2 0 2 1 8 P R O X Y S T A T E M E N T
Notice of Annual Meeting of Shareholders
to be held on April 30, 201823, 2021
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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| ☐ | Soliciting Material Pursuant to |
GATX CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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2 0 2 1 8 P R O X Y S T A T E M E N T
Notice of Annual Meeting of Shareholders
to be held on April 30, 201823, 2021
March 19, 201812, 2021
Dear Shareholders:
On behalf of the Board of Directors, I invite you to attend GATX Corporation’s 20182021 Annual Meeting of Shareholders on Monday,Friday, April 30, 2018,23, 2021, at 12:9:00 p.m.a.m. Central Time, at The Northern Trust Company, 50 South LaSalle Street, Sixth Floor Assembly Room, Chicago, Illinois.Time. Due to the continuing impact of the COVID-19 pandemic on public health, and out of concern for the health and safety of our shareholders, employees and directors, this year’s annual meeting will again be a virtual meeting of shareholders rather than an in-person meeting. You will be able to attend the annual meeting online, vote your shares electronically, and submit your questions during the annual meeting by visiting www.meetingcenter.io/220567690. Enclosed you will find a notice setting forth the items we expect to address at the meeting, our proxy statement,Proxy Statement, a form of proxy, and a copy of our 20172020 annual report to our shareholders.
TheIn 2020, GATX earned $4.27 per diluted share. We sold our American Steamship business in May 2020. Thus, focusing on continuing operations and adjusting for the reversal of a previously announced tax rate reduction in the United Kingdom, we earned $4.59 per diluted share.1 We suspended earnings guidance at the end of the first quarter of 2020 due to the onset of the COVID-19 pandemic and its effect on our businesses. Entering 2020, the North American railcar leasing market experienced its third yearwas already in a weakened position due to a dramatic oversupply of a downturnrailcars. As the pandemic set in 2017. Large numbers of idle existing railcars, combined withand North American railcar loadings fell to levels beneath the overbuilding of new railcars, caused a continued oversupply situationbottom seen in the market. Despite relatively stable underlying demandGreat Recession, we saw a negative impact on what were already low lease rates. COVID-19 also had a dampening effect on activity in the secondary market for railcar sales, and modest improvementit created inefficiencies in our maintenance network due to frequent facility closings in an effort to keep our employees safe. In Europe and India, COVID-19 resulted in delayed investment in both businesses due to shutdowns and delays at the railcar loadings, this oversupply of railcars tempered lease rate increases across the industry.
In light of these industry conditions, our performance was outstanding. We maintained an industry-leading fleet utilization of over 98% throughout the year, reflective of the diversity and quality of our fleet and the breadth of our customer relationships. Our international railcar leasing business maintained higher fleet utilization than expected throughout the year, while our American Steamship subsidiary significantly increasedmanufacturers. The pandemic had its profitability by carrying more tonnage and operating its fleet more efficiently. Lastly,most profound effect on RRPF, our aircraft spare engine leasing joint venturespartnerships with Rolls-Royce, produced another yeardue to the dramatic decline in airline traffic around the world.
Given the extremely negative environment, GATX’s employees handled the challenges extraordinarily well. For instance, we maintained our global railcar fleet utilization between 98 and 100%. As an essential industry in North America, our railcar maintenance employees showed up for work continuously and helped us realize the cost savings of excellent financial results.
Our strong operating performance during the year yielded excellent financial results as GATX:
Your vote is very important. Whether or not you plan to attend in person,the virtual annual meeting, please ensure that your shares are represented at the meeting by promptly voting and submitting your proxy by internet or telephone or by signing and returning your proxy card in the enclosed envelope.
On behalf of the Board of Directors and management, I would like to thank you for your continued support of GATX. We hope you will be able to attend the meeting and look forward to seeing you there.
Sincerely,
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Chairman of the Board, President and Chief Executive Officer |
Important Notice Regarding the Availability of Proxy Materials
Forfor the ShareholdersShareholders’ Meeting to be held on April 30, 2018.23, 2021.
The Company’s Proxy Statement for the 20182021 Annual Meeting of Shareholders, the Annual Report to Shareholders for the year ended December 31, 2017,2020, and the Company’s Annual Report onForm 10-K for the fiscal year ended December 31, 2017,2020, are available at:www.envisionreports.com/GATX.
| 1 | Our |
Notice of Annual Meeting of Shareholders |
GATX 20182021 Annual Meeting of Shareholders
Date: | Items of Business:
• Election of
• Adoption of Advisory Resolution to Approve Executive Compensation
• Ratification of Independent Registered Public Accounting Firm | |||||
Time: | ||||||
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Place: To support the health and safety of our shareholders, employees and directors, the annual meeting will be held as a live audio webcast at Record Date: | Close of business on
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Advance Voting Methods and Deadlines
Internet and telephone voting are available 24 hours a day, seven days a week up to these deadlines:
Registered Shareholders or Beneficial Owners—11:59 p.m. Eastern Time on April 29, 201822, 2021
Participants in GATX 401(k) Plans—8:00 a.m. Eastern Time on April 26, 2018.21, 2021
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Go to the website identified on the proxy card
• Enter the Control Number printed on the proxy card
• Follow the instructions on the screen. | Call the toll-free number identified on the proxy card
• Enter the Control Number printed on the proxy card
• Follow the recorded instructions. | Mark your selections on the enclosed proxy card
• Date and sign your name exactly as it appears on the proxy card
• Promptly mail the proxy card in the enclosed postage-paid
Return promptly to ensure that it is received before the deadlines stated above. | You can vote • Follow the instructions on the meeting website: www.meetingcenter.io/220567690 • Meeting Password: GATX2021 | |||||||||||||||
By Order of the Board of Directors,
Executive Vice President, General Counsel and
Corporate Secretary
| GATX CORPORATION - | i |
| GATX Corporation Director Independence Standard | A-1 | ||||
| EXHIBIT B | Reconciliation ofNon-GAAP Financial Measures | B-1 | ||||
| ii | GATX CORPORATION - |
The Board of Directors (the “Board”“Board”) of GATX Corporation (“GATX”GATX”, the “Company”“Company”, “we”“we”, “us”“us”, or “our”“our”) is soliciting proxies for use at the Company’s Annual Meeting of Shareholders to be held on Monday,Friday, April 30, 201823, 2021 (the “Annual Meeting”“Annual Meeting”). This Proxy Statement and accompanying proxy card are being mailed to shareholders on or about March 19, 2018.12, 2021.
This summary highlightsincludes information found elsewhere in this Proxy Statement and does not contain all of the information you should consider in voting. Please read the entirethis Proxy Statement carefully before voting your shares.
Annual Meeting of Shareholders
When g April 30, 2018, 12:23, 2021, 9:00 p.m.a.m. Central Time
Where g The Northern Trust Company,meeting will be held virtually via a live audio
50 South LaSalle Street, Sixth Floor Assembly Room, Chicago, Illinoiswebcast at www.meetingcenter.io/220567690
You may vote if you were a shareholder of record at the close of business on March 5, 2018.February 26, 2021. We hope that you will be able to attend the Annual Meeting virtually, but if you cannot do so, it is important that your shares be represented.
We urge you to read the Proxy Statement carefully and to vote your shares in accordance with the Board’s recommendations by internet or telephone or by signing and returning the enclosed proxy card in the postage-paid envelope provided, whether or not you plan to virtually attend the Annual Meeting.
Voting Recommendations of the Board
| Item | Description | For | Against | Page | Description | For | Against | Page | ||||||||||
1
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Election of directors
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Election of directors
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| 17 | ||||||||||||
2
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Adoption of advisory resolution approving our executive compensation
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Adoption of advisory resolution approving our executive compensation
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3
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Ratification of independent registered public accounting firm
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| 53 |
Ratification of independent registered public accounting firm
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| 56 | ||||||||||||
You may revoke your proxy and change your vote at any time before the final vote at the Annual Meeting.
Voting at the Annual Meeting (page 61)65)
If your shares are registered in your name with our transfer agent, you may vote in personvirtually at the Annual Meeting. If you hold your shares through a broker, bank, or other nominee, you will not be able to vote in personvirtually at the Annual Meeting unless you first obtain a legal proxy from your nominee. For further information, please seeHow do I vote? on page 61.65.
Questions and Answers (page 61)65)
We encourage you to review theQuestions and Answers about the Annual Meeting beginning on page 6165 for answers to common questions about the rules and procedures surrounding the proxy and annual meeting process.
| GATX CORPORATION - | 1 |
PROXY SUMMARY
CORPORATE GOVERNANCE (PAGE 5)9)
GATX has a long-standing commitmentis committed to strong corporate governance, which promotes the long-term interests of shareholders and strengthens Board and management accountability. Highlights of our corporate governance practices include:
✓ | Annual Election of Directors | ✓ | Annual CEO Succession Planning by Full Board | |||||
✓ | Majority Voting for Directors | ✓ | Risk Oversight by Full Board and Committees | |||||
✓ | Resignation Policy for Directors who Fail to Receive a Majority Vote | ✓ | Annual Board and Committee Self-Evaluations | |||||
✓ | ✓ | No Poison Pill | ||||||
✓ | Diversity of Experience and Skills | ✓ | Anti-Hedging/Anti-Pledging Policies for Directors, Officers, and Employees | |||||
✓ | ✓ | Share Ownership Requirements for Directors and Executive Officers | ||||||
✓ | Independent Lead Director | ✓ | Clawback Policy for Equity Awards and Incentive Compensation | |||||
✓ | Independent Audit, Compensation, and Governance Committees | ✓ | Annual “Say on Pay” Advisory Vote | |||||
✓ | After Each Board Meeting | ✓ | Active Shareholder Engagement Program | |||||
DIRECTOR NOMINEES (PAGE 17)20)
The following table provides summary information about each director nominee. Ernst A. Häberli, who currently serves on the Board, will not be standing for re-election and will be retiring at the 2021 Annual Meeting. GATX is grateful to Mr. Häberli for his 14 years of dedicated and valuable service to the Company.
| Name | Age | Director Since | Principal Occupation | Committee Memberships1 | Other Public Company | Age | Director Since | Principal Occupation | Committee Memberships1 | Other Public Company | ||||||||||||
Diane M. Aigotti* | 53 | 2016 | Executive Vice President, Managing Director and Chief Financial Officer, | A, G | 0 | 56 | 2016 | Executive Vice President, Managing Director and Chief Financial Officer, | A, G | 0 | ||||||||||||
Anne L. Arvia* | 54 | 2009 | Former Acting President, Senior Vice President and Managing Director, USAA Bank | A (Chair), G | 0 | 57 | 2009 | Executive Vice President, Banking and Financial Services, The Auto Club Group; President and Chief Executive Officer, The Auto Club Trust | A (Chair) | 0 | ||||||||||||
Ernst A. Häberli* | 69 | 2007 | Retired; Former President, Commercial Operations International, The Gillette Company | C, G | 0 | |||||||||||||||||
Brian A. Kenney | 58 | 2004 | Chairman, President and Chief Executive Officer, GATX Corporation | None | 1 | 61 | 2004 | Chairman, President and Chief Executive Officer, GATX Corporation | None | 0 | ||||||||||||
James B. Ream* | 62 | 2008 | Former Senior Vice President – Operations, American Airlines | LD | 0 | 65 | 2008 | Former Senior Vice President – Operations, American Airlines | LD | 0 | ||||||||||||
Robert J. Ritchie* | 73 | 2011 | Retired; Former Chief Executive Officer, Canadian Pacific Railway Company | A, G | 0 | |||||||||||||||||
Adam L. Stanley* | 47 | 2019 | Chief Information Officer and Chief Digital Officer, Cushman & Wakefield plc | A, G | 0 | |||||||||||||||||
David S. Sutherland* | 68 | 2007 | Retired; Former President and Chief Executive Officer, IPSCO, Inc. | C (Chair), G | 2 | 71 | 2007 | Retired; Former President and Chief Executive Officer, IPSCO, Inc. | C (Chair) | 2 | ||||||||||||
Casey J. Sylla* | 74 | 2005 | Retired; Former Chairman and Chief Executive Officer, Allstate Life Insurance Company | A, C | 2 | |||||||||||||||||
Stephen R. Wilson* | 69 | 2014 | Retired; Former Chairman, President and Chief Executive Officer, CF Industries Holdings, Inc. | A, C | 1 | 72 | 2014 | Retired; Former Chairman, President and Chief Executive Officer, CF Industries Holdings, Inc. | A, C | 1 | ||||||||||||
Paul G. Yovovich* | 64 | 2012 | President, Lake Capital | C, G (Chair) | 0 | 67 | 2012 | President, Lake Capital | C, G (Chair) | 0 | ||||||||||||
| * | Independent Director |
| 1 | A= Audit Committee;C= Compensation Committee;G= Governance Committee;LD = Lead Director |
| 2 | GATX CORPORATION - |
PROXY SUMMARY
APPROVAL OF 2017 EXECUTIVE COMPENSATION (PAGE 25)2020 PERFORMANCE AND KEY ACCOMPLISHMENTS
Railcar leasing is our core business, accounting for approximately 85%In 2020, despite the negative effect of the COVID-19 pandemic on all of our 2017 revenue. Our rail customers operatebusiness segments, we executed on our strategic priorities and produced solid financial results. We earned $4.24 per diluted share, or $4.59 per diluted share from continuing operations after excluding the net negative impact of tax adjustments and other items. We maintained our global railcar fleet utilization between 98%-100%. As participants in cyclical markets, such as the petroleum, chemical, fertilizer, food/agricultural, transportation, and construction industries. Combined with changing macroeconomic conditions and swings in railcar supply, this results in significant volatility in utilization and lease rates for railcars over time. At the same time, railcars have very long useful lives of20-45 years. Thus, we have to proactively managean essential industry, our business with a long-term view, which includes buying, leasing, maintaining, and selling railcars into these constantly changing business conditions over decades.
Our compensation programs reflect this cyclicality by appropriately rewarding management to emphasize current financial returns over growth in capital employed during stronger markets and, conversely, to emphasize growth in capital employed over current financial returns in weaker markets. In this way, our Compensation Committee believes that our plans have been designed to reward executives for achieving those goals that will maximize long-term shareholder value.
The North American railcar leasing market experienced its third yearrail maintenance employees worked continuously through the pandemic and helped us realize the cost savings of a downturnperforming increased maintenance work in 2017. Large numbers of idleour owned network. We capitalized
existing railcars, combined with the overbuilding of new railcars, caused a continued oversupply situationon difficult market conditions by investing over $1.0 billion in the market. Despite relatively stable underlying demand and modest improvement in railcar loadings, this oversupply of railcars tempered lease rate increases across the industry.
In light of these industry conditions, our performance was outstanding. We maintained an industry-leading fleet utilization of 98% or higher throughout the year, reflective of the diversity of our quality fleet and the breadth of our customer relationships.attractively priced, long-lived transportation assets. Our international businesses vigorously pursued railcar leasing business maintained higher fleet utilization than expected throughout the year, while our American Steamship subsidiary significantly increased its profitability by carrying more tonnage and operating its fleet more efficiently. Lastly, ourgrowth plans. The RRPF aircraft spare engine leasing joint ventures with Rolls-Royce produced another yearventure handled the wave of excellentcustomer relief requests efficiently and identified new investment opportunities. We acquired Trifleet Leasing Holding B.V. (“Trifleet”), the world’s fourth largest tank container lessor. We also continued our focus on core franchises by divesting our Great Lakes shipping business. The table below shows our financial results. In addition, our strong balance sheet continues to offer us flexibility to pursue any secondary market acquisition opportunities that may arise. We believe that we are well prepared to capitalize on the inherent cyclicality in our markets and well positioned to achieve our twin objectives of growth and returnoperational performance over the long term.past three years (2018-2020):
Key 2017 Accomplishments
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| 2 | Reflects continuing operations only. |
| 3 | Operational data in the charts relates to our Rail North America business. |
| GATX CORPORATION - | 3 |
PROXY SUMMARY
Executing Strategy • Ensured the health and safety of our global workforce, many of whom are essential to the rail industry. • Capitalized on difficult market conditions by investing over $1.0 billion in attractively-priced, long-lived transportation assets. • Handled waves of customer financial relief requests across our businesses with immaterial financial impact to GATX. • Achieved high utilization of our existing fleets despite challenging operating environments. • Sold American Steamship Company, our Great Lakes shipping business, to continue focusing on our core franchises. |
Growing Internationally • Acquired Trifleet, the world’s fourth largest tank container leasing business, further expanding our global transportation asset base. • Achieved record year for railcar investment at GATX Rail Europe. • Continued growth of our rail leasing platform in India by adding customers, creating new railcar designs and offering new leasing solutions. • Ongoing investment in aircraft spare engine leasing business. |
Returning Capital •Concluded our 102nd consecutive year of paying a dividend to our shareholders. •Increased our dividend for the tenth consecutive year. |
Developing Leadership • Continued the development of our future leaders through senior leadership organizational changes. • Increased women managers and leaders as a result of our diversity and inclusion initiatives. • Ongoing longer-term succession planning initiatives to enhance our future growth and further drive the excellent performance our shareholders expect. |
| 4 | GATX CORPORATION - 2021 Proxy Statement |
PROXY SUMMARY
EXECUTIVE COMPENSATION (PAGE 29)
Railcar leasing is our core business, accounting for 99% of our 2020 revenues. We believe that the key to generating long-term shareholder value involves optimizing asset growth and asset return by emphasizing each at the appropriate point in the railcar business cycle. In stronger railcar markets, we focus on increasing lease rates and lengthening lease terms to lock-in attractive lease revenue as long as possible. We also de-emphasize new railcar investment due to the higher railcar prices usually present in such a market. Conversely, in weaker markets, when railcar prices tend to be lower, we seek to increase railcar investment on favorable terms. We also aggressively reduce lease rates to maintain asset utilization and shorten lease terms to position us to capture value when lease rates improve.
Our executive compensation plans are directly linked to our financial and operating performance and creation of long-term shareholder value. Approximately 81% of our Chief Executive Officer’sOur compensation programs are designed to reward management to emphasize current financial returns over growth in capital employed during stronger markets and, approximately 63% of our other named executive officers’ compensation is performance-based and not guaranteed.conversely, to emphasize growth in capital employed over current financial returns in weaker markets. We encourage
you to read theCompensation Discussion and Analysis starting on page 2628 for more details regarding our performance and the alignment of our executive compensation with our performance and long-term shareholder value.
Executive Compensation Snapshot
Our Compensation Committee considered the impact of the COVID-19 pandemic on all of our business segments, but did not adjust or otherwise intervene in any of the outstanding incentive plans, including the 2020 annual incentive plan and the outstanding performance share plans. No changes were made to underlying plan measures and metrics and no adjustments were made to final achievement and payouts under any of our executive compensation plans. This snapshot of compensation paid to or accrued by our Named Executive Officers (“NEOs”) in 2020 highlights in the “Non-Equity Incentive Plan Compensation” column that despite the pandemic’s negative impact on our business, we achieved 89% of our pre-COVID-19 pandemic target for the 2020 plan year, earning 84.8% of our annual cash incentive target.
Name and
| Year
| Salary
| Stock Awards ($)(1)(2)
| Option
| Non-Equity
| Change in
| All Other
| Total
| Total
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(a)
| (b)
| (c)
| (e)
| (f)
| (g)
| (h)
| (i)
| (j)
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Brian A. Kenney | 2020 | $ | 1,000,917 | $ | 1,911,336 | $ | 1,800,344 | $ | 849,177 | $ | 1,716,441 | $ | 8,550 | $ | 7,286,765 | $ | 5,570,324 | |||||||||||||||||||
Chairman of the Board, | 2019 | $ | 980,500 | $ | 1,740,919 | $ | 1,745,432 | $ | 1,132,674 | $ | 2,055,203 | $ | 8,400 | $ | 7,663,127 | $ | 5,607,924 | |||||||||||||||||||
President and Chief | 2018 | $ | 976,500 | $ | 1,790,795 | $ | 1,755,880 | $ | 1,260,857 | $ | 0 | $ | 8,250 | $ | 5,792,282 | $ | 5,792,282 | |||||||||||||||||||
Executive Officer | ||||||||||||||||||||||||||||||||||||
Thomas A. Ellman | 2020 | $ | 525,750 |
| $ | 434,675 |
| $ | 409,578 |
| $ | 312,232 |
| $ | 913,460 |
| $ | 8,550 | $ | 2,604,245 |
| $ | 1,690,785 |
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Executive Vice President | 2019 | $ | 512,500 | $ | 410,554 | $ | 411,344 | $ | 414,428 | $ | 962,321 | $ | 8,400 | $ | 2,719,546 | $ | 1,757,225 | |||||||||||||||||||
and Chief Financial Officer |
| 2018 |
| $ | 493,333 |
| $ | 802,344 |
| $ | 393,597 |
| $ | 445,893 |
| $ | 0 |
| $ | 8,250 | $ | 2,143,417 |
| $ | 2,143,417 |
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Robert C. Lyons | 2020 | $ | 566,083 |
| $ | 434,675 |
| $ | 409,578 |
| $ | 336,185 |
| $ | 939,090 |
| $ | 8,550 | $ | 2,694,161 |
| $ | 1,755,071 |
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Executive Vice President | 2019 | $ | 551,833 | $ | 410,554 | $ | 411,344 | $ | 446,234 | $ | 1,092,048 | $ | 8,400 | $ | 2,920,413 | $ | 1,828,365 | |||||||||||||||||||
and President, Rail | 2018 | $ | 536,300 | $ | 831,633 | $ | 422,023 | $ | 484,728 | $ | 0 | $ | 8,250 | $ | 2,282,934 | $ | 2,282,934 | |||||||||||||||||||
North America | ||||||||||||||||||||||||||||||||||||
Deborah A. Golden | 2020 | $ | 484,917 |
| $ | 303,656 |
| $ | 285,805 |
| $ | 246,842 |
| $ | 398,996 |
| $ | 8,550 | $ | 1,728,765 |
| $ | 1,329,769 |
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Executive Vice President, | 2019 | $ | 469,417 | $ | 286,100 | $ | 286,829 | $ | 325,362 | $ | 579,213 | $ | 8,400 | $ | 1,955,321 | $ | 1,376,108 | |||||||||||||||||||
General Counsel and | 2018 | $ | 439,700 | $ | 294,979 | $ | 288,638 |
| $ | 340,644 | $ | 48,154 | $ | 8,250 | $ | 1,420,365 | $ | 1,372,211 | ||||||||||||||||||
Corporate Secretary | ||||||||||||||||||||||||||||||||||||
N. Gokce Tezel(7) | 2020 | $ | 443,667 |
| $ | 212,713 |
| $ | 200,288 |
| $ | 225,844 |
| $ | 595,277 |
| $ | 215,859 |
| $ | 1,893,648 |
| $ | 1,298,371 |
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Executive Vice President | ||||||||||||||||||||||||||||||||||||
and President, | ||||||||||||||||||||||||||||||||||||
Rail International | ||||||||||||||||||||||||||||||||||||
| GATX CORPORATION - 2021 Proxy Statement | 5 |
PROXY SUMMARY
| (1) | For awards granted under the GATX 2012 Amended and Restated Incentive Award Plan, amounts shown reflect the dollar amount of the grant date fair market value of restricted stock units and performance stock units for the years shown, in accordance with Accounting Standards Codification Topic No. 718, Compensation — Stock Compensation. Assumptions used to calculate these amounts are included in the Notes to our audited financial statements contained in our Annual Reports on Form 10-K for fiscal years ended December 31, 2020, December 31, 2019 and December 31, 2018. During 2018, as part of our longer-term management succession efforts, Mr. Lyons and Mr. Ellman switched positions and each received an off-cycle one-time grant of restricted stock units at a value of $399,973. |
| (2) | In the event the performance stock units pay out at maximum value (i.e. 200% of target), the total grant date values for grants of restricted stock units and performance stock units are as follows: Mr. Kenney ($3,822,672, $3,481,837, and $3,581,590); Mr. Ellman ($869,350, $821,107, and $1,204,715); Mr. Lyons ($869,350, $821,107, and $1,263,293); Ms. Golden ($607,312, $572,200, and $589,958); and Mr. Tezel ($425,426). |
| (3) | The amounts shown reflect the annual incentive awards earned under the GATX Cash Incentive Compensation Plan by each NEO for the years shown. |
| (4) | Change in pension value reflects the increase in the present value of the accumulated pension benefit during the years shown. The Pension Benefits Table shows the present value of the accumulated pension benefit as of December 31, 2020 and the assumptions used in the calculation of that value. We determined the December 31, 2020, December 31, 2019 and December 31, 2018 present values using the same assumptions except that the interest rates used for discounting under Accounting Standards Codification Topic No. 715, Compensation—Retirement Benefits, were 2.42% in 2020, 3.17% in 2019 and 4.32% in 2018. For year 2019, our NEOs experienced compensation increases largely driven by a change in pension value attributable to decreases in the discount rate and the application of actuarial calculations. |
| (5) | For 2020, amounts shown reflect matching contributions of $8,550 to the GATX Salaried Employees Retirement Savings Plan for each NEO. Mr. Tezel received compensation associated with his expatriate assignment consistent with the Company’s International Compensation Policy for housing allowance ($47,885); relocation costs ($34,074); tuition fees ($33,935); tax preparation and planning ($44,242); and cost of living adjustment, vehicle, home leave and professional fees associated with his international assignment ($47,173). For all periods presented, all other compensation excludes dividends on NQSOs and performance shares held by each NEO because those dividends are included in the grant date fair value amounts for stock awards as reported in columns (e) and (f) of the table above and in column (m) of the Grants of Plan-Based Awards Table. |
| (6) | Total Without Change in Pension Value represents total compensation, as determined under applicable SEC rules (column j), minus the amount reported in the Change in Pension Value and Nonqualified Deferred Compensation Earnings column (column h). The amounts set forth in the Total Without Change in Pension Value column differ substantially from, and are not a substitute for, the amounts required to be reported in the Total column pursuant to SEC regulations. We are presenting this supplemental column to illustrate how the Compensation Committee views the annual compensation elements for the NEOs. While the Compensation Committee does review the table in its totality, we note that the change in pension value amount reported in the Change in Pension Value and Nonqualified Deferred Compensation Earnings column does not reflect current compensation and represents the present value of an estimated stream of payments to be made following retirement. The methodology used to report the change in pension value under applicable accounting rules is sensitive to external variables such as assumptions about life expectancy and changes in the discount rate determined at each year end, which are functions of economic factors and actuarial calculations that do not relate to our performance and are outside of the control of the Compensation Committee. |
| (7) | Payments made to Mr. Tezel in non-U.S. currency was converted to U.S. Dollars monthly using the exchange rate for the relevant currency as reported by Bloomberg on the last day of each month. |
See Compensation Discussion and Analysis Beginning on page 28 for more Details on 2020 Executive Compensation.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PAGE 53)56)
We ask that our shareholders ratify the selection of Ernst & Young LLP as our independent registered public accounting firm for 2018.2021. Below is summary information
about Ernst & Young LLP’s fees for services provided in 20172020 and 2016.2019.
| Type of Fees | 2017 | 2016 |
2020 ($)
|
2019 ($)
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Audit Fees | $ | 2,613,000 | $2,747,000 |
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2,646,000 |
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2,578,000 | |||||
Audit-Related Fees | $ | 136,000 | $134,000 |
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143,000 |
|
147,000 | |||||
Tax Fees | $ | 63,000 | $44,500 |
|
22,000 |
|
49,000 | |||||
All Other Fees | $ | 2,000 | $2,000 |
|
3,000 |
|
2,000 | |||||
TOTAL Fees | $ | 2,814,000 | $2,927,500 |
|
2,814,000 |
|
2,776,000 | |||||
| GATX CORPORATION - |
PROXY SUMMARY
Sustainability and Corporate Citizenship
GATX’S VISION IS TO BE RECOGNIZED AS THE FINEST RAILCAR LEASING COMPANY IN THE WORLD BY OUR CUSTOMERS, SHAREHOLDERS, EMPLOYEES, AND THE COMMUNITIES WHERE WE OPERATE. | ||||||||
Consistent with our vision, we are committed to growing our business in a sustainable and socially responsible manner, and we demonstrate our commitment through our programs and initiatives. Our Environmental, Social and Governance (“ESG”) Committee, a multi-functional team, meets periodically to develop, assess and prioritize ESG topics that are important to our business and all our stakeholders and to continually improve both the measurement and transparency of our ESG disclosures and practices. The Governance Committee has primary oversight responsibility for our ongoing and
developing ESG efforts. We maintain a Sustainability page on our website (www.gatx.com) to highlight our environmental and social responsibility accomplishments and provide key performance data to our stakeholders.
We believe that investing in our people, in our communities, and in operating our business sustainably and ethically will drive long-term value for GATX and its shareholders. Our ESG priorities center on these four foundational pillars:
| OUR ETHICS AND INTEGRITY | OUR PEOPLE | |||||||
• Committing to operate our business consistent with the highest standards of honest and ethical behavior • Company-wide ethics and compliance program intended to provide our employees with resources and regular training to assist them in doing their jobs in an ethical manner, while empowering them to raise questions and concerns without fear of retaliation | • Protecting the safety of our employees is our highest priority • Committing to our Diversity Hiring Initiative • Pursuing initiatives to increase diversity in leadership positions • Ensuring pay equity through annual compensation analysis • Investing in our employees through training, professional development, benefit programs and education |
| OUR ENVIRONMENT | OUR COMMUNITIES | |||||||
• Implementing sustainable policies and practices that reduce energy use, decrease waste, increase recycling and lower water consumption in our operations • Evaluating, quantifying and reporting on business, operational and strategic risks associated with climate change | • Investing in civic engagement initiatives to support the communities where we live and work • Encouraging employee involvement in their local communities through charitable donations and by offering opportunities for them to volunteer, including mentoring, tutoring, refurbishing classrooms and schools, working at food banks and shelters, and participating in food, clothing, and toy collection drives each year |
| GATX CORPORATION - 2021 Proxy Statement | 7 |
PROXY SUMMARY
2020 KEY INITIATIVES AND ACCOMPLISHMENTS
Health and Safety | ||
✓ We ensured that our railcar maintenance facility employees and inspectors who are “essential” workers in the rail industry could safely perform their jobs every day. We established consistent employee screening, safe work practices and training, and robust cleaning procedures within our repair facility network in order to minimize COVID-19 risks to our employees, their families and the communities in which we operate. We managed our employees’ actual and potential exposure to COVID-19 to minimize transmission and to provide paid time off and related benefits to affected employees. ✓ In addition to being recognized as a Responsible Care® Partner by the American Chemistry Council (“ACC”) and the Chemical Industry Association of Canada (“CIAC”), we continued our active participation in the Transportation Community Awareness and Emergency Response (TRANSCAER®) initiative, a national outreach effort assisting communities to prepare for and respond to a possible hazardous materials transportation incident. In 2020, GATX donated a 30,000-gallon tank car to the CIAC to provide tank car and service equipment training to emergency responders throughout Canada. ✓ Our repair facilities maintained ongoing relationships with first responders in the communities where we operate to train and coordinate response plans in the event of any incident involving our railcars or our facilities. We offered training across North America on the proper use of railcars and related equipment through our TankTrainer mobile classroom, a tank car outfitted for instruction. Over the past three years, we have trained 1,600 customers. | ||
Community Engagement | ||
✓ In response to the COVID-19 pandemic, GATX employees donated 600 meals to support healthcare workers on the front lines and individuals experiencing homelessness and hardship. ✓ GATX employees held a successful 2020 virtual annual employee giving campaign and fundraiser for Make-A-Wish Illinois. We have donated nearly $4.5 million to help Make-A-Wish Illinois grant wishes to children with critical illnesses since 2008, making us the largest corporate partner to the organization. ✓ In 2020, we awarded GATX Scholarships to students through our partnership with Big Shoulders Fund, which provides support to inner-city schools in Chicago. GATX employees have mentored more than 150 Big Shoulders students since 2016 and comprise the largest single group of mentors to the organization. |
| Environment | ||||
✓ In 2020, GATX initiated a project to calculate Scope 1 and Scope 2 greenhouse gas (“GHG”) emissions for all our facilities globally to assess our impact on the environment and identify the greatest opportunities to reduce that impact. ✓ We pursued programs to reduce the amount of waste sent to landfills by eliminating, reducing, reusing or recycling various waste streams. In 2020, approximately 93,000 gross tons of steel from scrapped railcars and railcar parts were recycled. In addition, our annual network-wide sustainability project for 2020 resulted in a 62% reduction in total paint waste at our North American railcar maintenance facilities. ✓ We invested in our railcar fleets in Europe and India, resulting in the ability to transport more goods by rail and off roads and lowering carbon emissions and reducing highway noise and congestion. | ||||
| Human Capital Management | ||||
✓ We continued to increase female representation in senior management roles as a result of our focused efforts on hiring, developing and promoting female talent. ✓ We ensured gender pay equity for professional, managerial and executive level positions by undertaking our annual compensation analysis, which compares internal pay, reviews external market data (for executive positions) and brings upgraded gender pay reporting to increase transparency for management. ✓ We continued our Diversity Hiring Initiative employing diverse candidate slates, diverse interviewer slates and a uniform approach to evaluate candidates for management roles and management-feeder roles. ✓ We conducted employee engagement surveys, including specific questions geared towards diversity and inclusion, to assess engagement levels across the organization, as well as in diverse groups. | ||||
| 8 | GATX CORPORATION - 2021 Proxy Statement |
The Board of Directors provides oversight, strategic direction, and counsel to management regarding the business, affairs, and long-term interests of GATX and our shareholders. Its responsibilities include the following:
GATX has a long-standing commitment to strong corporate governance and ethical standards. Demonstrating this commitment, the Board has adopted the GATX Corporate Governance Guidelines, Code of Business Conduct and
Ethics, and Code of Ethics for
Senior Company Officers, as well as charters for each of the Board’s committees. These documents constitute the foundation of our corporate governance structure and are available on our website (www.gatx.com) in the Investor Relations section under “Corporate Governance”.Governance.”
The Board and its committees meet throughout the year on an established schedule and hold special meetings from time to time as appropriate. Following each meeting, the Board’s independent directors meet in executive sessions without the Chairman and Chief Executive Officer or other members of management present. The Lead Director serves as Chair of the executive sessions of the Board.
The Board met six7 times during 2017,2020, and each director attended at least 75% of the meetings of the Board and the committees on which he or she served during the year. We encourage all directors to attend the 20182021 Annual Meeting of Shareholders, and in 2017,2020 all directors then serving on the Board attended the annual meeting.
The Board has adopted the GATX Director Independence Standard set forth inExhibit A to this Proxy Statement to evaluate the independence of directors and director nominees and to ensure compliance with the independence standards required by the New York Stock Exchange (“NYSE”NYSE”) for listed companies. In accordance with this standard, and considering all relevant facts and circumstances, the Board has made an affirmative
determination that none of the following directors has a material relationship with GATX other than in his or her capacity as a member of the Board and that all of the following directors are independent: Diane M. Aigotti, Anne L. Arvia, Ernst A. Häberli, James B. Ream, Robert J. Ritchie,Adam L. Stanley, David S. Sutherland, Casey J. Sylla, Stephen R. Wilson, and Paul G. Yovovich.
Brian A. Kenney serves as our Chairman and Chief Executive Officer
James B. Ream serves as our Lead Director
| • | 8 of our |
All of the members of the Board’s Audit, Compensation, and Governance Committees are independent.independent
The Board believes that having our Chief Executive Officer serve as Chairman of the Board is in the best interests of our shareholders because the Chief Executive Officer’s extensive knowledge of our business and strategy provides the Board with a clear understanding of the issues facing the Company and promotes effective Board decision-making, alignment on corporate strategy, and effective execution of that strategy by management.
| GATX CORPORATION - |
CORPORATE GOVERNANCE
The Board believes it is important to select the most qualified and appropriate director to serve as Chairman, whether that individual is an outside director or a member of executive management. Currently, Brian A. Kenney, our Chief Executive Officer, serves as Chairman. The Board believes that Mr. Kenney is the most appropriate individual to serve as Chairman because of his extensive knowledge of our business and strategy, as well as his demonstrated skill and commitment to performing effectively as Chairman of the Board. Having the Chief Executive Officer serve as Chairman provides the Board with a clear understanding of issues facing GATX, which, in turn, promotes effective Board decision-making, alignment on corporate strategy, and accountabilityeffective execution of that strategy by management.
Our Board is structured to promote independence whether or not its Chairman is a member of executive management. The entire Board, with the exception of Mr. Kenney, consists of independent directors, and the Audit, Compensation, and Governance Committees also are composed entirely of independent directors. The independent directors on the Board meet after each Board meeting in executive sessions that are not attended by Mr. Kenney or other members of management.
In addition, under our Corporate Governance Guidelines, the independent directors serving on the Board annually designate an independent Lead Director to provide leadership to thenon-management members of the
Board and to work with the Chairman and Chief Executive Officer and the other Board members to provide effective and
independent oversight of our management and affairs. Currently, James B. Ream serves as Lead Director. The Board’s independent directors have adopted the Lead Director Guidelines, which establish the powers and duties of the Lead Director includinginclude the following:
| Director* | Board of Directors | Audit Committee | Compensation Committee | Governance Committee | Board of
| Audit
| Compensation
| Governance
| |||||||||||||||||
Diane M. Aigotti | ● | ● | ● | ● | ● | ● | |||||||||||||||||||
Anne L. Arvia | ● | C | ● | ● | C | ||||||||||||||||||||
Ernst A. Häberli | ● | ● | ● | ● | ● | ● | |||||||||||||||||||
Brian A. Kenney | C | C | |||||||||||||||||||||||
James B. Ream | L | L | |||||||||||||||||||||||
Robert J. Ritchie | ● | ● | ● | ||||||||||||||||||||||
Adam L. Stanley | ● | ● | ● | ||||||||||||||||||||||
David S. Sutherland | ● | C | ● | ● | C | ||||||||||||||||||||
Casey J. Sylla | ● | ● | ● | ||||||||||||||||||||||
Stephen R. Wilson | ● | ● | ● | ● | ● | ● | |||||||||||||||||||
Paul G. Yovovich | ● | ● | C | ● | ● | C | |||||||||||||||||||
Number of 2017 meetings
| 6
| 6
| 5
| 4
| |||||||||||||||||||||
Number of 2020 meetings
| 7
| 6
| 5
| 4
| |||||||||||||||||||||
| * | In the table above, “C” means Chair and “L” means Lead Director. |
| GATX CORPORATION - |
CORPORATE GOVERNANCE
The Board has three standing committees: the Audit Committee, the Compensation Committee, and the Governance Committee. Each committee is composed of directors determined by the Board to be independent in accordance with the listing standards of the NYSE. Mr. Ream serves as Lead Director and, while he does not serve as a member of any particular Board committee, he
has a standing invitation as Lead Director to attend the attends all meetings of all Board committees.
The principal responsibilities of each of these committees are described generally below and in detail in their respective committee charters, which are available on our website (www.gatx.com) in the Investor Relations section under “Corporate Governance”.Governance.”
Audit Committee
The Board has determined that each member of the Audit Committee has accounting or related financial management expertise and is “financially literate”,literate,” as that term is used in the listing standards of the NYSE. In addition, the Board has determined that each member of the Audit Committee isDiane M. Aigotti, Anne L. Arvia, and Stephen R. Wilson qualifies as an “audit committee financial expert”,expert,” as that term is defined by the rules of the US Securities and Exchange Commission (“SEC”SEC”). All members of the Audit Committee satisfy the NYSE’s independence standards applicable to audit committee members.
The Audit Committee’s functions include the appointment, retention, compensation, and oversight of our independent registered public accounting firm. The Audit Committee also reviews any related party transactions and assists the Board in oversight of:
The Audit Committee maintains free and open communication, and meets separately at each regularly scheduled committee meeting, with our independent registered public accounting firm, our internal auditor, and management.
Compensation Committee
The Compensation Committee’s functions include:
Pay Governance LLC (“Pay Governance”Governance”) served as the Compensation Committee’s independent compensation consultant during 2017.2020. In addition to providing advice on various aspects of GATX’s compensation plans, programs, and policies, Pay Governance also advises the Compensation Committee periodically on current trends and best practices and reviews the agendas and supporting materials with management and the Compensation Committee Chair in advance of each committee meeting. A Pay Governance representative attends all Compensation Committee meetings, including executive sessions at which management is not present, and meets independently with the Compensation Committee as appropriate. In addition, Pay Governance provides specific recommendations for the Chief Executive Officer’s compensation and advice on the recommendations made by the Chief Executive Officer with respect to the compensation of other executives.
| GATX CORPORATION - |
CORPORATE GOVERNANCE
Governance Committee
The Governance Committee’s functions include:
Annual Board and Committee Evaluations
The Board conducts an evaluation of its performance and effectiveness on an annual basis. The purpose of the evaluation is to obtain the directors’ feedback on the Board’s performance and identify ways to enhance its effectiveness. As part of the evaluation, each director receives a written questionnaire developed by the Governance Committee to solicit input on the Board’s performance, effectiveness, composition, priorities, and culture. Using the questionnaire as a guide, the Governance Committee Chair conducts personal interviews with all directors to obtain their feedback and
discuss any other issues or concerns they may have. The Governance Committee Chair compiles the collective views and comments of the directors and then reports the results of the evaluation to the full Board.
Each of the Board’s committees conducts its own evaluation using the same process as the Board evaluation. The Chair of each committee conducts personal interviews with the other committee members and, after compiling the results, presents a report to the committee and the full Board.
Each year, the Governance Committee Chair conducts a personal interview with each Board member to gatherin-depth perspectives and candid insight about Board performance and effectiveness. The Chair of each committee follows the same process to obtain feedback from committee members on the committee’s performance and effectiveness.
The Board, led by the Governance Committee, regularly evaluates its own composition and succession plans in light of the Company’s evolving business and strategic needs. The focus of this process is to ensure that the Board is composed of directors who possess a wide variety of relevant skills, professional experience, and backgrounds, bring diverse viewpoints and perspectives, and effectively represent the long-term interests of shareholders. WhileIn identifying individuals for Board membership, the Board does not haveGovernance Committee considers a formal policy on diversity, the Board values diversity in viewpoints, professional experiences, education, skills,candidate’s gender, age, ethnicity, and other individual qualities and attributes that contribute to an active, effective Board. The Board believes that new ideas and perspectives are critical to a forward-looking
and strategic Board, as are the extensive experience and deep
understanding of our business and industry that long-serving directors possess. Accordingly, in its board refreshment and succession planning process, the Board considers both the benefits of continuity and fresh perspectives that new directors can bring.
In considering potential director candidates, the Governance Committee and Board take into account, among other factors, the needs of the Board and the Company in light of the overall composition of the Board with a view to achieving a balance of the skills, experience, and attributes that would be beneficial to the Board’s oversight role. For more information, seeDirector Criteria and Nomination Process on page 15.17.
| GATX CORPORATION - |
CORPORATE GOVERNANCE
The Board regularly reviews long-term and emergency succession plans for the Chief Executive Officer and for other senior management positions. In assessing possible Chief Executive Officer candidates, the Board identifies the key skills, experience, and attributes it believes are
required to be an effective Chief Executive Officer in light of the Company’s business strategies, opportunities, and challenges. In addition, the Board ensures that directors
have substantial opportunities over the course of the year to engage with possible succession candidates. As part of these long-term succession planning efforts, we implemented organizational changes to some of our senior leadership positions in order to enhance our growth efforts and further drive the excellent performance our shareholders expect.
| GATX CORPORATION - |
CORPORATE GOVERNANCE
FULL BOARD
While management is responsible for managing risk, the Board and its committees play a role in overseeing our risk management | ||||||||
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Audit Committee |
Compensation Committee |
Governance Committee | ||||||||||||||||||
Plays a key role in the Board’s risk oversight process, particularly in relation to risks that could have a financial impact, such as financial reporting, taxes, accounting, disclosure, internal controls, legal matters, cybersecurity, and our ethics and compliance programs. �� Discusses our risk assessment and risk management guidelines and policies with management, the internal auditors, and the independent registered public accounting firm.
Receives regular reports from management and discusses steps taken by management to monitor and control risk exposures.
Reviews all of our quarterly financial reports, including any disclosure therein of risk factors affecting us and our business.
Receives
Provides regular reports to the Board on its risk oversight activities and any issues identified thereby.
| Manages risks associated with personnel and compensation issues, including executive compensation.
Receives regular reports from the independent compensation consultant and management concerning our compensation plans, policies, and practices.
Sets performance goals under our annual and long-term incentive plans and oversees our compensation plans, policies, and practices.
Provides regular reports to the Board on its oversight of compensation-related risks.
Together with the Compensation Committee’s independent consultant, provides input to our human resources staff in conjunction with their annual assessment of potential risks that may be created by our compensation plans, policies, and practices. The assessment conducted for
| Manages risks associated with governance issues, such as the independence of the Board, Board effectiveness and organization, corporate governance, and director succession planning.
Reviews the skills and experience of the directors on a regular basis to ensure the diversity of relevant experience necessary for an effective Board.
Maintains corporate governance guidelines and procedures designed to assure compliance with all applicable legal and regulatory requirements and governance standards.
Oversees environmental, social and governance matters. Provides regular reports to the Board on its risk oversight activities.
|
| GATX CORPORATION - |
CORPORATE GOVERNANCE
Anti-Hedging, Anti-Pledging Policies
In addition to prohibiting our directors, officers, and employees from trading in GATX stock while in possession of materialnon-public information, our Insider Trading Policy also prohibits certain transactions in GATX stock that may create the potential for the interests of a director, officer, or employee to diverge from the interests of GATX and its shareholders. In particular, our policy
prohibits directors, officers, and employees from
engaging in hedging transactions, including short sales, and transactions in publicly traded options involving GATX stock.stock, and use of financial instruments such as prepaid variable forwards, equity swaps, collars, and exchange funds. The policy also prohibits directors, officers, and employees from holding GATX stock in a margin account or pledging GATX stock as collateral for a loan.
Related Party Transactions Approval Policy
We recognize that transactions with related parties present a heightened risk of real or perceived conflicts of interest and, therefore, may raise questions as to whether those transactions are consistent with the best interests of GATX and its shareholders. Accordingly, we have a formal, written policy that requires all related party transactions to be reviewed and approved by the Audit Committee. A “related party transaction” means any transaction (or series of transactions) valued at over $120,000 in which GATX is a participant and in which any “related party” has or will have a direct or indirect material interest. Our policy defines a “related party” to include all of our directors and executive officers, holders of more than 5% of our voting stock, and the immediate family members of those persons.
Under our policy, the Audit Committee will approve a related party transaction only if it determines that the
transaction is in, or not inconsistent with, the best
interests of GATX and our shareholders, including, for example, situations where:
Upon completion of its review, the Audit Committee will approve or disapprove the related party transaction. In approving any related party transaction, the Audit Committee also will make a determination that the transaction does not constitute a conflict of interest under our Code of Business Conduct and Ethics.
Director and Officer Indemnification and Insurance Arrangements
As required by ourBy-Laws, we indemnify our directors and officers to the fullest extent permitted by the New York Business Corporation Law. In addition, we have entered into indemnification agreements with each member of the Board that contractually obligate us to provide this indemnification to our directors.
As permitted by the New York Business Corporation Law and ourBy-Laws, we maintain insurance policies that
provide liability protection to our directors and officers for claims for which they may not be indemnified by the Company. These insurance policies also provide reimbursement to GATX for indemnification payments we make on behalf of our directors and officers, subject to the conditions and exclusions specified in the policies.
| GATX CORPORATION - |
CORPORATE GOVERNANCE
We believe that understanding issues of importance to our shareholders is critical for us to address their interests in a meaningful and effective way. It is also a tenet of good corporate governance. In that light, we engage with our shareholders on a regular basis to discuss a range of topics, including our performance, strategy, executive compensation, and corporate governance. Dialogue and engagement with our shareholders helpshelp us understand how they view us, set goals and expectations for our performance, and identify emerging issues that may affect our strategies, corporate governance, compensation practices, or other aspects of our operations.
Our shareholder outreach and engagement program includestakes many forms and is a year-round activity. We participate in numerous investor road shows, analyst meetings, and investor conferences. We also provide investors with access to our executive officers in an effort to provide a full perspective on business operations, market conditions, and our long-term strategy. We communicate with shareholders through various media, including our annual report and SEC filings, Proxy
filings, proxy statement,Statement, news releases, and our website. We hold conference calls for our quarterly earnings releases and other major corporate events which are open to all. These calls are available in real time and as archived webcasts on our website.
In addition, over the last eighteen months, our investor relations staff contacted2020, we reached out to our largest shareholders to offerinvestors, representing over 80% of our outstanding shares, and offered them the opportunity to meet with members of our Board and senior management. For thosemanagement to discuss a range of issues. Discussion topics included our response to the COVID-19 pandemic, human capital management, diversity and inclusion efforts, enterprise risk management, ESG and executive compensation.
During our interactions with shareholders, who expressed an interest in meeting, we offered to arrange meetings withhear a diverse range of views. In general, our Lead Director, the Chairs ofinvestors appreciate our Compensationtransparency and Governance Committees, andwillingness by our senior management team to discuss corporate governance, business strategy,executives and other topics of interest to them. Over the last 18 months, members of ourthe Board or senior management have metto engage with, five of our largest shareholders, who collectively own more than 50% of our outstanding shares.
Environmental, Health, and Safety
GATX’s vision islisten to, be recognized as the finest railcar leasing company in the world by our customers, shareholders, employees, and the communities in which we operate. Consistent with that vision, we are
committed to operating at the highest levels of safety and ethics, and in compliance with environmental, health, and safety (“EHS”) rules, regulations, and standards applicable to our business.
Our EHS Program
Responsible Care Partnership
GATX was the first U.S. railcar leasing company to achieve certification as a Responsible Care® Partner, as certified by the American Chemistry Council (“ACC”) and the Chemical Industry Association of Canada. The Responsible Care® Partnership program is a voluntary initiative developed by the global chemical industry to drive continuous improvement and achieve excellence in environmental, health and safety, and security performance. As a Responsible Care® partner, we are required to meet technical and management standards for:
Using the Responsible Care® framework, we have established an EHS management system that strives for continuous improvement. We continually measure our performance and set goals for improvement in many key metrics such as safety incident rate, community involvement and support, environmental emissions, workers’ compensation, waste generation, and energy consumption. Our management team takes an active role in developing and communicating our annual EHS goals across the organization and monitoring the Company’s efforts to achieve those goals.
CORPORATE GOVERNANCE
We take our commitment to the Responsible Care®framework very seriously, and as part of our participation, our facilities are audited on a periodic basis by nationally-accredited, independent auditors to ensure compliance with program standards. Our commitment to our EHS program is supported by the results we have achieved. Highlights of our work in 2017 include:
TankTrainer Program®
Our repair and maintenance facilities maintain an ongoing relationship with first responders in the communities where we operate to coordinate response plans in the event of an EHS incident involving our railcars or our facilities.shareholders. In addition, we offer a TankTrainer® Program
that provideshands-on trainingcontinue to make enhancements to our diversity and inclusion efforts, ESG initiatives and the Proxy Statement in the proper use and handling of railcars for customers, railroads, and first responders. Since 1993, our TankTrainer® has conducted more than 250 mobile training events for nearly 22,000 emergency responders and customers.response to suggestions from investors.
Sustainability
We are committed to environmental sustainability and take a leadership position in voluntary environmental initiatives by working proactively with governments, environmental groups, academia, and industry. In order to minimize the environmental impact of our operations, we invest in programs targeted to make our operations more efficient and reduce our impact on the environment.
Our American Steamship Company (“ASC”) subsidiary continues to work on developing new ballast water treatment systems for use in our vessels that operate on the Great Lakes. Ballast water discharges in the Great Lakes from vessels sailing internationally have
introducednon-native aquatic species which pose a threat to the marine ecosystem of the Great Lakes. While our vessels sail exclusively within the Great Lakes, ballast water discharges from our vessels can potentially contribute to the spread of these invasive species. For the last several years, ASC has partnered with experts in the public and private sector to develop and test new technology to achieve higher levels of purity in ballast water with the goal of eliminating these invasive species from the ballast water of Great Lakes vessels.
Social
Truth, honesty, and treating all people with respect and dignity reflects our culture and the kind of workplace we are committed to maintaining: One in which our employees can reach their highest potential. We encourage diversity and inclusiveness in our workforce, and our policies and programs are designed to provide fair treatment of all employees. We believe that our investments in training, diversity, benefit programs, and education helps us to attract and retain a talented workforce. In addition, we offer our employees competitive compensation and a full array of health, welfare, and retirement benefits.
We also encourage our employees to volunteer in their communities, and we offer opportunities for them to tutor, mentor, build playgrounds, paint schools, work at food banks and shelters, and participate in food, clothing, and
toy collection drives. Key highlights of our employee engagement and volunteer efforts in 2017 included:
CORPORATE GOVERNANCE
GATX shareholders and other interested parties may, at any time, communicate directly with the Board, any of our directors individually (including the Lead Director), or ournon-management directors as a group through the office of our Corporate Secretary as follows:
| • | electronically by sending ane-mail tocontactboard@gatx.com |
| • | anonymously through our hotline vendor, Convercent, by internet at www.convercent.com/report or by telephone at (800) 461-9330 |
Our Corporate Secretary will review communications received by any of these methods and forward the communication promptly to the Board, individual directors, the Lead Director, or thenon-management directors as a group, as appropriate, depending on the subject matter and facts and circumstances described in the communication.
Communications that are not related to the duties and responsibilities of the Board, are patently frivolous, or are otherwise considered to be improper for submission to the intended recipient(s), will not be forwarded.
| GATX CORPORATION - |
PROPOSAL1: ELECTION OF DIRECTORS
Director Criteria and Nomination Process
Each year, the Board nominates a slate of director candidates for election at the Annual Meeting of Shareholders. The Board has delegated the process for screening potential director candidates to the Governance Committee with input from the Chairman and Chief Executive Officer and the Lead Director. When the Governance Committee determines that it is desirable to add a director or fill a vacancy on the Board, it will identify one or more individuals qualified to become directors and recommend them to the Board. In identifying qualified individuals, the Governance Committee generally retains a search firm for this purpose. To be consideredIn evaluating individuals for potential membership on the Board, a candidate must meetthe Governance Committee gives due consideration to the following minimum criteria:
Diversity is a factor considered when identifying prospective nominees for our Board, although the Governance Committee does not have a formal diversity policy. Nominees are selected so that the Board represents a diversity of viewpoints, professional experiences, education, skills, backgrounds, and other individual qualities and attributes that contribute to an active, effective Board.
ELECTION OF DIRECTORS
Director Experience, Qualifications, and Skills
The Governance Committee is responsible for recommending to the full Board a slate of director nominees who collectively have the complementary experience, qualifications, skills, and attributes to guide the Company and function effectively as a Board. We believe that each of the nominees satisfies the criteria for membership set forth above and has key skills and attributes that are important to an effective board. Each of
the nominees, other than Mr. Kenney, is also independent of the Company and management. SeeBoard Independence on page 5.9.
Listed below are certain key experiences, qualifications, and skills of our director nominees that the Governance Committee believes are relevant and important in light of GATX’s business and structure.
| Brian A. Kenney (Chair & CEO) | James Ream | Diane M. | Anne L. Arvia | Adam L. Stanley | David S. Sutherland | Stephen R. Wilson | Paul G. Yovovich | |||||||||||
KNOWLEDGE, SKILLS AND EXPERIENCE |  | |||||||||||||||||
2021 Tenure | 16 | 12 | 4 | 11 | 1 | 13 | 6 | 8 | ||||||||||
2021 Age | 61 | 65 | 56 | 57 | 47 | 71 | 72 | 67 | ||||||||||
Rail & Other Transportation | ✓ | ✓ | ✓ | ✓ | ||||||||||||||
Air Transportation | ✓ | ✓ | ||||||||||||||||
Operations | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||
Raw Materials | ✓ | ✓ | ✓ | ✓ | ||||||||||||||
Human Resources & Recruiting | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||
Customer Perspectives | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||
International & Emerging Markets | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||
Finance / M&A | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||
Capital Markets / Private Equity | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||
Fixed Income Investments | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||
Debt Market Experience | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||
Risk Management | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||
Accounting & Financial Audit | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||
Technology & Data Security | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||
Law & Litigation | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||
Regulatory & Public Affairs | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||
| 18 | GATX CORPORATION - 2021 Proxy Statement |
ELECTION OF DIRECTORS
| Brian A. Kenney (Chair & CEO) | James Ream | Diane M. | Anne L. Arvia | Adam L. Stanley | David S. Sutherland | Stephen R. Wilson | Paul G. Yovovich | |||||||||||
DEMOGRAPHICS | ||||||||||||||||||
RACE / ETHNICITY | ||||||||||||||||||
American Indian / Alaska Native | ||||||||||||||||||
Asian | ||||||||||||||||||
Black or African American | ✓ | |||||||||||||||||
Hispanic or Latino | ||||||||||||||||||
Native Hawaiian / Other Pacific Islander | ||||||||||||||||||
White or Caucasian | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||
Other | ||||||||||||||||||
GENDER | ||||||||||||||||||
Male | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||
Female | ✓ | ✓ | ||||||||||||||||
Other | ||||||||||||||||||
| GATX CORPORATION - | 19 |
ELECTION OF DIRECTORS
Shareholder Recommendation and Nomination of Directors
The Board also will consider any candidates who may be recommended by shareholders. The Board conducts such inquiry into each candidate’s background, qualifications, and independence as it believes is necessary or appropriate under the circumstances and regardless of whether the candidate was recommended by shareholders or by others. Any recommendations of director candidates by shareholders should be submitted to the Governance Committee, c/o the Corporate Secretary, GATX Corporation, 222 West Adams Street,233 South Wacker Drive,
Chicago, Illinois 60606.60606-7147. The recommendation must be received not more than 120 and not less than 90 days prior to the first anniversary of the preceding year’s annual meeting and must include all information required by the proxy rules, applicable law, and ourBy-Laws. If a shareholder submits a director candidate in accordance with the requirements specified in ourBy-Laws, the Governance Committee will consider such director candidate using the same standards it applies to evaluate other director candidates.
Nominees for Election to the Board of Directors
Our Board is currently composed of tennine directors, alleight of whom are standing for re-election for a term of one year, to serve until the 20192022 Annual Meeting of Shareholders or until their successors are elected and qualified. Ernst A. Häberli, who currently serves on the Board, will not be standing for re-election and will be retiring at the 2021 Annual Meeting. The Board is grateful to Mr. Häberli for his 14 years of dedicated and valuable service to the Company.
All director nominees have consented to serve on the Board, if elected. At the time of the Annual Meeting, if any director nominee is unable or declines to serve, the
proxies may be voted for any other person who may be
nominated by the Board to fill the vacancy, or the size of the Board may be reduced accordingly.
Please see below for information on the background of each of the teneight director nominees, as well as each individual’s specific experience, qualifications, and skills that led the Board to conclude that such individual should serve on the Board in light of the Company’s business and leadership structure.
The Board of Directors recommends that you voteFOR each director nominee named below.
ELECTION OF DIRECTORS
Diane M. Aigotti | ||||
|
Ms. Aigotti has served as Executive Vice President, Managing Director and Chief Financial Officer
2008. Earlier in her career, she served as the Vice President of Finance at The University
| |||
ExperienceSpecific Qualifications, Attributes, Skills and Qualifications of Particular Relevance to GATXExperience
Ms. Aigotti serves as a member of our Audit and Governance Committees. In deciding to nominate Ms. Aigotti, the Board considered her extensive
Extensive financial expertise, including in capital markets transactions, financial reporting, and internal controls
Deep understanding of the insurance industry gained through her experience as the Chief Financial Officer of a large global insurance organization as well as her prior experience as Chief Risk Officer and Treasurer at a NYSE-listed multinational insurance, risk management, and human resources firm. She has significant
Substantial expertise in key areas such as financial planning and reporting, operations, risk management, treasury management, mergers and acquisitions, information technology, and tax and regulatory compliance. As a result, she is ablecompliance enables her to provide the Board with valuable insights on issues that are critical to the Board’s oversight of our business, strategy, and operations.operations
| 20 | GATX CORPORATION - 2021 Proxy Statement |
ELECTION OF DIRECTORS
Anne L. Arvia | ||
|
Board Committees:Audit (Chair) Ms. Arvia has served as Executive Vice President, Banking and Financial Services, The Auto Club Group and President, CEO, The Auto Club Trust, since August 2018. Previously, Ms. Arvia served as Acting President, USAA Bank,
Nationwide Direct Distribution
| |
ExperienceSpecific Qualifications, Attributes, Skills and QualificationsExperience
Deep understanding of Particular Relevance to GATX
Ms. Arvia serves as the Chair of our Audit Committeeauditing, accounting standards, and as a member of our Governance Committee. In deciding to nominate Ms. Arvia, the Board considered her qualificationsfinancial reporting rules and regulations
Qualified as a Certified Public Accountant and an Audit Committee Financial Expert as well as her
Wealth of experience and knowledge of accounting standards and financial reporting rules and regulations. In addition, Ms. Arvia’s experience in various senior management positions in the financial services sector provides the Board with valuable expertise on investment, operations, risk management, and financial matters.
ELECTION OF DIRECTORS
| ||
 |
| |
Experience and Qualifications of Particular Relevance to GATX:
Mr. Häberli is a member of our Compensation and Governance Committees. In deciding to nominate Mr. Häberli, the Board considered hismatters gained through her many years inof senior executive positions at leading multinational companies, which enables him to bring to the Board extensive operating, marketing, financial, and management experience. In addition, Mr. Häberli has considerable experience with mergers and acquisitions, private equity, and capital markets matters. He also provides the Board with valuable insights into international business development in light of his significant experience in global business markets.the financial services sector
Brian A. Kenney
| ||
 |
Mr. Kenney has served as our Chairman of the Board and Chief Executive Officer since 2005 and as President
| |
ExperienceSpecific Qualifications, Attributes, Skills and Qualifications of Particular Relevance to GATX:Experience
Mr. Kenney serves as our Chairman of the Board
Unique perspective and Chief Executive Officer. In deciding to nominate Mr. Kenney, the Board considered his unique perspectiveinsight that comes from managing the Company’s business on aday-to-day basis as well as his significant
Substantial operating, risk management, and transportation industry experience. His extensiveexperience
Extensive financial background and capital markets expertise make him particularly well qualified
Strategic leadership skills necessary to serve as Chairman of the Board as he is able to provide critical insight into the Company’smanage GATX’s leasing business and corporate strategies. Mr. Kenney has significant board andthrough market cycles while meeting the challenges of a constantly changing environment across GATX’s portfolio of assets
Broad experience on corporate governance issues gained through his experience as he serves as a member of the boardon public company boards of directors and Governance Committee of USG Corporation, a publicly held manufacturer and supplier of building supply products.
| GATX CORPORATION - |
ELECTION OF DIRECTORS
James B. Ream
| ||
 |
Age:65 Lead Director
joining ExpressJet, Mr. Ream held various positions of increasing responsibility with Continental Airlines and American Airlines. Mr. Ream was a director of ExpressJet Holdings, Inc.
| |
ExperienceSpecific Qualifications, Attributes, Skills and Qualifications of Particular Relevance to GATX:Experience
Mr. Ream serves as our Lead Director. In deciding to nominate Mr. Ream, the Board considered
Significant experience in management, strategy, finance, and operations gained through his financial and accounting expertise and his qualifications as an Audit Committee Financial Expert. With his years of experience as avarious senior executive roles in the transportation industry, Mr. Ream brings to the Board considerable expertiseincluding as Chief Executive Officer of ExpressJet Holdings, Inc.
Substantial experience in strategic planning and management issues, including extensive experience relating to financing, management, maintenance, customer relations, regulatory issues, and operations of large fleets of transportation assets.assets
Extensive financial, accounting, and risk management expertise
Enhanced perspectives on corporate governance, risk management, and other issues applicable to public companies
Robert J. RitchieAdam L. Stanley
  |
Since March 2014, Mr. Stanley has served as Chief
|
ExperienceSpecific Qualifications, Attributes, Skills and Qualifications of Particular Relevance to GATX:Experience
Mr. Ritchie serves as a member of our Audit
Deep experience in information technology systems, security, data and Governance Committees. In deciding to nominate Mr. Ritchie, the Board considered hisdigital transformation
Extensive human capital management and process integration expertise
Significant financial and accounting expertise, his qualifications as an Audit Committee Financial Expert,risk management skills and his prior experience as a Chief Executive Officer
Far-reaching exposure to global business markets and board member of a large, publicly held railroad company. With his long career in the railway industry, Mr. Ritchie brings to the Board critical operating, industry, commercial, railcar portfolio,mergers and management expertise. In addition, he has a wealth of knowledge about the railroads and their business, which comprise a significant part of the Company’s railcar leasing customer base. Having served on numerous North American rail associations, including the board of the Association of American Railroads, Mr. Ritchie also provides valuable insights on rail regulatory matters and industry affairs, including in international markets.acquisitions
| GATX CORPORATION - |
ELECTION OF DIRECTORS
David S. Sutherland
 |
Mr. Sutherland retired as President and Chief Executive Officer
|
ExperienceSpecific Qualifications, Attributes, Skills and Qualifications of Particular Relevance to GATX:Experience
Mr. Sutherland serves as the Chair of our Compensation Committee and as member of our Governance Committee. In deciding to nominate Mr. Sutherland, the Board considered his strong
Proven leadership and record of achievement as the former Chief Executive of a publicly held steel producer. He bringsproducer
Deep knowledge of the steel industry, which is a critical raw material for the production of railcars, and the manufacturing industry, which is a key sector for the Company’s business
Substantial senior management experience, which enables him to the Boardprovide valuable insights on business operations and strategy, global markets, financial matters, and risk management. In addition, the Board appreciates Mr. Sutherland’s perspectivesmanagement
Broad experience on market conditions and trends in the steel and manufacturing industries, which are critical sectors for the Company’s business. Mr. Sutherland also has significant board and corporate governance issues gained through his experience on public company boards of directors, including his past service as he serves asnon-executive chairman and a director of United States Steel Corporation and as a director of Imperial Oil Ltd.
Casey J. Sylla
 |
|
Experience and Qualifications of Particular Relevance to GATX:
Mr. Sylla serves as a member of our Audit and Compensation Committees. In deciding to nominate Mr. Sylla, the Board considered his financial and accounting expertise and his qualifications as an Audit Committee Financial Expert. The Board also considered Mr. Sylla’s substantial management, business, and leadership experience based upon his various roles as a senior executive, as well as his valuable risk management and customer relations skills and abilities. In addition, the Board benefits from his perspectives on financial, transactional, and investment matters due to his management experience in an investment and financial business. Mr. Sylla also serves as a director or trustee of various mutual funds in the Northern Funds and Northern Institutional Funds family.Lead Director
ELECTION OF DIRECTORS
Stephen R. Wilson
 |
Mr. Wilson retired as Chairman, President and Chief Executive Officer
2003. Mr. Wilson began his career with Inland Steel Industries, Inc.
|
ExperienceSpecific Qualifications, Attributes, Skills and Qualifications of Particular Relevance to GATX:Experience
Mr. Wilson serves as a member
Demonstrated financial, operating, strategic, and business management expertise gained though his many years of our Audit and Compensation Committees. In deciding to nominate Mr. Wilson, the Board considered his qualifications as an Audit Committee Financial Expert and his experience in his former rolesenior executive roles, including as the former Chief Executive Officer of a leading manufacturer and distributor of fertilizer products, which provides the Board with valuable financial, operating, and business management expertise. He also has significantCF Industries
Significant experience in strategic planning, regulatory environment, transformational corporate transactions, and business integration, including in numerous international markets. In addition, the Board values Mr. Wilson’smarkets
Extensive financial and accounting expertise from his experience serving as a Chief Executive Officer and Chief Financial Officer at a major publicly held corporation. Mr. Wilson also serves oncorporation
Provides valuable rail industry customer perspective gained through his experience as the boardChief Executive Officer of directorslarge fertilizer company that is a major shipper of Ameren Corporation where he is chair of the Finance Committee and a member of the Human Resources Committee.goods by rail
| GATX CORPORATION - 2021 Proxy Statement | 23 |
ELECTION OF DIRECTORS
Paul G. Yovovich
 |
Age:67
Mr. Yovovich is President of Lake Capital, a private equity firm
of Advance Ross Corporation
|
ExperienceSpecific Qualifications, Attributes, Skills and Qualifications of Particular Relevance to GATX:Experience
Mr. Yovovich serves as Chair of our Governance Committee
Broad strategic, operating, financial, accounting, regulatory, and as a member of our Compensation Committee. In deciding to nominate Mr. Yovovich, the Board considered that, withbusiness management experience gained through his over thirtymore than 30 years of experience as a senior executive, principal, and corporate director he brings to the Board extensive strategic, operating, financial, accounting, regulatory, and business management experience. Mr. Yovovich also provides the Board with
Qualified as a Certified Public Accountant
Significant experience in technology and data security experience. Asissues
Deep expertise in transactional, investment, and capital markets matters through his many years as a private equity executive Mr. Yovovich has substantial experience investing in, and actively overseeing the management of, Lake Capital’s portfolio companies to foster growth and value creation. As a result, he also provides the Board with considerable expertise in transactional, investment,creation
Substantial corporate governance expertise gained through his experience on serving on public company boards of directors and capital markets matters.on the boards of Lake Capital’s portfolio companies
| GATX CORPORATION - |
2017 DirectorThe Compensation
| Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2)(3) | NQSO ($) | Non-equity ($) | Change in ($) | All other ($) | Total ($) | |||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | |||||||||||||||||||
Diane M. Aigotti | 80,000 | 90,000 | 0 | 0 | 0 | 0 | 170,000 | |||||||||||||||||||
Anne L. Arvia | 97,500 | 90,000 | 0 | 0 | 0 | 0 | 187,500 | |||||||||||||||||||
Ernst A. Häberli | 80,000 | 90,000 | 0 | 0 | 0 | 0 | 170,000 | |||||||||||||||||||
James B. Ream | 98,333 | 90,000 | 0 | 0 | 0 | 0 | 188,333 | |||||||||||||||||||
Robert J. Ritchie | 80,000 | 90,000 | 0 | 0 | 0 | 0 | 170,000 | |||||||||||||||||||
David S. Sutherland | 96,667 | 90,000 | 0 | 0 | 0 | 0 | 186,667 | |||||||||||||||||||
Casey J. Sylla | 80,000 | 90,000 | 0 | 0 | 0 | 0 | 170,000 | |||||||||||||||||||
Stephen R. Wilson | 80,000 | 90,000 | 0 | 0 | 0 | 0 | 170,000 | |||||||||||||||||||
Paul G. Yovovich | 90,000 | 90,000 | 0 | 0 | 0 | 0 | 180,000 | |||||||||||||||||||
Committee with assistance from Pay Governance, reviews and makes recommendations to the Board regarding the form and amount of compensation for non-employee directors. Mr. Kenney receives no director compensation for his service on the Board. GATX’s independent director compensation program is designed to enable continued attraction and retention of highly qualified directors and to address the time, effort, expertise, and accountability required of active Board membership. The Company’s independent director compensation program for 20172020 consisted of the following amounts shown in the table below:
Our 20172020 Director Compensation Program
| Retainer (Annualized Amounts) | January 1 - December 31 ($) | |
- Cash | 90,000 | |
- Phantom Stock | 120,000 | |
- Lead Director | 25,000 | |
- Audit Committee Chair | 20,000 | |
- Compensation Committee Chair | 15,000 | |
- Governance Committee Chair | 10,000 | |
Each director’s phantom stock account is credited with additional units representing dividends declared on GATX common stock based on the date such dividend is paid.
At the expiration of each director’s service on the Board, settlement of phantom stock units is made in shares of common stock equal to the number of units of phantom
DIRECTOR COMPENSATION
stock then credited to his or her account. Any fractional units are paid in cash. Directors may elect to receive their payouts in a lump sum or up to ten annual installments in accordance with the terms, and subject to the limitations, set forth in the Directors’ Phantom Stock Plan.
We offer a Directors’ Voluntary Deferred Fee Plan in whichnon-employee directors may defer receipt of the cash portion of their retainer in the form of either cash or
phantom stock units. If the deferral is in cash, the deferred amount accrues interest at a rate equal to the20-year US government bond rate. If the deferral is in
units of phantom stock, the units are credited to an account for each participating director along with dividends and are settled, following expiration of the director’s service on the Board, in accordance with his or her election/distribution form on file. FiveFour current directors participated in the Deferred Fee Plan in 2017.2020.
The stock ownership goal fornon-employee directors is 5.0 times the annual cash retainer. New directors have five years following election to the Board to achieve this ownership goal.
| GATX CORPORATION - 2021 Proxy Statement | 25 |
DIRECTOR COMPENSATION
2020 Director Compensation
| Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2)(3) | Total ($) | |||||||||
(a) | (b) | (c) | (h) | |||||||||
Diane M. Aigotti |
| 90,000 |
|
| 120,000 |
|
| 210,000 |
| |||
Anne L. Arvia |
| 110,000 |
|
| 120,000 |
|
| 230,000 |
| |||
Ernst A. Häberli |
| 90,000 |
|
| 120,000 |
|
| 210,000 |
| |||
James B. Ream |
| 115,000 |
|
| 120,000 |
|
| 235,000 |
| |||
Robert J. Ritchie(4) |
| 30,000 |
|
| 40,000 |
|
| 70,000 |
| |||
Adam L. Stanley |
| 90,000 |
|
| 120,000 |
|
| 210,000 |
| |||
David S. Sutherland |
| 105,000 |
|
| 120,000 |
|
| 225,000 |
| |||
Stephen R. Wilson |
| 90,000 |
|
| 120,000 |
|
| 210,000 |
| |||
Paul G. Yovovich |
| 100,000 |
|
| 120,000 |
|
| 220,000 |
| |||
| (1) | Under the Directors’ Voluntary Deferred Fee Plan, the following directors have deferred a portion of their cash retainer into phantom stock units during 2020: Ms. Aigotti ($45,000), Messrs. Ream ($23,000), Ritchie ($30,000), Sutherland ($105,000), and Yovovich ($100,000). |
| (2) | Ms. Aigotti and Ms. Arvia and Messrs. Häberli, Ream, Ritchie, Sutherland, Wilson and Yovovich received stock grants with grant date fair values of $30,000 on January 31, April 30, July 31 and October 31. Mr. Ritchie retired as a Director on April 24, 2020. His stock grants were prorated to reflect his service prior to his retirement from the Board. These awards were fully vested upon grant and the amounts shown represent the dollar amounts recognized for financial statement reporting purposes for the fiscal year ended December 31, 2020, in accordance with Accounting Standards Codification Topic No. 718, Compensation—Stock Compensation. Assumptions used to calculate these amounts are included in the Notes to the Company’s audited financial statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020. |
| (3) | The aggregate number of GATX phantom stock units held on December 31, 2020 was: Ms. Aigotti (9,293), Ms. Arvia (26,024), Mr. Häberli (31,119), Mr. Ream (32,606), Mr. Ritchie (25,256), Mr. Stanley (2,086), Mr. Sutherland (61,921), Mr. Wilson (11,002), and Mr. Yovovich (28,797). |
| (4) | Mr. Ritchie retired from the Board effective April 24, 2020. |
| 26 | GATX CORPORATION - |
| PROPOSAL 2: | ADVISORY RESOLUTION ON EXECUTIVE COMPENSATION |
We are seeking your approval, on anon-binding advisory basis, of the compensation of our named executive officers as described in theCompensation Discussion and Analysisbeginning on page 26.28. We believe that we have designed compensation programs that pay for performance and align compensation with the long-term interests of our shareholders. In deciding how you vote on this proposal, we encourage you to read theCompensation Discussion and Analysis for a full description of our executive compensation philosophy and programs, the decisions our Compensation Committee has made under those programs, and the factors it considers in making those decisions.
The North American railcar leasing market experienced its third year of a downturn in 2017. Large numbers of idle existing railcars, combined with the overbuilding of new railcars, caused a continued oversupply situation in the market. Despite relatively stable underlying demand and modest improvement in railcar loadings, this oversupply of railcars tempered lease rate increases across the industry. In light of these industry conditions, our performance was outstanding. We maintained an industry-leading fleet utilization of 98% or higher throughout the year, reflective of the diversity of our quality fleet and the breadth of our customer relationships. Our international railcar leasing business maintained higher fleet utilization than expected throughout the year, while our American Steamship subsidiary significantly increased its profitability by carrying more tonnage and operating its fleet more efficiently. Lastly, our aircraft spare engine leasing joint ventures with Rolls-Royce produced another year of excellent financial results.
Key accomplishments in 2017 included:
We value the feedback provided by our shareholders, who approved our executive compensation program at the 20172020 Annual Meeting of Shareholders by a favorable vote of 97.3% in favor.approximately 98%. We have discussions with
many of our shareholders on an ongoing basis regarding various topics, including executive compensation, and we take into account the views of shareholders regarding the design and effectiveness of our executive compensation program.
Shareholders are being asked to approve the following resolution at the Annual Meeting:
“RESOLVED, that the shareholders of GATX Corporation (the “Company”) approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed in this Proxy Statement pursuant to Item 402 ofRegulation S-K, including the Compensation Discussion and Analysis, and the Executive Compensation Tables, together with the narrative discussion related thereto.”
The Board of Directors recommends that you voteFOR adoption of the advisory resolution to approve the compensation of our named executive officers as disclosed in this Proxy Statement.
| GATX CORPORATION - |
COMPENSATION DISCUSSION AND ANALYSIS
This section discusses material information relating to our executive compensation program and plans for our named executive officers (“NEOs”):NEOs:
Brian A. Kenney
Chairman, President and Chief Executive Officer
Robert C. LyonsThomas A. Ellman
Executive Vice President and Chief Financial Officer
James F. Earl
Executive Vice President and President, Rail International
Thomas A. EllmanRobert C. Lyons
Executive Vice President and President, Rail North America
Deborah A. Golden
Executive Vice President, General Counsel and Corporate Secretary
N. Gokce Tezel
Executive Vice President and President, Rail International
Page | ||||
| Executive Compensation Tables | ||||
| — Summary Compensation | ||||
| — Grants of Plan-Based Awards | ||||
| — Outstanding Equity Awards at FiscalYear-End | ||||
| — Option Exercises and Stock Vested | ||||
| — Pension Benefits | ||||
| 55 | ||||
ThisCompensation Discussion and Analysis makes reference to financial data derived from our financial statements prepared in accordance with generally accepted accounting principles (“GAAP”GAAP”) and certain
other financial data prepared usingnon-GAAP
components. For a reconciliation of thesenon-GAAP components to the most comparable GAAP components, seeExhibit B to this Proxy Statement.
| GATX CORPORATION - |
COMPENSATION DISCUSSION AND ANALYSIS
Our Business and Strategy
GATX is in the business of owning and leasing long-lived transportation assets. We are the leading global railcar lessor, owning and leasing railcars in North America, Europe, and Asia. Most of our railcar leases are full-serviceservice-intensive leases under which we provide maintenance, engineering, administrative, and a variety of other value-added services. We operate an extensive network of railcar maintenance facilities in the United States, Canada, and Europe dedicated to performing timely, efficient, and high quality maintenance for our railcar leasing customers.
In addition, we operate the largest fleet ofUS-flagged vessels on the Great Lakes and invest in aircraft spare engines with Rolls-Royce plc, a leading manufacturer of commercial aircraft jet engines, in a group of joint ventures that lease aircraft spare engines. We also invest directly in aircraft spare engines that are managed by this joint venture. Lastly, we recently acquired the world’s fourth largest tank container leasing fleet, a complementary business to railcar leasing.
Railcar leasing isremains our core business, accounting for approximately 85%99% of our 20172020 revenue. OurPrior to the pandemic, the North American railcar leasing market was in a weakened condition due to a significant oversupply of railcars, exacerbated by decreased railcar loadings, increased rail velocity, lower lease rates and a highly competitive leasing environment. In addition, our rail customers generally operate in cyclical markets, such as the petroleum, chemical, fertilizer, food/agricultural, transportation, and construction industries. CombinedThis cyclical demand, combined with changing macroeconomic conditions and swings in railcar supply, this results in significant
volatility in utilization and lease rates for railcars over time. At the
same time, our railcars have very long useful lives of20-45 years. Thus, we have to proactively manage our business with a long-term view, which includes buying, leasing, maintaining, and selling railcars into constantly changing business conditions over decades. Given the COVID-19 pandemic’s adverse impacts in 2020, successful execution of our long-term strategic priorities was critically important in this challenging operating environment.
We believe that the key to generating long-term shareholder value involves optimizing asset growth and asset return by emphasizing each at the appropriate point in the railcar business cycle. For example, in stronger railcar markets, we focus on increasing lease rates and lengthening lease termterms tolock-in attractive lease revenue as long as possible. At the same time, wede-emphasize new railcar investment due to the high railcar prices usually present in such a market. Conversely, in weaker markets, when railcar prices tend to be lower, we seek to increase railcar investment on favorable terms. We also aggressively reduce lease rates to maintain asset utilization and shorten lease terms to position us to capture value when lease rates improve. The following chart illustrates our approach to managing leases through these cycles over the past decade.
The cyclicality of our industry is also illustrated by the backlog of orders at the railcar manufacturers. Rising backlogs tend to represent a strengthening market while falling backlogs tend to represent a weakening market. While we invest in railcars at all points in the business cycle, we strive to achieve lower railcar cost by trying to
place large new railcar orders and acquire existing fleets in weaker markets when asset prices tend to be lower. The following chart illustrates this cyclicality and our efforts to focus on the lower points in the business cycle for large railcar investments.
The Lease Price Index is an internally generated business indicator measuring the percentage change between the average renewal lease rate and the average expiring lease rate weighted by fleet composition. Excludes boxcar fleet. |
| GATX CORPORATION - |
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Principles
Our Compensation Committee is responsible for the oversight of our executive compensation program, including approval of our Chief Executive Officer’s compensation and establishing the performance goals used to determine the compensation of our executive officers. Our executive compensation program is based on the following principles:
The Compensation Committee expects our executive team to create long-term shareholder value by growing
capital employed while also earning an attractive return on that capital. The inherent cyclicality of the railcar leasing business is an important consideration in how we structure our executive compensation programs to appropriately
incentivize management to achieve the financial goals that will positively impact the Company’s performance over the long-term. Our Committee considered the impact of COVID-19 on all of our business segments, but did not adjust any of the outstanding incentive plans, including the 2020 annual incentive plan and the outstanding performance share plans. No changes were made to underlying plan measures and metrics and no adjustments were made to final achievement and payouts under any of our executive compensation plans
Due to the cyclicality of our business, management must strategically shift the emphasis we place on each of these dual objectives (i.e., growth in capital employed and financial returns) to adapt to changes in market conditions. Our compensation programs reflect this cyclicality by appropriately rewarding management to emphasize current financial returns over growth in capital employed during stronger markets and, conversely, to emphasize growth in capital employed over current financial returns in weaker markets. As a result, the level of performance on which we measure our incentives reflect this cyclicality and may not reflect year-over-year increases. In this way, the Compensation Committee believes that our plans have been designed to reward executives for achieving those goals that will maximize long-term shareholder value.
| GATX CORPORATION - |
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Plan Design
The overarching goal of our compensation philosophy and incentive plan design is to incentivize management by aligning their interests with those of our shareholders. The Compensation Committee establishes performance metrics for our annual and long-term plans through a multi-step process that considers the business plan and the macroeconomic environment impacting the railcar leasing industry each year. This rigorous approach to goal setting and creating alignment with shareholders is important to the Committee and accordingly each of our
executive officers receives the vast majority of pay from equity — which is 100% performance-based. In 2017,2020, approximately 81%83% of total direct compensation for our Chief Executive Officer, and approximately 63%68% for our other NEOs, was performance-based and not
guaranteed. The light and dark blue colors in the charts below denote performance-based compensation. The following graphs provide a snapshot of the elements of pay for our NEOs and explain why each element is provided:
Note: The percentages in the chartcharts above reflect the base salary and incentive targets in effect for the named executive officersNEOs for 2017,2020, and thus are not intended to match amounts shown in the Summary Compensation Table or the Grant of Plan-Based Awards Table.
Incentive Type | Compensation |
| Key Features & | Form of Payment | ||||
| FIXED | Base Salary | Typically consider market pay levels, specific responsibilities and experience of each NEO, and his or her individual performance | • Attract and retain key talent • Provide a degree of financial certainty | Cash | ||||
PERFORMANCE- BASED INCENTIVES | Annual Incentive Awards | Achievement of Company net income goal. We set annual incentive opportunities to be competitive with market | • Drive achievement of key business results on an annual basis | Cash | ||||
Long-Term Equity Based Incentive Awards | Achievement of Company return on equity and investment volume goals. We set target long-term incentive opportunities to be competitive with market. The value of regular, annual long-term incentive awards to each NEO is divided equally between stock options and performance shares | • Directly tie interests of our NEOs to those of our shareholders
• Reward achievement of long-term objectives, typically over a three-year performance period
• Reward creation of long-term shareholder value | Non-qualified stock options or | |||||
| GATX CORPORATION - |
COMPENSATION DISCUSSION AND ANALYSIS
20172020 Key Management Objectives
With weakEntering 2020, the North American railcar leasing market conditions continuing aswas in a weakened position due to a significant oversupply of railcars. As the pandemic set in, North American railcar loadings fell to levels below the bottom of the 2008-2010 recession with negative impacts on already low lease rates. The impact of lower lease rates on renewals of railcar leases and the competitive pressures in re-leasing of railcars negatively impacted financial performance. The pandemic also had a dampening effect on secondary market activity and created inefficiencies in our North American Rail maintenance network due to frequent facility closings in an effort to keep our employees safe and healthy. In Europe and India, COVID-19 resulted in delayed new investment due to temporary closing and delays at railcar manufacturers. The pandemic’s most profound negative impact was on our aircraft spare engine leasing business due to the significant reduction in global air travel.
In light of the pandemic’s negative impacts across all of our segments, we entered 2017, we establishedimmediately pursued the following performance objectives, among others:
20172020 Key Accomplishments
TheIn 2020, despite COVID-19’s negative effect on all of our business segments, we executed on our strategic priorities and produced solid financial results. We earned $4.24 per diluted share, or $4.59 per diluted share from continuing operations after excluding the net negative impact of tax adjustments and other items. We maintained our global railcar fleet utilization between 98%-100%. As participants in an essential industry, our North American railcar leasingrail maintenance employees worked continuously through the pandemic and helped us realize the cost savings of performing increased maintenance work in our owned network. We capitalized on difficult market experienced its third year of a downturnconditions by investing over $1.0 billion in 2017. Large numbers of idle existing railcars, combined with the overbuilding of new railcars, caused a continued oversupply situation in the market. Despite relatively stable underlying demand andattractively priced, long-lived
modest improvementtransportation assets. Our international businesses vigorously pursued railcar growth plans. The RRPF aircraft spare engine leasing joint venture handled the wave of customer relief requests efficiently and identified new investment opportunities. We also acquired Trifleet, the world’s fourth largest tank container lessor.
We divested our non-core Great Lakes shipping business and maintained a strong balance sheet with access to capital and executed our strategy of investing in railcar loadings, this oversupply of railcars tempered lease rate increases across the industry. In light of these industry conditions, our performance was outstanding:long-lived transportation assets in down markets at attractive prices.
| 32 | GATX CORPORATION - 2021 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS
Key performance highlights include the following:
Solid Earnings | • Net income from continuing operations of
• Diluted earnings per share from continuing operations of
• Return on equity of | |
Excellent Operating Performance | • Protected our maintenance employees through the adoption of strict COVID-19 protocols at our facilities. Maintained • Capitalized on difficult market conditions by investing over $1.0 billion in attractively-priced, long-lived transportation assets. • Achieved railcar lease utilization of
• Placed the majority of our
•
• • Grew our rail leasing platform in India by adding customers, creating new railcar designs and offering new leasing solutions. • Acquired the world’s fourth largest tank container leasing business, • Sold our Great Lakes shipping business to focus on core franchises. | |
Returned Cash to Shareholders | • Increased our dividend for the
|
| 1 | Our |
| GATX CORPORATION - 2021 Proxy Statement | 33 |
COMPENSATION DISCUSSION AND ANALYSIS
Performance Measures, Goal Setting, andPay-for-Performance Alignment
Our unique position as an independent, publicly traded railcar lessor means that there are no directly comparable peers against which we can assess pay and performance. Over the last few years, our Compensation Committee has considered multiple approaches tofor identifying a relevant peer group but has found all of them to lack appropriate comparability. For example, the companies in our General Industry Classification Standard (GICS)(“GICS”) code have significantly different business models, customer bases, and asset composition, and they lack GATX’s focus on very
long-lived assets. Our competitors in the railcar leasing
industry are typically very small parts of much larger diversified companies, which may or may not be publicly traded, making comparisons extremely difficult. However, we compete for executive talent against these much larger organizations. Lacking a clear group of peers for comparison, our Compensation Committee has chosen to use multiple data points to assess our executive compensation, including:
COMPENSATION DISCUSSION AND ANALYSIS
In addition to the unavailability of relevant peer pay data, lack of a peer group makes it difficult to compare GATX’s relative total shareholder return (“TSR”TSR”) to the TSR of other companies in our industry because there are no other independent, publicly traded railcar leasing companies that we believe would provide a useful basis for comparison.
This is the primary reason why our Compensation Committee does not use relative TSR as a performance measure in our annual and long-term incentive plans. Instead, the Compensation Committee has chosen to use performance measures that reflect our financial performance and the cyclical nature of our business.
In setting the performance measures for our annual and long-term plans, our Compensation Committee reviews with management the Company’s budgets and business plans in a multi-meeting process each year. The Committee sets goals intended to align executive compensation with the appropriate achievement of our dual goals of growth and return at various points in the business cycle. Reflecting this focus, our Compensation Committee uses net income as the performance measure in our annual incentive plan and return on equity and investment volume as the performance measures in all of our annual and long-term incentive plans. The Compensation Committee recognizes that our growth/investment and returns will differ at various points in the cycle, and sets the performance goals for each of these measures with the intent of focusing management on achieving results that will have the biggest impact on our financial performance and long-term shareholder value in light of where we are in the business cycle. As a result of this balanced approach to goal setting, our long-term incentive plans will pay out at the maximum level only if performance is exceptional over the three-year performance period.
The following graphs show our compensation plan goals for our NEOs in 2017,2020, and our actual achievement against such goals, for each of net income, return on equity, and investment volume.
Annual Incentive Plan Measure
Net Income1
| 1 | Our 2020 financial results calculated in accordance with GAAP include $1.1 million of net income from discontinued operations and $12.3 million of tax adjustments and other items. For annual incentive award purposes, net income excludes results from discontinued operations and tax adjustments and other items. For a reconciliation of net income from continuing operations, excluding tax adjustments and other items, to net income from continuing operations, calculated in accordance with GAAP, please see Exhibit B to this Proxy Statement. |
| 34 | GATX CORPORATION - 2021 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS
When the Compensation Committee set the target for our annual incentive plan at the beginning of 2017,2020, before the pandemic took hold, we believed that weakness in thewere continuing to experience adverse market conditions as new railcar lease rates remained below expiring rates and a persistent oversupply of certain railcar types continued. The railcar leasing market would continue, butwas also experiencing uncertain shipper demand due to the impact and durationimpacts of the downturn remained unclear. Despite this uncertainty, ourPrecision Scheduled Railroading. As a result, we anticipated pressure on 2020 revenues. Our Compensation Committee desired to set an ambitiousa net income target for our NEOs that would be appropriately rigorous and challenging notwithstanding difficult market conditions.challenging. The Committee set the 20172020 net income target at $218.3$180.8 million, which
was the same as our 2016 net income target and higher thanCompany’s budgeted net income for 2017 ($174.8 million). Therefore, in order for our NEOs to receive a 100% payout under our annual incentive plan, 2017 actual net income would need to exceed
budgeted net income by 25%. The Compensation Committee took this step to address the high degree of uncertainty in the market regarding the downturn and ensure that our NEOs would receive a 100% payout only if GATX outperformed expectations and achieved excellent financial performance despite uncertain and challenging market conditions.income. Based on the 20172020 plan design, our net income achievement of 84.8%89.9% of target resulted in a payout to our NEOs at 81.6%84.8% of their target awards. 2017Our Committee considered the negative impact of COVID-19 on the business, but did not adjust the target or otherwise intervene in the determination of the final achievement and 2016payouts under the annual incentive plan. 2020 and 2019 actual net income performance shown in the chart above reflects certain adjustments during the year.1 SeeAnnual Incentive Awards on page 3639 for more details about our annual incentive plan and how this payout was determined.
COMPENSATION DISCUSSION AND ANALYSIS
Performance Share Plan Measures
| Return on Equity1 | Investment Volume | |
|
|
Under the terms of our 2015-2017 performance share program, our actual average return on equity results fell short of target while our cumulative investment volume matched target, which resulted in our executives earning 83.8% of their target performance shares. However, the actual value of the payouts depends upon the market price of our common stock on the vesting date, which may be higher or lower than the grant price. See2017-2019Performance ShareMeasures and Goal Setting on
page 38 for a description of our performance share program. The return on equity and investment volume measures are weighted equally in calculating our Performance Share Plan results. Our Compensation Committee believes that these two measures strike an appropriate balance between achieving a meaningful return for our shareholders while holding to a disciplined investment strategy through business cycles. Under the terms of our 2018-2020 performance share program, our actual average return on equity, and our cumulative investment
volume both exceeded target. Based on these results, our executives earned 124.1% of their target performance shares. However, the actual value of the payouts depends upon the market price of our common stock on the determination date, which may be higher or lower than the grant price. See 2020-2022 PerformanceShare Measures and Goal Setting on page 41 for a description of our performance share program.
| 1 | We report return on equity, calculated in accordance with GAAP, in our financial statements. We also use return on equity as a performance measure for our long-term equity incentive awards, including our performance shares. For purposes of calculating performance share plan results, return on equity excludes |
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COMPENSATION DISCUSSION AND ANALYSIS
CEOPay-For-Performance Alignment
We continue to maintain a strong pay and performance linkage through all points in the business cycle, as illustrated in the following charts, which show our Chief Executive Officer’s compensation measured against our financial performance for the years 2008-2017.2008-2020. As we
continue to manage through weakchallenging and cyclical market conditions in the railcar leasing industry, our Compensation Committee expects management to emphasize disciplined growth and investment over short-term financial returns.
  |  | |
 | ||
|
| |
| 1 | Amounts in the charts are based on net income, excluding tax adjustments and other items. For a reconciliation of net income, diluted earnings per share, and return on equity, excluding tax adjustments and other items, to net income, diluted earnings per share, and return on equity calculated in accordance with GAAP for |
| 36 | GATX CORPORATION - |
COMPENSATION DISCUSSION AND ANALYSIS
Shareholder Return and CEO Compensation
The chart below compares the changes in shareholder return and our Chief Executive Officer’s compensation over the past tentwelve years, which have been representative of the cyclical nature of the railcar leasing market. During this time frame, our Chief Executive Officer’s compensation remained relatively flat, withyear-to-year
year-to-yearvolatility in line with our annual financial performance as highlighted above. Since 2008, total direct compensation for our Chief Executive Officer has increased by 19%36.7%, a compound annual growth rate of approximately 2.0%2.6%, while TSR increased 166%283.8%, a compound annual growth rate of approximately 13.0%11.9%.
* Amounts are asCEO Compensation Index based on amounts reported in the Summary Compensation Table less changes in pension value.
20172020 Say-on-Pay Vote
At our 20172020 Annual Meeting of Shareholders, approximately 97.3%98% of shareholder votes were cast in favor of an advisory resolution approving the compensation of our NEOs as disclosed in our 2017 proxy statement2020 Proxy Statement (the“say-on-pay” resolution). The Compensation Committee believes that the overwhelming
shareholder vote in favor of thesay-on-pay resolution was an affirmation of shareholders’ support of our approach to executive compensation and, therefore, did not make any changes to its executive compensation plans or programs as a result of the vote.
| GATX CORPORATION - | 37 |
COMPENSATION DISCUSSION AND ANALYSIS
GATX’s Executive Compensation Practices
We regularly review and refine our executive compensation program to ensure that it continues to reflect practices and policies that are aligned with ourpay-for-performance philosophy. We believe that our
practices and policies set forth below are in line with current best practices for aligning executive and shareholder interests and sound corporate governance practices.
 |  | |
| What We Do | What We Don’t Do | |
✓Pay for Performance—Approximately
✓Robust Stock Ownership Guidelines—We have stock ownership guidelines for executive officers of 5.0x base salary for CEO and 2.5x base salary for other executive officers
✓Stock Retention Requirements—We require our executive officers to retain 50% of theafter-tax profits realized from their GATX equity awards until stock ownership guidelines are met
✓Annual“Say-on-Pay” Vote—We seek an annualnon-binding advisory vote from our shareholders to approve compensation paid to our NEOs as disclosed in our
✓Clawback Policy—Our policy provides for the recovery of equity awards and incentive compensation paid to executive officers in the event of a material restatement of our financial results
✓Independent Compensation Consultant—The Compensation Committee retains an independent compensation consultant and reassesses independence annually
✓Annual Review of Compensation—The Compensation Committee, with input from its independent compensation consultant, conducts an annual review of all of our compensation programs in light of current best practices
✓Annual Compensation Risk Assessment—Each year we perform an assessment of any risks that could result from our compensation plans and programs | ÒEmployment Agreements—We do not provide our executive officers with employment agreements, other than agreements that provide severance in connection with a change in control
Ò Hedging/Pledging of Company Stock—We prohibit our officers, directors, and employees from hedging, margining, pledging, short-selling, or publicly trading options in our stock
ÒTaxGross-Ups—We do not provide taxgross-ups, other than in agreements entered into prior to 2009 and will eliminate the tax gross-ups from those agreements if they are amended in the future
ÒDividends on Unvested Equity Awards—We do not pay dividends on unvested equity awards, including options, restricted stock, and performance shares
Ò Perquisites—We
Ò Repricing or Exchange of Underwater Options—We prohibit share repricing without shareholder approval
ÒSingle-Trigger Change of Control Vesting/Benefits—We do not allow for single-trigger vesting or payment of benefits upon a change of control. Rather, we require double-trigger, or both a change of control and termination of executive’s employment, before vesting is accelerated |
| 38 | GATX CORPORATION - |
COMPENSATION DISCUSSION AND ANALYSIS
Detailed Compensation Discussion and Analysis
In 2017,2020, our executive compensation program consisted of three elements: Base salary, annual incentive, and long-term equity compensation. We also provide various
retirement and benefit programs, which are generally available to all employees. Further details on each element of compensation are discussed below.
Base salary constitutes approximately 19%17% of total targeted compensation for our Chief Executive Officer (approximately 37%32% for our other NEOs), which is consistent with our philosophy that a majority of executive compensation should be performance-based.
In establishing salary levels, we typically consider market pay levels, the specific responsibilities and experience of each NEO, and his or her individual performance. Base salaries may be adjusted during the Compensation Committee’s annual review for:
NoneIn 2020, all of our NEOs received an increase in base salary in 2017.
In 2018, Messrs. Kenney, Lyons, and Ellman and Ms. Golden received the Company’s standard general increase of 2.5% to their base salaries. Mr. EllmanIn 2021, all of our NEOs received an additional 6%the Company’s standard general increase of 1.5% to recognize his performance, consistent with market levels. Mr. Earl, who retired from GATX effective March 1, 2018, did not receive an increase totheir base salary for 2018.salaries.
Process for Setting Annual Incentive Targets
Target incentive opportunities for NEOs are expressed as a percentage of base salary and are intended to be competitive with the market. Please seeThe Determination of Market Competitive Payon page 4244 for a description of how we determine competitive pay levels. For 2018, target incentive opportunities for our NEOs
remained unchanged from 2017 levels.In 2020, Mr. Kenney’s target incentive opportunity is was
100% of his base salary. The target annual incentive opportunities for our other NEOs are 70% of base salary for Messrs. Lyons, Earl,Ellman and Ellman,Lyons, and 60% of base salary for Ms. Golden.Golden and Mr. Tezel. For 2021, target percentage incentive opportunities for our NEOs remained unchanged from 2020 levels.
Annual Incentive Plan Design
Our NEOs earn their annual incentive awards under our Cash Incentive Compensation Plan (the “CICP”) based on achievement ofpre-established financial performance goals. The CICP is designed to arrive at a maximum possible incentive award, which then may be reduced by the Compensation Committee based on such other metrics as it may determine appropriate. This design was intended to meet the requirements for tax deductibility of our annual incentive, while providing the Compensation Committee the flexibility to adjust performance metrics as necessary to meet our strategic business needs.
Under the CICP, a maximum bonus of 0.75% of “Total Gross Income Less Total Ownership Costs” (as such term is defined in the CICP) is earned. However, as previously mentioned, the Compensation Committee does not expect to pay the full amount. Rather, it has historically measured performance against targeted net income and determined bonuses based on achievement
against a net income goal established from a financial plan which is reviewed by the full Board. The Compensation Committee has chosen net income as the goal because it provides executives with a strong incentive to increase our profitability.
The performance metrics and payout levels are established at the beginning of each year by the Compensation Committee with input from the independent consultant and
management. The level of financial performance required for the maximum payout is established based on the Compensation Committee’s assessment of the level of performance that shareholders would likely consider superior in view of general economic conditions and the economic outlook for GATX and its industry in particular. This process is essentially reversed to establish the threshold or minimum performance level, defined as the level of financial performance below which no incentive is payable.
| GATX CORPORATION - | 39 |
COMPENSATION DISCUSSION AND ANALYSIS
20172020 Annual Incentive Plan Design.Design When. As described earlier at page 34, at the time of budgeting and forecasting, expectations were that 2020 would be a year of market challenges and uncertainties. During its review of the budget and business forecasts over multiple meetings, the Compensation Committee set the target for our annual incentive plan at the beginning of 2017, we believed that weakness in the railcar leasing market would continue, but the impact and duration of the downturn remained unclear. Despite this uncertainty, our Compensation Committee desiredsought to set an ambitiousa net income target for our NEOs that would be
appropriately rigorous and challenging notwithstanding difficult market conditions.challenging. The Committee set the 20172020 net income target at $218.3$180.8 million, which was the same as our 2016 net income target and higher than budgeted net income from continuing operations for 2017 ($174.8 million). Therefore, in
order for our NEOs to receive a 100% payout under our annual incentive plan, 2017 actual net income would need to exceed budgeted net income by 25%. The Compensation Committee took this step to address the high degree of uncertainty in the market regarding the downturn and ensure that our NEOs would receive a 100% payout only if GATX outperformed expectations and achieved excellent financial performance despite uncertain and challenging market conditions.year.
The goals and payout levels under the 20172020 annual incentive plan design are shown in the following table:
| 2017 Annual Incentive Plan Design For Executive Officers | ||||||||||||||||
2020 Annual Incentive Plan Design For Executive Officers | 2020 Annual Incentive Plan Design For Executive Officers | |||||||||||||||
Net Income (Millions) | Achievement (Actual/Budget Net Income) | Payout | Net Income (Millions) | Achievement (Actual/Budget Net Income) | Payout | |||||||||||
Threshold | $157.3 | 90% | 50% | $144.6 | 80 | % | 70% | |||||||||
Budget | $174.8 | 100% | 70% | |||||||||||||
Target (Goal) | $218.3 | 125% | 100% | $180.8 | 100 | % | 100% | |||||||||
Maximum | $244.7 | 140% | 170% | $253.1 | 140 | % | 170% | |||||||||
20172020 Annual Incentive Plan Payouts. Net income, excluding tax adjustments and other items and discontinued operations, for 2017,2020, was $185.0$162.5 million1, which was 84.8%89.9% of the target level of performance.
performance. Based on the targets illustrated above, this level of performance resulted in incentive payouts to our NEOs of 81.6%84.8% of their target award levels.
Long-Term Equity Based Incentive Awards
Process for Granting Awards
We set target long-term incentive opportunities for our NEOs to be competitive with the market. The value of the regular, annual long-term incentive awards to each NEO is divided equally betweennon-qualified stock options (“NQSOs”NQSOs”) and performance shares. We chose this combination of grant types because it focuses executive attention on total shareholder return and on specific financial goals, both of which are essential to our long-term success. The grant date for regular long-term
incentive awards is the date of the Compensation
Committee’s first meeting of each calendar year. We grant NQSOs to NEOs at the same time we grant them to other employees. NQSOs vest ratably over a three-year period and expire seven years after the grant date. We have no program, plan, or practice to time NQSO grants to NEOs or any other employees in coordination with the release of materialnon-public information. We generally makeoff-cycle grants (if any) to newly hired employees on the last trading date of the month following the hire date and Compensation Committee approval of the award.
Award Types and How Each Fits Into Our Program
Non-Qualified Stock Options. NQSOs are granted to align the interests of our NEOs and other employees with our shareholders. NQSOs are granted at a price equal to fair market value of our common stock (the average of the high and low trading prices on the date of grant) as approved by the Compensation Committee. Because TSR is comprised of stock price appreciation and dividends, dividend equivalents are attached to NQSOs. We believe that rewarding both components of
shareholder return better aligns management and shareholder interests. Dividend equivalents accrue until vesting and are paid in cash thereafter until the NQSO is exercised or expires. Because the value of dividend equivalents is fully factored into the determination of grant size, the number of NQSOs granted is correspondingly smaller than it would be if dividend equivalents were not attached because the value of each NQSO is higher.
| 1 | Our 2020 financial results calculated in accordance with GAAP include $1.1 million of net income from discontinued operations and $12.3 million of tax adjustments and other items. For annual incentive award purposes, net income excludes discontinued operations and tax adjustments and other items. For a reconciliation of net income from continuing operations, excluding tax adjustments and other items, to net income from continuing operations, calculated in accordance with GAAP, please seeExhibit B to this Proxy Statement. |
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COMPENSATION DISCUSSION AND ANALYSIS
Performance Shares.Performance shares are designed to focus attention on, and to reward the achievement of, our long-term financial and strategic objectives. The Compensation Committee establishes the goals for which the performance shares may be earned at the beginning of a three-year performance period rather than annually. At the end of the performance period, a percentage ranging from 0% to 200% of the number of performance shares initially awarded will be earned based on the extent to which the three-year goals are achieved. The value of eachEach earned performance share equals the price of one share of our common stock at the end of the performance period, with payment of earned performance shares made in the form of GATX common stock.
| • | Performance Metrics Design. Performance shares are earned based on achievement of a specified level of “Total Gross Income Less Total Ownership Costs” (as defined in the GATX Amended and Restated 2012 Incentive Award Plan) at the end of the performance period. If the goal is not met, the entire performance share award is cancelled. If the goal is met, the Compensation Committee may reduce, but not increase, the number of performance shares otherwise payable based on the achievement of other long-term performance objectives established at the beginning of the performance period. This design |
| • | Dividends Paid |
| • | Cash Election Feature. |
2017-20192020-2022 Performance Share Measures and Goal Setting
Background
Our target setting process, conducted at the beginning of each three-year performance period, combines goals related to growth and return to reflect the cyclical nature
of our business. Our targets are designed to incentivize behavior which enhances long-term shareholder value at all points in the business cycle.
Design
In addition to the Total Gross Income Less Total Ownership Costs threshold goal specified in the GATX Amended and Restated 2012 Incentive Award Plan, theThe number of performance shares that willto be earned in 2019 will also be2022 are subject to two equally weighted measures:
The Compensation Committee set ambitious targets of 10.5%10.3% for return on equity, and $2.5$2.84 billion for cumulative
investment volume, for the 2017-2019 performance period, both of which are significantly higher thanis equal to the Company’s budgeted return on equity (8.9%) and cumulative investment volume ($1.98 billion) for the three-year performance period. Therefore, in order for our NEOs to achieve a 100% payout for the 2017-2019 performance period, our return on equity would need to exceed the budgeted level by 18% and cumulative investment volume would need to exceed budget by 26%. The Committee believes that achievement of these rigorous targets would represent excellent financial performance by GATX in light of continuing weak market conditions in the railcar leasing business.
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COMPENSATION DISCUSSION AND ANALYSIS
Rationale
As stated above, we establish our growth and return objectives depending on where we are in the business cycle. When the market is stronger and asset prices are high, we emphasize earning a higher return over making investments to grow capital employed. When the market is weaker and asset prices are reduced, we emphasize making prudent investments at attractive prices over attempting to earn an unrealisticallyunsustainably high short-term return. We believe that a single-minded focus on achieving growth over return, or vice versa, at the wrong points in the cycle is likely to impair shareholder value over the longer term.
The return on equity and cumulative investment targets for the 2017-20192020-2022 performance period were set in the first quarter of 20172020 amidst weaknesssigns of continued pressure on results and uncertainty in the North American railcar leasing rail
market. Consistent with our objective of striking an appropriate balance between our growth and return objectives and in lightspite of challenginguncertain market conditions, the Compensation Committee set a lower target for average return on equity for the 2017-2019 performance
period (10.5%) than for the prior three-year performance period (12.0% for 2016-2018). However, the 10.5% target is 18% higher than the Company’s budgeted net income of 8.9% for the 2017-2019 performance period, and the Compensation Committee believes that achievement of a 10.5%10.3% return on equity forover the three-year2020-2022 performance period, would represent excellentsuperior financial achievement by GATX in challenging market conditions. While the return on equity target was set lower than the prior performance period, theThe Compensation Committee increasedset the cumulative investment volume target for the 2017-20192020-2022 performance period to $2.50at $2.84 billion, which is significantly higher than the target fora 16.9% increase in targeted investment over the prior year’s three-year performance period ($2.15 billion for 2016-2018) and is 26% higher than our budgeted cumulative investment volume for the 2017-2019 performance period. This increase in theplan. The Committee believes this aggressive cumulative investment volume target is consistent with our goal to pursue a disciplined investment strategy by investing more in weaker markets at attractive prices and less in stronger markets when asset prices are at or near their peak.
Formula for Determining Award Numbers
In granting performance shares for the 2017-20192020-2022 performance period, we determined the number of shares awarded by dividing the value of the performance share award by the average of the closing prices of our common stock on the four Fridays immediately preceding the
Compensation Committee meeting at which the grant
was awarded. To determine the number of NQSOs awarded, we used the same average closing price multiplied by 31%, which represents the value of the NQSO award based on the Black-Scholes valuation methodology.
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COMPENSATION DISCUSSION AND ANALYSIS
20172020 Long-Term Incentive Payouts
The performance shares granted in 20152018 vested at the end of 2017.2020. Each target award was based 50% on a three-year average return on equity goal and 50% on a
three-year cumulative investment volume goal.1 The goals and payout levels under the 2015-20172018-2020 Performance Share Plan are indicated in the following table:
Performance Share Plan Design
| Return on Equity1 | Return on Equity1 | Return on Equity1
| ||||||
Average Three-Year | Payout | Average Three-Year
| Payout
| |||||
Threshold | 12.9% | 25% |
6.2% |
25% | ||||
Target (Goal) | 15.2% | 100% |
8.9% |
100% | ||||
Maximum | 17.5% | 200% |
12.6% |
200% | ||||
| Investment Volume | Investment Volume | Investment Volume
| ||||||
Three-Year Cumulative Investment Volume (millions) | Payout | Three-Year Cumulative Investment Volume (billions)
| Payout
| |||||
Threshold | $1.20 | 25% |
$1.75 |
25% | ||||
Target (Goal) | $1.93 | 100% |
$2.50 |
100% | ||||
Maximum | $2.70 | 200% |
$3.50 |
200% | ||||
As shown in the charts on page 32,35, the three-year average return on equity for the period was 14.2%9.7% versus a goal of 15.2%8.9%, and the cumulative investment volume for the period was $1.93$2.77 billion, which matchedwas higher than the goal of $1.93$2.50 billion. Based on these results, performance share payouts were 83.8%124.1% of target. Performance share award values at vestingthe determination date were 102.7%177.2% of target award values based on average fair market value of GATX stock
GATX stock price on January 25, 2018.February 16, 2021. Messrs. Kenney, Lyons,Ellman, and EarlLyons and Ms. Golden elected to receive their performance share payouts in the form of cash. Mr. EllmanTezel received his performance share payout in the form of shares. For details regarding the 2015-20172018-2020 performance share payments to the NEOs, please see theOption Exercises and Stock Vested Table on page 48.51.
Employee Benefits – Severance – Double Trigger Vesting
Employee Benefit Plans
We sponsor a standard array of retirement, health, and welfare benefits. Our retirement programs include 401(k) and defined benefit pension programs, as well as a supplemental plan intended solely to restore pension benefits limited by law to the level specified by formula in the qualified pension plan applicable to all salaried employees. The pension and 401(k) programs are intended to supplement employees’ personal retirement savings and social security benefits. Health and welfare
benefits include medical, dental, vision, life, and disability
insurance. These programs provide protection against catastrophic loss and encourage health maintenance. NEOs participate in the same programs, and on the same basis, as other salaried employees. No retirement, savings, medical, disability, or other insurance program or arrangement exists which provides benefits to our NEOs in excess of those provided to other salaried employees generally. No excessive perquisites were paid to our NEOs in 2017.2020.
| 1 | We report return on equity, calculated in accordance with GAAP, in our financial statements. We also use return on equity as a performance measure for our long-term equity incentive awards, including our performance shares. For purposes of calculating performance share plan results, return on equity excludes |
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COMPENSATION DISCUSSION AND ANALYSIS
Change of Control Agreements
We have entered into agreements with our NEOs that provide certain benefits if employment is terminated following a change of control (“COC”COC”). This protection is provided for competitive reasons and to ensure the stability, continuity, and impartiality of our executives in a COC situation. The level of protection provided is intended to be similar to that provided by similarly sized organizations.
The COC agreements are “double-trigger” agreements, meaning that benefits are payable only if a COC occurs and an executive’s employment is terminated or
constructively terminated. For a description of the key terms of these agreements, please seePotentialPayments uponTermination or Change of Controlon page 49.52. Since 2009, we have not entered into any new COC agreements that provide excise taxgross-up benefits, and we do not intend to offer this feature in the future. We do, however, have older agreements entered into in 2009 or earlier that have excise taxgross-up benefits. In the event that we amend such agreements for any reason in the future, we will eliminate such excise taxgross-ups.
Double-Trigger Equity Vesting
The vesting of equity awards upon a COC is determined under the GATX Amended and Restated 2012 Incentive Award Plan and related grant agreements. These terms apply to all employees who receive long-term incentive
awards. In addition, all grant agreements require both a COC event and an executive’s actual or constructive termination before vesting is accelerated.
Mr. Earl’s Retirement
On March 1, 2018, James F. Earl, former Executive Vice President of the Company and President, Rail International, retired from GATX after more than 30 years of service. In October 2017, to facilitate an orderly transition in connection with his retirement, we entered into an agreement with Mr. Earl pursuant to which we will make the following separation payments to him in exchange for certain waivers, releases, andnon-competition,non-solicitation, and confidentiality covenants for our benefit: (a) within 60 days of his retirement, a lump sum payment of $621,300 and a
$36,000 contribution to his health reimbursement account; (b) on February 28, 2019, a lump sum payment of $745,000; (c) in February 2019, when the Company’s annual incentive awards are paid for 2018, a payment equal to the spread between $434,910 and the pro rata incentive award actually earned by Mr. Earl for 2018; and (d) provided Mr. Earl elects coverage under the Company’spre-65 retiree health plan, a subsidy for the first 12 months of such coverage totaling $14,000, which will be provided in 12 monthly installments.
Process for Determining Executive Compensation (Including NEOs)
Compensation Committee and Management
The Compensation Committee, with input from the independent compensation consultant, regularly reviews:
Our human resources staff and the Chief Executive Officer also provide input to the Compensation Committee regarding base salary increases, target level annual incentives, long-term incentive awards, and the
goals applicable to earning such compensation. After reviewing these recommendations, the Compensation Committee determines and approves the compensation of each NEO as well as the performance goals. Our Chief Executive Officer, however, does not participate in, nor is he present during, any discussions of his own compensation. Such discussions occur during the Compensation Committee’s executive sessions. The Compensation Committee also reviews its pay decisions regarding our Chief Executive Officer with the other independent directors on the Board.
COMPENSATION DISCUSSION AND ANALYSIS
The Determination of Market Competitive Pay
We have structured our compensation programs to provide total direct compensation opportunities comparable to the median range of opportunities provided by companies of similar revenue size to GATX (which we refer to as “competitive” or “market” pay levels throughout thisCompensation Discussion and Analysis).
Because we have no direct peers in the railcar leasing business for which relevant compensation data is available, gathering information on competitive pay levels with precision for our particular industry is not possible. Instead, the Compensation Committee, with assistance from our human resources staff and the independent compensation consultant, regularly reviews information on pay for executives as reported in national compensation surveys published by Aon Hewitt and Willis Towers Watson for organizations of similar revenue as ours.
These surveys include general,non-company specific compensation information, on an aggregate basis, for approximately 170201 public companies with annual revenues between$1-3 billion. We use these surveys to better understand current compensation practices at other companies of similar revenue size and as a data point to assist us in meeting our goal of having the various elements of compensation be market-competitive.
While these surveys are a starting point for our compensation review process, actual compensation decisions with respect to specific individuals are influenced by a variety of factors in addition to the surveys, including experience, tenure, skills, unique responsibilities, individual performance, and our specific talent requirements.
| 44 | GATX CORPORATION - 2021 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS
Stock Ownership and Stock Retention Requirements
To underscore the importance of stock ownership, we have established mandatory stock ownership and stock retention policies for our NEOs and other members of senior management. These policies require that each executive must retain shares of GATX stock having a value equal to 50% of theafter-tax profits realized from GATX equity awards until the executive owns GATX shares equal in value to a multiple of salary based on his or her position.
The multiple is 5.0 times salary for the
Chief Executive Officer and 2.5 times salary for other NEOs.
As of January 31, 2018,2021, all of our NEOs had exceeded their respective stock ownership requirements having achievedby the following approximate percentages of their respective requirements:percentages: Mr. Kenney (373%)581%, Mr. Ellman 482%, Mr. Lyons (389%)532%, Mr. Earl (493%), Mr. Ellman (312%), and Ms. Golden (298%)322% and Mr. Tezel 185%.
Clawback Policy
We have a policy which provides for the recovery of all or part of any bonus or other compensation paid to an executive officer that was based upon the achievement of financial results that were subsequently restated. In the event of a material restatement of our financial results, the Board, or a committee designated by the Board, will review the facts and circumstances that led to the restatement and will take such action as it deems necessary or appropriate.
The Board will consider whether any executive officer received excess compensation because the original financial statements
statements were incorrectly presented. In addition, the Board will consider the accountability of any executive officer whose acts or omissions were responsible in whole or in part for the events that led to the restatement and whether such acts or omissions constituted misconduct.
Under such policy, the Board may also, depending upon the facts and circumstances, take disciplinary action, up to and including termination of employment, or decide to pursue other available remedies, including, but not limited to, canceling stock-based awards.
Section 162(m) and RegulatoryTax Considerations
Section 162(m) of the Internal Revenue Code generally places a $1 million limit on the amount of compensation a company can deduct in any one year for certain executive officers. While ourOur Compensation Committee considers the deductibility of awards as one factortax impact on both the executives and the Company in determining executive compensation,compensation. However, the Committee also looks at
other factors in making its decisions as noted above,described earlier in this Compensation Discussion and Analysis and
retains the flexibility to award compensation that it determines to be consistent with the goals of our executive compensation program even if the awards are not tax deductible by GATX for tax purposes.
COMPENSATION DISCUSSION AND ANALYSIS
The 2017 annual incentive and performance share award opportunities granted to our executive officers were designed in a manner intended to be exempt from the deduction limitation of Section 162(m) as in effect at the time of grant because they are paid based on the achievement ofpre-determined performance goals established by our Compensation Committee pursuant to our shareholder-approved equity incentive plan.
Base salary is not subject to performance goals and, therefore, is not exempt from Section 162(m) and will not be deductible to the extent the $1 million limit of Section 162(m) is exceeded.
The Tax Cuts and Jobs Act of 2017 repealed the exemption from Section 162(m)’s deduction limit for performance-based compensation, effective for taxable years beginning after December 31, 2017, such that compensation paid to our covered executive officers in excess of $1 million will not be deductible unless it
qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017.
Despite our Compensation Committee’s efforts to structure our annual incentive awards and performance share awards to NEOs in a manner intended to be exempt from Section 162(m) and, therefore, not subject to its deduction limits, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, including the uncertain scope of the transition relief under the legislation repealing Section 162(m)’s exemption from the deduction limit, no assurance can be given that compensation intended to satisfy the requirements for exemption from Section 162(m) will, in fact, do so. Further, our Compensation Committee reserves the right to modify compensation that was initially intended to be exempt from Section 162(m) if it determines that such modifications are consistent with GATX’s business needs.GATX.
Compensation Committee’s Independent Consultant
The Compensation Committee retained Pay Governance as its independent compensation consultant,consultant. Pay Governance has been retained by, and reports directly to, the Compensation Committee and does not have any other consulting engagements with management or GATX. The Compensation Committee has assessed the independence of Pay Governance and its employees working on GATX matters pursuant to applicable SEC rules and NYSE listing standards and determined that no conflict of interest or independence concerns exist.
With respect to Chief Executive Officer compensation, Pay Governance provides an independent recommendation to
the Compensation Committee in the form of a range of possible outcomes, for the committee’sCommittee’s consideration. In developing its recommendation, Pay Governance relies on its understanding of GATX’s business and compensation programs and its own independent research and analysis. Pay Governance does not meet with our Chief Executive Officer with respect to his compensation. In addition to advising on Chief Executive Officer compensation, Pay Governance reviews the Chief Executive Officer’s recommendations on compensation of his direct reports.
| GATX CORPORATION - 2021 Proxy Statement | 45 |
COMPENSATION DISCUSSION AND ANALYSIS
The Compensation Committee of the Board of Directors has reviewed and discussed theCompensation Discussion and Analysis required by Item 402(b) ofRegulation S-K with management and, based on such review and discussions, the Compensation Committee
recommended to the Board that theCompensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference in our Annual Report onForm 10-K.
David S. Sutherland (Chair)
Ernst A. Häberli
Casey J. Sylla
Stephen R. Wilson
Paul G. Yovovich
| 46 | GATX CORPORATION - |
Our Compensation Committee considered the impact of the COVID-19 pandemic on all of our business segments, but did not adjust or otherwise intervene in any of the outstanding incentive plans, including the 2020 annual incentive plan and the outstanding performance share plans. No changes were made to underlying plan measures and metrics and no adjustments were made to final achievement and payouts under any of our executive compensation plans. The compensation paid to or accrued by our NEOs in 2020 reflects a change in pension value attributable to changes in the discount rate and the application of actuarial calculations. The change in pension value fluctuates year to year due to economic factors and actuarial calculations that do not relate to our performance and are outside the control of the Compensation Committee.
Name and Principal Position | Year | Salary ($) | Stock Awards ($)(1)(2) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(3) | Change in Pension Value and Non- Qualified Deferred Compensation Earnings ($)(4) | All Other Compensation ($)(5) | Total ($) | Year
| Salary
| Stock
| Option
| Non-Equity
| Change in
| All Other
| Total ($)
| Total
| |||||||||||||||||||||||||||||||||||||||||||||||||
| (b) | (c) | (e) | (f) | (g) | (h) | (i) | (j) | (b)
| (c)
| (e)
| (f)
| (g)
| (h)
| (i)
| (j)
| |||||||||||||||||||||||||||||||||||||||||||||||||||
Brian A. Kenney | 2017 | 956,500 | 1,535,493 | 1,571,667 | 780,695 | 1,223,234 | 8,100 | 6,075,689 |
| 2020
|
| $
| 1,000,917
|
| $
| 1,911,336
|
| $
| 1,800,344
|
| $
| 849,177
|
| $
| 1,716,441
|
| $
| 8,550
|
| $
| 7,286,765
|
| $
| 5,570,324
|
| |||||||||||||||||||||||||||||||
Chairman of the Board, | 2016 | 956,500 | 1,496,083 | 1,512,126 | 1,071,854 | 1,270,477 | 7,950 | 6,314,990 |
|
2019
|
| $
| 980,500
|
| $
| 1,740,919
|
| $
| 1,745,432
|
| $
| 1,132,674
|
| $
| 2,055,203
|
| $
| 8,400
|
| $
| 7,663,127
|
| $
| 5,607,924
|
| |||||||||||||||||||||||||||||||
President and Chief | 2015 | 956,500 | 1,436,408 | 1,432,824 | 1,016,951 | 884,069 | 7,950 | 5,734,702 |
| 2018
|
| $
| 976,500
|
| $
| 1,790,795
|
| $
| 1,755,880
|
| $
| 1,260,857
|
| $
| 0
|
| $
| 8,250
|
| $
| 5,792,282
|
| $
| 5,792,282
|
| |||||||||||||||||||||||||||||||
Executive Officer | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thomas A. Ellman
|
| 2020
|
| $
| 525,750
|
| $
| 434,675
|
| $
| 409,578
|
| $
| 312,232
|
| $
| 913,460
|
| $
| 8,550
|
| $
| 2,604,245
|
| $
| 1,690,785
|
| |||||||||||||||||||||||||||||||||||||||
Executive Vice President
|
| 2019
|
| $
| 512,500
|
| $
| 410,554
|
| $
| 411,344
|
| $
| 414,428
|
| $
| 962,321
|
| $
| 8,400
|
| $
| 2,719,546
|
| $
| 1,757,225
|
| |||||||||||||||||||||||||||||||||||||||
and Chief Financial Officer
|
| 2018
|
| $
| 493,333
|
| $
| 802,344
|
| $
| 393,597
|
| $
| 445,893
|
| $
| 0
|
| $
| 8,250
|
| $
| 2,143,417
|
| $
| 2,143,417
|
| |||||||||||||||||||||||||||||||||||||||
Robert C. Lyons | 2017 | 525,300 | 397,638 | 407,469 | 300,125 | 614,748 | 8,100 | 2,253,380 |
| 2020
|
| $
| 566,083
|
| $
| 434,675
|
| $
| 409,578
|
| $
| 336,185
|
| $
| 939,090
|
| $
| 8,550
|
| $
| 2,694,161
|
| $
| 1,755,071
|
| |||||||||||||||||||||||||||||||
Executive Vice President | 2016 | 523,583 | 378,527 | 382,536 | 410,709 | 511,602 | 7,950 | 2,214,907 |
| 2019
|
| $
| 551,833
|
| $
| 410,554
|
| $
| 411,344
|
| $
| 446,234
|
| $
| 1,092,048
|
| $
| 8,400
|
| $
| 2,920,413
|
| $
| 1,828,365
|
| |||||||||||||||||||||||||||||||
and Chief Financial Officer | 2015 | 512,500 | 373,899 | 372,280 | 381,423 | 323,742 | 7,950 | 1,971,794 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
James F. Earl | 2017 | 621,300 | 358,486 | 366,722 | 354,974 | 934,077 | 8,100 | 2,643,659 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Vice President | 2016 | 619,267 | 363,245 | 367,290 | 485,766 | 993,618 | 7,950 | 2,837,136 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and President, Rail | 2015 | 606,150 | 379,021 | 377,728 | 451,120 | 657,853 | 7,950 | 2,479,822 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
International | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thomas A. Ellman | 2017 | 460,000 | 358,486 | 366,722 | 262,816 | 477,646 | 8,100 | 1,933,770 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Vice President, | 2016 | 455,000 | 306,819 | 310,464 | 305,924 | 349,212 | 7,950 | 1,735,369 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and President, Rail | 2015 | 425,833 | 256,095 | 256,056 | 271,647 | 195,293 | 7,950 | 1,412,874 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
North America | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and President, Rail North America
|
| 2018
|
| $
| 536,300
|
| $
| 831,633
|
| $
| 422,023
|
| $
| 484,728
|
| $
| 0
|
| $
| 8,250
|
| $
| 2,282,934
|
| $
| 2,282,934
|
| |||||||||||||||||||||||||||||||||||||||
Deborah A. Golden | 2017 | 430,700 | 240,418 | 246,422 | 210,922 | 354,049 | 8,100 | 1,490,611 |
| 2020
|
| $
| 484,917
|
| $
| 303,656
|
| $
| 285,805
|
| $
| 246,842
|
| $
| 398,996
|
| $
| 8,550
|
| $
| 1,728,765
|
| $
| 1,329,769
|
| |||||||||||||||||||||||||||||||
Executive Vice President, | 2016 | 429,300 | 234,718 | 237,006 | 288,643 | 325,872 | 7,950 | 1,523,489 |
| 2019
|
| $
| 469,417
|
| $
| 286,100
|
| $
| 286,829
|
| $
| 325,362
|
| $
| 579,213
|
| $
| 8,400
|
| $
| 1,955,321
|
| $
| 1,376,108
|
| |||||||||||||||||||||||||||||||
General Counsel and | 2015 | 420,250 | 225,364 | 225,184 | 268,086 | 226,684 | 7,950 | 1,373,518 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate Secretary | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Counsel and Corporate Secretary
|
| 2018
|
| $
| 439,700
|
| $
| 294,979
|
| $
| 288,638
|
| $
| 340,644
|
| $
| 48,154
|
| $
| 8,250
|
| $
| 1,420,365
|
| $
| 1,372,211
|
| |||||||||||||||||||||||||||||||||||||||
N. Gokce Tezel(7) |
| 2020
|
| $
| 443,667
|
| $
| 212,713
|
| $
| 200,288
|
| $
| 225,844
|
| $
| 595,277
|
| $
| 215,859
|
| $
| 1,893,648
|
| $
| 1,298,371
|
| |||||||||||||||||||||||||||||||||||||||
Executive Vice President | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and President, Rail International | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | For awards granted under the GATX 2012 Amended and Restated |
| (2) |
|
| (3) | The amounts shown reflect the annual incentive awards earned under the GATX Cash Incentive Compensation Plan by each NEO for the years shown. |
| (4) | Change in pension value reflects the increase in the present value of the accumulated pension benefit during the years shown. The Pension Benefits Table shows the present value of the accumulated pension benefit as of December 31, |
| (5) | For |
| GATX CORPORATION - 2021 Proxy Statement | 47 |
EXECUTIVE COMPENSATION TABLES
| compensation excludes dividends on |
| (6) | ||
|
EXECUTIVE COMPENSATION TABLES
| (7) | Payments made to Mr. Tezel in non-U.S. currency was converted to U.S. Dollars monthly using the exchange rate for the relevant currency as reported by Bloomberg on the last day of each month. |
Grants of Plan-Based Awards Table
| Estimated Possible Payouts UnderNon-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Option Awards: Number of Securities Underlying | Exercise or Base Price of Option | Grant Date Fair Value of Stock & Option |
Estimated Possible Payouts
|
Estimated Future Payouts
| All Other Stock Awards: Number of Stock or Units (#)(3)
|
All Other Awards: (#)(3)
| Exercise
| Grant & Option ($)
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Options (#)(3) | Awards ($) | Awards ($) | Grant Date
| Threshold ($)
| Target ($)
| Maximum ($)
| Threshold (#)
| Target (#)
| Maximum (#)
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (b) | (c) | (d) | (e) | (f) | (g) | (h) | (j) | (k) | (m) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(a)
| (b)
| (c)
| (d)
| (e)
| (f)
| (g)
| (h)
| (i)
| (j)
| (k)
| (m)
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brian A. Kenney | 1/1/2017 | 478,250 | 956,500 | 1,626,050 |
| 1/1/2020 |
|
| 700,642 |
|
| 1,000,917 |
|
| 1,701,559 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/31/2020 |
|
| 80,000 |
|
| 77.07 |
| $1,800,344 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/31/2020 |
|
| 6,200 |
|
| 24,800 |
|
| 49,600 |
| $1,911,336 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thomas A. Ellman |
| 1/1/2020 |
|
| 257,618 |
|
| 368,025 |
|
| 625,643 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/26/2017 | 81,000 | 61.175 | $1,571,667 |
| 1/31/2020 |
|
| 18,200 |
|
| 77.07 |
| $409,578 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/26/2017 | 6,275 | 25,100 | 50,200 | $1,535,493 |
| 1/31/2020 |
|
| 1,410 |
|
| 5,640 |
|
| 11,280 |
| $434,675 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert C. Lyons | 1/1/2017 | 183,855 | 367,710 | 625,107 |
| 1/1/2020 |
|
| 277,381 |
|
| 396,258 |
|
| 673,639 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/26/2017 | 21,000 | 61.175 | $407,469 |
| 1/31/2020 |
|
| 18,200 |
|
| 77.07 |
| $409,578 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/26/2017 | 1,625 | 6,500 | 13,000 | $397,638 |
| 1/31/2020 |
|
| 1,410 |
|
| 5,640 |
|
| 11,280 |
| $434,675 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
James F. Earl | 1/1/2017 | 217,455 | 434,910 | 739,347 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/26/2017 | 18,900 | 61.175 | $366,722 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/26/2017 | 1,465 | 5,860 | 11,720 | $358,486 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thomas A. Ellman | 1/1/2017 | 161,000 | 322,000 | 547,400 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/26/2017 | 18,900 | 61.175 | $366,722 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/26/2017 | 1,465 | 5,860 | 11,720 | $358,486 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deborah A. Golden | 1/1/2017 | 129,210 | 258,420 | 439,314 |
| 1/1/2020 |
|
| 203,665 |
|
| 290,950 |
|
| 494,615 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/26/2017 | 12,700 | 61.175 | $246,422 |
| 1/31/2020 |
|
| 12,700 |
|
| 77.07 |
| $285,805 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/26/2017 | 983 | 3,930 | 7,860 | $240,418 |
| 1/31/2020 |
|
| 985 |
|
| 3,940 |
|
| 7,880 |
| $303,656 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
N. Gokce Tezel |
| 1/1/2020 |
|
| 186,340 |
|
| 266,200 |
|
| 452,540 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/31/2020 |
|
| 8,900 |
|
| 77.07 |
| $200,288 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/31/2020 |
|
| 690 |
|
| 2,760 |
|
| 5,520 |
| $212,713 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | Amounts shown reflect target, threshold and maximum annual incentive payouts for |
| (2) | Amounts shown reflect the number of performance shares granted in |
| (3) |
|
| 48 | GATX CORPORATION - 2021 Proxy Statement |
EXECUTIVE COMPENSATION TABLES
Narrative Discussion Related to the Summary Compensation Table and Grants of Plan-Based Awards Table
Annual Incentive Awards
In 2017,2020, our NEOs were eligible for annual incentive awards based solely on financial performance goals measured in terms of GATX net income. The target incentive awards were payable at 100% of targeted net income, which was set at 125% of budgeted net income. Threshold and maximum incentive awards (50%(70% and 170%, respectively, of the target awards) were payable at 90%80% and 140% or more, respectively, of targeted net income.
Based on individual targets and on actual net income as described in theCompensation Discussion and Analysis, 20172020 incentive payouts under the GATX Cash Incentive Compensation Plan are shown in column (g) of the Summary Compensation Table. GATXGATX’s net income achievement for 2017 was $185.0 million12020 for incentive payout purposes was $162.5 million, or 84.8%89.9% of target for our NEOs, resulting in payouts at 81.6%84.8% of their target awards.1
EXECUTIVE COMPENSATION TABLES
Equity-Based Long-Term Incentives
Equity-based long-term incentive awards in 20172020 consisted of NQSOs and performance shares.
NQSOs vest in three equal annual installments and expire seven years after the grant date. The grant price is based on the average of the high and low prices of GATX common stock on the date of grant. Dividend equivalents accrue on NQSO grants and are not paid until vesting and each quarter thereafter until the NQSOs are exercised or expire. The NQSOs granted to the NEOs on January 26, 201731, 2020 will vest in three equal installments on January 2631 of 2018, 2019,2021, 2022, and 2020.2023.
The number of NQSOs awarded in 20172020 and their grant date fair value are shown in columns (j) and (m), respectively, in the Grants of Plan-Based Awards Table. The grant date fair value of the 2017, 2016,2020, 2019, and 20152018 NQSO awards are shown in column (f) of the Summary Compensation Table for each year granted.
The percentage of each performance share award that will be earned is based on the extent to whichpre-established goals on two independent performance measures, each of which is weighted at 50%, are achieved over a three-year performance period ending on
December 31, 2019.2022. The two performance measures are three-year average return on equity (defined as net income divided by average equity) and three-year cumulative investment volume (defined as the sum of
cumulative GAAP-basis portfolio investments and capital additions as reported on the Company’s audited statement of cash flows for each year in the performance period), subject to adjustment.
The number of performance shares earned at the end of the performance period ranges from 0% to 200% of the initial target grant. For the return on equity component, the 2017 target grant, will be earned if return on equity is 100% of targeted performance. The threshold and maximum number of performance shares are 25% and 200% ofwith the target grant respectively. For the cumulative investment volume component, the 2017 target grant is earned if cumulative investment volume is 100% ofat targeted performance. The threshold and maximum number of performance shares are 25% and 200% of the target grant, respectively. Dividend equivalents accrue throughout the performance period and are only paid on the number of performance shares earned at the end of the performance period.
The grant date fair value of the 2017, 2016,2020, 2019, and 20152018 performance shares are shown in column (e) of the Summary Compensation Table. The number of performance shares granted in 20172020 that may be earned at threshold, target, threshold, and maximum levels is shown in columns (g)(f), (f)(g), and (h), respectively, of the Grants of Plan-Based Awards Table.
| 1 | Our 2020 financial results calculated in accordance with GAAP include $1.1 million of net income from discontinued operations and $12.3 million of tax adjustments and other items. For a reconciliation of net income, diluted earnings per share, and return on equity, excluding tax adjustments and other items, to net income, diluted earnings per share, and return on equity calculated in accordance with GAAP, please see Exhibit B to this Proxy Statement. |
| GATX CORPORATION - | 49 |
EXECUTIVE COMPENSATION TABLES
Outstanding Equity Awards at FiscalYear-End Table
The following table summarizes the number of shares of our stock underlying outstanding equity incentive plan awards for each NEO as of December 31, 2017.2020.
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Number of | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested (#) | Market Value of Shares of Units of Stock that Have Not Vested ($) | Equity Incentive Number of | Equity Incentive Market or | Number of securities underlying unexercised options (#) Exercisable | Number of securities underlying unexercised options (#) Unexercisable | Equity incentive plan awards: Number of securities underlying unexercised unearned options (#) | Option Exercise Price ($) | Option expiration date | Number of shares or units of stock that have not vested (#) | Market value of shares or units of stock that have not vested ($) | Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#) | Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j)(6) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(a)
| (b)
| (c)
| (d)
| (e)
| (f)
| (g)
| (h)
| (i)
| (j)(7)
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brian A. Kenney | 0 | 81,000 | (1) | 61.175 | 1/26/2024 | 25,100 | (4) | 1,560,216 | 0 | 80,000 | (1) | 77.0700 | 1/31/2027 | 49,600 | (5) | 4,125,728 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 26,166 | 52,334 | (2) | 71.5250 | 1/24/2026 | 48,680 | (6) | 4,049,202 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 53,533 | 26,767 | (3) | 69.7350 | 1/25/2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 81,000 | 61.1750 | 1/26/2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 109,100 | 39.1850 | 1/28/2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 78,900
|
|
| 56.9100
|
|
| 1/29/2022
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thomas A. Ellman | 0 | 18,200 | (1) | 77.0700 | 1/31/2027 | 3,532 | (4) | 293,792 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 36,366 | 72,734 | (2) | 39.185 | 1/28/2023 | 38,180 | (5) | 2,373,269 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 52,600 | 26,300 | (3) | 56.910 | 1/29/2022 | 6,166 | 12,334 | (2) | 71.5250 | 1/24/2026 | 11,280 | (5) | 938,270 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 57,500 | 58.345 | 1/30/2021 | 12,000 | 6,000 | (3) | 69.7350 | 1/25/2025 | 11,480 | (6) | 954,906 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 62,500 | 45.891 | 1/24/2020 | 18,900 | 61.1750 | 1/26/2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 76,900 | 44.015 | 1/26/2019 | 22,400 | 39.1850 | 1/28/2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 75,000 | 33.935 | 1/27/2018 |
| 14,100
|
|
| 56.9100
|
|
| 1/29/2022
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert C. Lyons | 0 | 21,000 | (1) | 61.175 | 1/26/2024 | 6,500 | (4) | $404,040 | 0 | 18,200 | (1) | 77.0700 | 1/31/2027 | 3,532 | (4) | 293,792 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 9,200 | 18,400 | (2) | 39.185 | 1/28/2023 | 9,660 | (5) | 600,466 | 6,166 | 12,334 | (2) | 71.5250 | 1/24/2026 | 11,280 | (5) | 938,270 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 13,667 | 6,833 | (3) | 56.910 | 1/29/2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 17,500 | 58.345 | 1/30/2021 | 12,866 | 6,434 | (3) | 69.7350 | 1/25/2025 | 11,480 | (6) | 954,906 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 17,900 | 45.891 | 1/24/2020 | 21,000 | 61.1750 | 1/26/2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 18,200 | 44.015 | 1/26/2019 | 27,600 | 39.1850 | 1/28/2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 18,500 | 33.935 | 1/27/2018 |
| 20,500
|
|
| 56.9100
|
|
| 1/29/2022
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
James F. Earl | 0 | 18,900 | (1) | 61.175 | 1/26/2024 | 5,860 | (4) | 364,258 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deborah A. Golden | 0 | 12,700 | (1) | 77.0700 | 1/31/2027 | 7,880 | (5) | 655,458 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4,300 | 8,600 | (2) | 71.5250 | 1/24/2026 | 8,000 | (6) | 665,440 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8,800 | 4,400 | (3) | 69.7350 | 1/25/2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 6,700
|
|
| 61.1750
|
|
| 1/26/2024
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
N. Gokce Tezel | 0 | 8,900 | (1) | 77.0700 | 1/31/2027 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8,333 | 17,667 | (2) | 39.185 | 1/28/2023 | 9,270 | (5) | 576,223 | 3,000 | 6,000 | (2) | 71.5250 | 1/24/2026 | 5,520 | (5) | 459,154 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 13,867 | 6,933 | (3) | 56.910 | 1/29/2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 16,900 | 58.345 | 1/30/2021 | 4,800 | 2,400 | (3) | 69.7350 | 1/25/2025 | 5,560 | (6) | 462,481 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 19,200 | 45.891 | 1/24/2020 | 4,900 | 61.1750 | 1/26/2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 21,500 | 44.015 | 1/26/2019 | 6,400 | 39.1850 | 1/28/2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thomas A. Ellman | 0 | 18,900 | (1) | 61.175 | 1/26/2024 | 5,860 | (4) | 364,258 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 7,466 | 14,934 | (2) | 39.185 | 1/28/2023 | 7,830 | (5) | 486,713 |
| 4,200
|
|
| 56.9100
|
|
| 1/29/2022
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 9,400 | 4,700 | (3) | 56.910 | 1/29/2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12,500 | 58.345 | 1/30/2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 9,300 | 45.891 | 1/24/2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8,500 | 44.015 | 1/26/2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deborah A. Golden | 0 | 12,700 | (1) | 61.175 | 1/26/2024 | 3,930 | (4) | 244,289 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5,700 | 11,400 | (2) | 39.185 | 1/28/2023 | 5,990 | (5) | 372,338 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8,267 | 4,133 | (3) | 56.910 | 1/29/2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 11,700 | 58.345 | 1/30/2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 11,600 | 45.891 | 1/24/2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12,100 | 44.015 | 1/26/2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | NQSOs will vest in three, equal, annual installments on 1/ |
| (2) | 50% of the unexercisable |
| (3) | 100% of the |
| (4) | Amounts shown reflect the number of outstanding restricted stock units granted in 2018. 25% vested on 8/9/2019, the remaining 75% will vest on 8/9/2021. |
| (5) | Amounts shown reflect the number of target performance shares granted in |
Amounts shown reflect the number of target performance shares granted in |
Market value of restricted stock units and performance shares is based on the closing price of GATX common stock on the last trading day of the year, December |
| 50 | GATX CORPORATION - |
EXECUTIVE COMPENSATION TABLES
Option Exercises and Stock Vested Table
| Option Awards | Stock Awards(1) | ||||||||||||||||||||||||||||||||||||||||||||
| Option Awards | Stock Awards(1) | ||||||||||||||||||||||||||||||||||||||||||||
| Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | Number of
| Value
| Number of
| Value
| |||||||||||||||||||||||||||||||||||||
| (a) | (b) | (c) | (d) | (e) | (b)
| (c)
| (d)
| (e)
| |||||||||||||||||||||||||||||||||||||
Brian A. Kenney | 0 | 0 | 21,151 | 1,474,965 |
|
120,000 |
|
|
3,356,413 |
|
|
31,869 |
|
|
3,172,718 |
| |||||||||||||||||||||||||||||
Thomas A. Ellman |
|
21,800 |
|
|
593,455 |
|
|
7,161 |
|
|
712,913 |
| |||||||||||||||||||||||||||||||||
Robert C. Lyons | 0 | 0 | 5,506 | 383,961 |
|
17,500 |
|
|
216,300 |
|
|
7,682 |
|
|
764,782 |
| |||||||||||||||||||||||||||||
James F. Earl | 0 | 0 | 5,581 | 389,191 | |||||||||||||||||||||||||||||||||||||||||
Thomas A. Ellman | 9,300 | 251,658 | 3,771 | 262,971 | |||||||||||||||||||||||||||||||||||||||||
Deborah A. Golden | 13,300 | 406,787 | 3,318 | 231,381 |
|
23,100 |
|
|
626,028 |
|
|
5,249 |
|
|
522,564 |
| |||||||||||||||||||||||||||||
N. Gokce Tezel |
|
7,200 |
|
|
200,705 |
|
|
2,867 |
|
|
285,424 |
| |||||||||||||||||||||||||||||||||
| (1) | Amounts shown include |
Each of our NEOs participated in a defined benefit pension plan during the year ended December 31, 2017.2020. The following table contains information about these plans that provide for payments or other benefits to our NEOs at, following, or in connection with retirement.
| Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($) (1)(2) | Payments During Last Fiscal Year ($) | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($)(1)(2) | Payments During Last Fiscal Year ($) | ||||||||||||||||||
| | (b) | (c) | (d) | (e) | ||||||||||||||||||||||
(a)
| (b)
| (c)
| (d)
| (e)
| ||||||||||||||||||||||
Brian A. Kenney | GATXNon-Contributory Pension Plan for Salaried Employees | 22.2 | 691,050 | 0 | GATX Non-Contributory Pension Plan for Salaried Employees
|
| 25.2
|
| $
| 1,136,127
|
| $0
| ||||||||||||||
| GATX Supplemental Retirement Plan
|
| 25.2
|
| $
| 9,388,105
|
| $0
| ||||||||||||||||||
Thomas A. Ellman
| GATX Non-Contributory Pension Plan for Salaried Employees
|
| 24.3
|
| $
| 1,073,584
|
| $0
| ||||||||||||||||||
| GATX Supplemental Retirement Plan | 22.2 | 6,264,333 | 0 | GATX Supplemental Retirement Plan
|
| 24.3
|
| $
| 2,538,200
|
| $0
| |||||||||||||||
Robert C. Lyons | GATXNon-Contributory Pension Plan for Salaried Employees | 21.3 | 738,820 | 0 | GATX Non-Contributory Pension Plan for Salaried Employees
|
| 24.3
|
| $
| 1,215,297
|
| $0
| ||||||||||||||
| GATX Supplemental Retirement Plan | 21.3 | 2,047,648 | 0 | GATX Supplemental Retirement Plan
|
| 24.3
|
| $
| 3,453,051
|
| $0
| |||||||||||||||
James F. Earl | GATXNon-Contributory Pension Plan for Salaried Employees | 29.9 | 1,370,026 | 0 | ||||||||||||||||||||||
| GATX Supplemental Retirement Plan | 29.9 | 4,971,563 | 0 | |||||||||||||||||||||||
Thomas A. Ellman | GATXNon-Contributory Pension Plan for Salaried Employees | 21.3 | 617,544 | 0 | ||||||||||||||||||||||
| GATX Supplemental Retirement Plan | 21.3 | 1,117,355 | 0 | |||||||||||||||||||||||
Deborah A. Golden | GATXNon-Contributory Pension Plan for Salaried Employees | 12.0 | 622,326 | 0 | GATX Non-Contributory Pension Plan for Salaried Employees
|
| 15.0
|
| $
| 965,196
|
| $0
| ||||||||||||||
| GATX Supplemental Retirement Plan | 12.0 | 1,170,205 | 0 | GATX Supplemental Retirement Plan
|
| 15.0
|
| $
| 1,796,066
|
| $0
| |||||||||||||||
N. Gokce Tezel
| GATX Non-Contributory Pension Plan for Salaried Employees
|
| 20.1
|
| $
| 759,817
|
| $0
| ||||||||||||||||||
| GATX Supplemental Retirement Plan
|
| 20.1
|
| $
| 996,385
|
| $0
| ||||||||||||||||||
| (1) | Present value of accumulated benefit is calculated as the amount payable at age |
| (2) | NEOs may also qualify for subsidized early retirement benefits. |
| GATX CORPORATION - | 51 |
EXECUTIVE COMPENSATION TABLES
Narrative Discussion Related to Pension Benefits Table
NEOs participate in ourNon-Contributory Pension Plan for Salaried Employees (the “Qualified Plan”“Qualified Plan”), which covers salaried employees of GATX and its domestic subsidiaries.
All NEOs have met the Qualified Plan’s vesting requirement. Subject to certain limitations imposed by law, pensions are based on years of service and average monthly compensation during (i) the five consecutive calendar years of highest compensation during the last 15 calendar years preceding retirement or the date on which employment terminates or (ii) the 60 consecutive calendar months preceding retirement or the date on which employment terminates, whichever is greater. Benefits under the Qualified Plan are not subject to any deduction for Social Security or other offset amounts.
Annual benefits in excess of certain limits imposed by the Employee Retirement Income Security Act of 1974 or the Internal Revenue Code on payments from the Qualified Plan will be paid by the Company under the GATX Supplemental Retirement Plan (the “Non-Qualified Plan”Plan”). TheNon-Qualified Plan is designed to restore those benefits that would otherwise be limited by statutory regulations. Payments are made as a single lump sum amount representing the actuarially equivalent present value of the benefit payable at age 65. Payments made pursuant to theNon-Qualified Plan are funded from the general assets of the Company.
Key provisions of the Qualified Plan include the following:
| • |
| • | Normal Retirement Benefits. Normal retirement is at age 65 with five years of credited service. The basic formula is a base benefit equal to 1% of average monthly compensation multiplied by years of benefit service plus an excess benefit equal to 0.65% of |
average monthly compensation in excess of monthly Social Security Covered Compensation multiplied by years of benefit service (to a maximum of 35 years). |
| • | Early Retirement Benefits. Qualified benefits can commence at any age in the form of an annuity with the accrued benefit actuarially reduced for commencement before age 65, or as a single lump sum payment representing the actuarially equivalent present value of the age 65 benefit. Qualified benefits accrued prior to July 1, 2008 and payable in annuity form to employees who (a) are at least age 55 with 15 or more years of service or (b) have at least 30 years of service and whose age plus service total 90 or more, are subject to a partial rather than full actuarial reduction for early commencement. |
“Compensation” is defined as regular earnings during the calendar year, including covered bonuses but excluding deferred and contingent compensation. For NEOs, compensation includes salary and annual incentive awards paid under the GATX Cash Incentive Compensation Plan. For the Final Average Pay Formula, “Social Security Covered Compensation” means the35-year average of Social Security taxable wage bases in effect up to and including the year in which an individual attains Social Security Normal Retirement Age calculated in accordance with Revenue Ruling89-70.
For unmarried participants, the normal form of payment is a life annuity. For married participants, the normal form of payment is a 50%joint-and-survivor annuity. Optional forms of payment include a single lump sum of the accrued pension’s actuarially equivalent present value, or a joint and survivorco-pensioner annuity. All forms of payment have the same actuarially equivalent value as the life annuity.
The present value of accumulated pension benefits for each NEO is shown in column (d) of the Pension Benefits Table.
Potential Payments upon Termination or Change of Control
Except for the COC agreements described in theCompensation Discussion and Analysisand the employment agreement with Mr. Earl described on page 41,, we have not entered into employment agreements with any of the NEOs. They participate in the same plans and are subject to the same treatment as all other salaried employees in the event of termination due to voluntary resignation, discharge for cause, involuntary
separation, death, disability, and
retirement. This discussion, and the table that follows, therefore focuses solely on termination in the event of a change of control of GATX. The key provisions of the COC agreements are described below, followed by a table that shows the amounts that we would pay or the benefits we would have provided to each NEO if such a change of control situation had occurred on December 31, 2017.2020.
| 52 | GATX CORPORATION - |
EXECUTIVE COMPENSATION TABLES
Key Provisions of the COC Agreements
Each NEO has entered into a COC agreement that provides certain benefits should employment be terminated or constructively terminated following a change of control. Key terms under the agreements include the following:
Executive Benefit | Description | |
Term | • Agreement effective fortwo-year rolling term and renews automatically each year unless GATX gives60-days’ advance notice ofnon-renewal | |
• Employment period is two years | ||
• Unless a COC occurs, employment is at will | ||
Payment Triggers | • Involuntary termination without “cause” or voluntary termination for “good reason” within two years following a COC | |
• Failure of a successor to assume the Agreement | ||
• Termination prior to, but in contemplation of, a COC | ||
• Payments are not triggered in the event of death, disability, “cause,” or voluntary termination for other than “good reason” | ||
Severance Benefits | • Three times the sum of base salary and target annual bonus (paid in lump sum) | |
• Three years of additional age and service credit for retirement purposes | ||
• Three years of additional coverage in health and welfare plans (such coverage becomes secondary ifre-employed); thereafter, coverage continues at executive’s cost until eligible for Medicare | ||
• Outplacement services at a maximum cost of 10% of salary | ||
• Pro rata portion of target bonus for the year in which the COC occurs for the actual period served during the year of the COC prior to termination and payment of previously deferred compensation plus interest | ||
Excise Tax Gross Up | • Tax gross up not included in COC agreements entered into after 2009 | |
• Provided pursuant to pre-2009 agreements unless value of severance benefits is within 110% of the level that would not trigger excise taxes; if so, the amount of severance benefits otherwise payable is reduced so that excise taxes are not imposed | ||
| ||
Enforcement and Legal Fees | • Payable by Company unless a court determines that such payment was unjust | |
Definition of Key Terms | • COC means any of the following: | |
— | ||
— | ||
— | ||
— | ||
— | ||
• “Cause” means the willful illegal conduct, gross misconduct, or continued failure of the executive to perform his or her duties after receipt of written notice and explanation of performance shortfalls | ||
• “Good Reason” means any of the following: | ||
— | ||
| ||
— | ||
—amaterial diminution in the budget over which authority is retained | ||
— |
| GATX CORPORATION - | 53 |
EXECUTIVE COMPENSATION TABLES
Amounts Payable under COC Agreements
The table below reflects certain assumptions made in accordance with SEC rules, namely that (a) the COC and termination of employment occurred on December 31, 20172020 and (b) the value of a share of the Company’s common stock on December 29, 2017,31, 2020, the last trading day of the year, was $62.16.$83.18. It includes the lump sum payments associated with the benefits described above, as well as the value of all equity awards for which vesting is accelerated as provided under the GATX Amended and Restated 2012 Incentive Award Plan. The table excludes the following payments and benefits that are not enhanced by the termination of employment following a COC:
Potential Payments upon Change of Control Table
| Accelerated Vesting of Equity Awards(3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accelerated Vesting of Equity Awards(3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Severance ($) | Bonus (Accrued ($)(1) | SRP Payment ($)(2) | Gross-up Payment ($) | Options/SARs ($) | Performance Shares ($) | Outplacement ($) | Total Value ($) | Severance ($) | Bonus (Accrued Obligations) ($)(1) | SRP Payment ($)(2) | Grossup Payment ($) | NQSOs ($) | Restricted Units ($) | Performance ($) | Outplacement ($) | Total Value | |||||||||||||||||||||||||||||||||||||||||||||||
Brian A. Kenney(4) | 5,739,000 | 956,500 | 2,406,506 | 0 | 1,888,908 | 3,933,485 | 95,650 | 15,020,052 |
| 6,030,000
|
|
| 1,005,000
|
|
| 3,756,500
|
|
|
0 |
|
| 1,458,623
|
|
|
0 |
|
| 4,087,465
|
|
| 100,500
|
| 16,438,088��
| |||||||||||||||||||||||||||||||
Thomas A. Ellman |
| 2,692,290
|
|
| 369,530
|
|
| 1,875,470
|
|
|
0 |
|
| 335,617
|
|
| 293,833
|
|
| 946,588
|
|
| 52,790
|
| 6,566,118
| |||||||||||||||||||||||||||||||||||||||
Robert C. Lyons(4) | 2,679,030 | 367,710 | 1,009,521 | 0 | 479,300 | 1,004,506 | 52,530 | 5,592,597 |
| 2,898,840
|
|
|
397,880 |
|
| 1,907,958
|
|
|
0 |
|
| 341,441
|
|
| 293,833
|
|
| 946,588
|
|
| 56,840
|
| 6,843,380
| |||||||||||||||||||||||||||||||
James F. Earl(4) | 3,168,630 | 434,910 | 1,525,117 | 0 | 431,841 | 940,481 | 62,130 | 6,563,109 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thomas A. Ellman | 2,346,000 | 322,000 | 872,431 | 0 | 386,385 | 850,971 | 46,000 | 4,823,787 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deborah A. Golden(4) | 2,067,360 | 258,420 | 633,141 | 0 | 296,125 | 616,627 | 43,070 | 3,914,743 |
| 2,337,120
|
|
| 292,140
|
|
| 1,359,117
|
|
|
0 |
|
| 238,300
|
|
|
0 |
|
| 660,449
|
|
| 48,690
|
| 4,935,816
| |||||||||||||||||||||||||||||||
N. Gokce Tezel |
| 2,160,000
|
|
| 270,000
|
|
| 1,193,510
|
|
|
0 |
|
| 156,576
|
|
|
0 |
|
| 460,817
|
|
| 45,000
|
| 4,285,903
| |||||||||||||||||||||||||||||||||||||||
| (1) | Represents the executive’s current target bonus amount. |
| (2) | Represents the present value of the incremental portion ofnon-qualified pension benefits calculated using the discount rate specified in the COC |
| (3) | Under the GATX Amended and Restated 2012 Incentive Award Plan, a termination following a change of control results in the accelerated vesting of all unvested NQSOs, |
| (4) | The value of |
| 54 | GATX CORPORATION - |
EXECUTIVE COMPENSATION TABLES
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of RegulationS-K, we are providing the following information regarding the ratio of the total annual compensation of Brian A. Kenney, our Chief Executive Officer (our “CEO”(“CEO”), to the total annual compensation of our median employee for our last completed fiscal year.
In 2017,2020, our last completed fiscal year, the total annual compensation of our CEO as reported in the Summary Compensation Table, was $6,075,689.$7,286,765. The total annual compensation of our median employee calculated in the same manner as the CEO’s, was $70,824.$87,434. As a result, for 2017, our estimate of2020, the ratio of our CEO’s total annual compensation to the total annual compensation of our median employee was approximately 8683 to 1.
To determine the annual total compensation of our CEO, we used the amount reported in the “Total” column of the Summary Compensation Table, which includes salary, stock and option awards, bonus, change in pension value, and all other compensation. We then calculated our median employee’s total annual compensation in accordance with the same requirements applicable to the
CEO’s compensation, as reported in the Summary Compensation Table, and used that number to calculate the ratio of our CEO’s pay to that of our median employee.
We identified ourthe median employee by examining compensation information derived from payroll records for all employees, excluding the CEO, who were employed by us on October 1, 2017. As of such date, we employed approximately 2,282 people, with 1,403 of these employees located in the United States and 860 located outside the United States. We elected to exclude employees in India (12), Russia (4), and France (3) given the small number of employees located in those jurisdictions.2020. In identifying our median employee, we selected actual base salary (for salaried employees) and wages (for hourly employees) for the9-month period ended September 30, 2017 as the most appropriate measure of compensation and consistently applied that measure to all employees included in the calculation.
As of October 1, 2020, we employed approximately 1,821 people, with 1,060 located in the United States and 761 located outside the United States. We continue to exclude employees in India (20), Mexico (10), Russia (5), and France (3) given the small number of employees located in those jurisdictions. There have been no changes in employee compensation arrangements that could significantly impact our pay ratio.
| GATX CORPORATION - | 55 |
| PROPOSAL 3: | RATIFICATION OF THE |
The Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of the independent registered public accounting firm retained to audit our financial statements. The Audit Committee has appointed Ernst & Young LLP to serve(“EY”) as our independent registered public accounting firm for 2018. Ernst & Young LLPfiscal year 2021, and our Board is seeking shareholder ratification of the appointment. EY and its predecessor firms have served as our independent registered public accounting firm since 1916.
The Audit Committee regularly evaluates the performanceShareholder ratification of this appointment is not required by our By-Laws or applicable laws and independence of Ernst & Young LLP and considersnon-audit fees and services when assessing independence. The Audit Committee and theregulations. However, our Board believe that the continued retention of Ernst & Young LLP as our independent registered public accounting firm is in the best interests of GATX and our shareholders.annually submits this appointment
Because the members of the Audit Committee value shareholders’ views on our independent registered public accounting firm, we are seekingfor shareholder ratification as an element of the appointment even though ratification is not legally required.our strong governance program. While this vote cannot be binding, if shareholders do not ratify the appointment of Ernst & Young LLP,EY, the Audit Committee will take the vote into account in making future appointments.
Representatives of Ernst & Young LLPEY are expected to be present at the Annual Meeting. They will have the opportunity to make a statement if they so desire and will be available to respond to appropriate questions by shareholders.
In determining whether to reappoint EY, the Audit Committee considered the qualifications, performance, and independence of the firm and the audit engagement team, the quality of its discussions with EY, and the fees charged by EY for the breadth of services provided. In connection with the 2021 appointment, the Audit Committee considered, among other things, the following:
the Audit Committee and management, and areas of continued focus and improvement opportunities |
The Audit Committee determined that the appointment of EY is in the best interest of GATX and our shareholders. The Audit Committee has appointed, subject to shareholder ratification, EY as our independent registered public accounting firm for fiscal year 2021 and recommends that shareholders ratify the appointment at the Annual Meeting.
The Board of Directors recommends that you voteFOR the proposal to ratify Ernst & Young LLP as our independent registered public accounting firm for 2018.2021.
| 56 | GATX CORPORATION - 2021 Proxy Statement |
PROPOSAL 3: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee’s responsibilities, as set forth in its charter, include providing oversight of our financial accounting and reporting process through periodic meetings with our management, independent registered public accounting firm, and internal auditors to review accounting, auditing, internal controls, and financial reporting matters. The Audit Committee Charter is available on our website (www.gatx.com) in the Investor Relations section under “Corporate Governance”.Governance.”
The Audit Committee has the ultimate authority to select and engage our independent registered public accounting firm, evaluate its performance, evaluate the performance of the lead audit partner, oversee the required rotation of the lead audit partner every five years, review and consider the selection of the lead audit partner, approve all audit andnon-audit work, and approve all associated fees. The Audit Committee’s oversight includes regular private sessions with the independent registered public accounting firm and discussions with the firm regarding the scope of its audit.
GATX management is responsible for the preparation and integrity of our financial reporting information and related systems of internal control. In the discharge of its functions, the Audit Committee relies on our management (including senior financial management), internal audit staff, and independent registered public accounting firm.
It is not the Audit Committee’s responsibility to plan or conduct audits or to determine that our financial statements are complete and accurate and prepared in accordance with generally accepted accounting principles. That work is the responsibility of GATX management and our independent registered public accounting firm. In making its recommendation to the Board noted below, the Audit Committee has relied on management to prepare the financial statements with integrity and objectivity and in conformance with generally accepted accounting principles and the report of our independent registered public accounting firm with respect to the financial statements.
The Audit Committee currently consists of fivefour directors: Anne L. Arvia (Chair), Diane M. Aigotti, Robert J. Ritchie, Casey J. Sylla,Adam L. Stanley, and Stephen R. Wilson, each of whom is an “independent director” under the NYSE listing standards applicable to Audit Committee members. The Board has determined that each member of the Audit Committee is financially literate and has accounting and related financial management expertise, and that each of Diane M. Aigotti, Anne L. Arvia, and Stephen R. Wilson is an “audit committee financial expert” (as such term is defined by the SEC).
PROPOSAL 3: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has reviewed and discussed with management the audited consolidated financial statements included in our Annual Report onForm 10-K for the fiscal year ended December 31, 2017.2020.
The Audit Committee has discussed with Ernst & Young LLP,EY, our independent registered public accounting firm, the matters required to be discussed under Public Company Accounting Oversight Board (“the applicable requirements of the PCAOB”) Auditing Standard No. 1301,Communication with Audit Committees, and the SEC, including the quality of our accounting policies, the reasonableness of significant judgments and the clarity of disclosures in the financial statements.
The Audit Committee also has received from Ernst & Young LLPEY the written disclosures regarding the auditors’
independence required by PCAOB Ethics and Independence Rule 3256,Communication with AuditCommittees Concerning Independence, and the Audit Committee has discussed with Ernst & Young LLPEY its independence.
Based on the review and discussions noted above, the Audit Committee has recommended to the Board of Directors that the audited financial statements be included in our Annual Report onForm 10-K for the year ended December 31, 20172020 for filing with the SEC.
Anne L. Arvia (Chair)
Diane M. Aigotti
Robert J. Ritchie
Casey J. SyllaAdam L. Stanley
Stephen R. Wilson
| GATX CORPORATION - 2021 Proxy Statement | 57 |
PROPOSAL 3: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Pursuant to ourpre-approval policy, the Audit Committee mustpre-approve all audit andnon-audit services provided to GATX by our independent registered public accounting firm before the firm is engaged to perform the services. Each year, the Audit Committee reviews the annual audit plan submitted by the independent registered public accounting firm andpre-approves all necessary and appropriate audit services for the year.
Each quarter, the Company and the independent registered public accounting firm jointly provide the Audit Committee a report of all the audit-related, tax, and othernon-audit services that were performed by the independent registered public accounting firm during the current fiscal quarter pursuant to the authority previously approved by the Committee. In addition, the Company
and the independent registered public accounting firm provide the Audit Committee with an estimate of the nature and amount of the services expected to be needed in the next fiscal quarter, together with a joint statement confirming that the services are consistent with the SEC’s rules on auditor independence. The Audit Committee thenpre-approves those services, as appropriate. Any proposed changes to the estimate of services reviewed as part of the annual audit plan also are discussed with the Audit Committee at that time. The Audit Committee may delegatepre-approval authority to one or more of its members. Any member or members to whom such authority is delegated must report anypre-approval decisions to the Audit Committee at its next scheduled meeting.
Audit Fees
The aggregate fees for professional services rendered by Ernst & Young LLPEY in connection with (i) the audit of the annual financial statements set forth in our Annual Report onForm 10-K, (ii) the review of the interim financial statements in our Quarterly Reports onForm 10-Q, (iii) comfort letters, consents, and other services related to SEC filings, and
(iv) related audit services provided to
other subsidiaries of GATX were approximately $2,613,000$2,646,000 for 20172020 and approximately $2,747,000$2,578,000 for 2016.2019. Audit fees also include the audit of the effectiveness of our internal control over financial reporting as required by SEC rules adopted under Section 404 of the Sarbanes-Oxley Act of 2002.
PROPOSAL 3: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Audit-Related Fees
The aggregate fees for assurance and related services that were related to the performance of the audit or review of our financial statements were approximately
$136,000143,000 for 20172020 and approximately $134,000$147,000 for 2016.2019. In both years, the services performed related toincluded employee benefit plan audits.
Tax Fees
The aggregate fees for professional services rendered for federal and international tax compliance, advice, and
planning were approximately $63,000$22,000 for 20172020 and approximately $44,500$49,000 for 2016.2019.
All Other Fees
Fees for other professional services rendered by Ernst & Young LLPEY were approximately $3,000 for 2020 and $2,000 for each of 20172019,
and 2016, primarily related to access and use of Ernst & Young LLP’sEY’s online accounting research tool.
| 58 | GATX CORPORATION - |
SECURITY OWNERSHIP OF DIRECTORS AND
EXECUTIVE OFFICERS
Each director,Director, each executive officerNEO named in the Summary Compensation Table, and all directorsDirectors and executive officersExecutive Officers as a group, owned the number of shares of GATX common stock set forth in the following table:
| Name of Beneficial Owner | Shares of Common Stock Beneficially Owned as of February 26, 2021(1)(2) | |||
Diane M. Aigotti | 9,799 | |||
Anne L. Arvia | 26,817 | |||
| ||||
Thomas A. Ellman | 318,112 | |||
Deborah A. Golden | 112,724 | |||
Ernst A. Häberli | 31,626 | |||
Brian A. Kenney | 1,197,255 | |||
Robert C. Lyons | 371,486 | |||
James B. Ream | 38,185 | |||
Adam L. Stanley | 2,428 | |||
David S. Sutherland | 72,894 | |||
N. Gokce Tezel | 109,416 | |||
Stephen R. Wilson | 15,395 | |||
Paul G. Yovovich | 31,699 | |||
All Directors and | 2,580,828 | |||
| (1) | Includes (i) units of phantom common stock credited to the accounts of individuals and payable in shares of common stock following retirement from the Board as follows: Ms. Aigotti |
| (2) | Each person has sole investment and voting power (or shares such powers with his or her spouse), except with respect to units of phantom common stock, restricted common stock, and option grants. None of the directors or |
| GATX CORPORATION - | 59 |
The entities listed below are the only persons known to us to beneficially own more than 5% of our common stock. To our knowledge, except as indicated in the footnotes to this table, the entities named below have sole voting and sole investment power with respect to all shares beneficially owned by them. Percentage of beneficial ownership is based on 37,805,98835,371,761 shares outstanding as of March 5, 2018.February 26, 2021.
| Name and Address of Beneficial Owner | Shares Beneficially Owned | Percent of Common Stock | ||||||
State Farm Mutual Automobile Insurance Company(1) One State Farm Plaza Bloomington, Illinois 61710 | 6,458,893 | 17.1 | ||||||
The Vanguard Group, Inc.(2) 100 Vanguard Boulevard Malvern, Pennsylvania 19355 | 4,857,941 | 12.8 | ||||||
GAMCO Investors, Inc.(3) One Corporate Center Rye, New York 10580 | 4,376,737 | 11.6 | ||||||
BlackRock, Inc.(4) 55 East 52nd Street New York, New York 10022 | 4,163,530 | 11.0 | ||||||
Dimensional Fund Advisors LP(5) Building One 6300 Bee Cave Road Austin, Texas 78746 | 3,235,037 | 8.6 | ||||||
Wellington Management Group LLP(6) 280 Congress Street Boston, Massachusetts 02210 | 2,605,283 | 6.9 | ||||||
| Name and Address of Beneficial Owner | Shares Beneficially Owned | Percent of Common Stock | ||||||||
State Farm Mutual Automobile Insurance Company(1) One State Farm Plaza Bloomington, Illinois 61710 |
|
6,085,700 |
|
| 17.2
|
| ||||
BlackRock, Inc.(2) 55 East 52nd Street New York, New York 10055 |
|
4,270,392 |
|
| 12.1
|
| ||||
GAMCO Investors, Inc.(3) One Corporate Center Rye, New York 10580 |
|
3,346,145 |
|
| 9.5
|
| ||||
The Vanguard Group, Inc.(4) 100 Vanguard Boulevard Malvern, Pennsylvania 19355 |
|
3,315,470 |
|
| 9.4
|
| ||||
Dimensional Fund Advisors LP(5) Building One 6300 Bee Cave Road Austin, Texas 78746 |
|
2,549,247 |
|
| 7.2
|
| ||||
EARNEST Partners, LLC(6) 1180 Peachtree Street NE, Suite 2300 Atlanta, Georgia 30309 |
|
2,363,318 |
|
| 6.7
|
| ||||
| (1) | Based on a Schedule 13G amendment filed with the SEC on February |
| (2) | Based on a Schedule 13G amendment filed with the SEC on |
| (3) | Based on a Schedule 13D amendment filed with the SEC on |
PRINCIPAL SHAREHOLDERS
| (4) |
Based on a Schedule 13G amendment filed with the SEC on February |
| (5) | Based on a Schedule 13G amendment filed with the SEC on February 12, 2021. Dimensional Fund Advisors LP, an investment adviser registered under Section 203 of the Investment Advisers Act of 1940, furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager orsub-adviser to certain other commingled funds, group trusts and separate accounts (such as investment companies, trusts and accounts, collectively referred to as the “Funds”). In certain cases, subsidiaries of Dimensional Fund Advisors LP may act as an adviser orsub-adviser to certain Funds. In its role as investment adviser,sub-adviser and/or |
| 60 | GATX CORPORATION - 2021 Proxy Statement |
PRINCIPAL SHAREHOLDERS
| manager, Dimensional Fund Advisors LP or its subsidiaries (collectively, “Dimensional”) may possess voting and/or investment power over the shares that are owned by the Funds, and may be deemed to be the beneficial owner of the shares held by the Funds. However, all of the reported shares are owned by the Funds. Dimensional disclaims beneficial ownership of such shares. The Funds have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares held in their respective accounts. To the knowledge of Dimensional, the interest of any one such Fund does not exceed 5% of the outstanding shares of GATX. Dimensional has sole voting power with respect to 2,489,923 of the reported shares. |
| (6) | Based on a Schedule 13G amendment filed with the SEC on February |
| GATX CORPORATION - | 61 |
Statements in this Proxy Statementproxy statement not based on historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and, accordingly, involve known and unknown risks and uncertainties that are difficult to predict and could cause our actual results, performance, or achievements to differ materially from those discussed. These include statements as to our future expectations, beliefs, plans, strategies, objectives, events, conditions, financial performance, prospects, or future events. In some cases, forward-looking statements can be identified by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “outlook,” “continue,” “likely,” “will,” “would,”“would”, and similar words and phrases. Forward-looking statements are necessarily based on estimates and assumptions that, while considered reasonable by us and our management, are inherently uncertain. Accordingly, you should not place undue reliance on forward-looking statements, which speak only as of the date they are made, and are not guarantees of future performance. We do not undertake any obligation to publicly update or revise these forward-looking statements.
The following factors, in addition to those discussed under “Risk Factors” in our other filings with the SEC, including ourAnnual Report on Form10-K for the year ended December 31, 2017,2020 and in our other filings with the U.S. Securities and Exchange Commission (“SEC”), could cause actual results to differ materially from our current expectations expressed in forward-lookingforward looking statements:
| — | weak macroeconomic conditions |
| — | weak market conditions in our customers’ businesses |
| — | adverse changes in the price of, or demand for, commodities |
| — | changes in railroad operations, |
| — |
| — | availability of pipelines, trucks, and other alternative modes of transportation |
| — | changes in conditions affecting the aviation industry, including reduced demand for air travel, geographic exposure and customer concentrations |
| — | other operational or commercial needs or decisions of our customers |
| — | customers’ desire to buy, rather than lease, our transportation assets |
| 62 | GATX CORPORATION - 2021 Proxy Statement |
FORWARD-LOOKING STATEMENTS
| GATX CORPORATION - |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers, and persons who own more than 10% of our common stock, to file with the SEC and the NYSE reports of their ownership, and any changes in ownership, of our common stock. In addition, SEC regulations require these
persons to furnish us with copies of all such reports. Based solely on our review of the reports furnished to us, and written representations that no other reports were required, we believe that all Section 16(a) reports were timely filed in 2017.
20182021 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 61)66) may exercise their discretionary voting authority under the proxies they hold to vote in accordance with their best judgment on any such proposal.
20192022 Shareholder Proposals
Proposals Under SEC Rule14a-8
In order for a shareholder proposal to be considered for inclusion in our proxy materials for the 20192022 annual meeting of shareholders pursuant to SECRule 14a-8, the shareholder proposal must be received by the Corporate Secretary, GATX Corporation, 222 West Adams Street,233 South Wacker Drive, Chicago, Illinois 6060660606-7147 no later than November 19, 2018.13, 2021. Any such proposal may be included in next year’s proxy
statementProxy Statement only if it complies with ourBy-Laws and the rules and regulations promulgated by the SEC, includingRule 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 20192022 annual meeting of shareholders outside the processes of SEC Rule14a-8, the proposal must be received by the Corporate Secretary, GATX Corporation, 222 West Adams Street,233 South Wacker Drive, Chicago, Illinois 6060660606-7147 no earlier than December 31, 2018,24, 2021, and no later than January 30, 2019.23, 2022. The notice must contain, and be
and be accompanied by, all of the information as specified in ourBy-Laws. We recommend that any shareholder wishing to bring any item before an annual meeting of shareholders review ourBy-Laws, which are available on our website (www.gatx.com) in the Investor Relations section under “Corporate Governance”.Governance.”
20192022 Director Nominations
Director nominations by shareholders for consideration at the 20192022 annual meeting of shareholders must be received by the Governance Committee, c/o the Corporate Secretary, GATX Corporation, 222 West Adams Street,233 South Wacker Drive, Chicago, Illinois 6060660606-7147 no earlier
than December 31, 2018,24, 2021, and no later than January 30, 2019.
23, 2022. The notice must contain, and be accompanied by all information required by ourBy-Laws, the proxy rules, and applicable law.
| GATX CORPORATION - |
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 5, 2018February 26, 2021 (the “Record Date”“Record Date”) will be entitled to vote at the Annual Meeting. On that day, 37,805,98835,371,761 shares of common stock were issued and
and outstanding and eligible to vote. Each share is entitled to one vote on each matter presented at the Annual Meeting.
Who canHow do I attend the Virtual 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 arewere 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. If you are a shareholder of record, you will need to visit www.meetingcenter.io/220567690 and enter your 15-digit Control Number and the password to attend the virtual Annual Meeting. Your Control Number was provided in the proxy card you received, and the password is GATX2021.
Beneficial Owner of Shares Held in Street Name. If you hold your shares through a broker, bank or other nominee, you will need to register in advance to receive a Control Number and participate in the meeting. To register you must obtain a legal proxy, executed in your favor, from the broker, bank, or other nominee that holds your shares and submit proof of your legal proxy reflecting the number of shares of GATX stock you held as of the record date, along with your name and email address, to Computershare. Please forward the email from your record holder, or attach an image of your legal proxy to an email, to legalproxy@computershare.com. Requests for registration must be labeled as “Legal
Proxy” and be received no later than 5:00 p.m., Eastern Time, on April 20, 2021. You will receive a confirmation of your registration, with a Control Number, by email from Computershare. At the time of the meeting, go to www.meetingcenter.io/220567690 and enter your Control Number and the meeting password to attend the virtual Annual Meeting. The meeting password is GATX2021.
Attending as a Guest. Those without a Control Number may attend as guests, but they will not have the option to vote their shares or participate during the virtual Annual Meeting.
Technical Assistance. The virtual meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome and Safari) and devices (desktops, laptops, tablets and cell phones) running the most up-to-date version of applicable software and plugins. Participants should ensure that they have a strong WiFi connection wherever they intend to participate in the meeting. We encourage you to access the meeting prior to the start time. A link on the meeting page will provide further assistance should you need it or you may call 888-724-2416 or 781-575-2748.
How do I vote?
Shareholder of Record. If you are a shareholder of record, 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 virtual Annual Meeting and voting in person.online.
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 persononline at the Annual Meeting, you must first obtain a legal proxy issued in your name from the nominee that holds your shares.shares and register to attend the Annual Meeting as described above under “How do I attend the Virtual Annual Meeting?” – Beneficial Owners.
| GATX CORPORATION - 2021 Proxy Statement | 65 |
QUESTIONS AND ANSWERS ABOUT THE MEETING
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”“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, and (3) FOR the ratification of the Audit Committee’s appointment of Ernst & Young LLP as our independent registered public accounting firm for 2018.2021.
QUESTIONS AND ANSWERS ABOUT THE MEETING
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 anon-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 “brokernon-vote”.non-vote.”
Ratification of the Audit Committee’s appointment of Ernst & Young LLP as our independent registered public accounting firm for 20182021 (Proposal No. 3) is considered a “routine” matter. A bank, broker, or other nominee may generally vote on routine matters, and therefore, no brokernon-votes are expected to occur in connection with Proposal No. 3. The election of directors (Proposal No. 1) and the advisory vote on executive compensation (Proposal No. 2) 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, brokernon-votes may occur on Proposals 1 and 2.
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 and 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. Brokernon-votes and abstentions are counted only 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
virtually attending the meeting and voting in person.online. However, your attendance at the Virtual 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,233 South Wacker Drive, Chicago, Illinois 60606.60606-7147.
| 66 | GATX CORPORATION - 2021 Proxy Statement |
QUESTIONS AND ANSWERS ABOUT THE MEETING
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.
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 37,805,98835,371,761 shares of our common stock issued and outstanding on the Record Date are represented, invirtually
in person or by proxy, at the Annual Meeting. Brokernon-votes and abstentions will be counted for purposes of determining whether a quorum is present.
QUESTIONS AND ANSWERS ABOUT THE MEETING
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 brokernon-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 and 3 requires the affirmative vote of a majority of the shares presentvotes cast in personfavor of or represented by proxy and entitled to vote on that proposal atagainst the Annual Meeting.proposal.
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”“401(k) Plans”), you will receive a separate proxy card for any shares you hold in those plans (your “Plan Shares”“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 April 26, 2018.21, 2021. 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 yournon-Plan Shares as described above.
| GATX CORPORATION - 2021 Proxy Statement | 67 |
QUESTIONS AND ANSWERS ABOUT THE MEETING
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.
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.
QUESTIONS AND ANSWERS ABOUT THE MEETING
Where can I find the voting results of the Annual Meeting?
We will publish final voting results in a Current Report onForm 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
| GATX CORPORATION - |
| Exhibit A | GATX Corporation Director Independence Standard |
A director of the Company will not be considered “independent” if:
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. |
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.
| GATX CORPORATION - | A-1 |
| Exhibit B | Reconciliation ofNon-GAAP Financial Measures |
Non-GAAP Financial Measures
This Proxy Statement includes certain financial measures computed usingnon-GAAP components, as defined by the SEC. These measures are not in accordance with, or a substitute for, GAAP,U.S. generally accepted accounting principles (“GAAP”), and our financial measures may be different fromnon-GAAP financial measures used by other companies. We have provided a reconciliation of ournon-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 analyzingyear-to-year financial performance on a comparable basis and assessing trends.
| B-1 | GATX CORPORATION - |
EXHIBIT B RECONCILIATION OFNON-GAAP FINANCIAL MEASURES
Reconciliation
The following table shows our shareholders’ equity, excluding accumulated other comprehensive loss, as of December 31 (in millions):
| 2017 | 2016 | 2015 | 2014 | |||||||||||
Shareholders’ equity (GAAP) | $ | 1,792.7 | $ | 1,347.2 | $ | 1,280.2 | $1,314.0 | |||||||
Add: accumulated other comprehensive loss | 109.6 | 211.1 | 198.8 | 148.4 | ||||||||||
Less: impact of the Tax Cuts and Jobs Act of 2017 | (315.9 | ) | — | — | — | |||||||||
|
| |||||||||||||
Shareholders’ Equity, as adjusted (non-GAAP) | $ | 1,586.4 | $ | 1,558.3 | $ | 1,479.0 | $1,462.4 | |||||||
2020 | 2019 | 2018 | 2017 | |||||||||||
Shareholders’ Equity (GAAP)
|
$
|
1,957.4
|
|
$
|
1,835.1
|
|
$
|
1,788.1
|
|
$1,792.7
| ||||
Add: accumulated other comprehensive loss
|
| 137.5
|
|
| 163.6
|
|
| 164.6
|
|
109.6
| ||||
|
| |||||||||||||
Shareholders’ Equity, as adjusted (non-GAAP) (1)
|
$
|
2,094.9
|
|
$
|
1,998.7
|
|
$
|
1,952.7
|
|
$1,902.3
| ||||
The following tables show our net income, diluted earnings per share, and return on equity, excluding tax adjustments and other items, for the years ended December 31 (in millions, except per share data):
| Impact of Tax Adjustments and Other Items on Net Income: | 2017 | 2016 | 2015 | |||||||||
Net income (GAAP) | $ | 502.0 | $ | 257.1 | $ | 205.3 | ||||||
Adjustments attributable to consolidatedpre-tax income: | ||||||||||||
Railcar impairment at Rail North America (1) | — | 29.8 | — | |||||||||
Net (gain) loss on wholly owned Portfolio Management marine investments (2) | (1.8 | ) | 2.5 | 9.2 | ||||||||
Residual sharing settlement at Portfolio Management (3) | — | (49.1 | ) | — | ||||||||
Early retirement program (4) | — | — | 9.0 | |||||||||
|
| |||||||||||
Total adjustments attributable to consolidatedpre-tax income | $ | (1.8 | ) | $ | (16.8 | ) | $ | 18.2 | ||||
Income taxes thereon, based on applicable effective tax rate | $ | 0.7 | $ | 7.2 | $ | (6.9 | ) | |||||
Other income tax adjustments attributable to consolidated income: | ||||||||||||
Impact of the Tax Cuts and Jobs Act of 2017 (5) | (315.9 | ) | — | — | ||||||||
Foreign tax credit utilization (6) | — | (7.1 | ) | — | ||||||||
Income tax rate change (7) | — | — | 14.1 | |||||||||
|
| |||||||||||
Total other income tax adjustments attributable to consolidated income | $ | (315.9 | ) | $ | (7.1 | ) | $ | 14.1 | ||||
Adjustments attributable to affiliates’ earnings, net of taxes: | ||||||||||||
Net (gain) loss on Portfolio Management marine affiliate (2) | — | (0.6 | ) | 11.9 | ||||||||
Income tax rate changes (8) | — | (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) | $ | 185.0 | $ | 235.9 | $ | 234.9 | ||||||
|
| |||||||||||
| Impact of Tax Adjustments and Other Items on Diluted Earnings Per Share: | 2017 | 2016 | 2015 | |||||||||
Diluted earnings per share (GAAP) | $ | 12.75 | $ | 6.29 | $ | 4.69 | ||||||
Adjustments attributable to consolidated income, net of taxes: | ||||||||||||
Railcar impairment at Rail North America (1) | — | 0.47 | — | |||||||||
Net (gain) loss on wholly owned Portfolio Management marine investments (2) | (0.03 | ) | 0.04 | 0.13 | ||||||||
Residual sharing settlement at Portfolio Management (3) | — | (0.74 | ) | — | ||||||||
Early retirement program (4) | — | — | 0.13 | |||||||||
Impact of the Tax Cuts and Jobs Act of 2017 (5) | (8.02 | ) | — | — | ||||||||
Foreign tax credit utilization (6) | — | (0.17 | ) | — | ||||||||
Income tax rate change (7) | — | — | 0.32 | |||||||||
Adjustments attributable to affiliates’ earnings, net of taxes: | ||||||||||||
Net (gain) loss on Portfolio Management marine affiliate (2) | — | (0.02 | ) | 0.27 | ||||||||
Income tax rate changes (8) | — | (0.10 | ) | (0.18 | ) | |||||||
|
| |||||||||||
Diluted earnings per share, excluding tax adjustments and other items(non-GAAP)* | $ | 4.70 | $ | 5.77 | $ | 5.37 | ||||||
|
| |||||||||||
* sum of individual components may not be additive due to rounding. | ||||||||||||
Impact of Tax Adjustments and Other Items on Net Income. | 2020 | 2019 | 2018 | |||||||||
Net income (GAAP)
|
$
|
151.3
|
|
$
|
211.2
|
|
$
|
211.3
|
| |||
Less: Net income from discontinued operations (GAAP) | 1.1 | 30.4 | 20.8 | |||||||||
|
| |||||||||||
Net income from continuing operations (GAAP) | $ | 150.2 | $ | 180.8 | $ | 190.5 | ||||||
Adjustments attributable to pre-tax income from continuing operations:
| ||||||||||||
Cost attributable to the closure of a maintenance facility at Rail International (2)
|
|
—
|
|
|
—
|
|
|
9.5
|
| |||
|
| |||||||||||
Total adjustments attributable to pre-tax income from continuing operations
|
$
|
—
|
|
$
|
—
|
|
$
|
9.5
|
| |||
Income taxes thereon, based on applicable effective tax rate | $ | — | $ | — | $ | (3.1 | ) | |||||
Other income tax adjustments attributable to income from continuing operations:
| ||||||||||||
Income tax rate changes (3)
|
|
—
|
|
|
(2.8
|
)
|
|
—
|
| |||
Impact of the Tax Cuts and Jobs Act of 2017 (“Tax Act”) (4)
|
|
—
|
|
|
—
|
|
|
(16.7
|
)
| |||
Foreign tax credit utilization (5)
|
|
—
|
|
|
—
|
|
|
(1.4
|
)
| |||
|
| |||||||||||
Total other income tax adjustments attributable to income from continuing operations
|
$
|
—
|
|
$
|
(2.8
|
)
|
$
|
(18.1
|
)
| |||
Adjustments attributable to affiliates’ earnings from continuing operations, net of taxes:
| ||||||||||||
Income tax rate changes (6)
|
|
12.3
|
|
|
—
|
|
|
—
|
| |||
|
| |||||||||||
Total adjustments attributable to affiliates’ earnings, net of taxes
| $
| 12.3
|
|
$
|
—
|
|
$
|
—
|
| |||
|
| |||||||||||
Net income from continuing operations, excluding tax adjustments and other items (non-GAAP)
|
$
|
162.5
|
|
$
|
178.0
|
|
$
|
178.8
|
| |||
|
| |||||||||||
Adjustments attributable to discontinued operations, net of taxes:
| ||||||||||||
Net casualty gain at ASC (7)
|
|
—
|
|
|
(8.1
|
)
|
|
—
|
| |||
Impact of the Tax Act (4)
|
|
—
|
|
|
—
|
|
|
0.2
|
| |||
|
| |||||||||||
Total adjustments attributable to discontinued operations, net of taxes
|
$
|
—
|
|
$
|
(8.1
|
)
|
$
|
0.2
|
| |||
|
| |||||||||||
Net income from discontinued operations, excluding tax adjustments and other items (non-GAAP)
|
$
|
1.1
|
|
$
|
22.3
|
|
$
|
21.0
|
| |||
|
| |||||||||||
Net income from consolidated operations, excluding tax adjustments and other items (non-GAAP)
|
$
|
163.6
|
|
$
|
200.3
|
|
$
|
199.8
|
| |||
|
| |||||||||||
| GATX CORPORATION - | B-2 |
EXHIBIT B RECONCILIATION OFNON-GAAP FINANCIAL MEASURES
| Return on Equity: | 2017 | 2016 | 2015 | |||||||||
Return on Equity (GAAP) | 32.0 | % | 19.6 | % | 15.8 | % | ||||||
Return on Equity, excluding tax adjustments and other items(non-GAAP) (9) | 13.1 | % | 18.0 | % | 18.1 | % | ||||||
Return on Equity, applicable for performance share plan measures(non-GAAP) (10) | 11.8 | % | 16.3 | % | 13.1 | % | ||||||
Impact of Tax Adjustments and Other Items on Diluted Earnings Per Share: | 2020 | 2019 | 2018 | |||||||||
Diluted earnings per share from consolidated operations (GAAP)
|
$
|
4.27
|
|
$
|
5.81
|
|
$
|
5.52
|
| |||
Less: Diluted earnings per share from discontinued operations (GAAP)
|
|
0.03
|
|
|
0.84
|
|
|
0.54
|
| |||
|
| |||||||||||
Diluted earnings per share from continuing operations (GAAP)
|
$
|
4.24
|
|
$
|
4.97
|
|
$
|
4.98
|
| |||
Adjustments attributable to income from continuing operations, net of taxes:
|
| |||||||||||
Cost attributable to the closure of a maintenance facility at Rail International (2)
|
|
—
|
|
|
—
|
|
|
0.17
|
| |||
Income tax rate changes (3)
|
|
—
|
|
|
(0.08
|
)
|
|
—
|
| |||
Impact of the Tax Act (4)
|
|
—
|
|
|
—
|
|
|
(0.44
|
)
| |||
Foreign tax credit utilization (5)
|
|
—
|
|
|
—
|
|
|
(0.04
|
)
| |||
Adjustments attributable to affiliates’ earnings from continuing operations, net of taxes:
| ||||||||||||
Income tax rate changes (6)
|
|
0.35
|
|
|
—
|
|
|
—
|
| |||
|
| |||||||||||
Diluted earnings per share from continuing operations, excluding tax adjustments and other items (non-GAAP)
|
$
|
4.59
|
|
$
|
4.89
|
|
$
|
4.67
|
| |||
|
| |||||||||||
Adjustments attributable to discontinued operations, net of taxes:
| ||||||||||||
Net casualty gain at ASC (7)
|
|
—
|
|
|
(0.22
|
)
|
|
—
|
| |||
Impact of the Tax Act (4)
|
|
—
|
|
|
—
|
|
|
0.01
|
| |||
|
| |||||||||||
Diluted earnings per share from discontinued operations, excluding tax adjustments and other items (non-GAAP)
|
$
|
0.03
|
|
$
|
0.62
|
|
$
|
0.55
|
| |||
|
| |||||||||||
Diluted earnings per share from consolidated operations, excluding tax adjustments and other items (non-GAAP)
|
$
|
4.62
|
|
$
|
5.51
|
|
$
|
5.22
|
| |||
|
| |||||||||||
Return on Equity:
|
2020
|
2019
|
2018
| |||||||||
Return on Equity (GAAP)
|
|
8.0
|
%
|
|
11.7
|
%
|
|
11.8
|
%
| |||
Return on Equity (non-GAAP) (8)
|
|
10.5
|
%
|
|
13.5
|
%
|
|
13.6
|
%
| |||
Return on Equity, applicable for performance share plan measures (non-GAAP) (9)
|
|
7.4
|
%
|
|
10.7
|
%
|
|
11.0
|
%
| |||
| (1) |
|
| (2) |
|
| (3) |
|
| (4) |
|
Benefits attributable to the utilization of foreign tax |
| (6) | Deferred income tax adjustment due to the elimination of a previously announced corporate income tax rate reduction in the United Kingdom. |
| (7) |
|
| (8) |
Return on |
Return on |
| B-3 |
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.
| GATX CORPORATION - |
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qGATX VOTE Your vote matters – here’s how to vote! You may vote online or by phone instead of mailing this card. Votes submitted electronically and via telephone must be received by 11:59 p.m. Eastern Time, on April 22, 2021 (for registered shares) and 8:00 a.m. Eastern Time, on April 21, 2021 (for Plan Shares, as defined in the Proxy Statement). Online Go to www.envisionreports.com/GATX or scan the QR code – login details are located in the shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada. Save paper, time and money! Sign up for electronic delivery at www.envisionreports.com/GATX Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. 2021 Annual Meeting Proxy Card IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION,VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
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NOTE: Please sign exactly as namename(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or guardian,custodian, please give full title as such.title. Date (mm/dd/yyyy) – Please print date below. Signature 1 – Please keep signature within the box. Signature 2 – Please keep signature within the box. 1 P C F 03DYNC
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The 2021 Annual Meeting of Shareholders of GATX Corporation will be held on Friday, April 23, 2021 at 9:00 a.m. CT, virtually via live audio webcast at www.meetingcenter.io/220567690. To access the virtual meeting, you must have the information that is printed in the shaded bar located on the reverse side of this form. The password for this meeting is – GATX 2021. Important notice regarding the internet availability of proxy materials for the Annual Meeting of Shareholders.The Proxy Statement and the 2017 Annual Report to Shareholders arematerial is available at: www.envisionreports.com/GATX
qGATX. Small steps make an impact. Help the environment by consenting to receive electronic delivery. Sign up at www.envisionreports.com/GATX. IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION,VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
Proxy — GATX Corporation
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
2021 Annual Meeting of Shareholders Proxy Solicited by Board of Directors for Annual Meeting – April 30, 2018
THIS PROXY IS SOLICITED ON BEHALF OF GATX CORPORATION’S BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints23, 2021 Brian A. Kenney, Thomas A. Ellman, and Deborah A. Golden, and Robert C. Lyons, and eachor any of them, the undersigned’s true and lawful agents and proxieseach with fullthe power of substitution, in each,are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Shareholders of GATX CORPORATIONCorporation to be held via live audio webcast at The Northern Trust Company, 50 South LaSalle Street, Sixth Floor Assembly Room, Chicago, Illinois 60603www.meetingcenter.io/220567690 on Monday,Friday, April 30, 2018,23, 2021, at 12:9:00 p.m.a.m. Central Time, andor at any postponement or adjournment thereof, on all matters coming before said meeting.
This proxy, when properly executed and returned, will be voted in the manner directed hereinthereof. Shares represented by the undersigned shareholder. If this proxy is properly executed and returned but no direction is made, this proxy will be voted as directed by the shareholder. If no such directions are indicated, the Proxies will have authority to vote FOR all director nominees in proposal 1the election of the Board of Directors and FOR proposalsitems 2 and- 3. Whether or not direction is made, this proxy, when properly executed, will be voted inIn their discretion, the discretion of the proxy holdersProxies are authorized to vote upon such other business as may properly come before the Annual Meeting of Shareholders or any adjournment or postponement thereof.
RECEIPT IS HEREBY ACKNOWLEDGED OF THE GATX CORPORATION NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT
(Continued andmeeting. (Items to be marked, dated, and signed,voted appear on the otherreverse side.) C Non-Voting Items Change of Address - Please print new address below. Comments - Please print your comments below.
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q PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
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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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Important notice regarding the internet availability of proxy materials for the Annual Meeting of Shareholders.The Proxy Statement and the 2017 Annual Report to Shareholders are available at: www.edocumentview.com/GATX
q PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
Proxy — GATX Corporation
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
April 30, 2018
THIS PROXY IS SOLICITED ON BEHALF OF GATX CORPORATION’S BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Brian A. Kenney, Deborah A. Golden, and Robert C. Lyons, and each of them, the undersigned’s true and lawful agents and proxies with full power of substitution in each, to represent the undersigned at the Annual Meeting of Shareholders of GATX CORPORATION to be held at The Northern Trust Company, 50 South LaSalle Street, Sixth Floor Assembly Room, Chicago, Illinois 60603 on Monday, April 30, 2018, at 12:00 p.m. Central Time, and at any adjournment thereof, on all matters coming before said meeting.
This proxy, when properly executed and returned, will be voted in the manner directed herein by the undersigned shareholder. If this proxy is properly executed and returned but no direction is made, this proxy will be voted FOR all director nominees in proposal 1 and FOR proposals 2 and 3. Whether or not direction is made, this proxy, when properly executed, will be voted in the discretion of the proxy holders upon such other business as may properly come before the Annual Meeting of Shareholders or any adjournment or postponement thereof.
RECEIPT IS HEREBY ACKNOWLEDGED OF THE GATX CORPORATION NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT
(Continued and to be marked, dated, and signed, on the other side.)
