DEF 14A 1 nav-2020xdef14a.htm DEF 14A Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Rule 14a-101)
SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No.__ )
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Filed by the Registrant
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Filed by a Party other than the Registrant

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Preliminary Proxy Statement
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Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to Section 240.14a-12
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Navistar International Corporation

(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.
 
 
 
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NOTICE OF ANNUAL MEETING
 
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To our stockholders:
On behalf of the Board of Directors of Navistar International Corporation, you are cordially invited to attend our 2020 Annual Meeting of Stockholders.
 
When
Tuesday, February 25, 2020,
11:00 A.M. — Central Time
 
 
 
 
 
Voting Matters
Board Recommendation
Page
 
 
 
 
 
 
 
Proposal 1:
To elect as directors the nominees named in the accompanying proxy statement
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FOR each
director
nominee
 
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Where
Navistar Corporate Headquarters 2701 Navistar Drive, Lisle, Illinois 60532
Whether or not you plan to attend the 2020 Annual Meeting of Stockholders, please vote your proxy either by mail, telephone, mobile device or over the Internet.
Proposal 2:
To act on an advisory vote on executive compensation as disclosed in the accompanying proxy statement
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FOR
 
 
 
Proposal 3:
To ratify the appointment of our independent registered public accounting firm
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FOR
 
 
 
We will also act upon any other matters properly brought before the annual meeting.
We plan to send a Notice of Internet Availability of Proxy Materials on or about January 6, 2020. The Notice of Internet Availability of Proxy Materials contains instructions on how to access our materials on the Internet, as well as instructions on obtaining a paper copy of the proxy materials. The Notice of Internet Availability of Proxy Materials is not a form for voting and presents only an overview of the proxy materials. In order to attend our 2020 Annual Meeting of Stockholders, you must have an admission ticket. Procedures for requesting an admission ticket are detailed in the accompanying proxy statement. Attendance and voting is limited to stockholders of record at the close of business on December 31, 2019.
By Order of the Board of Directors,
 
 
 
 
 
How to vote
 
 
 
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In Person:
Stockholders who obtain an admission ticket can attend and vote at the annual meeting.
 
 
 
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Via the Internet:
http://www.proxyvote.com
 
 
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By Mail:
Complete, sign and mail the enclosed proxy card.
 
 
 
 
 
 
 
 
RICHARD E. BOND
Secretary
 
 
 
 
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YOUR VOTE IS IMPORTANT!
Important Notice of Internet Availability of Proxy Materials for the Stockholders Meeting.
The Annual Report and Proxy Statement are available at http://www.navistar.com/navistar/investors
 
By Telephone (Toll Free):
1-800-690-6903
 
 
 
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By Scanning your QR Code:
Vote with your mobile device.
 
 
 
 
 
 
 

2020 Proxy Statement
1


TABLE OF CONTENTS


2
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PROXY SUMMARY
This summary highlights information collected elsewhere in this proxy statement or in our corporate governance documents published on our website: http://www.navistar.com/navistar/investors/corporategovernance/.
This summary does not contain all of the information you should consider. We encourage you to read this proxy statement in its entirety before voting.
Company Overview
Navistar International Corporation (‘‘we,’’ ‘‘our’’, the ‘‘Company’’ or ‘‘Navistar’’), incorporated under the laws of the State of Delaware in 1993, is a holding company whose principal operating entities are Navistar, Inc. (‘‘Navistar, Inc.’’) and Navistar Financial Corporation (‘‘NFC’’). Navistar’s fiscal year ends October 31 and as such all references to a year refer to the applicable fiscal year unless stated otherwise.
 
 
 
 
PROPOSAL 1
ELECTION OF DIRECTORS
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For further information, please see page 7.
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Your Board of Directors recommends a vote FOR each of the Director nominees.
Director Nominees
Our Board of Directors (the “Board”) recommends that you vote “for” all of the director nominees listed below. Set forth below is summary information about each director nominee, with more detailed information about the qualifications and experience of each director nominee contained under Proposal 1 - Election of Directors beginning on page 9 of this proxy statement.
 
 
 
 
Current Committee Membership
 
Nominee and Principal Occupation
Age
Director Since
A
C
F
NG
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Troy A. Clarke
President and Chief Executive Officer of Navistar
64
April 2013
 
 
 
 
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José María Alapont
Former Chairman, President and Chief Executive Officer of
Federal-Mogul Corporation
69
October 2016
 
 
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Stephen R. D'Arcy
Partner, Quantum Group LLC
65
October 2016
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Vincent J. Intrieri
Founder, President and Chief Executive Officer,
VDA Capital Management LLC
63
October 2012
 
 
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Raymond T. Miller
Principal, MHR Fund Management LLC
35
April 2018
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Mark H. Rachesky, M.D.
Founder and President, MHR Fund Management LLC
60
October 2012
 
 
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Andreas H. Renschler
Chief Executive Officer, TRATON SE
61
February 2017
 
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Christian Schulz
Chief Financial Officer, TRATON SE
42
August 2018
 
 
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Kevin M. Sheehan
Former President and Chief Executive Officer, Scientific Games
66
October 2018
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Dennis A. Suskind
Retired General Partner, Goldman Sachs & Company
77
October 2016
 
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A  Audit
C  Compensation
F  Finance
NG  Nominating & Governance
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Chair
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Co-Chair
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Member

2020 Proxy Statement
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PROXY SUMMARY

Business Strategy
 
 
OUR 2019 ACCOMPLISHMENTS
OUR EXPECTATIONS GOING FORWARD
ü    Continued Focus on Customer and Market Segmentation
ü    Strong Core Market Share Growth
ü    Delivering Operational Excellence Through Investments in Manufacturing Footprint and Cost Management
ü    Business Transformation to Strengthen Brand
ü    TRATON Strategic Alliance Progress
ü    Enhanced Our Cross-Functional Teamwork and Winning Culture
ü    Focus on Costs to Fund Growth Initiatives
ü    Continue to Grow Market Share and Margins
ü    Deliver Superior Shareholder Return
ü    Continue Driving High Performing Cross-Functional Teams
ü    Create Sustainable Long-Term Performance Advantage
ü    Focus on Key Markets
 
 
Corporate Governance Highlights
 
 
 
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Ten of our 11 directors are independent under our corporate governance guidelines and the New York Stock Exchange (‘‘NYSE’’) listing standards.
All of the members of our Audit Committee, Compensation Committee, Finance Committee and the Nominating and Governance Committee are independent and financially literate.
 
We have Co-Independent
Lead Directors.
 
 
 
10 of 11 directors are independent under our corporate governance guidelines and the New York Stock Exchange (‘‘NYSE’’) listing standards.
We have Co-Independent Lead Directors.
We have Board standing committees that are composed of 100% independent directors.
We have a declassified Board.
We have stockholder representation on all of our Board committees.
We have a director resignation policy for directors who fail to obtain a majority vote.
We have no super-majority voting provisions to approve transactions, including a merger.
We have a claw-back policy to re-coup incentive-based compensation in the event of an accounting restatement or intentional misconduct.
We do not provide tax gross-ups for perquisites and other similar benefits to officers who are subject to Section 16 (the ‘‘Section 16 Officers’’) of the Securities Exchange Act of 1934, as amended (the ‘‘Exchange Act’’). Additionally, we do not provide tax gross-ups for any cash or equity awards for any employees.
We have ‘‘double trigger’’ change in control severance benefits.
Our Named Executive Officers (“NEOs”) and directors are subject to stock ownership guidelines and stock retention requirements.
Our executives and directors are prohibited from engaging in short sales, derivatives trading and hedging transactions, and we impose restrictions on pledges and margin account use.

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PROXY SUMMARY

Shareholder Engagement
The Company has a robust stockholder outreach and engagement program. We engage in regular contact with our stockholders throughout the year. Approximately 66% of our stock is held by five of our stockholders. Three of these stockholders have representation on our Board as discussed in Proposal 1 - Election of Directors. These stockholders, through their representation on our Board, also are members of our Compensation Committee and are integrally involved in our compensation decisions and policies. We also engage in regular dialogue with our two remaining largest stockholders without representation on our Board. We maintain open lines of communication with corporate governance advisory institutions and with all of our stockholders in order to inform them of Company updates and solicit their feedback. In September 2019, the Company hosted an investor day event that discussed our strategy and growth plans for the next several years. This event was well attended by the investment community and feedback from the event has been very positive. We continuously work to improve our shareholder engagement efforts and place importance on the feedback provided to us during this process.
 
 
 
 
PROPOSAL 2
ADVISORY VOTE ON EXECUTIVE COMPENSATION
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For further information, please see page 29.
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Your Board of Directors recommends a vote FOR the approval of named executive officer compensation.
Our Compensation Program
The overall objective of our executive compensation program is to maintain a close link between pay and performance, both long-term and short-term. We believe that the compensation of our executives should be closely tied to the performance and growth of the Company, so their interests are aligned with the long-term interests of our stockholders.
Executive Compensation Highlights
We continue to focus on, and are aware of, investor concerns regarding the link between pay and performance. In 2018, the results against our annual incentive metrics resulted in our awards being paid at 112.4% of target. For 2019, Navistar exceeded the 2019 annual incentive plan targets for most of the performance goals while the Company was below target on one goal, which will yield an overall payout percentage of 134.7% of target.
For a summary of our commitment to best practices in executive compensation and changes made in 2019, please see the Executive Summary section of the Compensation, Discussion and Analysis section of this proxy statement.
 
Highlights of the changes made in 2019 include:
Retained an Annual Incentive (“AI”) plan that leverages our scorecard approach, retained the adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization ("EBITDA") multiplier, the individual performance factor, and market share, cost and liquidity metrics and replaced the quality metric with an uptime (24 hour repair velocity) metric
In our 2019 Long-Term Incentive (“LTI”) plan we retained the current vehicles and mix of performance-based and time-based equity as well as the use of adjusted EBITDA, Revenue Growth and the relative Total Shareholder Return (“TSR”) multiplier
 
Key Executive Compensation Decisions
Consistent with pay-for-performance principles, 2019 base salary performance increases were based upon named executive officer ("NEO") and Company performance. The CEO makes base salary recommendations for the NEOs and Section 16 Officers to the Compensation Committee. The CEO does not participate in decisions regarding his own compensation. The Compensation Committee reviews the salary for the CEO and reviews, approves and/or adjusts the CEO's base salary recommendations for the other NEOs and Section 16 Officers included in the CEO's recommendation. The Compensation Committee then recommends, and the independent members of the Board approve or adjust, the salary recommendation for the CEO.

2020 Proxy Statement
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PROXY SUMMARY

Executive Compensation Best Practices
WHAT WE DO
 
WHAT WE DON’T DO
ü    We use multiple performance measures in our short-term and long-term incentive plans. These performance measures are designed to link pay to performance and stockholder interests.
ü    The Compensation Committee reviews external market data when making compensation decisions.
ü    The Compensation Committee selects and engages its own independent advisor, Pay Governance LLC.
ü    We maintain a clawback policy to recoup incentive-based compensation in the event of an accounting restatement.
ü    Change in Control severance benefits are payable only upon a Change in Control (also referred to in this proxy statement as “CIC”) with termination of employment (“double trigger”).
ü    To aid in aligning the interest of our shareholders and officers, all officers are subject to stock ownership requirements, ranging from 6x base pay for the CEO to 3x base pay for other senior executives - including a retention requirement.
ü    Our 2019 long-term incentive plan includes both absolute and relative performance metrics.
 
û    The Company maintains policies that eliminate all tax gross-ups for perquisites and other similar benefits to Section 16 Officers, and prohibit tax gross-ups for any cash or equity awards for all employees.
û    We do not reprice stock options or provide cash buyouts of underwater options.
û    We prohibit short selling, trading in derivatives or engaging in hedging transactions by executives and directors. In addition, any pledging and margin account use must be pre-cleared through the Corporate Secretary or the General Counsel.
û    We do not accelerate the vesting of long-term incentive awards, except in certain situations upon death.
û    We do not grant extra pension service
 
 
 
 
PROPOSAL 3
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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For further information, please see page 68.
 
 
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Your Board of Directors recommends a vote FOR the ratification of the appointment of KPMG LLP ("KPMG") as Navistar’s independent registered public accounting firm for 2020.

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CORPORATE GOVERNANCE MATTERS

 
 
PROPOSAL 1
ELECTION OF DIRECTORS
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Your Board of Directors recommends a vote FOR each of the Director nominees.
At the Annual Meeting, ten directors will be nominated for election. An eleventh director is appointed by the United Automobiles, Aerospace and Agricultural Implement Workers of America (the ‘‘UAW‘‘) pursuant to a 1993 settlement agreement we entered into in connection with the restructuring of our postretirement health care and life insurance benefits and is not elected by the stockholders. Currently, a twelfth director position remains vacant. Substantial refreshment in Board composition took place during 2017 and 2018. During the course of 2019 the Board continued to evaluate the appropriate timing for filling the twelfth director position. The Board intends to conduct a search process to identify the best candidate to fill this twelfth Board seat at a future date. All directors elected at the Annual Meeting will be elected for a one-year term.
If a nominee is unavailable for election, proxy holders will vote for another nominee proposed by the Board or, as an alternative, the Board may reduce the number of directors to be elected at the Annual Meeting. We know of no reason why any nominee would be unable to accept nomination or election. All nominees have consented to be named in this proxy statement and to serve if elected.
During 2014 and pursuant to settlement agreement amendments (the "Settlement Agreement Amendments") we entered into with two of our largest stockholders (namely, Carl C. Icahn and several entities controlled by him (collectively, the "Icahn Group") and Mark H. Rachesky, M.D. and several entities controlled by him (collectively, the "MHR Group")), we granted each of the Icahn Group and the MHR Group the right to nominate two directors to serve on our Board effective as of March 10, 2014, the date of our 2014 Annual Meeting of stockholders (the "2014 Annual Meeting"). The Icahn Group’s current nominees are Mr. Vincent J. Intrieri and Mr. Kevin M. Sheehan. The MHR Group’s current nominees are Dr. Mark H. Rachesky and Mr. Raymond T. Miller. Moreover, in connection with our alliance with TRATON SE ("TRATON"), and pursuant to the terms of a Stockholder Agreement dated as of September 5, 2016 by and among TRATON and us (the "Stockholder Agreement"), two persons nominated by TRATON were initially elected to our Board effective February 28, 2017. TRATON’s current nominees are Mr. Andreas H. Renschler and Mr. Christian Schulz.
Board of Directors
Selection of Directors
The Nominating and Governance Committee identifies nominees for directors from various sources, including suggestions from Board members and management, and in the past has used third party consultants to assist in identifying and evaluating potential nominees. The Nominating and Governance Committee will consider persons recommended by the stockholders in the same manner as a committee-recommended nominee. The Nominating and Governance Committee has specified the following minimum qualifications that it believes must be met by a nominee for a position on the Board:
knowledge and contacts in the Company’s industry and other relevant industries
positive reputation in the business community
the highest personal and professional ethics and integrity and values that are compatible with the Company’s values
experiences and achievements that provide the nominee with the ability to exercise good business judgment
ability to make significant contributions to the Company’s success
ability to work successfully with other directors
willingness to devote the necessary time to the work of the Board and its committees which includes being available for the entire time of meetings
ability to assist and evaluate the Company’s management

2020 Proxy Statement
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CORPORATE GOVERNANCE MATTERS

involvement only in other activities or interests that do not create a conflict with his or her responsibilities to the Company and its stockholders
understanding of and ability to meet his or her responsibilities to the Company’s stockholders, including the duty of care (making informed decisions) and the duty of loyalty (maintaining confidentiality and avoiding conflicts of interest)
potential to serve on the Board for at least five years
The Nominating and Governance Committee believes that consideration should also be given to having a diversity of backgrounds, skills, and perspectives among the directors.
In addition, in selecting directors, the Nominating and Governance Committee will consider the need to strengthen the Board by providing a diversity of persons in terms of their expertise, age, gender, race, ethnicity, education, and other attributes which contribute to the Board’s diversity. Our Board diversity policy is contained within our Corporate Governance Guidelines.
The satisfaction of the above criteria is implemented and assessed through ongoing consideration of directors and nominees by the Nominating and Governance Committee and the Board, as well as through the Board’s self-evaluation process. Based upon these activities and its review of the current composition of the Board, the Nominating and Governance Committee and the Board believe that these criteria have been satisfied. At the same time, the Nominating and Governance Committee and the Board acknowledge the current lack of gender diversity. They intend to consider gender as a prominent factor when it is the appropriate time to fill the twelfth director position.
As outlined in our Corporate Governance Guidelines, any director who receives more ‘‘withheld’’ votes than ‘‘for’’ votes in an uncontested election is required to tender his resignation to the Nominating and Governance Committee for consideration and recommendation to the Board. The Board will publicly disclose its decision.
Continued Stockholder Representation on Our Board
Pursuant to the Settlement Agreement Amendments, we granted each of the Icahn Group and the MHR Group the right to nominate two directors to serve on our Board, effective as of March 10, 2014, the date of our 2014 Annual Meeting. The current Icahn Group nominees serving as members of our Board are Vincent J. Intrieri and Kevin M. Sheehan. The current MHR Group nominees serving as members of our Board are Mark H. Rachesky and Raymond T. Miller. Mr. Intrieri, Mr. Sheehan, Dr. Rachesky and Mr. Miller are nominated for re-election. In addition, pursuant to the Stockholder Agreement, TRATON was granted the right to nominate two directors to serve on our Board effective as of February 28, 2017. The current TRATON nominees serving as members of our Board are Andreas H. Renschler and Christian Schulz. Mr. Renschler and Mr. Schulz are nominated for re-election. As a result, three (3) of our largest stockholders have Board representation and collectively hold six (6) of the eleven (11) seats currently filled on our twelve (12) seat Board.
Communication with the Board
Interested parties may communicate with any of our directors, our Board as a group, our non-employee directors as a group or any committees of the Board by sending an e-mail to presiding.director@navistar.com or by writing to the Presiding Director, c/o the Corporate Secretary, at 2701 Navistar Drive, Lisle, Illinois 60532. The Board has given the Corporate Secretary the discretion to distribute communications to the director or directors, after ascertaining whether the communications are appropriate to the duties and responsibilities of the Board. Communications that relate to ordinary business matters that are not within the scope of the Board’s duties and responsibilities will be forwarded to the appropriate employee within the Company. Solicitations, junk e-mail and obviously frivolous or inappropriate communications will not be forwarded. You will receive written acknowledgement from the Corporate Secretary’s Office upon receipt of your communication.
UAW Appointed Director
In July 1993, we restructured our postretirement health care and life insurance benefits pursuant to a settlement agreement, which required, among other things, the addition of a seat on our Board. The director is not elected by the stockholders and is filled by a person appointed by the UAW.

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CORPORATE GOVERNANCE MATTERS

Director Biographies
The following summarizes information about each of the nominees and the continuing director as of the date of this proxy statement, including their business experience, public company director positions held currently or at any time during the last five years, involvement in certain legal or administrative proceedings, if applicable, and the experiences, qualifications, attributes or skills that qualify our nominees and the continuing director to serve as directors of the Company. The nominees were evaluated and recommended by the Nominating and Governance Committee in accordance with the process for nominating directors.
 
 
 
 
 
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Troy A. Clarke
Chief Executive Officer
 
 
Professional Highlights
 
 
Mr. Clarke has served as President and Chief Executive Officer of Navistar since April 2013. Prior to this position, Mr. Clarke served as President and Chief Operating Officer of Navistar since August 2012, as President of the Truck and Engine Group of Navistar, Inc. from June 2012 to August 2012, as President of Asia-Pacific Operations of Navistar, Inc. from 2011 to 2012, and as Senior Vice President of Strategic Initiatives of Navistar, Inc. from 2010 to 2011. Prior to joining Navistar, Inc., Mr. Clarke held various positions at General Motors Company, including President of General Motors North America from 2006 to 2009 and President of General Motors Asia Pacific from 2003 to 2006. Over the course of his career with GM, he held several additional leadership roles, including President and Managing Director of GM de Mexico and Director of Manufacturing for GM de Mexico.
 
 
 
 
 
Age 
64
Director since
April 2013
 
 
 
Past Directorships
 
 
    Director of Fuel System Solutions, a publicly-traded company, from December 2011 to June 2016 where he served as the chair of its Compensation Committee
 
 
Education
 
 
Mr. Clarke received a bachelor’s degree in engineering from the General Motors Institute in 1978 and a master’s degree in business administration from the University of Michigan in 1982.
 
 
Skills and Qualifications
 
 
Mr. Clarke’s vast experience in the automotive industry over the past 40 years is invaluable to the Board in evaluating and directing the Company’s future. As a result of his professional and other experiences, Mr. Clarke possesses particular knowledge and experience in a variety of areas, including corporate governance, engineering, manufacturing (international and domestic), mergers and acquisitions, sales (international and domestic) and union/labor relations, which strengthens the Board’s collective knowledge, capabilities and experience and well qualifies him to serve on our Board.


2020 Proxy Statement
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CORPORATE GOVERNANCE MATTERS

 
 
 
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José María Alapont
Independent
 
Professional Highlights
 
Mr. Alapont served as President and Chief Executive Officer of Federal-Mogul Corporation, a supplier of automotive powertrain and safety components, from March 2005 to March 2012. He was the Chief Executive Officer and a director of Fiat Iveco, S.p.A., a leading global manufacturer of commercial trucks and vans, buses, recreational, off-road, firefighting, defense and military vehicles of the Fiat Group, from 2003 to 2005. Mr. Alapont has held executive, Vice President and President positions for more than 30 years at other leading global vehicle manufacturers and suppliers such as Delphi Corporation, Valeo S.A., and Ford Motor Company.
 
 
 
Age 
69
Director since 
October 2016
Committees
Finance and Nominating & Governance (Chair)
 
Other Current Directorships
 
    Director of Ferroglobe Plc., a publicly-traded silicon, manganese and special alloys producer company, since January 2018, member of its Audit and Compensation Committees, since 2018, and Senior Lead Director and Chairman of its Governance Committee, since January 2019
    Director of Ashok Leyland, a publicly-traded commercial trucks, vans, buses and defense manufacturing company, since January 2017, and member of its Nomination and Remuneration Committee, since 2018, and its Audit Committee, since 2019
    Member of the board of Hinduja Investment and Project Services Limited, a privately-held investment and service group, since 2016
    Director of Hinduja Automotive Limited, a privately-held automotive holding group, since November 2014
 
Past Directorships
 
    Director of Manitowoc Company, a publicly-traded crane manufacturing company, from March 2016 to February 2018
    Has served as a director of a number of other companies prior to 2016
 
Education
 
Mr. Alapont holds a degree in Industrial Engineering from the Valencia Technical School and a degree in Philosophy from the University of Valencia, Spain.
 
Skills and Qualifications
 
Mr. Alapont brings broad executive and leadership experience of more than 30 years serving several automotive manufacturing companies, together with his significant experience as a member of other public and private company boards. Mr. Alapont’s particular knowledge and experience in a variety of areas, including corporate finance, accounting, corporate governance, distribution, engineering, finance, human resources, manufacturing (domestic and international), marketing, mergers and acquisitions, military and government contracting, purchasing, sales (domestic and international), tax and treasury matters and union and labor relations, well qualify him to serve on our Board.

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CORPORATE GOVERNANCE MATTERS

 
 
 
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Stephen R. D’Arcy
Independent
 
Professional Highlights
 
Mr. D’Arcy has been a Partner of Quantum Group LLC, an investment and consulting firm, since 2010. Previously he was a Partner at PricewaterhouseCoopers LLP, a multinational professional services firm, for 34 years, serving most recently as Global Automotive Leader from 2002 to 2010.
 
Other Current Directorships
 
    Director of Premier, Inc., a publicly-traded healthcare improvement company, since October 2013
    Penske Corporation, a privately-held, diversified, on-highway, transportation services company, since 2011
 
Age 
65
Director since
October 2016
Committees: 
Audit (Chair)
 
 
Past Directorships
 
    Member of the Board of Directors of Vanguard Health Systems Inc., a company previously listed on the NYSE, from 2011 to 2013
 
Skills and Qualifications
 
Mr. D’Arcy has broad experience as a member of other public and private company boards of directors, including as chairman of an audit committee. He possesses strong skills and experience in accounting, corporate governance, finance and mergers and acquisitions matters, which well qualifies him to serve on our Board.
 
 
 
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Vincent J. Intrieri
Independent
 
Professional Highlights
 
In January 2017, Mr. Intrieri founded VDA Capital Management LLC, a private investment firm, where he currently serves as President and Chief Executive Officer. Mr. Intrieri was employed by Icahn related entities from October 1998 to December 2016 in various investment related capacities. Mr. Intrieri served as Senior Managing Director of Icahn Capital LP, the entity through which Carl C. Icahn manages private investment funds from January 2008 to December 2016. In addition, Mr. Intrieri was a Senior Managing Director of Icahn Onshore LP, the general partner of Icahn Partners LP, and Icahn Offshore LP, the general partner of Icahn Partners Master Fund LP, entities through which Mr. Icahn invests in securities from November 2004 to December 2016. Mr. Intrieri also served as Senior Vice President of Icahn Enterprises L.P. from October 2011 to September 2012.
 
Age
63
Director since
October 2012 (Co-Independent Lead Director since October 2018)
Committees
Finance (Co-Chair) and Nominating & Governance
 
Other Current Directorships
 
    Director of Hertz Global Holdings, Inc., a publicly-traded company engaged in the car rental business, since September 2014
    Director of Transocean Ltd., a publicly-traded provider of offshore contract drilling services for oil and gas wells, since May 2014

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CORPORATE GOVERNANCE MATTERS

 
 
Past Directorships
 
 
    Director of Chesapeake Energy Corporation, an oil and gas exploration and production company, from June 2012 to September 2016
Director of Ferrous Resources Limited, a privately-held iron ore mining company with operations in Brazil, from June 2015 to December 2016
Director of Conduent Incorporated, a business process services company that was launched following its separation from Xerox, from January 2017 to May 2018
Director of Energen Corporation, an oil and gas exploration company, from March 2018 to December 2018
Has served on more than 15 corporate boards during his career
 
 
Education
 
 
Mr. Intrieri graduated in 1984, with distinction, from The Pennsylvania State University (Erie Campus) with a B.S. in Accounting and was a Certified Public Accountant.
 
 
Skills and Qualifications
 
 
Mr. Intrieri possesses strong skills and experience in accounting, corporate governance, finance, mergers and acquisitions and treasury matters. Mr. Intrieri’s significant experience as a director of various companies enables him to understand complex business and financial issues, which contributes greatly to the capabilities and composition of our Board and well qualifies him to serve on our Board.
 
 
 
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Raymond T. Miller
Independent
 
Professional Highlights
 
Mr. Miller is a Principal at MHR Fund Management LLC, an investment firm that manages approximately $5 billion of assets and utilizes a private equity approach to investing in middle market companies with an emphasis on special situation and distressed investments. Prior to joining MHR Fund Management LLC in 2011, Mr. Miller spent five years at Guggenheim Partners Investment Management LLC investing across capital structures in a variety of industries.
 
 
Past Directorships
 
 
 
Age
35
Director since
April 2018
Committees
Audit and Compensation
 
Director of Erickson, Inc., a leading aerospace manufacturer and global provider of aviation services, from May 2017 to August 2019
 
Education
 
Mr. Miller holds a B.B.A, with high distinction, from the Stephen M. Ross School of Business at the University of Michigan.
 
Skills and Qualifications
 
Mr. Miller possesses strong corporate finance and business expertise which well qualifies him to serve on our Board.

12
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CORPORATE GOVERNANCE MATTERS

 
 
 
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Mark H. Rachesky, M.D.
Independent
 
Professional Highlights
 
Dr. Rachesky is the founder and President of MHR Fund Management LLC, an investing firm that manages approximately $5 billion of assets and utilizes a private equity approach to investing in middle market companies with an emphasis on special situation and distressed investments.
 
 
 
Other Current Directorships
 
 
    Chairman of the board of directors of Loral Space & Communications Inc., a publicly-traded satellite communications company, since 2006, and Director. since 2005
    Chairman of the board of directors of Lions Gate Entertainment Corp., a publicly-traded entertainment company, since 2015, and Director, since 2009
    Chairman of the board of directors of Telesat Canada, a privately-held satellite company, since 2012, and Director since 2007
    Member of the Board of Directors of Titan International, Inc., a publicly-traded wheel, tire and undercarriage systems and components company, since 2014
    Member of the Board of Directors of Emisphere Technologies, Inc., a publicly-traded biopharmaceutical company, since 2005
Age
60
Director since
October 2012
(Co-Independent Lead Director since October 2018)
Committees
Finance (Co-Chair) and Nominating & Governance
 
 
Past Directorships
 
    Member and chairman of the board of Leap Wireless International, Inc., a publicly-traded digital wireless company, from 2004 until its acquisition by AT&T in March 2014
 
Education
 
Dr. Rachesky holds a B.S. in molecular aspects of cancer from the University of Pennsylvania, an M.D. from the Stanford University School of Medicine and an M.B.A. from the Stanford University School of Business.
 
Skills and Qualifications
 
Dr. Rachesky brings significant corporate finance and business expertise to our Board due to his background as an investor and fund manager. Dr. Rachesky also has significant expertise and perspective as a member of the boards of directors of private and public companies engaged in a wide range of businesses. Dr. Rachesky’s broad and insightful perspectives relating to economic, financial and business conditions affecting the Company and its strategic direction well qualify him to serve on our Board.

2020 Proxy Statement
13



CORPORATE GOVERNANCE MATTERS

 
 
 
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Andreas H. Renschler
Independent
 
Professional Highlights
 
Mr. Renschler has been Chief Executive Officer of TRATON SE, a leading commercial vehicle manufacturer, since February 2015. He has also served as a member of the Board of Management of Volkswagen AG since February 2015. He served as a member of the Daimler AG Board of Management in charge of Manufacturing and Procurement at Mercedes-Benz Cars & Mercedes-Benz Vans from April 2013 to January 2014. Mr. Renschler began his career at Daimler-Benz AG in 1988. Following various posts at Daimler-Benz AG, he led the M Class unit, serving as President and CEO of Mercedes-Benz US. Later he served as Senior Vice President, Executive Management Development, at DaimlerChrysler AG and President of smart GmbH in the same year. He was assigned to Mitsubishi Motors in Japan in 2004 and was subsequently named a member of the Daimler AG Board of Management with responsibility for the Daimler Trucks Division.
 
 
Age
61
Director since
February 2017
Committees
Compensation and Nominating & Governance
 
 
Past Directorships
 
    Member of the Board of Management of Daimler AG from October 2004 to January 2014
 
Skills and Qualifications
 
Mr. Renschler has broad experience as a Chief Executive Officer, executive officer and board member of other automotive manufacturing companies. He possesses strong skills and experience in accounting, corporate governance, distribution (domestic and international), finance, human resources, compensation, employee benefits, manufacturing (domestic and international), marketing, mergers and acquisitions, purchasing, sales (domestic and international) and union/ labor relations matters, which well qualifies him to serve on our Board.
 
 
 
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Christian Schulz
Independent
 
Professional Highlights
 
Mr. Schulz has been the Chief Financial Officer and a member of the Board of Management of TRATON SE since June 2018. Previously he was in charge of Corporate Development, Strategy and Mergers & Acquisitions at TRATON SE from January 2017 to June 2018. As part of this role, he led the advancement of both TRATON SE’s strategic development and its strategic partnership.
Prior to joining TRATON SE, Mr. Schulz spent five years as Director of Controlling Operations worldwide at Mercedes-Benz Cars and its shareholdings abroad from 2011 to 2017. Mr. Schulz was the Controlling Director for Purchasing, Production, and R&D at Mitsubishi Fuso in Japan from 2008 to 2010. His previous roles included management responsibilities in the fields of finance and controlling at Daimler Group, including serving as Chief Financial Officer of the transmissions plant in Gaggenau, Germany.
 
 
Age
42
Director since
August 2018
Committees
Finance
 
 
Skills and Qualifications
 
Mr. Schulz possesses strong financial expertise, having served in key management roles in fields of finance, controlling and business development within the automotive manufacturing business. His background and experience well qualify him to serve on our Board.

14
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CORPORATE GOVERNANCE MATTERS

 
 
 
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Kevin M. Sheehan
Independent
 
Professional Highlights
 
From August 2016 to June 2018, Mr. Sheehan served as the President and Chief Executive Officer at Scientific Games, a gaming and lottery company. From February 2015 through August 2016, Mr. Sheehan taught full time as the John J. Phelan, Jr. Distinguished Visiting Professor of Business at Adelphi University. Mr. Sheehan previously held several senior positions with Norwegian Cruise Line Holdings Ltd., a global cruise company, from November 2007 to January 2015. These positions included President from August 2010 to January 2015; Chief Executive Officer from November 2008 to January 2015; and Chief Financial Officer from November 2007 to September 2010.
 
Age
66
Director since
October 2018
Committees
Audit and Compensation
 
Other Current Directorships
 
    Director of Hertz Global Holdings, Inc. since August 2018 where he currently serves on the Finance and IT committees
    Director of Dave & Buster’s, Inc. since 2013 where he currently chairs the Audit Committee and serves on the Finance Committee
    Lead Director of Gannett Co., Inc. (formerly know as New Media Investment Group Inc.) since 2019, and Director since November 2013 where he chairs the Audit Committee and serves on the Compensation Committee
 
Past Directorships
 
    Director of Bob Evans Farms, Inc. from 2013 to 2017 where he served on the Audit Committee.
 
Education
 
Mr. Sheehan is a graduate of Hunter College and New York University Graduate School of Business (with a Masters degree in finance and taxation) and is a Certified Public Accountant.
 
Skills and Qualifications
 
Mr. Sheehan has broad experience as a Chief Executive Officer of several large, diversified corporations and as a member of the board of directors of other public companies. He has experience as a Chief Financial Officer of several global businesses. Mr. Sheehan possesses particular expertise, knowledge, and strong skills in accounting, corporate governance, finance, mergers and acquisitions, and treasury matters, which strengthens the Board’s collective knowledge, capabilities, and experiences and well qualifies him to serve on our Board.

2020 Proxy Statement
15



CORPORATE GOVERNANCE MATTERS

 
 
 
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Dennis A. Suskind
Independent
 
Professional Highlights
 
Mr. Suskind is a retired General Partner of Goldman Sachs & Company, a multinational finance company that engages in global investment banking. Mr. Suskind served as Vice Chairman of NYMEX, Vice Chairman of COMEX, a member of the board of the Futures Industry Association, a member of the board of International Precious Metals Institute, and a member of the boards of the Gold and Silver Institutes in Washington, D.C.
 
Other Current Directorships
 
 
    Director of CME Group, Inc., since August 2008 where he chairs the Risk Committee and also serves on the Audit Committee
    Director of Bridge Bancorp Inc. since July 2002 where he is Vice Chairman and chairs the Governance Committee
Age
77
Director since
October 2016
Committees
Compensation (Chair) and Nominating & Governance
 
 
Skills and Qualifications
 
Mr. Suskind has broad experience as a member of other public company boards of directors, including as chairman of a risk committee and a governance committee. He possesses strong skills and experience in accounting, corporate governance, finance, human resources, marketing and mergers and acquisitions matters, which well qualifies him to serve on our Board.
The director appointed by UAW is not elected by stockholders at the Annual Meeting. During 2017, Jeffrey A. Dokho replaced Dennis D. Williams as the UAW appointed member.
 
 
 
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Jeffrey A. Dokho
Independent
 
Professional Highlights
 
Mr. Dokho is currently the Assistant Director of the United Automotive Workers’ ("UAW") Research Department, where he directs a group of financial analysts and oversees the union’s financial research and analysis. Mr. Dokho has worked on many high-profile contract negotiations between the UAW and large multinational companies and plays a leading role in the development and implementation of profit sharing plans, including those currently in place for UAW members at General Motors Company, Ford Motor Company and Fiat Chrysler Automobiles N.V. Before joining the UAW in 2006, Mr. Dokho was a Senior Analyst at Lear Corporation, a tier 1 supplier to the automotive industry. While at Lear, Mr. Dokho focused largely in mergers & acquisitions and joint ventures. From 2000 to 2002, Mr. Dokho provided both audit and business risk consulting to clients in a wide range of industries, including defense and manufacturing, while at Ernst & Young, a global public accounting firm. Prior to Ernst & Young, Mr. Dokho conducted regulatory compliance audits at the National Futures Association, the self-regulatory organization for the U.S. derivatives industry.
 
Age
45
Director since
April 2017
Committees
Audit and Finance
 
Education
 
Mr. Dokho received a B.A. in Accounting from Michigan State University and is a licensed Certified Public Accountant in the state of Michigan.
 
Skills and Qualifications
 
Mr. Dokho possesses a broad range of experience in accounting, financial analysis, business risk consulting, mergers and acquisitions and profit-sharing plan design and implementation, including in the automotive sector.

16
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CORPORATE GOVERNANCE MATTERS

Board Refreshment
The Board believes that periodic Board refreshment can provide new experiences and fresh perspectives to our Board. The Board also recognizes the need to maintain continuity and retain the benefit of relevant historical perspective and experiences. The current average director tenure is approximately 4 years.
Board Composition
Following a 33% and 25% refreshment in Board composition during 2017 and 2018, respectively, there were no changes in the composition of the Board during 2019. In addition, the Co-Lead Directors, committee chairs and committee membership remained unchanged during 2019.
Shareholder Nominations
Shareholders may nominate any person as a candidate for director for election at our 2021 annual meeting of stockholders by writing to our Corporate Secretary at 2701 Navistar Drive, Lisle, Illinois 60532 and complying with the procedures for director nomination set forth in the Company’s By-Laws. Your letter must be received by Navistar’s Corporate Secretary no earlier than September 28, 2020, and no later than October 28, 2020, and must include all of the information required by the Company’s By-Laws including, but not limited to, the proposed nominee’s biographical information and principal occupation, the number of shares of capital stock of the Company which are owned by the proposed nominee, appropriate information about the proposed nominee that would be required to be included in a proxy statement under the rules of the SEC, the number of shares held by you, information about the relationship between the proposed nominee and you, any pending or threatened litigation in which the proposed nominee is a party and a representation that you intend to appear in person or by proxy at the meeting to nominate the proposed nominee. Your letter must be accompanied by the written consent of the proposed nominee to being named as a nominee and to serve as a director if elected. You may only recommend a candidate for director if you hold shares of Common Stock on the date you give the notice described above, on the record date for the annual meeting of stockholders at which you propose such nominee be elected and on the date of the annual meeting of stockholders at which you propose such nominee be elected.
Board Tenure Policy
There are no term limits and there is no maximum retirement age for directors. The Board does not believe that such arbitrary limits on a director's service are appropriate. However, the Board also believes that a director should not have an expectation of being renominated at the end of his or her term.

2020 Proxy Statement
17



CORPORATE GOVERNANCE MATTERS

The Board’s Role and Responsibilities
Overview
Under the direction of the Chief Executive Officer, the Company's senior officers are responsible for the day-to-day operations of the Company, implementation of the strategic plan, the financial and management policies of the Company and the preparation of financial statements and other reports reflecting information about the Company. However, the Board oversees these activities. Taking an active role in the Company's strategic direction, the Board continuously refreshes its knowledge of the Company's products, markets, distribution networks, customers, competitors and culture. The Board assesses risk, evaluates management's performance, plans for successors and provides overall guidance and direction to the Company.
Role in Risk Management
Our Board has overall responsibility for the oversight of risk management at our Company.
 
 
 
 
 
 
 
BOARD OF DIRECTORS
    Our Board, either as a whole or through its committees, regularly discusses with management our major risk exposures, their potential impact on our Company, and the steps we take to monitor and control such exposures.
    While our Board has general oversight responsibility for risk at our Company, the Board has delegated some of its risk oversight duties to the various Board committees. Each of the Board committees periodically reviews these risks and then discusses the process and results with the full Board.
 
 
 
 
 
 
 
 
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AUDIT COMMITTEE
NOMINATING AND GOVERNANCE COMMITTEE
COMPENSATION COMMITTEE
FINANCE COMMITTEE
 
 
    Responsible for generally reviewing and discussing the Company’s policies and guidelines with respect to risk assessment and risk management
    Focuses on the Company's management of financial risk exposure
    Oversees risks related to the Company's financial statement compliance and control environment
    Oversees risks related to corporate governance, including risk related to the political environment
    Assists our Board in overseeing the management of risks arising from our compensation policies and programs and programs related to assessment, selection, succession planning, training and development of executives of the Company
    Responsible for overseeing policies with respect to financial risk assessment and financial risk management including, without limitation, risks relating to liquidity/access to capital and macroeconomic trends/environment risks
 
 
 
 
 
 
 
 
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MANAGEMENT
    Day-to-day risk management is the responsibility of management, which has implemented an Enterprise Risk Management process to identify, assess, manage and monitor risks that our Company faces.
    Enterprise Risk Management operates within our Internal Audit and Corporate Compliance department.
 
 
 
 
 
 
 
 
CYBERSECURITY RISK MANAGEMENT
The Board recognizes the threats and consequences posed by cybersecurity incidents and is committed to the Company's creation and maintenance of a robust process to prevent, timely detect and mitigate the effects of any such events on the Company. The Audit Committee oversees the Company's controls related to cybersecurity. The Company's Chief Information Officer gives regular reports to the Audit Committee on cyber risks and threats, the status of ongoing efforts to strengthen the Company's information security systems, assessments of the Company's security program and the emerging threat outlook. In turn, the Audit Committee updates the full Board on these matters.
 

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CORPORATE GOVERNANCE MATTERS

Code of Conduct
Our Code of Conduct embodies a code of ethics (the ‘‘Code’’) applicable to all of our directors, officers and employees. The Code establishes the principles, policies, standards and conduct for professional behavior in the workplace. Every director, officer and employee is required to read and follow the Code. A copy of the Code is available on the Investor Relations section of our website at http://www.navistar.com/navistar/investors/corporategovernance/documents. Any waiver of the Code for executive officers or directors of the Company requires the approval of the Audit Committee and must be promptly disclosed to the Company’s stockholders. We intend to disclose on the Investor Relations section of our website (http://www.navistar.com/navistar/investors/corporategovernance/documents) any amendments to, or waivers from, the Code that are required to be publicly disclosed under the rules of the SEC.
The Audit Committee has established procedures for employees, vendors and other interested parties to communicate concerns with respect to our accounting, internal controls or financial reporting to the Audit Committee, which has responsibility for these matters. Concerns may be reported as follows:
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VIA THE NAVISTAR BUSINESS ABUSE
AND COMPLIANCE HOTLINE
WRITE TO THE AUDIT
COMMITTEE
E-MAIL THE AUDIT
COMMITTEE
1-877-734-2548 or via the Internet at
https://iwf.tnwgrc.com/navistar/
Audit Committee c/o Corporate
Secretary Navistar International
Corporation 2701 Navistar Drive
Lisle, Illinois 60532
Audit.committee@navistar.com
Management Succession Planning
The Board's Nominating and Governance Committee exercises primary responsibility for planning and running the process for a CEO succession and makes recommendations for action to the independent directors. The Compensation Committee holds responsibility for assisting the CEO with succession planning for other executives. The Compensation Committee reviews programs for assessment, selection, and succession planning for executive officers and key executives of the Company and its material subsidiaries, and programs for training and development of executive level employees of the Company taking into account such objectives as diversity, and oversees any associated risks.

2020 Proxy Statement
19



CORPORATE GOVERNANCE MATTERS

Board Structure
Board Leadership Structure
The Company’s Corporate Governance Guidelines require the Board to select the Chairman of the Board and the CEO and to determine from time to time whether the positions are combined and filled by one person or separated and filled by two persons. Prior to 2013, our CEO served as Chairman and we had an Independent Lead Director. Beginning in April 2013, with the appointment of Mr. Clarke as our CEO, our Board decided to select one of our independent directors to serve as Chairman. Upon that director’s retirement at the 2017 Annual Meeting, the Board determined that it was an appropriate time to appoint Mr. Clarke as Chairman. Mr. Clarke would continue to serve as the CEO as well. Accordingly, also at the 2017 Annual Meeting, General Stanley McChrystal was selected as the Independent Lead Director. However, General McChrystal elected to not stand for re-election at the 2018 Annual Meeting. The Board continued to believe that this leadership structure was in the best interests of the Company and its stockholders, but it did not immediately identify a successor Independent Lead Director. After careful consideration and discussion by and among the Nominating and Governance Committee and the full Board, on October 16, 2018, Vincent J. Intrieri and Mark H. Rachesky were selected and currently serve as the Co-Independent Lead Directors.
Board Independence
We believe that a substantial majority of the members of our Board should be independent non-employee directors. Our Board has affirmatively determined that ten of our eleven directors, namely Dr. Rachesky and Messrs. Alapont, D’Arcy, Dokho, Intrieri, Miller, Renschler, Schulz, Sheehan and Suskind, qualify as ‘‘independent directors’’ in accordance with the NYSE’s independence requirements and our own internal guidelines for determining director independence. Each of these directors has also been determined to be financially literate. All of the members of our Audit Committee, Compensation Committee, Finance Committee and the Nominating and Governance Committee are independent and financially literate.
Both the NYSE requirements and our own guidelines include a series of objective tests for determining the independence of a director, such as that the director or his family member is not an employee of Navistar and has not engaged in various types of commercial or charitable relationships with Navistar. A copy of our existing guidelines for determining director independence, as included in our Corporate Governance Guidelines, is available on the Investor Relations section of our website at http://www.navistar.com/navistar/investors/corporategovernance/documents. Our Board has made a determination as to each independent director that no relationship exists which, in the opinion of the Board, would interfere with the exercise of the director’s independent judgment in carrying out his responsibilities as a director. In making these determinations, our Board reviewed and discussed information provided by the directors and Navistar with regard to each director’s business and personal activities as they may relate to Navistar, its management and/or its independent registered public accounting firm. This process included a review of the continuing development of Navistar’s commercial relationships with TRATON for which Messrs. Renschler and Schulz serve as the Chief Executive Officer and Chief Financial Officer, respectively. More information on the TRATON relationship is set forth in the Related Party Transactions and Approval Policy portion of the Corporate Governance section of this proxy statement.
Executive Sessions
At the conclusion of each regularly scheduled Board meeting, the Board will meet in executive session without management present other than Mr. Clarke. In addition, and as provided by the Corporate Governance Guidelines, the Board meets in an executive session of independent directors a minimum of three (3) times per year to review the Company's strategic plan and CEO performance and compensation and to conduct its self-evaluation process.


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CORPORATE GOVERNANCE MATTERS

Board Committees
The Board has four standing committees: an Audit Committee, a Compensation Committee, a Finance Committee and a Nominating and Governance Committee. Each of the committees is governed by a written charter, copies of which are available on the Investor Relations section of our website at http://www.navistar.com/navistar/investors/corporategovernance/documents.
Below is a table indicating committee membership and a description of each committee of the Board.
 
Committee Membership (as of December 31, 2019)
Members
Audit
Compensation
Finance
Nominating & Governance
Troy A. Clarke
 
 
 
 
José María Alapont
 
 
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Stephen R. D’Arcy
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Jeffrey A. Dokho
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Vincent J. Intrieri
 
 
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Raymond T. Miller
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Mark H. Rachesky
 
 
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Andreas H. Renschler
 
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Christian Schulz
 
 
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Kevin M. Sheehan
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Dennis A. Suskind
 
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Chair
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Co-Chair
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Member
Audit Committee
 
 
Current Members
Stephen R. D’Arcy (Chair)
Jeffrey A. Dokho
Raymond T. Miller
Kevin M. Sheehan
Meetings in 2019
8
Attendance
100%
Roles and Responsibilities
    Assists the Board in fulfilling its responsibility for oversight of the Company’s financial reporting process, the Company’s legal and regulatory compliance, the retention, compensation, engagement partner selection, independence, qualifications and performance of the Company’s independent registered public accounting firm and the performance of the Company’s internal audit function and corporate compliance function
    Reviews the audit plans of the Company’s independent registered public accounting firm and internal audit staff, reviews the audit of the Company’s accounts with the independent registered public accounting firm and the internal auditors, considers the adequacy of the audit scope and reviews and discusses with the auditors and management the auditors’ reports
    Reviews environmental reports and compliance activities for the Company’s facilities and the expense accounts of executive officers and directors
    Reviews and decides on conflicts of interest and waivers of compliance with the Company’s Code of Conduct that may affect executive officers and directors and discusses policies and guidelines with respect to risk assessment and risk management
    Reviews and recommends to the Board that the Board either approve, ratify, reject or take other action with respect to related person transactions and it prepares and approves the Audit Committee Report for inclusion in the Company’s proxy statement
All members of the Audit Committee are independent and the Board designated each of the Audit Committee members as an ‘‘audit committee financial expert,’’ as defined by applicable law, rules and regulations.
The Audit Committee conducted an evaluation of its performance in October 2019. Additional information on the roles and responsibilities of the Audit Committee is provided in the Audit Committee Report section of this proxy statement.

2020 Proxy Statement
21



CORPORATE GOVERNANCE MATTERS

Compensation Committee
 
 
Current Members
Dennis A. Suskind (Chair)
Raymond T. Miller
Andreas H. Renschler
Kevin M. Sheehan
Meetings in 2019
7
Attendance
86%
Roles and Responsibilities
    Makes recommendations to the Board with respect to the appointment and responsibilities of all executive officers
    Reviews and approves the compensation of executive officers who are not also directors of the Company
    Reviews and approves the Company’s compensation strategy and any associated risks
    Recommends to the independent members of the Board the compensation of executive officers who also are directors of the Company
    Administers the Company’s equity and incentive compensation plans
    Engages the compensation consultants that advise the Compensation Committee
    Approves the consultants’ fees and terms of engagement
    Furnishes an annual Compensation Committee Report on executive compensation
    Reviews and discusses the Compensation Discussion & Analysis (‘‘CD&A’’) with management and recommends to the Board the inclusion of the CD&A in the Company’s proxy statement
    Upon management’s recommendation, reviews basic changes to non-represented employees’ base compensation and incentive and benefit plans
Oversees the development and implementation of succession plans for senior executives (with the exception of our CEO)
In 2019, the Compensation Committee continued its annual delegation of authority to approve certain equity awards pursuant to the 2013 Performance Incentive Plan ("2013 PIP") to the Committee Chair, Dennis A. Suskind. The equity awards are for retention, new hire, promotion or special recognition purposes and are subject to share- and value-based limitations established by the Compensation Committee. Periodically, but no less frequently than annually, such awards are communicated to the other members of the Compensation Committee. The Compensation Committee conducted an evaluation of its performance in October 2019. Additional Information on the roles and responsibilities of the Compensation Committee is provided in the CD&A section of this proxy statement.
Finance Committee
 
 
Current Members
Vincent J. Intrieri (Co-Chair)
Mark H. Rachesky (Co-Chair)
José María Alapont
Jeffrey A. Dokho
Christian Schulz
Meetings in 2019
8
Attendance
95%
Roles and Responsibilities
    Reviews the Company’s financing requirements, procedures by which projections and estimates of cash flow are developed, dividend policy and investment spending and capital expenditure budgets
    Oversees the Company’s policies with respect to financial risk assessment and financial risk management, including liquidity and access to capital and macroeconomic trends/ environment risks
The Finance Committee conducted an evaluation of its performance in October 2019.
Nominating and Governance Committee
 
 
Current Members
José María Alapont (Chair)
Vincent J. Intrieri
Mark H. Rachesky
Andreas H. Renschler
Dennis A. Suskind
Meetings in 2019
5
Attendance
92%
Roles and Responsibilities
    Responsible for the organizational structure of the Board and its committees
    Recommending to the Board the directors to serve on the standing Board committees
    Reviewing and making recommendations to the Board concerning nominees for election as directors and CEO succession planning
    Reviewing and making recommendations to the Board concerning corporate governance practices and policies and changes to our Restated Certificate of Incorporation and our By-Laws
    Overseeing risks related to corporate governance and the political environment
    Leads the Board in its self-evaluation process
    Monitors compliance with the Corporate Governance Guidelines
The Nominating and Governance Committee conducted an evaluation of its performance in October 2019.

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CORPORATE GOVERNANCE MATTERS

Board Practices, Policies and Processes
History of Commitment to Good Governance Practices
During 2019, we strove to maintain effective governance practices and policies, and to solicit and consider input from our stockholders. Beginning with the 2014 Annual Meeting, the Board was declassified and all directors became subject to annual election to one-year terms. In February 2017, upon the election of Troy A. Clarke, our Chief Executive Officer, as Chairman, the Board appointed General (Retired) Stanley A. McChrystal as the Independent Lead Director. Currently, Vincent J. Intrieri and Mark H. Rachesky serve as Co-Independent Lead Directors. In addition to these actions, we believe that the following items, among others, contribute to a strong governance and compensation profile:
10 of 11 directors are independent under our Corporate Governance Guidelines and the NYSE listing standards.
We have Co-Independent Lead Directors.
We have Board standing committees that are composed of 100% independent directors.
We have a declassified Board.
We have stockholder representation on all of our Board committees.
We have a director resignation policy for directors who fail to obtain a majority vote.
We have no super-majority voting provisions to approve transactions, including a merger.
We have a claw-back policy to recoup incentive-based compensation in the event of an accounting restatement or intentional misconduct.
We do not provide tax gross-ups for perquisites and other similar benefits to Section 16 Officers and we do not provide tax gross-ups for any cash or equity awards for any employees.
We have ‘‘double trigger’’ change in control benefits.
Our NEOs and directors are subject to stock ownership guidelines and stock retention requirements.
Our executives and directors are prohibited from engaging in short sales, derivatives trading and hedging transactions, and we impose restrictions on pledges and margin account use.
Board Meetings and Attendance
In 2019, the full Board met 9 times. In addition, the Board’s independent directors met 3 times in executive session without management present to evaluate the performance of the CEO and discuss CEO succession, corporate strategies and the self-assessment process for the Board and its committees. The chairs of our Audit, Compensation, Nominating and Governance and Finance Committees of the Board each preside as the chair at meetings or executive sessions of independent directors at which the principal items to be considered are within the scope of the authority of his committee.
During 2019 each of the directors attended 75% or more of all the meetings of the Board and the committees on which he serves with the exception of Andreas H. Renschler and Christian Schulz. The average attendance of all directors at meetings of the Board and the committees on which they served in 2018 was 92%. We encourage all Board members to attend all meetings, including the Annual Meeting. Ten of our eleven directors who were directors at the time of our 2019 annual meeting of stockholders attended that meeting with one of the ten participating by teleconference.
Board Performance Evaluation
The Board documented its governance practices, policies and procedures in our Corporate Governance Guidelines. These governance standards embody many of our long-standing practices, policies and procedures, which are the foundation of our commitment to best practices. In October 2019, the Board conducted an evaluation of the committees and the Board.
Director Orientation and Continuing Education
When joining the Board, a new director is provided with a Directors' Reference Book which gives an overview of the Company, its senior management and its governance structure. As soon as practicable following election to the Board, the new director is scheduled to spend a day in individual or small group meetings with members of the senior management team and selected members of their staffs. In addition, directors have opportunities for continuing education and also receive regular presentations at Board meetings.

2020 Proxy Statement
23



CORPORATE GOVERNANCE MATTERS

Corporate Governance Guidelines
Our Board has adopted Corporate Governance Guidelines, which are available on the Investor Relations section of our website at http://www.navistar.com/navistar/investors/corporategovernance/documents. These guidelines reflect the Board’s commitment to oversee the effectiveness of policy and decision-making both at the Board and management level, with a view to enhancing stockholder value.
Transactions with Related Persons
Our Policy and Procedures with Respect to Related Person Transactions governs the review, approval and ratification of transactions involving the Company and related persons where the amount involved exceeds $120,000. Related persons include our executive officers, directors, director nominees, 5% stockholders and immediate family members of such persons, and entities in which one of these persons has a direct or indirect material interest. Under this policy, prior to entering into any related-person transaction, the General Counsel or Corporate Secretary of Navistar is to be notified of the facts and circumstances of the proposed transaction, including: (i) the related person’s relationship to the Company and interest in the transaction; (ii) the material facts of the proposed transaction, including the proposed aggregate value of such transaction or, in the case of indebtedness, the amount of principal that would be involved; (iii) the benefits to the Company of the proposed transaction; (iv) if applicable, the availability of other sources of comparable products or services; and (v) an assessment of whether the proposed transaction is on terms that are comparable to the terms available to an unrelated third party or to employees generally.
The General Counsel or Corporate Secretary then assesses whether the proposed transaction is a related-person transaction for purposes of the policy and SEC rules. If the General Counsel or Corporate Secretary determines that the proposed transaction is a related-person transaction for such purposes, the proposed transaction is then submitted to the Audit Committee of the Board for its consideration. The Audit Committee considers all of the relevant facts and circumstances available, including (if applicable) but not limited to: (i) the benefits to the Company; (ii) the impact on a director’s independence, in the event a person involved with, or connected to, the proposed transaction is a director; (iii) the availability of other sources for comparable products or services; (iv) the terms of the transaction; and (v) the terms available to unrelated third parties or to employees generally. No member of the Audit Committee shall participate in any review, consideration or approval of any related-person transaction with respect to which such member or any of his or her immediate family members is the related person. The Audit Committee will then make a recommendation to the Board. The Board approves only those proposed transactions that are in, or are not inconsistent with, the best interests of the Company and its stockholders, as determined by the Board in good faith. In the event that the Company becomes aware of a related-person transaction that has not been previously approved or ratified by the Board or the Audit Committee, a similar process will be undertaken by the Board and the Audit Committee in order to determine if the existing transaction should continue or be terminated and/or if any disciplinary action is appropriate. The General Counsel or Corporate Secretary may also develop, implement and maintain from time to time certain administrative procedures to ensure the effectiveness of this policy.
A copy of our Policy and Procedures with Respect to Related Person Transactions is available on the Investor Relations section of our website at http://www.navistar.com/navistar/investors/corporategovernance/documents.
Since the beginning of 2019, the following related-person transactions occurred:
TRATON, Andreas H. Renschler and Christian Schulz. The Company and its subsidiaries have historically had a series of commercial relationships with TRATON and its affiliates and subsidiaries, and the parties entered into additional transactions prior to and during 2019. The total aggregate value of these transactions amounted to approximately $169,318,441 during 2019. As of December 31, 2019, TRATON is a 16.8% stockholder of the Company and is therefore a related person. Messrs. Renschler and Schulz, who are members of our Board, are also the Chief Executive Officer and Chief Financial Officer, respectively, of TRATON. By virtue of their positions as officers of TRATON, Messrs. Renschler and Schulz are deemed to have an indirect material interest in the Company’s transactions with TRATON. The related person transactions which existed, were entered into or are currently being proposed between the Company and TRATON during 2019 and the first two months of 2020 (the "TRATON Transactions”) are as follows:
1.
Navistar pays MAN Truck & Bus AG (“MAN”), an indirect subsidiary of TRATON, a royalty for the use of certain base technology associated with our current A26 diesel engine and our discontinued 13 liter diesel engine. The royalty payment for 2019 was €2,102,000 (US$2,363,823).

24
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CORPORATE GOVERNANCE MATTERS

2.
MWM International Motores, S.A. (“MWM”), one of our Brazil operating subsidiaries, purchases various parts from MAN and its direct and indirect subsidiaries, and generators from Scania AB, a subsidiary of TRATON. In 2019, the amount paid for such parts, including commissions, was US$2,479,487.
3.
MWM contract manufactures the D08 engine (6.9 and 4.6 liter) for MAN Latin America Indústria e Comércio de Veículos Ltda. (“MAN Latin America”), an indirect subsidiary of TRATON. MWM assembles and supplies D26 13L engines, produces the D26 block cylinder and sells loose engines and spare parts to MAN Latin America. MWM also sells block cylinders to MAN. The net revenue associated with this relationship during 2019 was approximately US$157,299,423.
4.
Global Truck & Bus Procurement LLC (the “Procurement JV”), a joint venture entity, was formed and commenced operations in 2017. Owned 51% by TRATON, LLC (formerly known as Volkswagen Truck & Bus, LLC), a subsidiary of TRATON, and 49% by International Truck and Engine Investments Corporation (“ITEIC”), an indirect subsidiary of the Company, the purpose of the Procurement JV is to make sourcing recommendations to TRATON and Navistar. The Procurement JV’s annual operating budget is funded on a cost plus basis. In 2019, the parties each made operating cost payments to the Procurement JV in the amount of $2,310,041.
5.
Certain of our subsidiaries have entered into agreements, or are currently proposing to enter into agreements, with certain indirect subsidiaries of TRATON with respect to supplying us with big bore diesel engines with after-treatment and transmissions, certain consulting and /or engineering services in connection with our development and building of a prototype electric school bus, an electric battery for medium duty trucks, and a transmission for use with A26 engines. Payments made by us under these agreements during 2019 totaled US$2,789,368.
6.
Certain direct or indirect subsidiaries or affiliates of TRATON have paid MWM for engineering services related to the homologation of engines and the distribution and after-sale support for certain MAN engines. Payments made to us associated with this relationship totaled US$284,650 during 2019.
7.
Navistar has entered into arrangements with certain direct and indirect subsidiaries of TRATON for the lease of certain office spaces, workshops, studies and training. Payments made pursuant to these arrangements totaled US$621,384 in 2019. Navistar has leased vehicles manufactured by Volkswagen AG for certain of its salesforce, through a third party leasing company which is not affiliated with Navistar or TRATON. The amount paid by Navistar to the third party leasing company for such vehicles in 2019 was US$1,171,265.
Each of the TRATON Transactions was the result of arms-length negotiations with no unique concessions on pricing or other terms and conditions, and certain of the transactions are of long-term strategic importance to the Company. The Audit Committee and the Board considered these factors and in December 2019 the Board, upon the recommendation of the Audit Committee and with Messrs. Renschler and Schulz not participating since they have an indirect material interest, approved and ratified the TRATON Transactions on the basis that the Navistar/TRATON relationship is in the best interests of the Company.
Walter Borst. As an executive officer of the Company, Walter Borst is a related person. Mr. Borst currently serves as a trustee of Kettering University. The Company has pledged a charitable gift to Kettering University in the amount of $2,000,000 to be paid in five annual payments of $400,000. The first payment was made in 2019. The gift funds technology research, scholarships for STEM students, and the naming rights for Kettering University's corporate common space. In December 2018, the Audit Committee and the Board reviewed, approved and ratified the Kettering University charitable pledge.

2020 Proxy Statement
25



CORPORATE GOVERNANCE MATTERS

Compensation of Directors
Director Compensation for 2019
In recent years, our non-employee director pay has been low in comparison to our peer group of companies. In 2019, during our annual review of director compensation, our analysis of competitive survey data, peer group proxy information, and general industry practices confirmed that our non-employee director total direct compensation was still below median, with our total cash compensation and our total equity compensation being at the lowest levels amongst our peers. Based on these findings, on October 15, 2019, the Board approved several changes to non-employee director compensation.
The following table describes components of non-employee director compensation in effect during calendar 2019 and the new compensation program that will become effective January 1, 2020 (unless otherwise noted):
Compensation Element
Calendar Year 2019 Compensation Program
New Calendar Year 2020 Compensation Program
Annual Retainer
$130,000 retainer (paid quarterly); $105,000 paid in cash, $25,000 paid in fully vested shares of our Common Stock
$115,000 cash retainer (paid quarterly);
$150,000 equity retainer paid in restricted
stock units that vest on the first anniversary
of the grant
Lead Director Additional
Annual Retainer
$25,000
$25,000
Committee Chairman Additional Annual Retainer
$25,000 for Audit Committee
$15,000 for Compensation Committee
  
$15,000 for Finance Committee  
$15,000 for Nominating and Governance Committee
$25,000 for Audit Committee
$15,000 for Compensation Committee
$15,000 for Finance Committee
$15,000 for Nominating and Governance
Committee
Committee Member
Additional Annual Retainer
None
None
Attendance Fees
None
None
Stock Options
5,000 shares annually (the exercise price is equal to the fair market value of our Common Stock on the date of grant) which vest in equal annual installments on the first three anniversaries of the grant date.
None
Other Benefits
We also pay the premiums on directors’ and officers’ liability insurance policies covering the directors and reimburse directors for expenses related to attending Board and committee meetings and director continuing education seminars.
We also pay the premiums on directors’ and officers’ liability insurance policies covering the directors and reimburse directors for expenses related to attending Board and committee meetings and director continuing education seminars.
Special Committees
Determined on a case by case basis.
  Determined on a case by case basis.

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CORPORATE GOVERNANCE MATTERS

The following table provides information concerning the compensation of our non-employee directors for 2019. Directors who are employees of the Company receive no compensation for their services as directors or as members of the Board or a committee thereof. For a complete understanding of the table, please review the footnotes and the narrative disclosures that follow the table.
Director Compensation Table
Name
Fees Earned
or Paid in Cash
($)
(1)(2)(3)

Stock
Awards
($)
(2)(3)(4)(5)(6)

Option
Awards
($)
(5)(6)(7)

All Other
Compensation
($)

Total
($)

José María Alapont
117,545

24,968

63,000


205,513

Stephen R. D'Arcy
127,545

24,968

63,000


215,513

Jeffrey A. Dokho(8)





Vincent J. Intrieri
122,928

25,000

63,000


210,928

Raymond T. Miller

128,342

63,000


191,342

Mark H. Rachesky

147,928

63,000


210,928

Andreas Renschler
103,374

24,968

63,000


191,342

Christian Schulz(9)





Kevin M. Sheehan
103,374

24,968

63,000


191,342

Dennis A. Suskind

142,513

63,000


205,513

(1) 
Amounts in this column reflect fees earned by our non-employee directors in 2019.
(2) 
Under our Non-Employee Directors Deferred Fee Plan (the ‘‘Deferred Fee Plan’’), our directors who are not employees received an annual retainer, payable quarterly, at their election, either in shares of our Common Stock or in cash. A director may elect to defer any portion of such compensation until a later date in deferred share units (" DSUs") or in cash. Each such election is made prior to December 31st for the next succeeding calendar year or within 30 days of first joining the Board. Mr. Intrieri, Mr. Miller, Dr. Rachesky, and Mr. Suskind elected to defer the receipt of some or all of their compensation received for their retainer fees in 2019. Mr. Intrieri deferred receipt of 100% of the 2019 first calendar year quarterly retainer fee normally paid in shares of our Common Stock and received a total of 773.994 DSUs in 2019. Mr. Miller deferred receipt of 100% of his quarterly retainer fees in DSUs and received 4,250.691 DSUs in 2019. Dr. Rachesky deferred receipt of 100% of his quarterly retainer fees, except the portion payable in shares of our Common Stock, in calendar year 2019 and received 4,112.483 DSUs. Mr. Suskind deferred receipt of 100% of his quarterly retainer fees, except the portion payable in shares of our Common Stock, in calendar year 2019 and received 3,943.587 DSUs. The amount of DSUs for Mr. Intrieri, Mr. Miller, Dr. Rachesky, and Mr. Suskind has been credited as stock units in an account under each of their names at the then current market price of our Common Stock. The units issued to Mr. Intrieri during 2019 will be converted into Common Stock and issued within 60 days after his separation from service on the Board. The units issued to Mr. Miller, Dr. Rachesky, and Mr. Suskind during 2019 will be converted into Common Stock and issued within 60 days after January 1, 2020.
(3) 
Effective April 1, 2019, each non-employee director, other than Mr. Dokho and Mr. Schulz, received 773 shares of our Common Stock in lieu of $25,000 of their first quarter retainer, except for Mr. Intrieri and Mr. Miller who each elected to defer receipt of their shares in DSUs, as described in footnote 2 above. The grant date fair value of the restricted stock and DSUs was determined in accordance with FASB ASC Topic 718. Mr. Dokho does not personally receive compensation for his service on the Board, as noted under footnotes 5 and 8 below, and Mr. Schulz has declined compensation for his service on the Board. For additional information regarding assumptions underlying valuation of equity awards see Note 18 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended October 31, 2019.
(4) 
The aggregate number of shares subject to stock awards granted by the Company that were outstanding for each non-employee director as of October 31, 2019, including DSUs earned or owned by Mr. Intrieri, Mr. Miller, Dr. Rachesky, and Mr. Suskind is indicated in the table below. All of these stock awards and DSUs are 100% vested:
Name
Total Number of Stock
Awards Outstanding
(#)

José María Alapont
1,509

Stephen R. D'Arcy
2,156

Jeffrey A. Dokho

Vincent J. Intrieri
10,956

Raymond T. Miller
5,647

Mark H. Rachesky
32,724

Andreas H. Renschler
1,244

Christian Schulz

Kevin M. Sheehan
773

Dennis A. Suskind
8,017

(5) 
At the request of the UAW, the UAW representative director, Jeffrey Dokho, does not receive stock or stock option awards. Mr. Schulz has declined compensation for his service on the Board at this time.
(6) 
The values in these columns reflect the grant date fair value as determined in accordance with FASB ASC Topic 718. For additional information see Note 18 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended October 31, 2019, regarding assumptions underlying valuation of equity awards.

2020 Proxy Statement
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CORPORATE GOVERNANCE MATTERS

(7) 
The number of options granted in 2019 and the aggregate number of stock options outstanding for each non-employee director as of October 31, 2019, are indicated in the table below.
Name
Total Stock Option
Awards Outstanding
at 2019 Year End

Option Awards
Granted During Fiscal 2019
(#)

Grant Price
($)

Grant Date Fair Value of
Option Awards
Granted During Year
($)
(a)

José María Alapont
15,000

5,000

27.31

63,000

Stephen R. D’Arcy
15,000

5,000

27.31

63,000

Jeffrey A. Dokho




Vincent J. Intrieri
30,000

5,000

27.31

63,000

Raymond J. Miller
5,000

5,000

27.31

63,000

Mark H. Rachesky
35,000

5,000

27.31

63,000

Andreas H. Renschler
10,000

5,000

27.31

63,000

Christian Schulz




Kevin M. Sheehan
5,000

5,000

27.31

63,000

Dennis A. Suskind
15,000

5,000

27.31

63,000

(a) 
These amounts do not reflect compensation realized by our directors. The amounts shown represent the value of the stock options based on the grant date fair value of the award as determined in accordance with FASB ASC Topic 718. The stock options generally vest over a three year period with ⅓rd vesting on each of the first three anniversaries of the date on which they are awarded, so that in three years the stock options are 100% vested. The stock options granted on December 11, 2018, expire ten years after the date of grant. For additional information regarding assumptions underlying valuation of equity awards see Note 18 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended October 31, 2019.
(8) 
At the request of the UAW, the organization which recommended Mr. Dokho to the Board, the entire cash portion of Mr. Dokho's annual retainer is contributed to a trust which was created in 1993 pursuant to a restructuring of our retiree health care and life insurance benefits.
(9) 
As stated in footnote 5 above, Mr. Schulz has declined receiving compensation for his service on the Board at this time. For 2019 the Company would have paid Mr. Schulz the sum of $191,342.
Share Ownership Guidelines
To encourage non-employee directors to own our shares, $25,000 of each non-employee director’s annual retainer in calendar year 2019 was paid in the form of fully vested shares of our Common Stock. For calendar year 2020, instead of $25,000 of each non-employee director's annual retainer being paid in the form of fully vested shares of our Common Stock and in lieu of an annual stock option grant, each non-employee director will receive restricted stock units ("RSUs") valued at $150,000 on the award date. The RSUs are provided pursuant to the 2013 PIP and will vest on the first anniversary of the grant date. For additional information regarding the 2013 PIP, see Note 18 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended October 31, 2019. Effective January 1, 2020, non-employee directors are subject to share ownership guidelines under which they are expected to own shares equivalent to five times their annual cash retainer. The current share ownership guidelines provide that they are expected to own shares equivalent to three times their annual cash retainer. The expectation under the share ownership guidelines is for a director to meet the share ownership level within five years of joining the Board.
Deferred Fee Plan for Non-Employee Directors
Under our Non-Employee Directors' Deferred Fee Plan, non-employee directors may defer fees otherwise payable in the form of cash or restricted stock or stock units. The amount otherwise payable in cash may be deferred in cash or in deferred share units ('DSUs"). Any amount deferred in cash is generally paid to the director, with interest at the prime rate, at the date specified by the director at the time of his election to defer. The amount otherwise payable in restricted stock or stock units may be deferred in DSUs. Any amount deferred in DSUs is credited into the director’s account at the then current market price. Such units are generally distributed to the director in the form of our Common Stock at the date specified by the director at the time of his or her election to defer. Elections to defer are made in the calendar year prior to the year in which the fees are earned.
Compensation Committee Interlocks and Insider Participation
Andreas H. Renschler, a member of the Compensation Committee of the Board, has an indirect material interest in related person transactions between the Company and TRATON because he is the Chief Executive Officer of TRATON. A description of the related person transactions between the Company and TRATON during 2019 is set forth in the Related Party Transactions and Approval Policy portion of the Corporate Governance section of this proxy statement.

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EXECUTIVE COMPENSATION
 
 
PROPOSAL 2
ADVISORY VOTE ON EXECUTIVE COMPENSATION
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Your Board of Directors recommends a vote FOR the approval of named executive officer compensation.
At our 2017 annual meeting of stockholders, a majority of our stockholders voted in favor of holding a non-binding advisory vote on executive compensation on an annual basis. In light of those results, our Board determined that the Company will continue to hold a non-binding advisory vote on executive compensation on an annual basis. The next required non-binding advisory vote regarding the frequency interval will be held at our 2023 annual meeting of stockholders.
The Company places importance on the feedback of our stockholders regarding our compensation practices. We are focused on continuously reviewing and improving such practices in order to best align executive pay with Company performance. At our 2018 and 2019 annual meetings of stockholders, our stockholders expressed their support of our executive compensation programs by approving our non-binding advisory vote on our executive compensation by approximately 99% of those voting in both years. Since that time we have continued our stockholder outreach initiatives and our continuous efforts to best align executive pay with Company performance.
As described more fully in our Compensation, Discussion and Analysis (“CD&A”), our executive compensation programs for our NEOs, as well as other executives, are designed to closely align executive rewards with the total return to stockholders and both corporate and individual performance. As evidence of our commitment to align executive pay with Company performance:
The 2017 LTI performance results are slightly above target for the performance-based portion of the award.
The 2018 LTI performance results are projected to be above target for Adjusted EBITDA and at target for Revenue Growth.
The 2019 LTI performance results are projected to be above target for Adjusted EBITDA and at target for Revenue Growth.
The 2019 AI awards will be paid out at 134.7% of target percentage due to our achievements.
The Board urges our stockholders to read the CD&A, which describes in more detail the changes made to the executive compensation programs and how the executive compensation programs are designed to support our Company and our business strategies in concert with our culture, compensation philosophies and guiding principles. We believe that the Company’s executive compensation programs appropriately align pay and performance and enable the Company to attract and retain talented executives within our industry.
We are asking our stockholders to indicate their support for our executive compensation as described in this proxy statement, as required pursuant to Section 14A of the Exchange Act. This proposal, commonly known as a ‘‘say-on-pay’’ proposal, gives you as a stockholder the opportunity to express your views on our 2019 executive compensation policies and procedures described in this proxy statement.
This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs as described in this proxy statement. Accordingly, we ask our stockholders to vote ‘‘FOR’’ the following resolution at the Annual Meeting:
RESOLVED, that the stockholders of the Company approve, on an advisory basis, the compensation of the named executive officers, as disclosed pursuant to Item 402 of Regulation S-K in the Company’s proxy statement for the Annual Meeting.
Although this is an advisory vote that will not be binding on the Compensation Committee or the Board, we will carefully review the results of the vote, as we did last year. The Compensation Committee will consider our stockholders’ concerns and take into account the outcome of ‘‘say-on-pay’’ votes when designing future executive compensation programs. The Board recommends that you indicate your support for the Company’s executive compensation in 2019, as outlined in the above resolution.

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EXECUTIVE COMPENSATION

Report of the Compensation Committee
The Compensation Committee reviewed and discussed the CD&A required by Item 402(b) of Regulation S-K with management, and based upon this review and discussion, the Compensation Committee recommended to the Board that the CD&A be included in this proxy statement. The independent members of the Board reviewed and discussed the compensation of the CEO.
The Compensation Committee
Independent Board members
(non-Compensation Committee members)
Dennis A. Suskind, Chairman
José Marìa Alapont
Raymond T. Miller
Stephen R. D’Arcy
Andreas H. Renschler
Jeffrey A. Dokho
Kevin M. Sheehan
Vincent J. Intrieri
 
Mark H. Rachesky
 
Christian Schulz
(Approved by the Compensation Committee, with Raymond T. Miller serving as Chair Pro Tem, and the other independent members of the Board except Christian Schulz on December 9, 2019. Dennis A. Suskind and Christian Schulz were unable to attend the meeting.)
Compensation Discussion & Analysis
In this section, we describe our executive compensation philosophy and program, which is intended to support our strategic objectives and serve the long-term interests of our shareholders. We also discuss how our CEO, CFO, and other NEOs were compensated in 2019 and describe how their compensation fits within our executive compensation philosophy.
The following are our fiscal 2019 NEOs that will be discussed throughout the CD&A.
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TROY A. CLARKE 
President and Chief
Executive Officer
 
WALTER G. BORST 
Executive Vice
President and Chief
Financial Officer
 
PERSIO V. LISBOA 
Executive Vice
President and Chief
Operating Officer
 
WILLIAM V.
MCMENAMIN
 
President, Financial
Services and Treasurer
 
CURT A. KRAMER 
Senior Vice President
and General Counsel
Executive Overview
Highlights of 2019 Results – Financial and Strategic
 
 
 
 
Core market share up 1.3 points
Class 6/7 up 3.7 points
Revenue up 10%, primarily reflects higher volumes in our Core markets
Core chargeouts up 18%
Up double digits in Class 8 and Class 6/7 trucks
Adjusted net income up 29% to $423 million
Adjusted EBITDA up 7% to $882 million
Opened new parts distribution center in Olive Branch, MS near Memphis, TN
Expanded our service network through our partnership with Love's Travel Stops
Continued cadence of actions to improve the balance sheet

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EXECUTIVE COMPENSATION

OPERATIONAL RESULTS
($ in millions, except figures expressed as per share)
 
Years Ended
October 31
(A)
 
2019

2018

Chargeouts(B)
87,200

73,900

Sales and revenues
$
11,251

$
10,250

Net income(C)
$
221

$
340

Diluted income per share(C)
$
2.22

$
3.41

Adjusted Net income
$
423

$
327

Adjusted EBITDA
$
882

$
826

Adjusted EBITDA margin
7.8
%
8.1
%
Note: Contains non-GAAP information
(A) 
2019 results reflect ASC 606 while 2018 results are as reported
(B) 
Includes U.S. and Canada School buses and Class 6-8 trucks.
(C) 
Amounts attributable to Navistar International Corporation. Excludes net income attributable to non-controlling interests.
2019 Executive Compensation Highlights
During 2019, we grew our business, focusing our efforts on becoming the #1 choice in our industry. From our industry leading uptime for our customers to our continued market share growth, we demonstrated why we are the best investment choice in the industry. Moving forward, we are well positioned to continue our intense focus on costs to fund our growth initiatives, keep growing our market share and maximize shareholder return.
An overall objective of our executive compensation program is to maintain a linkage between pay and performance, both long-term and short-term. Earning Before Interest, Taxes, Depreciation and Amortization ("EBITDA") is a key pay component linked to pay for performance and our short and long-term incentives. In 2019 the Company saw an improvement of approximately $56M in adjusted EBITDA. Also in 2019:
The Company approved 2019 long-term equity awards for each executive based on an assessment of such executive’s performance and scope of the executive’s role.
Based on 2019 results, the 2019 LTI awards based on performance measures are projected to be above target for adjusted EBITDA and at target for Revenue Growth.    
Based on 2019 performance measures of our short-term annual incentive plan, 2019 AI awards will be paid at 134.7% of target.
For 2020, AI performance goals as determined by our Compensation Committee will include Market Share, Cost, Liquidity and A26 Sales Mix with both an adjusted EBITDA multiplier and an individual performance factor.
In 2019, the Compensation Committee took the following actions with respect to the Company’s executive compensation program:
Maintained our clawback policy, which enables the Company to recover incentive-based compensation in the event of an accounting restatement due to material non-compliance with financial reporting requirements, as well as intentional misconduct; and
Continued to exclude pro-rata bonus from the calculation of any pension/retirement benefit under our Executive Severance Agreements.

2020 Proxy Statement
31



EXECUTIVE COMPENSATION

Pay for Performance
We continue to take actions that we believe will improve our efficiency and performance and continue to evaluate additional opportunities to enhance value to our customers. We had many accomplishments in 2019, including opening a new parts distribution center in Olive Branch, Mississippi, launching a new business unit, NEXT eMobility Solutions, to deliver customized electrification solutions in the truck and school bus markets, expanding to the industry’s largest service network through our partnership with Love’s Travel Stops, and increasing our core market share. For 2019, AI awards will be paid out at 134.7% of target.
With respect to LTI, the 2017, 2018 and 2019 LTI plans were 50% performance-based and 50% time-based. Based on Company results:
The 2017 LTI performance results are slightly above target for the performance-based portion of the award.
The 2018 LTI performance results are projected to be above target for Adjusted EBITDA and at target for Revenue Growth.
The 2019 LTI performance results are projected to be above target for Adjusted EBITDA and at target for Revenue Growth.
The following table outlines the LTI awards granted to our NEOs for 2017, 2018 and 2019, along with the tracking performance of those awards as of October 31, 2019.
FY 2017
Portion of
LTI Award
Award Type
Performance Measure
Goals/Conditions
Results
Adjustment for 3-Year
Relative TSR Modifier
(+/- 25%)
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Performance RCUs —Adjusted EBITDA
Adjusted EBITDA in each year and cumulatively
over all three years
2017: $600M 
2018: $700M 
2019: $825M 
2017-2019: $2.125B
2017: $582M 
2018: $826M 
2019: $882M 
2017-2019: $2.29B => 107.25% Payout
-3%
p33_lti2017mktshare.jpg
Performance RCUs —Market Share
Market Share in each 
year and cumulatively 
over all three years
2017: 16.3% 
2018: 17.8% 
2019: 18.4% 
2017-2019: 17.5%
2017: 17.3% 
2018: 17.5% 
2019: 18.8% 
2017-2019: 17.9% => 101% Payout
-3%
p33_lti2017timersu.jpg
Time-Based RSUs
Value realized is 
determined by stock price
Continued service
Share price on 10/31/19 = $31.28
NA
p33_lti2017stockoptions.jpg
Stock Options
Value realized is 
determined by increase 
(if any) in stock price over strike price of $27.48
Continued service
Share price on 10/31/19 = $31.28
NA

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EXECUTIVE COMPENSATION

FY 2018
Portion of
LTI Award
Award Type
Performance Measure
Goals/Conditions
Results
Adjustment for 3-Year
Relative TSR Modifier
(+/- 25%)
p34_lti2018ebitda.jpg
Performance RCUs —Adjusted EBITDA
Total Adjusted EBITDA, 2018-2020
Threshold: $1.818B 
Target: $2.272B 
Distinguished: $2.726B
2018 Performance is 
projected to be above 
target
projected to be 
below target
p34_lti2018revgrowth.jpg
Performance RCUs —Revenue Growth
Revenue Growth in each year and cumulatively over all three years
2018: 10% 
2019: 4.8% 
2020: 5.4%
2018-2020: 21.5%
2018 Performance is projected to be at target
projected to be 
below target
p34_lti2018timersu.jpg
Time-Based RSUs
Value realized is determined by stock price
Continued service
Share price on 10/31/19 = $31.28. 
Exercise price/closing 
price grant
N/A
p34_lti2018stockoptions.jpg
Stock Options
Value realized is determined by increase (if any) in stock price over strike price of $40.18.
Continued service
Share price on 10/31/19 = $31.28.
N/A
FY 2019
Portion of
LTI Award
Award Type
Performance Measure
Goals/Conditions
Results
Adjustment for 3-Year
Relative TSR Modifier
(+/- 25%)
p34_lti2019ebitda.jpg
Performance RCUs —Adjusted EBITDA
Total Adjusted EBITDA, 2019-2021
Threshold: $1.96B 
Target: $2.45B 
Distinguished: $2.94B
2019 Performance is projected to be above target
projected to be 
below target
p34_lti2019revgrowth.jpg
Performance RCUs —Revenue Growth
Revenue Growth in each year and cumulatively over all three years
2019: 11% 
2020: -5% 
2021: 9%
2019-2021: 14.9%
2019 Performance is projected to be at target
projected to be 
below target
p34_lti2019timersu.jpg
Time-Based RSUs
Value realized is 
determined by stock price
Continued service
Share price on 10/31/19 = $31.28. 
Exercise price/closing price grant
N/A
p34_lti2019stockoptions.jpg
Stock Options
Value realized is determined by increase (if any) in stock price
Continued service
Share price on 10/31/19 = $31.28.
N/A
In 2019, we continued to align pay with performance throughout the organization through:
50% performance-based LTI awards for the NEOs and the CEO, with grant sizes adjusted based on the performance of the individual and their scope within the organization.
An AI program designed to align with key Company performance targets which resulted in a payout at 134.7% of target.

2020 Proxy Statement
33



EXECUTIVE COMPENSATION

Shareholder Feedback and Response
The Company actively engages stockholders in Say-On-Pay discussions. Three of the largest stockholders are represented on the Board as well as the Compensation Committee. Other stockholder opinions are solicited in discussions throughout the year and the Company continues to align pay with performance throughout the organization based on best practices.
The Company has a robust stockholder outreach and engagement program. We engage in regular contact with our stockholders throughout the year. Approximately 66% of our stock is held by five of our stockholders. Three of these stockholders have representation on our Board as discussed in our Executive Summary and Proposal One - Election of Directors. These stockholders, through their representatives on our Board, also are members of our Compensation Committee and are integrally involved in our compensation decisions and policies. We also engage in regular dialogue with our two remaining largest stockholders without representatives on our Board. We maintain open lines of communication with corporate governance advisory institutions and with all of our stockholders in order to inform them of Company updates and solicit their feedback. In September 2019, the Company hosted an investor day event that discussed our strategy and growth plans for the next several years. This event was well attended by the investment community and feedback from the event has been very positive. We continuously work to improve our shareholder engagement efforts and place importance on the feedback provided to us during this process.
Executive Compensation Best Practices
WHAT WE DO
 
WHAT WE DON’T DO
ü    We use multiple performance measures in our short-term and long-term incentive plans. These performance measures are designed to link pay to performance and stockholder interests.
ü    The Compensation Committee reviews external market data when making compensation decisions.
ü    The Compensation Committee selects and engages its own independent advisor, Pay Governance LLC.
ü    We maintain a clawback policy to recoup incentive-based compensation in the event of an accounting restatement.
ü    Change in Control severance benefits are payable only upon a CIC with termination of employment (“double trigger”).
ü    To aid in aligning the interest of our shareholders and officers, all officers are subject to stock ownership requirements, ranging from 6x base pay for the CEO to 3x base pay for other senior executives - including a retention requirement.
ü    Our 2019 long-term incentive plan includes both absolute and relative performance metrics.
 
û    The Company maintains policies that eliminate all tax gross-ups for perquisites and other similar benefits to Section 16 Officers, and prohibit tax gross-ups for any cash or equity awards for all employees.
û    We do not reprice stock options or provide cash buyouts of underwater options.
û    We prohibit short selling, trading in derivatives or engaging in hedging transactions by executives and directors. In addition, any pledging and margin account use must be pre-cleared through the Corporate Secretary or the General Counsel.
û    We do not accelerate the vesting of long-term incentive awards, except in certain situations upon death.
û    We do not grant extra pension service
Compensation of Executive Officers
Our Business Strategy
Our 2019 Accomplishments
We continue to demonstrate the growth of our business, focusing our efforts on becoming the #1 choice in our industry. In 2019, we made several notable advancements on our strategic vision.
Customer-Centric: Our focus on customer and market segmentation to better align our efforts with customer needs led to the following accomplishments in 2019:
Opened a new parts distribution center in Olive Branch, Mississippi near the FedEx World Hub in Memphis, Tennessee which will provide next day parts delivery to 95% of our dealer locations

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EXECUTIVE COMPENSATION

Enhanced our predictive parts stocking through digitalization
Expanded to the industry's largest service network with over 1,000 locations through our partnership with Love's Travel Stops
Operational Excellence: We made improvements to operations as follows:
Reduced our warranty expense as a percentage of manufacturing revenue from 1.7% in 2018 to 1.4% in 2019
Announced investments in our manufacturing footprint to expand our capabilities in Huntsville, Alabama for an integrated powertrain with TRATON Group and building a benchmark truck manufacturing facility in San Antonio, Texas
Core Business: We now have the industry's newest and most comprehensive vehicle line-up supported by our unique open architecture all-brands remote diagnostic system OnCommand Connection ("OCC"). In addition:
Our core market share improved from 17.5% in 2018 to 18.8% in 2019
We expanded the footprint of parts availability by adding 5 new Fleetrite retail outlets in the U.S. and Canada
Business Transformation: Our strategic transformation has been and will continue to be a crucial element of how we play to win. The following are a few ways we have gained significant momentum during 2019:
Created a new aftersales function that will manage every facet of the business after the initial sale of the truck, including oversight of parts and service, warranty, and dealer development
Launched a new business unit, NEXT eMobility Solutions ("NEXT"), to deliver customized electrification solutions in the truck and school bus markets using lean, agile practices. NEXT establishes a comprehensive "four C's" approach to developing eMobility solutions: Consulting, Constructing, Charging, and Connecting
Additional actions to de-risk the balance sheet through the purchase of a Canadian pension annuity, paying off $411 million in subordinated convertible notes with cash on hand in April, expanding the revolving credit facilities of NFC, and ending the year with $1.4 billion in consolidated cash, cash equivalents and marketable securities
Selling off non-core business units including a 70% equity interest in our former defense business, ND Holdings, LLC, and our ownership in our former joint venture in China with Anhui Jianghuai Automobile Co., Ltd
We believe these actions coupled with our strategic alliance with the TRATON Group and our winning culture anchored by our high performing cross-functional teams continue to position us for success.
Our Expectations Going Forward
Moving forward, we will continue our intense focus on costs to fund our growth initiatives, grow our market share and margins, and deliver superior shareholder return. We are focused on our Navistar 4.0 playing to win strategy, which is based on three critical elements:
People: Driving high performing cross-functional teams while recruiting and developing key leadership roles by:
Expanding on our lean culture through visual management, agile approaches, and a focus on execution
Developing our best resources and redeploying resources to focus on our growth initiatives, and
Leveraging our strong values
Performance: Creating a sustainable long-term performance advantage within our products and services by investing in those areas with the greatest impact on our margins and overall financial performance. These areas include the following:
Enterprise Platform Strategy: A shared platform strategy for all key vehicle systems
Advanced Modular Architecture: Optimizing parts used in our vehicles to be able to deliver a customized solution to customers with the least amount of engineering work. This creates the potential to significantly improve productivity in engineering and research & development and provide us more flexibility to invest in new products and technologies
Integrated Manufacturing: Investments that will allow us to optimize our manufacturing network by having a strong supplier footprint, and provide mutually beneficial relationships with our suppliers

2020 Proxy Statement
35



EXECUTIVE COMPENSATION

Aftersales Acceleration: Builds on our commitment to organically grow the parts business by helping our dealers to improve their parts sales though enhanced training, data analysis and market knowledge
Integrated Powertrain: Joint effort between Navistar and TRATON Group to incorporate the requirements we need for the North American market into their next generation of products that when combined with our investment in our Huntsville, Alabama facility for localizing the next generation big-bore diesel powertrain, will provide significant growth and margin opportunities
#1 Choice: Identifying and focusing on key markets where we have a differentiated value, defining how we will operate in that market, and how to prove to our customers that we are their #1 choice by:
Following a Listen-Understand-Deliver approach to provide our customers what they truly need to succeed
Understanding our customers better than our competitors, ensuring that our products and services provide value to our customers, and by organizing to be aligned with our customers
Ensuring our products and services provide leading uptime and low total cost of ownership
Strengthening our brand and residual values to capture more of the 2nd and 3rd owner markets, and
Strengthening our dealers and building stronger partnerships with them through our Vision 2025 strategy
We believe Navistar 4.0 is built upon the right vision and the right strategy. We are confident that success will result in "the best team", an operating performance advantage and a brand preference that will result in our leadership in key markets and continued improvement in our financial performance.
Navistar’s Compensation Philosophy
We believe the compensation of our executives should be closely tied to the performance and growth of the Company, so that their interests are aligned with the long-term interests of our stockholders. Consistent with this philosophy, the following guiding principles provide a framework for the Company’s executive compensation program:
 
 
 
COMPETITIVE POSITIONING
PAY-FOR-PERFORMANCE
OWNERSHIP AND RESPONSIBILITY
Total remuneration is designed to attract and retain the executive talent necessary to achieve our goals through a market competitive total remuneration package.
A substantial portion of each NEO's compensation is performance-based with a direct link to Company as well as individual performance. It is designed to align the interests of executives and stockholders.
Compensation programs are designed to recognize individual contributions as well as link NEO and stockholder interests through programs that reward our NEOs, based on the financial success of the Company and increases to stockholder value.
 
 
 

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EXECUTIVE COMPENSATION

Structure of Our Compensation Program
Pay Mix
A key goal of our compensation philosophy and objectives is the alignment of the pay mix for our CEO and top executives compared to the market. By pursuing that alignment, we can be assured that not only are the elements appropriate, but the overall package is properly designed. Although recommendations relative to each of these compensation elements are made separately, the Compensation Committee considers the total compensation and benefits package when making any compensation decision.
Working with an independent compensation advisor, we developed the following charts which illustrate the alignment of Navistar’s executive pay and the external marketplace.
The below charts present Navistar’s total direct compensation (“TDC”) mix (excluding special grants) for the CEO, CFO and other NEOs relative to the peer group mix.
NAVISTAR CEO TARGET TDC MIX
 
MARKET CEO TARGET TDC MIX
 
 
 
p38_navceotdcmix.jpg
 
p38_marketceotdcmix.jpg
NAVISTAR CFO TARGET TDC MIX
 
MARKET CFO TARGET TDC MIX
p38_navcfotdcmix.jpg
 
p38_marketcfotdcmix.jpg

2020 Proxy Statement
37



EXECUTIVE COMPENSATION

NAVISTAR NEO TARGET TDC MIX
 
MARKET NEO TARGET TDC MIX
p39_navneotdcmix.jpg
 
p39_marketneotdcmix.jpg
Elements of Total Direct Executive Compensation
Pay Element
What it Does
Performance Measures
Base Salary
Provides competitive base salary, typically reviewed annually, and balances risk-taking concerns with stockholder interests
Job scope, experience, performance and market data
Short-term Annual Incentive or AI
Provides a competitive incentive opportunity and aligns individual and Company performance
The goals established for 2019 include Market Share, Cost, Liquidity and Uptime as well as an adjusted EBITDA multiplier
Long-Term Equity Incentives or LTI (including stock option grants)
Aligns executive and stockholder interests by tying compensation to share price appreciation, builds long-term stockholder value, and cultivates stock ownership
The amount of the 2019 LTI awards were adjusted for each executive based upon an evaluation of market data, individual performance, and scope of the position within the organization
Chief Executive Officer Total Direct Compensation or “TDC”
Troy A. Clarke was named as the President and CEO in April 2013. The Board, with the assistance of the independent compensation advisor, reviewed CEO pay levels of our peer group, as well as those of other manufacturing organizations with similar revenues. Consistent with our compensation philosophy and the market review for other company chief executive officers, the Compensation Committee targeted total compensation at the market median but believed the pay for the President and CEO should be weighted with the greatest emphasis on performance.
Mr. Clarke’s compensation is specifically structured to focus on performance over the longer term and was negotiated with significant input from our stockholder-nominated directors.
In general, our practice excludes the use of employment contracts for NEOs, except with respect to the Company’s CEO. Previously, in connection with Mr. Clarke’s appointment to President and CEO in April 2013, we entered into a three-year employment and services agreement with him (the “Employment Agreement”) which was extended for two additional years in April 2016, and was extended for an additional year in April 2018. The Employment Agreement was amended in April 2019 to extend the expiration of the Agreement for one year (the “2019 Employment Agreement Amendment”). The 2019 Employment Agreement Amendment includes a “service after term” provision under which, in summary, Mr. Clarke agrees, if requested by the Board, to serve as Executive Chairman of the Board for a period of up to two years after he ceases serving as President and CEO.

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EXECUTIVE COMPENSATION

The following table summarizes certain material terms of the Employment Agreement, as amended, as well as certain other benefits received by Mr. Clarke.
Pay Element
Contractual Terms
Annual Base Salary
$1,050,000
Short-term Annual Incentive or AI(1)
Target AI of 125% of Base Salary Maximum AI of 250% of Base Salary. For the fiscal year in which his employment term ends, Mr. Clarke will be entitled to a pro-rata portion of AI (based on actual performance results) paid in a lump sum, even if he is not employed by the Company on the payment date.
Long-Term Incentive or LTI
Value of $5,500,000 in 2019
Total Target Direct Compensation
$7,862,500
Other Benefits
Eligible to participate in the Company plans, policies, perquisites and arrangements that are applicable to other senior officers of the Company, including life insurance equal to five times base salary and vacation equal to four weeks
Severance Provisions
In the event that Mr. Clarke’s employment is terminated without Cause or due to constructive termination other than in connection with a CIC, he would receive severance of: (i) two times Mr. Clarke’s base salary plus target AI award, (ii) a pro-rated portion of the AI award that would have been paid to Mr. Clarke had he remained employed at the time such payments are made to the employees generally, (iii) 12 months continued health care coverage with an option to purchase an additional 12 months at the cost of coverage rate, and (iv) continued life insurance for 24 months after termination.
In the event that Mr. Clarke’s employment is terminated without Cause or due to constructive termination within either 90 days prior to a CIC or within 24 months after a CIC, he would receive severance of: (i) two times Mr. Clarke’s base salary plus target AI award, (ii) a pro-rated portion of the target AI award, (iii) 12 months continued health care coverage with an option to purchase an additional 12 months at the cost of coverage rate, and (iv) continued life insurance for 24 months after termination.
Following expiration of his employment term, if requested by the Board, Mr. Clarke will serve as executive chairman of the Board for a period of not more than two years. During such period, his compensation will be equal to the cash equivalent of the non-employee director cash and equity retainer. Vesting of equity awards and performance cash incentives outstanding following Mr. Clarke’s termination of employment will continue regardless of whether he has been requested by the Board to serve as executive chairman following his employment term, subject to his continued compliance with non-competition and non-solicitation covenants.
(1) 
Actual payout at 134.7% of target for 2019.

2020 Proxy Statement
39



EXECUTIVE COMPENSATION

CEO Performance Evaluation
Traditionally, each year in December, the Compensation Committee and the independent members of the Board evaluate the CEO’s performance for the prior year. This review is based on the CEO’s achievement of goals set at the start of that prior year. The CEO presents information on the achievement of such goals solely to the independent members of the Board, who then discuss it in executive session without the CEO present. The independent members’ evaluation of the CEO’s performance then forms the basis for the decision on the CEO’s short-term incentive award under our AI plan for the prior year. The Chairman of the Compensation Committee then informs the CEO of the performance evaluation and any compensation decisions resulting from that evaluation. In December 2019, the independent members of the Board discussed and evaluated Mr. Clarke’s accomplishments as CEO. These accomplishments include:
Leadership Accomplishments
    Completed strong succession plans for all key positions
    Made changes to senior leadership to support the desired performance and organizational culture
Product Accomplishments
    Created e-Mobility business unit and opened e-technology center
    Introduced concept e-MB and e-IC school bus
    Increased focus on product line profitability
Operation Accomplishments
    Significantly improved material cost in the face of commodity increases
    Made substantial progress toward the 5 year cost savings target from the procurement JV with TRATON
Commercial Accomplishments
    Increased overall market share
    Implemented new after-sales organization and support network transformation
    Surpassed the Uptime performance of a key competitor
Based upon the Compensation Committee’s determination of Mr. Clarke’s and the Company’s performance against the applicable AI goals, the Compensation Committee recommended that Mr. Clarke receive an AI award in the amount of $1,767,938.
Mr. Clarke’s primary goals for 2020 include the following:
Management of the alliance relationship, procurement JV, and product programs
Analysis of options for enhancing our powertrain portfolio
Implementation of a product line profitability process to manage mix, content, complexity and pricing
Preparation of business plans that are responsive to uncertain 2020 market conditions
Acceleration of succession plans for key leader positions and further develop CEO transition plan
In December 2019, the Compensation Committee approved Mr. Clarke’s CEO goals for 2020 as noted above. The initiatives supporting the above goals include improving market share, pursuing strategic opportunities, strengthening the Company’s balance sheet and focusing on the development of Navistar leadership.
NEO 2019 Base Salary
Consistent with pay-for-performance principles, in 2019, base salary performance increases were based upon NEO and Company performance. The table below summarizes the base salaries for our NEOs in 2019 as well as their previous base salaries.
NEO
Current Base Salary

Effective Date
Previous Base Salary

Effective Date
Troy A. Clarke
$
1,050,000

April 16, 2018
$
1,000,000

April 22, 2016
Walter G. Borst(2)
$
772,335

February 1, 2018
$
749,840

February 1, 2016
Persio V. Lisboa(1)
$
765,450

February 1, 2019
$
729,000

February 1, 2018
William V. McMenamin(2)
$
460,000

September 1, 2017
$
386,650

February 1, 2016
Curt A. Kramer(1)
$
471,656

February 1, 2019
$
440,800

February 1, 2018
(1) 
Messrs. Lisboa and Kramer received base salary increases due to performance in February 2019.
(2) 
In lieu of a base salary increase, Messrs. Borst and McMenamin received one-time lump sum bonus payments in February 2019 of $30,893 and $18,400, respectively, due to the Compensation Committee's subjective determination of each executive's performance.

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EXECUTIVE COMPENSATION

Goal Setting for Incentive Plans
On an annual basis, the Board reviews a multi-year strategic plan developed and presented by the management team. Based on that plan, an operating plan is developed for the subsequent year and reviewed by the Board. The Compensation Committee approves the AI and LTI plan targets on the basis of the annual operating plan. The operating plan is based upon the goals of sustaining profitability and competitiveness with the market and the strategic plan incorporates long-term growth targets.
Annual Incentive or “AI”
Navistar provides its executives with an annual incentive compensation opportunity through the AI plan, a short-term incentive plan designed to align a significant portion of their total cash compensation with the overall financial performance of the Company. Each executive’s target award is determined based on a percentage of their base pay and organization level. For 2019, Mr. Clarke’s target annual incentive opportunity is 125% of base salary. For other NEOs, target awards range from 60 to 75 percent of base salary.
2019 Annual Incentive
The AI plan for 2019 was based on the attainment of 100% corporate goals established and approved by the Compensation Committee. The AI plan was authorized under our stockholder approved 2013 PIP. The AI plan has threshold, target, and distinguished goal ranges for NEOs from 40% to 150%. AI payout targets for NEOs ranged from 60% to 125% of base salary. Consolidated financial results between performance levels were interpolated on a straight-line basis to determine payment amounts.
Each AI financial performance metric is independent. Eligibility for payout is based on the attainment of each individual metric.
We use two design features: an adjusted EBITDA multiplier which scales the annual incentive up or down from the target level based upon actual financial performance of Navistar, and an individual performance factor.
We continue to leverage our AI scorecard using multiple performance metrics. This allows the NEOs to see how their individual achievements contribute to the overall effort and success of the Company.
Below is a summary of the 2019 AI performance goals, associated performance metrics, and level of goal achievement.
2019 Performance Goal
Metric
% Allocation
Level Achieved
Market Share
Segment-Weighted
30%
Above Target
Cost
Total Cost Reduction
30%
Below Target
Liquidity
Operating Cash Flow
30%
Above Target
Uptime
24hr Repair Velocity
10%
Above Target
Adjusted EBITDA
Multiplier
N/A
Above Target
(1) 
Liquidity metric is $395M less dividends. In addition, management applied a discretionary reduction based on elements that were not in the original scope of the AI plan, including the exclusion of any receivables purchased by NFC from Canada operations and any NFC advanced tax payments.
2019 Annual Incentive Target Award Percentages and Amount Earned
As seen in the table above, Navistar exceeded three of the 2019 AI plan targets for many of the performance goals while the Company was below target on one goal, yielding an overall payout percentage of 134.7% of target. Below are the NEO payment amounts.
Named Executive Officer
Target as % of Base Salary

2019 AI Amount Earned

Troy A. Clarke
125
%

$1,767,938

Walter G. Borst
75
%

$780,251

Persio V. Lisboa
75
%

$773,296

William V. McMenamin
60
%

$371,772

Curt A. Kramer
60
%

$381,192


2020 Proxy Statement
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EXECUTIVE COMPENSATION

2020 Annual Incentive
In 2020, we are well positioned to continue our intense focus on costs to fund our growth initiatives, continue to grow our market share and seek to maximize shareholder return. Our strategic direction continues to focus on our customer-centric strategy, operational excellence, our core business and our business transformation.
Due to our success in driving business results in 2019, we created an AI plan that enables our strategy and drives results for our employees, customers and shareholders. The table below illustrates the 2020 AI performance goals and metrics.
2020 Annual Incentive Targets
2020 Performance Goal
Weighting

Description
Target
Market Share
30
%
Segment-Weighted
19.7%
Gross Margin
30
%
Segment-Weighted
19.0%
Liquidity
30
%
Operating Cash Flow
$0
A26 Sales Mix
10
%
Charge-outs
35.0%
2020 AI design features include:
Continuing to use Market Share and Liquidity metrics.
Replacing the Cost metric with a Gross Margin metric.
Replacing the Uptime metric with an A26 Sales Mix metric.
Continuing the use of the adjusted EBITDA multiplier and an individual performance factor.
The final payout as a percent of target will be calculated based upon level of attainment of the performance metrics multiplied by the adjusted EBITDA multiplier and the individual performance factor. Payout levels will be interpolated on a straight line basis between threshold, target, and distinguished levels.
Long-term Incentives or “LTI”
Our objectives for including long-term incentives as part of our executive officer’s total compensation package include:
Aligning NEO and stockholder interests by tying compensation to share price appreciation.
Building long-term stockholder value.
Cultivating stock ownership.
LTI awards are governed by the 2013 PIP, which is an omnibus plan that allows for various awards such as cash, time and performance based stock options, stock appreciation rights, time and performance-based RSUs, restricted cash units (“RCUs”), premium share units ("PSUs"), deferred share units ("DSUs") and performance shares.
The Compensation Committee approved LTI awards under the 2013 PIP for 2019 for eligible plan participants in February 2019. LTI awards granted to NEOs in 2019 were comprised of performance-based RCUs, based on adjusted EBITDA and revenue growth goals, time-based RSUs (share settled), and time-based stock options as indicated in the following table. The value of each NEO’s LTI awards was split 50% in RCUs, 30% in RSUs and 20% in stock options.

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EXECUTIVE COMPENSATION

Target Payout
 
 
3 Year Cliff Vesting
 
 
 
 
 
 
3 Year Cliff Vesting
 
Vest ratably on an annual basis over 3 years
 
 
 
 
 
 
Performance-Based RCUs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
25%
Adjusted
EBITDA
+
25%
Revenue
Growth
 
x
TSR
Multiplier*
 
+
30%
Time Based
RSUs
+
20%
Stock
Options
=
100%
Target
Payout
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Performance Cycle
2019-2021
 
 
 
 
 
FY19
Goal
 
FY20
Goal
 
FY21
Goal
Cumulative Goal
 
 
 
 
 
 
 
 
4 Distinct Goals
11.0
%
(5.0
)%
9.0%
14.9%
 
 
 
 
 
 
 
 
(3 Annual + 1 Cumulative) each worth 50% of the Revenue Growth goal
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3-Year Cumulative Goal
 
 
 
 
 
 
 
 
 
 
 
$2.450B
 
 
 
 
 
 
 
 
Cumulative
Adj. EBITDA
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
p44_targetpayout3yrebitda.jpg
 
 
 
 
 
 
 
 
*
We have a 3-Year Relative Total Shareholder Return (TSR) “wrapper” around the annual goals in order to measure Navistar’s stock price against our proxy peer group and any payouts are subject to the TSR multiplier which can decrease the payment by as much as 25% or increase the payment by as much as 25%, depending on the value of the TSR at the end of fiscal year 2021.
2019 Long-Term Incentive Awards
The following table summarizes our 2019 long-term incentive grant for our NEOs.
NEO
Performance-
Based RCUs

Time-Based Restricted Stock Units
Time-Based Stock Options
Targeted
Economic Value

Troy A. Clarke(1)
$
2,750,000

46,955
66,747
$
5,500,000

Walter G. Borst(1)
$
1,050,000

17,958
30,900
$
2,205,000

Persio V. Lisboa(1)
$
900,000

15,393
26,485
$
1,890,000

William V. McMenamin(1)
$
250,000

4,275
7,356
$
525,000

Curt A. Kramer(1)
$
375,000

6,413
11,035
$
787,500

(1) 
Long-term incentive awards for all NEOs were granted in February 2019 with the exception of Mr. Clarke. Mr. Clarke’s long-term incentive awards were granted in April 2019.

2020 Proxy Statement
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EXECUTIVE COMPENSATION

2017 Long Term Incentive - Performance Awards
The table below provides details on the performance awards our NEOs were granted in 2017 and the actual amounts earned for the performance period ending October 31, 2019 upon the attainment of certain performance metrics, as approved by the Compensation Committee in December 2019. The Performance-Based RCU payments will be made in February of 2020 with the exception of Mr. Kramer's RCU payment which will be made in March of 2020. The right to the awards are subject to service conditions being met.
TARGET
 
 
 
 
 
 
 
 
 
 
 
 
80%
Adjusted EBITDA
+
20%
Market Share
 
×
 
TSR Multiplier
=
 
Performance Cash Payout
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ADJUSTED EBITDA GOAL
 
MARKET SHARE GOALS
 
 
 
Threshold
(50%)
Target
(100%)
Distinguished
(125%)
 
Threshold
(50%)
Target
(100%)
Distinguished
(125%)
 
 
2019
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2019
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2018
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2018
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2017
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2017
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Results:
2017 – 2019
Weighted Total
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*
Values shown reflect the new segment-weighted methodology for 2019.
RESULTS
 
 
 
 
 
 
 
 
 
 
 
 
85.8%
Adjusted EBITDA
(80% x 107.25% = 85.8%)
+
20.2%
Market Share
(20% x 101% = 20.2%)
 
×
 
0.97
TSR Multiplier
=
 
102.8%
Performance Cash Payout
 
 
 
 
 
 
 
 
 
 
 
In addition to the performance-based RCU grant, in fiscal year 2017 Mr. Kramer received a time-based RCU grant consistent with his organizational level prior to his promotional change in 2017. These time-based RCUs vest ratably over 3 years and are subject to continued employment.  If these conditions are met, the time-based RCUs will be paid no later than February 2020.

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EXECUTIVE COMPENSATION

Our Decision-Making Process
The Compensation Committee has the responsibility to approve and monitor all compensation and benefit programs for our executive officers (for purposes of this proxy statement, the term "executive officer" means the senior leadership of the Company, including Section 16 Officers and NEOs) and makes recommendations for the compensation and benefits of our CEO, which is then reviewed and approved by the independent members of our Board. As part of its responsibilities, the Compensation Committee reviews the performance of our executive officers and approves compensation based on the overall successes of the individual executive and the organization as a whole. The Compensation Committee is governed by a written charter, a copy of which is available on the Investor Relations section of our website at http://www.navistar.com/navistar/investors/corporategovernance/documents.
SUMMARY OF THE EXECUTIVE SALARY PLANNING APPROVAL PROCESS
1
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2
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3
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The CEO makes base salary recommendations for the NEOs and most Section 16 Officers to the Compensation Committee. The CEO does not participate in decisions regarding his own compensation.
The Compensation Committee reviews the salary for the CEO and reviews, approves and/or adjusts the CEO’s base salary recommendations for the other NEOs and Section 16 Officers included in the CEO’s recommendation.
The Compensation Committee then recommends, and the independent members of the Board approve or adjust, the salary recommendation for the CEO.
Compensation Consultant
The Compensation Committee engages the services of an independent compensation consultant to assist with decisions regarding executive compensation plans and programs. The independent compensation consultant reports solely to the Compensation Committee. The Compensation Committee uses Pay Governance, LLC to render the following services:
Attend committee meetings at the request of the Compensation Committee
Advise the Compensation Committee on market trends, regulatory issues and developments and how these could impact our executive compensation programs
Review the compensation strategy and executive compensation programs for alignment with our strategic business objectives
Advise on the design of executive compensation programs to ensure the linkage between pay and performance;
Provide market data analysis to the Company
Advise the Compensation Committee and the Board on setting the CEO pay
Review the annual compensation of the other NEOs as recommended by the CEO
Perform such other activities as requested by the Compensation Committee.
The Compensation Committee has the sole authority to approve the terms of Pay Governance's engagement.
Pay Governance did not provide any services to the Company other than executive compensation consulting services during 2019.
In compliance with SEC and NYSE requirements regarding the independence of compensation consultants, Pay Governance provided the Compensation Committee with information regarding any personal, financial, or business relationships between Pay Governance and the Company, its management, or the members of the Compensation Committee that could impair Pay Governance’s independence or present a conflict of interest. Based on its review of this information, the Compensation Committee determined that there were no relationships that impair the independence or create a material conflict of interest between Pay Governance, the Company and the partners, consultants, and employees who service the Compensation Committee on executive compensation matters and governance issues.

2020 Proxy Statement
45



EXECUTIVE COMPENSATION

Compensation Peer Group
Annually, we conduct a peer company review to determine whether our comparator companies continue to meet our criteria for inclusion. For 2019, management recommended, and the Compensation Committee approved, the following changes to our peer group. We removed Masco Corporation from our peer group and added three companies (Adient plc, American Axle & Manufacturing Holdings, Inc. and Delphi Technologies PLC) to our peer group. Masco Corporation was removed because it no longer met Navistar’s peer industry criteria as a non-automotive/heavy truck operation. Adient plc, American Axle & Manufacturing Holdings, Inc. and Delphi Technologies PLC were added because these entities meet several of our criteria specific to industry, company type/geography, size, and qualitative factors.
We continue to select companies similar in overall size to Navistar with consideration being given to companies that meet one or more of the following criteria:
Included in the Aerospace and Defense, Construction Machinery and Heavy Trucks, Industrial Machinery, Auto Parts and Equipment, Tires and Rubber or Agricultural and Farm Machinery sub-industries (i.e., primary industries), as defined by the S&P Global Industry Classification Standard (“GICS”)
Headquarters or primary operations are in the U.S. (preference for companies headquartered in the Midwest)
Names Navistar as a peer group company
Similar revenues
Was included in the prior year’s peer group
Navistar’s 2019 peer group consists of the following 22 companies:
3-Year Average Revenues(1) 
($ mil.)
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(1) 
Average of trailing 12-month revenues, as of August 31, 2016, 2017, and 2018 (excluding American Axle, for which trailing 12-month revenues are as of August 2018 only. 2016 and 2017 data were not applicable, because trailing 12 month revenues for such periods were before American Axle's acquisition of Metaldyne and did not provide meaningful results as such trailing 12-month revenues skewed the 3-year average for American Axle much lower).

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EXECUTIVE COMPENSATION

TRAILING 12 MONTHS ASSETS
($ mil.)
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TRAILING 12 MONTHS ENTERPRISE VALUE
($ mil.)
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With respect to the above table:
All financial and market data are taken from Standard & Poor’s Capital IQ database.
All data is as of August 31, 2018 unless otherwise noted.
All data shown as reviewed by the Compensation Committee at the time of the peer group approval.
External Market Compensation Review
The Compensation Committee reviews various components of our executive compensation program to ensure that (i) pay opportunities are competitive with the external market, (ii) there is an appropriate link between performance and pay, and (iii) the program supports our stated compensation philosophy.

2020 Proxy Statement
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EXECUTIVE COMPENSATION

In 2019 our Compensation Committee reviewed total compensation levels and mix relative to the above-described peer group and broader industry surveys, including Aon’s 2019 U.S. Total Compensation Measurement (‘‘TCM’’) Executive & Senior Mgmt. Survey and Willis Towers Watson's 2019 U.S. General Industry Executive Survey. Survey market pay data has been size-adjusted to Navistar's revenues (corporate and unit-specific) and updated to January 1, 2020.
We maintain our compensation philosophy of targeting the 50th percentile (market median) for total direct compensation (base salary plus target bonus plus the approved grant value of long-term incentive), using a combination of peer group and market surveys. We consider an NEO to be within the competitive range if the NEO's total direct compensation is within 80 to 120 percent of the market median. Under special circumstances, when we are recruiting for critical roles, we may target an NEO's total direct compensation to a higher level.
Compensation Risk
The Company performed, and the Compensation Committee reviewed, a risk assessment to determine whether our compensation policies, practices, plans and programs were ‘‘reasonably likely to have a materially adverse effect’’ on the Company. Approximately thirty compensation-related topics were reviewed during 2019, including but not limited to, programs governed by the 2013 PIP. A matrix was created for management's use that summarized the program reviewed, as well as associated mitigating factors. Management discussed the analysis internally and with our compensation consultant and discussed final results with the Compensation Committee. The Company and the Compensation Committee believe that the following are factors that mitigate the likelihood of excessive risk taking.
General Description
    Compensation Committee approval of overall compensation philosophy and plan design
    Compensation mix of base salary, short-term and long-term incentives
    Market competitive analysis conducted using the comparator group
    Market analysis based on individual job
Executive Stock
Ownership Plan
    Aligns executives' interests with stockholders
    Ownership requirement of 1x base pay for executives, 3x base pay for senior executives and 6x base pay for CEO
Holding periods for at least 1 year following the vesting date of equity awards; even after ownership requirements have been attained
2019 Annual
Incentive Plan
    Design focused on four key financial performance metrics enabling our strategy and driving results for our employees, customers and stockholders
Individual Performance Factor applicable to only a small percentage of employees
2019 Long-Term
Incentive Awards
    Performance-based equity awards are made at the discretion of the Compensation Committee and are intended to focus participants on the long-term growth of the Company.
    LTI awards are calculated based on actual grant date values.
    LTI values are primarily based upon external market data.
Executive Severance
Agreements (“ESAs”)
    The Change in Control definition in our ESAs excludes funds affiliated with designated board members.
    Good Reason in our ESAs requires a decrease in the executive’s organizational level or a change to his or her reporting structure that requires the executive to report to a supervisor whose organizational level is below the executive’s current organizational level.
    Agreement period post Change in Control is eighteen months.
The Change in Control agreement requires a double trigger.
    The agreement is automatically extended annually for successive one-year periods starting on the first anniversary of the Effective Date and on each subsequent anniversary of the Effective Date.
Other Controls and
Procedures
    Capital expenditure approval policies and procedures that control the possibility of engaging in unintended risk
    Sarbanes Oxley / Internal Controls procedures and processes adopted by the Company
    Claw-back policy that requires the repayment of short-and long-term incentive-based compensation as a result of a financial restatement or intentional misconduct

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EXECUTIVE COMPENSATION

Other Compensation
Executive Benefits and Perquisites
The following table summarizes the executive benefits and perquisites we provide to our NEOs:
NEO
Life Insurance(1)
Executive Flexible
Perquisite Program
(2)
Pension/Retirement/401(k) Plans(3)
RAP
SRAP
SERP
Troy A. Clarke
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Walter G. Borst
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Persio V. Lisboa
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William V. McMenamin
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Curt A. Kramer
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(1) 
Life Insurance. We provide our executives Company-paid life insurance equal to five times base salary. The beneficiary of each individual policy is as designated by the executive.
(2) 
Executive Flexible Perquisites. This provides a cash stipend to each of our NEOs, the amount of which varies by executive, based upon the executive’s organization level and is set forth in the table below. In addition, a spouse may accompany an NEO while he or she is traveling on Company business. Although this occurs on a limited basis, the spouse’s travel expense is included in taxable compensation of the NEO.
(3) 
Pension/Retirement/401(k) Plans
We began transitioning to defined contribution/401(k) plans as the primary retirement income program for all non-represented employees hired on or after January 1, 1996. These plans are as follows:
Retirement Accumulation Plan (‘‘RAP’’). This is our tax-qualified defined contribution/401(k) plan for salaried employees. Our NEOs receive age-weighted contributions and/or matching contributions depending on their eligibility for retiree medical coverage.
Supplemental Retirement Accumulation Plan (‘‘SRAP’’). This is our non-qualified deferred compensation plan designed primarily to restore the age-weighted contributions that participants would otherwise have received if the IRC compensation limit had not applied to the RAP.
Supplemental Executive Retirement Plan (‘‘SERP’’). This is designed as a pension supplement to attract and retain key executives. The SERP is unfunded and is not qualified for tax purposes.
Additional information on the pension/401(k) plans are provided in the Pension Benefits, Non-Qualified Defined Contribution and Other Non-Qualified Deferred Compensation sections of this proxy statement.
2019 Executive Perquisite
Named Executive Officer
Annual Flexible
Perquisite Payment
($)
Perquisite Payment
($)

 
Total Perquisite Payment
($)
Troy A. Clarke
46,000