EXHIBIT 10.2
GATX CORPORATION
2004 EQUITY INCENTIVE COMPENSATION PLAN
PERFORMANCE SHARE AGREEMENT
THIS AGREEMENT, entered into as of March 8, 2007, 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 "▇▇▇▇▇ Date" is March 8, 2007.
The "Performance Period" is January 1, 2007 to December 31, 2009.
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 in paragraph 13 or
elsewhere in this Agreement or in the Plan.
2. Grant. 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 $430,000,000 (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 2007 resolution 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 of the
company ("Shares") 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 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 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 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, the Participant 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
2
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 during the period beginning on the date
of commencement 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 Participant as described
therein relating to certain transactions involving a
subsidiary or 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 Shares 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 Shares equal in number to
two-thirds (2/3) of his or her Performance Shares.
(C) If a Change in Control occurs during the third year of
the Performance Period, such Participant shall be
entitled to receive
3
Shares 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 number of the Participant's Performance
Shares and (y) the dividend declared on a single Share 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 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, 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
4
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 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 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.
13. Definitions. For purposes of this Agreement, the terms used in this
Agreement shall be subject to the following:
5
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 reported on the
company's audited balance sheet 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.
Designated Beneficiary. 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. 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.
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: ▇▇▇▇▇ ▇▇▇▇▇▇
Its: Chairman, President and CEO
7
Exhibit 1
PERFORMANCE GOALS, WEIGHTS AND % OF TARGET EARNED
2007 -- 2009 PERFORMANCE PERIOD
--------------------------------------------------------------------------------
3-YEAR AVERAGE ▇▇▇ (1)
(50% WEIGHT) % OF TARGET GRANT EARNED
--------------------------------------------------------------------------------
11% or less 0.0%
--------------------------------------------------------------------------------
12% 25.0%
--------------------------------------------------------------------------------
13% 47.5%
--------------------------------------------------------------------------------
14% 70.0%
--------------------------------------------------------------------------------
15% 100.0%
--------------------------------------------------------------------------------
16% 110.0%
--------------------------------------------------------------------------------
17% 150.0%
--------------------------------------------------------------------------------
17.5% or more 200.0%
--------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------
3-YEAR CUMULATIVE INVESTMENT
VOLUME (2)
(50% WEIGHT) % OF TARGET GRANT EARNED
--------------------------------------------------------------------------------
$1.5 billion or less 0%
--------------------------------------------------------------------------------
$1.65 billion 25%
--------------------------------------------------------------------------------
$1.80 billion 50%
--------------------------------------------------------------------------------
$1.95 billion 75%
--------------------------------------------------------------------------------
$2.10 billion 100%
--------------------------------------------------------------------------------
$2.30 billion 125%
--------------------------------------------------------------------------------
$2.50 billion 150%
--------------------------------------------------------------------------------
$2.70 billion or more 200%
--------------------------------------------------------------------------------
(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
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WEIGHTED
PERFORMANCE TARGET ASSUMED PAYOUT PAYOUT
GOAL WEIGHT GOAL ACTUAL PERCENTAGE PERCENTAGE
--------------------------------------------------------------------------------
3-Year Average ▇▇▇ 50% 15% 14% 70% 35.0%
3-Year Cumulative
Investment Volume 50% $2.1 billion $2.5 billion 150% 75.0%
--------------------------------------------------------------------------------
TOTAL WEIGHTED PAYOUT 110.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PERFORMANCE SHARES EARNED
--------------------------------------------------------------------------------
Shares Weighted Total Performance
Granted Payout Shares Earned
--------------------------------------------------------------------------------
1,000 x 110.0% = 1,100
--------------------------------------------------------------------------------