<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / 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>
EXPEDITORS INTERNATIONAL
OF WASHINGTON, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
WEDNESDAY, MAY 17, 1995
To the Shareholders of Expeditors
International of Washington, Inc.
Notice is hereby given that the Annual Meeting of Shareholders of EXPEDITORS
INTERNATIONAL OF WASHINGTON, INC. (the "Company") will be held at 2:00 in the
afternoon, on Wednesday, May 17, 1995, at the Company's corporate headquarters
at 19119 - 16th Avenue South, Seattle, Washington, for the following purposes:
(1) To elect six (6) directors, each to serve until the next annual meeting
of shareholders or until his successor is elected and qualified; and
(2) To transact such other business as may properly come before the meeting.
Shareholders of record on the books of the Company at the close of business
on March 27, 1995, will be entitled to notice of and to vote at the meeting and
any adjournment thereof.
By Order of the Board of Directors
[SIGNATURE]
Jeffrey J. King
SECRETARY
Seattle, Washington
April 17, 1995
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE SIGN, DATE
AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED STAMPED AND ADDRESSED
ENVELOPE. THIS WILL ENSURE A QUORUM AT THE MEETING. THE GIVING OF THE PROXY WILL
NOT AFFECT YOUR RIGHT TO VOTE AT THE MEETING IF THE PROXY IS REVOKED IN THE
MANNER SET FORTH IN THE ACCOMPANYING PROXY STATEMENT.
<PAGE>
EXPEDITORS INTERNATIONAL
OF WASHINGTON, INC.
19119 16TH AVENUE SOUTH
SEATTLE, WASHINGTON 98188
------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 17, 1995
INFORMATION REGARDING PROXIES
This proxy statement and the accompanying form of proxy are furnished in
connection with the solicitation of proxies by the Board of Directors of
Expeditors International of Washington, Inc. (the "Company") for use at the
annual meeting of shareholders (the "Annual Meeting") to be held at the
Company's corporate headquarters at the above address on Wednesday, May 17,
1995, at 2:00 p.m. local time, and at any adjournment or adjournments thereof.
Only shareholders of record on the books of the Company at the close of business
on March 27, 1995 (the "Record Date") will be entitled to notice of and to vote
at the meeting. It is anticipated that these proxy solicitation materials and a
copy of the Company's 1994 Annual Report to Shareholders will be mailed to
shareholders on or about April 17, 1995.
If the accompanying form of proxy is properly executed and returned, the
shares represented thereby will be voted in accordance with the instructions
specified thereon. In the absence of instructions to the contrary, such shares
will be voted for all of the nominees for the Company's Board of Directors
listed in this proxy statement and in the form of proxy. Any shareholder
executing a proxy has the power to revoke it at any time prior to the voting
thereof on any matter (without, however, affecting any vote taken prior to such
revocation) by delivering written notice to the Secretary of the Company, by
executing and delivering to the Company another proxy dated as of a later date
or by voting in person at the meeting.
VOTING SECURITIES AND PRINCIPAL HOLDERS
The only outstanding voting securities of the Company are shares of common
stock, $.01 par value (the "Common Stock"). As of the Record Date, there were
11,945,205 shares of Common Stock issued and outstanding, and each such share is
entitled to one vote at the Annual Meeting. The presence in person or by proxy
of holders of record of a majority of the outstanding shares of Common Stock is
required to constitute a quorum for the transaction of business at the Annual
Meeting. Shares of Common Stock underlying abstentions and broker non-votes will
be considered present at the Annual Meeting for the purpose of determining
whether a quorum is present.
Under Washington law and the Company's charter documents, if a quorum is
present, the six nominees for election to the Board of Directors who receive the
greatest number of votes cast by persons present in person at the Annual Meeting
or represented by proxy shall be elected Directors. Abstentions and broker
non-votes will have no effect on the election of directors.
Proxies and ballots will be received and tabulated by the First Interstate
Bank of Washington, an independent business entity not affiliated with the
Company.
1
<PAGE>
The Common Stock is listed for trading on the NASDAQ National Market. The
last sale price for the Common Stock, as reported by NASDAQ on March 31, 1995,
was $21.00 per share.
The following table sets forth information, as of March 27, 1995, with
respect to all shareholders known by the Company to be beneficial owners of more
than five percent of its outstanding Common Stock. Except as noted below, each
person has sole voting and dispositive powers with respect to the shares shown.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OWNERSHIP CLASS
- -------------------------------------------------------------------------------- --------------------- -----------
<S> <C> <C>
1,148,900 9.62%
The Prudential Insurance Company of America (1).................................
Prudential Plaza
Newark, New Jersey 07102-3777
1,052,600 8.81%
RCM Capital Management (2)......................................................
Four Embarcadero Center
Suite 2900
San Francisco, CA 94111
805,200 6.74%
FMR Corporation (3).............................................................
82 Devonshire Street
Boston, MA 02109
800,000 6.70%
Wanger Asset Management, L.P. (4)...............................................
227 West Monroe Street,
Suite 3000
Chicago, IL 60606
657,400 5.50%
First Pacific Advisors, Inc. (5)................................................
11400 W. Olympic Boulevard
Suite 120
Los Angeles, CA 90064
<FN>
- ------------------------
(1) The holding shown is as of December 31, 1994, according to a Schedule 13G
dated January 31, 1995 filed by The Prudential Insurance Company of America
("Prudential"), an insurance company, broker-dealer and investment advisor.
Prudential reports that it has sole voting and dispositive power with
respect to 376,200 shares and shared voting and dispositive power with
respect to 772,700 shares. Prudential further reports that 1,139,900 of
these shares are held for the benefit of its clients by its separate
accounts, externally managed accounts, registered investment companies
and/or affiliates and that the combined holdings of these entities were
reported for purpose of administrative convenience.
(2) The holding shown is as of December 31, 1994, according to a joint
statement on Schedule 13G dated February 8, 1995 filed by RCM Capital
Management ("RCM"), an investment advisor; RCM Limited L.P. ("RCM
Limited"), the General Partner of RCM; and RCM General Corporation ("RCM
General"), the General Partner of RCM Limited. RCM, RCM Limited, and RCM
General report that, as a group, they have sole voting and dispositive
power with respect to 939,600 and 1,037,600 of these shares, respectively,
including sole dispositive power with respect to 636,100 of these shares
which are held by RCM Capital Funds, Inc., an investment company for which
RCM serves as investment advisor. A Schedule 13G dated February 13, 1995
was also filed by RCM Capital Funds, Inc. with respect to such 636,100
shares.
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
(3) The holding shown is as of December 31, 1994, according to a Schedule 13G
dated February 13, 1995 filed by FMR Corp., a parent holding company on
behalf of itself and Fidelity Management & Research Company, a wholly-owned
subsidiary of FMR Corp. and an investment advisor ("Fidelity Management");
Fidelity Management Trust Company, a wholly-owned subsidiary of FMR Corp.
and a bank; Fidelity International Limited; and Edward C. Johnson 3d
("Johnson") in his individual capacity and as a controlling shareholder of
FMR Corp. Fidelity Management reports that it is the beneficial owner of
163,900 shares. FMR Corp. and Johnson report that they have sole
dispositive power with respect to 163,900 shares. Fidelity Management Trust
Company reports that it is the beneficial owner of 624,300 shares. Johnson
and FMR Corp. report that they have sole voting and dispositive power over
624,300 of these shares. Fidelity International Limited reports beneficial
ownership of 17,000 shares.
(4) The holding shown is as of December 31, 1994, according to a Schedule 13G
dated February 15, 1995 filed jointly by Wanger Asset Management, Ltd.
("WAM Ltd."), for itself and as sole general partner for Wanger Asset
Management, L.P. ("WAM") and by Ralph Wanger in his individual capacity as
principal stockholder of WAM, Ltd. WAM serves as investment advisor to
Acorn Investment Trust, Series Designated Acorn Fund (the "Trust"), and
various of WAM's limited partners and employees are also officers and
trustees of the Trust. WAM, as investment advisor, has shared voting power
and shared dispositive power with respect to all of these shares, including
600,000 of these shares which are held by the Trust. A Schedule 13G, dated
February 8, 1995, was also filed by the Trust with respect to such 600,000
shares, disclosing shared voting and dispositive power with respect to all
600,000 such shares.
(5) The holding shown is as of December 31, 1994, according to a Schedule 13G
dated January 26, 1995, filed by First Pacific Advisors, Inc. ("FPA"), an
investment advisor. FPA reports that it has shared voting and dispositive
power with respect to 411,400 and 657,400 of these shares, respectively.
</TABLE>
PROPOSAL 1 -- ELECTION OF DIRECTORS
NOMINEES
A Board of Directors consisting of six directors will be elected at the
Annual Meeting to hold office until the next annual meeting of shareholders or
until their successors are elected and qualified. The Board of Directors has
unanimously approved the nominees named below, all of whom are members of the
current Board of Directors. Unless otherwise instructed, it is the intention of
the persons named in the accompanying form of proxy to vote shares represented
by properly executed proxies for the six nominees of the Board of Directors
named below. Although the Board of Directors anticipates that all of the
nominees will be available to serve as directors of the Company, should any one
or more of them not accept the nomination, or otherwise be unwilling or unable
to serve, it is intended that the proxies will be voted for the election of a
substitute nominee or nominees designated by the Board of Directors.
3
<PAGE>
The following table lists the names and ages, and the amount and nature of
the beneficial ownership of Common Stock of each nominee, each of the Named
Executive Officers, as described in the Summary Compensation Table, and all
directors and executive officers as a group at March 27, 1995. Except as noted
below, each person has sole voting and dispositive powers with respect to the
shares shown.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME AGE OWNERSHIP CLASS
- ------------------------------------------------------------------------------ --- ------------------ -----------
<S> <C> <C> <C>
Nominees:
Peter J. Rose (1)......................................................... 52 270,120 2.26%
Kevin M. Walsh (1)........................................................ 44 286,160 2.40%
James L.K. Wang (2)(3).................................................... 47 156,052 1.31%
James J. Casey (4)........................................................ 62 7,050 *
Dan P. Kourkoumelis (4)................................................... 44 4,000 *
John W. Meisenbach (4).................................................... 58 49,000 *
Additional Named Executives:
Glenn M. Alger (5)........................................................ 38 155,322 1.30 %
Michael R. Claydon (1).................................................... 47 61,486 *
All directors and executive officers as a group (15 persons) (2)(6)........... 1,145,103 9.59 %
<FN>
- ------------------------
* Less than 1%
(1) Includes 60,000 shares subject to purchase options exercisable within sixty
days.
(2) Includes an aggregate of 31,000 shares held by Mr. Wang for the benefit of
the following individuals: Johnny Chang (15,000 shares), M.F. Chi (8,000
shares), Michael Wong (1,000 shares) and Tammy Han (7,000 shares), with
respect to which Mr. Wang disclaims beneficial ownership. Mr. Wang and each
of these beneficial owners are employees of E.I. Freight (Taiwan) Ltd., the
Company's exclusive agent in Taiwan.
(3) Includes 20,000 shares subject to purchase options exercisable within sixty
days.
(4) Includes 4,000 shares subject to purchase options exercisable within sixty
days.
(5) Includes 70,200 shares subject to purchase options exercisable within sixty
days.
(6) Includes 402,200 shares subject to purchase options exercisable within
sixty days.
</TABLE>
------------------------
All directors hold office until the next annual meeting of shareholders of
the Company and until their successors are elected and qualified.
Peter J. Rose has served as a director and Vice President of the Company
since July 1981. Mr. Rose was elected a Senior Vice President of the Company in
May 1986, Executive Vice President in May 1987, President and Chief Executive
Officer in October 1988, and Chairman and Chief Executive Officer in May 1991.
Kevin M. Walsh has served as a director and Vice President of the Company
since July 1981. Mr. Walsh was elected a Senior Vice President of the Company in
May 1986, Executive Vice President in December 1989, and President and Chief
Operating Officer in May 1991.
4
<PAGE>
James L.K. Wang has served as a director and the Managing Director of
Expeditors International Taiwan Ltd., the Company's former exclusive Taiwan
agent, since September 1981. Mr. Wang's employment agreement with the Company
has been assigned to the Company's current exclusive Taiwan agent, E.I. Freight
(Taiwan), Ltd.("EIFT"). In October 1988, Mr. Wang became a director and Director
- -- Far East of the Company. Mr. Wang has been nominated for reelection to the
Board of Directors pursuant to a contractual undertaking made by the Company in
connection with the acquisition by the Company in 1984 of its Hong Kong and
Singapore subsidiaries and all of the assets of the Company's exclusive Taiwan
agent. See "Executive Compensation -- Employment Contracts" and "Certain
Transactions."
James J. Casey became a director of the Company in May 1984. From May 1987
to December 1989, Mr. Casey was the Executive Vice President of Avia Group
International, a subsidiary of Reebok and retailer of athletic shoes and
sporting apparel. From December 1985 to April 1987, Mr. Casey was the Chief
Operating Officer of Starbucks Coffee and Tea, a distributor of premium coffees
and teas. From 1978 to November 1985, Mr. Casey was employed by Eddie Bauer,
Inc., a subsidiary of General Mills and retailer of high quality recreational
and sporting apparel and equipment, in various management capacities including,
most recently, President -- Direct Marketing.
Dan P. Kourkoumelis became a director of the Company in March 1993. Since
1967, Mr. Kourkoumelis has been employed in various positions by Quality Food
Centers, Inc., an independent supermarket chain. He was appointed Executive Vice
President in 1983 and Chief Operating Officer in 1987, and has served as
President and Chief Operating Officer since 1989 and as a director since 1991.
In 1994, Mr. Kourkoumelis became a member of the Board of Directors of Shurgard
Storage Centers, Inc., a self storage industry Real Estate Investment Trust.
John W. Meisenbach became a director of the Company in November 1991. Since
1972, Mr. Meisenbach has been the President and sole shareholder of Meisenbach
Capital Management, a financial services company. From 1983 through 1993, Mr.
Meisenbach served on the Board of Directors of Pioneer Bank, a savings bank,
and, since 1983, has served on the Board of Directors of Price/Costco, Inc., a
wholesale membership store chain.
BOARD AND COMMITTEE MEETINGS
The Board of Directors of the Company held one meeting during the year ended
December 31, 1994, and transacted business on fifteen occasions during the year
by unanimous written consent.
The Board of Directors has an Audit Committee which consists of Messrs.
Casey, Kourkoumelis, and Meisenbach. The function of the Audit Committee is to
meet with the internal financial staff of the Company and the independent
certified public accountants engaged by the Company to review (i) the scope and
findings of the annual audit, (ii) quarterly financial statements, (iii)
accounting policies and procedures and the Company's financial reporting, and
(iv) the internal controls employed by the Company. The Audit Committee also
recommends to the Board of Directors the independent public accountants to be
selected to audit the Company's annual financial statements and reviews the fees
charged for audits and for any non-audit engagements. The Committee's findings
and recommendations are reported to management and the Board of Directors for
appropriate action. The Audit Committee held four meetings during 1994.
The Board of Directors has a Compensation Committee which consists of
Messrs. Casey, Kourkoumelis, and Meisenbach. The function of the Compensation
Committee is to consider and act upon management's recommendations to the Board
of Directors on salaries, bonuses and other forms of compensation
5
<PAGE>
for the Company's executive officers and certain other key employees. The
Compensation Committee has been appointed by the Board of Directors to
administer the Company's stock option plans. The Compensation Committee held two
meetings during 1994, and transacted business on five occasions during the year
by unanimous written consent.
The Board of Directors does not have a standing Nominating Committee.
Each director attended at least 75% of the aggregate of the total number of
Board of Directors meetings and meetings of committees of the Board of Directors
on which he served, except Mr. Meisenbach who, due to foreign travel
commitments, was only able to attend two of the four meetings of the Audit
Committee.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company operates in the highly-competitive international transportation
services industry. The Company believes that the quality of its service depends
upon the quality of its officers and employees. In order to succeed, the Company
believes that it must be able to attract and retain qualified executives.
The Compensation Committee of the Board of Directors was established to
develop and implement compensation policies, plans and programs which seek to:
- attract and retain key executives critical to the long-term success of the
Company,
- enhance the profitability of the Company, and thus shareholder value, by
aligning closely the financial interests of the Company's senior managers
with those of its shareholders, and
- support the short- and long-term strategic goals and objectives of the
Company.
Compensation for each of the Named Executive Officers, as well as other
senior executives, consists of a base salary, annual incentive bonus
compensation, and long-term incentives in the form of stock options. The
Committee considers the competitiveness of the entire compensation package of an
executive officer relative to that paid by similar companies when determining
base salaries, percentage allocation of the bonus program, and grant of stock
options. The Company's objective is to offer a total compensation package which
gives the executive the opportunity to be paid at a level which is superior to
that offered by the Company's competitors in the international transportation
industry.
BASE SALARY. Throughout its history, the Company has followed the policy of
offering its officers and other key managers a compensation package which is
weighted towards incentive-based compensation. Accordingly, the Company believes
that annual base salaries of its executive officers are generally set well below
competitive levels paid to senior executives with comparable qualifications,
experience and responsibilities at other comparably-sized companies engaged in
similar businesses as the Company. This belief is based on the general knowledge
of the Committee and management of compensation practices in the industry and,
in part, on a review of compensation disclosures in the proxy statements of such
comparably-sized companies, including certain companies in the industry group
index shown in the stock performance graph elsewhere in this proxy statement.
Base salaries for executives are reviewed by the Compensation Committee on an
annual basis as part of an overall examination of compensation and the base
salary may be changed based on the Committee's decision that an individual's
contribution, duties, and responsibilities to the Company has changed. The
Compensation Committee believes that the total compensation of the
6
<PAGE>
Chairman and Chief Executive Officer should be closely linked to operating
income, and as a result, the fixed portion (represented by base salary) of the
compensation package for this position has remained at the current level since
June 1, 1987.
INCENTIVE COMPENSATION. The Company has maintained an incentive bonus
program for executive officers since inception of the Company. In January 1985,
the Compensation Committee fixed the aggregate amount of bonuses available under
the program at ten percent of pre-bonus operating income. Factors considered in
determining the percentage to be made available for distribution included the
number of executives participating in the bonus program, as well as the level of
Company operations. The Compensation Committee also considered the aggregate
amount of discretionary bonuses paid to executive officers in each of the years
from 1982 to 1984, which approximated ten percent of operating income during
those years. The Committee believes that setting the aggregate executive bonus
at a fixed percentage of operating income, with actual increases in bonuses paid
tied to actual increases in operating income, provides both a better incentive
to the executives than discretionary bonuses or targeted performance goals, and
a more direct relationship between the executives' incentive compensation and
shareholders' return. By placing emphasis on growth in operating income, any
change in compensation is directly proportional to the profit responsibility of
the executive team.
All officers of the Company are eligible for inclusion in the executive
officer bonus program, although inclusion in the program and the allocation of
the aggregate amount among individual executives is determined at the beginning
of each year at the discretion of senior management. Annually the Compensation
Committee reviews the compensation package for each executive officer, including
the allocation of incentive compensation. The percentage of the executive bonus
pool allocated to the Chairman and Chief Executive Officer has changed
periodically to allow increased allocations to other executives and as a result
of a change in the total number of participating executives. In 1994, the
portion of the executive bonus pool allocated to the Chairman and Chief
Executive Officer decreased by four percent due to an increase in the number of
participating executives.
The incentive compensation program adopted by the Compensation Committee for
senior executives mirrors the compensation program that has been in place in
each operating office since the inception of the Company. The Company has
maintained a consistent compensation philosophy: offer a confident and capable
individual a modest base salary and the opportunity to share in a fixed and
determinable percentage of the operating profit generated by the business unit
under his or her control. Growth in individual compensation will only occur in
conjunction with an increase in the contribution to Company profits. Along with
the branch manager, key department managers and supervisors share in the
distribution of this branch bonus pool.
Key elements of this compensation philosophy include encouraging each
manager to think and act as an entrepreneur, establishing compensation levels
that are not perceived as being arbitrary, developing financial rewards that are
team oriented, and closely aligning the interests of the individual employee
with the goals of the Company and returns to the shareholders.
LONG-TERM INCENTIVES. The Compensation Committee believes that stock option
grants afford a desirable, long-term compensation method because they closely
ally the interests of management with shareholder value.
In 1990, the Compensation Committee granted to the Chairman and Chief
Executive Officer, along with other executive officers, including the Named
Executive Officers, certain non-qualified stock options
7
<PAGE>
with provisions for reload options which would automatically be granted upon the
voluntary exercise of the original options within certain specified time
periods. In February 1993, the Chairman and Chief Executive Officer, along with
the other executive officers holding options with reload provisions, voluntarily
waived their rights to, and released the Company from any obligation for, the
automatic reload of stock options. Future grants of stock options to any
employee, including the Chairman and Chief Executive Officer and other named
officers, will be based on recommendations by senior management, and a detailed
review and approval by the Compensation Committee. Prior to the grant of stock
options, the Compensation Committee reviews factors such as an employee's
current position, time with the Company, and any previous stock option grants.
POST EMPLOYMENT -- PERSONAL SERVICES AGREEMENT. During 1994 the
Compensation Committee negotiated an amendment to the employment contract of the
Chairman and Chief Executive Officer calling for post employment personal
services for a minimum of sixty days per year including up to twenty days of
business travel annually. Subject to earlier termination as described below, the
personal services agreement will run for a period of ten years or until age
seventy whichever comes first. In exchange, the Chairman and Chief Executive
Officer will receive an annual payment initially equal to the base salary
received for the most recent twelve months of service. Payments after the first
year will be indexed for changes to the CPI or similar index. In the event that
retirement occurs prior to age sixty, the initial annual compensation shall be
reduced by four percent for each year, or fraction thereof, below age sixty. If
the Chairman and Chief Executive Officer were to retire in 1995 the initial
annual payment would be $74,800 and the agreement would run for ten years unless
terminated as provided below. The amendment also extends coverage under the
Company standard benefits package as amended from time to time. The Chairman and
Chief Executive Officer is prohibited from competing with the Company during the
term of the personal services agreement. The obligation of the Company for such
compensation is subject to termination in the event of death, disability or
willful failure to perform and would also terminate in the event that employment
was terminated with cause.
In making these changes, the Compensation Committee recognizes the key role
that continuity in personal relationships play in the international service
business. This agreement calling for personal services assures the Company of
the post retirement involvement and loyalty of the Chairman and Chief Executive
Officer. In addition, this agreement anticipates and facilitates the eventual
orderly transition from one Chief Executive Officer to another while at the same
time providing a modest incentive for the incumbent to at least delay retirement
until at least age sixty.
Under the Omnibus Budget Reconciliation Act of 1993, beginning in 1994, the
federal income tax deduction for certain types of compensation paid to the Chief
Executive Officer and four other most highly compensated officers of publicly
held companies is limited to $1,000,000 per officer per fiscal year unless such
compensation meets certain requirements. The Committee is aware of this
limitation and believes that the deductibility of compensation payable in 1995
will not be affected by this limitation.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
James J. Casey
Dan P. Kourkoumelis
John W. Meisenbach
8
<PAGE>
SUMMARY COMPENSATION TABLE
The following table shows compensation paid by the Company for services
rendered during fiscal years 1994, 1993, and 1992 to the person who was the
Chief Executive Officer at the end of fiscal 1994 and the four other most highly
compensated executive officers of the Company whose salary and bonus exceeded
$100,000 in 1994 (the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ---------------
NAME AND ---------------------- AWARDS ALL OTHER
PRINCIPAL POSITION FISCAL YEAR SALARY BONUS (1) OPTIONS # COMPENSATION (2)
- ------------------------------------------------ ----------- ---------- ---------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
Peter J. Rose, 1994 $ 110,000 $ 448,961 -0- $ 1,500
Chairman and Chief Executive Officer 1993 110,000 357,524 -0- 1,500
1992 110,000 335,679 -0- 1,500
Kevin M. Walsh, 1994 110,000 448,961 -0- 1,500
President and Chief 1993 110,000 357,524 -0- 1,500
Operating Officer 1992 110,000 335,679 -0- 1,500
James L.K. Wang, 1994 92,179 522,492 -0- -0-
Director -- Far East 1993 94,988 266,836 -0- -0-
1992 94,524 173,426 -0- -0-
Glenn M. Alger, 1994 96,000 322,292 5,000 1,500
Senior Vice President 1993 96,000 255,389 -0- 1,500
1992 96,000 239,771 -0- 1,500
Michael R. Claydon, 1994 118,865 224,887 5,000 -0-
Director -- Europe 1993 116,192 170,189 -0- -0-
1992 135,750 159,847 -0- -0-
<FN>
- ------------------------
(1) These amounts were paid pursuant to bonus programs in place since the
inception of the Company. Since 1985, the Compensation Committee of the
Board of Directors has set the aggregate amount of executive bonuses at ten
percent of pre-bonus operating income. Since the inception of the Company,
Mr. Wang's bonus has been paid from a share in the Company standard bonus
program for operating units in the Far East under Mr. Wang's supervision.
(2) These amounts represent the Company's matching contributions of $.50 for
each $1.00 of employee savings, up to a maximum annual Company contribution
of $1,500 per qualified employee, under an employee savings plan intended
to qualify under Section 401(k) of the Internal Revenue Code, as amended.
</TABLE>
9
<PAGE>
OPTION GRANT TABLE
The following table sets forth certain information regarding options granted
during 1994 to the Named Executive Officers.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR (1)
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
-------------------------------------------------------- ANNUAL RATES OF
NUMBER OF STOCK PRICE
SECURITIES % OF TOTAL APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OR OPTION TERM (3)
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION --------------------
NAME GRANTED (1) FISCAL YEAR ($/SH) (3) DATE (2) 5% ($) 10% ($)
- -------------------------------------------- ------------- --------------- ----------- ----------- --------- ---------
Peter J. Rose............................... -- -- -- -- -- --
Kevin M. Walsh.............................. -- -- -- -- -- --
James L.K. Wang............................. -- -- -- -- -- --
Glenn M. Alger.............................. 5,000 2.8 17.00 5/18/2004 53,450 135,450
Michael R. Claydon.......................... 5,000 2.8 17.00 5/18/2004 53,450 135,450
<FN>
- ------------------------
(1) The above grants were made on May 18, 1994 pursuant to the Company's 1985
Stock Option Plan (the "1985 Plan"). All options granted in fiscal 1994 are
subject to a vesting schedule. Subject to earlier vesting under the
conditions set forth in the 1985 Plan, fifty percent of the options will be
exercisable commencing three years from the date of the grant and
twenty-five percent will be exercisable four and five years after the date
of the grant, respectively. See "Change in Control Arrangements."
(2) All options expire ten years after the date of the grant.
(3) Realizable values are reported net of the option exercise price and
ignoring tax consequences. The dollar amounts under these columns are the
result of calculations using the standard 5% and 10% rates set by the
Securities and Exchange Commission. Actual gains, if any, on stock option
exercises are dependent on future appreciation in value of all outstanding
Common Stock. The potential realizable value calculation assumes that the
option holder remains employed through the vesting period and then waits
until the end of the option term to exercise the option.
</TABLE>
10
<PAGE>
OPTION EXERCISES AND YEAR-END OPTION VALUE TABLE
The following table sets forth certain information as of December 31, 1994
regarding options held by the Named Executive Officers.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUE
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1994 DECEMBER 31, 1994 (2)
ACQUIRED ON VALUE -------------------------- ---------------------------
NAME EXERCISE REALIZED (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ ----------- ----------- ----------- ------------- ----------- --------------
Peter J. Rose................. -0- -0- 60,000 20,000 $ 630,000 $ 210,000
Kevin M. Walsh................ -0- -0- 60,000 20,000 $ 630,000 $ 210,000
James L.K. Wang............... 40,000 217,600 20,000 20,000 $ 210,000 $ 210,000
Glenn M. Alger................ -0- -0- 70,200 27,500 $ 743,166 $ 256,550
Michael R. Claydon............ -0- -0- 60,000 15,000 $ 759,300 $ 128,750
<FN>
- ------------------------
(1) Represents the difference between the closing price of the Company's Common
Stock on the date of exercise and the exercise price of the options,
multiplied by the number of options exercised.
(2) This value is calculated based on the closing price of the Company's Common
Stock at December 30, 1994, less the exercise price multiplied by the
number of in-the-money options held and ignoring tax consequences. There is
no guarantee that if and when these options are exercised they will have
this value.
</TABLE>
DIRECTORS' COMPENSATION
Currently directors who are not employees of the Company are each paid an
annual retainer fee of $7,500 as well as $750 for each Board of Directors and
committee meeting attended. Pursuant to the 1993 Directors Non-Qualified Stock
Option Plan, each director who is not an employee of the Company and who is
elected to office at the annual meeting of shareholders of any year will, on the
first business day of the immediately succeeding month, be automatically granted
an option to purchase 2,000 shares of Common Stock at the fair market value of
the stock on that date.
11
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The following graph shows a five year comparison of cumulative returns for
the Company's Common Stock, the NASDAQ Stock Market (U.S. and Foreign) and
NASDAQ Trucking and Transportation Stock Index. The total cumulative return on
investment (change in month-end stock price plus reinvested dividends) for each
of the periods for the Company, the NASDAQ Stock Market (U.S. and Foreign) and
the NASDAQ Trucking and Transportation Index is based on the stock price or
index at December 29, 1989.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPANY MARKET INDEX PEER INDEX
<S> <C> <C> <C>
12/29/89 100 100 100
1/31/90 99.048 91.755 89.39
2/28/90 99.524 93.977 93.444
3/30/90 93.333 96.636 95.167
4/30/90 89.524 93.387 91.442
5/31/90 95.238 102.432 96.17
6/29/90 98.095 103.247 95.543
7/31/90 94.762 98.313 94.166
8/31/90 61.905 85.993 79.519
9/28/90 60 78.003 73.268
10/31/90 60.952 74.893 70.758
11/30/90 61.905 81.539 73.003
12/31/90 70 85.017 77.657
1/31/91 83.81 94.069 88.247
2/28/91 94.286 103.077 93.542
3/28/91 98.095 110.001 98.486
4/30/91 95.238 110.683 98.061
5/31/91 102.857 115.79 104.681
6/28/91 104.762 109.017 101.405
7/31/91 111.429 115.42 103.351
8/30/91 120.952 120.925 106.443
9/30/91 100.952 121.524 105.799
10/31/91 100 125.543 109.227
11/29/91 102.857 121.363 104.312
12/31/91 118.095 135.708 112.891
1/31/92 121.905 143.84 124.424
2/28/92 128.571 147.044 131.598
3/31/92 128.571 140.239 129.583
4/30/92 109.048 134.246 131.301
5/29/92 123.81 135.969 131.092
6/30/92 123.81 130.631 123.275
7/31/92 127.619 134.991 122.928
8/31/92 119.048 130.957 118.973
9/30/92 118.095 135.572 122.172
10/30/92 118.095 140.648 126.741
11/30/92 115.238 151.664 133.219
12/31/92 118.095 157.359 138.151
1/29/93 129.524 162.043 142.587
2/26/93 111.429 156.228 142.226
3/31/93 110.476 160.944 148.656
4/30/93 95.238 154.503 147.158
5/28/93 105.632 163.799 151.187
6/30/93 101.33 164.852 151.686
7/30/93 97.506 165.143 154.295
8/31/93 101.33 173.764 158.684
9/30/93 109.933 178.59 158.335
10/29/93 119.493 181.693 163.737
11/30/93 105.539 175.973 164.295
12/31/93 115.134 181.153 167.842
1/31/94 123.769 186.922 178.822
2/28/94 145.836 184.94 178.761
3/31/94 136.242 173.591 167.803
4/29/94 121.85 171.316 166.635
5/31/94 134.724 171.541 161.417
6/30/94 132.799 164.794 155.303
7/29/94 138.573 168.69 162.622
8/31/94 155.895 178.944 167.037
9/30/94 153.97 178.701 160.027
10/31/94 159.744 181.781 159.72
11/30/94 167.837 175.456 149.469
12/30/94 167.837 175.253 152.198
</TABLE>
12
<PAGE>
EMPLOYMENT CONTRACTS
The Company has entered into employment agreements with the following Named
Executive Officers which provide for the base salaries and expiration dates
indicated below:
<TABLE>
<CAPTION>
CURRENT BASE
NAME AND CURRENT POSITION ANNUAL SALARY EXPIRATION DATE
- ------------------------------------------------------ --------------- ----------------
<S> <C> <C>
Peter J. Rose ........................................ US$110,000 May 1995
Chairman and Chief Executive Officer
Kevin M. Walsh ....................................... US$110,000 May 1995
President and Chief Operating Officer
James L.K. Wang ...................................... NT$2,448,000 February 1996
Director -- Far East
Glenn M. Alger ....................................... US$96,000 May 1995
Senior Vice President
Michael R. Claydon ................................... UKL77,500 April 1996
Director -- Europe
</TABLE>
Each of the above employment agreements is automatically renewable upon
expiration for additional one-year periods unless either party elects otherwise.
Each agreement includes a covenant of the employee not to compete with the
Company during its term and for a period of at least six months following
termination, at the option of the Company, provided that no change in control
shall have occurred. See "Change in Control Arrangements" below. The Company has
the right to terminate any of these agreements at any time. For Messrs. Rose,
Walsh and Alger, if the Company terminates an agreement without cause during the
term thereof, the employee is entitled to receive an amount equal to his last
six-months compensation. In other circumstances such persons will receive a lump
sum payment equal to six months base salary in the event the Company elects the
post employment covenant not to compete. If the Company terminates Mr. Wang's
agreement without cause during the term thereof, Mr. Wang will receive his base
salary for the remainder of the term or until such time as he becomes otherwise
employed in the freight forwarding business, whichever is earlier. Mr. Claydon
is entitled to 12-months notice in the event employment is terminated without
cause, and an additional six-months compensation in the event the Company
exercises its rights under the non-competition provisions of the agreement.
CHANGE IN CONTROL ARRANGEMENTS
The employment agreement for each executive officer allows the Company to
extend the restriction on competition with the Company for at least six months
following termination of the employment relationship. The extension is at the
sole election of the Company unless the employee terminates the employment
relationship by resigning during a specified period surrounding a "change in
control," as defined below, in which case the employee may decline any offered
lump sum payment and thereby avoid the accompanying restriction on competition.
Historically, most options granted under the Company's 1985 Plan vest at the
rate of 50% three years after the date of grant, and an additional 25% four
years after the date of grant and the balance five years after the date of
grant. However, the 1985 Plan provides that outstanding options will become
immediately vested and fully exercisable in connection with the occurrence of a
"change in control" of the Company.
13
<PAGE>
"Change in Control" means either one of the following: (i) when any person
(with certain exceptions) becomes the beneficial owner, directly or indirectly,
of 50% or more of the combined voting power of the Company's then outstanding
securities or (ii) shareholder approval of a transaction involving the sale of
all or substantially all of the assets of the Company or the merger of the
Company with or into another corporation.
CERTAIN TRANSACTIONS
Due to restrictions imposed by the laws of Taiwan the Company conducts
business in Taiwan through EIFT. Through its wholly-owned subsidiary, E.I.
Freight (H.K.) Ltd. ("E.I. Freight"), the Company has entered into an Exclusive
Agency Agreement with EIFT pursuant to which EIFT acts as the exclusive agent of
the Company and its affiliates to conduct freight forwarding operations in
Taiwan. The initial term of this Exclusive Agency Agreement expires in 2005 and
is renewable at the Company's option for additional consecutive one year
periods. The Exclusive Agency Agreement may be terminated by the Company at any
time if, in its sole discretion, it determines that EIFT is not competently
performing services thereunder or is failing to meet reasonable performance
goals. Pursuant to the Exclusive Agency Agreement, EI Freight is entitled to
receive or retain a fixed percentage of all revenues generated by EIFT on behalf
of the Company and its affiliates. EIFT has also agreed not to render similar
services to any other party. James Li Kou Wang, the Company's Director -- Far
East and a nominee for re-election to the Board of Directors, is the Managing
Director of EIFT. During 1994, EIFT handled revenues on behalf of the Company
and its affiliates aggregating $99,336,000.
In connection with the acquisition of the assets of certain Far East
affiliates including Taiwan effective January 1, 1984, the Company agreed to use
its best efforts, so long as James Li Kou Wang remains a shareholder of the
Company and is employed by the Company or any of its affiliates or exclusive
agents, to cause one person nominated by Mr. Wang to be elected to the Company's
Board of Directors. In addition, the Company agreed that it will make no
appointment of a manager for any Far East office without prior consultation with
Mr. Wang so long as he remains a shareholder of the Company and is employed by
the Company or one of its affiliates or exclusive agents. Pursuant to this
agreement, Mr. Wang has been nominated for re-election to the Company's Board of
Directors.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Company has selected KPMG Peat Marwick, LLP to continue as its principal
independent public accountants for the current year. Representatives of KPMG
Peat Marwick, LLP are expected to be present at the Annual Meeting and have the
opportunity to make a statement if they so desire and to respond to appropriate
questions.
OTHER BUSINESS
As of the date of this Proxy Statement, management knows of no other
business which will be presented for action at the meeting. If any other
business requiring a vote of the shareholders should come before the meeting,
the persons designated as your proxies will vote or refrain from voting in
accordance with their best judgment.
14
<PAGE>
SECTION 16(A) REPORTING DELINQUENCIES
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that certain of the Company's officers and directors, and persons who own more
than ten percent of a registered class of the Company's equity securities, file
reports of ownership and changes of ownership with the Securities and Exchange
Commission (the "SEC"). Officers, directors and greater than ten percent
shareholders are required by SEC regulation to furnish the Company with copies
of all such forms they file.
Based solely on its review of the copies of such forms received by the
Company, and on written representations by the Company's officers and directors
regarding their compliance with the filing requirements, the Company believes
that in 1994 all filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with, except that
Michael R. Claydon, Director -- Europe, filed a late Form 5 concerning a grant
of shares of stock under the Company's Employee Stock Purchase Plan.
SHAREHOLDER PROPOSALS FOR THE
1996 ANNUAL MEETING OF SHAREHOLDERS
Shareholder proposals to be presented at the 1996 Annual Meeting of
Shareholders must be received by the Secretary at the Company's executive
offices by December 18, 1995, in order to be included in the Company's Proxy
Statement and form of proxy relating to that meeting.
SOLICITATION OF PROXIES
The proxy accompanying this Proxy Statement is solicited by the Board of
Directors of the Company. Proxies may be solicited by officers, directors and
regular supervisory and executive employees of the Company, none of whom will
receive any additional compensation for their services. In addition, the Company
has agreed to pay the firm of Hill and Knowlton a fee of $3,250 plus reasonable
expenses for proxy solicitation services. Solicitations of proxies may be made
personally, or by mail, telephone, telegraph, facsimile or messenger.
The Company, if requested, will pay persons holding shares of Common Stock
in their names or in the names of nominees, but not owning such shares
beneficially, such as brokerage houses, banks and other fiduciaries, for the
expense of forwarding soliciting materials to their principals. All such costs
of solicitation of proxies will be paid by the Company.
By Order of the Board of Directors
[SIGNATURE]
Jeffrey J. King
SECRETARY
Seattle, Washington
April 17, 1995
15
<PAGE>
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Peter J. Rose and Jeffrey J. King, and each
of them, as proxies, each with full power of substitution, to represent and to
vote for and on behalf of the undersigned, as designated below, the number of
shares of common stock of Expeditors International of Washington, Inc. that the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Shareholders to be held on May 17, 1995, or at any adjournment
thereof. The undersigned directs that this proxy be voted as follows:
(1) Election of Directors:
<TABLE>
<S> <C>
/ / FOR all nominees (except as indicated to the / / WITHHOLD AUTHORITY to vote for all nominees
contrary below). named below.
</TABLE>
P.J. Rose, K.M. Walsh, J.L.K. Wang, J.J. Casey, D.P. Kourkoumelis, J.W.
Meisenbach
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, PRINT
THAT NOMINEE'S NAME IN THE FOLLOWING SPACE:
_______________________________________________________________
(2) In their discretion, the holders of this proxy are authorized to vote upon
such other business as may properly come before the meeting.
(CONTINUED AND TO BE SIGNED ON OTHER SIDE.)
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED ON
THIS PROXY CARD. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES
DESIGNATED ON THIS PROXY CARD. IF NO SPECIFICATION IS MADE, ALL SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED FOR ALL OF SAID NOMINEES AND WILL BE
VOTED IN ACCORDANCE WITH THE DISCRETION OF THE PROXIES ON ALL OTHER MATTERS
WHICH MAY COME BEFORE THE MEETING OR ANY ADJOURNMENT.
The undersigned hereby revokes any proxy or proxies hereunto given for such
shares and ratifies all that said proxies or their substitutes may lawfully do
by virtue hereof.
Please sign exactly as name appears on this proxy. If stock is held jointly,
both persons should sign. Persons signing in a representative capacity should
give their title.
Date: _______________, 1995.
____________________________
Signature
____________________________
Signature if held jointly
PLEASE PROMPTLY DATE, SIGN AND RETURN THIS PROXY CARD
