-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, pjefULMI7M/RJY6bAtNFiuAhqdC/fOArDLnY3zma8QountSN+/nR/sLMc2OTk9tC /pUk8aH7cE2hV/JgiZB5PA== 0000950152-95-000249.txt : 19950302 0000950152-95-000249.hdr.sgml : 19950302 ACCESSION NUMBER: 0000950152-95-000249 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950410 FILED AS OF DATE: 19950228 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GOODYEAR TIRE & RUBBER CO /OH/ CENTRAL INDEX KEY: 0000042582 STANDARD INDUSTRIAL CLASSIFICATION: TIRES AND INNER TUBES [3011] IRS NUMBER: 340253240 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-01927 FILM NUMBER: 95516190 BUSINESS ADDRESS: STREET 1: 1144 E MARKET ST CITY: AKRON STATE: OH ZIP: 44316 BUSINESS PHONE: 2167962121 MAIL ADDRESS: STREET 1: 1144 E MARKET ST CITY: AKRON STATE: OH ZIP: 44316 DEF 14A 1 GOODYEAR DEF 14A 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SCHEDULE 14A (RULE 14a) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant /X/ Filed by a Party other than the Registrant / / Check the appropriate box: / / Preliminary Proxy Statement / / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14a-6(e)(2)) /X/ Definitive Proxy Statement / / Definitive Additional Materials / / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
THE GOODYEAR TIRE & RUBBER COMPANY (NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) XXXXXXXXXXXXXXXX (NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT) Payment of filing fee (Check the appropriate box): /X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A. / / $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). / / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies:___________ (2) Aggregate number of securities to which transaction applies:______________ (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):______________________________ (4) Proposed maximum aggregate value of transaction:__________________________ (5) Total fee paid:___________________________________________________________ / / Fee paid previously with preliminary materials. / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid:___________________________________________________ (2) Form, Schedule or Registration Statement No.:_____________________________ (3) Filing Party:_____________________________________________________________ (4) Date Filed:_______________________________________________________________ ================================================================================ 2 (LOGO) NOTICE OF 1995 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT The Goodyear Tire & Rubber Company 1144 East Market Street Akron, Ohio 44316-0001 DATE: Monday, April 10, 1995 TIME: 10:00 A.M., Akron Time PLACE: Office Of The Company Goodyear Theater 1201 East Market Street Akron, Ohio
YOUR VOTE IS IMPORTANT ------------------------------------------------------------ PLEASE COMPLETE, DATE AND SIGN YOUR PROXY AND PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE. 3 THE GOODYEAR TIRE & RUBBER COMPANY AKRON, OHIO 44316-0001 STANLEY C. GAULT CHAIRMAN OF THE BOARD CHIEF EXECUTIVE OFFICER February 27, 1995 DEAR SHAREHOLDERS: You are cordially invited to attend your Company's 1995 Annual Meeting of Shareholders, which will be held at the Goodyear Theater, 1201 East Market Street, Akron, Ohio, at 10:00 A.M., Akron Time, on Monday, April 10, 1995. I hope you will be able to attend and participate. The Notice of 1995 Annual Meeting of Shareholders and Proxy Statement follow. The 1994 Annual Report is enclosed. At the Annual Meeting, shareholders will elect four persons to serve as directors for terms of three years (Item 1 on your Proxy). Each nominee is an incumbent. The Proxy Statement contains information regarding each nominee for director and the seven continuing directors. Your Board of Directors is presenting for action by the shareholders its proposal that shareholders ratify the Board's appointment of Price Waterhouse LLP as independent accountants for the Company for 1995 (Item 2 on your Proxy). Your Board of Directors recommends that you vote for the ratification of the appointment of Price Waterhouse. If you plan to attend the Annual Meeting, please mark the indicated box on the reverse side of your Proxy. You are cordially invited to join us for refreshments from 9:00 to 9:45 A.M in the Goodyear Gymnasium, which is adjacent to the Theater. You do not need a ticket to attend the Annual Meeting or the reception. Whether or not you plan to attend, it is important that you complete, date, sign and promptly return your Proxy. This will ensure that your shares will be represented at the meeting. If you attend and decide to vote in person, you may revoke your Proxy. Remember, your vote is important! Sincerely, /s/ Stanley C. Gault Chairman of the Board and Chief Executive Officer 4 CONTENTS
PAGE NOTICE OF 1995 ANNUAL MEETING OF SHAREHOLDERS............................ I PROXY STATEMENT General Information.................................................... 1 Shares Voting....................................................... 1 Vote Required -- Cumulative Voting.................................. 1 Voting of Proxy -- Confidentiality.................................. 1 Revocability of Proxy............................................... 2 The Board of Directors and Its Committees.............................. 2 Audit Committee..................................................... 2 Compensation Committee.............................................. 2 Nominating Committee................................................ 3 Committee on Corporate Responsibility............................... 3 Election of Directors (Proxy Item 1)................................... 3 Ratification of Appointment of Independent Accountants (Proxy Item 2).................................................................. 7 Other Business......................................................... 7 Beneficial Ownership of Common Stock................................... 7 Executive Officer Compensation......................................... 9 Summary of Compensation............................................. 9 Option/SAR Grants in 1994........................................... 10 Option/SAR 1994 Exercises and Year-End Values....................... 11 Long Term Incentive Awards.......................................... 11 Other Plan Information.............................................. 13 Retirement Benefits................................................. 14 Employment Agreement................................................ 15 Directors' Compensation............................................. 16 Other Matters....................................................... 16 Compensation Committee Report on Executive Compensation................ 17 Performance Graph...................................................... 20 Miscellaneous.......................................................... 21 Submission of Shareholder Proposals................................. 21 10-K Report......................................................... 21 Dividend Reinvestment Plan Shares................................... 21 Savings Plan Shares................................................. 21 Costs of Solicitation............................................... 21
5 THE GOODYEAR TIRE & RUBBER COMPANY NOTICE OF THE 1995 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 10, 1995 TO THE SHAREHOLDERS: The 1995 Annual Meeting of Shareholders of The Goodyear Tire & Rubber Company (the "Company"), an Ohio corporation, will be held at the Goodyear Theater (in the Company's Principal Office Complex), 1201 East Market Street, Akron, Ohio, on Monday, April 10, 1995, at 10:00 A.M., Akron Time, for the following purposes: 1. To elect four directors, each to serve for a term of three years (Proxy Item 1); 2. To consider and vote upon a proposal to ratify the appointment of Price Waterhouse LLP as independent accountants for the Company for 1995 (Proxy Item 2); and 3. To act upon such other matters and to transact such other business as may properly come before the meeting or any adjournments thereof. The Board of Directors fixed the close of business on February 16, 1995 as the record date for determining shareholders entitled to notice of, and to vote at, the 1995 Annual Meeting. Only holders of record of the Common Stock of the Company at the close of business February 16, 1995 will be entitled to vote at the 1995 Annual Meeting and adjournments, if any, thereof. By order of the Board of Directors: February 27, 1995 /s/ James Boyazis, Secretary - -------------------------------------------------------------------------------- Please complete and sign your proxy and return it promptly in the enclosed envelope. I 6 PROXY STATEMENT The Goodyear Tire & Rubber Company ------------------------ GENERAL INFORMATION This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of The Goodyear Tire & Rubber Company, an Ohio corporation (the "Company"), to be voted at the Annual Meeting of Shareholders to be held April 10, 1995, and at any adjournments thereof, for the purposes set forth in the accompanying notice. The principal executive offices of the Company are located at 1144 East Market Street, Akron, Ohio 44316-0001. The Company's telephone number is (216) 796-2121. The Company's Annual Report to Shareholders for the year ended December 31, 1994 (the "Annual Report") is enclosed with this Proxy Statement. The Annual Report is not considered part of the proxy solicitation materials. The approximate date on which this Proxy Statement and the related form of Proxy are first being sent to shareholders is March 1, 1995. SHARES VOTING Holders of shares of the Common Stock, without par value, of the Company (the "Common Stock") at the close of business on February 16, 1995 are entitled to notice of the Annual Meeting and to vote shares held on that date at the Meeting. As of the close of business February 16, 1995 (the "record date"), there were 151,498,048 shares of Common Stock outstanding and entitled to vote at the Annual Meeting. Each share of Common Stock is entitled to one vote. VOTE REQUIRED -- CUMULATIVE VOTING Except with respect to the election of directors, the affirmative vote of at least a majority of the shares of Common Stock outstanding on the record date is required for a resolution to be adopted. In the election of directors, the four candidates receiving the most votes will be elected. Each shareholder has the right to vote cumulatively for candidates whose names have been placed in nomination prior to the voting. In voting cumulatively, a shareholder may (a) give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of shares of Common Stock the shareholder is entitled to vote, or (b) distribute his or her votes on the same principle among two or more candidates as desired. Abstentions, "withheld" votes and broker non-votes do not count for or against a nominee for election as a director and have the same effect as votes against the Board's proposal. VOTING OF PROXY -- CONFIDENTIALITY The accompanying Proxy is designed to permit each shareholder of record at the close of business on February 16, 1995 to vote on the election of directors and on the resolution proposed by the Board of Directors described in this Proxy Statement. Three directors of the Company, Messrs. Gault, Minter and Turner, have been designated as proxies to vote shares in accordance with the instructions on the Proxy. Unless a shareholder requests that voting of the Proxy be withheld for any one or more of the nominees for director, the Proxy will be voted for the four nominees whose names are set forth at page 3. However, the proxies designated by your Board of Directors may cumulatively vote each Proxy received if such action is deemed by them to be appropriate, except to the extent authority to so cumulate votes is expressly withheld as to any one or more of the nominees. Your Board of Directors does not presently anticipate that any of the nominees named will be unavailable for election. In the event an unexpected vacancy occurs, the Proxies received may be voted for the election of a new nominee designated by the Board of Directors. Where a shareholder specifies a choice with respect to any other matter set forth in this Proxy Statement, his or her shares will be voted (or withheld from voting) in accordance with the instructions given. If no specific instructions are given, shares will be voted in favor of the proposal by the Board of Directors to ratify the appointment of Price Waterhouse as independent accountants for the Company for 1995. --1-- 7 The Company's policy is that the vote, whether by proxy or ballot, of each shareholder shall be treated as confidential, except (a) as may be required by law, (b) as may be necessary to assert or defend claims for or against the Company, (c) in the case of a contested election of director(s), or (d) at the express request of the shareholder. The inspectors of election and persons processing proxy cards and ballots and tabulating the vote will not be employees of the Company. Representatives of First Chicago Trust Company of New York have been appointed to serve as the inspectors of election for the 1995 Annual Meeting. REVOCABILITY OF PROXY A shareholder may revoke or revise any proxy given to the Board of Directors by the execution of a later proxy or by giving notice to the Company in writing or in open meeting. No revocation or revision of any proxy shall affect any vote previously taken. THE BOARD OF DIRECTORS AND ITS COMMITTEES In accordance with the Ohio General Corporation Law and the Articles of Incorporation and Code of Regulations of the Company, the Company is managed under the direction of the Board of Directors by the chief executive officer and other officers to whom authority has been delegated. The Board is charged with specific responsibility with regard to the selection and evaluation of management, the reporting of financial results to the shareholders, and the consideration of other fundamental corporate matters, including the declaration of dividends, the issuance of stock and significant business transactions. The Board also regularly reviews the Company's operating results and financial statements, approves capital expenditures and works with senior management in planning the Company's business strategy and establishing its long term and short term business objectives. Historically, a majority of the members of the Board have been neither officers nor employees of the Company. Nine of the eleven directors currently serving are neither present nor past officers or employees of the Company or any of its subsidiaries. Of the four nominees (each currently serving as a director), three are neither present nor past officers or employees of the Company or any of its subsidiaries. The Board meets on a regularly scheduled basis at least nine times during the year. The average attendance of all directors at the nine Board meetings held during 1994 was 93%. The average attendance of all directors at all meetings of the Board and its standing committees held during 1994 was 92%. During 1994, each incumbent director attended at least 75% of all meetings of the Board and the standing committees of the Board upon which he or she served, other than Mr. Breen who attended 70% of such meetings. The Board of Directors has four standing committees to assist it in the discharge of its responsibilities. Their principal activities are set forth below. AUDIT COMMITTEE The Audit Committee, established in 1967, is comprised of six directors who are not present or past employees of the Company or any of its subsidiaries. Each member of the Committee must be, in the opinion of the entire Board, "independent." The Audit Committee held three formal meetings during 1994. The Audit Committee reviews for the Board the activities of the Company's internal auditors and its independent accountants to determine whether the Company's organization, internal controls and policies are reasonably designed to assure the adequacy of the Company's financial statements and records and provide for the safekeeping of the assets of the Company. The Audit Committee annually considers the qualifications of the independent accountants of the Company, makes recommendations to the Board as to their selection, reviews the audit plan, approves services rendered or to be rendered by the independent accountants and reviews the results of their audit for the previous year. The Audit Committee reviews financial reports and monitors compliance with the Company's ethics policies and accounting controls, procedures and practices, receiving direct reports in this connection from the Company's internal auditors and its independent accountants. COMPENSATION COMMITTEE The Compensation Committee, established in 1979, is comprised of all directors who are not present or past employees of the Company or any of its subsidiaries. The Compensation Committee held seven formal meetings during 1994. --2-- 8 The Compensation Committee has primary responsibility for establishing and administering the compensation programs of the Company for its executive officers and other key personnel. The Compensation Committee consults with the chief executive officer of the Company regarding executive compensation policies, practices and plans, and undertakes such special studies regarding compensation as he or the Board may request. The Compensation Committee also administers the 1989 Goodyear Performance and Equity Incentive Plan, the Company's Performance Recognition Plan, the Company's 1987 and 1982 Employees' Stock Option Plans, and the Company's Deferred Compensation Plan For Executives. NOMINATING COMMITTEE The Nominating Committee, established in 1978, is comprised of the Chairman of the Board and Chief Executive Officer of the Company and six directors who are not present or past employees of the Company or any of its subsidiaries. The Nominating Committee held one formal meeting during 1994. The principal function of the Nominating Committee is to identify candidates for election to the Board of Directors. The Nominating Committee has the primary responsibility for evaluating, and for selecting or recommending to the Board, candidates for Board membership. The Nominating Committee also follows the development of members of senior management for possible future nomination to the Board. The Nominating Committee has adopted a procedure whereby shareholders may submit candidates for consideration for nomination to the Board. The Committee will consider each candidate and will make recommendations as to such candidate to the Board. Any shareholder desiring to submit a candidate for consideration by the Nominating Committee should send the name of such proposed candidate, together with such biographical data and background information concerning the candidate as the shareholder may desire, to: The Office of the Secretary, The Goodyear Tire & Rubber Company, Akron, Ohio 44316-0001. COMMITTEE ON CORPORATE RESPONSIBILITY The Committee on Corporate Responsibility was established in 1976 and is comprised of seven directors who are not present or past officers or employees of the Company or any of its subsidiaries. During 1994, the Committee held two formal meetings. The principal functions of the Committee on Corporate Responsibility are to periodically review the Company's policies relating to the manner in which the Company conducts its business and its relationships with its shareholders, employees and customers, as well as governmental agencies and the general public, and to review the need for, and to develop, new policies relating to such matters. The Committee is also responsible for establishing, with the concurrence of the entire Board, methods for monitoring the implementation of, and compliance with, policies adopted by the Company. ELECTION OF DIRECTORS (ITEM 1 ON THE PROXY) The Board of Directors is comprised of eleven directors and is classified into three classes of directors. At each Annual Meeting directors of one of the classes, on a rotating basis, are elected to three year terms, to serve as the successors to the directors of the same class whose terms expire at that Annual Meeting. Classes I and II are each comprised of four directors and Class III is comprised of three directors. The current terms of the four Class II directors will expire at the 1995 Annual Meeting. The current terms of the four Class I directors and the three Class III Directors will expire at the 1996 and 1997 Annual Meetings, respectively. At the 1995 Annual Meeting four persons are to be elected as Class II directors, each to a three year term. The Board of Directors has selected the following nominees recommended by the Nominating Committee for election to the Board of Directors, each to hold office for a three year term expiring at the 1998 Annual Meeting and until his successor shall have been duly elected and qualified: John G. Breen William E. Butler Stanley C. Gault George H. Schofield Each nominee is an incumbent director whose term of office expires at the Annual Meeting. The following page contains certain information concerning the four nominees, which information was furnished by them. --3-- 9 NOMINEES FOR DIRECTOR -- THREE YEAR TERMS EXPIRING IN 1998 - -------------------------------------------------------------------------------- JOHN G. BREEN Chairman of the Board and Chief Executive Officer, The Sherwin-Williams Company, a manufacturer of paints, coatings and related products. Mr. Breen has served as the Chairman of the Board and Chief Executive Officer of The Sherwin-Williams Company since April 1980. He is also a director of Mead Corporation, National City Corporation and Parker-Hannifin Corporation. Chairman of Compensation Committee and member of Audit and Nominating Committees. Age: 60 Director since: January 7, 1992 - -------------------------------------------------------------------------------- WILLIAM E. BUTLER Chairman of the Board and Chief Executive Officer of Eaton Corporation, a manufacturer of highly engineered products for the automotive, industrial, commercial and military markets. Mr. Butler joined Eaton Corporation in 1957. After serving in various posts he was elected President and Chief Operating Officer in February of 1989. He was elected President and Chief Executive Officer on September 4, 1991 and Chairman of the Board and Chief Executive Officer in January of 1992. Mr. Butler is also a director of Bearings, Inc., Ferro Corporation, Pitney Bowes Inc. and Zurn Industries, Inc. and the Chairman of the Board of the International Trade Alliance. Member of Compensation Committee. Age: 63 Director since: February 8, 1995 - -------------------------------------------------------------------------------- STANLEY C. GAULT Chairman of the Board and Chief Executive Officer. Mr. Gault served as the Chairman of the Board and Chief Executive Officer of Rubbermaid Incorporated from May 1, 1980 to May 1, 1991, when he retired. Mr. Gault was elected Chairman of the Board and Chief Executive Officer of the Company on June 4, 1991. He is also a director of Rubbermaid Incorporated, Avon Products, Inc., International Paper Company, PPG Industries, Inc., The Timken Company and The New York Stock Exchange, Inc. Mr. Gault is also a director of the National Association of Manufacturers and Chairman of the Board of Trustees of The College of Wooster. Member of Nominating Committee. Age: 69 Director since: February 14, 1989 - -------------------------------------------------------------------------------- GEORGE H. SCHOFIELD Chairman of the Board of Zurn Industries, Inc., which designs, manufactures and markets power systems, water controls and mechanical drives. Mr. Schofield joined Zurn Industries, Inc. as its President in 1985 after 33 years of service in various capacities with General Electric Company. Mr. Schofield has served as the Chairman of the Board and Chief Executive Officer of Zurn Industries, Inc. from 1986 until October 17, 1994, when he retired as Chief Executive Officer. He is also a director of Autoclave Engineers, Inc. and National Fuel Gas Company. Chairman of Audit Committee and member of Compensation and Corporate Responsibility Committees. Age: 65 Director since: December 3, 1991 - -------------------------------------------------------------------------------- The following two pages contain certain information concerning the seven directors whose terms of office continue after the 1995 Annual Meeting, which information was provided by the continuing directors. -- 4 -- 10 CONTINUING DIRECTORS -- TERMS EXPIRING IN 1996 - -------------------------------------------------------------------------------- GERTRUDE G. MICHELSON Retired. Formerly Senior Vice President -- External Affairs, R. H. Macy & Co., Inc., a national retail merchandising chain. Mrs. Michelson joined R. H. Macy & Co., Inc. in 1947. After serving in various posts, she was elected Senior Vice President-External Affairs of R. H. Macy & Co., Inc., in November of 1980, which post she held until she retired effective September 1, 1992. Mrs. Michelson served as a Senior Advisor to R. H. Macy & Co. Inc. following retirement until December 31, 1994. She is a director of Federated Department Stores, Inc., The Chubb Corporation, General Electric Company, The Quaker Oats Company and The Stanley Works. Mrs. Michelson is also a governor of the American Stock Exchange and a trustee of RAND Corporation. Chairwoman of Committee on Corporate Responsibility and member of Audit, Compensation and Nominating Committees. Age: 69 Director since: May 5, 1981 - -------------------------------------------------------------------------------- CHARLES W. PARRY Retired. Formerly Chairman of the Board and Chief Executive Officer of Aluminum Company of America (ALCOA), a manufacturer of aluminum, aluminum products and other products. Mr. Parry joined ALCOA in 1948. He served as President of ALCOA from 1981 to April of 1983, when he was elected Chairman of the Board and Chief Executive Officer, which post he held until he retired on June 30, 1987. Mr. Parry is also a director of Nalco Chemical Company. Member of Audit, Compensation and Corporate Responsibility Committees. Age: 70 Director since: February 10, 1987 - -------------------------------------------------------------------------------- WILLIAM C. TURNER Chairman of the Board and Chief Executive Officer of Argyle Atlantic Corporation, a consulting firm to multinational corporations on international strategy, investments and strategic alliances. Mr. Turner has served as Chairman and Chief Executive Officer of Argyle Atlantic Corporation since 1977. He is a director of Rural/Metro Corporation and Microtest, Inc. Mr. Turner is also Chairman of the International Advisory Council of Avon Products, Inc., a member of the Board of Governors of the Lauder Institute of Management and International Studies of the University of Pennsylvania, a trustee and former Chairman of the Board of the American Graduate School of International Management, and a trustee and Executive Committee member of the United States Council for International Business. Member of Compensation, Corporate Responsibility and Nominating Committees. Age: 65 Director since: October 3, 1978 - -------------------------------------------------------------------------------- HOYT M. WELLS Vice Chairman of the Board, President and Chief Operating Officer. Mr. Wells joined the Company in 1951. He served in various posts until elected Vice President for general products manufacturing operations in 1980. On June 2, 1987, he was elected Executive Vice President for the worldwide general products operations of the Company and its subsidiaries. Mr. Wells served as an Executive Vice President of the Company and the President and Chief Operating Officer -- General Products, responsible for the worldwide general products operations of the Company and its subsidiaries from August 15, 1988 through March 31, 1991. Mr. Wells was elected President and Chief Operating Officer of the Company effective April 1, 1991 and Vice Chairman of the Board, President and Chief Operating Officer of the Company effective January 4, 1994. Age: 68 Director since: December 6, 1988 --5-- 11 CONTINUING DIRECTORS -- TERMS EXPIRING IN 1997 - -------------------------------------------------------------------------------- THOMAS H. CRUIKSHANK Chairman of the Board and Chief Executive Officer of Halliburton Company, a supplier of oil field equipment and services and engineering and construction services. Mr. Cruikshank joined Halliburton Company in 1969. He was elected its President in November of 1981, its Chief Executive Officer in May of 1983 and its Chairman of the Board and Chief Executive Officer in June of 1989. Mr. Cruikshank is also a director of The Williams Companies, Inc., the American Petroleum Institute and the Petroleum Equipment Suppliers Association and a trustee of The California Institute of Technology. Chairman of Nominating Committee and member of Audit and Compensation Committees. Age: 63 Director since: October 7, 1986 - -------------------------------------------------------------------------------- STEVEN A. MINTER Executive Director and President of The Cleveland Foundation, a community trust devoted to health, education, social services and civic and cultural affairs. Mr. Minter has been the Executive Director and President of The Cleveland Foundation, Cleveland, Ohio, since January 1, 1984. Mr. Minter served as Associate Director and Program Officer of The Cleveland Foundation from 1975 to 1980 and from 1981 to 1983. Mr. Minter served as Undersecretary of the United States Department of Education from May, 1980, until January, 1981. Mr. Minter is also a director of Consolidated Natural Gas Company, Rubbermaid Incorporated, and KeyCorp, a trustee of The College of Wooster and Director of The Foundation Center. Member of Compensation, Corporate Responsibility and Nominating Committees. Age: 56 Director since: February 12, 1985 - -------------------------------------------------------------------------------- AGNAR PYTTE President of Case Western Reserve University. Dr. Pytte was a research physicist at Princeton University and Professor of Physics, Dean of Science and Dean of Graduate Studies at Dartmouth College prior to becoming the Provost of Dartmouth College in 1982, a position he held until July 1, 1987, when he was elected President of Case Western Reserve University. Dr. Pytte is also a director of A. O. Smith Corporation and the Sherman Fairchild Foundation Inc. Member of Compensation, Corporate Responsibility and Nominating Committees. Age: 62 Director since: January 5, 1988 --6-- 12 RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS (ITEM 2 ON THE PROXY) Price Waterhouse LLP ("Price Waterhouse") served as the Company's independent accountants for the year ended December 31, 1994. In addition to rendering audit services during 1994, Price Waterhouse performed various non-audit services for the Company and its subsidiaries. The Audit Committee approved these non-audit services prior to their performance and has determined that the independence of Price Waterhouse was not impaired. It is the Company's policy that, under ordinary circumstances, Audit Committee approval will precede the performance of any non-audit services. The Board of Directors, on the recommendation of the Audit Committee, has appointed Price Waterhouse as independent accountants for the Company for the year ending December 31, 1995. In making its recommendation, the Audit Committee reviewed past audit results and the non-audit services performed during 1994 and proposed to be performed during 1995. In selecting Price Waterhouse, the Audit Committee and the Board of Directors carefully considered their independence. Price Waterhouse has reconfirmed that, as in the past, no member of the firm has any direct or indirect financial interest in the Company or any of its subsidiaries and no relationship exists other than the usual relationship between independent accountants and client. Representatives of Price Waterhouse will attend the Annual Meeting. They will have the opportunity to make a statement, if they so desire, and have advised the Company that they will be available to respond to appropriate questions of shareholders. The following resolution will be presented by your Board of Directors at the Annual Meeting: "Resolved, that the action of the Board of Directors in selecting and appointing Price Waterhouse LLP as independent accountants for the Company for the year ending December 31, 1995 be, and hereby is, ratified." In the event the appointment of Price Waterhouse is not ratified by the shareholders, the adverse vote will be deemed to be an indication to the Board of Directors that it should consider selecting other independent accountants for 1996. YOUR BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR RATIFICATION (PROXY ITEM 2). OTHER BUSINESS In addition to the matters described above, there will be an address by the Chairman of the Board and a report on operations by the Vice Chairman of the Board. A discussion period will follow during which shareholders will have an opportunity to ask appropriate questions regarding the Company and its operations. The Board of Directors does not intend to bring any other business before the Annual Meeting and is not aware of any other business intended to be presented by any other person. If any other matters properly come before the Annual Meeting, the persons whose names appear in the enclosed Proxy intend to vote all Proxies received by the Board of Directors in such manner as they, in their discretion, deem appropriate. BENEFICIAL OWNERSHIP OF COMMON STOCK To the knowledge of the Company, no person, firm or group beneficially owned (as defined in Rule 13d-3 of the Securities Exchange Act of 1934) more than 5% of the shares of Common Stock outstanding on the record date, February 16, 1995. As of February 16, 1995, each director and nominee, each executive officer named in the Summary Compensation Table on page 9, and all directors and officers as a group, beneficially owned the number of shares of Common Stock set forth in the Beneficial Ownership Table on the next page. --7-- 13 BENEFICIAL OWNERSHIP TABLE
BENEFICIAL OWNERSHIP AT FEBRUARY 16, 1995 ------------------------------------------ PERCENT OF SHARES COMMON NAME OWNED(1)(2) STOCK(2) ------------------------------------------------ ----------- ---------- John G. Breen................................... 5,200(3)(4) * William E. Butler............................... 400 * Thomas H. Cruikshank............................ 800(4) * Stanley C. Gault................................ 1,118,694(5)(6)(7)(8) .73% Samir F. Gibara................................. 34,283(5)(6)(7) .02% Gertrude G. Michelson........................... 1,200(4) * Steven A. Minter................................ 1,480(4) * Charles W. Parry................................ 1,100(4)(9) * Agnar Pytte..................................... 1,200(4) * John M. Ross.................................... 57,116(5)(6)(7) .04% George H. Schofield............................. 2,200(4) * William J. Sharp................................ 104,201(5)(6)(7) .07% William C. Turner............................... 1,100(4) * Hoyt M. Wells................................... 157,512(5)(6)(7)(10) .10% All directors and officers as a group (29 persons)...................................... 1,921,876(5)(6)(7)(11) 1.25%
NOTES TO BENEFICIAL OWNERSHIP TABLE: (1) Unless otherwise indicated in a subsequent note, each person named and each member of the group has sole voting and investment power with respect to the shares of Common Stock shown. (2) The number of shares indicated as beneficially owned by each of the directors and named executive officers, and by all directors and officers as a group, and the percentage of all Common Stock beneficially owned by each person and the group, has been computed in accordance with Rule 13d- 3(d)(1) promulgated under the Securities Exchange Act of 1934. Asterisk indicates percentage of ownership is less than one hundredth of one percent of all shares of Common Stock. (3) Includes 5,000 shares jointly owned by Mr. Breen and his spouse. (4) Includes 200 shares acquired pursuant to the Company's 1994 Restricted Stock Award Plan for Non-employee Directors, which shares are subject to restrictions on transfer and forfeiture under certain circumstances. See "Directors' Compensation" at page 16. (5) Does not include shares contingently receivable in 1996, 1997 and 1998 pursuant to Performance Equity Grants made under the 1989 Goodyear Performance and Equity Incentive Plan (the "1989 Plan"). (6) Includes shares which may be acquired upon the exercise of options which are exercisable prior to April 18, 1995 under the 1989 Plan and predecessor employee stock option plans of the Company as follows: Mr. Gault, 1,002,000 shares; Mr. Gibara, 27,500 shares; Mr. Ross, 48,900 shares; Mr. Sharp, 99,800 shares; Mr. Wells, 103,000 shares; and all other officers, 364,890 shares. (7) Includes full shares held in trust under the Company's Employee Savings Plan for Salaried Employees ("Savings Plan") at January 31, 1995 (the last practicable date for which data is available). No participant's interest in the Savings Plan Trust exceeded 2,095 shares. (8) Includes 100,250 shares acquired by Mr. Gault pursuant to the terms of an Employment Agreement, a Purchase Agreement and the 1989 Plan, which shares are subject to certain restrictions on transfer and the Company's option to repurchase. See "Employment Agreement" at page 15. (9) Includes 900 shares jointly owned by Mr. Parry and his spouse. (10) Includes 200 shares owned by Mr. Wells' spouse, as to which he disclaims beneficial ownership. (11) Includes 239,798 shares owned of record and beneficially or owned beneficially through a nominee, 27,838 shares held in the Savings Plan Trust, 1,646,090 shares subject to options (exercisable prior to April 18, 1995) granted under the Company's stock option plans, and 8,150 shares held by or jointly with family members of certain directors and officers. --8-- 14 EXECUTIVE OFFICER COMPENSATION SUMMARY OF COMPENSATION The Summary Compensation Table below sets forth information in respect of the compensation of the Chief Executive Officer of the Company during 1994 and the persons who were, at December 31, 1994, the other four most highly compensated executive officers of the Company (the "Named Officers") for services in all capacities to the Company and its subsidiaries during 1994, 1993 and 1992. SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION ------------------------------------------ AWARDS ANNUAL COMPENSATION ----------------------- PAYOUTS -------------------------------------------------- SECURITIES -------------- OTHER UNDERLYING LONG TERM ANNUAL RESTRICTED OPTIONS/ INCENTIVE COMPEN- STOCK SARS PLAN BONUS SATION AWARD(S) (NUMBER PAYOUTS SALARY (DOLLARS) (DOLLARS) (DOLLARS) OF (DOLLARS) NAME AND PRINCIPAL POSITION YEAR (DOLLARS) (1) (2) (3) SHARES)(4) (5) - ------------------------------- ---- --------- ---------- ------------ --------- --------- -------------- STANLEY C. GAULT, 1994 $995,000 (7) $1,162,500 $ 32,004 -0- 150,000 $1,014,375 Chairman of the Board and 1993 935,000 1,018,973 31,560 -0- 150,000 -0- Chief Executive Officer 1992 875,000 945,000 33,700 -0- 150,000 -0- HOYT M. WELLS, 1994 725,000 750,000 8,000 -0- 40,000 578,194 Vice Chairman of the Board, 1993 637,500 592,500 8,000 -0- 34,000 -0- President and Chief 1992 568,750 487,500 9,000 -0- 34,000 -0- Operating Officer(8) WILLIAM J. SHARP, 1994 350,000 240,000 8,000 -0- 12,400 213,019 Executive Vice President 1993 330,000 240,000 8,000 -0- 12,400 -0- 1992 301,250 225,000 9,000 -0- 12,400 -0- SAMIR F. GIBARA, 1994 350,000 262,500 8,000 -0- 15,000 182,588 Executive Vice President(9) 1993 300,000 232,500 23,134 -0- 21,000 -0- 1992 271,250 200,655 149,106 -0- 11,000 -0- JOHN M. ROSS, 1994 315,000 232,500 8,000 -0- 13,000 182,588 Vice President and 1993 300,000 225,000 8,000 -0- 12,400 -0- General Counsel 1992 250,000 202,500 8,000 -0- 11,000 -0- ALL OTHER COMPEN- SATION (DOLLARS) NAME AND PRINCIPAL POSITION (6) - ------------------------------- ------------ STANLEY C. GAULT, $4,500 Chairman of the Board and 4,497 Chief Executive Officer 4,364 HOYT M. WELLS, 4,500 Vice Chairman of the Board, 4,497 President and Chief 4,364 Operating Officer(8) WILLIAM J. SHARP, 4,500 Executive Vice President 4,497 4,364 SAMIR F. GIBARA, 4,500 Executive Vice President(9) 4,497 -0- JOHN M. ROSS, 4,500 Vice President and 4,497 General Counsel 4,364
NOTES TO SUMMARY COMPENSATION TABLE: (1) Amounts awarded in respect of 1994, 1993 and 1992 and paid in February of 1995, 1994 and 1993, respectively, pursuant to the Company's Performance Recognition Plan for 1994, 1993 and 1992, except that payment of the awards to Messrs. Gault and Wells in respect of 1994 was deferred pursuant to the Company's Deferred Compensation Plan for Executives. (2) Amounts shown represent the cost to the Company of tax and financial planning assistance provided by third parties, plus, in respect of Mr. Gault, the cost of his use of a Company car and driver, and, in respect of Mr. Gibara, reimbursements for moving expenses, relocation allowances and tax reimbursement payments in 1993 and various foreign service allowances (including $54,934 for housing), relocation allowances and tax equalization payments in 1992. (3) No restricted stock was awarded or issued by the Company to any Named Officer or other officer of the Company during 1994, 1993 or 1992. On August 9, 1991, Mr. Gault purchased, pursuant to the terms of an employment agreement and a related purchase agreement and under the 1989 Plan, 100,250 shares (after giving effect to the 2-for-1 stock split on May 4, 1993) of the Common Stock of the Company for $.05 per share, which shares are restricted and not transferable through December 31, 1995. The Company has the option to purchase all or any part of the 100,250 shares for $.05 per share through December 31, 1995 if Mr. Gault's employment terminates prior to that date for any reason other than his death, disability or incapacity or his termination by the Company without cause. The value of the 100,250 restricted shares (net of the purchase price) was $3,365,893.75 at December 31, 1994, based on a December 30, 1994 closing price on the New York Stock Exchange Composite Transactions Tape of $33.625 per share. Mr. Gault receives all dividends paid on the Common Stock whether or not said 100,250 shares are vested. See "Employment Agreement" at Page 15. No other restricted stock has been awarded or issued to the Named Officers or any other officers of the Company. (4) The number of shares has been adjusted, as necessary, to give effect to the 2-for-1 split of the Common Stock distributed on May 4, 1993. --9-- 15 (5) The payouts indicated in respect of 1994 relate to amounts distributed in February of 1995 pursuant to Performance Equity Grants awarded in 1992 pursuant to the 1989 Plan in respect of the three year performance period ended December 31, 1994. Under the Performance Equity Grants, participants received a specified number of Performance Units payable 70% in shares of the Common Stock of the Company and 30% in cash if aggregate earnings per share of Common Stock (adjusted by the Committee to eliminate the effects of accounting changes in 1992 and 1993) during the performance period were at least $6.30. Since the aggregate earnings (adjusted as aforesaid) per share of the Common Stock of the Company during the performance period were in excess of $7.55, each Performance Unit received a supplemental cash amount equal to 50% of the value of the Performance Units. The Performance Units were valued based on the fair market value of the Common Stock of the Company at December 30, 1994, which was $33.8125 based on the average of the high and low sale prices on that date as reported on the New York Stock Exchange Composite Transactions Tape. (6) All Other Compensation consists of amounts contributed during or accrued in respect of 1994, 1993 and 1992 as matching contributions by the Company for the Named Officers under the Savings Plan. See "Savings Plan" at page 13. (7) The Company deferred payment of $40,000 of Mr. Gault's 1994 salary until the year following his retirement. (8) Mr. Wells was elected Vice Chairman of the Board, President and Chief Operating Officer on January 4, 1994. Mr. Wells was President and Chief Operating Officer from April 1, 1991 through January 3, 1994. (9) Mr. Gibara was elected an Executive Vice President of the Company on May 3, 1994. He served as a Vice President of the Company from October 1, 1992 through May 2, 1994. He was the Chairman of a European subsidiary of the Company from December 1, 1990 to September 30, 1992. OPTION/SAR GRANTS IN 1994 The Option/SAR Grants Table below shows all grants of stock options and stock appreciation rights ("SARs") during 1994 to the Named Officers. OPTION/SAR GRANTS TABLE OPTION/SAR GRANTS IN 1994
INDIVIDUAL GRANTS POTENTIAL -------------------------------------------------- REALIZABLE VALUE % OF AT ASSUMED NUMBER OF TOTAL ANNUAL RATES OF SECURITIES OPTIONS/ EXERCISE STOCK PRICE UNDERLYING SARS OR APPRECIATION FOR OPTIONS/SARS GRANTED BASE PRICE OPTION TERM GRANTED TO (DOLLARS (DOLLARS)(3) (NUMBER OF EMPLOYEES PER EXPIRATION ------------------------- NAME SHARES)(1) IN 1994 SHARE)(2) DATE 5%(4) 10%(4) - ------------------------- ------------ --------- ---------- ---------- ---------- ----------- Stanley C. Gault 150,000 8.9% $44.25 1-3-04 $4,174,500 $10,578,000 Hoyt M. Wells 40,000 2.4 44.25 1-3-04 1,113,200 2,820,800 William J. Sharp 12,400 0.7 44.25 1-3-04 345,092 874,448 Samir F. Gibara 15,000 0.9 44.25 1-3-04 417,450 1,057,800 John M. Ross 13,000 0.8 44.25 1-3-04 361,790 916,760
NOTES TO OPTION/SAR GRANTS TABLE: (1) All grants were made on January 4, 1994, when non-qualified stock options in respect of 1,664,150 shares of Common Stock were granted to 778 persons, including the Named Officers. The exercise price of each stock option is equal to 100% of the per share fair market value of the Common Stock on January 4, 1994, the date granted. The stock options are exercisable in respect of 50% of the shares covered thereby beginning January 4, 1995 and are fully exercisable beginning January 4, 1996. Unexercised stock options terminate automatically if the optionee ceases to be an employee of the Company or one of its subsidiaries for any reason, except that (a) upon the Retirement or Disability (as such terms are defined in the 1989 Plan) of the optionee more than six months after the date of the grant thereof, such stock option or SAR shall become immediately exercisable and remain exercisable for three years following the --10-- 16 Retirement of the optionee and until the expiration date indicated in the Option/SAR Grants Table in the event of a Disability, and (b) in the event of the death of the optionee more than six months after the grant thereof, the stock option or SAR shall be exercisable up to one year after the date of death of the optionee by the person or persons to whom the rights passed by his or her will or according to the laws of descent and distribution. Upon any exercise, the Company will be entitled to a tax deduction equal to the excess of the market value of the acquired shares over the stock option exercise price. (2) In respect of each stock option granted during 1994, the holder may, subject to certain conditions, pay the exercise price by delivery of owned shares of Common Stock (valued at the market value on the date of exercise) and/or may satisfy withholding tax obligations by delivering owned shares of Common Stock or by using shares of Common Stock acquired upon the exercise of the stock option. (3) The dollar amounts under these columns are the result of calculations at the 5% and 10% rates set by the Securities and Exchange Commission and therefore are not intended to forecast possible future appreciation, if any, of the price of the Common Stock. No economic benefit to the optionees is possible without an increase in price of the Common Stock, which will benefit all shareholders commensurately. (4) In order to realize the potential values set forth in the 5% and 10% columns of the Option/SAR Grants Table, the per share price of the Common Stock would be $72.08 and $114.77, respectively. OPTION/SAR 1994 EXERCISES AND YEAR-END VALUES The Option/SAR Exercises and Year-End Values Table below sets forth certain information regarding options and SARs exercised by the Named Officers in 1994 and the value of options/SARs held by the Named Officers at December 31, 1994, valued at $33.675 per share, the closing price of the Common Stock on the New York Stock Exchange Composite Transactions Tape on December 30, 1994. OPTION/SAR EXERCISES AND YEAR-END VALUES TABLE AGGREGATED OPTION/SAR EXERCISES IN 1994 AND DECEMBER 31, 1994 OPTION/SAR VALUES
NUMBER OF SECURITIES SHARES UNDERLYING VALUE OF UNEXERCISED ACQUIRED UNEXERCISED OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS ON DECEMBER 31, 1994 AT DECEMBER 31, 1994 EXERCISE VALUE (NUMBER OF SHARES)(1) (DOLLARS)(2) (NUMBER OF REALIZED ----------------------------- ----------------------------- NAME SHARES)(1) (DOLLARS) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - --------------------- ---------- ---------- ----------- ------------- ----------- ------------- Stanley C. Gault -0- -0- 927,000 75,000 $9,258,600 -0- Hoyt M. Wells 5,000 $54,375.00 66,000 57,000 239,575 -0- William J. Sharp -0- -0- 87,400 18,600 1,070,860 -0- Samir F. Gibara 8,000(3) 84,687.50 24,500(3) 20,500 191,750 -0- John M. Ross -0- -0- 36,200 19,200 111,225 -0-
NOTES TO OPTION/SAR EXERCISES AND YEAR-END VALUES TABLE: (1) Except as indicated at Note 3, all shares acquired and all exercisable and unexercised shares are options to acquire Common Stock. (2) Based on the closing price of the Common Stock of the Company on the New York Stock Exchange Composite Transactions Tape on December 30, 1994, which price was $33.675. (3) The shares acquired by Mr. Gibara include SARs in respect of 6,000 shares exercised for cash. Mr. Gibara's exercisable Options/SARs include 10,000 shares subject to SARs exercisable for cash. LONG TERM INCENTIVE AWARDS The 1989 Goodyear Performance and Equity Incentive Plan (the "1989 Plan"), adopted on December 6, 1988 and approved by shareholders on April 10, 1989, empowers the Committee to grant Awards from time to time until December 31, 1998, which Awards may be Incentive, Non-Qualified or Deferred Compensation Stock Options, Stock Appreciation Rights, Restricted Stock or Restricted Unit Grants, Performance Equity or Performance Unit Grants, any other Stock-Based Awards authorized by the Committee, or any combination of any or all of such Awards, whether in tandem with each other or otherwise, to officers and other key employees of the Company and its subsidiaries. The Long Term Incentive Plan Awards Table on page 12 sets forth the long term incentive awards in 1994 to the Named Officers, all of which were Performance Equity Grants awarded under the 1989 Plan. --11-- 17 LONG TERM INCENTIVE PLAN AWARDS TABLE LONG TERM INCENTIVE PLANS -- AWARDS IN 1994
ESTIMATED FUTURE PAYOUTS UNDER NON-STOCK NUMBER OF SHARES, PRICE-BASED PLANS(4) UNITS OR ------------------------------------------------- OTHER RIGHTS THRESHOLD TARGET MAXIMUM (EXPRESSED IN PERFORMANCE (EXPRESSED IN (EXPRESSED IN (EXPRESSED IN NUMBER OF OR OTHER NUMBER OF NUMBER OF NUMBER OF SHARES OF PERIOD UNTIL SHARES OF SHARES OF SHARES OF COMMON STOCK) MATURATION OR COMMON COMMON COMMON NAME (1)(2) PAYOUT(3) STOCK) STOCK) STOCK) - -------------------------------------- ------------------ ------------- ------------- ------------- Stanley C. Gault 20,800(1) 1/1/94 to 12/31/96(1) 16,640(5) 20,800(7) 31,200 (9) 20,800(2) 1/1/95 to 12/31/97(2) 16,640(6) 20,800(8) 31,200(10) Hoyt M. Wells 15,000(1) 1/1/94 to 12/31/96(1) 12,000(5) 15,000(7) 22,500 (9) 15,000(2) 1/1/95 to 12/31/97(2) 12,000(6) 15,000(8) 22,500(10) William J. Sharp 4,200(1) 1/1/94 to 12/31/96(1) 3,360(5) 4,200(7) 6,300 (9) 4,200(2) 1/1/95 to 12/31/97(2) 3,360(6) 4,200(8) 6,300(10) Samir F. Gibara 5,000(1) 1/1/94 to 12/31/96(1) 4,000(5) 5,000(7) 7,500 (9) 5,000(2) 1/1/95 to 12/31/97(2) 4,000(6) 5,000(8) 7,500(10) John M. Ross 4,200(1) 1/1/94 to 12/31/96(1) 3,360(5) 4,200(7) 6,300 (9) 4,200(2) 1/1/95 to 12/31/97(2) 3,360(6) 4,200(8) 6,300(10)
NOTES TO LONG TERM INCENTIVE PLAN AWARDS TABLE: (1) On January 4, 1994, the Committee awarded Performance Equity Grants ("1996 Performance Units") under the 1989 Plan to the Named Officers and 30 other key executives of the Company. The number of 1996 Performance Units paid will be determined by and contingent upon the extent to which the performance goals are achieved. Each 1996 Performance Unit earned will be paid 50% in shares of Common Stock and 50% in cash in February of 1997 (unless deferred). The performance goals are specified levels of aggregate earnings per share of the Common Stock during the three year period of January 1, 1994 through December 31, 1996 (the "1996 Performance Period"). (2) On December 6, 1994, the Committee awarded Performance Equity Grants ("1997 Performance Units") under the 1989 Plan to the Named Officers and 28 other key executives of the Company. The number of 1997 Performance Units paid will be determined by and contingent upon the extent to which the performance goals are achieved. Each 1997 Performance Unit earned will be paid 50% in shares of Common Stock and 50% in cash in February of 1998 (unless deferred). The performance goals are specified levels of aggregate earnings per share of the Common Stock during the three year period of January 1, 1995 through December 31, 1997 (the "1997 Performance Period"). (3) A participant must be an employee at the end of a Performance Period to receive the proceeds of the Performance Units; except that if such participant dies, retires or becomes disabled prior to the end of the Performance Period, any Performance Units earned will be prorated based on the portion of the Performance Period he or she was an employee. (4) Various payouts, ranging from 80% to 150% of the Performance Units, may be paid based on the aggregate earnings per share of Common Stock during the relevant Performance Period. Under the 1989 Plan, the Committee may eliminate the effect of accounting changes and extraordinary events in determining the aggregate earnings per share of Common Stock during a Performance Period. (5) The aggregate earnings per share of Common Stock during the 1996 Performance Period must be at least $10.27 before any distribution may be made. If aggregate earnings are at least $10.27 during the 1996 Performance Period, at least 80% of the 1996 Performance Units will be distributed. (6) The aggregate earnings per share of Common Stock during the 1997 Performance Period must be at least $12.15 before any distributions may be made. If aggregate earnings are at least $12.15 during the 1997 Performance Period, at least 80% of the 1997 Performance Units will be distributed. (7) If the aggregate earnings per share of Common Stock are $11.02 to $11.26 during the 1996 Performance Period, 100% of the 1996 Performance Units will be distributed. (8) If the aggregate earnings per share of Common Stock are $12.90 to $13.14 during the 1997 Performance Period, 100% of the 1997 Performance Units will be distributed. (9) If the aggregate earnings per share of Common Stock are $12.27 or more during the 1996 Performance Period, 150% of the 1996 Performance Units will be distributed. (10) If the aggregate earnings per share of Common Stock are $14.15 or more during the 1997 Performance Period, 150% of the 1997 Performance Units will be distributed. --12-- 18 OTHER PLAN INFORMATION STOCK OPTIONS AND APPRECIATION RIGHTS The 1989 Plan provides, among other things, for the granting of Incentive Stock Options, Non-Qualified Stock Options, SARs and other Awards in respect of up to approximately 21,500,000 shares of the Common Stock. The 1989 Plan will expire on December 31, 1998, except with respect to Stock Options, SARs and other Awards then outstanding. At January 31, 1995, there were outstanding Stock Options granted under the 1989 Plan in respect of 8,150,762 shares (including Stock Options with tandem Change in Control SARs in respect of 46,800 shares and tandem SARs in respect of 674,875 shares) and independent SARs in respect of 184,171 shares. PERFORMANCE RECOGNITION PLAN FOR 1995 On December 6, 1994, the Board of Directors of the Company adopted the Performance Recognition Plan for 1995 (the "Performance Plan"). Approximately 894 key employees, including all executive officers of the Company, will participate. The Committee determined the participants and established their respective target bonuses. Thereafter the Committee reviewed and approved the performance criteria and goals established for each participant. The target bonus of each participant is subject to adjustment between zero and 150%, depending upon the level of achievement measured relative to the performance criteria and goals established by the Committee in respect of such participant. The Performance Plan establishes specific goals for earnings before interest and taxes ("EBIT"), with required reductions in sales, administrative and general expenses ("SAG"), and cash flow for the Company or an operating unit, as the case may be, in respect of the participant. Payment of awards under the Performance Plan will be made in February of 1996, except to the extent deferred by the Committee or an eligible participant pursuant to the Company's Deferred Compensation Plan for Executives, contingent upon the level achievement of the EBIT, SAG reduction and cash flow goals and upon the Committee's determination that payment would be appropriate. Awards, if any, will be paid in cash. Target bonuses under the Performance Plan have been established for calendar year 1995 as follows: Mr. Gault, $825,000; Mr. Wells, $525,000; Mr. Sharp, $175,000; Mr. Gibara, $190,000; Mr. Ross, $160,000; and all participants (894 persons) as a group, $16,473,446. SAVINGS PLAN In 1984, the Company adopted the Employee Savings Plan for Salaried Employees (the "Savings Plan"). An eligible employee (any full-time salaried employee with at least one year of service) may contribute 1% to 16% of his or her compensation (to a maximum of $150,000 in 1995) to the Savings Plan, subject to an annual contribution ceiling of $9,240 in 1995. Such contributions to the Savings Plan are not included in the current taxable income of the employee pursuant to Section 401(k) of the Internal Revenue Code of 1986, as amended (the "Code"). Employee contributions are, at the direction of the participant, invested by the Savings Plan Trustee in the Fixed Interest Fund, the Stock Equity Fund, the Balanced Fund or in any combination of such Funds. During 1995, the Company is matching each dollar contributed by a participating employee (up to a maximum of the lesser of 6% of such participant's compensation during 1995 or $9,000) with 50 cents. The level of the Company's matching contributions in future years will be determined annually by the Company's Board of Directors. Company contributions are made in cash and are invested by the Savings Plan Trustee in shares of Common Stock. SEVERANCE PLAN The Goodyear Employee Severance Plan (the "Severance Plan") was adopted by the Company on February 14, 1989 pursuant to the authorization of the Board of Directors and upon the recommendation of the Compensation Committee. The Severance Plan provides that, if the employment of an eligible employee is involuntarily terminated (as defined in the Severance Plan) within two years following a Change in Control, such employee is entitled to receive severance pay, either in a lump sum or, at the employee's election, on a regular salary payroll interval basis, in an amount equal to the sum of (a) two weeks' pay for each full year of service with the Company and its subsidiaries completed by such employee and (b) one month's pay for each $12,000 of such employee's total annual compensation (which includes such employee's base salary rate in effect at the date of termination, plus all bonus, profit sharing and incentive compensation paid to such employee during the twelve months prior to his or her separation); provided, that such severance pay shall not exceed two times the total annual compensation of such employee. In addition, each such person shall receive medical benefits and basic life insurance coverage on the same basis as in effect prior to his or her separation for a period of weeks equal to the number of weeks of severance pay. Any full-time salaried employee of the Company or any of its domestic subsidiaries having at least one year of service and participating in the Retirement Plan is eligible for benefits under the Severance Plan. Under the Severance Plan, a Change in Control is deemed to occur upon the acquisition of --13-- 19 35% or more of the Common Stock by any "Acquiring Person" or any change in the composition of the Board of Directors of the Company with the effect that a majority of the directors are not "continuing directors." If it is assumed that the Named Officers had been involuntarily terminated as of December 31, 1994 following within two years of a Change in Control, the amount of severance pay due under the Severance Plan to the Named Officers in such event would have been: Mr. Gault, $4,077,946; Mr. Wells, $2,685,000; Mr. Sharp, $1,180,000; Mr. Gibara, $1,165,000; and Mr. Ross, $1,080,000. DEFERRED COMPENSATION PLAN The Company's Deferred Compensation Plan for Executives was adopted by the Board of Directors of the Company upon the recommendation and approval of the Compensation Committee on and effective as of October 4, 1994. Pursuant to the Deferred Compensation Plan, an eligible employee may elect to defer all or a portion of his or her Performance Plan award and/or all or a portion of his or her annual salary in excess of $150,000 by making a timely deferral election. The deferral period options are five years, the year following retirement or in five to fifteen annual installments commencing the year following retirement. In addition, any cash compensation earned by any officer of the Company which, if paid as and when due, would not be deductible by the Company for Federal Income Tax purposes by reason of the limitations of Section 162(m) of the Code shall automatically be deferred under the Deferred Compensation Plan. Amounts deferred earn amounts equivalent to the returns on one or more of five reference funds, as selected by the participant. RETIREMENT BENEFITS The Company maintains a Retirement Plan for Salaried Employees (the "Retirement Plan"), a defined benefit plan qualified under the Code, in which most salaried employees (other than employees assigned to retail store locations) of the Company, including all officers, are eligible to participate. The Retirement Plan permits any eligible employee to make monthly optional contributions at an annual rate equal to 2% of his or her annual earnings in excess of Social Security covered compensation ($25,920 in 1995), up to a maximum 1995 contribution of $2,481.60. Recent amendments to the Code limit the maximum amount of earnings that may be used in calculating benefits under the Retirement Plan, which limit is $150,000 for 1995. In 1994, the Company established a non-qualified, unfunded Excess Benefits Plan which provides additional benefits to a select group of highly compensated employees. The Excess Benefits Plan will pay benefits equal to the difference between the monthly amount paid under the Retirement Plan and the monthly amount which would have been paid under the Retirement Plan if calculated without the limitation on compensation ($150,000 in 1995) under the Code. The Company also maintains a Supplementary Pension Plan (the "Supplementary Plan"), a non-qualified plan which provides additional retirement benefits to all officers of the Company and certain other key employees. Participants in the Supplementary Plan do not participate in the Excess Benefits Plan. The Retirement Plan and the Supplementary Plan (the "Pension Plans") provide pension benefits to participants who have at least 30 years of service or have at least ten years of service and have attained the age of 55. Benefits payable to a participant who retires between ages 55 and 62 are subject to a reduction of 4.8% for each full year of retirement before age 62. Prior to retirement, a participant may elect to receive, subject to approval of the Committee, a lump sum settlement of the benefits payable under the Supplementary Plan. The Pension Plan Table below shows estimated annual benefits payable at selected earnings levels under the Retirement Plan, as supplemented by the Supplementary Plan, assuming retirement on July 1, 1995 at age 65 after selected periods of service.
PENSION PLAN TABLE ESTIMATED ANNUAL BENEFITS UPON RETIREMENT AT JULY 1, 1995, WITH YEARS OF SERVICE INDICATED. -------------------------------------------------------------------------------------------------- REMUNERATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS 45 YEARS - ------------ -------- ---------- ---------- ---------- ---------- ---------- ---------- $ 250,000 $ 71,927 $ 91,443 $ 104,237 $ 117,031 $ 125,344 $ 133,656 $ 141,969 500,000 152,872 194,872 223,402 251,931 266,991 282,051 297,111 750,000 235,372 299,872 343,402 386,931 409,491 432,051 454,611 1,000,000 317,872 404,872 463,402 521,931 551,991 582,051 612,111 1,250,000 400,372 509,872 583,402 656,931 694,491 732,051 769,611 1,500,000 482,872 614,872 703,402 791,931 836,991 882,051 927,111 1,750,000 565,372 719,872 823,402 926,931 979,491 1,032,051 1,084,611 2,000,000 647,872 824,872 943,402 1,061,931 1,121,991 1,182,051 1,242,111 2,250,000 730,372 929,872 1,063,402 1,196,931 1,264,491 1,332,051 1,399,611 2,500,000 812,872 1,034,872 1,183,402 1,331,931 1,406,991 1,482,051 1,557,111
--14-- 20 The pension benefit amounts shown in the Pension Plan Table include the maximum benefits obtainable under the formula for the optional contributory portion of the Retirement Plan and under the Supplementary Plan and assume payments are made on a five year certain and life annuity basis (and not under any of the various survivor options or the lump sum option) and are not subject to any deduction for social security or any other offsets. Pension benefits are based on the participant's highest average monthly earnings, consisting of salary and cash payments under the Performance Recognition Plan (and prior annual incentive plans) for any period of 60 consecutive months within the 120 months immediately preceding his or her retirement (assuming full participation in the contributory feature of the Retirement Plan), with monthly benefits ranging from as low as 22% of such earnings in the case of a participant who retires after 10 years of service to as high as 63% of such earnings in the case of a participant who retires after 45 years of service. Earnings covered by the Pension Plans are substantially equivalent to the sum of the amounts set forth under the "Salary" and "Bonus" columns of the Summary Compensation Table in respect of each of the Named Officers, except Mr. Gault who does not participate in the contributory feature of the Retirement Plan or in the Supplementary Plan. Mr. Gault will not be entitled to benefits under the Retirement Plan until he has five years of service, in which event his annual benefit is estimated to be approximately $300 for each year of service. The years of credited service under the Plans for each of the Named Officers are: Mr. Gault, 3 years; Mr. Wells, 43 years; Mr. Sharp, 30 years; Mr. Gibara, 28 years; and Mr. Ross, 29 years. EMPLOYMENT AGREEMENT Mr. Gault and the Company entered into an Employment Agreement (as amended, the "Employment Agreement") and a Stock Purchase Agreement (as amended, the "Purchase Agreement"), each dated August 6, 1991. The Employment Agreement, as amended by action of the Board of Directors pursuant to the recommendation of the Compensation Committee, provides for the employment of Mr. Gault as Chairman of the Board and Chief Executive Officer through December 31, 1995. Mr. Gault's annual base salary under the Employment Agreement is $840,000 per year, subject to increase by the Compensation Committee of the Board of Directors (the "Committee") in accordance with Company practices based upon Mr. Gault's performance. The Committee increased his salary to an annual rate of $900,000 effective June 1, 1992, $960,000 effective June 1, 1993 and $1,020,000 effective June 1, 1994. The Employment Agreement also provides that Mr. Gault shall receive annual incentive compensation each year of his employment after 1991 in an amount not less than the greater of (a) $420,000, (b) fifty percent of his annual base salary, or (c) such amount as may be awarded to him as incentive compensation. In accordance with the Employment Agreement and determinations of the Committee, Mr. Gault received $945,000, $1,018,973 and $1,162,500 pursuant to the Performance Recognition Plan as annual incentive compensation for 1992, 1993 and 1994, respectively. For 1995, Mr. Gault's target incentive compensation award under the Performance Plan is $825,000, which amount is subject to increase to 150% of that amount or reduction to $510,000 depending on the extent to which the EBIT, SAG reduction and cash flow goals for the Company are attained. Under the terms of the Employment Agreement, the Purchase Agreement and the 1989 Plan, Mr. Gault, in lieu of retirement benefits, was granted the right to purchase, and he purchased, 100,250 shares (after giving effect to the two-for-one stock split on May 4, 1993) of the Common Stock for $.05 per share, which shares are restricted stock and, as such, may not be transferred by Mr. Gault until after December 31, 1995 and are subject to a repurchase option whereby the Company may repurchase all or any portion of such shares at $.05 per share through December 31, 1995 if Mr. Gault ceases to be employed by the Company for any reason through December 31, 1995, unless by reason of death, disability or incapacity or by the Company without cause, in which event the Company's option to repurchase the 100,250 shares will terminate. If the Company repurchases all or a portion of the 100,250 shares, under certain circumstances the Company would be required to pay to Mr. Gault up to $50,000 for each month of service prior to the termination of his employment. In accordance with the Employment Agreement, Mr. Gault was granted, as long term incentive compensation, Stock Options for the purchase of Common Stock in respect of 300,000 shares on June 4, 1991, 552,000 shares on August 6, 1991, 150,000 shares on January 7, 1992 and 150,000 shares on January 5, 1993, under and in accordance with the terms of the 1989 Plan. Mr. Gault was granted Stock Options pursuant to the 1989 Plan in respect of 150,000 shares of Common Stock on January 4, 1994, which are exercisable beginning July 5, 1994. Mr. Gault was granted Stock Options pursuant to the 1989 Plan in respect of 155,000 shares of Common Stock on January 4, 1995, which are exercisable beginning July 5, 1995. All Stock Options were granted to Mr. Gault at 100% of the fair market value of the Common Stock on the date of grant. --15-- 21 The Employment Agreement provides that Mr. Gault is entitled to receive the same non-salary benefits generally made available to executives of the Company. Mr. Gault also has the use of a Company car and driver and a Company apartment in Akron, Ohio. DIRECTORS' COMPENSATION Directors of the Company who are not serving as officers of or consultants to the Company or any of its subsidiaries receive, as compensation for their services to the Company as a director, $7,000 per calendar quarter, plus $1,200 for each Board meeting attended and for each committee meeting attended. Travel and lodging expenses incurred by such directors in attending Board and committee meetings are paid by the Company. A director who is also an officer of or a consultant to the Company or any of its subsidiaries does not receive additional compensation for his or her services as a director. The Company has a Retirement Plan for Outside Directors, whereunder each person who is or becomes a director and never serves as an officer or employee of the Company or any of its subsidiaries is eligible for benefits upon retirement from the Board if he or she (i) has attained the age of 70 and served as a director for at least five years or (ii) has attained the age of 65 and served as a director for at least ten years. After retirement, each eligible former director will receive $20,000 per year until his or her death. If the director dies within five years after retirement, his or her beneficiary will receive a lump sum payment of $100,000, less all amounts theretofore received by the retired director under the Plan. Effective August 1, 1992, the Company established a directors' Charitable Award Program funded by Company purchased and owned life insurance policies on the lives of pairs of directors. The Company will donate $1 million per director to one or more qualifying charitable organizations recommended by the paired directors after both of the paired directors are deceased. Assuming current tax laws remain in effect, the Company will recover the cost of the program over time with the proceeds of the insurance policies purchased. Individual directors will derive no financial benefit from the program, as the related charitable contributions will accrue to the Company. On June 1, 1994, each director who is not an employee of the Company purchased 200 shares of the Common Stock of the Company for $1.00 per share pursuant to the terms of the Company's 1994 Restricted Stock Award Plan for Nonemployee Directors. The shares are restricted and subject to forfeiture until certain requirements have been satisfied. The 1994 Restricted Stock Award Plan for Nonemployee Directors was adopted by the Board of Directors in lieu of an increase in compensation and to directly link a portion of each nonemployee director's compensation with the long-term growth of the Company and appreciation in the value of the Common Stock. OTHER MATTERS Section 16(a) of the Exchange Act requires the Company's directors and officers to file reports of ownership and changes in ownership in the Company's equity securities with the Securities and Exchange Commission, the New York Stock Exchange and the Company. Based solely on a review of the copies of Forms 3, 4 and 5 received by the Company, or on written representations from certain directors and officers that no updating Section 16(a) forms were required to be filed by them, the Company believes that no director or officer of the Company filed a late report or failed to file a required report under Section 16(a) of the Exchange Act during or in respect of the year ended December 31, 1994, except that Mr. J. W. Barnett, a Vice President of the Company, filed a report on Form 4 with respect to one transaction twenty-four days after the date required and Messrs. F. J. Kovac and G. R. Hargreaves, Jr., retired officers of the Company, each filed a Form 5 relating to a deferred reporting transaction nine days late. To the knowledge of the Company, no person owned 10% or more of any class of the Company's equity securities registered under the Exchange Act during 1994. Mrs. Gertrude G. Michelson, a director of the Company, was a director of, and served as a Senior Advisor to, R. H. Macy & Co., Inc. from September 1, 1992 to December 31, 1994. On January 27, 1992, R. H. Macy & Co., Inc. commenced a case seeking reorganization under the Federal Bankruptcy Code and emerged from bankruptcy on December 19, 1994. Mrs. Michelson retired as the Senior Vice President -- External Affairs of R. H. Macy & Co., Inc. effective September 1, 1992. Mrs. Michelson is a director of Federated Department Stores, Inc., which acquired R. H. Macy & Co., Inc. During 1994, the Company and its subsidiaries in the ordinary course of their business and at competitive prices and terms made sales to or purchases from, or engaged in other transactions with, corporations of which certain of the Company's non-employee directors are executive officers. The Company does not consider the amounts involved in such transactions or the transactions themselves to be material to its business and believes such amounts and transactions were not material in relation to the business of such other corporations or the interests of the directors concerned. --16-- 22 COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION COMPENSATION COMMITTEE POLICIES AND PRACTICES The Board of Directors of the Company (the "Board") has delegated to the Compensation Committee of the Board (the "Committee") primary responsibility for establishing and administering the compensation programs of the Company for its executive officers and other key personnel. In performing its duties, the Committee meets with the Chief Executive Officer to review compensation policy and specific levels of compensation paid to the executive officers and other key personnel, administers the Company's annual, intermediate term and long term compensation plans for its executive officers and certain other key personnel and reports and makes recommendations to the Board regarding executive compensation policies and programs. Each director who is not a former or current officer or employee of the Company or any of its subsidiaries is a member of the Committee. Members of the Committee are not eligible to participate in any of the Company's executive compensation programs. The Committee annually reviews the compensation of the Company's executive officers to determine whether (a) the Company is competitive and can attract and retain qualified and experienced personnel, and (b) the executive officers are appropriately motivated to seek to attain short term and intermediate term corporate and business unit performance goals approved by the Committee and to manage the Company for sustained long term growth. The Company's compensation programs are designed to retain and motivate its executive officers and other key personnel and align their interests with the interests of the shareholders by providing its executive officers compensation in the form of: (1) competitive salaries; (2) annual cash bonuses pursuant to the Company's Performance Recognition Plan (the "Performance Plan") based on operating performance measured against specific goals for earnings before interest and taxes ("EBIT") and cash flow; (3) intermediate term compensation in the form of the Common Stock of the Company and cash pursuant to the 1989 Goodyear Performance and Equity Incentive Plan (the "1989 Plan") involving Performance Equity Grants having three year performance periods where payout is dependent on the Company achieving designated levels of cumulative earnings per share during the performance period; and (4) long term compensation in the form of stock options granted under the 1989 Plan at the fair market value of the Company's Common Stock on the date of grant. Other elements of compensation, such as retirement, health and life insurance benefits, are also considered by the Committee in its evaluation of the compensation package provided to the Company's executive officers. The Company's executive compensation programs are designed so that a substantial percentage of each executive officer's compensation is dependent upon corporate performance and appreciation in the value of the Company's Common Stock. Section 162(m) of the Internal Revenue Code (the "Code") provides that compensation paid to a public company's chief executive officer and its four other highest paid executive officers in tax years 1994 and thereafter in excess of $1 million is not deductible unless such compensation is paid only upon the achievement of objective performance goals where certain procedural requirements have been satisfied. Alternatively, such compensation may be deferred until the executive officer is no longer a covered person under Section 162(m) of the Code. The Committee has adopted a policy of conforming to the requirements of Section 162(m) of the Code. The Committee believes that in general the Company's compensation programs currently comply with the requirements of Section 162(m) of the Code and the regulations promulgated thereunder. Any compensation which would be subject to the Section 162(m) limitation has been or will be automatically deferred until the payment of such compensation would be deductible by the Company. However, the Committee recognizes that there may be instances in the future where it would be in the best interest of the Company and its shareholders to pay compensation which would not be deductible by reason of Section 162(m) of the Code. COMPENSATION OF EXECUTIVE OFFICERS The Committee met with the Chief Executive Officer to receive his recommendations regarding 1994 adjustments to the salary and Performance Plan participation guidelines for each executive officer position and certain other key positions. The guidelines for each position were based primarily on market data from six generally available surveys of the salary and annual bonus practices of other companies. Each of the surveys included compensation data compiled from at least 100 companies, with one survey using data compiled from more than 1,000 companies. The Committee generally seeks to establish salary and annual Performance Plan guidelines at levels that approximate the median (the 50th percentile) of such kinds of compensation paid by companies included in said surveys. The median survey compensation for each position was determined utilizing regression analysis based on revenues. The results of the surveys were also weighted to emphasize manufacturing companies, especially producers of non-durable goods. In addition to the --17-- 23 individual position data surveys, nine other general surveys indicating past, present and projected salary structure increases for executive positions were reviewed. The compensation levels indicated by the aforesaid surveys were the principal basis used by the Committee for establishing the combined salary and annual Performance Plan compensation for the Company's executive officers. The Committee also considered the Chief Executive Officer's recommendations which were based in substantial part on the aforesaid guidelines as well as on certain subjective factors, namely the Chief Executive Officers's evaluation of the performance of each executive officer, the performance of the Company and general economic and competitive conditions. In 1994, salaries of the executive officers named in the Summary Compensation Table (the "Named Officers") were an average of 13.0% higher than the median indicated by the guidelines and 9.3% higher than in 1993. The aggregate salaries paid to all executive officers during 1994, which included promotional and merit increases, were 12.2% higher than in 1993. Salaries averaged approximately 57% of total annual cash compensation paid to executive officers (51% of such amount paid to the Named Officers) in respect of 1994. Pursuant to the Performance Plan for 1994, the Committee established, based on the recommendations of the Chief Executive Officer, the target amount of the bonus for each executive officer and reviewed and adopted performance goals. Compensation paid under the Performance Plan for 1994 was based on the EBIT and cash flow performance of the entire Company and of the operating unit to which the executive officer is assigned, or, as in the case of certain officers of the Company including Messrs. Gault, Wells and Ross, based solely on the EBIT and cash flow performance of the entire Company. Payouts could range from zero to 150% of the target amounts depending on the extent to which applicable EBIT and cash flow goals were achieved. The target annual incentive compensation levels (assuming payout at 100% of target) for 1994 represented approximately 30% of total 1994 annual cash (salary and Performance Plan) compensation, which was substantially the same proportion as the median level established by the aforesaid surveys. EBIT and cash flow goals for 1994 were exceeded by the Company and most operating units. Aggregate payouts for 1994 averaged approximately 147% of the target levels for the various operating units and 150% of the target level for the Company. The Performance Plan payments represented an average of approximately 43% of the total 1994 annual cash compensation of the Company's executive officers and 49% of annual cash compensation of the Named Officers. The 1994 Performance Plan payouts of Messrs. Gault and Wells were deferred pursuant to the Company's Deferred Compensation Plan for Executives. A significant portion of the total compensation package of each executive officer is contingent upon the performance of the Company over the intermediate term, where performance is measured by the Company's cumulative net income per share or another appropriate standard. Accordingly, Performance Equity Grants have been awarded annually since 1992 to executive officers (and certain other key employees) of the Company pursuant to the 1989 Plan. The Committee, after consultation with and based on the recommendations of the Chief Executive Officer, establishes the terms and conditions of all grants, including the performance criteria, the target levels for payout and the aggregate amount of grants, selects the persons to whom grants are made and fixes the size of each such person's grant. The Committee awarded Performance Equity Grants under the 1989 Plan to all of the executive officers of the Company and certain other key employees of the Company on January 4, 1994 and on December 6, 1994, each based on guidelines established using the median of medium and long term compensation awards by 37 manufacturing companies (having median annual sales of approximately $13.5 billion) included in a 1992 survey acquired by the Company. The Performance Equity Grants awarded on January 4, 1994 were granted to executive officers in respect of substantially the same number of units as granted in 1993, except as adjusted to reflect changes in an executive officer's responsibilities and performance. The Performance Equity Grants awarded on December 6, 1994 were granted in respect of substantially the same number of units as were granted in January of 1994. Performance Equity Grants are designed to comprise approximately 50% of target medium and long term compensation. Payouts in respect of the Performance Equity Grants awarded on January 4, 1994 may range from zero to 150% of the targeted amounts, depending on the cumulative net income per share of the Common Stock of the Company during the three year performance period ending December 31, 1996, which must equal or exceed $10.27 per share of Common Stock for any payout to be made. If total net income per share during the performance period is $12.27 or more, 150% of the targeted payout amount may be paid. Payouts in respect of the Performance Equity Grants awarded on December 6, 1994 may range from zero to 150% of the targeted amounts, depending on the cumulative net income per share of the --18-- 24 Common Stock of the Company during the three year performance period ending December 31, 1997, which must equal or exceed $12.15 per share of Common Stock for any payout to be made. If total net income per share during the performance period is $14.15 or more, 150% of the targeted amount may be paid. The Committee grants stock options to officers and other key employees of the Company pursuant to the 1989 Plan. The Committee believes that annual grants of stock options provide an additional long term incentive for key personnel to remain with the Company and improve future Company performance and confirm the mutuality of interests shared by the Company's management and its other shareholders with compensation dependent upon the appreciation of the Company's Common Stock. All options are granted at a per share exercise price equal to the market value of the Common Stock of the Company on the date of grant. The Committee obtains and reviews surveys of the option granting practices of other manufacturing companies of a similar size in order to determine if the Company's grants are competitive in size and terms and conditions. The Committee believes that options should be granted once each year and that, under ordinary circumstances, each year each executive officer should be granted options in respect of shares having approximately the same dollar value, determined using the standard growth methodology applied in the aforesaid survey of 37 manufacturing companies used by the Company for determining competitive Performance Equity Grant levels, and subject to variation to reflect changes in the responsibility or performance of the executive officers or changes in the performance or circumstances of the Company. Accordingly, in recent years, including 1994, options have been granted to all executive officers and other key employees at the beginning of each year. Within the guideline ranges established using the aforesaid survey, the size of individual stock option grants were determined primarily on the basis of the responsibilities and relative position of each executive officer in the Company. Recent Company performance, prior grants and the prior performance of the executive officers were also considered in determining the size of individual grants. On January 4, 1994, stock options in respect of 1,664,150 shares were granted at $44.25 per share (the fair market value of the Common Stock of the Company on that day) to 778 key employees (including all executive officers), which options expire on January 3, 2004. COMPENSATION OF THE CHIEF EXECUTIVE OFFICER Mr. Gault, the Chairman of the Board and Chief Executive Officer of the Company, entered into a three year employment agreement which he negotiated with the Committee when he was elected to the office in June of 1991. In May of 1994, the Company, by action of the Board of Directors taken pursuant to the recommendation of the Compensation Committee, amended the employment agreement with Mr. Gault to extend the term of Mr. Gault's employment through December 31, 1995. Under the employment agreement, Mr. Gault is entitled to receive an annual salary of at least $840,000 a year, which was increased by the Committee to an annual rate of $900,000 per year effective June 1, 1992, an annual rate of $960,000 effective June 1, 1993 and an annual rate of $1,020,000 effective June 1, 1994, in recognition of his outstanding performance in leading the Company's continued improvement in operating results and financial condition during 1993, as reflected by, among other things, a 24.6% increase in the Company's income before taxes, extraordinary items and the cumulative effect of accounting changes. In accordance with the Compensation Committee's policy, Mr. Gault's cash compensation in respect of 1994 which would be subject to the limitation on deductibility for Federal Income Tax purposes under Section 162(m) of the Code was automatically deferred until at least January of 1996. Under the amended employment agreement, Mr. Gault was entitled to receive at least $510,000 (50% of his salary) of annual incentive compensation in 1994, whether under the Performance Plan or otherwise. The Committee, in view of the performance of Mr. Gault in 1993, as reflected by the substantial improvements in the Company's operating results and financial condition, determined that Mr. Gault's compensation arrangement should provide upside potential in the event of continued improvements in the Company's performance during 1994. Accordingly, under the Performance Plan Mr. Gault was granted at the beginning of 1994 a target annual incentive compensation level for 1994 in excess of the minimum required by the employment agreement, and he earned an amount equivalent to 212% of the minimum amount required by the employment agreement and 150% of the target amount. Payment of the 1994 award earned was deferred pursuant to the Company's Deferred Compensation Plan for Executives. Applying the same guidelines used in respect of other executive officers, Mr. Gault was awarded, as incentive compensation contingent upon the earnings performance of the Company, a Performance Equity Grant for the three year performance period ending on December 31, 1996 and another Performance Equity Grant for the three year performance period ending on December 31, 1997. Pursuant to the terms of the employment agreement, Mr. Gault was granted, as long-term incentive --19-- 25 compensation, stock options under the 1989 Plan in respect of an aggregate of 1,152,000 shares through December 31, 1993. The Committee determined that it would be appropriate to continue to provide the same level of long term incentive compensation for 1994 as provided in prior years pursuant to the employment agreement. Accordingly, Mr. Gault was granted a non-qualified incentive stock option under the 1989 Plan on January 4, 1994 in respect of 150,000 shares of the Company's Common Stock. Each option was granted at the fair market value of the Common Stock on the date of grant. February 8, 1995 The Compensation Committee John G. Breen, Chairman William E. Butler Charles W. Parry Thomas H. Cruikshank Agnar Pytte Gertrude G. Michelson George H. Schofield Steven A. Minter William C. Turner
PERFORMANCE GRAPH Set forth below is a graph comparing the cumulative total shareholder returns of the Common Stock of the Company ("Goodyear Common"), the Standard & Poor's 500 Composite Stock Index (the "S&P 500") and the Dow Jones Auto Parts & Equipment-All Index (the "Dow Auto Parts") at each December 31 during the period beginning December 31, 1989 and ending December 31, 1994. The graph assumes the investment of $100 on December 31, 1989 in Goodyear Common Stock, in the S&P 500 and in the Dow Auto Parts. Total shareholder return was calculated on the basis that in each case all dividends were reinvested. COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN GOODYEAR COMMON, S & P 500 AND DOW AUTO PARTS
MEASUREMENT PERIOD GOODYEAR DOW AUTO (FISCAL YEAR COVERED) COMMON S & P 500 PARTS 1989 100 100 100 1990 47 97 79 1991 135 126 118 1992 173 136 152 1993 235 150 189 1994 177 152 161
--20-- 26 MISCELLANEOUS SUBMISSION OF SHAREHOLDER PROPOSALS If a shareholder desires to have a proposal included in the Proxy Statement and Proxy of the Board of Directors for the 1996 Annual Meeting of Shareholders, such proposal shall conform to the applicable proxy rules of the Securities and Exchange Commission concerning the submission and content of proposals and must be received by the close of business on October 30, 1995 at the executive offices of the Company, 1144 East Market Street, Akron, Ohio 44316-0001, Attention: Office of the Secretary. 10-K REPORT Interested shareholders may obtain a copy of the Company's Annual Report for 1994 (on Form 10-K) to the Securities and Exchange Commission, including all financial statements, schedules and exhibits, without charge by writing to: Investor Relations The Goodyear Tire & Rubber Company 1144 East Market Street Akron, Ohio 44316-0001 or by a telephone call to: 216-796-3457. DIVIDEND REINVESTMENT PLAN SHARES First Chicago Trust Company of New York will vote any shares that it holds as custodian for the account of a shareholder participating in the Goodyear Dividend Reinvestment and Stock Purchase Plan in accordance with the Proxy returned by the participant to the Company in respect of the shares of Common Stock such participant holds of record. Shares of Common Stock in respect of which a Proxy or other written instruction is not received will not be voted. SAVINGS PLAN SHARES A separate "Confidential Voting Instructions" card is being sent to each employee or former employee of the Company participating in one or more of the Employee Savings Plans in which shares of Common Stock are held in a Savings Plan trust for the account of such participant. Shares of Common Stock held in a Savings Plan trust will be voted by the Plan trustee as instructed by Plan participants. Shares held in a Savings Plan trust for which voting instructions are not received will be voted by the Plan trustee in the same proportion as it votes shares for which voting instructions were received from participants in that Savings Plan. COSTS OF SOLICITATION The costs of solicitation of proxies will be borne by the Company. The Company has retained Beacon Hill Partners, Inc., 90 Broad Street, New York, New York 10004, to assist the Company in the distribution of the proxy materials and the solicitation of proxies for an estimated fee of $12,500 plus reimbursement of reasonable out-of-pocket expenses. Beacon Hill Partners, Inc. may solicit proxies from shareholders by mail, telephone, telex, telegram or personal call or visit. In addition, officers or other employees of the Company may, without additional compensation therefor, solicit proxies in person or by telephone. February 27, 1995 By Order of the Board of Directors JAMES BOYAZIS, Secretary --21-- 27 [GOODYEAR LOGO] THE GOODYEAR TIRE & RUBBER COMPANY PROXY FOR 1995 ANNUAL MEETING OF SHAREHOLDERS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned, a holder (or designated proxy) of shares of the Common Stock of The Goodyear Tire & Rubber Company, hereby appoints STANLEY C. GAULT, STEVEN A. MINTER, and WILLIAM C. TURNER, and each or any of them, the proxies or proxy of the undersigned, with full power of substitution, to represent the undersigned, and to vote all of the shares of Common Stock P that the undersigned is entitled to vote, at the Annual Meeting of Shareholders of the Company to be held at its offices in Akron, Ohio, on R Monday, April 10, 1995, at 10:00 A.M., Akron time, and at any and all adjournments thereof; to vote for the election of four Directors of the O Company, each to a term of three years, and with the power to vote said shares FOR the ratification of appointment of Independent Accountants and X upon all other matters as may properly come before the meeting or any adjournment thereof. This Proxy is given and is to be construed according Y to the laws of the State of Ohio. Unless otherwise specified on the reverse side, the PROXY will be voted: FOR election of the four nominees for Director named on the reverse side, with discretionary authority to cumulate votes (Item 1 on the reverse side), and FOR ratification of appointment of Independent Accountants (Item 2 on the reverse side). IF YOU PLAN TO ATTEND THE 1995 ANNUAL MEETING, PLEASE MARK THE BOX INDICATED ON THE REVERSE SIDE. THIS PROXY IS CONTINUED ON THE REVERSE SIDE. PLEASE MARK, DATE AND SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - FOLD AND DETACH HERE ANNUAL MEETING OF SHAREHOLDERS THE GOODYEAR TIRE & RUBBER COMPANY APRIL 10, 1995 10:00 A.M. OFFICE OF THE COMPANY GOODYEAR THEATER 1201 EAST MARKET STREET AKRON, OHIO Refreshments will be served from 9:00 to 9:45 a.m. in the Goodyear Gymnasium, which is adjacent to the Theater in Goodyear Hall. WE INVITE YOU TO JOIN US. YOUR VOTE IS IMPORTANT ====================== PLEASE COMPLETE, DATE AND SIGN YOUR PROXY AND PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE. 28 /X/ Please mark your 5721 votes in blue or black ink as in this example. THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF NOTICE OF 1995 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF ALL NOMINEES FOR ITEM 2. ITEM 1. ELECTION OF DIRECTORS. Each Nominee is nominated to serve a 3-year term. ITEM 2. Ratification of appointment of Price Waterhouse LLP as FOR ALL / / WITHHOLD / / NOMINEES: John G. Breen Independent Accountants. NOMINEES AUTHORITY William E. Butler FOR AGAINST ABSTAIN AS TO ALL Stanley C. Gault / / / / / / NOMINEES George H. Schofield (To withhold authority to vote for any individual nominee I plan to attend the Annual write that nominee's name in the space provided below.) Meeting of Shareholders. / / _______________________________________________________ Please sign name exactly as it appears above. Each joint owner should sign. ___________________________________________ Please indicate title if you are signing as executor, administrator, trustee, SIGNATURE DATE custodian, guardian or corporate officer. ___________________________________________ SIGNATURE DATE - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - FOLD AND DETACH HERE Directions for the most direct route to Goodyear are provided below: MOTORISTS NORTH OF AKRON ------------------------ Route 8 South to I-76 East. Exit I-76 East at Exit 24 Arlington Street/Kelly Avenue. Follow directions for Kelly Avenue. Left on Kelly one block to traffic light. Right on Third Avenue to traffic light. Left on Martha to traffic light. Left on East Market to Goodyear and Shareholder Parking Lot on right. MOTORISTS SOUTH OF AKRON ------------------------ I-77 North to I-76 East. Exit I-76 East at Exit 24 Arlington Street/Kelly Avenue. Follow directions for Kelly Avenue. Left on Kelly one block to traffic light. Right on Third Avenue to traffic light. Left on Martha to traffic light. Left on East Market to Goodyear and Shareholder Parking Lot on right. MOTORISTS EAST OF AKRON ----------------------- Due to major construction on I-76, east of the Goodyear corporate headquarters area, we suggest you allow for extra driving time. I-76 East to Exit 25 Martha Avenue. Right on Martha to East Market Street. Left on East Market to Goodyear and Shareholder Parking Lot on right. MOTORISTS WEST OF AKRON ----------------------- I-76 East. Exit I-76 East at Exit 24 Arlington Street/Kelly Avenue. Follow directions for Kelly Avenue. Left on Kelly one block to traffic light. Right on Third Avenue to traffic light. Left on Martha to traffic light. Left on East Market to Goodyear and Shareholder Parking Lot on right. NOTE: 45 MPH SPEED LIMIT STRICTLY ENFORCED IN CONSTRUCTION AREA! ***I-76 TIPS*** - - Turn car radio to 530 or 1610 AM for - Look for changeable message signs - CALL 76 AKRON (216) 762-5766 traffic information in a 14-mile with advice for drivers. The signs A traffic hot-line provides radius of the central interchange. provide advance warning of problems. complete traffic information. Signs along the roadside will indicate Hot-line callers can also order which radio station covers the free a more detailed alternate direction you're driving. route map to keep in the car.
29 CONFIDENTIAL VOTING INSTRUCTIONS THE GOODYEAR TIRE & RUBBER COMPANY EMPLOYEE SAVINGS PLANS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF GOODYEAR The proxy soliciting materials furnished by the Board of Directors of The Goodyear Tire & Rubber Company in connection with the Annual Meeting of Shareholders to be held on Monday, April 10, 1995 are delivered herewith. Under each Employee Savings Plan in which you participate ("Plan"), you have the right to give written instructions to the Trustee for such Plan to vote as you specify the number of full shares of Common Stock of The Goodyear Tire & Rubber Company representing your proportionate interest in each such Plan on February 16, 1995. If you wish to have such shares voted by the Trustee, please sign the authorization on the reverse side of this card and return it in the accompanying envelope. If you do not give instructions by marking, signing and returning this Confidential Voting Instructions Card in the envelope provided, shares of the Common Stock held for your account in each Plan will be voted by the Trustee in the same proportion as it votes shares for which Confidential Voting Instructions are received by the Trustee from other participants in that Plan. I hereby instruct the Trustee to vote (or cause to be voted) all shares of Common Stock of The Goodyear Tire & Rubber Company credited to my account under each Plan at February 16, 1995 at the Annual Meeting of Shareholders to be held on April 10, 1995, and at any adjournment thereof, as indicated on the reverse side hereof or, if not so indicated, as recommended by the Board of Directors. UNLESS INSTRUCTIONS ARE GIVEN ON THE REVERSE SIDE, THE TRUSTEE WILL VOTE FOR THE ELECTION OF THE FOUR NOMINEES FOR DIRECTOR AND FOR ITEM 2. IF YOU PLAN TO ATTEND THE 1995 ANNUAL MEETING, PLEASE MARK THE BOX INDICATED ON THE REVERSE SIDE. THIS CONFIDENTIAL VOTING INSTRUCTIONS CARD IS CONTINUED ON THE REVERSE SIDE. PLEASE MARK, DATE AND SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - FOLD AND DETACH HERE ANNUAL MEETING OF SHAREHOLDERS THE GOODYEAR TIRE & RUBBER COMPANY April 10, 1995 10:00 A.M. OFFICE OF THE COMPANY GOODYEAR THEATER 1201 EAST MARKET STREET AKRON, OHIO Refreshments will be served from 9:00 to 9:45 a.m. in the Goodyear Gymnasium, which is adjacent to the Theater in Goodyear Hall. WE INVITE YOU TO JOIN US. YOUR VOTE IS IMPORTANT ====================== PLEASE COMPLETE, DATE AND SIGN YOUR PROXY AND PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE. 30 /X/ Please mark your 8396 votes in blue or black ink as in this example. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF ALL NOMINEES FOR ITEM 2. ITEM 1. ELECTION OF DIRECTORS. Each Nominee is nominated to serve a 3-year term. ITEM 2. Ratification of appointment of Price Waterhouse LLP as FOR ALL / / WITHHOLD / / NOMINEES: John G. Breen Independent Accountants. NOMINEES AUTHORITY William E. Butler FOR AGAINST ABSTAIN AS TO ALL Stanley C. Gault / / / / / / NOMINEES George H. Schofield (To withhold authority to vote for any individual nominee I plan to attend the Annual write that nominee's name in the space provided below.) Meeting of Shareholders. / / _______________________________________________________ Authorization: I acknowledge receipt of the Notice of 1995 Annual Meeting and ___________________________________________ Proxy Statement. I hereby instruct the trustee to vote by proxy, in the form SIGNATURE DATE solicited by the Board of Directors, the number of full shares in my Plan account(s) as specified above, or, if not specified above, as recommended by ___________________________________________ the Board of Directors. SIGNATURE DATE - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - FOLD AND DETACH HERE Directions for the most direct route to Goodyear are provided below: MOTORISTS NORTH OF AKRON ------------------------ Route 8 South to I-76 East. Exit I-76 East at Exit 24 Arlington Street/Kelly Avenue. Follow directions for Kelly Avenue. Left on Kelly one block to traffic light. Right on Third Avenue to traffic light. Left on Martha to traffic light. Left on East Market to Goodyear and Shareholder Parking Lot on right. MOTORISTS SOUTH OF AKRON ------------------------ I-77 North to I-76 East. Exit I-76 East at Exit 24 Arlington Street/Kelly Avenue. Follow directions for Kelly Avenue. Left on Kelly one block to traffic light. Right on Third Avenue to traffic light. Left on Martha to traffic light. Left on East Market to Goodyear and Shareholder Parking Lot on right. MOTORISTS EAST OF AKRON ----------------------- Due to major construction on I-76, east of the Goodyear corporate headquarters area, we suggest you allow for extra driving time. I-76 East to Exit 25 Martha Avenue. Right on Martha to East Market Street. Left on East Market to Goodyear and Shareholder Parking Lot on right. MOTORISTS WEST OF AKRON ----------------------- I-76 East. EXIT I-76 East at Exit 24 Arlington Street/Kelly Avenue. Follow directions for Kelly Avenue. Left on Kelly one block to traffic light. Right on Third Avenue to traffic light. Left on Martha to traffic light. Left on East Market to Goodyear and Shareholder Parking Lot on right. NOTE: 45 MPH SPEED LIMIT STRICTLY ENFORCED IN CONSTRUCTION AREA! ***I-76 TIPS*** - - Turn car radio to 530 or 1610 AM for - Look for changeable message signs - CALL 76 AKRON (216) 762-5766 traffic information in a 14-mile with advice for drivers. The signs A traffic hot-line provides radius of the central interchange. provide advance warning of problems. complete traffic information. Signs along the roadside will indicate Hot-line callers can also order which radio station covers the free a more detailed alternate direction you're driving. route map to keep in the car.
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