January 1, 1995
GATX CORPORATION
MANAGEMENT INCENTIVE PLAN
1. OBJECTIVE.
This Management Incentive Plan (the "Plan"), which is administered by the
Compensation Committee of the Board of Directors (the "Committee"), is
established for the period January 1 through December 31, 1995 (the "Plan
Year"), to motivate and reward those employees whose activities and
contributions have a significant bearing on the success and profitability of
GATX Corporation and its Subsidiaries (collectively, the "Company").
2. ELIGIBILITY.
Recommendation for participation in the Plan is initiated by the
Subsidiary Presidents or the Vice President of Human Resources, and approved
by the Chief Executive Officer.
3. PARTICIPATION.
Participants under this Plan will be exempt salaried employees with
the Company who are individually authorized to participate (the
"Participants"). Each Participant will be notified by the Subsidiary
President or Corporate Department Head of his or her participation and
participation level ("Target Bonus").
4. DEFINITIONS.
For purposes of this Plan, the following terms will have the following
meanings:
A. "Base Salary" will mean (1) the total salary (excluding any
incentive compensation or lump sum payments) paid to a Participant by the
Company before reduction for any contribution authorized under the GATX
Corporation Salaried Employees Retirement Savings Plan, plus (2) any
compensation which the Participant elects to defer under any deferred
compensation plan of the Company.
B. "Income Goals" will mean the net income goals established annually
by the Committee for GATX and each subsidiary. See Exhibit II.
C. "Bonus" will mean the amount payable to a Participant under this
Plan for the current Plan Year, calculated in accordance with the provisions
of this Plan, and approved by the Committee.
D. "Target Bonus" will mean the percentage of base salary payable if
100% of income goals and individual performance goals (if applicable) are
attained.
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E. "Profit Attainment Percentage" will mean the quotient of income
divided by income goal expressed as a percentage.
F. "Payout Percentage" will mean the percentage of the Bonus paid for
the Company or Subsidiary performance as determined by the Profit Attainment
Percentage. The relationship between the Profit Attainment Percentage and
the Payout Percentage is approved by the Committee and presented in
Exhibit III.
G. "Personal Evaluation Percentage" will mean the percentage of the Bonus
paid for the Participant's individual performance during the Plan Year . See
Exhibit IV.
H. "Threshold" will mean the minimum level of income required for payout
under the Earnings Portion of this Plan. See Exhibit II.
5. COMPONENTS OF THE BONUS.
The Bonus is composed of a GATX Earnings Portion, a Subsidiary Earnings
Portion and a Personal Portion. As soon as practical following the start of
each Plan Year, the Committee will establish Income Goals for GATX and each
participating subsidiary.
A. GATX Earnings Portion - The extent to which GATX meets its Income
Goal - determined by reference to the Profit Attainment Percentages (Exhibit
III) - will be the basis for the GATX Earnings Portion of the Bonus for both
corporate and subsidiary participants.
B. Subsidiary Earnings Portion - For subsidiary Participants, the
extent to which each subsidiary meets its Income Goal - determined by
reference to the Profit Attainment Percentages (Exhibit III) - will be the
basis for that subsidiary's Earnings Portion of the Bonus.
For corporate Participants, the Subsidiary Earnings Portion will recognize
the relative proportion of the Income Goals established for each participating
subsidiary. At the start of the Plan Year, each participating subsidiary will
be assigned a weight by the Committee calculated on the basis of its Income
Goal as a percent of the total of the Income Goals of all participating
subsidiaries, with a minimum weight of 5.0% (Exhibit II). The extent to which
each subsidiary meets its Income Goal - determined by reference to the Profit
Attainment Percentages (Exhibit III) - will be the basis for the Subsidiary
Earnings Portion of the Bonus.
C. Personal Portion - The Personal Portion recognizes the level of the
Participant's individual performance (Exhibit IV). The percentage of the
Bonus represented by the Personal Portion may vary depending upon whether or
not the Threshold levels established annually for the GATX Earnings Portion
(for corporate Participants) and the Subsidiary Earnings Portion (for
subsidiary Participants) are met.
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6. WEIGHTING OF THE COMPONENTS OF THE BONUS.
As soon as practical following the start of each Plan Year, the
Committee will determine the weight to be allocated to each of the component
parts of the Bonus identified in paragraph 5 hereof. For the current Plan
Year, the component parts of the Bonus for each category of Participant are
attached as Exhibit I.
7. CALCULATION OF THE BONUS.
A. The weighting of the Income Goals is multiplied by a Participant's
Target Bonus to determine the Target Value for the Income Goal. (Exhibit V,
Section A).
B. Payout Percentages are determined from the Profit Attainment
Percentages as described in paragraph 5 (Exhibit V, Section B.)
C. Payout Percentages are multiplied by the Target Values of the
Income Goals to determine the Earnings Portion of the Bonus. (Exhibit V,
Section C.) The Personal Portion is determined by multiplying the Target
Value of the Personal Portion by the Personal Evaluation Percentage as
determined from the table attached as Exhibit IV.
D. The Bonus will be the sum of the Earnings Portions and the Personal
Portion of the Bonus, provided that no Bonus payment will be made with respect
to the Earnings Portions unless the Company and participating subsidiaries
reach Threshold levels as established by the Committee.
E. The Company or Subsidiary President may increase or decrease the
Bonus to an individual Participant by a maximum of 25%, based on an assessment
of that Participant's overall contribution or performance related to a
special project.
8. ADMINISTRATION OF THE PLAN.
A. Administration.
Administration of the Plan will be the responsibility of the
Committee which may delegate responsibility thereunder to the Corporate
Director of Compensation and Benefits, Corporate Human Resources Department.
B. New Participants.
Subject to the provisions of the following sentence, new
employees who join the Company during the Plan Year may be authorized to
participate in the Plan on a pro-rata basis with the approval of the Chief
Executive Officer. Participation under this Plan will not be available to
any new employee after October 1st of any Plan Year.
C. Transfers and Promotions.
If a Participant is transferred or promoted during the Plan
Year causing an adjustment in his Target Bonus, such Participant's bonus
will be calculated on a pro-rata basis to reflect this change.
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D. Retirement, Death or Disability.
A Participant who retires, dies, or becomes totally and
permanently disabled, as that term is defined in the GATX Pension Plan for
Salaried Employees, during the Plan Year will be entitled to a pro-rated
bonus in accordance with Paragraph E.
E. Payment of Bonus.
Bonuses will be paid as soon as possible after the completion
of the Company's year-end audit, normally no later than March 1. The
Participant does not have a contractual right to receive the Bonus.
Participants become entitled to receive Bonus payments only after the
payments have been approved and authorized by the Committee.
F. Employment as a Condition Precedent.
No bonus will be paid, except pursuant to the provisions of
Paragraph D above, unless the Participant is an employee of the Company at
the end of the Plan Year.
G. No Employment Contract.
Neither the establishment of the Plan nor the authorization
to be a Participant in the Plan will be construed as giving the Participant
the right to be retained in the service of the Company.
H. Modification of Goals.
The Committee may, from time to time during the Plan Year,
modify the Plan as appropriate including (i) Income Goals, (ii) Thresholds,
(iii) Payout Percentages, (iv) assigned weights established for one or more
subsidiaries and (v) weighting of the Components of the Bonus if, in the
sole discretion of the Committee, any part of the Plan ceases to be a
reasonable measure of desired performance. Notwithstanding anything to the
contrary contained herein, the Committee shall have the authority and
exclusive discretion to determine whether income or expenses of an unusual
or nonrecurring nature are to be included with other income of the Company
for purposes of determining whether the established Income Goals have been
achieved.
EXHIBIT I
WEIGHTING OF THE COMPONENTS OF THE BONUS
1995 MANAGEMENT INCENTIVE PLAN
CEO and COO 100% GATX
OTHER SENIOR CORPORATE OFFICERS 30% GATX
and SUBSIDIARY PRESIDENTS 70% subsidiary or
combined subsidiaries
------
100%
======
OTHER PARTICIPANTS 10% GATX
40% subsidiary or combined subsidiaries
50% Personal*
------
100%
======
*30% if Threshold not met
EXHIBIT II
INCOME GOALS, WEIGHTING OF THE INCOME GOALS, THRESHOLDS
1995 MANAGEMENT INCENTIVE PLAN
1995 INCOME GOALS ($ IN OOO'S)
NET
INCOME CORP STAFF
GOALS WEIGHTING
------------ ----------------
GATC 65,001 45.12%
CAPITAL 30,205 20.97%
TERMINALS 34,458 23.92%
ASC 6,237 5.00%
LOGISTICS 100 5.00%
100.00%
GATX CORP 97,769
THRESHOLDS
The threshold will be 80% of the Income Goal for GATX and each participating
subsidiary with the exception of GATC, for which the Threshold will be 85%
of the Income Goal.
EXHIBIT III
PROFIT ATTAINMENT AND PAYOUT PERCENTAGES
1995 MANAGEMENT INCENTIVE PLAN
PAYOUT PERCENTAGE
PROFIT ATTAINMENT --------------------------------------------
PERCENTAGE GATX & ALL SUBS EXCEPT GATC GATC
- ---------------------- --------------------------- ------------
THRESHOLD 80 30
81 35
82 40
83 45
84 50
GATC 85 55 55.0
86 60 60.0
87 65 65.0
88 70 70.0
89 75 75.0
90 80 80.0
91 83 83.0
92 86 86.0
93 89 89.0
94 92 92.0
95 95 95.0
96 96 96.0
97 97 97.0
98 98 98.0
99 99 99.0
100 100 100.0
101 101 101.3
102 102 102.7
103 103 104.0
104 104 106.0
105 105 110.0
106 108 114.0
107 111 118.0
108 114 122.0
109 117 126.0
110 120 130.0
111 123 134.0
112 126 138.0
113 129 142.0
114 132 146.0
115 135 150.0
116 138
117 141
118 144
119 147
120 150
Actual Payout Percentage will be interpolated, if necessary, and rounded to
the nearest hundredth.
EXHIBIT IV
PERFORMANCE EVALUATION PERCENTAGE DETERMINATION
1995 MANAGEMENT INCENTIVE PLAN
PERFORMANCE
EVALUATION
EVALUATION CRITERIA PERCENTAGE
------------------------------------------------- -------------
Performance was truly outstanding; consistently 150%
exceeded job requirements and attained particularly
difficult and aggressive, high priority goals during
the performance period.
Performance was well above average; job 125%
requirements were often exceeded and difficult
goals were attained during the performance period.
Performance was fully satisfactory; met or at 100%
times exceeded job requirements and attained
important goals during the performance period.
Performance was less than satisfactory; some 50%
but not all job requirements were met and important
goals were not attained during the performance period.
Performance was not acceptable; few job 0%
requirements were met or goals attained during the
performance period.
EXHIBIT V
1995 MANAGEMENT INCENTIVE PLAN
BONUS CALCULATION EXAMPLE
EMPLOYEE: (Corporate Participant) Base Salary $75,000
---------------------------- Target Percentage 20.0%
Target Bonus $15,000
A. TARGETS - EARNINGS AND PERSONAL PORTIONS
FACTOR WEIGHTING TARGET BONUS TARGET VALUE
- ------------------ ----------------------- ------------ -----------
1. CORP INCOME 10% =10.000% $15,000.00 $1,500.00
2. GATC 45.12% x 40% = 18.05% $15,000.00 $2,707.00
Capital 20.97% x 40% = 8.39% $15,000.00 $1,258.00
Terminals 23.92% x 40% = 9.57% $15,000.00 $1,435.00
ASC 5.00% x 40% = 2.000% $15,000.00 $300.00
Logistics 5.00% x 40% = 2.000% $15,000.00 $300.00
3. PERSONAL 50% =50.000% $15,000.00 $7,500.00
-------------- ------------
TARGET AMOUNT 100.000% $15,000.00
============== ============
B. GATX AND SUBSIDIARY PERFORMANCE
FACTOR THRESHOLD INCOME GOAL ACTUAL PROFIT % PAYOUT %
- --------------- ---------- ----------- ---------- --------- ---------
1. CORP INCOME 72,000,000 90,000,000 81,000,000 90% 80%
2. GATC 52,000,000 65,000,000 64,350,000 99% 99%
Capital 24,000,000 30,000,000 31,500,000 105% 105%
Terminals 24,000,000 30,000,000 33,000,000 110% 120%
ASC 4,800,000 6,000,000 5,640,000 94% 92%
Logistics 400,000 500,000 425,000 85% 55%
C. INDIVIDUAL BONUS CALCULATION
FACTOR PAYOUT % TARGET VALUE AWARD
- --------------- --------- ------------ ---------
1. CORP INCOME 80% x $1,500.00 = $1,200.00 $1,200.00
2. GATC 99% x $2,707.00 = $2,679.93
Capital 105% x $1,258.00 = $1,320.90
Terminals 120% x $1,435.00 = $1,722.00
ASC 92% x $300.00 = $276.00
Logistics 55% x $300.00 = $165.00 $6,163.83
--------- ---------
3. PERSONAL 125% x $7,500.00 = $9,375.00 $9,375.00
--------- ---------
TOTAL BONUS $16,738.83
==========
EXHIBIT V
1995 MANAGEMENT INCENTIVE PLAN
BONUS CALCULATION EXAMPLE
EMPLOYEE: (Subsidiary Participant) Base Salary $75,000
----------------------------- Target Percentage 20.0%
Target Bonus $15,000
A. TARGETS - EARNINGS AND PERSONAL PORTIONS
FACTOR WEIGHTING TARGET BONUS TARGET VALUE
- ---------------- ----------------- ------------ ------------
1. CORP INCOME 100% x 10% = 10% $15,000.00 $1,500.00
2. SUB INCOME 100% x 40% = 40% $15,000.00 $6,000.00
-----------
$7,500.00
3. PERSONAL 50% = 50.00% $15,000.00 $7,500.00
------- ----------
TARGET AMOUNT 100.00% $15,000.00
======= ==========
B. GATX AND SUBSIDIARY PERFORMANCE
FACTOR THRESHOLD INCOME GOAL ACTUAL PROFIT % PAYOUT %
- -------------- --------- ----------- ------ -------- ---------
1. CORP INCOME 72,000,000 90,000,000 81,000,000 90% 80%
2. SUB INCOME 52,000,000 65,000,000 64,350,000 99% 99%
C. INDIVIDUAL BONUS CALCULATION
FACTOR PAYOUT % TARGET VALUE AWARD
- --------------- -------- ------------- -------
1. CORP INCOME 80% x $1,500.00 = $1,200.00
2. SUB INCOME 99% x $6,000.00 = $5,940.00
---------
$7,140.00
----------
3. PERSONAL 125% x $7,500.00 = $9,375.00
-----------
TOTAL BONUS $16,515.00
===========