SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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[_] Definitive Additional Materials by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 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)(1) and 0-11.
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(SC14A-07/98)
<PAGE>
NAVISTAR INTERNATIONAL CORPORATION
455 North Cityfront Plaza Drive
Chicago, Illinois 60611
NOTICE OF 1999 ANNUAL MEETING OF SHAREOWNERS
To be held Tuesday, February 23, 1999
To Our Shareowners:
You are cordially invited to attend Navistar International Corporation's
1999 Annual Meeting of Shareowners. This year's meeting will be held at the
Gleacher Center, University of Chicago, 6th Floor, 450 North Cityfront Plaza
Drive, Chicago, Illinois on Tuesday, February 23, 1999, at 11:00 a.m.
The purposes of the Annual Meeting are:
o To elect 3 directors; and
o To transact such other business as may properly come before the
meeting and any adjournments or postponements thereof.
Shareowners of record at the close of business on January 8, 1999 are
entitled to notice of and to vote at this meeting.
YOUR VOTE IS IMPORTANT. Whether you plan to attend the meeting or not, we
urge you to vote your shares via a toll-free telephone number or by signing and
mailing the enclosed proxy card in the envelope provided. Instructions regarding
both methods of voting are contained on the proxy card. If you attend the
meeting and prefer to vote in person, you may do so.
By Order of the Board of Directors,
/s/ STEVEN K. COVEY
Steven K. Covey
Secretary
January 19, 1999
<PAGE>
TABLE OF CONTENTS
NOTICE OF ANNUAL MEETING ..................................................COVER
INFORMATION ABOUT THE ANNUAL MEETING ...................................... 1
INFORMATION ABOUT VOTING .................................................. 1
Quorum Requirements .................................................. 2
Required Vote ........................................................ 2
Other Matters ........................................................ 2
ELECTION OF DIRECTORS ..................................................... 2
BOARD MEETINGS AND COMMITTEES ............................................. 5
DIRECTORS' COMPENSATION ................................................... 6
NAVISTAR COMMON STOCK OWNERSHIP BY
DIRECTORS AND OFFICERS ............................................... 7
PERSONS OWNING MORE THAN 5% OF NAVISTAR COMMON STOCK ...................... 8
EXECUTIVE COMPENSATION .................................................... 8
Committee on Compensation and Governance Executive
Compensation Report .................................................. 8
Performance Graph .................................................... 11
Executive Compensation Tables ........................................ 12
Termination Arrangements ............................................. 14
Retirement Plans ..................................................... 14
Certain Related Transactions ......................................... 17
OTHER INFORMATION ......................................................... 18
Annual Reports ....................................................... 18
Section 16(a) Beneficial Ownership Reporting Compliance .............. 18
Proxy Solicitation ................................................... 18
Shareowner Proposals for the 2000 Annual Meeting ..................... 18
Independent Public Accountants ....................................... 18
<PAGE>
PROXY STATEMENT
Navistar International Corporation
455 North Cityfront Plaza Drive
Chicago, Illinois 60611
INFORMATION ABOUT THE ANNUAL MEETING
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Navistar International Corporation, a
Delaware corporation, for use at the Annual Meeting of Shareowners. The meeting
will be held at the University of Chicago in the Gleacher Center, 6th Floor, 450
North Cityfront Plaza Drive, Chicago, Illinois on Tuesday, February 23, 1999 at
11:00 a.m. This Proxy Statement summarizes information that we are required to
provide you under the rules of the U.S. Securities and Exchange Commission and
is designed to assist you in voting your shares. On or about January 19, 1999,
we began sending these proxy materials to all shareowners of record at the close
of business on January 8, 1999.
INFORMATION ABOUT VOTING
Shareowners can vote in person at the Annual Meeting or by proxy. There are
two ways to vote by proxy:
-- By Telephone -- If you hold your shares in your own name rather than
through a broker, you can vote by telephone by calling the toll-free
number listed on the proxy card. Please see your proxy card for
specific instructions.
-- By Mail -- You can vote by mail by signing, dating and mailing the
enclosed proxy card.
By voting by proxy, you will direct the individuals named on the card (your
"proxies") to vote your shares at the Annual Meeting in the manner you indicate.
The persons named as proxies were selected by the Board of Directors and are
either directors or officers of the Company or both. If you sign and return the
card without indicating your instructions, then the designated proxies will vote
your shares "FOR" the election of all three nominees for director.
You may revoke or change your proxy at any time before it is exercised by
sending a written revocation to the Company's Secretary, by providing a later
dated proxy, by voting by telephone at a later time, or by attending the Annual
Meeting and voting in person.
You may have your votes kept confidential by so indicating in the
designated place on the proxy card or when prompted during telephone voting. If
you are a participant in the Company's 401(k) Retirement Savings Plan, the proxy
card will represent the number of shares allocated to your account under the
Plan and will serve as a direction to the Plan's trustee as to how the shares in
your account are to be voted.
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Holders of record of Navistar's common stock at the close of business on
January 8, 1999 are entitled to receive this notice and to vote their shares at
the Annual Meeting. As of that date, there were outstanding 66,194,628 shares of
common stock. You are entitled to one vote per share, exercisable in person or
by proxy, with respect to all matters to come before the Annual Meeting.
Quorum Requirements
A quorum is necessary to hold a valid meeting. Under the Company's Bylaws
at least one-third of the Company's common stock must be represented at the
Annual Meeting, whether in person or by proxy, to constitute a quorum.
Abstentions and broker non-votes are counted as present for establishing a
quorum. A broker "non-vote" occurs when a broker votes on some matter on the
proxy card but not on others because the broker does not have the authority to
do so.
Required Vote
Directors are elected by a plurality vote of shares present at the meeting,
meaning that the three nominees for director receiving the highest number of
votes will be elected. Abstentions and broker "non-votes" are not counted for
purposes of election of directors.
Other Matters
The Board of Directors does not know of any other matters that will be
presented at the Annual Meeting other than the proposals discussed in this Proxy
Statement. If any other matter properly comes before the Annual Meeting, your
proxies will vote your shares in accordance with their best judgment.
Discretionary authority to vote on other matters is included in the proxy.
ELECTION OF DIRECTORS
Our Board of Directors currently is divided into three classes (Class I,
Class II, and Class III) for purposes of election. One class is elected at each
annual meeting of shareowners to serve for a three-year term.
Three directors will be elected at the Annual Meeting to serve as Class III
directors for a three-year term beginning at this Annual Meeting and expiring at
our Annual Meeting in the year 2002. The Board of Directors has nominated
William F. Andrews, John D. Correnti, and Allen J. Krowe for election as Class
III directors. Each nominee is presently a director of Navistar. Your proxies
will vote your shares FOR the nominees, unless you instruct otherwise. Each
nominee elected as a director will continue in office until his successor has
been elected, or until his death, resignation or retirement.
The Board of Directors Recommends a Vote FOR the Election of these Nominees
as Directors.
The Company expects each nominee to be able to serve. If a nominee is
unavailable for election, the Board may choose another nominee and your proxies
will then vote your shares for that nominee, or, as an alternative, the Board
may reduce the number of directors to be
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elected at the Annual Meeting. The Board currently has 10 members. The Board has
authority under Company's Bylaws to fill vacancies and to increase and decrease
its size.
If you want to recommend a director candidate, you may do so in accordance
with the Company's Bylaws which require advance notice to the Company and
certain other information. If you are interested in recommending a director
candidate, you should request a copy of the Bylaws provisions from the Company's
Secretary.
Class I and Class II directors will continue in office following this
Annual Meeting and their term will expire in 2000 (Class I) or 2001 (Class II).
The following are brief biographies of each of the directors and director
nominees.
Nominees for Class III Directors Whose Terms Expire 2002
William F. Andrews, 67, director since 1984. He is Chairman of Northwestern
Steel & Wire Co., a manufacturer of steel rods, wire and beams, since 1998. He
is also Chairman of Scovill Fasteners, Inc., a manufacturer of apparel and
industrial fasteners, since 1995. From 1995 to 1998 he served as Chairman of
Schrader, Inc. a manufacturer of tire valves and automotive accessories. From
1992 to 1995 he served as President and Chief Executive Officer at Amdura
Company, a manufacturer of products for construction and agricultural machinery.
He is a director of Johnson Controls, Inc., Katy Industries, Inc., Black Box
Corp., and Dayton Superior Corp. Committees: Compensation and Governance,
Executive, and Finance (Chair).
John D. Correnti, 51, director since 1994. He is Chief Executive Officer,
President and Vice Chairman of Nucor Company, one of the largest steel
manufacturers in the U.S., since 1996. From 1991 to 1996 he served as President
and Chief Operating Officer and a director of Nucor. He is a director of
Harnischfeger, Inc., Steel Manufacturers Association, and CEM Company.
Committees: Audit and Compensation and Governance.
Allen J. Krowe, 66, director since 1997. He retired as Vice Chairman from
Texaco Inc., a global energy company, in 1997, a position he held since 1993.
From 1988 to 1995 he served as Chief Financial Officer, and from 1988 to 1993 as
Senior Vice President of Texaco. He is a director of the University of Maryland
Foundation, PPG Industries, Inc., Infomart, IBJ Schroder Bank and Trust Company,
Amphion Ventures, L.P., American Council for Capital Formation and
Westchester-Putnam Council of the Boy Scouts of America. Committees: Audit
(Chair), Executive, and Finance.
Class I Directors Whose Terms Expire 2000
Jerry E. Dempsey, 66, director since 1984. He is the retired Chairman of
the Board and Chief Executive Officer of PPG Industries, Inc., a diversified
global manufacturer of glass, protective coatings and chemicals, a position he
held from 1993 to 1997. 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. He is a director of Eastman Chemicals. He is
a member of the Dean's Advisory Board for Clemson University's School of
Engineering, Chairman of the President's Advisory Council, and Co-Chairman of
the Commission on the Future of Clemson University. He serves as a Trustee of
the Pittsburgh Theological Seminary and is a director of the Greenville
Symphony. Committees: Compensation and Governance (Chair), Executive, and
Finance.
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Robert C. Lannert, 58, director since 1990. He is Executive Vice President
and Chief Financial Officer of Navistar since 1990. He is President of the Des
Plaines Valley Council of the Boy Scouts of America.
Dr. Abbie Griffin, 44, director since December 1998. She is a Professor of
Business Administration at the University of Illinois, Urbana-Champaign since
1997. She was Associate Professor of Marketing and Production Management from
1993 to 1997 and Assistant Professor of Marketing and Production Management from
1989 to 1993 at the University of Chicago, Graduate School of Business.
Class II Directors Whose Terms Expire 2001
Michael N. Hammes, 57, director since 1996. He is Chairman and Chief
Executive Officer of the Guide Company, a major supplier of automotive lighting
components since 1998. He was Chairman and Chief Executive Officer of The
Coleman Company, Inc., a manufacturer and distributor of camping and outdoor
recreational products and hardware/home products, from 1993 to 1997. From 1990
to 1993, he was Vice Chairman of the Black & Decker Company and President of its
Power Tool and Home Products Group. He is a director of Johns Manville Company
and a member of the Board of Visitors of Georgetown University's School of
Business. Committees: Finance and Public Policy.
John R. Horne, 61, director since 1990. He is Chairman of the Board of
Directors since 1996, and President and Chief Executive Officer of Navistar
since 1995. He was President and Chief Operating Officer for Navistar from 1990
to 1995. Mr. Horne serves on the Board of Directors of the National Association
of Manufacturers (NAM), Intermet Company, and Junior Achievement of Chicago; is
a member of the Board of Trustees of Taylor University in Upland, Indiana;
serves on the Mechanical Engineering Industrial Advisory Council for Purdue
University; and is a member of the Conference Board, the Economic Club of
Chicago and the Executive's Club of Chicago. Committee: Executive (Chair).
William F. Patient, 64, director since 1996. He is Chairman of the Board
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. He serves
on the Board 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 Compensation and Governance.
Additional Director
In July, 1993, the Company restructured its post-retirement health care and
life insurance benefits pursuant to a settlement agreement which required, among
other things, the addition of a seat on the Company's Board of Directors. The
director's seat is filled by a person appointed by the United Automobile,
Aerospace & Agricultural Implement Workers of America (the "UAW"). This director
is not part of the classes referred to above and is not standing for election by
shareowners at the Annual Meeting.
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Walter J. Laskowski, 58, director since 1995. He is International Vice
President of the UAW since 1995. 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 is a member of the NAACP, the Coalition of Labor Union Women, and the Delta
Dental Board. Mr.Laskowski was appointed to the Board of Directors by the UAW
for a term extending through July 31, 1999. Committees: Audit, Executive, and
Finance.
BOARD MEETINGS AND COMMITTEES
In fiscal year 1998 our full Board met 9 times. In addition, the Board's
non-employee directors met 2 times during the fiscal year in executive sessions
to evaluate the performance of the Chief Executive Officer. All of the directors
except Mr. Laskowski attended at least 75% of all the meetings of the Board and
the committees on which he or she serves during the fiscal year.
Our Board has 5 standing committees. Committee membership is noted for each
director next to the director's name in the biographical section above.
Executive Committee -- The Executive Committee is composed of 5 directors,
a majority of whom are not employees of the Company. 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
1998.
Audit Committee -- The Audit Committee is composed of 4 directors, none of
whom is an employee of the Company. The Committee oversees our financial
reporting process on behalf of the Board. During 1998, the Committee reviewed
the 1998 audit plans of the Company's independent public accountants and of our
internal audit staff, reviewed the audit of our accounts with the independent
public accountants and the internal auditors, considered the adequacy of audit
scope and reviewed and discussed with the auditors and management the auditors'
reports. The Committee recommended to the Board the selection of the Company's
independent public accountants. The Committee also reviewed environmental
surveys and compliance activities for the Company's facilities, and the expense
accounts of principal executives. In fiscal year 1998, the Committee held 5
meetings.
Finance Committee -- The Finance Committee is composed of 5 directors, none
of whom is an employee of the Company. The Committee reviews the Company's
financing requirements; custody and management of assets which fund the pension
and retirement savings plans of the Company'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 Company's relationship and communications with our
lenders and our financial disclosure policy. In fiscal year 1998, the Committee
held 6 meetings.
Committee on Compensation and Governance -- The Committee on Compensation
and Governance (formerly named the Committee on Organization) is composed of 4
directors,
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none of whom is an employee of the Company. The Committee recommends to the
Board the election, structure, responsibilities and compensation of all
executive officers. The Committee also has responsibilities for the organization
of the Board. The Committee reviews and makes recommendations to the Board
concerning nominees for election as directors. Upon management's recommendation,
the Committee also reviews basic changes to non-represented employees' base
compensation and incentive and benefit plans. The Committee held 9 meetings in
fiscal year 1998.
Public Policy Committee -- The Public Policy Committee is composed of 1
director, who is not an employee of the Company. The Committee reviews 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 1 meeting in fiscal year 1998.
DIRECTORS' COMPENSATION
Directors who are Navistar employees receive no fees for their service as
directors. Directors who are not employees of the Company receive separate
compensation for Board service. That compensation includes:
Annual Retainer: $26,000
Attendance Fees: $1,000 for each Board meeting
$1,000 for each committee meeting
Expenses related to attendance
Committee Chairman
Additional Retainer: $3,000
Stock Options: 2,000 shares annually (The exercise
price of these options is equal to the
fair market value of Navistar's common
stock on the first business day after
the date of grant. The options expire 10
years after the grant date.)
At least one-fourth of the annual retainer is paid in the form of restricted
stock.
Under Navistar's Non-Employee Directors Deferred Fee Plan, directors may
defer payment of fees in cash or in restricted stock. 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 stock which otherwise would be payable to
Mr. Laskowski, is contributed to a trust created in 1993 pursuant to a
restructuring of Navistar's retiree health care benefits.
Directors who are not employees of the Company 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 receive 100% of the
annual retainer. Directors who joined the Board after that time receive 50% of
the annual retainer, which increases by 10% for each year of service beyond five
years, 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 begins on the later of the director's
retirement or age 65. Retirement fees
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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 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 Company as defined in
the retirement agreement.
NAVISTAR COMMON STOCK OWNERSHIP BY DIRECTORS AND OFFICERS
This table indicates how much common stock the executive officers and
directors beneficially own as of December 31, 1998. In general, "beneficial
ownership" includes those shares a director or executive officer has the power
to vote or transfer, and stock options exercisable within 60 days. Except as
noted, the persons named in the table below have the sole voting and investment
power with respect to all shares beneficially owned by them.
<TABLE>
<CAPTION>
Number of Shares
------------------------------------
Obtainable
Through
Stock Option
Name/Group Owned(1)(2) Exercise Total
- ---------- ----------- -------- ------------
<S> <C> <C> <C>
William F. Andrews ............................ 2,580 8,250 10,830
John J. Bongiorno ............................. 45,435 42,604 88,039
John D. Correnti .............................. 1,780 6,500 8,280
Don DeFosset, Jr .............................. 91,356 102,096 193,452
Jerry E. Dempsey .............................. 2,480 8,250 10,730
Dr. Abbie Griffin ............................. 250 0 250
Michael N. Hammes ............................. 1,260 4,000 5,260
John R. Horne ................................. 165,546 257,320 422,866
Allen J. Krowe ................................ 2,653 2,000 4,653
Robert C. Lannert ............................. 126,520 183,630 310,150
Walter J. Laskowski ........................... 0 6,000 6,000
William F. Patient ............................ 3,675 4,000 7,675
Daniel C. Ustian .............................. 47,012 47,099 94,111
All Directors and Executive Officers as a Group 875,803 962,352 1,838,155
</TABLE>
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(1) Includes shares over which there is shared investment power as follows: Mr.
Andrews -- 2,400 shares; Mr. Lannert -- 25,000 shares; Directors and
Executive Officers as a Group -- 27,450 shares. Includes shares over which
there is shared voting power as follows: Mr. Lannert -- 25,000 shares;
Directors and Executive Officers as a Group -- 25,050 shares.
(2) The number of shares shown for each executive officer (and all executive
officers as a group) includes the number of shares of Navistar common stock
owned indirectly, as of December 31, 1998, by such executive officers in
our 401(k) Retirement Savings Plan, as reported to us by the Plan trustee.
Under our Stock Ownership Program executives may defer their cash bonus
into deferred share units ("DSUs"). If an executive officer has elected to
defer cash bonus, the number of shares shown for such executive officer
includes these DSUs. These DSUs vest immediately (but may not settle within
60 days of December 31, 1998). The number of shares shown for each
executive officer (and all executive officers as a group) also includes
premium share units ("PSUs") that were awarded under the Stock Ownership
Program. PSUs vest in equal installments on each of the first three
anniversaries of the date on which they are awarded (but may not settle
within 60 days of December 31, 1998).
Under Navistar's Non-Employee Directors Deferred Fee Plan, directors may
defer the portion of their retained fee payable in restricted stock. If a
director has elected to defer this portion of the retained fee into phantom
stock units, these phantom stock units are shown in this column.
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As of December 31, 1998, all directors and executive officers as a group
beneficially owned 2.8% of the outstanding shares of common stock. No person
named in the table above beneficially owned more than 1% of the outstanding
shares of common stock.
PERSONS OWNING MORE THAN 5% OF NAVISTAR COMMON STOCK
This table indicates, as of December 31, 1998, all persons we know to be
beneficial owners of more than 5% of Navistar's common stock. This information
is based on Schedule 13G reports filed with the U.S. Securities and Exchange
Commission by each of the firms listed in the table below.
<TABLE>
<CAPTION>
Total Amount
and Nature of
Beneficial
Name and Address Ownership Percent of Class
---------------- --------- ----------------
<S> <C> <C>
The Prudential Insurance Company of America
751 Broad Street
Newark, New Jersey 07102-3777 .................. 4,989,270(A) 7.44%
</TABLE>
----------
(A) As reported in a Schedule 13G, dated July 9, 1998, filed with the U.S.
Securities and Exchange Commission by The Prudential Insurance Company
of America . It is reported in the Schedule 13G that The Prudential
Insurance Company of America has sole voting power with respect to
336,070 shares and shared voting power with respect to 4,555,770
shares; and sole dispositive power with respect to 336,070 shares and
shared dispositive power with respect to 4,653,200 shares.
EXECUTIVE COMPENSATION
Committee on Compensation and Governance Executive Compensation Report
The Board's Committee on Compensation and Governance ("Committee") makes
the compensation decisions with respect to the Company'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 Company 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. 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 company 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 Company's income tax liability.
The principal elements of the Company's executive compensation program
include base salary, annual incentive and long-term incentive.
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Market Compensation Review
In 1998 the Committee conducted a comprehensive review of the compensation
program for its executives. The review included the analysis of:
o comparable programs of 60 major companies, including 20 industrial
manufacturers with revenues of at least $5 billion;
o four major published surveys on compensation of executives; and
o compensation programs of 10 peer companies.
Base Salary
Based on the results of the review and the recommendation by the external
consultant, the Committee increased the salaries of a number of senior
executives and recommended increases in the Chief Executive Officer's base
salary, which were approved by the Board.
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 475 participants are 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. For 1997, the Committee established a performance goal based
on the Company's return on equity. In past years the Committee had structured
the formula so that participants would receive an incentive award equal to 100%
of the target if the performance goal was achieved and a payout as much as 150%
of the target incentive if the goal was exceeded.
For 1998, the Committee decided to change the incentive plan for senior
executives to a "double or nothing" payout. Under this plan, the performance
goal for the year was raised (increased 28% vs. the prior year) and the payout
percent of incentive target increased to 200%, with no payment to be made for
below goal performance. The 1998 goal was exceeded and incentive payments will
be made accordingly.
The Committee also approved several revisions that will be put into effect
for the 1999 annual incentive plan. The changes will increase the incentive
targets management can receive, as a percent of their base salary, but return
the target multiplier to the levels of the 1997 incentive plan.
Long-Term Incentive
Until 1998, long-term incentive payments consisted of a combination of
stock options and restricted stock.
Previously issued shares of restricted stock were awarded subject to
forfeiture based on certain contingencies. One-sixth of the shares are
forfeitable if the executive officer did not remain an employee during a defined
period. Five sixths of the shares are performance based, that is, they are
forfeitable if the Company's stock performance goals are not achieved. The
performance goals set by the Committee are based on the stock performance of the
Company 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. None of
the performance based restricted
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shares will be forfeited if the Company's stock price performance exceeds the
peer group's performance. All of the performance based restricted shares will be
forfeited if the Company's stock price performance is not at least equal to the
peer group's performance
In 1997 the Committee decided that all future long-term incentive payments
to executive officers would consist entirely of stock options. Stock options are
valued pursuant to the Black-Scholes formula (less a 20% discount). Stock
options are issued at current market value of the date of grant. In 1998,
one-third of the options granted become exercisable on each of the first, second
and third anniversaries of the grant.
Committee on Compensation and Governance
Jerry E. Dempsey, Chairperson
William F. Andrews
John D. Correnti
William F. Patient
10
<PAGE>
Performance Graph
This graph shows the yearly percentage change in the Company's cumulative
total shareowner return on Navistar's Common Stock during the last five fiscal
years ended October 31, 1998. The graph also shows the cumulative total returns
of the S&P 500 Index and the S&P Truck and Parts Index.
The comparison assumes $100 was invested on October 31, 1993, in Navistar
common stock and in each of the indices shown and assumes reinvestment of
dividends.
Comparison of Five Year Cumulative Total Return
Navistar Common Stock, S&P 500 Index and S&P Trucks & Parts Index
Fiscal Year Ending October 31
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
--------------------------------------------------
93 94 95 96 97 98
- --------------------------------------------------------------------------------
Navistar 100.0 48.4 37.8 34.6 85.5 77.0
S&P 500 100.0 101.0 124.3 150.8 195.5 234.8
S&P Trucks & Parts 100.0 83.0 77.6 94.3 159.5 132.1
- --------------------------------------------------------------------------------
11
<PAGE>
Executive Compensation Tables
This table provides compensation information for the fiscal years 1996,
1997 and 1998 for the Company's Chief Executive Officer and the four next most
highly compensated executive officers.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation Awards
-----------------------
Restricted Securities
Annual Compensation Stock Underlying All Other
------------------------- Awards Options/ Compensation
Name and Principal Position Year Salary ($) Bonus ($)(1) ($)(2)(3) SARs (#) ($)(4)
- --------------------------- ---- ---------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
John R. Horne .................. 1998 $716,667 $900,000 0 63,000 $21,134
Chairman, President and 1997 $650,000 $480,000 $452,575 73,800 $11,893
Chief Executive Officer 1996 $650,000 0 $ 29,931 40,000 $ 7,067
Robert C. Lannert .............. 1998 $441,667 $500,000 0 41,000 $10,553
Executive Vice President 1997 $425,000 $300,000 $334,922 47,900 $ 7,071
and Chief Financial Officer 1996 $425,000 0 $ 19,656 25,700 $ 4,557
Don DeFosset, Jr.(5) ........... 1998 $416,667 $550,000 $149,624 38,500 $17,943
Executive Vice President and 1997 $400,000 $217,580 $218,783 50,000 $ 7,527
President, Truck Group 1996 $ 20,290 $250,000 0 50,000 0
Daniel C. Ustian ............... 1998 $288,333 $375,000 $73,292 16,100 $ 3,168
Group Vice President/General 1997 $250,000 $259,557 $86,967 18,900 $ 2,236
Manager, Engine and Foundry 1996 $245,000 0 $ 7,788 10,100 $ 1,715
John J. Bongiorno .............. 1998 $280,000 $300,000 $80,136 16,100 $ 8,634
Group Vice President/General 1997 $250,000 $166,161 $71,903 18,900 $ 6,547
Manager, Financial Services 1996 $250,000 0 $ 7,788 10,100 $ 4,529
</TABLE>
- ----------
(1) The amounts shown include the dollar value of bonuses earned in fiscal
years 1997 and 1998 but deferred into deferred share units under the
Company's Stock Ownership Program at the election of the named executive
officer.
(2) The amounts shown include the dollar value of premium share units
representing shares of Common Stock awarded in fiscal years 1997 and 1998
under the Company's Stock Ownership Program based on (a) the attainment of
certain stock ownership thresholds by the named executive officer and/or
(b)the election of the named executive officer to defer a portion of his
future cash bonus into deferred share units.
(3) The number and value of the aggregate restricted stock holdings, including
premium share units ("PSUs"), at October 31, 1998 for each of the persons
named above is as follows: Mr. Horne, 13,483 shares and 24,851 PSUs with an
aggregate value of $800,223 ($281,458 of which represents the value of
shares which will be forfeited if performance goals are not met); Mr.
Lannert, 9,883 shares and 16,250 PSUs with an aggregate value of $545,527
($206,308 of which represents the value of shares which will be forfeited
if performance goals are not met); Mr. DeFosset, 16,587 PSUs with a value
of $346,254; Mr. Bongiorno, 5,750 shares and 6,286 PSUs with an aggregate
value of $251,251 ($120,031 of which represents the value of shares which
will be forfeited if performance goals are not met); and Mr. Ustian, 5,750
shares and 7,025 PSUs with an aggregate value of $266,678 ($120,031 of
which represents the value of shares which will be forfeited if performance
goals are not met). The PSUs vest in equal installments on each of the
first three anniversaries of the date on which they are awarded. Holders of
restricted shares and PSUs receive dividends at the same time and at the
same rate as other common stock owners.
(4) The amounts shown represent life insurance premiums paid by the Company for
the persons named in the Summary Compensation Table; and for Mr. DeFosset
include (a) Company matching contributions in 1998 under the salary
reduction feature of the Navistar Retirement Accumulation Plan ("RAP") of
$5,000, and (b)Company retirement contributions in 1997 and 1998 under the
RAP of $4,348 and $8,000, respectively.
(5) Mr. DeFosset joined the Company in October 1996.
12
<PAGE>
Option/SAR Grants In Fiscal Year 1998
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------------
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise Grant Date
Options/SARs Employees in or Base Price Expiration Present
Name Granted (#) Fiscal Year ($/Sh)(3) Date Value ($)(4)
---- ------------ ------------ ------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
John R. Horne .................. 11,928(1) 1.47 23.31 12-16-07 87,671
51,072(2) 6.31 23.31 12-17-07 375,379
Robert C. Lannert .............. 11,928(1) 1.47 23.31 12-16-07 87,671
29,072(2) 3.59 23.31 12-17-07 213,679
Don DeFosset, Jr. .............. 11,928(1) 1.47 23.31 12-16-07 87,671
26,572(2) 3.28 23.31 12-17-07 195,304
Daniel C. Ustian ............... 11,928(1) 1.47 23.31 12-16-07 87,671
4,172(2) .51 23.31 12-17-07 30,664
John J. Bongiorno .............. 11,928(1) 1.47 23.31 12-16-07 87,671
4,172(2) .51 23.31 12-17-07 30,664
</TABLE>
- ----------
(1) Incentive Stock Options
(2) Non-Qualified Options
(3) All options become exercisable under the following schedule: one-third on
the first anniversary of the grant, one-third on the second anniversary,
and one-third on the third anniversary.
(4) The Black-Scholes model was used to calculate the grant date present value
of the options granted. The following assumptions were used to estimate the
value of options: a 3.5 year expected life of the options; a dividend yield
of 0%; expected volatility for Navistar Stock of 31.8%; and a risk-free
rate of return of 5.7%.
Aggregated Option/SAR Exercises During Fiscal Year 1998
And Fiscal Year End Option/SAR Values
<TABLE>
<CAPTION>
Number of Value of
Securities Unexercised
Underlying In-the-
Unexercised Money
Options/SARs Options/SARs
1998 Fiscal Year 1998 Fiscal
End (#) Year End ($)
Shares ---------------- -------------
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable
---- ------------ ------------ ---------------- -------------
<S> <C> <C> <C> <C>
John R. Horne .......... 0 0 236,320/63,000 1,809,568/0
Robert C. Lannert ...... 0 0 186,900/41,000 1,406,843/0
Don DeFosset, Jr. ...... 10,738 155,030 89,262/38,500 1,008,434/0
Daniel C. Ustian ....... 13,808 241,417 41,732/16,100 184,928/0
John J. Bongiorno ...... 11,704 230,788 37,237/16,100 130,029/0
</TABLE>
13
<PAGE>
Termination Arrangements
To assure stability and continuity of management, the Company has entered
into executive termination agreements with each of its executive officers. The
agreements provide that if the officer's employment is terminated by the Company
for any reason other than for cause, as defined in the agreement, the officer
will receive a lump sum payment varying in amounts from 200% of his or her
annual base salary plus annual target bonus (for the Chief Executive Officer) to
150% of his or her annual base salary plus annual target bonus (for the other
executive officers). However, if the officer's employment is terminated by the
Company within 3 years after a "change in control," the officer will receive a
lump sum payment equal to the greater of: (i) three times the officer's current
annual base salary plus annual target bonus; and (ii) 295% of the officer's
average annual compensation during the previous five years. The agreements'
definition of a "change in control" includes the acquisition by any person or
group of securities of the Company representing 25% or more of the combined
voting power of the Company's then outstanding securities. Each agreement
expires June 30, 2000 and is then renewed automatically for successive one-year
periods unless the Board, six months prior to the renewal date, elects not to
renew it.
Retirement Plans
The Navistar International Transportation Corp. Retirement Plan for
Salaried Employees ("RPSE"), which covers substantially all of the salaried
employees of the Company first hired before January 1, 1996, 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 ($130,000 in 1999, 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 Company. In addition,
these benefits are subject to a requirement that annual compensation in excess
of an annual limit ($160,000 in 1999, 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 Company 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 Company 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 Company will pay the difference to the employee.
14
<PAGE>
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 Company, 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.
The Company also has a Supplemental Executive Retirement Plan ("SERP"). The
SERP covers certain executive officers who have attained age 55, and provides
annual retirement income objectives to such executive officers 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 Mr.
DeFosset (without regard to the reduction by the actuarial equivalent of his
retirement account under the RAP) would be approximately 48% of his "final
average earnings" and to Mr. Bongiorno, would be approximately 8% of his
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 1998 were $288,524.
In the event of a termination of employment by the Company following a
"change in control," certain benefits under the MRO Plan and the SERP will
become contractual rights and not subject to change without the consent of those
affected employees who have accrued at least five years of credited service as
of the date of such termination.
15
<PAGE>
PENSION PLAN TABLES
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
1,200,000 432,000 576,000 720,000 720,000 720,000
1,500,000 540,000 720,000 900,000 900,000 900,000
2,000,000 720,000 960,000 1,200,000 1,200,000 1,200,000
</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
1,200,000 306,000 408,000 510,000 612,000 720,000
1,500,000 382,500 510,000 637,500 765,000 900,000
2,000,000 510,000 680,000 850,000 1,020,000 1,200,000
</TABLE>
The number of years of credited service as of October 31, 1998 for Mr.
Horne is 32.3; Mr. Lannert is 35.6; Mr. Ustian is 25.7; and Mr. Bongiorno is
17.5. Mr. DeFosset is not a participant in the RPSE or the MRO Plan.
16
<PAGE>
Certain Related Transactions
The Company established the Navistar International Company Stock Ownership
Program in 1997 to more closely align the interests of shareowners and the
Company's senior management. Under the Program all executive officers and
certain senior managers of the Company are required to purchase and hold a
specified amount of Navistar's common stock equal to a multiple of his or her
annual base salary. During 1997 and 1998, certain executive officers received
full-recourse loans for the purchase price of the common stock they purchased
from the Company. The loans have a five-year term and accrue interest at the
applicable federal rate (as determined by Section 1274(d) of the Internal
Revenue Code) on the purchase date for loans of such maturity, compounded
annually. The loans are unsecured.
Principal and interest is due at maturity in a balloon payment. The payment
of the loan will be accelerated if a participant's employment is terminated for
cause or for certain other reasons prior to or following a change of control. In
the event of retirement, there is no loan acceleration. The loan may be prepaid
at any time at the participant's option.
The following executive officers of the Company have outstanding loans
under the Program. The table indicates the largest amount of the indebtedness
outstanding during fiscal year 1998, the interest rate charged, and the
aggregate outstanding balance as of December31, 1998:
Maximum Aggregate
Indebtedness Outstanding Interest
During Balance as of Rate
Name Fiscal Year 1998 December 31, 1998 (%)
---- ---------------- ----------------- -------
Robert A. Boardman ..... $ 335,297 $ 338,828 6.65
John R. Horne .......... 1,208,279 1,221,003 6.65
Thomas M. Hough ........ 56,134 56,738 6.80
36,956 37,346 6.65
David J. Johanneson .... 305,610 308,828 6.65
J. Steven Keate ........ 89,105 90,043 6.65
Robert C. Lannert ...... 549,428 555,214 6.65
551,261 556,850 6.39
James L. Simonton ...... 124,931 126,247 6.65
Mark T. Schwetschenau .. 74,422 75,119 5.68
Joseph V. Thompson ..... 386,608 390,679 6.65
Daniel C. Ustian ....... 233,014 235,468 6.65
Dennis W. Webb ......... 145,562 147,095 6.65
Brian B. Whalen ........ 217,914 220,208 6.65
17
<PAGE>
OTHER INFORMATION
Annual Reports
A copy of our Annual Report, which includes our Consolidated Financial
Statements for the three years ended October 31, 1998, was mailed to all
shareowners of record as of January 8, 1999. The Annual Report is not to be
regarded as proxy soliciting materials.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and executive officers to file reports of holdings and transfers of Navistar
stock with the U.S. Securities and Exchange Commission and the New York Stock
Exchange. Based on our review of those reports and other information, we believe
that in 1998 our directors and executive officers made all required filings on
time.
Proxy Solicitation
This solicitation is made on behalf of the Board of Directors. The Company
pays for the cost of soliciting these proxies. In addition to solicitation by
mail, proxies may be solicited personally, or by telephone or by telegraph, by
employees of the Company. The Company also reimburses brokerage houses for
forwarding proxy materials to shareowners.
Shareowner Proposals for the 2000 Annual Meeting
Under the rules of the U.S Securities and Exchange Commission proposals of
shareowners intended to be presented at the Company's 2000 Annual Meeting must
be received by the Company's Secretary at the principal executive offices of the
Company, 455North Cityfront Plaza Drive, Chicago, Illinois 60611, no later than
the close of business on September 20, 1999 for inclusion in the proxy statement
and the proxy related to that meeting. In addition, the Company's Bylaws provide
that any shareowner wishing to bring any matter before the annual meeting must
notify the Company in writing not less than 120 days nor more than 180 days in
advance of the meeting, and the notice must meet other requirements contained in
the Bylaws.
Independent Public Accountants
The firm of Deloitte & Touche LLP, Two Prudential Plaza, 180 N. Stetson
Avenue, Chicago, Illinois 60601, has been selected to examine the financial
statements of the Company for the current fiscal year ending October 31, 1999.
Representatives of Deloitte & Touche, LLP will be present at the annual meeting,
will have the opportunity to make a statement, and will also respond to
appropriate questions.
By Order of the Board of Directors,
/s/ STEVEN K. COVEY
Steven K. Covey
Secretary
January 19, 1999
18
<PAGE>
NOTES
19
<PAGE>
NAVISTAR INTERNATIONAL CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY
FOR WITHHELD FOR ALL
1. ELECTION OF DIRECTORS - ALL ALL EXCEPT_____________________
01 William F. Andrews 02 John D. Correnti
03 Allen J. Krowe
MARK HERE TO HAVE YOUR VOTE REMAIN CONFIDENTIAL
A VOTE FOR PROPOSAL 1 IS RECOMMENDED BY THE BOARD OF DIRECTORS
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:________________________,1999
x__________________________________
Signature
x__________________________________
Signature
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH SPECIFICATION MADE.
IF NO CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED FOR PROPOSAL 1.
SM-1R
FOLD AND DETACH HERE
CONTROL NUMBER
VOTE BY TELEPHONE
QUICK***EASY***IMMEDIATE
Call***Toll Free***On a Touch Tone Telephone
1-888-776-5652 - ANYTIME
There is No Charge to you for this call.
Your telephone vote authorizes the named proxies to vote your shares in the same
manner as if you marked, signed and returned your proxy card. You will be asked
to enter a Control Number which is located in the Box to the left of this form.
To vote FOR ALL nominees, Press 1; to WITHHOLD FOR ALL nominees, Press 9.
To WITHHOLD FOR AN INDIVIDUAL nominee, Press 0 and listen to the instructions.
If you wish your vote held confidential Press 0 for yes or Press 1 for no.
WHEN ASKED, PLEASE CONFIRM YOUR VOTE BY PRESSING 1 - THANK YOU FOR VOTING
If you vote by telephone, DO NOT mail back your proxy
1
<PAGE>
PROXY
NAVISTAR INTERNATIONAL CORPORATION
PROXY FOR ANNUAL MEETING TO BE HELD FEBRUARY 23, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
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 FEBRUARY 23, 1999, AND AT ANY ADJOURNMENT 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 marked, dated and signed, on the other side)
Dear Shareowner:
On the reverse side of this card are instructions on how to vote for the
election of directors by telephone. Please consider voting by telephone. Your
vote is recorded as if you mailed in your proxy card. We believe voting this way
is convenient and it also saves the Company money.
Thank you for your attention to these matters.
2
