reminder letter

Dear Fellow Employee:

This is a great time for Caterpillar, and our future promises to be even more rewarding. As an employee, a participant in our equity program and an investor in Caterpillar stock, you have an opportunity to take an active role in our company’s future by voting on the proposals put forth in our 2006 proxy. Before you do so, I’d like to personally explain our board of directors’ positions on certain proposals.

Management Proposals
The proxy introduces five management proposals, and the board of directors recommends a vote “for” each of them. I would like to call your attention to three management proposals in particular.
  • Approve Caterpillar Inc. 2006 Long-Term Incentive Plan and Executive Short-Term Incentive Plan
    Incentive compensation is critical for us to attract, retain, and motivate highly qualified people. Our former long-term incentive plan expired on April 9, and the executive short-term incentive plan expires on December 31. The long-term incentive plan includes our equity compensation program, or stock option plan as it was known in the past. As a recipient of an equity award, your total compensation is directly impacted by this proposal. Approval of the 2006 long-term incentive plan is necessary to enable us to continue our equity-based award program. I encourage you to vote “for” Proposals 3 and 4.

Stockholder Proposals
The proxy also introduces three stockholder proposals, and the board of directors recommends a vote “against” each of them. Please read the proxy for Caterpillar’s full response to each of these proposals.




I urge you to give these proposals particular attention. You should have already received an e-mail with information and voting instructions, and you will receive a follow-up e-mail in a few days. Every vote is important and strengthens our ability to continue delivering outstanding performance. Thank you again for your consideration.

Sincerely,

/s/ James W. Owens