Contract
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GATX CORPORATION
2012 INCENTIVE AWARD PLAN
PERFORMANCE SHARE AGREEMENT
FOR EXECUTIVE OFFICERS
This PERFORMANCE SHARE AGREEMENT (this “Agreement”) is entered into
as of January 25, 2018 (the “Grant Date”) by and between the Participant and GATX
Corporation (the "Company") in respect of the performance period beginning on
January 1, 2018 through and including December 31, 2020 (the “Performance Period”).
WHEREAS, the Company maintains the GATX Corporation 2012 Incentive
Award Plan (the "Plan"), which is incorporated into and forms a part of this Agreement,
and the Participant has been selected by the Compensation Committee of the Board of
Directors of the Company (the “Committee”), which has been charged with the
responsibility of administering the Plan, to receive a grant of Performance Shares under
the Plan;
NOW, THEREFORE, IT IS AGREED, by and between the Company and the
Participant as follows:
1. Defined Terms. Certain capitalized terms used in this Agreement are defined in
paragraph 13 or elsewhere in this Agreement. Capitalized terms used but not
defined herein shall have the meanings ascribed thereto in the Plan.
2. Award. Subject to the terms of the Plan and this Agreement, the Participant is
hereby granted the number of Performance Shares approved by the Committee,
subject to Section 3.1 and Article 5 of the Plan and as set forth on the Xxxxxx
Xxxxxxx StockPlan Connect website (xxxxx://xxx.xxxxxxxxxxxxxxxx.xxx) or any
successor administrator the Committee may designate from time to time to
administer the Plan and this Agreement (the “Award”). Each Performance Share
entitles the Participant to receive one share of Common Stock of the Company
(each a “Share”) subject to the terms and conditions of this Agreement.
3. Voting Rights and Dividends. Notwithstanding anything to the contrary, the
Participant shall not have any rights as a shareholder of the Company, including
the right to vote, until the Participant actually receives Shares in accordance with
paragraph 4 of this Agreement.
An account shall be established for the Participant, to which shall be credited
dividend equivalents equal to the product of (a) the number of the Participant’s
Performance Shares and (b) the dividend declared on a single share of Common
Stock. To the extent the Participant becomes vested in Performance Shares, the
Participant shall be entitled to a distribution of the dividend equivalents credited
to his or her account if and when Shares are issued with respect to Performance
Shares to which the Participant becomes entitled pursuant to paragraph 4 of this
Agreement. All dividend equivalents paid will be considered ordinary income and
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will be subject to supplemental withholding rates for income tax purposes
including payroll taxes, applicable to such supplemental income.
4. Vesting, Transfer and Forfeiture.
(a) After the end of the Performance Period, the Committee shall determine
the number of the Participant's Performance Shares that have been
earned for the Performance Period in accordance with the schedule set
forth on Exhibit 1, weighted by the percentages set forth in the column
captioned “Weight” on Exhibit 2 and calculated in the manner set forth on
Exhibit 2 (provided that the determination under this subparagraph 4(a)
shall be subject to modification as provided in paragraph 8 hereof). The
date of the Committee’s determination being the “Determination Date”.
(b) Notwithstanding anything in this Agreement to the contrary that requires
delivery and payment of Shares, the Participant may elect, in his or her
sole discretion in lieu of Shares, to receive from the Company cash equal
to the Fair Market Value of the Shares (as of the Determination Date) that
otherwise would be delivered and payable under the terms of this
Agreement, provided that the following conditions are met: (i) the
Participant is within five years of being retirement-eligible under the GATX
Non-Contributory Pension Plan for Salaried Employees as of the last day
of the Performance Period; or (ii) the Participant satisfies at least 150% of
his or her ownership requirement under the Company’s stock retention
policy as of the last day of the Performance Period; and (iii) such election
is submitted in writing on such form as the Company may specify (the
“Cash Election”). The Participant may submit a Cash Election only during
any period in which the Participant is allowed to trade in the Company’s
Shares under the Company’s xxxxxxx xxxxxxx policy, but no later than the
Determination Date for the Performance Period. If any of the foregoing
conditions are not met, then the election will be void and the Participant
shall receive payment under this Agreement in the form of Shares.
Otherwise, an election to receive cash in lieu of Shares may not be
revoked or changed once made.
(c) As soon as practicable after the Determination Date, but not later than
March 15 of the year following the end of the Performance Period, an
equal number of Shares shall be transferred to the Participant.
(d) Except as provided in subparagraph 4(e) below, if the Participant's Date of
Termination occurs prior to the end of the Performance Period, the
Participant shall forfeit all Performance Shares and rights under this
Agreement.
(e) Notwithstanding subparagraph 4(d) above, the Participant shall become
vested in a number of earned Performance Shares hereunder, and shall
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become owner of an equal number of Shares in respect thereof, free and
clear of all restrictions otherwise imposed by this Agreement, as follows:
(i) If the Participant’s employment is involuntarily terminated by the
Company other than for Cause, not less than eighteen (18) months
following the beginning of the Performance Period but on or prior to
the end of the Performance Period, the Participant will be entitled to
a pro rata portion of his or her earned Performance Shares based
on the length of his or her employment during the Performance
Period. The pro rata portion of the Performance Shares shall equal
the product of:
(A) the number of Performance Shares to which the Participant
would otherwise be entitled in accordance with the foregoing
provisions of this paragraph 4 had his or her employment not
been terminated; and
(B) a fraction (not greater than one), the numerator of which is
the number of days the Participant was employed by the
Company or its Subsidiaries during the period beginning on
the date of commencement of the Performance Period and
ending on the Date of Termination, and the denominator of
which is the number of days in the Performance Period.
The Shares to which the Participant is entitled pursuant to this
subparagraph 4(e)(i) shall be transferred to the Participant in the
year following the end of the Performance Period as soon as
practical following the Determination Date , but not later than March
15 of the year following the end of the Performance Period.
(ii) If the Participant's Date of Termination occurs by reason of the
Participant's death, Retirement or Disability prior to the end of the
Performance Period, the Participant will be entitled to receive a pro
rata portion of his or her earned Performance Shares based on the
length of his or her employment during the Performance Period.
The pro rata portion of the Performance Shares shall equal the
product of:
(A) the number of Performance Shares to which the Participant
would otherwise be entitled in accordance with the foregoing
provisions of this paragraph 4 if no Date of Termination had
occurred; and
(B) a fraction (not greater than one), the numerator of which is
the number of days during the period beginning on the date
of commencement of the Performance Period and ending on
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the date of the Participant’s death, Retirement or Disability,
and the denominator of which is the number of days in the
Performance Period.
Notwithstanding the foregoing, if the Participant’s Date of
Termination occurs by reason of the Participant’s death, Retirement
or Disability, the Committee may, in its sole discretion, increase the
number of Performance Shares to which the Participant is entitled,
but in no event will the Participant be entitled to a distribution that is
greater than what would have been distributable if no Date of
Termination had occurred. The Shares to which the Participant is
entitled pursuant to this subparagraph 4(e)(ii) shall be transferred to
the Participant in the year following the end of the Performance
Period as soon as practical following the Determination Date, but
not later than March 15 of the year following the end of the
Performance Period.
(iii) Subject to the provisions of Section 14.2 of the Plan (relating to the
adjustment of Shares), if a Change in Control occurs prior to a
Participant's Date of Termination and before the end of the
Performance Period and, within two (2) years after the occurrence
of the Change in Control, the Participant's Date of Termination
occurs by reason of discharge by the Participant's employer without
Cause or the Participant resigns from employment with the
employer for Good Reason, the Participant shall become vested in
all Performance Shares granted under this Agreement prior to the
Change in Control that are held by the Participant as of the Date of
Termination, in accordance with subparagraphs 4(e)(iv) or 4(e)(v),
as applicable.
(iv) With respect to any Performance Shares that become vested in
connection with a Change in Control described in Subsection
2.7(a), (b), (c) or (d) of the Plan, the number of Shares to which the
Participant is entitled upon the vesting of his or her Performance
Shares shall be calculated as if the Company had achieved 100%
performance against its Performance Goals, and shall be
transferred to the Participant as soon as practicable following the
Date of Termination. Following a distribution in accordance with
this subparagraph 4(e)(iv), the Participant shall have no further
rights under this Agreement.
(v) With respect to any Performance Shares that become vested in
connection with a Change in Control described in Subsection 2.7(e)
of the Plan, with respect to a Participant as described therein
(relating to certain transactions involving a Subsidiary or Business
Segment), as soon as practicable following the Date of
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Termination, the Participant shall receive a distribution of the
following number of Shares, determined on the assumption that the
Company achieved 100% performance against its Performance
Goals as follows:
(A) If the Date of Termination occurs during the first year of the
Performance Period, the Participant shall be entitled to
receive Shares equal in number to one-third (1/3) of his or
her Performance Shares.
(B) If the Date of Termination occurs during the second year of
the Performance Period, the Participant shall be entitled to
receive Shares equal in number to two-thirds (2/3) of his or
her Performance Shares.
(C) If a Date of Termination occurs during the third year of the
Performance Period, such Participant shall be entitled to
receive Shares equal in number to the total of all of his or
her Performance Shares.
Following a distribution in accordance with this subparagraph
4(d)(v), the Participant shall have no further rights under this
Agreement.
(vi) For purposes of subparagraphs 4(e)(iii) and 4(e)(v) hereof, if, as a
result of a Change in Control described in Subsection 2.7(e) of the
Plan, the Participant’s employer ceases to be a Subsidiary (and the
Participant’s employer is or becomes an entity that is separate from
the Company), and the Participant is not, immediately following the
Change in Control, employed by the Company or an entity that is
then a Subsidiary, then the occurrence of the Change in Control
shall be treated as the Participant’s Date of Termination caused by
the Participant being discharged by the employer without Cause.
(f) Except pursuant to a domestic relations order, the Performance Shares
may not be sold, assigned, transferred, pledged or otherwise encumbered
until Shares have been distributed to the Participant free and clear of all
restrictions.
5. Withholding. The granting, vesting and settlement of Performance Shares under
this Agreement are subject to withholding of all applicable taxes. Subject to such
rules and limitations as may be established by the Committee from time to time,
the Participant may satisfy his or her withholding obligations through (i) payment
of cash to the Company equal to the amount of taxes required to be withheld, (ii)
contemporaneously withholding from other sources of income otherwise payable
to the Participant by the Company or any Subsidiary, or (iii) the surrender of
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Shares which the Participant already owns, or to which the Participant is
otherwise entitled under the Plan or this Agreement; provided, however, that,
except as otherwise provided by the Committee, Shares otherwise payable under
this Agreement may not be used to satisfy more than the Company's minimum
statutory withholding obligation (based on minimum statutory withholding rates
for income tax purposes, including payroll taxes, that are applicable to such
supplemental taxable income). In the event that the withholding obligation arises
during a period in which the Participant is prohibited from trading in Common
Stock pursuant to the Company’s xxxxxxx xxxxxxx policy, or by applicable
securities or other laws, then unless otherwise elected by the Participant during a
period when he or she was not so restricted from trading, the Company shall
automatically satisfy the Participant’s withholding obligation by withholding from
Shares otherwise deliverable under this Agreement.
6. Heirs and Successors. This Agreement shall be binding upon, and inure to the
benefit of, the Company and its successors and assigns, including any person
acquiring, whether by merger, consolidation, purchase of assets or otherwise, all
or substantially all of the Company's assets and business. If any rights of the
Participant or benefits distributable to the Participant under this Agreement have
not been exercised or distributed, respectively, at the time of the Participant's
death, such rights shall be exercisable by the Designated Beneficiary, and such
benefits shall be distributed to the Designated Beneficiary, in accordance with the
provisions of this Agreement and the Plan. If a deceased Participant fails to
designate a beneficiary, or if the Designated Beneficiary does not survive the
Participant, any rights that would have been exercisable by the Participant and
any benefits distributable to the Participant shall be exercised by or distributed to
the legal representative of the estate of the Participant. If the Designated
Beneficiary survives the Participant but dies before the exercise of all rights or
the complete distribution of benefits under this Agreement, then any remaining
rights and any remaining benefit distribution shall be exercisable by or distributed
to the legal representative of the estate of the Designated Beneficiary.
7. Administration. The authority to manage and control the operation and
administration of this Agreement shall be vested in the Committee, and the
Committee shall have all powers with respect to this Agreement as it has with
respect to the Plan. Any interpretation of this Agreement by the Committee and
any decision made by it with respect to this Agreement shall be final and binding
on all persons.
8. Modification of Performance Goals. Pursuant to Subsection 2.33(b) of the Plan,
in determining the extent to which the Performance Goals have been achieved,
the Committee may, in its sole discretion, include or exclude items or events that
impact the final results, positively or negatively, as it deems appropriate.
9. Plan Governs. Notwithstanding anything in this Agreement to the contrary, the
terms of this Agreement shall be subject to the terms of the Plan, a copy of which
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may be obtained by the Participant from the Director, Compensation of the
Company. This Agreement is subject to all interpretations, amendments, rules
and regulations promulgated by the Committee from time to time pursuant to the
Plan.
10. Not An Employment Contract. The grant of Performance Shares hereunder will
not confer on the Participant any right with respect to continuance of employment
or other service with the Company or any Subsidiary, nor will it interfere in any
way with any right the Company or any Subsidiary would otherwise have to
terminate or modify the terms of such Participant's employment or other service
at any time.
11. Notices. Any written notices provided for in this Agreement or the Plan shall be
provided in accordance with subparagraph 11(a) or 11(b), as applicable and, if
provided to the Company, shall be addressed as follows:
GATX Corporation
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
U.S.A.
(a) Any notice required by the Participant pursuant to the definition of Good
Reason, as defined below, shall be in writing given by hand delivery or by
registered or certified mail, return receipt requested, postage prepaid,
addressed to the Senior Vice President, Human Resources and shall be
effective when actually received.
(b) All other notices shall be in writing and shall be deemed sufficiently given
if either hand delivered or if sent by fax or overnight courier, or by postage
paid first class mail. Any such notice sent by mail shall be deemed
received three business days after mailing, but in no event later than the
date of actual receipt and shall be directed, if to the Participant, at the
Participant's address indicated by the Company's records, or if to the
Company, to the attention of the Director, Compensation.
12. Amendment. This Agreement may be amended in accordance with the
provisions of the Plan, and may otherwise be amended by written agreement of
the parties.
13. Definitions. For purposes of this Agreement, the terms used in this Agreement
shall be subject to the following:
“3-Year Average Return on Equity” shall mean the sum of net income divided by
average equity for each year in the Performance Period divided by three (3).
Accumulated other comprehensive income is excluded from equity.
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“3-Year Cumulative Investment Volume” shall mean the sum of consolidated
cumulative GAAP basis portfolio investments and capital additions as reported
on the company’s audited balance sheet for each year in the Performance
Period. Purchases of leased in assets are excluded.
“Cause” shall mean (i) the willful and continued failure of the Participant to
perform the Participant’s duties with the Company or one of its affiliates (other
than any such failure resulting from incapacity due to physical or mental illness),
or (ii) the willful engaging by the Participant in illegal conduct or gross misconduct
in the course of his or her discharge of duties for the Company. For purposes of
this provision, no act or failure to act, on the part of the Participant, shall be
considered “willful” unless it is done, or omitted to be done, by the Participant in
bad faith or without reasonable belief, that the Participant’s action or omission
was in the best interests of the Company.
“Change in Control” shall have the meaning ascribed to it in Section 2.7 of the
Plan.
“Date of Termination” shall mean the date on which the Participant incurs a
Termination of Service.
“Designated Beneficiary” shall mean the beneficiary or beneficiaries designated
by the Participant in a writing filed with the Committee in such form and at such
time as the Committee shall require.
“Disability” shall mean, except as otherwise provided by the Committee, the
period in which the Participant is considered to be "disabled" as that term is
defined in the Company's long term disability plan.
“Good Reason” shall mean the occurrence of one or more of the following
conditions without the consent of the Participant:
(a) a material diminution in the Participant's base compensation, compared
with the Participant's base compensation in effect immediately prior to the
consummation of a Change in Control;
(b) a material diminution in the Participant's authority, duties, or
responsibilities, compared with the authority, duties, and responsibilities of
the Participant immediately prior to the consummation of a Change in
Control;
(c) the Participant is required to report to a supervisor with materially less
authority, duties, or responsibilities than the authority, duties, and
responsibilities of the supervisor who had the greatest such authority,
duties, and responsibilities at the time the Participant was required to
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report to such supervisor during the 120-day period immediately preceding
the consummation of a Change in Control;
(d) a material diminution in the budget over which the Participant retains
authority, compared with the most significant budget, if any, over which
the Participant had authority at any time during the 120-day period
immediately preceding the consummation of a Change in Control;
(e) a material change in the geographic location at which the Participant must
perform services; or
(f) any other action or inaction by the Company that constitutes a material
breach of any change of control agreement between the Company and the
Participant that is in effect when a Change in Control occurs.
If (I) the Participant provides written notice to the Company of the occurrence of
Good Reason within a reasonable time (not more than 90 days) after the
Participant has knowledge of the circumstances constituting Good Reason,
which notice specifically identifies the circumstances which the Participant
believes constitute Good Reason; (II) the Company fails to notify the Participant
of the Company's intended method of correction within a reasonable period of
time (not less than 30 days) after the Company receives the notice, or the
Company fails to correct the circumstances within a reasonable period of time
after such notice (except that no such opportunity to correct shall be applicable if
the circumstances constituting Good Reason are those described in paragraph
(e) above, relating to relocation); and (III) the Participant resigns within a
reasonable time after receiving the Company's response, if such notice does not
indicate an intention to correct such circumstances, or within a reasonable time
after the Company fails to correct such circumstances (provided that in no event
may such termination occur more than two (2) years after the initial existence of
the condition constituting Good Reason); then the Participant shall be considered
to have terminated for Good Reason.
“Performance Goals” shall mean 3-Year Average Return on Equity and 3-Year
Cumulative Investment Volume established by the Committee for the
Performance Period as set forth in Exhibit 1.
“Retirement shall mean retirement of the Participant on a "Retirement Date," as
that term is defined in the GATX Corporation Non-Contributory Pension Plan for
Salaried Employees.
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Exhibit 1
Performance Goals, Weights and % of Target Earned
2018-2020 Performance Period
3-Year Average XXX (1)
(50% weight)
% of Target Grant Earned
<6.2% 0%
6.2% 25%
7.1% 50%
8.1% 75%
8.9% 100%
9.8% 125%
10.8% 150%
11.7% 175%
>= 12.6% 200%
Interpolated for actual performance between levels shown
(1) 3-Year Average Return on Equity is defined as the sum of net income divided by average equity for each year in the
Performance Period divided by three (3); excludes accumulated other comprehensive income from equity.
3-Year Cumulative
Investment Volume (2)
(50% weight)
% of Target Grant Earned
<$1.75 billion 0%
$1.75 billion 25%
$2.00 billion 50%
$2.25 billion 75%
$2.50 billion 100%
$2.75 billion 125%
$3.00 billion 150%
$3.25 billion 175%
>= $3.50 billion 200%
Interpolated for actual performance between levels shown
(2) 3-Year Cumulative Investment Volume is defined as the sum of consolidated cumulative GAAP basis portfolio
investments and capital additions as externally reported for each year in the Performance Period; excludes
purchases of leased in assets.
In determining the extent to which the Performance Goals have been achieved, the
Committee, in its sole discretion, may include or exclude items or events that impact the
final results, positively or negatively.
Exhibit 2
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Sample Calculation of Performance Shares Earned
Number of Performance Shares Granted: 1,000
Performance
Goal Weight
Target
Goal
Assumed
Actual
Payout
Percentage
Weighted
Payout
Percentage
3-Year
Average XXX
3-Year
Cumulative
Investment
Volume
50%
50%
8.9%
$2.50 billion
10.8%
$2.25 billion
150%
75%
75.0%
37.5%
Total Weighted Payout
112.5%
Performance Shares Earned
Shares Granted
Weighted
Payout
Total
Performance
Shares Earned
1,000 x 112.5% = 1,125
