2 0 1 92 2 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 29, 201922, 2022
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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| ☒ | Definitive Proxy Statement |
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| ☐ | Soliciting Material Pursuant to§240.14a-12 |
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 1 92 2 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 29, 201922, 2022
March 18, 201911, 2022
Dear Shareholders:
On behalf of the Board of Directors, I invite you to attend GATX Corporation’s 20192022 Annual Meeting of Shareholders on Monday,Friday, April 29, 2019,22, 2022 at 12:9:00 p.m.a.m. Central Time, atTime. Due to the continuing impact of the COVID-19 pandemic on public health, and out of concern for the health and safety of our corporate headquarters located at 233 South Wacker Drive, 52nd Floor, Chicago, Illinois.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 https://meetnow.global/MMHSFKX. 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 20182021 annual report to our shareholders.
Our financial resultsIn 2021, GATX’s net income from continuing operations was $143.1 million, or $3.98 per diluted share.1 We increasingly outperformed our original earnings expectations as we moved through the year. That was especially true for Rail North America. Absolute lease rates have increased for six consecutive quarters, and that drove our Lease Pricing Index to be virtually flat at negative 0.7% in 2018 were significantly betterthe 4th quarter. This pricing strength was driven by solid demand, our diversified fleet composition, and excellent execution by our commercial team. High lease renewal success drove lower fleet churn than expected, and combined with fewer railroad repairs and our ongoing efforts to increase the share of railcar repairs in our owned network, we experienced much lower maintenance cost than originally expected. The last factor that drove strength in Rail North America was high asset values—not only did the railcars that we sold in the secondary market realize the values that we originally anticipated. Capitalizing on an improved railcar leasing environment inplanned, but continued high scrap prices also drove strong scrap gains throughout 2021 as well. Thus, it was a very strong year for Rail North America as its segment profit increased by $58 million, or over 25% from the year prior.
Turning to our International Rail businesses, we realized higher fleet utilization,expected a higher renewal success rate,significant increase in profitability in 2021, and higher lease renewal rates versus our original expectations. Maintenance expensethey delivered as planned, increasing their segment profit by over $21 million, or 26% from the year prior. That performance was also lower than anticipated in 2018 due to fewer repairs performeddriven by railroadsvery strong underlying markets and increasing earnings from the significant investments we have made over the last few years, as well as fewernot having to face the foreign exchange headwinds they experienced in 2020.
Within Portfolio Management, pre-tax earnings in our Rolls-Royce & Partners Finance joint venture was down nearly $40 million from the prior year, just as we anticipated. That joint venture continues to operate in a difficult market for long-haul air travel, and the drop in profitability was driven by much lower asset remarketing gains relative to 2020. Lastly, the acquisition of Trifleet, our tank qualifications. Whilecontainer leasing company, also outperformed our expectations as the worldwide tank container market strengthened throughout the year.
Before I close the discussion on 2021, I want to highlight that we saw broad increases in market lease rates in 2018, revenue was still pressured as new lease rates remained below rates on expiring leases.
We executed on our strategy to invest aggressively in cost-advantaged railcars. In 2018, we entered into two long-term railcar supply agreements and invested more than $730$1 billion again in 2021. $360 million in our North American fleet, including the acquisition of a competitor’s portfolio of approximately 3,100 railcars. We also continuedthat total was for railcar deliveries that we were obligated to capitalize on strong North American secondary market demand by optimizing the fleet through railcar sales, generating significant remarketing income. In addition, our international railcar leasing business outperformed our expectations and achieved record high fleet utilization, while our American Steamship subsidiary significantly increased its profitability by operating its fleet more efficiently and capitalizing on late season demand opportunities. Lastly, our aircraft spare engine leasing joint ventures with Rolls-Royce produced another year of strong financial results.
Our outstanding operating performance duringtake coming into the year yielded excellent financial results as GATX:
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returned more than $184from our Committed Supply Agreements in Rail North America. Thus, we were able to close over $770 million of other economically attractive investment opportunities in 2021. That was extraordinary investment performance by our team, especially given the sharp rise in new asset prices in 2021 across our businesses. In order to amortize the higher asset cost, our shareholders through payment of dividendsteam had to secure customers in advance and share repurchases
invested over $900 millionhave them commit to higher lease rates, and in many cases, longer lease terms. Their success in doing so is not only a sign that our businesses around the globe.team has strong customer relationships, but it is also a sign that there is strong demand for our assets across our markets. In summary, it was a strong year financially for GATX compared to original expectations.
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 29, 2019.22, 2022.
The Company’s Proxy Statement for the 20192022 Annual Meeting of Shareholders, the Annual Report to Shareholders for the year ended December 31, 2018,2021, and the Company’s Annual Report onForm 10-K for the fiscal year ended December 31, 2018,2021, are available at:www.envisionreports.com/GATX.
| 1 | Our |
Notice of Annual Meeting of Shareholders |
GATX 20192022 Annual Meeting of Shareholders
Date: | Items of Business:
• Election of 9 Directors
• 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 28, 201921, 2022
Participants in GATX 401(k) Plans—8:00 a.m. Eastern Time on April 25, 2019.20, 2022
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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: |
By Order of the Board of Directors,
Executive Vice President, General Counsel and
Corporate Secretary
| GATX CORPORATION - | i |
TABLE OF CONTENTS
| 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 29, 201922, 2022 (the “Annual Meeting”“Annual Meeting”). This Proxy Statement and accompanying proxy card are being mailed to shareholders on or about March 18, 2019.11, 2022.
This summary highlightsincludes information includedfound elsewhere in this Proxy Statement and does not contain all of the information you should consider in voting. Please read this Proxy Statement carefully before voting your shares.
Annual Meeting of Shareholders
When g April 29, 2019, 12:22, 2022, 9:00 p.m.a.m. Central Time
Where g GATX Corporation,The meeting will be held virtually via a live audio
233 South Wacker Drive, 52nd Floor, Chicago, Illinoiswebcast at https://meetnow.global/MMHSFKX
You may vote if you were a shareholder of record at the close of business on March 4, 2019.February 25, 2022. 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 | ||||||||||||
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Election of directors
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Election of directors
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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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Ratification of independent registered public accounting firm
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Ratification of independent registered public accounting firm
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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 65)69)
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 65.69.
Questions and Answers (page 65)69)
We encourage you to review theQuestions and Answers about the Annual Meeting beginning on page 6569 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 7)11)
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 | |||
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| Majority Voting for Directors | ✓ | Risk Oversight by Full Board and Committees | |||
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| Resignation Policy for Directors who Fail to Receive a Majority Vote | ✓ | Annual Board and Committee Self-Evaluations | |||
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| ✓ | No Poison Pill | ||||
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| Diversity of Experience and Skills Among Directors | ✓ | Anti-Hedging/Anti-Pledging Policies for Directors, Officers, and Employees | |||
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| Regular Director Skills Assessment and Board Succession Planning | ✓ | Share Ownership Requirements for Directors and Executive Officers | |||
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| Independent Lead Director | ✓ | Clawback Policy for Equity Awards and Incentive Compensation | |||
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| Independent Audit, Compensation, and Governance Committees | ✓ | Annual | |||
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| Executive Sessions of Independent Directors After Each Board Meeting | ✓ | Active Shareholder Engagement Program | |||
DIRECTOR NOMINEES (PAGE 20)22)
The following table provides summary information about each director nominee. Casey J. Sylla, who currently serves on the Board, will not be standing forre-election and will be retiring at the 2019 Annual Meeting. GATX is grateful to Mr. Sylla for his 14 years of dedicated and valuable service to the Company.nominee:
Name
| Age
| Director Since
| Principal Occupation
| Committee
| Other Public Company
| Age | Director Since | Principal Occupation | Committee Memberships1 | Other Public Company | ||||||||||
Diane M. Aigotti* | 54 | 2016 | Executive Vice President, Managing Director and Chief Financial Officer, | A, G | 0 | 57 | 2016 | Retired; Former Executive Vice President, Managing Director and Chief Financial Officer, | A, G | 0 | ||||||||||
Anne L. Arvia* | 55 | 2009 | Executive Vice President, Banking and Financial Services, The Auto Club Group; President and Chief Executive Officer, The Auto Club Trust | A (Chair), G | 0 | 58 | 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* | 70 | 2007 | Retired; Former President, Commercial Operations International, The Gillette Company | C, G | 0 | |||||||||||||||
Brian A. Kenney | 59 | 2004 | Chairman, President and Chief Executive Officer, GATX Corporation | None | 1 | 62 | 2004 | Chairman, President and Chief Executive Officer, GATX Corporation | None | 0 | ||||||||||
Robert C. Lyons | 58 | — | Executive Vice President and President, Rail North America, GATX Corporation | — | 1 | |||||||||||||||
James B. Ream* | 63 | 2008 | Former Senior Vice President – Operations, American Airlines | LD | 0 | 66 | 2008 | Retired; Former Senior Vice President – Operations, American Airlines | LD, C, G | 0 | ||||||||||
Robert J. Ritchie* | 74 | 2011 | Retired; Former Chief Executive Officer, Canadian Pacific Railway Company | A, G | 0 | |||||||||||||||
Adam L. Stanley* | 48 | 2019 | Chief Experience Officer, Teach for America | A, G | 0 | |||||||||||||||
David S. Sutherland* | 69 | 2007 | Retired; Former President and Chief Executive Officer, IPSCO, Inc. | C (Chair), G | 2 | 72 | 2007 | Retired; Former President and Chief Executive Officer, IPSCO, Inc. | C (Chair) | 2 | ||||||||||
Stephen R. Wilson* | 70 | 2014 | Retired; Former Chairman, President and Chief Executive Officer, CF Industries Holdings, Inc. | A, C | 1 | 73 | 2014 | Retired; Former Chairman, President and Chief Executive Officer, CF Industries Holdings, Inc. | A, C | 0 | ||||||||||
Paul G. Yovovich* | 65 | 2012 | President, Lake Capital | C, G (Chair) | 0 | 68 | 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
2018 PERFORMANCE AND KEY ACCOMPLISHMENTSEXECUTIVE COMPENSATION (PAGE 31)
We encourage you to review the Compensation Discussion and Analysis beginning on page 31 for information about our executive compensation program.
OUR EXECUTIVE COMPENSATION PROGRAM SUPPORTS OUR LONG-TERM FOCUS THROUGH INDUSTRY CYCLES
GATX is in the business of owning and leasing long-lived transportation assets. We are the leading global railcar lessor, leasing railcars in North America, Europe, and Asia. Most of our railcar leases are service-intensive leases under which we provide maintenance, engineering, administrative, and a variety of other value-added services. Railcar leasing accounted for 94% of our 2021 revenues.
Our financialThe Railcar Leasing Market is Highly Cyclical. The railcar leasing market in which GATX operates is extremely cyclical. Many of our rail customers also operate in cyclical markets, such as the petroleum, chemical, fertilizer, food/agricultural, transportation, and construction industries. This cyclical demand, combined with changing macroeconomic conditions and swings in railcar supply, results in 2018 were significantly better thansignificant volatility in industry-wide railcar utilization and lease rates over time.
We Manage Our Business With a Long-Term View. Most of our operating assets typically have economic useful lives of 20 to 40 years. We proactively manage our business with a long-term view, which includes buying, leasing, maintaining, and selling long-lived assets into constantly changing business conditions over decades. It is critical that we originally anticipated. Capitalizingmake disciplined investment decisions that match the long lives of our assets. Through multiple industry and economic cycles, we have maintained a long-term focus on an improvedinvesting while executing numerous strategic initiatives to enhance our competitive advantage.
Our Strategy Varies Depending on Position in Market Cycle. Our strategy of emphasizing asset growth and asset return at different points in the railcar leasing environmentmarket cycle enables GATX to generate strong long-term shareholder return.
| — | In stronger railcar markets, we focus on increasing lease rates and lengthening lease terms to lock in attractive lease revenue as long as possible. At the same time, we may de-emphasize new railcar investment due to high railcar prices unless we identify assets that will earn correspondingly higher lease rates with long lease terms. |
| — | Conversely, in weaker markets, when railcar prices tend to be lower, we seek to increase railcar investment on favorable terms. We also reduce lease rates to maintain asset utilization and shorten lease terms to position us to capture value when lease rates improve. |
Our Executive Compensation Program Supports This Long-Term Cyclical Approach and Strategy. Our executive compensation program is designed and managed by our Compensation Committee to motivate and retain management through each stage of the business cycle, including in North America, we realized higher fleet utilization, a higher renewal success rate,both strong and higher lease renewal rates versusweak railcar leasing markets. The Committee sets goals intended to align executive compensation with the appropriate achievement of our original expectations. We executed on our strategy to invest aggressively in cost-advantaged railcars, signing two long-term supply agreements for a totaldual goals of over 12,450 railcars to be delivered through 2023growth and acquiring a
competitor’s portfolio of approximately 3,100 railcars. We also capitalized on strong North American secondary market demand by optimizing the fleet through railcar sales, generating significant remarketing income. We continue to execute our strategy through allreturn 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 three-year average return on equity and three-year cumulative investment volume as the performance measures in our long-term incentive plans. The Committee recognizes that our growth, investment and returns will differ at various points in the cycle and deliver against keysets 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.
LONG-TERM PERFORMANCE LED BY OUR CEO
At the close of the 2022 Annual Meeting of Shareholders, Brian Kenney will retire as GATX’s Chief Executive Officer (“CEO”) after 17 years. During his tenure, we have:
Exited non-core businesses to focus on opportunities where GATX had the greatest competitive advantage—leasing long-lived, widely used transportation assets which we uniquely understand and where we provide valuable services in connection with those assets.
| GATX CORPORATION - 2022 Proxy Statement | 3 |
PROXY SUMMARY
Invested counter-cyclically by capitalizing on weak market conditions to acquire assets at economically attractive valuations.
Avoided chasing short-term trends with long-lived assets; for example, during the energy boom in 2013-2014 we remained disciplined with our railcar investments, which positioned us well to weather the down-cycle that followed.
Increased the percentage of service events performed in Rail North America’s wholly owned repair network, where we believe our safety, quality, delivery, and cost metrics we useare superior.
Expanded into international and emerging markets by leveraging our knowledge and expertise in our compensation plans. railcar design and engineering.
STOCK PERFORMANCE AND TOTAL SHAREHOLDER RETURN (TSR)
The tablechart below shows the cumulative return to shareholders of GATX relative to several major stock market indices over Mr. Kenney’s tenure. A $100 investment in GATX on December 31, 2004, with dividends reinvested, would be valued at $566 on December 31, 2021, outperforming all three major indices shown below.
| 4 | GATX CORPORATION - 2022 Proxy Statement |
PROXY SUMMARY
STRONG 2021 FINANCIAL AND OPERATIONAL RESULTS IN A WEAK LEASING MARKET
Leasing Market Continued in a Weakened Position in 2021. Entering 2021, the North American railcar leasing market remained in a weakened position due to a significant industry-wide oversupply of railcars. We were facing lower rates on lease renewals and intense competitive pressures threatened fleet utilization. There was uncertainty with respect to continuing adverse impacts related to COVID-19 and whether a sustained recovery would occur in 2021, primarily in international markets where another round of lockdowns had recently commenced. The pandemic’s most profound negative impact on our business continued to be on our aircraft spare engine leasing business due to the ongoing, significant reduction in global air travel.
| • | Strong Total Shareholder Return Despite Challenging Environment. In this challenging environment, we executed our strategic priorities and delivered strong financial results, including a one-year total shareholder return of 27.9%.1 |
Strong 2021 Financial and Operational Results. Set forth below is a summary of our key financial and operational performance over the past three years (2016-2018):achievements during 2021 despite operating in a weakened leasing market:
| 1 | Total shareholder return calculation assumes dividends are reinvested. |
| 2 | Amounts in these charts are based on net income, excluding tax adjustments and other items, and are non-GAAP financial measures. 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. |
| 3 | Reflects continuing operations only. |
| 4 | Operational data in the charts relates to our Rail North America segment. |
| 5 | Excludes boxcars. |
| GATX CORPORATION - 2022 Proxy Statement | 5 |
PROXY SUMMARY
THE CHART ABOVE ILLUSTRATES THE FOLLOWING KEY ACHIEVEMENTS DURING 2021:
Strong Earnings | • Net income from continuing operations of $143.1 million ($182.2 million excluding tax adjustments and other items).1 • Diluted earnings per share from continuing operations of $3.98 ($5.06 excluding tax adjustments and other items).1 • Return on equity of 7.2% (11.0% excluding tax adjustments and other items).1 | |
Excellent Operating Performance | • Protected our maintenance employees, who are deemed essential employees, through the enhancement of strict COVID-19 protocols at our facilities. Managed our employees’ actual and potential exposure to COVID-19 to minimize transmission and offered vaccine incentives and benefits. Protected our office employees through connected but remote work. • Capitalized on difficult market conditions by investing over $1.0 billion in attractively priced, long-lived transportation assets for the second consecutive year. • Achieved railcar lease utilization of 98-100% across our rail businesses. • Achieved high renewal success rates for our railcar fleets, which resulted in lower fleet churn and reduced maintenance expense incurred in preparing railcars for new customers. • Reduced railcar maintenance expense by continuing to increase the percentage of railcar repairs performed in Rail North America’s wholly-owned network of shops, where we believe our safety, quality, delivery, and cost metrics are superior. • Further optimized our North American rail fleet through selective divestitures and scrapping. • Continued expansion and diversification of the railcar fleets at GATX Rail Europe and GATX Rail India, despite an extremely challenging pandemic year. • Invested $350 million directly in aircraft spare engines, capitalizing on the downturn in aerospace to add attractive assets to our portfolio. • Made record tank container investments at Trifleet, further expanding our global transportation asset base. | |
Returned Cash to Shareholders | • Increased our dividend for the 11th consecutive year to $2.00 (annualized) per share, completing our 103rd year of uninterrupted dividends. |
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PROXY SUMMARY
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| GATX CORPORATION - |
PROXY SUMMARY
OUR 2021 EXECUTIVE COMPENSATION (PAGE 30)PROGRAM REFLECTED OUR PAY FOR PERFORMANCE PHILOSOPHY
Railcar leasing isSubstantial Majority of 2021 Pay Aligned with Performance. We design our core business, accounting for approximately 85% of our 2018 revenue. Our rail customers operate 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 manage our business with a long-term view, which includes buying, leasing, maintaining, and selling railcars in these constantly changing business conditions over decades.
Our compensationpay 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.
Our compensation plans are directly linked to our financial and operatingpositive Company performance and creationalign with shareholder interests by having a significant portion of compensation composed of performance-based and long-term shareholder value. Approximately 80%incentive awards. As shown in the charts below, 84% of our Chief Executive Officer’sCEO’s 2021 total target compensation and approximately 65%71% of the 2021 total target compensation for our other named executive officers’ compensation is performance based and not guaranteed. We encourage you to readofficers listed in the 2021 Summary Compensation Discussion and Analysis startingtable (our “NEOs”) on page 3051 were tied to annual and long-term incentives based on Company performance relative to objective, quantifiable financial goals or, with respect to stock options, will only have value if our stock price increases.
Note: The percentages in the charts above reflect the base salary and incentive targets in effect for more details regardingthe NEOs for 2021, and thus are not intended to match amounts shown in the Summary Compensation Table or the Grant of Plan-Based Awards Table on pages 51 and 52, respectively.
| • | Rigorous Incentive Targets. Our Compensation Committee carefully considered the adverse market conditions affecting our business and set performance goals that we determined would be appropriately rigorous and difficult to achieve given the challenging market. Annual incentive awards for our NEOs are based on net income objectives. Long-term incentives in the form of performance shares are earned based on achievement of two equally weighted measures of the three-year average return on equity (return measure) and the three-year cumulative investment volume (growth measure). Please see Compensation Discussion & Analysis – Performance Measures, Goal Setting, and Pay-for-Performance Alignment on page 40 for more information about how the Compensation Committee establishes our annual and long-term performance measures. |
No Adjustments to Performance Metrics or Achievement Levels. Our Compensation Committee did not adjust performance achievement levels or reduce goals tied to corporate performance under any of the outstanding incentive plans, including the 2021 annual incentive plan and the outstanding performance share plans, to account for adverse impacts of the COVID-19 pandemic on our business segments.
Market Data Considered in Designing Competitive Compensation Program. Our Compensation Committee also reviewed market compensation levels and program design to provide a frame of reference for comparison in designing and setting competitive 2021 executive compensation commensurate with market, Company, and NEO performance, and the alignmentneed to retain executive officers of our executive compensation with our performanceoutstanding ability and long-term shareholder value.potential.
Executive Compensation Snapshot
Name and Principal Position
| Year
| Salary
| Stock
| Option
| Non-Equity
| Change in
| All Other
| Total ($)
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(a)
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| (c)
| (e)
| (f)
| (g)
| (h)
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Brian A. Kenney | 2018 | 976,500 | 1,790,795 | 1,755,880 | 1,260,857 | 0 | 8,250 | 5,792,282 | ||||||||||||||||||||||||
Chairman of the Board, | 2017 | 956,500 | 1,535,493 | 1,571,667 | 780,695 | 1,223,234 | 8,100 | 6,075,689 | ||||||||||||||||||||||||
President and Chief | 2016 | 956,500 | 1,496,083 | 1,512,126 | 1,071,854 | 1,270,477 | 7,950 | 6,314,990 | ||||||||||||||||||||||||
Executive Officer | ||||||||||||||||||||||||||||||||
Thomas A. Ellman |
| 2018 |
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| 493,333 |
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| 802,344 |
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| 393,597 |
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| 445,893 |
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| 0 |
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| 8,250 |
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| 2,143,417 |
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Executive Vice President | 2017 | 460,000 | 358,486 | 366,722 | 262,816 | 477,646 | 8,100 | 1,933,770 | ||||||||||||||||||||||||
and Chief Financial Officer |
| 2016 |
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| 455,000 |
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| 306,819 |
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| 310,464 |
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| 305,924 |
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| 349,212 |
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| 7,950 |
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| 1,735,369 |
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Robert C. Lyons |
| 2018 |
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| 536,300 |
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| 831,633 |
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| 422,023 |
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| 484,728 |
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| 0 |
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| 8,250 |
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| 2,282,934 |
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Executive Vice President | 2017 | 525,300 | 397,638 | 407,469 | 300,125 | 614,748 | 8,100 | 2,253,380 | ||||||||||||||||||||||||
and President, Rail | 2016 | 523,583 | 378,527 | 382,536 | 410,709 | 511,602 | 7,950 | 2,214,907 | ||||||||||||||||||||||||
North America | ||||||||||||||||||||||||||||||||
Deborah A. Golden |
| 2018 |
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| 439,700 |
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| 294,979 |
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| 288,638 |
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| 340,644 |
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| 48,154 |
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| 8,250 |
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| 1,420,365 |
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Executive Vice President, | 2017 | 430,700 | 240,418 | 246,422 | 210,922 | 354,049 | 8,100 | 1,490,611 | ||||||||||||||||||||||||
General Counsel and | 2016 | 429,300 | 234,718 | 237,006 | 288,643 | 325,872 | 7,950 | 1,523,489 | ||||||||||||||||||||||||
Corporate Secretary | ||||||||||||||||||||||||||||||||
Paul F. Titterton |
| 2018 |
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| 397,424 |
|
| 579,890 |
|
| 177,119 |
|
| 267,384 |
|
| 0 |
|
| 8,250 |
|
| 1,430,067 |
| ||||||||
| Senior Vice President and Chief Operating Officer, | ||||||||||||||||||||||||||||||||
Rail North America | ||||||||||||||||||||||||||||||||
|
|
| GATX CORPORATION - |
PROXY SUMMARY
|
|
See Compensation Discussion and Analysis Beginning on page 3051, includes the Change in Pension Value and Non-Qualified Deferred Compensation Earnings for each of the years 2019-2021, which is sensitive to external variables such as changes in interest rates and assumptions about life expectancy.
While the Compensation Committee considers all elements of annual compensation for our NEOs, the Committee is aware that the change in pension value fluctuates year to year and is unrelated to performance and outside of its control. These fluctuations year over year can significantly impact our NEOs’ total compensation as evidenced by a comparison of amounts in our CEO’s Total Compensation column in the Summary Compensation Table with those in the Total Without Change in Pension Value column, particularly for the years 2019 and 2020. The change in pension value amount reported in the Change in Pension Value and Nonqualified Deferred Compensation Earnings for the three-year period does not reflect current compensation and represents the present value of an estimated stream of payments to be made to our NEOs following retirement.
For more detailsinformation on 2019 Executive Compensation.our NEOs’ 2021 total compensation as calculated under SEC rules, see the 2021 Summary Compensation Table on page 51 and accompanying notes and narrative.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PAGE 57)60) UPDATE
We ask that our shareholders ratify the selection of Ernst & Young LLP as our independent registered public accounting firm for 2019.2022. Below is summary information
about Ernst & Young LLP’s fees for services provided in 20182021 and 2017.2020.
Type of Fees
|
2018 ($)
|
2017 ($)
| 2021 ($) | 2020 ($) | ||||||||
Audit Fees |
|
2,571,000 |
|
2,613,000 |
| 2,799,000 |
| 2,646,000 | ||||
Audit-Related Fees |
|
139,000 |
|
136,000 |
| 140,000 |
| 143,000 | ||||
Tax Fees |
|
43,000 |
|
63,000 |
| 67,000 |
| 22,000 | ||||
All Other Fees |
|
2,000 |
|
2,000 |
| 3,000 |
| 3,000 | ||||
TOTAL Fees |
|
2,755,000 |
|
2,814,000 |
| 3,009,000 |
| 2,814,000 | ||||
| 8 | GATX CORPORATION - 2022 Proxy Statement |
PROXY SUMMARY
Sustainability and Corporate Citizenship
AT GATX, OUR MISSION IS TO PROVIDE INNOVATIVE, UNPARALLELED SERVICE THAT ENABLES OUR CUSTOMERS TO TRANSPORT WHAT MATTERS SAFELY AND SUSTAINABLY WHILE CHAMPIONING THE WELL-BEING OF OUR EMPLOYEES AND COMMUNITIES. | ||||||||
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 of GATX’s Board has primary oversight responsibility for our ongoing and developing ESG efforts. In 2021, we published Scope 1 and Scope 2 greenhouse gas (“GHG”) emissions and our first Sustainability Accounting Standards Board (“SASB”) report, which discloses metrics related to relevant ESG factors. We also issued our Supplier Code of Conduct, setting forth our expectations for suppliers. 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.1
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 • Championing a 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 • Fostering a diverse and inclusive workplace through our policies and programs • Investing in our employees through training, professional development, benefit programs, and education |
OUR ENVIRONMENT | OUR COMMUNITIES | |||||||
• Striving for the highest levels of asset quality and safety • Implementing sustainable policies and practices designed to 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 safety training and civic engagement initiatives to support the communities where we live and work • Encouraging employee involvement in their local communities through fundraising campaigns and volunteer projects |
| 1 | Nothing on our website shall be deemed incorporated by reference into this Proxy Statement. |
| GATX CORPORATION - 2022 Proxy Statement | 9 |
PROXY SUMMARY
2021 KEY INITIATIVES AND ACCOMPLISHMENTS
Health and Safety | ||
✓ We continued to ensure that our railcar maintenance facility employees and inspectors who are “essential” workers in the rail industry could safely perform their jobs every day by screening, maintaining safe work practices, and executing robust cleaning practices 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 offered vaccine incentives and benefits. ✓ In addition to being recognized as a Responsible Care® Partner by the American Chemistry Council and the Chemical Industry Association of Canada, 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. ✓ Our repair facilities maintained 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 four years, we have trained 1,600 individuals and first responders. ✓ We enhanced training and standardized work procedures and employed other operational practices to improve our employees’ safety. As a result of these enhanced measures, we successfully reduced both days away, restricted or transferred and total recordable incident rates in our Rail North America business. | ||
Community Engagement | ||
✓ GATX has a long history of organizing volunteer projects between our employees and nonprofit partners, but we also know that our employees’ philanthropic interests and passions are as unique as our employees themselves. To further support and encourage employees’ individual efforts, we implemented a “Do Good Day”– a paid day off for full-time corporate employees in North America to volunteer in their communities for a cause personally meaningful to them. ✓ GATX employees held a successful 2021 employee giving campaign and fundraiser for Make-A-Wish Illinois. We celebrated a milestone of 25 years of partnership with Make-A-Wish Illinois and more than $5 million in total giving to help Make-A-Wish Illinois grant wishes to children with critical illnesses. Since 2008, GATX has been the largest corporate partner to the organization. ✓ Through our partnership with Big Shoulders Fund, which provides support to inner-city schools in Chicago, employees engaged students during virtual service days as well as volunteered on site to clean and ready schools for the new school year. Further, GATX employees have mentored Big Shoulders students since 2016 and make up the largest single group of mentors to the organization. |
| Environment | ||||
✓ We continue to make significant investments in railcars globally, resulting in the ability to transport more goods by rail versus roads, which lowers carbon emissions and reduces highway noise and congestion. ✓ In 2021, GATX calculated and published 2019 and 2020 Scope 1 and Scope 2 GHG emissions for all our facilities globally and initiated an assessment of our full value chain impacts on the environment in an effort to identify opportunities to reduce those impacts. ✓ GATX also published our inaugural SASB report, which discloses metrics related to relevant ESG factors. ✓ We pursued programs to reduce the amount of waste sent to landfills by eliminating, reducing, reusing, or recycling various waste streams. In 2021, approximately 114,000 gross tons of steel from scrapped railcars and railcar parts were recycled. In addition, we sustained a 51% reduction in total paint waste and implemented recycling at our North American railcar maintenance facilities. | ||||
| Human Capital Management | ||||
✓ Our hiring initiatives are designed to encourage diverse hires and mitigate unconscious bias by broadening candidate slates, creating interviewer panels with diverse voices in the selection process, and relying upon a consistent job-related criteria and methodology to evaluate talent. ✓ We hired a Head of Diversity, Equity and Inclusion to oversee and help direct our diversity and inclusion efforts. ✓ We continued to increase female representation in leadership positions. ✓ We supported employees in building the skills and capacity to work in an inclusive manner by hosting a Day of Understanding for all employees, which included workshops, panels, and speakers on diversity and inclusion. ✓ We sought to ensure gender, racial, and ethnicity pay equity for professional, managerial, and executive level positions by conducting an annual compensation analysis. ✓ Our employee engagement surveys include specific questions geared toward diversity and inclusion to help us continually assess engagement levels across the organization and in diverse groups. |
| 10 | GATX CORPORATION - |
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:
reviewing and approving our major financial objectives, strategic and operating plans, strategic transactions with third parties, and other significant actions
overseeing the conduct of our business
assessing business risks to evaluate whether any changes to our business, strategy, or risk management practices may be warranted
overseeing our processes for maintaining the integrity of our financial statements and other public disclosures
overseeing compliance with law and ethical standards.standards
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 seven11 times during 2018,2021, 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 20192022 Annual Meeting of Shareholders, and in 20182021 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
|
All of the members of the Board’s Audit, Compensation, and Governance Committees are 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.
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 ChairmanChair 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 accountability of management.
Our Board is structured to promote independence whether or not its ChairmanChair 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
| GATX CORPORATION - 2022 Proxy Statement | 11 |
CORPORATE GOVERNANCE
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 powers and duties of the Lead Director include the following:
presiding at meetings of the Board if the Chairman and Chief Executive Officer is not present
regularly convening and serving as Chair of executive sessions of the independent directors
attending the meetings of all Board committees
serving as principal liaison between the Chairman and Chief Executive Officer and the independent directors
advising the Chairman and Chief Executive Officer as to the quality, quantity, and timeliness of the flow of information from the Company’s management that is necessary for the independent directors to effectively and responsibly perform their duties
in consultation with the Chairman and Chief Executive Officer, establishing the meeting schedules and agendas for each Board meeting to ensure that the Board has adequate time for discussion and consideration of matters
interviewing, along with the Chair of the Governance Committee, all director candidates and making recommendations to the Governance Committee.
The independent directors have been engaged in long-term CEO succession planning for many years. As a result of their succession planning, the independent directors unanimously elected Robert C. Lyons, Executive Vice President and President, Rail North America, to succeed Mr. Kenney as President and Chief Executive Officer effective at the close of the Annual Meeting. The Board also nominated Mr. Lyons for election as a director at the Annual Meeting.
As part of these succession planning discussions, the Board evaluated the Board leadership structure and concluded that, following his retirement as CEO, Mr. Kenney will continue to serve on the Board as non-executive Chairman for a transitional period ending October 31, 2022. The Board believes that having Mr. Kenney serve as Chairman during this period will facilitate a smooth leadership transition for GATX. Mr. Kenney’s extensive knowledge of our business and strategy provides the Board with a clear understanding of the issues facing the Company and promotes alignment on corporate strategy and effective execution of that strategy. During this transition period, Mr. Ream will continue to serve as Lead Director to provide independent oversight.
The Board will appoint an independent director to serve as Chair effective November 1, 2022 upon Mr. Kenney’s retirement from the Board. The Board believes that with a newly-appointed Chief Executive Officer it will be in the best interests of our shareholders to have a separate, independent Chair because this leadership structure more closely aligns with current governance practices and promotes effective independent Board oversight.
Director*
| Board of
| Audit
| Compensation
| Governance
| 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 2018 meetings
| 7
| 6
| 6
| 5
| ||||||||||||
Number of 2021 meetings
| 11
| 7
| 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 servealso as a member of any particular Board committee, hethe Governance and Compensation Committees and attends theall 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 integrity of our financial statements
our compliance with legal and regulatory requirements
our guidelines, policies, and procedures with respect to risk assessment and risk management
the independent registered public accounting firm’s qualifications and independence with respect to services performed, includingnon-audit fees and services
the performance of our internal audit function and the independent registered public accounting firm.firm
our cybersecurity risks, controls and procedures
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:
conducting an annual evaluation of the Chief Executive Officer’s performance
annually setting the Chief Executive Officer’s compensation level and reviewing and approving compensation levels of our other senior officers
establishing and administering our incentive compensation plans, equity-based plans, and other bonus plans, including granting awards and approving payouts under our plans
annually reviewing the corporate goals and objectives relating to compensation of our Chief Executive Officer and other senior officers
periodically reviewing and making recommendations to the Board regarding the compensation of ournon-management directors
evaluating the qualifications and independence of the Compensation Committee’s independent compensation consultant.consultant
Pay Governance LLC (“Pay Governance”Governance”) served as the Compensation Committee’s independent compensation consultant during 2018.2021. 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
| GATX CORPORATION - 2022 Proxy Statement | 13 |
CORPORATE GOVERNANCE
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.
CORPORATE GOVERNANCE
Governance Committee
The Governance Committee’s functions include:
identifying individuals qualified to become Board members and recommending to the Board a slate of director nominees for election at each annual meeting of shareholders
ensuring that all of the Board committees have the benefit of qualified and experienced independent directors
regularly reviewing a matrix of director skills to ensure a diversity of relevant experience, fresh perspective, skills, backgrounds, and other attributes on the Board
developing and overseeing an effective set of corporate governance policies and procedures designed to ensure that GATX adheres to strong corporate governance and ethical standards and complies with all applicable legal and regulatory requirements
overseeing the evaluation of the Board’s performance and effectiveness, including the directors’ attendance and contributions to Board deliberations, and making such recommendations to the Board as may be appropriate.
overseeing ESG matters and receiving periodic reports from management on related strategic initiatives
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. In identifying
| 14 | GATX CORPORATION - 2022 Proxy Statement |
CORPORATE GOVERNANCE
individuals for Board membership, the Governance Committee considers a 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 18.
CORPORATE GOVERNANCE
19.
TheFor many years, the Board has regularly reviewsreviewed long-term and emergency succession plans for the Chief Executive Officer and for other senior management positions. In assessing possible Chief Executive Officer candidates,During this extended period, the Board identifies the key skills, experience,independent directors had repeated 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, in August 2018,more recent years 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.
In assessing possible Chief Executive Officer candidates in 2021, the independent directors, with the assistance of a recruiting firm with a nationally recognized succession planning practice, identified the key skills, experience, and attributes they believe are required to be an effective Chief Executive Officer in light of the Company’s business strategies, opportunities, and challenges. The independent directors also engaged in various succession-related activities, including but not limited to assessing and evaluating suitable CEO candidates and receiving strategic presentations from each candidate. As previously noted, these succession planning activities and other initiatives resulted in the independent directors’ unanimous election of Robert C. Lyons to succeed Mr. Kenney as President and Chief Executive Officer effective at the close of the 2022 Annual Meeting of Shareholders.
| 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, including but not limited to receiving regular reports from management on environmental risks and opportunities and ESG disclosures. 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, transactions in publicly traded options involving GATX 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:
the transaction may enable us to obtain products or services of a nature, quantity, or quality, or on other terms, that are not readily available from alternative sources
the transaction is on “arm’s length” terms comparable to the terms on which we provide products or services to unrelated third parties or to our employees generally.generally
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.
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.
| GATX CORPORATION - 2022 Proxy Statement | 17 |
CORPORATE GOVERNANCE
Our shareholder outreach and engagement program takestake 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 statement,Proxy 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.
Our ChairmanDuring the past 18 months, we contacted our largest shareholders, representing more than 80% of our outstanding shares, and Chief Executive Officer, Chief Financial Officer and investor relations staffoffered them the opportunity to meet frequently with investors to discuss GATX’s strategy, financial and business performance. In addition, members of our
Board including our Lead Director, the Chair of the Governance Committee, and the Chair of the Compensation Committee meet with our large shareholdersmanagement to discuss a range of issues, includingissues. Discussion topics included our response to the COVID-19 pandemic, human capital management, diversity and inclusion efforts, enterprise risk management, environmental matters, and executive compensation, corporate governance, and corporate social responsibility matters.compensation.
During 2018, we met with eight of our 12 largest shareholders (representing approximately 67% of the shares outstanding) to discuss a range of issues, including:
During our many shareholder interactions with shareholders, we heardhear a diverse range of views. In general, our investors appreciatedappreciate our transparency and willingness by our senior executives and members of the Board to engage with, and listen to, shareholders. In addition, we have made somecontinue to make enhancements to our diversity and inclusion efforts, ESG reporting, and the Proxy Statement in response to suggestions from investors, including increased use of graphics and a more fulsome explanation of the qualifications of our directors and the role of our Lead Director.
CORPORATE GOVERNANCE
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 in which we operate. Consistent with that 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. We maintain a Corporate Social Responsibility page on our website (www.gatx.com) to highlight our environmental and social responsibility accomplishments and provide key performance data to our shareholders. Sustainability
is integrated into our operations, and we have an Environmental, Health, and Safety organization that is focused on maintaining a safe and healthy working environment, demonstrating environmental leadership, and meeting or exceeding regulatory compliance standards.
We believe that investing in operating our business in a sustainable manner, investing in our people, and investing in our communities is key to achieving sustainable growth over the long-term for the benefit of our shareholders:
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CORPORATE GOVERNANCE
2018 Key Initiatives and Accomplishments
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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:
by mail addressed to the Board, any director, or thenon-management directors as a group, c/o the Corporate Secretary, GATX Corporation, 233 South Wacker Drive, Chicago, Illinois 60606-7147
| • | 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.
| 18 | GATX CORPORATION - |
PROPOSAL 1: 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. In evaluating individuals for potential membership on the Board, the Governance Committee gives due consideration to the following criteria:
the highest level of personal and professional ethics, integrity, and values
an inquisitive and objective perspective
broad experience at the policy-making level in business, finance, accounting, government, or education
expertise and experience relevant to GATX and complementary to the background and experience of other Board members, so that an optimal balance and diversity of Board members may be achieved and maintained
broad business and social perspective and mature judgment
the overall diversity of the Board
commitment to serve on the Board for an extended period of time to ensure continuity and to develop knowledge about the Company’s business
demonstrated ability to communicate freely with management and the other directors, as well as the ability and disposition to meaningfully participate in a collegial decision-making process
willingness to devote the required time and effort to carry out the duties and responsibilities of a Board member
independence from any particular constituency, and the ability to represent the best interests of all shareholders and to appraise objectively the performance of management.management
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.
| GATX CORPORATION - | 19 |
ELECTION OF DIRECTORS
Director Demographics, 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 and Mr. Lyons, is also independent of the Company and management. SeeBoard Independence on page 7.11.
Listed below are certain demographics and 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.
BOARD MATRIX
| Brian A. Kenney (Chair & CEO) | Robert C. (CEO- elect) | James Ream | Diane M. | Anne L. Arvia | Adam L. Stanley | David S. Sutherland | Stephen R. Wilson | Paul G. Yovovich | | |||||||||||||||||||||||||||||
KNOWLEDGE, SKILLS, AND EXPERIENCE
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2022 Tenure
| 17 | NA | 13 | 5 | 12 | 2 | 14 | 7 | 9 | |||||||||||||||||||||||||||||
2022 Age
| 62 | 58 | 66 | 57 | 58 | 48 | 72 | 73 | 68 | |||||||||||||||||||||||||||||
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
| ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||||||||||||||
| 20 | GATX CORPORATION - 2022 Proxy Statement |
ELECTION OF DIRECTORS
| Brian A. Kenney (Chair & CEO) | Robert C. (CEO- elect) | 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 - |
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, 233 South Wacker Drive,
Chicago, Illinois 60606-7147. TheIn order to be considered, 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 teneight directors, nineall of whom are standing forre-election for a term of one year, to serve until the 20192023 Annual Meeting of Shareholders or until their successors are elected and qualified. Casey J. Sylla, who currently serves onduly qualified, although Mr. Kenney intends to resign as a director effective October 31, 2022. At the 2022 Annual Meeting, the Board will not be standing forre-electionexpanded to nine directors, and will be retiring atRobert C. Lyons has been nominated to fill the 2019 Annual Meeting. The Board is grateful to Mr. Sylla for his 14 years of dedicated and valuable service to the Company.additional directorship.
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 nine 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 | ||
 | Years of Service:
Age:
Board Committees: Audit, Governance
Ms. Aigotti | |
Specific Qualifications, Attributes, Skills, and Experience
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
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 enables her to provide valuable insights on issues critical to the Board’s oversight of our business, strategy, and operations.operations
| 22 | GATX CORPORATION - 2022 Proxy Statement |
ELECTION OF DIRECTORS
Anne L. Arvia
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 | Years of Service:
Age:
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 | |
Specific Qualifications, Attributes, Skills, and Experience
Deep understanding of auditing, accounting standards, and financial reporting rules and regulations
Qualified as a Certified Public Accountant and an Audit Committee Financial Expert
Wealth of experience in investment, operations, risk management, and financial matters gained through her many years of senior management experience in the financial services sector.
ELECTION OF DIRECTORS
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Specific Qualifications, Attributes, Skills and Experience
Extensive operating, marketing, financial, and management experience gained through his many years in senior executive positions at leading multinational companies
Considerable experience with mergers and acquisitions, private equity, and capital markets matters
Broad exposure to global business markets and significant experience with international business development and business strategies.sector
Brian A. Kenney
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 | Years of Service:
Age:
Chairman of the Board, President and Chief Executive Officer
Mr. Kenney has served as our Chairman of the Board and Chief Executive Officer since 2005 and as President since | |
Specific Qualifications, Attributes, Skills, and Experience
Unique perspective and insight that comes from managing the Company’s business on aday-to-day basis
Substantial operating, risk management, and transportation industry experience
Extensive financial and capital markets expertise
Strategic leadership skills necessary to manage GATX’s leasing business through 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 on public company boards of directors.directors
| GATX CORPORATION - | 23 |
ELECTION OF DIRECTORS
Robert C. Lyons | ||
 | Years of Service:NA Age:58 Chief Executive Officer-elect Mr. Lyons has served as our Executive Vice President and President, Rail North America since 2018 and in December 2021 was elected CEO of GATX Corporation effective April 22, 2022. Previously, Mr. Lyons served as our Executive Vice President and Chief Financial Officer from 2012 to August 2018, Senior Vice President and Chief Financial Officer from 2007 to 2012, Vice President and Chief Financial Officer from 2004 to 2007, Vice President, Investor Relations from 2000 to 2004, Project Manager, Corporate Finance from 1998 to 2000, and Director of Investor Relations from 1996 to 1998. Mr. Lyons has served as a Director of Packaging Corporation of America since 2011 and is a member of the Audit Committee. | |
Specific Qualifications, Attributes, Skills, and Experience
Deep knowledge of our core railcar leasing business gained through his leadership role as President of Rail North America
Substantial transportation industry experience including in aircraft spare engine leasing
Extensive expertise in capital market transactions, mergers and acquisitions, expansion of asset portfolios, operations, and business strategy
Strategic leadership skills and expertise consistently demonstrated in various roles during his long tenure at GATX
James B. Ream
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 | Years of Service:
Age:
Lead Director Board Committees:Compensation, Governance
Mr. Ream served as Senior Vice President – Operations of American Airlines from 2012 to 2014 and as American’s Senior Vice President, Maintenance and Engineering from 2010 to 2012. Previously, Mr. Ream served as Chief Executive Officer of ExpressJet Holdings, Inc., an operator of regional jets in North America, from 2001 to 2010 and President of ExpressJet from 1999 to 2010. Prior to joining ExpressJet, Mr. Ream held various positions of increasing responsibility with Continental Airlines and American Airlines. Mr. Ream was a director of | |
Specific Qualifications, Attributes, Skills, and Experience
Significant experience in management, strategy, finance, and operations gained through his various senior executive roles in the transportation industry, including as Chief Executive Officer of ExpressJet Holdings, Inc.
SubstantialDeep experience in financing, management, maintenance, customer relations, regulatory issues, and operations of large fleets of transportation assets
Extensive financial, accounting, and risk management expertise
Enhanced perspectives on corporate governance, risk management, and other issues applicable to public companies.companies
Robert J. Ritchie
| 24 | GATX CORPORATION - 2022 Proxy Statement |
ELECTION OF DIRECTORS
Adam L. Stanley
  | Years of Service:
Age:
Board Committees: Audit, Governance
Mr. |
Specific Qualifications, Attributes, Skills, and Experience
Critical operating, industry, commercial, railcar portfolio,Deep experience in information technology systems, security, data, and management expertise from his long career in the railroad industry, including as a Chief Executive Officer and board member of large, publicly held railroad companydigital transformation
Deep understanding of the railroad business, which comprises a significant part of the Company’s railcar leasing customer baseExtensive human capital management and process integration expertise
Broad expertise in rail regulatory mattersSignificant financial and industry affairs, including in international markets, gained through hisrisk management skills and experience serving on numerous North American rail associations, including the board of the Association of American Railroads
Financial expertise, including in accountingFar-reaching exposure to global business markets and controls, corporate finance, mergers and acquisitions and capital markets.
ELECTION OF DIRECTORS
David S. Sutherland
 | Years of Service:
Age:
Board Committees: Compensation (Chair)
Mr. Sutherland retired as President and Chief Executive Officer of IPSCO, Inc., a steel producer, in July 2007, having served in that position since January 2002. During his30-year career with IPSCO, Mr. Sutherland held a number of strategically important roles for the company, including Executive Vice President and Chief Operating Officer from April 2001 to January 2002 and Vice President of Raw Materials and Coil Processing from 1997 to |
Specific Qualifications, Attributes, Skills, and Experience
Proven leadership and record of achievement as the former Chief Executive of a publicly held steel producer
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 provide valuable insights on business operations and strategy, global markets, financial matters, and risk management
Broad experience on corporate governance issues gained through his experience on public company boards of directors, including his past service as our Lead Director.Director
| GATX CORPORATION - 2022 Proxy Statement | 25 |
ELECTION OF DIRECTORS
Stephen R. Wilson
 | Years of Service:
Age:
Board Committees: Audit, Compensation
Mr. Wilson retired as Chairman, President and Chief Executive Officer of CF Industries Holdings, Inc. |
Specific Qualifications, Attributes, Skills, and Experience
Demonstrated financial, operating, strategic, and business management expertise gained though his many years of experience in senior executive roles, including as the former Chief Executive Officer of CF Industries
Significant experience in strategic planning, regulatory environment, transformational corporate transactions, and business integration, including in numerous international markets
Extensive financial and accounting expertise from his experience serving as a Chief Executive Officer and Chief Financial Officer at a major publicly held corporation
Provides valuable rail industry customer perspective gained through his experience as the Chief Executive Officer of large fertilizer company that is a major shipper of goods by rail.rail
ELECTION OF DIRECTORS
Paul G. Yovovich
 | Years of Service:
Age:
Board Committees: Compensation, Governance (Chair)
Mr. Yovovich is President of Lake Capital, a private equity firm heco-founded in 1998. He has over 30 years of experience as a senior executive, principal and corporate director, including serving as President |
Specific Qualifications, Attributes, Skills, and Experience
Broad strategic, operating, financial, accounting, regulatory, and business management experience gained through his more than 30 years of experience as a senior executive, principal, and corporate director
Qualified as a Certified Public Accountant
Significant experience in technology and data security issues
Deep expertise in transactional, investment, and capital markets matters through his many years as a private equity executive investing in, and actively overseeing the management of, Lake Capital’s portfolio companies to foster growth and value creation
Substantial corporate governance expertise gained through his experience on serving on public company boards of directors and on the boards of Lake Capital’s portfolio companies.companies
| 26 | 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 |
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80,000 |
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115,000 |
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0 |
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0 |
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0 |
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0 |
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195,000 | |||||||
Anne L. Arvia |
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97,500 |
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115,000 |
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0 |
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0 |
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0 |
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0 |
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212,500 | |||||||
Ernst A. Häberli |
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80,000 |
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115,000 |
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0 |
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0 |
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0 |
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0 |
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195,000 | |||||||
James B. Ream |
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100,000 |
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115,000 |
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0 |
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0 |
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0 |
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0 |
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215,000 | |||||||
Robert J. Ritchie |
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80,000 |
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115,000 |
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0 |
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0 |
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0 |
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0 |
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195,000 | |||||||
David S. Sutherland |
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95,000 |
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115,000 |
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0 |
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0 |
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0 |
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0 |
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210,000 | |||||||
Casey J. Sylla |
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80,000 |
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115,000 |
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0 |
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0 |
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0 |
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0 |
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195,000 | |||||||
Stephen R. Wilson |
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80,000 |
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115,000 |
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0 |
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0 |
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0 |
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0 |
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195,000 | |||||||
Paul G. Yovovich |
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90,000 |
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115,000 |
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0 |
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0 |
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0 |
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0 |
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205,000 | |||||||
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Committee, with assistance from Pay Governance, reviews and makes recommendations to the Board regarding the form and amount of compensation for non-employee directors. In 2021, Mr. Kenney received 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 20182021 consisted of the following amounts shown in the table below:
Our 20182021 Director Compensation Program
| Retainer (Annualized Amounts) | January 1 - December 31 ($) | |
- Cash |
| |
- Phantom Stock |
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- Lead Director | 25,000 | |
- Audit Committee Chair |
20,000 | |
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- Compensation Committee Chair |
15,000 | |
- Governance Committee Chair |
10,000 | |
Each director’s phantom stock account is credited with additional units representing dividends declared on GATX common stock based on the date such dividend is paid.
At the expiration of each director’s service on the Board, settlement of phantom stock units is made in shares of common stock equal to the number of units of phantom
DIRECTOR COMPENSATION
stock then credited to his or her account. Any fractional units are paid in cash. Directors may elect to receive their payouts in a lump sum or up to ten annual installments in accordance with the terms, and subject to the limitations, set forth in the Directors’ Phantom Stock Plan.
We offer a Directors’ Voluntary Deferred Fee Plan in whichnon-employee directors may defer receipt of the cash portion of their retainer in the form of either cash or phantom stock units. If the deferral is in cash, the deferred amount accrues interest at a rate equal to the20-year US government bond rate. If the deferral is in
units of phantom stock, the units are credited to an account for each participating director along with dividends and are settled, following expiration of the director’s service on the Board, in accordance with his or her election/distribution form on file. FiveFour current directors participated in the Deferred Fee Plan in 2018.2021.
The stock ownership goal fornon-employee directors is 5.0 times the annual cash retainer. New directors have five years following election to the Board to achieve this ownership goal.
| GATX CORPORATION - | 27 |
DIRECTOR COMPENSATION
2021 Director Compensation
| Name | Fees earned or paid in cash ($)(1) | Stock Awards ($)(2)(3) | Total ($) | |||||||||
(a) | (b) | (c) | (h) | |||||||||
Diane M. Aigotti |
| 90,000 |
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| 120,000 |
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| 210,000 |
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Anne L. Arvia |
| 110,000 |
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| 120,000 |
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| 230,000 |
| |||
Ernst A. Häberli(4) |
| 30,000 |
|
| 40,000 |
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| 70,000 |
| |||
James B. Ream |
| 115,000 |
|
| 120,000 |
|
| 235,000 |
| |||
Adam L. Stanley |
| 90,000 |
|
| 120,000 |
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| 210,000 |
| |||
David S. Sutherland |
| 105,000 |
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| 120,000 |
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| 225,000 |
| |||
Stephen R. Wilson |
| 90,000 |
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| 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 2021: Ms. Aigotti ($45,000), Messrs. Ream ($23,000), Sutherland ($105,000), and Yovovich ($100,000). |
| (2) | Mesdames Arvia and Aigotti and Messrs. Ream, Stanley, 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. Häberli retired as a Director on April 23, 2021. 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, 2021, 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, 2021. |
| (3) | The aggregate number of GATX phantom stock units held on December 31, 2021 was: Ms. Aigotti (11,286), Ms. Arvia (27,907), Mr. Häberli (22,845), Mr. Ream (34,886), Mr. Stanley (3,431), Mr. Sutherland (65,747), Mr. Wilson (12,547), and Mr. Yovovich (31,824). |
| (4) | Mr. Häberli retired from the Board effective April 23, 2021. |
| 28 | GATX CORPORATION - 2022 Proxy Statement |
| 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 30. 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.
Our financial results in 2018 were significantly better than we originally anticipated. Capitalizing on an improved railcar leasing environment in North America, we realized higher fleet utilization, a higher renewal success rate, and higher lease renewal rates versus our original expectations. Maintenance expense was also lower than anticipated in 2018 due to fewer repairs performed by railroads as well as fewer tank qualifications. While we saw broad increases in market lease rates in 2018, revenue was still pressured as new lease rates remained below rates on expiring leases signed during the previous strong market from 2012 to 2015 and the renewal lease rate change for GATX’s Lease Price Index was negative 9.8% for the year.
We executed on our strategy to invest aggressively in cost-advantaged railcars. In 2018, we entered into two long-term railcar supply agreements, for a total of 12,450 railcars to be delivered from 2019—2023, which will allow us to grow our asset base to meet the needs of our customers. We invested more than $730 million in our North American fleet in 2018, including the acquisition of a competitor’s portfolio of approximately 3,100 railcars. We also continued to capitalize on strong North American secondary market demand by optimizing the fleet through railcar sales, generating significant remarketing income.
In addition, our international railcar leasing business also outperformed our expectations and achieved record high fleet utilization, while our American Steamship subsidiary
significantly increased its profitability by operating its fleet more efficiently and capitalizing on late season demand opportunities. Lastly, our aircraft spare engine leasing joint ventures with Rolls-Royce produced another year of strong financial results.
Key accomplishments in 2018 included:
We value the feedback provided by our shareholders, who approved our executive compensation program at the 20182021 Annual Meeting of Shareholders by a favorable vote of 98.0% in favor.approximately 97%. 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.
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PROPOSAL 2: ADVISORY RESOLUTION ON EXECUTIVE COMPENSATION
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 - | 29 |
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. Lyons(1)
Executive Vice President and President, Rail North America
Thomas A. Ellman(2)
Executive Vice President and Chief Financial Officer
Deborah A. Golden
Executive Vice President, General Counsel and Corporate Secretary
Paul F. Titterton(3)N. Gokce Tezel
SeniorExecutive Vice President and Chief Operating Officer,President, Rail North AmericaInternational
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TABLE OF CONTENTS:
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.
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COMPENSATION DISCUSSION AND ANALYSIS
Our Business and StrategyExecutive Compensation Program Supports Our Long-Term Focus Through Industry Cycles
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 networkRailcar leasing accounted for 94% of railcar maintenance facilities in the United States, Canada, and Europe dedicated to performing timely, efficient, and high quality maintenance for our 2021 revenues.
The Railcar Leasing Market is Highly Cyclical. The railcar leasing customers. In addition,market in which we operate the largest fleet ofUS-flagged vessels on the Great Lakes and invest with Rolls-Royce plc, a leading manufacturer of commercial aircraft jet engines, in a group of joint ventures that lease aircraft spare engines.
Railcar leasing is our core business, accounting for approximately 85%extremely cyclical. Many of our 2018 revenue. Our rail customers also 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 industry-wide railcar utilization and lease rates for railcars over time. At the
same time, railcarsWe Manage Our Business With a Long-Term View. Most of our operating assets typically have very longeconomic useful lives of20-45 20 to 40 years. Thus, we have toWe proactively manage our business with a long-term view, which includes buying, leasing, maintaining, and selling railcarslong-lived assets into constantly changing business conditions over decades.
We believe It is critical that we make disciplined investment decisions that match the keylong lives of our assets. Through multiple crises and economic cycles, we have maintained a long-term focus on investing while executing numerous strategic initiatives to generating long-term shareholder value involves optimizingenhance our competitive advantage.
Our Strategy Varies Depending on Position in Market Cycle. Our strategy of emphasizing asset growth and asset return by emphasizing each at the appropriate pointdifferent points in the railcar business cycle. For example, inleasing cycle enables GATX to generate strong long-term shareholder return.
| — | In stronger railcar markets, we focus on increasing lease rates and lengthening lease terms to lock in attractive lease revenue as long as possible. At the same time, we may de-emphasize new railcar investment due to high railcar prices unless we identify assets that will earn correspondingly higher lease rates with long lease terms. |
| — | Conversely, in weaker markets, when railcar prices tend to be lower, we seek to increase railcar investment on favorable terms. We also reduce lease rates to maintain asset utilization and shorten lease terms to position us to capture value when lease rates improve. |
Our Executive Compensation Program Supports This Long-Term Cyclical Approach and Strategy. Our executive compensation programs are designed and managed by our Compensation Committee to motivate and retain management through each stage of the business cycle, including in both strong and weak railcar leasing markets. 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 our long-term incentive plans. The 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.
Long-Term Performance Led By Our CEO
At the close of the 2022 Annual Meeting of Shareholders, Brian Kenney will retire as GATX’s CEO after 17 years. During his tenure, we have:
Exited non-core businesses to focus on opportunities where GATX had the greatest competitive advantage—leasing long-lived, widely used transportation assets which we uniquely understand and where we provide valuable services in connection with those assets.
Invested counter-cyclically by capitalizing on weak market conditions to acquire assets at economically attractive valuations.
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COMPENSATION DISCUSSION AND ANALYSIS
Avoided chasing short-term trends with long-lived assets; for example, during the energy boom in 2013-2014 we remained disciplined with our railcar investments which positioned us well to weather the down-cycle that followed.
Increased the percentage of service events performed in Rail North America’s owned repair network, where we believe our safety, quality, delivery, and cost metrics are superior.
Expanded into international and emerging markets by leveraging our knowledge and expertise in railcar design and engineering.
Managing Leases Through Cycles. As illustrated in the table below, since 2016, the North American railcar leasing market has been in a weakened position due to a significant industry-wide oversupply of railcars, lower lease rates, and lengtheninga highly competitive leasing environment. As described above, we utilize different lease rates and lease term tolock-in attractive lease revenue as long as possible. Atstrategies depending on where we are at in the same time, wede-emphasize new railcar investment due tomarket cycle. The chart below illustrates 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 illustratesresults of 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. |
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COMPENSATION DISCUSSION AND ANALYSIS
Investment Focus in Weaker Markets. 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. We strive to achieve lower railcar cost by trying to place large new railcar orders and acquire existing fleets in weaker markets at attractive prices. The following chart illustrates this cyclicality and our efforts to focus on the lower points in the business cycle for large investments in assets.
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COMPENSATION DISCUSSION AND ANALYSIS
Compensation PrinciplesStrong 2021 Financial And Operational Results In A Weak Leasing Market
Leasing Market Continued in a Weakened Position in 2021. Entering 2021, the North American railcar leasing market remained in a weakened position due to a significant industry-wide oversupply of railcars. We were facing lower rates on lease renewals, and intense competitive pressures threatened fleet utilization. Market uncertainty hindered new railcar placements with customers. There was further uncertainty with respect to continuing adverse impacts related to COVID-19 and whether a sustained recovery would occur in 2021, primarily in international markets where another round of lockdowns was underway. The pandemic’s most profound negative impact on our business continued to be in aircraft spare engine leasing due to the ongoing, significant reduction in global air travel.
| • | Strong Total Shareholder Return Despite Challenging Environment. In this challenging environment, we executed on our strategic priorities and delivered strong financial results, including a one-year total shareholder return of 27.9%.1 |
Strong 2021 Financial and Operational Results. Set forth below is a summary of our key financial and operational achievements during 2021 despite operating in a weakened leasing market.
| 1 | Total shareholder return calculation assumes dividends are reinvested. |
| 2 | Amounts in these charts are based on net income, excluding tax adjustments and other items, and are non-GAAP financial measures. 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. |
| 3 | Reflects continuing operations only. |
| 4 | Operational data in the charts relates to our Rail North America segment. |
| 5 | Excludes boxcars. |
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COMPENSATION DISCUSSION AND ANALYSIS
The chart above illustrates the following key achievements during 2021:
Strong Earnings | • Net income from continuing operations of $143.1 million ($182.2 million excluding tax adjustments and other items).1 • Diluted earnings per share from continuing operations of $3.98 ($5.06 excluding tax adjustments and other items).1 • Return on equity of 7.2% (11.0% excluding tax adjustments and other items).1 | |
Excellent Operating Performance | • Protected our maintenance employees, who are deemed essential employees, through the enhancement of strict COVID-19 protocols at our facilities. Managed our employees’ actual and potential exposure to COVID-19 to minimize transmission and offered vaccine incentives and benefits. Protected our office employees through connected but remote work. • Capitalized on difficult market conditions by investing over $1.0 billion in attractively priced, long-lived transportation assets for the second consecutive year. • Achieved railcar lease utilization of 98-100% across our rail businesses. • Achieved high renewal success rates for our railcar fleets, which resulted in lower fleet churn and reduced maintenance expense incurred in preparing railcars for new customers. • Reduced railcar maintenance expense by continuing to increase the percentage of railcar repairs performed in Rail North America’s wholly-owned network of shops, where we believe our safety, quality, delivery, and cost metrics are superior. • Further optimized our North American rail fleet through selective divestitures and scrapping. • Continued expansion and diversification of the railcar fleets at GATX Rail Europe and GATX Rail India, despite an extremely challenging pandemic year. • Invested $350 million directly in aircraft spare engines, capitalizing on the downturn in aerospace to add attractive assets to our portfolio. • Made record tank container investments at Trifleet, further expanding our global transportation asset base. | |
Returned Cash to Shareholders | • Increased our dividend for the 11th consecutive year to $2.00 (annualized) per share, completing our 103rd year of uninterrupted dividends. |
| 1 | Our 2021 financial results calculated in accordance with GAAP include $39.1 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. |
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COMPENSATION DISCUSSION AND ANALYSIS
Summary Of Key 2021 Compensation Actions
HOW WE DETERMINED NEO PAY FOR 2021
Substantial Majority of Pay Aligned with Performance. We design our pay programs to reward executives for positive Company performance and align with shareholder interests by having a significant portion of compensation comprised of performance-based and long-term incentive awards. As shown in the charts on page 39, 84% of our CEO’s 2021 total target compensation and approximately 71% of the 2021 total target compensation for our other NEOs were tied to annual and long-term incentives based on Company performance relative to objective, quantifiable goals using key financial metrics or, with respect to stock options, will only have value if our stock price increases.
| • | Rigorous Incentive Targets. Our Compensation Committee carefully considered the adverse market conditions affecting our business and set performance goals that we determined would be appropriately difficult and rigorous to achieve given the challenging market. Annual incentive awards for our NEOs are based on net income objectives. Long-term incentives in the form of performance shares are earned based on achievement of two equally weighted measures of the average return on equity (return measure) and the cumulative investment volume (growth measure) over a three-year performance period. Please see Compensation Discussion & Analysis – Performance Measures, Goal Setting, and Pay-for-Performance Alignment on page 40 for more information about how the Compensation Committee establishes our annual and long-term performance measures. |
No Adjustments to Performance Metrics or Achievement Levels. Our Compensation Committee did not adjust performance achievement levels or reduce goals tied to corporate performance under any of the outstanding incentive plans, including the 2021 annual incentive plan and the outstanding performance share plans, to account for adverse impacts of the COVID-19 pandemic on our business segments.
Market Data Considered in Designing Competitive Compensation Program. Our Compensation Committee also reviewed market compensation levels and program design to provide a frame of reference for comparison in designing and setting competitive 2021 executive compensation commensurate with market, Company and NEO performance, and the need to retain executive officers of outstanding ability and potential.
HOW WE PAID OUR NEOS IN 2021
Modest Increases in Base Salaries in Line with Employees Generally. Base salaries for 2021 reflected each NEO’s role, responsibility and experience, and the Compensation Committee’s review of competitive market information. Our NEOs all received a 1.5% increase in base salary, consistent with base salary increases across our Company.
Annual Incentive Payouts for NEOs Tied to Strong Performance. Annual incentive awards for our NEOs are based on objective, quantitative corporate financial goals. In February 2022, the Compensation Committee determined that the achieved payout for our NEOs relative to the corporate financial goals for 2021 was 121.7% of target as a result of our strong net income results highlighted above. In addition, Ms. Golden received a discretionary increase in her annual incentive award due to extraordinary individual performance and efforts, as described in footnote 7 to the Summary Compensation Table.
Long-Term Incentives. For 2021, the value of long-term incentives granted to each NEO was divided equally between non-qualified stock options (“NQSOs”) and performance shares. NQSOs vest ratably over three years and performance shares are earned based on achievement of two equally weighted measures: the three-year average return on equity (return measure) and the three-year cumulative investment volume (growth measure).
Vesting of 2019-2021 Performance Shares Above Target. The performance shares granted in 2019 vested at the end of 2021 and were weighted equally between a three-year average return on equity (achieving 8.3% versus a goal of 10%) and a three-year cumulative investment volume goal (achieving $2.96 billion versus a goal of $2.43 billion), resulting in a payout of 112.1% of target.
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COMPENSATION DISCUSSION AND ANALYSIS
At our 2021 Annual Meeting of Shareholders, approximately 97% of shareholder votes were cast in favor of an advisory resolution approving the compensation of our NEOs as disclosed in our 2021 Proxy Statement (the “say-on-pay” resolution). Approximately 97%, 98%, 98%, 98%, and 97% of shareholder votes were cast in favor of the say-on-pay resolutions in 2021, 2020, 2019, 2018, and 2017, respectively. The Compensation Committee believes that the overwhelming shareholder votes in favor of these recent say-on-pay resolutions are a continuing 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 2021 vote.
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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 our pay-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.
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| What We Do | What We Don’t Do | |
✓Pay for Performance—Approximately 84% of our CEO’s (and 71% of other NEOs’) total direct compensation is performance-based ✓Robust Stock Ownership Guidelines—We have stock ownership guidelines for executive officers of 5.0x base salary for our CEO and 2.5x base salary for other executive officers ✓Stock Retention Requirements—We require our executive officers to retain 50% of the after-tax profits realized from their GATX equity awards until stock ownership guidelines are met ✓Annual “Say-on-Pay” Vote—We seek an annual non-binding advisory vote from our shareholders to approve compensation paid to our NEOs as disclosed in our Proxy Statement ✓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 | Ò Employment Agreements—We do not provide our executive officers with employment agreements, other than agreements that provide severance in connection with a change of control ÒHedging/Pledging of Company Stock—We prohibit our officers, directors, and employees from hedging, margining, pledging, short-selling, or publicly trading options in our stock ÒTax Gross-Ups—We do not provide tax gross-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 ÒPerquisites—We do not provide excessive perquisites to our NEOs ÒRepricing 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 |
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COMPENSATION DISCUSSION AND ANALYSIS
Compensation Principles and Plan Design
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:
a substantial majority of management’s compensation should be performance-based and closely linked to our financial performance to align the interests of management with those of our shareholders
performance goals should be robust and reward executives for the achievement of our annual and long-term business goals through changes in business cycles
compensation opportunities should be competitive to enable us to attract, motivate, and retain key executives who are critical to delivering long-term shareholder value.value
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.
Due to the cyclicality of our business, management must strategically shift the emphasis we place on each of these dual objectives (i.e.(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 reflects 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.
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Plan Design
The overarching goal of our compensation philosophy and incentive plan design is to incentivizemotivate 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 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 and only tied to quantitative, objective financial metrics. In 2018,2021, approximately 80%84% of total direct compensation for our Chief Executive Officer and approximately 65%71% for our other NEOs was performance-based and not
guaranteed. The light blue 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 charts above reflect the base salary and incentive targets in effect for the named executive officersNEOs for 2018,2021, and thus are not intended to match amounts shown in the Summary Compensation Table or the Grant of Plan-Based Awards Table.Table on pages 51 and 52 respectively.
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COMPENSATION DISCUSSION AND ANALYSIS
Incentive Type
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Compensation
| How Determined/
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Key Features &
| Form of Payment
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| 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 the market
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• 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
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• 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 | |||||
COMPENSATION DISCUSSION AND ANALYSIS
2018 Key Management Objectives
As we entered 2018, there were signs of improvement in certain sectors of the railcar leasing market after a three-year downturn. However, we were unable to predict the pace and extent of any recovery. In light of these uncertain market conditions, we established the following performance objectives, among others:
2018 Key Accomplishments
Our financial results in 2018 were significantly better than we originally anticipated. Capitalizing on an improved railcar leasing environment in North America, we realized higher fleet utilization, a higher renewal success rate, and higher lease renewal rates versus our original expectations. Maintenance expense was lower than anticipated in 2018 due to fewer repairs performed by
railroads as well as fewer tank qualifications. We also executed on our strategy to invest aggressively in cost-advantaged railcars.
Key highlights of our performance in 2018 include the following:
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COMPENSATION DISCUSSION AND ANALYSIS
Performance Measures, Goal Setting, andPay-for-Performance Alignment
Performance Measures Tied to Financial Performance. 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:
market data for companies with annual revenues between$1-3 billion
results from our annual internal talent assessment, which includes survey data on pay for particular executive positions
individual performance.performance
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.
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COMPENSATION DISCUSSION AND ANALYSIS
Performance Goals Aligned with Budget and Annual Objectives. 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 budgeted net income as the performance measure in our annual incentive plan and the three-year average return on equity and three-year cumulative investment volume budget 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 2018,2021, and our actual achievement against such goals, for each of net income, return on equity, and investment volume.
Annual Incentive Plan MeasureMeasures
Net Income1
| 1 | Our 2021 financial results calculated in accordance with GAAP include $39.1 million of tax adjustments and other items. For annual incentive award purposes, net income excludes tax adjustments and other items. For a reconciliation of net income, excluding tax adjustments and other items, to net income, calculated in accordance with GAAP, please seeExhibit B to this Proxy Statement. |
2021 Annual Incentive Plan Target Reflected Challenging Market Dynamics and Uncertainty. Our budgeted net income varies from year to year based on anticipated lease rates, renewal success, and other factors specific to our business, including industry cycles and expected headwinds. Given the highly cyclical nature of our business, our budgeted net income may increase or decrease from year to year as we manage our dual goals of growth and return at various points in the business cycle. As a result, the target level of performance under our annual incentive plan may also increase or decrease each year as well.
COMPENSATION DISCUSSION AND ANALYSIS
When the Compensation Committee set the target for our annual incentive plan at the beginning of 2018, we were continuing2021, there was uncertainty around further COVID-19 related disruptions to experience pressure on revenues as newour global businesses. In establishing the target net income goal and related performance and payout opportunities, the Compensation Committee considered these uncertainties, including:
We expected flat segment profit at Rail North America in 2021 due to anticipated lease rates remainedon railcar renewals, which were expected to be below expiring lease rates, and competitive risks to railcar utilization. We planned for asset disposition income to offset the persistent oversupply of railcarsanticipated negative lease revenue, but asset dispositions are subject to market volatility.
We expected favorable year-over-year performance at Rail International, but the year began with renewed pandemic-related lockdowns, whose duration and frequency had the potential to negatively affect income.
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COMPENSATION DISCUSSION AND ANALYSIS
Lastly, RRPF, our aircraft spare engine leasing joint venture, continued to operate in thean extremely challenged market continued. for long-haul air travel, and its 2021 profit was expected to be down substantially.
As a result of these factors, we expected GATX’s total net income to be down in 2021 as much as $25 million from the speed and extent of any recovery in the railcar leasing market remained uncertain. In addition, the Committee also anticipated higher maintenance expenses in 2018 due to the significant amount of scheduled maintenance events for various railcars in our fleet, which was expected to further challenge financial performance. prior year.
Our Compensation Committee desired to set a net
income target for our NEOs that would be appropriately rigorous and challenging. The Committee set the 20182021 net income target at $143.8 million, which was the Company’s budgeted net income. Our Compensation Committee believes that consistently tying the net income target for purposes of our annual incentive plan to budgeted net income for the applicable year closely aligns management with the financial objectives set by the Board for the Company. Given the highly cyclical nature of $170.7 million. Basedour business, our budgeted net income may increase or decrease from year to year as we manage our dual goals of growth and return at various points in the business cycle. As a result, the target level of performance under our annual incentive plan may also increase or decrease each year as well.
Our 2021 earnings expectations proved to be accurate for every segment except Rail North America, where the market conditions improved significantly throughout the year and we successfully pursued strategic commercial and operational initiatives to capitalize on the 2018 plan design, ourrapidly improving market. Rail North America’s strong financial and operational performance drove GATX net income achievement of 117.1%126.7% of targettarget. Based on our plan design, this performance resulted in a payout to our NEOs at 129.1%121.7% of their target awards. 2018Our Committee did not adjust the target or otherwise intervene in the determination of the final achievement and 2017payouts under the annual incentive plan as a result of any negative impacts of COVID-19 on the business. 2021 and 2020 actual net income performance shown in the chart above reflects certain adjustments during the year.1 SeeAnnual Incentive Awards on page 4044 for more details about our annual incentive plan and how this payout was determined.
Performance Share Plan Measures
| Return on Equity1 | Investment Volume $ Billion | |
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Under the terms of our 2016-2018 performance share program, our actual average return on equity and cumulative investment volume results exceeded target, which resulted in our executives earning 126.4% 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. See2018-2020Performance ShareMeasures and Goal Setting on
page 42 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.
| 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 |
Long-Term Incentive Plan Targets Reflect Focus on Appropriate Balance of Growth and Return Over Long Term. 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. As with the net income targets under our annual incentive plan, our investment volume targets are typically tied to our budgeted investment volume for the applicable year, which similarly fluctuates from year to year. Under the terms of our 2019-2021 performance share program, our cumulative investment volume exceeded target, while our average return on equity fell short of target. Based on these results, our executives earned 112.1% 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 2021-2023 PerformanceShare Measures and Goal Setting on page 46 for a description of our performance share program.
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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 2021 compensation decisions described above and in the following charts, which show our Chief Executive Officer’s compensation measured against our financial performance for the years 2008-2018.2008-2021. As we
continue to manage through challenging 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.
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| 1 | Amounts in the charts are based on net income, excluding tax adjustments and other items. For a reconciliation of net income, |
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 eleven 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, with year-
to-year volatility in line with our annual financial performance as highlighted above. Since 2008, total direct compensation for our Chief Executive Officer has increased by 42.0%, a compound annual growth rate of approximately 3.5%, while TSR increased 210.0%, a compound annual growth rate of approximately 12.0%.
* Amounts are as reported in the Summary Compensation Table, less changes in pension value.
2018Say-on-Pay Vote
At our 2018 Annual Meeting of Shareholders, approximately 98.0% of shareholder votes were cast in favor of an advisory resolution approving the compensation of our NEOs as disclosed in our 2018 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 - |
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.
 |  | |
|
|
COMPENSATION DISCUSSION AND ANALYSIS
Detailed Compensation Discussion and Analysis
In 2018,2021, our executive compensation program consisted of three elements: Basebase 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%16% of total targeted compensation for our Chief Executive Officer (approximately 37%29% 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:
Annual salary increases
Changes in role, such as promotions or added responsibilities
Market adjustments.
adjustments
In 2018, Messrs. Kenney, Ellman, Lyons, and Titterton and Ms. Golden2021, all of our NEOs received the Company’s standard general increase of 2.5%1.5% to their base salaries. Mr. Ellman received an additional 6% increase to recognize his performance,salaries consistent with market levels. Mr. Titterton received an additional 14% increase in connection with his promotion to Senior Vice President and Chief Operating Officer, Rail North America.
While the Company’s 2019 annual salary increases will reflect an average increase of 3%, Mr. Kenney’s base salary for 2019 will remain unchanged at his request. Ms. Golden will receive an additional 5% increase to recognize her performance, consistent with market pay levels. Mr. Titterton’s general increase will be prorated from the date of his promotion to Senior Vice President and Chief Operating Officer, Rail North America, on August 9, 2018.broader employee base.
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 4548 for a description of how we determine competitive pay levels. For 2019, target incentive opportunities for our NEOs
remained unchanged from 2018 levels.In 2021, Mr. Kenney’s target incentive opportunity iswas 100% of his base salary. The target annual incentive opportunities for our other NEOs are 70% of base salary for Messrs. Ellman and Lyons and Ellman, 60% of base salary for Ms. Golden and 55% of base salary for Mr. Titterton.Tezel.
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 originally intended to meet requirements for tax deductibility then in effect, 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. Please see Performance Measures, Goal Setting, and Pay-for-Performance Alignment on page 40 for a discussion of how the Compensation Committee selects performance measures and designs annual performance goals.
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.
COMPENSATION DISCUSSION AND ANALYSIS
20182021 Annual Incentive Plan Design.Design When the Compensation Committee set the target for our annual incentive plan. As described earlier at page 41, at the beginningtime of 2018, webudgeting and forecasting, expectations were continuingthat 2021 would be a year of market challenges and uncertainties due to experience pressure on revenues as newlower lease rates remained below expiring rates and the persistent oversupply of railcars in theon railcar renewals at Rail North America, market continued. As a result, the speed and extent of any recoveryvolatility related to expected asset dispositions, uncertain shipper demand in the railcar leasing market, remained uncertain. In addition,a challenging market for long-haul air travel for our aircraft spare engine joint venture at RRPF, renewed pandemic-related lockdowns in Europe affecting GATX Rail Europe as well as other COVID-19 related disruptions to our global businesses, all of which resulted in anticipated pressure on 2021 revenues. As a result of these factors, we expected GATX’s total net income to be down in 2021 as much as $25 million from the Committee also anticipated higher maintenance expenses in 2018 due toprior year. During its review of the significant amount of scheduled maintenance events for
various railcars in our fleet, which was expected to further challenge financial performance. Ourbudget and business forecasts over multiple meetings, the Compensation Committee desiredsought to set a net income target for our NEOs that would be appropriately rigorous and challenging.challenging, given these market headwinds. The Compensation Committee set the 20182021 net income target at $143.8 million, which was the budgeted net income of $170.7 million.from continuing operations for the year.
| 44 | GATX CORPORATION - 2022 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS
The goals and payout levels under the 20182021 annual incentive plan design, which are tied to fully quantitative, objective metrics, are shown in the following table:
2018 Annual Incentive Plan Design For Executive Officers | ||||||||
Net Income (Millions) | Achievement (Actual/Budget Net Income) | Payout | ||||||
Threshold | $136.6 | 80 | % | 70% | ||||
Target (Goal) | $170.7 | 100 | % | 100% | ||||
Maximum | $239.0 | 140 | % | 170% | ||||
2021 Annual Incentive Plan Design For Executive Officers | ||||||||
Net Income (Millions) | Achievement (Actual/Budget Net Income) | Payout | ||||||
Threshold | $115.0 | 80 | % | 80% | ||||
Target (Goal) | $143.8 | 100 | % | 100% | ||||
Maximum | $230.1 | 160 | % | 170% | ||||
20182021 Annual Incentive Plan Payouts. Net income, excluding tax adjustments and other items for 2018,2021, was $199.8$182.2 million1, which was 117.1%126.7% of the target level of
performance. Based on the targets illustrated above, this level of performance resulted in incentive payouts to our NEOs of 129.1%121.7% of their target award levels. In addition, the Compensation Committee determined to provide Ms. Golden with an additional $300,000 in connection with her annual incentive plan payout in recognition of extraordinary individual performance and efforts relating to divestitures and acquisitions of subsidiaries and assisting our Board in long-term succession planning, which culminated in the appointment of our new CEO. These successful transactions and the significant efforts committed by Ms. Golden to the succession planning and CEO transition process were not contemplated by the annual incentive plan objectives, and therefore the Committee determined this adjustment to her annual incentive plan payout was appropriate to ensure that Ms. Golden was adequately compensated for her efforts in these endeavors.
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. Long-term incentive target values for our NEOs are set between the 50th and 75th percentiles based on market survey data used by our Compensation Committee in setting executive compensation, as described below under Process for Determining Executive Compensation (Including NEOs).The reason for targeting up to the 75th percentile is to encourage and reward above-market performance and to provide flexibility to compensate officers with longer tenure. The Compensation Committee establishes an NEO’s target long-term incentive value for each year within this range based on its evaluation of individual performance and responsibilities and overall leadership within the organization. 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.
During 2018, as part of our longer-term management succession efforts, Mr. Lyons and Mr. Ellman switched positions and Mr. Titterton was promoted. In order to continue to drive performance and enhance our growth efforts, and to recognize, motivate, and reward these executives in their new roles, each received anoff-cycle grant of restricted stock units (“RSUs”) which vest 25% on the first anniversary of the grant and 75% on the third anniversary of the grant, subject to continued employment with GATX.
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 comprisedcomposed 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 2021 financial results calculated in accordance with GAAP include $39.1 million of tax adjustments and other items. For annual incentive award purposes, net income excludes tax adjustments and other items. For a reconciliation of net income, excluding tax adjustments and other items, to net income, calculated in accordance with GAAP, please seeExhibit B to this Proxy Statement. |
| GATX CORPORATION - |
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 two equally weighted measures of a |
| • | Dividends Paid |
| • | Cash Election Feature. Participants have the opportunity to elect to receive their performance share |
payout in the form of cash if the participant meets one of two conditions: (1) the participant has exceeded 150% of his or her stock ownership goal or (2) the participant is within five years of normal retirement age (65) under the Company’s pension plan. This election must be made no later than |
Restricted Stock Units.Restricted stock units vest based solely on continued employment and are designed to recognize and incentivize executives, by providing equity value if the executive remains employed through the vesting date. RSUs have not historically been a part of our equity compensation program, however, in 2018 the Compensation Committee granted RSUs to Messrs. Ellman, Lyons and Titterton in order to recognize, motivate, and reward these executives as they moved into new leadership roles as part of the Board’s longer-term senior management succession planning efforts. These RSU grants also served as consideration for thenon-compete,non-solicitation and confidential information covenants GATX obtained from Messrs. Ellman, Lyons and Titterton in connection with the changes in their respective roles.
2018-20202021-2023 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
2020 will also be 2023 is subject to two equally weighted measures:
Three-year average return on equity (return measure)
Three-year cumulative investment volume (growth measure).
COMPENSATION DISCUSSION AND ANALYSIS
The Compensation Committee set targets of 8.9%10% for return on equity and $2.5$3.65 billion for cumulative investment volume, forwhich is equal to the 2018-2020 performance period, both of which are significantly higher than the Company’s
budgeted return on equity (8.1%) and cumulative investment volume ($2.26 billion) for the three-year performance period.
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 investmentsemploy several strategies to grow capital employed.maximize returns while investing prudently. 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, which are quantitative, objective metrics, for the 2018-20202021-2023 performance period were set in the first quarter of 20182021 amidst signs of strengtheningcontinued pressure on results and uncertainty in the North American railcar leasing market after a three-year downturn.rail market. Consistent with our objective of striking an appropriate balance between our growth and
| 46 | GATX CORPORATION - 2022 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS
return objectives and in lightspite of uncertain market conditions, the
Compensation Committee set a lower target for average return on equity for the 2018-2020 performance period (8.9%) than for the prior three-year performance period. However, the target is 10% higher than the Company’s budgeted return on equity for the 2018-2020 performance period, and the Compensation Committee believes that achievement of a 8.9%10.0% return on equity forover the three-year2021-2023 performance period, a significantly higher return than the Company’s budgeted return on equity (8.3%), would represent excellentsuperior financial achievement by GATX in challenging market conditions. The Compensation Committee set the cumulative investment volume target for the 2018-20202021-2023 performance period at $2.5$3.65 billion, which is 11% higher than our budgeted cumulativea 28.5% increase in targeted investment volume forover the 2017-2019 performance period. Thisprior year’s three-year plan. 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 2018-20202021-2023 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 32%, which represents the value of the NQSO award based on the Black-Scholes valuation methodology.
COMPENSATION DISCUSSION AND ANALYSIS
20182021 Long-Term Incentive Payouts of 2019-2021 Performance Share Plan
The performance shares granted in 20162019 vested at the end of 2018.2021. 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 2016-20182019-2021 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 |
10.0% |
25% |
6.8% |
25% | ||||
Target (Goal) |
12.0% |
100% |
10.0% |
100% | ||||
Maximum |
16.0% |
200% |
14.0% |
200% | ||||
| Investment Volume
| ||||
Three-Year Cumulative Investment Volume (millions)
| Payout
| |||
Threshold |
$1.20 |
25% | ||
Target (Goal) |
$2.15 |
100% | ||
Maximum |
$2.55 |
200% | ||
| Investment Volume
| ||||
Three-Year Cumulative Investment Volume (billions)
| Payout
| |||
Threshold |
$1.70 |
25% | ||
Target (Goal) |
$2.43 |
100% | ||
Maximum |
$3.41 |
200% | ||
As shown in the charts on page 36,42, the three-year average return on equity for the period was 14.0%8.3% versus a goal of 12.0%10%, and the cumulative investment volume for the period was $2.17$2.96 billion, which was higher than the goal of $2.15$2.43 billion. Based on these results, performance share payouts were 126.4%112.1% of target. Performance share award values at vestingthe determination date were 231.0%112.1% of target award values based on average fair market value
of GATX stock price on January 24, 2019.February 16, 2022. Messrs. Kenney, Ellman, Lyons, and LyonsTezel and Ms. Golden elected to receive their performance share payouts in the form of cash. Mr. Titterton received his performance share payout in the form of shares. For details regarding the 2016-20182019-2021 performance share payments to the NEOs, please see theOption Exercises and Stock Vested Table on page 52.55.
| 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 accumulated other comprehensive loss from the equity component for each year. Please see Exhibit B of this Proxy Statement for a reconciliation of return on equity calculated for performance share purposes to return on equity calculated in accordance with GAAP. |
| GATX CORPORATION - 2022 Proxy Statement | 47 |
COMPENSATION DISCUSSION AND ANALYSIS
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 2018.
|
COMPENSATION DISCUSSION AND ANALYSIS
2021.
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 53.56. 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.
Process for Determining Executive Compensation (Including NEOs)
Compensation Committee and Management
The Compensation Committee, with input from the independent compensation consultant, regularly reviews:
the competitiveness of our compensation program
the competitiveness of each NEO’s compensation
recent developments and current trends in executive compensation practices.practices
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.
The Determination of Market Competitive Pay
We have structured our compensation programs to provide total direct compensation opportunities comparable tobetween the median range50th and 75th percentiles based on market survey data 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
| 48 | GATX CORPORATION - 2022 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS
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 225201 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. The Compensation Committee does not receive individual company information for any of the companies included in the surveys.
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.
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, 2019,2022, all of our NEOs had exceeded their respective stock ownership requirements having achievedby the following approximate percentages of their respective requirements:percentages: Mr. Kenney (377%)568%, Mr. Ellman (350%)601%, Mr. Lyons (431%)489%, Ms. Golden (287%)347% and Mr. Titterton (118%)Tezel 247%.
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
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)Tax 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 described earlier in this CD&ACompensation 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.
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 - | 49 |
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. SyllaJames B. Ream
Stephen R. Wilson
Paul G. Yovovich
| 50 | GATX CORPORATION - |
Name and Principal Position
| Year
| Salary
| Stock
| Option
| Non-Equity
| Change in
| All Other
| Total ($)
| Year | Salary ($) | Bonus ($) | Stock Awards ($)(1)(2) | Option Awards ($)(1) | Non-equity plan | Change in qualified ($)(4) | All Other Compensation ($)(5) | Total ($) | Total Without Change in Pension Value ($)(6) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
(a)
| (b)
| (c)
| (e)
| (f)
| (g)
| (h)
| (i)
| (j)
| (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brian A. Kenney |
|
2018 |
|
|
976,500 |
|
|
1,790,795 |
|
|
1,755,880 |
|
| 1,260,857
|
|
|
0 |
|
|
8,250 |
|
| 5,792,282
|
| 2021 | $ | 1,017,583 | $ | 0 | $ | 2,352,520 | $ | 2,379,580 | $ | 1,238,297 | $ | 467,804 | $ | 8,700 | $ | 7,464,484 | $ | 6,996,680 | |||||||||||||||||||||||||||||
Chairman of the Board, |
|
2017 |
|
|
956,500 |
|
|
1,535,493 |
|
|
1,571,667 |
|
|
780,695 |
|
|
1,223,234 |
|
|
8,100 |
|
|
6,075,689 |
| 2020 | $ | 1,000,917 | $ | 0 | $ | 1,911,336 | $ | 1,800,344 | $ | 849,177 | $ | 1,716,441 | $ | 8,550 | $ | 7,286,765 | $ | 5,570,324 | |||||||||||||||||||||||||||||
President and Chief |
|
2016 |
|
|
956,500 |
|
|
1,496,083 |
|
|
1,512,126 |
|
|
1,071,854 |
|
|
1,270,477 |
|
|
7,950 |
|
|
6,314,990 |
| 2019 | $ | 980,500 | $ | 0 | $ | 1,740,919 | $ | 1,745,432 | $ | 1,132,674 | $ | 2,055,203 | $ | 8,400 | $ | 7,663,127 | $ | 5,607,924 | |||||||||||||||||||||||||||||
Executive Officer | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert C. Lyons | 2021 | $ | 575,483 | $ | 0 | $ | 498,826 | $ | 505,476 | $ | 490,215 | $ | 139,667 | $ | 8,700 | $ | 2,218,367 | $ | 2,078,700 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Vice President | 2020 | $ | 566,083 | $ | 0 | $ | 434,675 | $ | 409,578 | $ | 336,185 | $ | 939,090 | $ | 8,550 | $ | 2,694,161 | $ | 1,755,071 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
and President, | 2019 | $ | 551,833 | $ | 0 | $ | 410,554 | $ | 411,344 | $ | 446,234 | $ | 1,092,048 | $ | 8,400 | $ | 2,920,413 | $ | 1,828,365 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Rail North America | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thomas A. Ellman |
|
2018 |
|
|
493,333 |
|
|
802,344 |
|
|
393,597 |
|
|
445,893 |
|
|
0 |
|
|
8,250 |
|
|
2,143,417 |
| 2021 | $ | 534,483 | $ | 0 | $ | 498,826 | $ | 505,476 | $ | 455,289 | $ | 175,780 | $ | 8,700 | $ | 2,178,554 | $ | 2,002,774 | |||||||||||||||||||||||||||||
Executive Vice President |
|
2017 |
|
|
460,000 |
|
|
358,486 |
|
|
366,722 |
|
|
262,816 |
|
|
477,646 |
|
|
8,100 |
|
|
1,933,770 |
| 2020 | $ | 525,750 | $ | 0 | $ | 434,675 | $ | 409,578 | $ | 312,232 | $ | 913,460 | $ | 8,550 | $ | 2,604,245 | $ | 1,690,785 | |||||||||||||||||||||||||||||
and Chief Financial Officer |
|
2016 |
|
|
455,000 |
|
|
306,819 |
|
|
310,464 |
|
|
305,924 |
|
|
349,212 |
|
|
7,950 |
|
|
1,735,369 |
| 2019 | $ | 512,500 | $ | 0 | $ | 410,554 | $ | 411,344 | $ | 414,428 | $ | 962,321 | $ | 8,400 | $ | 2,719,546 | $ | 1,757,225 | |||||||||||||||||||||||||||||
Robert C. Lyons |
|
2018 |
|
|
536,300 |
|
|
831,633 |
|
|
422,023 |
|
|
484,728 |
|
|
0 |
|
|
8,250 |
|
|
2,282,934 |
| ||||||||||||||||||||||||||||||||||||||||||||||||
Executive Vice President |
|
2017 |
|
|
525,300 |
|
|
397,638 |
|
|
407,469 |
|
|
300,125 |
|
|
614,748 |
|
|
8,100 |
|
|
2,253,380 |
| ||||||||||||||||||||||||||||||||||||||||||||||||
and President, Rail |
|
2016 |
|
|
523,583 |
|
|
378,527 |
|
|
382,536 |
|
|
410,709 |
|
|
511,602 |
|
|
7,950 |
|
|
2,214,907 |
| ||||||||||||||||||||||||||||||||||||||||||||||||
North America | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deborah A. Golden |
|
2018 |
|
|
439,700 |
|
|
294,979 |
|
|
288,638 |
|
|
340,644 |
|
|
48,154 |
|
|
8,250 |
|
|
1,420,365 |
| 2021 | $ | 492,983 | $ | 300,000 | (7) | $ | 340,773 | $ | 345,852 | $ | 359,947 | $ | 141,814 | $ | 8,700 | $ | 1,990,069 | $ | 1,848,255 | ||||||||||||||||||||||||||||
Executive Vice President, |
|
2017 |
|
|
430,700 |
|
|
240,418 |
|
|
246,422 |
|
|
210,922 |
|
|
354,049 |
|
|
8,100 |
|
|
1,490,611 |
| 2020 | $ | 484,917 | $ | 0 | $ | 303,656 | $ | 285,805 | $ | 246,842 | $ | 398,996 | $ | 8,550 | $ | 1,728,765 | $ | 1,329,769 | |||||||||||||||||||||||||||||
General Counsel and |
|
2016 |
|
|
429,300 |
|
|
234,718 |
|
|
237,006 |
|
|
288,643 |
|
|
325,872 |
|
|
7,950 |
|
|
1,523,489 |
| 2019 | $ | 469,417 | $ | 0 | $ | 286,100 | $ | 286,829 | $ | 325,362 | $ | 579,213 | $ | 8,400 | $ | 1,955,321 | $ | 1,376,108 | |||||||||||||||||||||||||||||
Corporate Secretary | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Paul F. Titterton |
|
2018 |
|
|
397,424 |
|
|
579,890 |
|
|
177,119 |
|
| 267,384
|
|
|
0 |
|
|
8,250 |
|
| 1,430,067
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
Senior Vice President and Chief Operating Officer, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rail North America | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
N. Gokce Tezel(8) | 2021 | $ | 455,667 | $ | 0 | $ | 288,698 | $ | 292,644 | $ | 332,700 | $ | 174,378 | $ | 669,889 | $ | 2,213,975 | $ | 2,039,597 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Vice President | 2020 | $ | 443,667 | $ | 0 | $ | 212,713 | $ | 200,288 | $ | 225,844 | $ | 595,277 | $ | 215,859 | $ | 1,893,648 | $ | 1,298,371 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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 |
| (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. |
| GATX CORPORATION - | 51 |
EXECUTIVE COMPENSATION TABLES
| (7) | Amount represents a discretionary increase to the cash bonus awarded to Ms. Golden pursuant to the GATX Cash Incentive Compensation Plan in recognition of extraordinary individual performance and efforts relating to divestitures and acquisitions of subsidiaries and assisting our Board in long-term succession planning, which culminated in the appointment of our new CEO, as further discussed in the Compensation Discussion and Analysis. |
| (8) | Payments made to Mr. Tezel in non-U.S. currency were 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
|
Estimated Future Payouts
| All Other Stock Awards: Number of Stock or Units (3)(#)
|
All Other Awards: (4)(#)
| Exercise
| Closing
| Grant & Option ($)
|
|
Estimated Future Payouts |
Estimated Future Payouts | All Other of Shares (#)(3) | All Other Underlying (#)(3) | Exercise Option | Grant ($) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name
| Grant Date
| Threshold ($)
| Target ($)
| Maximum ($)
| Threshold (#)
| Target (#)
| Maximum (#)
| Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(a)
| (b)
| (c)
| (d)
| (e)
| (f)
| (g)
| (h)
| (i)
| (j)
| (k)
| (l)
| (m)
| (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (m) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brian A. Kenney |
| 1/1/2018 |
|
| 683,550 |
|
| 976,500 |
|
| 1,660,050 |
|
|
| 1/1/2021 |
|
| 814,066 |
|
| 1,017,583 |
|
| 1,729,891 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/25/2018 |
|
| 80,300 |
|
| 69.735 |
|
| 70.280 |
| 1,755,880 |
| 1/29/2021 |
|
| 80,500 |
|
| 91.36 |
| $2,379,580 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/25/2018 |
|
| 6,240 |
|
| 25,680 |
|
| 51,360 |
| 1,790,795 |
| 1/29/2021 |
|
| 6,438 |
|
| 25,750 |
|
| 51,500 |
| $2,352,520 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thomas A. Ellman |
| 1/1/2018 |
|
| 241,733 |
|
| 345,333 |
|
| 587,067 |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/25/2018 |
|
| 18,000 |
|
| 69.735 |
|
| 70.280 |
| 393,597 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/25/2018 |
|
| 1,443 |
|
| 5,770 |
|
| 11,540 |
| 402,371 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8/9/2018 |
|
| 4,710 |
| 399,973 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert C. Lyons |
| 1/1/2018 |
|
| 262,787 |
|
| 375,410 |
|
| 638,197 |
|
|
| 1/1/2021 |
|
| 322,270 |
|
| 402,838 |
|
| 684,825 |
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/25/2018 |
|
| 19,300 |
|
| 69.735 |
|
| 70.280 |
| 422,023 |
| 1/29/2021 |
|
| 17,100 |
|
| 91.36 |
| $505,476 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/25/2018 |
|
| 1,548 |
|
| 6,190 |
|
| 12,380 |
| 431,660 |
| 1/29/2021 |
|
| 1,365 |
|
| 5,460 |
|
| 10,920 |
| $498,826 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thomas A. Ellman |
| 1/1/2021 |
|
| 299,310 |
|
| 374,138 |
|
| 636,035 |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8/9/2018 |
|
| 4,710 |
| 399,973 |
| 1/29/2021 |
|
| 17,100 |
|
| 91.36 |
| $505,476 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/29/2021 |
|
| 1,365 |
|
| 5,460 |
|
| 10,920 |
| $498,826 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deborah A. Golden |
| 1/1/2018 |
|
| 184,674 |
|
| 263,820 |
|
| 448,494 |
|
|
| 1/1/2021 |
|
| 236,632 |
|
| 295,790 |
|
| 502,843 |
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/25/2018 |
|
| 13,200 |
|
| 69.735 |
|
| 70.280 |
| 288,638 |
| 1/29/2021 |
|
| 11,700 |
|
| 91.36 |
| $345,852 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/25/2018 |
|
| 1,058 |
|
| 4,230 |
|
| 8,460 |
| 294,979 |
| 1/29/2021 |
|
| 933 |
|
| 3,730 |
|
| 7,460 |
| $340,773 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Paul F. Titterton |
| 1/1/2018 |
|
| 152,624 |
|
| 218,034 |
|
| 370,657 |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
N. Gokce Tezel |
| 1/1/2021 |
|
| 218,720 |
|
| 273,400 |
|
| 464,780 |
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/25/2018 |
|
| 8,100 |
|
| 69.735 |
|
| 70.280 |
| 177,119 |
| 1/29/2021 |
|
| 9,900 |
|
| 91.36 |
| $292,644 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/25/2018 |
|
| 645 |
|
| 2,580 |
|
| 5,160 |
| 179,916 |
| 1/29/2021 |
|
| 790 |
|
| 3,160 |
|
| 6,320 |
| $288,698 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8/9/2018 |
|
| 4,710 |
| 399,973 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | Amounts shown reflect target, threshold and maximum annual incentive payouts for |
| (2) | Amounts shown reflect the number of performance shares granted in |
| (3) |
|
| 52 | GATX CORPORATION |
|
EXECUTIVE COMPENSATION TABLES
Narrative Discussion Related to the Summary Compensation Table and Grants of Plan-Based Awards Table
Annual Incentive Awards
In 2018,For 2021, 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. Threshold and maximum incentive awards (70%(80% and 170%, respectively, of the target awards) were payable at 80% and 140%160% or more, respectively, of targeted net income.
Based on individual targets and on actual net income as described in theCompensation Discussion and Analysis, 20182021 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 2018 was $199.8 million2021 for incentive payout purposes was $182.2 million, or 117.1%126.7% of target for our NEOs, resulting in payouts at 129.1%121.7% of their target awards.1
|
EXECUTIVE COMPENSATION TABLES
In addition, the Compensation Committee determined to provide Ms. Golden with an additional $300,000 in connection with her annual incentive plan payout in recognition of extraordinary individual performance and efforts relating to divestitures and acquisitions of subsidiaries and assisting our Board in long-term succession planning, which culminated in the appointment of our new CEO, as further discussed in the Compensation Discussion and Analysis.
Equity-Based Long-Term Incentives
Equity-based long-term incentive awards in 20182021 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 25, 201831, 2021 will vest in three equal installments on January 2531 of 2019, 2020,2022, 2023, and 2021.2024.
The number of NQSOs awarded in 20182021 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 2018, 2017,2021, 2020, and 20162019 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, 2020.2023. 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 2018 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 2018 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 2018, 2017,2021, 2020, and 20162019 performance shares are shown in column (e) of the Summary Compensation Table. The number of performance shares granted in 20182021 that may be earned at threshold, target, threshold, and maximum levels is shown in columns (f), (g), and (h), respectively, of the Grants of Plan-Based Awards Table.
| 1 | Our 2021 financial results calculated in accordance with GAAP include $39.1 million of tax adjustments and other items. For a reconciliation of net income, diluted earnings per share, and return on equity, excluding tax adjustments and other items, to net income, diluted earnings per share, and return on equity calculated in accordance with GAAP, please see Exhibit B to this Proxy Statement. |
| GATX CORPORATION - | 53 |
EXECUTIVE COMPENSATION TABLES
Outstanding Equity Awards at FiscalYear-End Table
The following table summarizes the number of shares of our stock underlying outstanding equity incentive plan awards for each NEO as of December 31, 2018.2021.
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Number of | Option Exercise Price ($) | 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 ($) | Equity Incentive Number of | Equity Incentive Market or | Number of (#) Exercisable | Number of Unexercisable | Equity (#) | Option Exercise Price ($) | Option expiration date | Number of shares or units of stock that have not vested (#) | Market ($) | Equity incentive unearned (#) | Equity incentive that have not vested ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
(a)
| (b)
| (c)
| (d)
| (e)
| (f)
| (g)
| (h)
| (i)
| (j)(6)
| (b)
| (c)
| (d)
| (e)
| (f)
| (g)
| (h)
| (i)
| (j)(6)
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brian A. Kenney | 0 | 80,300 | (1) | 69.735 | 1/25/2025 | 25,680 | (5) | 1,818,401 | 0 | 80,500 | (1) | 91.3600 | 1/29/2028 | 51,500 | (4) | 5,365,785 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 27,000 | 54,000 | (2) | 61.175 | 1/26/2024 | 25,100 | (6) | 1,777,331 | 26,666 | 53,334 | (2) | 77.0700 | 1/31/2027 | 49,600 | (5) | 5,167,824 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 72,734 | 63,366 | (3) | 39.185 | 1/28/2023 | 52,333 | 26,167 | (3) | 71.5250 | 1/24/2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 78,900 | 56.910 | 1/29/2022 | 80,300 | 69.7350 | 1/25/2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 57,500 | 58.345 | 1/30/2021 | 81,000 | 61.1750 | 1/26/2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 62,500
|
|
| 45.891
|
|
| 1/24/2020
|
|
| 17,067
|
|
| 39.1850
|
|
| 1/28/2023
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thomas A. Ellman | 0 | 18,000 | (1) | 69.735 | 1/25/2025 | 4,710 | (4) | 333,515 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert C. Lyons | 0 | 17,100 | (1) | 91.3600 | 1/29/2028 | 10,920 | (4) | 1,137,755 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6,300 | 12,600 | (2) | 61.175 | 1/26/2024 | 5,770 | (5) | 408,574 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 14,934 | 7,466 | (3) | 39.185 | 1/28/2023 | 5,860 | (6) | 414,947 | 6,066 | 12,134 | (2) | 77.0700 | 1/31/2027 | 11,280 | (5) | 1,175,263 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 14,100 | 56.910 | 1/29/2022 | 12,333 | 6,167 | (3) | 71.5250 | 1/24/2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12,500 | 58.345 | 1/30/2021 | 19,300 | 69.7350 | 1/25/2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 9,300
|
| 45.891 |
| 1/24/2020
|
|
| 21,000
|
|
| 61.1750
|
|
| 1/26/2024
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert C. Lyons | 0 | 19,300 | (1) | 69.735 | 1/25/2025 | 4,710 | (4) | 333,515 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thomas A. Ellman | 0 | 17,100 | (1) | 91.3600 | 1/29/2028 | 10,920 | (4) | 1,137,755 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 7,000 | 14,000 | (2) | 61.175 | 1/26/2024 | 6,190 | (5) | 438,314 | 6,066 | 12,134 | (2) | 77.0700 | 1/31/2027 | 11,280 | (5) | 1,175,263 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 18,400 | 9,200 | (3) | 39.185 | 1/28/2023 | 6,500 | (6) | 460,265 | 12,333 | 6,167 | (3) | 71.5250 | 1/24/2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 20,500 | 56.910 | 1/29/2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 17,500 | 58.345 | 1/30/2021 | 18,000 | 69.7350 | 1/25/2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 17,900
|
|
| 45.891
|
|
| 1/24/2020
|
| 18,900 | 61.1750 | 1/26/2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 22,400
|
|
| 39.1850
|
|
| 1/28/2023
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deborah A. Golden | 0 | 13,200 | (1) | 69.735 | 1/25/2025 | 4,230 | (5) | 299,526 | 0 | 11,700 | (1) | 91.3600 | 1/29/2028 | 7,460 | (4) | 777,257 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4,233 | 8,467 | (2) | 61.175 | 1/26/2024 | 3,930 | (6) | 278,283 | 4,233 | 8,467 | (2) | 77.0700 | 1/31/2027 | 7,880 | (5) | 821,017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 11,400
|
|
| 5,700
| (3)
|
| 39.185
|
|
| 1/28/2023
|
|
| 8,600
|
|
| 4,300
| (3)
|
| 71.5250
|
|
| 1/24/2026
|
| |||||||||||||||||||||||||||||||||||||||||||||||||
Paul F. Titterton | 0 | 8,100 | (1) | 69.735 | 1/25/2025 | 4,710 | (4) | 333,515 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
N. Gokce Tezel | 0 | 9,900 | (1) | 91.3600 | 1/29/2028 | 6,320 | (4) | 658,481 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2,933 | 5,867 | (2) | 61.175 | 1/26/2024 | 2,580 | (5) | 182,690 | 2,966 | 5,934 | (2) | 77.0700 | 1/31/2027 | 5,520 | (5) | 575,129 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5,900 | 3,934 | (3) | 39.185 | 1/28/2023 | 2,720 | (6) | 192,603 | 6,000 | 3,000 | (3) | 71.5250 | 1/24/2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5,400 | 56.910 | 1/29/2022 | 7,200 | 69.7350 | 1/25/2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 4,300
|
|
| 58.345
|
|
| 1/30/2021
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4,900 | 61.1750 | 1/26/2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 6,400
|
|
| 39.1850
|
|
| 1/28/2023
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | NQSOs will vest in three, equal, annual installments on 1/ |
| (2) | 50% of the unexercisable NQSOs will vest on 1/ |
| (3) | 100% of the NQSOs will vest on 1/ |
| (4) | Amounts shown reflect the number of |
| (5) | Amounts shown reflect the number of target performance shares granted in |
| (6) |
|
Market value of performance shares is based on the closing price of GATX common stock on the last trading day of the year, December 31, |
| 54 | 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 shares acquired on exercise (#) | Value realized on exercise ($) | Number of shares acquired on vesting (#) | Value realized on vesting ($) | |||||||||||||||||||||||||||||||||||||
(a)
| (b)
| (c)
| (d)
| (e)
| (b) | (c) | (d) | (e) | |||||||||||||||||||||||||||||||||||||
Brian A. Kenney |
|
75,000 |
|
|
2,664,375 |
|
|
48,260 |
|
|
3,451,797 |
|
| 170,933 |
|
| 8,373,540 |
|
| 27,285 |
|
| 2,905,307 |
| |||||||||||||||||||||
|
46,900 |
|
|
3,178,661 |
| ||||||||||||||||||||||||||||||||||||||||
Robert C. Lyons |
| 48,100 |
|
| 2,467,537 |
|
| 6,435 |
|
| 685,199 |
| |||||||||||||||||||||||||||||||||
| 3,532 |
|
| 324,008 |
| ||||||||||||||||||||||||||||||||||||||||
Thomas A. Ellman |
|
8,500 |
|
|
361,633 |
|
|
9,897 |
|
|
707,883 |
|
| 14,100 |
|
| 551,874 |
|
| 6,435 |
|
| 685,199 |
| |||||||||||||||||||||
Robert C. Lyons |
|
18,500 |
|
|
657,213 |
|
|
12,210 |
|
|
873,320 |
| |||||||||||||||||||||||||||||||||
| 3,532 |
|
| 324,008 |
| ||||||||||||||||||||||||||||||||||||||||
|
18,200 |
|
|
767,676 |
| ||||||||||||||||||||||||||||||||||||||||
Deborah A. Golden |
|
12,100 |
|
|
307,885 |
|
|
7,571 |
|
|
541,516 |
|
| 19,900 |
|
| 604,823 |
|
| 4,484 |
|
| 477,456 |
| |||||||||||||||||||||
|
11,700 |
|
|
134,024 |
| ||||||||||||||||||||||||||||||||||||||||
N. Gokce Tezel |
| 4,200 |
|
| 182,910 |
|
| 3,116 |
|
| 331,792 |
| |||||||||||||||||||||||||||||||||
|
12,400 |
|
|
307,706 |
| ||||||||||||||||||||||||||||||||||||||||
|
11,600 |
|
|
425,360 |
|
| 1,350 |
|
| 285,424 |
| ||||||||||||||||||||||||||||||||||
Paul F. Titterton |
|
0 |
|
|
0 |
|
|
5,208 |
|
|
372,502 |
| |||||||||||||||||||||||||||||||||
| (1) | Amounts shown include the number and value of restricted stock units vested in 2021 and performance shares earned |
Each of our NEOs participated in a defined benefit pension plan during the year ended December 31, 2018.2021. 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 ($) | Payments during last fiscal year ($) | ||||||||||||||||||
(a)
| (b)
| (c)
| (d)
| (e)
| (b) | (c) | (d)(1)(2) | (e) | ||||||||||||||||||
Brian A. Kenney
| GATXNon-Contributory Pension Plan for Salaried Employees
|
| 23.2
|
|
| 693,554
|
| 0
| GATX Non-Contributory Pension Plan for Salaried Employees |
| 26.2 |
| $ | 1,224,502 |
| $0 | ||||||||||
| GATX Supplemental Retirement Plan
|
| 23.2
|
|
| 6,059,031
|
| 0
| GATX Supplemental Retirement Plan |
| 26.2 |
| $ | 9,767,534 |
| $0 | ||||||||||
Robert C. Lyons | GATX Non-Contributory Pension Plan for Salaried Employees |
| 25.3 |
| $ | 1,274,667 |
| $0 | ||||||||||||||||||
GATX Supplemental Retirement Plan |
| 25.3 |
| $ | 3,533,348 |
| $0 | |||||||||||||||||||
Thomas A. Ellman
| GATXNon-Contributory Pension Plan for Salaried Employees
|
| 22.3
|
|
| 581,615
|
| 0
| GATX Non-Contributory Pension Plan for Salaried Employees |
| 25.3 |
| $ | 1,110,794 |
| $0 | ||||||||||
| GATX Supplemental Retirement Plan
|
| 22.3
|
|
| 1,154,388
|
| 0
| ||||||||||||||||||
Robert C. Lyons
| GATXNon-Contributory Pension Plan for Salaried Employees
|
| 22.3
|
|
| 709,537
|
| 0
| ||||||||||||||||||
| GATX Supplemental Retirement Plan
|
| 22.3
|
|
| 1,927,673
|
| 0
| GATX Supplemental Retirement Plan |
| 25.3 |
| $ | 2,676,770 |
| $0 | ||||||||||
Deborah A. Golden
| GATXNon-Contributory Pension Plan for Salaried Employees
|
| 13.0
|
|
| 642,125
|
| 0
| GATX Non-Contributory Pension Plan for Salaried Employees |
| 16.0 |
| $ | 1,017,748 |
| $0 | ||||||||||
| GATX Supplemental Retirement Plan
|
| 13.0
|
|
| 1,140,928
|
| 0
| GATX Supplemental Retirement Plan |
| 16.0 |
| $ | 1,885,328 |
| $0 | ||||||||||
Paul F. Titterton
| GATXNon-Contributory Pension Plan for Salaried Employees
|
| 21.4
|
|
| 41,540
|
| 0
| ||||||||||||||||||
N. Gokce Tezel | GATX Non-Contributory Pension Plan for Salaried Employees |
| 21.1 |
| $ | 775,532 |
| $0 | ||||||||||||||||||
| GATX Supplemental Retirement Plan
|
| 21.4
|
|
| 459,122
|
| 0
| GATX Supplemental Retirement Plan |
| 21.1 |
| $ | 1,155,048 |
| $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 - | 55 |
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 Analysis, 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, 2018.2021.
| 56 | 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: | |
— the acquisition of 20% or more of the Company’s outstanding shares or voting securities | ||
— a turnover in a majority of the Company’s board members | ||
— consummation of a reorganization, merger, consolidation, sale, or disposition of substantially all assets unless shareholders immediately prior to the merger beneficially own more than 65% of outstanding shares or voting power of the resulting entity | ||
— consummation of a reorganization, merger, consolidation, sale, or disposition of substantially all assets of any subsidiary or10-K business segment that is the primary employer of the executive | ||
— shareholder approval of liquidation or dissolution of the Company | ||
• “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: | ||
— a material diminution of the executive’s authority or duties | ||
— a material diminution in base compensation | ||
— a material diminution in the budget over which authority is retained | ||
— a material change in geographic location at which services must be performed |
| GATX CORPORATION - | 57 |
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, 20182021 and (b) the value of a share of the Company’s common stock on December 31, 2018,2021, the last trading day of the year was $70.81.$104.19. It includes the lump sum payments associated with the benefits described above, as well as the value of all equity awards for which vesting is accelerated as provided under the GATX Amended and Restated 2012 Incentive Award Plan. The table excludes the following payments and benefits that are not enhanced by the termination of employment following a COC:
accrued vacation pay, health plan continuation, and other similar amounts payable when employment terminates under programs applicable to our salaried employees generally
stock options or SARs that have vested and are exercisable as shown in Column (b) of the Outstanding Equity Awards at FiscalYear-End Table
performance shares and restricted stock that have vested as shown in Column (e) of the Option Exercises and Stock Vested Table
the present value of pension benefits calculated in accordance with the assumptions applicable to all participants in the GATXNon-Contributory Pension Plan for Salaried Employees.Employees
Potential Payments upon Change of Control Table
| Accelerated Vesting of Equity Awards(3) | Accelerated Vesting of Equity Awards(3) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Severance ($) | Bonus (Accrued Obligations) ($)(1) | SRP Payment ($)(2) | Gross-up Payment ($) | Options/SARs ($) | Restricted ($) | Performance ($) | Outplacement ($) | Total Value ($) | Severance ($) | Bonus (Accrued Obligations) ($)(1) | SRP ($)(2) | Grossup Payment ($) | NQSOs ($) | Restricted ($) | Performance ($) | Outplacement ($) | Total Value | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Brian A. Kenney(4) |
|
5,883,000 |
|
|
980,500 |
|
|
2,715,658 |
|
|
0 |
|
|
1,756,708 |
|
|
0 |
|
|
3,595,732 |
|
|
98,080 |
|
15,029,648 |
| 6,120,600 |
|
| 1,020,100 |
|
| 3,336,507 |
|
| 0 |
|
| 3,333,949 |
|
| 0 |
|
| 5,266,805 |
|
| 102,010 |
|
| 19,179,971 |
| ||||||||||||||||||
Robert C. Lyons(4) |
| 2,942,190 |
|
| 403,830 |
|
| 1,558,115 |
|
| 0 |
|
| 749,883 |
|
| 0 |
|
| 1,156,509 |
|
| 57,690 |
|
| 6,868,217 |
| |||||||||||||||||||||||||||||||||||||||||||
Thomas A. Ellman |
|
2,550,000 |
|
|
350,000 |
|
|
996,558 |
|
|
0 |
|
|
376,895 |
|
|
333,515 |
|
|
823,521 |
|
|
50,000 |
|
5,480,489 |
| 2,732,580 |
|
| 375,060 |
|
| 1,487,388 |
|
| 0 |
|
| 749,883 |
|
| 0 |
|
| 1,156,509 |
|
| 53,580 |
|
| 6,555,000 |
| ||||||||||||||||||
Robert C. Lyons(4) |
|
2,746,350 |
|
|
376,950 |
|
|
1,090,951 |
|
|
0 |
|
|
446,588 |
|
|
333,515 |
|
|
898,579 |
|
|
53,850 |
|
5,946,783 | |||||||||||||||||||||||||||||||||||||||||||||
Deborah A. Golden(4) |
|
2,119,200 |
|
|
264,900 |
|
|
672,769 |
|
|
0 |
|
|
276,022 |
|
|
0 |
|
|
577,809 |
|
|
44,150 |
|
3,954,850 |
| 2,372,160 |
|
| 296,520 |
|
| 1,371,548 |
|
| 0 |
|
| 520,187 |
|
| 0 |
|
| 799,138 |
|
| 49,420 |
|
| 5,408,973 |
| ||||||||||||||||||
Paul F. Titterton |
|
1,317,500 |
|
|
233,750 |
|
|
485,840 |
|
|
0 |
|
|
189,639 |
|
|
333,515 |
|
|
375,293 |
|
|
42,500 |
|
3,725,891 | |||||||||||||||||||||||||||||||||||||||||||||
N. Gokce Tezel |
| 2,192,640 |
|
| 274,080 |
|
| 998,031 |
|
| 0 |
|
| 385,942 |
|
| 0 |
|
| 616,804 |
|
| 45,680 |
|
| 4,513,177 |
| |||||||||||||||||||||||||||||||||||||||||||
| (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 COC results in the accelerated vesting of all unvested NQSOs, |
| (4) | The value of |
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 (“CEO”CEO”), to the total annual compensation of our median employee for our last completed fiscal year.
In 2018,2021, our last completed fiscal year, the total annual compensation of our CEO as reported in the Summary Compensation Table, was $5,792,282.$7,464,484. The total annual compensation of our median employee calculated in the same manner as the CEO’s, was $54,243.$67,036. As a result, for 2018, our estimate of2021, the ratio of our CEO’s total annual compensation to the total annual compensation of our median employee was approximately 107111 to 1.
| 58 | GATX CORPORATION - 2022 Proxy Statement |
EXECUTIVE COMPENSATION TABLES
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 the median employee by examining compensation information derived from payroll records for all employees, excluding the CEO, who were employed by us on October 1, 2020. In identifying our median employee, we selected actual base salary (for salaried employees) and wages (for hourly employees) as the most appropriate measure of compensation and consistently applied that measure to all employees included in the calculation. We are permitted to use of the sameidentify our median employee identified on October 1, 2017 for up toonce every three years unless there has been a meaningful change toin our employee population or a change in employee compensation arrangements that we reasonably believe would result in a significant modificationchange to theour pay ratio disclosure. Also, within those three years, if the median employee’s compensation significantly changes, wethe company may use another employee whosewith substantially similar compensation is comparableas its median employee. For 2021, we continue to use the original
same median employee based on the compensation measure used to select the original median employee.from 2020.
As of October 1, 2018,2020, we employed approximately 2,1841,854 people, with 1,3551,047 located in the United States and 829807 located outside the United States. We continue to exclude employees in India (14)(21), Mexico (10), France (7), Russia (3)(5), and France (3)China (5) given the small number of employees located in those jurisdictions. This is comparable to 2,263 employed on October 1, 2017, with 1,403 located in the United States and 860 located outside the United States. There have been no changes in employee compensation arrangements that could significantly impact our pay ratio.
However, our original median employee had a change in circumstances during 2018 which made using his/her compensation inappropriate, as it would significantly change the pay ratio. Accordingly, we identified a new median employee for this year by looking back at the original dataset by which we identified our original median employee. For our new median employee, we chose the employee with compensation that was the closest in proximity to our original median employee. We then calculated the actual annual total compensation for this new median employee using the same methodology we used in 2017.
| GATX CORPORATION - | 59 |
| PROPOSAL 3: | RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
The Audit Committee has appointed Ernst & Young LLP (“EY”EY”) as our independent registered public accounting firm for fiscal year 2019,2022, 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.
Shareholder ratification of this appointment is not required by our By-Laws or applicable laws and regulations. However, our Board annually submits this appointment for shareholder ratification as an element of our strong
governance program. While this vote cannot be binding, if shareholders do not ratify the appointment of EY, the Audit Committee will take the vote into account in making future appointments.
Representatives of EY 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 20192022 appointment, the Audit Committee considered, among other things, the following:
Audit Quality — The quality of EY’s audit andnon-audit work, based on its oversight of the firm’s work product, as well as its discussions with management in executive session without EY present and its discussions with EY in executive session without management present
Performance — EY’s reports on its quality controls and its performance during our 20182021 and prior-year audits
Qualitative Review — EY’s (i) expertise and resources, (ii) audit planning, (iii) communication and interaction, (iv) independence, objectivity, and professional skepticism and (v) value for fees
Self-Assessment — EY’s annual self-assessment of its accomplishments in connection with its audit, its satisfaction of the service needs and expectations of the Audit Committee and management, and areas of continued focus and improvement opportunities
|
Regulatory Reviews — External data on the firm’s audit quality and performance, including recent Public Company Accounting Oversight Board (“PCAOB”) reports on EY and its peer firms
Reasonableness of Fees — The appropriateness of EY’s fees for audit andnon-audit services, both on an absolute basis and relative to comparable firms
Independence — Written disclosures from the firm and the independence letter required by the PCAOB
Tenure — EY’s tenure as our independent auditor, including the benefits of having a long-tenured auditor and the institutional knowledge gained from prior years of engagement.engagement
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 stockholdershareholder ratification, EY as our independent registered public accounting firm for fiscal year 20192022 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 2019.2022.
| 60 | GATX CORPORATION - |
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).
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, 2018.2021.
The Audit Committee has discussed with EY, our independent registered public accounting firm, the matters required to be discussed under 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 EY 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 EY 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, 20182021 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 - 2022 Proxy Statement | 61 |
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
PROPOSAL 3: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 EY 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 $2,571,000$2,799,000 for 20182021 and $2,613,000$2,646,000 for 2017.2020. 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.
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
$139,000 $140,000 for 20182021 and $136,000$143,000 for 2017.2020. 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 $43,000$67,000 for 20182021 and $63,000$22,000 for 2017.
2020.
All Other Fees
Fees for other professional services rendered by EY were approximately $2,000$3,000 for each of 20182021 and 2017,$3,000 for 2020, primarily
related to access and use of EY’s online accounting research tool.
| 62 | 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
| |||
Diane M. Aigotti |
|
|
| |
Anne L. Arvia |
|
|
| |
Thomas A. Ellman |
|
|
| |
Deborah A. Golden |
|
|
| |
|
| |||
Brian A. Kenney |
|
|
| |
Robert C. Lyons |
|
|
| |
James B. Ream |
|
|
| |
|
|
|
| |
David S. Sutherland |
|
|
| |
|
|
|
| |
|
| |||
Stephen R. Wilson |
|
|
| |
Paul G. Yovovich |
|
|
| |
All Directors and |
|
|
| |
| (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 - | 63 |
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 36,451,68635,554,228 shares outstanding as of March 4, 2019.February 25, 2022.
| 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 |
|
6,399,500 |
|
| 17.1
|
| ||
The Vanguard Group, Inc.(2) 100 Vanguard Boulevard Malvern, Pennsylvania 19355 |
|
5,046,660 |
|
| 13.5
|
| ||
BlackRock, Inc.(3) 55 East 52nd Street New York, New York 10055 |
|
4,370,637 |
|
| 11.7
|
| ||
GAMCO Investors, Inc.(4) One Corporate Center Rye, New York 10580 |
|
3,971,390 |
|
| 10.6
|
| ||
Dimensional Fund Advisors LP(5) Building One 6300 Bee Cave Road Austin, Texas 78746 |
|
3,117,019 |
|
| 8.3
|
| ||
| 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 | 5,870,700 | 16.5 | ||||||
BlackRock, Inc.(2) 55 East 52nd Street New York, New York 10055 | 4,000,784 | 11.3 | ||||||
The Vanguard Group, Inc.(3) 100 Vanguard Boulevard Malvern, Pennsylvania 19355 | 3,688,924 | 10.4 | ||||||
GAMCO Investors, Inc.(4) One Corporate Center Rye, New York 10580 | 3,039,058 | 8.5 | ||||||
EARNEST Partners, LLC(5) 1180 Peachtree Street NE, Suite 2300 Atlanta, Georgia 30309 | 2,503,703 | 7.0 | ||||||
Dimensional Fund Advisors LP(6) Building One 6300 Bee Cave Road Austin, Texas 78746 | 2,402,923 | 6.8 | ||||||
Wellington Management Group LLP(7) c/o Wellington Management Company LLP 280 Congress Street Boston, Massachusetts 02210 | 1,918,586 | 5.4 | ||||||
| (1) | Based on a Schedule 13G amendment filed with the SEC on February |
| (2) | Based on a Schedule 13G |
|
| (3) | Based on a Schedule 13G amendment filed with the SEC on February 10, 2022. The Vanguard Group, Inc. and certain of its affiliated entities (collectively, “Vanguard”) have sole voting power with respect to |
| (4) | Based on a Schedule 13D amendment filed with the SEC on |
| 64 | GATX CORPORATION - 2022 Proxy Statement |
PRINCIPAL SHAREHOLDERS
| (5) | Based on a Schedule 13G amendment filed with the SEC on February 11, 2022. EARNEST Partners, LLC is an investment adviser to its clients. No single client interest in these shares is greater than 5% of the total number of outstanding shares of GATX stock. EARNEST Partners, LLC has sole voting power with respect to 1,825,991 shares and shared voting power with respect to 2,805 of the reported shares. |
| (6) | Based on a Schedule 13G amendment filed with the SEC on February 8, |
PRINCIPAL SHAREHOLDERS
| 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 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 2,356,052 of the reported shares. |
| (7) | Based on a Schedule 13G filed with the SEC on February 4, 2022. Various clients of investment advisers directly or indirectly owned by Wellington Management Group LLP (collectively, “Wellington”) have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, these shares. No single client has such power with respect to more than 5% of the total number of outstanding shares of GATX stock). Wellington has sole voting power with respect to none of the reported shares, shared voting power with respect to 1,739,747 of the reported shares and sole dispositive power with respect to none of the reported shares. |
| GATX CORPORATION - | 65 |
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. TheseForward-looking statements 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 Annual Report on Form 10-K for the year ended December 31, 2021 and elsewhere in this report and in our other filings with the SEC, including our Form10-K for the year ended December 31, 2018,U.S. Securities and Exchange Commission (“SEC”), could cause actual results to differ materially from our current expectations expressed in forward-looking statements:
the duration and effects of the global COVID-19 pandemic and any mandated pandemic mitigation requirements, including adverse impacts on our business, personnel, operations, commercial activity, supply chain, the demand for our transportation assets, the value of our assets, our liquidity and macroeconomic conditions
exposure to damages, fines, criminal and civil penalties, and reputational harm arising from a negative outcome in litigation, including claims arising from an accident involving our railcarstransportation assets
inability to maintain our transportation assets on lease at satisfactory rates due to oversupply of railcarsassets in the market or other changes in supply and demand
a significant decline in customer demand for our railcars or othertransportation assets or services, including as a result of:
| — | weak macroeconomic conditions |
| — | weak market conditions in our customers’ businesses |
| — |
| adverse changes in the price of, or demand for, commodities |
| — | changes in railroad operations, |
| — | changes in, or disruptions to, supply chains |
| — | 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 |
higher costs associated with increased railcar assignments of our transportation assets followingnon-renewal of leases, customer defaults, and compliance maintenance programs or other maintenance initiatives
events having an adverse impact on assets, customers, or regions where we have a concentrated investment exposure
financial and operational risks associated with long-term railcar purchase commitments including increased costs due to tariffs or trade disputesfor transportation assets
reduced opportunities to generate asset remarketing income
inability to successfully consummate and financialmanage ongoing acquisition and divestiture activities
| 66 | GATX CORPORATION - 2022 Proxy Statement |
FORWARD-LOOKING STATEMENTS
reliance on Rolls-Royce in connection with our aircraft spare engine leasing businesses, and the risks related tothat certain factors that adversely affect Rolls-Royce could have an adverse effect on our affiliate investments, including the Rolls-Royce & Partners Finance joint venturesbusinesses
fluctuations in foreign exchange rates
inflation or deflation
failure to successfully negotiate collective bargaining agreements with the unions representing a substantial portion of our employees
asset impairment charges we may be required to recognize
deterioration of conditions in the capital markets, reductions in our credit ratings, or increases in our financing costs
changes in banks’ inter-lending rate reporting practices and the LIBOR calculation process and potential phasing out of LIBOR after 2021
competitive factors in our primary markets, including competitors with a significantly lower costcosts of capital than GATX
risks related to our international operations and expansion into new geographic markets, including the imposition of new or additionallaws, regulations, tariffs, quotas,taxes, treaties, sanctions or trade barriers affecting our activities in the countries where we do business
changes in, or failure to comply with, laws, rules, and regulations
U.S. and global political conditions
inability to obtain cost-effective insurance
environmental liabilities and remediation costs
potential obsolescence of our assets
inadequate allowances to cover credit losses in our portfolio
operational, functional and regulatory risks associated with severe weather events, climate change and natural disasters
inability to maintain and secure our information technology infrastructure from cybersecurity threats and related disruption of our business.business
changes in assumptions, increases in funding requirements or investment losses in our pension and post-retirement plans
inability to maintain effective internal control over financial reporting and disclosure controls and procedures
| 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 2018.
20192022 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 65)70) may exercise their discretionary voting authority under the proxies they hold to vote in accordance with their best judgment on any such proposal.
20202023 Shareholder Proposals
Proposals Under SEC Rule14a-8
In order for a shareholder proposal to be considered for inclusion in our proxy materials for the 20202023 annual meeting of shareholders pursuant to SECRule 14a-8, the shareholder proposal must be received by the Corporate Secretary, GATX Corporation, 233 South Wacker Drive, Chicago, Illinois 60606-7147 no later than November 19, 2019.11, 2022. Any such proposal may be included in next year’s
proxy statement Proxy 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 20202023 annual meeting of shareholders outside the processes of SEC Rule14a-8, the proposal must be received by the Corporate Secretary, GATX Corporation, 233 South Wacker Drive, Chicago, Illinois 60606-7147 no earlier than December 31, 2019,23, 2022, and no later than January 30, 2020.22, 2023. The notice must contain,
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.”
20202023 Director Nominations
Director nominations by shareholders for consideration at the 20202023 annual meeting of shareholders must be received by the Governance Committee, c/o the Corporate Secretary, GATX Corporation, 233 South Wacker Drive, Chicago, Illinois 60606-7147 no earlier
than December 31, 2019,23, 2022, and no later than January 30, 2020.22, 2023. The notice must contain, and be accompanied by all information required by ourBy-Laws, the proxy rules, and applicable law. In addition to satisfying the foregoing requirements, to comply with the universal proxy rules (once they become effective), shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than February 21, 2023.
| 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 4, 2019February 25, 2022 (the “Record Date”“Record Date”) will be entitled to vote at the Annual Meeting. On that day 36,451,68635,554,228 shares of common stock were issued and
outstanding and eligible to vote. Each share is entitled to one vote on each matter presented at the Annual Meeting.
Who 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 https://meetnow.global/MMHSFKX and enter your 15-digit Control Number to attend the virtual Annual Meeting. Your Control Number was provided in the proxy card you received.
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. By mail: Computershare, GATX Corporation Legal Proxy, P.O. Box 43001, Providence, RI 02940-3001. Requests for registration must be labeled as “Legal Proxy” and be received no later than 9.00 a.m., Eastern Time, on April 19, 2022. You will receive a confirmation of your registration, with a Control Number, by email from Computershare. At the time of the meeting, go to https://meetnow.global/MMHSFKX and enter your Control Number to attend the virtual Annual Meeting.
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 (MS Edge, Firefox, Chrome and Safari) and devices (desktops, laptops, tablets and cell phones) running the most up-to-date version of applicable software and plugins. Note: Internet Explorer is not a supported browser. 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. For further assistance should you need it, you may call 888-724-2416.
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 - 2022 Proxy Statement | 69 |
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 2019.2022.
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
QUESTIONS AND ANSWERS ABOUT THE MEETING
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 20192022 (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 virtual 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 233 South Wacker Drive, Chicago, Illinois 60606-7147.
| 70 | GATX CORPORATION - 2022 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 36,451,68635,554,228 shares of our common stock issued and outstanding on the Record Date are represented, in
personvirtually, online 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 votes cast FORin favor of or AGAINST 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 25, 2019.20, 2022. 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 - 2022 Proxy Statement | 71 |
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$10,500 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:
The director is, or has been within the last three years, an employee of the Company, or an immediate family member is, or has been within the last three years, an executive of the Company.
The director has received, or has an immediate family member who has received, during any twelve-month period within the last three years, more than $120,000 in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent on continued service).
(A) The director is a current partner or employee of a firm that is the Company’s internal or external auditor; (B) the director has an immediate family member who is a current partner of such firm; (C) the director has an immediate family member who is a current employee of such firm and who works on the Company’s audit; or (D) the director or an immediate family member was within the last three years a partner or employee of such firm and personally worked on the Company’s audit within that time.
The director or an immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of the Company’s present executive officers at the same time serves or served on that company’s compensation committee.
The director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments from, the Company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenues.
|
The director is a partner of a firm providing tax, accounting, legal, or other consulting services to the Company which received payment from the Company for such services, in any of the last three fiscal years, in excess of $250,000.
The director is an executive officer or employee, or an immediate family member is an executive officer, of another company that does business with the Company and the sales by that company to the Company or purchases by that company from the Company, in any single fiscal year during the evaluation period, are more than the greater of 1% of the annual revenues of that company or $1 million.
The director is an executive officer or employee, or an immediate family member is an executive officer, of another company which is indebted to the Company, or to which the Company is indebted, and the total amount of either company’s indebtedness to the other at the end of the last completed fiscal year is more than 1% of the other company’s total consolidated assets.
The director serves as an officer, director, or trustee of a charitable organization, and the Company’s discretionary charitable contributions to the organization exceeded 1% of that organization’s total annual charitable receipts during its last completed fiscal year.
In addition, the Board will review all relevant facts and circumstances as to any other relationship which may exist between the Company and any director.
| 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, U.S. generally accepted accounting principles (“GAAP”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.
| GATX CORPORATION - | B-1 |
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):
2018 | 2017 | 2016 | 2015 | 2021 | 2020 | 2019 | 2018 | |||||||||||||||||||||
Shareholders’ Equity (GAAP)
|
$
|
1,788.1
|
|
$
|
1,792.7
|
|
$
|
1,347.2
|
|
$1,280.2
|
$
|
2,019.2
|
|
$
|
1,957.4
|
|
$
|
1,835.1
|
|
$1,788.1
| ||||||||
Add: accumulated other comprehensive loss
|
| 164.6
|
|
| 109.6
|
|
| 211.1
|
|
198.8
|
|
160.6
|
|
|
137.5
|
|
|
163.6
|
|
164.6
| ||||||||
Less: impact of the Tax Cuts and Jobs Act of 2017
|
|
(315.9
|
)
|
|
(315.9
|
)
|
|
—
|
|
—
| ||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Shareholders’ Equity, as adjusted(non-GAAP) (1)
|
$
|
1,636.8
|
|
$
|
1,586.4
|
|
$
|
1,558.3
|
|
$1,479.0
|
$
|
2,179.8
|
|
$
|
2,094.9
|
|
$
|
1,998.7
|
|
$1,952.7
| ||||||||
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: | 2018 | 2017 | 2016 | |||||||||
Net income (GAAP) |
$ |
211.3 |
|
$ |
502.0 |
|
$ |
257.1 |
| |||
Adjustments attributable to consolidated pre-tax income: | ||||||||||||
Cost attributable to the closure of a maintenance facility at Rail International (2) |
|
9.5 |
|
|
—
|
|
|
— |
| |||
Railcar impairment at Rail North America (3) |
|
—
|
|
|
—
|
|
|
29.8 |
| |||
Net (gain) loss on wholly owned Portfolio Management marine investments (4) |
|
— |
|
|
(1.8
|
)
|
|
2.5 |
| |||
Residual sharing settlement at Portfolio Management (5) |
|
— |
|
|
— |
|
|
(49.1 |
) | |||
|
| |||||||||||
Total adjustments attributable to consolidated pre-tax income |
$ |
9.5 |
|
$ |
(1.8 |
) |
$ |
(16.8 |
) | |||
Income taxes thereon, based on applicable effective tax rate |
$ |
(3.1 |
) |
$ |
0.7 |
|
$ |
7.2 |
| |||
Other income tax adjustments attributable to consolidated income: | ||||||||||||
Impact of the Tax Cuts and Jobs Act of 2017 (6) |
|
(16.5 |
) |
|
(315.9 |
) |
|
— |
| |||
Foreign tax credit utilization (7) |
|
(1.4 |
) |
|
—
|
|
|
(7.1 |
) | |||
|
| |||||||||||
Total other income tax adjustments attributable to consolidated income |
$ |
(17.9 |
) |
$ |
(315.9 |
) |
$ |
(7.1 |
) | |||
Adjustments attributable to affiliates’ earnings, net of taxes: | ||||||||||||
Net gain on Portfolio Management marine affiliate (4) |
|
— |
|
|
—
|
|
|
(0.6 |
) | |||
Income tax rate changes (8) |
|
— |
|
|
—
|
|
|
(3.9 |
) | |||
|
| |||||||||||
Total adjustments attributable to affiliates’ earnings, net of taxes |
$ |
— |
|
$ |
— |
|
$ |
(4.5 |
) | |||
|
| |||||||||||
Net income, excluding tax adjustments and other Items (non-GAAP) |
$ |
199.8 |
|
$ |
185.0 |
|
$ |
235.9 |
| |||
|
| |||||||||||
Impact of Tax Adjustments and Other Items on Diluted Earnings Per Share: | 2018 | 2017 | 2016 | |||||||||
Diluted earnings per share (GAAP) |
$ |
5.52 |
|
$ |
12.75 |
|
$ |
6.29 |
| |||
Adjustments attributable to consolidated income, net of taxes: | ||||||||||||
Cost attributable to the closure of a maintenance facility at Rail International (2) |
|
0.17
|
|
|
—
|
|
|
—
|
| |||
Railcar impairment at Rail North America (3) |
|
—
|
|
|
—
|
|
|
0.47 |
| |||
Net (gain) loss on wholly owned Portfolio Management marine investments (4) |
|
—
|
|
|
(0.03
|
)
|
|
0.04
|
| |||
Residual sharing settlement at Portfolio Management (5) |
|
— |
|
|
— |
|
|
(0.74 |
) | |||
Impact of the Tax Cuts and Jobs Act of 2017 (6) |
|
(0.43
|
)
|
|
(8.02
|
)
|
|
— |
| |||
Foreign tax credit utilization (7) |
|
(0.04
|
)
|
|
—
|
|
|
(0.17
|
)
| |||
Adjustments attributable to affiliates’ earnings, net of taxes: | ||||||||||||
Net gain on Portfolio Management marine affiliate (4) |
|
—
|
|
|
—
|
|
|
(0.02 |
) | |||
Income tax rate changes (8) |
|
— |
|
|
— |
|
|
(0.10 |
) | |||
|
| |||||||||||
Diluted earnings per share, excluding tax adjustments and other items (non-GAAP) |
$ |
5.22 |
|
$ |
4.70 |
|
$ |
5.77 |
| |||
|
| |||||||||||
Impact of Tax Adjustments and Other Items on Net Income: | 2021 | 2020 | 2019 | |||||||||
Net income (GAAP) | $ | 143.1 | $ | 151.3 | $ | 211.2 | ||||||
Less: Net income from discontinued operations (GAAP) | — | 1.1 | 30.4 | |||||||||
|
|
|
|
|
| |||||||
Net income from continuing operations (GAAP) | $ | 143.1 | $ | 150.2 | $ | 180.8 | ||||||
Adjustments attributable to pre-tax income from continuing operations: | ||||||||||||
Net insurance proceeds (2) | (5.3 | ) | — | — | ||||||||
Debt extinguishment costs (3) | 4.5 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total adjustments attributable to pre-tax income from continuing operations | $ | (0.8 | ) | $ | — | $ | — | |||||
Income taxes thereon, based on applicable effective tax rate | $ | 0.2 | $ | — | $ | — | ||||||
Other income tax adjustments attributable to income from continuing operations: | ||||||||||||
Income tax rate change (4) | — | — | (2.8 | ) | ||||||||
|
|
|
|
|
| |||||||
Total other income tax adjustments attributable to income from continuing operations | $ | — | $ | — | $ | (2.8 | ) | |||||
Adjustments attributable to affiliates’ earnings from continuing operations, net of taxes: | ||||||||||||
Income tax rate changes (5) | $ | 39.7 | $ | 12.3 | $ | — | ||||||
|
|
|
|
|
| |||||||
Total adjustments attributable to affiliates’ earnings, net of taxes | $ | 39.7 | $ | 12.3 | $ | — | ||||||
|
|
|
|
|
| |||||||
Net income from continuing operations, excluding tax adjustments and other items (non-GAAP) | $ | 182.2 | $ | 162.5 | $ | 178.0 | ||||||
|
|
|
|
|
| |||||||
Adjustments attributable to discontinued operations, net of taxes: | ||||||||||||
Net casualty gain at ASC (6) | — | — | (8.1 | ) | ||||||||
|
|
|
|
|
| |||||||
Total adjustments attributable to discontinued operations, net of taxes | $ | — | $ | — | $ | (8.1 | ) | |||||
|
|
|
|
|
| |||||||
Net income from discontinued operations, excluding tax adjustments and other items (non-GAAP) | $ | — | $ | 1.1 | $ | 22.3 | ||||||
|
|
|
|
|
| |||||||
Net income from consolidated operations, excluding tax adjustments and other items (non-GAAP) | $ | 182.2 | $ | 163.6 | $ | 200.3 | ||||||
|
|
|
|
|
| |||||||
| B-2 | GATX CORPORATION - |
EXHIBIT B RECONCILIATION OFNON-GAAP FINANCIAL MEASURES
Impact of Tax Adjustments and Other Items on Diluted Earnings Per Share: | 2021 | 2020 | 2019 | |||||||||
Diluted earnings per share from consolidated operations (GAAP) | $ | 3.98 | $ | 4.27 | $ | 5.81 | ||||||
Less: Diluted earnings per share from discontinued operations (GAAP) | — | 0.03 | 0.84 | |||||||||
|
|
|
|
|
| |||||||
Diluted earnings per share from continuing operations (GAAP) | $ | 3.98 | $ | 4.24 | $ | 4.97 | ||||||
Adjustments attributable to income from continuing operations, net of taxes: | ||||||||||||
Net insurance proceeds (2) | (0.11 | ) | — | — | ||||||||
Debt extinguishment costs (3) | 0.09 | — | — | |||||||||
Income tax rate change (4) | — | — | (0.08 | ) | ||||||||
Adjustments attributable to affiliates’ earnings from continuing operations, net of taxes: | ||||||||||||
Income tax rate changes (5) | 1.10 | 0.35 | — | |||||||||
|
|
|
|
|
| |||||||
Diluted earnings per share from continuing operations, excluding tax adjustments and other items (non-GAAP) | $ | 5.06 | $ | 4.59 | $ | 4.89 | ||||||
|
|
|
|
|
| |||||||
Adjustments attributable to discontinued operations, net of taxes: | ||||||||||||
Net casualty gain at ASC (6) | — | — | (0.22 | ) | ||||||||
|
|
|
|
|
| |||||||
Diluted earnings per share from discontinued operations, excluding tax adjustments and other items (non-GAAP) | $ | — | $ | 0.03 | $ | 0.62 | ||||||
|
|
|
|
|
| |||||||
Diluted earnings per share from consolidated operations, excluding tax adjustments and other items (non-GAAP) | $ | 5.06 | $ | 4.62 | $ | 5.51 | ||||||
|
|
|
|
|
| |||||||
Return on Equity:
|
2018
|
2017
|
2016
| 2021 | 2020 | 2019 | ||||||||||||||||||
Return on Equity (GAAP)
|
|
11.8
|
%
|
|
32.0
|
%
|
|
19.6
|
%
| 7.2 | % | 8.0 | % | 11.7 | % | |||||||||
Return on Equity (non-GAAP) (9)
|
|
13.6
|
%
|
|
13.1
|
%
|
|
18.0
|
%
| |||||||||||||||
Return on Equity, applicable for performance share plan measures(non-GAAP) (10)
|
|
13.1
|
%
|
|
11.8
|
%
|
|
16.9
|
%
| |||||||||||||||
Return on Equity (non-GAAP) (7) | 11.0 | % | 10.5 | % | 13.5 | % | ||||||||||||||||||
Return on Equity, applicable for performance share plan measures (non-GAAP) (8) | 6.7 | % | 7.4 | % | 10.7 | % | ||||||||||||||||||
| (1) | Shareholders’ Equity as used for purposes of performance share plan measures (non-GAAP). |
| (2) |
|
| (3) |
|
| (4) |
|
| (5) |
|
|
|
Deferred income tax adjustments due to an enacted |
Net casualty gain attributable to insurance recovery for a vessel at ASC. |
| (7) | Return on Equity is calculated as net income, excluding tax adjustments and other items, divided by Shareholders’ Equity. For |
Return on Equity is calculated as net income divided by Shareholders’ Equity, adjusted as shown above. |
| GATX CORPORATION - | B-3 |
GATX Corporation, 233 South Wacker Drive, 52nd Floor, Chicago, Illinois
The Annual Meeting will be held in our corporate headquarters on the 52nd floor of Willis Tower, which is located at 233 South Wacker Drive in Chicago, Illinois. Willis Tower is undergoing a renovation, and only the entrances on Franklin Street and Adams Street are currently open. To reach the location of the meeting, please follow the instructions below:
GATX CORPORATION 222 West Adams Street Chicago, IL 60606-5314 (312) 621-6200 (800) 428-8161 www.gatx.comGATX CORPORATION 233 South Wacker DriveChicago, Illinois 60606 (312) 621-6200 (800) 428-8161 www.gatx.com
| ||||||||
| ||||||||
| ||||||||
 |
| |||||||
|  |  |
| |||||
|
| |
q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q
 |
| For | Against | Abstain | For | Against | Abstain | |||||||||||||||
| 2. | ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION | ☐ | ☐ | ☐ | 3. | RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR ENDING DECEMBER 31, 2019 | ☐ | ☐ | ☐ |
GATX VOTE 01 - Diane M. Aigotti 04 - Robert C. Lyons 07 - David S. Sutherland 02 - Anne L. Arvia 05 - James B. Ream 08 - Stephen R. Wilson 03 - Brian A. Kenney 06 - Adam L. Stanley For Against Abstain For Against Abstain For Against Abstain 1 P C F 09 - Paul G. Yovovich Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. 03L9OC + + Proposals — The Board of Directors recommends a vote FOR A all the nominees listed and FOR Proposals 2 – 3. 2. ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION 3. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR ENDING DECEMBER 31, 2022 1. ELECTION OF DIRECTORS: For Against Abstain Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.
|
|
02ZV3G
Important notice regarding the internet availability of proxy materialsbox. Signature 2 — Please keep signature within the box. B Authorized Signatures — This section must be completed for the Annual Meeting of Shareholders.
The material is available at: www.envisionreports.com/GATX
 |
|  | ||
| ||||
q IFyour vote to count. Please date and sign below. qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.qENVELOPE.q 2022 Annual Meeting Proxy Card For Against Abstain You may vote online or by phone instead of mailing this card. Online Go to www.envisionreports.com/GATX or scan the QR code — login details are located in the shaded bar below. Save paper, time and money! Sign up for electronic delivery at www.envisionreports.com/GATX Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada. Your vote matters – here’s how to vote! Votes submitted electronically must be received by April 21, 2022 at 11:59 P.M., Eastern Time (for registered shares) and 8:00 a.m. Eastern Time, on April 20, 2022 (for Plan Shares, as defined in the Proxy Statement).
| | |
Notice of 2019Small steps make an impact. Help the environment by consenting to receive electronic delivery. Sign up at www.envisionreports.com/GATX. 2022 Annual Meeting of Shareholders
Proxy Solicited by Board of Directors for Annual Meeting –— April 29, 2019
22, 2022 Brian A. Kenney, Thomas A. Ellman, and Deborah A. Golden, or any of them, each with the power of substitution, 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 Corporation to be held via live audio webcast at GATX Corporation, 233 South Wacker Drive, 52nd Floor, Chicago, Illinoishttps://meetnow.global/MMHSFKX on Monday,Friday, April 29, 2019,22, 2022, at 12:9:00 p.m.a.m. Central Time, or at any postponement or adjournment thereof.
Shares represented by this proxy will be voted as directed by the shareholder. If no such directions are indicated, the Proxies will have authority to vote FOR the election of the Board of Directors and FOR items 2-3.
2 - 3. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.
(Items (Items to be voted appear on reverse side.)
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q IF GATX Corporation qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q
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| For | Against | Abstain | For | Against | Abstain | |||||||||||||||
| 2. | ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION | ☐ | ☐ | ☐ | 3. | RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR ENDING DECEMBER 31, 2019 | ☐ | ☐ | ☐ |
ENVELOPE.q Change of Address — Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.
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02ZV4F
print new address below. Comments — Please print your comments below. C Non-Voting Items + + Important notice regarding the internet availability of proxy materials for the
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Notice of 2019 Annual Meeting of Shareholders
Proxy Solicited by Board of Directors for Annual Meeting – April 29, 2019
Brian A. Kenney, Thomas A. Ellman, and Deborah A. Golden, or any of them, each with the power of substitution, 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 theShareholders. The material is available at: www.envisionreports.com/GATX. The 2022 Annual Meeting of Shareholders of GATX Corporation towill be held on Friday, April 22, 2022 at GATX Corporation, 233 South Wacker Drive, 52nd Floor, Chicago, Illinois9:00 a.m. CT, virtually via live audio webcast at https://meetnow.global/MMHSFKX. To access the virtual meeting, you must have the information that is printed in the shaded bar located on Monday, April 29, 2019, at 12:00 p.m. Central Time, or at any postponement or adjournment thereof.
Shares represented bythe reverse side of this proxy will be voted by the shareholder. If no such directions are indicated, the Proxies will have authority to vote FOR the election of the Board of Directors and FOR items 2-3.
In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.
(Items to be voted appear on reverse side.)form.
