon stock options and
Mr. Zell was a director and executive officer of those companies; Mr. Zell and
Mrs. Rosenberg were members of the Compensation Committee of the Board of
Directors of Great American Management and Investment, Inc., Mr. Dammeyer was an
executive officer and a director of that company, and Mr. Zell and Mrs.
Rosenberg were executive officers of that company; Mr. Zell was a member of the
Compensation Committee of the Board of Directors of American Classic Voyages
Co., and Mrs. Rosenberg was a director and executive officer of that company;
and Mr. Zell and Mrs. Rosenberg also served as members of the board of directors
of numerous non-public companies owned in whole or in part by Mr. Zell or his
affiliates which did not have compensation committees, and in many cases the
executive officers of those companies included Mrs. Rosenberg and/or Mr. Zell.
The Company rents office space under leases expiring as late as 1998 from,
and shares certain services with, affiliates or associates of Mr. Zell and Mrs.
Rosenberg. The net amounts paid by the Company in 1994 for these matters were
$3,096,000 for rent and improvements, $45,000 for legal services from Rosenberg
& Liebentritt, P.C., and $132,000 for all other services. The Company believes
that these transactions and allocations (which are based on usage) were at
market rates or below.
As part of its ongoing program to repurchase its shares, the Company has
purchased and is continuing to purchase shares of its Common Stock from Mr. Zell
and affiliates of Mr. Zell and Mrs. Rosenberg. These purchases are at market or
the average price paid by the Company for shares purchased in the public market
that day and are proportional in amount to the shares being purchased from
others at that time. 1,427,833 shares were so purchased in 1994 for a total of
$45,326,130.
Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933, or the Exchange Act that might
incorporate future filings, including this Proxy Statement, in whole or in part,
the report presented below and the Performance Graph following shall not be
incorporated by reference into any such filings.
9
<PAGE> 12
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The compensation policy of the Company for its executive officers
(including those named in the Summary Compensation Table) has been to pay base
salaries and annual bonuses within the median of the range paid by others for
comparable positions and to provide long-term incentive opportunities within the
high end of the range provided by others for comparable positions. While the
Committee has from time to time reviewed the compensation practices of public
companies (of all sizes and industries without limitation to the companies
included in the published industry index used in the "Performance Graph"), the
determination that current compensation of executive officers is consistent with
this policy is subjective.
The 1994 salary and bonus opportunity for the Chief Executive Officer were
set by his employment agreement entered into in January 1992 and amended in
January 1994. His agreed salary was $625,000 (reduced to $395,000 effective
January 1, 1995 pursuant to a new agreement executed in 1995 to recognize his
less than full time responsibilities). His agreed bonus opportunity was 50% to
112.5% of base salary, with a target of 75%. The Committee determined at the
beginning of 1994 that for 1994 this bonus would be determined 40% by the
results of Anixter Inc., 30% by the results of ANTEC Corporation, and 30% by the
monetization of specified assets. The components based on Anixter's and ANTEC's
results provided for achievement of target upon reaching budgeted operating
earnings, pretax earnings and return on capital. These subcomponents were
weighted equally. The component based on monetization of assets provided for
achievement of target upon achieving a specified sum.
The Chief Executive Officer was awarded an incentive award of $656,250 for
1994. This represents 140% of his target bonus of 75% of his base salary. This
award was attributable to each financial objective being exceeded.
The target annual bonus opportunities for 1994 for the other executive
officers (other than Mr. Knox who does not participate in the incentive awards)
were set at the beginning of the year at percentages of salary, ranging from 60%
for the highest level officer to 30% for the lowest level, in the same manner as
the other components of compensation were determined as described above. Each of
these bonus opportunities were dependent on achievement of the 1994 financial
objectives described above. Because each of these financial objectives was
exceeded, the 1994 incentive awards exceeded target in the case of each officer.
Mr. Hill's incentive award was set at target because of his mid-year departure.
Option grants at twice the usual annual level were made in 1994 to the
Chief Executive Officer and Mr. Knox and at the usual annual level to another
executive officer. The multiple year grants were made because of the intention
of the Committee not to consider these optionees for further grants until 1996.
At the time of such grants, the targets for annual grants (without consideration
of previous grants) were determined for each officer by taking a percentage of
salary and dividing that amount by the value per share on the date of grant. The
percentages for the Chief Executive Officer and the other executive officers
were set by the Committee in the same manner as other components of compensation
were determined as described above. In lieu of stock options, Mr. Civgin was
granted shares of restricted stock at the level granted other executive officers
in 1992. These restricted shares were believed by the Committee to have a value
equal to approximately the value of the options these officers would otherwise
be granted over a three year period. These grants were made to provide more
incentive than options would provide for these officers to stay with the Company
through the changes it was completing.
In connection with the sale of the Company's interest in Railcar Trust No.
1992-1 over the period 1993-94, the Committee awarded Messrs. Dammeyer and Zell
each 70,000 restricted shares of Common Stock. In making those awards the
Committee considered the profitability of this particular transaction, the role
of the grantees in the beneficial transactions of the Company which had preceded
these transactions, the compensation which the grantees and other executives of
the Company had received during this entire period, and the fees and awards
received over the past few years by others in connection with similar large
transactions.
The components of executive officer compensation related to the performance
of the Company are the levels of the annual bonus awards as described above and
the ultimate value of long-term incentive awards as determined by the stock
market.
10
<PAGE> 13
It is the policy of the Company to structure its compensation in a manner
which will avoid the limitations imposed by the Omnibus Budget Reconciliation
Act of 1993 on the deductibility of executive compensation under Section 162(m)
of the Internal Revenue Code to the extent it can reasonably do so consistent
with its goal of retaining and motivating its executives in a cost effective
manner. Depending on the market value of the Common Stock and the level of their
compensation on the vesting dates, a portion of the value of the restricted
shares of Messrs. Dammeyer and Zell vesting in 1998 may be nondeductible because
of this limitation.
Bernard F. Brennan, Chairman
Sheli Z. Rosenberg
F. Philip Handy
11
<PAGE> 14
PERFORMANCE GRAPHS
Below is a graph comparing total shareholder return on the Company's Common
Stock over the last five years with a broad equity market index and a published
industry index as required by the rules of the Securities and Exchange
Commission. Also provided is a graph comparing total shareholder return on the
Company's Common Stock with the broad equity market index for the years since
1984 to reflect the time current management has been in place. (The industry
index being utilized by the Company is not available for the earlier years.)
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
<TABLE>
<CAPTION>
MEASUREMENT PERIOD S&P MISCEL-
(FISCAL YEAR COVERED) ITEL CORP S & P 500 LANEOUS
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 43.75 96.89 97.74
1991 85.80 126.42 123.30
1992 103.98 136.05 137.86
1993 127.27 149.76 158.66
1994 157.39 151.74 163.87
</TABLE>
COMPARISON OF TEN YEAR CUMULATIVE TOTAL RETURN*
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) ITEL CORP S&P 500
<S> <C> <C>
1984 100.00 100.00
1985 185.71 131.73
1986 254.76 156.32
1987 335.71 164.53
1988 350.00 191.85
1989 419.05 252.64
1990 183.33 244.79
1991 359.51 319.37
1992 435.70 343.71
1993 533.29 378.35
1994 659.47 383.35
</TABLE>
* ASSUMES $100 INVESTED AT END OF FIRST YEAR AND ANY DIVIDENDS REINVESTED.
COMPANIES CURRENTLY IN THE S&P MISCELLANEOUS INDEX ARE AIR TOUCH
COMMUNICATIONS; AMERICAN GREETINGS CORP.; CORNING INC.; DIAL CORP.; HARCOURT
GENERAL INC.; HARRIS CORP.; JOSTENS, INC.; MINNESOTA MINING & MFG. CO.;
PIONEER HI-BRED INTERNATIONAL, INC.; TRW INC.; WHITMAN CORP.
12
<PAGE> 15
SECTION 16(A) REPORTING DELINQUENCIES
Under the rules of the Securities and Exchange Commission, the Company is
required to report, based upon its review of copies of reports to the Securities
and Exchange Commission about ownership of or transactions in its stock
furnished to the Company and written representations of its directors and
officers about such ownership and transactions, that a report required to be
filed by Mr. Sloan upon becoming a director and a report to be filed by Harold
Haynes, a director, on the acquisition and disposition of Common Stock were
filed late.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of March 17, 1995, certain information
with respect to the Common Stock that may be deemed to be beneficially owned by
each director or nominee for director of Itel, the officers named in the Summary
Compensation Table and by all directors and officers as a group.
<TABLE>
<CAPTION>
STOCK
OPTIONS PERCENT
COMMON AND OF
STOCK WARRANTS(2) TOTAL CLASS
--------- ------- --------- ----
<S> <C> <C> <C> <C>
Name of Beneficial Owner(1)
Sir James Blyth...............................
Bernard F. Brennan............................ 5,000 25,000 30,000 *
Rod F. Dammeyer............................... 119,483 69,934 189,417 *
Robert E. Fowler, Jr..........................
F. Phillip Handy.............................. 42,200(3) 45,000 87,200 *
Harold Haynes................................. 40,000 40,000 *
Jerome Jacobson............................... 40,000 40,000 *
Melvyn N. Klein............................... 2,500(4) 55,000 57,500 *
John R. Petty................................. 35,000 35,000 *
John A. Pigott................................ 2,000 5,000 7,000 *
Sheli Z. Rosenberg............................ 27,641(5) 10,000 37,641(5) *
Samuel Zell................................... 7,233,704(6) 33,333 7,267,037(6) 25.4(7)
James E. Knox................................. 11,096 172,859 183,955 *
Gary M. Hill.................................. 100 100 *
John P. McNicholas............................ 500 500 *
Don Civgin....................................
All directors and executive officers as a
group including the above-named
persons....................................... 7,449,224 531,904 7,981,128 27.4(7)
</TABLE>
- ---------------
* Percentage of shares beneficially owned does not exceed one percent of the
class.
(1) Unless otherwise indicated, each person included in the group has sole
investment power and sole voting power with respect to the securities
beneficially owned by such person.
(2) The amounts shown in this column reflect shares of Common Stock subject to
warrants and stock options granted to officers and directors under the
1983, 1987, 1989 and 1992 Stock Plans that are exercisable within 60 days
of the date of this table.
(3) Includes 9,700 shares held in trust for Mr. Handy's minor children and of
which Mr. Handy disclaims beneficial ownership.
(4) Includes 2,000 shares held in trust for Mr. Klein's minor children and of
which Mr. Klein disclaims beneficial ownership.
(5) Mrs. Rosenberg is a co-trustee of the trust described in "Security Ownership
of Principal Stockholders" below and by reason thereof may be deemed to be
the beneficial owner of 7,126,120 shares of Common Stock held by that trust
and of the Common Stock held by the partnerships described in note (6)
below
13
<PAGE> 16
of which that trust is one of two general partners. Mrs. Rosenberg
disclaims any beneficial ownership of the shares of Common Stock held by
such trust and its partnerships.
(6) All but 70,000 of the shares of Common Stock shown in this table are owned
by partnerships of which a trust of which Mr. Zell is the trustee and
beneficiary is one of two general partners or managing general partners.
(See "Security Ownership of Principal Stockholders" below.) Mr. Zell
disclaims beneficial ownership of all of these shares of Common Stock.
(7) All warrants and options exercisable within 60 days of the date of this
table which may be deemed to be beneficially owned by the person or persons
for whom the calculation is being made are deemed to have been exercised
for the purpose of calculating this percentage.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS
The following table sets forth information as of March 18, 1994 with
respect to each person who is known by the management of Itel to be the
beneficial owner of more than 5% of the outstanding shares of Common Stock.
Unless otherwise indicated, the beneficial owner has sole voting and investment
power.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
TITLE NAME AND ADDRESS OF BENEFICIAL OF
OF CLASS BENEFICIAL OWNER OWNERSHIP CLASS
- ------------ --------------------------------------- ------------ -----
<S> <C> <C> <C>
Common Riverside Partners 5,616,917(1) 25.8%(6)
SZRL Investments 1,446,787(1)
Equity Holdings 100,000(1)
Robert H. and
Ann Lurie Trust 62,416(1)
Sheli Z. Rosenberg 37,641(1)
Samuel Zell 103,333(1)
Two North Riverside Plaza
Suite 600
Chicago, Illinois 60606
Common TIG Partners, L.P. 2,777,000(2) 9.7%
200 West Madison Street
Suite 3800
Chicago, Illinois 60606
Common The Equitable Companies Incorporated 1,808,367(3) 6.3%
787 Seventh Avenue
New York, New York 10019
Common Dietche & Field Advisers, Inc. 3,607,500(4) 12.6%
437 Madison Avenue
New York, New York 10022
Common FMR Corp. 3,344,200(5) 11.7%
82 Devonshire Street
Boston, Mass. 02109
</TABLE>
- ---------------
(1) Riverside Partners, SZRL Investments and Equity Holdings are partnerships,
the general partners or managing general partners of which are the Samuel
Zell Revocable Trust and the Robert H. and Ann Lurie Trust. Samuel Zell is
the beneficiary and trustee of the Samuel Zell Revocable Trust. Mrs. Lurie
is the beneficiary and Mmes. Lurie and Rosenberg are the co-trustees of the
Robert H. and Ann Lurie Trust. As a result, Mr. Zell and Mmes. Lurie and
Rosenberg may be deemed to be the beneficial owners of the shares of Common
Stock held by Riverside Partners, SZRL Investments and Equity Holdings. Mr.
Zell and Mmes. Lurie and Rosenberg disclaim beneficial ownership of the
stock owned by Riverside Partners, SZRL Investments and Equity Holdings and
Mrs. Rosenberg disclaims beneficial ownership of the Common Stock held by
the Robert H. and Ann Lurie Trust. The amounts shown include 43,333 shares
obtainable within 60 days of the date of this table by the exercise of
options. Substantially all of the shares owned by Riverside Partners, SZRL
Investments and Equity Holdings are pledged to various financial
institutions as collateral for loans to these entities. Under the various
loan agreements, the pledgees cannot vote or exercise any ownership rights
relating to the pledged shares or warrants unless there is an event of
default.
14
<PAGE> 17
(2) The general partner of TIG Partners, L.P. is PDA Corp. All of the issued and
outstanding capital stock of PDA Corp. is owned by Nicholas J. Pritzker.
(3) According to a Schedule 13G filed by The Equitable Companies Incorporated
("Equitable"), on behalf of its subsidiaries and Alpha Assurances I.A.R.D.
Mutuelle, Alpha Assurances Vie Mutuelle, AXA Assurances I.A.R.D. Mutuelle,
AXA Assurances Vie Mutuelle, and Uni Europe Assurance Mutuelle, and AXA,
all French companies directly or indirectly owning stock of Equitable,
Equitable and its subsidiaries (each of which makes independent voting and
investment decisions) may be deemed, as of December 31, 1994, to have sole
voting power for 1,804,417 shares, sole investment power for 1,808,217
shares and shared investment power for 150 shares.
(4) According to a Schedule 13G, dated January 19, 1995, Dietche & Field
Advisors, Inc. has only sole voting power for these shares.
(5) According to a Schedule 13G as of December 31, 1994, FMR Corp. has sole
voting power for 67,400 shares and sole investment power for 3,344,200
shares.
(6) All options exercisable within 60 days of the date of this table which may
be deemed to be beneficially owned by the person or persons for whom the
calculation is being made are deemed to have been exercised for the purpose
of calculating this percentage.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For a description of transactions between the Company and affiliates or
associates of Samuel Zell, chairman and director, and Sheli Rosenberg, director,
see "Compensation Committee Interlocks and Insider Participation."
For a description of transactions between the Company and Mr. Pigott, a
director, see "Compensation of Directors."
Mr. Knox, Senior Vice President, General Counsel and Secretary of Itel, is
a partner in the law firm of Mayer, Brown & Platt. The Company has retained and
intends to continue to retain Mayer, Brown & Platt to perform certain legal
services for the Company. Amounts paid in 1994 for these services were $664,000.
In connection with the sale of the Company's investment in Servicios Financieros
Quadrum, S.A. and Q-Tel, S.A. de C.V. ("Q-Tel"), Mr. Knox in October 1994
purchased, at the same price per share as that paid by the other investors who
bought the remaining 90% of the Q-Tel shares being sold by the Company,
1,100,000 shares of Q-Tel for $122,400. The determination of the price and the
ultimate purchasers for the Q-Tel shares was made by Q-Tel within the context of
the total transaction for the sale of Itel's investments in both companies for
$4.9 million to Q-Tel and its designees.
In July 1994, the Company paid Railcar Services Corporation ("RSC") $1
million for the agreement of RSC that the Company could sell the Company's
interest in Railcar Trust No. 1992-1 notwithstanding its partnership agreement
with RSC that prohibited such a sale. In March 1995, in a transaction in which
the Company was represented by its Chief Executive Officer, the Company
purchased RSC, the assets of which included a 1% interest in Railcar Trust No.
1992-1 and approximately $2.1 million in cash equivalents, including the $1
million previously received from the Company, for a total purchase price of
$4,000,000, including $600,000, $320,000, $180,000, $180,000 and $120,000 paid
to Messrs. Knox, Hill, Civgin, McNicholas and Meno, respectively, for their
interest in RSC.
For a description of the ownership of shares of Santa Fe Energy Resources,
Inc. by the Company and a partnership in which certain directors and officers of
the Company have an interest, see the Note to "Election of Directors."
PROPOSAL 1
APPROVAL OF MANAGEMENT
INCENTIVE PLAN
For the past several years, executive officers of the Company have earned
annual bonuses under a Management Incentive Plan (the "Plan") adopted each year
by Compensation Committee (the "Committee") of the Board of Directors. The
Committee has determined that the availability of the Plan for 1995 and
subsequent years should be subject to the approval of the stockholders at this
meeting so that the amounts
15
<PAGE> 18
paid pursuant to the Plan will not be subject to, or cause other compensation to
be subject to, the limitations imposed by the Omnibus Budget Reconciliation Act
of 1993 (the "Act") on the deductibility of executive compensation under Section
162(m) of the Internal Revenue Code.
The purpose of the Plan is to provide annual awards to the executives of
the Company for the achievement of the financial objectives of the Company each
year. The Chairman, President and other key officers of the Company are
designated each year as participants in the Plan by the Committee. The number of
participants in the Plan will vary from year to year. In 1994 six officers
participated in the Plan and in 1995 only two officers are expected to
participate in the Plan for the full year. Each executive participating in the
Plan is assigned a target by the Committee expressed as a percentage of that
executive's annual salary. The targets may be from 100% to 20%. The actual
awards may range from zero to 150% of the assigned target depending on the
achievement of annual financial objectives established by the Committee during
the first 90 days of each year.
The financial objectives may be operating, pretax or net earnings of the
Company, a subsidiary, a division or business unit thereof, or an other entity
where there is a significant investment and opportunity to influence
performance; return on capital, tangible or total, employed by any of these
entities as measured by any of these earnings; or the realization of specified
proceeds from specific dispositions or dispositions in general by any of these
entities. Which of those measures are utilized and the percent of target earned
by the levels of achievement of each financial objective, including the
weighting of the measures if there are multiple objectives, are determined by
the Committee when it establishes the financial objectives for the year. The
measures and weighting utilized for 1994 are discussed above under "Compensation
Committee Report on Executive Compensation."
The Committee is to be comprised of "outside" directors as provided by the
regulations under the Act. The Committee has the authority and responsibility
for the interpretation, administration and application of the provisions of the
Plan, and the Committee's interpretations of the Plan and all actions taken by
it and determinations made by it are binding on all persons. No Board or
Committee member will be liable for any determination, decision or action made
in good faith with respect to the Plan.
The Committee may amend or terminate the Plan at any time, provided,
however, that in no event can the Committee, after the period for establishing
Objectives for a year, adjust for that year any Targets, Objectives, or the
percent of Target earned by levels of achievement of each Objective in a manner
that would increase the amount of compensation that would otherwise be payable
absent such adjustment.
No participant in the Plan may be paid an annual award of more than
$750,000. Amounts earned under the Plan are determined and paid by the Committee
as soon as practicable after the end of each year. The Committee may establish
deferred arrangements for the payment of awards under the Plan and accrue
interest on such deferred amounts at rates not to exceed 140% of the U.S.
Treasury 10-year note rate in effect from time to time.
The amounts which will be paid pursuant to the Plan for 1995 are not
determinable at this time. Set forth below are the amounts paid under the Plan
for 1994.
16
<PAGE> 19
BENEFITS UNDER THE MANAGEMENT INCENTIVE PLAN
FOR ACHIEVEMENT OF FINANCIAL OBJECTIVES IN 1994
<TABLE>
<CAPTION>
TARGET % OF DOLLAR
NAME & PRINCIPAL POSITION % TARGET VALUE
- ------------------------- ------ ------ ----------
<S> <C> <C> <C>
Rod Dammeyer...................................................... 75% 140% $ 656,250
President & Chief Executive Officer
Samuel Zell....................................................... 60% 140% 210,000
Chairman
Gary Hill......................................................... 50% 100% 72,333
Sr. V.P.-Finance(1)
James Knox........................................................ N/A N/A N/A
Sr. V.P. Gen. Counsel & Secretary
John McNicholas................................................... 35% 150% 73,500
V.P.-Controller
Don Civgin........................................................ 35% 150% 73,500
V.P.-Treasurer
Executive Group
including the above............................................. $1,137,333
No other participants
</TABLE>
- ---------------
(1) Award was based on target because of mid-year departure.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 1
INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of its Audit Committee, has
selected Ernst & Young as independent auditors of Itel for 1995. Ernst & Young
(and predecessor firm) have audited Itel's financial statements since 1980.
Representatives of Ernst & Young, who are expected to be present at the meeting,
will be given an opportunity to make a statement if they so desire and to
respond to appropriate questions asked by stockholders.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1996 Annual
Meeting of Stockholders must be received by Itel at its principal offices by
December 2, 1995 in order to be considered for inclusion in Itel's Proxy
Statement and Proxy relating to the 1996 Annual Meeting of Stockholders.
17
<PAGE> 20
CONCLUSION
The Board of Directors knows of no other matters to be presented for
stockholder action at the meeting. However, if other matters do properly come
before the meeting, it is intended that the persons named in the proxies will
vote upon them in accordance with their best judgment.
March 31, 1995
BY ORDER OF THE BOARD OF DIRECTORS
[SIG]
JAMES E. KNOX, Secretary
18
<PAGE> 21
<TABLE>
<CAPTION>
Please mark
/X/ your votes
as this
------------------------
SHARES OF COMMON STOCK
<S> <C> <C> <C> <C> <C> <C>
FOR AGAINST ABSTAIN
1. Election of the following 2. Proposal 1 -
nominees as Directors: Approval of Management Incentive / / / / / /
Sir James Blyth, Brenard FOR WITHHOLD Plan
F. Brennan, Rod F. Dammeyer, all nominees AUTHORITY
Robert E. Fowler, Jr., 3. In their discretion, such other
F. Phillip Handy, Melvyn / / / / matters as properly may come
N. Klein, John R. Petty, before the meeting or at any
John A. Pigott, Sheli Z. adjournment(s) therefore.
Rosenberg, Stuart M. Sloan
and Samuel Zeli.
PLEASE CHECK BOX IF YOU
Withhold for the following only: INTEND TO BE PRESENT AT MEETING / /
(Instruction: Write the name of the nominee(s) from
whom you are withholding your vote in this space.) COMMENT/ADDRESS CHANGE
Please mark this box if you have
written comments/address change / /
on the reverse side.
Dated: , 1995
----------------------------------------------
---------------------------------------------------------
(Signature of Stockholder)
---------------------------------------------------------
(Signature if held jointly)
IMPORTANT: Please date this proxy and sign exactly as your name
appears hereon. If stock is held jointly, both holders should
sign. Executors, administrators, trustees, guardians and others
signing in a representative capacity should give full title.
PLEASE MARK, SIGN DATE, AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT TO THE COMPANY
PLEASE SIGN AND RETURN YOUR PROXY BY
TEARING OFF THE TOP PORTION OF THE SHEET
AND RETURNING IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE
<PAGE> 22
PROXY SOLICITED BY AND ON BEHALF OF
THE BOARD OF DIRECTORS OF
ITEL CORPORATION
The undersigned hereby appoints Rod F. Dammeyer, Dennis J. Letham and
James E. Knox and each of them (with full power of substitution in each)
proxies of the undersigned to vote at the Annual Meeting of Stockholders of
Itel Corporation to be held at 10:00 A.M., Central time, May 4, 1995, in the
Market Room, upper lobby, at 30 South Wacker Drive, Chicago, Illnois, and at
any adjournments thereof, all of the shares of Common Stock of Itel
Corporation in the name of the undersigned on the record date.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED STOCKHOLDER. UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF ALL NOMINEES AND FOR APPROVAL OF THE MANAGEMENT
INCENTIVE PLAN.
PLEASE SIGN AND DATE THE PROXY CARD ON THE REVERSE SIDE.
_________________________________________________________________________
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE |
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FOLD AND DETACH HERE
