10-K405 1 RYDER SYSTEM FORM 10-K405 12/31/94 1 ================================================================================ FORM 10-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 (NO FEE REQUIRED) FOR THE TRANSITION PERIOD FROM TO -------------- ------------- Commission file number 1-4364 RYDER SYSTEM, INC. (Exact name of registrant as specified in its charter) FLORIDA 59-0739250 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3600 N.W. 82 AVENUE, MIAMI, FLORIDA 33166 (305) 593-3726 (Address of principal executive (Telephone number offices including zip code) including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: YES X NO --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K: [ X ] --- The aggregate market value of the voting stock held by non-affiliates of the registrant computed by reference to the price at which the stock was sold as of January 31, 1995, was $1,697,753,340. The number of shares of Ryder System, Inc. Common Stock ($.50 par value) outstanding as of January 31, 1995, was 78,766,628.
Documents Incorporated by Part of Form 10-K into which Reference into this Report Document is Incorporated -------------------------- ---------------------------- Ryder System, Inc. 1994 Annual Parts I, II and IV Report to Shareholders* Ryder System, Inc. 1995 Proxy Part III Statement
*The Ryder System, Inc. 1994 Annual Report to Shareholders is incorporated herein only to the extent specifically stated. ================================================================================ [Cover page 1 of 3 pages] 2 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class of securities Exchange on which registered --------------------------------- ---------------------------- Ryder System, Inc. Common Stock New York Stock Exchange ($.50 par value) and Preferred Pacific Stock Exchange Share Purchase Rights Chicago Stock Exchange (the Rights are not currently exercisable or transferable apart from the Common Stock) Ryder System, Inc. 8 3/4% Series E New York Stock Exchange Extendible Notes, due July 1, 2000 Ryder System, Inc. 9% Series G Bonds, New York Stock Exchange due May 15, 2016 Ryder System, Inc. 8 3/8% Series H Bonds, New York Stock Exchange due February 15, 2017 Ryder System, Inc. 8 3/4% Series J Bonds, New York Stock Exchange due March 15, 2017 Ryder System, Inc. 9 7/8% Series K Bonds, New York Stock Exchange due May 15, 2017 Ryder System, Inc. 9 1/4% Series N Notes, None due May 15, 2001 Ryder System, Inc. Medium-Term Notes None due from 9 months to 10 years from date of issue at rate based on market rates at time of issuance Ryder System, Inc. Medium-Term Notes, None Series 2, due from 9 months to 10 years from date of issue at rate based on market rates at time of issuance Ryder System, Inc. Medium-Term Notes, None Series 6, due from 9 months to 30 years from date of issue at rate based on market rates at time of issuance
[Cover page 2 of 3 pages] 3
Title of each class of securities Exchange on which registered --------------------------------- ---------------------------- Ryder System, Inc. Medium-Term Notes, None Series 7, due from 9 months to 30 years from date of issue at rate based on market rates at time of issuance Ryder System, Inc. Medium-Term Notes, None Series 8, due from 9 months to 30 years from date of issue at rate based on market rates at time of issuance Ryder System, Inc. Medium-Term Notes, None Series 9, due from 9 months to 30 years from date of issue at rate based on market rates at time of issuance Ryder System, Inc. Medium-Term Notes, None Series 10, due from 9 months to 30 years from date of issue at rate based on market rates at time of issuance Ryder System, Inc. Medium-Term Notes, None Series 11, due from 9 months to 30 years from date of issue at rate based on market rates at time of issuance SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
[Cover page 3 of 3 pages] 4 RYDER SYSTEM, INC. Form 10-K Annual Report TABLE OF CONTENTS
Page No. -------- PART I Item 1 Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Item 2 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Item 3 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Item 4 Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . 10 PART II Item 5 Market for Registrant's Common Equity and Related Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Item 6 Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . 11 Item 8 Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . 11 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . . 11 PART III Item 10 Directors and Executive Officers of the Registrant . . . . . . . . . . . . 12 Item 11 Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Item 12 Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Item 13 Certain Relationships and Related Transactions . . . . . . . . . . . . . . 12 PART IV Item 14 Exhibits, Financial Statement Schedules, and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4 5 PART I ITEM 1. BUSINESS General Ryder System, Inc. ("the Company") was incorporated in Florida in 1955. Through its subsidiaries, the Company engages primarily in the following businesses: 1) full service leasing and short-term rental of trucks, tractors, and trailers; 2) dedicated logistics services; 3) public transit management and student transportation; and 4) transportation of new automobiles and trucks. The Company's main operating segments are Vehicle Leasing & Services and Automotive Carriers. General Motors Corporation ("GM") is the largest single customer of the Company, accounting for approximately 10%, 11%, and 12% of consolidated revenue of the Company in 1994, 1993 and 1992, respectively. At December 31, 1994, the Company and its subsidiaries had a fleet of 188,831 vehicles and 43,095 employees.(1) Segment Information Financial information about industry segments is incorporated by reference from the table "Selected Financial and Operational Data" on page 32, and "Notes to Consolidated Financial Statements - Segment Information" on page 46, of the Ryder System, Inc. 1994 Annual Report to Shareholders. Vehicle Leasing & Services The Vehicle Leasing & Services Division, comprised of Ryder Truck Rental, Inc. ("RTR"), Ryder Dedicated Logistics, Inc., and the Ryder Public Transportation Services group of companies, engages in a variety of highway transportation services including full service truck leasing, dedicated logistics services, commercial and consumer truck rental, truck maintenance, student transportation, and public transit management, operations and maintenance. As of December 31, 1994, the Vehicle Leasing & Services Division had 179,725 vehicles and 36,929 employees, excluding reimbursed public transit and leased personnel. Full service truck leasing was provided to more than 12,300 customers (ranging from small companies to large national enterprises), with a fleet of 83,100 vehicles (including 10,480 vehicles leased to affiliates), through 1,008 locations in 49 states, Puerto Rico, and 8 Canadian provinces. Under full service leases, RTR (as Ryder Commercial Leasing & Services) provides customers with the vehicles, maintenance, supplies and equipment necessary for operation, while the customers furnish drivers and dispatch and exercise control over the vehicles. A fleet of 73,265 vehicles, ranging from heavy-duty tractors and trailers to light trucks, is available for short-term rental from over 4,800 Division locations and independent dealers in 49 states and Canada. Short-term truck rental, which tends to be seasonal, is used by commercial customers to supplement their fleets during peak business seasons. Additionally, RTR (as Ryder Consumer Truck Rental) serves the short-term consumer truck rental market, which also tends to be seasonal and is principally used by consumers for moving household goods. At December 31, 1994, RTR was servicing 32,163 vehicles (including 7,877 vehicles of affiliates) under Ryder Programmed Maintenance, which provides essentially the same maintenance services for customer-owned vehicles as are provided through full service truck leasing. Through Ryder Dedicated Logistics, Inc. ("RDL"), the Division offers customer-tailored industrial and consumer product distribution and logistics services from 661 locations in the U.S. and Canada. Services include varying combinations of logistics system design, provision of vehicles and equipment, maintenance, provision of drivers, warehouse management, transportation management, vehicle dispatch, just-in-time delivery, and information systems support. RDL also offers integrated logistics, the single source management of a customer's primary logistics activities. ____________________ (1) This number does not include: (a) operating personnel of local transit authorities managed by certain subsidiaries of the Company (in such situations, the entire cost of compensation and benefits for such personnel is passed through to the transit authority, which reimburses the Company's subsidiaries); or (b) drivers obtained by certain subsidiaries of the Company under driver leasing agreements for some of their operations. 5 6 Logistics systems include metropolitan shuttles, interstate long-haul operations, just-in-time service to assembly plants, and factory-to-warehouse-to-retail facility service. These services are employed in the automotive industry (RDL specializes in inbound and aftermarket parts delivery for customers such as GM (including Saturn), Chrysler Corporation ("Chrysler"), Toyota Motor Manufacturing USA Inc. ("Toyota"), Ford Motor Company ("Ford") and auto parts retailers), and in the paper and paper packaging, chemical, electronic and office equipment, news, food and beverage, housing, general retail and other industries. Through Ryder Public Transportation Services ("RPTS"), in 1994 the Division continued to expand its presence in the public transportation management, operations and maintenance and student transportation markets through internal growth. RPTS now manages or operates 89 public transit systems with 4,741 vehicles in 29 states, operates 7,753 school buses in 20 states, maintains about 17,500 public transit or fleet vehicles in 18 states and provides public transportation management consulting services. The Division has historically disposed of its used and surplus revenue earning equipment at prices in excess of book value. The Division reported gains on the sale of revenue earning equipment (reported as reductions in depreciation expense) of approximately 19%, 16% and 12% of the Division's earnings before interest and taxes in 1994, 1993 and 1992, respectively. The extent to which the Division may consistently continue to realize gains on disposal of its revenue earning equipment is dependent upon various factors including the general state of the used vehicle market, the condition and utilization of the Division's fleet and depreciation policies with respect to its vehicles. International The Company's International Division has developed and is in the process of implementing a strategy for growth in international markets outside the United States and Canada. This strategy is designed to enable the International Division to take advantage of, and build upon, the Company's expertise in providing services to businesses involved in the over-the-road transportation of goods. The Company's previously existing lease, rental, maintenance and logistics operations in the United Kingdom, Germany and Poland have been integrated into the International Division and expanded. In the fourth quarter of 1994, the International Division opened offices and its first maintenance facility in Mexico City. As of December 31, 1994, the International Division had 9,973 vehicles, 2,918 employees, and provided service through 93 locations in the United Kingdom, Germany, Mexico and Poland. (For financial reporting purposes, the International Division's results are included with those of the Vehicle Leasing & Services Division). Automotive Carriers The Company's Automotive Carrier Division transports new automobiles and trucks to dealers and to and from distribution points throughout the United States and several Canadian provinces for GM, Chrysler, Toyota, Ford, Honda and most other automobile and light truck manufacturers. GM remains the Division's largest customer, accounting for 54%, 54% and 57% of the Division's revenue in 1994, 1993 and 1992, respectively. The GM carriage contracts are typically subject to cancellation upon 30 days' notice by either party. The business is primarily dependent on the level of North American production, importation and sales by GM and various other manufacturers. Consequently, the business is adversely affected by any significant reductions in or prolonged curtailments of production by customers because of market conditions, strikes or otherwise. As of December 31, 1994, the Automotive Carrier Division had 4,306 auto transport vehicles, 5,769 employees (exclusive of leased drivers), and provided service through 80 locations in 32 states and 3 Canadian provinces. Most of the Division's employees are covered by an industry-wide collective bargaining agreement, the term of which ends in May 1995. A new industry-wide collective bargaining agreement is currently being negotiated. Competition The Vehicle Leasing & Services Division's customers may finance lease or purchase their own vehicles and provide maintenance services for themselves substantially similar to those offered by the Division, or purchase such services from others, or obtain transportation services from other common or contract carriers. The Division also competes with other companies conducting nationwide truck leasing, rental or bus operations, a large number of regional truck leasing 6 7 companies with multiple branches, many smaller companies operating primarily on a local basis, but frequently with nationwide service and maintenance capabilities resulting from their participation in cooperative programs and membership in various associations, and both local and nationwide common and contract carriers. Competition in the truck leasing business is based on a number of factors which include price, equipment, maintenance and geographical coverage. The Division also competes, to an extent, with a number of trailer and vehicle manufacturers who have entered the field of trailer and vehicle leasing, extended warranty maintenance, rental and other forms of transportation services. The carriage and dedicated logistics operations of the Vehicle Leasing & Services Division and the Automotive Carrier Division are subject to potential competition in most of the regions they serve from railroads and motor carriers providing similar services, and from customers insofar as they may own or lease equipment and provide the services for themselves. A growing number of U.S. school districts now have the option of contracting with private operators for student transportation services. In areas where private contractors are utilized, the market is fragmented and competitive. Even where private operators are being utilized, school districts still may have the option of performing student transportation services themselves. Public transit agencies generally have the option of contracting with private operators for public transportation services or providing such services themselves. The market for most types of public transportation services is fragmented and competitive. In the United Kingdom, both truck leasing and dedicated logistics are well developed competitive markets, similar to those in the U.S. and Canada. Value-added differentiation of the Company's service offerings continues to be the Company's strategy in those markets. Recent developments in Mexico following the approval of the North American Free Trade Agreement (NAFTA), Germany's continued integration into the European Community and consequent deregulation, and Poland's transformation to a market economy, create a growing opportunity for the Company to provide services in these new markets. The Company expects that competition with the Company's services in these emerging markets will develop. Other Developments and Further Information Many federal, state and local laws designed to protect the environment, and similar laws in some foreign jurisdictions, have varying degrees of impact on the way the Company and its subsidiaries conduct their business operations, primarily with regard to their use, storage and disposal of petroleum products and various wastes associated with vehicle maintenance activities. Compliance with these laws and with the Company's environmental protection policies involves the expenditure of considerable amounts. Based on information presently available, management believes that the ultimate disposition of such matters, although potentially material to the Company's results of operations in any one year, will not have a material adverse effect on the Company's financial condition or liquidity. For further discussion concerning the business of the registrant and its subsidiaries see the information referenced under Items 7 and 8 of this report. 7 8 Executive Officers of the Registrant All of the executive officers of the Company were elected or re-elected to their present offices either at or subsequent to the meeting of the Board of Directors held on May 6, 1994, in conjunction with the Company's 1994 Annual Meeting on the same date. They all hold such offices, at the discretion of the Board of Directors, until their removal, replacement or retirement.
Name Age Position --------------------- --- ---------------------------------- M. Anthony Burns 52 Chairman, President and Chief Executive Officer C. Robert Campbell 50 Executive Vice President - Human Resources and Administration Dwight D. Denny 51 President - Ryder Commercial Leasing & Services R. Ray Goode 58 Senior Vice President - Public Affairs James B. Griffin 40 President - Ryder Automotive Carrier Group, Inc. James M. Herron 60 Senior Executive Vice President and General Counsel Edwin A. Huston 56 Senior Executive Vice President - Finance and Chief Financial Officer Larry S. Mulkey 51 President - Ryder Dedicated Logistics, Inc. Bruce D. Parker 47 Senior Vice President - Management Information Systems and Chief Information Officer J. Ernest Riddle 53 Executive Vice President - Marketing Gerald R. Riordan 46 President - Ryder Consumer Truck Rental and President - Ryder Public Transportation Services Anthony G. Tegnelia 49 Senior Vice President and Controller Randall E. West 46 Senior Vice President and General Manager of the International Division
M. Anthony Burns has been Chairman of the Board since May 1985, Chief Executive Officer since January 1983 and President and a director since December 1979. C. Robert Campbell has been Executive Vice President - Human Resources and Administration since March 1991. Mr. Campbell served as Executive Vice President - Finance of the Vehicle Leasing & Services Division from October 1981 to March 1991. 8 9 Dwight D. Denny has been President - Ryder Commercial Leasing & Services since December 1992, and was Executive Vice President and General Manager - Commercial Leasing & Services of Ryder Truck Rental, Inc. from June 1991 until December 1992. Mr. Denny served Ryder Truck Rental, Inc. as Senior Vice President and General Manager - Eastern Area from March 1991 to June 1991 and Senior Vice President - Central Area from December 1990 to March 1991. Mr. Denny previously served Ryder Truck Rental, Inc. as Region Vice President in Tennessee from July 1985 to December 1990. R. Ray Goode has been Senior Vice President - Public Affairs since November 1993 and was President and Chief Executive Officer of We Will Rebuild from September 1992 to November 1993. He was Managing Partner of Goode, Olcott, Knight & Associates from April 1989 to September 1992, and served successively as Vice President, President and Chairman and Chief Executive Officer of The Babcock Company (a subsidiary of Weyerhaeuser Company) from 1976 to 1989. Mr. Goode served as County Manager for Metropolitan Dade County, Florida from 1970 to 1976. James B. Griffin has been President - Ryder Automotive Carrier Group, Inc. since February 1993, and was Vice President and General Manager - Mid-South Region of Ryder Truck Rental, Inc. from December 1990 to February 1993. Mr. Griffin previously served Ryder Truck Rental, Inc. as Region Vice President in Syracuse, New York from April 1988 to December 1990. James M. Herron has been Senior Executive Vice President since July 1989 and General Counsel since April 1973. Mr. Herron was also Secretary from February 1983 through February 1986. Edwin A. Huston has been Senior Executive Vice President - Finance and Chief Financial Officer since January 1987. Mr. Huston was Executive Vice President - Finance from December 1979 to January 1987. Larry S. Mulkey has been President - Ryder Dedicated Logistics, Inc. (formerly Ryder Distribution Resources, Inc.) since November 1990. Mr. Mulkey was President - Ryder Public Transportation Services from June 1993 to October 1994 and, prior to the organization of the Ryder Public Transportation Services group in June 1993, from November 1990 to June 1993 he was President of each of the companies comprising that group. From November 1990 to December 1992, Ryder's operations in the United Kingdom and Germany reported to Mr. Mulkey. He was Senior Vice President and General Manager - Central Area of Ryder Truck Rental, Inc. from January 1986 to November 1990, and was Senior Vice President and General Manager - Eastern Area of Ryder Truck Rental, Inc. from August 1985 to January 1986. Bruce D. Parker has been Senior Vice President - Management Information Systems and Chief Information Officer since September 1994. Mr. Parker previously served American Airlines, Inc. as a Vice President of American and President of Sabre Development Services Division from April 1993 to September 1994, as a Vice President of Sabre Computer Services Division from 1988 to April 1993, and as Managing Director of Customer Services for Sabre Computer Services Division from 1987 to 1988. J. Ernest Riddle has been Executive Vice President - Marketing since June 1994. Mr. Riddle previously served as Senior Vice President - Marketing and Sales of Ryder Commercial Leasing & Services from January 1993 to June 1994. Mr. Riddle served Xerox Corporation as European Director of Marketing and Sales from October 1992 to January 1993, as Vice President - Worldwide Marketing Operations from November 1990 to October 1992, and as Vice President - Marketing for the U.S. Marketing Group from November 1988 to November 1990. Gerald R. Riordan has been President - Ryder Consumer Truck Rental since December 1992 and has been President - Ryder Public Transportation Services since October 1994. Mr. Riordan previously served as Senior Vice President and General Manager - Consumer Rental of Ryder Truck Rental, Inc. from June 1991 to December 1992. He served Ryder Truck Rental, Inc. as Senior Vice President - Rental and Quality from December 1990 to June 1991, as Vice President of Quality from January 1988 to December 1990, and as Vice President of Rental from January 1983 to January 1988. Anthony G. Tegnelia has been Senior Vice President since March 1991 and Controller since August 1988. He is the Company's principal accounting officer. Mr. Tegnelia was Vice President - Corporate Systems from November 1986 to August 1988. Mr. Tegnelia served as Executive Vice President - Finance of the Company's former Freight System 9 10 Division from September 1985 to October 1986, and Senior Vice President - Finance of Ryder Distribution System (now Ryder Dedicated Logistics, Inc.) from March 1984 to August 1985. Randall E. West has been Senior Vice President and General Manager of the International Division since December 1993, and was Vice President and General Manager - Southwest Region of Ryder Truck Rental, Inc. (Ryder Commercial Leasing & Services) from September 1991 to December 1993. Mr. West previously served Ryder Truck Rental, Inc. as Region Vice President at New Orleans from November 1988 to September 1991. ITEM 2. PROPERTIES The Company's property consists primarily of vehicles, vehicle maintenance and repair facilities and other real estate and improvements. Information regarding vehicles is included in Item 1, which is incorporated herein by reference. The Vehicle Leasing & Services Division has 1,968 locations in the United States, Canada and Puerto Rico; 470 of these facilities are owned and the remainder are leased. Such locations generally include a repair shop and administrative offices. The International Division has 93 locations in the United Kingdom, Germany, Mexico and Poland; 18 of these facilities are owned and the remainder are leased. Such locations generally include a repair shop and administrative offices. The Automotive Carrier Division has 72 operating locations in 32 states throughout the United States and 8 operating locations in Canada; 25 locations are owned and the remainder are leased. ITEM 3. LEGAL PROCEEDINGS The Company and its subsidiaries are involved in various claims, law suits, and administrative actions arising in the course of their businesses. Some involve claims for substantial amounts of money and/or claims for punitive damages. While any proceeding or litigation has an element of uncertainty, management believes that the disposition of such matters, in the aggregate, will not have a material impact on the consolidated financial condition, results of operation or liquidity of the Company and its subsidiaries. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of security holders during the quarter ended December 31, 1994. 10 11 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The information required by Item 5 is incorporated by reference from page 47 ("Common Stock Data") of the Ryder System, Inc. 1994 Annual Report to Shareholders. ITEM 6. SELECTED FINANCIAL DATA The information required by Item 6 is incorporated by reference from pages 48 and 49 of the Ryder System, Inc. 1994 Annual Report to Shareholders. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information required by Item 7 is incorporated by reference from pages 26 through 31 of the Ryder System, Inc. 1994 Annual Report to Shareholders. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by Item 8 is incorporated by reference from pages 34 through 46 and page 47 ("Quarterly Data") of the Ryder System, Inc. 1994 Annual Report to Shareholders. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. 11 12 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by Item 10 regarding directors is incorporated by reference from pages 4 through 8 of the Ryder System, Inc. 1995 Proxy Statement. The information required by Item 10 regarding executive officers is set out in Item 1 of Part I of this Form 10-K Annual Report. Additional information required by Item 10 is incorporated by reference from page 24 ("Filings Under Section 16(a)") of the Ryder System, Inc. 1995 Proxy Statement. ITEM 11. EXECUTIVE COMPENSATION The information required by Item 11 is incorporated by reference from pages 9, 10 ("Compensation of Directors") and 28 through 31 of the Ryder System, Inc. 1995 Proxy Statement. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by Item 12 is incorporated by reference from page 23 of the Ryder System, Inc. 1995 Proxy Statement. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by Item 13 is incorporated by reference from page 10 of the Ryder System, Inc. 1995 Proxy Statement. 12 13 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) 1. Financial Statements for Ryder System, Inc. and Consolidated Subsidiaries: Items A through E are incorporated by reference from pages 33 through 46 of the Ryder System, Inc. 1994 Annual Report to Shareholders. A) Consolidated Statements of Earnings for years ended December 31, 1994, 1993 and 1992. B) Consolidated Balance Sheets for December 31, 1994 and 1993. C) Consolidated Statements of Cash Flows for years ended December 31, 1994, 1993 and 1992. D) Notes to Consolidated Financial Statements. E) Independent Auditors' Report. 2. Not applicable. All other schedules and statements are omitted because they are not applicable or not required or because the required information is included in the consolidated financial statements or notes thereto. Supplementary Financial Information consisting of selected quarterly financial data is incorporated by reference from page 47 of the Ryder System, Inc. 1994 Annual Report to Shareholders. 13 14 3. Exhibits: The following exhibits are filed with this report or, where indicated, incorporated by reference (Forms 10-K, 10-Q and 8-K referenced herein have been filed under the Commission's file No. 1-4364). The Company will provide a copy of the exhibits filed with this report at a nominal charge to those parties requesting them. EXHIBIT INDEX Exhibit Number Description ------ -------------------------------------------------------------------- 3.1 The Ryder System, Inc. Restated Articles of Incorporation, dated November 8, 1985, as amended through May 18, 1990, previously filed with the Commission as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1990, are incorporated by reference into this report. 3.2 The Ryder System, Inc. By-Laws, as amended through November 23, 1993, previously filed with the Commission as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, are incorporated by reference into this report. 4.1 The Company hereby agrees, pursuant to paragraph (b)(4)(iii) of Item 601 of Regulation S-K, to furnish the Commission with a copy of any instrument defining the rights of holders of long-term debt of the Company, where such instrument has not been filed as an exhibit hereto and the total amount of securities authorized thereunder does not exceed 10% of the total assets of the Company and its subsidiaries on a consolidated basis. 4.2(a) The Form of Indenture between Ryder System, Inc. and The Chase Manhattan Bank (National Association) dated as of June 1, 1984, filed with the Commission on November 19, 1985 as an exhibit to the Company's Registration Statement on Form S-3 (No. 33-1632), is incorporated by reference into this report. 4.2(b) The First Supplemental Indenture between Ryder System, Inc. and The Chase Manhattan Bank (National Association) dated October 1, 1987. 4.3 The Form of Indenture between Ryder System, Inc. and The Chase Manhattan Bank (National Association) dated as of May 1, 1987, and supplemented as of November 15, 1990 and June 24, 1992, filed with the Commission on July 30, 1992 as an exhibit to the Company's Registration Statement on Form S-3 (No. 33-50232), is incorporated by reference into this report. 4.4 The Rights Agreement between Ryder System, Inc. and First Chicago Trust Company of New York (then named Morgan Guaranty Trust Company of New York) dated as of February 28, 1986, previously filed with the Commission as an exhibit to the Company's Registration Statement on Form 8-A dated March 7, 1986, is incorporated by reference into this report. 4.5 The Amendment to Rights Agreement between Ryder System, Inc. and First Chicago Trust Company of New York dated as of July 28, 1989, previously filed with the Commission as an exhibit to the Company's Amendment to Application or Report on Form 8 dated August 2, 1989, is incorporated by reference into this report. 14 15 10.1(a) The change of control severance agreement for the Company's chief executive officer dated as of January 1, 1992, and the severance agreement for the Company's chief executive officer dated as of January 1, 1992, previously filed with the Commission as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1991, are incorporated by reference into this report. 10.1(b) Amendments dated as of August 20, 1993 to the change of control severance agreement for the Company's chief executive officer dated as of January 1, 1992, and the severance agreement for the Company's chief executive officer dated as of January 1, 1992, previously filed with the Commission as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, are incorporated by reference into this report. 10.2(a) The form of amended and restated change of control severance agreement for executive officers dated as of February 24, 1989. 10.2(b) Amendment dated as of August 20, 1993 to the form of amended and restated change of control severance agreement for executive officers dated as of February 24, 1989, previously filed with the Commission as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, is incorporated by reference into this report. 10.2(c) The form of change of control severance agreement for executive officers effective as of July 1, 1993, previously filed with the Commission as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, is incorporated by reference into this report. 10.3(a) The form of amended and restated severance agreement for executive officers dated as of February 24, 1989. 10.3(b) Amendment dated as of August 20, 1993 to the form of amended and restated severance agreement for executive officers dated as of February 24, 1989, previously filed with the Commission as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, is incorporated by reference into this report. 10.3(c) The form of severance agreement for executive officers effective as of July 1, 1993, previously filed with the Commission as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, is incorporated by reference into this report. 10.4(a) The form of Ryder System, Inc. incentive compensation deferral agreement dated as of November 30, 1993, previously filed with the Commission as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, is incorporated by reference into this report. 10.4(b) The form of Ryder System, Inc. incentive compensation deferral agreement dated as of November 30, 1994. 10.5(a) The form of Ryder System, Inc. salary deferral agreement dated as of November 30, 1993, previously filed with the Commission as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, is incorporated by reference into this report. 15 16 10.5(b) The form of Ryder System, Inc. salary deferral agreement dated as of November 30, 1994. 10.6(a) The form of Ryder System, Inc. director's fee deferral agreement dated as of December 31, 1993, previously filed with the Commission as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, is incorporated by reference into this report. 10.6(b) The form of Ryder System, Inc. director's fee deferral agreement dated as of December 31, 1994. 10.7(a) The Ryder System, Inc. and Vehicle Leasing & Services Division 1994 Incentive Compensation Plan for Headquarters Executive Management, previously filed with the Commission as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, is incorporated by reference into this report. 10.7(b) The Ryder System, Inc. 1995 Incentive Compensation Plan for Headquarters Executive Management. 10.8(a) The Ryder System, Inc. 1994 Incentive Compensation Plan for Ryder System, Inc. Senior Executive Vice Presidents, previously filed with the Commission as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, is incorporated by reference into this report. 10.8(b) The Ryder System, Inc. 1995 Incentive Compensation Plan for Ryder System, Inc. Senior Executive Vice Presidents. 10.9(a) The Ryder System, Inc. 1994 Incentive Compensation Plan for Senior Vice President and General Manager of the International Division, previously filed with the Commission as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, is incorporated by reference into this report. 10.9(b) The Ryder System, Inc. 1995 Incentive Compensation Plan for Senior Vice President and General Manager, International Division. 10.10(a) The Ryder System, Inc. 1994 Incentive Compensation Plan for President, Automotive Carrier Division, previously filed with the Commission as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, is incorporated by reference into this report. 10.10(b) The Ryder System, Inc. 1995 Incentive Compensation Plan for President, Automotive Carrier Division. 10.11(a) The Ryder System, Inc. 1994 Incentive Compensation Plan for Chairman, President & Chief Executive Officer, Ryder System, Inc., previously filed with the Commission as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, is incorporated by reference into this report. 10.11(b) The Ryder System, Inc. 1995 Incentive Compensation Plan for Chairman, President & Chief Executive Officer, Ryder System, Inc. 16 17 10.12(a) The Ryder System, Inc. 1994 Incentive Compensation Plan for President-Commercial Leasing & Services, Vehicle Leasing & Services Division, previously filed with the Commission as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, is incorporated by reference into this report. 10.12(b) The Ryder System, Inc. 1995 Incentive Compensation Plan for President-Commercial Leasing & Services. 10.13(a) The Ryder System, Inc. 1994 Incentive Compensation Plan for President-Consumer Rental, Vehicle Leasing & Services Division, previously filed with the Commission as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, is incorporated by reference into this report. 10.13(b) The Ryder System, Inc. 1995 Incentive Compensation Plan for President-Consumer Truck Rental. 10.14(a) The Ryder System, Inc. 1994 Incentive Compensation Plan for President-Ryder Dedicated Logistics, Vehicle Leasing & Services Division, previously filed with the Commission as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, is incorporated by reference into this report. 10.14(b) The Ryder System, Inc. 1995 Incentive Compensation Plan for President-Ryder Dedicated Logistics. 10.15(a) The Ryder System, Inc. 1980 Stock Incentive Plan, as amended and restated as of October 22, 1993, previously filed with the Commission as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, is incorporated by reference into this report. 10.15(b) Form of Combined Non-Qualified Stock Option and Limited Stock Appreciation Right Agreement, dated May 6, 1994. 10.15(c) Form of Combined Non-Qualified Stock Option and Limited Stock Appreciation Right Agreement, dated October 21, 1994. 10.15(d) Combined Non-Qualified Stock Option and Limited Stock Appreciation Right Agreement, dated December 15, 1994, between Ryder System, Inc. and M. Anthony Burns. 10.16 The Ryder System, Inc. Directors Stock Plan, as amended and restated as of December 17, 1993, previously filed with the Commission as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, is incorporated by reference into this report. 10.17(a) The Ryder System Benefit Restoration Plan, effective January 1, 1985, previously filed with the Commission as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1992, is incorporated by reference into this report. 10.17(b) The First Amendment to the Ryder System Benefit Restoration Plan, effective as of December 16, 1988. 17 18 10.18 Amendment, dated November 10, 1994, to the Amended and Restated Severance Agreement between Ryder System, Inc. and C. R. Campbell. 10.19 Letter agreement, dated April 9, 1993, between Ryder System, Inc. and James Ernest Riddle. 10.20 Distribution and Indemnity Agreement dated as of November 23, 1993 between Ryder System, Inc. and Aviall, Inc., previously filed with the Commission as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, is incorporated by reference into this report. 10.21 Tax Sharing Agreement dated as of November 23, 1993 between Ryder System, Inc. and Aviall, Inc., previously filed with the Commission as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, is incorporated by reference into this report. 11.1 Statement regarding computation of per share earnings. 13.1 The Ryder System, Inc. 1994 Annual Report to Shareholders. Those portions of the Ryder System, Inc. 1994 Annual Report to Shareholders which are not incorporated by reference into this report are furnished to the Commission solely for information purposes and are not to be deemed "filed" as part of this report. 21.1 List of subsidiaries of the registrant, with the state or other jurisdiction of incorporation or organization of each, and the name under which each subsidiary does business. 23.1 Auditors' consent to incorporation by reference in certain Registration Statements on Forms S-3 and S-8 of their reports on consolidated financial statements and schedules of Ryder System, Inc. and its consolidated subsidiaries. 24.1 Manually executed powers of attorney for each of: Arthur H. Bernstein Edward T. Foote II John A. Georges Vernon E. Jordan, Jr. Howard C. Kauffmann David T. Kearns Lynn M. Martin James W. McLamore Paul J. Rizzo Donald V. Seibert Hicks B. Waldron Alva O. Way Mark H. Willes 27.1 Financial Data Schedule. (b) Reports on Form 8-K: The Company did not file any reports on Form 8-K during the last quarter of 1994. 18 19 (c) Executive Compensation Plans and Arrangements: Please refer to the description of Exhibits 10.1 through 10.19 set forth under Item 14(a)3 of this report for a listing of all management contracts and compensation plans and arrangements filed with this report pursuant to Item 601(b)(10) of Regulation S-K. 19 20 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: March 29, 1995 RYDER SYSTEM, INC. By: M. Anthony Burns --------------------------------- M. Anthony Burns Chairman, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: March 29, 1995 By: M. Anthony Burns --------------------------------- M. Anthony Burns Chairman, President and Chief Executive Officer (Principal Executive Officer) Date: March 29, 1995 By: Edwin A. Huston --------------------------------- Edwin A. Huston Senior Executive Vice President-Finance and Chief Financial Officer (Principal Financial Officer) Date: March 29, 1995 By: Anthony G. Tegnelia --------------------------------- Anthony G. Tegnelia Senior Vice President and Controller (Principal Accounting Officer) 20 21 Date: March 29, 1995 By: Arthur H. Bernstein * --------------------------------- Arthur H. Bernstein Director Date: March 29, 1995 By: Edward T. Foote II * --------------------------------- Edward T. Foote II Director Date: March 29, 1995 By: John A. Georges * --------------------------------- John A. Georges Director Date: March 29, 1995 By: Vernon E. Jordan, Jr. * --------------------------------- Vernon E. Jordan, Jr. Director Date: March 29, 1995 By: Howard C. Kauffmann * ------------------------------ Howard C. Kauffmann Director Date: March 29, 1995 By: David T. Kearns * --------------------------------- David T. Kearns Director Date: March 29, 1995 By: Lynn M. Martin * --------------------------------- Lynn M. Martin Director Date: March 29, 1995 By: James W. McLamore * ------------------------------ James W. McLamore Director 21 22 Date: March 29, 1995 By: Paul J. Rizzo * ----------------------------- Paul J. Rizzo Director Date: March 29, 1995 By: Donald V. Seibert * --------------------------------- Donald V. Seibert Director Date: March 29, 1995 By: Hicks B. Waldron * -------------------------------- Hicks B. Waldron Director Date: March 29, 1995 By: Alva O. Way * ---------------------------------- Alva O. Way Director Date: March 29, 1995 By: Mark H. Willes * -------------------------------- Mark H. Willes Director *By: Ann E. Neal --------------------------------- Ann E. Neal Attorney-in-Fact 22 EX-4.2B 2 SUPPLEMENTAL INDENTURE 10-1-87 1 EXHIBIT 4.2 (b) ------------------------------------------------------------------ RYDER SYSTEM, INC. AND THE CHASE MANHATTAN BANK (National Association), as Trustee ---------------------------------- FIRST SUPPLEMENTAL INDENTURE Dated as of October 1, 1987 ----------------------------------- Supplemental to Indenture Dated as of June 1, 1984 Debt Securities ------------------------------------------------------------------ 2 FIRST SUPPLEMENTAL INDENTURE, dated as of October 1, 1987, between RYDER SYSTEM, INC., a Florida corporation (the "Company") and THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), a national banking association duly incorporated and existing under the laws of the United States of America (the "Trustee"), as Trustee under the Original Indenture hereinafter mentioned. RECITALS OF THE COMPANY The Company has heretofore executed and delivered its Indenture, dated as of June 1, 1984 (the "Original Indenture"), to the Trustee to provide for the issuance from time to time of certain Debt Securities. Section 9.01(4) of the Original Indenture provides, in pertinent part, that the Company and the Trustee may enter into a supplemental indenture without the consent of any Debt Securityholder to make any change in the Original Indenture that does not adversely affect the rights of any Debt Securityholder. The Company deems it advisable and not adverse to the interests of any Debt Securityholder to amend the Original Indenture as provided below. NOW, THEREFORE, in consideration of the sum of one dollar duly paid by the Company to the Trustee, the receipt of which is hereby acknowledged, it is mutually covenanted and agreed that the Original Indenture will be amended, as follows: ARTICLE ONE AMENDMENT Section 1.01. The Original Indenture is hereby amended by adding Section 3.07 as follows: Section 3.07. Redemption at the Option of the Debt Securityholder. If any Debt Securities of a Series are redeemable at the option of a Debt Securityholder on a date which is prior to their maturity date, pursuant to the provisions of Section 2.09, any such Debt Securities redeemed by the Company shall continue to be outstanding until they are delivered to the Trustee with instructions that such Securities 2 3 be cancelled. In connection with any such optional redemption of Debt Securities, the Company may arrange for their purchase pursuant to an agreement with one or more purchasers for the purchase of such Debt Securities to be effected by such purchaser or purchasers paying to the Debt Securityholder on or before the close of business on the redemption date, an amount not less than the redemption price payable by the Company upon the redemption of such Debt Securities, and the obligation of the Company to pay the redemption price of such Debt Securities shall be satisfied and discharged to the extent such payment is so paid by such purchaser or purchasers. ARTICLE TWO MISCELLANEOUS PROVISIONS Section 2.01. Terms Used Herein. For all purposes of this First Supplemental Indentures, except as otherwise stated herein, terms used in capitalized form herein and defined in the Original Indenture have the meanings specified in the Original Indenture. Section 2.02. Trustee's Rights, Duties, etc. All the provisions of the Original Indenture with respect to the rights, duties and immunities of the Trustee shall be applicable in respect hereof as fully and with like effect as if set forth herein in full. Section 2.03. Governing Law. The laws of the State of New York shall govern this Supplemental Indenture. Section 2.04. Duplicate Originals. The parties may sign any number of copies of this First Supplemental Indenture. Each signed copy shall be an original, but all of them together shall together 3 4 represent the same agreement. One signed copy is enough to prove this First Supplemental Indenture. SIGNATURES RYDER SYSTEM, INC. By: /s/ C.F. Wilson ----------------------------- Vice President and Treasurer [Seal] Attest: /s/ Jeffrey J. Murphy ---------------------------- Secretary THE CHASE MANHATTAN BANK (National Association) as Trustee By: /s/ Ann L. Edmonds ----------------------------- Vice President [Seal] Attest: /s/ Mary Joe Hammill ----------------------------- Title: Trust Officer STATE OF FLORIDA ) ) ss.: COUNTY OF DADE ) Before me personally appeared Charles F. Wilson and Jeffrey J. Murphy, known to me to be the individuals described in and who executed the foregoing instrument as 4 5 the Vice President and Treasurer and the Secretary respectively, of the above named RYDER SYSTEM, INC., a Florida corporation, and severally acknowledged to and before me that they executed such instrument as such Vice President and Treasurer and Secretary, respectively, of said corporation, and that the seal affixed to the foregoing instrument is the corporate seal of said corporation and that it was affixed to said instrument by due and regular corporate authority, and that said instrument is the free act and deed of said corporation. WITNESS my hand and official seal this 13th day of October, 1987. /s/ Donna E. Ashley ------------------- Notary Public Notary Public, State of Florida STATE OF NEW YORK ) ) ss.: COUNTY OF ) On this 15th day of October, 1987 before me personally came Ann L. Edmonds, to me known, who, being by me duly sworn, did depose and say that he resides at Rye, New York, that he is a Vice President of the CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), one of the corporations described in and which executed the above instrument; that he knows the corporate seal of said corporation; that the seal affixed the said instrument is such corporate seal; that is was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written. /s/ Della K. Benjamin --------------------- Notary Public Notary Public, State of New York 5 EX-10.2A 3 CHANGE OF CONTROL SEVERANCE AGREEMENT 1 EXHIBIT 10.2(a) Amended and Restated Change of Control Severance Agreement THIS AMENDED AND RESTATED AGREEMENT dated as of February 24, 1989 amends, restates and supersedes the provisions of a certain Change of Control Severance Agreement between RYDER SYSTEM, INC., a Florida corporation (the "Corporation"), and ________________ (the "Executive"), dated as of June 26, 1987. WITNESSETH: WHEREAS, the Executive is an officer and/or key employee of the Corporation and/or its subsidiaries or affiliates and an integral part of its management; and WHEREAS, in order to retain the Executive and to assure both the Executive and the Corporation of the continuity of management in the event of any actual or threatened Change of Control (as defined in Section 2) of the Corporation, the Corporation desires to provide severance benefits to the Executive if the Executive's employment with the Corporation and/or its subsidiaries or affiliates terminates as provided herein concurrent with or subsequent to a Change of Control; NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, it is hereby agreed by and between the Corporation and the Executive as follows: 1. Term of Agreement. This Agreement shall become effective as of the date hereof and shall terminate upon the occurrence of the earliest of the events specified below; provided, however, that Section 5 shall survive termination of this Agreement: (a) the last day of the Severance Period (as defined in Section 3(f)); (b) the termination of the Executive's employment by the Corporation or its subsidiaries or affiliates for Death, Disability or Cause, or by the Executive other than for Good Reason (as defined in Sections 3(b), (a), and (c) respectively); (c) one (1) year following the date of receipt of a mailing (by overnight express mail or registered or certified mail, return receipt requested) or hand delivery to the Executive by the Corporation of written notice of its intent to terminate this Agreement, provided that such written notice shall have been received by the Executive prior to the date of a Change of Control (as defined in Section 2); (d) three (3) years following the date of a Change of Control (as defined in Section 2) if the Executive's employment with the Corporation or its subsidiaries or affiliates has not been terminated as of such time; (e) the material breach by the Executive of the provisions of Section 5. 2 Additionally, notwithstanding anything in this Agreement to the contrary, if the Executive should die while receiving severance pay or benefits pursuant to Section 4 as a result of the termination of the Executive's employment by the Corporation or its subsidiaries or affiliates other than for Death, Disability or Cause, or by the Executive for Good Reason (as defined in Sections 3(b), (a), and (c) respectively), this Agreement shall terminate immediately upon the Executive's death and both parties shall be released from all obligations under this Agreement other than those under Section 5(b)(II) and those relating to amounts or benefits which are payable under this Agreement within five (5) business days after the Executive's Date of Termination (if not already paid), are vested under any plan, program, policy or practice, or the Executive is otherwise entitled to receive upon his death, including but not limited to, life insurance. Any payment due pursuant to the preceding sentence upon the Executive's death shall be made to the estate of the deceased Executive, unless the plan, program, policy, practice or law provides otherwise. 2. Change of Control. For the purpose of this Agreement, a "Change of Control" shall be deemed to have occurred if: (a) a third person, including a "group" as defined in Section l3(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), but excluding any employee benefit plan or plans of the Corporation and its subsidiaries and affiliates, becomes the beneficial owner, directly or indirectly, of twenty percent (20%) or more of the combined voting power of the Corporation's outstanding voting securities ordinarily having the right to vote for the election of directors of the Corporation; or (b) the individuals who, as of June 26, 1987, constituted the Board of Directors of the Corporation (the "Board" generally and as of June 26, 1987 the "Incumbent Board") cease for any reason to constitute at least two-thirds (2/3) of the Board, or in the case of a merger or consolidation of the Corporation, do not constitute or cease to constitute at least two-thirds (2/3) of the board of directors of the surviving company (or in a case where the surviving corporation is controlled, directly or indirectly, by another corporation or entity do not constitute or cease to constitute at least two-thirds (2/3) of the board of such controlling corporation or do not have or cease to have at least two-thirds (2/3) of the voting seats on any body comparable to a board of directors of such controlling entity or, if there is no body comparable to a board of directors, at least two-thirds (2/3) voting control of such controlling entity), provided that any person becoming a director (or, in the case of a controlling non-corporate entity, obtaining a position comparable to a director or obtaining a voting interest in such entity) subsequent to June 26, 1987 whose election, or nomination for election, was approved by a vote of the persons comprising at least two-thirds (2/3) of the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; or (c) there is a liquidation or dissolution of the Corporation or a sale of all or 2 3 substantially all of the assets of either or both (i) the business group which constituted the Vehicle Leasing and Services Division of the Corporation as of June 26, 1987 or (ii) the combined business groups of the Corporation as constituted as of June 26, 1987 other than the business group which constituted the Vehicle Leasing and Services Division of the Corporation as of June 26, 1987. If the Corporation enters into an agreement or series of agreements or the Board passes a resolution which will result in the occurrence of any of the matters described in Subsections (a), (b) or (c), and the Executive's employment is terminated subsequent to the date of execution of such agreement or series of agreements or the passage of such resolution, but prior to the occurrence of any of the matters described in Subsections (a), (b) or (c), then, upon the occurrence of any of the matters described in Subsections (a), (b) or (c), a Change of Control shall be deemed to have retroactively occurred on the date of the execution of the earliest of such agreement(s) or the passage of such resolution. 3. Certain Definitions. (a) Cause. The Executive's employment may be terminated for Cause only if a majority of the Incumbent Board determines that Cause (as defined below) exists. For purposes of this Agreement, "Cause" means (i) an act or acts of fraud, misappropriation, or embezzlement on the Executive's part which result in or are intended to result in his or another's personal enrichment at the expense of the Corporation or its subsidiaries or affiliates, (ii) conviction of a felony, (iii) conviction of a misdemeanor involving moral turpitude, or (iv) willful failure to report to work for more than thirty (30) continuous days not attributable to eligible vacation or supported by a licensed physician's statement. (b) Death or Disability. (i) The Executive's employment will be terminated by the Corporation or its subsidiaries or affiliates automatically upon the Executive's death ("Death"). (ii) After having established the Executive's Disability (as defined below), the Corporation may give to the Executive written notice of the Corporation's and/or its subsidiaries' or affiliates' intention to terminate the Executive's employment for Disability. The Executive's employment will terminate for Disability effective on the thirtieth (30th) day after the Executive's receipt of such notice (the "Disability Effective Date") if within such thirty (30) day period after such receipt the Executive shall fail to return to full-time performance of his duties. For purposes of this Agreement, "Disability" means disability which after the expiration of more than twenty-six (26) weeks after its commencement is determined to be total and permanent by an independent licensed physician mutually agreeable to the parties. In the event of the Executive's termination for Death or Disability, the Executive and, to the extent applicable, his legal representatives, executors, heirs, legatees and beneficiaries, shall have no rights under this Agreement and their sole recourse, if any, shall be under the death or 3 4 disability provisions of the plans, programs policies and practices of the Corporation and/or its subsidiaries and affiliates, as appropriate. (c) Good Reason. For purposes of this Agreement, "Good Reason" means: (i) any failure by the Corporation and/or its subsidiaries or affiliates to furnish the Executive and/or where applicable, his family, with (A) total annual cash compensation (including annual incentive compensation), (B) total aggregate value of perquisites, (C) total aggregate value of benefits, or (D) total aggregate value of long term compensation, including but not limited to, stock options, in each case at least equal to or otherwise comparable to in the aggregate or exceeding the highest level received by the Executive from the Corporation and/or its subsidiaries or affiliates during the six (6) month period (or the one (1) year period for compensation, perquisites and benefits which are paid less frequently than every six (6) months) immediately preceding the Change of Control, other than an inadvertent failure remedied by the Corporation within five (5) business days after receipt of notice thereof given by the Executive; (ii) the Corporation's and/or its subsidiaries' or affiliates' requiring the Executive to be based or to perform services at any site or location more than fifteen (15) miles from the site or location at which the Executive is based at the time of the Change of Control, except for travel reasonably required in the performance of the Executive's responsibilities (which does not materially exceed the level of travel required of the Executive in the six (6) month period immediately preceding the Change of Control); (iii) any failure by the Corporation to obtain the assumption and agreement to perform this Agreement by a successor as contemplated by Section 8(b); (iv) any failure by the Corporation to pay into the Trust(s) (as defined in Section 4(c)) the amounts and at the time or times as are required pursuant to the terms of such Trust(s); (v) any purported termination by the Corporation or its subsidiaries or affiliates of the Executive's employment that is not effected pursuant to a Notice of Termination satisfying the requirements of Section 3(d), which purported termination shall not be effective for purposes of this Agreement; or (vi) if the Executive is in management level 14 or above immediately prior to the Change of Control, (A) any assignment to the Executive of duties inconsistent in any material respect with the highest level of the Executive's position (including titles and reporting relationships), authority, responsibilities or status as in effect at any time during the six (6) month period immediately preceding the Change of Control without the express prior written consent of the Executive (which consent the Executive has the absolute right to withhold), or (B) any other material adverse change in such position, authority, responsibilities or status without the express prior written consent of the Executive (which consent the Executive has the absolute right to withhold). 4 5 For the purposes of this Section 3(c), any good faith interpretation by the Executive of the foregoing definitions of "Good Reason" shall be conclusive on the Corporation. Additionally, the Executive's continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason hereunder. (d) Notice of Termination. Any termination of the Executive's employment by the Executive for Good Reason or by the Corporation or its subsidiaries or affiliates for any reason other than Death shall be communicated by a Notice of Termination to the other party, with a copy to the Trustee (as defined in Section 4(c)) hereto given in accordance with Section 9(b). For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated, and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than fifteen (15) days after the giving of such notice or, in the event of Disability, the Disability Effective Date). (e) Date of Termination. Date of Termination means the date of receipt by the Executive or the Corporation or its subsidiaries or affiliates of the Notice of Termination or any later date specified therein, as the case may be; provided, however, that if the Executive's employment is terminated by reason of Death or Disability, the Date of Termination shall be the date of Death of the Executive or the Disability Effective Date, as the case may be. (f) Severance Period. Unless terminated sooner pursuant to Section 1, the Severance Period means the period set forth below depending on the Executive's management level immediately prior to the Change of Control, which period shall begin on the day following the Executive's Date of Termination: Mgmt. Level 19 or above Three (3) years Mgmt. Level 15-18 Two (2) years Mgmt. Level 14 One (1) year and six (6) months Mgmt. Level 13 One (1) year Mgmt. Level 11-12 Six (6) months
4. Obligations of the Corporation. (a) Circumstances of Termination. (i) If, within the three (3) year period commencing on a Change of Control of the Corporation, (A) the Corporation or its subsidiaries or affiliates shall terminate the Executive's employment for any reason other than for Death, Disability or Cause, or (B) the Executive shall terminate his employment with the Corporation or its subsidiaries or affiliates for Good Reason, the Corporation agrees to provide the 5 6 Executive with compensation, benefits and perquisites in accordance with the terms and provisions set forth in Subsection (iii) below and the other provisions of this Agreement, and the Executive agrees that he shall be subject to such terms and provisions. The Executive shall not be deemed to have terminated his employment with the Corporation or any of its subsidiaries or affiliates if he leaves the employ of the Corporation or any of its subsidiaries or affiliates for immediate reemployment with the Corporation or any of its subsidiaries or affiliates. (ii) If during the term of this Agreement, (A) the Corporation or its subsidiaries or affiliates shall terminate the Executive's employment for Death, Disability or Cause or (B) the Executive shall terminate his employment with the Corporation or its subsidiaries or affiliates other than for Good Reason, then the Executive shall not be entitled to any of the benefits set forth in Subsection (iii) below or in any other section of this Agreement, except to the extent of the amounts which represent vested benefits or which the Executive is otherwise entitled to receive under any plan, program, policy or practice of the Corporation or any of its subsidiaries or affiliates at or subsequent to the Executive's Date of Termination. (iii) If the Executive is entitled to receive severance pay and benefits under Subsection (i) above, the Corporation agrees to provide the Executive with the following compensation, benefits and perquisites, subject to Section 5(b): (I) Cash Entitlement. The Corporation and/or the Trustee (as defined in Section 4(c)) shall pay to the Executive the aggregate of the amounts determined pursuant to clauses a through f below: a. Unpaid Salary and Vacation. If not already paid, the Executive's base salary and unused vacation entitlement through the Executive's Date of Termination at the rate in effect at the time the Notice of Termination was given, or if greater, at the highest rate in effect during the six (6) month period immediately preceding the Change of Control. b. Salary Multiple. The Executive's annual base salary at the rate in effect at the time the Notice of Termination was given, or if greater, at the highest rate in effect during the six (6) month period immediately preceding the Change of Control ("Annual Base Salary"), multiplied by the following salary multiple depending on the Executive's management level immediately preceding the Change of Control: Mgmt. Level 19 or above 3 Mgmt. Level 15-18 2 Mgmt. Level 14 1.5 Mgmt. Level 13 1 Mgmt. Level 11-12 .5
6 7 c. Bonus Multiple. An amount equal to the product of (i) the Executive's Annual Base Salary multiplied by (ii) the stated maximum bonus opportunity percentage available to the Executive under the respective incentive compensation plan immediately preceding either the Notice of Termination or, if greater, the Change of Control multiplied by (iii) the "Executive's Three Year Average Bonus Percentage" (as defined below) (the total hereinafter referred to as the "Bonus Opportunity") multiplied by (iv) the following multiple depending on the Executive's management level immediately preceding either the Notice of Termination or, if greater, the Change of Control: Mgmt. Level 17 or above 1 Mgmt. Level 11-16 0
The "Executive's Three Year Average Bonus Percentage" is the sum of the bonus percentages paid to the Executive divided by the stated maximum bonus opportunity percentages available to the Executive rounded to one decimal place (e.g., 86.3%) for each of the three (3) fiscal years immediately preceding either the Notice of Termination or, if greater, the Change of Control divided by three (3). If the Executive has been employed by the Corporation and/or its subsidiaries or affiliates for less than three (3) fiscal years prior to the Change of Control, or if the Executive was not eligible to receive an incentive compensation award pursuant to an incentive compensation plan of the Executive was not employed or eligible to receive an incentive award will be the average bonus percentage paid for such year to all executives in the Corporation or the Executive's respective division, as appropriate, with a stated maximum bonus opportunity level similar to that of the Executive immediately preceding either the Notice of Termination or, if greater, the Change of Control divided by the average stated maximum bonus opportunity available to these executives rounded to one decimal place (e.g., 86.3%). CALCULATION EXAMPLE OF EXECUTIVE'S THREE YEAR AVERAGE BONUS PERCENTAGE
(1) (2) (1)/(2) Bonus Percentage Stated Maximum Bonus Opportunity Year Paid Bonus Opportunity Percent ---- ---------------------- ----------------- --------------- 1 55.1% 60.0% 91.8% 2 71.8% 80.0% 89.8%
7 8
(1) (2) (1)/(2) Bonus Percentage Stated Maximum Bonus Opportunity Year Paid Bonus Opportunity Percent ---- ---- ----------------- ------- 3 102.0% 100.0% 102.0% ------ Sum 283.6% Executive's Three Year Average Bonus Percentage (Sum divided by 3) 94.5%
d. Tenure - Related Bonus. An amount equal to the product of the Bonus Opportunity determined in clause c above multiplied by the number of the Executive's full and prorated partial years of service with the Corporation and/or its subsidiaries or affiliates, subject to a maximum of twelve (12) years, divided by twelve (12). e. Change of Control Year Bonus. If the Executive has not yet been paid an incentive compensation award for the calendar year in which the Change of Control occurred in accordance with the terms of the respective incentive compensation plan in effect immediately preceding the Change of Control, the Executive shall receive an amount equal to the product of (i) the actual salary earned by the Executive during the calendar year in which the Change of Control occurred multiplied by (ii) the sum of (a) the greater of actual company performance or eighty percent (80%) of maximum company performance opportunity for such calendar year under the respective incentive compensation plan as in effect immediately preceding the Change of Control plus (b) the greater of actual individual performance or eighty percent (80%) of maximum individual performance opportunity for the Executive for such calendar year under the respective incentive compensation plan as in effect immediately preceding the Change of Control; provided, however, if a "Big Six" accounting firm chosen by the Corporation does not verify the actual company and individual performance in accordance with the terms of respective incentive compensation plan in effect immediately preceding the Change of Control, the Executive shall receive an amount equal to the product of (i) above multiplied by the sum of (a) one hundred percent (100%) of maximum company performance opportunity for such calendar year under the respective incentive compensation plan as in effect immediately preceding the Change of Control plus (b) one hundred percent (100%) of maximum individual performance opportunity for the Executive for such calendar year under the respective incentive compensation plan as in effect immediately preceding the Change of Control. f. Prior Year Bonus. If bonuses for the calendar year prior to the Executive's Date of Termination (other than those payable pursuant to clause e above) have been distributed and the Executive is entitled to and has not yet been paid his incentive compensation award for such calendar year, and his Date of Termination is subsequent to the incentive compensation award payment date for such calendar year, then the Executive shall receive an additional amount equal to the product of the actual salary earned by the Executive during the prior calendar year multiplied by the actual bonus percentage approved for the Executive for such calendar year under the respective incentive compensation plan. 8 9 The Corporation and/or the Trustee (as defined in Section 4(c)) shall pay to the Executive the aggregate of the amounts determined pursuant to clauses a through d and clause f above in a lump sum by cashier's check within five (5) business days after the later of the Executive's Date of Termination or the date of receipt by the Corporation and the Trustee (as defined in Section 4(c)) of the Executive's written demand for payment accompanied by notarized copies of the Notice of Termination, release and, to the extent applicable, letter of resignation (as described in Section 5(b)(II)). The Corporation and/or the Trustee (as defined in Section 4(c)) shall pay to the Executive the amount determined pursuant to clause e above by cashier's check no later than (i) the first March 15th following the calendar year in which the Change of Control occurred or (ii) five (5) business days after the later of the Executive's Date of Termination or the date of receipt by the Corporation and the Trustee (as defined in Section 4(c)) of the Executive's written demand for payment accompanied by notarized copies of the Notice of Termination, release and, to the extent applicable, letter of resignation (as described in Section 5(b)(II)), whichever is the last to occur. (II) Medical, Dental, Disability, Life Insurance and Other Similar Plans and Programs. Until the earliest to occur of (i) the last day of the Severance Period, (ii) the date on which the Executive becomes eligible for the designated or comparable coverage as an employee of another employer which provides or offers such coverage to its employees, or (iii) in the case of benefits requiring employee contributions, the date the Executive fails to make such contributions pursuant to the Corporation's or the plan's instructions (which instructions shall be reasonable and given to the Executive by the Corporation within five (5) business days following the Executive's Date of Termination) or otherwise cancels his coverage in accordance with plan provisions (the "Benefits Continuation Period"), the Corporation shall continue to provide all benefits which the Executive and/or his family is or would have been entitled to receive under all medical, dental, disability, supplemental life, group life, and accidental death and dismemberment insurance plans and programs, and other similar plans and programs of the Corporation and/or its subsidiaries or affiliates not otherwise provided for in this Agreement, in each case on a basis providing the Executive and/or his family with the opportunity to receive benefits at least equal to the greatest level of benefits provided by the Corporation and/or its subsidiaries or affiliates for the Executive under such plans and programs if and as in effect at any time during the six (6) month period immediately preceding either the Notice of Termination or, if greater, the Change of Control whether or not such plans or programs were in effect at the time of the execution of this Agreement. The non-contributory benefits will be paid for by the Corporation. The medical and dental plan benefits, to the extent applicable, will be provided in accordance with the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), except that the Corporation shall pay the COBRA premiums for the standard medical and dental plan benefits during the Benefits Continuation Period. If the Executive's participation in any such plan or program is barred by COBRA or for any other reason, the Corporation shall pay or provide for payment of such benefits or substantially similar benefits to the Executive and/or his family. Upon termination of 9 10 his coverage under this paragraph, the Executive may be eligible under COBRA to continue some of his benefits for an additional period of time. Additionally, the Executive has thirty-one (31) days from the last day of coverage in which to convert his group life insurance to an individual policy. The Executive must arrange for conversion through an agent of The Prudential Insurance Company of America, or such other insurance company as is then providing coverage. (III) Car. a. If, immediately prior to the Change of Control, the Executive was assigned a car and was in management level 14 or above, within five (5) business days after the Executive's Date of Termination, the Corporation shall transfer to the Executive free and clear title to the car assigned to the Executive on the Executive's Date of Termination, if any, or if the Executive chooses, to a car comparable to that assigned to the Executive at any time during the six (6) month period immediately preceding the Change of Control. b. If, immediately prior to the Change of Control, the Executive was assigned a car and was in management level 13 or below, then the following provisions will apply: If the Executive has less than one (1) full year of service with the Corporation and/or its subsidiaries or affiliates, the Executive may purchase from the Corporation free and clear title to the car assigned to the Executive on the Executive's Date of Termination, if any, or if the Executive chooses, to a car comparable to that assigned to the Executive at any time during the six (6) month period immediately preceding the Change of Control, for the average retail value of the car listed in the National Automobile Dealer's Association, Official Used Car Guide as of the date of the purchase. If the Executive has one (1) or more but fewer than five (5) full years of service with the Corporation and/or its subsidiaries or affiliates, the Executive may purchase from the Corporation free and clear title to the car assigned to the Executive on the Executive's Date of Termination, if any, or if the Executive chooses, to a car comparable to that assigned to the Executive at any time during the six (6) month period immediately preceding the Change of Control, for fifty percent (50%) of the average retail value of the car listed in the National Automobile Dealer's Association, Official Used Car Guide as of the date of the purchase. If the Executive has completed five (5) or more full years of service with the Corporation and/or its subsidiaries or affiliates, the Corporation shall transfer to the Executive free and clear title to the car assigned to the Executive on the Executive's Date of Termination, if any, or if the Executive chooses, to a car comparable to that assigned to the Executive at any time during the six (6) month period immediately preceding the Change of Control. 10 11 Purchase arrangements and title transfer must be completed within five (5) business days after the Executive's Date of Termination. c. The Executive shall not be entitled to any car telephone provided by the Corporation or its subsidiaries or affiliates and such car telephone, if applicable, shall be returned to the Corporation immediately upon title transfer. The Executive will be responsible for the sales tax on transfer as well as for all insurance, maintenance, taxes and other liabilities associated with the car after title transfer. Additionally, the Corporation shall assign to the Executive all claims for breach of warranty and other similar matters against the vendor and manufacturer of the car. The Executive agrees to accept such car in an "As Is" condition. THE EXECUTIVE WAS SOLELY RESPONSIBLE FOR THE SELECTION AND MAINTENANCE OF THE CAR AND THEREFORE ACKNOWLEDGES THAT THE CORPORATION DOES NOT MAKE ANY WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE CAR, INCLUDING, BUT NOT LIMITED TO THE CONDITION OR DESIGN OF THE CAR, ANY LATENT DEFECTS OF THE CAR, THE MERCHANTABILITY OF THE CAR OR ITS FITNESS FOR ANY PARTICULAR PURPOSE. d. Notwithstanding the Executive's management level, if the Executive was receiving a car allowance immediately preceding the Change of Control, the Corporation and/or the Trustee (as defined in Section 4(c)) shall pay to the Executive, in a lump sum by cashier's check within five (5) business days after the later of the Executive's Date of Termination or the date of receipt by the Corporation and the Trustee (as defined in Section 4(c)) of the Executive's written demand for payment accompanied by notarized copies of the Notice of Termination, release and, to the extent applicable, letter of resignation (as described in Section 5(b)(II)), an amount equal to the product of the Executive's monthly car allowance in effect at the time the Notice of Termination was given, or if greater, the highest monthly car allowance in effect for the Executive during the six (6) month period immediately preceding the Change of Control, multiplied by the salary multiple for the Executive set forth in clause (I)b above multiplied by 12. (IV) Outplacement. The Corporation and/or the Trustee (as defined in Section 4(c)) shall pay to the Executive, in a lump sum by cashier's check within five (5) business days after the later of the Executive's Date of Termination or the date of receipt by the Corporation and the Trustee (as defined in Section 4(c)) of the Executive's written demand for payment accompanied by notarized copies of the Notice of Termination, release and, to the extent applicable, letter of resignation (as described in Section 5(b)(II)), an amount equal to twenty percent (20%) of the aggregate of the Executive's Annual Base Salary and Bonus Opportunity (as defined in clauses (I)b and (I)c above respectively), subject to a maximum cost of $50,000 if the Executive was in management level 11-19 immediately prior to either the Notice of Termination, or if greater, the Change of Control and a maximum cost of $75,000 if the Executive was above management level 19 immediately prior to either the Notice of Termination, 11 12 or if greater, the Change of Control, which Control, the Corporation amount may be used by the Executive as he sees fit and, at his sole discretion, in seeking new employment, including outplacement services. (V) Perquisite, Country Club and Financial Planning/Tax Preparation Allowances. The Corporation and/or the Trustee (as defined in Section 4(c)) shall pay to the Executive, in a lump sum by cashier's check within five (5) business days after the later of the Executive's Date of Termination or the date of receipt by the Corporation and the Trustee (as defined in Section 4(c)) of the Executive's written demand for payment accompanied by notarized copies of the Notice of Termination, release and, to the extent applicable, letter of resignation (as described in Section 5(b)(II)), an amount equal to the perquisite, country club and financial planning/tax preparation allowances, as appropriate, the Executive would have been entitled to receive under the plans, programs, policies and practices of the Corporation and/or its subsidiaries or affiliates for the twelve (12) month perquisite and financial planning/tax preparation payment period of the Corporation or the Executive's respective division, as appropriate (i.e., January - December or September - August), in which the Notice of Termination was given, if not yet paid, and one (1) additional twelve (12) month period thereafter, but in no event for longer than the Severance Period, in each case on a basis providing the Executive with benefits at least equal to the greatest level of benefits provided by the Corporation and/or its subsidiaries or affiliates for the Executive under such plans, programs, policies and practices if and as in effect at any time during the six (6) month period immediately preceding either the Notice of Termination, or if greater, the Change of Control. (VI) Split-Dollar Life Insurance and Deferred Compensation. Notwithstanding anything in the applicable agreements, plans or policies to the contrary, if the Executive is covered by the Corporation's split-dollar life insurance with its attendant deferred compensation benefit on his Date of Termination, and the Executive wishes to retain both the life insurance coverage and its future deferred compensation benefit, the Executive may purchase the policy from the Corporation by paying the Corporation an amount equal to the cash value of the policy. If the Executive elects to purchase the policy from the Corporation, the Executive will have all the benefits inherent in ownership of the whole-life policy, including the cash value of the policy. If the Executive wishes to retain the life insurance coverage only, the Executive may convert the policy by forfeiting the deferred compensation benefit. If the Executive chooses this alternative, the Corporation will transfer ownership of the policy to the Executive, and contemporaneously the Executive will execute an agreement relinquishing the deferred compensation benefit. This alternative transfers the entire cash value of the policy to the Executive and relieves the Corporation of the administrative record-keeping associated with the Executive's deferred compensation benefit. 12 13 The Executive must notify the Corporation of his election for the transfer of his split-dollar life insurance policy and deferred compensation benefit within thirty (30) days following the Executive's Date of Termination and the Corporation shall complete the transfer immediately upon receipt of such notice and the required payment or executed agreement. (b) Gross-Up for Excise Tax. In the event that it shall be determined that any payment or benefit by the Corporation to or for the benefit of the Executive pursuant to the terms of this Agreement or any other payments or benefits received or to be received by the Executive in connection with or as a result of the Change of Control or the Executive's termination of employment or any event which is deemed by the Internal Revenue Service or any other taxing authority to constitute a change in the ownership or effective control of the Corporation, or in the ownership of a substantial portion of the assets of the Corporation ("Change of Control Payments") shall be subject to the tax (the "Excise Tax") imposed by Section 4999 (or any successor section) of the Internal Revenue Code of 1986, as it may be amended from time to time (the "Code"), the Corporation and/or the Trustee (as defined in Paragraph 4(c)) shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after (i) payment of any Excise Tax on the Change of Control Payments and (ii) payment of any federal and state and local income tax and Excise Tax upon the Gross-Up Payment, shall be equal to the Change of Control Payments. The determination of whether the Executive is subject to the Excise Tax and the amount of the Gross-Up Payment, if any, shall be made by a "Big Six" accounting firm chosen by the Trustee (as defined in Section 4(c)) and reasonably agreeable to the Executive, which determination shall be binding upon the Executive and the Corporation. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the calendar year in which the Gross-Up Payment is to be made in the state or locality of the Executive's residence on the Executive's Date of Termination. The Gross-Up Payment shall be paid to the Executive by cashier's check within five (5) business days following the receipt by the Trustee (as defined in Section 4(c)) of the Gross-Up Payment determination from the selected "Big Six" accounting firm. (c) Trust(s). (i) In order to ensure in the event of a Change of Control that timely payment will be made of certain obligations of the Corporation to the Executive provided for under this Agreement, the Corporation shall pay into one or more trust(s) (the "Trust(s)") established between the Corporation and any financial institution with assets in excess of $100 million selected by the Corporation prior to the Change of Control, as trustee (the "Trustee"), such amounts and at such time or times as are required in order to fully pay all amounts due the Executive pursuant to Section 4 that 13 14 are payable in cash or by cashier's check, or as are otherwise required pursuant to the terms of the Trust(s). Thereafter, all such payments required to be paid hereunder shall be made out of the Trust(s); provided, however, that the Corporation shall retain liability for and pay the Executive any amounts or provide for such other benefits due the Executive under this Agreement for which there are insufficient funds in the Trust(s), for which no funding of the Trust(s) is required or in the event that the Trustee fails to make such payment to the Executive within the time frames set forth in this Agreement. Prior to the Change of Control, and to the extent necessary because of a change in the Trustee, after the Change of Control, the Corporation shall provide the Executive with the name and address of the Trustee. (ii) For purposes of this Agreement, the term "the Corporation and/or the Trustee" shall mean the Trustee to the extent the Corporation has put funds in the Trust(s) and the Corporation to the extent the Corporation has not funded or fully funded the Trust(s); provided, however, that in accordance with Subsection (i) above, the Corporation shall retain liability for and pay the Executive any amounts or provide for such other benefits due the Executive under this Agreement for which the Trustee fails to make adequate payment to the Executive within the time frames set forth in this Agreement. 5. Obligations of the Executive. (a) Covenant of Confidentiality. All documents, records, techniques, business secrets and other information of the Corporation, its subsidiaries and affiliates, which have or will come into the Executive's possession from time to time during the Executive's affiliation with the Corporation and/or any of its subsidiaries or affiliates and which the Corporation treats as confidential and proprietary to the Corporation and/or any of its subsidiaries or affiliates shall be deemed as such by the Executive and, shall be the sole and exclusive property of the Corporation, its subsidiaries and affiliates. The Executive agrees that the Executive will keep confidential and not divulge to any other party any of the Corporation's or its subsidiaries' or affiliates' confidential information and business secrets, including, but not limited to, such matters as costs, profits, markets, sales, products, product lines, key personnel, pricing policies, operational methods, customers, customer requirements, suppliers, plans for future developments, and other business affairs and methods and other information not readily available to the public. Additionally, the Executive agrees that upon his termination of employment, the Executive shall promptly return to the Corporation any and all confidential and proprietary information of the Corporation and/or its subsidiaries or affiliates that is in his possession. (b) If, within the three (3) year period commencing on a Change of Control of the Corporation, (i) the Corporation or its subsidiaries or affiliates shall terminate the Executive's employment for any reason other than for Death, Disability or Cause, or (ii) the Executive shall terminate his employment with the Corporation or its subsidiaries 14 15 or affiliates for Good Reason, and the Executive shall elect to receive severance pay and benefits in accordance with Section 4, the Executive shall be subject to the following additional provisions: (I) Covenant Against Competition. During the Severance Period or the one (1) year period following the Executive's Date of Termination, whichever is shorter, the Executive shall not, without the prior written consent of the Corporation's Chief Executive Officer, directly or indirectly engage or become a partner, director, officer, principal, employee, consultant, investor, creditor or stockholder in any business, proprietorship, association, firm or corporation not owned or controlled by the Corporation or its subsidiaries or affiliates which is engaged or proposes to engage or hereafter engages in a business competitive directly with the business conducted by the Corporation or any of its subsidiaries or affiliates immediately prior to the Change of Control in any geographic area where such business of the Corporation or its subsidiaries or affiliates is conducted; provided, however, that the Executive is not prohibited from owning one percent (1%) or less of the outstanding capital stock of any corporation whose stock is listed on a national securities exchange. During the Severance Period or the one (1) year period following the Executive's Date of Termination, whichever is shorter, the Executive shall not, either on the Executive's own account or for any person, firm or company, solicit, interfere with or induce, or attempt to induce, any employee of the Corporation or any of its subsidiaries or affiliates to leave his employment or to breach his employment agreement, if any. (II) Release. Upon the Executive's termination of employment, the Executive and the Corporation shall execute a release agreement in the form attached as Exhibit A; provided, however, that the only condition to the Executive's receipt of any payments or benefits pursuant to this Agreement shall be his tender of such release, executed by him, to the Corporation, and the Executive's obligations and limitations under such release as executed by him shall be conditioned upon the execution of such release by the Corporation and delivery to the Executive within thirty (30) days of the Executive's tender thereof to the Corporation. In addition, to the extent applicable, upon the Executive's termination of employment, the Executive shall execute a resignation letter in the form attached as Exhibit B. (c) Specific Remedy. The Executive acknowledges and agrees that if the Executive commits a material breach of the Covenant of Confidentiality (Subsection (a) above) or the Covenant Against Competition (clause (I) of Subsection (b) above), the Corporation shall have the right to have the covenant specifically enforced by any court having appropriate jurisdiction on the grounds that any such breach will cause irreparable injury to the Corporation, and that money damages will not provide an adequate remedy to the Corporation. The Executive further acknowledges and agrees that the Covenant of Confidentiality and, if applicable, the Covenant Against Competition contained in this Agreement are fair, do not unreasonably restrict the 15 16 Executive's future employment and business opportunities, and are commensurate with the compensation arrangements set out in this Agreement. In addition, once the Executive makes an election to receive severance pay and benefits pursuant to Section 4 and is subject to Subsection (b) above, the Executive shall have no right to return any amounts or benefits that are already paid or to refuse to accept any amounts or benefits that are payable in the future in lieu of his specific performance of his obligations under Subsection (b) above. 6. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other plans, programs, policies or practices provided by the Corporation or any of its subsidiaries or affiliates and for which the Executive may qualify, nor shall anything herein limit or otherwise affect such rights as the Executive may have under such plans, programs, policies or practices or under any stock option or other agreements with the Corporation or any of its subsidiaries or affiliates, specifically including but not limited to the Ryder System, Inc. 1980 Stock Incentive Plan, the deferred compensation agreements, the Corporation's and/or its subsidiaries' or affiliates' retirement, 401(k) and profit sharing plans, the Ryder System, Inc. Benefit Restoration Plan supplemental disability and retiree life insurance. In the event there are any amounts which represent vested benefits or which the Executive is otherwise entitled to receive under these or any other plans, programs, policies or practices, including any plan, program, policy or practice adopted after the execution of this Agreement, of the Corporation or any of its subsidiaries or affiliates at or subsequent to the Executive's Date of Termination, the Corporation shall pay or cause the relevant plan, program, policy or practice to pay such amounts, to the extent not already paid, in accordance with the provisions of such plan, program, policy or practice. The phrase "Termination Date" as used in the Ryder System, Inc. 1980 Stock Incentive Plan shall mean the end of the Severance Period with respect to Non-Qualified Stock Options granted to the Executive, if any, pursuant to such plan, and the Executive's Date of Termination with respect to Incentive Stock Options and Restricted Stock Rights granted to the Executive, if any, thereunder. The last day of the Severance Period will be considered to be the Executive's termination date for purposes of the Executive's deferred compensation agreement(s), if any. 7. Full Settlement. Except as specifically provided otherwise in this Agreement, the Corporation's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any setoff, counterclaim, recoupment, defense or other right which the Corporation may have against the Executive or others. The Executive shall not be obligated to seek other employment by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement nor, except as specifically provided otherwise in this Agreement, shall the amount of any payment provided for under this Agreement be reduced by any compensation or benefits earned by the Executive as the result of employment by another employer after the Date of Termination, or otherwise. The Corporation agrees to pay all legal fees and expenses 16 17 which the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Corporation or others of the validity or enforceability of, or liability under any provision of this Agreement or any guarantee of performance thereof, in each case plus interest, compounded daily, on the total unpaid amount determined to be payable under this Agreement, such interest to be calculated on the basis of the greater of (a) two percent (2%) over the base or prime commercial lending rate announced by the First National Bank of Boston in effect from time to time during the period of such nonpayment or (b) eighteen percent (18%), but in no event greater than the highest interest rate permitted by law for such payments. 8. Successors. (a) This Agreement is personal to the Executive and the Executive does not have the right to assign this Agreement or any interest herein. (b) This Agreement shall inure to the benefit of and be binding upon the Corporation and its successors. The Corporation shall require any successor to all or substantially all of the business and/or assets of the Corporation, whether directly or indirectly, by purchase, merger, consolidation, acquisition of stock, or otherwise, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as the Corporation would be required to perform if no such succession had taken place, by a written agreement in form and substance reasonably satisfactory to the Executive, delivered to the Executive within five (5) business days after such succession. As used in this Agreement, "Corporation" shall mean the Corporation as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. 9. Miscellaneous. (a) The parties agree to submit to the non-exclusive jurisdiction of the courts in the state of Florida. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party and/or the Trustee, as applicable, by overnight express mail or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: at the Executive's last address appearing in the payroll/personnel records of the Corporation; If to the Corporation: Ryder System, Inc. 3600 N.W. 82nd Avenue Miami, Florida 33166 Attention: General Counsel 17 18 If to the Trustee: at the address provided pursuant to Section 4(c); or to such other address as either party or the Trustee shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. The Executive's failure to insist upon strict compliance with any provision hereof shall not be deemed to be a waiver of such provision or any other provision thereof. (d) The Executive understands and acknowledges that the payment and benefits provided to the Executive pursuant to this Agreement may be unsecured obligations of the Corporation. The Executive further understands and acknowledges that the payments and benefits under this Agreement, including but not limited to the cash payments, the car, the outplacement, and the split-dollar life insurance, may be compensation and as such may be included in either the Executive's W-2 earnings statements or 1099 statements. The Corporation may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation, as well as any other deductions consented to in writing by the Executive. (e) This Agreement, including its attached Exhibits, contains the entire understanding of the Corporation and the Executive with respect to the subject matter hereof. No agreements or representations, oral or written, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement and its attached Exhibits. (f) The employment of the Executive by the Corporation or its subsidiaries or affiliates may be terminated by either the Executive or the Corporation or its subsidiaries or affiliates at any time and for any reason. Nothing contained in this Agreement shall affect such rights to terminate; provided, however, that nothing in this Section 9(f) shall prevent the terms and provisions of this Agreement from being enforced in the event of a termination described in Section 4(a). (g) Whenever used in this Agreement, the masculine gender shall include the feminine or neuter wherever necessary or appropriate and vice versa and the singular shall include the plural and vice versa. (h) This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 10. Amendment and Restatement. The Corporation and the Executive agree 18 19 that this Agreement amends and correctly restates the entire agreement between the parties as of February 24, 1989; that the provisions of this Agreement supersede and replace the provisions of the Change of Control Severance Agreement between the Corporation and the Executive dated as of June 26, 1987; and that the terms and provisions of this Agreement shall be binding on the Corporation and the Executive in all respects. IN WITNESS WHEREOF, the Executive has hereunto set his hand and the Corporation has caused these presents to be executed in its name on its behalf, and its corporate seal to be hereunto affixed and attested by its secretary, all as of the day and year first above written. ------------------------- ------------------------ Witness Executive ------------------------- ------------------------ Witness Social Security Number ATTEST: RYDER SYSTEM, INC. (the "Corporation") By: ------------------------ --------------------- Secretary Executive Vice President (Seal) 19 20 Amended and Restated Change of Control Severance Agreement EXHIBIT A MUTUAL RELEASE AGREEMENT FOR AND IN CONSIDERATION OF (A) THE PAYMENT TO (Executive's Name) OF THE SEVERANCE BENEFITS PURSUANT TO THE AMENDED AND RESTATED CHANGE OF CONTROL SEVERANCE AGREEMENT BETWEEN RYDER SYSTEM, INC. ("RSI") AND (Executive's Name) DATED ____________________, 19__(THE "CHANGE OF CONTROL SEVERANCE AGREEMENT") AND (B) THE EXECUTION OF THIS MUTUAL RELEASE AGREEMENT BY BOTH RSI AND (Executive's Name), WITH THE EXECUTION OF THIS AGREEMENT BY RSI AND THE DELIVERY THEREOF TO (Executive's Name) OCCURRING WITHIN THIRTY (30) DAYS OF (Executive's Name)'S TENDER OF THIS AGREEMENT TO RSI, (Executive's Name), ON BEHALF OF HIMSELF/HERSELF, HIS/HER HEIRS, SUCCESSORS AND ASSIGNS (COLLECTIVELY THE "EXECUTIVE"), AND RSI, ON BEHALF OF ITSELF, AND AS AGENT FOR ALL OF ITS SUBSIDIARIES AND AFFILIATES, THEIR AGENTS, EMPLOYEES, OFFICERS, DIRECTORS, SUCCESSORS AND ASSIGNS (COLLECTIVELY THE "CORPORATION"), HEREBY RELEASE AND FOREVER DISCHARGE EACH OTHER FROM ANY AND ALL CLAIMS, DEMANDS, ACTIONS, AND CAUSES OF ACTION, AND ALL LIABILITY WHATSOEVER, WHETHER KNOWN OR UNKNOWN, FIXED OR CONTINGENT, WHICH THEY HAVE OR MAY HAVE AGAINST EACH OTHER AS A RESULT OF THE EXECUTIVE'S EMPLOYMENT BY AND SUBSEQUENT TERMINATION AS AN EMPLOYEE OF THE CORPORATION. THIS INCLUDES BUT IS NOT LIMITED TO CLAIMS AT LAW OR EQUITY OR SOUNDING IN CONTRACT (EXPRESS OR IMPLIED) OR TORT ARISING UNDER FEDERAL, STATE, OR LOCAL LAWS PROHIBITING AGE, SEX, RACE, HANDICAP, VETERAN OR ANY OTHER FORMS OF DISCRIMINATION (INCLUDING THE AGE DISCRIMINATION IN EMPLOYMENT ACT AND TITLE VII OF THE CIVIL RIGHTS ACT OF 1964) OR CLAIMS GROWING OUT OF ANY LEGAL RESTRICTIONS ON THE CORPORATION'S RIGHT TO TERMINATE ITS EMPLOYEES. The Executive and the Corporation understand and agree that this Agreement and the Change of Control Severance Agreement shall not in any way be construed as an admission by the Corporation or the Executive of any unlawful or wrongful acts whatsoever against each other or any other person, and both the Corporation and the Executive specifically disclaim any liability to or wrongful acts against each other or any other person. The Corporation and the Executive agree that the terms and provisions of this Agreement and the Change of Control Severance Agreement, as well as any and all incidents leading to or resulting from this Agreement and the Change of Control Severance Agreement, are confidential and may not be discussed with anyone without the prior written consent of the other party, except as required by law; provided, however, that the Executive and RSI or its successor agree to immediately give the other party notice of any request to discuss this Agreement or the Change of Control Severance Agreement and to provide the other party with the opportunity to contest such request prior to their response. 21 The Executive and the Corporation acknowledge and agree that this Agreement is intended to include and discharge all claims which they do not know or suspect to exist at the time of execution relating to the Executive's employment and termination and they expressly waive and relinquish any rights that they may have to the contrary; provided, however, that this Agreement does not release the Corporation or the Executive from any of their current, future or ongoing obligations under the Change of Control Severance Agreement, specifically including but not limited to cash payments and benefits due the Executive in the case of the Corporation, and the Covenant of Confidentiality and, to the extent applicable, the Covenant Against Competition in the case of the Executive. This Agreement shall be governed by and construed in accordance with the laws of the state of Florida, without reference to principles of conflict of laws. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. WE CERTIFY THAT WE HAVE FULLY READ, HAVE RECEIVED AN EXPLANATION OF, HAVE NEGOTIATED AND COMPLETELY UNDERSTAND THE PROVISIONS OF THIS AGREEMENT, THAT WE HAVE HAD SUFFICIENT TIME AND THE OPPORTUNITY TO SEEK LEGAL ADVICE FROM AN ATTORNEY BEFORE ENTERING INTO THIS AGREEMENT, AND THAT WE ARE SIGNING THIS AGREEMENT FREELY AND VOLUNTARILY, WITHOUT DURESS, COERCION OR UNDUE INFLUENCE. Dated this ___ day of _______, 19__. __________________________ __________________________ Witness Executive __________________________ __________________________ Witness Social Security Number ATTEST: RYDER SYSTEM, INC., on behalf of itself and as agent for the Corporation By: __________________________ __________________________ Secretary Its: (Seal) ______________________ Executive's Date of Termination: _____________________ 2 22 STATE OF _________) ) ss: COUNTY OF ________) Before me personally appeared __________________, to me well known and known to me to be the person described in and who executed the foregoing instrument, and acknowledged to and before me that he/she executed said instrument for the purposes therein expressed. WITNESS my hand and official seal this _____ day of ______________, 19__. ________________________ Notary Public My Commission Expires: _______________________ (Seal) STATE OF _________) ) ss: COUNTY OF ________) Before me personally appeared ________________________ and ________________________, to me well known and known to me to be the _____ _________________ and ____________________ of Ryder System, Inc. who executed the foregoing instrument, and acknowledged to and before me that they executed said instrument for the purposes therein expressed. WITNESS my hand and official seal this _____ day of ______________, 19__. ________________________ Notary Public My Commission Expires: _______________________ (Seal) 3 23 Amended and Restated Change of Control Severance Agreement EXHIBIT B Resignation Letter TO THE BOARD OF DIRECTORS OF RYDER SYSTEM, INC. Gentlemen: Effective immediately, I hereby resign as an officer and/or director of Ryder System, Inc. and/or its subsidiaries and affiliates and, to the extent applicable, from all committees of which I am a member. Sincerely, ________________________ Executive's Name ________________________ Date EX-10.3A 4 SEVERANCE AGREEMENT 1 EXHIBIT 10.3(a) Amended and Restated Severance Agreement THIS AMENDED AND RESTATED AGREEMENT dated as of February 24, 1989 amends, restates and supersedes the provisions of a certain Non-Change of Control Severance Agreement between RYDER SYSTEM, INC., a Florida corporation (the "Corporation"), and _________________________________ (the "Executive"), dated as of June 26, 1987. WITNESSETH: WHEREAS, the Executive is an officer and/or key employee of the Corporation and/or its subsidiaries or affiliates and an integral part of its management; and WHEREAS, in order to retain the Executive, the Corporation desires to provide severance benefits to the Executive if the Executive's employment with the Corporation or its subsidiaries or affiliates terminates as provided herein prior to a Change of Control (as defined in Section 2); NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, it is hereby agreed by and between the Corporation and the Executive as follows: 1. Term of Agreement. This Agreement shall become effective as of the date hereof and shall terminate upon the occurrence of the earliest of the events specified below; provided, however, that Section 5 shall survive termination: (a) the last day of the Severance Period (as defined in Section 3(e)); (b) the termination of the Executive's employment by the Executive for any reason or by the Corporation or its subsidiaries or affiliates for Death, Disability or Cause (as defined in Sections 3(b) and (a) respectively); (c) one (1) year following the date of receipt of a mailing (by registered or certified mail, return receipt requested) or hand delivery to the Executive by the Corporation of written notice of its intent to terminate this Agreement, provided that the Executive is not then receiving severance pay and benefits pursuant to Section 4 as a result of his termination by the Corporation or its subsidiaries or affiliates other than for Death, Disability or Cause (as defined in Sections 3(b) and (a) respectively) prior to the end of the one (1) year period; (d) a Change of Control of the Corporation (as defined in Section 2), provided that the Executive is not then receiving severance pay and benefits pursuant to Section 4 as a result of his termination by the Corporation or its subsidiaries or affiliates other than for Death, Disability or Cause (as defined in Sections 3(b) and (a) respectively) prior to the Change of Control; (e) the material breach by the Executive of the provisions of Section 5; 2 (f) the termination of this Agreement pursuant to Section 4(a)(i) or Section 4(a)(iii)(II). Additionally, notwithstanding anything in this Agreement to the contrary, if the Executive should die while receiving severance pay or benefits pursuant to Section 4 as a result of his termination by the Corporation or its subsidiaries or affiliates other than for Death, Disability or Cause (as defined in Sections 3(b) and (a) respectively), this Agreement shall terminate immediately upon the Executive's death and both parties shall be released from all obligations under this Agreement other than those under Section 5(b)(II) and those relating to amounts or benefits which are payable under this Agreement within five (5) business days after the Executive's Date of Termination (if not yet paid), are vested under any plan, program, policy or practice or which the Executive is otherwise entitled to receive upon his death, including but not limited to, life insurance. Any payment due pursuant to the preceding sentence upon the Executive's death shall be made to the estate of the deceased Executive, unless the plan, program, policy, practice or law provides otherwise. 2. Change of Control. For the purpose of this Agreement, a "Change of Control" shall be deemed to have occurred if: (a) a third person, including a "group" as defined in Section l3(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), but excluding any employee benefit plan or plans of the Corporation and its subsidiaries and affiliates, becomes the beneficial owner, directly or indirectly, of twenty percent (20%) or more of the combined voting power of the Corporation's outstanding voting securities ordinarily having the right to vote for the election of directors of the Corporation; or (b) the individuals who, as of June 26, 1987, constituted the Board of Directors of the Corporation (the "Board" generally and as of June 26, 1987, the "Incumbent Board") cease for any reason to constitute at least two-thirds (2/3) of the Board, or in the case of a merger or consolidation of the Corporation, do not constitute or cease to constitute at least two-thirds (2/3) of the board of directors of the surviving company (or in a case where the surviving corporation is controlled, directly or indirectly, by another corporation or entity do not constitute or cease to constitute at least two-thirds (2/3) of the board of such controlling corporation or do not have or cease to have at least two-thirds (2/3) of the voting seats on any body comparable to a board of directors of such controlling entity or, if there is no body comparable to a board of directors, at least two-thirds (2/3) voting control of such controlling entity), provided that any person becoming a director (or, in the case of a controlling non-corporate entity, obtaining a position comparable to a director or obtaining a voting interest in such entity) subsequent to June 26, 1987 whose election, or nomination for election, was approved by a vote of the persons comprising at least two-thirds (2/3) of the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; or 2 3 (c) there is a liquidation or dissolution of the Corporation or a sale of all or substantially all of the assets of either or both (i) the business group which constituted the Vehicle Leasing and Services Division of the Corporation as of June 26, 1987 or (ii) the combined business groups of the Corporation as constituted as of June 26, 1987 other than the business group which constituted the Vehicle Leasing and Services Division of the Corporation as of June 26, 1987. If the Corporation enters into an agreement or series of agreements or the Board passes a resolution which will result in the occurrence of any of the matters described in Subsections (a), (b) or (c), and the Executive's employment is terminated subsequent to the date of execution of such agreement or series of agreements or the passage of such resolution, but prior to the occurrence of any of the matters described in Subsections (a), (b) or (c), then, upon the occurrence of any of the matters described in Subsections (a), (b) or (c), a Change of Control shall be deemed to have retroactively occurred on the date of the execution of the earliest of such agreement(s) or the passage of such resolution. 3. Certain Definitions. (a) Cause. The Executive's employment may be terminated for Cause only if the Corporation's Chief Executive Officer determines that Cause (as defined below) exists. For purposes of this Agreement, "Cause" means (i) an act or acts of fraud, misappropriation, or embezzlement on the Executive's part which result in or are intended to result in his or another's personal enrichment at the expense of the Corporation or its subsidiaries or affiliates, (ii) conviction of a felony, (iii) conviction of a misdemeanor involving moral turpitude, or (iv) willful failure to report to work for more than thirty (30) continuous days not attributable to eligible vacation or supported by a licensed physician's statement. For the purposes of this Section 3(a), any good faith interpretation by the Corporation of the foregoing definition of "Cause" shall be conclusive on the Executive. (b) Death or Disability. (i) The Executive's employment will be terminated by the Corporation or its subsidiaries or affiliates automatically upon the Executive's death ("Death"). (ii) After having established the Executive's Disability (as defined below), the Corporation may give to the Executive written notice of the Corporation's and/or its subsidiaries' or affiliates' intention to terminate the Executive's employment for Disability. The Executive's employment will terminate for Disability effective on the thirtieth (30th) day after the Executive's receipt of such notice (the "Disability Effective Date") if within such thirty (30) day period after such receipt the Executive shall fail to return to full-time performance of his duties. For purposes of this Agreement, "Disability" means disability which after the expiration of more than twenty-six (26) weeks after its commencement is determined to be total and permanent by a licensed physician selected by the Corporation or its insurers and reasonably acceptable to the Executive or his legal representative. 3 4 In the event of the Executive's termination for Death or Disability, the Executive and, to the extent applicable, his legal representatives, executors, heirs, legatees and beneficiaries shall have no rights under this Agreement and their sole recourse, if any, shall be under the death or disability provisions of the plans, programs, policies and practices of the Corporation and/or its subsidiaries and affiliates, as appropriate. (c) Notice of Termination. Any termination by the Corporation or its subsidiaries or affiliates other than for Death shall be communicated by a Notice of Termination to the Executive hereto given in accordance with Section 9(b). For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated, and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than fifteen (l5) days after the giving of such notice or, in the event of Disability, the Disability Effective Date). (d) Date of Termination. Date of Termination means the date of receipt of the Notice of Termination or any later date specified therein, as the case may be; provided, however, that if the Executive's employment is terminated by reason of Death or Disability, the Date of Termination shall be the date of Death of the Executive or the Disability Effective Date, as the case may be. (e) Severance Period. Unless terminated sooner pursuant to Section 1, the Severance Period means the period set forth below depending on the Executive's management level at the time the Notice of Termination was given, which period shall begin on the day following the Executive's Date of Termination: Mgmt. Level 19 or above Three (3) years Mgmt. Level 15-18 Two (2) years Mgmt. Level 14 One (1) year and six (6) months Mgmt. Level 13 One (1) year Mgmt. Level 11-12 Six (6) months
4. Obligations of the Corporation. (a) Circumstances of Termination. (i) If, during the term of this Agreement prior to a Change of Control, the Corporation or its subsidiaries or affiliates shall terminate the Executive's employment for any reason other than for Death, Disability or Cause, the Corporation agrees to provide the Executive with compensation, benefits and perquisites in accordance with 4 5 the terms and provisions set forth in Subsection (iii) below and the other provisions of this Agreement, and the Executive agrees that he shall be subject to such terms and provisions. The Executive shall not be deemed to have terminated his employment with the Corporation or any of its subsidiaries or affiliates, and thus shall not be entitled to any amounts or benefits pursuant to this Agreement, if he leaves the employ of the Corporation or any of its subsidiaries or affiliates for immediate reemployment with the Corporation or any of its subsidiaries or affiliates. Additionally, notwithstanding anything in this Agreement to the contrary, the Executive shall not be entitled to any amounts or benefits pursuant to this Agreement if, as a result of the sale of all or substantially all of the stock or assets of one or more of the Corporation's subsidiaries or affiliates not constituting a Change of Control, the Executive continues as an employee of any of the companies whose stock or assets were sold or the Executive leaves the employ of the Corporation or any of its subsidiaries or affiliates and the Executive (A) is offered employment with the purchasing company or any of its subsidiaries or affiliates, or (B) is offered continuing employment with the Corporation or any of its remaining subsidiaries or affiliates. In the event of the occurrence of any of the events set forth in the preceding sentence, this Agreement shall terminate immediately and the Executive shall not be entitled to any amounts or benefits hereunder; provided, however, that this Agreement shall continue in effect if the Executive accepts the offer of continuing employment with the Corporation or any of its remaining subsidiaries or affiliates. (ii) If during the term of this Agreement, the Executive shall terminate his employment with the Corporation or its subsidiaries or affiliates for any reason, or the Corporation or its subsidiaries or affiliates shall terminate the Executive's employment for Death, Disability or Cause, then the Executive shall not be entitled to any of the benefits set forth in Subsection (iii) below or in any other provision of this Agreement, except to the extent of the amounts which represent vested benefits or which the Executive is otherwise entitled to receive under any plan, program, policy or practice of the Corporation or any of its subsidiaries or affiliates at or subsequent to the Executive's Date of Termination. (iii) If the Executive is entitled to receive severance pay and benefits under Subsection (i) above, the Corporation agrees to provide the Executive with the following compensation, benefits and perquisites, subject to Section 5(b): (I) Cash Entitlement. The Corporation shall pay to the Executive the aggregate of the amounts determined pursuant to clauses a through e below: a. Unpaid Salary and Vacation. If not already paid, the Executive's base salary and unused vacation entitlement through the Executive's Date of Termination at the rate in effect at the time the Notice of Termination was given. 5 6 b. Salary Multiple. A continuation of the Executive's annual base salary at the rate in effect at the time the Notice of Termination was given ("Annual Base Salary") for the Executive's applicable Severance Period (as defined in Section 3(e)). c. Bonus Multiple. An amount equal to the product of (i) the Executive's Annual Base Salary multiplied by (ii) the stated maximum bonus opportunity percentage available to the Executive under the respective incentive compensation plan immediately preceding the Notice of Termination multiplied by (iii) the "Executive's Three Year Average Bonus Percentage" (as defined below) (the total hereinafter referred to as the "Bonus Opportunity") multiplied by (iv) the following multiple depending on the Executive's management level at the time the Notice of Termination was given: Mgmt. Level 17 or above 1 Mgmt. Level 11-16 0
The "Executive's Three Year Average Bonus Percentage" is the sum of the bonus percentages paid to the Executive divided by the stated maximum bonus opportunity percentages available to the Executive rounded to one decimal place (e.g., 86.3%) for each of the three (3) fiscal years immediately preceding the date the Notice of Termination was given divided by three (3). If the Executive has been employed by the Corporation and/or its subsidiaries or affiliates for less than three (3) fiscal years at the time the Notice of Termination was given, or if the Executive was not eligible to receive an incentive compensation award pursuant to an incentive compensation plan of the Corporation and/or its subsidiaries or affiliates for one (1) or more of the three (3) fiscal years immediately preceding the date the Notice of Termination was given, the bonus percentage to be applied in the "Executive's Three Year Bonus Percentage" calculation for any year in which the Executive was not employed or eligible to receive an incentive award will be the average bonus percentage paid for such year to all executives in the Corporation or the Executive's respective division, as appropriate, with a stated maximum bonus opportunity level similar to that of the Executive at the date the Notice of Termination was given divided by the average stated maximum bonus opportunity percentage available to these executives for such year rounded to one decimal place (e.g., 86.3%). 6 7 CALCULATION EXAMPLE OF EXECUTIVE'S THREE YEAR AVERAGE BONUS PERCENTAGE
(1) (2) (1)(2) Bonus Percentage Stated Maximum Bonus Opportunity Year Paid Bonus Opportunity Percent ---- -------------------- ----------------- ------------------------ 1 55.1% 60.0% 91.8% 2 71.8% 80.0% 89.8% 3 102.0% 100.0% 102.0% ------ Sum 283.6% Executive's Three Year Average Bonus Percentage (Sum divided by 3) 94.5%
d. Tenure - Related Bonus. An amount equal to the product of the Bonus Opportunity determined in clause c above multiplied by the number of the Executive's full and prorated partial years of service with the Corporation and/or its subsidiaries or affiliates, subject to a maximum of twelve (12) years, divided by twelve (12). e. Prior Year Bonus. If bonuses for the calendar year prior to the Executive's Date of Termination have been distributed and the Executive has not yet been paid his incentive compensation award for such calendar year, and his Date of Termination is subsequent to the incentive compensation award payment date for such calendar year, then the Executive shall receive an additional amount equal to the product of the actual salary earned by the Executive during the prior calendar year multiplied by the actual bonus percentage approved for the Executive for such calendar year under the respective incentive compensation plan. The Executive agrees that he shall not be eligible for or entitled to any other incentive compensation award, including any pro rata incentive compensation award, pursuant to the Corporation's and/or its subsidiaries' or affiliates' incentive compensation plans. The Executive's agreement to this provision is a material consideration for the Corporation's executing this Agreement. The Corporation shall pay to the Executive the amounts determined in clauses a through e above as follows: Clause a: In a lump sum no later than the next normal pay period for the Executive, unless otherwise required by law. 7 8 Clause b: In equal semi-monthly installments on the fifteenth and last day of each month during the Severance Period. Clause c: No later than the first March 1st following the Executive's Date of Termination. Clauses d and e: In a lump sum within five (5) business days after the Executive's Date of Termination. (II) Medical, Dental, Disability, Life Insurance and Other Similar Plans and Programs. Until the earliest to occur of (i) the last day of the Severance Period, (ii) the date on which the Executive becomes eligible for the designated coverage as an employee of another employer which provides or offers such coverage to its employees, or (iii) in the case of benefits requiring employee contributions, the date the Executive fails to make such contributions pursuant to the Corporation's or the plan's instructions or otherwise cancels his coverage in accordance with plan provisions (the "Benefits Continuation Period"), the Corporation shall continue to provide all benefits which the Executive and/or his family is or would have been entitled to receive under all medical, dental, disability, supplemental life, group life, and accidental death and dismemberment insurance plans and programs, and other similar plans and programs of the Corporation and/or its subsidiaries or affiliates not otherwise provided for in this Agreement, in each case on a basis providing the Executive and/or his family with the opportunity to receive benefits at least equal to those benefits provided by the Corporation and/or its subsidiaries or affiliates for the Executive under such plans and programs if and as in effect at the time the Notice of Termination was given whether or not such plans or programs were in effect at the time of the execution of this Agreement. The non-contributory benefits will be paid for by the Corporation. The medical and dental plan benefits, to the extent applicable, will be provided in accordance with the provisions of the Consolidated Omnibus Budget Reconciliation Act of l985, as amended ("COBRA"), except that the Corporation shall pay the COBRA premiums for the standard medical and dental plan benefits during the Benefits Continuation Period. If the Executive's participation in any such plan or program is barred by COBRA or for any other reason, the Corporation shall pay or provide for payment of such benefits or substantially similar benefits to the Executive and/or his family. Failure of the Executive to accept available coverage from another employer or to notify the Corporation, in writing, within thirty (30) days of the Executive's eligibility for coverage under another employer's plan shall terminate the Severance Period and this Agreement immediately, and the Corporation shall have no further obligations to the Executive under this Agreement; provided, however, that the Executive will, if applicable, continue to be subject to the provisions of Section 5 of this Agreement. Upon termination of his coverage under this paragraph, the Executive may be eligible under COBRA to continue some of his benefits for an additional period of time. Additionally, the Executive has thirty-one (31) days from the last day of coverage in which to convert his group life insurance to an individual policy. The Executive must arrange for conversion through 8 9 an agent of The Prudential Insurance Company of America, or such other insurance company as is then providing coverage. (III) Car. a. If, at the time the Notice of Termination was given, the Executive was assigned a car and was in management level 14 or above, within five (5) business days after the Executive's Date of Termination, the Corporation shall transfer to the Executive free and clear title to the car assigned to the Executive at the time the Notice of Termination was given. b. If, at the time the Notice of Termination was given, the Executive was assigned a car and was in management level 13 or below, then the following provisions will apply: If the Executive has less than one (1) full year of service with the Corporation and/or its subsidiaries or affiliates, the Executive shall have no right to purchase or receive from the Corporation the car assigned to the Executive at the time the Notice of Termination was given since the Executive shall have no rights under this Agreement pursuant to Section 4(c). If the Executive has one (1) or more but fewer than five (5) full years of service with the Corporation and/or its subsidiaries or affiliates, the Executive may purchase from the Corporation free and clear title to the car assigned to the Executive at the time the Notice of Termination was given for fifty percent (50%) of the average retail value of the car listed in the National Automobile Dealer's Association, Official Used Car Guide as of the date of the purchase. If the Executive has completed five (5) or more full years of service with the Corporation and/or its subsidiaries or affiliates, the Corporation shall transfer to the Executive free and clear title to the car assigned to the Executive at the time the Notice of Termination was given. Purchase arrangements and title transfer must be completed within five (5) business days after the Executive's Date of Termination. c. The Executive shall not be entitled to any car telephone provided by the Corporation or its subsidiaries or affiliates and such car telephone, if applicable, shall be returned to the Corporation immediately upon title transfer. The Executive will be responsible for the sales tax on transfer as well as for all insurance, maintenance, taxes and other liabilities associated with the car after title transfer. Additionally, the Corporation shall assign to the Executive all claims for breach of warranty and other similar matters against the vendor and manufacturer of the car. The Executive agrees to accept such car in an "As-Is" condition. THE EXECUTIVE WAS SOLELY RESPONSIBLE FOR THE SELECTION AND MAINTENANCE OF THE CAR AND THEREFORE ACKNOWLEDGES THAT THE CORPORATION DOES NOT MAKE 9 10 ANY WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE CAR, INCLUDING, BUT NOT LIMITED TO THE CONDITION OR DESIGN OF THE CAR, ANY LATENT DEFECTS OF THE CAR, THE MERCHANTABILITY OF THE CAR OR ITS FITNESS FOR ANY PARTICULAR PURPOSE. d. Notwithstanding the Executive's management level, if the Executive was receiving a car allowance at the time the Notice of Termination was given, the Corporation shall pay to the Executive, in a lump sum within five (5) business days after the Executive's Date of Termination, an amount equal to the product of the Executive's monthly car allowance in effect at the time the Notice of Termination was given multiplied by 12 multiplied by the following multiple depending on the Executive's management level at the time the Notice of Termination was given: Mgmt. Level 19 or above 3 Mgmt. Level 15-18 2 Mgmt. Level 14 1.5 Mgmt. Level 13 1 Mgmt. Level 11-12 .5
(IV) Outplacement. Until the end of the Severance Period or until the Executive obtains another full-time job, whichever occurs first, the Corporation shall provide the Executive with professional outplacement services of the Corporation's choice and shall reimburse the Executive for documented incidental outplacement expenses directly related to job search such as resume mailing, interviewing trips, and clerical support, subject to a maximum cost of the lesser of (i) ten percent (10%) of the Executive's Annual Base Salary (as defined in clause (I)b above), or (ii) $20,000 if the Executive was in management level 11-19 at the time the Notice of Termination was given or $30,000 if the Executive was above management level 19 at the time the Notice of Termination was given. The Executive shall not be entitled to receive cash in lieu of the professional outplacement services provided by the Corporation. (V) Perquisite, Country Club and Financial Planning/Tax Preparation Allowances. For the twelve (12) month perquisite, country club and financial planning/tax preparation payment period of the Corporation or the Executive's respective division, as appropriate (i.e., January - December or September - August), in which the Notice of Termination was given, if not yet paid, and one (1) additional twelve (12) month period thereafter, but in no event for longer than the Severance Period, the Corporation shall continue to provide the Executive with the perquisite, country club and financial planning/tax preparation allowances, as appropriate, the Executive would have been entitled to receive under the plans, programs, policies and practices of the Corporation and/or its subsidiaries or affiliates (subject to the Corporation's receipt of 10 11 appropriate documented evidence of such expenses), in each case on a basis providing the Executive with an opportunity to receive benefits at least equal to those provided by the Corporation and/or its subsidiaries or affiliates for the Executive under such plans, programs, policies and practices if and as in effect at the time the Notice of Termination was given. (VI) Split-Dollar Life Insurance and Deferred Compensation. Notwithstanding anything in the applicable agreements, plans or policies to the contrary, if the Executive is covered by the Corporation's split-dollar life insurance with its attendant deferred compensation benefit at the time the Notice of Termination is given, and the Executive wishes to retain both the life insurance coverage and its future deferred compensation benefit, the Executive may purchase the policy from the Corporation by paying the Corporation an amount equal to the cash value of the policy. If the Executive elects to purchase the policy from the Corporation, the Executive will have all the benefits inherent in ownership of the whole-life policy, including the cash value of the policy. If the Executive wishes to retain the life insurance coverage only, the Executive may convert the policy by forfeiting the deferred compensation benefit. If the Executive chooses this alternative, the Corporation will transfer ownership of the policy to the Executive, and contemporaneously the Executive will execute an agreement relinquishing the deferred compensation benefit. This alternative transfers the entire cash value of the policy to the Executive and relieves the Corporation of the administrative record-keeping associated with the Executive's deferred compensation benefit. The Executive must notify the Corporation of his election for the transfer of his split-dollar life insurance policy and deferred compensation benefit within thirty (30) days following the Executive's Date of Termination and the Corporation shall complete the transfer immediately upon receipt of such notice and the required payment or executed agreement. (b) If a Change of Control occurs and the Executive is then receiving severance pay and benefits pursuant to Section 4(a) as a result of his termination by the Corporation or its subsidiaries or affiliates other than for Death, Disability or Cause prior to the Change of Control, the Corporation shall pay to the Executive in a lump sum, within five (5) business days after the Change of Control, an amount (in lieu of future periodic payments) equal to the present value of all future cash payments due to the Executive under this Agreement (including the maximum outplacement and perquisite, country club and financial planning/tax preparation allowances, as appropriate) using the First National Bank of Boston's base or prime commercial lending rate then in effect for such computation. The Corporation and the Executive shall continue to be liable to each other for all of their other respective obligations under this Agreement. 11 12 (c) Notwithstanding anything in this Agreement to the contrary, no amount shall be paid or payable under this Agreement unless the Executive has been employed by the Corporation and/or its subsidiaries or affiliates for at least twelve (12) consecutive months at the time of his termination. In the event the Executive is employed for less than twelve (12) consecutive months, the Executive hereby agrees that he shall not receive or be entitled to anything under this Agreement. 5. Obligations of the Executive. (a) Covenant of Confidentiality. All documents, records, techniques, business secrets and other information of the Corporation, its subsidiaries and affiliates which have or will come into the Executive's possession from time to time during the Executive's affiliation with the Corporation and/or any of its subsidiaries or affiliates and which the Corporation treats as confidential and proprietary to the Corporation and/or any of its subsidiaries or affiliates shall be deemed as such by the Executive and, shall be the sole and exclusive property of the Corporation, its subsidiaries and affiliates. The Executive agrees that the Executive will keep confidential and not divulge to any other party any of the Corporation's or its subsidiaries' or affiliates' confidential information and business secrets, including, but not limited to, such matters as costs, profits, markets, sales, products, product lines, key personnel, pricing policies, operational methods, customers, customer requirements, suppliers, plans for future developments, and other business affairs and methods and other information not readily available to the public. Additionally, the Executive agrees that upon his termination of employment, the Executive shall promptly return to the Corporation any and all confidential and proprietary information of the Corporation and/or its subsidiaries or affiliates that is in his possession. (b) If, at any time during the term of this Agreement, the Corporation or its subsidiaries or affiliates shall terminate the Executive's employment for any reason other than for Death, Disability or Cause, and the Executive shall elect to receive severance pay and benefits in accordance with Section 4, the Executive shall be subject to the following additional provisions: (I) Covenant Against Competition. During the Severance Period, the Executive shall not, without the prior written consent of the Corporation's Chief Executive Officer, directly or indirectly engage or become a partner, director, officer, principal, employee, consultant, investor, creditor or stockholder in any business, proprietorship, association, firm or corporation not owned or controlled by the Corporation or its subsidiaries or affiliates which is engaged or proposes to engage or hereafter engages in a business competitive directly with the business conducted by the Corporation or any of its subsidiaries or affiliates in any geographic area where such business of the Corporation or its subsidiaries or affiliates is conducted; provided, however, that the Executive is not prohibited from owning one percent (1%) or less of the outstanding capital stock of any corporation whose stock is listed on a national 12 13 securities exchange. During the Severance Period, the Executive shall not, either on the Executive's own account or for any person, firm or company, solicit, interfere with or induce, or attempt to induce, any employee of the Corporation or any of its subsidiaries or affiliates to leave his employment or to breach his employment agreement, if any. (II) Release. Upon his termination of employment, the Executive shall execute a release agreement in the form attached as Exhibit A and, to the extent applicable, a resignation letter in the form attached as Exhibit B, prior to and as a condition to receiving any payments or benefits pursuant to this Agreement. (c) Specific Remedy. The Executive acknowledges and agrees that if the Executive commits a material breach of the Covenant of Confidentiality (Subsection (a) above) or the Covenant Against Competition (clause (I) of Subsection (b) above), the Corporation shall have the right to have the covenant specifically enforced by any court having appropriate jurisdiction on the grounds that any such breach will cause irreparable injury to the Corporation, and that money damages will not provide an adequate remedy to the Corporation. The Executive further acknowledges and agrees that the Covenant of Confidentiality and, if applicable, the Covenant Against Competition contained in this Agreement are fair, do not unreasonably restrict the Executive's future employment and business opportunities, and are commensurate with the compensation arrangements set out in this Agreement. In addition, once the Executive makes an election to receive severance pay and benefits pursuant to Section 4 and is subject to Subsection (b) above, the Executive shall have no right to return any amounts or benefits that are already paid or to refuse to accept any amounts or benefits that are payable in the future in lieu of his specific performance of his obligations under Subsection (b) above. 6. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other plans, programs, policies or practices provided by the Corporation or any of its subsidiaries or affiliates and for which the Executive may qualify, nor shall anything herein limit or otherwise affect such rights as the Executive may have under such plans, programs, policies or practices or under any stock option or other agreements with the Corporation or any of its subsidiaries or affiliates, specifically including but not limited to the Ryder System, Inc. 1980 Stock Incentive Plan, the deferred compensation agreements, the Corporation's and/or its subsidiaries' or affiliates' retirement, 401(k) and profit sharing plans, the Ryder System, Inc. Benefit Restoration Plan, supplemental disability and retiree life insurance. In the event there are any amounts which represent vested benefits or which the Executive is otherwise entitled to receive under these or any other plans, programs, policies or practices, including any plan, program, policy or practice adopted after the execution of this Agreement, of the Corporation or any of its subsidiaries or affiliates at or subsequent to the Executive's Date of Termination, the 13 14 Corporation shall cause the relevant plan, program, policy or practice to pay such amount, to the extent not already paid, in accordance with the provisions of such plan, program, policy or practice. The phrase "Termination Date" as used in the Ryder System, Inc. 1980 Stock Incentive Plan shall mean the end of the Severance Period with respect to Non-Qualified Stock Options granted to the Executive, if any, pursuant to such plan, and the Executive's Date of Termination with respect to Incentive Stock Options and Restricted Stock Rights granted to the Executive, if any, thereunder. The last day of the Severance Period will be considered to be the Executive's termination date for purposes of the Executive's deferred compensation agreement(s), if any. 7. No Mitigation. In no event shall the Executive be obligated to seek other employment by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement nor, except as specifically provided otherwise in this Agreement, shall the amount of any payment provided for under this Agreement be reduced by any compensation or benefits earned by the Executive as the result of employment by another employer after the Date of Termination, or otherwise. 8. Assignment. This Agreement is personal to the Executive and the Executive does not have the right to assign this Agreement or any interest herein. This Agreement shall inure to the benefit of and be binding upon the Corporation and its successors. 9. Miscellaneous. (a) This Agreement shall be governed by and construed in accordance with the laws of the state of Florida, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: at the Executive's last address appearing in the payroll/personnel records of the Corporation. If to the Corporation: Ryder System, Inc. 3600 N.W. 82nd Avenue Miami, Florida 33166 Attention: General Counsel or to such other address as either party shall have furnished to the other in writing in 14 15 accordance herewith. Notice and communications shall be effective when actually received by the addressee. (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. (d) The Executive understands and acknowledges that the payments and benefits provided to the Executive pursuant to this Agreement may be unsecured, unfunded obligations of the Corporation. The Executive further understands and acknowledges that the payments and benefits under this Agreement, including but not limited to the cash payments, the car, the outplacement, and the split-dollar life insurance, may be compensation and as such may be included in either the Executive's W-2 earnings statements or 1099 statements. The Corporation may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation, as well as any other deductions consented to in writing by the Executive. (e) This Agreement, including its attached Exhibits, contains the entire understanding of the Corporation and the Executive with respect to the subject matter hereof. No agreements or representations, oral or written, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement and its attached Exhibits. (f) The employment of the Executive by the Corporation or its subsidiaries or affiliates may be terminated by either the Executive or the Corporation or its subsidiaries or affiliates at any time and for any reason. Nothing contained in this Agreement shall affect such rights to terminate; provided, however, that nothing in this Section 9(f) shall prevent the terms and provisions of this Agreement from being enforced in the event of a termination described in Section 4(a). (g) Whenever used in this Agreement, the masculine gender shall include the feminine or neuter wherever necessary or appropriate and vice versa and the singular shall include the plural and vice versa. (h) This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 10. Amendment and Restatement. The Corporation and the Executive agree that this Agreement amends and correctly restates the entire agreement between the parties as of February 24, 1989; that the provisions of this Agreement supersede and replace the provisions of the Non-Change of Control Severance Agreement between the Corporation and the Executive dated as of June 26, 1987; and that the terms and provisions of this Agreement shall be binding on the Corporation and the Executive in all respects. 15 16 IN WITNESS WHEREOF, the Executive has hereunto set his hand and the Corporation has caused these presents to be executed in its name on its behalf, and its corporate seal to be hereunto affixed and attested by its secretary, all as of the day and year first above written. ________________________ ________________________ Witness Executive ________________________ ________________________ Witness Social Security Number ATTEST: RYDER SYSTEM, INC. (the "Corporation") By: ________________________ _____________________ Secretary Executive Vice President (Seal) 16 17 Amended and Restated -------------------- Severance Agreement --------------------- EXHIBIT A --------- RELEASE AGREEMENT ----------------- FOR AND IN CONSIDERATION OF THE PAYMENT TO ME OF THE SEVERANCE BENEFITS PURSUANT TO THE AMENDED AND RESTATED SEVERANCE AGREEMENT BETWEEN RYDER SYSTEM, INC. ("RSI") AND ME DATED _________________, 19__ (THE "SEVERANCE AGREEMENT"), I, (Executive's Name), ON BEHALF OF MYSELF, MY HEIRS, SUCCESSORS AND ASSIGNS (COLLECTIVELY "I" OR "ME"), HEREBY RELEASE AND FOREVER DISCHARGE RSI AND ALL OF ITS SUBSIDIARIES AND AFFILIATES, THEIR AGENTS, EMPLOYEES, OFFICERS, DIRECTORS, SUCCESSORS AND ASSIGNS (COLLECTIVELY THE "CORPORATION"), FROM ANY AND ALL CLAIMS, DEMANDS, ACTIONS, AND CAUSES OF ACTION, AND ALL LIABILITY WHATSOEVER, WHETHER KNOWN OR UNKNOWN, FIXED OR CONTINGENT, WHICH I HAVE OR MAY HAVE AGAINST THE CORPORATION AS A RESULT OF MY EMPLOYMENT BY AND SUBSEQUENT TERMINATION AS AN EMPLOYEE OF THE CORPORATION. THIS INCLUDES BUT IS NOT LIMITED TO CLAIMS AT LAW OR EQUITY OR SOUNDING IN CONTRACT (EXPRESS OR IMPLIED) OR TORT ARISING UNDER FEDERAL, STATE, OR LOCAL LAWS PROHIBITING AGE, SEX, RACE, HANDICAP, VETERAN OR ANY OTHER FORMS OF DISCRIMINATION (INCLUDING THE AGE DISCRIMINATION IN EMPLOYMENT ACT AND TITLE VII OF THE CIVIL RIGHTS ACT OF 1964) OR CLAIMS GROWING OUT OF ANY LEGAL RESTRICTIONS ON THE CORPORATION'S RIGHT TO TERMINATE ITS EMPLOYEES. I understand and agree that this Agreement and the Severance Agreement shall not in any way be construed as an admission by the Corporation of any unlawful or wrongful acts whatsoever against me or any other person, and the Corporation specifically disclaims any liability to or wrongful acts against me or any other person. I agree that the terms and provisions of this Agreement and the Severance Agreement, as well as any and all incidents leading to or resulting from this Agreement and the Severance Agreement, are confidential and that I may not discuss them with anyone without the prior written consent of RSI's or its successor's Chief Executive Officer, except as required by law; provided, however, that I agree to immediately give RSI or its successor notice of any request to discuss this Agreement or the Severance Agreement and to provide RSI or its successor with the opportunity to contest such request prior to my response. Additionally, I agree that during the Severance Period (as defined in the Severance Agreement), I shall not make any remarks disparaging the conduct or character of the Corporation. I acknowledge and agree that this Agreement is intended to include and discharge all claims which I do not know or suspect to exist at the time of execution relating to my employment and termination and I expressly waive and relinquish any rights that I may have to the contrary; 18 provided, however, that this Agreement does not release the Corporation from any of its current, future or ongoing obligations under the Severance Agreement, specifically including but not limited to cash payments and benefits due me. This Agreement shall be governed by and construed in accordance with the laws of the state of Florida, without reference to principles of conflict of laws. This Agreement may not be amended or modified otherwise than by a written agreement executed by RSI and me or our respective successors and legal representatives. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. I CERTIFY THAT I HAVE FULLY READ, HAVE RECEIVED AN EXPLANATION OF, HAVE NEGOTIATED AND COMPLETELY UNDERSTAND THE PROVISIONS OF THIS AGREEMENT, THAT I HAVE HAD SUFFICIENT TIME AND THE OPPORTUNITY TO SEEK LEGAL ADVICE FROM AN ATTORNEY BEFORE ENTERING INTO THIS AGREEMENT, AND THAT I AM SIGNING THIS AGREEMENT FREELY AND VOLUNTARILY, WITHOUT DURESS, COERCION OR UNDUE INFLUENCE. Dated this ___ day of _______, 19__. __________________________ __________________________ Witness Executive __________________________ __________________________ Witness Social Security Number Executive's Date of Termination:_____________________________________ 2 19 STATE OF _________) ) ss: COUNTY OF ________) Before me personally appeared __________________, to me well known and known to me to be the person described in and who executed the foregoing instrument, and acknowledged to and before me that he/she executed said instrument for the purposes therein expressed. WITNESS my hand and official seal this ___ day of __________, 19__. _________________________ Notary Public Commission Expires: _________________________ (Seal) 3 EX-10.4B 5 INCENTIVE COMPENSATION DEFFERAL AGREEMENT 1 EXHIBIT 10.4(b) INCENTIVE COMPENSATION DEFERRAL AGREEMENT THIS AGREEMENT, dated as of November 30, 1994, between Ryder System, Inc. (the "Company") and ___________________________________ (the "Executive"). WITNESSETH: WHEREAS, the Company has established an incentive compensation plan, with respect to the performance of the Executive and the Company during 1994, in which the Executive is eligible to participate; and WHEREAS, the Executive and the Company desire to enter into an arrangement with respect to the deferred payment of a portion of such incentive compensation upon the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the mutual covenants and benefits set forth herein, the Company and the Executive hereby agree as follows: 1. $ _______________ or _______________%, whichever is less, of the Executive's 1994 incentive compensation award to be made in 1995, less any deductions consented to in writing by the Executive, shall be deferred by the Company. 2. The deferred incentive compensation is subject to Social Security and Medicare taxes at the time the incentive compensation award is made. Therefore, the Executive and the Company agree that the Social Security and Medicare taxes will be paid in the manner determined by the Company. Interest will be computed as set forth in Article 3 hereof on the amount of the incentive compensation award deferred pursuant to Article 1 hereof. The deferred incentive compensation plus interest computed as set forth in Article 3 hereof (the "Deferred Compensation") shall be payable to the Executive, the Executive's designated beneficiary, or the Executive's estate as set forth in this Agreement. 3. Interest will be credited to the Executive's account at December 31st of each year. Interest will accrue at a rate equal to the average annual base rate charged by the First National Bank of Boston, compounded annually, provided, however, that such annual interest rate will not exceed 12% nor be less than 5%. Interest will accrue on the average daily balance of the Executive's account beginning with the date on which the deferred compensation or accrued interest is credited to the Executive's account and ending with the date on which the deferred compensation or accrued interest is actually paid. Executive Initials ______________ 2 The Executive may elect payment of the account balance either in installments or in a lump sum. Installment payments will be computed by dividing the combined total of deferred compensation and credited interest, as of the prior year end, by the number of installments remaining. Lump sum and final installment payments will include principal and interest credited to the Executive's account as of the prior year end and all interest accrued subsequently in the year of payment. 4. Deferred Compensation shall be paid to the Executive after the first to occur of the listed events and in accordance with the method of payment and commencement date selected by the Executive on the attached Exhibit A which is made a part of this Agreement. Notwithstanding the foregoing, in the event of a Change of Control of the Company as defined by the Company's Board of Directors on August 20, l993, the Company shall immediately pay the Deferred Compensation in a lump sum to the Executive. The Executive should notify the Director of Corporate Accounting immediately upon the occurrence of the triggering event to ensure timely payment. For purposes of Exhibit A, the term "effective date" means the Executive's last day of employment or the last day of the Executive's severance period, if applicable, whichever occurs later. For purposes of this Article 4, the Executive shall be deemed to be continuously employed by the Company or any affiliate of the Company if the Executive is re-employed by the Company or an affiliate of the Company within four weeks of the date the Executive's employment first ceased. 5. The Executive shall have the right to designate a beneficiary who, in the event of the Executive's death prior to the payment of any or all of the Deferred Compensation pursuant to this Agreement, shall receive the unpaid Deferred Compensation. Such designation shall be made by the Executive on the form attached hereto. The Executive may, at any time, change or revoke such designation by written notice to the Director of Compensation. 6. (a) If the Executive dies prior to receipt of any or all of the Deferred Compensation, no Deferred Compensation shall be paid for a period of thirty days from the date the Director of Compensation receives written notice of the Executive's death. (b) If the Executive has designated a beneficiary pursuant to Article 5 hereof, on the first day of the month following such thirty day period, the unpaid Deferred Compensation shall be paid to the designated beneficiary in a lump sum, unless the Executive's beneficiary elects within such thirty day period, by written notice to the Director of Compensation that the Deferred Compensation be paid to such beneficiary in annual (2 - 10) installments or not be paid at all. (c) If the Executive does not designate a beneficiary or the designated beneficiary predeceases the Executive or elects not to receive the unpaid Deferred 2 3 Compensation, the unpaid Deferred Compensation shall be paid to the Executive's estate in a lump sum on the first day of the month following the thirty day period. (d) If the designated beneficiary dies after the Executive but prior to the payment of the Deferred Compensation and has not elected not to receive such Deferred Compensation, no Deferred Compensation shall be paid for a period of thirty days from the date the Director of Compensation receives written notice of the death of the designated beneficiary. The Deferred Compensation shall then be paid to the estate of the designated beneficiary in a lump sum on the first day of the month following such thirty day period. 7. The Company shall pay to the Executive during the term of the Executive's employment that portion of the Deferred Compensation which shall be necessary in the case of an unforeseeable emergency. For purposes of this Article 7 an unforeseeable emergency shall mean an unanticipated emergency that is caused by an event beyond the control of the Executive and that would result in severe financial hardship to the Executive if early withdrawal were not permitted. The Compensation Committee of the Board of Directors of the Company (the "Compensation Committee") shall limit any early withdrawal to the amount necessary to meet the emergency. The Executive shall apply to the Compensation Committee for any emergency payment under this Article 7 and shall furnish to the Compensation Committee such information as the Executive deems appropriate and as the Company and counsel for the Company deem necessary and appropriate to make such determination. The determination of the Compensation Committee as to whether a payment is warranted under this Article 7, and the amount of such payment, shall be conclusive and binding on the Executive and the Company. 8. The Deferred Compensation shall be paid out of the general funds of the Company and no funds shall be set aside therefor. The Executive shall have the status of a general unsecured creditor of the Company and this Agreement constitutes a mere promise by the Company to make benefit payments in the future. It is the intention of the parties that the arrangements be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). 9. Any rights to receive Deferred Compensation payments under this Agreement are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of the Executive or the Executive's beneficiary. Any such attempted action shall be null and void and shall extinguish the Company's obligation under this Agreement to pay Deferred Compensation. 10. For purposes of determining deferrals or entitlements under certain other benefit programs maintained by the Company in which the Executive participates including, but not limited to, the Company's Retirement Plan and the Company's Employee Savings Plan, any amount of incentive compensation deferred pursuant to this Agreement will not be 3 4 included in the Executive's compensation base unless and until such deferred amount is paid to the Executive while the Executive is employed by the Company or any affiliate of the Company. 11. The Executive and the Company acknowledge that this Agreement is not an employment agreement between the Executive and the Company, and that the Company and the Executive each has the right to terminate the Executive's employment at any time for any reason unless there is a written employment contract to the contrary. 12. This Agreement shall be binding upon any successor to the Company by merger, consolidation, purchase or otherwise. 13. This Agreement, together with the Executive's beneficiary designation, constitutes the entire agreement between the Company and the Executive regarding the Deferred Compensation and shall not be modified except upon the written agreement of the Company and the Executive. 14. This Agreement shall be governed in accordance with the laws of the State of Florida. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the day and year first above written. _____________________________________ (Executive) _____________________________________ Social Security Number RYDER SYSTEM, INC. By:_________________________________ M. Anthony Burns Chairman of the Board, President and Chief Executive Officer In accordance with Article 5 of the Incentive Compensation Deferral Agreement set forth above, I hereby designate __________________________________ my beneficiary. ________________________________________ (Executive) 4 5 included in the Executive's compensation base unless and until such deferred amount is paid to the Executive while the Executive is employed by the Company or any affiliate of the Company. 11. The Executive and the Company acknowledge that this Agreement is not an employment agreement between the Executive and the Company, and that the Company and the Executive each has the right to terminate the Executive's employment at any time for any reason unless there is a written employment contract to the contrary. 12. This Agreement shall be binding upon any successor to the Company by merger, consolidation, purchase or otherwise. 13. This Agreement, together with the Executive's beneficiary designation, constitutes the entire agreement between the Company and the Executive regarding the Deferred Compensation and shall not be modified except upon the written agreement of the Company and the Executive. 14. This Agreement shall be governed in accordance with the laws of the State of Florida. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the day and year first above written. ________________________________________ (Executive) ________________________________________ Social Security Number RYDER SYSTEM, INC. By:____________________________________ James M. Herron Senior Executive Vice President and General Counsel In accordance with Article 5 of the Incentive Compensation Deferral Agreement set forth above, I hereby designate __________________________________ my beneficiary. ________________________________________ (Executive) 4 6 included in the Executive's compensation base unless and until such deferred amount is paid to the Executive while the Executive is employed by the Company or any affiliate of the Company. 11. The Executive and the Company acknowledge that this Agreement is not an employment agreement between the Executive and the Company, and that the Company and the Executive each has the right to terminate the Executive's employment at any time for any reason unless there is a written employment contract to the contrary. 12. This Agreement shall be binding upon any successor to the Company by merger, consolidation, purchase or otherwise. 13. This Agreement, together with the Executive's beneficiary designation, f constitutes the entire agreement between the Company and the Executive regarding the Deferred Compensation and shall not be modified except upon the written agreement of the Company and the Executive. 14. This Agreement shall be governed in accordance with the laws of the State of Florida. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the day and year first above written. ________________________________________ (Executive) ________________________________________ Social Security Number RYDER SYSTEM, INC. By:_____________________________________ C. Robert Campbell Executive Vice President - Human Resources and Administration In accordance with Article 5 of the Incentive Compensation Deferral Agreement set forth above, I hereby designate __________________________________ my beneficiary. ________________________________________ (Executive) 4 7 EXHIBIT A TO INCENTIVE COMPENSATION DEFERRAL AGREEMENT DATED AS OF NOVEMBER 30, 1994 INSTRUCTIONS: Indicate your selections by circling one (1) Method of Payment and one (1) Commencement Date for each event listed. If you select installments or a specific month or date for payment, fill in the appropriate information. Then initial or sign this Exhibit, as appropriate, where indicated. YOU MUST COMPLETE SECTIONS I, II, III AND IV. The "FIXED DATE" event in Sections V and VI is optional and should not be completed unless some form of distribution is desired prior to retirement or termination. Event Triggering Payment I. Early Retirement
METHOD OF PAYMENT COMMENCEMENT DATE _____________________________ _________________________________ - Lump Sum = deferred - January 1st following effective amount plus accrued interest. date of early retirement. - Annual Installments - First day of month following Select 2-10: ____________ = effective date of early retirement. account balance plus interest credited thereto divided by - First day of month that you elect number of installments following effective date of early outstanding. retirement. Specify month: ___________________________________.
II. Normal Retirement
METHOD OF PAYMENT COMMENCEMENT DATE _______________________________ _____________________________________ - Lump Sum = deferred - January 1st following effective amount plus accrued interest. date of normal retirement. - Annual Installments - First day of month following Select 2-10: ____________ = effective date of normal retirement. account balance plus interest credited thereto divided by - First day of month that you elect number of installments following effective date of normal outstanding. retirement. Specify month: ___________________________. Executive Initials _____________________
1 8 Exhibit A (continued) Event Triggering Payment III. Voluntary or Involuntary Termination
METHOD OF PAYMENT COMMENCEMENT DATE _______________________________ ____________________________________ - Lump Sum = deferred - January 1st following effective amount plus accrued interest. date of voluntary or involuntary termination. - Annual Installments - First day of month following Select 2-10: ____________ = effective date of voluntary or account balance plus interest involuntary termination. credited thereto divided by number of installments outstanding.
IV. Disability Termination (prior to eligibility for retirement)
METHOD OF PAYMENT COMMENCEMENT DATE _______________________________ ____________________________________ - Lump Sum = deferred - January 1st following effective plus accrued interest. date of disability termination. - Annual Installments - First day of month following Select 2-10: ____________ = effective date of disability account balance plus interest termination. credited thereto divided by number of installments outstanding. 11/30/94 Executive Initials _____________________
THE TERM "EFFECTIVE DATE" MEANS THE EXECUTIVE'S LAST DAY OF EMPLOYMENT OR THE LAST DAY OF THE EXECUTIVE'S SEVERANCE PERIOD, IF APPLICABLE, WHICHEVER OCCURS LATER. 2 9 Exhibit A (continued) Event Triggering Payment V. Fixed Date Full Payment (Optional)
METHOD OF PAYMENT COMMENCEMENT DATE _______________________________ ____________________________________ - Lump Sum = deferred - First day of month of fixed amount plus accrued interest. date. Specify month and year: _______________________. - Annual Installments Select 2-10: ____________ = account balance plus interest credited thereto divided by number of installments outstanding.
VI. Fixed Date Partial Payment (Optional)
METHOD OF PAYMENT COMMENCEMENT DATE _______________________________ ____________________________________ - Lump Sum = partial - First day of month of fixed payment amount with the date. Specify month and year: remainder to be paid as _______________________. indicated by the first appropriate event triggering payment. - Annual Installments Amount $ __________ or __________% Select 2-10: ____________ = partial payment amount divided by number of installments outstanding with the remainder to be paid as indicated by the first appropriate event triggering payment. __________________________________ (Executive)
3 EX-10.5B 6 SALARY DEFERRAL AGREEMENT 1 EXHIBIT 10.5(b) SALARY DEFERRAL AGREEMENT THIS AGREEMENT, dated as of November 30, 1994, between Ryder System, Inc. (the "Company") and ___________________________________ (the "Executive"). WITNESSETH: WHEREAS, the Executive is serving as an executive of the Company at an annual rate of $_______________ as of November 30, 1994; and WHEREAS, the Executive and the Company desire to enter into an arrangement with respect to the deferred payment of a portion of the Executive's salary upon the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the mutual covenants and benefits set forth herein, the Company and the Executive hereby agree as follows: 1. $_______________ of the Executive's 1995 annual salary shall be deferred by the Company, in equal installments, from the semi-monthly salary payments paid to the Executive during such year. The deferred salary is subject to Social Security and Medicare taxes at the time of deferral. Therefore, the Executive and the Company agree that the Social Security and Medicare taxes will be paid in the manner determined by the Company. Such deferred salary plus interest computed and accrued as set forth in Article 2 hereof (the "Deferred Compensation") shall be payable to the Executive, the Executive's designated beneficiary, or the Executive's estate as set forth in this Agreement. 2. Interest will be credited to the Executive's account at December 31st of each year. Interest will accrue at a rate equal to the average annual base rate charged by the First National Bank of Boston, compounded annually, provided, however, that such annual interest rate will not exceed 12% nor be less than 5%. Interest will accrue on the average daily balance of the Executive's account beginning with the date on which the deferred compensation or accrued interest is credited to the Executive's account and ending with the date on which the deferred compensation or accrued interest is actually paid. The Executive may elect payment of the account balance either in installments or in a lump sum. Installment payments will be computed by dividing the combined total of deferred compensation and credited interest, as of the prior year end, by the number of installments remaining. Lump sum and final installment payments will include principal and interest credited to the Executive's account as of the prior year end and all interest accrued subsequently in the year of payment. Executive Initials _______________ 2 3. Deferred Compensation shall be paid to the Executive after the first to occur of the listed events and in accordance with the method of payment and commencement date selected by the Executive on the attached Exhibit A which is made a part of this Agreement. Notwithstanding the foregoing, in the event of a Change of Control of the Company as defined by the Company's Board of Directors on August 20, l993, the Company shall immediately pay the Deferred Compensation in a lump sum to the Executive. The Executive should notify the Director of Corporate Accounting immediately upon the occurrence of the triggering event to ensure timely payment. For purposes of Exhibit A, the term "effective date" means the Executive's last day of employment or the last day of the Executive's severance period, if applicable, whichever occurs later. For purposes of this Article 3, the Executive shall be deemed to be continuously employed by the Company or any affiliate of the Company if the Executive is re-employed by the Company or an affiliate of the Company within four weeks of the date the Executive's employment first ceased. 4. The Executive shall have the right to designate a beneficiary who, in the event of the Executive's death prior to the payment of any or all of the Deferred Compensation pursuant to this Agreement, shall receive the unpaid Deferred Compensation. Such designation shall be made by the Executive on the form attached hereto. The Executive may, at any time, change or revoke such designation by written notice to the Director of Compensation. 5. (a) If the Executive dies prior to receipt of any or all of the Deferred Compensation, no Deferred Compensation shall be paid for a period of thirty days from the date the Director of Compensation receives written notice of the Executive's death. (b) If the Executive has designated a beneficiary pursuant to Article 4 hereof, on the first day of the month following such thirty day period, the unpaid Deferred Compensation shall be paid to the designated beneficiary in a lump sum, unless the Executive's beneficiary elects within such thirty day period, by written notice to the Director of Compensation, that the Deferred Compensation be paid to such beneficiary in annual (2 - 10) installments or not be paid at all. (c) If the Executive does not designate a beneficiary or the designated beneficiary predeceases the Executive or elects not to receive the unpaid Deferred Compensation, the unpaid Deferred Compensation shall be paid to the Executive's estate in a lump sum on the first day of the month following the thirty day period. 2 3 (d) If the designated beneficiary dies after the Executive but prior to the payment of the Deferred Compensation and has not elected not to receive such Deferred Compensation, no Deferred Compensation shall be paid for a period of thirty days from the date the Director of Compensation receives written notice of the death of the designated beneficiary. The Deferred Compensation shall then be paid to the estate of the designated beneficiary in a lump sum on the first day of the month following such thirty day period. 6. The Company shall pay to the Executive during the term of the Executive's employment that portion of the Deferred Compensation which shall be necessary in the case of an unforeseeable emergency. For purposes of this Article 6 an unforeseeable emergency shall mean an unanticipated emergency that is caused by an event beyond the control of the Executive and that would result in severe financial hardship to the Executive if early withdrawal were not permitted. The Compensation Committee of the Board of Directors of the Company (the "Compensation Committee") shall limit any early withdrawal to the amount necessary to meet the emergency. The Executive shall apply to the Compensation Committee for any emergency payment under this Article 6 and shall furnish to the Compensation Committee such information as the Executive deems appropriate and as the Company and counsel for the Company deem necessary and appropriate to make such determination. The determination of the Compensation Committee as to whether a payment is warranted under this Article 6, and the amount of such payment, shall be conclusive and binding on the Executive and the Company. 7. The Deferred Compensation shall be paid out of the general funds of the Company and no funds shall be set aside therefor. The Executive shall have the status of a general unsecured creditor of the Company and this Agreement constitutes a mere promise by the Company to make benefit payments in the future. It is the intention of the parties that the arrangements be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). 8. Any rights to receive Deferred Compensation payments under this Agreement are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of the Executive or the Executive's beneficiary. Any such attempted action shall be null and void and shall extinguish the Company's obligation under this Agreement to pay Deferred Compensation. 9. For purposes of determining deferrals or entitlements under certain other benefit programs maintained by the Company in which the Executive participates including, but not limited to, the Company's Retirement Plan and the Company's Employee Savings Plan, any amount of salary deferred pursuant to this Agreement will not be included in the Executive's compensation base unless and until such deferred amount is paid to the Executive while the Executive is employed by the Company or any affiliate of the Company. 3 4 10. The Executive and the Company acknowledge that this Agreement is not an employment agreement between the Executive and the Company, and the Company and the Executive each has the right to terminate the Executive's employment at any time for any reason unless there is a written employment agreement to the contrary. 11. This Agreement shall be binding upon any successor to the Company by merger, consolidation, purchase or otherwise. 12. This Agreement, together with the Executive's beneficiary designation, constitutes the entire agreement between the Company and the Executive regarding the Deferred Compensation and shall not be modified except upon the written agreement of the Company and the Executive. 13. This Agreement shall be governed in accordance with the laws of the State of Florida. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the day and year first above written. ________________________________________ (Executive) ________________________________________ Social Security Number RYDER SYSTEM, INC. By:______________________________________ M. Anthony Burns Chairman of the Board President and Chief Executive Officer In accordance with Article 4 of the Salary Deferral Agreement set forth above, I hereby designate _____________________________________________ my beneficiary. ________________________________________ (Executive) 4 5 10. The Executive and the Company acknowledge that this Agreement is not an employment agreement between the Executive and the Company, and the Company and the Executive each has the right to terminate the Executive's employment at any time for any reason unless there is a written employment agreement to the contrary. 11. This Agreement shall be binding upon any successor to the Company by merger, consolidation, purchase or otherwise. 12. This Agreement, together with the Executive's beneficiary designation, constitutes the entire agreement between the Company and the Executive regarding the Deferred Compensation and shall not be modified except upon the written agreement of the Company and the Executive. 13. This Agreement shall be governed in accordance with the laws of the State of Florida. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the day and year first above written. ________________________________________ (Executive) ________________________________________ Social Security Number RYDER SYSTEM, INC. By:_____________________________________ James M. Herron Senior Executive Vice President and General Counsel In accordance with Article 4 of the Salary Deferral Agreement set forth above, I hereby designate _____________________________________________ my beneficiary. ________________________________________ (Executive) 4 6 10. The Executive and the Company acknowledge that this Agreement is not an employment agreement between the Executive and the Company, and the Company and the Executive each has the right to terminate the Executive's employment at any time for any reason unless there is a written employment agreement to the contrary. 11. This Agreement shall be binding upon any successor to the Company by merger, consolidation, purchase or otherwise. 12. This Agreement, together with the Executive's beneficiary designation, constitutes the entire agreement between the Company and the Executive regarding the Deferred Compensation and shall not be modified except upon the written agreement of the Company and the Executive. 13. This Agreement shall be governed in accordance with the laws of the State of Florida. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the day and year first above written. ________________________________________ (Executive) ________________________________________ Social Security Number RYDER SYSTEM, INC. By:______________________________________ C. Robert Campbell Executive Vice President - Human Resources and Administration In accordance with Article 4 of the Salary Deferral Agreement set forth above, I hereby designate _____________________________________________ my beneficiary. _______________________________________ (Executive) 4 7 EXHIBIT A TO SALARY DEFERRAL AGREEMENT DATED AS OF NOVEMBER 30, 1994 INSTRUCTIONS: Indicate your selections by circling one (1) Method of Payment and one (1) Commencement Date for each event listed. If you select installments or a specific month or date for payment, fill in the appropriate information. Then initial or sign this Exhibit, as appropriate, where indicated. YOU MUST COMPLETE SECTIONS I, II, III AND IV. The "FIXED DATE" event in Sections V and VI is optional and should not be completed unless some form of distribution is desired prior to retirement or termination. Event Triggering Payment I. Early Retirement
METHOD OF PAYMENT COMMENCEMENT DATE _______________________________ ____________________________________ - Lump Sum = deferred - January 1st following effective amount plus accrued interest. date of early retirement. - Annual Installments - First day of month following Select 2-10: ____________ = effective date of early retirement. account balance plus interest credited thereto divided by - First day of month that you elect number of installments following effective date of early outstanding. retirement. Specify month: ___________________________.
II. Normal Retirement
METHOD OF PAYMENT COMMENCEMENT DATE _______________________________ ____________________________________ - Lump Sum = deferred - January 1st following effective amount plus accrued interest. date of normal retirement. - Annual Installments - First day of month following Select 2-10: ____________ = effective date of normal retirement. account balance plus interest credited thereto divided by - First day of month that you elect number of installments following effective date of normal outstanding. retirement. Specify month: ___________________________. Executive Initials _______________
1 8 Exhibit A (continued) Event Triggering Payment III. Voluntary or Involuntary Termination
METHOD OF PAYMENT COMMENCEMENT DATE _______________________________ ____________________________________ - Lump Sum = deferred - January 1st following effective amount plus accrued interest. date of voluntary or involuntary termination. - Annual Installments - First day of month following Select 2-10: ____________ = effective date of voluntary or account balance plus interest involuntary termination. credited thereto divided by number of installments outstanding.
IV. Disability Termination (prior to eligibility for retirement)
METHOD OF PAYMENT COMMENCEMENT DATE _______________________________ ____________________________________ - Lump Sum = deferred - January 1st following effective amount plus accrued interest. date of disability termination. - Annual Installments - First day of month following Select 2-10: ____________ = effective date of disability account balance plus interest termination. credited thereto divided by number of installments outstanding. Executive Initials ___________________
THE TERM "EFFECTIVE DATE" MEANS THE EXECUTIVE'S LAST DAY OF EMPLOYMENT OR THE LAST DAY OF THE EXECUTIVE'S SEVERANCE PERIOD, IF APPLICABLE, WHICHEVER OCCURS LATER. 2 9 Exhibit A (continued) Event Triggering Payment V. Fixed Date Full Payment (Optional)
METHOD OF PAYMENT COMMENCEMENT DATE _______________________________ ____________________________________ - Lump Sum = deferred - First day of month of fixed amount plus accrued interest. date. Specify month and year: _______________________. - Annual Installments Select 2-10: ____________ = account balance plus interest credited thereto divided by number of installments outstanding.
VI. Fixed Date Partial Payment (Optional)
METHOD OF PAYMENT COMMENCEMENT DATE _______________________________ ____________________________________ - Lump Sum = partial - First day of month of fixed payment amount with the date. Specify month and year: remainder to be paid as _______________________. indicated by the first appropriate event triggering payment. - Annual Installments Amount $ __________ or __________% Select 2-10: ____________ = partial payment amount divided by number of installments outstanding with the remainder to be paid as indicated by the first appropriate event triggering payment. _____________________________________ (Executive)
3 EX-10.6B 7 DIRECTORS FEE DEFERRAL AGREEMENT 1 EXHIBIT 10.6(b) AGREEMENT THIS AGREEMENT, dated as of December 31, 1994, between RYDER SYSTEM, INC. (the "Company") and (the "Director"). W I T N E S S E T H: WHEREAS, the Director is now serving as a member of the Board of Directors of the Company; and WHEREAS, the Director and the Company desire to enter into an arrangement with respect to the deferred payment of the Director's 1995 total annual fees upon the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the mutual covenants and benefits set forth herein, the Company and the Director hereby agree as follows: 1. $ _______________ or _______________% of the Director's total annual fees for calendar year 1995, including (i) the cash portion of the Board of Directors' Annual Retainer Fee, (ii) Committee Annual Retainer Fee, (iii) Board Meeting Per Diem Fee, and (iv) Committee Meeting Per Diem Fee shall be deferred by the Company. Such deferred fees plus interest computed as set forth in Article 2 hereof (the "Deferred Compensation") shall be payable to the Director, the Director's designated beneficiary, or the Director's estate as set forth in this Agreement. 2. Interest will be credited to the Director's account at December 31st of each year. Interest will accrue at a rate equal to the average annual base rate charged by the First National Bank of Boston, compounded annually, provided, however, that such annual interest rate will not exceed 12% nor be less than 5%. Interest will accrue on the average daily balance of the Director's account beginning with the date on which the deferred compensation or accrued interest is credited to the Director's account and ending with the date on which the deferred compensation or accrued interest is actually paid. The Director may elect payment of the account balance either in installments or in a lump sum. Installment payments will be computed by dividing the combined total of deferred compensation and credited interest, as of the prior year end, by the number of installments remaining. Lump sum and final installment payments will include principal and interest credited to the Director's account as of the prior year end and all interest accrued subsequently in the year of payment. Director Initials _____________________ 2 3. Deferred Compensation shall be paid to the Director after the first to occur of the listed events and in accordance with the method of payment and commencement date selected by the Director on the attached Exhibit A which is made a part of this Agreement. Notwithstanding the foregoing, in the event of a Change of Control of the Company as defined by the Company's Board of Directors on August 20, 1993, the Company shall immediately pay the Deferred Compensation in a lump sum to the Director. The Director should notify the Director of Corporate Accounting immediately upon the occurrence of the triggering event to ensure timely payment. 4. The Director shall have the right to designate a beneficiary who, in the event of the Director's death prior to payment of any or all of the Deferred Compensation payable to the Director pursuant to this Agreement, shall receive such Deferred Compensation. Such designation shall be made by the Director on the form attached hereto. The Director may, at any time, change or revoke such designation by written notice to the Director of Compensation. 5. (a) If the Director dies prior to receipt of any or all of the Deferred Compensation, no Deferred Compensation shall be paid for a period of thirty days from the date the Director of Compensation receives written notice of the Director's death. (b) If the Director has designated a beneficiary pursuant to Article 4 hereof, on the first day of the month following such thirty day period, the unpaid Deferred Compensation shall be paid to the designated beneficiary in a lump sum, unless the Director's beneficiary elects within such thirty day period, by written notice to the Director of Compensation, that the Deferred Compensation be paid to such beneficiary in annual (2-10) installments or not be paid at all. (c) If the Director does not designate a beneficiary or the designated beneficiary predeceases the Director or elects not to receive the unpaid Deferred Compensation, then the unpaid Deferred Compensation shall be paid to the Director's estate in a lump sum on the first day of the month following such thirty day period. (d) If the designated beneficiary of the Director dies after the Director, but prior to the payment of the Deferred Compensation, and has not elected not to receive such Deferred Compensation, no Deferred Compensation shall be paid for a period of thirty days from the date the Director of Compensation receives written notice of the death of the designated beneficiary. The Deferred Compensation shall then be paid to the estate of the designated beneficiary in a lump sum on the first day of the month following such thirty day period. 2 3 6. The Company shall pay to the Director during the term of the Director's service that portion of the Deferred Compensation which shall be necessary in the case of an unforeseeable emergency. For purposes of this Article 6 an unforeseeable emergency shall mean an unanticipated emergency that is caused by an event beyond the control of the Director and that would result in severe financial hardship to the Director if early withdrawal were not permitted. The Compensation Committee of the Board of Directors of the Company (the "Compensation Committee") shall limit any early withdrawal to the amount necessary to meet the emergency. The Director shall apply to the Compensation Committee for any emergency payment under this Article 6 and shall furnish to the Compensation Committee such information as the Director deems appropriate and as the Company and counsel for the Company deem necessary and appropriate to make such determination. The determination of the Compensation Committee as to whether a payment is warranted under this Article 6, and the amount of such payment, shall be conclusive and binding on the Director and the Company. If the Director is a member of the Compensation Committee, the Director shall not sit as a member of such Committee in the determination of the Director's application under this Article 6. 7. The Deferred Compensation shall be paid out of the general funds of the Company and no funds shall be set aside therefor. The Director shall have the status of a general unsecured creditor of the Company and this Agreement constitutes a mere promise by the Company to make benefit payments in the future. It is the intention of the parties that the arrangements be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). 8. Any rights to receive Deferred Compensation payments under this Agreement are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of the Director or the Director's beneficiary. Any such attempted action shall be null and void and shall extinguish the Company's obligation under this Agreement to pay Deferred Compensation. 9. The Director and the Company acknowledge that this Agreement is not an agreement concerning continued service as a Director between the Director and the Company. 10. This Agreement shall be binding upon any successor to the Company by merger, consolidation, purchase or otherwise. 11. This Agreement, together with the Director's beneficiary designation, constitutes the entire agreement between the Company and the Director regarding Deferred Compensation and shall not be modified except upon the written agreement of the Company and the Director. 3 4 12. This Agreement shall be governed in accordance with the laws of the State of Florida. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the day and year first above written. ___________________________________ (Director) ___________________________________ Social Security Number RYDER SYSTEM, INC. By:________________________________ M. Anthony Burns Chairman of the Board, President and Chief Executive Officer In accordance with Article 4 of the Agreement set forth above, I hereby designate _____________________________________________________________ my beneficiary. __________________________________ (Director) 4 5 EXHIBIT A TO DIRECTOR DEFERRAL AGREEMENT DATED AS OF DECEMBER 31, 1994 INSTRUCTIONS: Indicate your selections by circling one (1) Method of Payment and one (1) Commencement Date for each event listed. If you select installments or a specific month or date for payment, fill in the appropriate information. Then initial or sign this Exhibit, as appropriate, where indicated. The "FIXED DATE" events are optional and should not be completed unless some form of distribution is desired prior to termination or retirement. Event Triggering Payment I. Termination of the Director's Service as a Member of the Company's Board of Directors _______________________________________________
METHOD OF PAYMENT COMMENCEMENT DATE _______________________________ ____________________________________ - Lump Sum = deferred - January 1st following effective amount plus accrued interest. date of termination. - Annual Installments - First day of month following Select 2-10: _______________ = effective date of termination. account balance plus interest credited thereto divided by number of installments outstanding.
II. Retirement as a Member of the Company's Board of Directors
METHOD OF PAYMENT COMMENCEMENT DATE _______________________________ ____________________________________ - Lump Sum = deferred - January 1st following effective amount plus accrued interest. date of retirement. - Annual Installments - First day of month following Select 2-10: _______________ = effective date of retirement. account balance plus interest credited thereto divided by - First day of month that you number of installments elect following effective date of outstanding. retirement. Specify month: ____________________. Director Initials __________________________
1 6 EXHIBIT A (continued) Event Triggering Payment III. Fixed Date While Providing Outside Director's Services for Ryder Full Payment (Optional)
METHOD OF PAYMENT COMMENCEMENT DATE _______________________________ ____________________________________ - Lump Sum = deferred - First day of month of fixed amount plus accrued interest. date. Specify month and year: ______________________. - Annual Installments Select 2-10: _____________ = account balance plus interest credited thereto divided by number of installments outstanding.
IV. Fixed Date While Providing Outside Director's Services for Ryder Partial Payment (Optional)
METHOD OF PAYMENT COMMENCEMENT DATE _______________________________ ____________________________________ - Lump Sum = partial - First day of month of fixed payment amount with the date. Specify month and year: remainder to be paid as ______________________. indicated in the event of termination or retirement, whichever occurs first. - Annual Installments Amount $_______________ or __________% Select 2-10: ____________ = partial payment amount divided by number of installments outstanding with the remainder to be paid as indicated in the event of termination or retirement, whichever occurs first. _______________________________ (Director)
2 EX-10.7B 8 1995 INCENTIVE COMPENSATION PLAN - RSI 1 EXHIBIT 10.7(b) -------------------------------------------------------------------------------- RYDER RSI HEADQUARTERS EXECUTIVE MANAGEMENT 1995 INCENTIVE COMPENSATION PLAN PAGE 1 -------------------------------------------------------------------------------- Supersedes 1994 Headquarters Executive Management Incentive Compensation Plan INTRODUCTION The following material explains the operation and administration of the 1995 Incentive Plan for Ryder System, Inc. (RSI or the Company) headquarters staff Officers, Directors and Managers whose positions are evaluated at 700 Hay Points or higher. The plan is intended to serve as a single, comprehensive source of information that will explain your bonus for achieving various levels of performance. Questions should be addressed to your supervisor. BONUS OPPORTUNITY The following table summarizes the maximum bonus opportunity for each participating management level: MAXIMUM BONUS OPPORTUNITY AS A PERCENTAGE OF BASE SALARY
RSI INDIVIDUAL TOTAL BONUS MANAGEMENT LEVEL PERFORMANCE PERFORMANCE OPPORTUNITY Management Level 14 + * 80% 20% 100% (1500 + Hay Points) Management Level 13 48% 12% 60% (1192-1499 Hay Points) Management Level 12 40% 10% 50% (1050-1191 Hay Points) Management Level 11 32% 8% 40% (890-1049 Hay Points) Management Level 10 24% 6% 30% (790-889 Hay Points) Management Level 9 16% 4% 20% (700-789 Hay Points)
* See Special ROE Award section BONUS PERFORMANCE MEASURES For 1995, your bonus payout will be based on RSI performance and your performance as an individual. RSI performance is measured based on RSI Net Earnings After Tax (NAT) Return on Equity (ROE) performance and RSI Net Earnings Before Tax (NBT) performance for 1995. Individual performance is determined based on a year-end assessment of your performance against objectives that you agreed to with management at the start of the year. Given their importance, the objectives should be in writing and may be updated during the year to adjust for priorities that may have changed. 2 -------------------------------------------------------------------------------- RYDER RSI HEADQUARTERS EXECUTIVE MANAGEMENT 1995 INCENTIVE COMPENSATION PLAN PAGE 2 -------------------------------------------------------------------------------- DEFINITION OF MEASURES Performance levels attained in the following areas determine the extent to which participants of this bonus plan are eligible for bonus awards. - RSI PERFORMANCE -- RSI performance payout is based on a grid which combines RSI ROE performance and RSI NBT performance. RSI ROE performance for the bonus year is calculated by dividing RSI NAT by RSI average equity. -- RSI NAT is defined as RSI's consolidated Net Earnings After Tax from continuing operations for the bonus year, as certified to the Board of Directors and shareholders of RSI by the Company's independent auditors, including appropriate accruals for all incentive awards estimated to be payable for that bonus year. -- RSI average equity is defined as the average of the four quarters' average equity. A quarter's average equity is defined as the equity, as shown on RSI's balance sheet at the beginning of each quarter plus the total equity as shown on RSI's balance sheet at the end of each quarter, divided by two. RSI NBT is defined as RSI's consolidated Net Earnings Before Tax as certified to the Board of Directors and shareholders of RSI by the Company's independent auditors, net of a provision for the total of all incentive awards, for the bonus year. - INDIVIDUAL PERFORMANCE -- Individual performance is defined as each participant's performance against job requirements and objectives (MBOs), as agreed upon between the individual and his/her management, at the beginning of the bonus year. If necessary, goals and objectives may be revised during the bonus year to reflect changing business priorities. Individual performance awards are separate from payments based upon financial measurements and may be paid, in part or in whole, based on the Company's performance and/or ability to pay. Bonus awards are subject to the recommendation of the Administrator of the plan and approval by the Board of Directors of RSI. (See "Bonus Payment") NOTE: The effects of any unusual and material accounting transactions may be excluded from bonus calculations with the approval of the Board of Directors of RSI. 3 -------------------------------------------------------------------------------- RYDER RSI HEADQUARTERS EXECUTIVE MANAGEMENT 1995 INCENTIVE COMPENSATION PLAN PAGE 3 -------------------------------------------------------------------------------- BONUS CALCULATION Bonus awards are based on the following grids. 1) RSI PERFORMANCE - ROE/NBT RSI performance payout is based on a grid consisting of two performance variables: 1995 RSI NAT ROE and 1995 RSI NBT. The potential bonus payout percent is determined by locating the point on the grid where the variables intersect. Actual performance may fall between the points specifically displayed on the grid, and the grid allows for interpolation between NBT points as shown. No bonus awards will be paid for performance below threshold. The potential bonus payout is expressed as a percentage of Maximum RSI Performance Bonus Opportunity, as shown on page 1. POTENTIAL RSI PERFORMANCE BONUS PAYOUT AS A PERCENTAGE OF MAXIMUM RSI PERFORMANCE BONUS OPPORTUNITY
1995 RSI NBT ($MM) THRESHOLD MAXIMUM 260.5 276 289 306 313 327 ROE % OF OPPORTUNITY < 14.5 30 40 50 55 75 80 14.5 - 17 40 50 60 65 85 90 > 17 50 60 65 75 90 100
2) INDIVIDUAL PERFORMANCE Individual performance payout is based on a grid consisting of individual performance results versus objectives. The potential bonus payout percent is determined by awarding a percentage within one of the grid ranges. The potential bonus payout is expressed as a percentage of Maximum Individual Performance Bonus Opportunity, as shown on page 1. POTENTIAL INDIVIDUAL PERFORMANCE BONUS PAYOUT AS A PERCENTAGE OF MAXIMUM INDIVIDUAL PERFORMANCE BONUS OPPORTUNITY
FAIR - SOME CONSISTENT SIGNIFICANTLY CRITICAL WITH ABOVE INDIVIDUAL PERFORMANCE SHORTFALLS EXPECTATIONS EXPECTATIONS EXCEPTIONAL % OF INDIVIDUAL PERFORMANCE OPPORTUNITY 0-50% 51-70% 71-89% 90-100%
ALL PERFORMANCE GRIDS REPRESENT GUIDELINES ONLY. ACTUAL PAYOUTS MAY BE PRORATED DOWNWARD AT THE COMPANY'S DISCRETION. ADDITIONAL CRITERIA MAY ADJUST THE PERFORMANCE PORTION DOWNWARD IF SPECIFIC GOALS ARE NOT ACHIEVED. THE GRIDS WILL BE REVISED ANNUALLY TO ENSURE CONSISTENCY WITH COMPANY GOALS AND OBJECTIVES. 4 -------------------------------------------------------------------------------- RYDER RSI HEADQUARTERS EXECUTIVE MANAGEMENT 1995 INCENTIVE COMPENSATION PLAN PAGE 4 -------------------------------------------------------------------------------- BONUS CALCULATION EXAMPLE Total bonus would be calculated as follows for a Management Level 9 participant, given the following information: Eligible Base Salary $50,000 1995 RSI NBT $ 313MM 1995 RSI NAT ROE 15% Individual Performance Significantly Above Expectations
1) RSI Performance 16% Maximum RSI Performance Bonus Opportunity 85% Potential RSI Performance Bonus Payout (from grid) 16% x 85% = 13.6% of Eligible Base Salary 13.6% x $50,000 = $6,800 2) Individual Performance 4% Maximum Individual Performance Bonus Opportunity 75% Potential Individual Performance Bonus Payout (from grid) 4% x 75% = 3% of Eligible Base Salary 3% x $50,000 = $1,500 ------ TOTAL BONUS $8,300
5 -------------------------------------------------------------------------------- RYDER RSI HEADQUARTERS EXECUTIVE MANAGEMENT 1995 INCENTIVE COMPENSATION PLAN PAGE 5 -------------------------------------------------------------------------------- BASE SALARY CALCULATION For the purpose of bonus calculations, base salary is defined as the average annual rate of pay for the calendar year, excluding all other compensation paid to the employee during the year, e.g. bonus, commissions, employee benefits, moving expenses, and imputed income from company car, insurance, and amounts attributable to any of the Company's stock plans. Average annual rate of pay for a participant whose base salary changes within the bonus year is calculated as shown below. BASE SALARY CALCULATION EXAMPLE Average annual rate of pay would be calculated as follows for a participant who begins a bonus year with a base salary of $50,000, then effective June 1 receives an increase to a base salary of $53,000: January 1 through May 31 of Bonus Year: --------------------------------------- 31 + 28 + 31 + 30 + 31 = 151=.414 x $50,000/yr. = $20,700 ---------------------- --- 365 days 365 June 1 through December 31 of Bonus Year: ----------------------------------------- 365 - 151 = 214=.586 x $53,000/yr. = $31,058 --------- --- 365 days 365 AVERAGE ANNUAL RATE OF PAY FOR BONUS YEAR = $51,758
SPECIAL ROE AWARD One and one-half percent of the RSI NAT amount in excess of that required to reach 17% Return on Equity (ROE) will be credited to deferred compensation for elected Officers of the Company, Division Presidents and the Senior Vice President and General Manager Ryder International. This amount will be prorated based on each individual participant's earned salary (while in the eligible position) in relation to the sum of the earned salaries of all participants. 6 -------------------------------------------------------------------------------- RYDER RSI HEADQUARTERS EXECUTIVE MANAGEMENT 1995 INCENTIVE COMPENSATION PLAN PAGE 6 -------------------------------------------------------------------------------- ADMINISTRATION The Chairman, President, and Chief Executive Officer of RSI will administer this Incentive Compensation Plan. BONUS YEAR The bonus year is defined as the calendar year in which bonus awards are earned. ELIGIBILITY Employees whose positions are designated on page 1 and who are employed in good standing at the time bonus payments are made are eligible to participate in this plan. Individuals who have agreements which specifically provide for incentive compensation other than that which is provided in this plan or who are participants in any other incentive compensation plan of RSI, its subsidiaries or affiliates are not eligible to participate in this plan. Employees who are newly hired, promoted or transferred into or out of eligible positions and those who move from one eligibility level to another will receive pro rata bonus awards based on the average annual rate of pay in eligible positions, provided they are employed in good standing at the time bonus awards are distributed. In addition, participants who leave the Company during the bonus year under any of the following conditions may be eligible for pro rata bonus awards: - retirement under the provisions of one of the Company's retirement plans or the Social Security Act, or - disability Note: The spouse or legal representative of a deceased participant may be eligible for pro rata bonus awards as well. BONUS ELIGIBILITY ON CHANGE OF CONTROL Notwithstanding anything in this plan to the contrary, in the event of a Change of Control of the Company (as defined and adopted by the Board of Directors on August 20, 1993), the funds necessary to pay incentive awards will be placed in a trust administered by an outside financial institution. The amount of each participant's incentive award will be determined in accordance with the provisions of the plan by a "Big 6" accounting firm chosen by the Company. Participants will receive bonus awards for actual time employed during the bonus year based upon: a) the greater of actual company performance or 80% of maximum company performance opportunity plus b) the greater of actual individual performance or 80% of maximum individual performance opportunity. 7 -------------------------------------------------------------------------------- RYDER RSI HEADQUARTERS EXECUTIVE MANAGEMENT 1995 INCENTIVE COMPENSATION PLAN PAGE 7 -------------------------------------------------------------------------------- However, if the Company fails to verify incentive awards through a "Big 6" accounting firm, participants will receive 100% of their maximum company and individual performance opportunities based on actual time worked during the bonus year. The Company will be responsible for all legal fees and expenses which participants may reasonably incur in enforcing their rights under the plan in the event of a Change of Control of the Company. Should a Change of Control occur during 1995, participants will receive instructions regarding the collection of incentive awards. BONUS ELIGIBILITY ON TERMINATION Participants leaving the Company or VLSD under any conditions other than those outlined in the Eligibility or Change of Control sections of this plan are not eligible for bonus awards for the bonus year in which they leave, nor are they eligible for awards for the preceding bonus year, if such awards have not yet been distributed. BONUS PAYMENT Shortly after the end of the calendar year and after considering the recommendations of the Administrator of the plan, the Compensation Committee of the Board of Directors or the full Board of Directors of RSI will, in its sole discretion, determine the participants, if any, who will receive bonus awards and the amounts of such awards. Bonus award payments will be distributed to eligible participants following such Board or Committee approval and subsequent to certification of consolidated financial statements by an independent auditor. BONUS FUNDING A maximum of 2.5% of consolidated RSI NBT and 9% of Vehicle Leasing and Services Division (VLSD) NBT may be accrued by RSI and VLSD, respectively, throughout the bonus year to fund all awards under the RSI Headquarters Executive Management Incentive Compensation Plan, the VLSD field and headquarters bonus plans, the RSI SEVP Incentive Compensation Plan, the SVP and General Manager Ryder International Incentive Compensation Plan, the Ryder International field and bonus plans, and the Ryder Services Corporation Incentive Compensation Plan, as well as any incentive or bonus payments resulting from employment commitments or agreements. Accruals for the Chairman, President and Chief Executive Officer of RSI, the President of Automotive Carrier Division, the President of Commercial Leasing & Services, the President of Consumer Truck Rental, the President of Ryder Dedicated Logistics, and all discretionary awards are excluded from this funding limitation. Bonus payout maximums are limited by the lower of the total earned opportunity provided under the plan, the amount of the accrual, or the funding limitation. Should the funding limitation or accrual not provide for bonus allotments under the plan, proration will be affected at the discretion of the Chairman, President and Chief Executive Officer of RSI. Unused monies from the fund may not be carried forward for subsequent bonus years. 8 -------------------------------------------------------------------------------- RYDER RSI HEADQUARTERS EXECUTIVE MANAGEMENT 1995 INCENTIVE COMPENSATION PLAN PAGE 8 -------------------------------------------------------------------------------- DISCRETIONARY AWARDS With the approval of the Board of Directors of RSI, the Chairman, President, and Chief Executive Officer of RSI has the authority to grant discretionary bonus awards for exemplary performance to non-participants or to enhance the awards of participants. Discretionary awards are not subject to the funding limitations of this plan. While it is common to grant discretionary awards at the same time as regular awards, it may be appropriate, on occasion, to recognize an employee off-cycle due to extremely unusual performance. Off-cycle discretionary awards must be approved by the Chairman, President and Chief Executive Officer of RSI. The total of all discretionary awards for employees under the RSI Headquarters Executive Management Incentive Compensation Plan, the VLSD field and headquarters bonus plans, the RSI SEVP Incentive Compensation Plan, the SVP and General Manager Ryder International Incentive Compensation Plan, the Ryder International field and bonus plans, the Ryder Services Corporation Incentive Compensation Plan, and the Division Presidents' bonus plans, including those granted off-cycle, may not exceed $430,000 per year. AMENDMENTS The Board of Directors of RSI reviews RSI's, its subsidiaries' and affiliates' incentive compensation plans annually to ensure equitability both within the Company, and in relation to current economic conditions. THE BOARD OF DIRECTORS RESERVES THE RIGHT TO AMEND, SUSPEND, TERMINATE OR MAKE EXCEPTIONS TO THIS PLAN AT ANY TIME. EX-10.8B 9 1995 INCENTIVE COMPENSATION PLAN - EX V.P. 1 EXHIBIT 10.8(b) -------------------------------------------------------------------------------- RYDER SENIOR EXECUTIVE VICE PRESIDENTS 1995 INCENTIVE COMPENSATION PLAN PAGE 1 -------------------------------------------------------------------------------- Supersedes 1994 Senior Executive Vice Presidents Incentive Compensation Plan INTRODUCTION The following material explains the operation and administration of the 1995 Incentive Plan for the Senior Executive Vice Presidents Chairman, President & Chief Executive Officer (CEO) of Ryder System, Inc. (RSI or the Company). The plan is intended to serve as a single, comprehensive source of information that will explain your bonus for achieving various levels of performance. BONUS OPPORTUNITY The following table summarizes the maximum bonus opportunity: MAXIMUM BONUS OPPORTUNITY AS A PERCENTAGE OF BASE SALARY
RSI RSI PERFORMANCE INDIVIDUAL TOTAL BONUS PERFORMANCE ABOVE PLAN PERFORMANCE OPPORTUNITY* 80% 20% 20% 120%
* See Special ROE Award section BONUS PERFORMANCE MEASURES For 1995, your bonus payout will be based on RSI performance, RSI performance above plan, and your performance as an individual. RSI performance is measured based on RSI Net Earnings After Tax (NAT) Return on Equity (ROE) performance and RSI Net Earnings Before Tax (NBT) performance for 1995. RSI performance above plan is measured based on RSI NBT performance for 1995. Individual performance is determined based on a year-end assessment of your performance against objectives that you agreed to with management at the start of the year. The objectives may be updated during the year to adjust for priorities that may have changed. 2 -------------------------------------------------------------------------------- RYDER SENIOR EXECUTIVE VICE PRESIDENTS 1995 INCENTIVE COMPENSATION PLAN PAGE 2 -------------------------------------------------------------------------------- DEFINITION OF MEASURES Performance levels attained in the following areas determine the extent to which participants of this bonus plan are eligible for bonus awards. - RSI PERFORMANCE -- RSI performance payout is based on a grid which combines RSI ROE performance and RSI NBT performance. RSI ROE performance for the bonus year is calculated by dividing RSI NAT by RSI average equity. -- RSI NAT is defined as RSI's consolidated Net Earnings After Tax from continuing operations for the bonus year, as certified to the Board of Directors and shareholders of RSI by the Company's independent auditors, including appropriate accruals for all incentive awards estimated to be payable for that bonus year. -- RSI average equity is defined as the average of the four quarters' average equity. A quarter's average equity is defined as the equity, as shown on RSI's balance sheet at the beginning of each quarter plus the total equity as shown on RSI's balance sheet at the end of each quarter, divided by two. RSI NBT is defined as RSI's consolidated Net Earnings Before Tax as certified to the Board of Directors and shareholders of RSI by the Company's independent auditors, net of a provision for the total of all incentive awards, for the bonus year. - RSI PERFORMANCE ABOVE PLAN -- RSI performance above plan payout is based on RSI NBT performance. To achieve a payout, RSI NBT performance must be above Plan. - INDIVIDUAL PERFORMANCE -- Individual performance is defined as each participant's performance against job requirements and objectives (MBOs), as agreed upon between the individual and his/her management, at the beginning of the bonus year. If necessary, goals and objectives may be revised during the bonus year to reflect changing business priorities. Individual performance awards are separate from payments based upon financial measurements and may be paid, in part or in whole, based on the Company's performance and/or ability to pay. Bonus awards are subject to the recommendation of the Administrator of the plan and approval by the Board of Directors of RSI. (See "Bonus Payment") NOTE: The effects of any unusual and material accounting transactions may be excluded from bonus calculations with the approval of the Board of Directors of RSI. 3 -------------------------------------------------------------------------------- RYDER SENIOR EXECUTIVE VICE PRESIDENTS 1995 INCENTIVE COMPENSATION PLAN PAGE 3 -------------------------------------------------------------------------------- BONUS CALCULATION Bonus awards are based on the following grids. 1) RSI PERFORMANCE - ROE/NBT RSI performance payout is based on a grid consisting of two performance variables: 1995 RSI NAT ROE and 1995 RSI NBT. The potential bonus payout percent is determined by locating the point on the grid where the variables intersect. Actual performance may fall between the points specifically displayed on the grid, and the grid allows for interpolation between NBT points as shown. No bonus awards will be paid for performance below threshold. The potential bonus payout is expressed as a percentage of Maximum RSI Performance Bonus Opportunity, as shown on page 1. POTENTIAL RSI PERFORMANCE BONUS PAYOUT AS A PERCENTAGE OF MAXIMUM RSI PERFORMANCE BONUS OPPORTUNITY
1995 RSI NBT ($MM) THRESHOLD MAXIMUM 260.5 276 289 306 313 327 ROE % OF OPPORTUNITY < 14.5 30 40 50 55 75 80 14.5 - 17 40 50 60 65 85 90 > 17 50 60 65 75 90 100
2) RSI PERFORMANCE ABOVE PLAN - NBT RSI performance above plan payout is based on a grid of 1995 RSI NBT. The potential bonus payout percent is determined by locating the point on the grid under the 1995 RSI NBT. Actual performance may fall between the points specifically displayed on the grid, and the grid allows for interpolation between NBT points as shown. No bonus awards will be paid for performance below threshold. The potential bonus payout is expressed as a percentage of Maximum RSI Performance Above Plan Bonus Opportunity, as shown on page 1. POTENTIAL RSI PERFORMANCE ABOVE PLAN BONUS PAYOUT AS A PERCENTAGE OF MAXIMUM RSI PERFORMANCE ABOVE PLAN BONUS OPPORTUNITY 1995 RSI ABOVE PLAN NBT ($MM) THRESHOLD MAXIMUM 306.0 313.0 327.0 % OF OPPORTUNITY 0 50 100
4 -------------------------------------------------------------------------------- RYDER SENIOR EXECUTIVE VICE PRESIDENTS 1995 INCENTIVE COMPENSATION PLAN PAGE 4 -------------------------------------------------------------------------------- 3) INDIVIDUAL PERFORMANCE Individual performance payout is based on a grid consisting of individual performance results versus objectives. The potential bonus payout percent is determined by awarding a percentage within one of the grid ranges. The potential bonus payout is expressed as a percentage of Maximum Individual Performance Bonus Opportunity, as shown on page 1. POTENTIAL INDIVIDUAL PERFORMANCE BONUS PAYOUT AS A PERCENTAGE OF MAXIMUM INDIVIDUAL PERFORMANCE BONUS OPPORTUNITY
FAIR - SOME CONSISTENT SIGNIFICANTLY CRITICAL WITH ABOVE INDIVIDUAL PERFORMANCE SHORTFALLS EXPECTATIONS EXPECTATIONS EXCEPTIONAL % OF INDIVIDUAL PERFORMANCE OPPORTUNITY 0-50% 51-70% 71-89% 90-100%
ALL PERFORMANCE GRIDS REPRESENT GUIDELINES ONLY. ACTUAL PAYOUTS MAY BE PRORATED DOWNWARD AT THE COMPANY'S DISCRETION. ADDITIONAL CRITERIA MAY ADJUST THE PERFORMANCE PORTION DOWNWARD IF SPECIFIC GOALS ARE NOT ACHIEVED. THE GRIDS WILL BE REVISED ANNUALLY TO ENSURE CONSISTENCY WITH COMPANY GOALS AND OBJECTIVES. 5 -------------------------------------------------------------------------------- RYDER SENIOR EXECUTIVE VICE PRESIDENTS 1995 INCENTIVE COMPENSATION PLAN PAGE 5 -------------------------------------------------------------------------------- BONUS CALCULATION EXAMPLE Total bonus would be calculated as follows, given the following information: Eligible Base Salary $350,000 1995 RSI NAT ROE 15% 1995 RSI NBT $ 313MM Individual Performance Significantly Above Expectations
1) RSI Performance 80% Maximum RSI Performance Bonus Opportunity 85% Potential RSI Performance Bonus Payout (from grid) 80% x 85% = 68% of Eligible Base Salary 68% x $350,000 = $238,000 2) RSI Performance Above Plan 20% Maximum RSI Performance Above Plan Bonus Opportunity 50% Potential RSI Performance Above Plan Bonus Payout (from grid) 20% x 50% = 10% of Eligible Base Salary 10% x $350,000 = 35,000 3) Individual Performance 20% Maximum Individual Performance Bonus Opportunity 75% Potential Individual Performance Bonus Payout (from grid) 20% x 75% = 15% of Eligible Base Salary 15% x $350,000 = $ 52,500 -------- TOTAL BONUS $325,500
6 -------------------------------------------------------------------------------- RYDER SENIOR EXECUTIVE VICE PRESIDENTS 1995 INCENTIVE COMPENSATION PLAN PAGE 6 -------------------------------------------------------------------------------- BASE SALARY CALCULATION For the purpose of bonus calculations, base salary is defined as the average annual rate of pay for the calendar year, excluding all other compensation paid to the employee during the year, e.g. bonus, commissions, employee benefits, moving expenses, and imputed income from company car, insurance, and amounts attributable to any of the Company's stock plans. Average annual rate of pay for a participant whose base salary changes within the bonus year is calculated as shown below. BASE SALARY CALCULATION EXAMPLE Average annual rate of pay would be calculated as follows for a participant who begins a bonus year with a base salary of $350,000, then effective June 1 receives an increase to a base salary of $375,000: January 1 through May 31 of Bonus Year: --------------------------------------- 31 + 28 + 31 + 30 + 31 = 151=.414 x $350,000/yr. = $144,900 ---------------------- --- 365 days 365 June 1 through December 31 of Bonus Year: ----------------------------------------- 365 - 151 = 214=.586 x $375,000/yr. = $219,750 --------- --- 365 days 365 AVERAGE ANNUAL RATE OF PAY FOR BONUS YEAR = $364,650
SPECIAL ROE AWARD One and one-half percent of the RSI NAT amount in excess of that required to reach 17% Return on Equity (ROE) will be credited to deferred compensation for elected Officers of the Company, Division Presidents and the Senior Vice President and General Manager Ryder International. This amount will be prorated based on each individual participant's earned salary (while in the eligible position) in relation to the sum of the earned salaries of all participants. 7 -------------------------------------------------------------------------------- RYDER SENIOR EXECUTIVE VICE PRESIDENTS 1995 INCENTIVE COMPENSATION PLAN PAGE 7 -------------------------------------------------------------------------------- ADMINISTRATION The Chairman, President, and Chief Executive Officer of RSI will administer this Incentive Compensation Plan. BONUS YEAR The bonus year is defined as the calendar year in which bonus awards are earned. ELIGIBILITY Employees whose positions are designated on page 1 and who are employed in good standing at the time bonus payments are made are eligible to participate in this plan. Individuals who have agreements which specifically provide for incentive compensation other than that which is provided in this plan or who are participants in any other incentive compensation plan of RSI, its subsidiaries or affiliates are not eligible to participate in this plan. Employees who are newly hired, promoted or transferred into or out of eligible positions and those who move from one eligibility level to another will receive pro rata bonus awards based on the average annual rate of pay in eligible positions, provided they are employed in good standing at the time bonus awards are distributed. In addition, participants who leave the Company during the bonus year under any of the following conditions may be eligible for pro rata bonus awards: - retirement under the provisions of one of the Company's retirement plans or the Social Security Act, or - disability Note: The spouse or legal representative of a deceased participant may be eligible for pro rata bonus awards as well. BONUS ELIGIBILITY ON CHANGE OF CONTROL Notwithstanding anything in this plan to the contrary, in the event of a Change of Control of the Company (as defined and adopted by the Board of Directors on August 20, 1993), the funds necessary to pay incentive awards will be placed in a trust administered by an outside financial institution. The amount of each participant's incentive award will be determined in accordance with the provisions of the plan by a "Big 6" accounting firm chosen by the Company. Participants will receive bonus awards for actual time employed during the bonus year based upon: a) the greater of actual company performance or 80% of maximum company performance opportunity plus b) the greater of actual individual performance or 80% of maximum individual performance opportunity. 8 -------------------------------------------------------------------------------- RYDER SENIOR EXECUTIVE VICE PRESIDENTS 1995 INCENTIVE COMPENSATION PLAN PAGE 8 -------------------------------------------------------------------------------- However, if the Company fails to verify incentive awards through a "Big 6" accounting firm, participants will receive 100% of their maximum company and individual performance opportunities based on actual time worked during the bonus year. The Company will be responsible for all legal fees and expenses which participants may reasonably incur in enforcing their rights under the plan in the event of a Change of Control of the Company. Should a Change of Control occur during 1995, participants will receive instructions regarding the collection of incentive awards. BONUS ELIGIBILITY ON TERMINATION Participants leaving the Company under any conditions other than those outlined in the Eligibility or Change of Control sections of this plan are not eligible for bonus awards for the bonus year in which they leave, nor are they eligible for awards for the preceding bonus year, if such awards have not yet been distributed. BONUS PAYMENT Shortly after the end of the calendar year and after considering the recommendations of the Administrator of the plan, the Compensation Committee of the Board of Directors or the full Board of Directors of RSI will, in its sole discretion, determine the participants, if any, who will receive bonus awards and the amounts of such awards. Bonus award payments will be distributed to eligible participants following such Board or Committee approval and subsequent to certification of consolidated financial statements by an independent auditor. BONUS FUNDING A maximum of 2.5% of consolidated RSI NBT and 9% of Vehicle Leasing and Services Division (VLSD) NBT may be accrued by RSI and VLSD, respectively, throughout the bonus year to fund all awards under the RSI Headquarters Executive Management Incentive Compensation Plan, the VLSD field and headquarters bonus plans, the RSI SEVP Incentive Compensation Plan, the SVP and General Manager Ryder International Incentive Compensation Plan, the Ryder International field and bonus plans, and the Ryder Services Corporation Incentive Compensation Plan, as well as any incentive or bonus payments resulting from employment commitments or agreements. Accruals for the Chairman, President and Chief Executive Officer of RSI, the President of Automotive Carrier Division, the President of Commercial Leasing & Services, the President of Consumer Truck Rental, the President of Ryder Dedicated Logistics, and all discretionary awards are excluded from this funding limitation. Bonus payout maximums are limited by the lower of the total earned opportunity provided under the plan, the amount of the accrual, or the funding limitation. Should the funding limitation or accrual not provide for bonus allotments under the plan, proration will be affected at the discretion of the Chairman, President and Chief Executive Officer of RSI. Unused monies from the fund may not be carried forward for subsequent bonus years. 9 -------------------------------------------------------------------------------- RYDER SENIOR EXECUTIVE VICE PRESIDENTS 1995 INCENTIVE COMPENSATION PLAN PAGE 9 -------------------------------------------------------------------------------- DISCRETIONARY AWARDS With the approval of the Board of Directors of RSI, the Chairman, President, and Chief Executive Officer of RSI has the authority to grant discretionary bonus awards for exemplary performance to non-participants or to enhance the awards of participants. Discretionary awards are not subject to the funding limitations of this plan. While it is common to grant discretionary awards at the same time as regular awards, it may be appropriate, on occasion, to recognize an employee off-cycle due to extremely unusual performance. Off-cycle discretionary awards must be approved by the Chairman, President and Chief Executive Officer of RSI. The total of all discretionary awards for employees under the RSI Headquarters Executive Management Incentive Compensation Plan, the VLSD field and headquarters bonus plans, the RSI SEVP Incentive Compensation Plan, the SVP and General Manager Ryder International Incentive Compensation Plan, the Ryder International field and bonus plans, the Ryder Services Corporation Incentive Compensation Plan, and the Division Presidents' bonus plans, including those granted off-cycle, may not exceed $430,000 per year. AMENDMENTS The Board of Directors of RSI reviews RSI's, its subsidiaries' and affiliates' incentive compensation plans annually to ensure equitability both within the Company, and in relation to current economic conditions. THE BOARD OF DIRECTORS RESERVES THE RIGHT TO AMEND, SUSPEND, TERMINATE OR MAKE EXCEPTIONS TO THIS PLAN AT ANY TIME. EX-10.9B 10 1995 INCENTIVE COMPENSATION PLAN V.P. & G.M. 1 EXHIBIT 10.9(b) -------------------------------------------------------------------------------- RYDER SENIOR VICE PRESIDENT & GENERAL MANAGER RYDER INTERNATIONAL 1995 INCENTIVE COMPENSATION PLAN PAGE 1 -------------------------------------------------------------------------------- Supersedes 1994 Senior Vice President and General Manager Incentive Compensation Plan INTRODUCTION The following material explains the operation and administration of the 1995 Incentive Plan for the Senior Vice President and General Manager, Ryder International. The plan is intended to serve as a single, comprehensive source of information that will explain your bonus for achieving various levels of performance. Questions should be addressed to your supervisor. BONUS OPPORTUNITY The following table summarizes the maximum bonus opportunity: MAXIMUM BONUS OPPORTUNITY AS A PERCENTAGE OF BASE SALARY
RSI INTERNATIONAL DEVELOPMENT INDIVIDUAL TOTAL BONUS PERFORMANCE PERFORMANCE OBJECTIVES PERFORMANCE OPPORTUNITY* ----------- ----------- ---------- ----------- ------------ 60% 10% 10% 20% 100%
* See Special ROE Award section BONUS PERFORMANCE MEASURES For 1995, your bonus payout will be based upon Ryder System, Inc. (RSI or the Company) performance, International performance, International development objectives and your performance as an individual. RSI performance is measured based on RSI Net Earnings After Tax (NAT) Return on Equity (ROE) performance and RSI Net Earnings Before Tax (NBT) performance for 1995. International performance is measured based on International NBT performance for 1995. International development is measured based on objectives set for 1995. Individual performance is determined based on a year-end assessment of your performance against objectives that you agreed to with management at the start of the year. Given their importance, the objectives should be in writing and may be updated during the year to adjust for priorities that may have changed. 2 -------------------------------------------------------------------------------- RYDER SENIOR VICE PRESIDENT & GENERAL MANAGER RYDER INTERNATIONAL 1995 INCENTIVE COMPENSATION PLAN PAGE 2 -------------------------------------------------------------------------------- DEFINITION OF MEASURES Performance levels attained in the following areas determine the extent to which participants of this bonus plan are eligible for bonus awards. o RSI PERFORMANCE -- RSI performance payout is based on a grid which combines RSI ROE performance and RSI NBT performance. RSI ROE performance for the bonus year is calculated by dividing RSI NAT by RSI average equity. -- RSI NAT is defined as RSI's consolidated Net Earnings After Tax from continuing operations for the bonus year, as certified to the Board of Directors and shareholders of RSI by the Company's independent auditors, including appropriate accruals for all incentive awards estimated to be payable for that bonus year. -- RSI average equity is defined as the average of the four quarters' average equity. A quarter's average equity is defined as the equity, as shown on RSI's balance sheet at the beginning of each quarter plus the total equity as shown on RSI's balance sheet at the end of each quarter, divided by two. RSI NBT is defined as RSI's consolidated Net Earnings Before Tax as certified to the Board of Directors and shareholders of RSI by the Company's independent auditors, net of a provision for the total of all incentive awards, for the bonus year. o INTERNATIONAL PERFORMANCE -- International performance payout is based on International NBT performance. International NBT performance is defined as International's consolidated Net Earnings Before Tax as verified by the Senior Vice President and Controller, RSI, net of a provision for the total of all incentive awards, for the bonus year. o INTERNATIONAL DEVELOPMENT OBJECTIVES -- Payout is determined based on achieving the following objectives: -- Double German revenue and break even on a monthly basis by the end of the year. -- Develop and launch a European joint venture or alliance. -- Determine and implement appropriate business processes and systems to support new and existing services. -- In support of global human resource planning, create an international bench strength pool (identification and preparation of candidates). -- Identify the next strategic market and begin the entry process. -- Complete and implement a Pan-European strategy. -- Sign 5 new significant customers in Mexico by year end. 3 -------------------------------------------------------------------------------- RYDER SENIOR VICE PRESIDENT & GENERAL MANAGER RYDER INTERNATIONAL 1995 INCENTIVE COMPENSATION PLAN PAGE 3 -------------------------------------------------------------------------------- Note: All quantitative values are subject to interpolation. o INDIVIDUAL PERFORMANCE -- Individual performance is defined as each participant's performance against job requirements and objectives (MBOs), as agreed upon between the individual and his/her management, at the beginning of the bonus year. If necessary, goals and objectives may be revised during the bonus year to reflect changing business priorities. Individual performance awards are separate from payments based upon financial measurements and may be paid, in part or in whole, based on the Company's performance and/or ability to pay. Bonus awards are subject to the recommendation of the Administrator of the plan and approval by the Board of Directors of RSI. (See "Bonus Payment") NOTE: The effects of any unusual and material accounting transactions may be excluded from bonus calculations with the approval of the Board of Directors of RSI. 4 -------------------------------------------------------------------------------- RYDER SENIOR VICE PRESIDENT & GENERAL MANAGER RYDER INTERNATIONAL 1995 INCENTIVE COMPENSATION PLAN PAGE 4 -------------------------------------------------------------------------------- BONUS CALCULATION Bonus awards are based on the following grids. 1) RSI PERFORMANCE - ROE/NBT RSI performance payout is based on a grid consisting of two performance variables: 1995 RSI NAT ROE and 1995 RSI NBT. The potential bonus payout percent is determined by locating the point on the grid where the variables intersect. Actual performance may fall between the points specifically displayed on the grid, and the grid allows for interpolation between NBT points as shown. No bonus awards will be paid for performance below threshold. The potential bonus payout is expressed as a percentage of Maximum RSI Performance Bonus Opportunity, as shown on page 1. POTENTIAL RSI PERFORMANCE BONUS PAYOUT AS A PERCENTAGE OF MAXIMUM RSI PERFORMANCE BONUS OPPORTUNITY
1995 RSI NBT ($MM) THRESHOLD ------------------ MAXIMUM --------- ------- 260.5 276 289 306 313 327 ROE % OF OPPORTUNITY --- ---------------- Less Than 14.5 30 40 50 55 75 80 14.5 - 17 40 50 60 65 85 90 Greater Than 17 50 60 65 75 90 100
2) INTERNATIONAL PERFORMANCE - NBT International performance payout is based on 1995 International NBT. The bonus payout percent is determined by locating the point on the grid which corresponds to the variable. Actual performance may fall between the points specifically displayed on the grid, and the grid allows for interpolation between NBT points as shown. No bonus awards will be paid for performance below threshold. The potential bonus payout is expressed as a percentage of Maximum International Performance Bonus Opportunity, as shown on page 1. POTENTIAL INTERNATIONAL PERFORMANCE BONUS PAYOUT AS A PERCENTAGE OF MAXIMUM INTERNATIONAL PERFORMANCE BONUS OPPORTUNITY
1995 INTERNATIONAL NBT ($MM) ---------------------------- THRESHOLD MAXIMUM --------- -------- 0.25 1 2 4 % OF OPPORTUNITY ---------------- 55 65 80 100
5 -------------------------------------------------------------------------------- RYDER SENIOR VICE PRESIDENT & GENERAL MANAGER RYDER INTERNATIONAL 1995 INCENTIVE COMPENSATION PLAN PAGE 5 -------------------------------------------------------------------------------- 3) INTERNATIONAL DEVELOPMENT OBJECTIVES International development objectives payout is based on the percentage of objectives achieved in 1995 as shown on page 2. The potential bonus payout is expressed as a percentage of Maximum Bonus Opportunity, as shown on page 1. 4) INDIVIDUAL PERFORMANCE Individual performance payout is based on a grid consisting of individual performance results versus objectives. The potential bonus payout percent is determined by awarding a percentage within one of the grid ranges. The potential bonus payout is expressed as a percentage of Maximum Individual Performance Bonus Opportunity, as shown on page 1. POTENTIAL INDIVIDUAL PERFORMANCE BONUS PAYOUT AS A PERCENTAGE OF MAXIMUM INDIVIDUAL PERFORMANCE BONUS OPPORTUNITY
FAIR - SOME CONSISTENT WITH SIGNIFICANTLY CRITICAL WITH ABOVE INDIVIDUAL PERFORMANCE SHORTFALLS EXPECTATIONS EXPECTATIONS EXCEPTIONAL ---------------------- ---------- ------------ ------------ ----------- % OF INDIVIDUAL PERFORMANCE OPPORTUNITY 0-50% 51-70% 71-89% 90-100%
ALL PERFORMANCE GRIDS REPRESENT GUIDELINES ONLY. ACTUAL PAYOUTS MAY BE PRORATED DOWNWARD AT THE COMPANY'S DISCRETION. ADDITIONAL CRITERIA MAY ADJUST THE PERFORMANCE PORTION DOWNWARD IF SPECIFIC GOALS ARE NOT ACHIEVED. THE GRIDS WILL BE REVISED ANNUALLY TO ENSURE CONSISTENCY WITH COMPANY GOALS AND OBJECTIVES. 6 -------------------------------------------------------------------------------- RYDER SENIOR VICE PRESIDENT & GENERAL MANAGER RYDER INTERNATIONAL 1995 INCENTIVE COMPENSATION PLAN PAGE 6 -------------------------------------------------------------------------------- BONUS CALCULATION EXAMPLE Total bonus would be calculated as follows, given the following information: Eligible Base Salary $190,000 1995 RSI NAT ROE 15% 1995 RSI NBT $ 313MM 1995 International NBT $ 1.0MM 1995 International Development Objectives 75% Individual Performance Significantly Above Expectations
1) RSI Performance 60% Maximum RSI Performance Bonus Opportunity 85% Potential RSI Performance Bonus Payout (from grid) 60% x 85% = 51% of Eligible Base Salary 51% x $190,000 = $ 96,900 2) International Performance 10% Maximum International Performance Bonus Opportunity 65% Potential International Performance Bonus Payout (from grid) 10% x 65% = 6.5% of Eligible Base Salary 6.5% x $190,000 = 12,350 3) International Development Objectives 10% Maximum International Objectives Bonus Opportunity 75% Potential International Objectives Bonus Payout 10% x 75% = 7.5% 7.5% x $190,000 = 14,250 4) Individual Performance 20% Maximum Individual Performance Bonus Opportunity 75% Potential Individual Performance Bonus Payout (from grid) 20% x 75% = 15% of Eligible Base Salary 15% x $190,000 = $ 28,500 -------- TOTAL BONUS $152,000
7 -------------------------------------------------------------------------------- RYDER SENIOR VICE PRESIDENT & GENERAL MANAGER RYDER INTERNATIONAL 1995 INCENTIVE COMPENSATION PLAN PAGE 7 -------------------------------------------------------------------------------- BASE SALARY CALCULATION For the purpose of bonus calculations, base salary is defined as the average annual rate of pay for the calendar year, excluding all other compensation paid to the employee during the year, e.g. bonus, commissions, employee benefits, moving expenses, and imputed income from company car, insurance, and amounts attributable to any of the Company's stock plans. Average annual rate of pay for a participant whose base salary changes within the bonus year is calculated as shown below. BASE SALARY CALCULATION EXAMPLE Average annual rate of pay would be calculated as follows for a participant who begins a bonus year with a base salary of $190,000, then effective June 1 receives an increase to a base salary of $210,000: January 1 through May 31 of Bonus Year: --------------------------------------- 31 + 28 + 31 + 30 + 31 = 151=.414 x $190,000/yr. = $ 78,660 ---------------------- --- 365 days 365 June 1 through December 31 of Bonus Year: ----------------------------------------- 365 - 151 = 214=.586 x $210,000/yr. = $123,060 --------- --- 365 days 365 AVERAGE ANNUAL RATE OF PAY FOR BONUS YEAR = $201,720
SPECIAL ROE AWARD One and one-half percent of the RSI NAT amount in excess of that required to reach 17% Return on Equity (ROE) will be credited to deferred compensation for elected Officers of the Company, Division Presidents and the Senior Vice President and General Manager Ryder International. This amount will be prorated based on each individual participant's earned salary (while in the eligible position) in relation to the sum of the earned salaries of all participants. 8 -------------------------------------------------------------------------------- RYDER SENIOR VICE PRESIDENT & GENERAL MANAGER RYDER INTERNATIONAL 1995 INCENTIVE COMPENSATION PLAN PAGE 8 -------------------------------------------------------------------------------- ADMINISTRATION The Chairman, President, and Chief Executive Officer of RSI will administer this Incentive Compensation Plan. BONUS YEAR The bonus year is defined as the calendar year in which bonus awards are earned. ELIGIBILITY The Senior Vice President and General Manager Ryder International, employed in good standing at the time bonus payments are made are eligible to participate in this plan. Individuals who have agreements which specifically provide for incentive compensation other than that which is provided in this plan or who are participants in any other incentive compensation plan of Ryder System, Inc. (RSI or the Company), its subsidiaries or affiliates are not eligible to participate in this plan. Employees who are newly hired, promoted or transferred into or out of eligible positions and those who move from one eligibility level to another will receive pro rata bonus awards based on the average annual rate of pay in eligible positions, provided they are employed in good standing at the time bonus awards are distributed. In addition, participants who leave the Company during the bonus year under any of the following conditions may be eligible for pro rata bonus awards: o retirement under the provisions of one of the Company's retirement plans or the Social Security Act, or o disability. Note: The spouse or legal representative of a deceased participant may be eligible for pro rata bonus awards as well. BONUS ELIGIBILITY ON CHANGE OF CONTROL Notwithstanding anything in this plan to the contrary, in the event of a Change of Control of RSI (as defined and adopted by the Board of Directors on August 20, 1993), the funds necessary to pay incentive awards will be placed in a trust administered by an outside financial institution. The amount of each participant's incentive award will be determined in accordance with the provisions of the plan by a "Big 6" accounting firm chosen by RSI. Participants will receive bonus awards for actual time employed during the bonus year based upon: a) the greater of actual company performance or 80% of maximum company performance opportunity plus b) the greater of actual individual performance or 80% of maximum individual performance opportunity. 9 -------------------------------------------------------------------------------- RYDER SENIOR VICE PRESIDENT & GENERAL MANAGER RYDER INTERNATIONAL 1995 INCENTIVE COMPENSATION PLAN PAGE 9 -------------------------------------------------------------------------------- However, if RSI fails to verify incentive awards through a "Big 6" accounting firm, participants will receive 100% of their maximum company and individual performance opportunities based on actual time worked during the bonus year. RSI will be responsible for all legal fees and expenses which participants may reasonably incur in enforcing their rights under the plan in the event of a Change of Control of RSI. Should a Change of Control occur during 1995, participants will receive instructions regarding the collection of incentive awards. BONUS ELIGIBILITY ON TERMINATION Participants leaving the Company under any conditions other than those outlined in the Eligibility or Change of Control sections of this plan are not eligible for bonus awards for the bonus year in which they leave, nor are they eligible for awards for the preceding bonus year, if such awards have not yet been distributed. BONUS PAYMENT Shortly after the end of the calendar year and after considering the recommendations of the Administrator of the plan, the Compensation Committee of the Board of Directors or the full Board of Directors of RSI will, in its sole discretion, determine the participants, if any, who will receive bonus awards and the amounts of such awards. Bonus award payments will be distributed to eligible participants following such Board or Committee approval and subsequent to certification of consolidated financial statements by an independent auditor. BONUS FUNDING A maximum of 2.5% of consolidated RSI NBT and 9% of Vehicle Leasing and Services Division (VLSD) NBT may be accrued by RSI and VLSD, respectively, throughout the bonus year to fund all awards under the RSI Headquarters Executive Management Incentive Compensation Plan, the VLSD field and headquarters bonus plans, the RSI SEVP Incentive Compensation Plan, the SVP and General Manager Ryder International Incentive Compensation Plan, the Ryder International field and bonus plans, and the Ryder Services Corporation Incentive Compensation Plan, as well as any incentive or bonus payments resulting from employment commitments or agreements. Accruals for the Chairman, President and Chief Executive Officer of RSI, the President of Automotive Carrier Division, the President of Commercial Leasing & Services, the President of Consumer Truck Rental, the President of Ryder Dedicated Logistics, and all discretionary awards are excluded from this funding limitation. Bonus payout maximums are limited by the lower of the total earned opportunity provided under the plan, the amount of the accrual, or the funding limitation. Should the funding limitation or accrual not provide for bonus allotments under the plan, proration will be effected at the discretion of the Chairman, President and Chief Executive Officer of RSI. Unused monies from the fund may not be carried forward for subsequent bonus years. 10 -------------------------------------------------------------------------------- RYDER SENIOR VICE PRESIDENT & GENERAL MANAGER RYDER INTERNATIONAL 1995 INCENTIVE COMPENSATION PLAN PAGE 10 -------------------------------------------------------------------------------- DISCRETIONARY AWARDS With the approval of the Chairman, President and Chief Executive Officer of RSI, and the Board of Directors, has the authority to grant discretionary bonus awards for exemplary performance to non-participants or to enhance the awards of participants. Discretionary awards are not subject to the funding limitations of this plan. While it is common to grant discretionary awards at the same time as regular awards, it may be appropriate, on occasion, to recognize an employee off-cycle due to extremely unusual performance. Off-cycle discretionary awards for officers must be approved by the Chairman, President and Chief Executive Officer of RSI. Off-cycle discretionary awards for non-officers may be granted with the approval of the Chairman, President and Chief Executive Officer of RSI. The total of all discretionary awards for employees under the RSI Headquarters Executive Management Incentive Compensation Plan, the VLSD field and headquarters bonus plans, the RSI SEVP Incentive Compensation Plan, the SVP and General Manager Ryder International Incentive Compensation Plan, the Ryder International field and bonus plans, the Ryder Services Corporation Incentive Compensation Plan, and the Division Presidents' bonus plans, including those granted off-cycle, may not exceed $430,000 per year. AMENDMENTS The Board of Directors of RSI reviews RSI's, its subsidiaries' and affiliates' incentive compensation plans annually to ensure equitability both within the Company, and in relation to current economic conditions. THE BOARD OF DIRECTORS RESERVES THE RIGHT TO AMEND, SUSPEND, TERMINATE OR MAKE EXCEPTIONS TO THIS PLAN AT ANY TIME. EX-10.10B 11 1995 INCENTIVE COMPENSATION PLAN - PRESIDENT 1 EXHIBIT 10.10(b) -------------------------------------------------------------------------------- RYDER PRESIDENT AUTOMOTIVE CARRIER DIVISION 1995 INCENTIVE COMPENSATION PLAN PAGE 1 -------------------------------------------------------------------------------- Supersedes 1994 ACD President Incentive Compensation Plan INTRODUCTION The following material explains the operation and administration of the 1995 Incentive Plan for the President, Automotive Carrier Division (ACD). The plan is intended to serve as a single, comprehensive source of information that will explain your bonus for achieving various levels of performance. Questions should be addressed to your supervisor. BONUS OPPORTUNITY The following table summarizes the maximum bonus opportunity: MAXIMUM BONUS OPPORTUNITY AS A PERCENTAGE OF BASE SALARY
RSI ACD INDIVIDUAL TOTAL BONUS OPPORTUNITY PERFORMANCE PERFORMANCE PERFORMANCE 60% 20% 20% 100%
BONUS PERFORMANCE MEASURES For 1995, your bonus payout will be based on Ryder System, Inc. (RSI or the Company) performance, ACD performance, and your performance as an individual. RSI performance is measured based on RSI Net Earnings After Tax (NAT) Return on Equity (ROE) performance and RSI Net Earnings Before Tax (NBT) performance for 1995. ACD performance is measured based on ACD NBT performance for 1995. Individual performance is determined based on a year-end assessment of your performance against objectives that you agreed to with management at the start of the year. Given their importance, the objectives should be in writing and may be updated during the year to adjust for priorities that may have changed. 2 -------------------------------------------------------------------------------- RYDER PRESIDENT AUTOMOTIVE CARRIER DIVISION 1995 INCENTIVE COMPENSATION PLAN PAGE 2 -------------------------------------------------------------------------------- DEFINITION OF MEASURES Performance levels attained in the following areas determine the extent to which participants of this bonus plan are eligible for bonus awards. - RSI PERFORMANCE -- RSI performance payout is based on a grid which combines RSI ROE performance and RSI NBT performance. RSI ROE performance for the bonus year is calculated by dividing RSI NAT by RSI average equity. -- RSI NAT is defined as RSI's consolidated Net Earnings After Tax from continuing operations for the bonus year, as certified to the Board of Directors and shareholders of RSI by the Company's independent auditors, including appropriate accruals for all incentive awards estimated to be payable for that bonus year. -- RSI average equity is defined as the average of the four quarters' average equity. A quarter's average equity is defined as the equity, as shown on RSI's balance sheet at the beginning of each quarter plus the total equity as shown on RSI's balance sheet at the end of each quarter, divided by two. RSI NBT is defined as RSI's consolidated Net Earnings Before Tax as certified to the Board of Directors and shareholders of RSI by the Company's independent auditors, net of a provision for the total of all incentive awards, for the bonus year. - ACD PERFORMANCE -- ACD performance payout is based on ACD NBT performance. ACD NBT performance is defined as ACD's consolidated Net Earnings Before Tax as verified by the Senior Vice President and Controller, RSI, net of a provision for the total of all incentive awards, for the bonus year. 3 -------------------------------------------------------------------------------- RYDER PRESIDENT AUTOMOTIVE CARRIER DIVISION 1995 INCENTIVE COMPENSATION PLAN PAGE 3 -------------------------------------------------------------------------------- - INDIVIDUAL PERFORMANCE -- Individual performance is defined as each participant's performance against job requirements and objectives (MBOs), as agreed upon between the individual and his/her management, at the beginning of the bonus year. If necessary, goals and objectives may be revised during the bonus year to reflect changing business priorities. Individual performance awards are separate from payments based upon financial measurements and may be paid, in part or in whole, based on the Company's performance and/or ability to pay. Bonus awards are subject to the recommendation of the Administrator of the plan and approval by the Board of Directors of RSI. (See "Bonus Payment") NOTE: The effects of any unusual and material accounting transactions may be excluded from bonus calculations with the approval of the Board of Directors of RSI. 4 -------------------------------------------------------------------------------- RYDER PRESIDENT AUTOMOTIVE CARRIER DIVISION 1995 INCENTIVE COMPENSATION PLAN PAGE 4 -------------------------------------------------------------------------------- BONUS CALCULATION Bonus awards are based on the following grids. 1) RSI PERFORMANCE - ROE/NBT RSI performance payout is based on a grid consisting of two performance variables: 1995 RSI NAT ROE and 1995 RSI NBT. The potential bonus payout percent is determined by locating the point on the grid where the variables intersect. Actual performance may fall between the points specifically displayed on the grid, and the grid allows for interpolation between NBT points as shown. No bonus awards will be paid for performance below threshold. The potential bonus payout is expressed as a percentage of Maximum RSI Performance Bonus Opportunity, as shown on page 1. POTENTIAL RSI PERFORMANCE BONUS PAYOUT AS A PERCENTAGE OF MAXIMUM RSI PERFORMANCE BONUS OPPORTUNITY
1995 RSI NBT ($MM) THRESHOLD MAXIMUM 260.5 276 289 306 313 327 ROE % OF OPPORTUNITY < 14.5 30 40 50 55 75 80 14.5 - 17 40 50 60 65 85 90 > 17 50 60 65 75 90 100
2) ACD PERFORMANCE - NBT ACD performance payout is based on 1995 ACD NBT. The bonus payout percent is determined by locating the point on the grid which corresponds to the variable. Actual performance may fall between the points specifically displayed on the grid, and the grid allows for interpolation between NBT points as shown. No bonus awards will be paid for performance below threshold. The potential bonus payout is expressed as a percentage of Maximum ACD Performance Bonus Opportunity, as shown on page 1. POTENTIAL ACD PERFORMANCE BONUS PAYOUT AS A PERCENTAGE OF MAXIMUM ACD PERFORMANCE BONUS OPPORTUNITY 1995 ACD NBT ($MM) THRESHOLD MAXIMUM 46 49 52 56 59 62 % OF OPPORTUNITY 20 40 55 65 80 100
5 -------------------------------------------------------------------------------- RYDER PRESIDENT AUTOMOTIVE CARRIER DIVISION 1995 INCENTIVE COMPENSATION PLAN PAGE 5 -------------------------------------------------------------------------------- 3) INDIVIDUAL PERFORMANCE Individual performance payout is based on a grid consisting of individual performance results versus objectives. The potential bonus payout percent is determined by awarding a percentage within one of the grid ranges. The potential bonus payout is expressed as a percentage of Maximum Individual Performance Bonus Opportunity, as shown on page 1. POTENTIAL INDIVIDUAL PERFORMANCE BONUS PAYOUT AS A PERCENTAGE OF MAXIMUM INDIVIDUAL PERFORMANCE BONUS OPPORTUNITY
FAIR - SOME CONSISTENT SIGNIFICANTLY CRITICAL WITH ABOVE INDIVIDUAL PERFORMANCE SHORTFALLS EXPECTATIONS EXPECTATIONS EXCEPTIONAL % OF INDIVIDUAL PERFORMANCE OPPORTUNITY 0-50% 51-70% 71-89% 90-100%
ALL PERFORMANCE GRIDS REPRESENT GUIDELINES ONLY. ACTUAL PAYOUTS MAY BE PRORATED DOWNWARD AT THE COMPANY'S DISCRETION. ADDITIONAL CRITERIA MAY ADJUST THE PERFORMANCE PORTION DOWNWARD IF SPECIFIC GOALS ARE NOT ACHIEVED. THE GRIDS WILL BE REVISED ANNUALLY TO ENSURE CONSISTENCY WITH COMPANY GOALS AND OBJECTIVES. 6 -------------------------------------------------------------------------------- RYDER PRESIDENT AUTOMOTIVE CARRIER DIVISION 1995 INCENTIVE COMPENSATION PLAN PAGE 6 -------------------------------------------------------------------------------- BONUS CALCULATION EXAMPLE Total bonus would be calculated as follows given the following information: Eligible Base Salary $200,000 1995 RSI NAT ROE 15% 1995 RSI NBT $ 313MM 1995 ACD NBT $ 56MM Individual Performance Significantly Above Expectations
1) RSI Performance 60% Maximum RSI Performance Bonus Opportunity 85% Potential RSI Performance Bonus Payout (from grid) 60% x 85% = 51% of Eligible Base Salary 51% x $200,000 = $102,000 2) ACD Performance 20% Maximum RPTS Performance Bonus Opportunity 65% Potential RPTS Performance Bonus Payout (form grid) 20% x 65% = 13% of Eligible Base Salary 13% x $200,000 = $ 26,000 3) Individual Performance 20% Maximum Individual Performance Bonus Opportunity 75% Potential Individual Performance Bonus Payout (from grid) 20% x 75% = 15% of Eligible Base Salary 15% x $200,000 = $ 30,000 -------- TOTAL BONUS $158,000
7 -------------------------------------------------------------------------------- RYDER PRESIDENT AUTOMOTIVE CARRIER DIVISION 1995 INCENTIVE COMPENSATION PLAN PAGE 7 -------------------------------------------------------------------------------- BASE SALARY CALCULATION For the purpose of bonus calculations, base salary is defined as the average annual rate of pay for the calendar year, excluding all other compensation paid to the employee during the year, e.g. bonus, commissions, employee benefits, moving expenses, and imputed income from company car, insurance, and amounts attributable to any of the Company's stock plans. Average annual rate of pay for a participant whose base salary changes within the bonus year is calculated as shown below. BASE SALARY CALCULATION EXAMPLE Average annual rate of pay would be calculated as follows for a participant who begins a bonus year with a base salary of $200,000, then effective June 1 receives an increase to a base salary of $220,000: January 1 through May 31 of Bonus Year: --------------------------------------- 31 + 28 + 31 + 30 + 31 = 151=.414 x $200,000/yr. = $ 82,800 ---------------------- --- 365 days 365 June 1 through December 31 of Bonus Year: ----------------------------------------- 365 - 151 = 214=.586 x $220,000/yr. = $128,920 --------- --- 365 days 365 AVERAGE ANNUAL RATE OF PAY FOR BONUS YEAR = $211,720
SPECIAL ROE AWARD One and one-half percent of the RSI NAT amount in excess of that required to reach 17% Return on Equity (ROE) will be credited to deferred compensation for elected Officers of the Company, Division Presidents and the Senior Vice President and General Manager Ryder International. This amount will be prorated based on each individual participant's earned salary (while in the eligible position) in relation to the sum of the earned salaries of all participants. 8 -------------------------------------------------------------------------------- RYDER PRESIDENT AUTOMOTIVE CARRIER DIVISION 1995 INCENTIVE COMPENSATION PLAN PAGE 8 -------------------------------------------------------------------------------- ADMINISTRATION The Chairman, President, and Chief Executive Officer of RSI will administer this Incentive Compensation Plan. BONUS YEAR The bonus year is defined as the calendar year in which bonus awards are earned. ELIGIBILITY The President, Automotive Carrier Division, if employed in good standing at the time bonus payments are made is eligible to participate in this plan. If the President, Automotive Carrier Division has an agreement which specifically provides for incentive compensation other than that which is provided in this plan or is a participant in any other incentive compensation plan of RSI, its subsidiaries or affiliates, he/she is not eligible to participate in this plan. Employees who are newly hired, promoted or transferred into or out of eligible positions and those who move from one eligibility level to another will receive pro rata bonus awards based on the average annual rate of pay in eligible positions, provided they are employed in good standing at the time bonus awards are distributed. In addition, participants who leave ACD or the Company during the bonus year under any of the following conditions may be eligible for pro rata bonus awards: - retirement under the provisions of one of the Company's retirement plans or the Social Security Act, or - disability Note: The spouse or legal representative of a deceased participant may be eligible for pro-rata bonus awards as well. BONUS ELIGIBILITY ON CHANGE OF CONTROL Notwithstanding anything in this plan to the contrary, in the event of a Change of Control of the Company (as defined and adopted by the Board of Directors on August 20, 1993), the funds necessary to pay incentive awards will be placed in a trust administered by an outside financial institution. The amount of each participant's incentive award will be determined in accordance with the provisions of the plan by a "Big 6" accounting firm chosen by the Company. Participants will receive bonus awards for actual time employed during the bonus year based upon: a) the greater of actual company performance or 80% of maximum company performance opportunity plus b) the greater of actual individual performance or 80% of maximum individual performance opportunity. 9 -------------------------------------------------------------------------------- RYDER PRESIDENT AUTOMOTIVE CARRIER DIVISION 1995 INCENTIVE COMPENSATION PLAN PAGE 9 -------------------------------------------------------------------------------- However, if the Company fails to verify incentive awards through a "Big 6" accounting firm, participants will receive 100% of their maximum company and individual performance opportunities based on actual time worked during the bonus year. The Company will be responsible for all legal fees and expenses which participants may reasonably incur in enforcing their rights under the plan in the event of a Change of Control of the Company. Should a Change of Control occur during 1995, participants will receive instructions regarding the collection of incentive awards. BONUS ELIGIBILITY ON TERMINATION Participants leaving ACD or the Company under any conditions other than those outlined in the Eligibility or Change of Control sections of this plan are not eligible for bonus awards for the bonus year in which they leave, nor are they eligible for awards for the preceding bonus year, if such awards have not yet been distributed. BONUS PAYMENT Shortly after the end of the calendar year and after considering the recommendations of the Administrator of the plan, the Compensation Committee of the Board of Directors or the full Board of Directors of RSI will, in its sole discretion, determine the participants, if any, who will receive bonus awards and the amounts of such awards. Bonus award payments will be distributed to eligible participants following such Board or Committee approval and subsequent to certification of consolidated financial statements by an independent auditor. BONUS FUNDING Accruals based on bonus performance measures for the President, ACD are excluded from funding limitations. Bonus payout maximums are limited by the lower of the total earned opportunity provided under the plan or the amount of the accrual. Should the accrual not provide for bonus allotments under the plan, proration will be affected at the discretion of the Chairman, President and Chief Executive Officer of RSI. Unused monies may not be carried forward for subsequent bonus years. DISCRETIONARY AWARDS With the approval of the Board of Directors of RSI, the Chairman, President, and Chief Executive Officer of RSI has the authority to grant discretionary bonus awards for exemplary performance to non-participants or to enhance the awards of participants. Discretionary awards are not subject to the funding limitations of this plan. While it is common to grant discretionary awards at the same time as regular awards, it may be appropriate, on occasion, to recognize an employee off-cycle due to extremely unusual performance. Off-cycle discretionary awards must be approved by the Chairman, President and Chief Executive Officer of RSI. 10 -------------------------------------------------------------------------------- RYDER PRESIDENT AUTOMOTIVE CARRIER DIVISION 1995 INCENTIVE COMPENSATION PLAN PAGE 10 -------------------------------------------------------------------------------- The total of all discretionary awards for employees under the RSI Headquarters Executive Management Incentive Compensation Plan, the VLSD field and headquarters bonus plans, the RSI SEVP Incentive Compensation Plan, the SVP and General Manager Ryder International Incentive Compensation Plan, the Ryder International field and bonus plans, the Ryder Services Corporation Incentive Compensation Plan, and the Division Presidents' bonus plans, including those granted off-cycle, may not exceed $430,000 per year. AMENDMENTS The Board of Directors of RSI reviews RSI's, its subsidiaries' and affiliates' incentive compensation plans annually to ensure equitability both within the Company, and in relation to current economic conditions. THE BOARD OF DIRECTORS RESERVES THE RIGHT TO AMEND, SUSPEND, TERMINATE OR MAKE EXCEPTIONS TO THIS PLAN AT ANY TIME. EX-10.11B 12 1995 INCENTIVE COMPENSATION PLAN - CEO 1 EXHIBIT 10.11(b) -------------------------------------------------------------------------------- RYDER CHAIRMAN, PRESIDENT & CHIEF EXECUTIVE OFFICER 1995 INCENTIVE COMPENSATION PLAN PAGE 1 -------------------------------------------------------------------------------- Supersedes 1994 Chairman, President & Chief Executive Officer Incentive Compensation Plan INTRODUCTION The following material explains the operation and administration of the 1995 Incentive Plan for the Chairman, President & Chief Executive Officer (CEO) of Ryder System, Inc. (RSI or the Company). The plan is intended to serve as a single, comprehensive source of information that will explain your bonus for achieving various levels of performance. BONUS OPPORTUNITY The following table summarizes the maximum bonus opportunity: MAXIMUM BONUS OPPORTUNITY AS A PERCENTAGE OF BASE SALARY
RSI RSI PERFORMANCE INDIVIDUAL TOTAL BONUS PERFORMANCE ABOVE PLAN PERFORMANCE OPPORTUNITY* 80% 30% 20% 130%
* See Special ROE Award section BONUS PERFORMANCE MEASURES For 1995, your bonus payout will be based on RSI performance, RSI performance above plan, and your performance as an individual. RSI performance is measured based on RSI Net Earnings After Tax (NAT) Return on Equity (ROE) performance and RSI Net Earnings Before Tax (NBT) performance for 1995. RSI performance above plan is measured based on RSI NBT performance for 1995. Individual performance is determined based on a year-end assessment of your performance against objectives that you agreed to with the Board of Directors at the start of the year. The objectives may be updated during the year to adjust for priorities that may have changed. 2 -------------------------------------------------------------------------------- RYDER CHAIRMAN, PRESIDENT & CHIEF EXECUTIVE OFFICER 1995 INCENTIVE COMPENSATION PLAN PAGE 2 -------------------------------------------------------------------------------- DEFINITION OF MEASURES Performance levels attained in the following areas determine the extent to which participants of this bonus plan are eligible for bonus awards. - RSI PERFORMANCE -- RSI performance payout is based on a grid which combines RSI ROE performance and RSI NBT performance. RSI ROE performance for the bonus year is calculated by dividing RSI NAT by RSI average equity. -- RSI NAT is defined as RSI's consolidated Net Earnings After Tax from continuing operations for the bonus year, as certified to the Board of Directors and shareholders of RSI by the Company's independent auditors, including appropriate accruals for all incentive awards estimated to be payable for that bonus year. -- RSI average equity is defined as the average of the four quarters' average equity. A quarter's average equity is defined as the equity, as shown on RSI's balance sheet at the beginning of each quarter plus the total equity as shown on RSI's balance sheet at the end of each quarter, divided by two. RSI NBT is defined as RSI's consolidated Net Earnings Before Tax as certified to the Board of Directors and shareholders of RSI by the Company's independent auditors, net of a provision for the total of all incentive awards, for the bonus year. - RSI PERFORMANCE ABOVE PLAN -- RSI performance above plan payout is based on RSI NBT performance. To achieve a payout, RSI NBT performance must be above plan. - INDIVIDUAL PERFORMANCE -- Individual performance is defined as each participant's performance against job requirements and objectives (MBOs), as agreed upon between the individual and his/her management, at the beginning of the bonus year. If necessary, goals and objectives may be revised during the bonus year to reflect changing business priorities. Individual performance awards are separate from payments based upon financial measurements and may be paid, in part or in whole, based on the Company's performance and/or ability to pay. Such payments Bonus awards are subject to the recommendation of the Administrator of the plan and approval by the Board of Directors of RSI. (See "Bonus Payment") NOTE: The effects of any unusual and material accounting transactions may be excluded from bonus calculations with the approval of the Board of Directors of RSI. 3 -------------------------------------------------------------------------------- RYDER CHAIRMAN, PRESIDENT & CHIEF EXECUTIVE OFFICER 1995 INCENTIVE COMPENSATION PLAN PAGE 3 -------------------------------------------------------------------------------- BONUS CALCULATION Bonus awards are based on the following grids. 1) RSI PERFORMANCE - ROE/NBT RSI performance payout is based on a grid consisting of two performance variables: 1995 RSI NAT ROE and 1995 RSI NBT. The potential bonus payout percent is determined by locating the point on the grid where the variables intersect. Actual performance may fall between the points specifically displayed on the grid, and the grid allows for interpolation between NBT points as shown. No bonus awards will be paid for performance below threshold. The potential bonus payout is expressed as a percentage of Maximum RSI Performance Bonus Opportunity, as shown on page 1. POTENTIAL RSI PERFORMANCE BONUS PAYOUT AS A PERCENTAGE OF MAXIMUM RSI PERFORMANCE BONUS OPPORTUNITY
1995 RSI NBT ($MM) THRESHOLD MAXIMUM 260.5 276 289 306 313 327 ROE % OF OPPORTUNITY < 14.5 30 40 50 55 75 80 14.5 - 17 40 50 60 65 85 90 > 17 50 60 65 75 90 100
2) RSI PERFORMANCE ABOVE PLAN - NBT RSI performance above plan payout is based on a grid of 1995 RSI NBT. The potential bonus payout percent is determined by locating the point on the grid under the 1995 RSI NBT. Actual performance may fall between the points specifically displayed on the grid, and the grid allows for interpolation between NBT points as shown. No bonus awards will be paid for performance below threshold. The potential bonus payout is expressed as a percentage of Maximum RSI Performance Above Plan Bonus Opportunity, as shown on page 1. POTENTIAL RSI PERFORMANCE ABOVE PLAN BONUS PAYOUT AS A PERCENTAGE OF MAXIMUM RSI PERFORMANCE ABOVE PLAN BONUS OPPORTUNITY 1995 RSI ABOVE PLAN NBT ($MM) THRESHOLD MAXIMUM 306.0 313.0 327.0 % OF OPPORTUNITY 0 50 100
4 -------------------------------------------------------------------------------- RYDER CHAIRMAN, PRESIDENT & CHIEF EXECUTIVE OFFICER 1995 INCENTIVE COMPENSATION PLAN PAGE 4 -------------------------------------------------------------------------------- 3) INDIVIDUAL PERFORMANCE Individual performance payout is based on a grid consisting of individual performance results versus objectives. The potential bonus payout percent is determined by awarding a percentage within one of the grid ranges. The potential bonus payout is expressed as a percentage of Maximum Individual Performance Bonus Opportunity, as shown on page 1. POTENTIAL INDIVIDUAL PERFORMANCE BONUS PAYOUT AS A PERCENTAGE OF MAXIMUM INDIVIDUAL PERFORMANCE BONUS OPPORTUNITY
FAIR - SOME CONSISTENT SIGNIFICANTLY CRITICAL WITH ABOVE INDIVIDUAL PERFORMANCE SHORTFALLS EXPECTATIONS EXPECTATIONS EXCEPTIONAL % OF INDIVIDUAL PERFORMANCE OPPORTUNITY 0-50% 51-70% 71-89% 90-100%
ALL PERFORMANCE GRIDS REPRESENT GUIDELINES ONLY. ACTUAL PAYOUTS MAY BE PRORATED DOWNWARD AT THE COMPANY'S DISCRETION. ADDITIONAL CRITERIA MAY ADJUST THE PERFORMANCE PORTION DOWNWARD IF SPECIFIC GOALS ARE NOT ACHIEVED. THE GRIDS WILL BE REVISED ANNUALLY TO ENSURE CONSISTENCY WITH COMPANY GOALS AND OBJECTIVES. 5 -------------------------------------------------------------------------------- RYDER CHAIRMAN, PRESIDENT CHIEF EXECUTIVE OFFICER 1995 INCENTIVE COMPENSATION PLAN PAGE 5 -------------------------------------------------------------------------------- BONUS CALCULATION EXAMPLE Total bonus would be calculated as follows, given the following information: Eligible Base Salary $725,000 1995 RSI NAT ROE 15% 1995 RSI NBT $ 313MM Individual Performance Significantly Above Expectations
1) RSI Performance 80% Maximum RSI Performance Bonus Opportunity 85% Potential RSI Performance Bonus Payout (from grid) 80% x 85% = 68% of Eligible Base Salary 68% x $725,000 = $493,000 2) RSI Performance Above Plan 30% Maximum RSI Performance Above Plan Bonus Opportunity 50% Potential RSI Performance Above Plan Bonus Payout (from grid) 30% x 50% = 15% of Eligible Base Salary 15% x $725,000 = 108,750 3) Individual Performance 20% Maximum Individual Performance Bonus Opportunity 75% Potential Individual Performance Bonus Payout (from grid) 20% x 75% = 15% of Eligible Base Salary 15% x $725,000 = $108,750 -------- TOTAL BONUS $710,500
6 -------------------------------------------------------------------------------- RYDER CHAIRMAN, PRESIDENT & CHIEF EXECUTIVE OFFICER 1995 INCENTIVE COMPENSATION PLAN PAGE 6 -------------------------------------------------------------------------------- BASE SALARY CALCULATION For the purpose of bonus calculations, base salary is defined as the average annual rate of pay for the calendar year, excluding all other compensation paid to the employee during the year, e.g. bonus, commissions, employee benefits, moving expenses, and imputed income from company car, insurance, and amounts attributable to any of the Company's stock plans. Average annual rate of pay for a participant whose base salary changes within the bonus year is calculated as shown below. BASE SALARY CALCULATION EXAMPLE Average annual rate of pay would be calculated as follows for a participant who begins a bonus year with a base salary of $725,000, then effective June 1 receives an increase to a base salary of $760,000: January 1 thru May 31 of Bonus Year: ------------------------------------ 31 + 28 + 31 + 30 + 31 = 151=.414 x $725,000/yr. = $300,150 ---------------------- --- 365 days 365 June 1 thru December 31 of Bonus Year: -------------------------------------- 365 - 151 = 214=.586 x $760,000/yr. = $445,360 --------- --- 365 days 365 AVERAGE ANNUAL RATE OF PAY FOR BONUS YEAR = $745,510
SPECIAL ROE AWARD One and one-half percent of the RSI NAT amount in excess of that required to reach 17% Return on Equity (ROE) will be credited to deferred compensation for elected Officers of the Company, Division Presidents and the Senior Vice President and General Manager Ryder International. This amount will be prorated based on each individual participant's earned salary (while in the eligible position) in relation to the sum of the earned salaries of all participants. 7 -------------------------------------------------------------------------------- RYDER CHAIRMAN, PRESIDENT & CHIEF EXECUTIVE OFFICER 1995 INCENTIVE COMPENSATION PLAN PAGE 7 -------------------------------------------------------------------------------- ADMINISTRATION The Compensation Committee of the Board of Directors of RSI will administer this Incentive Compensation Plan. BONUS YEAR The bonus year is defined as the calendar year in which bonus awards are earned. ELIGIBILITY The Chairman, President & Chief Executive Officer of RSI, if employed in good standing at the time bonus payments are made, is eligible to participate in this plan. If the CEO has an agreement which specifically provides for incentive compensation other than that which is provided in this plan or is a participant in any other incentive compensation plan of RSI, its subsidiaries or affiliates, he/she is not eligible to participate in this plan. Employees who are newly hired, promoted or transferred into or out of eligible positions and those who move from one eligibility level to another will receive pro rata bonus awards based on the average annual rate of pay in eligible positions, provided they are employed in good standing at the time bonus awards are distributed. In addition, participants who leave the Company during the bonus year under any of the following conditions may be eligible for pro rata bonus awards: - retirement under the provisions of one of the Company's retirement plans or the Social Security Act, or - disability Note: The spouse or legal representative of a deceased participant may be eligible for pro rata bonus awards as well. BONUS ELIGIBILITY ON CHANGE OF CONTROL Notwithstanding anything in this plan to the contrary, in the event of a Change of Control of the Company (as defined and adopted by the Board of Directors on August 20, 1993), the funds necessary to pay incentive awards will be placed in a trust administered by an outside financial institution. The amount of each participant's incentive award will be determined in accordance with the provisions of the plan by a "Big 6" accounting firm chosen by the Company. Participants will receive bonus awards for actual time employed during the bonus year based upon: a) the greater of actual company performance or 80% of maximum company performance opportunity plus b) the greater of actual individual performance or 80% of maximum individual performance opportunity. 8 -------------------------------------------------------------------------------- RYDER CHAIRMAN, PRESIDENT & CHIEF EXECUTIVE OFFICER 1995 INCENTIVE COMPENSATION PLAN PAGE 8 -------------------------------------------------------------------------------- However, if the Company fails to verify incentive awards through a "Big 6" accounting firm, participants will receive 100% of their maximum company and individual performance opportunities based on actual time worked during the bonus year. The Company will be responsible for all legal fees and expenses which participants may reasonably incur in enforcing their rights under the plan in the event of a Change of Control of the Company. Should a Change of Control occur during 1995, participants will receive instructions regarding the collection of incentive awards. BONUS ELIGIBILITY ON TERMINATION Participants leaving the Company under any conditions other than those outlined in the Eligibility or Change of Control sections of this plan are not eligible for bonus awards for the bonus year in which they leave, nor are they eligible for awards for the preceding bonus year, if such awards have not yet been distributed. BONUS PAYMENT Shortly after the end of the calendar year and after considering the recommendations of the Administrators of the plan, the full Board of Directors of RSI will, in its sole discretion, determine the participants, if any, who will receive bonus awards and the amounts of such awards. Bonus award payments will be distributed to eligible participants following such Board approval and subsequent to certification of consolidated financial statements by an independent auditor. BONUS FUNDING Accruals for the CEO and all discretionary awards are excluded from funding limitations. Bonus payout maximums are limited by the lower of the total earned opportunity provided under the plan or the amount of the accrual. Should the accrual not provide for bonus allotments under the plan, proration will be affected at the discretion of the Board of Directors of RSI. Unused monies may not be carried forward for subsequent bonus years. DISCRETIONARY AWARDS With the approval of the Board of Directors of RSI, the Administrators of this plan have the authority to grant discretionary bonus awards to enhance the award of the participant of this plan. Discretionary awards are not subject to funding limitations. AMENDMENTS The Board of Directors of RSI reviews RSI's, its subsidiaries' and affiliates' incentive compensation plans annually to ensure equitability both within the Company, and in relation to current economic conditions. THE BOARD OF DIRECTORS RESERVES THE RIGHT TO AMEND, SUSPEND, TERMINATE OR MAKE EXCEPTIONS TO THIS PLAN AT ANY TIME. EX-10.12B 13 1995 INCENTIVE COMPENSATION PLAN - PRES. COMM. 1 EXHIBIT 10.12(b) -------------------------------------------------------------------------------- RYDER PRESIDENT COMMERCIAL LEASING & SERVICES 1995 INCENTIVE COMPENSATION PLAN PAGE 1 -------------------------------------------------------------------------------- Supersedes 1994 President, Commercial Leasing & Services Incentive Compensation Plan INTRODUCTION The following material explains the operation and administration of the 1995 Incentive Plan for the President, Commercial Leasing & Services (Commercial). The plan is intended to serve as a single, comprehensive source of information that will explain your bonus for achieving various levels of performance. Questions should be addressed to your supervisor. BONUS OPPORTUNITY The following table summarizes the maximum bonus opportunity: MAXIMUM BONUS OPPORTUNITY AS A PERCENTAGE OF BASE SALARY
RSI RSI ABOVE PLAN COMMERCIAL INDIVIDUAL TOTAL BONUS PERFORMANCE PERFORMANCE PERFORMANCE PERFORMANCE OPPORTUNITY * 60% 20% 20% 20% 120%
* See Special ROE Award section BONUS PERFORMANCE MEASURES For 1995, your bonus payout will be based on Ryder System, Inc. (RSI or the Company) performance, Commercial performance, RSI performance above plan, and your performance as an individual. RSI performance is measured based on RSI Net Earnings After Tax (NAT) Return on Equity (ROE) performance and RSI Net Earnings Before Tax (NBT) performance for 1995. RSI performance above plan is measured based on RSI NBT performance for 1995. Commercial performance is measured based on Commercial Net Earnings After Tax (NAT) Return on Assets (ROA) and Commercial NBT for 1995. Individual performance is determined based on a year-end assessment of your performance against objectives that you agreed to with management at the start of the year. Given their importance, the objectives should be in writing and may be updated during the year to adjust for priorities that may have changed. 2 -------------------------------------------------------------------------------- RYDER PRESIDENT COMMERCIAL LEASING & SERVICES 1995 INCENTIVE COMPENSATION PLAN PAGE 2 -------------------------------------------------------------------------------- DEFINITION OF MEASURES Performance levels attained in the following areas determine the extent to which participants of this bonus plan are eligible for bonus awards. - RSI PERFORMANCE -- RSI performance payout is based on a grid which combines RSI ROE performance and RSI NBT performance. RSI ROE performance for the bonus year is calculated by dividing RSI NAT by RSI average equity. -- RSI NAT is defined as RSI's consolidated Net Earnings After Tax from continuing operations for the bonus year, as certified to the Board of Directors and shareholders of RSI by the Company's independent auditors, including appropriate accruals for all incentive awards estimated to be payable for that bonus year. -- RSI average equity is defined as the average of the four quarters' average equity. A quarter's average equity is defined as the equity, as shown on RSI's balance sheet at the beginning of each quarter plus the total equity as shown on RSI's balance sheet at the end of each quarter, divided by two. RSI NBT is defined as RSI's consolidated Net Earnings Before Tax as certified to the Board of Directors and shareholders of RSI by the Company's independent auditors, net of a provision for the total of all incentive awards, for the bonus year. - RSI PERFORMANCE ABOVE PLAN -- RSI performance above plan payout is based on RSI NBT performance. To achieve a payout, RSI NBT performance must be above plan. - COMMERCIAL PERFORMANCE -- Commercial performance payout is based on a grid which combines Commercial ROA performance and Commercial NBT performance. Commercial ROA performance for the bonus year is calculated by dividing Commercial NAT by Commercial average assets. -- Commercial NAT is defined as Commercial's consolidated Net Earnings After Tax for the bonus year, as verified by the Senior Vice President and Controller, RSI, including appropriate accruals for all incentive awards estimated to be payable for that bonus year. -- Commercial average assets is defined as the average of the four quarters' average assets. A quarter's average assets is defined as the assets, as shown on Commercial's balance sheet at the beginning of each quarter plus the total assets as shown on Commercial's balance sheet at the end of each quarter, divided by two. 3 -------------------------------------------------------------------------------- RYDER PRESIDENT COMMERCIAL LEASING & SERVICES 1995 INCENTIVE COMPENSATION PLAN PAGE 3 -------------------------------------------------------------------------------- Commercial NBT performance is defined as Commercial consolidated Net Earnings Before Tax as verified by the Senior Vice President and Controller, RSI, net of a provision for the total of all incentive awards, for the bonus year. - INDIVIDUAL PERFORMANCE -- Individual performance is defined as each participant's performance against job requirements and objectives (MBOs), as agreed upon between the individual and his/her management, at the beginning of the bonus year. If necessary, goals and objectives may be revised during the bonus year to reflect changing business priorities. Individual performance awards are separate from payments based upon financial measurements and may be paid, in part or in whole, based on the Company's performance and/or ability to pay. Bonus awards are subject to the recommendation of the Administrator of the plan and approval by the Board of Directors of RSI. (See "Bonus Payment") NOTE: The effects of any unusual and material accounting transactions may be excluded from bonus calculations with the approval of the Board of Directors of RSI. 4 -------------------------------------------------------------------------------- RYDER PRESIDENT COMMERCIAL LEASING & SERVICES 1995 INCENTIVE COMPENSATION PLAN PAGE 4 -------------------------------------------------------------------------------- BONUS CALCULATION Bonus awards are based on the following grids. 1) RSI PERFORMANCE - ROE/NBT RSI performance payout is based on a grid consisting of two performance variables: 1995 RSI NAT ROE and 1995 RSI NBT. The potential bonus payout percent is determined by locating the point on the grid where the variables intersect. Actual performance may fall between the points specifically displayed on the grid, and the grid allows for interpolation between NBT points as shown. No bonus awards will be paid for performance below threshold. The potential bonus payout is expressed as a percentage of Maximum RSI Performance Bonus Opportunity, as shown on page 1. POTENTIAL RSI PERFORMANCE BONUS PAYOUT AS A PERCENTAGE OF MAXIMUM RSI PERFORMANCE BONUS OPPORTUNITY
1995 RSI NBT ($MM) THRESHOLD MAXIMUM 260.5 276 289 306 313 327 ROE % OF OPPORTUNITY < 14.5 30 40 50 55 75 80 14.5 - 17 40 50 60 65 85 90 > 17 50 60 65 75 90 100
2) RSI PERFORMANCE ABOVE PLAN - NBT RSI performance above plan payout is based on a grid of 1995 RSI NBT. The potential bonus payout percent is determined by locating the point on the grid under the 1995 RSI NBT. Actual performance may fall between the points specifically displayed on the grid, and the grid allows for interpolation between NBT points as shown. No bonus awards will be paid for performance below threshold. The potential bonus payout is expressed as a percentage of Maximum RSI Performance Above Plan Bonus Opportunity, as shown on page 1. POTENTIAL RSI PERFORMANCE ABOVE PLAN BONUS PAYOUT AS A PERCENTAGE OF MAXIMUM RSI PERFORMANCE ABOVE PLAN BONUS OPPORTUNITY 1995 RSI ABOVE PLAN NBT ($MM) THRESHOLD MAXIMUM 306.0 313.0 327.0 % OF OPPORTUNITY 0 50 100
5 -------------------------------------------------------------------------------- RYDER PRESIDENT COMMERCIAL LEASING & SERVICES 1995 INCENTIVE COMPENSATION PLAN PAGE 5 -------------------------------------------------------------------------------- 3) COMMERCIAL PERFORMANCE - ROA/NBT Commercial performance payout is based on a grid consisting of two performance variables: 1995 Commercial NAT ROA and 1995 Commercial NBT. The potential bonus payout percent is determined by locating the point on the grid where the variables intersect. Actual performance may fall between the points specifically displayed on the grid, and the grid allows for interpolation between NBT points as shown. No bonus awards will be paid for performance below threshold. The potential bonus payout is expressed as a percentage of Maximum Commercial Performance Bonus Opportunity, as shown on page 1. POTENTIAL COMMERCIAL PERFORMANCE BONUS PAYOUT AS A PERCENTAGE OF MAXIMUM COMMERCIAL NBT PERFORMANCE BONUS OPPORTUNITY
1995 COMMERCIAL NBT ($MM) THRESHOLD MAXIMUM 180 189 198 208 218 224 234 ROA % OF OPPORTUNITY Less Than 3.3 20 30 40 50 55 75 90 Greater Than or Equal To 3.3 30 40 50 60 65 85 100
4) INDIVIDUAL PERFORMANCE Individual performance payout is based on a grid consisting of individual performance results versus objectives. The potential bonus payout percent is determined by awarding a percentage within one of the grid ranges. The potential bonus payout is expressed as a percentage of Maximum Individual Performance Bonus Opportunity, as shown on page 1. POTENTIAL INDIVIDUAL PERFORMANCE BONUS PAYOUT AS A PERCENTAGE OF MAXIMUM INDIVIDUAL PERFORMANCE BONUS OPPORTUNITY
FAIR - SOME CONSISTENT SIGNIFICANTLY CRITICAL WITH ABOVE INDIVIDUAL PERFORMANCE SHORTFALLS EXPECTATIONS EXPECTATIONS EXCEPTIONAL % OF INDIVIDUAL PERFORMANCE OPPORTUNITY 0-50% 51-70% 71-89% 90-100%
ALL PERFORMANCE GRIDS REPRESENT GUIDELINES ONLY. ACTUAL PAYOUTS MAY BE PRORATED DOWNWARD AT THE COMPANY'S DISCRETION. ADDITIONAL CRITERIA MAY ADJUST THE PERFORMANCE PORTION DOWNWARD IF SPECIFIC GOALS ARE NOT ACHIEVED. THE GRIDS WILL BE REVISED ANNUALLY TO ENSURE CONSISTENCY WITH COMPANY GOALS AND OBJECTIVES. 6 -------------------------------------------------------------------------------- RYDER PRESIDENT COMMERCIAL LEASING & SERVICES 1995 INCENTIVE COMPENSATION PLAN PAGE 6 -------------------------------------------------------------------------------- BONUS CALCULATION EXAMPLE Total bonus would be calculated as follows given the following information: Eligible Base Salary $330,000 1995 RSI NAT ROE 15% 1995 RSI NBT $ 313MM 1995 Commercial NAT ROA 3.4% 1995 Commercial NBT $ 218MM Individual Performance Significantly Above Expectations
1) RSI Performance 60% Maximum RSI Performance Bonus Opportunity 85% Potential RSI Performance Bonus Payout (from grid) 60% x 85% = 51% of Eligible Base Salary 51% x $330,000 = $168,300 2) RSI Performance Above Plan 20% Maximum RSI Performance Above Plan Bonus Opportunity 50% Potential RSI Performance Above Plan Bonus Payout (from grid) 20% x 50% = 10% of Eligible Base Salary 10% x $330,000 = $ 33,000 3) Commercial Performance 20% Maximum Commercial Performance Bonus Opportunity 65% Potential Commercial Performance Bonus Payout (from grid) 20% x 65% = 13% of Eligible Base Salary 13% x $330,000 = $ 42,900 4) Individual Performance 20% Maximum Individual Performance Bonus Opportunity 75% Potential Individual Performance Bonus Payout (from grid) 20% x 75% = 15% of Eligible Base Salary 15% x $330,000 = $ 49,500 -------- TOTAL BONUS $293,700
7 -------------------------------------------------------------------------------- RYDER PRESIDENT COMMERCIAL LEASING & SERVICES 1995 INCENTIVE COMPENSATION PLAN PAGE 7 -------------------------------------------------------------------------------- BASE SALARY CALCULATION For the purpose of bonus calculations, base salary is defined as the average annual rate of pay for the calendar year, excluding all other compensation paid to the employee during the year, e.g. bonus, commissions, employee benefits, moving expenses, and imputed income from company car, insurance, and amounts attributable to any of the Company's stock plans. Average annual rate of pay for a participant whose base salary changes within the bonus year is calculated as shown below. BASE SALARY CALCULATION EXAMPLE Average annual rate of pay would be calculated as follows for a participant who begins a bonus year with a base salary of $330,000, then effective June 1 receives an increase to a base salary of $350,000: January 1 through May 31 of Bonus Year: --------------------------------------- 31 + 28 + 31 + 30 + 31 = 151=.414 x $330,000/yr. = $136,620 ---------------------- --- 365 days 365 June 1 through December 31 of Bonus Year: ----------------------------------------- 365 - 151 = 214=.586 x $350,000/yr. = $205,100 --------- --- 365 days 365 AVERAGE ANNUAL RATE OF PAY FOR BONUS YEAR = $341,720
SPECIAL ROE AWARD One and one-half percent of the RSI NAT amount in excess of that required to reach 17% Return on Equity (ROE) will be credited to deferred compensation for elected Officers of the Company, Division Presidents and the Senior Vice President and General Manager Ryder International. This amount will be prorated based on each individual participant's earned salary (while in the eligible position) in relation to the sum of the earned salaries of all participants. 8 -------------------------------------------------------------------------------- RYDER PRESIDENT COMMERCIAL LEASING & SERVICES 1995 INCENTIVE COMPENSATION PLAN PAGE 8 -------------------------------------------------------------------------------- ADMINISTRATION The Chairman, President, and Chief Executive Officer of RSI will administer this Incentive Compensation Plan. BONUS YEAR The bonus year is defined as the calendar year in which bonus awards are earned. ELIGIBILITY The President, Commercial Leasing & Services, if employed in good standing at the time bonus payments are made, is eligible to participate in this plan. If the President, Commercial Leasing & Services has an agreement which specifically provides for incentive compensation other than that which is provided in this plan or is a participant in any other incentive compensation plan of RSI, its subsidiaries or affiliates, he/she is not eligible to participate in this plan. Employees who are newly hired, promoted or transferred into or out of eligible positions and those who move from one eligibility level to another will receive pro rata bonus awards based on the average annual rate of pay in eligible positions, provided they are employed in good standing at the time bonus awards are distributed. In addition, participants who leave the Company or VLSD during the bonus year under any of the following conditions may be eligible for pro rata bonus awards: - retirement under the provisions of one of the Company's retirement plans or the Social Security Act, or - disability Note: The spouse or legal representative of a deceased participant may be eligible for pro rata bonus awards as well. BONUS ELIGIBILITY ON CHANGE OF CONTROL Notwithstanding anything in this plan to the contrary, in the event of a Change of Control of the Company (as defined and adopted by the Board of Directors on August 20, 1993), the funds necessary to pay incentive awards will be placed in a trust administered by an outside financial institution. The amount of each participant's incentive award will be determined in accordance with the provisions of the plan by a "Big 6" accounting firm chosen by the Company. Participants will receive bonus awards for actual time employed during the bonus year based upon: a) the greater of actual company performance or 80% of maximum company performance opportunity plus b) the greater of actual individual performance or 80% of maximum individual performance opportunity. 9 -------------------------------------------------------------------------------- RYDER PRESIDENT COMMERCIAL LEASING & SERVICES 1995 INCENTIVE COMPENSATION PLAN PAGE 9 -------------------------------------------------------------------------------- However, if the Company fails to verify incentive awards through a "Big 6" accounting firm, participants will receive 100% of their maximum company and individual performance opportunities based on actual time worked during the bonus year. The Company will be responsible for all legal fees and expenses which participants may reasonably incur in enforcing their rights under the plan in the event of a Change of Control of the Company. Should a Change of Control occur during 1995, participants will receive instructions regarding the collection of incentive awards. BONUS ELIGIBILITY ON TERMINATION Participants leaving the Company or VLSD under any conditions other than those outlined in the Eligibility or Change of Control sections of this plan are not eligible for bonus awards for the bonus year in which they leave, nor are they eligible for awards for the preceding bonus year, if such awards have not yet been distributed. BONUS PAYMENT Shortly after the end of the calendar year and after considering the recommendations of the Administrator of the plan, the Compensation Committee of the Board of Directors or the full Board of Directors of RSI will, in its sole discretion, determine the participants, if any, who will receive bonus awards and the amounts of such awards. Bonus award payments will be distributed to eligible participants following such Board or Committee approval and subsequent to certification of consolidated financial statements by an independent auditor. BONUS FUNDING Accruals based on bonus performance measures for the President, Commercial Leasing & Services are excluded from funding limitations. Bonus payout maximums are limited by the lower of the total earned opportunity provided under the plan or the amount of the accrual. Should the accrual not provide for bonus allotments under the plan, proration will be affected at the discretion of the Chairman, President and Chief Executive Officer of RSI. Unused monies may not be carried forward for subsequent bonus years. DISCRETIONARY AWARDS With the approval of the Board of Directors of RSI, the Chairman, President, and Chief Executive Officer of RSI has the authority to grant discretionary bonus awards for exemplary performance to non-participants or to enhance the awards of participants. Discretionary awards are not subject to the funding limitations of this plan. While it is common to grant discretionary awards at the same time as regular awards, it may be appropriate, on occasion, to recognize an employee off-cycle due to extremely unusual performance. Off-cycle discretionary awards must be approved by the Chairman, President and Chief Executive Officer of RSI. 10 -------------------------------------------------------------------------------- RYDER PRESIDENT COMMERCIAL LEASING & SERVICES 1995 INCENTIVE COMPENSATION PLAN PAGE 10 -------------------------------------------------------------------------------- The total of all discretionary awards for employees under the RSI Headquarters Executive Management Incentive Compensation Plan, the VLSD field and headquarters bonus plans, the RSI SEVP Incentive Compensation Plan, the SVP and General Manager Ryder International Incentive Compensation Plan, the Ryder International field and bonus plans, the Ryder Services Corporation Incentive Compensation Plan, and the Division Presidents' bonus plans, including those granted off-cycle, may not exceed $430,000 per year. AMENDMENTS The Board of Directors of RSI reviews RSI's, its subsidiaries' and affiliates' incentive compensation plans annually to ensure equitability both within the Company, and in relation to current economic conditions. THE BOARD OF DIRECTORS RESERVES THE RIGHT TO AMEND, SUSPEND, TERMINATE OR MAKE EXCEPTIONS TO THIS PLAN AT ANY TIME. EX-10.13B 14 1995 INCENTIVE COMPENSATION PLAN - PRES. CONS. 1 EXHIBIT 10.13(b) -------------------------------------------------------------------------------- RYDER PRESIDENT CONSUMER TRUCK RENTAL 1995 INCENTIVE COMPENSATION PLAN PAGE 1 -------------------------------------------------------------------------------- Supersedes 1994 President, Consumer Truck Rental Incentive Compensation Plan INTRODUCTION The following material explains the operation and administration of the 1995 Incentive Plan for the President, Consumer Truck Rental (Consumer). The plan is intended to serve as a single, comprehensive source of information that will explain your bonus for achieving various levels of performance. Questions should be addressed to your supervisor. BONUS OPPORTUNITY The following table summarizes the maximum bonus opportunity: MAXIMUM BONUS OPPORTUNITY AS A PERCENTAGE OF BASE SALARY
RSI CONSUMER RPTS INDIVIDUAL TOTAL BONUS PERFORMANCE PERFORMANCE PERFORMANCE PERFORMANCE OPPORTUNITY * 60% 10% 10% 20% 100%
* See Special ROE Award section BONUS PERFORMANCE MEASURES For 1995, your bonus payout will be based on Ryder System, Inc. (RSI or the company) performance, Consumer performance, Ryder Public Transportation Services (RPTS) performance and your performance as an individual. RSI performance is measured based on RSI Net Earnings After Tax (NAT) Return on Equity (ROE) performance and RSI Net Earnings Before Tax (NBT) performance for 1995. Consumer performance is measured based on Consumer Net Earnings After Tax (NAT) Return on Assets (ROA) performance and Consumer NBT performance for 1995. RPTS performance is measured based on RPTS Revenue performance and RPTS Product Line Profit performance for 1995. Individual performance is determined based on a year-end assessment of your performance against objectives that you agreed to with management at the start of the year. Given their importance, the objectives should be in writing and may be updated during the year to adjust for priorities that may have changed. 2 -------------------------------------------------------------------------------- RYDER PRESIDENT CONSUMER TRUCK RENTAL 1995 INCENTIVE COMPENSATION PLAN PAGE 2 -------------------------------------------------------------------------------- DEFINITION OF MEASURES Performance levels attained in the following areas determine the extent to which participants of this bonus plan are eligible for bonus awards. - RSI PERFORMANCE -- RSI performance payout is based on a grid which combines RSI ROE performance and RSI NBT performance. RSI ROE performance for the bonus year is calculated by dividing RSI NAT by RSI average equity. -- RSI NAT is defined as RSI's consolidated Net Earnings After Tax from continuing operations for the bonus year, as certified to the Board of Directors and shareholders of RSI by the Company's independent auditors, including appropriate accruals for all incentive awards estimated to be payable for that bonus year. -- RSI average equity is defined as the average of the four quarters' average equity. A quarter's average equity is defined as the equity, as shown on RSI's balance sheet at the beginning of each quarter plus the total equity as shown on RSI's balance sheet at the end of each quarter, divided by two. RSI NBT is defined as RSI's consolidated Net Earnings Before Tax as certified to the Board of Directors and shareholders of RSI by the Company's independent auditors, net of a provision for the total of all incentive awards, for the bonus year. - CONSUMER PERFORMANCE -- Consumer performance payout is based on a grid which combines Consumer ROA performance and Consumer NBT performance. Consumer ROA performance for the bonus year is calculated by dividing Consumer NAT by Consumer average assets. -- Consumer NAT is defined as Consumer's consolidated Net Earnings After Tax for the bonus year, as certified to the Board of Directors and shareholders of RSI by the Company's independent auditors, including appropriate accruals for all incentive awards estimated to be payable for that bonus year. -- Consumer average assets is defined as the average of the four quarters' average assets. A quarter's average assets is defined as the assets, as shown on Consumer's balance sheet at the beginning of each quarter plus the total assets as shown on Consumer's balance sheet at the end of each quarter, divided by two. Consumer NBT is defined as Consumer's consolidated Net Earnings Before Tax as verified by the Senior Vice President and Controller, RSI, net of a provision for the total of all incentive awards, for the bonus year. 3 -------------------------------------------------------------------------------- RYDER PRESIDENT CONSUMER TRUCK RENTAL 1995 INCENTIVE COMPENSATION PLAN PAGE 3 -------------------------------------------------------------------------------- - RPTS PERFORMANCE -- RPTS performance payout is based on a grid which combines RPTS Revenue performance and RPTS Product Line Profit performance. RPTS Revenue is defined as RPTS's total revenue as verified by the Senior Vice President and Controller, RSI. RPTS Product Line Profit is defined as RPTS's product line profit as verified by the Senior Vice President and Controller, RSI. - INDIVIDUAL PERFORMANCE -- Individual performance is defined as each participant's performance against job requirements and objectives (MBOs), as agreed upon between the individual and his/her management, at the beginning of the bonus year. If necessary, goals and objectives may be revised during the bonus year to reflect changing business priorities. Individual performance awards are separate from payments based upon financial measurements and may be paid, in part or in whole, based on the Company's performance and/or ability to pay. Bonus awards are subject to the recommendation of the Administrator of the plan and approval by the Board of Directors of RSI. (See "Bonus Payment") NOTE: The effects of any unusual and material accounting transactions may be excluded from bonus calculations with the approval of the Board of Directors of RSI. 4 -------------------------------------------------------------------------------- RYDER PRESIDENT CONSUMER TRUCK RENTAL 1995 INCENTIVE COMPENSATION PLAN PAGE 4 -------------------------------------------------------------------------------- BONUS CALCULATION Bonus awards are based on the following grids. 1) RSI PERFORMANCE - ROE/NBT RSI performance payout is based on a grid consisting of two performance variables: 1995 RSI NAT ROE and 1995 RSI NBT. The potential bonus payout percent is determined by locating the point on the grid where the variables intersect. Actual performance may fall between the points specifically displayed on the grid, and the grid allows for interpolation between NBT points as shown. No bonus awards will be paid for performance below threshold. The potential bonus payout is expressed as a percentage of Maximum RSI Performance Bonus Opportunity, as shown on page 1. POTENTIAL RSI PERFORMANCE BONUS PAYOUT AS A PERCENTAGE OF MAXIMUM RSI PERFORMANCE BONUS OPPORTUNITY
1995 RSI NBT ($MM) THRESHOLD MAXIMUM 260.5 276 289 306 313 327 ROE % OF OPPORTUNITY < 14.5 30 40 50 55 75 80 14.5 - 17 40 50 60 65 85 90 > 17 50 60 65 75 90 100
2) CONSUMER PERFORMANCE - ROA/NBT Consumer performance payout is based on a grid consisting of two performance variables: 1995 Consumer NAT ROA and 1995 Consumer NBT. The potential bonus payout percent is determined by locating the point on the grid where the variables intersect. Actual performance may fall between the points specifically displayed on the grid, and the grid allows for interpolation between NBT points as shown. No bonus awards will be paid for performance below threshold. The potential bonus payout is expressed as a percentage of Maximum Consumer Performance Bonus Opportunity, as shown on page 1. POTENTIAL CONSUMER PERFORMANCE BONUS PAYOUT AS A PERCENTAGE OF MAXIMUM CONSUMER PERFORMANCE BONUS OPPORTUNITY
1995 CONSUMER NBT ($MM) THRESHOLD MAXIMUM 18 22 27 29 32 ROA % OF OPPORTUNITY >1 - <2 20 35 50 55 60 2 - 2.7 30 55 65 85 95 > 2.7 40 65 80 90 100
5 -------------------------------------------------------------------------------- RYDER PRESIDENT CONSUMER TRUCK RENTAL 1995 INCENTIVE COMPENSATION PLAN PAGE 5 -------------------------------------------------------------------------------- 3) RPTS PERFORMANCE - REVENUE/PRODUCT LINE PROFIT RPTS performance payout is based on a grid consisting of two performance variables: 1995 RPTS Revenue and RPTS Product Line Profit. The potential bonus payout percent is determined by locating the point on the grid where the variables intersect. Actual performance may fall between the points specifically displayed on the grid, and the grid allows for interpolation between Profit points as shown. No bonus awards will be paid for performance below threshold. The potential bonus payout is expressed as a percentage of Maximum RPTS Performance Bonus Opportunity, as shown on page 1. POTENTIAL RPTS PERFORMANCE BONUS PAYOUT AS A PERCENTAGE OF MAXIMUM RPTS PERFORMANCE BONUS OPPORTUNITY
1995 RPTS PRODUCT LINE PROFIT ($MM) THRESHOLD MAXIMUM REVENUE 28 32 34 36 ($MM) % OF OPPORTUNITY < 375 20 50 55 75 375 - 405 30 60 65 85 > 405 40 70 75 100
4) INDIVIDUAL PERFORMANCE Individual performance payout is based on a grid consisting of individual performance results versus objectives. The potential bonus payout percent is determined by awarding a percentage within one of the grid ranges. The potential bonus payout is expressed as a percentage of Maximum Individual Performance Bonus Opportunity, as shown on page 1. POTENTIAL INDIVIDUAL PERFORMANCE BONUS PAYOUT AS A PERCENTAGE OF MAXIMUM INDIVIDUAL PERFORMANCE BONUS OPPORTUNITY
FAIR - SOME CONSISTENT SIGNIFICANTLY CRITICAL WITH ABOVE INDIVIDUAL PERFORMANCE SHORTFALLS EXPECTATIONS EXPECTATIONS EXCEPTIONAL % OF INDIVIDUAL PERFORMANCE OPPORTUNITY 0-50% 51-70% 71-89% 90-100%
ALL PERFORMANCE GRIDS REPRESENT GUIDELINES ONLY. ACTUAL PAYOUTS MAY BE PRORATED DOWNWARD AT THE COMPANY'S DISCRETION. ADDITIONAL CRITERIA MAY ADJUST THE PERFORMANCE PORTION DOWNWARD IF SPECIFIC GOALS ARE NOT ACHIEVED. THE GRIDS WILL BE REVISED ANNUALLY TO ENSURE CONSISTENCY WITH COMPANY GOALS AND OBJECTIVES. 6 -------------------------------------------------------------------------------- RYDER PRESIDENT CONSUMER TRUCK RENTAL 1995 INCENTIVE COMPENSATION PLAN PAGE 6 -------------------------------------------------------------------------------- BONUS CALCULATION EXAMPLE Total bonus would be calculated as follows given the following information: Eligible Base Salary $220,000 1995 RSI NAT ROE 15% 1995 RSI NBT $ 313MM 1995 Consumer NAT ROA 2.2% 1995 Consumer NBT $ 27MM 1995 RPTS Revenue $ 380MM 1995 RPTS Product Line Profit $ 34MM Individual Performance Significantly Above Expectations
1) RSI Performance 60% Maximum RSI Performance Bonus Opportunity 85% Potential RSI Performance Bonus Payout (from grid) 60% x 85% = 51% of Eligible Base Salary 51% x $220,000 = $112,200 2) Consumer Performance 10% Maximum Consumer Performance Bonus Opportunity 65% Potential Consumer Performance Bonus Payout (from grid) 10% x 65% = 6.5% of Eligible Base Salary 6.5% x $220,000 = $ 14,300 3) RPTS Performance 10% Maximum RPTS Performance Bonus Opportunity 65% Potential RPTS Performance Bonus Payout (from grid) 10% x 65% = 6.5% of Eligible Base Salary 6.5% x $220,000 = $ 14,300 4) Individual Performance 20% Maximum Individual Performance Bonus Opportunity 75% Potential Individual Performance Bonus Payout (from grid) 20% x 75% = 15% of Eligible Base Salary 15% x $220,000 = $ 33,000 -------- TOTAL BONUS $173,800
7 -------------------------------------------------------------------------------- RYDER PRESIDENT CONSUMER TRUCK RENTAL 1995 INCENTIVE COMPENSATION PLAN PAGE 7 -------------------------------------------------------------------------------- BASE SALARY CALCULATION For the purpose of bonus calculations, base salary is defined as the average annual rate of pay for the calendar year, excluding all other compensation paid to the employee during the year, e.g. bonus, commissions, employee benefits, moving expenses, and imputed income from company car, insurance, and amounts attributable to any of the Company's stock plans. Average annual rate of pay for a participant whose base salary changes within the bonus year is calculated as shown below. BASE SALARY CALCULATION EXAMPLE Average annual rate of pay would be calculated as follows for a participant who begins a bonus year with a base salary of $220,000, then effective June 1 receives an increase to a base salary of $240,000: January 1 through May 31 of Bonus Year: --------------------------------------- 31 + 28 + 31 + 30 + 31 = 151=.414 x $220,000/yr. = $ 91,080 ---------------------- --- 365 days 365 June 1 through December 31 of Bonus Year: ----------------------------------------- 365 - 151 = 214=.586 x $240,000/yr. = $140,640 --------- --- 365 days 365 AVERAGE ANNUAL RATE OF PAY FOR BONUS YEAR = $231,720
SPECIAL ROE AWARD One and one-half percent of the RSI NAT amount in excess of that required to reach 17% Return on Equity (ROE) will be credited to deferred compensation for elected Officers of the Company, Division Presidents and the Senior Vice President and General Manager Ryder International. This amount will be prorated based on each individual participant's earned salary (while in the eligible position) in relation to the sum of the earned salaries of all participants. 8 -------------------------------------------------------------------------------- RYDER PRESIDENT CONSUMER TRUCK RENTAL 1995 INCENTIVE COMPENSATION PLAN PAGE 8 -------------------------------------------------------------------------------- ADMINISTRATION The Chairman, President, and Chief Executive Officer of RSI will administer this Incentive Compensation Plan. BONUS YEAR The bonus year is defined as the calendar year in which bonus awards are earned. ELIGIBILITY The President, Consumer Truck Rental, if employed in good standing at the time bonus payments are made, is eligible to participate in this plan. If the President, Consumer Rental has an agreement which specifically provides for incentive compensation other than that which is provided in this plan or is a participant in any other incentive compensation plan of RSI, its subsidiaries or affiliates, he/she is not eligible to participate in this plan. Employees who are newly hired, promoted or transferred into or out of eligible positions and those who move from one eligibility level to another will receive pro rata bonus awards based on the average annual rate of pay in eligible positions, provided they are employed in good standing at the time bonus awards are distributed. In addition, participants who leave the Company or VLSD during the bonus year under any of the following conditions may be eligible for pro rata bonus awards: - retirement under the provisions of one of the Company's retirement plans or the Social Security Act, or - disability Note: The spouse or legal representative of a deceased participant may be eligible for pro rata bonus awards as well. BONUS ELIGIBILITY ON CHANGE OF CONTROL Notwithstanding anything in this plan to the contrary, in the event of a Change of Control of the Company (as defined and adopted by the Board of Directors on August 20, 1993), the funds necessary to pay incentive awards will be placed in a trust administered by an outside financial institution. The amount of each participant's incentive award will be determined in accordance with the provisions of the plan by a "Big 6" accounting firm chosen by the Company. Participants will receive bonus awards for actual time employed during the bonus year based upon: a) the greater of actual company performance or 80% of maximum company performance opportunity plus b) the greater of actual individual performance or 80% of maximum individual performance opportunity. 9 -------------------------------------------------------------------------------- RYDER PRESIDENT CONSUMER TRUCK RENTAL 1995 INCENTIVE COMPENSATION PLAN PAGE 9 -------------------------------------------------------------------------------- However, if the Company fails to verify incentive awards through a "Big 6" accounting firm, participants will receive 100% of their maximum company and individual performance opportunities based on actual time worked during the bonus year. The Company will be responsible for all legal fees and expenses which participants may reasonably incur in enforcing their rights under the plan in the event of a Change of Control of the Company. Should a Change of Control occur during 1995, participants will receive instructions regarding the collection of incentive awards. BONUS ELIGIBILITY ON TERMINATION Participants leaving the Company or VLSD under any conditions other than those outlined in the Eligibility or Change of Control sections of this plan are not eligible for bonus awards for the bonus year in which they leave, nor are they eligible for awards for the preceding bonus year, if such awards have not yet been distributed. BONUS PAYMENT Shortly after the end of the calendar year and after considering the recommendations of the Administrator of the plan, the Compensation Committee of the Board of Directors or the full Board of Directors of RSI will, in its sole discretion, determine the participants, if any, who will receive bonus awards and the amounts of such awards. Bonus award payments will be distributed to eligible participants following such Board or Committee approval and subsequent to certification of consolidated financial statements by an independent auditor. BONUS FUNDING Accruals based on bonus performance measures for the President, Consumer Truck Rental are excluded from funding limitations. Bonus payout maximums are limited by the lower of the total earned opportunity provided under the plan or the amount of the accrual. Should the accrual not provide for bonus allotments under the plan, proration will be affected at the discretion of the Chairman, President and Chief Executive Officer of RSI. Unused monies may not be carried forward for subsequent bonus years. DISCRETIONARY AWARDS With the approval of the Board of Directors of RSI, the Chairman, President, and Chief Executive Officer of RSI has the authority to grant discretionary bonus awards for exemplary performance to non-participants or to enhance the awards of participants. Discretionary awards are not subject to the funding limitations of this plan. While it is common to grant discretionary awards at the same time as regular awards, it may be appropriate, on occasion, to recognize an employee off-cycle due to extremely unusual performance. Off-cycle discretionary awards must be approved by the Chairman, President and Chief Executive Officer of RSI. 10 -------------------------------------------------------------------------------- RYDER PRESIDENT CONSUMER TRUCK RENTAL 1995 INCENTIVE COMPENSATION PLAN PAGE 10 -------------------------------------------------------------------------------- The total of all discretionary awards for employees under the RSI Headquarters Executive Management Incentive Compensation Plan, the VLSD field and headquarters bonus plans, the RSI SEVP Incentive Compensation Plan, the SVP and General Manager Ryder International Incentive Compensation Plan, the Ryder International field and bonus plans, the Ryder Services Corporation Incentive Compensation Plan, and the Division Presidents' bonus plans, including those granted off-cycle, may not exceed $430,000 per year. AMENDMENTS The Board of Directors of RSI reviews RSI's, its subsidiaries' and affiliates' incentive compensation plans annually to ensure equitability both within the Company, and in relation to current economic conditions. THE BOARD OF DIRECTORS RESERVES THE RIGHT TO AMEND, SUSPEND, TERMINATE OR MAKE EXCEPTIONS TO THIS PLAN AT ANY TIME. EX-10.14B 15 1995 INCENTIVE COMPENSATION PLAN - PRES. DED. 1 EXHIBIT 10.14(b) -------------------------------------------------------------------------------- RYDER PRESIDENT RYDER DEDICATED LOGISTICS 1995 INCENTIVE COMPENSATION PLAN PAGE 1 -------------------------------------------------------------------------------- Supersedes 1994 President, Ryder Dedicated Logistics Incentive Compensation Plan INTRODUCTION The following material explains the operation and administration of the 1995 Incentive Plan for the President, Ryder Dedicated Logistics (RDL). The plan is intended to serve as a single, comprehensive source of information that will explain your bonus for achieving various levels of performance. Questions should be addressed to your supervisor. BONUS OPPORTUNITY The following table summarizes the maximum bonus opportunity: MAXIMUM BONUS OPPORTUNITY AS A PERCENTAGE OF BASE SALARY
RSI RSI RDL INDIVIDUAL TOTAL BONUS PERFORMANCE ABOVE PLAN PERFORMANCE PERFORMANCE OPPORTUNITY * 60% 20% 20% 20% 120%
* See Special ROE Award section BONUS PERFORMANCE MEASURES For 1995, your bonus payout will be based on Ryder System, Inc. (RSI or the Company) performance, RSI performance above plan, RDL performance, and your performance as an individual. RSI performance is measured based on RSI Net Earnings After Tax (NAT) Return on Equity (ROE) performance and RSI Net Earnings Before Tax (NBT) performance for 1995. RSI performance above plan is measured based on RSI NBT performance for 1995. RDL performance is measured based on RDL Revenue performance and RDL Product Line NBT performance for 1995. Individual performance is determined based on a year-end assessment of your performance against objectives that you agreed to with management at the start of the year. Given their importance, the objectives should be in writing and may be updated during the year to adjust for priorities that may have changed. 2 -------------------------------------------------------------------------------- RYDER PRESIDENT RYDER DEDICATED LOGISTICS 1995 INCENTIVE COMPENSATION PLAN PAGE 2 -------------------------------------------------------------------------------- DEFINITION OF MEASURES Performance levels attained in the following areas determine the extent to which participants of this bonus plan are eligible for bonus awards. - RSI PERFORMANCE -- RSI performance payout is based on a grid which combines RSI ROE performance and RSI NBT performance. RSI ROE performance for the bonus year is calculated by dividing RSI NAT by RSI average equity. -- RSI NAT is defined as RSI's consolidated Net Earnings After Tax from continuing operations for the bonus year, as certified to the Board of Directors and shareholders of RSI by the Company's independent auditors, including appropriate accruals for all incentive awards estimated to be payable for that bonus year. -- RSI average equity is defined as the average of the four quarters' average equity. A quarter's average equity is defined as the equity, as shown on RSI's balance sheet at the beginning of each quarter plus the total equity as shown on RSI's balance sheet at the end of each quarter, divided by two. RSI NBT is defined as RSI's consolidated Net Earnings Before Tax as certified to the Board of Directors and shareholders of RSI by the Company's independent auditors, net of a provision for the total of all incentive awards, for the bonus year. - RSI PERFORMANCE ABOVE PLAN -- RSI performance above plan payout is based on RSI NBT performance. To achieve a payout, RSI NBT performance must be above Plan. - RDL PERFORMANCE -- RDL performance payout is based on a grid which combines RDL revenue performance and RDL Product Line NBT performance. RDL revenue is defined as RDL's total revenue as verified by the Senior Vice President and Controller, RSI. RDL Product Line NBT is defined as RDL's Product Line Net Earnings Before Tax as verified by the Senior Vice President and Controller, RSI, net of a provision for the total of all incentive awards, for the bonus year. 3 -------------------------------------------------------------------------------- RYDER PRESIDENT RYDER DEDICATED LOGISTICS 1995 INCENTIVE COMPENSATION PLAN PAGE 3 -------------------------------------------------------------------------------- - INDIVIDUAL PERFORMANCE -- Individual performance is defined as each participant's performance against job requirements and objectives (MBOs), as agreed upon between the individual and his/her management, at the beginning of the bonus year. If necessary, goals and objectives may be revised during the bonus year to reflect changing business priorities. Individual performance awards are separate from payments based upon financial measurements and may be paid, in part or in whole, based on the Company's performance and/or ability to pay. Bonus awards are subject to the recommendation of the Administrator of the plan and approval by the Board of Directors of RSI. (See "Bonus Payment") NOTE: The effects of any unusual and material accounting transactions may be excluded from bonus calculations with the approval of the Board of Directors of RSI. 4 -------------------------------------------------------------------------------- RYDER PRESIDENT RYDER DEDICATED LOGISTICS 1995 INCENTIVE COMPENSATION PLAN PAGE 4 -------------------------------------------------------------------------------- BONUS CALCULATION Bonus awards are based on the following grids. 1) RSI PERFORMANCE - ROE/NBT RSI performance payout is based on a grid consisting of two performance variables: 1995 RSI NAT ROE and 1995 RSI NBT. The potential bonus payout percent is determined by locating the point on the grid where the variables intersect. Actual performance may fall between the points specifically displayed on the grid, and the grid allows for interpolation between NBT points as shown. No bonus awards will be paid for performance below threshold. The potential bonus payout is expressed as a percentage of Maximum RSI Performance Bonus Opportunity, as shown on page 1. POTENTIAL RSI PERFORMANCE BONUS PAYOUT AS A PERCENTAGE OF MAXIMUM RSI PERFORMANCE BONUS OPPORTUNITY
1995 RSI NBT ($MM) THRESHOLD MAXIMUM 260.5 276 289 306 313 327 ROE % OF OPPORTUNITY < 14.5 30 40 50 55 75 80 14.5 - 17 40 50 60 65 85 90 > 17 50 60 65 75 90 100
2) RSI PERFORMANCE ABOVE PLAN - NBT RSI performance above plan payout is based on a grid of 1995 RSI NBT. The potential bonus payout percent is determined by locating the point on the grid under the 1995 RSI NBT. Actual performance may fall between the points specifically displayed on the grid, and the grid allows for interpolation between NBT points as shown. No bonus awards will be paid for performance below threshold. The potential bonus payout is expressed as a percentage of Maximum RSI Performance Above Plan Bonus Opportunity, as shown on page 1. POTENTIAL RSI PERFORMANCE ABOVE PLAN BONUS PAYOUT AS A PERCENTAGE OF MAXIMUM RSI PERFORMANCE ABOVE PLAN BONUS OPPORTUNITY 1995 RSI ABOVE PLAN NBT ($MM) THRESHOLD MAXIMUM 306.0 313.0 327.0 % OF OPPORTUNITY 0 50 100
5 -------------------------------------------------------------------------------- RYDER PRESIDENT RYDER DEDICATED LOGISTICS 1995 INCENTIVE COMPENSATION PLAN PAGE 5 -------------------------------------------------------------------------------- 3) RDL PERFORMANCE - REVENUE/PRODUCT LINE NBT RDL performance payout is based on a grid consisting of two performance variables: 1995 RDL Revenue and 1995 RDL Product Line NBT. The potential bonus payout percent is determined by locating the point on the grid where the variables intersect. Actual performance may fall between the points specifically displayed on the grid, and the grid allows for interpolation between NBT points as shown. No bonus awards will be paid for performance below threshold. The potential bonus payout is expressed as percentage of Maximum RDL Performance Bonus Opportunity, as shown on page 1. POTENTIAL RDL PERFORMANCE BONUS PAYOUT AS A PERCENTAGE OF MAXIMUM RDL PERFORMANCE BONUS OPPORTUNITY
1995 RDL PRODUCT LINE NBT ($MM) THRESHOLD MAXIMUM REVENUE 25 27 30 33 37 40 ($MM) % OF OPPORTUNITY Less Than 800 10 25 40 55 70 80 Greater Than or Equal To 800 25 35 55 65 90 100
4) INDIVIDUAL PERFORMANCE Individual performance payout is based on a grid consisting of individual performance results versus objectives. The potential bonus payout percent is determined by awarding a percentage within one of the grid ranges. The potential bonus payout is expressed as a percentage of Maximum Individual Performance Bonus Opportunity, as shown on page 1. POTENTIAL INDIVIDUAL PERFORMANCE BONUS PAYOUT AS A PERCENTAGE OF MAXIMUM INDIVIDUAL PERFORMANCE BONUS OPPORTUNITY
FAIR - SOME CONSISTENT SIGNIFICANTLY CRITICAL WITH ABOVE INDIVIDUAL PERFORMANCE SHORTFALLS EXPECTATIONS EXPECTATIONS EXCEPTIONAL % OF INDIVIDUAL PERFORMANCE OPPORTUNITY 0-50% 51-70% 71-89% 90-100%
ALL PERFORMANCE GRIDS REPRESENT GUIDELINES ONLY. ACTUAL PAYOUTS MAY BE PRORATED DOWNWARD AT THE COMPANY'S DISCRETION. ADDITIONAL CRITERIA MAY ADJUST THE PERFORMANCE PORTION DOWNWARD IF SPECIFIC GOALS ARE NOT ACHIEVED. THE GRIDS WILL BE REVISED ANNUALLY TO ENSURE CONSISTENCY WITH COMPANY GOALS AND OBJECTIVES. 6 -------------------------------------------------------------------------------- RYDER PRESIDENT RYDER DEDICATED LOGISTICS 1995 INCENTIVE COMPENSATION PLAN PAGE 6 -------------------------------------------------------------------------------- BONUS CALCULATION EXAMPLE Total bonus would be calculated as follows given the following information: Eligible Base Salary $315,000 1995 RSI NAT ROE 15% 1995 RSI NBT $ 313MM 1995 RDL Revenue $ 800MM 1995 RDL Product Line NBT $ 33MM Individual Performance Significantly Above Expectations
1) RSI Performance 60% Maximum RSI Performance Bonus Opportunity 85% Potential RSI Performance Bonus Payout (from grid) 60% x 85% = 51% of Eligible Base Salary 51% x $315,000 = $160,650 2) RSI Above Plan Performance 20% Maximum RSI Above Plan Performance Bonus Opportunity 50% Potential RSI Above Plan Performance Bonus Opportunity 20% x 50% = 10% of Eligible Base Salary 10% x $315,000 = $ 31,500 3) RDL Performance 20% Maximum RDL Performance Bonus Opportunity 65% Potential RDL Performance Bonus Payout (from grid) 20% x 65% = 13% of Eligible Base Salary 13% x $315,000 = $ 40,950 4) Individual Performance 20% Maximum Individual Performance Bonus Opportunity 75% Potential Individual Performance Bonus Payout (from grid) 20% x 75% = 15% of Eligible Base Salary 15% x $315,000 = $ 47,250 -------- TOTAL BONUS $280,350
7 -------------------------------------------------------------------------------- RYDER PRESIDENT RYDER DEDICATED LOGISTICS 1995 INCENTIVE COMPENSATION PLAN PAGE 7 -------------------------------------------------------------------------------- BASE SALARY CALCULATION For the purpose of bonus calculations, base salary is defined as the average annual rate of pay for the calendar year, excluding all other compensation paid to the employee during the year, e.g. bonus, commissions, employee benefits, moving expenses, and imputed income from company car, insurance, and amounts attributable to any of the Company's stock plans. Average annual rate of pay for a participant whose base salary changes within the bonus year is calculated as shown below. BASE SALARY CALCULATION EXAMPLE Average annual rate of pay would be calculated as follows for a participant who begins a bonus year with a base salary of $315,000, then effective June 1 receives an increase to a base salary of $330,000: January 1 through May 31 of Bonus Year: --------------------------------------- 31 + 28 + 31 + 30 + 31 = 151=.414 x $315,000/yr. = $130,410 ---------------------- --- 365 days 365 June 1 through December 31 of Bonus Year: ----------------------------------------- 365 - 151 = 214=.586 x $330,000/yr. = $193,380 --------- --- 365 days 365 AVERAGE ANNUAL RATE OF PAY FOR BONUS YEAR = $323,790
SPECIAL ROE AWARD One and one-half percent of the RSI NAT amount in excess of that required to reach 17% Return on Equity (ROE) will be credited to deferred compensation for elected Officers of the Company, Division Presidents and the Senior Vice President and General Manager Ryder International. This amount will be prorated based on each individual participant's earned salary (while in the eligible position) in relation to the sum of the earned salaries of all participants. 8 -------------------------------------------------------------------------------- RYDER PRESIDENT RYDER DEDICATED LOGISTICS 1995 INCENTIVE COMPENSATION PLAN PAGE 8 -------------------------------------------------------------------------------- ADMINISTRATION The Chairman, President, and Chief Executive Officer of RSI will administer this Incentive Compensation Plan. BONUS YEAR The bonus year is defined as the calendar year in which bonus awards are earned. ELIGIBILITY The President, Ryder Dedicated Logistics, if employed in good standing at the time bonus payments are made, is eligible to participate in this plan. If the President, Ryder Dedicated Logistics has an agreement which specifically provides for incentive compensation other than that which is provided in this plan or is a participant in any other incentive compensation plan of RSI, its subsidiaries or affiliates, he/she is not eligible to participate in this plan. Employees who are newly hired, promoted or transferred into or out of eligible positions and those who move from one eligibility level to another will receive pro rata bonus awards based on the average annual rate of pay in eligible positions, provided they are employed in good standing at the time bonus awards are distributed. In addition, participants who leave the Company or VLSD during the bonus year under any of the following conditions may be eligible for pro rata bonus awards: - retirement under the provisions of one of the Company's retirement plans or the Social Security Act, or - disability Note: The spouse or legal representative of a deceased participant may be eligible for pro rata bonus awards as well. BONUS ELIGIBILITY ON CHANGE OF CONTROL Notwithstanding anything in this plan to the contrary, in the event of a Change of Control of the Company (as defined and adopted by the Board of Directors on August 20, 1993), the funds necessary to pay incentive awards will be placed in a trust administered by an outside financial institution. The amount of each participant's incentive award will be determined in accordance with the provisions of the plan by a "Big 6" accounting firm chosen by the Company. Participants will receive bonus awards for actual time employed during the bonus year based upon: a) the greater of actual company performance or 80% of maximum company performance opportunity plus b) the greater of actual individual performance or 80% of maximum individual performance opportunity. 9 -------------------------------------------------------------------------------- RYDER PRESIDENT RYDER DEDICATED LOGISTICS 1995 INCENTIVE COMPENSATION PLAN PAGE 9 -------------------------------------------------------------------------------- However, if the Company fails to verify incentive awards through a "Big 6" accounting firm, participants will receive 100% of their maximum company and individual performance opportunities based on actual time worked during the bonus year. The Company will be responsible for all legal fees and expenses which participants may reasonably incur in enforcing their rights under the plan in the event of a Change of Control of the Company. Should a Change of Control occur during 1995, participants will receive instructions regarding the collection of incentive awards. BONUS ELIGIBILITY ON TERMINATION Participants leaving the Company or VLSD under any conditions other than those outlined in the Eligibility or Change of Control sections of this plan are not eligible for bonus awards for the bonus year in which they leave, nor are they eligible for awards for the preceding bonus year, if such awards have not yet been distributed. BONUS PAYMENT Shortly after the end of the calendar year and after considering the recommendations of the Administrator of the plan, the Compensation Committee of the Board of Directors or the full Board of Directors of RSI will, in its sole discretion, determine the participants, if any, who will receive bonus awards and the amounts of such awards. Bonus award payments will be distributed to eligible participants following such Board or Committee approval and subsequent to certification of consolidated financial statements by an independent auditor. BONUS FUNDING Accruals based on bonus performance measures for the President, Ryder Dedicated Logistics are excluded from funding limitations. Bonus payout maximums are limited by the lower of the total earned opportunity provided under the plan or the amount of the accrual. Should the accrual not provide for bonus allotments under the plan, proration will be affected at the discretion of the Chairman, President and Chief Executive Officer of RSI. Unused monies may not be carried forward for subsequent bonus years. DISCRETIONARY AWARDS With the approval of the Board of Directors of RSI, the Chairman, President, and Chief Executive Officer of RSI has the authority to grant discretionary bonus awards for exemplary performance to non-participants or to enhance the awards of participants. Discretionary awards are not subject to the funding limitations of this plan. While it is common to grant discretionary awards at the same time as regular awards, it may be appropriate, on occasion, to recognize an employee off-cycle due to extremely unusual performance. Off-cycle discretionary awards must be approved by the Chairman, President and Chief Executive Officer of RSI. 10 -------------------------------------------------------------------------------- RYDER PRESIDENT RYDER DEDICATED LOGISTICS 1995 INCENTIVE COMPENSATION PLAN PAGE 10 -------------------------------------------------------------------------------- The total of all discretionary awards for employees under the RSI Headquarters Executive Management Incentive Compensation Plan, the VLSD field and headquarters bonus plans, the RSI SEVP Incentive Compensation Plan, the SVP and General Manager Ryder International Incentive Compensation Plan, the Ryder International field and bonus plans, the Ryder Services Corporation Incentive Compensation Plan, and the Division Presidents' bonus plans, including those granted off-cycle, may not exceed $430,000 per year. AMENDMENTS The Board of Directors of RSI reviews RSI's, its subsidiaries' and affiliates' incentive compensation plans annually to ensure equitability both within the Company, and in relation to current economic conditions. THE BOARD OF DIRECTORS RESERVES THE RIGHT TO AMEND, SUSPEND, TERMINATE OR MAKE EXCEPTIONS TO THIS PLAN AT ANY TIME. EX-10.15B 16 NON-QUALIFIED STOCK OPTION AGREEMENT 05/94 1 EXHIBIT 10.15(b) RYDER SYSTEM, INC. COMBINED NON-QUALIFIED STOCK OPTION AND LIMITED STOCK APPRECIATION RIGHT AGREEMENT THIS AGREEMENT, made as of this 6th day of May, 1994, between Ryder System, Inc., a Florida corporation ("RSI"), and ((NAME)) (the "Grantee"); W I T N E S S E T H: WHEREAS, the Board of Directors of RSI has adopted and the shareholders of RSI have approved the Ryder System, Inc. 1980 Stock Incentive Plan, as amended (the "Plan"), which provides for the issuance of (i) Non-qualified Stock Options ("Non-qualified Stock Options") to purchase shares of Common Stock and (ii) Limited Stock Appreciation Rights ("Limited SARs") to key executive Employees of the Company; and WHEREAS, the Grantee is a key executive Employee and has been selected by the Board of Directors of RSI and/or the Compensation Committee of the Board of Directors of RSI (collectively, the "Committee") to receive Non-qualified Stock Options and Limited SARs under the Plan; NOW, THEREFORE, in consideration of the premises, RSI and the Grantee agree as follows: I. NON-QUALIFIED STOCK OPTION Grant of Option Subject to the limitations and other terms and conditions set forth in this Agreement and the Plan, the Committee grants to the Grantee as of May 6th, 1994 a Non-qualified Stock Option to purchase an aggregate of ((SHARES)) shares of RSI's Common Stock, par value $.50 per share (the "Shares"), at a price of $24.0625 per Share, the Fair Market Value on the date of grant. Limitations on Exercise of Option Subject to the limitations and other terms and conditions set forth in this Agreement and the Plan, the Non-qualified Stock Option shall be exercisable on or before May 5th, 2004 as follows: (i) None of the Shares subject to the Non-qualified Stock Option for a period of two (2) years from the date of grant; (ii) 100% of the Shares subject to the Non-qualified Stock Option for a period beginning at least two (2) years after the date of grant AND the earlier of (A) eight (8) years from the date of grant or, (B) when Ryder stock trades at or above $45.00 per share based on the average of the high and low price for the last trading day for each of three (3) consecutive months. 2 Subject to the foregoing and the provisions of the Plan, when the Non-qualified Stock Option becomes exercisable it shall thereafter be exercisable at any time on or before the expiration of the term of the Non-qualified Stock Option on May 5th, 2004. Exercise and Payment of Option Subject to the limitations and other terms and conditions set forth in this Agreement and the Plan, the Non-qualified Stock Option, to the extent then exercisable, may be exercised in whole or in part from time-to-time by delivering written notice to RSI addressed to the Controller of RSI specifying the number of Shares the Grantee then elects to purchase under the Non-qualified Stock Option, together with the full purchase price of the Shares being purchased in cash or a certified or bank cashier's check payable to the order of RSI, or in Shares having a Fair Market Value on the date of exercise equal to the purchase price, or a combination of the foregoing having an aggregate Fair Market Value equal to the purchase price. As promptly as practicable after any such exercise, RSI will deliver to the Grantee certificates for the number of Shares with respect to which the Non-qualified Stock Option has been exercised, issued in the name of the Grantee. The exercise of a Non-qualified Stock Option shall reduce on a one-for-one basis the number of Shares subject to the related Limited SAR granted under Section II of this Agreement. Exercise and Payment Upon a Change of Control Subject to the limitations and other terms and conditions set forth in this Agreement and the Plan: (i) Notwithstanding any other provision of this Agreement, pursuant to Section 7(i) of the Plan, unless otherwise determined by the Committee prior to a Change of Control, in the event of a Change of Control, the Non-qualified Stock Option granted under Section I of this Agreement, to the extent not previously exercised or expired under the terms of this Agreement and the Plan, shall become immediately exercisable in full and shall remain exercisable to the full extent of the Shares available thereunder, regardless of any installment provisions applicable thereto, for the remainder of its term, unless Section 14(a) of the Plan applies or the Grantee has been terminated for cause, in which case the Non-qualified Stock Option shall automatically terminate as of the Incumbent Board's determination pursuant to Section 14(a) of the Plan or the Grantee's Termination Date, as appropriate. (ii) If the Committee so determines prior to or during the thirty day period following the occurrence of a Change of Control, the Grantee may in lieu of exercising, require RSI to purchase for cash all or any portion of the Non-qualified Stock Option granted under Section I of this Agreement, which is not otherwise exercised or expired under the terms of this Agreement and the Plan as to which no Limited SAR is then exercisable, for a period of sixty days following the occurrence of a Change of Control at the Price upon a Change of Control specified below; provided that if the Grantee is subject to Section 16(b) of the 1934 Act with respect to RSI, the Grantee must have held such Non-qualified Stock Option for at least six-months. Price Upon a Change of Control Subject to the limitations and other terms and conditions set forth in this Agreement and the Plan, upon the occurrence of a Change of Control, the Price of the Limited SAR and the Non-qualified Stock Option or portions thereof as to which no Limited SAR is then exercisable, shall be the excess of the highest of: 2 3 (i) the highest closing price of the Common Stock reported by the composite transaction reporting system for securities listed on the New York Stock Exchange within the sixty days preceding the date of exercise; (ii) the highest price per share of Common Stock included in a filing made by any third person, including a "group" as defined in Section 13(d)(3) of the 1934 Act, but excluding any employee benefit plan or plans of RSI and its Subsidiaries and affiliates, who becomes the beneficial owner, directly or indirectly, of twenty percent or more of the combined voting power of RSI's outstanding voting securities ordinarily having the right to vote for the election of directors of RSI, on any Schedule 13D pursuant to Section 13(d) of the 1934 Act as paid within the sixty days prior to the date of such report; and (iii) the value of the consideration to be received by the holders of Common Stock, expressed on a per share basis, in any liquidation or dissolution of RSI or any sale of all or substantially all of the assets of RSI, with all noncash consideration being valued in good faith by the Incumbent Board; over the purchase price per Share at which the related Non-qualified Stock Option is exercisable, as applicable. II. LIMITED STOCK APPRECIATION RIGHT Grant of Limited SAR Subject to the limitations and other terms and conditions set forth in this Agreement and the Plan, the Committee grants to the Grantee as of May 6th, 1994 a Limited SAR with respect to all Shares subject to the related Non-qualified Stock Option granted under Section I of this Agreement. Such Limited SAR shall be exercisable only in the event of a Change of Control and only if the Grantee is subject, in the opinion of counsel to RSI, to Section 16(b) of the Securities Exchange Act of 1934 with respect to RSI at the time of the Change of Control. The Limited SAR is the right to receive an amount (the "Limited SAR Spread") equal to the product computed by multiplying (i) the Price upon a Change of Control specified in Section I above by (ii) the number of Shares with respect to which such Limited SAR is being exercised. Limitations on Exercise of Limited SAR Subject to the limitations and other terms and conditions set forth in this Agreement and the Plan, the Limited SAR shall be exercisable only if and to the extent that the related Non-qualified Stock Option is exercisable, but no later than May 5th, 2004, the expiration date of the related Non-qualified Stock Option, provided, however, that the Limited SAR may not be exercised in any event until the expiration of six months from the date of grant of the Limited SAR nor more than six months after the Termination Date of the Grantee. The Limited SAR may be exercised only during the sixty day period commencing after the occurrence of a Change of Control provided, however, that if the Limited SAR has not been held by the Grantee for at least six months before the occurrence of a Change of Control, such Limited SAR may be exercised only during the sixty day period commencing upon the expiration of such six month period. 3 4 Exercise and Payment of Limited SAR Subject to the limitations and other terms and conditions set forth in this Agreement and the Plan, the Limited SAR may be exercised by delivering a written notice to RSI addressed to the Controller of RSI specifying the number of Shares with respect to which the Grantee is exercising the Limited SAR. As promptly as practicable after any such exercise, RSI will deliver to the Grantee an amount in cash equal to the Limited SAR Spread. The exercise of a Limited SAR shall reduce the number of Shares subject to the related Non-qualified Stock Option on a one-for-one basis. III. GENERAL Transferability of Awards No Awards or any rights or interests therein shall be assignable or transferable by the Grantee except by will or the laws of descent and distribution. During the lifetime of the Grantee, an Award shall be exercisable only by the Grantee or the Grantee's guardian or legal representative. Notices All notices provided for in this Agreement or the Plan shall be inwriting and shall be deemed to have been duly given if delivered in person or mailed by registered mail, return receipt requested: (a) If to RSI, at Ryder System, Inc., P. O. Box 020816, Miami, Florida 33102-0816, Attention: Controller; and (b) If to the Grantee, at the Grantee's business address or address appearing in the payroll records of RSI; or (c) At such other addresses as may be furnished to RSI or the Grantee in accordance with this paragraph. Definitions and Interpretation Capitalized terms not otherwise defined in this Agreement are defined as in the Plan. This Agreement and the grant, exercise, adjustment, modification, cancellation and termination of the Non-qualified Stock Option and the Limited SAR, the issuance of Shares subject thereto and the payment of cash thereunder are subject in all respects to the terms of the Plan and in the event that any provision of this Agreement shall be inconsistent with the terms of the Plan, then the terms of the Plan shall govern. The Committee shall have plenary authority to interpret this Agreement and the Plan and to make all determinations deemed necessary or advisable for the administration of the Plan. The Committee's interpretations and determinations shall be conclusive. Acknowledgement The Grantee acknowledges that he/she has read the entire Plan including the provisions thereof relating to termination of employment and Change of Control. Additionally, Grantee acknowledges that this Agreement is not an employment agreement between the Grantee and RSI, and RSI and the Grantee each has the right to terminate the Grantee's employment at any time for any reason whatsoever, unless there is a written employment agreement to the contrary. 4 5 Governing Law This Agreement shall be construed and enforced in accordance with, and governed by, the laws of the State of Florida. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. Attest: Ryder System, Inc. By:____________________________________ By: ________________________________ Yasmine B. Zyne C. Robert Campbell Assistant Secretary Executive Vice President - Human Resources and Administration ________________________________ GRANTEE ________________________________ Social Security Number 5 EX-10.15C 17 NON-QUALIFIED STOCK OPTION AGREEMENT 10/94 1 EXHIBIT 10.15(c) RYDER SYSTEM, INC. COMBINED NON-QUALIFIED STOCK OPTION AND LIMITED STOCK APPRECIATION RIGHT AGREEMENT THIS AGREEMENT, made as of this 21st day of October, 1994, between Ryder System, Inc., a Florida corporation ("RSI"), and ((NAME)) (the "Grantee"); W I T N E S S E T H: WHEREAS, the Board of Directors of RSI has adopted and the shareholders of RSI have approved the Ryder System, Inc. 1980 Stock Incentive Plan, as amended (the "Plan"), which provides for the issuance of (i) Non-qualified Stock Options ("Non-qualified Stock Options") to purchase shares of Common Stock and (ii) Limited Stock Appreciation Rights ("Limited SARs") to key executive Employees of the Company; and WHEREAS, the Grantee is a key executive Employee and has been selected by the Board of Directors of RSI and/or the Compensation Committee of the Board of Directors of RSI (collectively, the "Committee") to receive Non-qualified Stock Options and Limited SARs under the Plan; NOW, THEREFORE, in consideration of the premises, RSI and the Grantee agree as follows: I. NON-QUALIFIED STOCK OPTION Grant of Option Subject to the limitations and other terms and conditions set forth in this Agreement and the Plan, the Committee grants to the Grantee as of October 21, 1994 a Non-qualified Stock Option to purchase an aggregate of ((SHARES)) shares of RSI's Common Stock, par value $.50 per share (the "Shares"), at a price of $25.3750 per Share, the Fair Market Value on the date of grant. Limitations on Exercise of Option Subject to the limitations and other terms and conditions set forth in this Agreement and the Plan, the Non-qualified Stock Option shall be exercisable in installments on or before October 20, 2004 as follows: (i) None of the Shares subject to the Non-qualified Stock Option for a period of one year from the date of grant; (ii) 50% of the Shares subject to the Non-qualified Stock Option on or after October 21, 1995; 2 (iii) an additional 50% of the Shares subject to the Non-qualified Stock Option on or after October 21, 1996. Subject to the foregoing and the provisions of the Plan, any installment portion of the Non-qualified Stock Option that becomes exercisable shall thereafter accumulate and be exercisable at any time on or before the expiration of the term of the Non-qualified Stock Option on October 20, 2004. Exercise and Payment of Option Subject to the limitations and other terms and conditions set forth in this Agreement and the Plan, the Non-qualified Stock Option, to the extent then exercisable, may be exercised in whole or in part from time-to-time by delivering written notice to RSI addressed to the Controller of RSI specifying the number of Shares the Grantee then elects to purchase under the Non-qualified Stock Option, together with the full purchase price of the Shares being purchased in cash or a certified or bank cashier's check payable to the order of RSI, or in Shares having a Fair Market Value on the date of exercise equal to the purchase price, or a combination of the foregoing having an aggregate Fair Market Value equal to the purchase price. As promptly as practicable after any such exercise, RSI will deliver to the Grantee certificates for the number of Shares with respect to which the Non-qualified Stock Option has been exercised, issued in the name of the Grantee. The exercise of a Non-qualified Stock Option shall reduce on a one-for-one basis the number of Shares subject to the related Limited SAR granted under Section II of this Agreement. Exercise and Payment Upon a Change of Control Subject to the limitations and other terms and conditions set forth in this Agreement and the Plan: (i) Notwithstanding any other provision of this Agreement, pursuant to Section 7(i) of the Plan, unless otherwise determined by the Committee prior to a Change of Control, in the event of a Change of Control, the Non-qualified Stock Option granted under Section I of this Agreement, to the extent not previously exercised or expired under the terms of this Agreement and the Plan, shall become immediately exercisable in full and shall remain exercisable to the full extent of the Shares available thereunder, regardless of any installment provisions applicable thereto, for the remainder of its term, unless Section 14(a) of the Plan applies or the Grantee has been terminated for cause, in which case the Non-qualified Stock Option shall automatically terminate as of the Incumbent Board's determination pursuant to Section 14(a) of the Plan or the Grantee's Termination Date, as appropriate. (ii) If the Committee so determines prior to or during the thirty day period following the occurrence of a Change of Control, the Grantee may in lieu of exercising, require RSI to purchase for cash all or any portion of the Non-qualified Stock Option granted under Section I of this Agreement, which is not otherwise exercised or expired under the terms of this Agreement and the Plan as to which no Limited SAR is then exercisable, for a period of sixty days following the occurrence of a Change of Control at the Price upon a Change of Control specified below; provided that if the Grantee is subject to Section 16(b) of the 1934 Act with respect to RSI, the Grantee must have held such Non-qualified Stock Option for at least six-months. 2 3 Price Upon a Change of Control Subject to the limitations and other terms and conditions set forth in this Agreement and the Plan, upon the occurrence of a Change of Control, the Price of the Limited SAR and the Non-qualified Stock Option or portions thereof as to which no Limited SAR is then exercisable, shall be the excess of the highest of: (i) the highest closing price of the Common Stock reported by the composite transaction reporting system for securities listed on the New York Stock Exchange within the sixty days preceding the date of exercise; (ii) the highest price per share of Common Stock included in a filing made by any third person, including a "group" as defined in Section 13(d)(3) of the 1934 Act, but excluding any employee benefit plan or plans of RSI and its Subsidiaries and affiliates, who becomes the beneficial owner, directly or indirectly, of twenty percent or more of the combined voting power of RSI's outstanding voting securities ordinarily having the right to vote for the election of directors of RSI, on any Schedule 13D pursuant to Section 13(d) of the 1934 Act as paid within the sixty days prior to the date of such report; and (iii) the value of the consideration to be received by the holders of Common Stock, expressed on a per share basis, in any liquidation or dissolution of RSI or any sale of all or substantially all of the assets of RSI, with all noncash consideration being valued in good faith by the Incumbent Board; over the purchase price per Share at which the related Non-qualified Stock Option is exercisable, as applicable. II. LIMITED STOCK APPRECIATION RIGHT Grant of Limited SAR Subject to the limitations and other terms and conditions set forth in this Agreement and the Plan, the Committee grants to the Grantee as of October 21, 1994 a Limited SAR with respect to all Shares subject to the related Non-qualified Stock Option granted under Section I of this Agreement. Such Limited SAR shall be exercisable only in the event of a Change of Control and only if the Grantee is subject, in the opinion of counsel to RSI, to Section 16(b) of the Securities Exchange Act of 1934 with respect to RSI at the time of the Change of Control. The Limited SAR is the right to receive an amount (the "Limited SAR Spread") equal to the product computed by multiplying (i) the Price upon a Change of Control specified in Section I above by (ii) the number of Shares with respect to which such Limited SAR is being exercised. Limitations on Exercise of Limited SAR Subject to the limitations and other terms and conditions set forth in this Agreement and the Plan, the Limited SAR shall be exercisable only if and to the extent that the related Non-qualified Stock Option is exercisable, but no later than May 5th, 2004, the expiration date of the related Non-qualified Stock Option, provided, however, that the Limited SAR may not be exercised in any event until the expiration of six 3 4 months from the date of grant of the Limited SAR nor more than six months after the Termination Date of the Grantee. The Limited SAR may be exercised only during the sixty day period commencing after the occurrence of a Change of Control provided, however, that if the Limited SAR has not been held by the Grantee for at least six months before the occurrence of a Change of Control, such Limited SAR may be exercised only during the sixty day period commencing upon the expiration of such six month period. Exercise and Payment of Limited SAR Subject to the limitations and other terms and conditions set forth in this Agreement and the Plan, the Limited SAR may be exercised by delivering a written notice to RSI addressed to the Controller of RSI specifying the number of Shares with respect to which the Grantee is exercising the Limited SAR. As promptly as practicable after any such exercise, RSI will deliver to the Grantee an amount in cash equal to the Limited SAR Spread. The exercise of a Limited SAR shall reduce the number of Shares subject to the related Non-qualified Stock Option on a one-for-one basis. III. GENERAL Transferability of Awards No Awards or any rights or interests therein shall be assignable or transferable by the Grantee except by will or the laws of descent and distribution. During the lifetime of the Grantee, an Award shall be exercisable only by the Grantee or the Grantee's guardian or legal representative. Notices All notices provided for in this Agreement or the Plan shall be in writing and shall be deemed to have been duly given if delivered in person or mailed by registered mail, return receipt requested: (a) If to RSI, at Ryder System, Inc., P. O. Box 020816, Miami, Florida 33102-0816, Attention: Controller; and (b) If to the Grantee, at the Grantee's business address or address appearing in the payroll records of RSI; or (c) At such other addresses as may be furnished to RSI or the Grantee in accordance with this paragraph. Definitions and Interpretation Capitalized terms not otherwise defined in this Agreement are defined as in the Plan. This Agreement and the grant, exercise, adjustment, modification, cancellation and termination of the Non-qualified Stock Option and the Limited SAR, the issuance of Shares subject thereto and the payment of cash thereunder are subject in all respects to the terms of the Plan and in the event that any provision of this Agreement shall be inconsistent with the terms of the Plan, then the terms of the Plan shall govern. The Committee shall have plenary authority to interpret this Agreement and the Plan and to make all determinations deemed necessary or advisable for the administration of the Plan. The Committee's interpretations and determinations shall be conclusive. 4 5 Acknowledgement The Grantee acknowledges that he/she has read the entire Plan including the provisions thereof relating to termination of employment and Change of Control. Additionally, Grantee acknowledges that this Agreement is not an employment agreement between the Grantee and RSI, and RSI and the Grantee each has the right to terminate the Grantee's employment at any time for any reason whatsoever, unless there is a written employment agreement to the contrary. Governing Law This Agreement shall be construed and enforced in accordance with, and governed by, the laws of the State of Florida. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. Attest: RSI By:_________________________________ By: ___________________________________ Yasmine B. Zyne C. Robert Campbell Assistant Secretary Executive Vice President - Human Resources and Administration _____________________________________ GRANTEE _____________________________________ Social Security Number 5 6 Acknowledgement The Grantee acknowledges that he/she has read the entire Plan including the provisions thereof relating to termination of employment and Change of Control. Additionally, Grantee acknowledges that this Agreement is not an employment agreement between the Grantee and RSI, and RSI and the Grantee each has the right to terminate the Grantee's employment at any time for any reason whatsoever, unless there is a written employment agreement to the contrary. Governing Law This Agreement shall be construed and enforced in accordance with, and governed by, the laws of the State of Florida. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. Attest: RSI By:__________________________________ By: ___________________________________ Edward R. Henderson James M. Herron Assistant Secretary Senior Executive Vice President and General Counsel ___________________________________ GRANTEE ___________________________________ Social Security Number 6 EX-10.15D 18 NON-QUALIFIED STOCK OPTION AGREEMENT 12/94 1 EXHIBIT 10.15(d) RYDER SYSTEM, INC. COMBINED NON-QUALIFIED STOCK OPTION AND LIMITED STOCK APPRECIATION RIGHT AGREEMENT THIS AGREEMENT, made as of this 15th day of December, 1994, between Ryder System, Inc., a Florida corporation ("RSI"), and M. A. Burns (the "Grantee"); W I T N E S S E T H: WHEREAS, the Board of Directors of RSI has adopted and the shareholders of RSI have approved the Ryder System, Inc. 1980 Stock Incentive Plan, as amended (the "Plan"), which provides for the issuance of (i) Non-qualified Stock Options ("Non-qualified Stock Options") to purchase shares of Common Stock and (ii) Limited Stock Appreciation Rights ("Limited SARs") to key executive Employees of the Company; and WHEREAS, the Grantee is a key executive Employee and has been selected by the Board of Directors of RSI and/or the Compensation Committee of the Board of Directors of RSI (collectively, the "Committee") to receive Non-qualified Stock Options and Limited SARs under the Plan; NOW, THEREFORE, in consideration of the premises, RSI and the Grantee agree as follows: I. NON-QUALIFIED STOCK OPTION Grant of Option Subject to the limitations and other terms and conditions set forth in this Agreement and the Plan, the Committee grants to the Grantee as of December 15, 1994 a Non-qualified Stock Option to purchase an aggregate of 130,000 shares of RSI's Common Stock, par value $.50 per share (the "Shares"), at a price of $21.9375 per Share, the Fair Market Value on the date of grant. Limitations on Exercise of Option Subject to the limitations and other terms and conditions set forth in this Agreement and the Plan, the Non-qualified Stock Option shall be exercisable in installments on or before December 14, 2004 as follows: (i) 20% of the Shares subject to the Non-qualified Stock Option effective immediately; (ii) 20% of the Shares subject to the Non-qualified Stock Option on or after December 15,1995; 2 (iii) 20% of the Shares subject to the Non-qualified Stock Option on or after December 15, 1996; (iv) 20% of the Shares subject to the Non-qualified Stock Option on or after December 15, 1997; (v) and the final 20% of the Shares subject to the Non-qualified Stock Option on or after December 15, 1998. Subject to the foregoing and the provisions of the Plan, any installment portion of the Non-qualified Stock Option that becomes exercisable shall thereafter accumulate and be exercisable at any time on or before the expiration of the term of the Non-qualified Stock Option on December 14, 2004. Exercise and Payment of Option Subject to the limitations and other terms and conditions set forth in this Agreement and the Plan, the Non-qualified Stock Option, to the extent then exercisable, may be exercised in whole or in part from time-to-time by delivering written notice to RSI addressed to the Controller of RSI specifying the number of Shares the Grantee then elects to purchase under the Non-qualified Stock Option, together with the full purchase price of the Shares being purchased in cash or a certified or bank cashier's check payable to the order of RSI, or in Shares having a Fair Market Value on the date of exercise equal to the purchase price, or a combination of the foregoing having an aggregate Fair Market Value equal to the purchase price. As promptly as practicable after any such exercise, RSI will deliver to the Grantee certificates for the number of Shares with respect to which the Non-qualified Stock Option has been exercised, issued in the name of the Grantee. The exercise of a Non-qualified Stock Option shall reduce on a one-for-one basis the number of Shares subject to the related Limited SAR granted under Section II of this Agreement. Exercise and Payment Upon a Change of Control Subject to the limitations and other terms and conditions set forth in this Agreement and the Plan: (i) Notwithstanding any other provision of this Agreement, pursuant to Section 7(i) of the Plan, unless otherwise determined by the Committee prior to a Change of Control, in the event of a Change of Control, the Non-qualified Stock Option granted under Section I of this Agreement, to the extent not previously exercised or expired under the terms of this Agreement and the Plan, shall become immediately exercisable in full and shall remain exercisable to the full extent of the Shares available thereunder, regardless of any installment provisions applicable thereto, for the remainder of its term, unless Section 14(a) of the Plan applies or the Grantee has been terminated for cause, in which case the Non-qualified Stock Option shall automatically terminate as of the Incumbent Board's determination pursuant to Section 14(a) of the Plan or the Grantee's Termination Date, as appropriate. (ii) If the Committee so determines prior to or during the thirty day period following the occurrence of a Change of Control, the Grantee may in lieu of exercising, require RSI to purchase for cash all or any portion of the Non-qualified Stock Option granted under Section I of this Agreement, which is not otherwise exercised or expired under the terms of this Agreement and the Plan as to which no Limited SAR is then exercisable, for a period of sixty 2 3 days following the occurrence of a Change of Control at the Price upon a Change of Control specified below; provided that if the Grantee is subject to Section 16(b) of the 1934 Act with respect to RSI, the Grantee must have held such Non-qualified Stock Option for at least six-months. Price Upon a Change of Control Subject to the limitations and other terms and conditions set forth in this Agreement and the Plan, upon the occurrence of a Change of Control, the Price of the Limited SAR and the Non-qualified Stock Option or portions thereof as to which no Limited SAR is then exercisable, shall be the excess of the highest of: (i) the highest closing price of the Common Stock reported by the composite transaction reporting system for securities listed on the New York Stock Exchange within the sixty days preceding the date of exercise; (ii) the highest price per share of Common Stock included in a filing made by any third person, including a "group" as defined in Section 13(d)(3) of the 1934 Act, but excluding any employee benefit plan or plans of RSI and its Subsidiaries and affiliates, who becomes the beneficial owner, directly or indirectly, of twenty percent or more of the combined voting power of RSI's outstanding voting securities ordinarily having the right to vote for the election of directors of RSI, on any Schedule 13D pursuant to Section 13(d) of the 1934 Act as paid within the sixty days prior to the date of such report; and (iii) the value of the consideration to be received by the holders of Common Stock, expressed on a per share basis, in any liquidation or dissolution of RSI or any sale of all or substantially all of the assets of RSI, with all noncash consideration being valued in good faith by the Incumbent Board; over the purchase price per Share at which the related Non-qualified Stock Option is exercisable, as applicable. II. LIMITED STOCK APPRECIATION RIGHT Grant of Limited SAR Subject to the limitations and other terms and conditions set forth in this Agreement and the Plan, the Committee grants to the Grantee as of December 15, 1994 a Limited SAR with respect to all Shares subject to the related Non-qualified Stock Option granted under Section I of this Agreement. Such Limited SAR shall be exercisable only in the event of a Change of Control and only if the Grantee is subject, in the opinion of counsel to RSI, to Section 16(b) of the Securities Exchange Act of 1934 with respect to RSI at the time of the Change of Control. The Limited SAR is the right to receive an amount (the "Limited SAR Spread") equal to the product computed by multiplying (i) the Price upon a Change of Control specified in Section I above by (ii) the number of Shares with respect to which such Limited SAR is being exercised. Limitations on Exercise of Limited SAR Subject to the limitations and other terms and conditions set forth in this Agreement and the Plan, the Limited SAR shall be exercisable only if and to the extent that the related Non-qualified Stock Option is exercisable, but no later than 3 4 December 14, 2004, the expiration date of the related Non-qualified Stock Option, provided, however, that the Limited SAR may not be exercised in any event until the expiration of six months from the date of grant of the Limited SAR nor more than six months after the Termination Date of the Grantee. The Limited SAR may be exercised only during the sixty day period commencing after the occurrence of a Change of Control provided, however, that if the Limited SAR has not been held by the Grantee for at least six months before the occurrence of a Change of Control, such Limited SAR may be exercised only during the sixty day period commencing upon the expiration of such six month period. Exercise and Payment of Limited SAR Subject to the limitations and other terms and conditions set forth in this Agreement and the Plan, the Limited SAR may be exercised by delivering a written notice to RSI addressed to the Controller of RSI specifying the number of Shares with respect to which the Grantee is exercising the Limited SAR. As promptly as practicable after any such exercise, RSI will deliver to the Grantee an amount in cash equal to the Limited SAR Spread. The exercise of a Limited SAR shall reduce the number of Shares subject to the related Non-qualified Stock Option on a one-for-one basis. III. GENERAL Transferability of Awards No Awards or any rights or interests therein shall be assignable or transferable by the Grantee except by will or the laws of descent and distribution. During the lifetime of the Grantee, an Award shall be exercisable only by the Grantee or the Grantee's guardian or legal representative. Notices All notices provided for in this Agreement or the Plan shall be in writing and shall be deemed to have been duly given if delivered in person or mailed by registered mail, return receipt requested: (a) If to RSI, at Ryder System, Inc., P. O. Box 020816, Miami, Florida 33102-0816, Attention: Controller; and (b) If to the Grantee, at the Grantee's business address or address appearing in the payroll records of RSI; or (c) At such other addresses as may be furnished to RSI or the Grantee in accordance with this paragraph. Definitions and Interpretation Capitalized terms not otherwise defined in this Agreement are defined as in the Plan. This Agreement and the grant, exercise, adjustment, modification, cancellation and termination of the Non-qualified Stock Option and the Limited SAR, the issuance of Shares subject thereto and the payment of cash thereunder are subject in all respects to the terms of the Plan and in the event that any provision of this Agreement shall be inconsistent with the terms of the Plan, then the terms of the Plan shall govern. The Committee shall have plenary authority to interpret this Agreement and the Plan and to make all determinations deemed necessary or advisable for the administration of the Plan. The Committee's interpretations and determinations shall be conclusive. 4 5 Acknowledgement The Grantee acknowledges that he/she has read the entire Plan including the provisions thereof relating to termination of employment and Change of Control. Additionally, Grantee acknowledges that this Agreement is not an employment agreement between the Grantee and RSI, and RSI and the Grantee each has the right to terminate the Grantee's employment at any time for any reason whatsoever, unless there is a written employment agreement to the contrary. Governing Law This Agreement shall be construed and enforced in accordance with, and governed by, the laws of the State of Florida. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. Attest: RSI By: /s/ Yasmine B. Zyne By: /s/ James M. Herron ------------------------------- ------------------------------------ Yasmine B. Zyne James M. Herron Assistant Secretary Senior Executive Vice President and General Counsel /s/ M.A. Burns --------------------------------------- GRANTEE _______________________________________ Social Security Number 5 EX-10.17B 19 BENEFIT RESTORATION PLAN 1 EXHIBIT 10.17(b) FIRST AMENDMENT TO THE RYDER SYSTEM BENEFIT RESTORATION PLAN WHEREAS, with approval of its Board of Directors, Ryder System, Inc. and its subsidiaries (the "Company") previously adopted the Ryder System Benefit Restoration Plan ("Plan") effective as of January 1, 1985; and WHEREAS, the Company desires to amend the Plan to provide certain benefits in the event of a Change of Control (as that term is defined in the Ryder System, Inc. Retirement Plan); and WHEREAS, the Company has been authorized by the Compensation Committee of its Board of Directors on December 16, 1988 to make such amendments; NOW, THEREFORE, in consideration of the premises herein contained, the Plan shall be amended to read as follows: I. Section 1.03 is amended to read as follows: "Code" - The Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder. II. The following new Article VI is added to the Plan: ARTICLE VI Change of Control Provisions 6.01 Vesting - in the event of a Change of Control, any Participant who would be eligible for benefits under the Plan if his employment had terminated as of the date of the Change of Control, except for the fact that the Participant was not yet vested in such benefits under the terms of the vesting schedule applicable to the qualified plan in which he is a Participant, shall be deemed to be immediately 100% vested in such benefits. 2 6.02 Benefits Payable in the Event of Change of Control - In the event of such Change of Control, the eligible Participant shall be entitled to receive an immediate cash payment equal to the actuarial value of monthly benefits otherwise payable from this Plan computed under the assumption that the Participant's employment terminated as of the date of Change of Control. The amount of such cash payment shall be determined in accordance with the following provisions: (a) The monthly benefit to which the Participant would have been entitled at his normal retirement date and at each early retirement date will be computed in accordance with the terms of his or her plan, where such amount shall be computed without regard to limitations under Section 415 of the Code or any other Code or federal law requirement or Canadian federal law requirement. For this purpose, each Participant will be deemed to have met the applicable requirements to be eligible for the maximum early retirement benefit that could be payable under the terms of the qualified plan in which he or she participates. (b) The amount of benefit payable under the qualified retirement plan in which the individual participates will be computed at each applicable early and normal retirement age. (c) After subtracting the amount in (b) above from the amount determined in (a) above at each applicable early or normal retirement age, a lump sum cash payment amount shall be determined by applying the Pension Benefit Guaranty Corporation (PBGC) annuity rates, in effect as of January 1 of the year that includes the date of the Change of Control to the resulting benefit payable at each of the retirement ages. The result which produces the largest lump sum amount shall be the cash amount payable under this Plan. 6.03 Adjustment to Payment to Cover Participant's Tax Liability - In addition to the cash payment determined under 6.02 above, an additional amount shall be payable to the Participant such that the total cash payment amount to the Participant shall be equal to the amount that would (after adjusting for the assumed amount of federal income tax applicable to the total cash payment) result in a net cash after-tax amount to the Participant equal to the cash payment amount determined in 6.02 above. 3 6.04 No Duplication of Benefits - In the event these Change of Control provisions become applicable, any future benefits payable under this Plan to the Participant shall be actuarially adjusted to reflect the benefits paid under the provisions of this Article VI. The purpose of this Section 6.04 is to avoid the duplication of benefit payments on behalf of a Participant. III. The remaining provisions of the Plan shall remain in full force and effect. IN WITNESS WHEREOF, the Company has caused this First Amendment to be signed by its duly appointed officers and its corporate seal to be hereunto affixed as of the day and year above written. By: /s/ Gail M. McDonald ------------------------------------- Gail M. McDonald Title: Senior Vice President Human Resources ------------------------------------- ATTEST: By: /s/ Fred Ray Stuever ----------------------------- Fred Ray Stuever Title: Assistant Secretary ----------------------------- (SEAL) EX-10.18 20 SEVERANCE AGREEMENT - C.R. CAMPBELL 1 EXHIBIT 10.18 RYDER SYSTEM, INC. 3600 NW 82 Avenue Miami, Florida 33166 RYDER (LOGO) MEMORANDUM November 10, 1994 TO: C. Robert Campbell FROM: M. Anthony Burns RE: Release Agreement In accordance with the Older Workers Benefit Protection Act, I am required to inform you of the following regarding your execution of the attached Release Agreement, Amendment and letter of resignation (collectively, the "Release Agreement"). 1. You should consult with an attorney before signing the Release Agreement. 2. You will have twenty-one days to execute the Release Agreement. If you have not executed the Release Agreement by such date, it will automatically be declared null and void and revoked. 3. After you have executed the Release Agreement, you have seven (7) calendar days to revoke your acceptance of it. If you revoke the Release Agreement within the seven (7) calendar days, it is null and void. 4. If you do not revoke your execution of the Release Agreement within the seven (7) calendar days, it will become effective and you and Ryder will be subject to the terms of your Amended and Restated Severance Agreement dated as of February 24, 1989, as amended by the Amendment. Please acknowledge below your receipt of this document as well as the Release Agreement and that you have read and understand this page of conditions. Acknowledged: ------------------------- C. Robert Campbell ------------------------- Date Attachment 2 Amendment to the Amended and Restated Severance Agreement between RYDER SYSTEM, INC. and C. R. CAMPBELL dated February 24, l989 THIS AMENDMENT made as of the 10th day of November, 1994 by and between RYDER SYSTEM, INC., a Florida corporation (the "Corporation"), and C. R. CAMPBELL (the "Executive"). WITNESSETH: WHEREAS, the Corporation and the Executive have entered into an Amended and Restated Severance Agreement dated as of February 24, 1989, including Exhibits A and B thereto (the "Severance Agreement"), providing for the Corporation's payment of severance benefits to the Executive if the Executive's employment with the Corporation or its subsidiaries or affiliates terminates prior to a Change of Control (as defined in Section 2 of the Severance Agreement); and WHEREAS, the Corporation and the Executive now desire to amend the Severance Agreement as set forth herein; NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Corporation and the Executive have agreed and do hereby agree as follows: 1. Section 3(c) is deleted in its entirety and the following new Section 3(c) is inserted in lieu thereof: "(c) Notice of Termination. The Executive agrees that as of November 1, 1994 he has received adequate Notice of Termination and that his Date of Termination is as specified in Section 3(d)." 2. Section 3(d) is deleted in its entirety and the following new Section 3(d) is inserted in lieu thereof: "(d) Date of Termination. Date of Termination means the date determined by the Corporation's Chief Executive Officer, but in no event shall it be later than forty-five (45) days following the date the Executive's successor begins employment with the Corporation as the Corporation's senior human resources officer. Until the Date of Termination, the Executive agrees that he shall continue to provide expertise and guidance in the business, affairs, and management of the Corporation, specifically including but not limited to human resources expertise and guidance, as requested by the Chief Executive Officer of the Corporation, or his designee, and to conduct himself in strict compliance and consistent with the Corporation's management principles and the highest overall ethical standards. 3 If the Executive obtains employment with another company or becomes self employed prior to the Date of Termination as defined in the preceding paragraph, the Executive shall immediately give notice of that event to the Corporation and the Date of Termination shall be the date of such notice." 3. Section 4(a)(iii)(I) is deleted in its entirety and the following new Section 4(a)(iii)(I) is inserted in lieu thereof: "(I) Cash Entitlement. The Corporation shall pay to the Executive the aggregate of the amounts determined pursuant to clauses a through d below: a. Unpaid Salary and Vacation. The Executive's base salary and unused vacation entitlement through the Executive's Date of Termination at the rate in effect at the time the Notice of Termination was given. b. Salary Multiple. A continuation of the Executive's annual base salary at the rate in effect at the time the Notice of Termination was given ("Annual Base Salary") for the Executive's applicable Severance Period (as defined in Section 3(e)). c. 1994 Bonus and Bonus Multiple. Subject to the approval of the Corporation's Board of Directors, a bonus pursuant to the Corporation's 1994 incentive compensation plan if the Executive has not been terminated by the Corporation for Cause prior to December 31, 1994. In addition, a bonus multiple in an amount equal to the product of (i) the Executive's Annual Base salary multiplied by (ii) the stated maximum bonus opportunity percentage available to the Executive under the respective incentive compensation plan immediately preceding the Notice of Termination multiplied by (iii) the "Executive's Three Year Average Bonus Percentage" (as defined below) (the total hereinafter referred to as the "Bonus Opportunity"). The "Executive's Three Year Average Bonus Percentage" is the sum of the bonus percentages paid to the Executive divided by the stated maximum bonus opportunity percentages available to the Executive rounded to one decimal place (e.g., 86.3%) for each of the three (3) fiscal years 1992, 1993, and 1994 (bonuses paid in February 1993, 1994, and 1995)(or for fiscal years 1991, 1992, and 1993 if the Executive does not receive a bonus for fiscal year 1994), divided by three (3). 2 4 CALCULATION EXAMPLE OF EXECUTIVE'S THREE YEAR AVERAGE BONUS PERCENTAGE
(1) (2) Stated (1)/(2) Bonus Maximum Bonus Percentage Bonus Opportunity Year Paid Opportunity Percent ---- ---------- ----------- ----------- 1992 55.1% 60.0% 91.8% 1993 71.8% 80.0% 89.8% 1994 102.0% 100.0% 102.0% ------ Sum 283.6% Executive's Three Year Average Bonus Percentage (Sum divided by 3) 94.5%
d. Tenure - Related Bonus. An amount equal to the Bonus Opportunity determined in clause c above. The Executive agrees that he shall not be eligible for or entitled to any other incentive compensation award, including any pro rata incentive compensation award, pursuant to the Corporation's and/or its subsidiaries' or affiliates' incentive compensation plans. The Executive's agreement to this provision is a material consideration for the Corporation's executing this Agreement. The Corporation shall pay to the Executive the amounts determined in clauses a through d above as follows: Clause a: The Executive's base salary shall be paid in equal semi-monthly installments on the fifteenth and last day of each month through the Executive's Date of Termination. The Executive's unused vacation shall be paid in a lump sum no later than the next normal pay period for the Executive following the Executive's Date of Termination, unless otherwise required by law. Clause b: In equal semi-monthly installments on the fifteenth and last day of each month during the Severance Period. Clause c: The Executive's 1994 bonus shall be paid no later than March 1, 1995. The Executive's bonus multiple shall be paid no later than March 1, 1996. Clauses d: In a lump sum within five (5) business days after the Executive's Date of Termination or March 1, 1995, whichever occurs later." 3 5 4. The third sentence of Section 4(a)(iii)(II) is deleted in its entirety and the following two (2) new sentences are inserted in lieu thereof: "The medical and dental plan benefits, to the extent applicable, will be provided in accordance with the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), except that the Corporation shall pay the COBRA premiums for the standard medical and dental plan benefits during the Benefits Continuation Period minus the Executive's contributory obligation determined as if the Executive were still an officer of the Corporation. The Executive agrees that he will pay all required employee contributions at the then current officer rate and be subject to the terms of the plans, as they may be amended from time to time, in order to be eligible for coverage under this Section." 5. The first sentence of Section 4(a)(iii)(III)c is deleted in its entirety and the following new sentence is inserted in lieu thereof: "Within five (5) business days following the Executive's Date of Termination, the Corporation shall transfer to the Executive the car telephone assigned to the Executive at the time the Notice of Termination was given and the Executive shall be solely responsible for all liabilities associated with the telephone thereafter." 6. Section 4(a)(iii)(IV) is deleted in its entirety and the following new Section 4(a)(iii)(IV) is inserted in lieu thereof: "(IV) Outplacement, Office Space, Secretarial Support and References. Until the end of the Severance Period or until the Executive secures employment with another employer or becomes self-employed, whichever occurs first, the Corporation shall provide the Executive with professional outplacement services of the Corporation's choice and shall reimburse the Executive for documented incidental outplacement expenses directly related to job search such as resume mailing, interviewing trips, professional services fees, including those for Barry Cohen, and clerical support, subject to a maximum cost of $30,000. The Executive shall not be entitled to receive cash in lieu of the professional outplacement services provided by the Corporation. In addition, until the earliest to occur of the following: the end of the Severance Period, twelve (12) months following the Executive's Date of Termination, or the date the Executive secures employment with another employer or becomes self-employed, the Corporation shall provide the Executive with appropriate office space, equipment and secretarial support at a location to be determined by the Corporation. If possible, the Corporation will attempt to find an appropriate office at the Corporation's headquarters building, but will not be obligated to do so. The Corporation's Chief Executive Officer shall provide a favorable reference for the Executive to any prospective employer who shall contact such individual seeking a reference for the Executive. The Corporation agrees that the Executive may market himself as Executive Vice President - Development reporting to the 4 6 Chief Executive Officer through the end of the Severance Period or until the Executive secures employment with another employer or becomes self-employed, whichever occurs first, and that he will be reported in the Corporation's Annual Report, Form 10-K and Proxy Statements in accordance with applicable rules and regulations." 7. The following new sentence is added to the current end of Section 4(a)(iii)(V): "In addition, the Corporation agrees that the Executive will have continued use of the Corporation's Doral and Deering Bay Country Club memberships during calendar year 1995." 8. Section 5(b)(II) is deleted in its entirety and the following new Section 5(b)(II) is inserted in lieu thereof: "(II) Release. As a condition to receiving any payments or benefits pursuant to this Agreement, the Executive shall execute (i) a release agreement in the form attached as Exhibit A upon his execution of the Amendment to this Agreement dated November 10, 1994 and again upon his Date of Termination, and (ii) a resignation letter in the form attached as Exhibit B upon his Date of Termination." 9. The remaining provisions of the Severance Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment to the Amended and Restated Severance Agreement as of the day and year first above written. ----------------------------- ------------------------------ Witness C. R. CAMPBELL ----------------------------- ------------------------------ Witness Social Security Number ATTEST: RYDER SYSTEM, INC. (the "Corporation") ----------------------------- By: -------------------------- Assistant Secretary Its: -------------------------- 5 7 Exhibit A RELEASE AGREEMENT FOR AND IN CONSIDERATION OF THE PAYMENT TO ME OF THE SEVERANCE BENEFITS PURSUANT TO THE AMENDED AND RESTATED SEVERANCE AGREEMENT BETWEEN RYDER SYSTEM, INC. ("RSI") AND ME DATED FEBRUARY 24, 1989, AS AMENDED ON NOVEMBER 10, 1994 (THE "SEVERANCE AGREEMENT"), I, C. ROBERT CAMPBELL, ON BEHALF OF MYSELF, MY HEIRS, SUCCESSORS AND ASSIGNS (COLLECTIVELY "I" OR "ME"), HEREBY RELEASE AND FOREVER DISCHARGE RSI AND ALL OF ITS SUBSIDIARIES AND AFFILIATES, THEIR CURRENT AND FORMER AGENTS, EMPLOYEES, OFFICERS, DIRECTORS, SUCCESSORS AND ASSIGNS (COLLECTIVELY THE "CORPORATION"), FROM ANY AND ALL CLAIMS, DEMANDS, ACTIONS, AND CAUSES OF ACTION, AND ALL LIABILITY WHATSOEVER, WHETHER KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED, FIXED OR CONTINGENT, WHICH I HAVE OR MAY HAVE AGAINST THE CORPORATION AS A RESULT OF MY EMPLOYMENT BY AND SUBSEQUENT TERMINATION AS AN EMPLOYEE OF THE CORPORATION, UP TO THE DATE OF THIS AGREEMENT. THIS INCLUDES BUT IS NOT LIMITED TO CLAIMS AT LAW OR EQUITY OR SOUNDING IN CONTRACT (EXPRESS OR IMPLIED) OR TORT ARISING UNDER FEDERAL, STATE, OR LOCAL LAWS PROHIBITING AGE, SEX, RACE, DISABILITY, VETERAN OR ANY OTHER FORMS OF DISCRIMINATION. THIS FURTHER INCLUDES ANY AND ALL CLAIMS ARISING UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT, THE AMERICANS WITH DISABILITIES ACT OF 1990, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, AND THE EMPLOYEE RETIREMENT INCOME SECURITY ACT (ERISA), AS AMENDED, OR CLAIMS GROWING OUT OF ANY LEGAL RESTRICTIONS ON THE CORPORATION'S RIGHT TO TERMINATE ITS EMPLOYEES. This Agreement does not release the Corporation from any of its current, future or ongoing obligations under the Severance Agreement, specifically including but not limited to cash payments and benefits due me. I understand and agree that this Agreement and the Severance Agreement shall not in any way be construed as an admission by the Corporation of any unlawful or wrongful acts whatsoever against me or any other person, and the Corporation specifically disclaims any liability to or wrongful acts against me or any other person. I agree that the terms and provisions of this Agreement and the Severance Agreement, as well as any and all incidents leading to or resulting from this Agreement and the Severance Agreement, are confidential and that I may not discuss them with anyone without the prior written consent of RSI's or its successor's Chief Executive Officer, except as required by law; provided, however, that I agree to immediately give RSI or its successor notice of any request to discuss this Agreement or the Severance Agreement and to provide RSI or its successor with the opportunity to contest such request prior to my response. 6 8 Additionally, I agree that I shall not make any remarks disparaging the conduct or character of the Corporation and that I will cooperate with the Corporation, at no extra cost, in any litigation or administrative proceedings involving any matters with which I was involved during my employment with the Corporation. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida, without reference to principles of conflict of laws. This Agreement may not be amended or modified otherwise than by a written agreement executed by RSI and me or our respective successors and legal representatives. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. I UNDERSTAND AND ACKNOWLEDGE THAT I HAVE SEVEN (7) CALENDAR DAYS FOLLOWING MY EXECUTION OF THIS RELEASE AGREEMENT TO REVOKE MY ACCEPTANCE OF THIS RELEASE AGREEMENT AND THAT THIS RELEASE AGREEMENT SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS EXPIRED. I CERTIFY THAT I HAVE FULLY READ, HAVE RECEIVED AN EXPLANATION OF, HAVE NEGOTIATED AND COMPLETELY UNDERSTAND THE PROVISIONS OF THIS AGREEMENT, THAT I HAVE BEEN ADVISED BY RSI TO CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS AGREEMENT, THAT I HAVE BEEN GIVEN AT LEAST TWENTY-ONE (21) CALENDAR DAYS TO REVIEW AND CONSIDER THE PROVISIONS OF THIS AGREEMENT, AND THAT I AM SIGNING THIS AGREEMENT FREELY AND VOLUNTARILY, WITHOUT DURESS, COERCION OR UNDUE INFLUENCE. Dated this day of ,1994. ---------------------------- ----------------------------- Witness C. ROBERT CAMPBELL ---------------------------- ----------------------------- Witness Social Security Number 7 9 STATE OF FLORIDA ) ) ss: COUNTY OF DADE ) Before me personally appeared C. Robert Campbell, to me well known and known to me to be the person described in and who executed the foregoing instrument, and acknowledged to and before me that he executed said instrument for the purposes therein expressed. WITNESS my hand and official seal this day of ,1994. ------------------------------ Notary Public Commission Expires: (Seal) 8 10 Exhibit B Date TO THE BOARD OF DIRECTORS OF RYDER SYSTEM, INC. Gentlemen: Effective immediately, I hereby resign as an officer and/or director of Ryder System, Inc. and/or its subsidiaries and affiliates and, to the extent applicable, from all committees of which I am a member. Sincerely, C. Robert Campbell 9 EX-10.19 21 AGREEMENT WITH J.E. RIDDLE 1 EXHIBIT 10.19 RYDER SYSTEM, INC. 3600 NW 82 Avenue Miami, Florida 33166 RYDER (LOGO) April 9, 1993 Mr. James Ernest Riddle 44 Drayton Gardens London SW 10-9SB, England Dear Ernie: As we discussed, the purpose of this letter is to set out the terms of your employment as Senior Vice President-Marketing & Sales, Commercial Leasing & Services Division, and to modify the terms of the Company's Change of Control Severance Agreement and Severance Agreement, each dated December 14, 1992 (collectively, the "Severance Agreements"), which are included herein for your signature. As such, this letter supercedes your offer of employment letter dated October 26, 1992. As agreed, this position has an annual base salary of $260,000. Your payroll start date was December 14, 1992, at which time you were paid a $200,000 sign-on bonus. The incentive plan for this level of management (Level 16) currently provides for an annual bonus with a maximum potential of 100% of base salary. This bonus is based on individual and company performance according to the Ryder incentive compensation program applicable to the Division, and is paid in February of each year for the preceding year, subject to the approval of the Board of Directors each year. Notwithstanding the above, for the years 1993 and 1994 only, you will receive a minimum combined base salary and bonus guarantee of $400,000 for each year, so long as you are an employee in good standing at the time of payment. In addition, for the years 1993 and 1994, you will receive stock options for 15,000 shares for each year, so long as you are an employee in good standing at the time of grant. Thereafter, as with any other executive, your eligibility for stock options will be subject to the administration of the stock option plan by the Board of Directors. This position currently includes the following perquisites: use of a company car (including fuel, maintenance and insurance); use of the company's membership in the Doral Country Club; a cash perquisite allowance of $5,000 per year, grossed up for taxes; tax preparation and financial planning allowance of up to $6,000 per year; and a 2 Mr. James Ernest Riddle April 9, 1993 Page 2 split dollar life insurance policy (retirement supplement) of $50,000. The perquisites offered to officers of the Division are subject to change at the discretion of the Board of Directors. You are eligible for Ryder's transferred employee relocation package which includes a third party buy-out program for your residence and temporary living expenses for up to four months from your starting date. You are also entitled to those benefits currently offered to all Ryder employees, which are summarized in the enclosed package. In addition, you will be eligible for a pension in accordance with the provisions of the Ryder System, Inc. Retirement Plan and retiree medical coverage at age 55 with five years of service. In recognition of the reduced pension you incurred upon leaving Xerox before age 55, Ryder will contribute the sum of $100,000 per year for twelve years to a retirement supplement fund for your benefit according to the attached schedule. This fund will not accrue interest, however, the fund will immediately vest for the cumulative balance should you leave the Company voluntarily, with an accelerated fund balance should you leave the Company involuntarily. For example, if you voluntarily terminate your employment after two years, according to the attached schedule you will be entitled to the $200,000 balance contributed to the fund. If you are involuntarily terminated after two years, you will be entitled to a $600,000 fund balance, as illustrated. In either event, the Company would be relieved of its obligations to make any further contributions to the fund. As you know, the company's Severance Agreements provide for severance benefits in the case of an involuntary termination. These severance benefits are related to the management level of the executive and generally increase in value as the executive's management level increases. In consideration of the Company's accelerated contribution to your retirement supplement fund in the case of an involuntary termination, you agree that, in the event you are promoted above your current management level (Mgmt. Level 16), you will receive either (i) any increase in severance benefits accruing to your new management level pursuant to a Severance Agreement or (ii) your "involuntary separation benefit", as illustrated on the attached schedule, whichever is greater. In other words, in the event your "involuntary separation benefit" is greater than the value of the increase in severance benefits pursuant to a Severance Agreement, you will receive the accelerated fund balance in the retirement supplement fund and your severance benefits pursuant to a Severance Agreement will be limited to the benefits of your current management level. 3 Mr. James Ernest Riddle April 9, 1993 Page 3 In the event the increase in severance benefits pursuant to a Severance Agreement is greater than your "involuntary separation benefit", you will receive the severance benefits pursuant to a Severance Agreement according to your then-current management level and your fund balance in the retirement supplement fund will be determined without acceleration. In order to amend the Severance Agreements to give effect to the foregoing, you agree that you will not be entitled to the Mgmt. Level 19 or above Severance Period contained in Section 3(f) of the Change of Control Severance Agreement, the Mgmt. Level 19 or above salary multiple described in Section 4(a)(iii)(I)(b) of the Change of Control Severance Agreement or the Mgmt. Level 19 or above Severance Period contained in Section 3(e) of the Severance Agreement, even though your management level may be Level 19 or above at the time these determinations are made, it being understood that you would be limited to the benefits of Mgmt. Level 16. Provided, that, in the event your management level is Level 19 or above at the time any of these determinations is made and the increase in benefits that would accrue to you as a Level 19 would be greater than your "involuntary separation benefit", you shall be entitled to the Level 19 benefits and the fund balance in the retirement supplement fund will be determined without acceleration, i.e., as if your termination was voluntary. You also agree that you will not be entitled to the Bonus Multiple contained in Section 4(a)(iii)(I)(c) of the Severance Agreements even though your management level may be Level 17 or above at the time a determination is made, provided, however, that if the Bonus Multiple would be greater than your "involuntary separation benefit", you shall be entitled to the Bonus Multiple and the retirement supplement fund will be determined without acceleration, i.e., as if your termination was voluntary. As further consideration for your agreement to these changes, the Company agrees to waive the twelve-month employment provision of Section 4(c) of the Severance Agreement so that you will be immediately eligible for the benefits contained in the Severance Agreement. Although this letter describes matters relating to your employment by Ryder, it is expressly understood and agreed that this letter is not and is not meant to be construed as a contract of employment. 4 Mr. James Ernest Riddle April 9, 1993 Page 4 If this letter accurately reflects the matters we have discussed, including the changes to the Severance Agreements, please indicate your agreement by signing the enclosed copy of this letter and returning it to me together with two executed copies of each of the Severance Agreements, retaining one copy of each Agreement for your files. Sincerely, ---------------------- C. Robert Campbell Executive Vice President - Human Resources and Administration Accepted and Agreed ----------------------- James Ernest Riddle CRC/eh Enclosures 5 J. E. RIDDLE RETIREMENT SUPPLEMENT FUND $(000)s
A B B - A RETIREMENT RETIREMENT SUPPLEMENT SUPPLEMENT BALANCE BALANCE INVOLUNTARY VOLUNTARY INVOLUNTARY SEPARATION YEAR TERMINATION TERMINATION BENEFIT ---- ------------ ----------- ------- 1993 100 400 300 1994 200 600 400 1995 300 700 400 1996 400 800 400 1997 500 900 400 1998 600 1,000 400 1999 700 1,000 300 2000 800 1,000 200 2001 900 1,000 100 2002 1,000 1,000 - 2003 1,100 1,100 - 2004 1,200 1,200 -
5 EX-11.1 22 COMPUTATION OF PER SHARE EARNINGS 1 EXHIBIT 11.1 Statement re: Computation of Per Share Earnings Primary earnings per share are computed by dividing earnings available to common shares by the weighted average number of common and common equivalent shares outstanding during the period. For purposes of computing primary earnings per share, common equivalent shares include the average number of common shares issuable upon the exercise of all employee stock options and awards and outstanding employee stock subscriptions, if dilutive, less the common shares which could have been purchased at the average market price during the period, with the assumed proceeds, including "windfall" tax benefits, from the exercise of the options, awards and subscriptions. Fully-diluted earnings per share are computed by dividing the sum of earnings available to common shares and dividends on preferred shares, if any, that are potentially dilutive by the weighted average number of common shares, common equivalent shares and common shares assumed converted from potentially dilutive securities outstanding during the period. For purposes of computing fully-diluted earnings per share, common equivalent shares are computed on a basis comparable to that for primary earnings per share, except that common shares are assumed to be purchased at the market price at the end of the period, if dilutive. Common shares assumed converted from potentially dilutive securities in the twelve-month period ended December 31, 1992, include common shares that would have been issuable upon the conversion of the Registrant's Fixed Rate Auction Preferred Stock, Series A and B (collectively the "FRAPS"), at the applicable rate which would have resulted in the greatest potential dilution. For the twelve-month period ended December 31, 1992, the FRAPS were antidilutive. In the second quarter of 1993 the Company redeemed all of the FRAPS. The FRAPS have therefore not been considered potentially dilutive securities in the computation of fully-diluted earnings per share for the twelve-month periods ended December 31, 1993 and 1994. EX-13.1 23 1994 ANNUAL REPORT 1 EXHIBIT 13.1 [PHOTO] [RYDER Logo] 1994 ANNUAL REPORT 2 Ryder System is an international company doing business in the Americas and Western Europe, whose vision is to serve its customers with the best value in logistics and transportation solutions, around the world or around the corner. CONTENTS Letter to Shareholders 3 Understanding the Need 7 Responding to the Need 13 Introduction to Financial Section 25 Financial Review 26 Selected Finanical and Operational Data 32 Report of Management and Independent Auditors' Report 33 Consolidated Financial Statements 34 Notes to Consolidated Financial Statements 37 Supplemental Financial Data 47 Glossary of Industry Terms 50 Board of Directors and Corporate Management 54 Operating Management 55 Corporate Information 56 Corporate Responsibility 57 3 FINANCIAL HIGHLIGHTS Ryder System, Inc.
------------------------------------------------------------------------------------------------------------ (Dollars in thousands, except per share amounts) 1994 1993 Change ------------------------------------------------------------------------------------------------------------ OPERATING DATA: Revenue $ 4,685,603 4,217,030 +11% Earnings from continuing operations $ 153,529 114,722 +34% Net earnings (loss) (a) $ 153,529 (61,424) N/A ------------------------------------------------------------------------------------------------------------ FINANCIAL DATA: Total assets $ 5,014,473 4,258,388 +18% Total shareholders' equity $ 1,129,024 990,181 +14% Return on average common equity (b) 14.5% 10.2% +4.3 pts. Debt to equity 169% 155% +14 pts. Debt to tangible equity 227% 202% +25 pts. Total capital spending $ 1,914,736 1,237,521 +55% ------------------------------------------------------------------------------------------------------------ PER COMMON SHARE DATA: Earnings from continuing operations $ 1.95 1.43 +36% Net earnings (loss) (a) $ 1.95 (0.84) N/A Book value $ 14.33 12.81 +12% Cash dividends $ 0.60 0.60 - Market price (high-low) (c) $ 28-19 7/8 26 5/8-24 3/4 ------------------------------------------------------------------------------------------------------------ OTHER DATA: Common shareholders of record 19,605 19,025 +3% Common shares outstanding 78,760,742 77,294,484 +2% Number of vehicles 188,831 168,278 +12% Number of employees 43,095 37,949 +14% ============================================================================================================
(a) Net loss for 1993 includes an after tax charge of $25 million for the cumulative effect of a change in accounting and an after tax charge of $169 million related to the discontinued aviation services subsidiaries. See "Notes to Consolidated Financial Statements" for additional discussion. (b) Excludes the cumulative effect of a change in accounting and special charges related to discontinued operations. (c) On December 7, 1993, the company completed the spin off of its aviation services subsidiaries by distributing to common stockholders one share of Aviall, Inc. common stock valued at $16.25 for each four Ryder System, Inc. common shares owned. The high and low presented for 1993 were the values of the company's common stock after the spin off. The high and low for 1993 prior to the spin off were 33 1/2 and 26 1/4, respectively.
LINES OF BUSINESS ---------------------------------------------------------------------------------------------------------- (In thousands) 1994 1993 1992 1991 1990 ---------------------------------------------------------------------------------------------------------- REVENUE: Vehicle Leasing & Services $4,057,735 3,596,803 3,384,952 3,229,437 3,285,742 Automotive Carriers 645,402 634,634 651,216 645,051 688,971 Other - - - - 3,267 Intersegment (17,534) (14,407) (16,493) (23,154) (27,956) ---------------------------------------------------------------------------------------------------------- Total $4,685,603 4,217,030 4,019,675 3,851,334 3,950,024 ========================================================================================================== EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES: Vehicle Leasing & Services $ 234,258 204,370 135,291 52,511 79,711 Automotive Carriers 50,078 31,955 48,220 24,318 22,604 Other (23,817) (26,549) (17,966) (16,350) (3,625) ---------------------------------------------------------------------------------------------------------- Total $ 260,519 209,776 165,545 60,479 98,690 ==========================================================================================================
(Copyright 1995) Ryder System, Inc. 4 PERFORMANCE HIGHLIGHTS Earnings per share from Revenue (in millions) continuing operations [FIGURE 1] [FIGURE 3] 1990 - $3,950 1990 - $0.64 1991 - $3,851 1991 - $0.28 1992 - $4,020 1992 - $1.17 1993 - $4,217 1993 - $1.43 1994 - $4,686 1994 - $1.95 Expansion of contractual Earnings increased while business contributed to also making major the company's 11% revenue investments in logistics, growth during 1994. marketing and sales, and reengineering. Return on Average Full Service Lease Common Equity Customer Satisfaction Index [FIGURE 2] [FIGURE 4] 1990 - 5.0% 1990 - 81.0 1991 - 4.2% 1991 - 80.4 1992 - 8.1% 1992 - 82.6 1993 - 10.2% 1993 - 83.7 1994 - 14.5% 1994 - 84.5 Return on average common Customer satisfaction with equity approaches the com- the company's full service pany's 17% goal. truck leasing product con- tinues to climb. 2 5 LETTER TO SHAREHOLDERS [PHOTO] M. ANTHONY BURNS In terms of both revenue and earnings from continuing operations, 1994 was Ryder's strongest year ever. All of our business units contributed to the record-setting performance, and we are particularly pleased with the growth in our long-term, contractual businesses, which helps reduce our sensitivity to the inevitable peaks and valleys of the economy. STRONG FINANCIAL PERFORMANCE IN 1994 Revenue from continuing operations in 1994 was $4.7 billion, 11% greater than revenue of $4.2 billion in 1993 and the highest percentage increase in revenue since 1987. Earnings from continuing operations rose to $154 million, or $1.95 per share, an increase in earnings per share of 36%, compared with $115 million, or $1.43 per share, in 1993. It is important to note that we achieved this performance while continuing to make major investments in logistics, marketing and sales, and reengineering. In dedicated logistics, we enjoyed revenue growth in excess of 20%. The strong momentum of Ryder Dedicated Logistics was demonstrated by fourth quarter revenue growth of 33%, making the unit - for the first time - the company's second largest revenue generator. A 7% rise in revenue, with 9% growth in the fourth quarter, was recorded in full service truck leasing, still our largest business unit, with much of the increase coming from new customers. This bodes well for the future, because the bulk of this unit's growth has come historically from expanding business with existing customers. Net new sales of long-term, contractual business were excellent; in fact, sales of new full service truck leasing and dedicated logistics contracts exceeded previous highs. Ryder Plc, our United Kingdom subsidiary, experienced a 45% revenue increase in the fourth quarter of 1994, benefiting from continued growth in existing contractual business and several strategic acquisitions made during the year. Our return on equity in 1994 was 14.5%, moving us ever closer to our goal of a 17% return on equity in the next several years. Asset turnover was nearly 100%, and our capital spending reached $1.9 billion, the majority of which was invested in our long-term, contractual product lines. Our balance sheet is strong and our cash flow is solid. A REFINED VISION We refined our vision to reflect the exciting developments that are taking place within Ryder, our industry, and the markets we serve. We have also modified our organization to promote teamwork and ensure that our structure is aligned with our vision. Our vision is: Ryder will serve its customers with the best value in logistics and transportation solutions around the world or around the corner. Today, as never before, our customers expect excellent value from the solutions we offer, and we intend to deliver just that. Importantly, while increasing customer value is the key 3 6 to success in today's - and tomorrow's - marketplace, it is also central to building shareholder value. Our vision is reinforced by ever-increasing demands in the marketplace: - Reengineering efforts often lead companies to the conclusion that they should be focusing their efforts on their core competencies while outsourcing their non-core functions. - The speed with which companies deliver their products has taken on new significance as reduced cycle times yield competitive advantage. - Controlling costs, particularly in the area of inventory investment, is critical. - The battle for market share is being fought globally. This creates huge logistics challenges for companies as they develop efficient strategies to distribute their products throughout their markets. - More companies now see the need for formal logistics strategies. To fulfill our vision and capitalize on the significant opportunities arising from the marketplace needs, we are leveraging our core competencies of logistics management and asset management by focusing on three areas of emphasis. First, we will stress the value of the solutions we provide. Second, we will seek to increase the volume of business being done within each of our business units. Finally, we will continue to lower our cost structure. [PHOTO] We are using the power of information technology to add value, allowing our customers to replace inventory with information. ADDING VALUE Our value-added services help drive down our customers' costs, while allowing our customers to better serve their own customers. We continue to introduce new, high quality products and services to the market; in 1994, we expanded our services in transportation management (carrier selection) and inventory deployment to help fill out our integrated logistics capabilities. Acquisition and alliance activities are a key part of our strategy in order to compress the time required to introduce these services. We are also taking our value-added services into new industries. Just-in-time delivery, for example, a service we have been providing primarily to the automotive industry, is one that we are now expanding to serve such other industries as electronics and appliances. In addition, we are using the power of information technology to add value. Flow-through distribution services, enabled by technology, are allowing our customers to replace inventory with information. Introducing technology into our shop management services helps our customers better manage their transportation activities through improved management reporting. Technology is also a key enabler for our expanded services in the area of carrier management. We have added to our sales force and also improved our training and support efforts. We believe our sales force is the best prepared in the industry when it comes to helping our customers solve complex logistics and transportation issues, and we are continuing to build our expertise in the area of logistics system design. Our market coverage strategy is built around teams consisting of sales, operations and logistics managers. 4 7 [PHOTO] We have added to our sales force and also improved our training and support efforts. We believe our sales force is the best prepared in the industry. [PHOTO] Increased growth will come through the development of new markets as well as expanding our penetration in existing markets. These teams are organized, and performance-compensated, around the customer in order to speed decision making and pursue continuous customer improvement. We have implemented new pricing strategies and tools in order to better find and price value throughout the marketplace. INCREASING VOLUME We need to increase our volume in order to grow. Our robust volume growth in 1994 confirms the value we are providing to our customers. Ryder's full service truck leasing and dedicated logistics businesses added approximately 2,500 new customers in 1994, and expanding our business with existing customers also generated a significant portion of our revenue growth. Our fleet grew 12% during the year to a total of almost 190,000 vehicles. Increased growth will come through the development of new markets as well as expanding our penetration in existing markets. Telecommunications is a good example of a new market where significant progress has been made, and we are continuing to improve our penetration of the automotive, bakery, and beverage industries. We study the needs of the industries we target, develop new information systems and equipment to meet those needs, and hire industry specialists who understand the "ins and outs" of the business and can speak to customers in their own language. Our logistics and full service truck leasing businesses are also growing outside the U.S. In the United Kingdom, we made several acquisitions in 1994 which will provide a solid base from which we can hasten the growth of our distribution business, and we have strengthened our operations in Germany and opened new operations in Mexico. We will serve our existing customers as they expand in these markets, and, of course, seek to provide our services to companies that are already there. As we expand in Western Europe and the Americas, we will use the experience and expertise gained in Germany and Mexico to help us. ENHANCING SERVICES WHILE LOWERING COSTS The key to increasing customer value and lowering our cost structure lies in reengineering, where we are using technology and process changes to drive efficiencies. Information technology will help us take costs out. Building and changing processes provides the discipline to make sure unnecessary costs don't creep back in. Since we began our reengineering efforts, we have invested approximately $85 million in three crucial areas: - Marketing and sales, providing innovation in account management, knowledge-based marketing, and improved purchasing and asset management processes; - Vehicle maintenance, automating the shop environment and equipping our service technicians with state-of-the-art electronic diagnostic tools; and 5 8 [PHOTO] We are automating our maintenance shops and equipping our service technicians with state-of- the-art electronic tools. - Administration and finance, including a redesign of our invoice and billing processes to make them more customer friendly. We are sensitive to the impact that reengineering will have on the way we do business, and we are investing in change management processes to enhance the success of program implementation. The success of our ongoing reengineering initiatives was recognized in early 1995 when the consulting firm Arthur D. Little announced that Ryder was included in Little's 1995 "Best of the Best" list. Little's annual Best of the Best program recognizes 20 companies that have developed and implemented outstanding standards in six critical business processes: customer management, process management, manufacturing management, product and technology management, supply chain management and environmental management. Our standing as the leader in third-party logistics was similarly recognized during 1994, in a survey conducted by Northeastern University and Mercer Management Consulting among CEOs of companies that identify themselves as offering logistics services. According to that survey, Ryder is seen at the top of the list of "today's winners" and further out in front "three years from now." BOARD OF DIRECTORS Before closing this letter, I want to take a moment to acknowledge the return of Paul J. Rizzo, retired vice chairman of International Business Machines Corporation, to our board of directors, effective January 1, 1995. It is a pleasure to have Mr. Rizzo back with us. A LOOK AHEAD I have seen this company and the markets we serve change in ways that would have been impossible to predict just a few years ago. Today, we are transforming Ryder into a world class, integrated logistics company capable of delivering a broad base of customized, yet flexible products and services that can manage all, or part, of a customer's supply chain. We are on track to achieve our vision as we continue to drive toward a culture that is market-driven and fosters teamwork, collaboration and learning. I thank our employees for their limitless talent and devotion, our customers for giving us the opportunity to serve them, and our shareholders for your continued support. M. Anthony Burns Chairman, President and Chief Executive Officer February 17, 1995 6 9 [PHOTO] UNDERSTANDING THE NEED THE ROLE OF LOGISTICS AND TRANSPORTATION IN TODAY'S GLOBAL ECONOMY Call it distribution or logistics or supply-chain management. By whatever name, it is the sinuous, gritty, and cumbersome process by which companies move materials, parts, and products to customers.... Hard-pressed to knock out competitors on quality or price, companies are trying to gain an edge through their ability to deliver the right stuff in the right amount at the right time. FORTUNE, November 28, 1994 7 10 EFFICIENCIES IN LOGISTICS AND TRANSPORTATION HAVE BECOME JUST AS IMPORTANT TO STRATEGIC PLANNING AS IMPROVEMENTS IN MANUFACTURING AND MARKETING. Logistics and transportation services form the cornerstone of a steady shift in the way business is conducted in the global marketplace of the 1990s. Once regarded simply as overhead, these disciplines are now recognized as strategic and are used by sophisticated companies as a competitive weapon to improve customer service, control costs, reduce cycle time and increase margins. Producing and marketing world class products used to be enough to guarantee success. That is no longer true. Successful companies have found that speed - delivering the right products in the right quantity to the right place at the right time - at the right cost - is the key differentiator today. Nearly 80% of more than 1,300 corporate executives surveyed by Ryder agree. They said that product delivery is just as important as a product's quality. In addition, their customers have come to expect high quality at a reasonable price. Therefore, finding efficiencies in logistics and transportation has become just as important to their strategic planning as improvements in manufacturing and marketing. This trend has catapulted interest in logistics and transportation from the loading dock to the corporate boardroom. A recent survey by KPMG Peat Marwick LLP found that the logistics function now reports to the president or chief executive officer in 29% of the 309 companies surveyed. The top two concerns of executives in the KPMG study were cost control and inventory JUST IN TIME 300 TIMES [PHOTO] [PHOTO] [PHOTO] [PHOTO] A DAY, Thursday, 9 a.m.: A Workers load The drivers check Spring Hill,Tennesee, 365 DAYS Ryder truck arrives speedometers and the on-board com- Friday, 3 a.m.: The A YEAR at a Saturn supplier odometers packed in puter, which tells truck parks its trailer in Winchester, reusable bins. them where they at a computer- Virginia. should go, how to assigned spot. get there, and how long it should take.
8 11 management. To achieve gains in both, more and more companies are focusing on transportation and logistics. ON A BROAD SCALE AMERICAN COMPANIES ARE TAPPING INTO A TREMENDOUS RESOURCE - CASH PREVIOUSLY TIED UP IN EXCESS INVENTORY - BY MORE EFFCIENTLY MANAGING THE IN-BOUND FLOW OF MATERIAL. THE BACKBONE OF COMMERCE As the amount spent on global freight and passenger transportation continues to rise, productivity is being boosted also as both companies and their transportation partners become more sophisticated. The Eno Transportation Foundation, Inc., which tracks vital U.S. freight and passenger statistics, estimates that freight costs increased to over $390 billion in 1993 (truck freight expenditures represent almost 80 of this figure). Yet distribution costs as a percentage of gross domestic product declined by 33% from 1981 to 1992, according to Cass Information Systems. "Taken together," writes Keith G. Biondo, publisher of Inbound Logistics magazine, "these two facts show that on a broad scale American companies are tapping into a tremendous resource - cash previously tied up in excess inventory - by more efficiently managing the in-bound flow of material. Companies are using top carriers and premium services to do this for them, or to help them do it themselves." Dr. Douglas M. Lambert, the Prime F. Osborn III Professor of Transportation and Logistics at the University of North Florida, describes the importance of supply chain management this way: "For many manufacturers, wholesalers and retailers, investments in inventory represent the largest single component [PHOTO] [PHOTO] [PHOTO] [PHOTO] [PHOTO] A driver downloads The Ryder 12:53 p.m.: The trailer ...for Saturn and unwrap pre- the key-shaped floppy mainframe arrives at one of workers to unload inspected parts to disk from his on-board generates perfor- Saturn's 56 receiving the bins... ready them for the computer into mance reports docks, just in time... production line. Ryder's mainframe. for Saturn.
Text, photos and captions excerpted from "Delivering the Goods" by Ronald Henkoff, FORTUNE (November 28, 1994) (c) 1994 Time Inc. Reprinted by permission. 9 12 of a company's corporate assets. Utilizing efficient supply chain management concepts and integrated information systems can result in increased customer service, less inventory on hand, decreased transportation and warehousing costs and improvements in cash flow and return on assets." These factors take on even greater significance as companies reach out to large new markets around the world, aided by trade pacts such as the General Agreement on Tariffs and Trade (GATT) and the North American Free Trade Agreement (NAFTA). Three-quarters of the world's highway transportation market lies outside the U.S., with Europe and Latin America representing 23% and 14% of the world's market, respectively. CORPORATIONS AND PUBLIC SECTOR ORGANIZATIONS ARE EVALUATING THEIR LOGISTICS AND TRANSPORTATION PROCESSES IN ORDER TO FIND MORE EFFICIENT AND LESS EXPENSIVE WAYS TO MANAGE INVENTORY AND MOVE FREIGHT OR PEOPLE. Research by Bernard J. La Londe, Mason Professor of Transportation and Logistics at The Ohio State University, in conjunction with Cass Information Systems, identified the "global perspective" as one of five reasons why transportation and logistics have become such important topics among U.S. corporate executives: Global marketing perspective - executives are thinking about global market suppliers and competitors as well as local ones. Reduced order cycle times - the average transit time from factory to shelf in the U.S. is expected to decrease from 60 hours to 38 hours by the year 2000. Shift from transactional to contractual/relationship linkages among companies - the percentage of freight moving under contract in 1990 was 45%; that number is expected to grow to 75% by the year 2000. Replacing inventory with information in the logistics process - taking excess inventory out of the pipeline is key to speeding the process and saving money. Improved asset productivity - maximizing utilization of assets will increasingly be seen as the primary way to bring value to customers. This means more miles per truck, fewer vehicles on hand, filling vehicles to capacity, and maintaining vehicles when they are not used, anywhere, any place or any time of the day or night. TREND TOWARD OUTSOURCING The pressures of global competition are causing many companies to concentrate their resources on their core businesses. As a result, corporations and public sector organizations are evaluating their logistics and transportation processes in order to find more efficient and less expensive ways to manage inventory and move freight or people, whether it is around the corner or around the world. Increasingly, they are turning to third-party providers like Ryder which use sophisticated systems to meet those challenges. The best third-party providers have the ability to keep pace with current technology by leveraging their assets and expertise for the benefit of all their 10 13 customers. They achieve economies of scale that enable them to control costs and, in the end, provide competitive advantages for their customers. While third-party suppliers did $6 billion in full service truck leasing business and, according to Cass Information Systems, $16 billion in logistics business in the U.S. in 1993, it is widely believed that both of these businesses are underpenetrated. Professor Donald J. Bowersox of Michigan State University's Eli Broad Graduate School of Management writes that "the growth potential of leasing and contract logistics is limited only by the combined imagination of service providers and their customers." Research supports this. A study of fortune 500 manufacturing companies by Professor Robert C. Lieb of Northeastern University's College of Business Administration found that as the acceptance of transportation and logistics-related outsourcing continues to grow, so too does the level. Third-party logistics contracts which involve the out sourcing of all primary functions across a company's logistic channel are occurring with greater frequency. Therefore, there is a growing need for single-source providers capable of supplying cost-effective, integrated solutions. The decision to outsource logistics and transportation products and services by world class companies like those surveyed by Professor Lieb typically begins with an internal assessment of whether the company can manage and/or execute an integrated logistics strategy on its own in a cost-effective manner. Some can, and do it well. If the company decides to seek LOGISTICS HELPS XEROX KEEP ITS CUSTOMERS SATISFIED Excellence in business today means continually improving customer satisfaction, while at the same time controlling costs. Xerox understands this formula for success, as well as the role that logistics plays in bringing it to life. Xerox has been working with Ryder Dedicated Logistics for many years. Ryder is the largest third-party provider operating out-bound logistics systems for Xerox in which the traditional role of drivers has been significantly expanded. Ryder drivers are, in fact, highly trained customer service representatives that not only deliver office equipment to Xerox customers, but they also install the equipment and familiarize the office staff on its operation. Drivers are an integral component of the overall logistics process Ryder Dedicated Logistics manages for Xerox that includes: management of flow-through logistics centers, final equipment assembly, delivery, installation, equipment familiarization and the recovery and shipment of equipment being replaced. [PHOTO] The resulting benefit of this integrated process is that Xerox is able to cost-effectively compress the time it takes to fulfill a customer's order, enhancing customer satisfaction. The speed at which a company can deliver a product to the customer can mean the difference between winning and losing in today's competitive, time-based marketplace. 11 14 the assistance of a third-party provider for some or all of the services it needs, there is a broad range of logistics and transportation products and services offered in the marketplace. COMPLEX SERVICES LIKE INTEGRATED LOGISTICS REQUIRE HIGHLY TRAINED PERSONNEL AND SOPHISTICATED LOGISTICS INFORMATION SYSTEMS, AND INVOLVE LONG-TERM PARTNERSHIPS BETWEEN PROVIDERS AND SHIPPERS. These products and services have varying degrees of complexity and customization associated with each. They include services such as common and for-hire transport via highway, air, rail or water; warehousing; freight payment; dedicated contract carriage; traffic management; import/export management; and integrated logistics management of the entire supply chain. Complex services like integrated logistics require highly trained personnel and sophisticated logistics information systems, and involve long-term partnerships between providers and shippers. Cass Information Systems Executive Vice President Bob Delaney cites three additional reasons why companies outsource their logistics and transportation needs in his "Fifth Annual State of Logistics Report." They include: Financial leverage - outsourcing permits a company to get out of the transportation business, reducing equipment, facilities and personnel, as well as freeing up cash and improving return on investment. Freeing up management - companies can focus on their core business activities like manufacturing, marketing, or research and development. No more worrying about complex government regulations or inventory buffers. Risk reduction - the right provider has better resources to keep a company's distribution network running in spite of unexpected disaster, wherever it strikes. Earthquakes, fire, floods, snow and strikes all wreak havoc on smaller, less flexible internal organizations. These developments in transportation and logistics are not only changing the way products are sold, they are radically changing the way products are designed, manufactured and delivered. The impact of this is increasingly being felt in a wide range of businesses, such as the automotive, appliance and grocery industries, and in public sector organizations for their passenger transportation and fleet maintenance functions. Today's advanced logistics and transportation products and services are making global markets more accessible to more businesses. Most logistical accomplishments occur outside the glare of public attention; most consumers are unaware of the savings they have reaped in the past decade as a result of advances in logistics and transportation technologies. Clearly, a major opportunity exists for leaders in these disciplines to redefine their businesses and build even greater growth in the coming years. Ryder is one of the few companies that has the resources and track record to meet this challenge. 12 15 [FIGURE 5] Revenue of $4.7 billion Dedicated Logistics - 15% Full Service Leasing - 35% Commercial and Consumer Rental - 23% Automotive Carriers - 14% Public Transportation Services and Other - 13% RESPONDING TO THE NEED HOW RYDER USES LOGISTICS AND TRANSPORTATION SOLUTIONS TO HELP ITS CUSTOMERS BECOME MORE COMPETITIVE Today's increasingly global economy presents a clear and growing need for sophisticated, information-based logistics and transportation solutions and the resulting benefits of improved customer service, reduced inventory, lower overall costs, and greater speed to market. No company better understands the need and how to deliver the benefits - indeed, no one is better positioned to lead the growth in partnered logistics and transportation services - than Ryder. Ryder is a market-driven company focused on two core competencies - asset management and logistics management - that enable the company to provide customized, cost-effective logistics and transportation solutions to customers. The company leverages its core competencies across all of its business units. Through close coordination, Ryder is able to deliver to its customers a comprehensive range of products and services, ranging from a single truck rental to a complex integrated logistics system, seamlessly and efficiently. 13 16 LOGISTICS Ryder Dedicated Logistics is the company's fastest growing business unit, providing logistics reengineering, logistics operations and logistics management solutions for hundreds of customers in a multitude of industries, including such familiar names as Saturn, Xerox, Northern Telecom, The Wall Street Journal, and Delphi Energy and Engine Management Systems (formerly AC Delco Systems). Dedicated logistics enjoyed significant revenue growth during 1994 making the unit - for the first time - the company's second largest revenue generator. Revenue growth accelerated over the second half of 1994, as strategic investments in reengineering and marketing to expand the company's logistics capabilities began to take effect. This business unit is steadily building competencies to position itself as the first and best single-source integrated logistics provider, managing its customers' entire supply chain, from raw materials to finished product distribution. The business unit was selected in 1994 to provide logistics services by such world class companies as Mercedes-Benz, BellSouth and Whirlpool. THIS BUSINESS UNIT IS STEADILY BUILDING COMPETENCIES TO POSITION ITSELF AS THE FIRST AND BEST SINGLE-SOURCE INTEGRATED LOGISTICS PROVIDER, MANAGING ITS CUSTOMERS' ENTIRE SUPPLY CHAIN, FROM RAW MATERIALS TO FINISHED PRODUCT DISTRIBUTION. DEDICATED LOGISTICS REVENUE (in millions) [FIGURE 6] 1990 $337 1991 $416 1992 $498 1993 $569 1994 $692 The integrated logistics system that Ryder has been selected to operate for Whirlpool is one of the most comprehensive, non-automotive systems in the U.S. Ryder is responsible for transporting material and components from suppliers nationwide to eleven Whirlpool manufacturing facilities. In-bound loads are "mixed and matched" according to the changing needs of Whirlpool's flexible manufacturing plants, which can quickly convert from producing one appliance model to another. Whirlpool is just one of an increasing number of Ryder customers demanding a more complete range of information-based logistics service offerings. The acquisition of LogiCorp in 1994 gave Ryder the sophisticated information technology needed to deliver cost-efficient carrier management to its customers for all freight modes - domestically or internationally - whether it be by air, rail, sea, highway or an intermodal combination. Through alliances, Ryder has also expanded its service offerings in the area of inventory management. In a study conducted in 1994 by Mercer Management Consulting and Northeastern University, chief executive officers of 22 logistics firms - many direct competitors of Ryder - were asked to rank the country's leading third-party logistics providers. Ryder finished in first place. The study went on to ask which provider would be the leader in three years. Ryder was again ranked first, by an even wider margin. 14 17 "Ryder offered us a creative plan that places responsibility for our sophisticated and complex logistics operations under one roof. We expect the new system to reduce costs, improve quality, and reduce our overall order processing and manufacturing cycle time." Dan E. Prickett, Director of Inbound Logistics, Whirlpool North American Appliance Group [PHOTO] 15 18 [PHOTO] "Ryder plays an important role in delivering the commitment Pepperidge Farm has made to its customers and consumers in providing the freshest product possible to the market." Stephen D. Gould, Vice President of Distribution, Pepperidge Farm, Inc. 16 19 PUBLIC TRANSPORTATION Ryder's logistics expertise extends to its Public Transportation Services unit, which includes student transportation, public transit and public fleet maintenance. Performance of this unit was up solidly in 1994. Ryder is one of the largest providers of student transportation services in the U.S., transporting more than 440,000 students in 20 states to and from school each day. Through ATE Management and Service Company, Ryder operates or manages 89 public transit systems, ranging from computer-routed dial-a-ride vans for seniors and persons with disabilities, to fixed-route and commuter express bus services. Ryder/MLS is the nation's leading provider of municipal fleet management and maintenance services. MLS maintains thousands of vehicles for local governments and utilities, including police, fire, construction and other public works vehicles. PUBLIC TRANSPORTATION SERVICES REVENUE (in millions) [FIGURE 7] 1990 - $256 1991 - $272 1992 - $324 1993 - $345 1994 - $365 FULL SERVICE TRUCK LEASING Full service truck leasing continues to be Ryder's largest business and the foundation upon which Ryder's other units rest. The full FULL SERVICE LEASE AND PROGRAMMED MAINTENANCE REVENUE (in millions) [FIGURE 8] 1990 - $1,684 1991 - $1,725 1992 - $1,718 1993 - $1,750 1994 - $1,866 INVESTMENTS IN TECHNOLOGY, SALES AND MARKETING, AND REENGINEERING HAVE GREATLY ENHANCED RYDER'S FULL SERVICE TRUCK LEASING PRODUCTS AND SERVICES, AND HAVE HELPED THE COMPANY TO SUSTAIN ITS LEADERSHIP AND GROWTH POTENTIAL IN THE MARKETPLACE. service leasing unit provides nearly all the vehicles used by Ryder to serve logistics customers, as well as maintenance for Ryder's truck rental fleets and its Public Transportation Services vehicles. Ryder offers its customers a flexible and immediate range of full service truck leasing products and services. With more than 13,000 customers, including such well-known companies as Pepsi-Cola, Home Depot, and International Paper, Ryder is the largest full service truck leasing company in the world. Full service truck leasing reported a 7% increase in revenue in 1994, with much of the increase coming from new customers. Investments in technology, sales and marketing, and reengineering have greatly enhanced Ryder's full service truck leasing products and services, and have helped the company to sustain its leadership and growth potential in the marketplace. At the heart of Ryder's full service truck leasing success is its expertise in asset management. Ryder professionals purchase, manage, maintain and dispose of trucks better than anyone in the business. Included in Ryder's total fleet of almost 190,000 vehicles (one of the world's largest) are nearly 90,000 full service lease vehicles. The 17 20 company's network of more than 1,000 maintenance facilities allows customers to get responsive vehicle service no matter where they are or when they need it. Ryder's facilities are being equipped with Ryder Fast Track Maintenance technology used to maximize vehicle "uptime" by more quickly and accurately scheduling work, capturing valuable vehicle performance data, and diagnosing and repairing vehicle problems. One customer that relies heavily upon Ryder's maintenance expertise is Pepperidge Farm, which has been working with Ryder since 1974 and currently has more than 80 tractors, nearly 120 trailers and 10 straight trucks under full service lease. Consumers have come to expect the freshest products from Pepperidge Farm, making the dependability and productivity of its vehicles a particularly important concern. COMMERCIAL AND CONSUMER RENTAL REVENUE (in millions) [FIGURE 9] 1990 - $892 1991 - $778 1992 - $836 1993 - $936 1994 - $1,140 TRUCK RENTAL Ryder's two truck rental fleets - one serving commercial customers, the other primarily consumers - recorded higher revenue RYDER HAS SUCCESSFULLY DIFFERENTIATED ITSELF IN THE RENTAL MARKETPLACE THROUGH SUCH PROGRAMS AS THE COMMERCIAL TRUCK RENTAL GUARANTEE, WHICH PROMISES THAT VEHICLE CHECK-IN OR CHECK-OUT WILL NOT TAKE MORE THAN 20 MINUTES, AND THE VEHICLE WILL BE PROPERLY MAINTAINED, CLEAN AND ROAD-READY. in 1994, thanks to a strong economy and successful marketing programs that boosted vehicle utilization. Ryder is the world's largest commercial truck rental company and, with its fleet of more than 41,000 commercial rental vehicles, helps businesses meet their short-term transportation needs efficiently and cost-effectively. Ryder has successfully differentiated itself in the rental marketplace through such programs as the Commercial Truck Rental Guarantee. The company's promise is that vehicle check-in or check-out will not take more than 20 minutes, and the vehicle will be properly maintained, clean and road-ready. Such distinctive service is crucial, because truck rental is often a customer's first experience with Ryder. Therefore, that first impression can play a key role in the customer's decision to convert later to a full service truck lease. The commercial rental fleet is also used to supply replacement and initial start-up vehicles to Ryder's full service lease and logistics customers, and to supplement these customers' full-time fleets during peak demand periods. Ryder's more than 34,000 yellow consumer rental trucks are a familiar sight on the nation's highways and come equipped with the features that do-it-yourself movers want, such as air conditioning, automatic transmissions and AM/FM radios. 18 21 [PHOTO] "We used a 24-foot Ryder truck and car carrier to move our belongings from Chicago to Atlanta. Ryder was the most convenient company for us to rent from because they had dealerships in our neighborhoods in both Chicago and Atlanta." Curtis and Julia Phillip, Lithonia, Georgia 19 22 [PHOTO] "Ryder's automotive carriers have been transporting Chrysler vehicles to dealers for nearly 60 years. As our customers' needs have changed, our products have changed, and Ryder has changed with us. When it comes to transportation, it's fair to say that Ryder delivers." Edward J. Krajca, Director Logistics Procurement and Supply, Chrysler Corporation 20 23 The company prides itself on being the most convenient company for the do-it-yourself mover. Its over 4,800 dealers are located throughout North America. In addition to renting trucks, they offer a variety of moving supplies such as boxes, sealing tape and packing material. Ryder also provides its customers with instructional brochures, offers discounts to AAA members and maintains a 24-hour toll-free service hotline. RyderFIRST(R), the first nationwide automated reservation system for dealers in the consumer truck rental industry, is designed to ensure that the right truck is available to the consumer at the right time and at the right price, and also enables Ryder to more efficiently manage its fleet and maximize utilization. Ryder Move Management arranges cost-effective moves - both truck rental and van line - for clients such as Procter & Gamble and Bank of America. AUTOMOTIVE CARRIERS REVENUE (in millions) [FIGURE 10] 1990 - $689 1991 - $645 1992 - $651 1993 - $635 1994 - $645 AUTOMOTIVE CARRIERS Ryder's Automotive Carrier Division had an excellent year in 1994. Earnings were higher as a result of continued strength in IN ORDER TO ENSURE THE MOST EFFICIENT, DAMAGE-FREE DELIVERY FOR ITS CUSTOMERS, RYDER PROVIDES ITS DRIVERS WITH EXTENSIVE TRAINING ON HOW TO SAFELY DRIVE THEIR VEHICLES AND LOAD AND UNLOAD THEIR CARGO. the new vehicle market and the ongoing positive effects of an organizational streamlining that took place at the end of 1993. Ryder transports more than half of all the General Motors vehicles - and almost half of the Chrysler, Toyota and Honda vehicles - sold annually in the U.S. and transported nearly 6.3 million vehicles in 1994 from assembly plants, railheads and ports. Cars and trucks carried include popular models such as the complete Saturn line, the Cadillac Seville STS and El Dorado Touring Coupe, the full line of Chevrolet pickup trucks, the Nissan Altima, the Dodge Intrepid and Chrysler's Jeep(R) Grand Cherokee. In addition to vehicle transport, Ryder also offers a number of finished vehicle services, such as final detailing for automotive dealerships, on- and off-loading vehicles from rail cars, and yard management. In order to ensure the most efficient, damage-free delivery for its customers, Ryder provides its drivers with extensive training on how to safely drive their vehicles and load and unload their 21 24 cargo. Ryder has an excellent safety record as is reflected by its workers' compensation costs, which have dropped over the past several years. The company is also committed to constantly upgrading its carrier equipment and information technology. By reducing the weight of new transports, Ryder has been able to boost carrying capacity and fuel efficiency. The company has also developed a number of "driver-friendly" features such as hydraulic ramps and skids and easy-to-release friction tie-downs. The Automotive Carrier Division is also working with Ryder Dedicated Logistics to design seamless in-bound and out-bound automotive logistics solutions for a number of auto manufacturers, including Mercedes-Benz and General Motors. FOREIGN PORTION OF REVENUE (in millions) [FIGURE 11] 1990 - $302 1991 - $327 1992 - $336 1993 - $311 1994 - $348 INTERNATIONAL Ryder is already a leader in the U.S. transportation and logistics industries, but roughly three-fourths of the world's freight moves outside of the U.S. The international transportation and logistics THE INTERNATIONAL TRANSPORTATION AND LOGISTICS MARKETPLACE REPRESENTS AN OPPORTUNITY FOR RYDER TO EXPAND ITS FULL SERVICE TRUCK LEASING AND LOGISTICS BUSINESSES. EUROPE AND LATIN AMERICA HOLD THE BEST OPPORTUNITIES, AND THE COMPANY IS FOCUSING ITS EFFORTS IN THESE REGIONS. marketplace, therefore, represents an opportunity for Ryder to expand its full service truck leasing and logistics businesses. Europe and Latin America hold the best opportunities for Ryder internationally, and the company is focusing its efforts in these regions. Ryder's strategy is to serve its existing customers as they expand in these markets and to provide services to companies which are already there. Ryder has operations in several countries. The company has had a major presence in Canada and the United Kingdom for decades. Ryder has operated in Germany since the late 1980s. In 1993, Ryder opened an operation in Poland, and at the end of 1994, Ryder entered Mexico. Ryder Plc, the company's United Kingdom subsidiary, experienced a revenue increase of 45% in the fourth quarter of 1994, benefiting from continued growth in existing business and several strategic acquisitions made during the year. 22 25 "Ryder's integrated warehouse service provides us with efficient, cost effective and accurate distribution services that enable us to concentrate our resources on our specific product assembly requirements. It is a truly beneficial partnership." Robin Field, Chief Executive, Filofax Group plc London, England [PHOTO] 23 26 Filofax Group plc, a Ryder customer in the United Kingdom, became a customer as a result of a 1994 acquisition. Ryder provides a totally integrated warehouse and distribution service for all Filofax products throughout the United Kingdom. Ryder has strengthened its operations in Germany, consolidating its full service truck leasing, commercial truck rental and dedicated logistics operations in one headquarters office in Dusseldorf. This location was selected because of its favorable location in Germany and its proximity to other European nations. Ryder is developing a presence in the Mexican market as well. The company will focus initially on three major Mexican industrial centers: Guadalajara, Mexico City and Monterrey. Mexico and Germany, in addition to having enormous transportation and logistics needs themselves, will also serve as platforms for Ryder's future expansion into Latin America and Western Europe, respectively. LEADING THE INDUSTRY Businesses around the world are discovering the competitive advantages that well-designed and executed logistics and transportation systems can yield. As companies come closer to achieving parity in traditional areas such as quality and price - and with excellence in both areas taken as a given by today's customer - the role that logistics and transportation play in a company's ability to compete and win will only become more prominent. Ryder's expertise in asset management and logistics and the interaction among its business units make the company unique in its ability to provide its customers with a complete range of sophisticated logistics and transportation services. It would be difficult for any organization - customer or competitor - to duplicate this ability without the devotion of tremendous time and resources. Every industry needs a leader, and Ryder continues to strengthen its leadership in the logistics and transportation industry. Ryder's company-wide commitment to understanding the needs of its customers and responding to them with innovative, cost-effective logistics and transportation solutions will help to maintain the company's leadership position in the years ahead. 24 27 INTRODUCTION TO FINANCIAL SECTION Some of the Significant Factors Affecting 1994 Results Were: EARNINGS FROM CONTINUING OPERATIONS REACH NEW RECORD Earnings totaled $154 million, an increase of 34% from 1993, and reached the highest level ever for the company. REVENUE REACHES AN ALL TIME HIGH Total revenue was $4.7 billion, representing an increase of 11% over 1993's revenue of $4.2 billion, and the highest amount ever reported by the company. All product lines experienced revenue growth. REVENUE GROWTH FROM DEDICATED LOGISTICS AND FULL SERVICE TRUCK LEASING IS ACCELERATED Dedicated logistics revenue grew 21% in 1994 compared with 14% in 1993. For full service truck leasing, revenue in 1994 was 7% higher compared with flat revenue in 1993. SALES OF NEW LONG-TERM CONTRACTUAL BUSINESS EXCEED PREVIOUS HIGHS Sales of new contracts in both dedicated logistics and full service truck leasing reached their highest level ever, reflecting the successful efforts of the company's sales and marketing initiatives. RETURN ON AVERAGE COMMON EQUITY APPROACHES COMPANY'S GOAL 1994's return reached 14.5%, a substantial improvement over 1993's performance of 10.2%, and represents significant progress toward the company's goal of 17%. HIGHER CAPITAL SPENDING Increased capital spending 55% to $1.9 billion in response to higher sales of new long-term contractual business. HIGHER ASSET UTILIZATION IN COMMERCIAL AND CONSUMER TRUCK RENTAL Average asset utilization climbed as a result of better asset management and stronger economic conditions. SEVERAL STRATEGIC ACQUISITIONS COMPLETED, INCLUDING THREE IN THE UNITED KINGDOM The acquisitions included three leasing companies, a logistics management company and a provider of dedicated distribution solutions. The United Kingdom acquisitions will provide substantial revenue growth in the international area. CONTINUING INVESTMENT IN STRATEGIC INITIATIVES Invested a significant portion of the company's earnings in several strategic areas designed to enhance future profitability, including logistics and systems capabilities and reengineering of the maintenance, sales and marketing and finance and administration areas. CREDIT RATING UPGRADED Credit rating for the company's unsecured notes was raised by Moody's from Baa1 to A3, reflecting strengthening financial position. 25 28 FINANCIAL REVIEW Ryder System, Inc. and Consolidated Subsidiaries OVERVIEW The company continued to report strong growth in 1994, with both revenue and earnings from continuing operations reaching their highest levels in the company's history. These results were achieved while also making significant investments in logistics and systems capabilities, sales and marketing, and reengineering. Additionally, management believes it achieved its four primary objectives established for 1994. First, dedicated logistics growth was substantially accelerated, with resulting record sales of new logistics contracts signed and 21% higher dedicated logistics revenue in 1994 compared with 1993. Second, full service truck leasing growth also accelerated, with sales of new contracts at their highest level ever. Third, the company made significant progress toward implementing its reengineering programs which are intended to further improve customer service and reduce costs. Finally, the company began expanding its international operations. Earnings from continuing operations in 1994 increased to $154 million, or $1.95 per common share, compared with $115 million, or $1.43 per common share in 1993, and $98 million, or $1.17 per common share in 1992. Higher 1994 earnings reflected record pretax earnings from Vehicle Leasing & Services and a significant increase in pretax earnings at Automotive Carriers. Earnings comparisons were aided by a lower effective income tax rate in 1994 compared with 1993. The company's effective tax rate for continuing operations was 41.1% in 1994, 45.3% in 1993 and 40.8% in 1992. The higher 1993 rate resulted from an accumulated deferred income tax adjustment of $8 million, or $0.10 per common share, necessitated by an increase in the corporate Federal income tax rate from 34% to 35%. Revenue in 1994 totaled $4.7 billion, an increase of $469 million, or 11%, over 1993. Vehicle Leasing & Services revenue increased 13% to $4.1 billion, reflecting accelerated revenue growth in all of its major product lines. Automotive Carriers revenue increased slightly to $645 million. In 1993, the company reported an increase in revenue of $197 million, or 5%, compared with 1992, led by dedicated logistics and commercial and consumer truck rental. Operating expense increased 10% in 1994 compared with 1993, due primarily to the increase in revenue and higher spending on logistics and systems capabilities, sales and marketing, and reengineering. Higher direct operating costs at dedicated logistics also impacted 1994 operating expense. Operating expense in 1993 increased 5% compared with 1992 due primarily to increased revenue. Depreciation expense (net of gains) in 1994 increased 9% compared with 1993 due to a larger vehicle fleet as a result of strong lease sales (aided by growth in logistics contracts), and rental fleet expansion of certain vehicle types in selected markets. The size of the total vehicle fleet increased 12% in 1994 to 188,831 units. The increase in depreciation was partially offset by an increase in gains on vehicle sales of $19 million. Net depreciation expense decreased in 1993 compared with 1992 as a result of higher 1993 gains on vehicle sales. The higher gains more than offset an increase in depreciation which resulted from a larger vehicle fleet during 1993. Interest expense totaled $145 million in 1994, compared with $125 million in 1993 and $140 million in 1992. The 1994 increase was due to higher average outstanding debt levels, resulting from the growth in the vehicle fleet, combined with higher interest rates on the company's variable-rate debt in the second half of the year. The 1993 decrease resulted primarily from lower interest rates on the company's variable-rate debt. EARNINGS FROM CONTINUING OPERATIONS (in millions) [FIGURE 12] 1992 - $ 98 1993 - $115 1994 - $154 Higher 1994 earnings reflected record pretax earnings from Vehicle Leasing & Services and a significant increase in pretax earnings from Automotive Carriers. In 1993, the company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," and recorded an after tax charge of $25 million, or $0.33 per common share, to establish the resulting transition obligation. Expense for postretirement benefits for continuing operations was $6 million in 1994 and $5 million in 1993, compared with $3 million in 1992 under the previous accounting policy. 26 29 FINANCIAL RESOURCES AND LIQUIDITY CASH FLOW In 1994, a majority of the company's cash needs were funded internally through operations and sales of revenue earning equipment. The company also increased its level of borrowings in 1994 as a result of higher capital spending, including the company's continued investments in various programs designed to improve future profitability. Cash flow from continuing operating activities was $831 million in 1994, compared with $771 million in 1993 and $847 million in 1992. The increase in 1994 was a result of improved earnings and an increase in depreciation expense, partially offset by an increase in certain working capital items. The most significant working capital change impacting cash flow comparisons was an increase in receivables resulting from higher revenue. The decrease in cash flow from continuing operating activities in 1993 compared with 1992 was primarily attributable to higher proceeds from the sale of receivables in 1992. Capital expenditures were $1.8 billion in 1994, compared with $1.2 billion in 1993 and $1.1 billion in 1992. Capital expenditures in 1994 for full service truck leasing were $1.1 billion, an increase of $353 million compared with 1993, due to higher new lease sales, aided by growth in logistics contracts. Capital expenditures for commercial truck rental in 1994 increased $71 million to $255 million, as a result of demand created by new lease customers and an increase in the number of certain vehicle types within selected markets. Consumer truck rental 1994 capital expenditures of $196 million were relatively unchanged compared with 1993. Capital expenditures for the public transportation services businesses increased $18 million in 1994 to $35 million, as a result of new contracts and planned fleet replacement. Capital expenditures for Automotive Carriers in 1994 increased $13 million to $40 million, as a result of replacing older equipment with more efficient, higher technology, automobile hauling equipment. The remaining increase in capital expenditures was primarily for operating property and equipment and included expenditures to expand and upgrade maintenance facilities and for systems technology and development. During 1994, the company made expenditures of $145 million on strategic acquisitions which strengthened the company's existing full service truck leasing and logistics businesses. Acquisitions made include three providers of full service truck leasing (one in the U.S. and two in the United Kingdom), a logistics management company and a provider of dedicated distribution services in the United Kingdom. The company will continue to evaluate strategic acquisition opportunities as a means of strengthening its core contractual businesses. Cash flow from continuing operating activities (excluding sales of receivables) plus asset sales as a percentage of capital expenditures was 62% in 1994, compared with 80% in 1993 and 89% in 1992. The decrease in 1994 was due to a significant increase in capital expenditures required to support the increase in new lease sales. In 1995, management projects that capital expenditures will increase approximately 10% compared with 1994. The company plans to increase its capital expenditures for full service truck leasing (including the impact of logistics growth), commercial and consumer truck rental and the public transportation services businesses to accommodate planned vehicle replacements and an increase in fleet size. The company plans to increase capital expenditures at Automotive Carriers to continue the replacement of older equipment with more efficient, higher technology equipment. Capital expenditures within the company's international operations are also expected to increase as these operations expand. The company expects to fund its 1995 capital expenditures with internally generated funds and additional financing as necessary. TOTAL CAPITAL SPENDING (in millions) [FIGURE 13] 1992 - $1,092 1993 - $1,238 1994 - $1,915 Capital spending was higher in 1994 primarily as a result of increased purchases of full service lease equipment. Several strategic 1994 acquisitions also impacted capital spending. FINANCING Ryder is a capital intensive company and often depends on external capital. The company has a variety of financing alternatives available to fund its capital needs. These alternatives include long- and medium-term public and private 27 30 debt, as well as variable-rate financing available through bank credit facilities and commercial paper. The company also periodically enters into sale and leaseback agreements for revenue earning equipment which have historically been accounted for as operating leases. In August 1994, Moody's Investors Service upgraded its rating on the company's unsecured notes from Baa1 to A3 and reaffirmed the commercial paper rating of P2, reflecting the company's strengthening financial condition. The company's other credit ratings were A2 for commercial paper and A- for unsecured notes from Standard & Poor's Ratings Group, and D1 for commercial paper and A for unsecured notes from Duff and Phelps. Debt increased from $1.5 billion at the end of 1993 to $1.9 billion at the end of 1994. This increase was due to financing requirements associated with 1994 capital expenditures and acquisitions. During 1994, the company issued $437 million of primarily fixed-rate unsecured notes and made $119 million of scheduled unsecured note payments. The company also borrowed an amount equivalent to $99 million of primarily variable-rate pound sterling denominated obligations during 1994. U.S. commercial paper outstanding at December 31, 1994, was $44 million, compared with $84 million at the end of 1993. Proceeds from sale-leaseback transactions during 1994 were $400 million. The company did not enter into any sale-leaseback transactions during 1993. The company has no derivative financial instruments held for trading purposes or that are leveraged. During 1994, the company increased its outstanding interest rate swap agreements by a total notional principal amount of $358 million and interest rate cap agreements by a notional principal amount of $350 million, as part of the management of its interest rate exposure. See the "Financial Instruments" note to the consolidated financial statements for a further discussion of the company's interest rate management program. At the end of 1994, committed unused lines of credit totaled $614 million. At December 31, 1994, the company had $434 million of debt securities available for issuance under a shelf registration statement filed in 1992. The ratio of debt to equity at December 31, 1994 was 169%, compared with 155% at December 31, 1993. The ratio of debt to tangible equity at December 31, 1994 was 227%, compared with 202% at December 31, 1993. In January 1995, the company redeemed at par, $100 million of its 9.375% unsecured notes. The company also announced that it will redeem $200 million of 9.20% unsecured notes at par in March 1995. RESULTS OF OPERATIONS VEHICLE LEASING & SERVICES REVENUE. Revenue for Vehicle Leasing & Services increased 13% in 1994 compared with 1993 and 6% in 1993 compared with 1992. The increases reflected growth in all of the division's contractual product lines - full service truck leasing, dedicated logistics and public transportation services - as well as the truck rental businesses. Revenue from full service truck leasing increased 7% in 1994 compared with 1993 and 2% in 1993 compared with 1992. Revenue in 1994 benefited from a significant increase in new lease sales combined with the impact of acquisitions made in 1994. The average fleet size in 1994 increased 11% compared with 1993, a rate greater than the revenue growth rate, primarily as a result of lower prices on new leases compared with prices on those expiring. The increase in revenue in 1993 was due to new lease sales. Revenue from dedicated logistics increased 21% in 1994 compared with 1993. Higher revenue was attributable to a record level of new logistics contracts sold and an expansion of service provided to existing customers. The division continues to reinvest heavily in logistics capabilities, including new information technologies, and sales and marketing programs to further accelerate the growth in dedicated logistics. For the same reasons, dedicated logistics revenue increased 14% in 1993 compared with 1992. Revenue from the division's public transportation services businesses increased 6% in 1994 compared with 1993, as a result of several new student transportation contracts. The same businesses reported revenue that was 7% higher in 1993 compared with 1992, due primarily to new contracts and several small acquisitions made in late 1992. Commercial truck rental revenue increased 25% in 1994 compared with 1993, reflecting higher demand from both full service truck leasing customers awaiting new lease vehicles or satisfying short-term needs, and the commercial truck rental market in general. Increased demand in 1994 also reflected continued strength in the U.S. economy. To satisfy the higher demand, the average fleet size increased approximately 19% in 1994 compared with 1993. Revenue from commercial truck 28 31 rental increased 16% in 1993 compared with 1992, as a result of higher demand. Consumer truck rental revenue increased 19% in 1994 compared with 1993. This increase reflected higher demand for long-distance rentals, and to a lesser extent, local rentals, driven by continued strength in the nation's economy. Higher revenue per transaction for local rentals also contributed to the increase. The consumer truck rental average fleet size was 6% higher in 1994 than in 1993. Consumer truck rental revenue increased 8% in 1993 compared with 1992, driven by higher demand and an increase in market share for this product line. VEHICLE LEASING & SERVICES EARNINGS BEFORE REVENUE INCOME TAXES (in millions) (in millions) [FIGURE 14] [FIGURE 15] 1992 - $3,385 1992 - $135 1993 - $3,597 1993 - $204 1994 - $4,058 1994 - $234 EARNINGS BEFORE INCOME TAXES. Pretax earnings for Vehicle Leasing & Services were $234 million in 1994 compared with $204 million in 1993, an increase of 15%. Overall, higher pretax earnings in 1994 were the result of increased revenue in all major product lines, higher commercial and consumer truck rental margin as a percentage of revenue, and higher gains on vehicle sales. Partially offsetting these increases were continued investments in several strategic spending programs which are designed to improve the future growth and profitability of the division. The division's pretax earnings in 1993 increased $69 million, or 51%, compared with 1992. Margin (revenue less direct operating expenses, depreciation, and interest expense) from full service truck leasing increased slightly in 1994 as a result of higher revenue and acquisitions made. Margin as a percentage of revenue was lower in 1994 as a result of lower prices on new leases compared with prices on those expiring, combined with higher interest expense. Full service truck leasing margin in 1993 increased slightly compared with 1992, primarily as a result of higher revenue and lower interest expense as a percentage of revenue. Dedicated logistics reported slightly higher margin in both 1994 and 1993 as a result of the continued growth in revenue. Margin as a percentage of revenue for dedicated logistics was lower in 1994 as a result of higher operating costs including new contract start-up costs. Higher operating costs also resulted from increases in driver wages. Dedicated logistics margin as a percentage of revenue was relatively unchanged in 1993 compared with 1992. Margin from the public transportation services businesses increased in 1994 compared with 1993, primarily as a result of higher revenue; margin as a percentage of revenue was relatively unchanged. Margin from these businesses increased in 1993 compared with 1992 as a result of higher revenue and a decrease in vehicle liability and workers' compensation expense. Commercial truck rental margin and margin as a percentage of revenue increased substantially in 1994, reflecting higher revenue, increased asset utilization and lower maintenance costs as a percentage of revenue, partially offset by higher interest expense. Lower maintenance costs as a percentage of revenue reflected a reduction in the average age of the fleet. Both margin and margin as a percentage of revenue increased significantly in 1993 compared with 1992, primarily as a result of increased revenue, improved asset utilization, lower maintenance costs and lower interest expense. Consumer truck rental recorded significantly higher margin and higher margin as a percentage of revenue in 1994 as a result of revenue growth, increased asset utilization and lower maintenance costs as a percentage of revenue, partially offset by higher vehicle liability expense. The improvement in maintenance costs as a percentage of revenue was primarily due to a change in the age and mix of the fleet to newer and more maintenance efficient vehicles. Vehicle liability expense increased in 1994 over a lower than normal 1993 level. Consumer truck rental margin and margin as a percentage of revenue were higher in 1993 compared with 1992 as a result of revenue growth, better asset utilization and lower than normal vehicle liability expense. For the division as a whole, pretax profits were higher in 1994 compared with 1993 as a result of higher overall margin and an increase in gains on vehicle sales, partially offset by 29 32 increases in indirect operating expenses. Higher gains were due to an increase in both the average gain per vehicle sold and the number of vehicles sold. Higher indirect operating expenses were primarily the result of several strategic spending programs. These programs are focused on further developing logistics and other systems capabilities, improving the division's sales and marketing initiatives, and reengineering the company's maintenance, sales and marketing, and finance and administration functions. In fact, within dedicated logistics, the increase in strategic spending on logistics capabilities and sales and marketing programs in 1994 more than offset margin growth. These strategic spending programs are expected to continue to impact profitability in 1995 as the company strives to continue stimulating growth in its long-term contractual products while making its operations more customer responsive and efficient for the future. Pretax earnings for the division in 1993 were higher compared with 1992, as a result of margin increases and an increase of $21 million in gains on vehicle sales, partially offset by an increase in indirect operating expenses. Gains on vehicle sales increased due to higher gains per vehicle sold, while indirect operating expenses were affected by an increase in sales and marketing spending. AUTOMOTIVE CARRIERS REVENUE. Automotive Carriers revenue increased 2% in 1994 after a decrease of 3% in 1993. Higher 1994 revenue resulted from an increase in the number of units shipped, somewhat offset by a decline in average length of haul. The overall increase in the number of units shipped in 1994 was a result of higher vehicle production in North America. Shipments of General Motors vehicles were relatively unchanged in 1994 compared with 1993, while the number of vehicles shipped for other manufacturers was up 13%. Lower revenue in 1993 compared with 1992 reflected a decrease in average length of haul. The division's largest customer, General Motors, accounts for approximately 54% of its revenue. EARNINGS BEFORE INCOME TAXES. Pretax earnings increased $18 million in 1994 compared with 1993. Earnings comparisons were impacted by a 1993 pretax charge of $6 million for the cost of a program to streamline the division's operations. Pretax earnings in 1994 benefited from the effects of the 1993 streamlining, fleet operating efficiencies and reduced depreciation expense. Lower depreciation resulted from an increase in the age of the vehicle fleet and a reduction in the size of the fleet. Pretax earnings in 1993 were lower compared with 1992 due to a decrease in revenue, the charge for the organizational streamlining, higher labor costs, and higher cargo damage and vehicle liability expense. AUTOMOTIVE CARRIERS EARNINGS BEFORE REVENUE INCOME TAXES (in millions) (in millions) [FIGURE 16] [FIGURE 17] 1992 - $651 1992 - $48 1993 - $635 1993 - $32 1994 - $645 1994 - $50 The truckaway automobile hauling industry is currently negotiating a new industry-wide collective bargaining agreement with the International Brotherhood of Teamsters. The current agreement with the Teamsters expires on May 21, 1995. While negotiations are in the early stages, the agreement may provide for wage and benefit increases. However, management does not expect material adverse economic consequences from the outcome of the negotiations. OTHER Other, which is composed primarily of corporate administrative costs, reported net expenses of $24 million in 1994 compared with $27 million in 1993 and $18 million in 1992. The lower level of expenses in 1992 reflected a combination of higher reimbursement of corporate administrative costs from the divisions and lower overall levels of spending. FOREIGN OPERATIONS The majority of the company's foreign operations are in the United Kingdom and Canada. These operations are composed primarily of full service truck leasing, commercial and consumer truck rental, dedicated logistics and automotive carriage. The results of these operations have been included in the discussions above. In 1994, revenue and pretax earnings from foreign operations were $348 million and $16 million, respectively, compared with $311 million and $9 million in 1993 and $336 million and $7 million in 1992. The 1994 30 33 increase in revenue was due to a significant increase in full service truck lease and commercial truck rental revenue in the United Kingdom, primarily as a result of strong new lease sales and acquisitions made in 1994. Of the $7 million increase in pretax earnings in 1994, $4 million related to a change in the capital structure of the operations in the United Kingdom, which effectively reduced its interest costs. The remaining increase was due primarily to higher pretax earnings in the United Kingdom and Canada, somewhat offset by start-up costs in Germany and Mexico. Growth in profitability from foreign operations will continue to be impacted in the short-term by start-up related investments in Germany, Mexico and other targeted international markets as opportunities are identified. The company will continue to evaluate further strategic expansion in Western Europe and the Americas. Economic and political developments in Mexico will be closely monitored as the company expands in that country. At this time there are no legal restrictions regarding the repatriation of cash flows to the U.S. from the foreign countries where the company is currently operating. ENVIRONMENTAL MATTERS The operations of the company involve storing and dispensing petroleum products, primarily diesel fuel, regulated under environmental protection laws. These laws require the company to eliminate or mitigate the effect of such substances on the environment. In response to these requirements, the company has upgraded operating facilities and implemented various programs to detect and minimize contamination. Capital expenditures related to these programs totaled approximately $8 million in 1994. Environmental capital expenditures are primarily related to a mandated tank replacement program required to be completed by the end of 1998. These capital expenditures are not expected to increase materially in relation to the company's level of total capital expenditures. The company incurred $24 million of environmental expenses in 1994 and 1993, compared with $23 million in 1992. Based on the present standards imposed by governmental regulations, management expects that environmental expenses will remain at current levels or decrease slightly in the near-term. The ultimate cost of the company's environmental liabilities cannot presently be projected with certainty due to the presence of several unknown factors, primarily the level of contamination, the effectiveness of selected remediation methods, the stage of management's investigation at the individual sites and the recoverability of such costs from third parties. Based upon information presently available, management believes that the ultimate disposition of these matters, although potentially material to the results of operations in any one year, will not have a material adverse effect on the company's financial condition or liquidity. See the "Environmental Matters" note to the consolidated financial statements for a further discussion. RECENT ACCOUNTING PRONOUNCEMENTS In June 1993, the Financial Accounting Standards Board issued Statement No. 116, "Accounting for Contributions Received and Contributions Made." The statement, which is effective for fiscal years beginning after December 15, 1994, requires that promises to make contributions be recognized in the financial statements as an expense and a liability when a promise is made. Currently, contributions are recognized as an expense in the period paid. The company anticipates that adoption of the statement in the first quarter of 1995 will result in an after tax charge to earnings of approximately $8 million, or $0.10 per common share, to record the cumulative effect of the change in accounting. OUTLOOK In 1995, the company will continue to build upon accomplishments achieved and initiatives started in 1994. However, to ensure the momentum created in 1994 is sustained and shareholder value is maximized, the company will focus on three areas of emphasis in 1995. First, the company will intensify the marketing and selling of its highest value-added contractual products, dedicated logistics and full service truck leasing, to maximize its less economically sensitive sources of revenue. Second, the company will attempt to increase its market coverage and market share. Finally, the company will attempt to continue to lower its cost structure by further implementing its reengineering in the areas of sales and marketing, maintenance, and finance and administration. Strong financial results in 1994 have positioned Ryder for continued earnings growth in 1995. While continued investments in strategic initiatives may slow the growth in profitability in the near-term, these investments are being made to better position the company for long-term growth and profitability. Sustained earnings improvement in 1995 also depends to a great extent on domestic economic conditions. 31 34 SELECTED FINANCIAL AND OPERATIONAL DATA Ryder System, Inc. and Consolidated Subsidiaries
--------------------------------------------------------------------------------------------------------------------------------- (Dollars in thousands) 1994 1993 1992 --------------------------------------------------------------------------------------------------------------------------------- VEHICLE LEASING & SERVICES Revenue: Full service lease and programmed maintenance $1,865,738 1,749,592 1,718,090 Commercial and consumer rental 1,140,190 935,792 835,722 Dedicated logistics 691,647 569,479 497,509 Other 608,619 558,041 514,326 Eliminations (248,459) (216,101) (180,695) --------------------------------------------------------------------------------------------------------------------------------- Total 4,057,735 3,596,803 3,384,952 Operating expense 3,112,746 2,758,681 2,598,020 Depreciation expense 628,625 557,406 536,951 Gains on sales of revenue earning equipment (72,721) (54,084) (33,525) Interest expense 151,581 128,760 145,336 Miscellaneous expense, net 3,246 1,670 2,879 --------------------------------------------------------------------------------------------------------------------------------- Earnings before income taxes $ 234,258 204,370 135,291 --------------------------------------------------------------------------------------------------------------------------------- Fleet size (owned and leased): Full service lease 89,672 78,544 74,902 Commercial and consumer rental 75,759 67,016 62,924 Buses operated or managed 12,519 12,154 11,860 Ryder Truck Rental service locations 1,101 979 971 ================================================================================================================================= AUTOMOTIVE CARRIERS Revenue $ 645,402 634,634 651,216 --------------------------------------------------------------------------------------------------------------------------------- Earnings before income taxes $ 50,078 31,955 48,220 --------------------------------------------------------------------------------------------------------------------------------- Total units transported (000) 6,277 5,934 5,871 Total miles traveled (000) 239,831 238,840 247,034 Auto transports: Owned and leased 3,790 4,131 4,237 Owner-operators 516 505 508 Locations 80 89 92 =================================================================================================================================
32 35 REPORT OF MANAGEMENT To the Shareholders of Ryder System, Inc.: The financial information in this annual report has been prepared by the management of Ryder System. Management is responsible for the fair presentation of the financial statements of the company in accordance with generally accepted accounting principles and for the objectivity of key underlying assumptions and estimates. Ryder System maintains a dynamic system of internal controls to provide reasonable assurance that assets are safeguarded and transactions are properly authorized, recorded and reflected in the financial statements. This system is continually reviewed, evaluated and revised to reflect changes in the company and in the businesses in which we operate. One of the key elements of Ryder System's internal financial controls has been the company's success in recruiting, selecting, training and developing professional financial managers who implement and oversee the financial control system. The board of directors, acting through its audit committee, is responsible for determining that management fulfills its responsibilities in the preparation of financial statements and the financial control of operations. The audit committee is composed solely of outside directors. The committee recommends to the board of directors the appointment of the independent public accountants and meets regularly with management, internal auditors and independent accountants. Our commitment to social responsibility is a key management principle. Management is responsible for conducting our businesses in an ethical, moral manner assuring that our business practices encompass the highest, most uncompromising standards of personal and business conduct. These standards, which address conflicts of interest, compliance with laws and acceptable business practices and proper employee conduct are included in our Code of Conduct. The importance of these standards is stressed throughout the company and all of our employees are expected to comply with them. M. Anthony Burns Chairman, President and Chief Executive Officer Edwin A. Huston Senior Executive Vice President - Finance and Chief Financial Officer INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholders of Ryder System, Inc.: We have audited the accompanying consolidated balance sheets of Ryder System, Inc. and subsidiaries as of December 31, 1994 and 1993, and the related consolidated statements of earnings and cash flows for each of the years in the three-year period ended December 31, 1994. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Ryder System, Inc. and subsidiaries as of December 31, 1994 and 1993, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1994, in conformity with generally accepted accounting principles. As discussed in the notes to the consolidated financial statements, the Company changed its method of accounting for income taxes and for postretirement benefits other than pensions in 1993. KPMG PEAT MARWICK LLP Miami, Florida February 7, 1995 33 36
CONSOLIDATED STATEMENTS OF EARNINGS Ryder System, Inc. and Consolidated Subsidiaries Years ended December 31 ------------------------------------------------------------------------------------------------------------------------ (In thousands, except per share amounts) 1994 1993 1992 ------------------------------------------------------------------------------------------------------------------------ REVENUE $4,685,603 4,217,030 4,019,675 ------------------------------------------------------------------------------------------------------------------------ Operating expense 3,686,053 3,338,477 3,164,775 Depreciation expense, net of gains 591,669 543,338 547,013 Interest expense 144,735 124,789 139,664 Miscellaneous expense, net 2,627 650 2,678 ------------------------------------------------------------------------------------------------------------------------ 4,425,084 4,007,254 3,854,130 ------------------------------------------------------------------------------------------------------------------------ Earnings from continuing operations before income taxes 260,519 209,776 165,545 Provision for income taxes 106,990 95,054 67,495 ------------------------------------------------------------------------------------------------------------------------ Earnings from continuing operations 153,529 114,722 98,050 Earnings (loss) from discontinued operations - (150,713) 25,876 ------------------------------------------------------------------------------------------------------------------------ Earnings (loss) before cumulative effect of change in accounting 153,529 (35,991) 123,926 Cumulative effect of change in accounting - (25,433) - ------------------------------------------------------------------------------------------------------------------------ NET EARNINGS (LOSS) 153,529 (61,424) 123,926 Preferred dividend requirements - 3,617 10,500 ------------------------------------------------------------------------------------------------------------------------ EARNINGS (LOSS) APPLICABLE TO COMMON SHARES $ 153,529 (65,041) 113,426 ======================================================================================================================== Earnings (loss) per common share: Continuing operations $ 1.95 1.43 1.17 Discontinued operations - (1.94) 0.34 Cumulative effect of change in accounting - (0.33) - ------------------------------------------------------------------------------------------------------------------------ EARNINGS (LOSS) PER COMMON SHARE $ 1.95 (0.84) 1.51 ========================================================================================================================
See accompanying notes to consolidated financial statements. 34 37
CONSOLIDATED STATEMENTS OF CASH FLOWS Ryder System, Inc. and Consolidated Subsidiaries Years ended December 31 ------------------------------------------------------------------------------------------------------------------------ (In thousands) 1994 1993 1992 ------------------------------------------------------------------------------------------------------------------------ CONTINUING OPERATIONS CASH FLOWS FROM OPERATING ACTIVITIES: Earnings from continuing operations $ 153,529 114,722 98,050 Depreciation expense, net of gains 591,669 543,338 547,013 Deferred income taxes 56,648 44,905 22,292 Proceeds from sales of receivables - - 115,000 Decrease (increase) in receivables (87,761) (6,616) 2,282 Decrease (increase) in inventories (2,914) 881 (4,030) Increase in accounts payable 66,087 41,738 4,580 Increase in accrued expenses 25,031 7,584 13,909 Increase in other non-current liabilities 27,733 21,255 25,380 Other, net 941 3,226 22,126 ------------------------------------------------------------------------------------------------------------------------ 830,963 771,033 846,602 ------------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM FINANCING ACTIVITIES: Debt proceeds 609,637 165,503 244,494 Debt repaid, including capital lease obligations (195,099) (295,144) (533,503) Preferred stock redeemed - (100,000) - Common stock issued 27,601 37,225 31,242 Dividends on common and preferred stock (46,926) (50,790) (55,141) ------------------------------------------------------------------------------------------------------------------------ 395,213 (243,206) (312,908) ------------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and revenue earning equipment (1,769,130) (1,237,486) (1,070,472) Sales of property and revenue earning equipment 265,259 224,921 220,334 Sale and leaseback of revenue earning equipment 400,000 - 200,000 Acquisitions, net of cash acquired (144,574) - (20,525) Other, net 41,456 43,840 40,273 ------------------------------------------------------------------------------------------------------------------------ (1,206,989) (968,725) (630,390) ------------------------------------------------------------------------------------------------------------------------ NET CASH FLOWS FROM CONTINUING OPERATIONS 19,187 (440,898) (96,696) NET CASH FLOWS FROM DISCONTINUED OPERATIONS - 446,842 87,448 ------------------------------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 19,187 5,944 (9,248) Cash and cash equivalents at January 1 56,691 50,747 59,995 ------------------------------------------------------------------------------------------------------------------------ CASH AND CASH EQUIVALENTS AT DECEMBER 31 $ 75,878 56,691 50,747 ========================================================================================================================
See accompanying notes to consolidated financial statements. 35 38
CONSOLIDATED BALANCE SHEETS Ryder System, Inc. and Consolidated Subsidiaries December 31 ----------------------------------------------------------------------------------------------------------------------- (Dollars in thousands, except per share amounts) 1994 1993 ----------------------------------------------------------------------------------------------------------------------- ASSETS Current assets: Cash and cash equivalents $ 75,878 56,691 Receivables 316,855 197,956 Inventories 57,124 52,963 Tires in service 164,347 144,488 Deferred income taxes 51,619 60,326 Prepaid expenses and other current assets 92,999 89,020 ----------------------------------------------------------------------------------------------------------------------- Total current assets 758,822 601,444 ----------------------------------------------------------------------------------------------------------------------- Revenue earning equipment 3,135,064 2,676,047 Operating property and equipment 594,328 510,489 Direct financing leases and other assets 223,680 223,374 Intangible assets and deferred charges 302,579 247,034 ----------------------------------------------------------------------------------------------------------------------- $5,014,473 4,258,388 ======================================================================================================================= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 118,103 156,503 Accounts payable 422,532 297,282 Accrued expenses 552,518 514,982 ----------------------------------------------------------------------------------------------------------------------- Total current liabilities 1,093,153 968,767 ----------------------------------------------------------------------------------------------------------------------- Long-term debt 1,794,795 1,374,943 Other non-current liabilities 426,848 397,873 Deferred income taxes 570,653 526,624 Shareholders' equity: Common stock of $.50 par value per share Authorized, 400,000,000; outstanding, 1994 - 78,760,742; 1993 - 77,294,484 539,101 508,832 Retained earnings 603,226 496,623 Translation adjustment (13,303) (15,274) ----------------------------------------------------------------------------------------------------------------------- Total shareholders' equity 1,129,024 990,181 ----------------------------------------------------------------------------------------------------------------------- $5,014,473 4,258,388 =======================================================================================================================
See accompanying notes to consolidated financial statements. 36 39 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ryder System, Inc. and Consolidated Subsidiaries
December 31, 1994, 1993 and 1992 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF CONSOLIDATION. The consolidated financial statements include Ryder System, Inc. and subsidiaries. All significant intercompany transactions have been eliminated in consolidation. REVENUE RECOGNITION. Lease revenue and other transportation services revenue is recognized as earned. CASH EQUIVALENTS. All investments in highly liquid debt instruments with a maturity of three months or less at purchase are classified as cash equivalents. INVENTORIES. Inventories, which consist primarily of fuel and truck parts, are valued using the lower of cost (specific identification or average cost) or market. REVENUE EARNING EQUIPMENT, OPERATING PROPERTY AND EQUIPMENT AND DEPRECIATION. Revenue earning equipment, principally vehicles, and operating property and equipment are stated at cost. Provision for depreciation and amortization on substantially all depreciable assets is computed using the straight-line method. Annual straight-line depreciation rates are 8% to 30% for revenue earning equipment, 2.5% to 10% for buildings and improvements and 8% to 33% for machinery and equipment. Gains on operating property and equipment sales are reflected in miscellaneous expense. Gains on sales of revenue earning equipment, net of selling and equipment preparation costs, are reported as reductions of depreciation expense and totaled $74 million, $55 million and $34 million in 1994, 1993 and 1992, respectively. INTANGIBLE ASSETS. Intangible assets consist principally of goodwill totaling $270 million in 1994 and $215 million in 1993. These amounts are reported net of accumulated amortization of $65 million and $57 million, respectively. Goodwill is amortized on a straight-line basis primarily over 40 years, with goodwill acquired during 1994 amortized over a period of 10 to 20 years. Goodwill was reduced by $4 million in 1994 and $1 million in 1993 as a result of the recognition of tax benefits associated with prior year acquisitions. The company reevaluates the recoverability of intangible assets as well as the amortization periods to determine whether an adjustment to the carrying value or a revision to estimated useful lives is appropriate. The primary indicators of recoverability are the associated current and forecasted operating cash flow. ACCRUED INSURANCE AND LOSS RESERVES. The company retains a portion of the risk under vehicle liability, workers' compensation and other insurance programs. In addition, the company has indemnified the buyer of its reinsurance operations (sold in 1989) from adverse loss development in excess of loss reserves transferred to the buyer. Reserves have been recorded which reflect the undiscounted estimated liabilities including claims incurred but not reported. Amounts estimated to be paid within one year have been classified as accrued expenses with the remainder included in other non-current liabilities. OTHER COSTS. Advertising and sales promotion costs are expensed as incurred. Vehicle repairs and maintenance which do not extend the life or increase the value of the vehicle are expensed as incurred. FOREIGN CURRENCY TRANSLATION. The company's foreign operations use the local currency as their functional currency. Assets and liabilities of these operations are translated at the exchange rates in effect on the balance sheet date. Income statement items are translated at the average exchange rates for the year. For these companies, the impact of currency fluctuation is included in shareholders' equity as a translation adjustment. ACCOUNTING CHANGES. Effective January 1, 1995, the company will adopt Statement of Financial Accounting Standards No. 116, "Accounting for Contributions Received and Contributions Made." This statement requires that promises to make contributions be recognized in the financial statements as an expense and a liability when a promise is made. The company anticipates that adoption in the first quarter of 1995 will result in an after tax charge to earnings of approximately $8 million, or $0.10 per common share, to record the cumulative effect of the change in accounting. Effective January 1, 1993, the company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" and Statement No. 109, "Accounting for Income Taxes." The company also adopted Statement No. 112, "Employers' Accounting for Postemployment Benefits," effective January 1, 1993, which did not impact the company's financial position or results of operations. SALES OF RECEIVABLES The company participates in an agreement to sell, with limited recourse, up to $220 million of trade receivables on a revolving basis through September 1996. The costs associated with this program approximate the costs of issuing commercial paper and are charged to miscellaneous expense. At both December 31, 1994 and 1993, the outstanding balance of receivables sold pursuant to this agreement was $220 million. 37 40 REVENUE EARNING EQUIPMENT
---------------------------------------------------------------------------------------- (In thousands) 1994 1993 ---------------------------------------------------------------------------------------- Full service lease $ 2,631,148 2,361,684 Commercial and consumer rental 1,999,867 1,728,299 ---------------------------------------------------------------------------------------- 4,631,015 4,089,983 Accumulated depreciation (1,738,019) (1,636,778) ---------------------------------------------------------------------------------------- 2,892,996 2,453,205 ---------------------------------------------------------------------------------------- Other revenue earning equipment 699,571 694,139 Accumulated depreciation (457,503) (471,297) ---------------------------------------------------------------------------------------- 242,068 222,842 ---------------------------------------------------------------------------------------- $ 3,135,064 2,676,047 ========================================================================================
OPERATING PROPERTY AND EQUIPMENT
---------------------------------------------------------------------------------------- (In thousands) 1994 1993 ---------------------------------------------------------------------------------------- Land $ 116,212 108,209 Buildings and improvements 432,686 409,028 Machinery and equipment 394,400 323,359 Other 101,510 72,825 ---------------------------------------------------------------------------------------- 1,044,808 913,421 Accumulated depreciation (450,480) (402,932) ---------------------------------------------------------------------------------------- $ 594,328 510,489 ========================================================================================
ACCRUED EXPENSES AND OTHER NON-CURRENT LIABILITIES
---------------------------------------------------------------------------------------- (In thousands) 1994 1993 ---------------------------------------------------------------------------------------- Salaries and wages $ 119,183 104,787 Employee benefits 8,564 13,527 Interest 35,524 29,578 Operating taxes 66,995 61,898 Insurance and loss reserves 393,801 382,607 Postretirement benefits other than pensions 50,507 47,076 Vehicle rent and related accruals 149,842 143,199 Other 154,950 130,183 ---------------------------------------------------------------------------------------- 979,366 912,855 Less - non-current portion (426,848) (397,873) ---------------------------------------------------------------------------------------- Accrued expenses $ 552,518 514,982 ========================================================================================
ACQUISITIONS During 1994, the company completed a number of acquisitions, including a logistics management company, three providers of full service truck leasing (one in the U.S. and two in the U.K.) and a provider of dedicated distribution services in the U.K. All acquisitions consummated during the three-year period ended December 31, 1994 have been accounted for using the purchase method and were not material in relation to the company's total assets. The consolidated financial statements reflect the results of operations of the acquired businesses from the acquisition dates. Had the acquisitions been consummated at January 1, 1992, consolidated revenue and net earnings for the three-year period would not have been materially affected. The fair value of assets acquired and liabilities assumed in connection with these acquisitions follows:
---------------------------------------------------------------------------------------- (In thousands) 1994 1993 1992 ---------------------------------------------------------------------------------------- Working capital $ (3,675) - 435 Goodwill 66,969 - 3,072 Other net assets 82,181 - 17,173 Debt assumed - - (155) ---------------------------------------------------------------------------------------- Net assets acquired $145,475 - 20,525 ========================================================================================
LEASES OPERATING LEASES AS LESSOR. One of the company's major product lines is full service leasing of commercial trucks, tractors and trailers. The standard full service lease requires the company to furnish the customer a vehicle, together with all services, supplies and equipment necessary for its operation. These services include maintenance, parts, tires, licenses, taxes, a substitute vehicle if needed and, in most cases, fuel. The agreements provide for a fixed time charge plus a fixed per-mile charge and, in some instances, a provision for guaranteed mileage. A portion of these charges is often adjusted in accordance with changes in the Consumer Price Index. DIRECT FINANCING LEASES. The company leases additional revenue earning equipment under agreements that are accounted for as direct financing leases. The provisions of these lease agreements are essentially the same as operating leases, except these leases meet certain requirements for classification as direct financing leases under Statement of Financial Accounting Standards No. 13, "Accounting for Leases." The net investment in direct financing leases consists of:
---------------------------------------------------------------------------------------------------- (In thousands) 1994 1993 ---------------------------------------------------------------------------------------------------- Minimum lease payments receivable $254,585 259,654 Executory costs and unearned income (65,680) (70,387) Unguaranteed residuals 38,408 38,736 ---------------------------------------------------------------------------------------------------- Net investment in direct financing leases 227,313 228,003 Current portion included in receivables 42,151 43,143 ---------------------------------------------------------------------------------------------------- Non-current portion included in other assets $185,162 184,860 ====================================================================================================
OPERATING LEASES AS LESSEE. The company leases vehicles, facilities and office equipment under operating lease agreements. The majority of these agreements are vehicle leases which specify that rental payments be adjusted every six months based on changes in interest rates and provide for early termination at stipulated values. During 1994, 1993 and 1992, rent expense was $141 million, $137 million and $132 million, respectively. 38 41 CAPITAL LEASES. The company occasionally enters into lease arrangements accounted for as capitalized leases. Capital leases entered into during the three-year period ended December 31, 1994 were not material. Capital leases are amortized over the effective economic lease term. LEASE PAYMENTS. Future minimum payments for leases in effect at December 31, 1994, which include an estimate of the future fixed time and guaranteed mileage charges for operating leases as lessor, are as follows:
---------------------------------------------------------------------------------------------------- As Lessor As Lessee ----------------------- --------------------- Direct Operating Financing Operating Capital (In thousands) Leases Leases Leases Leases ---------------------------------------------------------------------------------------------------- 1995 $1,016,513 58,252 158,710 5,615 1996 834,856 49,878 172,115 5,439 1997 659,624 41,106 139,028 3,385 1998 492,625 30,064 128,945 2,874 1999 299,133 24,237 129,486 2,622 Thereafter 226,823 51,048 223,071 423 ---------------------------------------------------------------------------------------------------- $3,529,574 254,585 951,355 20,358 Portion representing interest (3,836) ---------------------------------------------------------------------------------------------------- Present value of minimum lease payments $16,522 ====================================================================================================
The amounts on the previous table are based upon the assumption that revenue earning equipment will remain on lease for the length of time specified by the respective lease agreements. This is not a projection of future fixed lease revenue; no effect has been given to renewals, new business, cancellations or future rate changes. INCOME TAXES Effective January 1, 1993, the company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." Under this method, deferred tax assets and liabilities are determined based upon differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Additionally, deferred tax balances are adjusted in periods that include the enactment of tax rate changes. The adoption of this statement, which was made on a prospective basis, did not have a material impact on the company's financial condition or results of operations. Prior to 1993, the company followed the accounting for income taxes prescribed by Statement No. 96. The total provision for income taxes (excluding taxes related to discontinued operations and cumulative effect of change in accounting) includes the following components:
---------------------------------------------------------------------------------------------- (In thousands) 1994 1993 1992 --------------------------------------------------------------------------------------------- Current tax expense: Federal $ 44,039 45,557 31,648 State 6,232 3,563 13,841 Foreign 71 1,029 (286) ---------------------------------------------------------------------------------------------- 50,342 50,149 45,203 --------------------------------------------------------------------------------------------- Deferred tax expense: Federal 34,123 28,836 20,825 State 14,267 11,332 (3,041) Foreign 8,258 4,737 4,607 --------------------------------------------------------------------------------------------- 56,648 44,905 22,391 --------------------------------------------------------------------------------------------- Amortization of deferred investment tax credits - - (99) --------------------------------------------------------------------------------------------- Provision for income taxes $106,990 95,054 67,495 =============================================================================================
A reconciliation of the Federal statutory tax rate with the effective tax rate for continuing operations follows:
---------------------------------------------------------------------------------------------- % of Pretax Income ---------------------------------------- 1994 1993 1992 ---------------------------------------------------------------------------------------------- Statutory rate 35.0 35.0 34.0 Impact on deferred taxes for changes in tax rates 0.6 3.7 - State income taxes, net of Federal income tax benefit 4.5 4.6 4.3 Amortization and write-down of goodwill, net of benefits realized from business sold 0.8 1.0 1.0 Miscellaneous items, net 0.2 1.0 1.5 ---------------------------------------------------------------------------------------------- Effective rate 41.1 45.3 40.8 ==============================================================================================
The components of the net deferred income tax asset and liability as of December 31, 1994 and 1993 were as follows:
---------------------------------------------------------------------------------------------- (In thousands) 1994 1993 ---------------------------------------------------------------------------------------------- Deferred income tax assets: Accrued insurance and loss reserves $ 148,816 145,719 Alternative minimum taxes 32,380 34,869 Accrued compensation and benefits 37,789 37,191 Accrued reserves and other items 70,510 63,027 --------------------------------------------------------------------------------------------- 289,495 280,806 Valuation allowance (7,855) (5,723) --------------------------------------------------------------------------------------------- 281,640 275,083 ---------------------------------------------------------------------------------------------- Deferred income tax liabilities: Property and equipment basis differences (734,722) (672,341) Other items (65,952) (69,040) ---------------------------------------------------------------------------------------------- (800,674) (741,381) --------------------------------------------------------------------------------------------- Net deferred income tax liability $(519,034) (466,298) =============================================================================================
39 42 Deferred taxes have not been provided on temporary differences related to investments in foreign subsidiaries that are considered permanent in duration. These temporary differences consist primarily of undistributed foreign earnings of $62 million at December 31, 1994. A full foreign tax provision has been made on these undistributed foreign earnings. Determination of the amount of deferred taxes on these temporary differences is not practicable due to foreign tax credits and exclusions. The company had unused investment tax credits, for tax purposes, of $1 million and unused alternative minimum tax credits, for tax purposes, of $32 million at December 31, 1994, available to reduce future income tax liabilities. The investment tax credits are expected to be utilized before their expiration in 1998, and have been reflected in the financial statements as a reduction of deferred income taxes. Income taxes paid totaled $45 million in 1994. Income taxes paid of $52 million in 1993 and $44 million in 1992 include amounts related to both continuing and discontinued operations. DEBT
---------------------------------------------------------------------------------------------- (In thousands) 1994 1993 ---------------------------------------------------------------------------------------------- U.S. commercial paper $ 44,000 83,500 Canadian commercial paper 55,963 32,482 Unsecured U.S. notes: Debentures, 8.38% to 9.88%, due 1998 to 2017 839,499 840,499 Medium-term notes, 4.81% to 9.90%, due 1995 to 2021 748,400 393,300 Discount on unsecured U.S. notes (22,215) (22,776) Unsecured foreign obligations (principally pound sterling), 6.21% to 11.75%, due 1995 to 1998 195,793 105,466 Capital lease obligations and other debt 51,458 98,975 --------------------------------------------------------------------------------------------- Total debt 1,912,898 1,531,446 Less - amount classified as current (118,103) (156,503) --------------------------------------------------------------------------------------------- Long-term debt $1,794,795 1,374,943 ==============================================================================================
Debt maturities (including sinking fund requirements and excluding capital lease obligations) during the five years subsequent to December 31, 1994, are as follows:
---------------------------------------------------------------------------------------------- Debt (In thousands) Maturities ---------------------------------------------------------------------------------------------- 1995 $114,057 1996 171,760 1997 169,357 1998 467,862 1999 261,899 ==============================================================================================
In January 1995, the company redeemed at par $100 million of 9.375% debentures scheduled to be retired in 1998; these debentures were refinanced with medium-term notes at an average rate of 8.37% maturing in 1999 and 2000 (maturities of new debt reflected above). Additionally, in January 1995, the company announced that it will redeem in March 1995 at par $200 million of 9.20% debentures scheduled to mature in 1998. To support the company's outstanding U.S. commercial paper, the company maintains two revolving credit agreements. The primary agreement, with a total commitment of $500 million, has no expiration date. The secondary agreement, with a total commitment of $150 million, expires in December 1999. No compensating balances are required for either of these facilities, however they do require annual commitment fees ranging from .095% to .165%. There were no borrowings under either of these agreements during 1994 or 1993. The company had $606 million available under these agreements at December 31, 1994. The company has other committed lines of credit at December 31, 1994 totaling $43 million, of which $8 million was available. The weighted average interest rate for outstanding U.S. and Canadian commercial paper was 6.06% and 6.07%, respectively, at December 31, 1994. The primary revolving loan agreement contains the most restrictive covenants as to the payment of cash dividends. As of December 31, 1994, approximately $105 million of consolidated retained earnings were available for the payment of cash dividends. Interest paid totaled $139 million in 1994. Interest paid was $154 million in 1993 and $187 million in 1992 and included amounts related to both continuing and discontinued operations. 40 43 FINANCIAL INSTRUMENTS The company enters into interest rate swap and cap agreements as part of the management of its interest rate exposure; the company has no derivative financial instruments held for trading purposes and none of the instruments are leveraged. The company has assigned each interest rate swap and cap agreement to a debt or operating lease obligation. In order to manage its mix of fixed and variable rate debt instruments and to better match the repricing life of the company's debt to its portfolio of assets, the company enters into interest rate swap agreements which effectively convert the interest rate on certain debt from fixed rate to floating rate over the terms of the agreements. The company had notional principal amounts of $500 million and $200 million of such "fixed to floating" rate swap agreements outstanding at December 31, 1994 and 1993, respectively, with expiration dates ranging from 2001 to 2009. Under these agreements, the company received an average fixed rate of 6.15% and paid an average floating rate of 5.93% at December 31, 1994. In 1994, the company entered into interest rate cap agreements to limit its exposure to movements in interest rates above a specified level on certain fixed to floating rate swap agreements. Under these agreements the company is entitled to receive the amount, if any, by which London Interbank Offered Rate (LIBOR) exceeds the fixed cap rate specified in the agreement applied to a notional principal amount. At December 31, 1994, the company had interest rate cap agreements outstanding with an aggregate notional principal amount of $350 million. The premiums paid by the company for the interest rate caps are recorded in deferred charges and amortized over the lives of the cap agreements, which expire in 1996 and 1997. The recorded amount of the interest rate caps was $2 million at December 31, 1994. The company receives payments under the cap agreements when floating rates exceed the fixed cap rates, which average 5.46% at December 31, 1994. To mitigate exposure to variable interest rates, the company enters into agreements to effectively convert the interest rate exposure on certain debt and operating lease agreements in which the company is a lessee, from floating rate to fixed rate over the terms of the agreements. These "floating to fixed" rate swap agreements had notional amounts totaling $173 million and $115 million outstanding at December 31, 1994 and 1993, respectively, with expiration dates ranging from 1996 to 1998. Under these agreements, the company received an average floating rate of 6.36% and paid an average fixed rate of 7.02% at December 31, 1994. Under the interest rate swap agreements the company agrees to exchange in cash, at specified intervals, the difference between fixed and floating interest rate amounts based on agreed upon notional principal amounts. Floating interest rates paid or received by the company are based on the LIBOR and reprice periodically, typically in three to six month intervals. Amounts to be paid or received under the swap and cap agreements are recognized over the terms of the agreements as adjustments to interest expense or rent expense. Amounts receivable or payable under the agreements are included in receivables or accrued expenses in the consolidated balance sheets and were not material at December 31, 1994 and 1993. Although the company is exposed to credit loss for the interest rate differential in the event of nonperformance by the counterparties to the agreements described above, it does not currently anticipate nonperformance. The company mitigates counterparty risk by entering into transactions with financial institutions in the high investment grade category of ratings by Standard & Poor's Ratings Group and/or Moody's Investors Service. The estimated fair values of the company's debt, interest rate swap and cap agreements were determined from dealer quotations and represent the discounted future cash flows through maturity or expiration using current rates, and are effectively the amounts the company would pay or receive to terminate the agreements or retire the debt. The fair values of the interest rate swap and cap agreements discussed below are before consideration of the offsetting gains or losses associated with the exposures the instruments are intended to hedge. At December 31, 1994, the company had unrecognized gains of $13 million and $5 million on the interest rate caps and floating to fixed rate swap agreements, respectively, and an unrecognized loss of $61 million on the fixed to floating rate swap agreements. At December 31, 1993, the company had an unrecognized gain of $7 million on its fixed to floating rate swap agreements and an unrecognized loss of $3 million on its floating to fixed rate swap agreements. Changes in the fair values of these instruments are offset by changes in the fair values of the underlying assigned obligations. The estimated fair value of the company's debt (excluding capital lease obligations) was $1.91 billion and $1.65 billion at December 31, 1994 and 1993, respectively. This compares with net book values of $1.90 billion and $1.50 billion at December 31, 1994 and 1993, respectively. 41 44
SHAREHOLDERS' EQUITY -------------------------------------------------------------------------------------------------------------------------------- Preferred Common Retained Translation (In thousands, except share and per share amounts) Stock Stock Earnings Adjustment Total -------------------------------------------------------------------------------------------------------------------------------- At December 31, 1991 $ 98,025 430,033 856,027 3,569 1,387,654 Net earnings - - 123,926 - 123,926 Dividends declared: Common stock - $.60 per share - - (44,641) - (44,641) Fixed Rate Auction Preferred Stock (FRAPS) - $10.50 per share - - (10,500) - (10,500) Common stock issued under employee plans (1,720,115 shares) - 31,242 - - 31,242 Foreign currency translation adjustment - - - (14,587) (14,587) Other - 2,040 - - 2,040 -------------------------------------------------------------------------------------------------------------------------------- At December 31, 1992 98,025 463,315 924,812 (11,018) 1,475,134 Net loss - - (61,424) - (61,424) Dividends declared: Common stock - $.60 per share - - (45,832) - (45,832) FRAPS - $4.96 per share - - (4,958) - (4,958) Aviall, Inc. stock - - (314,000) - (314,000) Redemption of FRAPS (98,025) - (1,975) - (100,000) Common stock issued under employee plans (1,883,062 shares) - 37,225 - - 37,225 Foreign currency translation adjustment - - - (4,256) (4,256) Other - 8,292 - - 8,292 -------------------------------------------------------------------------------------------------------------------------------- At December 31, 1993 - 508,832 496,623 (15,274) 990,181 Net earnings - - 153,529 - 153,529 Common stock dividends declared - $.60 per share - - (46,926) - (46,926) Common stock issued under employee plans (1,466,258 shares) - 27,601 - - 27,601 Foreign currency translation adjustment - - - 1,971 1,971 Other - 2,668 - - 2,668 -------------------------------------------------------------------------------------------------------------------------------- AT DECEMBER 31, 1994 $ - 539,101 603,226 (13,303) 1,129,024 ================================================================================================================================
At December 31, 1994, the company had 78,760,742 Preferred Stock Purchase Rights (Rights) outstanding. The Rights were issued in March 1986 as a dividend to common shares outstanding and expire in 1996. The Rights contain provisions to protect shareholders in the event of an unsolicited attempt to acquire the company which is not believed by the board of directors to be in the best interest of shareholders. The Rights are evidenced by common stock certificates, are subject to antidilution provisions, and are not exercisable or transferable apart from the common stock until ten days after a person, or a group of affiliated or associated persons, acquires beneficial ownership of 10% or more, or makes a tender offer for 30% or more, of the company's common stock. The Rights entitle the holder, except such an acquiring person, to purchase at the current exercise price of $100 that number of the company's common shares which at the time would have a market value of $200. In the event the company is acquired in a merger or other business combination (including one in which the company is the surviving corporation), each Right entitles its holder to purchase at the current exercise price of $100 that number of common shares of the surviving corporation which would then have a market value of $200. In lieu of common shares, Rights holders can purchase 1/150 of a share of Series C Preferred Stock for each Right. The Series C Preferred Stock would be entitled to quarterly dividends equal to the greater of $10 per share or 150 times the common stock dividend per share, and have 150 votes per share, voting together with the common stock. The Rights have no voting rights and are redeemable, at the option of the company, at a price of $.033 per Right prior to the acquisition by a person or a group of affiliated or associated persons of beneficial ownership of 10% or more of the company's common stock. In 1993, the company redeemed all of its outstanding Fixed Rate Auction Preferred Stock (Series A and B) for $100 million. EMPLOYEE STOCK OPTION AND DIRECTORS' STOCK PLANS OPTION PLANS. The Profit Incentive Stock Plan provides for the granting of stock options to certain non-officer employees to purchase common shares at prices not less than 85% of the fair market value at the date of grant; all options granted in 1994, 1993 and 1992 were at fair market value. These options are for terms not exceeding 10 years and are exercisable cumulatively 25% or 50% each year, based on the terms of the grant. The 1980 Stock Incentive Plan provides for the granting of stock options to key employees at a price equal to the fair market value of shares at the date of grant. These options are for terms not exceeding 10 years, are generally exercisable cumulatively 42 45 20% or 50% each year, based on the terms of the grant, and may be granted in tandem with stock appreciation rights, limited stock appreciation rights and performance units. The plan also provides for restricted stock rights to these employees at no cost to them; none were granted in 1994, 1993 or 1992. The following table summarizes the status of the company's stock option plans:
---------------------------------------------------------------- (Shares in thousands) 1994 1993 1992 ---------------------------------------------------------------- Outstanding, January 1 6,110 6,342 6,557 Average per share $22.45 23.09 22.37 Granted 1,380 772 840 Average per share $24.80 26.43 23.93 Exercised 405 1,305 757 Average per share $20.42 20.32 17.18 Expired or canceled 505 127 298 Average per share $24.87 24.98 24.57 Adjustment for dividend of Aviall stock - 428 - Outstanding, December 31 6,580 6,110 6,342 Average per share $22.88 22.45 23.09 Exercisable, December 31 4,839 4,901 4,957 Available for future grant 983 1,858 903 ================================================================
During December 1993, the number and exercise price of all options outstanding at the time of the spin off of Aviall were adjusted using a conversion ratio such that: (1) the aggregate difference between the exercise price and the market value of the shares which are subject to the options is unchanged from the same calculation immediately prior to the spin off and (2) the ratio of the exercise price per option to the market value per share is also unchanged. DIRECTORS' STOCK PLAN. Under the company's Directors' Stock Plan, any eligible director may elect to receive restricted common shares equal to the nearest number of whole shares that can be purchased for $15 thousand based on the fair market value at the date of the grant, in lieu of $10 thousand cash compensation. The shares fully vest six months after the date of grant, provided that the director continues to serve in that capacity at that date. The shares may not be sold or transferred until six months after the date when service as a director ceases. During 1994, 6,232 shares, with a fair market value of $165 thousand at the date of grant, were issued under this plan. No shares were issued pursuant to this plan prior to 1994. PENSION PLANS The company and its subsidiaries sponsor several defined benefit pension plans, covering substantially all employees not covered by union-administered plans, including certain employees in foreign countries. These plans generally provide participants with benefits based on years of service and career-average compensation levels. Funding policy for these plans is to make contributions based on normal costs plus amortization of unfunded past service liability, but not greater than the maximum allowable contribution deductible for Federal income tax purposes. The majority of the plans' assets are invested in a master trust which, in turn, is primarily invested in listed stocks and bonds. The company also contributed to various defined benefit, union-administered, multi- employer plans for employees under collective bargaining agreements. Total pension expense for 1994, 1993 and 1992 was as follows:
---------------------------------------------------------------- (In thousands) 1994 1993 1992 ---------------------------------------------------------------- Company-administered plans: Present value of benefits earned during the year $ 23,378 21,780 20,320 Interest cost on projected benefit obligation 32,290 28,263 25,269 Return on plan assets: Actual (1,725) (43,551) (26,387) Deferred (34,345) 11,366 (2,271) Other, net 165 (2,066) (2,113) ---------------------------------------------------------------- 19,763 15,792 14,818 Union-administered plans 21,282 19,239 19,448 ---------------------------------------------------------------- Net pension expense $ 41,045 35,031 34,266 ================================================================
Included in the above amounts is the pension expense allocated to discontinued operations totaling $2 million in 1993 and 1992. The following table sets forth the plans' funded status and the company's prepaid expense at December 31, 1994 and 1993:
----------------------------------------------------------------------------- (In thousands) 1994 1993 ----------------------------------------------------------------------------- Plan assets at fair value $ 442,562 423,636 ----------------------------------------------------------------------------- Actuarial present value of service rendered to date: Accumulated benefit obligation, including vested benefits of $323,455 in 1994 and $376,951 in 1993 (350,269) (402,560) Additional benefit based on estimated future salary levels (53,681) (56,431) ----------------------------------------------------------------------------- Projected benefit obligation (403,950) (458,991) ----------------------------------------------------------------------------- Projected benefit obligation (in excess of) less than plan assets 38,612 (35,355) Unrecognized transition amount (22,647) (26,276) Other, primarily unrecognized prior service cost and net (gains) losses (1,389) 66,865 ----------------------------------------------------------------------------- Prepaid pension expense $ 14,576 5,234 =============================================================================
43 46 The following table sets forth the actuarial assumptions used for the company's dominant plan:
----------------------------------------------------------- 1994 1993 ----------------------------------------------------------- Discount rate for determining projected benefit obligation 8.50% 7.00% Rate of increase in compensation levels 5.00% 5.00% Expected long-term rate of return on plan assets 8.50% 8.50% Transition amortization in years 15 15 Gain and loss amortization in years 9 9 ===========================================================
The cumulative effect of the change in the discount rate as of December 31, 1994 is included above in unrecognized net gains (losses). In connection with the spin off of Aviall, the company was required to retain the accumulated benefit obligation and associated assets related to participants in the company's primary pension plan who were either present or former employees of Aviall for services rendered through the date of the spin off. The company treated all present or former employees of Aviall as terminated participants of this plan as of the date of the spin off. EMPLOYEE SAVINGS AND STOCK PURCHASE PLANS SAVINGS PLANS. The company has defined contribution savings plans that cover substantially all eligible employees. Company contributions to the plans are based on employee contributions and the level of company match. Company contributions to the plans totaled approximately $7 million in 1994 and 1993 and $4 million in 1992. PURCHASE PLANS. The Employee Stock Purchase Plan provides for periodic offerings to substantially all U.S. and Canadian employees, with the exception of executives who participate in the 1980 Stock Incentive Plan, to subscribe shares of the company's common stock at 85% of the fair market value on either the date of offering or the last day of the purchase period, whichever is less. The U.K. Stock Purchase Scheme provides for periodic offerings to substantially all U.K. employees to subscribe shares of the company's common stock at 85% of the fair market value on the date of the offering. The following table summarizes the status of the company's stock purchase plans:
---------------------------------------------------------------------- (Shares in thousands) 1994 1993 1992 ---------------------------------------------------------------------- Outstanding, January 1 1,187 1,784 1,350 Average per share $18.08 19.79 19.06 Granted 1,827 - 1,745 Average per share $22.92 - 19.92 Exercised 1,054 641 1,019 Average per share $18.16 19.92 19.23 Expired or canceled 141 53 292 Average per share $18.45 19.92 19.24 Adjustment for dividend of Aviall stock - 97 - Outstanding, December 31 1,819 1,187 1,784 Average per share $22.87 18.08 19.79 Exercisable, December 31 - 1,142 - Available for future grant 1,574 3,260 3,207 ======================================================================
Shares outstanding at the time of the spin off of Aviall were adjusted using a method similar to the one used for the company's stock option plans. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS The company and its subsidiaries sponsor plans which provide retired employees with certain health care and life insurance benefits. Substantially all employees not covered by union-administered health and welfare plans are eligible for these benefits. Health care benefits for the company's principal plans are generally provided to qualified retirees under age 65 and eligible dependents. Generally, these plans require employee contributions which vary based on years of service and include provisions which cap company contributions. Effective January 1, 1993, the company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." The statement requires that the expected costs of health care and life insurance provided to retired employees be recognized as expense during the years employees render service. As a result of adopting this statement, a pretax charge of $41 million ($25 million after tax, or $0.33 per common share) was recorded as the cumulative effect of a change in accounting principle to establish a liability for the present value of expected future benefits attributed to employees' service rendered prior to January 1, 1993. Under the company's previous accounting policy the cost of these benefits was recognized as expense as claims were incurred. Costs under this method were $3 million in 1992. 44 47 Total periodic postretirement benefit expense for 1994 and 1993 was as follows:
-------------------------------------------------------------------- (In thousands) 1994 1993 -------------------------------------------------------------------- Current year service cost $1,792 1,360 Interest accrued on postretirement benefit obligation 3,693 3,682 Other, net 317 - -------------------------------------------------------------------- Periodic postretirement benefit cost $5,802 5,042 ====================================================================
The company's postretirement benefit plans are not funded. The company's obligation under the plans as of December 31, 1994 and 1993 is as follows:
-------------------------------------------------------------------- (In thousands) 1994 1993 -------------------------------------------------------------------- Accumulated postretirement benefit obligation: Retirees $26,586 27,487 Fully eligible active plan participants 6,631 4,401 Other active plan participants 16,031 20,697 -------------------------------------------------------------------- 49,248 52,585 Unrecognized net gain (loss) 1,259 (5,509) -------------------------------------------------------------------- Accrued unfunded postretirement benefit obligation $50,507 47,076 ====================================================================
The following table sets forth the actuarial assumptions used for the company's dominant plan:
-------------------------------------------------------------------- 1994 1993 -------------------------------------------------------------------- Discount rate for determining accumulated postretirement benefit obligation 8.50% 7.00% Present health care cost trend rate 12.50% 13.00% Ultimate trend rate in 2003 and later 6.00% 6.00% ====================================================================
The cumulative effect of the change in the discount rate as of December 31, 1994 is included above in unrecognized net gain (loss). Increasing the assumed health care cost trend rates by 1% in each year would increase the accumulated postretirement benefit obligation as of December 31, 1994 by $2 million and would not have a material effect on periodic postretirement benefit cost for 1994. ENVIRONMENTAL MATTERS The company's operations involve storing and dispensing petroleum products, primarily diesel fuel. In 1988, the Environmental Protection Agency issued regulations that established requirements for testing and replacing underground storage tanks. The company is involved in various stages of investigation, cleanup and tank replacement to comply with the regulations. In addition, the company received notices from the Environmental Protection Agency and others that it has been identified as a potentially responsible party (PRP) under the Comprehensive Environmental Response, Compensation and Liability Act, the Superfund Amendments and Reauthorization Act and similar state statutes and may be required to share in the cost of cleanup of 25 identified disposal sites. The company records a liability for environmental assessments and/or cleanup when it is probable a loss has been incurred. Generally, the timing of these accruals coincides with the identification of an environmental problem through the company's internal procedures or upon notification from regulatory agencies. The company's probable environmental loss is based on information obtained from independent environmental engineers and/or from company experts regarding the nature and extent of environmental contamination, remedial alternatives available and the cleanup criteria required by relevant governmental agencies. The estimated costs include anticipated site testing, consulting, remediation, disposal, post-remediation monitoring and legal fees, as appropriate, based on information available at that time. These amounts represent the estimated undiscounted costs to fully resolve the environmental matters in accordance with prevailing Federal, state and local requirements based on information presently available. The liability does not reflect possible recoveries from insurance companies or reimbursement of remediation costs by state agencies, but does include a reasonable estimate of cost sharing with other PRPs at Superfund sites. At December 31, 1994 and 1993, the company had accrued $57 million and $45 million, respectively, for environmental liabilities. The company incurred $24 million of environmental expenses in both 1994 and 1993 and $23 million in 1992. The ultimate costs of the company's environmental liabilities cannot be projected with certainty due to the presence of several unknown factors, primarily the level of contamination, the effectiveness of selected remediation methods, the stage of investigation at the individual sites, the determination of the company's liability in proportion to other responsible parties and the recoverability of such costs from third parties. Based on information presently available, management believes that the ultimate disposition of these matters, although potentially material to the results of operations in any one year, will not have a material adverse effect on the company's financial condition or liquidity. DISCONTINUED OPERATIONS On December 7, 1993, the company completed the spin off of its aviation services subsidiaries as a new public company ("Aviall, Inc." or "Aviall"). Under the terms of the spin off, the company distributed to common stockholders one share of Aviall, Inc. common stock for each four Ryder System, Inc. common shares owned. The distribution had the effect of reducing the company's retained earnings by $314 million. In the accompanying consolidated statements of earnings, Aviall's results of operations have been combined with those of the company's previously discontinued aircraft leasing 45 48 business, which was disposed of in 1992, and reported as discontinued operations. The results of discontinued operations are summarized below:
---------------------------------------------------------------------------- Period Ended Year Ended December 7, December 31, (In thousands) 1993 1992 ---------------------------------------------------------------------------- Net sales $1,086,600 1,171,847 ============================================================================ Earnings (loss) from operations before income taxes and disposition gain $ (191,874) 33,099 Income tax benefit (provision) 41,161 (13,223) ---------------------------------------------------------------------------- Earnings (loss) from operations before disposition gain (150,713) 19,876 ---------------------------------------------------------------------------- Estimated gain on disposition - 9,272 Income tax provision - (3,272) ---------------------------------------------------------------------------- Net gain on disposition - 6,000 ---------------------------------------------------------------------------- Earnings (loss) from discontinued operations $ (150,713) 25,876 ============================================================================
The loss from discontinued operations in 1993 includes an after tax charge of $169 million ($2.18 per common share) related to the restructuring of Aviall and transaction costs associated with the spin off. Earnings from discontinued operations for 1992 include an after tax gain of $6 million ($0.08 per common share) on the final disposition of the discontinued aircraft leasing business. Interest expense was allocated to the discontinued businesses based upon an assumed debt to equity ratio consistent with other similar businesses and with the company's historical interest allocation method for segment reporting. Interest expense of $24 million and $33 million was included in the operating results of discontinued operations for 1993 and 1992, respectively. The company will continue to guarantee, for a limited period, approximately $19 million of Aviall's indebtedness to the European Investment Bank in exchange for a customary guarantee fee. OTHER MATTERS The company is a party to various claims, legal actions and complaints arising in the ordinary course of business. While any proceeding or litigation has an element of uncertainty, management believes that the disposition of these matters will not have a material impact on the financial condition, liquidity or results of operations of the company. SEGMENT INFORMATION The company's operating segments are Vehicle Leasing & Services and Automotive Carriers. Vehicle Leasing & Services offers a variety of truck-related services including full service truck leasing, commercial and consumer truck rental, programmed maintenance service and dedicated logistics. It also operates student transit services and manages and operates public transit services. Automotive Carriers is the largest highway transporter of new cars and trucks in the United States and a major transporter in Canada. Revenue by segment includes intersegment transactions which are based on substantially the same terms as transactions with unaffiliated customers. These amounts are eliminated in consolidation. Revenue of $452 million, $453 million and $468 million, primarily from Automotive Carriers, was derived from General Motors Corporation in 1994, 1993 and 1992, respectively.
------------------------------------------------------------------------------- (In thousands) 1994 1993 1992 ------------------------------------------------------------------------------- REVENUE: Vehicle Leasing & Services $4,057,735 3,596,803 3,384,952 Automotive Carriers 645,402 634,634 651,216 Intersegment (17,534) (14,407) (16,493) ------------------------------------------------------------------------------- $4,685,603 4,217,030 4,019,675 ------------------------------------------------------------------------------- Foreign portion of revenue $ 347,671 311,265 336,499 =============================================================================== OPERATING PROFIT: Vehicle Leasing & Services $ 389,085 335,793 283,505 Automotive Carriers 49,850 31,832 47,876 Other 166 (49) 118 ------------------------------------------------------------------------------- Operating profit 439,101 367,576 331,499 Miscellaneous expense, net (2,627) (650) (2,678) Interest expense (144,735) (124,789) (139,664) Unallocated corporate overhead expense (31,220) (32,361) (23,612) ------------------------------------------------------------------------------- Earnings from continuing operations before income taxes $ 260,519 209,776 165,545 ------------------------------------------------------------------------------- Foreign portion of operating profit $ 30,030 26,176 25,692 ------------------------------------------------------------------------------- Foreign portion of earnings from continuing operations before income taxes $ 16,017 9,140 6,711 =============================================================================== DEPRECIATION: Vehicle Leasing & Services $ 628,625 557,406 536,951 Automotive Carriers 35,689 39,418 43,155 Other 900 1,074 1,144 ------------------------------------------------------------------------------- 665,214 597,898 581,250 Gains on vehicle sales (73,545) (54,560) (34,237) ------------------------------------------------------------------------------- $ 591,669 543,338 547,013 =============================================================================== IDENTIFIABLE ASSETS: Vehicle Leasing & Services $4,644,294 3,908,931 3,446,998 Automotive Carriers 285,950 277,310 303,917 Other 121,911 107,327 61,283 Eliminations (37,682) (35,180) (43,789) ------------------------------------------------------------------------------- 5,014,473 4,258,388 3,768,409 Net assets of discontinued operations - - 910,124 ------------------------------------------------------------------------------- Total assets $5,014,473 4,258,388 4,678,533 ------------------------------------------------------------------------------- Foreign portion of identifiable assets $ 562,664 414,173 394,571 =============================================================================== CAPITAL EXPENDITURES, INCLUDING CAPITAL LEASES: Vehicle Leasing & Services $1,722,329 1,205,620 1,030,012 Automotive Carriers 43,789 31,045 40,528 Other 4,044 856 494 ------------------------------------------------------------------------------- $1,770,162 1,237,521 1,071,034 ===============================================================================
46 49
SUPPLEMENTAL FINANCIAL DATA Ryder System, Inc. and Consolidated Subsidiaries QUARTERLY DATA ---------------------------------------------------------------------------------------------------------------------------- Quarters ------------------------------------------------------------- (In thousands, except per share amounts) First Second Third Fourth ---------------------------------------------------------------------------------------------------------------------------- Revenue: 1994 $1,071,837 1,176,339 1,194,675 1,242,752 1993 $ 999,657 1,080,233 1,043,495 1,093,645 ---------------------------------------------------------------------------------------------------------------------------- Earnings from continuing operations: 1994 $ 23,738 49,842 41,957 37,992 1993 $ 19,946 40,744 23,488 30,544 ---------------------------------------------------------------------------------------------------------------------------- Net earnings (loss): 1994 $ 23,738 49,842 41,957 37,992 1993 $ (1,197) (122,204) 27,783 34,194 ---------------------------------------------------------------------------------------------------------------------------- Earnings per common share from continuing operations: 1994 $ 0.30 0.64 0.53 0.48 1993 $ 0.23 0.51 0.30 0.39 ---------------------------------------------------------------------------------------------------------------------------- Net earnings (loss) per common share: 1994 $ 0.30 0.64 0.53 0.48 1993 $ (0.05) (1.60) 0.36 0.44 ============================================================================================================================
Quarterly and year-to-date computations of per share amounts are made independently; therefore, the sum of per share amounts for the quarters may not equal per share amounts for the year. Net loss in the first quarter of 1993 includes the cumulative effect of a change in accounting resulting in an after tax charge of $25 million ($0.33 per common share). See "Postretirement Benefits Other Than Pensions" note for additional discussion. Net loss for the second quarter of 1993 includes an after tax charge of $169 million ($2.18 per common share) related to the discontinued aviation services subsidiaries. See "Discontinued Operations" note for additional discussion. COMMON STOCK DATA At December 31, 1994 and 1993, the company had 78,760,742 and 77,294,484 shares, respectively, of common stock outstanding. As of January 31, 1995, there were 19,516 common stockholders. The payment of cash dividends is subject to the restrictions described on page 40. The company's common shares are traded on the New York Stock Exchange, the Chicago Stock Exchange and the Pacific Stock Exchange and its ticker symbol is "R." Quarterly market price ranges of the common shares and quarterly cash dividends on common shares during 1994 and 1993 were as follows:
----------------------------------------------------------------------------------------------------- Market Price ------------------------------------------------ Common Share 1994 1993 Cash Dividends -------------------- ------------------- --------------- High Low High Low 1994 1993 ----------------------------------------------------------------------------------------------------- First quarter $27 7/8 24 1/8 32 1/4 27 1/4 .15 .15 Second quarter 25 7/8 21 3/8 31 7/8 26 1/2 .15 .15 Third quarter 28 24 1/2 33 1/2 27 7/8 .15 .15 Fourth quarter (a) 26 7/8 19 7/8 26 5/8 24 3/4 .15 .15 =====================================================================================================
(a) On December 7, 1993, the company completed the spin off of its aviation services subsidiaries by distributing to common stockholders one share of Aviall, Inc. common stock valued at $16.25 for each four Ryder System, Inc. common shares owned. The high and low presented for the first, second and third quarter of 1993 represent the values of the company's common stock before the spin off. The high and low for the fourth quarter of 1993 represent the values of the company's common stock after the spin off. The high and low for the fourth quarter prior to the spin off were 31 3/4 and 26 1/4, respectively. 47 50
SUPPLEMENTAL FINANCIAL DATA ELEVEN YEAR SUMMARY ---------------------------------------------------------------------------------------------------------- (Dollars in thousands, except per share amounts) 1994 1993 1992 1991 ---------------------------------------------------------------------------------------------------------- Revenue $4,685,603 4,217,030 4,019,675 3,851,334 Earnings from continuing operations (a): Before income taxes $ 260,519 209,776 165,545 60,479 After income taxes $ 153,529 114,722 98,050 30,923 Per common share $ 1.95 1.43 1.17 0.28 Net earnings (loss) (b) $ 153,529 (61,424) 123,926 14,017 Per common share (b) $ 1.95 (0.84) 1.51 0.05 ---------------------------------------------------------------------------------------------------------- Cash dividends per common share $ 0.60 0.60 0.60 0.60 Average number of common and common equivalent shares (in thousands) 78,768 77,535 75,046 73,837 Average common equity $1,057,931 1,266,715 1,327,624 1,317,888 Return on average common equity (%) (c) 14.5 10.2 8.1 4.2 Book value per common share $ 14.33 12.81 18.26 17.50 Market price - high (d) $ 28 26 5/8 28 7/8 21 5/8 Market price - low (d) $ 19 7/8 24 3/4 19 5/8 14 ---------------------------------------------------------------------------------------------------------- Total debt $1,912,898 1,531,446 1,668,947 1,988,509 Long-term debt $1,794,795 1,374,943 1,499,765 1,742,911 Debt to equity (%) 169 155 113 143 Debt to tangible equity (%) 227 202 135 176 ---------------------------------------------------------------------------------------------------------- Year-end assets $5,014,473 4,258,388 4,678,533 4,843,991 Return on average assets (%) (e) 3.3 2.7 2.3 0.5 Average asset turnover (%) (e) 99.6 103.2 104.0 95.2 ---------------------------------------------------------------------------------------------------------- Cash flow from continuing operating activities and asset sales $1,096,222 995,954 1,066,936 855,373 Capital expenditures, including capital leases $1,770,162 1,237,521 1,071,034 598,044 ---------------------------------------------------------------------------------------------------------- Number of vehicles (e) 188,831 168,278 160,188 155,159 Number of employees (e) 43,095 37,949 37,336 35,566 ==========================================================================================================
(a) Earnings from continuing operations for 1989 include a pretax charge of $83 million ($52 million after tax or $0.67 per common share) related to several unusual items, primarily anticipated losses on accelerated vehicle dispositions, changes to prior years' workers' compensation loss reserves and staff and facility reductions. Earnings from continuing operations for 1988 include a pretax charge of $66 million ($50 million after tax or $0.63 per common share) related to a provision for business restructurings and revaluation of goodwill. (b) Net loss for 1993 includes the cumulative effect of a change in accounting resulting in an after tax charge of $25 million ($0.33 per common share), and an after tax charge of $169 million ($2.18 per common share) related to the discontinued aviation services subsidiaries. Net earnings for 1992 include an after tax gain of $6 million ($0.08 per common share), related to the final disposition of the discontinued aircraft leasing business. Net earnings for 1991 and 1990 include after tax charges of $52 million ($0.70 per common share) and $36 million ($0.48 per common share), respectively, for the discontinuance of the same business. Net earnings for 1989 and 1988 include, in addition to the items discussed in (a) above, after tax extraordinary losses of $6 million ($0.08 per common share) and $19 million ($0.23 per common share), respectively, related to the early retirement of debt. Also included in 1988 is a one-time favorable adjustment of $81 million ($1.02 per common share) for the cumulative effect of a change in accounting for income taxes. Net earnings (loss) for all years include the results of discontinued operations. 48 51
Ryder System, Inc. and Consolidated Subsidiaries ------------------------------------------------------------------------------------------------------------------------------------ (Dollars in thousands, except per share amounts) 1990 1989 1988 1987 1986 1985 1984 ------------------------------------------------------------------------------------------------------------------------------------ Revenue 3,950,024 3,889,063 3,842,724 3,621,526 3,105,632 2,723,705 2,445,038 Earnings from continuing operations (a): Before income taxes 98,690 54,090 167,131 237,560 232,855 188,686 191,125 After income taxes 58,632 31,975 100,249 149,615 139,317 118,496 115,736 Per common share 0.64 0.31 1.18 1.82 1.80 1.64 1.62 Net earnings (loss) (b) 42,680 45,986 197,173 187,113 160,933 125,316 135,908 Per common share (b) 0.43 0.50 2.40 2.29 2.09 1.73 1.91 ------------------------------------------------------------------------------------------------------------------------------------ Cash dividends per common share 0.60 0.60 0.56 0.52 0.44 0.40 0.36 Average number of common and common equivalent shares (in thousands) 74,769 77,275 79,641 79,621 74,898 72,410 71,226 Average common equity 1,365,269 1,419,226 1,406,470 1,227,372 957,084 814,897 702,972 Return on average common equity (%) (c) 5.0 3.1 9.1 14.8 16.3 15.4 16.8 Book value per common share 18.06 18.24 18.71 16.75 14.72 12.20 10.84 Market price - high (d) 23 3/8 31 1/8 32 1/2 43 35 1/2 24 5/8 19 5/8 Market price - low (d) 12 1/4 19 3/4 22 5/8 20 21 1/2 14 5/8 12 3/4 ------------------------------------------------------------------------------------------------------------------------------------ Total debt 2,402,741 2,674,884 2,576,568 2,614,018 2,037,824 1,553,100 1,055,471 Long-term debt 1,883,869 2,151,411 2,281,604 2,476,715 1,866,980 1,459,235 1,012,054 Debt to equity (%) 168 180 162 185 164 160 138 Debt to tangible equity (%) 213 226 202 232 214 231 151 ------------------------------------------------------------------------------------------------------------------------------------ Year-end assets 5,263,498 5,690,450 5,639,674 5,450,809 4,526,087 3,643,599 2,718,591 Return on average assets (%) (e) 1.1 0.5 2.0 3.5 3.6 3.8 4.8 Average asset turnover (%) (e) 88.7 83.0 83.5 87.2 83.4 87.2 100.6 ------------------------------------------------------------------------------------------------------------------------------------ Cash flow from continuing operating activities and asset sales 1,093,739 1,017,418 1,004,776 1,006,819 891,601 697,987 658,935 Capital expenditures, including capital leases 787,740 1,032,056 1,120,751 1,157,993 758,450 768,509 865,463 ------------------------------------------------------------------------------------------------------------------------------------ Number of vehicles (e) 160,983 163,082 162,633 153,848 134,987 109,644 100,654 Number of employees (e) 35,591 37,628 40,625 36,811 30,865 24,624 21,688 ====================================================================================================================================
(c) Excludes the cumulative effect of changes in accounting and special charges and gains related to discontinued operations. (d) On December 7, 1993, the company completed the spin off of its aviation services subsidiaries by distributing to common stockholders one share of Aviall, Inc. common stock valued at $16.25 for each four Ryder System, Inc. common shares owned. The high and low presented for 1993 were the values of the company's common stock after the spin off. The high and low for 1993 prior to the spin off were 33 1/2 and 26 1/4, respectively. (e) Excludes discontinued operations. Average common shares and all per share information have been adjusted for 3% stock dividends in 1983-1984, the March 1985 two-for-one split and the May 1986 three-for-two split, as appropriate. 49 52 GLOSSARY OF INDUSTRY TERMS [PHOTO] Ryder auto carriers transported nearly 6.3 million vehicles in 1994. ASSET MANAGEMENT: A Ryder core competency that encompasses the specification, purchasing, managing, maintaining, and disposing of vehicles at the appropriate time, all to increase return on investment. ASSET RATIONALIZATION: A process that audits a company's transportation and distribution assets and compares them against an optimum supply chain design. AUTOMOTIVE CARRIAGE: A business that delivers finished vehicles to dealers from manufacturing plants, ports and railheads. Automotive carriers often provide other value-added services such as vehicle inspection, yard management and finished vehicle detailing. BACKHAUL: The return movement of a vehicle from its original destination back to its point of origin with a payload. CONTRACT CARRIER: A for-hire carrier that serves only shippers with which the carrier has a continuing contract, and not the general public. CONTRACT LOGISTICS: The use of a third-party provider to plan, implement and control the efficient, cost-effective flow and storage of raw materials, in-process inventory, finished goods and related information from the point of origin to the point of consumption, or any portion thereof. CUBED OUT: A term that refers to the percentage of a vehicle's cubic hauling space that is utilized in a shipment. If a particular vehicle is 100% "cubed out," it has no additional space in which to carry freight. CYCLE TIME: The time it takes for a business to receive, fulfill and then deliver an order to a customer. Once measured only in days, many industries now measure it in hours. DEDICATED CONTRACT CARRIAGE: A third-party contractual service that dedicates vehicles and drivers to a single customer for its exclusive use, usually done in a closed loop or fixed route situation. EFFICIENT CONSUMER RESPONSE (ECR): A grocery industry initiative designed to replenish stock on store shelves based on actual consumer demand rather than by demand forecasting. 50 53 [PHOTO] Home Depot is one of Ryder's more than 13,000 full service truck leasing customers. ELECTRONIC DATA INTERCHANGE (EDI): Computer-to-computer communication between two or more companies that is used to generate documents like purchase orders and invoices. EDI also enables firms to access the information systems of suppliers, customers and carriers to determine real-time status of shipments and inventory. FINANCE LEASE: Often, a full-payout agreement in which the customer, at the end of the lease term, assumes ownership of the vehicle or is provided with a purchase option. The lessee is usually responsible for maintenance, taxes and insurance. FLOW-THROUGH DISTRIBUTION: A process in which products from multiple locations are brought into a central facility (sometimes called a cross-dock), are re-sorted by delivery destination and shipped in the same day. This eliminates warehousing, reduces inventory levels and speeds order turnaround time. The designing, location and management of flow-through distribution locations is often a part of a company's logistics reengineering strategy. FULL SERVICE TRUCKLEASE: A full service truck lease is a system that provides the customer with a truck and a variety of support services for a single monthly lease payment. Full service leases may include features like preventive maintenance, emergency roadside repairs, equipment evaluations and specifications, fuel, administrative support, driver support, safety programs, and the return of vehicles at the end of the contract term. INTEGRATED LOGISTICS: A system-wide management view of the entire supply chain, from raw materials supply through finished goods distribution. It requires managing all functions that make up the supply chain as a single entity, rather than managing individual functions separately. INTERMODAL TRANSPORTATION: Transporting freight by using two or more transportation modes. An example would be freight in containers which might first be taken to a port by truck, transported by ship, then carried by rail, and finally be transferred back to a truck for delivery to its final destination. INVENTORY DEPLOYMENT: A technique for reducing the number of warehouses required by replacing excess inventory with event-driven information derived from tracking the location of inventory at rest as well as in motion. It is typically done using bar-coding and radio frequency technology, which eliminate paperwork. 51 54 [PHOTO] Ryder Dedicated Logistics delivers parts to Saturn's manufacturing facility just in time, 300 times a day, 365 days a year. INVENTORY MANAGEMENT: The process of ensuring the availability of products through inventory administration activities such as planning, stock positioning, and monitoring the age of the product. INVENTORY TURNS: The number of times inventory is sold during a period, generally measured in turns per year. JUST-IN-TIME (JIT): An in-bound manufacturing strategy that smoothes material flow into assembly and manufacturing plants. JIT minimizes inventory investment by providing timely, sequential deliveries of product exactly where and when it is needed, from a multitude of suppliers. Traditionally an automotive strategy, it is being introduced into many other industries. LESS-THAN-TRUCKLOAD (LTL) CARRIERS: Trucking companies that consolidate and then transport small shipments of freight by utilizing a network of terminals and relay points. LOGISTICS: The function which encompasses materials management and physical distribution. LOGISTICS CHANNEL: The network of supply chain participants engaged in storage, handling, transfer, transportation and communications functions that contribute to the efficient flow of goods. OUTSOURCING: Subcontracting business functions or processes such as logistics and transportation services to an outside firm, instead of doing them in-house. PRIVATIZATION: A trend in the U.S. public sector brought about by the need to gain cost and service efficiencies available through private management of public services. PUBLIC TRANSIT: The transportation of people by public sector organizations to and from work or other destinations. There is a trend in the public sector to outsource public transit to third-party providers, or "privatize," in order to gain cost and service efficiencies. QUICK RESPONSE (QR) DELIVERY: A rapidly expanding delivery process using information technology to measure customer demand, enabling retailers to have stock on shelves when needed while maintaining minimum backroom inventories. 52 55 [PHOTO] Ryder has more than 34,000 vehicles in its consumer truck rental fleet. RENTAL DAY: The basic unit used to measure fleet utilization rates by companies that are in the business of renting vehicles. The total number of rental days recorded by commercial truck rental companies is an indicator that measures businesses' incremental need to ship products. REVERSE LOGISTICS: Historically, the logistics process ended once products reached the consumer. Reverse logistics melds classic logistics activities with conservation, recycling and disposal - activities that center around preserving the environment and the need to conserve raw materials. ROLLING STOCK: In the transportation business, rolling stock traditionally has meant "vehicles." The term is used in logistics to refer to inventory in motion, not at rest. STUDENT TRANSPORTATION: The logistics business that transports students to and from school and extracurricular activities. SUPPLY CHAIN MANAGEMENT: An integrating process that combines the classic logistics functions of physical distribution and materials management with the purchasing of raw materials and/or inventory and sales, marketing, information technology and strategic planning functions. [PHOTO] Ryder Student Transportation Services transports more than 440,000 students to and from school each day. THIRD-PARTY PROVIDER: A firm that supplies goods and services such as transportation and logistics to another company. TIME-BASED COMPETITION: A competitive marketing strategy based on a company's ability to deliver its products to customers faster than its competition. TRUCKLOAD (TL) CARRIERS: Trucking companies that move full truckloads of freight directly from the point of origin to its destination. TRUCK RENTAL: A short-term transaction, generally under 12 months, that allows the customer the use of a truck for a specified period of time, generally measured in "rental days." Rental can be used to supplement a leased or privately-owned fleet during short periods of peak need to execute rush orders or handle excess volume, or to test new routes and distribution channels. UTILIZATION RATE: A fleet productivity measurement that tracks the percentage of time that a truck or vehicle is being used or rented. 53 56 BOARD OF DIRECTORS CORPORATE MANAGEMENT M. ANTHONY BURNS M. ANTHONY BURNS Chairman, President and Chairman, President and Chief Executive Officer Chief Executive Officer ARTHUR H.BERNSTEIN (1,3) JAMES M. HERRON President and Chief Executive Officer, Senior Executive Vice President and Bancorp Capital Group,Inc. General Counsel EDWARD T. FOOTE II (2,3) EDWIN A. HUSTON President, University of Miami Senior Executive Vice President - Finance and Chief Financial Officer JOHN A. GEORGES (1,4) Chairman and C. ROBERT CAMPBELL Chief Executive Officer, Executive Vice President - International Paper Company Human Resources and Administration VERNON E. JORDAN, JR. (1,4) J. ERNEST RIDDLE Senior Partner, Executive Vice President - Akin, Gump, Strauss, Marketing Hauer & Feld, LLP R. RAY GOODE HOWARD C. KAUFFMANN (2,4) Senior Vice President - Retired President, Public Affairs Exxon Corporation JOHN R. HADDOCK DAVID T. KEARNS (1,3) Senior Vice President - Chairman, Industry and Commercial Marketing New American Schools Development Corporation and Retired Chairman BRUCE D. PARKER and Chief Executive Officer, Senior Vice President - Xerox Corporation MIS and Chief Information Officer LYNN M. MARTIN (2,3) KEVIN M. PETERS Former U.S. Secretary of Labor; Senior Vice President - Chairperson, Corporate Account Sales Deloitte & Touche's Council for the Advancement of Women; ANTHONY G. TEGNELIA advisor to Deloitte & Touche; and Senior Vice President and Controller Professor, J.L. Kellogg Graduate School of Management at Northwestern University STEVEN R. GOLDBERG Vice President and Treasurer JAMES W. MCLAMORE (1,4) Chairman Emeritus, JOSHUA HIGH Burger King Corporation Vice President - Corporate Tax PAUL J. RIZZO (2,3) J. WAYNE JOHNSON Retired Vice Chairman, Vice President - Risk Management International Business Machines Corporation LISA A. RICKARD Vice President - Federal Affairs DONALD V. SEIBERT (1,4) Retired Chairman of the Board and FRED RAY STUEVER Chief Executive Officer, Vice President - J.C. Penney Company, Inc. Environment, Health and Safety HICKS B. WALDRON (2,4) H. JUDITH CHOZIANIN Retired Chairman and Secretary Chief Executive Officer, Avon Products, Inc. ALVA O. WAY (2,3) Chairman, IBJ Schroder Bank & Trust Company MARK H. WILLES (2,3) Vice Chairman, General Mills, Inc. (1) Audit Committee (2) Compensation Committee (3) Finance Committee (4) Committee on Directors and Public Responsibility
54 57 OPERATING MANAGEMENT VEHICLE LEASING & RYDER PUBLIC SERVICES DIVISION TRANSPORTATION SERVICES President RYDER COMMERCIAL Gerald R. Riordan LEASING &SERVICES President Senior Vice President & Dwight D. Denny General Manager John H. Dorr Senior Vice President Franklin W. Stephens Vice Presidents & General Managers Vice Presidents & John A. Elliott General Managers (Ryder Student Transportation Joel E. Biggerstaff Services, Inc.) (Southeast Region) John C. Green Christopher H. Culley (Managed Logistics (Mid West Region) Systems, Inc.) Robert A. Dickinson Bobby J. Griffin (Southwest Region) (ATE Management and John R. Hosmer Service Company,Inc.) (Mid Atlantic Region) Stephen E. Hunt (Northeast Region) AUTOMOTIVE CARRIER Edward R. Justis, Jr. DIVISION (Mid South Region) William L. O'Donnell RYDER AUTOMOTIVE CARRIER (Great Lakes Region) GROUP, INC. Douglas M. Slack President (West Region) James B. Griffin Vice Presidents Executive Vice President George E. Arseneau Michael J. Wagner Thomas D. Hjertquist Michael W. Kuryla Senior Vice President Tracy A. Leinbach Steven C. Nichols J. Randall Nobles Robert P. Tabb Vice President Rolland G. Hill RYDER TRUCK RENTAL CANADA LTD. A.T.G. AUTOMOTIVE Vice President & TRANSPORT GROUP, INC. General Manager Vice President & Gordon J. Box General Manager David N. Flett RYDER DEDICATED LOGISTICS, INC. BLAZER TRUCK LINES, INC. President Vice President & Larry S. Mulkey General Manager Donn B. Whitmer Senior Vice President William D. Zollars RYDER AUTOMOTIVE OPERATIONS, INC. Vice Presidents Senior Vice President William A. Baum Bruce R. LeMar Jerry W. Bowman Enrique P. Fiallo Vice Presidents Shar Javad Ronald R. Borges C. Michael McCanta Ronald L. Butterbaugh Miles M. Raper Stephen M. Donly Vincent E. Fortuna RYDER CONSUMER John S.Gottlieb TRUCK RENTAL Gerald J. MacDonald President Craig J. McGrath Gerald R. Riordan W. Joseph Tripp Area Vice Presidents Raymond W. Casey INTERNATIONAL (Eastern Area) DIVISION Wayne M. Mincey (Central Area) Senior Vice President & Jack P. Summerville General Manager (Western Area) Randall E.West Vice Presidents Vice Presidents David S. Russell Dennis M. Custage C. Mack Kenneth V. Eckhart Scott R. Francis Glenn A. Schneider RYDER PLC Managing Director John Hodges RYDER TRANSPORT SERVICES GMBH Managing Director Rainer Sandow RYDER DE MEXICO, S.A. DE C.V. Managing Director Jaime White Ibanez
55 58 RYDER IN THE MARKETPLACE VEHICLE LEASING & SERVICES DIVISION Ryder Commercial Leasing & Services Ryder Dedicated Logistics, Inc. Ryder Consumer Truck Rental Ryder Student Transportation Services,Inc. Ryder Truck Rental Canada Ltd. ATE Management and Service Company,Inc. Ryder Move Management,Inc. Managed Logistics Systems, Inc. AUTOMOTIVE CARRIER DIVISION Automotive Transport Inc. Blazer Truck Lines, Inc. Commercial Carriers, Inc. Delavan F.J. Boutell Driveaway Co., Inc. MCL Motor Carriers Limited QAT, Inc. INTERNATIONAL DIVISION Ryder Plc (United Kingdom) Ryder Transport Services GmbH (Germany) Ryder Polska Sp.z o.o (Poland) Ryder de Mexico, S.A. de C.V. (Mexico) DIVIDEND REINVESTMENT PLAN Stockholders may automatically reinvest their dividends and cash in additional shares of Ryder System stock by enrolling in the company's Dividend Reinvestment Plan. Costs of the plan are paid by the company. Information about the Dividend Reinvestment Plan may be obtained by writing to the following address: The First National Bank of Boston Shareholder Services Division Dividend Reinvestment Unit M/S 45-01-06 Post Office Box 1681 Boston, Massachusetts 02105-1681 CORPORATE INFORMATION ANNUAL MEETING The annual meeting of stockholders of Ryder System, Inc. will be held at 11:00 a.m., Friday, May 5, 1995, at the Miami Airport Hilton and Towers, 5101 Blue Lagoon Drive, Miami,Florida. A formal notice of the meeting, together with a proxy statement and a form of proxy, was mailed to each stockholder with this annual report. STOCKHOLDER INFORMATION AND 1994 FORM 10-K For stockholder information or to obtain without charge a copy of Ryder System's Form 10-K Annual Report to the Securities and Exchange Commission, which will be available after March 31, 1995, please write to: Robert H. Tromberg Group Director - Investor Relations Ryder System, Inc. 3600 N.W. 82nd Avenue Miami, Florida 33166 AUDITORS KPMG Peat Marwick LLP Certified Public Accountants One Biscayne Tower Suite 2900 2 South Biscayne Boulevard Miami,Florida 33131 TRANSFER AGENT AND REGISTRAR The First National Bank of Boston Shareholder Services Division Investor Relations Unit M/S 45-02-09 Post Office Box 644 Boston, Massachusetts 02105-0644 (617) 575-3170 COMMON STOCK LISTINGS New York Stock Exchange Chicago Stock Exchange Pacific Stock Exchange TRADING SYMBOL: R EXECUTIVE OFFICES Ryder System,Inc. 3600 N.W. 82nd Avenue Miami, Florida 33166 (305) 593-3726 56 59 CORPORATE RESPONSIBILITY In communities where its employees live and work, Ryder supports efforts which favorably impact the ability of women, minorities and the disadvantaged to participate more fully in society. The company believes such efforts are not only the right things to do, but also good business. Ryder addresses corporate responsibility in two ways, through Ryder-based programs designed to expand opportunities for women and minorities and through support of community organizations with the same focus. To Ryder, expanding opportunities for women and minorities provides a competitive advantage, both domestically and in important emerging global markets. The company believes so strongly in this advantage that it now requires employement diversity objectives as part of annual business plans for all bonus-eligible management personnel. To attract the best and brightest talent, including women and minority employees, Ryder works with and receives excellent advice from groups such as Catalyst, which represents women's issues; National Council of LaRaza, which represents Hispanic issues; and the National Urban League, which represents African American issues. Recruiting drives at historically black colleges and universities such as Florida A&M University, Howard University and Morehouse College also continue to be rich sources of qualified recruits. Of Ryder's 1994 MBA college recruits, more than 50% were women or minorities. [PHOTO] MEMBERS OF THE DIVERSITY COUNCIL MEET WITH TONY BURNS. From left: CAELI MATTHEWS, PRESIDENT, RYDER WOMEN'S MANAGEMENT ASSOCIATION; OFELIA SAN PEDRO, PRESIDENT, RYDER HISPANIC NETWORK; LOLLY WALTON, PRESIDENT, RYDER PROFESSIONAL SECRETARIES; AND MARY WALTON, PRESIDENT, RYDER BLACK EMPLOYEE NETWORK. The company has established employee network groups for the areas of Black Employees, Hispanic Employees, Professional Secretaries and Women's Management. These groups provide tangible business results through mentoring and recruiting, and by offering special insights into ways to improve operations and marketing. One interesting outgrowth has been an initiative to expand market penetration in key minority markets. The company's charitable contributions are made largely through the Ryder System Charitable Foundation, which supports a wide array of local and national causes aimed at bringing the disadvantaged more fully into the mainstream. Reflecting a growing belief that education provides the best hope of reaching that goal, a relatively large precentage of giving is made to programs in this area. From the local classroom to the national level, the company supports efforts to address the complex challenges facing today's educators. Scholarships and financial aid are made available for minority students at the community college, undergraduate and graduate levels through relationships with specific schools as well as the United Negro College Fund and the Jackie Robinson Foundation, which combines college scholarships with much-needed hands-on business experience. At home in South Florida, Ryder is a leader in meeting a variety of community needs. The company provides active leadership and significant financial support to such human needs groups as the United Way of Dade County. Extending its educational focus to the arts, support for "in-school" programs of the Florida Grand Opera, Coconut Grove Playhouse and Florida Philharmonic helps expose people of all ages and backgrounds to new cultural arts experiences. The company has made a significant gift to the South Florida Performing Arts Center Foundation's capital campaign and is providing leadership to that campaign, which will help fund construction of a new performing arts complex in downtown Miami. At Ryder, diversity and community involvement are fundamental elements of its business philosophy, and the company also encourage its employees to be active in the communities where they live and work. In doing so, the company believes it not only extends a positive impact to the communities, but also helps to develop business leadership skills in its employees. 57 60 RYDER SYSTEM, INC. 3600 NW 82nd Avenue Miami, Florida 33166 EX-21.1 24 LIST OF SUBSIDIARIES 1 EXHIBIT 21.1 RYDER SYSTEM, INC. Subsidiaries as of March 1, 1995
State/Country of ---------------- Name of Company Incorporation --------------- ------------- ATE Management and Service Company, Inc. Delaware ATE Management of Duluth, Inc. Minnesota A.T.G. Automotive Transport Group, Inc. Canada Automobile Transport Inc. Canada B & C, Inc. (1) Michigan Blazer Truck Lines Inc. (2) Michigan F. J. Boutell Driveaway Co., Inc. Michigan Cape Area Transportation Systems, Inc. Massachusetts Central Virginia Transit Management Company, Inc. Virginia Commercial Carriers, Inc. (3) Michigan Commuter Services, Inc. Virginia E/H Service Corporation Wisconsin Far East Freight, Inc. Florida Forrest Rental Services Limited England Harbor Drive Realty, Inc. Florida H.N.S. Management Company, Inc. Connecticut Managed Logistics System, Inc. Delaware MCL Motor Carriers Limited Canada Merrimack Valley Area Transportation Co., Corp. Massachusetts Metro Service Corp. Wisconsin Mid-South Transportation Management, Inc. Tennessee Mitchell Self Drive Limited England Murray Recon, Inc. New York Network Sales, Inc. (4) Tennessee Network Vehicle Central, Inc. Florida Old Dominion Transit Management Company Virginia OSHCO, Inc. Florida Paratransit Brokerage Services, Inc. Massachusetts Parking Management of Southwest Virginia, Inc. Virginia QAT, Inc. Florida RMX, Inc. (5) Delaware RSI Acquisition Corp. Delaware RSI Purchase Corp. Delaware RTA Transit Services, Inc. Massachusetts Ryder Automotive Carrier Group, Inc. Florida Ryder Automotive Operations, Inc. Florida Ryder Capital S.A. de C.V. Mexico RYDERCORP Florida RYDERCORP, Inc. Delaware Ryder de Mexico S.A. de C.V. Mexico Ryder Dedicated Capacity, Inc. Tennessee Ryder Dedicated Logistics, Inc. (6) Delaware Ryder Dedicated Logistics Limited England Ryder Distribution Services Ltd. England
2 Ryder Driver Leasing, Inc. Florida Ryder Energy Distribution Corporation Florida Ryder (Europe) Limited England Ryder Finance, Inc. Florida Ryder Freight Broker, Inc. Virginia Ryder International, Inc. Florida Ryder Mexicana, S.A. de C.V. Mexico Ryder Move Management, Inc. Oregon Ryder Pension Fund Limited England Ryder Plc England Ryder Polska Sp. z o. o. Poland Ryder Puerto Rico, Inc. Delaware Ryder Realty, Inc. Delaware Ryder Relocation Services, Inc. Florida Ryder Services Corporation (7) Florida Ryder Servicios S.A. de C.V. Mexico Ryder St. Louis Redevelopment Corporation Missouri Ryder Student Transportation Services, Inc. (8) Florida Ryder System, B.V. Amsterdam, Netherlands Ryder System, Ltd. England Ryder System Holdings (UK) Limited England Ryder Transport Services GmbH West Germany Ryder Transport Services Limited England Ryder Transportation Limited England Ryder Truck Rental, Inc. (9) Florida Ryder Truck Rental Canada Ltd. (10) Canada Ryder Truck Rental Limited England Ryder Truck Rental-One Way, Inc. Delaware Ryder Truckstops, Inc. Florida Ryder Vehicle Leasing & Sales Corp. Barbados Saunders Leasing System of Canada Limited [Canada] - being dissolved Southwestern Virginia Transit Management Company, Inc. Virginia Terminal Service Co. (11) Washington Transit Management Company of Laredo Texas Transit Management of Alexandria, Inc. Virginia Transit Management of Charlotte, Inc. North Carolina Transit Management of Connecticut, Inc. Connecticut Transit Management of Decatur, Inc. Illinois Transit Management of Durham, Inc. North Carolina Transit Management of Great Falls, Inc. Montana Transit Management of Hamilton, Inc. Ohio Transit Management of Jamestown, Inc. New York Transit Management of Monroe County, Inc. Michigan Transit Management of Nashua, Inc. New Hampshire Transit Management of Richland, Inc. Ohio Transit Management of St. Joseph, Inc. Missouri Transit Management of Sioux Falls, Inc. South Dakota Transit Management of Spartanburg, Inc. South Carolina Transit Management of Tucson, Inc. Arizona
3 Transit Management of Tyler, Inc. Texas Transit Management of Washoe, Inc. Nevada Transit Management of Waukesha, Inc. Wisconsin Transport Support, Inc. Delaware Unilink Contract Hire Limited England UniRyder Limited England United Contract Hire Limited England Westland Trailer Co., S.A. de C.V. [Mexico] - being dissolved Westside Corporate Center, Inc. Florida
(1) Kentucky and Wisconsin: B & C, Inc. of Michigan (2) California: Michigan Blazer Truck Lines Inc. (3) Florida: d/b/a Commercial Carriers of Michigan, Inc. Michigan and New York: d/b/a Delavan (4) Ontario, Canada: d/b/a Vehicle Network Sales (5) Texas: Delaware RMX, Inc. (6) Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Missouri, Nebraska, Nevada, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Utah, Virginia and Washington: d/b/a LogiCorp. Florida: d/b/a UniRyder (7) New Jersey, Ohio and Texas: d/b/a Ryder Claims Services Corporation (8) California, Colorado, Connecticut, Illinois, Minnesota, Missouri, Montana and New Jersey: d/b/a Ryder Transportation California: d/b/a Ryder Colorado: d/b/a Grand Connection Illinois: d/b/a North American Motor Coach Massachusetts: d/b/a DePalma Transportation Sales Minnesota: d/b/a Kare Kabs New York: d/b/a Ryder Student Transportation Rhode Island: d/b/a Ryder Student Transportation Sales 4 (9) Maryland and Virginia: d/b/a Ryder/Jacobs Michigan: d/b/a Atlas Trucking, Inc. Michigan: d/b/a Ryder Atlas Trucking of Western Michigan (10) French Name: Location de Camions Ryder du Canada Ltee. Canadian Provinces: Ryder Dedicated Logistics (11) Florida: Terminal Service Co. of Washington EX-23.1 25 AUDITORS CONSENT KPMG PEAT MARWICK 1 EXHIBIT 23.1 KPMG Peat Marwick LLP One Biscayne Tower Telephone 305 358 2300 Telefax 305 577 0544 Suite 2900 2 South Biscayne Boulevard Miami, FL 33131 Independent Auditors' Consent To the Board of Directors and Shareholders Ryder System, Inc.: We consent to incorporation by reference in the following Registration Statements on Forms S-3 and S-8 of Ryder System, Inc. of our reports dated February 7, 1995, relating to the consolidated balance sheets of Ryder System, Inc. and subsidiaries as of December 31, 1994 and 1993, and the related consolidated statements of earnings and cash flows for each of the years in the three-year period ended December 31, 1994, which reports appear in, or are incorporated by reference in, the December 31, 1994 annual report on Form 10-K of Ryder System, Inc.: Form S-3: - Registration Statement No. 33-20359 covering $1,000,000,000 aggregate principal amount of debt securities. - Registration Statement No. 33-50232 covering $800,000,000 aggregate principal amount of debt securities. Form S-8: - Registration Statement No. 33-20608 covering the Ryder System Employee Stock Purchase Plan. - Registration Statement No. 33-4333 covering the Ryder Employee Savings Plan. - Registration Statement No. 1-4364 covering the Ryder System Profit Incentive Stock Plan. - Registration Statement No. 33-69660 covering the Ryder System, Inc. 1980 Stock Incentive Plan. - Registration Statement No. 33-37677 covering the Ryder System UK Stock Purchase Scheme. - Registration Statement No. 33-442507 covering the Ryder Student Transportation Services, Inc. Retirement/Savings Plan. - Registration Statement No. 33-63990 covering the Ryder System, Inc. Directors' Stock Plan. - Registration Statement No. 33-58001 covering the Ryder System, Inc. Employee Savings Plan A. 2 Independent Auditors' Consent Ryder System, Inc. Page 2 - Registration Statement No. 33-58003 covering the Ryder System, Inc. Employee Savings Plan B. - Registration Statement No. 33-58045 covering the Ryder System, Inc. Savings Restoration Plan. Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not considered a part of a registration statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of the Act. KPMG PEAT MARWICK LLP Miami, Florida March 29, 1995 EX-24.1 26 POWERS OF ATTORNEY 1 EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints James M. Herron, Edward R. Henderson and Ann E. Neal, and each of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for the undersigned and in his or her name, place and stead, in any and all capacities, to sign the Ryder System, Inc. Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) for the fiscal year ended December 31, 1994 (the "Form 10-K"), and any and all amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission and with the New York Stock Exchange, Chicago Stock Exchange and Pacific Stock Exchange, granting unto each said attorney-in-fact and agent full power and authority to perform every act requisite and necessary to be done in connection with the execution and filing of the Form 10-K and any and all amendments thereto, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying all that each said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof. /s/ Arthur H. Bernstein ------------------------ Arthur H. Bernstein STATE OF FLORIDA ) ) ss: COUNTY OF DADE ) Before me appeared Arthur H. Bernstein, personally known to me and known to me to be the person described in and who executed the foregoing instrument, and acknowledged to and before me this 17th day of February, 1995 that he or she executed said instrument for the purposes therein expressed. Witness my hand and official seal: /s/ H. Judith Chozianin ---------------------------------- Notary Public My commission expires: 2 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints James M. Herron, Edward R. Henderson and Ann E. Neal, and each of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for the undersigned and in his or her name, place and stead, in any and all capacities, to sign the Ryder System, Inc. Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) for the fiscal year ended December 31, 1994 (the "Form 10-K"), and any and all amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission and with the New York Stock Exchange, Chicago Stock Exchange and Pacific Stock Exchange, granting unto each said attorney-in-fact and agent full power and authority to perform every act requisite and necessary to be done in connection with the execution and filing of the Form 10-K and any and all amendments thereto, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying all that each said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof. /s/ Edward T. Foote II ----------------------- Edward T. Foote II STATE OF FLORIDA ) ) ss: COUNTY OF DADE ) Before me appeared Edward T. Foote II, personally known to me and known to me to be the person described in and who executed the foregoing instrument, and acknowledged to and before me this 27 day of February, 1995 that he or she executed said instrument for the purposes therein expressed. Witness my hand and official seal: /s/ Susan E. Myers ---------------------------------- Notary Public My commission expires: 3 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints James M. Herron, Edward R. Henderson and Ann E. Neal, and each of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for the undersigned and in his or her name, place and stead, in any and all capacities, to sign the Ryder System, Inc. Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) for the fiscal year ended December 31, 1994 (the "Form 10-K"), and any and all amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission and with the New York Stock Exchange, Chicago Stock Exchange and Pacific Stock Exchange, granting unto each said attorney-in-fact and agent full power and authority to perform every act requisite and necessary to be done in connection with the execution and filing of the Form 10-K and any and all amendments thereto, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying all that each said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof. /s/ John A. Georges -------------------- John A. Georges STATE OF FLORIDA ) ) ss: COUNTY OF DADE ) Before me appeared John A. Georges, personally known to me and known to me to be the person described in and who executed the foregoing instrument, and acknowledged to and before me this 17th day of February, 1995 that he or she executed said instrument for the purposes therein expressed. Witness my hand and official seal: /s/ H. Judith Chozianin ---------------------------------- Notary Public My commission expires: 4 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints James M. Herron, Edward R. Henderson and Ann E. Neal, and each of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for the undersigned and in his or her name, place and stead, in any and all capacities, to sign the Ryder System, Inc. Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) for the fiscal year ended December 31, 1994 (the "Form 10-K"), and any and all amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission and with the New York Stock Exchange, Chicago Stock Exchange and Pacific Stock Exchange, granting unto each said attorney-in-fact and agent full power and authority to perform every act requisite and necessary to be done in connection with the execution and filing of the Form 10-K and any and all amendments thereto, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying all that each said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof. /s/ Vernon E. Jordan, Jr. -------------------------- Vernon E. Jordan, Jr. STATE OF FLORIDA ) ) ss: COUNTY OF DADE ) Before me appeared Vernon E. Jordan, Jr., personally known to me and known to me to be the person described in and who executed the foregoing instrument, and acknowledged to and before me this 17th day of February, 1995 that he or she executed said instrument for the purposes therein expressed. Witness my hand and official seal: /s/ H. Judith Chozianin ---------------------------------- Notary Public My commission expires: 5 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints James M. Herron, Edward R. Henderson and Ann E. Neal, and each of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for the undersigned and in his or her name, place and stead, in any and all capacities, to sign the Ryder System, Inc. Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) for the fiscal year ended December 31, 1994 (the "Form 10-K"), and any and all amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission and with the New York Stock Exchange, Chicago Stock Exchange and Pacific Stock Exchange, granting unto each said attorney-in-fact and agent full power and authority to perform every act requisite and necessary to be done in connection with the execution and filing of the Form 10-K and any and all amendments thereto, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying all that each said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof. /s/ Howard C. Kauffmann ------------------------ Howard C. Kauffmann STATE OF FLORIDA ) ) ss: COUNTY OF DADE ) Before me appeared Howard C. Kauffmann, personally known to me and known to me to be the person described in and who executed the foregoing instrument, and acknowledged to and before me this 17th day of February, 1995 that he or she executed said instrument for the purposes therein expressed. Witness my hand and official seal: /s/ H. Judith Chozianin ---------------------------------- Notary Public My commission expires: 6 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints James M. Herron, Edward R. Henderson and Ann E. Neal, and each of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for the undersigned and in his or her name, place and stead, in any and all capacities, to sign the Ryder System, Inc. Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) for the fiscal year ended December 31, 1994 (the "Form 10-K"), and any and all amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission and with the New York Stock Exchange, Chicago Stock Exchange and Pacific Stock Exchange, granting unto each said attorney-in-fact and agent full power and authority to perform every act requisite and necessary to be done in connection with the execution and filing of the Form 10-K and any and all amendments thereto, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying all that each said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof. /s/ David T. Kearns -------------------- David T. Kearns STATE OF FLORIDA ) ) ss: COUNTY OF DADE ) Before me appeared David T. Kearns, personally known to me and known to me to be the person described in and who executed the foregoing instrument, and acknowledged to and before me this 17th day of February, 1995 that he or she executed said instrument for the purposes therein expressed. Witness my hand and official seal: /s/ H. Judith Chozianin ---------------------------------- Notary Public My commission expires: 7 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints James M. Herron, Edward R. Henderson and Ann E. Neal, and each of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for the undersigned and in his or her name, place and stead, in any and all capacities, to sign the Ryder System, Inc. Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) for the fiscal year ended December 31, 1994 (the "Form 10-K"), and any and all amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission and with the New York Stock Exchange, Chicago Stock Exchange and Pacific Stock Exchange, granting unto each said attorney-in-fact and agent full power and authority to perform every act requisite and necessary to be done in connection with the execution and filing of the Form 10-K and any and all amendments thereto, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying all that each said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof. /s/ Lynn M. Martin ------------------- Lynn M. Martin STATE OF FLORIDA ) ) ss: COUNTY OF DADE ) Before me appeared Lynn M. Martin, personally known to me and known to me to be the person described in and who executed the foregoing instrument, and acknowledged to and before me this 17th day of February, 1995 that he or she executed said instrument for the purposes therein expressed. Witness my hand and official seal: /s/ H. Judith Chozianin ---------------------------------- Notary Public My commission expires: 8 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints James M. Herron, Edward R. Henderson and Ann E. Neal, and each of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for the undersigned and in his or her name, place and stead, in any and all capacities, to sign the Ryder System, Inc. Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) for the fiscal year ended December 31, 1994 (the "Form 10-K"), and any and all amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission and with the New York Stock Exchange, Chicago Stock Exchange and Pacific Stock Exchange, granting unto each said attorney-in-fact and agent full power and authority to perform every act requisite and necessary to be done in connection with the execution and filing of the Form 10-K and any and all amendments thereto, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying all that each said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof. /s/ James W. McLamore ---------------------- James W. McLamore STATE OF FLORIDA ) ) ss: COUNTY OF DADE ) Before me appeared James W. McLamore, personally known to me and known to me to be the person described in and who executed the foregoing instrument, and acknowledged to and before me this 17th day of February, 1995 that he or she executed said instrument for the purposes therein expressed. Witness my hand and official seal: /s/ H. Judith Chozianin ---------------------------------- Notary Public My commission expires: 9 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints James M. Herron, Edward R. Henderson and Ann E. Neal, and each of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for the undersigned and in his or her name, place and stead, in any and all capacities, to sign the Ryder System, Inc. Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) for the fiscal year ended December 31, 1994 (the "Form 10-K"), and any and all amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission and with the New York Stock Exchange, Chicago Stock Exchange and Pacific Stock Exchange, granting unto each said attorney-in-fact and agent full power and authority to perform every act requisite and necessary to be done in connection with the execution and filing of the Form 10-K and any and all amendments thereto, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying all that each said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof. /s/ Paul J. Rizzo ------------------ Paul J. Rizzo STATE OF FLORIDA ) ) ss: COUNTY OF DADE ) Before me appeared Paul J. Rizzo, personally known to me and known to me to be the person described in and who executed the foregoing instrument, and acknowledged to and before me this 17th day of February, 1995 that he or she executed said instrument for the purposes therein expressed. Witness my hand and official seal: /s/ H. Judith Chozianin ---------------------------------- Notary Public My commission expires: 10 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints James M. Herron, Edward R. Henderson and Ann E. Neal, and each of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for the undersigned and in his or her name, place and stead, in any and all capacities, to sign the Ryder System, Inc. Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) for the fiscal year ended December 31, 1994 (the "Form 10-K"), and any and all amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission and with the New York Stock Exchange, Chicago Stock Exchange and Pacific Stock Exchange, granting unto each said attorney-in-fact and agent full power and authority to perform every act requisite and necessary to be done in connection with the execution and filing of the Form 10-K and any and all amendments thereto, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying all that each said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof. /s/ Donald V. Seibert ---------------------- Donald V. Seibert STATE OF FLORIDA ) ) ss: COUNTY OF DADE ) Before me appeared Donald V. Seibert, personally known to me and known to me to be the person described in and who executed the foregoing instrument, and acknowledged to and before me this 17th day of February, 1995 that he or she executed said instrument for the purposes therein expressed. Witness my hand and official seal: /s/ H. Judith Chozianin ---------------------------------- Notary Public My commission expires: 11 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints James M. Herron, Edward R. Henderson and Ann E. Neal, and each of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for the undersigned and in his or her name, place and stead, in any and all capacities, to sign the Ryder System, Inc. Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) for the fiscal year ended December 31, 1994 (the "Form 10-K"), and any and all amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission and with the New York Stock Exchange, Chicago Stock Exchange and Pacific Stock Exchange, granting unto each said attorney-in-fact and agent full power and authority to perform every act requisite and necessary to be done in connection with the execution and filing of the Form 10-K and any and all amendments thereto, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying all that each said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof. /s/ Hicks B. Waldron --------------------- Hicks B. Waldron STATE OF FLORIDA ) ) ss: COUNTY OF DADE ) Before me appeared Hicks B. Waldron, personally known to me and known to me to be the person described in and who executed the foregoing instrument, and acknowledged to and before me this 17th day of February, 1995 that he or she executed said instrument for the purposes therein expressed. Witness my hand and official seal: /s/ H. Judith Chozianin ---------------------------------- Notary Public My commission expires: 12 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints James M. Herron, Edward R. Henderson and Ann E. Neal, and each of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for the undersigned and in his or her name, place and stead, in any and all capacities, to sign the Ryder System, Inc. Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) for the fiscal year ended December 31, 1994 (the "Form 10-K"), and any and all amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission and with the New York Stock Exchange, Chicago Stock Exchange and Pacific Stock Exchange, granting unto each said attorney-in-fact and agent full power and authority to perform every act requisite and necessary to be done in connection with the execution and filing of the Form 10-K and any and all amendments thereto, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying all that each said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof. /s/ Alva O. Way ---------------- Alva O. Way STATE OF FLORIDA ) ) ss: COUNTY OF DADE ) Before me appeared Alva O. Way, personally known to me and known to me to be the person described in and who executed the foregoing instrument, and acknowledged to and before me this 17th day of February, 1995 that he or she executed said instrument for the purposes therein expressed. Witness my hand and official seal: /s/ H. Judith Chozianin ---------------------------------- Notary Public My commission expires: 13 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears below constitutes and appoints James M. Herron, Edward R. Henderson and Ann E. Neal, and each of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for the undersigned and in his or her name, place and stead, in any and all capacities, to sign the Ryder System, Inc. Form 10-K (Annual Report pursuant to the Securities Exchange Act of 1934) for the fiscal year ended December 31, 1994 (the "Form 10-K"), and any and all amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission and with the New York Stock Exchange, Chicago Stock Exchange and Pacific Stock Exchange, granting unto each said attorney-in-fact and agent full power and authority to perform every act requisite and necessary to be done in connection with the execution and filing of the Form 10-K and any and all amendments thereto, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying all that each said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof. /s/ Mark H. Willes ------------------- Mark H. Willes STATE OF FLORIDA ) ) ss: COUNTY OF DADE ) Before me appeared Mark H. Willes, personally known to me and known to me to be the person described in and who executed the foregoing instrument, and acknowledged to and before me this 17th day of February, 1995 that he or she executed said instrument for the purposes therein expressed. Witness my hand and official seal: /s/ H. Judith Chozianin ---------------------------------- Notary Public My commission expires: EX-27.1 27 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE RYDER SYSTEM, INC. AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AND STATEMENTS OF EARNINGS FOR THE YEAR ENDED DECEMBER 31, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR DEC-31-1994 DEC-31-1994 75,878 0 316,855 0 57,124 758,822 6,375,394 2,646,002 5,014,473 1,093,153 1,794,795 539,101 0 0 589,923 5,014,473 0 4,685,603 0 4,280,349 0 0 144,735 260,519 106,990 153,529 0 0 0 153,529 1.95 0