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o Preliminary Proxy Statement | ||
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | ||
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o Definitive Additional Materials | ||
o Soliciting Material Pursuant to Section 240.14a-12 |
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DATE: | April 26, 2005 | |
TIME: | 9:00 A.M., Akron Time | |
PLACE: | Offices Of The Company Goodyear Theater 1201 East Market Street Akron, Ohio |
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ROBERT J. KEEGAN | |
CHAIRMAN OF THE BOARD, | |
CHIEF EXECUTIVE OFFICER | |
AND PRESIDENT |
Sincerely, | |
Robert J. Keegan | |
Chairman of the Board, | |
Chief Executive Officer | |
and President |
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1. | To elect five directors, three to serve as Class I directors each for a term of three years, and two directors to serve as Class III directors for a one year term (Proxy Item 1); and | |
2. | To consider and vote upon an amendment to Goodyear’s Code of Regulations to permit Goodyear to notify shareholders of meetings by electronic or other means authorized by the shareholder (Proxy Item 2); and | |
3. | To consider and vote upon an amendment to Goodyear’s Code of Regulations to provide for the annual election of directors (Proxy Item 3); and | |
4. | To consider and vote upon a proposal to approve the adoption of the Goodyear 2005 Performance Plan (Proxy Item 4); and | |
5. | To consider and vote upon a proposal to ratify the appointment of PricewaterhouseCoopers LLP as independent accountants for Goodyear for 2005 (Proxy Item 5); and | |
6. | To consider and vote upon a Shareholder Proposal (Proxy Item 6), if properly presented at the Annual Meeting; and | |
7. | To act upon such other matters and to transact such other business as may properly come before the meeting or any adjournments thereof. |
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Corporate | Nominating & | |||||||||||||||||||||
Name of Director | Audit | Compensation | Responsibility | Finance | Board Governance | Class | ||||||||||||||||
Non-Employee Directors | ||||||||||||||||||||||
Susan E. Arnold | X | X | X | I | ||||||||||||||||||
James C. Boland | X | * | X | X | III | |||||||||||||||||
John G. Breen | X | X | * | X | I | |||||||||||||||||
Gary D. Forsee | X | X | X | I | ||||||||||||||||||
William J. Hudson, Jr | X | X | X | * | I | |||||||||||||||||
Steven A. Minter | X | * | X | III | ||||||||||||||||||
Denise M. Morrison(1) | X | X | I | |||||||||||||||||||
Rodney O’Neal | X | X | * | II | ||||||||||||||||||
Shirley D. Peterson | X | X | X | II | ||||||||||||||||||
Thomas H. Weidemeyer(2) | X | X | I | |||||||||||||||||||
Employee Director | ||||||||||||||||||||||
Robert J. Keegan | II | |||||||||||||||||||||
Number of Meetings in Fiscal 2004 | 12 | 4 | 2 | 3 | 4 |
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Class I | |
Gary D. Forsee | |
Denise M. Morrison | |
Thomas H. Weidemeyer | |
Class III | |
John G. Breen | |
William J. Hudson, Jr. |
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* | In the event that the proposal to amend Goodyear’s Code of Regulations to require the annual election of directors is approved by shareholders, the directors in Classes I and II have agreed to shorten their terms so that they expire at the 2006 Annual Meeting of Shareholders. |
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• | A classified board reduces a Company’s vulnerability to certain potentially abusive takeover tactics. Classified boards do provide greater shareholder protection in the event of a takeover attempt for less than fair value. They help ensure the necessary time and perspective to determine if the bid is adequate and fair, negotiate fairer value or seek more beneficial alternatives that maximize shareholder value. | |
• | Classified boards promote continuity and stability. Serving three year terms allows directors to gain a deeper knowledge of a Company’s business, and encourages directors to maintain a longer-term perspective on strategic matters. |
• | Annual board elections foster accountability. Classified board opponents maintain that directors should be accountable to shareholders on an annual basis and that three year terms reduce accountability and promote insularity and entrenchment. | |
• | The anti-takeover effect of a classified board could have a negative impact on shareholder value. Because a classified board could increase the cost of an attempted hostile takeover, some transactions that would otherwise be in the interests of shareholders may be deterred. |
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• | Construe and interpret the Plan, | |
• | Make rules and regulations relating to the administration of the Plan, |
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• | Select participants, and | |
• | Establish the terms and conditions of grants and awards. |
• | The maximum number of shares which may be subject to any type of grant or award or any outstanding grant or award, or awarded to any participant during any specified period. | |
• | The per share exercise price of any outstanding stock option or stock appreciation right and the number or value of any units which are the subject of any other outstanding grant or award. |
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Number of Shares | ||||||||||||
Remaining Available for | ||||||||||||
Number of Shares to be | Weighted Average | Future Issuance under | ||||||||||
Issued upon Exercise of | Exercise Price of | Equity Compensation | ||||||||||
Outstanding Options, | Outstanding Options, | Plans (Excluding Shares | ||||||||||
Plan Category | Warrants and Rights | Warrants and Rights | Reflected in Column (a)) | |||||||||
(a) | (b) | (c) | ||||||||||
Equity compensation plans approved by shareholders | 25,834,292 | $ | 25.93 | 965,138 | (1) | |||||||
Equity compensation plans not approved by shareholders(2)(3) | 3,136,748 | $ | 16.96 | 0 | ||||||||
Total | 28,971,040 | $ | 24.96 | 965,138 | ||||||||
(1) | Under Goodyear’s 1989 Performance and Equity Incentive Plan, 1997 Performance Incentive Plan and 2002 Performance Plan, performance units have been awarded for up to 351,972 shares of Common Stock in respect of performance periods ending on and after December 31, 2004. Each unit is equivalent to one share of Common Stock. In addition, up to 85,061 shares of Common Stock may be issued in respect of the deferred payout of awards made under Goodyear’s 1989 Performance and Equity Incentive Plan, the 1997 Performance Incentive Plan and the 2002 Performance Plan. The number of units indicated assumes the maximum possible payout that may be earned during the relevant deferral periods. The 1989 and 1997 Plans have expired except with respect to outstanding options and other grants. The 2002 Performance Plan expires on April 15, 2005. | |
(2) | Goodyear’s Stock Option Plan for Hourly Bargaining Unit Employees at Designated Locations provided for the issuance of up to 3.5 million shares of Common Stock upon the exercise of stock options granted to employees represented by the United Steelworkers of America at various manufacturing plants. No eligible employee received an option to purchase more than 200 shares of Common Stock. Options were granted on December 4, 2000 and September 3, 2001 to 19,983 eligible employees. Each option has a term of ten years and is subject to certain vesting requirements over two or three year periods. The options granted on December 4, 2000 have an exercise price of $17.68 per share. The options granted on September 3, 2001 have an exercise price of $25.03 per share. No additional options may be granted under this Plan, which expired September 30, 2001, except with respect to options then outstanding. | |
(3) | The Hourly and Salaried Employees Stock Option Plan provided for the issuance of up to 600,000 shares of Common Stock pursuant to stock options granted to selected hourly and non-executive salaried employees of Goodyear and its subsidiaries. Options in respect of 117,610 shares of Common Stock were granted on December 4, 2000, each having an exercise price of $17.68 per share and options in respect of 294,690 shares of Common Stock were granted on September 30, 2002, each having an exercise price of $8.82 per share. Each option granted has a ten year term and is subject to certain vesting requirements. The Plan expired on December 31, 2002, except with respect to options then outstanding. |
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RESOLVED, shareholders recommend that our Corporation’s by-laws be amended by adding the following new Section: |
(a) | in the case of performance-based compensation, the Corporation shall first have disclosed to stockholders the specific performance goals and standards adopted for any performance-based compensation plan, including any schedule of earned values under any long-term or annual incentive plan; and |
(b) | in the case of incentive stock options, the Corporation shall record as an expense on its financial statements the fair value of any stock options granted.” |
This proposal would require that our company not pay any executive compensation in excess of the amount the Internal Revenue Code permits to be deducted as an expense for federal income tax purposes, without first securing shareholder approval. | ||
Currently, the Code provides that publicly held corporations generally may not deduct more than $1 million in annual compensation for any of the company’s five highest-paid executives. The Code provides an exception for certain kinds of “performance-based compensation.” | ||
Under this proposal our company would be able to pay “performance-based compensation” in excess of the deductibility limit, so long as the company has disclosed to shareholders the performance goals and standards the Board has adopted under these plans. This proposal also provides an exception for incentive stock options, if the Board has recorded the expense of such options in its financial statements. |
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A proposal similar to this was submitted by Amanda Kahn-Kirby to MONY Group and received a 38% yes-vote as a more challenging binding proposal at the MONY 2003 annual meeting. The 38% yes-vote was more impressive because: | ||
1) This was the first time this proposal was ever voted. | ||
2) The proponent did not even solicit shareholder votes. | ||
I think it’s reasonable to require our company to fully disclose to shareholders both the costs and the terms of its executive compensation plans, if the Board wishes to pay executives more than the amounts that are generally deductible under federal income taxes. | ||
Subject Non-Deductible Executive Compensation to Shareholder Vote | ||
Yes on 6 |
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Shares of Common | Percent of Common | ||||||||
Name and Address | Stock Beneficially | Stock Outstanding | |||||||
of Beneficial Owner | Owned | Beneficially Owned | |||||||
Brandes Investment Partners, Inc. and related parties | |||||||||
11988 El Camino Real, Suite 500 | |||||||||
San Diego, California 92130 | 33,021,221 | (1) | 18.8 | % | |||||
Appaloosa Partners Inc. and related parties | |||||||||
26 Main Street | |||||||||
Chatham, NJ 07928 | 13,098,700 | (2) | 7.5 | % |
(1) | Shared dispositive power in respect of 33,021,221 shares and shared voting power in respect of 26,521,914 shares, as stated in a Schedule 13G filed with the Securities and Exchange Commission on February 14, 2005. | |
(2) | Shared dispositive power in respect of 13,098,700 shares and shared voting power in respect of 13,098,700 shares, as stated in a Schedule 13G filed with the Securities and Exchange Commission on January 24, 2005. |
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Beneficial Ownership at March 4, 2005 (1) | ||||||||||||||||
Shares of | ||||||||||||||||
Shares of | Common Stock | Shares of Common | ||||||||||||||
Common Stock | Held in Savings | Stock Subject to | Deferred Share | |||||||||||||
Name | Owned Directly (2) | Plan (3) | Exercisable Options (4) | Equivalent Units | ||||||||||||
Susan E. Arnold | -0- | -0- | -0- | 11,292 | (14) | |||||||||||
James C. Boland | 3,000 | -0- | -0- | 12,715 | (14) | |||||||||||
John G. Breen | 5,200 | (5)(6) | -0- | -0- | 43,124 | (14) | ||||||||||
Gary D. Forsee | 1,000 | -0- | -0- | 14,982 | (14) | |||||||||||
C. Thomas Harvie | 9,150 | 1,077 | 167,675 | -0- | ||||||||||||
William J. Hudson, Jr. | 5,000 | -0- | -0- | 31,795 | (14) | |||||||||||
Robert J. Keegan | 71,634 | (7) | 435 | 482,500 | -0- | |||||||||||
Richard J. Kramer | 22,453 | (8) | 209 | 70,650 | 455 | (15) | ||||||||||
Steven A. Minter | 1,580 | (6) | -0- | -0- | 23,565 | (14) | ||||||||||
Denise M. Morrison | -0- | (9) | -0- | -0- | -0- | |||||||||||
Rodney O’Neal | -0- | -0- | -0- | 4,700 | (14) | |||||||||||
Shirley D. Peterson | -0- | -0- | -0- | 2,798 | (14) | |||||||||||
Jonathan D. Rich | 1,000 | (10) | 2,864 | 40,550 | 23,405 | (15) | ||||||||||
Michael J. Roney | 200 | (11) | 214 | 111,875 | 697 | (15) | ||||||||||
Thomas H. Weidemeyer | -0- | (12) | -0- | -0- | -0- | |||||||||||
All directors, the Named Officers and all other executive officers as a group (31 persons) | 188,978 | (13) | 20,619 | 1,562,953 | 180,931 |
(1) | The number of shares indicated as beneficially owned by each of the directors and named executive officers, and the 1,772,550 shares of Common Stock indicated as beneficially owned by all directors and officers as a group, and the percentage of Common Stock outstanding beneficially owned by each person and the group, has been determined in accordance with Rule 13d-3(d)(1) promulgated under the Securities Exchange Act of 1934. In each case, beneficial ownership is less than one percent of all outstanding shares of Common Stock. | |
(2) | Unless otherwise indicated in a subsequent note, each person named and each member of the group has sole voting and investment power with respect to the shares of Common Stock shown. | |
(3) | Shares held in trust under Goodyear’s Employee Savings Plan for Salaried Employees. | |
(4) | Shares which may be acquired upon the exercise of options which are exercisable prior to May 3, 2005 under Goodyear’s 2002 Performance Plan (the “2002 Plan”), Goodyear’s 1997 Performance Incentive Plan (the “1997 Plan”) and the 1989 Goodyear Performance and Equity Incentive Plan (the “1989 Plan”). | |
(5) | Includes 5,000 shares jointly owned by Mr. Breen and his spouse. | |
(6) | Includes 200 shares acquired pursuant to Goodyear’s 1994 Restricted Stock Award Plan for Non-employee Directors, which shares are subject to certain restrictions. | |
(7) | Includes 13,000 shares owned by his spouse. | |
(8) | Includes 10,000 shares acquired under the 2002 Plan and a Restricted Stock Purchase Agreement, which shares are subject to the Company’s repurchase option and certain restrictions on transfer. | |
(9) | Subsequent to the record date, Ms. Morrison purchased 1,100 shares of Common Stock. |
(10) | Shares owned jointly by Mr. Rich and his spouse. | |
(11) | Shares owned jointly by Mr. Roney and his spouse. | |
(12) | Subsequent to the record date, Mr. Weidemeyer purchased 1,000 shares of Common Stock. | |
(13) | Includes 161,883 shares owned of record and beneficially or owned beneficially through a nominee, and 27,095 shares held by or jointly with family members of certain directors and executive officers. | |
(14) | Deferred units, each equivalent to a hypothetical share of Common Stock, accrued to accounts of the director under Goodyear’s Outside Directors’ Equity Participation Plan, payable in cash following retirement from the Board of Directors. See “Directors’ Compensation” at page 6. | |
(15) | Units, each equivalent to a hypothetical share of Common Stock, deferred pursuant to performance awards earned under the 2002 Plan, 1997 Plan and the 1989 Plan and receivable in cash, shares of Common Stock, or any combination thereof, at the election of the executive officer. |
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Long Term Compensation | |||||||||||||||||||||||||||||||||
Awards | Payouts | ||||||||||||||||||||||||||||||||
Annual Compensation | |||||||||||||||||||||||||||||||||
Securities | |||||||||||||||||||||||||||||||||
Other | Underlying | Long Term | All | ||||||||||||||||||||||||||||||
Annual | Restricted | Options/ | Incentive | Other | |||||||||||||||||||||||||||||
Compen- | Stock | SARs | Plan | Compen- | |||||||||||||||||||||||||||||
Bonus | sation | Award(s) | (Number | Payouts | sation | ||||||||||||||||||||||||||||
Name and Principal | Salary | (Dollars) | (Dollars) | (Dollars) | of | (Dollars) | (Dollars) | ||||||||||||||||||||||||||
Position | Year | (Dollars) | (1) | (2) | (3) | Shares) | (4) | (5) | |||||||||||||||||||||||||
Robert J. Keegan | 2004 | $ | 1,050,000 | $ | 2,600,000 | — | — | 261,548 | $ | 472,113 | $ | 1,000,000 | |||||||||||||||||||||
Chairman of the Board, | 2003 | 1,000,000 | 509,200 | — | — | 200,000 | — | — | |||||||||||||||||||||||||
Chief Executive Officer | 2002 | 840,000 | — | — | — | 140,000 | — | 5,100 | |||||||||||||||||||||||||
and President(6) | |||||||||||||||||||||||||||||||||
Jonathan D. Rich | 2004 | 420,000 | 680,000 | — | — | 52,000 | 55,080 | 500,000 | |||||||||||||||||||||||||
President, North American | 2003 | 345,000 | 63,476 | — | — | 45,000 | — | — | |||||||||||||||||||||||||
Tire(7) | 2002 | 223,333 | 131,770 | — | — | 25,000 | — | 5,100 | |||||||||||||||||||||||||
C. Thomas Harvie | 2004 | 431,000 | 560,000 | — | — | 49,087 | 157,371 | 200,000 | |||||||||||||||||||||||||
Senior Vice President, | 2003 | 415,000 | 175,000 | — | — | 42,700 | — | — | |||||||||||||||||||||||||
General Counsel and | 2002 | 415,000 | 102,537 | — | — | 32,000 | — | 6,655 | |||||||||||||||||||||||||
Secretary | |||||||||||||||||||||||||||||||||
Richard J. Kramer | 2004 | 378,750 | 587,704 | — | — | 47,861 | 78,686 | 500,000 | |||||||||||||||||||||||||
Executive Vice President and | 2003 | 300,000 | 50,496 | — | — | 41,600 | — | — | |||||||||||||||||||||||||
Chief Financial Officer(8) | 2002 | 289,583 | 251,216 | — | $ | 155,400 | 26,000 | — | 5,782 | ||||||||||||||||||||||||
Michael J. Roney | 2004 | 394,667 | 570,000 | $ | 132,665 | — | 48,000 | 157,371 | 664,152 | ||||||||||||||||||||||||
President | 2003 | 380,000 | 133,000 | 147,754 | — | 37,300 | — | 271,450 | |||||||||||||||||||||||||
European Union Tire | 2002 | 370,000 | 224,000 | 153,251 | — | 28,000 | — | 181,509 |
(1) | Represents amounts awarded under the Performance Recognition Plan. Additional information regarding the amounts awarded to the Named Officers and other executive officers under the Performance Recognition Plan is contained in the Compensation Committee Report On Executive Compensation beginning at page 32. In addition, the amount reported for Mr. Kramer in 2002 includes an award of 15,000 shares of unrestricted stock on August 6, 2002 valued at $233,250. | |
(2) | These amounts represent reimbursements made to Mr. Roney for incremental taxes resulting from his foreign assignment. | |
(3) | Mr. Kramer purchased 10,000 shares of Common Stock for a purchase price of $.01 per share on August 6, 2002. Through August 6, 2005, the shares are subject to transfer and other restrictions and to Goodyear’s option to repurchase under specified circumstances at a price of $.01 per share. The dollar value reported ($155,400) represents the market value of the shares at the date of grant ($15.55 per share on August 6, 2002), less the purchase price. The restrictions and Goodyear’s option in respect of all 10,000 shares of Common Stock will lapse if Mr. Kramer continues to be a Goodyear employee through August 5, 2005. If Mr. Kramer ceases to be an employee prior to that date due to his death or disability, he will be entitled to receive 277 of the shares of Common Stock for each full month of service. Mr. Kramer receives all dividends, if any, paid on the shares of Common Stock. The value of the 10,000 shares of Common Stock (net of the purchase price) was $156,600 at December 31, 2004, based on a closing price on the New York Stock Exchange of $15.67 per share on that date. No other shares of restricted stock were granted, awarded or issued by Goodyear to any Named Officer during 2004, 2003 or 2002. |
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(4) | The payouts for 2004 relate to performance equity units granted on December 3, 2001 and August 6, 2002. Amounts earned were determined by the extent to which the performance goals related to the units were achieved during the three year performance period ended December 31, 2004. Payouts are to be made 50% in cash and 50% in shares of Common Stock. The performance measure for 50% of each unit was based on Goodyear’s average annual return on invested capital and the other 50% was based on Goodyear’s total shareholder return relative to a peer group consisting of the firms included in the S&P Auto Parts & Equipment Index. Payouts ranging from 0% to 150% of the units granted could have been earned. Amounts earned were determined based on Goodyear’s average annual total shareholder return (potential payouts ranged from 30% of the units if the total shareholder return equaled or exceeded the 30th percentile of the peer group to 75% of the units if Goodyear’s total shareholder return during the relevant performance period equaled or exceeded the 75th percentile of the peer group) and its return on the invested capital (with potential payouts ranging from 35% of the units if a 7.6% average annual return were achieved to 75% of the units if a 13.6% average annual return were achieved) during the performance period. As a result of the achievement of the target levels during the performance period, each participant earned 89.64% of the units granted. The value of each unit, $14.63, is based on the average of the high and low sale price of the Common Stock on December 31, 2004. | |
(5) | All Other Compensation for each Named Officer in 2004 consists of the guaranteed payout related to grants to the Named Officers under the Executive Performance Plan (the “EP Plan”). This payout will only be made if the Named Officer remains an employee of Goodyear through December 31, 2006. Additional information on grants made under the EP Plan is contained in the Long Term Incentive Plan Awards Table at page 26. In addition, with respect to Mr. Roney, all other compensation includes payments generally applicable to employees temporarily assigned outside their home countries in an amount aggregating $264,152. This amount includes a foreign housing allowance, tuition for foreign schooling and a foreign service premium payment. | |
(6) | Mr. Keegan became a Goodyear employee on October 1, 2000 and served as President and Chief Operating Officer from October 3, 2000 until he was elected the President and Chief Executive Officer effective January 1, 2003. Mr. Keegan became Chairman of the Board effective June 30, 2003. | |
(7) | Mr. Rich has served as President of North American Tire since December of 2002. He previously served as President of Chemical Products. | |
(8) | Mr. Kramer has served as Executive Vice President and Chief Financial Officer since June of 2004. He previously served as Vice President-Corporate Finance from March 2000 to July 2002, Vice President, Finance-North American Tire from July 2002 to August 2003 and Senior Vice President, Strategic Planning and Restructuring from September 2003 to June 2004. |
Individual Grants | ||||||||||||||||||||||||
Potential Realizable Value | ||||||||||||||||||||||||
Number of Securities | % of Total | at Assumed Annual Rates of | ||||||||||||||||||||||
Underlying | Options/ | Exercise | Stock Price Appreciation for | |||||||||||||||||||||
Options/SARs | SARs | or | Option Term | |||||||||||||||||||||
Granted | Granted to | Base Price | (Dollars)(3) | |||||||||||||||||||||
(Number of | Employees | (Dollars per | Expiration | |||||||||||||||||||||
Name | Shares)(1) | in 2004 | Share)(2) | Date | 5% | 10% | ||||||||||||||||||
Robert J. Keegan | 233,000 | 5.6 | % | $ | 12.54 | 12-9-14 | $ | 1,838,370 | $ | 4,657,670 | ||||||||||||||
28,548 | .7 | 10.91 | 12-3-12 | 507,298 | 807,908 | |||||||||||||||||||
Jonathan D. Rich | 52,000 | 1.3 | 12.54 | 12-9-14 | 410,280 | 1,039,480 | ||||||||||||||||||
C. Thomas Harvie | 43,000 | 1.0 | 12.54 | 12-9-14 | 339,270 | 859,570 | ||||||||||||||||||
6,087 | .2 | 12.27 | 12-3-12 | 121,679 | 193,749 | |||||||||||||||||||
Richard J. Kramer | 45,000 | 1.1 | 12.54 | 12-9-14 | 355,050 | 899,550 | ||||||||||||||||||
2,861 | .1 | 12.21 | 12-3-12 | 56,905 | 90,608 | |||||||||||||||||||
Michael J. Roney | 48,000 | 1.2 | 12.54 | 12-9-14 | 378,720 | 959,520 |
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(1) | On December 9, 2004, stock options in respect of an aggregate of 4,031,135 shares of Common Stock were granted to 867 persons, including the Named Officers. In the case of each Named Officer, incentive stock options were granted on December 9, 2004 in respect of 7,800 shares. All other shares are the subject of non-qualified stock options. Each stock option will vest at the rate of 25% per annum. Each unexercised stock option terminates automatically if the optionee ceases to be an employee of Goodyear or one of its subsidiaries for any reason, except that (a) upon retirement or disability of the optionee more than six months after the grant date, the stock option will become immediately exercisable and remain exercisable until its expiration date, and (b) in the event of the death of the optionee more than six months after the grant thereof, each stock option will become exercisable and remain exercisable for up to three years after the date of death of the optionee. Each option also includes the right to the automatic grant of a new option (a “reinvestment option”) for that number of shares tendered in the exercise of the original stock option. The reinvestment option will be granted on, and will have an exercise price equal to the fair market value of the Common Stock on, the date of the exercise of the original stock option and will be subject to the same terms and conditions as the original stock option except for the exercise price and the reinvestment option feature. The following reinvestment options were granted during 2004: Mr. Keegan, 28,548 shares on August 19, 2004; Mr. Harvie, 6,087 shares on November 18, 2004; and Mr. Kramer, 2,861 shares on November 23, 2004. | |
(2) | The exercise price of each stock option is equal to 100% of the per share fair market value of the Common Stock on the date granted. The option exercise price and/or withholding tax obligations may be paid by delivery of shares of Common Stock valued at the market value on the date of exercise. | |
(3) | The dollar amounts shown reflect calculations at the 5% and 10% rates set by the Securities and Exchange Commission and, therefore, are not intended to forecast possible future appreciation, if any, of the price of the Common Stock. No economic benefit to the optionees is possible without an increase in price of the Common Stock, which will benefit all shareholders commensurately. |
Number of Securities | ||||||||||||||||||||||||
Underlying | ||||||||||||||||||||||||
Unexercised | Value of Unexercised | |||||||||||||||||||||||
Shares | Options/SARs at | In-the-Money Options/SARs | ||||||||||||||||||||||
Acquired | December 31, 2004 | at December 31, 2004 | ||||||||||||||||||||||
on Exercise | Value | (Number of Shares) | (Dollars)(1) | |||||||||||||||||||||
(Number of | Realized | |||||||||||||||||||||||
Name | Shares) | (Dollars) | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
Robert J. Keegan | 35,000 | $ | 103,775 | 482,500 | 504,048 | $ | 627,700 | $ | 2,248,915 | |||||||||||||||
Jonathan D. Rich | -0- | -0- | 40,550 | 101,850 | 172,313 | 459,178 | ||||||||||||||||||
C. Thomas Harvie | 8,000 | 34,600 | 167,675 | 105,112 | 137,559 | 464,624 | ||||||||||||||||||
Richard J. Kramer | 3,750 | 16,013 | 70,650 | 97,061 | 106,840 | 397,729 | ||||||||||||||||||
Michael J. Roney | -0- | -0- | 116,875 | 96,225 | 167,281 | 415,444 |
(1) | Determined using $14.66 per share, the closing price of the Common Stock on December 31, 2004, as reported on the New York Stock Exchange Composite Transactions tape. |
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Performance or | ||||||||||||||||||||
Other Period | Estimated Future Pay-Outs Under | |||||||||||||||||||
Until | Non-Stock Price-Based Plans(2) | |||||||||||||||||||
Number of | Maturation or | |||||||||||||||||||
Name | Units(1) | Pay-Out | Threshold | Target | Maximum | |||||||||||||||
Robert J. Keegan | 40,000 | 1/1/04-12/31/06 | $ | 1,000,000 | $ | 4,000,000 | $ | 8,000,000 | ||||||||||||
44,000 | 1/1/05-12/31/07 | — | 4,400,000 | 8,800,000 | ||||||||||||||||
Jonathan D. Rich | 10,000 | 1/1/04-12/31/06 | 500,000 | 1,000,000 | 2,000,000 | |||||||||||||||
11,000 | 1/1/05-12/31/07 | — | 1,100,000 | 2,200,000 | ||||||||||||||||
C. Thomas Harvie | 8,000 | 1/1/04-12/31/06 | 200,000 | 800,000 | 1,600,000 | |||||||||||||||
8,300 | 1/1/05-12/31/07 | — | 830,000 | 1,660,000 | ||||||||||||||||
Richard J. Kramer | 10,000 | 1/1/04-12/31/06 | 500,000 | 1,000,000 | 2,000,000 | |||||||||||||||
10,700 | 1/1/05-12/31/07 | — | 1,070,000 | 2,140,000 | ||||||||||||||||
Michael J. Roney | 8,000 | 1/1/04-12/31/06 | 400,000 | 800,000 | 1,600,000 | |||||||||||||||
10,000 | 1/1/05-12/31/07 | — | 1,000,000 | 2,000,000 |
(1) | Represents units granted under the Executive Performance Plan. Following the respective performance period, each unit will have a value of between $0 to $200 depending upon the level of achievement of the performance measures. The performance measure for 50% of each unit is based on a cumulative target level of net income over the performance period. The other 50% is based on a cumulative target level of total cash flow over the performance period. | |
(2) | The target amount represents the amount to be paid if the units are paid out at a value of $100 per unit. The maximum amount represents the amount to be paid if the units are paid out of a value of $200 per unit. With respect to the units with a performance period ending December 31, 2007, no award will be paid out if the minimum target levels of net income and cash flow are not achieved. With respect to the units with a performance period ending December 31, 2006, the threshold amount represents the amount guaranteed to be paid if the Named Officer remains in the continuous employ of the Company through the performance period. |
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5 Year Average | Estimated annual benefits upon retirement at July 1, 2005, for years of service indicated. | |||||||||||||||||||||||||
Annual | ||||||||||||||||||||||||||
Remuneration | 10 Years | 15 Years | 20 Years | 25 Years | 30 Years | 35 Years | ||||||||||||||||||||
$ | 250,000 | $ | 50,355 | $ | 68,881 | $ | 87,158 | $ | 99,137 | $ | 111,170 | $ | 118,472 | |||||||||||||
500,000 | 105,355 | 143,881 | 182,158 | 206,637 | 231,170 | 245,972 | ||||||||||||||||||||
750,000 | 160,355 | 218,881 | 277,158 | 314,137 | 351,170 | 373,472 | ||||||||||||||||||||
1,000,000 | 215,355 | 293,881 | 372,158 | 421,637 | 471,170 | 500,972 | ||||||||||||||||||||
1,250,000 | 270,355 | 368,881 | 467,158 | 529,137 | 591,170 | 628,472 | ||||||||||||||||||||
1,500,000 | 325,355 | 443,881 | 562,158 | 636,637 | 711,170 | 755,972 | ||||||||||||||||||||
1,750,000 | 380,355 | 518,881 | 657,158 | 744,137 | 831,170 | 883,472 | ||||||||||||||||||||
2,000,000 | 435,355 | 593,881 | 752,158 | 851,637 | 951,170 | 1,010,972 | ||||||||||||||||||||
2,500,000 | 545,355 | 743,881 | 942,158 | 1,066,637 | 1,191,170 | 1,265,972 | ||||||||||||||||||||
3,000,000 | 655,355 | 893,881 | 1,132,158 | 1,281,637 | 1,431,170 | 1,520,972 | ||||||||||||||||||||
3,500,000 | 765,355 | 1,043,881 | 1,322,158 | 1,496,637 | 1,671,170 | 1,775,972 | ||||||||||||||||||||
4,000,000 | 875,355 | 1,193,881 | 1,512,158 | 1,711,637 | 1,911,170 | 2,030,972 |
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2004 | 2003 | |||||||
Audit Fees and Expenses(1) | $ | 20,041,000 | $ | 11,352,000 | ||||
Audit-Related Fees and Expenses(2) | 1,934,000 | 2,228,000 | ||||||
Tax Fees and Expenses(3) | 1,368,000 | 2,245,000 | ||||||
All Other Fees and Expenses(4) | 1,925,000 | 1,835,000 | ||||||
Total | $ | 25,268,000 | $ | 17,660,000 |
(1) | Audit fees and expenses represents fees and expenses for professional services provided in connection with the audit of our financial statements and review of our quarterly financial statements and audit services provided in connection with other statutory or regulatory filings. For 2004, Audit Fees and Expenses includes fees and expenses for professional services provided in connection with the assessment of our internal controls pursuant to Section 404 of the Sarbanes-Oxley Act of 2002. |
(2) | Audit-related fees and expenses consists primarily of accounting consultations, employee benefit plan audits and services related to business acquisitions and divestitures. |
(3) | Tax fees and expenses consists primarily of expatriate tax services, assistance in the preparation of international tax returns and consultations on various tax matters worldwide. |
(4) | All other fees and expenses principally includes forensic accounting investigative services in 2004 and 2003. |
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James C. Boland, Chairman | ||
John G. Breen | Gary D. Forsee | |
William J. Hudson, Jr. | Shirley D. Peterson |
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James C. Boland | Gary D. Forsee |
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December 31, | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | ||||||||||||||||||
GOODYEAR COMMON STOCK | 100.00 | 86.46 | 93.35 | 27.67 | 31.93 | 59.56 | ||||||||||||||||||
S&P 500 | 100.00 | 90.89 | 80.09 | 62.39 | 80.29 | 89.02 | ||||||||||||||||||
DOW AUTO PARTS | 100.00 | 73.02 | 95.52 | 86.13 | 122.49 | 129.20 |
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By Order of the Board of Directors | |
C. Thomas Harvie, Secretary |
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(1) | A Director will not be independent if, within the preceding three years: (i) the Director was employed by Goodyear; (ii) an immediate family member of the Director was employed by Goodyear as an executive officer; (iii) the Director, or an immediate family member of the Director, received more than $100,000 in direct compensation in any twelve month period from Goodyear, other than director and committee fees and pension or other forms of deferred compensation for prior service; (iv) the Director or an immediate family member of the Director was (but is no longer) a partner or employee of Goodyear’s present or former independent auditor and personally worked on Goodyear’s audit; or (v) a Goodyear executive officer was on the compensation committee of the board of directors of a company that concurrently employed the Goodyear Director or employed an immediate family member of the Director as an officer. Additionally, a Director will not be independent if the Director or an immediate family member is a current partner of Goodyear’s independent auditors, if the Director has an immediate family member who is a current employee of Goodyear’s independent auditors and who participates in the firm’s audit, assurance or tax compliance (but not tax planning) practices, or if the Director is a current employee of Goodyear’s independent auditors. | |
(2) | The following commercial relationships will not be considered to be material relationships that would impair a Director’s independence: if, within the preceding three years, a Goodyear Director was an executive officer or employee, or his or her immediate family member was an executive officer, of another company that made payments to, or received payments from, Goodyear for property or services in an amount which, in any single fiscal year, was less than the greater of $1 million, or two percent of such other company’s consolidated gross revenues. | |
(3) | If, within the preceding three years, a Goodyear Director served as an executive officer of a charitable organization, and Goodyear’s charitable contributions to the organization, in any single fiscal year, were more than the greater of $1 million, or two percent of such organization’s total annual receipts, then such relationship: (i) will be disclosed in the Company’s proxy statement; and (ii) will be evaluated by the Board of Directors in order to determine whether or not the Director should be considered independent. Such determination will be made by the Directors who satisfy the independence guidelines set forth in (1) and (2) above. |
“executive officer” means the company president, any vice-president in charge of a principal business unit, division or function (such as sales, administration or finance) or any other person who performs similar policy-making functions for the company; and | ||
“immediate family member” means any of the person’s spouse, parents, children, siblings, mothers- and fathers-in law, sons- and daughters-in-law, and brothers- and sisters-in-law and anyone who shares the person’s home. |
A-1
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B-1
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C-1
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1. | PURPOSE. |
2. | DEFINITIONS. |
D-1
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D-2
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3. | EFFECTIVE DATE; TERM. |
4. | SHARES OF COMMON STOCK SUBJECT TO PLAN. |
5. | ADMINISTRATION. |
D-3
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6. | STOCK OPTIONS. |
D-4
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7. | STOCK APPRECIATION RIGHTS. |
D-5
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8. | RESTRICTED STOCK GRANTS AND AWARDS. |
D-6
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9. | PERFORMANCE GRANTS AND AWARDS. |
D-7
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10. | OTHER STOCK-BASED GRANTS AND AWARDS. |
11. | DEFERRALS. |
12. | NON-TRANSFERABILITY OF GRANTS AND AWARDS. |
D-8
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13. | CHANGE IN CONTROL. |
D-9
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14. | AMENDMENT AND TERMINATION. |
15. | MISCELLANEOUS. |
D-10
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D-11
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C/O EQUISERVE TRUST COMPANY N.A.
P.O. BOX 8020
EDISON, NJ 08818-8020
VOTE BY INTERNET — www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time April 25, 2005. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
VOTE BY TELEPHONE — 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time April 25, 2005. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to The Goodyear Tire & Rubber Company, c/o ADP, 51 Mercedes Way, Edgewood, NY 11717.
If you vote via the Internet or by phone,
please do not mail your card.
Your vote is important. Please vote immediately.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | GDYR01 | KEEP THIS PORTION FOR YOUR RECORDS | ||
DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
THE GOODYEAR TIRE & RUBBER COMPANY | ||||||||||||
The Board of Directors Recommends a Vote FOR Election of All Nominees and FOR Items 2, 4, 5, AGAINST Item 6 and makes no recommendation on Item 3. | ||||||||||||
Vote on Directors | ||||||||||||
ITEM 1. | Election of Directors | |||||||||||
NOMINEES: | Class I Directors — Each to serve a 3 year term 01) Gary D. Forsee, 02) Denise M. Morrison, 03) Thomas H. Weidemeyer Class III Directors —To serve remaining year of 3 year term 04) John G. Breen, 05) William J. Hudson, Jr. | |||||||||||
Vote on Proposals | For | Against | Abstain | |||||||||
ITEM 2. | Proposal to amend Goodyear’s Code of Regulations to permit Goodyear to notify shareholders of meetings by electronic or other means authorized by the shareholder. | o | o | o | ||||||||
ITEM 3. | Proposal to amend Goodyear’s Code of Regulations to provide for the annual election of Directors. | o | o | o | ||||||||
Please sign name exactly as it appears above. Each joint owner should sign. Please indicate title if you are signing as executor, administrator, trustee, custodian, guardian or corporate officer. | ||||||||||||
YES | NO | |||||||||||
Please indicate if you plan to attend this meeting | o | o | ||||||||||
For All | Withhold All | For All Except | To withhold authority to vote for any individual nominee, mark “For All Except” and write the nominee’s name on the line below. | |||||||||
o | o | o | ||||||||||
For | Against | Abstain | ||||||||||
ITEM 4. | Proposal to approve the adoption of the Goodyear 2005 Performance Plan. | o | o | o | ||||||||
ITEM 5. | Ratification of appointment of PricewaterhouseCoopers LLP as Independent Accountants. | o | o | o | ||||||||
ITEM 6. | Shareholder Proposal — re: Executive Compensation. | o | o | o | ||||||||
The undersigned hereby acknowledges receipt of Notice of 2005 Annual Meeting of Shareholders and Proxy Statement. |
Signature (Joint Owners) Date |
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Annual Meeting Of Shareholders
The Goodyear Tire & Rubber Company
April 26, 2005
9:00 A.M.
Office Of The Company
Goodyear Theater
1201 East Market Street
Akron, Ohio
PLEASE VOTE — YOUR VOTE IS IMPORTANT
THE GOODYEAR TIRE & RUBBER COMPANY
PROXY FOR 2005 ANNUAL MEETING OF SHAREHOLDERS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, a holder (or designated proxy) of shares of the Common Stock of The Goodyear Tire & Rubber Company, hereby appoints JAMES C. BOLAND, ROBERT J. KEEGAN and STEVEN A. MINTER and each or any of them, the proxies or proxy of the undersigned, with full power of substitution, to represent the undersigned, and to vote all of the shares of Common Stock that the undersigned is entitled to vote, at the Annual Meeting of Shareholders of the Company to be held at its offices in Akron, Ohio, on Tuesday, April 26, 2005, at 9:00 A.M., Akron time, and at any and all adjournments thereof; with the power to vote said shares for the election of five Directors of the Company (with discretionary authority to cumulate votes), upon the other matters listed on the reverse side hereof and upon all other matters as may properly come before the meeting or any adjournment thereof. This Proxy is given and is to be construed according to the laws of the State of Ohio.
If you sign and return this card without marking, this proxy card will be treated as being FOR the election of Directors (with discretionary authority to cumulate votes), FOR Items 2, 4 and 5, AGAINST the proposal listed as Item 6 and no vote will be cast on Item 3.
If you plan to attend the 2005 ANNUAL MEETING, please mark the box indicated on the reverse side.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE MARK, DATE AND SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
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C/O EQUISERVE TRUST COMPANY N.A.
P.O. BOX 8020
EDISON, NJ 08818-8020
VOTE BY INTERNET — www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time April 25, 2005. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
VOTE BY TELEPHONE — 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time April 25, 2005. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to The Goodyear Tire & Rubber Company, c/o ADP, 51 Mercedes Way, Edgewood, NY 11717.
If you vote via the Internet or by phone,
please do not mail your card.
Your vote is important. Please vote immediately.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | GDYR03 | KEEP THIS PORTION FOR YOUR RECORDS | ||
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | DETACH AND RETURN THIS PORTION ONLY |
THE GOODYEAR TIRE & RUBBER COMPANY | ||||||||||||
The Board of Directors Recommends a Vote FOR Election of All Nominees and FOR Items 2, 4, 5, AGAINST Item 6 and makes no recommendation on Item 3. | ||||||||||||
Vote on Directors | ||||||||||||
ITEM 1. | Election of Directors | |||||||||||
NOMINEES: | Class I Directors — Each to serve a 3 year term 01) Gary D. Forsee, 02) Denise M. Morrison, 03) Thomas H. Weidemeyer Class III Directors —To serve remaining year of 3 year term 04) John G. Breen, 05) William J. Hudson, Jr. | |||||||||||
Vote on Proposals | For | Against | Abstain | |||||||||
ITEM 2. | Proposal to amend Goodyear’s Code of Regulations to permit Goodyear to notify shareholders of meetings by electronic or other means authorized by the shareholder. | o | o | o | ||||||||
ITEM 3. | Proposal to amend Goodyear’s Code of Regulations to provide for the annual election of Directors. | o | o | o | ||||||||
For All | Withhold All | For All Except | To withhold authority to vote for any individual nominee, mark “For All Except” and write the nominee’s name on the line below. | |||||||||
o | o | o | ||||||||||
For | Against | Abstain | ||||||||||
ITEM 4. | Proposal to approve the adoption of the Goodyear 2005 Performance Plan. | o | o | o | ||||||||
ITEM 5. | Ratification of appointment of PricewaterhouseCoopers LLP as Independent Accountants. | o | o | o | ||||||||
ITEM 6. | Shareholder Proposal — re: Executive Compensation. | o | o | o | ||||||||
Authorization: I acknowledge receipt of the Notice of 2005 Annual Meeting and Proxy Statement. I hereby instruct the trustee to vote by proxy, in the form solicited by the Board of Directors, the number of full shares in this Plan account(s) as specified above, or, if not specified above, as recommended by the Board of Directors.
YES | NO | |||||||||
Please indicate if you plan to attend this meeting | o | o | ||||||||
Signature (Joint Owners) Date |
Table of Contents
Annual Meeting Of Shareholders
The Goodyear Tire & Rubber Company
April 26, 2005
9:00 A.M.
Office Of The Company
Goodyear Theater
1201 East Market Street
Akron, Ohio
PLEASE VOTE — YOUR VOTE IS IMPORTANT
CONFIDENTIAL VOTING INSTRUCTIONS 2005 ANNUAL MEETING OF SHAREHOLDERS
THE GOODYEAR TIRE & RUBBER COMPANY EMPLOYEE SAVINGS AND OTHER PLANS
Solicited on Behalf of the Board of Directors
April 26, 2005
The proxy soliciting materials furnished by the Board of Directors of The Goodyear Tire & Rubber Company in connection with the Annual Meeting of Shareholders to be held on Tuesday, April 26, 2005, are delivered herewith.
Under each employee savings or similar plan in which you participate, you have the right to give written instructions to the trustee for such plan to vote as you specify the number of full shares of Common Stock of The Goodyear Tire & Rubber Company representing your proportionate interest in each such plan on March 4, 2005.
As a participant in and a named fiduciary (i.e. the responsible party identified in the voting section of each Plan Document) under an employee savings plan or other similar plan, you have the right to direct The Northern Trust Company, as trustee, how to vote the shares of Common Stock of The Goodyear Tire & Rubber Company allocated to this account under such plan as well as a portion of any shares for which no timely voting instructions are received from other participants. Each savings plan provides that the trustee will vote the shares for which voting instructions have not been received in the same proportion as it votes the shares for which it has received such instructions unless to do so would be inconsistent with the trustee’s duties. If you wish to have the shares allocated to this account under the plan as well as a portion of any shares for which no timely voting instructions are received from other participants voted by the trustee in accordance with your instructions, please sign the authorization on the reverse side of this card and return it in the enclosed envelope or give your instructions by telephone or via the Internet.
I hereby instruct the trustee to vote (or cause to be voted) all shares of Common Stock of The Goodyear Tire & Rubber Company credited to this account under each plan at March 4, 2005 at the Annual Meeting of Shareholders to be held on April 26, 2005 and at any adjournment thereof as indicated on the reverse side hereof and upon all other matters as may properly come before the meeting or any adjournment thereof.
Unless otherwise specified on the reverse side, if you give your instructions by signing and returning this card, or by telephone or via the Internet, the Trustee will vote FOR the election of Directors (with discretionary authority to cumulate votes), FOR Items 2, 4 and 5, AGAINST the proposal listed as Item 6 and no vote will be cast on Item 3.
If you plan to attend the 2005 ANNUAL MEETING, please mark the box indicated on the reverse side.
THIS CONFIDENTIAL VOTING INSTRUCTIONS CARD IS CONTINUED ON THE REVERSE SIDE.
PLEASE MARK, DATE AND SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.