<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>
[LOGO]
EXPEDITORS INTERNATIONAL
OF WASHINGTON, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
WEDNESDAY, MAY 8, 1996
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 8, 1996, at the Seattle Marriott Hotel, SeaTac
located at 3201 South 176th Street, Seattle, Washington, for the following
purposes:
(1)To elect six (6) directors, each to serve until the next annual meeting
of shareholders and until a 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 11, 1996, 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
March 25, 1996
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>
[LOGO]
EXPEDITORS INTERNATIONAL
OF WASHINGTON, INC.
19119 16TH AVENUE SOUTH
SEATTLE, WASHINGTON 98188
------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 8, 1996
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 Seattle
Marriott Hotel, SeaTac located at 3201 South 176th Street, Seattle, Washington
on Wednesday, May 8, 1996, 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 11, 1996 (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 1995 Annual Report to
Shareholders will be mailed to shareholders on or about March 25, 1996.
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
12,038,687 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.
1
<PAGE>
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, N.A., an independent business entity not affiliated with the
Company.
The Common Stock is listed for trading on the NASDAQ National Market under
the symbol EXPD. The last sale price for the Common Stock, as reported by NASDAQ
on March 11, 1996, was $27.25 per share.
The following table sets forth information, as of March 11, 1996, 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>
RCM Capital Management (1)...................................................... 1,173,600 9.75%
Four Embarcadero Center
Suite 2900
San Francisco, CA 94111
FMR Corp. (2)................................................................... 974,300 8.09%
82 Devonshire Street
Boston, MA 02109
Wanger Asset Management, L.P. (3)............................................... 800,000 6.65%
227 West Monroe Street
Suite 3000
Chicago, IL 60606
The Prudential Insurance Company of America (4)................................. 685,400 5.69%
Prudential Plaza
Newark, NJ 07102-3777
First Pacific Advisors, Inc. (5)................................................ 667,500 5.54%
11400 W. Olympic Boulevard
Suite 1200
Los Angeles, CA 90064
</TABLE>
- ------------------------
(1) The holding shown is as of December 31, 1995, according to a joint statement
on Schedule 13G dated February 5, 1996 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 power with respect to 1,055,600 of
these shares, sole dispositive power with respect to 1,158,600 shares and
shared dispositive power with respect to 15,000 shares. The above disclosure
includes 680,100 shares as to which RCM Capital Funds, Inc., a diversified
open-end management investment company, claims sole dispositive power and
347,800 shares as to which RCM Growth Equity Fund claims sole dispositive
power, as set forth in a joint Schedule 13G dated February 8, 1996.
2
<PAGE>
(2) The holding shown is as of December 31, 1995, according to a Schedule 13G
dated February 14, 1996 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, Edward C. Johnson 3d ("Mr.
Johnson") in his individual capacity and as a predominant shareholder of FMR
Corp.; and Abigail Johnson in her individual capacity and as a predominant
shareholder of FMR Corp. Fidelity Management reports that it is the
beneficial owner of 286,700 shares. FMR Corp. and Mr. Johnson report that
they have sole dispositive power with respect to 267,700 shares. Fidelity
International Limited reports that it has sole voting and dispositive power
over 19,000 of these shares. Fidelity Management Trust Company reports that
it is the beneficial owner of 687,600 shares. Mr. Johnson and FMR Corp.
report that they have sole voting and dispositive power over 687,600 of
these shares.
(3) The holding shown is as of December 31, 1995, according to a Schedule 13G
dated February 9, 1996 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 ("Wanger") in his individual capacity as
principal stockholder of WAM, Ltd. Each of WAM Ltd., WAM and Wanger report
shared voting and dispositive power with respect to the 800,000 shares. 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, reports shared voting and dispositive power with respect to 600,000
shares which are held by the Trust.
(4) The holding shown is as of December 31, 1995, according to a Schedule 13G
dated February 9, 1996 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 200,700 shares and shared voting and dispositive power with
respect to 484,700 shares. Prudential further reports that 676,400 of these
shares are held for the benefit of its clients by its separate accounts,
externally managed accounts, registered investment companies and/or other
affiliates and that the combined holdings of these entities were reported
for the purpose of administrative convenience.
(5) The holding shown is as of December 31, 1995, according to a Schedule 13G
dated February 13, 1996, filed by First Pacific Advisors, Inc. ("FPA"), an
investment advisor. FPA reports that it has shared voting and dispositive
power with respect to 421,500 and 667,500 of these shares, respectively.
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 and
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 described in the Summary Compensation Table, and all
directors and executive officers as a group at March 11, 1996. 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)......................................................... 52 291,620 2.42%
Kevin M. Walsh (1)........................................................ 45 306,160 2.54%
James L.K. Wang (2)....................................................... 48 156,052 1.30%
James J. Casey (3)........................................................ 63 9,350 *
Dan P. Kourkoumelis (3)................................................... 44 6,000 *
John W. Meisenbach (3).................................................... 59 56,000 *
Additional Named Executives:
Glenn M. Alger (4)........................................................ 39 176,707 1.47%
Michael R. Claydon (5).................................................... 48 71,932 *
All directors and executive officers as a group (15 persons) (2)(6)........... 1,255,301 10.43%
</TABLE>
- ------------------------
* Less than 1%
(1) Includes 80,000 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.
(3) Includes 6,000 shares subject to purchase options exercisable within sixty
days.
(4) Includes 90,000 shares subject to purchase options exercisable within sixty
days.
(5) Includes 70,000 shares subject to purchase options exercisable within sixty
days.
(6) Includes 472,500 shares subject to purchase options exercisable within sixty
days.
------------------------
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.
James L.K. Wang has served as a director and the Managing Director of
Expeditors International Taiwan Ltd. since September 1981 and with its
successor, E.I. Freight (Taiwan), Ltd., since January 1991. In October 1988, Mr.
Wang became a director and Director -- Far East of the Company and in January
1996 he
4
<PAGE>
was elected Executive Vice President. 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 1984 acquisition of the Company's Hong Kong,
Singapore and Taiwan offices. 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, 1995, and transacted business on seven 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 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 1995.
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 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 three meetings
during 1995, and transacted business on two occasions during the year by
unanimous written consent.
5
<PAGE>
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.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company operates in the highly-competitive global logistics 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 global logistics services
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 toward 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 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
6
<PAGE>
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 1995, 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. During 1995, the
Committee granted stock options to 160 employees including each Named Executive
Officer. Except in the case of the Chairman and Chief Executive Officer and
certain other Named Executive Officers, the Committee granted stock options
based upon recommendations made by senior management. Prior to approving any
stock option grants, the Committee reviews and considers factors such as the
employee's current position, length of service, and any prior stock option
grants.
During the 1995 stock option review process, the Compensation Committee
determined that stock option grants should also be made to the Chairman and
Chief Executive Officer and certain other Named Executive Officers. The last
stock option grants for each of these executive officers had been made in 1990
and contained provisions for reload options which would be automatically granted
upon exercise of the
7
<PAGE>
original options within specified time periods. In 1993, the Chairman and Chief
Executive Officer along with each executive officer holding options with reload
provisions, voluntarily waived their rights to, and released the Company from
any obligation for, the automatic reload of stock options. No reload provisions
have been included with any other options granted by the Committee. As a result
of the 1995 stock option grants, each executive officer of the Company holds
unvested stock options. The Committee believes that unvested options promote
stability in the management team and provide a continuing incentive for focus on
sustained long-term growth in shareholder value.
POST EMPLOYMENT -- PERSONAL SERVICES AGREEMENT. The employment contract of
the Chairman and Chief Executive Officer contains a provision 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 1996 the initial annual payment would be $79,200 and the agreement
would run for ten years unless terminated as provided below. The contract 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.
The Compensation Committee recognizes the key role that continuity in
personal relationships play in the global logistics services 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 delay retirement until at
least age sixty.
POLICY ON DEDUCTIBILITY OF COMPENSATION. Under Section 162(m) of the
Internal Revenue Code of 1986 the Federal income tax deduction for certain types
of compensation paid to the Company's Chief Executive Officer and to the four
highest compensated officers whose compensation must be reported to shareholders
under the Securities Exchange Act of 1934, is limited to $1,000,000 per officer
per taxable year unless such compensation meets certain requirements. The
Compensation Committee is aware of this limitation and believes that the
deductibility of compensation payable in 1996 will not be affected by this
limitation. The Committee's present intention is to structure compensation to
comply with Section 162(m) and maintain the deductibility of compensation.
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 1995, 1994, and 1993 to the person who was the
Chief Executive Officer at the end of fiscal 1995 and the four other most highly
compensated executive officers of the Company whose salary and bonus exceeded
$100,000 in 1995 (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, 1995 $ 110,000 $ 551,278 40,000 $ 1,500
Chairman and 1994 110,000 448,961 -0- 1,500
Chief Executive Officer 1993 110,000 357,524 -0- 1,500
Kevin M. Walsh, 1995 110,000 551,278 40,000 1,500
President and 1994 110,000 448,961 -0- 1,500
Chief Operating Officer 1993 110,000 357,524 -0- 1,500
James L.K. Wang, 1995 97,881 406,165 40,000 -0-
Executive Vice President and 1994 92,179 522,492 -0- -0-
Director -- Far East 1993 94,988 266,836 -0- -0-
Glenn M. Alger, 1995 96,000 394,973 25,000 1,500
Senior Vice President 1994 96,000 322,292 5,000 1,500
1993 96,000 255,389 -0- 1,500
Michael R. Claydon, 1995 122,433 279,788 25,000 -0-
Director -- Europe 1994 118,865 224,887 5,000 -0-
1993 116,192 170,189 -0- -0-
</TABLE>
- ------------------------
(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 $1,500 per qualified employee, under an employee savings plan intended to
qualify under Section 401(k) of the Internal Revenue Code, as amended.
9
<PAGE>
OPTION GRANT TABLE
The following table sets forth certain information regarding options granted
during 1995 to the Named Executive Officers.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR (1)
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------------------------- VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM (3)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED (1) FISCAL YEAR ($/SH) (3) DATE (2) 5% ($) 10% ($)
- ----------------------------------------- ----------- ------------- ----------- ----------- --------- ----------
Peter J. Rose............................ 40,000 11.3 22.50 5/17/2005 566,005 1,434,368
Kevin M. Walsh........................... 40,000 11.3 22.50 5/17/2005 566,005 1,434,368
James L.K. Wang.......................... 40,000 11.3 22.50 5/17/2005 566,005 1,434,368
Glenn M. Alger........................... 25,000 7.1 22.50 5/23/2005 353,753 896,480
Michael R. Claydon....................... 25,000 7.1 22.50 5/23/2005 353,753 896,480
</TABLE>
- ------------------------
(1) The above grants were made on May 17, 1995 and May 23, 1995 pursuant to the
Company's 1985 Stock Option Plan (the "1985 Plan"). All options granted in
fiscal 1995 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.
10
<PAGE>
OPTION EXERCISES AND YEAR-END OPTION VALUE TABLE
The following table sets forth certain information as of December 31, 1995
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, 1995 DECEMBER 31, 1995 (2)
ACQUIRED ON VALUE -------------------------- ----------------------------
NAME EXERCISE REALIZED (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------- ----------- ----------- ----------- ------------- ------------ --------------
Peter J. Rose................ -0- -0- 80,000 40,000 $ 1,190,000 $ 145,000
Kevin M. Walsh............... -0- -0- 80,000 40,000 $ 1,190,000 $ 145,000
James L.K. Wang.............. 20,000 315,000 20,000 40,000 $ 297,500 $ 145,000
Glenn M. Alger............... 2,700 54,891 90,000 30,000 $ 1,324,950 $ 136,250
Michael R. Claydon........... -0- -0- 70,000 30,000 $ 1,170,550 $ 136,250
</TABLE>
- ------------------------
(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 29, 1995, 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.
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 31, 1990.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPANY INDEX MARKET INDEX PEER INDEX
<S> <C> <C> <C>
12/31/90 100 100 100
1/31/91 119.728 110.647 113.637
2/28/91 134.694 121.244 120.455
3/28/91 140.136 129.388 126.822
4/30/91 136.054 130.19 126.274
5/31/91 146.939 136.199 134.799
6/28/91 149.66 128.225 130.58
7/31/91 159.184 135.757 133.086
8/30/91 172.789 142.229 137.068
9/30/91 144.218 142.934 136.239
10/31/91 142.857 147.659 140.654
11/29/91 146.939 142.742 134.324
12/31/91 168.708 159.611 145.372
1/31/92 174.15 169.175 160.222
2/28/92 183.673 172.943 169.46
3/31/92 183.674 164.938 166.865
4/30/92 155.782 157.901 169.078
5/29/92 176.871 159.934 168.809
6/30/92 176.871 153.746 158.743
7/31/92 182.313 158.88 158.296
8/31/92 170.068 154.131 153.203
9/30/92 168.708 159.564 157.323
10/30/92 168.708 165.523 163.206
11/30/92 164.626 178.488 171.548
12/31/92 168.708 185.193 177.899
1/29/93 185.034 190.705 183.611
2/26/93 159.184 183.862 183.146
3/31/93 157.823 189.41 191.426
4/30/93 136.054 181.834 189.497
5/28/93 150.902 192.77 194.686
6/30/93 144.757 194.01 195.328
7/30/93 139.294 194.349 198.688
8/31/93 144.757 204.464 204.34
9/30/93 157.048 210.197 203.89
10/29/93 170.704 215.05 210.847
11/30/93 150.771 208.265 211.564
12/31/93 164.477 214.394 216.132
1/31/94 176.813 221.233 230.272
2/28/94 208.338 218.837 230.194
3/31/94 194.631 205.42 216.082
4/29/94 174.072 202.737 214.604
5/31/94 192.463 202.979 207.888
6/30/94 189.713 194.986 200.077
7/29/94 197.962 199.607 209.686
8/31/94 222.707 211.741 215.325
9/30/94 219.957 211.445 206.35
10/31/94 228.206 215.127 206.116
11/30/94 239.767 207.649 192.825
12/30/94 239.767 207.369 196.161
1/31/95 237.011 208.171 195.838
2/28/95 242.522 218.952 209.161
3/31/95 231.499 225.11 205.36
4/28/95 253.546 231.59 214.868
5/31/95 245.905 237.45 213.003
6/30/95 248.668 256.042 223.803
7/31/95 270.771 273.702 231.085
8/31/95 256.957 278.74 229.185
9/29/95 298.401 286.921 229.784
10/31/95 290.112 283.977 214.506
11/30/95 282.487 289.866 231.059
12/29/95 289.41 287.971 223.114
</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 1996
Chairman and Chief Executive Officer
Kevin M. Walsh ....................................... US$110,000 May 1996
President and Chief Operating Officer
James L.K. Wang ...................................... NT$2,592,960 February 1997
Executive Vice President and
Director -- Far East
Glenn M. Alger ....................................... US$96,000 May 1996
Senior Vice President
Michael R. Claydon ................................... UKL77,500 April 1997
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
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 L.K. 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.
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 1995 all filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with, except that
Charles J. Lynch, Corporate Controller, filed a late Form 5 concerning a grant
of shares of stock under the Company's Employee Stock Purchase Plan.
14
<PAGE>
SHAREHOLDER PROPOSALS FOR THE
1997 ANNUAL MEETING OF SHAREHOLDERS
Shareholder proposals to be presented at the 1997 Annual Meeting of
Shareholders must be received by the Secretary at the Company's executive
offices by November 26, 1996, 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 Allen Nelson & Co. a fee of $3,000 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
March 25, 1996
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, 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 8, 1996, or at any adjournment
thereof. The undersigned directs that this proxy be voted as follows:
(CONTINUED AND TO BE SIGNED ON OTHER SIDE.)
- -------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
<PAGE>
Please mark ----
your votes as | X |
indicated in | |
this example ----
FOR all nominees WITHHOLD AUTHORITY
(except as indicated to vote for all nominees
to the contrary below). named below.
(1) Election of Directors: ---- ---- 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:
- ------------------------------------------
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 PROMPTLY DATE, SIGN AND
RETURN THIS PROXY CARD
Signature ___________ Signature if held jointly __________ Dated ________, 1996
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.
- -------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
