<PAGE>
[LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of PACCAR Inc will be held at 10:30 a.m.
on Tuesday, April 25, 1995, at the MEYDENBAUER CENTER, 11100 N.E. 6TH STREET,
BELLEVUE, WASHINGTON for the following purposes:
1. To elect three directors to serve three-year terms ending in 1998.
2. To transact such other business as may properly come before the meeting.
Pursuant to Section 3 of Article VI of the Bylaws, stockholders entitled to
notice of and to vote at this meeting are those of record as of the close of
business on March 1, 1995.
IMPORTANT: The vote of each stockholder is important regardless of the
number of shares held. Whether or not you plan to attend the meeting, you are
requested to date and sign the enclosed proxy card and return it promptly in the
enclosed postpaid envelope.
DIRECTIONS TO THE MEYDENBAUER CENTER CAN BE FOUND ON THE BACK COVER OF THE
ATTACHED PROXY STATEMENT.
By order of the Board of Directors
G. G. Morie
VICE PRESIDENT, GENERAL
COUNSEL AND SECRETARY
Bellevue, Washington
March 20, 1995
<PAGE>
------------
PROXY STATEMENT
------------
The accompanying proxy is solicited by the Board of Directors of PACCAR Inc
(the "Company") for use at the Annual Meeting of Stockholders of the Company to
be held April 25, 1995, at the Meydenbauer Center, 11100 N.E. 6th Street,
Bellevue, Washington. Execution of the proxy will not in any way affect a
stockholder's right to attend the meeting or prevent voting in person. A proxy
may be revoked by later dated proxy or by notice to the Secretary of the Company
at any time before it is voted.
The executive offices of the Company are located in the PACCAR Building, 777
- -106th Avenue N.E., Bellevue, Washington 98004. This proxy statement and proxy
card were first sent to stockholders about March 20, 1995.
Expenses for solicitation of proxies will be paid by the Company.
Solicitation will be by mail except for any facsimile, telephone or personal
solicitation by directors, officers and employees of the Company which may be
made without additional compensation. The Company will request banks and brokers
to solicit proxies from their customers and will reimburse those banks and
brokers for reasonable out-of-pocket costs for this solicitation.
VOTING RIGHTS
Stockholders eligible to vote at the meeting are those of record at the
close of business on March 1, 1995. Each outstanding share of common stock, par
value $12 per share is entitled to one vote on all matters to be presented at
the meeting. As of the close of business on March 1, 1995, the Company had
outstanding 38,859,281 shares of common stock.
STOCK OWNERSHIP
CERTAIN OWNERS
The following persons are known to the Company to be the beneficial owner of
more than five percent of the Company's common stock at December 31, 1994:
<TABLE>
<CAPTION>
SHARES
NAME AND ADDRESS BENEFICIALLY PERCENT
BENEFICIAL OWNER OWNED(A) OF CLASS
---------------------------------- ------------- ---------
<S> <C> <C>
BankAmerica Corporation 4,171,762(b) 10.7
555 California Street
San Francisco, California 94104
Charles M. Pigott 2,587,069(c)(d) 6.7
P.O. Box 1518
Bellevue, Washington 98009
James C. Pigott 2,200,819(d)(e) 5.7
1405 42nd Ave. East
Seattle, Washington 98112
</TABLE>
1
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
The following tabulation sets forth the shares of common stock beneficially
owned by each director and executive officer and by all directors and executive
officers as a group at December 31, 1994:
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT
NAME OWNED(A) OF CLASS
---------------------------------- ------------- ---------
<S> <C> <C>
William E. Boisvert............... 2,811(f) *
Richard P. Cooley................. 1,150 *
John M. Fluke, Jr................. 1,699 *
Carl H. Hahn...................... 835 *
Harold J. Haynes.................. 3,999 *
David J. Hovind................... 23,461(d)(f) *
Charles M. Pigott................. 2,587,069(c)(d) 6.7
James C. Pigott................... 2,200,819(d)(e) 5.7
Mark C. Pigott.................... 370,645(d)(g) *
John W. Pitts..................... 2,490(d) *
Michael A. Tembreull.............. 12,301(f) *
James H. Wiborg................... 24,743(h) *
Total of all directors and
executive
officers as a group (15
individuals).................... 4,221,951(i) 10.9
<FN>
- ------------
* does not exceed one percent.
(a) Amounts shown are rounded to whole-share amounts.
(b) Of the 4,171,762 shares, BankAmerica Corporation and/or its subsidiaries
have sole voting power as to 3,759,424 shares, sole dispositive power as to
zero shares, shared voting power as to 1,380 shares and shared dispositive
power as to 3,898,381 shares.
(c) Includes 13,044 shares allocated in the Company's Savings Investment Plan
for which he has sole voting power but no dispositive power, 54,404 stock
units accrued for a deferred contingent cash award under the Long-Term
Incentive Plan and options to purchase 18,448 shares. Also includes 894,167
shares held by a charitable trust of which he is co-trustee and shares
voting and dispositive power, and 134,228 shares held by a corporation over
which he has sole voting power and sole dispositive power over 114,480 of
such shares.
(d) Does not include shares held in the name of a spouse and/or children to
which beneficial ownership is disclaimed.
(e) Includes the same 894,167 shares referenced in note (c) held by a
charitable trust of which he is a co-trustee and shares voting and
dispositive power.
(f) Includes shares allocated in the Company's Savings Investment Plan for
which the participant has sole voting power but no dispositive power as
follows: W. E. Boisvert (1,188), D. J. Hovind (6,353) and M. A. Tembreull
(4,187). Includes stock units accrued for deferred contingent cash awards
under the Long-Term Incentive Plan as follows: D. J. Hovind (930) and M. A.
Tembreull (1,693). Also includes options to purchase shares as follows: D.
J. Hovind (10,053) and M. A. Tembreull (4,956).
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
(g) Includes 2,730 shares allocated in the Company's Savings Investment Plan
for which he has sole voting power but no dispositive power, and the same
134,288 shares owned by the corporation referenced in note (c) over which
he has no voting or dispositive power. Also includes options to purchase
2,031 shares.
(h) Includes 12,900 shares held in trust for which he is a trustee and shares
voting and dispositive power, and 1,365 shares owned by a university on
whose board of trustees he sits.
(i) Reflects elimination of duplicate reporting of 894,167 shares referenced in
notes (c) and (e) and 134,288 shares referenced in notes (c) and (g).
</TABLE>
ELECTION OF DIRECTORS
Three directors, constituting Class III Directors, are to be elected at the
meeting. The persons named below have been designated by the Board as nominees
for election as Class III Directors for a term expiring at the Annual Meeting of
Stockholders in 1998. All of the nominees are now directors of the Company.
Under Delaware law, directors are elected by a plurality of the votes cast
for the election of directors. Shares that are not voted for the election of
directors (whether because authority to vote is withheld, the stockholder does
not return a proxy, the broker holding the shares does not vote or otherwise)
will not count in determining the total number of votes for each nominee.
Unless otherwise instructed, proxies which are returned will be voted for
the three nominees for director as Class III Directors. If any of the nominees
is unable to act as a director because of an unexpected occurrence, the holders
of the proxies, in their discretion, may vote the proxies for another person. In
the alternative, the Board of Directors may make an appropriate reduction in the
number of directors to be elected. The Class I and Class II Directors named
below have terms which expire in 1996 and 1997, respectively.
NOMINEES FOR TERMS EXPIRING AT THE ANNUAL MEETING IN 1998 (CLASS III DIRECTORS):
CARL H. HAHN, age 68, served as Chairman of the board of Volkswagen AG from
1981 until his retirement at the end of 1992. Dr. Hahn is Chairman of the Board
of Directors of Saurer AG, and a director of The British Petroleum Company
p.l.c. and TRW Inc. He also serves as a member of the supervisory boards of a
number of major European companies, including Volkswagen AG, Thyssen AG, Gerling
and Commerzbank. In addition, Dr. Hahn is the honorary chairman of the
supervisory boards of Audi AG, SEAT and Skoda, and is a member of the foreign
trade advisory committee at the Federal Republic of Germany's Federal Economics
Ministry.
CHARLES M. PIGOTT, age 65, became the Chief Executive Officer of the Company
in 1968 and Chairman of the Company in 1986. He was President of the Company
from 1965 to January 1987 and has been a director since 1961. He is also a
director of The Boeing Company, Chevron Corporation, and Seattle Times Company.
Mr. Pigott is the brother of James C. Pigott, and the father of Mark C. Pigott,
both directors of the Company.
JOHN W. PITTS, age 68, has been President, Chief Executive Officer and a
director of MacDonald, Dettwiler and Associates Ltd., a systems engineering
company, since 1982. He was Chairman, President, Chief Executive Officer and a
director of Okanagan Helicopters Ltd., a helicopter charterer, from 1970 to
1982. He has served as a director of the Company since 1964. He has served as a
director of BC Sugar Refinery Limited, BC TELECOM Inc. and Radarsat
International, Inc.
3
<PAGE>
DIRECTORS WHOSE TERMS EXPIRE AT THE ANNUAL MEETING IN 1996 (CLASS I DIRECTORS):
JOHN M. FLUKE, JR., age 52, is Chairman of Fluke Capital Management, L.P.,
private investments. He was Chairman of Fluke Corporation (formerly John Fluke
Mfg. Co., Inc.), a manufacturer of electronic test and measurement equipment,
from 1984 to 1990. He was Chief Executive Officer of that company from 1983 to
1987 and has been a director since 1976. He has served as a director of the
Company since 1984. He is also a director of U.S. Bank of Washington, N.A.
DAVID J. HOVIND, age 54, became President and a director of PACCAR Inc in
January 1992. He was Executive Vice President of the Company from July 1987 to
January 1992, Senior Vice President from December 1985 to July 1987 and Vice
President from September 1985 to December 1985.
MICHAEL A. TEMBREULL, age 48, became a Vice Chairman of the Company in
January 1995. He served as Executive Vice President from January 1992 to January
1995, Senior Vice President from September 1990 to January 1992 and was
previously General Manager of the Company's Peterbilt Motors Company division.
Mr. Tembreull became a director of the Company in July 1994.
JAMES H. WIBORG, age 70, has been Chairman of Univar Corporation, a
distributor of chemicals, since September 1986. He has also been Chairman and
Chief Strategist of VWR Corporation since March 1986. He was Chairman and Chief
Executive Officer of Univar from 1983 to 1986 and he was President and Chief
Executive Officer from 1966 to 1983. He has served as a director of the Company
since 1975. He is also a director of PENWEST, Ltd., PrimeSource Corporation,
Univar Corporation, and VWR Corporation.
DIRECTORS WHOSE TERMS EXPIRE AT THE ANNUAL MEETING IN 1997 (CLASS II DIRECTORS):
RICHARD P. COOLEY, age 71, an honorary director of Seafirst Corporation and
Seattle-First National Bank, a holding corporation and banking company, was
Chairman and Chief Executive Officer of Seafirst Corporation and Seattle-First
National Bank from 1983 to 1990. Mr. Cooley has served as a director of the
Company since 1991. He is also a director of Egghead, Inc.
HAROLD J. HAYNES, age 69, has been Senior Counselor for Bechtel Group, Inc.,
a worldwide engineering and construction company, since 1981. He was Chairman,
Chief Executive Officer and a director of Standard Oil Company of California
(now Chevron Corporation), an integrated petroleum company, from 1974 until his
retirement in 1981. Mr. Haynes has served as a director of the Company since
1981. He is also a director of The Boeing Company, Citicorp and Hewlett-Packard
Company.
JAMES C. PIGOTT, age 58, has been President of Pigott Enterprises, Inc.,
private investments, since 1983 and President and/or Chairman and Chief
Executive Officer of Management Reports & Services, Inc., a provider of business
services, since February 1986. He was President, Chief Executive Officer and a
director of Stetson-Ross, Inc., a woodworking machinery manufacturer, from 1976
to 1983. He has served as a director of the Company since 1972. He is also a
director of Americold Corporation. Mr. Pigott is the brother of Charles M.
Pigott, and the uncle of Mark C. Pigott, both directors of the Company.
MARK C. PIGOTT, age 41, became a Vice Chairman of the Company in January
1995. He served as Executive Vice President since December 1993; Senior Vice
President from January 1990 to December 1993; and was previously Vice President.
Mr. Pigott became a director of the Company in July 1994. He is also a director
of Seattle-First National Bank. Mr. Pigott is the son of Charles M. Pigott, also
a director of the Company, and nephew of James C. Pigott, a director of the
Company.
4
<PAGE>
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The Norcliffe Company ("Norcliffe") is a wholly owned subsidiary of the
Company acquired in 1987. Norcliffe is the general partner and has a nine
percent interest in the Norcliffe Limited Partnership ("NLP"). C. M. Pigott, J.
C. Pigott, their three sisters, their sister-in-law and members of their
families are limited partners of NLP.
NLP owned a fifty percent interest in an office building joint venture,
whose books are maintained on a tax basis. In 1994, NLP sold seventy percent of
its interest in the joint venture and made a distribution of the proceeds to its
partners. Norcliffe, whose GAAP basis in NLP is $0, recorded a gain on
investment of $439,980 on this distribution. For tax purposes, Norcliffe also
recognized an estimated loss of $99,000 as a result of the ongoing operations of
the joint venture.
Norcliffe is entitled to a nominal fee for its services in managing NLP.
Norcliffe is also entitled to indemnification to the extent of NLP's assets for
losses incurred in its capacity as general partner.
STOCKHOLDER PROPOSALS
A stockholder proposal must be received at the principal executive offices
of the Company, P.O. Box 1518, Bellevue, Washington 98009 by November 21, 1995
to be considered for inclusion in the proxy materials for the Company's 1996
Annual Meeting.
BOARD COMMITTEES AND MEETINGS
AUDIT COMMITTEE -- The Board of Directors has a standing Audit Committee.
Members of the Audit Committee are Messrs. J. M. Fluke, Jr., J. C. Pigott and J.
W. Pitts. The functions of the Audit Committee include review of the independent
accountant's report, modification of audit procedures as may be appropriate and
performance of such other responsibilities as the Board of Directors may
prescribe. The Committee met once in 1994.
COMPENSATION COMMITTEE -- The Board of Directors has a standing Compensation
Committee. Members of the Compensation Committee are Messrs. R. P. Cooley, H. J.
Haynes and J. H. Wiborg. The functions of the Compensation Committee include
reviewing and approving compensation of certain executives. The Committee also
administers the Company's Long-Term Incentive Plan. The Committee met twice in
1994.
The Company does not have a Nominating Committee.
The Board of Directors met four times during 1994, and each member attended
all of the meetings of the Board of Directors and the committees on which he
served.
5
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND RELATED MATTERS
The information in the following table relates to the annual and long-term
compensation for service in all capacities to the Company for the fiscal years
ended December 31, 1994, 1993 and 1992 of those persons who were, during 1994
and at December 31, 1994, (a) the Chief Executive Officer and (b) the other four
most highly compensated executive officers of the Company (the "Named
Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ALL OTHER
ANNUAL COMPENSATION LONG-TERM COMPENSATION COMPENSATION(a)
-------------------------------------- ------------------------- ---------------
AWARDS PAYOUTS
------------ ----------
SECURITIES
OTHER UNDERLYING LONG-TERM
ANNUAL OPTIONS/SARS INCENTIVE
NAME AND PRINCIPAL POSITION YEAR SALARY(b) BONUS COMPENSATION (SHARES) PAYOUTS(c)
- ------------------------------ ---- --------- ----------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
C. M. Pigott ................. 1994 $897,116 $ (d) (e) 6,441 $451,238 $7,500
Chairman and Chief Executive 1993 750,000 525,000 $6,594(e) 5,126 413,438 8,994
Officer 1992 773,308 525,000 (e) 5,534 0 8,728
D. J. Hovind ................. 1994 476,808 (d) (e) 2,605 138,740 7,500
President 1993 439,654 249,480 1,105(e) 2,324 121,481 8,994
1992 437,192 219,555 (e) 2,508 0 8,728
M. A. Tembreull .............. 1994 329,385 (d) (e) 1,627 84,780 7,500
Vice Chairman 1993 297,212 160,650 84(e) 1,428 69,694 8,994
1992 293,885 145,920 (e) 1,542 0 8,728
W. E. Boisvert ............... 1994 320,000 (d) (e) 1,679 0 7,500
Executive Vice President 1993 309,769 158,720 301(e) 1,503 0 8,994
1992 310,616 168,000 (e) 1,623 183,465 8,728
M. C. Pigott ................. 1994 298,269 (d) (e) 1,443 61,776 7,500
Vice Chairman 1993 212,212 91,853 (e) 911 64,969 8,994
1992 206,769 78,400 (e) 983 0 8,728
<FN>
- ---------------
(a) Amounts of All Other Compensation represent Company matching contributions
to the Company's Savings Investment Plan.
(b) The Company pays salaries every two weeks; in 1992 there were 27 salary
payments rather than the usual 26. No executive officer's salary was
reduced for 1993.
(c) Represents cash awards which were paid, or were payable but deferred at the
Named Officer's election, during 1992, 1993 and 1994 and earned during the
1989-1991, 1990-1992 and 1991-1993 Long-Term Incentive Plan performance
cycles, respectively.
(d) Amounts of bonuses earned in 1994 to be paid in 1995 were not determined on
the date this proxy statement was prepared.
(e) All amounts shown represent interest on deferred bonus payments and
payments under the Long-Term Incentive Plan in excess of 120% of the
applicable Federal long-term rate (as prescribed under Section 1274(d) of
the Internal Revenue Code). The aggregate amount of perquisites and other
personal benefits was less than the required reporting threshold (the
lesser of $50,000 or 10% of the total of annual salary and bonus for the
Named Officer).
</TABLE>
6
<PAGE>
OPTION GRANTS -- Shown below is information on grants of stock options
pursuant to the 1991 Long-Term Incentive Plan in 1994 to the Named Officers
which are reflected in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR(A)
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- -----------------------------------------------------------------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS GRANT
UNDERLYING GRANTED TO MARKET PRICE DATE
OPTIONS EMPLOYEES IN EXERCISE OR ON DATE OF EXPIRATION PRESENT
NAME GRANTED FISCAL YEAR BASE PRICE GRANT DATE VALUE(B)
- ------------------------- ---------- ------------- ----------- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
C. M. Pigott............. 6,441 20.26% $44.54 $53.00 4/26/2004 $140,993
D. J. Hovind............. 2,605 8.19 44.54 53.00 4/26/2004 57,023
M. A. Tembreull.......... 1,627 5.12 44.54 53.00 4/26/2004 35,615
W. E. Boisvert........... 1,679 5.28 44.54 53.00 4/26/2004 36,753
M. C. Pigott............. 1,443 4.54 44.54 53.00 4/26/2004 31,587
<FN>
- ------------
(a) The date that all options granted in 1994 become exercisable is January 1,
1997. This date may be accelerated in the event of a change in control of
the Company (as defined in the 1991 Long-Term Incentive Plan).
(b) The grant date present value was prepared by an independent consultant
using a variation of the Black-Scholes option pricing model with the
following assumptions: (i) 26.0% expected share price volatility, (ii)
6.97% risk-free rate of return, (iii) an expected dividend yield of 2.6%
and (iv) an expected ten-year exercise period.
</TABLE>
OPTION EXERCISES AND FISCAL YEAR-END VALUES -- Shown below is information
concerning the exercise of stock appreciation rights and options to purchase the
Company's common stock under the 1981 Long-Term Incentive Plan and the 1991
Long-Term Incentive Plan by the Named Officers in 1994 or held by them at
December 31, 1994:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/ SARS
ACQUIRED ON OPTIONS/SARS AT FY-END AT FY-END
NAME EXERCISE VALUE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------------- ----------- -------------- ---------------------- --------------------------
<S> <C> <C> <C> <C>
C. M. Pigott............. 0 $ 0 12,914 / 17,101 $ 169,671 / $5,811
D. J. Hovind............. 0 0 7,545 / 7,437 105,542 / 2,633
M. A. Tembreull.......... 1,000 15,950 3,414 / 4,597 46,302 / 1,609
W. E. Boisvert........... 0 0 0 / 4,805 0 / 1,704
M. C. Pigott............. 981 25,094 1,048 / 3,337 14,808 / 1,032
</TABLE>
7
<PAGE>
LONG-TERM INCENTIVE PLANS -- All stock-based awards under the Company's
Long-Term Incentive Plan are shown in the Option Grant and Option Exercise
tables set forth above. Shown below is information in respect of non-stock
price-based awards made in 1994 under the Long-Term Incentive Plan:
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
PERFORMANCE OR NON-STOCK PRICE-BASED PLANS
OTHER PERIOD UNTIL ------------------------------
NAME MATURATION OR PAYOUT THRESHOLD TARGET MAXIMUM
- -------------------------- --------------------- --------- -------- --------
<S> <C> <C> <C> <C>
C. M. Pigott.............. 1/1/94 - 12/31/96 $30,713 $337,500 $675,000
D. J. Hovind.............. 1/1/94 - 12/31/96 26,379 136,500 273,000
M. A. Tembreull........... 1/1/94 - 12/31/96 25,191 85,250 170,500
W. E. Boisvert............ 1/1/94 - 12/31/96 26,004 88,000 176,000
M. C. Pigott.............. 1/1/94 - 12/31/96 22,347 75,625 151,250
</TABLE>
Payments of awards under the Company's Long-term Incentive Plan are tied to
achieving Company, business unit and individual goals over a three-year
performance period. Goals established for Company performance are based on the
Company's financial performance relative to a selected group of companies with
similar business characteristics. Goals established for business unit and
individual performance are based on financial and strategic objectives approved
by the Compensation Committee on an individual basis.
RETIREMENT BENEFITS -- The following table shows the estimated annual
retirement benefit payable to participating employees, including the Named
Officers, under the Company's noncontributory retirement plan and Supplemental
Retirement Plan:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
------------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------------------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 350,000..................... $ 76,927 $102,569 $128,211 $153,853 $179,495
400,000..................... 88,177 117,569 146,961 176,353 205,745
500,000..................... 110,677 147,569 184,461 221,353 258,245
600,000..................... 133,177 177,569 221,961 266,353 310,745
700,000..................... 155,677 207,569 259,461 311,353 363,245
800,000..................... 178,177 237,569 296,961 356,353 415,745
1,400,000.................... 313,177 417,569 521,961 626,353 730,745
1,500,000.................... 335,677 447,569 559,461 671,353 783,245
</TABLE>
The Company has a noncontributory retirement plan which has been in effect
since 1947. Named Officers participate in this plan on the same basis as other
salaried employees. The plan provides benefits based on years of service and
salary. The benefit for each year of service, up to 35 years, is equal to 1% of
salary plus 0.5% of salary in excess of the Social Security Covered Compensation
level. Salary is defined as the average of the highest 60 consecutive months of
an employee's cash compensation, which includes those amounts reported in the
"Salary" and "Bonus" columns of the Summary Compensation Table, but it excludes
compensation under the Long-Term Incentive Plan. Years of credited service as of
December 31, 1994 for the Named Officers are: C. M. Pigott, 35 years; D. J.
Hovind, 30 years; W. E. Boisvert, 6 years; M. A. Tembreull, 24 years; M. C.
Pigott, 16 years.
The Company's unfunded Supplemental Retirement Plan provides a retirement
benefit to those affected by the maximum benefit limitations permitted for
qualified plans by the Internal Revenue Code and to those deferring incentive
compensation bonuses. The benefit is equal to the amount of
8
<PAGE>
normal pension benefit reduction resulting from the application of maximum
benefit and salary limitations and the exclusion of deferred incentive
compensation bonuses from the retirement plan benefit formula.
The Pension Plan Table illustrates approximate retirement benefits at age 65
and are based on single-life annuity amounts. They are not subject to any
deduction for Social Security or other offset amounts.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION -- The Compensation
Committee of the Board of Directors has furnished the following report on
executive compensation:
Under the supervision of the Compensation Committee, the Company has
designed its executive pay programs to provide a direct link between Company
performance and executive compensation. These programs have been in use for a
number of years. The compensation of Company executives under these programs is
determined annually by the Compensation Committee.
The Company believes that its overall executive compensation package should
be sufficient to attract and retain highly qualified executives and should
provide meaningful incentives for measurably superior performance. The Company's
executive compensation program is comprised of three main components: (i) base
salaries; (ii) annual cash bonuses intended to focus maximum effort on achieving
profitability, individually assigned objectives, and the highest level of
product quality; and (iii) long-term incentives in the form of stock options and
cash awards intended to focus efforts on achieving long-term growth in net
income, return on sales and return on capital.
BASE SALARIES. Base salaries are compared with independent salary surveys,
and consultants are utilized from time to time to assure that the overall
compensation package is competitive with the average compensation packages
offered by similar companies, including some of the selected companies described
in the long-term incentive plan discussed below (the "Selected Companies"). The
most recent survey compared the compensation packages of 335 companies with
which the Company competes in the market for executive talent. Nine of the
thirteen companies included in the Standard & Poor's indices used in the
performance graph set forth below were included in the survey.
The base salaries of the Company's executive officers were generally
equivalent to the average salaries paid by these similar companies; the Chief
Executive Officer's base salary was above the average.
ANNUAL CASH BONUSES. Annual cash bonuses may range up to 77% of the
executive's base salary. In general, from 50% to 60% of these bonuses are based
on the Company's performance compared to an overall profit goal approved by the
Compensation Committee. The balance of the executives' bonus calculation is
based upon the attainment, in the subjective judgment of the Compensation
Committee, of one or more individual goals. In general, these goals involve
factors such as the financial performance of the business units for which the
executive has direct responsibility, such as profitability or return on
investment, as well as non-financial performance criteria such as market share
improvement, product quality, product improvement, new product development,
production efficiencies and similar specific individual assignments. The
individual goals are changed annually, and a level of importance is assigned to
each goal on a percentage basis. The calculation of the bonus takes into account
both the level of achievement and the assigned importance of the goal. The
achievement of each goal is determined separately, and no bonus for a specific
goal is paid unless at least 70% of that goal is achieved.
The bonuses paid in 1994 reflect an achievement in excess of 100% of the
Company's overall profit goal for 1993. The amounts of bonuses earned in 1994
(to be paid in 1995) were not determined on the date this proxy statement was
prepared.
9
<PAGE>
LONG-TERM INCENTIVES. Given the cyclical nature of the Company's business,
long-term incentives are based on a three-year performance period and are
provided through annual grants of stock options and cash incentives. The
Compensation Committee determines a target award for each executive officer,
expressed as a percentage of salary at the date the award is granted. The target
award is allocated one-half to stock options and one-half to the cash incentive
award. Stock options automatically become exercisable at the end of the
three-year performance period and are intended to link the interests of key
employees directly with stockholders' interests through increased individual
stock ownership.
A significant portion (50% to 75%) of the long-term cash incentive award is
based on overall Company performance measured in terms of the Company's ranking
in compound growth of net income, return on sales, and return on capital
(weighted equally) when compared to the Selected Companies, a group of
Fortune-500 companies in similar industries. The Selected Companies have been
used for this comparison for a number of years; these companies have been
selected because, in the judgment of the Company's compensation consultants and
the Compensation Committee, they are the most directly comparable in size and
nature of business to the Company. The Selected Companies include eight of the
thirteen companies which make up the published Standard & Poor's indices in the
performance graph set forth below.
The balance of the executives' long-term cash incentive award is based upon
each executive's meeting business unit and individual objectives. These
objectives are established on the same basis as the types of individual goals
described above for the annual cash bonus, but they are measured over a
three-year performance cycle. The actual amount of each individual's cash
incentives related to the executive's business unit financial performance and
other individual objectives is determined by the Compensation Committee at the
end of a rolling three-year performance cycle, based on the Committee's
subjective evaluation of each executive's performance during the preceding three
years. The target amount will be earned if Company financial performance ranks
above at least half of the Selected Companies and business unit and individual
performance are at 100% of goal. The maximum award amount will be earned if
Company financial performance ranks above all of the comparison companies and
business unit and individual performance are at least 150% of goal. No award
will be earned if Company financial performance ranks below 75% or more of the
Selected Companies and business unit and individual performance is below 75% of
goal.
For the three-year cycle ended in 1993, the Company achieved in excess of
100% of the comparative performance goal. The incentive cash awards for each
executive officer for the three-year cycle ended in 1994 were not determined on
the date this proxy statement was prepared.
CHIEF EXECUTIVE OFFICER'S COMPENSATION. The Chief Executive Officer's
compensation is comprised of the same components as other executives: (i) base
salary; (ii) an annual cash bonus; and (iii) a long-term incentive in the form
of stock options and a cash award. However, the CEO's annual cash bonus is based
entirely on the Company's profit goal as established by the Compensation
Committee. The bonus earned in 1993 and paid in 1994 reflects an achievement in
excess of 100% of the goal for 1993. The bonus earned in 1994 to be paid in 1995
was not determined on the date this proxy statement was prepared. The cash
portion of the long-term incentive is likewise based entirely on the Company's
performance during the three-year cycle as compared to the Selected Companies.
For the three-year cycle ended in 1993, the Company achieved in excess of 100%
of this goal. The incentive cash award for the three-year cycle ended in 1994
was not determined on the date this proxy statement was prepared. As with other
executives, the size of the stock option award is determined on the basis of
salary and not on the amount and terms of options already held.
10
<PAGE>
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation over $1 million
paid to the Company's executive officers. The Compensation Committee considers
the net cost to the Company (including the availability of income tax
deductions) in making all compensation decisions.
OVERALL COMPENSATION. The overall compensation packages (base salary,
annual cash bonuses and long-term incentives) for each of the Company's
executive officers and the Chief Executive Officer was below the average
compensation of executive officers in equivalent positions of similar companies
surveyed. The Compensation Committee believes, however, that the overall
compensation package for the Company's key executives meets the objective of
providing significant individual performance incentives.
MEMBERS OF THE
COMPENSATION COMMITTEE
R. P. Cooley
H. J. Haynes
J. H. Wiborg
11
<PAGE>
SHAREOWNER RETURN PERFORMANCE PRESENTATION -- Set forth below is a line
graph comparing the yearly percentage change in the cumulative total shareowner
return on the Company's common stock to the cumulative total return of the
Standard & Poor's Composite-500 Stock Index and an equally-weighted simple
average of the Standard & Poor's Heavy-Duty Trucks & Parts and the Standard &
Poor's Machinery (Diversified) indices for the period of five fiscal years
commencing December 31, 1989 and ending on December 31, 1994. Management
believes that the blending of these two indices provides a better comparison
than either of the indices alone because the Company's performance can be
compared to a larger number of comparable companies. The comparison assumes that
$100 was invested on December 31, 1989 in the Company's common stock and in the
stated indices and assumes reinvestment of dividends.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
PACCAR Inc 100.00 77.58 119.50 144.28 159.47 141.32
S & P 500 100.00 96.89 126.41 136.05 149.76 151.74
S & P Indices 100.00 83.95 104.48 123.18 167.60 153.92
</TABLE>
COMPENSATION OF DIRECTORS
In 1994, each director who was not an employee was entitled to an annual
retainer of $35,000 and a fee of $5,000 for each Board or committee meeting
attended. A single meeting attendance fee is paid when more than one meeting is
held on the same day.
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young have performed the audit of the Company's financial statements
for the year 1994 and have been selected to perform this function for 1995.
Partners from the Seattle office of Ernst & Young LLP are expected to be present
at the stockholders' meeting with the opportunity to make a statement if they
desire to do so and are expected to be available to respond to appropriate
questions.
12
<PAGE>
OTHER BUSINESS
The Company knows of no other matters likely to be brought before the
meeting. However, if other proposals are presented, proxies will be voted in
respect thereof in accordance with the judgment of the person or persons voting
such proxies.
G. G. Morie
VICE PRESIDENT, GENERAL
COUNSEL AND SECRETARY
March 20, 1995
13
<PAGE>
DIRECTIONS TO MEYDENBAUER CENTER:
[MAP]
From I-405 take the N.E. 4th Street Exit, head west.
Turn right on 112th Avenue N.E. (heading north),
Turn left on N.E. 6th Street (heading west).
Parking garage entrance is on N.E. 6th Street
<PAGE>
PROXY
PACCAR INC
777 106TH AVE. N.E., BELLEVUE, WASHINGTON 98004
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR THE ANNUAL MEETING OF STOCKHOLDERS APRIL 25, 1995
The undersigned hereby appoints Charles M. Pigott and John W. Pitts as Proxies,
each with the power to appoint his substitute, and hereby authorizes them to
represent and to vote, as designated below, all the shares of common stock of
PACCAR Inc held of record by the undersigned on March 1, 1995, at the annual
meeting of stockholders to be held on April 25, 1995, or any adjournment
thereof.
Election of three Class III Directors to serve three-year terms ending in 1998:
Carl H. Hahn, Charles M. Pigott, John W. Pitts
You are encouraged to specify your choices by marking the appropriate boxes, SEE
REVERSE SIDE.
SEE REVERSE
SIDE
<PAGE>
/ X / PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted by the Savings Investment Plan Trustee in accordance with the Plan.
FOR WITHHELD
1. Elections of Directors (see reverse) / / / /
For, accept vote withheld from the following nominee(s):
2. In their discretion Proxies are authorized to vote upon such other manners as
may properly come before the meeting.
- ---------------------------
Please sign exactly as name appearers below. When shares are held by joint
owners, both should sign. When acting as attorney, executor, administrator,
trustee or guardian, please give full title as such, if a corporation please
sign full corporate name by President or other authorized officer, if a
partnership, please sign partner name by authorized person.
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
- ---------------------------------------------------
- ---------------------------------------------------
SIGNATURE(S) DATE
<PAGE>
PROXY
PACCAR INC
777 106TH AVE. N.E., BELLEVUE, WASHINGTON 98004
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR THE ANNUAL MEETING OF STOCKHOLDERS APRIL 25, 1995
The undersigned hereby appoints Charles M. Pigott and John W. Pitts as Proxies,
each with the power to appoint his substitute, and hereby authorizes them to
represent and to vote, as designated below, all the shares of common stock of
PACCAR Inc held of record by the undersigned on March 1, 1995, at the annual
meeting of stockholders to be held on April 25, 1995, or any adjournment
thereof.
Election of three Class III Directors to serve three-year terms ending in 1998:
Carl H. Hahn, Charles M. Pigott, John W. Pitts
You are encouraged to specify your choices by marking the appropriate boxes, SEE
REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance
with the Board of Directors' recommendations. The Designated Proxies cannot vote
your shares unless you sign and return this card.
SEE REVERSE
SIDE
<PAGE>
/ X / PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted FOR all nominees for director.
FOR WITHHELD
1. Elections of Directors (see reverse) / / / /
For, accept vote withheld from the following nominee(s):
- ---------------------------
2. In their discretion Proxies are authorized to vote upon such other manners as
may properly come before the meeting.
Please sign exactly as name appearers below. When shares are held by joint
owners, both should sign. When acting as attorney, executor, administrator,
trustee or guardian, please give full title as such, if a corporation please
sign full corporate name by President or other authorized officer, if a
partnership, please sign partner name by authorized person.
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
- ---------------------------------------------------
- ---------------------------------------------------
SIGNATURE(S) DATE
