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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
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[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Paccar, Inc.
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(Name of Registrant as Specified In Its Charter)
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[PACCAR LOGO]
March 15, 2001
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
PACCAR Inc which will be held at the Meydenbauer Center, 11100 N.E. 6th Street,
Bellevue, Washington at 10:30 a.m. on April 24, 2001.
The principal business of the Annual Meeting will be the election of three
directors. We will also provide an update on the Company's activities. The Board
of Directors recommends a vote FOR the election of the nominees.
Please note that Mr. Charles M. Pigott, Chairman Emeritus of the Company,
is retiring as a director after 40 years of distinguished service on the board.
On behalf of PACCAR we want to express our deepest appreciation to Mr. Pigott
for his outstanding leadership of the Company.
Your VOTE is important. Whether or not you plan to attend the Annual
Meeting, please vote your proxy either by mail, telephone, or over the Internet.
Sincerely,
/s/ MARK C. PIGOTT
--------------------------------------
Mark C. Pigott
Chairman of the Board and
Chief Executive Officer
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[PACCAR LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of PACCAR Inc will be held at 10:30 a.m.
on Tuesday, April 24, 2001, at the Meydenbauer Center, 11100 N.E. 6th Street,
Bellevue, Washington for these purposes:
1. To elect three directors to serve three-year terms ending in 2004.
2. To transact such other business as may properly come before the meeting.
Stockholders entitled to vote at this meeting are those of record as of the
close of business on February 28, 2001.
IMPORTANT: THE VOTE OF EACH STOCKHOLDER IS IMPORTANT REGARDLESS OF THE
NUMBER OF SHARES HELD. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE
COMPLETE AND RETURN YOUR PROXY FORM.
DIRECTIONS TO THE MEYDENBAUER CENTER CAN BE FOUND ON THE BACK COVER OF THE
ATTACHED PROXY STATEMENT.
By order of the Board of Directors
/s/ JANICE M. D'AMATO
--------------------------------------
J. M. D'Amato
Secretary
Bellevue, Washington
March 15, 2001
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TABLE OF CONTENTS
PAGE
----
General Information......................................... 1
Voting Rights............................................. 1
Voting by Proxy........................................... 1
Proxy Voting Procedures................................... 1
Vote Required and Method of Counting Votes................ 2
Expenses of Solicitation.................................. 2
Stock Ownership............................................. 2
ITEM NO. 1: ELECTION OF DIRECTORS........................... 4
Board Meetings and Committees............................... 5
Compensation of Directors................................... 6
Compensation of Executive Officers.......................... 6
Summary Compensation...................................... 6
2000 Option Grants........................................ 7
Aggregated Option Exercises and Fiscal Year-End Values.... 7
Long Term Incentive Plan Awards in Last Fiscal Year....... 7
Pension Plan.............................................. 8
Compensation Committee Report on Executive Compensation... 8
Independent Auditors........................................ 10
Audit Committee Report...................................... 10
Audit Fees................................................ 11
Audit Related Fees........................................ 11
Financial Information Systems Design and Implementation
Fees................................................... 11
All Other Fees............................................ 11
Stockholder Return Performance Graph........................ 12
Stockholder Proposals and Director Nominations for 2002..... 12
Other Business.............................................. 13
Appendix A -- Audit Committee Charter....................... A-1
Map to the Stockholder Meeting
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PROXY STATEMENT
---------------
The Board of Directors of PACCAR Inc issues this proxy statement to solicit
proxies for use at the Annual Meeting of Stockholders on April 24, 2001 at the
Meydenbauer Center in Bellevue, Washington. This proxy statement includes
information about the business matters that will be voted upon at the meeting.
The proxy statement and proxy form were first sent to stockholders on or about
March 15, 2001.
GENERAL INFORMATION
VOTING RIGHTS
Stockholders eligible to vote at the meeting are those identified as owners
at the close of business on the record date, February 28, 2001. Each outstanding
share of common stock is entitled to one vote on all items presented at the
meeting. At the close of business on February 28, 2001 the Company had
76,528,414 shares of common stock outstanding and entitled to vote.
Stockholders may vote in person at the meeting or by proxy. Execution of a
proxy does not affect the right of a stockholder to attend the meeting. THE
BOARD RECOMMENDS THAT STOCKHOLDERS EXERCISE THEIR RIGHT TO VOTE BY PROMPTLY
COMPLETING AND RETURNING THE PROXY FORM EITHER BY MAIL, TELEPHONE, OR THE
INTERNET.
VOTING BY PROXY
Mark C. Pigott and Gerald Grinstein are designated proxy holders to vote
shares on behalf of stockholders at the 2001 Annual Meeting. The proxy holders
are authorized to:
- vote shares as instructed by the stockholders who have properly completed
and returned the proxy form;
- vote shares as recommended by the Board when stockholders have executed
and returned the proxy form, but have given no instructions; and
- vote shares at their discretion on any matter not identified in the proxy
form that is properly brought before the Annual Meeting.
The Trustee for the PACCAR Inc Savings Investment Plan (the "SIP Plan")
votes shares held in the SIP Plan according to each member's instructions on the
proxy form. If the proxy form is not returned or is returned without voting
instructions, the Trustee will vote the shares in direct proportion to the voted
shares of all other SIP Plan members, as provided for in the SIP Plan.
The Company has received a letter that a stockholder may ask to bring to
vote certain matters at the Annual Meeting, including reporting on shares held
by employees and directors as well as report on the results of shareholder
proposals. If properly brought before the Annual Meeting for a vote, the
designated proxy holders named in the proxy form will exercise their discretion
to vote for current Company practices.
PROXY VOTING PROCEDURES
The Proxy Form allows registered stockholders to vote in one of three ways:
Mail. Stockholders may complete, sign, date, and return the proxy form in
the pre-addressed, postage-paid envelope provided.
Telephone. Stockholders may call the toll free number listed on the proxy
form and follow the voting instructions given.
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Internet. Stockholders may access the Internet address listed on the proxy
form and follow the voting instructions given.
Telephone and Internet voting procedures authenticate each stockholder by
using a control number. The voting procedures will confirm that your
instructions have been properly recorded. Stockholders who vote by telephone or
Internet should not return the proxy form.
Stockholders who hold shares through a broker or agent should follow the
voting instructions received from them.
Revoking Proxy Voting Instructions. A proxy may be revoked by later dated
proxy or by written notice to the Secretary of the Company at any time before it
is voted. Stockholders who hold shares through a broker should contact the
broker or other agent if they wish to change their vote after executing the
proxy.
VOTE REQUIRED AND METHOD OF COUNTING VOTES
ITEM NO 1: ELECTION OF DIRECTORS
Directors are elected by a plurality of the votes cast for the election of
directors. If a stockholder does not vote for the election of directors because
authority to vote is withheld, because the proxy is not returned, because the
broker holding the shares does not vote, or because of some other reason, the
shares will not count in determining the total number of votes for each nominee.
Proxies signed but returned unmarked will be voted FOR the nominees for Class
III Director.
If any nominee is unable to act as director because of an unexpected
occurrence, the proxy holders may vote the proxies for another person or the
Board of Directors may reduce the number of directors to be elected.
EXPENSES OF SOLICITATION
Expenses for solicitation of proxies will be paid by the Company.
Solicitation will be by mail, except for any facsimile, telephone, or personal
solicitation by directors, officers, and employees of the Company which may be
made without additional compensation. The Company will request banks and brokers
to solicit proxies from their customers and will reimburse those banks and
brokers for reasonable out-of-pocket costs for this solicitation.
STOCK OWNERSHIP
The following persons are known to the Company to be the beneficial owners
of more than five percent of the Company's common stock as of December 31, 2000
(amounts shown are rounded to whole share amounts):
NAME AND ADDRESS OF SHARES PERCENT
BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
------------------- ------------------ --------
BankAmerica Corporation...................... 5,081,992(a) 6.7
100 N. Tryon Street
Charlotte, North Carolina 28255
Charles M. Pigott............................ 4,618,222(b)(c)(d) 5.9
P.O. Box 1518
Bellevue, Washington 98009
Capital Research and Management Co........... 4,293,600(e) 5.6
333 South Hope Street
Los Angeles, California 90071
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The following list shows the shares of common stock beneficially owned by
(a) each director and nominee, (b) the Chief Executive Officer and the other
four most highly compensated executive officers (collectively the "Named
Officers") and (c) by all directors, nominees and executive officers as a group
as of December 31, 2000 (amounts shown are rounded to whole share amounts):
SHARES PERCENT
NAME BENEFICIALLY OWNED OF CLASS
---- ------------------ --------
John M. Fluke, Jr. .......................... 3,962(d) *
Gerald Grinstein............................. 4,443(d) *
David J. Hovind.............................. 99,513(f) *
Gary S. Moore................................ 34,897(f) *
David K. Newbigging.......................... 443(d) *
Charles M. Pigott............................ 4,618,222(b)(c)(d) 5.9
James C. Pigott.............................. 3,708,748(d)(g) 4.7
Mark C. Pigott............................... 933,262(c)(h) 1.2
Thomas E. Plimpton........................... 35,789(f) *
William G. Reed, Jr. ........................ 131,311(c)(d) *
Harry C. Stonecipher......................... 0
Michael A. Tembreull......................... 136,941(f) *
Harold A. Wagner............................. 2,443(d) *
Total of all directors and executive officers
as a group (16 individuals)................ 8,062,446(i) 10.2
---------------
* does not exceed one percent.
(a) Of the 5,081,992 shares, BankAmerica Corporation and/or its 4 subsidiaries
jointly reported that they have sole voting power over 5,032,387 shares,
shared voting power over 49,605 shares, and sole investment power as to
4,862,355 shares, and shared investment power as to 186,328 shares.
(b) Includes 1,432,862 shares held by a charitable trust of which he is
co-trustee and shares voting and investment power, and 268,455 shares held
by a corporation over which he has sole voting power and sole investment
power over 228,960 of such shares.
(c) Does not include shares held in the name of a spouse and/or children to
which beneficial ownership is disclaimed.
(d) Includes restricted shares in the Restricted Stock and Deferred Compensation
Plan for Non-Employee Directors over which the participant has sole voting
but no investment power.
(e) Capital Research and Management Co, (CRM) and Income Fund of America (IFA)
jointly reported the following information on a Schedule 13G filed February
12, 2001: CMR has sole investment power over 4,293,600 shares and has voting
power over 0 shares. IFA has sole voting power over 3,838,600 shares and has
investment power over 0 shares.
(f) Includes shares allocated in the Company's SIP for which the participant has
sole voting power over all shares and investment power as follows: D. J.
Hovind (9,720 total/3,508 investment), G. S. Moore (12,534 total/3,842
investment), T. E. Plimpton (6,096 total/851 investment), and M. A.
Tembreull (12,974 total/4,000 investment). Includes stock units accrued for
deferred contingent cash awards under the Deferred Incentive Compensation
(DIC) and the Long Term Incentive (LTI) Plans as follows: D. J. Hovind
(11,409), T. E. Plimpton (608), and M. A. Tembreull (17,595). Also includes
options to purchase shares exercisable within sixty (60) days of December
31, 2000 as follows: D. J. Hovind (68,421), G. S. Moore (22,255), T. E.
Plimpton (29,085), and M. A. Tembreull (97,027).
(g) Includes the same 1,432,862 shares referenced in note (b) held by a
charitable trust of which he is a co-trustee and shares voting and
investment power.
(h) Includes 8,991 shares allocated in the Company's SIP for which he has sole
voting power over all shares and investment power over 1,979; 17,757 stock
units accrued for a deferred contingent cash award under the LTI and DIC
Plans, and the same 268,455 shares owned by the corporation referenced in
note
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(b) over which he has no voting or investment power. Also includes options
to purchase 174,747 shares exercisable within sixty (60) days of December
31, 2000.
(i) Reflects elimination of duplicate reporting of 1,432,862 shares referenced
in notes (b) and (g) and 268,455 shares referenced in notes (b) and (h).
ITEM NO. 1: ELECTION OF DIRECTORS
Three Class III Directors are to be elected at the meeting. The persons
named below have been designated by the Board as nominees for election as Class
III Directors for a term expiring at the Annual Meeting of Stockholders in 2004.
Two of the nominees are currently serving as Directors of the Company.
BOARD NOMINEES FOR CLASS III DIRECTOR
(TERMS EXPIRE AT THE 2004 ANNUAL MEETING)
DAVID K. NEWBIGGING, age 67, is chairman of Friends' Provident Life Office,
a life assurance and asset management company based in the United Kingdom. He
has held that position since 1998 and has served as a director since 1993. He is
also chairman of Faupel Trading Group Plc and Thistle Hotels Plc, and deputy
chairman of Benchmark Group Plc, all United Kingdom based companies. From
1995 - 1998 he served as chairman of Equitas Holdings Limited, the parent
company of a group of reinsurance companies based in the United Kingdom. He is a
director of Merrill Lynch & Co Inc. and Ocean Energy Inc. He has served as a
director of the Company since 1999.
HARRY C. STONECIPHER, age 64, is president and chief operating officer of
The Boeing Company, manufacturer of aerospace equipment, commercial and military
aircraft, and related services. He has held that position since 1997. Mr.
Stonecipher served as president and chief executive officer of McDonnell Douglas
Corporation from 1994 until its merger with Boeing in 1997. He was chairman,
president and chief executive officer of Sundstrand Corporation from 1991 to
1994. He is a director of The Boeing Company and Milacron, Inc. He is nominated
by the Board to serve as a Class III director upon the retirement of Charles M.
Pigott.
HAROLD A. WAGNER, age 65, served as chairman and chief executive officer of
Air Products and Chemicals, Inc., a supplier of industrial gases, related
equipment and chemicals, from 1992 to December 2000. He is a director of CIGNA
Corporation, Daido-Hoxan, Inc, and United Technologies Corporation. He has
served as a director of the Company since 1999.
RETIRING CLASS III DIRECTOR
CHARLES M. PIGOTT, age 71, became Chairman Emeritus of the Company in
January 1997. He served as President of the Company from 1965 to 1987, Chief
Executive Officer from 1967 until 1997 and Chairman from 1986 until 1997. He is
the brother of James C. Pigott, and the father of Mark C. Pigott, both directors
of the Company. He is a director of The Boeing Company, Chevron Corporation, and
The Seattle Times. He has served as a director of the Company since 1961, and
will retire from the Company's Board of Directors effective April 23, 2001.
CLASS I DIRECTORS (TERMS EXPIRE AT THE 2002 ANNUAL MEETING)
JOHN M. FLUKE, JR., age 58, is chairman of Fluke Capital Management, L.P.,
a private investment company, and has held that position since 1990. He has
served as a director of the Company since 1984.
GERALD GRINSTEIN, age 68, is non-executive chairman of Agilent
Technologies, Inc., a manufacturer of test and measurement instruments. He has
held that position since August 1999. He is also a principal of Madrona
Investment Group, L.L.C., a private investment company. Mr. Grinstein served as
non-executive chairman of Delta Airlines, Inc. from August 1997 to October 1999.
He served as chairman of Burlington Northern Santa Fe Corp., a railroad
transportation company, until his retirement in 1995. He was chairman and chief
executive officer of Burlington Northern Inc. from 1991 to 1995. He is a
director of Agilent
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Technologies, Inc., Delta Airlines, Inc., Expedia, Inc., Imperial Sugar
Corporation, the Pittston Company, and Vans, Inc. He has served as a director of
the Company since 1997.
DAVID J. HOVIND, age 60, is President of the Company and has held that
position since January 1992. He was Executive Vice President of the Company from
July 1987 to January 1992, Senior Vice President from December 1985 to July 1987
and Vice President from September 1985 to December 1985. He has served as a
director of the Company since January 1992.
MICHAEL A. TEMBREULL, age 54, is Vice Chairman of the Company and has held
that position since January 1995. He was Executive Vice President from January
1992 to January 1995 and Senior Vice President from September 1990 to January
1992. He has served as a director of the Company since July 1994.
CLASS II DIRECTORS (TERMS EXPIRE AT THE 2003 ANNUAL MEETING)
JAMES C. PIGOTT, age 64, is president of Pigott Enterprises, Inc., a
private investment company, and has held that position since 1983. He was
chairman and chief executive officer of Management Reports and Services, Inc., a
provider of business services, from 1986 until December 1999. He is the brother
of Charles M. Pigott, retiring director, and the uncle of Mark C. Pigott,
director of the Company. He has served as a director of the Company since 1972.
MARK C. PIGOTT, age 47, is Chairman and Chief Executive Officer of the
Company and has held that position since January 1997. He was a Vice Chairman of
the Company from January 1995 to December 31, 1996, Executive Vice President
from December 1993 to January 1995, Senior Vice President from January 1990 to
December 1993 and Vice President from October 1988 to December 1989. He is the
son of Charles M. Pigott, retiring director, and nephew of James C. Pigott,
director of the Company. He has served as a director of the Company since July
1994.
WILLIAM G. REED, JR., age 61, is chairman of the board of Safeco
Corporation and has held that position since January 2001. He was chairman of
Simpson Investment Company, a forest products holding company and the parent
company of Simpson Timber Company, from 1971 to 1996. He is a director of
Microsoft Corporation, Safeco Corporation, Simpson Investment Company, The
Seattle Times, and Washington Mutual, Inc. He has served as a director of the
Company since 1998.
THE BOARD RECOMMENDS A VOTE FOR EACH OF THE NOMINEES.
BOARD MEETINGS AND COMMITTEES
The Board of Directors met four times during 2000, and each member attended
at least 75% of the combined total of meetings of the Board of Directors and the
committees of the Board on which each served. The Board has four standing
committees. The members are listed below with the chairman of each committee
listed first.
AUDIT COMPENSATION EXECUTIVE NOMINATING
COMMITTEE COMMITTEE COMMITTEE COMMITTEE
---------------- ---------------- --------------- ------------
J. C. Pigott G. Grinstein C. M. Pigott M. C. Pigott
J. M. Fluke, Jr. D. K. Newbigging M. C. Pigott G. Grinstein
W. G. Reed, Jr. J. C. Pigott W. G. Reed, Jr. C. M. Pigott
H. A. Wagner W. G. Reed, Jr.
The Audit Committee recommends to the Board the selection of independent
auditors; reviews reports of independent auditors, internal auditors, and the
annual financial statements; and monitors the effectiveness of the audit
process, financial reporting, and the corporate compliance programs. The
Committee met twice in 2000.
The Compensation Committee reviews and approves salaries and other
compensation matters for executive officers. It administers the Long Term
Incentive Plan ("LTI Plan"), the Senior Executive Incentive
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Plan ("SEI Plan"), and the Deferred Incentive Compensation Plan ("DIC Plan").
The Committee met four times in 2000.
The Executive Committee acts on routine Board matters when the Board is not
in session. The Committee acted twice in 2000.
The Nominating Committee recommends candidates for election to the Board of
Directors and considers nominees recommended by stockholders. The Committee met
once in 2000.
COMPENSATION OF DIRECTORS
In 2000, each director who was not an employee was entitled to an annual
retainer of $60,000, of which $50,000 is paid in cash and $10,000 is paid in
restricted stock under the Restricted Stock and Deferred Compensation Plan for
Non-Employee Directors ("RSDC Plan"). The Company also paid non-employee
directors a fee of $5,000 for each Board or committee meeting attended. A single
meeting attendance fee is paid when more than one meeting is held on the same
day. Non-employee directors may elect to defer all or a part of their cash
retainer and fees to an income account or to a stock unit account under the RSDC
Plan.
COMPENSATION OF EXECUTIVE OFFICERS
The Named Officers received the following compensation for each of the last
three fiscal years ended December 31, 2000:
SUMMARY COMPENSATION
LONG TERM COMPENSATION
-------------------------
AWARDS PAYOUTS
------------ ----------
ANNUAL COMPENSATION SECURITIES
---------------------------------------------- UNDERLYING LONG-TERM
OTHER ANNUAL OPTIONS/SARS INCENTIVE ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(A) COMPENSATION(B) (SHARES) PAYOUTS(C) COMPENSATION(D)
--------------------------- ---- ---------- -------- --------------- ------------ ---------- ---------------
M. C. Pigott................ 2000 $1,070,000 $ 0 $ 403 69,393 $607,500 $8,500
Chairman and Chief 1999 938,462 828,666 99 61,407 243,750 8,000
Executive Officer 1998 846,923 714,000 0 39,625 240,000 8,000
D. J. Hovind................ 2000 710,577 215,888 7,711 42,610 405,000 8,500
President 1999 673,462 540,000 1,718 35,013 268,125 8,000
1998 632,500 443,334 0 25,251 300,000 8,000
M. A. Tembreull............. 2000 710,577 215,888 1,961 42,610 405,000 8,500
Vice Chairman 1999 673,462 540,000 314 35,013 243,750 8,000
1998 632,500 443,334 0 25,251 240,000 8,000
T. E. Plimpton.............. 2000 474,923 145,685 1,165 21,913 153,900 8,500
Executive 1999 414,616 293,493 157 17,452 76,125 8,000
Vice President 1998 371,462 212,375 0 10,489 75,600 8,000
G. S. Moore................. 2000 313,212 132,403 2,316 12,272 85,948 8,500
Senior 1999 299,135 177,600 353 10,342 67,320 8,000
Vice President 1998 274,385 138,188 0 5,983 43,200 8,000
---------------
(a) Bonuses earned in 2000 are determined and paid in 2001.
(b) Amounts represent interest on deferred bonus payments and payments under the
LTI Plan in excess of 120% of the applicable Federal long-term rate (as
prescribed under Section 1274(d) of the Internal Revenue Code). The
aggregate amount of the perquisites and other personal benefits was less
than the required reporting threshold (the lesser of $50,000 or 10% of the
total of annual salary and bonus for the Named Officer).
(c) Represents cash awards paid, or payable but deferred at the executive's
election during 1998, 1999 and 2000 that were earned during the 1995 - 1997
performance cycle, the 1996 - 1998 performance cycle, and the 1997 - 1999
performance cycles respectively.
(d) Represents Company matching contributions to the SIP Plan.
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2000 OPTION GRANTS
Stock options granted in 2000 pursuant to the LTI Plan to the Named
Officers are as follows:
INDIVIDUAL GRANTS
-----------------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO GRANT DATE
OPTIONS EMPLOYEES IN EXERCISE OR EXPIRATION PRESENT
NAME GRANTED FISCAL YEAR BASE PRICE DATE(A) VALUE(B)
---- ---------- ---------------- ----------- ---------- ----------
M. C. Pigott......................... 69,393 11.7% $41.75 1/25/2010 $1,166,934
D. J. Hovind......................... 42,610 7.2 41.75 1/25/2010 716,543
M. A. Tembreull...................... 42,610 7.2 41.75 1/25/2010 716,543
T. E. Plimpton....................... 21,913 3.7 41.75 1/25/2010 368,496
G. S. Moore.......................... 12,272 2.1 41.75 1/25/2010 206,370
---------------
Individual grants were awarded in the form of Stock Options only without
tandem SARs.
(a) Options granted in 2000 become exercisable on January 1, 2003. This date may
be accelerated in the event of a Change in Control of the Company (as
defined in the LTI Plan).
(b) The Grant Date Present Value dollar amount was calculated using a variation
of the Black-Scholes option pricing model using the following assumptions:
(i) 51.16% expected share price volatility, (ii) 6.87% risk-free rate of
return, (iii) an expected dividend yield of 4.45%, (iv) a ten-year exercise
period, and (v) a five-year expected life.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END VALUES
Shown below is information about the exercise of stock options and stock
appreciation rights under the 1981 Long Term Incentive Plan and the LTI Plan by
the Named Officers in 2000 and the value of unexercised options on December 31,
2000:
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED VALUE OPTIONS AT FY-END OPTIONS AT FY-END
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------- ------------------------- -------------------------
M. C. Pigott..................... 0 $ 0 135,122/170,425 $2,802,085/$520,448
D. J. Hovind..................... 0 0 43,170/102,874 834,243/ 319,575
M. A. Tembreull.................. 1,000 17,625 71,776/102,874 1,340,108/ 319,575
T. E. Plimpton................... 0 0 18,596/ 49,854 304,980/ 164,348
G. S. Moore...................... 0 0 16,272/ 28,597 299,080/ 92,040
LONG TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
All stock-based awards under the LTI Plan are shown in the Option Grant and
Option Exercise tables above. Shown below is information with respect to the
contingent cash awards for the 2000 - 2002 cycle under the LTI Plan:
ESTIMATED FUTURE PAYOUTS
PERFORMANCE ---------------------------------
NAME PERIOD THRESHOLD TARGET MAXIMUM
---- --------------------- --------- -------- ----------
M. C. Pigott............................ 1/1/2000 - 12/31/2002 $106,875 $534,375 $1,068,750
D. J. Hovind............................ 1/1/2000 - 12/31/2002 65,625 328,125 656,250
M. A. Tembreull......................... 1/1/2000 - 12/31/2002 65,625 328,125 656,250
T. E. Plimpton.......................... 1/1/2000 - 12/31/2002 59,063 168,750 337,500
G. S. Moore............................. 1/1/2000 - 12/31/2002 33,075 94,500 189,000
Awards are tied to achieving Company, business unit and individual goals
over a three-year performance period. Company performance goals are based on the
Company's financial performance relative to a select
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group of companies with similar business characteristics. Business unit and
individual performance goals are based on financial and strategic objectives
approved by the Compensation Committee on an individual basis.
The target amount will be earned if Company financial performance ranks
above at least half of the selected companies and individual and business unit
performance are at 100% of goal. The maximum award amount will be earned if
Company financial performance ranks above all of the comparison companies and
business unit and individual performance are at least 150% of goal.
PENSION PLAN
The following table shows the estimated annual retirement benefit payable
to participating employees, including the Named Officers, under the Company's
noncontributory retirement plan and Supplemental Retirement Plan:
YEARS OF SERVICE
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REMUNERATION 15 20 25 30 35
------------ -------- -------- -------- -------- ----------
$ 400,000................................. $ 87,368 $116,490 $145,613 $174,735 $ 203,858
700,000................................. 154,868 206,490 258,113 309,735 361,358
1,100,000................................. 244,868 326,490 408,113 489,735 571,358
1,600,000................................. 357,368 476,490 595,613 714,735 833,858
2,100,000................................. 469,868 626,490 783,113 939,735 1,096,358
The Company's noncontributory retirement plan has been in effect since
1947. The Named Officers participate in this plan on the same basis as other
salaried employees. The plan provides benefits based on years of service and
salary. The benefit for each year of service, up to a maximum of 35 years, is
equal to 1% of salary plus 0.5% of salary in excess of the Social Security
Covered Compensation level. Salary is defined as the average of the highest 60
consecutive months of an employee's cash compensation, which includes those
amounts reported in the "Salary" and "Bonus" columns of the Summary Compensation
Table, but it excludes compensation under the LTI Plan. Years of credited
service as of December 31, 2000 for the Named Officers are: M. C. Pigott, 22
years; D. J. Hovind, 35 years; M. A. Tembreull, 30 years; T. E. Plimpton, 24
years; and G. S. Moore, 31 years.
The Company's unfunded Supplemental Retirement Plan provides a retirement
benefit to those affected by the maximum benefit limitations permitted for
qualified plans by the Internal Revenue Code and to those deferring incentive
compensation bonuses. The benefit is equal to the amount of normal pension
benefit reduction resulting from the application of maximum benefit and salary
limitations and the exclusion of deferred incentive compensation bonuses from
the retirement plan benefit formula.
The Pension Plan Table illustrates approximate retirement benefits at age
65, based on single life annuity amounts. The benefit listed is not subject to
any deduction for Social Security or other offset amounts.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
Under the supervision of the Compensation Committee, the Company has
designed its executive pay programs to provide a direct link between Company
performance and executive compensation. These programs have been in use for a
number of years. The compensation of executive officers under these programs is
determined annually by the Compensation Committee. The Committee is composed
exclusively of independent directors.
The Company believes that its executive compensation package should be
sufficient to attract and retain highly qualified executives and should provide
meaningful incentives for measurably superior performance. The Company's
executive compensation is comprised of three main components: (i) base salaries;
(ii) annual cash bonuses intended to focus maximum effort on achieving
profitability, individually assigned objectives, and
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the highest level of product quality; and (iii) long term incentives in the form
of stock options and cash awards intended to focus efforts on achieving long
term growth in net income, return on sales, and return on capital.
Base Salaries. Salary surveys provided by outside consultants are used to
compare base salaries to comparable positions at companies with which the
Company competes for executive talent. These surveys include data from a wide
variety of vehicle manufacturing and other large manufacturing companies,
including some of the selected companies described in the LTI Plan discussed
below (the "Selected Companies"). The surveys include six of the ten companies
which comprise the Standard & Poor's indices used in the performance graph set
forth later in this proxy statement. The Committee believes it is important to
include some of the companies that make up the Standard & Poor's indices, and to
also include organizations with which the Company competes in the broader market
for executive talent. According to the survey, the base salaries of the
Company's executive officers, including its Chief Executive Officer, were in the
median range of the salaries paid by companies surveyed.
Annual Cash Bonuses. Annual cash bonuses may range from 0% up to 96% of the
executive officer's base salary. Bonuses are awarded based upon Company
performance relative to an overall profit goal and the attainment of one or more
individual goals approved by the Compensation Committee. In general, these goals
involve factors such as the financial performance of the business units for
which the executive has direct responsibility, profitability or return on
investment as well as non-financial performance criteria such as market share
improvement, product quality, new product development, production efficiencies,
and similar specific individual assignments. The individual goals are changed
annually, and a level of importance is assigned to each goal on a percentage
basis. The calculation of the bonus takes into account both the level of
achievement and the assigned importance of the goal. The achievement of each
goal is determined separately, and no bonus for a specific goal is paid unless
at least 70% of that goal is achieved. The bonuses earned in 2000 and paid in
2001 reflect achievement of less than 100% of the Company's overall profit goal
for 2000.
Long Term Incentives. Given the cyclical nature of the Company's business,
long term incentives are based on a three-year performance period and are
provided through annual grants of stock options and cash incentives. The
Compensation Committee determines a target award for each executive officer,
expressed as a percentage of salary at the date the award is granted. The target
award is allocated 85% to stock options and 15% to the cash incentive award.
Stock options become exercisable at the end of the three-year performance period
and are intended to link the interests of key employees directly with
stockholders' interests through increased individual stock ownership. The
exercise price of the stock options is the market price at the time of grant.
A significant portion (50% to 100%) of the long term cash incentive award
is based on overall Company performance measured in terms of the Company's rank
in compound growth of net income, return on sales, and return on capital
(weighted equally) when compared to the Selected Companies, a group of Fortune
500 companies in similar industries. The Selected Companies have been used for
this comparison for a number of years. These companies have been selected
because, in the judgment of the Company's compensation consultants and the
Compensation Committee, they are the most directly comparable to the Company in
size and nature of business. The Selected Companies include six of the ten
companies which make up the published Standard & Poor's indices in the
performance graph set forth below.
The remaining portion of the long term cash incentive award is based upon
business unit and individual objectives that involve factors similar to those
described above for the annual cash bonus, but are measured over a three-year
performance cycle. The cash incentive award is based on the Committee's
evaluation of each executive's achievement of performance objectives during the
preceding three years. The target amount will be earned if the Company's
financial performance ranks above at least half of the Selected Companies (the
"Comparative Performance Goal") and business unit and individual performance are
at 100% of goal. The maximum award amount will be earned if Company's financial
performance ranks above all of the Selected Companies and business unit and
individual performance are at least 150% of goal. No award will be earned if
Company's financial performance ranks below 75% of the Selected Companies and
business unit and individual performance are below 75% of goal.
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The cash awards paid in 2000 for the three-year cycle ended in 1999 reflect
an achievement in excess of 100% of the Comparative Performance Goal. The
incentive cash awards for each executive officer for the three-year cycle ended
in 2000 had not been determined on the date this proxy statement was prepared.
Chief Executive Officer's Compensation. The Chief Executive Officer's
compensation is comprised of the same components as other executives: (i) base
salary; (ii) an annual cash bonus; and (iii) a long term incentive in the form
of stock options and a cash award.
The CEO's 2000 annual cash bonus was based entirely on the Company's profit
goal. No annual bonus was earned in 2000 and, accordingly, no payment was made
in 2001. The cash portion of the long term incentive was based 100% on the
Company's performance during the three-year cycle as compared to the Selected
Companies. For the three-year cycle ended in 1999, Company performance resulted
in goal achievement in excess of 100% of the Comparative Performance Goal. The
incentive cash award for the three-year cycle ended in 2000 had not been
determined on the date this proxy statement was prepared.
The LTI Plan and the annual cash bonus program are structured to allow the
Company to preserve tax deductions for performance based executive compensation
under Section 162(m) of the Internal Revenue Code.
THE COMPENSATION COMMITTEE
G. Grinstein
D. K. Newbigging
J. C. Pigott
W. G. Reed, Jr.
INDEPENDENT AUDITORS
Ernst & Young LLP performed the audit of the Company's financial statements
for 2000 and has been selected to perform this function for 2001. Partners from
the Seattle office of Ernst & Young LLP will attend the Annual Meeting, and will
have the opportunity to make statements if they desire, as well as be available
to respond to appropriate questions.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors has furnished the following
report:
The Audit Committee is comprised of four members each of whom meets the
independence and financial literacy requirements of the NASDAQ Rules. It adopted
a written charter outlining its responsibilities which was approved by the Board
of Directors. The charter is included as Appendix A to this proxy statement.
Among the Committee's responsibilities is the selection and evaluation of
the independent auditors and the review of the financial statements. The
Committee reviewed and discussed the audited consolidated financial statements
for the most recent fiscal year with management. In addition, the Committee
discussed all matters required to be discussed with the independent auditors
Ernst & Young LLP under SAS 61 (Codification of Statements on Auditing
Standards, AU sec. 380). The Committee received from Ernst & Young LLP the
written disclosures required by Independence Standards Board Standard No. 1, and
discussed with them their independence from the Company. Based on the Audit
Committee's review of the audited financial statements and its discussions with
management and the independent auditors, the Committee recommends to the Board
of Directors that the audited consolidated financial statements be included in
the Company's Annual Report (10-K) for the year ended December 31, 2000, and be
filed with the Securities and Exchange Commission.
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The Committee considered whether services provided by its principal
accountant, Ernst & Young LLP, unrelated to the audit are compatible with its
position as independent auditor. The services provided are as follows:
AUDIT FEES
In the year ended December 31, 2000, the independent auditors, Ernst &
Young LLP, billed the Company $1.2 million for professional services rendered
for the audit of the Company's annual financial statements included in the
Company's Form 10-K and reviews of the financial statements included in the
Company's Forms 10-Q.
AUDIT RELATED FEES
In the year ended December 31, 2000, Ernst & Young LLP billed the Company
$0.5 million for audit related professional services. These services include
statutory audits of foreign subsidiaries, audits of employee benefit plans and
other assurance services not directly related to the audit of the Company's
consolidated financial statements.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
In the year ended December 31, 2000, Ernst & Young LLP performed no
professional services for information technology systems design and
implementation.
ALL OTHER FEES
In the year ended December 31, 2000, Ernst & Young LLP billed the Company
$1.8 million related to other professional services. These services primarily
include tax compliance and consulting as well as merger and acquisition advisory
services.
THE AUDIT COMMITTEE
J. C. Pigott
J. M. Fluke, Jr.
W. G. Reed, Jr.
H. A. Wagner
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STOCKHOLDER RETURN PERFORMANCE GRAPH
The following line graph compares the yearly percentage change in the
cumulative total shareowner return on the Company's common stock to the
cumulative total return of the Standard & Poor's Composite-500 Stock Index and
an equally-weighted simple average of the Standard & Poor's Heavy-Duty Trucks &
Parts and the Standard & Poor's Machinery (Diversified) indices (as reported on
the Bloomberg data service) for the period of five fiscal years commencing
December 31, 1995 and ending December 31, 2000. Management believes that the
blending of these two indices provides a better comparison than either of the
indices alone because the Company's performance can be compared to a larger
number of comparable companies. The comparison assumes that $100 was invested
December 31, 1995 in the Company's common stock and in the stated indices and
assumes reinvestment of dividends.
[PERFORMANCE GRAPH]
--------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000
--------------------------------------------------------------------------------
PACCAR Inc 100 167.36 268.64 221.69 251.83 292.39
S&P 500 100 122.68 163.29 209.57 253.34 230.46
S&P Indices 100 124.21 172.11 148.82 162.15 147.39
--------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR 2002
A stockholder proposal must be addressed to the Corporate Secretary and
received at the principal executive offices of the Company, P.O. Box 1518,
Bellevue, Washington 98009 by the close of business on November 15, 2001 to be
considered for inclusion in the proxy materials for the Company's 2002 Annual
Meeting of Stockholders.
For business to be brought before the Annual Meeting of Stockholders by a
stockholder, other than those proposals included in the proxy materials, the
Company's Bylaws (Art. III, Sec. 5) provide that notice of such business must be
received at the Company's principal executive offices not less than 45 nor more
than 60 days prior to the meeting. The notice must specify the stockholder's
name, address, and number of shares of the Company beneficially owned, and it
must specify certain other information stated in the Bylaws.
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The Bylaws of the Company provide (Art. III, Sec. 6) that nominations for
director by a stockholder must be received by the Corporate Secretary at the
Company's principal executive offices not less than 45 nor more than 60 days
prior to a stockholders' meeting. The notice must specify the stockholder's
name, address, and number of shares of the Company beneficially owned, and it
must specify certain information relating to the nominee as required under
Regulation 14A under the Securities Exchange Act of 1934.
A copy of the pertinent Bylaw provision is available on request to the
Corporate Secretary, PACCAR Inc, P. O. Box 1518, Bellevue, WA 98009.
OTHER BUSINESS
The Company knows of no other business likely to be brought before the
meeting.
/s/ JANICE M. D'AMATO
J. M. D'Amato
Secretary
March 15, 2001
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APPENDIX A
PACCAR INC
AUDIT COMMITTEE CHARTER
MEMBERSHIP
The Chairman and the members of the Audit Committee are appointed by the Board
of Directors at the Annual Organization Meeting of the Board. The Committee
shall consist of three or more directors who meet the independence, financial
literacy and all other NASDAQ requirements for participation.
SCOPE OF COMMITTEE RESPONSIBILITIES
1. Subject to ratification by the Board of Directors, the Audit Committee
will select, evaluate and ensure the ultimate accountability of the
independent auditors to the Committee and the Board.
2. Evaluate the independence of the independent auditors, assist in
preserving that independence, and consider the effects on their
independence, if any, of management's plans to engage their firm to
perform management advisory services. Obtain a formal written statement
annually from the independent auditors discussing relationships between
the auditors and the Company to ensure the auditors remain independent.
3. Review the scope and results of the audit of the financial statements
of the Corporation and its subsidiaries.
4. Present to the Board of Directors such comments and recommendations as
deemed appropriate in connection with the Committee's responsibilities.
5. Review and approve the engagement letter submitted by the independent
auditors and inquire into the scope of the audit for the coming year.
Include inquiry of the extent to which the planned audit can be relied
upon to detect fraud or weaknesses in accounting controls.
6. Confer with representatives of the independent auditors, the Company's
internal auditors, the Chief Executive Officer, the Chief Financial and
Accounting Officers, and other members of management of the Company as
deemed necessary to determine:
(a) The effectiveness of the audit effort and that no restrictions
were placed on the scope of the examination.
(b) The effectiveness of the Company's financial reporting systems.
(c) The effectiveness of the Company's internal auditing activities.
(d) The adequacy of financial and accounting control systems.
(e) The effectiveness of the financial and accounting organizations.
7. Prior to release of the Annual Report to the Stockholders and the Form
10-K report to the Securities and Exchange Commission, review the
financial statements and commentary contained therein with Company
management and the independent auditors. Review any changes in
accounting principles and determine that the independent auditors are
satisfied with the disclosure and content of the statements.
8. Review procedures followed to assure compliance with all laws,
regulations and Company policies relating to (1) political
contributions, (2) payments to individuals or organizations retained as
sales consultants, and (3) maintenance of appropriate financial records
and the effectiveness of internal control procedures.
9. Review the adequacy of the Company's internal control program.
A-1
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10. Review of significant pending and threatened litigation with in-house
counsel and outside counsel as needed.
11. Review compliance with the Company's policies on business ethics and
principles of conduct.
STATED MEETINGS
The Committee shall meet at least annually prior to release of the annual report
for the preceding year. The Committee shall reassess the adequacy of this
charter annually.
QUORUM
A majority of the members of the Committee shall constitute a quorum. The
Committee shall act only on the affirmative vote of at least two of the members.
A-2
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MAP
From I-405 take the N.E. 4th Street Exit, head west.
Turn right on 112th Avenue N.E. (heading north)
Turn left on N.E. 6th Street (heading west).
Parking garage entrance is on N.E. 6th Street.
21
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COMPANY #
CONTROL #
------------------
THERE ARE THREE WAYS TO VOTE YOUR PROXY
YOUR TELEPHONE OR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES
IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.
VOTE BY PHONE -- TOLL FREE -- 1-800-240-6326 -- QUICK *** EASY ***IMMEDIATE
o Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a week,
until 12:00 p.m. (ET) on April 23, 2001.
o You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above.
o Follow the simple instructions the voice provides you.
VOTE BY INTERNET -- http://www.eproxy.com/pcar -- QUICK *** EASY *** IMMEDIATE
o Use the Internet to vote your proxy 24 hours a day, 7 days a week, until 12:00
p.m. (ET) on April 23, 2001.
o You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above to obtain your records and create an
electronic ballot.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to PACCAR Inc, c/o Shareowner Services(SM), P.O.
Box 64873, St. Paul, MN 55164-0873.
IF YOU VOTE BY PHONE OR INTERNET, PLEASE DO NOT MAIL YOUR PROXY CARD.
v Please detach here v
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES FOR DIRECTOR.
1. Election of directors 01 David K. Newbigging 03 Harold A. Wagner [ ] Vote FOR all nominess [ ] Vote WITHHELD
(except as marked) from all nominees
02 Harry C. Stonecipher
-----------------------------------------
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE,
WRITE THE NUMBERS(s) OF THE NOMINEE(s) IN THE BOX PROVIDED TO THE RIGHT.)
-----------------------------------------
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR ALL NOMINEES FOR DIRECTOR.
Address Change? Mark Box [ ] Date
Indicate changes below: --------------------------------------
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| |
| |
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Signature(s) in Box
Please sign exactly as name(s) appears in type.
If shares are held by joint owners, all persons
must sign. When acting as attorney, executor,
administrator, trustee, or guardian, please give
full title as such. If a corporation, please
sign full corporate name by president or other
authorized officer. If a partnership, please
sign partnership name by authorized person.
22
PACCAR INC
ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, APRIL 24, 2001
10:30 A.M.
MEYDENBAUER CENTER
11100 N.E. 6TH STREET
BELLEVUE, WASHINGTON 98004
PACCAR INC 777 -- 106TH AVENUE N.E.
BELLEVUE, WA 98004 PROXY
--------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING
ON APRIL 24, 2001.
The shares of common stock you hold of record on February 28, 2001 will be voted
as you specify on the reverse side.
IF THE PROXY IS SIGNED AND NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED "FOR"
ALL NOMINEES FOR DIRECTOR.
By signing the proxy, you revoke all prior proxies and appoint Mark C. Pigott,
and Gerald Grinstein, and each of them, with full power of substitution, to vote
your shares on the matters shown on the reverse side and to vote in their
discretion on any other matters which may properly come before the Annual
Meeting and all adjournments.
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
See reverse for voting instructions.