EXHIBIT 10.2
GATX CORPORATION
2004 EQUITY INCENTIVE COMPENSATION PLAN
PERFORMANCE SHARE AGREEMENT
THIS AGREEMENT, entered into as of March 10, 2006, by and between the
Participant and GATX Corporation (the "Company");
WHEREAS, the Company maintains the GATX Corporation 2004 Equity Incentive
Compensation 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 which has been charged with
the responsibility of administering the Plan (the "Committee") to receive
Performance Shares under the Plan;
NOW, THEREFORE, IT IS AGREED, by and between the Company and the
Participant, as follows:
1. Terms of Award. The following terms used in this Agreement shall have the
meanings set forth in this paragraph 1:
The "Participant" is FirstName MiddleInitial LastName
The "Xxxxx Date" is March 10, 2006.
The "Performance Period" is January 1, 2006 to December 31, 2008.
The number of Performance Shares granted under this Agreement is
NumberofShares. Such number of Performance Shares is sometimes referred to
in this Agreement as the "Target Grant."
Other terms used in this Agreement are defined pursuant to paragraph 13 or
elsewhere in this Agreement. Capitalized terms not defined herein shall
have the meaning ascribed thereto in the Plan.
2. Award. The Participant is hereby granted the number of Performance Shares
set forth in paragraph 1, subject to the terms of the Plan and this
Agreement.
3. Vesting, Transfer and Forfeiture
(a) Subject to the terms hereof, if, for each of the three years during
the Performance Period, the Company's Total Gross Income Less Total
Ownership Costs (as reported on the Company's audited income statement
for each year during the Performance Period) is greater than
$380,000,000 (the "Threshold Goal"), then, following the Committee's
certification that the Threshold Goal has been achieved, the
Participant shall be entitled to the number of shares set forth in the
2006 resolutions of the Committee providing for the grant of this
award (the
"Unadjusted Award Amount"). However, if the Threshold Goal is not
achieved for the Performance Period, the Unadjusted Award Amount shall
be zero.
(b) 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 in
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
paragraph (b) shall be subject to paragraph 8). The Unadjusted Award
Amount shall be reduced to the number of Performance Shares determined
to be earned in accordance with the foregoing provisions of this
paragraph (b), and any unearned portion of the Unadjusted Award Amount
or Performance Shares shall be forfeited. In no event shall the shares
earned by the Participant exceed the Unadjusted Award Amount.
(c) As soon as practicable after the Committee has made the determination
of the number of the earned shares under paragraph (a) and (b) above,
that number of shares of common stock shall be transferred to the
Participant.
(d) Notwithstanding the foregoing provisions of this paragraph 3, the
Participant's Performance Shares shall be determined and exchanged for
shares of common stock and the Participant shall be vested therein,
and become owner 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, he or she will be
entitled to a pro rata portion of his or her Performance Shares
hereunder equal in number to the product of the number of
Performance Shares to which the Participant would otherwise be
entitled in accordance with the foregoing provisions of this
paragraph 3, multiplied by a fraction (not greater than one), the
numerator of which is the number of full and fractional months
the Participant is employed by the Company or its Subsidiaries
from the beginning of the Performance Period, and ending on the
Date of Termination and the denominator of which is 36, the
number of months in the Performance Period. The Performance
Shares to which the Participant is entitled pursuant to this
subparagraph (i) shall be distributed to the Participant free and
clear of all restrictions as soon as practical following the
determinations described in paragraphs (a) and (b) above.
(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, he or she will be entitled to
distribution of a pro rata portion of his or her Performance
Shares free and clear of all restrictions promptly following the
end of the Performance Period, equal in number to
2
the product of the number of Performance Shares to which the
Participant would otherwise be entitled in accordance with the
foregoing provisions of this paragraph 3, multiplied by a
fraction (not greater than one), the numerator of which is the
number of full and fractional months from the beginning of the
Performance Period and ending on the date of the Participant's
death, Retirement or Disability and the denominator of which is
36, the number of months in the Performance Period. If a
Participant's Date of Termination occurs by reason of the
Participant's death, Retirement or Disability, as described in
the first sentence of this subparagraph (ii), 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.
(iii) If a Change in Control described in paragraphs 5.2(a), (b), (c)
or (d) of the Plan occurs on or before the Participant's Date of
Termination and before the end of the Performance Period, the
number of shares of common stock to which the Participant is
entitled shall be calculated as if the Company had achieved 100%
performance against goals, and shall be distributed to the
Participant free and clear of all restrictions as soon as
practicable following the Change in Control, and the Participant
shall have no further rights under this Agreement.
(iv) If a Change in Control described in paragraph 5.2(e) of the Plan
occurs with respect to a Subsidiary or operating segment of the
Company as the latter is defined in Section 5(e) of the Plan
(hereinafter, a "Business Segment"), and the Participant is
principally employed by such Subsidiary or the Participant
renders substantially all of his or her services to such Business
Segment, then as soon as practicable following the Change in
Control, the Participant shall receive a distribution, free and
clear of all restrictions, of the following number of shares of
common stock, determined on the assumption that the Company
achieved both one hundred percent (100%) performance against goal
as follows:
(A) If the Change in Control occurs during the first year of the
Performance Period, the Participant shall be entitled to
receive common stock of the Company equal in number to
one-third (1/3) of his or her Performance Shares.
(B) If the Change in Control occurs during the second year of
the Performance Period, the Participant shall be entitled to
receive common stock of the Company equal in number to
two-thirds (2/3) of his or her Performance Shares.
3
(C) If a Change in Control occurs during the third year of the
Performance Period, such Participant shall be entitled to
common stock of the Company equal in number to the total of
all of his or her Performance Shares.
Following a distribution in accordance with this paragraph (iv),
the Participant shall have no further rights under this
Agreement.
(e) Subject to paragraph (d) above, if the Participant's Date of
Termination occurs prior to the end of the Performance Period, the
Participant shall forfeit all shares and rights under this Agreement.
(f) The Performance Shares may not be sold, assigned, transferred, pledged
or otherwise encumbered until the shares have been distributed to the
Participant free and clear of all restrictions.
4. Voting Rights and Dividends. Notwithstanding anything to the contrary, the
Participant shall not be entitled to vote his or her Performance Shares
until such shares have been distributed.
Unless a Participant's Date of Termination shall have previously occurred,
on each dividend payment date during the Performance Period, the
Participant's account shall be credited with dividend equivalents equal to
the product of (x) the Participant's Performance Shares and (y) the
dividend declared on a single share of the Company's common stock with
respect to the immediately preceding dividend record date. A Participant
shall be entitled to a distribution of an amount equal to the dividend
equivalents credited to his or her account and attributable to his or her
Performance Shares if and when he or she is entitled to distribution of
such shares. The dividend equivalents attributable to forfeited Performance
Shares shall likewise be forfeited.
5. Withholding. The grant, vesting and distribution of benefits 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 the surrender of shares of common stock which the Participant
already owns, or to which the Participant is otherwise entitled under the
Plan; provided, however, that, except as otherwise provided by the
Committee, such shares may be used to satisfy not more than the Company's
minimum statutory withholding obligation (based on minimum statutory
withholding rates for Federal and state tax purposes, including payroll
taxes, that are applicable to such supplemental taxable income).
6. Heirs and Successors. This Agreement shall be binding upon, and inure to
the benefit of, the Company and its successors and assigns, and upon 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,
4
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 the Agreement by the
Committee and any decision made by it with respect to the Agreement shall
be final and binding on all persons.
8. Modification of Goals. In determining the extent to which the Performance
Goals (but not the Threshold Goal) have been achieved, the Committee may
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 may be obtained by the Participant from the Director,
Compensation of the Company; and 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 Award 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 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. Notices sent by mail shall be deemed received three business
days after mailing but in no event later than the date of actual receipt.
Notices 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 at the Company's principal
executive office.
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.
5
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. The term "3-Year Average Return on Equity"
shall mean the sum of normalized (per the consolidated budget) net income
divided by average equity excluding changes in accumulated other
comprehensive income from equity for each year in the Performance Period
divided by 3.
3-Year Cumulative Investment Volume. The term "3-Year Cumulative Investment
Volume" shall mean the sum of consolidated cumulative GAAP basis portfolio
investments and capital additions as externally reported for each year in
the Performance Period.
Cause. The term "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. The term "Change in Control" shall have the meaning
ascribed to it in Section 5 of the Plan.
Date of Termination. The term "Date of Termination" means the first day
occurring on or after the Grant Date on which the Participant is not
employed by the Company or any Subsidiary, regardless of the reason for the
termination of employment; provided that a termination of employment shall
not be deemed to occur by reason of a transfer of the Participant between
the Company and a Subsidiary or between two Subsidiaries; and further
provided that the Participant's employment shall not be considered
terminated while the Participant is on a leave of absence from the Company
or a Subsidiary approved by the Participant's employer.
Disability. Except as otherwise provided by the Committee, the Participant
shall be considered to have a "Disability" during the period in which the
Participant is considered to be "disabled" as that term is defined in the
Company's long term disability plan.
Performance Goals. The term "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. "Retirement" of the Participant means retirement on a
"Retirement Date," as that term is defined in the GATX Corporation
Non-Contributory Pension Plan for Salaried Employees (the "Pension Plan");
provided that if the Participant is not a
6
participant in the Pension Plan, the Retirement Date shall be the date of
retirement determined by the Committee.
The Committee may modify the terms of this Agreement to the extent it determines
may be necessary to avoid the imposition of interest and/or penalties under
Internal Revenue Code Section 409A.
IN WITNESS WHEREOF, the Participant has executed this Agreement, and the
Company has caused these presents to be executed in its name and on its behalf,
all as of the Grant Date.
Participant:
------------------------
GATX Corporation
By: /s/ Xxxxx Xxxxxx
---------------------------------
Its: Chairman, President and CEO
7
Exhibit 1
PERFORMANCE GOALS, WEIGHTS AND % OF TARGET EARNED
2006 - 2008 PERFORMANCE PERIOD
3-YEAR AVERAGE XXX (1) 3-YEAR CUMULATIVE INVESTMENT VOLUME (2)
(70% WEIGHT) (30% WEIGHT) % OF TARGET GRANT EARNED
---------------------- --------------------------------------- ------------------------
Less than 10% $1.6 billion or less 0%
10% $1.8 billion 25%
12% $2.0 billion 50%
13% $2.4 billion 100%
14% $2.8 billion 150%
16% or more $3.2 billion or more 200%
Interpolated for actual performance between levels shown
(1) 3-Year Average Return on Equity is defined as the sum of normalized (per
the consolidated budget) net income divided by average equity excluding
changes in accumulated other comprehensive income from equity for each year
in the Performance Period divided by 3
(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
In determining the extent to which the Performance Goals (but not the Threshold
Goal) have been achieved, the Compensation Committee, in its sole discretion,
may include or exclude items or events that impact the final results, positively
or negatively. However, in no event will the award exceed the Unadjusted Award
Amount.
Exhibit 2
SAMPLE CALCULATION OF PERFORMANCE SHARES EARNED
NUMBER OF PERFORMANCE SHARES GRANTED: 1,000
TARGET ASSUMED WEIGHTED PAYOUT
PERFORMANCE GOAL WEIGHT GOAL ACTUAL PAYOUT PERCENTAGE PERCENTAGE
---------------- ------ ------------ ------------ ----------------- ---------------
3-Year Average XXX 70% 13% 13.5% 125% 87.5%
3-Year Cumulative Investment Volume 30% $2.4 billion $2.4 billion 100% 30.0%
-----
TOTAL WEIGHTED PAYOUT 117.5%
-----
PERFORMANCE SHARES EARNED
Shares Granted Weighted Payout Total Performance Shares Earned
-------------- --------------- -------------------------------
1,000 x 117.5% = 1,175
