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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Under Rule 14a-12
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Navistar International Corporation
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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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)
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Amount previously paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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To consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of November 7, 2020, as it may be amended from time to time (the “Merger Agreement”), by and among the Company, TRATON SE, a Societas Europaea (“Parent” or “TRATON”), and Dusk Inc., a Delaware corporation and wholly owned indirect subsidiary of Parent (“Merger Sub”);
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To consider and vote on a proposal to approve, by non-binding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the Merger;
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To elect as directors the nominees named in the accompanying proxy statement;
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To consider and vote on a non-binding, advisory vote on executive compensation as disclosed in the accompanying proxy statement;
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To ratify the appointment of the Company’s independent registered public accounting firm; and
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To approve the adjournment or postponement of the Annual Meeting, if necessary, to continue to solicit votes for the Merger Proposal.
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2021 Proxy Statement
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i
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2021 Proxy Statement
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ii
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Cordially,
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Troy A. Clarke
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Executive Chairman
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Persio V. Lisboa
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President and Chief Executive Officer
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2021 Proxy Statement
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iii
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Walter G. Borst
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Executive Vice President and Chief Financial Officer
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2021 Proxy Statement
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iv
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When
March 2, 2021,
11:00 a.m. — Central Time
Where
Held Virtually
Whether or not you plan to attend virtually the 2021 Annual Meeting of Stockholders, please vote your proxy either by mail, telephone, scanning your QR Code or over the Internet.
How to vote
Virtually at the Annual Meeting:
Stockholders who obtain their 16-digit control number can attend the Annual Meeting virtually and vote at the Annual Meeting.
Via the Internet:
http://www.proxyvote.com
By Mail:
Complete, sign and mail the enclosed proxy card.
By Telephone (Toll Free):
1-800-690-6903
Via Mobile Phone:
Scan your QR Code with your mobile phone.
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To our stockholders:
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On behalf of the Board of Directors of Navistar International Corporation, you are cordially invited to attend our 2021 Annual Meeting of Stockholders.
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Voting Matters
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Board
Recommendation
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Page
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Proposal 1: To adopt the Merger Agreement
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FOR
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Proposal 2: To approve, by non-binding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the Merger
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FOR
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Proposal 3: To elect as directors the nominees named in the accompanying proxy statement
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FOR each director nominee
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Proposal 4: To act on an advisory vote on executive compensation as disclosed in the accompanying proxy statement
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FOR
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Proposal 5: To ratify the appointment of our independent registered public accounting firm
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FOR
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Proposal 6: To approve the adjournment or postponement of the Annual Meeting, if necessary, to continue to solicit votes for the Merger Proposal
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FOR
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We will also act upon any other matters properly brought before the Annual Meeting
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We plan to send a Notice of Internet Availability of Proxy Materials on or about January 29, 2021. The Notice of Internet Availability of Proxy Materials contains instructions on how to access our materials on the Internet, as well as instructions on obtaining a paper copy of the proxy materials. The Notice of Internet Availability of Proxy Materials is not a form for voting and presents only an overview of the proxy materials.
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In order to attend our 2021 Annual Meeting of Stockholders virtually, you must have your assigned 16-digit control number. Procedures for obtaining your assigned 16-digit control number are detailed in the accompanying proxy statement. Attendance and voting is limited to stockholders of record at the close of business on January 22, 2021. If you are the representative of a corporate or institutional stockholder, you must have their assigned 16-digit control number provided on their proxy card, voting instruction form or other applicable proxy notices
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By Order of the Board of Directors,
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RICHARD E. BOND
Secretary
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YOUR VOTE IS IMPORTANT!
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Important Notice of Internet Availability of Proxy Materials for the Stockholders Meeting.
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The Annual Report and Proxy Statement are available at https://ir.navistar.com/
governance/annual-meeting-of-stockholders/default.aspx
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2021 Proxy Statement
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2021 Proxy Statement
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2021 Proxy Statement
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2021 Proxy Statement
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iii
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to consider and vote on a proposal (the “Merger Proposal”) to adopt the Agreement and Plan of Merger, dated as of November 7, 2020 as it may be amended from time to time (the “Merger Agreement”), by and among the Company, TRATON SE, a Societas Europaea (“Parent” or “TRATON”) and Dusk Inc., a Delaware corporation and wholly owned indirect subsidiary of Parent (“Merger Sub”);
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to consider and vote on a proposal (the “Merger Compensation Proposal”) to approve, by non-binding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the Merger (defined below);
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to elect as directors the nominees named in the accompanying proxy statement (the “Election of Directors Proposal”);
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to consider and vote on a non-binding, advisory vote on executive compensation as disclosed in the accompanying proxy statement (the “Say-On-Pay Proposal”);
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to ratify the appointment of the Company’s independent registered public accounting firm (the “Ratification of Independent Accounting Firm Proposal”); and
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to approve the adjournment or postponement of the Annual Meeting, if necessary, to continue to solicit votes for the Merger Proposal (the “Adjournment Proposal”).
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2021 Proxy Statement
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1
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Proposal 1
MERGER PROPOSAL
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For further information please see page 57.
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Proposal 2
MERGER COMPENSATION PROPOSAL
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For further information please see page 113.
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Proposal 3
ELECTION OF DIRECTORS PROPOSAL
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For further information please see page 116.
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Proposal 4
SAY-ON-PAY PROPOSAL
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For further information please see page 141.
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Proposal 5
RATIFICATION OF INDEPENDENT ACCOUNTING FIRM PROPOSAL
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For further information please see page 180.
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Proposal 6
ADJOURNMENT PROPOSAL
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For further information please see page 182.
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2021 Proxy Statement
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2
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Approval of the Merger Proposal requires the affirmative vote of a majority of the shares of our common stock outstanding and entitled to vote on the Merger Proposal. With respect to the Merger Proposal, you may vote “FOR,” “AGAINST” or “ABSTAIN.” Abstentions and broker non-votes will have the same effect as a vote “AGAINST” approval of the Merger Proposal.
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The Merger Compensation Proposal is an advisory vote and the results will not be binding on the Board or the Company. The affirmative vote of a majority of the shares present virtually or represented by proxy at the Annual Meeting and entitled to vote on the matter will constitute the stockholders’ non-binding approval of the Merger Compensation Proposal. With respect to the Merger Compensation Proposal, you may vote “FOR,” “AGAINST” or “ABSTAIN.” If you abstain from voting on the Merger Compensation Proposal, the abstention will have the same effect as an “AGAINST” vote. Broker non-votes will not have an effect on this proposal.
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The approval of each of the director nominees in the Election of Directors Proposal requires the affirmative vote of a plurality of the shares present virtually or represented by proxy at the Annual Meeting and entitled to vote on each director nominee in the Election of Directors Proposal. With respect to the Election of Directors Proposal, you may vote “FOR” all nominees, “WITHHOLD” your vote as to all nominees, or “FOR” all nominees except those specific nominees from whom you “WITHHOLD” your vote. A properly executed proxy card marked “WITHHOLD” with respect to the election of one or more directors will not be voted with respect to the director or directors indicated. Proxies may not be voted for more than nine directors and stockholders may not cumulate votes in the election of directors. Abstentions and broker non-votes will not have an effect on this proposal.
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The Say-On-Pay Proposal is an advisory vote and the results will not be binding on the Board or the Company. The affirmative vote of a majority of shares present virtually or represented by proxy at the Annual Meeting and entitled to vote on the matter will constitute the stockholders’ non-binding approval of the Say-On-Pay Proposal. With respect to the Say-On-Pay Proposal, you may vote “FOR,” “AGAINST” or “ABSTAIN.” If you abstain from voting on the Say-On-Pay Proposal, the abstention will have the same effect as an “AGAINST” vote. Broker non-votes will not have an effect on this proposal.
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The approval of the Ratification of Independent Accounting Firm Proposal requires the affirmative vote of a majority of the shares present virtually or represented by proxy at the Annual Meeting and entitled to vote on the Ratification
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2021 Proxy Statement
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3
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The approval of the Adjournment Proposal requires the affirmative vote of a majority of shares present virtually or represented by proxy at the Annual Meeting and entitled to vote on the Adjournment Proposal. With respect to the Adjournment Proposal, you may vote “FOR,” “AGAINST” or “ABSTAIN.” If you abstain from voting on the Adjournment Proposal, the abstention will have the same effect as an “AGAINST” vote. Broker non-votes will not have an effect on this proposal.
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2021 Proxy Statement
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4
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Your Board of Directors recommends a vote FOR the adoption of the Merger Agreement and transactions contemplated thereby.
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2021 Proxy Statement
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5
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2021 Proxy Statement
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6
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2021 Proxy Statement
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7
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Under the Merger Agreement, in connection with the closing of the Merger, (i) each option to purchase shares of common stock (each, a “Company Stock Option”) that is outstanding immediately prior to the Effective Time, whether or not exercisable or vested, will automatically be canceled and converted into the right to receive an amount in cash equal to the product of (x) the excess if any, of (A) the Merger Consideration over (B) the per share exercise price for such Company Stock Option, multiplied by (y) the total number of shares underlying such Company Stock Option (assuming full vesting of the Company Stock Option) had such holder exercised the Company Stock Option in full immediately prior to the Effective Time, (ii) each restricted stock unit (including each deferred stock unit) entitling the holder to delivery of shares of common stock, subject to satisfaction of vesting or other forfeiture conditions, whether settled in cash or in stock (each, a “Company Restricted Stock Unit Award”) that is outstanding immediately prior to the Effective Time, whether or not vested, will automatically be canceled and converted into the right to receive an amount in cash equal to the product of (x) the Merger Consideration, multiplied by (y) the number of shares of common stock represented by such Company Restricted Stock Unit Award and (iii) each Company performance cash unit entitling the holder to delivery of cash that is subject to performance and to the satisfaction of vesting or other forfeiture conditions that is outstanding immediately prior to the Effective Time will be amended to provide that the applicable performance conditions are deemed to have been achieved at the greater of target or actual performance, with such performance cash unit to otherwise be governed by its existing terms and conditions, and restricted cash units whose terms provide only for service-based vesting will continue to be governed by their existing terms and conditions.
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The Company’s executive officers are covered under an executive severance agreement, employment agreement or the Navistar, Inc. Income Protection Plan (“IPP”) that provide for severance benefits in the event that the executive officer’s employment with the Company is involuntarily terminated for any reason other than for cause or if a Constructive Termination (as defined in the section entitled “The Merger—Interests of Certain Persons in the Merger—Severance” beginning on page 88) occurs within 18 months (or, for Messrs. Lisboa and Clarke and under the IPP, 24 months) following a change in control.
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2021 Proxy Statement
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8
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In accordance with the Merger Agreement, with respect to compensation of the Company’s non-employee directors, annual equity awards may be granted prior to the closing of the Merger in the ordinary course of business consistent with past practice solely in the form of Company Restricted Stock Unit Awards, and cash fees in respect of fiscal year 2021 may be paid in full prior to the closing. Pursuant to the Non-Employee Directors’ Deferred Fee Plan, any and all earned and vested amounts that are credited to each director’s deferred cash account immediately prior to the Effective Time will be paid to the director immediately.
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The Company may implement strategies to mitigate the impact of Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended (the “IRC”) with respect to payments and other benefits that may be payable to employees (including executive officers) in connection with the transaction; provided that no tax gross-ups will be provided. In accordance with the foregoing, in December 2020 prior to the date of this proxy statement, the Board or the Compensation Committee, as applicable, approved the acceleration of service-based vesting and payment in December 2020 of the 2018 performance cash units that would otherwise have become fully vested and been payable in calendar year 2021, based on actual performance for the applicable performance period, to mitigate the potential impact of Sections 280G and 4999 of the IRC on the Company and its executive officers (including certain of the named executive officers). This did not increase the amount to be paid or vested, just accelerated the timing of such payment or vesting.
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The Company’s directors and officers will be entitled to certain ongoing indemnification and coverage under directors’ and officers’ liability insurance policies pursuant to the Merger Agreement (as described in the section entitled “The Merger Agreement—Indemnification; Directors’ and Officers’ Insurance” beginning on page 109).
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2021 Proxy Statement
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9
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Common Stock. Each share of our common stock outstanding immediately prior to the Effective Time of the Merger (other than excluded shares and dissenting shares) will be converted into the right to receive from Parent $44.50 in cash, without interest.
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Series B Stock. The sole share of Series B Stock outstanding immediately prior to the Effective Time will be unaffected by the Merger and remain outstanding as one share of Series B Stock of the Company with the same rights, powers, preferences and privileges attributable to the sole share of Series B Stock immediately prior to the Effective Time.
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Series D Stock. Each share of Series D Stock outstanding immediately prior to the Effective Time will be converted into the right to receive, without interest, an amount equal to the portion of the Common Merger Consideration that would have been payable in respect of such share of Series D Stock had such share converted into our common stock pursuant to the terms of the certificate of incorporation of the Company in effect immediately prior to the Effective Time.
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2021 Proxy Statement
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10
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Company Stock Options. At or immediately prior to the Effective Time, each Company Stock Option that is outstanding immediately prior to the Effective Time, whether or not exercisable or vested, will automatically be canceled and converted into the right to receive an amount in cash equal to the product of (i) the excess if any, of (A) the Merger Consideration over (B) the per share exercise price for such Company Stock Option, multiplied by (ii) the total number of shares underlying such Company Stock Option (assuming full vesting of the Company Stock Option) had such holder exercised the Company Stock Option in full immediately prior to the Effective Time.
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Company Restricted Stock Unit Awards. At or immediately prior to the Effective Time, each Company Restricted Stock Unit Award that is outstanding immediately prior to the Effective Time, whether or not vested, will automatically be canceled and converted into the right to receive an amount in cash equal to the product of (i) the Merger Consideration, multiplied by (ii) the number of shares of common stock represented by such Company Restricted Stock Unit Award.
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Company Performance Cash Units and Restricted Cash Units. At or immediately prior to the Effective Time, each Company performance cash unit entitling the holder to delivery of cash that is subject to performance and to the satisfaction of vesting or other forfeiture conditions that is outstanding immediately prior to the Effective Time will be amended to provide that the applicable performance conditions are deemed to have been achieved at the greater of target or actual performance, with such performance cash unit to otherwise remain governed by its existing terms and conditions. Restricted cash units whose terms provide only for service-based vesting will continue to be governed by their existing terms and conditions.
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2021 Proxy Statement
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by either Parent or the Company, if:
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the Merger has not been consummated by the End Date (September 30, 2021 being the “End Date,” as may be extended to December 31, 2021 if all of the conditions to the closing of the Merger are satisfied other than the receipt of regulatory approvals or CFIUS approval (if a CFIUS filing request is received by the parties prior to the closing of the Merger), other than those conditions that are by their nature required to be satisfied at the closing);
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any order permanently restraining, enjoining or otherwise prohibiting consummation of the Merger has become final and non-appealable; or
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at the Annual Meeting of the Company’s stockholders, including any adjournment or postponement thereof, the stockholders of the Company do not approve the Merger Proposal;
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by the Company, if:
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there is an uncured breach of any representation, warranty, covenant or agreement made by Parent or Merger Sub in the Merger Agreement that would cause certain closing conditions set forth in the Merger Agreement not to be satisfied; or
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prior to the stockholders of the Company adopting the Merger Agreement, the Board has made an Adverse Recommendation Change (as described in the section entitled “The Merger Agreement—Solicitation of Acquisition Proposals; Board Recommendation Changes” beginning on page 101) in order to accept a Superior Proposal and the Company concurrently enters into a binding written definitive acquisition agreement to consummate the transaction for a Superior Proposal if the Company, prior to or concurrently with such termination, pays to Parent in immediately available funds $125,000,000 (the “Termination Fee”), provided that the Company has complied with the solicitation and board recommendation provisions of the Merger Agreement.
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by Parent, if:
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prior to the stockholders of the Company adopting the Merger Agreement, an Adverse Recommendation Change has occurred;
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after receipt or public announcement of an Acquisition Proposal, the Board fails to publicly reaffirm its recommendation within ten business days after receipt of written request to do so from Parent; or
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there is an uncured breach of any representation, warranty, covenant or agreement made by Company in the Merger Agreement that would cause certain closing conditions set forth in the Merger Agreement not to be satisfied.
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2021 Proxy Statement
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12
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Parent terminates the Merger Agreement if (i) prior to the stockholders of the Company adopting the Merger Agreement, an Adverse Recommendation Change has occurred; (ii) after receipt or public announcement of an Acquisition Proposal, the Board fails to publicly reaffirm its recommendation within ten business days after receipt of written request to do so from Parent; or (iii) there is an uncured breach of any representation, warranty, covenant or agreement made by Company in the Merger Agreement that would cause the closing condition of Parent or Merger Sub not to be satisfied, but only if the failure to satisfy such condition results from an intentional breach by the Company of any of its representations, warranties, covenants or agreements contained in the Merger Agreement;
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The Company terminates the Merger Agreement if, prior to the stockholders of the Company adopting the Merger Agreement, the Board has made an Adverse Recommendation Change in order to accept a Superior Proposal and the Company concurrently enters into a binding written definitive acquisition agreement to consummate the transaction for a Superior Proposal; or
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either Parent or the Company terminates the Merger Agreement if (i) (x) the Merger has not been consummated by the End Date, as may be extended or (y) the Company’s stockholders do not approve the Merger Agreement at the stockholder meeting, and (ii) prior to the termination of the Merger Agreement, an Acquisition Proposal has been publicly announced or otherwise communicated to the Board or Company stockholders and not withdrawn within five business days prior to the date of termination or prior to the date of the Company stockholders meeting, and (iii) within 12 months after termination of the Merger Agreement, such Acquisition Proposal is consummated (with the percentages set forth in the definition of such term in the Merger Agreement changed from 20% to 50%).
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2021 Proxy Statement
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13
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2021 Proxy Statement
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14
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Your Board of Directors recommends a vote FOR the non-binding, advisory vote on the compensation of the Company’s named executive officers in connection with the Merger.
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2021 Proxy Statement
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15
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2021 Proxy Statement
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16
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Your Board of Directors recommends a vote FOR each of the Director nominees.
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Current Committee
Membership
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Nominee and Principal Occupation
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Age
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Director Since
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A
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C
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F
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NG
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Troy A. Clarke
Executive Chairman and Chairman of the Board of Navistar
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65
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April 2013
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José María Alapont
Former Chairman, President and Chief Executive Officer of Federal-Mogul Corporation
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70
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October 2016
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Stephen R. D’Arcy
Partner, Quantum Group LLC
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66
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October 2016
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Vincent J. Intrieri
Founder, President and Chief Executive Officer,
VDA Capital Management LLC
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64
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October 2012
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Mark H. Rachesky, M.D.
Founder and President, MHR Fund Management LLC
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61
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October 2012
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Christian Schulz
Chief Financial Officer, TRATON SE
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43
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August 2018
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Kevin M. Sheehan
Former President and Chief Executive Officer, Scientific Games
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67
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October 2018
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Dennis A. Suskind
Retired General Partner, Goldman Sachs & Company
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78
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October 2016
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Janet T. Yeung
Principal and General Counsel, MHR Fund Management LLC
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56
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December 2020
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A Audit
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C Compensation
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F Finance
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NG Nominating & Governance
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Chair
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Co-Chair
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Member
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2021 Proxy Statement
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17
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| |
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OUR 2020 ACCOMPLISHMENTS
|
| |
OUR EXPECTATIONS GOING FORWARD
|
✔ People
✔ Adapted our agile and collaborative visual management-based teaming practices to online tools and practices that were quickly scaled across
the organization
✔ Made significant leadership changes which strengthened Navistar’s focus on critical areas that
will take us into the future
✔ Navistar and our employees were leaders in our communities in this year of the COVID-19 pandemic
and social unrest
✔ Performance
✔ Took deliberate and concerted actions to preserve liquidity and performance during the COVID-19
pandemic
✔ Moved forward with key capital infrastructure projects, including breaking ground on the new San Antonio Plant and the Huntsville, AL Plant
expansion
✔ #1 Choice
✔ Announced our first order for 18 Electric CE school
buses
✔ Formed partnerships with TuSimple and 7 leading
telematics service providers
✔ Launched the industry’s first holistic suite of products designed to minimize Total Cost of
Ownership – Intelligent Fleet Care in
OnCommand Connection
|
| |
✔ Growth Initiatives:
✔ Commercial Transformation is collaborating
with our International dealer network to
sustainably grow truck sales
✔ Uptime / Total Cost of Ownership / Connected is supporting our customers on the road better
than our competitors, through technology and
responsiveness
✔ Profitability Initiatives:
✔ Project Compass is reducing unnecessary
complexity while meeting customer needs
✔ Emerging Technologies is deploying lifecycle
innovative solutions leveraging internal competencies and strategic partnerships to address new profit opportunities. This initiative is focused on electric, fuel cell, and
autonomous solutions.
✔ Manufacturing 4.0 is combining our
manufacturing and procurement expertise, along with innovative technologies, to improve
quality and minimize conversion cost
✔ Foundational Initiatives:
✔ People 4.0 is creating a culture of trust,
empowerment, and accountability to build
the best teams
✔ Innovation is embedding into our identity the
fun, curiosity and energy of problem-solving
and breakthrough thinking
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| |
|
|
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| |
|
Nine of our ten directors are independent under our corporate governance guidelines and the NYSE listing standards.
|
|
| |
We have Co-Independent Lead Directors.
|
All of the members of our Audit Committee, Compensation Committee, Finance Committee and the Nominating and Governance Committee are independent and financially literate.
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||||
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2021 Proxy Statement
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| |
18
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•
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Nine of ten directors are independent under our corporate governance guidelines and the NYSE listing standards.
|
•
|
We have Co-Independent Lead Directors.
|
•
|
We have four Board committees that are composed of 100% independent directors.
|
•
|
We have a declassified Board.
|
•
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We have stockholder representation on all of our Board committees.
|
•
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We have a director resignation policy for directors who fail to obtain a majority vote.
|
•
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We have no super-majority voting provisions to approve transactions, including a merger.
|
•
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We have a clawback policy to re-coup incentive-based compensation in the event of an accounting restatement or intentional misconduct.
|
•
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We do not provide tax gross-ups for perquisites and other similar benefits to officers who are subject to Section 16 of the Exchange Act (“the Section 16 Officers”). Additionally, we do not provide tax gross-ups for any cash or equity awards for any employees.
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•
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We have “double trigger” change in control severance benefits.
|
•
|
Our Named Executive Officers (“NEOs”) and directors are subject to stock ownership guidelines and stock retention requirements.
|
•
|
Our executives and directors are prohibited from engaging in short sales, derivatives trading and hedging transactions, and we impose restrictions on pledges and margin account use.
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| |
2021 Proxy Statement
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| |
19
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| |
Your Board of Directors recommends a vote FOR the approval of named executive officer compensation.
|
•
|
Retained an Annual Incentive (“AI”) plan that leverages our scorecard approach, retained the adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”) multiplier, the individual performance factor, and market share and liquidity metrics, replaced cost (total cost reduction) with gross margin, and replaced the quality metric with the A26 sales mix metric, which focuses on the sale of our A26 proprietary engine.
|
•
|
As a result of the TRATON acquisition offer and the associated impact on Navistar’s stock price, we modified the vehicles in our 2020 Long-Term Incentive (“LTI”) plan to include restricted cash units (“RCUs”) and performance-based cash. The performance-based cash retained revenue growth as a metric, adjusted the EBITDA goal from dollars to margin and removed the relative Total Stockholder Return (“TSR”) multiplier.
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|
| |
2021 Proxy Statement
|
| |
20
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|
WHAT WE DO
|
| |
WHAT WE DON’T DO
|
|
|
✔ We use multiple performance measures in our short-term and long-term incentive plans. These performance measures are designed to link pay to
performance and stockholder interests.
✔ The Compensation Committee reviews external
market data when making compensation decisions.
✔ The Compensation Committee selects and engages
its own independent advisor, Pay Governance LLC.
✔ We maintain a clawback policy to recoup incentive-based compensation in the event of an
accounting restatement.
✔ Change in control severance benefits are payable only upon a change in control (also referred to in this proxy statement as “CIC”) with termination of
employment (“double trigger”).
✔ To aid in aligning the interest of our stockholders and officers, all officers are subject to stock ownership requirements, ranging from 6x base pay for the CEO and Executive Chairman to 3x base pay for other
senior executives - including a retention requirement.
|
| |
✘ The Company maintains policies that eliminate all tax gross-ups for perquisites and other similar benefits to Section 16 Officers and prohibit tax gross-ups for any
cash or equity awards for all employees.
✘ We do not reprice stock options or provide cash
buyouts of underwater options.
✘ We prohibit short selling, trading in derivatives or engaging in hedging transactions by executives and directors. In addition, any pledging and margin account use must be pre-cleared through the
Corporate Secretary or the General Counsel.
✘ We do not grant extra pension service.
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|
|
| |
2021 Proxy Statement
|
| |
21
|
|
| |
Your Board of Directors recommends a vote FOR the ratification of the appointment of KPMG LLP (“KPMG”) as Navistar’s independent registered public accounting firm for 2021.
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|
| |
2021 Proxy Statement
|
| |
22
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|
| |
Your Board of Directors recommends a vote FOR the proposal to enable the adjournment or postponement of the Annual Meeting, if necessary, to continue to solicit votes for the Merger Proposal.
|
|
| |
2021 Proxy Statement
|
| |
23
|
•
|
The Purchaser Group Members expect to realize benefits from the Merger due to geographic complementarities, additional volume scale and profitability stabilization;
|
○
|
The Purchaser Group Members believe that the Merger could provide Parent with a well-balanced and global footprint;
|
○
|
The Purchaser Group Members believe that the Merger will provide Parent with enhanced access to the North American market;
|
○
|
The Purchaser Group Members believe that the Merger would give the Company access to Parent’s powertrain technologies and allow the Purchaser Group Members to benefit from higher volumes;
|
•
|
The Purchaser Group Members believe that post-merger integration of the Company would be efficient because Parent already understands the Company’s business through its existing strategic partnership and minority stock ownership;
|
|
| |
2021 Proxy Statement
|
| |
24
|
|
| |
2021 Proxy Statement
|
| |
25
|
•
|
an extraordinary corporate transaction following consummation of the Merger such as a merger, reorganization or liquidation;
|
•
|
the relocation of any material operations or sale or transfer of a material amount of assets; or
|
•
|
any other material changes in its business or the composition of its management.
|
•
|
that Parent publicly announced its unsolicited offer to acquire the Company for $35.00 per share on January 30, 2020 and the Company did not receive a better offer from a third party prior to the execution of the Merger Agreement;
|
•
|
that the Merger Consideration, valued at approximately $44.50 per share of the Company’s common stock, represents an approximate 84.88% premium to the closing price of shares of the Company’s common stock of $24.07 on January 30, 2020, the last trading day prior to the announcement by Parent of its unsolicited offer to acquire the Company for $35.00 per share, and a 58.14% premium to the volume-weighted average price of shares of the Company’s common stock for the 30 trading days ended January 30, 2020;
|
•
|
that the Merger Consideration is in cash for all unaffiliated holders of Company common stock, which provides a degree of certainty of value and liquidity to the Company’s unaffiliated security holders;
|
•
|
that consummation of the Merger will allow the Company’s unaffiliated security holders not to be exposed to risks and uncertainties relating to the prospects of the Company following completion of the Merger;
|
|
| |
2021 Proxy Statement
|
| |
26
|
•
|
that the Merger Consideration resulted from active negotiations between Parent and the Company, which were authorized by the Board and the Parent’s Boards and taken note of by the Volkswagen Management Board and the Volkswagen Supervisory Board, and that two large independent stockholders of the Company were significantly involved in deliberations by the Company with respect to the negotiation and agreed to vote in favor of the Merger;
|
•
|
that the Merger is conditioned on approval by the holders of the Company’s common stock representing a majority of outstanding shares of common stock entitled to vote at the Annual Meeting Meeting;
|
•
|
notwithstanding that the respective opinions of J.P. Morgan and PJT Partners were provided solely to the Board in connection with its evaluation of the Merger and are not recommendations as to any action the Board or any common stockholder may take and that the Purchaser Group Members are not entitled to, nor did they, rely on such opinions, the fact that the Board received an opinion of J.P. Morgan, dated as of November 7, 2020, and an opinion of PJT Partners, dated as of November 7, 2020, that, as of the date of each such opinion, based upon and subject to, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations of the review undertaken by J.P. Morgan and PJT Partners, respectively, in connection with the preparation of their respective opinions as set forth therein, the Merger Consideration to be received by the holders of the Company’s common stock in the Merger was fair to such holders from a financial point of view (as more fully described under “The Merger—Opinion of J.P. Morgan Securities LLC” beginning on page 74 and “The Merger—Opinion of PJT Partners LP” beginning on page 76);
|
•
|
that Parent’s designated directors on the Board fully recused themselves from the Board’s deliberations concerning the Merger and the Merger Agreement; and
|
•
|
that the Merger and the Merger Agreement were unanimously (other than Parent’s designated directors) approved by the Board and that the Board unanimously (other than Parent’s designated directors) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, were in the best interests of the Company and the Company’s unaffiliated stockholders.
|
|
| |
2021 Proxy Statement
|
| |
27
|
|
|
| |
Amount to be Paid
|
|
|
Financial advisory fees and expenses
|
| |
$ 21,000,000
|
|
|
Legal, accounting and other professional fees
|
| |
$18,000,000
|
|
|
SEC filing fees
|
| |
$405,817.31
|
|
|
Proxy solicitation, printing and mailing costs
|
| |
$73,524
|
|
|
Transfer Agent and paying agent fees and expenses
|
| |
$232,470
|
|
|
Total
|
| |
39,711,811
|
|
|
|
| |
Amount to be Paid
|
|
|
Financial advisory fees and expenses
|
| |
$ 27,000,000
|
|
|
Legal, accounting and other professional fees
|
| |
$21,000,000
|
|
|
Total
|
| |
48,000,000
|
|
|
| |
2021 Proxy Statement
|
| |
28
|
(a)
|
reviewed certain publicly available business and financial information relating to Navistar;
|
(b)
|
reviewed certain financial forecasts relating to Navistar for 2024 prepared by the management of Navistar (the “Navistar Forecasts”);
|
(c)
|
reviewed certain financial forecasts relating to Navistar prepared by the management of Parent (the “Parent-Navistar Forecasts”) and discussed with the management of Parent its assessments as to the relative likelihood of achieving the future financial results reflected in the Navistar Forecasts and the Parent-Navistar Forecasts;
|
(d)
|
reviewed certain estimates as to the amount and timing of cost savings and revenue enhancements (collectively, the “Synergies”) anticipated by the management of Parent to result from the Merger;
|
(e)
|
reviewed certain estimates relating to tax-related assets, litigation-related contingencies and other adjustments to the assets and liabilities of Navistar prepared by the management of Parent (the “Balance Sheet Adjustments”);
|
(f)
|
discussed the past and current business, operations, financial condition and prospects of Navistar with members of senior managements of Navistar and Parent, and discussed the past and current business, operations, financial condition and prospects of Parent with members of senior management of Parent;
|
(g)
|
discussed with the management of Parent its assessments as to (i) Navistar’s existing and future relationships, agreements and arrangements with, and Parent’s ability to retain, key customers, clients, suppliers and employees of Navistar and (ii) the products, product candidates and technology of Navistar, including the validity of, risks associated with, and the integration by Parent of, such products, product candidates and technology;
|
(h)
|
reviewed the trading history for Navistar’s common stock and a comparison of that trading history with the trading histories of other companies BofA Securities deemed relevant;
|
(i)
|
compared certain financial and stock market information of Navistar with similar information of other companies BofA Securities deemed relevant;
|
(j)
|
compared certain financial terms of the Merger to financial terms, to the extent publicly available, of other transactions BofA Securities deemed relevant;
|
(k)
|
reviewed the draft, dated November 6, 2020, of the Merger Agreement (the “Draft Agreement”); and
|
(l)
|
performed such other analyses and studies and considered such other information and factors as BofA Securities deemed appropriate.
|
|
| |
2021 Proxy Statement
|
| |
29
|
|
| |
2021 Proxy Statement
|
| |
30
|
Truck OEM Selected Companies
|
| |
|
|||
•
|
| |
PACCAR Inc.
|
| |
|
•
|
| |
Volvo AB
|
| |
|
•
|
| |
TRATON SE
|
| |
|
Capital Goods Selected Companies
|
| |
|
|||
•
|
| |
CNH Industrial N.V.
|
| |
|
•
|
| |
Deere & Company
|
| |
|
•
|
| |
Caterpillar Inc.
|
| |
|
CV Supply Selected Companies
|
| |
|
|||
•
|
| |
Allison Transmission Holdings, Inc.
|
| |
|
•
|
| |
Cummins Inc.
|
| |
|
|
Implied Per Share Equity Value Reference Ranges for the Company
|
| |
Consideration
|
|
|
FY 2022E Ind. Pen. Adj. EBITDA
|
| |
|
|
|
$16.75 - $23.75
|
| |
$44.50
|
|
|
Acquiror
|
| |
Target
|
| ||||||
|
•
|
| |
TRATON SE(1)
|
| |
•
|
| |
Navistar (16.6% Stake)
|
|
|
•
|
| |
Volkswagen AG
|
| |
•
|
| |
MAN SE
|
|
|
•
|
| |
Volkswagen AG
|
| |
•
|
| |
Scania AB
|
|
|
•
|
| |
MAN SE
|
| |
•
|
| |
Scania AB
|
|
(1)
|
Predecessor entity.
|
|
| |
2021 Proxy Statement
|
| |
31
|
|
Implied Per Share Equity Value Reference Ranges for the Company
|
| |
Consideration
|
| |||
|
FY 2019A Ind. Pen. Adj. EBITDA
|
| |
FY 2020E Ind. Pen. Adj. EBITDA
|
| |
|
|
|
$28.25 - $53.25
|
| |
$19 - $40.25
|
| |
$44.50
|
|
|
Implied Per Share Equity Value Reference Range for the Company
|
| |
Consideration
|
| |||
|
Without Synergies
|
| |
With Synergies
|
| |
|
|
|
$18.75 - $44.50
|
| |
$39.75 - $74.00
|
| |
|
|
|
Without Synergies with NOLs
|
| |
With Synergies and NOLs
|
| |
$44.50
|
|
|
$18.75 - $48.75
|
| |
$39.75 - $78.25
|
| |
|
|
•
|
historical trading prices of the Company common stock during the one-year period ended January 30, 2020, which represents one-day prior to the initial offer by Parent; and
|
|
| |
2021 Proxy Statement
|
| |
32
|
•
|
publicly available research analysts’ price targets as of January 30, 2020, which represents one-day prior to the initial offer by Parent, for the Company common stock, discounted to present value at an illustrative rate of 10.0%, reflecting the Company mid-point estimated cost of equity, which generally indicated values ranging from $26.25 to $34.50 and undiscounted, which generally indicated values ranging from $29.00 to $38.00. One price target was excluded from this presentation as aberrational in BofA Securities’ professional judgment.
|
|
| |
2021 Proxy Statement
|
| |
33
|
(a)
|
the Merger Agreement;
|
(b)
|
annual reports (including the consolidated financial statements (Konzernjahreabschluss)) of Parent for the year ended December 31, 2019 and the consolidated financial statements (Konzernjahreabschluss) of Parent for the three years ended December 31, 2018;
|
(c)
|
Annual Reports on Form 10-K of the Company for the five fiscal years ended October 31, 2019;
|
(d)
|
certain interim reports to stockholders of Parent and certain Quarterly Reports on Form 10-Q of the Company;
|
(e)
|
certain public communications from Parent and the Company to their respective stockholders;
|
(f)
|
certain publicly available research analyst reports for Parent and the Company;
|
(g)
|
the Company’s strategic plan for fiscal years 2020 through 2024, as of December 4, 2019, a review of the Company’s 2020 operations including forecasts for fiscal year 2020, as of August 19, 2020, and discussion materials regarding potential synergies to result from the Merger, as of September 2020, in each case, as prepared by the management of the Company; and
|
(h)
|
certain internal financial analyses and forecasts for Parent and certain financial analyses and forecasts for the Company, which are referred to in this section as the “Business Forecasts”, in each case, as prepared by the management of Parent and approved for Goldman Sachs Bank Europe SE’s use by Parent, including certain operating synergies projected by the management of Parent to result from the Merger, as approved for Goldman Sachs Bank
|
|
| |
2021 Proxy Statement
|
| |
34
|
|
| |
2021 Proxy Statement
|
| |
35
|
•
|
an implied premium of 84.9% based on the closing price per share of the Company’s common stock on January 30, 2020 of $24.07;
|
•
|
an implied premium of 57.8% based on the price per share of the Company’s common stock, implied by (1) the average trading performance of the common stock of the selected companies for the period from January 30, 2020 to November 6, 2020 and (2) the closing price per share of the Company’s common stock on January 30, 2020, of $28.20;
|
•
|
an implied premium of 51.5% based on the VWAP per share of the Company’s common stock for the 90-trading day period ended January 30, 2020 of $29.37;
|
•
|
an implied premium of 13.7% based on the highest closing price per share of the Company’s common stock for the 52-week period ended January 30, 2020 of $39.15; and
|
•
|
an implied premium of 24.3% based on the average closing price per share of the Company’s common stock for the period from January 1, 2005 to November 6, 2020 of $35.79.
|
|
| |
2021 Proxy Statement
|
| |
36
|
|
| |
2021 Proxy Statement
|
| |
37
|
|
| |
2021 Proxy Statement
|
| |
38
|
|
| |
2021 Proxy Statement
|
| |
39
|
Q.
|
When and where is the Annual Meeting?
|
A.
|
The Annual Meeting of the stockholders of the Company will be held virtually, without a physical meeting location, on March 2, 2021 at 11:00 a.m., Central Time.
|
Q.
|
How do I attend and participate in the virtual Annual Meeting?
|
A.
|
The Company is holding the Annual Meeting in a virtual only format, which will be conducted via live audio webcast only. Stockholders will not be able to attend the Annual Meeting in person. Participating in the virtual Annual Meeting online will allow stockholders to ask questions and vote electronically, all in real time.
|
Q.
|
What if I need technical assistance?
|
A.
|
If you encounter any technical difficulties accessing the virtual Annual Meeting during the check-in or meeting time, please call the technical support number that will be posted on the login page. Please be sure to check in by 10:45 a.m. Central Time on March 2, 2021, the date of the Annual Meeting, so that any technical difficulties may be addressed before the virtual Annual Meeting live audio webcast begins.
|
Q.
|
Who can attend the Annual Meeting?
|
A.
|
Anyone wishing to attend the Annual Meeting must have their assigned 16-digit control number provided on the Notice, your proxy card, voting instruction form or other applicable proxy notices. Admission is limited to:
|
•
|
Stockholders of record on January 22, 2021;
|
•
|
An authorized proxy holder of a stockholder of record on January 22, 2021; or
|
•
|
An authorized representative of a stockholder of record who has been designated to present a properly-submitted stockholder proposal.
|
|
| |
2021 Proxy Statement
|
| |
40
|
Q.
|
What is the quorum requirement for the Annual Meeting?
|
A.
|
Under the By-Laws, holders of at least one-third of the shares of common stock issued and outstanding on the close of business on the record date must be present in person virtually or represented by proxy in order to constitute a quorum for voting at the Annual Meeting. Abstentions and broker non-votes are counted as present for purposes of establishing a quorum.
|
Q.
|
What is the purpose of the Annual Meeting?
|
A.
|
The purpose of the Annual Meeting is to have stockholders consider and act upon the matters outlined in the Notice and this proxy statement, which include (i) Proposal 1—the Merger Proposal, (ii) Proposal 2—the Merger Compensation Proposal, (iii) Proposal 3—the Election of Directors Proposal, (iv) Proposal 4—the “Say-on-Pay” Proposal, (v) Proposal 5—the Ratification of Independent Accounting Firm Proposal, (vi) Proposal 6—the Adjournment Proposal, and (vii) any other matters properly brought before the Annual Meeting. In addition, management may report on the performance of the Company and respond to appropriate questions from stockholders.
|
Q.
|
How does the Board recommend that I vote?
|
A.
|
The Board recommends that you vote:
|
•
|
“FOR” approval of the Merger Proposal (Proposal 1);
|
•
|
“FOR” approval of the Merger Compensation Proposal (Proposal 2);
|
•
|
“FOR” approval of the Election of Directors Proposal (Proposal 3);
|
•
|
“FOR” the approval of the Say-On-Pay Proposal (Proposal 4);
|
•
|
“FOR” the Ratification of Independent Accounting Firm Proposal (Proposal 5); and
|
•
|
“FOR” the Adjournment Proposal, if necessary or appropriate (Proposal 6).
|
Q.
|
Why am I receiving this proxy statement and proxy card or voting instruction form?
|
A.
|
You are receiving this proxy statement and proxy card or voting instruction form because you own shares of the Company’s common stock as of the record date. This proxy statement describes matters on which we urge you to vote and is intended to assist you in deciding how to vote your shares of our common stock with respect to such matters.
|
Q.
|
Why did I receive a Notice of Internet Availability of Proxy Materials?
|
A.
|
Pursuant to the rules of the SEC, we have elected to provide access to our proxy materials over the internet. Accordingly, we have sent you a Notice because the Board is soliciting your proxy to vote your shares at our Annual Meeting. This proxy statement includes information that we are required to provide to you under the rules of the SEC and is designed to assist you in voting your shares. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice or request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the internet or to request a printed copy can be found in the Notice.
|
Q.
|
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
|
A.
|
A stockholder of record or registered stockholder is a stockholder whose ownership of our common stock is reflected directly on the books and records of our transfer agent, Computershare Investor Services (the “Transfer Agent”). As the stockholder of record, you have the right to vote, grant your voting rights directly to the Company or to a third party or to vote virtually at the Annual Meeting.
|
|
| |
2021 Proxy Statement
|
| |
41
|
Q.
|
If my shares of common stock are held in “street name” by my bank, brokerage firm or other nominee, will my bank, brokerage firm or other nominee vote my shares of common stock for me?
|
A.
|
Your bank, brokerage firm or other nominee will only be permitted to vote your shares of our common stock if you instruct your bank, brokerage firm or other nominee how to vote. You should follow the procedures provided by your bank, brokerage firm or other nominee regarding the voting of your shares of our common stock. Banks, brokerage firms or other nominees who hold shares in street name for customers have the authority to vote on “routine” proposals when they have not received instructions from beneficial owners, such as the Ratification of Independent Accounting Firm Proposal. However, banks, brokerage firms and other nominees are precluded from exercising their voting discretion with respect to approving non-routine matters, such as the Merger Proposal, the Merger Compensation Proposal, the Election of Directors Proposal, the Say-On-Pay Proposal and the Adjournment Proposal, and, as a result, absent specific instructions from the beneficial owner of such shares of our common stock, banks, brokerage firms or other nominees are not empowered to vote those shares of our common stock on those non-routine matters. If you do not instruct your bank, brokerage firm or other nominee to vote your shares of our common stock, your shares of our common stock will not be voted, and the effect will be the same as a vote “AGAINST” approval of the Merger Proposal, and your shares of our common stock will not be voted and will not have an effect on the Merger Compensation Proposal, the Election of Directors Proposal, the Say-On-Pay Proposal and the Adjournment Proposal.
|
Q.
|
When is the record date and who is entitled to vote at the Annual Meeting?
|
A.
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The Board has set January 22, 2021, as the record date for the Annual Meeting. All of the holders of record of our common stock as of the close of business on January 22, 2021, the record date for the Annual Meeting, are entitled to receive notice of, and to vote virtually at, the Annual Meeting. Each holder of our common stock is entitled to cast one vote on each matter properly brought before the Annual Meeting for each share of our common stock that such holder owned as of the record date. If the holder holds shares of our common stock as a participant in any of the Company’s 401(k) or retirement savings plans, such holder’s proxy card will represent the number of shares of common stock allocated to the holder’s account under the plan and will serve as a direction to the plan’s trustee as to how the shares in such holder’s account are to be voted.
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Q.
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How do I vote?
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A.
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Stockholder of Record. If you are a stockholder of record, you may have your shares of our common stock voted on matters presented at the Annual Meeting in any of the following ways:
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Virtually. You may attend the Annual Meeting virtually and cast your vote during the virtual Annual Meeting. You will need your assigned 16-digit control number to vote your shares electronically at the Annual Meeting.
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Via the Internet, Scanning your QR Code or by Telephone. You can vote via the Internet, scanning your QR Code or by telephone by following the instructions in the proxy card. Votes submitted via the Internet, by scanning your QR Code or by telephone must be received by 11:59 p.m., Central Time, on March 1, 2021; or
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By Mail. You can vote by mail if you received a printed proxy card by dating, signing and promptly returning your proxy card in the postage prepaid envelope provided with the materials. Votes submitted by mail must be received by the close of business on March 1, 2021.
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Q.
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How do I submit my vote?
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A.
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Voting by Proxy before the Annual Meeting. If you are a stockholder of record as of the record date, January 22, 2021, you may direct how your shares are voted without attending the Annual Meeting by: (i) voting via the Internet at www.proxyvote.com or by scanning your QR Code; (ii) voting by telephone at 1-800-690-6903; or (iii) voting by mail by returning your completed proxy card in the postage paid envelope provided, or by returning it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, New York 11717. If you provide specific instructions with regard to items of business to be voted on at the virtual Annual Meeting, your shares will be voted as you instruct. If you just sign your proxy card with no further instructions, or if you submit your proxy by telephone, by scanning your QR Code or via the Internet, but do not direct your vote on particular proposals, your shares will be voted “FOR” approval of such proposals, in
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Q.
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How many votes do I have?
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A.
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You are entitled to one vote for each share of the common stock held of record by you as of the record date, January 22, 2021. As of the close of business on the record date, there were 99,620,873 outstanding shares of common stock.
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Q.
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How can I change or revoke my vote?
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A.
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For stockholders of record: You may change or revoke your proxy at any time before it is exercised by (i) submitting a written notice of revocation to Navistar c/o the Corporate Secretary at 2701 Navistar Drive, Lisle, Illinois 60532, (ii) signing and returning a new proxy card with a later date, (iii) validly submitting a later-dated vote via the Internet, by scanning your QR Code or by telephone on or before 11:59 p.m. Central Time on March 1, 2021 or (iv) attending the virtual Annual Meeting and voting your shares virtually at the Annual Meeting (but simply virtually attending the Annual Meeting will not cause your proxy to be revoked). For all methods of voting, the last vote properly cast will supersede all previous votes.
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Q.
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Is my vote confidential?
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A.
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Yes. Proxy cards, ballots and voting tabulations that identify stockholders are kept confidential. There are exceptions for contested proxy solicitations or when necessary to meet legal requirements. Broadridge Financial Solutions, Inc., the independent proxy tabulator appointed by the Company for the Annual Meeting, will count the votes and act as the inspector of elections for the Annual Meeting.
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Q.
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What is a proxy?
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A.
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A proxy is your legal designation of another person, referred to as a “proxy,” to vote your shares of our common stock. The written document describing the matters to be considered and voted on at the Annual Meeting is called a “proxy statement.” The document used to designate a proxy to vote your shares of our common stock is called a “proxy card.”
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Q.
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Will my shares be voted if I do not provide my proxy?
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A.
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For stockholders of record: If you are the stockholder of record and you do not vote by proxy card, by telephone, scanning your QR Code, via the Internet or virtually at the Annual Meeting, your shares will not be voted at the Annual Meeting.
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Q.
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If a stockholder gives a proxy, how are the shares of common stock voted?
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A.
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Regardless of the method you choose to vote, the individuals named on the enclosed proxy card will vote your shares of our common stock in the way that you indicate. When completing the Internet, QR Code or telephone processes on the proxy card, you may specify whether your shares of our common stock should be voted for or against or to abstain from voting on all, some or none of the specific items of business to come before the Annual Meeting.
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Q.
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How are votes counted?
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A.
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For the Merger Proposal, the Merger Compensation Proposal, the Election of Directors Proposal, the Say-On-Pay Proposal, the Ratification of Independent Accounting Firm Proposal and the Adjournment Proposal, you may vote “FOR,” “AGAINST” or “ABSTAIN.” Abstentions and broker non-votes will have the same effect as votes “AGAINST” approval of the Merger Proposal. Abstentions will have the same effect as a vote “AGAINST” approval of the Merger Compensation Proposal, the Say-On-Pay Proposal, the Ratification of Independent Accounting Firm Proposal or the Adjournment Proposal. Abstentions will have no effect on the Election of Directors Proposal, and broker non-votes will have no effect on the outcome of the vote on the Merger Compensation Proposal, the Election of Directors Proposal, the Say-On-Pay Proposal, the Ratification of Independent Accounting Firm Proposal or the Adjournment Proposal.
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Q.
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What vote is necessary for action to be taken on proposals?
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It will depend on each proposal.
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Proposal 1 (the Merger Proposal) requires the affirmative vote of a majority of the shares of our common stock outstanding and entitled to vote on the Merger Proposal.
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Proposal 2 (the Merger Compensation Proposal) is an advisory vote and the results will not be binding on the Board or the Company. The affirmative vote of a majority of the shares present virtually or represented by proxy at the Annual Meeting and entitled to vote on the matter will constitute the stockholders’ non-binding approval of the Merger Compensation Proposal.
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Proposal 3 (the Election of Directors Proposal) requires the affirmative vote of a plurality of the shares present virtually or represented by proxy at the Annual Meeting and entitled to vote on each director nominee in the Election of Directors Proposal, meaning that the director nominees with the greatest number of affirmative votes are elected to fill the available seats. As outlined in our Corporate Governance Guidelines, any director who receives more “withheld” votes than “for” votes in an uncontested election is required to tender his resignation to the Nominating and Governance Committee for consideration and recommendation to the Board.
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Proposal 4 (the Say-On-Pay Proposal) is an advisory vote and the results will not be binding on the Board or the Company. The affirmative vote of a majority of shares present virtually or represented by proxy at the Annual Meeting and entitled to vote on the matter will constitute the stockholders’ non-binding approval of the Say-On-Pay Proposal. Our Board will review the voting results and take them into consideration when making future decisions regarding executive compensation.
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Proposal 5 (the Ratification of Independent Accounting Firm Proposal) requires the affirmative vote of a majority of the shares present virtually or represented by proxy at the Annual Meeting and entitled to vote on the Ratification of Independent Accounting Firm Proposal.
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Proposal 6 (the Adjournment Proposal) requires the affirmative vote of a majority of the shares present virtually or represented by proxy at the Annual Meeting and entitled to vote on the Adjournment Proposal.
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Q.
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What is householding?
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If you and other residents at your mailing address own shares of our common stock in street name, your bank, brokerage firm or other nominee may notify you that your household will receive only one annual report and proxy statement for the Company if you hold shares through that bank, brokerage firm, or other nominee. In this practice known as “householding,” you were deemed to have consented to receiving only one annual report and proxy statement for your household. Householding benefits both you and the Company because it reduces the volume of duplicate information received at your household and helps the Company to reduce expenses. Accordingly, the Company and your broker or bank will send one copy of the Notice (or our annual report and proxy statement if you have requested a physical copy) to your address. Each stockholder will continue to be entitled to vote a separate proxy and/or voting instruction card. We will promptly deliver an additional copy of either document to you if you call or write us at the following address or phone number: Investor Relations, Navistar International Corporation, 2701 Navistar Drive, Lisle, Illinois 60532, 331-332-2143. If you and other residents at your mailing address are receiving multiple copies of the Notice (or our annual report and proxy statement), and you prefer to receive only a single copy of each, you may so request by writing to us or contacting us at the address and phone number referred to above.
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Q.
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What does it mean if I receive more than one proxy card or more than one Notice?
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Whenever possible, shares of common stock, including shares held of record by a participant in any of the Company’s 401(k) or retirement savings plans, for multiple accounts for the same registered stockholder will be combined into the same Notice or proxy card. Shares with different, even though similar, registered stockholders cannot be combined, and as a result, the stockholder may receive more than one Notice or proxy card. For example, shares registered in the name of John Doe will not be combined on the same proxy card as shares registered jointly in the name of John Doe and his spouse. Shares held in street name are not combined with shares registered in the name of an individual stockholder or for a participant in any of the Company’s 401(k) or retirement savings plans and may result in the stockholder receiving more than one proxy and/or voting instruction card. For example, shares held in street name by a broker for John Doe will not be combined with shares registered in the name of John Doe.
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Q.
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What happens if I sell my shares of common stock before the Annual Meeting?
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A.
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The record date for stockholders entitled to vote virtually at the Annual Meeting is earlier than both the date of the Annual Meeting and the consummation of the Merger. If you transfer your shares of our common stock after the record date but before the Annual Meeting, unless special arrangements (such as provision of a proxy) are made between you and the person to whom you transfer your shares and each of you notifies the Company in writing of such special arrangements, you will retain your right to vote such shares at the Annual Meeting but will transfer the right to receive the per share Merger Consideration to the person to whom you transfer your shares.
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Q.
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What happens if I sell my shares of common stock after the Annual Meeting but before the Effective Time?
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If you transfer your shares after the Annual Meeting but before the Effective Time, you will have transferred the right to receive the per share Merger Consideration to the person to whom you transfer your shares. In order to receive the per share Merger Consideration, you must hold your shares of common stock through completion of the Merger.
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Q.
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Who pays for the solicitation of proxies?
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A.
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This solicitation is being made by the Company. Accordingly, the Company pays the cost of soliciting proxies. This solicitation is being made by mail, but also may be made by telephone, e-mail or in person. We have hired Alliance Advisors, LLC (“Alliance Advisors”) to assist in the solicitation of proxies. The Company has agreed to reimburse Alliance Advisors for certain out-of-pocket fees and expenses and will also indemnify Alliance Advisors, its subsidiaries and their respective directors, officers, employees and agents against certain claims, liabilities, losses, damages and expenses. The Company may advance monies to Alliance Advisors to pay on the Company’s behalf charges rendered by banks, brokers or their agents for their expenses in forwarding proxy materials to beneficial owners of our common stock. Proxies may also be solicited by our directors, officers and employees who will not receive any additional compensation for those activities. We will reimburse brokerage firms and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for sending proxy materials to stockholders and obtaining their votes.
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Q.
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When are stockholder proposals or nominations due for the 2022 Annual Meeting of Stockholders?
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In order to be included in the Company’s proxy materials for our 2022 Annual Meeting (as defined in the section entitled “Submission of Stockholder Proposals”) of stockholders pursuant to SEC Rule 14a-8 under the Exchange Act, any such stockholder proposal must be received by the Company’s Corporate Secretary no later than October 1, 2021. Any proposal may be included in next year’s proxy statement only if such proposal complies with the Company’s By-Laws and the rules and regulations promulgated by the SEC, specifically Rule 14a-8.
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Q.
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Are there any matters to be voted on at the Annual Meeting that are not included in the proxy?
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We do not know of any matters to be acted upon at the Annual Meeting other than those discussed in this proxy statement. If any other matter is properly presented, proxy holders will vote on the matter in their discretion.
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Q.
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May stockholders ask questions at the Annual Meeting?
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Yes. During the Annual Meeting, stockholders and duly appointed proxy holders will be able to submit questions for the live question and answer portion of the Annual Meeting. Questions can be submitted only during the virtual Annual Meeting and using the means specified during the virtual Annual Meeting. Stockholders and proxy holders will be able to ask relevant questions by selecting the messaging icon and typing questions within the chat box at the bottom of the messaging screen and clicking the send button to submit the question. Confirmation that your question has been received should then appear. We intend to answer properly submitted questions that are pertinent to the Company and Annual Meeting matters, as time permits. Questions sent will be moderated before being sent to the Chairman of the Meeting. The Company reserves the right to edit profanity or other inappropriate language, or to exclude questions that are not pertinent to Annual Meeting matters or that are otherwise inappropriate.
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How can I submit questions during the virtual Annual Meeting?
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We expect to hold, to the extent feasible and practical, a live question and answer session in connection with the virtual Annual Meeting. Stockholders will be able to submit questions for the question and answer session during the virtual Annual Meeting. Questions can be submitted only during the meeting and using the means specified during the Annual Meeting. You will be able to ask relevant questions by selecting the messaging icon, typing your question within the chat box at the bottom of the messaging screen and, once you are satisfied with the question, clicking the send button. Confirmation that your message has been received should then appear.
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How can I find the voting results of the Annual Meeting?
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Preliminary voting results will be announced at the Annual Meeting. Final voting results will be published in a Current Report on Form 8-K to be filed with the SEC within four business days after the Annual Meeting. If the official voting results are not available at that time, we will provide preliminary voting results in the Form 8-K and will provide the final voting results in an amendment to the Form 8-K as soon as they become available.
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What do I need to do now?
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Even if you plan to virtually attend the Annual Meeting, after carefully reading and considering the information contained in this proxy statement, please vote promptly to ensure that your shares are represented at the Annual Meeting.
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Q.
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What is the proposed Merger and what effects will it have on the Company?
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The proposed Merger is the acquisition of the Company by Parent, through Merger Sub, pursuant to the terms and subject to the conditions of the Merger Agreement. If the Merger Proposal is approved by our stockholders and the other closing conditions under the Merger Agreement have been satisfied or waived, Merger Sub will merge with and into the Company, with the Company being the surviving corporation. As a result of the Merger, the Company will become a wholly owned subsidiary of Parent and will no longer be a publicly held corporation, and you, will no longer be a holder of our common stock, and will no longer have any interest in our future earnings or growth. In addition, following the Merger, our common stock will be delisted from the NYSE and deregistered under the Exchange Act, and we will no longer file periodic reports with the SEC on account of our common stock.
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Q.
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What will I receive if the Merger is completed?
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In connection with the Merger, each outstanding share of our common stock (other than excluded shares and dissenting shares) will automatically be converted into the right to receive an amount in cash equal to $44.50, without interest. Each share of Series D Stock outstanding immediately prior to the Effective Time will be converted into an amount in cash, without interest, equal to the portion of the per share Merger Consideration $44.50 per share of common stock that would have been payable in respect of such share of Series D Stock had such share converted into our common stock pursuant to the terms of the certificate of incorporation of the Company.
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Q.
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How does the per share Merger Consideration compare to the market price of our common stock prior to announcement of the Merger?
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The per share Merger Consideration of $44.50 per share of common stock represents a premium of approximately 84.88% to the closing price of the Company’s common stock as of January 30, 2020, the last trading day prior to the announcement by Parent of its unsolicited offer to acquire the Company for $35.00 per share, and a 58.14% premium to the volume-weighted average price of shares of the Company’s common stock for the 30 trading days ended January 30, 2020, a premium of approximately 24.16% to the closing price of the Company’s common stock as of September 9, 2020, the last trading day prior to the Company’s confirmation of a revised proposal from Parent to acquire the Company for $43.00 per share and a premium of approximately 2.61% to the closing price of our common stock as of November 6, 2020, the last trading day prior to the public announcement of the execution of the Merger Agreement.
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When do you expect the Merger to be completed?
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We are working towards completing the Merger as soon as possible, however, Parent is not required to close on the Merger prior to July 1, 2021 under the terms of the Merger Agreement. Assuming timely receipt of required regulatory approvals and the satisfaction or waiver of other closing conditions, including approval by our stockholders of the Merger Proposal, we anticipate that the Merger will be completed mid-2021.
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What happens if the Merger is not completed?
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If the Merger Proposal is not approved by the stockholders of the Company or if the Merger is not completed for any other reason, the stockholders of the Company will not receive any payment for their shares in connection with the Merger. Instead, the Company will remain an independent public company and our common stock will continue to be listed and traded on the NYSE.
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What conditions must be satisfied to complete the Merger?
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There are several conditions which must be satisfied to complete the Merger, including obtaining stockholder approval, obtaining regulatory approvals, no governmental entity having instituted any order or restraint to prohibit the consummation of the Merger or any of the other transactions contemplated by the Merger Agreement, there having been no Company material adverse effect (as defined in the section “The Merger Agreement—Representations and
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Q.
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Is the Merger expected to be taxable to me?
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Yes. The exchange of shares of our common stock for the per share Merger Consideration pursuant to the Merger will generally be a taxable transaction to U.S. holders (as defined under the section entitled “The Merger—Material U.S. Federal Income Tax Consequences of the Merger”) for U.S. federal income tax purposes. If you are a U.S. holder, in connection with the Merger, you will generally recognize gain or loss in an amount equal to the difference, if any, between the amount of cash received with respect to your shares of our common stock and your adjusted tax basis in such shares. We encourage you to read the section entitled “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” for a more detailed discussion of the U.S. federal income tax consequences of the Merger. You should also consult your tax advisor regarding the particular tax consequences to you of the exchange of shares of common stock for cash pursuant to the Merger in light of your particular circumstances (including the application and effect of any state, local or foreign income and other tax laws). If you are not a U.S. holder, the Merger will generally not result in tax to you under U.S. federal income tax laws unless you have certain connections to the United States, and the Company encourages you to seek tax advice regarding such matters.
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Why am I being asked to consider and vote on a proposal to approve, by non-binding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the Merger?
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Under SEC rules, we are required to seek a non-binding, advisory vote with respect to the compensation that may be paid or become payable to our named executive officers that is based on or otherwise relates to the Merger, commonly referred to as “golden parachute” compensation.
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What will happen if the Company’s stockholders do not approve the Merger Compensation Proposal?
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Approval of the compensation that may be paid or become payable to the Company’s named executive officers that is based on or otherwise relates to the Merger is not a condition to completion of the Merger. The vote is an advisory vote and will not be binding on the Company or the surviving corporation in the Merger. Because the Merger-related compensation to be paid to the named executive officers in connection with the Merger is based on contractual arrangements with the named executive officers, such compensation may be payable, regardless of the outcome of this advisory vote, if the Merger Agreement is adopted (subject only to the contractual obligations applicable thereto).
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What vote is required for the Company’s stockholders to approve the Merger Proposal?
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Approval of the Merger Proposal requires the affirmative vote of a majority of the shares of our common stock outstanding and entitled to vote on the Merger Proposal.
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What vote of our stockholders is required to approve the Merger Compensation Proposal?
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Approval of the Merger Compensation Proposal requires the affirmative vote of the holders of a majority of the shares of our common stock that are present virtually or by proxy at the Annual Meeting and entitled to vote on such proposal. Accordingly, abstentions will have the same effect as a vote “AGAINST” approval of the Merger Compensation Proposal, and broker non-votes will have no effect on the outcome of the vote.
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What are the Voting Agreements?
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Concurrently with the execution of the Merger Agreement, Parent and Merger Sub entered into voting and support agreements, each dated November 7, 2020, with (i) the Icahn Stockholders and (ii) the MHR Stockholders. The Voting Agreements require each of the Icahn Stockholders and MHR Stockholders and their respective affiliates, who collectively hold approximately 33.2% of the outstanding voting power of our common stock as of December 17, 2020, to vote approximately 92.4% of their collective shares of our common stock in favor of the adoption of the Merger Agreement. See the section entitled “The Voting Agreements” beginning on page 111.
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Do any of the Company’s directors or officers have interests in the Merger that may differ from or be in addition to my interests as a stockholder?
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In considering the recommendation of the Board with respect to the Merger Proposal, you should be aware that our directors and executive officers may have certain interests in the Merger that may be different from, or in addition to, the interests of our stockholders generally. The Board was aware of and considered these interests, among other matters, in evaluating and negotiating the Merger Agreement and the Merger, and in recommending that the Merger Agreement be adopted by the stockholders of the Company. See the sections entitled “The Merger—Interests of Certain Persons in the Merger” beginning on page 87 and “Proposal 2—Merger Compensation Proposal” beginning on page 113.
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Should I send in my stock certificates now?
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No. If the Merger Proposal is approved, you will be sent a letter of transmittal promptly, and in any event within three business days, after the completion of the Merger, describing how you may exchange your shares of our common stock for the per share Merger Consideration. If your shares of our common stock are held in “street name” through a bank, brokerage firm or other nominee, you should contact your bank, brokerage firm or other nominee for instructions as to how to effect the surrender of your “street name” shares of our common stock in exchange for the per share Merger Consideration. Please do NOT return your stock certificate(s) with your proxy.
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Am I entitled to exercise appraisal rights under the DGCL instead of receiving the per share Merger Consideration for my shares of our common stock?
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Stockholders who do not vote in favor of the adoption of the Merger Agreement are entitled to exercise appraisal rights under Section 262 of the DGCL in connection with the Merger if they take certain actions and meet certain conditions. For additional information, see “Appraisal Rights” beginning on page 198. For the full text of Section 262 of the DGCL, please see Annex D of this proxy statement. Because of the complexity of the DGCL relating to appraisal rights, if you wish to exercise your appraisal rights, we encourage you to seek the advice of legal counsel.
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Who can help answer any other questions I might have?
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A.
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If you have additional questions about the Merger, need assistance in submitting your proxy or voting your shares of our common stock, or need additional copies of the proxy statement or the enclosed proxy card, please contact Alliance Advisors, our proxy solicitor, by calling toll-free at 833-550-0986. Banks and brokers should also contact Alliance Advisors by calling toll-free at 833-550-0986.
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the Merger Proposal;
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the Merger Compensation Proposal;
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the Election of Directors Proposal;
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the Say-On-Pay Proposal;
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the Ratification of Independent Accounting Firm Proposal; and
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the Adjournment Proposal.
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Send a written statement to that effect to our Corporate Secretary at 2701 Navistar Drive, Lisle, Illinois 60532, which must be received by us before the Annual Meeting;
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Vote via the Internet, by scanning your QR Code or by telephone as instructed above. Only your latest Internet, QR Code or telephone vote is counted. You may not change your vote over the Internet, by QR Code or by telephone after 11:59 p.m., Central Time, on March 1, 2021.
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Sign a new proxy and mail it as instructed above. Only your latest dated, valid proxy received not later than the close of business on March 1, 2021 will be counted.
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Attend the virtual Annual Meeting, request that your proxy be revoked and vote virtually as instructed above. Attending the virtual Annual Meeting will not revoke your Internet vote, QR Code vote, telephone vote or proxy, as the case may be, unless you specifically request it.
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Your Board of Directors recommends a vote FOR the adoption of the Merger Agreement and the transactions contemplated thereby.
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Attractive Value. The Board considered that the per share Merger Consideration provides our stockholders with an attractive value for their shares of our common stock in light of a number of factors, including:
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The per share Merger Consideration constitutes a premium of:
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approximately 84.88% to the closing price of the Company’s common stock as of January 30, 2020, the last trading day prior to the announcement by TRATON of its unsolicited offer to acquire the Company for $35.00 per share,
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approximately 58.14% to the volume-weighted average price of shares of the Company’s common stock for the 30 trading days ended January 30, 2020,
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approximately 24.16% to the closing price of the Company’s common stock as of September 9, 2020, the last trading day prior to the Company’s confirmation of a revised proposal from TRATON to acquire the Company for $43.00 per share, and
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approximately 2.61% to the closing price of the Company’s common stock as of November 6, 2020, the last trading day prior to the public announcement of the execution of the Merger Agreement.
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○
|
Negotiations with TRATON. The Board considered the improvement in the per share Merger Consideration offered by TRATON, after negotiation with the Company and its advisors, from $35.00 per share of our common stock on January 30, 2020 to $43.00 per share of our common stock on September 9, 2020 and then finally to $44.50 per share of our common stock on October 15, 2020, which price the Board believes was in the best interests of the Company and our stockholders and represented the highest per share consideration reasonably attainable at the time as described in the section entitled “The Merger—Background of the Merger” beginning on page 58.
|
○
|
Receipt of Fairness Opinions from J.P. Morgan and PJT Partners. The Board considered the financial analyses presented to the Board by J.P. Morgan and PJT Partners. The Board also considered the oral opinions of J.P. Morgan and PJT Partners, each rendered to the Board on November 7, 2020, subsequently confirmed in their written opinions dated November 7, 2020, that as of the date thereof, and based upon and subject to, among other things, the assumptions made, procedures followed, matters considered, and qualifications and
|
|
| |
2021 Proxy Statement
|
| |
69
|
○
|
Certainty of Value. The per share Merger Consideration is all cash, which provides our stockholders immediate certainty of value and liquidity at the consummation of the Merger for their shares and enables our stockholders to realize value that has been created at the Company while eliminating long-term business and operational risk.
|
•
|
Value Relative to Stand-Alone Prospects. The Board’s belief that the per share Merger Consideration compares favorably to the potential long-term value of a share of our common stock if the Company were to remain as a stand-alone entity after taking into account the risks and uncertainties associated with this alternative, including the Company’s business, competitive position and current market and financial conditions. Specifically, among other things, the Board considered:
|
○
|
The anticipated synergies from the combination of the two companies, as identified through the Company’s strategic alliance with TRATON on procurement and technology development, including additional cost savings, a full integration of research and development capabilities and cost of capital opportunities, and the fact that the Company’s stockholders would have the certainty of participating in a portion of the benefits from these anticipated synergies through the premium on the Company’s common stock per share price to be paid in connection with the consummation of the Merger;
|
○
|
that taking into account the short-term impact that the COVID-19 pandemic has had on the Company’s business to date (including, a negative impact on truck and bus sales, in particular product segments where the Company has historically had a relatively stronger position, parts revenues due to decreased demand for truck and bus repairs, supply disruptions due to COVID-19 Measures and incremental working capital requirements resulting in the Company borrowing an additional $600,000,000to bolster its liquidity during COVID-19), the adverse impact of the pandemic could be sustained or even deepened in the future, and that at the time the Board approved the Merger Agreement, a “second wave” of COVID-19 cases in the United States appeared to be in the beginning stages and it was likely that a renewed round of COVID-19 Measures would follow;
|
○
|
the Board’s assessment of the Company’s historical and projected financial performance, including the July 2020 management projections and the Base Case and Upside Case management projections;
|
○
|
the challenges of operating as a public company, including balancing the competing needs for improved or stable stockholder returns on a quarter-to-quarter basis, on the one hand, with the need for increased spending to advance implementation of the Company’s growth initiatives under its long-term strategic plan, on the other hand;
|
○
|
the macroeconomic factors currently affecting the U.S. trucking market and the broad economic, political and commercial trends affecting the Company’s business and financial results, including the COVID-19 pandemic, and certain risk factors detailed in the Company’s most recent Annual Report on Form 10-K for the fiscal year ended October 31, 2020, as well as broader economic and commercial trends affecting the Company’s business and financial results;
|
○
|
the manufacturing risks related to the effects of the COVID-19 pandemic; and
|
○
|
the risks and uncertainties relating to the competition in the trucking industry.
|
|
| |
2021 Proxy Statement
|
| |
70
|
•
|
Value Relative to Other Strategic Alternatives. Following consultation with its financial advisors, the Board’s belief that TRATON would be the potential transaction partner, and that seeking to consummate the Merger under the terms of the Merger Agreement would be, most likely to offer the best combination of value and closing certainty to stockholders. In reaching that determination, the Board considered, among other things:
|
○
|
that after the Company issued a press release publicly confirming TRATON’s initial $35.00 per share proposal in January 2020, the Company did not receive any inquiries from any other parties relating to a potential acquisition of the Company, as described in the section entitled “The Merger—Background of the Merger” beginning on page 58; and
|
○
|
the Board’s belief that the terms of the Merger Agreement, taken as a whole, are reasonable to the Company and its stockholders.
|
•
|
High Likelihood of Completion; Certainty of Payment. The Board considered its belief that, absent a Superior Proposal, the Merger represented a transaction that would likely be consummated based on, among other factors:
|
○
|
the reputation and financial condition of TRATON and its affiliates, and the Board’s perception that TRATON is willing to devote the resources necessary to complete the Merger in an expeditious manner;
|
○
|
the absence of any financing condition to the consummation of the Merger;
|
○
|
the fact that the conditions to the closing of the Merger are specific and limited in scope, and the definition of “material adverse effect” in the Merger Agreement contains certain carve-outs that make it less likely that adverse changes in the Company’s business between announcement and the closing of the Merger will provide a basis for TRATON to refuse to consummate the Merger, as described in the section entitled “the Merger Agreement—Conditions to the Merger” beginning on page 106, and as described in the section entitled “the Merger Agreement—Representations and Warranties of the Company” beginning on page 96;
|
○
|
the fact the September 30, 2021 end date allows for sufficient time to consummate the Merger, and such end date will be automatically extended to December 31, 2021 if all closing conditions (other than those that by their nature are to be satisfied at closing) are satisfied or waived (to the extent permitted by applicable law) other than the closing conditions relating to receipt of regulatory approvals, as described in the section entitled “the Merger Agreement—Termination” beginning on page 107;
|
○
|
the fact that the Merger is not subject to the approval of TRATON’s stockholders;
|
○
|
TRATON’s representation that it will have, at the closing, all funds necessary to satisfy all of its obligations under the Merger Agreement, including payment of the Merger Consideration as described in the section entitled “The Merger Agreement—”Representations and Warranties of Parent” beginning on page 96;
|
○
|
the support of the Merger by the Icahn Stockholders and MHR Stockholders, who each entered into voting agreements pursuant to which they agreed to vote their shares of common stock in favor of the Merger and the other transactions contemplated by the Merger Agreement as described in the section entitled “The Voting Agreements” beginning on page 111; and
|
○
|
the Board’s determination not to condition the approval of the Merger on the approval of a majority of the Company's unaffiliated security holders because over 80% of the issued and outstanding shares of the Company are owned by shareholders not affiliated with TRATON, and because such approval is not required under Delaware law.
|
•
|
Other Terms of the Merger Agreement. The Board considered other terms and conditions of the Merger Agreement and related transaction documents, including:
|
○
|
the provision allowing the Board to change its recommendation prior to obtaining the Company Stockholder Approval in specified circumstances relating to a Superior Proposal or Intervening Event, subject to TRATON’s right to terminate the Merger Agreement and receive payment of the Termination Fee, as described in the sections entitled “The Merger Agreement—Termination” beginning on page 107, and “The Merger Agreement—Termination Fee” beginning on page 108; and
|
○
|
the provisions requiring the Company and TRATON to use their respective reasonable best efforts to take or cause to be taken all actions, and do or cause to be done all things, necessary or advisable on their respective parts under the Merger Agreement and applicable law to consummate and make effective the Merger and the
|
|
| |
2021 Proxy Statement
|
| |
71
|
•
|
Opportunity for the Company’s Stockholders to Vote. The Board considered the fact that the Merger would be subject to the approval of the Company’s stockholders, and the stockholders would be free to evaluate the Merger and vote for or against the adoption of the Merger Agreement at the Annual Meeting.
|
•
|
Appraisal Rights. The Board considered the availability of statutory appraisal rights under Delaware law in connection with the Merger for the Company’s stockholders who timely and properly exercise such rights in compliance with Section 262 of the DGCL and the absence of any closing conditions in the Merger Agreement related to the exercise of appraisal rights by the Company’s stockholders. See the section entitled “Appraisal Rights” beginning on page 198.
|
•
|
Board Independence. The Merger and the Merger Agreement were approved by a majority of directors of the Board that (i) are not employees of the Company or any of its subsidiaries, (ii) are not affiliated with Parent or its affiliates, and (iii) have no financial interest in the Merger that is different from that of the Company’s unaffiliated shareholders, other than as discussed below under the heading “Interests of Certain Persons in the Merger” beginning on page 87.
|
•
|
the potential loss of the strategic alliance with TRATON if TRATON decides to sell its shares of common stock and terminate the strategic alliance arrangements if the Company did not enter into the Merger Agreement;
|
•
|
that Company stockholders will have no ongoing equity participation in the Company following the Merger and Company stockholders will cease to participate in the Company’s future earnings, dividends or growth, if any, and will not benefit from increases, if any, in the value of the Company following the Merger;
|
•
|
the risk that all conditions to the parties’ obligations to consummate the Merger, including obtaining or maintaining certain regulatory approvals, will not be satisfied on a timely basis or at all and that the Merger therefore will be delayed or will not be consummated, including the risk that obtaining or maintaining such approvals could be affected adversely by potential changes in law in the relevant jurisdictions;
|
•
|
the risk that the pendency of the Merger or failure to consummate the Merger could adversely affect the operations of the Company and its subsidiaries and the relationships of the Company and its subsidiaries with their respective employees (including making it more difficult to attract and retain key personnel), customers, suppliers and others with whom they have business dealings;
|
•
|
the effect that a failure to consummate the Merger could have on the price of our common stock and on the market’s perceptions of the Company’s prospects, resulting in loss of value to stockholders;
|
•
|
the restrictions imposed by the terms of the Merger Agreement on the conduct of the Company’s business prior to consummation of the Merger, which may delay or prevent the Company from capitalizing on business opportunities that may arise pending consummation of the Merger, and the resultant risk if the Merger is not consummated, as described in the section entitled “The Merger Agreement—Conduct of Our Business Pending the Merger” beginning on page 99;
|
•
|
the significant effort and cost involved in connection with negotiating the Merger Agreement and consummating the Merger (including certain costs and expenses if the Merger is not consummated), the substantial time and effort of management required to effectuate the Merger and the potential further disruptions to the Company’s day-to-day operations during the pendency of the Merger;
|
•
|
the restrictions imposed on the Company under the Merger Agreement with respect to actively soliciting, or, subject to certain exceptions, participating in discussions or negotiations relating to, Acquisition Proposals from third parties; and the right afforded to TRATON under the Merger Agreement to match Acquisition Proposals that the Board
|
|
| |
2021 Proxy Statement
|
| |
72
|
•
|
the possibility that the Company may be required to pay TRATON the Termination Fee under certain circumstances following termination of the Merger Agreement, including if the Board changes its recommendation in light of an Intervening Event or terminates the Merger Agreement to accept a Superior Proposal, which, while as a percentage of the equity value of the Company is within a customary range for similar transactions, may discourage other parties that otherwise might have an interest in a business combination with, or an acquisition of, the Company or may reduce the price offered by such other parties in a competing bid, as described in the section entitled “The Merger Agreement—Termination Fee” beginning on page 108;
|
•
|
as the Merger has a potential end date as late as December 31, 2021, the possibility that the stockholders could be asked to vote to adopt the Merger Agreement well in advance of completion of the transaction, depending on when the transaction actually closes;
|
•
|
the fact that the receipt of cash in exchange for our common stock pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes for many of our stockholders; and
|
•
|
the fact that the Company’s directors and executive officers may have interests in the Merger that are different from, or in addition to, the interests of the Company’s stockholders, including, among other things, the settlement of equity awards held by directors and executive officers, the payment of severance benefits to executive officers upon a qualifying termination of employment following the Merger, and the interests of the Company’s directors and officers in being entitled to continued indemnification, advancement of expenses and insurance coverage from the surviving corporation, as described in the section entitled “The Merger—Interests of Certain Persons in the Merger” beginning on page 87.
|
|
| |
2021 Proxy Statement
|
| |
73
|
(a)
|
reviewed a draft dated November 6, 2020 of the Merger Agreement and a draft dated November 6, 2020 of the Voting Agreements;
|
(b)
|
reviewed certain publicly available business and financial information concerning the Company and the industries in which it operates;
|
(c)
|
compared the financial and operating performance of the Company with publicly available information concerning certain other companies J.P. Morgan deemed relevant and reviewed the current and historical market prices of the Company common stock and certain publicly traded securities of such other companies;
|
(d)
|
reviewed certain internal financial analyses and forecasts prepared by the management of the Company relating to its business; and
|
(e)
|
performed such other financial studies and analyses and considered such other information as J.P. Morgan deemed appropriate for the purposes of its opinion.
|
|
| |
2021 Proxy Statement
|
| |
74
|
|
| |
2021 Proxy Statement
|
| |
75
|
(a)
|
reviewed certain publicly available information concerning the business, financial condition and operations of the Company;
|
(b)
|
reviewed certain internal information concerning the business, financial condition and operations of the Company prepared and furnished to PJT Partners by the management of the Company;
|
(c)
|
reviewed certain internal financial analyses, estimates and forecasts relating to the Company, including projections that were prepared by or at the direction of the management of the Company and approved for PJT Partners’ use by the Board;
|
(d)
|
held discussions with members of senior management of the Company concerning, among other things, their evaluation of the Merger and the Company’s business, operating and regulatory environment, financial condition, prospects and strategic objectives;
|
(e)
|
reviewed the historical market prices and trading activity for the Company common stock;
|
(f)
|
compared certain publicly available financial and stock market data for the Company with similar information for certain other companies that PJT Partners deemed to be relevant;
|
(g)
|
reviewed a draft, dated November 6, 2020 of the Merger Agreement and a draft dated November 6, 2020 of the Voting Agreements; and
|
(h)
|
performed such other financial studies, analyses and investigations, and considered such other matters, as PJT Partners deemed necessary or appropriate for purposes of rendering its opinion.
|
|
| |
2021 Proxy Statement
|
| |
76
|
|
| |
2021 Proxy Statement
|
| |
77
|
|
| |
2021 Proxy Statement
|
| |
78
|
|
|
| |
Implied Per Share
Equity Value
|
| |||
|
|
| |
Low
|
| |
High
|
|
|
Adjusted Total Enterprise Value / 2021E Manufacturing EBITDAPO
|
| |
$12.60
|
| |
$42.20
|
|
|
|
| |
Implied Per Share
Equity Value
|
| |||
|
|
| |
Low
|
| |
High
|
|
|
Discounted cash flow analysis
|
| |
$30.00
|
| |
$42.40
|
|
•
|
Historical Trading Range. The Financial Advisors presented to the Board the trading range per share of the Company for the 52-week period ending January 30, 2020, which was $21.36 to $39.15 and compared that to the (i) closing price per share of the Company’s common stock on January 30, 2020 and (ii) the Merger Consideration. The Financial Advisors noted that the historical trading range analysis is not a valuation methodology and that such analysis was presented for reference purposes only and not as a component of the fairness analysis.
|
•
|
Analyst Price Targets. The Financial Advisors presented to the Board price targets as of January 30, 2020 and November 4, 2020 of certain public equity research analysts for the Company which provided a reference range of $30.00 to $45.00 and $43.00 to $50.00 per share respectively. The Financial Advisors noted that the analyst price targets analysis is not a valuation methodology and that such analysis was provided for reference purposes only and not as a component of the fairness analysis.
|
|
| |
2021 Proxy Statement
|
| |
79
|
•
|
Selected Transaction Analysis. Using publicly available information, the Financial Advisors examined selected transactions involving commercial vehicle companies engaged in businesses which the Financial Advisors judged to be sufficiently analogous to the business of the Company. For each of these selected transactions, the Financial Advisors calculated the Total Enterprise Value (“TEV”) as a multiple of the EBITDA for the 12-month period preceding the transaction (“LTM EBITDA”). Based on the results of this analysis and other factors that the Financial Advisors considered appropriate, the Financial Advisors selected a multiple reference range of TEV/LTM EBITDA of 10.0x to 15.0x. The TEV/LTM EBITDA multiples were then applied to the Company’s 2020 LTM EBITDA indicating an implied equity value per share range for the Company’s common stock of $19.00 to $37.50.
|
•
|
Discounted Cash Flow Analysis. The Financial Advisors performed the same Discounted Cash Flow Analysis as described above using the unlevered free cash flows as provided by the Upside Case projections and Upside Case extrapolations. This analysis indicated an implied equity value per share range for the Company’s common stock of $44.10 to $59.40.
|
|
| |
2021 Proxy Statement
|
| |
80
|
|
| |
2021 Proxy Statement
|
| |
81
|
|
| |
2021 Proxy Statement
|
| |
82
|
•
|
“CAGR” which means the compound average growth rate.
|
•
|
“Adjusted EBITDA” which means Navistar’s consolidated EBITDA adjusted for restructuring expenses, asset impairments, pre-existing warranty and significant one-time items.
|
•
|
“EBIAT” which means the Manufacturing EBITPO minus tax expenses of the manufacturing portion of the Company for such fiscal year.
|
•
|
“EBITDA” which means earnings from Navistar’s consolidated operations before the inclusion of expenses (or income) from interest, taxes and depreciation and amortization.
|
•
|
“Manufacturing Adjusted EBITDA” which means the Adjusted EBITDA earnings from Navistar’s manufacturing operations.
|
•
|
“Manufacturing EBITDAPO” which means the Manufacturing Adjusted EBITDA for such fiscal year plus the non-service pension and OPEB expenses of the Company for such fiscal year.
|
•
|
“Manufacturing EBITPO” which means the Manufacturing EBITDAPO minus depreciation and amortization of the manufacturing portion of the Company for such fiscal year.
|
•
|
“Manufacturing Revenue” which means the revenue from Navistar’s truck and parts operations, calculated by subtracting revenues of Navistar Financial Corporation (“NFC”) from Revenue.
|
•
|
“Revenue” which means the consolidated revenue of the Company and its subsidiaries.
|
•
|
“Unlevered Free Cash Flow” which means the EBIAT plus the manufacturing depreciation and amortization of the Company for such fiscal year minus the capital expenditures, change in net working capital and other certain other net long term assets of the Company for such fiscal year.
|
•
|
Industry assumed to remain in line with replacement demand during the forecast period;
|
•
|
The Company’s market share to grow from 18.8% in fiscal year 2019 to 22.8% by fiscal year 2024;
|
•
|
Parts revenue assumed to grow from $2,200,000,000 in fiscal year 2019 to approximately $2,600,000,000 by fiscal year 2024.
|
|
|
| |
2020
|
| |
2021
|
| |
2022
|
| |
2023
|
| |
2024
|
|
|
Revenue
|
| |
$9,608
|
| |
$10,500
|
| |
$11,170
|
| |
$12,390
|
| |
$12,050
|
|
|
Adjusted EBITDA
|
| |
$725
|
| |
$880
|
| |
$1,120
|
| |
$1,450
|
| |
$1,450
|
|
|
(1) Financials reflect an October 31 fiscal year end.
|
|
|
| |
2021 Proxy Statement
|
| |
83
|
|
Industry
|
| |
FY21
|
| |
FY22
|
| |
FY23
|
| |
FY24
|
| |
FY25
|
| |
FY26
|
| |
CAGR
|
|
|
July Update
|
| |
289
|
| |
371
|
| |
412
|
| |
388
|
| |
363
|
| |
363
|
| |
4.7%
|
|
|
October Upside
|
| |
325
|
| |
378
|
| |
415
|
| |
339
|
| |
353
|
| |
353
|
| |
1.7%
|
|
|
October Base Case
|
| |
325
|
| |
378
|
| |
415
|
| |
339
|
| |
353
|
| |
353
|
| |
1.7%
|
|
|
Market Share Growth
|
| |
FY21
|
| |
FY22
|
| |
FY23
|
| |
FY24
|
| |
FY25
|
| |
FY26
|
| |
CAGR
|
|
|
July Update
|
| |
18.1%
|
| |
19.3%
|
| |
20.3%
|
| |
21.4%
|
| |
22.8%
|
| |
23.5%
|
| |
5.3%
|
|
|
October Upside
|
| |
17.5%
|
| |
18.9%
|
| |
20.4%
|
| |
22.2%
|
| |
22.6%
|
| |
22.6%
|
| |
5.3%
|
|
|
October Base Case
|
| |
17.5%
|
| |
18.0%
|
| |
18.8%
|
| |
20.1%
|
| |
20.2%
|
| |
20.2%
|
| |
2.9%
|
|
|
Parts Revenue in $MM
|
| |
FY21
|
| |
FY22
|
| |
FY23
|
| |
FY24
|
| |
FY25
|
| |
FY26
|
| |
CAGR
|
|
|
July Update
|
| |
$2,051
|
| |
$2,150
|
| |
$2,375
|
| |
$2,573
|
| |
$2,733
|
| |
$2,733
|
| |
5.9%
|
|
|
October Upside
|
| |
$2,060
|
| |
$2,150
|
| |
$2,312
|
| |
$2,485
|
| |
$2,607
|
| |
$2,607
|
| |
4.8%
|
|
|
October Base Case
|
| |
$2,060
|
| |
$2,128
|
| |
$2,249
|
| |
$2,379
|
| |
$2,470
|
| |
$2,470
|
| |
3.7%
|
|
|
|
| |
2020
|
| |
2021
|
| |
2022
|
| |
2023
|
| |
2024
|
|
|
Revenue
|
| |
$7,305
|
| |
$8,050
|
| |
$10,563
|
| |
$12,039
|
| |
$12,401
|
|
|
Adjusted EBITDA
|
| |
$300
|
| |
$585
|
| |
$988
|
| |
$1,376
|
| |
$1,494
|
|
|
(1) Financials reflect an October 31 fiscal year end.
|
|
|
| |
2021 Proxy Statement
|
| |
84
|
|
|
| |
Q3-Q4
2020
|
| |
Oct-
2021
|
| |
Oct-
2022
|
| |
Oct-
2023
|
| |
Oct-
2024
|
| |
Oct-
2025
|
| |
Oct-
2026
|
| |
Oct-
2027(2)
|
| |
Oct-
2028(2)
|
| |
Oct-
2029(2)
|
|
|
Manufacturing Revenue
|
| |
$3,463
|
| |
$7,879
|
| |
$10,376
|
| |
$11,843
|
| |
$12,202
|
| |
$12,206
|
| |
$12,429
|
| |
$12,643
|
| |
$12,847
|
| |
$13,039
|
|
|
Manufacturing Adjusted EBITDA
|
| |
$96
|
| |
$461
|
| |
$842
|
| |
$1,213
|
| |
$1,327
|
| |
$1,327
|
| |
$1,352
|
| |
$1,375
|
| |
$1,397
|
| |
$1,418
|
|
|
Manufacturing EBITDAPO
|
| |
$124
|
| |
$535
|
| |
$880
|
| |
$1,239
|
| |
$1,341
|
| |
$1,331
|
| |
$1,348
|
| |
$1,375
|
| |
$1,397
|
| |
$1,418
|
|
|
Unlevered FCF
|
| |
$1
|
| |
$148
|
| |
$506
|
| |
$803
|
| |
$782
|
| |
$741
|
| |
$771
|
| |
$793
|
| |
$812
|
| |
$829
|
|
|
(1) Financials reflect an October 31 fiscal year end.
(2) Management extrapolations.
|
|
|
Industry
|
| |
312,000
|
|
|
Market Share
|
| |
16.3%
|
|
|
Consolidated Revenue
|
| |
$7,400,000,000
|
|
|
Adjusted EBITDA
|
| |
$ 350,000,000
|
|
|
|
| |
2020
|
| |
2021
|
| |
2022
|
| |
2023
|
| |
2024
|
| |
2025
|
| |
2026
|
|
|
Revenue
|
| |
$7,400
|
| |
$8,729
|
| |
$10,465
|
| |
$11,681
|
| |
$11,203
|
| |
$11,756
|
| |
$11,756
|
|
|
Adjusted EBITDA
|
| |
$370
|
| |
$700
|
| |
$1,013
|
| |
$1,295
|
| |
$1,190
|
| |
$1,291
|
| |
$1,282
|
|
|
(1) Financials reflect an October 31 fiscal year end.
|
|
|
|
| |
Oct-
2021
|
| |
Oct-
2022
|
| |
Oct-
2023
|
| |
Oct-
2024
|
| |
Oct-
2025
|
| |
Oct-
2026
|
| |
Oct-
2027(2)
|
| |
Oct-
2028(2)
|
| |
Oct-
2029(2)
|
| |
Oct-
2030(2)
|
|
|
Manufacturing Revenue
|
| |
$8,504
|
| |
$10,185
|
| |
$11,386
|
| |
$10,903
|
| |
$11,454
|
| |
$11,454
|
| |
$11,497
|
| |
$11,584
|
| |
$11,714
|
| |
$11,890
|
|
|
Manufacturing Adjusted EBITDA
|
| |
$574
|
| |
$837
|
| |
$1,111
|
| |
$1,008
|
| |
$1,108
|
| |
$1,100
|
| |
$1,212
|
| |
$1,221
|
| |
$1,235
|
| |
$1,253
|
|
|
Manufacturing EBITDAPO
|
| |
$594
|
| |
$853
|
| |
$1,123
|
| |
$1,017
|
| |
$1,114
|
| |
$1,100
|
| |
$1,208
|
| |
$1,221
|
| |
$1,235
|
| |
$1,253
|
|
|
Unlevered FCF
|
| |
$205
|
| |
$391
|
| |
$666
|
| |
$399
|
| |
$509
|
| |
$470
|
| |
$629
|
| |
$641
|
| |
$653
|
| |
$668
|
|
|
(1) Financials reflect an October 31 fiscal year end.
(2) Management extrapolations.
|
|
|
| |
2021 Proxy Statement
|
| |
85
|
|
|
| |
2020
|
| |
2021
|
| |
2022
|
| |
2023
|
| |
2024
|
| |
2025
|
| |
2026
|
|
|
Revenue
|
| |
$7,400
|
| |
$8,729
|
| |
$10,732
|
| |
$12,315
|
| |
$11,887
|
| |
$12,600
|
| |
$12,600
|
|
|
Adjusted EBITDA
|
| |
$370
|
| |
$700
|
| |
$1,064
|
| |
$1,432
|
| |
$1,337
|
| |
$1,464
|
| |
$1,604
|
|
|
(1) Financials reflect an October 31 fiscal year end.
|
|
|
|
| |
Oct-
2021
|
| |
Oct-
2022
|
| |
Oct-
2023
|
| |
Oct-
2024
|
| |
Oct-
2025
|
| |
Oct-
2026
|
| |
Oct-
2027(2)
|
| |
Oct-
2028(2)
|
| |
Oct-
2029(2)
|
| |
Oct-
2030(2)
|
|
|
Manufacturing Revenue
|
| |
$8,504
|
| |
$10,451
|
| |
$12,020
|
| |
$11,588
|
| |
$12,298
|
| |
$12,298
|
| |
$12,344
|
| |
$12,437
|
| |
$12,577
|
| |
$12,765
|
|
|
Manufacturing Adjusted EBITDA
|
| |
$574
|
| |
$889
|
| |
$1,249
|
| |
$1,156
|
| |
$1,282
|
| |
$1,422
|
| |
$1,427
|
| |
$1,438
|
| |
$1,454
|
| |
$1,476
|
|
|
Manufacturing EBITDAPO
|
| |
$594
|
| |
$905
|
| |
$1,260
|
| |
$1,164
|
| |
$1,287
|
| |
$1,422
|
| |
$1,423
|
| |
$1,438
|
| |
$1,454
|
| |
$1,476
|
|
|
Unlevered FCF
|
| |
$205
|
| |
$456
|
| |
$798
|
| |
$508
|
| |
$648
|
| |
$705
|
| |
$786
|
| |
$799
|
| |
$813
|
| |
$831
|
|
|
(1) Financials reflect an October 31 fiscal year end.
(2) Management extrapolations.
|
|
|
| |
2021 Proxy Statement
|
| |
86
|
•
|
Company Stock Options. At or immediately prior to the Effective Time, each Company Stock Option that is outstanding immediately prior to the Effective Time, whether or not exercisable or vested, will automatically be canceled and converted into the right to receive an amount in cash equal to the product of (i) the excess if any, of (A) the Merger Consideration over (B) the per share exercise price for such Company Stock Option, multiplied by (ii) the total number of shares underlying such Company Stock Option (assuming full vesting of the Company Stock Option) had such holder exercised the Company Stock Option in full immediately prior to the Effective Time.
|
|
| |
2021 Proxy Statement
|
| |
87
|
•
|
Company Restricted Stock Unit Awards. At or immediately prior to the Effective Time, each Company Restricted Stock Unit Award that is outstanding immediately prior to the Effective Time, whether or not vested, will automatically be canceled and converted into the right to receive an amount in cash equal to the product of (i) the Merger Consideration, multiplied by (ii) the number of shares of common stock represented by such Company Restricted Stock Unit Award.
|
•
|
Company Performance Cash Units and Restricted Cash Units. At or immediately prior to the Effective Time, each Company performance cash unit entitling the holder to delivery of cash that is subject to performance and to the satisfaction of vesting or other forfeiture conditions that is outstanding immediately prior to the Effective Time will be amended to provide that the applicable performance conditions are deemed to have been achieved at the greater of target or actual performance, with such performance cash unit to otherwise remain governed by its existing terms and conditions. Restricted cash units whose terms provide only for service-based vesting will continue to be governed by their existing terms and conditions.
|
(a)
|
a lump sum in an amount equal to (i) a pro rata portion of the executive officer’s annual incentive plan award at target level, plus (ii) a multiplier ranging from 150% to 300% of the sum of the executive officer’s annual base salary in effect at the time of termination and the executive officer’s annual incentive award at target level;
|
(b)
|
continued health insurance for the 24-month period following termination; provided that for the first 12-month period, the executive officer shall pay for such coverage at the current rate for active employees who participate in the same plan at the same level of coverage and for the remaining 12-month period, the executive officer shall pay for such coverage on a monthly cost of coverage basis;
|
(c)
|
continued life insurance coverage for the 18-month (or, for Mr. Lisboa, 24-month) period following termination;
|
(d)
|
outplacement services;
|
(e)
|
such pension due to the executive officer upon his or her termination pursuant to and in accordance with the respective Company-sponsored pension plans under which they are accrued and/or provided (including grow-in rights as provided under the terms of the applicable plan); and
|
|
| |
2021 Proxy Statement
|
| |
88
|
(f)
|
a lump sum cash payment equal to the difference in (i) the actuarial present value of the executive officer’s non-tax-qualified pension benefits assuming the executive officer was 18 months older and had 18 more months of service, over (ii) the actuarial present value of the executive officer’s non-tax-qualified pension benefits at the date of termination (except for Mr. Lisboa, whose employment agreement does not provide for such a cash lump sum payment).
|
|
| |
2021 Proxy Statement
|
| |
89
|
•
|
a citizen or individual resident of the United States;
|
•
|
a corporation, or other entity classified as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state thereof, or the District of Columbia;
|
•
|
a trust if (1) a court within the United States is able to exercise primary supervision over the trust’s administration, and one or more U.S. persons are authorized to control all substantial decisions of the trust or (2) such trust has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a U.S. person; or
|
•
|
an estate the income of which is subject to U.S. federal income tax regardless of its source.
|
|
| |
2021 Proxy Statement
|
| |
90
|
|
| |
2021 Proxy Statement
|
| |
91
|
|
| |
2021 Proxy Statement
|
| |
92
|
|
| |
2021 Proxy Statement
|
| |
93
|
|
| |
2021 Proxy Statement
|
| |
94
|
|
| |
2021 Proxy Statement
|
| |
95
|
•
|
our and our subsidiaries’ due organization, existence, good standing and corporate power and authority to carry on our and their businesses;
|
•
|
the capitalization of the Company and its subsidiaries;
|
•
|
our corporate power and authority to execute the Merger Agreement, consummate the Merger, perform our obligations under the Merger Agreement and the enforceability of the Merger Agreement against us;
|
•
|
the absence of required filings, authorizations, registrations, permits, consents and approvals of governmental authorities and other third parties in connection with our execution, delivery and performance of the Merger Agreement, or the consummation of the transactions contemplated by the Merger Agreement;
|
•
|
our SEC filings since November 1, 2018 and the financial statements included therein, and our disclosure controls and procedures and internal controls over financial reporting;
|
•
|
our conduct of business in the ordinary course from October 31, 2019, and the absence of any circumstance, occurrence or development which has had or would reasonably be expected to have, a material adverse effect;
|
•
|
the absence of certain legal proceedings, investigations and other proceedings pending or, to the Company’s knowledge, threatened against the Company or any of its subsidiaries;
|
•
|
the absence of certain undisclosed liabilities or obligations;
|
•
|
Since November 1, 2018, the Company’s and its subsidiaries’ compliance with applicable laws, and the possession by the Company and its subsidiaries of all licenses or other authorizations or approvals of a governmental authority necessary for the lawful conduct of the business of the Company and its subsidiaries, except for those the absence of which would not reasonably be likely to have a material adverse effect;
|
|
| |
2021 Proxy Statement
|
| |
96
|
•
|
the compliance of the Company and its subsidiaries with the provisions of the U.S. Foreign Corrupt Practices Act of 1977, as amended (15 U.S.C. §§ 78dd1, et seq.), applicable sanctions authorities, and export controls, anti-trust or anti-money laundering laws;
|
•
|
matters relating to significant contracts of the Company and its subsidiaries;
|
•
|
the absence of a stockholder rights plan, “poison pill”, anti-takeover plan or other similar device, agreement or instrument in effect to which the Company or any of its subsidiaries is a party or otherwise bound;
|
•
|
corporate action taken to exempt the Merger Agreement and the transactions contemplated by the Merger Agreement from Section 203 of DGCL;
|
•
|
the proxy statement of the Company and Schedule 13E-3 filed with the SEC in connection with the Merger and the information contained therein;
|
•
|
the owned real property and leased real property of the Company and its subsidiaries;
|
•
|
intellectual property matters relating to the Company and its subsidiaries;
|
•
|
environmental matters relating to the Company and its subsidiaries;
|
•
|
tax matters relating to the Company and its subsidiaries;
|
•
|
matters relating to employee benefit plans of the Company and its subsidiaries;
|
•
|
labor matters relating to the Company and its subsidiaries;
|
•
|
the fairness opinion of each of J.P. Morgan and PJT Partners received in connection with the Merger;
|
•
|
the absence of any undisclosed brokerage or finder’s fees; and
|
•
|
the absence of any other express or implied representation or warranty by the Company or any other person with respect to the Company or any of its affiliates.
|
(a)
|
any change, event, occurrence or effect affecting the industries in which the Company or any of its subsidiaries operate or in which their products are used or distributed;
|
(b)
|
any change, event, occurrence or effect in global, national or regional political conditions (including any acts of war (whether or not declared), civil disobedience, political conditions (including trade practices and policies, regulatory conditions, elections and proclamations of public officials), hostilities, sabotage, terrorism, military or police actions or the escalation of any of the foregoing (whether perpetrated or encouraged by a state or non-state actor or actors));
|
(c)
|
any change, event, occurrence or effect in currency exchange, interest or inflation rates or in general economic, business, regulatory, political or market conditions or in national or global financial or capital markets;
|
(d)
|
any adoption, proposal, implementation or change in applicable law or any interpretation of applicable law by any governmental authority;
|
(e)
|
any change in Generally Accepted Accounting Principles (“GAAP”) (or comparable applicable national accounting standards) or the implementation or interpretation thereof;
|
(f)
|
any hurricane, flood, tornado, earthquake, or other weather or natural disaster, or any national or global outbreak of illness or other national or global public health event (including COVID-19) and the governmental responses thereto (including any applicable law, directive, guideline or recommendation promulgated by any U.S. industry group or governmental authority in connection with or in response to COVID-19, each a “COVID-19 Measure”);
|
|
| |
2021 Proxy Statement
|
| |
97
|
(g)
|
any matter that has been disclosed in the Disclosure Schedule;
|
(h)
|
any actions required to be taken or to not be taken, by the Company or any of its subsidiaries pursuant to the Merger Agreement or any action taken (or omitted to be taken) at the written request of Parent or taken with Parent’s written consent;
|
(i)
|
any actions taken by Parent or its affiliates or representatives;
|
(j)
|
the negotiation, execution, announcement or performance of the Merger Agreement, the Voting Agreements and the transactions contemplated by the Merger Agreement, including any change related to the identity of Parent, or facts and circumstances relating thereto, any loss or threatened loss of, or adverse change or threatened adverse change in, the relationship of the Company or any of its subsidiaries with any of their current or prospective suppliers, customers, wholesalers, service providers, distributors, licensors, licensees, regulators, employees, creditors, stockholders or other third parties;
|
(k)
|
any change in the market price or trading volume of any securities of the Company (it being understood that any cause underlying such change in market price may be taken into account in determining whether a material adverse effect has occurred to the extent permitted by this definition);
|
(l)
|
the failure of the Company or its subsidiaries to meet any internal or public projections, forecasts, guidance or estimates, including revenues or earnings (it being understood that any cause underlying such change in market price may be taken into account in determining whether a material adverse effect has occurred to the extent permitted by this definition); and
|
(m)
|
any change in the credit ratings of the Company or any of its subsidiaries (it being understood that any cause underlying such change in credit rating may be taken into account in determining whether a material adverse effect has occurred to the extent permitted by this definition).
|
•
|
their due organization, existence, good standing and authority to carry on their businesses;
|
•
|
their corporate power and authority to execute the Merger Agreement, consummate the Merger, perform their obligations under the Merger Agreement, and the enforceability of the Merger Agreement against them;
|
•
|
that Merger Sub is a wholly owned subsidiary of Parent that was formed solely for the purpose of engaging in the transactions contemplated by the Merger Agreement;
|
•
|
the absence of required filings, authorizations, registrations, permits and consents and approvals of governmental authorities or other third parties in connection with their execution, delivery and performance of the Merger Agreement, or the consummation of the transactions contemplated by the Merger Agreement;
|
•
|
the absence of certain legal proceedings, investigations and other proceedings pending or, to the knowledge of Parent, threatened against Parent or any of its subsidiaries, except as would not, individually or in the aggregate, reasonably be likely to prevent, materially delay or materially impede the consummation of the Merger by Parent;
|
•
|
the supply of information in writing by Parent for inclusion in the proxy statement;
|
•
|
the solvency of Parent and Merger Sub at the Effective Time;
|
•
|
that, upon the satisfaction of the conditions to closing the Merger (see the section entitled “The Merger Agreement—Conditions to the Merger” beginning on page 106), Parent will have all funds necessary to satisfy its obligations under the Merger Agreement, including payment of the Merger Consideration;
|
|
| |
2021 Proxy Statement
|
| |
98
|
•
|
the absence of any undisclosed brokerage or finder’s fees; and
|
•
|
the absence of any other express or implied representation or warranty by Parent or any other person with respect to Parent or any of its affiliates.
|
•
|
amend its organizational documents;
|
•
|
redeem, repurchase or acquire or offer to redeem, repurchase or acquire any Company securities or any of its subsidiaries’ securities, other than (i) repurchases of Company common stock from employees, officers or directors of the Company or any of its subsidiaries in the ordinary course of business pursuant to any of the Company’s agreements or plans in effect as of the date of the Merger Agreement in respect of equity awards outstanding as of the date of the Merger Agreement in accordance with their terms and, as applicable, the Company benefit plans as in effect on the date of the Merger Agreement or (ii) as expressly required by the certificate of incorporation of the Company with respect to any redemption or conversion of Company preferred stock made solely at the option of the holder thereof;
|
•
|
split, combine, exchange, subdivide or reclassify any shares of its capital stock or declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock or other equity interests, other than dividends between the Company and any of its wholly owned subsidiaries or from any wholly owned subsidiary to another wholly owned subsidiary;
|
•
|
issue, deliver or sell or authorize the issuance, delivery or sale of any shares of capital stock, equity or voting securities, convertible securities, or options of the Company or any of its subsidiaries, other than the issuance of subsidiary securities to the Company or to any other subsidiary, or issuances with respect to equity awards under the Company benefit plans outstanding as of the date of the Merger Agreement;
|
•
|
amend any term of any Company security or subsidiary security;
|
•
|
incur any capital expenditures, obligations or liabilities in excess of $30,000,000 in the aggregate, or $2,000,000 individually, except as contemplated by the capital expenditure budget provided in the Disclosure Schedule, or any unbudgeted capital expenditure reasonably necessary to mitigate a potential or actual material business interruption;
|
•
|
acquire, directly or indirectly, any assets, securities, properties, interests or businesses, other than (i) capital assets in the ordinary course of business consistent with past practice, (ii) capital expenditures permitted under the Merger Agreement, (iii) acquisitions of supplies and inventory in the ordinary course of business consistent with past
|
|
| |
2021 Proxy Statement
|
| |
99
|
•
|
sell, lease, license, transfer, dispose of, abandon or permit to lapse, create, or incur any lien on any of its assets (other than intellectual property), securities, properties, interests or businesses, other than (i) sales or leases of inventory, equipment or repossessed assets in the ordinary course of business consistent with past practice, (ii) any disposition of property or assets in the ordinary course of business that are surplus, negligible, obsolete, uneconomical, worn-out or no longer useful to the business of the Company and its subsidiaries, (iii) sales of assets, securities, properties, interests or businesses with a sale price (including any related assumed indebtedness) that does not exceed $10,000,000 individually or $25,000,000 in the aggregate, (iv) sales of assets pursuant to securitizations or other forms of asset financings or other forms of asset sales in the ordinary course of business and (v) certain permitted liens under the Merger Agreement;
|
•
|
except as otherwise permitted under the Merger Agreement, make any loans, advances or capital contributions to, or any investment in, other persons, other than (i) in the ordinary course of business consistent with past practice or (ii) loans to or on behalf of, or investments in, troubled suppliers under circumstances reasonably necessary to mitigate a potential or actual business interruption not in excess of $5,000,000 outstanding in the aggregate; or (iii) non-ordinary course contributions or investments not in excess of $10,000,000 individually or $25,000,000 in the aggregate, together with certain acquisitions permitted under the Merger Agreement;
|
•
|
create, incur, assume or otherwise become liable with respect to any indebtedness for borrowed money or guarantees thereof (whether evidenced by a note or other instrument, pursuant to an issuance of debt securities, financing lease, sale-leaseback transaction or otherwise), other than (i) indebtedness under the Company financing facilities incurred in the ordinary course of business, (ii) indebtedness under other facilities or agreements made available to Parent prior to execution of the Merger Agreement in the ordinary course of business; (iii) indebtedness solely between the Company and a wholly owned subsidiary of the Company, or between wholly owned subsidiaries of the Company in the ordinary course of business; (iv) indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business; (v) indebtedness in respect of any sale/leaseback transaction with respect to the purchase of tooling and related manufacturing equipment in the ordinary course of business; (vi) indebtedness in respect of securitizations of wholesale notes, retail accounts receivable, finance leases and operating leases in the ordinary course of business; (vii) indebtedness in respect of securitizations of equipment leases in the ordinary course of business; (viii) indebtedness constituting capital lease obligations in the ordinary course of business; (ix) guarantees to or on behalf of suppliers by the Company and its subsidiaries in the ordinary course of business consistent with past practice; and (x) indebtedness incurred to renew, extend, refinance, replace or refund any indebtedness for borrowed money or agreements in respect of indebtedness for borrowed money listed in the preceding clauses (i) through (ix) in the ordinary course of business; provided that in the case of clauses (v) through (x) any such indebtedness shall not in each case exceed an outstanding aggregate amount of $50,000,000;
|
•
|
amend, modify, terminate, cancel, renew, extend, enter into, or waive or release its rights under any significant contract, to the extent such action is outside the ordinary course of business or such action binds or applies to Parent or any of its affiliates after the closing in any material respect;
|
•
|
except as required by applicable law or the terms of a Company benefit plan, (i) grant any severance, retention or termination pay to or enter into or amend any severance, retention, termination, employment, consulting, bonus, change in control or severance agreement with any current or former service provider, (ii) increase the compensation or benefits provided to any current or former service provider (other than employees with a base compensation of less than $275,000, or increases in base compensation of less than 5% for employees with base compensation greater than or equal to $275,000 in the ordinary course of business and consistent with past practice and the payment of annual bonuses and earned amounts under other variable pay plans that have been previously disclosed to Parent), (iii) grant any equity or equity-based awards to, or discretionarily accelerate the vesting or payment of any such awards held by any current or former service provider, (iv) establish, adopt, enter into or materially amend any Company benefit plan or collective bargaining agreement or (v) hire any employees other than to fill vacancies arising due to terminations of employment or with base compensation of less than $275,000 or terminate the employment of any employees with base compensation of $275,000 or more other than for cause;
|
|
| |
2021 Proxy Statement
|
| |
100
|
•
|
change any accounting method, principle or practice, except as required by changes in GAAP or in Regulation S-X of the 1934 Act, as agreed to by the Company’s independent public accountants, or as may be required by applicable law;
|
•
|
except with respect to taxes or stockholder litigation relating to the Merger Agreement, the Merger or any of the other transactions contemplated by the Merger Agreement, settle, or offer or propose to settle (i) any material litigation, investigation, arbitration, proceeding, other claim or dispute involving or against the Company and any of its subsidiaries (other than settlements that do not exceed $30,000,000 in the aggregate or $10,000,000 individually (excluding insurance reimbursements) and that do not create liabilities that would impose any restrictions on the business of the Company or any of its subsidiaries) or (ii) any stockholder litigation, demand or dispute against the Company and any of its subsidiaries or any of their respective officers or directors or that relates to the Merger;
|
•
|
sell, lease, license or otherwise transfer or dispose of, abandon or permit to lapse, fail to take any action necessary to maintain, or fail to, in accordance with the Company’s reasonable business judgment, enforce or protect any material owned intellectual property, in each case, other than in the ordinary course of business;
|
•
|
fail to maintain existing material insurance policies or comparable replacement policies;
|
•
|
adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, division, restructuring, recapitalization or other reorganization of or relating to the Company or any of its wholly owned subsidiaries; or
|
•
|
agree, resolve or commit to take any action prohibited by the foregoing.
|
•
|
solicit, initiate, or take any action to knowingly facilitate or encourage the submission of any Acquisition Proposal;
|
•
|
enter into or participate in any discussions or negotiations with, furnish any information relating to the Company or any of its subsidiaries or afford access to the non-public business, properties, assets, books or records of the Company or any of its subsidiaries to, otherwise knowingly cooperate in any way with, or knowingly assist, participate in, facilitate or encourage any effort by any third party that is seeking to make, or has made, an Acquisition Proposal;
|
•
|
fail to make, withdraw or modify in a manner adverse to Parent the Company Board Recommendation or recommend an Acquisition Proposal (any of the foregoing an “Adverse Recommendation Change”);
|
•
|
fail to enforce or grant any waiver or release under any standstill or similar agreement with respect to any class of equity securities of the Company or any of its subsidiaries;
|
•
|
approve any transaction under, or any person becoming an “interested stockholder” under, Section 203 of DGCL; or
|
•
|
enter into any agreement in principle, letter of intent, term sheet, merger agreement, acquisition agreement, option agreement or other similar instrument relating to an Acquisition Proposal.
|
|
| |
2021 Proxy Statement
|
| |
101
|
•
|
engage in any negotiations or discussions with any third party and its representatives, subject to compliance with the no-solicitation provisions of the Merger Agreement, who has made a Superior Proposal or an Acquisition Proposal that the Board reasonably believes could result in a Superior Proposal;
|
•
|
furnish to such third party or its representatives with non-public information relating to the Company or any of its subsidiaries pursuant to a confidentiality agreement; provided that, all such information, not previously provided or made available to Parent, will be provided or made available to Parent within 24 hours after such information is provided or made available to such third party, and
|
•
|
take any action that a court of competent jurisdiction orders the Company to take;
|
|
| |
2021 Proxy Statement
|
| |
102
|
•
|
the Company must give Parent at least five business days’ prior written notice of its intent to make an Adverse Recommendation Change (which period will be extended by three business days for each subsequent extension for any amendment to the financial or other terms with respect to a Superior Proposal);
|
•
|
in the case of an Adverse Recommendation Change to be made following receipt of a Superior Proposal, the Company provides Parent with the most current version of the proposed agreement under which such Superior Proposal is proposed to be consummated and the identity of the third party making the Superior Proposal following which Parent may make a binding offer on terms at least as favorable to the Company’s stockholders as the Superior Proposal; and
|
•
|
in the case of an Intervening Event, the Company provides Parent with a reasonably detailed description of the reasons for making the Adverse Recommendation Change, following which Parent may make a binding offer that, in the reasonable judgment of the Board, obviates the need for such Adverse Recommendation Change.
|
•
|
preparing and filing all documentation to effect all necessary notices, reports and other filings (including filings under the HSR Act, and other required regulatory approvals specified in the Merger Agreement);
|
•
|
defending through litigation on the merits any civil, criminal or administrative action, suit, claim, hearing, arbitration, investigation or other proceeding seeking to prevent, materially delay or materially impair the consummation of the transactions; and
|
•
|
obtaining as promptly as practicable all consents, registrations, approvals, permits and authorizations necessary or advisable to be obtained from any third party and/or any governmental authority in order to consummate the transactions contemplated by the Merger Agreement.
|
|
| |
2021 Proxy Statement
|
| |
103
|
•
|
furnish the other (and its counsel) with all information concerning itself, its affiliates, directors, officers and stockholders and such other matters as may be reasonably necessary or advisable in connection with any statement, filing, notice, application or other communication (whether written or oral) made by or on behalf of Parent, the Company or any of their respective affiliates to any third party and/or any governmental authority in connection with the transactions contemplated by the Merger Agreement;
|
•
|
provide the other (and its counsel) the right to review in advance, and consult with the other (and its counsel) on and consider in good faith the views of the other (and its counsel) in connection with, all the information relating to Parent or the Company and any of their respective affiliates, that appears in any filing made with, written materials submitted to, or any material proposed oral communication with any third party and/or any governmental authority in connection with the transactions contemplated by the Merger Agreement; and
|
•
|
not permit any of their respective controlled affiliates or officers or any other representatives or agents to participate in any meeting with any third party with respect to any material consent, approval or waiver in connection with the transactions contemplated by the Merger Agreement or any governmental authority in respect of any filings, investigation or other inquiry relating to the transactions contemplated by the Merger Agreement, unless it consults with the other party in advance and, to the extent permitted by law and such third party or governmental authority, as applicable, gives the other party the opportunity to attend and participate in such meeting.
|
(a)
|
providing direct contact between prospective lenders and the officers and directors of the Company and its subsidiaries;
|
(b)
|
providing assistance in Parent’s preparation of confidential information memoranda, preliminary offering memoranda, financial information and other materials customarily used in connection with obtaining debt financing of the same type as the Financing;
|
(c)
|
cooperation with the marketing efforts of Parent and its financing sources with respect to such Financing, including participation in customary management presentation sessions, “road shows” and sessions with rating agencies;
|
(d)
|
providing assistance in obtaining any consents of third parties necessary in connection with such Financing;
|
|
| |
2021 Proxy Statement
|
| |
104
|
(e)
|
cooperation with respect to matters relating to pledges of collateral to take effect at the Effective Time in connection with such Financing;
|
(f)
|
assisting Parent in securing the cooperation of the independent accountants of the Company and its subsidiaries, including with respect to the delivery of accountants’ comfort letters to the extent historical financial statements of the Company would be required to be included by the Parent in a relevant registration statement of Parent under the rules and regulations of the SEC, or would be customarily included by Parent in a relevant offering memorandum of Parent, in each case in connection with any Financing;
|
(g)
|
providing the financial information necessary for the satisfaction of the obligations and conditions set forth in the commitment letter relating to such Financing within the time periods required thereby; and
|
(h)
|
the Company will take reasonable best efforts to seek any amendment, waiver or consent, pay down any principal amounts, redeem or repay (including securing release of all liens, guarantees and other credit support agreements securing or relating to) any indebtedness of the Company or its subsidiaries; in each case contingent on the occurrence of the Effective Time; it being understood that Parent will take into consideration the available funds of the Company and its subsidiaries in connection with any such pay down, redemption or repayment.
|
|
| |
2021 Proxy Statement
|
| |
105
|
•
|
a base salary or base rate of pay and a target cash compensation opportunity (including but not limited to annual bonus, commission and profit-sharing plan opportunities) that are no less favorable than that provided to each such Company employee immediately prior to the closing of the Merger; and
|
•
|
employee benefits (other than long-term incentive compensation) that are no less favorable in the aggregate than the employee benefits (other than long-term incentive compensation) provided to each such Company employee immediately prior to the closing of the Merger.
|
•
|
waive any preexisting condition limitations otherwise applicable to Company employees and their eligible dependents under any plan of Parent or any of its affiliates that provides health benefits in which Company employees may be eligible to participate following the closing of the Merger, to the extent waived or satisfied with respect to such employees as of the closing of the Merger under the analogous Company benefit plan;
|
•
|
honor any deductible, co-payment and out-of-pocket maximums incurred by Company employees and their eligible dependents under the health plans in which they participated immediately prior to the closing of the Merger during the portion of the calendar year prior to the closing of the Merger in satisfying any deductibles, co-payments or out-of-pocket maximums under health plans of Parent or any of its affiliates in which they are eligible to participate after the closing of the Merger in the same plan year in which such deductibles, co-payments or out-of-pocket maximums were incurred; and
|
•
|
waive any waiting period limitation or evidence of insurability requirement that would otherwise be applicable to a Company employee and his or her eligible dependents on or after the closing of the Merger, in each case to the extent such Company employee or eligible dependent had satisfied any similar limitation or requirement under an analogous Company benefit plan prior to the closing of the Merger.
|
•
|
Company Stockholder Approval must have been obtained;
|
•
|
the absence of any law, governmental or court order (whether temporary, preliminary or permanent) prohibiting the transactions contemplated by the Merger Agreement;
|
•
|
the expiration or early termination of certain antitrust waiting periods (and any extensions) applicable to the consummation of the Merger (including under the HSR Act); and
|
•
|
the required filings, consents, approvals or other actions under any other required governmental approvals (i) in the jurisdictions identified by the parties prior to the signing of the Merger Agreement (see the section entitled “The
|
|
| |
2021 Proxy Statement
|
| |
106
|
•
|
the Company must have performed and complied in all material respects with all obligations, agreements and covenants required to be performed by it on or prior to the Effective Time;
|
•
|
(i) the representations and warranties of the Company relating to certain aspects of its organization, good standing, and qualifications, corporate authority and approval, the execution of the Merger Agreement not resulting in a breach or default under the organization documents of the Company or any of its subsidiaries, the inapplicability of certain takeover statues, the opinion of the Company’s financial advisors and the absence of undisclosed brokerage or finders fees, must be true in all material respects, (ii) the representations and warranties relating to its capital structure must be true and correct except for de minimis inaccuracies and (iii) the remaining representations and warranties of the Company (without giving effect to any “materiality” qualifiers or qualifiers of similar import set forth therein) must be true and correct in all material respects, in each case, as of the date of the Merger Agreement and as of the closing date as though made on and as of such date and time (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct in all material respects as of such earlier date), and in the case of clause (iii) the failure of such representation and warranties to be true and correct has not had and is not reasonably likely to have a material adverse effect on the Company;
|
•
|
Parent shall have received at the Effective Time a certificate signed on behalf of the Company by an authorized officer of the Company certifying that all of the above conditions have been satisfied;
|
•
|
if a CFIUS filing request is received by the parties prior to the Closing, CFIUS approval must have been obtained and be in full force and effect; and
|
•
|
the absence of a material adverse effect on the Company.
|
•
|
each of Parent and Merger Sub shall have performed and complied in all material respects with all covenants required to be performed by it at or prior to the Effective Time;
|
•
|
the representations and warranties of Parent (without giving effect to any “materiality” qualifiers or qualifiers of similar import set forth therein) shall be true and correct in all material respects as of the date hereof and as of the closing date as though made on and as of such date and time (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct in all material respects as of such earlier date); and
|
•
|
the Company shall have received at the Effective Time a certificate signed by an authorized officer of Parent certifying that all of the above conditions have been satisfied.
|
•
|
by either Parent or the Company if:
|
○
|
the Merger has not been consummated by the End Date; provided however that if all of the conditions to the closing of the Merger (other than those conditions that by their nature are to be satisfied at the closing) are satisfied or waived (other than the receipt of required regulatory approvals or CFIUS approval, if a CFIUS filing request is received by the parties prior to the closing of the Merger), the End Date will be automatically extended to December 31, 2021;
|
|
| |
2021 Proxy Statement
|
| |
107
|
○
|
any governmental authority issues any order that makes the consummation of the Merger illegal or otherwise prohibited or enjoins the Company or Parent from consummating the Merger and such order becomes final and non-appealable; or
|
○
|
at the applicable Company stockholder meeting, the Company Stockholder Approval is not obtained.
|
•
|
by Parent, if:
|
○
|
prior to obtaining the Company Stockholder Approval, an Adverse Recommendation Change occurs, or upon the Company’s receipt or public announcement of an Acquisition Proposal, the Board fails to publicly reaffirm the Company Board Recommendation within ten business days after receipt of written request to do so from Parent (such reaffirmation will only be required once with respect to each Acquisition Proposal and any amendment thereof); or
|
○
|
there has been an breach of any representation or warranty or failure to perform any obligation, covenant or agreement by the Company that would cause Parent’s condition to closing related to the accuracy of Company’s representations and warranties and the performance by Company with respect to its obligations, agreements and covenants to not be satisfied and such breach is not cured or is not curable within the earlier of (i) 30 days of receipt of written notice of such breach from Parent or (ii) the End Date.
|
•
|
by the Company if:
|
○
|
there has been a breach of any representation or warranty or failure to perform any obligation, covenant or agreement by Parent or Merger Sub that would cause the closing conditions set forth in the Merger Agreement, relating to the accuracy of Parent and Merger Sub’s representations and warranties and the performance by Parent and Merger Sub with respect to their obligations, agreements and covenants to not be satisfied and such breach is not cured or is not curable within the earlier of (i) 30 days of receipt of written notice of such breach from Company or (ii) the End Date; or
|
○
|
prior to obtaining the Company Stockholder Approval, an Adverse Recommendation Change occurs with respect to a Superior Proposal and the Company concurrently enters into a binding agreement with respect to such Superior Proposal.
|
•
|
by Parent if (i) prior to obtaining the Company Stockholder Approval, an Adverse Recommendation Change occurs, or upon the Company’s receipt or public announcement of an Acquisition Proposal, the Board fails to publicly reaffirm the Company Board Recommendation within ten business days after receipt of written request to do so from Parent (such reaffirmation will only be required once with respect to each Acquisition Proposal and any amendment thereof) or (ii) there has been an breach of any representation or warranty or failure to perform any obligation, covenant or agreement by the Company that would cause Parent’s condition to closing related to the accuracy of Company’s representations and warranties and the performance by Company with respect to its obligations, agreements and covenants to not be satisfied and such breach is not cured or is not curable within the earlier of (i) 30 days of receipt of written notice of such breach from Parent or (ii) the End Date; provided, that in the case of clause (ii) the Termination Fee will only be payable if the failure to satisfy the Parent’s condition to closing results from an intentional breach by the Company of any of its representations, warranties, covenants or agreements;
|
•
|
by the Company if prior to obtaining the Company Stockholder Approval, an Adverse Recommendation Change occurs with respect to a Superior Proposal and the Company concurrently enters into a binding agreement with respect to such Superior Proposal; or
|
•
|
by either Parent or the Company if (i) (x) the Merger has not been consummated by the End Date, as may be extended or (y) the Company Stockholder Approval is not obtained, and (ii) prior to the termination of the Merger Agreement, an Acquisition Proposal has been publicly announced or otherwise communicated to the Board or Company stockholders and not withdrawn within five business days prior to the date of termination or prior to the date of the Company stockholders meeting, and (iii) within 12 months after termination of the Merger Agreement, an Acquisition Proposal is consummated (with the percentages set forth in the definition of such term in the Merger Agreement changed from 20% to 50%).
|
|
| |
2021 Proxy Statement
|
| |
108
|
|
| |
2021 Proxy Statement
|
| |
109
|
|
| |
2021 Proxy Statement
|
| |
110
|
|
| |
2021 Proxy Statement
|
| |
111
|
|
| |
2021 Proxy Statement
|
| |
112
|
|
| |
Your Board of Directors recommends a vote FOR the non-binding, advisory vote on the compensation of the Company’s named executive officers in connection with the Merger.
|
|
Name
|
| |
Cash ($)(1)
|
| |
Equity ($)(2)
|
| |
Pension/ Non-
Qualified Deferred
Compensation
($)(3)
|
| |
Perquisites/Benefits
($)(4)
|
| |
Total ($)
|
|
|
Persio V. Lisboa
|
| |
7,140,600
|
| |
768,149
|
| |
0
|
| |
65,037
|
| |
7,973,786
|
|
|
Troy A. Clarke
|
| |
9,025,600
|
| |
2,297,749
|
| |
196,450
|
| |
82,941
|
| |
11,602,740
|
|
|
Walter G. Borst
|
| |
6,460,738
|
| |
896,157
|
| |
604,367
|
| |
65,295
|
| |
8,026,557
|
|
|
William V. McMenamin
|
| |
2,872,908
|
| |
213,336
|
| |
334,172
|
| |
42,926
|
| |
3,463,342
|
|
|
Curt A. Kramer
|
| |
2,419,322
|
| |
320,026
|
| |
2,125,997
|
| |
46,792
|
| |
4,912,137
|
|
|
Samara A. Strycker
|
| |
1,822,335
|
| |
213,336
|
| |
306,345
|
| |
39,314
|
| |
2,381,330
|
|
(1)
|
Cash. The cash payments payable to the named executive officers by the Company consist of (i) severance payable in a lump sum in an amount equal to (1) a pro rata portion of the executive officer’s annual incentive plan award at target level, plus (2) a multiplier ranging from 150% to 300% of the sum of the executive officer’s annual base salary in effect at the time of termination and the executive officer’s annual incentive award at target level, and (ii) the acceleration of the vesting of restricted cash units (with performance cash units measured at the greater of target or actual performance, and prorated for the number of days worked during the vesting period for 2020 performance and restricted cash unit awards). Such cash payments are “double-trigger” (i.e., the benefits are payable only upon an involuntary termination for any reason other than for cause or a Constructive Termination within (i) 18 months (or, for Messrs. Lisboa and Clarke, 24 months) following a change in control for the lump sum cash severance payment or (ii) 36 months following a change in control for the acceleration of the vesting of restricted cash units). Receipt of the lump sum cash severance payment is conditioned upon the named executive officer’s execution of a written release agreement and compliance with restrictive covenants relating to confidentiality (perpetual), non-disparagement (perpetual), non-competition (for 12 months, or, for Messrs. Lisboa and Clarke, 24 months, following the Merger), non-solicitation (for 24 months following the Merger) and cooperation (perpetual) (collectively, the “Severance Conditions”), and the Company and its principal operating subsidiary, Navistar, Inc., are jointly and severally obligated to provide such lump sum cash severance payment to the named executive officer. The acceleration of the vesting of restricted cash units is generally conditioned upon compliance with restrictive covenants relating to confidentiality (perpetual) and non-competition (for 12 months following the Merger). Set forth below are the separate values of each of the cash payments assuming a termination on July 1, 2021.
|
|
| |
2021 Proxy Statement
|
| |
113
|
|
Name
|
| |
Cash Severance ($)
|
| |
Company Performance and
Restricted Cash Units ($)
|
| |
Total ($)
|
|
|
Persio V. Lisboa
|
| |
4,509,333
|
| |
2,631,267
|
| |
7,140,600
|
|
|
Troy A. Clarke
|
| |
3,966,667
|
| |
5,058,933
|
| |
9,025,600
|
|
|
Walter G. Borst
|
| |
4,440,926
|
| |
2,019,812
|
| |
6,460,738
|
|
|
William V. McMenamin
|
| |
2,392,000
|
| |
480,908
|
| |
2,872,908
|
|
|
Curt A. Kramer
|
| |
1,697,961
|
| |
721,361
|
| |
2,419,322
|
|
|
Samara A. Strycker
|
| |
1,341,427
|
| |
480,908
|
| |
1,822,335
|
|
(2)
|
Equity. As described in more detail in the section entitled “The Merger Agreement—Treatment of Common Stock and Equity Plan Awards” beginning on page 95, at or immediately prior to the Effective Time, any outstanding Company Stock Options and Company Restricted Stock Unit Awards will vest in full upon the closing (i.e., “single-trigger” vesting) and be settled for the Merger Consideration (less, in the case of Company Stock Options, the applicable exercise price). Set forth in the table below are the values of each type of unvested equity-based award that, in each case, would vest on the closing of the Merger based on the assumed Effective Time of July 1, 2021.
|
|
Name
|
| |
Company Stock
Options ($)
|
| |
Company Restricted
Stock ($)
|
| |
Company Restricted
Stock Units ($)
|
| |
Total ($)
|
|
|
Persio V. Lisboa
|
| |
83,160
|
| |
—
|
| |
684,989
|
| |
768,149
|
|
|
Troy A. Clarke
|
| |
208,251
|
| |
—
|
| |
2,089,498
|
| |
2,297,749
|
|
|
Walter G. Borst
|
| |
97,026
|
| |
—
|
| |
799,131
|
| |
896,157
|
|
|
William V. McMenamin
|
| |
23,098
|
| |
—
|
| |
190,238
|
| |
213,336
|
|
|
Curt A. Kramer
|
| |
34,647
|
| |
—
|
| |
285,379
|
| |
320,026
|
|
|
Samara A. Strycker
|
| |
23,098
|
| |
—
|
| |
190,238
|
| |
213,336
|
|
(3)
|
Pension/Non-Qualified Deferred Compensation. Reflects in total the (i) acceleration of vesting of the executive officer’s SERP (as defined in the section entitled “Proposal 4—Say-On-Pay–Compensation of Executive Officers–Executive Benefits and Perquisites” beginning on page 161) benefit (other than for Messrs. Lisboa, Clarke, Borst and McMenamin who are all retirement eligible under the SERP without regard to the Merger), (ii) acceleration of vesting of the executive officer’s SRAP (as defined in the section entitled “Proposal 4—Say-On-Pay–Compensation of Executive Officers–Executive Benefits and Perquisites” beginning on page 161) balance (other than for Messrs. Lisboa, Clarke and McMenamin, who are all retirement eligible under the SRAP without regard to the Merger) and (iii) a lump sum cash payment equal to the difference in (x) the actuarial present value of the executive officer’s non-tax-qualified pension benefits assuming the executive officer was 18 months older and had 18 more months of service, over (y) the actuarial present value of the executive officer’s non-tax-qualified pension benefits at the date of termination (except for Mr. Lisboa, whose employment agreement does not provide for such a cash lump sum payment and Messrs. Borst and Kramer, whose lump sum cash payment is $0 because the vesting of their SRAP following a change in control, which offsets the non-tax qualified pension benefit, mitigates the effect of the 18 months of age and service). Such benefits are “double-trigger” (i.e., (i) the acceleration of the SERP benefit occurs only upon an involuntary termination by the Company for reasons other than for cause within two years following a change in control; (ii) the acceleration of the SRAP balance occurs only upon an involuntary termination by the Company for reasons other than for cause within two years following a change in control; and (iii) the lump sum cash payment is payable only upon an involuntary termination for any reason other than for cause or a Constructive Termination within 18 months (or, for Mr. Clarke, 24 months) following a change in control). Receipt of the lump sum cash payment is conditioned upon the named executive officer’s compliance with the Severance Conditions, and the Company and Navistar, Inc. are jointly and severally obligated to provide such lump sum cash payment to the named executive officer. Set forth below are the separate values of each of the pension/non-qualified deferred compensation payments assuming a termination on July 1, 2021.
|
|
Name
|
| |
SERP
Acceleration ($)
|
| |
SRAP
Acceleration ($)
|
| |
Lump Sum
Cash Payment ($)
|
|
|
Persio V. Lisboa
|
| |
—
|
| |
—
|
| |
—
|
|
|
Troy A. Clarke
|
| |
—
|
| |
—
|
| |
196,450
|
|
|
Walter G. Borst
|
| |
—
|
| |
604,367
|
| |
—
|
|
|
William V. McMenamin
|
| |
—
|
| |
—
|
| |
334,172
|
|
|
Curt A. Kramer
|
| |
1,988,520
|
| |
137,477
|
| |
—
|
|
|
Samara A. Strycker
|
| |
185,257
|
| |
84,334
|
| |
36,754
|
|
(4)
|
Perquisites/Benefits. Reflects the cost of (i) continued health insurance for the 24-month period beginning on July 1, 2021 (assuming that for the first 12-month period, the executive officer will pay for such coverage at the current rate for active employees who participate in the same plan at the same level of coverage and for the remaining 12-month period, the executive officer will pay for such coverage on a monthly cost of coverage basis), (ii) continued life insurance coverage for the 18-month (or, for Mr. Lisboa, 24-month) period beginning on July 1, 2021, in the same amount as in effect immediately before the date of termination and under the same terms and conditions such coverage is otherwise made available to active employees of the Company and its wholly owned subsidiaries after the named executive officer’s termination (which is equal to, for Mr. Lisboa: $25,846; Mr. Clarke: $48,425; and Mr. Borst: $25,026) and (iii) outplacement services with the Company-designated service provider, and provided that the named executive officer initiates services within 60 days after the date of termination. Such benefits are “double-trigger” (i.e., the benefits are payable only upon an involuntary termination for any reason other than for cause or a Constructive Termination within 18 months (or, for Messrs. Lisboa and Clarke, 24 months) following a change in control). The receipt of such benefits is conditioned upon the named executive officer’s compliance with the Severance Conditions, and the Company and Navistar, Inc. are jointly and severally obligated to provide such benefits to the named executive officer.
|
|
| |
2021 Proxy Statement
|
| |
114
|
|
| |
2021 Proxy Statement
|
| |
115
|
|
| |
Your Board of Directors recommends a vote FOR each of the Director nominees.
|
•
|
knowledge and contacts in the Company’s industry and other relevant industries
|
•
|
positive reputation in the business community
|
•
|
the highest personal and professional ethics and integrity and values that are compatible with the Company’s values
|
•
|
experiences and achievements that provide the nominee with the ability to exercise good business judgment
|
•
|
ability to make significant contributions to the Company’s success
|
•
|
ability to work successfully with other directors
|
•
|
willingness to devote the necessary time to the work of the Board and its committees, which includes being available for the entire time of meetings
|
•
|
ability to assist and evaluate the Company’s management
|
•
|
involvement only in other activities or interests that do not create a conflict with his or her responsibilities to the Company and its stockholders
|
|
| |
2021 Proxy Statement
|
| |
116
|
•
|
understanding of and ability to meet his or her responsibilities to the Company’s stockholders, including the duty of care (making informed decisions) and the duty of loyalty (maintaining confidentiality and avoiding conflicts of interest)
|
•
|
potential to serve on the Board for at least five years
|
|
| |
2021 Proxy Statement
|
| |
117
|
|
Age
65
Director since
April 2013
|
| |
Troy A. Clarke
Executive Chairman and Chairman of Board of Directors
|
|
|
|
| |||
|
Professional Highlights
|
| |||
|
Mr. Clarke has served as Executive Chairman of Navistar since July 2020 and as Chairman of the Board of Directors since February 2017. Mr. Clarke was President and Chief Executive Officer of Navistar from April 2013 to July 2020. Mr. Clarke also served as President and Chief Operating Officer of Navistar from August 2012 to April 2013, as President of the Truck and Engine Group of Navistar, Inc. from June 2012 to August 2012, as President of Asia-Pacific Operations of Navistar, Inc. from 2011 to 2012, and as Senior Vice President of Strategic Initiatives of Navistar, Inc. from 2010 to 2011. Prior to joining Navistar, Inc., Mr. Clarke held various positions at General Motors Company, including President of General Motors North America from 2006 to 2009 and President of General Motors Asia Pacific from 2003 to 2006. Over the course of his career with GM, he held several additional leadership roles, including President and Managing Director of GM de Mexico and Director of Manufacturing for GM de Mexico.
|
| |||
|
|
| |||
|
Past Directorships
|
| |||
|
• Director of Fuel System Solutions, a publicly traded company, from December 2011
to June 2016, where he served as the chair of its Compensation Committee
|
| |||
|
|
| |||
|
Education
|
| |||
|
Mr. Clarke received a bachelor’s degree in engineering from the General Motors Institute and a master’s degree in business administration from the University of Michigan.
|
| |||
|
|
| |||
|
Skills and Qualifications
|
| |||
|
Mr. Clarke’s particular knowledge and experience in the automotive industry over the past 40 years, corporate governance, engineering, manufacturing (international and domestic), mergers and acquisitions, sales (international and domestic) and union/labor relations, well qualify him to serve on our Board.
|
|
|
| |
2021 Proxy Statement
|
| |
118
|
|
Age
70
Director since
October 2016
Committees
Finance and Nominating & Governance (Chair)
|
| |
José María Alapont
Independent
|
|
|
|
| |||
|
Professional Highlights
|
| |||
|
Mr. Alapont served as President and Chief Executive Officer of Federal-Mogul Corporation, a supplier of automotive powertrain and safety components, from 2005 to 2012. He was the Chief Executive Officer and a director of Fiat Iveco, S.p.A., a leading global manufacturer of commercial trucks and vans, buses, recreational, off-road, firefighting, defense and military vehicles of the Fiat Group, from 2003 to 2005. Mr. Alapont has held executive positions for more than 30 years at other leading global vehicle manufacturers and suppliers such as Delphi Corporation, Valeo S.A., and Ford Motor Company.
|
| |||
|
|
| |||
|
Other Current Directorships
|
| |||
|
• Director of Ferroglobe Plc., a publicly-traded silicon, manganese and special alloys producer company, since 2018, member of its Audit and Compensation
Committees, since 2018, Senior Lead Director and Chairman of its Governance Committee, since 2019 and member of its Nomination Committee, since 2020
• Director of Ashok Leyland, a publicly-traded commercial trucks, vans, buses and
defense manufacturing company, since 2017, and member of its Investment and Technology Committees, since 2017, Nomination and Remuneration Committee, since 2018, and its Audit Committee, since 2019
• Director of Switch Mobility Limited, a manufacturer of urban buses that is a wholly
owned UK subsidiary of Ashok Leyland, since November 2020, and Chairman of its
Governance, Nomination and Compensation Committee since November 2020
• Member of the board of Hinduja Investment and Project Services Limited, a
privately-held investment and service group, since 2016
• Director of Hinduja Automotive Limited, a privately-held automotive holding group,
since 2014
|
| |||
|
|
| |||
|
Past Directorships
|
| |||
|
• Director of Manitowoc Company, a publicly traded crane manufacturing company,
from 2016 to 2018
• Has served as a director of a number of other companies prior to 2016
|
| |||
|
|
| |||
|
Education
|
| |||
|
Mr. Alapont holds a degree in Industrial Engineering from the Valencia Technical School and a degree in Philosophy from the University of Valencia, Spain.
|
| |||
|
|
| |||
|
Skills and Qualifications
|
| |||
|
Mr. Alapont’s particular knowledge and experience in serving several automotive manufacturing companies for over 30 years, corporate finance, accounting, corporate governance, distribution, engineering, finance, human resources, manufacturing (domestic and international), marketing, mergers and acquisitions, military and government contracting, purchasing, sales (domestic and international), tax and treasury matters and union and labor relations, and as a member of other public and private company boards of directors, well qualify him to serve on our Board.
|
|
|
| |
2021 Proxy Statement
|
| |
119
|
|
Age
66
Director since
October 2016
Committees:
Audit (Chair)
|
| |
Stephen R. D’Arcy
Independent
|
|
|
|
| |||
|
Professional Highlights
|
| |||
|
Mr. D’Arcy has been a Partner of Quantum Group LLC, an investment and consulting firm, since 2010. Previously he was a Partner at PricewaterhouseCoopers LLP, a multinational professional services firm, for 34 years, serving most recently as Global Automotive Leader from 2002 to 2010.
|
| |||
|
|
| |||
|
Other Current Directorships
|
| |||
|
• Director of Premier, Inc., a publicly traded healthcare improvement company,
since 2013, where he serves on the Audit Committee
• Penske Corporation, a privately held, diversified, on-highway, transportation
services company, since 2011
|
| |||
|
|
| |||
|
Past Directorships
|
| |||
|
• Member of the Board of Directors of Vanguard Health Systems Inc., a company
previously listed on the NYSE, from 2011 to 2013, where he served on the Audit
and Compliance Committee
|
| |||
|
|
| |||
|
Education
|
| |||
|
Mr. D’Arcy received a bachelor’s degree in business administration from the University of Michigan.
|
| |||
|
|
| |||
|
Skills and Qualifications
|
| |||
|
Mr. D’Arcy’s particular knowledge and experience in accounting, corporate governance, finance and mergers and acquisitions matters, and as a member of other public and private company boards of directors (including as chairman of an audit committee), well qualify him to serve on our Board.
|
|
|
| |
2021 Proxy Statement
|
| |
120
|
|
Age
64
Director since
October 2012 (Co-Independent
Lead Director since October 2018)
Committees
Finance (Co-Chair) and Nominating & Governance
|
| |
Vincent J. Intrieri
Independent
|
|
|
|
| |||
|
Professional Highlights
|
| |||
|
In January 2017, Mr. Intrieri founded VDA Capital Management LLC, a private investment firm, where he currently serves as President and Chief Executive Officer. Previously, Mr. Intrieri was employed by Icahn-related entities from October 1998 to December 2016 in various investment-related capacities, serving as Senior Managing Director of Icahn Capital LP, the entity through which Carl C. Icahn manages private investment funds from 2008 to 2016, a Senior Managing Director of Icahn Onshore LP, the general partner of Icahn Partners LP, and Icahn Offshore LP, the general partner of Icahn Partners Master Fund LP, entities through which Mr. Icahn invested in securities from 2004 to 2016. Mr. Intrieri also served as Senior Vice President of Icahn Enterprises L.P. from 2011 to 2012.
|
| |||
|
|
| |||
|
Other Current Directorships
|
| |||
|
• Director of Hertz Global Holdings, Inc., a publicly traded company engaged in the
car rental business, since 2014
• Director of Transocean Ltd., a publicly traded provider of offshore contract drilling
services for oil and gas wells, since 2014
|
| |||
|
|
| |||
|
Past Directorships
|
| |||
|
• Director of Chesapeake Energy Corporation, a publicly traded oil and gas
exploration and production company, from 2012 to 2016
• Director of Ferrous Resources Limited, a privately held iron ore mining company
with operations in Brazil, from 2015 to 2016
• Director of Conduent Incorporated, a publicly traded business process services
company that was launched following its separation from Xerox, from 2017 to
2018
• Director of Energen Corporation, a publicly traded oil and gas exploration
company, from March 2018 to December 2018
• Has served on more than 15 corporate boards during his career
|
| |||
|
|
| |||
|
Education
|
| |||
|
Mr. Intrieri graduated, with distinction, from the Pennsylvania State University (Erie Campus) with a B.S. in Accounting and was a Certified Public Accountant.
|
| |||
|
|
| |||
|
Skills and Qualifications
|
| |||
|
Mr. Intrieri’s particular knowledge and experience in accounting, corporate governance, finance, mergers and acquisitions and treasury matters, and as a member of other public and private company boards of directors, well qualify him to serve on our Board.
|
|
|
| |
2021 Proxy Statement
|
| |
121
|
|
Age
61
Director since
October 2012
(Co-Independent Lead Director
since October 2018)
Committees
Finance (Co-Chair) and Nominating & Governance
|
| |
Mark H. Rachesky, M.D.
Independent
|
|
|
|
| |||
|
Professional Highlights
|
| |||
|
Dr. Rachesky is the founder and President of MHR Fund Management LLC, a New York-based private equity firm that invests in distressed and undervalued middle market companies and manages approximately $5,000,000,000 of capital across a variety of industries.
|
| |||
|
|
| |||
|
Other Current Directorships
|
| |||
|
• Chairman of the board of directors of Loral Space & Communications Inc., a
publicly traded satellite communications company, since 2006, and Director,
since 2005
• Chairman of the board of directors of Lions Gate Entertainment Corp., a publicly
traded entertainment company, since 2015, and Director, since 2009
• Chairman of the board of directors of Telesat Canada, a privately held satellite
company, since 2012, and Director, since 2007
• Member of the Board of Directors of Titan International, Inc., a publicly traded
wheel, tire and undercarriage systems and components company, since 2014
|
| |||
|
|
| |||
|
Past Directorships
|
| |||
|
• Member of the Board of Directors of Emisphere Technologies, Inc., a publicly
traded biopharmaceutical company, since 2005 until its acquisition by Novo
Nordisk in December 2020
• Member and chairman of the board of Leap Wireless International, Inc., a publicly
traded digital wireless company, from 2004 until its acquisition by AT&T in
March 2014
|
| |||
|
|
| |||
|
Education
|
| |||
|
Dr. Rachesky holds a B.S. in molecular aspects of cancer from The University of Pennsylvania, an M.D. from the Stanford University School of Medicine and an M.B.A. from the Stanford University School of Business.
|
| |||
|
|
| |||
|
Skills and Qualifications
|
| |||
|
Dr. Rachesky’s particular knowledge and experience in corporate finance, economic, financial and business conditions affecting the Company and its strategic direction, and as a member of the boards of directors of private and public companies engaged in a wide range of businesses, well qualify him to serve on our Board.
|
|
|
| |
2021 Proxy Statement
|
| |
122
|
|
Age
43
Director since
August 2018
Committees
Finance
|
| |
Christian Schulz
Independent
|
|
|
|
| |||
|
Professional Highlights
|
| |||
|
Mr. Schulz has been the Chief Financial Officer of TRATON SE and its predecessor entities since June 2018. Previously he was Head of Business Development at TRATON SE’s predecessor entities from January 2017 to June 2018. As part of this role, he led the advancement of both TRATON SE’s strategic development and its strategic partnership.
Prior to that, Mr. Schulz was Director of Controlling Operations worldwide at Mercedes-Benz Cars from 2011 to 2016 and was the Controlling Director for Purchasing, Production, and R&D at Mitsubishi Fuso in Japan from 2008 to 2010. His previous roles included management responsibilities in the fields of finance and controlling at Daimler Group, including serving as Chief Financial Officer of the transmissions plant in Gaggenau, Germany.
|
| |||
|
|
| |||
|
Skills and Qualifications
|
| |||
|
Mr. Schulz’s particular knowledge and experience in finance, controlling and business development within the automotive manufacturing business well qualify him to serve on our Board.
|
|
|
| |
2021 Proxy Statement
|
| |
123
|
|
Age
67
Director since
October 2018
Committees
Audit and Compensation
|
| |
Kevin M. Sheehan
Independent
|
|
|
|
| |||
|
Professional Highlights
|
| |||
|
From August 2016 to June 2018, Mr. Sheehan served as the President and Chief Executive Officer at Scientific Games, a gaming and lottery company. From February 2015 through August 2016, Mr. Sheehan taught full time as the John J. Phelan, Jr. Distinguished Visiting Professor of Business at Adelphi University. Mr. Sheehan previously held several senior positions with Norwegian Cruise Line Holdings Ltd., a global cruise company, from 2007 to 2015, including President (August 2010 to January 2015); Chief Executive Officer (November 2008 to January 2015); and Chief Financial Officer (November 2007 to September 2010).
|
| |||
|
|
| |||
|
Other Current Directorships
|
| |||
|
• Director of publicly-traded Hertz Global Holdings, Inc. since 2018 where he
currently serves on the Finance, Technology and Audit Committees
• Director of publicly-traded Dave & Buster’s Entertainment, Inc. since 2013 where he
currently chairs the Audit Committee and serves on the Finance and Nominating
and Governance Committees
• Lead Director of publicly-traded Gannett Co., Inc. (formerly known as New Media
Investment Group Inc.) since 2019, and Director since November 2013 where he
chairs the Audit Committee and serves on the Compensation Committee
|
| |||
|
|
| |||
|
Past Directorships
|
| |||
|
• Director of publicly-traded Bob Evans Farms, Inc. from 2013 to 2017 where he
served on the Audit and Finance Committees
|
| |||
|
|
| |||
|
Education
|
| |||
|
Mr. Sheehan is a graduate of Hunter College and New York University Graduate School of Business (with a Master’s degree in finance and taxation) and is a Certified Public Accountant.
|
| |||
|
|
| |||
|
Skills and Qualifications
|
| |||
|
Mr. Sheehan’s particular knowledge and experience in accounting, corporate governance, finance, mergers and acquisitions, and treasury matters, and as a member of the board of directors of other public companies, well qualify him to serve on our Board.
|
|
|
| |
2021 Proxy Statement
|
| |
124
|
|
Age
78
Director since
October 2016
Committees
Compensation (Chair) and
Nominating & Governance
|
| |
Dennis A. Suskind
Independent
|
|
|
|
| |||
|
Professional Highlights
|
| |||
|
Mr. Suskind is a retired General Partner of Goldman Sachs & Company, a multinational finance company that engages in global investment banking. Mr. Suskind also served as Vice Chairman of NYMEX, Vice Chairman of COMEX, a member of the board of the Futures Industry Association, a member of the board of International Precious Metals Institute, and a member of the boards of the Gold and Silver Institutes in Washington, D.C.
|
| |||
|
|
| |||
|
Other Current Directorships
|
| |||
|
• Director of the publicly-traded CME Group, Inc., since 2008, where he chairs the
Risk Committee and also serves on the Audit Committee
• Director of he publicly-traded Bridge Bancorp Inc. since 2002, where he is Vice
Chairman and chairs the Corporate Committee and Nominating and Risk
Committees and serves on the Audit Committee
|
| |||
|
|
| |||
|
Skills and Qualifications
|
| |||
|
Mr. Suskind’s particular knowledge and experience in accounting, corporate governance, finance, human resources, marketing and mergers and acquisitions matters, and as a member of other public company boards of directors, well qualify him to serve on our Board.
|
|
|
Age
56
Director since
December 2020
Committees
Audit and Compensation
|
| |
Janet T. Yeung
Independent
|
|
|
|
| |||
|
Professional Highlights
|
| |||
|
Ms. Yeung has been Principal and General Counsel of MHR Fund Management LLC, a New York-based private equity firm that invests in distressed and undervalued middle-market companies and manages approximately $5,000,000,000 of capital across a variety of industries, since May 2012. From 2008 to May 2012, Ms. Yeung was Principal and Counsel of MHR. From 2000 to 2008, Ms. Yeung was Vice President and Deputy General Counsel of Loral Space & Communications, Inc., a satellite communications company engaged in satellite-based communications services.
|
| |||
|
|
| |||
|
Past Directorships
|
| |||
|
Director of Loral Space & Communications Inc., a publicly-traded satellite communications company, since 2015
|
| |||
|
|
| |||
|
Education
|
| |||
|
Ms. Yeung has an A.B. in Economics from Cornell University and a J.D. from Georgetown University Law Center.
|
| |||
|
|
| |||
|
Skills and Qualifications
|
| |||
|
Ms. Yeung’s particular knowledge and experience in corporate governance, corporate law and mergers and acquisitions, and as a member of the board of directors of another public company, well qualify her to serve on our Board.
|
|
|
| |
2021 Proxy Statement
|
| |
125
|
|
Age
45
Director since
April 2017
Committees
Audit and Finance
|
| |
Jeffrey A. Dokho
Independent
|
|
|
|
| |||
|
Professional Highlights
|
| |||
|
Mr. Dokho is currently the Director of the UAW Research Department, where he directs a group of financial analysts and oversees the union’s financial, industry and future mobility research. Since joining the UAW in 2006, Mr. Dokho has worked on many high-profile contract negotiations between the UAW and large multinational companies and plays a leading role in the development and implementation of profit-sharing plans, including those currently in place for UAW members at General Motors Company, Ford Motor Company and Fiat Chrysler Automobiles N.V. In October 2020, Mr. Dokho was appointed to the Michigan Council on Future Mobility and Electrification and, in March 2020, he was appointed to the U.S. Asset Owner’s Advisory Council of the Council of Institutional Investors. From 2002 to 2006, Mr. Dokho was a Senior Analyst at Lear Corporation, a tier 1 supplier to the automotive industry, focusing largely on mergers & acquisitions and joint ventures. From 2000 to 2002, Mr. Dokho was at Ernst & Young, a global public accounting firm, providing both audit and business risk consulting to clients in a wide range of industries, including defense and manufacturing. Prior to that, Mr. Dokho conducted regulatory compliance audits at the National Futures Association, the self-regulatory organization for the U.S. derivatives industry.
|
| |||
|
|
| |||
|
Education
|
| |||
|
Mr. Dokho received a B.A. in Accounting from Michigan State University and is a licensed Certified Public Accountant.
|
| |||
|
|
| |||
|
Skills and Qualifications
|
| |||
|
Mr. Dokho’s particular knowledge and experience in accounting, financial analysis, business risk consulting, mergers and acquisitions and profit-sharing plan design and implementation, including in the automotive sector, well qualify him to serve on our Board.
|
|
|
| |
2021 Proxy Statement
|
| |
126
|
|
| |
2021 Proxy Statement
|
| |
127
|
|
BOARD OF DIRECTORS
|
|
|
• Our Board, either as a whole or through its committees, regularly discusses with management our major risk
exposures, their potential impact on our Company, and the steps we take to monitor and control such exposures.
|
|
|
• While our Board has general oversight responsibility for risk at our Company, the Board has delegated some of
its risk oversight duties to the various Board committees. Each of the Board committees periodically reviews these
risks and then discusses the process and results with the full Board.
|
|
|
AUDIT COMMITTEE
|
| |
NOMINATING AND GOVERNANCE COMMITTEE
|
| |
COMPENSATION COMMITTEE
|
| |
FINANCE COMMITTEE
|
|
|
• Responsible for generally reviewing and discussing the Company’s policies and guidelines with respect to risk assessment and risk
management
• Focuses on the Company’s management
of financial risk exposure
• Oversees risks related to the Company’s financial statement compliance
and control environment
|
| |
• Oversees risks related to corporate governance, including risk related to
the political environment
|
| |
• Assists our Board in overseeing the management of risks arising from our compensation policies and programs and programs related to assessment, selection, succession planning, training and development of executives of the
Company
|
| |
• Responsible for overseeing policies with respect to financial risk assessment and financial risk management including, without limitation, risks relating to liquidity/access to capital and macroeconomic
trends/environment risks
|
|
|
MANAGEMENT
|
|
|
• Day-to-day risk management is the responsibility of management, which has implemented an Enterprise Risk
Management process to identify, assess, manage and monitor risks that our Company faces.
|
|
|
• Enterprise Risk Management operates within our Internal Audit and Corporate Compliance department.
|
|
|
CYBERSECURITY RISK MANAGEMENT
|
|
|
The Board recognizes the threats and consequences posed by cybersecurity incidents and is committed to the Company’s creation and maintenance of a robust process to prevent, timely detect and mitigate the effects of any such events on the Company. The Audit Committee oversees the Company’s controls related to cybersecurity. The Company’s Chief Information Officer gives regular reports to the Audit Committee on cyber risks and threats, the status of ongoing efforts to strengthen the Company’s information security systems, assessments of the Company’s security program and the emerging threat outlook. In turn, the Audit Committee updates the full Board on these matters.
|
|
|
| |
2021 Proxy Statement
|
| |
128
|
|
| |
2021 Proxy Statement
|
| |
129
|
|
| |
2021 Proxy Statement
|
| |
130
|
|
|
| |
Committee Membership (as of December 17, 2020)
|
| |||||||||
|
Members
|
| |
Audit
|
| |
Compensation
|
| |
Finance
|
| |
Nominating & Governance
|
|
|
Troy A. Clarke
|
| |
|
| |
|
| |
|
| |
|
|
|
José María Alapont
|
| |
|
| |
|
| |
|
| |
|
|
|
Stephen R. D’Arcy
|
| |
|
| |
|
| |
|
| |
|
|
|
Jeffrey A. Dokho
|
| |
|
| |
|
| |
|
| |
|
|
|
Vincent J. Intrieri
|
| |
|
| |
|
| |
|
| |
|
|
|
Mark H. Rachesky
|
| |
|
| |
|
| |
|
| |
|
|
|
Christian Schulz
|
| |
|
| |
|
| |
|
| |
|
|
|
Kevin M. Sheehan
|
| |
|
| |
|
| |
|
| |
|
|
|
Dennis A. Suskind
|
| |
|
| |
|
| |
|
| |
|
|
|
Janet T. Yeung
|
| |
|
| |
|
| |
|
| |
|
|
|
Chair
|
| |
Co-Chair
|
| |
Member
|
| |
|
|
|
| |
2021 Proxy Statement
|
| |
131
|
|
Current Members
Stephen R. D’Arcy (Chair)
Jeffrey A. Dokho
Kevin M. Sheehan
Janet T. Yeung
Meetings in 2020
10
Attendance
100%
|
| |
Roles and Responsibilities
• Assists the Board in fulfilling its responsibility for oversight of the Company’s financial reporting process, the Company’s legal and regulatory compliance, the retention, compensation, engagement partner selection, independence, qualifications and performance of the Company’s independent registered public accounting firm and the performance of the Company’s internal audit function and corporate compliance
function
• Reviews the audit plans of the Company’s independent registered public accounting firm and internal audit staff, reviews the audit of the Company’s accounts with the independent registered public accounting firm and the internal auditors, considers the adequacy of the audit scope and reviews and discusses with the auditors and management the auditors’
reports
• Reviews environmental reports and compliance activities for the Company’s facilities
and the expense accounts of executive officers and directors
• Reviews and decides on conflicts of interest and waivers of compliance with the
Company’s Code of Conduct that may affect executive officers and directors and
discusses policies and guidelines with respect to risk assessment and risk management
• Reviews and recommends to the Board that the Board either approve, ratify, reject or
take other action with respect to related-person transactions and it prepares and
approves the Audit Committee Report for inclusion in the Company’s proxy statement
All members of the Audit Committee are independent and the Board designated each of the Audit Committee members, with the exception of Ms. Yeung, as an “audit committee financial expert,” as defined by applicable law, rules and regulations. Currently, Mr. Sheehan serves on the audit committee of four public companies, including the Company. After evaluating the circumstances, including the fact that Mr. Sheehan does not currently serve as the executive of a public company, the Board determined, as required by NYSE listing rules, that such simultaneous service does not impair Mr. Sheehan’s ability to effectively serve on the Company’s Audit Committee. The Audit Committee conducted an evaluation of its performance in October 2020. Additional information on the roles and responsibilities of the Audit Committee is provided in the Audit Committee Report section of this proxy statement. |
|
|
| |
2021 Proxy Statement
|
| |
132
|
|
Current Members
Dennis A. Suskind (Chair)
Kevin M. Sheehan
Janet T. Yeung
Meetings in 2020
8
Attendance
94%
|
| |
Roles and Responsibilities
• Makes recommendations to the Board with respect to the appointment and
responsibilities of all executive officers
• Reviews and approves the compensation of executive officers who are not also
directors of the Company
• Reviews and approves the Company’s compensation strategy and any associated risks
• Recommends to the independent members of the Board the compensation of executive
officers who also are directors of the Company
• Administers the Company’s equity and incentive compensation plans
• Engages the compensation consultants that advise the Compensation Committee
• Approves the consultants’ fees and terms of engagement
• Furnishes an annual Compensation Committee Report on executive compensation
• Reviews and discusses the Compensation Discussion & Analysis (“CD&A”) with management and recommends to the Board the inclusion of the CD&A in the
Company’s proxy statement
• Upon management’s recommendation, reviews basic changes to non-represented
employees’ base compensation and incentive and benefit plans
• Oversees the development and implementation of succession plans for senior
executives (with the exception of our CEO)
The Compensation Committee Charter provides that, in fulfilling its responsibilities, the Committee shall be entitled to delegate any or all of its responsibilities to a subcommittee of the Committee and, to the extent not expressly reserved to the Committee by the Board, or by applicable law, rule or regulation, to any other committee of the Board, which may or may not be composed of members of the Committee; provided, however, that all subcommittee members must be composed entirely of members who satisfy the membership criteria as set forth above. In 2020, the Compensation Committee continued its annual delegation of authority to approve certain equity awards pursuant to the 2013 Performance Incentive Plan (“2013 PIP”) to the Committee Chair, Dennis A. Suskind. The equity awards are for retention, new hire, promotion or special recognition purposes and are subject to share- and value-based limitations established by the Compensation Committee. Periodically, but no less frequently than annually, such awards are communicated to the other members of the Compensation Committee. The Compensation Committee conducted an evaluation of its performance in October 2020. Additional Information on the roles and responsibilities of the Compensation Committee is provided in the CD&A section of this proxy statement. |
|
|
| |
2021 Proxy Statement
|
| |
133
|
|
Current Members
Vincent J. Intrieri (Co-Chair)
Mark H. Rachesky (Co-Chair)
José María Alapont
Jeffrey A. Dokho
Christian Schulz
Meetings in 2020
8
Attendance
83%*
(*97% excluding recusals)
|
| |
Roles and Responsibilities
• Reviews the Company’s financing requirements, procedures by which projections and estimates of cash flow are developed, dividend policy and investment spending and
capital expenditure budgets
• Oversees the Company’s policies with respect to financial risk assessment and financial risk management, including liquidity and access to capital and macroeconomic
trends/environment risks
The Finance Committee conducted an evaluation of its performance in October 2020. |
|
|
Current Members
José María Alapont (Chair)
Vincent J. Intrieri
Mark H. Rachesky
Dennis A. Suskind
Meetings in 2020
9
Attendance
95%
|
| |
Roles and Responsibilities
• Responsible for the organizational structure of the Board and its committees
• Recommending to the Board the directors to serve on the standing Board committees
• Reviewing and making recommendations to the Board concerning nominees for
election as directors and CEO succession planning
• Reviewing and making recommendations to the Board concerning corporate
governance practices and policies and changes to our Restated Certificate of
Incorporation and our By-Laws
• Overseeing risks related to corporate governance and the political environment
• Leads the Board in its self-evaluation process
• Monitors compliance with the Corporate Governance Guidelines
The Nominating and Governance Committee conducted an evaluation of its performance in October2020. |
|
|
| |
2021 Proxy Statement
|
| |
134
|
|
|
| |
Nine of ten directors are independent under our Corporate Governance Guidelines and the NYSE listing standards.
|
|
|
|
| |
We have Co-Independent Lead Directors.
|
|
|
|
| |
We have Board standing committees that are composed of 100% independent directors.
|
|
|
|
| |
We have a declassified Board.
|
|
|
|
| |
We have stockholder representation on all of our Board committees.
|
|
|
|
| |
We have a director resignation policy for directors who fail to obtain a majority vote.
|
|
|
|
| |
We have no super-majority voting provisions to approve transactions, including a merger.
|
|
|
|
| |
We have a clawback policy to recoup incentive-based compensation in the event of an accounting restatement or intentional misconduct.
|
|
|
|
| |
We do not provide tax gross-ups for perquisites and other similar benefits to Section 16 Officers and we do not provide tax gross-ups for any cash or equity awards for any employees.
|
|
|
|
| |
We have “double trigger” change in control benefits.
|
|
|
|
| |
Our NEOs and directors are subject to stock ownership guidelines and stock retention requirements.
|
|
|
|
| |
Our executives and directors are prohibited from engaging in short sales, derivatives trading and hedging transactions, and we impose restrictions on pledges and margin account use.
|
|
|
| |
2021 Proxy Statement
|
| |
135
|
|
| |
2021 Proxy Statement
|
| |
136
|
|
Compensation Element
|
| |
Calendar Year 2019 Compensation Program
|
| |
New Calendar Year 2020 Compensation Program
|
|
|
Annual Retainer
|
| |
$130,000 retainer (paid quarterly);
$105,000 paid in cash, $25,000 paid in fully vested shares of our common stock
|
| |
$115,000 cash retainer (paid quarterly);
$150,000 equity retainer paid in restricted stock units that vest on the first anniversary of the grant
|
|
|
Lead Director Additional Annual Retainer
|
| |
$25,000
|
| |
$25,000
|
|
|
Committee Chairman Additional Annual Retainer
|
| |
$25,000 for Audit Committee
$15,000 for Compensation Committee
$15,000 for Finance Committee
$15,000 for Nominating and Governance Committee
|
| |
$25,000 for Audit Committee
$15,000 for Compensation Committee
$15,000 for Finance Committee
$15,000 for Nominating and Governance Committee
|
|
|
Committee Member Additional Annual Retainer
|
| |
None
|
| |
None
|
|
|
Attendance Fees
|
| |
None
|
| |
None
|
|
|
Stock Options
|
| |
5,000 shares annually (the exercise price is equal to the fair market value of our common stock on the date of grant) which vest in equal annual installments on the first three anniversaries of the grant date.
|
| |
None
|
|
|
Other Benefits
|
| |
We also pay the premiums on directors’ and officers’ liability insurance policies covering the directors and reimburse directors for expenses related to attending Board and committee meetings and director continuing education seminars.
|
| |
We also pay the premiums on directors’ and officers’ liability insurance policies covering the directors and reimburse directors for expenses related to attending Board and committee meetings and director continuing education seminars.
|
|
|
Special Committees
|
| |
Determined on a case-by-case basis.
|
| |
Determined on a case-by-case basis.
|
|
|
| |
2021 Proxy Statement
|
| |
137
|
|
Name
|
| |
Fees Earned
or Paid in Cash
($)(1)(2)(3)
|
| |
Stock
Awards
($)(3)(4)(5)(6)(7)
|
| |
Option
Awards
($)(6)(8)
|
| |
Non-Qualified
Deferred
Compensation
Earnings
$(9)
|
| |
All Other
Compensation
($)
|
| |
Total
($)
|
|
|
José María Alapont
|
| |
115,946
|
| |
149,985
|
| |
—
|
| |
300
|
| |
—
|
| |
266,231
|
|
|
Stephen R. D’Arcy
|
| |
124,673
|
| |
150,000
|
| |
—
|
| |
323
|
| |
—
|
| |
274,996
|
|
|
Jeffrey A. Dokho(10)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
|
Vincent J. Intrieri
|
| |
120,309
|
| |
150,000
|
| |
—
|
| |
312
|
| |
—
|
| |
270,621
|
|
|
Raymond T. Miller
|
| |
—
|
| |
267,486
|
| |
—
|
| |
—
|
| |
—
|
| |
267,486
|
|
|
Mark H. Rachesky
|
| |
—
|
| |
287,471
|
| |
—
|
| |
—
|
| |
—
|
| |
287,471
|
|
|
Andreas H. Renschler(11)
|
| |
74,245
|
| |
149,985
|
| |
—
|
| |
214
|
| |
—
|
| |
224,444
|
|
|
Christian Schulz(12)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
|
Kevin M. Sheehan
|
| |
102,854
|
| |
149,985
|
| |
—
|
| |
265
|
| |
—
|
| |
253,104
|
|
|
Dennis A. Suskind
|
| |
91,910
|
| |
174,020
|
| |
—
|
| |
300
|
| |
—
|
| |
266,230
|
|
(1)
|
Amounts in this column reflect fees earned by our non-employee directors in 2020.
|
(2)
|
In calendar year 2020 the Board approved a Non-Elective Deferred Compensation Plan, whereby 35% of each directors annual cash retainer fees, including Lead Director additional cash retainers and additional Committee Chair cash retainers otherwise payable for service rendered between April 21, 2020 through August 31, 2020 was deferred from payment until November 30, 2020. The deferred cash amounts were paid on November 30, 2020 with 6% annual interest. Mr. Alapont and Mr. Suskind had a total of $16,540.76 deferred, Mr. D’Arcy had a total of $17,813.13 deferred, Mr. Dokho, who’s cash retainer is surrendered to a UAW trust, and Mr. Sheehan both had a total of $14,632.21 deferred, Mr. Intrieri had a total of $17,176.94 deferred, and Mr. Renschler had a total of $9,491.59 deferred. See the Non-Qualified Deferred Compensation Earnings column in the table above for the interest amounts earned.
|
(3)
|
Under our Non-Employee Directors Deferred Fee Plan (the “Deferred Fee Plan”), our directors who are not employees received an annual retainer, payable quarterly, at their election, either in shares of our common stock or in cash. A director may elect to defer any portion of such compensation until a later date in deferred share units (“DSUs”) or in cash. Each such election is made prior to December 31st for the next succeeding calendar year or within 30 days of first joining the Board. Mr. D’Arcy, Mr. Intrieri, Mr. Miller, Dr. Rachesky, and Mr. Suskind elected to defer the receipt of some or all of their compensation received for their retainer fees in 2020. Mr. D’Arcy deferred receipt of 100% of the 2020 equity retainer normally paid in share settled Restricted Stock Units (“RSUs”) and received a total of 4,125.413 DSUs in 2020. Mr. Intrieri deferred receipt of 100% of the 2020 equity retainer normally paid in share settled RSUs and received a total of 4,125.413 DSUs in 2020. Mr. Miller deferred receipt of 100% of his quarterly cash retainer fees and 100% of the 2020 equity retainer normally paid in share settled RSUs, into DSUs and received 8,293.317 DSUs through September 30, 2020. Dr. Rachesky deferred receipt of 100% of his quarterly cash retainer fees, except the portion payable in share settled RSUs in 2020 and received 4,877.814 DSUs through September 30, 2020. Mr. Suskind deferred receipt of 100% of his quarterly cash retainer fees for November and December 2019 and received 830.523 DSUs. The amount of DSUs for Mr. D’Arcy, Mr. Intrieri, Mr. Miller, Dr. Rachesky, and Mr. Suskind has been credited as stock units in an account under each of their names at the then current market price of our common stock. The units issued to Mr. D’Arcy and Mr. Intrieri during 2020 will be converted into common stock and issued within 60 days after their separation from service on the Board. The units issued to Mr. Miller and Dr. Rachesky during 2020 generally will be converted into common stock and issued within 60 days after January 1, 2021. The units issued to Mr. Miller, Dr. Rachesky and Mr. Suskind covering the period of November 2019 through December 2019 were converted into common stock and issued on February 28, 2020.
|
(4)
|
Effective February 25, 2020, each non-employee director, other than Mr. Dokho and Mr. Schulz, received 4,125 shares of settled RSUs in payment of their annual equity retainer, except for Mr. D’Arcy, Mr. Intrieri and Mr. Miller who each elected to defer receipt of their shares in DSUs, as described in footnote 3 above. The grant date fair value of the RSUs and DSUs was determined in accordance with the FASB Accounting Standards Codification (“FASB ASC”) Topic 718. Mr. Dokho does not personally receive compensation for his service on the Board, as noted under footnotes 6 and 10 below, and Mr. Schulz has declined compensation for his service on the Board. For additional information regarding assumptions underlying valuation of equity awards see Note 19 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended October 31, 2020.
|
|
| |
2021 Proxy Statement
|
| |
138
|
(5)
|
The aggregate number of shares subject to stock awards granted by the Company that were outstanding for each non-employee director as of October 31, 2020, including stock awards, RSUs and DSUs earned or owned by Mr. D’Arcy, Mr. Intrieri, Mr. Miller, Dr. Rachesky, and Mr. Suskind is indicated in the table below. All of these stock awards and DSUs are 100% vested, except for the equity retainer granted on February 25, 2020, in the form of RSUs, which vests as to 100% of the shares on February 25, 2021:
|
|
Name
|
| |
Total Number of
Stock Awards
Outstanding
(#)
|
|
|
José María Alapont
|
| |
5,634
|
|
|
Stephen R. D’Arcy
|
| |
6,281
|
|
|
Jeffrey A. Dokho
|
| |
—
|
|
|
Vincent J. Intrieri
|
| |
15,081
|
|
|
Raymond T. Miller
|
| |
14,319
|
|
|
Mark H. Rachesky
|
| |
47,164
|
|
|
Andreas H. Renschler(10)
|
| |
1,244
|
|
|
Christian Schulz
|
| |
—
|
|
|
Kevin M. Sheehan
|
| |
4,898
|
|
|
Dennis A. Suskind
|
| |
13,395
|
|
(6)
|
At the request of the UAW, the UAW representative director, Jeffrey Dokho, does not receive stock or stock option awards. Mr. Schulz has declined compensation for his service on the Board, including stock or stock option awards.
|
(7)
|
The value in this column reflect the grant date fair value as determined in accordance with FASB ASC Topic 718. For additional information see Note 19 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended October 31, 2020, regarding assumptions underlying valuation of equity awards.
|
(8)
|
No stock options were granted in 2020. The aggregate number of stock options outstanding for each non-employee director as of October 31, 2020, are indicated in the table below.
|
(9)
|
Represents the interest earned on cash retainer fees, including Lead Director additional cash retainers and additional Committee Chair cash retainers that were deferred pursuant to the Non-Elective Deferred Compensation Plan enacted in FY 2020, and as further described in footnote 2 above. The interest payments were made effective November 30, 2020. Mr. Dokho earned interest of $265, which was surrendered to a UAW trust account.
|
|
Name
|
| |
Total Stock Option
Awards Outstanding
at 2020 Year End(a)
(#)
|
|
|
José María Alapont
|
| |
15,000
|
|
|
Stephen R. D’Arcy
|
| |
15,000
|
|
|
Jeffrey A. Dokho
|
| |
—
|
|
|
Vincent J. Intrieri
|
| |
30,000
|
|
|
Raymond J. Miller
|
| |
5,000
|
|
|
Mark H. Rachesky
|
| |
30,000
|
|
|
Andreas H. Renschler(10)
|
| |
5,000
|
|
|
Christian Schulz
|
| |
—
|
|
|
Kevin M. Sheehan
|
| |
5,000
|
|
|
Dennis A. Suskind
|
| |
15,000
|
|
(a)
|
The stock options generally vest over a three-year period with one-third vesting on each of the first three anniversaries of the date on which they are awarded, so that in three years the stock options are 100% vested. Generally the outstanding stock options expire ten years after the date of grant, except that any stock options granted prior to December 13, 2016 expire seven years after the date of grant.
|
(10)
|
At the request of the UAW, the organization which recommended Mr. Dokho to the Board, the entire cash portion of Mr. Dokho’s annual retainer is contributed to a trust which was created in 1993 pursuant to a restructuring of our retiree health care and life insurance benefits.
|
(11)
|
Mr. Renschler resigned from the board, effective July 15, 2020.
|
(12)
|
As stated in footnote 6 above, Mr. Schulz has declined receiving compensation for his service on the Board at this time. For 2020, the Company would have paid Mr. Schulz the sum of $252,839.
|
|
| |
2021 Proxy Statement
|
| |
139
|
|
| |
2021 Proxy Statement
|
| |
140
|
|
| |
Your Board of Directors recommends a vote FOR the approval of named executive officer compensation.
|
•
|
The 2018 LTI performance results are slightly above target for the performance-based portion of the award.
|
•
|
The 2019 LTI performance results are projected to be below target for Adjusted EBITDA and at target for Revenue Growth.
|
•
|
The 2020 LTI performance results are projected to be at target for both Adjusted EBITDA Margin and Revenue Growth.
|
•
|
The Special Incentive Plan (“SI Plan”) performance result is projected to be above target.
|
•
|
The 2020 AI awards will be paid out at 5.5% of target percentage. AI plan goals were established and approved in December of 2019 prior to the global pandemic. As such, our results are not truly representative of the Company’s performance and have been greatly impacted by the current economic environment.
|
|
| |
2021 Proxy Statement
|
| |
141
|
|
The Compensation Committee
|
| |
Independent Board members
(non-Compensation Committee members)
|
|
|
Dennis A. Suskind, Chairman
|
| |
José María Alapont
|
|
|
Raymond T. Miller
|
| |
Stephen R. D’Arcy
|
|
|
Kevin M. Sheehan
|
| |
Jeffrey A. Dokho
|
|
|
|
| |
Vincent J. Intrieri
|
|
|
|
| |
Mark H. Rachesky
|
|
|
|
| |
Christian Schulz
|
|
|
|
| |
Janet T. Yeung
|
|
PERSIO V. LISBOA
President and Chief Executive Officer
|
| |
TROY A. CLARKE
Executive Chairman and Chairman of the Board
|
| |
WALTER G. BORST
Executive Vice President and Chief Financial Officer
|
| |
WILLIAM V. MCMENAMIN
President, Financial Services and Treasurer
|
| |
CURT A. KRAMER
Senior Vice President and General Counsel
|
| |
SAMARA A. STRYCKER
Senior Vice President and Corporate Controller
|
|
| |
2021 Proxy Statement
|
| |
142
|
|
|
| |
|
|
|
• Took deliberate and concerted actions to preserve
liquidity and performance during the COVID-19
pandemic:
○ Enhanced liquidity through completion of a
$600,000,000 senior secured notes offering
○ Maintained production as an “essential” business
○ Maintained service Parts Distribution Centers, used
truck centers and dealers
○ Implemented IT solutions to maintain critical
operations and projects to increase flexibility to
work from home
○ Reduced cash outflows by re-timing non-critical capital improvements and IT projects, and targeted deferrals
and other permanent cost reduction actions
|
| |
• Launched the International® HX® Series with increased component commonality that further aligns our full
product line with our project compass initiative
• Announced our first order for 18 Electric CE school buses
for the province of British Columbia in Canada.
• Announced Partnerships with Self-driving and Electric
Vehicle Related Companies and Organizations
• Broke ground on the new San Antonio plant and on the
Huntsville plant expansion
• Made significant senior leadership changes, including Persio V. Lisboa being named President and CEO
|
|
|
($ in millions, except figures expressed as per share)
|
| ||||||
|
|
| |
Years Ended
October 31
|
| |||
|
|
| |
2020
|
| |
2019
|
|
|
Chargeouts(A)
|
| |
50,400
|
| |
87,200
|
|
|
Sales and revenues
|
| |
$7,503
|
| |
$11,251
|
|
|
Net income(B)
|
| |
$(347)
|
| |
$221
|
|
|
Diluted income per share(B)
|
| |
$(3.48)
|
| |
$2.22
|
|
|
Adjusted Net income
|
| |
$10
|
| |
$423
|
|
|
Adjusted EBITDA
|
| |
$420
|
| |
$882
|
|
|
Adjusted EBITDA Margin
|
| |
5.6%
|
| |
7.8%
|
|
(A)
|
Includes U.S. and Canada School buses and Class 6-8 trucks.
|
(B)
|
Amounts attributable to Navistar International Corporation. Excludes net income attributable to non-controlling interests.
|
•
|
The Company approved 2020 long-term incentive awards for each executive based on an assessment of such executive’s performance and scope of the executive’s role.
|
•
|
Based on 2020 results, the 2020 LTI awards based on performance measures are projected to be at target for adjusted EBITDA Margin and at target for Revenue Growth.
|
•
|
Based on 2020 performance measures of our short-term annual incentive plan, 2020 AI awards will be paid at 5.5% of target.
|
|
| |
2021 Proxy Statement
|
| |
143
|
•
|
Based on performance measures ending October 31, 2020, the Compensation Committee approved the acceleration of service-based vesting and payment in December 2020 of the 2018 performance awards that would have otherwise become fully vested and been payable in calendar year 2021.
|
•
|
For Q4 FY 2020 through Q1 FY 2021, the SI Plan, which was approved by the Compensation Committee, is based on Adjusted EBITDA performance during Q4 fiscal year 2020 and Q1 fiscal year 2021 and is intended to reinforce the need to close out FY 2020 strong and continue this momentum into FY 2021.
|
•
|
For 2021, AI performance goals as determined by our Compensation Committee will include Adjusted EBITDA Margin, Market Share, Parts Revenue, Cost, and Navistar 4.0 Milestones along with an individual performance factor.
|
•
|
Maintained our clawback policy, which enables the Company to recover incentive-based compensation in the event of an accounting restatement due to material non-compliance with financial reporting requirements, as well as intentional misconduct; and
|
•
|
Continued to exclude pro rata bonus from the calculation of any pension/retirement benefit under our Executive Severance Agreements.
|
•
|
The 2018 LTI performance results are below target for Adjusted EBITDA and at target for Revenue Growth.
|
•
|
The 2019 LTI performance results are projected to be below target for Adjusted EBITDA and at target for Revenue Growth.
|
•
|
The 2020 LTI performance results are projected to be at target for Adjusted EBITDA Margin and at target for Revenue Growth.
|
|
FY 2018
|
| |||||||||||||||
|
Portion of
LTI Award
|
| |
Award Type
|
| |
Performance Measure
|
| |
Goals/Conditions
|
| |
Results
|
| |
Adjustment for Three-
Year Relative TSR
Modifier (+/- 25%)
|
|
|
|
| |
Performance RCUs —Adjusted EBITDA
|
| |
Total Adjusted EBITDA, 2018-2020
|
| |
Threshold: $1.818B Target: $2.272B Distinguished: $2.727B
|
| |
2018-2020: $2.128B => 84.1% Payout
|
| |
+10%
|
|
|
|
| |
Performance RCUs —Revenue Growth
|
| |
Revenue Growth in each year and cumulatively over all three years
|
| |
2018: 10% 2019: 4.8% 2020: 5.4% 2018-2020: 21.5%
|
| |
2018: 10.0% 2019: 19.3% 2020: (33.3)% 2018-2020: (12.5)% => 100% Payout
|
| |
+10%
|
|
|
|
| |
Time-Based RSUs
|
| |
Value realized is determined by stock price
|
| |
Continued service
|
| |
Share price on 10/30/2020 = $43.11
|
| |
N/A
|
|
|
|
| |
Stock Options
|
| |
Value realized is determined by increase (if any) in stock price over strike price of $40.18
|
| |
Continued service
|
| |
Share price on 10/30/2020 = $43.11
|
| |
N/A
|
|
|
| |
2021 Proxy Statement
|
| |
144
|
|
FY 2019
|
| |||||||||||||||
|
Portion of
LTI Award
|
| |
Award Type
|
| |
Performance Measure
|
| |
Goals/Conditions
|
| |
Results
|
| |
Adjustment for 3-Year
Relative TSR
Modifier (+/- 25%)
|
|
|
|
| |
Performance RCUs —Adjusted EBITDA
|
| |
Total Adjusted EBITDA, 2019-2021
|
| |
Threshold: $1.96B Target: $2.45B Distinguished: $2.94B
|
| |
2019 Performance is projected to be below target
|
| |
projected to be above target
|
|
|
|
| |
Performance RCUs —Revenue Growth
|
| |
Revenue Growth in each year and cumulatively over all three years
|
| |
2019: 11% 2020: -5% 2021: 9% 2019-2021: 14.9%
|
| |
2019 Performance is projected to be at target
|
| |
projected to be above target
|
|
|
|
| |
Time-Based RSUs
|
| |
Value realized is determined by stock price
|
| |
Continued service
|
| |
Share price on 10/30/2020 = $43.11 Exercise price/closing price grant
|
| |
N/A
|
|
|
|
| |
Stock Options
|
| |
Value realized is determined by increase (if any) in stock price over strike price of $35.08
|
| |
Continued service
|
| |
Share price on 10/30/2020 = $43.11
|
| |
N/A
|
|
|
FY 2020
|
| ||||||||||||
|
Portion of
LTI Award
|
| |
Award Type
|
| |
Performance Measure
|
| |
Goals/Conditions
|
| |
Results
|
|
|
|
| |
Performance RCUs —Adjusted EBITDA Margin
|
| |
Adjusted EBITDA Margin in each year and cumulatively over all three years
|
| |
2020: 7.7% 2021: 8.0% 2022: 9.0% 2020-2022: 8.2%
|
| |
2020 Performance is projected to be at target
|
|
|
|
| |
Performance RCUs —Revenue Growth
|
| |
Revenue Growth in each year and cumulatively over all three years
|
| |
2020: -15.6% 2021: 6.0% 2022: 6.0% 2020-2022: -5.1%
|
| |
2020 Performance is projected to be at target
|
|
|
|
| |
Time-Based RCUs
|
| |
Continued service
|
| |
|
| |
|
|
•
|
50% performance-based LTI awards for the NEOs and the CEO, with grant sizes adjusted based on the performance of the individual and their scope within the organization.
|
•
|
An AI program designed to align with key Company performance targets which resulted in a payout at 5.5% of target.
|
|
| |
2021 Proxy Statement
|
| |
145
|
|
WHAT WE DO
|
| |
WHAT WE DON’T DO
|
|
|
✔ We use multiple performance measures in our short-term and long-term incentive plans. These performance measures are designed to link pay to
performance and stockholder interests.
✔ The Compensation Committee reviews external
market data when making compensation decisions.
✔ The Compensation Committee selects and engages
its own independent advisor, Pay Governance LLC.
✔ We maintain a clawback policy to recoup incentive-based compensation in the event of an
accounting restatement.
✔ Change in control severance benefits are payable
only upon a double trigger.
✔ To aid in aligning the interests of our stockholders
and officers, all officers are subject to stock ownership requirements, ranging from 6x base pay for the CEO and Executive Chairman to 3x base pay for other senior executives - including a retention
requirement.
|
| |
✘ The Company maintains policies that eliminate all tax gross-ups for perquisites and other similar benefits to Section 16 Officers, and prohibit tax gross-ups for any
cash or equity awards for all employees.
✘ We do not reprice stock options or provide cash
buyouts of underwater options.
✘ We prohibit short selling, trading in derivatives or engaging in hedging transactions by executives and directors. In addition, any pledging and margin
account use must be pre-cleared through the
Corporate Secretary or the General Counsel.
✘ We do not grant extra pension service.
|
|
•
|
We immediately adapted our agile and collaborative visual management-based teaming practices to online tools and practices that were quickly scaled across the organization. Once stay-at-home orders started, we were able to quickly train and ramp up our organization to operate remotely with minimal disruption to most operations.
|
|
| |
2021 Proxy Statement
|
| |
146
|
•
|
Significant senior leadership changes were made that strengthen Navistar’s focus on those critical areas that will help us achieve our objectives and guide us into the future:
|
○
|
Persio V. Lisboa became President and Chief Executive Officer. He is a strong leader with a proven record of driving results. Troy Clarke became Executive Chairman and Chairman of the Board, dedicated to ensuring a smooth leadership transition and to continue to manage discussions with Navistar’s strategic partner, TRATON.
|
○
|
We integrated sales, marketing and aftersales under one leader to further improve the complete commercial process for customers and dealers.
|
○
|
To further drive operating efficiencies, Navistar global operations, including Brazil, Mexico and the Global Export business, have been combined under the same leadership with our current integrated operations of procurement, product development, manufacturing and supply chain.
|
•
|
Navistar and our employees are also proud of being leaders in our communities in this year of the COVID-19 pandemic, and social unrest. As a company that thrives with diversity, inclusion and social engagement, Navistar leaders, dealers and employees stepped up and demonstrated our values. Some notable examples of this are:
|
○
|
International dealers served nearly 10,000 meals to truckers all over the U.S. and Canada.
|
○
|
International Truck, Triumph Business Capital and Triumph Pay donated more than 6,500 face masks and 6,000 bottles of hand sanitizer to drivers who came in for service at select International Truck dealerships.
|
○
|
Our South American engine subsidiary MWM Motores provided two mobile generators to power a soccer arena in Sao Paulo that had been converted into a temporary hospital with 200 beds.
|
○
|
We established the “International Cares” and “IC Bus Cares” programs to provide innovative financing solutions for our customers and to offer free access to services like our fleet management tools International 360 and IC Bus 360.
|
○
|
We established a platform for our employees to share concerns, thoughts and ideas on dealing with a multitude of topics going on in our world through a series of online sessions entitled “Shifting Gears.” These sessions connected employees of all backgrounds and experiences across Navistar, helping them deal with ongoing events.
|
○
|
Navistar also moved quickly at the onset of the COVID-19 pandemic to ensure a safe environment for our employees by aggressively implementing safety protocols at all our facilities.
|
•
|
Took deliberate and concerted actions to preserve liquidity and performance during the COVID-19 pandemic. Those actions included:
|
○
|
Enhanced liquidity through completion of a $600,000,000 senior secured notes offering.
|
○
|
Maintained production as an “essential business” by working closely with our supply chain.
|
○
|
Maintained service at parts distribution centers, used truck centers and dealers, in part by leveraging e-commerce and data analytics.
|
○
|
Implemented IT solutions to maintain critical operations and projects to increase flexibility to work from home.
|
○
|
Reduced cash outflows by retiming non-critical capital improvement and IT projects, and targeted deferrals and other permanent cost reduction actions.
|
|
| |
2021 Proxy Statement
|
| |
147
|
•
|
Moved forward with key capital infrastructure projects, including:
|
○
|
Broke ground on the new San Antonio, TX plant, a $250,000,000 investment that will incorporate the latest manufacturing principles - digital factory, connected machinery, robust lean manufacturing processes and cloud analytics - to enable predictive quality and maintenance, and allow data-driven decisions to be made real time on the shop floor.
|
○
|
Broke ground on a $125,000,000 Huntsville, AL plant expansion that will support the production of next-generation big-bore powertrains developed with TRATON.
|
•
|
Signed a new 20-year agreement with the city of Tulsa, OK for our bus plant that will keep the IC Bus school bus manufacturing facility at the Tulsa International Airport.
|
•
|
Successfully extended our relationship with Cummins Inc. (“Cummins”) to supply Cummins engines through the next two greenhouse gas emissions cycles for medium duty and heavy duty big-bore engines.
|
•
|
Piloted new dealer sales processes, capturing new customers and launching new training modules, as well as continued to expand our portfolio of Fleetrite® products and the number of our dedicated retail service parts locations.
|
•
|
Launched the International® HX® Series, the next generation of severe service trucks in late 2020, with increased component commonality that further aligns our full product line with our project compass initiative.
|
•
|
Further solidified our ongoing relationship with one of the nation’s largest fleet carriers by delivering our 5,000th LT series truck in 3 ½ years.
|
•
|
Announcement of our first order for 18 Electric CE school buses for the province of British Columbia in Canada. We expect to begin delivery of the units in 2021.
|
•
|
Formed partnerships with TuSimple, Inc. (“TuSimple”), a global self-driving technology company to co-develop SAE Level 4 self-driving trucks.
|
•
|
Formed a partnership with seven leading telematics service providers (“TSP”) that we believe covers at least 70% of the TSP market.
|
•
|
Through our NEXT e-Mobility solutions business unit, we signed a master services agreement with In-Charge Energy to provide charging infrastructure and consulting services to Navistar and our electric vehicle customers.
|
•
|
Became a member of CharIN E.V., which is a global association that focuses on electric vehicle adoption, to further establish Navistar as a participant in the electric future of the commercial truck industry.
|
•
|
Launched the industry’s first holistic suite of products designed to minimize Total Cost of Ownership - Intelligent Fleet Care in OnCommand Connection.
|
•
|
Growth Initiatives
|
○
|
Commercial Transformation is collaborating with our International dealer network to sustainably grow truck sales.
|
|
| |
2021 Proxy Statement
|
| |
148
|
○
|
Uptime/Total Cost of Ownership/Connected is supporting our customers on the road better than our competitors, through technology and responsiveness.
|
•
|
Profitability Initiatives
|
○
|
Project Compass is reducing unnecessary complexity while meeting customer needs.
|
○
|
Emerging Technologies is deploying lifecycle innovative solutions leveraging internal competencies and strategic partnerships to address new profit opportunities. This initiative is focused on electric, fuel cell, and autonomous solutions.
|
○
|
Manufacturing 4.0 is combining our manufacturing and procurement expertise, along with innovative technologies, to improve quality and minimize conversion cost.
|
•
|
Foundational Initiatives
|
○
|
People 4.0 is creating a culture of trust, empowerment and accountability to build the best teams.
|
○
|
Innovation is embedding into our identity the fun, curiosity and energy of problem-solving and breakthrough thinking.
|
|
COMPETITIVE POSITIONING
|
| |
PAY-FOR-PERFORMANCE
|
| |
OWNERSHIP AND RESPONSIBILITY
|
|
|
Total remuneration is designed to attract and retain the executive talent necessary to achieve our goals through a market competitive total remuneration package.
|
| |
A substantial portion of each NEO’s compensation is performance-based with a direct link to Company as well as individual performance. It is designed to align the interests of executives and stockholders.
|
| |
Compensation programs are designed to recognize individual contributions as well as link NEO and stockholder interests through programs that reward our NEOs, based on the financial success of the Company and increases to stockholder value.
|
|
|
| |
2021 Proxy Statement
|
| |
149
|
|
| |
2021 Proxy Statement
|
| |
150
|
|
Pay Element
|
| |
What it Does
|
| |
Performance Measures
|
|
|
Base Salary
|
| |
Provides competitive base salary, typically reviewed annually, and balances risk-taking concerns with stockholder interests
|
| |
Job scope, experience, performance and market data
|
|
|
Short-Term Annual Incentive or AI
|
| |
Provides a competitive incentive opportunity and aligns individual and Company performance
|
| |
The goals established for 2020 include Market Share, Gross Margin, Liquidity and A26 Sales Mix as well as an adjusted EBITDA multiplier
|
|
|
Long-Term Incentives or LTI (including stock option grants)
|
| |
Aligns executive and stockholder interests by tying compensation to achievement of multi-year goals and share price appreciation, builds long-term stockholder value, and cultivates stock ownership
|
| |
The amount of the 2020 LTI awards were adjusted for each executive based upon an evaluation of market data, individual performance, and scope of the position within the organization
|
|
|
| |
2021 Proxy Statement
|
| |
151
|
|
Pay Element
|
| |
Contractual Terms
|
|
|
Annual Base Salary
|
| |
$890,000
|
|
|
Short-Term Annual Incentive or AI(1)
|
| |
Target AI of 115% of Base Salary with a maximum AI of two times his Target AI.
|
|
|
Long-Term Incentive or LTI
|
| |
Value of $4,500,000 in 2020
|
|
|
Total Target Direct Compensation
|
| |
$6,413,500
|
|
|
Other Benefits
|
| |
Eligible to participate in the Company plans, policies, perquisites and arrangements that are applicable to other senior officers of the Company, including life insurance equal to five times base salary and vacation equal to four weeks
|
|
|
Severance Provisions
|
| |
In the event that Mr. Lisboa’s employment is terminated without cause or due to Constructive Termination other than in connection with a change in control, he would receive severance of: (i) two times Mr. Lisboa’s base salary plus target AI award, (ii) a prorated portion of the AI award for the year of termination that would have been paid to Mr. Lisboa had he remained employed at the time such payments are made to the employees generally, (iii) 12 months’ continued health care coverage with an option to purchase an additional 12 months at the cost of coverage rate, and (iv) continued life insurance for 24 months after termination.
In the event that Mr. Lisboa’s employment is terminated without cause or due to Constructive Termination within 24 months after a CIC, he would receive severance of: (i) two times Mr. Lisboa base salary plus target AI award, (ii) a prorated portion of the target AI award for the year of termination, (iii) 12 months’ continued health care coverage with an option to purchase an additional 12 months at the cost of coverage rate, and (iv) continued life insurance for 24 months after termination.
Vesting of equity awards and performance cash incentives outstanding following Mr. Lisboa’s termination of employment will be governed by the respective plans and agreements pursuant to which they were granted and awarded.
|
|
(1)
|
Actual payout at 5.5% of target for 2020.
|
|
| |
2021 Proxy Statement
|
| |
152
|
|
|
| ||||||
|
Commercial Area Leadership Consolidation Accomplishments
|
| |
•
|
| |
Sales, Marketing, and Aftersales responsibilities were consolidated under one leader
|
|
|
•
|
| |
The commercial area was restructured
|
| |||
|
•
|
| |
In Marketing, two leadership roles were consolidated into one and Marketing assumed responsibility for the company’s Product Planning function
|
| |||
|
Commercial Acceleration Accomplishments
|
| |
•
|
| |
The “Commercial Transformation” program was launched and several workstreams were developed to drive increased dealer sales
|
|
|
•
|
| |
Six pilot programs were successfully implemented with key dealers and the program is ready to be scaled up
|
| |||
|
Emerging Technologies Accomplishments
|
| |
•
|
| |
Recruited a new leader to head the strategy group and also assume the newly created role of VP of Emerging Technologies
|
|
|
•
|
| |
Completed the technology and equity agreement with TuSimple, our strategic partner in the development of autonomous technology
|
| |||
|
Navistar 4.0 Accomplishments
|
| |
•
|
| |
The Navistar 4.0 strategy was segmented into seven strategic initiatives and they were cascaded to the entire organization
|
|
|
•
|
| |
Implemented a formal governance structure for Navistar 4.0 that created a strong and agile pace of execution
|
| |||
|
•
|
| |
All Navistar 4.0 strategic initiatives are funded and running on track
|
|
•
|
Successful achievement of all relevant annual milestones of Navistar 4.0 strategy, measured individually in each of the seven strategic initiatives.
|
•
|
Development of a robust post-merger integration plan in collaboration with TRATON.
|
•
|
Development of two new business expansion opportunities, measured by their revenue and earnings contributions in the five-year strategic cycle plan.
|
•
|
Implementation of a formal platform for Diversity and Inclusion, integral to the culture of the Company and embedded in its recruiting, talent development and succession planning processes.
|
•
|
Succession plans for key leaders.
|
|
NEO
|
| |
Current Base
Salary
|
| |
Effective Date
|
| |
Previous Base
Salary
|
| |
Effective Date
|
|
|
Persio V. Lisboa(1)
|
| |
$890,000
|
| |
July 1, 2020
|
| |
$765,450
|
| |
February 1, 2019
|
|
|
Troy A. Clarke(2)
|
| |
$850,000
|
| |
July 1, 2020
|
| |
$1,050,000
|
| |
April 16, 2018
|
|
|
Walter G. Borst
|
| |
$772,335
|
| |
February 1, 2018
|
| |
$749,840
|
| |
February 1, 2016
|
|
|
William V. McMenamin
|
| |
$460,000
|
| |
September 1, 2017
|
| |
$386,650
|
| |
February 1, 2016
|
|
|
Curt A. Kramer
|
| |
$471,656
|
| |
February 1, 2019
|
| |
$440,800
|
| |
February 1, 2018
|
|
|
Samara A. Strycker
|
| |
$372,619
|
| |
February 1, 2019
|
| |
$360,018
|
| |
February 1, 2018
|
|
(1)
|
Mr. Lisboa received a base salary increase due to his promotion to CEO in July 2020.
|
(2)
|
Mr. Clarke received a base salary decrease due to his role change from CEO to Executive Chairman in July 2020.
|
|
| |
2021 Proxy Statement
|
| |
153
|
•
|
Each AI financial performance metric is independent. Eligibility for payout is based on the attainment of each individual metric.
|
•
|
We use two design features: an adjusted EBITDA multiplier which scales the annual incentive up or down from the target level based upon actual financial performance of Navistar and an individual performance factor.
|
•
|
We continue to leverage our AI scorecard using multiple performance metrics. This allows the NEOs to see how their individual achievements contribute to the overall effort and success of the Company.
|
|
2020 Performance Goal
|
| |
Metric
|
| |
% Allocation
|
| |
Level Achieved
|
|
|
Market Share
|
| |
Segment-Weighted
|
| |
30%
|
| |
Below Threshold
|
|
|
Gross Margin
|
| |
Segment-Weighted
|
| |
30%
|
| |
Below Threshold
|
|
|
Liquidity
|
| |
Operating Cash Flow
|
| |
30%
|
| |
At Threshold
|
|
|
A26 Sales Mix
|
| |
Charge-outs
|
| |
10%
|
| |
Above Target
|
|
|
Adjusted EBITDA
|
| |
Multiplier
|
| |
N/A
|
| |
Below Threshold
|
|
|
Named Executive Officer
|
| |
Target as %
of Base Salary
|
| |
2020 AI
Amount Earned
|
|
|
Persio V. Lisboa
|
| |
115%
|
| |
$56,293
|
|
|
Troy A. Clarke
|
| |
100%
|
| |
$46,750
|
|
|
Walter G. Borst
|
| |
75%
|
| |
$31,859
|
|
|
William V. McMenamin
|
| |
60%
|
| |
$15,180
|
|
|
Curt A. Kramer
|
| |
60%
|
| |
$15,565
|
|
|
Samara A. Stryker
|
| |
60%
|
| |
$12,296
|
|
|
| |
2021 Proxy Statement
|
| |
154
|
|
2021 Performance Goal
|
| |
Weighting
|
| |
Description
|
| |
Target
|
|
|
Adjusted EBITDA Margin
|
| |
30%
|
| |
Adjusted EBITDA as a % of Revenue
|
| |
8.0%
|
|
|
Market Share
|
| |
20%
|
| |
Segment-Weighted
|
| |
17.5%
|
|
|
Parts Revenue
|
| |
20%
|
| |
Parts Revenue Growth
|
| |
$230,000,000
|
|
|
Cost
|
| |
10%
|
| |
Total Cost Reduction
|
| |
$150,000,000
|
|
|
Navistar 4.0
|
| |
20%
|
| |
Milestones
|
| |
Scorecard
|
|
•
|
Continuing to use a Market Share metric
|
•
|
Replacing the Gross Margin, Liquidity and A26 Sales Mix metrics with Adjusted EBITDA Margin, Parts Revenue, Cost, and Navistar 4.0 Milestone metrics
|
•
|
Continuing the use of an individual performance factor
|
•
|
Removing the Adjusted EBITDA multiplier
|
•
|
Adjusting the threshold and distinguished payout percentages to 50% and 200%, respectively
|
|
Named Executive Officer
|
| |
Target as % of Base Salary
|
|
|
Persio V. Lisboa
|
| |
28.75%
|
|
|
Troy A. Clarke
|
| |
25%
|
|
|
Walter G. Borst
|
| |
18.75%
|
|
|
William V. McMenamin
|
| |
15%
|
|
|
Curt A. Kramer
|
| |
15%
|
|
|
Samara A. Strycker
|
| |
15%
|
|
•
|
Aligning NEO and stockholder interests by tying compensation to share price appreciation.
|
•
|
Building long-term stockholder value.
|
•
|
Cultivating stock ownership.
|
|
| |
2021 Proxy Statement
|
| |
155
|
|
NEO
|
| |
Performance-
Based RCUs
|
| |
Time-Based
Restricted Cash Units
|
| |
Targeted
Economic Value
|
|
|
Persio V. Lisboa(1)
|
| |
$2,250,000
|
| |
$2,250,000
|
| |
$4,500,000
|
|
|
Troy A. Clarke(1)
|
| |
$2,750,000
|
| |
$2,750,000
|
| |
$5,500,000
|
|
|
Walter G. Borst(1)
|
| |
$1,050,000
|
| |
$1,050,000
|
| |
$2,100,000
|
|
|
William V. McMenamin(1)
|
| |
$250,000
|
| |
$250,000
|
| |
$500,000
|
|
|
Curt A. Kramer(1)
|
| |
$375,000
|
| |
$375,000
|
| |
$750,000
|
|
|
Samara A. Strycker(1)
|
| |
$250,000
|
| |
$250,000
|
| |
$500,000
|
|
(1)
|
Long-term incentive awards for all NEOs were granted in February 2020 with the exception of Messrs. Lisboa and Clarke. Mr. Lisboa received a portion of his long-term incentive awards in February 2020 and the remainder in July 2020 due to his promotion to CEO. Mr. Clarke’s long-term incentive awards were granted in April 2020.
|
|
| |
2021 Proxy Statement
|
| |
156
|
|
1
|
| |
2
|
| |
3
|
|
|
The CEO makes base salary recommendations for the NEOs and most Section 16 Officers to the Compensation Committee. The CEO does not participate in decisions regarding his own compensation.
|
| |
The Compensation Committee reviews the salary for the CEO and reviews, approves and/or adjusts the CEO’s base salary recommendations for the other NEOs and Section 16 Officers included in the CEO’s recommendation.
|
| |
The Compensation Committee then recommends, and the independent members of the Board approve or adjust, the salary recommendation for the CEO.
|
|
|
| |
2021 Proxy Statement
|
| |
157
|
•
|
Attend committee meetings at the request of the Compensation Committee;
|
•
|
Advise the Compensation Committee on market trends, regulatory issues and developments and how these could impact our executive compensation programs;
|
•
|
Review the compensation strategy and executive compensation programs for alignment with our strategic business objectives;
|
•
|
Advise on the design of executive compensation programs to ensure the linkage between pay and performance;
|
•
|
Provide market data analysis to the Company;
|
•
|
Advise the Compensation Committee and the Board on setting the CEO pay;
|
•
|
Review the annual compensation of the other NEOs as recommended by the CEO; and
|
•
|
Perform such other activities as requested by the Compensation Committee.
|
•
|
Included in the Aerospace and Defense, Construction Machinery and Heavy Trucks, Industrial Machinery, Auto Parts and Equipment, Tires and Rubber or Agricultural and Farm Machinery sub-industries (i.e., primary industries), as defined by the S&P Global Industry Classification Standard
|
•
|
Headquarters or primary operations are in the U.S. (preference for companies headquartered in the Midwest)
|
•
|
Names Navistar as a peer group company
|
•
|
Similar revenues
|
•
|
Was included in the prior year’s peer group
|
|
| |
2021 Proxy Statement
|
| |
158
|
(1)
|
Average of trailing 12-month revenues, as of August 31, 2017, 2018, and 2019.
|
|
| |
2021 Proxy Statement
|
| |
159
|
•
|
All financial and market data are taken from Standard & Poor’s Capital IQ database.
|
•
|
All data is as of August 31, 2019 unless otherwise noted.
|
•
|
All data shown as reviewed by the Compensation Committee at the time of the peer group approval.
|
|
| |
2021 Proxy Statement
|
| |
160
|
|
|
| |||||||||
|
Executive Severance Agreements (“ESAs”)
|
| |
•
|
| |
The change in control definition in our ESAs excludes funds affiliated with designated board members.
|
| |||
|
•
|
| |
Good Reason in our ESAs requires a decrease in the executive’s organizational level or a change to his or her reporting structure that requires the executive to report to a supervisor whose organizational level is below the executive’s current organizational level.
|
| ||||||
|
•
|
| |
The agreement period for the ESA post-change in control is 18 months.
|
| ||||||
|
•
|
| |
The change in control agreement requires a double trigger.
|
| ||||||
|
•
|
| |
The ESA is automatically extended annually for successive one-year periods starting on the first anniversary of the Effective Date of the ESA (as defined in the ESA) and on each subsequent anniversary of such Effective Date.
|
| ||||||
|
Other Controls and Procedures
|
| |
•
|
| |
Capital expenditure approval policies and procedures that control the possibility of engaging in unintended risk
|
| |||
|
•
|
| |
Sarbanes Oxley / Internal Controls procedures and processes adopted by the Company
|
| ||||||
|
•
|
| |
Clawback policy that requires the repayment of short- and long-term incentive-based compensation as a result of a financial restatement or intentional misconduct
|
|
|
NEO
|
| |
Life Insurance(1)
|
| |
Executive Flexible
Perquisite Program(2)
|
| |
Pension/Retirement/401(k) Plans(3)
|
| ||||||
|
RAP
|
| |
SRAP
|
| |
SERP
|
| |||||||||
|
Persio V. Lisboa
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
Troy A. Clarke
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
Walter G. Borst
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
William V. McMenamin
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
Curt A. Kramer
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
Samara A. Strycker
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(1)
|
Life Insurance. We provide our executives Company-paid life insurance equal to five times base salary. The beneficiary of each individual policy is as designated by the executive.
|
(2)
|
Executive Flexible Perquisites. This provides a cash stipend to each of our NEOs, the amount of which varies by executive, based upon the executive’s organization level, and is set forth in the table below. In addition, a spouse may accompany an NEO while he or she is traveling on Company business. Although this occurs on a limited basis, the spouse’s travel expense is included in taxable compensation of the NEO.
|
(3)
|
Pension/Retirement/401(k) Plans. We began transitioning to defined contribution/401(k) plans as the primary retirement income program for all non-represented employees hired on or after January 1, 1996. These plans are as follows:
|
•
|
Retirement Accumulation Plan (“RAP”). This is our tax-qualified defined contribution/401(k) plan for salaried employees. Our NEOs receive age-weighted contributions and/or matching contributions depending on their eligibility for retiree medical coverage.
|
•
|
Supplemental Retirement Accumulation Plan (“SRAP”). This is our non-qualified deferred compensation plan designed primarily to restore the age-weighted contributions that participants would otherwise have received if the IRC compensation limit had not applied to the RAP.
|
•
|
Supplemental Executive Retirement Plan (“SERP”). This is designed as a pension supplement to attract and retain key executives. The SERP is unfunded and is not qualified for tax purposes.
|
|
| |
2021 Proxy Statement
|
| |
161
|
|
Named Executive Officer
|
| |
Annual Flexible
Perquisite
Payment(1)
($)
|
| |
Perquisite Payment
($)
|
| |
Total Perquisite
Payment
($)
|
|
|
Persio V. Lisboa
|
| |
18,500
|
| |
7,050(2)
|
| |
25,550
|
|
|
Troy A. Clarke
|
| |
23,000
|
| |
6,371(2)
|
| |
29,371
|
|
|
Walter G. Borst
|
| |
18,500
|
| |
—
|
| |
18,500
|
|
|
William V. McMenamin
|
| |
14,000
|
| |
—
|
| |
14,000
|
|
|
Curt A. Kramer
|
| |
14,000
|
| |
—
|
| |
14,000
|
|
|
Samara A. Strycker
|
| |
14,000
|
| |
—
|
| |
14,000
|
|
(1)
|
The Annual Flexible Perquisite Payment amounts reflect the amount paid in November 2019 for the period of November 2019 through April 2020. Due to our COVID-19 measures, the regular May 2020 payments are not included as they were not paid until November 2020 (FY2021).
|
(2)
|
$7,050 was paid on behalf of Mr. Lisboa and $6,371 was paid on behalf of Mr. Clarke for legal fees incurred with establishment of Mr. Lisboa’s Employment Agreement, as amended, and Mr. Clarke’s ESA.
|
|
|
| |
Up to Age 55
|
| |
On or After Age 55
|
|
|
Each Year of Age
|
| |
1/2%
|
| |
1%
|
|
|
Each Year of Service
|
| |
1/2%
|
| |
1%
|
|
|
| |
2021 Proxy Statement
|
| |
162
|
|
| |
2021 Proxy Statement
|
| |
163
|
•
|
A requirement that an executive retain a certain amount of shares received pursuant to Company executive compensation programs (75% for the CEO and 50% for other executives) until the executive satisfies the stock ownership guideline multiples described above; and
|
•
|
A one-year holding period (75% for the CEO and 50% for other executives) of shares received pursuant to Company executive compensations programs after the executive satisfies the stock ownership guideline multiples described above.
|
|
| |
2021 Proxy Statement
|
| |
164
|
•
|
The expiration date of the agreement period post-CIC will be the date that occurs 18 months after the date of the CIC;
|
|
| |
2021 Proxy Statement
|
| |
165
|
•
|
A CIC will not occur if certain “Excluded Persons” (including Mark H. Rachesky, Icahn Enterprises and employee or retirement benefit plans or trusts sponsored or established by the Company) become the “Beneficial Owners” of securities representing 50% or more of the combined voting power of the Company’s then-outstanding securities;
|
•
|
The level of ownership of securities required to trigger a CIC is 50% or more of the combined voting power of the Company’s then-outstanding securities;
|
•
|
A termination will be deemed to occur after a CIC if it occurs during the agreement period or during the 18-month period immediately following the CIC;
|
•
|
A diminution of authority sufficient to trigger a termination for Good Reason (as defined below) occurs if the executive officer experiences a decrease in his or her organizational level, a reduction in base salary by 10% or more, or a change to his or her reporting structure that requires the executive to report to a supervisor whose organizational level is below the executive’s current organizational level;
|
•
|
The executive officer’s obligations (i) not to disclose confidential, secret, proprietary or privileged information pertaining to the business of the Company, (ii) to refrain from making any defamatory, disparaging, slanderous, libelous or derogatory statements about the Company and (iii) to cooperate and provide assistance to the Company in connection with litigation or any other matters, continue at all times during the agreement period of the ESA and at all times following the executive officer’s termination of employment for any reason;
|
•
|
The Compensation Committee may require the executive officer to repay incentive pay previously received from the Company if the Compensation Committee determines that repayment is due on account of a restatement of the Company’s financial statements or for another reason under the Company’s clawback policy;
|
•
|
Continued life insurance coverage provided for an 18-month period following termination;
|
•
|
In the event of a termination under the ESA, the executive officer’s eligibility for separation payments and benefits is conditioned on the executive officer’s timely signing, and not revoking, a written release agreement in a form acceptable to the Company; and
|
•
|
No payments are eligible for IRC Section 280G excise tax gross-up.
|
•
|
Be paid the value of unused and accrued vacation;
|
•
|
Not be eligible for an AI payment if the termination occurred prior to year-end or if the termination occurred after year-end and prior to the payment date;
|
•
|
Be able to exercise vested stock options for 12 months, following a voluntary termination, but not following a termination for cause;
|
•
|
Forfeit any unvested time- and performance-based stock options;
|
•
|
Forfeit any unvested restricted stock and time- and performance-based RSUs;
|
•
|
Forfeit any unvested cash-settled performance shares; and
|
•
|
Forfeit any unvested RCUs.
|
|
| |
2021 Proxy Statement
|
| |
166
|
•
|
The value of unused and accrued vacation;
|
•
|
Monthly income from any defined benefit pension plans, both tax-qualified and non-tax-qualified, that the executive participated in solely to the extent provided under the terms of such plans;
|
•
|
Distributions from any defined contribution plans, both tax-qualified and non-tax-qualified, that the executive participated in solely to the extent provided under the terms of such plans; and
|
•
|
A pro rata portion of performance-based RCUs.
|
•
|
An amount equal to 100% to 200% of the total of (i) the executive’s annual base salary in effect at the time of termination and (ii) the executive’s AI plan award at target level;
|
•
|
Continued health insurance for the 24-month period following termination; provided that for the first 12-month period, the executive shall pay for such coverage at no greater after tax costs to the executive than the after-tax cost to the executive officer immediately prior to the date of termination, and for the remaining 12-month period, the executive officer shall pay for such coverage on a monthly cost of coverage basis;
|
•
|
Pro rata annual incentive for the number of months of fiscal year eligible participation, which is based upon actual results and will only be paid if and at the same time that the Company pays AI plan awards to active employees;
|
•
|
Continued life insurance coverage for the 18-month period following termination;
|
•
|
Outplacement services;
|
•
|
Retention of any flexible perquisite allowance actually paid to the executive officer on or before the time of termination;
|
•
|
A lump sum cash payment equal to the value of unused and accrued vacation;
|
•
|
Rights to a SERP benefit payable at age 55 if the executive officer is not retirement eligible upon termination and meets certain criteria pursuant to and in accordance with the SERP;
|
•
|
The right to exercise vested stock options for 12 months; and
|
•
|
The forfeiture of any unvested RCUs, any unvested stock options and any unvested restricted stock or RSUs.
|
|
| |
2021 Proxy Statement
|
| |
167
|
•
|
An amount equal to (i) a pro rata portion of the executive officer’s AI plan award at target level (the “CIC Prorated Bonus”), which payment shall be in lieu of any payment to which the executive officer may otherwise have been entitled to receive under a Change-in-Control-sponsored incentive or bonus plan, plus (ii) a multiplier ranging from 150% to 300% of the sum of the executive officer’s annual base salary in effect at the time of termination and the executive officer’s AI award at target level (the “CIC Severance Pay”). The CIC Severance Pay and the CIC Prorated Bonus shall be paid in a lump sum on the payment date;
|
•
|
Continued health insurance for the 24-month period following termination; provided that for the first 12-month period, the executive officer shall pay for such coverage at no greater after tax costs to the executive officer than the after tax cost to the executive officer immediately prior to the date of termination and for the remaining 12-month period, the executive officer shall pay for such coverage on a monthly cost of coverage basis;
|
•
|
Continued life insurance coverage for the 18-month period following termination;
|
•
|
Outplacement services;
|
•
|
Retention of any flexible perquisite allowance actually paid to the executive officer on or before the time of termination;
|
•
|
A lump sum cash payment equal to the value of unused vacation;
|
•
|
Acceleration of the vesting of all options, which such options will be exercisable for a period of three years from the date of the change in control, or if earlier the original term of the Award;
|
•
|
Acceleration of the vesting of cash-settled RCUs at the target performance level;
|
•
|
2020 performance-based RCUs are prorated for the number of days worked during the vesting period and are based on the greater of target or actual performance;
|
•
|
2020 time-based RCUs are prorated for the number of days worked during the vesting period;
|
•
|
Rights to a SERP benefit payable at age 55 if the executive officer is not retirement eligible upon termination and meets certain criteria pursuant to an in accordance with the SERP. If he or she does not meet the criteria for a grow-in but has worked at least 5 years, he or she would be eligible for a deferred vested benefit payable at age 55 pursuant to and in accordance with the SERP;
|
•
|
Additional vesting service under the SERP may be provided if at termination the executive is less than age 55, has less than five years of service but would have had five years of service within the 18 months following the termination;
|
•
|
Acceleration of vesting of the SRAP balance; and
|
•
|
A lump sum cash payment equal to the difference in (i) the actuarial present value of the executive officer’s non-tax-qualified pension benefits following a CIC assuming the executive officer was 18 months older and had 18 more months of service, over (ii) the actuarial present value of the executive officer’s non-tax-qualified pension benefits at the date of termination without a CIC.
|
|
NEO
|
| |
Multiplier – Involuntary Not for
Cause or Good Reason Termination
|
| |
Multiplier –
Changein Control
|
|
|
Persio V. Lisboa(1)
|
| |
200%
|
| |
200%
|
|
|
Troy A. Clarke
|
| |
0%
|
| |
200%
|
|
|
Walter G. Borst
|
| |
200%
|
| |
300%
|
|
|
William V. McMenamin
|
| |
150%
|
| |
300%
|
|
|
Curt A. Kramer
|
| |
150%
|
| |
200%
|
|
|
Samara A. Strycker
|
| |
150%
|
| |
200%
|
|
(1)
|
Mr. Lisboa does not have an ESA. Per the Employment Agreement, as amended, in the event his employment with the Company is terminated (i) by the Company without cause, or (ii) by Mr. Lisboa due to either Good Reason or Constructive Termination, as such terms are defined in the Employment Agreement, as amended, then in addition to accrued obligations, he is eligible for the sum of 200% of his base salary plus target annual incentive.
|
|
| |
2021 Proxy Statement
|
| |
168
|
|
Name and Principal Position
|
| |
Year
|
| |
Salary
($)(1)
|
| |
Bonus
($)
|
| |
Stock
Awards
($)(2)
|
| |
Option
Awards
($)(3)
|
| |
Non-Equity
Incentive Plan
Compensation
($)(4)
|
| |
Change in
Pension
Value and Non-
Qualified
Deferred
Compensation
Earnings
($)(6)
|
| |
All Other
Compensation
($)(7)
|
| |
Total
($)
|
|
|
Persio V. Lisboa
President and CEO(5)
|
| |
2020
|
| |
806,967
|
| |
—
|
| |
—
|
| |
—
|
| |
866,693
|
| |
1,400,071
|
| |
133,969
|
| |
3,207,699
|
|
|
2019
|
| |
756,338
|
| |
—
|
| |
539,986
|
| |
449,980
|
| |
1,640,105
|
| |
1,214,759
|
| |
142,517
|
| |
4,743,685
|
| |||
|
2018
|
| |
715,500
|
| |
—
|
| |
479,990
|
| |
319,998
|
| |
859,547
|
| |
398,058
|
| |
109,580
|
| |
2,882,943
|
| |||
|
Troy A. Clarke
Executive Chairman, Former President and CEO(5)
|
| |
2020
|
| |
983,333
|
| |
—
|
| |
—
|
| |
—
|
| |
2,832,500
|
| |
1,786,522
|
| |
235,192
|
| |
5,837,548
|
|
|
2019
|
| |
1,050,000
|
| |
—
|
| |
1,649,999
|
| |
1,099,991
|
| |
4,205,840
|
| |
1,703,461
|
| |
254,730
|
| |
9,964,021
|
| |||
|
2018
|
| |
1,027,183
|
| |
—
|
| |
1,649,976
|
| |
1,099,997
|
| |
2,350,250
|
| |
593,454
|
| |
202,289
|
| |
6,923,149
|
| |||
|
Walter G. Borst
Executive Vice President and Chief Financial Officer
|
| |
2020
|
| |
772,335
|
| |
—
|
| |
—
|
| |
—
|
| |
1,095,509
|
| |
692,059
|
| |
134,395
|
| |
2,694,297
|
|
|
2019
|
| |
772,335
|
| |
30,893
|
| |
629,967
|
| |
524,991
|
| |
1,917,939
|
| |
933,188
|
| |
154,021
|
| |
4,963,334
|
| |||
|
2018
|
| |
766,711
|
| |
—
|
| |
629,982
|
| |
419,998
|
| |
1,018,578
|
| |
4,644
|
| |
123,455
|
| |
2,963,368
|
| |||
|
William V. McMenamin
President Financial Services and Treasurer
|
| |
2020
|
| |
460,000
|
| |
—
|
| |
—
|
| |
—
|
| |
268,430
|
| |
1,008,644
|
| |
83,205
|
| |
1,820,279
|
|
|
2019
|
| |
460,000
|
| |
18,400
|
| |
149,967
|
| |
124,978
|
| |
642,650
|
| |
753,984
|
| |
99,180
|
| |
2,249,159
|
| |||
|
2018
|
| |
460,000
|
| |
—
|
| |
149,992
|
| |
99,999
|
| |
388,974
|
| |
357,860
|
| |
80,567
|
| |
1,537,392
|
| |||
|
Curt A. Kramer
Senior Vice President and General Counsel
|
| |
2020
|
| |
471,656
|
| |
—
|
| |
—
|
| |
—
|
| |
268,815
|
| |
705,696
|
| |
75,494
|
| |
1,521,660
|
|
|
2019
|
| |
463,942
|
| |
—
|
| |
224,968
|
| |
187,485
|
| |
489,544
|
| |
414,282
|
| |
82,726
|
| |
1,862,947
|
| |||
|
2018
|
| |
425,600
|
| |
—
|
| |
149,992
|
| |
99,999
|
| |
272,503
|
| |
155,339
|
| |
53,252
|
| |
1,156,685
|
| |||
|
Samara A. Strycker
Senior Vice President and Corporate Controller
|
| |
2020
|
| |
372,619
|
| |
—
|
| |
—
|
| |
—
|
| |
265,546
|
| |
517,236
|
| |
54,321
|
| |
1,209,722
|
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
(1)
|
The amounts reported in this column for 2020 reflect salary earned in fiscal year 2020 and include compensation that was mandatorily deferred under the Company’s 2020 Non-Elective Deferred Compensation Plan. NEOs had a percentage of pay temporarily deferred effective April 20, 2020. The percentage of pay deferred was dependent on the employee’s organizational level. The deferral ended on August 31, 2020 and was repaid on November 30, 2020 with 6% annual interest. The deferred amounts which do not include interest earned on such amounts are as follows: Mr. Lisboa $98,035.02, Mr. Clarke $123,389.59, Mr. Borst $85,149.96, Mr. McMenamin $50,715.00, Mr. Kramer $52,000.07, and Ms. Strycker $41,081.22.
|
(2)
|
The amounts reported in this column reflect the aggregate fair value of stock-based awards (other than stock options) granted in the year computed in accordance with FASB ASC Topic 718. Generally the aggregate grant date fair value is the amount that the Company expects to expense for accounting purposes over the award’s vesting schedule and does not correspond to the actual value that will be realized by the officers. The fair values of stock-based awards are estimated using the closing price of our stock on the grant date. Stock-based awards settle in common stock on a one-for-one basis, or the cash equivalent of the common stock. The grant date fair values of each individual stock-based award in 2020 are set forth in the Grants of Plan-Based Awards table on page 171. Additional information about these values is included in Note 19 to our audited financial statements included in our Annual Report on Form 10-K for the year ended October 31, 2020.
|
(3)
|
The amounts reported in this column reflect the aggregate fair value of stock options, granted in the year computed in accordance with FASB ASC Topic 718. These amounts reflect the Company’s accounting expense and do not correspond to the actual value that will be realized by the officers. Assumptions used in the calculation of these values are included in Note 19 to our audited financial statements included in our Annual Report on Form 10-K for the year ended October 31, 2020. A description of stock options appears in the narrative text following the Grants of Plan-Based Awards table.
|
|
| |
2021 Proxy Statement
|
| |
169
|
(4)
|
The amounts reported in this column represent the 2020 AI plan award payment based on an actual payout at 5.5% of target and performance-based RCUs earned and paid in 2020 under the 2018 LTI. AI awards are projected to be paid in February 2021. The value of the 2020 AI Awards is as follows: Mr. Lisboa $56,293, Mr. Clarke $46,750, Mr. Borst $31,859, Mr. McMenamin $15,180, Mr. Kramer $15,565, and Ms. Strycker $12,296. The value of the performance-based RCUs for each NEO are as follows: Mr. Lisboa $810,400, Mr. Clarke $2,785,750, Mr. Borst $1,063,650, Mr. McMenamin $253,250, Mr. Kramer $253,250, and Ms. Strycker $253,250.
|
(5)
|
Mr. Lisboa was promoted to President and CEO on July 1, 2020. Mr. Clarke’s last day as President and CEO was June 30, 2020. Mr. Clarke transitioned to the role of Executive Chairman on July 1, 2020.
|
(6)
|
These amounts represent the difference in the market interest rate under the IRC and the interest credit rate of 7.5% per annum compounded on a daily basis on the SRAP. The 7.5% is the rate used to design the SRAP as a comparable replacement for the MRO. The interest credit rate constitutes an “above-market interest rate” under the IRC. These amounts also represent the change in actuarial present value of the SERP for Messrs. Lisboa, Clarke, Borst, McMenamin, Kramer, and Ms. Strycker. Also, included are the amounts which represent the difference in the above market interest rate and the 6.0% per annum on compensation deferred through the Company’s 2020 Non-Elective Deferred Compensation Plan from April 20, 2020 through August 31, 2020 and repaid on November 30, 2020. The above market interest earned on the deferred salary amounts in fiscal year 2020 is as follows: Mr. Lisboa $1,251.98, Mr. Clarke $1,703.64, Mr. Borst $1,139.97, Mr. McMenamin $678.96, Mr. Kramer $696.17, and Ms. Strycker $549.98.
|
(7)
|
“All Other Compensation” reflects the following items: flexible perquisite cash allowances; Company-paid legal fees; Company-paid life and accidental death and disability (“AD&D”) insurance premiums; and Company contributions to the RAP and the SRAP.
|
|
NEO
|
| |
Flexible
Perquisites
Cash
Allowances(1)
|
| |
Company-Paid
Legal Fees(2)
|
| |
Company
Paid Life
and AD&D
Insurance
Premiums
|
| |
Company
Contributions
to RAP
|
| |
Company
Contributions
to SRAP
|
| |
Taxable
Spouse Travel
|
| |
Other
Compensation
|
| |
Total
|
|
|
Lisboa
|
| |
$18,500
|
| |
$7,050
|
| |
$10,467
|
| |
$26,650
|
| |
$71,302
|
| |
$0
|
| |
$0
|
| |
$133,969
|
|
|
Clarke
|
| |
$23,000
|
| |
$6,371
|
| |
$33,230
|
| |
$26,650
|
| |
$145,941
|
| |
$0
|
| |
$0
|
| |
$235,192
|
|
|
Borst
|
| |
$18,500
|
| |
$0
|
| |
$14,923
|
| |
$26,650
|
| |
$74,322
|
| |
$0
|
| |
$0
|
| |
$134,395
|
|
|
McMenamin
|
| |
$14,000
|
| |
$0
|
| |
$10,690
|
| |
$26,650
|
| |
$31,865
|
| |
$0
|
| |
$0
|
| |
$83,205
|
|
|
Kramer
|
| |
$14,000
|
| |
$0
|
| |
$4,841
|
| |
$26,650
|
| |
$30,003
|
| |
$0
|
| |
$0
|
| |
$75,494
|
|
|
Strycker
|
| |
$14,000
|
| |
$0
|
| |
$2,997
|
| |
$21,617
|
| |
$15,707
|
| |
$0
|
| |
$0
|
| |
$54,321
|
|
(1)
|
The Annual Flexible Perquisite Payment amounts reflect the amount paid in November 2019 for the period of November 2019 through April 2020. The regular May 2020 payments are not included as they were deferred and were paid in November 2020 (FY2021).
|
(2)
|
$7,050 was paid on behalf of Mr. Lisboa and $6,371 was paid on behalf of Mr. Clarke for legal fees incurred with the establishment of Mr. Lisboa’s Employment Agreement, as amended, and Mr. Clarke’s Executive Severance Agreement.
|
|
| |
2021 Proxy Statement
|
| |
170
|
|
|
| |
|
| |
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
|
| |
|
| ||||||
|
Name
|
| |
Grant Date
|
| |
Threshold
($)
|
| |
Target
($)
|
| |
Maximum
($)
|
| |
Time-based
Restricted
Cash Units ($)
|
|
|
Persio V. Lisboa
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
Performance RCU – Adjusted EBITDA Margin(1)
|
| |
2/25/2020 & 7/1/2020
|
| |
421,875
|
| |
1,125,000
|
| |
2,812,500
|
| |
—
|
|
|
Performance RCU – Revenue Growth(1)
|
| |
2/25/2020 & 7/1/2020
|
| |
421,875
|
| |
1,125,000
|
| |
2,812,500
|
| |
—
|
|
|
AI Plan Award – Cash(2)
|
| |
2/25/2020 & 7/1/2020
|
| |
102,350
|
| |
1,023,500
|
| |
2,302,875
|
| |
—
|
|
|
Time–based RCU(3)
|
| |
2/25/2020 & 7/1/2020
|
| |
|
| |
|
| |
|
| |
2,250,000
|
|
|
Troy A. Clarke
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
Performance RCU – Adjusted EBITDA Margin(1)
|
| |
4/11/2020
|
| |
515,625
|
| |
1,375,000
|
| |
3,437,500
|
| |
—
|
|
|
Performance RCU – Revenue Growth(1)
|
| |
4/11/2020
|
| |
515,625
|
| |
1,375,000
|
| |
3,437,500
|
| |
—
|
|
|
AI Plan Award – Cash(2)
|
| |
|
| |
85,000
|
| |
850,000
|
| |
1,912,500
|
| |
—
|
|
|
Time–based RCU(3)
|
| |
|
| |
|
| |
|
| |
|
| |
2,750,000
|
|
|
Walter G. Borst
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
Performance RCU – EBITDA Margin(4)
|
| |
2/25/2020
|
| |
196,875
|
| |
525,000
|
| |
1,312,500
|
| |
—
|
|
|
Performance RCU – Revenue Growth(4)
|
| |
2/25/2020
|
| |
196,875
|
| |
525,000
|
| |
1,312,500
|
| |
—
|
|
|
AI Plan Award – Cash(2)
|
| |
|
| |
57,925
|
| |
579,251
|
| |
1,303,315
|
| |
—
|
|
|
Time–based RCU(3)
|
| |
2/25/2020
|
| |
|
| |
|
| |
|
| |
1,050,000
|
|
|
William V. McMenamin
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
Performance RCU – Adjusted EBITDA Margin(1)
|
| |
2/25/2020
|
| |
46,875
|
| |
125,000
|
| |
312,500
|
| |
—
|
|
|
Performance RCU – Revenue Growth(1)
|
| |
2/25/2020
|
| |
46,875
|
| |
125,000
|
| |
312,500
|
| |
—
|
|
|
AI Plan Award – Cash(2)
|
| |
|
| |
27,600
|
| |
276,000
|
| |
621,000
|
| |
—
|
|
|
Time–based RCU(3)
|
| |
2/25/2020
|
| |
|
| |
|
| |
|
| |
250,000
|
|
|
Curt A. Kramer
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
Performance RCU – Adjusted EBITDA Margin(1)
|
| |
2/25/2020
|
| |
70,313
|
| |
187,500
|
| |
468,750
|
| |
—
|
|
|
Performance RCU – Revenue Growth(1)
|
| |
2/25/2020
|
| |
70,313
|
| |
187,500
|
| |
468,750
|
| |
—
|
|
|
AI Plan Award – Cash(2)
|
| |
|
| |
28,299
|
| |
282,994
|
| |
636,737
|
| |
—
|
|
|
Time–based RCU(3)
|
| |
2/25/2020
|
| |
|
| |
|
| |
|
| |
375,000
|
|
|
Samara A. Strycker
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
Performance RCU – Adjusted EBITDA Margin(1)
|
| |
2/25/2020
|
| |
46,875
|
| |
125,000
|
| |
312,500
|
| |
—
|
|
|
Performance RCU – Revenue Growth(1)
|
| |
2/25/2020
|
| |
46,875
|
| |
125,000
|
| |
312,500
|
| |
—
|
|
|
AI Plan Award – Cash(2)
|
| |
|
| |
22,357
|
| |
223,571
|
| |
503,035
|
| |
—
|
|
|
Time–based RCU(3)
|
| |
2/25/2020
|
| |
|
| |
|
| |
|
| |
250,000
|
|
(1)
|
Performance RCUs - Adjusted EBITDA Margin and Performance RCUs - Revenue Growth. The amounts shown represent the threshold, target and maximum number of performance RCUs that we awarded in the fiscal year to the NEOs under our 2013 PIP, as described more fully under the Long-Term Incentives section of this proxy statement. The extent to which our NEOs will receive any amounts under the EBITDA Margin performance award is based on the individual EBITDA Margin for fiscal years 2020, 2021 and 2022, and a Cumulative EBITDA Margin for fiscal years 2020, 2021 and 2022. The extent to which our NEOs will receive any amounts under the Revenue Growth performance award is based on the individual Revenue Growth rates for fiscal years 2020, 2021 and 2022, and a Cumulative Revenue Growth rate, based on the combined percentage increase/decrease in Revenue Growth for fiscal years 2020, 2021 and 2022. The RCUs represent a cash plan with each RCU representing $1. These amounts may not be paid to or realized by the NEOs. The RCUs generally cliff vest as to 100% of the units awarded on the three-year anniversary of the date the award was granted, subject to the service conditions and performance conditions being met.
|
(2)
|
The amounts set forth in this row represent the estimated cash payments to be awarded to our NEO’s under the Company’s 2020 AI Plan. The actual cash payments will be based on achievement at 5.5% of target. For additional information regarding the 2020 cash AI awards, see the Annual Incentives section of this proxy statement. Under the AI plan, the performance metric threshold is 40% of target, target is 100%, and for purposes of this table maximum equals distinguished which is 150% of target. In addition, there is an EBITDA multiplier under the AI plan, which is 25% for under threshold, 40% at threshold, 100% at target and 150% at distinguished.
|
(3)
|
The time-based RCUs represent a cash plan with each RCU representing $1. These amounts may not be paid to or realized by the NEOs. The RCUs generally cliff vest as to 100% of the units awarded on the three-year anniversary of the date the award was granted, subject to the service conditions being met.
|
|
| |
2021 Proxy Statement
|
| |
171
|
|
|
| |
Option Awards(1)(3)
|
| |
Stock Awards
|
| ||||||||||||
|
|
| |
Number of Securities
Underlying
Unexercised Options
|
| |
Option
Exercise
Price ($)
|
| |
Option
Expiration
Date
|
| |
Number of
Shares or Units of
Stock Held that
Have Not Vested
(#)(2)(3)
|
| |
Market Value of
Shares or Units of
Stock Held that
Have Not Vested
($)
|
| |||
|
Name
|
| |
Exercisable
(#)
|
| |
Unexercisable
(#)
|
| ||||||||||||
|
Persio V. Lisboa
|
| |
8,317
|
| |
—
|
| |
27.670
|
| |
2/11/2022
|
| |
11,946
|
| |
514,992
|
|
|
9,981
|
| |
—
|
| |
27.670
|
| |
2/11/2022
|
| |
15,393
|
| |
663,592
|
| |||
|
21,228
|
| |
—
|
| |
27.480
|
| |
2/14/2027
|
| |
—
|
| |
—
|
| |||
|
2,919
|
| |
—
|
| |
28.610
|
| |
3/1/2027
|
| |
—
|
| |
—
|
| |||
|
11,488
|
| |
5,744
|
| |
40.180
|
| |
2/13/2028
|
| |
—
|
| |
—
|
| |||
|
8,829
|
| |
17,656
|
| |
35.080
|
| |
2/13/2029
|
| |
—
|
| |
—
|
| |||
|
Total:
|
| |
62,762
|
| |
23,400
|
| |
|
| |
|
| |
27,339
|
| |
1,178,584
|
|
|
Troy A. Clarke
|
| |
135,012
|
| |
—
|
| |
35.090
|
| |
3/10/2021
|
| |
40,530
|
| |
1,747,248
|
|
|
81,007
|
| |
—
|
| |
43.860
|
| |
3/10/2021
|
| |
46,955
|
| |
2,024,230
|
| |||
|
68,233
|
| |
—
|
| |
27.480
|
| |
2/14/2027
|
| |
—
|
| |
—
|
| |||
|
37,665
|
| |
18,832
|
| |
40.710
|
| |
4/16/2028
|
| |
—
|
| |
—
|
| |||
|
22,249
|
| |
44,498
|
| |
35.140
|
| |
4/24/2029
|
| |
—
|
| |
—
|
| |||
|
Total:
|
| |
344,166
|
| |
63,330
|
| |
|
| |
|
| |
87,485
|
| |
3,771,478
|
|
|
Walter G. Borst
|
| |
12,476
|
| |
—
|
| |
27.670
|
| |
2/11/2022
|
| |
15,679
|
| |
675,922
|
|
|
14,971
|
| |
—
|
| |
27.670
|
| |
2/11/2022
|
| |
17,958
|
| |
774,169
|
| |||
|
31,842
|
| |
—
|
| |
27.480
|
| |
2/14/2027
|
| |
—
|
| |
—
|
| |||
|
15,078
|
| |
7,539
|
| |
40.180
|
| |
2/13/2028
|
| |
—
|
| |
—
|
| |||
|
10,300
|
| |
20,600
|
| |
35.080
|
| |
2/13/2029
|
| |
—
|
| |
—
|
| |||
|
Total:
|
| |
84,667
|
| |
28,139
|
| |
|
| |
|
| |
33,637
|
| |
1,450,091
|
|
|
William V. McMenamin
|
| |
1,723
|
| |
—
|
| |
27.670
|
| |
2/11/2022
|
| |
3,733
|
| |
160,930
|
|
|
2,067
|
| |
—
|
| |
27.670
|
| |
2/11/2022
|
| |
4,275
|
| |
184,295
|
| |||
|
7,581
|
| |
—
|
| |
27.480
|
| |
2/14/2027
|
| |
—
|
| |
—
|
| |||
|
3,590
|
| |
1,795
|
| |
40.180
|
| |
2/13/2028
|
| |
—
|
| |
—
|
| |||
|
2,452
|
| |
4,904
|
| |
35.080
|
| |
2/13/2029
|
| |
—
|
| |
—
|
| |||
|
Total:
|
| |
17,413
|
| |
6,699
|
| |
|
| |
|
| |
8,008
|
| |
345,225
|
|
|
Curt A. Kramer
|
| |
3,303
|
| |
—
|
| |
24.620
|
| |
3/31/2027
|
| |
3,733
|
| |
160,930
|
|
|
3,590
|
| |
1,795
|
| |
40.180
|
| |
2/13/2028
|
| |
6,413
|
| |
276,464
|
| |||
|
3,679
|
| |
7,356
|
| |
35.080
|
| |
2/13/2029
|
| |
—
|
| |
—
|
| |||
|
Total:
|
| |
10,572
|
| |
9,151
|
| |
|
| |
|
| |
10,146
|
| |
437,394
|
|
|
Samara A. Strycker
|
| |
1,396
|
| |
—
|
| |
27.670
|
| |
2/11/2022
|
| |
3,733
|
| |
160,930
|
|
|
1,675
|
| |
—
|
| |
27.670
|
| |
2/11/2022
|
| |
4,275
|
| |
184,295
|
| |||
|
7,581
|
| |
—
|
| |
27.480
|
| |
2/14/2027
|
| |
—
|
| |
—
|
| |||
|
3,590
|
| |
1,795
|
| |
40.180
|
| |
2/13/2028
|
| |
—
|
| |
—
|
| |||
|
2,452
|
| |
4,904
|
| |
35.080
|
| |
2/13/2029
|
| |
—
|
| |
—
|
| |||
|
Total:
|
| |
16,694
|
| |
6,699
|
| |
|
| |
|
| |
8,008
|
| |
345,225
|
|
(1)
|
All stock options, other than performance stock options, became or will become exercisable under the following schedule: one-third on each of the first three anniversaries of the date of grant. Performance stock options that expire on February 11, 2022, cliff vested on the three-year anniversary of the date of grant upon performance conditions being met. The Compensation Committee certified that EBITDA performance conditions on options expiring on February 11, 2022 were met as to 30%, and that Revenue Growth performance conditions on options expiring on February 11, 2022 were met as to 25%.
|
|
| |
2021 Proxy Statement
|
| |
172
|
(2)
|
Amounts in this column represent RSUs. In general RSUs become vested as to one-third of the shares granted on each of the first three anniversaries of the date of grant or cliff vest as to 100% of the units granted three years after the grant date.
|
(3)
|
The vesting dates of outstanding unexercisable stock options and unvested RSUs at October 31, 2020, are listed below.
|
|
Name
|
| |
Type of
Award
|
| |
Grant Date
|
| |
Number of
Unexercised or
Unvested Shares
Remaining from
Original Grant
|
| |
Number of
Shares Vesting
and Vesting Date
in 2021
|
| |
Number of
Shares Vesting
and Vesting Date
in 2022
|
|
|
Persio V. Lisboa
|
| |
Options
|
| |
2/13/2018
|
| |
5,744
|
| |
5,744 on 2/13/2021
|
| |
—
|
|
|
Options
|
| |
2/13/2019
|
| |
17,656
|
| |
8,828 on 2/13/2021
|
| |
8,828 on 2/13/2022
|
| |||
|
RSUs
|
| |
2/13/2018
|
| |
11,946
|
| |
11,946 on 2/13/2021
|
| |
—
|
| |||
|
RSUs
|
| |
2/13/2019
|
| |
15,393
|
| |
—
|
| |
15,393 on 2/13/2022
|
| |||
|
Troy A. Clarke
|
| |
Options
|
| |
4/16/2018
|
| |
18,832
|
| |
18,832 on 4/16/2021
|
| |
—
|
|
|
Options
|
| |
4/24/2019
|
| |
44,498
|
| |
22,249 on 4/24/2021
|
| |
22,249 on 4/24/2022
|
| |||
|
RSUs
|
| |
4/16/2018
|
| |
40,530
|
| |
40,530 on 4/16/2021
|
| |
—
|
| |||
|
RSUs
|
| |
4/24/2019
|
| |
46,955
|
| |
—
|
| |
46,955 on 4/24/2022
|
| |||
|
Walter G. Borst
|
| |
Options
|
| |
2/13/2018
|
| |
7,539
|
| |
7,539 on 2/13/2021
|
| |
—
|
|
|
Options
|
| |
2/13/2019
|
| |
20,600
|
| |
10,300 on 2/13/2021
|
| |
10,300 on 2/13/2022
|
| |||
|
RSUs
|
| |
2/13/2018
|
| |
15,679
|
| |
15,679 on 2/13/2021
|
| |
—
|
| |||
|
RSUs
|
| |
2/13/2019
|
| |
17,958
|
| |
—
|
| |
17,958 on 2/13/2022
|
| |||
|
William V. McMenamin
|
| |
Options
|
| |
2/13/2018
|
| |
1,795
|
| |
1,795 on 2/13/2021
|
| |
—
|
|
|
Options
|
| |
2/13/2019
|
| |
4,904
|
| |
2,452 on 2/13/2021
|
| |
2,452 on 2/13/2022
|
| |||
|
RSUs
|
| |
2/13/2018
|
| |
3,733
|
| |
3,733 on 2/13/2021
|
| |
—
|
| |||
|
RSUs
|
| |
2/13/2019
|
| |
4,275
|
| |
—
|
| |
4,275 on 2/13/2022
|
| |||
|
Curt A. Kramer
|
| |
Options
|
| |
2/13/2018
|
| |
1,795
|
| |
1,795 on 2/13/2021
|
| |
—
|
|
|
Options
|
| |
2/13/2019
|
| |
7,356
|
| |
3,678 on 2/13/2021
|
| |
3,678 on 2/13/2022
|
| |||
|
RSUs
|
| |
2/13/2018
|
| |
3,733
|
| |
3,733 on 2/13/2021
|
| |
—
|
| |||
|
RSUs
|
| |
2/13/2019
|
| |
6,413
|
| |
—
|
| |
6,413 on 2/13/2022
|
| |||
|
Samara A. Strycker
|
| |
Options
|
| |
2/13/2018
|
| |
1,795
|
| |
1,795 on 2/13/2021
|
| |
—
|
|
|
Options
|
| |
2/13/2019
|
| |
4,904
|
| |
2,452 on 2/13/2021
|
| |
2,452 on 2/13/2022
|
| |||
|
RSUs
|
| |
2/13/2018
|
| |
3,733
|
| |
3,733 on 2/13/2021
|
| |
—
|
| |||
|
RSUs
|
| |
2/13/2019
|
| |
4,275
|
| |
—
|
| |
4,275 on 2/13/2022
|
|
|
Name
|
| |
Option Awards
|
| |
Stock Awards
|
| ||||||
|
Number of Shares
Acquired on Exercise
(#)
|
| |
Value Realized
Upon Exercise
($)
|
| |
Number of Shares
Acquired on Vesting
(#)
|
| |
Value Realized
Upon Vesting
($)(1)
|
| |||
|
Persio V. Lisboa
|
| |
32,895
|
| |
338,161
|
| |
17,380
|
| |
645,892
|
|
|
Troy A. Clarke
|
| |
—
|
| |
—
|
| |
49,126
|
| |
1,831,417
|
|
|
Walter G. Borst
|
| |
—
|
| |
—
|
| |
22,925
|
| |
854,644
|
|
|
William V. McMenamin
|
| |
9,663
|
| |
99,336
|
| |
5,458
|
| |
203,474
|
|
|
Curt A. Kramer
|
| |
2,056
|
| |
21,136
|
| |
3,043
|
| |
62,778
|
|
|
Samara A. Strycker
|
| |
—
|
| |
—
|
| |
5,458
|
| |
203,474
|
|
(1)
|
The value realized upon vesting for our NEOs is attributable to the vesting of cash- and share-settled RSUs during the year ended October 31, 2020.
|
|
| |
2021 Proxy Statement
|
| |
173
|
|
Named Executive Officers
|
| |
Number of Years
of Credited Service
(#)
|
| |
Present Value of
Accumulated Benefit
($)(1)
|
| |
Payments During
Last Fiscal Year
($)
|
|
|
Persio V. Lisboa
|
| |
22.0
|
| |
4,625,075
|
| |
—
|
|
|
Troy A. Clarke
|
| |
10.0
|
| |
10,012,697
|
| |
—
|
|
|
Walter G. Borst
|
| |
7.5
|
| |
4,350,832
|
| |
—
|
|
|
William V. McMenamin
|
| |
19.6
|
| |
3,497,205
|
| |
—
|
|
|
Curt A. Kramer
|
| |
19.0
|
| |
1,742,263
|
| |
—
|
|
|
Samara A. Strycker
|
| |
6.5
|
| |
1,090,344
|
| |
—
|
|
(1)
|
Unless otherwise noted, all present values reflect benefits payable at the earliest retirement date when the pension benefits are unreduced. Also, unless otherwise noted, the form of payment, discount rate (2.79%) and mortality (107% of PRI-2012 White Collar benefit-weighted using separate sex-distinct rates, projected from 2012 with Scale MP2020 on a generational basis, using long-term improvement rates of 0.75% through age 85, decreasing linearly to 0.6375% at age 95, decreasing linearly to 0 at age 115. The projection scale is adjusted for years 2020–2023 to achieve 8% higher mortality rates in 2020, 4% higher mortality rates in 2021, 2% higher mortality rates in 2022, and no difference in mortality rates in 2023+ compared to what would have otherwise be projected for the respective years, to reflect expectations of the effect of the COVID-19 pandemic on future mortality rates. There is no mortality assumed prior to commencement of benefit payments). Additionally, SERP benefits have only been offset by benefits under other Navistar sponsored retirement programs. At actual retirement, these benefits will also be offset by benefits accumulated under programs for employment prior to Navistar.
|
|
Named Executive Officers
|
| |
Registrant
Contributions in
Last Fiscal Year(1)
($)
|
| |
Executive
Contributions in
Last Fiscal Year(2)
($)
|
| |
Aggregate
Earnings In Last
Fiscal Year(3)
($)
|
| |
Aggregate
Withdrawals/
Distributions
($)
|
| |
Aggregate Balance
As of Last Fiscal
Year End(4)
($)
|
|
|
Persio V. Lisboa
|
| |
71,302
|
| |
98,035
|
| |
32,748
|
| |
—
|
| |
502,741
|
|
|
Troy A. Clarke
|
| |
145,941
|
| |
123,390
|
| |
136,647
|
| |
—
|
| |
1,302,631
|
|
|
Walter G. Borst
|
| |
74,322
|
| |
85,150
|
| |
157,787
|
| |
—
|
| |
1,027,604
|
|
|
William V. McMenamin
|
| |
31,865
|
| |
50,715
|
| |
35,803
|
| |
—
|
| |
344,184
|
|
|
Curt A. Kramer
|
| |
30,003
|
| |
52,000
|
| |
7,437
|
| |
—
|
| |
150,845
|
|
|
Samara A. Strycker
|
| |
15,707
|
| |
41,081
|
| |
4,988
|
| |
—
|
| |
105,036
|
|
(1)
|
Our contributions represent any notional contribution credits to the SRAP during the year. These contributions are also included in the “All Other Compensation” column of the “Summary Compensation Table.” The amount includes the value of salary was mandatorily deferred under the Company’s 2020 Non-Elective Deferred Compensation Plan. NEOs had a percentage of pay temporarily deferred effective April 20, 2020. The percentage of pay deferred was dependent on the employee’s organizational level. The deferral ended on August 31, 2020 and was repaid in November 2020 (fiscal year 2021) with six percent annual interest. The deferred amounts which do not include interest are as follows: Mr. Lisboa $98,035.02, Mr. Clarke $123,389.59, Mr. Borst $85,149.96, Mr. McMenamin $50,715.00, Mr. Kramer $52,000.07, and Ms. Strycker $41,081.22, and are included in the “Salary” column of the “Summary Compensation Table”.
|
(2)
|
NEOs had a percentage of pay temporarily and mandatorily deferred under the Company’s 2020 Non-elective Deferred Compensation Plan, effective April 20, 2020. The percentage of pay deferred was dependent on the employee’s organizational level. The deferral ended on August 31, 2020 and was repaid in November 2020 (fiscal year 2021) with six percent annual interest. The deferred amounts, which do not include interest, are as follows: Mr. Lisboa $98,035, Mr. Clarke $123,390, Mr. Borst $85,150, Mr. McMenamin $50,715, Mr. Kramer $52,000, and Ms. Strycker $41,081 and are included in the “Salary” column of the “Summary Compensation Table”.
|
(3)
|
“Aggregate Earnings in Last Fiscal Year” represent the notional interest credited during the year for participants in the SRAP plus the change in value from the beginning of the year to the end of the year in the PSUs and/or DSUs held by each NEO, if applicable. Also included is the interest earned from April 20, 2020 through October 31, 2020 on compensation that was deferred from April 20, 2020 through August 31, 2020 and repaid on November 30, 2020 under the 2020 Non-Elective Deferred Compensation Plan and based on a 6% per annum rate. For the SRAP, “Aggregate Earnings in Last Fiscal Year” is the interest credited to each NEO from the beginning of the year until the end of the year at a 7.5% interest crediting rate. The above market portion of this notional interest is included in the “Change in Pension Value & Non-Qualified Deferred Compensation” column of the “Summary Compensation Table.” The above market portions are: $6,275 for Mr. Lisboa, $14,980 for Mr. Clarke, $8,118 for Mr. Borst, $3,621 for Mr. McMenamin, $1,556 for Mr. Kramer, and $4,215 for Ms. Strycker. “Aggregate Earnings in Last Fiscal Year” for purposes of the PSUs is the aggregate change in value of the PSUs held during the year. The above market value of the interest earned from the 2020 Non-Elective Deferred Compensation Plan is as follows: Mr. Lisboa $1,251.98, Mr. Clarke $1,703.64, Mr. Borst $1,139.97, Mr. McMenamin $678.96, Mr. Kramer $696.17, and Ms. Strycker $549.98.
|
(4)
|
The “Aggregate Balance as of Last Fiscal Year End” consists of the sum of each NEO’s notional account balance in the SRAP at the end of the year and the value at year end of the outstanding PSUs and/or DSUs. The “Aggregate Balance as of Last Fiscal Year End” reported in the prior year’s proxy statement was: Mr. Lisboa $300,655, Mr. Clarke $896,653, Mr. Borst $710,345, Mr. McMenamin $225,801, and Mr. Kramer $61,406. Ms. Strycker was not an NEO last fiscal year and therefore did not have a value.
|
|
| |
2021 Proxy Statement
|
| |
174
|
|
NEO
|
| |
Severance
Amount/
Cash
Payment
($)
|
| |
Payment
Under Non-
Qualified
Plan
($)(1)
|
| |
Stock
Options
($)(2)
|
| |
Restricted
Stock /Cash
Units
($)(3)
|
| |
Performance
Units
($)(4)
|
| |
Benefit
Continuation
($)(5)
|
| |
Outplacement
Counseling
($)(6)
|
| |
Total
($)(15)
|
|
|
Persio V. Lisboa
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
Involuntary Termination Without Cause or Voluntary Termination with Good Reason(7)
|
| |
3,827,000
|
| |
0
|
| |
158,608
|
| |
1,298,861
|
| |
1,505,261
|
| |
34,868
|
| |
25,000
|
| |
6,849,598
|
|
|
Change in Control(7)(12)
|
| |
4,850,500
|
| |
0
|
| |
158,608
|
| |
1,653,930
|
| |
2,055,068
|
| |
34,868
|
| |
25,000
|
| |
8,777,974
|
|
|
Disability(7)(8)
|
| |
534,000
|
| |
0
|
| |
158,608
|
| |
3,548,861
|
| |
1,505,261
|
| |
—
|
| |
—
|
| |
5,746,730
|
|
|
Death(7)(9)
|
| |
—
|
| |
0
|
| |
158,608
|
| |
3,548,861
|
| |
1,505,261
|
| |
—
|
| |
—
|
| |
5,212,730
|
|
|
Voluntary Termination Without Good Reason or Involuntary Termination for cause
|
| |
—
|
| |
0
|
| |
—
|
| |
101,955
|
| |
—
|
| |
—
|
| |
—
|
| |
101,955
|
|
|
Troy A. Clarke
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
Involuntary Termination Without Cause or Voluntary Termination with Good Reason
|
| |
—
|
| |
0
|
| |
399,846
|
| |
6,785,010
|
| |
7,763,250
|
| |
—
|
| |
—
|
| |
14,948,106
|
|
|
Change in Control(11)(12)
|
| |
4,250,000
|
| |
475,478
|
| |
399,846
|
| |
4,544,827
|
| |
6,009,817
|
| |
59,119
|
| |
25,000
|
| |
15,764,087
|
|
|
Disability(8)
|
| |
510,000
|
| |
0
|
| |
399,846
|
| |
6,785,010
|
| |
4,004,294
|
| |
—
|
| |
—
|
| |
11,699,150
|
|
|
Death(9)
|
| |
—
|
| |
0
|
| |
399,846
|
| |
6,785,010
|
| |
4,004,294
|
| |
—
|
| |
—
|
| |
11,189,150
|
|
|
Voluntary Termination Without Good Reason or Involuntary Termination for cause
|
| |
—
|
| |
0
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
|
Walter G. Borst
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
Involuntary Termination Without Cause or Voluntary Termination with Good Reason(10)
|
| |
2,703,173
|
| |
0
|
| |
—
|
| |
446,878
|
| |
—
|
| |
37,321
|
| |
25,000
|
| |
3,212,372
|
|
|
Change in Control(11)(12)(13)
|
| |
4,634,010
|
| |
493,975
|
| |
187,507
|
| |
2,135,736
|
| |
2,338,767
|
| |
37,321
|
| |
25,000
|
| |
9,852,316
|
|
|
Disability(8)
|
| |
463,401
|
| |
0
|
| |
187,507
|
| |
2,946,969
|
| |
1,687,617
|
| |
—
|
| |
—
|
| |
5,285,494
|
|
|
Death(9)
|
| |
—
|
| |
0
|
| |
187,507
|
| |
2,946,969
|
| |
1,687,617
|
| |
—
|
| |
—
|
| |
4,822,093
|
|
|
Voluntary Termination Without Good Reason or Involuntary Termination for Cause
|
| |
—
|
| |
0
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
|
|
|
William V. McMenamin
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
Involuntary Termination Without Cause or Voluntary Termination with Good Reason(10)
|
| |
1,104,000
|
| |
0
|
| |
44,638
|
| |
417,693
|
| |
344,964
|
| |
15,870
|
| |
25,000
|
| |
1,952,165
|
|
|
Change in Control(11)(12)
|
| |
2,484,000
|
| |
454,268
|
| |
44,638
|
| |
474,542
|
| |
556,849
|
| |
15,870
|
| |
25,000
|
| |
4,055,167
|
|
|
Disability(8)
|
| |
276,000
|
| |
0
|
| |
44,638
|
| |
667,693
|
| |
401,813
|
| |
—
|
| |
—
|
| |
1,390,144
|
|
|
Death(9)
|
| |
—
|
| |
0
|
| |
44,638
|
| |
667,693
|
| |
401,813
|
| |
—
|
| |
—
|
| |
1,114,144
|
|
|
Voluntary Termination Without Good Reason or Involuntary Termination for Cause
|
| |
—
|
| |
0
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
0
|
|
|
| |
2021 Proxy Statement
|
| |
175
|
|
NEO
|
| |
Severance
Amount/
Cash
Payment
($)
|
| |
Payment
Under Non-
Qualified
Plan
($)(1)
|
| |
Stock
Options
($)(2)
|
| |
Restricted
Stock /Cash
Units
($)(3)
|
| |
Performance
Units
($)(4)
|
| |
Benefit
Continuation
($)(5)
|
| |
Outplacement
Counseling
($)(6)
|
| |
Total
($)(15)
|
|
|
Curt A. Kramer
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
Involuntary Termination Without Cause or Voluntary Termination with Good Reason(10)(13)
|
| |
1,131,974
|
| |
2,284,047
|
| |
—
|
| |
—
|
| |
—
|
| |
21,416
|
| |
25,000
|
| |
3,462,437
|
|
|
Change in Control(11)(12)(13)
|
| |
1,792,293
|
| |
2,071,342
|
| |
64,328
|
| |
522,668
|
| |
710,274
|
| |
21,413
|
| |
25,000
|
| |
5,207,318
|
|
|
Disability(8)
|
| |
282,994
|
| |
0
|
| |
64,328
|
| |
812,394
|
| |
488,122
|
| |
—
|
| |
—
|
| |
1,647,838
|
|
|
Death(9)
|
| |
—
|
| |
0
|
| |
64,328
|
| |
812,394
|
| |
488,122
|
| |
—
|
| |
—
|
| |
1,364,844
|
|
|
Voluntary Termination Without Good Reason or Involuntary Termination for Cause
|
| |
—
|
| |
0
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
|
Samara A. Strycker
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
|
Involuntary Termination Without Cause or Voluntary Termination with Good Reason(10)
|
| |
1,117,856
|
| |
0
|
| |
—
|
| |
—
|
| |
—
|
| |
13,990
|
| |
25,000
|
| |
1,156,846
|
|
|
Change in Control(11)(12)(14)
|
| |
1,415,951
|
| |
379,821
|
| |
44,638
|
| |
402,074
|
| |
556,849
|
| |
13,990
|
| |
25,000
|
| |
2,838,323
|
|
|
Disability(8)
|
| |
223,571
|
| |
0
|
| |
44,638
|
| |
595,225
|
| |
401,813
|
| |
—
|
| |
—
|
| |
1,265,247
|
|
|
Death(9)
|
| |
—
|
| |
0
|
| |
44,638
|
| |
595,225
|
| |
401,813
|
| |
—
|
| |
—
|
| |
1,041,676
|
|
|
Voluntary Termination Without Good Reason or Involuntary Termination for Cause
|
| |
—
|
| |
0
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
*
|
For more information see the Potential Payments Upon Termination or Change in Control section on page 165 of this proxy statement.
|
(1)
|
Included in the Payment Under Non-Qualified Plan figure above is only the value of acceleration of vesting of any SERP benefits, payable as an annuity (other than for Messrs. Lisboa, Clarke, Borst, and McMenamin who are all retirement eligible under the SERP in all termination circumstances and whose actuarial present value of SERP benefits are shown in the Pension Benefits Table on page 174). Mr. Kramer and Ms. Strycker are not eligible for a SERP benefit with the exception of Involuntary Termination and/or change in control thus in any other termination they would not receive the benefits in the Pension Benefits Table beginning on page 174. Also included in the Payment Under Non-Qualified Plan figure above is the acceleration of vesting of any SRAP balances (other than for Messrs. Lisboa, Clarke, and McMenamin who are retirement eligible under the SRAP in all termination circumstances and whose SRAP balances are included in the Non-Qualified Deferred Compensation Table on page 174). Messrs. Borst and Kramer and Ms. Strycker are not eligible for an SRAP benefit except upon a change in control thus in any other termination they would not receive the benefits in the Non-Qualified Deferred Compensation Table beginning on page 174 except for the contributions and interest under the Company’s 2020 Non-Elective Deferred Compensation Plan which total $86,751 for Mr. Borst, $52,978 for Mr. Kramer, and $41,854 for Ms. Strycker.
|
(2)
|
The amount includes the value of unvested in-the-money stock options. The per share value for options is equal to the difference between the option exercise price and the closing price as of the last business day of the fiscal year (October 30, 2020), which was $43.11 per share. Please refer to the Outstanding Equity Awards Table of this proxy statement for more information on this subject as the amounts in this column represent awards that have already been granted to the NEOs in previous years. The value in the table actually realized by the terminated executive could be higher or lower than what is set forth in the table due to the price at the time the terminated executive exercises the option, if the terminated executive does, in fact timely exercise.
|
(3)
|
The amount includes the value of outstanding RSUs or PSUs and is based on the October 30, 2020 closing price of $43.11 per share, which was the last business day of the fiscal year. The amount also includes the value of unvested time based RCUs. Please refer to the Outstanding Equity Awards Table of this proxy statement for more information on this subject as a portion of the amounts in this column represent unvested RSUs awards that have already been granted to the NEOs in previous years. Amounts indicated for voluntary and involuntary for cause termination represent deferred shares that have already been earned.
|
(4)
|
This amount includes the value of all unvested cash-settled performance RCUs based on current forecasting models with respect to the attainment of the applicable performance goal. The value to be received is contingent on actual performance achieved.
|
(5)
|
Benefits include 12 months continued health-care coverage with an option to purchase an additional 12 months at the cost of coverage rate. Benefits also include 18 months of continued life insurance coverage for all NEOs (per their ESAs) terminated without cause, with Good Reason or following a change in control, with the exception of Mr. Lisboa, who is eligible for 24 months of continued life insurance coverage.
|
(6)
|
This amount represents our cost for NEO outplacement counseling and services.
|
(7)
|
In the event Mr. Lisboa’s employment and service with the Company terminate for any reason, including due to his death or disability, Mr. Lisboa will be entitled to unpaid and accrued payments and benefits.
|
•
|
A lump sum severance payment equal to 200% of the sum of his base salary and AI target;
|
•
|
Twelve months continued health-care coverage with an option to purchase an additional 12 months at the cost of coverage rate;
|
|
| |
2021 Proxy Statement
|
| |
176
|
•
|
24 months of continued life insurance coverage;
|
•
|
Outplacement services;
|
•
|
Retention of any remaining flexible perquisite allowance already paid; and
|
•
|
A pro rata portion of the earned AI award that would have been payable to Mr. Lisboa for the Company’s fiscal year in which the termination occurred, based on actual performance effective October 31
|
(8)
|
The Severance amount is 60% of annualized base salary as of October 31, 2020 and is not offset by other sources of income, such as Social Security. It represents the amount that would be paid annually over the term of the disability.
|
(9)
|
The SERP or SRAP do not provide for acceleration of vesting in the event of death.
|
(10)
|
This calculation, as described in the ESA, is 150% to 200% of the sum of the NEO’s annual base salary plus AI target with the exception of Mr. Clarke. Mr. Clarke’s ESA does not provide for any benefits other than in a change in control scenario.
|
(11)
|
The change in control calculation, as defined in the ESA, is 200% to 300% of the sum of the executive’s annual base salary plus AI target plus pro-rata AI.
|
(12)
|
Included in the Payment Under Non-Qualified Plan figure above for change in control is the lump sum cash payment equal to the difference in (i) the actuarial present value of the NEOs non-tax qualified pension benefits assuming the executive was 18 months older and had 18 months more of service, over (ii) the actuarial present value of the NEOs’ non-tax qualified pension benefits at the date of termination. The lump sum cash payment for Mr. Clarke is $475,478, Mr. McMenamin is $454,268 and Ms. Strycker is $109,210. The lump sum cash payments for Messrs. Borst and Kramer are $0, because the vesting of their SRAP under a CIC, which offsets the non-tax qualified pension benefits, mitigates effect of the additional 18 months of age and service. The lump sum cash payment for Mr. Lisboa is $0 as Mr. Lisboa’s Employment Agreement does not have a provision for this lump sum cash payment. Also included in the Payment Under Non-Qualified Plan figure above for change in control, is the value of the SRAP account which immediately vests upon a termination within two years following CIC. For Messrs. Borst and Kramer and Ms. Strycker, the SRAP would be paid as a lump sum and the figure reported is the SRAP account balance which is $493,975 for Mr. Borst, $97,868 for Mr. Kramer and $63,182 for Ms. Strycker.
|
(13)
|
Under an involuntary termination by the Company for reasons other than for Cause, if an executive has not yet attained age 55, whose age plus continuous vacation service totals 55 or more and they have at least 10 years of credited service, they would be eligible to grow-in to a SERP benefit payable at age 55. The monthly benefit amounts for Mr. Kramer are $11,216.05 payable until age 62 and $10,098.55. Under a Termination following a change in control, the SRAP will vest and Mr. Kramer’s SERP benefit will be offset by the annuitization of the SRAP therefore for change in control, Mr. Borst’s monthly benefit amounts are $9,794.84 until age 62 and $8,677.34 after age 62.
|
(14)
|
Under an involuntary termination by the Company for reasons other than for Cause, within two years following a change in control, the SERP provides a deferred vested pension for participants who have at least five years of credited service but do not meet the “Age 55 requirement” for vesting or the criteria to grow-in to a SERP benefit. Under a change in control, Ms. Strycker would be eligible for a SERP monthly benefit payable for her lifetime starting at age 55 of $1,015.56.
|
(15)
|
The values in the this column do not reflect the Pension and Non-Qualified Deferred Compensation Benefits for Messrs. Lisboa, Clarke, Borst, and McMenamin which are set forth in the Pension Benefits Table and Non-Qualified Deferred Compensation Table beginning on page 174.
|
|
| |
2021 Proxy Statement
|
| |
177
|
|
Plan Category(1)
|
| |
(a)
Number of Securities
to be Issued
Upon Exercise
of Outstanding
Options, Warrants
and Rights
|
| |
(b)
Weighted-Average
Exercise Price
of Outstanding
Options, Warrants
and Rights
|
| |
(c)
Number of Securities
Remaining Available
for Future Issuance
Under Equity Compensation
Plans (Excluding Securities
Reflected in Column (a))
|
|
|
Equity compensation plans approved by stockholders
|
| |
1,376,654(2)
|
| |
$34.15(3)
|
| |
3,949,512(4)(5)
|
|
|
Equity compensation plans not approved by stockholders(6)
|
| |
4,586(6)(7)
|
| |
N/A(3)
|
| |
—
|
|
|
Total
|
| |
1,381,240
|
| |
N/A
|
| |
3,949,512
|
|
(1)
|
This table does not include information regarding our 401(k) plans. Our 401(k) plans consist of the following: Navistar, Inc. 401(k) Plan for Represented Employees and Navistar, Inc. Retirement Accumulation Plan. As of October 31, 2020, there were 911,110 shares of common stock held in these plans.
|
(2)
|
This number includes stock options, DSUs and PSUs (as described in the Executive Stock Ownership Program discussed below) granted under our 2004 PIP; and stock options, performance stock options, RSUs, DSUs, and PSUs granted under our 2013 PIP. Stock options awarded to employees for the purchase of common stock from the 2013 PIP were granted with an exercise price equal to the fair market value of the stock on the date of grant, generally have a ten-year contractual life, except for options granted under the 2013 PIP between February 19, 2013 and December 12, 2017, which have a contractual life of seven years, and generally become exercisable as to one-third of the shares on each of the first three anniversaries of the date of grant, so that in three years the shares are 100% vested. Performance stock options granted under the 2013 PIP generally do not become exercisable until after the three-year anniversary of the date of grant and only if performance conditions are met. The terms of RSU awards granted under the 2013 PIP were established by the Board or a committee thereof at the time of issuance. The 2004 PIP expired on February 18, 2013, and as such no further awards may be granted under the 2004 PIP. As of October 31, 2020, 1,338 DSUs, and 12,931 PSUs remain outstanding for shares of common stock reserved for issuance under the 2004 PIP, and 1,015,029 stock options, including performance stock options, 306,515 RSUs, 28,363 DSUs and 12,478 PSUs remain outstanding for shares of common stock reserved for issuance under the 2013 PIP. For more information on the 2013 PIP, see footnote 5 below.
|
(3)
|
RSUs, DSUs and PSUs settled in shares do not have an exercise price and are settled only for shares of our common stock on a one-for-one basis. These awards have been disregarded for purposes of computing the weighted-average exercise price. For more information on DSUs and PSUs, see the discussion in footnote 6 below entitled “The Ownership Program.” There were no options or warrants outstanding under the unapproved plans as of October 31, 2020.
|
(4)
|
Our 2004 PIP was approved by the Board and the Compensation and Governance Committee on October 21, 2003, and, subsequently by our stockholders on February 17, 2004. Our 2004 PIP was amended on December 14, 2004, which amendment was approved by stockholders on March 23, 2005. The plan was subsequently amended on December 13, 2005, April 16, 2007, June 18, 2007, May 27, 2008, December 16, 2008, January 9, 2009, December 15, 2009 and April 19, 2010. The 2004 PIP replaced, on a prospective basis, our 1994 PIP, the 1998 Supplemental Stock Plan, both of which expired on December 16, 2003, and our 1998 Non-Employee Director Stock Option Plan (collectively, the “Prior Plans”). A total of 3,250,000 shares of common stock were reserved for awards under the 2004 PIP. On February 16, 2010, our stockholders approved an amendment to increase the number of shares available for issuance under the 2004 PIP from 3,250,000 to 5,750,000. Shares subject to awards under the 2004 PIP, or the Prior Plans after February 17, 2004 and before February 19, 2013, that were canceled, expired, forfeited, settled in cash, tendered to satisfy the purchase price of an award, withheld to satisfy tax obligations or otherwise terminated without a delivery of shares to the participant again became available for awards.
|
(5)
|
The 2013 PIP was approved by the Board and the Compensation Committee on December 11, 2012 and by our stockholders on February 19, 2013. Our 2013 PIP was amended on February 11, 2015, and again on December 9, 2019. The 2013 PIP replaced on a prospective basis the 2004 PIP and the Prior Plans, and awards may no longer be granted under the 2004 PIP or the Prior Plans. A total of 3,665,500 shares of common stock were reserved for awards under the 2013 PIP. Shares subject to awards under the 2013 PIP, the 2004 PIP or the Prior Plans after February 19, 2013, that are canceled, expired, forfeited, settled in cash, tendered to satisfy the purchase price of an award, withheld to satisfy tax obligations or otherwise terminated without a delivery of shares to the participant again become available for awards. This number represents the remaining number of unused shares from the year ended October 31, 2020, which are available for issuance.
|
(6)
|
The following plans were not approved by our stockholders: The Executive Stock Ownership Program (the “Ownership Program”), and the Deferred Fee Plan, except that any DSUs awarded out of the Deferred Fee Plan on or after September 30, 2013, are now issued out of the 2013 PIP. Below is a brief description of the material features of each plan, but in each case the information is qualified in its entirety by the text of such plans.
|
(7)
|
Includes 3,091 PSUs granted under the Ownership Program, which were outstanding as of October 31, 2020.
|
|
| |
2021 Proxy Statement
|
| |
178
|
|
| |
2021 Proxy Statement
|
| |
179
|
|
The Board is asking our stockholders to ratify the Audit Committee’s appointment of KPMG as the Company’s independent registered public accounting firm for the fiscal year ending October 31, 2021. KPMG has been the Company’s auditors since 2006. For additional information regarding the Company’s relationship with KPMG, please refer to the Report of the Audit Committee and the Fees of Independent Registered Public Accounting Firm contained below.
If the appointment of KPMG as our independent registered public accounting firm for 2021 is not ratified by our stockholders, the adverse vote will be considered a direction to the Audit Committee to consider other auditors for next year. However, because of the difficulty in making any substitution of auditors after the beginning of the current year, the appointment for 2021 will stand, unless the Audit Committee finds other good reason for making a change.
Representatives of KPMG will be present at the Annual Meeting and will have the opportunity to make a statement if they desire to do so. The representatives will also be available to respond to questions at the Annual Meeting.
|
|
|
| |
Your Board of Directors recommends a vote FOR the ratification of the appointment of KPMG as Navistar’s independent registered public accounting firm for fiscal year 2021.
|
|
|
| |
2020(1)
|
| |
2019(1)
|
|
|
Audit fees
|
| |
$8.7
|
| |
$10.8
|
|
|
Audit-related fees
|
| |
0.6
|
| |
0.1
|
|
|
Tax fees
|
| |
—
|
| |
0.1
|
|
|
All other fees
|
| |
—
|
| |
—
|
|
|
Total fees
|
| |
$9.3
|
| |
$11.0
|
|
(1)
|
In millions.
|
|
| |
2021 Proxy Statement
|
| |
180
|
|
| |
2021 Proxy Statement
|
| |
181
|
|
| |
Your Board of Directors recommends a vote FOR the proposal to approve the adjournment or postponement of the Annual Meeting, if necessary or appropriate, to continue to solicit votes for the Merger Proposal.
|
|
| |
2021 Proxy Statement
|
| |
182
|
|
|
| |
Common Stock Price
|
| ||||||
|
|
| |
High
|
| |
Low
|
| |
Dividend Per Share
|
|
|
FY 2018
|
| |
|
| |
|
| |
|
|
|
First quarter
|
| |
$47.73
|
| |
$37.37
|
| |
$0
|
|
|
Second quarter
|
| |
$46.72
|
| |
$31.56
|
| |
$0
|
|
|
Third quarter
|
| |
$44.34
|
| |
$33.53
|
| |
$0
|
|
|
Fourth quarter
|
| |
$43.71
|
| |
$29.90
|
| |
$0
|
|
|
FY 2019
|
| |
|
| |
|
| |
|
|
|
First quarter
|
| |
$35.54
|
| |
$23.69
|
| |
$0
|
|
|
Second quarter
|
| |
$39.52
|
| |
$30.96
|
| |
$0
|
|
|
Third quarter
|
| |
$35.50
|
| |
$28.30
|
| |
$0
|
|
|
Fourth quarter
|
| |
$32.62
|
| |
$21.32
|
| |
$0
|
|
|
FY 2020
|
| |
|
| |
|
| |
|
|
|
First quarter
|
| |
$37.48
|
| |
$23.56
|
| |
$0
|
|
|
Second quarter
|
| |
$38.00
|
| |
$15.01
|
| |
$0
|
|
|
Third quarter
|
| |
$32.28
|
| |
$21.14
|
| |
$0
|
|
|
Fourth quarter
|
| |
$45.25
|
| |
$31.48
|
| |
$0
|
|
|
| |
2021 Proxy Statement
|
| |
183
|
|
Name and Address
|
| |
Total Amount
and Nature of
Beneficial Ownership
|
| |
Percent of
Class(A)
|
|
|
Carl C. Icahn
c/o Icahn Capital LP
16690 Collins Avenue
Sunny Isles Beach, FL 33160
|
| |
16,729,960(B)
|
| |
16.8%
|
|
|
TRATON SE
Dachauer Str. 641
80995 Munich, Germany
|
| |
16,629,667(C)
|
| |
16.7%
|
|
|
Mark H. Rachesky, M.D.
1345 Avenue of the Americas, 42 Floor
New York, NY 10105
|
| |
16,298,482(D)
|
| |
16.4%
|
|
|
Franklin Resources, Inc.
One Franklin Parkway
San Mateo, CA 94403-1906
|
| |
7,131,551(E)
|
| |
7.2%
|
|
(A)
|
Applicable percentage ownership is based upon 99,620,873 shares of common stock outstanding as of January 22, 2021.
|
(B)
|
As reported in Schedule 13D/A, as filed with the SEC on March 17, 2017, by High River Limited Partnership (“High River”), Hopper Investments LLC (“Hopper”), Barberry Corp. (“Barberry”), Icahn Partners Master Fund LP (“Icahn Master”), Icahn Offshore LP (“Icahn Offshore”), Icahn Partners LP (“Icahn Partners”), Icahn Onshore LP (“Icahn Onshore”), Icahn Capital LP (“Icahn Capital”), IPH GP LLC (“IPH”), Icahn Enterprises Holdings L.P. (“Icahn Enterprises Holdings”), Icahn Enterprises G.P. Inc. (“Icahn Enterprises GP”), Beckton Corp. (“Beckton”) and Carl C. Icahn (collectively, the “Icahn Reporting Persons”). The Icahn Reporting Persons reported the following: High River has sole voting power and sole dispositive power with regard to 3,345,991 shares of common stock, and each of Hopper, Barberry and Mr. Icahn has shared voting power and shared dispositive power with regard to such shares of common stock; Icahn Master has sole voting power and sole dispositive power with regard to 5,446,990 shares of common stock, and each of Icahn Offshore, Icahn Capital, IPH, Icahn Enterprises Holdings, Icahn Enterprises GP, Beckton and Mr. Icahn has shared voting power and shared dispositive power with regard to such shares of common stock; and Icahn Partners has sole voting power and sole dispositive power with regard to 7,936,979 shares of common stock, and each of Icahn Onshore, Icahn Capital, IPH, Icahn Enterprises Holdings, Icahn Enterprises GP, Beckton and Mr. Icahn has shared voting power and shared dispositive power with regard to such shares of common stock. Barberry is the sole member of Hopper, which is the general partner of High River. Icahn Offshore is the general partner of Icahn Master. Icahn Onshore is the general partner of Icahn Partners. Icahn Capital is the general partner of each of Icahn Offshore and Icahn Onshore. Icahn Enterprises Holdings is the sole member of IPH, which is the general partner of Icahn Capital. Beckton is the sole stockholder of Icahn Enterprises GP, which is the general partner of Icahn Enterprises Holdings. Mr. Icahn is the sole stockholder of each of Barberry and Beckton. As such, Mr. Icahn is in a position indirectly to determine the investment and voting decisions made by each of the Icahn Reporting Persons. In addition, Mr. Icahn is the indirect holder of approximately 92.6% of the outstanding depositary units representing limited partnership interests in Icahn Enterprises L.P. (“Icahn Enterprises”). Icahn Enterprises GP is the general partner of Icahn Enterprises, which is the sole limited partner of Icahn Enterprises Holdings. See the Schedule 13D/A filed by the Icahn Reporting Persons for certain disclaimers of beneficial ownership.
|
(C)
|
As reported in a Schedule 13D/A filed with the SEC on December 4, 2020, by TRATON and Volkswagen Aktiengesellschaft (“Volkswagen”) (collectively the “Reporting Persons”). TRATON is the beneficial owner of 16,629,667 shares of common stock. Volkswagen is deemed to have beneficial ownership of the 16,629,667 shares of common stock owned beneficially by TRATON. The Reporting Persons both have shared power to vote and to dispose of 16,629,667 shares of common stock.
|
(D)
|
As reported in a Schedule 13D/A filed with the SEC on December 17, 2020 by MHR Institutional Partners III LP, MHR Institutional Advisors III LLC, MHR Fund Management LLC, MHR Holdings LLC and Mark H. Rachesky, M.D. (collectively, the “MHR Reporting Persons”), and as further supplemented by reports filed on Form 4 by Dr. Rachesky, pursuant to Section 16(a) of the Exchange Act. The MHR Reporting Persons reported the following: MHR Institutional Partners III LP and MHR Institutional Advisors III LLC each has sole voting and dispositive power over 14,980,528 shares of common stock. MHR Fund Management LLC and MHR Holdings LLC each has sole voting and dispositive power over 16,225,000 shares of common stock. Dr. Rachesky has sole voting and dispositive power over 16,298,482 shares of common stock, which includes (i) 16,225,000 shares of common stock beneficially owned by Dr. Rachesky as the managing member of MHRC LLC, MHR Institutional Advisors III LLC and MHR Holdings LLC; (ii) 48,482 shares of common stock held directly by Dr. Rachesky; and (iv) options to purchase 25,000 shares of common stock granted to Dr. Rachesky in his capacity as a director.
|
(E)
|
As reported in a Schedule 13G/A filed with the SEC on December 31, 2019, by Franklin Resources, Inc. (“FRI”), Charles B. Johnson, Rupert H. Johnson, Jr. and Templeton Global Advisors Limited. These securities are beneficially owned by one or more open- or closed-end investment companies or other managed accounts that are investment management clients of investment managers that are direct and indirect subsidiaries of FRI. Charles B. Johnson and Rupert H. Johnson, Jr. each own in excess of 10% of the outstanding common stock of FRI and are the principal stockholders of FRI. See the Schedule 13G/A for certain disclaimers of beneficial ownership.
|
|
| |
2021 Proxy Statement
|
| |
184
|
|
Name/Group
|
| |
Owned(A)
|
| |
Number of DSUs,
PSUs or RSUs
Convertible into
Common Stock(B)
|
| |
Obtainable
Through Stock
Option Exercise
|
| |
Total
|
| |
Percent of
Class
|
|
|
José María Alapont – Director
|
| |
1,509
|
| |
4,125
|
| |
13,333
|
| |
18,967
|
| |
*
|
|
|
Walter G. Borst – EVP and CFO
|
| |
90,546
|
| |
26,045
|
| |
102,506
|
| |
219,097
|
| |
*
|
|
|
Troy A. Clarke – Chairman, President & CEO
|
| |
182,444
|
| |
6,113
|
| |
128,147
|
| |
316,704
|
| |
*
|
|
|
Stephen R. D’Arcy – Director
|
| |
3,500
|
| |
4,125
|
| |
13,333
|
| |
20,958
|
| |
*
|
|
|
Jeffrey A. Dokho(C) – Director
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
*
|
|
|
Vincent J. Intrieri – Director
|
| |
2,727
|
| |
12,877
|
| |
23,333
|
| |
38,937
|
| |
*
|
|
|
Curt A. Kramer – SVP and General Counsel
|
| |
5,241
|
| |
3,733
|
| |
16,045
|
| |
25,019
|
| |
*
|
|
|
Persio V. Lisboa – EVP and COO
|
| |
57,688
|
| |
14,736
|
| |
77,334
|
| |
149,758
|
| |
*
|
|
|
William V. McMenamin – President, Financial Services and Treasurer
|
| |
30,822
|
| |
5,414
|
| |
21,660
|
| |
57,896
|
| |
*
|
|
|
Mark H. Rachesky(D) – Director
|
| |
16,264,570
|
| |
8,912
|
| |
23,333
|
| |
16,296,815
|
| |
16.4%
|
|
|
Christian Schulz – Director
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
*
|
|
|
Kevin M. Sheehan – Director
|
| |
773
|
| |
4,125
|
| |
3,333
|
| |
8,231
|
| |
*
|
|
|
Samara A. Strycker – SVP and Corporate Controller
|
| |
13,871
|
| |
3,733
|
| |
20,941
|
| |
38,545
|
| |
|
|
|
Dennis A. Suskind – Director
|
| |
4,770
|
| |
4,125
|
| |
13,333
|
| |
22,228
|
| |
*
|
|
|
Janet T. Yeung – Director
|
| |
—
|
| |
121
|
| |
—
|
| |
121
|
| |
*
|
|
|
All Directors and Executive Officers as a Group (16 persons)(E)
|
| |
16,660,461
|
| |
98,184
|
| |
456,631
|
| |
17,215,276
|
| |
17.3%
|
|
*
|
Percentage of shares beneficially owned does not exceed 1%.
|
(A)
|
The number of shares shown for each NEO (and all directors and executive officers as a group) includes the number of shares of common stock owned indirectly, as of January 22, 2021, by such executive officers in our Retirement Accumulation Plan, as reported to us by the Retirement Accumulation Plan trustee.
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(B)
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For additional information on DSUs, PSUs and RSUs, see below.
|
(C)
|
At the request of the UAW, the UAW representative director, Jeffrey Dokho, does not receive stock or stock option grant awards.
|
(D)
|
As reported in various Form 4s filed with the SEC by MHR Institutional Partners III LP, MHR Institutional Advisors III LLC, MHR Fund Management LLC, MHR Holdings LLC and Dr. Rachesky. See also Footnote D to the section “Persons Owning More Than Five Percent of Company Common Stock” in this proxy statement beginning on page 184.
|
(E)
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Includes all current directors and executive officers (including Section 16 Officers) as a group.
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2021 Proxy Statement
|
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185
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Entity Name
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Jurisdiction Of
Organization
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Business Address and
Telephone Number
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Principal Business
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Volkswagen AG
|
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Germany
|
| |
Berliner Ring 2,
38440 Wolfsburg, Germany
|
| |
The principal business of Volkswagen AG is to manufacture cars. Volkswagen AG, or other companies owned or controlled, directly or indirectly, by Volkswagen AG, produce motor vehicles under the brand names Volkswagen, Porsche, Audi, Bentley, Lamborghini, Bugatti, Ducati (which produces motorcycles), Skoda and SEAT.
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TRATON SE
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Germany
|
| |
Dachauer Str. 641,
80995 Munich, Germany
|
| |
Parent is an indirect subsidiary of Volkswagen AG, and its principal business purpose is the holding of investments in companies whose business purpose is the manufacturing and distribution of vehicles and engines of any kind, as well as such items’ ancillary equipment and all plants, machinery, tools and other technical products.
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TRATON US Inc.
|
| |
Delaware
|
| |
c/o TRATON SE
Dachauer Str. 641,
80995 Munich, Germany
|
| |
TRATON US Inc. is an indirect subsidiary of Parent. TRATON US Inc. has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the Merger Agreement.
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Dusk Inc.
|
| |
Delaware
|
| |
c/o TRATON SE
Dachauer Str. 641,
80995 Munich, Germany
|
| |
Merger Sub was formed solely for the purposes of effecting the Merger. Merger Sub has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the Merger Agreement and Voting Agreements.
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2021 Proxy Statement
|
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186
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2021 Proxy Statement
|
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187
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2021 Proxy Statement
|
| |
188
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2021 Proxy Statement
|
| |
189
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2021 Proxy Statement
|
| |
190
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2021 Proxy Statement
|
| |
191
|
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2021 Proxy Statement
|
| |
192
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|
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2021 Proxy Statement
|
| |
193
|
|
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2021 Proxy Statement
|
| |
194
|
(a)
|
The Company pays MAN Truck & Bus AG (“MAN”), an indirect subsidiary of Parent, a royalty for the use of certain base technology associated with the Company’s current A26 diesel engine and our discontinued 13L diesel engine. The royalty payment for 2019 was €2,102,000 ($2,363,823) and for 2020 was €1,471,800 (US$1,658,370).
|
(b)
|
MWM International Motores, S.A. (“MWM”), one of the Company’s Brazil operating subsidiaries, purchases various parts from MAN and its direct and indirect subsidiaries, and generators from Scania AB, a subsidiary of Parent. In 2019 and 2020, the aggregate amount paid for such parts was $2,479,487 and $5,271,326, respectively.
|
(c)
|
MWM manufactures the 6.9L and 4.6L D08 engines for MAN Latin America Indústria e Comércio de Veículos Ltda. (“MAN Latin America”), an indirect subsidiary of Parent. MWM assembles and supplies D26 13L engines, produces the D26 block cylinder and sells loose engines and spare parts to, and direct ships parts for, MAN Latin America. MWM also sells kits of specific D08 engine parts to MAN SE. The net revenue associated with this relationship during 2019 and 2020 was approximately $157,299,423 and BRL$604,791,005 (US$121,708,191), respectively.
|
(d)
|
Global Truck & Bus Procurement LLC (the “Procurement JV”), a joint venture entity, was formed and commenced operations in 2017. Owned 51% by TRATON, LLC (formerly known as Volkswagen Truck & Bus, LLC), a subsidiary of Parent, and 49% by International Truck and Engine Investments Corporation, an indirect subsidiary of the Company, the purpose of the Procurement JV is to make sourcing recommendations to Parent and the Company. The Procurement JV’s annual operating budget is funded on a cost plus basis. In 2019 and 2020, the parties each made payments to the Procurement JV in the amounts of $2,310,041 and $1,830,755, respectively.
|
(e)
|
Certain of the Company’s subsidiaries have entered into agreements, or are currently proposing to enter into agreements, with certain indirect subsidiaries of Parent with respect to supplying the Company with big bore diesel engines with after-treatment and transmissions, certain consulting and/or engineering services in connection with sourcing parts and suppliers of engines, e-mobility components and production parts. Payments made by the
|
|
| |
2021 Proxy Statement
|
| |
195
|
(f)
|
Certain direct or indirect subsidiaries or affiliates of Parent have paid MWM for engineering services related to the homologation of engines. Payments made to the Company associated with this relationship totaled $284,650 in 2019 and $32,816 in 2020.
|
(g)
|
The Company has entered into arrangements with certain direct and indirect subsidiaries of Parent for the lease of certain office spaces and training. Payments made pursuant to these arrangements totaled $621,384 in 2019 and $168,013 in 2020.
|
(h)
|
The Company has leased vehicles manufactured by Volkswagen AG for certain of its salesforce, through a third-party leasing company which is not affiliated with the Company or Parent. The amount paid by the Company to the third-party leasing company for such vehicles in 2019 was $1,171,265 and in 2020 was $1,424,901.
|
(i)
|
Navistar Canada ULC, the Company’s Canadian affiliate (“Navistar Canada”), and Scania CV, an affiliate of Parent, expect to enter into a distributor agreement at the end of 2020 under which Navistar Canada will be the exclusive distributor for Scania off-road mining vehicles in Canada utilizing the International sales and service network. No payments were made or received related to this transaction in 2020 and no payments are expected to be made in the first two months of 2021.
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2021 Proxy Statement
|
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196
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2021 Proxy Statement
|
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197
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2021 Proxy Statement
|
| |
198
|
|
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2021 Proxy Statement
|
| |
199
|
|
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2021 Proxy Statement
|
| |
200
|
|
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2021 Proxy Statement
|
| |
201
|
|
| |
2021 Proxy Statement
|
| |
202
|
•
|
Annual Report on Form 10-K, for the fiscal year ended October 31, 2020, filed with the SEC on December 17, 2020; and
|
•
|
Current Reports on Form 8-K, filed with the SEC on December 17, 2020, December 17, 2020 and January 13, 2021.
|
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2021 Proxy Statement
|
| |
203
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2021 Proxy Statement
|
| |
204
|
Annex A
|
| |
Agreement and Plan of Merger, dated as of November 7, 2020, by and among Navistar International Corporation, TRATON SE and Dusk Inc.
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| |
|
Annex B
|
| |
Voting and Support Agreement, dated as of November 7, 2020, by and among TRATON SE, Dusk Inc. and Carl Icahn, Icahn Partners LP, Icahn Partners Master Fund LP, Icahn Offshore LP, Icahn Onshore LP, Beckton Corp., Icahn Capital LP, IPH GP LLC, Icahn Enterprises Holdings L.P. and Icahn Enterprises G.P. Inc.
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|
Annex C
|
| |
Voting and Support Agreement, dated as of November 7, 2020, by and among TRATON SE, Dusk Inc. and MHR Capital Partners Master Account LP, MHR Capital Partners (100) LP and MHR Institutional Partners III LP.
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|
Annex D
|
| |
Section 262 of the Delaware General Corporation Law.
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|
Annex E
|
| |
Opinion of J.P. Morgan Securities LLC, dated as of November 7, 2020.
|
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|
Annex F
|
| |
Opinion of PJT Partners LP, dated as of November 7, 2020.
|
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|
Annex G
|
| |
Opinion of Bank of America Europe DAC, dated as of November 7, 2020.
|
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|
Annex H
|
| |
Opinion of Goldman Sachs Bank Europe SE, dated as of November 7, 2020.
|
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2021 Proxy Statement
|
| |
205
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2021 Proxy Statement
|
| |
206
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PAGE
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ARTICLE 1
DEFINITIONS
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ARTICLE 2
THE MERGER
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ARTICLE 3
THE SURVIVING CORPORATION
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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2021 Proxy Statement
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A-i
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PAGE
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT
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ARTICLE 6
COVENANTS OF THE COMPANY
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ARTICLE 7
COVENANTS OF PARENT
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ARTICLE 8
COVENANTS OF PARENT AND THE COMPANY
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ARTICLE 9
CONDITIONS TO THE MERGER
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2021 Proxy Statement
|
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A-ii
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PAGE
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ARTICLE 10
TERMINATION
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ARTICLE 11
MISCELLANEOUS
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2021 Proxy Statement
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A-iii
|
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2021 Proxy Statement
|
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A-1
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2021 Proxy Statement
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A-2
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2021 Proxy Statement
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A-3
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2021 Proxy Statement
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A-4
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2021 Proxy Statement
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A-5
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2021 Proxy Statement
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A-6
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2021 Proxy Statement
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A-7
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2021 Proxy Statement
|
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A-8
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Term
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Section
|
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Adverse Recommendation Change
|
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6.03
|
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Agreement
|
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Preamble
|
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Annual Meeting
|
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6.02(c)
|
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Certificates
|
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2.03
|
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CFIUS Filing Request
|
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8.01(c)
|
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CFIUS Notice
|
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8.01(c)
|
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Closing
|
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2.01(b)
|
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Closing Date
|
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2.01(b)
|
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Common Merger Consideration
|
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2.02(a)
|
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Company
|
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Preamble
|
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Company Board
|
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4.03(b)
|
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Company Board Recommendation
|
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4.03(b)
|
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Company Financial Statements
|
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4.06(d)
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Company Permits
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4.10(a)
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Company Proxy Statement
|
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4.13(a)
|
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Company Restricted Share
|
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2.04(b)
|
|
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Company Restricted Stock Awards
|
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2.04(b)
|
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Company RSU
|
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2.04(b)
|
|
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Company SEC Documents
|
| |
4.06(a)
|
|
|
Company Securities
|
| |
6.01(d)
|
|
|
Company Stock Options
|
| |
2.04(a)
|
|
|
Company Stockholder Approval
|
| |
4.03(a)
|
|
|
Company Stockholder Meeting
|
| |
6.02(a)
|
|
|
DCSA
|
| |
4.04(a)
|
|
|
D&O Insurance
|
| |
7.03(c)
|
|
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Effective Time
|
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2.01(c)
|
|
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Employment Law
|
| |
4.19(a)
|
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End Date
|
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10.01(b)(i)
|
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Exchange Agent
|
| |
2.03(a)
|
|
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Expense Reimbursement
|
| |
11.04(c)
|
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Financing
|
| |
6.06(a)
|
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FOCI Mitigation
|
| |
8.01(d)
|
|
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Indemnified Person
|
| |
7.03(a)
|
|
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Intervening Event
|
| |
6.03(b)(ii)
|
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J.P. Morgan
|
| |
4.20
|
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Leased Real Property
|
| |
4.14(c)
|
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Merger
|
| |
2.01(a)
|
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Merger Consideration
|
| |
2.02(e)
|
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Merger-Related Litigation
|
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6.07
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Merger Subsidiary
|
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Preamble
|
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Navistar Defense
|
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8.01(c)
|
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Order
|
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9.01(b)
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Other Indemnitors
|
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7.03(f)
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Owned Real Property
|
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4.14(c)
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Parent
|
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Preamble
|
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PJT Partners
|
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4.20
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Representatives
|
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6.03(a)
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Required Governmental Approvals
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4.04(a)
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Sanctions
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4.10(c)
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2021 Proxy Statement
|
| |
A-9
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Term
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| |
Section
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|
Schedule 13E-3
|
| |
4.13(b)
|
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Section 721
|
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1.01
|
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Series B Director
|
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3.03
|
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Series D Merger Consideration
|
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2.02(e)
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Significant Contract
|
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4.11(a)
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Significant Lease
|
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4.14(b)
|
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Significant Subsidiaries
|
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4.05(a)
|
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Subsidiary Securities
|
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6.01(d)
|
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Superior Proposal
|
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6.03
|
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Surviving Corporation
|
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2.01(a)
|
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Taxing Authority
|
| |
1.01
|
|
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Termination Fee
|
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11.04(b)(i)
|
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Uncertificated Shares
|
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2.03(a)
|
|
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2021 Proxy Statement
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A-10
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2021 Proxy Statement
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A-11
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2021 Proxy Statement
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A-12
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2021 Proxy Statement
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A-13
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2021 Proxy Statement
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A-14
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2021 Proxy Statement
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A-15
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2021 Proxy Statement
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A-16
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2021 Proxy Statement
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A-17
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2021 Proxy Statement
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A-18
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2021 Proxy Statement
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A-19
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2021 Proxy Statement
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A-20
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2021 Proxy Statement
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A-21
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2021 Proxy Statement
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A-22
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2021 Proxy Statement
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A-23
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2021 Proxy Statement
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A-24
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2021 Proxy Statement
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A-25
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2021 Proxy Statement
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A-26
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2021 Proxy Statement
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A-27
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2021 Proxy Statement
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A-28
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2021 Proxy Statement
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A-29
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2021 Proxy Statement
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A-30
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2021 Proxy Statement
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A-31
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2021 Proxy Statement
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A-32
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2021 Proxy Statement
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A-33
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2021 Proxy Statement
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A-34
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2021 Proxy Statement
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A-35
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2021 Proxy Statement
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A-36
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2021 Proxy Statement
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A-37
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2021 Proxy Statement
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A-38
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2021 Proxy Statement
|
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A-39
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2021 Proxy Statement
|
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A-40
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2021 Proxy Statement
|
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A-41
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2021 Proxy Statement
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A-42
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2021 Proxy Statement
|
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A-43
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2021 Proxy Statement
|
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A-44
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2021 Proxy Statement
|
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A-45
|
|
| |
NAVISTAR INTERNATIONAL CORPORATION
|
|||
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|
| |
By:
|
| |
/s/ Troy A. Clarke
|
|
| |
Name:
|
| |
Troy A. Clarke
|
|
| |
Title:
|
| |
Executive Chairman
|
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| |
By:
|
| |
/s/ Persio V. Lisboa
|
|
| |
Name:
|
| |
Persio V. Lisboa
|
|
| |
Title:
|
| |
President and Chief Executive Officer
|
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| |
2021 Proxy Statement
|
| |
A-46
|
|
| |
TRATON SE
|
|||
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By:
|
| |
/s/ Matthias Gründler
|
|
| |
Name:
|
| |
Matthias Gründler
|
|
| |
Title:
|
| |
Chief Executive Officer
|
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Christian Schulz
|
|
| |
Name:
|
| |
Christian Schulz
|
|
| |
Title:
|
| |
Chief Financial Officer
|
|
| |
|
| |
|
|
| |
DUSK INC.
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Do Young Kim
|
|
| |
Name:
|
| |
Do Young Kim
|
|
| |
Title:
|
| |
Chairman
|
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Franz Haslinger
|
|
| |
Name:
|
| |
Franz Haslinger
|
|
| |
Title:
|
| |
Secretary/Treasurer
|
|
| |
2021 Proxy Statement
|
| |
A-47
|
|
| |
2021 Proxy Statement
|
| |
A-48
|
|
| |
2021 Proxy Statement
|
| |
A-49
|
|
| |
2021 Proxy Statement
|
| |
A-50
|
|
| |
2021 Proxy Statement
|
| |
A-51
|
|
| |
2021 Proxy Statement
|
| |
B-1
|
|
| |
2021 Proxy Statement
|
| |
B-2
|
|
| |
2021 Proxy Statement
|
| |
B-3
|
|
| |
2021 Proxy Statement
|
| |
B-4
|
|
| |
2021 Proxy Statement
|
| |
B-5
|
|
| |
2021 Proxy Statement
|
| |
B-6
|
|
| |
2021 Proxy Statement
|
| |
B-7
|
|
| |
2021 Proxy Statement
|
| |
B-8
|
|
| |
2021 Proxy Statement
|
| |
B-9
|
|
| |
2021 Proxy Statement
|
| |
B-10
|
|
| |
TRATON SE
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Matthias Gründler
|
|
| |
Name:
|
| |
Matthias Gründler
|
|
| |
Title:
|
| |
Chief Executive Officer
|
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Christian Schulz
|
|
| |
Name:
|
| |
Christian Schulz
|
|
| |
Title:
|
| |
Chief Financial Officer
|
|
| |
|
| |
|
|
| |
DUSK INC.
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Do Young Kim
|
|
| |
Name:
|
| |
Do Young Kim
|
|
| |
Title:
|
| |
Chairman
|
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Franz Haslinger
|
|
| |
Name:
|
| |
Franz Haslinger
|
|
| |
Title:
|
| |
Secretary/Treasurer
|
|
| |
2021 Proxy Statement
|
| |
B-11
|
|
| |
ICAHN PARTNERS MASTER FUND LP
|
|||
|
| |
ICAHN OFFSHORE LP
|
|||
|
| |
ICAHN PARTNERS LP
|
|||
|
| |
ICAHN ONSHORE LP
|
|||
|
| |
BECKTON CORP.
|
|||
|
| |
|
| ||
|
| |
By:
|
| |
/s/ Keith Cozza
|
|
| |
Name:
|
| |
Keith Cozza
|
|
| |
Title:
|
| |
Chief Executive Officer
|
|
| |
|
| |
|
|
| |
ICAHN CAPITAL LP
|
|||
|
| |
By: IPH GP LLC, its general partner
|
|||
|
| |
By: Icahn Enterprises Holdings L.P., its sole member
|
|||
|
| |
By: Icahn Enterprises G.P. Inc., its general partner
|
|||
|
| |
IPH GP LLC
|
|||
|
| |
By: Icahn Enterprises Holdings L.P., its sole member
|
|||
|
| |
By: Icahn Enterprises G.P. Inc., its general partner
|
|||
|
| |
ICAHN ENTERPRISES HOLDINGS L.P.
|
|||
|
| |
By: Icahn Enterprises G.P. Inc., its general partner
|
|||
|
| |
ICAHN ENTERPRISES G.P. INC.
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Keith Cozza
|
|
| |
Name:
|
| |
Keith Cozza
|
|
| |
Title:
|
| |
Chief Executive Officer
|
|
| |
2021 Proxy Statement
|
| |
B-12
|
|
| |
CARL C. ICAHN
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Carl C. Icahn
|
|
| |
2021 Proxy Statement
|
| |
B-13
|
|
Direct Beneficial Owner
|
| |
Number of Existing Stockholder Shares
|
|
|
Icahn Partners LP
|
| |
9,889,908 shares of Company Common Stock
|
|
|
Icahn Partners Master Fund LP
|
| |
6,840,052 shares of Company Common Stock
|
|
|
Indirect Beneficial Owner
|
| |
—
|
|
|
Icahn Offshore LP
|
| |
—
|
|
|
Icahn Onshore LP
|
| |
—
|
|
|
Beckton Corp.
|
| |
—
|
|
|
Icahn Capital LP
|
| |
—
|
|
|
IPH GP LLC
|
| |
—
|
|
|
Icahn Enterprises Holdings L.P.
|
| |
—
|
|
|
Icahn Enterprises G.P. Inc.
|
| |
—
|
|
|
Carl Icahn
|
| |
—
|
|
|
Total
|
| |
16,729,960 shares of Company Common Stock
|
|
|
| |
2021 Proxy Statement
|
| |
B-14
|
|
| |
By:
|
| |
|
|
| |
Name:
|
| |
|
|
| |
Title:
|
| |
|
|
| |
|
| |
|
|
| |
Address for Notices:
|
|
| |
2021 Proxy Statement
|
| |
B-15
|
|
| |
2021 Proxy Statement
|
| |
C-1
|
|
| |
2021 Proxy Statement
|
| |
C-2
|
|
| |
2021 Proxy Statement
|
| |
C-3
|
|
| |
2021 Proxy Statement
|
| |
C-4
|
|
| |
2021 Proxy Statement
|
| |
C-5
|
|
| |
2021 Proxy Statement
|
| |
C-6
|
|
| |
2021 Proxy Statement
|
| |
C-7
|
|
| |
2021 Proxy Statement
|
| |
C-8
|
|
| |
2021 Proxy Statement
|
| |
C-9
|
|
| |
2021 Proxy Statement
|
| |
C-10
|
|
| |
TRATON SE
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Matthias Gründler
|
|
| |
Name:
|
| |
Matthias Gründler
|
|
| |
Title:
|
| |
Chief Executive Officer
|
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Christian Schulz
|
|
| |
Name:
|
| |
Christian Schulz
|
|
| |
Title:
|
| |
Chief Financial Officer
|
|
| |||||
|
| |
|
| |
|
|
| |
DUSK INC.
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Do Young Kim
|
|
| |
Name:
|
| |
Do Young Kim
|
|
| |
Title:
|
| |
Chairman
|
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Franz Haslinger
|
|
| |
Name:
|
| |
Franz Haslinger
|
|
| |
Title:
|
| |
Secretary/Treasurer
|
|
| |
2021 Proxy Statement
|
| |
C-11
|
|
| |
MHR INSTITUTIONAL PARTNERS III LP
By: MHR Institutional Advisors III LLC, its general partner
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Janet Yeung
|
|
| |
Name:
|
| |
Janet Yeung
|
|
| |
Title:
|
| |
Authorized Signatory
|
|
| |
|
| |
|
|
| |
MHR CAPITAL PARTNERS MASTER ACCOUNT LP
By: MHR Advisors LLC, its general partner
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Janet Yeung
|
|
| |
Name:
|
| |
Janet Yeung
|
|
| |
Title:
|
| |
Authorized Signatory
|
|
| |
|
| |
|
|
| |
MHR CAPITAL PARTNERS (100) LP
By: MHR Advisors LLC, its general partner
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Janet Yeung
|
|
| |
Name:
|
| |
Janet Yeung
|
|
| |
Title:
|
| |
Authorized Signatory
|
|
| |
2021 Proxy Statement
|
| |
C-12
|
Beneficial Owner
|
| |
Number of Existing Stockholder Shares
|
MHR Capital Partners Master Account LP
|
| |
1,099,046 shares of Company Common Stock
|
MHR Capital Partners (100) LP
|
| |
145,426 shares of Company Common Stock
|
MHR Institutional Partners III LP
|
| |
14,980,528 shares of Company Common Stock
|
|
| |
2021 Proxy Statement
|
| |
C-13
|
|
| |
By:
|
| |
|
|
| |
Name:
|
| |
|
|
| |
Title:
|
| |
|
|
| |
|
| |
|
|
| |
Address for Notices:
|
|
| |
2021 Proxy Statement
|
| |
C-14
|
|
| |
2021 Proxy Statement
|
| |
D-1
|
|
| |
2021 Proxy Statement
|
| |
D-2
|
|
| |
2021 Proxy Statement
|
| |
D-3
|
|
| |
2021 Proxy Statement
|
| |
D-4
|
|
| |
2021 Proxy Statement
|
| |
E-1
|
Very truly yours,
|
| |
|
|
| |
|
/s/ J.P. Morgan Securities LLC
|
| |
|
J.P. MORGAN SECURITIES LLC
|
| |
|
|
| |
2021 Proxy Statement
|
| |
E-2
|
|
|
| |
|
|
(i)
|
reviewed certain publicly available information concerning the business, financial condition and operations of the Company;
|
(ii)
|
reviewed certain internal information concerning the business, financial condition and operations of the Company prepared and furnished to us by the management of the Company;
|
(iii)
|
reviewed certain internal financial analyses, estimates and forecasts relating to the Company, including projections that were prepared by or at the direction of the management of the Company and approved for our use by the Board (collectively, the “Company Projections”);
|
(iv)
|
held discussions with members of senior management of the Company concerning, among other things, their evaluation of the Transaction and the Company’s business, operating and regulatory environment, financial condition, prospects and strategic objectives;
|
(v)
|
reviewed the historical market prices and trading activity for the Company Stock;
|
(vi)
|
compared certain publicly available financial and stock market data for the Company with similar information for certain other companies that we deemed to be relevant;
|
(vii)
|
reviewed a draft, dated November 6, 2020 of the Agreement and a draft dated November 6, 2020 of the Support Agreements; and
|
(viii)
|
performed such other financial studies, analyses and investigations, and considered such other matters, as we deemed necessary or appropriate for purposes of rendering this opinion.
|
|
| |
2021 Proxy Statement
|
| |
F-1
|
|
| |
2021 Proxy Statement
|
| |
F-2
|
|
| |
2021 Proxy Statement
|
| |
F-3
|
|
| |
Very truly yours,
|
|
| |
|
|
| |
/s/ PJT Partners LP
|
|
| |
PJT Partners LP
|
|
| |
2021 Proxy Statement
|
| |
F-4
|
(a)
|
reviewed certain publicly available business and financial information relating to Navistar;
|
(b)
|
reviewed certain financial forecasts relating to Navistar for 2024 prepared by the management of Navistar (the “Navistar Forecasts”);
|
(c)
|
reviewed certain financial forecasts relating to Navistar prepared by the management of TRATON (the “TRATON-Navistar Forecasts”) and discussed with the management of TRATON its assessments as to the relative likelihood of achieving the future financial results reflected in the Navistar Forecasts and the TRATON-Navistar Forecasts;
|
(d)
|
reviewed certain estimates as to the amount and timing of cost savings and revenue enhancements (collectively, the “Synergies”) anticipated by the management of TRATON to result from the Merger;
|
(e)
|
reviewed certain estimates relating to tax-related assets, litigation-related contingencies and other adjustments to the assets and liabilities of Navistar prepared by the management of TRATON (the “Balance Sheet Adjustments”);
|
(f)
|
discussed the past and current business, operations, financial condition and prospects of Navistar with members of senior managements of Navistar and TRATON, and discussed the past and current business, operations, financial condition and prospects of TRATON with members of senior management of TRATON;
|
(g)
|
discussed with the management of TRATON its assessments as to (a) Navistar’s existing and future relationships, agreements and arrangements with, and TRATON’s ability to retain, key customers, clients, suppliers and employees of Navistar and (b) the products, product candidates and technology of Navistar, including the validity of, risks associated with, and the integration by TRATON of, such products, product candidates and technology;
|
(h)
|
reviewed the trading history for Navistar Common Stock and a comparison of that trading history with the trading histories of other companies we deemed relevant;
|
(i)
|
compared certain financial and stock market information of Navistar with similar information of other companies we deemed relevant;
|
|
| |
2021 Proxy Statement
|
| |
G-1
|
(j)
|
compared certain financial terms of the Merger to financial terms, to the extent publicly available, of other transactions we deemed relevant;
|
(k)
|
reviewed a draft, dated November 6, 2020, of the Agreement (the “Draft Agreement”); and
|
(l)
|
performed such other analyses and studies and considered such other information and factors as we deemed appropriate.
|
|
| |
2021 Proxy Statement
|
| |
G-2
|
|
| |
2021 Proxy Statement
|
| |
G-3
|
|
| |
2021 Proxy Statement
|
| |
H-1
|
|
| |
2021 Proxy Statement
|
| |
H-2
|
/s/ Goldman Sachs Bank Europe SE
|
| |
/s/ Goldman Sachs Bank Europe SE
|
Goldman Sachs Bank Europe SE
|
| |
Goldman Sachs Bank Europe SE
|
Title: Managing Director
|
| |
Title: Managing Director
|
|
| |
2021 Proxy Statement
|
| |
H-3
|