<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
RYDER SYSTEM, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
RYDER SYSTEM, INC.
NOTICE OF
1995 ANNUAL MEETING AND
PROXY STATEMENT
<PAGE> 3
RYDER SYSTEM
RYDER SYSTEM, INC.
3600 N.W. 82nd Avenue
Miami, Florida 33166
TO THE STOCKHOLDERS OF RYDER SYSTEM, INC.:
You are cordially invited to attend our Annual Meeting of Stockholders on
Friday, May 5, 1995, at 11:00 A.M., at the Miami Airport Hilton and Towers,
located in Miami, Florida.
The proposals to be acted upon at the Meeting include the election of
directors, the ratification of the adoption of the new Ryder System, Inc. Stock
for Merit Increase Replacement Plan, the ratification of the adoption of the
new Ryder System, Inc. 1995 Stock Incentive Plan, and the ratification of the
appointment of independent auditors for 1995. I hope you will carefully read
the proposals, which are described in the accompanying Proxy Statement, and
cast your vote in favor of them.
The Company has been informed that certain Stockholders again intend to present
proposals for consideration at the Meeting. The Board of Directors believes
that these proposals are not in the best interest of the Company and its
Stockholders and unanimously recommends a vote AGAINST the Stockholder
proposals.
It is important that your shares be represented at the Meeting. Accordingly,
even if you plan to attend the Meeting, please sign, date and promptly mail the
enclosed proxy card in the postage-prepaid envelope.
On behalf of the Board of Directors, thank you for your cooperation and
continued support.
Sincerely,
M. Anthony Burns
Chairman, President and
Chief Executive Officer
March 20, 1995
<PAGE> 4
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 5, 1995
The Annual Meeting of Stockholders of Ryder System, Inc. will be held at the
Miami Airport Hilton and Towers, 5101 Blue Lagoon Drive, Miami, Florida, on
Friday, May 5, 1995, at 11:00 A.M., for the following purposes:
(1) To elect five directors;
(2) To ratify the adoption of the Ryder System, Inc. Stock for Merit
Increase Replacement Plan;
(3) To ratify the adoption of the Ryder System, Inc. 1995 Stock Incentive
Plan;
(4) To ratify the appointment of KPMG Peat Marwick LLP as auditors for the
Company;
(5) To consider, if properly brought before the Meeting, certain
Stockholder proposals described in the Proxy Statement; and
(6) To transact such other business as may properly come before the
Meeting and any adjournments of the Meeting.
Only Stockholders of record of the Company's Common Stock at the close of
business on March 9, 1995, are entitled to vote in person or by proxy at the
Annual Meeting or any adjournments of the Meeting.
The 1994 Annual Report of the Company has been mailed with this Notice and
Proxy Statement to each Stockholder entitled to vote at the Meeting.
RYDER SYSTEM, INC.
H. Judith Chozianin
Secretary
March 20, 1995
Miami, Florida
YOUR VOTE IS IMPORTANT!
Please sign, date and return the accompanying proxy card in the enclosed
postage-prepaid envelope as promptly as possible.
If because of a disability you will need auxiliary aids or services to attend
the Annual Meeting, please contact the Secretary prior to the Meeting.
<PAGE> 5
RYDER SYSTEM
RYDER SYSTEM, INC.
3600 N.W. 82nd Avenue
Miami, Florida 33166
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
TABLE OF CONTENTS PAGE
- ------------------------------------------------------------------------
<S> <C>
Proxy Statement __
Solicitation and Voting of Proxies __
Policy of Confidential Voting __
Procedures for the Meeting __
Participants in the 401(k) Plan __
Outstanding Voting Stock __
Election of Directors (Item No. 1) __
Board of Directors and Committees of the Board __
Compensation of Directors __
Certain Relationships __
Ryder System, Inc. Stock for Merit
Increase Replacement Plan (Item No. 2) __
Ryder System, Inc. 1995 Stock
Incentive Plan (Item No. 3) __
Selection of Auditors (Item No. 4) __
Stockholder Proposal (Item No. 5) __
Stockholder Proposal (Item No. 6) __
Beneficial Ownership of Shares __
Compensation Committee Report on
Executive Compensation __
Compensation of Executive Officers __
Option Grants __
Aggregated Option Exercises and
Fiscal Year-End Option Values __
Pension Benefits __
Stock Performance __
Cost of Solicitation __
Submission of Stockholder Proposals
for the 1996 Annual Meeting __
- ------------------------------------------------------------------------
</TABLE>
<PAGE> 6
PROXY STATEMENT
RYDER SYSTEM, INC.
3600 N.W. 82ND AVENUE
MIAMI, FLORIDA 33166
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Ryder System, Inc. (the "Company") of proxies to be voted
at the Annual Meeting of Stockholders of the Company to be held on Friday, May
5, 1995, and at any adjournments of the meeting ("Annual Meeting" or
"Meeting"). This Proxy Statement and the accompanying proxy card are being
distributed on or about March 20, 1995, to holders of the Company's common
stock ("Stockholders" or, singularly, a "Stockholder") entitled to vote at the
Meeting.
A Proxy Committee consisting of M. Anthony Burns, James M. Herron and Edwin A.
Huston will vote the shares of common stock, par value $.50 per share, of the
Company ("Common Stock", "Common Shares" or "Shares" or, singularly, "Common
Share" or "Share") represented by each proxy card returned to the Company. The
Shares represented by such proxy cards will be voted in favor of the election
of each director nominated in this Proxy Statement, in favor of the adoption of
the Ryder System, Inc. Stock for Merit Increase Replacement Plan, in favor of
the adoption of the Ryder System, Inc. 1995 Stock Incentive Plan, and in favor
of the ratification of KPMG Peat Marwick LLP as auditors of the Company, but
against the Stockholder proposals set forth in this Proxy Statement (if
properly brought before the Meeting), unless a contrary instruction is made on
such proxy card, in which event the proxy will be voted by the Proxy Committee
in accordance with the Stockholder's instructions. Any Stockholder giving a
proxy has the power to revoke it at any time before it is exercised at the
Meeting by filing with the Secretary of the Company an instrument revoking it,
by delivering a duly executed proxy card bearing a later date, or by appearing
at the Meeting and voting in person.
POLICY OF CONFIDENTIAL VOTING
It is the Company's policy that all proxies, ballots and vote tabulations that
identify the particular vote of a Stockholder be kept confidential, except that
disclosure may be made: (i) to allow the independent election inspectors to
certify the results of the vote; (ii) as necessary to meet applicable legal
requirements, including the pursuit or defense of judicial actions; or (iii) in
the event of a proxy or consent solicitation in opposition to the Company based
on an opposition proxy or consent statement filed, or required to be filed,
with the Securities and Exchange Commission (the "SEC"). Accordingly, proxy
cards are returned in envelopes addressed to the tabulator, which receives,
inspects and tabulates the proxies. The final tabulation is inspected by
inspectors of election. Both the tabulator and the inspectors are independent
of the Company, its directors, officers and employees. Except as described
above, information as to the voting instructions given by individuals who are
participants in the Ryder System, Inc. Employee Savings Plan (the "401(k)
Plan") will not be disclosed to management by the trustee of the 401(k) Plan.
Information as to which Stockholders have not voted and periodic status reports
on the aggregate vote will be available to the Company.
<PAGE> 7
PROCEDURES FOR THE MEETING
The presence, in person or by proxy, of the holders of a majority of the
outstanding Shares of Common Stock entitled to vote at the Meeting is necessary
to constitute a quorum at the Annual Meeting. Business at the Meeting will be
conducted in accordance with the procedures determined by the Chairman of the
Meeting and will be limited to matters properly brought before the Meeting
pursuant to the procedures prescribed in the Company's By-Laws. Those
procedures include the requirement that any Stockholder who desires either to
bring a Stockholder proposal before an annual meeting or to nominate a person
for election as a director at an annual meeting give written notice, prior to
such annual meeting, to the Company with respect to the proposal or nominee
(see also "Submission of Stockholder Proposals for the 1996 Annual Meeting").
The Chairman of the Meeting may refuse to acknowledge any Stockholder proposal
or any nomination for director not made in accordance with the foregoing.
The Board of Directors does not anticipate that any matters other than those
set forth in this Proxy Statement will be brought before the Annual Meeting.
If, however, other matters are properly brought before the Meeting, proxies
will be voted in accordance with the judgment of the Proxy Committee.
PARTICIPANTS IN THE 401(k) PLAN
If a Stockholder is a participant in the 401(k) Plan, the proxy card represents
the number of full Shares held for the benefit of the participant in the 401(k)
Plan as well as any Shares registered in the participant's name. Thus, a proxy
card for such a participant grants a proxy for Shares registered in the
participant's name and serves as a voting instruction for the trustee of the
401(k) Plan for the Share account in the participant's name.
OUTSTANDING VOTING STOCK
On March 9, 1995, there were __,__,__ outstanding Shares of Common Stock. All
such Shares may be voted at the Annual Meeting and each outstanding Common
Share is entitled to one vote. Only holders of Common Stock of record at the
close of business on March 9, 1995, are entitled to vote at the Annual Meeting
or any adjournments of the Meeting. Neither broker non-votes nor abstentions
are counted as affirmative votes, in whole or in part.
-2-
<PAGE> 8
ELECTION OF DIRECTORS
(ITEM NO. 1)
The Company has three classes of directors serving staggered three-year terms.
Serving in the class of directors whose term expires at the 1995 Annual Meeting
are Vernon E. Jordan, Jr., James W. McLamore, Paul J. Rizzo, Donald V. Seibert
and Alva O. Way. The term of office of David T. Kearns, Lynn M. Martin, Hicks
B. Waldron and Mark H. Willes expires at the 1996 Annual Meeting. Arthur H.
Bernstein, M. Anthony Burns, Edward T. Foote II, John A. Georges and Howard C.
Kauffmann are currently serving a term which expires at the 1997 Annual
Meeting.
On January 1, 1995, Paul J. Rizzo was appointed by the Board of Directors to
serve in the class of directors whose term expires at the 1995 Annual Meeting.
In addition, Joseph L. Dionne has been nominated by the Board to serve as a
member of the Board of Directors, serving in the class of directors whose term
expires at the 1996 Annual Meeting.
Howard C. Kauffmann and Donald V. Seibert will retire as members of the Board
of Directors effective May 5, 1995, at which time they will each be appointed
Director Emeritus by the Board of Directors.
Accordingly, the Stockholders are asked to elect Vernon E. Jordan, Jr., James
W. McLamore, Paul J. Rizzo and Alva O. Way, all of whom have been duly
nominated by the Board of Directors, to serve a term of office expiring at the
1998 Annual Meeting, and Joseph L. Dionne, who has been duly nominated by the
Board of Directors, to serve a term of office expiring at the 1996 Annual
Meeting.
Unless a proxy card specifies otherwise, the Proxy Committee will vote the
Shares covered by the proxy for the election of Vernon E. Jordan, Jr., James
W. McLamore, Paul J. Rizzo and Alva O. Way to the class of directors whose term
expires at the 1998 Annual Meeting, and for the election of Joseph L. Dionne to
the class of directors whose term expires at the 1996 Annual Meeting. In the
event any of these nominees becomes unavailable to serve (which is not
anticipated), the proxy card gives the Proxy Committee the authority to vote
for such other person as it may select.
The following material sets forth the name of each nominee and of each director
continuing in office, a description of positions and offices with the Company,
any other principal occupation, business experience during at least the last
five (5) years, certain directorships presently held, age and length of service
as a director of the Company.
The affirmative vote of a majority of the Shares entitled to vote at the
Meeting is necessary for the election of each nominee to the Board of
Directors.
-3-
<PAGE> 9
NOMINEES FOR DIRECTOR
FOR A TERM OF OFFICE EXPIRING AT THE 1998 ANNUAL MEETING
-4-
<PAGE> 10
<TABLE>
<S> <C> <C>
VERNON E. JORDAN, JR. Mr. Jordan is a Senior Partner
Senior Partner, in the law firm of Akin, Gump,
(Picture) Akin, Gump, Strauss, Strauss, Hauer & Feld, LLP.
Hauer & Feld, LLP Prior to joining Akin, Gump in
1982, he was President and Chief
Executive Officer of the
Member -- Audit Committee National Urban League from 1972
to 1981. From 1970 to 1972, he
Member -- Committee on was Executive Director of the
Directors and United Negro College Fund. He
Public is currently serving on the
Responsibility Board of Directors of American
Express Company, Bankers Trust
Company, Bankers Trust New York
Corporation, Corning Inc., Dow
Jones & Company, Inc., Revlon
Group, J.C. Penney Company,
Inc., Sara Lee Corporation,
Union Carbide Corporation and
Director since 1989 Xerox Corporation. He is also a
Age 59 director of The Brookings
Institution and The Ford
Foundation.
</TABLE>
-5-
<PAGE> 11
<TABLE>
<S> <C> <C>
JAMES W. MCLAMORE Mr. McLamore has been
Chairman Emeritus, extensively involved in the
Burger King Corporation food service industry
throughout the past 47 years.
(Picture) In 1954, he co-founded Burger
Chairman -- Committee on King Corporation and served as
Directors and Public its President or Chairman of
Responsibility the Board through 1976. He
currently serves as Chairman
Emeritus of both Burger King
Member -- Audit Corporation and the Board of
Committee Trustees of the University of
Miami. He also serves as a
Director since 1977 director of Lennar
Age 68 Corporation.
</TABLE>
-6-
<PAGE> 12
<TABLE>
<S> <C> <C>
PAUL J. RIZZO Mr. Rizzo was employed with
Retired Vice Chairman, International Business Machines
International Business Machines Corporation from 1958, where he
Corporation held increasingly responsible
(Picture) positions, until his retirement
as Vice Chairman of the Board in
Member -- Compensation 1987. He returned to IBM in 1993
Committee as Vice Chairman of the Board
until he retired again on
Member -- Finance December 31, 1994. He was Dean
Committee of the Kenan-Flagler Business
School of the University of North
Carolina from 1987 until 1992,
when he retired from that
position to become a partner in
Franklin Street Partners, a
Chapel Hill investment firm.
Prior to joining IBM in 1958, he
was associated with Dan River
Mills, and Lybrand, Ross,
Montgomery (now Coopers &
Lybrand). He is currently
serving on the Board of Directors
Director 1987-1993 of Johnson & Johnson, McGraw-
and since 1995 Hill, Inc., Cox Enterprises and
Age 67 Maersk, Inc.
</TABLE>
-7-
<PAGE> 13
<TABLE>
<S> <C> <C>
ALVA O. WAY Mr. Way was elected Chairman
Chairman, of the Board of IBJ Schroder
IBJ Schroder Bank & Bank & Trust Company in 1986.
(Picture) Trust Company He serves as a consultant to
and director of Schroder PLC,
London, and related companies.
Chairman -- Finance Mr. Way joined General
Committee Electric Company in 1951,
where he served in various
Member -- Compensation executive positions including
Committee Chief Financial Officer. In
1979, he was elected Vice
Chairman of American Express
Company, and in 1981 he was
named President of American
Express Company and Chairman
and Chief Executive Officer of
American Express International
Banking Corporation. Mr. Way
served as President of The
Travelers Companies, a
financial services
organization, from 1983
through 1984. He is a
director of Eli Lilly and
Company, Guidant Corporation,
McGraw-Hill, Inc. and Gould,
Inc. He is Chancellor of Brown
University and a trustee of
the Committee for Economic
Director since 1985 Development.
Age 65
</TABLE>
-8-
<PAGE> 14
NOMINEE FOR DIRECTOR
FOR A TERM OF OFFICE EXPIRING AT THE 1996 ANNUAL MEETING
-9-
<PAGE> 15
<TABLE>
<S> <C> <C>
JOSEPH L. DIONNE Mr. Dionne has been Chairman of the
Chairman and Chief Executive Board and Chief Executive Officer of
Officer, McGraw-Hill, Inc. McGraw-Hill, Inc. since 1988. He joined
McGraw-Hill Book Company in 1967 as Vice
(Picture) President for Research and Development
at Educational Developmental
Laboratories. A year later, he was
appointed General Manager of California
Test Bureau and became a Vice President
of McGraw-Hill Book Company in 1970. He
has held various positions in the
company including Executive Vice
President-Operations. In 1981, he
became President and Chief Operating
Officer of McGraw-Hill and held that
position until 1983 when he became
President and Chief Executive Officer.
Prior to joining McGraw-Hill,
Mr. Dionne's experience included
teaching, educational administration and
consulting work on a number of
experimental education projects. He
serves on the Board of Directors of
Alexander & Alexander Services, Inc.,
The Equitable Companies, Incorporated,
The Equitable Life Assurance Society of
the United States, and Harris
Age 61 Corporation, and is a trustee of Hofstra
University.
</TABLE>
-10-
<PAGE> 16
DIRECTORS CONTINUING IN OFFICE
-11-
<PAGE> 17
<TABLE>
<S> <C> <C>
ARTHUR H. BERNSTEIN Mr. Bernstein has been
President and Chief Executive President and Chief Executive
Officer, Bancorp Capital Group, Officer of Bancorp Capital
Inc. Group, Inc., a venture capital
(Picture) firm, since 1987. He joined
the Company in 1955 as General
Member -- Audit Counsel and Secretary and from
Committee 1958 to 1965 he was Vice
President and Treasurer and a
Member -- Finance member of the Board of
Committee Directors. In 1966, Mr.
Bernstein joined Lazard Freres
& Co., Investment Bankers. In
1968, he joined Norton Simon,
Inc. as Vice President-Finance,
and from 1970 to 1976 he was
Senior Vice President of Max
Factor & Co. and a member of
its Board of Directors. From
1977 to 1980, Mr. Bernstein was
a practicing attorney and
business consultant and from
1980 to 1993 he was Managing
General Partner of California
Capital Investors, Ltd. Mr.
Bernstein serves as a trustee
of the Sierra Trust Fund, the
Director 1958-1966 Sierra Variable Annuity Fund
and since 1974 and the Phillips Graduate
Age 69 Institute.
</TABLE>
-12-
<PAGE> 18
<TABLE>
<S> <C> <C>
M. ANTHONY BURNS Mr. Burns, who joined the Company
Chairman, President and in 1974, was elected a director,
Chief Executive Officer, President and Chief Operating
(Picture) Ryder System, Inc. Officer of the Company in
December, 1979. Effective
January 1, 1983, he was elected
to the position of Chief
Executive Officer of the Company,
and on May 3, 1985, he became
Chairman of the Board. He serves
on the Board of Directors of The
Chase Manhattan Corporation, The
Chase Manhattan Bank, N.A., J.C.
Penney Company, Inc. and Pfizer
Inc. He is an Active Member of
The Business Council, is a member
of The Business Roundtable and
The Business Roundtable's Policy
Committee, and chairs The
Business Roundtable Health,
Welfare, and Retirement Income
Task Force. He serves on the
boards of the United Way of
America, the American Red Cross
and the Boy Scouts of America.
Director since 1979 He also serves on the Board of
Age 52 Trustees of the University of
Miami.
</TABLE>
-13-
<PAGE> 19
<TABLE>
<S> <C> <C>
EDWARD T. FOOTE II Mr. Foote has been President of
President, University the University of Miami since
of Miami 1981. Prior to joining the
University of Miami, he was
Special Advisor to the Chancellor
(Picture) Member -- Compensation and Board of Trustees, Washington
Committee University, from 1980 to 1981.
From 1973 to 1980, he was Dean of
Member -- Finance the Washington University School
Committee of Law, and from 1970 to 1973, he
was Vice Chancellor, General
Counsel and Secretary to the
Board of Trustees of Washington
University. Prior to that he was
an associate with the law firm of
Director since 1987 Bryan, Cave, McPheeters and
Age 57 McRoberts.
</TABLE>
-14-
<PAGE> 20
<TABLE>
<S> <C> <C>
JOHN A. GEORGES Mr. Georges was elected Chairman
Chairman and Chief Executive of the Board of International
Officer, International Paper Paper in 1985 and Chief Executive
Company Officer in 1984. He is Chairman
(Picture) of the Board and a Director of IP
Forest Resources Company (the
Member -- Audit managing general partner of IP
Committee Timberlands, Ltd.). He is also a
Director of Warner-Lambert
Member -- Committee on Company, AK Steel Holding
Directors and Corporation and Scitex
Public Corporation. Mr. Georges is a
Responsibility member of The Business Council
and the Policy Committee of The
Business Roundtable, a member of
the Board of the Business Council
of New York State and a trustee
of its Public Policy Institute,
serves on The Trilateral
Commission and a member of the
Advisory Committee for Trade
Policy and Negotiations. He is
Director since 1993 also a trustee of Drexel
Age 64 University.
</TABLE>
-15-
<PAGE> 21
<TABLE>
<S> <C> <C>
DAVID T. KEARNS Mr. Kearns has been Chairman
Chairman, of the New American Schools
New American Schools Development Corporation since
Development Corporation, 1993 and was Deputy Secretary
(Picture) and Retired Chairman and Chief of the United States
Executive Officer of Xerox Department of Education from
Corporation 1991 through 1993. From 1982
through 1990, Mr. Kearns was
Chairman -- Audit Chairman and Chief Executive
Committee Officer of Xerox Corporation,
which he joined in 1971 as a
Member -- Finance Vice President. Prior to
Committee joining Xerox, he was a Vice
President in the Data
Processing Division of
International Business
Machines Corporation. Mr.
Kearns is a senior university
fellow at Harvard University
and a member of The Business
Council, the Council on
Foreign Relations and the
American Philosophical
Society. Mr. Kearns is a
trustee of the University of
Rochester and the Ford
Foundation and a director of
The Chase Manhattan Bank,
Director 1988 - 1991 N.A., The Chase Manhattan
and since 1993 Corporation and Time Warner,
Age 64 Inc.
</TABLE>
-16-
<PAGE> 22
<TABLE>
<S> <C> <C>
LYNN M. MARTIN Since serving as Secretary of Labor
Former U.S. Secretary of under President George Bush from
Labor; Chairperson, Deloitte & 1991 to 1993, Ms. Martin has served
Touche's Council for the as Chairperson of Deloitte &
Advancement of Women; advisor Touche's Council for the
(Picture) to Deloitte & Touche; and Advancement of Women and as an
Professor, J. L. Kellogg advisor to that firm. She is a
Graduate School of Management regular commentator, panelist,
at Northwestern University columnist and speaker on radio and
television programs, in national
publications and before various
Member -- Compensation business and academic groups, with
Committee respect to the changing global
economic and political
Member -- Finance environment. Prior to serving as
Committee Secretary of Labor, Ms. Martin
represented the 16th District of
Illinois in the U.S. House of
Representatives from 1981 to 1991.
She also serves as a director of
The Procter & Gamble Company,
Ameritech, Harcourt General, Inc.,
The Dreyfus Corporation and
Chicago's Lincoln Park Zoo. She is
Director since 1993 a member of the Council on Foreign
Age 55 Relations.
</TABLE>
-17-
<PAGE> 23
<TABLE>
<S> <C> <C>
HICKS B. WALDRON Mr. Waldron was Chairman and
Retired Chairman and Chief Chief Executive Officer of Avon
Executive Officer, Products, Inc. from 1983 through
Avon Products, Inc. 1988. Prior to joining Avon, he
was Executive Vice President of
(Picture) Member -- Committee on R.J. Reynolds Industries, Inc.,
Directors and which he joined when R.J.
Public Reynolds acquired Heublein, Inc.
Responsibility in 1982. He joined Heublein in
1973 as President and became
Member -- Compensation Chief Executive Officer in 1975
Committee and Chairman in 1982. From 1946
to 1973, Mr. Waldron was
associated with General Electric
Company, acting in various
management and executive
capacities. He is currently
Director since 1987 serving as a director of the
Age 71 Atlantic Richfield Company.
</TABLE>
-18-
<PAGE> 24
<TABLE>
<S> <C> <C>
MARK H. WILLES Mr. Willes was elected Vice
Vice Chairman, General Mills, Chairman of General Mills, Inc.
Inc. in April 1992. Mr. Willes joined
General Mills on July 1, 1980, as
Executive Vice President and
(Picture) Chairman -- Compensation Chief Financial Officer and a
Committee member of the company's
Management Policy Committee. He
Member -- Finance was elected to the Board of
Committee Directors in December 1984, and
elected President in 1985. Prior
to joining General Mills,
Mr. Willes served as President of
the Federal Reserve Bank of
Minneapolis from 1977 to 1980.
He had previously been with the
Federal Reserve Bank of
Philadelphia, where he was named
Director of Research in March
1970 and First Vice President in
October 1971. From 1967 to 1971,
Mr. Willes was Assistant
Professor of Finance and Visiting
Lecturer, Wharton School of
Finance and Commerce at the
University of Pennsylvania. Mr.
Willes serves as a director of
Black & Decker Corporation and
The Talbots, Inc. He is Chairman
of the National Advisory Council
of the School of Management,
Brigham Young University. He is
also Chairman of the Science
Museum of Minnesota.
Director since 1992
Age 53
</TABLE>
-19-
<PAGE> 25
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors currently consists of 14 members. During 1994, the
Board met 8 times. The Board has established standing Audit, Compensation and
Finance Committees and a Committee on Directors and Public Responsibility to
assist the Board in the discharge of its responsibilities. The Board may also
appoint other committees for specialized functions as appropriate. All of the
directors of the Company are independent directors (as that term is defined in
the Company's By-Laws) other than Mr. Burns. The Company's By-Laws provide
that a majority of the Board of Directors, and all members of the Compensation
Committee and the Committee on Directors and Public Responsibility, must be
independent directors.
The Audit Committee consists of David T. Kearns, Chairman, Arthur H. Bernstein,
John A. Georges, Vernon E. Jordan, Jr., James W. McLamore and Donald V.
Seibert. The Audit Committee met 6 times in 1994. The Committee is
responsible for recommending to the Board the engagement of independent
auditors, reviewing the scope of and budget for the annual audit and reviewing
with the independent auditors the results of the audit engagement, including
the financial statements of the Company. The Committee also reviews the scope
and results of the Company's internal audit procedures and reviews compliance
with Company policies relating to conflicts of interest and business ethics.
The Compensation Committee consists of Mark H. Willes, Chairman, Edward T.
Foote II, Howard C. Kauffmann, Lynn M. Martin, Paul J. Rizzo, Hicks B. Waldron
and Alva O. Way. The Compensation Committee met 6 times in 1994. The
Committee reviews and approves or recommends to the Board, as appropriate,
compensation for senior management, recommends to the Board the adoption and
implementation of incentive compensation plans, stock option plans and employee
benefit plans and reviews non-management Board members' compensation and
benefits and recommends changes as appropriate. The Compensation Committee
Report on Executive Compensation is set forth on pages ___ through ___ of this
Proxy Statement.
The Finance Committee consists of Alva O. Way, Chairman, Arthur H. Bernstein,
Edward T. Foote II, David T. Kearns, Lynn M. Martin, Paul J. Rizzo and Mark H.
Willes. The Finance Committee met 6 times in 1994. The Committee reviews the
financial condition and capital structure of the Company, advises the Board
with respect to capital appropriations and other financial matters affecting
the Company and reviews and recommends to the Board a dividend policy for the
Company and any actions to be taken thereunder.
The Committee on Directors and Public Responsibility consists of James W.
McLamore, Chairman, John A. Georges, Vernon E. Jordan, Jr., Howard C.
Kauffmann, Donald V. Seibert and Hicks B. Waldron. The Committee met 6 times
in 1994. The Committee reviews and recommends criteria for Board membership,
reviews the qualifications of and recommends individuals for election as
directors and reviews and recommends the function and authority of all Board
Committees as well as their composition. The Committee will review nominees
suggested by Stockholders in writing and sent to the Secretary of the Company.
Any such
-20-
<PAGE> 26
suggestion should include sufficient information about the proposed nominee to
permit the Board of Directors to make an informed determination as to whether
the proposed nominee, if elected, would be an independent director, as that
term is defined in the Company's By-Laws. Additional responsibilities of the
Committee include identifying and analyzing current trends and issues
pertaining to public policy, public affairs and corporate responsibility and
bringing such matters to the attention of the Board.
The directors spend a considerable amount of time preparing for Board and
Committee meetings and, in addition, are called upon for their counsel between
meeting dates. Each of the incumbent directors attended 75% or more of the
aggregate number of meetings of the Board of Directors and the committees on
which he or she served in 1994.
COMPENSATION OF DIRECTORS
Each director of the Company, other than Mr. Burns, is entitled to an annual
retainer of $21,500 for Board membership and $3,500 for each membership on a
major Board Committee. The chairperson of each such Committee is also entitled
to an additional retainer of $4,500 per year. The meeting fee payable to
directors for telephonic meetings of the Board of Directors or standing
Committees of the Board is $1,100. Directors are entitled to a per diem fee
for all other regular and special meetings of the Board or its Committees of
$2,200 and $1,100, respectively, together with reimbursement for travel
expenses. Mr. Burns does not receive any additional compensation by reason of
his membership on the Board or attendance at meetings of any of its committees.
Under the Company's Directors Stock Plan any eligible director may make an
election to receive a combination of Common Shares determined by a formula and
$11,500 in cash (collectively, the "Formula") in lieu of the annual retainer.
The Formula provides that the number of Shares granted to a participant will be
equal to the nearest number of whole Shares which can be purchased for $15,000
based on the Fair Market Value of the Shares on the date of grant. The Shares
will be entitled to cash dividends and full voting rights, but will not fully
vest until six months after the date of grant provided that the director
continues to serve in that capacity at that date. None of the Shares may be
sold or transferred prior to six months after the date when service as a
director ceases. Substantially all of the eligible directors have elected to
participate in the Directors Stock Plan.
The Company also provides all non-employee directors with $100,000 of coverage
under the Company's accidental death and dismemberment insurance policy, yearly
compensation at retirement equal to 100% of the annual Board membership cash
retainer in effect at the time of their retirement, optional coverage under the
Company's medical plan, $100,000 of coverage under the Company's group term
life insurance policy and the use of a Company-owned automobile, resulting in
additional average compensation of $12,894 to each such director. The Company
also provides all non-employee directors with long-term disability income
protection.
-21-
<PAGE> 27
The Company has adopted a Directors' Charitable Award Program under which it
intends to make charitable contributions in the name of current and future
directors. The program is designed to acknowledge the service of directors and
to benefit and recognize the mutual interest of directors and the Company in
supporting worthy charitable and educational institutions. In addition, it
enhances the Company's ability to attract and retain directors of the highest
caliber and experience. Under the Directors' Charitable Award Program, each
current or future director may designate up to 2 charitable organizations and
it is the Company's intention to contribute the sum of $500,000, in ten annual
installments, to the designated organizations in the director's name upon the
director's death. The program may be funded with the proceeds of insurance
policies on the lives of paired directors. Individual directors will derive no
financial benefit from this program, as all charitable deductions accrue solely
to the Company. Substantially all of the current directors and three retired
directors participate in the Directors' Charitable Award Program.
Directors of the Company may elect to defer receipt of their retainer and fees.
Deferred funds become part of the general assets of the Company and bear simple
interest at a rate based upon the base or prime rate of a major bank, but not
lower than 5% or higher than 12% per annum. At the discretion of the director,
the funds may be deferred until the earlier to occur of a fixed date,
retirement, disability, or removal, and are payable in a lump sum or
installments. However, upon a change of control of the Company all deferred
amounts will be distributed immediately to the director in a lump sum.
CERTAIN RELATIONSHIPS
Mr. Jordan is a senior partner in the law firm of Akin, Gump, Strauss, Hauer &
Feld, LLP which performed professional services on behalf of the Company in
1994. Additionally, in the ordinary course of business, the Company and its
subsidiaries may from time to time engage in transactions with other
unaffiliated corporations whose officers or directors are also directors of the
Company. All such transactions are conducted on a commercial, arms-length
basis and may not come to the special attention of the directors or officers of
either the Company or the other corporation involved. The Company does not
consider either the transactions or the amounts involved in such transactions
to be significant.
-22-
<PAGE> 28
RYDER SYSTEM, INC.
STOCK FOR MERIT INCREASE REPLACEMENT PLAN
(ITEM NO. 2)
On December 16, 1994, the Board of Directors adopted, subject to ratification
by the Company's Stockholders, the Ryder System, Inc. Stock for Merit Increase
Replacement Plan (the "Replacement Plan"). The Replacement Plan is designed to
give certain executive officers of the Company the opportunity to receive stock
option grants in lieu of merit salary increases. The intent of the Replacement
Plan is to increase the proportion of executive compensation and benefits tied
to stock ownership while reducing the proportion related to cash compensation.
In addition, the Replacement Plan will provide these executives with an
ownership interest in the Company's Common Stock.
The Board believes that increased Common Stock ownership by key employees more
closely aligns Stockholder and employee interests by encouraging greater focus
on the long-term growth and profitability of the Company and its Common Stock.
The Replacement Plan may also provide the Company with an immediate benefit due
to lower salaries and lower cash bonuses.
The Replacement Plan is designed to meet the strict requirements of Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), regarding
performance-based compensation so that stock-based compensation in excess of $1
million will be tax deductible by the Company.
A summary of the material features of the Replacement Plan appears below. The
full text of the Replacement Plan is set forth in Appendix A and should be
referred to for a complete description of its provisions.
Effective Date and Expiration
The Replacement Plan will become effective on May 5, 1995, if ratified by the
Company's Stockholders. Grants may be made under the Replacement Plan until
its termination on May 4, 2005, but awards made prior thereto may extend beyond
that date.
Administration
The Replacement Plan will be administered by the Compensation Committee of the
Board of Directors (the "Committee"), which consists entirely of outside
directors as defined for purposes of Section 162(m) of the Code. No member of
the Committee will be eligible to participate in the Replacement Plan. The
Committee will have full authority to interpret the Replacement Plan and to
establish rules for its administration.
-23-
<PAGE> 29
Limitations on Awards
The aggregate number of Shares for which stock options may be granted under the
Replacement Plan may not exceed 500,000 Shares. No individual participant may
receive stock options for more than 300,000 Shares in the aggregate during the
term of the Replacement Plan. On March 15, 1995, the closing price of a Common
Share on the New York Stock Exchange Composite Index was $ ___.
Eligibility for Awards
Awards under the Replacement Plan may be made to members of the Company's
senior leadership group, known as the Executive Committee, and to such other
key executives as the Committee may determine. The Executive Committee
currently consists of 12 individuals. No executive eligible to participate in
the Replacement Plan may receive an award under the Replacement Plan unless the
executive has made an irrevocable election to receive stock options in lieu of
a merit salary increase at least six (6) months in advance of the date of grant
of such stock options.
It is impossible to determine the exact number of persons who will be eligible
under the Replacement Plan during its term because the selection of
participants is a discretionary decision of the Committee. Non-employee
directors are not eligible to participate in the Replacement Plan.
Determination of Amount and Form of Award
The amount of individual awards to participants will be determined by the
Committee, subject to the limitations of the Replacement Plan. Nonqualified
stock options and options qualifying as incentive stock options may be awarded
to participants under the Replacement Plan. The option price must be not less
than 100% of the fair market value of a Share of Common Stock on the date of
grant. The term of a stock option cannot exceed ten years from the date of
grant. Options generally will terminate three months after the termination of
employment, except in the event of the participant's death, disability or
retirement or except if the participant is terminated for cause. Because these
option grants are made in place of salary increases, twenty percent (20%) of
each option grant will vest immediately, with the remainder to vest in equal
annual installments over a four (4) year period. A participant exercising a
stock option must pay the exercise price in full in cash or, at the discretion
of the Committee, in previously acquired Shares or in a combination of cash and
Shares.
Change of Control
In the event of a "change of control" (as defined on page _ of the Replacement
Plan), each unexercised and unexpired stock option will become immediately
exercisable in full, and remain exercisable in full for the remainder of its
term, unless the participant is terminated for cause or unless otherwise
determined by the Committee. Participants holding unexercised and unexpired
-24-
<PAGE> 30
stock options may, in lieu of exercising, at any time within 60 days following
a change of control, require the Company to purchase or cash out such stock
options or portions thereof at a price based upon the highest of: (i) the
highest closing price of the Common Stock within the 60-day period preceding
the date of purchase or cash out; (ii) the highest price per Share of Common
Stock reported in certain Schedule 13D reports; or (iii) a liquidation or
breakup value for the Company.
Amendment
The Committee can at any time amend, modify or terminate the Replacement Plan,
but cannot, among other things, without the Stockholders' approval, materially
increase the benefits accruing to participants, materially increase the number
of securities which may be issued under the Replacement Plan or materially
modify the requirements for eligibility for participation in the Replacement
Plan. However, in the case of a merger, consolidation, reorganization,
recapitalization, stock dividend, stock split or other change in the corporate
structure of the Company, the Committee may make appropriate adjustments in the
Replacement Plan or any awards granted under the Replacement Plan.
Federal Income Tax Consequences
The grant of a nonqualified stock option does not result in income for the
grantee or in a deduction for the Company. The exercise of a nonqualified
stock option results in ordinary income for the grantee and a compensation
deduction for the Company measured by the difference between the option price
and the fair market value of the Shares received at the time of exercise.
Income and employment tax withholding is required. To the extent permitted by
law and Committee rules, a grantee may authorize the Company to reduce the
number of Shares to be issued for an option exercise in satisfaction of the
withholding obligation.
Neither the grant nor the exercise of an incentive stock option results in
taxable income for the grantee or in a deduction for the Company. However, the
excess of the market value on the exercise date over the option price of the
Shares is an "item of adjustment" for purposes of the grantee's alternative
minimum tax. When a grantee disposes of Shares acquired by exercise of an
incentive stock option, the grantee's gain (the difference between the sale
proceeds and the price paid by the grantee for the Shares) upon the disposition
will be taxed as capital gain, provided the grantee (i) does not dispose of the
Shares within two years after the date of grant nor within one year after the
transfer of Shares upon exercise and (ii) exercises the option while an
employee of the Company or a subsidiary or within three months after
termination of employment for reasons other than death or disability. If the
Shares are disposed of before the expiration of either period, the grantee
generally will realize ordinary income in the year of the disqualifying
disposition and the Company can deduct that amount as compensation.
-25-
<PAGE> 31
Additional Information
Because awards under the Replacement Plan will require future action by the
Committee and a decision by each eligible executive whether to participate or
not, it is impossible at this time to state the benefits any named executive
officer or other individual executive may receive if the Replacement Plan is
ratified by the Company's Stockholders. The awards made under the 1980 Plan
during the last three years to the five highest paid executive officers of the
Company are described on pages __ and __ of this Proxy Statement.
The affirmative vote of a majority of the Shares entitled to vote at the
Meeting is required for ratification of the Ryder System, Inc. Stock for Merit
Increase Replacement Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE RYDER SYSTEM,
INC. STOCK FOR MERIT INCREASE REPLACEMENT PLAN.
-26-
<PAGE> 32
RYDER SYSTEM, INC.
1995 STOCK INCENTIVE PLAN
(ITEM NO. 3)
On February 17, 1995, the Board of Directors adopted, subject to ratification
by the Company's Stockholders, the Ryder System, Inc. 1995 Stock Incentive
Plan (the "1995 Plan"). The 1995 Plan is designed to provide incentive
compensation to key management employees of the Company and to provide them
with an ownership interest in the Company's Common Stock. The Board believes
that the 1995 Plan will be beneficial to the Company and its Stockholders by
enhancing the Company's position in the highly competitive market for key
executives. The Board intends to grant options and other awards under the 1995
Plan as a means to recruit, retain, motivate and appropriately reward those
highly qualified individuals who contribute to the success of the Company.
The 1995 Plan is substantially the same as the Ryder System, Inc. 1980 Stock
Incentive Plan (the "1980 Plan"), which was originally approved by the
Stockholders at the 1980 Annual Meeting. If the Stockholders ratify the 1995
Plan, no further Shares will be added to the 1980 Plan and it will terminate in
accordance with its terms. The major changes between the 1980 Plan and the
1995 Plan are designed to meet the strict requirements of Section 162(m) of the
Code regarding performance-based compensation so that stock-based compensation
in excess of $1 million will be tax deductible by the Company.
A summary of the material features of the 1995 Plan appears below. The full
text of the 1995 Plan is set forth in Appendix B and should be referred to for
a complete description of its provisions.
Effective Date and Expiration
The 1995 Plan will become effective on May 5, 1995, if ratified by the
Company's Stockholders, and will terminate on May 4, 2005. No award may be
made under the 1995 Plan after its expiration date, but awards made prior
thereto may extend beyond that date.
Administration
The 1995 Plan will be administered by the Compensation Committee of the Board
of Directors (the "Committee"), which consists entirely of outside directors as
defined for purposes of Section 162(m) of the Code. No member of the Committee
will be eligible to participate in the 1995 Plan. The Committee will have full
authority to interpret the 1995 Plan and to establish rules for its
administration. The Committee may, in its discretion, accelerate the date on
which a stock option, SAR or Limited SAR (as defined on page ___) may be
exercised, the date of termination of restrictions applicable to a restricted
stock right, or the end of a performance period under a performance unit award.
-27-
<PAGE> 33
Limitations on Awards
The 1995 Plan provides that over its ten-year term, stock options (and related
SARs and Limited SARs) and restricted stock rights for not more than 3,300,000
shares of Common Stock may be issued. No individual participant may receive
stock options for more than 800,000 Shares in the aggregate during the term of
the 1995 Plan. On March 15, 1995, the closing price of a Common Share on the
New York Stock Exchange Composite Index was $ ___.
Eligibility for Awards
Awards under the 1995 Plan may be made to key management employees selected by
the Committee. The current eligible group consists of approximately ___
persons. It is impossible to determine the exact number of persons who will be
eligible under the 1995 Plan during its term because the selection of
participants is a discretionary decision of the Committee. Non-employee
directors are not eligible to participate in the 1995 Plan.
Determination of Amount and Form of Award
The amount of individual awards to key employees will be determined by the
Committee, subject to the limitations of the 1995 Plan. In determining the
amount and form of an award, consideration will be given to the functions and
responsibilities of the key employee, his or her potential contributions to the
success of the Company and other factors deemed relevant by the Committee.
Five types of awards may be granted to participants under the 1995 Plan: (1)
stock options, (2) Stock Appreciation Rights ("SARs"), (3) Limited Stock
Appreciation Rights ("Limited SARs"), (4) Performance Units and (5) Restricted
Stock Rights ("Rights"). SARs, Limited SARs and Performance Units may be
granted only in connection with stock options. The exercise of SARs, Limited
SARs or Performance Units reduces the number of Shares subject to the related
stock options on a one-for-one basis. The exercise of a stock option reduces
the number of related SARs, Limited SARs and Performance Units on a one-for-one
basis. Unless the Committee determines otherwise, a participant may not be
granted both Rights and a stock option in any one year.
Stock Options
The Committee may grant nonqualified stock options and options qualifying as
incentive stock options under the Code. The term of a stock option cannot
exceed ten years from the date of grant. The option price must be not less
than 100% of the fair market value of a Share of Common Stock on the date of
grant. A participant exercising a stock option must pay the exercise price in
full in cash or, at the discretion of the Committee, in previously acquired
Shares or in a combination of cash and Shares.
-28-
<PAGE> 34
SARs and Limited SARs
The Committee may grant SARs which permit the participant to receive in cash or
Shares (or a combination of both) the excess of the fair market value of a
Share on the date the SAR is exercised over the exercise price for the related
stock option. Limited SARs function in a manner identical to SARs, except that
Limited SARs are exercisable by the participant only in the event of a change
of control of the Company (see "Change of Control"). The amount paid to the
participant on exercise of a Limited SAR is based on the price specified for
the cash out of a stock option following a change of control. Generally, each
participant who receives a grant of a stock option will receive Limited SARs
covering all of the Shares subject to such stock option.
Performance Units
The Committee may also grant Performance Units which are payable in cash or
Shares (or a combination of both) at the end of a specified performance period.
Payment will be contingent upon achieving performance goals by the end of the
performance period. The Committee will determine the length of the performance
period, the minimum performance goals required before any payment will be made
and the payment value of any award. However, no payment may exceed 150% of the
exercise price per Share of the related stock option.
Rights
The Committee may grant Rights which entitle a grantee to receive a stated
number of Common Shares over a certain period of time during which the
participant must remain in the employment of the Company. A participant who
holds Rights is not entitled to any of the rights of a holder of Common Stock
prior to the issuance of Shares pursuant to the Right, but is entitled to an
amount in cash equal to the per Share cash dividend.
Change of Control
In the event of a "change of control" (as defined on page 1 of the 1995 Plan),
each unexercised and unexpired stock option becomes immediately exercisable in
full, and remains exercisable in full for the remainder of its term, unless the
participant is terminated for cause or unless otherwise determined by the
Committee. Participants holding unexercised and unexpired stock options as to
which no SARs or Limited SARs are then exercisable may, in lieu of exercising,
at any time within 60 days following a change of control, require the Company
to purchase or cash out such stock options or portions thereof at a price based
upon the highest of: (i) the highest closing price of the Common Stock within
the 60-day period preceding the date of purchase or cash out; (ii) the highest
price per Share of Common Stock reported in certain Schedule 13D reports; or
(iii) a liquidation or breakup value for the Company, except that incentive
stock options will be limited to the spread between the fair market value of
Common Stock on the date of exercise and the purchase price per Share at which
the related stock option is exercisable. In the event of a change of control,
all restrictions on Rights would expire and
-29-
<PAGE> 35
all Shares subject to Rights would be issued to the participants, unless
otherwise determined by the Committee.
Amendment
The Committee can at any time amend, modify or terminate the 1995 Plan, but
cannot, among other things, without the Stockholders' approval, materially
increase the benefits accruing to participants, materially increase the number
of securities which may be issued under the 1995 Plan or materially modify the
requirements for eligibility for participation in the 1995 Plan. However, in
the case of a merger, consolidation, reorganization, recapitalization, stock
dividend, stock split or other change in the corporate structure of the
Company, the Committee may make appropriate adjustments in the 1995 Plan or any
awards granted under the 1995 Plan.
Federal Income Tax Consequences
The grant of a nonqualified stock option or the addition of a SAR, a Limited
SAR or a Performance Unit to an option, does not result in income for the
grantee or in a deduction for the Company. The exercise of a nonqualified
stock option results in ordinary income for the grantee and a compensation
deduction for the Company measured by the difference between the option price
and the fair market value of the Shares received at the time of exercise.
Income and employment tax withholding is required. To the extent permitted by
law and Committee rules, a grantee may authorize the Company to reduce the
number of Shares to be issued for an option exercise in satisfaction of the
withholding obligation.
Neither the grant nor the exercise of an incentive stock option results in
taxable income for the grantee or in a deduction for the Company. However, the
excess of the market value on the exercise date over the option price of the
Shares is an "item of adjustment" for purposes of the grantee's alternative
minimum tax. When a grantee disposes of Shares acquired by exercise of an
incentive stock option, the grantee's gain (the difference between the sale
proceeds and the price paid by the grantee for the Shares) upon the disposition
will be taxed as capital gain, provided the grantee (i) does not dispose of the
Shares within two years after the date of grant nor within one year after the
transfer of Shares upon exercise and (ii) exercises the option while an
employee of the Company or a subsidiary or within three months after
termination of employment for reasons other than death or disability. If the
Shares are disposed of before the expiration of either period, the grantee
generally will realize ordinary income in the year of the disqualifying
disposition and the Company can deduct that amount as compensation.
Additional Information
Because awards under the 1995 Plan will require future action by the Committee,
it is impossible at this time to state the benefits any named executive officer
or other individual employee may receive if the 1995 Plan is ratified by the
Company's Stockholders. The awards made under the 1980 Plan during the last
three years to the five highest paid executive officers of the Company are
described on pages __ and __ of this Proxy Statement.
-30-
<PAGE> 36
The affirmative vote of a majority of the Shares entitled to vote at the
Meeting is required for ratification of the Ryder System, Inc. 1995 Stock
Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE RYDER SYSTEM,
INC. 1995 STOCK INCENTIVE PLAN.
-31-
<PAGE> 37
SELECTION OF AUDITORS
(ITEM NO. 4)
Upon the recommendation of the Audit Committee of the Board of Directors, the
Board has selected KPMG Peat Marwick LLP, independent certified public
accountants, to audit the accounts of the Company and its subsidiaries for the
fiscal year ending December 31, 1995.
The firm of KPMG Peat Marwick LLP has audited the accounts of the Company since
1955 and has offices in, or convenient to, most of the localities where the
Company and its subsidiaries operate. The Company has been advised that
representatives of KPMG Peat Marwick LLP will be present at the 1995 Annual
Meeting with the opportunity to make a statement and to respond to appropriate
questions raised at the Meeting.
KPMG Peat Marwick LLP performed audit services in connection with the
examination of the financial statements of the Company and its subsidiaries for
the year ended December 31, 1994. In addition, they also rendered other audit
services which included the review of financial statements and related
information contained in various registration statements and filings with the
SEC, services related to the Company's acquisition of other companies,
examinations of the separate financial statements of the Company's retirement
and benefit plans, and limited reviews of financial statements and related
information contained in quarterly reports provided to the Stockholders and the
SEC.
The affirmative vote of a majority of the Shares entitled to vote at the
Meeting is necessary for the ratification of the appointment of KPMG Peat
Marwick LLP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE SELECTION OF
KPMG PEAT MARWICK LLP AS AUDITORS.
-32-
<PAGE> 38
STOCKHOLDER PROPOSAL
(ITEM NO. 5)
The Company has been informed that John J. Gilbert of 29 East 64th Street, New
York, New York 10021 and Martin Glotzer of 7601 N. Kedzie, Chicago, Illinois
60645 again intend to offer a proposal at the Annual Meeting requesting that
the Board of Directors take the steps necessary so that, once the current terms
of sitting Directors have expired, future elections of all Directors will be
annual, rather than by class. Mr. Glotzer states that he owns 70 Shares and
Mr. Gilbert states that he owns 105 Shares. Mr. Gilbert states that he also
represents an additional 600 Shares held by family interests and an affiliated
corporation.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
The proposal which the Company understands the proponents intend to introduce
at the Annual Meeting is as follows:
"RESOLVED: That the stockholders of Ryder System, Inc., assembled in
annual meeting in person and by proxy, hereby request that the Board
of Directors take the needed steps to provide that at future elections
of directors new directors be elected annually and not by classes, as
is now provided, and that on expiration of present terms of directors
their subsequent election shall also be on an annual basis."
The proponents have furnished the following statement in support of their
proposal:
"Continued very strong support along the lines we suggest were shown
at the last annual meeting when 57%, 1,826 proxies representing
34,437,590 shares, were cast in favor of this proposal. The vote
against included 1,192 unmarked proxies.
Last year ARCO, to its credit, voluntarily ended theirs, stating that
when a very high percentage, 34.6%, desired it to be changed to an
annual election it was reason enough for them to change it. Several
other companies have also followed suit such as: Pacific Enterprises,
Katy Industry, Hanover Direct, Campbell Soup and others.
Because of normal need to find new directors and because of
environmental problems and the recent avalanche of derivative losses
and many groups desiring to have directors who are qualified on the
subjects, we think that ending the stagger system of electing
directors is the answer. In addition, some recommendations have been
made to carry out the Valdez 10 points. The 11th, in our opinion,
should be to end the stagger system of electing directors and to have
cumulative voting.
Recently Equitable Life Insurance, which is now called Equitable
Companies, converted from a policy owned company to a public
stockholder meeting. Thanks to AXA, the comptrolling French insurance
company not wanting it they now do not have a staggered board.
The Orange and Rockland Utility Company had a terrible time with the
stagger system and its 80% clause to recall a director. The chairman
was involved in a scandal effecting the company. Not having enough
votes the meeting to get rid of the chairman had to be adjourned.
Finally, at the adjourned meeting enough votes were counted to recall
him.
-33-
<PAGE> 39
If you agree, please mark your proxy for this resolution; otherwise it
is automatically cast against it, unless you have marked to abstain."
The affirmative vote of a majority of the Shares entitled to vote at the
Meeting is necessary for adoption of the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
Before 1984 the directors were elected annually. At the 1984 Annual Meeting,
the Stockholders approved an amendment to the Restated Articles of
Incorporation providing that the Board be divided into three classes of
directors serving staggered three-year terms.
In the 1984 Proxy Statement the Board stated that it believed the interests of
the Stockholders were better served by a classified board than by the annual
election of all directors. Among the reasons presented at that time in favor
of a classified system of director elections, the Board stated the following:
The classification of directors will have the effect of making it more
difficult to change the composition of the Board of Directors. At
least two Stockholder meetings, instead of one, will be required to
effect a change in the control of the Board. While there has been no
problem in the past with the continuity or stability of the Board, the
Board believes that the longer time required to elect a majority of a
classified Board will help to assure the continuity and stability of
the Company's management and policies in the future, since a majority
of the directors at any given time will have prior experience as
directors of the Company.
The Board continues to believe that a classified Board of Directors promotes
continuity of experience on the Board, provides for an orderly succession of
directors and would encourage any unsolicited bidder for control of the Company
to negotiate with the Board, which can best represent the interests of all of
the Stockholders. In addition, the Company's system of director elections is
fully supported by Florida law.
The resolution offered by the proponents would not amend the Restated Articles
of Incorporation at this time, but, instead requests that the Board take the
steps necessary to elect all directors on an annual basis in the future. Under
the terms of the amendment to the Company's Restated Articles of Incorporation
approved by the Stockholders in 1984, an affirmative vote of 75% of the Shares
entitled to vote on a future resolution proposed by the Board to amend the
Restated Articles would be required at a future meeting of Stockholders in
order to amend the provisions governing the staggered election of directors.
ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THIS
PROPOSAL.
-34-
<PAGE> 40
STOCKHOLDER PROPOSAL
(ITEM NO. 6)
The Company has been informed that Arthur Wair of 984 Barners Road, Antioch,
Tennessee 37013, intends to offer a proposal at the Annual Meeting requesting
that the Board of Directors either redeem or submit to a vote of the
Stockholders the Company's Preferred Share Purchase Rights Plan. Mr. Wair
states that he owns 450 Shares.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
The proposal which the Company understands this proponent intends to introduce
at the Annual Meeting is as follows:
"Resolved, that the shareholders of Ryder System, Inc. hereby request the
Board of Directors redeem the shareholder rights issued in 1986, unless the
issue is approved by the affirmative vote of a majority of the outstanding
shares at a meeting of the shareholders held as soon as possible."
The proponent has furnished the following statement in support of his proposal:
"On February 28, 1986, the Board of Directors adopted a shareholder rights
plan which issued a dividend of one preferred share purchase right for each
outstanding share of common stock. In my opinion, such plans tend to
entrench management and depress companies' stock prices.
The Board created this plan unilaterally without consulting shareholders.
Furthermore, the Board protected the plan by an unusual voting requirement:
To overturn the plan, a majority of shares outstanding must be cast against
the plan, instead of a majority of votes cast.
Our proposal attempts to give shareholders an opportunity to express their
views on the rights issue and the manner by which it was adopted.
Since the adoption of this plan, shareholders have expressed opposition. In
1994, 62.7% of stockholders voting supported this proposal. This echoed the
62.5% vote on a similar proposal in 1990, and the 59.6% in 1991. However,
these votes represented less than 50% of the shares outstanding.
At other companies, such votes are enough to prod directors to make the
changes that a majority of voting shareholders want. We feel management's
refusal to heed past overwhelming expressions of shareholder opinion on the
subject of the poison pill reflect the negative impact this plan has had on
shareholder relations.
Poison pills have drawn increasing fire in recent years. Following the
spring annual meeting season, the Investor Responsibility Research Center
found that five of the seven resolutions calling for a change in poison
pills won majority votes, and three actually passed. Proposals
-35-
<PAGE> 41
such as this one were the most common type of shareholder initiatives in
1993, according to the IRRC. During 1993 Consolidated Freightways agreed to
put their poison pill plans to a shareholder vote following a resolution
advanced by a Teamster. The company joined companies like Time Warner,
Lockheed, United Technologies, and La Quinta Inns in voluntarily redeeming
their poison pills since 1990.
Congress expressed opposition to poison pills. In a vote on takeover
reforms, the Senate chose to ban such plans. Sponsors of the amendment
argued that a poison pill is an inappropriate way to stop hostile takeovers.
Academic researchers have criticized poison pills, showing that they harm
shareholder value.
For these reasons, we urge you to vote FOR this resolution."
The adoption of this proposal requires the affirmative vote of a majority of
the Shares entitled to vote at the Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
The Preferred Share Purchase Rights Plan (the "Rights Plan") was adopted by the
Board of Directors on February 28, 1986 to protect the Company's Stockholders
against certain abusive takeover practices prevalent in the marketplace and to
ensure that all Stockholders are treated fairly and equally.
The overriding objective of the Board of Directors in adopting the Rights Plan
was, and continues to be, the preservation and maximization of the Company's
value for all Stockholders.
The Board believes that the Rights Plan is a sound and reasonable means of
protecting against unfair and abusive takeover practices and is both
appropriately within its discretion and an essential exercise of its fiduciary
obligations to the Stockholders. The Board also believes that many
Stockholders have come to recognize the effectiveness of these plans in
protecting and enhancing value for all Stockholders.
The Rights Plan does not preclude a prospective bidder from making an offer for
the Company. Moreover, the Rights Plan is not intended to prevent a takeover
of the Company nor would it do so.
The Rights Plan is intended to give the Board sufficient time, if confronted
with an offer to acquire the Company, to evaluate the offer and any possible
alternatives and to take those steps that the Board believes would be necessary
to maximize the value that can be achieved for all Stockholders. The Rights
Plan is designed to encourage any prospective bidder for the Company to
negotiate with the Company's Board. The Board believes that its ability to
negotiate effectively with a
-36-
<PAGE> 42
potential acquiror on behalf of all Stockholders is significantly greater than
that of the Stockholders individually. A bidder who chooses to bypass the
Board is pursuing his own interests and is not concerned with the interests of
the other Stockholders. In this regard, it is important to remember that
hostile acquirors are interested in buying a company as cheaply as they can.
Without the Rights Plan, the Company could find itself negotiating with the
acquiror from a defensive posture rather than at arms-length. While a bidder
may make an offer for the Company's stock which is in excess of the stock's
current market price, without such negotiations the premium offered may not
reflect the long-term value of the Company. This is particularly true of
companies whose stock is prone to cyclical movements, such as the Company.
The Board strongly disagrees with the view that rights plans deter legitimate
acquisition proposals from being made or depress the price of the stock of
corporations adopting them. Since the adoption of the Rights Plan, at least 65
companies which had rights plans have been acquired or were parties to
agreements to be acquired, including 42 companies which were acquired after
receiving an unsolicited bid. Furthermore, in 36 of the 42 acquisitions of
companies with rights plans that were initiated by unsolicited bids, the prices
ultimately received by stockholders were higher than the initial bids by an
average premium to the initial bid of more than 21%.(1)
Two of the largest corporate takeovers in the past two years, AT&T's
acquisition of NCR and Viacom's acquisition of Paramount, involved target
companies with rights plans. In the case of NCR, AT&T's original bid of $85
per share was eventually raised to $110 per share in a negotiated merger of the
two companies. In the case of Viacom's acquisition of Paramount, Viacom's
final bid, which included a tender offer at $107 per share for 50.1% of
Paramount's common stock, followed a protracted bidding contest which started
with Viacom's initial offer valued at $69.14 per share.
While the proponent cites Time Warner as a company which had previously
redeemed its rights plan, the proponent fails to mention that Time Warner
adopted a new rights plan a year ago in an action described by the IRRC as one
where "some institutional shareholders actually pushed for the adoption of the
new pill".
Studies by Georgeson & Co., a leading investor communications firm, have
concluded that "[rights plans] do not prevent takeovers nor do they diminish
the value of a company's stock." These studies also indicated that "companies
with [rights plans] receive premiums 69% higher in takeover contests than
companies without [rights plans]."
The Board of Directors believes that the Rights Plan continues to protect
Stockholders against abusive and unfair practices that force Stockholders to
sell their investments at less than full value. Over 1,700 of the largest U.S.
companies, representing the entire spectrum of American business, have adopted
rights plans in response to such practices. The Board supports the Rights Plan
and asks Stockholders to be aware that if the rights were redeemed now, without
a substitute
__________________________________
(1) Based on data obtained from Securities Data Corporation and other
industry sources.
-37-
<PAGE> 43
plan and in the absence of any specific acquisition proposal, the Board would
be deprived of an effective negotiating tool which could otherwise be used to
protect and enhance Stockholder value.
It is for these reasons that the Board of Directors believes that the
redemption of the rights at the present time would not be in the best interest
of the Company's Stockholders.
ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THIS
PROPOSAL.
-38-
<PAGE> 44
BENEFICIAL OWNERSHIP OF SHARES
As of January 15, 1995, each director or nominee and each executive officer
named in the Summary Compensation Table herein, individually, and all
directors, nominees and executive officers of the Company as a group,
beneficially owned Common Stock as follows:
<TABLE>
<CAPTION>
Name of Beneficial Amount and Nature
Owner of Beneficial Ownership(1) Percent of Class(2)
-------------------------- ----------------------- ----------------
<S> <C> <C>
Arthur H. Bernstein(3,6) 16,241
M. Anthony Burns(4,5) 624,492
Dwight D. Denny(5) 86,503
Joseph L. Dionne 0 less
Edward T. Foote II(6) 1,741 than
James M. Herron(5) 201,913 1%
Edwin A. Huston(4,5) 249,369 per
John A. Georges(6) 1,599 ind-
Vernon E. Jordan, Jr.(6) 1,741 vidual
Howard C. Kauffmann(6) 3,799
David T. Kearns(6) 2,041
Lynn M. Martin 500
James W. McLamore(6) 57,245
Larry S. Mulkey(5) 86,164
Paul J. Rizzo 2,000
Donald V. Seibert(6) 1,324
Hicks B. Waldron(6) 3,891
Alva O. Way(6) 2,741
Mark H. Willes(3,6) 3,268
Directors, Nominees and
Executive Officers as a
Group (27 persons)(3,4,5,6) 1,671,228 2.12%
- ----------------------------------
</TABLE>
(1) Unless otherwise noted, all Shares included in this table are owned
directly, with sole voting and dispositive power. The inclusion of Shares in
this table shall not be construed as an admission that such Shares are
beneficially owned for purposes of Section 16 of the Securities Exchange Act of
1934 (the "Exchange Act").
(2) Percent of class has been computed in accordance with Rule 13d-3(d)(1)
of the Exchange Act.
(3) Includes Shares held jointly with their spouses or other family members,
as follows: Mr. Bernstein 15,000 Shares; Mr. Willes 2,027 Shares; all
directors, nominees and executive officers as a group 17,451 Shares.
(4) Includes Shares held in the accounts of executive officers pursuant to
the 401(k) Plan as of December 31, 1994, as follows: Mr. Burns 7,035 Shares and
Mr. Huston 3,572 Shares; all directors, nominees and executive officers as a
group 26,023 Shares.
(5) Includes Shares the direct ownership of which may be acquired within 60
days of January 15, 1995, through the exercise of stock options, as follows:
Mr. Burns 523,077 Shares; Mr. Denny 77,503 Shares; Mr. Herron 190,667 Shares;
Mr. Huston 223,603 Shares and Mr. Mulkey 86,164 Shares; all directors, nominees
and executive officers as a group 1,403,382 Shares.
(6) Includes the following number of Shares held as of January 15, 1995, in
the account of each of the following directors pursuant to the Directors Stock
Plan: 1,241 Shares in the account of Mr. Bernstein, Mr. Foote, Mr. Jordan, Mr
Kearns, Mr. McLamore, Mr. Waldron, Mr. Way, and Mr. Willes; 599 Shares in the
account of Mr. Georges; and 799 Shares in the account of Mr. Kauffmann and Mr.
Seibert.
-39-
<PAGE> 45
As of January 15, 1995, the following table sets forth information regarding
the number and percentage of Shares held by all persons who are known by the
Company to beneficially own or exercise voting or dispositive control of more
than 5% of the Company's outstanding Common Stock:
<TABLE>
<CAPTION>
Number of Shares
Name and Address Beneficially Owned Percent of Class
- ---------------- ------------------ ----------------
<S> <C> <C>
State Treasurer
State of Michigan
P.O. Box 15128
Lansing, Michigan 48901 5,053,145(1) 6.42%
</TABLE>
FILINGS UNDER SECTION 16(a)
Compliance with Section 16(a) of the Exchange Act requires the Company's
directors, executive officers, and persons owning more than 10% of the
Company's Common Stock to file with the SEC and the New York Stock Exchange
initial reports of ownership of Common Stock and other equity securities of the
Company on Form 3 and reports of changes in such ownership on Forms 4 or 5.
Directors, executive officers and greater than 10% Stockholders are required to
furnish the Company with copies of all Section 16(a) reports they file.
To the Company's knowledge, based solely on a review of the copies of the
reports furnished to the Company and written representations that no other
reports were required during the fiscal year ended December 31, 1994, the
Company's directors and executive officers complied with all applicable Section
16(a) filing requirements.
__________________________________
(1) The Michigan State Treasurer has sole voting power and sole dispositive
power as to all 5,053,145 Shares. The foregoing ownership information is based
upon oral information furnished to the Company on behalf of the Michigan State
Treasurer on February 10, 1995, and confirmed in writing by the Company.
-40-
<PAGE> 46
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Company's executive compensation program is overseen and administered by
the Compensation Committee of the Board of Directors, composed entirely of
independent Directors. The Committee reviews and recommends, and the Board of
Directors determines considering such recommendations, all matters involving
Mr. Burns' compensation, other than the approval of the long-term component
(stock options) of his compensation, which remains the responsibility of the
Committee under applicable tax requirements. Compensation actions affecting
executive officers of the Company other than Mr. Burns are based upon
recommendations made to the Committee by Mr. Burns. The Committee reviews Mr.
Burns' recommendations with respect to the long-term component of these
executive officers' compensation and determines the appropriate awards.
Recommendations with respect to the remaining components of these executive
officers' compensation are reviewed and evaluated by the Committee and, upon
approval, are forwarded to the Board for final review and approval. No member
of the Committee is eligible to participate in any of the executive
compensation plans or programs that the Committee oversees. Further, there are
no interlocks between the members of the Committee and any executive officer.
In 1994, the Committee reviewed but, except as discussed below, did not
significantly change any of the Company's executive compensation policies or
programs. Among other matters, the Committee considered the possible effects
of the new tax law that limits the deductibility by the Company of compensation
in excess of $1 million paid to certain of the Company's executive officers.
In response to this new law, the Committee recommended to the Board and the
Board has proposed to the shareholders their approval of two new
performance-based executive compensation plans designed to meet these new tax
law requirements (See "Deductibility of Executive Compensation").
Evaluation Of Executive Performance
In its evaluation of executive performance, the Committee employs criteria
designed to motivate individual executives. The Committee believes that the
executive compensation program strengthens the Company's ability to attract,
retain, motivate and appropriately reward those individuals who are responsible
for the Company's short-term and long-term profitability, growth and return to
shareholders. The Company's compensation program is designed to link executive
compensation to both individual performance and the performance of the Company
and the Committee believes that total compensation should increase or decrease
with such performance. As a result, a significant portion of each executive
officer's total compensation opportunity is at risk, to be earned only if
specific financial and individual goals are met. In 1994, 57% of Mr. Burns'
total cash compensation opportunity was at risk and an average of 55% of total
cash compensation opportunity was at risk for the other named executive
officers.
-41-
<PAGE> 47
The Committee reviews the executive compensation program continuously to ensure
its effectiveness and to ensure that the program remains externally competitive
within the range that the Committee considers appropriate, based upon the
Company's performance. Each element of the program is compared to the
practices of several similar companies (companies with sales levels and/or
financial characteristics similar to those of the Company) contained in survey
data analyzed by management and by Hewitt Associates and Frederick W. Cook &
Co., Inc., independent compensation consultants retained by the Company. This
data includes information regarding various components of compensation and
benefits provided to executives holding comparable positions at similar
companies and is referenced by the Committee to aid in setting executive
compensation within the median range for companies similar to the Company.
The Company's competitors for executive talent are not necessarily the same
companies that would be included in a peer group established to compare
shareholder returns. For purposes of the five-year stock performance
comparison graph, the Company has identified the Dow Jones Transportation 20 as
its peer group. The Company, however, generally recruits executive talent from
companies other than those comprising this peer group. Since these non-peer
group companies compete with the Company for, and are often the source of,
executive talent, the Committee believes that they are the most appropriate
comparison group for purposes of compensation decisions. Therefore, the
comparable companies for purposes of executive compensation are not the same as
the peer group index used in the five-year stock performance comparison graph
included in this Proxy Statement.
The Company's executive compensation program consists of three key elements:
(1) base salary, (2) annual cash incentive awards and (3) long-term incentive
awards, typically in the form of stock options. In addition, executive
officers receive a range of employee benefits generally available to all
employees of the Company, including participation in a retirement plan, a
savings incentive plan, a benefit restoration plan and a medical plan. While
each element of compensation is reviewed separately, the Committee takes into
account the total compensation and benefits package offered by the Company to
each executive officer in making compensation decisions. The Committee
believes that the total package represents an attractive compensation and
benefits program. The goal is for the program to be flexible with the ability
to be customized to attract and motivate the talent necessary to execute the
Company's business strategy.
In evaluating management's 1994 performance, the Committee considered the
Company's financial results, which included record revenue and earnings, the
continued refocusing of the Company as a provider of transportation "solutions"
and management's progress toward implementing its stated strategic initiatives.
The Committee also recognized the Company's substantial increase in return on
equity in 1994 which represents significant progress toward the Company's
long-term goal of a 17% return on equity.
-42-
<PAGE> 48
Base Salary
Base salaries for executive officers are determined by assigning each executive
officer to a pay grade and range which indicates the level of responsibility
associated with that executive officer's position and the importance of that
position to the operations of the Company. Salary levels for executive
officers are competitive in comparison to salary levels at similar companies
with which the Company competes for executive talent. In making decisions to
adjust individual salary levels, the Committee considers Company performance,
the executive officer's individual performance and position in the existing
salary range, and the external comparative data provided by the Company's
outside compensation consultants. The Committee, however, does not employ any
predetermined formula or assign any particular weight to any individual
criterion in making these adjustments.
Mr. Burns' salary in 1994 remained at the level set in June 1992. In December
1994, however, in accordance with the Committee's emphasis on performance-based
compensation, the Committee awarded Mr. Burns options to purchase 130,000
Shares in lieu of an increase in his base salary. These options were granted
at the fair market value of the Company's stock on the date of grant and vest
in five equal installments over a four-year period commencing on the date of
grant. The Ryder System, Inc. Stock for Merit Increase Replacement Plan, which
is being recommended by the Board of Directors to the shareholders for their
approval at the Annual Meeting, will provide an opportunity for the majority of
executive officers of the Company, including all of the named executive
officers, to elect to receive stock options in lieu of future merit salary
increases.
Annual Incentive Awards
The Company's annual incentive compensation program provides for the payment of
cash bonuses, as a percentage of base salary, to executive officers and other
key employees of the Company based upon Company financial performance and
individual performance. Bonus payouts are primarily driven by the Company's
financial results with approximately 85% of the maximum bonus opportunity based
upon financial results and approximately 15% of the maximum bonus opportunity
based upon individual performance. The financial results-based portion of the
bonus awards is based upon annual financial performance targets set in the
Company's Business Plan, which is approved by the Board of Directors at the
beginning of each year and used to manage the Company's business. These
financial performance targets are measured by net after-tax return on assets
("NAT ROA"), net before tax ("NBT") earnings, (for two executive officers in
1994) business unit revenue and (for one executive officer in 1994)
quantifiable strategic benchmarks tied to new markets and accounts. The
specific targets are considered confidential by the Company and are not
included in this Report in order to avoid compromising the Company's
competitive position. When determining these annual bonus plan targets, the
Committee strives to align the bonus plan with the Company's long-term goals so
that strategic focus is maintained. The Committee believes that improvements
in these financial measures will, over time, result in the Company reaching its
long-term return
-43-
<PAGE> 49
on equity goal and the maximization of stockholder value. Accordingly
individual cash bonuses are linked directly to these performance measurements.
Executive officers of the Company, other than Mr. Burns, are eligible for bonus
awards in an amount ranging from 0% to 100% of base salary based upon Company
performance and 0% to 20% of base salary based upon their individual
performance. Award opportunities are set to provide above-median compensation
in comparison to comparable companies in a year when Company performance
exceeds financial performance targets and below-median compensation in
comparison to comparable companies in a year when performance is below these
targets. In February of 1995, each of the named executive officers of the
Company was awarded the cash bonus illustrated in the Summary Compensation
Table on page __ based upon the Committee's review of the Company's (or
applicable business unit's) 1994 financial performance and its success in
meeting the 1994 financial performance targets and each executive's individual
performance during 1994.
Mr. Burns was eligible for a 1994 incentive award of up to 110% of his base
salary based upon Company performance, measured by NAT ROA and NBT earnings,
and an additional award of up to 20% of his base salary based upon his
individual performance. Since the Business Plan targets set by the Board for
the Company's 1994 financial performance were achieved, Mr. Burns received a
bonus equal to 98.5% of his base salary based upon Company performance. Mr.
Burns also received an individual performance award equal to 20% of his base
salary based upon the Committee's evaluation of Mr. Burns' contributions toward
the Company's achievement of record financial results in 1994 and his
accomplishment of other individual goals which he presented to the Board at the
beginning of 1994. These goals included progress in the Company's focus on
marketing and its reengineering projects as well as progress in organizational
and management development.
Long-Term Incentive Awards
To encourage strategic decision-making and tie executive compensation directly
to shareholder return, the Committee believes that a significant portion of
executive compensation should be comprised of long-term incentives. The
Company's 1980 Stock Incentive Plan provides such an incentive through the
award of stock options to executive officers and other key executives at the
discretion of the Committee. Under this Plan, stock options may only be
granted at the fair market value of the Company's stock on the date of grant
and the executive receives a benefit only if the price of the Company's stock
appreciates. In addition, the Company's executive stock ownership guidelines
tie executives receiving stock options directly to the future performance of
the Company, while the amount of stock owned by these executives may be
considered by the Committee in determining future awards (See "Stock Ownership
Program").
The Company has no policy regarding the timing and frequency of stock option
grants, although stock option awards generally have been made on an annual
basis to the Company's executive officers and on some occasions upon the hiring
of a new executive.
-44-
<PAGE> 50
In 1994, the Committee made such an annual grant to certain key executives of
the Company, including each of the named executive officers, utilizing three
criteria to determine individual awards: current individual performance,
potential for promotion and impact on Company performance. These options were
granted at the fair market value of the Company's stock on the date of grant
and vest over a two-year period.
In making its determination of the total amount of options to be granted in
1994, the Committee considered the amount of previous awards and determined
that the 1994 option awards would be granted at a median level in comparison to
similar companies. Additional awards of stock options were granted to certain
key executive officers, including two of the named executive officers, in 1994
as a further incentive to accomplish financial performance objectives and give
these executives a larger and more meaningful stake in the Company. These
additional options were granted at the fair market value of the Company's stock
on the date of grant and will vest the earlier of eight years after the date of
grant or, after a minimum of two years, when the price per share of the
Company's stock reaches $45, almost double the exercise price of the options,
on the last business day of each of three consecutive months.
In 1994, in addition to the stock options which Mr. Burns received in lieu of a
merit increase to his base salary, Mr. Burns was granted options to purchase
70,000 shares as an incentive to continue his efforts toward improving the
long-term financial performance of the Company and based upon the Committee's
judgment of Mr. Burns' importance to the attainment of those long-term goals.
Deductibility of Executive Compensation
The Committee has reviewed the Company's executive compensation program in
light of recent changes to the Internal Revenue Code relating to the
disallowance of deductions for compensation in excess of $1 million to certain
executive officers. The tax law changes include an exception for
"performance-based" compensation, including stock options, provided certain
requirements are met. The Company's 1980 Stock Incentive Plan discussed
earlier meets these requirements. Accordingly, stock options awarded to the
Company's executive officers in 1994 are eligible for the "performance-based"
compensation exception. The proposed Ryder System, Inc. 1995 Stock Incentive
Plan (see page __) and the proposed Ryder System, Inc. Stock for Merit Increase
Replacement Plan (see page __) are designed to meet these new requirements as
well and are being proposed to the shareholders for their approval partially in
response to these tax law changes. The annual incentive awards granted to the
Company's executive officers in 1994 are not eligible for the
"performance-based" exception because they are based in part on individual
performance goals that are not deemed "performance-based" by the tax law
changes. The Committee, however, believes that these individual goals are a
valuable part of the annual incentive award and does not believe that
eliminating these individual performance measures from the annual incentive
program would be in the best interests of the Company and its shareholders. In
addition, the Committee does not believe that the amount of any deduction
foregone by the Company with respect to the annual incentive awards would be
material in comparison to the value of this program. The
-45-
<PAGE> 51
Committee will continue to evaluate its position on these tax law changes in
consultation with its outside compensation advisers as regulations are
finalized.
Stock Ownership Program
In 1993, the Board of Directors adopted guidelines for stock ownership by all
executives of the Company. Under these guidelines, executives are encouraged
to own Company stock equal in value to various multiples of their annual
salary.
MARK H. WILLES [CHAIRMAN], EDWARD T. FOOTE II, HOWARD C. KAUFFMANN, LYNN M.
MARTIN, PAUL J. RIZZO, HICKS B. WALDRON AND ALVA O. WAY.
-46-
<PAGE> 52
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the annual and long-term compensation which the
Company paid to, or deferred for, those persons who were at December 31, 1994
(a) the chief executive officer and (b) each of the other four most highly
compensated executive officers of the Company (collectively, the "named
executive officers") for services rendered in 1994, 1993 and 1992:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
AWARDS
---------------------------------------------------------------
OTHER ANNUAL SECURITIES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS/LIMITED SARs(2) COMPENSATION(3)
($) ($) ($)(1) (#) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
M. Anthony Chairman of the 1994 725,000 860,000 56,627 200,000 12,688
Burns Board, President 1993 725,000 460,000 4,219 60,000 12,642
and Chief Executive
Officer 1992 693,750 810,000 3,370 54,712 11,541
- ------------------------------------------------------------------------------------------------------------------------------------
Dwight D. Denny President - Ryder 1994 300,000 315,000 2,994 90,000 9,330
Commercial Leasing 1993 260,000 225,862 2,813 25,000 6,316
& Services 1992 220,000 251,680 2,246 20,405 4,575
- ------------------------------------------------------------------------------------------------------------------------------------
James M. Herron Senior Executive 1994 358,000 403,000 2,994 25,000 18,257
Vice President and 1993 336,917 275,427 2,813 23,000 16,884
General Counsel 1992 318,500 361,000 2,246 22,432 13,854
- ------------------------------------------------------------------------------------------------------------------------------------
Edwin A. Huston Senior Executive 1994 434,167 485,000 2,994 30,000 16,485
Vice President - 1993 413,250 337,842 2,813 25,000 16,425
Finance and Chief 1992 391,167 437,000 2,246 25,715 14,394
Financial Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Larry S. Mulkey President - Ryder 1994 285,833 280,000 2,994 55,000 9,952
Dedicated 1993 240,833 180,155 2,813 25,000 7,023
Logistics, Inc. 1992 188,833 174,783 2,246 23,069 5,570
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
____________________
(1) This column represents amounts reimbursed for the payment of income taxes
on certain perquisites provided to these executive officers. Other
perquisites and personal benefits furnished to the named executive officers,
other than Mr. Burns, do not meet the disclosure thresholds established under
SEC regulations and are not included in this column. Of the 1994 amount shown
for Mr. Burns, $25,663 represents the incremental cost to the Company for his
personal use of the Company aircraft. The balance of the 1994 amount shown for
Mr. Burns includes a Company provided car, a tax planning allowance and other
perquisites.
(2) Stock option and Limited SAR grants generally vest in 50% annual
installments commencing with the first anniversary of the date of grant. The
May 1994 grant will vest 100% at the earlier of eight years or, after a minimum
of two years, when the average of the high and low prices of a Share on the
last business day of each of three consecutive months exceeds $45 per Share.
The December 1994 grant will vest in 20% annual installments commencing with
the date of grant. Each named executive officer who received a grant of stock
options received a number of Limited SARs equal to the number of Shares subject
to such stock option. The numbers given reflect an option with a tandem
Limited SAR as a single unit. Under the antidilution provisions of the
Company's 1980 Stock Incentive Plan, as amended and restated as of October 22,
1993, upon a payment of a special dividend effecting the spin off of the
Company's aviation services business (Aviall, Inc.) on December 7, 1993, all
then outstanding stock option grants were converted so that as to each such
grant there was an increased number of ex-dividend Shares at a lower exercise
price per Share and the optionees' resulting spreads were the same as they were
prior to the dividend.
(3) This column is composed of: (a) contributions to the 401(k) Plan in the
amount of $400, $400, and $200 for each named executive officer for 1994, 1993
and 1992, respectively; (b) dollar value of premiums for compensatory
split-dollar insurance payments for Mr. Burns in the amounts of $355, $315, and
$960 for 1994, 1993 and 1992, respectively; for Mr. Denny in the amounts of
$105, $80 and $0 for 1994, 1993, and 1992, respectively; for Mr. Herron in the
amounts of $507, $441, and $1,516 for 1994, 1993, and 1992, respectively; for
Mr. Huston in the amounts of $446, $398, and $898 for 1994, 1993, and 1992,
respectively; and for Mr. Mulkey in the amounts of $127, $113, and $432 in
1994, 1993, and 1992, respectively; (c) premiums paid under the Supplemental
Retiree Life Insurance Plan for Mr. Burns in the amounts of $3,795, $3,789, and
$2,243 for 1994, 1993 and 1992, respectively; for Mr. Denny in the amounts of
$3,459, $3,453, and $2,090 for 1994, 1993, and 1992, respectively; for Mr.
Herron in the amounts of $8,380, $8,353, and $4,448 for 1994, 1993, and 1992,
respectively; for Mr. Huston in the amounts of $4,805, $4,793 and $2,462 for
1994, 1993, and 1992, respectively; and for Mr. Mulkey in the amounts of
$3,484, $3,479, and $2,049 for 1994, 1993, and 1992, respectively; (d) premiums
paid under the Supplemental Long Term Disability Insurance Plan for Mr. Burns
in the amounts of $8,138, $8,138, and $8,138 for 1994, 1993, and 1992,
respectively; for Mr. Denny in the amounts of $5,366, $2,383, and $2,285 for
1994, 1993, and 1992, respectively; for Mr. Herron in the amounts of $8,970,
$7,690, and $7,690 for 1994, 1993, and 1992, respectively; for Mr. Huston in
the amounts of $10,834, $10,834, and $10,834 for 1994, 1993, and 1992,
respectively; and for Mr. Mulkey in the amounts of $5,941, $3,031, and $2,889
for 1994, 1993, and 1992, respectively.
-47-
<PAGE> 53
SEVERANCE AGREEMENTS
The Company has entered into severance agreements with each executive officer,
including the named executive officers, and other key employees of the Company
and its subsidiaries, which provide that if the Company terminates the
employment of an executive for reasons other than death, disability or cause,
or, if within the three-year period commencing with a change of control of the
Company (as defined on page ___ of Appendix A), the executive terminates
employment with the Company for good reason, the Company will provide the
executive with a multiple of salary and bonus ranging from a maximum of three
times salary and three times bonus for the highest level executive to a minimum
of .5 times salary and, for each year of service, one month bonus (subject to a
maximum of 12 months bonus) for lower level executives, as well as various
benefits and perquisites, net of excise taxes. In the event of a termination
of employment and, if applicable, a change of control of the Company, which
triggers the provisions of a severance agreement, Mr. Burns would be entitled
to three times salary and three times bonus, Messrs. Denny, Herron, and Huston
would be entitled to three times salary and two times bonus and Mr. Mulkey
would be entitled to two times salary and two times bonus.
-48-
<PAGE> 54
OPTION GRANTS
The following table provides information regarding the grant of stock options
to the named executive officers in fiscal year 1994. In addition, in
accordance with SEC regulations, hypothetical gains of 5% and 10% required by
the SEC along with a third column representing a 0% gain (listed in the table
under "Potential Realizable Value at Assumed Annual Rates of Stock Price
Appreciation for Option/Limited SAR Term") are shown for these stock options.
These hypothetical gains are based on assumed rates of annual compound stock
price appreciation of 0%, 5% and 10% from the date the stock options were
granted over the full option term of ten (10) years. Each named executive
officer also received a grant of one Limited SAR in tandem with each Common
Share subject to the stock option. Such Limited SAR may only be exercised in
the event of a change of control of the Company if the named executive officer
is at that time a Section 16(b) insider.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
OPTION/LIMITED SAR GRANTS IN FISCAL YEAR 1994
- -----------------------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE(1)
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION/LIMITED SAR TERM
- -----------------------------------------------------------------------------------------------------------------------------
NUMBER(2) % OF TOTAL
OF SECURITIES OPTIONS/
UNDERLYING LIMITED SARs
OPTIONS/ GRANTED TO
LIMITED EMPLOYEES IN EXERCISE
SARs FISCAL YEAR PRICE PER EXPIRATION
NAME GRANTED 1994 SHARE(3) DATE(4) 0% 5% 10%
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
M. Anthony Burns 70,000 5% $25.38 October 20, 2004 $0 $1,117,074 $2,830,885
130,000 9% 21.94 December 14, 2004 0 1,793,529 4,545,154
Dwight D. Denny 60,000 4% 24.06 May 5, 2004 0 907,967 2,300,966
30,000 2% 25.38 October 20, 2004 0 478,746 1,213,236
James M. Herron 25,000 2% 25.38 October 20, 2004 0 398,955 1,011,030
Edwin A. Huston 30,000 2% 25.38 October 20, 2004 0 478,746 1,213,236
Larry S. Mulkey 30,000 2% 24.06 May 5, 2004 0 453,983 1,150,483
25,000 2% 25.38 October 20, 2004 0 398,955 1,011,030
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
______________________
(1) If the 5% or 10% annual compound stock price appreciation shown in the
table were to occur, the price of the May 1994 grant would be $39.20 or $62.41,
respectively, on May 5, 2004; the October 1994 grant would be $41.33 or $65.82,
respectively, on October 20, 2004; and the December 1994 grant would be $35.73
or $56.90, respectively, on December 14, 2004; and the appreciation in the
market value of the Company's Common Stock would be $1,191,868,742 and
$3,020,429,400, respectively, for the May 1994 grant; $1,256,879,764 and
$3,185,180,095, respectively, for the October 1994 grant; and $1,086,612,801
and $2,753,690,181, respectively, for the December 1994 grant. The
appreciation during this period realized by the five named executive officers
from each of these stock options would be 0.11% (May 1994), 0.23% (October
1994), and 0.17% (December 1994) of the gain to all Stockholders under these
two cases. The use of the 5% and 10% rates as required by the SEC is not
intended by the Company to forecast possible future appreciation of the
Company's Common Stock.
(2) Stock options and Limited SAR grants generally vest in 50% annual
installments commencing with the first anniversary of the date of grant. The
May 1994 grant will vest 100% at the earlier of eight years or, after a minimum
of two years, when the average of the high and low prices of a Share exceeds
$45 per Share on the last business day of each of three consecutive months.
The December 1994 grant will vest in 20% annual installments commencing with
the date of grant. Each named executive officer who received a grant of stock
options received Limited SARs equal to the number of Shares subject to such
stock option. The numbers given reflect an option with a tandem Limited SAR as
a single unit.
(3) Represents fair market value as of date of grant.
(4) Ten (10) years from grant date of May 6, 1994, October 21, 1994, or
December 15, 1994.
-49-
<PAGE> 55
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table provides information, with respect to the named executive
officers, regarding the exercise of options during fiscal year 1994 and
unexercised options held as of the end of fiscal year 1994.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1994 AND FISCAL YEAR-END 1994
OPTION VALUES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-MONEY
UNEXERCISED OPTIONS/LIMITED SARS OPTIONS AT FISCAL YEAR-END 1994(1)
AT FISCAL YEAR-END 1994
SHARES --------------------------------------------------------------------------
ACQUIRED VALUE
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
M. Anthony Burns 0 $0 523,077 204,000 $327,975 $0
Dwight D. Denny 0 0 77,503 102,661 204,628 0
James M. Herron 0 0 190,667 36,500 354,604 0
Edwin A. Huston 0 0 223,603 42,500 161,125 0
Larry S. Mulkey 0 0 86,164 68,137 82,153 0
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
__________________________________
(1) Amounts reflect gains on outstanding stock options based on a fair market
value of $21.69 for the Common Stock, as determined by using the average of the
high and low price on December 30, 1994. As no change in control of the
Company has occurred the tandem Limited SARs had no calculable value at such
date.
-50-
<PAGE> 56
PENSION BENEFITS
The Company covers substantially all regular full-time employees who are not
covered by plans administered by labor unions or plans sponsored by a
subsidiary or division of the Company ("Division Plans") under the Ryder
System, Inc. Retirement Plan ("Retirement Plan"). Benefits payable under the
Retirement Plan are based on an employee's career earnings with the Company and
its subsidiaries. At normal retirement age of 65, a participant is entitled to
a monthly pension benefit payable for life. The annual pension benefit, when
paid in the form of a life annuity with no survivor's benefits, is generally
equal to the sum of 1.45% of the first $15,600 of compensation and bonus
received, plus 1.85% of the portion of such compensation and bonus in excess of
$15,600 during each such year while a Retirement Plan member. Accrued benefits
under the Retirement Plan have been improved from time to time.
Retirement Plan benefits vest at the earlier of the completion of five (5)
years of credited service or upon reaching age 65, provided, however, that in
the event of a change of control of the Company, all participants will be fully
vested and the term "accrued benefit" will include the value of early
retirement benefits for any participant age 45 or above or with 10 or more
years of service. These benefits are not subject to any reduction for Social
Security benefits or other offset amounts. An employee's pension benefits may
be paid in certain alternative forms having actuarially equivalent values.
The maximum annual benefit under a qualified pension plan is currently $120,000
beginning at the Social Security retirement age (currently age 65). The
maximum compensation and bonus that may be taken into account in determining
annual retirement accruals is currently $150,000. The Company maintains a
non-qualified, unfunded benefit plan, called the Benefit Restoration Plan (the
"Restoration Plan"), which covers those participants of the Retirement Plan and
certain Division Plans whose benefits are reduced by the Internal Revenue Code
or other United States or Canadian laws. A participant in the Restoration Plan
is entitled to a benefit equaling the difference between the amount of benefits
the participant is entitled to without reduction and the amount of benefits the
participant is entitled to after the reductions.
The table below sets forth annual pension benefit projections assuming each
named executive officer remains continuously employed by the Company at current
compensation levels until retirement at the normal retirement date.
ESTIMATED ANNUAL BENEFITS AT RETIREMENT(1)
(IN THE FORM OF A SINGLE LIFE ANNUITY)
M. Anthony Burns $605,512
Dwight D. Denny $260,502
James M. Herron $211,081
Edwin A. Huston $314,487
Larry S. Mulkey $219,294
- ---------------------
(1) These amounts include benefits under the Retirement Plan and the
Restoration Plan combined.
-51-
<PAGE> 57
In addition to the Retirement Plan and the Restoration Plan, the Company
maintains the Split Dollar Life Insurance Plan and Deferred Compensation Plan
for the benefit of each named executive officer and certain other key
executives who elect to participate. The Split Dollar Life Insurance Plan
provides participants with additional life insurance and the Deferred
Compensation Plan acts as a supplemental pension benefit. The participant pays
a portion of the premium and the Company pays that portion of the premium which
is equal to the increase in cash surrender value of the policy during each
policy year. In the event of death prior to normal retirement, the face value
of the policy is paid to the participant's chosen beneficiary and the Company's
investment in the policy is recaptured by a supplemental term policy maintained
by the Company. In the event a participant ceases to be employed by the
Company prior to the participant's normal retirement date, the participant has
the right to purchase the policy from the Company for its cash surrender value.
Assuming normal retirement dates, the named executive officers would have the
following estimated minimum annual benefit shown below:
M. Anthony Burns $14,077
Dwight D. Denny $ 5,247
James M. Herron $ 5,064
Edwin A. Huston $ 5,700
Larry S. Mulkey $ 9,780
-52-
<PAGE> 58
STOCK PERFORMANCE
COMPARISON OF 5 YEAR CUMULATIVE RETURN
AMONG RYDER SYSTEM, INC., S&P 500 INDEX & DOW JONES TRANSPORTATION 20 INDEX(1)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RYDER SYSTEM, INC. $100 $76 $106 $148 $166 $141
- ------------------------------------------------------------------------------------------------------
S&P 500 INDEX $100 $97 $126 $136 $150 $152
- ------------------------------------------------------------------------------------------------------
DOW JONES TRANSPORTA- $100 $79 $119 $129 $159 $133
TION 20 INDEX
======================================================================================================
</TABLE>
__________________________________
(1) Assumes for comparison that the value of the Company's Common Stock and
of each index was $100 on December 31, 1989, and that all dividends, including
the Company's distribution of Aviall, Inc. common stock in December 1993, were
reinvested. Past performance is not necessarily an indicator of future
results.
-53-
<PAGE> 59
COST OF SOLICITATION
The cost of solicitation of proxies, including expenses in connection with the
preparation and mailing of this Proxy Statement, will be borne by the Company.
The Company has retained D. F. King & Co., Inc. to aid in the solicitation of
proxies. For their services, D. F. King & Co., Inc. will receive a fee
estimated at $18,000 plus reimbursement of reasonable out-of-pocket expenses.
The Company does not otherwise expect to pay any compensation for the
solicitation of proxies, but will reimburse brokers and nominees for their
reasonable expenses for sending proxy material to principals and obtaining
their proxies. In addition to solicitation by mail, directors, officers and
employees of the Company may solicit proxies personally or by telephone or
other means of communication.
SUBMISSION OF STOCKHOLDER PROPOSALS FOR
THE 1996 ANNUAL MEETING
Pursuant to SEC regulations, in order to be included in the Company's Proxy
Statement for the 1996 Annual Meeting, Stockholder proposals must be received
at the principal office of the Company, 3600 N.W. 82nd Avenue, Miami, Florida,
33166, Attention: Secretary, no later than November __, 1995, as well as meet
all other SEC requirements. In addition, the Company's By-Laws provide that
any Stockholder who desires either to bring a Stockholder proposal before an
annual meeting or to present a nomination for director at an annual meeting
must give advance notice to the Company regarding the proposal or nominee. The
By-Laws require that written notice be delivered to the Secretary of the
Company not less than 60 days prior to the date of the annual meeting at which
the proposal or nomination is to be presented and contain certain information
regarding the Stockholder desiring to present a proposal or make a nomination,
as the case may be. A copy of the By-Laws is available upon request from the
Secretary of the Company.
RYDER SYSTEM, INC.
H. Judith Chozianin
Secretary
March 20, 1995
Miami, Florida
-54-
<PAGE> 60
APPENDIX A
RYDER SYSTEM, INC.
STOCK FOR MERIT INCREASE REPLACEMENT PLAN
1. Purpose Of This Plan
The purpose of the Ryder System, Inc. Stock for Merit Increase Replacement Plan
(this "Plan") is to give key employees of Ryder System, Inc. (the "Company")
and its subsidiaries who are primarily responsible for the management of the
business of the Company the opportunity to receive stock option grants in lieu
of merit salary increases, thereby encouraging focus on the growth and
profitability of the Company and its Common Stock (as defined in Section 4).
2. Effective Date And Term Of This Plan
This Plan shall become effective on May 5, 1995, subject to the approval of the
shareholders of the Company. Unless previously terminated in accordance with
Section 14 of this Plan, this Plan shall terminate on the close of business on
May 4, 2005, after which no Options (as defined in Section 4) shall be granted
under this Plan. Such termination shall not affect any Options granted prior
to such termination.
3. Administration Of This Plan
This Plan shall be administered by the Compensation Committee (the "Committee")
of the Board of Directors of the Company which shall consist of not less than
three members of the Board of Directors, each of whom shall be a "disinterested
person" as defined in Rule 16b-3 under the Securities Exchange Act of 1934, as
amended (the "1934 Act"). Additionally, all members of the Committee shall be
"outside directors" as defined or interpreted for purposes of Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"). A majority of the
Committee shall constitute a quorum, and the acts of a majority of the members
present at any meeting at which a quorum is present, or acts approved in
writing by all members of the Committee without a meeting, shall be the acts of
the Committee.
4. Common Stock Subject To This Plan
The shares of Common Stock of the Company, par value $.50 per share ("Common
Stock"), to be issued upon the exercise of an option to purchase Common Stock
granted in lieu of a merit salary increase (an "Option") may be made available
from the authorized but unissued Common
-55-
<PAGE> 61
Stock, shares of Common Stock held in the treasury, or Common Stock purchased
on the open market or otherwise.
Subject to the provisions of the next succeeding paragraph, the maximum
aggregate number of shares of Common Stock for which Options may be granted
under this Plan shall be 500,000 shares. If an Option granted under this Plan
expires or is terminated without having been exercised in full, the unpurchased
or forfeited shares or rights to receive shares shall become available for
grant to other employees. No employee shall be eligible to receive any Options
or series of Options covering, in the aggregate, more than 300,000 shares
during the term of this Plan.
If there shall be any change in the shares of Common Stock subject to this Plan
or any Option granted under this Plan as a result of merger, consolidation,
reorganization, recapitalization, stock dividend, stock split or other change
in the corporate structure, adjustments may be made by the Committee, as it may
deem appropriate, in the aggregate number and kind of shares subject to this
Plan or to any outstanding Option, and in the terms and provisions of this Plan
and any Options granted hereunder, in order to reflect, on an equitable basis,
any such change in the shares contemplated by this paragraph. Any adjustment
made by the Committee pursuant to this paragraph shall be conclusive and
binding upon the grantee of an Option, the Company and any other related
person.
5. Eligible Persons
Only persons who are members of the Company's senior leadership group, known as
the "Executive Committee", or other key executives of the Company or its
subsidiaries selected by the Committee, shall be eligible to receive grants of
Options under this Plan in lieu of a merit salary increase. No grant shall be
made to any member of the Committee or any other non-employee director.
No executive eligible to participate in this Plan may receive a grant of
Options unless the executive has made an irrevocable election to receive
Options in lieu of a merit salary increase at least six (6) months in advance
of the date of grant of such Option.
6. Purchase Price Of Options
The purchase price for each share of Common Stock issuable under an Option
shall not be less than 100 percent (100%) of the Fair Market Value of a share
of Common Stock on the date of grant. "Fair Market Value" as used in this Plan
shall equal the mean of the high and low price of the Common Stock as reported
by the composite transaction reporting system for securities listed on the New
York Stock Exchange on the applicable date.
-56-
<PAGE> 62
7. Option Term
The term of each Option grant as determined by the Committee shall not exceed
ten (10) years from the date of grant and shall expire as of the last day of
the designated term, unless terminated earlier under the provisions of this
Plan.
8. Option Type
Option grants may be either non-qualified stock options, governed by Section 83
of the Code, or incentive stock options, governed by Section 422(b) of the
Code.
9. Non-Transferability Of Options
No Option granted under this Plan shall be assignable or transferable by the
grantee except by will or the laws of descent and distribution. A grantee shall
forfeit any Option assigned or transferred, voluntarily or involuntarily, other
than as permitted under this Section. Each Option shall be exercised during
the grantee's lifetime only by the grantee or the grantee's guardian or legal
representative.
10. Exercise Of Options
Except as provided in Sections 12 and 13, and subject to any limitations under
Section 16 of the 1934 Act, each Option shall be exercisable as follows: (i)
twenty percent (20%) of the shares of Common Stock subject to an Option on the
date of grant and (ii) the remainder of the shares subject to such Option in
four equal annual installments on the first, second, third and fourth
anniversary of the date of grant.
Subject to the provisions of this Section 10, each Option may be exercised in
whole or, from time to time, in part with respect to the number of then
exercisable shares in any sequence desired by the grantee and without regard to
the date of grant of stock options under other plans of the Company; provided,
however, that any incentive stock option must be exercised in accordance with
Section 422(b) of the Code.
To exercise an Option, the grantee shall (i) give written notice to the Company
in form satisfactory to the Committee indicating the number of shares of Common
Stock which the grantee elects to purchase, (ii) deliver to the Company payment
of the full purchase price of the shares being purchased (A) in cash or a
certified or bank cashier's check payable to the order of the Company, or (B)
if the grantee elects with the approval of the Committee, in shares of Common
Stock having a Fair Market Value on the date of exercise equal to the purchase
price, or a combination of the foregoing having an aggregate Fair Market Value
equal to such purchase price, and (iii) deliver to the Secretary of the Company
such written representations, warranties
-57-
<PAGE> 63
and covenants as the Company may require to permit this Plan and any Options or
shares of Common Stock granted or issued hereunder to comply with any
applicable blue sky or other federal or state securities laws.
Upon proper exercise of any Option, the grantee shall be treated for all
purposes as the registered owner of the shares of Common Stock as to which the
Option has been exercised as of the close of business on the date of exercise.
11. Withholding Taxes On Option Exercise
Each grantee exercising an Option shall deliver to the Company payment in cash
or by check (as described in Section 10) equal to all federal, state and local
withholding taxes required to be collected by the Company in respect of the
exercise of such Option, and until such payment is made, the Company may, in
its discretion, retain all or a portion of the shares to be issued.
Notwithstanding the foregoing, to the extent permitted by law and pursuant to
such rules as the Committee may adopt, a grantee may authorize the Company to
satisfy any such withholding requirement by directing the Company to withhold
from any shares to be issued such number of shares as shall be sufficient to
satisfy the withholding obligation.
12. Exercise Of Options In The Event Of A Change Of Control
Notwithstanding any other provision of this Plan, unless otherwise determined
by the Committee prior to a Change of Control (as defined below), in the event
of a Change of Control, each Option not previously exercised or expired under
the terms of this Plan shall become immediately exercisable in full and shall
remain exercisable to the full extent of the shares of Common Stock available
thereunder, regardless of any installment provisions applicable thereto, for
the remainder of its term, unless the Grantee has been terminated for Cause (as
defined below) in which case the Options shall automatically terminate as of
the Committee's determination or the Grantee's termination, as appropriate.
If the Committee so determines prior to or during the thirty (30) day period
following the occurrence of a Change of Control, grantees of Options not
otherwise exercised or expired under the terms of this Plan may, in lieu of
exercising, require the Company to purchase for cash all such Options or
portions thereof for a period of sixty (60) days following the occurrence of a
Change of Control at the Price specified below; provided that Options subject
to this purchase requirement held by grantees who are subject to Section 16(b)
of the 1934 Act must have been held for at least six (6) months.
Any determination made by the Committee pursuant to this Section 12 may be made
as to all eligible Options or only as to certain of such Options specified by
the Committee. Once made, any determination by the Committee pursuant to this
Section 12 shall be irrevocable.
-58-
<PAGE> 64
For purposes of this Section 12 and otherwise, the following definitions shall
apply:
A "Change of Control" shall be deemed to have occurred if:
(i) a third person, including a "group" as defined in Section
13(d)(3) of the 1934 Act, but excluding any employee benefit plan or plans of
the Company and its subsidiaries and affiliates, becomes the beneficial owner,
directly or indirectly, of twenty percent (20%) or more of the combined voting
power of the Company's outstanding voting securities ordinarily having the
right to vote for the election of directors of the Company; or
(ii) the individuals who, as of June 26, 1987, constituted the
Board of Directors of the Company (the "Board" generally and as of June 26,
1987 the "Incumbent Board") cease for any reason to constitute at least
two-thirds (2/3) of the Board, or in the case of a merger or consolidation of
the Company, do not constitute or cease to constitute at least two-thirds (2/3)
of the board of directors of the surviving company (or in a case where the
surviving corporation is controlled, directly or indirectly, by another
corporation or entity, do not constitute or cease to constitute at least
two-thirds (2/3) of the board of such controlling corporation or do not have or
cease to have at least two-thirds (2/3) of the voting seats on any body
comparable to a board of directors of such controlling entity, or if there is
no body comparable to a board of directors, at least two-thirds (2/3) voting
control of such controlling entity), provided that any person becoming a
director (or, in the case of a controlling non-corporate entity, obtaining a
position comparable to a director or obtaining a voting interest in such
entity) subsequent to June 26, 1987 whose election, or nomination for election,
was approved by a vote of the persons comprising at least two-thirds (2/3) of
the Incumbent Board (other than an election or nomination of an individual
whose initial assumption of office is in connection with an actual or
threatened election contest, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the 1934 Act) shall be, for purposes of this
Plan, considered as though such person were a member of the Incumbent Board; or
(iii) there is a liquidation or dissolution of the Company or a sale
of all or substantially all of its assets.
If the Company enters into an agreement or series of agreements or the Board
passes a resolution which will result in the occurrence of any of the matters
described in subparagraphs (i), (ii) or (iii), and a grantee's employment is
terminated subsequent to the date of execution of such agreement or series of
agreements or the passage of such resolution, but prior to the occurrence of
any of the matters described in subparagraphs (i), (ii) or (iii), then, upon
the occurrence of any of the matters described in subparagraphs (i), (ii) or
(iii), a Change of Control shall be deemed to have retroactively occurred on
the date of the execution of the earliest of such agreement(s) or the passage
of such resolution.
"Cause" shall mean (i) an act or acts of fraud, misappropriation or
embezzlement on the grantee's part which result in or are intended to result in
the grantee's personal enrichment at the expense of the Company, (ii)
conviction of a felony, (iii) conviction of a misdemeanor involving
-59-
<PAGE> 65
moral turpitude, or (iv) willful failure to report to work for more than thirty
(30) continuous days not supported by a licensed physician's statement, all as
determined only by a majority of the Incumbent Board.
"Price" shall mean, upon the occurrence of a Change of Control, the excess
of the highest of:
(i) the highest closing price of the Common Stock reported by the
composite transaction reporting system for securities listed on the New York
Stock Exchange within the sixty (60) days preceding the date of exercise;
(ii) the highest price per share of Common Stock included
in a filing made by any person or group referred to in subparagraph (i) of the
definition of Change of Control on any Schedule 13D pursuant to Section 13(d)
of the 1934 Act as paid within the sixty (60) days prior to the date of such
report; and
(iii) the value of the consideration to be received by the holders
of Common Stock, expressed on a per share basis, in any transaction referred to
in subparagraph (iii) of the definition of Change of Control, with all noncash
consideration being valued in good faith by the Incumbent Board;
over the purchase price per share at which the related Option is exercisable as
applicable, except that incentive stock options are limited to the spread
between the Fair Market Value of Common Stock on the date of exercise and the
purchase price per share at which the related Option is exercisable.
13. Termination Of Employment
If the grantee's employment with the Company or any subsidiary terminates for
any reason other than as specified in the subsequent paragraphs of this Section
13, any Option shall terminate three (3) months after the later of (i) the date
of such termination or (ii) with respect to a non-qualified stock option, the
end of any severance period applicable to such grantee; provided, however, that
in the event of the death of the grantee during such three (3) month period,
such Option shall, to the extent it was exercisable on the termination date or
at the end of any applicable severance period, be exercisable by the grantee's
personal representatives, heirs or legatees for a period of one (1) year
commencing on the date of the grantee's death and shall terminate at the
expiration of such period.
If the termination of employment is due to the grantee's death, any Option
shall, to the extent it was exercisable on the termination date, continue to be
exercisable by such grantee's legal representatives, heirs or legatees for the
term of such Option.
If the termination of employment is due to the grantee's retirement or
disability, any non-qualified stock option not previously exercised or expired
shall continue to vest and be exercisable during
-60-
<PAGE> 66
the three (3) year period following the grantee's termination date, and to the
extent it is exercisable at the expiration of such three (3) year period, it
shall continue to be exercisable by such grantee or such grantee's legal
representatives, heirs or legatees for the term of such non-qualified stock
option. Any incentive stock option shall, to the extent it was exercisable on
the termination date, continue to be exercisable by such grantee or such
grantee's legal representatives, heirs or legatees for the term of such
incentive stock option; provided, however, that in order to qualify for the
special tax treatment afforded by Section 421 of the Code, incentive stock
options must be exercised within the three (3) month period commencing on the
termination date (the exercise period shall be one (1) year in the case of
termination by reason of disability, within the meaning of Section 22(e)(3) of
the Code). Incentive stock options not exercised within such three (3) month
period shall be treated as non-qualified stock options.
If a grantee is terminated for Cause (as defined in Section 12), all Options
with respect to such grantee shall automatically terminate as of the grantee's
termination date.
14. Amendments To This Plan
The Committee may at any time (i) terminate this Plan or (ii) modify or amend
this Plan in any respect, except that without shareholder approval the
Committee may not (A) materially increase the benefits accruing to grantees
under this Plan, if and to the extent required to maintain the qualification of
this Plan under the 1934 Act, (B) materially increase the number of securities
which may be issued under this Plan or (C) materially modify the requirements
as to eligibility for participation in this Plan. Should this Plan require
amendment to maintain full legal compliance because of rules, regulations,
opinions or statutes issued by the Securities and Exchange Commission, the U.S.
Department of the Treasury or any other governmental or governing body, then
the Committee or the Board may take whatever action, including but not limited
to amending or modifying this Plan, is necessary to maintain such compliance.
The termination or any modification or amendment of this Plan shall not,
without the consent of any grantee involved, adversely affect rights under an
Option previously granted to such grantee.
15. Miscellaneous Provisions
(a) Service on the Committee shall constitute service as a
director of the Company and members of the Committee shall be entitled to
indemnification, advancement of expenses and reimbursement as directors of the
Company pursuant to its Restated Articles of Incorporation, By-Laws,
resolutions of the Board of Directors of RSI or otherwise.
(b) No Employee shall have any claim or right to be granted an
Award under this Plan, nor having been selected as a Grantee for one Year, any
right to be a Grantee in any other Year. Neither this Plan nor any action
taken hereunder shall be construed as giving any Grantee any right to be
retained in the employ of the Company expressly reserves its right at any time
to dismiss any Grantee with or without cause.
-61-
<PAGE> 67
APPENDIX B
RYDER SYSTEM, INC. 1995 STOCK INCENTIVE PLAN
1. Purpose. The purpose of this Plan is to enable the Company to recruit
and retain those key executives most responsible for the Company's continued
success and progress, and by offering comparable incentives, to compete with
other organizations in attracting, motivating and retaining such executives,
thereby furthering the interests of the Company and its shareholders by giving
such executives a greater personal stake in and commitment to the Company and
its future growth and prosperity.
2. Definitions. For the purpose of this Plan:
(a) The term "Award" shall mean and include any Stock Option, SAR,
Limited SAR, Performance Unit or Restricted Stock Right granted under this
Plan.
(b) During the three (3) year period following a Change of
Control, the term "cause" as used in Section 7 and Section 14(a) of this Plan
with respect to any Stock Option shall mean (i) an act or acts of fraud,
misappropriation, or embezzlement on the Grantee's part which result in or are
intended to result in his personal enrichment at the expense of the Company,
(ii) conviction of a felony, (iii) conviction of a misdemeanor involving moral
turpitude, or (iv) willful failure to report to work for more than thirty (30)
continuous days not supported by a licensed physician's statement, all as
determined only by a majority of the Incumbent Board or the Committee, as the
case may be.
(c) A "Change of Control" shall be deemed to have occurred if:
(i) a third person, including a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the "1934
Act"), but excluding any employee benefit plan or plans of RSI and its
Subsidiaries and affiliates, becomes the beneficial owner, directly or
indirectly, of twenty percent (20%) or more of the combined voting power of
RSI's outstanding voting securities ordinarily having the right to vote for the
election of directors of RSI; or
(ii) the individuals who, as of June 26, 1987, constituted
the Board of Directors of RSI (the "Board" generally and as of June 26, 1987
the "Incumbent Board") cease for any reason to constitute at least two-thirds
(2/3) of the Board, or in the case of a merger or consolidation of RSI, do not
constitute or cease to constitute at least two-thirds (2/3) of the board of
directors of the surviving company (or in a case where the surviving
corporation is controlled, directly or indirectly, by another corporation or
entity, do not constitute or cease to constitute at least two-thirds (2/3) of
the board of such controlling corporation or do not have or cease to have
-62-
<PAGE> 68
at least two-thirds (2/3) of the voting seats on any body comparable to a board
of directors of such controlling entity, or if there is no body comparable to a
board of directors, at least two-thirds (2/3) voting control of such
controlling entity), provided that any person becoming a director (or, in the
case of a controlling non-corporate entity, obtaining a position comparable to
a director or obtaining a voting interest in such entity) subsequent to June
26, 1987 whose election, or nomination for election, was approved by a vote of
the persons comprising at least two-thirds (2/3) of the Incumbent Board (other
than an election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest, as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the 1934 Act)
shall be, for purposes of this Plan, considered as though such person were a
member of the Incumbent Board; or
(iii) there is a liquidation or dissolution of RSI or a
sale of all or substantially all of its assets.
If RSI enters into an agreement or series of agreements or the Board passes a
resolution which will result in the occurrence of any of the matters described
in subparagraphs (i), (ii) or (iii), and a Grantee's employment is terminated
subsequent to the date of execution of such agreement or series of agreements
or the passage of such resolution, but prior to the occurrence of any of the
matters described in subparagraphs (i), (ii) or (iii), then, upon the
occurrence of any of the matters described in subparagraphs (i), (ii) or (iii),
a Change of Control shall be deemed to have retroactively occurred on the date
of the execution of the earliest of such agreement(s) or the passage of such
resolution.
(d) The term "Code" shall mean the Internal Revenue Code of 1986
as it may be amended from time to time.
(e) The term "Committee" shall mean the Compensation Committee of
the Board of Directors of RSI constituted as provided in Section 5 of this
Plan.
(f) The term "Common Stock" shall mean the common stock of RSI as
from time to time constituted.
(g) The term "Company" shall mean RSI and its Subsidiaries.
(h) The term "Disability" shall mean total physical or mental
disability of a Grantee as determined by the Committee upon the basis of such
evidence as the Committee in its discretion deems necessary and appropriate.
(i) The term "Disinterested Person" shall mean any person who
qualifies as a disinterested person as defined in Rule 16b-3, as promulgated
under the 1934 Act, or any successor definition.
-63-
<PAGE> 69
(j) The term "Employee" shall mean a full-time salaried employee
of RSI or any Subsidiary (which term shall include salaried officers).
(k) The term "Fair Market Value" shall mean, with respect to the
Common Stock, the mean between the highest and lowest sale price for shares as
reported by the composite transaction reporting system for securities listed on
the New York Stock Exchange on the date as of which such determination is being
made or on the most recently preceding date on which there was such a sale.
(l) The term "Grantee" shall mean an Employee who is selected by
the Committee to receive an Award under this Plan and in the case of a deceased
Employee shall mean the beneficiary of the Employee.
(m) The term "Incentive Stock Option" shall mean a Stock Option
granted under this Plan or a previously granted Stock Option that is
redesignated by the Committee as an Incentive Stock Option which is intended to
constitute an incentive stock option within the meaning of Section 422(b) of
the Code.
(n) The term "Limited SAR" shall mean a Limited Stock Appreciation
Right granted by the Committee pursuant to Section 9 of this Plan.
(o) The term "Non-qualified Stock Option" shall mean a Stock
Option granted under this Plan which is not intended to qualify under Section
422(b) of the Code.
(p) The term "Offer" shall mean any tender offer or exchange offer
for Shares, other than one made by the Company, including all amendments and
extensions of any such Offer.
(q) The term "Option" shall mean any stock option granted under
this Plan.
(r) The term "Performance Goals" shall have the meaning set forth
in Section 10(c) of this Plan.
(s) The term "Performance Period" shall have the meaning set forth
in Section 10(d) of this Plan.
(t) The term "Performance Units" shall mean Performance Units
granted by the Committee pursuant to Section 10 of this Plan.
(u) The term "Plan" shall mean the Ryder System, Inc. 1995 Stock
Incentive Plan as the same shall be amended.
-64-
<PAGE> 70
(v) The term "Price" shall mean, upon the occurrence of a Change
of Control, the excess of the highest of:
(i) the highest closing price of the Common Stock
reported by the composite transaction reporting system for securities listed on
the New York Stock Exchange within the sixty (60) days preceding the date of
exercise;
(ii) the highest price per share of Common Stock included
in a filing made by any person or group referred to in subparagraph (i) of
Section 2(c) on any Schedule 13D pursuant to Section 13(d) of the 1934 Act as
paid within the sixty (60) days prior to the date of such report; and
(iii) the value of the consideration to be received by the
holders of Common Stock, expressed on a per share basis, in any transaction
referred to in subparagraph (iii) of Section 2(c), with all noncash
consideration being valued in good faith by the Incumbent Board;
over the purchase price per Share at which the related Option is exercisable as
applicable, except that Incentive Stock Options and, if and to the extent
required in order for the related Option to be treated as an Incentive Stock
Option, SARs and Limited SARs granted with respect to Incentive Stock Options,
are limited to the spread between the Fair Market Value of Common Stock on the
date of exercise and the purchase price per Share at which the related Option
is exercisable.
(y) The term "Restricted Period" shall have the meaning set forth
in Section 11(a) of this Plan.
(z) The term "RSI" shall mean Ryder System, Inc.
(aa) The term "Restricted Stock Rights" shall mean a Restricted
Stock Right granted by the Committee pursuant to Section 11 of this Plan.
(bb) The term "Retirement" shall mean retirement under the
provisions of the various retirement plans of the Company (whichever is
appropriate to a particular Grantee) as then in effect, or in the absence of
any such retirement plan being applicable, as determined by the Committee.
(cc) The term "SAR" shall mean a Stock Appreciation Right granted
by the Committee pursuant to the provisions of Section 8 of this Plan.
(dd) The term "Shares" shall mean shares of the Common Stock and
any shares of stock or other securities received as a result of the adjustment
provided for in Section 12 of this Plan.
-65-
<PAGE> 71
(ee) The term "Spread" with respect to a SAR shall have the meaning
set forth in Section 8(b) of this Plan, and with respect to a Limited SAR, the
meanings set forth in Sections 9(c) and 9(d) of this Plan.
(ff) The term "Stock Option" shall mean any stock option granted
under this Plan.
(gg) The term "Subsidiary" shall mean any corporation, other than
RSI, or other form of business entity more than fifty percent (50%) of the
voting interest of which is owned or controlled, directly or indirectly, by RSI
and which the Committee designates for participation in this Plan.
(hh) The term "Termination Date" shall mean the date that a Grantee
ceases to be employed by RSI or any Subsidiary for any reason; provided,
however, it shall mean the end of any severance period applicable to a Grantee
with respect to any Non-qualified Stock Options held by such Grantee.
(ii) The term "Year" shall mean a calendar year.
3. Shares of Stock Subject to this Plan.
(a) Subject to the provisions of Paragraph (b) of this Section 3,
no more than 3,300,000 Shares shall be issuable pursuant to grants under this
Plan. Shares issued pursuant to this Plan may be either authorized but
unissued or reacquired Shares held in the treasury.
(b) In the event any Stock Option or Restricted Stock Right
expires or terminates unexercised or any Restricted Stock Right is forfeited or
cancelled, the number of Shares subject to such Stock Option or Restricted
Stock Right shall again become available for issuance under this Plan, subject
to the provisions of Sections 7(a), 8(a), 9(b) and 10(i) of this Plan.
(c) No Grantee shall be eligible to receive any Stock Option or
series of Stock Options covering, in the aggregate, more than 800,000 Shares
during the term of this Plan.
4. Participation. Awards under this Plan shall be limited to key
executive Employees selected from time to time by the Committee.
5. Administration. This Plan shall be administered by the Compensation
Committee of the Board of Directors of RSI which shall consist of not less than
three members of the Board of Directors, each of whom shall be a Disinterested
Person. All members of the Committee shall be "outside directors" as defined
or interpreted for purposes of Section 162(m) of the Code. The Committee shall
have plenary authority, subject to the express provisions of this Plan, to (i)
select Grantees; (ii) establish and adjust Performance Goals and Performance
Periods for Performance
-66-
<PAGE> 72
Units; (iii) determine the nature, amount, time and manner of payment of Awards
made under this Plan, and the terms and conditions applicable thereto; (iv)
interpret this Plan; (v) prescribe, amend and rescind rules and regulations
relating to this Plan; (vi) determine whether and to what extent Stock Options
previously granted under this Plan shall be redesignated as Incentive Stock
Options and, in this connection, amend any Stock Option Agreement or make or
authorize any reports or elections or take any other action to the extent
necessary to implement the redesignation of any Stock Option as an Incentive
Stock Option, provided that any redesignation of a previously granted Stock
Option as an Incentive Stock Option shall not be effective unless and until
consented to by the Grantee; and (vii) make all other determinations deemed
necessary or advisable for the administration of this Plan. The Committee's
determination on the foregoing matters shall be conclusive. A majority of the
Committee shall constitute a quorum, and the acts of a majority of the members
present at any meeting at which a quorum is present, or acts approved in
writing by all members of the Committee without a meeting, shall be the acts of
the Committee.
6. Awards. Subject to the provisions of Section 3 of this Plan, the
Committee shall determine Awards taking into consideration, as it deems
appropriate, the responsibility level and performance of each Grantee. The
Committee may grant the following types of Awards: Stock Options pursuant to
Section 7 hereof, SARs pursuant to Section 8 hereof, Limited SARs pursuant to
Section 9 hereof, Performance Units pursuant to Section 10 hereof and
Restricted Stock Rights pursuant to Section 11 hereof. Unless otherwise
determined by the Committee, a Grantee may not be granted in any Year both (i)
a Restricted Stock Right and (ii) a Stock Option, SAR, Limited SAR or
Performance Unit.
7. Stock Options.
(a) The Committee from time to time may grant Stock Options either
alone or in conjunction with and related to SARs, Limited SARs and/or
Performance Units to key executive Employees selected by the Committee as being
eligible therefor. The Stock Options may be of two types, Incentive Stock
Options and Non-qualified Stock Options. Each Stock Option shall cover such
number of Shares and shall be on such other terms and conditions not
inconsistent with this Plan as the Committee may determine and shall be
evidenced by a Stock Option Agreement setting forth such terms and conditions
executed by the Company and the Grantee. The Committee shall determine the
number of Shares subject to each Stock Option. The number of Shares subject to
an outstanding Stock Option shall be reduced on a one for one basis to the
extent that any related SAR, Limited SAR or Performance Unit is exercised and
such Shares shall not again become available for issuance pursuant to this
Plan.
In the case of Stock Options, the aggregate Fair Market Value
(determined as of the date of grant) of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by an Employee
during any Year under this Plan or any other plan of the Company shall not
exceed $100,000. To the extent, if any, that the Fair Market Value of such
Common
-67-
<PAGE> 73
Stock with respect to which Incentive Stock Options are exercisable exceeds
$100,000, such Incentive Stock Options shall be treated as separate
Non-qualified Stock Options. For purposes of the two immediately preceding
sentences of this subparagraph (a), Stock Options shall be taken into account
in the order in which they were granted.
(b) Unless the Committee shall determine otherwise, each Stock
Option may be exercised only if the Grantee has been continuously employed by
RSI or any Subsidiary for a period of at least one (1) year commencing on the
date the Stock Option is granted; provided, however, that this provision shall
not apply in the event of a Change of Control.
(c) Each Stock Option shall be for such term (but, in no event for
greater than ten years) and shall be exercisable in such installments as shall
be determined by the Committee at the time of grant of the Stock Option.
The Committee may, at any time, provide for the acceleration
of installments or any part thereof.
(d) The price per Share at which Shares may be purchased upon the
exercise of a Stock Option shall be determined by the Committee on the grant of
the Stock Option but such price shall not be less than one hundred percent
(100%) of the Fair Market Value on the date of grant of the Stock Option. If a
Grantee owns (or is deemed to own under applicable provisions of the Code and
rules and regulations promulgated thereunder) more than ten percent (10%) of
the combined voting power of all classes of the stock of the Company and a
Stock Option granted to such Grantee is intended to qualify as an Incentive
Stock Option, the Incentive Stock Option price shall be no less than one
hundred and ten percent (110%) of the Fair Market Value of the Common Stock on
the date the Incentive Stock Option is granted and the term of such Incentive
Stock Option shall be no more than five years.
(e) Except as provided in Paragraphs (h) and (l) of this Section
7, no Stock Option may be exercised unless the Grantee, at the time of
exercise, is an Employee and has continuously been an Employee of RSI or any
Subsidiary since the grant of such Stock Option. A Grantee shall not be deemed
to have terminated his period of continuous employ with RSI or any Subsidiary
if he leaves the employ of RSI or any Subsidiary for immediate reemployment
with RSI or any Subsidiary.
(f) To exercise a Stock Option, the Grantee shall (i) give written
notice to the Company in form satisfactory to the Committee indicating the
number of Shares which he elects to purchase, (ii) deliver to the Company
payment of the full purchase price of the Shares being purchased (A) in cash or
a certified or bank cashier's check payable to the order of the Company, or (B)
if the Grantee elects with the approval of the Committee, in Shares of the
Common Stock having a Fair Market Value on the date of exercise equal to the
purchase price, or a combination of the foregoing having an aggregate Fair
Market Value equal to such purchase price, and (iii) deliver to the Secretary
of the Company such written representations, warranties and covenants as the
Company may require under Section 16(a) of this Plan.
-68-
<PAGE> 74
(g) Upon proper exercise of a Stock Option, the Grantee shall be
treated for all purposes as the registered owner of the Shares as to which the
Stock Option has been exercised as of the close of business on the date of
exercise.
(h) Notwithstanding any other provision of this Plan, unless
otherwise determined by the Committee prior to a Change of Control, in the
event of a Change of Control, each Stock Option not previously exercised or
expired under the terms of this Plan shall become immediately exercisable in
full and shall remain exercisable to the full extent of the Shares available
thereunder, regardless of any installment provisions applicable thereto, for
the remainder of its term, unless Section 14(a) of this Plan applies or the
Grantee has been terminated for cause, in which case the Stock Options shall
automatically terminate as of the Incumbent Board's determination pursuant to
Section 14(a) or the Grantee's Termination Date, as appropriate.
(i) If the Committee so determines prior to or during the thirty
(30) day period following the occurrence of a Change of Control, Grantees of
Stock Options not otherwise exercised or expired under the terms of this Plan
as to which no SARs or Limited SARs are then exercisable may, in lieu of
exercising, require RSI to purchase for cash all such Stock Options or portions
thereof for a period of sixty (60) days following the occurrence of a Change of
Control at the Price specified in Section 2(v); provided that Stock Options
subject to this purchase requirement held by Grantees who are subject to
Section 16(b) of the 1934 Act with respect to RSI must have been held for at
least six (6) months.
(j) Any determination made by the Committee pursuant to Section
7(h) or 7(i) may be made as to all eligible Stock Options or only as to certain
of such Stock Options specified by the Committee. Once made, any determination
by the Committee pursuant to Section 7(h) or 7(i) shall be irrevocable.
(k) The Company intends that Section 7(i) shall comply with the
requirements of Rule 16b-3 under the 1934 Act (the "Rule") during the term of
this Plan. Should any provision of Section 7(i) not be necessary to comply
with the requirements of the Rule, or should any additional provisions be
necessary for Section 7(i) to comply with the requirements of the Rule, the
Committee may amend this Plan or any Stock Option agreement to add to or modify
the provisions thereof accordingly.
(l) Notwithstanding any of the provisions of this Section 7, a
Stock Option shall in all cases terminate and not be exercisable after the
expiration of the term of the Stock Option established by the Committee.
Except as provided in Section 7(h), Stock Options shall be exercisable after
the Grantee ceases to be employed by RSI or any Subsidiary as follows, unless
otherwise determined by the Committee:
(i) In the event that a Grantee ceases to be employed by
RSI or any Subsidiary by reason of Disability or Retirement, (A) any
Non-qualified Stock Option not previously exercised or expired shall continue
to vest and be exercisable during the three (3) year period following the
Grantee's Termination Date, and to the extent it is exercisable at the
expiration of
-69-
<PAGE> 75
such three (3) year period, it shall continue to be exercisable by such Grantee
or such Grantee's legal representatives, heirs or legatees for the term of such
Non-qualified Stock Option, and (B) any Incentive Stock Option shall, to the
extent it was exercisable on the Termination Date, continue to be exercisable
by such Grantee or such Grantee's legal representatives, heirs or legatees for
the term of such Incentive Stock Option; provided, however, that in order to
qualify for the special tax treatment afforded by Section 421 of the Code,
Incentive Stock Options must be exercised within the three (3) month period
commencing on the Termination Date (the exercise period shall be one (1) year
in the case of termination by reason of disability, within the meaning of
Section 422(e)(3) of the Code). Incentive Stock Options not exercised within
such three (3) month period shall be treated as Non-qualified Stock Options.
(ii) In the event that a Grantee ceases to be employed by
RSI or any Subsidiary by reason of death, any Stock Option shall, to the extent
it was exercisable on the Termination Date, continue to be exercisable by such
Grantee's legal representatives, heirs or legatees for the term of such Stock
Option.
(iii) Except as otherwise provided in subparagraph (i) or
(ii) above, in the event that a Grantee ceases to be employed by RSI or any
Subsidiary for any reason other than termination for cause, any Stock Option
shall, to the extent it was exercisable on the Termination Date, continue to be
exercisable for a period of three (3) months commencing on the Termination Date
and shall terminate at the expiration of such period; provided, however, that
in the event of the death of the Grantee during such three (3) month period,
such Stock Option shall, to the extent it was exercisable on the Termination
Date, be exercisable by the Grantee's personal representatives, heirs or
legatees for a period of one (1) year commencing on the date of the Grantee's
death and shall terminate at the expiration of such period.
(m) Except as otherwise provided in Section 7(1), a Stock Option
shall automatically terminate as of the Termination Date, provided that if a
Grantee's employment is interrupted by reason of Disability or a leave of
absence (as determined by the Committee) the Committee may permit the exercise
of some or all of the Stock Options granted on such terms and for such period
of time as it shall determine.
8. Stock Appreciation Rights.
(a) The Committee shall have authority in its discretion to grant
a SAR to any Grantee of a Stock Option with respect to all or some of the
Shares covered by such Stock Option. Each SAR shall be on such terms and
conditions not inconsistent with this Plan as the Committee may determine and
shall be evidenced by a SAR Agreement setting forth such terms and conditions
executed by the Company and the holder of the SAR. A SAR may be granted either
at the time of grant of a Stock Option or at any time thereafter during its
term. A SAR may be granted to a Grantee irrespective of whether such Grantee
has a Limited SAR. Each SAR shall be exercisable only if and to the extent
that the related Stock Option is exercisable, provided, however, that no SAR
may be exercised in any event (i) until the expiration of six (6) months
-70-
<PAGE> 76
from the date of grant of the SAR unless prior to the expiration of such six
(6) month period the holder of the SAR ceases to be employed by RSI or any
Subsidiary because of death or Disability, or (ii) more than six (6) months
after the Termination Date of a Grantee. Upon the exercise of a SAR, the
related Stock Option shall cease to be exercisable to the extent of the Shares
with respect to which such SAR is exercised and shall be considered to have
been exercised to that extent for purposes of determining the number of Shares
available for the grant of further Awards pursuant to this Plan. Upon the
exercise or termination of a Stock Option, the SAR related to such Stock Option
shall terminate to the extent of the Shares with respect to which such Stock
Option was exercised or terminated.
(b) The term "Spread" as used in this Section 8 shall mean, with
respect to the exercise of any SAR, an amount equal to the product computed by
multiplying (i) the excess of (A) the Fair Market Value per Share on the date
such SAR is exercised over (B) the purchase price per Share at which the
related Stock Option is exercisable by (ii) the number of Shares with respect
to which such SAR is being exercised, provided; however, that the Committee may
at the grant of any SAR limit the maximum amount of the Spread to be paid upon
the exercise thereof.
(c) Only if and to the extent required in order for the related
Stock Option to be treated as an Incentive Stock Option, a SAR may be exercised
only when there is a positive Spread, that is, when the Fair Market Value per
Share exceeds the purchase price per Share at which the related Stock Option is
exercisable. Upon the exercise of a SAR, the Committee shall pay to the
Grantee exercising the SAR an amount equivalent to the Spread. The Committee
shall have the sole and absolute discretion to determine whether payment for
such SAR will be made in cash, Shares or a combination of cash and Shares,
provided, that any Shares used for payment shall be valued at their Fair Market
Value on the date of the exercise of the SAR.
(d) A SAR may be exercised only during the period beginning on the
third (3rd) business day following the date of release for publication of the
quarterly and annual summary statements of sales and earnings of the Company
and ending on the twelfth (12th) business day following such date. Such
release shall be deemed to have taken place if the specified financial data
appears (i) on a wire service, (ii) in a financial news service, (iii) in a
newspaper of general circulation or (iv) is otherwise made publicly available.
(e) The Company intends that this Section 8 shall comply with the
requirements of the Rule during the term of this Plan. Should any provision of
this Section 8 not be necessary to comply with the requirements of the Rule or
should any additional provisions be necessary for this Section 8 to comply with
the requirements of the Rule, the Committee may amend this Plan or any Award
agreement to add to or modify the provisions thereof accordingly.
(f) To exercise a SAR, the Grantee shall (i) give written notice
to the Company in form satisfactory to the Committee specifying the number of
Shares with respect to which such holder is exercising the SAR and (ii) deliver
to the Company such written representations, warranties and covenants as the
Company may require under Section 16(a) of this Plan.
-71-
<PAGE> 77
(g) A person exercising a SAR shall not be treated as having
become the registered owner of any Shares issued on such exercise until such
Shares are issued.
(h) The exercise of a SAR shall reduce the number of Shares
subject to the related Stock Option on a one for one basis.
9. Limited SARs.
(a) The Committee shall have authority in its discretion to grant
a Limited SAR to the holder of any Stock Option with respect to all or some of
the Shares covered by such Stock Option; provided, however, that in the case of
Incentive Stock Options, the Committee may grant Limited SARs only if and to
the extent that the grant of such Limited SARs is consistent with the treatment
of the Stock Option as an Incentive Stock Option. Each Limited SAR shall be on
such terms and conditions not inconsistent with this Plan as the Committee may
determine and shall be evidenced by a Limited SAR Agreement setting forth such
terms and conditions executed by the Company and the holder of the Limited SAR.
A Limited SAR may be granted to a Grantee irrespective of whether such Grantee
has a SAR.
(b) Limited SARs may be exercised only during the sixty (60) day
period commencing after the occurrence of a Change of Control; provided,
however, that a Limited SAR that has not been held by the Grantee for at least
six (6) months before the occurrence of a Change of Control may be exercised
only during the sixty (60) day period commencing upon the expiration of such
six (6) month holding period.
Each Limited SAR shall be exercisable only if and to the extent that the
related Option is exercisable; provided, however, that no Limited SAR may be
exercised in any event (i) until the expiration of six (6) months from the date
of grant of the Limited SAR, or (ii) more than six (6) months after the
Termination Date of a Grantee. Upon the exercise of a Limited SAR, the related
Stock Option shall cease to be exercisable to the extent of the Shares with
respect to which such Limited SAR is exercised, and the Stock Option shall be
considered to have been exercised to that extent for purposes of determining
the number of Shares available for the grant of further Awards pursuant to this
Plan. Upon the exercise or termination of an Option, the Limited SAR with
respect to such Option shall terminate to the extent of the Shares with respect
to which the Option was exercised or terminated.
(c) For any Limited SAR, the term "Spread" as used in this Section
9 shall mean an amount equal to the product computed by multiplying (A) the
Price specified in Section 2(v) by (B) the number of Shares with respect to
which such Limited SAR is being exercised.
(d) Only if and to the extent required in order for the related
Stock Option to be treated as an Incentive Stock Option, a Limited SAR may be
exercised only when there is a positive Spread, that is, when the Fair Market
value per Share exceeds the purchase price per
-72-
<PAGE> 78
Share at which the related Stock Option is exercisable. Upon the exercise of a
Limited SAR, the holder thereof shall receive an amount in cash equal to the
Spread.
(e) Notwithstanding any other provision of this Plan, no SAR or
Performance Unit may be exercised with respect to any Stock Option at a time
when any Limited SAR with respect to such Stock Option held by the Grantee of
such SAR or Performance Unit may be exercised.
(f) The Company intends that this Section 9 shall comply with the
requirements of the Rule during the term of this Plan. Should any provision of
this Section 9 not be necessary to comply with the requirements of the Rule, or
should any additional provisions be necessary for this Section 9 to comply with
the requirements of the Rule, the Committee may amend this Plan or any Award
agreement to add to or modify the provisions thereof accordingly.
(g) To exercise a Limited SAR, the holder shall give written
notice to the Company in form satisfactory to the Committee specifying the
number of Shares with respect to which he is exercising the Limited SAR.
(h) The exercise of a Limited SAR shall reduce on a one for one
basis the number of Shares subject to the related Stock Option.
10. Performance Units.
(a) In conjunction with the granting of Stock Options under this
Plan, the Committee may grant Performance Units relating to such Stock Options;
provided, however, that in the case of Incentive Stock Options, the Committee
may grant Performance Units only if and to the extent that the grant of such
Performance Units is consistent with the treatment of the Stock Option as an
Incentive Stock Option. Each grant of Performance Units shall cover such
number of Shares and shall be on such other terms and conditions not
inconsistent with this Plan as the Committee may determine and shall be
evidenced by a Performance Unit Agreement setting forth such terms and
conditions executed by the Company and the Grantee of the Performance Units.
The number of Performance Units granted shall be equal to a specified number of
Shares subject to the related Stock Options. The Committee shall value such
Units to the extent that Performance Goals are achieved; provided, however,
that in no event shall the value per Performance Unit exceed one hundred and
fifty percent (150%) of the purchase price per Share at which the related Stock
Option is exercisable.
(b) The Committee shall have full and final authority to establish
Performance Goals for each Performance Period on the basis of such criteria,
and the attainment of such objectives, as the Committee may from time to time
determine. In setting Performance Goals, the Committee may take into
consideration such matters which it deems relevant and such financial and other
criteria including but not limited to projected cumulative compounded rate of
growth in earnings per Share and average return on equity. During any
Performance Period, the Committee shall have the authority to adjust
Performance Goals for the Performance Period as
-73-
<PAGE> 79
it deems equitable in recognition of extraordinary or nonrecurring events
experienced by the Company during the Performance Period including, but not
limited to, changes in applicable accounting rules or principles or changes in
the Company's methods of accounting during the Performance Period or
significant changes in tax laws or regulations which affect the financial
results of the Company.
(c) The term "Performance Goals" as used in this Section 10 shall
mean the performance objectives established by the Committee for the Company
for a Performance Period for the purpose of determining if, as well as the
extent to which, a Performance Unit shall be earned.
(d) The term "Performance Period" as used in this Section 10 shall
mean the period of time selected by the Committee (which period shall be not
more than five nor less than three years) commencing on January 1 of the Year
in which the grant of Performance Units is made, during which the performance
of the Company is measured for the purpose of determining the extent to which
Performance Units have been earned.
(e) Performance Units shall be earned to the extent that
Performance Goals and other conditions established in accordance with Paragraph
(b) of this Section 10 are met. The Company shall promptly notify each Grantee
of the extent to which Performance Units have been earned by such Grantee. A
Performance Unit may be exercised only during the period following such notice
and prior to expiration of the related option. Performance Units which have
been earned shall be paid after exercise by the Grantee pursuant to Paragraph
(h) of this Section 10. The Committee shall have the sole and absolute
discretion to determine whether payment for such Performance Unit will be made
in cash, Shares or a combination of cash and Shares, provided that any Shares
used for payment shall be valued at their Fair Market Value on the date of the
exercise of the Performance Unit.
(f) Unless otherwise determined by the Committee, in the event
that a Grantee of Performance Units ceases to be employed by RSI or any
Subsidiary during the term of the related Stock Option, the Performance Units
held by him shall be exercisable only to the extent the related Stock Option is
exercisable and shall be forfeited to the extent that the related Stock Option
was not exercisable on the Termination Date.
(g) The Company intends that this Section 10 shall comply with the
requirements of Section 16(b) of the 1934 Act and the rules thereunder, as from
time to time in effect, including the Rule. Should any provision of this
Section 10 not be necessary to comply with the requirements of said Section
16(b) and the rules thereunder or should any additional provision be necessary
for this Section 10 to comply with the requirements of Section 16(b) and the
rules thereunder, the Committee may amend this Plan or any Award agreement to
add to or modify the provisions thereof accordingly.
-74-
<PAGE> 80
(h) To exercise Performance Units, the Grantee shall give written
notice to the Company in form satisfactory to the Committee addressed to the
Secretary of the Company specifying the number of Shares with respect to which
he is exercising Performance Units.
(i) The exercise of Performance Units shall reduce on a one for
one basis the number of Shares subject to the related Stock Option.
11. Restricted Stock Rights.
(a) The Committee from time to time may grant Restricted Stock
Rights to key executive Employees selected by the Committee as being eligible
therefor, which would entitle a Grantee to receive a stated number of Shares
subject to forfeiture of such Rights if such Grantee failed to remain
continuously in the employ of RSI or any Subsidiary for the period stipulated
by the Committee (the "Restricted Period").
(b) Restricted Stock Rights shall be subject to the following
restrictions and limitations:
(i) The Restricted Stock Rights may not be sold,
assigned, transferred, pledged, hypothecated, or otherwise disposed of;
(ii) Except as otherwise provided in Paragraph (d) of this
Section 11, the Restricted Stock Rights and the Shares subject to such
Restricted Stock Rights shall be forfeited and all rights of a Grantee to such
Restricted Stock Rights and Shares shall terminate without any payment of
consideration by the Company if the Grantee fails to remain continuously as an
Employee of RSI or any Subsidiary for the Restricted Period. A Grantee shall
not be deemed to have terminated his period of continuous employment with RSI
or any Subsidiary if he leaves the employ of RSI or any Subsidiary for
immediate reemployment with RSI or any Subsidiary.
(c) The Grantee of Restricted Stock Rights shall not be entitled
to any of the rights of a holder of the Common Stock with respect to the Shares
subject to such Restricted Stock Rights prior to the issuance of such Shares
pursuant to this Plan. During the Restricted Period, for each Share subject to
a Restricted Stock Right, the Company will pay the holder an amount in cash
equal to the cash dividend declared on a Share during the Restricted Period on
or about the date the Company pays such dividend to the stockholders of record.
(d) In the event that the employment of a Grantee terminates by
reason of death, Disability or Retirement, such Grantee shall be entitled to
receive the number of Shares subject to the Restricted Stock Right multiplied
by a fraction (x) the numerator of which shall be the number of days between
the date of grant of such Restricted Stock Right and the date of such
termination of employment, and (y) the denominator of which shall be the number
of days in the Restricted Period, provided, however, that any fractional Share
shall be cancelled. If a Grantee's employment is interrupted by reason of
Disability or a leave of absence (as determined by the
-75-
<PAGE> 81
Committee), then the Committee may permit the delivery of the Shares subject to
the Restricted Stock Right in such amounts as the Committee may determine.
(e) Notwithstanding Paragraphs (a) and (b) of this Section 11,
unless otherwise determined by the Committee prior to the occurrence of a
Change of Control, in the event of a Change of Control all restrictions on
Restricted Stock shall expire and all Shares subject to Restricted Stock Rights
shall be issued to the Grantees. Additionally, the Committee may, at any time,
provide for the acceleration of the Restricted Period and of the issuance of
all or part of the Shares subject to Restricted Stock Rights. Any
determination made by the Committee pursuant to this Section 11(e) may be made
as to all Restricted Stock Rights or only as to certain Restricted Stock Rights
specified by the Committee. Once made, any determination by the Committee
pursuant to this Section 11(e) shall be irrevocable.
(f) When a Grantee shall be entitled to receive Shares pursuant to
a Restricted Stock Right, the Company shall issue the appropriate number of
Shares registered in the name of the Grantee.
12. Dilution and Other Adjustments. If there shall be any change in the
Shares subject to this Plan or any Award granted under this Plan, as a result
of merger, consolidation, reorganization, recapitalization, stock dividend,
stock split or other change in the corporate structure, adjustments may be made
by the Committee, as it may deem appropriate, in the aggregate number and kind
of Shares subject to this Plan or to any outstanding Award, and in the terms
and provisions of this Plan and any Awards granted hereunder, in order to
reflect, on an equitable basis, any such change in the Shares contemplated by
this Section 12. Any adjustment made by the Committee pursuant to this Section
12 shall be conclusive and binding upon the Grantee, the Company and any other
related person.
13. Substitute Options. Incentive and/or Non-qualified Stock Options may
be granted under this Plan from time to time in substitution for either
incentive or non-qualified stock options or both held by employees of other
corporations who are about to become employees of the Company as the result of
a merger, consolidation or reorganization of the employing corporation with the
Company, or the acquisition by the Company of the assets of the employing
corporation, or the acquisition by the Company of stock of the employing
corporation as the result of which it becomes a Subsidiary of the Company. The
terms and conditions of the Stock Options so granted may vary from the terms
and conditions set forth in this Plan to such extent as the Committee at the
time of grant may deem appropriate to conform, in whole or in part, to the
provisions of the stock options in substitution for which they are granted,
but, in the event that the option for which a substitute Stock Option is being
granted is an incentive stock option, no variation shall adversely affect the
status of any substitute Stock Option as an incentive stock option under the
Code.
-76-
<PAGE> 82
14. Miscellaneous Provisions.
(a) Notwithstanding any other provision of this Plan, no Stock
Option, SAR, Limited SAR or Restricted Stock Right granted hereunder may be
exercised nor shall any payment in respect of any Performance Unit granted
hereunder be made and all rights of the Grantee thereof, or of the Grantee's
legal representatives, heirs or legatees, shall be forfeited if, prior to the
time of such exercise or payment, the Committee (or in the event of a Change of
Control, the Incumbent Board) determines that the Grantee has (i) used for
profit or disclosed confidential information or trade secrets of the Company to
unauthorized persons, or (ii) breached any contract with, or violated any legal
obligation to, the Company, or (iii) engaged in any other activity which would
constitute grounds for termination for cause of the Grantee by the Company.
The Committee (or the Incumbent Board) shall give a Grantee written notice of
such determination prior to making any such forfeiture. The Committee (or the
Incumbent Board) may waive the conditions of this Paragraph in full or in part
if, in its sole judgment, such waiver will have no substantial adverse effect
upon the Company. The determination of the Committee (or the Incumbent Board)
as to the occurrence of any of the events specified above and to the
forfeiture, if any, shall be conclusive and binding upon the Grantee, the
Company and any other related person.
(b) The Grantee of an Award shall have no rights as a stockholder
with respect thereto, except as otherwise expressly provided in this Plan,
unless and until certificates for Shares are issued.
(c) No Award or any rights or interests therein shall be
assignable or transferable by the Grantee except by will or the laws of descent
and distribution. During the lifetime of the Grantee, an Award shall be
exercisable only by the Grantee or the Grantee's guardian or legal
representative.
(d) The Company shall have the right to deduct from all Awards
granted hereunder to be distributed in cash any Federal, state, local or
foreign taxes required by law to be withheld with respect to such cash
payments. In the case of Awards to be distributed in Shares, the holder or
other person receiving such Common Stock shall be required, as a condition of
such distribution, either to pay to the Company at the time of distribution
thereof the amount of any such taxes which the Company is required to withhold
with respect to such Shares or to have the number of the Shares, valued at
their Fair Market Value on the date of distribution, to be distributed reduced
by an amount equal to the value of such taxes required to be withheld.
(e) No Employee shall have any claim or right to be granted an
Award under this Plan, nor having been selected as a Grantee for one Year, any
right to be a Grantee in any other Year. Neither this Plan nor any action
taken hereunder shall be construed as giving any Grantee any right to be
retained in the employ of RSI or any Subsidiary, and the Company expressly
reserves its right at any time to dismiss any Grantee with or without cause.
-77-
<PAGE> 83
(f) The costs and expense of administering this Plan shall be
borne by the Company and not charged to any Award nor to any Grantee.
(g) This Plan shall be unfunded. The Company shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure the payment of any Award under this Plan, and
payment of Awards shall be subordinate to the claims of the Company's general
creditors.
(h) Whenever used in this Plan, the masculine gender shall include
the feminine or neuter wherever necessary or appropriate and vice versa and the
singular shall include the plural and vice versa.
15. Indemnification of the Committee. Service on the Committee shall
constitute service as a director of the Company and members of the Committee
shall be entitled to indemnification, advancement of expenses and reimbursement
as directors of the Company pursuant to its Restated Articles of Incorporation,
By-Laws, resolutions of the Board of Directors of RSI or otherwise.
16. Compliance with Law.
(a) Each Grantee, to permit the Company to comply with the
Securities Act of 1933, as amended (the "1933 Act"), and any applicable blue
sky or state securities laws, shall represent in writing to the Company at the
time of the grant of an Award and at the time of the issuance of any Shares
thereunder that such Grantee does not contemplate and shall not make any
transfer of any Shares to be acquired under an Award except in compliance with
the 1933 Act and such Grantee shall enter into such agreements and make such
other representations as, in the opinion of counsel to the Company, shall be
sufficient to enable the Company legally to issue the Shares without
registration thereof under the 1933 Act. Certificates representing Shares to
be acquired under Awards shall bear legends as counsel for the Company may
indicate are necessary or appropriate to accomplish the purposes of this
Section 16.
(b) If at any time the Committee shall determine that the listing,
registration or qualification of the Shares subject to any Award upon any
securities exchange or under any state or federal law, or the consent or
approval of any government regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of or issuance of Shares
under such Award, such Shares shall not be issued unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Committee.
17. Amendment of this Plan. The Committee may at any time (i) terminate
this Plan or (ii) modify or amend this Plan in any respect, except that without
shareholder approval the Committee may not (A) materially increase the benefits
accruing to Grantees under this Plan, if
-78-
<PAGE> 84
and to the extent required to maintain the qualification of this Plan under the
1934 Act, (B) materially increase the number of securities which may be issued
under this Plan, or (C) materially modify the requirements as to eligibility
for participation in this Plan. Should this Plan require amendment to maintain
full legal compliance because of rules, regulations, opinions or statutes
issued by the SEC, the U.S. Department of the Treasury or any other
governmental or governing body, then the Committee or the Board may take
whatever action, including but not limited to amending or modifying this Plan,
is necessary to maintain such compliance. The termination or any modification
or amendment of this Plan shall not, without the consent of any Grantee
involved, adversely affect his rights under an Award previously granted to him.
18. Effective Date and Term of this Plan.
(a) This Plan shall become effective on May 5, 1995, subject to
the approval of the shareholders of RSI.
(b) Unless previously terminated in accordance with Section 17 of
this Plan, this Plan shall terminate on the close of business on May 4, 2005,
after which no Awards shall be granted under this Plan. Such termination shall
not affect any Awards granted prior to such termination.
-79-
<PAGE> 85
APPENDIX C
RYDER SYSTEM, INC.
ANNUAL MEETING - MAY 5, 1995
P PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R
O The undersigned hereby constitutes and appoints M. Anthony Burns,
X James M. Herron and Edwin A. Huston, and each of them, as true and lawful
Y agents and proxies with full power of substitution in each, to represent
the undersigned and to vote, as designated below, all the shares of common
stock of RYDER SYSTEM, INC., held of record by the undersigned on March 9,
1995, at the Annual Meeting of Stockholders to be held at the Miami Airport
Hilton and Towers, 5101 Blue Lagoon Drive, Miami, Florida, on Friday, May
5, 1995, and at any adjournments thereof, on all matters to come before the
meeting.
Election of Directors. NOMINEES: COMMENTS: (change of address)
Vernon E. Jordan, Jr., James W. McLamore, -----------------------------
Paul J. Rizzo and Alva O. Way for a term of
office expiring at the 1998 Annual Meeting; -----------------------------
and Joseph L. Dionne for a term of office
expiring at the 1996 Annual Meeting. -----------------------------
(If you have written in the
above space, please mark the
corresponding box on the
reverse of this card.)
You are encouraged to specify your choices by marking the appropriate
boxes, SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations. However, please sign
the card in any event since the Proxy Committee cannot vote your shares unless
you sign and return this card.
SEE REVERSE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
/X/ Please mark your votes as in the example.
This proxy when properly executed will be voted in the manner directed herein.
If no direction is made, this proxy will be voted FOR election of directors and
FOR proposals 2, 3 and 4 and AGAINST proposals 5 and 6.
- --------------------------------------------------------------------------------
DIRECTORS RECOMMEND A VOTE "FOR"
- --------------------------------------------------------------------------------
1. Election of Directors. (SEE REVERSE)
/ / FOR / / WITHHELD
For, except vote withheld from following nominees.
------------------------------------------------
2. Ratification of the Ryder System, Inc. Stock for Merit Increase Replacement
Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. Ratification of the Ryder System, Inc. 1995 Stock Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
4. Ratification of KPMG Peat Marwick LLP as auditors.
/ / FOR / / AGAINST / / ABSTAIN
- --------------------------------------------------------------------------------
DIRECTORS RECOMMEND A VOTE "AGAINST"
- --------------------------------------------------------------------------------
5. Stockholder Proposal relating to Annual Election of all directors.
/ / FOR / / AGAINST / / ABSTAIN
6. Stockholder Proposal relating to the Ryder System, Inc. Preferred Share
Purchase Rights Plan.
/ / FOR / / AGAINST / / ABSTAIN
- --------------------------------------------------------------------------------
In their discretion said proxies may vote Change of Address/
for a new nominee of management. If any Comments on Reverse
nominee has become unavailable, and any Side. / /
other matters properly coming before the
Meeting, all as set forth in the Notice
of Annual Meeting and Proxy Statement.
Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
Stockholder Dated
------------------------------------- -------------
Signature(s) Dated
------------------------------------- -------------
