<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>
BUDGET GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) 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
(BUDGET LOGO)
April 18, 2000
Dear Stockholder:
We cordially invite you to attend our 2000 Annual Meeting of Stockholders
on Thursday, May 18, 2000 beginning at 10:00 a.m. local time. The meeting will
be held at the Renaissance Orlando Resort, 6677 Sea Harbor Drive, Palani
Sailfish Room, Orlando, Florida, (407) 351-5555.
The attached Notice of Annual Meeting and Proxy Statement fully describe
the formal business to be transacted at the annual meeting, including (1) the
election of three Class II directors, (2) the approval of the Budget Group, Inc.
2000 Stock Plan, as more fully described in the accompanying Proxy Statement,
and (3) the ratification of the Board of Directors' appointment of Arthur
Andersen LLP as Budget's independent accountants for the 2000 fiscal year.
It is important that your shares be represented at the annual meeting.
Whether or not you plan to attend, please complete, sign and date the enclosed
proxy card and return it in the enclosed postage prepaid envelope. If you attend
the annual meeting and vote in person, your proxy card will not be used. The
prompt return of your proxy card will save the expense involved in further
communication.
Your Board of Directors and I look forward to seeing you at the annual
meeting.
Very truly yours,
/s/ SANFORD MILLER
SANFORD MILLER
Chairman of the Board and Chief
Executive Officer
<PAGE> 3
(BUDGET LOGO)
BUDGET GROUP, INC.
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 2000
---------------------
TO OUR STOCKHOLDERS:
The 2000 Annual Meeting of Stockholders of Budget Group, Inc. will be held
at the Renaissance Orlando Resort, 6677 Sea Harbor Drive, Palani Sailfish Room,
Orlando, Florida, (407) 351-5555 on Thursday, May 18, 2000, beginning at 10:00
a.m. local time. At the meeting, stockholders will act on the following matters:
(1) Election of three Class II directors, each for a term of three
years;
(2) Approval of the Budget Group, Inc. 2000 Stock Plan;
(3) Ratification of the appointment of Arthur Andersen LLP as Budget's
independent accountants for fiscal 2000; and
(4) Any other matters that properly come before the meeting.
Stockholders of record at the close of business on March 24, 2000 are
entitled to attend and vote at the meeting or any postponement or adjournment.
By order of the Board of Directors,
/s/ SANFORD MILLER
SANFORD MILLER
Chairman of the Board and Chief
Executive Officer
April 18, 2000
Daytona Beach, Florida
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE SIGN, DATE AND
MAIL THE ENCLOSED PROXY CARD PROMPTLY. IF YOU ATTEND THE ANNUAL MEETING AND VOTE
IN PERSON, THE PROXY CARD WILL NOT BE USED. IF THE PROXY CARD IS MAILED IN THE
UNITED STATES IN THE ENCLOSED ENVELOPE, NO POSTAGE IS REQUIRED. THE PROMPT
RETURN OF YOUR PROXY CARD WILL SAVE US THE EXPENSE INVOLVED IN FURTHER
COMMUNICATION.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ABOUT THE MEETING........................................... 1
Why Am I Receiving This Proxy Statement And Proxy Card?... 1
What Is The Purpose Of The Annual Meeting?................ 1
Who Is Entitled To Vote?.................................. 1
How Many Votes Does Each Share Of Common Stock Entitle Its
Holder To Cast?........................................ 1
Who Can Attend The Meeting?............................... 1
How Many Votes Do You Need To Hold The Meeting?........... 2
How Do I Vote?............................................ 2
Can I Change My Vote After I Return My Proxy Card?........ 2
Will My Shares Be Voted If I Do Not Sign And Return My
Proxy Card?............................................ 2
Can My Shares Be Voted On Matters Other Than Those
Described In This Proxy Statement?..................... 2
What Are The Board's Recommendations?..................... 3
What Vote Is Required To Approve Each Item?............... 3
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS............. 4
ITEM 1 -- Election Of Directors............................. 7
Directors Standing For Election........................... 7
Who Are The Nominees This Year?........................ 7
What If A Nominee Is Unwilling To Serve?............... 7
What Is The Background Of This Year's Nominees?........ 7
Directors Continuing In Office............................ 8
What Is The Background Of The Directors Not Standing For
Election This Year?.................................... 8
How Are Directors Compensated?............................ 9
How Often Did The Board Meet During 1999?................. 9
What Committees Has The Board Established?................ 9
Executive Officers........................................ 10
Executive Compensation.................................... 12
Executive Compensation Summary Table................... 12
Option Grants During 1999 And Year-End Option Values... 13
Aggregate Option Exercises During 1999 And Year-End
Option Values......................................... 14
Performance Graph...................................... 15
Compensation Committee Report On Executive
Compensation.......................................... 15
Compensation Committee Interlocks And Insider
Participation......................................... 17
Executive Severance Agreements......................... 17
Certain Relationships And Related Transactions............ 18
Signing Bonus and Stock Purchase Loan.................. 18
Leases................................................. 18
Tranex Credit Corporation.............................. 19
Peninsula Bank......................................... 19
Credit Suisse First Boston Corporation................. 19
McDonald Investments, Inc. ............................ 19
ITEM 2 -- APPROVAL OF ADOPTION OF THE BUDGET GROUP, INC.
2000 STOCK PLAN................................... 20
Administration............................................ 20
Coverage Eligibility And Annual Grant Limits.............. 20
Shares Reserved for Issuance Under Plan................... 21
Options................................................... 21
Stock Appreciation Rights................................. 21
Stock Grants.............................................. 22
Non-Transferability....................................... 22
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Amendments To The 2000 Plan............................... 22
Adjustment Of Shares...................................... 22
Mergers................................................... 22
Change In Control......................................... 22
Loans and Tax Payments.................................... 23
Federal Income Tax Consequences........................... 23
ITEM 3 -- RATIFICATION OF APPOINTMENT OF INDEPENDENT
ACCOUNTANTS....................................... 25
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE..... 25
OTHER MATTERS............................................... 25
ADDITIONAL INFORMATION...................................... 25
</TABLE>
<PAGE> 6
BUDGET GROUP, INC.
125 BASIN STREET
SUITE 210
DAYTONA BEACH, FLORIDA 32114
---------------------
PROXY STATEMENT
---------------------
This Proxy Statement contains information regarding the 2000 annual meeting
of stockholders of Budget Group, Inc. ("Budget"). The meeting will be held on
Thursday, May 18, 2000, beginning at 10:00 a.m., at the Renaissance Orlando
Resort, 6677 Sea Harbor Drive, Palani Sailfish Room, Orlando, Florida, (407)
351-5555. The proxy card enclosed with this Proxy Statement is being solicited
by the Budget Board of Directors. Voting material for the meeting, which
includes this Proxy Statement, the enclosed proxy card and our 1999 Annual
Report, will be mailed to our stockholders on or about April 18, 2000.
ABOUT THE MEETING
WHY AM I RECEIVING THIS PROXY STATEMENT AND PROXY CARD?
You are receiving a Proxy Statement and proxy card because you own shares
of Class A or Class B common stock of Budget. This Proxy Statement describes
issues on which we would like you, as a stockholder, to vote. It also gives you
information on these issues so you can make an informed decision.
When you sign the proxy card, you appoint Sanford Miller and Robert L.
Aprati as your representatives at the meeting. Mr. Miller and Mr. Aprati will
vote your shares, as you have instructed them on the proxy card, at the meeting.
This way, your shares will be voted whether or not you attend the annual
meeting. Even if you plan to attend the meeting, it is a good idea to complete,
sign and return your proxy card in advance of the meeting just in case your
plans change.
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At the annual meeting, stockholders will act on the matters outlined in the
accompanying Notice of Meeting. These matters include the election of three
Class II directors, the approval of the Budget Group, Inc. 2000 Stock Plan and
ratification of the appointment of our independent accountants. In addition,
management will report on the performance of Budget during 1999 and respond to
questions from stockholders.
WHO IS ENTITLED TO VOTE?
Only stockholders of record at the close of business on the record date,
March 24, 2000, are entitled to receive notice of the annual meeting and to vote
the shares of common stock that they held on that date at the meeting, or any
postponement or adjournment of the meeting. At the close of business on the
record date, 35,474,072 shares of Budget's Class A common stock and 1,936,600
shares of Budget's Class B common stock were outstanding and are entitled to
vote at the annual meeting.
HOW MANY VOTES DOES EACH SHARE OF COMMON STOCK ENTITLE ITS HOLDER TO CAST?
Holders of Class A common stock are entitled to one vote per share, and
holders of Class B common stock are entitled to ten votes per share on each
matter to be voted on at the meeting. No cumulative voting rights are authorized
and dissenter's rights of appraisal under Delaware law or the rules of the New
York Stock Exchange do not apply to the matters being proposed.
WHO CAN ATTEND THE MEETING?
All stockholders as of the record date, or their duly appointed proxies,
may attend the meeting, and may be accompanied by guests. Registration and
seating will begin at 9:00 a.m. Each stockholder may be
<PAGE> 7
asked to present valid picture identification, such as a driver's license or
passport. Cameras, recording devices and other electronic devices will not be
permitted at the meeting.
Please note that if you hold your shares in "street name" (that is, through
a broker or other nominee), you must bring a copy of a brokerage statement
reflecting your stock ownership as of the record date and check in at the
registration desk at the meeting.
HOW MANY VOTES DO YOU NEED TO HOLD THE MEETING?
Our bylaws provide that the presence in person or by proxy of the holders
of a majority of the combined voting power of all shares of common stock issued
and outstanding on the record date and entitled to vote at the meeting is
required to hold the meeting and conduct business. This is called a "quorum."
Proxy cards received but marked "ABSTAIN" or as "broker non-votes" will be
included in the calculation of the number of shares considered to be present at
the meeting for purposes of determining if a quorum is present.
HOW DO I VOTE?
YOU MAY VOTE BY MAIL. You do this by signing your proxy card and mailing
it in the enclosed, prepaid and addressed envelope. If you mark your voting
instructions on the proxy card, your shares will be voted as you instruct. If
you return a signed card but do not provide voting instructions, your shares
will be voted FOR the three named nominees, FOR the approval of the Budget
Group, Inc. 2000 Stock Plan and FOR the ratification of the appointment of the
independent accountants.
YOU MAY VOTE IN PERSON AT THE MEETING. Written ballots will be passed out
to anyone who wants to vote at the meeting. If you hold your shares in "street
name" (through a broker or other nominee), you must request a legal proxy from
your stockbroker to vote at the meeting.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. Even after you have submitted your proxy card, you may change your
vote at any time before the proxy is exercised by filing with the Secretary of
Budget either a notice of revocation or an executed proxy card with a later
date. The powers of the proxy holders will be suspended if you attend the
meeting in person AND SO REQUEST. Attendance at the meeting will not by itself
revoke a previously granted proxy.
WILL MY SHARES BE VOTED IF I DO NOT SIGN AND RETURN MY PROXY CARD?
If your shares are held in street name, your brokerage firm may vote your
shares under certain circumstances. These circumstances include certain
"routine" matters, such as the election of directors. Therefore, if you do not
vote your proxy, your brokerage firm may either vote your shares on routine
matters, or leave your shares unvoted. When a brokerage firm votes its
customers' unvoted shares on routine matters, these shares are counted for
purposes of establishing a quorum to conduct business at the meeting.
A brokerage firm cannot vote customers' shares on non-routine matters.
Therefore, if your shares are held in street name and you do not vote your
proxy, your shares will not be voted on non-routine matters and will not be
counted in determining the number of shares necessary for approval. Shares
represented by such "broker non-votes" will, however, be counted in determining
whether there is a quorum.
CAN MY SHARES BE VOTED ON MATTERS OTHER THAN THOSE DESCRIBED IN THIS PROXY
STATEMENT?
Budget does not know of any items other than those referred to in this
Proxy Statement which may properly come before the meeting or other matters
incident to the conduct of the meeting. Should the election of any person as a
Director in place of a nominee named in this proxy statement who becomes unable
to serve or for good cause will not serve properly come before the meeting, the
proxies received will be voted for substitute nominee(s) designated by the Board
of Directors or if no such substitute nominees are designated by the Board of
Directors then in accordance with the discretion of the proxy holders. As to any
other item or proposal that may properly come before the meeting, including
voting on a proposal
2
<PAGE> 8
omitted from this Proxy Statement pursuant to the rules of the Securities and
Exchange Commission, it is intended that proxies received will be voted in
accordance with the discretion of the proxy holders.
WHAT ARE THE BOARD'S RECOMMENDATIONS?
Unless you give other instructions on your proxy card, the persons named as
proxy holders on the proxy card will vote in accordance with the recommendations
of the Board of Directors. The Board's recommendation is set forth together with
the description of each item in this proxy statement. In summary, the Board
recommends a vote:
- FOR election of the three nominees for Class II director (see page 7);
- FOR approving the Budget Group, Inc. 2000 Stock Plan (see page 20); and
- FOR ratification of the appointment of Arthur Andersen LLP as Budget's
independent accountants (see page 25).
With respect to any other matter that properly comes before the meeting,
the proxy holders will vote as recommended by the Board of Directors or, if no
recommendation is given, in their own discretion.
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
ELECTION OF DIRECTORS. The affirmative vote of a plurality of the votes
cast at the meeting is required for the election of directors. "Plurality" means
that the individuals who receive the largest number of votes cast are elected as
directors. Consequently, shares not voted, whether by marking "ABSTAIN" on your
proxy card, by broker non-vote (which is described above) or otherwise, have no
impact on the election of directors. Unless a properly executed proxy card is
marked "WITHHOLD AUTHORITY," the proxy given will be voted "FOR" the three
nominees for director.
ADOPTION OF THE BUDGET GROUP, INC. 2000 STOCK PLAN. The affirmative vote
of the majority of the combined voting power of shares of Class A common stock
and Class B common stock represented in person or by proxy and entitled to vote
at the meeting is required to approve the Budget Group, Inc. 2000 Stock Plan. A
properly executed proxy card marked "ABSTAIN" with respect to the approval of
the Budget Group, Inc. 2000 Stock Plan will not be voted. Accordingly, an
abstention will have the effect of a vote "AGAINST" the proposal to approve the
Budget Group, Inc. 2000 Stock Plan.
RATIFICATION OF THE APPOINTMENT OF THE AUDITORS. The affirmative vote of
the majority of the combined voting power of shares of Class A common stock and
Class B common stock represented in person or by proxy and entitled to vote at
the meeting is required for approval. A properly executed proxy card marked
"ABSTAIN" with respect to the ratification of the appointment of the auditors
will not be voted. Accordingly, an abstention will have the effect of a vote
"AGAINST" the proposal.
3
<PAGE> 9
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Unless otherwise indicated, the following table sets forth certain
information, as of March 24, 2000, with respect to the beneficial ownership of
our common stock by (1) each person known by us to beneficially own more than 5%
of either class of common stock, (2) each director or nominee for director, (3)
our named executive officers and (4) all directors and executive officers as a
group. As of March 24, 2000, we had outstanding 35,474,072 shares of Class A
common stock and 1,936,600 shares of Class B common stock. This table also gives
effect to shares that may be acquired pursuant to options as described in the
footnotes below.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK CLASS B COMMON STOCK PERCENT OF
------------------------------- ------------------------------- TOTAL VOTING
NUMBER OF PERCENT OF NUMBER OF PERCENT OF POWER OF COMMON
CLASS A SHARES CLASS A SHARES CLASS B SHARES CLASS B SHARES STOCK
BENEFICIALLY BENEFICIALLY BENEFICIALLY BENEFICIALLY BENEFICIALLY
DIRECTORS AND EXECUTIVE OFFICERS OWNED(A) OWNED OWNED(A) OWNED OWNED
- -------------------------------- -------------- -------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Sanford Miller................. 1,277,923(b) 3.5% 1,092,050(b) 45.5% 19.6%
Jeffrey D. Congdon............. 799,185(c) 2.2 671,650(c) 28.0 12.1
David N. Siegel................ 141,800(d) * -- -- *
Robert L. Aprati............... 120,001(e) * -- -- *
Michael B. Clauer.............. 0 * -- -- *
Mark R. Sotir.................. 75,838(f) * -- -- *
Ronald D. Agronin.............. 52,400(g) * -- -- *
James F. Calvano............... 77,500(h) * -- -- *
Martin P. Gregor............... 63,905(g) * -- -- *
F. Perkins Hixon............... 230,000(i) * -- -- *
John P. Kennedy................ 692,666(j) 1.9 637,900(j) 26.5 11.5
Dr. Stephen L. Weber........... 56,300(h) * -- -- *
All directors and executive
officers as a group (13
persons)..................... 3,587,518(k) 9.4% 2,401,600(l) 100.0% 42.1%
5% STOCKHOLDERS
- -------------------------------
AXA Financial Inc.............. 5,575,700(m) 15.7% -- -- 9.8%
Baron Capital Group, Inc....... 3,384,050(n) 9.5% -- -- 5.9%
Dimensional Fund Advisors I.... 1,759,700(o) 5.0% -- -- 3.1%
</TABLE>
- ------------------------------
* Less than 1%
(a) In determining the number and percent of shares beneficially owned by each
person, shares that may be acquired by such person pursuant to options,
convertible notes or convertible preferred stock exercisable or convertible
within 60 days of the date hereof are deemed outstanding for purposes of
determining the total number of outstanding shares for such person and are
not deemed outstanding for such purpose for all other stockholders. To the
best of our knowledge, except as otherwise indicated, beneficial ownership
includes sole voting and dispositive power with respect to all shares.
(b) Includes (i) 905,800 shares of Class A common stock issuable upon
conversion of Class B common stock, (ii) 186,250 shares of Class A common
stock issuable upon conversion of Class B common stock issuable upon
exercise of options granted under our 1994 Incentive Stock Option Plan (the
"1994 Employee Option Plan"), (iii) 8,000 shares of Class A common stock
owned by Mr. Miller's minor children but with respect to which Mr. Miller
has sole voting and dispositive power, (iv) 16,666 shares of Class A common
stock representing a one-third interest in 50,000 shares of Class A common
stock held by MCK Real Estate Corporation in which Mr. Miller owns
one-third interest and shares voting and dispositive power with Mr. Congdon
and Mr. Kennedy and (v) 1,237 shares of Class A common stock held by the
Budget Group, Inc. Savings Plus Plan ("Savings Plus Plan") and 1,072 shares
held in a 401(k) retirement account. Mr. Miller's address is 125 Basin
Street, Suite 210, Daytona Beach, Florida 32114.
4
<PAGE> 10
(c) Includes (i) 515,400 shares of Class A common stock issuable upon
conversion of Class B common stock, (ii) 156,250 shares of Class A common
stock issuable upon conversion of Class B common stock issuable upon
exercise of options granted under the 1994 Employee Option Plan, (iii)
16,669 shares of Class A common stock owned by the Congdon Family
Foundation, Inc. (the "Foundation"), of which Mr. Congdon and his wife
share voting and dispositive power as the President and Treasurer and Vice
President and Secretary, respectively, of the Foundation, (iv) 16,666
shares of Class A common stock representing a one-third interest in 50,000
shares of Class A common stock held by MCK Real Estate Corporation in which
Mr. Congdon owns one-third interest and shares voting and dispositive power
with Mr. Miller and Mr. Kennedy; (v) 317 shares of Class A common stock
held by the Savings Plus Plan and 1,004 shares held in a 401(k) retirement
account. Mr. Congdon's address is Woodland Corporate Center One, 7602
Woodland Drive, Suite 150, Indianapolis, Indiana 46278-2706.
(d) Includes 30,000 shares of Class A common stock held by a trust for benefit
of Mr. Siegel's children of which Mr. Siegel's sister-in-law is the trustee
and Mr. Siegel may therefore be deemed to have voting and dispositive power
of such shares.
(e) Includes (i) 86,250 shares of Class A common stock issuable upon exercise
of options granted under the 1994 Employee Option Plan and (ii) 502 shares
of Class A common stock held by the Savings Plus Plan.
(f) Includes (i) 45,750 shares of Class A common stock issuable upon exercise
of options granted under 1994 Employee Option Plan and (ii) (ii) 463 shares
of Class A common stock held by the Savings Plus Plan.
(g) Includes 47,500 shares of Class A common stock issuable upon exercise of
options granted under the 1994 Directors' Plan.
(h) Includes 52,500 shares of Class A common stock issuable upon exercise of
options granted under the 1994 Directors' Plan.
(i) Includes 30,000 shares of Class A common stock issuable upon exercise of
options granted under the 1994 Directors' Plan.
(j) Includes (i) 515,400 shares of Class A common stock issuable upon
conversion of Class B common stock, (ii) 122,500 shares of Class A common
stock issuable upon conversion of Class B common stock issuable upon
exercise of options granted under the 1994 Employee Option Plan, (iii)
15,000 shares of Class A common stock issuable upon exercise of options
granted under the 1994 Directors' Plan, and (iv) 16,666 shares of Class A
common stock representing a one-third interest in 50,000 shares of Class A
common stock held by MCK Real Estate Corporation in which Mr. Kennedy owns
one-third interest and shares voting and dispositive power with Mr. Miller
and Mr. Congdon. Mr. Kennedy's address is 131 Church Street, Suite 210,
Burlington, Vermont 05401.
(k) Includes (i) 1,936,600 shares of Class A common stock issuable upon
conversion of Class B common stock, (ii) 465,000 shares of Class A common
stock issuable upon conversion of Class B common stock issuable upon
exercise of options granted under the 1994 Employee Option Plan, (iii)
377,000 shares of Class A common stock issuable upon exercise of options
granted under the 1994 Employee Option Plan, (iv) 2,519 shares of Class A
common stock held by the Savings Plus Plan, and (v) 2,076 shares held in
401(k) retirement plans.
(l) Includes 465,000 shares of Class B common stock issuable upon exercise of
options granted under the 1994 Employee Stock Option Plan.
(m) Represents shares of Class A common stock owned by affiliates and
subsidiaries of AXA Financial, Inc. (formerly known as The Equitable
Companies Incorporated) ("AXA") as follows: (i) 1,225,000 shares of Class A
common stock held by The Equitable Life Assurance Society of the United
States; and (ii) 4,350,700 shares of Class A common stock held by Alliance
Capital Management L.P. The Equitable's address is 1290 Avenue of the
Americas, New York, New York 10104. This information is included in
reliance upon a Schedule 13G filed by AXA with the Commission on February
14, 2000.
5
<PAGE> 11
(n) Represents shares of Class A common stock beneficially owned by Ronald
Baron and by the following entities controlled by Mr. Baron: Baron Capital
Group, Inc., BAMCO, Inc., Baron Asset Fund and Baron Capital Management,
Inc. (the "Baron Affiliates"). The address for the Baron Affiliates is 767
Fifth Avenue, 24th Floor, New York, New York 10153. This information is
included in reliance upon a Schedule 13G/A filed by the Baron Affiliates
with the Commission on February 15, 2000.
(o) The address of Dimensional Fund Advisors ("DFA") is 1299 Ocean Avenue, 11th
Floor, Santa Monica, California 90401. This information is included in
reliance upon a Schedule 13G filed by DFA with the Commission on February
3, 2000.
6
<PAGE> 12
ELECTION OF DIRECTORS (ITEM 1)
DIRECTORS STANDING FOR ELECTION
The Board of Directors currently consists of eight (8) directors divided
into three classes, having three-year terms that expire in successive years.
WHO ARE THE NOMINEES THIS YEAR?
The current term of office of Messrs. Congdon and Hixon and Dr. Weber, who
are directors in Class II, expires at the 2000 annual meeting. The Board
proposes that Messrs. Congdon and Hixon and Dr. Weber be re-elected to Class II
for a new term of three years and until their successors are duly elected and
qualified.
WHAT IF A NOMINEE IS UNWILLING TO SERVE?
Each of the nominees has consented to serve a three-year term. If any of
them should become unavailable to serve as a director, the Board may designate a
substitute nominee. In that case, the persons named as proxies will vote for the
substitute nominee designated by the Board. In no event will proxies be voted
for the election of more than two nominees to the Board of Directors.
WHAT IS THE BACKGROUND OF THIS YEAR'S NOMINEES?
CLASS II DIRECTORS.
The directors standing for election are:
Jeffrey D. Congdon, 56, was first elected as a director in April 1994 and
has been Vice Chairman of the Board of Directors since January 1991. From
January 1991 to March 1998 Mr. Congdon also served as Budget's Chief Financial
Officer. From December 1990 until March 1999, he was Secretary and Treasurer of
Tranex Credit Corporation, which provided financing for purchases of previously
owned vehicles. From 1980 to 1989, he was an executive officer and principal
stockholder of corporations that owned and operated 30 Budget franchises that
were sold to BRACC in 1989. From 1982 to 1996, Mr. Congdon owned and operated
retail new and/or used vehicle sales operations in Indianapolis, Indiana.
Dr. Stephen L. Weber, 58, was first elected as a director in April 1994.
Since June 1996, Dr. Weber has been the President of San Diego State University.
From August 1995 to June 1996, he was the Interim Provost of the State
University of New York System. From 1988 until June 1996, he was President of
the State University of New York, College at Oswego. Dr. Weber is a member of
Budget's Nominating Committee.
F. Perkins Hixon, Jr., 41, has served since February 1996 as a managing
director in Credit Suisse First Boston Corporation's ("CSFBC") New York
Investment Banking Department, where he was first employed as an associate in
1985. Mr. Hixon also serves as a member of CSFBC's Worldwide Investment Banking
and Investment Committees. Mr. Hixon is the Chairman of the Board's
Audit/Finance Committee and is a member of the Nominating Committee.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE ELECTION OF MESSRS. CONGDON AND HIXON AND DR. WEBER TO HOLD OFFICE UNTIL THE
ANNUAL MEETING OF STOCKHOLDERS IN 2003 OR UNTIL THEIR SUCCESSORS ARE ELECTED AND
QUALIFIED.
7
<PAGE> 13
DIRECTORS CONTINUING IN OFFICE
WHAT IS THE BACKGROUND OF THE DIRECTORS NOT STANDING FOR ELECTION THIS YEAR?
CLASS I DIRECTORS. The following Class I directors were elected at
Budget's 1998 annual meeting for terms ending in 2001:
Sanford Miller, 47, has been the Chairman of the Board of Directors and
Chief Executive Officer and a director since April 1994. From August 1991 to
August 1994, he was Vice President of Tranex Rentals of New York, Inc.
("Tranex"), which operated the Albany and Rochester Budget franchises, and from
December 1991 to August 1994, was Vice President of Capital City Leasing, Inc.
("Capital City"), which operated the Richmond, Virginia Budget franchise. From
1989 to 1991, Mr. Miller served as Director of Marketing, Special Accounts, for
Budget Rent a Car Corporation ("BRACC"). From 1981 to 1989, Mr. Miller was an
executive officer and principal stockholder of corporations that owned and
operated 30 Budget franchises that were sold to BRACC in 1989. From 1979 to
1981, he was North East Regional Field Operation Manager for BRACC. Mr. Miller
served as President of the American Car Rental Association, a nationwide
industry trade association in 1993 and Chairman of the Licensee Local Market
Advisory Board of the Budget System in 1989 and 1990. Mr. Miller is also a
director of Tranex Credit Corporation, AVTEAM, Inc. and Peninsula Bank of
Central Florida and is the Chairman of the Board of College Foundation, Inc.,
Oswego State University. Mr. Miller is the first cousin of Mr. Agronin.
James F. Calvano, 63, was first elected as a director in August 1994. Since
January 1999, Mr. Calvano has been a consultant for MoneyGram Payment Systems,
Inc ("MoneyGram"), a provider of electronic money transfer services, where he
served as Chairman of the Board, Chief Executive Officer and a director from
December 1996 to July 1998 and was a consultant from February 1996 to December
1996. From June 1991 to February 1996, he was the Executive Vice President of
Marketing for Travelers Group, a subsidiary of Travelers, Inc. From November
1993 to February 1995, he was Chief Administrative Officer of Travelers
Insurance Companies. From June 1991 to May 1993, Mr. Calvano was President and
Chief Operating Officer of New Valley Corp. From January 1989 to December 1990,
Mr. Calvano was President and Chief Executive Officer of Carlson Travel Group
and Executive Vice President of Carlson Companies Inc. From November 1986 to
December 1988, he served as President of Commercial Credit Corp. and Executive
Vice President of Primerica Corp. Mr. Calvano served American Express Travel
Related Services Co., Inc. as its Vice Chairman, President of Payment Systems
Division, USA and President of Consumer Financial Services Division, USA between
October 1981 and November 1986. From 1972 to 1981, Mr. Calvano was employed by
Avis and served in various capacities, including President and Chief Executive
Officer, Executive Vice President and Chief Operation Officer and Group Vice
President, Western Hemisphere. Mr. Calvano is Chairman of the Board's Nominating
Committee and is a member of the Compensation Committee.
Martin P. Gregor, 36, was first elected as a director in December 1996. Mr.
Gregor serves as a managing director of McDonald Investments, Inc., where he
began his employment as an associate in 1989. Mr. Gregor is Chairman of the
Board's Compensation Committee and is a member of the Audit/Finance Committee.
CLASS III DIRECTORS. The following Class III directors were elected at
Budget's 1999 annual meeting for terms ending in 2002:
Ronald D. Agronin, 62, was first elected as a director in April 1994. He
has been a consultant for Black Clawson Company ("Black Clawson"), a
manufacturer of paper making machinery, and United Container Machinery, Inc.
("United Container Machinery"), a corrugating machinery manufacturer, since
April 1998. From 1993 to April 1998, Mr. Agronin was Vice Chairman of Black
Clawson and President and Chief Executive Officer of United Container Machinery.
He served as Executive Vice President and Chief Operating Officer of Black
Clawson from 1987 to 1993. Mr. Agronin is the first cousin of Mr. Miller. Mr.
Agronin is a member of the Board's Compensation and Audit/Finance Committees.
John P. Kennedy, 55, was first elected as a director in April 1994 and
served as Vice Chairman of the Board of Directors from May 1997 to December
1998. From August 1994 to May 1997, he was Budget's
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<PAGE> 14
President and Chief Operating Officer. From November 1991 to August 1994, he was
Chairman and President of Metro West, Inc., whose wholly owned subsidiary
previously owned Budget's San Diego airport operations. From November 1990 to
November 1991, he was an independent consultant to the vehicle rental industry.
From July 1985 to August 1989, he served as President of NYRAC, Inc. d/b/a
Budget Rent a Car of Kennedy and La Guardia Airports. From 1968 to 1984, he
served in various capacities with Avis, Inc. ("Avis"), including Vice President
of Operations.
HOW ARE DIRECTORS COMPENSATED?
CASH COMPENSATION. Non-employee directors receive an annual retainer of
$18,000. Directors who are also employees of Budget are not separately
compensated for their service as directors.
OPTIONS. Non-employee directors are eligible to participate in Budget's
1994 Directors' Stock Option Plan (the "Directors' Plan"). In 1999, Budget
granted options to purchase an aggregate of 105,000 shares of Class A common
stock to outside directors under the 1994 Directors' Plan. These options were
granted on February 25, 1999, expire on February 25, 2009 and are exercisable at
a price of $11.00 per share.
HOW OFTEN DID THE BOARD MEET DURING 1999?
The Board of Directors met or acted by written consent nine times during
1999. Each director attended more than 75% of the total number of meetings of
the Board and Committees on which he served.
WHAT COMMITTEES HAS THE BOARD ESTABLISHED?
The Board of Directors has standing Nominating, Compensation and
Audit/Finance Committees.
NOMINATING COMMITTEE. The Nominating Committee consists of Messrs. Calvano
and Hixon and Dr. Weber. This Committee is responsible for nominating candidates
for election to the Board of Directors. The Nominating Committee will consider
nominees recommended by Budget's stockholders if the nomination is set forth in
writing and delivered to Budget's General Counsel and Secretary at 125 Basin
Street, Suite 210, Daytona Beach, Florida 32114. During 1999 the Nominating
Committee held one meeting.
COMPENSATION COMMITTEE. The Compensation Committee consists of Messrs.
Gregor, Calvano and Agronin. The Compensation Committee establishes salaries,
incentives and other forms of compensation for senior officers of Budget,
administers Budget's incentive compensation and benefit plans and recommends
policies relating to such plans. This Committee met or acted by written consent
seven times in 1999.
AUDIT/FINANCE COMMITTEE. The Audit/Finance Committee consists of Messrs.
Agronin, Gregor and Hixon. This Committee reviews Budget's accounting practices,
internal accounting controls and financial results and oversees the engagement
of Budget's independent auditors. The Audit/Finance Committee met four times in
1999.
9
<PAGE> 15
EXECUTIVE OFFICERS
The following table sets forth certain information regarding Budget's
executive officers:
<TABLE>
<CAPTION>
NAME AGE POSITION(S) WITH BUDGET
- ---- --- -----------------------
<S> <C> <C>
Sanford Miller......................... 47 Chairman of the Board of Directors,
Chief Executive Officer and Director
Jeffrey D. Congdon..................... 56 Vice Chairman of the Board of Directors
and Director
David N. Siegel(1)..................... 38 President and Chief Operating Officer
Neal S. Cohen(2)....................... 39 Executive Vice President and Chief
Financial Officer
Robert L. Aprati....................... 55 Executive Vice President, General
Counsel and Secretary
Mark R. Sotir.......................... 36 President, North American Vehicle
Rental Operations
</TABLE>
- ---------------
(1) Mr. Siegel became President and Chief Operating Officer of Budget effective
as of October 26, 1999.
(2) Mr. Cohen became Executive Vice President and Chief Financial Officer of
Budget effective as of January 10, 2000.
Each of the above executive officers was elected by the Board to hold
office until the next annual election of officers and until his successor is
elected and qualified or until his earlier resignation or removal.
David N. Siegel has been President and Chief Operating Officer since
October 26, 1999. From 1995 until his appointment at Budget, he served as
President of Continental Express, a wholly owned subsidiary of Continental
Airlines, Inc. From 1993 to 1995, Mr. Siegel served Continental Airlines, Inc.
as Senior Vice President of Planning, and, previously, as Vice President of
Corporate Development. From 1991 to 1993, Mr. Siegel served as Director of
Corporate Planning for Northwest Airlines. Prior to 1991, Mr. Siegel worked for
Bain & Company, an international strategy consulting firm specializing in
business turnarounds.
Neal S. Cohen has been Executive Vice President and Chief Financial Officer
since January 10, 2000. From 1991 to his appointment at Budget, Mr. Cohen worked
for Northwest Airlines where his responsibilities included capital markets and
banking, budgeting, tax and risk management, business development and market
planning, and where, most recently, he served as Senior Vice President and
Treasurer. From 1984 to 1991, Mr. Cohen worked for General Motors at its New
York treasurer's office where he held positions in international finance,
banking, financial analysis, and planning.
Robert L. Aprati has been Executive Vice President, General Counsel and
Secretary of Budget since August 1997, was Senior Vice President, General
Counsel and Secretary of BRACC from January 1988 to July 1997 and was Vice
President, General Counsel and Secretary of BRACC from September 1978 to January
1988.
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<PAGE> 16
Mark R. Sotir has been President, North American Vehicle Rental Operations
since January 2000. He has served in management positions for BRACC since April
1995. He served as President, North America, Budget Rent a Car Corporation from
January 1999 to December 1999. From August 1998 to January 1999, he was Senior
Vice President, Operations; from June 1997 to August 1998 he was Senior Vice
President, Marketing; from June 1996 to June 1997 he was Vice President,
Marketing; and from April 1995 to June 1996 he was Vice President, Revenue
Management. Prior to joining BRACC, Mr. Sotir was Marketing Manager for The
Coca-Cola Company from August 1994 to April 1995 and was Senior Production
Manager from July 1993 to August 1994.
For descriptions of the business experience of Mr. Miller, see "Item
1 -- Directors Continuing in Office" and of Mr. Congdon, see "Item
1 -- Directors Standing for Election."
11
<PAGE> 17
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION SUMMARY TABLE
The following table sets forth information concerning total compensation
earned or paid to the Chief Executive Officer and the five other most highly
compensated executive officers of Budget who served in such capacities as of
December 31, 1999 (the "Named Executive Officers") for services rendered to
Budget during each of the last three fiscal years.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS COMPENSATION(2)
- --------------------------- ---- -------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Sanford Miller............. 1999 $607,625 $ 0 -- 155,000 $24,354
Chairman of the Board 1998 468,807 327,000 -- 115,000 3,667
of Directors and Chief 1997 317,500 334,000 -- 90,000 17,625
Executive Officer
Jeffrey D. Congdon......... 1999 425,000 0 -- 135,000 32,062
Vice Chairman of the 1998 406,874 286,500 95,000 3,525
Board of Directors 1997 298,750 333,000 -- 75,000 2,855
David N. Siegel(3)......... 1999 57,693 500,000 -- 500,000 718
President and Chief
Operating Officer
Robert L. Aprati(4)........ 1999 240,000 51,950 -- 45,000 18,494
Executive Vice President, 1998 220,444 150,000 -- 50,000 2,969
General Counsel and 1997 133,200 150,000 -- 50,000 4,152
Secretary
Michael B. Clauer(5)....... 1999 240,000 53,000 -- 46,000(6) 4,515
Executive Vice President 1998 218,563 40,000 -- 35,000 577
and Chief Financial
Officer 1997 25,000 40,000 40,000 92
Mark R. Sotir.............. 1999 250,808 42,000 -- 60,000 6,438
President, North American 1998 173,785 100,000 -- 41,500 42,902
Vehicle Rental Operations 1997 150,408 0 -- 10,000 37,504
</TABLE>
- ---------------
(1) While the Named Executive Officers enjoy certain perquisites, for fiscal
years 1999, 1998 and 1997 these did not exceed the lesser of $50,000 or 10%
of each Named Executive Officer's salary and bonus.
(2) For all the Named Executive Officers, "All other compensation" includes
amounts for:
- Payment of life and insurance premiums;
- Payment of disability insurance premiums; and
- Matching contributions under Budget's 401(k) Plan.
<TABLE>
<CAPTION>
LIFE INSURANCE DISABILITY
NAME PREMIUMS INSURANCE PREMIUMS MATCHING CONTRIBUTIONS
---- -------------- ------------------ ----------------------
<S> <C> <C> <C>
Sanford Miller............... $17,072 $3,523 $2,679
Jeffrey D. Congdon........... 25,125 4,412 2,525
David N. Siegel.............. 718 0 0
Robert L. Aprati............. 12,732 2,731 3,031
Michael B. Clauer............ 596 2,817 1,102
Mark R. Sotir................ 3,295 77 3,066
</TABLE>
For Mr. Miller, "All other compensation" also includes $1,080 related to an
automobile allowance.
12
<PAGE> 18
(3) Mr. Siegel began his employment with Budget on October 26, 1999.
(4) Mr. Aprati commenced serving as an executive officer in August 1997. The
1997 salary reflects amounts paid from April 30, 1997, when Team Rental
Group, Inc. acquired Budget Rent a Car Corporation, to December 31, 1997.
(5) Mr. Clauer began his employment with Budget in November 1997 and commenced
serving as an executive officer in September 1998. Mr. Clauer resigned his
position on January 10, 2000, effective as of February 28, 2000.
(6) Options to purchase 34,500 shares of Class A common stock granted in 1999
were forfeited upon Mr. Clauer's resignation.
OPTION GRANTS DURING 1999 AND YEAR-END OPTION VALUES
The following table describes the stock options granted to the Named
Executive Officers in 1999:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
-------------------------------------------------------- ANNUAL RATES OF
NUMBER OF PERCENT OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM(1)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME GRANTED(2) FISCAL YEAR(3) PER SHARE DATE 5% 10%
- ---- ---------- ---------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sanford Miller............. 155,000(4) 9.3% $ 11.00 2/24/09 1,072,265 2,717,331
Jeffrey D. Congdon......... 135,000(4) 8.1 11.00 2/24/09 933,909 2,366,708
David N. Siegel............ 500,000(5) 29.9 6.1875 10/21/09 1,945,643 4,930,641
Robert L. Aprati........... 45,000(5) 2.7 11.00 2/24/09 311,606 788,903
Mark R. Sotir.............. 60,000(5) 3.6 11.00 2/24/09 415,070 1,051,870
Michael B. Clauer.......... 46,000(5) 2.8 11.00 2/24/09(6) 318,221 806,434
</TABLE>
- ---------------
(1) Potential realizable value assumes that the stock price increases from the
date of grant until the end of the option term (10 years) at the annual rate
specified (5% and 10%). The 5% and 10% assumed annual rates of appreciation
are mandated by Commission rules and do not represent Budget's estimate or
projection of the future price of Class A common stock. Budget does not
believe that this method accurately illustrates the potential value of a
stock option.
(2) Options granted to executive officers in 1999 (other than Mr. Siegel) vest
in four equal annual installments on February 24 of each year during the
four-year period ending February 26, 2003. Options granted to Mr. Siegel in
1999 vest in four equal installments on October 21 of each year during the
four-year period ended October 21, 2003.
(3) Options to purchase a total of 1,379,700 shares of Class A common stock and
290,000 shares of Class B common stock were granted to employees in 1999.
(4) Represents options to purchase shares of Class B common stock.
(5) Represents options to purchase shares of Class A common stock.
(6) Options to purchase 34,500 shares of Class A common stock granted in 1999
were forfeited upon Mr. Clauer's resignation.
13
<PAGE> 19
AGGREGATE OPTION EXERCISES DURING 1999 AND YEAR-END OPTION VALUES
The following table sets forth certain information with respect to option
exercises by the Named Executive Officers during 1999 and the value of options
owned by the Named Executive Officers at December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1999 DECEMBER 31, 1999(1)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sanford Miller................. 0 0 118,750 241,250 $0 $ 0
Jeffrey D. Congdon............. 0 0 98,750 206,250 0 0
David N. Siegel................ 0 0 0 500,000 0 1,421,875
Robert L. Aprati............... 0 0 62,500 82,500 0 0
Mark R. Sotir.................. 0 0 20,375 111,500 0 0
Michael B. Clauer.............. 0 0 48,750 121,000 0 0
</TABLE>
- ---------------
(1) In accordance with SEC rules, values are calculated by subtracting the
exercise price from the fair market value of the underlying common stock.
For purposes of this table, fair market value is deemed to be $9.03125, the
average of the high and low Class A common stock price reported for New York
Stock Exchange transactions on December 31, 1999.
As of December 31, 1999, options to purchase a total of 3,378,371 of Class
A common stock and 665,000 shares of Class B common stock with exercise prices
ranging from $6.1875 to $37.07 per share were outstanding under Budget's 1994
Incentive Stock Option Plan.
On March 24, 2000, the closing sales price of the Class A common stock on
the New York Stock Exchange was $4.6875.
14
<PAGE> 20
PERFORMANCE GRAPH
Set forth below is a line graph comparing the percentage change in the
cumulative total stockholder return on Budget's Class A common stock against the
cumulative total return of the New York Stock Exchange Composite Index, the
Standard & Poors 500 Index, Budget's peer group index for 1998 (the "1998 Peer
Group") and Budget's peer group index for 1999 (the "1999 Peer Group"). The 1998
Peer Group consists of Amerco, National Auto Credit, Inc., Pacific International
Services Corp., Rollins Truck Leasing Corp. and Ryder Systems Inc. The 1999 Peer
Group consists of Avis Group Holdings, Inc., Hertz Corporation, Dollar Thrifty
Automotive Group, Inc., Amerco, Autonation, Inc. and United Auto Group, Inc. In
revising its former peer group index, Budget took into consideration its
expansion into additional lines of business, the entry of new competitors into
Budget's lines of business and a reassessment of Budget's position in the
marketplace. The stock performance graph assumes $100 was invested on December
31, 1994 and measures the return thereon at various points based on the closing
price of the Class A common stock on the dates indicated.
<TABLE>
<CAPTION>
12/31/94 12/31/96 12/31/97 12/31/97 12/31/98 12/31/99
<S> <C> <C> <C> <C> <C> <C>
BGI 100.0000 175.1724 381.3793 179.3103 93.7931 104.8276
S&P 500 100.0000 134.1107 161.2864 211.2984 267.6487 319.9099
NYSE 100.0000 133.4516 168.1672 206.2426 239.4464 299.8383
1999 Peer Group 100.0000 201.1878 157.9528 274.3017 231.2829 245.6499
1998 Peer Group 100.0000 123.2781 161.9131 106.3749 99.3401 88.3272
</TABLE>
The Stock Performance Graph shall not be deemed incorporated by reference
by any general statement incorporating by reference this Proxy Statement into
any filing under either of the Acts, except to the extent Budget specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Budget's executive compensation program is administered by the Compensation
Committee of the Board of Directors. The Compensation Committee consists
entirely of directors who are not employees of Budget to ensure that executive
compensation is determined in an objective manner. In addition to determining
the salary and bonus compensation for Budget's most highly compensated executive
officers, the Compensation Committee administers Budget's 1994 Employee
Incentive Stock Option Plan (the
15
<PAGE> 21
"Plan") and, accordingly, determines the nature, timing and amount of option
grants to executive officers under the Plan.
Executive Officer Compensation Policy. Budget is engaged in a highly
competitive and dynamic industry, and Budget's success depends in large part
upon its ability to attract, motivate, retain and reward executive officers. The
Compensation Committee endeavors to align the long-term interests of Budget, its
stockholders and its management in determining executive compensation. The
Compensation Committee believes the mutuality of interests between Budget's
executive officers and Budget's stockholder is strengthened by increasing
executive officer's ownership of Common Stock through equity-based compensation.
A significant portion of executive officer compensation, therefore, generally
consists of stock option grants.
At least annually the Compensation Committee reviews the individual
contributions and performance of each executive officer, as well as prior
compensation granted. The Compensation Committee takes into account the Chief
Executive's recommendation as well as various qualitative and quantitative
indicators of corporate and individual performance in determining the level and
composition of compensation for executive officers. In particular, the
Compensation Committee considers several financial performance measures,
including stock price, revenue growth and net income, as well as the individual
executive's work experience, level of responsibility and contribution to
Budget's long-term success. It also monitors executive compensation levels of
certain comparably sized public companies to ensure Budget's executive
compensation levels remain competitive.
Executive compensation decisions in 1999 were largely considered in light
of the contributions of executive officers to the successful integration of the
1998 acquisitions, the compensation level of officers of acquired companies who
joined Budget in 1998, and the need to attract and motivate seasoned, new
executive officers to Budget who are able to make valuable contributions to
Budget's success. The Board of Directors also considered the restructuring and
other initiatives implemented by Budget in 1999 and the need to attract and
retain qualified executive officers to implement these initiatives.
Chief Executive Officer Compensation. The compensation of the Chief
Executive Officer, Mr. Miller, is established by the Compensation Committee and
reviewed and adjusted at least annually. Mr. Miller's compensation is
principally comprised of a base salary, a bonus and stock option awards which
are primarily tied to Budget's revenue growth, net income per share and other
achievements. In determining the reasonableness of the compensation awarded to
Mr. Miller in 1999, the Compensation Committee applied the policies and factors
discussed above with an emphasis on his continuing importance to the strategic
direction and growth of Budget.
Mr. Miller's base salary to February 2, 1999 was $500,000 per year. From
February 2, 1999 to December 31, 1999, Mr. Miller's base salary was $643,500. In
1999, Budget paid Mr. Miller no bonus and granted Mr. Miller an option to
purchase 155,000 shares of Class B common stock under the Plan with an exercise
price equal to $11.00, the fair market value of the underlying stock on the date
prior to the date of grant.
The Committee has determined that it is unlikely that Budget would pay any
amounts for 1999 that would result in a loss of the federal income tax deduction
under Section 162(m) of the Internal Revenue Code of 1986, as amended, and
accordingly, has not recommended that any special actions be taken or that any
plans or programs be revised at this time.
THE COMPENSATION COMMITTEE
Martin P. Gregor
James F. Calvano
Ronald D. Agronin
The Compensation Committee Report on Executive Compensation shall not be
deemed incorporated by reference by any general statement incorporating by
reference this Proxy Statement into any filing under the Securities Act of 1933
or under the Securities Exchange Act of 1934 (together, the "Acts"), except to
the extent Budget specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.
16
<PAGE> 22
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Gregor, a director who served on Budget's Compensation Committee in
1999, is a managing director of McDonald Investments, Inc. ("McDonald"), an
investment banking firm which periodically performs services for Budget for
which it receives compensation.
McDonald has been appointed as consultant to the Budget Group Inc.
SavingsPlus Plan and Budget Rent a Car Corporation Employees' Pension Plan and
is responsible for establishing, implementing and supervising Investment
Policies and other related services. McDonald is entitled to receive cash
compensation of $290,000 annually, which is charged to the plans proportionately
based on the amount of services provided.
EXECUTIVE SEVERANCE AGREEMENTS
Budget has entered into a severance agreement (the "Severance Agreement")
with each of the Named Executive Officers as well as Mr. Cohen (each an
"Executive") which provides for severance payments and benefits to the Executive
if his employment is terminated under various circumstances described therein.
Under each Severance Agreement, if an Executive's employment is terminated (a)
voluntarily by the Executive within one year after a "change in control" of
Budget, (b) by reason of the Executive's death or "disability", (c) within one
year after the occurrence of certain other events constituting "good reason" or
(d) involuntarily terminated without "cause" (as such terms are defined in the
Severance Agreement), the Executive generally would be entitled (i) to receive a
lump sum payment due within 30 days of termination in an amount of up to three
times the sum of the Executive's annual base salary rate plus certain bonus
amounts, (ii) to receive his base salary and a pro rated portion of his target
bonus through the date of termination, (iii) to receive certain contributions
(or equivalents) under the Budget Defined Contribution Retirement Plan and the
Budget SavingsPlus (401(k) Plan), (iv) to continue to participate in Budget's
insurance benefit programs for up to 36 months, (v) to use up to two Company
cars for up to 36 months and (vi) to receive certain other benefits.
17
<PAGE> 23
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SIGNING BONUS AND STOCK PURCHASE LOAN
Upon his employment by Budget, David N. Siegel, President and Chief
Operating Officer, received a $500,000 signing bonus and Neal S. Cohen,
Executive Vice President and Chief Financial Officer, received a $250,000
signing bonus (each bonus respectively, a "Signing Bonus"). If Mr. Siegel or Mr.
Cohen voluntarily terminates his employment without "good reason", within twelve
months of the beginning of his employment by Budget (i.e., prior to October 26,
2000 for Mr. Siegel and prior to January 10, 2001 for Mr. Cohen), his respective
Signing Bonus will be repayable in full to Budget.
Upon his employment by Budget, Mr. Seigel also received a $1 million
interest-free loan and Mr. Cohen received a $250,000 interest-free loan (each
loan respectively, a "Loan") from Budget, the proceeds of which were used
exclusively for the purchase of Budget Class A common stock. Each Loan will be
forgiven at the rate of 25% per year over the first four years of Mr. Siegel's
and Mr. Cohen's respective employment by Budget. Budget will provide Mr. Siegel
and Mr. Cohen with additional cash compensation to cover the tax consequences to
Mr. Siegel and Mr. Cohen of any imputed interest with respect to the Loan. In
addition, Budget will pay additional cash compensation in an amount sufficient
to pay, on an after tax basis, the tax consequences of any debt forgiveness with
the Loan if the average closing price of the Budget Class A common stock is
equal to or greater than certain agreed-upon target levels. If Mr. Siegel or Mr.
Cohen sells, within 48 months of the beginning of his employment by Budget, any
Budget Class A common stock purchased with proceeds of the Loan, Mr. Siegel or
Mr. Cohen, respectively, will repay to Budget a portion of the Loan based on the
number of shares sold. If Mr. Siegel or Mr. Cohen voluntarily terminates his
employment without "good reason" within 48 months of the beginning of his
employment by Budget, the outstanding principal balance of the Loan, after
taking into account any forgiveness will be repayable to Budget.
For purposes of each Signing Bonus and each Loan, "good reason" is
generally defined as (1) the assignment of duties inconsistent with the
position, duties and responsibilities of President and Chief Operating Officer
or Executive Vice President and Chief Financial Officer, for each of Mr. Siegel
and Mr. Cohen, respectively, (2) a material diminution in Mr. Siegel's or Mr.
Cohen's respective position, duties and responsibilities, (3) reduction in Mr.
Siegel's or Mr. Cohen's respective benefits and total compensation package, (4)
exclusively relating to Mr. Siegel, relocation from the metropolitan Chicago
area to an area other than Denver, Colorado or Orlando, Florida and (5)
exclusively relating to Mr. Cohen, relocation from the metropolitan Chicago
area.
LEASES
Alabama. Our Mobile, Alabama airport service facility is leased from
Messrs. Miller and Congdon and another individual. This lease terminates July
14, 2004 and is not subject to any renewal options. Rental payments under the
lease were approximately $69,800 in 1999.
Florida. Our Gainesville, Florida airport service facility is leased from
Mr. and Mrs. Miller, Mr. and Mrs. Congdon and another individual. This lease
terminates May 31, 2004, subject to renewal. Rental payments under the Lease
were approximately $53,000 in 1999. Our Tallahassee, Florida airport service
facility is leased from Mr. and Mrs. Miller, Mr. Miller's brother-in-law, who is
an employee of Budget, and an unrelated individual. This lease terminates May
31, 2004. Rental payments under the lease were approximately $61,100 in 1999.
Indiana. Mr. Congdon had a 50% equity interest in CM Land Management, LP,
an entity that owned a retail car sales facility in Indianapolis, Indiana which
is leased to Budget. This lease terminates on March 1, 2004, subject to renewal.
Rental payments under the lease totaled approximately $312,000 in 1999.
New York. Our Rochester, New York airport facility is leased from a
partnership formed by Mr. Miller and a former employee of Budget. This lease
terminates in 2013, subject to renewal. Rental
18
<PAGE> 24
payments under the lease were approximately $97,300 in 1999. Our La Guardia, New
York airport service facility is leased from Messrs. Miller, Congdon and
Kennedy. This lease terminated June 30, 1999, and is currently on a month to
month basis pending completion of lease negotiations. Rental payments under the
lease were approximately $779,600 in 1999.
Ohio. We lease one of our Dayton, Ohio retail car sales facilities from
MCK Real Estate Corporation ("MCK"), which is owned by Messrs. Miller, Congdon
and Kennedy. This lease terminates in March 2007, subject to renewal. Rental
payments under the lease were approximately $135,100 in 1999.
Pennsylvania. Our Philadelphia, Pennsylvania retail vehicle sales
facility, regional administrative headquarters and vehicle maintenance facility
are leased from MCK. This lease terminates in September 2002, subject to
renewal. Rental payments under the lease were approximately $222,500 in 1999.
Virginia. Our Richmond, Virginia airport facility is leased from a
partnership formed by Mr. Miller and an another individual (the "Richmond
Partnership"). This lease terminates in 2013, subject to renewal. Rental
payments under the lease were approximately $108,500 in 1999. Our Chesterfield
County, Virginia non-airport facility is also leased from the Richmond
Partnership. This lease commenced in June 1994 and terminates in May 2014,
subject to renewal. Rental payments under this lease were approximately $44,600
in 1999. Our Richmond, Virginia retail vehicle sales facility is leased from
MCK. This lease terminates in October 2000, subject to renewal. Rental payments
under the lease were approximately $160,700 in 1999.
All of the above leases are on a triple net basis (i.e., we are responsible
for the payment of taxes, insurance and utilities and for the general
maintenance of these facilities in addition to our obligations to pay base
rent). We believe that these leases are on terms no less favorable to us than
could be obtained from unaffiliated third parties.
TRANEX CREDIT CORPORATION
Prior to March 1999, Mr. Congdon owned a 50% equity interest in and served
as Secretary and Treasurer and a director of Tranex Credit Corporation
("Tranex"). In 1999, we sold accounts receivable to Tranex totaling
approximately $744,606 generated pursuant to financing arrangements we extended
to purchasers of vehicles sold by us at our retail sales locations.
PENINSULA BANK
Mr. Miller is a director of Peninsula Bank of Central Florida, in Daytona
Beach, Florida. We maintained a cash management account at that bank which had
an average monthly balance during 1999 of approximately $4,654,626.
CREDIT SUISSE FIRST BOSTON CORPORATION
Mr. Hixon, one of our directors, is a managing director of CSFBC, an
investment banking firm which periodically performs fee-based services for us.
CSFBC and its affiliates have provided extensive investment banking and advisory
services to us in connection with certain of our debt facilities and public
offerings of securities for customary fees. Most recently, during 1999 CSFBC
acted as a lead underwriter in connection with the issuance of Budget's 9 1/8%
Senior Notes Due April 1, 2006. CSFBC is also a lender under our $550 million
credit facility.
MCDONALD INVESTMENTS, INC.
Mr. Gregor, one of our directors, is a managing director of McDonald, an
investment banking firm which periodically performs services for Budget for
which it receives compensation. McDonald has been appointed as consultant to the
Budget Group Inc. SavingsPlus Plan and Budget Rent A Car Corporation Employees'
Pension Plan and is responsible for establishing, implementing and supervising
Investment Policies and other related services. McDonald is entitled to receive
cash compensation of $290,000 annually, which is charged to the plans
proportionately based on the amount of services provided.
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<PAGE> 25
APPROVAL OF THE BUDGET
GROUP, INC. 2000 STOCK PLAN (ITEM 2)
The Board of Directors has adopted and unanimously recommends that the
shareholders approve the Budget Group, Inc., 2000 Stock Plan (the "2000 Plan"),
initially covering the issuance of 5,935,117 shares of common stock.
The 2000 Plan will be approved upon receiving the affirmative vote of
holders of a majority of the shares voting at the meeting. Proxies will be voted
in accordance with the specifications marked thereon, and, if no specification
is made, will be voted "FOR" approval of the 2000 Plan.
The primary purpose of the 2000 Plan is to (i) attract and retain key
individuals, (ii) provide an incentive to individuals and (iii) to provide key
individuals with a stake in the future of Budget which corresponds to the stake
of each of Budget's shareholders.
The 2000 Plan was developed as part of the restructuring program announced
by Budget in January 2000. In connection with the restructuring program, Budget
has offered to buy back and cancel options to acquire approximately 763,120
shares of Class A common stock which had been granted under Budget's 1994
Incentive Stock Option Plan (the "1994 Plan"). Budget does not intend to grant
any additional options under the 1994 Plan. The 2000 Plan was developed in
consultation with Organizational Concepts, an outside compensation consulting
firm, and is designed to more closely align the interests of option recipients
with the interests of Budget's outside stockholders.
The following discussion summarizes the material terms of the 2000 Plan.
This discussion does not comport to be complete and is qualified in its entirety
by reference to the 2000 Plan, a copy of which is attached to this proxy
statement as Annex "A".
ADMINISTRATION
The 2000 Plan will be administered by a Committee of two or more Directors
serving on Budget's Board of Directors (the "Committee"). Each Director, while
serving as a member of the Committee, must satisfy the requirements for a
"Non-Employee" Director under Rule 16(b)-(3) of the Securities Exchange Act of
1934 (the "Exchange Act") and an "outside Director " under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"). All grants under the
2000 Plan will be evidenced by a certificate that will incorporate such terms
and conditions as the Committee deems necessary or appropriate.
COVERAGE ELIGIBILITY AND ANNUAL GRANT LIMITS
The 2000 Plan will provide for the issuance of stock options ("Options") to
key individuals, for the issuance of stock appreciation rights ("SAR") to key
individuals and for the making of stock grants ("Stock Grants") to key
individuals. A key individual will be any member of the Board of Directors who
is not an employee of Budget (or any subsidiary, parent or affiliate of Budget)
and any employee of Budget or any subsidiary, parent or affiliate of Budget
designated by the Committee and who, in the judgment of the Committee, acting in
its absolute discretion, is a key to the success of one of these entities.
Budget estimates that there currently are approximately 100 such key employees.
No key individual in any calendar year may be granted an option to purchase more
than 500,000 shares of common stock or an SAR or Stock Grant with respect to
more than 500,000 shares of common stock unless such grant is made in connection
with his or her initial employment with Budget or any subsidiary, parent or
affiliate of Budget, or his initial appointment to the Board of Directors, in
which event the share limit will be 1,000,000 shares.
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<PAGE> 26
SHARES RESERVED FOR ISSUANCE UNDER PLAN
There initially shall be 5,935,117 shares of common stock reserved for
issuance under the 2000 Plan. These shares shall consist of:
(1) 1,820,000 new shares, and
(2) the 4,115,117 shares which currently remain available for issuance
under the 1994 Plan.
However, each share of common stock issued under the 1994 Plan or under the
Budget Group, Inc. 1994 Directors' Stock Option Plan pursuant to the exercise of
outstanding options granted under such plans shall reduce the number of shares
of common stock reserved for issuance under the 2000 Plan by one share of stock.
As of January 1, 2001 and as of each January 1 thereafter, the Board of
Directors shall have the right to reserve an additional number of shares of
common stock for issuance under the 2000 Plan, but such additional number in no
event shall exceed the lesser of (a) 1.5% of the average number of fully diluted
shares of common stock outstanding in the immediately preceding calendar year or
(b) the number of shares of stock which, when added to the number of shares of
stock already reserved for issuance under the 2000 Plan, would result in a total
number of shares of stock reserved for issuance under the 2000 Plan on such
January 1 which is not more than 12.5% of the average number of fully diluted
shares of common stock outstanding in the immediately preceding calendar year.
Finally, any shares of common stock used to exercise an Option or to
satisfy any condition to a Stock Grant thereafter also shall be reserved for
issuance under the 2000 Plan, but any shares of stock used to satisfy a
withholding obligation shall not again be reserved for issuance under the 2000
Plan.
OPTIONS
Under the 2000 Plan, either incentive stock options ("ISOs"), which are
intended to qualify for special tax treatment under Code Section 422, or
non-incentive stock options ("Non-ISOs") may be granted to key individuals who
are employees of Budget or a subsidiary or parent of Budget. Non-ISOs can be
granted to all key individuals. Each Option granted under the 2000 Plan entitles
the holder thereof to purchase the number of shares of common stock specified in
the grant at the option price specified in the related stock option certificate.
The terms and conditions of each Option granted under the 2000 Plan will be
determined by the Committee, but no ISO will be granted at an exercise price
which is less than the fair market value of the common stock as determined on
the grant date in accordance with the 2000 Plan. In addition, if the Option is
an ISO that is granted to a 10% shareholder of Budget, the option price will be
no less than 110% of the fair market value of the shares of common stock on the
grant date. No Option may be exercisable more than 10 years from the grant date,
or, if the Option is an ISO granted to a 10% shareholder of Budget, it may not
be exercisable more than 5 years from the grant date. Moreover, no key
individual who is an employee may be granted ISOs which are first exercisable in
any calendar year for stock having an aggregate fair market value (determined as
of the date the ISO was granted) that exceeds $100,000.
STOCK APPRECIATION RIGHTS
SARs may be granted by the Committee to key individuals under the 2000
Plan, either as part of an Option or as stand alone SARs. The terms and
conditions for an SAR granted as part of an Option will be set forth in the
related Option Certificate while the terms and conditions of a stand alone SAR
will be set forth in a related SAR certificate. SARs entitle the holder to
receive an amount equal to the excess of the fair market value of one share of
common stock as of the date such right is exercised over the baseline price
specified in the Option or SAR certificate (the "SAR Value"), multiplied by the
number of shares of common stock in respect of which the SAR is being exercised.
The SAR Value for an SAR will be the fair market value of share of Common Stock
as determined on the grant date in accordance with the 2000 Plan.
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<PAGE> 27
STOCK GRANTS
A Stock Grant may be made by the Committee to key individuals under the
2000 Plan. The terms and conditions for a Stock Grant made will be set forth in
the related Award Certificate and will be determined by the Committee, acting in
its sole discretion. The Committee may make the issuance of Stock under a Stock
Grant subject to the satisfaction of one or more employment, performance,
purchase or other conditions and may make the forfeiture of common stock issued
pursuant to such a grant subject to similar conditions. Upon the satisfaction of
any applicable forfeiture conditions, the Shares underlying the Stock Grant will
be transferred to the key individual.
NON-TRANSFERABILITY
No Option, Stock Grant or SAR will (absent the Committee's consent) be
transferable by a key individual other than by will or the laws of descent and
distribution, and any Option, Stock Grant or SAR will (absent the Committee's
consent) be exercisable during a key individual's lifetime only by the key
individual.
AMENDMENTS TO THE 2000 PLAN
The 2000 Plan may be amended by the Board to the extent it deems necessary
or appropriate (but any amendment relating to ISOs will be made subject to the
limitations of Code Section 422), and the 2000 Plan may be terminated by the
Board at any time. The Board may not unilaterally modify, amend or cancel any
Option, Stock Grant or SAR previously granted without the consent of the holder
of such Option, Stock Grant or SAR or unless there is a dissolution or
liquidation of Budget or a similar transaction.
ADJUSTMENT OF SHARES
The number, kind, or class of shares of common stock reserved for issuance
under the 2000 Plan, the annual grant, caps, the number, kind or class of shares
of common stock subject to Options, Stock Grants or SARs granted under the 2000
Plan and the option price of the Options and the SAR value of the SARs shall be
adjusted by the Committee in an equitable manner to reflect any change in the
capitalization of Budget.
MERGERS
The Committee as part of any transaction described in Code Section 424(a)
shall have the right to adjust (in any manner which the Committee in its
discretion deems consistent with Code Section 424(a)) the number, kind or class
of shares of common stock reserved for issuance under the 2000 Plan, and the
number, kind and class of shares of common stock subject to Option and SAR
grants and Stock Grants previously made under the 2000 Plan and the related
option price of the Options and SAR Value of the SARs and, further, shall have
the right to make (in any manner which the Committee in its discretion deems
consistent with Code Section 424(a)) Option and SAR grants and Stock Grants to
effect the assumption of, or the substitution for, restricted stock, option and
stock appreciation right grants previously made by any other corporation to the
extent that such transaction calls for the substitution or assumption of such
grants.
CHANGE IN CONTROL
If there is a change in control of Budget (i) any conditions to the
exercise of outstanding Options and SARs and Stock Grants made under the 2000
Plan automatically shall expire and shall have no further force or effect on a
date selected by the Board of Directors which shall provide each key individual
a reasonable opportunity to exercise his or her Options and SARs and to take
such other action as necessary or appropriate to receive Common Stock subject to
any Stock Grants before the date of the change in control and (ii) each then
outstanding Option, Stock Grant and SAR grant may be canceled unilaterally by
the Board of Directors immediately before the date of the change in control of
Budget.
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<PAGE> 28
LOANS AND TAX PAYMENTS
If approved by the Committee, Budget may lend money to, or guarantee loans
by, a third party to any key individual to finance the exercise of any Option
granted under the 2000 Plan or purchase any stock subject to Stock Grants and,
further, may authorize payments to cover a key individual's tax liability from
the exercise of an Option or SAR or a Stock Grant becoming non-forfeitable.
FEDERAL INCOME TAX CONSEQUENCES
The rules concerning the federal income tax consequences with respect to
grants made pursuant to the 2000 Plan are technical, and reasonable persons may
differ on the proper interpretation of such rules. Moreover, the applicable
statutory and regulatory provisions are subject to change, as are their
interpretations and applications, which may vary in individual circumstances.
Therefore, the following discussion is designed to provide only a brief, general
summary description of the federal income tax consequences associated with such
grants, based on a good faith interpretation of the current federal income tax
laws, regulations (including certain proposed regulations) and judicial and
administrative interpretations. The following discussion does not set forth (i)
any federal tax consequences other than income tax consequences or (ii) any
state, local or foreign tax consequences that may apply.
ISOs. In general, a key individual will not recognize taxable income upon
the grant or the exercise of an ISO. For purposes of the alternative minimum
tax, however, the key individual will be required to treat an amount equal to
the difference between the fair market value of the common stock on the date of
exercise over the exercise price as an item of adjustment in computing the key
employee's alternative minimum taxable income. If the key individual does not
dispose of the common stock received pursuant to the exercise of the ISO within
either (i) two years after the date of the grant of the ISO or (ii) one year
after the date of exercise of the ISO, a subsequent disposition of the common
stock will generally result in long-term capital gain or loss to such individual
with respect to the difference between the amount realized on the disposition
and exercise price. Budget will not be entitled to any income tax deduction as a
result of such disposition. Budget normally will not be entitled to take an
income tax deduction at either the grant or the exercise of an ISO.
If the key individual disposes of the common stock acquired upon exercise
of the ISO within either of the above-mentioned time periods, then in the year
of such disposition, such individual generally will recognize ordinary income,
and Budget will be entitled to an income tax deduction (provided Budget
satisfies applicable federal income tax reporting requirements), in an amount
equal to the lesser of (i) the excess of the fair market value of the common
stock on the date of exercise over the exercise price or (ii) the amount
realized upon disposition of the common stock over the exercise price. Any gain
in excess of such amount recognized by the key individual as ordinary income
would be taxed to such individual as short-term or long-term capital gain
(depending on the applicable holding period).
Non-ISOs. A key individual will not recognize any taxable income upon the
grant of a Non-ISO, and Budget will not be entitled to take an income tax
deduction at the time of such grant. Upon the exercise of an Non-ISO, the key
individual generally will recognize ordinary income and Budget will be entitled
to take an income tax deduction (provided Budget satisfies applicable federal
income tax reporting requirements) in an amount equal to the excess of the fair
market value of the common stock on the date of exercise over the exercise
price. Upon a subsequent sale of the common stock by the key individual, such
individual will recognize short-term or long-term capital gain or loss
(depending on the applicable holding period).
SARs. A key individual will recognize ordinary income for federal income
tax purposes upon the exercise of a SAR under the 2000 Plan for cash, common
stock or a combination of cash and common stock, and the amount of income that
the key individual will recognize will depend on the amount of cash, if any, and
the fair market value of the common stock, if any, that the key individual
receives as a result of such exercise. Budget generally will be entitled to a
federal income tax deduction in an amount equal to the ordinary income
recognized by the key individual in the same taxable year in which the key
employee recognizes such income, if Budget satisfies applicable federal income
tax reporting requirements.
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<PAGE> 29
Stock Grants. A key individual generally will recognize ordinary income
when his interest in a Stock Grant is no longer subject to a substantial risk of
forfeiture. Such income will equal the excess of the then fair market value of
the common stock subject to such Stock Grant over the purchase price, if any,
paid for such stock. Budget generally will be entitled to a federal income tax
deduction in an amount equal to the ordinary income recognized by the key
individual in the same taxable year in which the key individual recognizes such
income, if Budget satisfies the applicable federal income tax reporting
requirements.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE APPROVAL
OF THE BUDGET GROUP, INC. 2000 STOCK PLAN.
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<PAGE> 30
RATIFICATION OF APPOINTMENT OF
INDEPENDENT ACCOUNTANTS (ITEM 3)
Budget has appointed Arthur Andersen LLP as Budget's independent
accountants for the fiscal year ending December 31, 2000. Arthur Andersen LLP
has served as Budget's independent accountants since 1996.
Representatives of Arthur Andersen LLP will be present at the annual
meeting to respond to appropriate questions and to make such statements as they
may desire.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION
OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS BUDGET'S INDEPENDENT ACCOUNTANTS
FOR FISCAL 2000.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Budget's directors and executive
officers and persons who own more than 10% of a registered class of Budget's
equity securities to file with the Commission initial reports of ownership and
statements of changes in ownership of common stock and other equity securities
of Budget. Based solely upon a review of such reports furnished to Budget and
certain representations of such persons, all such persons complied with the
Section 16(a) reporting requirements except for the following inadvertent late
filings: (i) the initial statement of beneficial ownership on Form 3 required to
be filed by Mr. Cohen within ten days after his becoming a reporting officer of
Budget on January 15, 2000 was filed on February 10, 2000; (ii) the purchase of
5,000 shares of Class A common stock on December 31, 1999 by Mr. Kennedy which
was reportable on a Form 4 due by January 10, 2000 was reported on a Form 4
filed on February 10, 2000 and his purchase of 8,000 shares on October 10, 1999
reportable on a Form 4 due by November 10, 1999 was filed on December 9, 1999;
(iii) the purchase of 10,000 shares of Class A common stock on November 1, 1999
by Mr. Calvano which was reportable on a Form 4 due by December 10, 1999 was
reported on a Form 4 filed on March 29, 2000; (iv) the purchase of 20,000 shares
of Class A common stock on November 9, 1999 by Mr. Sotir which was reportable on
a Form 4 due by December 10, 1999 was reported on a Form 4 filed on March 29,
2000; (v) the purchase of 4,000 shares of Class A common stock on March 1, 1999
by Mr. Miller which was reportable on a Form 4 due by April 12, 1999 and the
purchase of 5,000 shares on August 18, 1999 which was reportable on a Form 4 due
by September 10, 1999 were reported on a Form 4 filed on October 12, 1999; and
(vi) the purchase of 500 shares of Class A common stock on August 28, 1995 by
Mr. Miller in a private transaction reportable on a Form 4 due by September 10,
1995 was reported on April 3, 2000.
OTHER MATTERS
As of the date of this Proxy Statement, Budget knows of no business that
will be presented for consideration at the annual meeting other than the items
referred to above. If any other matter is properly brought before the meeting
for action by stockholders, proxies in the enclosed form returned to Budget will
be voted in accordance with the recommendation, in accordance with the judgment
of the proxy holder.
ADDITIONAL INFORMATION
STOCKHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING. Stockholders interested
in presenting a proposal for consideration at Budget's annual meeting of
stockholders in 2001 must present such proposal in writing to the Secretary of
Budget in accordance with the bylaws of Budget. Such proposal must be delivered
to the principal executive offices of Budget not less than sixty (60) nor more
than ninety (90) days prior to the scheduled date of the meeting, regardless of
any postponements, deferrals or adjournments of that meeting to a later date;
provided, however, that if less than seventy (70) days' notice or prior public
disclosure of the scheduled date of the meeting is given or made, the
stockholder must deliver such proposal no later than the close of business on
the fifteenth (15th) day following the earlier of the day on
25
<PAGE> 31
which such notice of the scheduled date of the meeting was mailed or such public
disclosure was made. Any stockholder proposal must include (1) a brief
description of the business or proposal desired to be brought before the meeting
and the reasons for conducting such business or considering such proposal at the
meeting; (2) the name and address of the stockholder; (3) the class and number
of shares of capital stock of Budget which are beneficially owned by the
stockholder and (4) any financial or other material interest of the stockholder
in such business or proposal. In addition, any stockholder proposal for the
nomination of an individual for election to the Board of Directors of Budget
must include (a) the name, age, business address and residence address of the
person; (b) the principal occupation or employment of the person; (c) the class
and number of shares of capital stock of Budget which are beneficially owned by
the person and (d) any other information relating to the person that is required
to be disclosed in solicitations for proxies for election of directors pursuant
to Regulation 14A of the Securities Exchange Act of 1934, as amended.
ANNUAL REPORT ON FORM 10-K. Budget will provide without charge a copy of
its Annual Report on Form 10-K for the year ended December 31, 1999, including
the financial statements and financial statement schedules, as filed with the
Commission (without exhibits), upon the written request of any stockholder.
Copies of exhibits to the Annual Report on Form 10-K will be furnished (upon
payment of Budget's reasonable expenses in furnishing such exhibits) upon
request to the General Counsel and Secretary, Budget Group, Inc., 125 Basin
Street, Suite 210, Daytona Beach, Florida 32114.
PROXY SOLICITATION COSTS. The proxies being solicited hereby are being
solicited by Budget. The cost of soliciting proxies in the enclosed form will be
borne by Budget. Budget has retained MacKenzie Partners, 156 Fifth Avenue, PH 3,
New York, New York 10010, to aid in the solicitation. For these services, Budget
will pay MacKenzie Partners a fee of $12,500 and reimburse it for certain
out-of-pocket disbursements and expenses. Officers and regular employees of
Budget may, but without compensation other than their regular compensation,
solicit proxies by further mailing or personal conversations, or by telephone,
telex, facsimile or electronic means. Budget will, upon request, reimburse
brokerage firms and others for their reasonable expenses in forwarding
solicitation material to the beneficial owners of stock.
By order of the Board of Directors,
/s/ Sanford Miller
SANFORD MILLER
Chairman of the Board
and Chief Executive Officer
April 18, 2000
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<PAGE> 32
ANNEX A
BUDGET GROUP, INC.
2000 STOCK PLAN
<PAGE> 33
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 1 Background and Purpose.................................. A-3
SECTION 2 Definitions............................................. A-3
2.1 Affiliate................................................... A-3
2.2 Award....................................................... A-3
2.3 Award Certificate........................................... A-3
2.4 Board....................................................... A-3
2.5 Budget...................................................... A-3
2.6 Change in Control........................................... A-3
2.7 Code........................................................ A-3
2.8 Committee................................................... A-3
2.9 Fair Market Value........................................... A-3
2.10 Fully Diluted Number of Shares.............................. A-4
2.11 ISO......................................................... A-4
2.12 Key Individual.............................................. A-4
2.13 1933 Act.................................................... A-4
2.14 1934 Act.................................................... A-4
2.15 Non-ISO..................................................... A-4
2.16 Option...................................................... A-4
2.17 Option Price................................................ A-4
2.18 Parent...................................................... A-4
2.19 Plan........................................................ A-4
2.20 Rule 16b-3.................................................. A-4
2.21 SAR Value................................................... A-4
2.22 Stock....................................................... A-4
2.23 Stock Grant................................................. A-4
2.24 Stock Appreciation Right.................................... A-4
2.25 Subsidiary.................................................. A-4
2.26 Ten Percent Shareholder..................................... A-4
SECTION 3 Shares Reserved Under Plan............................... A-4
SECTION 4 Effective Date........................................... A-5
SECTION 5 Committee................................................ A-5
SECTION 6 Eligibility and Annual Grant Caps........................ A-5
SECTION 7 Options.................................................. A-6
7.1 Committee Action............................................ A-6
7.2 $100,000 Limit.............................................. A-6
7.3 Option Price................................................ A-6
7.4 Payment..................................................... A-6
7.5 Exercise Period............................................. A-6
SECTION 8 Stock Appreciation Rights................................ A-7
8.1 Committee Action............................................ A-7
8.2 Terms and Conditions........................................ A-7
8.3 Exercise.................................................... A-7
SECTION 9 Stock Grants............................................. A-7
9.1 Committee Action............................................ A-7
9.2 Conditions.................................................. A-8
9.3 Dividends and Voting Rights................................. A-8
9.4 Satisfaction of Forfeiture Conditions; Provision for Income
Taxes....................................................... A-8
</TABLE>
A-1
<PAGE> 34
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 10 Non-Transferability..................................... A-8
SECTION 11 Securities Registration................................. A-9
SECTION 12 Life of Plan............................................ A-9
SECTION 13 Adjustment.............................................. A-9
13.1 Capital Structure........................................... A-9
13.2 Mergers..................................................... A-9
13.3 Fractional Shares........................................... A-10
SECTION 14 Sale, Merger or Change in Control....................... A-10
SECTION 15 Amendment or Termination................................ A-10
SECTION 16 Miscellaneous........................................... A-10
16.1 Shareholder Rights.......................................... A-10
16.2 No Contract of Employment or Director Status................ A-11
16.3 Withholding................................................. A-11
16.4 Construction................................................ A-11
16.5 Other Conditions............................................ A-11
16.6 Rule 16b-3.................................................. A-11
16.7 Loans....................................................... A-11
16.8 Provision for Income Taxes.................................. A-11
</TABLE>
A-2
<PAGE> 35
SECTION 1
BACKGROUND AND PURPOSE
The purpose of this Plan is (1) to attract and retain Key Individuals in
order to further promote the growth, development and financial success of Budget
through Option and Stock Appreciation Right grants to Key Individuals and Stock
Grants to Key Individuals, (2) to provide an additional incentive to each Key
Individual to work to increase the value of Stock and (3) to further align the
interests of each Key Individual with the long term interests of Budget and each
of Budget's stockholders.
SECTION 2
DEFINITIONS
2.1 Affiliate -- means any organization (other than a Subsidiary) that
would be treated as under common control with Budget under sec. 414(c) of the
Code if "50 percent" were substituted for "80 percent" in the income tax
regulations under sec. 414(c) of the Code.
2.2 Award -- means any Option or Stock Appreciation Right granted under
this Plan and any Stock Grant made under this Plan.
2.3 Award Certificate -- means the written certificate which sets forth the
terms and conditions of any Option or Stock Appreciation Right grant or any
Stock Grant.
2.4 Board -- means the Board of Directors of Budget.
2.5 Budget -- means Budget Group, Inc. and any successor to Budget Group,
Inc.
2.6 Change in Control -- means (1) a "change in control" of Budget of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A for a proxy statement filed under Section 14(a) of the 1934 Act,
(2) a "person" (as that term is used in Section 14(d)(2) of the 1934 Act)
becomes after the effective date of this Plan the beneficial owner (as defined
in Rule 13d-3 under the 1934 Act) directly or indirectly of securities
representing 50% or more of the combined voting power for election of directors
of the then outstanding securities of Budget, (3) the individuals who at the
beginning of any period of two consecutive years or less constitute the Board
cease for any reason during such period to constitute at least a majority of the
Board, unless the election or nomination for election of each new member of the
Board was approved by vote of at least two-thirds of the members of the Board
then still in office who were members of the Board at the beginning of such
period, (4) the shareholders of Budget approve any dissolution or liquidation of
Budget or any sale or disposition of all or substantially all of the assets or
business of Budget or (5) the shareholders of Budget approve a merger or
consolidation to which Budget is a party (other than a merger or consolidation
with a wholly-owned subsidiary of Budget) or a share exchange in which Budget
shall exchange Budget shares for shares of another corporation as a result of
which the persons who were shareholders of Budget immediately before the
effective date of such merger, consolidation or share exchange shall have
beneficial ownership of less than 30% of the combined voting power for election
of directors of the surviving corporation following the effective date of such
merger, consolidation or share exchange.
2.7 Code -- means the Internal Revenue Code of 1986, as amended.
2.8 Committee -- means a committee of the Board which shall have at least 2
members, each of whom shall be appointed by and shall serve at the pleasure of
the Board and shall come within the definition of a "non-employee director"
under Rule 16b-3 and an "outside director" under sec. 162(m) of the Code.
2.9 Fair Market Value -- means for any date (1) the closing price for the
immediately preceding business day for a share of Stock as reported by The Wall
Street Journal or, if The Wall Street Journal no longer reports such price, such
price as reported by a newspaper or trade journal selected by the Committee or,
if no such price is available for such business day, (2) the price which the
Committee
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acting in good faith determines through any reasonable valuation method that a
share of Stock might change hands between a willing buyer and a willing seller,
neither being under any compulsion to buy or to sell and both having reasonable
knowledge of the relevant facts.
2.10 Fully Diluted Number of Shares -- means for any January 1 the average
number of shares of Class A and Class B Stock outstanding during the immediately
preceding calendar year as reported on a diluted basis in Budget's financial
statements for such calendar year.
2.11 ISO -- means an option granted under this Plan to purchase Stock which
is intended to satisfy the requirements of sec. 422 of the Code.
2.12 Key Individual -- means (1) an employee of Budget or any Subsidiary or
Parent or Affiliate designated by the Committee who, in the judgment of the
Committee acting in its absolute discretion, is key directly or indirectly to
the success of Budget and (2) any member of the Board who is not a current
employee of Budget or any Subsidiary or Parent or Affiliate.
2.13 1933 Act -- means the Securities Act of 1933, as amended.
2.14 1934 Act -- means the Securities Exchange Act of 1934, as amended.
2.15 Non-ISO -- means an option granted under this Plan to purchase Stock
which is intended to fail to satisfy the requirements of sec. 422 of the Code.
2.16 Option -- means an ISO or a Non-ISO which is granted under sec. 7 of
this Plan.
2.17 Option Price -- means the price which shall be paid to purchase one
share of Stock upon the exercise of an Option granted under this Plan.
2.18 Parent -- means any corporation which is a parent of Budget within the
meaning of sec. 424(e) of the Code.
2.19 Plan -- means this Budget Group, Inc. 2000 Stock Plan as effective as
of the date adopted by the Board and as amended from time to time thereafter.
2.20 Rule 16b-3 -- means the exemption under Rule 16b-3 to Section 16(b) of
the 1934 Act or any successor to such rule.
2.21 SAR Value -- means the value assigned by the Committee to a share of
Stock in connection with the grant of a Stock Appreciation Right under sec. 8.
2.22 Stock -- means the Class A or the Class B Common Stock of Budget.
2.23 Stock Grant -- means Stock which is granted under sec. 9 of this Plan.
2.24 Stock Appreciation Right -- means a right granted under sec. 9 of this
Plan.
2.25 Subsidiary -- means a corporation which is a subsidiary corporation
(within the meaning of sec. 424(f) of the Code) of Budget.
2.26 Ten Percent Shareholder -- means a person who owns (after taking into
account the attribution rules of sec. 424(d) of the Code) more than ten percent
of the total combined voting power of all classes of stock of either Budget, a
Subsidiary or Parent.
SECTION 3
SHARES RESERVED UNDER PLAN
There shall be 5,935,117 shares of Stock reserved for issuance under this
Plan subject to the following four special rules:
(1) Each share of Stock issued on or after the effective date of this
Plan (as determined under sec. 4) either under the Budget Group, Inc. 1994
Incentive Stock Option Plan or under the Budget
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Group, Inc. 1994 Directors' Stock Option Plan shall reduce the number of
shares of Stock reserved for issuance under this Plan by one share of
Stock.
(2) As of January 1, 2001 and as of each January 1 which comes before
the earliest date described in sec. 12, the Board shall have the right to
reserve an additional number of shares of Stock for issuance under this
Plan, but such additional number in no event shall exceed the lesser of (a)
1.5% of the Fully Diluted Number of Shares on such January 1 or (b) the
number of shares of Stock which, when added to the number of shares of
Stock already reserved for issuance under this Plan, would result in a
total number of shares of Stock reserved for issuance under this Plan on
such January 1 which is not more than 12.5% of the Fully Diluted Number of
Shares.
(3) No more than 5,935,117 shares of Stock shall be issued pursuant to
the exercise of ISOs under this Plan.
(4) The number of shares reserved for issuance under this Plan shall
be subject to adjustment pursuant to sec. 13.
All shares of Stock reserved under this Plan shall be reserved to the extent
that Budget deems appropriate from authorized but unissued shares of Stock and
from shares of Stock which have been reacquired by Budget. Any share of Stock
used to exercise an Option or to satisfy any condition to a Stock Grant
thereafter also shall be reserved for issuance under this Plan, but any shares
of Stock used to satisfy a withholding obligation shall not again be reserved
for issuance under this Plan.
SECTION 4
EFFECTIVE DATE
The effective date of this Plan shall be the date of its adoption by the
Board, provided the shareholders of Budget (acting at a duly called meeting of
such shareholders) approve such adoption within twelve (12) months after such
effective date. Any Option or Stock Appreciation Right granted and any Stock
Grant made before such shareholder approval shall automatically be granted or
made subject to such approval.
SECTION 5
COMMITTEE
This Plan shall be administered by the Committee. The Committee acting in
its absolute discretion shall exercise such powers and take such action as
expressly called for under this Plan and, further, the Committee shall have the
power to interpret this Plan and (subject to sec. 14 and sec. 15 and Rule 16b-3)
to take such other action in the administration and operation of this Plan as
the Committee deems equitable under the circumstances, which action shall be
binding on Budget, on each affected Key Individual and on each other person
directly or indirectly affected by such action.
SECTION 6
ELIGIBILITY AND ANNUAL GRANT CAPS
Only Key Individuals who are employed by Budget or a Subsidiary or a Parent
shall be eligible for the grant of ISOs under this Plan, but all Key Individuals
shall be eligible for the grant of Non-ISOs and Stock Appreciation Rights and
Stock Grants under this Plan. No Key Individual in any calendar year shall
(subject to sec. 13) be granted an Option to purchase more than 500,000 shares
of Stock or a Stock Appreciation Right or Stock Grant with respect to more than
500,000 shares of Stock except for a grant made in connection with a Key
Individual's initial employment with Budget or a Subsidiary or a Parent or an
Affiliate or his or her initial appointment as a member of the Board, and no
Option shall be granted in connection with a Key Individual's initial employment
or initial appointment as a member of the Board for
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more than 1,000,000 shares of Stock and no Stock Appreciation Right or Stock
Grant shall be granted in connection with such initial employment or initial
appointment with respect to more than 1,000,000 shares of Stock.
SECTION 7
OPTIONS
7.1 Committee Action. The Committee acting in its absolute discretion
shall have the right to grant Options to Key Individuals under this Plan from
time to time to purchase shares of Stock. Each grant of an Option shall be
evidenced by an Award Certificate, and each Award Certificate shall set forth
whether the Option is an ISO or a Non-ISO and shall set forth such other terms
and conditions of such grant as the Committee, acting in its absolute
discretion, deems consistent with the terms of this Plan; however, if the
Committee grants an ISO and a Non-ISO to a Key Individual on the same date, the
right of the Key Individual to exercise the ISO shall not be conditioned on his
or her failure to exercise the Non-ISO.
7.2 $100,000 Limit. No Option shall be treated as an ISO to the extent
that the aggregate Fair Market Value of the Stock subject to the Option which
would first become exercisable in any calendar year exceeds $100,000. Any such
excess shall instead automatically be treated as a Non-ISO. The Committee shall
interpret and administer the ISO limitation set forth in this sec. 7.2 in
accordance with sec. 422(d) of the Code, and the Committee shall treat this sec.
7.2 as in effect only for those periods for which sec. 422(d) of the Code is in
effect.
7.3 Option Price. The Option Price for each share of Stock subject to an
ISO shall be no less than the Fair Market Value of a share of Stock on the date
the Option is granted; provided, however, if the ISO is granted to a Key
Individual who is a Ten Percent Shareholder, the Option Price for each share of
Stock subject to such ISO shall be no less than 110% of the Fair Market Value of
a share of Stock on the date such ISO is granted. The Option Price for each
share of stock subject to a Non-ISO shall be set by the Committee.
7.4 Payment. The Option Price shall be payable in full upon the exercise
of any Option, and at the discretion of the Committee an Award Certificate can
provide for the payment of the Option Price either in cash, by check or in Stock
which has been held for at least 6 months and which is acceptable to the
Committee or in any combination of cash, check and such Stock. The Option Price
in addition may be paid through any cashless exercise procedure which is
acceptable to the Committee or its delegate. Any payment made in the form of
Stock shall be treated as equal to the Fair Market Value of such Stock on the
date the certificate for such Stock (or evidence satisfactory to the Committee
of such certificate) is presented to the Committee or its delegate.
7.5 Exercise Period. Each Option granted under this Plan shall be
exercisable in whole or in part at such time or times as set forth in the
related Award Certificate, but no Award Certificate shall make an Option
exercisable on or after the earlier of
(1) the date which is the fifth anniversary of the date the Option is
granted, if the Option is an ISO and the option is granted to a Key
Individual who is a Ten Percent Shareholder on the date the Option is
granted, or
(2) the date which is the tenth anniversary of the date the Option is
granted, if the Option is (a) a Non-ISO or (b) an ISO which is granted to a
Key Individual who is not a Ten Percent Shareholder on the date the Option
is granted.
An Award Certificate may provide for the exercise of an Option after the
employment of a Key Individual's employment or status as a member of the Board
has terminated for any reason whatsoever, including death or disability.
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SECTION 8
STOCK APPRECIATION RIGHTS
8.1 Committee Action. The Committee acting in its absolute discretion
shall have the right to grant Stock Appreciation Rights to Key Individuals under
this Plan from time to time. Each Stock Appreciation Right which is not granted
as part of any Option shall be evidenced by an Award Certificate, and each Stock
Appreciation Right which is granted as part of an Option shall be evidenced by
the Award Certificate for the related Option.
8.2 Terms and Conditions.
(1) Award Certificate which does not include an Option. If a Stock
Appreciation Right is evidenced by a Award Certificate which does not
include an Option, such certificate shall set forth the number of shares of
Stock on which the Key Individual has the right to appreciation and the SAR
Value of each share of Stock. Such SAR Value shall be set by the Committee.
The Award Certificate shall set forth such other terms and conditions for
the exercise of the Stock Appreciation Right as the Committee deems
appropriate under the circumstances, but no Award Certificate shall make a
Stock Appreciation Right exercisable on or after the date which is the
tenth anniversary of the date such Stock Appreciation Right is granted.
(2) Award Certificate which includes an Option. If a Stock
Appreciation Right is evidenced by an Award Certificate which includes an
Option, the number of shares of Stock on which the Key Individual shall
have an appreciation right shall be the same as the number of shares of
Stock subject to the related Option and the SAR Value for each share of
Stock subject to the Stock Appreciation Right shall be no less than the
Option Price for the related Option. Each such Award Certificate shall
provide that the exercise of the Stock Appreciation Right with respect to
any share of Stock shall cancel the Key Individual's right to exercise his
or her Option with respect to such share and, conversely, that the exercise
of the Option with respect to any share of Stock shall cancel the Key
Individual's right to exercise his or her Stock Appreciation Right with
respect to such share. A Stock Appreciation Right which is granted as part
of an Option shall be exercisable only while the related Option is
exercisable. The Award Certificate shall set forth such other terms and
conditions for the exercise of the Stock Appreciation Right as the
Committee deems appropriate under the circumstances.
8.3 Exercise. A Stock Appreciation Right shall be exercisable only when
the Fair Market Value of a share of Stock subject to such Stock Appreciation
Right exceeds the SAR Value for such share, and the payment due on exercise
shall be based on such excess with respect to the number of shares of Stock to
which the exercise relates. A Key Individual upon the exercise of his or her
Stock Appreciation Right shall receive a payment from Budget in cash or in
Stock, or in a combination of cash and Stock, and any payment in Stock shall be
based on the Fair Market Value of a share of Stock on the date the Stock
Appreciation Right is exercised. The Committee acting in its absolute discretion
shall have the right to determine the form and time of any payment under this
sec. 8.3.
SECTION 9
STOCK GRANTS
9.1 Committee Action. The Committee acting in its absolute discretion
shall have the right to make Stock Grants to Key Individuals under this Plan
from time to time. Each Stock Grant shall be evidenced by a Award Certificate,
and each Award Certificate shall set forth the conditions, if any, under which
the grant will be effective and the conditions under which the Key Individual's
interest in the underlying Stock will become non-forfeitable.
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9.2 Conditions.
(1) Conditions to Issuance of Stock. The Committee acting in its
absolute discretion may make the issuance of Stock under a Stock Grant to a
Key Individual subject to the satisfaction of one, or more than one,
performance, purchase or other condition which the Committee deems
appropriate under the circumstances for Key Individuals generally or for a
Key Individual in particular, and the related Award Certificate shall set
forth each such condition and the deadline for satisfying each such
condition. Stock subject to a Stock Grant shall be issued in the name of a
Key Individual only after each such condition to the issuance of such
Stock, if any, has been timely satisfied, and any Stock which is so issued
shall be held by Budget pending the satisfaction of the forfeiture
conditions, if any, under sec. 9.2(2) for the related Stock Grant.
(2) Forfeiture Conditions. The Committee acting in its absolute
discretion may make Stock issued in the name of a Key Individual under a
Stock Grant subject to one, or more than one, objective employment,
performance or other forfeiture condition that the Committee acting in its
absolute discretion deems appropriate under the circumstances for Key
Individuals generally or for a Key Individual in particular, and the
related Award Certificate shall set forth each such forfeiture condition,
if any, and the deadline, if any, for satisfying each such forfeiture
condition. A Key Individual's non-forfeitable interest in the shares of
Stock issued pursuant to a Stock Grant shall depend on the extent to which
he or she timely satisfies each such condition. Each share of Stock so
issued shall be unavailable under sec. 3 after such issuance unless such
share thereafter is forfeited as a result of a failure to timely satisfy a
forfeiture condition, in which event such share of Stock shall again become
available under sec. 3 as of the date of such forfeiture.
9.3 Dividends and Voting Rights. If a cash dividend is paid on a share of
Stock issued pursuant to a Stock Grant during the period which begins on the
date such Stock is issued and ends immediately before the first date that a Key
Individual's interest in such Stock (1) is forfeited completely or (2) becomes
completely non-forfeitable, Budget shall pay such cash dividend directly to such
Key Individual. If a Stock dividend is paid on such a share of Stock during such
period, such Stock dividend shall be treated as part of the grant of the related
Stock Grant, and a Key Individual's interest in such Stock dividend shall be
forfeited or shall become non-forfeitable at the same time as the Stock with
respect to which the Stock dividend was paid is forfeited or becomes
non-forfeitable. The disposition of each other form of dividend which is
declared on such a share of Stock during such period shall be made in accordance
with such rules as the Committee shall adopt with respect to each such dividend.
A Key Individual also shall have the right to vote the Stock issued pursuant to
his or her Stock Grant during such period.
9.4 Satisfaction of Forfeiture Conditions; Provision for Income Taxes. If
a Key Individual's interest in any share of Stock becomes non-forfeitable under
the terms of his or her Stock Grant, the certificate representing such share
shall be transferred to the Key Individual as soon as practicable thereafter.
SECTION 10
NON-TRANSFERABILITY
No Option, Stock Grant or Stock Appreciation Right shall (absent the
Committee's consent) be transferable by a Key Individual other than by will or
by the laws of descent and distribution, and any Option or Stock Appreciation
Right shall (absent the Committee's consent) be exercisable during a Key
Individual's lifetime only by the Key Individual. The person or persons to whom
an Option or Stock Grant or Stock Appreciation Right is transferred by will or
by the laws of descent and distribution (or with the Committee's consent)
thereafter shall be treated as the Key Individual.
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SECTION 11
SECURITIES REGISTRATION
As a condition to the receipt of any shares of Stock under this Plan, the
Key Individual shall, if so requested by Budget, agree to hold such shares of
Stock for investment and not with a view towards a resale or distribution to the
public and, if so requested by Budget, shall deliver to Budget a written
statement satisfactory to Budget to that effect. Furthermore, if so requested by
Budget, each Key Individual shall make a written representation to Budget that
he or she will not sell or offer for sale any of such Stock unless a
registration statement shall be in effect with respect to such Stock under the
1933 Act and any applicable state securities law or he or she shall have
furnished to Budget an opinion in form and substance and from legal counsel
satisfactory to Budget that such registration is not required. Certificates
representing the Stock transferred upon the exercise of an Option or Stock
Appreciation Right or upon the lapse of the forfeiture conditions, if any, on
any Stock Grant may, at the discretion of Budget, bear a legend to the effect
that such Stock has not been registered under the 1933 Act or any applicable
state securities law and that such Stock cannot be sold or offered for sale in
the absence of an effective registration statement as to such Stock under the
1933 Act and any applicable state securities law or in the absence of an opinion
in form and substance and from legal counsel satisfactory to Budget that such
registration is not required.
SECTION 12
LIFE OF PLAN
No Option or Stock Appreciation Right shall be granted under this Plan and
no Stock Grant shall be made on or after the earlier of the tenth anniversary of
the effective date of this Plan (as determined under sec. 4) or the date as of
which Budget terminates this Plan. However, this Plan thereafter shall continue
in effect until the date all outstanding Options and Stock Appreciation Rights
have been exercised in full or are no longer exercisable and all Stock Grants
have been forfeited or have become nonforfeitable.
SECTION 13
ADJUSTMENT
13.1 Capital Structure. The number, kind or class (or any combination
thereof) of shares of Stock reserved under sec. 3 of this Plan, the annual grant
caps described in sec. 6 of this Plan, the number, kind or class (or any
combination thereof) of shares of Stock subject to Options or Stock Appreciation
Rights granted under this Plan and the Option Price of such Options and the SAR
Value of such Stock Appreciation Rights as well as the number, kind or class (or
any combination thereof) of shares of Stock subject to Stock Grants made under
this Plan may be adjusted by the Committee in an equitable manner to reflect any
change in the capitalization of Budget, including, but not limited to, changes
such as stock dividends or stock splits.
13.2 Mergers. The Committee as part of any corporate transaction described
in sec. 424(a) of the Code shall have the right to adjust (in any manner which
the Committee in its discretion deems consistent with sec. 424(a) of the Code)
the number, kind or class (or any combination thereof) of shares of Stock
reserved under sec. 3 of this Plan and the annual grant caps described in sec. 6
of this Plan. Furthermore, the Committee as part of any corporate transaction
described in sec. 424(a) of the Code shall have the right to adjust (in any
manner which the Committee in its discretion deems consistent with sec. 424(a)
of the Code) the number, kind or class (or any combination thereof) of shares of
Stock underlying any Stock Grants previously made under this Plan and any
related grant conditions and forfeiture conditions, and the number, kind or
class (or any combination thereof) of shares subject to Option and Stock
Appreciation Right grants previously made under this Plan and the related Option
Price and SAR Value for each such Option and Stock Appreciation Right, and,
further, shall have the right (in any manner which the
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Committee in its discretion deems consistent with sec. 424(a) of the Code and
without regard to the annual grant caps described in sec. 6 of this Plan) to
make Stock Grants, Option and Stock Appreciation Right grants to effect the
assumption of, or the substitution for, stock grants and option and stock
appreciation right grants previously made by any other corporation to the extent
that such corporate transaction calls for such substitution or assumption of
such stock grants and option or stock appreciation right grants.
13.3 Fractional Shares. If any adjustment under this sec. 13 would create
a fractional share of Stock or a right to acquire a fractional share of Stock,
such fractional share shall be disregarded and the number of shares of Stock
reserved under this Plan and the number subject to any Option or Stock
Appreciation Right grants and Stock Grants shall be the next lower number of
shares of Stock, rounding all fractions downward. An adjustment made under this
sec. 13 by the Committee shall be conclusive and binding on all affected
persons.
SECTION 14
SALE, MERGER OR CHANGE IN CONTROL
If (1) Budget on any date agrees (whether or not such agreement is subject
to the approval of Budget's shareholders) to sell all or substantially all of
its assets or agrees to any merger, consolidation, reorganization, division or
other corporate transaction in which Stock is converted into another security or
into the right to receive securities or property or if (2) there otherwise is a
Change in Control of Budget on any date, any and all conditions to the exercise
of all outstanding Options and Stock Appreciation Rights on such date and any
and all outstanding issuance and forfeiture conditions on any Stock Grants on
such date automatically shall be deemed satisfied in full, and the Board shall
have the right (to the extent required as part of such transaction) to cancel
such Options, Stock Appreciation Rights and Stock Grants after providing each
Key Individual a reasonable period (which period shall be no less than 60
consecutive days) to exercise his or her Options and Stock Appreciation Rights
and to take such other action as necessary or appropriate to receive the Stock
subject to any Stock Grants.
SECTION 15
AMENDMENT OR TERMINATION
This Plan may be amended by the Board from time to time to the extent that
the Board deems necessary or appropriate; provided, however, (1) no amendment
shall be made absent the approval of the shareholders of Budget to the extent
such approval is required under applicable law, sec. 422 of the Code, applicable
stock exchange rules or Rule 16b-3 and (2) no amendment shall be made to sec. 14
on or after any date described in sec. 14(1) or sec. 14(2) if such amendment
might adversely affect the rights which otherwise vest under sec. 14 on such
date. The Board also may suspend the granting of Options or Stock Appreciation
Rights or making Stock Grants under this Plan at any time and may terminate this
Plan at any time; provided, however, the Board shall not have the right
unilaterally to modify, amend or cancel any Option or Stock Appreciation Right
granted or Stock Grant made before such suspension or termination unless (1) the
Key Individual consents in writing to such modification, amendment or
cancellation or (2) there is a dissolution or liquidation of Budget or a
transaction described in sec. 13 or sec. 14 of this Plan.
SECTION 16
MISCELLANEOUS
16.1 Shareholder Rights. No Key Individual shall have any rights as a
shareholder of Budget as a result of the grant of an Option or a Stock
Appreciation Right granted to him or her under this Plan or his or her exercise
of such Option or Stock Appreciation Right pending the actual delivery of the
Stock subject to such Option to such Key Individual. Subject to sec. 9.3, a Key
Individual's rights as a shareholder
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in the shares of Stock underlying a Stock Grant which is effective shall be set
forth in the related Award Certificate.
16.2 No Contract of Employment or Director Status. Granting an Option or a
Stock Appreciation Right or making a Stock Grant to a Key Individual under this
Plan shall not constitute a contract for employment or for membership on the
Board and shall not confer on a Key Individual any rights upon his or her
termination of employment or status as a member of the Board in addition to
those rights, if any, expressly set forth in the related Award Certificate.
16.3 Withholding. Each Option, Stock Appreciation Right and Stock Grant
shall be made subject to the condition that the Key Individual consents to
whatever action the Committee directs to satisfy the federal and state tax
withholding requirements, if any, which the Committee in its discretion deems
applicable to the exercise of such Option or Stock Appreciation Right or the
satisfaction of any forfeiture conditions with respect to Stock issued in the
name of the Key Individual under any Stock Grant. The Committee also shall have
the right to provide in an Award Certificate that a Key Individual may elect to
satisfy federal and state tax withholding requirements through a reduction in
the cash or the number of shares of Stock actually transferred to him or to her
under this Plan.
16.4 Construction. All references to sections (sec.) are to sections
(sec.) of this Plan unless otherwise indicated. This Plan shall be construed
under the laws of the State of Delaware. Finally, each term set forth in sec. 2
shall have the meaning set forth opposite such term for purposes of this Plan
and, for purposes of such definitions, the singular shall include the plural and
the plural shall include the singular.
16.5 Other Conditions. Each Award Certificate may require that a Key
Individual (as a condition to the exercise of an Option or a Stock Appreciation
Right or the receipt of Stock under a Stock Grant) enter into an agreement or
make such representations prepared by Budget, including (without limitation) an
agreement which restricts the transfer of Stock acquired pursuant to the
exercise of an Option or a Stock Appreciation Right or under any Stock Grant, or
provides for the repurchase of such Stock by Budget.
16.6 Rule 16b-3. The Committee shall have the right to amend any Option or
Stock Appreciation Right grant or any Stock Grant to withhold or otherwise
restrict the transfer of any Stock or cash under this Plan to a Key Individual
as the Committee deems appropriate in order to satisfy any condition or
requirement under Rule 16b-3 to the extent Rule 16 of the 1934 Act might be
applicable to such grant or transfer.
16.7 Loans. If approved by the Committee, Budget may lend money to, or
guarantee loans made by a third party to, any Key Individual to finance all or a
part of the exercise of any Option granted under this Plan or the purchase of
any Stock under any Stock Grant under this Plan, and the exercise of an Option
or the purchase of any Stock with the proceeds of any such loan shall be treated
as an exercise or purchase for cash under this Plan.
16.8 Provision for Income Taxes. The Committee acting in its absolute
discretion shall have the power to authorize and direct Budget to pay a cash
bonus (or to provide in the terms of the Award Certificate for Budget to make
such payment) to a Key Individual to pay all, or any portion of, his or her
federal, state and local income tax liability which the Committee deems
attributable to his or her exercise of an Option or SAR or his or her interest
in any Stock subject to a Stock Grant becoming non-forfeitable and, further, to
pay any such tax liability attributable to such cash bonus.
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IN WITNESS WHEREOF, Budget Group, Inc. has caused its duly authorized
officer to execute this Plan to evidence its adoption of this Plan.
BUDGET GROUP, INC.
By:
------------------------------------
Date:
-----------------------------------
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BUDGET GROUP, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 18, 2000
The undersigned hereby appoints SANFORD MILLER and ROBERT L. APRATI, and
each of them, Proxies, with full power of substitution and resubstitution, for
and in the name of the undersigned, to vote all shares of stock of Budget Group,
Inc. (the "Company"), which the undersigned would be entitled to vote if
personally present at the 2000 Annual Meeting of Stockholders (the "Annual
Meeting") to be held on Thursday, May 18, 2000, and at any adjournment thereof,
upon the matters described in the accompanying Notice of Annual Meeting of
Stockholders and Proxy Statement, receipt of which is hereby acknowledged, and
upon any other business that may properly come before the meeting or any
adjournment thereof. Said Proxies are directed to vote on the matters described
in the Notice of Annual Meeting and Proxy Statement as follows, and otherwise in
their discretion upon such other business as may properly come before the
meeting or any adjournment thereof.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
FOLD AND DETACH HERE
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. IF YOU ATTEND
THE MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY
RETURNED YOUR PROXY.
<PAGE> 46
<TABLE>
<S> <C> <C>
Please mark
your votes as
indicated in [X]
the example
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS YOU VOTE FOR PROPOSAL NOS. 1, 2 AND 3.
FOR WITHHOLD AUTHORITY
all nominees (except as marked to vote for
to the contrary below) nominees listed
FOR AGAINST ABSTAIN
Proposal No. 1 To elect three directors to serve as Proposal No. 2 To approve adoption of the [ ] [ ] [ ]
Class II Directors, as follows: Budget Group, Inc., 2000 Stock Plan.
FOR AGAINST ABSTAIN
Nominees: Jeffrey D. Congdon Proposal No. 3 To ratify the action of [ ] [ ] [ ]
Stephen L. Weber the Board of Directors of Budget appointing
F. Perkins Hixon, Jr. Arthur Andersen LLP as Budget's independent
accountants for the year ending
(Instruction: To withhold authority to vote for December 31, 2000.
any individual nominee, strike a line through the
nominee's name in the list above.) In their discretion, the Proxies are authorized
to vote upon such other business as may properly
come before the Annual Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE
VOTED IN THE MANNER DIRECTED HEREIN BY THE
________ UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS
| MADE, THIS PROXY WILL BE VOTED "FOR" ALL PRO-
| POSALS. IF ANY OTHER MATTERS ARE PROPERLY PRE-
| SENTED AT THE ANNUAL MEETING FOR ACTION TO BE
TAKEN THEREUNDER, THIS PROXY WILL BE VOTED ON
SUCH MATTERS BY THE PERSONS NAMED AS PROXIES
HEREIN IN ACCORDANCE WITH THEIR BEST JUDGMENT.
Signature(s) Date: 2000
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Please sign exactly as your name or names appear hereon. Where more than one owner is shown above, each should sign. When signing
in a fiduciary or representative capacity, please give full title. If this Proxy is submitted by a corporation, limited liability
company or partnership, it should be executed in the full entity name by a duly authorized officer, member or partner, as the case
may be.
- FOLD AND DETACH HERE -
YOUR VOTE IS IMPORTANT.
PLEASE RETURN YOUR PROXY PROMPTLY.
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