SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE

SECURITIES EXCHANGE ACT OF 1934

(AMENDMENT NO.   )

Filed by the Registrant  ☒                            Filed by a Party other than the Registrant  ☐

Check the appropriate box:

March 11, 202016, 2021

Dear Stockholder:

You are cordially invited to attend the Annual Meeting of Stockholders of PACCAR Inc, which will be held at the MeydenbauerPACCAR Parts Distribution Center, located at 11100 N.E. 6^th Street, Bellevue,405 Houser Way North, Renton, Washington, at 10:30 a.m. on Tuesday, April 21, 2020.27, 2021. PACCAR may have its annual meeting virtually, similar to 2020, if required by state health mandates regarding COVID-19 restrictions.

The principal business of the Annual Meeting is stated on the attached Notice of Annual Meeting of Stockholders. We will also provide an update on the Company’s activities. The Board of Directors recommends a voteFORItemsItem 1 2 and 3; and a voteAGAINST Item 4.2.

YourVOTE is important. Whether or not you plan to attend the Annual Meeting, please vote your proxy either by mail, telephone or the internet.

Sincerely,

Mark C. Pigott

Executive Chairman of the Board

The Annual Meeting of Stockholders of PACCAR Inc will be held at 10:30 a.m. on Tuesday, April 21, 2020,27, 2021, at the MeydenbauerPACCAR Parts Distribution Center, located at 11100 N.E. 6^th Street, Bellevue,405 Houser Way North, Renton, Washington, or, if required by state health mandates regarding COVID-19 restrictions, in a virtual-only format, for these purposes:

Stockholders entitled to vote at this meeting are those of record as of the close of business on February 25, 2020.March 2, 2021.

IMPORTANT: The vote of each stockholder is important regardless of the number of shares held. Whether or not you plan to attend the meeting, please complete and return your proxy form.

Directions to the MeydenbauerPACCAR Parts Distribution Center can be found on the back cover of the attached proxy statement. If the meeting is held virtually, you can register for the meeting at register.proxypush.com/pcar.

By order of the Board of Directors

I. E. Song

Secretary

Bellevue, Washington

March 11, 202016, 2021

TABLE OF CONTENTS

PROXY STATEMENT

The Board of Directors of PACCAR Inc issues this proxy statement to solicit proxies for use at the Annual Meeting of Stockholders at 10:30 a.m., local time, on Tuesday, April 21, 2020,27, 2021, at the MeydenbauerPACCAR Parts Distribution Center in Bellevue,Renton, Washington. This proxy statement includes information about the business matters that will be voted upon at the meeting. The executive offices of the Company are located at 777 106^th Avenue N.E., Bellevue, Washington 98004. This proxy statement and proxy form were sent to stockholders on or about March 11, 2020.16,  2021.

GENERAL INFORMATION

Voting Rights

Stockholders eligible to vote at the meeting are those identified as owners at the close of business on the record date, February 25, 2020.March 2, 2021. Each outstanding share of common stock is entitled to one vote on each of the items presented at the meeting. At the close of business on February 25, 2020,March 2, 2021, the Company had 346,392,101347,134,971 shares of common stock outstanding and entitled to vote.

Stockholders may vote in person at the meeting or by proxy. Execution of a proxy does not affect the right of a stockholder to attend the meeting.The Board recommends that stockholders exercise their right to vote by promptly completing and returning the proxy form either by mail, telephone or the internet.

Voting by Proxy

Mark C. Pigott and Mark A. Schulz are designated proxy holders to vote shares on behalf of stockholders at the 20202021 Annual Meeting. The proxy holders are authorized to:

The Trustee for the PACCAR Inc Savings Investment Plan (the “SIP”) votes shares held in the SIP according to each member’s instructions on the proxy form. If no voting instructions are received, the Trustee will vote the shares in direct proportion to the shares for which it has received timely voting instructions, as provided in the SIP.

Proxy Voting Procedures

The proxy form allows registered stockholders to vote in one of three ways:

Mail.    Stockholders may complete, sign, date and return the proxy form in thepre-addressed, postage-paid envelope provided.

TelephoneTelephone..    Stockholders may call the toll-free number listed on the proxy form and follow the voting instructions given.

InternetInternet..    Stockholders may access the internet address listed on the proxy form and follow the voting instructions given.

Telephone and internet voting procedures authenticate each stockholder by using a control number. The voting procedures will confirm that your instructions have been properly recorded. Stockholders who vote by telephone or internet should not return the proxy form.

Stockholders who hold shares through a broker or agent should follow the voting instructions received from that broker or agent.

Revoking Proxy Voting Instructions.A proxy may be revoked by a later-dated proxy or by written notice to the Secretary of the Company at any time before it is voted. Stockholders who hold shares through a broker should contact the broker or other agent if they wish to change their vote after executing the proxy.

Online Availability of Annual Meeting Materials

Important Notice Regarding the Availability of Proxy Materials for the Annual Stockholder Meeting to be held at 10:30 a.m. on April 21, 2020,27, 2021, at the MeydenbauerPACCAR Parts Distribution Center in Bellevue, Washington.Renton, Washington, or virtually, if required. The 20202021 proxy statement and the 20192020 Annual Report to stockholders are available on the Company’s website atwww.paccar.com/2020annualmeeting2021annualmeeting.

Stockholders who hold shares in a bank or brokerage account who previously elected to receive the annual meeting materials electronically and now wish to change their election and receive paper copies may contact their bank or broker to change their election.

Stockholders who receive annual meeting materials electronically will receive a notice when the proxy materials become available with instructions on how to access them over the internet.

Multiple Stockholders Sharing the Same Address

Registered stockholders at a shared address who would like to discontinue receipt of multiple copies of the annual report and proxy statement in the future should write to EQ Shareowner Services, Attn: Householding, P.O. Box 64854, St. Paul, Minnesota 55164-0854. Street name stockholders at a shared address who would like to discontinue receipt of multiple copies of the annual report and proxy statement in the future should contact their bank or broker.

Some street name stockholders elected to receive one copy of the 20192020 Annual Report and 20202021 Proxy Statement at a shared address prior to the 20202021 Annual Meeting. If those stockholders now wish to change that election, they may do so by contacting their bank, broker or PACCAR at 425.468.7495 or P.O. Box 1518, Bellevue, Washington 98009.

Vote Required and Method of Counting Votes

The presence at the Annual Meeting, in person or by duly authorized proxy, of a majority of all the stock issued and outstanding and having voting power shall constitute a quorum for the transaction of business. Abstentions are counted as shares present at the meeting.

Item 1: Election of Directors

In an uncontested director election, each director nominee shall be elected by the affirmative vote of the majority of the votes cast with respect to that director’s election at any meeting for the election of directors at which a quorum is present. A majority of votes cast means that the number of shares voted “for” a director’s election exceeds 50 percent of the number of votes cast with respect to that director’s election. Votes cast include votes “against” but exclude “abstentions” and “broker nonvotes” with respect to that director’s election. Pursuant to the Company’s Bylaws, an incumbent director that is not elected by a majority vote will tender his or her

resignation subject to acceptance by the Board. The Company’s Certificate of Incorporation does not provide for cumulative voting. Proxies signed, dated and returned unmarked will be votedFOR all of the nominees.Please note that brokers and custodians may not vote on the election of directors in the absence of specific client instruction. Those who hold shares in such accounts are encouraged to provide voting instructions to the broker or custodian.

If any nominee is unable to act as director because of an unexpected occurrence, the proxy holders may vote the proxies for another person or the Board of Directors may reduce the number of directors to be elected.

Item 2: Stockholder Proposal

Proxies signed, dated and returned unmarked will be votedFORAGAINST Item 2.

To be approved, Item 2 must receive the affirmative vote of a majority of shares present in person or by proxy and entitled to vote at the Annual Meeting. Abstentions will have the effect of a vote against the item.

Item 3:

Proxies signed, dated and returned unmarked will be votedFOR Item 3.

To be approved, Item 3 must receive the affirmative vote oftwo-thirds of the shares outstanding. Abstentions will have the effect of a vote against the item.

Item 4:

Proxies signed, dated and returned unmarked will be votedAGAINST Item 4.

To be approved, Item 4 must receive the affirmative vote of a majority of shares present in person or by proxy and entitled to vote at the Annual Meeting. Abstentions will have the effect of a vote against the item.

STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following persons are known to the Company to be the beneficial owner of five percent or more of the Company’s common stock as of December 31, 20192020 (amounts shown are rounded to whole shares):

STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

The following list includes all shares of the Company’s common stock beneficially owned by each Company director and Named Executive Officer, and by Company directors and executive officers as a group as of February 25, 2020March 2, 2021 (amounts shown are rounded to whole share amounts).

*Does not exceed one percent.

EXPENSES FOR SOLICITATION

Expenses for solicitation of proxies will be paid by the Company. In addition to the mailing of these proxy materials, solicitation may be made by directors, officers and employees of the Company through electronic, telephone or personal solicitation, which will be made without additional compensation. The Company has retained D. F. King & Co., Inc. to aid in the solicitation of stockholders for a fee of approximately $9,500 plus reimbursement of expenses. The Company will request banks and brokers to solicit proxies from their customers and will reimburse those banks and brokers reasonableout-of-pocket costs for this solicitation.

Eleven directors are to be elected at the meeting. The persons named below have been designated by the Board as nominees for election as directors for a term expiring at the Annual Meeting of Stockholders in 2021. All2022. Ten of the nominees are currently serving as directors of the Company.Company and Ganesh Ramaswamy is a new nominee. Chuck Williamson will retire from the Board effective April 26, 2021. The Company is grateful to Chuck for his fifteen years of outstanding leadership on the Board. He was the lead director for six years and chaired several Board committees.

BOARD NOMINEES FOR DIRECTORS

(TERMS EXPIRE AT THE 20212022 ANNUAL MEETING)

MARK C. PIGOTT, age 66,67, is Executive Chairman of the Company and has held that position since April 2014. Mr. Pigott was Chairman and Chief Executive Officer of the Company from January 1997-April 2014, Vice Chairman from January 1995-December 1996, Executive Vice President from December 1993-January 1995, Senior Vice President from January 1990-December 1993, and Vice President from October 1988-December 1989. He has served as a director of Franklin Resources Inc., an investment management company, since 2011.from 2011-2021. He is the brother of John M. Pigott, a director of the Company. He has served as a director of the Company since 1994. Mr. Pigott has the attributes and qualifications listed in the Company guidelines for board membership including engineering and business degrees from Stanford University, thorough knowledge of the global commercial vehicle industry and an outstanding record of profitable growth generated through 4142 years with the Company. PACCAR has benefited from an excellent record of industry-leading stockholder returns generated under his leadership.

DAME ALISON J. CARNWATH, age 67,68, has been a senior adviser to Evercore Partners, an independent corporate finance advisory firm (formerly known as Lexicon Partners) since 2005, and chair of the advisory board at Living Bridge Equity Partners, LLP, a private equity firm (formerly known as ISIS Equity Partners, LLP) since 1999, both based in the United Kingdom. She has served as a director of BP p.l.c. since 2018 and as a director of Coller Capital Ltd. since 2015, both based in thea United Kingdom.Kingdom-based company. She has been a member of the supervisory board and chair of the audit committee of BASF, a leading chemical company based in Germany, since 2014, and she has served as a director of Zurich Insurance Group since 2012. She previously served as chair of Land Securities plc, the United Kingdom’s largest property company listed on the London Stock Exchange (2008-2018); asnon-executive chair of MF Global Holdings Ltd. (2008-2010); and as anon-executive director of BP p.l.c. (2018-January 2021) and the Man Group plc (2001-2013), aboth based in the United Kingdom based company.Kingdom. She has served as a director of the Company since 2005. Dame Alison has the attributes and qualifications listed in the Company guidelines for board membership including certification as a chartered accountant, service as chair (1999-2004) and chief executive (2001) of the Vitec Group plc, a British supplier to the broadcast industry, and 3233 years’ experience in international finance and investment banking including three years as a managing director of Donaldson, Lufkin and Jenrette (1997-2000).

FRANKLIN L. FEDER, age 68,69, served as chief executive officer, Alcoa Latin America & Caribbean of Alcoa Inc., a global producer of bauxite, alumina and aluminum, from 2004-2014. He previously served as vice president and director of corporate development of Alcoa Inc. from 1999-2004, chief financial officer of Alcoa Latin America from 1994-1999 and director corporate planning from 1990-1994. He was also managing partner of Technomic Consultores from 1978-1988, and a partner at Booz, Allen & Hamilton from 1989-1990. He has

RODERICK C. MCGEARY, age 69,70, served in consulting and audit roles with KPMG LLP from 1972-2000 culminating in the position asco-vice chairman of consulting (1997-1999). He has served as a director of Raymond James Financial, Inc. since September 2015. He was chairman of BearingPoint Inc., formerly KPMG Consulting, LLC, a management and technology consulting firm, from 2004-2009 and was its interim chief executive officer from 2004-2005. He has served as a director of Cisco Systems since 2003. He has served as a director of the Company since 2012. Mr. McGeary has the attributes and qualifications listed in the Company guidelines for board membership including a B.S. degree in accounting from Lehigh University, strong experience as a certified public accountant and extensive experience in management and technology consulting.

GREGORY M. E. SPIERKEL, age 63,64, served as chief executive officer of Ingram Micro Inc., a worldwide distributor of technology products, from 2005-2012. He previously served as president from March 2004-April 2005. During his14-year tenure with that company he held other senior positions including executive vice president. He has served as a director of MGM Resorts International since 2013 and as a director of Schneider Electric (Paris) since 2014. He has served as a director of the Company since 2008. Mr. Spierkel has the attributes and qualifications listed in the Company guidelines for board membership including an M.B.A. from Georgetown University and 32 years of management experience around the world including seven years as chief executive of Ingram Micro.

CHARLES R. WILLIAMSON, age 71, served as chairman of the board of Weyerhaeuser Company, a forest products company (2009-2016), and of Talisman Energy Inc., a Canadian oil and gas company (2009-2015). He continues to serve on the board of Weyerhaeuser Company as lead independent director and has been a director of Greyrock Energy Inc since 2009. He served as chairman and chief executive officer of Unocal, the California-based energy company, from 2001 until Unocal merged with Chevron in 2005. Mr. Williamson was the chairman of theUS-ASEAN Business Council (2002-2005). He has served as a director of the Company since 2006 and served as the Company lead director from 2014-2020. Mr. Williamson has the attributes and qualifications listed in the Company guidelines for board membership including a Ph.D. in geology from the University of Texas at Austin and a28-year career in technical and management positions with Unocal around the world that provided a broad perspective on international markets in Europe and Asia and culminated in four years as its chairman and chief executive officer.

THE BOARD RECOMMENDS A VOTEFOR EACH OF THE NOMINEES.

BOARD GOVERNANCE

The Board of Directors has determined that the following persons served as independent directors in 20192020 as defined by NASDAQNasdaq Rule 5605(a)(2): Dame Alison J. Carnwath, Franklin L. Feder, Beth E. Ford, Kirk S. Hachigian, Roderick C. McGeary, Mark A. Schulz, Gregory M. E. Spierkel and Charles R. Williamson.

Stockholders may contact the Board of Directors by writing to: The Board of Directors, PACCAR Inc, 11^th Floor, P.O. Box 1518, Bellevue, WA 98009, or bye-mailingPACCAR.Board@paccar.com. The Corporate Secretary will receive, process and acknowledge receipt of all written stockholder communications. Suggestions or concerns involving accounting, internal controls or auditing matters will be directed to the Audit Committee chairman. Concerns regarding other matters will be directed to the individual director or committee named in the correspondence. If no identification is made, the matter will be directed to the Executive Committee of the Board.

The Board of Directors met sixfive times during 2019.2020. Each member attended at least 75 percent of the combined total of meetings of the Board of Directors and the committees of the Board on which each served. All Company directors are expected to attend each annual stockholder meeting. All directors attended the annual stockholder meeting in April 2019.2020.

The Board has four standing committees. The members of each committee in 2020 are listed below with the chair of each committee listed first:

The Committee has authority to employ a compensation consultant to assist in the evaluation of the compensation of the Company’s CEO and other executive officers. ItIn 2020, the Committee retained Mercer, a wholly owned subsidiary of Marsh and McLennan Companies, to provide a market analysis of the compensation of the executive officers. Mercer analyzed data from the Peer Companies (defined in the Compensation Discussion and Analysis section below) and industry surveys and reported its results to the Committee. Mercer was paid $84,650 for this project. Mercer and its affiliates were also retained by the Company to provide insurance brokerage and human resources consulting services, and were paid $228,972 in the aggregate for these additional services. The Committee did not employ a compensation consultantreview or approve the other services provided by Mercer and its affiliates for the Company, as those services were approved by management in 2019.the normal course of business. The Committee conducted an independence assessment and no conflict of interest was identified.

The Compensation Committee charter describes the Committee’s responsibilities. It is posted atwww.paccar.com/about-us/board-of-directors/compensation-committee-charter/compensation-committee-charter. All four members of the Compensation Committee meet the director independence requirements of the SEC and NASDAQNasdaq rules the “outside director” requirements of Section 162(m) of the Internal Revenue Code, and the “nonemployee director” requirements of Rule16b-3 of the Securities Exchange Act of 1934. The Committee met five times in 2019.2020.

Nominating and Governance Committee

The Nominating and Governance Committee is responsible for evaluating director candidates and selecting nominees for approval by the independent members of the Board of Directors. It also makes recommendations to the Board on corporate governance matters including director compensation.

The Committee has established written criteria for the selection of new directors, which are available atwww.paccar.com/about-us/board-of-directors/guidelines-for-board-membership/guidelines-for-board-membership . The criteria state that a diversity of perspectives, skills and business experience relevant to the Company’s global operations should be represented on the Board. The Committee recognizes the importance of having a diversity of gender, heritage and backgrounds to ensure that a variety of opinions and perspectives are represented on the Board. Initial lists of director candidates will include qualified femaleracially/ethnically and racially/ethnicallygender diverse candidates. To be a qualified director candidate, a person must have achieved significant success in business, education or public service, must not have a conflict of interest and must be committed to representing the long-term interests of the stockholders. In addition, the candidate must have the following attributes:

The Nominating and Governance Committee charter describes the Committee’s responsibilities. It is posted atwww.paccar.com/about-us/board-of-directors/nominating-and-governance-committee/nominating-and-governance-committee . Each of the four Committee members meets the independence requirements of the NASDAQNasdaq rules. The Committee met four times in 2019.2020.

Executive Committee

The Executive Committee acts on routine Board matters when the Board is not in session. The Committee took action one timetwo times in 2019.2020.

Board Composition and Diversity

PACCAR’s Board of Directors is committed to a broad range of experience and expertise that will build on the Company’s 115-year record of success. The composition of the Board reflects different genders, ethnicities, and geographic and cultural backgrounds that enhance the Board’s understanding of our employees, customers, dealers and other stakeholders.

COMPENSATION OF DIRECTORS

The following table provides information on compensation fornon-employee directors who served during the fiscal year ending December 31, 2019:2020:

Summary Compensation

Non-Employee Director Compensation Program

In addition to the cash compensation described in footnote (a) above, on the first business day of the year, eachnon-employee director received $150,000 in restricted stock or restricted stock units under the RSDC Plan. The number of shares or units received is determined by dividing $150,000 by the closing price of a share of Company stock on the first business day of the year and rounding up to the nearest whole share.Non-employee directors newly elected during the calendar year receive a prorated award to reflect the number of calendar quarters the director will serve in the year of election. Restricted shares vest three years after the date of grant or upon retirement, death or disability. Directors receive dividends and voting rights on all shares during the vesting period. Ifnon-employee directors elect to receive a credit to the stock unit account in lieu of a grant of restricted stock, the account is credited with the number of shares otherwise applicable to the grant of restricted stock and subject to the same vesting conditions as discussed below.

Non-employee directors may elect to defer all or a part of their cash retainer and fees to an income account or to a stock unit account under the RSDC Plan. The income account accrues interest at a rate equal to the simple combined average of the monthly Aa Industrial Bond yield averages for the immediately preceding quarter and is compounded quarterly. Stock unit accounts are credited with the number of shares of Company common stock that could have been purchased at the closing price on the date the cash compensation is payable. Thereafter, dividends earned are treated as if they were reinvested at the closing price of Company stock on the date the dividend is payable. Those electing stock units have no voting rights in the stock. The balances in a director’s deferred accounts are paid out at or after retirement or termination in accordance with the director’s deferred account election. The balance in the stock unit account is distributed in shares of the Company’s common stock. The aggregate number of deferred stock units accumulated in the deferral account of participatingnon-employee directors is reflected in footnote (b) to the Stock Ownership Table on page 4.

The Company provides transportation or reimbursesnon-employee directors for travel andout-of-pocket expenses incurred in connection with their services. It also pays or reimburses directors for expenses incurred to participate in continuing education programs related to their service as a PACCAR director.

Stock Ownership Guidelines forNon-Employee Directors

Allnon-employee directors are expected to hold at least five times their annual cash retainer in Company stock and/or deferred stock units while serving as a director. Directors have five years from date of appointment to attain this ownership threshold. Allnon-employee directors with five or more years of service have the required stockholding as of January 1, 2020.2021.

POLICIES AND PROCEDURES FOR TRANSACTIONS WITH RELATED PERSONS

Under its Charter, the Audit Committee of the Board of Directors is responsible for reviewing and approving related-person transactions as set forth in Item 404 of the Securities and Exchange CommissionRegulation S-K. The Committee will consider whether such transactions are in the best interests of the Company and its stockholders. The Company has written procedures designed to bring such transactions to the attention of management. Management is responsible for presenting related-person transactions to the Audit Committee for review and approval.

DELINQUENT SECTION 16(a) REPORTS

The Company believes that all of its directors and executive officers complied with all reporting requirements of Section 16(a) of the Securities and Exchange Act on a timely basis during 2019, based on written

COMPENSATION OF EXECUTIVE OFFICERS

COMPENSATION DISCUSSION AND ANALYSIS (“CD&A”)

Executive Summary of Company Performance and Compensation Practices

In 2019,2020, the Company reported record net sales and revenues of $25.60$18.73 billion and record net income of $2.39$1.30 billion. The Company has achieved 8182 consecutive years of net income, paid annual dividends every year since 1941 and delivered aan average annual total shareholder return to stockholders over the past 20 years of 4515.2 percent compared toversus 7.5 percent for the S&P 500 Index total return of 31 percent in 2019.Index.

20192020 Financial Results and Business Highlights:

Key Compensation and Governance Practices

The Company emphasizes pay for performance and equity-based incentive programs designed to compensate executives for generating outstanding performance for stockholders.

Compensation Program Objectives and Structure

PACCAR’s compensation programs are directed by the Compensation Committee of the Board of Directors (the “Committee”), composed exclusively of independent directors. The programs are designed to attract and retain high-quality executives, link incentives to the Company’s performance and align the interests of management with those of stockholders. These programs offer compensation that is competitive with companies that operate in the same industries globally. PACCAR’s goal is to achieve superior performance measured against its industry peers. The Company has delivered 8182 consecutive years of net income, paid annual dividends every year since 1941 and delivered excellent stockholder returns. The Company delivered aan average annual total shareholder return to stockholders over the past 20 years of 4515.2 percent compared toversus 7.5 percent for the S&P 500 Index total return of 31 percent in 2019.Index. The compensation framework has these components:

Short-term performance compensation:

Long-term performance compensation:

The Committee believes that this combination of salary, cash incentives and equity-based compensation provides appropriate incentives for executives to deliver superior short- and long-term business performance and stockholder returns.

The Named Executive Officers and all U.S. salaried employees participate in the Company’s retirement programs. The Named Executive Officers also participate in the Company’s unfunded Supplemental Retirement Plan described on page 29, which provides a retirement benefit to those employees affected by the maximum benefit limitations permitted for qualified plans by the Internal Revenue Code and other qualified plan benefit limitations.

The Company does not provide any other significant perquisites or executive benefits to its Named Executive Officers.

Stockholder Approval for the Company’s Executive Compensation Programs

In 2017,2020, stockholders voted on an advisory basis to approve the compensation of the Named Executive Officers (known as a “say on pay” vote), with 9596 percent of the shares voting to approve the Company’s compensation practices. The Committee believes the stockholder vote affirms the Company’s conservative approach to executive compensation. In 2017, an advisory vote was taken on the frequency of review of our executive compensation program. A majority of the shares that voted on this proposal approved a three-year period for review of the executive compensation program. A “say on pay” vote will be held this year and is described on page 33.

Executive Compensation Criteria

The Committee considers a number of important factors when reviewing and determining executive compensation, including job responsibilities, Company performance, business unit performance, individual performance and compensation for executives among peer organizations. The Committee also considers the opinion of the Chief Executive Officer when determining compensation for the executives that report to him.

Industry Compensation Comparison Groups.    The Committee periodically utilizes information from published compensation surveys as well as compensation data from Peer Companies to determine if compensation for the Chief Executive Officer and other executive officers is competitive with the market. The Committee believes that comparative compensation information should be used in its deliberations. It does not specify a “target” compensation level for any given executive but rather a range of target compensation. The Committee has discretion to determine the nature and extent to which it will use comparative compensation data.

Role of Compensation Consultants.    The Committee periodically retains a compensation consultant to assess the competitiveness of the Company’s compensation programs. In 2018,2020, the Committee retained Mercer, a wholly owned subsidiary of Marsh and McLennan Companies, to evaluate the executive base salaries and total compensation structure, which were previously reviewed in 2016.2018. Mercer compiled compensation data from the Company’s Peer Companies, as well as from a Mercer study concerning executive compensation in the United States and a Willis Towers Watson survey. Mercer provided the Committee with aggregated data obtained from the surveyed companies. The review found that the Company’s salary structure midpoints were on average six percent below the market median and the base salaries for the executive officers were on average fiveseven percent below the market median. Mercer reported its findings to the Committee and proposed a revised salary structure with midpoints increased sixten percent to approximatelyslightly above the market median. The Committee adopted the proposed executive salary structure effective January 1, 2019.2021. The Mercer report also supported an adjustment to the base salary target percentages for the restricted stock and stock option portion of the LTIP for certain Named Executive Officers. The new target percentages, which are shown on page 24, were adopted by the Compensation Committee effective January 1, 2021.

Peer Companies.    As part of its analysis of comparative data, the Committee includes compensation data from Peer Companies. In particular, the Company measures its financial performance against Peer Companies when evaluating achievement of the cash portion of the LTIP Company performance goal. The Committee reviews the composition of the Peer Companies annually to ensure the companies are appropriate for comparative purposes. The Peer Companies are listed below. The Peer Group Index is listed on page 37.35. Commencing with the 2021-2023 LTIP cycle, TRATON will replace Navistar International Corporation as a Peer Company.

Elements of Total Compensation

The Company’s executive compensation program is comprised of base salaries, annual incentive cash and long-term incentives consisting of cash, stock options and restricted stock/RSUs.

Compensation Mix.    The Company’s executive compensation program structure includes a balance of salary and annual and long-term incentives, including Company equity. For 2019,2020, the Committee approved target allocations as displayed below for R. P. Feight, the Company’s current CEO, and the currentother Named Executive Officers. The Company believes these allocations promote its objectives of profitable growth and superior long-term results, which benefit stockholders. The Chief Executive Officer’s long-term incentives percentage was low because he was not promoted to that position until July 2019.

Base Salary.    Base salary provides a level of compensation that is competitive with industry Peer Companies to attract and retain high-caliber executives. The midpoints of the base salary ranges are set at approximately the market median of the 2018 Mercer report with the minimum salary at 70 percent of the midpoint and the maximum salary at 130 percent of the midpoint. An executive officer’s actual salary relative to this salary range reflects his or her responsibility, experience, tenure with the Company and individual performance.

The Committee reviews base salaries every 12 to 24 months and may or may not approve changes. Consistent with this practice, the Committee reviewed the salary of each Named Executive Officer in 2019.2020. The Committee considered performance, the addition of new responsibilities and the midpoint of the base salary range. The Chief Executive Officer suggested salary revisions for the other Named Executive Officers. The Committee approved salary percentage increases in 20192020 as follows: R. P. Feight, 71.4 percent, reflecting his normal merit increase, and his promotion and expanded responsibilities as Chief Executive Officer; H. C. Schippers, 6.3 percent; G. L. Moore, 6.75.9 percent; D. C. Siver, 10 percent; and M. T. Barkley, 7.29.1 percent. The Committee believes these increases align the Named Executive Officers with the salaries of the median of the industry Peer Group reflecting current market trends and the responsibilities of the Named Executive Officers. The Committee believes that the base salary of each Named Executive Officer is appropriate based on scope of responsibility, experience, tenure with the Company, individual performance and competitive pay practices.

Annual Incentive Cash Compensation (“IC”).    This program provides yearly cash incentives for the Named Executive Officers to achieve annual Company profit and business unit goals. Subject to the funding maximums established by the Committee that are described below under the heading “IC Funding Limit”, the Committee sets annual performance goals and a threshold, target and maximum award for each Named Executive Officer, expressed as a percentage of base salary. 20192020 awards are measured on a sliding scale as follows:

A hallmark of the annual cash incentive program has been a consistent and rigorous focus on achieving the Company’s annual net income goal. The Committee has chosen net income, not EBITDA or operating profit, as the chief financial metric for this program because it is the primary indicator of corporate performance to stockholders. When setting incentive compensation goals for the Named Executive Officers, the Committee believes that corporate performance is an appropriate measure of individual performance. Accordingly, the majority of the 20192020 annual incentive compensation for the Chief Executive Officer and a substantial portion of the annual incentive compensation for each of the Named Executive Officers is based upon Company net income performance. The net income goal is proposed by Company management and approved by the Board and the Committee before or within the first 90 days of each year. The target level represents an amount of net income that the Committee determines is attainable with excellent performance under expected economic conditions. The remaining goals for the Chief Executive Officer and the other Named Executive Officers are based upon individual business unit or leadership criteria determined by the Committee for the Chief Executive Officer and by the Chief Executive Officer for the other Named Executive Officers. The Committee assesses annual goal achievement and approves awards for the Named Executive Officers.

For 2019,2020, the Company’s net income target was $2.10$1.90 billion with a minimum incentive compensation threshold of $1.80$1.60 billion and a maximum incentive compensation threshold of $2.50$2.30 billion. Actual net income achieved was $2.39$1.30 billion. The Committee evaluated the negative profit impact of COVID-19, which resulted in the closing of all production facilities worldwide for five weeks beginning in March 2020. The Committee approved award payments of 157.6based on 70 percent attainment (40 percent of target payouts) for the PACCAR net income target award, which corresponds with achievement of 128.8 percent of the net income goal for each eligible Named Executive Officer.goal. The Committee approved an overall payment for R. P. Feight of 148.262.5 percent of target, based on 128.870 percent achievement of the Company profit goal and 110.0115 percent for his leadership in achieving the Company’s strategic initiatives in his role as Chief Executive Officer, beginning July 1, 2019. For the first half of 2019 in R. P. Feight’s role as Executive Vice President, the Committee approved an overall payment of 129.2 percent, including 102.8 percent achievement for business unit profit goals and 110.0 percent for his leadership of advanced technology initiatives.Officer. The Committee approved an overall payment for H. C. Schippers of 137.967 percent of target, including 114.970 percent achievement of the business unit profit goal and 110.0 percent achievement for his leadership of Company technology initiatives. The Committee approved an overall payment for G. L. Moore of 140.2 percent of target, including 97.5 percent achievement of the business unit profit goals and 125.0 percent achievement for his leadership of Company growth initiatives. The Committee approved an

below under the heading “IC Funding Limit” in determining payout as described above. The following table outlines the 20192020 goals and incentive awards for each of the current Named Executive Officers:

IC Funding Limit.    IC Awards for the Named Executive Officers are subject to the terms of the Senior Executive Yearly Incentive Compensation Plan (the “IC Plan”) approved by the stockholders. The maximum amount that may be paid to any eligible participant in any year under the IC Plan is $4,500,000. Pursuant to the IC Plan, the Committee established a yearly funding plan limit for 20192020 IC awards equal to a percentage of the Company’s net income (the “Annual Pool”) and assigned a percentage of the Annual Pool to each Named Executive Officer. The 20192020 funding limit equaled three percent of the Company’s net income and the corresponding maximum share of such pool for the current Chief Executive Officer and the next four most highly compensated executive officers was 45.7%39.7%, 19.2%21.4%, 17.0%19.0%, 9.3%10.2% and 8.8%9.7%, respectively. The Committee, in its sole discretion, may reduce or eliminate (but not increase) any award otherwise payable to the Named Executive Officers under each officer’s funding maximum based on the achievement of the IC Plan goals, an assessment of individual performance and other factors within the discretion of the Committee. The Committee exercised such discretion in determining the IC awards for 20192020 performance.

Long-term incentive compensation cash award.    ThisprogramThisprogram focuses on long-term growth in stockholder value by providing an incentive for superior Company performance that is measured against Peer Companies’ performance over a three-year period.Companyperiod.Company performance is measured by the three-year change in net income, return on sales and return on capital (weighted equally) as compared to the Peer Companies (“Company Performance Goal”). Named Executive Officers and all executive officers are eligible for a long-term incentive cash award based upon three-year performance goals approved by the Committee with a new performance period beginning every calendar year. Subject to the funding maximums established by the Committee that are described below under the heading “LTIP Funding Limit”, the Committee approved the following goals for the 2019-20212020-2022 cycle:

The Committee believes that the three-year change in net income, return on sales and return on capital are excellent indicators of the Company’s performance against the Peer Companies. The target amount will be earned if the Company’s financial performance ranks above at least half of the Peer Companies. The maximum

All Named Executive Officers in the 2016-20182017-2019 LTIP cycle had goals in addition to the Company Performance Goal. The award for R. P. Feight was based 35 percent on business unit profit at DAF and Leyland and 25 percent on business unit leadership. The Committee determined that R. P. Feight exceeded each goal and approved an overall payout of 153.1 percent of target. The award for R. E. Armstrong was based 25 percent on strategic goals focused on business growth in emerging markets, the penetration of the PACCAR engine, market share growth and expanding financial services. The Committee determined that R. E. Armstrong exceeded each goal and approved an overall payout of 169.6168.7 percent of target. The award for H. C. Schippers was based 4025 percent on business unit profit at DAF, Leyland and PACCAR Parts and 2025 percent on business unit leadership. The Committee determined that H. C. Schippers exceeded each goal and approved an overall payout of 151.3 percent of target. The award for G. L. Moore was based 25 percent on business unit profit at Kenworth and 25 percent on business unit leadership. The Committee determined that G. L. Moore exceeded each goal and approved an overall payout of 160.9 percent of target. The award for D. C. Siver was based 50 percent on business unit profit at Peterbilt and 25 percent on business unit leadership. The Committee determined that D. C. Siver exceeded each goal and approved an overall payout of 155.0178.3 percent of target. The award for M. T. Barkley was based 60 percent on business unit leadership. The Committee determined that M. T. Barkley exceeded each goal and approved an overall payout of 153.1164 percent of target. The award for T. K. Quinn was based 50 percent on business unit profit at Peterbilt and 25 percent on business unit leadership. The Committee determined that T. K. Quinn exceeded each goal and approved an overall payout of 180 percent of target. The award for D. C. Siver was based 30 percent on business unit profit at Peterbilt and 35 percent on business unit leadership. The Committee determined that D. C. Siver exceeded each goal and approved an overall payout of 172 percent of target. The Committee exercised discretion to reduce each Named Executive Officer’s maximum funding amount described below under the heading “LTIP Funding Limit” in determining payout as described above. The long-term cash awards for the 2017-20192018-2020 LTIP cycle have not been determined as of the date of this proxy statement because Peer Group comparison data was not available.

LTIP Funding Limit.    The maximum cash portion amount that may be paid to any eligible participant in any year under the LTIP program is $7,000,000. The LTIP awards for the Named Executive Officers are subject to the conditions of payment set forth in the Long-Term Incentive Plan. Pursuant to the LTIP, the Committee established a funding limit for the 2019-20212020-2022 LTIP performance cycle equal to one percent of the Company’s cumulative net income and the maximum share of such pool assigned to the current Chief Executive Officer and the next four most highly compensated executive officers was 51.6%45.4%, 17.4%19.7%, 14.8%16.8%, 8.3%9.3% and 7.9%8.8%, respectively. The Committee, in its sole discretion, may reduce or eliminate (but not increase) any award otherwise payable to the Named Executive Officers under each officer’s funding maximum based on the achievement of the LTIP goals, an assessment of individual performance and other factors within the discretion of the Committee.

or RSU grants are made in the following year if the Committee determines that the performance goal is achieved. The number of restricted shares or RSUs is determined by multiplying the executive’s base salary by the target award percentage and dividing by the average closing price of the Company’s stock on the first five trading days of the year. The restricted shares are valued at the closing price of the Company’s stock on the date of grant. The restricted stock vestsor RSUs vest 25 percent on the first day of the month following the grant and an additional 25 percent on each succeeding first of January. Unvested sharesawards are forfeited upon termination unless termination is by reason of death, disability or retirement. All sharesawards vest immediately upon a change in control. Each Named Executive Officer has the same rights as all other stockholders to vote the shares and receive cash dividends. Named Executive Officers may elect to receive RSUs instead of restricted stock on the above terms, except that RSUs do not have voting rights.

The performance goal for 20192020 was five percentafter-tax return on revenue. The goal was determined based on the average return on revenues of heavy- and medium-duty truck manufacturers in Europe and North America. Return on revenue is defined as net income divided by total revenues.

On February 4, 2020,2, 2021, the Committee determined that the 20192020 performance goal was achieved and approved the grant of restricted stock or RSUs consistent with the target award percentages listed on page 20.19. The restricted stock or RSUs granted on February 4,2, 2021 for 2020 for 2019 performance are included in footnote (b) on page 26.

Compensation of the Chief Executive Officer

The Committee applies the same compensation philosophy, policies and comparative data analysis to the Chief Executive Officer as it applies to the other Named Executive Officers. The Chief Executive Officer is the only officer with overall responsibility for all corporate functions and, as a result, has a greater percentage of his total compensation based on the overall financial performance of the Company. R. E. Armstrong retired as Chief Executive Officer on June 30, 2019. R. P. Feight became Chief Executive Officer on July 1, 2019. Under theirhis leadership in 2019,2020, the Company achieved record revenuegood annual revenues and record net income.income, while prioritizing employees’ health and safety during a global pandemic.

Effect of Post-Termination Events

The Company has no written employment agreement with its Chief Executive Officer or with any Named Executive Officer. Executive compensation programs provide full benefits only if a Named Executive Officer remains with the Company until normal retirement at age 65. In general, upon a termination without cause a Named Executive Officer retains vested benefits but receives no enhancements or severance. In a termination for cause, the executive forfeits all benefits except those provided under a qualified pension plan. Long-term cash incentives are prorated upon retirement at age 62, with 15 years of service, or death and are awarded at the maximum level upon a change in control. The annual restricted stock grants become fully vested at retirement, death or a change in control. The Company believes that the benefits described in this section help it attract and retain its executive officers by providing financial security in the event of certain qualifying terminations of employment or a change in control of the Company. The fact that the Company provides these benefits does not materially affect other decisions that the Company makes regarding compensation. The Company maintains a separation pay plan for all U.S. salaried employees that provides a single payment of up to six months of base salary in the event of job elimination in a business restructuring or reduction in the workforce. The Named Executive Officers are eligible for the benefit on the same terms as any other eligible U.S. salaried employee.

Effect of Tax Treatment

While the Compensation Committee considers the deductibility of compensation as one factor in determining executive compensation, the Compensation Committee believes that it is in the best interests of our stockholders to structure a program that is considered to be the most effective in attracting, motivating and retaining key executives.

Compensation Forfeiture

In the event the Board determines that an executive officer has engaged in misconduct detrimental to the Company, including fraudulent conduct which results in a material inaccuracy in the Company’s financial

Changes Approved For 2021

The Committee approved a revised salary structure and an increase in the target percentages of base salary for the stock option and restricted stock portion of the LTIP for the Chief Executive Officer and Named Executive Officers based on the results of the Mercer market study conducted in 2020. The changes are indicated in the following tables.

Conclusion

The Company’s compensation programs are designed and administered in a manner consistent with its conservative executive compensation philosophy and guiding principles. The programs emphasize the retention of key executives and appropriate rewards for excellent results. The Committee monitors these programs in recognition of the dynamic marketplace in which the Company competes for talent. The Company will continue to emphasizepay-for-performance and equity-based incentive programs that compensate executives for results that are consistent with generating outstanding performance for its stockholders.

COMPENSATION COMMITTEE REPORT

The Committee reviewed and discussed the Compensation Discussion and Analysis Section (“CD&A”) for 20192020 with management. Based on the Committee’s review and its discussions with management, the Committee recommends to the Board of Directors that the CD&A be included in the Company’s proxy statement for the 20202021 Annual Meeting.Meeting and incorporated by reference into the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

THE COMPENSATION COMMITTEE

G. M. E. Spierkel, Chairman

B. E. Ford

K. S. Hachigian

M. A. Schulz

20192020 Summary Compensation

The following table provides information on compensation for the Named Executive Officers for the last three fiscal years that ended December 31, 2019:2020:

20192020 Grants of Plan-Based Awards

The following table shows all plan-based awards granted to the Named Executive Officers during 2019:2020:

20192020 Outstanding Equity Awards at FiscalYear-End

The following table shows all outstanding stock option and restricted stock or RSU awards held by the Named Executive Officers on December 31, 2019:2020: