NAVISTAR INTERNATIONAL CORP /DE/NEW, DEF 14A, 1994-01-13

NAVISTAR INTERNATIONAL CORP /DE/NEW
DEF 14A, 1994-01-13
MOTOR VEHICLES & PASSENGER CAR BODIES

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Page 1

PROXY STATEMENT

Navistar International Corporation
455 North Cityfront Plaza Drive
Chicago, Illinois 60611
Annual Meeting of Shareowners: March 16, 1994

PROXY

This Proxy Statement is being mailed on or about January 27,
1994, to holders of Common Stock, but not including Class B Common
Stock, ("Common Stock") of Navistar International Corporation
("Navistar" or the "Corporation") in connection with the
solicitation of proxies by Navistar's Board of Directors (the
"Board of Directors" or the "Board"). The Annual Meeting of
Shareowners ("Annual Meeting") will be held at the Arthur Rubloff
Auditorium of the Art Institute of Chicago, Monroe Street and
Columbus Drive, Chicago, Illinois 60603, on March 16, 1994, at
10:15 a.m., Central Standard Time. To assure greatest
representation at the Annual Meeting, the Board requests that all
shareowners sign and return promptly the enclosed proxy. The proxy
is solicited by the Board of Directors. Only shareowners of record
at the close of business on January 18, 1994, will be entitled to
vote at the Annual Meeting. The persons named as proxies were
selected by the Board of Directors and are either directors or
officers of the Corporation or both. Shareowners may have their
votes kept secret by so indicating in the designated place on the
proxy card. If a shareholder is a participant in the Corporation's
401(k) Retirement Savings Plan, the proxy card will represent the
number of shares allocated to the participant's account under the
plan and will serve as a direction to the plan's trustee as to how
the shares in the account are to be voted.

Any shareowner giving a proxy has the power to revoke it by
written revocation delivered to the Corporate Secretary at any time
before it is voted. If not revoked, the shares represented by the
proxy will be voted by the persons named as proxies, and, if the
shareowner specifies a choice with respect to a Proposal (a ballot
is provided in the proxy), the shares will be voted in accordance
with that specification. If no such specification is made, the
shares will be voted in accordance with the Board of Directors'
recommendation. The affirmative vote of the holders of a majority
of the outstanding Common Stock present (whether in person or by
proxy) and voting at the Annual Meeting will be required to approve
each Proposal. As to each Proposal, abstentions will be included,
but broker non-votes will not be included, in the calculation of
the number of holders who are considered present and voting at the
Annual Meeting.

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VOTING SECURITIES OF THE CORPORATION

As of January 6, 1994 there were outstanding 49,775,740 shares
of Common Stock. Holders of Common Stock are entitled to one vote
per share, exercisable in person or by proxy, with respect to all
matters to come before the Annual Meeting. Under the Corporation's
By-laws, shareowners holding at least one-third (1/3) of the
outstanding shares of Common Stock, entitled to vote, must be
present in person or by proxy at the Annual Meeting to constitute
a quorum.

PROPOSAL NO. I - ELECTION OF DIRECTORS

The Corporation has three classes of directors, each with
staggered terms, with the members of each class serving a three
year term on the Board. At this Annual Meeting, the terms of the
Class I directors will expire.

The Board's retirement policy provides that directors shall
retire prior to the first annual meeting of shareowners which is
held after the date they attain age 70. In October, 1992 the Board
suspended this policy for a two year period, which eliminates any
mandatory retirement of a director based on age during that time.
The policy will go back into effect in October, 1994. Under the
By-laws, any portion of a director's term which remains at the time
of his or her resignation or retirement may be completed by a
person appointed by the Board or the Board may choose to reduce the
number of members of the Board.

The Class I nominee directors are Jack R. Anderson, James C.
Cotting, Jerry E. Dempsey and Robert C. Lannert. These persons
have been nominated for election to three-year terms expiring in
1997, and until their successors are elected or appointed and
qualified. The Corporation's By-laws provide that nomination for
election to the office of director at a meeting of shareowners will
be accepted, and votes cast for a nominee will be counted, only if
the Corporate Secretary has received, at least twenty-four hours
prior to the Annual Meeting, a statement over the signature of the
nominee that he or she consents to being a nominee and, if elected,
intends to serve as a director. Each nominee has complied with
this requirement. All of the nominees are now directors of the
Corporation and have served continuously since their first election
or appointment. Class II and Class III directors will continue in
office for the remainder of their terms or until their retirement,
whichever is earlier.

If any nominee is unable to accept the office of director, or
will not serve, which is not anticipated, the Board may choose
another nominee, and the shares represented by the proxies will
then be voted for that nominee.
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NOMINEES FOR ELECTION AS CLASS I DIRECTORS CONTINUING IN OFFICE
UNTIL 1997

JACK R. ANDERSON, 68, Director since 1989. He is President of
Calver Corporation, a health care consulting and investment firm
since 1982. He is a director of Horizon Mental Health Services,
Inc., Manor Care, Inc., Medical Care America, Inc., Take Care, Inc.
and United Dental Care, Inc. Committees: Audit and Public Policy.

JAMES C. COTTING, 60, Director since 1983. He is Chairman and
Chief Executive Officer since 1987. Prior to his present
assignment, he served as Vice Chairman and Chief Financial Officer
from 1983 to 1987; Executive Vice President, Finance and Planning,
from 1982 to 1983; Senior Vice President, Finance and Planning,
from 1979 to 1982. He is a director of USG Corporation, Asarco
Incorporated and Interlake Corporation. He is a member of the
Board of Directors of the National Association of Manufacturers,
and a member of the Conference Board. He is a Director of Junior
Achievement of Chicago and a trustee of the Adler Planetarium.
Committees: Executive (Chairman) and Finance.

JERRY E. DEMPSEY, 61, Director since 1984. He is Chairman of the
Board and Chief Executive Officer of PPG Industries, Inc., a
diversified global manufacturer of glass, protective coatings and
chemicals, since 1993. From 1991 until 1993, Mr. Dempsey was
Chairman of the Board and a Director of Chemical Waste Management,
Inc., and Senior Vice President of WMX Technologies, Inc. From
1985 to 1991, he was President and Chief Executive Officer and a
Director of Chemical Waste Management, Inc. From 1984 to 1988, he
was Vice Chairman of the Board of WMX Technologies. From 1980 to
1984, Mr. Dempsey was President and Chief Operating Officer of
Borg-Warner Corporation. He is a Director of WMX Technologies,
Inc., Chairman of the Dean's Advisory Board for Clemson
University's School of Engineering, a member of Clemson's
Foundation Board, the President's Advisory Council, and the Mid-
America Committee. Committees: Executive, Finance and
Organization.

ROBERT C. LANNERT, 53, Director since 1990. He is Executive Vice
President and Chief Financial Officer since November, 1990. Prior
to his present assignment, he served as Vice President and
Treasurer from 1979 to 1990 and Assistant Treasurer from 1976 to
1979. He is a member of the Dean's Advisory Committee, Krannert
School, Purdue University.

CLASS II DIRECTORS CONTINUING IN OFFICE UNTIL 1995

WALLACE W. BOOTH, 71, Director since 1981. He is the retired
Chairman of the Board of Ducommun Incorporated, a Los Angeles based
corporation engaged principally in the manufacture of components
and assemblies for the aerospace industries. Mr. Booth joined
Ducommun as President, Chief Executive Officer and a director in
1977 and became Chairman in 1978. In 1988 he relinquished the
positions of President and Chief Executive
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Officer and retired as Chairman at the end of 1988. From 1975 to
1977 Mr. Booth was President, Chief Executive Officer and a
Director of United Brands Corporation. He is a director of Litton
Industries, Inc., Rohr, Inc. and First Interstate Bank of
California. He also is Trustee of the University of Chicago.
Committees: Finance and Organization (Chairman).

MARY GARST, 64, Director since 1977. She is Manager, Cattle
Division, Garst Company of Coon Rapids, Iowa, a diversified
agri-business enterprise involved in the production of hybrid seed
corn, commercial feed grains, fertilizer, as well as an integrated
cow-calf and feed lot operation. Ms. Garst has been active in the
business of the Garst Company for many years, assuming her present
position in 1974. Committees: Audit and Public Policy
(Chairwoman).

DR. ARTHUR G. HANSEN, 68, Director since 1974. He is an education
consultant since 1986. Dr. Hansen is the former Chancellor, Texas
A&M University System from 1982 to 1986, the former President of
Purdue University, 1971 to 1982, and the former President of the
Georgia Institute of Technology, 1969 to 1971. He is a director of
American Electric Power Company, Inc., International Paper Company
and Interlake Corporation. He is a member of the National Academy
of Engineering, Chairman of the Board of the Corporation for
Educational Technology and a Fellow of the American Association for
the Advancement of Science. Committees: Audit, Executive and
Organization.

JOHN R. HORNE, 55, Director since 1990. He is President and Chief
Operating Officer since November, 1990. Prior to his present
assignment, he served as Group Vice President - General Manager,
Engine and Foundry Group from March, 1990 to November, 1990; Vice
President and General Manager, Engine and Foundry Group from 1983
to March, 1990; Manager, Engine Engineering from 1980 to 1983; and
Manager, Diesel Engine Engineering from 1977 to 1980. Mr. Horne
serves as a trustee and Vice-Chairman of the Board of Taylor
University. Committee: Executive.

CLASS III DIRECTORS CONTINUING IN OFFICE UNTIL 1996

WILLIAM F. ANDREWS, 62, Director since 1984. Advisor and
Consultant for Investor International (U.S.), Inc., formerly,
Instoria Providentia and also, since February, 1993, Chairman and
Chief Executive officer of Amdura Corp., a manufacturer of waste
management equipment, and Chairman of Utica Corp., a manufacturer
of aircraft turbine blades. Both companies are affiliated with
Investor International (U.S.) Inc., a privately-owned investment
corporation. From 1990 to January 1992, he was President and
Chief Executive Officer of UNR Industries, Inc., a manufacturer of
steel products. He was President of Massey Investment Company from
1989 to 1990. He was Chairman, President and Chief Executive
Officer of SSMC Inc. from 1986 to 1989. From 1981 to 1986, Mr.
Andrews served as Chairman, President and Chief Executive Officer
of Scovill, Inc. He is a director of Harley Davidson, Inc.,
Johnson Controls, Inc., Katy Industries, Inc., Southern New England
Telephone Company, PT Holdings, Inc., MB
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Communications, and Corrections Corp. of America. He also serves
on the National Board of the American Red Cross. Committees:
Executive, Organization and Public Policy.

DR. ANDREW F. BRIMMER, 67, Director since 1976. He is President of
Brimmer & Company, Inc., an economic and financial consulting firm
in Washington, D.C. In addition, he is the Wilmer D. Barrett
Professor of Economics at the University of Massachusetts -
Amherst. He also is Public Governor of Commodity Exchange, Inc.
Dr. Brimmer served as a member of the Board of Governors of the
Federal Reserve System from 1966 until 1974. He is a director of
E. I. DuPont de Nemours & Corporation, UAL Corp. - United
Airlines, Bank America Corporation and Bank of America, NT and SA,
Gannett Company, Bell South Corporation, Connecticut Mutual Life
Insurance Company, Blackrock Investment Income Trust (and other
Blackrock Mutual Funds), Mercedes-Benz, N.A. and PHH Corporation.
He is a Trustee of the College Retirement Equities Fund. Dr.
Brimmer is a member of the American Association of Collegiate
Schools of Business (National Honoree), American Economic
Association, American Finance Association, American Statistical
Association, Council on Foreign Relations, National Economic
Association and Eastern Economic Association (Fellow and Past
President). He is a Fellow of American Academy of Arts and
Sciences, American Philosophical Society, National Association of
Business Economists and Washington Academy of Sciences. He is a
trustee of the Committee for Economic Development, Harvard College
and Tuskegee University (Chairman of the Board). He also is a
member of the Association for Study of Afro-American Life and
History. Committees: Audit (Chairman), Finance and Public Policy.

DONALD D. LENNOX, 75, Director since 1982. He is Chairman and a
director of International Imaging Materials, Inc., a manufacturer
of thermal transfer ribbons, since February, 1990. He was Chairman
and Chief Executive Officer of Schlegel Company from April 1987 to
March 1989. He was Chairman and Chief Executive Officer of
Navistar from 1983 to 1987 and President and Chief Executive
Officer of Navistar from 1982 to 1983. He also is a director of
Gleason Corporation and several Prudential-Bache mutual funds. Mr.
Lennox is a member of the Advisory Board of Marine Midland Bank,
and the Advisory Council of the Graduate School of Business of the
William T. Simon School, University of Rochester. He also is a
member of the Board of Trustees of St. John Fisher College, the
United Way of Greater Rochester and Rochester Chamber of Commerce.
Committees: Audit, Executive and Finance (Chairman).

ADMIRAL ELMO R. ZUMWALT, JR., 73, Director since 1984. He is
President of Admiral Zumwalt & Consultants, Inc., Washington, D.C.
From 1970 through his retirement from the Navy in 1974, he served
as Chief of Naval Operations of the United States Navy. Admiral
Zumwalt serves as a director of Dallas Semiconductor Corporation,
Fleet Aerospace Corporation, Fleet Aerospace, Inc., NL Industries,
Inc. and Lincorp Savings Bank. He is a former governor of the
American Stock Exchange, Inc. and a former director of Ames
Department Store, American Building Maintenance Industries, Esmark,
Transway International, Todd Shipyards

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Corporation and Gifford-Hill & Company, Inc. The Admiral also is
Chairman of the Ethics and Public Policy Center and Chairman of the
National Marrow Donor Program. Committees: Organization and
Public Policy.

Additional Directors

In July, 1993, the Corporation restructured its post
retirement health care and life insurance benefits pursuant to a
settlement agreement which required, among other things, the
addition of three seats on Navistar's Board of Directors,
increasing the Board to 15 members. These three directors are not
part of the classes referred to above.

BILL CASSTEVENS, 65, Director since August 1, 1993. He has served
as Secretary-Treasurer of the UAW since January, 1988 and in
various other capacities with the UAW since 1962. Mr. Casstevens
has served as a trustee on the board of Medical Mutual of Northeast
Ohio (Blue Shield) and the Medical Mutual Life Insurance Co. He
served for nine years on the Board of Trustees of Cleveland State
University; the Union Eye Care Centers in Ohio; and the Executive
Committee of the United Labor Agency. He also served in an
advisory capacity to the Greater Cleveland United Torch Services.
He served on the Ohio Governors Committee on Occupational Safety &
Health, the Governors Judicial Review Committee and the Governor's
Health Task Force. He is a member of the Democratic National
Committee, representing Michigan. He is a member of the Board of
Directors of Blue Cross/Blue Shield of Michigan and of the United
Way of Southeastern Michigan. Mr. Casstevens was elected to the
Board of Directors by the UAW for a term extending through July 31,
1994. Committees: Executive, Finance and Public Policy.

RICHARD F. CELESTE, 56, Director since August 15, 1993. He is
Chairman of the Democratic National Committee's National Health
Care Campaign since August 1993. He also is a principal of Celeste
& Sabety Ltd., a public policy consulting firm based in Columbus,
Ohio since 1991. Prior to this, he served as two-term Governor of
Ohio, 1983-1991, directed the U.S. Peace Corps, 1979-1981 and
served in the U.S. Foreign Service in India. He currently is
Chairman of the Government-University-Industry Research Roundtable
of the National Academy of Sciences. He chairs the Advisory Board
of the Pacific Northwest Laboratory, and is a member of the Board
of Directors of Youth Service America, AFS Intercultural Programs,
and Habitat for Humanity International. He is a member of the
Advisory Board of BP America Inc. and Oak Ridge National
Laboratory, and a member of the Board of Advisors of The Leadership
Institute at the University of Southern California. He is a
Trustee of the Carnegie Corporation of New York, and a member of
the Council on Foreign Relations. Governor Celeste was elected to
the Board of Directors by the Supplemental Trust, a retiree trust
created in 1993 pursuant to the restructuring of retiree health
care and life insurance programs, for a term extending through
July 31, 1994. Committees: Audit and Public Policy.

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WILLIAM C. CRAIG, 55, Director since August 15, 1993. He served as
Executive Vice President of Mack Trucks, 1989-1992. Prior to this,
Mr. Craig served as Vice President of Human Resources of Volkswagen
of America, 1982-1989 and Plant Manager, Volkswagen Stamping Plant,
1977-1982. Mr. Craig also served as General Superintendent of
Production, Chevrolet Buffalo Gear and Axle,
and in various other capacities for General Motors, 1960-1977. Mr.
Craig was elected to the Board of Directors by the Supplemental
Trust, a retiree trust created in 1993 pursuant to the
restructuring of retiree health care and life insurance programs,
for a term extending through July 31, 1994. Committees: Finance
and Organization.

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The following table sets forth information concerning the Common
Stock ownership of each director, each of the five most highly
compensated executive officers, and directors and executive
officers as a group as of December 31, 1993. Each individual owns
less than 1% of the Corporation's Common Stock. As a group, the
directors and officers own .96% of the Common Stock.

Name/Group Number of Shares
Owned Obtainable Total
Through
Stock Option
Exercise

Jack R. Anderson 340 1,000 1,340
William F. Andrews 630 1,500 2,130
Wallace W. Booth 530 1,500 2,030
John J. Bongiorno 13,412 17,200 30,612
Andrew F. Brimmer 447 1,500 1,947
Bill Casstevens 0 0 0
Richard F. Celeste 0 0 0
James C. Cotting 37,211 56,760 93,971
William Craig 0 0 0
Jerry E. Dempsey 530 1,500 2,030
Mary Garst 440 1,500 1,940
Arthur G. Hansen 540 1,500 2,040
John R. Horne 28,588 25,720 54,308
Robert C. Lannert 19,891 18,100 37,991
Donald D. Lennox 1,658 1,500 3,158
Mark D. Schwabero 760 12,010 12,770
Elmo R. Zumwalt, Jr. 440 1,500 1,940

Directors and Executive
Officers as a Group 216,349 264,340 480,689

TRANSACTIONS WITH THE CORPORATION

Certain of the Corporation's directors also serve as directors
of or advisors to banks which are or have been lenders to the
Corporation, to its subsidiary, Navistar International
Transportation Corp. or to its finance subsidiary, Navistar
Financial Corporation. In every case, terms with respect to such
loans and any extensions, renewals or amendments were arrived at
without regard to those relationships.

COMMITTEES OF THE BOARD OF DIRECTORS

There are five standing committees which assist the Board of
Directors in discharging its responsibilities. Committee
membership is noted for each director next to the director's name
in the biographical section above. Functions of the various
committees are set forth below.

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EXECUTIVE COMMITTEE - The Executive Committee represents the Board
between meetings for the purpose of consulting with officers,
considering matters of importance and either taking
action or making recommendations to the Board. The Committee did
not hold any meetings in fiscal year 1993.

AUDIT COMMITTEE - The Audit Committee is composed of five
directors, none of whom is a current employee of the Corporation.
The Committee oversees the Corporation's financial reporting
process on behalf of the Board. During 1993, the Committee
reviewed the 1993 audit plans of Deloitte & Touche and of the
Corporation's internal audit staff, reviewed the audit of the
Corporation's accounts with the independent public accountants and
the internal auditors, considered the adequacy of audit scope and,
in its overview role, reviewed and discussed with the auditors and
management the auditors' reports. The Committee recommended to the
Board, subject to shareowner approval, the selection of the
Corporation's independent public accountants. The Committee also
reviewed environmental surveys and compliance activities for the
Corporation's facilities, compliance with the Corporation's
Conflicts of Interest and Ethical Business Conduct Policies and the
expense accounts of principal executives. The independent public
accountants, the internal auditors and the Committee have
unrestricted access to each other, without management present, to
discuss the results of audit work and opinions on the adequacy of
internal accounting controls, the quality of financial reporting
and any other matter deemed appropriate. The Committee held eight
meetings in fiscal year 1993, reported the results of those
meetings and made recommendations to the Board.

FINANCE COMMITTEE - The Finance Committee reviews the Corporation's
financing requirements, custody and management of assets which fund
the pension and retirement savings plans of the Corporation's
subsidiaries, procedures by which projections and estimates of
revenues, expenses, earnings and cash flow are developed, dividend
policy and operating and capital expenditure budgets. The
Committee also monitors the Corporation's relationship and
communications with its lenders and the Corporation's financial
disclosure policy. In fiscal year 1993, the Committee held six
meetings, reported the results of those meetings and made
recommendations to the Board.

COMMITTEE ON ORGANIZATION - The Committee on Organization is
composed of five directors, none of whom is a current employee of
the Corporation. The Committee fulfills its compensation and
management oversight role by considering and recommending to the
Board the election, title changes, structure, responsibilities and
compensation of all executive officers. The Committee also has
responsibilities for the organization of the Board of Directors.
The Committee reviews and makes recommendations to the Board
concerning nominees for election as directors. The Committee also
reviews and recommends to the Board the compensation, committee
membership and tenure policy for directors. In recommending to the
Board the nominees to be proposed for election as director, the
Committee will consider the qualifications of nominees proposed by
shareowners in writing<PAGE>
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to the Corporate Secretary provided such nominations are
accompanied by a statement over the signature of the nominee that
the individual consents to being a nominee and, if elected, intends
to serve as a director. Upon management's recommendation, the
Committee also reviews and acts upon basic changes to
non-represented employees' base compensation and incentive and
benefit plans. The Committee held four meetings in fiscal year
1993, reported the results of those meetings and made
recommendations to the Board.

PUBLIC POLICY COMMITTEE - The Public Policy Committee reviews,
advises management and makes recommendations to the Board on
corporate policy in areas of public responsibility, such as
conflict of interest, product integrity and protection of the
environment. The Committee held two meetings in fiscal year 1993,
reported the results of those meetings and made recommendations to
the Board.

MEETINGS OF DIRECTORS

In fiscal year 1993, the Board of Directors held twelve meetings.
The number of meetings held by the committees of the Board of
Directors are noted above. Each director of the Corporation
attended at least 75% of the aggregate meetings held by the Board
and by the Committees on which the director served except for
Governor Celeste. Governor Celeste was elected to the Board on
August 15, 1993. He attended each meeting held through October 31,
1993 (the end of the Corporation's fiscal year) except for one
Audit Committee meeting and one Board of Directors meeting, both of
which were held on August 18, 1993. Governor Celeste was unable to
attend those meetings because of a death in his family.

RECOMMENDATION OF THE BOARD OF DIRECTORS

The Board of Directors recommends a vote FOR the election of the
nominees listed above as Class I Directors of the Corporation.

PROPOSAL NO. 2 - RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS

The firm of Deloitte & Touche, 2 Prudential Plaza, Chicago,
Illinois 60601, has examined the financial statements of the
Corporation for many years, and the Board of Directors wishes to
continue the services of this firm for the current fiscal year
ending October 31, 1994. A resolution will be presented at the
Annual Meeting to ratify the appointment by the Board of Directors
of the firm of Deloitte & Touche, as independent public
accountants, to examine the financial statements of the Corporation
for the current fiscal year ending October 31, 1994, and to perform
other appropriate accounting services.

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From time to time, Deloitte & Touche performs some non-audit
services for the Corporation and such services were performed by
the firm in 1993. Both the Board and the Audit Committee believe
that these non-audit services have no effect on the independence of
Deloitte & Touche in fulfilling its audit responsibilities.
Representatives of the firm will attend the Annual Meeting and will
have the opportunity to make a statement if they desire to do so.
They will be available to respond to appropriate questions.

If the shareowners do not ratify the appointment of Deloitte &
Touche, the selection of independent public accountants will be
reconsidered by the Board of Directors.

RECOMMENDATION OF THE BOARD OF DIRECTORS

The Board of Directors recommends a vote FOR the ratification of
its appointment of Deloitte & Touche as independent public
accountants.

PROPOSAL NO. 3 - APPROVAL OF THE NAVISTAR 1994
PERFORMANCE INCENTIVE PLAN

In March, 1988 the shareowners approved the Navistar 1988
Performance Incentive Plan ("1988 Plan"). The purpose of the 1988
Plan as well as the purpose of the proposed Navistar 1994
Performance Incentive Plan ("the Plan") is to provide incentive
compensation linked to performance and key employee retention while
promoting an alignment of interests between shareowners and
participants by encouraging and creating Common Stock ownership
opportunities.

In July, 1993 the Corporation entered into a settlement agreement
with its employees, retirees and collective bargaining
organizations which restructured its post-retirement health care
and life insurance benefits. (The "Settlement Agreement"). The
Settlement Agreement requires that the Corporation not sell or
acquire Common Stock or other securities or take other actions if
to do so would put the Corporation at risk of an "ownership change"
(as defined in Section 382 of the Internal Revenue Code) which
would result in a severe limitation of the Corporation's use of its
net operating losses. The Settlement Agreement required, among
other things, the establishment of a supplemental trust to which
the Corporation has contributed 25,641,545 shares of Class B Common
Stock. The issuance of the Class B Common Stock and recent public
offering of 23,600,000 shares of Common Stock will not by
themselves constitute an "ownership change". However, those
issuances increase the possibility that subsequent transfers of the
Corporation's equity securities would cause an "ownership change".
Under Section 382 of the Internal Revenue Code, an "ownership
change" occurs when there is a more than 50 percentage point change
in the ownership of the Corporation on any measurement date that
occurred within a three year period.

Page 12

Certain transactions with the Corporation's stock, such as a
redemption or issuance of stock, cause a measurement date. For
these reasons, certain amendments ("Amendments") were made to the
1988 Plan with respect to outstanding stock options and Restricted
Shares to insure that the stock features of the 1988 Plan do not
result in any "ownership changes".

AMENDMENTS TO THE 1988 PLAN

Stock Options

The exercise of stock options causes a measurement date. To
better control when exercises of stock options occur, the
Corporation amended existing stock options to permit the
Corporation to postpone an exercise. The following is a summary of
these Amendments.

1. The Corporation may refuse to accept an employee's exercise
if, in its sole judgment, the exercise presents a
substantial risk of causing an "ownership change".

2. If the Corporation refuses to accept an exercise, the
Corporation will, as soon as possible, issue shares of
Common Stock equal in value to the difference between the
exercise price per share and the closing market price per
share times the number of shares covered by the exercise
notice plus interest on the total for the period of delay
calculated at the composite prime rate to corporate
borrowers as published in The Wall Street Journal.

3. In consideration of the foregoing, the term of all current
stock options was extended by three (3) years.

Restricted Stock

Redemption, forfeiture and issuance of stock by and to the
Corporation also cause a measurement date. To better control those
events with respect to Restricted Stock, the Corporation amended
the terms of the Restricted Stock and the 1988 Plan. The following
is a summary of those Amendments.

1. Under the 1988 Plan, Restricted Shares were issued which
permitted a holder to have the Corporation redeem shares for
withholding tax purposes when the restriction lapses.
Restricted Shares have been amended so that the Corporation
can refuse the redemption if there is a substantial risk of
causing an "ownership change" in which case the holder may
sell shares to pay the withholding taxes due on the lapse of
the restriction.

2. The 1988 Plan also provided that additional shares could be
earned at the end of each three year cycle based on
performance during the cycle. The Corporation amended the
1988 Plan to provide that all of the performance shares are
issued at the beginning of a cycle and the shares are

Page 13

subject to forfeiture if the performance goals are not met.
If, at the time the shares are forfeited, a measurement date
would cause a substantial risk of "ownership change", shares
forfeit to the trusts for salaried and hourly pension plans
of its principal operating subsidiary and not to the
Corporation. Existing Restricted Shares and the provisions
regarding the issuance of Restricted Shares in the future
also were amended to provide for this forfeiture feature.

The Corporation has requested a number of rulings from the
Internal Revenue Service to approve these Amendments. If the
Internal Revenue Service requires additional amendments, the
Corporation will amend the 1988 Plan and the 1994 Plan to comply
with the response and still meet the purpose of the plans.

THE 1994 NAVISTAR PERFORMANCE INCENTIVE PLAN

The Corporation has adopted a new incentive plan to replace the
1988 Plan subject to approval of the shareowners. The Plan has the
same purposes as the 1988 Plan and contains many of the provisions
of the 1988 Plan, including the Amendments described above plus a
new annual share authorization of 1% of the aggregate number of
outstanding shares of Common Stock, including Class B Common Stock.

A summary of the material provisions of the Plan is set forth
below and reference is made to Exhibit A of this Proxy Statement
for the full text of the Plan. As of the date hereof no awards
have been made or are determinable under the Plan.

SUMMARY

The Plan authorizes the Committee on Organization of the Board
of Directors of the Corporation (the "Committee") to grant:

(i) Annual Incentive Awards based on the level of achievement
attained against previously approved performance goals.
Annual Incentive Awards will be paid in cash;

(ii) Long-term Incentive Awards based upon performance goals
for corporate achievement over a long-term cycle.
Restricted shares will be awarded at the beginning of a
long-term cycle. Restricted Shares, other than a base
grant for retention purposes, will be subject to attaining
specific performance goals; and

(iii) Stock Options in amounts and at times determined by the
Committee which normally are exercisable after one year
after grant only if the employee is still employed by the
Corporation. Option grants shall be limited to a maximum
of 50,000 shares per year for any Participant.

<PAGE>
Page 14

PRINCIPAL FEATURES OF THE PLAN

1. The purpose of the Plan is to provide incentive compensation
linked to performance and key employee retention while
promoting an alignment of interests between shareowners and
participants by encouraging and creating Common Stock
ownership opportunities.

2. The Committee is responsible for the administration of the
Plan and has the authority to interpret, modify and terminate
the Plan.

3. Management will recommend to the Committee key employees who
have substantial managerial or professional capacity.

4. For annual incentive awards the measurement period shall be a
fiscal year. For long term incentive awards the measurement
period will be a period of three (3) or more years as
determined by the Committee. Stock options will be granted by
the Committee in the amounts and at times it determines
appropriate.

5. The Committee will approve performance goals for annual and
long term incentive awards. These goals will be based upon
the strategic plans of the Corporation for the award period.

6. Annual incentive awards will be paid in cash. Long term
incentive awards will be made in shares with base shares and
performance shares awarded at the beginning of each long-term
cycle. All such shares are restricted and subject to
forfeiture in the event of employment termination prior to the
end of the base restriction period. In addition, the
performance shares are subject to forfeiture upon failure to
meet the performance goals. A change in control of the
Corporation, as defined in the Plan, will cause all
restrictions on shares to lapse immediately.

7. The Committee may grant non-qualified stock options and
incentive stock options. The Committee shall determine the
option price and other terms, conditions and restrictions on
grants of options. The period within which an option must be
exercised may not be later than ten years and one day for
nonqualified options and ten years for incentive stock
options. In the event of termination of employment, options
must be exercised within a specified period of time or they
lapse. A change in control, as defined in the Plan, shall
cause all options granted and still outstanding to be
immediately exercisable. When an option is exercised, the
exercise price may be paid in cash or shares of Common Stock
already owned by the employee. The latter feature permits
"pyramiding" exercises. Pyramiding is a series of successive,
simultaneous exercises in which a holder can deliver one or
more shares of Common Stock and exercise all of his or her
options with no cash payment.

<PAGE>
Page 15

8. In addition to the Restricted Shares to be awarded as part of
the long term incentives, the Committee may also grant
Restricted Shares to key employees recommended by management
for either retention or performance purposes or as part of an
employment agreement.

9. The shares to be used under the Plan will be authorized but
previously unissued shares or shares reacquired by the
Corporation, as determined by the Committee. Each fiscal year
one (1) percent of the outstanding shares of Common Stock,
including Class B Common Stock, outstanding as of the end of
the immediately preceding fiscal year will be reserved for
issue under the Plan. If less than one (1) percent of the
shares is granted or awarded in any fiscal year, the
difference will be available for use in the following year.
No more than 500,000 shares may be used in any one year for
incentive stock options.

10. If approved by the shareowners, the duration of the plan shall
be for ten (10) years.

FEDERAL INCOME TAX CONSEQUENCES

The following is a discussion of general tax consequences that
the Corporation believes will apply to the transactions under the
Plan. The Corporation has requested certain rulings from the
Internal Revenue Service to eliminate uncertain areas of tax
treatment. Amendments to the Plan will be considered as necessary
to obtain favorable tax treatment.

Modification of Existing Options

The modification of the Corporation's existing options to
provide for deferral of the exercise of the options and
extension of the term of the options will not be a taxable
event to the holders of the options. The holders will be
taxed as described below.

Nonqualified Options

No income is recognized by an employee at the time a
nonqualified stock option is granted. Ordinary income will be
recognized at the time the employee receives stock on exercise
of an option. The amount of income will equal the fair market
value of the stock received less the option price paid by the
employee. The Corporation believes that if the current
exercise of an option is prohibited to avoid a measurement
date, the employee will not recognize income as a result of
the attempted exercise of the option. The employee will
recognize ordinary income at the time he or she actually
receives stock in an amount equal to the fair market value of
the stock.

In the case of an executive officer who is subject to a six-
month holding period under Section 16(b) of the Securities Act
of 1934, if an option were exercised during such six-month
holding period income would not be recognized until the end of
such six-month period. An option could be exercised during
the six-month period, for example, in the event of a change in
control as defined in the Plan.

Page 16

Incentive Stock Options

No income will be recognized by an employee at the time of the
grant of an incentive stock option ("ISO"). No income will be
recognized (except for the purpose of the alternative minimum
tax) as a result of exercise of the option if the stock is
held for the ISO holding period of two years from the date of
grant and one year from the date of exercise. On the
subsequent sale of the stock, long-term capital gain will be
recognized equal to the difference between the amount received
on the sale and the option price. If the stock is disposed of
by sale or otherwise before the ISO holding period is
satisfied, the employee will recognize ordinary income at the
time of the disposition. A disposition of stock will occur if
the employee uses pyramiding to pay the option price, or
transfers previously acquired ISO stock to pay the option
price. The amount of ordinary income will be limited to the
difference between the fair market value of the stock on the
date of exercise and the option price. Any income in excess
of this amount will be taxed as capital gain.
The Corporation believes that if the current exercise of an
option is prohibited to avoid a measurement date, the employee
will not recognize income as a result of the attempted
exercise of the option. The employee will recognize ordinary
income at the time he or she actually receives stock in an
amount equal to the fair market value of the stock.

Restricted Stock

Generally, an employee will not recognize income at the time
restricted stock that is subject to forfeiture is transferred
to him or her, and the employee will not recognize income in
the event the shares are forfeited because the restrictions
lapsed. The employee will recognize ordinary income at the
time the stock is no longer subject to forfeiture because the
restrictions lapsed. The income will be equal to the fair
market value of the stock at the time the restriction lapses.

<PAGE>
Page 17

Instead of being taxed at the time the restrictions lapse, an
employee can make an election to be taxed at the time the
shares are transferred to him or her. The election must be
made within 30 days of the transfer by giving notice to the
Internal Revenue Service and the Corporation. If an election
were made, the income would be equal to the fair market value
of unrestricted stock on the date of transfer. Any subsequent
gain on the stock would be capital gain. No deduction would
be allowed to the employee if the stock was subsequently
forfeited.

Generally, the Corporation will be entitled to a deduction in
the amount of ordinary income recognized by the employee on the
stock options and restricted stock. The Corporation will not be
allowed a deduction for the amount recognized as capital gain under
ISO's.

RECOMMENDATION OF THE BOARD OF DIRECTORS

The Board of Directors recommends a vote FOR approval of the
Navistar 1994 Performance Incentive Plan.

PROPOSAL NO. 4 - ADOPTION OF AMENDMENTS
TO THE NAVISTAR 1988 NON-EMPLOYEE
DIRECTOR STOCK OPTION PLAN

In March, 1988 the shareowners approved the Navistar 1988 Non-
Employees Director Stock Option Plan ("Option Plan"). The Option
Plan provided for an annual grant to each non-employee director of
an option to purchase 250 shares of Common Stock. The purpose of
the Option Plan is to strengthen the Corporation's ability to
attract, motivate and retain directors with experience and ability
and to provide, as part of their compensation plan, equity
incentives closely aligned with the interests of shareowners.

The Settlement Agreement described above requires that the
Corporation not sell or acquire Common Stock or other securities or
take other action if to do so would put the Corporation at risk of
an "ownership change" which would result in a severe limitation of
the Corporation's use of its net operating losses. The issuance of
25,641,545 shares of Class B Common Stock under the Settlement
Agreement and the recent public offering of 23,600,000 shares of
Common Stock increase the possibility that subsequent transfers of
the Corporation's equity securities would cause an "ownership
change". Under Section 382 of the Internal Revenue Code, an
"ownership change" occurs when there is a more than 50 percentage
point change in the ownership of the Corporation on any measurement
date that occurred within a three year period. Certain
transactions with the Corporation's stock, such as a redemption or
issuance of stock, cause a measurement date. The exercise of stock
options causes a measurement date. For these reasons the
amendments described in paragraph 1, 2 and 3 below were made to the
Option Plan. The amendment described in paragraph 4, to increase
the annual option grant from 250 to 500 shares of Common Stock, was
made in order to enhance the

Page 18

Corporation's ability to attract, motivate and retain directors
with experience and ability. All of the amendments are subject to
shareowner approval.

AMENDMENTS TO THE OPTION PLAN

1. The Corporation may refuse to accept a director's exercise
if, in its sole judgment, the exercise presents a
substantial risk of causing an "ownership change".

3. In consideration of the foregoing, the term of all current
options under the Option Plan was extended by three (3)
years subject to shareowner approval.

4. The Option Plan has been amended to increase the annual
grant from 250 to 500 shares of Common Stock. The Board
of Directors has, subject to shareowner approval, amended
Section 5 of the Option Plan to read as follows:

"5. NUMBER OF SHARES TO BE GRANTED

At each regularly scheduled December Meeting of the
Board, an option will be granted to each non-
employee director for five hundred (500) shares of
Common Stock."

The Federal income tax consequences for the directors will be
the same as those described under Proposal 3 for executive officers
under the employee plan. As of the date hereof no awards have been
made or are determinable under the Option Plan.

RECOMMENDATION OF THE BOARD OF DIRECTORS

The Board of Directors recommend a vote FOR approval of the
amendments to the Navistar 1988 Non-Employee Director Stock Option
Plan.
<PAGE>
Page 19

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

DIRECTORS' COMPENSATION

No director fees are paid to directors who are full-time
employees of the Corporation or any of its subsidiaries. Directors
who are not employees of the Corporation or any of its subsidiaries
receive an annual retainer of $18,000 ($3,000 of which is paid in
the form of Restricted Shares of Common Stock), plus $800 for each
directors' meeting and committee meeting they attend. The non-
employee directors who serve as chairpersons of committees receive
an annual retainer of $2,800.

Non-employee directors will be eligible to receive retirement
fees, provided that they have served as directors for at least five
years and retire from the Board at or after age 65. The annual
retirement fees equal the annual retainer paid at time of
retirement. The payment of retirement fees begins upon retirement
from the Board of Directors and continues until the earlier of the
director's death or a period equal to the number of years served on
the Board. A director's right to receive retirement fees will vest
automatically in the event of a change in control of the
Corporation as defined in the retirement agreement.

The Navistar 1988 Non-Employee Director Stock Option Plan
provides that every year each non-employee director will be granted
an option to purchase 250 shares of Common Stock at a price equal
to the fair market value of the Common Stock on the first business
day after the option is granted. Directors may exercise the option
at any time after one year following the date of grant. The
options expire ten years after the date of grant.

<PAGE>
Page 20

EXECUTIVE OFFICERS' COMPENSATION

The following table shows the compensation of the five most
highly compensated executive officers of Navistar International
Corporation and of Navistar International Transportation Corp.
("Transportation") for fiscal year 1993:

<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE

Annual Compensation Long-Term Compensation
Awards Payouts
Name and Principal
Position Year Salary($) Bonus($) Restricted Options/ LTIP All Other
Stock SARs (#) Payouts Compensation
Awards ($) ($)(2)
($) (1)
<S> <C> <C> <C> <C> <C> <C> <C>
James C. Cotting 1993 $450,000 0 $27,750 0 0 $6,102
Chairman and Chief 1992 $450,000 0 $42,550 0 0 $5,550
Executive Officer 1991 $450,000 0 $33,300 16,000 0 $5,015

John R. Horne 1993 $360,000 0 $21,375 0 0 $3,870
President and Chief 1992 $360,000 0 $32,775 0 0 $3,543
Operating Officer 1991 $360,000 0 $25,650 12,000 0 $3,199

Robert C. Lannert 1993 $260,000 0 $16,313 0 0 $3,048
Executive V.P. and 1992 $260,000 0 $25,013 0 0 $2,803
Chief Financial Officer 1991 $260,000 0 $18,450 9,200 0 $2,347

John J. Bongiorno 1993 $220,000 0 $9,188 0 0 $3,239
Group V.P./General Mgr. 1992 $220,000 0 $14,088 0 0 $2,951
Financial Services 1991 $192,500 0 $11,025 6,400 0 $2,292

Mark D. Schwabero 1993 $215,000 0 $9,188 0 0 $1,006
Group Vice President, 1992 $215,000 0 $14,088 0 0 $ 978
Truck Businesses 1991 $201,250 0 $11,025 6,400 0 $ 853

<FN>

(1) The number and value of the aggregate restricted stock holdings at October 31, 1993 for each
of the persons named above is as follows: Mr. Cotting, 2,960 shares with a value of $80,290;
Mr. Horne, 2,280 shares with a value of $61,845; Mr. Lannert, 1,740 shares with a value of
$47,198; Mr. Bongiorno, 980 shares with a value of $26,583 and Mr. Schwabero, 980 shares with
a value of $26,583. Holders of restricted stock will receive dividends at the same time and
at the same rate as other Common Stock owners. Restricted stock is subject to forfeiture if
employment terminates prior to the end of the vesting period.

(2) The amounts listed under the All Other Compensation Column represent life insurance premiums
paid by the Corporation for the persons named in the Summary Compensation table.

/TABLE
<PAGE>
Page 21

OPTION/SAR GRANTS IN LAST FISCAL YEAR

Percent of Total
Options/SARs
Options/SARs Granted to Exercise Expiration
Granted (#) Employees in or Base Price Date
Name Fiscal Year ($/Sh)
<S> <C> <S> <S> <S>
James C. Cotting 0 n/a n/a n/a
John R. Horne 0 n/a n/a n/a
Robert C. Lannert 0 n/a n/a n/a
John J. Bongiorno 0 n/a n/a n/a
Mark D. Schwabero 0 n/a n/a n/a

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES

Number of Value of
Shares Unexercised Unexercised
Name Acquired on Value Options/SARs In-the-money
Exercise # Realized ($) at FY End (#) Options/SARs
Exercisable/ at FY end ($)
Unexercisable Exercisable/
Unexercisable
<S> <C> <C> <S> <S>
James C. Cotting 0 0 56,760 exercisable $89,000
John R. Horne 0 0 25,720 exercisable 66,750
Robert C. Lannert 0 0 18,100 exercisable 51,175
John J. Bongiorno 0 0 17,200 exercisable 35,600
Mark D. Schwabero 0 0 12,010 exercisable 35,600

<CAPTION>
LONG-TERM INCENTIVE PLANS-AWARDS IN LAST FISCAL YEAR

Number Performance Estimated Future Payouts Under Non-stock
of Shares, or Other Price-based Plans
Units or Period Until
Other Rights Maturation Threshold Target Maximum
or Payout
<S> <C> <S> <S> <S> <S>
James C. Cotting 0 n/a n/a n/a n/a
John R. Horne 0 n/a n/a n/a n/a
Robert C. Lannert 0 n/a n/a n/a n/a
John J. Bongiorno 0 n/a n/a n/a n/a
Mark D. Schwabero 0 n/a n/a n/a n/a

/TABLE
<PAGE>
Page 22

The Navistar International Transportation Corp. Retirement Plan
for Salaried Employees ("RPSE"), which covers substantially all of
the salaried employees of the Corporation and of Transportation,
including officers, provides annual retirement benefits based upon
age, credited service and "final average annual earnings" computed
on the basis of the individual's highest consecutive five years of
base salary out of the ten years immediately preceding retirement,
reduced by a portion of the Social Security benefits to which it is
estimated the participant will be entitled. Benefits accrue at a
lower rate for service after December 31, 1988, than for service
prior to that date. Maximum benefits which may be provided to an
employee under the RPSE are subject to the annual pension
limitation ($115,641 indexed for inflation) imposed for qualified
plans under The Employee Retirement Income Security Act ("ERISA").
Such benefits may be subject to further limitation under ERISA
because of participation in any defined contribution plan of the
Corporation or of Transportation. In addition, these benefits are
subject to a requirement that annual compensation in excess of an
annual limit ($235,840 in 1993) is not taken into account. Recent
legislation has reduced this compensation limit to $150,000
(indexed for inflation), effective January 1, 1994.

With respect to eligible upper level employees who retire at or
after age 55 with at least 10 years of credited service, the
Corporation and Transportation also have a Managerial Retirement
Objective ("MRO") Plan. The MRO Plan currently provides a
retirement benefit objective based upon age, credited service and
"final average annual earnings" computed on the basis of the
individual's highest consecutive five years of base salary plus
certain cash incentive compensation out of the ten years
immediately preceding retirement. Benefits accrue at a lower rate
for service after December 31, 1988, than for service prior to that
date. If the annual retirement benefits of any eligible employee
from all sources from both the Corporation and/or Transportation
contributions and employee contributions (including benefits under
the RPSE and a portion of the Social Security benefits to which it
is estimated the individual will be entitled, but not including the
Navistar International Transportation Corp. 401(k) Retirement
Savings Plan or any individual deferred compensation agreements) do
not equal the retirement benefit objective under the MRO Plan, the
Corporation and/or Transportation will pay the difference to the
employee.

The annual retirement benefits for employees who have earned
years of service both before and after January 1, 1989, will be
within the range defined by the tables below.

<PAGE>
Page 23

ESTIMATED ANNUAL RETIREMENT BENEFITS
(ASSUMING ALL SERVICE IS EARNED PRIOR TO JANUARY 1, 1989)
Final
Average
Annual 35 and
Earnings 15 20 25 30 Over
<C> <C> <C> <C> <C> <C>
$ 200,000 $ 72,000 $ 96,000 $120,000 $120,000 $120,000
300,000 108,000 144,000 180,000 180,000 180,000
400,000 144,000 192,000 240,000 240,000 240,000
500,000 180,000 240,000 300,000 300,000 300,000
600,000 216,000 288,000 360,000 360,000 360,000

<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFITS
(ASSUMING ALL SERVICE IS EARNED AFTER DECEMBER 31, 1988)
Final
Average
Annual 35 and
Earnings 15 20 25 30 Over
<C> <C> <C> <C> <C> <C>
$ 200,000 $ 51,000 $ 68,000 $ 85,000 $102,000 $120,000
300,000 76,500 102,000 127,500 153,000 180,000
400,000 102,000 136,000 170,000 204,000 240,000
500,000 127,500 170,000 212,500 255,000 300,000
600,000 153,000 204,000 255,000 306,000 360,000

</TABLE>

The number of years of credited service as of October 31, 1993
for Mr. Cotting is 15.0; Mr. Horne is 27.3; Mr. Lannert is 30.6;
Mr. Schwabero is 17.5; and Mr. Bongiorno is 12.5.

In recognition of the need to provide a retirement benefit for
executives who, as a result of commencing employment with the
Corporation or Transportation late in their careers, are unable to
attain the age and service requirements necessary to qualify for
retirement benefits under the above plans, the Corporation and
Transportation also have a Supplemental Executive Retirement Plan
("SERP"). The SERP covers certain members of executive management
and provides annual retirement benefits to those members of
executive management who have at least five years of credited
service based upon the individual's "final average annual earnings"
as defined above, reduced by a portion of the Social Security
benefits and prior employers' benefits to which it is estimated the
participant will be entitled. Payments under the SERP in fiscal
1993 were $209,813.

In the event of a termination of employment by the Corporation
or by Transportation following a change in control of the
Corporation, as defined, certain benefits will become contractual
rights and not subject to change which is adverse to employees
without their consent under the MRO Plan and the SERP with respect
to eligible employees who have accrued at least five years of
credited service as of the date of such termination.

Page 24

TERMINATION ARRANGEMENTS

To assure stability and continuity of management, the Corporation
has entered into agreements with each of the persons named in the
Summary Compensation Table and with each other Executive Officer.
Each agreement provides that if the officer's employment is
terminated by the Corporation for any reason other than for cause,
as defined in the agreement, the officer will receive a lump sum
payment of an amount equal to 100% of the officer's current annual
base salary. However, if the officer's employment is terminated by
the Corporation within three years after a change in control of the
Corporation, the officer will receive a lump sum payment of an
amount equal to 295% of the officer's average annual compensation
during the previous five years. The agreements' definition of a
change in control of the Corporation includes the acquisition by
any person or group of securities of the Corporation representing
25% or more of the combined voting power of the Corporation's then
outstanding securities. Each agreement has a term of three years
and is then renewed automatically for successive one year periods
unless the Board of Directors, six months prior to the renewal
date, elects not to renew it. In addition, Mr. Horne's agreement
provides for the continuation of his salary for one year if he
leaves the Corporation.

COMMITTEE ON ORGANIZATION EXECUTIVE COMPENSATION REPORT

The Board's Committee on Organization ("Committee") makes the
compensation decisions with respect to the Corporation's executive
officers and makes recommendations to the Board regarding the
compensation of the Chairman and Chief Executive Officer,
President and Chief Operating Officer and Executive Vice President
and Chief Financial Officer. The Committee is made up exclusively
of non-employee directors.

The Committee believes that the compensation program for senior
executives has been designed to provide competitive compensation if
the Corporation meets or exceeds performance criteria established
by the Committee. The performance criteria are designed to link
compensation and performance while promoting an alignment of
interests between shareowners and senior executives by encouraging
and creating share ownership opportunities. The compensation
program is designed to vary compensation significantly based on
performance. The Committee reviews the compensation program each
year.

The principal elements of the Corporation's executive
compensation program include base salary, annual incentive and
long-term incentive.

BASE SALARY

The Committee reviews the salaries of the Corporation's executive
officers on an annual basis. The goal of the Committee is to set
executive officers' base salaries at the 50th percentile of a peer
group of companies. The Committee uses three different surveys to
determine competitive base salary

Page 25

levels. From November 1, 1991 through the end of fiscal year 1993,
the base salaries of all non-represented employees were frozen and
Mr. Cotting did not receive a base salary increase during that
time. As a result of the salary freeze, the Corporation's
executive officers' salaries, including Mr. Cotting's salary, were
below the 50th percentile of the peer group of companies.

ANNUAL INCENTIVE

Annual incentive payments are made in cash based upon the
attainment of certain performance goals established by the
Committee prior to the beginning of each fiscal year. The
Committee sets performance goals at three different levels -
threshold, target and distinguished. No annual incentive payments
are made unless the threshold level is reached. At the target
level, the Chairman and Chief Executive Officer would earn an
annual incentive equal to 50% of his base salary. At the
distinguished level, annual incentive would equal 75% of his base
salary. At the target level, other senior executives would earn
annual incentive equal to 45% of their base salary and at the
distinguished level, 67.5% of their base salary. The Committee has
set performance goals based on net income of the Corporation.
Since the Corporation had a net loss for 1993, the threshold level
was not reached and no annual incentive payments were earned.

LONG-TERM INCENTIVE

Long-term incentive is stock based, with 50% paid in the form of
stock options and 50% in the form of Restricted Stock. At the
Chief Executive Officer level, long-term incentive is designed to
equal 80% of target cash compensation. Target cash compensation is
equal to base salary plus a target annual incentive of 50%. For
the Restricted Stock portion, a base amount is awarded as a
retention tool. There is the potential to earn up to five times
the base amount in performance shares if performance goals set by
the Committee at the beginning of each long-term cycle are
attained.

The performance goals set by the Committee for the 1994-96 cycle
are based on the stock performance of the Corporation against the
stock performance of a peer group of companies made up of Cummins,
Dana, Eaton and Paccar which, along with Navistar, are the
companies that make up the Standard and Poor's Heavy Duty Truck and
Parts Index. If the Corporation's stock performance at the end of
the cycle matches the performance of the index, Mr. Cotting will
earn shares equal to two times the base amount. If the
Corporation's stock performance exceeds the index by 15%, Mr.
Cotting will earn shares equal to five times the base amount.
<PAGE>
Page 26

Since the Corporation did not meet the performance criteria set
for the 1991-93 cycle, no performance shares were earned in 1993.

Committee on Organization

Wallace W. Booth, Chairman
William F. Andrews
William C. Craig
Jerry E. Dempsey
Arthur G. Hansen
Elmo R. Zumwalt, Jr.

PERFORMANCE GRAPH

A line graph comparing the yearly percentage change in the
Corporation's cumulative total shareowner return on its Common
Stock is contained on the following page.

<PAGE>
Page 27

This page contains a line graph entitled "COMPARISON OF FIVE YEAR
CUMULATIVE TOTAL RETURN". It plots Navistar Common Stock, the S&P
500 Index and the S&P Heavy Duty Trucks & Parts Index. The Y axis
represents DOLLARS; the X axis represents YEARS beginning with 1988
to 1993. The values are listed in the following table:

1988 1989 1990 1991 1992 1993
Navistar 100.0 76.2 40.5 52.4 35.7 51.7
S&P 500 100.0 126.2 116.6 155.2 170.1 194.7
S&P H-D Truck 100.0 97.7 66.9 99.8 126.5 179.1
& Parts

Assumes $100 invested on October 31, 1988 in Navistar Common Stock.
S&P 500 Index and S&P Heavy Duty Trucks & Parts Index. Fiscal year
ending October 31 / assumes reinvestment of dividends.
<PAGE>
Page 28

GENERAL

ANNUAL REPORTS

A copy of the Annual Report, which includes the Corporation's
Consolidated Financial Statements for the three years ended October
31, 1993, was mailed to all shareowners of record as of January 18,
1994. The Annual Report is not to be regarded as proxy soliciting
materials.

PROXY SOLICITATION

The cost of the solicitation of proxies will be paid by the
Corporation. In addition to the use of the mails, proxies may be
solicited personally, or by telephone or by telegraph, by employees
of the Corporation or its subsidiaries. The Corporation will
reimburse brokers and other persons holding stock in their names,
or in the names of nominees, for their expenses for sending proxy
materials to principals and obtaining their proxies.

PROPOSALS OF SHAREOWNERS

Proposals of shareowners intended to be included in next year's
proxy statement must be received by the Corporate Secretary at the
principal executive offices of Navistar International Corporation,
455 North Cityfront Plaza Drive, Chicago, Illinois 60611, no later
than the close of business on September 30, 1994.

FURTHER BUSINESS

So far as the Board of Directors knows, there are no matters to
come before the Annual Meeting other than those set forth in this
Proxy Statement. If any further business is presented to the
Annual Meeting, the persons named in the proxies will act on behalf
of the shareowners they represent according to their best judgment.

By order of the Board of Directors,

Steven K. Covey
Secretary
January 27, 1994
<PAGE>
Page 29

Appendix A

NAVISTAR 1994 PERFORMANCE INCENTIVE PLAN

SECTION I

ESTABLISHMENT OF THE PLAN

The Board of Directors of Navistar International Corporation
approved the establishment of the Navistar 1994 Performance
Incentive Plan ("Plan"). The Plan replaces the Navistar 1988
Performance Incentive Plan which consolidated and modified the
Corporation's Annual Incentive Plan, the Long Term Incentive Plan
and the 1984 Stock Option Plan into one plan.

SECTION II

PURPOSE OF THE PLAN

The purpose of the Plan is to enable the Corporation and its
subsidiaries to attract and retain highly qualified personnel, to
provide key employees who hold positions of major responsibility
the opportunity to earn incentive awards commensurate with the
quality of individual performance, the achievement of performance
goals and ultimately the increase in shareowner value.

SECTION III

DEFINITIONS

For the purposes of the Plan, the following words and phrases
shall have the meanings described below in this Section III unless
a different meaning is plainly required by the context.

(1) "Annual Incentive Award" means an award of cash approved
by the Committee based on the level of achievement
attained against annual performance goals approved by the
Committee on or prior to the commencement of the
applicable Fiscal year.

(2) "Award" means an award made under the Plan.

(3) "Board of Directors" means the Board of Directors of
Navistar International Corporation.

(4) "Change in Control" shall be deemed to have occurred if
(A) any "Person" or "group" (as such terms are used in
Section 13 (d) and 14 (d) of the Securities
Exchange Act of 1934) other than employee or retiree
benefit plans or trusts sponsored or established by the
Corporation or Navistar International Transportation Corp.
("NITC") is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934),
directly or indirectly, of securities of the

Page 30

Corporation representing 25% or more of the combined
voting power of the Corporation's then outstanding
securities, (B) as the result of, or in connection with,
any cash tender offer, exchange offer, merger or other
business combination, sale of assets, proxy or consent
solicitation, contested election or substantial stock
accumulation (a "Control Transaction"), the members of the
Board of Directors of the Corporation immediately prior to
the first public announcement relating to such Control
Transaction shall immediately thereafter, or within two
years, cease to constitute a majority of the Board of
Directors of the Corporation or (C) any dissolution or
liquidation of the Corporation or NITC or an agreement for
the sale or disposition of all or substantially all (more
than 50%) of the assets of the Corporation or NITC occurs.
Notwithstanding the foregoing, the sale or disposition of
any or all of the assets or stock of Navistar Financial
Corporation shall not be deemed a Change in Control.

(5) "Committee" means the Committee on Organization of the
Board of Directors.

(6) "Common Stock" means the common stock of the Corporation.

(7) "Corporation" means Navistar International Corporation.

(8) "Employee" means a person regularly employed by the
Corporation or any subsidiary of the Corporation,
including its officers.

(9) "Fair Market Value" means the average of the high and the
low prices of a share of Common Stock on the effective
date of grant as set forth in the New York Stock Exchange
- Composite Transactions listing published in the Midwest
Edition of The Wall Street Journal or equivalent financial
publication.

(10) "Fiscal Year" means the fiscal year of the Corporation.

(11) "Incentive Stock Option" means a right, as evidenced by an
agreement between the Participant and the Company in a
form approved by the Committee, to purchase a certain
number of shares of Common Stock at Fair Market Value for
a period of ten (10) years from the date of grant which
options are designed to meet the requirements set out
under Section 422 of the Internal Revenue Code.

(12) "Long Term Incentive Award" means an award of Restricted
Shares for a long term cycle, the amount of the award and
the length of the cycle will be determined by the
Committee.

(13) "Nonqualified Stock Option" means a right, as evidenced by
an agreement between the Participant and the Company in a
form approved by the Committee, to purchase a certain
number of shares of Common Stock at Fair Market Value for
a period of ten (10) years and one day from
<PAGE>
Page 31

the date of grant on which options are stated not to be
qualified as incentive stock options under Section 422 of
the U.S. Internal Revenue Code.

(14) "Participant" means an Employee selected by the
Corporation for participation in the Plan.

(15) "Plan" means the Navistar 1994 Performance Incentive Plan
as set forth herein and as it may be amended hereafter
from time to time.

(16) "Qualified Retirement" means a retirement from employment
of the Corporation or any of its subsidiaries at any time
after the attainment of age fifty-five (55) with at least
ten (10) years of credited service as defined by the
applicable retirement plan.

(17) "Restricted Share" means a share of Common Stock awarded
to a Participant by the Committee without payment by the
Participant which is restricted as to sale or transfer and
subject to forfeiture pursuant to terms established by the
Committee at the time of issuance.

(18) "Stock Option" means either an Incentive Stock Option or
a Nonqualifed Stock Option.

SECTION IV

ELIGIBILITY

Management will, from time to time, select and recommend to the
Committee Employees who are to become Participants in the Plan.
Such Employees will be selected from those who, in the opinion of
management, have substantial responsibility in a managerial or
professional capacity. Employees selected for participation in the
Plan may not concurrently participate in any other annual
performance, long term performance, sales incentive or profit
sharing plan of the Corporation or any of its subsidiaries except
as specifically approved by the Committee.

SECTION V

ANNUAL INCENTIVE AWARDS

(1) On or before the commencement of each Fiscal Year, the
Committee will approve performance goals for corporate
achievement for such Fiscal Year, and the amount of the
Annual Incentive Awards for such Fiscal Year will be based
on the level of achievement attained against
<PAGE>
Page 32

previously approved performance goals. The Committee also
will approve an award percentage for each organization
level for each performance goal.

(2) Performance goals for Annual Incentive Awards will not be
increased or decreased within a Fiscal Year except for
extraordinary circumstances approved by the Committee.

(3) An Annual Incentive Award determination will be made by
the Committee when the financial results and performance
levels for a Fiscal Year are presented to the Committee by
management.

(4) Payment of an Annual Incentive Award will be made in cash
to the Participant as soon as practicable after an Annual
Incentive Award determination has been made by the
Committee. A Participant who is not an Employee at the
end of a Fiscal Year will not be entitled to an Annual
Incentive Award for that Fiscal Year unless the Committee
determines otherwise.

SECTION VI

LONG TERM INCENTIVE AWARDS

(1) On or before the commencement of each Fiscal Year, the
Committee will approve performance goals for corporate
achievement for a long term cycle as determined by the
Committee. The amount of any Long Term Incentive Award
earned shall be based on the cumulative level of
performance attained against the approved performance
goals.

(2) Criteria for Long Term Incentive Awards will not be
increased or decreased for any long term cycle which has
begun except for extraordinary circumstances approved by
the Committee.

(3) Separate Long Term Incentive Award determinations will be
made by the Committee for each long term cycle.

(4) Restricted Shares will be awarded by the Committee to each
Participant approved by the Committee at the beginning of
each cycle unless to do so would present a substantial
risk of causing the Corporation to undergo an ownership
change, as such term is defined in Section 382 of the
Internal Revenue Code, in which event the Committee shall
delay the award until there is no longer such a risk. The
amount to be awarded will be pursuant to a formula
approved by the Committee which will be based on the
ability of the Participant to contribute to the efforts to
achieve the performance goals approved by the Committee
for the applicable cycle. The Committee shall designate
which shares shall be subject to performance goals. The
Committee will make the final Long Term Award
determination. No fractional shares

<PAGE>
Page 33

will be issued. A Participant who quits or is
involuntarily separated will forfeit any Restricted
Shares. Any Restricted Shares forfeited shall be
forfeited (i) to the Company or (ii) if the forfeiture to
the Company creates a substantial risk of an ownership
change under Section 382 of the Internal Revenue Code,
then to the salaried and hourly pension trusts of the
Corporation's principal operating subsidiary pro rata
based on assets held in the trusts as of the beginning of
the prior plan year. If a Participant dies, becomes
permanently and totally disabled, or retires pursuant to
a Qualified Retirement, Restricted Shares previously
awarded which are subject to performance goals, will be
retain until the shares are earned or forfeited for
failure to meet the performance goals.

(5) A Participant may elect to pay any withholding tax due on
Stock Options or on Restricted Shares awarded pursuant to
the Plan either (i) by cash including a personal check
made payable to the Corporation or (ii) by delivering at
Fair Market Value unrestricted Common Stock already owned
by the Participant or (iii) by any combination of cash or
unrestricted Common Stock. If the Participant is an
officer of the Corporation who is subject to Section 16(b)
of the Securities Exchange Act of 1934, he or she may make
an election pursuant to (ii) or (iii) above only if it is
made in writing (a) at least six (6) months following the
date of grant of an option or an award and at least six
(6) months prior to the date on which the amount of the
minimum required withholding tax related to the option or
award is determined or (b) within a ten-day period
following the release of the Corporation's annual or
quarterly financial results. Once an officer, who is
subject to Section 16(b) of the Securities Exchange Act of
1934, makes an election pursuant to (ii) or (iii) above
with respect to a specific option or award, it shall be
irrevocable unless the election is disapproved by the
Committee at its next meeting following the election. If
the redemption of shares by the Corporation to pay
withholding taxes would present a substantial risk of
causing an ownership change under Section 382 of the
Internal Revenue Code, the Corporation may refuse the
redemption. In such a case of refusal to redeem by the
Corporation, the Participant would be permitted to sell
sufficient shares to pay any withholding taxes due.

SECTION VII

STOCK OPTIONS

(1) The Committee may grant Nonqualified Stock Options or
Incentive Stock Options or a combination of both to
Participants in the amount and at the time that the
Committee approves. Option grants shall be limited to a
maximum of 50,000 shares per year for any Participant

<PAGE>
Page 34

(2) Unless otherwise determined by the Committee, a Stock
Option granted under the Plan will become exercisable in
whole or in part after the commencement of the second year
of the term of the Stock Option. The Committee will be
authorized to establish the manner of exercise of a Stock
Option. The effective date of the grant of a Stock Option
will, unless the Committee expressly determines otherwise,
be the business day on which the Committee approves the
grant of such Stock Option, provided that such grant will
expire if a written option agreement is not signed by the
Participant receiving a Stock Option and delivered to the
Corporation within thirty (30) days of such approval by
the Committee. The purchase price and any withholding tax
is to be paid in full to the Corporation upon the exercise
of a Stock Option either (i) by cash including a personal
check made payable to the Corporation; (ii) by delivering
at Fair Market Value unrestricted Common Stock already
owned by the Participant or (iii) by any combination of
cash and unrestricted Common Stock. If permitting the
exercise of a Stock Option at the time notice of intent is
given by the Participant to the Corporation would present
a substantial risk of causing an ownership change under
Section 382 of the Internal Revenue Code, the Corporation
may refuse to permit the exercise in which event as soon
as the Corporation determines that a substantial risk of
causing an ownership change no longer exists, it will
issue shares of Common Stock equal in value to the
difference between the exercise price per share and the
market price per share times the number of shares covered
by the exercise plus interest on the total for the period
of the delay calculated at the composite prime rate of
interest to corporate borrowers as published in The Wall
Street Journal. The Committee also will be authorized in
its discretion to prescribe in the option agreement for
the exercise of the Stock Option in specific installments.
A Stock Option granted under the Plan will be exercisable
during such period as the Committee may determine, and
will be subject to earlier termination as hereinafter
provided. In no event, however, may a Stock Option
governed by the Plan be exercised after the expiration of
its term. Except as provided herein, no Stock Option may
be exercised at any time unless the Participant who holds
the Stock Option is then an Employee. The Participant who
holds a Stock Option will have none of the rights of a
shareowner with respect to the shares subject to a Stock
Option until such shares are issued upon the exercise of
a Stock Option. Shares which otherwise would be delivered
to the holder of a Stock Option may be delivered, at the
election of the holder, to the Corporation in payment of
Federal, state and/or local withholding taxes due in
connection with an exercise.

(3) Neither the Corporation nor any subsidiary may directly or
indirectly lend money to any Participant for the purpose
of assisting the individual to acquire shares of Common
Stock issued upon the exercise of Stock Options granted
under the Plan.

<PAGE>
Page 35

(4) In the event of the termination of the employment of a
Participant who holds an outstanding Stock Option, other
than by reason of death, total and permanent disability or
a Qualified Retirement, the Participant may (unless the
Stock Option shall have been previously terminated)
exercise the Stock Option at any time within three (3)
months after such termination, but not after the
expiration of the term of the grant, to the extent of the
number of shares which were exercisable at the date of the
termination of employment. Stock Options governed by the
Plan will not be affected by any change of employment so
long as the Participant continues to be an Employee.

(5) In the event of Qualified Retirement or total and
permanent disability, a Participant who holds an
outstanding Stock Option may exercise the Stock Option, to
the extent that the Participant was entitled to do so
pursuant to the provisions of the stock option agreement
at the time of such termination, at any time within three
(3) years after such termination but not after the
expiration of the term of the grant. In the event of the
death of a Participant who holds an outstanding Stock
Option, the Stock Option may be exercised by a legatee, or
by the personal representatives or distributees, at any
time within a period of two (2) years after death, but not
after the expiration of the term of the grant. If death
occurs while employed by the Corporation or a subsidiary,
options may be exercised to the extent of the remaining
shares covered by Stock Options whether or not such shares
were exercisable at the date of death. If death occurs
during the three-month period specified in Section VII(4)
or within the three-year period specified in the
immediately preceding sentence, Stock Options may be
exercised to the extent of the number of shares which were
exercisable at the date of death.

<PAGE>
Page 36

SECTION VIII

RESTRICTED SHARES

(1) In addition to the Restricted Shares which the Committee
may award pursuant to Section VI(4), the Committee also
may award Restricted Shares to individuals recommended by
management for either retention or performance purposes or
as part of an employment agreement.

(2) The Participant will be entitled to all dividends paid
with respect to all Restricted Shares awarded under the
Plan during the period of restriction and will not be
required to return any such dividends to the Corporation
in the event of the forfeiture of the Restricted Shares.
The Participant also will be entitled to vote Restricted
Shares during the period of restriction.

(3) All Restricted Share certificates awarded under the Plan
are to be delivered to the Participant with an appropriate
legend imprinted on the certificate.

SECTION IX

ADJUSTMENTS UPON CHANGES IN CAPITALIZATION

Notwithstanding any other provision of the Plan, the option
agreements may contain such provisions as the Committee determines
to be appropriate for the adjustment of the number and class of
shares, subject to each outstanding Stock Option, the option prices
in the event of changes in, or distributions with respect to, the
outstanding Common Stock by reason of stock dividends,
recapitalizations, mergers, consolidations, split-ups, combinations
or exchanges of shares, spinoffs and the like, and, in the event of
any such changes in, or distribution with respect to, the
outstanding Common Stock, the aggregate number and class of shares
available under the Plan shall be appropriately adjusted by the
Committee, whose determination shall be conclusive.

SECTION X

ADMINISTRATION OF THE PLAN

Full power and authority to construe, interpret and administer
the Plan is vested in the Committee. Decisions of the Committee
will be final, conclusive and binding upon all parties, including
the Corporation, shareowners and employees. The foregoing will
include, but will not be limited to, all determinations by the
Committee as to (a) the approval of Employees for participation in
the Plan, (b) the amount of the Awards, (c) the performance levels
at which different percentages of the Awards would be earned and
all subsequent adjustments to such levels and (d) the determination
of all Awards. Any person who accepts any Award hereunder agrees
to accept as final,

Page 37

conclusive and binding all determinations of the Committee. The
Committee will have the right, in the case of employees not
employed in the United States, to vary from the provision of the
Plan to the extent the Committee deems appropriate in order to
preserve the incentive features of the Plan.

SECTION XI

NON-ASSIGNMENT

Awards under the Plan may not be assigned or alienated. In case
of a Participant's death, the amounts distributable to the deceased
Participant under the Plan with respect to which a designation of
beneficiary has been made (to the extent it is valid and
enforceable under applicable law) shall be distributed in
accordance with the Plan to the designated beneficiary or
beneficiaries. The amount distributable to a Participant upon
death and not subject to such a designation shall be distributed to
the Participant's estate. If there is any question as to the
right of any beneficiary to receive a distribution under the Plan,
the amount in question may be paid to the estate of the
Participant, in which event the Corporation will have no further
liability to anyone with respect to such amount.

SECTION XII

RIGHTS OF PARTICIPANT

To the extent that any Participant, beneficiary or estate
acquires a right to receive payments or distributions under the
Plan, such right will be no greater than the right of a general
unsecured creditor of the Corporation. All payments and
distributions to be made hereunder will be paid from the general
assets of the Corporation. Nothing contained in the Plan, and no
action taken pursuant to its provisions, shall create or be
construed to create any contracted right or trust of any kind or
fiduciary relationship between the Corporation and any Participant,
beneficiary or estate.

SECTION XIII

MODIFICATION, AMENDMENT OR TERMINATION

The Committee may modify without the consent of the Participant
(i) the Plan, (ii) the terms of any option previously granted or
(iii) the terms of Restricted Shares previously awarded at any
time, provided that, no such modification will, without the
approval of the shareowners of the Corporation, increase the number
of shares of Common Stock available hereunder. The Committee may
terminate the Plan at any time.
<PAGE>
Page 38
SECTION XIV

RESERVATION OF SHARES

Each fiscal year, there will be reserved for issue under the
Plan one (1) percent of the outstanding shares of Common Stock
including Class B Common Stock of the Corporation as determined by
the number of shares outstanding as of the end of the immediately
preceding fiscal year. No more than Five Hundred Thousand
(500,000) shares shall be granted as Incentive Stock Options in any
calendar year. Such shares may be in whole or in part, as the
Board of Directors shall from time to time determine, authorized
and unissued shares of Common Stock or issued shares of Common
Stock which shall have been reacquired by the Corporation. If less
than one (1) percent of the shares is granted or awarded in any
fiscal year, the difference will be available for use in the
following year only and if not used in the following year, those
shares will no longer be available. Any shares available from the
prior year will be the last shares to be granted or awarded. If
any Stock Option or Restricted Share granted or awarded under the
Plan shall expire or terminate for any reason without having been
exercised or earned in full, the shares subject thereto will again
be available for the purposes of the Plan.

SECTION XV

AGREEMENT TO SERVE

Each Participant receiving a Nonqualified Stock Option or an
Incentive Stock Option shall, as one of the terms of the option
agreement, agree to remain in the service of the Corporation or of
one of its subsidiaries for a period of at least one (1) year from
the date of granting the option. Such service will (subject to the
provisions of any contract between the Corporation or any such
subsidiary and such Participant) be at the pleasure of the
Corporation or of such subsidiary and at such compensation as the
Corporation or such subsidiary shall determine from time to time.
Any termination of a Participant's service for any reason other
than death, permanent and total disability or Qualified Retirement
during such period shall be deemed a violation of the Agreement
contained in this Section. In the event of such violation, any
Nonqualified Stock Option or Incentive Stock Option held by the
Participant under the Plan will immediately be canceled. Nothing
in the Plan will confer on any Participant any right to continue in
the employ of the Corporation or any of its subsidiaries or
interfere with or prevent in any way the right of the Corporation
or any of its subsidiaries to terminate a Participant's employment
at any time for any reason.

SECTION XVI

CHANGE IN CONTROL

Notwithstanding any provision contained herein to the contrary,
in the event of a Change in Control, all awarded

Page 39

Restricted Shares will immediately be free of all restrictions and
performance contingencies and will be deemed fully earned and not
subject to forfeiture and all outstanding options governed by the
Plan will be immediately exercisable and shall continue to be
exercisable for a period of three (3) years from the date of the
Change in Control regardless of the original term or employment
status, except that the term of any Incentive Stock Option shall
not be extended beyond ten (10) years from the date of grant.

SECTION XVII

LIMITATION OF ACTIONS

Every right of action by or on behalf of the Corporation or any
shareowner against any past, present or future member of the Board
of Directors, officer or Employee arising out of or in connection
with the Plan will, irrespective of the place where action may be
brought and irrespective of the place of residence of any such
director, officer or employee, cease and be barred by the
expiration of three years from whichever is the later of (a) the
date of the act or omission in respect of which such right of
action arises or (b) the first date upon which there has been made
generally available to shareowners an annual report of the
Corporation and a proxy statement for the annual meeting of
shareowners following the issuance of such annual report, which
annual report and proxy statement alone or together set forth, for
the related period, the aggregate amount of Awards under the Plan
during such period; and any and all right of action by an Employee
(past, present or future) against the Corporation arising out of or
in connection with the Plan shall, irrespective of the place where
action may be brought, cease and be barred by the expiration of
three (3) years from the date of the act or omission in respect of
which such right of action arises.

SECTION XVIII

GOVERNING LAW

The Plan will be governed by and interpreted pursuant to the
laws of the State of Delaware, the place of incorporation of the
Corporation.

SECTION XIX

SUBSIDIARIES' PLANS

To the extent determined by the Committee, any subsidiary may,
without regard to the limitations under the Plan, have a separate
incentive plan or program. The Committee will have exclusive
jurisdiction and sole discretion to approve or disapprove any such
plan or program and, from time to time, to amend, modify, or
suspend any such plan or program. Individuals eligible for Awards
under any such plan or program will not be considered Employees
eligible for Awards under the Plan, unless

Page 40

otherwise determined by the Committee. No provision of any such
plan or program will be included in, or considered a part of, the
Plan and any awards made under any such plan or program will not be
charged against the aggregate amount available under the Plan
unless otherwise determined by the Committee.

SECTION XX

EFFECTIVE DATE

The effective date of the Plan shall be December 16, 1993, if
approved by the shareowners at the 1994 Annual Meeting, and the
Plan shall continue in effect for ten (10) years from the effective
date.

Page 1

NAVISTAR INTERNATIONAL CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK
ONLY ____

1994 A Vote FOR Items 1,2,3 and 4
is recommended by the Board
P Board of Directors

For All
1. Election of Directors - For Withheld Except
R Nominees: Jack R. Anderson,
James C. Cotting,
James E. Dempsey, and
Robert C. Lannert ___ ___ _________
O
2. Ratification of Appointment For Against Abstain
of Independent Public
Accountants ___ ___ ___
X
3. Approval of the Navistar 1994 For Against Abstain
Performance Incentive Plan ___ ___ ___

Y
4. Adoption of Amendments to the For Against Abstain
Navistar 1988 Non-Employee
Director Stock Option Plan ___ ___ ___

Dated___________________, 1994
X_____________________________
Signature
THIS PROXY WILL BE VOTED IN X_____________________________
ACCORDANCE WITH SPECIFICATION Signature
MADE. IF NO CHOICES ARE
INDICATED, THIS PROXY WILL BE NOTE: Please sign exactly as
VOTED FOR ITEMS 1, 2, 3 AND 4 name appears hereon. For Joint
accounts both owners should
sign. When signing as executor,
MARK HERE TO HAVE YOUR VOTE administrator attorney,
REMAIN CONFIDENTIAL ___ trustee or guardian, etc.
please sign your full title.

NAVISTAR INTERNATIONAL CORPORATION
PROXY FOR ANNUAL MEETING TO BE HELD MARCH 16, 1994
This Proxy is Solicited on Behalf of the Board of Directors

THE UNDERSIGNED HEREBY APPOINTS JAMES C. COTTING, JOHN R. HORNE AND
ROBERT A. BOARDMAN, AND EACH OF THEM, PROXIES, WITH POWER OF
SUBSTITUTION, TO VOTE ALL STOCK OF THE UNDERSIGNED, AT THE ANNUAL
MEETING OF NAVISTAR INTERNATIONAL CORPORATION TO BE HELD MARCH 16,
1994, AND AT ANY ADJOURNMENT THEREOF, ON ANY BUSINESS THAT MAY
PROPERLY COME BEFORE THE MEETING, INCLUDING; THE PROPOSALS SHOWN
BELOW, WHICH ARE REFERRED TO BY THE SAME PROPOSAL NUMBER IN THE
NOTICE OF ANNUAL MEETING SET FORTH IN THE PROXY STATEMENT.

IMPORTANT - This proxy must be signed and dated on the reverse
side.