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PROPOSAL 4:
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APPROVAL OF THE AMENDED AND RESTATED 2012 INCENTIVE AWARD PLAN
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Our Board is seeking shareholder approval of an amendment, restatement, and continuation of the GATX Corporation 2012
Incentive Award Plan (the “
2012 Plan
”), which, among other things, will increase the shares available for grant by 3,500,000 shares (the “
Restated Plan
”). Our Board has approved the Restated Plan, subject to
obtaining shareholder approval at the Annual Meeting. If approved by shareholders, the Restated Plan will become effective on the day of the Annual Meeting. If the shareholders do not approve the Restated Plan, the Restated Plan will not become
effective and the 2012 Plan will continue in full force and effect in accordance with its original terms.
The Board originally adopted the 2012 Plan on February 20, 2012 as a replacement of the GATX 2004 Equity
Incentive Compensation Plan (the “
2004 Plan
”) and, following such approval, no further awards were granted under the 2004 Plan. The terms and conditions of the 2004 Plan continue to govern any outstanding awards thereunder. Any
Awards under the 2004 Plan which are forfeited are added back to the available share pool under the 2012 Plan and, if approved, the Restated Plan.
The
following description of the Restated Plan is qualified in its entirety by reference to the full text of the Restated Plan, which is attached hereto as
Exhibit C
to this Proxy Statement.
Why Shareholders
Should Vote to Approve the Restated Plan
Equity Incentive Awards are an Important Part of Our Compensation Philosophy
Equity compensation is a key element of our compensation philosophy. We use long-term equity compensation to tie the
interests of our employees and directors directly to the interests of our shareholders. We
also emphasize long-term incentive opportunities more heavily than short-term incentives consistent with our business, which involves buying, leasing, maintaining, and selling long-lived assets
into constantly changing business conditions over decades.
Our Existing Equity Plans
will no Longer have Shares Available for Grant
Under our current forecasts, the 2012 Plan will run out of shares available for grant within the next 12 months, and
we will no longer be able to continue to issue equity to our employees or directors unless shareholders approve the Restated Plan. This assumes that we continue to grant awards consistent with our historical usage and current practices, as reflected
in our historical burn rate
discussed below, and noting that unanticipated changes in future circumstances could require changes to our current equity grant practices. While we could increase cash compensation if we are
unable to grant equity incentives, we anticipate having difficulty attracting, retaining, and motivating our employees and directors if we are unable to make equity grants to them.
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GATX CORPORATION - 2017 Proxy Statement
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PROPOSAL 4: APPROVAL OF THE AMENDED AND RESTATED 2012 INCENTIVE AWARD PLAN
Determination of Share Reserve for the Restated Plan
The table below presents information regarding the number of shares subject to outstanding awards under the 2004 Plan and the 2012 Plan, and shares remaining
available for issuance under the 2012 Plan, as of March 10, 2017.
2012 Incentive Award Plan Share Usage and Activity
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Original 2012 Incentive Award Plan Shares
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3,500,000
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less options/SARs granted
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-1,778,500
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less Full Value Awards granted ( x 1.7)
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-1,542,919
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plus options/SARs cancelled
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153,851
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plus Full Value Awards cancelled – 2012 Plan ( x 1.7)
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193,258
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plus Full Value Awards cancelled – 2004 Plan ( x 1.0)
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27,119
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Shares Available to be Granted
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552,809
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Outstanding SARs Granted under the 2004 Plan
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336,074
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In determining whether to approve the Restated Plan, including the increase to the share reserve, the Board
considered the following:
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The Restated Plan will increase the shares available for grant by 3,500,000 shares, so that the shares available for future grant will include (i) the newly
available 3,500,000 shares
plus
(ii) shares that remain available for future grant under the 2012 Plan
plus
(iii) any potential forfeitures of the shares subject to outstanding stock appreciation rights
(“
SARs
”) that remain outstanding under the 2004 Plan. The 2012 Plan originally provided for a pool of 3,500,000 shares, and the Restated Plan will add 3,500,000 new shares, for a total aggregate pool of 7,000,000 shares, plus any
shares that could be forfeited under the 2004 Plan.
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In calendar years 2014, 2015, and 2016, GATX’s annual equity burn rates (calculated by dividing (1) the number of shares subject to equity awards
granted during the year by (2) the weighted-average number of shares outstanding at the end of the applicable year) under the 2012 Plan were 0.97%, 1.15%, and 1.68%, respectively. If each Full Value Award (as defined below) is multiplied by 1.7
(as provided in the 2012 plan and consistent with the methodology employed by certain proxy advisory firms), the “adjusted” annual burn rate under the 2012 Plan would be 1.17%, 1.40%, and
2.04%
for calendar years 2014, 2015, and 2016, respectively.
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We expect the share reserve under the Restated Plan to provide us with enough shares for awards for approximately five years, assuming we continue to grant
awards consistent with our current practices and historical usage, as reflected in our historical burn rate, and further dependent on the price of GATX shares
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and hiring activity during the next few years, forfeitures of outstanding awards under the 2012 Plan and the 2004 Plan, and noting that unanticipated changes in future circumstances could require
changes to our current equity grant practices. We cannot predict our future equity grant practices, the future price of GATX shares, forfeiture rates, or our future hiring activity with any degree of certainty at this time, and the share reserve
under the Restated Plan could last for a shorter or longer time than we expect.
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The potential dilution to our shareholders that may result from the issuance of shares pursuant to outstanding awards and awards to be issued under the Restated
Plan is determined by reference to the “overhang” rate. In calendar years 2014, 2015, and 2016, the end-of-year overhang rate (calculated by dividing (1) the sum of the number of shares subject to equity awards outstanding at the end
of the calendar year plus shares remaining available for issuance for future awards at the end of the calendar year by (2) the number of shares outstanding at the end of the calendar year) was 10.0%, 9.3%, and 8.0%, respectively. If the
Restated Plan is approved, GATX expects the overhang rate to increase to approximately 16.7% following such approval due to the 3,500,000 additional shares added by the Restated Plan.
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Analysis by the Compensation Committee’s independent compensation consultant, which was based on generally accepted evaluation methodologies used by proxy
advisory firms, has found that the number of shares to be reserved under the Restated Plan is within generally accepted standards as measured by an analysis of the Restated Plan cost relative to industry practice.
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PROPOSAL 4: APPROVAL OF THE AMENDED AND RESTATED 2012 INCENTIVE AWARD PLAN
In light of the factors described above, and the fact that the ability to continue to grant equity compensation is
vital to our capability to attract, retain, and motivate highly qualified individuals in the competitive markets in which
we compete, our Board has determined that the size of the share reserve under the Restated Plan is reasonable and appropriate at this time.
Equity Compensation Best Practices Reflected in the Restated Plan
In keeping with our commitment to strong corporate governance, we have included a number of provisions in the
Restated Plan that we believe are consistent with best practices in equity compensation and protective of the interests of our shareholders. The Restated Plan contains the following improvements over the terms of the 2012 Plan:
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Requirement that Dividends be Paid Only on Vested Awards.
The Restated Plan explicitly provides that no dividends or dividend equivalents may be
paid on any unvested equity awards. The 2012 Plan applies this limitation only to unvested performance awards.
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Specific Limitation on
Non-Employee
Director Compensation.
An annual limit of $350,000 per calendar year
applies to the sum of all cash or other compensation and the grant date fair value of all equity awards paid or granted to a
non-employee
director for services as a member of our Board.
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In addition, the Restated Plan continues the following best practices of the 2012 Plan:
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Continued Broad-Based Eligibility for Equity Awards.
We grant equity awards to a significant number of employees and all
non-employee
directors. We believe that this ties their interests directly with the interests of our shareholders and motivates these individuals to act as owners of the business. As of March 10, 2017,
222 of GATX’s active and retired employees and nine of its non-employee directors held outstanding equity awards.
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No Discount Options or SARs.
All options and SARs will have an exercise price equal to or greater than the fair market value of our common stock on
the date the option or SAR is granted; provided, that discount options may be granted in the event options are assumed or substituted in connection with certain corporate transactions. The closing sale price for a share of our common stock on the
New York Stock Exchange, or the NYSE, on March 10, 2017 was $58.45
.
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No Recycling of Shares Used to Pay Exercise Price or Satisfy Tax Withholding.
Shares used to pay option or SAR exercise price, to satisfy tax
withholding obligations, or otherwise purchased on the open market with cash proceeds from the exercise of options are not recycled back in the Restated Plan for
re-grant.
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No Automatic Single-Trigger Vesting of Awards.
The Restated Plan does not provide for automatic “single-trigger” accelerated vesting upon
a change of control.
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Fungible Share Pools with Reasonable Limit on Full Value Awards.
For purposes of calculating the shares that remain available for issuance under
the Restated Plan, grants of options and SARs will be counted as the grant of one share for each one share actually granted, as described above. However, to protect shareholders from potentially greater dilutive effect of restricted stock,
restricted stock units, phantom stock, and stock payments (“
Full Value Awards
”), all grants of Full Value Awards on or after the effective date of the Restated Plan will be deducted from the share reserve as 2.0 shares for every one
share actually granted. Prior to the effective date of the Restated Plan, all Full Value Awards were deducted from the 2012 Plan share reserve as 1.7 shares for every one share actually granted.
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Minimum
One-Year
Vesting Period.
All options, SARs, restricted stock, restricted stock units, phantom
stock, and stock payment awards that vest based on time shall not vest for any period of less than one year.
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No Repricing of Awards
.
Awards may not be repriced, replaced, or
re-granted
through
cancellation or modification without shareholder approval if the effect would be to reduce the exercise price for the shares under the award.
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No Tax
Gross-Ups
.
The Restated Plan does not provide for any tax
gross-ups.
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GATX CORPORATION - 2017 Proxy Statement
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PROPOSAL 4: APPROVAL OF THE AMENDED AND RESTATED 2012 INCENTIVE AWARD PLAN
Shareholder approval requirement
Shareholder approval of the Restated Plan is needed for GATX to satisfy the shareholder approval requirements of the
NYSE and so that certain stock options granted under the Restated Plan will qualify as “incentive stock options,” or “
ISOs
”, as defined in Section 422 of the Internal Revenue Code of 1986, as amended from time to time
(the “
Code
”).
In addition, shareholder approval of the material terms of the Restated Plan is necessary to preserve our ability to
provide “qualified performance-based compensation” (“
QPBC
”) that will be tax deductible without regard to the limits of Section 162(m) of the Code (as described below under the heading
Section 162(m)
Limitation
). The material terms of the Restated Plan include, without limitation, the classes of individuals eligible to receive awards, the award limits, and the performance criteria
described on page 60 under the heading
Performance Awards
. GATX has not adopted a policy that all compensation paid to executive officers must be deductible, and there is no
guarantee that incentive compensation paid to our covered employees will qualify as QPBC for purposes of Section 162(m). However, shareholder approval of the material terms of the Restated Plan will permit the Compensation Committee to seek to
structure incentive compensation to meet the performance-based compensation requirements if it chooses to do so.
Therefore, we are asking shareholders
to approve the terms of the Restated Plan for purposes of complying with the requirements of the NYSE and satisfying the shareholder-approval requirements of Sections 422 and 162(m) of the Code.
Description of the
Restated Plan
The following sets forth a
description of the material terms of the Restated Plan.
Authorized Shares
The Restated Plan authorizes the issuance of the sum of:
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3,500,000 originally authorized shares under the 2012 Plan (of which 552,809 shares remain available for future grant as of March 10, 2017),
plus
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3,500,000 additional shares (for a maximum of 7,000,000 shares that have been or could be granted under both the 2012 Plan and the Restated Plan),
plus
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Any potential forfeitures of the shares that remain subject to outstanding SARs outstanding under the 2004 Plan which could be forfeited or lapse unexercised or
are settled in cash or are not issued under the 2004 Plan (as of March 10, 2017, there were 336,074 such awards);
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provided
that the aggregate number of shares of common stock that remain available for issuance under the Restated Plan shall be
reduced by 2.0 shares for each share delivered in settlement of any Full Value Award granted on or after the effective date of the Restated Plan and shall be reduced by 1.7 shares for each share delivered in settlement of any
Full Value Award granted prior to the effective date of the Restated Plan and by one share for each share delivered in settlement of any option or stock appreciation right.
As of March 10, 2017, 1,563,785 shares were subject to outstanding options and SARs under the 2012 Plan (of which 768,575 remained unvested and subject to
forfeiture), and 627,679 shares were subject to outstanding Full Value Awards (of which 431,210 remained unvested and subject to forfeiture). Assuming forfeiture of all outstanding unvested options, SARs, and Full Value Awards under the 2012 Plan
and the 2004 Plan (a total of 1,732,328 potentially forfeitable awards) and counting the 552,809 shares remaining in the 2012 Plan share pool and the 3,500,000 new shares to be added to the share pool, a maximum of 5,588,668 shares could potentially
become available for issuance under the Restated Plan, if it is approved. Shares issued under the Restated Plan may be authorized but unissued shares, shares purchased on the open market, or treasury shares.
Share Counting Provisions
If an award under the Restated Plan or 2004 Plan expires, lapses or is terminated, exchanged for cash, surrendered,
repurchased, or canceled without having been fully exercised or forfeited, in any case, in a manner that results in GATX acquiring shares covered by such award
at a price not greater than the price (as adjusted to reflect any equity restructuring) paid by the participant for the shares or not issuing one or more shares covered by such award, the unused
shares covered by the award will become or again be available for grant under
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PROPOSAL 4: APPROVAL OF THE AMENDED AND RESTATED 2012 INCENTIVE AWARD PLAN
the Restated Plan. In addition, shares delivered to GATX to satisfy the applicable withholding obligation (including
shares retained by GATX from the award being exercised or purchased and/or creating the tax obligation) will, as applicable, become or again be available for grant under the Restated Plan. For any shares granted pursuant to an award under the
Restated Plan or 2004 Plan, the shares available under the Restated Plan will be increased by 2.0 shares for each share subject to a Full Value Award
granted on or after the effective date of the Restated Plan, 1.7 shares for each share subject to a Full Value Award granted prior to the effective date of the Restated Plan, and one share for
each share subject to an option or SAR, in each case, that becomes or again is available for issuance pursuant to the foregoing share counting provisions of the Restated Plan. Dividend equivalents paid in cash will not be counted against the number
of shares reserved under the Restated Plan.
Administration
The Restated Plan will be administered by the Compensation Committee or a subcommittee thereof (or by the Board or
another Board committee as may be determined by the Board from time to time). The administrator of the Restated Plan (the “
Administrator
”) or its delegate will have the authority to determine which employees and non-employee
directors receive awards
and set the terms and conditions applicable to the award within the confines of the Restated Plan’s terms. The Administrator will have the authority to make all determinations and
interpretations under, prescribe all forms for use with, and adopt rules for the administration of, the Restated Plan.
Award Limits for Employees
The Restated Plan includes annual limits on awards that may be granted to any individual participant. For
participants other than
non-employee
directors, the maximum aggregate number of shares of common stock with respect to all options and SARs that may be granted to any one person during any calendar year is
500,000, and the maximum aggregate number of shares of common stock that may be earned with respect to any Full Value Award during any calendar year is 300,000.
The maximum aggregate amount originally designated to become payable only in cash to any one person during any calendar year is $5,000,000. These numbers may be adjusted to take into account
equity restructurings and certain other corporate transactions as described below. For purposes of these individual award limits, each share subject to an award (including a Full Value Award) will be counted as one share against the specified limit.
Compensation Limit for
Non-Employee
Directors
The sum of all cash or other compensation and the value (determined as of the grant date in accordance with FASB ASC
Topic 718 (or any successor thereto)) of all awards granted to a
non-employee
director under the Restated Plan or otherwise paid as fees during any
calendar year for services as a member of the Board may not exceed $350,000. This limit applies to all compensation provided to a
non-employee
director,
whether or not such compensation is provided under the Restated Plan.
Eligibility
Employees and
non-employee
directors of GATX or any of its subsidiaries are
eligible to receive awards under the Restated Plan. As of March 10, 2017, GATX and its subsidiaries had approximately 200 active employees and
9
non-employee
directors who would have been eligible to receive awards under the Restated Plan had it been in effect on such date.
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GATX CORPORATION - 2017 Proxy Statement
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PROPOSAL 4: APPROVAL OF THE AMENDED AND RESTATED 2012 INCENTIVE AWARD PLAN
Types of Awards
The Restated Plan provides for the grant of stock options (including ISOs and nonqualified stock options
(“
NQSOs
”)), SARs, restricted stock, restricted stock units, dividend equivalent awards, phantom stock awards, stock payment awards, and performance awards
that are cash-based, stock-based, or a combination thereof. Awards to eligible individual will be subject to the terms of an individual award agreement between GATX and the individual. A brief
description of each award type follows:
Stock Options
Options provide the option holder with the right to purchase shares of common stock at a specified price and usually
become exercisable in one or more installments after the grant date. The option exercise price may be paid by:
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shares of common stock which have been held by the option holder for such period as required by the Administrator
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proceeds from the sale of a portion of the shares covered by such option in a broker assisted cashless exercise or
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such other methods as the Administrator may approve from time to time.
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Options may take two forms, NQSOs and ISOs. NQSOs may be granted for any term specified by the Compensation Committee up to a maximum of ten years. The terms of ISOs are subject to certain restrictions contained in
the Code in order to qualify as
incentive stock options for tax purposes, including the following:
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The exercise price of an ISO must not be less than the fair market value of our common stock on the date of grant or, if granted to an individual who owns at
least 10% of the total combined voting power of all classes of GATX stock (a “
10% Holder
”), the exercise price may not be less than 110% of the fair market value of the common stock on the date of grant
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ISOs may be granted only to employees
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ISOs expire within a specified time following termination of the holder’s employment with the Company
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ISOs must be exercised within ten years after the date of grant or, with respect to a 10% Holder, no more than five years after the date of grant
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ISOs may not be exercisable for the first time for shares of common stock having an aggregate fair market value in excess of $100,000, determined based on the
exercise price.
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Stock Appreciation Rights
SARs provide for payment to the SAR holder based on increases in the price of the Company’s common stock over a
specified base price. SARs may be granted in connection with options or other awards or separately.
The term of each SAR is set by the Administrator up to a maximum of ten years from the date of grant. Payment for SARs may be made in cash, common stock, or any combination of the
two.
Restricted Stock
A restricted stock award is a
non-transferable
grant of shares of common
stock at a price determined by the Administrator (which price may be zero) and, unless otherwise determined by the Administrator at the time of award, may be forfeited upon termination of employment or service during a restricted period. The
Administrator shall also determine in the award agreement whether the
holder will be entitled to vote the shares of restricted stock or receive dividends on such shares. Restricted stock granted to employees will vest according to the terms of each individual award
agreement, as determined by the Administrator. Any dividends that accrue on restricted stock will be held and not paid until the restricted stock vests.
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PROPOSAL 4: APPROVAL OF THE AMENDED AND RESTATED 2012 INCENTIVE AWARD PLAN
Restricted Stock Units
Restricted stock units represent the right to receive shares of common stock at a specified date in the future. On
the vesting date specified in the award agreement, the Company will deliver to the holder of the restricted
stock unit, unrestricted shares of GATX common stock which will be freely transferable. The Administrator will specify the vesting requirements in each award agreement.
Dividend Equivalents
Dividend equivalents may be paid in cash or stock and represent the value of the dividends on the common stock,
calculated with reference to the number of shares covered by an award. Dividend equivalents paid in cash do not count against the share and award limits under the
Restated Plan. Dividend equivalents will be paid out only if, when, and to the extent that the awards vest. The value of dividends and other distributions payable with respect to awards that do
not vest will be forfeited.
Performance Awards
Performance awards are denominated in cash or shares of GATX common stock and are linked to the satisfaction of
performance criteria established by the Administrator. If the Administrator determines that the award is intended to meet the requirements of “qualified performance based
compensation” for purposes of Section 162(m) of the Code, then the performance criteria on which the award will be based will be with reference to any one or more of the following:
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earnings (either before or after any one or more of interest, taxes, depreciation, and amortization)
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gross or net sales or revenue
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income (gross or net, before or after taxes)
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adjusted income (gross or net)
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operating earnings or profit
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cash flow (including, but not limited to, operating cash flow and free cash flow)
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return on shareholders’ equity
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total shareholder return
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gross or net profit or operating margin
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adjusted earnings per share
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regulatory body approval for commercialization of a product
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implementation or completion of critical projects
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cash flow return on capital
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price per share of common stock
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total gross income less total ownership costs
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Any of the foregoing criteria may be measured either in absolute terms, as an incremental increase or decrease,
or as compared to results of a peer group or market performance indicators.
Stock Payments
Payments to Participants of bonuses or other compensation under the Restated Plan may be made in
the form of common stock.
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PROPOSAL 4: APPROVAL OF THE AMENDED AND RESTATED 2012 INCENTIVE AWARD PLAN
Phantom Stock
Phantom stock typically is awarded without payment of consideration and may be subject to vesting conditions,
including satisfaction of performance criteria. Shares of common stock are not actually issued until the phantom stock award has vested. Recipients of phantom stock
also have no voting or dividend rights prior to vesting and delivery of the phantom stock. Payment for phantom stock may be made in cash, common stock, or any combination of the two.
Minimum Vesting Period
All options, SARs, restricted stock, restricted stock units, phantom stock, stock payment awards, and performance
awards that vest based on time shall not vest for any period of less than one year.
Prohibition on Repricing
The Restated Plan prohibits the Administrator from repricing options or SARs without shareholder approval (other than
as permitted in connection with certain transactions), including any repricing accomplished through the cancellation of an option or SAR in exchange
for cash or another award when the exercise price of the option or the base measurement price of the SAR exceeds the current fair market value of the common stock.
Change of
Control
In connection with a change of control, all outstanding awards will continue in effect or be assumed or converted in
the transaction. If an award is continued, assumed, or substituted for an equivalent award and a participant’s service is terminated without cause within twenty-four months, or such lesser period as provided in the award agreement, following
the change of control, then the
participant will become fully vested in the continued, assumed, or substituted award. In the event that outstanding awards are not assumed or substituted, such awards will become fully
exercisable immediately prior to the change of control and all forfeiture restrictions on such awards will lapse.
Adjustments upon Certain
Events
In the event of a stock dividend, stock split, combination or exchange of shares, merger, consolidation,
spin-off,
recapitalization, or other distribution (other than normal cash dividends) of GATX assets to shareholders, or other similar changes affecting the shares or share price of GATX common stock, the
Administrator shall make equitable adjustments to reflect changes with respect to (i) the terms and conditions of any outstanding awards, (ii) the number and kind of shares subject to an award, (iii) the aggregate number and kind of
shares that may be issued under the Restated Plan, and (iv) the grant, exercise, or base price per share for any outstanding
awards. In addition, upon such events the Administrator may provide for the (1) termination of any awards in exchange for cash equal to the amount the holder would otherwise be entitled if
they had exercised the award, (2) full vesting, exercisability, or payment of any award, (3) assumption of such award by any successor, (4) replacement of such award with other rights or property, (5) the adjustment of the number
and type of shares and/or the terms and conditions of the awards which may be granted in the future, or (6) that awards cannot vest, be exercised or become payable after such event.
Amendment and Termination
The Restated Plan may be wholly or partially amended or otherwise modified, suspended, or terminated at any time by
the Board, provided that shareholder approval will be obtained for any amendment that (i) increases the number of shares available under the Restated Plan, (ii) reduces
the exercise price or base price of any outstanding option or SAR, (iii) cancels any option or SAR in exchange for cash or for another award having a lower per share exercise price, or (iv) is
necessary or desirable to comply with any applicable law or stock exchange rule.
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PROPOSAL 4: APPROVAL OF THE AMENDED AND RESTATED 2012 INCENTIVE AWARD PLAN
Awards Not Transferable
In general, awards may not be pledged, assigned or transferred other than by will or by laws of descent and
distribution. The Administrator may allow awards other than ISOs to be transferred for estate or tax
planning purposes to members of the holder’s family, charitable institutions, or trusts for the benefit of family members.
Forfeiture and Clawbacks
All awards (including the gross amount of any proceeds, gains, or other economic benefit obtained in connection with
any award) made under the Restated Plan are subject to clawback by GATX to the extent required to
comply with applicable laws or the GATX Executive Compensation Recoupment Policy, as amended from time to time.
Data Privacy
All holders of awards explicitly consent to the collection, use and transfer, in electronic or other form, of
personal data by the Company and its subsidiaries for the exclusive
purpose of implementing, administering, and managing participation in the Restated Plan.
Miscellaneous
As a condition to the issuance or delivery of stock or payment of other compensation pursuant to the exercise or
lapse of restrictions on any award, GATX has the authority to require participants to discharge all applicable withholding tax obligations. Shares held by or to be issued to a participant may also be used to
discharge tax withholding obligations, subject to the discretion of the Administrator to disapprove of such use. The Restated Plan will expire and no further awards may be granted after the tenth
anniversary of its approval by GATX shareholders.
United States
Federal Income Tax Consequences
The tax consequences of the Restated Plan under current U.S. federal law are summarized in the following discussion.
This discussion is limited to the general tax principles applicable to the Restated Plan, is intended for general information only and is not tax advice. State,
local, and foreign income taxes are not discussed. Tax laws are complex and subject to change and may vary depending on individual circumstances and from locality to locality.
Nonqualified Stock Options
For U.S. federal income tax purposes, an option holder generally will not recognize taxable income at the time a NQSO
is granted under the Restated Plan. The holder will recognize ordinary income, and the Company generally will be entitled to a deduction, upon the exercise of a NQSO. The amount of income recognized (and the amount deductible by the Company)
generally will be equal to the excess, if any, of the fair market value of the common stock at the time of exercise over the aggregate
exercise price paid for the option, regardless of whether the exercise price is paid in cash, shares or other property. A holder’s tax basis for the shares acquired on exercise, for purposes
of determining his or her gain or loss upon a subsequent disposition, generally will be the fair market value of the common stock on the date of exercise of the option, and any subsequent gain or loss will generally be taxable as capital gain or
loss.
Incentive Stock Options
A holder of an ISO generally will not recognize taxable income either at the time of grant or at the time of
exercise. However, the amount by which the fair market value of the shares at the time of exercise exceeds the exercise price will be an “item of tax preference” to the holder for purposes of the alternative minimum tax. Generally, upon
the sale or other taxable disposition of
the shares acquired upon exercise of an ISO, the holder will recognize taxable income. If shares acquired upon the exercise of an ISO are held for the longer of two years from the date of grant
or one year from the date of exercise, the gain or loss (in an amount equal to the difference between the fair market value on the date of sale and the exercise price) upon disposition will be
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GATX CORPORATION - 2017 Proxy Statement
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59
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PROPOSAL 4: APPROVAL OF THE AMENDED AND RESTATED 2012 INCENTIVE AWARD PLAN
treated as a long-term capital gain or loss, and the Company will not be entitled to any deduction. If this holding
period is not met and the stock is sold for a gain, then the difference between the option price and the fair market value of the stock on the date of exercise will be taxed as ordinary income and any gain over that will be eligible for long or
short term capital gain treatment. If the
holding period is not met and the shares are disposed of for less than the fair market value on the date of exercise, then the amount of ordinary income is limited to the excess, if any, of the
amount realized over the exercise price paid. The Company generally will be entitled to a deduction in the amount of any ordinary income recognized by the holder of an ISO.
Stock Appreciation Rights
No taxable income is generally recognized upon the grant of SARs. Upon exercise, the cash or the fair market
value of the shares received generally will be taxable as ordinary income in the year of such exercise. The
Company generally will be entitled to a compensation deduction for the same amount which the holder recognizes as ordinary income.
Restricted Stock
A holder of restricted stock generally will not recognize taxable income upon issuance, and the Company generally
will not then be entitled to a deduction, unless an election is made by the holder under Section 83(b) of the Code. However, when the restricted stock vests and the shares are no longer subject to a substantial risk of forfeiture, the holder
generally will recognize ordinary income, and the Company generally will be entitled to a deduction for an amount equal to the excess of the fair
market value of the shares on the vesting date over the purchase price thereof. If an election is made under Section 83(b) of the Code, then the holder generally will recognize ordinary
income on the date of issuance equal to the excess, if any, of the fair market value of the shares on that date over the purchase price therefor, and the Company will be entitled to a deduction for the same amount.
Restricted Stock Unit
A holder of a restricted stock unit generally will not recognize taxable income upon the grant thereof. However, when
the restricted stock unit vests and shares are delivered to the holder, the value of such shares at
that time will be taxable to the holder as ordinary income. Generally, the Company will be entitled to a deduction for an amount equal to the amount of ordinary income recognized by the holder.
Phantom Stock
A holder of a phantom stock award will generally not recognize taxable income upon grant. However, when the phantom
stock vests and shares are delivered to the holder, the value of such shares at that time will be
taxable to the holder as ordinary income. Generally, the Company will be entitled to a deduction for an amount equal to the amount of ordinary income recognized by the holder.
Stock Payment Awards
A holder will recognize taxable ordinary income on the fair market value of any stock delivered as payment for
bonuses or other compensation under the Restated Plan,
and the Company generally will be entitled to a corresponding deduction.
Performance Awards
A holder who has been granted a performance award (either performance unit or stock) generally will not recognize
taxable income at the time of grant, and the Company will not be entitled to a deduction at that time.
When the award vests and is paid, whether in cash or shares, the holder generally will recognize ordinary income, and the Company generally will be entitled to a corresponding deduction.
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PROPOSAL 4: APPROVAL OF THE AMENDED AND RESTATED 2012 INCENTIVE AWARD PLAN
Code Section 409A
Certain awards under the Restated Plan, depending in part on the particular terms and conditions of such awards, may
be considered nonqualified deferred compensation subject to the requirements of Code
Section 409A. If the terms of such awards do not meet the requirements of Code Section 409A, the holder of the award may be charged an additional 20% tax obligation, plus penalties and
interest.
Section 162(m) Limitation
In general, under Section 162(m), income tax deductions of publicly held corporations may be limited to the
extent that the total compensation (including base salary, annual bonus, stock option exercises and
non-qualified
benefits paid) of certain executive officers exceeds $1,000,000 (less the amount of any
“excess parachute payments” as defined in Section 280G of the Code) in any one year. However, under Section 162(m), the deduction limit does not apply to certain “qualified performance-based compensation” established by
an independent compensation committee which is adequately disclosed to, and approved by, shareholders. In particular, options and SARs will satisfy the “qualified performance-based compensation” exception if (i) the awards are made by
a qualifying compensation committee, (ii) the plan sets the maximum number of shares that can be granted to any person within a specified period, and (iii) the compensation is based solely on an increase in the stock price after the grant
date (
i.e.,
the option exercise price is equal to or greater than the fair market value of the stock subject to the award on the grant date). Restricted stock,
restricted stock units, phantom stock, stock payment awards, and performance unit/share awards granted under the Restated Plan may qualify as “qualified performance-based compensation”
for purposes of Section 162(m) if such awards are granted or vest upon
pre-established
objective performance measures based on the performance goals described on page 57 under the section entitled
Performance Awards
.
The Company has attempted to structure the Restated Plan in such a manner that the Administrator can determine the terms and
conditions of awards granted thereunder such that the remuneration attributable to such Awards will not be subject to the $1,000,000 deduction limitation. The Company has not, however, requested a ruling from the U.S. Internal Revenue Service (the
“
IRS
”) or an opinion of counsel regarding this issue. This discussion will neither bind the IRS nor preclude the IRS from taking a contrary position with respect to the Restated Plan or any awards granted under the Restated Plan.
New Plan Benefits
The number of awards that an individual participant may receive under the Restated Plan is in the discretion of the
Administrator, which has not determined the type or amount of awards that will be granted in the future to specific individuals. However, under our current director compensation program, our non-employee directors are
entitled to receive an annual grant of phantom stock units with a value equal to $90,000 on the date of grant. Although our past practices may not be continued in the future, the table below sets
forth information with respect to awards previously granted in 2016 to our NEOs and other groups of individuals named below under the 2012 Plan:
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Name and
Position
|
|
Dollar Value
($)
(1)
|
|
|
Number of
Phantom /
Restricted
Stock Units
|
|
|
Number
of
Performance
Shares
(2)
|
|
|
Number of Stock
Options
|
|
|
Brian A. Kenney
|
|
|
3,008,209
|
|
|
|
—
|
|
|
|
38,180
|
|
|
|
109,100
|
|
|
Chairman of the Board, President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert C. Lyons
|
|
|
761,063
|
|
|
|
—
|
|
|
|
9,660
|
|
|
|
27,600
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
James F. Earl
|
|
|
730,535
|
|
|
|
—
|
|
|
|
9,270
|
|
|
|
26,500
|
|
|
Executive Vice President and President, Rail International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Thomas A. Ellman
|
|
|
617,283
|
|
|
|
—
|
|
|
|
7,830
|
|
|
|
22,400
|
|
|
Executive Vice President and President, Rail North America
|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
Deborah A. Golden
|
|
|
471,724
|
|
|
|
—
|
|
|
|
5,990
|
|
|
|
17,100
|
|
|
Executive Vice President, General Counsel and Corporate Secretary
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Executive Group
|
|
|
7,344,316
|
|
|
|
7,330
|
|
|
|
89,360
|
|
|
|
255,400
|
|
|
Non-Executive Director Group
|
|
|
735,978
|
(3)
|
|
|
176,111
|
|
|
|
|
|
|
|
|
|
|
Non-Executive Officer Employee Group
|
|
|
5,886,331
|
|
|
|
69,670
|
|
|
|
5,740
|
|
|
|
211,500
|
|
|
(1)
|
Represents the aggregate grant date fair value of the awards granted in 2016, including the grant date fair value of performance share awards at target payout levels.
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(2)
|
Represents the number of performance shares awarded at target payout levels for 2016.
|
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(3)
|
Represents the aggregate grant date fair value and amount of phantom stock units awarded to our nine non-employee directors in 2016, including a grant of phantom stock units
pro-rated to reflect Ms. Aigotti’s appointment to the Board effective October 28, 2016.
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GATX CORPORATION - 2017 Proxy Statement
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PROPOSAL 4: APPROVAL OF THE AMENDED AND RESTATED 2012 INCENTIVE AWARD PLAN
Equity Compensation Plan Information
The following table provides certain information as of
December 31, 2016 and March 10, 2017 about the GATX common stock that may be issued under our existing equity compensation plans:
Equity Compensation Plan Information
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|
|
Plan Category
|
|
Number of Securities to be
Issued Upon Exercise of
Outstanding Options,
Warrants, and Rights
|
|
|
|
Weighted-Average
Exercise
Price of
Outstanding Options,
Warrants, and Rights
|
|
|
|
Number of
Securities Remaining
Available for Future Issuance
Under Equity Compensation
Plans (Excluding Securities
Reflected in Column (a))
|
|
|
|
As of
12/31/16
|
|
As of
3/10/17
|
|
|
|
As of
12/31/16
|
|
As of
3/10/17
|
|
|
|
As of
12/31/16
|
|
As of
3/10/17
|
|
Equity Compensation Plans Approved by Security Holders
|
|
2,273,247
(1)
|
|
2,527,538
(2)
|
|
|
|
46.73
(3)
|
|
49.65
(3)
|
|
|
|
1,088,201
|
|
552,809
|
|
Equity Compensation Plans not Approved by Security Holders
|
|
—
|
|
—
|
|
|
|
—
|
|
—
|
|
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
2,273,247
|
|
2,527,538
|
|
|
|
|
|
|
|
|
|
1,088,201
|
|
552,809
|
|
(1)
|
Consists of 1,648,235 stock options and SARs with a remaining weighted average contractual term of 4.13 years, 232,459 performance shares, 203,130 restricted stock units, and
189,423 phantom stock units.
|
|
(2)
|
Consists of 1,899,859 stock options and SARs with a remaining weighted average contractual term of 4.55 years, 219,056 performance shares, 213,490 restricted stock units, and
195,133 phantom stock units.
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|
(3)
|
Weighted-average exercise price does not include performance shares, restricted stock units, or phantom stock units.
|
The Board of Directors recommends that you vote
FOR
approval of the Amended and Restated 2012 Incentive Award Plan.
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GATX CORPORATION - 2017 Proxy Statement
|
Shareholder
Proposals
2017 Annual
Meeting Proposals
The Board does not know of any matters to be presented at the meeting other than those described in this Proxy
Statement, and we have not received notice of any shareholder proposals for the upcoming Annual Meeting. In the event that a shareholder proposal is made at the
Annual Meeting, the Proxyholders (as defined on page 72) may exercise their discretionary voting authority under the proxies they hold to vote in accordance with their best judgment on any such
proposal.
2018 Shareholder Proposals
Proposals Under SEC Rule
14a-8
In order for a shareholder proposal to be considered for inclusion in our proxy materials for the 2018 annual meeting
of shareholders pursuant to SEC
Rule 14a-8,
the shareholder proposal must be received by the Corporate Secretary, GATX Corporation, 222 West Adams Street, Chicago, Illinois 60606 no later than
November 24, 2017. Any such proposal may be included in next year’s proxy
statement only if it complies with our
By-Laws
and the rules and regulations promulgated by the SEC, including
Rule 14a-8.
Nothing in this section shall be deemed to require us to include, in our proxy materials relating to any annual meeting, a shareholder proposal that does not meet all of the requirements for
inclusion established by the SEC.
Non-14a-8
Proposals
If a shareholder intends to present a proposal for consideration at the 2018 annual meeting of shareholders outside
the processes of SEC Rule
14a-8,
the proposal must be received by the Corporate Secretary, GATX Corporation, 222 West Adams Street, Chicago, Illinois 60606 no earlier than January 5, 2018, and no later
than February 4, 2018. The notice must contain, and be
accompanied by, all of the information as specified in our
By-Laws.
We recommend that any shareholder wishing to bring any item before an annual meeting of
shareholders review our
By-Laws,
which are available on our website (
www.gatx.com
) in the Investor Relations section under “Corporate Governance”.
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70
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GATX CORPORATION - 2017 Proxy Statement
|
OTHER INFORMATION
2018 Director Nominations
Director nominations by shareholders must be received by the Governance Committee, c/o the Corporate Secretary,
GATX Corporation, 222 West Adams Street, Chicago, Illinois 60606 no earlier than January 5, 2018,
and no later than February 4, 2018. The notice must contain, and be accompanied by all information required by our
By-Laws,
the proxy rules, and
applicable law.
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GATX CORPORATION
- 2017 Proxy Statement
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71
|
QUESTIONS AND ANSWERS ABOUT THE MEETING
Who may vote at the Annual Meeting?
Only holders of shares of our common stock as of the close of business on March 10, 2017 (the “
Record
Date
”) will be entitled to vote at the Annual Meeting. On that day, 39,331,094 shares of common stock were issued and
outstanding and eligible to vote. Each share is entitled to one vote on each matter presented at the Annual Meeting.
Who can attend the Annual Meeting?
Only holders of our common stock as of the Record Date, or their duly appointed proxies, will be entitled to attend
the Annual Meeting. If you hold your shares through a broker, bank, or other nominee, you will not be
admitted to the Annual Meeting unless you bring a copy of a statement (such as a brokerage statement) from your nominee reflecting your stock ownership as of the Record Date.
How do I vote?
Shareholder of Record.
If your shares are registered directly in your name with our transfer agent,
Computershare Investor Services, then you are considered the shareholder “of record” with respect to those shares. You can vote (1) by Internet or telephone by following the instructions on the proxy card, (2) signing, dating,
and returning the proxy card, or (3) attending the Annual Meeting and voting in person.
Beneficial Owner of Shares Held in Street Name.
If
you hold your shares through a broker, bank, or other nominee, then the nominee holding your shares is
considered the shareholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to instruct that nominee on how to vote the shares held in your
account. Your nominee will provide you with instructions on how to vote your shares, including any available telephone or Internet voting options. If you hold your shares through a broker, bank, or other nominee and would like to vote in person at
the Annual Meeting, you must first obtain a legal proxy issued in your name from the nominee that holds your shares.
What does it mean to vote by proxy?
It means that you give someone else the right to vote your shares in accordance with your instructions. In this case,
we are asking you to give your proxy to each of our Chief Executive Officer, Chief Financial Officer, and
General Counsel (the “
Proxyholders
”). In this way, you ensure that your vote will be counted even if you are unable to attend the Annual Meeting.
What happens if I do not give specific
voting instructions?
Shareholder of Record.
If you are a shareholder of record and you indicate when voting by Internet or
telephone that you wish to vote as recommended by the Board, or you sign and return a proxy card without giving specific voting instructions, the Proxyholders will vote
your shares (1) FOR the election of each of the Board’s nominees for director, (2) FOR the adoption of the shareholder advisory resolution to approve the Company’s executive
compensation, (3) FOR a frequency of EVERY YEAR as the frequency for future executive
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72
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GATX CORPORATION - 2017 Proxy Statement
|
QUESTIONS AND ANSWERS ABOUT THE MEETING
compensation advisory votes, (4) FOR the approval of the Company’s Amended and Restated 2012 Incentive
Award Plan, and (5) FOR the ratification of the Audit Committee’s appointment of Ernst & Young LLP as our independent registered public accounting firm for 2017.
Beneficial Owner of Shares
Held in Street Name.
If you hold your shares through a bank, broker, or other nominee and you do not provide that nominee with specific voting instructions,
under the rules of various national and regional securities exchanges, the nominee that holds your shares may generally vote on “routine” matters but cannot vote on
“non-routine”
matters.
If your nominee does not receive instructions from you on how to vote your shares on a
non-routine
matter at least 10 days before the Annual Meeting, your nominee will inform the inspector of election
that it does not have the authority to vote your shares on that matter. This is generally referred to as a “broker
non-vote”.
Ratification of the Audit Committee’s appointment of Ernst & Young LLP as our independent registered
public accounting firm for 2017 (Proposal No. 5) is considered a “routine” matter. A bank, broker, or other nominee may generally vote on routine matters, and therefore, no broker
non-votes
are expected to occur in connection with Proposal No. 5. The election of directors (Proposal No. 1), the advisory vote on executive compensation (Proposal No. 2), the
advisory vote on the frequency of future advisory votes on executive compensation (Proposal 3), and the approval of the Company’s Amended and Restated 2012 Incentive Award Plan (Proposal 4) are considered
“non-routine”
matters. A bank, broker, or other nominee cannot vote on those matters without instructions from the beneficial owner of the shares, and therefore, broker
non-votes
may occur on Proposals 1, 2, 3, and 4.
How are the votes counted?
Our transfer agent, Computershare Investor Services, will serve as tabulator and will count the votes. You may vote
FOR, AGAINST, or ABSTAIN with respect to each director nominee and on Proposals 2, 4, and 5. You may vote EVERY YEAR, EVERY 2 YEARS, EVERY 3 YEARS, or ABSTAIN on Proposal 3. If you abstain from voting on any director nominee or item,
your abstention will not
have an effect on the outcome of the vote. In tabulating the voting results, only FOR and AGAINST votes are counted except for Proposal 3 where only EVERY YEAR, EVERY 2 YEARS, and EVERY
3 YEARS votes are counted. Broker
non-votes
and abstentions are counted for purposes of determining whether a quorum is present.
Can I change my mind after I have voted?
You may revoke your proxy and change your vote at any time before the final vote at the Annual Meeting. If you vote
by Internet or by telephone only your latest Internet or telephone proxy that is timely submitted prior to the meeting will be counted. If you vote by signing and returning a proxy card, you may change your vote by completing a new proxy card with a
later date. You may also revoke your proxy and change your vote by
attending the meeting and voting in person. However, your attendance at the Annual Meeting will not automatically revoke your proxy unless you vote again at the Annual Meeting or specifically
request that your prior proxy be revoked by delivering written notice to the Company’s Corporate Secretary at 222 West Adams Street, Chicago, Illinois 60606.
What happens if other matters come up at the
Annual Meeting?
If any matters other than those referred to in the Notice of Annual Meeting properly come before the meeting, the
Proxyholders will have the discretion to vote the proxies held by them in accordance with their best judgment.
However, we have not received timely and proper notice from any shareholder of any other matter to be presented at the meeting.
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GATX CORPORATION - 2017 Proxy Statement
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73
|
QUESTIONS AND ANSWERS ABOUT THE MEETING
What constitutes a quorum?
The Annual Meeting will be held only if a quorum is present. A quorum will be present if a majority of the 39,331,094
shares of our common stock issued and outstanding on the Record Date are represented, in
person or by proxy, at the Annual Meeting. Broker
non-votes
and abstentions will be counted for purposes of determining whether a quorum is present.
How is it determined whether a matter has
been approved?
Assuming a quorum is present, each director nominee will be elected by a majority of votes cast with respect to his
or her election. A majority of votes cast means that the number of votes cast FOR the election of a director nominee exceeds the number of votes cast AGAINST such director nominee’s election. Under the Board’s existing resignation policy,
each director is expected to tender his or her resignation when nominated for election to the Board. The resignation will become effective only if the director receives more votes AGAINST his or her election than FOR votes and the Governance
Committee, or other duly authorized committee of the Board, decides
to accept the resignation. Abstentions and broker
non-votes
are not considered votes cast for the foregoing purpose and will have no effect on the election
of director nominees.
Approval of Proposals 2, 4, and 5 requires the affirmative vote of a majority of the shares present in person or represented by
proxy and entitled to vote on that proposal at the Annual Meeting. For Proposal 3, the frequency of future votes on executive compensation, the frequency having the affirmative vote of the greatest number of shares voted on such proposal shall be
approved.
What shares are covered by the proxy card?
Shareholders Who Are Not Current or Former GATX Employees.
If you are not a current or former employee of
GATX, the standard proxy card covers all shares held by you of record.
Current or Former GATX Employees.
If you are a current or former
employee of GATX and you have shares in the GATX Stock Fund as a result of your participation in the GATX salaried or hourly 401(k) plans (collectively, the “
401(k) Plans
”), you will receive a separate proxy card for any shares you
hold in those plans (your “
Plan Shares
”). This separate proxy card will cover all of your Plan Shares. Subject to applicable law, the trustee of the 401(k) Plans will vote your Plan Shares in accordance with the voting instructions
you provide by completing
and returning the proxy card for your Plan Shares or by voting your Plan Shares by Internet or by telephone. If you do not instruct the trustee how to vote, the trustee will vote your Plan Shares
in the same proportion as those Plan Shares for which the trustee receives timely voting instructions from other shareholder participants in the 401(k) Plans. To allow sufficient time for the trustee to vote your Plan Shares in accordance with your
direction, your voting instructions must be received by the trustee no later than 8:00 a.m. Eastern Time on May 1, 2017. Please note that the proxy card covering your Plan Shares does not cover any other GATX shares held by you outside of the 401(k)
Plans, and you will need to provide separate voting instructions for your
non-Plan
Shares as described above.
Who pays to prepare, mail, and solicit the
proxies?
GATX pays all the costs of preparing, mailing, and soliciting proxies. We ask brokers, banks, voting trustees, and
other nominees to forward proxy materials to the beneficial owners and to obtain authority to execute
proxies, and we generally reimburse these brokers, banks, voting trustees, and other nominees for their expenses upon request.
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74
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GATX CORPORATION - 2017 Proxy Statement
|
QUESTIONS AND ANSWERS ABOUT THE MEETING
We have retained D.F. King & Co., Inc. to aid in the solicitation of proxies by mail, telephone, facsimile,
e-mail,
and personal solicitation. For these services, we will pay D.F. King & Co., Inc. a fee of $9,500 plus expenses. In
addition, certain directors, officers, or employees of the Company, who will receive no extra compensation for their services, may solicit proxies by telephone, facsimile,
e-mail,
or personal contact.
Where can I find the voting results of the
Annual Meeting?
We will publish final voting results in a Current Report on
Form 8-K
to
be filed with the SEC within four business days after the Annual Meeting.
By Order of the Board of Directors,
Executive Vice President, General Counsel and
Corporate Secretary
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GATX CORPORATION - 2017 Proxy Statement
|
|
75
|
|
Exhibit A
|
|
GATX Corporation Director Independence Standard
|
A director of the Company will not be considered “independent” if:
|
•
|
|
The director is, or has been within the last three years, an employee of the Company, or an immediate family member is, or has been within the last three years,
an executive of the Company.
|
|
•
|
|
The director has received, or has an immediate family member who has received, during any twelve-month period within the last three years, more than $120,000 in
direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent on continued service).
|
|
•
|
|
(A) The director is a current partner or employee of a firm that is the Company’s internal or external auditor; (B) the director has an immediate
family member who is a current partner of such firm; (C) the director has an immediate family member who is a current employee of such firm and who works on the Company’s audit; or (D) the director or an immediate family member was
within the last three years a partner or employee of such firm and personally worked on the Company’s audit within that time.
|
|
•
|
|
The director or an immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of the
Company’s present executive officers at the same time serves or served on that company’s compensation committee.
|
|
•
|
|
The director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments
from, the Company for property or services
|
|
|
|
in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenues.
|
|
•
|
|
The director is a partner of a firm providing tax, accounting, legal, or other consulting services to the Company which received payment from the Company for
such services, in any of the last three fiscal years, in excess of $250,000.
|
|
•
|
|
The director is an executive officer or employee, or an immediate family member is an executive officer, of another company that does business with the Company
and the sales by that company to the Company or purchases by that company from the Company, in any single fiscal year during the evaluation period, are more than the greater of one percent of the annual revenues of that company or $1 million.
|
|
•
|
|
The director is an executive officer or employee, or an immediate family member is an executive officer, of another company which is indebted to the Company, or
to which the Company is indebted, and the total amount of either company’s indebtedness to the other at the end of the last completed fiscal year is more than 1% of the other company’s total consolidated assets.
|
|
•
|
|
The director serves as an officer, director, or trustee of a charitable organization, and the Company’s discretionary charitable contributions to the
organization exceeded 1% of that organization’s total annual charitable receipts during its last completed fiscal year.
|
In
addition, the Board will review all relevant facts and circumstances as to any other relationship which may exist between the Company and any director.
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GATX CORPORATION - 2017 Proxy Statement
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A-1
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Exhibit B
|
|
Reconciliation of Non-GAAP Financial Measures
|
Non-GAAP
Financial Measures
This Proxy Statement includes certain financial measures computed using non-GAAP components, as defined by the SEC.
These measures are not in accordance with, or a substitute for, GAAP, and our financial measures may be different from non-GAAP financial measures used by other companies. We have provided a reconciliation of our non-GAAP components to the most
directly comparable GAAP components.
We exclude the effects of certain tax adjustments and other items for purposes of presenting net income, diluted
earnings per share, and return on equity because
we believe these items are not attributable to our business operations. Management utilizes this information when analyzing financial performance because such amounts reflect the underlying
operating results that are within management’s ability to influence. Accordingly, we believe presenting this information provides investors and other users of our financial statements with meaningful supplemental information for purposes of
analyzing year-to-year financial performance on a comparable basis and assessing trends.
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GATX CORPORATION - 2017 Proxy Statement
|
|
B-1
|
EXHIBIT B RECONCILIATION OF
NON-GAAP
FINANCIAL MEASURES
Reconciliation
The following table presents shareholders’ equity,
excluding accumulated other comprehensive loss, as of December 31 (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|
Shareholders’ equity (GAAP)
|
|
$
|
1,347.2
|
|
|
$
|
1,280.2
|
|
|
$
|
1,314.0
|
|
|
$
|
1,397.0
|
|
|
Add: accumulated other comprehensive loss
|
|
|
211.1
|
|
|
|
198.8
|
|
|
|
148.4
|
|
|
|
42.7
|
|
|
|
|
|
|
|
|
Shareholders’ equity, excluding accumulated other comprehensive loss (non-GAAP)
|
|
$
|
1,558.3
|
|
|
$
|
1,479.0
|
|
|
$
|
1,462.4
|
|
|
$
|
1,439.7
|
|
The following table presents net income, diluted earnings per share, and return on equity, excluding tax adjustments and other
items (in millions, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
Net income (GAAP)
|
|
$
|
257.1
|
|
|
$
|
205.3
|
|
|
$
|
205.0
|
|
|
Adjustments attributable to consolidated income, pretax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Railcar impairment at Rail North America (1)
|
|
|
29.8
|
|
|
|
—
|
|
|
|
—
|
|
|
Net loss on wholly owned Portfolio Management marine investments (2)
|
|
|
2.5
|
|
|
|
9.2
|
|
|
|
—
|
|
|
Residual sharing settlement at Portfolio Management (3)
|
|
|
(49.1
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Early retirement program (4)
|
|
|
—
|
|
|
|
9.0
|
|
|
|
—
|
|
|
|
|
|
|
|
|
Total adjustments attributable to consolidated income, pretax
|
|
$
|
(16.8
|
)
|
|
$
|
18.2
|
|
|
$
|
—
|
|
|
Income taxes thereon, based on applicable effective tax rate
|
|
$
|
7.2
|
|
|
$
|
(6.9
|
)
|
|
$
|
—
|
|
|
Other income tax adjustments attributable to consolidated income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign tax credit utilization (5)
|
|
|
(7.1
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Income tax rate change (6)
|
|
|
—
|
|
|
|
14.1
|
|
|
|
—
|
|
|
|
|
|
|
|
|
Total other income tax adjustments attributable to consolidated income
|
|
$
|
(7.1
|
)
|
|
$
|
14.1
|
|
|
$
|
—
|
|
|
Adjustments attributable to affiliates’ earnings, net of taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (gain) loss on Portfolio Management affiliate (2)
|
|
|
(0.6
|
)
|
|
|
11.9
|
|
|
|
—
|
|
|
Income tax rate changes (7)
|
|
|
(3.9
|
)
|
|
|
(7.7
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
Total adjustments attributable to affiliates’ earnings, net of taxes
|
|
$
|
(4.5
|
)
|
|
$
|
4.2
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
Net income, excluding tax adjustments and other Items
(non-GAAP)
|
|
$
|
235.9
|
|
|
$
|
234.9
|
|
|
$
|
205.0
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
$
|
6.29
|
|
|
$
|
4.69
|
|
|
$
|
4.48
|
|
|
Diluted earnings per share, excluding tax adjustments and other items
|
|
$
|
5.77
|
|
|
$
|
5.37
|
|
|
$
|
4.48
|
|
|
Return on equity (GAAP)
|
|
|
19.6
|
%
|
|
|
15.8
|
%
|
|
|
15.1
|
%
|
|
Return on equity, excluding tax adjustments and other items
(non-GAAP)
|
|
|
18.0
|
%
|
|
|
18.1
|
%
|
|
|
15.1
|
%
|
|
Return on equity, excluding accumulated other comprehensive loss
(non-GAAP)
(8)
|
|
|
16.3
|
%
|
|
|
13.1
|
%
|
|
|
13.1
|
%
|
|
(1)
|
In 2016, we recorded impairment losses related specifically to certain railcars in flammable service that we believe have been permanently and negatively impacted by
regulatory changes.
|
|
(2)
|
In 2015, we made the decision to exit the majority of our
non-core,
marine investments within our Portfolio Management segment. As a
result, we recorded losses and gains associated with the impairments and sales of certain investments.
|
|
(3)
|
Proceeds were recorded as a result of the settlement of a residual sharing agreement related to a residual guarantee we provided on certain rail assets.
|
|
(4)
|
Expenses associated with an early retirement program offered to certain eligible employees.
|
|
(5)
|
Benefits attributable to the utilization of foreign tax credit carryforwards.
|
|
(6)
|
A net deferred income tax adjustment attributable to an increase of our effective state income tax rate.
|
|
(7)
|
Deferred tax adjustments due to enacted statutory rate decreases in the United Kingdom in 2016 and 2015.
|
|
(8)
|
Return on equity for 2016, 2015 and 2014 excludes favorable adjustments of $15.6 million, $16.0 million, and $15.7 million, respectively, related to a change in
the accounting estimate of depreciable lives for railcars.
|
|
|
|
|
|
B-2
|
|
GATX CORPORATION - 2017 Proxy Statement
|
|
Exhibit C
|
|
Amended and Restated 2012 Incentive Award Plan
|
GATX CORPORATION
AMENDED
AND RESTATED 2012 INCENTIVE AWARD PLAN
ARTICLE 1.
PURPOSE
GATX Corporation (the “
Company
”) originally adopted the 2012 Incentive Award Plan (the “
2012
Plan
”) effective April 27, 2012 (the “
2012 Effective Date
”) in order to promote the success and enhance the value of the Company by linking the individual interests of the members of the Board and Employees to those of
Company shareholders and by providing such individuals with an incentive for outstanding performance to generate superior returns to Company shareholders. The 2012
Plan is amended, restated, and continued in the form of this GATX Corporation Amended and Restated 2012 Incentive Award Plan (as it may be further amended and restated from time to time, the
“
Plan
”). The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of members of the Board and Employees upon whose judgment, interest, and special effort the
successful conduct of the Company’s operation is largely dependent.
ARTICLE 2.
DEFINITIONS AND CONSTRUCTION
Wherever the following terms are used in the Plan they shall have the meanings specified below, unless the context
clearly indicates otherwise. The singular pronoun shall include the plural where the context so indicates.
2.1 “
Administrator
” shall
mean the entity that conducts the general administration of the Plan as provided in Article 13. With reference to the duties of the Committee under the Plan which have been delegated to one or more persons pursuant to Section 13.6, or as to
which the Board has assumed, the term “Administrator” shall refer to such person(s) unless the Committee or the Board has revoked such delegation or the Board has terminated the assumption of such duties.
2.2 “
Applicable Accounting Standards
” shall mean Generally Accepted Accounting Principles in the United States, International Financial Reporting
Standards, or such other accounting principles or standards as may apply to the Company’s financial statements under United States federal securities laws from time to time.
2.3 “
Award
” shall mean an Option, a Restricted Stock award, a Restricted Stock Unit award, a Performance Award, a Dividend Equivalents award, a Phantom Stock award, a Stock Payment award, a Stock
Appreciation
Right, or a cash-based award, which may be awarded or granted under the Plan (collectively, “
Awards
”).
2.4 “
Award Agreement
” shall mean any written notice, agreement, terms and conditions, contract, or other instrument or document evidencing an Award, including through electronic medium, which shall
contain such terms and conditions with respect to an Award as the Administrator shall determine consistent with the Plan.
2.5 “
Award
Limit
” shall mean with respect to Awards that shall be payable in Shares or in cash, as the case may be, the respective limit set forth in Section 3.3.
2.6 “
Board
” shall mean the Board of Directors of the Company.
2.7 “
Change in
Control
” shall mean and includes each of the following:
(a) The acquisition by any individual, entity, or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, a “
Person
”) of beneficial ownership (within the meaning of Rule
13d-3
promulgated under the Exchange Act) of 20% or more of either
(i) the then outstanding shares of common stock of the Company (the “
Outstanding Company Common Stock
”) or (ii) the
|
|
|
|
|
GATX CORPORATION - 2017 Proxy Statement
|
|
C-1
|
EXHIBIT C AMENDED AND RESTATED 2012 INCENTIVE AWARD PLAN
combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “
Outstanding Company Voting
Securities
”);
provided, however
, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (1) any acquisition directly from the Company, (2) any acquisition by the
Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (4) any acquisition by any corporation pursuant to a transaction which
complies with clauses (i), (ii), and (iii) of subsection (c) of this Section 2.7;
(b) Individuals who, as of the date
hereof, constitute the Board (the “
Incumbent Board
”) cease for any reason to constitute at least a majority of the Board;
provided, however
, that any individual becoming a Director subsequent to the date hereof whose
election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the Directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of Directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the Board;
(c) Consummation of a reorganization, merger or
consolidation, or sale or other disposition (including, without limitation, a disposition occurring by merger, consolidation, sale, or other similar transactions of one or more subsidiaries of the Company) of all or substantially all of the assets
of the Company (a “
Business Combination
”), in each case unless, following such Business Combination (other than a Business Combination of the type referred to in the first parenthetical of this subsection (c) which results in
the disposition of all or substantially all of the assets of the Company), (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 65% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or
through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be,
(ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business Combination, and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination;
(d)
Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company; or
(e) Consummation of a
reorganization, merger or consolidation, or sale or other disposition of any subsidiary or of all or substantially all of the assets of any subsidiary of the Company or a disposition (in a single transaction or series of integrated transactions) of
all or substantially all of the assets of an operating segment of the Company as identified in the financial statements included in the Company’s most recent Annual Report on Form
10-K
(each a
“
Business Segment
”) that is, in either case, the primary employer of a Holder or to which the Holder’s responsibilities primarily relate immediately prior thereto, and which does not constitute a Business Combination as defined
in Section 2.7(c), unless immediately thereafter the Company, either directly or indirectly, owns (i) at least 50% of the voting stock of any such subsidiary disposed of or (ii) in the case of the disposition of all or substantially all of
the assets of a subsidiary or Business Segment, at least 50% of both the voting power over and the equity in any entity holding title to such assets.
2.8 “
Code
” shall mean the Internal Revenue Code of 1986, as amended from time to time, together with the regulations and official guidance
promulgated thereunder.
|
|
|
|
|
C-2
|
|
GATX CORPORATION - 2017 Proxy Statement
|
EXHIBIT C AMENDED AND RESTATED 2012 INCENTIVE AWARD PLAN
2.9 “
Committee
” shall mean the Compensation Committee of the Board, or another committee or
subcommittee of the Board, appointed as provided in Section 13.1.
2.10 “
Common Stock
” shall mean the common stock of the Company,
par value $0.625 per share.
2.11 “
Company
” shall have the meaning set forth in Article 1.
2.12 “
Covered Employee
” shall mean any Employee who is, or could be, a “covered employee” within the meaning of Section 162(m) of the
Code.
2.13 “
Director
” shall mean a member of the Board, as constituted from time to time.
2.14 “
Director Limit
” shall have the meaning set forth in Section 4.7.
2.15 “
Dividend Equivalent
” shall mean a right to receive the equivalent value (in cash or Shares) of dividends paid on Shares, awarded under Section 10.2.
2.16 “
DRO
” shall mean a domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as
amended from time to time, or the rules thereunder.
2.17 “
Effective Date
” shall mean the date this amended and restated Plan is
approved by the Board, subject to approval of the Plan by the Company’s shareholders.
2.18 “
Eligible Individual
” shall mean any
person who is an Employee or a
Non-Employee
Director, as determined by the Committee.
2.19
“
Employee
” shall mean any officer or other employee (as determined in accordance with Section 3401(c) of the Code and the Treasury Regulations thereunder) of the Company or of any Subsidiary.
2.20 “
Equity Restructuring
” shall mean a nonreciprocal transaction between the Company and its shareholders, such as a stock dividend, stock split,
spin-off,
rights offering, or recapitalization through a large, nonrecurring cash dividend, that affects the number or kind of Shares (or other securities of the Company) or the share price of Common Stock (or
other securities) and causes a change in the per share value of the Common Stock underlying outstanding Awards.
2.21 “
Exchange Act
”
shall mean the Securities Exchange Act of 1934, as amended from time to time.
2.22 “
Fair Market Value
” shall mean, as of any given
date, the value of a Share determined as follows:
(a) If the Common Stock is listed on any (i) established securities exchange
(such as the New York Stock
Exchange, the NASDAQ Global Market, and the NASDAQ Global Select Market), (ii) national market system, or (iii) automated quotation system on which the Shares are listed, quoted or traded,
its Fair Market Value shall be the average of the highest and lowest prices at which a Share is traded on such exchange or system on the date as of which the determination is being made or, if the Common Stock is not traded on the date in question,
the average of the highest and lowest prices on the next preceding date on which the Common Stock is traded, based on such source as the Administrator deems reliable;
(b) If the Common Stock is not listed on an established securities exchange, national market system, or automated quotation system, but the Common Stock is regularly quoted by a recognized securities dealer, its
Fair Market Value shall be the mean of the high bid and low asked prices for such date or, if there are no high bid and low asked prices for a Share on such date, the high bid and low asked prices for a Share on the last preceding date for which
such information exists, as reported in such source as the Administrator deems reliable; or
(c) If the Common Stock is neither listed
on an established securities exchange, national market system, or automated quotation system nor regularly quoted by a recognized securities dealer, its Fair Market Value shall be established by the Administrator in good faith.
2.23 “
Full Value Award
” shall mean any Award other than (i) an Option, (ii) a Stock Appreciation Right, or (iii) any other Award for
which the Holder pays the intrinsic value existing as of the date of grant (whether directly or by forgoing a right to receive a payment from the Company or any Subsidiary) and that is settled in Shares.
2.24 “
Greater Than 10% Shareholder
” shall mean an individual then owning (within the meaning of Section 424(d) of the Code) more than 10% of the
total combined voting power of all classes of stock of the Company or any subsidiary corporation (as defined in Section 424(f) of the Code) or parent corporation thereof (as defined in Section 424(e) of the Code).
2.25 “
Holder
” shall mean a person who has been granted an Award.
2.26 “I
ncentive Stock Option
” shall mean an Option that is intended to qualify as an incentive stock option and conforms to the applicable provisions of Section 422 of the Code.
2.27 “
Non-Employee
Director
” shall mean a Director of the Company who is not an Employee.
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|
|
|
|
GATX CORPORATION - 2017 Proxy Statement
|
|
C-3
|
EXHIBIT C AMENDED AND RESTATED 2012 INCENTIVE AWARD PLAN
2.28 “
Non-Qualified
Stock Option
” shall mean an Option that
is not an Incentive Stock Option.
2.29 “
Option
” shall mean a right to purchase Shares at a specified exercise price, granted under
Article 6. An Option shall be either a
Non-Qualified
Stock Option or an Incentive Stock Option;
provided, however
, that Options granted to
Non-Employee
Directors
shall only be
Non-Qualified
Stock Options.
2.30 “
Option Term
” shall have the meaning set forth
in Section 6.4.
2.31 “
Parent
” shall mean any entity (other than the Company), whether domestic or foreign, in an unbroken chain of
entities ending with the Company if each of the entities other than the Company beneficially owns, at the time of the determination, securities or interests representing at least fifty percent (50%) of the total combined voting power of all classes
of securities or interests in one of the other entities in such chain.
2.32 “
Performance Award
” shall mean a cash bonus award, stock
bonus award, performance award or incentive award that is paid in cash, Shares or a combination of both, awarded under Section 10.1.
2.33
“
Performance-Based Compensation
” shall mean any compensation that is intended to qualify as “performance-based compensation” as described in Section 162(m)(4)(C) of the Code.
2.34 “
Performance Criteria
” shall mean the criteria (and adjustments) that the Committee selects for an Award for purposes of establishing the
Performance Goal or Performance Goals for a Performance Period, determined as follows:
(a) The Performance Criteria that shall be used
to establish Performance Goals are limited to the following: (i) earnings (either before or after one or more of the following: (A) interest, (B) taxes, (C) depreciation and (D) amortization); (ii) gross or net sales or revenue;
(iii) income (gross or net, either before or after taxes); (iv) adjusted income (gross or net); (v) operating earnings or profit; (vi) cash flow (including, but not limited to, operating cash flow and free cash flow); (vii) return on
assets; (viii) return on capital; (ix) return on shareholders’ equity; (x) total shareholder return; (xi) return on sales; (xii) gross or net profit or operating margin; (xiii) costs; (xiv) funds from operations;
(xv) expenses; (xvi) working capital; (xvii) earnings per share; (xviii) adjusted earnings per share; (xix) price per Share; (xx) regulatory body approval for commercialization of a product; (xxi) implementation or
completion of critical projects; (xxii) market share; (xxiii) economic value; (xxiv) productivity; (xxv) operating efficiency; (xxvi)
economic value-added; (xxvii) cash flow return on capital; (xxviii) return on net assets; (xxix) total gross income less total ownership costs; and (xxx) ownership costs, any
of which may be measured either in absolute terms or as compared to any incremental increase or decrease or as compared to results of a peer group or to market performance indicators or indices.
(b) The Administrator may, in its sole discretion, provide that one or more objectively determinable adjustments shall be made to one or more of
the Performance Goals. Such adjustments may include one or more of the following: (i) items related to a change in accounting principle; (ii) items relating to financing activities; (iii) expenses for restructuring or productivity
initiatives; (iv) other
non-operating
items; (v) items related to acquisitions; (vi) items attributable to the business operations of any entity acquired by the Company during the Performance
Period; (vii) items related to the disposal of a business or segment of a business; (viii) items related to discontinued operations that do not qualify as a segment of a business under Applicable Accounting Standards; (ix) items
attributable to any stock dividend, stock split, combination or exchange of stock occurring during the Performance Period; (x) any other items of significant income or expense which are determined to be appropriate adjustments; (xi) items
relating to unusual or infrequent corporate transactions, events or developments, (xii) items related to amortization of acquired intangible assets; (xiii) items that are outside the scope of the Company’s core,
on-going
business activities; (xiv) items related to acquired
in-process
research and development; (xv) items relating to changes in tax laws; (xvi) items
relating to major licensing or partnership arrangements; (xvii) items relating to asset impairment charges; (xviii) items relating to gains or losses for litigation, arbitration and contractual settlements; or (xix) items relating to
any other unusual or nonrecurring events or changes in applicable laws, accounting principles or business conditions. For all Awards intended to qualify as Performance-Based Compensation, such determinations shall be made within the time prescribed
by, and otherwise in compliance with, Section 162(m) of the Code.
2.35 “
Performance Goals
” shall mean, for a Performance Period, one or
more goals established in writing by the Administrator for the Performance Period based upon one or more Performance Criteria. Depending on the Performance Criteria used to establish such Performance Goals, the Performance Goals may be expressed in
terms of overall Company performance or the performance of a
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Subsidiary, division, business unit, or an individual. The achievement of each Performance Goal shall be determined in accordance with Applicable Accounting Standards.
2.36 “
Performance Period
” shall mean one or more periods of time, which may be of varying and overlapping durations, as the Administrator may
select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Holder’s right to, and the payment of, an Award.
2.37 “
Performance Stock Unit
” shall mean a Performance Award awarded under Section 10.1 which is denominated in units of value including dollar value of Shares.
2.38 “
Permitted Transferee
” shall mean, with respect to a Holder, any “family member” of the Holder, as defined under the instructions of
the Form
S-8
Registration Statement under the Securities Act, after taking into account any state, federal, local, or foreign tax and securities laws applicable to transferable Awards.
2.39 “
Phantom Stock
” shall mean the right to receive Shares or the Fair Market Value of such Shares awarded under Article 9.
2.40 “
Plan
” shall have the meaning set forth in Article 1.
2.41 “
Prior Plan
” shall mean the GATX Corporation 2004 Equity Incentive Compensation Plan.
2.42
“
Program
” shall mean any program adopted by the Administrator pursuant to the Plan containing the terms and conditions intended to govern a specified type of Award granted under the Plan and pursuant to which such type of Award may
be granted under the Plan.
2.43 “
Restricted Stock
” shall mean Common Stock awarded under Article 8 that is subject to certain
restrictions and may be subject to risk of forfeiture or repurchase.
2.44 “
Restricted Stock Units
” shall mean the right to receive
Shares awarded under Article 9.
2.45 “
Securities Act
” shall mean the Securities Act of 1933, as amended.
2.46 “
Shares
” shall mean shares of Common Stock.
2.47 “
Stock Appreciation Right
” shall mean a stock appreciation right granted under Article 11.
2.48 “
Stock Appreciation Right Term
” shall have the meaning set forth in Section 11.4.
2.49 “
Stock Payment
” shall mean (a) a payment in the form of Shares, or (b) an option or other right to purchase
Shares, as part of a bonus, deferred compensation, or other arrangement, awarded under Section 10.3.
2.50 “
Subsidiary
” shall mean any entity (other than the Company), whether domestic or foreign, in an unbroken chain of entities beginning with the Company if each of the entities other than the
last entity in the unbroken chain beneficially owns, at the time of the determination, securities or interests representing at least fifty percent (50%) of the total combined voting power of all classes of securities or interests in one of the other
entities in such chain.
2.51 “
Substitute Award
” shall mean an Award granted under the Plan upon the assumption of, or in substitution
for, outstanding equity awards previously granted by a company or other entity in connection with a corporate transaction, such as a merger, combination, consolidation, or acquisition of property or stock;
provided, however
, that in no event
shall the term “Substitute Award” be construed to refer to an award made in connection with the cancellation and repricing of an Option or Stock Appreciation Right.
2.52 “
Termination of Service
” shall mean:
(a) As to a
Non-Employee
Director, the time when a Holder who is a
Non-Employee
Director ceases to be a Director for any reason, including, without limitation, a termination by
resignation, failure to be elected, death, or retirement, but excluding terminations where the Holder simultaneously commences or remains in employment or service with the Company or any Subsidiary, including, but not limited to, as a consultant.
(b) As to an Employee, the time when the employee-employer relationship between a Holder and the Company or any Subsidiary is
terminated for any reason, including, without limitation, a termination by resignation, discharge, death, disability, or retirement; but excluding terminations where the Holder simultaneously commences or remains in employment or service with the
Company or any Subsidiary.
The Administrator, in its sole discretion, shall determine the effect of all matters and questions relating to Terminations
of Service, including, without limitation, the question of whether a Termination of Service resulted from a discharge for cause and all questions of whether particular leaves of absence constitute a Termination of Service;
provided, however
,
that, with respect to Incentive Stock Options, unless the Administrator otherwise provides in the terms of the Program, the Award Agreement or otherwise, a leave of absence, change in status from an employee to an independent
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contractor or other change in the employee-employer relationship shall constitute a Termination of Service only if, and to the extent that, such leave of absence, change in status or other change
interrupts employment for the purposes of Section 422(a)(2) of the Code and the then applicable regulations and revenue rulings under said Section. For purposes of the Plan, a Holder’s
employee-
employer relationship or consultancy relations shall be deemed to be terminated in the event that the Subsidiary employing or contracting with such Holder ceases to remain a Subsidiary following
any merger, sale of stock or other corporate transaction or event (including, without limitation, a
spin-off).
ARTICLE 3.
SHARES SUBJECT TO THE PLAN
3.1
Number of Shares
.
(a) Subject to Section 14.2 and Section 3.1(b), the aggregate number of Shares which may be issued or transferred pursuant to Awards under the Plan is (i) 7,000,000 plus (ii) any Shares subject to awards
under the Prior Plan which after the 2012 Effective Date are forfeited or lapse unexercised or are settled in cash or are not issued under the Prior Plan;
provided
,
however
, that such aggregate number of Shares available for
issuance under the Plan shall be reduced by (x) 2.0 shares for each Share delivered in settlement of any Full Value Award granted on or after the Effective Date and (y) 1.7 shares for each Share delivered in settlement of any Full Value Award
granted prior to the Effective Date. After the 2012 Effective Date, no awards may be granted under the Prior Plan, however, any awards under the Prior Plan that are outstanding as of the 2012 Effective Date shall continue to be subject to the terms
and conditions of the Prior Plan.
(b) If (i) any Shares subject to an Award that is not a Full Value Award are forfeited or
expire or such Award is settled for cash (in whole or in part) or (ii) any Shares subject to an award under the Prior Plan are forfeited or expire or an award under the Prior Plan is settled for cash (in whole or in part), the Shares subject to
such Award or award under the Prior Plan shall, to the extent of such forfeiture, expiration, or cash settlement, again be available for future grants of Awards under the Plan. To the extent that a Full Value Award granted under this Plan is
forfeited or expires or such Full Value Award is settled for cash (in whole or in part), the Shares available under the Plan shall be increased by (x) 2.0 Shares subject to such Full Value Award granted on or after the Effective Date and (y) 1.7
Shares subject to each Full Value Award granted prior to the Effective Date that is forfeited, expired, or settled in cash. Notwithstanding anything to the contrary contained herein, the following Shares shall not be added to the Shares authorized
for grant under Section 3.1(a) and will not be available for future grants
of Awards: (i) Shares tendered by a Holder or withheld by the Company in payment of the exercise price of an Option; (ii) Shares tendered by the Holder or withheld by the Company to
satisfy any tax withholding obligation with respect to an Award; (iii) Shares subject to a Stock Appreciation Right that are not issued in connection with the stock settlement of the Stock Appreciation Right on exercise thereof; and
(iv) Shares purchased on the open market with the cash proceeds from the exercise of Options. Any Shares repurchased by the Company under Section 8.4 at the same price paid by the Holder so that such Shares are returned to the Company will
again be available for Awards. The payment of Dividend Equivalents in cash in conjunction with any outstanding Awards shall not be counted against the Shares available for issuance under the Plan. Notwithstanding the provisions of this Section
3.1(b), no Shares may again be optioned, granted, or awarded if such action would cause an Incentive Stock Option to fail to qualify as an incentive stock option under Section 422 of the Code.
(c) Substitute Awards shall not reduce the Shares authorized for grant under the Plan. Additionally, in the event that a company acquired by the
Company or any Subsidiary or with which the Company or any Subsidiary combines has shares available under a
pre-existing
plan approved by shareholders and not adopted in contemplation of such acquisition or
combination, the shares available for grant pursuant to the terms of such
pre-existing
plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula
used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares authorized
for grant under the Plan; provided, however, that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the
pre-existing
plan, absent the
acquisition or combination, and shall only be made to individuals
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who were not employed by or providing services to the Company or its Subsidiaries immediately prior to such acquisition or combination.
3.2
Stock Distributed
. Any Shares distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Common Stock, treasury Common Stock or Common Stock purchased on the open
market.
3.3
Limitation on Number of Shares Subject to Awards
. Notwithstanding any provision in the Plan to the contrary, and subject to
Section 14.2, (a) the maximum aggregate
number of Shares with respect to one or more Option or Stock Appreciation Right Awards that may be granted to any one person during any calendar year shall be 500,000, (b) the maximum aggregate
number of Shares with respect to one or more Full Value Awards that may be granted to any one person during any calendar year shall be 300,000, and (c) the maximum aggregate amount of cash that may be paid in cash to any one person during any
calendar year with respect to one or more Awards originally designated to be payable only in cash shall be $5,000,000.
ARTICLE 4.
GRANTING OF AWARDS
4.1
Participation
. The Administrator may, from time to time, select from among all Eligible Individuals, those
to whom an Award shall be granted and shall determine the nature and amount of each Award, which shall not be inconsistent with the requirements of the Plan. No Eligible Individual shall have any right to be granted an Award pursuant to the Plan.
4.2
Award Agreement
. Each Award shall be evidenced by an Award Agreement that sets forth the terms, conditions and limitations for such Award,
which may include the term of the Award, the provisions applicable in the event of the Holder’s Termination of Service, and the Company’s authority to unilaterally or bilaterally amend, modify, suspend, cancel, or rescind an Award. Award
Agreements evidencing Awards intended to qualify as Performance-Based Compensation shall contain such terms and conditions as may be necessary to meet the applicable provisions of Section 162(m) of the Code. Award Agreements evidencing Incentive
Stock Options shall contain such terms and conditions as may be necessary to meet the applicable provisions of Section 422 of the Code.
4.3
Limitations Applicable to Section 16 Persons
. Notwithstanding any other provision of the Plan, the Plan, and any Award granted or awarded to any individual who is then subject to Section 16 of the Exchange Act, shall be subject to
any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including Rule
16b-3
of the Exchange Act and any amendments thereto) that are requirements for
the application of such exemptive rule. To the extent permitted by applicable law, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.
4.4
At-Will
Employment; Voluntary Participation
. Nothing in the Plan or in any Program or Award Agreement
hereunder shall confer upon any Holder any right to continue in the employ of, or as a Director for, the Company or any Subsidiary, or shall interfere with or restrict in any way the rights of
the Company and any Subsidiary, which rights are hereby expressly reserved, to discharge any Holder at any time for any reason whatsoever, with or without cause, and with or without notice, or to terminate or change all other terms and conditions of
employment or engagement, except to the extent expressly provided otherwise in a written agreement between the Holder and the Company or any Subsidiary. Participation by each Holder in the Plan shall be voluntary and nothing in the Plan shall be
construed as mandating that any Eligible Individual shall participate in the Plan.
4.5
Foreign Holders
. Notwithstanding any provision of the Plan
to the contrary, in order to comply with the laws in other countries in which the Company and its Subsidiaries operate or have Employees or
Non-Employee
Directors, or in order to comply with the requirements
of any foreign securities exchange, the Administrator, in its sole discretion, shall have the power and authority to: (a) determine which Subsidiaries shall be covered by the Plan; (b) determine which Eligible Individuals outside the
United States are eligible to participate in the Plan; (c) modify the terms and conditions of any Award granted to Eligible Individuals outside the United States to comply with applicable foreign laws or listing requirements of any such foreign
securities exchange; (d) establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable (any such subplans and/or modifications shall be attached to the Plan as
appendices);
provided, however
, that no such subplans and/or modifications shall increase the share limitations contained in Sections 3.1 and 3.3; and (e) take any action, before or after an Award is made, that it deems advisable to
obtain approval or comply with
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any necessary local governmental regulatory exemptions or approvals or listing requirements of any such foreign securities exchange. Notwithstanding the foregoing, the Administrator may not take
any actions hereunder, and no Awards shall be granted, that would violate the Code, the Exchange Act, the Securities Act, any other securities law or governing statute, the rules of the securities exchange or automated quotation system on which the
Shares are listed, quoted or traded, or any other applicable law. For purposes of the Plan, all references to foreign laws, rules, regulations, or taxes shall be references to the laws, rules, regulations, and taxes of any applicable jurisdiction
other than the United States or a political subdivision thereof.
4.6
Stand-Alone and Tandem Awards
. Awards granted pursuant to the Plan may, in the sole discretion of the
Administrator, be granted either alone, in addition to, or in tandem with, any other Award granted pursuant to the Plan. Awards granted in addition to or in tandem with other Awards may be granted either at the same time as or at a different time
from the grant of such other Awards.
4.7
Non-Employee
Director Awards
. Notwithstanding any provision to
the contrary in the Plan, the sum of the grant date fair value of equity-based Awards and the amount of any cash-based Awards granted or fees otherwise payable to a
Non-Employee
Director during any calendar
year shall not exceed $350,000 (the “
Director Limit
”).
ARTICLE 5.
PROVISIONS APPLICABLE TO AWARDS INTENDED TO QUALIFY AS PERFORMANCE-BASED COMPENSATION.
5.1
Purpose
. The Committee, in its sole discretion, may determine at the time an Award is granted or at any
time thereafter whether such Award is intended to qualify as Performance-Based Compensation. If the Committee, in its sole discretion, decides to grant such an Award to an Eligible Individual that is intended to qualify as Performance-Based
Compensation, then the provisions of this Article 5 shall control over any contrary provision contained in the Plan. The Administrator may in its sole discretion grant Awards to other Eligible Individuals that are based on Performance Criteria or
Performance Goals but that do not satisfy the requirements of this Article 5 and that are not intended to qualify as Performance-Based Compensation. Unless otherwise specified by the Administrator at the time of grant, the Performance Criteria with
respect to an Award intended to be Performance-Based Compensation payable to a Covered Employee shall be determined on the basis of Applicable Accounting Standards.
5.2
Applicability
. The grant of an Award to an Eligible Individual for a particular Performance Period shall not require the grant of an Award to such Individual in any subsequent Performance Period and the
grant of an Award to any one Eligible Individual shall not require the grant of an Award to any other Eligible Individual in such period or in any other period.
5.3
Types of Awards
. Notwithstanding anything in the Plan to the contrary, the Committee may grant any Award to an Eligible Individual intended to qualify as Performance-Based Compensation, including,
without limitation, Restricted Stock the restrictions with respect to which lapse upon the attainment of specified Performance Goals, Restricted Stock Units that vest and
become payable upon the attainment of specified Performance Goals and any Performance Awards described in Article 10 that vest or become exercisable or payable upon the attainment of one or more
specified Performance Goals.
5.4
Procedures with Respect to Performance-Based Awards
. To the extent necessary to comply with the requirements of
Section 162(m)(4)(C) of the Code, with respect to any Award granted to one or more Eligible Individuals which is intended to qualify as Performance-Based Compensation, no later than 90 days following the commencement of any Performance Period or any
designated fiscal period or period of service (or such earlier time as may be required under Section 162(m) of the Code), the Committee shall, in writing, (a) designate one or more Eligible Individuals, (b) select the Performance Criteria
applicable to the Performance Period, (c) establish the Performance Goals, and amounts of such Awards, as applicable, which may be earned for such Performance Period based on the Performance Criteria, and (d) specify the relationship
between Performance Criteria and the Performance Goals and the amounts of such Awards, as applicable, to be earned by each Covered Employee for such Performance Period. Following the completion of each Performance Period, the Committee shall certify
in writing whether and the extent to which the applicable Performance Goals have been achieved for such Performance Period. In determining the amount earned under such Awards, the Committee shall have the right to reduce or eliminate (but not to
increase) the amount payable at a given level of performance to take into account additional factors that the Committee may deem relevant, including the
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assessment of individual or corporate performance for the Performance Period.
5.5
Payment of
Performance-Based Awards
. Unless otherwise provided in the applicable Program or Award Agreement and only to the extent otherwise permitted by Section 162(m)(4)(C) of the Code, as to an Award that is intended to qualify as Performance-Based
Compensation, the Holder must be employed by the Company or a Subsidiary throughout the Performance Period. Unless otherwise provided in the applicable Performance Goals, Program or Award Agreement, a Holder shall be eligible to receive payment
pursuant to such Awards for a Performance Period only if and to the
extent the Performance Goals for such period are achieved.
5.6
Additional Limitations
.
Notwithstanding any other provision of the Plan and except as otherwise determined by the Administrator, any Award which is granted to an Eligible Individual and is intended to qualify as Performance-Based Compensation shall be subject to any
additional limitations set forth in Section 162(m) of the Code or any regulations or rulings issued thereunder that are requirements for qualification as Performance-Based Compensation, and the Plan, the Program and the Award Agreement shall be
deemed amended to the extent necessary to conform to such requirements.
ARTICLE 6.
GRANTING OF OPTIONS
6.1
Granting of Options to Eligible Individuals
. The Administrator is authorized to grant Options to Eligible
Individuals from time to time, in its sole discretion, on such terms and conditions as it may determine which shall not be inconsistent with the Plan.
6.2
Qualification of Incentive Stock Options
. No Incentive Stock Option shall be granted to any person who is not an Employee of the Company or any
“subsidiary corporation” of the Company (as defined in Section 424(f) of the Code). No person who qualifies as a Greater Than 10% Shareholder may be granted an Incentive Stock Option unless such Incentive Stock Option conforms to the
applicable provisions of Section 422 of the Code. Any Incentive Stock Option granted under the Plan may be modified by the Administrator, with the consent of the Holder, to disqualify such Option from treatment as an “incentive stock
option” under Section 422 of the Code. To the extent that the aggregate fair market value of stock with respect to which “incentive stock options” (within the meaning of Section 422 of the Code, but without regard to Section
422(d) of the Code) are exercisable for the first time by a Holder during any calendar year under the Plan, and all other plans of the Company and any subsidiary or parent corporation thereof (each as defined in Section 424(f) and (e) of the
Code, respectively), exceeds $100,000, the Options shall be treated as
Non-Qualified
Stock Options to the extent required by Section 422 of the Code. The rule set forth in the preceding sentence shall be
applied by taking Options and other “incentive stock options” into account in the order in which they were granted and the Fair Market Value of stock shall be determined as of the time the respective options were granted.
6.3
Option Exercise Price
. The exercise price per Share subject to each Option shall be set by the
Administrator, but shall not be less than 100% of the Fair Market Value of a Share on the date the Option is granted (or, as to Incentive Stock Options, on the date the Option is modified, extended, or renewed for purposes of Section 424(h) of the
Code). In addition, in the case of Incentive Stock Options granted to a Greater Than 10% Shareholder, such price shall not be less than 110% of the Fair Market Value of a Share on the date the Option is granted (or the date the Option is modified,
extended, or renewed for purposes of Section 424(h) of the Code).
6.4
Option Term
. The term of each Option (the “
Option Term
”)
shall be set by the Administrator in its sole discretion;
provided, however
, that the Option Term shall not be more than ten (10) years from the date the Option is granted, or five (5) years from the date an Incentive Stock Option
is granted to a Greater Than 10% Shareholder. The Administrator shall determine the time period, including the time period following a Termination of Service, during which the Holder has the right to exercise the vested Options, which time period
may not extend beyond the last day of the Option Term. Except as limited by the requirements of Section 409A or Section 422 of the Code and regulations and rulings thereunder, the Administrator may extend the Option Term of any outstanding
Option, and may extend the time period during which vested Options may be exercised, in connection with any Termination of Service of the Holder, and may amend any other term or condition of such Option relating to such a Termination of Service.
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6.5
Option Vesting
.
(a) The period during which the right to exercise, in whole or in part, an Option vests in the Holder shall be set by the Administrator, and the Administrator may determine that an Option may not be exercised in
whole or in part for a specified period after it is granted. Such vesting may be based on service with the Company or any Subsidiary, any of the Performance Criteria, or any other criteria selected by the Administrator;
provided, however
, no
Option which vests solely based on time shall vest over a period of less than one year. Notwithstanding the foregoing, at any time after grant of an Option, the Administrator may, in its sole discretion and subject to whatever terms and conditions
it selects, accelerate the period during which an Option vests.
(b) No portion of an Option which is unexercisable at a Holder’s
Termination of Service shall thereafter become exercisable, except as may be otherwise
provided by the Administrator either in the Program, the Award Agreement or by action of the Administrator following the grant of the Option.
6.6
Substitute Awards
. Notwithstanding the foregoing provisions of this Article 6 to the contrary, in the case of an Option that is a Substitute Award, the
price per share of the shares subject to such Option may be less than the Fair Market Value per share on the date of grant;
provided
that the excess of: (a) the aggregate Fair Market Value (as of the date such Substitute Award is
granted) of the shares subject to the Substitute Award, over (b) the aggregate exercise price thereof does not exceed the excess of: (x) the aggregate fair market value (as of the time immediately preceding the transaction giving rise to
the Substitute Award, such fair market value to be determined by the Administrator) of the shares of the predecessor entity that were subject to the grant assumed or substituted for by the Company, over (y) the aggregate exercise price of such
shares.
ARTICLE 7.
EXERCISE OF OPTIONS
7.1
Partial Exercise
. An exercisable Option may be exercised in whole or in part. However, an Option shall not
be exercisable with respect to fractional shares and the Administrator may require that, by the terms of the Option, a partial exercise must be with respect to a minimum number of shares.
7.2
Manner of Exercise
. All or a portion of an exercisable Option shall be deemed exercised upon delivery of all of the following to the Secretary of the Company, or such other person or entity designated by
the Administrator, or his, her or its office, as applicable:
(a) A written or electronic notice complying with the applicable rules
established by the Administrator stating that the Option, or a portion thereof, is exercised. The notice shall be signed by the Holder or other person then entitled to exercise the Option or such portion of the Option;
(b) Such representations and documents as the Administrator, in its sole discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act and any other federal, state, or foreign securities laws or regulations, the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded, or any other
applicable law. The Administrator
may, in its sole discretion, also take whatever additional actions it deems appropriate to effect such compliance including, without limitation, placing legends on share certificates and issuing
stop-transfer notices to agents and registrars;
(c) In the event that the Option shall be exercised pursuant to Section 12.3 by
any person or persons other than the Holder, appropriate proof of the right of such person or persons to exercise the Option, as determined in the sole discretion of the Administrator; and
(d) Full payment of the exercise price and applicable withholding taxes to the stock administrator of the Company for the shares with respect to
which the Option, or portion thereof, is exercised, in a manner permitted by Section 12.1 and 12.2.
7.3
Notification Regarding Disposition
.
The Holder shall give the Company prompt written or electronic notice of any disposition of Shares acquired by exercise of an Incentive Stock Option which occurs within (a) two years from the date of granting (including the date the Option is
modified, extended, or renewed for purposes of Section 424(h) of the Code) such Option to such Holder, or (b) one year after the transfer of such shares to such Holder.
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ARTICLE 8.
AWARD OF RESTRICTED STOCK
8.1
Award of Restricted Stock
.
(a) The Administrator is authorized to grant Restricted Stock to Eligible Individuals, and shall determine the terms and conditions, including the restrictions applicable to each award of Restricted Stock, which
terms and conditions shall not be inconsistent with the Plan, and may impose such conditions on the issuance of such Restricted Stock as it deems appropriate.
(b) The Administrator shall establish the purchase price, if any, and form of payment for Restricted Stock;
provided, however
, that if a purchase price is charged, such purchase price shall be no less than
the par value of the Shares to be purchased, unless otherwise permitted by applicable law. In all cases, legal consideration shall be required for each issuance of Restricted Stock.
8.2
Rights as Shareholders
. Subject to Section 8.4, upon issuance of Restricted Stock, the Holder shall have, unless otherwise provided by the Administrator, all the rights of a shareholder with respect
to said shares, subject to the restrictions in the applicable Program or in each individual Award Agreement, including the right to receive all dividends and other distributions paid or made with respect to the shares;
provided, however
,
that, in the sole discretion of the Administrator, any extraordinary distributions with respect to the Shares shall be subject to the restrictions set forth in Section 8.3. In addition, with respect to a share of Restricted Stock subject to
vesting conditions, dividends which are paid prior to vesting shall be paid out to the Holder only if, when and to the extent that the vesting conditions are subsequently satisfied and the share of Restricted Stock vests.
8.3
Restrictions
. All shares of Restricted Stock (including any shares received by Holders thereof with respect to shares of Restricted Stock as a result of
stock dividends, stock splits or any other form of recapitalization) shall, in the terms of the applicable Program or in each individual Award Agreement, be subject to such restrictions and vesting requirements as the Administrator shall provide.
Such restrictions may include, without limitation, restrictions concerning voting rights and transferability and such restrictions may lapse separately or in combination at such times and pursuant to such circumstances or based on such criteria as
selected by the Administrator, including, without limitation, criteria based on the Holder’s duration of employment, directorship or consultancy with the Company, the Performance Criteria, Company performance, individual
performance, or other criteria selected by the Administrator;
provided, however
, that Restricted Stock that vests based solely on time, shall become vested over a period of not less than
one year. Notwithstanding the foregoing, by action taken after the Restricted Stock is issued, the Administrator may, on such terms and conditions as it may determine to be appropriate, accelerate the vesting of such Restricted Stock by removing any
or all of the restrictions imposed by the terms of the Program or the Award Agreement. Restricted Stock may not be sold or encumbered until all restrictions are terminated or expire.
8.4
Repurchase or Forfeiture of Restricted Stock
. If no price was paid by the Holder for the Restricted Stock, upon a Termination of Service, the Holder’s rights in unvested Restricted Stock then
subject to restrictions shall lapse, and such Restricted Stock shall be surrendered to the Company and cancelled without consideration. If a price was paid by the Holder for the Restricted Stock, upon a Termination of Service, the Company shall have
the right to repurchase from the Holder the unvested Restricted Stock then subject to restrictions at a cash price per share equal to the price paid by the Holder for such Restricted Stock or such other amount as may be specified in the Program or
the Award Agreement. The Administrator in its sole discretion may provide that in the event of certain events, including a Change in Control, the Holder’s death, retirement, disability, or any other specified Termination of Service, or any
other event, the Holder’s rights in unvested Restricted Stock shall not lapse, such Restricted Stock shall vest and, if applicable, the Company shall not have a right of repurchase.
8.5
Certificates for Restricted Stock
. Restricted Stock granted pursuant to the Plan may be evidenced in such manner as the Administrator shall determine. Certificates or book entries evidencing shares of
Restricted Stock must include an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock. The Company may, in its sole discretion, (a) retain physical possession of any stock certificate
evidencing shares of Restricted Stock until the restrictions thereon shall have lapsed and/or (b) require that the stock certificates evidencing shares of Restricted Stock be held in custody by a designated escrow agent (which may but need not
be the Company) until the restrictions thereon shall have lapsed, and that the Holder deliver a stock power, endorsed in blank, relating to such Restricted Stock.
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8.6
Section 83(b) Election
. If a Holder makes an election under Section 83(b) of the Code to be taxed with
respect to the Restricted Stock as of the date of transfer of the Restricted Stock rather than as of the date or dates upon
which the Holder would otherwise be taxable under Section 83(a) of the Code, the Holder shall be required to deliver a copy of such election to the Company promptly after filing such election
with the Internal Revenue Service.
ARTICLE 9.
AWARD OF RESTRICTED STOCK UNITS AND PHANTOM STOCK
9.1
Grant of Restricted Stock Units and Phantom Stock
. The Administrator is authorized to grant Awards of
Restricted Stock Units and Phantom Stock to any Eligible Individual selected by the Administrator in such amounts and subject to such terms and conditions as determined by the Administrator.
9.2
Term
. Except as otherwise provided herein, the term of a Restricted Stock Unit award and a Phantom Stock award shall be set by the Administrator in its sole discretion.
9.3
Purchase Price
. The Administrator shall specify the purchase price, if any, to be paid by the Holder to the Company with respect to any Restricted Stock
Unit award or Phantom Stock award;
provided, however
, that value of the consideration shall not be less than the par value of a Share, unless otherwise permitted by applicable law.
9.4
Vesting
. At the time of grant, the Administrator shall specify the date or dates on which the Restricted Stock Units and Phantom Stock shall become fully vested and nonforfeitable, and may specify such
conditions to vesting as it deems appropriate, including, without limitation, vesting based upon the Holder’s duration of service to the Company or any Subsidiary, one or more Performance Criteria, Company performance, individual performance,
or other specific criteria, in each case on a specified date or dates or over any period or periods, as determined by the Administrator;
provided, however
, that, Restricted Stock Units and Phantom Stock that vests solely based on time, shall
become vested and nonforfeitable over a period of not less than one year. Notwithstanding the foregoing, by action taken after the Restricted Stock Unit or Phantom Stock is granted, the Administrator may, in its sole discretion and subject to
whatever terms and conditions it selects, accelerate the period during which the Restricted Stock Unit or Phantom Stock vests.
9.5
Maturity/Settlement and Payment
. At the time of grant, the Administrator shall specify the maturity date applicable to each grant of Restricted Stock Units and the settlement date applicable to each grant of Phantom Stock, which shall be no
earlier than the vesting date or
dates of such Award and may be determined at the election of the Holder (if permitted by the applicable Award Agreement);
provided, however
, that, except as otherwise determined by the
Administrator, set forth in any applicable Award Agreement, and subject to compliance with Section 409A of the Code, in no event shall the maturity date relating to each Restricted Stock Unit or the settlement date relating to each share of Phantom
Stock occur following the later of (a) the 15
th
day of the third month
following the end of calendar year in which the Restricted Stock Unit or Phantom Stock vests; or (b) the 15
th
day of the third month following the end of the Company’s fiscal year in which the Restricted Stock Unit or Phantom Stock vests. On the maturity date or the settlement date, as applicable, the Company shall,
subject to Section 12.4(e), transfer to the Holder one unrestricted, fully transferable share of Common Stock for each Restricted Stock Unit or share of Phantom Stock, as applicable, scheduled to be paid out on such date and not previously
forfeited, or in the sole discretion of the Administrator, an amount in cash equal to the Fair Market Value of such shares on the maturity date or settlement date, as applicable, or a combination of cash and Common Stock as determined by the
Administrator.
9.6
Payment upon Termination of Service
. An Award of Restricted Stock Units or Phantom Stock shall only be payable while the
Holder is an Employee or a member of the Board, as applicable;
provided, however
, that the Administrator, in its sole and absolute discretion may provide (in an Award Agreement or otherwise) that a Restricted Stock Unit award or Phantom Stock
award may be paid subsequent to a Termination of Service in certain events, including a Change in Control, the Holder’s death, retirement, disability, or any other specified Termination of Service.
9.7
No Rights as a Shareholder
. Unless otherwise determined by the Administrator, a Holder who is awarded Restricted Stock Units or Phantom Stock shall
possess no incidents of ownership with respect to the Shares represented by such Restricted Stock Units or Phantom Stock, as applicable, unless and until the same are transferred to the Holder pursuant to the terms of this Plan and the Award
Agreement.
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ARTICLE 10.
AWARD OF PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS, STOCK PAYMENTS
10.1
Performance Awards
.
(a) The Administrator is authorized to grant Performance Awards, including Awards of Performance Stock Units, to any Eligible Individual and to determine whether such Performance Awards shall be Performance-Based
Compensation. The value of Performance Awards, including Performance Stock Units, may be linked to any one or more of the Performance Criteria or other specific criteria determined by the Administrator, in each case on a specified date or dates or
over any period or periods determined by the Administrator. Performance Awards, including Performance Stock Unit awards may be paid in cash, Shares, or a combination of cash and Shares, as determined by the Administrator.
(b) Without limiting Section 10.1(a), the Administrator may grant Performance Awards to any Eligible Individual in the form of a cash bonus
payable upon the attainment of objective Performance Goals, or such other criteria, whether or not objective, which are established by the Administrator, in each case on a specified date or dates or over any period or periods determined by the
Administrator. Any such bonuses paid to a Holder which are intended to be Performance-Based Compensation shall be based upon objectively determinable bonus formulas established in accordance with the provisions of Article 5.
10.2
Dividend Equivalents
. Dividend Equivalents may be granted by the Administrator based on dividends declared on the Common Stock, to be credited as of
dividend payment dates during the period between the date an Award is granted to a Holder and the date such Award vests, is exercised, is distributed or expires, as determined by the Administrator. Such Dividend Equivalents shall be converted to
cash or additional Shares by such formula and at such time and subject to such limitations as may be determined by the Administrator. In addition, Dividend Equivalents shall be paid out to the Holder only if, when and to the extent that such Awards
vest. The value of dividends and other
distributions payable with respect to Awards that do not vest shall be forfeited.
10.3
Stock
Payments
. The Administrator is authorized to make Stock Payments to any Eligible Individual. The number or value of shares of any Stock Payment shall be determined by the Administrator and may be based upon one or more Performance Criteria or
any other specific criteria, including service to the Company or any Subsidiary, determined by the Administrator;
provided
,
however
, no Stock Payment which vests solely based on time shall vest over a period of less than one year.
Shares underlying a Stock Payment which is subject to a vesting schedule or other conditions or criteria set by the Administrator will not be issued until those conditions have been satisfied. Unless otherwise provided by the Administrator, a Holder
of a Stock Payment shall have no rights as a Company shareholder with respect to such Stock Payment until such time as the Stock Payment has vested and the Shares underlying the Award have been issued to the Holder. Stock Payments may, but are not
required to, be made in lieu of base salary, bonus, fees, or other cash compensation otherwise payable to such Eligible Individual.
10.4
Term
.
The term of a Performance Award, Dividend Equivalent award and/or Stock Payment award shall be set by the Administrator in its sole discretion.
10.5
Purchase Price
. The Administrator may establish the purchase price of a Performance Award or shares distributed as a Stock Payment award;
provided, however
, that value of the consideration shall not be less than the par value of a
Share, unless otherwise permitted by applicable law.
10.6
Termination of Service
. A Performance Award, Stock Payment award and/or Dividend
Equivalent award is distributable only while the Holder is an Employee or Director, as applicable. The Administrator, however, in its sole discretion may provide that the Performance Award, Dividend Equivalent award and/or Stock Payment award may be
distributed subsequent to a Termination of Service in certain events, including a Change in Control, the Holder’s death, retirement, disability, or any other specified Termination of Service.
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ARTICLE 11.
AWARD OF STOCK APPRECIATION RIGHTS
11.1
Grant of Stock Appreciation Rights
.
(a) The Administrator is authorized to grant Stock Appreciation Rights to Eligible Individuals from time to time, in its sole discretion, on such
terms and conditions as it may determine consistent with the Plan.
(b) A Stock Appreciation Right shall entitle the Holder (or other
person entitled to exercise the Stock Appreciation Right pursuant to the Plan) to exercise all or a specified portion of the Stock Appreciation Right (to the extent then exercisable pursuant to its terms) and to receive from the Company an amount
determined by multiplying the difference obtained by subtracting the exercise price per share of the Stock Appreciation Right from the Fair Market Value on the date of exercise of the Stock Appreciation Right by the number of Shares with respect to
which the Stock Appreciation Right shall have been exercised, subject to any limitations the Administrator may impose. Except as described in (c) below, the exercise price per Share subject to each Stock Appreciation Right shall be set by the
Administrator, but shall not be less than 100% of the Fair Market Value on the date the Stock Appreciation Right is granted.
(c)
Notwithstanding the foregoing provisions of Section 11.1(b) to the contrary, in the case of an Stock Appreciation Right that is a Substitute Award, the price per share of the shares subject to such Stock Appreciation Right may be less than 100% of
the Fair Market Value per share on the date of grant;
provided, however
, that the excess of: (i) the aggregate Fair Market Value (as of the date such Substitute Award is granted) of the shares subject to the Substitute Award, over
(ii) the aggregate exercise price thereof does not exceed the excess of: (x) the aggregate fair market value (as of the time immediately preceding the transaction giving rise to the Substitute Award, such fair market value to be determined
by the Administrator) of the shares of the predecessor entity that were subject to the grant assumed or substituted for by the Company, over (y) the aggregate exercise price of such shares.
11.2
Stock Appreciation Right Vesting
.
(a)
The period during which the right to exercise, in whole or in part, a Stock Appreciation Right vests in the Holder shall be set by the Administrator and the Administrator may determine that a Stock Appreciation Right may not be exercised in whole or
in part for a specified period after it is granted. Such vesting may
be based on service with the Company or any Subsidiary, or any other criteria selected by the Administrator;
provided, however
, no Stock Appreciation Right which vests solely based on time
shall vest over a period of less than one year. Notwithstanding the foregoing, at any time after grant of a Stock Appreciation Right, the Administrator may, in its sole discretion and subject to whatever terms and conditions it selects, accelerate
the period during which a Stock Appreciation Right vests.
(b) No portion of a Stock Appreciation Right which is unexercisable at
Termination of Service shall thereafter become exercisable, except as may be otherwise provided by the Administrator either in the applicable Program or Award Agreement or by action of the Administrator following the grant of the Stock Appreciation
Right.
11.3
Manner of Exercise
. All or a portion of an exercisable Stock Appreciation Right shall be deemed exercised upon delivery of all of the
following to the stock administrator of the Company, or such other person or entity designated by the Administrator, or his, her or its office, as applicable:
(a) A written or electronic notice complying with the applicable rules established by the Administrator stating that the Stock Appreciation Right, or a portion thereof, is exercised. The notice shall be signed by
the Holder or other person then entitled to exercise the Stock Appreciation Right or such portion of the Stock Appreciation Right;
(b)
Such representations and documents as the Administrator, in its sole discretion, deems necessary or advisable to effect compliance with all applicable provisions of the Securities Act and any other federal, state or foreign securities laws or
regulations. The Administrator may, in its sole discretion, also take whatever additional actions it deems appropriate to effect such compliance; and
(c) In the event that the Stock Appreciation Right shall be exercised pursuant to this Section 11.3 by any person or persons other than the Holder, appropriate proof of the right of such person or persons to
exercise the Stock Appreciation Right.
11.4
Stock Appreciation Right Term
. The term of each Stock Appreciation Right (the “
Stock
Appreciation Right Term
”) shall be set by the Administrator in its sole discretion;
provided, however
, that the term shall not be
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more than ten (10) years from the date the Stock Appreciation Right is granted. The Administrator shall determine the time period, including the time period following a Termination of
Service, during which the Holder has the right to exercise the vested Stock Appreciation Rights, which time period may not extend beyond the expiration date of the Stock Appreciation Right Term. Except as limited by the requirements of Section 409A
of the Code and regulations and rulings thereunder, the Administrator may extend the Stock Appreciation Right Term of any outstanding Stock Appreciation Right, and may extend the time period
during which vested Stock Appreciation Rights may be exercised, in connection with any Termination of Service of the Holder, and may amend any other term or condition of such Stock Appreciation
Right relating to such a Termination of Service.
11.5
Payment
. Payment of the amounts payable with respect to Stock Appreciation Rights pursuant
to this Article 11 shall be in cash, Shares (based on its Fair Market Value as of the date the Stock Appreciation Right is exercised), or a combination of both, as determined by the Administrator.
ARTICLE 12.
ADDITIONAL TERMS OF AWARDS
12.1
Payment
. The Administrator shall determine the methods by which payments by any Holder with respect to
any Awards granted under the Plan shall be made, including, without limitation: (a) cash or check, (b) Shares (including, in the case of payment of the exercise price of an Award, Shares issuable pursuant to the exercise of the Award) or
Shares held for such period of time as may be required by the Administrator in order to avoid adverse accounting consequences, in each case, having a Fair Market Value on the date of delivery equal to the aggregate payments required,
(c) delivery of a written or electronic notice that the Holder has placed a market sell order with a broker with respect to Shares then issuable upon exercise or vesting of an Award, and that the broker has been directed to pay a sufficient
portion of the net proceeds of the sale to the Company in satisfaction of the aggregate payments required; provided that payment of such proceeds is then made to the Company upon settlement of such sale, or (d) other form of legal consideration
acceptable to the Administrator. The Administrator shall also determine the methods by which Shares shall be delivered or deemed to be delivered to Holders. Notwithstanding any other provision of the Plan to the contrary, no Holder who is a Director
or an “executive officer” of the Company within the meaning of Section 13(k) of the Exchange Act shall be permitted to make payment with respect to any Awards granted under the Plan, or continue any extension of credit with respect to such
payment, with a loan from the Company or a loan arranged by the Company in violation of Section 13(k) of the Exchange Act.
12.2
Tax Withholding
.
The Company or any Subsidiary shall have the authority and the right to deduct or withhold, or require a Holder to remit to the Company, an amount sufficient to satisfy federal, state, local, and foreign taxes (including the Holder’s FICA,
employment tax, or other social security contribution obligation)
required by law to be withheld with respect to any taxable event concerning a Holder arising as a result of the Plan or any Award. The Administrator may in its sole discretion and in satisfaction
of the foregoing requirement, or in satisfaction of such additional withholding obligations as a Holder may have elected, allow a Holder to satisfy such obligations by any payment means described in Section 12.1 hereof, including, without
limitation, by allowing such Holder to elect to have the Company or any Subsidiary withhold Shares otherwise issuable under an Award (or allow the surrender of Shares). The number of Shares which may be so withheld or surrendered shall be no greater
than the number of Shares which have a fair market value on the date of withholding or repurchase equal to the aggregate amount of such liabilities based on the maximum statutory withholding rates in such Holder’s applicable jurisdiction for
federal, state, local, and foreign income tax and payroll tax purposes that are applicable to such supplemental taxable income. The Administrator shall determine the fair market value of the Shares, consistent with applicable provisions of the Code,
for tax withholding obligations due in connection with a broker-assisted cashless Option or Stock Appreciation Right exercise involving the sale of Shares to pay the Option or Stock Appreciation Right exercise price or any tax withholding
obligation.
12.3
Transferability of Awards
.
(a) Except as otherwise provided in Section 12.3(b):
(i) No Award under the Plan may be sold,
pledged, assigned, or transferred in any manner other than by will or the laws of descent and distribution or, subject to the consent of the Administrator, pursuant to a DRO, unless and until such Award has been exercised, or the shares underlying
such Award have been issued, and all restrictions applicable to such shares have lapsed;
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(ii) No Award or interest or right therein shall be liable for the debts, contracts, or engagements
of the Holder or his successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, hypothecation, encumbrance, assignment, or any other means whether such disposition be voluntary or involuntary or by
operation of law by judgment, levy, attachment, garnishment, or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to the extent that such
disposition is permitted by the preceding sentence; and
(iii) During the lifetime of the Holder, only the Holder may exercise an Award
(or any portion thereof) granted to him under the Plan, unless it has been disposed of pursuant to a DRO; after the death of the Holder, any exercisable portion of an Award may, prior to the time when such portion becomes unexercisable under the
Plan or the applicable Program or Award Agreement, be exercised by his personal representative or by any person empowered to do so under the deceased Holder’s will or under the then applicable laws of descent and distribution.
(b) Notwithstanding Section 12.3(a), the Administrator, in its sole discretion, may determine to permit a Holder to transfer an Award other than
an Incentive Stock Option to any one or more Permitted Transferees, subject to the following terms and conditions: (i) an Award transferred to a Permitted Transferee shall not be assignable or transferable by the Permitted Transferee other than
by will or the laws of descent and distribution; (ii) an Award transferred to a Permitted Transferee shall continue to be subject to all the terms and conditions of the Award as applicable to the original Holder (other than the ability to
further transfer the Award); (iii) an Award may not be transferred for value or consideration, and (iv) the Holder and the Permitted Transferee shall execute any and all documents requested by the Administrator, including, without limitation
documents to (A) confirm the status of the transferee as a Permitted Transferee, (B) satisfy any requirements for an exemption for the transfer under applicable federal, state and foreign securities laws, and (C) evidence the
transfer.
(c) Notwithstanding Section 12.3(a), a Holder may, in the manner determined by the Administrator, designate a beneficiary to
exercise the rights of the Holder and to receive any distribution with respect to any Award upon the Holder’s death. A beneficiary, legal guardian, legal representative, or other person
claiming any rights pursuant to the Plan is subject to all terms and conditions of the Plan and any Program or Award Agreement applicable to the Holder, except to the extent the Plan, the
Program, and the Award Agreement otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Administrator. If the Holder is married and resides in a community property state, a designation of a person other than the
Holder’s spouse as his or her beneficiary with respect to more than 50% of the Holder’s interest in the Award shall not be effective without the prior written or electronic consent of the Holder’s spouse. If no beneficiary has been
designated or survives the Holder, payment shall be made to the person entitled thereto pursuant to the Holder’s will or the laws of descent and distribution. Subject to the foregoing, a beneficiary designation may be changed or revoked by a
Holder at any time;
provided, however
, that the change or revocation is filed with the Administrator prior to the Holder’s death.
12.4
Conditions to Issuance of Shares
.
(a) Notwithstanding anything herein to the contrary, the Company shall not be required to
issue or deliver any certificates or make any book entries evidencing Shares pursuant to the exercise of any Award, unless and until the Board or the Committee has determined, with advice of counsel, that the issuance of such shares is in compliance
with all applicable laws, regulations of governmental authorities, and, if applicable, the requirements of any exchange on which the Shares are listed or traded, and the Shares are covered by an effective registration statement or applicable
exemption from registration. In addition to the terms and conditions provided herein, the Board or the Committee may require that a Holder make such reasonable covenants, agreements, and representations as the Board or the Committee, in its
discretion, deems advisable in order to comply with any such laws, regulations, or requirements.
(b) All Share certificates delivered
pursuant to the Plan and all shares issued pursuant to book entry procedures are subject to any stop-transfer orders and other restrictions as the Administrator deems necessary or advisable to comply with federal, state, or foreign securities or
other laws, rules, and regulations and the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted, or traded. The Administrator may place legends on any Share certificate or book entry to reference
restrictions applicable to the Shares.
(c) The Administrator shall have the right to require any Holder to comply with any timing or
other restrictions
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with respect to the settlement, distribution or exercise of any Award, including a window-period limitation, as may be imposed in the sole discretion of the Administrator.
(d) No fractional Shares shall be issued and the Administrator shall determine, in its sole discretion, whether cash shall be given in lieu of
fractional shares or whether such fractional shares shall be eliminated by rounding down.
(e) Notwithstanding any other provision of
the Plan, unless otherwise determined by the Administrator or required by any applicable law, rule, or regulation, the Company shall not deliver to any Holder certificates evidencing Shares issued in connection with any Award and instead such Shares
shall be recorded in the books of the Company (or, as applicable, its transfer agent or stock plan administrator).
12.5
Forfeiture and Claw-Back
Provisions
. Pursuant to its general authority to determine the terms and conditions applicable to Awards under the Plan, the Administrator shall have the right to provide, in an Award Agreement or otherwise, or to require a Holder to agree by
separate written or electronic instrument, that:
(a) (i) Any proceeds, gains or other economic benefit actually or constructively
received by the Holder upon any receipt or exercise of the Award, or upon the receipt or resale of any Shares underlying the Award, must be paid to the Company, and (ii) the Award shall terminate and any unexercised portion of the Award
(whether or not vested) shall be forfeited, if (x) a Termination of Service occurs prior to a specified date, or within a specified time period following receipt or exercise of the Award, or (y) the Holder at any time, or during a
specified time period, engages in any activity in competition with the Company, or which is inimical, contrary, or harmful to the interests of the Company, as further defined by the Administrator or (z) the Holder incurs a Termination of
Service for “cause” (as such term is defined in the sole discretion of the Administrator, or as set forth in a written agreement relating to such Award between the Company and the Holder); and
(b) All Awards (including any proceeds, gains, or other economic benefit actually or constructively received by the Holder upon any receipt or
exercise of any Award or upon the receipt or resale of any Shares underlying the Award) shall be subject to the provisions of the claw-back policy for equity awards and incentive compensation adopted by the Company, including, without limitation,
any amendment to such claw-back policy adopted to further comply with the requirements of the Dodd-Frank Wall Street Reform and Consumer
Protection Act and any rules or regulations promulgated thereunder or any other applicable laws or regulations, to the extent set forth in such claw-back policy and/or in the applicable Award
Agreement.
12.6
Prohibition on Repricing
. Except as permitted under Section 14.2, the terms of outstanding Awards may not be amended to
reduce the exercise price per Share of outstanding Options or Stock Appreciation Rights or cancel outstanding Options or Stock Appreciation Rights in exchange for cash, other Awards, or Options or Stock Appreciation Rights with an exercise price per
Share that is less than the exercise price per Share of the original Options or Stock Appreciation Rights without the approval of the shareholders of the Company.
12.7
Data Privacy
. As a condition of receipt of any Award, each Holder explicitly and unambiguously consents to the collection, use, and transfer, in electronic or other form, of personal data as described
in this Section 12.7 by and among, as applicable, the Company and its Subsidiaries for the exclusive purpose of implementing, administering, and managing the Holder’s participation in the Plan. The Company and its Subsidiaries may hold
certain personal information about a Holder, including, but not limited to, the Holder’s name, home address, and telephone number, date of birth, social security or insurance number or other identification number, salary, nationality, job
title(s), any shares of stock held in the Company or any of its Subsidiaries, and details of all Awards, in each case, for the purpose of implementing, managing, and administering the Plan and Awards (the “
Data
”). The Company and
its Subsidiaries may transfer the Data among themselves as necessary for the purpose of implementation, administration, and management of a Holder’s participation in the Plan, and the Company and its Subsidiaries may each further transfer the
Data to any third parties assisting the Company and its Subsidiaries in the implementation, administration, and management of the Plan. These recipients may be located in the Holder’s country, or elsewhere, and the Holder’s country may
have different data privacy laws and protections than the recipients’ country. Through acceptance of an Award, each Holder authorizes such recipients to receive, possess, use, retain, and transfer the Data, in electronic or other form, for the
purposes of implementing, administering, and managing the Holder’s participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom the Company or any of its Subsidiaries or
the Holder may elect to deposit any Shares. The Data related to a Holder will be held only as long as is necessary to implement, administer, and manage the Holder’s participation in the Plan. A Holder may, at any time, view the Data held by the
Company with respect to such
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Holder, request additional information about the storage and processing of the Data with respect to such Holder, recommend any necessary corrections to the Data with respect to the Holder or
refuse or withdraw the consents herein in writing, in any case without cost, by contacting his or her local human resources representative. The Company may cancel Holder’s ability to participate in the
Plan and, in the Administrator’s discretion, the Holder may forfeit any outstanding Awards if the Holder refuses or withdraws his or her consents as described herein. For more information on
the consequences of refusal to consent or withdrawal of consent, Holders may contact their local human resources representative.
ARTICLE 13.
ADMINISTRATION
13.1
Administrator
. The Committee (or another committee or a subcommittee of the Board assuming the functions
of the Committee under the Plan) shall administer the Plan (except as otherwise permitted herein) and, unless otherwise determined by the Board, shall consist solely of two or more
Non-Employee
Directors
appointed by and holding office at the pleasure of the Board, each of whom is intended to qualify as both a
“non-employee
director” as defined by Rule
16b-3
of
the Exchange Act or any successor rule, an “outside director” for purposes of Section 162(m) of the Code and an “independent director” under the rules of any securities exchange or automated quotation system on which the
Shares are listed, quoted or traded;
provided, however
, that any action taken by the Committee shall be valid and effective, whether or not members of the Committee at the time of such action are later determined not to have satisfied the
requirements for membership set forth in this Section 13.1 or otherwise provided in any charter of the Committee. Except as may otherwise be provided in any charter of the Committee, appointment of Committee members shall be effective upon
acceptance of appointment. Committee members may resign at any time by delivering written or electronic notice to the Board. Vacancies in the Committee may only be filled by the Board. Notwithstanding the foregoing, (a) the full Board, acting
by a majority of its members in office, shall conduct the general administration of the Plan with respect to Awards granted to
Non-Employee
Directors and, with respect to such Awards, the terms
“Administrator” and “Committee” as used in the Plan shall be deemed to refer to the Board and (b) the Board or Committee may delegate its authority hereunder to the extent permitted by Section 13.6.
13.2
Duties and Powers of Committee
. It shall be the duty of the Committee to conduct the general administration of the Plan in accordance with its
provisions. The Committee shall have the power to interpret the Plan, the Program and the Award Agreement, and to adopt such rules for the administration, interpretation, and application of the Plan as are not inconsistent therewith, to interpret,
amend, or revoke any such rules and to amend any
Program or Award Agreement;
provided, however
, that the rights or obligations of the Holder of the Award that is the subject of any such Program or Award Agreement are not affected
adversely by such amendment, unless the consent of the Holder is obtained or such amendment is otherwise permitted under Section 14.10. Any such grant or award under the Plan need not be the same with respect to each Holder. Any such
interpretations and rules with respect to Incentive Stock Options shall be consistent with the provisions of Section 422 of the Code. In its sole discretion, the Board may at any time and from time to time exercise any and all rights and duties
of the Committee under the Plan except with respect to matters which under Rule
16b-3
under the Exchange Act or any successor rule, or Section 162(m) of the Code, or any regulations or rules issued thereunder,
or the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted, or traded are required to be determined in the sole discretion of the Committee.
13.3
Action by the Committee
. Unless otherwise established by the Board or in any charter of the Committee, a majority of the Committee shall constitute a quorum and the acts of a majority of the members
present at any meeting at which a quorum is present, and acts approved in writing by all members of the Committee in lieu of a meeting, shall be deemed the acts of the Committee. Each member of the Committee is entitled to, in good faith, rely or
act upon any report or other information furnished to that member by any officer or other employee of the Company or any Subsidiary, the Company’s independent certified public accountants, or any executive compensation consultant or other
professional retained by the Company to assist in the administration of the Plan.
13.4
Authority of Administrator
. Subject to any specific
designation in the Plan, the Administrator has the exclusive power, authority and sole discretion to:
(a) Designate Eligible
Individuals to receive Awards;
(b) Determine the type or types of Awards to be granted to each Eligible Individual;
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GATX CORPORATION - 2017 Proxy Statement
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EXHIBIT C AMENDED AND RESTATED 2012 INCENTIVE AWARD PLAN
(c) Determine the number of Awards to be granted and the number of Shares to which an Award will
relate;
(d) Determine the terms and conditions of any Award granted pursuant to the Plan, including, but not limited to, the exercise
price, grant price, or purchase price, any performance criteria, any restrictions or limitations on the Award, any schedule for vesting, lapse of forfeiture restrictions or restrictions on the exercisability of an Award and accelerations or waivers
thereof, and any provisions related to
non-competition
and recapture of gain on an Award, based in each case on such considerations as the Administrator in its sole discretion determines;
(e) Determine whether, to what extent, and pursuant to what circumstances an Award may be settled in, or the exercise price of an Award may be
paid in cash, Shares, other Awards, or other property, or an Award may be canceled, forfeited, or surrendered;
(f) Prescribe the form
of each Award Agreement, which need not be identical for each Holder;
(g) Decide all other matters that must be determined in
connection with an Award;
(h) Establish, adopt, or revise any rules and regulations as it may deem necessary or advisable to
administer the Plan;
(i) Interpret the terms of, and any matter arising pursuant to, the Plan, any Program or any Award Agreement;
(j) Accelerate wholly or partially the vesting or lapse of restrictions of any Award or portion thereof at any time after the grant of
an Award, subject to whatever terms and conditions it selects and Section 14.2(d); and
(k) Make all other decisions and determinations
that may be required pursuant to the Plan or as the
Administrator deems necessary or advisable to administer the Plan.
13.5
Decisions Binding
.
The Administrator’s interpretation of the Plan, any Awards granted pursuant to the Plan, any Program, any Award Agreement and all decisions and determinations by the Administrator with respect to the Plan are final, binding, and conclusive on
all parties.
13.6
Delegation of Authority
. To the extent permitted by applicable law or the rules of any securities exchange or automated
quotation system on which the Shares are listed, quoted, or traded, the Board or Committee may from time to time delegate to a committee of one or more members of the Board or one or more officers of the Company the authority to grant or amend
Awards or to take other administrative actions pursuant to Article 13;
provided,
however
, that in no event shall an officer of the Company be delegated the authority to grant awards to, or amend awards held by, the following
individuals: (a) individuals who are subject to Section 16 of the Exchange Act, (b) Covered Employees, or (c) officers of the Company (or Directors) to whom authority to grant or amend Awards has been delegated hereunder;
and
provided further
, that any delegation of administrative authority shall only be permitted to the extent it is permissible under Section 162(m) of the Code and applicable securities laws or the rules of any securities exchange or
automated quotation system on which the Shares are listed, quoted, or traded. Any delegation hereunder shall be subject to the restrictions and limits that the Board or Committee specifies at the time of such delegation, and the Board may at any
time rescind the authority so delegated or appoint a new delegatee. At all times, the delegatee appointed under this Section 13.6 shall serve in such capacity at the pleasure of the Board and the Committee.
ARTICLE 14.
MISCELLANEOUS PROVISIONS
14.1
Amendment, Suspension or Termination of the Plan
. Except as otherwise provided in this Section 14.1,
the Plan may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Board. However, without approval of the Company’s shareholders given within twelve (12) months before or
after the action by the Administrator, no action of the Administrator may, except as provided in Section 14.2, (a) increase the limits imposed in Section 3.1 on the maximum number of shares which may be issued under the Plan, or
(b) reduce
the price per share of any outstanding Option or Stock Appreciation Right granted under the Plan, or (c) cancel any Option or Stock Appreciation Right in exchange for cash or another Award
when the Option or Stock Appreciation Right price per share exceeds the Fair Market Value of the underlying Shares. In addition, to the extent necessary and desirable to comply with any applicable law or stock exchange rule, the Administrator shall
obtain shareholder approval of any Plan amendment in such a manner and to such a degree as required. Except as provided in Section 14.10, no amendment,
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C-19
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EXHIBIT C AMENDED AND RESTATED 2012 INCENTIVE AWARD PLAN
suspension or termination of the Plan shall, without the consent of the Holder, impair any rights or obligations under any Award theretofore granted or awarded, unless the Award itself otherwise
expressly so provides. No Awards may be granted or awarded during any period of suspension or after termination of the Plan, and in no event may any Award be granted under the Plan after the tenth (10
th
) anniversary of the Effective Date.
14.2
Changes in Common Stock or Assets of the Company, Acquisition or Liquidation of the Company and Other Corporate Events
.
(a) In the event of any stock dividend, stock split, combination or exchange of shares, merger, consolidation, or other distribution (other than normal cash dividends) of Company assets to shareholders, or any
other change affecting the shares of the Company’s stock or the share price of the Company’s stock other than an Equity Restructuring, the Administrator shall make equitable adjustments, if any, to reflect such change with respect to
(i) the aggregate number and kind of shares that may be issued under the Plan (including, but not limited to, adjustments of the limitations in Section 3.1 on the maximum number and kind of shares which may be issued under the Plan, and
adjustments of the Award Limit, and adjustments of the manner in which shares subject to Full Value Awards will be counted); (ii) the number and kind of Shares (or other securities or property) subject to outstanding Awards; (iii) the terms and
conditions of any outstanding Awards (including, without limitation, any applicable performance targets or criteria with respect thereto); and (iv) the grant or exercise price per share for any outstanding Awards under the Plan. Any adjustment
affecting an Award intended as Performance-Based Compensation shall be made consistent with the requirements of Section 162(m) of the Code.
(b) In the event of any transaction or event described in Section 14.2(a) or any unusual or nonrecurring transactions or events affecting the Company, any Subsidiary of the Company, or the financial statements of
the Company or any Subsidiary, or of changes in applicable laws, regulations or accounting principles, the Administrator, in its sole discretion, and on such terms and conditions as it deems appropriate, either by the terms of the Award or by action
taken prior to the occurrence of such transaction or event and either automatically or upon the Holder’s request, is hereby authorized to take any one or more of the following actions whenever the Administrator determines that such action is
appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with
respect to any Award under the Plan, to facilitate such transactions or events or to give effect to such changes in laws, regulations or principles:
(i) To provide for either (A) termination of any such Award in exchange for an amount of cash, if any, equal to the amount that would have
been attained upon the exercise of such Award or realization of the Holder’s rights (and, for the avoidance of doubt, if as of the date of the occurrence of the transaction or event described in this Section 14.2 the Administrator
determines in good faith that no amount would have been attained upon the exercise of such Award or realization of the Holder’s rights, then such Award may be terminated by the Company without payment) or (B) the replacement of such Award
with other rights or property selected by the Administrator in its sole discretion having an aggregate value not exceeding the amount that could have been attained upon the exercise of such Award or realization of the Holder’s rights had such
Award been currently exercisable or payable or fully vested;
(ii) To provide that such Award be assumed by the successor or survivor
corporation, or a parent or subsidiary thereof, or shall be substituted for by similar options, rights, or awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the
number and kind of shares and prices;
(iii) To make adjustments in the number and type of shares of the Company’s stock (or other
securities or property) subject to outstanding Awards, and in the number and kind of outstanding Restricted Stock and/or in the terms and conditions of (including the grant or exercise price), and the criteria included in, outstanding Awards and
Awards which may be granted in the future;
(iv) To provide that such Award shall be exercisable or payable or fully vested with
respect to all shares covered thereby, notwithstanding anything to the contrary in the Plan or the applicable Program or Award Agreement; and
(v) To provide that the Award cannot vest, be exercised or become payable after such event.
(c) In
connection with the occurrence of any Equity Restructuring, and notwithstanding anything to the contrary in Sections 14.2(a) and 14.2(b):
(i) The number and type of securities subject to each outstanding Award and the exercise price or grant price thereof, if applicable, shall be equitably adjusted; and/or
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C-20
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GATX CORPORATION - 2017 Proxy Statement
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EXHIBIT C AMENDED AND RESTATED 2012 INCENTIVE AWARD PLAN
(ii) The Administrator shall make such equitable adjustments, if any, as the Administrator in its
discretion may deem appropriate to reflect such Equity Restructuring with respect to the aggregate number and kind of shares that may be issued under the Plan (including, but not limited to, adjustments of the limitations in Section 3.1 on the
maximum number and kind of shares which may be issued under the Plan, and adjustments of the Award Limit, and adjustments of the manner in which shares subject to Full Value Awards will be counted). The adjustments provided under this Section
14.2(c) shall be nondiscretionary and shall be final and binding on the affected Holder and the Company.
(d) Notwithstanding any other
provision of the Plan, in the event of a Change in Control, each outstanding Award shall continue in effect or be assumed or an equivalent Award substituted by the successor corporation or a parent or subsidiary of the successor corporation. In the
event of a Change in Control, other than one occurring under Section 2.7(e), in which the an Award continues in effect or is assumed or an equivalent Award substituted, and the surviving or successor corporation terminates Holder’s employment
or service without cause upon or within twenty-four (24) months, or such lesser period as specified in the Award Agreement, following such Change in Control (not including a Change in Control under Section 2.7(e)), then such Holder shall be
fully vested in such continued, assumed, or substituted Award. In the event of a Change in Control under Section 2.7(e), the Administrator, in its sole discretion, may specify in the Award Agreement, or at the time of such Change in Control, the
treatment of any Award held by a Holder whose employment is affected by such Change in Control.
(e) In the event that the successor
corporation in a Change in Control (other than a Change in Control under Section 2.7(e)) refuses to assume or substitute for the Award, such Awards shall become fully exercisable immediately prior to the consummation of such transaction and all
forfeiture restrictions on any or all of such Awards to lapse. If an Award is exercisable in lieu of assumption or substitution in the event of a Change in Control (other than a Change in Control under Section 2.7(e)), the Administrator shall notify
the Holder that the Award shall be fully exercisable for a period of fifteen (15) days from the date of such notice, contingent upon the occurrence of such Change in Control, and the Award shall terminate upon the expiration of such period.
(f) For the purposes of this Section 14.2, an Award shall be considered assumed if, following
the Change in Control, the Award confers the right to purchase or receive, for each share of Common Stock subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or other securities or property)
received in the Change in Control by holders of Common Stock for each share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the
outstanding shares);
provided, however
, that if such consideration received in the Change in Control was not solely common stock of the successor corporation or its parent, the Administrator may, with the consent of the successor corporation,
provide for the consideration to be received upon the exercise of the Award, for each share of Common Stock subject to an Award, to be solely common stock of the successor corporation or its parent equal in fair market value to the per share
consideration received by holders of Common Stock in the Change in Control.
(g) The Administrator may, in its sole discretion, include
such further provisions and limitations in any Award, agreement or certificate, as it may deem equitable and in the best interests of the Company that are not inconsistent with the provisions of the Plan.
(h) With respect to Awards which are granted to Covered Employees and are intended to qualify as Performance-Based Compensation, no adjustment or
action described in this Section 14.2 or in any other provision of the Plan shall be authorized to the extent that such adjustment or action would cause such Award to fail to so qualify as Performance-Based Compensation, unless the
Administrator determines that the Award should not so qualify. No adjustment or action described in this Section 14.2 or in any other provision of the Plan shall be authorized to the extent that such adjustment or action would cause the Plan to
violate Section 422(b)(1) of the Code. Furthermore, no such adjustment or action shall be authorized to the extent such adjustment or action would result in short-swing profits liability under Section 16 or violate the exemptive conditions
of Rule
16b-3
unless the Administrator determines that the Award is not to comply with such exemptive conditions.
(i) The existence of the Plan, the Program, the Award Agreement and the Awards granted hereunder shall not affect or restrict in any way the right or power of the Company or the shareholders of the Company to make
or authorize any adjustment, recapitalization,
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GATX CORPORATION - 2017 Proxy Statement
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C-21
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EXHIBIT C AMENDED AND RESTATED 2012 INCENTIVE AWARD PLAN
reorganization, or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of stock or of options, warrants or rights to
purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights are superior to or affect the Common Stock or the rights thereof or which are convertible into or exchangeable for Common Stock, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.
(j) No action shall be taken under this Section 14.2 which shall cause an Award to fail to comply with Section 409A of the Code or the
Treasury Regulations thereunder, to the extent applicable to such Award.
(k) In the event of any pending stock dividend, stock split,
combination or exchange of shares, merger, consolidation, or other distribution (other than normal cash dividends) of Company assets to shareholders, or any other change affecting the Shares or the share price of the Common Stock including any
Equity Restructuring, for reasons of administrative convenience, the Company in its sole discretion may refuse to permit the exercise of any Award during a period of up to thirty (30) days prior to the consummation of any such transaction.
14.3
Approval of Plan by Shareholders
. The Plan will be submitted for the approval of the Company’s shareholders within twelve
(12) months after the date of the Board’s initial adoption of the Plan. If the Plan is not approved by the Company’s shareholders, (i) it will not become effective, (ii) no Awards shall be granted under the terms of this
Plan document, and (iii) the 2012 Plan will continue in full force and effect in accordance with its terms not taking into account the provisions of this amendment and restatement.
14.4
No Shareholders Rights
. Except as otherwise provided herein, a Holder shall have none of the rights of a shareholder with respect to Shares covered by any Award until the Holder becomes the record owner
of such Shares.
14.5
Paperless Administration
. In the event that the Company establishes, for itself or using the services of a third party, an
automated system for the documentation, granting or exercise of Awards, such as a system using an internet website or interactive voice response, then the paperless documentation, granting or exercise of Awards by a Holder may be permitted through
the use of such an automated system.
14.6
Effect of Plan upon Other Compensation Plans
. The adoption of the Plan shall not affect any other
compensation or incentive plans in effect for the Company or any Subsidiary. Nothing in the Plan shall be construed to limit the right of the Company or any Subsidiary: (a) to establish any other forms of incentives or compensation for
Employees or Directors of the Company or any Subsidiary or (b) to grant or assume options or other rights or awards otherwise than under the Plan in connection with any proper corporate purpose including without limitation, the grant or
assumption of options in connection with the acquisition by purchase, lease, merger, consolidation or otherwise, of the business, stock, or assets of any corporation, partnership, limited liability company, firm, or association.
14.7
Compliance with Laws
. The Plan, the granting and vesting of Awards under the Plan and the issuance and delivery of Shares and the payment of money under
the Plan or under Awards granted or awarded hereunder are subject to compliance with all applicable federal, state, local, and foreign laws, rules, and regulations (including but not limited to state, federal, and foreign securities law and margin
requirements), the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted, or traded, and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the
Company, be necessary or advisable in connection therewith. Any securities delivered under the Plan shall be subject to such restrictions, and the person acquiring such securities shall, if requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary or desirable to assure compliance with all applicable legal requirements. To the extent permitted by applicable law, the Plan and Awards granted or awarded hereunder shall be deemed
amended to the extent necessary to conform to such laws, rules and regulations.
14.8
Titles and Headings, References to Sections of the Code or
Exchange Act
. The titles and headings of the Sections in the Plan are for convenience of reference only and, in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control. References to sections of the
Code or the Exchange Act shall include any amendment or successor thereto.
14.9
Governing Law
. The Plan and any agreements hereunder shall be
administered, interpreted and enforced under the internal laws of the State of New York without regard to conflicts of laws thereof or of any other jurisdiction.
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C-22
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GATX CORPORATION - 2017 Proxy Statement
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EXHIBIT C AMENDED AND RESTATED 2012 INCENTIVE AWARD PLAN
14.10
Section 409A
. To the extent that the Administrator determines that any Award granted under the Plan is
subject to Section 409A of the Code, the Plan or the Program pursuant to which such Award is granted and the Award Agreement evidencing such Award shall incorporate the terms and conditions required by Section 409A of the Code. In that regard, to
the extent any Award under the Plan or any other compensatory plan or arrangement of the Company or any of its Subsidiaries is subject to Section 409A of the Code, and such Award or other amount is payable on account of a Participant’s
Termination of Service (or any similarly defined term), then (a) such Award or amount shall only be paid to the extent such Termination of Service qualifies as a “separation from service” as defined in Section 409A of the Code and
(b) if such Award or amount is payable to a “specified employee” as defined in Section 409A of the Code then to the extent required in order to avoid a prohibited distribution under Section 409A of the Code, such Award or other
compensatory payment shall not be payable prior to the earlier of (i) the expiration of the
six-month
period measured from the date of the Participant’s Termination of Service or (ii) the date
of the Participant’s death. To the extent applicable, the Plan, the Program and any Award Agreements shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued
thereunder, including, without limitation any such regulations or other guidance that may be issued after the Effective Date. Notwithstanding any provision of the Plan to the contrary, in the event that following the Effective Date the Administrator
determines that any Award may be subject to Section 409A of the Code and related Department of Treasury guidance (including such Department of Treasury guidance as may be issued after the Effective Date), the Administrator may adopt such amendments
to the Plan and the applicable Program and Award Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Administrator determines are necessary
or appropriate to (a) exempt the Award from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Award or (b) comply with the
requirements of Section 409A of the Code and related Department of Treasury guidance and thereby avoid the application of any penalty taxes under such Section. The Company makes no representations or warranties as to the tax treatment of any Award
under Section 409A of the Code or otherwise. The Company shall have no obligation under this Section 14.10 or otherwise to take any action (whether or not described herein) to avoid the imposition of taxes, penalties or interest under Section
409A of the Code with respect to any Award and shall have no liability to any Holder or any other person if any Award, compensation or other benefits under the Plan are determined to constitute
non-compliant,
“nonqualified deferred compensation” subject to the imposition of taxes, penalties and/or interest under Section 409A of the Code.
14.11
No
Rights to Awards
. No Eligible Individual or other person shall have any claim to be granted any Award pursuant to the Plan, and neither the Company nor the Administrator is obligated to treat Eligible Individuals, Holders or any other persons
uniformly.
14.12
Unfunded Status of Awards
. The Plan is intended to be an “unfunded” plan for incentive compensation. With respect to
any payments not yet made to a Holder pursuant to an Award, nothing contained in the Plan or any Program or Award Agreement shall give the Holder any rights that are greater than those of a general creditor of the Company or any Subsidiary.
14.13
Relationship to other Benefits
. No payment pursuant to the Plan shall be taken into account in determining any benefits under any pension,
retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Subsidiary except to the extent otherwise expressly provided in writing in such other plan or an agreement thereunder.
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GATX CORPORATION - 2017 Proxy Statement
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C-23
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EXHIBIT C AMENDED AND RESTATED 2012 INCENTIVE AWARD PLAN
14.14
Expenses
. The expenses of administering the Plan shall be borne by the Company and its Subsidiaries.
* * * * *
I hereby certify that the
foregoing Plan was duly adopted by the Board of Directors of GATX Corporation on , 2017.
* * * * *
I hereby certify that the foregoing Plan
was approved by the shareholders of GATX Corporation on , 2017.
Executed on this day of , 2017.
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C-24
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GATX CORPORATION - 2017 Proxy Statement
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Exhibit D
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Location of the 2017 Annual Meeting of the Shareholders of GATX Corporation
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The Northern Trust Company, 50 S. LaSalle Street, Chicago, Illinois
The Annual Meeting will be held in the
Assembly Room, Sixth Floor, of The Northern Trust Company, which is located at 50 S. LaSalle Street on the northwest corner of the intersection of LaSalle and Monroe Streets in Chicago, Illinois.
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GATX CORPORATION - 2017 Proxy Statement
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D-1
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IMPORTANT ANNUAL MEETING INFORMATION
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Electronic Voting Instructions
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Available 24 hours a day, 7 days a week!
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Instead of mailing your proxy, you may choose one of the
voting methods outlined below to vote your proxy.
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VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE
BAR.
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The deadline for submitting proxies by Internet or
telephone is 11:59 p.m. Eastern Time, on May 4 (for registered shares) and 8:00 a.m. Eastern Time, on May 1 (for Plan Shares, as defined in the Proxy Statement).
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Vote by Internet
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• Go to
www.envisionreports.com/GAT
X
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• Or scan the QR code with your smartphone
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• Follow the steps outlined on the secure website
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Using a
black ink
pen, mark your votes with an
X
as shown in this example. Please do not write outside the designated areas.
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☒
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Vote by telephone
• Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on
a touch tone telephone
• Follow the instructions provided by the recorded
message
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q
IF YOU HAVE NOT VOTED VIA THE
INTERNET
OR
TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
q
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A
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Proposals — THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
ALL OF THE NOMINEES FOR DIRECTOR IN PROPOSAL 1,
FOR
PROPOSALS 2, 4 AND 5, AND
EVERY
YEAR
FOR PROPOSAL 3.
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1.
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ELECTION OF DIRECTORS:
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+
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Nominees:
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For
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Against
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Abstain
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For
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Against
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Abstain
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For
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Against
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Abstain
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01 - Diane M. Aigotti
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☐
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☐
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☐
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05 - James
B. Ream
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☐
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☐
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☐
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08 - Casey
J. Sylla
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02 - Anne L. Arvia
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☐
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☐
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☐
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06 - Robert
J. Ritchie
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☐
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☐
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☐
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09 - Stephen R. Wilson
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☐
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☐
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03 - Ernst
A. Häberli
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☐
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☐
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☐
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07 - David S. Sutherland
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☐
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☐
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☐
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10 - Paul G. Yovovich
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04 - Brian A. Kenney
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For
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Against
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Abstain
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For
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Against
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Abstain
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2.
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ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION
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4. APPROVAL OF THE GATX CORPORATION AMENDED AND RESTATED 2012 STOCK INCENTIVE PLAN
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Every
Year
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Every
2 Years
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Every
3 Years
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Abstain
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5. RATIFICATION
OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2017
In their discretion, the Proxies are authorized to vote upon other matters as may properly come before the meeting.
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3.
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ADVISORY RESOLUTION ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION
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Change of Address
— Please print new address below.
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Comments
— Please print your comments below.
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C
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Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below
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NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give full title as such.
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Date (mm/dd/yyyy) — Please print date below.
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Signature 1 — Please keep signature within the box.
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Signature 2 — Please keep signature within the box.
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/
/
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Important notice regarding the Internet availability of proxy materials for the Annual Meeting of
Shareholders.
The Proxy Statement and the 2016 Annual Report to Shareholders are available at: www.envisionreports.com/GATX
q
IF YOU HAVE NOT VOTED VIA THE INTERNET
OR
TELEPHONE,
FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
q
Proxy — GATX Corporation