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Caterpillar Issues Proxy Statement and Highlights Record-Breaking 2008


PEORIA, Ill. - Caterpillar Inc. (NYSE: CAT) today filed its proxy statement and annual meeting notification with the United States Securities and Exchange Commission (SEC). The proxy statement provides details on Caterpillar’s 2008 executive compensation and highlights the company’s long-held philosophy of pay for performance and pay at risk. The document also includes other information related to the company’s business and financial performance in 2008.

Caterpillar’s 2008 sales and revenues were $51.324 billion, a 14 percent increase over 2007, the sixth straight year for record sales and revenues. Profit per share of $5.66 was also a record, up 5 percent from 2007. Caterpillar set many other records in 2008, enhancing the company’s global strength and positioning the company for future success:

* Capital expenditures of $2.4 billion in 2008 increased 44 percent compared to 2007.

* Caterpillar invested $1.7 billion for research and development in 2008, up 23 percent.

* Total wages and benefits provided by Caterpillar to employees were $9.1 billion, up 9 percent compared to 2007.

* The Caterpillar Foundation provided a record $39 million in grants in 2008, up 7 percent.

* Health care expenditures for employees and retirees by the company totaled more than $600 million.

* Incentive pay for employees totaled $670 million, up 13.6 percent. Caterpillar’s incentive pay program covers thousands of employees, and the payments are based on aggressive goals established at the start of each year.

The proxy statement includes detailed 2008 compensation information for Caterpillar’s senior leaders, including cash and equity-based compensation. It’s notable that the equity portion of the compensation is primarily comprised of stock appreciation rights (SARs) granted in March 2008 with a grant price of $73.20 per share. These SARs will only have value if the shares are above this price during the term of the grant. This follows Caterpillar’s long-held philosophy of pay for performance and pay at risk, which clearly aligns executive compensation with stockholders’ interests.

For 2009, Caterpillar has already announced that it expects significant reductions in total compensation for its senior leadership group. These reflect planned reductions in the company’s incentive compensation program and equity-based compensation—directly tied to share price— again designed to align the interests of our senior managers and executives with the interests of Caterpillar’s stockholders.


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