<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-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.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
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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(4) Date Filed:
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<PAGE>
NAVISTAR INTERNATIONAL CORPORATION
455 North Cityfront Plaza Drive
Chicago, Illinois 60611
NOTICE OF 2000 ANNUAL MEETING OF SHAREOWNERS
TO BE HELD TUESDAY, FEBRUARY 22, 2000
To Our Shareowners:
You are cordially invited to attend Navistar International Corporation's
2000 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 22, 2000, at 11:00 a.m.
The purposes of the Annual Meeting are:
- To elect 4 directors; and
- 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 7, 2000 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 18, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
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...................................... 9
Committee on Compensation and Governance Executive
Compensation Report................................... 9
Performance Graph........................................ 14
Executive Compensation Tables............................ 15
Termination Arrangements................................. 17
Retirement Plans......................................... 17
Certain Related Transactions............................. 20
OTHER INFORMATION........................................... 21
Annual Reports........................................... 21
Section 16(a) Beneficial Ownership Reporting
Compliance............................................ 21
Proxy Solicitation....................................... 21
Shareowner Proposals for the 2001 Annual Meeting......... 21
Independent Public Accountants........................... 21
</TABLE>
<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 22, 2000 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 18, 2000,
we began sending these proxy materials to all shareowners of record at the close
of business on January 7, 2000.
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 four 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, 40l(k) Plan for
Represented Employees, or Retirement Accumulation 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.
1
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Holders of record of Navistar's Common Stock at the close of business on
January 7, 2000 are entitled to receive this notice and to vote their shares at
the Annual Meeting. As of that date, there were outstanding 62,176,537 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 (in person or by
proxy) at the meeting, meaning that the four nominees for director receiving the
highest number of votes will be elected. Abstentions and broker "non-votes" are
not counted in determining the number of shares voted for or against any nominee
for director.
OTHER MATTERS
The Board of Directors does not know of any other matters that will be
presented at the Annual Meeting other than the proposal 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.
Four directors will be elected at the Annual Meeting to serve as Class I
directors for a three-year term beginning at this Annual Meeting and expiring at
our Annual Meeting in the year 2003. The Board of Directors has nominated Y.
Marc Belton, Jerry E. Dempsey, Dr. Abbie Griffin, and Robert C. Lannert for
election as Class I 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
or her successor has been elected, or until his or her 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
2
<PAGE>
elected at the Annual Meeting. The Board currently has 10 members. The Board has
authority under the 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 II and Class III directors will continue in office following this
Annual Meeting and their term will expire in 2001 (Class II) or 2002 (Class
III). The following are brief biographies of each of the directors and director
nominees.
NOMINEES FOR CLASS I DIRECTORS WHOSE TERMS EXPIRE 2003
Y. MARC BELTON, 40, director since February, 1999. He is Senior Vice
President of General Mills, Inc. and President of the "Big G" Division since
July 1999. General Mills, Inc. is engaged in the manufacture and marketing of
consumer food products. From 1997 to 1999 he was President of New Ventures. From
1994 to 1997 he was President, Snacks Division. He was named Vice President of
General Mills in 1991. He serves on the board of directors of Urban Ventures and
the New Union in Minneapolis as well as the Board of Trustees of Northwestern
College. He is a member of the Executive Leadership Council and the Minnesota
Prayer Breakfast. COMMITTEES: AUDIT AND COMPENSATION AND GOVERNANCE.
JERRY E. DEMPSEY, 67, 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 had held
from 1993 to 1997. He is a director of Eastman Chemicals and Birmingham Steel
Corporation. 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.
DR. ABBIE J. GRIFFIN, 45, director since 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 at the University of Chicago, Graduate School of
Business. COMMITTEES: FINANCE AND AUDIT.
ROBERT C. LANNERT, 59, 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.
CLASS II DIRECTORS WHOSE TERMS EXPIRE 2001
MICHAEL N. HAMMES, 58, director since 1996. He is Chairman and Chief
Executive Officer of the Guide Corporation, 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. He is a
director of Johns Manville Company and Sunrise Medical, and a member of the
Board of Visitors of Georgetown University's School of Business. COMMITTEES:
FINANCE AND COMPENSATION AND GOVERNANCE.
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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
(Chairman); 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 Executives' Club of Chicago. COMMITTEE: EXECUTIVE (CHAIR).
WILLIAM F. PATIENT, 65, director since 1996. Mr. Patient is the retired
Chairman of the Board and Chief Executive Officer of the Geon Company, positions
he held from 1993 until his retirement in June 1999. 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. He is a director of The Geon Company and National
City Bank in Cleveland, and chairs the Board of Trustees for Cleveland State
University. COMMITTEES: AUDIT AND COMPENSATION AND GOVERNANCE.
CLASS III DIRECTORS WHOSE TERMS EXPIRE 2002
WILLIAM F. ANDREWS, 68, director since 1984. He is Chairman of Northwestern
Steel & Wire Co., a manufacturer of steel rods, wire and beams, since 1999. He
also is Chairman of Scovill Fasteners, Inc., a manufacturer of apparel and
industrial fasteners, since 1995. From 1995 to 1999 he served as Chairman of
Schrader, Inc. a manufacturer of tire valves and automotive accessories. From
1992 to 1995 he served as Chairman, 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., Dayton Superior Corp., and Trex Corporation. COMMITTEES:
FINANCE (CHAIR), COMPENSATION AND GOVERNANCE, AND EXECUTIVE.
JOHN D. CORRENTI, 52, director since 1994. He is Chairman and Chief
Executive Officer of Birmingham Steel Corporation, a manufacturer of steel and
steel products, since December 1999. Mr. Correnti resigned as Chief Executive
Officer, President and Vice Chairman of Nucor Company, one of the largest steel
manufacturers in the U.S., in June 1999, a position he had held since 1996. From
1991 to 1996 he served as President and Chief Operating Officer and as a
director of Nucor. He is a director of Harnischfeger, Inc. and Steel
Manufacturers Association. COMMITTEES: AUDIT AND COMPENSATION AND GOVERNANCE.
ALLEN J. KROWE, 67, director since 1997. He retired as Vice Chairman from
Texaco Inc., a global energy company, in 1997, a position he had held since
1993. From 1988 to 1995 he served as Chief Financial Officer of Texaco. He is a
director of the University of Maryland Foundation, PPG Industries, Inc., and IBJ
Whitehall Bank and Trust Company. COMMITTEES: AUDIT (CHAIR), EXECUTIVE, AND
FINANCE.
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
4
<PAGE>
standing for election by shareowners at the Annual Meeting. From 1995 until his
death in August 1999, the seat was occupied by Walter Laskowski, International
Vice President of the UAW. As of the date of this Proxy Statement, the seat is
vacant.
BOARD MEETINGS AND COMMITTEES
In fiscal year 1999 our full Board met 7 times, one of which was an
executive session to evaluate the performance of the Board. In addition, the
Board's non-employee directors met once in an executive session to evaluate the
performance of the Chief Executive Officer. All of the directors attended at
least 75% of all the meetings of the Board and the committees on which he or she
serves.
Our Board has 4 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 4 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 1999.
AUDIT COMMITTEE -- The Audit Committee is composed of 5 directors, none of
whom is an employee of the Company. The Committee oversees our financial
reporting process on behalf of the Board. During 1999, the Committee reviewed
the 1999 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, the
Corporation's Y2K readiness program, and the expense accounts of principal
executives. In fiscal year 1999, the Committee held 4 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 1999, the Committee
held 6 meetings.
COMMITTEE ON COMPENSATION AND GOVERNANCE -- The Committee on Compensation
and Governance is composed of 6 directors, 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 6 meetings in fiscal year 1999.
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<PAGE>
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:
<TABLE>
<S> <C>
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.)
</TABLE>
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.
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 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.
6
<PAGE>
NAVISTAR COMMON STOCK OWNERSHIP BY DIRECTORS AND OFFICERS
This table shows how much Common Stock the executive officers and directors
beneficially own as of December 31, 1999. 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............................... 2,740 8,250 10,990
Y. Marc Belton................................... 0 0 0
Robert A. Boardman............................... 41,050 37,334 78,384
John J. Bongiorno................................ 42,880 57,638 100,518
John D. Correnti................................. 1,941 8,500 10,441
Jerry E. Dempsey................................. 2,640 10,250 12,890
Dr. Abbie Griffin................................ 410 2,000 2,410
Michael N. Hammes................................ 1,420 6,000 7,420
John R. Horne.................................... 176,628 307,717 484,345
Allen J. Krowe................................... 11,570 4,000 15,570
Robert C. Lannert................................ 126,184 206,467 332,651
William F. Patient............................... 4,433 6,000 10,433
Daniel C. Ustian................................. 44,426 56,933 101,359
All Directors and Executive Officers as a
Group.......................................... 677,129 938,799 1,615,928
</TABLE>
- ----------
(1) Includes shares over which there is shared investment power as follows:
Mr. Andrews -- 2,740 shares; Mr. Lannert -- 25,000 shares; Directors and
Executive Officers as a Group -- 27,740 shares. Includes shares over which
there is shared voting power as follows: Mr. Lannert 25,000 shares;
Directors and Executive Officers as a Group -- 25,000 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, 1999, by such executive officers in our
401(k) Retirement Savings Plan and Retirement Accumulation 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, 1999). 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,
1999).
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.
As of December 31, 1999, all directors and executive officers as a group
beneficially owned 2.6% 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.
7
<PAGE>
PERSONS OWNING MORE THAN 5% OF NAVISTAR COMMON STOCK
This table indicates, as of December 31, 1999, 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.................... 4,774,174(A) 7.7%
Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013......................... 3,854,699(B) 6.2%
Salomon Brothers Holding Company
388 Greenwich Street
New York, New York 10013......................... 3,854,699(B) 6.2%
Salomon Smith Barney Holdings Inc.
388 Greenwich Street
New York, New York 10013......................... 4,136,387(C) 6.7%
Citigroup Inc.
153 East 53rd Street
New York, New York 10043......................... 4,155,317(D) 6.7%
FMR Corp.
82 Devonshire Street
Boston, Massachusetts 02109...................... 9,834,690(E) 15.8%
</TABLE>
---------------
(A) As reported in a Schedule 13G, as amended, dated January 29, 1999,
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 295,070 shares and shared voting power with respect to
4,423,974 shares; and sole dispositive power with respect to 295,070
shares and shared dispositive power with respect to 4,479,104 shares.
(B) As reported in a Schedule 13G, dated February 12, 1999, filed with the
U.S. Securities and Exchange Commission by Salomon Smith Barney Inc.
("SSB"), Salomon Brothers Holding Company Inc. ("SBHC"), Salomon Smith
Barney Holdings Inc. ("SSBH"), and Citigroup Inc. ("Citigroup"). It is
reported in the Schedule 13G that SSB and SBHC each have shared voting
power and dispositive power with respect to 3,854,699 shares. SBHC is the
sole stockholder of SSB, SSBH is the sole stockholder of SBHC, and
Citigroup is the sole stockholder of SSBH. Each of Citigroup and SSBH
disclaims beneficial ownership of all shares reflected in said Schedule
13G.
(C) As reported in a Schedule 13G, dated February 12, 1999, filed with the
U.S. Securities and Exchange Commission by Salomon Smith Barney Inc.
("SSB"), Salomon Brothers Holding Company Inc. ("SBHC"), Salomon Smith
Barney Holdings Inc. ("SSBH"), and Citigroup Inc. ("Citigroup"). It is
reported in the Schedule 13G that SSBH has shared voting power and
dispositive power with respect to 4,136,387 shares. SBHC is the sole
stockholder of SSB, SSBH is the sole stockholder of SBHC, and Citigroup
is the sole stockholder of SSBH. Each of Citigroup and SSBH disclaims
beneficial ownership of all shares reflected in said Schedule 13G.
8
<PAGE>
(D) As reported in a Schedule 13G, dated February 12, 1999, filed with the
U.S. Securities and Exchange Commission by Salomon Smith Barney Inc.
("SSB"), Salomon Brothers Holding Company Inc. ("SBHC"), Salomon Smith
Barney Holdings Inc. ("SSBH"), and Citigroup Inc. ("Citigroup"). It is
reported in the Schedule 13G that Citigroup has shared voting power and
dispositive power with respect to 4,155,317 shares. SBHC is the sole
stockholder of SSB, SSBH is the sole stockholder of SBHC, and Citigroup
is the sole stockholder of SSBH. Each of Citigroup and SSBH disclaims
beneficial ownership of all shares reflected in said Schedule 13G.
(E) As reported in a Schedule 13G, as amended, dated September 29, 1999,
filed with the U.S. Securities and Exchange Commission by FMR Corp.
("FMR"), Edward C. Johnson, 3d, Chairman of FMR, Abigail P. Johnson, a
Director of FMR, and Fidelity International Limited. It is reported in
the Schedule 13G that (1) FMR has sole dispositive power with respect to
9,161,750 shares and sole voting power with respect to 2,292,990 shares,
(2) Edward C. Johnson, 3d and Abigail P. Johnson have sole dispositive
power over these shares, and (3) these shares represented (a) 6,508,960
shares beneficially owned by Fidelity Management & Research Company
("Fidelity"), a wholly-owned subsidiary of FMR, as a result of acting as
investment advisor to various investment companies ("Funds"), (b)
2,652,790 shares beneficially owned by Fidelity Management Trust Company,
a wholly-owned subsidiary of FMR, as a result of its serving as
investment manager of certain institutional accounts, and (c) 672,940
shares beneficially owned by Fidelity International Limited, Pembroke
Hall, 42 Crowlane, Hamilton, Bermuda, a company of which a partnership
controlled by Mr. Johnson and family members owns approximately 40% of
the voting stock, as a result of acting as investment adviser to various
non-U.S. investment companies and certain institutional investors. The
voting power with respect to the 6,508,960 shares beneficially owned by
Fidelity is held by the Board of Trustees of the various investment
companies of which Fidelity is the investment advisor. FMR, Edward C.
Johnson, 3d, and the Funds collectively each has the sole power to
dispose of the 6,508,960 shares beneficially owned by Fidelity.
EXECUTIVE COMPENSATION
COMMITTEE ON COMPENSATION AND GOVERNANCE EXECUTIVE COMPENSATION REPORT
INTRODUCTION
The Board's Committee on Compensation and Governance ("Committee")
establishes, administers, and monitors all compensation and benefit programs
under which executive benefits are provided and compensation is paid or awarded
to the Company's executive officers. Specifically the Committee reviews the
performance of executive officers and makes compensation decisions with respect
to the Company's executive officers, given the overall successes of the
individual executives and the organization as a whole.
COMPENSATION PHILOSOPHY AND OBJECTIVES
The executive compensation program is designed to closely align executive
compensation with corporate and individual performance and the total return to
shareowners. The Company has developed an overall compensation philosophy that
is built on a foundation of guiding principles:
- COMPETITIVE POSITIONING: To attract and retain the executive talent
required to achieve the Company's goals through a market competitive total
remuneration package.
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- PERFORMANCE ORIENTATION: Executive compensation has a strong individual
performance-based link, and is designed to promote an alignment of
interests between shareowners and senior executives.
- EQUITY: Our compensation programs are fair and equitable, and create no
advantage for any one individual or group on the basis of age, service, or
other non-performance related criteria.
- OWNERSHIP AND RESPONSIBILITY: The Company has designed a compensation
program that recognizes individual contributions as well as linking
executive and shareowner interests through compensation programs that are
based on common measures of financial success.
MARKET COMPENSATION REVIEW
In 1999 the Committee conducted a comprehensive review of the executive
compensation program to ensure that pay opportunities are competitive with the
current market, and that there is an appropriate link between company and
individual performance, the Company's stated compensation philosophy, and actual
executive compensation. This process included consultation with an independent
compensation and benefits consulting firm throughout the year on such issues as
base salaries, incentive awards, and overall compensation and benefits
philosophy. The Committee reviews executive compensation against peer groups of
companies with which the Company competes for talent. Competitive executive
compensation data was gathered from the following industry and peer groups:
- A group of aerospace, automobile, and other transportation companies, and
- A custom peer group of 17 companies reflecting a cross section of
automotive companies, and companies with $6 to $10 billion in revenues.
The Committee believes that the market in which the Company competes for
talent is growing in breadth and scope. Therefore, we feel it is relevant to
include in our compensation review not only some of those companies that make up
the Standard and Poor's Heavy Duty Truck & Parts Index, which appears in the
Performance Graph in this Proxy Statement, but also those organizations that we
view as a relevant source for executive talent.
The Company has established and communicated to executives a policy of
targeting base salaries at the 50th percentile of the competitive market. Our
incentive compensation is targeted to reward executives with total compensation
at the 50th percentile of the market for target corporate performance, and at
the 75th percentile for distinguished corporate performance. This philosophy was
adhered to in setting base salaries and granting annual incentive awards in
1999.
POLICY ON DEDUCTIBILITY OF COMPENSATION
Section 162(m) of The Internal Revenue Code of 1986 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 that 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
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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.
ELEMENTS OF EXECUTIVE COMPENSATION
The elements of the Company's executive compensation program include base
salary, an annual incentive program, and long-term incentives. Although each
decision relative to these compensation programs has to be undertaken
separately, the Committee considers the total compensation and benefits package
(including salary, incentives, stock options, pension benefits, supplemental
retirement benefits, insurance and other benefits) when making any compensation
decision. Also, in considering the individual performance of the executives
named in this proxy statement, the Committee takes into consideration the
opinions and recommendations of Mr. Horne, the Chief Executive Officer, for
positions other than his own.
BASE SALARY
Base salaries for executive officers are determined initially by evaluating
and comparing the responsibilities of their positions and experiences and by
reference to the competitive marketplace for executive talent. Salary
adjustments are determined by evaluating the performance of the Company and of
each executive. In addition, the market is surveyed to determine average year
over year industry changes in executive pay.
Based on the competitive survey conducted by the outside consultants and a
subjective review of individual performance, the Committee increased base pay of
the executives named in the Summary Compensation Table by an average of 9% in
1999. These increases in base pay resulted in the group of executive officers
who are paid at the median of the competitive market.
ANNUAL INCENTIVE
A substantial portion of the Company's executive compensation package is
contingent upon the Company attaining financial and non-financial performance
goals established by the Committee prior to the beginning of each fiscal year.
Approximately 485 participants are eligible for annual incentive payments. The
target annual incentive varies by organization level, from 25% of base salary
for managers to 100% of base salary for the Chief Executive Officer. In 1997,
the Committee established a performance goal based on the Company's return on
equity. For 1999, the Committee structured the formula so participants 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.
The Committee also approved several revisions that will be put into effect
for the 2000 annual incentive plan. The changes will increase the incentive
targets certain levels of management employees can receive, as a percent of
their base salary, and increase the target multiplier to 200% of target at
distinguished levels of Company performance.
LONG-TERM INCENTIVES
In recent years, the Company has delivered long-term incentive compensation
entirely in annual stock option grants to all executives. Option grants are made
to executives at the fair market value price on the date of grant and expire on
the 10th anniversary of the grant. In
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1999, one-third of the options granted become exercisable on each of the first,
second and third anniversaries of the grant.
When determining the size of the option grants made to executives, the
Committee again considered the results of a competitive compensation survey
conducted by an outside consulting firm.
The Company feels strongly that it is important to encourage senior
executives to hold significant amounts of Navistar stock, thereby tying their
long-term economic interest directly to that of the shareowners. To achieve this
goal, the Company has implemented stock ownership guidelines for those
executives. The Company's stock ownership targets apply to approximately 35
executives, the majority of whom hold the title of staff vice president and
above. Executives are expected to attain their respective ownership level within
five years. These executives have ownership requirements that range from 75% to
300% as a percent of base salary. Currently, the average number of shares owned
by these executives exceeds the required number of shares.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Horne's 1998 base salary was significantly below the median base salary
for comparable positions, according to the compensation survey conducted that
same year. As a result of this below market competitive pay level for
Mr. Horne's base salary, his 1999 salary was increased by $100,000 to $850,000
which, according to the compensation survey, is still 16% below the 50th
percentile of the Company's competitive market. However, it was the Committee's
preference to increase the base salary, but still lag the 50th percentile, and
to increase his incentive potential. As a result, the Committee increased
Mr. Horne's maximum annual incentive plan from 150% to 200% of target for
distinguished performance.
Mr. Horne's 1999 annual cash incentive payment was awarded on the
achievement of a very challenging return on equity goal for the Company
established by the Committee, as well as the achievement of various
non-financial goals of each business unit. These non-financial goals include,
but are not limited to, culture initiatives, product developments, Y2K
readiness, safety and manufacturing improvements. The incentive awards paid in
2000 reflect the outstanding achievement of these fiscal 1999 goals. Mr. Horne
received 200% of his annual incentive payment for fiscal year 1999 for a total
annual incentive payment of $1,700,000 as recognition of this goal achievement.
In fiscal year 1999, Mr. Horne was also granted an option to purchase
142,000 shares of Common Stock. This award is both competitive and commensurate
with market practice given the recent outstanding Company and individual
performance.
It is the Committee's view that the Company's executive compensation
programs and awards provide a significant link between individual and corporate
performance and
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compensation paid. We also believe that the programs are appropriate in the
current competitive market and in the shareowners' interests.
Committee on Compensation and
Governance
Jerry E. Dempsey, Chairperson
William F. Andrews
Y. Marc Belton
John D. Correnti
Michael N. Hammes
William F. Patient
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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, 1999. 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 $100 was invested on October 31, 1994, in Navistar
Common Stock and in each of the indices shown and assumes reinvestment of
dividends.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
<S> <C> <C> <C>
NAVISTAR COMMON STOCK, S&P 500 INDEX AND S&P TRUCKS & PARTS
INDEX
FISCAL YEAR ENDING OCTOBER 31
DOLLARS
NAVISTAR S&P 500 S&P TRUCKS & PARTS
94 100.0 100.0 100.0
95 78.1 123.1 93.5
96 71.4 149.3 113.3
97 176.7 193.6 192.1
98 159.0 232.6 159.2
99 320.0 288.5 219.6
</TABLE>
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EXECUTIVE COMPENSATION TABLES
This table provides compensation information for the fiscal years 1997, 1998
and 1999 for the Company's Chief Executive Officer and the four next most highly
compensated executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
--------------------------
RESTRICTED SECURITIES
ANNUAL COMPENSATION STOCK UNDERLYING ALL OTHER
---------------------------- AWARDS OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)(1) ($) (2)(3) SARS (#) ($) (4)
- --------------------------- -------- ---------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
John R. Horne ............... 1999 $833,333 $1,700,000 0 142,000 $19,500
Chairman, President and 1998 $716,667 $ 900,000 0 63,000 $21,134
Chief Executive Officer 1997 $650,000 $ 480,000 $452,575 73,800 $11,893
Robert C. Lannert ........... 1999 $450,000 $ 488,750 0 48,000 $ 7,966
Executive Vice President and 1998 $441,667 $ 500,000 0 41,000 $10,553
Chief Financial Officer 1997 $425,000 $ 300,000 $334,922 47,900 $ 7,071
Daniel C. Ustian ............ 1999 $333,333 $ 600,000 0 32,000 $ 2,847
President, Engine and Foundry 1998 $288,333 $ 375,000 $ 73,292 16,100 $ 3,168
1997 $250,000 $ 259,557 $ 86,967 18,900 $ 2,236
John J. Bongiorno ........... 1999 $295,000 $ 327,500 0 32,000 $ 6,725
President, Financial Services 1998 $280,000 $ 300,000 $ 80,136 16,100 $ 8,634
1997 $250,000 $ 166,161 $ 71,903 18,900 $ 6,547
Robert A. Boardman .......... 1999 $293,333 $ 297,500 0 21,000 $ 3,038
Senior Vice President and 1998 $271,667 $ 250,000 $ 13,779 16,100 $ 3,668
General Counsel 1997 $255,000 $ 181,000 $114,442 18,900 $ 2,838
</TABLE>
- ----------
(1) The amounts shown include the dollar value of bonuses earned in fiscal years
1997, 1998 and 1999 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, 1998 and
1999 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 premium share ("PSUs") units on
October 31, 1999 for each of the persons named above is as follows:
Mr. Horne 24,851 PSUs with an aggregate value of $1,043,742; Mr. Lannert
16,250 PSUs with an aggregate value of $682,500; Mr. Ustian 7,025 PSUs with
an aggregate value of $295,050; Mr. Bongiorno 6,286 PSUs with an aggregate
value of $264,012; and Mr. Boardman 6,377 PSUs with an aggregate value of
$267,834. The PSUs vest in equal installments on each of the first three
anniversaries of the date on which they are awarded. Holders of PSUs receive
dividends at the same time and at the same rate as other Common Stock
owners.
(4) The amounts shown represent life insurance premiums paid by the Company for
the persons named in the Summary Compensation Table.
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OPTION/SAR GRANTS IN FISCAL YEAR 1999
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS/SARS EMPLOYEES IN OR BASE PRICE EXPIRATION PRESENT
NAME GRANTED (#) FISCAL YEAR ($/SH)(4) DATE VALUE ($)(5)
---- ------------- ------------ ------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
John R. Horne.................... 4,428(1) .35 25.87 12-15-08 36,088
137,572(2) 10.82 25.87 12-16-08 1,121,212
Robert C. Lannert................ 4,428(1) .35 25.87 12-15-08 36,088
43,572(4) 3.43 25.87 12-16-08 355,112
1,974(2)(3) .16 38.19 12-21-02 16,088
Daniel C. Ustian................. 4,428(1) .35 25.87 12-15-08 36,088
27,572(2) 2.17 25.87 12-16-08 224,712
John J. Bongiorno................ 4,428(1) .35 25.87 12-15-08 36,088
27,572(2) 2.17 25.87 12-16-08 224,712
Robert A. Boardman............... 4,428(1) .35 25.87 12-15-08 36,088
16,572(2) 1.30 25.87 12-16-08 135,062
</TABLE>
- ----------
(1) Incentive Stock Options
(2) Non-Qualified Options
(3) Restoration options with the following terms: granted at fair market value;
becoming exercisable two years from the grant date, or, if sooner, one month
before the end of the remaining term of the options they replaced; and
expiring coincident with the options they replaced. Restoration options are
issued when an executive uses shares of Company Common Stock to pay the
option exercise price of a previously issued option.
(4) All options (other than restoration options) become exercisable under the
following schedule: one-third on the first anniversary of the grant,
one-third on the second anniversary, and one-third on the third anniversary.
(5) The Black-Scholes model was used to calculate the grant date present value
of the options granted. The following assumptions were used to estimate the
value of options: a 4.0 year expected life of the options; a dividend yield
of 0%; expected volatility for Navistar Stock of 35.1%; and a risk-free rate
of return of 4.5%.
AGGREGATED OPTION/SAR EXERCISES DURING FISCAL YEAR 1999
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
1999 FISCAL YEAR 1999 FISCAL
END (#) YEAR END ($)
SHARES ---------------- -------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
------------ ------------ ---------------- -------------------
<S> <C> <C> <C> <C>
John R. Horne......................... 0 0 257,320/184,000 7,260,045/3,327,625
Robert C. Lannert..................... 18,937 277,808 181,630/77,307 5,148,341/1,398,608
Daniel C. Ustian...................... 6,000 169,500 41,099/42,733 888,075/775,331
John J. Bongiorno..................... 0 0 42,604/42,733 874,592/775,331
Robert A. Boardman.................... 0 0 24,967/31,733 447,050/582,830
</TABLE>
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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 ($135,000 in 2000, 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
($170,000 in 2000, 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 has 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 short-term 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.
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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. Bongiorno, would be approximately 8% of his individual "final average
earnings" and to Mr. Boardman, would be approximately 11% 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 1999
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.
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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
1,500,000 540,000 720,000 900,000 900,000 900,000
2,000,000 720,000 960,000 1,200,000 1,200,000 1,200,000
2,500,000 900,000 1,200,000 1,500,000 1,500,000 1,500,000
3,000,000 1,080,000 1,440,000 1,800,000 1,800,000 1,800,000
</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
1,500,000 382,500 510,000 637,500 765,000 900,000
2,000,000 510,000 680,000 850,000 1,020,000 1,200,000
2,500,000 637,500 850,000 1,062,500 1,275,000 1,500,000
3,000,000 765,000 1,020,000 1,275,000 1,530,000 1,800,000
</TABLE>
The number of years of credited service as of October 31, 1999 for
Mr. Horne is 33.3; Mr. Lannert is 36.6; Mr. Ustian is 26.7; Mr. Bongiorno is
18.5 and Mr. Boardman is 9.
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CERTAIN RELATED TRANSACTIONS
The Company established the Navistar International Corporation 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, 1998 and 1999 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 1999, the interest rate charged, and the
aggregate outstanding balance as of December 31, 1999:
<TABLE>
<CAPTION>
MAXIMUM AGGREGATE
INDEBTEDNESS OUTSTANDING INTEREST
DURING BALANCE AS OF RATE
NAME FISCAL YEAR 1999 DECEMBER 31, 1999 (%)
---- ---------------- ------------------ --------
<S> <C> <C> <C>
Robert A. Boardman............................ $ 357,595 $ 361,360 6.65
John R. Horne................................. 1,228,630 1,302,199 6.65
Thomas M. Hough............................... 59,952 60,596 6.80
39,415 39,830 6.65
David J. Johanneson........................... 325,934 329,366 6.65
J. Steven Keate............................... 95,031 96,032 6.65
Robert C. Lannert............................. 585,966 592,136 6.65
586,487 592,433 6.39
Mark T. Schwetschenau......................... 78,673 79,386 5.68
55,005 55,530 5.82
James L. Simonton............................. 133,240 134,643 6.65
Daniel C. Ustian.............................. 248,510 251,127 6.65
Dennis W. Webb................................ 155,242 156,877 6.65
Brian B. Whalen............................... 232,406 234,853 6.65
</TABLE>
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OTHER INFORMATION
ANNUAL REPORTS
A copy of our Annual Report, which includes our Consolidated Financial
Statements for the three years ended October 31, 1999, was mailed to all
shareowners of record as of January 7, 2000. 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 and persons who own more than ten percent of a registered
class of our equity securities to file reports of holdings and transfers of
Navistar stock with the U.S. Securities and Exchange Commission and the New York
Stock Exchange and to provide copies of those reports to the Company. Based on
our review of those reports received by the Company, or written representations
from certain reporting persons, we believe that in 1999 our directors, executive
officers and ten percent shareowners made all required filings on time, except
that R. Gary Diaz, a former officer of the Company, filed late three Forms 4
reporting a total of thirteen transactions.
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, employees of the Company may solicit proxies personally or by telephone.
The Company also reimburses brokerage houses for forwarding proxy materials to
shareowners.
SHAREOWNER PROPOSALS FOR THE 2001 ANNUAL MEETING
Under the rules of the U.S Securities and Exchange Commission, proposals of
shareowners intended to be presented at the Company's 2001 Annual Meeting must
be received by the Company's Secretary at the principal executive offices of the
Company, 455 North Cityfront Plaza Drive, Chicago, Illinois 60611, no later than
the close of business on September 20, 2000 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, 2000.
Representatives of Deloitte & Touch, 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 18, 2000
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SM-101-71
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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 Y. Marc Belton 02 Jerry E. Dempsey
03 Dr. Abbie J. Griffin 04 Robert C. Lannert
MARK HERE TO HAVE YOUR VOTE REMAIN A VOTE FOR ALL NOMINEES LISTED IS
CONFIDENTIAL 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: _________________________, 2000
X______________________________________
Signature
X______________________________________
Signature
THIS PROXY WILL BE VOTED IN ACCORDANCE / / Do not mail future Annual Reports
WITH SPECIFICATION MADE. IF NO CHOICES for this account. Another is
ARE INDICATED, THIS PROXY WILL BE VOTED received at this household.
FOR ALL NOMINEES LISTED.
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 22, 2000
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 22, 2000, 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.
We also ask you to notify the Company if you are receiving multiple
copies of the Company's Annual Report at your household. You can do so by
checking the box under the signature block of the proxy card and mail in your
proxy card. If you do so the Company can save money by reducing the number of
Annual Reports it must print and mail.
Thank you for your attention to these matters.
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