<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to________ 14a-11(c) or________ 14a-12
NAVISTAR INTERNATIONAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
[_] Set forth the amount on which the filing fee is calculated and state how
it was determined.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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NAVISTAR INTERNATIONAL CORPORATION
455 NORTH CITYFRONT PLAZA DRIVE
CHICAGO, ILLINOIS 60611
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
TO BE HELD
MARCH 19, 1997
TO THE SHAREOWNERS:
The Annual Meeting of Shareowners of Navistar International Corporation, a
Delaware corporation (the "Corporation"), will be held at the Arthur Rubloff
Auditorium of the Art Institute of Chicago, Monroe Street and Columbus Drive,
Chicago, Illinois 60603, on March 19, 1997, at 10:15 a.m., Central Standard
Time, for the following purposes:
1. To elect three directors to serve for three year terms until the 2000
Annual Meeting of Shareowners (the Board of Directors of the Corporation
recommends a vote FOR the nominees named in the Corporation's Proxy
Statement);
2. To consider and act upon a proposal to ratify the appointment of
Deloitte & Touche llp as independent public accountants for the current
fiscal year (the Board of Directors of the Corporation recommends a vote
FOR this proposal); and
3. To transact such other business as may properly come before the
meeting and any adjournments or postponements thereof.
Shareowners of record of the Common Stock of the Corporation at the close of
business on January 21, 1997 are entitled to notice of and to vote at this
meeting.
PLEASE SIGN AND RETURN PROMPTLY THE ACCOMPANYING BLUE PROXY in the enclosed
envelope which does not require postage if mailed in the United States or
Canada.
By order of the Board of Directors,
Steven K. Covey
Secretary
February 14, 1997
<PAGE>
PROXY STATEMENT
NAVISTAR INTERNATIONAL CORPORATION
455 NORTH CITYFRONT PLAZA DRIVE
CHICAGO, ILLINOIS 60611
ANNUAL MEETING OF SHAREOWNERS: MARCH 19, 1997
PROXY
This Proxy Statement is being mailed on or about February 14, 1997 to
holders of voting 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 will be held at
the Arthur Rubloff Auditorium of the Art Institute of Chicago, Monroe Street
and Columbus Drive, Chicago, Illinois 60603, on March 19, 1997 at 10:15 a.m.,
Central Standard Time. To assure greatest representation at the Annual Meeting
of Shareowners, and any adjournments or postponements thereof (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 21, 1997 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 confidential by so
indicating in the designated place on the proxy card. If a shareowner 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 before it is voted
by (i) delivering a written revocation to the Secretary of the Corporation,
(ii) submitting a duly executed new proxy bearing a later date, or (iii)
attending the Annual Meeting and voting in person. If not revoked, the shares
represented by the proxy will be voted by the persons named as proxies, in
accordance with the specifications marked thereon. If no such specification is
made, the shares will be voted in accordance with the Board of Directors'
recommendation. The Board of Directors recommends that shareowners vote FOR
Proposals 1 and 2. Director nominees receiving the greatest number of votes
will be elected directors. The affirmative vote of the holders of a majority
of the outstanding Common Stock present (whether in person or by proxy) and
entitled to vote at the Annual Meeting will be required to approve Proposal 2.
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 entitled to vote at the Annual Meeting.
VOTING SECURITIES OF THE CORPORATION
As of January 21, 1997, there were outstanding 49,341,900 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.
In addition to the 49,341,900 shares of voting Common Stock outstanding as of
January 21, 1997, the Corporation has outstanding 24,292,606 shares of Class B
common stock (the "Class B Stock") which are not entitled to vote at the
Annual Meeting. All shares of Class B Stock are held by the Supplemental
Benefit Trust, a retiree trust created in 1993 pursuant to a restructuring of
retiree health care and life insurance programs (the "Supplemental Trust"). On
July 1, 1998, the non-voting Class B Stock automatically converts into an
equal number of shares of voting Common Stock.
1
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PROPOSAL NO. 1--ELECTION OF DIRECTORS
The Corporation has three classes of directors, 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 for directors' retirement prior to
the first annual meeting of shareowners which is held after the date they
attain age 70. Dr. Andrew F. Brimmer will have attained age 70 prior to the
Annual Meeting, but at the request of the Board has agreed to continue in
office. Under the Corporation's Certificate of Incorporation, any vacancies on
the Board resulting from the resignation of a director or other cause shall be
filled by the members of the Board elected by the holders of Common Stock.
The Class I nominee directors are Mr. Jerry E. Dempsey, Mr. Robert C.
Lannert and Mr. John F. Fiedler. These persons have been nominated by the
Board for election to three year terms expiring in 2000, and until their
successors are elected or appointed and qualified. Nominations by shareowners
for election of a director may be made in accordance with the Corporation's
By-laws which require that advance notice be given to the Corporation and
require certain additional information. Any shareowner interested in making
such a nomination should request a copy of the By-laws provisions from the
Secretary of the Corporation.
All of the Class I nominees are now directors of the Corporation and have
served continuously since their first election or appointment. Current 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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DIRECTORS' BIOGRAPHIES
NOMINEES FOR ELECTION AS CLASS I DIRECTORS CONTINUING IN OFFICE UNTIL 2000
JERRY E. DEMPSEY, 64, 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., Business Roundtable, National
Association of Manufacturers, Allegheny Conference on Community Development
and United Way of Southwestern Pennsylvania. He is a board member of The
Carnegie, Pittsburgh Symphony Society and The Duquesne Club. He is Chairman of
the Dean's Advisory Board for Clemson University's School of Engineering and
the President's Advisory Council. He also is a member of the Conference Board
and the Committee on Economic Development. Committees: Executive, Finance and
Organization (Chair).
ROBERT C. LANNERT, 56, director since 1990. He is Executive Vice President
and Chief Financial Officer since 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 and is Vice President/Finance of the Des
Plaines Valley Council, Boy Scouts of America.
JOHN F. FIEDLER, 58, director since 1995. He is Chairman and Chief Executive
Officer since 1996 and a director since 1994 and from 1994 to 1995 he was
President and Chief Executive Officer of Borg-Warner Automotive, Inc., a
supplier of engineered components and systems, primarily for automotive drive
train applications. From 1965 to 1994, he was employed by The Goodyear Tire
and Rubber Company, where he held positions of increasing responsibility,
including President of Retread Systems Company, President of Kelly Springfield
Tire Company (a division of Goodyear), President of Goodyear Asia, and
Executive Vice President responsible for the North American Tires Division,
the largest entity within Goodyear. Committees: Organization and Public
Policy.
CLASS II DIRECTORS CONTINUING IN OFFICE UNTIL 1998
MARY GARST, 68, 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, Executive and Public Policy
(Chair).
JOHN R. HORNE, 58, director since 1990. He is Chairman of the Board of
Directors since April 1, 1996, and President and Chief Executive Officer since
April, 1995. He was President and Chief Operating Officer from 1990 to 1995.
Prior to that 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 1990; Manager,
Engine Engineering from 1980 to 1983; and Manager, Diesel Engine Engineering
from 1977 to 1980. Mr. Horne serves on the Board of Directors of the American
Trucking Association Foundation, the National Association of Manufacturers
(NAM), and Junior Achievement of Chicago; is Chairman of the Board of Trustees
of Taylor University in Upland, Indiana; serves on the Mechanical Engineering
Advisory Board for Purdue University; and is a member of the Conference Board.
Committee: Executive (Chair).
MICHAEL N. HAMMES, 55, director since 1996. He is Chairman and Chief
Executive Officer of The Coleman Company, Inc., a manufacturer and distributor
of camping and outdoor recreational products and hardware/home products, since
1993. From 1990 to 1993, he was Vice Chairman of the Black & Decker
Corporation and
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President of its Power Tool and Home Products Group. From 1986 to 1990, Mr.
Hammes was President--International Operations for Chrysler Corporation and a
Vice President of the company. He is a director of Schuller International,
Inc., formerly Manville Corporation, and is a member of the Board of Visitors
of Georgetown University's School of Business. Committees: Finance and Public
Policy.
WILLIAM F. PATIENT, 62, director since 1996. He is Chairman of the Board,
President and Chief Executive Officer of The Geon Company, since 1993. The
Geon Company manufactures polyvinyl chloride (PVC) resins and compounds, which
are used in a wide variety of applications, including household appliances,
business machines and construction products. From 1989 to 1993, Mr. Patient
served as Senior Vice President and President of B. F. Goodrich Company's Geon
Vinyl Division. From 1962 to 1989, Mr. Patient served as Vice President of
sales and marketing; Vice President of manufacturing; and President of Borg
Warner Chemicals Europe. He serves as chairman of The Vinyl Institute, a
division of The Society of the Plastics Industry. He is a director of National
City Bank in Cleveland, and serves on the Board of Trustees for Cleveland
State University and on the Board of Cleveland Tomorrow. Committees: Audit and
Organization.
CLASS III DIRECTORS CONTINUING IN OFFICE UNTIL 1999
WILLIAM F. ANDREWS, 65, director since 1984. He is Chairman of Schrader,
Inc., a manufacturer of tire valves and automotive accessories, since March,
1995. He is also Chairman of Scovill Fasteners, Inc., a manufacturer of
apparel and industrial fasteners, since October, 1995. 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
Singer Sewing Machines, Inc. from 1986 to 1989. From 1979 to 1986, Mr. Andrews
served as Chairman, President and Chief Executive Officer of Scovill, Inc. He
is a director of Johnson Controls, Inc., Katy Industries, Inc., Southern New
England Telephone Company, Micom Communications, Corrections Corp. of America
and Northwestern Steel & Wire. Committees: Executive, Organization and Finance
(Chair).
DR. ANDREW F. BRIMMER, 70, director since 1976. 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. Dr. Brimmer served as a member of the
Board of Governors of the Federal Reserve System from 1966 to 1974. In June,
1995, President Clinton appointed Dr. Brimmer to head the District of Columbia
Financial Responsibility and Management Assistance Authority, a board created
by Congress to address the finances of the District of Columbia. He is a
director of E.I. DuPont de Nemours & Company, Airborne Express, Bank America
Corporation and Bank of America, NT and SA, Gannett Company, CarrAmerica
Realty Company, BlackRock Investment Income Trust (and other BlackRock Mutual
Funds), and PHH Corporation. 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,
Eastern Economic Association (Fellow and Past President) and North American
Economic and Financial Association (President). He is a fellow of the American
Academy of Arts and Sciences, American Philosophical Society, National
Association of Business Economists and Washington Academy of Sciences. He is a
trustee of Tuskegee University (Chairman of the Board). He also is a member of
the Association for Study of Afro-American Life and History. Committees: Audit
(Chair), Executive, Finance and Public Policy.
JOHN D. CORRENTI, 49, director since 1994. He is Chief Executive Officer,
President and Vice Chairman of Nucor Corporation, one of the four largest
steel manufacturers in the U.S., since January, 1996. Mr. Correnti joined
Nucor as Construction Manager in Utah in 1980, and in 1982 became General
Manager of the company's mill in Brigham City, Utah. In 1991, he became
President and Chief Operating Officer and a director of Nucor. He is a
director of Harnischfeger, Inc., Wacovia Bank of North Carolina, Steel
Manufacturers Association, Steel Service Center and CEM Corporation.
Committees: Audit and Organization.
4
<PAGE>
ADDITIONAL DIRECTORS
In July, 1993, the Corporation restructured its postretirement 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. These three directors are not part of the classes referred to above
and are not standing for election by shareowners at the Annual Meeting.
WALTER J. LASKOWSKI, 56, director since 1995. He is International Vice
President of the UAW. Mr. Laskowski heads the UAW's Chrysler Department and is
in charge of the UAW's Navistar, Mack, Volvo, Freightliner and General
Dynamics Departments. As an International Representative on the staff of
Region 1D from 1971 until he was elected assistant director of Region 1D in
1986, Mr. Laskowski serviced the General Motors, Independent, and Parts
Supplier plants in the Saginaw, Bay City and northern lower peninsula area in
Michigan. He was elected to a three year term as a city commissioner of Bay
City, Michigan in 1968. He is a member of the NAACP and the Coalition of Labor
Union Women. Mr. Laskowski was appointed to the Board by the UAW, the holder
of all the Series B preference shares, for a term extending through July 31,
1997. Committees: Audit, Executive and Finance.
RICHARD F. CELESTE, 59, director since 1993. He 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 Healthsouth Corporation, Republic Engineered Steel
Incorporated and Habitat for Humanity International. He is a member of the
Advisory Board of BP America Inc., 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 appointed to the Board of Directors
by the Supplemental Trust, holder of all the Series A preference shares, for a
term extending through July 31, 1997. Committees: Audit and Public Policy.
WILLIAM C. CRAIG, 57, director since 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
appointed to the Board of Directors by the Supplemental Trust, holder of all
the Series A preference shares, for a term extending through July 31, 1997.
Committees: Executive, Finance and Organization.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and executive officers to file reports of beneficial
ownership and change of ownership of the Corporation's equity securities with
the U.S. Securities and Exchange Commission and the New York Stock Exchange.
To the Corporation's knowledge, based solely on review of the copies of such
reports furnished to the Corporation and written representation that no
reports were required, all of its directors and executive officers made all
required filings on time, except that Mr. Robert Morrison, a former executive
officer of the Corporation, filed a Form 4 to report a sale of 525 shares of
the Corporation's Common Stock 6 days after the date by which it should have
been filed.
5
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The following table sets forth information concerning the Common Stock
ownership of each director and director nominee, the Corporation's Chief
Executive Officer, each of the four most highly compensated executive
officers, and the directors and executive officers as a group as of December
31, 1996. Each individual owns less than 1% of the Corporation's Common Stock.
As a group, the directors and officers own or have the right to acquire 2.5%
of the Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES
-------------------------------
OBTAINABLE
THROUGH
STOCK OPTION
NAME/GROUP OWNED(1) EXERCISE TOTAL
- ---------- -------- ------------ ---------
<S> <C> <C> <C>
William F. Andrews.............................. 1,720 4,250 5,970
Robert A. Boardman.............................. 16,492 39,300 55,792
John J. Bongiorno............................... 18,739 46,100 64,839
Andrew F. Brimmer............................... 1,537 4,250 5,787
Richard F. Celeste.............................. 1,090 2,750 3,840
John D. Correnti................................ 920 2,500 3,420
James C. Cotting................................ 34,155 138,660 172,815
William C. Craig................................ 1,090 2,750 3,840
Jerry E. Dempsey................................ 1,620 4,250 5,870
John F. Fiedler................................. 1,620 2,000 3,620
Mary Garst...................................... 1,530 4,250 5,780
Michael N. Hammes............................... 970 0 970
John R. Horne................................... 95,091 165,720 260,811
Robert C. Lannert............................... 53,892 141,500 195,392
Walter J. Laskowski............................. 0 2,000 2,000
William F. Patient.............................. 1,000 0 1,000
Daniel C. Ustian................................ 15,609 41,790 57,399
Directors and Executive Officers as a Group..... 362,283 848,440 1,210,723
</TABLE>
- --------
(1) Includes shares over which there is shared investment power as follows:
Mr. Andrews--1,720 shares; Directors and Executives Officers as a Group--
1,730 shares.
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. In addition to the
committees described below, the Board of Directors has appointed a Strategic
Initiatives Committee, an ad hoc committee composed of Dr. Andrew F. Brimmer,
Mr. John D. Correnti, Mr. William F. Andrews, Mr. John F. Fiedler and Mr.
Jerry E. Dempsey (who serves as chair). This committee reviews and advises the
Board on the Corporation's manufacturing strategies.
EXECUTIVE COMMITTEE--The Executive Committee is composed of seven directors,
a majority of whom are not current employees of the Corporation. The 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 held no meetings in fiscal year
1996.
AUDIT COMMITTEE--The Audit Committee is composed of six 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 1996,
the Committee reviewed the 1996 audit plans of Deloitte & Touche llp 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,
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<PAGE>
subject to shareowner ratification, 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 four meetings in fiscal year 1996, reported the results of
those meetings and made recommendations to the Board.
FINANCE COMMITTEE--The Finance Committee is composed of seven directors,
none of whom is a current employee of the Corporation. The 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 1996, the Committee held seven
meetings, reported the results of those meetings and made recommendations to
the Board.
COMMITTEE ON ORGANIZATION--The Committee on Organization is composed of six
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 to the Secretary of the
Corporation in accordance with the Corporation's By-laws. 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 eleven meetings in fiscal year 1996, reported the results of
those meetings and made recommendations to the Board.
PUBLIC POLICY COMMITTEE--The Public Policy Committee is composed of six
directors, none of whom is a current employee of the Corporation. The
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 1996, reported the results of those meetings
and made recommendations to the Board.
MEETINGS OF DIRECTORS
Pursuant to the Board's corporate governance guidelines, in addition to the
regular and any special meetings of the Board of Directors, the Board's non-
employee directors meet in an executive session at regular intervals to
evaluate the performance of the Chief Executive Officer and the Board itself.
In fiscal year 1996, the Board of Directors held ten meetings, two of which
were executive sessions for non-employee directors only. 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 required to be attended by such Director and held by the Board and by
the committees on which such Director served, except that, because of
conflicts in schedules, Mr. Correnti attended 73% of the aggregate meetings.
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RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote FOR the election of the nominees
listed above as directors of the Corporation.
PROPOSAL NO. 2--RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Deloitte & Touche llp, Two Prudential Plaza, 180 N. Stetson
Avenue, 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, 1997. A
resolution will be presented at the Annual Meeting to ratify the appointment
by the Board of Directors of the firm of Deloitte & Touche llp, as independent
public accountants, to examine the financial statements of the Corporation for
the current fiscal year ending October 31, 1997, and to perform other
appropriate accounting services.
From time to time, Deloitte & Touche llp performs some non-audit services
for the Corporation and such services were performed by the firm in 1996. Both
the Board and the Audit Committee believe that these non-audit services have
no effect on the independence of Deloitte & Touche llp 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 llp,
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 llp as independent public accountants.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS' COMPENSATION
Directors who are full-time employees of the Corporation or any of its
subsidiaries are not compensated for their service on the Board or any
committee. Directors who are not employees of the Corporation or any of its
subsidiaries receive an annual retainer of $26,000. One-fourth of the annual
retainer to non-employee directors is paid in the form of restricted shares of
Common Stock. In addition, the Company pays each such director a fee of $1,000
for each directors' meeting and each committee meeting he or she attends. A
non-employee director who serves as chair of a committee receives an
additional annual fee of $3,000. At the request of the UAW (the organization
which elected Mr. Laskowski to the Board), all but $1,500 of the cash portion
of Mr. Laskowski's annual retainer, together with a cash amount equal to the
value of the restricted shares of Common Stock which otherwise would be
payable to Mr. Laskowski as part of his annual retainer, is contributed to the
Supplemental Trust, a retiree trust created in 1993 pursuant to the
Corporation's restructuring of retiree health care and life insurance
programs.
Non-employee directors are eligible to receive retirement fees if they serve
on the Board for at least five years. The annual retirement fee is equal to a
percentage of the annual retainer at the time of the director's retirement.
Directors who joined the Board prior to 1994 and who retire with five years of
service receive 100% of the annual retainer. Directors who joined the Board
after that time and who retire with five years of service receive 50% of the
annual retainer, which increases by 10% for each additional year of service,
with a maximum retirement fee of 100% of the annual retainer for ten years of
service. Retirement fees are paid to the director and, upon his or her death,
to the director's spouse. Payment of retirement fees begins on the later of
the director's retirement or age 65. Retirement fees continue for a period
equal to the number of years the director served on the Board. However, in the
event of the death of the director (or the director's spouse, if the director
is
8
<PAGE>
survived by his or her spouse), retirement fees automatically terminate. 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
2000 shares of Common Stock at a price equal to the fair market value of the
Common Stock on the first business day after the day 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.
EXECUTIVE OFFICERS' COMPENSATION
The following table shows the compensation of the Chief Executive Officer
and the four most highly compensated executive officers of the Corporation and
of Navistar International Transportation Corp. ("Transportation"), the
Corporation's wholly owned subsidiary, for fiscal year 1996:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
-------------------- ---------------------
RESTRICTED SECURITIES
STOCK UNDERLYING ALL OTHER
NAME AWARDS OPTIONS/ COMPENSATION
AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($) (1) SARS (#) ($) (2)
- ---------------------- ---- ---------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
John R. Horne(3).......... 1996 $650,000 0 $ 29,931 40,000 $ 7,067
Chairman, President and 1995 $544,166 $425,000 $762,244 50,000 $10,458
Chief Executive Officer 1994 $393,000 $150,000 $ 42,623 50,000 $ 6,191
Robert C. Lannert(4)...... 1996 $425,000 0 $ 19,656 25,700 $ 4,557
Executive Vice President
and 1995 $367,083 $275,000 $420,875 47,700 $ 6,135
Chief Financial Officer 1994 $283,833 $110,000 $ 30,304 50,000 $ 3,533
John J. Bongiorno......... 1996 $250,000 0 $ 7,788 10,100 $ 4,529
Group Vice
President/General 1995 $242,500 $147,939 $ 8,794 9,600 $ 4,180
Manager, Financial Serv-
ices 1994 $233,750 $ 79,670 $ 18,068 9,200 $ 3,630
Robert A. Boardman........ 1996 $247,500 0 $ 7,788 10,100 $ 2,052
Senior Vice President and 1995 $238,750 $126,719 $ 8,794 9,600 $ 1,897
General Counsel 1994 $223,333 $ 87,177 $ 18,068 9,200 $ 1,664
Daniel C. Ustian.......... 1996 $245,000 0 $ 7,788 10,100 $ 1,715
Group Vice
President/General Manager, 1995 $237,500 $104,603 $ 8,794 9,600 $ 1,554
Engine and Foundry 1994 $212,917 $ 57,439 $ 18,068 9,200 $ 1,747
</TABLE>
- --------
(1) The number and value of the aggregate restricted stock holdings at October
31, 1996 for each of the persons named above is as follows: Mr. Horne
77,233 shares with a value of $724,060 ($338,897 of which represents the
value of shares which will be forfeited if performance goals are not met);
Mr. Lannert, 38,383 shares with a value of $359,841 ($237,188 of which
represents the value of shares which will be forfeited if performance
goals are not met); Mr. Bongiorno, 14,250 shares with a value of $133,594
($120,319 of which represents the value of shares which will be forfeited
if performance goals are not met); Mr. Boardman, 14,250 shares with a
value of $133,594 ($120,319 of which represents the value of shares which
will be forfeited if performance goals are not met) and Mr. Ustian 14,250
shares with a value of $133,594 ($120,319 of which represents the value of
shares which will be forfeited if performance goals are not met). Holders
of restricted stock will receive dividends at the same time and at the
same rate as other Common Stock owners.
(2) The amounts listed under the All Other Compensation Column represent life
insurance premiums paid by the Corporation for the persons named in the
Summary Compensation Table.
(3) The Corporation granted Mr. Horne 54,825 restricted shares of Common Stock
on April 18, 1995 for purposes of retention under the Corporation's 1994
Performance Incentive Plan. Such shares vest ratably over 3 years.
(4) The Corporation granted Mr. Lannert 30,000 restricted shares of Common
Stock on April 18, 1995 for purposes of retention under the Corporation's
1994 Performance Incentive Plan. 15,000 shares vested on May 18, 1995 and
the balance of such shares vest ratably over 3 years.
9
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
GRANT DATE
INDIVIDUAL GRANTS VALUE
-------------------------------------------------- ------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS/SARS EMPLOYEES IN OR BASE PRICE EXPIRATION PRESENT
NAME GRANTED (#) FISCAL YEAR ($/SH)(3) DATE VALUE ($)(4)
---- ------------ ------------ ------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
John R. Horne........... 40,000(2) 5.57 10.56 12-20-05 193,520
Robert C. Lannert....... 25,700(2) 3.57 10.56 12-20-05 124,337
John J. Bongiorno....... 8,914(1) 1.24 10.56 12-19-05 43,126
1,186(2) 0.16 10.56 12-20-05 5,738
Robert A. Boardman...... 8,914(1) 1.24 10.56 12-19-05 43,126
1,186(2) 0.16 10.56 12-20-05 5,738
Daniel C. Ustian........ 8,914(1) 1.24 10.56 12-19-05 43,126
1,186(2) 0.16 10.56 12-20-05 5,738
</TABLE>
- --------
(1)Incentive Stock Options
(2)Non-Qualified Options
(3)All options become exercisable one year after the date of grant.
(4) The Black-Scholes model was used to calculate the grant date present value
of the options granted, discounted by 20% for non-transferability, the risk
of forfeiture and non-exercisability for the first year.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE
UNEXERCISED MONEY
OPTIONS/SARS OPTIONS/SARS
AT FY END (#) AT FY END ($)
--------------- -------------
SHARES
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
---- ------------ ------------ --------------- -------------
<S> <C> <C> <C> <C>
John R. Horne........... 0 0 125,720/ 40,000 0
Robert C. Lannert....... 0 0 115,800/ 25,700 0
John J. Bongiorno....... 0 0 36,000/ 10,100 0
Robert A. Boardman...... 0 0 29,200/ 10,100 0
Daniel C. Ustian........ 0 0 31,690/ 10,100 0
</TABLE>
10
<PAGE>
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
NUMBER PERFORMANCE UNDER NON-STOCK
OF SHARES, OR OTHER PRICE-BASED PLANS (2)
UNITS OR PERIOD UNTIL ---------------------------
OTHER RIGHTS MATURATION THRESHOLD TARGET MAXIMUM
NAME (#) OR PAYOUT (1) ($ OR #) ($ OR #) ($ OR #)
- ---- ------------ ------------------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
John R. Horne........... 14,083 10/31/98-10/31/2000 n/a n/a n/a
Robert C. Lannert....... 9,250 10/31/98-10/31/2000 n/a n/a n/a
John J. Bongiorno....... 3,667 10/31/98-10/31/2000 n/a n/a n/a
Robert A. Boardman...... 3,667 10/31/98-10/31/2000 n/a n/a n/a
Daniel C. Ustian........ 3,667 10/31/98-10/31/2000 n/a n/a n/a
</TABLE>
- --------
(1) All of the awards reported above are restricted shares of Common Stock
which are subject to partial or total forfeiture at the end of the
performance period if the movement of an index of the price of the Common
Stock has not equalled or exceeded the movement of a similar index
(weighted for market capitalization) reflecting the stock price of the
four peer companies whose stock price performance is reflected in the
performance graph on page 16. None of the restricted shares will be
forfeited if the Corporation's stock price performance exceeds the peer
group's performance by 15%. All of the restricted shares will be forfeited
if the Corporation's stock price performance is not at least equal to the
peer group's performance.
(2) Long-term incentive for executive officers is stock based. For a
description, see "Long-Term Incentive" on page 15.
11
<PAGE>
PENSION PLAN TABLE
ESTIMATED ANNUAL RETIREMENT BENEFIT OBJECTIVE
UPON NORMAL RETIREMENT AT AGE 65
(ASSUMING ALL SERVICE IS EARNED PRIOR TO JANUARY 1, 1989)
<TABLE>
<CAPTION>
FINAL YEARS OF SERVICE
AVERAGE -----------------------------------------------------------------
ANNUAL 35 AND
EARNINGS 15 20 25 30 OVER
---------- -------- -------- --------- --------- ---------
<S> <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
700,000 252,000 336,000 420,000 420,000 420,000
800,000 288,000 384,000 480,000 480,000 480,000
900,000 324,000 432,000 540,000 540,000 540,000
1,000,000 360,000 480,000 600,000 600,000 600,000
1,100,000 396,000 528,000 660,000 660,000 660,000
1,200,000 432,000 576,000 720,000 720,000 720,000
</TABLE>
ESTIMATED ANNUAL RETIREMENT BENEFIT OBJECTIVE UPON NORMAL RETIREMENT AT AGE 65
(ASSUMING ALL SERVICE IS EARNED AFTER DECEMBER 31, 1988)
<TABLE>
<CAPTION>
FINAL YEARS OF SERVICE
AVERAGE --------------------------------------------------------------
ANNUAL 35 AND
EARNINGS 15 20 25 30 OVER
---------- -------- -------- -------- -------- --------
<S> <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
700,000 178,500 238,000 297,500 357,000 420,000
800,000 204,000 272,000 340,000 408,000 480,000
900,000 229,500 306,000 382,500 459,000 540,000
1,000,000 255,000 340,000 425,000 510,000 600,000
1,100,000 280,500 374,000 467,500 561,000 660,000
1,200,000 306,000 408,000 510,000 612,000 720,000
</TABLE>
The number of years of credited service as of October 31, 1996 for Mr. Horne
is 30.3; Mr. Lannert is 33.6; Mr. Bongiorno is 15.5; Mr. Boardman is 7.0 and
Mr. Ustian is 23.7.
12
<PAGE>
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 ($120,000 in 1996, 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 ($150,000 in 1996, indexed
for inflation) is not taken into account. Employees who are first hired on or
after January 1, 1996, are not eligible to participate in the RPSE.
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. Employees who are first hired on or after January 1, 1996, are
not eligible to participate in the MRO Plan.
Substantially all of the salaried employees of the Corporation and of
Transportation, including officers, who are first hired on or after January 1,
1996, are covered by the Navistar Retirement Accumulation Plan (RAP), which is
a defined contribution plan that provides for an annual contribution to be
allocated to each participant's retirement account based on an age-weighted
percentage of the participant's eligible compensation for the calendar year.
The RAP also contains a 401(k) feature and provides for a company match,
currently 50% of the first 6% of pre-tax salary reduction contributions made
on behalf of the participant.
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 who have attained age 55, and provides annual retirement income
objectives to such members of executive management who have at least five
years of credited service, based upon age, credited service and "final average
earnings" (as defined above for purposes of the MRO Plan). SERP objectives
range from 30% to 50% of "final average earnings", and are reduced by
benefits, if any, under the RPSE and the MRO Plan, by the actuarial equivalent
of the executive's retirement account (but not the 401(k) or company match
accounts) under the RAP, by 50% of the participant's social security benefit
and by retirement benefits from prior employers. It is estimated that the
annual benefits payable under the SERP upon normal retirement (at age 65) to
Messrs. Bongiorno and Boardman would be approximately 8% and 11%,
respectively, of their individual "final average earnings" It is estimated
that Messrs. Horne, Lannert and Ustian would derive no benefit from the SERP.
Payments under the SERP in fiscal 1996 were $288,524.
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.
13
<PAGE>
TERMINATION ARRANGEMENTS
To assure stability and continuity of management, the Corporation has
entered into agreements with each of the executive officers 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 one
year 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.
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 President and
Chief Executive Officer and the Executive Vice President and Chief Financial
Officer.
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 and to promote an
alignment of interests between shareowners and senior executives by
encouraging and creating share ownership opportunities. The Committee has
adopted share ownership guidelines for each executive officer. The
compensation program is designed to vary compensation significantly based on
performance. The Committee reviews the compensation program each year. The
Internal Revenue Code provides that a public corporation generally may not
deduct the amount of annual compensation paid to certain executive officers
which is more than $1 million. The provision does not apply to certain
performance based compensation which meets the requirements contained in IRS
regulations. Performance based compensation can include income from stock
options, restricted stock, and certain formula driven compensation that meets
the IRS requirements. The Committee has considered the effect of this Internal
Revenue Code limitation, and has concluded that the limitation will not have
any significant effect on the Corporation's income tax liability.
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
levels. The three surveys are as follows: one survey is composed of the peer
companies included in the performance graph on page 16, another consists of
manufacturing companies of a similar size in sales to Navistar in the
metallurgical/fabricating industries; and a third one consists of all
manufacturing companies with sales of $5 to $10 billion. Mr. Horne, who had
been named Chief Executive Officer on March 31, 1995, was elected to the
additional position of Chairman of the Board on April 1, 1996. He received no
increase in base salary at that time, nor at any time during the year.
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. Approximately 400 participants are
14
<PAGE>
eligible for annual incentive payments. The target annual incentive varies by
organization level, from 25% of base salary for managers to 50% of base salary
for the Chief Executive Officer. In 1996, the Corporation did not meet the
goals established by the Committee at the threshold level, and no annual
incentive payments were earned.
LONG-TERM INCENTIVE
Long-term incentive for executive officers is stock based, with 50% paid in
the form of stock options and 50% in the form of restricted shares. Stock
options are valued pursuant to the Black-Scholes formula (less a 20% discount)
and restricted shares are valued at their market value on the date of
issuance. Stock options are issued at current market value on the date of
grant and are not exercisable during the first year. All restricted shares are
awarded at the beginning of the cycle. One-sixth of the restricted shares are
subject to forfeiture if employment is terminated prior to the end of the
restriction period. Five-sixths of the restricted shares are subject to
forfeiture if performance goals set by the Committee at the beginning of the
cycle are not attained. 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% of
base salary.
The performance goals set by the Committee for the last three cycles, each
of which is three years, 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. Horne will earn shares equal to two times the
base amount. If the Corporation's stock performance exceeds the index by 15%,
Mr. Horne will earn shares equal to five times the base amount. Mr. Horne will
earn a pro-rata amount between two and five times the base amount if
performance is between 100% of the index and 115% of the index.
Since the Corporation did not meet the performance criteria for the 1994-
1996 cycle, no performance shares were earned in 1996.
Committee on Organization
Jerry E. Dempsey, ChairpersonWilliam
F. Andrews John D. CorrentiWilliam
C. CraigJohn F. Fiedler William F.
Patient
15
<PAGE>
PERFORMANCE GRAPH
A line graph comparing the yearly percentage change in the Corporation's
cumulative total shareowner return on its Common Stock is set forth below.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
NAVISTAR COMMON STOCK, S&P 500 INDEX & S&P HEAVY DUTY TRUCKS & PARTS INDEX
LOGO
ASSUMES $100 INVESTED ON OCTOBER 31, 1991 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.
16
<PAGE>
GENERAL
ANNUAL REPORTS
A copy of the Annual Report, which includes the Corporation's Consolidated
Financial Statements for the three years ended October 31, 1996, was mailed to
all shareowners of record as of January 21, 1997. 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. In
addition, the Corporation has engaged the services of Georgeson & Company Inc.
to assist in the solicitation of proxies at a fee of $6,500 plus expenses.
PROPOSALS OF SHAREOWNERS
Proposals of shareowners intended to be included in next year's proxy
statement must be received by the Secretary of the Corporation 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 October 17, 1997. The Corporation's policy is to include the name,
mailing address and number of shares held by any shareowner whose proposal is
included in the proxy statement. In addition, the Corporation's By-laws
provide that any shareowner wishing to bring any matter before the Annual
Meeting must give written notice to the Corporation not less than 120 days nor
more than 180 days in advance of the Annual Meeting and the notice must meet
certain other requirements.
FURTHER BUSINESS
The only business to come before the Annual Meeting of which the Board of
Directors is presently aware is set forth in this Proxy Statement. If any
further business is properly presented at the Annual Meeting, it is intended
that discretionary authority to vote the proxies shall be exercised in respect
thereof in accordance with the best judgment of the proxy holders.
By order of the Board of Directors,
Steven K. Covey
Secretary
February 14, 1997
17
<PAGE>
NAVISTAR INTERNATIONAL CORPORATION
PROXY FOR ANNUAL MEETING TO BE HELD MARCH 19, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
THE UNDERSIGNED HEREBY APPOINTS JOHN R. HORNE, ROBERT C. LANNERT 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 19, 1997, AND AT ANY ADJOURNMENTS OR POSTPONEMENTS
THEREOF, ON ANY BUSINESS THAT MAY PROPERLY COME BEFORE THE MEETING. IN THEIR
DISCRETION, THE PROXIES ARE HEREBY AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS OR POSTPONEMENTS
THEREOF.
(Continued and to be signed on other side)
A VOTE FOR PROPOSALS 1 AND 2 IS RECOMMENDED BY THE BOARD OF DIRECTORS
FOR ALL
FOR WITHHELD EXCEPT _________________
/ / / / / /
1. Election of Directors
Nominees: Jerry E. Dempsey, Robert C. Lannert and John Fiedler
2. Ratification of Appointment of FOR AGAINST ABSTAIN
Independent Public Accountants / / / / / /
Mark here to have your vote on all proposals remain confidential / /
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH SPECIFICATION MADE.
IF NO CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
NOTE: Please sign exactly as name appears hereon. For joint accounts both owners
should sign. When signing as executor, administrator, attorney, trustee or
guardian, etc., please sign your full title.
Dated: __________________________________________________________ , 1997
X ______________________________________________________________________
Signature
X ______________________________________________________________________
Signature
