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0000950144-05-003243.txt : 20050330
0000950144-05-003243.hdr.sgml : 20050330
20050330111123
ACCESSION NUMBER: 0000950144-05-003243
CONFORMED SUBMISSION TYPE: DEF 14A
PUBLIC DOCUMENT COUNT: 14
CONFORMED PERIOD OF REPORT: 20050506
FILED AS OF DATE: 20050330
DATE AS OF CHANGE: 20050330
EFFECTIVENESS DATE: 20050330
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: RYDER SYSTEM INC
CENTRAL INDEX KEY: 0000085961
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-AUTO RENTAL & LEASING (NO DRIVERS) [7510]
IRS NUMBER: 590739250
STATE OF INCORPORATION: FL
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: DEF 14A
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-04364
FILM NUMBER: 05712200
BUSINESS ADDRESS:
STREET 1: 3600 NW 82ND AVE
CITY: MIAMI
STATE: FL
ZIP: 33166
BUSINESS PHONE: 3055003726
MAIL ADDRESS:
STREET 1: 3600 NW 82 AVENUE
CITY: MIAMI
STATE: FL
ZIP: 33166
DEF 14A
1
g93895def14a.htm
RYDER SYSTEM, INC.
Ryder System, Inc.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant x
Filed by a Party other than the
Registrant o
Check the appropriate box:
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o Preliminary
Proxy Statement |
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o Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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x Definitive Proxy
Statement |
o Definitive
Additional Materials |
o Soliciting
Material under Rule 14a-12 |
Ryder System, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
o Fee computed on
table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to which transaction applies: |
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(2) |
Aggregate number of securities to which transaction applies: |
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(3) |
Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was
determined): |
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(4) |
Proposed maximum aggregate value of transaction: |
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Fee paid previously with preliminary materials: |
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Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing. |
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(1) |
Amount Previously Paid: |
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(2) |
Form, Schedule or Registration Statement No.: |
Ryder System, Inc.
11690 N.W. 105th Street
Miami, Florida 33178
NOTICE OF 2005 ANNUAL MEETING OF SHAREHOLDERS
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Time:
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11:00 a.m. |
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Date:
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Friday, May 6, 2005 |
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Place:
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Hilton Miami Airport and Towers
5101 Blue Lagoon Drive
Miami, Florida 33126 |
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Purpose:
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To elect two directors. |
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To ratify the appointment of KPMG LLP as the Companys
independent auditors. |
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3. |
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To approve the Ryder System, Inc. 2005 Equity Compensation Plan. |
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4. |
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To approve an amendment to the Ryder System, Inc. Stock Purchase
Plan for Employees to increase the number of shares issuable
under the Plan by 1,000,000. |
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5. |
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To consider any other business that is properly presented at the
meeting. |
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Who May Vote:
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You may vote if you were a record owner of Ryder common stock at
the close of business on March 11, 2005. |
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Proxy Voting:
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Your vote is important. You may vote by signing, dating and
returning your proxy card in the enclosed proxy envelope, by
calling the toll free number on the proxy card or via the
Internet using the instructions on the proxy card. |
By order of the Board of Directors
Robert D. Fatovic
Executive Vice President, General Counsel and Corporate Secretary
Miami, Florida
March 30, 2005
TABLE OF CONTENTS
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RYDER SYSTEM, INC.
11690 N.W. 105th STREET
MIAMI, FLORIDA 33178
PROXY STATEMENT
INFORMATION ABOUT OUR ANNUAL MEETING
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Q: |
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Why am I receiving this proxy statement? |
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You are receiving this proxy statement because you own shares of
Ryder common stock that entitle you to vote at the 2005 Annual
Meeting of Shareholders. The Board of Directors is soliciting
proxies from shareholders who wish to vote at the meeting. By
use of a proxy, you can vote even if you do not attend the
meeting. This proxy statement describes the matters on which you
may vote and provides information on those matters so that you
can make an informed decision. The notice of annual meeting,
this proxy statement and the proxy card are being mailed to
shareholders on or about March 30, 2005. |
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When and where is the annual meeting? |
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We will hold the annual meeting on Friday, May 6, 2005, at
11:00 a.m. Eastern Daylight Time at Hilton Miami Airport
and Towers, 5101 Blue Lagoon Drive, Miami, Florida 33126. A map
with directions to the meeting can be found on the enclosed
proxy card. |
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What am I voting on? |
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You are voting on four proposals: |
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1. Election of two directors Lynn M. Martin and
Hansel E. Tookes II for a term of three years. |
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2. Ratification of appointment of KPMG LLP as the
Companys independent auditors. |
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3. Approval of the Ryder System, Inc. 2005 Equity
Compensation Plan. |
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4. Approval of an amendment to the Ryder System, Inc. Stock
Purchase Plan for Employees to increase the number of shares
issuable under the Plan by 1,000,000. |
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What are the voting recommendations of the Board of
Directors? |
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The Board recommends the following votes: |
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FOR election of each of the director nominees |
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FOR ratification of the appointment of KPMG LLP as
the Companys independent auditors |
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FOR approval of the Ryder System, Inc. 2005 Equity
Compensation Plan |
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FOR amendment to the Ryder System, Inc. Stock
Purchase Plan for Employees |
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Who can vote? |
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Those persons named on the Companys records as owners of
Ryder common stock at the close of business on March 11,
2005 are considered shareholders of record and are entitled to
one vote per share. |
1
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What shares are reflected on my proxy? |
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Your proxy reflects all shares owned by you at the close of
business on March 11, 2005. For participants in
Ryders 401(k) Plan, shares held in your account as of that
date are included. |
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How many shares are entitled to vote? |
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As of March 11, 2005, the record date for the annual
meeting, there were 64,249,449 shares of common stock
outstanding and entitled to vote. Each share is entitled to one
vote. |
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How many votes are needed for the proposals to pass? |
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The affirmative vote of the holders of at least a majority of
the total number of shares outstanding and entitled to vote, or
32,124,725 shares, is required for the election of each
director and for approval of each proposal to be presented at
the meeting. |
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What is a quorum? |
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A quorum is the minimum number of shares required to hold a
meeting. Under Ryders By-Laws, the holders of a majority
of the total number of shares outstanding and entitled to vote
at the meeting, or 32,124,725 shares, must be present in
person or represented by proxy for a quorum. Broker non-votes
and proxies received but marked as abstentions will be included
in the calculation of the number of votes considered to be
present at the meeting. |
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Who can attend the annual meeting? |
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Only shareholders and their guests are invited to attend the
meeting. To gain admittance, you must bring a form of personal
identification to the meeting, where your name will be verified
against our shareholder list. If a broker or other nominee holds
your shares and you plan to attend the meeting, you should bring
a recent brokerage statement showing your ownership of the
shares and a form of personal identification. |
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If I plan to attend the annual meeting, should I still vote
by proxy? |
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Yes. Casting your vote in advance does not affect your right to
attend the meeting. Written ballots will be available at the
annual meeting for shareholders of record. If you send in your
proxy card and also attend the meeting, you do not need to vote
again at the meeting unless you want to change your vote. |
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Beneficial shareholders who wish to vote in person must request
a proxy from the nominee and bring that proxy to the meeting. |
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Who pays the cost of this proxy solicitation? |
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The Company pays the cost of soliciting your proxy and
reimburses brokerage firms and others for forwarding proxy
materials to you. We have hired D.F. King & Co., Inc.,
a proxy solicitation firm, to assist with the distribution of
proxy materials and the solicitation of votes at an estimated
cost of $18,000, plus out-of-pocket expenses. In addition to
solicitation by mail, solicitations may also be made by personal
interview, letter, fax and telephone. |
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What is Householding? |
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The Securities and Exchange Commissions Householding rule
affects the delivery of the Companys annual disclosure
documents (such as annual reports, proxy statements and other
information statements) to shareholders. Under this rule, the
Company is allowed to deliver a single set of the Companys
annual report and proxy statement to multiple shareholders at a
shared address or household, unless a shareholder at that shared
address delivers contrary instructions to the Company through
its transfer agent, Equiserve Trust Company, N.A. Each
shareholder will continue to receive a separate proxy card or
voting instruction card even when a single set of materials is
sent to a shared address under the Householding program. The
Householding program is designed to reduce the expense to the
Company of sending multiple disclosure documents to the same
address. |
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If you are a registered shareholder and you want to request a
separate copy of this proxy statement or accompanying annual
report, you may contact the Companys Investor Relations
Department by calling (305) 500-4053, in writing at Ryder
System, Inc., Investor Relations Department, 11690 N.W. 105th
Street, Miami, Florida 33178, or by e-mail to
RyderforInvestors@ryder.com, and a copy will be promptly
sent to you. If you wish to receive separate documents in future
mailings, please contact Equiserve by calling
(800) 730-4001, in writing at Equiserve, P.O.
Box 43010, Providence, Rhode Island 02940-3010, or by
e-mail at shareholder-equiserve@equiserve.com. The
Companys 2004 annual report and this proxy statement are
also available through the Companys website,
www.ryder.com. |
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Two or more shareholders sharing an address can request delivery
of a single copy of annual disclosure documents if they are
receiving multiple copies by contacting Equiserve in the manner
set forth above. |
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If a broker or other nominee holds your shares, please contact
such holder directly to inquire about the possibility of
Householding. |
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How do I vote? |
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If you are a shareholder of record, you may vote on the
Internet, by telephone or by signing, dating and mailing your
proxy card. Detailed instructions for Internet and telephone
voting are set forth on the enclosed proxy card. |
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If your shares are held in Ryders 401(k) Plan, the
enclosed proxy will serve as a voting instruction for the
trustee of Ryders 401(k) Plan who will vote your shares as
you instruct. To allow sufficient time for the trustee to vote,
your voting instructions must be received by May 3, 2005.
If the trustee does not receive your instructions by that date,
the trustee will vote the shares you hold in the Ryder 401(k)
Plan in the same proportion as those shares in the Ryder 401(k)
Plan for which voting instructions were received. |
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If you are a beneficial shareholder, you must follow the voting
procedures of your broker, bank or trustee included with your
proxy materials. |
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Who tabulates the votes? |
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The Board has appointed Equiserve Trust Company, N.A. as the
independent Inspector of Election. Representatives of Equiserve
will count the votes. |
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Is my vote confidential? |
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Yes. The voting instructions of shareholders of record will only
be available to the Inspector of Election (Equiserve) and
proxy solicitor (D.F. King). Voting instructions for employee
benefit plans will only be available to the plans trustees
and the Inspector of Election. The voting instructions of
beneficial shareholders will only be available to the
shareholders bank, broker or trustee. Your voting records
will not be disclosed to the Company unless required by a legal
order, requested by you or cast in a contested election. |
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What is a shareholder of record? |
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You are a shareholder of record if you are registered as a
shareholder with the Companys transfer agent, Equiserve
Trust Company, N.A. |
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What if I am a shareholder of record and I abstain or
withhold authority to vote on a proposal? |
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If you sign and return your proxy card marked
abstain or withhold on any proposal,
your shares will not be voted on that proposal and will not be
counted as votes cast in the final tally of votes with regard to
that proposal. However, your shares will be counted for purposes
of determining whether a quorum is present. |
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What does discretionary authority mean for shareholders of
record? |
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If you sign and return your proxy card without making any
selections, the proxy committee named on the proxy card will
vote your shares for proposals 1 through 4. If other
matters come before the meeting (such matters having been
presented to the Company at least 45 days before the date
of this proxy statement), the proxy committee will have the
authority to vote on those matters for you at their discretion.
At this time, we are not aware of any matters that will come
before the meeting other than those disclosed in this proxy
statement. |
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What is a beneficial shareholder? |
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You are a beneficial shareholder if a brokerage firm, bank,
trustee or other agent (the nominee) holds your
shares. This is often called ownership in street
name, since your name does not appear anywhere in the
Companys records. |
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What if I am a beneficial shareholder and I do not give the
nominee voting instructions or I abstain or withhold authority
to vote? |
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If you are a beneficial shareholder and your broker holds your
shares in its name, the broker is permitted to vote your shares
on the election of directors and the ratification of the
appointment of KPMG LLP as the Companys independent
auditors even if the broker does not receive voting instructions
from you. Under New York Stock Exchange (NYSE) rules, your
broker may not vote your shares on the proposals relating to the
2005 Equity Compensation Plan and Stock Purchase Plan for
Employees absent instructions from you. Without your
instructions on these two proposals, your shares may not be
voted on those matters and will not be counted in determining
the number of shares necessary for approval. Shares represented
by such broker non-votes will, however, be counted
in determining whether there is a quorum. |
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If you sign and return a proxy card marked abstain
or withhold on a proposal, your shares will not be
voted on the proposal and will not be counted as votes cast in
the final tally of votes with regard to that proposal. |
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What does discretionary authority mean for beneficial
shareholders? |
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If you sign and return your proxy card without making any
selections, the shares may be voted for you by the nominee on
proposals 1 through 4. If other matters come before the meeting,
the nominee may vote on those matters for you, subject to the
NYSEs rules on the exercise of discretionary authority. |
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How do I change my vote? |
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A shareholder of record may revoke a proxy by giving written
notice to the Companys Corporate Secretary before the
meeting, by delivering a later-dated proxy (either in writing,
by telephone or over the Internet), or by voting in person at
the meeting. |
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If you are a beneficial shareholder, you may change your vote by
following the nominees procedures for revoking or changing
your proxy. |
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When are shareholder proposals for next years annual
meeting due? |
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To be considered for inclusion in next years proxy
statement, shareholder proposals must be delivered in writing to
the Company at 11690 N.W. 105th Street, Miami, Florida 33178,
Attention: Corporate Secretary, no later than November 28,
2005. |
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There are additional requirements under the Companys
By-Laws and the proxy rules to present a proposal, such as
continuing to own a minimum number of Ryder shares until the
annual meeting and appearing in person at the meeting to explain
your proposal. A copy of the Companys By-Laws can be
obtained from the Companys Corporate Secretary. The
By-Laws are also included in the Companys filings with the
Securities and Exchange Commission which are available on the
SECs website at www.sec.gov. |
5
ELECTION OF DIRECTORS
(Proposal 1)
Under Ryders By-Laws, directors are elected for three-year
terms, typically with one-third of the directors standing for
election in any given year. The three directors whose terms
expire at the 2005 Annual Meeting are Joseph L. Dionne, Lynn M.
Martin and Hansel E. Tookes II. Mr. Dionne is retiring
from the Board of Directors effective May 6, 2005, in
accordance with the Companys retirement policy for
directors. Ms. Martin and Mr. Tookes are nominated for
re-election at the 2005 Annual Meeting for a three-year term
that expires at the 2008 Annual Meeting, and have each consented
to serve if elected.
John M. Berra, Daniel H. Mudd and Gregory T. Swienton are
currently serving terms that expire at the 2006 Annual Meeting.
David I. Fuente, Eugene A. Renna, Abbie J. Smith and Christine
A. Varney are currently serving terms that expire at the 2007
Annual Meeting.
The principal occupation and certain other information about
each director and director nominee appears on the following
pages.
The Board of Directors recommends a vote FOR the
election of each of the director nominees.
6
NOMINEES FOR DIRECTOR
FOR A TERM OF OFFICE EXPIRING AT THE 2008 ANNUAL MEETING
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Lynn M. Martin, 65, served as Secretary of Labor under
President George Bush from 1991 to 1993. Ms. Martin
currently serves as Chairperson of Deloitte & Touche
LLPs Council for the Advancement of Women and as an
advisor to that firm. Ms. Martin is also the President of
Martin Hall Group LLC, a consulting firm. She is a regular
commentator, panelist, columnist and speaker on issues relating
to the changing global economic and political environment
Ms. Martin was the Davie Chair at the J.L. Kellogg
Graduate School of Management and a Fellow of the Kennedy School
Institute of Politics.
Ms. Martin was elected to the Board of Directors in August
1993 and is the Chair of the Corporate Governance and Nominating
Committee and a member of the Compensation Committee.
Ms. Martin serves on the Boards of Directors of The
Procter & Gamble Company, SBC Communications, Inc., The
Dreyfus Funds, Constellation Energy Group, Inc. and
Chicagos Lincoln Park Zoo. She is also a member of the
Council on Foreign Relations. |
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Hansel E. Tookes II, 57, retired from Raytheon
Company in December 2002. He joined Raytheon in September 1999
as President and Chief Operating Officer of Raytheon Aircraft
Company. He was appointed Chief Executive Officer in January
2000 and Chairman in August 2000. Mr. Tookes became
President of Raytheon International in May 2001. Prior to
joining Raytheon in 1999, Mr. Tookes had served as
President of Pratt & Whitneys Large Military
Engines Group since 1996. He joined Pratt &
Whitneys parent company, United Technologies Corporation
in 1980. Mr. Tookes was a Lieutenant Commander and military
pilot in the U.S. Navy and later served as a commercial
pilot with United Airlines.
Mr. Tookes was elected to the Board of Directors in
September 2002 and is the Chair of the Finance Committee and a
member of the Audit Committee.
Mr. Tookes serves on the Board of Directors of Corning
Incorporated. |
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DIRECTORS CONTINUING IN OFFICE
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John M. Berra, 57, is Executive Vice President of Emerson
Electric Company and President of Emerson Process Management, a
global leader in providing solutions to customers in process
control. Mr. Berra joined Emersons Rosemount division
as a marketing manager in 1976 and thereafter continued assuming
more prominent roles in the organization until 1997 when he was
named President of Emersons Fisher-Rosemount division (now
Emerson Process Management). Prior to joining Emerson,
Mr. Berra was an instrument and electrical engineer with
Monsanto Company.
Mr. Berra was elected to the Board of Directors in July
2003 and is a member of the Compensation Committee and the
Finance Committee.
Mr. Berra serves as an advisory director to the Board of
Directors of Emerson Electric Company. He also serves as
Chairman of the Fieldbus Foundation and is a past Chairman of
the Measurement, Control, and Automation Association. |
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7
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David I. Fuente, 59, served as Chairman and Chief
Executive Officer of Office Depot, Inc. from 1987, one year
after the company was founded, until he retired as its Chief
Executive Officer in June 2000 and as Chairman in December 2001.
Before joining Office Depot, Mr. Fuente served for eight
years at the Sherwin-Williams Company as President of its Paint
Stores Group. Before joining Sherwin-Williams, he was Director
of Marketing at Gould, Inc.
Mr. Fuente was elected to the Board of Directors in May
1998 and is the Chair of the Compensation Committee and a member
of the Finance Committee.
Mr. Fuente serves on the Boards of Directors of Office
Depot, Inc. and Dicks Sporting Goods, Inc. |
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Daniel H. Mudd, 46, is Vice Chairman and Chief Operating
Officer of Fannie Mae, the nations largest financer of
home mortgages, and is currently serving as that companys
Interim Chief Executive Officer. As Chief Operating Officer,
Mr. Mudd is responsible for originations, marketing,
operations, systems, local outreach and administration. Prior to
joining Fannie Mae in February 2000, Mr. Mudd was President
and Chief Executive Officer of GE Capital, Japan. During his
career at GE Capital, Mr. Mudd served in Business
Development, International Financing and European Fleet
Services. He served as President of GE Capital Asia-Pacific from
1996 to 1999. Prior to his tenure at GE Capital, Mr. Mudd
held positions in management consulting and financial services
with Xerox Corporation, Ayers Whitmore and Company, and the
World Bank.
Mr. Mudd was elected to the Board of Directors in July 2002
and is a member of the Audit Committee and the Corporate
Governance and Nominating Committee.
Mr. Mudd serves on the Boards of Directors of Fannie Mae,
Oriental and General Fund, Ltd., the Fannie Mae Foundation, the
National Building Museum, Hampton University and St.
Patricks School. He is also a member of the Council on
Foreign Relations. |
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Eugene A. Renna, 60, retired from ExxonMobil Corporation
in January 2002 where he was an Executive Vice President and a
member of its Board of Directors. He was President and Chief
Operating Officer of Mobil Corporation, and a member of its
Board of Directors, until the time of its merger with Exxon
Corporation in 1999. As President and Chief Operating Officer of
Mobil, Mr. Renna was responsible for overseeing all of its
global exploration and production, marketing and refining, and
chemicals and technology business activities.
Mr. Rennas career with Mobil began in 1968 and
included a range of senior management roles such as:
responsibility for all marketing and refining operations in the
Pacific Rim, Africa and Latin America; Executive Vice President
of International Marketing and Refining Division; Vice President
of Planning and Economics; President of Mobils worldwide
Marketing and Refining Division; and Executive Vice President
and Director of Mobil.
Mr. Renna was elected to the Board of Directors in July
2002 and is the Chair of the Audit Committee and a member of the
Finance Committee.
Mr. Renna serves on the Board of Directors of Fortune
Brands, Inc. |
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8
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Abbie J. Smith, 51, is the Boris and Irene Stern
Professor of Accounting at the Graduate School of Business of
the University of Chicago. She joined their faculty in 1980 upon
completion of her Ph.D. at Cornell University. The primary focus
of her research is corporate restructuring, transparency, and
corporate governance. Professor Smith is a co-editor of the
Journal of Accounting Research.
Ms. Smith was elected to the Board of Directors in July
2003 and is a member of the Audit Committee and the Finance
Committee.
Ms. Smith serves on the Boards of Directors of HNI
Industries Inc., DFA Investment Dimensions Group Inc. and
Dimensional Investment Group Inc. |
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Gregory T. Swienton, 55, was appointed Chairman of Ryder
System, Inc. in May 2002 having been named Chief Executive
Officer in November 2000. Mr. Swienton joined Ryder as
President and Chief Operating Officer in June 1999. Before
joining Ryder, Mr. Swienton was Senior Vice
President-Growth Initiatives of Burlington Northern
Santa Fe Corporation (BNSF). Prior to that he
was BNSFs Senior Vice President-Coal and Agricultural
Commodities Business Unit and previously had been Senior Vice
President of its Industrial and Consumer Units. He joined the
former Burlington Northern Railroad in June 1994 as Executive
Vice President-Intermodal Business Unit. Prior to joining
Burlington Northern, Mr. Swienton was Executive
Director-Europe and Africa of DHL Worldwide Express in Brussels,
Belgium from 1991 to 1994, and prior to that he was DHLs
Managing Director-Western and Eastern Europe from 1988 to 1990,
also located in Brussels. For the five years prior to these
assignments, Mr. Swienton was Regional Vice President of
DHL Airways, Inc. in the United States. From 1971 to 1982,
Mr. Swienton held various national account, sales and
marketing positions with AT&T and Illinois Bell Telephone
Company.
Mr. Swienton was elected to the Board of Directors in June
1999.
Mr. Swienton serves on the Board of Directors of Harris
Corporation, and is on the Board of Trustees of St. Thomas
University in Miami. |
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Christine A. Varney, 49, is a Partner in the law firm of
Hogan & Hartson LLP, which she rejoined in 1997 after
five years in government service. She leads the Internet Law
practice group for the firm. Ms. Varney served as a Federal
Trade Commissioner from 1994 to 1997 and as a Senior White House
Advisor to the President from 1993 to 1994. She also served as
Chief Counsel to the Presidents Campaign in 1992 and as
General Counsel to the Democratic National Committee from 1989
to 1992. Prior to her government service, Ms. Varney
practiced law with the firms of Pierson, Semmes &
Finley (1986 to 1988) and Surrey & Morse (1984 to
1986).
Ms. Varney was elected to the Board of Directors in
February 1998 and is a member of the Compensation Committee and
the Corporate Governance and Nominating Committee. |
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9
CORPORATE GOVERNANCE
The Company maintains a Corporate Governance page on its website
at www.ryder.com which includes information regarding the
Companys corporate governance practices including the
Companys Corporate Governance Guidelines, Principles of
Business Conduct and Board Committee charters. The Corporate
Governance Guidelines set forth the Companys governance
principles relating to, among other things, director
independence; qualifications and responsibilities; Board
structure; director compensation; management succession; and
periodic performance evaluation of the Board. The Principles of
Business Conduct apply to officers, employees and directors of
the Company and cover all areas of professional conduct
including conflicts of interest, confidentiality and compliance
with law. The Principles of Business Conduct include a Finance
Code of Ethics applicable to the Companys Chief Executive
Officer, Chief Financial Officer, controller and senior
financial management. Any changes to these documents and any
waivers granted by the Company with respect to its Finance Code
of Ethics will be posted on the Companys website.
BOARD OF DIRECTORS
Director Independence
It is the Companys policy that a substantial majority of
the members of its Board of Directors and all of the members of
the Companys Audit Committee, Compensation Committee,
Corporate Governance and Nominating Committee and Finance
Committee qualify as independent under the independence
standards set forth in the NYSE corporate governance listing
standards and in the Companys By-Laws. In addition, no
director will be considered independent if he or she has a
material relationship with the Company.
Pursuant to the Companys Corporate Governance Guidelines,
the Board undertook its annual review of director independence
in February 2005. During this review, the Board considered any
transactions and relationships between each director and any
member of his or her immediate family and the Company or members
of the Companys senior management, and all other relevant
facts and circumstances, including each directors
commercial, banking, consulting, legal, accounting, charitable
and family relationships. Based on this review, the Board has
determined that each of the following directors (which together
constitute all of the members of the Board other than
Mr. Swienton, the Companys Chief Executive Officer)
is independent: John M. Berra, Joseph L. Dionne, David I.
Fuente, Lynn M. Martin, Daniel H. Mudd, Eugene A. Renna, Abbie
J. Smith, Hansel E. Tookes II and Christine A. Varney.
Communications with the Board
Shareholders and other interested parties can communicate with
the Companys independent directors as a group on the
Corporate Governance page of the Companys website at
www.ryder.com, or by mailing their communication to
Independent Directors, c/o Corporate Secretary, Ryder
System, Inc., 11690 N.W. 105th Street, Miami, Florida 33178. Any
communications received from interested parties in the manner
described above will be collected and organized by the
Companys Corporate Secretary and will be periodically, but
in any event prior to each regularly-scheduled Board meeting,
reported and/or delivered to the Companys independent
directors. The Corporate Secretary will not forward spam, junk
mail, mass mailings, service complaints or inquiries, job
inquiries, surveys, business solicitations or advertisements, or
patently offensive or otherwise inappropriate materials to the
Board. Correspondence relating to certain of these matters such
as service issues may be distributed internally within the
Company for review and possible response. The procedures for
communicating with the Companys independent directors as a
group are available on the Corporate Governance page of the
Companys website at www.ryder.com.
The Companys Audit Committee has established procedures
for the receipt, retention and treatment of complaints regarding
questionable accounting, internal control, financial
improprieties or auditing matters. Any of the Companys
employees or members of the general public may confidentially
communicate concerns about any of these matters to any
supervisor or manager, the Group Director of Internal Audit, the
Vice President, Deputy General Counsel-Global Compliance, Labor
and Employment, or on an anonymous basis by way of a toll-free
hotline number, ethics@ryder.com, or audit@ryder.com. All of the
reporting mechanisms are publicized on the Companys
website, in its Principles of Business Conduct and through
wallet cards, brochures and location posters. Upon receipt of a
complaint or concern, a determination will be made whether it
pertains to accounting, internal control or auditing matters and
if it does, it will be handled in accordance with the procedures
established by the Audit Committee.
10
Board Meetings
The Board of Directors held six meetings in 2004. Each of the
directors attended 75% or more of the aggregate number of
meetings of the Board and Committees on which the director
served in 2004. The Companys independent directors meet in
executive session without management present as part of each
regularly-scheduled Board meeting. The Chair of the
Companys Corporate Governance and Nominating Committee
presides over these executive Board sessions.
The Company expects each of its directors to attend the
Companys annual meeting of shareholders. Because the Board
of Directors holds one of its regular meetings in conjunction
with the Companys annual meeting of shareholders, unless
one or more members of the Board are unable to attend, all of
the members of the Board are present for the annual meeting. All
of the directors attended the 2004 Annual Meeting of
Shareholders.
BOARD COMMITTEES
The Board has four standing committees Audit,
Compensation, Finance and Corporate Governance and Nominating.
All of the Committees are composed entirely of independent
directors. The Company has adopted written charters for each of
the Committees that comply with the NYSEs corporate
governance listing standards and applicable provisions of the
Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) and SEC rules. The
Committee charters set forth each committees
responsibilities, and provide for a periodic review of the
charter and an annual evaluation of the committees
performance. The charters grant each committee the authority to
obtain the advice and assistance of, and receive appropriate
funding from the Company for, outside legal, accounting or other
advisors as the committee deems necessary to fulfill its
obligations. The Committee charters are available on the
Corporate Governance page of the Companys website at
www.ryder.com. Following is information regarding the
committees membership, responsibilities and meetings.
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Audit Committee
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Members:
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Eugene A. Renna (Chair)
Joseph L. Dionne
Daniel H. Mudd
Abbie J. Smith
Hansel E. Tookes II |
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Number of Meetings in 2004:
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13 |
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Responsibilities:
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|
The Audit Committee is responsible for appointing, overseeing
and determining the compensation and independence of the
Companys independent auditors. The Committee approves the
scope of the annual audit and the related audit fees as well as
the scope of internal audit procedures. The Committee reviews
audit results, financial disclosure and earnings guidance and
reviews risks that may have a significant impact on the
Companys financial statements. The Committee is also
responsible for overseeing investigations into accounting and
financial complaints. |
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|
In addition to the independence standards applicable to all
Board members, rules issued by the SEC pursuant to
Sarbanes-Oxley require that all members of the Companys
Audit Committee meet additional independence standards. The
Board undertook a review of the independence of Audit Committee
members and based on this review, the Board determined that each
member of the Audit Committee meets the enhanced independence
standards for audit committee members required by the SEC. |
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Each member of the Audit Committee is financially literate,
knowledgeable and qualified to review financial statements. In
addition, all of the members of the Audit Committee qualify as
audit committee financial experts under SEC rules
and have accounting and related financial management expertise
within the meaning of the NYSEs corporate governance
listing standards. |
11
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Compensation Committee |
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Members:
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David I. Fuente (Chair)
John M. Berra
Lynn M. Martin
Christine A. Varney |
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|
Number of Meetings in 2004:
|
|
5 |
|
|
Responsibilities:
|
|
The Compensation Committee is responsible for evaluating the
CEOs performance and recommending to the independent
directors, the CEOs compensation. The Committee approves
and recommends the appointment of new officers. The Committee
approves the compensation (including the stock grants and
incentive plan payouts) of senior management and recommends the
compensation of non-management directors. The Committee is also
responsible for approving changes to, and recommending the
adoption of, benefit, compensation and stock-related plans. |
Corporate Governance and Nominating Committee |
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Member:
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Lynn M. Martin (Chair)
Joseph L. Dionne
Daniel H. Mudd
Christine A. Varney |
|
|
Number of Meetings in 2004:
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5 |
|
|
Responsibilities:
|
|
The Company is responsible for recommending criteria for Board
membership and evaluating and recommending nominees for director
(including nominees recommended by shareholders that are
submitted in writing to the Companys Corporate Secretary
in accordance with the Companys By-Laws). The Committee
recommends the size, structure, composition and functions of
Board Committees, and reviews and recommends changes to the
committee charters. The Committee oversees the Board evaluation
process, and reviews and recommends changes to the
Companys Corporate Governance Guidelines and Principles of
Business Conduct. The Committee is also responsible for
identifying and analyzing trends in public policy, public
affairs and corporate responsibility. |
Finance Committee |
|
|
Member:
|
|
Hansel E. Tookes II (Chair)
John M. Berra
David I. Fuente
Eugene A. Renna
Abbie J. Smith |
|
|
Number of Meetings in 2004:
|
|
6 |
|
|
Responsibilities:
|
|
The Committee is responsible for reviewing the Companys
overall financial goals, position, arrangements and
requirements. The Committee reviews, approves and recommends
capital expenditures, issuances of debt and equity securities,
dividend policy and pension contributions. The Committee is also
responsible for reviewing the Companys relationships with
rating agencies, banks and analysts, and reviewing and assessing
the Companys risk management policies and procedures and
tax planning strategy. |
12
NOMINATION OF DIRECTORS
The Corporate Governance and Nominating Committee is responsible
for identifying qualified individuals to serve as directors,
reviewing the qualifications of director candidates, including
those recommended by the Companys shareholders pursuant to
its By-Laws, and recommending to the Board the nominees to be
proposed by the Board for election as directors at the
Companys annual meeting of shareholders.
In identifying individuals to nominate for election to the
Companys Board, the Committee seeks candidates that:
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have a high level of personal integrity and exercise sound
business judgment; |
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are highly accomplished in his or her field, with superior
credentials and recognition and have a reputation, both personal
and professional, consistent with the image and reputation of
the Company; |
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have relevant expertise and experience, and are able to offer
advice and guidance to the Companys senior management; |
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have an understanding of, and concern for, the interests of the
Companys shareholders; and |
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have sufficient time to devote to fulfilling his or her
obligations as a director. |
The Committee will seek to identify individuals that would
qualify as independent under the applicable NYSE listing
standards and that are independent of any particular
constituency. The Committee may, based on the composition of the
Board, seek individuals that have specialized skills or
expertise, experience as a leader of another public company or
major complex organization, or relevant industry experience. In
addition, the Committee will attempt to select candidates that
will assist in making the Board a diverse body in terms of age,
gender, ethnic background and professional experience.
Generally, the Committee identifies individuals for service on
the Companys Board through experienced director search
firms that are paid to use their extensive resources and
networks to find qualified individuals that meet the minimum
qualifications established by the Board. These search firms
create a comprehensive record of a candidates background,
business and professional experience and other information that
would be relevant to the Committee in determining a
candidates capabilities and suitability. The Committee
will also consider qualified candidates that are proposed by
other members of the Board, the Companys senior management
and, to the extent submitted in accordance with the procedures
described below, the Companys shareholders. The Committee
will not consider a director candidate unless it has received a
document evidencing the candidates willingness to serve on
the Board if elected and sufficient information relating to the
candidate to determine whether he or she meets the minimum
qualifications established by the Board.
If a shareholder would like to recommend a director candidate to
the Committee, they must deliver to the Committee the same
information and statement of willingness to serve described
above. In addition, the recommending shareholder must deliver to
the Committee a representation that the shareholder owns shares
in the Company and intends to continue holding those shares
until the relevant annual meeting of shareholders as well as a
representation regarding the shareholders direct and
indirect relationship to the suggested candidate. This
information should be delivered to the Company at
11690 N.W. 105th Street, Miami, Florida 33178,
Attention: Corporate Secretary, for delivery to the
Committee on or before the date on which shareholder proposals
are required to be delivered to the Company in order to be
included in the proxy statement for the next annual meeting of
the Companys shareholders. Any candidates properly
recommended by a shareholder will be considered and evaluated in
the same way as any other candidate submitted to the Committee.
Upon receipt of this information, the Committee will evaluate
and discuss the candidates qualifications, skills and
characteristics in light of the current composition of the
Board. The Committee may request additional information from the
recommending party or the candidate in order to complete its
initial evaluation. If the Committee determines that the
individual would be a suitable candidate to serve as a director
of the Company, the candidate will be asked to meet with members
of the Committee, members of the Board and/or members of senior
management, including in each case, the Companys CEO, to
discuss the candidates qualifications and ability to serve
on the Board. Based on the Committees discussions and the
results of these meetings, the Committee will recommend a
nominee or nominees for election to the Board either by the
Companys shareholders at its annual meeting of
shareholders or by the Board to fill vacancies on the Board
between annual meetings. The Board will, after consideration of
the Committees recommendations, nominate a slate of
directors for election by the Companys shareholders, or
with regards to filling vacancies, elect a nominee to the Board.
13
DIRECTOR COMPENSATION
2004 Compensation
The compensation of directors during 2004 was as follows:
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Retainer |
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$21,500 (with an option to receive $11,500 in cash and $15,000
worth of Ryder common stock which cannot be sold until six
months after the date on which the person ceases to be a
director) |
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Meeting Fees |
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$35,000 per year; if the Board or any committee meets more
than eight times in one year, a director receives $1,000 for
each additional Board or Committee meeting attended |
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Committee Chairs |
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$5,000 per year |
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Restricted Stock Units |
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500 annually; 1,000 upon election as a director |
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Stock Options |
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5,000 annually |
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Expenses |
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Reimbursement of travel expenses in connection with service |
2005 Compensation
The Board of Directors revised its compensation structure
effective January 1, 2005 to recognize the increased time
commitment of the directors. The new compensation arrangements
were recommended by an independent consultant to the
Compensation Committee based upon relevant benchmarks and was
approved by the Board. The new compensation structure is as
follows:
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Retainer |
|
$32,000 (with an option to receive all or any portion in Ryder
common stock which cannot be sold until six months after the
date on which the person ceases to be a director) |
|
Meeting Fees |
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$35,000 per year; if the Board or any committee meets more
than eight times in one year, a director receives $1,000 for
each additional Board or Committee meeting attended |
|
Committee Chairs |
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$5,000 per year for Chair of Compensation Committee,
Finance Committee and Corporate Governance and Nominating
Committee; $10,000 per year for Chair of Audit Committee |
|
Restricted Stock Units |
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Equivalent of $80,000 annually (based on the market price of
Ryder common stock on the date of grant which is generally the
date of the Annual Meeting of Shareholders) |
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Stock Options |
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None |
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Expenses |
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Reimbursement of travel expenses in connection with service |
Description of Benefits
Eligibility: Directors who are employees of the Company
receive no compensation or benefits for service as a director.
Options: Issued at the fair market value on date of grant
(generally on the date of the Annual Meeting of Shareholders).
The options vest over a three-year period and expire ten years
from the grant date. Upon the occurrence of a change in control,
as defined, all outstanding options become exercisable.
Restricted Stock Units: Generally issued on the date of
the annual meeting of shareholders. The restricted stock units
vest and are paid (either as a lump sum or in annual
installments) upon termination of a directors service on
the Board. The initial grant of restricted stock units will not
vest unless the director has served a minimum of three years.
Effective January 1, 2005, the vesting period for initial
grants of restricted stock units was reduced to one
14
year. The units receive dividends which are reinvested through
the Companys Dividend Reinvestment Program, but do not
have voting rights. Upon the occurrence of a change in control,
as defined, all outstanding restricted stock units will vest and
be paid to the director in a lump sum.
Deferred Compensation: Directors may elect to defer
receipt of their cash retainer and meeting and other fees, which
deferred amounts are part of the general assets of the Company
and are credited with earnings based on several investment
options selected by the director. The compensation may be
deferred until the later to occur of a fixed date, retirement,
disability or removal, and is payable in a lump sum or in
installments. Upon a change of control of the Company, however,
all deferred amounts will be paid immediately in a lump sum.
Directors Charitable Award Program: Under this
program, each director may designate up to two charitable
organizations to which the Company will contribute an aggregate
of $500,000, in ten annual installments in the directors
name following the directors death. The program may be
funded with the proceeds of insurance policies and the directors
obtain no financial benefits from the program. All of the
Companys directors currently participate in the program.
The Board elected to terminate this program effective
January 1, 2005. As a result, no director elected after
that date will be entitled to participate in the program.
Company Matching Gifts to Education: Directors may
participate in the Companys matching program available to
all employees, where the Company matches director contributions
to eligible educational institutions up to an annual maximum of
$10,000 per director.
Insurance: During 2004, the Company provided directors
who joined the Board prior to May 3, 2002 with $100,000
accidental death and dismemberment coverage under its travel
accident policy, $100,000 of group term life insurance and
coverage under the Companys medical plan. Effective
January 1, 2005, the Company ceased providing accidental
death and dismemberment and life insurance coverage to its
directors. Effective June 30, 2005, the Company will cease
providing medical plan coverage to its directors.
Stock Ownership Requirements: To further align the
interests of the Companys directors and shareholders, the
Company imposes stock ownership requirements on its directors.
Directors are expected to own Ryder stock or stock equivalents
having a minimum value equal to one times such directors
total annual compensation. The ownership guidelines must be
proportionately satisfied within five years of the
directors election to the Board.
CERTAIN RELATIONSHIPS
In the ordinary course of business, the Company engages in
transactions with organizations with which certain of our
directors are affiliated. All such transactions are conducted on
an arms length basis and are not material to either the
Company or the other organization.
15
RATIFICATION OF INDEPENDENT AUDITORS
(Proposal 2)
Upon the recommendation of the Audit Committee, the Board of
Directors has appointed KPMG LLP as the Companys
independent auditors for the 2005 fiscal year. The Audit
Committee is responsible for selecting the Companys
independent auditors. Although shareholder ratification of the
appointment of KPMG LLP is not required, the Board of Directors
believes that submitting the appointment to the shareholders for
ratification is a matter of good corporate governance. The Audit
Committee will consider the outcome of this vote in future
deliberations regarding the appointment of the Companys
independent auditors. Even if the selection of KPMG LLP is
ratified, the Audit Committee, in its sole discretion, may
change the appointment at any time during the year if it
determines that such change would be in the best interests of
the Company and its shareholders. Representatives of KPMG LLP
will be present at the 2005 Annual Meeting to respond to
questions and to make a statement if they desire to do so.
Fees and Services of KPMG LLP
The following fees were paid to KPMG LLP for services rendered
in fiscal years 2004 and 2003 ($ in millions):
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2004 | |
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2003 | |
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Audit Fees
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$ |
3.8 |
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$ |
2.7 |
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Audit-Related Fees
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0.3 |
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0.4 |
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Tax Fees
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0.5 |
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1.1 |
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All Other Fees
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0.2 |
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Total Fees
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$ |
4.6 |
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$ |
4.4 |
|
Audit Fees primarily represent amounts paid for the audit of the
Companys consolidated financial statements, a limited
review of financial statements included in the Companys
Form 10-Q (or other periodic reports or documents filed
with the SEC), statutory or financial audits for subsidiaries or
affiliates of the Company, and consultations relating to
financial accounting or reporting standards. In 2004, audit fees
also included fees for the audit pursuant to Section 404 of
Sarbanes-Oxley.
Audit-Related Fees represent amounts paid for assurance and
related services that are reasonably related to the performance
of the audit or review of the Companys financial
statements. These services include audits of employee benefit
plans and consultations concerning matters relating to
Section 404 of Sarbanes-Oxley.
Tax Fees represent amounts paid for U.S. and international tax
compliance services (including review of the Companys
federal, state, local and international tax returns), tax advice
and tax planning. Of the tax fees paid in 2004 and 2003, $0.3
and $0.1, respectively, relate to tax compliance services.
All Other Fees represent amounts paid for all other services
rendered to the Company that do not constitute Audit Fees,
Audit-Related Fees or Tax Fees. These services principally
relate to risk advisory services.
Approval Policy
All services rendered by KPMG LLP are pre-approved by the Audit
Committee in accordance with the Companys Approval Policy
for Independent Auditor Services and are monitored both as to
spending level and work content by the Audit Committee to
maintain the appropriate objectivity and independence of KPMG
LLPs core service, which is the audit of the
Companys consolidated financial statements. Under the
policy, the terms and fees of annual audit services, and any
changes thereto, must be approved by the Audit Committee. The
policy also sets forth detailed pre-approved categories of other
audit, audit-related, tax and other non-audit services that may
be performed by the Companys independent auditors during
the fiscal year, subject to the dollar limitations set by the
Committee. The Audit Committee may, in accordance with the
policy, delegate to any member of the Audit Committee the
authority to approve audit and non-audit services to be
performed by the independent auditors. Any Audit Committee
member who exercises this delegated authority must report any
approval decisions to the Audit Committee at its next scheduled
meeting. The foregoing pre-approval requirements are subject to
the de minimis exceptions for non-audit services described in
Section 10A(i)(1)(B) of the Securities Exchange Act of 1934
which are approved by the Audit Committee prior to completion of
the audit. All of the services described above were approved by
the Audit Committee in accordance with its Approval Policy.
The Board of Directors recommends a vote FOR
ratification of the appointment of KPMG LLP as independent
auditors.
16
AUDIT COMMITTEE REPORT
The following report of the Audit Committee shall not be
deemed to be soliciting material or to be
filed with the SEC nor shall this information be
incorporated by reference into any future filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934,
each as amended, except to the extent that Ryder
System, Inc. specifically incorporates it by reference into
a filing.
The Audit Committee is comprised of five outside directors, all
of whom are independent under the rules of the New York Stock
Exchange and applicable rules of the Securities and Exchange
Commission. The Committee operates under a written charter which
specifies the Committees responsibilities. The full text
of the Committees charter is available on the Corporate
Governance page of the Companys website
(www.ryder.com). The members are not professional
accountants or auditors and their functions are not intended to
duplicate or to certify the activities of management and the
independent auditor.
The Audit Committee serves in a board-level oversight role in
which it provides advice, counsel and direction to management
and the auditors on the basis of the information it receives,
discussions with management and the auditors, and the experience
of the Audit Committee members in business, financial and
accounting matters. Management is responsible for the
preparation, presentation and integrity of the Companys
financial statements, accounting and financial reporting
principles, internal controls and procedures designed to ensure
compliance with accounting standards, applicable laws and
regulations. The Companys independent auditors,
KPMG LLP, are responsible for performing an independent
audit of the consolidated financial statements and expressing an
opinion to the Audit Committee on the conformity of those
statements with accounting principles generally accepted in the
United States of America.
The Audit Committee discusses with the internal auditors and the
independent auditors the overall scope and plans for their
respective audits. The Committee meets periodically with the
internal auditors and independent auditors, with and without
management present, to discuss the results of their
examinations, their evaluations of internal controls and the
overall quality of financial reporting. The Audit Committee held
thirteen meetings during the calendar year 2004.
As part of its oversight of the Companys financial
statements, the Committee reviews and discusses with both
management and the Companys independent auditors all
annual and quarterly financial statements prior to their
issuance. During fiscal year 2004, management advised the
Committee that each set of financial statements reviewed had
been prepared in accordance with generally accepted accounting
principles, and reviewed significant accounting and disclosure
issues with the Committee. The Audit Committee has reviewed and
discussed the Companys audited financial statements for
the fiscal year ended December 31, 2004 with management and
with the Companys independent auditors. The Committee has
also discussed with KPMG LLP those matters required to be
discussed by Statement on Auditing Standards No. 6,
Communications with Audit Committees. The Audit
Committee has received the written disclosures from and
discussed with the independent auditors those items required by
Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees. The
Audit Committee discussed with KPMG LLP their independence,
including the non-audit services listed in their written
disclosures and presented in this proxy.
Based on the reviews and discussions referred to above, the
Audit Committee recommended to the Board of Directors that the
audited consolidated financial statements for the Company for
the fiscal year ended December 31, 2004 be included in the
Annual Report on Form 10-K for the fiscal year ended
December 31, 2004 for filing with the Securities and
Exchange Commission.
Submitted by the Audit Committee of the Board of Directors.
Eugene A. Renna (Chairman)
Joseph L. Dionne
Daniel H. Mudd
Abbie J. Smith
Hansel E. Tookes II
17
SECURITIES OWNERSHIP OF OFFICERS AND DIRECTORS
The following table shows the number of shares of common stock
beneficially owned as of January 15, 2005, by each director
and executive officer named in the Summary Compensation Table
herein, individually, and all directors and executive officers
as a group:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Beneficially | |
|
Shares Which | |
|
|
|
|
|
|
Owned or Subject | |
|
May Be | |
|
Total | |
|
|
|
|
to Currently | |
|
Acquired | |
|
Shares | |
|
|
|
|
Exerciseable | |
|
Within | |
|
Beneficially | |
|
Percent | |
Name of Beneficial Owner |
|
Options | |
|
60 Days1 | |
|
Owned2 | |
|
of Class3 | |
|
|
| |
|
| |
|
| |
|
| |
Gregory T.
Swienton4,5
|
|
|
822,667 |
|
|
|
124,999 |
|
|
|
947,666 |
|
|
|
1.465 |
% |
John M.
Berra6
|
|
|
1,392 |
|
|
|
0 |
|
|
|
1,392 |
|
|
|
* |
|
Joseph L.
Dionne6
|
|
|
27,289 |
|
|
|
0 |
|
|
|
27,289 |
|
|
|
* |
|
David I.
Fuente5,6
|
|
|
21,622 |
|
|
|
0 |
|
|
|
21,622 |
|
|
|
* |
|
Bobby J.
Griffin4,5
|
|
|
11,845 |
|
|
|
22,666 |
|
|
|
34,511 |
|
|
|
* |
|
Tracy A.
Leinbach4,5
|
|
|
70,795 |
|
|
|
26,249 |
|
|
|
97,044 |
|
|
|
* |
|
Lynn M.
Martin6
|
|
|
22,525 |
|
|
|
0 |
|
|
|
22,525 |
|
|
|
* |
|
Daniel H.
Mudd6
|
|
|
5,298 |
|
|
|
0 |
|
|
|
5,298 |
|
|
|
* |
|
Vicki A.
OMeara5
|
|
|
12,627 |
|
|
|
24,417 |
|
|
|
37,044 |
|
|
|
* |
|
Eugene A.
Renna6
|
|
|
4,701 |
|
|
|
0 |
|
|
|
4,701 |
|
|
|
* |
|
Abbie J.
Smith5,6
|
|
|
3,377 |
|
|
|
0 |
|
|
|
3,377 |
|
|
|
* |
|
Anthony G.
Tegnelia4,5
|
|
|
6,681 |
|
|
|
19,417 |
|
|
|
26,098 |
|
|
|
* |
|
Hansel E.
Tookes II4,6
|
|
|
5,320 |
|
|
|
0 |
|
|
|
5,320 |
|
|
|
* |
|
Christine A.
Varney5,6
|
|
|
21,036 |
|
|
|
0 |
|
|
|
21,036 |
|
|
|
* |
|
Directors and Executive Officers as a Group
(22 persons)4,5,6
|
|
|
1,060,850 |
|
|
|
303,100 |
|
|
|
1,363,950 |
|
|
|
2.108 |
% |
|
|
* |
Represents less than 1% of the Companys outstanding
common stock. |
|
|
1 |
Represents options to purchase shares which were exercisable
on January 15, 2005 or that became exercisable by
March 15, 2005 and shares of restricted stock that vested
between January 15, 2005 and March 15, 2005. |
2 |
Unless otherwise noted, all shares included in this table are
owned directly, with sole voting and dispositive power. Listing
shares in this table shall not be construed as an admission that
such shares are beneficially owned for purposes of
Section 16 of the Securities Exchange Act of 1934, as
amended (the Exchange Act). |
3 |
Percent of class has been computed in accordance with
Rule 13d-3(d)(1) of the Exchange Act. |
4 |
Includes shares held through a trust, jointly with their
spouses or other family members or held solely by their spouses,
as follows: Mr. Swienton, 14,500 shares;
Mr. Griffin, 5,801 shares; Ms. Leinbach,
3,846 shares; Mr. Tegnelia, 6,405 shares;
Mr. Tookes, 1,000 shares; and all directors and
executive officers as a group, 35,736 shares. |
5 |
Includes shares held in the accounts of executive officers
pursuant to the Companys 401(k) Plan and Deferred
Compensation Plan and shares held in the accounts of directors
pursuant to the Companys Deferred Compensation Plan as
follows: Mr. Swienton, 2,133 shares; Mr. Fuente,
1,423 shares; Mr. Griffin, 1,834 shares;
Ms. Leinbach, 4,365 shares; Ms. OMeara,
9,774 shares; Ms. Smith, 1,307 shares;
Mr. Tegnelia, 276 shares; Ms. Varney,
355 shares; and all directors and executive officers as a
group, 36,078 shares. |
6 |
Includes restricted stock and restricted stock units held in
the accounts of directors pursuant to the Directors Stock Plan
and the Directors Stock Award Plan, respectively, as follows:
Mr. Berra, 1,392 shares; Mr. Dionne,
12,289 shares; Mr. Fuente, 6,699 shares;
Ms. Martin, 7,525 shares; Mr. Mudd,
2,653 shares; Mr. Renna, 1,534 shares;
Ms. Smith, 1,392 shares; Mr. Tookes,
2,653 shares; and Ms. Varney, 6,884 shares. |
18
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires the Companys directors and executive officers to
file reports with the SEC and the NYSE relating to their common
stock ownership and changes in such ownership. To the
Companys knowledge, based solely on its records and
certain written representations, during the year ended
December 31, 2004, all Section 16(a) filing
requirements applicable to directors and executive officers were
complied with on a timely basis.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table shows the number of shares of common stock
held by all persons who are known by the Company to beneficially
own or exercise voting or dispositive control of more than five
percent of the Companys outstanding common stock.
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares | |
|
|
|
|
Beneficially | |
|
|
Name and Address |
|
Owned | |
|
Percent of Class | |
|
|
| |
|
| |
Barclays Global Investors, NA
|
|
|
11,283,8091 |
|
|
17.56 |
% |
|
|
45 Fremont Street
|
|
|
|
|
|
|
|
|
|
San Francisco, CA 94105
|
|
|
|
|
|
|
|
|
FMR Corp.
|
|
|
4,458,0922 |
|
|
6.94 |
% |
|
|
82 Devonshire Street
|
|
|
|
|
|
|
|
|
|
Boston, MA 02109
|
|
|
|
|
|
|
|
|
LSV Asset Management
|
|
|
3,308,3333 |
|
|
5.15 |
% |
|
|
1 N. Wacker Drive, Suite 4000
|
|
|
|
|
|
|
|
|
|
Chicago, IL 60606
|
|
|
|
|
|
|
|
|
|
|
1 |
Based upon the most recent filing by Barclays Global
Investors, NA with the SEC on Form 13G dated
February 14, 2005. Of the total shares shown, the nature of
beneficial ownership is as follows: sole voting power
10,269,476; shared voting power 0; sole dispositive power
11,283,809; and shared dispositive power 0. |
2 |
Based upon the most recent filing by FMR Corp. with the SEC
on Form 13G dated February 14, 2005. Of the total
shares shown, the nature of beneficial ownership is as follows:
sole voting power 536,692; shared voting power 0; sole
dispositive power 4,458,092; and shared dispositive power 0. |
3 |
Based upon the most recent filing by LSV Asset Management
with the SEC on Form 13G dated February 11, 2005. Of
the total shares shown, the nature of beneficial ownership is as
follows: sole voting power 2,384,633; shared voting power 0;
sole dispositive power 3,220,333; and shared dispositive power
0. |
19
APPROVAL OF RYDER SYSTEM, INC. 2005 EQUITY COMPENSATION
PLAN
(Proposal 3)
Background
The Board of Directors and its Compensation Committee believe
that attracting and retaining Board members, executives and
other key employees of high quality has been and will continue
to be essential to the Companys growth and success.
Consistent with this view, at the Annual Meeting, shareholders
will be asked to approve the Ryder System, Inc. 2005 Equity
Compensation Plan (which we refer to as the 2005 Plan), which
was approved by the Board of Directors on February 10,
2005. The 2005 Plan, like our current Ryder System, Inc. 1995
Stock Incentive Plan (which we refer to as the 1995 Plan) and
our Ryder System, Inc. Board of Directors Stock Award Plan
(which we refer to as the Directors Plan), will enable the
Company to formulate and implement a compensation program that
will attract, motivate and retain experienced, highly-qualified
directors and employees who will contribute to the
Companys financial success, and will align the interests
of the Companys directors and employees with those of its
shareholders.
The 2005 Plan would allow the Compensation Committee to grant a
variety of stock-based awards to the Companys directors,
executive officers and other key employees. The 2005 Plan will
serve as the umbrella plan for all of our stock-based and
cash-based incentive compensation programs for our directors,
senior executives and other key employees and would replace the
1995 Plan and the Ryder System, Inc. Stock for Merit Increase
Replacement Plan (which we refer to as the Stock for Merit Plan)
which will expire on May 4, 2005, as well as the Directors
Plan. If shareholders approve the 2005 Plan, the Company will
not grant any further awards under the 1995 Plan, the Stock for
Merit Plan or the Directors Plan (which we refer to collectively
as the Current Plans). Awards already outstanding under the
Current Plans will continue to remain outstanding in accordance
with their terms.
The Board of Directors seeks shareholder approval of the 2005
Plan in order to satisfy certain legal requirements, including
requirements of the New York Stock Exchange (NYSE). In addition,
the Board regards shareholder approval of the 2005 Plan as
desirable and consistent with good corporate governance
practices.
The Board of Directors and Compensation Committee also seek to
preserve the Companys ability to claim tax deductions for
compensation paid, to the greatest extent practicable.
Section 162(m) of the Internal Revenue Code limits the
deductions a publicly held company can claim for compensation in
excess of $1 million in a given year paid to the Chief
Executive Officer and the four other most highly compensated
executive officers serving on the last day of the fiscal year
(generally referred to as the covered employees).
Performance-based compensation that meets certain
requirements is not counted against the $1 million
deductibility cap, and therefore remains fully deductible. The
Company is seeking shareholder approval of the 2005 Plan in
order to meet a key requirement for certain awards to qualify as
performance-based under Section 162(m).
In addition, shareholder approval will permit designated stock
options to qualify as incentive stock options under the Internal
Revenue Code. Such qualification can give the holder of the
options more favorable tax treatment, as explained below.
The approval of the 2005 Plan will not affect the Companys
ability to make stock- or cash-based awards outside of the 2005
Plan to the extent consistent with applicable law and stock
exchange rules. It also does not govern the Companys stock
accumulation programs made available through the Companys
Stock Purchase Plan for Employees, 401(k) Savings Plan, and
Directors Stock Plan (pursuant to which non-employee directors
can elect to receive Company stock at fair market value in lieu
of all or a portion of their annual cash retainer).
Potential Dilution
The aggregate number of shares that may be issued to employees
and directors under the 2005 Plan will not exceed 5,000,000
(which consists of 1,900,000 shares available for grant
under the Current Plans and 3,100,000 additional shares). Of
this amount, no more than 1,000,000 shares may be issued
pursuant to grants of full-value awards (as
described below). Shares subject to awards granted under the
2005 Plan or under the Current Plans which are subsequently
forfeited, expire unexercised or are otherwise not issued will
not be treated as having been issued for purposes of the share
limitation.
20
Restrictions on Repricing
The 2005 Plan includes a restriction that, unless authorized by
shareholders, the Company will not amend or replace options
previously granted under the 2005 Plan in a transaction that
constitutes a repricing as that term is defined
under NYSE rules. Adjustments to the exercise price or number of
shares subject to an option to reflect the effects of a stock
split or other extraordinary corporate transaction will not
constitute a repricing.
Description of the 2005 Plan
The following is a brief description of the material features of
the 2005 Plan. This description is qualified in its entirety by
reference to the full text of the 2005 Plan, a copy of which is
attached to this Proxy Statement as Appendix A.
Administration. The Compensation Committee will
have the authority to select award recipients, determine the
type, size and other terms and condition of the award, and make
all other decisions and determinations as may be required under
the terms of the 2005 Plan or as the Compensation Committee may
deem necessary or advisable for the administration of the 2005
Plan. The Compensation Committee is composed of persons who are
both non-employee directors, as defined under Section 16b-3
of the Securities Exchange Act of 1934, as amended, and
outside directors within the meaning of
Section 162(m) of the Internal Revenue Code. The
Compensation Committee will be permitted to delegate to one or
more senior executives of the Company the authority to make
grants of awards to officers (other than executive officers) and
employees of the Company and such other administrative
responsibilities as the Compensation Committee may deem
necessary or advisable, to the extent such delegation is
consistent with applicable law.
Eligibility. Officers, employees and non-employee
directors of the Company and its subsidiaries are eligible to be
selected as award recipients.
Type of Awards. The Companys current equity
compensation awards to employees are generally comprised of
stock options and restricted stock. The 2005 Plan gives the
Committee the flexibility to grant a variety of other equity
instruments in addition to stock options and restricted stock
including bonus shares, stock appreciation rights, share units,
performance units and dividend equivalents. Awards may be
granted alone or in combination with any other award granted
under the 2005 Plan or any other plan. The Committee will
determine the size of each award to be granted (including, where
applicable, the number of shares to which an award will relate),
and all other terms and conditions of each award, provided that
(i) no award will expire more than seven years from the
date of grant, (ii) no full-value award (other than a
full-value award that is performance-based) will fully vest
within three years of the date of grant and (iii) no full-value
award that is performance-based will fully vest within one year
of the date of grant. Below is a description of the types of
awards that may be issued under the 2005 Plan:
|
|
|
Stock Options and Stock Appreciation Rights. A stock
option is a right to purchase a specified number of shares of
Ryder common stock at an exercise price established at the date
of grant. Stock options granted may be either non-qualified
stock options or incentive stock options (which are intended to
qualify as incentive stock options within
Section 422 of the Internal Revenue Code). The exercise
price of any stock option granted may not be less than the fair
market value of the Ryder common stock on the date of grant. A
stock appreciation right (SAR) entitles the recipient to
receive, upon surrender of the SAR, an amount of cash or number
of shares of Ryder common stock having a fair market value equal
to the positive difference, if any, between the fair market
value of one share of common stock on the date of exercise and
the exercise price of the SAR (which exercise price shall not be
less than the fair market value of the Ryder common stock on the
date of grant). The Committee will specify at the time an option
or SAR is granted, when, and in what proportions, an option or
SAR becomes vested and exercisable |
|
|
Restricted Stock and Restricted Stock Units. An award of
restricted stock is an issuance of shares of Ryder common stock
that is subject to certain restrictions established by the
Compensation Committee and to forfeiture to the Company if the
holder does not satisfy certain requirements (including, for
example, continued employment with the Company for a specified
period of time). Recipients of restricted stock do not receive
the stock until the restrictions are satisfied but may be
entitled to vote the restricted stock and to exercise other
shareholder rights. Thus, upon grant, the shares may be included
in the Companys total number of shares outstanding and
accrue and pay dividends. An award of restricted stock units
entitles the recipient to receive shares of Ryder common stock
at some later date once the holder has satisfied certain
requirements. At that |
21
|
|
|
time (and not before), the shares will be delivered and the
recipient will be entitled to all shareholder rights. Thus, upon
grant, the shares of common stock covered by the restricted
stock units are not considered issued and are not included in
the Companys total number of shares outstanding until all
conditions have been satisfied. Dividends may accrue, or be
paid, on restricted stock units at the discretion of the
Compensation Committee. |
|
|
Performance-Based Awards. The Committee may grant
performance awards, which may be cash- or stock-based.
Generally, performance awards require satisfaction of
pre-established performance goals, consisting of one or more
business criteria and a targeted performance level with respect
to such criteria as a condition of awards being granted,
becoming exercisable or settleable, or as a condition to
accelerating the timing of such events. The Committee will set
the performance goals used to determine the amount payable
pursuant to a performance award. In order to avoid the
limitations on tax deductibility under Section 162(m) of
the Internal Revenue Code, the business criteria used by the
Committee in establishing performance goals applicable to
performance awards to the covered employees must be selected
from among the following: earnings per share; revenues; cash
flow; cash flow return on investment; return on net assets,
return on assets, return on investment, return on invested
capital, return on equity; profitability; economic value added;
operating margins or profit margins; income or earnings before
or after taxes; pretax earnings; pretax earnings before
interest, depreciation and amortization; operating earnings;
pretax operating earnings, before or after interest expense and
before or after incentives, and extraordinary or special items;
net income; total stockholder return or stock price; book value
per share; and expense management; improvements in capital
structure; working capital; and costs. Performance goals may be
set based on consolidated Company performance and/or for
specified subsidiaries, divisions, or other business units, and
may be with fixed, quantitative targets; targets relative to
past performance; or targets compared to the performance of
other companies, such as a published or special index or a group
of companies selected by the Compensation Committee for
comparison. |
Limitations on Stock-Based Awards. The aggregate
number of shares that may be issued to employees and directors
under the 2005 Plan will not exceed 5,000,000 (which consists of
1,900,000 shares available for grant under the Current
Plans and 3,100,000 additional shares); provided that no more
than 1,000,000 shares may be issued pursuant to awards (which we
refer to as full-value awards) that do not require the employee
or director to pay (in cash, foregone cash compensation, or
consideration other than the performance of services) the full
fair market value (determined on the grant date) for the shares
(e.g., stock options with an exercise price equal to fair market
value) or that are not otherwise based solely on the
appreciation of the shares from the fair market value of the
shares as determined on the date the award is granted (e.g.,
stock appreciation rights). In addition, in any calendar year,
no employee or director may be granted stock-based awards that
relate to more than 500,000 shares, or cash-based awards
that can be settled for more than $5,000,000. Shares issued
under the 2005 Plan or any Current Plan that are reacquired by
the Company in connection with a cancellation, forfeiture,
termination or other failure to satisfy performance conditions
will not be treated as having been issued for purposes of the
share limitation provided that upon the exercise of any stock
appreciation right, the full number of shares underlying such
stock appreciation right on the date of grant will be counted
against the aggregate share limitation irrespective of the
manner in which such stock appreciation right is settled. Shares
delivered under the Plan may be newly issued shares, treasury
shares, or shares acquired in the open market.
Adjustments. In the event of a large, special or
non-recurring dividend or distribution, recapitalization, stock
split, stock dividend, reorganization, business combination, or
other similar corporate transaction or event affecting the
Companys common stock, the Compensation Committee may
adjust the number and kind of shares subject to the aggregate
and individual share limitations described above. The
Compensation Committee may also adjust outstanding awards upon
occurrence of these events in order to preserve the award
without enhancing the value of the award. These adjustments may
include changes to the number of shares subject to an award, the
exercise price or share price referenced in the award terms, and
other terms of the award. The Compensation Committee is also
authorized to adjust performance conditions and other terms of
awards in response to these kinds of events or to changes in
applicable laws, regulations, or accounting principles.
Amendment, Termination. The Board may amend,
suspend, discontinue, or terminate the 2005 Plan or the
Compensation Committees authority to grant awards under
the 2005 Plan without shareholder approval, provided that
shareholder approval will be required for any amendment that
will (i) materially modify the terms of the 2005
22
Plan or (ii) require shareholder approval as a matter of
law or regulation or under the NYSE rules. Unless earlier
terminated, the 2005 Plan will terminate ten years after its
approval by shareholders.
Tax Consequences
The federal income tax consequences arising with respect to
awards granted under the 2005 Plan will depend on the type of
award. From the recipients standpoint, as a general rule,
ordinary income will be recognized at the time of payment of
cash or delivery of actual shares. Future appreciation on shares
held beyond the ordinary income recognition event will be
taxable at capital gains rates when the shares are sold. The
Company, as a general rule, will be entitled to a tax deduction
that corresponds in time and amount to the ordinary income
recognized by the recipient, and the Company will not be
entitled to any tax deduction in respect of capital gain income
recognized by the recipient. Exceptions to these general rules
may arise under the following circumstances: (i) if shares,
when delivered, are subject to a substantial risk of forfeiture
by reason of failure to satisfy any employment or
performance-related condition, ordinary income taxation and the
Companys tax deduction will be delayed until the risk of
forfeiture lapses (unless the recipient makes a special election
to ignore the risk of forfeiture); (ii) if an employee is
granted an option that qualifies as incentive stock
option, no ordinary income will be recognized, and the
Company will not be entitled to any tax deduction, if shares
acquired upon exercise of such option are held more than the
longer of one year from the date of exercise and two years from
the date of grant; (iii) the Company will not be entitled
to a tax deduction for compensation attributable to awards
granted to one of its covered employees, if and to the extent
such compensation does not qualify as
performance-based compensation Section 162(m)
of their Internal Revenue Code, and such compensation, along
with any other non-performance-based compensation paid in the
same calendar year, exceeds $1 million; and (iv) an
award may be taxable at 20 percentage points above ordinary
income tax rates at the time it becomes vested, even if that is
prior to the delivery of the cash or Stock in settlement of the
award, if the award constitutes deferred
compensation under Code Section 409A, and the
requirements of Code Section 409A are not satisfied.
The foregoing provides only a general description of the
application of federal income tax laws to certain awards under
the 2005 Plan. This discussion is intended for the information
of shareholders considering how to vote at the Annual Meeting
and not as tax guidance to participants in the 2005 Plan, as the
tax consequences may vary with the types of awards made, the
identity of the recipients and the method of payment or
settlement. This summary does not address the effects of other
federal taxes (including possible golden parachute
excise taxes) or taxes imposed under state, local, or foreign
tax laws.
New Plan Benefits
Future benefits under the 2005 Plan generally will be granted at
the discretion of the Compensation Committee and are therefore
not currently determinable. During 2004, stock options and
shares of restricted stock were granted under the 1995 Plan to
the named executive officers as set forth herein in the tables
captioned Summary Compensation Table and Option Grants
in 2004. The amount and/or value of stock options and
restricted stock granted in 2004 under the Board of Directors
Stock Award Plan (and to be granted in 2005 under the 2005 Plan,
if approved) to the Companys non-employee directors is set
forth herein under Director Compensation. In addition,
during 2004, 924,300 stock options and 55,150 shares of
restricted stock were granted to all of the Companys
employees (other than named executive officers) under the 1995
Plan.
Vote Required
The affirmative vote of the holders of a majority of the total
number of shares outstanding and entitled to vote is required
for the approval of the 2005 Plan.
The Board of Directors recommends a vote FOR approval of the
Ryder System, Inc. 2005 Equity Compensation Plan.
23
AMENDMENT TO RYDER SYSTEM, INC. STOCK PURCHASE PLAN FOR
EMPLOYEES
(Proposal 4)
Background
The Board of Directors and its Compensation Committee believe
that providing employees with an opportunity to acquire an
ownership interest in the Company through the purchase of the
Companys common stock at a discount to fair market value
is beneficial to the Company and its shareholders. Consistent
with this view, at the Annual Meeting, shareholders will be
asked to approve an amendment to the Ryder System, Inc. Stock
Purchase Plan for Employees (which we refer to as the Purchase
Plan) that will increase the maximum number of shares of Ryder
common stock authorized for issuance under the Purchase Plan by
1,000,000 shares. The Board of Directors approved the
amendment on February 10, 2005, subject to shareholder
approval. If the amendment is approved by shareholders, the
aggregate number of shares available for future issuance under
the Purchase Plan would be 1,315,485.
The Company is seeking shareholder approval of the amendment to
the Purchase Plan so that it will continue to qualify under
Section 423 of the Internal Revenue Code. It is not a
tax-qualified, deferred compensation plan under
Section 401(a) of the Internal Revenue Code, nor is it
subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
Description of the Purchase Plan
The following is a brief description of the material features of
the Purchase Plan. This description is qualified in its entirety
by reference to the full text of the Purchase Plan, a copy of
which is attached to this Proxy Statement as Appendix B.
Administration. The Purchase Plan is administered
by the Compensation Committee of the Board of Directors
consisting of at least two disinterested directors which,
subject to the express provisions of the Purchase Plan, has full
power to (i) interpret the Purchase Plan, (ii) make
rules and regulations relating to the administration of the
Purchase Plan, and (iii) make all other determinations
relating to the Purchase Plan.
Eligibility and Participation. All regular
full-time and certain part-time employees of the Company or its
participating subsidiaries are eligible to participate in the
Purchase Plan except: (i) any employee who owns 5% or more
of the Companys common stock; (ii) any employee who
is ordinarily employed by the Company for less than
20 hours per week; or (iii) any executive officer of
the Company. A participants participation in the Purchase
Plan continues to be effective for each consecutive offering
period until the participant withdraws from the Purchase Plan or
ceases to be eligible to participate in the Purchase Plan.
As of December 31, 2004, approximately 2,456 employees were
participating in the Purchase Plan. Non-employee directors are
not eligible to participate. The actual benefits, if any, to
participants in the Purchase Plan are not determinable prior to
the purchase of shares thereunder as the value, if any, of such
shares to their holders is represented by the difference between
the market price of a share of the Companys common stock
on the date of the purchase and the purchase price of the
shares, as described below.
Offering Periods; Purchase Price; Holding Period.
The Purchase Plan provides for quarterly offerings of
shares of common stock to eligible employees. Employees may
subscribe and pay for shares through payroll deductions based
upon either (i) a percentage of the employees base
pay (up to 15%) or (ii) a specific dollar amount. In any
calendar year, a participating employee is not permitted to
purchase shares with an aggregate fair market value (as of each
offering date) in excess of $25,000.
The purchase price of the shares of common stock offered under
the Purchase Plan will be equal to 85% of the lesser of the fair
market value of the common stock as of the first day of the
offering period (the offering date) or the fair market value on
the last day of the offering period (the purchase date). For
example, if an employee who enrolls in the offering period
beginning on April 1, 2005 continues in the Purchase Plan
through the end of that quarterly period, he or she will make a
final purchase of stock on June 30, 2005 at 85% of the
lesser of the fair market value of the stock on April 1,
2005 or the fair market value on June 30, 2005. The
purchases are made for participants on the
24
last day of each calendar quarter by applying payroll deductions
accumulated over the preceding three months towards such
purchases.
Participating employees may withdraw from the Purchase Plan
during an offering period, and receive back their accumulated
payroll deductions, without interest, at any time during the
first two months of the offering period. If any employee does
not withdraw prior to that date, he or she will continue to
participate in Purchase Plan for the current offering period. A
participating employee may withdraw from the Purchase Plan
effective as of the next offering period at any time prior to
the beginning of such offering period.
In order to encourage continued investment in Ryder stock, the
Purchase Plan provides that participating employees may not sell
shares acquired through the Purchase Plan until one year (for
Company officers) or three months (for all other employees)
after the shares were purchased by the employee.
Termination of Employment or Loss of Eligibility.
Termination of a participants employment for any reason,
including retirement or death, or the failure of the participant
to remain in the continuous employ of the Company for at least
20 hours per week during an offering period (unless on an
approved leave of absence or a temporary reduction of hours),
causes the employee to become ineligible to participate in the
Purchase Plan. In such event, payroll deductions credited to the
participants account will be returned to him or her or, in
the case of death, to the person or persons entitled thereto as
provided in the Purchase Plan, without interest.
Capital Changes. In the event any change is made
in the Companys capitalization during an offering period,
such as a stock split or stock dividend, that results in an
increase or decrease in the number of shares of Common Stock
outstanding without receipt of consideration by the Company,
appropriate adjustment will be made to the purchase price and to
the number of shares subject to stock purchase under the
Purchase Plan and to the number of shares authorized for
issuance under the Purchase Plan.
Amendment and Termination. The Compensation
Committee may terminate or amend the Purchase Plan at any time,
except that no amendment will be effective unless it is approved
by the shareholders of the Company if such approval is required
under Section 423 of the Internal Revenue Code, or any
other applicable law, regulation or stock exchange rule. The
termination or modification of the Purchase Plan may not affect
rights to purchase stock previously granted.
Tax Consequences
The Purchase Plan, and the right of participants to make
purchases thereunder, is intended to qualify under the
provisions of Section 421 and 423 of the Internal Revenue
Code. Under these provisions, no income will be taxable to a
participant until the shares purchased under the Purchase Plan
are sold or otherwise disposed of. If a participant disposes of
his or her shares of common stock within the later of two years
from the offering date that applies to the shares or within one
year from the purchase date of the shares, a transaction
referred to as a disqualifying disposition occurs
and the participant will realize ordinary income in the year of
such disposition equal to the amount by which the fair market
value of the stock on the purchase date exceeded the purchase
price. In such instances, the amount of such ordinary income
will be added to the participants basis in the shares, and
any additional gain or resulting loss recognized on the
disposition of the shares after such basis adjustment will be a
capital gain or loss. A capital gain or loss will be long-term
if the participant holds the shares of common stock for more
than one year after the purchase date.
If the participant disposes of his or her shares of common stock
more than two years after the relevant offering date of such
shares and more than one year after the purchase date of such
shares, the participant will realize ordinary income in the year
of such disposition equal to the lesser of (i) the excess
of the fair market value of the shares on the date of
disposition over the purchase price or (ii) 15% of the fair
market value of the shares on the relevant offering date for
such shares. The amount of such ordinary income will be added to
the participants basis in the shares, and any additional
gain recognized on the disposition of the shares after such
basis adjustment will be long-term capital gain. If the fair
market value of the shares on the date of disposition is less
than the purchase price, there will be no ordinary income and
any loss recognized will be a capital loss.
The Company will generally be entitled to a deduction in the
year of a disqualifying disposition equal to the amount of
ordinary income recognized by the participant as a result of
such disposition. In all other cases, no deduction is allowed
the Company.
25
The foregoing provides only a general description of the
application of federal income tax laws upon the participants and
the Company with respect to participation in the Purchase Plan.
This discussion is intended for the information of shareholders
considering how to vote at the Annual Meeting and not as tax
guidance to participants in the Purchase Plan. This summary does
not address the effects of other federal taxes or taxes imposed
under state, local or foreign tax laws.
Vote Required
The affirmative vote of the holders of a majority of the total
number of shares outstanding and entitled to vote is required
for the approval of the amendment to the Purchase Plan.
The Board Recommends a vote FOR the amendment to the
Ryder System, Inc. Stock Purchase Plan for Employees.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION
PLANS
The following table includes information as of December 31,
2004 about certain plans which provide for the issuance of
common stock in connection with the exercise of stock options
and other stock-based awards. The table does not include the
additional shares of common stock that may be issued under the
2005 Plan or the Purchase Plan, as amended, if the 2005 Plan and
the amendment to the Purchase Plan are approved by shareholders
at the Annual Meeting.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of | |
|
|
|
|
|
|
Securities | |
|
|
|
|
|
|
Remaining | |
|
|
Number of | |
|
|
|
Available for | |
|
|
Securities to Be | |
|
|
|
Future Issuance | |
|
|
Issued Upon | |
|
|
|
Under Equity | |
|
|
Exercise of | |
|
Weighted-Average | |
|
Compensation | |
|
|
Outstanding | |
|
Exercise Price of | |
|
Plans Excluding | |
|
|
Options, | |
|
Outstanding | |
|
Securities | |
|
|
Warrants | |
|
Options, Warrants | |
|
Reflected in | |
Plan |
|
and Rights | |
|
and Rights | |
|
Column (a) | |
|
|
| |
|
| |
|
| |
|
|
(a) | |
|
(b) | |
|
(c) | |
|
|
(Shares in thousands) | |
Equity compensation plans approved by security holders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broad based employee stock option plans
|
|
|
4,567 |
|
|
$ |
27.05 |
|
|
|
3,090 |
|
|
Employee Stock Purchase Plan
|
|
|
|
|
|
|
|
|
|
|
315 |
|
|
Non-Employee Directors Stock Plans
|
|
|
203 |
|
|
$ |
24.76 |
|
|
|
270 |
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,770 |
|
|
$ |
26.96 |
|
|
|
3,675 |
|
|
|
|
|
|
|
|
|
|
|
26
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report of the Compensation Committee shall not
be deemed to be soliciting material or to be
filed with the SEC nor shall this information be
incorporated by reference into any future filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934,
each as amended, except to the extent that Ryder System, Inc.
specifically incorporates it by reference into a filing.
The Compensation Committee of the Companys Board of
Directors consists of four independent directors. None of the
directors on the Compensation Committee is an officer or
employee of the Company or any of its subsidiaries. No executive
officer of the Company serves on the compensation committee or
board of directors of another company that has an executive
officer on the Companys Compensation Committee or Board of
Directors. The Compensation Committee administers all of the
Companys executive compensation policies and programs
(including perquisites and other benefits) and regularly reports
to the Board of Directors on these matters.
Compensation Philosophy
The Companys goal in formulating and implementing
executive compensation policies and programs that are applicable
to all senior management including the Companys Chief
Executive Officer (CEO) and other executive officers named
herein in the Summary Compensation Table (named
officers) on page 30, is to:
|
|
|
|
|
attract, retain and motivate executive talent necessary to
execute the Companys long-term business strategy; |
|
|
emphasize and reward individual performance; |
|
|
promote ownership of Ryder stock; and |
|
|
align the short- and long-term interests of the Companys
executives with that of its shareholders through the use of
variable, at-risk and goal-oriented compensation. |
The Committee regularly evaluates the effectiveness of the
Companys executive compensation programs in light of the
Companys compensation philosophy. In order to ensure that
the compensation programs are competitive, the Committee
evaluates each element of the executive compensation program
based upon the compensation practices and financial performance
of a comparative group of similar companies. Management and
independent consultants analyze compensation survey data on
behalf of the Company to provide comparisons to the Compensation
Committee. The Committee utilizes the compensation survey
analysis and considers each element of the total executive
compensation and benefits package in evaluating the executive
compensation program and making individual compensation
decisions.
The Committee reviewed but did not change any of the
Companys executive compensation policies or programs
during 2004.
Components of Executive Compensation
In 2004, the Companys executive compensation program
consisted of three components: (1) base salary;
(2) annual incentive bonus payments based on the
Companys financial performance; and (3) long-term
incentive awards comprised of stock options, restricted stock
which vest over a period of years, and performance-based cash
awards. Executive officers also receive employee benefits
generally available to all employees of the Company. The
Committee annually reviews and determines total compensation for
members of senior management based in part on recommendations
made by the CEO. The Compensation Committee annually reviews,
and together with the Companys independent directors,
approves all compensation actions relating to the CEO. The
Compensation Committee believes that the total compensation
package for the CEO and senior management represents an
attractive compensation and benefits program that is both
competitive with comparable companies and consistent with the
Companys compensation philosophy.
Base Salary
When reviewing individual executive salary levels, the Committee
considers four factors: (1) Company performance;
(2) the executive officers individual performance;
(3) the executive officers responsibilities and
potential; and (4) comparative data provided by the
Companys outside compensation consultants. The Committee
does not utilize a formula in making salary adjustments. The
Compensation Committee believes that executive officer base
27
salaries are appropriate considering the responsibilities and
importance of those positions to the operations of the Company.
In 2004, the Committee approved a 2% merit-based salary increase
for all executive officers which was consistent with the merit
increase given to all of the Companys exempt employees.
One named officer received an equity-based salary increase in
2004.
Incentive Bonus Payments
The annual incentive bonus plan provides for payments to
executives of a specified cash amount (not to exceed 200% of the
target amount) based upon the percentage achievement of specific
financial objectives. Company-wide and individual financial
objectives and criteria are established at the start of each
fiscal year. The target bonus amount (which is generally based
on a percentage of the executives base salary) is also
established at the start of each fiscal year. Incentive bonus
payments for executives can be increased or decreased based on
individual performance.
Under the 2004 incentive plan, bonus awards for executives were
driven by economic value added, also known as EVA, and by other
performance measures including revenue growth. EVA is a
financial measure that indicates whether a business is earning
more than its cost of capital. Award opportunities were set to
provide above-median compensation in relation to comparable
companies if Company performance exceeded financial performance
targets and below-median compensation in relation to comparable
companies if performance was below these targets. The specific
targets are considered confidential by the Company and are not
included in this Report in order to avoid compromising the
Companys competitive position.
For 2004, the Company achieved 162% of its target bonus amount.
Bonus amounts paid to named officers were consistent with the
provisions of the 2004 incentive plan and are set forth herein
in the Summary Compensation Table on page 30.
The 2005 incentive plan approved by the Compensation Committee
in February 2005 includes new performance measures
net operating revenue, return on capital and earnings per share.
Long-Term Incentive Awards
Long-term incentive awards for senior management consist of
(1) a mix of stock options and restricted stock and
(2) performance-based cash awards.
Equity Awards. Under the Companys 1995 Stock
Incentive Plan, the Committee may award annual stock awards
comprised of options and/or restricted stock to executive
officers and newly promoted or newly-hired executives. The
Compensation Committee first determines the value of an award to
be granted to an executive based on the executives
responsibilities and position within the Company, current
individual performance, potential for promotion and the
officers impact on Company performance. Then, using
valuation methodologies determined by the Compensation Committee
in consultation with independent consultants, allocates the
award between stock options and restricted stock. The value or
amount of an executives existing stock awards does not
influence the size of future stock awards given to that
executive.
Stock options are issued at fair market value as of the date of
grant, typically vest over three years and have a seven year
term. Restricted stock typically vests over three years. In
2004, the Committee granted stock awards to the named officers
as set forth herein in the table titled Option Grants in 2004
on page 31.
Performance-Based Cash Awards. In 2002, the Company
introduced a long-term incentive plan which provides a
performance-based cash component of long-term compensation for
executive officers. The plan rewards executive officers with
additional compensation contingent upon attaining critical
business objectives during a three-year period. The Committee
establishes a three-year cycle for eligible executives with
performance measurements and goals for the executive for each
year of the cycle. The Company funds the plan annually by
depositing earned amounts into an account for the executive. The
amounts earned under the plan vest upon the sixth and eighteenth
month anniversaries of the end of each three-year cycle. Since
the inception of the plan in 2002, EVA has served as the only
performance measurement. The awards earned by the named officers
for the 2002-2004 plan cycle are set forth herein in the
Summary Compensation Table on page 30 under the
Deferred Bonus column.
28
Chief Executive Officer Compensation
The independent directors annually evaluate CEO performance, the
results of which are used to determine CEO compensation. In
February 2004, the independent directors approved a $60,000
salary increase for Mr. Swienton, the Companys CEO,
bringing his total salary to $700,000. The directors also
approved a grant of 150,000 stock options and 15,000 shares of
restricted stock which vests equally over three years. In
February 2005, the Committee approved bonus payments to
Mr. Swienton equal to $1,110,580 under the 2004 incentive
bonus plan and $1,694,410 under the long-term incentive plan,
which amounts are equal to the amounts he was entitled to
pursuant to the terms of those plans. The directors
decisions regarding CEO compensation were based on
Mr. Swientons leadership in advancing the
Companys operational and financial goals. In particular,
the directors focused on the Companys reported earnings
per share growth for the year, the rise in the Companys
stock price, the Companys balance sheet strength, the
appointment and development of key officers and the successful
completion and integration of two strategically-significant
acquisitions.
Stock Ownership Requirements
To demonstrate the importance of linking executive management
and shareholder interests, in 1993 the Company established
formal stock ownership requirements for all executive officers
of the Company. The CEO must own Company stock or stock
equivalents having a value equal to at least two times his
annual base salary, and executive officers must own Company
stock or stock equivalents having a value equal to at least one
times their base salary. All officers were in compliance with
these stock ownership requirements during 2004.
Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code (the
Code) precludes public companies from taking a
deduction for compensation in excess of $1 million paid to
the Companys CEO and the other four most highly paid
employees unless certain specific and detailed criteria are met,
including the requirement that compensation be
performance-based and under a plan approved by the
Companys shareholders.
The Committee has reviewed all components of the Companys
executive compensation program based upon the requirements of
Section 162(m) of the Internal Revenue Code. Stock-based
awards under the Companys stock incentive plans, including
the Ryder System, Inc. 2005 Equity Compensation Plan being
submitted for shareholder approval at the Annual Meeting, meet
the requirements of Section 162(m), and accordingly,
stock-based awards granted to the Companys executive
officers under these plans are eligible for the
performance-based exception to Section 162(m).
While the annual incentive bonus plan and the long-term
incentive plan are based on performance and may qualify for the
incentive compensation exception under Section 162(m),
these plans were not previously submitted to the shareholders
for their approval and therefore payments under the plans do not
qualify for the exceptions under Section 162(m). If the
2005 Plan is approved by shareholders at the Annual Meeting,
performance-based cash awards made under the plan will be
eligible for a Section 162(m) exception.
The Committee believes that preserving its flexibility in
awarding compensation is in the best interest of the Company and
its shareholders and may determine, in light of all applicable
circumstances, to award compensation otherwise then in a manner
that will preserve the deductibility of such compensation under
Section 162(m).
Submitted by the Compensation Committee of the Board of
Directors.
David I. Fuente (Chairman)
John M. Berra
Lynn M. Martin
Christine A. Varney
29
EXECUTIVE COMPENSATION
The following table sets forth for 2004, 2003 and 2002, the
compensation for the Companys chief executive officer and
for each of the four most highly compensated executive officers
of the Company, other than the chief executive officer, serving
as executive officers at the end of 2004 (collectively, the
named executive officers).
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long Term | |
|
|
|
|
|
|
|
|
Annual Compensation | |
|
Compensation | |
|
|
|
|
|
|
|
|
| |
|
| |
|
|
|
|
|
|
|
|
|
|
Bonus | |
|
|
|
Awards | |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Deferred | |
|
|
|
Other Annual | |
|
Restricted | |
|
Securities | |
|
All Other | |
|
|
|
|
|
|
|
|
Bonus | |
|
Total | |
|
Compensation | |
|
Stock | |
|
Underlying | |
|
Compensation | |
Name and Principal Position |
|
Year | |
|
Salary($) | |
|
Bonus($) | |
|
($)1 | |
|
Bonus($) | |
|
($)2 | |
|
Award($)3 | |
|
Options(#) | |
|
($)4 | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Gregory T. Swienton
|
|
Chairman, President and |
|
|
2004 |
|
|
|
685,000 |
|
|
|
1,110,580 |
|
|
|
1,694,410 |
|
|
|
2,804,990 |
|
|
|
9,612 |
|
|
|
553,200 |
|
|
|
150,000 |
|
|
|
193,323 |
|
|
|
Chief Executive Officer |
|
|
2003 |
|
|
|
633,750 |
|
|
|
616,314 |
|
|
|
798,855 |
|
|
|
1,415,169 |
|
|
|
2,697 |
|
|
|
221,000 |
|
|
|
100,000 |
|
|
|
11,431 |
|
|
|
|
|
|
2002 |
|
|
|
625,000 |
|
|
|
734,878 |
|
|
|
193,150 |
|
|
|
928,028 |
|
|
|
2,982 |
|
|
|
0 |
|
|
|
100,000 |
|
|
|
61,340 |
|
|
Bobby J. Griffin
|
|
Executive Vice President |
|
|
2004 |
|
|
|
336,988 |
|
|
|
409,726 |
|
|
|
423,777 |
|
|
|
833,503 |
|
|
|
4,376 |
|
|
|
55,320 |
|
|
|
20,000 |
|
|
|
16,569 |
|
|
|
International |
|
|
2003 |
|
|
|
329,083 |
|
|
|
240,021 |
|
|
|
200,392 |
|
|
|
440,413 |
|
|
|
1,798 |
|
|
|
33,150 |
|
|
|
20,000 |
|
|
|
10,590 |
|
|
|
Operations |
|
|
2002 |
|
|
|
316,667 |
|
|
|
328,794 |
|
|
|
47,214 |
|
|
|
376,008 |
|
|
|
1,988 |
|
|
|
0 |
|
|
|
25,000 |
|
|
|
17,088 |
|
|
Tracy A. Leinbach
|
|
Executive Vice President |
|
|
2004 |
|
|
|
477,050 |
|
|
|
580,021 |
|
|
|
542,566 |
|
|
|
1,122,587 |
|
|
|
2,004 |
|
|
|
82,980 |
|
|
|
30,000 |
|
|
|
5,144 |
|
|
|
and Chief Financial |
|
|
2003 |
|
|
|
429,722 |
|
|
|
313,685 |
|
|
|
233,398 |
|
|
|
547,083 |
|
|
|
1,798 |
|
|
|
324,550 |
|
|
|
35,000 |
|
|
|
6,646 |
|
|
|
Officer |
|
|
2002 |
|
|
|
340,000 |
|
|
|
353,054 |
|
|
|
49,790 |
|
|
|
402,844 |
|
|
|
1,988 |
|
|
|
0 |
|
|
|
25,000 |
|
|
|
24,550 |
|
|
Vicki A. OMeara
|
|
Executive Vice President |
|
|
2004 |
|
|
|
450,483 |
|
|
|
547,823 |
|
|
|
564,299 |
|
|
|
1,112,122 |
|
|
|
4,710 |
|
|
|
549,940 |
|
|
|
40,000 |
|
|
|
11,502 |
|
|
|
and Chief of Corporate |
|
|
2003 |
|
|
|
404,667 |
|
|
|
295,147 |
|
|
|
271,809 |
|
|
|
566,956 |
|
|
|
1,798 |
|
|
|
33,150 |
|
|
|
20,000 |
|
|
|
6,273 |
|
|
|
Operations |
|
|
2002 |
|
|
|
400,000 |
|
|
|
414,990 |
|
|
|
68,675 |
|
|
|
483,665 |
|
|
|
1,988 |
|
|
|
0 |
|
|
|
25,000 |
|
|
|
5,904 |
|
|
Anthony G. Tegnelia
|
|
Executive Vice President |
|
|
2004 |
|
|
|
340,125 |
|
|
|
413,498 |
|
|
|
299,266 |
|
|
|
712,764 |
|
|
|
9,771 |
|
|
|
64,540 |
|
|
|
25,000 |
|
|
|
25,078 |
|
|
|
U.S. Supply Chain |
|
|
2003 |
|
|
|
303,500 |
|
|
|
276,360 |
|
|
|
80,675 |
|
|
|
357,035 |
|
|
|
1,798 |
|
|
|
33,150 |
|
|
|
20,000 |
|
|
|
9,944 |
|
|
|
Solutions |
|
|
2002 |
|
|
|
295,000 |
|
|
|
289,928 |
|
|
|
0 |
|
|
|
289,928 |
|
|
|
1,988 |
|
|
|
0 |
|
|
|
10,000 |
|
|
|
53,634 |
|
|
|
1 |
Represents amounts earned under the Companys long-term
incentive plan in respect of the Companys annual
performance for the reported year. Amounts earned for the 2004,
2003 and 2002 three-year plan cycles vest and become payable if
the named executive officer is employed by the Company on the
following dates: June 30, 2007 (50%) and June 30, 2008
(balance) for the 2004 plan cycle, June 30, 2006 (50%) and
June 30, 2007 (balance) for the 2003 plan cycle and
June 30, 2005 (50%) and June 30, 2006
(balance) for the 2002 plan cycle. For 2003 and 2002, these
amounts were previously reported under the column entitled
LTIP Payouts and have been reclassified as
Deferred Bonus because the amounts awarded were in
respect of the Companys annual performance for 2003 and
2002, respectively. |
2 |
This column represents amounts reimbursed for the payment of
income taxes on certain perquisites provided to the named
executive officers. Other perquisites and personal benefits
furnished to the named executive officers do not meet the
disclosure thresholds established under SEC regulations and are
not included in this column. |
3 |
The amounts in this column represent the dollar value of the
Companys common stock on the date of grant of the
restricted stock. Dividends are paid on all shares of restricted
stock. As of December 31, 2004 (based on the market price
of $47.99 for the common stock on that date), the aggregate
number and dollar value of shares of restricted stock held by
the named executive officers was: Mr. Swienton,
21,666 shares ($1,039,751); Mr. Griffin,
6,500 shares ($311,935); Ms. Leinbach,
17,250 shares ($827,828); Ms. OMeara,
16,084 shares ($771,871) and Mr. Tegnelia,
4,950 shares ($237,551). On February 12, 2004,
Mr. Swienton received a grant of 15,000 shares of
restricted stock which vests in
331/3%
annual installments; Mr. Griffin received a grant of
1,500 shares of restricted stock which vests in
331/3%
annual installments; Ms. Leinbach received a grant of
2,250 shares of restricted stock which vests in
331/3%
annual installments; Ms. OMeara received a grant of
1,750 shares of restricted stock which vests in
331/3%
annual installments and Mr. Tegnelia received a grant of
1,750 shares of restricted stock which vests in
331/3%
annual installments. On October 8, 2004,
Ms. OMeara received a grant of 10,000 shares of
restricted stock which vests in
331/3%
annual installments. |
4 |
All Other Compensation includes the following payments or
accruals for each named executive officer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions to the | |
|
|
|
Premiums Paid | |
|
|
|
|
|
|
401(k) and | |
|
|
|
Under the | |
|
|
|
|
|
|
Deferred | |
|
Compensatory | |
|
Supplemental | |
|
|
|
|
|
|
Compensation | |
|
Split Dollar Insurance | |
|
Long-Term Disability | |
|
Relocation | |
|
|
|
|
Plans($) | |
|
Payments($)a | |
|
Insurance Plan($) | |
|
Expenses($) | |
|
|
|
|
| |
|
| |
|
| |
|
| |
Gregory T. Swienton
|
|
2004 |
|
|
4,438 |
|
|
|
12,057 |
|
|
|
8,102 |
|
|
|
168,726 |
|
|
|
2003 |
|
|
4,000 |
|
|
|
0 |
|
|
|
7,431 |
|
|
|
0 |
|
|
|
2002 |
|
|
4,000 |
|
|
|
0 |
|
|
|
6,806 |
|
|
|
50,534 |
|
|
Bobby J. Griffin
|
|
2004 |
|
|
4,994 |
|
|
|
4,495 |
|
|
|
7,080 |
|
|
|
0 |
|
|
|
2003 |
|
|
4,000 |
|
|
|
0 |
|
|
|
6,590 |
|
|
|
0 |
|
|
|
2002 |
|
|
13,016 |
|
|
|
0 |
|
|
|
4,072 |
|
|
|
0 |
|
|
Tracy A. Leinbach
|
|
2004 |
|
|
2,000 |
|
|
|
351 |
|
|
|
2,793 |
|
|
|
0 |
|
|
|
2003 |
|
|
4,000 |
|
|
|
0 |
|
|
|
2,646 |
|
|
|
0 |
|
|
|
2002 |
|
|
4,857 |
|
|
|
17,520 |
|
|
|
2,173 |
|
|
|
0 |
|
|
Vicki A. OMeara
|
|
2004 |
|
|
0 |
|
|
|
5,077 |
|
|
|
6,425 |
|
|
|
0 |
|
|
|
2003 |
|
|
0 |
|
|
|
0 |
|
|
|
6,273 |
|
|
|
0 |
|
|
|
2002 |
|
|
0 |
|
|
|
0 |
|
|
|
5,904 |
|
|
|
0 |
|
|
Anthony G. Tegnelia
|
|
2004 |
|
|
5,233 |
|
|
|
13,901 |
|
|
|
5,944 |
|
|
|
0 |
|
|
|
2003 |
|
|
4,000 |
|
|
|
0 |
|
|
|
5,944 |
|
|
|
0 |
|
|
|
2002 |
|
|
4,000 |
|
|
|
43,690 |
|
|
|
5,944 |
|
|
|
0 |
|
|
|
a |
For 2004, these amounts represent an amount equal to the cash
surrender value of the split dollar insurance policies less the
aggregate premiums paid by the Company for such policy, which
amounts were paid to the executive upon termination of the
policies effective December 31, 2003. For 2003 and 2002,
these amounts represent the premiums paid on the split dollar
policies for the executive. |
30
Severance and Change of Control Agreements
The Company has entered into a severance agreement with each of
its officers including the named executive officers, which
provides that if the Company terminates the employment of the
executive for reasons other than death, disability or cause (as
defined in the agreement), and certain other requirements are
met, the Company will provide the executive with a severance
payment and certain other benefits and perquisites. The
severance payment is based on a multiple of the executives
then-current base salary and tenure-related bonus. The severance
payment to which each named executive officer is entitled under
such officers severance agreement is as follows:
Mr. Swienton three times salary and three times
bonus; Mr. Griffin two times salary and two
times bonus; Ms. Leinbach three times salary
and two times bonus; Ms. OMeara three
times salary and two times bonus; and
Mr. Tegnelia two times salary and two times
bonus.
The Company has also entered into a change of control severance
agreement with each named executive officer and certain other
officers which provides that if the Company terminates the
employment of the executive for reasons other than death,
disability or cause or if the executive terminates his or her
employment for good reason (as defined in the agreement), in
each case within three years of a change of control of the
Company (as defined in the agreement), the Company will provide
the executive with severance benefits including those under the
above-described severance agreements and some additional
severance benefits.
OPTION GRANTS IN 2004
The following table provides information regarding the grant of
stock options to the named executive officers in 2004 and the
potential value of such stock options assuming annual compound
appreciation of the underlying share price at rates of 0%, 5%
and 10% from the date the stock options were granted over the
full option term of seven years. The 5% and 10% appreciation
rates are required to be disclosed by SEC rules and are not
intended to forecast possible future appreciation, if any, in
the Companys stock price.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual Grants | |
|
|
| |
|
Potential Realizable Value | |
|
|
Number of | |
|
% of Total | |
|
|
|
at Assumed Annual Rates | |
|
|
Securities | |
|
Options Granted | |
|
|
|
of Stock Price Appreciation | |
|
|
Underlying | |
|
to Employees in | |
|
Exercise | |
|
|
|
for Option Term($)4 | |
|
|
Options | |
|
Fiscal Year | |
|
Price | |
|
|
|
| |
Name |
|
Granted(#)1 | |
|
2004 | |
|
Per Share2 | |
|
Expiration Date3 | |
|
0% | |
|
5% | |
|
10% | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Gregory T. Swienton
|
|
|
150,000 |
|
|
|
9.3 |
% |
|
|
$36.88 |
|
|
|
February 12, 2011 |
|
|
|
0 |
|
|
|
2,251,500 |
|
|
|
5,248,500 |
|
Bobby J. Griffin
|
|
|
20,000 |
|
|
|
1.2 |
% |
|
|
$36.88 |
|
|
|
February 12, 2011 |
|
|
|
0 |
|
|
|
300,200 |
|
|
|
699,800 |
|
Tracy A. Leinbach
|
|
|
30,000 |
|
|
|
1.9 |
% |
|
|
$36.88 |
|
|
|
February 12, 2011 |
|
|
|
0 |
|
|
|
450,300 |
|
|
|
1,049,700 |
|
Vicki A. OMeara
|
|
|
25,000 |
|
|
|
1.6 |
% |
|
|
$36.88 |
|
|
|
February 12, 2011 |
|
|
|
0 |
|
|
|
375,250 |
|
|
|
874,750 |
|
|
|
|
15,000 |
|
|
|
0.9 |
% |
|
|
$48.54 |
|
|
|
October 8, 2011 |
|
|
|
0 |
|
|
|
296,400 |
|
|
|
690,750 |
|
Anthony G. Tegnelia
|
|
|
25,000 |
|
|
|
1.6 |
% |
|
|
$36.88 |
|
|
|
February 12, 2011 |
|
|
|
0 |
|
|
|
375,250 |
|
|
|
874,750 |
|
|
|
1 |
Stock option grants generally vest in annual installments
over three years commencing with the first anniversary of the
date of the grant. |
2 |
Represents fair market value as of the date of the grant. |
3 |
Seven (7) years from grant date of February 12,
2004 and October 8, 2004, respectively. |
4 |
If the 5% or 10% annual compound appreciation shown in the
table were to occur: |
|
|
|
|
|
|
|
|
|
|
|
5% | |
|
10% | |
|
|
| |
|
| |
The price of the Companys common stock on
February 12, 2011 would be
|
|
$ |
51.89 |
|
|
$ |
71.87 |
|
The price of the Companys common stock on
October 8, 2011 would be |
|
$ |
68.30 |
|
|
$ |
94.59 |
|
Appreciation in value of Companys common stock from the
date of the February 12, 2004 grant would
be |
|
$ |
965,305,889 |
|
|
$ |
2,250,236,711 |
|
Appreciation in value of Companys common stock from the
date of the October 8, 2004 grant would
be |
|
$ |
1,270,782,436 |
|
|
$ |
2,961,514,735 |
|
The appreciation during this period realized by the five
named executive officers from the stock options granted on
February 12, 2004 and October 8, 2004 would be 0.39%
and 0.02%, respectively, of the gain to all shareholders. The
use of the 5% and 10% rates as required by the SEC is not
intended by the Company to forecast possible future appreciation
of the Companys common stock.
31
AGGREGATED OPTION EXERCISES IN 2004 AND YEAR-END OPTION
VALUES
The following table provides information, with respect to the
named executive officers, regarding the exercise of options
during 2004:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities | |
|
|
|
|
|
|
|
|
Underlying Unexercised | |
|
Value of Unexercised | |
|
|
|
|
|
|
Options at Fiscal | |
|
In-the-Money Options at | |
|
|
|
|
Value | |
|
Year-End 2004(#) | |
|
Fiscal Year-End 2004($)1 | |
|
|
Shares Acquired | |
|
Realized | |
|
| |
|
| |
Name |
|
On Exercise(#) | |
|
($) | |
|
Exercisable | |
|
Unexercisable | |
|
Exercisable | |
|
Unexercisable | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Gregory T. Swienton
|
|
|
0 |
|
|
|
0 |
|
|
|
776,667 |
|
|
|
333,333 |
|
|
|
20,262,465 |
|
|
|
6,326,160 |
|
Bobby J. Griffin
|
|
|
71,164 |
|
|
|
1,031,804 |
|
|
|
0 |
|
|
|
41,666 |
|
|
|
0 |
|
|
|
743,718 |
|
Tracy A. Leinbach
|
|
|
88,840 |
|
|
|
1,629,631 |
|
|
|
58,584 |
|
|
|
61,666 |
|
|
|
1,181,883 |
|
|
|
1,043,318 |
|
Vicki A. OMeara
|
|
|
181,837 |
|
|
|
2,833,840 |
|
|
|
0 |
|
|
|
78,333 |
|
|
|
0 |
|
|
|
1,244,943 |
|
Anthony G. Tegnelia
|
|
|
138,067 |
|
|
|
1,625,100 |
|
|
|
0 |
|
|
|
41,666 |
|
|
|
0 |
|
|
|
693,498 |
|
|
|
1 |
Amounts reflecting gains on outstanding stock options based
on a fair market value of $47.99 for the common stock, as
determined by using the average of the high and low market price
on December 31, 2004. |
PENSION BENEFITS
The Company maintains the Ryder System, Inc. Retirement Plan
(the Retirement Plan) for regular full-time
employees other than those who are covered by plans administered
by labor unions and certain other non-exempt employees. Benefits
payable under the Retirement Plan are based on an
employees career earnings with the Company and its
subsidiaries. At customary retirement age of sixty-five (65), a
participant is entitled to a monthly pension benefit payable for
life. The annual pension benefit, when paid in the form of a
life annuity with no survivors benefits, is generally
equal to the sum of 1.45 percent of the first $15,600 of
total compensation received during the calendar year, plus
1.85 percent of the portion of such total compensation
received during the calendar year in excess of $15,600, during
each such year while a Retirement Plan member. Accrued benefits
under the Retirement Plan have been improved from time to time.
Retirement Plan benefits vest at the earlier of the completion
of five (5) years of credited service or upon reaching age
sixty-five (65), provided, however, that in the event of a
change of control of the Company, all participants will be fully
vested and the term accrued benefit will include the
value of early retirement benefits for any participant age
forty-five (45) or older or with ten (10) or more
years of service. These benefits are not subject to any
reduction for Social Security benefits or other offset amounts.
An employees pension benefits may be paid in certain
alternative forms having actuarially equivalent values.
The maximum annual benefit under a qualified pension plan is
currently $165,000 beginning at the Social Security retirement
age. The maximum compensation and bonus that may be taken into
account in determining annual retirement accruals is currently
$205,000. The Company also maintains a non-qualified, unfunded
benefit plan, called the Benefit Restoration Plan (the
Restoration Plan), which covers those participants
of the Retirement Plan whose benefits are reduced by the
Internal Revenue Code or other United States laws. A participant
in the Restoration Plan is entitled to a benefit equaling the
difference between the amount of benefits the participant is
entitled to without reduction and the amount of benefits the
participant is entitled to after the reductions.
The following table sets forth annual pension benefit
projections for the named executive officers assuming they
remain continuously employed by the Company at current
compensation levels until retirement at the normal retirement
date or age.
32
Estimated Annual Benefits at
Retirement1
(in the form of a single life annuity)
|
|
|
|
|
Gregory T. Swienton
|
|
|
$332,202 |
|
Bobby J. Griffin
|
|
|
180,665 |
|
Tracy A. Leinbach
|
|
|
393,921 |
|
Vicki A. OMeara
|
|
|
311,092 |
|
Anthony G. Tegnelia
|
|
|
232,206 |
|
|
|
1 |
These amounts include benefits under the Retirement Plan and
the Restoration Plan combined. |
Until December 31, 2003, the Company maintained a Split
Dollar Life Insurance Plan for the benefit of certain named
executive officers. The Plan provided participants with
additional life insurance. The Company paid all costs equal to
the premiums on the life insurance acquired prior to retirement.
The Company analyzed the impact of certain provisions of
Sarbanes-Oxley on its Split Dollar Life Insurance Plan. Based on
its evaluation, the Company terminated the Plan effective
December 31, 2003. As a result, during 2004, the Company
paid certain participants, including certain named executive
officers, an amount equal to the cash surrender value of the
relevant policy less the aggregate premiums paid by the Company
for such policy. Amounts paid to the named executive officers
are included in the Summary Compensation Table on
page 30.
PERFORMANCE GRAPH
The following graph compares the performance of the
Companys common stock with the performance of the
Standard & Poors 500 Composite Stock Index and
the Dow Jones Transportation Index for a five year period by
measuring the changes in common stock prices from
December 31, 1999.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1999 | |
|
2000 | |
|
2001 | |
|
2002 | |
|
2003 | |
|
2004 | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Ryder System, Inc.
|
|
$ |
100.00 |
|
|
$ |
70.24 |
|
|
$ |
98.87 |
|
|
$ |
102.25 |
|
|
$ |
157.33 |
|
|
$ |
226.50 |
|
S&P 500 Index
|
|
$ |
100.00 |
|
|
$ |
90.90 |
|
|
$ |
82.41 |
|
|
$ |
63.82 |
|
|
$ |
79.48 |
|
|
$ |
88.39 |
|
Dow Jones Transportation 20 Index
|
|
$ |
100.00 |
|
|
$ |
100.38 |
|
|
$ |
93.35 |
|
|
$ |
83.27 |
|
|
$ |
106.88 |
|
|
$ |
136.46 |
|
The performance graph assumes that $100 was invested on
December 31, 1999 in each of the Companys common
stock, the Standard & Poors 500 Composite Stock
Price Index and the Dow Jones Transportation Index, and that all
dividends were reinvested. Past performance is not necessarily
an indicator of future results.
33
APPENDIX A
RYDER SYSTEM, INC.
2005 EQUITY COMPENSATION PLAN
The purpose of this 2005 Equity Compensation Plan (the
Plan) is to advance the interests of the Company and
its shareholders by providing a means (a) to attract,
retain, and reward directors, officers, other employees, and
persons who provide services to the Company and its
Subsidiaries, (b) to link compensation to measures of the
Companys performance in order to provide additional
incentives, including stock-based incentives and cash-based
incentives, to such persons for the creation of shareholder
value, and (c) to enable such persons to acquire or
increase a proprietary interest in the Company in order to
promote a closer identity of interests between such persons and
the Companys shareholders. The Plan is intended to qualify
certain compensation awarded under the Plan as
performance-based compensation under Code
Section 162(m) to the extent deemed appropriate by the
Committee which administers the Plan.
Capitalized terms used in the Plan and not defined elsewhere in
the Plan shall have the meaning set forth in this Section.
|
|
|
2.1 Award means a
compensatory award made pursuant to the Plan pursuant to which a
Participant receives, or has the opportunity to receive, Shares
or cash. |
|
|
2.2 Award Agreement
means a written document prescribed by the Committee and
provided to a Participant evidencing the grant of an Award under
the Plan. |
|
|
2.3 Beneficiary means
the person(s) or trust(s) entitled by will or the laws of
descent and distribution to receive any rights with respect to
an Award that survive such Participants death, provided
that if at the time of a Participants death, the
Participant had on file with the Committee a written designation
of a person(s) or trust(s) to receive such rights, then such
person(s) (if still living at the time of the Participants
death) or trust(s) shall be the Beneficiary for
purposes of the Plan. |
|
|
2.4 Board means the
Board of Directors of the Company. |
|
|
2.5 Code means the
Internal Revenue Code of 1986, as amended, including regulations
thereunder and successor provisions and regulations thereto. |
|
|
2.6 Committee means the
committee appointed by the Board to administer the Plan or the
Board, where the Board is acting as the Committee or performing
the functions of the Committee, as set forth in Section 3. |
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2.7 Company means Ryder
System, Inc., a company organized under the laws of the state of
Florida. |
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2.8 Current Plans means
the Ryder System, Inc. 1995 Stock Incentive Plan, the Ryder
System, Inc. Stock for Merit Increase Replacement Plan and the
Ryder System, Inc. Board of Directors Stock Award Plan. |
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2.9 Fair Market Value
means, with respect to the Shares, the average of the highest
and lowest sale price for the Shares as reported by the
composite transaction reporting system for securities listed on
the New York Stock Exchange on the date as of which such
determination is being made or on the most recently preceding
date on which there was such a sale. |
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2.10 Full-Value Award
means any Award granted under the Plan other than (i) a
stock option that does not require a Participant to pay (in
cash, foregone cash compensation, or consideration other than
the performance of services) the Fair Market Value (determined
on the date of grant of the Award) for the Shares or (ii) a
stock appreciation right that is based solely on the
appreciation of the Shares underlying the Award from the Fair
Market Value of the Shares as determined on the date of grant of
the Award. |
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2.11 Non-Employee
Director means a member of the Companys Board of
Directors who is not otherwise employed by the Company or any
Subsidiary. |
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2.12 Participant means
any employee or director who has been granted an Award under the
Plan. |
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2.13 Qualified Member
means a member of the Committee who is a non-employee
director of the Company as defined in
Rule 16b-3(b)(3) under the United States Securities
Exchange Act of 1934 and an outside director within
the meaning of Regulation § 1.162-27 under Code
Section 162(m). |
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2.14 Shares means
common shares of the Company and such other securities as may be
substituted or re-substituted for Shares pursuant to
Section 7. |
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2.15 Subsidiary means
an entity that is, either directly or through one or more
intermediaries, controlled by the Company. |
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3.1 Committee. The
Compensation Committee of the Board shall administer the Plan,
unless the Board shall appoint a different committee. At any
time that a member of the Committee is not a Qualified Member,
(i) any action of the Committee relating to an Award
intended by the Committee to qualify as performance-based
compensation within the meaning of Code
Section 162(m) and regulations thereunder may be taken by a
subcommittee, designated by the Committee or the Board, composed
solely of two or more Qualified Members, and (ii) any
action relating to an Award granted or to be granted to a
Participant who is then subject to Section 16 of the
Securities Exchange Act of 1934 in respect of the Company may be
taken either by the Board, a subcommittee of the Committee
consisting of two or more Qualified Members or by the Committee
but with each such member who is not a Qualified Member
abstaining or recusing himself or herself from such action,
provided that, upon such abstention or recusal, the Committee
remains composed of two or more Qualified Members. Such action,
authorized by such a subcommittee or by the Committee upon the
abstention or recusal of such non-Qualified Member(s), shall be
the action of the Committee for purposes of the Plan. Other
provisions of the Plan notwithstanding, the Board may perform
any function of the Committee under the Plan, and that authority
specifically reserved to the Board under the terms of the Plan,
the Companys Articles of Incorporation, By-Laws, or
applicable law shall be exercised by the Board and not by the
Committee. The Board shall serve as the Committee in respect of
any Awards made to any Non-Employee Director. |
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3.2 Powers and Duties of
Committee. In addition to the powers and duties specified
elsewhere in the Plan, the Committee shall have full authority
and discretion to: |
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(a) adopt, amend, suspend, and rescind such rules and
regulations and appoint such agents as the Committee may deem
necessary or advisable to administer the Plan; |
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(b) correct any defect or supply any omission or reconcile
any inconsistency in the Plan and to construe and interpret the
Plan and any Award, rules and regulations, Award Agreement, or
other instrument hereunder; |
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(c) make determinations relating to eligibility for and
entitlements in respect of Awards, and to make all factual
findings related thereto; and |
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(d) make all other decisions and determinations as may be
required under the terms of the Plan or as the Committee may
deem necessary or advisable for the administration of the Plan. |
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All determinations and decisions of the Committee shall be final
and binding upon a Participant or any person claiming any rights
under the Plan from or through any Participant, and the
Participant or such other person may not further pursue his or
her claim in any court of law or equity or other arbitral
proceeding. |
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3.3 Delegation by Committee.
Except to the extent prohibited by applicable law or the
applicable rules of a stock exchange, or as provided in
Section 5.2, the Committee may delegate, on such terms and
conditions as it determines in its sole and absolute discretion,
to one or more senior executives of the Company (i) the
authority to make grants of Awards to officers (other than
executive officers) and employees of the Company and any
Subsidiary and (ii) other administrative responsibilities.
Any such allocation or delegation may be revoked by the
Committee at any time. |
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3.4 Limitation of Liability.
Each member of the Committee shall be entitled to, in good
faith, rely or act upon any report or other information
furnished to him by any officer or other employee of the Company
or any |
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Subsidiary, the Companys independent certified public
accountants, or any executive compensation consultant, legal
counsel, or other professional retained by the Company to assist
in the administration of the Plan. No member of the Committee,
nor any officer or employee of the Company acting on behalf of
the Committee, shall be personally liable for any action,
determination, or interpretation taken or made in good faith
with respect to the Plan, and all members of the Committee and
any officer or employee of the Company acting on behalf of the
Committee or members thereof shall, to the extent permitted by
law, be fully indemnified and protected by the Company with
respect to any such action, determination, or interpretation. |
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4.1 Eligibility. The
Committee shall have the discretion to select Award recipients
from among the following categories of eligible recipients:
(i) individuals who are employees (including officers) of
the Company or any Subsidiary, and (ii) Non-Employee
Directors. |
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4.2 Type of Awards. The
Committee shall have the discretion to determine the type of
Awards to be granted under the Plan. Such Awards may be in a
form payable in either Shares or cash, including, but not
limited to, options to purchase Shares, restricted Shares, bonus
Shares, appreciation rights, Share units, performance units and
dividend equivalents. The Committee is authorized to grant
Awards as a bonus, or to grant Awards in lieu of obligations of
the Company or any Subsidiary to pay cash or grant other awards
under other plans or compensatory arrangements, to the extent
permitted by such other plans or arrangements. Shares issued
pursuant to an Award in the nature of a purchase right (e.g.,
options) shall be purchased for such consideration, paid for at
such times, by such methods, and in such forms, including cash,
Shares, other Awards, or other consideration, as the Committee
shall determine. |
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4.3 Terms and Conditions of
Awards. The Committee shall determine the size of each Award
to be granted (including, where applicable, the number of Shares
to which an Award will relate), and all other terms and
conditions of each such Award (including, but not limited to,
any exercise price, grant price, or purchase price, any
restrictions or conditions relating to transferability,
forfeiture, exercisability, or settlement of an Award, and any
schedule or performance conditions for the lapse of such
restrictions or conditions, and accelerations or modifications
thereof, based in each case on such considerations as the
Committee shall determine). The Committee may determine whether,
to what extent, and under what circumstances an Award may be
settled, or the exercise price of an Award may be paid, in cash,
Shares, other Awards, or other consideration, or an Award may be
canceled, forfeited, or surrendered. The right of a Participant
to exercise or receive a grant or settlement of any Award, and
the timing thereof, may be subject to such performance
conditions as may be specified by the Committee. The Committee
may use such business criteria and measures of performance as it
may deem appropriate in establishing performance conditions, and
may exercise its discretion to reduce or increase the amounts
payable under any Award subject to performance conditions,
except as limited under Section 5.1 in the case of a
Performance Award intended to qualify under Code
Section 162(m). Notwithstanding the foregoing, (i) the
price per Share at which Shares may be purchased upon the
exercise of a stock option shall not be less than one hundred
percent (100%) of the Fair Market Value on the date of grant of
such stock option, (ii) with respect to stock appreciation
rights, the price per Share from which stock appreciation is
measured shall not be less than one hundred percent (100%) of
the Fair Market Value of such Share on the date of grant of the
stock appreciation right, (iii) the period during which an
Award may remain outstanding shall not exceed seven
(7) years from the date the Award is granted, (iv) no
Full-Value Award issued under the Plan (other than Full-Value
Awards that are performance-based) shall fully vest within three
years of the date of grant of such Full-Value Award, (v) no
Full-Value Award issued under the Plan that is performance-based
shall fully vest with one year of the date of grant of such
Full-Value Award and (vi) any Awards granted to
Non-Employee Directors shall be granted to all Non-Employee
Directors on a non-discretionary basis based on a formula
approved by the Committee. |
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4.4 Option Repricing. As to
any Award granted as an option to purchase Shares or an
appreciation right payable in Shares, the Committee is not
authorized to subsequently reduce the applicable exercise price
relating to such Award, or take such other action as may be
considered a repricing of such Award under generally accepted
accounting principles. |
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4.5 Stand-Alone, Additional,
Tandem, and Substitute Awards. Subject to Section 4.4,
Awards granted under the Plan may, in the discretion of the
Committee, be granted either alone or in addition to, in tandem
with, or in substitution or exchange for, any other Award or any
award granted under another plan of the Company, any Subsidiary,
or any business entity to be acquired by the Company or a
Subsidiary, or any other right of a Participant to receive
payment from the Company or any Subsidiary, and in granting a
new Award, the Committee may determine that the value of any
surrendered Award or award may be applied to reduce the exercise
price of any option or appreciation right or purchase price of
any other Award. |
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5.1 Performance Awards Granted
to Designated Covered Employees. If the Committee determines
that an Award to be granted to an eligible person who is
designated by the Committee as likely to be a Covered Employee
(as defined below) should qualify as performance-based
compensation for purposes of Code Section 162(m), the
grant, exercise, and/or settlement of such Award (a
Performance Award) shall be contingent upon
achievement of preestablished performance goals and other terms
set forth in this Section 5.1. This Section 5.1 shall
not apply to Awards that otherwise qualify as
performance-based compensation by reason of
Regulation §1.162-27(e)(2)(vi) (relating to certain stock
options and stock appreciation rights). |
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(a) Performance Goals Generally. The performance
goals for such Performance Awards shall consist of one or more
business criteria and a targeted level or levels of performance
with respect to each such criteria, as specified by the
Committee consistent with this Section 5.1. Performance
goals shall be objective and shall otherwise meet the
requirements of Code Section 162(m) and regulations
thereunder (including Regulation §1.162-27 and successor
regulations thereto), including the requirement that the level
or levels of performance targeted by the Committee result in the
achievement of performance goals being substantially
uncertain. The Committee may determine that such
Performance Awards shall be granted, exercised, and/or settled
upon achievement of any one performance goal or that two or more
of the performance goals must be achieved as a condition to
grant, exercise, and/or settlement of such Performance Awards.
Performance goals may differ for Performance Awards granted to
any one Participant or to different Participants. |
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(b) Business Criteria. One or more of the following
business criteria for the Company, on a consolidated basis,
and/or for specified Subsidiaries, divisions, or other business
units of the Company (where the criteria are applicable), shall
be used by the Committee in establishing performance goals for
such Performance Awards: (1) earnings per share;
(2) revenues; (3) cash flow; (4) cash flow return
on investment; (5) return on net assets, return on assets,
return on investment, return on invested capital, return on
equity; profitability; (6) economic value added
(EVA); (7) operating margins or profit margins;
(8) income or earnings before or after taxes; pretax
earnings; pretax earnings before interest, depreciation and
amortization; operating earnings; pretax operating earnings,
before or after interest expense and before or after incentives,
and extraordinary or special items; net income; (9) total
stockholder return or stock price; (10) book value per
share; (11) expense management; improvements in capital
structure; working capital; costs; and (12) any of the
above goals as compared to the performance of a published or
special index deemed applicable by the Committee including, but
not limited to, the Standard & Poors 500 Stock
Index or a group of comparator companies. EVA means the amount
by which a business units earnings exceed the cost of the
equity and debt capital used by the business unit during the
performance period, as determined by the Committee. Income of a
business unit may be before payment of bonuses, capital charges,
non-recurring or extraordinary income or expense, and general
and administrative expenses for the performance period, if so
specified by the Committee. |
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(c) Performance Period; Timing for Establishing
Performance Award Terms. Achievement of performance goals in
respect of such Performance Awards shall be measured over a
performance period of up to ten years, as specified by the
Committee. Performance goals, amounts payable upon achievement
of such goals, and other material terms of Performance Awards
shall be established by the Committee (i) while the
performance outcome for that performance period is substantially
uncertain and (ii) no more than 90 days after the
commencement of the performance period to which the performance
goal relates or, if less, the number of days which is equal to
25 percent of the relevant performance period. |
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(d) Performance Award Pool. The Committee may
establish a Performance Award pool, which shall be an unfunded
pool, for purposes of measuring performance of the Company in
connection with Performance Awards. The amount of such
Performance Award pool shall be based upon the achievement of a
performance goal or goals based on one or more of the business
criteria set forth in Section 5.1(b) hereof during the
given performance period, as specified by the Committee in
accordance with Section 5.1(c) hereof. The Committee may
specify the amount of the Performance Award pool as a percentage
of any of such business criteria, a percentage thereof in excess
of a threshold amount, or as another amount which need not bear
a strictly mathematical relationship to such business criteria.
In such case, Performance Awards may be granted as rights to
payment of a specified portion of the Award pool, and such
grants shall be subject to the requirements of
Section 5.1(c). |
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(e) Settlement of Performance Awards; Other Terms.
Settlement of such Performance Awards shall be in cash, Shares,
other Awards, in the discretion of the Committee. The Committee
may, in its discretion, reduce the amount of a settlement
otherwise to be made in connection with such Performance Awards,
but may not exercise discretion to increase any such amount
payable to a Covered Employee in respect of a Performance Award
subject to this Section 5.1. The Committee shall specify
the circumstances in which such Performance Awards shall be paid
or forfeited in the event of termination of employment by the
Participant prior to the end of a performance period or
settlement of Performance Awards. |
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(f) Impact Of Extraordinary Items Or Changes In
Accounting. To the extent applicable, the determination of
achievement of performance goals for Performance Awards shall be
made in accordance with U.S generally accepted accounting
principles (GAAP) and a manner consistent with the
methods used in the Companys audited financial statements,
and, unless the Committee decides otherwise within the period
described in Section 5.1(c), without regard to
(i) extraordinary items as determined by the Companys
independent public accountants in accordance with GAAP,
(ii) changes in accounting methods, or
(iii) non-recurring acquisition expenses and restructuring
charges. Notwithstanding the foregoing, in calculating operating
earnings or operating income (including on a per share basis),
the Committee may, within the period described in
Section 5.1(c), provide that such calculation shall be made
on the same basis as reflected in a release of the
Companys earnings for a previously completed period as
specified by the Committee. |
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5.2 Written Determinations.
Determinations by the Committee as to the establishment of
performance goals, the amount potentially payable in respect of
Performance Awards, the achievement of performance goals
relating to Performance Awards, and the amount of any final
Performance Award shall be recorded in writing. Specifically,
the Committee shall certify in writing, in a manner conforming
to applicable regulations under Code Section 162(m), prior
to settlement of each Performance Award, that the performance
goals and other material terms of the Performance Award upon
which settlement of the Performance Award was conditioned have
been satisfied. The Committee may not delegate any
responsibility relating to such Performance Awards, and the
Board shall not perform such functions at any time that the
Committee is composed solely of Qualified Members. |
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5.3 Status of Section 5.1
Awards under Code Section 162(m). It is the intent of
the Company that Performance Awards under Section 5.1
constitute performance-based compensation within the
meaning of Code Section 162(m) and regulations thereunder.
Accordingly, the terms of Sections 5.1, 5.2 and 5.3,
including the definitions of Covered Employee and other terms
used therein, shall be interpreted in a manner consistent with
Code Section 162(m) and regulations thereunder. The
foregoing notwithstanding, because the Committee cannot
determine with certainty whether a given Participant will be a
Covered Employee with respect to a fiscal year that has not yet
been completed, the term Covered Employee as used
herein shall mean only a person designated by the Committee, at
the time of grant of a Performance Award, as likely to be a
Covered Employee with respect to a specified fiscal year. If any
provision of the Plan as in effect on the date of adoption of
any agreements relating to Performance Awards does not comply or
is inconsistent with the requirements of Code
Section 162(m) or regulations thereunder, such provision
shall be construed or deemed amended to the extent necessary to
conform to such requirements. |
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6.1 Aggregate Number of Shares
Available for Awards. The maximum aggregate number of Shares
that may be delivered to Participants or their Beneficiaries
pursuant to all Awards granted under the Plan shall be 5,000,000
which represents 1,900,000 Shares that are available for
issuance under the Current Plans plus 3,100,000 additional
Shares; provided, however, that no more than 1,000,000 Shares
may be issued pursuant to Full-Value Awards. Upon shareholder
approval of the Plan, no further awards will be made under the
Current Plans. Any Shares underlying any award under the Current
Plans or any Award under the Plan that is cancelled, forfeited,
lapses or is otherwise terminated without an issuance of Shares
being made thereunder will no longer be counted against the
foregoing maximum share limitation and may again be made subject
to Awards under the Plan; provided, however, that
upon the exercise of a stock appreciation right, the full number
of Shares underlying such stock appreciation right on the date
of grant will be counted against the aggregate Share limitation
irrespective of the manner in which such stock appreciation
right is settled. |
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6.2 Per Participant Limitation
on Share-Based Awards. In any calendar year, no Participant
may be granted Awards that relate to more than
500,000 Shares. This Section 6.2 shall apply only with
respect to Awards that are denominated by a specified number of
Shares, even if the Award may be settled in cash or a form other
than Shares. If the number of Shares ultimately payable in
respect of an Award is a function of future achievement of
performance targets, then for purposes of this limitation, the
number of Shares to which such Award relates shall equal the
number of Shares that would be payable assuming maximum
performance was achieved. |
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6.3 Per Participant Limitation
on Other Awards. In any calendar year, no Participant may be
granted Awards not otherwise described in Section 6.2 that
can be settled for cash, Shares or other consideration having a
value in excess of $5,000,000. |
In the event of any change in the outstanding Shares by reason
of any Share dividend or split, reorganization,
recapitalization, merger, amalgamation, consolidation, spin-off,
combination or exchange of Shares, repurchase, liquidation,
dissolution or other corporate exchange, any large, special and
non-recurring dividend or distribution to shareholders, or other
similar corporate transaction, the Committee may make such
substitution or adjustment, if any, as it deems to be equitable
and in order to preserve, without enlarging, the rights of
Participants, as to (i) the number and kind of Shares which
may be delivered pursuant to Sections 6.1 and 6.2,
(ii) the number and kind of Shares subject to or
deliverable in respect of outstanding Awards, and (iii) the
exercise price, grant price or purchase price relating to any
Award. In addition, the Committee is authorized to make
adjustments in the terms and conditions of, and the criteria
included in, Awards (including cancellation of Awards in
exchange for the intrinsic (i.e., in-the-money) value, if any,
of the vested portion thereof, substitution of Awards using
securities or other obligations of a successor or other entity,
acceleration of the expiration date for Awards, or adjustment to
performance goals in respect of Awards) in recognition of
unusual or nonrecurring events (including events described in
the preceding sentence, as well as acquisitions and dispositions
of businesses and assets) affecting the Company, any Subsidiary
or any business unit, or the financial statements of the Company
or any Subsidiary, or in response to changes in applicable laws,
regulations, or accounting principles. Notwithstanding the
foregoing, if any such event will result in the acquisition of
all or substantially all of the Companys outstanding
Shares, then if the document governing such acquisition (e.g.,
merger agreement) specifies the treatment of outstanding Awards,
such treatment shall govern without the need for any action by
the Committee.
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8.1 Compliance with Laws and
Obligations. The Company shall not be obligated to issue or
deliver Shares in connection with any Award or take any other
action under the Plan in a transaction subject to the
registration requirements of any applicable securities law, any
requirement under any listing agreement between the Company and
any securities exchange or automated quotation system, or any
other law, regulation, or contractual obligation of the Company,
until the Company is satisfied that such laws, regulations, and
other obligations of the Company have been complied with in
full. Certificates representing Shares issued under the Plan
will be subject to such stop-transfer orders and other
restrictions as may be applicable under such laws, |
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regulations, and other obligations of the Company, including any
requirement that a legend or legends be placed thereon. |
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8.2 Limitations on
Transferability. Awards and other rights under the Plan will
not be transferable by a Participant except to a Beneficiary in
the event of the Participants death (to the extent any
such Award, by its terms, survives the Participants
death), and, if exercisable, shall be exercisable during the
lifetime of a Participant only by such Participant or his
guardian or legal representative; provided,
however, that such Awards and other rights may be
transferred during the lifetime of the Participant, for purposes
of the Participants estate planning or other purposes
consistent with the purposes of the Plan (as determined by the
Committee), and may be exercised by such transferees in
accordance with the terms of such Award, but only if and to the
extent permitted by the Committee. Awards and other rights under
the Plan may not be pledged, mortgaged, hypothecated, or
otherwise encumbered, and shall not be subject to the claims of
creditors. A Beneficiary, transferee, or other person claiming
any rights under the Plan from or through any Participant shall
be subject to all terms and conditions of the Plan and any Award
Agreement applicable to such Participant, except as otherwise
determined by the Committee, and to any additional terms and
conditions deemed necessary or appropriate by the Committee. |
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8.3 No Right to Continued
Employment; Leaves of Absence. Neither the Plan, the grant
of any Award, nor any other action taken hereunder shall be
construed as giving any employee, consultant, director, or other
person the right to be retained in the employ or service of the
Company or any of its Subsidiaries (for the vesting period or
any other period of time), nor shall it interfere in any way
with the right of the Company or any of its Subsidiaries to
terminate any persons employment or service at any time.
Unless otherwise specified in the applicable Award Agreement,
(i) an approved leave of absence shall not be considered a
termination of employment or service for purposes of an Award
under the Plan, and (ii) any Participant who is employed by
or performs services for a Subsidiary shall be considered to
have terminated employment or service for purposes of an Award
under the Plan if such Subsidiary is sold or no longer qualifies
as a Subsidiary of the Company, unless such Participant remains
employed by the Company or another Subsidiary. |
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8.4 Taxes. The Company and
any Subsidiary is authorized to withhold from any delivery of
Shares in connection with an Award, any other payment relating
to an Award, or any payroll or other payment to a Participant,
amounts of withholding and other taxes due or potentially
payable in connection with any transaction involving an Award,
and to take such other action as the Committee may deem
advisable to enable the Company, its Subsidiaries and
Participants to satisfy obligations for the payment of
withholding taxes and other tax obligations relating to any
Award. This authority shall include authority to withhold or
receive Shares or other consideration and to make cash payments
in respect thereof in satisfaction of withholding tax
obligations. |
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8.5 Changes to the Plan and
Awards. The Board may amend, suspend, discontinue, or
terminate the Plan or the Committees authority to grant
Awards under the Plan without the consent of shareholders or
Participants, except that any amendment shall be subject to the
approval of the Companys shareholders at or before the
next annual meeting of shareholders for which the record date is
after the date of such Board action if (i) it materially
modifies the terms of the Plan or (ii) such shareholder
approval is required by any applicable law, regulation or stock
exchange rule. The Board may otherwise, in its discretion,
determine to submit other such amendments to shareholders for
approval; provided, however, that, without the
consent of an affected Participant, no such action may
materially impair the rights of such Participant under any Award
theretofore granted. The Committee may amend, suspend,
discontinue, or terminate any Award theretofore granted and any
Award Agreement relating thereto; provided,
however, that, without the consent of an affected
Participant, no such action may materially impair the rights of
such Participant under such Award. Any action taken by the
Committee pursuant to Section 7 shall not be treated as an
action described in this Section 8.5. |
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8.6 No Right to Awards; No
Shareholder Rights. No Participant or other person shall
have any claim to be granted any Award under the Plan, and there
is no obligation for uniformity of treatment of Participants,
employees, consultants, or directors. No Award shall confer on
any Participant any of the rights of a shareholder of the
Company unless and until Shares are duly issued or transferred
and delivered to the Participant in accordance with the terms of
the Award. |
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8.7 Unfunded Status of Awards;
Creation of Trusts. The Plan is intended to constitute an
unfunded plan for incentive compensation. With
respect to any payments not yet made to a Participant pursuant
to an Award, |
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nothing contained in the Plan or any Award shall give any such
Participant any rights that are greater than those of a general
creditor of the Company; provided, however, that
the Committee may authorize the creation of trusts or make other
arrangements to meet the Companys obligations under the
Plan to deliver cash, Shares, other Awards, or other
consideration pursuant to any Award, which trusts or other
arrangements shall be consistent with the unfunded
status of the Plan unless the Committee otherwise determines. |
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8.8 Nonexclusivity of the
Plan. Neither the adoption of the Plan by the Board nor the
submission of the Plan or of any amendment to shareholders for
approval shall be construed as creating any limitations on the
power of the Board to adopt such other compensatory arrangements
as it may deem desirable, including the granting of awards
otherwise than under the Plan, and such arrangements may be
either applicable generally or only in specific cases. |
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8.9 Successors and Assigns.
The Plan and Award Agreements may be assigned by the Company to
any successor to the Companys business. The Plan and any
applicable Award Agreement shall be binding on all successors
and assigns of the Company and a Participant, including any
permitted transferee of a Participant, the Beneficiary or estate
of such Participant and the executor, administrator or trustee
of such estate, or any receiver or trustee in bankruptcy or
representative of the Participants creditors. |
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8.10 Governing Law. The Plan
and all Award Agreements shall be governed by and construed in
accordance with the laws of the State of Florida, without giving
effect to any choice of law or conflict of law provision or rule
(whether of the State of Florida or any other jurisdiction) that
would cause the application of the laws of any jurisdiction
other than the State of Florida. |
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8.11 Severability of
Provisions. If any provision of the Plan shall be held
invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provisions hereof, and the Plan shall
be construed and enforced as if such provisions had not been
included. |
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8.12 Plan Termination.
Unless earlier terminated by the Board, the Plan shall terminate
on the day before the tenth anniversary of the later of the date
the Companys shareholders originally approved the Plan
(May 6, 2005) or the date of any subsequent shareholder
approval of the Plan. Upon any such termination of the Plan, no
new authorizations of grants of Awards may be made, but
then-outstanding Awards shall remain outstanding in accordance
with their terms, and the Committee otherwise shall retain its
full powers under the Plan with respect to such Awards. |
A-8
APPENDIX B
RYDER SYSTEM, INC.
STOCK PURCHASE PLAN FOR EMPLOYEES
The Ryder System, Inc. Stock Purchase Plan for Employees, also
known as RyderShares (the Plan)
is intended to provide an opportunity for Eligible Employees of
the Company and its Participating Subsidiaries to acquire
ownership in the Company through the purchase of Shares. The
Company expects to benefit from the added interest which
Eligible Employees will have in the welfare of the Company as a
result of their ownership in the Company.
The following capitalized terms used in the Plan have the
respective meanings set forth in this Section:
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(a) Act: The Securities Exchange Act of 1934, as
amended, or any successor thereto. |
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(b) Beneficial Owner: As such term is defined in
Rule 13(d)(3) under the Act (or any successor Rule thereto). |
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(c) Beneficiary: The person or persons designated by
a Participant, upon such forms as shall be provided by the
Committee, to receive payments of the vested portion of the
Participants Brokerage Account after the
Participants death. If the Participant shall fail to
designate a Beneficiary, or if for any reason such designation
shall be ineffective, or if such Beneficiary shall predecease
the Participant or die simultaneously with him or her, then the
Beneficiary shall be, in the following order of preference:
(i) the Participants surviving spouse, or
(ii) the Participants estate. |
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(d) Board: The Board of Directors of the Company. |
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(e) Brokerage Account: An account established in a
Participants name with the Plan Broker. |
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(f) Change of Control: For purposes of the Plan, a
Change of Control shall be deemed to have occurred
if: |
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(i) any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Act, as amended) (a
Person) becomes the Beneficial Owner, directly or
indirectly, of twenty percent (20%) or more of the combined
voting power of the Companys outstanding voting securities
ordinarily having the right to vote for the election of
directors of the Company; provided, however, that
for purposes of this subparagraph (i), the following
acquisitions shall not constitute a Change of Control: any
acquisition by any employee benefit plan or plans (or related
trust) of the Company and its subsidiaries and affiliates or any
acquisition by any corporation pursuant to a transaction which
complies with clauses (a), (b) and (c) of
subparagraph (iii) of this Section 2(f); or |
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(ii) the individuals who, as of August 18, 1995,
constituted the Board of Directors of the Company (the
Board generally and as of August 18, 1995 the
Incumbent Board) cease for any reason to constitute
at least two-thirds (2/3) of the Board, provided that any person
becoming a director subsequent to August 18, 1995 whose
election, or nomination for election, was approved by a vote of
the persons comprising at least two-thirds (2/3) of the
Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection
with an actual or threatened election contest, as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the
1934 Act) shall be, for purposes of the Plan, considered as
though such person were a member of the Incumbent Board; or |
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(iii) there is a reorganization, merger or consolidation of
the Company (a Business Combination), in each case,
unless, following such Business Combination, (a) all or
substantially all of the individuals and entities who were the
Beneficial Owners, respectively, of the Companys
outstanding common stock and outstanding voting securities
ordinarily having the right to vote for the election of
directors of the Company immediately prior to such Business
Combination beneficially own, directly or indirectly, more than
fifty percent (50%) of, respectively, the then outstanding
shares of common stock and the combined voting |
B-1
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power of the then outstanding voting securities ordinarily
having the right to vote for the election of directors, as the
case may be, of the Company resulting from such Business
Combination (including, without limitation, a Company which as a
result of such transaction owns the Company or all or
substantially all of the Companys assets either directly
or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such
Business Combination, of the Companys outstanding common
stock and outstanding voting securities ordinarily having the
right to vote for the election of directors of the Company, as
the case may be, (b) no Person (excluding any Company
resulting from such Business Combination or any employee benefit
plan or plans (or related trust) of the Company or such Company
resulting from such Business Combination and their subsidiaries
and affiliates) beneficially owns, directly or indirectly, 20%
or more of the combined voting power of the then outstanding
voting securities of the Company resulting from such Business
Combination and (c) at least two-thirds (2/3) of the
members of the board of directors of the Company resulting from
such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business
Combination; or |
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(iv) there is a liquidation or dissolution of the Company
approved by the shareholders; or |
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(v) there is a sale of all or substantially all of the
assets of the Company. |
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If a Change of Control occurs and if a Participants
employment is terminated prior to the date on which the Change
of Control occurs, and if it is reasonably demonstrated by the
Participant that such termination of employment (A) was at
the request of a third party who has taken steps reasonably
calculated to effect a Change of Control or (B) otherwise
arose in connection with or in anticipation of a Change of
Control, a Change of Control shall be deemed to have
retroactively occurred on the date immediately prior to the date
of such termination of employment. |
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(g) Code: The Internal Revenue Code of 1986, as
amended, or any successor thereto. |
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(h) Committee: The Compensation Committee of the
Board. |
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(i) Company: Ryder System, Inc., a Florida
corporation. |
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(j) Compensation: Base salary and overtime, in each
case prior to reductions for pre-tax contributions made to a
plan, or salary reduction contributions to a plan excludable
from income under Section 125 of the Code. Notwithstanding
the foregoing, Compensation shall exclude, stay-on bonuses,
retirement income, change-in-control payments, stock
appreciation rights and other equity-based compensation and
other forms of special remuneration. |
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(k) Disability: A Participants inability to
engage in any substantial gainful activity by reason of any
medically determined physical or mental impairment which can be
expected to result in death or which has lasted or can be
expected to last for a continuous period of not less than
12 months, as determined in a uniform and
non-discriminatory manner by the Committee after requiring any
medical examinations by a physician or reviewing any medical
evidence which the Committee considers necessary, and which
results in the Participants separation of employment. |
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(l) Disqualifying Disposition: As such term is
defined in Section 10(f) of the Plan. |
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(m) Effective Date: July 1, 1998, as amended
through October 8, 2004. |
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(n) Eligible Employee: Any Employee of the Company
or of a Participating Subsidiary who is eligible to participate
in the Plan pursuant to Section 6 of the Plan. |
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(o) Employee: Any employee of the Company or of a
Participating Subsidiary. |
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(p) Enrollment Period: The month immediately
preceding the Offering Commencement Date for which participation
is sought by an Eligible Employee. |
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(q) Fair Market Value: The closing price of the
Shares on a given day as reported by the composite transaction
reporting system for securities listed on the New York Stock
Exchange, or, if no sales of the Shares were made on that day,
on the most recently preceding date on which there was such a
sale. |
B-2
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(r) Maximum Share Amount: The maximum number of
Shares that a Participant may purchase on any given Offering
Period is (i) between 1% and 15% of the Participants
Compensation; or (ii) a specific dollar amount with a
minimum of five dollars ($5.00) per pay period. Subject to
Section 423 of the Code, purchases shall not exceed $25,000
fair market value per annum determined at the time such option
is granted. |
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(s) Offering Commencement Date: The first day of an
Offering Period. |
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(t) Offering Period: Period of time during which
Participants will make contributions and pay for their Shares
pursuant to Section 5 of the Plan. |
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(u) Participant: Any Eligible Employee who
participates in the Plan. |
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(v) Participating Subsidiary: Any U.S. or
Canadian subsidiary of the Company. |
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(w) Payroll Deduction Account: An account to which
payroll deductions of Participants are credited pursuant to
Section 10(c) of the Plan. |
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(x) Plan: The Ryder System, Inc. Stock Purchase Plan
for Employees, also known as RyderShares. |
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(y) Plan Broker: A stock brokerage or other
financial services firm designated by the Committee in its sole
discretion to provide administrative services to the Plan. |
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(z) Purchase Date: The last trading day of an
Offering Period. |
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(aa) Purchase Price: The purchase price per Share as
determined pursuant to Section 9 of the Plan. |
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(bb) Retirement: An Employees termination of
employment from the Company or a Participating Subsidiary at or
after Retirement Age. |
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(cc) Retirement Age: The earlier of (i) the
date on which an Employee attains age 65, and (ii) the
date on which an Employee has both (a) attained age 55
and (b) completed at least 10 years of Service. For
purposes of this provision, Service shall mean that period of an
Employees continuous uninterrupted employment with the
Company or a Participating Subsidiary, from the Employees
last date of hire to the date of termination of his or her
employment for any reason; provided, however, that
the employment of an Employee, who immediately before his or her
current employment was employed by a predecessor or acquired
business continuously up to the date of its merger with or
acquisition by the Company or a Participating Subsidiary, shall
include only that part of his or her employment for said
business which has occurred after the date fixed for this
purpose by the Company and provided that the same date is
uniformly fixed for this purpose as to all of the Employees of a
given predecessor or acquired business. An Employee may work
simultaneously for the Company and a Participating Subsidiary or
for more than one Participating Subsidiary, but the total period
of his or her employment shall not be increased by reason of
such simultaneous employment. |
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(dd) Separation of employment: The discontinuance of
a Participants employment relationship with the Company or
a Participating Subsidiary due to Retirement, Disability, death
or other termination of employment (voluntary or involuntary). |
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(ee) Shares: Shares of common stock, par value
$0.50 per Share, of the Company. |
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(ff) Subsidiary: A subsidiary corporation, as
defined in Section 424(f) of the Code (or any successor
Section thereto). |
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3. |
Shares Subject to the Plan. |
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(a) Shares Authorized: Subject to Section 17,
the Board has authorized 1,700,000 Shares (as of
October 2, 2001) which may be issued to the Participants of
the Plan as well as an additional 1,000,000 shares (as of
May 7, 2005) upon shareholder approval. The Shares will be
made available to the Participants in a series of quarterly
Offering Periods which shall continue until all Shares reserved
under the Plan have been issued to the Participants. The
issuance of the Shares pursuant to the Plan shall reduce the
total number of Shares available under the Plan. Any Shares not
issued on a given Offering Period shall be available for
issuance in subsequent Offering Periods. |
B-3
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(b) Maximum Shares: If the total number of Shares
exercised by all the Participants on a given Purchase Date
exceeds the maximum number of Shares reserved under the Plan,
the Company (i) shall make a pro rata allocation of the
Shares available for delivery and distribution in as nearly a
uniform manner as shall be practicable and as the Committee
shall determine to be equitable, and (ii) all funds not
used to purchase Shares on the Purchase Date shall be returned,
without interest, to the Participants as promptly as reasonably
possible. |
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(c) Issuance of Shares: Shares to be delivered to a
Participant pursuant to the Plan, will be issued in the name of
the Participant or, if the Participant so directs by written
notice pursuant to Section 25 of the Plan or to the Plan
Broker prior to the Purchase Date applicable thereto, in the
names of the Participant and one such other person as may be
designated by the Participant, as joint tenants with rights of
survivorship, to the extent permitted by applicable law. |
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4. |
Administration of the Plan. |
The Plan shall be administered by the Committee, which consists
of at least two individuals who are each non-Employee
directors within the meaning of Rule 16b-3 under the
Act (or any successor Rule thereto). The Committee is authorized
to interpret the Plan, to establish, amend and rescind any rules
and regulations relating to the Plan, and to make any other
determinations that it deems necessary or desirable for the
administration of the Plan. The Committee may correct any defect
or supply any omission or reconcile any inconsistency in the
Plan in the manner and to the extent the Committee deems
necessary or desirable. Any decision of the Committee in the
interpretation and administration of the Plan, as described
herein, shall lie within its sole and absolute discretion and
shall be final, conclusive and binding on all parties concerned
(including, but not limited to, Participants and their
beneficiaries or successors and joint owners). Subject to
Section 16 of the Act or other applicable law, the
Committee may delegate its duties and powers under the Plan to
such individuals as it designates in its sole discretion.
During the Offering Period, Participants will make contributions
and pay for their Shares under the Plan. The Offering Period
shall be the three (3) month period starting each January,
April, July, and October. The first Offering Period shall
commence on July 1, 1998 (Offering Commencement Date) and
end on September 30, 1998 (Purchase Date). Notwithstanding
the foregoing, the Committee may change the duration of any
Offering Period in its sole discretion.
Any individual who was an active* Employee for ninety
(90) days prior to an Offering Period is eligible to
participate in the Plan, except for the following Employees:
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(a) Any Employee whose customary employment is twenty
(20) hours or less per week within the meaning of
Section 423(b)(4)(B) of the Code; |
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(b) Any Employee who participated in an Offering Period and
would immediately thereafter own shares possessing five percent
(5%) or more of the total combined voting power or value of all
classes of shares of the Company within the meaning of
Section 423(b)(3) of the Code. For purposes of this
Section 6(b) of the Plan, the Rules of Section 424(d)
of the Code shall apply in determining stock ownership of an
individual, and stock which the Employee may purchase shall be
treated as stock owned by the Employee; or |
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(c) Effective for periods prior to February 18, 2000,
Employees who are eligible to participate in any of the
Companys executive stock option plans, including, but not
limited to, the Ryder System, Inc. 1995 Stock Incentive Plan or
the Ryder System Profit Incentive Stock Plan. Effective for
periods on and after October 2, 2001, Employees in
Management Level MS 17 and higher. |
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* |
An Employee shall be considered actively employed when he/she is
presently performing his/her regular duties with the Company or
a Participating Subsidiary. |
B-4
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7. |
Participation in the Plan. |
The Committee shall set forth procedures pursuant to which
Participants may elect to participate in a given Offering Period
under the Plan.
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8. |
Enrollment and Restrictions on Participation. |
The Enrollment Period is the period of time during which
Participants may elect to participate in an offering. An
Eligible Employee may enroll and become a Participant by calling
the automated voice enrollment system during the Enrollment
Period for the applicable Offering Period for which
participation is sought. Properly authorized payroll deductions
for a Participant shall commence on the applicable Offering
Commencement Date when his/her authorization for a payroll
deduction becomes effective and shall end when terminated by the
Participant. No Participant shall be permitted to purchase
Shares under the Plan (or under any other employee stock
purchase plan within the meaning of Section 423(b) of
the Code, of the Company or any Participating Subsidiary) with
an aggregate Fair Market Value (as determined as of each
Offering date) in excess of $25,000.00 for any one calendar year
within the meaning of Section 423(b)(8) of the Code.
The Purchase Price per Share subject to an offering shall be
determined by the Board, in its sole discretion, and shall
remain in effect unless modified at least thirty (30) days
prior to the applicable Offering Commencement Date, but in no
event shall be less than the lesser of:
(a) Eighty-five percent (85%) of the Fair Market Value of a
Share on the Offering Commencement Date; or
(b) Eighty-five percent (85%) of the Fair Market Value of a
Share on the Purchase Date.
(a) Payroll deductions shall be made on each day that
Participants are paid during an Offering Period with respect to
all Participants who elect to participate in such Offering
Period. The deductions shall be made as a percentage of the
Participants Compensation in one percent (1%) increments,
from one percent (1%) to fifteen percent (15%) of such
participants Compensation, or a specific dollar amount
with a minimum of five dollars ($5.00) per pay period, as
elected by the Participant. For any given Offering Period,
payroll deductions shall commence on the Offering Commencement
Date and shall end on the related Purchase Date, unless sooner
altered or terminated as provided in the Plan.
(b) Subject to Section 12, a Participant may choose to
change the rate of payroll deductions at any time. To effect a
change in the rate of payroll deductions, the Participant must
call the automated voice enrollment system for the change to
take effect on the next Offering Commencement Date.
(c) All payroll deductions made with respect to a
Participant shall be credited to his/her Payroll Deduction
Account under the Plan and shall be deposited with the general
funds of the Company, and no interest shall accrue on the
amounts credited to such Payroll Deduction Accounts. All payroll
deductions received or held by the Company may be used by the
Company for any corporate purpose, and the Company shall not be
obligated to segregate such payroll deductions. A Participant
may not make any separate cash payment into his/her Payroll
Deduction Account, and payment for Shares purchased under the
Plan may not be made in any form other than by payroll
deductions.
(d) On each Purchase Date, the Company shall apply all
funds then in a Participants Payroll Deduction Account to
purchase Shares (in whole and/or fractional Shares, as the case
may be). In the event that the number of Shares to be purchased
by all the Participants in the Offering Period exceeds the
number of Shares then available for issuance under the Plan,
(i) the Company shall make a pro rata allocation of the
Shares available for delivery and distribution in as nearly a
uniform a manner as shall be practicable and as the Committee
shall determine to be equitable and (ii) all funds not used
to purchase Shares on the Purchase Date shall be returned,
without interest, to the Participant as promptly as reasonably
possible.
(e) As soon as practicable following the Purchase Date, the
number of Shares purchased by each Participant shall be
deposited into the Brokerage Account in the Participants
name. Dividends that are declared on the Shares
B-5
held in such account shall be reinvested in whole Shares at the
current Fair Market Value in the open market. The Company shall
pay the brokerage fees for these purchases. Subject to
Section 10(f) of the Plan, dividends on Shares that a
Participant holds in a certificate form, will be sent directly
to the Participant by the dividend paying agent. The Participant
may opt out of this dividend reinvestment program.
(f) Once the Shares have been purchased, the Participant
may (i) transfer his/her Shares to another brokerage
account of Participants choosing or (ii) request in
writing that a stock certificate be issued to him/her with
respect to the whole Shares in his/her Plan Broker account and
that any fractional Shares remaining in such account be paid in
cash to him/her, except that, (1) Participants in
Management Levels MS 14-16 may not sell, transfer or
request a certificate for one year from the date of purchase and
(2) effective January 1, 2005 Participants below
Management Level 14 may not sell, transfer or request a
certificate for three months from the date of purchase. The
Committee may require, in its sole discretion, that the
Participant bear the cost of transferring such Shares or issuing
certificates for such Shares. Any Participant who engages in a
Disqualifying Disposition of his/her Shares within
the meaning of Section 421(b) of the Code shall notify the
Company of such Disqualifying Disposition in accordance with
Section 22 of the Plan.
(g) Participants shall have no interest or voting rights in
the Shares until such Shares have been purchased on the
applicable Purchase Date.
(h) All other payroll deductions will be made before
deductions under the Plan. If after making these other
deductions the Employees remaining compensation is less
than the deduction under the Plan, no deduction with respect to
participation in the Plan will be made for that pay period.
(i) In the event that a Participant makes a hardship
withdrawal of employee deferral (401(k)) contributions under a
Code Section 401(k) plan of the Company or an affiliate,
such Participants payroll deductions and the purchase of
Shares under the Plan shall be suspended in accordance with the
provisions of such Code Section 401(k) plan. If such a
Participant has a cash balance credited to his payroll deduction
account at the time of withdrawal that has not already been
applied to the purchase of Shares, such cash balance shall be
returned to the Participant as soon as administratively possible.
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11. |
Joint Ownership of Shares. |
For periods prior to January 1, 2001 only, any Participant
may designate a co-owner or joint tenant provided that such
person is of legal age in the Participants state of
residence. The following rules apply to joint accounts under the
Plan:
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(i) Either party can order Shares to be sold, but any
checks paid out of the Brokerage Account will be made payable to
both owners; |
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(ii) Any transfer of joint stock requires the signatures of
both owners; |
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(iii) In case of the death of either owner, legal documents
are required before the Shares can be re-registered to the
surviving owner or anyone else; and, |
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(iv) Written notification signed by both owners is required
to authorize the Plan Broker to make any ownership changes. |
Each Participant may withdraw from an Offering Period under such
terms and conditions as are established by the Committee in its
sole discretion. Upon a Participants withdrawal from an
Offering Period, all accumulated payroll deductions in the
Payroll Deduction Account shall be returned, without interest,
to such Participant, as soon as practicable, and he/she shall
not be entitled to any Shares on the Purchase Date thereafter
with respect to the Offering Period in effect at the time of
such withdrawal. Such Participant shall be permitted to
participate in subsequent Offering Periods pursuant to such
terms and conditions established by the Committee in its sole
discretion.
B-6
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13. |
Termination of Employment. |
A Participant shall cease to participate in the Plan upon
his/her termination of employment for any reason (including, but
not limited to, Retirement or Disability). In such event, all
payroll deductions credited to the Participants Payroll
Deduction Account shall be returned, without interest, to such
Participant or to his/her designated Beneficiary, as the case
may be, as soon as practicable, and such Participant or
Beneficiary shall have no future rights to participate in any
future Offering Periods. For periods prior to June 30,
2001, if, upon termination of employment, a participating
employee receives severance payments under a severance
agreement, payroll deductions under the Plan shall continue
until the last day of the severance period.
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14. |
Termination of Employment Due to Death. |
Upon termination of the Participants employment because of
death, his/her Beneficiary shall have the right to elect, by
written notice pursuant to Section 25 of the Plan prior to
the earlier of the Purchase Date or the expiration of a period
of sixty (60) days commencing with the date of death of the
Participant, either:
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(a) To withdraw all of the payroll deductions credited to
the Participants Payroll Deduction Account under the
Plan, or |
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(b) To purchase on the next Purchase Date following the
date of the Participants death the number of full or
fractional Shares which the accumulated payroll deductions in
the Participants Payroll Deduction Account at the date of
the Participants death will purchase at the applicable
Purchase Price, and any excess in such account at that point
will be returned to said Beneficiary, without interest. |
In the event that no such written notice of election shall be
duly received by the Plan Broker, the Beneficiary shall
automatically be deemed to have elected Section 14
(a) of the Plan.
If a Participant goes on a leave of absence, such Participant
shall have the right to (a) elect to withdraw from an
Offering Period pursuant to Section 12, or (b) remain
a Participant in the Plan during such leave of absence.
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16. |
Termination and Amendment of the Plan. |
The Plan shall terminate (a) on the date that all of the
Shares for sale under the Plan have been purchased, or
(b) at any time, at the discretion of the Committee;
provided, however, that no termination shall
affect outstanding subscriptions.
The Company, by action of the Board (or a duly authorized
committee), may at any time amend the Plan. No amendment shall
be effective unless approved by the shareholders of the Company
if shareholder approval of such amendment is required to comply
with Code Section 423 or to comply with any other
applicable law, regulation, or stock exchange rule.
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17. |
Adjustments Upon Certain Events. |
Notwithstanding any other provisions in the Plan to the
contrary, the following provisions shall apply to Shares
purchased under the Plan:
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(a) In the event of any change in the outstanding Shares
under the Plan by reason of any Share dividend or split,
reorganization, re-capitalization, merger, consolidation,
spin-off, combination or exchange of Shares or other corporate
exchange, or any distribution to shareholders of Shares other
than regular cash dividends, the Committee in its sole
discretion and without liability to any Person may make such
substitution or adjustment, if any, as it deems to be equitable,
as to (i) the number or kind of Shares or other securities
issued or reserved for issuance pursuant to the Plan,
(ii) the Purchase Price and/or (iii) any other
affected provisions under the Plan. |
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(b) In the event of a Change in Control, the Committee in
its sole discretion and without liability to any person, may
take such actions, if any, as it deems necessary or desirable
with respect to any purchase of Shares under the Plan as of the
date of the consummation of the Change in Control. |
B-7
Neither payroll deductions credited to a Participants
Payroll Deduction Account nor any rights to receive Shares under
the Plan may be assigned, transferred, pledged, or otherwise
disposed of in any way by the Participant other than by will or
the laws of descent and distribution. Any such attempted
assignment, transfer, pledge or other disposition shall be
without effect, except that the Company may treat such act as an
election to withdraw funds in accordance with Section 12 of
the Plan.
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19. |
No Right to Employment. |
The purchase of Shares under the Plan shall impose no obligation
on the Company or any Participating Subsidiary to continue the
employment of a Participant and shall not lessen or affect the
Companys or Participating Subsidiarys right to
terminate the employment of such Participant.
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20. |
Application of Funds. |
All funds received or held by the Company under the Plan may be
used for any corporate purpose.
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21. |
Section 423 of the Code. |
The Plan is intended to qualify as an employee stock
purchase plan within the meaning of Section 423 of
the Code (or any successor Section thereto). Accordingly, all
Participants shall have the same rights and privileges under the
Plan, subject to any exceptions that are permitted under
Section 423(b)(5) of the Code. Any provision of the Plan
that is inconsistent with Section 423 of the Code (or any
successor provision) shall, without further act or amendment, be
reformed to comply with the requirements of Section 423.
This Section 21 of the Plan shall take precedence over all
other provisions of the Plan.
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22. |
Securities Laws Restrictions. |
(a) Share Issuance: Notwithstanding any other
provision of the Plan or any agreements entered into pursuant
hereto, the Company shall not be required to issue or deliver
any certificate for Shares under the Plan, and Shares shall not
be considered to have been purchased notwithstanding the tender
by the Participant of any consideration therefor, unless and
until each of the following conditions has been fulfilled:
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(i) There shall be in effect with respect to such Shares a
registration statement under the Act and any applicable state
securities laws if the Committee, in its sole discretion, shall
have determined to file, cause to become effective and maintain
the effectiveness of such registration statement; or if the
Committee has determined not to so register the Shares to be
issued under the Plan, (a) exemptions from registration
under the Act and applicable state securities laws shall be
available for such issuance (as determined by counsel to the
Company) and (b) there shall have been received from the
Participant (or, in the event of death or disability), the
Participants heir(s) or legal representative(s) any
representations or agreements requested by the Company in order
to permit such issuance to be made pursuant to such
exemptions; and |
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(ii) There shall have been obtained any other consent,
approval or permit from any state or federal governmental agency
which the Committee shall, in its sole discretion upon the
advice of counsel, deem necessary or advisable. |
(b) Share Transfers: Shares issued pursuant to the
Plan may not be sold, assigned, transferred, pledged, encumbered
or otherwise disposed of, whether voluntarily or involuntarily,
directly or indirectly, by operation of law or otherwise, except
pursuant to registration under the Act and applicable state
securities laws or pursuant to exemptions from such
registrations. The Company may condition the sale, assignment,
transfer, pledge, encumbrance or other disposition of such
Shares not issued pursuant to an effective and current
registration statement under the Act and all applicable state
securities laws on the receipt from the party to whom the Shares
are to be so transferred of any representations or agreement
requested by the Company in order to permit such transfer to be
made pursuant to exemptions from registration under the Act and
applicable state securities laws.
B-8
The Participants employer shall have the right to withhold
from such Participant such withholding taxes as may be required
by federal, state, local or other law, or to otherwise require
the Participant to pay such withholding taxes. A Participant may
elect to pay a portion or all of such withholding taxes by
(i) delivery of Shares or (ii) having Shares withheld
by the Company from the Shares otherwise to be received. The
Shares so delivered or withheld shall have an aggregate Fair
Market Value equal to the amount of such withholding taxes.
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24. |
Canadian Participants. |
With respect to Participants who reside or work in Canada, the
Committee may, in its sole discretion, amend the terms of the
Plan with respect to such Participants in order to conform such
terms with the requirements of local law.
All notices and other communications hereunder shall be in
writing and hand delivered or mailed by registered or certified
mail (return receipt requested) or sent by any means of
electronic message transmission with delivery confirmed (by
voice or otherwise) and will be deemed given on the date on
which such notice is received: Ryder System, Inc., Payroll
Department, Attn: Director of Payroll, 11690 N.W. 105th Street,
Miami, Florida 33178; Facsimile (305) 500-4599.
The Plan shall be governed by and construed in accordance with
the laws of the State of Florida applicable to contracts made
and to be performed in the State of Florida.
B-9
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Ryder System, Inc. |
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11690 N.W. 105th Street |
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Miami, Florida 33178 |
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www.ryder.com |
2990-PS-05
[MAP AND DIRECTIONS]
PROXY
RYDER SYSTEM, INC.
ANNUAL MEETING MAY 6, 2005
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Gregory T. Swienton, Tracy A. Leinbach and Robert D. Fatovic,
as true and lawful agents and proxies with full power of substitution in each, to represent the
undersigned on all matters to come before the meeting and to vote as designated below, all the
shares of common stock of RYDER SYSTEM, INC., held of record by the undersigned on March 11, 2005,
during or at any adjournment of the Annual Meeting of Shareholders to be held at 11:00 a.m., EDT at
the Hilton Miami Airport and Towers, 5101 Blue Lagoon Drive, Miami, Florida 33126 on Friday, May 6,
2005.
COMMENTS or CHANGE OF ADDRESS
(IF YOU HAVE WRITTEN ON THE ABOVE SPACE,
PLEASE MARK THE CORRESPONDING BOX ON
THE REVERSE OF THIS CARD.)
ON THE REVERSE SIDE OF THIS CARD YOU MAY SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES OR
SIMPLY SIGN AND RETURN THIS CARD TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS
RECOMMENDATIONS. UNLESS YOU VOTE BY TELEPHONE OR INTERNET, YOU MUST SIGN THIS CARD AND RETURN IT IN
THE ENCLOSED ENVELOPE SO THAT THE PROXY COMMITTEE MAY VOTE YOUR SHARES.
CONTINUED AND TO BE SIGNED ON
REVERSE SIDE
C/O EQUISERVE TRUST COMPANY N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694
VOTER CONTROL NUMBER
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VOTE BY INTERNET |
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VOTE BY TELEPHONE |
1.
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Log on to the Internet and go to
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1. |
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Call toll-free |
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http://www.eproxyvote.com/r
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OR
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1-877-PRX-VOTE (1-877-779-8683) |
THIS IS YOUR PROXY. YOUR VOTE IS IMPORTANT
Regardless of whether or not you plan to attend the Annual Meeting of Shareholders, you can be sure
your shares are represented
at the Meeting by promptly returning your proxy
(attached below) in the enclosed envelope.
Thank you for your attention to this important matter.
If you vote over the Internet or by telephone, please do not mail this card.
x PLEASE MARK VOTES AS IN THIS EXAMPLE.
The Board of Directors recommends a vote FOR Proposals 1, 2, 3 and 4.
This Proxy Card will be voted FOR Proposals 1, 2, 3 and 4 if no choice is selected.
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1.
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ELECTION OF DIRECTORS.
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2. |
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Ratification of KPMG LLP as independent auditors. |
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NOMINEES: (01) Lynn M. Martin, (02) Hansel E. Tookes II |
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for a term of office expiring at the 2008 Annual Meeting. |
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FOR
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WITHHELD
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FOR
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AGAINST
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ABSTAIN |
¨
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¨
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¨
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¨
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¨
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For all nominees except as noted above |
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3.
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Approval of Ryder System, Inc. 2005 Equity Compensation Plan
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4. |
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Approval of amendment to Ryder System,
Inc. Stock Purchase Plan for Employees to
increase the number of shares issuable
under the plan by 1,000,000. |
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FOR
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AGAINST
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ABSTAIN |
FOR
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AGAINST
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ABSTAIN |
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If you want to vote in accordance with the recommendations of the Board of Directors, simply sign below and return this card.
Change of Address/Comments On Reverse Side ¨
I hereby authorize the proxy committee, in their discretion, to vote for an alternate director
nominee if any nominee listed herein is unavailable, and to use their discretion to vote on any
other matters that may be properly presented before the Annual Meeting and at any adjournment of
the Annual Meeting.
Please sign exactly as name appears hereon. Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or guardian, please note such title.
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Signature
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Date
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Signature
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Date |
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