<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Ryder System, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(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
NOTICE OF ANNUAL MEETING
AND PROXY STATEMENT (RYDER LOGO)
1997
<PAGE> 3
RYDER SYSTEM, INC.
3600 N.W. 82nd Avenue
Miami, Florida 33166 RYDER LOGO
TO THE SHAREHOLDERS OF RYDER SYSTEM, INC.:
You are cordially invited to attend our Annual Meeting of Shareholders on
Friday, May 2, 1997, 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. Board of
Directors Stock Award Plan and the ratification of the appointment of
independent auditors for 1997. 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 Shareholders again intend to present
a proposal at the Meeting concerning the annual election of all directors. The
Board of Directors believes that this proposal is not in the best interest of
the Company and its Shareholders and unanimously recommends a vote AGAINST this
Shareholder proposal.
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,
/s/ M. ANTHONY BURNS
M. Anthony Burns
Chairman, President and
Chief Executive Officer
March 24, 1997
<PAGE> 4
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 2, 1997
The Annual Meeting of Shareholders of Ryder System, Inc. will be held at the
Miami Airport Hilton and Towers, 5101 Blue Lagoon Drive, Miami, Florida, on
Friday, May 2, 1997, at 11:00 A.M., for the following purposes:
(1) To elect three directors;
(2) To ratify the adoption of the Ryder System, Inc. Board of Directors
Stock Award Plan;
(3) To ratify the appointment of KPMG Peat Marwick LLP as auditors for the
Company;
(4) To consider, if properly brought before the Meeting, a Shareholder
proposal concerning the annual election of all directors; and
(5) To transact such other business as may properly come before the Meeting
and any adjournments of the Meeting.
Only Shareholders of record of the Company's Common Stock at the close of
business on March 6, 1997, are entitled to vote in person or by proxy at the
Annual Meeting or any adjournments of the Meeting.
The 1996 Annual Report of the Company has been mailed with this Notice and Proxy
Statement to each Shareholder entitled to vote at the Meeting.
RYDER SYSTEM, INC.
/s/ H. JUDITH CHOZIANIN
H. Judith Chozianin
Secretary
March 24, 1997
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 at Ryder
System, Inc., 3600 N.W. 82nd Avenue, Miami, Florida 33166 at (305) 500-3046.
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<PAGE> 5
RYDER SYSTEM, INC.
3600 N.W. 82nd Avenue
Miami, Florida 33166 RYDER LOGO
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TABLE OF CONTENTS PAGE
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Proxy Statement 1
Solicitation and Voting of Proxies 1
Policy of Confidential Voting 1
Procedures for the Meeting 1
Participants in the 401(k) Plan 2
Outstanding Voting Stock 2
Election of Directors (Item No. 1) 3
Board of Directors and Committees of
the Board 8
Compensation of Directors 8
Certain Relationships 10
Ryder System, Inc. Board of Directors
Stock Award Plan (Item No. 2) 11
Selection of Auditors (Item No. 3) 13
Shareholder Proposal (Item No. 4) 14
Beneficial Ownership of Shares 16
Compensation Committee Report on
Executive Compensation 18
Compensation of Executive Officers 21
Option Grants 22
Aggregated Option Exercises and Fiscal
Year-End Option Values 23
Pension Benefits 24
Stock Performance 26
Cost of Solicitation 26
Submission of Shareholder Proposals for
the 1998 Annual Meeting 27
Ryder System, Inc. Board of Directors
Stock Award Plan Appendix A
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<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 Shareholders of the Company to be held on Friday, May
2, 1997, 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 24, 1997, to holders of the Company's common stock ("Shareholders"
or, singularly, a "Shareholder") entitled to vote at the Meeting.
A Proxy Committee consisting of M. Anthony Burns, H. Judith Chozianin 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. Board of Directors Stock Award Plan and in favor of the
ratification of KPMG Peat Marwick LLP as auditors of the Company, but against
the Shareholder proposal 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 Shareholder's instructions. Any Shareholder 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 Shareholder 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 Shareholders have not voted and periodic status reports on the aggregate
vote will be available to the Company.
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 Shareholder who desires either to bring a
Shareholder 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 Shareholder Proposals for the 1998 Annual Meeting"). The Chairman
of the Meeting may refuse to acknowledge any Shareholder proposal or any
nomination for director not made in accordance with the foregoing.
<PAGE> 7
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 Shareholder 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 6, 1997, there were 77,164,375 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 6, 1997, 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
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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 1997 Annual Meeting
are Arthur H. Bernstein, M. Anthony Burns, Edward T. Foote II and John A.
Georges. The term of office of Vernon E. Jordan, Jr., Paul J. Rizzo and Alva O.
Way expires at the 1998 Annual Meeting. Joseph L. Dionne, David T. Kearns, Lynn
M. Martin and Mark H. Willes are currently serving a term which expires at the
1999 Annual Meeting.
Arthur H. Bernstein will retire as a member of the Board of Directors effective
May 2, 1997, at which time he will be appointed Director Emeritus by the Board
of Directors.
Accordingly, the Shareholders are asked to elect M. Anthony Burns, Edward T.
Foote II and John A. Georges, all of whom have been duly nominated by the Board
of Directors, to serve a term of office expiring at the 2000 Annual Meeting.
Unless a proxy card specifies otherwise, the Proxy Committee will vote the
Shares covered by the proxy for the election of M. Anthony Burns, Edward T.
Foote II and John A. Georges to the class of directors whose term expires at the
2000 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.
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3
<PAGE> 9
NOMINEES FOR DIRECTOR
FOR A TERM OF OFFICE EXPIRING AT THE 2000 ANNUAL MEETING
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M. ANTHONY BURNS Mr. Burns, who joined the Company in 1974, was elected a
Chairman, President and director, President and Chief Operating Officer of the
PHOTO Chief Executive Officer, Company in December 1979. Effective January 1, 1983, he was
Ryder System, Inc. elected to the position of Chief Executive Officer of the
Company, and on May 3, 1985, he became Chairman of the
Director since 1979 Board. He serves on the Board of Directors of The Chase
Age 54 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, a member of The Business
Roundtable and The Business Roundtable's Policy Committee,
and chairs The Business Roundtable's Health and Retirement
Task Force. He serves on the Board of the Boy Scouts of
America. He also serves on the Board of Trustees of the
University of Miami.
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EDWARD T. FOOTE II Mr. Foote has been President of the University of Miami
President, University of Miami since 1981. Prior to joining the University of Miami, he
PHOTO was Special Advisor to the Chancellor and Board of
Member--Compensation Committee Trustees, Washington University, from 1980 to 1981. From
Member-- Committee on Directors 1973 to 1980, he was Dean of the Washington University
Director since 1987 and Public School of Law, and from 1970 to 1973, he was Vice
Age 59 Responsibility 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 Bryan, Cave, McPheeters and
McRoberts.
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JOHN A. GEORGES Mr. Georges joined Windward Capital Partners, L.P. as a
Senior Managing Director, Senior Managing Director in May, 1996. Mr. Georges was
PHOTO Windward Capital Chairman of the Board and Chief Executive Officer of
Partners, L.P. and International Paper from 1984 until April 1996 when he
Retired Chairman and Chief retired. He is also a director of International Paper,
Director since 1993 Executive Officer, Warner-Lambert Company and AK Steel Holding Corporation.
Age 66 International Paper Company Mr. Georges is a member of The Business Council, The
Chairman--Audit Committee Trilateral Commission, President of the University of
Member-- Committee on Directors Illinois Foundation and a trustee of the Public Policy
and Public Institute of the Business Council of New York State. He was
Responsibility formerly a director of The New York Stock Exchange from
1987-1993 and a director of The Federal Reserve Bank of New
York from 1986-1992.
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4
<PAGE> 10
DIRECTORS CONTINUING IN OFFICE
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JOSEPH L. DIONNE Mr. Dionne has been Chairman of the Board and Chief
Chairman and Chief Executive Executive Officer of The McGraw-Hill Companies since 1988.
PHOTO Officer, The McGraw-Hill He joined McGraw-Hill Book Company in 1967 as Vice
Companies President for Research and Development at Educational
Developmental Laboratories. A year later, he was appointed
Director since 1995 Chairman-- Committee on Directors General Manager of California Test Bureau and became a Vice
Age 63 and Public President of McGraw-Hill Book Company in 1970. He has held
Responsibility various positions in the company including Executive Vice
Member--Audit Committee 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 The Equitable Companies, Incorporated, The
Equitable Life Assurance Society of the United States and
Harris Corporation, and is a trustee of Hofstra Univer-
sity.
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VERNON E. JORDAN, JR. Mr. Jordan is a Senior Partner in the law firm of Akin,
Senior Partner, Gump, Strauss, Hauer & Feld, LLP. Prior to joining Akin,
PHOTO Akin, Gump, Strauss, Gump in 1982, he was President and Chief Executive Officer
Hauer & Feld, LLP of the National Urban League from 1972 to 1981. From 1970
Member--Audit Committee to 1972, he was Executive Director of the United Negro
Director since 1989 Member-- Committee on Directors College Fund. He is currently serving on the Board of
Age 61 and Public Directors of American Express Company, Bankers Trust
Responsibility Company, Bankers Trust New York Corporation, Dow Jones &
Company, Inc., J.C. Penney Company, Inc., Revlon Group,
Sara Lee Corporation, Union Carbide Corporation and Xerox
Corporation. He is also a trustee of The Ford Foundation
and Howard University.
</TABLE>
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<PAGE> 11
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DAVID T. KEARNS Mr. Kearns has been Chairman of the New American Schools
Chairman, New American Schools Development Corporation since 1993 and was Deputy Secretary
PHOTO Development Corporation, and Re- of the United States Department of Education from 1991
tired Chairman and Chief through 1993. From 1982 through 1990, Mr. Kearns was
Executive Officer of Xerox Chairman and Chief Executive Officer of Xerox Corporation,
Director 1988-1991 Corporation which he joined in 1971 as a Vice President. Prior to
and since 1993 joining Xerox, he was a Vice President in the Data
Age 66 Member--Audit Committee Processing Division of International Business Machines
Member--Finance Committee Corporation. Mr. Kearns is 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 Time Warner, Inc.
</TABLE>
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LYNN M. MARTIN Since serving as Secretary of Labor under President George
Former U.S. Secretary of Labor; Bush from 1991 to 1993, Ms. Martin has served as
PHOTO Chairperson, Deloitte & Touche Chairperson of Deloitte & Touche LLP's Council for the
LLP's Council for the Advancement Advancement of Women and as an advisor to that firm. She is
of Women; advisor to Deloitte & a regular commentator, panelist, columnist and speaker on
Director since 1993 Touche LLP; and Professor, J.L. radio and television programs, in national publications and
Age 57 Kellogg Graduate School of before various business and academic groups, with respect
Management at Northwestern Uni- to the changing global economic and political environment.
versity Prior to serving as Secretary of Labor, Ms. Martin
represented the 16th District of Illinois in the U.S. House
Member--Compensation Committee of Representatives from 1981 to 1991. She also serves as a
Member--Finance Committee director of The Procter & Gamble Company, Ameritech,
Harcourt General, Inc., The Dreyfus Funds, TRW Inc. and
Chicago's Lincoln Park Zoo. She is a member of the Council
on Foreign Relations.
</TABLE>
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PAUL J. RIZZO Mr. Rizzo was employed with International Business Machines
Retired Vice Chairman, Corporation, where he held increasingly responsible
PHOTO International Business Machines positions, from 1958 until his retirement as Vice Chairman
Corporation of the Board in 1987. He returned to IBM in 1993 as Vice
Chairman of the Board until he retired again on December
Director 1987-1993 Member--Compensation Committee 31, 1994. He was Dean of the Kenan-Flagler Business School
and since 1995 Member--Finance Committee of the University of North Carolina from 1987 until 1992,
Age 69 when he retired from that position to become a partner in
Franklin Street Partners, a Chapel Hill investment firm. He
is currently serving on the Board of Directors of Johnson &
Johnson, The McGraw-Hill Companies and Morgan Stanley &
Co., Incorporated.
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ALVA O. WAY Mr. Way was elected Chairman of the Board of IBJ Schroder
Chairman, IBJ Schroder Bank & Trust Company in 1986. He serves as a consultant to
PHOTO Bank & Trust Company and director of Schroder PLC, London, and related
companies. In 1951, Mr. Way joined General Electric Company
Chairman--Finance Committee where he served in various executive positions including
Director since 1985 Member--Compensation Committee Chief Financial Officer. In 1979, he was elected Vice
Age 67 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 Interna-
tional 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, The McGraw-Hill Companies and Gould, Inc. He is a
member of the Brown University Board of Fellows and
Chancellor Emeritus and a trustee of the Committee for
Economic Development.
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MARK H. WILLES Mr. Willes has been Chairman, President and Chief Executive
Chairman, President and Officer of The Times Mirror Company since January 1996. He
PHOTO Chief Executive Officer, joined Times Mirror as President and Chief Executive
The Times Mirror Company Officer in June 1995. Prior to joining Times Mirror, Mr.
Willes was Vice Chairman of General Mills, Inc. from 1992
Director since 1992 Chairman-- Compensation until 1995. He joined General Mills in 1980 as Executive
Age 55 Committee Vice President and Chief Financial Officer and a member of
Member--Finance Committee the company's Management Policy Committee. He was elected
to the Board of Directors in 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 1970 and First Vice President in 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.
</TABLE>
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7
<PAGE> 13
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors currently consists of 11 members. During 1996, the Board
met 9 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 John A. Georges, Chairman, Arthur H. Bernstein,
Joseph L. Dionne, Vernon E. Jordan, Jr. and David T. Kearns. The Audit Committee
met 6 times in 1996. 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, Lynn M. Martin, Paul J. Rizzo and Alva O. Way. The Compensation Committee
met 7 times in 1996. The Committee reviews and recommends to the Board
compensation for senior management, recommends to the Board the adoption and
implementation of new 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 18 through 20 of this
Proxy Statement.
The Finance Committee consists of Alva O. Way, Chairman, Arthur H. Bernstein,
David T. Kearns, Lynn M. Martin, Paul J. Rizzo and Mark H. Willes. The Finance
Committee met 6 times in 1996. 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 Joseph L.
Dionne, Chairman, Edward T. Foote II, John A. Georges and Vernon E. Jordan, Jr.
The Committee met 6 times in 1996. 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 Shareholders in writing and sent to the Secretary of the
Company. Any such 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 the Board and
Committee meetings and, in addition, are called upon for their counsel between
meetings. Each of the incumbent directors attended more than 75% of the
aggregate number of meetings of the Board of Directors and the committees on
which he or she served in 1996 except Mr. Georges, who attended 71% of the
aggregate number of meetings, Ms. Martin, who attended 73% of the aggregate
number of meetings and Mr. Rizzo, who attended 68% of the aggregate number of
meetings.
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.
8
<PAGE> 14
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. None of the Shares
may be sold or transferred prior to six months after the date when service as a
director ceases. A majority 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 accidental
death and dismemberment coverage under the Company's travel accident insurance
policy, optional coverage under the Company's medical plan and $100,000 of
coverage under the Company's group term life insurance policy, resulting in
additional average compensation of approximately $3,508 to each such director.
In 1996, in connection with the Company's elimination of its Company car
program, each director received the Company car previously assigned to that
director, and a cash payment for federal and state taxes associated with the
transfer of the car, resulting in additional compensation as follows: Mr.
Bernstein $62,160, Mr. Dionne $68,828, Mr. Foote $50,361, Mr. Georges $121,646,
Mr. Jordan $55,108, Mr. Kearns $53,667, Ms. Martin $101,045, Mr. Rizzo $86,053,
Mr. Way $59,329 and Mr. Willes $93,654.
The Company has 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 two 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. All of
the current directors and four 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, at the
direction of the electing director, are credited with earnings based upon
several investment options, including Common Stock, a money market fund and
several equity mutual funds. 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.
The Board of Directors has determined that if the new Ryder System, Inc. Board
of Directors Stock Award Plan, as described in Item No. 2 on page 11, is
ratified by the Shareholders at the Annual Meeting, the Company will no longer
grant retirement benefits to non-employee directors. Under the Company's current
retirement program, non-employee directors who retire from, or otherwise cease
to be a member of, the Board of Directors at age 72 or at age 65 with ten years
of Board service receive the annual Board membership cash retainer in effect at
the time of their retirement for life. In lieu of this, and if the Shareholders
approve the ratification of the new Ryder System, Inc. Board of Directors Stock
Award Plan, each current non-employee director will receive units of Common
Stock equivalents in an amount that is the actuarial equivalent of the amount
that would have been due to such director upon his or her retirement, under the
current retirement plan, assuming the director had met the requirements for
retirement. Following termination of their service on the Board, each director
will be entitled to receive Common Stock in an amount equal to the number of
such units. Directors who previously retired from the Company will continue to
receive benefits under the program in effect at their retirement.
9
<PAGE> 15
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
1996. 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.
10
<PAGE> 16
RYDER SYSTEM, INC.
BOARD OF DIRECTORS STOCK AWARD PLAN
(ITEM NO. 2)
On February 21, 1997, the Board of Directors adopted the Ryder System, Inc.
Board of Directors Stock Award Plan (the "Stock Award Plan"), subject to
Shareholder ratification. The purpose of the Stock Award Plan is to attract and
retain persons of outstanding competence to serve as directors of the Company
and to provide a more direct link between directors' compensation and
Shareholder value by increasing the proportion of directors' compensation which
is stock based. The full text of the Stock Award Plan is set forth in Appendix A
to this Proxy Statement and the reader is urged to refer to it for a complete
description of its provisions.
The Stock Award Plan will become effective on May 2, 1997, if ratified by the
Company's Shareholders, and will terminate on May 1, 2007. No award may be made
under the Stock Award Plan after its expiration date, but awards made prior
thereto may extend beyond that date. All non-employee directors of the Company
will be eligible to participate in the Stock Award Plan in calendar year 1997
and thereafter. A total of 200,000 Shares have been reserved for issuance under
the Stock Award Plan, subject to ratification by the Shareholders of this
proposal. The Stock Award Plan will be administered by the Compensation
Committee (the "Committee") of the Board of Directors, which will have full
authority to interpret the Stock Award Plan and to establish rules for its
administration. Two types of awards may be made pursuant to the terms of the
Stock Award Plan: restricted stock units and stock options.
If the Stock Award Plan is ratified by the Shareholders at the Annual Meeting,
the Company will discontinue the current directors' retirement plan. Immediately
thereafter, each of the incumbent non-employee directors of the Company will
receive an award of restricted stock units in an amount that is the actuarial
equivalent of the amount that would have been due to such director upon his or
her retirement under the retirement plan. The restricted stock units will be
increased during their term by the value of any distributions on the Common
Stock. When a director retires from service on the Board, the restricted stock
units awarded to such director will vest and the director will be entitled to
receive an equivalent number of Shares of Common Stock. Distribution of the
Shares will be made, at the election of the director, either in a lump sum or in
installments.
In addition, on the date of the Annual Meeting, and on the date of each annual
meeting thereafter, each non-employee director will be granted an annual award
of 1,000 stock options, provided the director will continue to serve as a
director following the meeting. The stock option awards will be made in addition
to the directors' annual cash retainers and meeting attendance fees. The term of
a stock option cannot exceed ten years from the date of grant and the option
price must not be less than 100% of the fair market value of a Share of Common
Stock on the date of grant.
In the event of a "change of control" (as defined on page A-4 of the Stock Award
Plan), all restricted stock units and each unexercised and unexpired stock
option will become immediately vested.
The Committee may at any time (i) terminate the Stock Award Plan or (ii) modify
or amend the Stock Award Plan in any respect, except that, to the extent
required to maintain the qualification of the Stock Award Plan under Section 16
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or as
otherwise required to comply with applicable law or the regulations of any stock
exchange on which the Common Stock is listed, the Committee may not, without the
Shareholders' approval, (A) materially increase the benefits accruing to
participants under the Stock Award Plan, (B) materially increase the number of
securities which may be issued under the Stock Award Plan or (C) materially
modify the requirements as to eligibility for participation in the Stock Award
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
Stock Award Plan or any awards granted under the Stock Award Plan.
Under current Federal income tax laws, awards under the Stock Award Plan will
generally have the following consequences. The director will realize no income
for Federal income tax purposes at the time of award of the restricted stock
units or on the date of vesting. Instead, the director will be taxed on the fair
market value of the Shares of Common Stock on the date, or dates, when the
Shares are distributed to the director. The Company will be entitled to a
corresponding deduction when the director recognizes income. The grant of a
stock option will not
11
<PAGE> 17
result in income for the director or in a deduction for the Company. The
exercise of a stock option will result in ordinary income for the director and a
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. In the
case of both restricted stock units and stock options, the director's holding
period for the Shares will begin on the date the director recognizes income
under the Stock Award Plan.
The following table illustrates the benefits that the directors as a group will
receive under the terms of the Stock Award Plan:
STOCK AWARD PLAN
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE(1) NUMBER OF UNITS
- ----------------- --------------- ---------------
<S> <C> <C>
Eligible Director Group (10 persons)........................ $1,562,290 55,406 Shares
</TABLE>
- ---------------
(1)For 46,406 restricted stock units based on a fair market value of $31.375 for
the Common Stock as determined by using the average of the highest and lowest
sale price on March 14, 1997, as reported on the New York Stock Exchange
Composite Transaction Reporting System, and 9,000 stock options utilizing the
Black-Scholes option-pricing model.
The affirmative vote of a majority of the Shares represented and entitled to
vote at the Annual Meeting is required for ratification of the Stock Award Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE RYDER SYSTEM,
INC. BOARD OF DIRECTORS STOCK AWARD PLAN.
12
<PAGE> 18
SELECTION OF AUDITORS
(ITEM NO. 3)
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, 1997.
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 1997 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, 1996. They performed other audit services pertaining
to examinations of the separate financial statements of the Company's retirement
and benefit plans, as well as the Company's consumer truck rental business in
connection with the sale of that business. In addition, they rendered other
services related to the review of financial statements and related information
contained in various registration statements and filings with the SEC, and to
the Company's acquisition of other companies.
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.
13
<PAGE> 19
SHAREHOLDER PROPOSAL
(ITEM NO. 4)
The Company has been informed that John J. Gilbert and Margaret R. 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 and Ms.
Gilbert state that they also represent an additional 600 Shares held by family
interests.
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 Shareholders 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 54.1%, an increase over the previous year, 2,432
owners of 35,005,299 shares, were cast in favor of this proposal. The vote
against included 1,135 unmarked proxies.
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 Industries, Hanover Direct
and others. Ameritech is one of the latest to end theirs.
A few years ago my resolution on the subject was withdrawn when the
Westinghouse directors agreed to end their stagger system. At the
Lockheed-Martin merger the stagger system was ended and also at a special
meeting of First Commerce Corporation in 1995. Further, Allegheny Power
System tried to put in a stagger system, as well as take away cumulative
voting, and the Shareholders defeated it, showing Shareholders are
interested in their rights.
In the merger of Nynex into Bell Atlantic the annual election of directors,
instead of the stagger system that Nynex had, will be adopted.
Because of the normal need to find new directors and because of environment
problems and the 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.
Equitable Life Insurance Company, which is now called Equitable Companies,
converted from a policy owned company to a public Shareholder meeting.
Thanks to AXA, the controlling French insurance company not wanting it,
they now do not have a staggered board.
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.
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.
14
<PAGE> 20
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
Before 1984 the directors were elected annually. At the 1984 Annual Meeting, the
Shareholders approved an amendment to the Company's 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 Shareholders 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
Shareholder 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 Shareholders. 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 Shareholders 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 Shareholders in order
to amend the provisions governing the staggered election of directors.
ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THIS
PROPOSAL.
15
<PAGE> 21
BENEFICIAL OWNERSHIP OF SHARES
As of January 15, 1997, 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>
Amount and Nature
Name of Beneficial Owner of Beneficial Ownership(1) Percent of Class(2)
- ------------------------ -------------------------- -------------------
<S> <C> <C>
Arthur H. Bernstein(3,6).................................... 8,023 *
M. Anthony Burns(4,5)....................................... 789,488 1.013%
Dwight D. Denny(4,5)........................................ 141,165 *
Joseph L. Dionne(6)......................................... 1,633 *
Edward T. Foote II(6)....................................... 2,874 *
John A. Georges(6).......................................... 2,789 *
James M. Herron(5).......................................... 238,223 *
Edwin A. Huston(4,5)........................................ 270,098 *
Vernon E. Jordan, Jr.(6).................................... 2,886 *
David T. Kearns(6).......................................... 3,174 *
Lynn M. Martin.............................................. 500 *
Larry S. Mulkey(4,5)........................................ 128,434 *
J. Ernest Riddle(4,5)....................................... 70,661 *
Paul J. Rizzo(6)............................................ 3,098 *
Alva O. Way(6).............................................. 3,874 *
Mark H. Willes(3,6)......................................... 4,401 *
Directors, Nominees and Executive Officers as a Group
(22 persons)(3,4,5,6)..................................... 1,879,423 2.412%
</TABLE>
- ---------------
*Represents less than 1% of the Company's outstanding common stock.
(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 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 6,000 Shares; Mr. Willes 2,027 Shares; all directors,
nominees and executive officers as a group 9,720 Shares.
(4)Includes Shares held in the accounts of executive officers pursuant to the
401(k) Plan and the Savings Restoration Plan as of January 15, 1997, as
follows: Mr. Burns 12,880 Shares; Mr. Denny 4,137 Shares; Mr. Huston 4,001
Shares; Mr. Mulkey 9,367 Shares; Mr. Riddle 3,914 Shares; all directors,
nominees and executive officers as a group 61,689 Shares.
(5)Includes Shares the direct ownership of which may be acquired within 60 days
of January 15, 1997, through the exercise of stock options, as follows: Mr.
Burns 680,835 Shares; Mr. Denny 127,947 Shares; Mr. Herron 226,977 Shares;
Mr. Huston 249,782 Shares; Mr. Mulkey 108,223 Shares; Mr. Riddle 64,747
Shares; all directors, nominees and executive officers as a group 1,625,991
Shares.
(6)Includes the following number of Shares held as of January 15, 1997, in the
account of each of the following directors pursuant to the Directors Stock
Plan: 2,023 Shares in the account of Mr. Bernstein; 2,374 Shares in the
accounts of Mr. Foote, Mr. Jordan, Mr. Kearns, Mr. Way and Mr. Willes; 1,133
Shares in the account of Mr. Dionne; 1,789 Shares in the account of Mr.
Georges and 1,098 Shares in the account of Mr. Rizzo.
16
<PAGE> 22
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>
Putnam Investments, Inc..................................... 8,084,826(1) 9.9%
One Post Office Square
Boston, Massachusetts 02109
Sanford C. Bernstein & Co., Inc............................. 4,176,447(2) 5.1%
767 5th Avenue
New York, New York 10153
Franklin Mutual Advisers, Inc............................... 3,952,900(3) 5.1%
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078
</TABLE>
- ---------------
(1) Of the total Shares shown, the nature of beneficial ownership is as follows:
sole voting power 0; shared voting power 128,118; and shared dispositive
power 8,084,826. The foregoing ownership information is based upon
information furnished to the Company on behalf of Putnam Investments, Inc.
as of January 27, 1997.
(2) Of the total Shares shown, the nature of beneficial ownership is as follows:
sole voting power 2,363,226; shared voting power 473,134; and sole
dispositive power 4,176,447. The foregoing ownership information is based
upon information furnished to the Company on behalf of Sanford C. Bernstein
& Co., Inc. as of January 30, 1997.
(3) Franklin Mutual Advisers, Inc. has sole voting and sole dispositive power as
to all 3,952,900 Shares. The foregoing ownership information is based upon
information furnished to the Company on behalf of Franklin Mutual Advisers,
Inc. as of January 31, 1997.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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% Shareholders 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, 1996, the
Company's directors and executive officers complied with all applicable Section
16(a) filing requirements, except that two such reports covering seven
transactions were filed less than one month late by Mr. Bernstein.
17
<PAGE> 23
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company's Board of Directors (the "Committee")
is composed of five independent, non-employee directors of the Company. The
Committee administers the Company's executive policies and programs and
regularly reports to the Board of Directors on its activities and
recommendations, including decisions regarding Mr. Burns' compensation. There
are no interlocks between members of the Committee and any executive officer of
the Company.
In 1996, the Committee reviewed the Company's executive compensation policies
and programs as well as the Company's executive compensation philosophy. The
Company's goal is to attract, retain, motivate and reward management through
competitive compensation policies, while aligning executive interests more
closely with Shareholder interests. The Committee concluded that certain changes
would be made concerning the Company's annual incentive compensation program.
For 1997, the Company's annual incentive compensation program will be linked to
the creation of value ("Economic Value Added") for the Company's Shareholders in
both the short and long-term. Detailed changes to the annual incentive
compensation program for 1997 are discussed further in this report.
EVALUATION OF EXECUTIVE PERFORMANCE
In its evaluation of executive performance, the Committee employs criteria
designed to motivate individual executives. It is the Committee's belief that
variable, at-risk compensation, both annual and long-term, should comprise a
significant portion of executive compensation, to be earned only if specific
financial goals are met. As a result, in 1996, more than two-thirds of the
targeted compensation of Mr. Burns and the other named executive officers was at
risk and, as discussed further below, the 1996 compensation received by these
individuals was well below that of the past few years.
In evaluating management's 1996 performance, the Committee considered the
Company's financial results. While some executives of the Company individually
showed extraordinary efforts during 1996, the Committee determined that
financial results did not warrant any payments under the Company's 1996 annual
incentive compensation plans.
In addition to reviewing the internal effectiveness of the Company's executive
compensation programs, the Committee continuously evaluates whether the programs
remain externally competitive. The Committee evaluates each element of the
program in light of the compensation practices and financial performance of a
comparative group of similar companies (companies with sales levels and/or
financial characteristics similar to those of the Company) with which the
Company must compete in hiring and retaining executives. The Committee believes
that these companies are the most appropriate comparison group for purposes of
compensation decisions. As a result, the companies surveyed by the Committee for
executive compensation data are not the same as the peer group index used in the
five-year stock performance graph included in this Proxy Statement.
Survey data from this "compensation peer group" is analyzed by management and by
Frederick W. Cook & Co., Inc., independent compensation consultants retained by
the Company. The Committee utilizes this data to aid in setting total
compensation for the Company's executive officers within the median range for
this compensation peer group.
STOCK OWNERSHIP GUIDELINES
To further underscore the importance of linking executive and Shareholder
interests, the Company established formal stock ownership guidelines in 1993 for
all executive officers of the Company. Based on this philosophy, individuals
were given a three year period over which to attain the required stock ownership
levels. The Chief Executive Officer of the Company must own two times annual
base salary in Company stock and executive officers of the Company must own one
times their base salary in Company stock. The Company does not have any special
programs in place for executive officers to attain these stock ownership levels.
COMPONENTS OF EXECUTIVE COMPENSATION
The Company's executive compensation program consists of three key components:
(1) base salary; (2) annual cash incentive awards and (3) long-term incentive
awards in the form of stock options. Executive officers also receive a range of
employee benefits generally available to all employees of the Company. While
each element of
18
<PAGE> 24
compensation is reviewed separately, the Committee takes into account the total
compensation and benefits package in evaluating the executive compensation
program and making compensation decisions. The Committee believes that the total
package represents an attractive compensation and benefits program which is in
line with those of comparable companies.
BASE SALARY
Base salaries for executive officers are set at levels considered appropriate in
light of the scope of responsibilities of each executive officer's position and
the importance of that position to the operations of the Company. The Committee
believes that salary levels for executive officers should be set within the
median range in comparison to salary levels at comparable 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. In 1995, the Shareholders approved the
Stock For Merit Increase Replacement Plan for certain key executives. This plan
provides for executives to receive stock options in lieu of base salary cash
merit increases. During 1996, three such grants were made by the Committee. The
actions on base salaries of executive officers other than Mr. Burns are
recommended by Mr. Burns to the Committee based upon the above criteria and
recommended for approval to the Board of Directors by the Committee.
Mr. Burns did not receive an increase in his base salary during 1996 and thus
his salary remains at the level set in June 1992. The Committee has concluded
that it is not appropriate for Mr. Burns to receive a salary increase every
year, regardless of the Committee's annual evaluation of his performance.
ANNUAL INCENTIVE AWARDS
Under the 1996 annual incentive compensation plan, potential cash awards were
based upon Company financial performance and individual performance, subject to
the Committee's discretion. Award opportunities were 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. Bonus awards for 1996 were primarily driven by the Company's financial
results with approximately 85% of the 1996 maximum bonus opportunity based upon
financial results and approximately 15% of the 1996 maximum bonus opportunity
based upon individual performance. The financial results-based portion of 1996
bonus awards was based upon annual financial performance targets set in the
Company's Business Plan, which was approved by the Board of Directors at the
beginning of 1996. These financial performance targets are measured by net
after-tax return on equity ("NAT ROE"), net after-tax return on assets ("NAT
ROA"), net before tax ("NBT") earnings, (for one executive officer in 1996)
business unit revenue and (for one executive officer in 1996) 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.
Executive officers of the Company, other than Mr. Burns, were eligible for 1996
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 individual
performance. After cash award payments were calculated according to the above
measures, the Committee reviewed overall Company performance, and the
Committee's and/or Mr. Burns' assessment of individual performance, and
exercised its discretion in making the final awards.
The Committee determined that 1996 financial results did not warrant any
payments either for Company or individual performance under the Company's 1996
annual incentive compensation plans and none of the named executive officers of
the Company were awarded any cash bonuses, as illustrated in the Summary
Compensation Table on page 21.
For 1996, Mr. Burns was eligible for an annual 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. Mr. Burns did not receive a bonus for 1996 performance.
19
<PAGE> 25
For 1997, the Company has established a new annual incentive award program based
on the principles of Economic Value Added ("EVA"). The Company engaged Stern
Stewart & Co., independent financial consultants, to incorporate EVA into the
Company's financial management and compensation programs for 1997. EVA measures
the return on investment that enhances Shareholder value. EVA, which determines
whether a business is earning more than its true cost of capital, will be
utilized as a management tool for capital allocation and will provide a basis on
which to assess future goals, strategies and ultimate financial performance.
Under the EVA annual incentive award program, executive compensation will
reflect the Company's business strategy and its return to Shareholders. Awards
will be paid based solely upon Company financial performance as measured by EVA,
subject to the Committee's discretion.
LONG-TERM INCENTIVE AWARDS
Under the Ryder System, Inc. 1995 Stock Incentive Plan, which was approved by
the Shareholders at the 1995 Annual Meeting, stock options may be awarded to
executive officers and other key executives of the Company at the discretion of
the Committee. The size of an individual stock option award is based primarily
upon the individual executive's responsibilities and position within the
Company. The Committee also considers each executive's current individual
performance, potential for promotion and impact on Company performance and,
beginning in 1997, attainment of stock ownership guidelines. Stock option awards
are intended to reflect the median level of such awards for comparable positions
at peer companies.
The Company has no policy regarding the timing and frequency of stock option
awards, although such 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. In 1996, the Committee made an award of stock options to certain key
executives of the Company, including each of the named executive officers. The
Committee did not determine the size of such awards by reference to the amount
or value of stock options held by an individual executive officer at the time of
the award. These options were granted at the fair market value of the Company's
stock on the date of grant and will vest over a three-year period.
In 1996, Mr. Burns was granted options to purchase 100,000 shares as an
incentive to continue his restructuring efforts toward improving the long-term
financial performance of the Company. This award was set at the median level for
stock options awarded to chief executives of peer companies.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Committee has reviewed the Company's executive compensation program in light
of Section 162(m) of the Internal Revenue Code as it pertains to the
disallowance of deductions for compensation in excess of $1 million to certain
executive officers. The Company's 1995 Stock Incentive Plan does meet the
requirements for Section 162(m) and accordingly, stock options awarded to the
Company's executive officers in 1996 are eligible for the "performance-based"
compensation exception. In 1996, no executive officer received compensation in
excess of $1 million as defined by Section 162(m). For 1997, the annual
incentive compensation program will be based only on financial performance and
will not have the individual performance component formerly in the Company's
bonus plan. The Company will not be seeking Shareholder approval for the 1997
annual incentive program, and the Committee believes that preserving its
flexibility is in the best interest of the Company and its Shareholders. In
addition, the Company does not anticipate any material amounts in excess of $1
million.
Mark H. Willes [Chairman], Edward T. Foote II, Lynn M. Martin, Paul J. Rizzo,
and Alva O. Way
20
<PAGE> 26
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the annual and long-term compensation which the
Company paid to, or deferred for, those persons who were as of December 31, 1996
(a) the chief executive officer and (b) each of the other four most highly
compensated executive officers of the Company; and an executive officer who
would have been one of the other four most highly compensated executive officers
but for the fact that his employment as an executive officer was terminated
prior to December 31, 1996 (collectively, the "named executive officers") for
services rendered in 1996, 1995 and 1994:
SUMMARY COMPENSATION
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------- ---------------------
AWARDS
---------------------
SECURITIES UNDERLYING
OTHER ANNUAL OPTIONS/LIMITED
SALARY BONUS COMPENSATION(1) SARS
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#)
--------------------------- ---- ------ ----- --------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
M. Anthony Burns Chairman of the 1996 725,000 0 4,490 100,000
Board, President 1995 725,000 320,000 54,267 90,000
and Chief 1994 725,000 860,000 56,627 200,000
Executive Officer
Dwight D. Denny Executive Vice 1996 330,000 0 2,994 40,000
President -- 1995 330,000 137,000 2,994 20,000
Development 1994 300,000 315,000 2,994 90,000
James M. Herron Former Senior 1996 383,000 0 2,994 40,500
Executive Vice 1995 378,833 167,000 2,994 24,000
President and 1994 358,000 403,000 2,994 25,000
General Counsel
Edwin A. Huston Senior Executive Vice 1996 460,000 0 2,994 73,300
President -- Finance 1995 460,000 202,500 2,994 28,000
and Chief Financial 1994 434,167 485,000 2,994 30,000
Officer
Larry S. Mulkey President -- Ryder 1996 344,167 0 2,994 30,000
Integrated Logistics, 1995 315,000 175,000 2,994 23,000
Inc. 1994 285,833 280,000 2,994 55,000
J. Ernest Riddle Former Senior 1996 350,000 0 2,994 25,000
Vice President -- 1995 277,502 141,500 2,994 25,000
Ryder International 1994 255,667 253,197 2,994 55,000
<CAPTION>
ALL OTHER
COMPENSATION(2)
NAME AND PRIN ($)
------------- ---------------
<S> <C>
M. Anthony Burns 28,035
36,091
12,688
Dwight D. Denny 16,455
18,855
9,330
James M. Herron 26,269
29,624
18,257
Edwin A. Huston 26,124
30,300
16,485
Larry S. Mulkey 17,997
18,770
9,952
J. Ernest Riddle 19,809
20,497
32,260
</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 in 1995 and 1994, do not meet the disclosure thresholds
established under SEC regulations and are not included in this column. Mr.
Burns did not meet the disclosure thresholds established under the SEC
regulations in 1996. Of the 1995 and 1994 amounts shown for Mr. Burns,
$24,337 and $25,663, respectively, represent the incremental cost to the
Company for his personal use of the Company aircraft. The balance of the
1995 and 1994 amounts shown for Mr. Burns includes a Company provided car, a
tax planning allowance and other perquisites.
(2) This column is composed of: (a) contributions to the 401(k) Plan in the
amounts of $2,250, $2,250 and $400 for each named executive officer for
1996, 1995 and 1994, respectively; (b) contributions to the Savings
Restoration Plan for Mr. Burns in the amounts of $13,425 and $21,525 for
1996 and 1995, respectively; for Mr. Denny in the amounts of $4,755 and
$7,425 for 1996 and 1995, respectively; for Mr. Herron in the amounts of
$6,000 and $9,478 for 1996 and 1995, respectively; for Mr. Huston in the
amounts of $7,688 and $11,925 for 1996 and 1995, respectively; for Mr.
Mulkey in the amounts of $5,582 and $6,675 for 1996 and 1995, respectively;
and for Mr. Riddle in the amounts of $5,123 and $6,160 for 1996 and 1995,
respectively; (c) dollar value of premiums for compensatory split-dollar
insurance payments for Mr. Burns in the amounts of $427, $383 and $355 for
1996, 1995 and 1994, respectively; for Mr. Denny in the amounts of $125,
$114 and $105 for 1996, 1995 and 1994, respectively; for Mr. Herron in the
amounts of $669, $546 and $507 for 1996, 1995 and 1994, respectively; for
Mr. Huston in the amounts of $547, $486 and $446 for 1996, 1995 and 1994,
respectively; for Mr. Mulkey in the amounts of $154, $138 and $127 for 1996,
1995 and 1994, respectively; and for Mr. Riddle in the amounts of $139, $126
and $83 for 1996, 1995 and 1994, respectively; (d) premiums paid under the
Supplemental Retiree Life Insurance Plan for Mr. Burns in the amount of
$3,795 for 1996, 1995 and 1994, respectively; for Mr. Denny in the amount of
$3,459 for 1996, 1995 and 1994, respectively; for Mr. Herron in the amount
of $8,380 for 1996, 1995 and 1994, respectively; for Mr. Huston in the
amount of $4,805 for 1996, 1995 and 1994, respectively; for Mr. Mulkey in
the amount of $3,484 for 1996, 1995 and 1994, respectively; and for Mr.
Riddle in the amount of $4,342 for 1996, 1995 and 1994, respectively; (e)
premiums paid under the Supplemental Long Term Disability Insurance Plan for
Mr. Burns in the amount of $8,138 for 1996, 1995 and 1994, respectively; for
Mr. Denny in the amounts of $5,866, $5,607 and $5,366 for 1996, 1995 and
1994, respectively; for Mr. Herron in the amount of $8,970 for 1996, 1995
and 1994, respectively; for Mr. Huston in the amount of $10,834 for 1996,
1995 and 1994, respectively; for Mr. Mulkey in the amounts of $6,527, $6,223
and $5,941 for 1996, 1995 and 1994, respectively; and for Mr. Riddle in the
amounts of $7,955, $7,619 and $4,072 for 1996, 1995 and 1994, respectively;
and (f) relocation expenses paid for Mr. Riddle in the amount of $23,363 for
1994.
21
<PAGE> 27
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 in the Company's "1995 Stock Incentive Plan" filed as an
Exhibit to the Company's Annual Report on Form 10-K for the year ended December
31, 1995), 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, Huston and Mulkey would be entitled to three times salary
and two times bonus.
Mr. Herron's employment with the Company was terminated on December 31, 1996,
although he has agreed to remain with the Company as its General Counsel until
his successor is chosen. Pursuant to the terms of his severance agreement, Mr.
Herron will continue to receive his salary and other perquisites for a period of
twenty-nine (29) months. In addition, Mr. Herron received a lump sum bonus
payment in the amount of $304,330 at the time of his termination of employment
and has received an additional payment of $304,330 in 1997. Mr. Riddle's
employment as an executive officer of the Company was terminated on November 7,
1996, and his employment as an employee of the Company was terminated on January
31, 1997. Pursuant to the terms of his severance agreement, Mr. Riddle will
continue to receive his salary and other perquisites for a period of twenty-four
(24) months. In addition, Mr. Riddle received a lump sum bonus payment in the
amount of $93,092 at the time of his termination in 1997. In consideration of
the retirement benefits from his former employer which Mr. Riddle forfeited when
he accepted employment with the Company in 1992, Mr. Riddle also received a lump
sum payment of $1,240,000.
OPTION GRANTS
The following table provides information regarding the grant of stock options to
the named executive officers in fiscal year 1996. 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.
22
<PAGE> 28
OPTION/LIMITED SAR GRANTS IN FISCAL YEAR 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ----------------------------------------------------------------------------------------------
% OF TOTAL POTENTIAL REALIZABLE VALUE(1) AT
NUMBER(2) OF OPTIONS/LIMITED ASSUMED ANNUAL RATES OF
SECURITIES SARS GRANTED STOCK PRICE APPRECIATION FOR
UNDERLYING TO EMPLOYEES IN EXERCISE OPTION/LIMITED SAR TERM
OPTIONS/LIMITED FISCAL YEAR PRICE --------------------------------
NAME SARS GRANTED 1996 PER SHARE(3) EXPIRATION DATE(4) 0% 5% 10%
---- --------------- --------------- ------------ ------------------ ---- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
M. Anthony Burns....... 100,000 3.4% $29.688 October 1, 2006 $0 $1,867,031 $4,731,423
Dwight D. Denny........ 40,000 1.4% 29.688 October 1, 2006 0 746,812 1,892,569
James M. Herron........ 16,500 0.6% 29.438 June 12, 2006 0 305,466 774,111
24,000 0.8% 29.688 October 1, 2006 0 448,087 1,135,541
Edwin A. Huston........ 45,300 1.5% 24.063 January 14, 2006 0 685,515 1,737,229
28,000 1.0% 29.688 October 1, 2006 0 522,769 1,324,798
Larry S. Mulkey........ 30,000 1.0% 29.688 October 1, 2006 0 560,109 1,419,427
J. Ernest Riddle....... 25,000 0.9% 29.688 October 1, 2006 0 466,758 1,182,856
</TABLE>
- ---------------
(1)If the 5% or 10% annual compound stock price appreciation shown in the table
were to occur, the price of the stock for the January 1996 grant would be
$39.20 or $62.41, respectively, on January 14, 2006; the June 1996 grant
would be $47.95 or $76.35, respectively, on June 12, 2006; and the October
1996 grant would be $48.36 or $77.00, respectively, on October 1, 2006, and
the appreciation in the market value of the Company's Common Stock from the
date of the grant would be $1,179,768,755 and $2,989,765,658, respectively,
for the January 1996 grant, $1,443,301,516 and $3,657,609,415, respectively,
for the June 1996 grant, and $1,455,558,853 and $3,688,671,916, respectively,
for the October 1996 grant. The appreciation during this period realized by
the six named executive officers from these stock options would be .06%
(January 1996), .02% (June 1996) and .32% (October 1996) of the gain to all
Shareholders 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 annual installments
over three to five years commencing with the first anniversary of 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 January 1996, June 1996 or October 1996.
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 1996 and
unexercised options held as of the end of fiscal year 1996:
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1996 AND FISCAL YEAR-END 1996 OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/LIMITED IN-THE-MONEY OPTIONS AT
SARS AT FISCAL YEAR-END 1996 FISCAL YEAR-END 1996(1)
SHARES ACQUIRED VALUE ---------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
M. Anthony Burns.......... 49,242 $ 58,283 655,835 212,000 $3,733,640 $504,000
Dwight D. Denny........... 3,283 4,028 123,547 113,334 765,590 293,335
James M. Herron........... 11,490 13,191 226,977 53,200 1,522,652 46,000
Edwin A. Huston........... 24,073 291,901 235,802 82,907 1,211,734 207,687
Larry S. Mulkey........... 23,744 127,274 108,223 75,334 560,424 171,585
J. Ernest Riddle.......... 0 0 64,747 71,667 191,797 175,417
</TABLE>
- ---------------
(1)Amounts reflect gains on outstanding stock options based on a fair market
value of $28.3125 for the Common Stock, as determined by using the average of
the high and low price on December 31, 1996. As no change in control of the
Company has occurred the tandem Limited SARs had no calculable value at such
date.
23
<PAGE> 29
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. In 1996, the Company
offered a Voluntary Early Retirement Program to eligible employees, including
certain of the named executive officers. The program enhanced the benefits under
the Retirement Plan by adding three years to the age and years of service of
each eligible employee for purposes of calculating annual pension benefits. In
addition, the Program provided for a "social security bridge" of $500 per month
until age 62 and coverage under the Company's early retiree medical plan for
each eligible employee.
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 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(1) remains continuously employed by the Company at
current compensation levels until retirement at the normal retirement date.
ESTIMATED ANNUAL BENEFITS AT RETIREMENT(2)
(IN THE FORM OF A SINGLE LIFE ANNUITY)
<TABLE>
<S> <C>
M. Anthony Burns........................................... $583,250
Dwight D. Denny............................................ $248,549
James M. Herron............................................ $210,355
Edwin A. Huston............................................ $304,366
Larry S. Mulkey............................................ $235,188
</TABLE>
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
24
<PAGE> 30
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:
<TABLE>
<S> <C>
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
</TABLE>
- ---------------
(1)No amounts are included for Mr. Riddle who was not vested in the Company's
retirement plans at the time of his termination of employment.
(2)These amounts include benefits under the Retirement Plan and the Restoration
Plan combined.
25
<PAGE> 31
STOCK PERFORMANCE
COMPARISON OF 5 YEAR CUMULATIVE RETURN
AMONG RYDER SYSTEM, INC., S&P 500 INDEX & DOW JONES TRANSPORTATION 20 INDEX(1)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD RYDER S&P 500 DOW JONES
(FISCAL YEAR COVERED) SYSTEM, INC. INDEX TRANSPORTATION
20 INDEX
<S> <C> <C> <C>
1991 100 100 100
1992 139 108 107
1993 161 118 131
1994 137 120 110
1995 154 165 150
1996 175 202 171
</TABLE>
- ---------------
(1) Assumes for comparison that the value of the Company's Common Stock and of
each index was $100 on December 31, 1991, 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.
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 $20,000 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.
26
<PAGE> 32
SUBMISSION OF SHAREHOLDER PROPOSALS FOR
THE 1998 ANNUAL MEETING
Pursuant to SEC regulations, in order to be included in the Company's Proxy
Statement for the 1998 Annual Meeting, Shareholder 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 25, 1997, as well as meet
all other SEC requirements. In addition, the Company's By-Laws provide that any
Shareholder who desires either to bring a Shareholder 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
Shareholder 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.
/s/ H. Judith Chozianin
------------------------------------------
H. Judith Chozianin
Secretary
March 24, 1997
Miami, Florida
27
<PAGE> 33
APPENDIX A
RYDER SYSTEM, INC.
BOARD OF DIRECTORS STOCK AWARD PLAN
1. PURPOSE OF THIS PLAN
The purpose of the Ryder System, Inc. Board of Directors Stock Award Plan (this
"Plan") is to attract and retain persons of outstanding competence to serve as
directors of Ryder System, Inc. (the "Company") and to provide a more direct
link between directors' compensation and shareholder value by increasing the
proportion of directors' compensation which is stock based.
2. EFFECTIVE DATE AND TERM OF THIS PLAN
This Plan shall become effective on May 2, 1997, subject to the approval of the
shareholders of the Company. Unless previously terminated in accordance with
Section 13 of this Plan, this Plan shall terminate on the close of business on
May 1, 2007, after which no awards shall be granted under this Plan. Such
termination shall not affect any awards 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 (the "Board") of the Company. 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. The Committee shall have plenary authority, subject to the express
provisions of this Plan, to (i) interpret this Plan; (ii) prescribe, amend and
rescind rules and regulations relating to this Plan; and (iii) make all other
determinations deemed necessary or advisable for the administration of this
Plan.
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 in connection with an award under this Plan may be made
available from authorized but unissued Common Stock, 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 awards may be granted under this Plan shall be 200,000 shares. If a Unit
(as defined in Section 7) awarded under this Plan fails to become vested, any
share allocable to that Unit shall become available for grant to other
Participants (as defined in Section 5). If an Option (as defined in Section 9)
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 Participants.
If there shall be any change in the shares of Common Stock subject to this Plan
or any Unit or Option awarded under this Plan as a result of a 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 Unit or Option, and in the
terms and provisions of this Plan and any Unit or Option 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 Participant, the Company
and any other related person.
5. ELIGIBLE PERSONS
Participation in this Plan shall be limited to those members of the Board who,
at the time an award is made hereunder, are not employees of the Company or any
of its subsidiaries or affiliates within the meaning of the Employee Retirement
Income Security Act of 1974, as amended (a "Participant"). A member of the Board
who is
A-1
<PAGE> 34
an employee and who retires or resigns from employment with the Company or any
of its subsidiaries or affiliates, but remains a member of the Board, shall
become a Participant at the time of such termination of employment.
6. AWARDS
The Committee may grant the following types of awards under this Plan: Units
pursuant to Section 7 hereof and Options pursuant to Section 9 hereof.
7. UNITS
If this Plan is approved by the shareholders of the Company, effective as of May
2, 1997, the Company will discontinue its current retirement plan for the Board.
The retirement compensation which would have otherwise been payable at
retirement to those individuals who are Participants on May 2, 1997, shall be
converted to a present value dollar amount, based on actuarial assumptions
satisfactory to the Committee. Such dollar amount shall be converted into a
number of restricted stock units ("Units") by dividing such dollar amount by the
average of the Fair Market Values of the Common Stock on the last business day
of each of the three (3) months preceding May 2, 1997. "Fair Market Value" as
used in this Plan shall mean the average of the high and low price of a share of
Common Stock as reported by the composite transaction reporting system for
securities listed on the New York Stock Exchange on the applicable date.
The Company shall maintain an individual book account under this Plan for each
Participant awarded Units pursuant to this Section 7. Such account shall
initially be credited with the number of Units awarded to each Participant and
shall continue to be expressed in Units until such Participant has retired from
the Board. Any dividends or other distributions paid on the Common Stock shall
be credited to each Participant's account in respect of each Unit and shall be
deemed to be reinvested in additional Units based on the Fair Market Value of a
share of Common Stock on the dividend payment or distribution date. In addition,
the number of Units allocated to each Participant's account shall be adjusted to
reflect stock dividends, stock splits and similar transactions affecting the
value of Common Stock as described more fully in Section 4 hereof. The Units in
each Participant's account shall vest on the date of such Participant's
retirement from the Board and shall be paid to such Participant, in an
equivalent number of shares of Common Stock, in accordance with such
Participant's payment election described below in Section 8. Prior to vesting,
no Units in a Participant's account shall be assignable or transferable by such
Participant and no right or interest of any Participant shall be subject to any
lien, obligation or liability.
8. PAYMENT ELECTIONS FOR UNITS
In connection with the commencement of participation in this Plan, each
Participant eligible to receive an award of Units hereunder shall make an
election (the "Payment Election") concerning the timing of distribution of the
amounts credited to such Participant's account. Any payment from such account
shall commence following such Participant's retirement from the Board, but in no
event prior to one year after receipt by the Committee of such Participant's
initial Payment Election, except for Participants retiring from the Board in
calendar year 1997 who shall receive payment in a lump sum as soon as
practicable following their retirement. The forms of payment available to all
other Participants shall be a lump sum payment or annual installments over a
period not to exceed ten (10) years from the earliest date the Participant may
commence receiving payments hereunder. Subsequent Payment Elections which shall
supersede the initial Payment Election may be made by a Participant, but any
subsequent Payment Election shall not be valid unless it is made at least one
year prior to the date that the commencement of payments to the Participant
hereunder is otherwise due to commence.
In the event of a Participant's death before the balance from such Participant's
account is fully paid, payment of the balance of such Participant's account
shall be made to such Participant's estate in accordance with the manner
selected by the Participant prior to death; provided, however, the Committee
may, upon consideration of the application of the duly appointed administrator
or executor of such Participant's estate, direct that the balance of such
Participant's account be paid to the estate in a single payment.
9. STOCK OPTIONS
On the date of each annual meeting of the Company during the term of this Plan,
each Participant shall be granted a nonqualified stock option (an "Option") to
purchase 1,000 shares of Common Stock, provided the Participant will
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<PAGE> 35
continue to serve as a member of the Board following the meeting. Individuals
who are elected to the Board during the period of time between annual meetings,
and who would otherwise qualify as a Participant, shall receive an Option to
purchase a pro rata amount of Common Stock. 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. Each
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 Option. The Committee may, at any time,
provide for the acceleration of installments or any part thereof. No Option
granted under this Plan shall be assignable or transferable by a Participant
except by will or the laws of descent and distribution. A Participant shall
forfeit any Option assigned or transferred, voluntarily or involuntarily, other
than as permitted under this Section 9. Each Option shall be exercised during
the Participant's lifetime only by the Participant or the Participant's guardian
or legal representative.
10. EXERCISE OF OPTIONS
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 Participant. To exercise an
Option, the Participant shall (i) give written notice to the Company in form
satisfactory to the Committee indicating the number of shares of Common Stock
which the Participant 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) 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 (C) 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 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. A Participant
shall not have any rights as a Shareholder with respect to shares subject to an
Option until the close of business on the date on which the Option has been
exercised.
11. CESSATION OF SERVICE ON THE BOARD
If a Participant's service on the Board ceases for any reason, other than as
specified in the subsequent paragraphs of this Section 11, any Option held by
such Participant shall terminate three (3) months after the date of such
cessation of service; provided, however, that in the event of the death of the
Participant during such three-month period, such Option shall, to the extent it
was exercisable on the date of cessation of service, be exercisable by the
Participant's legal representatives, heirs or legatees for a period of one (1)
year commencing on the date of the Participant's death and shall terminate at
the expiration of such period.
If the cessation of service on the Board is due to the Participant's death, any
Option shall, to the extent it was exercisable on the date of death, continue to
be exercisable by such Participant's legal representatives, heirs or legatees
for the term of such Option.
If the cessation of service is due to the Participant's retirement or
disability, any Option not previously exercised or expired shall continue to
vest and be exercisable during the three (3) year period following the date of
cessation of service, and to the extent it is exercisable at the expiration of
such three (3) year period, it shall continue to be exercisable by such
Participant or such Participant's legal representatives, heirs or legatees for
the term of such Option.
12. CHANGE OF CONTROL
Notwithstanding any other provision of this Plan, in the event of a Change of
Control (as defined below), the Units in each Participant's account shall become
immediately vested and shall be paid in full in a lump sum of equivalent shares
of Common Stock to each Participant as soon as practicable following the Change
of Control. In addition, 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.
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<PAGE> 36
A "Change of Control" shall be deemed to have occurred if:
(i) any individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "1934
Act")) (a "Person") 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; provided, however, that for
purposes of this subparagraph (i), the following acquisitions shall not
constitute a Change of Control: (A) any acquisition by any employee benefit
plan or plans (or related trust) of the Company and its subsidiaries and
affiliates or (B) any acquisition by any corporation pursuant to a
transaction which complies with clauses (A), (B) and (C) of subparagraph
(iii) of this Section 12; or
(ii) the individuals who, as of August 18, 1995, constituted the Board (and
as of August 18, 1995, the "Incumbent Board") cease for any reason to
constitute at least two-thirds ( 2/3) of the Board, provided, that any
person becoming a director subsequent to August 18, 1995 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 reorganization, merger or consolidation of the Company (a
"Business Combination"), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Company's outstanding
Common Stock and outstanding voting securities ordinarily having the right
to vote for the election of directors of the Company immediately prior to
such Business Combination beneficially own, directly or indirectly, more
than fifty percent (50%) of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities ordinarily having the right to vote for the election of
directors, as the case may be, of the corporation resulting from such
Business Combination (including, without limitation, a corporation which as
a result of such transaction owns the Company or all or substantially all
of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Company's
outstanding Common Stock and outstanding voting securities ordinarily
having the right to vote for the election of directors of the Company, as
the case may be, (B) no Person (excluding any corporation resulting from
such Business Combination or any employee benefit plan or plans (or related
trust) of the Company or such corporation resulting from such Business
Combination and their subsidiaries and affiliates) beneficially owns,
directly or indirectly, 20% or more of the combined voting power of the
then outstanding voting securities of the corporation resulting from such
Business Combination and (C) at least two-thirds ( 2/3) of the members of
the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(iv) there is a liquidation or dissolution of the Company approved by the
shareholders; or
(v) there is a sale of all or substantially all of the assets of the
Company.
13. 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, to the extent required to maintain the
qualification of this Plan under Section 16 of the 1934 Act, or as otherwise
required to comply with applicable law or the regulations of any stock exchange
on which the Common Stock is listed, the Committee may not, without the
shareholders' approval, (A) materially increase the benefits accruing to
Participants under this Plan; (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
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<PAGE> 37
shall not, without the consent of any Participant involved, adversely affect
rights under a Unit or an Option previously awarded to such Participant.
Transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent any
provision of this Plan or action by the Committee fails to so comply, it shall
be deemed null and void, to the extent permitted by law and deemed advisable by
the Committee. Moreover, in the event this Plan does not include a provision
required by Rule 16b-3 to be stated herein, such provision (other than one
relating to eligibility requirements, or the price and amount of Options) shall
be deemed automatically to be incorporated by reference into this Plan.
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<PAGE> 38
APPENDIX B
(Front)
DETACH HERE
RYDER SYSTEM, INC.
Annual Meeting - May 2, 1997
Proxy Solicited on Behalf of the Board of Directors
The undersigned hereby constitutes and appoints M. Anthony Burns, H. Judith
Chozianin and Edwin A. Huston, and each of them, as true and lawful 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 6, 1997, at the Annual
Meeting of Shareholders to be held at the Miami Airport Hilton and Towers, 5101
Blue Lagoon Drive, Miami, Florida, on Friday, May 2, 1997, and at any
adjournments thereof, on all matters to come before the meeting.
COMMENTS: (change of address)
Election of Directors. Nominees:
M. Anthony Burns, Edward T. Foote II -----------------------------
and John A. Georges for a term of office -----------------------------
expiring at the 2000 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.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE> 39
APPENDIX B
(Back)
DETACH HERE
<TABLE>
<CAPTION>
[ X ] Please mark
votes as in
this 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 and 3 and AGAINST proposal 4.
- ----------------------------------------------------------------------------------- -----------------------------------------------
Directors recommend a vote "FOR" Directors recommend a vote "AGAINST"
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. Ratification of the [ ] [ ] [ ] 4. Shareholder Proposal re- [ ] [ ] [ ]
Directors, Ryder System, Inc. lating to Annual Elec-
(see reverse) Board of Directors tion of all Directors.
Stock Award Plan.
3. Ratification of KPMG [ ] [ ] [ ]
Peat Marwick LLP as
------------------------------ auditors.
For, except vote withheld from
the nominee(s) listed above
- -----------------------------------------------------------------------------------------------------------------------------------
Change of
Address/ [ ]
Comments On
Reverse Side
In their discretion said proxies may vote for a new nominee of
management, if any nominee has become unavailable, and any 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.
Signature: Date: Signature: Date:
--------------------------------- ----------------- ----------------------------- -----------------
</TABLE>
