<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] 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 240.14a-11(c) or 240.14a-12
PACCAR, 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] No fee required.
[ ] 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:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE> 2
PACCAR 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, 2000, at the Meydenbauer Center, 11100 N.E. 6th Street,
Bellevue, Washington for these purposes:
1. To elect three directors to serve three-year terms ending in 2003.
2. To approve the PACCAR Inc Restricted Stock and Deferred Compensation
Plan for Non-Employee Directors.
3. To vote on a stockholder proposal regarding the independent management
of the Board of Directors.
4. To transact such other business as may properly come before the meeting.
Stockholders entitled to vote at this meeting are those of record as of the
close of business on March 3, 2000.
IMPORTANT: THE VOTE OF EACH STOCKHOLDER IS IMPORTANT REGARDLESS OF THE
NUMBER OF SHARES HELD. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE
COMPLETE AND RETURN YOUR PROXY FORM.
DIRECTIONS TO THE MEYDENBAUER CENTER CAN BE FOUND ON THE BACK COVER OF THE
ATTACHED PROXY STATEMENT.
By order of the Board of Directors
/s/ JANICE M. D'AMATO
J. M. D'Amato
Secretary
Bellevue, Washington
March 16, 2000
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
General Information......................................... 1
Voting Rights............................................. 1
Voting by Proxy........................................... 1
Proxy Voting Procedures................................... 1
Vote Required and Method of Counting Votes................ 2
Expenses of Solicitation.................................. 2
Stock Ownership............................................. 3
ITEM NO. 1: ELECTION OF DIRECTORS........................... 4
Board Meetings and Committees............................... 5
Compensation of Directors................................... 6
ITEM NO. 2: PROPOSAL TO APPROVE THE PACCAR INC RESTRICTED
STOCK AND DEFERRED COMPENSATION PLAN FOR
NON-EMPLOYEE DIRECTORS.......................... 6
Compensation of Executive Officers.......................... 7
Summary Compensation...................................... 7
Option Grants............................................. 8
Option Exercises and Fiscal Year-End Values............... 8
Long Term Incentive Plan.................................. 8
Retirement Benefits....................................... 9
Compensation Committee Report on Executive Compensation... 9
Stockholder Return Performance Graph........................ 12
Independent Auditors........................................ 12
Stockholder Proposals....................................... 12
ITEM NO. 3: STOCKHOLDER PROPOSAL REGARDING INDEPENDENT
MANAGEMENT OF THE BOARD OF DIRECTORS............ 13
Board of Directors' Response................................ 13
Stockholder Proposals and Director Nominations for 2001..... 14
Other Business.............................................. 15
Appendix A--PACCAR Inc Restricted Stock and Deferred
Compensation Plan for Non-Employee Directors.............. A-1
Map to the Stockholder Meeting..............................
</TABLE>
i
<PAGE> 4
---------------
PROXY STATEMENT
---------------
The Board of Directors of PACCAR Inc issues this proxy statement to solicit
proxies for use at the Annual Meeting of Stockholders on April 25, 2000 at the
Meydenbauer Center in Bellevue, Washington. This proxy statement includes
information about the business matters that will be voted upon at the meeting.
The proxy statement and proxy form were first sent to stockholders on or about
March 16, 2000.
GENERAL INFORMATION
VOTING RIGHTS
Stockholders eligible to vote at the meeting are those identified as owners
at the close of business on the record date of March 3, 2000. Each outstanding
share of common stock is entitled to one vote on all items presented at the
meeting. At the close of business on March 3, 2000 the Company had outstanding
78,507,044 shares of common stock.
Stockholders may vote in person at the meeting or by proxy. Execution of a
proxy does not affect the right of a stockholder to attend the meeting. THE
BOARD RECOMMENDS THAT STOCKHOLDERS EXERCISE THEIR RIGHT TO VOTE BY PROMPTLY
COMPLETING AND RETURNING THE PROXY FORM EITHER BY MAIL, TELEPHONE, OR THE
INTERNET.
VOTING BY PROXY
Mark C. Pigott and Gerald Grinstein are designated proxy holders to vote
shares on behalf of stockholders at the 2000 Annual Meeting. The proxy holders
are authorized to:
- vote shares as instructed by the stockholders who have properly completed
and returned the proxy form;
- vote shares as recommended by the Board when stockholders have executed
and returned the proxy, but have given no instructions; and
- vote shares at their discretion on any matter not identified in the proxy
form that is properly brought before the Annual Meeting.
The Trustee for the PACCAR Inc Savings Investment Plan (the "SIP Plan")
votes shares held in the SIP Plan according to each member's instructions on the
proxy form. If the proxy form is not returned or is returned without voting
instructions, the Trustee will vote the shares in direct proportion to the voted
shares of all other SIP Plan members, as provided for in the SIP Plan.
The Company has received a letter that a stockholder may seek to bring
certain matters for discussion at the Annual Meeting including a report on
Company corporate governance practices, shareholder proposal and meeting
procedures. If properly brought before the Annual Meeting for a vote, the
designated proxy holders named in the proxy form will exercise their discretion
to vote for current Company policies.
PROXY VOTING PROCEDURES
The Proxy Form allows registered stockholders to vote in one of three ways:
Mail. Stockholders may complete, sign, date, and return their proxy form in
the pre-addressed, postage-paid envelope provided.
Telephone. Stockholders may call the toll free number listed on the proxy
form and follow the voting instructions given.
Internet. Stockholders may access the internet address listed on the proxy
form and follow the voting instructions given.
1
<PAGE> 5
Telephone and internet voting procedures authenticate each stockholder by
using a control number. The voting procedures will confirm that your
instructions have been properly recorded. Stockholders who vote by telephone or
internet should not return the proxy form.
Stockholders who hold shares through a broker or agent should follow the
voting instructions received from them.
Revoking Proxy Voting Instructions
A proxy may be revoked by later dated proxy or by written notice to the
Secretary of the Company at any time before it is voted. Stockholders who hold
shares through a broker should contact the broker or other agent if they wish to
change their vote after executing the proxy.
VOTE REQUIRED AND METHOD OF COUNTING VOTES
ITEM NO. 1: ELECTION OF DIRECTORS
Directors are elected by a plurality of the votes cast for the election of
directors. If a stockholder does not vote for the election of directors because
authority to vote is withheld, because the proxy is not returned, because the
broker holding the shares does not vote, or because of some other reason, the
shares will not count in determining the total number of votes for each nominee.
Proxies which are signed and returned unmarked will be voted FOR the nominees
for Class II Directors.
If any of the nominees are unable to act as a director because of an
unexpected occurrence, the proxy holders may vote the proxies for another person
or the Board of Directors may reduce the number of directors to be elected.
ITEM NO. 2: APPROVAL OF THE PACCAR INC RESTRICTED STOCK AND DEFERRED
COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
Approval of the proposed plan requires the affirmative vote of the majority
of shares present in person or by proxy. Abstentions count as a vote against the
proposed plan. Broker non-votes do not affect the voting calculations. Proxies
that are signed and returned unmarked will be voted FOR the proposed plan.
ITEM NO. 3: STOCKHOLDER PROPOSAL
Approval of the proposal requires the affirmative vote of the majority of
shares present in person or by proxy. Abstentions will count as a vote against
the proposal. Broker non-votes do not affect the voting calculations. Proxies
which are signed and returned unmarked will be voted AGAINST the proposal.
EXPENSES OF SOLICITATION
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.
2
<PAGE> 6
STOCK OWNERSHIP
The following persons are known to the Company to be the beneficial owners
of more than five percent of the Company's common stock as of December 31, 1999
(amounts shown are rounded to whole share amounts):
<TABLE>
<CAPTION>
SHARES
NAME AND ADDRESS OF BENEFICIALLY PERCENT
BENEFICIAL OWNER OWNED OF CLASS
------------------- ------------ --------
<S> <C> <C>
BankAmerica Corporation 5,254,122(a) 6.7
100 N. Tryon Street
Charlotte, North Carolina 28255
Charles M. Pigott 4,882,774(b)(c) 6.2
P.O. Box 1518
Bellevue, WA 98009
</TABLE>
The following list shows the shares of common stock beneficially owned by
each director and Named Officer (as identified below) and by all directors and
executive officers as a group as of December 31, 1999 (amounts shown are rounded
to whole share amounts):
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT
NAME OWNED OF CLASS
---- ------------ --------
<S> <C> <C>
John M. Fluke, Jr. ................................. 3,426 *
Gerald Grinstein.................................... 4,000 *
David J. Hovind..................................... 66,182(e) *
Gary S. Moore....................................... 28,517(e) *
David K. Newbigging................................. 0 *
Charles M. Pigott................................... 4,882,774(b)(c) 6.2
James C. Pigott..................................... 3,717,205(d) 4.7
Mark C. Pigott...................................... 891,979(c)(f) 1.1
Thomas E. Plimpton.................................. 24,808(e) *
William G. Reed, Jr. ............................... 130,868(c) *
Michael A. Tembreull................................ 108,859(e) *
Harold A. Wagner.................................... 2,000 *
Total of all directors and executive officers as a
group (15 individuals)............................ 8,206,959(g) 10.5
</TABLE>
- ---------------
* does not exceed one percent.
(a) Of the 5,254,122 shares, BankAmerica Corporation and/or its subsidiaries
have sole voting power as to 5,254,122 shares, sole investment power as to
5,254,122 shares, shared voting power as to 0 shares and shared investment
power as to 0 shares.
(b) Includes 34,837 shares allocated in the Company's Savings Investment Plan,
and options to purchase 242,720 shares. Also includes 1,432,862 shares held
by a charitable trust of which he is co-trustee and shares voting and
investment power, and 268,455 shares held by a corporation over which he has
sole voting power and sole investment power over 228,960 of such shares.
(c) Does not include shares held in the name of a spouse and/or children to
which beneficial ownership is disclaimed.
(d) Includes the same 1,432,862 shares referenced in note (b) held by a
charitable trust of which he is a co-trustee and shares voting and
investment power.
(e) Includes shares allocated in the Company's Savings Investment Plan for which
the participant has sole voting power over all shares and investment power
as follows: D. J. Hovind (9,110 total/3,508 investment), G. S. Moore (11,801
total/3,842 investment), T. E. Plimpton (5,644 total/851 investment), and M.
A. Tembreull (12,223 total/4,000 investment). Includes stock units accrued
for deferred contingent cash awards under the Deferred Incentive
Compensation (DIC) and the Long Term
3
<PAGE> 7
Incentive (LTI) Plans as follows: D. J. Hovind (3,939), T. E. Plimpton
(568), and M. A. Tembreull (15,517). Also includes options to purchase
shares as follows: D. J. Hovind (43,170), G. S. Moore (16,608), T. E.
Plimpton (18,596), and M. A. Tembreull (72,776).
(f) Includes 8,413 shares allocated in the Company's Savings Investment Plan for
which he has sole voting power over all shares and investment power over
1,979 shares; 16,677 stock units accrued for a deferred contingent cash
award under the LTI and DIC Plans, and the same 268,455 shares owned by the
corporation referenced in note (b) over which he has no voting or investment
power. Also includes options to purchase 135,122 shares.
(g) Reflects elimination of duplicate reporting of 1,432,862 shares referenced
in notes (b) and (d) and 268,455 shares referenced in notes (b) and (f).
ITEM NO. 1: ELECTION OF DIRECTORS
Three directors constituting Class II Directors are to be elected at the
meeting. The persons named below have been designated by the Board as nominees
for election as Class II Directors for a term expiring at the Annual Meeting of
Stockholders in 2003. All of the nominees are currently serving as directors of
the Company.
NOMINEES FOR CLASS II DIRECTORS WHOSE TERMS EXPIRE AT THE ANNUAL MEETING IN
2003:
JAMES C. PIGOTT, age 63, has been president of Pigott Enterprises, Inc., a
private investment company, since 1983 and chairman and chief executive officer
of Management Reports and Services, Inc., a provider of business services, until
December 1999. He is the brother of Charles M. Pigott and the uncle of Mark C.
Pigott, both directors of the Company. He has served as a director of the
Company since 1972.
MARK C. PIGOTT, age 46, has been Chairman and Chief Executive Officer of
the Company since January 1997. He served as a Vice Chairman of the Company from
January 1995 to December 31, 1996, Executive Vice President from December 1993
to January 1995, Senior Vice President from January 1990 to December 1993, and
Vice President from October 1988 to December 1989. He is the son of Charles M.
Pigott and nephew of James C. Pigott, both directors of the Company. He has
served as a director of the Company since July 1994.
WILLIAM G. REED, JR., age 60, served as chairman of Simpson Investment
Company, a forest products holding company and the parent company of Simpson
Timber Company, from 1971 to 1996. He has served as a director of the Company
since 1998. He is also a director of Microsoft Corporation, Safeco Corporation,
Simpson Investment Company, The Seattle Times, and Washington Mutual, Inc.
DIRECTORS WHOSE TERMS EXPIRE AT THE ANNUAL MEETING IN 2001 (CLASS III
DIRECTORS):
DAVID K. NEWBIGGING, age 66, has served as chairman of Friends' Provident
Life Office, a life assurance and asset management company based in the United
Kingdom, since 1998, and has served as a director since 1993. He also serves as
chairman of Faupel Trading Group Plc and Thistle Hotels Plc, and deputy chairman
of Benchmark Group Plc, all United Kingdom based companies. He was previously
chairman of Equitas Holdings Limited, the parent company of a group of
reinsurance companies based in the United Kingdom from 1995-1998. He has served
as a director of the Company since 1999. He is also a director of Merrill Lynch
& Co Inc. and Ocean Energy Inc.
CHARLES M. PIGOTT, age 70, became Chairman Emeritus of the Company in
January 1997. He served as President of the Company from 1965 to 1986, Chief
Executive Officer from 1968 until 1997, and Chairman from 1986 until 1997. He is
the brother of James C. Pigott, and the father of Mark C. Pigott, both directors
of the Company. He has served as a director of the Company since 1961. He is
also a director of The Boeing Company, Chevron Corporation, and The Seattle
Times.
HAROLD A. WAGNER, age 64, has served as chairman and chief executive
officer of Air Products and Chemicals, Inc., a supplier of industrial gases,
related equipment and chemicals, since 1992. He has served as
4
<PAGE> 8
a director of the Company since 1999. He is also a director of CIGNA
Corporation, Daido-Hoxan, Inc and United Technologies Corporation.
DIRECTORS WHOSE TERMS EXPIRE AT THE ANNUAL MEETING IN 2002 (CLASS I DIRECTORS):
JOHN M. FLUKE, JR., age 57, is chairman of Fluke Capital Management, L.P.,
a private investment company. He has served as a director of the Company since
1984.
GERALD GRINSTEIN, age 67, is non-executive chairman of Agilent
Technologies, Inc., a manufacturer of test and measurement instruments. He is
also a principal of Madrona Investment Group, L.L.C., a private investment
company. Mr. Grinstein served as non-executive chairman of Delta Airlines, Inc.
from August 1997 to October 1999. He served as chairman of Burlington Northern
Santa Fe Corp., a railroad transportation company, until his retirement in 1995.
He was chairman and chief executive officer of Burlington Northern Inc. from
1991 to 1995. He has served as a director of the Company since 1997. He is also
a director of Agilent Technologies, Inc., Delta Airlines, Inc., Expedia, Inc.,
Imperial Sugar Corporation, the Pittston Company, and Vans, Inc.
DAVID J. HOVIND, age 59, has been President of the Company since 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. He has served as a director of the Company
since January 1992.
MICHAEL A. TEMBREULL, age 53, has been Vice Chairman of the Company since
January 1995. He served as Executive Vice President from January 1992 to January
1995, and Senior Vice President from September 1990 to January 1992. He has
served as a director of the Company since July 1994.
The Board recommends a vote FOR the election of J. C. Pigott, M. C. Pigott,
and W. G. Reed, Jr. as directors.
BOARD MEETINGS AND COMMITTEES
The Board of Directors met four times during 1999, and each member attended
at least 75% of the aggregate of meetings of the Board of Directors and the
committees of the Board on which each served. The Board has four standing
committees. The members are listed below with the chairman of each committee
listed first.
<TABLE>
<CAPTION>
AUDIT COMPENSATION EXECUTIVE NOMINATING
COMMITTEE COMMITTEE COMMITTEE COMMITTEE
- ----------------- ---------------- --------------- ------------
<S> <C> <C> <C>
J. C. Pigott G. Grinstein C. M. Pigott M. C. Pigott
J. M. Fluke, Jr. D. K. Newbigging M. C. Pigott G. Grinstein
W. G. Reed, Jr. J. C. Pigott W. G. Reed, Jr. C. M. Pigott
H. A. Wagner W. G. Reed, Jr.
</TABLE>
The Audit Committee recommends to the Board the selection of independent
auditors; reviews reports of independent auditors, internal auditors, and the
annual financial statements; and monitors the effectiveness of the audit
process, financial reporting, and the corporate compliance programs. The
Committee met once in 1999.
The Compensation Committee reviews and approves salaries and other
compensation matters for executive officers. It administers the Long Term
Incentive Plan, the Senior Executive Incentive Plan, and the Deferred Incentive
Compensation Plan. The Committee met four times in 1999.
The Executive Committee acts on routine Board matters when the Board is not
in session. The Committee acted once in 1999.
The Nominating Committee recommends candidates for election to the Board of
Directors and considers nominees recommended by stockholders. The Committee met
once in 1999.
5
<PAGE> 9
COMPENSATION OF DIRECTORS
In 1999, each director who was not an employee was entitled to an annual
retainer of $40,000 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.
ITEM NO. 2. APPROVAL OF THE PACCAR INC RESTRICTED STOCK AND DEFERRED
COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
The Company recommends to the stockholders the approval of the PACCAR Inc
Restricted Stock and Deferred Compensation Plan for Non-Employee Directors (the
"Plan").
Summary of Benefits. Under the Plan, each non-employee director would
receive a grant of restricted stock annually in addition to cash compensation.
There are currently seven non-employee directors. The number of shares granted
is determined by dividing ten thousand dollars ($10,000) by the fair market
value of PACCAR Inc common stock on the grant date. In 2000 the grant date will
be July 5. In subsequent years the grant date will be the first business day of
each calendar year. Plan participants shall have all the rights of a stockholder
with respect to the restricted shares from the date of the grant, including the
right to vote the shares and to receive cash dividends on those shares. Each
grant will be evidenced by a written Restricted Stock Grant Agreement.
The restricted shares cannot be sold or otherwise transferred for three
years from the grant date. Shares that have not been held for the three year
holding period at the time the director terminates service as a director are
forfeited unless termination is due to mandatory retirement, disability, or
death. In those circumstances shares shall not be forfeited and are immediately
unrestricted.
The Plan also allows non-employee directors to defer their cash
compensation into an income account with interest at a variable rate or into a
stock unit account representing the value of an equal number of shares of PACCAR
stock. Unpaid stock units are credited with dividend equivalents in the same
amount as dividends paid on PACCAR stock. Upon retirement or termination from
the Board the stock unit account will be paid out in shares of PACCAR stock. The
director may elect to receive payment from the income account in a lump sum or
in installments over a period of up to 15 years.
New Plan Benefits. The following table sets forth the dollar amount of the
Plan benefits in each fiscal year.
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE
----------------- ------------
<S> <C>
Non-Executive Director Group(7)............................. $70,000
</TABLE>
Stock Available for Grants. The Plan reserves 50,000 shares of PACCAR
common stock for benefits under this Plan, which shall be authorized but
unissued shares of stock, treasury shares, or issued shares that have been
reacquired by the Company. The Board of Directors may adjust the number of
shares granted to prevent dilution in the event of a stock split, a stock
dividend, or other event that increases or decreases the number or value of
issued and outstanding shares.
Plan Administration. The Plan will be administered by the Executive
Committee of the Board of Directors. The Committee has sole discretion to make
all determinations necessary for plan administration. Its decisions shall be
binding on all persons.
Amendment or Termination. The Board of Directors or the Executive Committee
may amend or terminate the Plan at any time. Approval by the Company's
stockholders shall be obtained only if required by law.
Change in Control. In the event of a change in control all restricted stock
will become unrestricted. Deferred accounts will be payable within 30 days from
the date the change in control occurs.
Federal Tax Consequences. Grants of restricted stock are taxable to the
non-employee director as ordinary income in the year the grant becomes
unrestricted. Deferred compensation accounts are taxable as
6
<PAGE> 10
ordinary income in the year received. The Company is entitled to receive a
corresponding deduction for the year that monies are included in the
non-employee director's taxable income.
Effective Date and Duration. The Plan is effective upon approval by the
Company's stockholders and shall remain in effect until terminated.
The text of the Plan is set forth in Appendix A to this proxy statement.
The foregoing summary of its principal features does not purport to be complete
and is subject to and qualified in its entirety by Appendix A.
The Board recommends a vote FOR the approval of the PACCAR Inc Restricted
Stock and Deferred Compensation Plan for Non-Employee Directors.
COMPENSATION OF EXECUTIVE OFFICERS
The following table discloses the compensation of the Company's chief
executive officer and the other four most highly compensated executives
(collectively, the "Named Officers") for each of the last three fiscal years
ending December 31, 1999:
SUMMARY COMPENSATION
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------
AWARDS PAYOUTS
------------ ----------
SECURITIES
ANNUAL COMPENSATION(A) UNDERLYING LONG TERM
-------------------------- OPTIONS/SARS INCENTIVE ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(C) (SHARES) PAYOUTS(D) COMPENSATION(B)
--------------------------- ---- -------- -------- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
M. C. Pigott.................. 1999 $938,462 $828,666 61,407 $243,750 $8,000
Chairman and Chief 1998 846,923 714,000 39,625 240,000 8,000
Executive Officer 1997 743,269 557,500 52,850 90,750 8,000
D. J. Hovind.................. 1999 673,462 540,000 35,013 268,125 8,000
President 1998 632,500 443,334 25,251 300,000 8,000
1997 598,654 420,000 35,234 218,400 8,000
M. A. Tembreull............... 1999 673,462 540,000 35,013 243,750 8,000
Vice Chairman 1998 632,500 443,334 25,251 240,000 8,000
1997 597,308 420,000 35,234 109,120 8,000
T. E. Plimpton................ 1999 414,616 293,493 17,452 76,125 8,000
Executive Vice President 1998 371,462 212,375 10,489 75,600 8,000
1997 300,000 173,400 12,684 57,713 8,000
G. S. Moore................... 1999 299,135 177,600 10,342 67,320 8,000
Senior Vice President 1998 274,385 138,188 5,983 43,200 8,000
1997 255,000 117,715 8,386 45,000 8,000
</TABLE>
- ---------------
(a) There were no items of "Other Annual Compensation" above the reporting
threshold for any listed officer during the period covered by the Table.
(b) Amounts of All Other Compensation represent Company matching contributions
to the Company's Savings Investment Plan.
(c) Bonuses earned in 1999 are determined and paid in 2000.
(d) Represents cash awards which were paid, or were payable but deferred at the
Named Officer's election, during 1997, 1998, and 1999 and earned during the
1994-1996, 1995-1997, and 1996-1998 LTI Plan performance cycles,
respectively.
7
<PAGE> 11
OPTION GRANTS--Shown below is information on stock options granted in 1999
pursuant to the LTI Plan to the Named Officers.
OPTION GRANTS IN 1999
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------
NUMBER OF
SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS GRANTED GRANT DATE
OPTIONS TO EMPLOYEES IN EXERCISE OR EXPIRATION PRESENT
NAME GRANTED FISCAL YEAR BASE PRICE DATE(A) VALUE(B)
---- ---------- ---------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
M. C. Pigott......................... 61,407 12.2% $53.7813 4/27/2009 $1,181,845
D. J. Hovind......................... 35,013 6.9 53.7813 4/27/2009 673,864
M. A. Tembreull...................... 35,013 6.9 53.7813 4/27/2009 673,864
T. E. Plimpton....................... 17,452 3.5 53.7813 4/27/2009 335,883
G. S. Moore.......................... 10,342 2.1 53.7813 4/27/2009 199,043
</TABLE>
- ---------------
(a) Options granted in 1999 become exercisable on January 1, 2002. This date may
be accelerated in the event of a Change in Control of the Company (as
defined in the LTI Plan).
(b) The Grant Date Present Value was determined by using a variation of the
Black-Scholes option pricing model with the following assumptions: (i)
37.53% expected share price volatility, (ii) 6.01% risk-free rate of return,
(iii) an expected dividend yield of 4.25%, (iv) a ten-year exercise period,
and (v) a five-year expected life.
OPTION EXERCISES AND FISCAL YEAR-END VALUES--Shown below is information
about the exercise of stock options and stock appreciation rights (SARs) under
the 1981 Long Term Incentive Plan and the LTI Plan by the Named Officers in 1999
and the value of unexercised options/SARs on December 31, 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS/SARS IN-THE-MONEY OPTIONS/
ACQUIRED VALUE AT FY-END SARS AT FY-END
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
M. C. Pigott.................... 0 $ 0 82,272/153,882 $1,728,636/$406,284
D. J. Hovind.................... 0 0 46,796/ 95,498 915,447/ 270,861
M. A. Tembreull................. 15,000 491,563 37,542/ 95,498 734,415/ 270,861
T. E. Plimpton.................. 6,000 206,063 5,912/ 40,625 115,654/ 97,508
G. S. Moore..................... 8,222 321,447 7,886/ 24,711 154,270/ 64,467
</TABLE>
LONG TERM INCENTIVE PLAN--All stock-based awards under the LTI Plan are
shown in the Option Grant and Option Exercise tables above. Shown below is
information with respect to the contingent cash awards for the 1999-2001 cycle
under the LTI Plan:
LONG TERM INCENTIVE PLAN--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
PERFORMANCE -----------------------------------
NAME PERIOD THRESHOLD TARGET MAXIMUM
---- ----------------- --------- -------- ----------
<S> <C> <C> <C> <C>
M. C. Pigott.......................... 1/1/99 - 12/31/01 $48,628 $534,375 $1,068,750
D. J. Hovind.......................... 1/1/99 - 12/31/01 27,727 304,688 609,376
M. A. Tembreull....................... 1/1/99 - 12/31/01 27,727 304,688 609,376
T. E. Plimpton........................ 1/1/99 - 12/31/01 6,910 151,875 303,750
G. S. Moore........................... 1/1/99 - 12/31/01 4,095 90,000 180,000
</TABLE>
Payments of awards under the LTI Plan are tied to achieving Company,
business unit, and individual goals over a three-year performance period.
Company performance goals are based on the Company's financial
8
<PAGE> 12
performance relative to a selected group of companies with similar business
characteristics. Business unit and individual performance goals are based on
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>
$ 400,000.......................... $ 87,521 $116,694 $145,868 $175,041 $204,215
600,000.......................... 132,521 176,694 220,868 265,041 309,215
800,000.......................... 177,521 236,694 295,868 355,041 414,215
1,000,000.......................... 222,521 296,694 370,868 445,041 519,215
1,500,000.......................... 335,021 446,694 558,368 670,041 781,715
1,800,000.......................... 402,521 536,694 670,868 805,041 939,215
</TABLE>
The Company has a noncontributory retirement plan which has been in effect
since 1947. The 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 a maximum of 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 LTI Plan. Years of credited
service as of December 31, 1999 for the Named Officers are: M. C. Pigott, 21
years; D. J. Hovind, 35 years; M. A. Tembreull, 29 years; and T. E. Plimpton, 23
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 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 is 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 executive officers under these programs is
determined annually by the Compensation Committee. The Committee is composed
exclusively of independent directors.
The Company believes that its 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 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 compensation is
competitive with the average compensation offered by similar
9
<PAGE> 13
companies, including some of the selected companies described in the LTI Plan
discussed below (the "Selected Companies"). A 1999 survey compared the
compensation packages of 10 companies with which the Company competes in the
market for executive talent. Among the companies included in the survey were six
of the thirteen companies which comprise the Standard & Poor's indices used in
the performance graph set forth later in this proxy statement. For validation, a
broader based survey including 338 companies was reviewed. According to the
surveys, the base salaries of the Company's executive officers including its
Chief Executive Officer were in the median range of the salaries paid by
companies surveyed.
Annual Cash Bonuses. Annual cash bonuses may range from 0% up to 96% of the
executive officer's base salary. Bonuses are awarded based upon Company
performance relative to an overall profit goal and the attainment of one or more
individual goals approved by the Compensation Committee. In general, these goals
involve factors such as the financial performance of the business units for
which the executive has direct responsibility; profitability or return on
investment; as well as non-financial performance criteria such as market share
improvement, product quality, 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 earned in 1999 and paid in 2000 reflect an achievement in
excess of 100% of the Company's overall profit goal for 1999.
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 85% to stock options and 15% to the cash incentive award.
Stock options 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. The
exercise price of the stock options is the market price at the time of grant.
After considering the long term incentives available to executive officers in
equivalent positions in similar companies the Compensation Committee increased
the amount of the target award in 1999.
A significant portion (50% to 100%) 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 six of the thirteen
companies which make up the published Standard & Poor's indices in the
performance graph set forth below.
The remaining portion of the long term cash incentive award is based upon
business unit and individual objectives that involve factors similar to those
described above for the annual cash bonus, but are measured over a three-year
performance cycle. The cash incentive award is based on the Committee's
evaluation of each executive's achievement of performance objectives during the
preceding three years. The target amount will be earned if the Company's
financial performance ranks above at least half of the Selected Companies (the
"Comparative Performance Goal") and business unit and individual performance are
at 100% of goal. The maximum award amount will be earned if Company's financial
performance ranks above all of the Selected Companies and business unit and
individual performance are at least 150% of goal. No award will be earned if
Company's financial performance ranks below 75% of the Selected Companies and
business unit and individual performance are below 75% of goal.
The cash awards paid in 1999 for the three-year cycle ended in 1998 reflect
an achievement in excess of 100% of the Comparative Performance Goal. The
incentive cash awards for each executive officer for the three-year cycle ended
in 1999 were not determined on the date this proxy statement was prepared.
10
<PAGE> 14
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.
The CEO's 1999 annual cash bonus was based entirely on the Company's profit
goal as established by the Compensation Committee. The annual bonus earned in
1999 and paid in 2000 reflects an achievement in excess of 100% of the goal for
1999. The cash portion of the long term incentive was based 100% on the
Company's performance during the three-year cycle as compared to the Selected
Companies. For the three-year cycle ended in 1998, Company performance resulted
in goal achievement in excess of 100% of the Comparative Performance Goal. The
incentive cash award for the three-year cycle ended in 1999 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.
The LTI Plan and the annual cash bonus program are structured to allow the
Company to preserve tax deductions for performance based executive compensation
under section 162(m) of the Internal Revenue Code.
Overall Compensation. The overall compensation package (base salary, annual
cash bonuses, and long term incentives) for the Company's executive officers was
within the median range of compensation paid by similar companies surveyed
except for the Chief Executive Officer who was below the median range. The
Compensation Committee believes the overall compensation package for the
Company's key executives meets the objective of providing significant individual
performance incentives.
MEMBERS OF THE
COMPENSATION COMMITTEE
G. Grinstein
D. K. Newbigging
J. C. Pigott
W. G. Reed, Jr.
11
<PAGE> 15
STOCKHOLDER RETURN PERFORMANCE GRAPH--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 (as reported on the Bloomberg data service) for the period
of five fiscal years commencing December 31, 1994 and ending on December 31,
1999. 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, 1994 in the Company's
common stock and in the stated indices and assumes reinvestment of dividends.
[Performance Graph]
<TABLE>
<CAPTION>
PACCAR INC. S&P 500 S&P INDICES
----------- ------- -----------
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 104.24 134.11 115.37
1996 174.45 161.29 143.43
1997 280.02 211.30 197.95
1998 231.08 267.65 170.74
1999 262.50 319.91 187.00
</TABLE>
INDEPENDENT AUDITORS
Ernst & Young LLP performed the audit of the Company's financial statements
for 1999 and has been selected to perform this function for 2000. Partners from
the Seattle office of Ernst & Young LLP will attend the Annual Meeting, will
have the opportunity to make statements if they desire, and will be available to
respond to appropriate questions.
STOCKHOLDER PROPOSALS
The Company has been advised that one stockholder intends to present a
proposal at the Annual Meeting. The Company will furnish the name, address, and
number of shares held by the proponent of the following stockholder proposal
upon receipt of written or oral request for such information to the Secretary.
In accordance with the proxy regulations, the following is the complete
text of the proposal exactly as submitted. The Company accepts no responsibility
for the proposal.
12
<PAGE> 16
ITEM NO. 3: STOCKHOLDER PROPOSAL REGARDING THE INDEPENDENT MANAGEMENT OF THE
BOARD OF DIRECTORS
STOCKHOLDER PROPOSAL REGARDING THE INDEPENDENT MANAGEMENT OF THE BOARD OF
DIRECTORS (VERBATIM)
WHEREAS, the Board's practices in governing the Company's affairs can
significantly affect the value of the shareholders' investments;
WHEREAS, shareholders have a legitimate interest in evaluating the
composition of the Board, in order to assess the Board's ability to represent
shareholders' interests;
WHEREAS, the Company's current Board structure raises serious questions
about the Board's capacity to act independently of management if necessary.
RESOLVED, that the shareholders request that the Company adopt and
communicate to shareholders a policy to move as rapidly as possible to
reconfigure the Board of Directors so that: a substantial majority of directors
are independent, and so that there are Audit, Compensation and Nominating
committees that consist entirely of independent directors. An "independent
director" is one who has no present or former employment by the Company or any
significant financial or personal ties, other than stock ownership, to the
Company or management.
PROPONENT'S SUPPORTING STATEMENT (VERBATIM)
TIAA-CREF is a long-term shareholder with investments in more than 2,500
U.S. corporations, including a significant investment in PACCAR, Inc. We believe
the primary responsibility of a board of directors is fostering a company's
long-term success, consistent with the board's fiduciary obligation to
shareholders. To fulfill best that responsibility and thereby enhance a
company's ability to produce long-term shareholder value, a substantial majority
of the board should be independent directors, and certain key committees should
be composed entirely of independent directors.
After reviewing PACCAR's corporate governance practices and board
structure, we have serious questions about this Board's independence. A majority
of the Board is not independent, and none of the key committees (Audit,
Compensation and Nominating Committees) are composed entirely of independent
directors, in our view. The Company's practices are not consistent with the
corporate governance principles enunciated by The Business Roundtable, an
important and influential voice of corporate management in America, or by other
knowledgeable parties.
We believe an independent board is an essential component of any effective
corporate governance system. An independent board can best represent all
shareholders and inspire shareholder confidence in the quality and impartiality
of its decision-making processes and the decisions themselves, without the
appearance of conflicts of interest. We acknowledge the importance of input of
people with intimate knowledge of a company in board or committee deliberations,
but we believe key management executives can take an active part in board
discussions without being board members. Companies have greater credibility when
critical decisions on such subjects as executive compensation, audits,
management changes, corporate control contests, and major lawsuits, are made by
an independent board.
Because having a truly independent board structure is integral to
shareholders' confidence, and, ultimately, to enhancing the company's long-term
value, we ask that this resolution be adopted.
BOARD OF DIRECTORS' RESPONSE
THE BOARD OF DIRECTORS OPPOSES THE PROPOSED RESOLUTION AND UNANIMOUSLY
RECOMMENDS A VOTE AGAINST ITEM NO. 3 FOR THE FOLLOWING REASONS:
The shareholder proposal attaches a disproportionate importance to its very
rigid definition of "independence." The PACCAR Board accepts the definition of
"independent director" recently adopted by NASDAQ
13
<PAGE> 17
as well as that formulated by The Business Roundtable. The NASDAQ definition of
independent director was approved by the Securities and Exchange Commission
(SEC). PACCAR's shares are traded on NASDAQ.
Among other factors, the NASDAQ definition of independent director excludes
a director who was employed by the Company in the last three years or has an
immediate family member employed as a Company executive officer.
The majority of PACCAR's Board of Directors are independent from
management. Both the Company's audit and compensation committees are composed
entirely of independent directors per the NASDAQ definition of
independence. NASDAQ does not require the nominating committee to be composed
entirely of independent directors. Indeed, according to the Investor
Responsibility Research Center (IRRC), a majority of publicly-traded
corporations do not have nominating committees composed entirely of independent
members.
The Board also agrees with The Business Roundtable's opinion that corporate
boards should make a judgment about a director's independence based on
individual circumstances rather than the mechanical application of rigid
criteria. Directors with substantial shareholdings are highly motivated to
represent shareholder interests; indeed, their interests in this respect are the
same as those of other shareholders. Where an individual is wholly independent
of management and otherwise fully qualified, the Board believes that the
individual qualifies as an independent director.
Implementation of Item No. 3 would deprive the PACCAR Board of needed
flexibility in creating a balance of knowledge, experience, and capability on
the Board. Application of the rigid definition of "independence" proposed by one
institutional investor would exclude worthy candidates from being directors.
The Board believes that compliance with applicable securities exchange and
government rules combined with the Board's judgment about a director's ability
to contribute to shareholder value are the key elements in providing independent
governance. PACCAR's directors have served the shareholders and Company well for
many years. PACCAR continues to be one of the most profitable automotive
manufacturers in the world due to the strength and experience of its Board of
Directors.
The Board of Directors recommends that you vote AGAINST Item No. 3. Your
proxy will be voted against this proposal unless you specify otherwise.
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR 2001
A stockholder proposal must be received at the principal executive offices
of the Company, P.O. Box 1518, Bellevue, Washington 98009 by November 17, 2000
to be considered for inclusion in the proxy materials for the Company's 2001
Annual Meeting of Stockholders.
For business to be brought before the Annual Meeting of Stockholders by a
stockholder, other than those proposals included in the proxy materials, the
Company's Bylaws provide that notice of such business must be received at the
Company's principal executive offices not less than 45 nor more than 60 days
prior to the meeting. The notice must specify the stockholder's name, address,
and number of shares of the Company beneficially owned, and it must specify
certain other information.
The Bylaws of the Company provide (Art. III, Sec. 6) that nominations for
director by a stockholder must be received by the Corporate Secretary at the
Company's principal executive offices not less than 45 nor more than 60 days
prior to a stockholders' meeting. The notice must specify the stockholder's
name, address, and number of shares of the Company beneficially owned, and it
must specify certain information relating to the nominee as required under
Regulation 14A under the Securities Exchange Act of 1934.
14
<PAGE> 18
OTHER BUSINESS
The Company knows of no other business likely to be brought before the
meeting.
/s/ JANICE M. D'AMATO
J. M. D'Amato
Secretary
March 16, 2000
15
<PAGE> 19
APPENDIX A
PACCAR INC
RESTRICTED STOCK AND DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
1. PURPOSE OF THE PLAN
The COMPANY has established this PLAN to provide NON-EMPLOYEE DIRECTORS
with financial incentives to promote the success of the COMPANY'S long-term
business objectives, and to encourage qualified persons to accept nominations as
a NON-EMPLOYEE DIRECTOR. The PLAN is unfunded and benefits are payable in the
form of shares of PACCAR COMMON STOCK or cash.
2. DEFINITIONS
(a) BOARD OF DIRECTORS means the Board of Directors of PACCAR Inc.
(b) COMMITTEE means the Executive Committee of the BOARD OF DIRECTORS or
any successor to such committee.
(c) COMMON STOCK means common shares of PACCAR Inc with $1.00 par value and
any class of common shares into which such common shares hereafter may be
converted.
(d) COMPANY means PACCAR Inc, a Delaware corporation.
(e) DEFERRED ACCOUNTS means either the unfunded Stock Unit or Income
Account maintained by the COMPANY into which a NON-EMPLOYEE DIRECTOR may defer
payment of his or her cash compensation (retainer and fees) for service as a
COMPANY DIRECTOR.
(f) FAIR MARKET VALUE means the closing price of the COMMON STOCK on NASDAQ
reported for the date specified for determining such value.
(g) GRANT DATE means the date each year that NON-EMPLOYEE DIRECTORS receive
a grant of RESTRICTED STOCK.
(h) GRANTEE means the NON-EMPLOYEE DIRECTOR receiving the RESTRICTED STOCK
or his legal representative, legatees, distributees, or alternate payees, as the
case may be.
(i) MANDATORY RETIREMENT means retirement as a DIRECTOR at age seventy-two
(72) or at such other age as may be specified in the bylaws for the BOARD OF
DIRECTORS in effect at the time of a NON-EMPLOYEE DIRECTOR'S TERMINATION.
(j) NON-EMPLOYEE DIRECTOR means a member of the COMPANY'S BOARD OF
DIRECTORS who is not a current employee of the COMPANY.
(k) PLAN means this PACCAR Inc Restricted Stock and Deferred Compensation
Plan for Non-Employee Directors as it may be amended from time to time, or any
successor plan that the COMMITTEE or BOARD OF DIRECTORS may adopt from time to
time with respect to the grant of DIRECTOR RESTRICTED STOCK or other stock-based
grants.
(l) RESTRICTED STOCK means COMMON STOCK that may not be sold, transferred,
or otherwise disposed of by the GRANTEE except under such circumstances as may
be specified by the COMMITTEE.
(m) TERMINATION occurs when a NON-EMPLOYEE DIRECTOR ceases to be a member
of the BOARD OF DIRECTORS.
3. PARTICIPATION
Each NON-EMPLOYEE DIRECTOR of the COMPANY shall be a participant in the
PLAN during his tenure as a DIRECTOR.
A-1
<PAGE> 20
4. AWARDS OF RESTRICTED STOCK
(a) On July 5, 2000 and on the first business day of each calendar year
thereafter for the duration of the PLAN (the GRANT DATE), each person who is a
NON-EMPLOYEE DIRECTOR shall receive a grant of RESTRICTED STOCK in an amount to
be determined in accordance with the following formula: The number of shares of
RESTRICTED STOCK granted to each NON-EMPLOYEE DIRECTOR each calendar year shall
be determined by (i) dividing ten thousand dollars ($10,000) by the FAIR MARKET
VALUE of the COMMON STOCK on the GRANT DATE, and (ii) rounding the resulting
number up to the nearest whole share.
(b) Shares of RESTRICTED STOCK shall become unrestricted on the third
anniversary of the applicable GRANT DATE subject to the provisions of Section
10. Shares of RESTRICTED STOCK may not be resold or otherwise transferred by a
GRANTEE until such shares become unrestricted in accordance with the provisions
of this Section 4(b).
(c) Each RESTRICTED STOCK grant shall be evidenced by a written RESTRICTED
STOCK GRANT AGREEMENT that shall be executed by the GRANTEE and an authorized
COMPANY representative which shall indicate the date of the RESTRICTED STOCK
award, the number of shares of COMMON STOCK awarded, and contain such terms and
conditions as the COMMITTEE shall determine with respect to such RESTRICTED
STOCK grant consistent with the PLAN.
5. SHARES OF STOCK SUBJECT TO THE PLAN
There shall be reserved for use under the PLAN (subject to the provisions
of Section 8 hereof) a total of 50,000 shares of COMMON STOCK, which shares may
be authorized but unissued shares of COMMON STOCK, treasury shares, or issued
shares of COMMON STOCK that shall have been reacquired by the COMPANY.
6. DIVIDEND, VOTING, AND OTHER SHAREHOLDER RIGHTS
Except as otherwise provided in the PLAN, each GRANTEE shall have all of
the rights of a shareholder of the COMPANY with respect to all outstanding
shares of RESTRICTED STOCK registered in his name, including the right to
receive dividends and other distributions paid or made with respect to such
shares and the right to vote such shares.
7. DEFERRAL OF COMPENSATION
In addition to the grant of RESTRICTED STOCK a NON-EMPLOYEE DIRECTOR may
elect, on or before December 31 of any year, to defer payment of at least 25% of
the cash compensation to be paid to the NON-EMPLOYEE DIRECTOR for services as a
COMPANY director during the following calendar year. Before the term of a new
NON-EMPLOYEE DIRECTOR begins, he may elect to defer payment for the remainder of
the first calendar year of his term.
Each participating NON-EMPLOYEE DIRECTOR may elect to have all or a portion
of his cash compensation placed into one or both of two unfunded accounts
maintained by the COMPANY (hereafter DEFERRED ACCOUNTS).
(a) Stock Unit Account. The initial account balance will be equal to the
number of shares of COMMON STOCK that the amount deferred could have purchased
at the FAIR MARKET VALUE on the date the NON-EMPLOYEE DIRECTOR'S cash
compensation is payable. Thereafter any dividends earned will be treated as if
those dividends had been invested in additional shares of COMMON STOCK at the
FAIR MARKET VALUE on the date the dividend is payable. Payment from the PACCAR
Stock Unit Account will be in shares of COMMON STOCK from those authorized under
Section 5 of this PLAN. Fractional shares will be paid in cash.
(b) Income Account. Interest shall accrue on the balance in the account
commencing as of the date the NON-EMPLOYEE DIRECTOR'S cash compensation is
payable. Interest is credited at a rate equal to the
A-2
<PAGE> 21
simple combined average of the monthly Aa Industrial Bond yield averages for the
immediately preceding calendar quarter as reported in Moody's Bond Record.
Interest is compounded quarterly.
8. ADJUSTMENTS TO THE NUMBER OR VALUE OF SHARES OF COMMON STOCK
If there are any changes in the number or value of shares of COMMON STOCK
by reason of stock dividends, stock splits, reverse stock splits,
recapitalizations, mergers, consolidations, or other events that increases or
decreases the number or value of issued and outstanding shares of COMMON STOCK,
the BOARD OF DIRECTORS or COMMITTEE may make such adjustments as it shall deem
appropriate, in order to prevent dilution or enlargement of rights. This
provision does not, however, authorize the delivery of a fractional share of
COMMON STOCK under the PLAN.
9. NON-TRANSFERABILITY
Shares of RESTRICTED STOCK and any DEFERRED ACCOUNTS shall not be assigned,
attached, or otherwise subject to any creditor's process or transferred by the
GRANTEE except by will or the laws of descent and distribution, or pursuant to a
trust created for the benefit of the NON-EMPLOYEE DIRECTOR or his family or
pursuant to a qualified domestic relations order as defined by the Internal
Revenue Code, Title I of ERISA or the rules thereunder. The restrictions set
forth in Section 4(b) shall apply to the shares of RESTRICTED STOCK in the hands
of the trustee or NON-EMPLOYEE DIRECTOR'S former spouse.
10. TERMINATION OF STATUS AS A NON-EMPLOYEE DIRECTOR
(a) In the event of a TERMINATION by reason of MANDATORY RETIREMENT,
disability, or death all shares of RESTRICTED STOCK held by the GRANTEE shall
become unrestricted, notwithstanding the provisions of Section 4(b) hereof, and
the GRANTEE (or the GRANTEE'S estate or a person who acquired the shares of
RESTRICTED STOCK by bequest or inheritance) shall have the right to resell or
transfer such shares at any time.
(b) In the event of a TERMINATION for any reason other than those specified
in subparagraph (a) above, any shares of RESTRICTED STOCK granted hereunder
shall be forfeited and the GRANTEE shall return to the COMPANY for cancellation
any stock certificates representing such forfeited shares which shall be deemed
to be canceled and no longer outstanding as of the date of TERMINATION; and from
and after the date of TERMINATION, the GRANTEE shall cease to be a shareholder
with respect to such forfeited shares and shall have no dividend, voting, or
other rights with respect thereto.
(c) Upon TERMINATION for any reason, any balance in the deferred Stock Unit
Account in Section 7(a) will be paid in shares of COMMON STOCK. Payment from the
Income Account in Section 7(b) will be paid in a lump sum or, if the
NON-EMPLOYEE DIRECTOR elects, in quarterly, semi-annual, or annual installments
over a period not in excess of 15 years.
(d) Notwithstanding the provisions of subparagraphs (a) through (c) above,
the BOARD OF DIRECTORS may, in its sole discretion, establish different terms
and conditions pertaining to the effect of TERMINATION to the extent permitted
by applicable federal and state law.
11. CHANGE IN CONTROL
Upon the occurrence of a change in control of the Company, all time periods
relating to shares of RESTRICTED STOCK becoming unrestricted shall be
accelerated so that all such shares immediately become unrestricted. Any
DEFERRED ACCOUNTS will be payable within 30 days of the change in control in a
lump sum.
12. PLAN ADMINISTRATION
The PLAN will be administered by the Executive Committee of the BOARD OF
DIRECTORS (the COMMITTEE). The COMPANY will pay all costs of administration of
the PLAN. The COMMITTEE
A-3
<PAGE> 22
shall have sole discretion to interpret the PLAN, amend and rescind rules
relating to its implementation and make all determinations necessary for
administration of the PLAN. Any determination, decision, or action of the
COMMITTEE in connection with the interpretation, administration, or application
of the PLAN shall be final, conclusive, and binding on all persons. The
COMMITTEE may employ consultants or other persons and rely upon their advice.
All elections taken and all determinations made by the COMMITTEE in good faith
shall be final and binding upon all GRANTEES, the COMPANY, and all interested
persons. No member of the COMMITTEE shall be personally liable for any action,
determination, or interpretation made in good faith with respect to the PLAN.
The COMMITTEE may make such amendments or modifications in the terms and
conditions of any grant of RESTRICTED STOCK as it may deem advisable, or cancel
or annul any grant of RESTRICTED STOCK, provided, however, that no such
amendment, modification, cancellation or annulment may, without the consent of
the GRANTEE, adversely affect his rights with respect to such grant.
13. TAX WITHHOLDING
To the extent required by law, the GRANTEE may make such arrangements
satisfactory to the COMPANY to satisfy any tax withholding or employment tax
obligations resulting from the grant of RESTRICTED STOCK.
14. AMENDMENT AND TERMINATION OF THE PLAN
The BOARD OF DIRECTORS or the COMMITTEE may at any time suspend, terminate,
modify or amend the PLAN in any respect; provided, however, shareholder approval
of any PLAN amendment shall be obtained only if required by law or the
requirements of any stock exchange on which the COMMON STOCK is listed or
quoted. No suspension, termination, modification, or amendment of the PLAN may,
without the consent of the GRANTEE, adversely affect his rights with respect to
the RESTRICTED STOCK granted to such GRANTEE or his DEFERRED ACCOUNTS.
15. BENEFICIARY DESIGNATION
Each NON-EMPLOYEE DIRECTOR may designate a beneficiary for each outstanding
grant of RESTRICTED STOCK and for payment of his DEFERRED ACCOUNTS in the event
of his death. If no beneficiary is designated or the beneficiary does not
survive the NON-EMPLOYEE DIRECTOR, the award shall be made to the NON-EMPLOYEE
DIRECTOR'S surviving spouse or, if there is none, to his estate.
16. EFFECTIVE DATE OF THE PLAN AND DURATION
This PLAN will become effective upon approval by the shareholders of the
COMPANY and will remain in effect until terminated by the COMMITTEE or the BOARD
OF DIRECTORS.
A-4
<PAGE> 23
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> 24
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, 2000
The voter hereby appoints Mark C. Pigott and Gerald Grinstein as
P Proxies, each with the power to appoint his substitute, and hereby
R authorizes them to represent and to vote, as designated below, all the
O shares of common stock of PACCAR Inc held of record by the voter on
X March 3, 2000, at the annual meeting of stockholders to be held on April
Y 25, 2000, or any adjournment thereof, with respect to Items 1, 2, and 3.
Proxies are also authorized to vote, in their discretion, on such other
matters as may properly come before the meeting.
The three nominees for Class II Directors to serve three-year terms
ending in 2003 are:
01. James C. Pigott, 02. Mark C. Pigott, and 03. William G. Reed, Jr.
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> 25
Please mark your votes as in this example.
This proxy when properly signed will be voted as directed below by the
undersigned stockholder. IF PROPERLY SIGNED AND NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL NOMINEES FOR DIRECTOR, FOR ITEM 2, AND AGAINST ITEM 3.
FOR WITHHELD
1. Election of directors \ \ \ \
(see reverse)
For, except vote withheld from the
following nominee(s):
FOR AGAINST ABSTAIN
2. Proposal to approve the \ \ \ \ \ \
PACCAR Inc Restricted Stock and
Deferred Compensation Plan for
Non-Employee Directors.
3. Stockholder proposal \ \ \ \ \ \
regarding independent management
of the Board of Directors.
Please sign exactly as name appears in type. 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 partnership name by authorized person.
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
________________________________________________________
________________________________________________________
SIGNATURE(S) DATE
PACCAR Inc Now Offers Telephone or Internet Voting
24 Hours a day, 7 days a week
Voting by telephone or internet eliminates the need to return this proxy card.
Your vote authorizes the proxies named on the reverse of this card to vote your
shares to the same extent as if you marked, signed, dated, and returned the
proxy card. Before voting, read the proxy statement and voting instruction form.
Follow the steps listed. Your vote will be immediately confirmed and posted.
Thank you for voting!
TO VOTE BY TELEPHONE
1. On a touchtone telephone call toll free 1-877-779-8683.
(Outside the US and Canada call 201-324-0377).
2. Enter the last four digits from your social security number.
3. Enter the control number from the box above, just below the perforation.
4. You then have two options:
Option 1 To vote as the Board of Directors recommends on all items.
Option 2 To vote on each proposal separately.
TO VOTE BY INTERNET
1. Access the Internet and type http://www.eproxyvote.com/pcar.
2. Enter the control number from the box above, just below the perforation.
3. Follow the instructions.
IF YOU CHOOSE TO VOTE BY TELEPHONE OR INTERNET, DO NOT MAIL BACK YOUR PROXY
CARD.
