Ryder System, Inc.
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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
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Filed by a
Party other than the Registrant
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Check the
appropriate box:
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o Preliminary
Proxy Statement
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o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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þ Definitive
Proxy Statement
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o Definitive
Additional Materials
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o Soliciting
Material Pursuant to § 240.14a-12
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Ryder
System, Inc.
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
Payment of
Filing Fee (Check the appropriate box):
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No fee
required.
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Fee computed
on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
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(1)
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Title of
each class of securities to which transaction applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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Per unit
price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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previously with preliminary materials:
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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.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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Ryder System,
Inc.
11690 N.W.
105th
Street
Miami, Florida 33178
NOTICE OF 2008 ANNUAL MEETING
OF SHAREHOLDERS
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Time:
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10:00 a.m., Eastern Daylight Time
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Date:
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Friday, May 2, 2008
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Place:
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Ryder System, Inc. Headquarters
11690 N.W.
105th
Street
Miami, Florida 33178
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Purpose:
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1. To elect three directors.
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2. To approve an amendment to the Ryder System, Inc. 2005
Equity Compensation Plan.
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3. To ratify the appointment of PricewaterhouseCoopers LLP
as our independent auditor.
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4. To consider any other business that is properly
presented at the meeting.
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Who May Vote:
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You may vote if you were a record owner of our common stock at
the close of business on March 7, 2008.
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Proxy Voting:
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Your vote is important. You may vote by signing, dating and
returning the enclosed proxy card in the proxy envelope, by
calling the toll free number on the proxy card or via the
Internet using the instructions on the proxy card.
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By order of the Board of Directors,
Robert D. Fatovic
Executive Vice President, Chief Legal Officer and Corporate
Secretary
Miami, Florida
March 21, 2008
TABLE OF
CONTENTS
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A-1
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B-1
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RYDER SYSTEM,
INC.
11690 N.W. 105th
STREET
MIAMI, FLORIDA 33178
PROXY STATEMENT
INFORMATION ABOUT
OUR ANNUAL MEETING
You are receiving this proxy statement because you own shares of
Ryder common stock that entitle you to vote at the 2008 annual
meeting of shareholders. Our Board of Directors is soliciting
proxies from shareholders who wish to vote at the meeting. By
use of a proxy, you can vote even if you do not attend the
meeting. This proxy statement describes the matters on which you
are being asked to vote and provides information on those
matters so that you can make an informed decision. The notice of
annual meeting, this proxy statement and the proxy card are
being mailed to shareholders on or about March 21, 2008.
IMPORTANT NOTICE
REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
SHAREHOLDER MEETING TO BE HELD ON MAY 2, 2008.
The
Companys Proxy Statement and Annual Report are available
online at: http://annualmeeting.ryder.com
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When and where is the annual meeting? |
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We will hold the annual meeting on Friday, May 2, 2008, at
10:00 a.m. Eastern Daylight Time at the Ryder System,
Inc. Headquarters, 11690 N.W.
105th
Street, Miami, Florida 33178. A map with directions to the
meeting can be found on the enclosed proxy card. |
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What am I voting on? |
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You are voting on three proposals: |
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1. Election of directors as follows: L. Patrick Hassey,
Lynn M. Martin and Hansel E. Tookes, II for a three-year
term expiring at the 2011 annual meeting of shareholders.
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2. Approval of an amendment to the Ryder System, Inc. 2005
Equity Compensation Plan to increase the total number of shares
available for grant under the Plan and to increase the limit on
the number of shares available for full value awards
granted under the Plan.
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3. Ratification of the appointment of
PricewaterhouseCoopers LLP as our independent auditor.
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You will also be voting on such other business, if any, as may
properly come before the meeting, or any adjournment of the
meeting. |
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What are the voting recommendations of the Board of
Directors? |
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The Board recommends that you vote: |
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FOR the election of each of the director nominees
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FOR the approval of the amendment to the Ryder
System, Inc. 2005 Equity Compensation Plan
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FOR the ratification of the appointment of
PricewaterhouseCoopers LLP as our independent auditor
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1
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Who can vote? |
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The Board of Directors has set March 7, 2008 as the record
date for the annual meeting of shareholders. Holders of Ryder
common stock at the close of business on the record date are
entitled to vote their shares at the annual meeting of
shareholders. As of March 7, 2008, there were
57,446,317 shares of common stock issued, outstanding and
entitled to vote. Each share of common stock issued and
outstanding is entitled to one vote. |
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What is a shareholder of record? |
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You are a shareholder of record if you are registered as a
shareholder with our transfer agent, Computershare
Trust Company, N.A. |
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What is a beneficial shareholder? |
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You are a beneficial shareholder if a brokerage firm, bank,
trustee or other agent (the nominee) holds your
shares. This is often called ownership in street
name, since your name does not appear anywhere in our
records. |
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What shares are reflected on my proxy? |
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Your proxy reflects all shares owned by you at the close of
business on March 7, 2008. For participants in our 401(k)
Plan, shares held in your account as of that date are included
in your proxy, and the enclosed proxy card will serve as a
voting instruction for the trustee of our 401(k) Plan who will
vote your shares as you instruct. |
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How many votes are needed for the proposals to pass? |
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The affirmative vote of the holders of at least a majority of
the total number of shares issued and outstanding and entitled
to vote is required for the election of each director and for
approval of each proposal to be presented at the meeting. |
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What is a quorum? |
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A quorum is the minimum number of shares required to hold a
meeting. Under our By-Laws, the holders of a majority of the
total number of shares issued and outstanding and entitled to
vote at the meeting must be present in person or represented by
proxy for a quorum. Broker non-votes and proxies received but
marked as abstentions will be included in the calculation of the
number of votes considered to be present at the meeting. A
broker non-vote occurs when a broker or other nominee who holds
shares for another does not vote on a particular item because
the nominee does not have discretionary voting authority for
that item and has not received instructions from the owner of
the shares. |
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Who can attend the annual meeting? |
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Only shareholders are invited to attend the annual meeting. To
gain admittance, you must bring a form of personal
identification to the meeting, where your name will be verified
against our shareholder list. If a broker or other nominee holds
your shares and you plan to attend the meeting, you should bring
a recent brokerage statement showing your ownership of the
shares and a form of personal identification. If you wish to
vote your shares which are held by a broker or other nominee at
the meeting, you must obtain a proxy from your broker or nominee
and bring your proxy to the meeting. |
2
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How do I vote? |
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If you are a shareholder of record, you may vote on the
Internet, by telephone or by signing, dating and mailing your
proxy card. Detailed instructions for Internet and telephone
voting are set forth on the enclosed proxy card. |
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If your shares are held in our 401(k) Plan, the enclosed proxy
will serve as a voting instruction for the trustee of our 401(k)
Plan who will vote your shares as you instruct. To allow
sufficient time for the trustee to vote, your voting
instructions must be received by April 29, 2008. If the
trustee does not receive your instructions by that date, the
trustee will vote the shares you hold through our 401(k) Plan in
the same proportion as those shares in our 401(k) Plan for which
voting instructions were received. |
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If you are a beneficial shareholder, you must follow the voting
procedures of your broker, bank or trustee included with your
proxy materials. |
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What does it mean if I receive more than one proxy card? |
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It means that you hold shares in more than one account. To
ensure that all your shares are voted, sign and return each
proxy card. Alternatively, if you vote by telephone or on the
Internet, you will need to vote once for each proxy card and
voting instruction card you receive. |
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If I plan to attend the annual meeting, should I still vote
by proxy? |
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Yes. Casting your vote in advance does not affect your right to
attend the annual meeting. |
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If you send in your proxy card and also attend the meeting, you
do not need to vote again at the meeting unless you want to
change your vote. Written ballots will be available at the
meeting for shareholders of record. |
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Beneficial shareholders who wish to vote in person must request
a proxy from the nominee and bring that proxy to the annual
meeting. |
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Who pays the cost of this proxy solicitation? |
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We pay the cost of soliciting your proxy and reimburse brokerage
firms and others for forwarding proxy materials to you. We have
hired D.F. King & Co., Inc., a proxy solicitation
firm, to assist with the distribution of proxy materials and the
solicitation of votes at an estimated cost of $20,500, plus
out-of-pocket
expenses. In addition to solicitation by mail, solicitations may
also be made by personal interview, letter, fax and telephone. |
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What is Householding? |
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The Securities and Exchange Commissions (SEC) Householding
rule affects the delivery of our annual disclosure documents
(such as annual reports, proxy statements, notices of internet
availability of proxy materials and other information
statements) to shareholders. Under this rule, we are allowed to
deliver a single set of our annual report and proxy statement to
multiple shareholders at a shared address or household, unless a
shareholder at that shared address delivers contrary
instructions to us through our transfer agent, Computershare
Trust Company, N.A. Each shareholder will continue to
receive a separate proxy card or voting instruction card even
when a single set of materials is sent to a shared address under
the Householding rule. The Householding rule is designed to
reduce the expense of sending multiple disclosure documents to
the same address. |
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If you are a registered shareholder and you want to request a
separate copy of this proxy statement or accompanying annual
report, you may contact our Investor Relations Department by
calling
(305) 500-4053,
in writing at Ryder System, Inc., Investor Relations Department,
11690 N.W. 105th Street, Miami, Florida 33178, or by
e-mail to
RyderforInvestors@ryder.com, and a copy will be promptly
sent to you. If you wish to receive separate documents in future
mailings, please contact our transfer agent, Computershare
Trust Company, N.A. by calling
(800) 730-4001,
in writing at Computershare, P.O. Box 43078,
Providence, RI
02940-3078,
or by e-mail
at
http://www-us.computershare.com/investor/contactus/.
Our 2007 annual report and this proxy statement are also
available through our website at www.ryder.com. |
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Two or more shareholders sharing an address can request delivery
of a single copy of annual disclosure documents if they are
receiving multiple copies by contacting Computershare in the
manner set forth above. |
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If a broker or other nominee holds your shares, please contact
such holder directly to inquire about the possibility of
Householding. |
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Who tabulates the votes? |
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Our Board of Directors has appointed Computershare
Trust Company, N.A. as the independent Inspector of
Election. Representatives of Computershare will count the votes. |
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Is my vote confidential? |
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Yes. The voting instructions of shareholders of record will only
be available to the Inspector of Election (Computershare) and
proxy solicitor (D.F. King). Voting instructions for employee
benefit plans will only be available to the plans trustees
and the Inspector of Election. The voting instructions of
beneficial shareholders will only be available to the
shareholders bank, broker or trustee. Your voting records
will not be disclosed to us unless required by a legal order,
requested by you or cast in a contested election. |
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What if I abstain or withhold authority to vote on a
proposal? |
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If you sign and return your proxy card marked
abstain or withheld on any proposal,
your shares will not be voted on that proposal and will not be
counted as votes cast in the final tally of votes with regard to
that proposal. However, your shares will be counted for purposes
of determining whether a quorum is present. Accordingly, a
marking of abstain or withheld on any
proposal will have the same effect as a vote against the
proposal. |
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What if I sign and return my proxy card without making any
selections? |
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If you sign and return your proxy card without making any
selections, your shares will be voted FOR
proposals 1, 2 and 3. If other matters properly come before
the meeting, the proxy committee will have the authority to vote
on those matters for you at their discretion. As of the date of
this proxy, we are not aware of any matters that will come
before the meeting other than those disclosed in this proxy
statement. |
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What if I am a beneficial shareholder and I do not give the
nominee voting instructions? |
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If you are a beneficial shareholder and your shares are held in
the name of a broker, the broker is permitted to vote your
shares on the election of directors and the ratification of the
appointment of PricewaterhouseCoopers LLP as our independent
auditor even if the broker does not receive voting instructions
from you. Under New York Stock Exchange (NYSE) rules, your
broker may not vote your shares on the proposal relating to the
2005 Equity Compensation Plan absent instructions from you.
Without your instructions on this proposal, your shares may not
be voted on this matter 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. |
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If you are a beneficial shareholder and your shares are held by
a bank, trustee or other agent, your shares will not be voted
unless you give the nominee voting instructions. |
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How do I change my vote? |
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A shareholder of record may revoke a proxy by giving written
notice of revocation to our Corporate Secretary before the
meeting, by delivering a later-dated proxy (either in writing,
by telephone or over the Internet), or by voting in person at
the annual meeting. |
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If you are a beneficial shareholder, you may change your vote by
following the nominees procedures for revoking or changing
your proxy. |
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When are shareholder proposals for next years annual
meeting due? |
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To be considered for inclusion in Ryders 2009 proxy
statement, shareholder proposals must be delivered in writing to
us at 11690 N.W.
105th
Street, Miami, Florida 33178, Attention: Corporate Secretary, no
later than November 21, 2008. Additionally, we must receive
proper notice of any shareholder proposal to be submitted at the
2009 annual meeting of shareholders (but not required to be
included in our proxy statement) 90 days before the date of
the 2009 annual meeting. |
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There are additional requirements under our By-Laws and the
proxy rules to present a proposal, such as continuing to own a
minimum number of Ryder shares until the annual meeting. A copy
of our By-Laws can be obtained from our Corporate Secretary. The
By-Laws are also included in our filings with the SEC which are
available on the SECs website at www.sec.gov. |
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Can I receive future proxy materials electronically? |
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Yes. If you are a shareholder of record you may, if you wish,
receive future proxy statements and annual reports online. If
you vote via the Internet as described on your proxy card, you
may sign up for electronic delivery at the same time. You may
also register for electronic delivery of future proxy materials
on the Investor Relations page of our website at
www.ryder.com. |
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If you elect this feature, you will receive an
e-mail
message notifying you when the materials are available along
with a web address for viewing the materials and instructions
for voting by telephone or on the Internet. |
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We encourage you to sign up for electronic delivery of future
proxy materials as this will allow you to receive the materials
more quickly and will reduce printing and mailing cost. |
5
ELECTION OF
DIRECTORS
(Proposal 1)
Under our By-Laws, directors are elected for three-year terms,
typically with one-third of the directors standing for election
in any given year. The three directors whose terms expire at the
2008 Annual Meeting of Shareholders are L. Patrick Hassey, Lynn
M. Martin and Hansel E. Tookes, II. Upon the recommendation
of the Corporate Governance and Nominating Committee, our Board
of Directors has nominated Mr. Hassey, Ms. Martin and
Mr. Tookes for re-election at the 2008 Annual Meeting of
Shareholders for a three-year term that expires at the 2011
Annual Meeting of Shareholders, and each have consented to serve
if elected.
Our Board of Directors determined that each director nominee
qualifies as independent under applicable regulations, our
By-Laws, and the categorical director independence standards
adopted by our Board of Directors and set forth under
Director Independence on page 11 of this proxy
statement.
John M. Berra, Luis P. Nieto, Jr., E. Follin Smith and
Gregory T. Swienton are currently serving terms that expire at
the 2009 Annual Meeting of Shareholders. David I. Fuente, Eugene
A. Renna, Abbie J. Smith and Christine A. Varney are currently
serving terms that expire at the 2010 Annual Meeting of
Shareholders.
The principal occupation and certain other information about
each director and director nominee appears on the following
pages.
The Board of
Directors recommends a vote FOR the election of each of the
director nominees.
6
NOMINEES FOR DIRECTOR
FOR A TERM OF OFFICE EXPIRING AT THE 2011 ANNUAL MEETING
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L. Patrick Hassey, 62, is Chairman, President and
Chief Executive Officer of Allegheny Technologies Incorporated
(ATI), a global leader in the production of specialty materials.
Mr. Hassey was Executive Vice President and a member of the
corporate executive committee of Alcoa, Inc. from May 2000 until
his early retirement in February 2003. He served as Executive
Vice President of Alcoa and Group President of Alcoa Industrial
Components from May 2000 to October 2002. Prior to May 2000,
Mr. Hassey served as Executive Vice President of Alcoa and
President of Alcoa Europe, Inc. Prior to becoming President and
Chief Executive Officer of ATI in October 2003, he was an
outside management consultant to ATI executive management.
Mr. Hassey was elected to the Board of Directors in
December 2005 and is a member of the Compensation Committee and
the Corporate Governance and Nominating Committee.
Mr. Hassey serves on the Boards of Directors of ATI and the
Allegheny Conference on Community Development, which serves
Southwestern Pennsylvania.
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Lynn M. Martin, 68, served as Secretary of Labor under
President George H.W. Bush from 1991 to 1993. Ms. Martin is
the President of Martin Hall Group LLC, a consulting firm. She
is a regular commentator, panelist, columnist and speaker on
issues relating to the changing global economic and political
environment. Ms. Martin was the Davie Chair at the J.L.
Kellogg Graduate School of Management and a Fellow of the
Kennedy School Institute of Politics.
Ms. Martin was elected to the Board of Directors in August
1993 and is a member of the Compensation Committee and the
Corporate Governance and Nominating Committee.
Ms. Martin serves on the Boards of Directors of The
Procter & Gamble Company, AT&T Inc., The Dreyfus
Funds, Constellation Energy Group, Inc. and Chicagos
Lincoln Park Zoo. She is also a member of the Council on Foreign
Relations and the Chicago Council of Global Affairs.
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Hansel E. Tookes, II, 60, retired from Raytheon
Company in December 2002. He joined Raytheon in September 1999
as President and Chief Operating Officer of Raytheon Aircraft
Company. He was appointed Chief Executive Officer in January
2000 and Chairman in August 2000. Mr. Tookes became
President of Raytheon International in May 2001. Prior to
joining Raytheon in 1999, Mr. Tookes had served as
President of Pratt & Whitneys Large Military
Engines Group since 1996. He joined Pratt &
Whitneys parent company, United Technologies Corporation
in 1980. Mr. Tookes was a Lieutenant Commander and military
pilot in the U.S. Navy and later served as a commercial
pilot with United Airlines.
Mr. Tookes was elected to the Board of Directors in
September 2002 and is the Chair of the Finance Committee and a
member of the Audit Committee.
Mr. Tookes serves on the Boards of Directors of BBA
Aviation plc, Corning Incorporated, FPL Group, Inc., and Harris
Corporation.
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7
DIRECTORS
CONTINUING IN OFFICE
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John M. Berra, 60, is Executive Vice President of Emerson
Electric Company and President of Emerson Process Management, a
global leader in providing solutions to customers in process
control. Mr. Berra joined Emersons Rosemount division
as a marketing manager in 1976 and thereafter continued assuming
more prominent roles in the organization until 1997 when he was
named President of Emersons Fisher-Rosemount division (now
Emerson Process Management). Prior to joining Emerson,
Mr. Berra was an instrument and electrical engineer with
Monsanto Company.
Mr. Berra was elected to the Board of Directors in July
2003 and is the Chair of the Compensation Committee and a member
of the Finance Committee.
Mr. Berra serves as an advisory director to the Board of
Directors of Emerson Electric Company. He also serves as
Chairman of the Fieldbus Foundation and is a past Chairman of
the Measurement, Control, and Automation Association.
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David I. Fuente, 62, served as Chairman and Chief
Executive Officer of Office Depot, Inc. from 1987, one year
after the company was founded, until he retired as its Chief
Executive Officer in June 2000 and as Chairman in December 2001.
Before joining Office Depot, Mr. Fuente served for eight
years at the Sherwin-Williams Company as President of its Paint
Stores Group. Before joining Sherwin-Williams, he was Director
of Marketing at Gould, Inc.
Mr. Fuente was elected to the Board of Directors in May
1998 and is a member of the Compensation Committee and the
Finance Committee.
Mr. Fuente serves on the Boards of Directors of Office
Depot, Inc. and Dicks Sporting Goods, Inc.
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Luis P. Nieto, Jr., 52, is President of the Refrigerated
Foods Group for ConAgra Foods Inc., one of the largest packaged
foods companies in North America. Prior to joining ConAgra,
Mr. Nieto was President and Chief Executive Officer of the
Federated Group, a leading private label supplier to the retail
grocery and foodservice industries from 2002 to 2005. From 2000
to 2002, he served as President of the National Refrigerated
Products Group of Dean Foods Company. Prior to joining Dean
Foods, Mr. Nieto held positions in brand management and
strategic planning with Mission Foods, Kraft Foods and the
Quaker Oats Company.
Mr. Nieto was elected to the Board of Directors in February
2007 and is a member of the Audit Committee and the Corporate
Governance and Nominating Committee.
Mr. Nieto is a member of the University of Chicagos
College Visiting Committee.
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Eugene A. Renna, 63, retired from ExxonMobil Corporation
in January 2002 where he was an Executive Vice President and a
member of its Board of Directors. He was President and Chief
Operating Officer of Mobil Corporation, and a member of its
Board of Directors, until the time of its merger with Exxon
Corporation in 1999. As President and Chief Operating Officer of
Mobil, Mr. Renna was responsible for overseeing all of its
global exploration and production, marketing and refining, and
chemicals and technology business activities.
Mr. Rennas career with Mobil began in 1968 and
included a range of senior management roles such as:
responsibility for all marketing and refining operations in the
Pacific Rim, Africa and Latin America; Executive Vice President
of International Marketing and Refining Division; Vice President
of Planning and Economics; President of Mobils worldwide
Marketing and Refining Division; and Executive Vice President
and Director of Mobil.
Mr. Renna was elected to the Board of Directors in July
2002 and is a member of the Audit Committee and the Finance
Committee.
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Abbie J. Smith, 54, is the Boris and Irene Stern
Professor of Accounting at the Graduate School of Business of
the University of Chicago. She joined their faculty in 1980 upon
completion of her Ph.D. at Cornell University. The primary focus
of her research is corporate restructuring, transparency, and
corporate governance. Professor Smith is a co-editor of the
Journal of Accounting Research.
Ms. Smith was elected to the Board of Directors in July
2003 and is the Chair of the Audit Committee and a member of the
Finance Committee.
Ms. Smith serves on the Boards of Directors of HNI
Corporation, DFA Investment Dimensions Group Inc. and
Dimensional Investment Group Inc.
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E. Follin Smith, 48, served as the Executive Vice
President, Chief Financial Officer and Chief Administrative
Officer of Constellation Energy Group, Inc., the nations
largest competitive supplier of electricity to large commercial
and industrial customers and the nations largest wholesale
power seller, until May 2007. Ms. Smith joined
Constellation Energy Group as Senior Vice President, Chief
Financial Officer in June 2001 and was appointed Chief
Administrative Officer in December 2003. Before joining
Constellation Energy Group, Ms. Smith was Senior Vice
President and Chief Financial Officer of Armstrong Holdings,
Inc., the global leader in hard-surface flooring and ceilings.
Ms. Smith began her career with Armstrong in 1998 as Vice
President and Treasurer and was promoted to her last position in
March 2000. Prior to joining Armstrong, Ms. Smith held
various senior financial positions with General Motors including
Chief Financial Officer for General Motors Delphi Chassis
Systems division.
Ms. Smith was elected to the Board of Directors in July
2005 and is a member of the Audit Committee and the Corporate
Governance and Nominating Committee.
Ms. Smith serves on the Board of Directors of Discover
Financial Services, the Board of Trustees of the University of
Virginias Darden School of Business, the Board of Visitors
of Davidson College and the Board of CENTERSTAGE, in Baltimore,
Maryland.
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Gregory T. Swienton, 58, was appointed Chairman of Ryder
System, Inc. in May 2002 having been named Chief Executive
Officer in November 2000. Mr. Swienton joined Ryder as
President and Chief Operating Officer in June 1999. Before
joining Ryder, Mr. Swienton was Senior Vice
President-Growth Initiatives of Burlington Northern Santa Fe
Corporation (BNSF). Prior to that he was BNSFs
Senior Vice President-Coal and Agricultural Commodities Business
Unit and previously had been Senior Vice President of its
Industrial and Consumer Units. He joined the former Burlington
Northern Railroad in June 1994 as Executive Vice
President-Intermodal Business Unit. Prior to joining Burlington
Northern, Mr. Swienton was Executive Director-Europe and
Africa of DHL Worldwide Express in Brussels, Belgium from 1991
to 1994, and prior to that, he was DHLs Managing
Director-Western and Eastern Europe from 1988 to 1990, also
located in Brussels. For the five years prior to these
assignments, Mr. Swienton was Regional Vice President of
DHL Airways, Inc. in the United States. From 1971 to 1982,
Mr. Swienton held various national account, sales and
marketing positions with AT&T and Illinois Bell Telephone
Company.
Mr. Swienton was elected to the Board of Directors in June
1999.
Mr. Swienton serves on the Board of Directors of Harris
Corporation and is on the Board of Trustees of St. Thomas
University in Miami.
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Christine A. Varney, 52, is a Partner in the law firm of
Hogan & Hartson LLP, which she rejoined in 1997 after
five years in government service. She leads the Internet Law
practice group for the firm. Ms. Varney served as a Federal
Trade Commissioner from 1994 to 1997 and as a Senior White House
Advisor to President Clinton from 1993 to 1994. She also served
as Chief Counsel to President Clintons Campaign in 1992
and as General Counsel to the Democratic National Committee from
1989 to 1992. Prior to her government service, Ms. Varney
practiced law with the firms of Pierson, Semmes &
Finley (1986 to 1988) and Surrey & Morse (1984 to
1986).
Ms. Varney was elected to the Board of Directors in
February 1998 and is the Chair of the Corporate Governance and
Nominating Committee and a member of the Compensation Committee.
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10
CORPORATE
GOVERNANCE
We maintain a Corporate Governance page on our website at
www.ryder.com, which includes our Corporate Governance
Guidelines, Principles of Business Conduct and Board Committee
charters. The Corporate Governance Guidelines set forth our
governance principles relating to, among other things: director
independence (including our categorical director independence
standards); director qualifications and responsibilities; Board
structure; director compensation; management succession; and the
periodic performance evaluation of the Board. The Principles of
Business Conduct apply to our officers, employees and Board
members and cover all areas of professional conduct including
conflicts of interest, confidentiality, compliance with law, and
mechanisms to report known or suspected wrongdoing. The
Principles of Business Conduct include a Finance Code of Ethics
applicable to our Chief Executive Officer, Chief Financial
Officer, controller and senior financial management. Any changes
to these documents and any waivers granted by the Corporate
Governance and Nominating Committee (Governance Committee) with
respect to our Principles of Business Conduct will be posted on
our website. Any waivers with respect to our Principles of
Business Conduct shall also be disclosed in a public filing made
with the SEC.
Shareholders may submit requests for free printed copies of our
Corporate Governance Guidelines, Principles of Business Conduct
(including the Finance Code of Ethics) and Board Committee
Charters in writing to: Ryder System, Inc., Attention: Corporate
Secretary, 11690 N.W.
105th
Street, Miami, Florida 33178.
BOARD OF
DIRECTORS
Director
Independence
It is our policy that a substantial majority of the members of
our Board of Directors and all of the members of our Audit
Committee, Compensation Committee, Governance Committee and
Finance Committee qualify as independent as required by the New
York Stock Exchange (NYSE) corporate governance listing
standards and our By-Laws.
To assist it in making independence determinations, our Board of
Directors has adopted categorical director independence
standards. The Board determined that each of the following
transactions or relationships will not, by itself, be deemed to
create a material relationship for the purpose of determining a
directors independence:
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Prior Employment. The director was employed by
us or was personally working on our audit as an employee or
partner of our independent auditor, and over five years have
passed since such employment, partnership or auditing
relationship ended.
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Employment of Immediate Family
Member. (i) An immediate family member was
an officer of ours or was personally working on our audit as an
employee or partner of our independent auditor, and over five
years have passed since such employment, partnership or auditing
relationship ended; or (ii) an immediate family member is
currently employed by us in a non-officer position, or by our
independent auditor not as a partner and not participating in
the firms audit, assurance or tax compliance practice.
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Interlocking Directorships. An executive
officer of ours served on the board of directors of a company
that employed the director or employed an immediate family
member as an executive officer, and over five years have passed
since either such relationship ended.
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Commercial Relationships. The director is an
employee, partner, greater than 10% shareholder, or director (or
a directors immediate family member is a partner, greater
than 10% shareholder, director or officer) of a company that
makes or has made payments to, or receives or has received
payments (other than contributions, if the company is a
tax-exempt organization) from, us for property or services, and
the amount of such payments has not within any of such other
companys three most recently completed fiscal years
exceeded one percent (or $1 million, whichever is greater)
of such other companys consolidated gross revenues for
such year.
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Indebtedness. A director or an immediate
family member is a partner, greater than 10% shareholder,
director or officer of a company that is indebted to us or to
which we are indebted, and the aggregate amount of such debt is
less than one percent (or $1 million, whichever is greater)
of the total consolidated assets of the indebted company.
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Charitable Relationships. A director is a
trustee, fiduciary, director or officer of a tax-exempt
organization to which we make contributions, and the
contributions to such organization by us have not, within any of
such organizations three most recently completed fiscal
years, exceeded one percent (or $250,000, whichever is greater)
of such organizations consolidated gross revenues for such
year.
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For purposes of these independence standards, an immediate
family member includes a directors spouse, parents,
children, siblings, mother- and
father-in-law,
sons- and
daughters-in-law,
brothers- and
sisters-in-law,
and anyone (other than domestic employees) who shares such
directors home.
Pursuant to our Corporate Governance Guidelines, the Board
undertook its annual review of director independence in February
2008, which included a review of each directors responses
to questionnaires asking about any relationships with us. This
review is designed to identify and evaluate any transactions or
relationships between a director or any member of his or her
immediate family and us, or members of our senior management,
and all relevant facts and circumstances regarding any such
transactions or relationships.
As part of this review, other than the relationship with
Mr. Swienton, our CEO, the Governance Committee and the
Board identified and considered the following two transactions:
In his role as President of Emerson Process Management, John M.
Berra also serves as Executive Vice President of Emerson
Electric Company. We have entered into a commercial relationship
with Emerson Electric Company relating to Emersons lease
of vehicles from us. The transaction falls outside of the
NYSEs independence requirements and our categorical
director independence standards relating to commercial
relationships, and therefore, the Board determined that this
relationship did not impair Mr. Berras independence.
An immediate family member of E. Follin Smith serves as an
executive of Dow Jones & Company, Inc.. We have
entered into a commercial relationship with Dow Jones pursuant
to which Dow Jones leases vehicles from us. The transaction
falls outside of the NYSEs independence requirements and
our categorical director independence standards relating to
commercial relationships, and therefore, the Board determined
that this relationship did not impair Ms. Smiths
independence.
Based on its independence review and after considering the
transactions described above, the Board determined that each of
the following directors (which together constitute all of the
members of the Board other than Mr. Swienton) is
independent: John M. Berra, David I. Fuente, L. Patrick Hassey,
Lynn M. Martin, Luis P. Nieto, Jr., Eugene A. Renna, Abbie
J. Smith, E. Follin Smith, Hansel E. Tookes, II and
Christine A. Varney.
Communications
with the Board
Shareholders and other interested parties can communicate with
our independent directors as a group through the Corporate
Governance page of our website at www.ryder.com, or by
mailing their communication to Independent Directors,
c/o Corporate
Secretary, Ryder System, Inc., 11690 N.W. 105th Street, Miami,
Florida 33178. Any communications received from interested
parties in the manner described above will be collected and
organized by our Corporate Secretary and will be periodically,
but in any event prior to each regularly-scheduled Board
meeting, reported
and/or
delivered to our independent directors. The Corporate Secretary
will not forward spam, junk mail, mass mailings, service
complaints or inquiries, job inquiries, surveys, business
solicitations or advertisements, or patently offensive or
otherwise inappropriate materials to the independent directors.
Correspondence relating to certain of these matters such as
service issues may be distributed internally for review and
possible response. The procedures for communicating with our
independent directors as a group are available on the Corporate
Governance page of our website at www.ryder.com.
Our Audit Committee has established procedures for the receipt,
retention and treatment of complaints regarding questionable
accounting, internal control, financial improprieties or
auditing matters. Any of our employees or members of the general
public may confidentially communicate concerns about any of
these matters to any supervisor or manager, the Vice President
of Internal Audit, the Vice President, Global Compliance and
Business Standards/Deputy General Counsel, or on a confidential
and/or
anonymous basis by way of an external toll-free hotline number,
an internal ethics phone line, ethics@ryder.com, or to
members of our Audit Committee at audit@ryder.com. All of
the reporting mechanisms are publicized on our website at
www.ryder.com, in our Principles of Business Conduct,
through compliance training and wallet cards, brochures and
location posters. Upon receipt of a complaint or concern, a
determination will be made whether it pertains to accounting,
internal
12
control or auditing matters and if it does, it will be handled in accordance with
the procedures established by the Audit Committee. A summary of
all complaints, of whatever type, received through the reporting
mechanisms are reported to the Audit Committee at each
regularly-scheduled Audit Committee meeting. Matters requiring
immediate attention are promptly forwarded to the Chair of the
Audit Committee.
Board
Meetings
The Board of Directors held six regular and two special meetings
in 2007. Each of the directors attended 75% or more of the
aggregate number of meetings of the Board and Committees on
which the director served in 2007. Attendance by all directors
at Board and Committee meetings averaged 97% in 2007. Our
independent directors meet in executive session without
management present as part of each regularly-scheduled Board
meeting. The Chair of our Governance Committee presides over
these executive Board sessions.
We expect each of our directors to attend our annual meeting of
shareholders. Because the Board of Directors holds one of its
regular meetings in conjunction with our annual meeting of
shareholders, unless one or more members of the Board are unable
to attend, all of the members of the Board are present for the
annual meeting. All of our directors attended the 2007 Annual
Meeting of Shareholders.
Board
Committees
The Board has four standing committees Audit,
Compensation, Finance and Corporate Governance and Nominating.
All of the Committees are composed entirely of independent
directors who meet in executive session without management
present as part of each regularly-scheduled Committee meeting.
We have adopted written charters for each of the Committees that
comply with the NYSEs corporate governance listing
standards, applicable provisions of the Sarbanes-Oxley Act of
2002 (Sarbanes-Oxley) and SEC rules. Each Committee charter sets
forth the respective Committees responsibilities, and
provides for a periodic review of such charter and an annual
evaluation of the respective Committees performance. The
charters grant each Committee the authority to obtain the advice
and assistance of, and receive appropriate funding from us for,
outside legal, accounting or other advisors as the Committee
deems necessary to fulfill its obligations.
AUDIT
COMMITTEE
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Members:
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Abbie J. Smith (Chair)
Luis P. Nieto, Jr.
Eugene A. Renna
E. Follin Smith
Hansel E. Tookes, II
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Number of meetings in 2007:
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Responsibilities
The Audit Committee is responsible for appointing, overseeing
and determining the compensation and independence of our
independent auditor. The Audit Committee approves the scope of
the annual audit and the related audit fees as well as the scope
of internal audit procedures. The Audit Committee reviews audit
results, financial disclosure and earnings guidance, and is
responsible for overseeing investigations into accounting and
financial complaints. The Audit Committee also reviews,
discusses and oversees the process by which the Company assesses
and manages risk.
The Audit Committee meets in executive session, consisting
exclusively of independent directors, at the end of every
regularly-scheduled Audit Committee meeting (excluding
telephonic meetings). The Audit Committee also meets
individually with each of our Vice President of Internal Audit,
our independent auditor, and our Chief Financial Officer, at the
end of every regularly-scheduled Audit Committee meeting
(excluding telephonic meetings).
The specific powers and responsibilities of the Audit Committee
are set forth in more detail in the Audit Committees
charter, which is available on the Corporate Governance page of
our website at www.ryder.com. The charter is reviewed
annually by the Audit Committee and our Governance Committee.
Any changes to the charter are approved by the full Board.
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Independence
and Financial Expertise
In addition to the independence standards applicable to all
Board members, rules promulgated by the SEC in response to
Sarbanes-Oxley require that all members of our Audit Committee
meet additional independence standards. Under NYSE rules, each
member of the Audit Committee must be financially literate and
at least one member must have accounting or related financial
management expertise. The SEC requires that at least one Audit
Committee member be an audit committee financial
expert.
The Board reviewed the background, experience and independence
of Audit Committee members based in large part on the
directors responses to questions relating to their
background and experience. Based on this review, the Board
determined that each member of the Audit Committee meets the
independence requirements of the NYSEs corporate
governance listing standards and our categorical director
independence standards; meets the enhanced independence
standards for audit committee members required by the SEC; is
financially literate, knowledgeable and qualified to review
financial statements; and qualifies as an audit committee
financial expert under SEC rules.
COMPENSATION
COMMITTEE
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Members:
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John M. Berra (Chair)
David I. Fuente
L. Patrick Hassey
Lynn M. Martin
Christine A. Varney
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Number of Meetings in 2007:
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Responsibilities
The Compensation Committee of our Board of Directors oversees,
reviews and approves our executive and director compensation
policies and programs and regularly reports to the Board of
Directors on these matters. The Compensation Committee is also
responsible for approving compensation actions for direct
reports to the CEO, and recommending compensation actions for
the CEO for consideration by the independent directors. The
Compensation Committee approves and recommends the appointment
of new officers and reviews and discusses the Compensation
Discussion and Analysis included in this proxy statement to
determine whether to recommend it for inclusion in our proxy
statement.
The specific powers and responsibilities of the Compensation
Committee are set forth in more detail in the Compensation
Committees Charter, which is available on the Corporate
Governance page of our website at www.ryder.com. The
charter is reviewed annually by the Compensation Committee and
our Governance Committee. Any changes to the charter are
approved by the full Board.
Compensation
Committee Processes and Procedures
Meetings. The Compensation Committee meets at
least five times each year in February, May, July, October and
December. Each year in December, the Compensation Committee
reviews and approves an agenda schedule for the following year.
The agenda schedule outlines the various topics the Compensation
Committee will consider during the year to ensure that the
Compensation Committee adequately fulfills its responsibilities
under its Committee Charter. The Compensation Committee
considers other topics during the year as needed to fulfill its
responsibilities.
Our Chief Human Resources Officer (CHRO) works closely with the
Chair of the Compensation Committee prior to each Committee
meeting to ensure that the information presented to the
Compensation Committee in connection with the items to be
discussed
and/or
approved by the Compensation Committee is clear and
comprehensive. The information is then provided to the
Compensation Committee for its review and consideration
typically one week prior to the meeting.
The CHRO, CEO, Vice President of Compensation and Benefits and a
representative from our legal department attend all
regularly-scheduled Compensation Committee meetings to assist
the Committee in its discussion and analysis of the various
agenda items. These individuals are generally excused from the
meetings as appropriate, including for discussions regarding
their own compensation. The Compensation Committee meets in
executive session, consisting exclusively of independent
directors, at the end of every regularly-scheduled meeting.
Authority, Role of Management and
Delegation. The Compensation Committee is
responsible for reviewing and approving all of the components of
our executive compensation program as well as the compensation
program for
14
our Board of Directors. New executive compensation plans and
programs must be approved by the full Board based on
recommendations made by the Compensation Committee. Our
independent directors acting as a group are responsible for
setting CEO compensation based on recommendations from the
Compensation Committee in consultation with the Governance
Committee. The Compensation Committee, with input from our CEO,
is responsible for setting the compensation of all of our other
named executive officers (NEOs). For our NEOs who do not report
directly to our CEO, recommendations from the NEOs direct
supervisor are considered by the CEO when making his
recommendation to the Compensation Committee. All compensation
decisions for our Board of Directors are made by the Board based
in part on recommendations made by the Compensation Committee
and the Governance Committee.
The Compensation Committee previously delegated to our CEO, CFO
and CHRO, collectively, the authority to approve off-cycle
equity awards to our employees and new hires, other than awards
to current and prospective members of our Leadership Team (which
includes all of the NEOs), provided that amounts approved did
not exceed the applicable guidelines for equity awards
previously set by the Compensation Committee. Management did not
exercise this delegated authority at any time during 2007. In
February 2007, the Compensation Committee approved a Policy on
Equity Granting Practices. The Policy provides that all grants
of equity awards (except in the case of new hires) must be
approved by the Compensation Committee, or in the case of the
CEO, the independent directors acting as a group. In the case of
new hires (excluding executive officers and other direct reports
to our CEO), equity grants may be approved by the Chair of the
Compensation Committee.
Use of Compensation Consultants. The
Compensation Committee has authority to retain compensation
consultants, outside legal counsel and other advisors to assist
it in fulfilling its responsibilities. Although we do not have a
written policy regarding which members of management may engage
compensation consultants to assist in the evaluation of
executive compensation, historically, in addition to the
Compensation Committee, only our CHRO, Vice-President of
Compensation and Benefits and Chief Legal Officer have engaged
compensation consultants and outside legal counsel on behalf of
the Company to assist in the evaluation of executive
compensation. Outside legal counsel for the Company may only be
retained by and with the approval of the legal department. A
description of all compensation consultants and legal counsel
engaged by management or the Compensation Committee in 2007 is
set forth in the Compensation Discussion and Analysis on
page 27 of this proxy statement.
Compensation Committee Interlocks and Insider
Participation. In 2007, none of our executive
officers or directors was a member of the board of directors of
any other company where the relationship would be considered a
committee interlock under SEC rules.
CORPORATE
GOVERNANCE AND NOMINATING COMMITTEE
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Members:
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Christine A. Varney (Chair)
L. Patrick Hassey
Lynn M. Martin
Luis P. Nieto, Jr.
E. Follin Smith
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Number of Meetings in 2007:
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Responsibilities
The Corporate Governance and Nominating Committee is responsible
for recommending criteria for Board membership, identifying
qualified individuals to serve as directors, reviewing the
qualifications of director candidates, including those
recommended by our shareholders pursuant to our By-Laws, and
recommending to the Board the nominees to be proposed by the
Board for election as directors at our annual meeting of
shareholders. The Governance Committee recommends the size,
structure, composition and functions of Board Committees and
reviews and recommends changes to the charters of each committee
of the Board of Directors. The Governance Committee oversees the
Board evaluation process as well as the annual CEO evaluation
process. The Governance Committee reviews and recommends changes
to our Corporate Governance Guidelines and Principles of
Business Conduct. The Governance Committee is also responsible
for identifying and analyzing trends in public policy, public
affairs and corporate responsibility.
Our Chief Legal Officer (CLO) attends all regularly-scheduled
Governance Committee meetings to assist the Governance Committee
in its discussion and analysis of the various agenda items. The
CLO and other members of management are generally excused from
the Governance Committee meetings as appropriate.
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The specific powers and responsibilities of the Governance
Committee are set forth in more detail in the Governance
Committees charter, which is available on the Corporate
Governance page of our website at www.ryder.com. The
charter is reviewed annually by the Governance Committee. Any
changes to the charter are approved by the full Board.
Process for
Nominating Directors
In identifying individuals to nominate for election to our
Board, the Governance Committee seeks candidates that:
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have a high level of personal integrity and exercise sound
business judgment;
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are highly accomplished in their fields, with superior
credentials and recognition and have a reputation, both personal
and professional, consistent with our image and reputation;
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have relevant expertise and experience, and are able to offer
advice and guidance to our senior management;
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have an understanding of, and concern for, the interests of our
shareholders; and
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have sufficient time to devote to fulfilling their obligations
as directors.
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The Governance Committee will seek to identify individuals who
would qualify as independent under applicable NYSE listing
standards, our categorical director independence standards and
our By-Laws and who are independent of any particular
constituency. The Governance Committee may, based on the
composition of the Board, seek individuals that have specialized
skills or expertise, experience as a leader of another public
company or major complex organization, or relevant industry
experience. In addition, the Governance Committee will attempt
to select candidates who will assist in making the Board a
diverse body in terms of age, gender, ethnic background and
professional experience.
Generally, the Governance Committee identifies individuals for
service on our Board through the Committees retention of
experienced director search firms that are paid to use their
extensive resources and networks to find qualified individuals
who meet the qualifications established by the Board. These
search firms create a comprehensive record of a candidates
background, business and professional experience and other
information that would be relevant to the Governance Committee
in determining a candidates capabilities and suitability.
The Governance Committee will also consider qualified candidates
who are proposed by other members of the Board, our senior
management and, to the extent submitted in accordance with the
procedures described below, our shareholders. The Governance
Committee will not consider a director candidate unless the
candidate has expressed his or her willingness to serve on the
Board if elected and the Governance Committee has received
sufficient information relating to the candidate to determine
whether he or she meets the qualifications established by the
Board.
If a shareholder would like to recommend a director candidate to
the Governance Committee, he or she must deliver to the
Governance Committee the same information and statement of
willingness to serve described above. In addition, the
recommending shareholder must deliver to the Governance
Committee a representation that the shareholder owns shares of
our common stock and intends to continue holding those shares
until the relevant annual meeting of shareholders as well as a
representation regarding the shareholders direct and
indirect relationship to the suggested candidate. This
information should be delivered to us at 11690 N.W. 105th
Street, Miami, Florida 33178, Attention: Corporate Secretary,
for delivery to the Governance Committee no later than
90 days prior to the date of the annual meeting of
shareholders. Any candidates properly recommended by a
shareholder will be considered and evaluated in the same way as
any other candidate submitted to the Governance Committee.
Upon receipt of this information, the Governance Committee will
evaluate and discuss the candidates qualifications, skills
and characteristics in light of the current composition of the
Board. The Governance Committee may request additional
information from the recommending party or the candidate in
order to complete its initial evaluation. If the Governance
Committee determines that the individual would be a suitable
candidate to serve as one of our directors, the candidate will
be asked to meet with members of the Governance Committee,
members of the Board
and/or
members of senior management, including in each case, our CEO,
to discuss the candidates qualifications and ability to
serve on the Board. Based on the Governance Committees
discussions and the results of these meetings, the Governance
Committee will recommend a nominee or nominees for election to
the Board either by our shareholders at our annual meeting of
shareholders or by the Board to fill vacancies on the Board
between annual meetings. The Board will, after consideration of
the Governance Committees recommendations, nominate a
slate of directors for election by our shareholders, or with
regards to filling vacancies, elect a nominee to the Board.
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FINANCE
COMMITTEE
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Members:
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Hansel E. Tookes, II (Chair)
John M. Berra
David I. Fuente
Eugene A. Renna
Abbie J. Smith
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Number of Meetings in 2007:
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5
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Responsibilities
The Finance Committee is responsible for reviewing our overall
financial goals, position, arrangements and requirements. The
Committee reviews, approves and recommends certain capital
expenditures, issuances of debt and equity securities, dividend
policy and pension contributions. The Committee is also
responsible for reviewing our relationships with rating
agencies, banks and analysts, and reviewing and managing our
economic and insurance risk program and tax planning strategies.
Our Chief Financial Officer attends all regularly-scheduled
Finance Committee meetings to assist the Finance Committee in
its discussion and analysis of the various agenda items. Members
of management are generally excused from the Finance Committee
meetings as appropriate.
The specific powers and responsibilities of the Finance
Committee are set forth in more detail in the Finance
Committees charter which is available on the Corporate
Governance page of our website at www.ryder.com. The
charter is reviewed annually by the Finance Committee and our
Governance Committee. Any changes to the charter are approved by
the full Board.
RELATED PERSON
TRANSACTIONS
We recognize that related person transactions can present
potential or actual conflicts of interest and create the
appearance that our decisions are based on considerations other
than in our best interests and that of our shareholders.
Accordingly, as a general matter, it is our preference to avoid
related person transactions. Nevertheless, we recognize that
there are situations where related person transactions may be
in, or may not be inconsistent with, our and our
shareholders best interests. For example, there may be
times where we can obtain products or services from related
persons that are of a nature, quantity or quality, or on terms,
that are not readily available from alternative sources.
In December 2007, the Governance Committee adopted revised and
enhanced written Policies and Procedures Relating to Related
Person Transactions. In accordance with the Policy, all
related person transactions are subject to review,
approval or ratification by the Governance Committee. For
purposes of the Policy, and consistent with Item 404 of
Regulation S-K,
a related person transaction is (i) any
transaction in which we or a subsidiary of ours is a
participant, the amount involved exceeds $120,000 and a
related person has a direct or indirect material
interest, or (ii) any material amendment to an existing
related person transaction. Related persons are our
executive officers, directors, nominees for director, any person
who is known to be the beneficial owner of more than 5% of any
class of our voting securities, and any immediate family member
of any of the foregoing persons.
Our legal department is primarily responsible for the
development and implementation of procedures and controls to
obtain information from our directors and officers relating to
related person transactions and then determining, based on the
facts and circumstances, and in consultation with management and
outside counsel, whether the related person has a direct or
indirect material interest in the transaction. The Governance
Committee is responsible for reviewing and determining whether
to approve related person transactions.
In considering whether to approve a related person transaction,
the Governance Committee considers the following factors, to the
extent relevant: (i) whether the terms of the related
person transaction are fair to us and on the same basis as would
apply if the transaction did not involve a related person;
(ii) whether there are business reasons for us to enter
into the related person transaction; (iii) whether the
related person transaction would impair the independence of an
outside director; and (iv) whether the related person
transaction would present an improper conflict of interest for
any of our directors or executive officers, taking into account
the size of the transaction, the overall financial position of
the director, executive officer or related person, the direct or
indirect nature of the directors, executive officers
or related persons interest in the transaction and the
ongoing nature of any proposed relationship, and any other
factors the Governance Committee deems relevant. Any member of
the Governance Committee who has an interest in the transaction
under discussion will abstain from voting on the approval of the
related person transaction.
There were no related person transactions during 2007.
17
AMENDMENT TO THE
RYDER SYSTEM, INC. 2005 EQUITY COMPENSATION PLAN
(Proposal 2)
At the annual meeting, shareholders will be asked to approve an
amendment to the Ryder System, Inc. 2005 Equity Compensation
Plan (the 2005 Plan) to increase the total number of
shares available for grant under the 2005 Plan and to increase
the limit on the number of shares available for issuance under
full-value awards under the 2005 Plan. The 2005 Plan
was adopted by the Board of Directors on February 10, 2005
and was ratified by the shareholders at the 2005 annual meeting.
Currently, 5,000,000 shares of our common stock, par value
$.50 per share, are authorized to be issued under the 2005 Plan.
Information regarding outstanding options and rights previously
granted pursuant to the 2005 Plan and any securities remaining
available for future issuance under the 2005 Plan can be found
under the heading Securities Authorized for Issuance Under
Equity Compensation Plans on page 22. On March 7,
2008, the closing price of a share of our common stock on the
New York Stock Exchange Composite Index was $55.51.
On February 8, 2008, the Board of Directors approved,
subject to shareholder approval, an increase in the number of
shares of common stock available for grant under the 2005 Plan
to 8,000,000 shares (from 5,000,000). On such date, the
Board of Directors also approved, subject to shareholder
approval, an amendment to increase the number of shares of
common stock that may be issued pursuant to grants of full
value awards (as described below) under the 2005 Plan to
1,500,000 (from 1,000,000). The full text of the Ryder System,
Inc. 2005 Equity Compensation Plan, reflecting the proposed
amendments, is set forth as Appendix A to this Proxy
Statement.
Reasons for
the Amendment
The 2005 Plan is designed to provide incentive compensation to
our Board of Directors, officers and other key employees
(certain director and manager level employees) in order to
attract, motivate and retain experienced, highly-qualified
directors and employees who will contribute to our financial
success, and to align the interests of our directors and
employees with those of our shareholders. The Board of Directors
believes that it is in our best interests to increase
(i) the maximum number of shares of common stock available
for grant under the 2005 Plan and (ii) the number of shares
of common stock available for issuance pursuant to grants of
full-value awards under the 2005 Plan so as to
maintain the purpose of the 2005 Plan.
The 2005 Plan allows the Compensation Committee to grant a
variety of stock-based awards to our directors, officers and
other key employees. The 2005 Plan serves as the umbrella plan
for all of our stock-based and cash-based incentive compensation
programs for our directors, officers and other key employees.
The Board of Directors believes that the 2005 Plan has enhanced
our position in the highly competitive market for executive
officers and key employees, and has determined to continue to
grant options and other equity awards under the 2005 Plan as a
means of enhancing and encouraging the recruitment, retention
and motivation of those individuals who contribute significantly
to our continued success.
Description of
the 2005 Plan
The following is a brief description of the material features of
the 2005 Plan. This description is qualified in its entirety by
reference to the full text of the 2005 Plan, a copy of which is
attached as Appendix A to our 2005 Proxy Statement, filed
with the SEC on March 30, 2005, and the proposed Amended
2005 Plan, a copy of which is attached as Appendix A to
this Proxy Statement. The proposed amendment to the 2005 Plan
will become effective at the 2008 annual meeting of shareholders
only if approved by the required vote of our shareholders.
Administration. The Compensation Committee has
the authority to select award recipients, determine the type,
size and other terms and conditions of the award, and make all
other decisions and determinations as may be required under the
terms of the 2005 Plan or as the Compensation Committee may deem
necessary or advisable for the administration of the 2005 Plan.
The Compensation Committee is composed of persons who are both
non-employee directors, as defined under
Section 16b-3
of the Securities Exchange Act of 1934, as amended, and
outside directors within the meaning of
Section 162(m) of the Internal Revenue Code. Pursuant to
the 2005 Plan, the Compensation Committee is permitted to
delegate to one or more senior executives of the Company the
authority to make grants of awards to officers (other than
executive officers) and employees of the Company and such other
administrative responsibilities as the Compensation Committee
may deem necessary or advisable, to the extent such delegation
is consistent with applicable law. In February 2007, however,
the
18
Compensation Committee approved a Policy on Equity Granting Practices, which provides that all
grants of equity awards (except in the case of new hires) must
be approved by the Compensation Committee (or in the case of the
CEO, the independent directors acting as a group). In the case
of new hires (other than executive officers or other direct
reports to the CEO), equity grants may be approved by the Chair
of the Compensation Committee. Prior to the adoption of this
Policy, the Compensation Committee had delegated to our CEO, CFO
and CHRO, collectively, the authority to approve off-cycle
equity awards to our employees and new hires, other than awards
to current and prospective members or our Leadership Team (which
includes all of the NEOs), provided that amounts approved did
not exceed the applicable guidelines for equity awards
previously set by the Compensation Committee.
Eligibility. Officers, employees and
non-employee directors of the Company and its subsidiaries are
eligible to be selected as award recipients. As of March 7,
2008, approximately 10 non-employee directors,
58 officers and 1,743 key employees are eligible to
participate in the 2005 Plan.
Type of Awards. The 2005 Plan gives the
Compensation Committee the flexibility to grant a variety of
other equity instruments in addition to stock options and
restricted stock including bonus shares, stock appreciation
rights, share units, performance units and dividend equivalents.
Awards may be granted alone or in combination with any other
award granted under the 2005 Plan or any other plan. The
Compensation Committee will determine the size of each award to
be granted (including, where applicable, the number of shares to
which an award will relate), and all other terms and conditions
of each award, provided that (i) no award will expire more
than seven years from the date of grant, (ii) no full-value
award (other than a full-value award that is performance-based
or granted to non-employee directors) will fully vest within
three years of the date of grant, and (iii) no full-value
award that is performance-based will fully vest within one year
of the date of grant. Below is a description of the types of
awards that may be issued under the 2005 Plan:
Stock Options and Stock Appreciation Rights. A
stock option is a right to purchase a specified number of shares
of Ryder common stock at an exercise price established at the
date of grant. Stock options granted may be either non-qualified
stock options or incentive stock options (which are intended to
qualify as incentive stock options within
Section 422 of the Internal Revenue Code). The exercise
price of any stock option granted may not be less than the fair
market value of the Ryder common stock on the date of grant. A
stock appreciation right (SAR) entitles the recipient to
receive, upon surrender of the SAR, an amount of cash or number
of shares of Ryder common stock having a fair market value equal
to the positive difference, if any, between the fair market
value of one share of common stock on the date of exercise and
the exercise price of the SAR (which exercise price shall not be
less than the fair market value of the Ryder common stock on the
date of grant). The Compensation Committee will specify at the
time an option or SAR is granted, when, and in what proportions,
an option or SAR becomes vested and exercisable
Restricted Stock and Restricted Stock
Units. An award of restricted stock is an
issuance of shares of Ryder common stock that is subject to
certain restrictions established by the Compensation Committee
and to forfeiture to the Company if the holder does not satisfy
certain requirements (including, for example, continued
employment with the Company for a specified period of time).
Recipients of restricted stock do not receive the stock until
the restrictions are satisfied. Upon grant, the shares are
included in the Companys total number of shares
outstanding and accrue and pay dividend equivalents. An award of
restricted stock units entitles the recipient to receive shares
of Ryder common stock at some later date once the holder has
satisfied certain requirements. At that time (and not before),
the shares will be delivered and the recipient will be entitled
to all shareholder rights. Thus, upon grant, the shares of
common stock covered by the restricted stock units are not
considered issued and are not included in the Companys
total number of shares outstanding until all conditions have
been satisfied. Dividend equivalents accrue on restricted stock
units.
Performance-Based Awards. The Compensation
Committee may grant performance awards, which may be cash- or
stock-based. Generally, performance awards require satisfaction
of pre-established performance goals, consisting of one or more
business criteria and a targeted performance level with respect
to such criteria as a condition of awards being granted,
becoming exercisable or settleable, or as a condition to
accelerating the timing of such events. The Compensation
Committee will set the performance goals used to determine the
amount payable pursuant to a performance award. In order to
avoid the limitations on tax deductibility under
Section 162(m) of the Internal Revenue Code, the business
criteria used by the Compensation Committee in establishing
performance goals applicable to performance awards to the
covered
19
employees must be selected from among the following: earnings per share; revenues; cash
flow; cash flow return on investment; return on net assets;
return on assets; return on investment; return on invested
capital; return on equity; profitability; economic value added;
operating margins or profit margins; income or earnings before
or after taxes; pretax earnings; pretax earnings before
interest, depreciation and amortization; operating earnings;
pretax operating earnings, before or after interest expense and
before or after incentives, and extraordinary or special items;
net income; total stockholder return or stock price; book value
per share; expense management; improvements in capital
structure; working capital; and costs. Performance goals may be
set based on consolidated Company performance
and/or for
specified subsidiaries, divisions, or other business units, and
may be with fixed, quantitative targets; targets relative to
past performance; or targets compared to the performance of
other companies, such as a published or special index or a group
of companies selected by the Compensation Committee for
comparison.
Limitations on Stock-Based Awards. Subject to
shareholder approval of the proposed amendment to the 2005 Plan,
the aggregate number of shares of common stock that may be
issued to directors, officers, and employees under the 2005 Plan
will not exceed 8,000,000 (representing the original 5,000,000
authorized in 2005 and 3,000,000 additional shares); provided
that no more than 1,500,000 shares of common stock (which
represents an increase from 1,000,000 originally authorized in
2005) may be issued pursuant to full-value awards. For
purposes of the 2005 Plan, full-value awards are awards that do
not require the employee or director to pay (in cash, foregone
cash compensation, or consideration other than the performance
of services) the full fair market value (determined on the grant
date) for the shares (e.g., stock options with an exercise price
equal to fair market value) or that are not otherwise based
solely on the appreciation of the shares from the fair market
value of the shares as determined on the date the award is
granted (e.g., stock appreciation rights). In addition, in any
calendar year, no employee or director may be granted
stock-based awards that relate to more than 500,000 shares,
or cash-based awards that can be settled for more than
$5,000,000. Shares issued under the 2005 Plan that are
reacquired by the Company in connection with a cancellation,
forfeiture, termination or other failure to satisfy performance
conditions will not be treated as issued for purposes of the
share limitation provided that upon the exercise of any stock
appreciation right, the full number of shares underlying such
stock appreciation right on the date of grant will be counted
against the aggregate share limitation irrespective of the
manner in which such stock appreciation right is settled. Shares
delivered under the Plan may be newly issued shares, treasury
shares or shares acquired in the open market.
Adjustments. In the event of a reorganization,
recapitalization, merger, amalgamation, consolidation, spin-off,
combination or exchange of shares, repurchase, liquidation,
dissolution or other corporate exchange, any large, special and
non-recurring dividend or distribution, or other similar
corporate transaction or event affecting the Companys
common stock, the Compensation Committee may adjust the number
and kind of shares subject to the aggregate and individual share
limitations described above, as it deems to be equitable and in
order to preserve, without enlarging, the rights of
participants. These adjustments may include changes to the
number and kind of shares subject to an award and the exercise
price, grant price or purchase price referenced in the award
terms. The Compensation Committee is also authorized to adjust
performance conditions and other terms of awards in response to
these kinds of events or to changes in applicable laws,
regulations or accounting principles.
Restrictions on Repricing. The 2005 Plan
includes a restriction that, unless authorized by shareholders,
the Company will not amend or replace options previously granted
under the 2005 Plan in a transaction that constitutes a
repricing as that term is defined under NYSE rules,
including amending the terms of outstanding awards to reduce the
exercise price of outstanding options or SARs or cancelling
outstanding options or SARS in exchange for other equity awards
or options or SARs with an exercise price that is less than the
exercise price of the original options or SARs. Adjustments to
the exercise price or number of shares subject to an option to
reflect the effects of a stock split or other extraordinary
corporate transaction will not constitute a
repricing.
Amendment, Termination. The Board may amend,
suspend, discontinue or terminate the 2005 Plan or the
Compensation Committees authority to grant awards under
the 2005 Plan without shareholder approval, provided that
shareholder approval will be required for any amendment that
will (i) materially modify the terms of the 2005 Plan or
(ii) require shareholder approval as a matter of law or
regulation or under the NYSE rules. Unless earlier terminated,
the 2005 Plan will terminate on May 5, 2015.
20
Tax
Consequences
The federal income tax consequences arising with respect to
awards granted under the 2005 Plan depends on the type of award.
From the recipients standpoint, as a general rule,
ordinary income will be recognized at the time of payment of
cash or delivery of actual shares. Future appreciation on shares
held beyond the ordinary income recognition event will be
taxable at capital gains rates when the shares are sold. The
Company, as a general rule, is entitled to a tax deduction that
corresponds in time and amount to the ordinary income recognized
by the recipient, and the Company is not entitled to any tax
deduction in respect of capital gain income recognized by the
recipient. Exceptions to these general rules may arise under the
following circumstances: (i) if shares, when delivered, are
subject to a substantial risk of forfeiture by reason of failure
to satisfy any employment or performance-related condition,
ordinary income taxation and the Companys tax deduction
will be delayed until the risk of forfeiture lapses (unless the
recipient makes a special election to ignore the risk of
forfeiture); (ii) if an employee is granted an option that
qualifies as incentive stock option, no ordinary
income will be recognized, and the Company will not be entitled
to any tax deduction, if shares acquired upon exercise of such
option are held more than the longer of one year from the date
of exercise and two years from the date of grant; (iii) the
Company will not be entitled to a tax deduction for compensation
attributable to awards granted to one of its covered employees,
if and to the extent such compensation does not qualify as
performance-based compensation under
Section 162(m) of the Internal Revenue Code, and such
compensation, along with any other non-performance-based
compensation paid in the same calendar year, exceeds
$1 million; and (iv) an award may be taxable at
20 percentage points above ordinary income tax rates at the
time it becomes vested, even if that is prior to the delivery of
the cash or stock in settlement of the award, if the award
constitutes deferred compensation under Code
Section 409A, and the requirements of Code
Section 409A are not satisfied.
The foregoing provides only a general description of the
application of federal income tax laws to certain awards under
the 2005 Plan. This discussion is intended for the information
of shareholders considering how to vote at the 2008 annual
meeting of shareholders and not as tax guidance to participants
in the 2005 Plan, as the tax consequences may vary with the
types of awards made, the identity of the recipients and the
method of payment or settlement. This summary does not address
the effects of other federal taxes (including possible
golden parachute excise taxes) or taxes imposed
under state, local or foreign tax laws.
New Plan
Benefits
Future benefits under the 2005 Plan generally will be granted at
the discretion of the Compensation Committee and are therefore
not currently determinable. During 2007, stock options and
shares of performance-based restricted stock (with tandem cash
awards) were granted under the 2005 Plan to the named executive
officers as set forth herein in the tables captioned Summary
Compensation Table and 2007 Grants of Plan-Based Awards.
The amount
and/or value
of restricted stock granted in 2007 under the 2005 Plan to the
Companys non-employee directors is set forth herein under
2007 Director Compensation.
Vote
Required
The affirmative vote of the holders of a majority of the total
number of shares outstanding and entitled to vote is required
for the approval of this amendment to the 2005 Plan.
If you are a beneficial shareholder, under NYSE rules, your
broker may not vote your shares on this proposal absent
instructions from you. Without your instructions on this
proposal, your shares may not be voted on this matter and will
not be counted in determining the number of shares necessary for
approval.
The Board of
Directors recommends a vote FOR this amendment to
the Ryder System, Inc. 2005 Equity Compensation Plan.
21
SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION
PLANS
The following table includes information as of December 31,
2007 about certain plans which provide for the issuance of
common stock in connection with the exercise of stock options
and other share-based awards.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
Remaining Available
|
|
|
|
|
|
|
|
|
|
for Future Issuance
|
|
|
|
Number of Securities
|
|
|
|
|
|
Under Equity
|
|
|
|
to be Issued Upon
|
|
|
Weighted-Average
|
|
|
Compensation Plans
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
Excluding
|
|
|
|
Outstanding Options,
|
|
|
Outstanding
|
|
|
Securities
|
|
|
|
Warrants
|
|
|
Options, Warrants
|
|
|
Reflected in Column
|
|
Plans
|
|
and Rights
|
|
|
and Rights
|
|
|
(a)
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity compensation plans approved by security holders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Broad based employee stock option plans
|
|
|
3,285,170
|
|
|
$
|
38.90
|
|
|
|
2,812,572
|
|
Employee stock purchase plan
|
|
|
|
|
|
|
|
|
|
|
719,574
|
|
Non-employee directors stock plans
|
|
|
169,828
|
|
|
|
18.29
|
|
|
|
41,471
|
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,454,9981
|
|
|
$
|
37.88
|
|
|
|
3,573,617
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
This figure includes 88,900
performance-based restricted stock rights granted during 2006,
which do not vest, if at all, until the performance period ends
on December 31, 2008; 10,000 performance-based restricted
stock rights granted during 2006, which do not vest, if at all,
until the performance period ends on August 1, 2009; and
91,960 performance-based restricted stock rights granted during
2007, which do not vest, if at all, until the performance period
ends on December 31, 2009. These performance-based
restricted stock rights will vest and pay out upon approval of
the Compensation Committee only if Ryders total
shareholder return (generally the change in Ryders stock
price over the performance period assuming reinvestment of
dividends paid) meets or exceeds the total shareholder return of
the S&P 500 Composite Index over the respective three-year
performance period. Employee must be employed on the date the
Compensation Committee approves the award payout in order for
the performance-based restricted stock rights to vest. |
As of February 29, 2008, there were (i) 3,131,355
stock options outstanding with a weighted average exercise price
of $45.26 and weighted average term of 5.02 years and
(ii) 540,239 issued restricted shares that had not vested
and remained subject to forfeiture. As of February 29,
2008, there were 1,985,518 shares of common stock available
for grant under broad based employee stock option plans and
41,471 shares of common stock available for grant under
non-employee director stock plans.
22
RATIFICATION OF
INDEPENDENT AUDITOR
(Proposal 3)
Our Audit Committee appointed PricewaterhouseCoopers LLP as our
independent auditor for the 2008 fiscal year. Although
shareholder ratification of the appointment of
PricewaterhouseCoopers LLP is not required, the Board of
Directors believes that submitting the appointment to the
shareholders for ratification is a matter of good corporate
governance. The Audit Committee will consider the outcome of
this vote in future deliberations regarding the appointment of
our independent auditor. Representatives of
PricewaterhouseCoopers LLP will be present at the 2008 Annual
Meeting of Shareholders to respond to questions and to make a
statement if they desire to do so.
Fees and
Services of Independent Auditor
Fees billed for services by PricewaterhouseCoopers LLP for the
2007 and 2006 fiscal years were as follows ($ in millions):
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
Audit Fees
|
|
$
|
3.5
|
|
|
$
|
3.3
|
|
Audit-Related Fees
|
|
|
0.6
|
|
|
|
0.3
|
|
Tax
Fees1
|
|
|
0.2
|
|
|
|
0.3
|
|
All Other Fees
|
|
|
*
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
4.3
|
|
|
$
|
3.9
|
|
|
|
|
1 |
|
All of the tax fees paid in 2007
and 2006 relate to tax compliance services. |
* |
|
All Other Fees for each of 2006
and 2007 consist of $1,500 for research tools provided on a
subscription basis. |
Audit Fees primarily represent amounts for services related to
the audit of our consolidated financial statements and internal
control over financial reporting, a review of financial
statements included in our
Forms 10-Q
(or other periodic reports or documents filed with the SEC),
statutory or financial audits for our subsidiaries or
affiliates, and consultations relating to financial accounting
or reporting standards.
Audit-Related Fees represent amounts for assurance and related
services that are reasonably related to the performance of the
audit or review of our financial statements. These services
include audits of employee benefit plans, consultations
concerning matters relating to Section 404 of
Sarbanes-Oxley and due diligence.
Tax Fees represent amounts for U.S. and international tax
compliance services (including review of our federal, state,
local and international tax returns), tax advice and tax
planning, in accordance with our approval policies described
below.
Approval
Policy
All services rendered by our independent auditor are either
specifically approved (including the annual financial statement
audit) or are pre-approved by the Audit Committee in each
instance in accordance with our Approval Policy for Independent
Auditor Services (Approval Policy), and are monitored both as to
spending level and work content by the Audit Committee to
maintain the appropriate objectivity and independence of the
independent auditors core service, which is the audit of
our consolidated financial statements. Under the Approval
Policy, the terms and fees of annual audit services, and any
changes thereto, must be approved by the Audit Committee. The
Approval Policy also sets forth detailed pre-approved categories
of other audit, audit-related, tax and other non-audit services
that may be performed by our independent auditor during the
fiscal year, subject to the dollar limitations set by the Audit
Committee. The Audit Committee may, in accordance with the
Approval Policy, delegate to any member of the Audit Committee
the authority to approve audit and non-audit services to be
performed by the independent auditor. The Audit Committee has
delegated to the Chair of the Audit Committee the authority to
approve audit and non-audit services if it is not practical to
bring the matter before the full Audit Committee and the
estimated fee does not exceed $100,000. Any Audit Committee
member who exercises his or her delegated authority, including
the Chair, must report any approval decisions to the Audit
Committee at its next scheduled meeting. All of the services
provided in 2007 were approved by the Audit Committee in
accordance with the Approval Policy.
The Board of Directors recommends a vote FOR ratification
of
the appointment of PricewaterhouseCoopers LLP as our
independent auditor.
23
AUDIT COMMITTEE
REPORT
The following report of the Audit Committee shall not be
deemed to be soliciting material or to be
filed with the SEC nor shall this information
be incorporated by reference into any future filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934,
each as amended, except to the extent that Ryder System, Inc.
specifically incorporates it by reference into a filing.
The Audit Committee of the Board of Directors of Ryder System,
Inc. (Company) is comprised of five outside directors, all of
whom are independent under the rules of the New York Stock
Exchange, our categorical director independence standards and
applicable rules of the Securities and Exchange Commission
(SEC). The Committee operates under a written charter that
specifies the Committees responsibilities. The full text
of the Committees charter is available on the Corporate
Governance page of the Companys website
(www.ryder.com). The Audit Committee members are not
auditors and their functions are not intended to duplicate or to
certify the activities of management and the independent auditor.
The Audit Committee oversees the Companys financial
reporting process on behalf of the Board of Directors. The
Companys management has the responsibility for preparing
the consolidated financial statements, for maintaining effective
internal control over financial reporting, and for assessing the
effectiveness of internal control over financial reporting. The
Companys independent auditor is responsible for performing
an integrated audit of the Companys year-end consolidated
financial statements and internal control over financial
reporting as of the end of the year in accordance with the
standards of the Public Company Accounting Oversight Board
(PCAOB), and expressing opinions on (i) whether the
financial statements present fairly, in all material respects,
the financial condition and results of operations and cash flows
of the Company in conformity with accounting principles
generally accepted in the United States, and (ii) whether
the Company maintained effective internal control over financial
reporting based on criteria established in Internal
Control Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission
(COSO). In fulfilling its oversight responsibilities, the
Committee reviewed and discussed the audited consolidated
financial statements in the Annual Report on Form
10-K for the
fiscal year ended December 31, 2007 and managements
assessment of the effectiveness of internal control over
financial reporting with Company management, including a
discussion of the quality of the accounting principles, the
reasonableness of significant judgments, and the clarity of
disclosures in the financial statements.
The Committee reviewed with the independent auditor its
judgments as to the quality of the Companys accounting
principles and such other matters as are required to be
discussed with the Committee by Statement on Auditing Standards
No. 61, Communications with Audit Committees,
as amended, PCAOB Standards, rules of the SEC, and other
applicable regulations. In addition, the Committee has discussed
with the independent auditor the firms independence from
Company management and the Company, reviewed the written
disclosures and letter from the independent auditor required by
Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, and
considered the compatibility of non-audit services with the
independent auditors independence.
The Committee discussed with the Companys internal auditor
and the independent auditor the overall scope and plans for
their respective audits. The Committee met with the internal
auditor and the independent auditor, with and without management
present, to discuss the results of their audits; their
evaluations of the Companys internal control, including
internal control over financial reporting; and the overall
quality of the Companys financial reporting.
In reliance on the reviews and discussions referred to above,
the Committee recommended to the Board of Directors, and the
Board has approved, that the audited consolidated financial
statements and managements assessment of the effectiveness
of the Companys internal control over financial reporting
be included in the Annual Report on
Form 10-K
for the year ended December 31, 2007 filed by the Company
with the SEC. The Committee has also approved, subject to
shareholder ratification, the selection of
PricewaterhouseCoopers LLP as the Companys independent
auditor.
Submitted by the Audit Committee of the Board of Directors.
Abbie J. Smith (Chair)
Luis P. Nieto, Jr.
Eugene A. Renna
E. Follin Smith
Hansel E. Tookes, II
24
SECURITY
OWNERSHIP OF OFFICERS AND DIRECTORS
The following table shows the number of shares of common stock
beneficially owned as of January 9, 2008, by each director
and each executive officer named in the Summary Compensation
Table herein, individually, and all directors and executive
officers as a group. No family relationships exist among our
directors and executive officers.
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Shares Beneficially
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Owned or Subject
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Shares Which
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to Currently
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May be
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Exercisable
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Acquired Within
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Total Shares
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Percent of
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Name of Beneficial Owner
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Options
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60
Days1
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Beneficially
Owned2
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Class3
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Gregory T. Swienton
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662,094
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4,5
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162,461
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824,555
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1.415
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%
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John M. Berra
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6,421
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6
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6,411
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12,832
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*
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Robert D. Fatovic
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27,428
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5
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16,580
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44,008
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*
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David I. Fuente
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28,905
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5,6
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8,275
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37,180
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*
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L. Patrick Hassey
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0
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3,076
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3,076
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*
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Mark T.
Jamieson7
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0
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0
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0
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*
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Lynn M. Martin
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14,000
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13,244
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27,244
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*
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Luis P. Nieto, Jr.
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0
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1,546
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1,546
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*
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Vicki A.
OMeara7
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45,158
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5
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10,000
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55,158
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*
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Thomas S. Renehan
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14,550
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5
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17,164
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31,714
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*
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Eugene A. Renna
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11,500
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6,961
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18,461
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*
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Robert E. Sanchez
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25,613
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5
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17,229
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42,842
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*
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Abbie J. Smith
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12,347
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5,6
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6,411
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18,758
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*
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E. Follin Smith
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548
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6
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4,078
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4,626
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*
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Anthony G. Tegnelia
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13,856
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4,5
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25,032
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38,888
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*
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Hansel E. Tookes, II
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12,119
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4,6
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6,961
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19,080
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*
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Christine A. Varney
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19,513
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6
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8,275
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27,788
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*
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Directors and Executive Officers as a
Group (19 persons)
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908,058
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4,5,6
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334,978
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1,243,036
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2.134
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%
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* |
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Represents less than 1% of our
outstanding common stock. |
1 |
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Represents options to purchase
shares which became exercisable between January 9, 2008 and
March 9, 2008, time-based restricted stock rights that
vested between January 9, 2008 and March 9, 2008, and
restricted stock units held in the accounts of directors that
vest upon the directors departure from the Board, which
shares had the potential of vesting before March 9, 2008 if
a director departed from the Board prior to that date. |
2 |
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Unless otherwise noted, all
shares included in this table are owned directly, with sole
voting and dispositive power. Listing shares in this table shall
not be construed as an admission that such shares are
beneficially owned for purposes of Section 16 of the
Securities Exchange Act of 1934, as amended (the Exchange
Act). |
3 |
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Percent of class has been
computed in accordance with
Rule 13d-3(d)(1)
of the Exchange Act. |
4 |
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Includes shares held through a
trust, jointly with their spouses or other family members or
held solely by their spouses, as follows: Mr. Swienton,
14,500 shares; Mr. Sanchez, 920 shares;
Mr. Tookes, 1,000 shares; and all directors and
executive officers as a group, 16,420 shares. |
5 |
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Includes shares held in the
accounts of executive officers pursuant to our 401(k) Plan and
Deferred Compensation Plan and shares held in the accounts of
directors pursuant to our Deferred Compensation Plan as follows:
Mr. Swienton, 3,453 shares; Mr. Fuente,
1,494 shares; Mr. Renehan, 6,437 shares;
Mr. Sanchez, 3,313 shares; Ms. A. Smith,
5,876 shares; Mr. Tegnelia, 1,520 shares; and
Mr. Fatovic, 789 shares; and all directors and
executive officers as a group, 35,269 shares. |
6 |
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Includes stock granted to the
director in lieu of his or her annual cash retainer which stock
has vested but will not be delivered to the director until his
or her departure from the Board. |
7 |
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Mr. Jamieson and
Ms. OMeara have not been executive officers of ours
since their respective departures from the Company during 2007.
Mr. Jamieson and Ms. OMeara have no continuing
obligation to publicly report transactions in our stock.
Accordingly, the information reflected in this table is based
solely on information included in our books and records as of
January 9, 2008. |
25
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires our directors and executive officers, and persons who
beneficially own more than 10% of a registered class of our
equity securities, to file reports with the SEC relating to
their common stock ownership and changes in such ownership. To
our knowledge, based solely on our records and certain written
representations received from our executive officers and
directors, during the year ended December 31, 2007, all
Section 16(a) filing requirements applicable to directors,
executive officers and greater than 10% shareholders were
complied with on a timely basis.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table shows the number of shares of common stock
held by all persons who are known by us to beneficially own or
exercise voting or dispositive control over more than five
percent of our outstanding common stock.
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Number of Shares
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Beneficially
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Name and Address
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Owned
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Percent of Class
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FMR LLC
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8,471,296
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1
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14.599
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%
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82 Devonshire Street
Boston, MA 02109
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UBS AG
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5,706,129
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2
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9.9
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%
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Bahnhofstrasse 45
PO Box CH-8021
Zurich, Switzerland
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Goldman Sachs Asset Management, L.P.
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3,187,729
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3
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5.5
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%
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32 Old Slip
New York, NY 10005
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1 |
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Based upon the most recent SEC
filing by FMR LLC on Form 13G dated January 9, 2008.
Of the total shares shown, the nature of beneficial ownership is
as follows: sole voting power 70,696; shared voting power 0;
sole dispositive power 8,471,296; and shared dispositive power
0. |
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2 |
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Based upon the most recent SEC
filing by UBS AG on Form 13G dated February 14, 2008.
Of the total shares shown, the nature of beneficial ownership is
as follows: sole voting power 5,317,587; shared voting power 0;
sole dispositive power 0; and shared dispositive power
5,706,129. |
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3 |
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Based upon the most recent SEC
filing by Goldman Sachs Asset Management, L.P. on Form 13G dated
January 29, 2008. Of the total shares shown, the nature of
beneficial ownership is as follows: sole voting power,
2,895,863; shared voting power 48,400; sole dispositive power
3,137,229; and shared dispositive power 50,500. |
26
COMPENSATION
DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis is designed to provide
our shareholders with a clear understanding of the compensation
philosophy and objectives, compensation-setting process, and
compensation programs and actions for our named executive
officers. Our named executive officers are those executive
officers listed below, whose compensation is disclosed in the
Summary Compensation Table on page 42 of this proxy
statement (named executive officers or
NEOs):
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Gregory T. Swienton
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Chairman and Chief Executive Officer (CEO)
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Robert E. Sanchez
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Executive Vice President and Chief Financial Officer (CFO)
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Mark T. Jamieson
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Former Executive Vice President and Chief Financial Officer
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Vicki A. OMeara
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Former President U.S. Supply Chain Solutions
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Anthony G. Tegnelia
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President Fleet Management Solutions, North
America
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Thomas S. Renehan
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Executive Vice President Sales and Marketing, Fleet
Management Solutions, North America
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Robert D. Fatovic
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Executive Vice President, Chief Legal Officer and Corporate
Secretary
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Executive
Summary
The following provides a brief overview of the more detailed
disclosure set forth in our Compensation Discussion and Analysis.
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The objective of our executive compensation program is to
recruit, retain and motivate high-quality executives who possess
diverse skills and talents that can help us achieve our
short-term goals and long-term strategies.
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The Compensation Committee (Committee) of our Board of Directors
(Board) is responsible for reviewing and approving all of the
components of our executive compensation program, approving all
compensation actions for NEOs other than our CEO, evaluating the
CEOs performance and making recommendations to the full
Board regarding CEO compensation. Our independent directors
acting as a group are responsible for determining and setting
CEO compensation.
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We provide our named executive officers with the following types
of compensation: salary, annual cash incentive awards (annual
bonus), equity-based incentive compensation and limited
perquisites. We also provide welfare and retirement benefits as
well as severance and change of control benefits. A significant
portion of NEO compensation (approximately 70%) is at-risk,
performance based compensation.
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The Committee does not target executive pay levels at any
particular percentile of market data. Rather, the
Committees goal is to design an executive compensation
program and set compensation levels to provide market
compensation if we achieve target financial results, and
below-market compensation when Company
and/or
individual performance fail to meet expectations.
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While compensation levels may differ among NEOs based on
competitive factors and the role, responsibilities and
performance of each specific NEO, there are no material
differences in the compensation philosophies, objectives or
policies for our NEOs, nor do we have a policy regarding
internal pay equity.
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In evaluating each element of our executive compensation
program, the Committee considers the executive compensation
program and practices, as well as the financial performance of
comparative groups of companies, but does not attempt to
maintain a certain target percentile within the comparative
groups.
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Although at record levels, Company performance throughout 2007
was below our aggressive planned targets. As a result, the
annual bonus program payout was 63.7% of target, the plan payout
under the previously-granted long-term cash award opportunity
was 54.4% of target and the total cash compensation for
Mr. Swienton decreased by $351,928, or 13% from 2006 levels.
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Our equity-based incentive compensation grants to NEOs in 2007
consisted of a combination of stock options (45%) and
performance-based restricted stock rights (35%) with tandem cash
awards (20%). The equity granted in February 2007 to NEOs was
expected to deliver an aggregate target opportunity equal to
175% of the midpoint of the relevant salary range for the
NEOs management level and 350% in the case of our CEO.
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27
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We do not time our equity award grants relative to the release
of material non-public information.
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Our NEOs do not have employment agreements, but do have
agreements which entitle them to severance in certain scenarios.
On November 29, 2007, the Committee approved a severance
package for Ms. OMeara, in connection with her
departure from the Company, which was in accordance with the
material provisions of the existing severance agreement between
Ms. OMeara and the Company, with limited exceptions
as described below.
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We believe our executive compensation program achieves our
compensation objectives in a reasonable and efficient manner.
|
Oversight and
Authority over Executive Officer Compensation
Compensation
Setting Process
The Committee is responsible for determining the compensation
philosophy and objectives for our named executive officers and
for reviewing and recommending to the Board of Directors the
approval of all components of our executive compensation
program. Our independent directors, acting as a group, are
responsible for setting CEO compensation based on
recommendations from the Committee. The Committee, with input
from our CEO, is responsible for setting the compensation of all
of our other named executive officers.
With respect to compensation decisions for named executive
officers (excluding our CEO), in February of each year our CEO
gives the Committee a performance assessment and compensation
recommendation for each named executive officer. The performance
assessment includes strengths, weaknesses and succession
potential and is based on individual performance evaluations
conducted by the CEO and the executive officers direct
supervisor (if different from the CEO). Our CEO also reviews
compensation data provided by our compensation group, legal
department and outside consultants. At the Boards annual
Strategic Summit Meeting in October of each year, each NEO is
also evaluated by the full Board as part of the succession
planning process.
In February of each year (in connection with the conclusion of
our business planning process), the Committee conducts its
annual review of the compensation packages for each of our named
executive officers. Based on this review, the Committee approves
(a) base salary changes, (b) any cash payout amounts
earned under the previous years annual bonus program,
(c) equity grants and (d) performance targets and
target opportunity under any incentive compensation programs for
the current year. The Committee may take other individual
compensation actions during the year as needed. While the
Committee considers competitive market compensation paid by
other companies, it does not attempt to maintain a certain
target percentile within a comparative group. Rather, the
Committees objective is to target executive pay at levels
that are market competitive based on Company and individual
performance. Specifically, the Committees goal is to
design a compensation program and set compensation levels to
provide market compensation for achieving target financial
results, and below-market compensation when Company
and/or
individual performance fail to meet expectations. While
compensation levels may differ among NEOs based on competitive
factors and the role, responsibilities and performance of each
specific NEO, there are no material differences in the
compensation philosophies, objectives or policies for our NEOs,
nor do we have a policy regarding internal pay equity.
In determining the compensation package for Mr. Swienton,
the Committee and the independent directors consider the results
of Mr. Swientons annual performance evaluation,
comparative compensation data and information on our competitive
position and operating/financial performance, as discussed
further under the captions Compensation Philosophy and
Objectives, Benchmarking and Use of
Compensation Consultants. At the beginning of each fiscal
year, the Committee and the independent directors conduct a
performance review of the CEO. For the review, the CEO and each
independent director complete a comprehensive CEO evaluation
questionnaire. The 2007 questionnaire focused on (a) our
historical and forecasted performance,
(b) Mr. Swientons effectiveness in leading the
organization, the Board and external constituencies, and
(c) his effectiveness at team building and succession
planning and development. At the Committees February
meeting, the CEO presents his personal performance results for
the prior fiscal year and responds to any questions that the
Committee may have. At the completion of his performance review,
the Committee discusses the CEOs performance review in
executive session and formulates its recommendation. At the
February Board meeting, in executive session without the CEO
present, the independent directors determine the CEOs
compensation based on the recommendations of the Committee.
28
Compensation
Philosophy and Objectives
The most important objective of our executive compensation
program is to recruit, retain and motivate high-quality
executives who possess diverse skills and talents that can help
us achieve our short-term goals and long-term strategies. In
addition, we strive to design, implement and maintain an
executive compensation program that accomplishes the following
three key goals:
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Aligns the interests of our named executive officers and our
shareholders so that our named executive officers are motivated
to take actions that are in the best interests of our
shareholders when carrying out their duties as executives of our
Company.
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Emphasizes and rewards overall Company performance through clear
and simple incentive compensation programs that provide market
compensation for achieving target financial results and
below-average compensation when Company and/or individual
performance fail to meet expectations.
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Rewards each named executive officers performance,
contribution and value to the Company.
|
The Committee regularly evaluates the effectiveness of our
executive compensation programs, considering the cost to us and
the value to the executive of each element of compensation, in
light of the above stated compensation objectives.
Benchmarking
In evaluating each element of our executive compensation
program, the Committee considers the executive compensation
program and practices, as well as the financial performance of
comparative groups of companies. Management and the Committee
view this data as one factor in making compensation decisions,
but do not rely solely on this information.
Our business is comprised of three distinct, complex business
units: Fleet Management Solutions, Supply Chain Solutions and
Dedicated Contract Carriage. Although there are other public
companies that operate in one or more of our business segments,
we do not believe there are any public companies that provide
similar fleet management services (which represents nearly 60%
of our consolidated revenues) or that provide the same mix of
services, and that publicly disclose financial performance and
compensation data relating to that business. As a result, we do
not have access to relevant compensation data for our direct
competitors.
In determining 2007 compensation, management and the Committee,
with the assistance of Frederic W. Cook & Co., Inc.,
assembled a peer group which was determined to provide the most
useful comparison with respect to our CEO. The peer group
companies include a significant part of the Dow Jones
Transportation Index (excluding air and rail companies) and
several leasing companies, and specifically consists of:
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Avis Budget Group, Inc.
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Hertz Global Holdings, Inc.
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C. H. Robinson Worldwide, Inc.
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Hub Group, Inc.
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Celadon Group, Inc.
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Landstar System, Inc.
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CIT Group Inc.
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Old Dominion Freight Line, Inc.
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Con-way Inc.
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PHH Corporation
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CSX Corporation
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Trinity Industries, Inc.
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Expeditors International of Washington, Inc.
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United Parcel Service, Inc.
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FEDEX Corporation
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Werner Enterprises, Inc.
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GATX Corporation
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YRC Worldwide Inc.
|
Management and the Committee believe this peer group provides a
useful basis of comparison for our CEO compensation because,
similar to Ryder, many of these companies are asset-based
providers of transportation or transportation-related services
or otherwise provide leasing or rental services. Furthermore,
many are impacted by similar economic factors affecting our
Company including freight demand and fuel prices. However, for
the reasons described above, unlike with many other companies
who are able to compile a more relevant peer group, we do not
believe information relating to our peer group is necessarily
the most significant factor in determining executive
compensation. Consequently, when making compensation decisions
regarding our CEO for 2007, the Committee also considered
compensation data compiled by management and outside consultants
(at the request
29
of the Committee) for companies that are included in the S&P 500
and that are of similar size (i.e., revenue of between
$5.5 billion and $6.5 billion), scope (i.e., similar
industries/global) and performance. Although the Committee and
management consider this data, their compensation
recommendations and decisions are not based on maintaining a
certain target percentile within the comparative group(s). The
Industry, Performance and
Revenue peer groups considered by the Committee
during 2007 were as follows:
Industry Peer
Group (17 Companies)
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C. H. Robinson Worldwide, Inc.
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Celadon Group, Inc.
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Cendant Corporation
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|
CIT Group Inc.
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Con-way Inc.
|
|
CSX Corporation
|
Expeditors International of Washington, Inc.
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FEDEX Corporation
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GATX Corporation
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Hub Group, Inc.
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Landstar System, Inc.
|
|
Old Dominion Freight Line, Inc.
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PHH Corporation
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|
Trinity Industries, Inc.
|
United Parcel Service, Inc.
|
|
Werner Enterprises, Inc.
|
YRC Worldwide Inc.
|
|
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Performance Peer Group (20 Companies) These
companies were determined to be comparable to us from a
financial performance perspective based on a variety of
financial criteria, including one- and three-year performance on
sales growth, profit growth, return to shareholders, profit
margin and return on equity.
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American Power Conversion Corporation
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Cardinal Health, Inc.
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Citrix Systems, Inc.
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Fluor Corporation
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FPL Group, Inc.
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Genuine Parts Company
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Mattel, Inc.
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McCormick & Company, Incorporated
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Medco Health Solutions, Inc.
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Morgan Stanley
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Nabors Industries Ltd.
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North Fork Bancorporation, Inc.
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Office Depot, Inc.
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Paychex, Inc.
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PPL Corporation
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Reebok International Ltd.
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Regions Financial Corporation
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The Southern Company
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The St. Paul Travelers Companies, Inc.
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WW Grainger, Inc.
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Revenue Peer
Group (65 Companies)
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Advanced Micro Devices, Inc.
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Fisher Scientific Group Inc.
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AK Steel Holding Corporation
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Foot Locker, Inc.
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Allied Waste Industries, Inc.
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Freescale Semiconductor, Inc.
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Asbury Automotive Group, Inc.
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Google Inc.
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Atmos Energy Corporation
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Group 1 Automotive, Inc.
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Autoliv, Inc.
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IAC/InterActiveCorp
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Autozone, Inc.
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Interpublic Group of Companies, Inc.
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Ball Corporation
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Kerr-McGee Corporation
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BB&T Corporation
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The McGraw-Hill Companies, Inc.
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Becton, Dickinson and Company
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MeadWestvaco Corporation
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Bed Bath & Beyond Inc.
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Newell Rubbermaid Inc.
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Blockbuster Inc.
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Nova Chemicals Corporation
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Bluelinx Holdings Inc.
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OGE Energy Corp.
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Boston Scientific Corporation
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Owens Corning
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Brunswick Corporation
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Performance Food Group Company
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30
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Burlington Resources Inc.
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PPL Corporation
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C. H. Robinson Worldwide, Inc.
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QUALCOMM Incorporated
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Canadian National Railway Company
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|
Quebecor World Inc.
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Capital One Financial Corporation
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Quest Diagnostics Incorporated
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CarMax, Inc.
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Rockwell Automation, Inc.
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CDW Corporation
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Rogers Communications Inc.
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Celanese Corporation
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Ryerson Inc.
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CMS Energy Corporation
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Safeco Corporation
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CONECTIV
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Saks Incorporated
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Constellation Brands, Inc.
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Smith International, Inc.
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Darden Restaurants, Inc.
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Starbucks Corporation
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Dole Food Company, Inc.
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Starwood Hotels & Resorts Worldwide, Inc.
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Dover Corporation
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SYNNEX Corporation
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Embarq Corporation
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Terex Corporation
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The Estee Lauder Companies Inc.
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Toll Brothers, Inc.
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Family Dollar Stores, Inc.
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Unisys Corporation
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Federal-Mogul Corporation
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WW Grainger, Inc.
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Fidelity National Title Group, Inc.
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WellChoice, Inc.
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For our other NEOs, we continue to rely on broad-based published
surveys, specifically the Mercer Benchmark Database
Executive Positions, which is comprised of 2,473
U.S.-based
companies across all industries. A list of those companies is
included in Appendix B to this Proxy Statement. We also
utilize compensation data and benchmarking tools provided online
by Equilar, Inc. We do not utilize the peer groups identified
above to benchmark compensation for our other NEOs because we
believe that sufficient information is not available from any
peer group with respect to comparable positions and levels of
our other NEOs. The Mercer Benchmark Database is a
position-specific database which is searchable based on a
variety of factors. For any specific position, narrowed by
revenue and scope, the Database provides detailed compensation
data with respect to base salary, short-term incentives and
long-term incentives. Management uses this data to determine the
range of compensation amounts for the companies included in the
Database and benchmarks amounts paid to our named executive
officers against these published amounts.
The Committee uses benchmark comparisons to peer groups or
published surveys, as applicable, to ensure that it is acting
responsibly and to establish points of reference to determine
whether and to what extent it is establishing competitive levels
of compensation for our executives. The Committee compares
numerous elements of executive compensation, including base
salaries, annual incentive compensation, long-term cash and
equity-based incentives and retirement benefits, to assist in
determining whether proposed compensation programs are
competitive. The Committee then uses its experience and judgment
to make final compensation decisions.
Use of
Compensation Consultants
The Committee has authority to retain compensation consultants,
outside legal counsel and other advisors to assist it in
fulfilling its responsibilities. Historically, in addition to
the Committee, our Chief Human Resources Officer (CHRO), Vice
President of Compensation and Benefits and Chief Legal Officer
have from
time-to-time
engaged compensation consultants and outside legal counsel on
our behalf to assist in the evaluation of executive compensation.
During 2007, the Committee engaged Frederic W. Cook &
Co., Inc. (Cook), to assist in the review and competitive
analysis of the CEOs compensation package. Cook was
engaged to review data and competitive analyses prepared by
management regarding CEO compensation, and to work directly with
the Chair of the Committee to prepare a proposal for 2007 CEO
compensation to be considered by the Committee and the
independent directors. Based upon Cooks review of the
compensation data of the companies comprising the
Peer, Revenue and
Performance groups listed above, and their own
internal analysis, Cook provided recommendations to the
Committee for a competitive total CEO compensation package. The
Committee
31
considered Cooks recommendation as one factor in approving the CEOs 2007 compensation. Management did not
engage Cook for any compensation-related matter during 2007.
As discussed in further detail below under Severance and
Change of Control Benefits, management (at the request of
the Committee) retained Deloitte & Touche LLP
(Deloitte) and Mercer LLC (Mercer) during 2006 to review and
evaluate our severance and change of control severance programs
relative to market standards. As a result of this review, in
January 2007 the Board approved changes to our severance
and change of control severance programs that generally reduced
our officers severance benefits. Mercer compared the type
and amount of severance and change of control severance benefits
provided by us as well as the general terms and conditions of
our programs with those of comparable companies within
Mercers proprietary database. Deloitte provided
comprehensive data and calculations regarding potential change
of control severance payments under our existing program and
various other scenarios. Management also retained outside legal
counsel to review the terms and conditions of our existing
severance and change of control severance programs in light of
market trends and emerging governance practices. Each of the
consulting firms provided a report to management which
summarized their findings. The consulting firms did not interact
or cooperate in preparing or presenting their recommendations to
the Committee, however, representatives of the Committee
consulted directly with outside counsel to discuss the
recommendations of the consulting firms. Management did not
engage Mercer for any other purpose during 2007, but did
participate in and utilize the Mercer Benchmark
Database Executive Positions, during 2007.
Management did not engage Deloitte during 2007 for any other
compensation related matter, except that Deloitte was engaged to
perform certain calculations required for the executive
compensation tables contained herein. The Company also engages
Deloitte from
time-to-time
for non-compensation related matters.
Elements of
our 2007 Executive Compensation Program
Our executive officers do not have employment agreements in
order to provide the Committee with flexibility to change the
executive compensation program with respect to components, pay
mix and amounts. Our NEOs do, however, have individual severance
agreements which are described in more detail under the heading
Severance and Change of Control Benefits.
In 2007, our executive compensation program consisted of base
salary, annual bonus, long-term incentives, and benefits and
perquisites. We do not have a formal policy relating to the
allocation of total compensation among the various components.
However, both management and the Committee believe that the more
senior the position an executive holds, the more influence they
have over our financial performance. As such, a greater amount
of NEO compensation should be at-risk based on Company
performance. The compensation mix for our CEO for 2007 was
targeted as set forth in the following chart.
Pay Mix for Chief
Executive Officer (at target)
32
The chart below is representative of the overall target pay mix
for our other named executive officers (excluding our CEO) in
office at year end.
Pay Mix for Other
Named Executive Officers (at target)
The actual compensation mix for each named executive officer may
vary based on job responsibilities, Company performance,
individual performance and contributions to the organization.
Following is a description of each component of executive
compensation for 2007:
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ANNUAL COMPENSATION
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Base Salary
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Objective: The Committee sets an
executives base salary with the objective of hiring and
retaining highly qualified executives and rewarding individual
performance. Base salary is designed to adequately compensate
and reward the executive on a day-to-day basis for the time
spent and the services the executive performs. When setting and
adjusting individual executive salary levels, the Committee
considers the executive officers responsibilities,
experience, potential, individual performance and contribution,
competitive market position determined from market surveys and
comparative data provided by outside compensation consultants.
The Committee also considers other factors such as the annual
merit increase paid to all other Company employees, demand in
the labor market for the particular executive and succession
planning. These factors are not weighted. The Committee bases
salary adjustments on the overall assessment of all of these
factors. The Committee does not target base pay at any
particular level versus a peer group, but instead, the Committee
considers certain market and survey data, as described above,
and uses its judgment to set a base salary that, when combined
with all other compensation elements, results in a competitive
pay package.
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2007 Salary Actions: In February 2007, Mr. Swienton received a 3.5% salary increase and the other named executive officers, excluding Mr. Tegnelia, received .8% to 3.5% salary increases. These increases were effective in April 2007 and were consistent with the budgeted annual merit increase for all eligible employees which was 3.5%. Mr. Tegnelia received a 6.0% salary increase
comprised of a 3.5% merit increase and an additional 2.5% salary adjustment to better align his salary with his position and responsibilities, effective in April 2007. In October 2007, Mr. Sanchezs salary was increased to $400,000 in connection with his promotion to Chief Financial Officer.
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33
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Annual Bonus
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Objective: Our annual bonus program is
designed to reward executives (through additional cash
compensation) when the Company meets certain annual performance
targets. The Committee believes the annual bonus motivates
executives to focus their efforts on implementing the near-term
strategies and achieving the fiscal-year financial goals
established by management and approved by the Board.
2007 Annual Bonus Program: The performance
metrics and performance targets for our 2007 annual bonus
program were based on our 2007 internal business and strategic
plan. The 2007 annual bonus program for our named executive
officers was driven by a combination of the following three
Company performance metrics. There were no individual
performance metrics for our named executive officers.
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Operating
revenue (40% weighting) is our total revenue less fuel
services revenue (net of inter-segment billings) in our fleet
management solutions business segment and subcontracted
transportation revenue in our supply chain solutions and
dedicated contract carriage business segments. We believe net
operating revenue (a non-GAAP financial measure) is a better
measure of our operating performance and sales activity than
gross revenue because both fuel and subcontracted transportation
are largely pass-throughs to customers and therefore have
minimal impact on our profitability.
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Earning
per share (EPS) (30% weighting) is an effective measure
commonly used by shareholders to assess a companys annual
financial performance, and therefore, we think it is an
appropriate measure on which to compensate our named executive
officers.
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Return
on capital (30% weighting) is our tax adjusted earnings
excluding interest, as a percentage of (i) total debt,
(ii) on and off-balance sheet debt obligations and
(iii) shareholders equity. We believe return on capital
measures capital efficiency across all business segments, which
is critical to the success of capital-intensive businesses like
ours.
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We believe that these three performance metrics taken together
are useful in measuring our success in meeting our strategic
objective of growing our revenue in a way that creates solid
earnings leverage and earns an appropriate return on invested
capital.
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The following chart sets forth the performance measures, weights
and targets under our 2007 annual bonus program:
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Performance Measure
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Threshold
(25%
Payout)
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Target
(100%
Payout)
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Maximum
(200%
Payout)
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Actual
Achievement
in 2007
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Calculated
Payout as a
Percent of
Target
Opportunity
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Weighted
Payout
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Operating Revenue (40%)
(in thousands)
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$4,420.0
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$4,652.6
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$4,885.0
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$4,636.8
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94.9%
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37.96%
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Earnings Per Share (30%)
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$ 3.90
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$ 4.40
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$ 4.90
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$ 4.13
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59.5%
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17.85%
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Return on Capital (30%)
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7.40%
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7.96%
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8.25%
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7.41%
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26.3%
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7.90%
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63.7%
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34
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Actual performance relative to the target is calculated in
accordance with GAAP and adjusted for non-recurring and
non-operational items. The Committee adjusts the EPS results on
which payouts are determined in order to ensure that the payouts
properly reflect the earnings growth in our core business and
are not impacted by non-recurring or non-operational items.
Specifically, the Committee adjusted 2007 EPS to eliminate the
impact of benefits related to (i) tax law changes in the fourth
quarter and (ii) a $200 million share repurchase program
authorized and completed in 2007, all of which are discussed in
our financial statements and periodic SEC filings. As a result,
the EPS amount on which performance was measured was $0.11 lower
than reported EPS, which resulted in a reduced payout under the
annual bonus program.
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Under the 2007 annual bonus program, the target payout
opportunity for all executive officers (other than our CEO) was
75% of base salary. The target payout opportunity for our CEO
was 100% of base salary. These target payout amounts are
designed to motivate our executive officers to act in a way that
will result in us achieving significantly improved year over
year financial performance. Each year, the Committee considers
the appropriateness of these target payout amounts, and in
February 2007, the Committee considered both the benchmarking
data provided by management and Cook, as well as recommendations
from Cook, in deciding to keep the target payout amounts
unchanged. Mr. Swienton receives a higher target payout amount
than our other executive officers to reflect the increased
responsibility that accompanies the role of a CEO. The Committee
believes that given his position, a larger portion of Mr.
Swientons compensation should be based on Company
performance.
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For 2007, the actual payouts were 63.7% of the target
opportunity payout. The actual payout amounts were as follows:
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Named
Executive Officer
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2007 Payout ($)
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Gregory T. Swienton
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555,988
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Robert E. Sanchez
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155,851
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Mark T. Jamieson
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0
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Vicki A. OMeara
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*
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Anthony G. Tegnelia
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215,801
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Thomas S. Renehan
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148,611
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Robert D. Fatovic
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155,923
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* Ms.
OMeara received a pro-rata portion of her 2007 annual
bonus as part of her severance package, as described in detail
below under the heading Potential Payments Upon
Termination or Change of Control 2007
Events.
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2008 Annual Bonus Program: In February 2008,
the Committee approved the performance metrics, performance
targets and potential payout amounts for the 2008 annual bonus
awards. The Committee determined to maintain the same three
performance metrics (operating revenue, EPS and return on
capital). The target payout amounts for the non-CEO executive
officers will continue at 75% of base salary. Mr.
Swientons target payout for 2008 was increased from 100%
to 120% of base salary. The threshold and maximum target payout
amounts will remain unchanged from 2007.
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35
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LONG-TERM INCENTIVES
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Our 2007 long-term incentive program for our named executive
officers was comprised of non-qualified stock options and
performance-based restricted stock rights (with tandem cash
awards). Historically we have also maintained cash-based
long-term incentive plans and have awarded time-based restricted
stock rights. The cash long-term incentive plan and issuance of
time-based restricted stock rights was discontinued as part of
the long-term incentive program with the introduction of our
current long-term incentive plan in 2006. These legacy plans and
awards are described later in this Compensation Discussion and
Analysis.
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The Committee believes granting stock options and
performance-based restricted stock rights to our named executive
officers aligns their financial interests with that of our
shareholders in order to motivate our named executive officers
to create long-term value for our shareholders. These equity
awards also promote employee retention as the equity awards do
not fully vest until at least three years after the grant date.
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Equity Compensation
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2007 Long-Term Incentive Program: The
combination of stock options and performance-based restricted
stock rights (PBRSRs) (with tandem cash awards) granted in
February 2007 to named executive officers was expected to
deliver an aggregate target value equal to 175% of the midpoint
of the relevant salary range for the named executive
officers management level and 350% in the case of Mr.
Swienton. Of the total target value, 45% of the value was
allocated to the stock options, 35% was allocated to the PBRSRs
and 20% was allocated to the tandem cash award. These values
were converted into an equivalent number of shares based on the
fair value of the stock options (using a Black-Scholes pricing
model) and on the intrinsic value of the PBRSRs. This formula is
illustrated below.
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Value in Stock Options = Target
Value x 45%
Value in PBRSRs = Target Value x
35%
Value in Tandem Cash = Target
Value x 20%
Number of Stock Options Granted
= Value in Stock
Options
Black-Scholes
Value on Grant Date
Number of PBRSRs Granted
= Value
in PBRSRs
Average
of high and low price on Grant Date
Stock Options: The stock options were issued
at the average of the high and low sales price of our common
stock as reported by the NYSE on February 9, 2007, the day the
Committee (or the Board in the case of the CEO grant) approved
the grant. The stock options vest in three equal annual
installments and expire seven years from the grant date. The
stock options only have value to the extent our stock price
increases over the term of the option.
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Performance-based restricted stock rights: The
PBRSRs will vest and pay out at target upon approval of the
Committee only if Ryders total shareholder return
(generally the change in Ryders stock price over the
performance period assuming reinvestment of dividends paid)
meets or exceeds the total shareholder return of the S&P
500 Composite Index over the three-year period from January 1,
2007 to December 31, 2009. There is no threshold or maximum
payout. The PBRSRs entitle the named executive officer to
receive dividend equivalents during the performance period and
include a tandem cash award. Specifically, if the PBRSRs vest,
the named executive officer will also receive an amount of cash
that is expected to approximate the amount of the executive
officers tax liability relating to the vesting of the
PBRSRs. The Committee believes total shareholder return is an
appropriate performance metric because it assesses whether
management is focusing its efforts on the fundamental drivers of
shareholder value. Given the difficulty in identifying a
suitable peer group for our Company, the Committee selected the
S&P 500 as the comparable group because it is a
broad-based, widely-used index.
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36
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In February 2007, our independent directors approved an award
with a value of $3.2 million to Mr. Swienton, which converted to
112,385 stock options and 21,340 PBRSRs (with a $639,956 tandem
cash award). The aggregate fair market value of the stock
options and PBRSRs equaled 376% of the midpoint of the relevant
salary range, exceeding the 350% target value. The Committee
exceeded the target value for Mr. Swienton in order to reward
him for our continued strong financial performance and recognize
his continued efforts to improve our financial position and
execute our long-term strategies. The equity granted to Mr.
Swienton in 2007 was consistent with, though slightly less than,
the equity granted to him in 2006. Mr. Swientons
target value was set higher than the other NEOs to reflect
Mr. Swientons scope of responsibilities as our CEO,
as well as to maintain an appropriate total compensation level
based on competitive market data.
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With respect to awards to our executive officers, other than Mr.
Swienton, these target values were placed in a pool and were
allocated and awarded to our executive officers (including NEOs)
by the Committee (based on recommendations made by Mr.
Swienton). In determining the value (in stock options and
PBRSRs, with tandem cash awards) to grant to executive officers,
the Committee considered Company performance, competitive
practices, the cost to us (particularly in light of the new
stock option expensing rules) and share dilution. The Committee
also considered their individual responsibilities, performance
evaluation and long-term initiatives. The number and grant date
fair value of the equity granted to the named executive officers
in 2007 is set forth in the 2007 Grants of Plan-Based
Awards Table on page 44.
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OTHER BENEFITS AND PERQUISITES
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Perquisites and Benefits
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Objective: The Committee prefers to compensate
our named executive officers in cash and equity rather than with
perquisites. However, we do provide a limited number of
perquisites to our named executive officers that we believe are
related to the performance of their responsibilities. In
addition, we believe our named executive officers should be
eligible to participate in the standard benefits package
available to all U.S. salaried employees as well as a few
additional benefits that are customary for other executives in
their positions.
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2007 Perquisites: During 2007, each named
executive officer received the following perquisites:
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An annual
car allowance equal to $9,600 per year;
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An annual
executive perquisite of $5,000 for all executive officers and
$7,500 for our CEO (plus a tax gross-up). Although designed to
provide the executive with an amount of money that can be used
by him or her to pay for community, business or social
activities that may be indirectly related to the performance of
the executives duties but are not otherwise eligible for
reimbursement as direct business expenses, there is no
requirement that the executive use the perquisite for these
purposes;
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Given the
complex structure of certain elements of our compensation, we
reimburse our executives for up to $6,000 per year for amounts
paid by the executive for financial planning and tax preparation
services; |
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For
security reasons, we provide up to $5,000 for the installation
of a new or upgraded security system in the executives
home and pay any related monthly monitoring fees; and
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Certain of
our named executive officers also received a country club
membership during the first part of 2007, for which there was no
incremental cost to us. This perquisite has since been
discontinued.
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37
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2007 Benefits: During 2007, our named
executive officers were eligible to participate in the following
standard benefit plans: qualified pension plan, pension benefit
restoration plan (pension restoration plan), 401(k) savings plan
(including Company contribution based on Company performance),
deferred compensation plan, medical, dental and prescription
coverage, Company-paid short- and long- term disability
insurance, and paid vacation and holidays. The retirement and
deferred compensation plans are described below under the
headings Pension Benefits and 2007
Nonqualified Deferred Compensation beginning on
page 46. In addition, the named executive officers received
the following additional welfare benefits which are not
available to all salaried employees: executive term life
insurance coverage equal to three times the executives
current base salary in lieu of the standard Company-paid term
life insurance (limited to an aggregate of $3 million in life
insurance coverage under the policy) and individual supplemental
long-term disability insurance which provides up to $15,000 per
month in additional coverage over the $8,000 per month maximum
provided under our group long-term disability plan.
|
|
|
|
|
Other
Compensation
Historically, we have also maintained cash-based long-term
incentive plans and have awarded time-based restricted stock
rights, as discussed below. In February 2006, the Committee
decided to allocate more of our executive officers
long-term compensation from cash to equity and approved a new
long-term incentive program. As a result, the Committee ceased
granting long-term cash awards and instead began granting the
PBRSRs with tandem cash awards, which are described in more
detail above under Long-Term Incentives.
Cash
Awards
In May 2005, the Committee approved a cash based long-term
incentive plan (Cash LTIP) for our named executive officers that
provides cash compensation if the Company achieves certain
levels of operating revenue growth, earning per share growth and
return on capital during the period from April 1, 2005
through December 31, 2007. Based on the performance period
that ended December 31, 2007, the named executive officers
earned 54.4% of target. Amounts earned under the awards will
vest in June and be paid in July 2008. The target payout amount
for all executive officers is 75% of base salary (other than our
CEO, whose target payout amount is 150% of base salary). The
Committee set the target payout amounts based on the same
targets in use under the previous cash LTIP program.
Mr. Swienton was awarded a higher target payout amount than
the other NEOs due to his role as the CEO and the corresponding
level of responsibility for the operations of the Company that
accompanies this position, as well as his proven performance
related to objectives. This target was also consistent with the
benchmarking and compensation data reviewed by the Committee.
The awards provide for a threshold payout amount (equal to 50%
of the target payout amount) if we met the threshold performance
targets and a maximum payout amount (equal to two times the
target payout amount) if we met the maximum performance targets.
The following chart sets forth the performance measures, weights
and targets under the Cash LTIP plan:
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Maximum
|
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Calculated Payout
|
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|
Performance
|
|
Threshold
|
|
|
Target (100%
|
|
|
(200%
|
|
|
Actual
|
|
|
as a Percent of
|
|
|
Weighted
|
|
Measure
|
|
(50% Payout)
|
|
|
Payout)
|
|
|
Payout)
|
|
|
Achievement
|
|
|
Target Opportunity
|
|
|
Payout
|
|
|
Operating Revenue (40%)
|
|
$
|
4,224.7
|
|
|
$
|
4,696.1
|
|
|
$
|
4,881.1
|
|
|
$
|
4,636.8
|
|
|
|
93.7
|
%
|
|
|
37.48
|
%
|
(in thousands)
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
Earnings Per Share* (30%)
|
|
$
|
4.13
|
|
|
$
|
4.93
|
|
|
$
|
5.69
|
|
|
$
|
4.23
|
|
|
|
56.3
|
%
|
|
|
16.89
|
%
|
Return on Capital (30%)
|
|
|
7.9
|
%
|
|
|
8.3
|
%
|
|
|
8.7
|
%
|
|
|
7.8
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
54.4
|
%
|
|
|
|
* |
|
For purposes of this
calculation, earnings per share excludes after-tax expense for
Company administered pension and the impact of Company share
repurchase programs in 2005 and 2007. |
Time-Vested
Restricted Stock Rights
In the past, the Committee approved annual grants of time-vested
restricted stock rights to our named executive officers.
Generally, the restricted stock rights vested in three equal
annual installments regardless of Company
38
performance. Beginning in 2006, the Committee granted
performance-based restricted stock rights with tandem cash
awards in lieu of the time-vested restricted stock rights as the
Committee believes that performance-based restricted stock
rights are more consistent with its compensation objectives.
Time-vested restricted stock continues to be used for retention
concerns and new hires. The time-vested restricted stock rights
include a right to receive dividend equivalents during the
vesting period.
The Committee did not grant any time-vested restricted stock
rights to NEOs in 2007.
Severance and
Change of Control Benefits
All officers (including all executive officers) are currently
eligible for certain severance benefits under either individual
severance agreements (in the case of our NEOs) or the terms of
our new executive severance plan, as discussed below. These
benefits are described in more detail under the heading
Potential Payments Upon Termination or Change of
Control on page 49. Severance benefits are intended
to ease the consequences of an unexpected termination of
employment. These benefits are also designed to prevent our
senior executives from seeking employment with our competitors
after termination or soliciting our employees or customers
during the restricted period. The change of control benefits are
designed to preserve productivity, avoid disruption and prevent
attrition during a period when we are, or are rumored to be,
involved in a change of control transaction. The change of
control severance program also motivates executives to pursue
transactions that are in our shareholders best interests
notwithstanding the potential negative impact of the transaction
on their future employment. While cognizant of their terms, the
Committee does not view the change of control and severance
arrangements as an element of current compensation, and such
arrangements do not necessarily affect the Committees
annual compensation decisions.
During 2007 and through January 30, 2008, all officers
(including all executive officers) were eligible for certain
severance benefits under the terms of our severance agreement
and change of control benefits under the terms of our change of
control severance agreement, forms of which are on file with the
SEC. These benefits are described in more detail under the
heading Potential Payments Upon Termination or Change of
Control on page 49.
During 2006, the Committee conducted a comprehensive review and
evaluation of our severance and change of control severance
benefits. Management (at the request of the Committee) retained
Deloitte and Mercer to review and evaluate our severance and
change of control severance programs relative to market
standards. Mercer compared the type and amount of severance and
change of control severance benefits provided by us as well as
the general terms and conditions of our programs with those of
comparable companies within Mercers proprietary database.
Deloitte provided comprehensive data and calculations regarding
potential change of control severance payments under our
existing program and various other scenarios. Management also
retained outside legal counsel to review the terms and
conditions of our existing severance and change of control
severance programs in light of market trends and emerging
governance practices. Each of the consulting firms and outside
counsel provided a report to management which summarized their
findings. The Committee also considered benchmarking data
assembled by management for a 20 company peer group from 5
industry groups, each of which engage in some or all of our
business activities.
Specifically, that peer group consisted of:
|
|
|
Caterpillar Inc.
|
|
Hub Group, Inc.
|
Celadon Group, Inc.
|
|
JB Hunt Transport Services
|
Cendant Corporation
|
|
Landstar System, Inc.
|
C. H. Robinson Worldwide, Inc.
|
|
Old Dominion Freight Line, Inc.
|
CIT Group Inc.
|
|
PHH Corporation
|
Con-way Inc.
|
|
TNT N.V.
|
CSX Corporation
|
|
Trinity Industries, Inc.
|
Expeditors International of Washington, Inc.
|
|
United Parcel Service, Inc.
|
FEDEX Corporation
|
|
Werner Enterprises, Inc.
|
GATX Corporation
|
|
YRC Worldwide Inc.
|
This information, together with managements
recommendations, was communicated to the Committee and the Board
in connection with their review of our then existing severance
and change of control severance programs and their consideration
of changes to the programs. In reviewing and approving the
changes, the Committee and the Board considered a variety of
potential termination scenarios and stock prices and the
resulting payouts to
39
each of our NEOs in each scenario. The Committee also considered the
aggregate payouts to all NEOs and all other employees under the
various change of control scenarios.
In January 2007, based on the results of the Committees
comprehensive evaluation of our severance and change of control
severance programs and practices, our Board (based on the
recommendations of the Committee) decided to terminate all
existing severance and change of control severance agreements
and adopt a new program that would reflect a number of changes
to the current severance and change of control severance
benefits and generally reduce the severance and change of
control benefits available to our officers. Although the
Committee and management determined that our previous severance
and change of control benefits were reasonable, they believe the
approved changes are more consistent with current market
standards and emerging governance trends.
The new severance and change of control severance benefits for
the named executive officers, including Mr. Swienton, are
provided under new individual severance agreements, a form of
which was filed with the SEC on April 4, 2007, and which
replaced the executives previous severance and change of
control severance agreements effective January 30, 2008.
The Committee retained its own legal counsel to prepare the
individual severance agreements for each of our executive
officers, including Mr. Swienton, based on the terms
approved by the Committee. Any new executive officers appointed
after January 1, 2007 received an individual severance and
change of control severance agreement containing the new
severance and change of control severance benefits.
A description of the previous severance and change of control
severance benefits (which were in effect for all current
executive officers until January 31, 2008) and the
approved changes to the severance and change of control
severance benefits (which are in effect for all current officers
since January 30, 2008 and for all new executive officers
appointed after January 1, 2007) as well as a summary
of potential payments relating to these and other termination
events, can be found under the heading Potential Payments
Upon Termination or Change of Control on page 49.
On November 29, 2007, management recommended and the
Committee approved a severance package for Vicki A.
OMeara, our former President of U.S. Supply Chain
Solutions, in connection with her departure from the Company.
The terms of the severance package were in accordance with the
material provisions of the severance agreement between the
Company and Ms. OMeara, dated June 18, 1997,
including provisions concerning noncompetition, nonsolicitation
and nondisparagement. In addition, management recommended and
the Committee approved payment of (i) a pro-rata portion of
the 2007 bonus to be made if and when bonus payments are paid in
February 2008 and (ii) amounts previously earned by
Ms. OMeara under the
2004-2006
cash LTIP, which would otherwise be forfeited due to
Ms. OMearas failure to be actively employed on
the relevant payment dates. Actual amounts paid to
Ms. OMeara in connection with her severance are set
forth under the heading Potential Payments Upon
Termination or Change of Control 2007 Events
on page 52.
Equity
Granting Practices
In February 2007, the Committee approved a Policy on Equity
Granting Practices, which provides that all grants of equity
awards must be approved by the Committee (or in the case of the
CEO, the independent directors acting as a group), at a Board or
Committee meeting and not by written consent except in the case
of new hires (excluding executive officers and other direct
reports to our CEO), when equity grants may be approved by the
Chair of the Committee. The grant date of any equity awards
shall be the date of the Board or Committee meeting at which the
award was approved, provided that the grant date for a new hire
will be the later of (i) the date of the Board or Committee
meeting at which the award was approved and (ii) the date
on which the new hire commences employment. The exercise price
of any stock option issued by us will be the average of the high
and low sales price on the grant date (as required by our
current equity compensation plans). We do not time our equity
award grants relative to the release of material non-public
information.
Stock
Ownership Requirements
To demonstrate the importance of linking executive management
and shareholder interests, we established formal stock ownership
requirements for all of our officers. The CEO must own Company
stock or stock equivalents (including any unvested restricted
stock rights) having a value equal to at least two times his
annual base salary, and all other officers must own Company
stock or stock equivalents having a value equal to at least one
times their base salary. The ownership requirements must be
proportionately satisfied within five years of being appointed
an officer. As of December 31, 2007, all named executive
officers were in compliance with their stock ownership
requirements.
40
Tax and
Accounting Implications
Deductibility of
Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as
amended, precludes public companies from taking a federal income
tax deduction for compensation in excess of $1 million paid
to our named executive officers unless certain specific and
detailed criteria are met, including the requirement that
compensation be performance-based and under a plan
approved by our shareholders.
We review all components of our executive compensation program
based upon the requirements of Section 162(m) of the
Internal Revenue Code. Stock-based awards under our current
equity compensation plan are designed to meet the requirements
of Section 162(m), and accordingly, stock options and other
stock-based awards granted to the named executive officers under
this plan are eligible for the performance-based
exception to Section 162(m). Our 2007 annual bonus awards
were granted under the Ryder System, Inc. 2005 Equity
Compensation Plan, which was approved by our shareholders in May
2005. While the long-term cash incentive awards granted from
2002 to 2004 are performance-based, the relevant plan was not
submitted to our shareholders for their approval and, therefore,
we will not be able to deduct amounts paid under those awards in
calculating our taxes.
The Committee believes that preserving its flexibility in
awarding compensation is in our best interest and that of our
shareholders and may determine, in light of all applicable
circumstances, to award compensation in a manner that will not
preserve the deductibility of such compensation under
Section 162(m).
Nonqualified
Deferred Compensation
On October 22, 2004, the American Jobs Creation Act of 2004
was signed into law, changing the tax rules applicable to
nonqualified deferred compensation arrangements. The final
regulations became effective in April 2007 and we believe we are
operating in good faith compliance with the statutory
provisions. We have amended our practices as necessary and will
amend our relevant compensation plans during 2008 to the extent
necessary to comply with the final regulations.
COMPENSATION
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report of the Compensation Committee shall not
be deemed to be soliciting material or to be
filed with the SEC nor shall this information be
incorporated by reference into any future filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934,
each as amended, except to the extent that Ryder System, Inc.
specifically incorporates it by reference into a filing.
Our Committee has reviewed and discussed the Compensation
Discussion and Analysis contained in this Proxy Statement with
management. Based on our review and discussions, we have
recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in this Proxy Statement.
Submitted by the Compensation Committee of the Board of
Directors.
John M. Berra (Chair)
David I. Fuente
L. Patrick Hassey
Lynn M. Martin
Christine A. Varney
41
EXECUTIVE
COMPENSATION
The following table sets forth the 2007 compensation for:
|
|
|
|
|
our principal executive officer;
|
|
|
each person who served as our principal financial officer during
2007;
|
|
|
the three other most highly compensated executive officers
serving as executive officers at the end of 2007 (based on total
compensation (as reflected in the table below) reduced by the
amounts in the Change in Pension Value and Nonqualified
Deferred Compensation Earnings column); and
|
|
|
one additional individual who would have been one of the three
other most highly compensated executive officers in 2007 but for
the fact that she was not serving as an executive officer of the
Company at the end of 2007.
|
We refer to the executive officers included in the Summary
Compensation Table as our named executive officers.
A detailed description of the plans and programs under which our
named executive officers received the following compensation can
be found in the Compensation Discussion and Analysis beginning
on page 27.
Summary
Compensation Table
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
Deferred
|
|
|
|
|
|
|
|
Stock
|
Option
|
Incentive Plan
|
|
Compensation
|
All Other
|
|
|
|
|
Salary
|
Bonus
|
Awards
|
Awards
|
Compensation
|
|
Earnings
|
Compensation
|
Total
|
Name and Principal Position
|
Year
|
|
($)
|
($)
|
($)1
|
($)2
|
($)3
|
|
($)4
|
($)5
|
($)
|
|
Gregory T. Swienton
|
|
Chairman and
|
|
2007
|
|
|
|
872,500
|
|
|
0
|
|
|
771,080
|
|
|
1,283,619
|
|
|
1,363,932
|
|
|
|
308,173
|
|
|
61,113
|
|
|
4,660,417
|
|
|
|
Chief Executive Officer
|
|
2006
|
|
|
|
843,750
|
|
|
0
|
|
|
723,165
|
|
|
1,271,629
|
|
|
1,744,716
|
|
|
|
254,742
|
|
|
60,708
|
|
|
4,898,710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert E. Sanchez
|
|
Executive Vice President
|
|
2007
|
|
|
|
326,025
|
|
|
0
|
|
|
383,459
|
|
|
171,729
|
|
|
299,601
|
|
|
|
28,015
|
|
|
27,215
|
|
|
1,236,044
|
|
|
|
and Chief Financial Officer
|
|
2006
|
|
|
|
302,250
|
|
|
0
|
|
|
159,462
|
|
|
150,319
|
|
|
345,531
|
|
|
|
21,990
|
|
|
29,956
|
|
|
1,009,508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark T. Jamieson
|
|
Former Executive Vice
|
|
2007
|
|
|
|
403,417
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
|
0
|
|
|
29,515
|
|
|
432,932
|
|
|
|
President and Chief Financial Officer
|
|
2006
|
|
|
|
395,833
|
|
|
150,000
|
|
|
112,869
|
|
|
107,591
|
|
|
295,522
|
|
|
|
0
|
|
|
247,440
|
|
|
1,309,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vicki A. OMeara
|
|
Former President
|
|
2007
|
|
|
|
452,750
|
|
|
0
|
|
|
173,553
|
|
|
66,463
|
|
|
31,729
|
|
|
|
58,518
|
|
|
2,969,438
|
|
|
3,752,451
|
|
|
|
U.S. Supply Chain Solutions
|
|
2006
|
|
|
|
490,250
|
|
|
0
|
|
|
318,523
|
|
|
306,219
|
|
|
624,088
|
|
|
|
82,197
|
|
|
29,830
|
|
|
1,851,107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anthony G. Tegnelia
|
|
President
|
|
2007
|
|
|
|
451,500
|
|
|
0
|
|
|
299,955
|
|
|
260,285
|
|
|
411,373
|
|
|
|
129,306
|
|
|
34,454
|
|
|
1,586,873
|
|
|
|
U.S. Fleet Management
|
|
2006
|
|
|
|
430,250
|
|
|
0
|
|
|
264,478
|
|
|
228,534
|
|
|
552,717
|
|
|
|
186,208
|
|
|
34,364
|
|
|
1,696,551
|
|
|
|
Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas S. Renehan
|
|
Executive Vice President
|
|
2007
|
|
|
|
310,950
|
|
|
0
|
|
|
382,728
|
|
|
170,063
|
|
|
257,845
|
|
|
|
34,044
|
|
|
40,076
|
|
|
1,195,706
|
|
|
|
Sales and Marketing
|
|
2006
|
|
|
|
302,250
|
|
|
0
|
|
|
156,401
|
|
|
142,978
|
|
|
334,566
|
|
|
|
26,281
|
|
|
37,359
|
|
|
996,835
|
|
|
|
U.S. Fleet Management Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert D. Fatovic
|
|
Executive Vice President,
|
|
2007
|
|
|
|
326,250
|
|
|
0
|
|
|
115,535
|
|
|
155,275
|
|
|
277,783
|
|
|
|
30,475
|
|
|
31,704
|
|
|
937,022
|
|
|
|
Chief Legal Officer and
|
|
2006
|
|
|
|
317,250
|
|
|
0
|
|
|
100,418
|
|
|
123,439
|
|
|
235,442
|
|
|
|
26,558
|
|
|
26,220
|
|
|
829,327
|
|
|
|
Corporate Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
Stock awards consist of
time-vested restricted stock rights and performance-based
restricted stock rights. The amounts in this column do not
reflect compensation actually received by the named executive
officer nor do they reflect the actual value that will be
recognized by the named executive officer. Instead, the amounts
reflect the compensation cost recognized by us in fiscal year
2007 and 2006, respectively, for financial statement reporting
purposes in accordance with SFAS 123R for stock awards
granted in and prior to those years. The full grant date fair
value of stock awards granted in 2007 is reflected in the 2007
Grants of Plan-Based Awards table. For information regarding the
assumptions made in calculating the amounts reflected in this
column, see the section entitled Share-Based Compensation
Fair Value Assumptions in note 22 to our audited
consolidated financial statements for the year ended
December 31, 2007, included in our Annual Report on
Form 10-K
for the year ended December 31, 2007. Dividend equivalents
are paid on all restricted stock rights. The dividend
equivalents are factored into the compensation cost recognized
for financial statement reporting purposes. |
2 |
|
The amounts in this column do
not reflect compensation actually received by the named
executive officer nor do they reflect the actual value that will
be recognized by the named executive officer. Instead the
amounts reflect the compensation cost recognized by us in fiscal
years 2007 and 2006, respectively, for financial statement
reporting purposes in accordance with SFAS 123R for stock
options granted in and prior to those years. The full grant date
fair value of stock options granted in 2007, determined using
the Black-Scholes pricing model, is reflected in the 2007 Grants
of Plan-Based Awards table. For information regarding the
assumptions made in determining the value under the
Black-Scholes pricing model, see the section entitled
Share-Based Compensation Fair Value Assumptions in
note 22 to our audited consolidated financial statements
for the year ended December 31, 2007, included in our
Annual Report on
Form 10-K
for the year ended December 31, 2007. |
3 |
|
For 2007, the amounts in this
column represent (i) amounts earned in 2007 under the 2007
annual bonus program (which amounts were paid in February 2008),
(ii) amounts earned in 2007 under our cash-based long-term
incentive plan (Cash LTIP) for the
2005-2007
performance cycle, and (iii) earnings on amounts earned in
previous years but not yet paid under our Cash LTIP, as set
forth in the table below. For 2006, the amounts in this column
represent (i) amounts earned in 2006 under the 2006 annual
bonus program (which amounts were paid in February 2007),
|
42
|
|
|
|
|
(ii) amounts earned in 2006
under our cash-based long-term incentive plan (Cash LTIP) for
the
2004-2006
performance cycle, and (iii) earnings on amounts earned in
previous years but not yet paid under our Cash LTIP, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings on
|
|
|
|
|
|
|
|
|
|
Amounts Earned
|
|
|
Amounts Earned
|
|
|
|
|
|
|
Annual Bonus
|
|
|
Under Cash
|
|
|
But Unpaid Under
|
|
|
|
Year
|
|
|
Awards ($)
|
|
|
LTIP ($)
|
|
|
Cash LTIP ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory T. Swienton
|
|
|
2007
|
|
|
|
555,988
|
|
|
|
647,692
|
|
|
|
160,252
|
|
|
|
|
2006
|
|
|
|
834,958
|
|
|
|
685,082
|
|
|
|
224,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert E. Sanchez
|
|
|
2007
|
|
|
|
155,851
|
|
|
|
117,836
|
|
|
|
25,914
|
|
|
|
|
2006
|
|
|
|
224,310
|
|
|
|
88,571
|
|
|
|
32,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark T. Jamieson
|
|
|
2007
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
2006
|
|
|
|
295,522
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vicki A. OMeara
|
|
|
2007
|
|
|
|
0
|
|
|
|
0
|
|
|
|
31,729
|
|
|
|
|
2006
|
|
|
|
363,827
|
|
|
|
225,290
|
|
|
|
34,971
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anthony G. Tegnelia
|
|
|
2007
|
|
|
|
215,801
|
|
|
|
149,602
|
|
|
|
45,970
|
|
|
|
|
2006
|
|
|
|
319,311
|
|
|
|
170,049
|
|
|
|
63,357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas S. Renehan
|
|
|
2007
|
|
|
|
148,611
|
|
|
|
110,803
|
|
|
|
(1,569)
|
|
|
|
|
2006
|
|
|
|
224,310
|
|
|
|
78,310
|
|
|
|
31,946
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert D. Fatovic
|
|
|
2007
|
|
|
|
155,923
|
|
|
|
121,860
|
|
|
|
0
|
|
|
|
|
2006
|
|
|
|
235,442
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
4 |
|
The amounts in this column
include an estimate of the increase in the actuarial present
value of the accrued pension benefits (under both our pension
and pension restoration plans) for the named executive officer
for the respective year. Assumptions used to calculate these
amounts are described under Pension Benefits on
page 46. No named executive officer realized above-market
or preferential earnings on deferred compensation. |
5 |
|
All Other Compensation for 2007
and 2006, respectively, includes the following payments or
accruals for each named executive officer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
|
|
|
Premiums
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer
|
|
|
Long-Term
|
|
|
Paid for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions
|
|
|
Disability
|
|
|
Executive
|
|
|
Charitable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to the 401(k)
|
|
|
Insurance
|
|
|
Life
|
|
|
Awards
|
|
|
Severance
|
|
|
|
|
|
Tax
|
|
|
|
Year
|
|
|
Plan ($)
|
|
|
Plan ($)
|
|
|
Insurance ($)
|
|
|
Programs
($)(a)
|
|
|
Payment
($)(b)
|
|
|
Perquisites
($)(c)(d)
|
|
|
Gross-up
($)(e)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory T. Swienton
|
|
|
2007
|
|
|
|
3,124
|
|
|
|
8,203
|
|
|
|
3,706
|
|
|
|
17,639
|
|
|
|
0
|
|
|
|
24,139
|
|
|
|
4,302
|
|
|
|
|
2006
|
|
|
|
3,124
|
|
|
|
8,171
|
|
|
|
3,584
|
|
|
|
17,639
|
|
|
|
0
|
|
|
|
23,888
|
|
|
|
4,302
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert E. Sanchez
|
|
|
2007
|
|
|
|
3,124
|
|
|
|
4,328
|
|
|
|
1,382
|
|
|
|
0
|
|
|
|
0
|
|
|
|
16,583
|
|
|
|
1,798
|
|
|
|
|
2006
|
|
|
|
3,124
|
|
|
|
4,328
|
|
|
|
1,284
|
|
|
|
0
|
|
|
|
0
|
|
|
|
19,422
|
|
|
|
1,798
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark T. Jamieson
|
|
|
2007
|
|
|
|
0
|
|
|
|
2,952
|
|
|
|
1,714
|
|
|
|
0
|
|
|
|
0
|
|
|
|
24,639
|
|
|
|
210
|
|
|
|
|
2006
|
|
|
|
0
|
|
|
|
2,710
|
|
|
|
1,682
|
|
|
|
0
|
|
|
|
0
|
|
|
|
189,030
|
|
|
|
54,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vicki A. OMeara
|
|
|
2007
|
|
|
|
0
|
|
|
|
6,538
|
|
|
|
2,099
|
|
|
|
0
|
|
|
|
2,933,882
|
|
|
|
24,051
|
|
|
|
2,868
|
|
|
|
|
2006
|
|
|
|
0
|
|
|
|
6,483
|
|
|
|
2,083
|
|
|
|
0
|
|
|
|
0
|
|
|
|
18,396
|
|
|
|
2,868
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anthony G. Tegnelia
|
|
|
2007
|
|
|
|
3,124
|
|
|
|
5,944
|
|
|
|
1,918
|
|
|
|
0
|
|
|
|
0
|
|
|
|
20,600
|
|
|
|
2,868
|
|
|
|
|
2006
|
|
|
|
3,124
|
|
|
|
5,944
|
|
|
|
1,828
|
|
|
|
0
|
|
|
|
0
|
|
|
|
20,600
|
|
|
|
2,868
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas S. Renehan
|
|
|
2007
|
|
|
|
3,124
|
|
|
|
5,202
|
|
|
|
1,321
|
|
|
|
0
|
|
|
|
0
|
|
|
|
25,052
|
|
|
|
5,377
|
|
|
|
|
2006
|
|
|
|
3,124
|
|
|
|
5,072
|
|
|
|
1,284
|
|
|
|
0
|
|
|
|
0
|
|
|
|
23,725
|
|
|
|
4,154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert D. Fatovic
|
|
|
2007
|
|
|
|
3,124
|
|
|
|
4,996
|
|
|
|
1,386
|
|
|
|
0
|
|
|
|
0
|
|
|
|
20,400
|
|
|
|
1,798
|
|
|
|
|
2006
|
|
|
|
3,124
|
|
|
|
4,869
|
|
|
|
1,348
|
|
|
|
0
|
|
|
|
0
|
|
|
|
15,081
|
|
|
|
1,798
|
|
|
|
|
(a) |
|
As Chairman of the Board,
Mr. Swienton is eligible to participate in the
Companys Matching Gifts to Education Program and
Directors Charitable Award Program described under
Director Compensation on page 56. For 2007, the
amount in this column reflects (i) $10,000 in benefits
under the Companys Matching Gifts to Education Program and
(ii) $7,639 in insurance premium payments made on behalf of
Mr. Swienton in connection with the Directors
Charitable Award Program. For 2006, the amount in this column
reflects (i) $10,000 in benefits under the Companys
Matching Gifts to Education Program and (ii) $7,639 in
insurance premium payments made on behalf of Mr. Swienton
in connection with the Directors Charitable Award
Program. |
(b) |
|
For Ms. OMeara, this
column reflects payments made or accrued to
Ms. OMeara in connection with her severance package,
as described in more detail under the heading Potential
Payments Upon Termination or Change of Control 2007
Events on page 52. |
(c) |
|
Includes, for each executive, a
car allowance, a financial planning and tax preparation
allowance, an executive allowance, and amounts paid in
connection with the executives home security system. The
value reflected in this column reflects the aggregate
incremental cost to us of providing each perquisite to the
executive. Certain named executive officers also received
(i) a country club membership during the first part of 2007
and (ii) tickets to certain sporting and entertainment
events, for which there is no incremental cost to us. |
(d) |
|
For
Mr. Jamieson,
includes relocation assistance of $171,863 in 2006 and
$10,849 in 2007. For Mr. Renehan, includes travel expenses
for Mr. Renehans spouse paid by the Company in 2006
and 2007 in connection with her travel to the annual
Company-sponsored FMS sales contest trip. Mr. Renehan
attends this event annually as part of his role as the head of
Sales and Marketing for our FMS organization.
|
(e) |
|
Includes a tax
gross-up on
the executive perquisite and relocation assistance. |
43
2007 Grants of
Plan-Based Awards
The following table reflects the three types of plan-based
awards granted to our named executive officers in 2007. The
first row reflects the range of payouts under the 2007 annual
bonus awards granted under the Ryder System, Inc. 2005 Equity
Compensation Plan. The second row reflects the target payout
under the performance-based restricted stock rights granted in
2007 under the Ryder System, Inc. 2005 Equity Compensation Plan,
including the tandem cash award. The third row represents stock
options granted during 2007 under the Ryder System, Inc. 2005
Equity Compensation Plan. Mr. Jamieson and
Ms. OMeara did not receive an annual bonus under the
plan as their employment terminated prior to the date on which
the bonus was paid. Ms. OMeara received a pro-rata
portion of the annual bonus as part of her severance package, as
described under the heading Severance and Change of
Control Benefits beginning on page 39.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Future
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payouts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under
|
|
|
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
All Other
|
|
|
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Option Awards:
|
|
|
Exercise or
|
|
|
of Stock
|
|
|
|
|
|
|
Estimated Future Payouts Under
|
|
|
Plan
|
|
|
Number of
|
|
|
Base Price
|
|
|
and
|
|
|
|
|
|
|
Non-Equity Incentive Plan
Awards1
|
|
|
Awards2
|
|
|
Securities
|
|
|
of Option
|
|
|
Option
|
|
|
|
Grant
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Target
|
|
|
Underlying
|
|
|
Awards
|
|
|
Awards
|
|
Name
|
|
Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
Options
(#)3
|
|
|
($/Sh)4
|
|
|
($)5
|
|
|
Gregory T. Swienton
|
|
|
|
|
|
|
218,151
|
|
|
|
872,603
|
|
|
|
1,745,206
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/07
|
|
|
|
|
|
|
|
639,956
|
|
|
|
|
|
|
|
21,340
|
|
|
|
|
|
|
|
|
|
|
|
642,761
|
|
|
|
|
2/9/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
112,385
|
|
|
|
52.48
|
|
|
|
1,439,652
|
|
Robert E. Sanchez
|
|
|
|
|
|
|
61,151
|
|
|
|
244,602
|
|
|
|
489,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/07
|
|
|
|
|
|
|
|
112,157
|
|
|
|
|
|
|
|
3,740
|
|
|
|
|
|
|
|
|
|
|
|
112,649
|
|
|
|
|
2/9/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,685
|
|
|
|
52.48
|
|
|
|
252,165
|
|
Mark T. Jamieson
|
|
|
|
|
|
|
90,891
|
|
|
|
363,563
|
|
|
|
727,126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/07
|
|
|
|
|
|
|
|
119,954
|
|
|
|
|
|
|
|
4,000
|
|
|
|
|
|
|
|
|
|
|
|
120,480
|
|
|
|
|
2/9/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,070
|
|
|
|
52.48
|
|
|
|
269,907
|
|
Vicki A. OMeara
|
|
|
|
|
|
|
84,745
|
|
|
|
338,979
|
|
|
|
677,958
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/07
|
|
|
|
|
|
|
|
104,960
|
|
|
|
|
|
|
|
3,500
|
|
|
|
|
|
|
|
|
|
|
|
105,420
|
|
|
|
|
2/9/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,440
|
|
|
|
52.48
|
|
|
|
236,216
|
|
Anthony G. Tegnelia
|
|
|
|
|
|
|
84,673
|
|
|
|
338,692
|
|
|
|
677,384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/07
|
|
|
|
|
|
|
|
159,989
|
|
|
|
|
|
|
|
5,335
|
|
|
|
|
|
|
|
|
|
|
|
160,690
|
|
|
|
|
2/9/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,095
|
|
|
|
52.48
|
|
|
|
359,897
|
|
Thomas S. Renehan
|
|
|
|
|
|
|
58,310
|
|
|
|
233,240
|
|
|
|
466,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/07
|
|
|
|
|
|
|
|
110,958
|
|
|
|
|
|
|
|
3,700
|
|
|
|
|
|
|
|
|
|
|
|
111,444
|
|
|
|
|
2/9/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,490
|
|
|
|
52.48
|
|
|
|
249,667
|
|
Robert D. Fatovic
|
|
|
|
|
|
|
61,179
|
|
|
|
244,716
|
|
|
|
489,432
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/07
|
|
|
|
|
|
|
|
104,960
|
|
|
|
|
|
|
|
3,500
|
|
|
|
|
|
|
|
|
|
|
|
105,420
|
|
|
|
|
2/9/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,440
|
|
|
|
52.48
|
|
|
|
236,216
|
|
|
|
|
1 |
|
These columns reflect the range
of payouts under the 2007 annual bonus awards granted under the
Ryder System, Inc. 2005 Equity Compensation Plan. Amounts
actually earned in 2007 are reported as Non-Equity Incentive
Plan Compensation in the Summary Compensation Table. The
Target column also includes the tandem cash portion
of the performance-based restricted stock rights granted in
2007. For a more detailed description of the annual bonus
awards, see the section entitled Annual Bonus in the
Compensation Discussion and Analysis. For a detailed description
of the tandem cash award, see Performance-Based Restricted
Stock Rights in the Compensation Discussion and
Analysis. |
2 |
|
This column reflects the target
payout under the performance-based restricted stock rights
granted in 2007 under the Ryder System, Inc. 2005 Equity
Compensation Plan. The performance-based restricted stock rights
will payout at target only if our total shareholder return for
the three-year period ending on December 31, 2009 meets or
exceeds the total shareholder return of the S&P 500
Composite Index over the same period, as discussed in further
detail under the heading Performance-Based Restricted
Stock Rights in the Compensation Discussion and Analysis.
There is no threshold or maximum payout. The performance-based
restricted stock rights are entitled to receive dividend
equivalents. |
3 |
|
Represents stock options granted
under the Ryder System, Inc. 2005 Equity Compensation Plan. The
stock options for all of the named executive officers vest in
three equal annual installments beginning on February 9,
2008. For a more detailed description of our stock options and
stock option granting policies, see the section entitled
Long-Term Incentives and Equity Granting
Practices in the Compensation Discussion and
Analysis. |
4 |
|
The exercise price of the stock
options granted in 2007 were set as the average of the high and
the low sales prices of our common stock on the grant day as
required under the Ryder System, Inc. 2005 Equity Compensation
Plan. The closing stock price of our common stock was $52.16 on
February 9, 2007. |
5 |
|
The grant date fair value of the
stock and option awards is determined pursuant to SFAS 123R
and represents the total amount that we will expense in our
financial statements over the relevant vesting period. For
information regarding the assumptions made in calculating the
amounts reflected in this column, see the section entitled
Share-Based Compensation Fair Value Assumptions in
note 22 to our audited consolidated financial statements
for the year ended December 31, 2007, included in our
Annual Report on
Form 10-K
for the year ended December 31, 2007. |
44
Outstanding
Equity Awards as of December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
Number of
|
|
|
Payout Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
Unearned
|
|
|
of Unearned
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares or
|
|
|
Shares, Units
|
|
|
Shares, Units
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
or Other
|
|
|
or Other
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Option
|
|
|
|
|
|
Stock That
|
|
|
Stock That
|
|
|
Rights That
|
|
|
Rights That
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Exercise
|
|
|
Option
|
|
|
Have Not
|
|
|
Have Not
|
|
|
Have Not
|
|
|
Have Not
|
|
|
|
Options
|
|
|
Options
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested1
|
|
|
Vested
|
|
|
Vested1
|
|
Name
|
|
(#)
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory T. Swienton
|
|
|
|
|
|
|
112,385
|
4
|
|
|
52.48
|
|
|
|
2/9/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,334
|
|
|
|
116,666
|
5
|
|
|
42.73
|
|
|
|
2/13/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
116,667
|
|
|
|
58,333
|
6
|
|
|
44.89
|
|
|
|
2/10/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
|
36.88
|
|
|
|
2/12/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
210,000
|
|
|
|
|
|
|
|
16.60
|
|
|
|
10/10/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,000
|
|
|
|
|
|
|
|
22.10
|
|
|
|
2/13/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,333
|
9
|
|
|
391,734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
2
|
|
|
940,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,340
|
3
|
|
|
1,003,193
|
|
Robert E. Sanchez
|
|
|
|
|
|
|
19,685
|
4
|
|
|
52.48
|
|
|
|
2/9/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,250
|
|
|
|
12,500
|
5
|
|
|
42.73
|
|
|
|
2/13/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
2,500
|
7
|
|
|
38.99
|
|
|
|
7/15/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,000
|
|
|
|
4,000
|
6
|
|
|
44.89
|
|
|
|
2/10/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
417
|
9
|
|
|
19,603
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
833
|
10
|
|
|
39,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
11
|
|
|
705,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,900
|
2
|
|
|
183,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,740
|
3
|
|
|
175,817
|
|
Mark T. Jamieson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vicki A. OMeara
|
|
|
5,000
|
|
|
|
|
|
|
|
33.19
|
|
|
|
2/28/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
6
|
|
|
44.89
|
|
|
|
3/1/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
|
|
|
|
48.54
|
|
|
|
3/1/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anthony G. Tegnelia
|
|
|
|
|
|
|
28,095
|
4
|
|
|
52.48
|
|
|
|
2/9/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
5
|
|
|
42.73
|
|
|
|
2/13/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
5,000
|
8
|
|
|
33.19
|
|
|
|
10/7/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
6
|
|
|
44.89
|
|
|
|
2/10/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
667
|
9
|
|
|
31,356
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
10
|
|
|
235,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,900
|
2
|
|
|
277,359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,335
|
3
|
|
|
250,798
|
|
Thomas S. Renehan
|
|
|
|
|
|
|
19,490
|
4
|
|
|
52.48
|
|
|
|
2/9/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
5
|
|
|
42.73
|
|
|
|
2/13/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,500
|
|
|
|
2,500
|
8
|
|
|
33.19
|
|
|
|
10/7/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000
|
6
|
|
|
44.89
|
|
|
|
2/10/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
|
|
36.88
|
|
|
|
2/12/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
417
|
9
|
|
|
19,603
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
833
|
10
|
|
|
39,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
11
|
|
|
705,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,900
|
2
|
|
|
183,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,700
|
3
|
|
|
173,937
|
|
Robert D. Fatovic
|
|
|
|
|
|
|
18,440
|
4
|
|
|
52.48
|
|
|
|
2/9/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
|
12,000
|
5
|
|
|
42.73
|
|
|
|
2/13/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,000
|
|
|
|
4,000
|
6
|
|
|
44.89
|
|
|
|
2/10/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
|
|
48.54
|
|
|
|
10/8/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,333
|
|
|
|
|
|
|
|
36.88
|
|
|
|
2/12/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
433
|
9
|
|
|
20,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,500
|
2
|
|
|
164,535
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,500
|
3
|
|
|
164,535
|
|
|
|
|
1 |
|
Based on a stock price of
$47.01, which was the closing market price of our common stock
on December 31, 2007. |
2 |
|
Reflects the performance-based
restricted stock rights that will vest if our total shareholder
return for the three-year period ending December 31, 2008
meets or exceeds the total shareholder return of the S&P
500 Composite Index over the same period. |
3 |
|
Reflects the performance-based
restricted stock rights that will vest if our total shareholder
return for the three-year period ending December 31, 2009
meets or exceeds the total shareholder return of the S&P
500 Composite Index over the same period. |
4 |
|
These stock options will vest in
three annual installments on each of February 9, 2008,
February 9, 2009 and February 9, 2010. |
5 |
|
These stock options will vest in
two equal installments on February 13, 2008 and
February 13, 2009. |
6 |
|
These stock options will vest on
February 10, 2008. |
7 |
|
These stock options will vest on
July 15, 2008. |
8 |
|
These stock options will vest on
October 7, 2008. |
9 |
|
These restricted stock rights
will vest on February 10, 2008. |
10 |
|
These restricted stock rights
will vest on October 7, 2008. |
11 |
|
These restricted stock rights
will vest on October 6, 2009. |
45
2007 Option
Exercises and Stock Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock
Awards1
|
|
|
|
Number of Shares
|
|
|
Value Realized
|
|
|
Number of Shares
|
|
|
Value Realized
|
|
|
|
Acquired on Exercise
|
|
|
on Exercise
|
|
|
Acquired on Vesting
|
|
|
on Vesting
|
|
Name
|
|
(#)
|
|
|
($)2
|
|
|
(#)3
|
|
|
($)4
|
|
|
Gregory T. Swienton
|
|
|
84,000
|
5
|
|
|
2,420,630
|
|
|
|
13,333
|
|
|
|
696,649
|
|
Robert E. Sanchez
|
|
|
20,000
|
|
|
|
352,800
|
|
|
|
1,749
|
|
|
|
86,112
|
|
Mark T. Jamieson
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Vicki A. OMeara
|
|
|
57,167
|
|
|
|
740,319
|
|
|
|
6,415
|
|
|
|
303,540
|
|
Anthony G. Tegnelia
|
|
|
28,333
|
|
|
|
332,578
|
|
|
|
6,249
|
|
|
|
294,860
|
|
Thomas S. Renehan
|
|
|
10,250
|
|
|
|
112,208
|
|
|
|
1,666
|
|
|
|
81,776
|
|
Robert D. Fatovic
|
|
|
0
|
|
|
|
0
|
|
|
|
1,599
|
|
|
|
78,275
|
|
|
|
|
1 |
|
This column reflects time-based
restricted stock rights previously awarded to the named
executive officer that vested during 2007. |
2 |
|
Represents the difference
between the closing market price of Ryder common stock on the
date of exercise and the exercise price of the option. |
3 |
|
Of these amounts, shares were
withheld by us to cover tax withholding obligations as follows:
Gregory T. Swienton, 4,284 shares; Robert E. Sanchez,
518 shares; Vicki A. OMeara, 2,236 shares;
Anthony G. Tegnelia, 2,201 shares; Thomas S. Renehan,
491 shares; Robert D. Fatovic, 469 shares. |
4 |
|
Calculated based on the closing
market price of Ryder common stock on the vesting
date. |
5 |
|
All option exercises by
Mr. Swienton were effected pursuant to two
Rule 10b5-1
trading plans established by Mr. Swienton on August 2,
2006 and May 18, 2007. |
Pension
Benefits
We maintain the Ryder System, Inc. Retirement Plan (pension
plan) and the Ryder System, Inc. Benefit Restoration Plan
(pension restoration plan) for regular full-time employees other
than those who are covered by plans administered by labor unions
and certain other non-exempt employees. As a result of the
amendments approved by our Board of Directors in January 2007,
as discussed in detail below, effective December 31, 2007,
the pension and pension restoration plans were frozen for all
plan participants other than those who were eligible to continue
to participate and elected to do so. Benefits payable under the
pension plan are based on an employees career earnings
with us and our subsidiaries. At the normal retirement age of
sixty-five (65), a participant is entitled to a monthly pension
benefit payable for life. The annual pension benefit, when paid
in the form of a life annuity with no survivors benefits,
is generally equal to the sum of 1.45% of the first $15,600 of
total compensation received during the calendar year, plus
1.85 percent of the portion of such total compensation
received during the calendar year in excess of $15,600, during
each such year while a pension plan participant. The only
elements of compensation considered in applying the payment and
benefits formula are, to the extent applicable: salary, bonus,
overtime, vacation and commission.
Pension plan benefits vest at the earlier of the completion of
five years of credited service or upon reaching age sixty-five.
If a participant is over age fifty-five and has more than ten
years of credited service, he or she is eligible to retire with
an unreduced benefit at age sixty-two. We do not have a policy
for granting additional years of credited service. In certain
circumstances, we have given credit for years of service with a
prior employer in connection with a corporate acquisition or
other specific business arrangement. In the event of a change of
control, all participants will be fully vested and the term
accrued benefit will include the value of early
retirement benefits for any participant age forty-five or older
or with ten or more years of service. These benefits are not
subject to any reduction for Social Security benefits or other
offset amounts. An employees pension benefits may be paid
in certain alternative forms having actuarially equivalent
values.
The maximum annual benefit under a qualified defined benefit
pension plan is currently $180,000 beginning at the Social
Security retirement age. The maximum compensation and bonus that
may be taken into account in determining annual retirement
accruals during 2007 was $225,000. The pension restoration plan
covers those pension plan participants (including each of the
named executive officers) whose benefits are reduced by the
Internal Revenue Code or other United States laws and are
eligible to participate in the pension restoration plan. A
participant in the pension restoration plan is entitled to a
benefit equaling the difference between the amount of benefits
the participant is entitled to receive without reduction and the
amount of benefits the participant is entitled to receive after
the reductions.
46
The following table sets forth the present value of the
accumulated benefits for the named executive officers assuming
they retire at the unreduced early retirement age of 62 and have
ten years of service, and using interest rate and mortality rate
assumptions consistent with those used in our financial
statements. For information regarding interest rate and
mortality rate assumptions, see the section entitled
Employee Benefit Plans in note 23 to our
audited consolidated financial statements for the year ended
December 31, 2007, included in our Annual Report on
Form 10-K
for the year ended December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Present Value
|
|
|
|
|
|
|
|
|
Years Credited
|
|
|
of Accumulated
|
|
|
Payments During Last
|
|
Name
|
|
Plan Name
|
|
Service (#)
|
|
|
Benefit
($)1
|
|
|
Fiscal Year ($)
|
|
|
Gregory T. Swienton
|
|
Retirement Plan
|
|
|
9
|
|
|
|
245,819
|
|
|
|
0
|
|
|
|
Benefit Restoration Plan
|
|
|
9
|
|
|
|
1,356,185
|
|
|
|
0
|
|
Robert E. Sanchez
|
|
Retirement Plan
|
|
|
15
|
|
|
|
129,154
|
|
|
|
0
|
|
|
|
Benefit Restoration Plan
|
|
|
15
|
|
|
|
120,260
|
|
|
|
0
|
|
Mark T. Jamieson
|
|
Retirement Plan
|
|
|
2
|
|
|
|
0
|
|
|
|
0
|
|
|
|
Benefit Restoration Plan
|
|
|
2
|
|
|
|
0
|
|
|
|
0
|
|
Vicki A. OMeara
|
|
Retirement Plan
|
|
|
11
|
|
|
|
193,218
|
|
|
|
0
|
|
|
|
Benefit Restoration Plan
|
|
|
11
|
|
|
|
471,359
|
|
|
|
0
|
|
Anthony G. Tegnelia
|
|
Retirement Plan
|
|
|
31
|
|
|
|
999,291
|
|
|
|
0
|
|
|
|
Benefit Restoration Plan
|
|
|
31
|
|
|
|
1,214,458
|
|
|
|
0
|
|
Thomas S. Renehan
|
|
Retirement Plan
|
|
|
22
|
|
|
|
190,027
|
|
|
|
0
|
|
|
|
Benefit Restoration Plan
|
|
|
22
|
|
|
|
120,436
|
|
|
|
0
|
|
Robert D. Fatovic
|
|
Retirement Plan
|
|
|
13
|
|
|
|
114,909
|
|
|
|
0
|
|
|
|
Benefit Restoration Plan
|
|
|
13
|
|
|
|
103,034
|
|
|
|
0
|
|
|
|
|
|
|
|
1 |
|
These assumptions have been
modified to reflect the effect of the pension changes approved
in January 2007 and discussed below. |
Amendments to
Retirement Benefits
We also maintain a tax-qualified 401(k) plan that provides for
broad-based employee participation, including the named
executive officers. In January 2007, our Board of Directors
approved amendments to our pension and pension restoration
plans, our 401(k) plan and our deferred compensation plan (DCP).
As a result of the changes, effective December 31, 2007,
the pension and pension restoration plans were frozen for all
plan participants (including executive officers) other than
those who were eligible to continue to participate, as described
below, and elected to do so. As a result, these employees ceased
accruing further benefits under the defined benefit plans after
December 31, 2007. All retirement benefits earned as of
December 31, 2007 will be fully preserved, will continue to
be subject to the applicable vesting schedule, and will be paid
in accordance with the plans and applicable legal requirements.
No employees hired or rehired after January 1, 2007 are
eligible to participate in the pension or pension restoration
plans.
Effective January 1, 2008, employees who were no longer
eligible to continue to earn benefits in the pension plan were
automatically transitioned to the 401(k) plan and the deferred
compensation plan (if eligible) for their retirement benefits.
The 401(k) plan was enhanced for those employees no longer
eligible to earn pension benefits to provide for a
(i) Company contribution equal to 3% of eligible pay,
subject to a vesting schedule, even if employees do not make
contributions to the plan, (ii) a 50% Company match of
employee contributions of up to 5% of eligible pay, subject to
IRS limits and (iii) a discretionary Company contribution
based on our performance. The 401(k) plan for pension eligible
employees only provides for a discretionary Company contribution
based on our attainment of annual performance targets. Effective
December 31, 2007, our deferred compensation plan was
amended to provide for Company contributions in excess of the
applicable IRS limitations under the 401(k) plan. The deferred
compensation plan was also amended to provide for Company
discretionary contributions in excess of the applicable IRS
limitations to all DCP plan participants. Employees eligible for
the Company contribution enhancements in the 401(k) plan are
also eligible for the enhancements in the deferred compensation
plan provided they meet the eligibility requirements. Eligible
employees must elect to participate in DCP to be eligible for
any excess Company match.
Current pension plan participants who (1) earned a minimum
of 65 points (calculated as the sum of an employees age
and years of service with the Company as of December 31,
2007) or (2) had at least 20 years of
credited service with the Company as of December 31, 2007
(regardless of age) were given until August 2007 to make a
one-time, irrevocable election to continue to earn benefits
under the pension and pension restoration plans or transition to
the 401(k) plan and deferred compensation plan. Based on their
age and tenure with the
47
Company, Mr. Swienton, Mr. Tegnelia and Mr. Renehan met these eligibility
criteria and, like all other eligible plan participants, were
eligible to choose to continue accruing benefits under the
pension and pension restoration plans. Each of
Mr. Swienton, Mr. Tegnelia and Mr. Renehan
elected to do so.
2007
Nonqualified Deferred Compensation
We maintain a deferred compensation plan for certain employees,
including the named executive officers, pursuant to which
participants may elect to defer receipt of their cash
compensation (base salary, commissions and annual bonus only).
Any deferred amounts are part of our general assets and are
credited with hypothetical earnings based on several
hypothetical investment options selected by the employee,
including Ryder common stock. The compensation may be deferred
until the later to occur of a fixed date and separation of
employment due to retirement, disability or removal, and is
payable in a lump sum or, in the event of the employees
retirement, in installments for a period ranging from 2 to
15 years. Upon a change of control, all deferred amounts
will be paid immediately in a lump sum. Our current deferred
compensation plan does not provide for above-market or
preferential earnings and during 2007 did not provide for
Company contributions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions in
|
|
|
Aggregate Earnings
|
|
|
|
|
|
|
|
|
|
Last Fiscal
|
|
|
in Last Fiscal
|
|
|
Aggregate Withdrawals/
|
|
|
Aggregate Balance at
|
|
Name
|
|
Year ($)
|
|
|
Year
($)1
|
|
|
Distributions ($)
|
|
|
Last Fiscal Year-End
($)2
|
|
|
Gregory T. Swienton
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Robert E. Sanchez
|
|
|
0
|
|
|
|
(5,227
|
)
|
|
|
0
|
|
|
|
130,919
|
|
Mark T. Jamieson
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Vicki A. OMeara
|
|
|
0
|
|
|
|
10,177
|
|
|
|
0
|
|
|
|
301,882
|
|
Anthony G. Tegnelia
|
|
|
0
|
|
|
|
830
|
|
|
|
0
|
|
|
|
134,913
|
|
Thomas S. Renehan
|
|
|
0
|
|
|
|
8,816
|
|
|
|
81,777
|
|
|
|
160,280
|
|
Robert D. Fatovic
|
|
|
44,231
|
|
|
|
50,499
|
|
|
|
0
|
|
|
|
618,891
|
|
|
|
|
1 |
|
The amounts reflected in this
column were not reported as compensation to the named executive
officers in our Summary Compensation Table for 2007. |
2 |
|
Aggregate earnings on deferred
compensation included in these amounts were not reported as
compensation to the named executive officers in our Summary
Compensation Table for previous years. |
48
Potential
Payments Upon Termination or Change of Control
Severance and
Change of Control Severance Agreements
Historically, our officers were entitled to certain severance
benefits under the terms of our severance agreement and change
of control benefits under the terms of our change of control
severance agreement, forms of which are on file with the SEC.
These benefits are described below in more detail. During 2006,
the Committee conducted a comprehensive review and evaluation of
our severance and change of control severance benefits. In
January 2007, based on the results of the Committees
review, our Board of Directors decided to terminate all existing
severance and change of control severance agreements effective
January 31, 2008, and adopt a new severance and change of
control severance program that would generally reduce our
officers severance benefits. Any officers hired on or
after January 1, 2007 were covered under the new program.
Although the Committee and management determined that the
severance benefits under the prior agreements were reasonable,
they believe the approved changes are more in line with current
market standards and emerging governance trends. The new
severance benefits for the named executive officers, including
Mr. Swienton are provided under new individual severance
agreements, a form of which was filed with the SEC on
April 4, 2007. Following is a description of the agreement.
Voluntary
Termination and Termination for Cause
In the event an executive officer voluntarily terminates their
employment with us or is terminated for cause, the officer will
not be entitled to receive any severance payments pursuant to
the terms of the severance and change of control severance
program. In the event of voluntary termination, all unvested
equity awards will terminate and the executive officer will have
three months from the date of termination to exercise any vested
stock options. In the event of termination for cause, all
equity, vested and unvested, will be cancelled. The executive
officer will retain any accrued compensation and benefits to the
extent vested.
The Committee may, however, use its discretion to make severance
payments not required pursuant to the terms of an
executives severance or change of control severance
agreement, if such payment is determined to be in the best
interest of the Company.
Termination
for Death, Disability or Retirement
Cash. In the event an executive officer
retires, he or she will be entitled to receive any accrued
compensation and benefits including under our pension and
pension restoration plans, to the extent such benefits have
vested as described in more detail under the heading
Pension Benefits. In the event of death, the
executive officers beneficiaries would receive benefits
under the executive life insurance policies we maintain on their
behalf which benefits are equal to three times the
executives current base salary up to an aggregate of
$3 million. In addition, welfare benefits (health, dental
and prescription) are extended for 60 days for eligible
beneficiaries, the total cost of which would range from
approximately $1,052 to $1,626 for our named executive officers,
depending on the executives coverage and number of covered
family members. In the event of disability, the executive
officer would be entitled to any amounts paid under our
disability insurance policies, including the supplemental
long-term disability we maintain for executive officers (as
described under Benefits in the Compensation
Discussion and Analysis). Upon death or disability, the
executive officer (or his or her beneficiary) would be entitled
to a pro-rata payment under our annual bonus program.
Equity. Upon death or retirement, all unvested
stock options will terminate. Upon disability, stock options
will continue to vest for a period of three years following
disability. The intrinsic value as of December 31, 2007 of
the stock options that will continue to vest upon disability
(calculated based on the difference between the exercise price
of the options and the closing market price of our stock on
December 31, 2007) was as follows: Gregory T.
Swienton, $623,871; Robert E. Sanchez, $82,125; Mark T.
Jamieson, $0; Vicki A. OMeara, $0; Anthony G. Tegnelia,
$165,450; Thomas S. Renehan, $96,625; and Robert D. Fatovic,
$59,920. All vested stock options will remain exercisable for
the remainder of the term of the option. Upon death, disability
or retirement, a pro-rata portion of any unvested restricted
stock rights will vest; provided that performance-based
restricted stock rights will be held until the end of the
applicable performance period. The intrinsic value of the
pro-rata number of restricted stock rights that would have
vested had the death, disability or retirement occurred on
December 31, 2007 and assuming, with respect to the
performance-based restricted stock rights, that the performance
condition is met, is as follows: Gregory T. Swienton,
$1,298,911; Robert E. Sanchez, $511,819; Mark T. Jamieson, $0;
Vicki A. OMeara, $0; Anthony G. Tegnelia, $463,018; Thomas
S. Renehan, $511,241; and Robert D. Fatovic, $177,523.
49
Involuntary
Termination without Cause and Change of Control
Cash. Following is a description of the
previous severance and change of control severance benefits upon
involuntary termination without Cause and in the event of a
Change of Control (which were in effect for all current
executive officers until January 31, 2008) and the
recent changes to the severance and change of control severance
benefits (which have been in effect for all current officers
beginning after January 31, 2008 and for all new executive
officers appointed after January 1, 2007).
|
|
|
|
|
|
|
|
|
|
Severance Benefits
|
|
|
Change of Control Severance Benefits
|
Eligibility |
|
|
If we terminate the executives employment for any reason
other than death, disability or Cause (as defined in the
agreement and discussed below), and certain other requirements
are met, we will provide the executive with certain severance
benefits.
|
|
|
If we terminate the executives employment for any reason other than death, disability or Cause or if the executive terminates his or her employment for Good Reason (as defined in the agreement and discussed below), in each case within three years (referred to as the protection period) after a Change of Control (as defined in the agreement and discussed below) (COC), and certain other requirements
are met, we will provide the executive with certain change of control severance benefits.
Approved Change
The protection period in a COC was reduced to two years for all executive officers (including the CEO).
|
|
|
|
|
|
|
|
Cash Severance |
|
|
The executive will receive cash severance as follows:
salary continuation for the applicable
severance period (two or three years for all executive officers
and three years for the CEO).
a tenure bonus which is based on the
product of the (1) current base salary, (2) current target bonus
percentage, (3) three-year average bonus payout percentage, (4)
ratio of the executives tenure expressed as a percentage
of twelve years (and not to exceed 100%) and (5) applicable
bonus multiple (one or two times for all executive officers and
three times for the CEO).
|
|
|
The executive will receive cash severance as follows:
lump sum payment equal to the
executives eligible base salary times the applicable
salary multiple (two or three for all executive officers and
three for the CEO).
a tenure bonus which is based on the
product of the (1) current base salary, (2) current target bonus
percentage, (3) three-year average bonus payout percentage, (4)
ratio of the executives tenure expressed as a percentage
of twelve years (and not to exceed 100%) and (5) applicable
bonus multiple (one or two times for all executive officers and
three times for the CEO).
an additional COC bonus equal to the
greater of 120% of the target payout or the actual payout for
the year the change of control occurs.
|
|
|
|
Approved Change |
|
|
Approved Change
|
|
|
|
|
|
|
|
|
|
|
The severance period for all
executive officers (other than the CEO) is now 18 months.
The severance period for the CEO is now 30 months.
The bonus is now equal to the
target bonus amount for the year in which the termination occurs
times the applicable bonus multiple (which is 1.5 times for all
executive officers and 2.5 times for the CEO).
|
|
|
The salary multiple for all executive
officers (other than the CEO) is now two times and for the CEO
is now three times.
The bonus is now equal to the
target bonus amount for the year in which the termination occurs
times the applicable bonus multiple (which is two times for all
executive officers and three times for the CEO).
The COC bonus has been
eliminated.
|
|
|
|
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
Severance Benefits
|
|
|
Change of Control Severance Benefits
|
Benefits
|
|
|
The executive will be entitled to benefits as follows:
|
|
|
|
continuation of all medical, dental and
prescription insurance plans and programs and other similar
plans and programs until the earlier of the end of the
applicable severance period or the executive officers
eligibility to receive benefits from another employer.
|
|
|
|
continuation of executive life and
supplemental disability insurance until the end of the relevant
severance period.
|
|
|
|
outplacement services comprised of
services under a Company-sponsored program and reimbursement for
expenses up to a maximum of $20,000 for all executive officers
(other than the CEO, whose maximum is $30,000) in the event of
severance. For COC, the amounts were $75,000 for the CEO, and
ranged from $50,000 to $75,000 for all other NEOs.
Approved Change
|
|
|
|
Outplacement expense reimbursement
has been eliminated.
|
|
|
|
|
|
|
|
Perquisites
|
|
|
The executive will receive the following perquisites:
|
|
|
|
car allowance until the end of the
applicable severance period.
|
|
|
|
financial planning allowance and
executive perquisite for the year in which the termination
occurs (if not already paid) and for an additional one year
period.
Approved Change
|
|
|
|
All perquisites have been
eliminated.
|
|
|
|
|
|
|
|
Tax
Gross-Up
|
|
|
Executive is entitled to tax gross-up on executive perquisite.
Approved Change
The tax gross-up has been eliminated.
|
|
|
Executive officers are entitled to a full tax gross-up on all severance benefits.
Approved Change
The tax gross-up now includes a 10% cutback feature.
|
|
|
|
|
|
|
|
Cause
|
|
|
Cause generally means an act(s) of fraud, misappropriation, or embezzlement; conviction of any felony; conviction of a misdemeanor involving moral turpitude; willful failure to report to work for more than 30 days; and any other activity which would constitute cause.
Approved Change
Cause now also includes a material violation of our Principles of Business Conduct and willful failure to perform his or her duties.
|
|
|
Cause generally means an act(s) of fraud, misappropriation, or embezzlement; conviction of any felony; conviction of a misdemeanor involving moral turpitude; and willful failure to report to work for more than 30 days.
Approved Change
Cause now also includes a willful failure to perform his or her duties.
|
|
|
|
|
|
|
|
Good Reason
|
|
|
Not Applicable
|
|
|
Good Reason generally means a reduction in compensation; transferring the executive more than 15 miles; failure to obtain a successors agreement to honor the Change of Control Agreement; failure to pay certain change of control severance benefits into a trust; termination of employment not done in accordance with the agreement; and any material change in duties or any other material
adverse change in the terms and conditions of the executive officers employment.
Approved Change
Good Reason now requires a 50 mile relocation; a change in title or reporting relationship does not constitute Good Reason.
|
|
|
|
|
|
|
|
51
|
|
|
|
|
|
|
|
|
|
Severance Benefits
|
|
|
Change of Control Severance Benefits
|
Change of
Control
|
|
|
Not Applicable
|
|
|
Change of Control generally means the acquisition of 20% or more of the combined voting power of our common stock; a two-thirds change in the composition of our Board; any reorganization, merger or consolidation that results in more than a 50% change in the share ownership of our common stock, the acquisition of 20% or more of the voting power of our common stock by one person or a two-thirds
change in the composition of the Board; a liquidation or dissolution of our company; or a sale of substantially all of our assets.
Approved Change
The acquisition trigger has been increased from 20% to 30% and the continuity of the Board trigger has been reduced from a two-thirds change to a majority change.
|
|
|
|
|
|
|
|
The previous severance agreements and change of control
severance agreements contained, and the new agreements contain,
confidentiality, non-competition, non-solicitation and release
provisions.
Equity and Other Compensation. Our executive
officers (including all of our named executive officers) are
also entitled to certain severance and change of control
severance benefits under the terms of our equity, deferred
compensation, cash-based long-term incentive plans, and pension
plan and pension restoration plan. Specifically, (i) our
previous equity plans provide for continued vesting of equity
awards during the relevant severance period and for accelerated
vesting of outstanding equity awards upon a change of control
(single-trigger), (ii) our current equity plan provides for
accelerated vesting of outstanding equity awards upon a change
of control (single-trigger), but does not provide for continued
vesting during the severance period, (iii) upon a change of
control, all deferred compensation amounts and all amounts
previously earned but not paid under our cash-based long-term
incentive plan are paid to the executive and (iv) upon a
change of control, accrued benefits under our pension
restoration plan are immediately paid.
2007
Events
On November 29, 2007, as disclosed in a current report on
Form 8-K
filed on November 30, 2007, management recommended and the
Committee approved a severance package for Vicki A.
OMeara, our former President of U.S. Supply Chain
Solutions, in connection with her departure from the Company.
The terms of the severance package were in accordance with the
material provisions of the severance agreement between the
Company and Ms. OMeara, dated June 18, 1997,
including provisions concerning noncompetition, nonsolicitation
and nondisparagement. In addition, management recommended and
the Committee approved payment of (i) a pro-rata portion of
the 2007 bonus to be made if and when bonus payments are paid in
February 2008 and (ii) amounts previously earned by
Ms. OMeara under the
2004-2006
cash LTIP, which would otherwise be forfeited for
Ms. OMearas failure to be actively employed on
the relevant payment dates.
52
Actual amounts Ms. OMeara is entitled to receive in
connection with the termination of her employment are set forth
below:
|
|
|
|
|
Compensation
Component1
|
|
Value ($)
|
|
|
Base Salary
|
|
|
1,485,000
|
|
Tenure Related Bonus
|
|
|
774,958
|
|
2007 Pro-rated Bonus
|
|
|
215,984
|
|
Cash LTIP
|
|
|
363,022
|
2
|
Perquisite Allowance
|
|
|
5,000
|
|
Financial Planning
|
|
|
6,000
|
|
Car Allowance
|
|
|
28,800
|
|
Welfare/Life Insurance/Disability
|
|
|
55,118
|
|
|
|
|
|
|
|
|
|
2,933,882
|
|
|
|
|
1 |
|
Ms. OMeara is also
entitled to $48,500 of outplacement services, which will be paid
directly to the outplacement service provider. |
2 |
|
Estimated value as of
December 31, 2007. Actual amount to be paid-out in July
2008 will vary depending on market returns on
investments. |
Mr. Jamieson, our former Executive Vice President and Chief
Financial Officer resigned from the Company effective
October 26, 2007, and was not entitled to any severance
payments.
Estimated
Severance and Change of Control Severance Benefits as of
December 31, 2007 (Previous Program)
The estimated payments and benefits that would have been
provided to each named executive officer as the result of
involuntary termination without cause or the occurrence of a
change of control under our previous severance agreements and
change of control severance agreements (which were in effect for
all current executive officers until January 31,
2008) are set forth in the table below. Calculations for
this table are based on the following assumptions: (i) the
triggering event took place on December 31, 2007 and
(ii) the per share price of our common stock is $47.01, the
closing price on December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Triggering Event
|
|
|
|
|
|
|
|
|
Change of
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Control
|
|
|
|
|
|
|
|
|
Termination
|
|
|
without
|
|
|
Change of Control
|
|
|
|
Compensation
|
|
without Cause
|
|
|
Termination
|
|
|
with Termination
|
|
Name
|
|
Components
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Gregory T. Swienton
|
|
Cash
Severance1
|
|
|
4,876,413
|
|
|
|
0
|
|
|
|
5,932,413
|
|
|
|
Intrinsic Value of
Equity2
|
|
|
123,958
|
|
|
|
2,958,999
|
|
|
|
2,958,999
|
|
|
|
Retirement
Benefits3
|
|
|
0
|
|
|
|
335,816
|
|
|
|
335,816
|
|
|
|
Welfare
Benefits4
|
|
|
18,936
|
|
|
|
0
|
|
|
|
18,936
|
|
|
|
Outplacement/Perquisites5
|
|
|
100,800
|
|
|
|
0
|
|
|
|
117,300
|
|
|
|
Gross-up6
|
|
|
4,302
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Benefit to Employee
|
|
|
5,124,409
|
|
|
|
3,294,815
|
|
|
|
9,363,464
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert E. Sanchez
|
|
Cash
Severance1
|
|
|
1,943,096
|
|
|
|
0
|
|
|
|
2,303,096
|
|
|
|
Intrinsic Value of
Equity2
|
|
|
8,500
|
|
|
|
1,205,194
|
|
|
|
1,205,194
|
|
|
|
Retirement
Benefits3
|
|
|
0
|
|
|
|
66,367
|
|
|
|
66,367
|
|
|
|
Welfare
Benefits4
|
|
|
29,268
|
|
|
|
0
|
|
|
|
29,268
|
|
|
|
Outplacement/Perquisites5
|
|
|
88,300
|
|
|
|
0
|
|
|
|
105,200
|
|
|
|
Gross-up6
|
|
|
1,798
|
|
|
|
0
|
|
|
|
1,017,818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Benefit to Employee
|
|
|
2,070,962
|
|
|
|
1,271,561
|
|
|
|
4,726,943
|
|
53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Triggering Event
|
|
|
|
|
|
|
|
|
Change of
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Control
|
|
|
|
|
|
|
|
|
Termination
|
|
|
without
|
|
|
Change of Control
|
|
|
|
Compensation
|
|
without Cause
|
|
|
Termination
|
|
|
with Termination
|
|
Name
|
|
Components
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Anthony G. Tegnelia
|
|
Cash
Severance1
|
|
|
2,194,159
|
|
|
|
0
|
|
|
|
2,606,359
|
|
|
|
Intrinsic Value of
Equity2
|
|
|
10,625
|
|
|
|
960,013
|
|
|
|
960,013
|
|
|
|
Retirement
Benefits3
|
|
|
0
|
|
|
|
238,143
|
|
|
|
238,143
|
|
|
|
Welfare
Benefits4
|
|
|
29,340
|
|
|
|
0
|
|
|
|
29,340
|
|
|
|
Outplacement/Perquisites5
|
|
|
88,300
|
|
|
|
0
|
|
|
|
114,800
|
|
|
|
Gross-up6
|
|
|
2,868
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Benefit to Employee
|
|
|
2,325,292
|
|
|
|
1,198,156
|
|
|
|
3,948,655
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas S. Renehan
|
|
Cash
Severance1
|
|
|
1,212,610
|
|
|
|
0
|
|
|
|
1,494,850
|
|
|
|
Intrinsic Value of
Equity2
|
|
|
8,500
|
|
|
|
1,217,814
|
|
|
|
1,217,814
|
|
|
|
Retirement
Benefits3
|
|
|
0
|
|
|
|
60,042
|
|
|
|
60,042
|
|
|
|
Welfare
Benefits4
|
|
|
19,488
|
|
|
|
0
|
|
|
|
19,488
|
|
|
|
Outplacement/Perquisites5
|
|
|
78,700
|
|
|
|
0
|
|
|
|
80,200
|
|
|
|
Gross-up6
|
|
|
1,798
|
|
|
|
0
|
|
|
|
724,631
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Benefit to Employee
|
|
|
1,321,096
|
|
|
|
1,277,856
|
|
|
|
3,597,025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert D. Fatovic
|
|
Cash
Severance1
|
|
|
1,247,154
|
|
|
|
0
|
|
|
|
1,543,254
|
|
|
|
Intrinsic Value of
Equity2
|
|
|
8,500
|
|
|
|
409,345
|
|
|
|
409,345
|
|
|
|
Retirement
Benefits3
|
|
|
0
|
|
|
|
55,985
|
|
|
|
55,985
|
|
|
|
Welfare
Benefits4
|
|
|
19,464
|
|
|
|
0
|
|
|
|
19,464
|
|
|
|
Outplacement/Perquisites5
|
|
|
78,700
|
|
|
|
0
|
|
|
|
80,200
|
|
|
|
Gross-up6
|
|
|
1,798
|
|
|
|
0
|
|
|
|
648,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Benefit to Employee
|
|
|
1,355,616
|
|
|
|
465,330
|
|
|
|
2,757,157
|
|
|
|
|
1 |
|
Cash severance includes:
(i) base salary; (ii) a tenure related bonus; and
(iii) in a change of control scenario, a COC bonus
(calculated assuming 120% of the target payout), all as
described above. In the event of involuntary termination without
cause, base salary is paid over time in accordance with usual
payroll practices and the tenure related bonus is paid in a lump
sum shortly after termination. In the event of termination in
connection with a change of control, all payments are made in a
lump sum shortly after termination. |
2 |
|
The intrinsic value of the
equity under an involuntary termination without cause reflects
the intrinsic value of the equity awards that continue to vest
during the severance period as provided under our previous
equity plans. Under a change of control, the intrinsic value of
equity reflects the intrinsic value of the accelerated equity.
In each case, the amounts are calculated using the closing price
of our common stock on December 31, 2007
($47.01). |
3 |
|
This amount reflects the
incremental increase in value resulting from the acceleration of
the vesting of the pension restoration plan in the event of a
change of control (whether or not there is a termination of
employment), plus, in the event of a termination in connection
with a change of control, the value of the early retirement
subsidy in our pension plan. Assumed retirement age is the later
of age 55 or the executives age on December 31,
2007. |
4 |
|
Amounts are based on the current
cost to us of providing the named executives current
health, dental and prescription insurance coverage during the
severance period as described above. We continue to pay the
employer portion of the welfare benefits during the applicable
period, provided that the employee must continue to make the
required employee contributions. |
5 |
|
Perquisites continue for the
length of the severance period except for the executive
allowance and the financial planning/tax preparation allowance,
which continue for one year only, assuming termination on
December 31, 2007 as described above. In the event of
termination in connection with a change of control, such
payments are made in a lump sum shortly after termination. Also
includes the cost of outplacement services provided under a
Company-sponsored program. |
6 |
|
In the event of an involuntary
termination without cause, a tax
gross-up
applies only to the executive allowance. In the case of a
termination in connection with a change of control, the tax
gross-up
applies to all payments and benefits. The tax
gross-up
payment is made in a lump sum to the employee shortly after
termination. |
54
Estimated
Severance and Change of Control Severance Benefits as of
December 31, 2007 (New Program)
The estimated payments and benefits that would be provided to
each named executive officer as the result of involuntary
termination without cause or the occurrence of a change of
control under our new agreements (which have been in effect for
all current executive officers beginning after January 31,
2008) are set forth in the table below. Calculations for
this table are based on the following assumptions: (i) the
triggering event took place on December 31, 2007 and
(ii) the per share price of our common stock is $47.01, the
closing price on December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Triggering Event
|
|
|
|
|
|
|
|
|
Change of
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Control
|
|
|
|
|
|
|
|
|
Termination
|
|
|
without
|
|
|
Change of Control
|
|
|
|
Compensation
|
|
without Cause
|
|
|
Termination
|
|
|
with Termination
|
|
Name
|
|
Components
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Gregory T. Swienton
|
|
Cash
Severance1
|
|
|
4,400,000
|
|
|
|
0
|
|
|
|
5,280,000
|
|
|
|
Intrinsic Value of
Equity2
|
|
|
123,958
|
|
|
|
2,958,999
|
|
|
|
2,958,999
|
|
|
|
Retirement
Benefits3
|
|
|
0
|
|
|
|
335,816
|
|
|
|
335,816
|
|
|
|
Welfare
Benefits4
|
|
|
15,780
|
|
|
|
0
|
|
|
|
18,936
|
|
|
|
Outplacement/Perquisites5
|
|
|
28,500
|
|
|
|
0
|
|
|
|
28,500
|
|
|
|
Gross-up6
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Benefit to Employee
|
|
|
4,568,238
|
|
|
|
3,294,815
|
|
|
|
8,622,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert E. Sanchez
|
|
Cash
Severance1
|
|
|
1,050,000
|
|
|
|
0
|
|
|
|
1,400,000
|
|
|
|
Intrinsic Value of
Equity2
|
|
|
8,500
|
|
|
|
1,205,194
|
|
|
|
1,205,194
|
|
|
|
Retirement
Benefits3
|
|
|
0
|
|
|
|
66,367
|
|
|
|
66,367
|
|
|
|
Welfare
Benefits4
|
|
|
14,634
|
|
|
|
0
|
|
|
|
19,512
|
|
|
|
Outplacement/Perquisites5
|
|
|
28,500
|
|
|
|
0
|
|
|
|
28,500
|
|
|
|
Gross-up6
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Benefit to Employee
|
|
|
1,101,634
|
|
|
|
1,271,561
|
|
|
|
2,719,573
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anthony G. Tegnelia
|
|
Cash
Severance1
|
|
|
1,202,250
|
|
|
|
0
|
|
|
|
1,603,000
|
|
|
|
Intrinsic Value of
Equity2
|
|
|
10,625
|
|
|
|
960,013
|
|
|
|
960,013
|
|
|
|
Retirement
Benefits3
|
|
|
0
|
|
|
|
238,143
|
|
|
|
238,143
|
|
|
|
Welfare
Benefits4
|
|
|
14,670
|
|
|
|
0
|
|
|
|
19,560
|
|
|
|
Outplacement/Perquisites5
|
|
|
28,500
|
|
|
|
0
|
|
|
|
28,500
|
|
|
|
Gross-up6
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Benefit to Employee
|
|
|
1,256,045
|
|
|
|
1,198,156
|
|
|
|
2,849,216
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas S. Renehan
|
|
Cash
Severance1
|
|
|
823,200
|
|
|
|
0
|
|
|
|
1,097,600
|
|
|
|
Intrinsic Value of
Equity2
|
|
|
8,500
|
|
|
|
1,217,814
|
|
|
|
1,217,814
|
|
|
|
Retirement
Benefits3
|
|
|
0
|
|
|
|
60,042
|
|
|
|
60,042
|
|
|
|
Welfare
Benefits4
|
|
|
14,616
|
|
|
|
0
|
|
|
|
19,488
|
|
|
|
Outplacement/Perquisites5
|
|
|
28,500
|
|
|
|
0
|
|
|
|
28,500
|
|
|
|
Gross-up6
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Benefit to Employee
|
|
|
874,816
|
|
|
|
1,277,856
|
|
|
|
2,423,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert D. Fatovic
|
|
Cash
Severance1
|
|
|
863,625
|
|
|
|
0
|
|
|
|
1,151,500
|
|
|
|
Intrinsic Value of
Equity2
|
|
|
8,500
|
|
|
|
409,345
|
|
|
|
409,345
|
|
|
|
Retirement
Benefits3
|
|
|
0
|
|
|
|
55,985
|
|
|
|
55,985
|
|
|
|
Welfare
Benefits4
|
|
|
14,598
|
|
|
|
0
|
|
|
|
19,464
|
|
|
|
Outplacement/Perquisites5
|
|
|
28,500
|
|
|
|
0
|
|
|
|
28,500
|
|
|
|
Gross-up6
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Benefit to Employee
|
|
|
915,223
|
|
|
|
465,330
|
|
|
|
1,664,794
|
|
55
|
|
|
1 |
|
Cash severance includes:
(i) base salary; (ii) a tenure related bonus; and
(iii) in a change of control scenario, a COC bonus
(calculated assuming 120% of the target payout), all as
described above. In the event of involuntary termination without
cause, base salary is paid over time in accordance with usual
payroll practices and the tenure related bonus is paid in a lump
sum shortly after termination. In the event of termination in
connection with a change of control, all payments are made in a
lump sum shortly after termination. |
2 |
|
The intrinsic value of the
equity under an involuntary termination without cause reflects
the intrinsic value of the equity awards that continue to vest
during the severance period as provided under our previous
equity plans. Under a change of control, the intrinsic value of
equity reflects the intrinsic value of the accelerated equity.
In each case, the amounts are calculated using the closing price
of our common stock on December 31, 2007
($47.01). |
3 |
|
This amount reflects the
incremental increase in value resulting from the acceleration of
the vesting of the pension restoration plan in the event of a
change of control (whether or not there is a termination of
employment), plus, in the event of a termination in connection
with a change of control, the value of the early retirement
subsidy in our pension plan. Assumed retirement age is the later
of age 55 or the executives age on December 31,
2007. |
4 |
|
Amounts are based on the current
cost to us of providing the named executives current
health, dental and prescription insurance coverage during the
severance period as described above. We continue to pay the
employer portion of the welfare benefits during the applicable
period, provided that the employee must continue to make the
required employee contributions. |
5 |
|
No perquisites are provided
under the new program. Amounts reflect the cost of outplacement
services provided under a Company-sponsored program. |
6 |
|
In the event of an involuntary
termination without cause, a tax
gross-up
applies only to the executive allowance. In the case of a
termination in connection with a change of control, the tax
gross-up
applies to all payments and benefits. The tax
gross-up
payment is made in a lump sum to the employee shortly after
termination. |
DIRECTOR
COMPENSATION
Description of
Director Compensation Program
The key objective of the compensation program for our Board of
Directors is to align the interests of the Board with that of
our shareholders. In addition, our Board compensation program is
designed to attract directors that have the necessary skills,
experience and character to fulfill their responsibility to
oversee management with the goal of enhancing long-term value
for our shareholders and ensuring the continuity and vitality of
our Company. The program is also designed to recognize the
increasing time commitment and potential liability associated
with serving on the board of directors of a public company. All
compensation decisions for our Board of Directors are made by
the Board based in part on recommendations made by the
Compensation Committee and the Governance Committee. Our CEO, in
his role as Chairman of the Board, also reviews the information
to be presented to the Committee and the Board in connection
with our Board compensation program. Directors who are our
employees receive no compensation or benefits for service as a
director other than the right to participate in our Matching
Gifts to Education Program and Directors Charitable Awards
Program, as described below.
During 2007, our directors were paid an annual retainer equal to
$32,000 per year. The annual retainer is paid each year in
January. The directors are given the option to receive all or
any portion of their annual retainer in Ryder common stock that
cannot be sold until six months after the date on which the
person ceases to be a director. The directors also received an
annual committee retainer during 2007 equal to $35,000 per year.
Annual committee retainers are paid in May of each year. During
2007, if a director attended more than eight Board meetings or
more than eight Committee meetings he or she would receive
$1,000 for each additional Board or Committee meeting attended
during the year. Excess meeting fees are paid in December of
each year. During 2007, the Chairs of the Compensation
Committee, Finance Committee and Governance Committee each
received an additional $5,000 per year in Chair fees. The Chair
of the Audit Committee received an additional $10,000 per year.
Chair fees are paid in May of each year and are prorated based
on time served in the Chair position.
During 2007, the directors received $80,000 in restricted stock
units. This grant is made once annually on the date of our
Annual Shareholders Meeting in May. The number of restricted
stock units granted is based on the average of the high and low
sale price of Ryder common stock on the date of grant. The
restricted stock units vest and are paid (either as a lump sum
or in annual installments) upon termination of a directors
service on the Board. The initial grant of restricted stock
units will not vest unless the director has served a minimum of
one year. The units receive dividend equivalents which are
reinvested through our Dividend Reinvestment Program, but do not
have voting rights. Upon the occurrence of a change in control,
as defined in the relevant plan documents, all outstanding
restricted stock units will vest and be paid to the director in
a lump sum. We previously granted stock options to our
directors, but have not granted stock options to directors since
May 2004.
During 2007, our Compensation Committee conducted a
comprehensive review and evaluation of our compensation package
for non-employee directors based on information gathered and
provided by management,
56
Equilar, Steven Hall & Partners and Frederic W. Cook & Co.,
Inc. (Cook). Cook provided a competitive director compensation
analysis using the same 18 company peer group used to
benchmark CEO compensation in 2006 and 2007. The last adjustment
to our director compensation package was approved in May 2004
and effective January 1, 2005. In July 2007, based on
the results of the Committees review and the
recommendations of Cook, our Board of Directors approved the
following adjustments to the total compensation package of our
directors, effective January 1, 2008, in order to better
align our director compensation with the Companys peers
and general industry trends:
|
|
|
|
|
Annual retainer was increased to $45,000
|
|
|
Annual total equity compensation was increased to $90,000
|
|
|
Committee Chair fees for the Audit and Compensation Committee
were increased to $15,000
|
|
|
Committee Chair fees for the Finance and Corporate Governance
and Nominating Committee were increased to $7,500
|
|
|
Excess meeting fees will be paid for attendance in excess of six
meetings for either the Board or a Committee thereof
|
Directors may elect to defer receipt of their cash retainer and
meeting and other fees, which deferred amounts are part of our
general assets and are credited with earnings based on several
investment options selected by the director (including our
common stock). The compensation may be deferred until the later
to occur of a fixed date or termination of Board service, and is
payable in a lump sum or in installments. Upon a change of
control, however, all deferred amounts will be paid immediately
in a lump sum. We do not pay above-market or preferential
earnings on compensation deferred by the directors. Directors
are not eligible to participate in our pension plan or 401(k)
plan.
We maintain a Directors Charitable Awards Program pursuant
to which each director elected prior to January 1,
2005 may designate up to two charitable organizations to
which we will contribute an aggregate of $500,000, in ten annual
installments in the directors name following the
directors death. The program may be funded with the
proceeds of insurance policies and the directors obtain no
financial benefits from the program. All of our directors
elected prior to January 1, 2005, including
Mr. Swienton, currently participate in the program.
Directors may also participate in our matching gifts to
education program available to all employees, under which we
match a directors contributions to eligible educational
institutions up to a maximum of $10,000 per year. Employees are
limited to a maximum of $1,000 per year.
57
2007 Director
Compensation
The table below sets forth the total compensation received by
our non-management Board members in 2007. The amounts in column
(c) below reflect the compensation cost recognized by us in
fiscal year 2007 for financial statement reporting purposes in
accordance with SFAS 123R for (i) restricted stock
units granted to the directors in 2007 and (ii) dividends
on the restricted stock units granted to directors in 2007. The
amounts in column (d) reflect the compensation costs
recognized by us in fiscal year 2007 for financial statement
reporting purposes in accordance with SFAS 123R for stock
options granted prior to 2007. No stock options have been
granted since May 2004.
For additional information regarding the assumptions made in
calculating the amounts reflected in columns (c) and (d),
see the section entitled Share-Based Compensation Fair
Value Assumptions in note 22 to our audited
consolidated financial statements for the year ended
December 31, 2007, included in our Annual Report on
Form 10-K
for the year ended December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
|
|
|
|
Fees Earned
|
|
|
Stock
|
|
|
Option
|
|
|
All Other
|
|
|
(f)
|
|
(a)
|
|
or Paid in Cash
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Total
|
|
Name
|
|
($)1,2,3
|
|
|
($)4
|
|
|
($)5
|
|
|
($)6
|
|
|
($)
|
|
|
John M. Berra
|
|
|
72,000
|
|
|
|
84,551
|
|
|
|
2,855
|
|
|
|
17,414
|
|
|
|
176,820
|
|
David I. Fuente
|
|
|
67,000
|
|
|
|
85,991
|
|
|
|
2,855
|
|
|
|
17,210
|
|
|
|
173,056
|
|
L. Patrick Hassey
|
|
|
67,000
|
|
|
|
82,044
|
|
|
|
0
|
|
|
|
0
|
|
|
|
149,044
|
|
Lynn M. Martin
|
|
|
67,000
|
|
|
|
89,892
|
|
|
|
2,855
|
|
|
|
7,098
|
|
|
|
166,845
|
|
Daniel H.
Mudd7
|
|
|
50,960
|
|
|
|
0
|
|
|
|
2,855
|
|
|
|
6,960
|
|
|
|
60,775
|
|
Luis P. Nieto, Jr.
|
|
|
67,000
|
|
|
|
70,842
|
|
|
|
0
|
|
|
|
0
|
|
|
|
137,842
|
|
Eugene A. Renna
|
|
|
69,000
|
|
|
|
85,016
|
|
|
|
2,855
|
|
|
|
7,590
|
|
|
|
164,461
|
|
Abbie J. Smith
|
|
|
79,000
|
|
|
|
84,551
|
|
|
|
2,855
|
|
|
|
7,414
|
|
|
|
173,820
|
|
E. Follin Smith
|
|
|
69,000
|
|
|
|
82,833
|
|
|
|
0
|
|
|
|
10,000
|
|
|
|
161,833
|
|
Hansel E. Tookes, II
|
|
|
74,000
|
|
|
|
85,016
|
|
|
|
2,855
|
|
|
|
6,960
|
|
|
|
168,831
|
|
Christine A. Varney
|
|
|
72,000
|
|
|
|
85,991
|
|
|
|
2,855
|
|
|
|
4,785
|
|
|
|
165,631
|
|
|
|
|
1 |
|
Includes an annual committee
retainer of $35,000 plus an annual retainer of $32,000; provided
that certain directors elected to receive a portion of their
annual retainer in stock as follows: |
|
|
|
|
|
|
|
|
|
|
|
2007 Cash Taken in
|
|
|
|
|
|
|
Stock ($)
|
|
|
Number of Shares
|
|
|
John M. Berra
|
|
|
15,995
|
|
|
|
304
|
|
Daniel H. Mudd
|
|
|
7,978
|
|
|
|
152
|
|
E. Follin Smith
|
|
|
7,978
|
|
|
|
152
|
|
|
|
|
2 |
|
Includes Committee Chair fees as
follows: Mr. Berra, $5,000; Ms. A. Smith, $10,000;
Mr. Tookes, $5,000; and Ms. Varney, $5,000. |
3 |
|
This column includes an
additional meeting fee of $1,000, paid to members of the Audit
Committee, as follows: Mr. Renna, $2,000; Ms. A.
Smith, $2,000; Ms. E. Smith, $2,000; and Mr. Tookes,
$2,000. |
4 |
|
Includes compensation cost
recognized by the Company for financial statement reporting
purposes in accordance with SFAS 123R for dividends on the
restricted stock units granted to directors in 2007 in the
following amounts: Mr. Berra, $4,598; Mr. Fuente,
$6,037; Mr. Hassey. $2,090; Ms. Martin, $9,938;
Mr. Mudd, $0; Mr. Nieto, $882; Mr. Renna, $5,062;
Ms. A. Smith, $4,598; Ms. E. Smith, $2,879;
Mr. Tookes, $5,062; and Ms. Varney, $6,037.
Compensation expense for restricted stock units was historically
based on assumed years of service to retirement at age 72,
as discussed in our 2007 Proxy Statement. However, because the
restricted stock units do not contain an explicit service
vesting period, except for the initial grant, compensation
expense should have been recognized in the year the restricted
stock units were granted rather than over the assumed years of
service. The one-time impact of accelerating the recognition of
compensation expense on previously issued restricted stock units
was a pre-tax charge of $2 million for 2007. The pre-tax
charge is not reflected in this table. |
58
|
|
|
5 |
|
The following table sets forth
each directors outstanding stock and option awards as of
December 31, 2007. |
|
|
|
|
|
|
|
|
|
|
|
Outstanding
|
|
|
Outstanding
|
|
|
|
Stock Awards
|
|
|
Option Awards
|
|
|
John M. Berra
|
|
|
7,832
|
|
|
|
5,000
|
|
David I. Fuente
|
|
|
12,186
|
|
|
|
23,500
|
|
L. Patrick Hassey
|
|
|
3,076
|
|
|
|
0
|
|
Lynn M. Martin
|
|
|
13,244
|
|
|
|
13,500
|
|
Daniel H. Mudd
|
|
|
0
|
|
|
|
0
|
|
Luis P. Nieto, Jr.
|
|
|
1,546
|
|
|
|
0
|
|
Eugene A Renna
|
|
|
6,961
|
|
|
|
5,000
|
|
Abbie J. Smith
|
|
|
8,264
|
|
|
|
5,000
|
|
E. Follin Smith
|
|
|
4,474
|
|
|
|
0
|
|
Hansel E. Tookes, II
|
|
|
8,080
|
|
|
|
10,000
|
|
Christine A. Varney
|
|
|
12,688
|
|
|
|
15,000
|
|
|
|
|
6 |
|
Consists of (i) benefits
under the Companys Matching Gifts to Education program and
(ii) insurance premiums paid in connection with the
Directors Charitable Award Program. Payments for insurance
premiums related to the Directors Charitable Award Program
were as follows: Mr. Berra, $7,414; Mr. Fuente,
$7,210; Ms. Martin, $7,098; Mr. Mudd, $6,960;
Mr. Renna, $7,590; Ms. A. Smith, $7,414;
Mr. Tookes, $6,960; and Ms. Varney, $4,785. Benefits
under the Companys Matching Gifts to Education program
were as follows: Mr. Berra, $10,000; Mr. Fuente,
$10,000; and Ms. E. Smith, $10,000. As a Director,
Mr. Swienton also participates (at the $10,000 level) in
the Directors Charitable Award Program. The amounts paid
on behalf of Mr. Swienton in connection with these programs
are reflected in the Summary Compensation Table on
page 42. |
|
7 |
|
Mr. Mudd resigned from his
position as a director effective as of May 4,
2007. |
Stock
Ownership Requirements
To further align the interests of our directors and
shareholders, we impose stock ownership requirements on our
directors. Directors are expected to own Ryder stock or stock
equivalents having a minimum value equal to one times such
directors total annual compensation (approximately
$150,000 in 2007). The ownership requirements must be
proportionately satisfied within five years of the
directors election to the Board. As of December 31,
2007, all directors were in compliance with their stock
ownership requirements.
59
APPENDIX A
RYDER SYSTEM,
INC.
2005 EQUITY
COMPENSATION PLAN
The purpose of this 2005 Equity Compensation Plan (the
Plan) is to advance the interests of the Company and
its shareholders by providing a means (a) to attract,
retain, and reward directors, officers, other employees, and
persons who provide services to the Company and its
Subsidiaries, (b) to link compensation to measures of the
Companys performance in order to provide additional
incentives, including stock-based incentives and cash-based
incentives, to such persons for the creation of shareholder
value, and (c) to enable such persons to acquire or
increase a proprietary interest in the Company in order to
promote a closer identity of interests between such persons and
the Companys shareholders. The Plan is intended to qualify
certain compensation awarded under the Plan as
performance-based compensation under Code
Section 162(m) to the extent deemed appropriate by the
Committee which administers the Plan.
Capitalized terms used in the Plan and not defined elsewhere in
the Plan shall have the meaning set forth in this Section.
2.1 Award means a compensatory award
made pursuant to the Plan pursuant to which a Participant
receives, or has the opportunity to receive, Shares or cash.
2.2 Award Agreement means a written
document prescribed by the Committee and provided to a
Participant evidencing the grant of an Award under the Plan.
2.3 Beneficiary means the person(s) or
trust(s) entitled by will or the laws of descent and
distribution to receive any rights with respect to an Award that
survive such Participants death, provided that if at the
time of a Participants death, the Participant had on file
with the Committee a written designation of a person(s) or
trust(s) to receive such rights, then such person(s) (if still
living at the time of the Participants death) or trust(s)
shall be the Beneficiary for purposes of the Plan.
2.4 Board means the Board of Directors
of the Company.
2.5 Code means the Internal Revenue Code
of 1986, as amended, including regulations thereunder and
successor provisions and regulations thereto.
2.6 Committee means the committee
appointed by the Board to administer the Plan or the Board,
where the Board is acting as the Committee or performing the
functions of the Committee, as set forth in Section 3.
2.7 Company means Ryder System, Inc., a
company organized under the laws of the state of Florida.
2.8 Fair Market Value means, with
respect to the Shares, the average of the highest and lowest
sale price for the Shares as reported by the composite
transaction reporting system for securities listed on the New
York Stock Exchange on the date as of which such determination
is being made or on the most recently preceding date on which
there was such a sale.
2.9 Full-Value Award means any Award
granted under the Plan other than (i) a stock option that
requires the Participant to pay (in cash, foregone cash
compensation, or other consideration, other than the performance
of services, designated as acceptable by the Committee) at least
the Fair Market Value of the Shares subject thereto as
determined on the date of grant of an Award or (ii) a stock
appreciation right that is based solely on the appreciation of
the Shares underlying the Award from the Fair Market Value of
the Shares as determined on the date of grant of the Award.
2.10 Non-Employee Director means a
member of the Board who is not otherwise employed by the Company
or any Subsidiary.
A-1
2.11 Participant means any employee or
director who has been granted an Award under the Plan.
2.12 Prior Plans means the Ryder System,
Inc. 1995 Stock Incentive Plan, the Ryder System, Inc. Stock for
Merit Increase Replacement Plan and the Ryder System, Inc. Board
of Directors Stock Award Plan.
2.13 Qualified Member means a member of
the Committee who is a non-employee director of the
Company as defined in
Rule 16b-3(b)(3)
under the United States Securities Exchange Act of 1934 and an
outside director within the meaning of Regulation
§ 1.162-27 under Code Section 162(m).
2.14 Shares means common shares of the
Company and such other securities as may be substituted or
resubstituted for Shares pursuant to Section 7.
2.15 Subsidiary means an entity that is,
either directly or through one or more intermediaries,
controlled by the Company.
3.1 Committee. The Compensation Committee
of the Board shall administer the Plan, unless the Board shall
appoint a different committee. At any time that a member of the
Committee is not a Qualified Member, (i) any action of the
Committee relating to an Award intended by the Committee to
qualify as performance-based compensation within the
meaning of Code Section 162(m) and regulations thereunder
may be taken by a subcommittee, designated by the Committee or
the Board, composed solely of two or more Qualified Members, and
(ii) any action relating to an Award granted or to be
granted to a Participant who is then subject to Section 16
of the Securities Exchange Act of 1934 in respect of the Company
may be taken either by the Board, a subcommittee of the
Committee consisting of two or more Qualified Members or by the
Committee but with each such member who is not a Qualified
Member abstaining or recusing himself or herself from such
action, provided that, upon such abstention or recusal, the
Committee remains composed of two or more Qualified Members.
Such action, authorized by such a subcommittee or by the
Committee upon the abstention or recusal of such non-Qualified
Member(s), shall be the action of the Committee for purposes of
the Plan. Other provisions of the Plan notwithstanding, the
Board may perform any function of the Committee under the Plan,
and that authority specifically reserved to the Board under the
terms of the Plan, the Companys Articles of Incorporation,
By-Laws, or applicable law shall be exercised by the Board and
not by the Committee. The Board shall serve as the Committee in
respect of any Awards made to any Non-Employee Director.
3.2 Powers and Duties of Committee. In
addition to the powers and duties specified elsewhere in the
Plan, the Committee shall have full authority and discretion to:
(a) adopt, amend, suspend, and rescind such rules and
regulations and appoint such agents as the Committee may deem
necessary or advisable to administer the Plan;
(b) correct any defect or supply any omission or reconcile
any inconsistency in the Plan and to construe and interpret the
Plan and any Award, rules and regulations, Award Agreement, or
other instrument hereunder;
(c) make determinations relating to eligibility for and
entitlements in respect of Awards, and to make all factual
findings related thereto; and
(d) make all other decisions and determinations as may be
required under the terms of the Plan or as the Committee may
deem necessary or advisable for the administration of the Plan.
All determinations and decisions of the Committee shall be final
and binding upon a Participant or any person claiming any rights
under the Plan from or through any Participant, and the
Participant or such other person may not further pursue his or
her claim in any court of law or equity or other arbitral
proceeding.
3.3 Delegation by Committee. Except to
the extent prohibited by applicable law or the applicable rules
of a stock exchange, or as provided in Section 5.2, the
Committee may delegate, on such terms and conditions as it
determines in its sole and absolute discretion, to one or more
senior executives of the Company (i) the authority to make
grants of Awards to officers (other than executive officers) and
employees of the Company and any Subsidiary and (ii) other
administrative responsibilities. Any such allocation or
delegation may be revoked by the Committee at any time.
A-2
3.4 Limitation of Liability. Each member
of the Committee shall be entitled to, in good faith, rely or
act upon any report or other information furnished to him by any
officer or other employee of the Company or any Subsidiary, the
Companys independent certified public accountants, or any
executive compensation consultant, legal counsel, or other
professional retained by the Company to assist in the
administration of the Plan. No member of the Committee, nor any
officer or employee of the Company acting on behalf of the
Committee, shall be personally liable for any action,
determination, or interpretation taken or made in good faith
with respect to the Plan, and all members of the Committee and
any officer or employee of the Company acting on behalf of the
Committee or members thereof shall, to the extent permitted by
law, be fully indemnified and protected by the Company with
respect to any such action, determination, or interpretation.
4.1 Eligibility. The Committee shall have
the discretion to select Award recipients from among the
following categories of eligible recipients:
(i) individuals who are employees (including officers) of
the Company or any Subsidiary, and (ii) Non-Employee
Directors.
4.2 Type of Awards. The Committee shall
have the discretion to determine the type of Awards to be
granted under the Plan. Such Awards may be in a form payable in
either Shares or cash, including, but not limited to, options to
purchase Shares, restricted Shares, bonus Shares, appreciation
rights, Share units, performance units and dividend equivalents.
The Committee is authorized to grant Awards as a bonus, or to
grant Awards in lieu of obligations of the Company or any
Subsidiary to pay cash or grant other awards under other plans
or compensatory arrangements, to the extent permitted by such
other plans or arrangements. Shares issued pursuant to an Award
in the nature of a purchase right (e.g., options) shall
be purchased for such consideration, paid for at such times, by
such methods, and in such forms, including cash, Shares, other
Awards, or other consideration, as the Committee shall determine.
4.3 Terms and Conditions of Awards. The
Committee shall determine the size of each Award to be granted
(including, where applicable, the number of Shares to which an
Award will relate), and all other terms and conditions of each
such Award (including, but not limited to, any exercise price,
grant price, or purchase price, any restrictions or conditions
relating to transferability, forfeiture, exercisability, or
settlement of an Award, and any schedule or performance
conditions for the lapse of such restrictions or conditions, and
accelerations or modifications thereof, based in each case on
such considerations as the Committee shall determine). The
Committee may determine whether, to what extent, and under what
circumstances an Award may be settled, or the exercise price of
an Award may be paid, in cash, Shares, other Awards, or other
consideration, or an Award may be canceled, forfeited, or
surrendered. The right of a Participant to exercise or receive a
grant or settlement of any Award, and the timing thereof, may be
subject to such performance conditions as may be specified by
the Committee. The Committee may use such business criteria and
measures of performance as it may deem appropriate in
establishing performance conditions, and may exercise its
discretion to reduce or increase the amounts payable under any
Award subject to performance conditions, except as limited under
Section 5.1 in the case of a Performance Award intended to
qualify under Code Section 162(m). Notwithstanding the
foregoing, (i) the price per Share at which Shares may be
purchased upon the exercise of a stock option shall not be less
than one hundred percent (100%) of the Fair Market Value on the
date of grant of such stock option, (ii) with respect to
stock appreciation rights, the price per Share from which stock
appreciation is measured shall not be less than one hundred
percent (100%) of the Fair Market Value of such Share on the
date of grant of the stock appreciation right, (iii) the
period during which an Award may remain outstanding shall not
exceed seven (7) years from the date the Award is granted,
(iv) no Full-Value Award issued under the Plan (other than
Full-Value Awards that are either performance-based or granted
to Non-Employee Directors) shall fully vest within three
(3) years from the date of grant of such Full-Value Award,
(v) no Full-Value Award issued under the Plan that is
performance-based shall fully vest within one (1) year from
the date of grant of such Full-Value Award and (vi) any
Awards granted to Non-Employee Directors shall be granted to all
Non-Employee Directors on a non-discretionary basis based on a
formula approved by the Committee.
4.4 Option Repricing. As to any Award
granted as an option to purchase Shares or an appreciation right
payable in Shares, the Committee is not authorized to
subsequently reduce the applicable exercise price relating to
such Award, or take such other action as may be considered a
repricing of such Award under generally accepted accounting
principles.
A-3
4.5 Stand-Alone, Additional, Tandem, and Substitute
Awards. Subject to Section 4.4, Awards
granted under the Plan may, in the discretion of the Committee,
be granted either alone or in addition to, in tandem with, or in
substitution or exchange for, any other Award or any award
granted under another plan of the Company, any Subsidiary, or
any business entity to be acquired by the Company or a
Subsidiary, or any other right of a Participant to receive
payment from the Company or any Subsidiary, and in granting a
new Award, the Committee may determine that the value of any
surrendered Award or award may be applied to reduce the exercise
price of any option or appreciation right or purchase price of
any other Award.
5.1 Performance Awards Granted to Designated Covered
Employees. If the Committee determines that an
Award to be granted to an eligible person who is designated by
the Committee as likely to be a Covered Employee (as defined
below) should qualify as performance-based
compensation for purposes of Code Section 162(m), the
grant, exercise,
and/or
settlement of such Award (a Performance Award) shall
be contingent upon achievement of preestablished performance
goals and other terms set forth in this Section 5.1. This
Section 5.1 shall not apply to Awards that otherwise
qualify as performance-based compensation by reason
of Regulation § 1.162-27(e)(2)(vi) (relating to
certain stock options and stock appreciation rights).
(a) Performance Goals Generally. The
performance goals for such Performance Awards shall consist of
one or more business criteria and a targeted level or levels of
performance with respect to each such criteria, as specified by
the Committee consistent with this Section 5.1. Performance
goals shall be objective and shall otherwise meet the
requirements of Code Section 162(m) and regulations
thereunder (including Regulation § 1.162-27 and
successor regulations thereto), including the requirement that
the level or levels of performance targeted by the Committee
result in the achievement of performance goals being
substantially uncertain. The Committee may determine
that such Performance Awards shall be granted, exercised,
and/or
settled upon achievement of any one performance goal or that two
or more of the performance goals must be achieved as a condition
to grant, exercise,
and/or
settlement of such Performance Awards. Performance goals may
differ for Performance Awards granted to any one Participant or
to different Participants.
(b) Business Criteria. One or more of the
following business criteria for the Company, on a consolidated
basis,
and/or for
specified Subsidiaries, divisions, or other business units of
the Company (where the criteria are applicable), shall be used
by the Committee in establishing performance goals for such
Performance Awards: (1) earnings per share;
(2) revenues; (3) cash flow; (4) cash flow return
on investment; (5) return on net assets, return on assets,
return on investment, return on invested capital, return on
equity; profitability; (6) economic value added
(EVA); (7) operating margins or profit margins;
(8) income or earnings before or after taxes; pretax
earnings; pretax earnings before interest, depreciation and
amortization; operating earnings; pretax operating earnings,
before or after interest expense and before or after incentives,
and extraordinary or special items; net income; (9) total
stockholder return or stock price; (10) book value per
share; (11) expense management; improvements in capital
structure; working capital; costs; and (12) any of the
above goals as compared to the performance of a published or
special index deemed applicable by the Committee including, but
not limited to, the Standard & Poors 500 Stock
Index or a group of comparator companies. EVA means the amount
by which a business units earnings exceed the cost of the
equity and debt capital used by the business unit during the
performance period, as determined by the Committee. Income of a
business unit may be before payment of bonuses, capital charges,
non-recurring or extraordinary income or expense, and general
and administrative expenses for the performance period, if so
specified by the Committee.
(c) Performance Period; Timing for Establishing
Performance Award Terms. Achievement of
performance goals in respect of such Performance Awards shall be
measured over a performance period of up to ten years, as
specified by the Committee. Performance goals, amounts payable
upon achievement of such goals, and other material terms of
Performance Awards shall be established by the Committee
(i) while the performance outcome for that performance
period is substantially uncertain and (ii) no more than
90 days after the commencement of the performance period to
which the performance goal relates or, if less, the number of
days which is equal to 25 percent of the relevant
performance period.
(d) Performance Award Pool. The Committee
may establish a Performance Award pool, which shall be an
unfunded pool, for purposes of measuring performance of the
Company in connection with Performance Awards. The amount of
such Performance Award pool shall be based upon the achievement
of a performance goal or
A-4
goals based on one or more of the business criteria set forth in
Section 5.1(b) hereof during the given performance period,
as specified by the Committee in accordance with
Section 5.1(c) hereof. The Committee may specify the amount
of the Performance Award pool as a percentage of any of such
business criteria, a percentage thereof in excess of a threshold
amount, or as another amount which need not bear a strictly
mathematical relationship to such business criteria. In such
case, Performance Awards may be granted as rights to payment of
a specified portion of the Award pool, and such grants shall be
subject to the requirements of Section 5.1(c).
(e) Settlement of Performance Awards; Other
Terms. Settlement of such Performance Awards
shall be in cash, Shares, other Awards, in the discretion of the
Committee. The Committee may, in its discretion, reduce the
amount of a settlement otherwise to be made in connection with
such Performance Awards, but may not exercise discretion to
increase any such amount payable to a Covered Employee in
respect of a Performance Award subject to this Section 5.1.
The Committee shall specify the circumstances in which such
Performance Awards shall be paid or forfeited in the event of
termination of employment by the Participant prior to the end of
a performance period or settlement of Performance Awards.
(f) Impact Of Extraordinary Items Or Changes In
Accounting. To the extent applicable, the
determination of achievement of performance goals for
Performance Awards shall be made in accordance with U.S
generally accepted accounting principles (GAAP) and
a manner consistent with the methods used in the Companys
audited financial statements, and, unless the Committee decides
otherwise within the period described in Section 5.1(c),
without regard to (i) extraordinary items as determined by
the Companys independent public accountants in accordance
with GAAP, (ii) changes in accounting methods, or
(iii) non-recurring acquisition expenses and restructuring
charges. Notwithstanding the foregoing, in calculating operating
earnings or operating income (including on a per share basis),
the Committee may, within the period described in
Section 5.1(c), provide that such calculation shall be made
on the same basis as reflected in a release of the
Companys earnings for a previously completed period as
specified by the Committee.
5.2 Written
Determinations. Determinations by the Committee
as to the establishment of performance goals, the amount
potentially payable in respect of Performance Awards, the
achievement of performance goals relating to Performance Awards,
and the amount of any final Performance Award shall be recorded
in writing. Specifically, the Committee shall certify in
writing, in a manner conforming to applicable regulations under
Code Section 162(m), prior to settlement of each
Performance Award, that the performance goals and other material
terms of the Performance Award upon which settlement of the
Performance Award was conditioned have been satisfied. The
Committee may not delegate any responsibility relating to such
Performance Awards, and the Board shall not perform such
functions at any time that the Committee is composed solely of
Qualified Members.
5.3 Status of Section 5.1 Awards under Code
Section 162(m). It is the intent of the
Company that Performance Awards under Section 5.1
constitute performance-based compensation within the
meaning of Code Section 162(m) and regulations thereunder.
Accordingly, the terms of Sections 5.1, 5.2 and 5.3,
including the definitions of Covered Employee and other terms
used therein, shall be interpreted in a manner consistent with
Code Section 162(m) and regulations thereunder. The
foregoing notwithstanding, because the Committee cannot
determine with certainty whether a given Participant will be a
Covered Employee with respect to a fiscal year that has not yet
been completed, the term Covered Employee as used
herein shall mean only a person designated by the Committee, at
the time of grant of a Performance Award, as likely to be a
Covered Employee with respect to a specified fiscal year. If any
provision of the Plan as in effect on the date of adoption of
any agreements relating to Performance Awards does not comply or
is inconsistent with the requirements of Code
Section 162(m) or regulations thereunder, such provision
shall be construed or deemed amended to the extent necessary to
conform to such requirements.
6.1 Aggregate Number of Shares Available for
Awards. The maximum aggregate number of Shares
that may be delivered to Participants or their Beneficiaries
pursuant to all Awards granted under the Plan shall be 8,000,000
(which represents 1,900,000 Shares that were available for
issuance under the Prior Plans plus 6,100,000 additional
Shares), provided, however, that no more than
1,500,000 Shares may be issued pursuant to Full-Value
Awards. No further awards will be made under the Prior Plans.
Any Shares underlying any award under the Prior Plans or any
Award under the Plan that is cancelled, forfeited, lapses or is
otherwise terminated without an issuance of Shares being made
thereunder will no longer be counted against the foregoing
maximum
A-5
share limitation and may again be made subject to Awards under the Plan; provided,
however, that upon the exercise of a stock appreciation
right, the full number of Shares underlying such stock
appreciation right on the date of grant will be counted against
the aggregate Share limitation irrespective of the manner in
which such stock appreciation right is settled.
6.2 Per Participant Limitation on Share-Based
Awards. In any calendar year, no Participant may
be granted Awards that relate to more than 500,000 Shares.
This Section 6.2 shall apply only with respect to Awards
that are denominated by a specified number of Shares, even if
the Award may be settled in cash or a form other than Shares. If
the number of Shares ultimately payable in respect of an Award
is a function of future achievement of performance targets, then
for purposes of this limitation, the number of Shares to which
such Award relates shall equal the number of Shares that would
be payable assuming maximum performance was achieved.
6.3 Per Participant Limitation on Other
Awards. In any calendar year, no Participant may
be granted Awards not otherwise described in Section 6.2
that can be settled for cash, Shares or other consideration
having a value in excess of $5,000,000.
In the event of any change in the outstanding Shares by reason
of any reorganization, recapitalization, merger, amalgamation,
consolidation, spin-off, combination or exchange of Shares,
repurchase, liquidation, dissolution or other corporate
exchange, any large, special and non-recurring dividend or
distribution to shareholders, or other similar corporate
transaction, the Committee may make such substitution or
adjustment, if any, as it deems to be equitable and in order to
preserve, without enlarging, the rights of Participants, as to
(i) the number and kind of Shares which may be delivered
pursuant to Sections 6.1 and 6.2, (ii) the number and
kind of Shares subject to or deliverable in respect of
outstanding Awards, and (iii) the exercise price, grant
price or purchase price relating to any Award. The Committee
will make such substitutions or adjustments including as
described in (i), (ii) or (iii) above as it deems fair
and equitable to the Participants as a result of any Share
dividend or split declared by the Company. In addition, the
Committee is authorized to make adjustments in the terms and
conditions of, and the criteria included in, Awards (including
cancellation of Awards in exchange for the intrinsic (i.e.,
in-the-money)
value, if any, of the vested portion thereof, substitution of
Awards using securities or other obligations of a successor or
other entity, acceleration of the expiration date for Awards, or
adjustment to performance goals in respect of Awards) in
recognition of unusual or nonrecurring events (including events
described in the preceding sentence, as well as acquisitions and
dispositions of businesses and assets) affecting the Company,
any Subsidiary or any business unit, or the financial statements
of the Company or any Subsidiary, or in response to changes in
applicable laws, regulations, or accounting principles.
Notwithstanding the foregoing, if any such event will result in
the acquisition of all or substantially all of the
Companys outstanding Shares, then if the document
governing such acquisition (e.g., merger agreement)
specifies the treatment of outstanding Awards, such treatment
shall govern without the need for any action by the Committee.
8.1 Compliance with Laws and
Obligations. The Company shall not be obligated
to issue or deliver Shares in connection with any Award or take
any other action under the Plan in a transaction subject to the
registration requirements of any applicable securities law, any
requirement under any listing agreement between the Company and
any securities exchange or automated quotation system, or any
other law, regulation, or contractual obligation of the Company,
until the Company is satisfied that such laws, regulations, and
other obligations of the Company have been complied with in
full. Certificates representing Shares issued under the Plan
will be subject to such stop-transfer orders and other
restrictions as may be applicable under such laws, regulations,
and other obligations of the Company, including any requirement
that a legend or legends be placed thereon.
8.2 Limitations on
Transferability. Awards and other rights under
the Plan will not be transferable by a Participant except to a
Beneficiary in the event of the Participants death (to the
extent any such Award, by its terms, survives the
Participants death), and, if exercisable, shall be
exercisable during the lifetime of a Participant only by such
Participant or his guardian or legal representative;
provided, however, that such Awards and other rights may
be transferred during the lifetime of the Participant, for
purposes of the Participants estate planning or other
purposes consistent with the purposes of the Plan (as determined
by the Committee), and may be exercised by such transferees in
accordance with the terms of such Award, but only if and to the
extent permitted by the Committee. Awards and other rights under
the Plan may not be pledged, mortgaged, hypothecated, or
A-6
otherwise encumbered, and shall not be subject to the claims of creditors. A
Beneficiary, transferee, or other person claiming any rights
under the Plan from or through any Participant shall be subject
to all terms and conditions of the Plan and any Award Agreement
applicable to such Participant, except as otherwise determined
by the Committee, and to any additional terms and conditions
deemed necessary or appropriate by the Committee.
8.3 No Right to Continued Employment; Leaves of
Absence. Neither the Plan, the grant of any
Award, nor any other action taken hereunder shall be construed
as giving any employee, consultant, director, or other person
the right to be retained in the employ or service of the Company
or any of its Subsidiaries (for the vesting period or any other
period of time), nor shall it interfere in any way with the
right of the Company or any of its Subsidiaries to terminate any
persons employment or service at any time. Unless
otherwise specified in the applicable Award Agreement,
(i) an approved leave of absence shall not be considered a
termination of employment or service for purposes of an Award
under the Plan, and (ii) any Participant who is employed by
or performs services for a Subsidiary shall be considered to
have terminated employment or service for purposes of an Award
under the Plan if such Subsidiary is sold or no longer qualifies
as a Subsidiary of the Company, unless such Participant remains
employed by the Company or another Subsidiary.
8.4 Taxes. The Company and any Subsidiary
is authorized to withhold from any delivery of Shares in
connection with an Award, any other payment relating to an
Award, or any payroll or other payment to a Participant, amounts
of withholding and other taxes due or potentially payable in
connection with any transaction involving an Award, and to take
such other action as the Committee may deem advisable to enable
the Company, its Subsidiaries and Participants to satisfy
obligations for the payment of withholding taxes and other tax
obligations relating to any Award. This authority shall include
authority to withhold or receive Shares or other consideration
and to make cash payments in respect thereof in satisfaction of
withholding tax obligations.
8.5 Changes to the Plan and Awards. The
Board may amend, suspend, discontinue, or terminate the Plan or
the Committees authority to grant Awards under the Plan
without the consent of shareholders or Participants, except that
any amendment shall be subject to the approval of the
Companys shareholders at or before the next annual meeting
of shareholders for which the record date is after the date of
such Board action if (i) it materially modifies the terms
of the Plan or (ii) such shareholder approval is required
by any applicable law, regulation or stock exchange rule. The
Board may otherwise, in its discretion, determine to submit
other such amendments to shareholders for approval; provided,
however, that, without the consent of an affected
Participant, no such action may materially impair the rights of
such Participant under any Award theretofore granted. The
Committee may amend, suspend, discontinue, or terminate any
Award theretofore granted and any Award Agreement relating
thereto; provided, however, that, without the consent of
an affected Participant, no such action may materially impair
the rights of such Participant under such Award. Any action
taken by the Committee pursuant to Section 7 shall not be
treated as an action described in this Section 8.5.
8.6 No Right to Awards; No Shareholder
Rights. No Participant or other person shall have
any claim to be granted any Award under the Plan, and there is
no obligation for uniformity of treatment of Participants,
employees, consultants, or directors. No Award shall confer on
any Participant any of the rights of a shareholder of the
Company unless and until Shares are duly issued or transferred
and delivered to the Participant in accordance with the terms of
the Award.
8.7 Unfunded Status of Awards; Creation of
Trusts. The Plan is intended to constitute an
unfunded plan for incentive compensation. With
respect to any payments not yet made to a Participant pursuant
to an Award, nothing contained in the Plan or any Award shall
give any such Participant any rights that are greater than those
of a general creditor of the Company; provided, however,
that the Committee may authorize the creation of trusts or make
other arrangements to meet the Companys obligations under
the Plan to deliver cash, Shares, other Awards, or other
consideration pursuant to any Award, which trusts or other
arrangements shall be consistent with the unfunded
status of the Plan unless the Committee otherwise determines.
8.8 Nonexclusivity of the Plan. Neither
the adoption of the Plan by the Board nor the submission of the
Plan or of any amendment to shareholders for approval shall be
construed as creating any limitations on the power of the Board
to adopt such other compensatory arrangements as it may deem
desirable, including the granting of awards otherwise than under
the Plan, and such arrangements may be either applicable
generally or only in specific cases.
A-7
8.9 Successors and Assigns. The Plan and
Award Agreements may be assigned by the Company to any successor
to the Companys business. The Plan and any applicable
Award Agreement shall be binding on all successors and assigns
of the Company and a Participant, including any permitted
transferee of a Participant, the Beneficiary or estate of such
Participant and the executor, administrator or trustee of such
estate, or any receiver or trustee in bankruptcy or
representative of the Participants creditors.
8.10 Governing Law. The Plan and all
Award Agreements shall be governed by and construed in
accordance with the laws of the State of Florida, without giving
effect to any choice of law or conflict of law provision or rule
(whether of the State of Florida or any other jurisdiction) that
would cause the application of the laws of any jurisdiction
other than the State of Florida.
8.11 Severability of Provisions. If any
provision of the Plan shall be held invalid or unenforceable,
such invalidity or unenforceability shall not affect any other
provisions hereof, and the Plan shall be construed and enforced
as if such provisions had not been included.
8.12 Plan Termination. Unless earlier
terminated by the Board, the Plan shall terminate on the day
before the tenth anniversary of the later of the date the
Companys shareholders originally approved the Plan
(May 6, 2005) or the date of any subsequent
shareholder approval of the Plan. Upon any such termination of
the Plan, no new authorizations of grants of Awards may be made,
but then-outstanding Awards shall remain outstanding in
accordance with their terms, and the Committee otherwise shall
retain its full powers under the Plan with respect to such
Awards.
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Amended:
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December 14, 2006
February 8, 2008
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A-8
APPENDIX B
MERCER BENCHMARK
DATABASE EXECUTIVE POSITIONS
PARTICIPANT LIST
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21ST CENTURY ONCOLOGY
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7-ELEVEN, INC.
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A. T. KEARNEY, INC.
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AAA NATIONAL OFFICE
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ABBOTT LABORATORIES
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ABM INDUSTRIES, INC.
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ABM INDUSTRIES, INC. ENGINEERING
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ABM INDUSTRIES, INC. JANITORIAL
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ABM INDUSTRIES, INC. PARKING SERVICES
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ABS
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ABS CAPITAL PARTNERS
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ABT ASSOCIATES, INC.
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ACC CAPITAL HOLDINGS
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ACCENTURE
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ACCO BRANDS, INC.
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ACCOR NORTH AMERICA, INC.
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ACCREDITED HOME LENDERS, INC.
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ACE INA
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ACERGY US, INC.
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ADAMS RESPIRATORY THERAPEUTICS
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ADECCO
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ADESA, INC.
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ADVANTA CORPORATION
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ADVENTIST HEALTH
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ADVENTIST HEALTH SYSTEM
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ADVENTIST HEALTH SYSTEM FLORIDA HOSPITAL
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ADVENTIST HEALTH SYSTEM SHAWNEE MISSION MEDICAL
CENTER
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ADVO, INC.
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ADVOCATE HEALTHCARE
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AEGIS MORTGAGE CORPORATION
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AEGIS MORTGAGE CORPORATION AEGIS LENDING CORPORATION
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AEGIS MORTGAGE CORPORATION AEGIS WHOLESALE
CORPORATION
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AEGON USA COMMONWEALTH GENERAL
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AEGON USA LIFE INVESTORS INSURANCE
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AERONIX, INC.
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AETNA, INC.
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AFLAC INCORPORATED
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AG PROCESSING, INC.
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AGL RESOURCES
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AGNESIAN HEALTHCARE
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AIG
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AIPSO
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AIR FRAME MANUFACTURING & SUPPLY COMPANY, INC.
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AKER KVAERNER
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AKZO NOBEL, INC.
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ALABAMA GAS CORPORATION
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ALCOA, INC.
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ALCON LABORATORIES, INC.
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ALERIS INTERNATIONAL, INC.
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ALEXANDER & BALDWIN, INC.
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ALEXANDER & BALDWIN, INC. A&B PROPERTIES,
INC.
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ALEXANDER & BALDWIN, INC. HAWAIIAN
COMMERCIAL AND SUGAR COMPANY
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ALEXANDER & BALDWIN, INC. KAHULUI TRUCKING
& STORAGE, INC.
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ALEXANDER & BALDWIN, INC. KAUAI COFFEE COMPANY,
INC.
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ALEXANDER & BALDWIN, INC. KAUAI COMMERCIAL
COMPANY, INCORPORATED
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ALLEGHENY COUNTY SANITARY AUTHORITY
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ALLEGHENY ENERGY
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ALLIANCE DATA SYSTEMS
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ALLIANCE DATA SYSTEMS CPC
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ALLIANCE DATA SYSTEMS EPSILON
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ALLIANCE DATA SYSTEMS NETWORK SERVICES
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ALLIANCE DATA SYSTEMS RETAIL
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ALLIANCE DATA SYSTEMS THE MAIL |