ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
DIRECTORS
The names of the directors, their ages as of December 31,
2015
, and certain other information about them are set forth below:
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Name
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Age
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Position
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Director Since
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Malcolm P. Baker(1)(3)
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46
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Director
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September 2006
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Claude Germain(1)(2)
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48
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Director
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February 2009
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Kenneth Hanau(1)
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50
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Director
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October 2012
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Helmut Kaspers(2)(3)
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50
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Director
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December 2011
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Frederic H. Lindeberg(1)(2)(3)
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75
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Director
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October 2005
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Brian M. Sondey
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48
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Chairman, President, Chief Executive Officer and Director
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November 2004
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(1)
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Member of the Audit Committee
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(2)
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Member of the Compensation Committee
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(3)
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Member of the Nominating and Corporate Governance Committee
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Malcolm P. Baker
has served as a director of our company since
September 2006
. Mr. Baker is the Robert G. Kirby Professor and the head of the finance unit of the Harvard University Graduate School of Business, the director of the corporate finance program at the National Bureau of Economic Research, and a consultant for Acadian Asset Management. Mr. Baker holds a BA in applied mathematics and economics from Brown University, a M.Phil. in finance from Cambridge University, and a Ph.D. in business economics from Harvard University.
As a result of these professional and other experiences, we believe Mr. Baker possesses particular knowledge and experience in a variety of areas including corporate finance, capital markets, and economics that strengthens the Board’s collective knowledge, capabilities, and experience.
Claude Germain
has served as a director of our company since
February 2009
. Since 2010 Mr. Germain has been a principal in Rouge River Capital, an investment firm focused on acquiring controlling stakes in private midmarket transportation and manufacturing companies. From 2011 to 2013, Mr. Germain was also President and CEO of SMTC Corporation (NSDQ: SMTX), a global manufacturer of electronics based in Markham, Ontario. From 2005 to 2010, Mr. Germain was Executive Vice President and Chief Operating Officer for Schenker of Canada Ltd., an affiliate of DB Schenker, where he was accountable for Schenker’s Canadian business. DB Schenker is one of the largest logistics service providers in the world. As the former President of a Texas-based third-party logistics firm and a management consultant specializing in distribution for The Boston Consulting Group, Mr. Germain has extensive experience in global logistics. In 2002 and 2007, Mr. Germain won Canadian Executive of the Year in Logistics. Mr. Germain holds an MBA from Harvard Business School and a Bachelor of Engineering Physics (Nuclear) from Queen’s University.
As a result of these professional and other experiences, we believe Mr. Germain possesses particular knowledge and experience in a variety of areas including logistics, transportation, distribution, and strategic planning that strengthens the Board’s collective knowledge, capabilities, and experience.
Kenneth Hanau
has been a director of our Company since October 2012. Mr. Hanau is a Managing Director at Bain Capital Private Equity, a unit of Bain Capital, one of the world’s foremost private investment firms with approximately $75 billion in assets under management. He has significant experience in private equity investing, with specialized focus in the industrial and business services sectors, and currently leads Bain Capital Private Equity’s North American industrials team. Prior to joining Bain Capital in 2015, Mr. Hanau was the Managing Partner of 3i’s private equity business in North America. Mr. Hanau played an active role in investments in the industrial and business services sectors, including Mold Masters, a leading supplier of specialty components to the plastic industry, and Hilite, a global manufacturer of automotive solutions. Previously, Mr. Hanau held senior positions with Weiss, Peck & Greer and Halyard Capital. Before that, Mr. Hanau worked in investment banking at Morgan Stanley and at K&H Corrugated Case Corporation, a family-owned packaging business. Mr. Hanau is a CPA and started his career with Coopers & Lybrand. Mr. Hanau received his B.A. with honors from Amherst College and his M.B.A. from Harvard Business School.
As a result of these professional and other experiences, we believe Mr. Hanau possesses particular knowledge and experience in a variety of areas including corporate finance, capital markets, distribution, and strategic planning that strengthens the Board’s collective knowledge, capabilities, and experience.
Helmut Kaspers
has served as a director of our Company since December 2011. Mr. Kaspers is Chief Operating Officer, Global Air & Ocean Freight, for CEVA Logistics, one of the world's leading non-asset based supply-chain management companies. Prior to CEVA Logistics, he was the managing owner of Kaspers Consulting + Investments and a member of the Board of GreenCarrier AB, one of the Nordic region’s largest privately owned companies specializing in global transport solutions. Mr. Kaspers was also the Chairman of the Supervisory Board of ADI Consult GmbH, a globally operating consulting and placement company specializing in the transport and logistics industry. Mr. Kaspers has held leadership positions in a number of global transportation companies, serving as the Chief Commercial Officer Europe of the Damco Group, one of the world’s leading providers of freight forwarding and supply chain management services. Prior to Damco, he was a member of the Executive Committee and Chief Operating Officer, Air + Ocean of Logwin AG, Luxembourg from 2006 until 2013. From 2001 to 2006, Mr. Kaspers was Regional Director for Kuehne & Nagel, Germany, one of the leading transportation and logistics providers in the world. From 1996 to 2001, he was the Executive Vice President Seafreight at Schenker AG, Germany, one of the largest logistics service providers in the world. After studying in Germany, Mr. Kaspers has worked his entire career within the logistics and transportation industry, including extensive international assignments in North America and Asia.
As a result of these professional and other experiences, we believe
Mr. Kaspers possesses particular knowledge and experience in a variety of areas including logistics, transportation, distribution and strategic planning that strengthens the Board’s collective knowledge, capabilities, and experience.
Frederic H. Lindeberg
has served as a director of our company since
October 2005
. Mr. Lindeberg has had a consulting practice providing taxation, management and investment counsel since 1991, focusing on finance, real estate, manufacturing and retail industries. Mr. Lindeberg retired in 1991 as Partner-In-Charge of various KPMG tax offices after 24 years of service where he provided both accounting and tax counsel to various clients. Mr. Lindeberg was formerly an adjunct professor at Penn State Graduate School of Business. Mr. Lindeberg is currently a director of Safety Insurance Group, Inc. (NSDQ: SAFT), serving as chairman of its nominating and governance committee and as a member of its audit and compensation committees. Mr. Lindeberg was formerly a trustee of Provident Senior Living Trust. Mr. Lindeberg received a BS in Business Administration from Drexel University and a JD from Temple University School of Law. Mr. Lindeberg is a certified public accountant.
As a result of these professional and other experiences, Mr. Lindeberg has been determined to be an Audit Committee Financial Expert under the SEC rules and regulations, possesses particular knowledge and experience in a variety of areas including accounting and tax, and has public company board experience that strengthens the Board’s collective knowledge, capabilities, and experience.
Brian M. Sondey
is our Chairman, President and Chief Executive Officer, and has served as a director of our company since
November 2004
. Mr. Sondey joined our former parent, Transamerica Corporation, in April 1996 as Director of Corporate Development. He then joined TAL International Container Corporation in November 1998 as Senior Vice President of Business Development. In September 1999, Mr. Sondey became President of TAL International Container Corporation. Prior to his work with Transamerica Corporation and TAL International Container Corporation, Mr. Sondey worked as a Management Consultant at the Boston Consulting Group and as a Mergers & Acquisitions Associate at J.P. Morgan. Mr. Sondey holds an MBA from The Stanford Graduate School of Business and a BA degree in Economics from Amherst College.
As a result of these professional and other experiences, we believe Mr. Sondey possesses particular knowledge and experience in a variety of areas including corporate finance, intermodal equipment leasing, logistics, marketing, people management and strategic planning and strengthens the Board’s collective knowledge, capabilities, and experience.
EXECUTIVE OFFICERS
The following table sets forth certain information regarding our executive officers for the fiscal year ended
December 31, 2015
:
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Name
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Age
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Position
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Brian M. Sondey
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48
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Chairman, President, Chief Executive Officer and Director
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John Burns
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55
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Senior Vice President and Chief Financial Officer
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Adrian Dunner
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51
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Senior Vice President, Asia Pacific
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Kevin Valentine
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50
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Senior Vice President, Trader and Global Operations
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Marc Pearlin
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60
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Vice President, General Counsel and Secretary
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Brian M. Sondey
is our Chairman, President and Chief Executive Officer, and has served as a director of our company since November 2004. Mr. Sondey joined our former parent, Transamerica Corporation, in April 1996 as Director of Corporate Development. He then joined TAL International Container Corporation in November 1998 as Senior Vice President of Business Development. In September 1999, Mr. Sondey became President of TAL International Container Corporation. Prior to his work with Transamerica Corporation and TAL International Container Corporation, Mr. Sondey worked as a Management Consultant at the Boston Consulting Group and as a Mergers & Acquisitions Associate at J.P. Morgan. Mr. Sondey holds an MBA from The Stanford Graduate School of Business and a BA degree in Economics from Amherst College.
John Burns
is our Senior Vice President and Chief Financial Officer. He is responsible for overseeing our Finance & Accounting, Audit, IT, Legal, and HR departments. Mr. Burns was formerly our Senior Vice President of Corporate Development, where he was responsible for the execution of our corporate development strategy. Mr. Burns joined our former parent, Transamerica Corporation, in April 1996 as Director of Internal Audit and subsequently transferred to TAL International Container Corporation in April 1998 as Controller. Prior to joining Transamerica Corporation, Mr. Burns spent 10 years with Ernst & Young LLP in their financial audit practice. Mr. Burns holds a BA in Finance from the University of St. Thomas, St. Paul, Minnesota and is a certified public accountant.
Adrian Dunner
is our Senior Vice President, Asia Pacific. Mr. Dunner is responsible for managing operations and marketing for the Asia Pacific area. Mr. Dunner was previously our Senior Vice President for Marketing and Sales, where he was responsible for the execution of our global marketing strategy for all product lines, fleet operations, global logistics, and our used equipment sales efforts. Mr. Dunner joined TAL International Container Corporation in 1988 as Manager, Marketing, and has held positions as General Manager, US East Coast, Marketing Manager, and Vice President, located at various times in Cranford, NJ; Savannah, GA; Jacksonville, FL; and Purchase, NY. Prior to his employment with TAL International Container Corporation, Mr. Dunner worked as a Sales Representative for Container Transport International and as a Trade Specialist at the Center for International Trade. Mr. Dunner received a BS degree in Finance/Economics from Spring Hill University, and an MBA in Business from Jacksonville University.
Kevin Valentine
is our Senior Vice President, Trader and Global Operations. Mr. Valentine is responsible for the execution of our global container sales and trading activities and for overseeing our global fleet operations, our tank and chassis leasing product lines and our regional leasing activities in the Americas. Mr. Valentine joined TAL International Container Corporation in 1994 as Marketing Manager, UK following our acquisition of his previous employer, Tiphook Container Rental. Since joining TAL, Mr. Valentine has held positions in our London office as General Manager UK, Area Director Europe and Vice President, Trader Container Sales & Trading. Mr. Valentine relocated to our Headquarters in 2008. Prior to joining TAL International Container Corporation, Mr. Valentine held positions with Tiphook Container Rental from 1990 as Marketing Manager, Indian Subcontinent and Middle East based in London and Marketing Manager, Benelux based in Antwerp, Belgium. Mr. Valentine received a BA (Hons) degree in Business from Middlesex University, London, England.
Marc Pearlin
is our Vice President, General Counsel and Secretary, and is responsible for overseeing all legal matters. Mr. Pearlin joined TAL International Container Corporation in October 1986 as an Associate General Counsel, and has held positions as our Secretary and Assistant General Counsel. Mr. Pearlin holds a Juris Doctor degree from the University of Connecticut School of Law and a BA in Economics and Spanish from Trinity College, Hartford, Connecticut.
Corporate Governance and Related Matters
We are required to have a majority of independent directors on our Board of Directors and to have our Audit Committee, Compensation Committee and our Nominating and Corporate Governance Committee be composed entirely of independent directors. The Board of Directors has adopted a formal policy to assist it in determining whether a director is independent in accordance with the applicable rules of the New York Stock Exchange. The Director Independence Standards are available on our corporate website at
www.talinternational.com
. From our main web page, scroll over “Investors” on the left side of the page and click on “Corporate Governance” from the drop down menu. Next, click on “Director Independence Standards” in the middle of the page. Applying these standards, our Board of Directors has determined that Messrs.
Baker
,
Germain
,
Hanau
,
Kaspers
and
Lindeberg
qualify as independent, and constitute a majority of our Board of Directors. The Board of Directors has adopted formal Corporate Governance Principles and Guidelines which are available on our website at
www.talinternational.com
. From our main web page, scroll over “Investors” on the left side of the page and click on “Corporate Governance” from the drop down menu. Next, click on “Corporate Governance Principles and Guidelines” in the middle of the page.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's officers and directors, and holders of more than 10% of a registered class of the Company's equity securities, to file reports of ownership of such securities with the SEC. Officers, directors and greater than 10% beneficial owners are required by applicable regulations to furnish the Company with copies of all Section 16(a) forms they file.
Based on a review of the copies of Forms 3, 4 and 5 furnished to the Company, the Company believes that all Section 16(a) filing requirements applicable to its officers, directors and 10% holders were filed in a timely manner during fiscal year
2015
.
Risk Management
As a general matter, the Board of Directors has oversight responsibility with respect to risk management for the Company and its subsidiaries. Day-to-day risk management is the responsibility of senior management. The Board of Directors focuses on and discusses with senior management key areas of risk in the Company’s business and corporate functions such as capital expenditures, capital management, corporate debt, and customer credit and collection issues at its regular meetings.
Meetings and Committees of our Board of Directors
During
2015
, our Board of Directors held
seventeen
meetings and took action by unanimous written consent on
one
occasion. All of the directors attended
75%
or more of the meetings of the Board of Directors and committees of the Board of Directors on which they served. Directors are expected to make every effort to attend all meetings of the Board and the committees on which they serve, and to attend the Annual Meeting of Stockholders. All directors who stood for election at the
2015
Annual Meeting of Stockholders attended that meeting.
The Board of Directors has an Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee.
Audit Committee.
The Audit Committee is comprised of
four
independent directors, Messrs.
Lindeberg
(Chairman),
Baker
,
Germain
, and
Hanau
, each of whom also is independent under Rule10A-3 of the Securities Exchange Act of 1934. The Audit Committee met
four
times during
2015
. Our Board of Directors has determined that Mr. Lindeberg qualifies as an “audit committee financial expert” as such term is been defined by the SEC regulations.
The Audit Committee is responsible for (1) selecting the independent auditor and reviewing the fees proposed by the independent auditor for the coming year and approving in advance, all audit, audit-related and tax permissible non-audit services to be performed by the independent auditors, (2) approving the overall scope of the audit, (3) discussing the annual audited financial statements, quarterly financial statements, and Forms 10-K and 10-Q, including matters required to be reviewed under applicable legal, regulatory or New York Stock Exchange requirements, with management and the independent auditor, (4) discussing earnings press releases, guidance provided to analysts and other financial information provided to the public, with management and the independent auditor, as appropriate, (5) discussing our risk assessment and risk management policies, (6) reviewing our internal system of audit, financial and disclosure controls and the results of internal audits, (7) setting hiring policies for employees or former employees of the independent auditors, (8) establishing procedures concerning the treatment of complaints and concerns regarding accounting, internal accounting controls or audit matters, (9) handling such other matters that are specifically delegated to the Audit Committee by our Board of Directors from time to time, (10) reporting regularly to the full Board of Directors, and (11) performing the other related responsibilities that are set forth in its formal charter adopted by our Board of Directors.
The Audit Committee acts pursuant to a formal charter, which is available on our corporate website at
www.talinternational.com
. The charter may be found on our website as follows: From our main web page, scroll over “Investors” on the left side of the page and click on “Corporate Governance” from the drop down menu. Next, click on “Audit Committee” in the middle of the page. A written copy of the Audit Committee charter may be obtained free of charge by sending a request in writing to Marc Pearlin, our Secretary at TAL International Group, Inc., 100 Manhattanville Road, Purchase, New York 10577.
Compensation Committee.
The Compensation Committee is comprised of
three
independent directors: Messrs.
Germain
(Chairman),
Kaspers
and
Lindeberg
. The Compensation Committee met
three
times during
2015
, and took action by unanimous consent on
one
occasion. The Compensation Committee is responsible for (1) reviewing and approving corporate goals and objectives relevant to the compensation of our chief executive officer and annually evaluating the chief executive officer’s performance in light of these goals, (2) reviewing and approving the compensation and incentive opportunities of our executive officers, (3) reviewing and approving employment contracts, severance arrangements, incentive arrangements, change-in-control arrangements and other similar arrangements between us and our executive officers, (4) receiving periodic reports on our compensation programs as they affect all employees, (5) reviewing executive succession plans for business and staff organizations, (6) reviewing the Compensation Discussion and Analysis and approving it for inclusion in our Proxy Statement and (7) such other matters that are specifically delegated to the Compensation Committee by our Board of Directors from time to time.
The Compensation Committee acts pursuant to a formal charter, which is available on our corporate website at
www.talinternational.com
. The charter may be found on our website as follows: From our main web page, scroll over “Investors” on the left side of the page and click on “Corporate Governance” from the drop down menu. Next, click on
“Compensation Committee” in the middle of the page. A written copy of the Compensation Committee charter may be obtained free of charge by sending a request in writing to Marc Pearlin, our Secretary at TAL International Group, Inc., 100 Manhattanville Road, Purchase, New York 10577.
Nominating and Corporate Governance Committee.
The Nominating and Corporate Governance Committee is comprised of
three
independent directors: Messrs.
Baker
(Chairman),
Kaspers
and
Lindeberg
. The Nominating and Corporate Governance Committee met
twice
during
2015
. The Nominating and Corporate Governance Committee’s purpose is to assist our board in identifying individuals qualified to become members of our Board of Directors, assess the effectiveness of the board and develop our corporate governance principles. The Nominating and Corporate Governance Committee is responsible for (1) identifying and recommending for election individuals who meet the criteria the Board has established for board membership, (2) recommending nominees to be presented at the Annual Meeting of stockholders, (3) reviewing the Board’s committee structure and recommending to the Board the composition of each committee, (4) annually reviewing director compensation and benefits, (5) establishing a policy for considering stockholder nominees for election to our Board, (6) developing and recommending a set of corporate governance guidelines and reviewing them on an annual basis and (7) developing and recommending an annual self-evaluation process of the Board and its committees and overseeing such self-evaluations.
The Nominating and Corporate Governance Committee acts pursuant to a formal charter, which is available on our corporate website at
www.talinternational.com
. The charter may be found on our website as follows: From our main web page, scroll over “Investors” on the left side of the page and click on “Corporate Governance” from the drop down menu. Next, click on “Nominating and Corporate Governance Committee” in the middle of the page. A written copy of the Nominating and Corporate Governance Committee charter may be obtained free of charge by sending a request in writing to Marc Pearlin, our Secretary at TAL International Group, Inc., 100 Manhattanville Road, Purchase, New York 10577.
Executive Sessions
To promote open discussion among the non-executive directors, our non-executive directors, who are all independent, meet occasionally in executive sessions without management participation. For purposes of such executive sessions, our “non-executive” directors are those directors who are not executive officers of the Company. Although the Board of Directors has not designated a lead independent director, Mr.
Lindeberg
presides at such executive sessions.
Interested parties, including stockholders, may communicate directly with our non-executive directors by writing to the non-executive directors in care of Marc Pearlin, Secretary at TAL International Group, Inc., 100 Manhattanville Road, Purchase, New York 10577. Correspondence received by the Secretary will be forwarded to the appropriate person or persons in accordance with the procedures adopted by the non-executive directors.
Director Nomination Process
The Nominating and Corporate Governance Committee makes recommendations to our Board of Directors regarding the size and composition of our Board of Directors. The Nominating and Corporate Governance Committee reviews annually with our Board of Directors the composition of our Board of Directors as a whole and recommends, if necessary, measures to be taken so that our Board of Directors reflects the appropriate balance of knowledge, experience, skills, expertise and diversity required for our Board of Directors as a whole and contains at least the minimum number of independent directors required by the New York Stock Exchange and other applicable laws and regulations. The Nominating and Corporate Governance Committee is responsible for ensuring that the composition of our Board of Directors accurately reflects the needs of the Company's business and, in accordance with the foregoing, proposing the addition of members and the necessary resignation of members for purposes of obtaining the appropriate members and skills. In evaluating a director candidate, the Nominating and Corporate Governance Committee considers factors that are in the best interests of the Company and its stockholders, including the knowledge, experience, integrity and judgment of each candidate; the potential contribution of each candidate to the diversity of backgrounds, experience and competencies which our Board of Directors desires to have represented; each candidate’s ability to devote sufficient time and effort to his or her duties as a director; and any other criteria established by our Board of Directors and any core competencies or technical expertise necessary to staff committees.
The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders. The Nominating and Corporate Governance Committee does not intend to alter the manner in which it evaluates candidates, including the minimum qualifications set forth above, based on whether or not the candidate was recommended by a stockholder.
Stockholders who wish to recommend individuals for consideration by the Nominating and Corporate Governance Committee to become nominees for election to our Board of Directors may do so by delivering a written recommendation to the Nominating and Corporate Governance Committee at 100 Manhattanville Road, Purchase, New York 10577 not later than one hundred and twenty (120) days prior to the anniversary date of the proxy statement for the immediately preceding Annual Meeting; provided, however, that in the event that the Annual Meeting is called for a date that is not, within thirty (30) days before or after the anniversary date of the immediately preceding Annual Meeting, notice by the Stockholder in order to be timely received must be so received not later than the close of business on the tenth (10th) day following the day on which public disclosure of the date of the Annual Meeting was first made, and otherwise in compliance with our bylaws. Submission must include the full name, age, business address and residence address of the proposed nominee, a description of the proposed nominee's principal occupation and business experience for at least the previous five years, complete biographical information, a description of the proposed nominee's qualifications as a director, the class or series and number of shares of the Company stock that is owned beneficially or of record by the proposed nominee, the name and record address of such nominating stockholder, the class or series and number of shares of the Company stock that is owned beneficially or of record by such nominating stockholder, a description of all arrangements or understandings between such nominating stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, a representation that the nominating stockholder intends to appear in person or by proxy at the 2017 annual meeting to nominate the person(s) named in its written notice of recommendation and such other information as required by Regulation 14A under the Exchange Act. Any such submission must be accompanied by the written consent of the proposed nominee to be named as a nominee and to serve as a director if elected.
Code of Ethics
We have adopted the Company's Code of Ethics, which applies to all officers, directors and employees. The Code of Ethics is available on our corporate website at
www.talinternational.com
and may be found on our website as follows: From our main web page, scroll over “Investors” on the left side of the page and click on “Corporate Governance” from the drop down menu. Next, click on “Code of Ethics/Conduct” in the middle of the page. A written copy of the Code of Ethics may be obtained free of charge by sending a request in writing to Marc Pearlin, our Secretary at TAL International Group, Inc., 100 Manhattanville Road, Purchase, New York 10577.
Additionally we have adopted the Company's Code of Ethics for Chief Executive and Senior Financial Officers, which applies to our Chief Executive Officer, Chief Financial Officer and Controller. The Code of Ethics for Chief Executive and Senior Financial Officers is available on our corporate website at
www.talinternational.com
and may be found on our website as follows: From our main web page, scroll over “Investors” on the left side of the page and click on “Corporate Governance” from the drop down menu. Next, click on “Code of Ethics for Chief Executive and Senior Financial Officers” in the middle of the page. A written copy of the Code of Ethics for Chief Executive and Senior Financial Officers may be obtained free of charge by sending a request in writing to Marc Pearlin, our Secretary at TAL International Group, Inc., 100 Manhattanville Road, Purchase, New York 10577.
If we make any substantive amendment to, or grant a waiver from, a provision of the Company's Code of Ethics or the Company's Code of Ethics for Chief Executive and Senior Financial Officers, which applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions, we will promptly disclose the nature of the amendment or waiver on our website at
www.talinternational.com
.
Communications with Directors
Stockholders may communicate with our Board of Directors as a group, the non-executive (independent) directors as a group or an individual director directly by submitting a letter in a sealed envelope labeled accordingly. This letter should be placed in a larger envelope and mailed to TAL International Group, Inc., 100 Manhattanville Road, Purchase, New York 10577, Attention: Marc Pearlin, Secretary.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth information regarding the compensation earned by our directors in
2015
:
DIRECTOR COMPENSATION TABLE
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Name
|
|
Fees Earned
or Paid
in Cash
($) (A)
|
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Common Stock Awards ($) (B)
|
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All Other
Compensation
($)
|
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Total
($)
|
|
Malcolm P. Baker
|
|
45,000
|
|
144,340
|
|
—
|
|
189,340
|
|
Claude Germain
|
|
55,000
|
|
144,340
|
|
—
|
|
199,340
|
|
Kenneth J. Hanau
|
|
40,000
|
|
144,340
|
|
—
|
|
184,340
|
|
Helmut Kaspers
|
|
40,000
|
|
144,340
|
|
—
|
|
184,340
|
|
Frederic H. Lindeberg
|
|
55,000
|
|
144,340
|
|
—
|
|
199,340
|
|
Total
|
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235,000
|
|
721,700
|
|
—
|
|
956,700
|
|
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|
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(A)
|
In
2015
, directors received a $35,000 annual retainer, $5,000 for serving on one or more Committees, and an additional $5,000 for serving as the Chair of a Committee, except that the Chair of the Audit Committee and the Chair of the Compensation Committee received an additional $15,000 for serving as Chair.
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(B)
|
On
January 15, 2015
, Messrs. Baker, Germain, Hanau, Kaspers, and Lindeberg were each granted
3,500
shares of Common Stock. These shares of stock were granted to these independent directors at a price of
$41.11
per share and were fully vested upon grant.
|
For Mr.
Sondey
’s compensation, please see the
2015
Summary Compensation Table.
All directors are reimbursed for reasonable out-of-pocket expenses incurred in connection with their attendance at Board of Directors and committee meetings.
COMPENSATION OF EXECUTIVE OFFICERS
COMPENSATION DISCUSSION AND ANALYSIS
This compensation discussion and analysis describes the material elements of the Company's compensation program for its Chief Executive Officer, Chief Financial Officer and three other most highly compensated executive officers (the "Named Executive Officers"). Additional details are provided for each element of compensation in the tables and narratives which follow.
Compensation Objectives and Philosophy
The Company seeks to provide its senior executives with compensation packages that fairly reward the executives for their contributions to the Company and allow the Company to recruit and retain high quality individuals. The Company seeks to structure its compensation plans so that they are straightforward for the executives and stockholders to understand and value, and relatively easy for the Company to administer. The Company links a portion of overall compensation to near-term and long-term measures of performance to motivate its executives and align their interests with those of our stockholders.
We believe that our compensation policies and practices do not promote excessive risk taking and therefore are not reasonably likely to have a material adverse effect on the Company. As described above under "Risk Management", the Board of Directors has oversight responsibility with respect to risk management. The Compensation Committee oversees the Company's compensation and employee benefit plans and practices, including its executive compensation program and equity-based grant plan and in doing so, reviews each to see that they do not encourage excessive risk taking. The Company also has a policy prohibiting employees from engaging in speculative transactions involving Company stock, including hedging or pledging transactions. See "Anti-Hedging and Anti-Pledging Policy" below.
The stockholder’s approval in
2015
, on an advisory basis, of the overall compensation of the Named Executive Officers was taken into consideration in maintaining the general design of TAL’s executive compensation program.
Compensation Programs
The Company’s executive compensation programs include the following elements:
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•
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A base salary and a package of employee benefits that strives to be competitive with those offered to senior executives by our peers;
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•
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Annual incentive compensation based on individual and company performance; and
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|
•
|
Share-based, long-term incentive compensation.
|
Roles and Responsibilities
The Compensation Committee (the "Committee") is comprised of
three
independent directors: Claude Germain (Chairman), Helmut Kaspers and Frederic H. Lindeberg. In accordance with its written charter, the Committee is responsible for establishing and overseeing the Company's compensation and benefit philosophies, plans and practices, including its executive annual base compensation, annual incentive compensation program and equity-based compensation plan.
Compensation for the Chief Executive Officer and all senior executives is established by the Committee. The Committee makes all compensation decisions with respect to our Chief Executive Officer and reviews and considers our Chief Executive Officer’s recommendations with respect to compensation decisions for our other Named Executive Officers. The Committee has the authority under its charter to retain compensation consultants to assist it in setting executive compensation.
In establishing annual executive compensation, the Committee utilizes the following:
|
|
|
|
•
|
Executive compensation history;
|
|
|
|
|
•
|
Comparable company compensation; and
|
|
|
|
|
•
|
Executive and Company performance relative to established targets.
|
Benchmarking
The Company regularly reviews the compensation practices and the level of executive compensation at selected peer companies. Historically, this peer compensation analysis has been conducted annually, alternating between an analysis conducted in one year by the Company and then in the following year by an outside compensation consulting firm. As part of this review, the Company assesses the overall target and actual compensation levels and analyzes the mix of base salary, annual incentive compensation and long-term and equity-linked compensation of the Named Executive Officers at the peer companies. The Company does not specifically link the target or actual compensation levels of its Named Executive Officers to those at the identified peer companies, but rather uses the peer analysis as a point of reference when determining appropriate overall compensation levels and mix of compensation for its Named Executive Officers.
During
2015
, the Committee was presented with a Company prepared review of the Named Executive Officers’ compensation, with benchmarking against compensation practices of a Company identified peer group. This review supplemented a 2014 formal compensation benchmark analysis completed by Compensia, a compensation consultant that reviewed the Named Executive Officers’ compensation and performed benchmarking against compensation practices at a broad range of companies with revenue less than $1.1 billion as well as against a group of peer companies constructed by Compensia with input from Company management.
The peer group companies used in the
2015
benchmarking survey were:
|
|
|
|
|
|
• Aircastle Limited
|
• Hub Group
|
|
• CAI International
|
• Matson
|
|
• Forward Air
|
• McGrath Rentcorp
|
|
• GATX
|
• Mobile Mini
|
|
• H&E Equipment Services
|
|
The companies selected are either direct competitors of TAL or companies that operate in similar or adjacent industries.
The
2015
benchmarking survey considered base salary, total cash compensation, and long term equity grants. The
2015
survey found that the Company’s total compensation for the Chief Executive Officer was slightly above the mean indicated by the identified peer companies and was approaching the middle of the range indicated by the identified peer companies for the remaining executives. The information provided by the survey was considered in establishing executive compensation levels for
2016
.
Elements of Compensation
The Company’s executive compensation program consists of the following principal elements:
|
|
|
|
•
|
Annual cash-based incentive compensation based on the achievement of individual and Company performance goals, which are equally weighted;
|
|
|
|
|
•
|
Equity‑based long-term compensation; and
|
Base Salary
The Committee believes that competitive base salaries are necessary to attract and retain managerial talent. Base salaries are set at levels considered to be appropriate for the scope of the job function, the level of responsibility of the individual, the skills and qualifications of the individual, and the amount of time spent in the position. Base salaries are also established to be competitive with amounts paid to employees and executive officers with comparable qualifications, experience and responsibilities at the peer group companies.
The Committee reviews the performance and sets the salary for the Chief Executive Officer on an annual basis. The Chief Executive Officer makes salary recommendations to the Committee concerning the other Named Executive Officers, and the Committee reviews the Chief Executive Officer’s recommendations and may approve or change the recommendations for the other Named Executive Officers. Recommendations are based on individual performance, peer group data, and published survey data detailing average salary increases across various industries and company sizes.
The following is a summary of the Named Executive Officers’ base salaries:
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 Base Salary
|
|
2015 Base Salary
|
|
Increase
|
|
Brian M. Sondey(1)
|
|
$698,000
|
|
$725,000
|
|
3.9%
|
|
John Burns(2)
|
|
$330,000
|
|
$375,000
|
|
13.6%
|
|
Adrian Dunner
|
|
$337,000
|
|
$355,000
|
|
5.3%
|
|
Kevin Valentine
|
|
$280,000
|
|
$295,000
|
|
5.4%
|
|
Marc Pearlin
|
|
$285,000
|
|
$300,000
|
|
5.3%
|
|
|
|
|
(1)
|
In December
2015
, the Committee approved an increase to Mr. Sondey’s salary for
2016
to
$750,000
, effective January 1,
2016
.
|
|
|
|
|
(2)
|
In December
2015
, the Committee approved an increase to Mr. Burns’ salary for
2016
to
$390,000
, effective January 1,
2016
.
|
Annual Incentive Compensation
The Committee provides for annual incentive compensation in order to tie a portion of senior executives’ compensation to our short-term performance. Each year the Committee sets the target incentive compensation amount and the target incentive compensation range for the Chief Executive Officer. The Chief Executive Officer makes target incentive compensation recommendations to the Committee concerning the other Named Executive Officers, and the Committee reviews the Chief Executive Officer’s recommendations and may approve or change the recommendations for the other Named Executive Officers. Incentive compensation targets and ranges are expressed as a percentage of base salary. Targets are based on peer
group levels, and generally referenced to benchmark data. Each year, the Committee also establishes the performance criteria to be used as a guideline for the incentive compensation calculation, and other terms and conditions of awards under the incentive compensation program.
Each year the Board of Directors, with input from the Company’s senior management, sets the operating and financial plan for the Company, which includes the plan level for Adjusted Pre-tax Earnings per Share (“APEPS”). The Company focuses on adjusted pre-tax results since it considers gains and losses on interest rate swaps and the write-off of deferred financing costs to be unrelated to operating performance and since it does not expect to pay any significant income taxes for a number of years due to the availability of accelerated tax depreciation on its existing container fleet and anticipated future equipment purchases. The Compensation Committee uses this financial plan to establish the target level of APEPS for the APEPS component of annual incentive compensation. The Compensation Committee also establishes a payout matrix that determines how the actual level of the APEPS component will vary based on different levels of achieved APEPS. For
2015
, it was determined that executives would receive 100% of the APEPS component of their annual incentive compensation if actual APEPS equaled the plan level, and that actual payouts for the APEPS component would range from 0% of target if actual APEPS was less than 70% of plan APEPS to 200% of target if actual APEPS was more than 120% of plan APEPS. For
2015
, target APEPS was
$5.57
and actual APEPS was
$4.40
resulting in a payout of
62%
of the Incentive Compensation Target for the APEPS component of annual incentive compensation.
For the individual performance component of annual incentive compensation, each of the executive officers are evaluated based on a number of qualitative and quantitative metrics that the Compensation Committee believes are important measures of the Company’s and the executive officers’ performance. These criteria vary among the Company’s executive officers depending on their roles. Assessment criteria include strategic considerations such as how the Company’s operating and financial performance compared to the performance of its peers, how the Company’s growth rate compared to growth in the Company’s market, and how the Company’s market share changed with key customers. Performance on additional financial metrics such as leasing revenues and EBITDA are also considered as are changes in key operating metrics such as container utilization and average lease rates. The individual performance component is not determined by a formula comparing actual performance and target performance on these criteria. The Committee discusses the Company’s performance with reference to these criteria, and evaluates the strategic, operating and financial success of the Company as well as the perceived strength and importance of the contribution of each of the executive officers to the Company’s performance.
The following table shows the annual incentive compensation targets, ranges and actual incentive compensation awards for the most recent three years paid to our Named Executive Officers (in percentages):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentive
Compensation
Target
% of Salary
|
|
Annual Incentive
Compensation
Range
% of Salary
|
|
Annual Incentive
Compensation
Actual % of Salary
|
|
|
|
|
|
2015
|
|
2014
|
|
2013
|
|
Brian M. Sondey - 2015
|
|
100
|
|
0 - 200
|
|
115
|
|
N/A
|
|
N/A
|
|
Brian M. Sondey - 2014 & 2013 (1)
|
|
65
|
|
0 - 130
|
|
N/A
|
|
72
|
|
74
|
|
John Burns
|
|
60
|
|
0 - 120
|
|
64
|
|
60
|
|
57
|
|
Adrian Dunner
|
|
60
|
|
0 - 120
|
|
49
|
|
60
|
|
59
|
|
Kevin Valentine - 2015 & 2014
|
|
60
|
|
0 - 120
|
|
49
|
|
63
|
|
N/A
|
|
Kevin Valentine - 2013 (2)
|
|
50
|
|
0 - 100
|
|
N/A
|
|
N/A
|
|
52
|
|
Marc Pearlin
|
|
40
|
|
0 - 80
|
|
37
|
|
40
|
|
39
|
|
|
|
|
(1)
|
In December
2014
, the Committee increased Mr. Sondey's annual incentive compensation target amount to 100% of salary, effective January 1,
2015
.
|
|
|
|
|
(2)
|
In December 2013, the Committee increased Mr. Valentine's annual incentive compensation target amount to 60% of salary, effective January 1, 2014.
|
Long-Term Equity Compensation
The Company utilizes long-term equity compensation to retain key employees, motivate them to achieve long-range goals and align their compensation with the growth of long-term value for our stockholders. The Committee administers the plans and determines the individuals eligible to receive awards, the types and number of shares of stock subject to the awards, the price and timing of awards and the other terms, conditions, performance criteria and restrictions on the awards.
Restricted Stock Grants
The Compensation Committee considers individual performance, the importance of each executive officer to the Company’s current performance, each executive officer’s tenure in the position, relative experience and future leadership potential and how the executive officer’s total and long-term equity-linked compensation compares to levels at the identified peer companies in determining how many shares of restricted stock to award each of the executive officers. In considering the individual performance of each executive officer, the Committee considers many of the same factors considered in determining the individual performance component of annual incentive compensation, and similarly, the Committee exercises discretion in its assessment and in allocating shares of restricted stock.
In
2015
, the Committee approved the issuance of
141,250
shares of restricted stock to the Named Executive Officers and other management employees. Individual grants were set based on peer group levels and the Committee’s assessment of individual performance. The shares of restricted stock granted in
2015
have a cliff vesting date of January 1,
2018
contingent on continued employment as of the vesting date. The
2013
and
2014
restricted stock grants have cliff vesting as of the dates set forth in the table below and are contingent on continued employment as of the vesting date. There were
no
other restricted stock grants issued to the Named Executive Officers or other management employees in
2015
.
The following table lists the restricted stock grants outstanding for the Named Executive Officers as of December 31,
2015
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
Issued 2013
|
|
Vest Date for
2013 Grant
|
|
Restricted Stock
Issued 2014
|
|
Vest Date for
2014 Grant
|
|
Restricted Stock
Issued 2015
|
|
Vest Date for
2015 Grant
|
|
Brian M. Sondey
|
|
28,000
|
|
Jan. 1, 2016
|
|
28,000
|
|
Jan. 1, 2017
|
|
31,000
|
|
Jan. 1, 2018
|
|
John Burns
|
|
10,500
|
|
Jan. 1, 2016
|
|
10,500
|
|
Jan. 1, 2017
|
|
10,500
|
|
Jan. 1, 2018
|
|
Adrian Dunner
|
|
10,500
|
|
Jan. 1, 2016
|
|
10,500
|
|
Jan. 1, 2017
|
|
10,500
|
|
Jan. 1, 2018
|
|
Kevin Valentine
|
|
7,500
|
|
Jan. 1, 2016
|
|
8,000
|
|
Jan. 1, 2017
|
|
8,500
|
|
Jan. 1, 2018
|
|
Marc Pearlin
|
|
6,000
|
|
Jan. 1, 2016
|
|
6,000
|
|
Jan. 1, 2017
|
|
6,000
|
|
Jan. 1, 2018
|
Employee Benefits
For all Named Executive Officers, the Company provides health and welfare benefits and an employee funded tax-qualified 401(k) plan with the Company matching employee contributions up to
3%
of the employee’s salary, subject to IRS regulations and plan contribution limits. These are the same plans offered to all U.S. employees. All Named Executive Officers also receive a car allowance. Mr. Dunner receives a housing allowance in the amount of
$12,500
per month related to the additional housing costs he incurs while on assignment in Hong Kong.
Deferred Compensation Plan
The Company does not offer a deferred compensation plan to its Named Executive Officers.
Pension Plan
The Company does not offer a pension plan to its Named Executive Officers.
Change of Control
The 2013 and 2014 restricted stock grants under the Company’s 2005 Management Omnibus Incentive Plan and the 2015 restricted stock grants under the 2014 Equity Incentive Plan provide that the awards shall vest in the event of a Change of Control (as defined in the applicable award agreement). Otherwise, there are no change of control agreements with our Named Executive Officers.
Employment Agreement with Mr. Sondey
In November 2004, we entered into an employment agreement with Mr. Sondey, whereby he agreed to serve as our Chief Executive Officer. The agreement currently provides for automatically renewing successive one-year terms subject to at least 90 days’ advance notice by either party of a decision not to renew the employment agreement. Mr. Sondey’s base salary for
2016
is
$750,000
, and under the terms of the employment agreement, is increased annually to reflect his performance and increases in the consumer price index. Mr. Sondey is also entitled to certain perquisites, as well as other benefits that are provided to other employees, which include health and disability insurance and paid vacations. Mr. Sondey is entitled to
severance pay if his employment is terminated by us without cause (as defined by the employment agreement), if he terminates his employment for good reason (as defined by the employment agreement) or if he dies or becomes disabled. Upon a termination without cause or for good reason, Mr. Sondey is entitled to severance pay equal to his base salary and incentive compensation for 18 months. Upon termination of Mr. Sondey’s employment for any reason or no reason, subject to our election to continue to pay to Mr. Sondey his base salary for a one-year period following such termination, unless such termination is for cause, Mr. Sondey will be restricted from competing with us for a period of one year following such termination.
Non-Compete Agreements
We do not have any employment agreements with any other Named Executive Officers. However, all of our Named Executive Officers are bound by non-compete agreements, which provide that upon the termination of a Named Executive Officer's employment for any reason or no reason, subject to our election to continue to pay to that Named Executive Officer his base salary for a one year period following such termination, unless such termination is for cause, the Named Executive Officer will be restricted from competing with us for a period of one year following such termination. Our Named Executive Officers are also prohibited from disclosing any of our confidential information.
Executive Severance Plan
As previously announced, the Company and Triton Container International Limited ("Triton") have entered into a transaction agreement (the "Transaction Agreement") providing for the combination of the Company and Triton under a new holding company named Triton International Limited (the "Mergers"). In 2015, in connection with the execution of the Transaction Agreement, we adopted the TAL International Group, Inc. Executive Severance Plan (the "Executive Severance Plan") effective for the period beginning on November 9, 2015, and ending on the first anniversary of the closing date of the Mergers. Upon a qualifying termination of employment under the terms of the Executive Severance Plan, the Named Executive Officers employed in the United States (other than the Company's Chief Executive Officer, whose severance is governed by the terms of his employment agreement, as described below) will be eligible to receive severance payments under the Executive Severance Plan, with payment amounts depending upon the nature of the termination.
Under the terms of the Executive Severance Plan, if a participant is involuntarily terminated for performance reasons (as determined by the plan administrator), and provided that such termination is not the result of willful misconduct or gross negligence and is not for cause, the participant will receive the following severance payments (the "Category One Severance Payments"): (i) one week of base salary for one but less than five years of service; (ii) two weeks of base salary for five but less than ten years of service; and (iii) three weeks of base salary for ten or more years of service.
The Executive Severance Plan further provides that, if a participant’s employment is either (A) involuntarily terminated by the Company in connection with (i) a workforce reduction due to economic conditions or a decrease in company performance, (ii) a reorganization causing the discontinuance of jobs or resulting in changed job aptitude or skill requirements, (iii) being unable to locate another position after returning from a disability leave of absence because the prior position was filled or eliminated during the leave or (iv) a transfer of job functions to a third party or (B) terminated by the participant for good reason (as defined in the Executive Severance Plan), and provided in each case that the participant does not voluntarily resign or abandon his or her job, the participant does not accept a position within the Company or with a third party to which the Company transfers job functions or sells assets, the participant does not decline an offer of a comparable position with the Company or a third party to which the Company transfers job functions or sells assets, and the termination is not for cause (as defined in the U.S. Executive Severance Plan), then the participant will be eligible to receive a payment equal to eighteen months of base salary and target bonus (the "Category Two Severance Payments").
Severance payments under the Executive Severance Plan will be made in a lump sum within forty-five days of the participant’s termination date, subject to the participant’s prior execution of a waiver and release of claims. The Executive Severance Plan does not provide for any tax gross-up payments. In the event that any severance payment under the Executive Severance Plan would result in a participant being subject to any excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), such severance payments will be reduced to the extent necessary to make such payments not subject to the excise tax.
Executive Retention Bonus Plan
In 2015, in connection with the execution of the Transaction Agreement, we adopted the TAL International Group, Inc. Executive Retention Bonus Plan (the "Executive Retention Bonus Plan"), which provides for a retention bonus equal to six months of a participant's base salary upon the earliest to occur of (i) the first anniversary of the effective time of the Mergers,
provided that the participant remains continuously employed through, and has not tendered a notice of resignation prior to, such date, (ii) the termination of the participant's employment without cause or by the participant for good reason (each as defined in the Executive Retention Bonus Plan), (iii) the participant’s death or disability and (iv) June 30, 2017, provided that the participant remains continuously employed through, and has not tendered a notice of resignation prior to, such date. The retention bonus will be paid in a lump sum no later than sixty days following the applicable vesting date. Each of the Named Executive Officers participates in the Executive Retention Bonus Plan.
The Executive Retention Bonus Plan does not provide for any tax gross-up payments. In the event that any retention bonus payable under the Executive Retention Bonus Plan would result in the Named Executive Officer being subject to any excise tax imposed under Section 4999 of the Code, such retention bonus will be reduced to the extent necessary to make such payment not subject to the excise tax.
Anti-Hedging and Anti-Pledging Policy
Hedging and similar monetization transactions by a director or an executive officer can lead to a misalignment between the objectives of that director or executive officer and the objectives of our stockholders. The Company has a policy prohibiting employees, including officers, and directors from engaging in speculative transactions involving Company stock, including purchasing Company stock on margin, pledging Company stock to secure a loan, trading in options on the Company's stock, or short sales of Company stock.
Tax Deductibility of Compensation
Internal Revenue Code Section 162(m) generally imposes a $1 million limit on the amount that a public company may deduct for compensation paid to the chief executive officer as well as any of the Company’s three other most highly compensated officers (other than the chief financial officer). Qualifying performance-based compensation is not subject to this deduction limit. While it is the Committee’s objective to avoid the deduction limitations of Section 162(m), compensation paid may not be deductible because it exceeds the limitations or does not meet the “performance-based” or other requirements for deductibility under Section 162(m).
For a complete summary of all Named Executive Officers’ compensation, please see the Summary Compensation Table below.
Merger-Related Compensation For Named Executive Officers
As previously announced, the Company and Triton have entered into the Transaction Agreement providing for the Mergers. Each of the Named Executive Officers are eligible to receive certain compensation that is based on or otherwise relates to the Mergers.
At the effective time of the Mergers, all restricted shares held by the Named Executive Officers that were granted in 2014 and 2015 will automatically vest as a result of the completion of the Mergers. Restricted shares held by the Named Executive Officers granted in January 2016 do not automatically vest as a result of the completion of the Mergers and will be converted at the effective time of the Mergers into restricted shares of Triton International Limited.
As described above, each of the Named Executive Officers is also entitled to certain "double-trigger" severance payments upon certain terminations of employment, in the case of Mr. Sondey, under the terms of his employment agreement, and in the case of the other Named Executive Officers, under the terms of the Executive Severance Plan, and each Named Executive Officer is eligible to receive a retention bonus under the Executive Retention Bonus Plan.
Assuming that the Mergers were completed and the employment of each of the Named Executive Officers was involuntarily terminated without cause or for good reason on December 31, 2015, each Named Executive Officer would receive approximately the amounts set forth in the table below. The amounts reported below are estimates based on multiple assumptions that may or may not actually occur and do not reflect certain compensation actions that may occur prior to the completion of the Mergers (such as any merit-based salary increases). As a result, the actual amounts, if any, to be received by a Named Executive Officer may materially differ from the amounts set forth below.
Golden Parachute Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Cash ($)(1)
|
|
Equity ($)(2)
|
|
Other ($)(3)
|
|
Total ($)
|
|
Brian M. Sondey
|
|
2,175,000
|
|
2,149,450
|
|
362,500
|
|
4,686,950
|
|
John Burns
|
|
900,000
|
|
781,305
|
|
187,500
|
|
1,868,805
|
|
Adrian Dunner
|
|
852,000
|
|
781,305
|
|
177,500
|
|
1,810,805
|
|
Kevin Valentine
|
|
708,000
|
|
592,500
|
|
147,500
|
|
1,488,000
|
|
Marc Pearlin
|
|
630,000
|
|
446,460
|
|
150,000
|
|
1,226,460
|
(1) These amounts represent double-trigger cash severance amounts. For Mr. Sondey, this amount represents the continued payment of his base salary and annual incentive compensation for eighteen months following his termination date under the terms of his employment agreement. For the other Named Executive Officers, these amounts represent eighteen months of base salary and target bonus paid in a lump sum within forty-five days of the Named Executive Officer's termination date, subject to his prior execution of a waiver and release of claims and the terms and conditions of the Executive Severance Plan.
(2) These amounts represent the aggregate value of the fully vested Triton International Limited common shares that each Named Executive Officer will receive in respect of his outstanding restricted shares granted in 2013, 2014 and 2015, assuming the single-trigger vesting of all such outstanding restricted shares as a result of the completion of the Mergers, as well as the value of accrued dividends that will be paid to each Named Executive Officer upon vesting of their restricted shares. In accordance with the applicable SEC disclosure rules, the aggregate value of the fully vested Triton International Limited common shares has been calculated based on an implied share price of TAL common stock of $19.38 per share, which is the average closing market price of the Company's common stock over the first five business days following November 9, 2015, the date of the first public announcement of the transaction agreement. Restricted shares granted in January 2016 do not automatically vest as a result of the completion of the Mergers and will be converted at the effective time of the Mergers into restricted shares of Triton International Limited as set forth above. The following table summarizes the amounts set forth in this column:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Restricted TAL Shares (#)
|
|
Total Value of Resulting Consideration ($)
|
|
Total Value of Dividends that Accrued During Vesting Period ($)
|
|
Total ($)
|
|
Brian M. Sondey
|
|
87,000
|
|
1,686,060
|
|
463,390
|
|
2,149,450
|
|
John Burns
|
|
31,500
|
|
610,470
|
|
170,835
|
|
781,305
|
|
Adrian Dunner
|
|
31,500
|
|
610,470
|
|
170,835
|
|
781,305
|
|
Kevin Valentine
|
|
24,000
|
|
465,120
|
|
127,380
|
|
592,500
|
|
Marc Pearlin
|
|
18,000
|
|
348,840
|
|
97,620
|
|
446,460
|
(3) These amounts represent the cash retention bonuses equal to six months of each Named Executive Officer's base salary that are payable under the Executive Retention Bonus Plan. These amounts are single-trigger payments that are generally payable within 60 days of (i) the first anniversary of the effective time of the Mergers or (ii) June 30, 2017, whichever occurs first, subject to continued employment through the applicable date, provided that payment of the retention bonus will be accelerated upon a termination of the Named Executive Officer's employment without cause or good reason or the Named Executive Officer's death or disability prior to such dates.
Compensation Committee Interlocks and Insider Participation
The Board of Directors has established a Compensation Committee, consisting of Messrs. Germain, Lindeberg and Kaspers. No members of the Compensation Committee are officers, employees or former officers of the Company. No executive officer of the Company served as a member of the compensation committee (or other committee performing equivalent functions) or board of directors of another entity, one of whose executive officers served on the Compensation Committee or as a director of the Company.
Report of the Compensation Committee
The Compensation Committee of the Board of Directors has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this annual report on Form 10-K/A.
THE COMPENSATION COMMITTEE
Claude Germain,
Chairman
Helmut Kaspers
Frederic H. Lindeberg
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation of the Named Executive Officers for the fiscal years ended December 31,
2015
,
2014
and
2013
. The “Named Executive Officers” are the Chief Executive Officer, Chief Financial Officer, and three other most highly compensated executive officers ranked by their total compensation in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
Salary
($)
|
|
Stock
Awards
($)(A)
|
|
Non-Equity
Incentive Plan
Compensation
($)(B)
|
|
All Other
Compensation
($)(C)
|
|
Total
($)
|
|
Brian M. Sondey
|
|
2015
|
|
725,000
|
|
1,274,410
|
|
831,938
|
|
16,979
|
|
2,848,327
|
|
Chairman, President,
Chief Executive
Officer, Director
|
|
2014
|
|
698,000
|
|
1,236,480
|
|
499,070
|
|
16,523
|
|
2,450,073
|
|
|
2013
|
|
672,525
|
|
1,175,720
|
|
500,000
|
|
16,327
|
|
2,364,572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Burns
|
|
2015
|
|
375,000
|
|
431,655
|
|
238,500
|
|
17,524
|
|
1,062,679
|
|
Senior Vice President,
Chief Financial
Officer
|
|
2014
|
|
330,000
|
|
463,680
|
|
198,000
|
|
16,131
|
|
1,007,811
|
|
|
2013
|
|
320,000
|
|
440,895
|
|
183,360
|
|
15,950
|
|
960,205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adrian Dunner
|
|
2015
|
|
355,000
|
|
431,655
|
|
172,530
|
|
166,526
|
|
1,125,711
|
|
Senior Vice
President, Asia
Pacific
|
|
2014
|
|
337,000
|
|
463,680
|
|
202,500
|
|
166,149
|
|
1,169,329
|
|
|
2013
|
|
322,500
|
|
440,895
|
|
189,630
|
|
165,700
|
|
1,118,725
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Valentine
|
|
2015
|
|
295,000
|
|
349,435
|
|
143,370
|
|
16,326
|
|
804,131
|
|
Senior Vice President,
Trader and Global
Operations
|
|
2014
|
|
280,000
|
|
353,280
|
|
176,400
|
|
15,772
|
|
825,452
|
|
|
2013
|
|
265,000
|
|
314,925
|
|
136,475
|
|
15,595
|
|
731,995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marc Pearlin
|
|
2015
|
|
300,000
|
|
246,660
|
|
112,200
|
|
17,900
|
|
676,760
|
|
Vice President,
General Counsel and
Secretary
|
|
2014
|
|
285,000
|
|
264,960
|
|
114,000
|
|
16,569
|
|
680,529
|
|
|
2013
|
|
275,000
|
|
251,940
|
|
107,800
|
|
16,367
|
|
651,107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) The stock award values shown in this column represent the grant date fair value as calculated in accordance with FASB ASC 718 - "
Compensation - Stock Compensation."
For further discussion regarding the assumptions used in valuing the stock awards, please refer to TAL's Form 10-K (Footnote 6 - "Capital Stock and Stock Options") filed on
February 29, 2016
. These stock awards have three-year cliff vesting. Information concerning the stock awards is shown in the table below:
|
|
|
|
|
|
|
|
|
Grant Date
|
|
Grant Price
|
|
Vesting Date
|
|
January 15, 2015
|
|
$41.11
|
|
January 1, 2018
|
|
January 29, 2014
|
|
$44.16
|
|
January 1, 2017
|
|
January 29, 2013
|
|
$41.99
|
|
January 1, 2016
|
|
|
|
|
(B)
|
Represents cash awards earned under our annual incentive compensation program.
|
(C) In
2015
, all other compensation consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Housing
Allowance
($)
|
|
Savings Plan
Company Match
($)
|
|
Other
Compensation(1)
($)
|
|
Total
($)
|
|
Brian M. Sondey
|
|
—
|
|
7,950
|
|
9,029
|
|
16,979
|
|
John Burns
|
|
—
|
|
7,950
|
|
9,574
|
|
17,524
|
|
Adrian Dunner
|
|
150,000
|
(2)
|
7,950
|
|
8,576
|
|
166,526
|
|
Kevin Valentine
|
|
—
|
|
7,950
|
|
8,376
|
|
16,326
|
|
Marc Pearlin
|
|
—
|
|
7,950
|
|
9,950
|
|
17,900
|
|
|
|
|
(1)
|
Other compensation includes Company paid car allowances and Company paid life insurance premiums for coverage exceeding $50,000.
|
|
|
|
|
(2)
|
Mr. Dunner was paid a monthly housing allowance of
$12,500
. Mr. Dunner’s housing allowance amount is related to the additional housing costs he incurs while on assignment in Hong Kong.
|
GRANTS OF PLAN-BASED AWARDS TABLE FOR
2015
The following table includes certain information with respect to the non-equity incentive compensation plan awards and equity awards for the Named Executive Officers during the fiscal year ended
December 31, 2015
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 Range of Incentive Compensation
|
|
2015 Target Incentive Compensation
|
|
2015 Actual Incentive Compensation
|
|
2015 Restricted
Stock Issued
|
|
|
|
% of Salary
|
|
$
|
|
% of Salary
|
|
$
|
|
% of Salary
|
|
$
|
|
# of shares(1)
|
|
Grant Date
|
|
Grant Date Fair Value of Stock Awards ($)(2)(3)
|
|
Brian M. Sondey
|
|
0 - 200
|
|
0 - 1,450,000
|
|
100
|
|
725,000
|
|
115
|
|
831,938
|
|
31,000
|
|
January 15, 2015
|
|
1,274,410
|
|
John Burns
|
|
0 - 120
|
|
0 - 450,000
|
|
60
|
|
225,000
|
|
64
|
|
238,500
|
|
10,500
|
|
January 15, 2015
|
|
431,655
|
|
Adrian Dunner
|
|
0 - 120
|
|
0 - 426,000
|
|
60
|
|
213,000
|
|
49
|
|
172,530
|
|
10,500
|
|
January 15, 2015
|
|
431,655
|
|
Kevin Valentine
|
|
0 - 120
|
|
0 - 354,000
|
|
60
|
|
177,000
|
|
49
|
|
143,370
|
|
8,500
|
|
January 15, 2015
|
|
349,435
|
|
Marc Pearlin
|
|
0 - 80
|
|
0 - 240,000
|
|
40
|
|
120,000
|
|
37
|
|
112,200
|
|
6,000
|
|
January 15, 2015
|
|
246,660
|
(1) Represents shares of restricted stock that cliff-vest on
January 1, 2018
.
(2) The grant date fair value of the restricted stock awards reported in this column is the grant date value of the awards as determined under FASB ASC 718 - "
Compensation - Stock Compensation"
.
|
|
|
|
(3)
|
The Company's closing market price on the grant date was
$41.11
.
|
OPTIONS EXERCISED AND STOCK VESTED IN
2015
The following table includes shares of common stock received in
2015
by the Named Executive Officers due to the vesting of restricted stock awards granted to them on
January 18, 2012
that vested on
January 1, 2015
:
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Received Due to
Stock Option Exercises
|
|
Restricted Stock Awards Granted on January 18, 2012 and Vested on January 1, 2015
|
|
Value Realized on Vesting ($) (1)
|
|
Brian M. Sondey
|
|
—
|
|
25,000
|
|
1,089,250
|
|
John Burns
|
|
—
|
|
10,500
|
|
457,485
|
|
Adrian Dunner
|
|
—
|
|
10,500
|
|
457,485
|
|
Kevin Valentine
|
|
—
|
|
7,500
|
|
326,775
|
|
Marc Pearlin
|
|
—
|
|
6,000
|
|
261,420
|
|
|
|
|
(1)
|
The dollar amount represents the number of shares acquired on vesting multiplied by the market closing price of our common stock on the vesting date.
|
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END FOR
2015
The following table includes certain information with respect to restricted stock awards held by each of the Named Executive Officers as of
December 31, 2015
. None of the Named Executive Officers had unexercised stock options as of
December 31, 2015
.
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
Name(A)
|
|
Number of Shares That
Have Not Vested
(#)(A)
|
|
Market Value of Shares That
Have Not Vested
($)(B)
|
|
Brian M. Sondey
|
|
87,000
|
|
1,383,300
|
|
John Burns
|
|
31,500
|
|
500,850
|
|
Adrian Dunner
|
|
31,500
|
|
500,850
|
|
Kevin Valentine
|
|
24,000
|
|
381,600
|
|
Marc Pearlin
|
|
18,000
|
|
286,200
|
|
|
|
|
(A)
|
Mr. Sondey’s restricted shares vest as follows:
28,000
shares on January 1,
2016
,
28,000
shares on January 1,
2017
and
31,000
shares on January 1,
2018
. The restricted shares held by Mr. Burns and Mr. Dunner vest as follows:
10,500
shares on January 1,
2016
,
10,500
shares on January 1,
2017
and
10,500
shares on January 1,
2018
. Mr. Valentine’s restricted shares vest as follows:
7,500
shares on January 1,
2016
,
8,000
shares on January 1,
2017
and
8,500
shares on January 1,
2018
. Mr. Pearlin’s restricted shares vest as follows:
6,000
shares on January 1,
2016
,
6,000
shares on January 1,
2017
and
6,000
shares on January 1,
2018
.
|
|
|
|
|
(B)
|
The closing market price of the Company’s common stock on December 31,
2015
was
$15.90
.
|
Potential Payments upon Termination of Employment Obligations
Under the terms of his employment contract, Mr. Sondey is entitled to a minimum guaranteed payment of his base salary and incentive compensation for 18 months after termination of his employment (without cause by the Company or for good reason by Mr. Sondey). Assuming a qualifying termination of his employment occurred on December 31,
2015
, Mr. Sondey would have been entitled to receive
$2,250,000
under the terms of his employment agreement. All of the Named Executive Officers are also bound by a non-compete agreement, which states that when employment terminates, the Company may exercise the non-compete arrangement for a period of one year, with the Named Executive Officers entitled to a payment of one year's salary.
Under the terms of the Executive Severance Plan, assuming a qualifying termination of employment resulting in the payment of Category One Severance Benefits occurred on December 31,
2015
, each of the Named Executive Officers participating in such plan would be eligible to receive the following payments: Mr. Burns: $21,635; Mr. Dunner: $20,481; Mr. Valentine: $17,019; and Mr. Pearlin: $17,308. For each Named Executive Officer, these amounts represent three weeks of base salary. Assuming a qualifying termination of employment resulting in the payment of Category Two Severance Benefits occurred on December 31,
2015
, each of the Named Executive Officers participating in such plan would be eligible to receive the following payments: Mr. Burns: $900,000; Mr. Dunner: $852,000; Mr. Valentine: $708,000; and Mr. Pearlin: $630,000. For each Named Executive Officer, these amounts represent eighteen months of base salary and target bonus.
Under the terms of the Executive Retention Bonus Plan, assuming a qualifying termination of employment resulting in the payment of a retention bonus occurred on December 31,
2015
, each of the Named Executive Officers participating in such plan would be eligible to receive the following payments: Mr. Sondey: $362,500; Mr. Burns: $187,500; Mr. Dunner: $177,500; Mr. Valentine: $147,500; and Mr. Pearlin: $150,000. For each Named Executive Officer, these amounts represent six months of base salary.
For all of the Named Executive Officers, in the event their employment is terminated due to death, disability, or by the Company for any reason other than Cause (as such terms are defined in the award agreement or the 2014 Equity Incentive Plan or 2005 Management Omnibus Incentive Plan, whichever is applicable), all unvested restricted shares which were not granted during the year in which such termination of employment occurs will vest. For grants under the 2005 Management Omnibus Incentive Plan or the 2015 grants under the 2014 Equity Incentive Plan, in the event their employment is terminated due to their retirement, provided they are above the age of 60, all unvested restricted shares will vest as of the Named Executive Officer's termination of employment. Upon the occurrence of a Change of Control (as defined in the applicable award agreement), all unvested restricted shares will vest as of the date of such Change of Control.
Maximum shares eligible for accelerated vesting are shown above in the table "Outstanding Equity Awards at Fiscal Year End for
2015
".
Description of Equity Compensation Plans
Our Board of Directors adopted the 2014 Equity Incentive Plan (the “2014 Stock Plan”) which was approved by stockholders at our 2014 Annual Meeting on April 22, 2014. The 2014 Stock Plan replaced our 2005 Management Omnibus Incentive Plan. No further grants of awards will be made under the 2005 Management Omnibus Incentive Plan but the terms of the 2005 Management Omnibus Incentive Plan will continue to apply to awards previously issued under that plan.
2014 Stock Plan
We established our 2014 Stock Plan so that we and our subsidiaries could (i) attract and retain persons eligible to participate in the Plan; (ii) motivate persons eligible to participate, by means of appropriate incentives, to achieve long-range goals; (iii) provide incentive compensation opportunities that are competitive with those of other similar companies; and (iv) further align the interests of the persons eligible to participate with those of the Company’s other stockholders through compensation that is based on the Company’s common stock; and thereby promote the long-term financial interest of the Company and its subsidiaries, including the growth in value of the Company’s equity and enhancement of long-term stockholder return.
Shares reserved for issuance.
The maximum number of shares of Common Stock with respect to which awards may be granted under the 2014 Stock Plan is 3,000,000. To the extent that any shares subject to awards have been canceled, expired, not issued or forfeited for any reason (in whole or in part), such shares will again be available for awards under the 2014 Stock Plan. Shares subject to awards that have been retained by the Company or delivered to the Company in payment or satisfaction of the purchase price or tax withholding obligations will again be available for grant under the 2014 Stock Plan on a one-to-one basis. The Compensation Committee may make adjustments in the terms and conditions of, and the criteria included in Awards to reflect stock splits and other similar events, or in recognition of unusual or nonrecurring events affecting the Company or the financial statements of the Company or changes in applicable laws, regulations or accounting principles, as the Compensation Committee determines appropriate in its discretion whenever the Compensation Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the 2014 Stock Plan.
Administration.
The 2014 Stock Plan is administered by the Compensation Committee of our Board of Directors, which has the power to determine the eligibility of individuals to receive awards, the types and number of shares of stock subject to awards, the pricing and timing of awards and to establish the terms, conditions, performance criteria and restrictions on awards.
Participants.
Any of our employees, consultants, directors or any other person providing services to us or our subsidiaries, as determined by the Committee, may be selected to participate in the 2014 Stock Plan. The granting of awards under the 2014 Stock Plan is discretionary and therefore, the Company cannot now determine the number or type of awards to be granted in the future to any particular person or group. These participants may receive one or more of the following awards:
Stock Options.
Stock options may be granted under our 2014 Stock Plan, including incentive stock options, as defined under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), and nonqualified stock options. The exercise price of all stock options granted under the 2014 Stock Plan will be determined by the Compensation Committee, except that the exercise price cannot be less than 100% of the fair market value on the date of the grant (or not less than 110% of fair market value in the case of incentive stock options granted to a participant who, immediately after such grant, owns more than 10% of the total combined voting power or value of all classes of our capital stock).
Upon the exercise of a stock option, the purchase price must be paid in full in either cash or its equivalent by tendering previously acquired shares of our Common Stock with a fair market value at the time of exercise equal to the exercise price, provided such shares have been held for at least six months prior to tender. The Committee may also allow a broker-assisted cashless exercise, the retention of shares by the Company of shares otherwise to be delivered upon the exercise of the stock option or exercise by any other means that it determines to be consistent with the purpose of the 2014 Stock Plan and as permitted under applicable law.
No
stock options were granted to the Named Executive Officers or other management employees during
2015
.
Stock Appreciation Rights (SAR).
A SAR entitles a participant to receive a payment equal in value to the difference between the fair market value of a share of stock on the date of exercise of the SAR over the exercise price of the
SAR, which shall be payable in cash or shares of our Common Stock. The grant price in respect of a SAR shall equal the fair market value of the stock on the date of grant. The terms and conditions of any SAR will be determined by the Compensation Committee at the time of the grant of award and will be reflected in the award agreement.
No stock appreciation rights were granted to the Named Executive Officers or other management employees during
2015
.
Restricted Stock.
A restricted stock award is the grant of shares of our Common Stock on a date determined by the Committee, and is subject to substantial risk of forfeiture until specific conditions or goals are met. Restricted stock awards are subject to such conditions, restrictions and contingencies as the Compensation Committee shall determine.
In
2015
, the Compensation Committee approved the issuance of
141,250
shares of restricted stock to the Named Executive Officers and other management employees for the
2015
benefit year. The restricted stock granted in
2015
have a cliff vesting date of January 1,
2018
contingent upon continued employment as of the date of vesting. No other restricted stock was granted to the Named Executive Officers or other management employees during
2015
.
Dividend Equivalent Rights.
The award of Dividend Equivalent Rights permits the Participant to earn an amount equal to the dividends or other distributions payable with respect to shares of our Common Stock. The terms and conditions of any Dividend Equivalent Rights will be determined by the Compensation Committee at the time of the grant of the award and will be reflected in the award agreement.
No Dividend Equivalent Rights were granted to the Named Executive Officers or other management during
2015
.
Change in Control.
In the event of a Change in Control (as defined below), unless otherwise specifically prohibited under applicable laws, or by the rules and regulations of any governing governmental agencies or national securities exchanges or agreed otherwise in writing by the participants (a) any and all Options and SARs granted under the 2014 Stock Plan shall become immediately exercisable and (b) any restriction periods and restrictions imposed on Restricted Shares shall lapse
.
“Change in Control” means (1) a sale of all or substantially all of the Company’s assets or (2) a merger, consolidation or other business combination transaction of the Company with or into another corporation, entity or person; provided however, none of the following shall be considered a Change in Control: (a) a merger effected exclusively for the purpose of changing the domicile of the Company, (b) an equity financing in which the Company is the surviving corporation, or (c) a transaction in which the holders of at least 50% of the shares of voting capital stock of the Company outstanding immediately prior to such transaction continue to hold (either by such shares remaining outstanding or by their being converted into shares of voting capital stock of the surviving entity) 50% or more of the total voting power represented by the shares of voting capital stock of the Company (or surviving entity) outstanding immediately after such transaction.
Termination of Service.
Each award agreement shall set forth the extent to which the participant shall have the right to exercise Options and SARs, receive unvested shares of Restricted Stock and unvested Dividend Equivalent Rights, following Termination of Service with the Company. Such provisions will be determined in the sole discretion of the Committee, shall be included in the award agreement entered into with each participant, need not be uniform among all awards issued pursuant to the 2014 Stock Plan, and may reflect distinctions based on the reasons for Termination of Service.
Amendment and Termination.
The Board of Directors of the Company may at any time and from time to time, alter, amend, suspend or terminate the 2014 Stock Plan or any Award thereunder in whole or in part; provided, however, that no amendment which requires stockholder approval in order for the 2014 Stock Plan to continue to comply with any applicable tax or securities laws or regulations or the rules of any securities exchange on which the securities of the Company are listed, shall be effective unless such amendment shall be approved by the requisite vote of stockholders of the Company entitled to vote thereon; provided further that no such alteration, amendment, suspension or termination shall adversely affect any Award thereunder without the consent of the participant to whom such Award shall have been made. Notwithstanding the foregoing (and without the consent of any participant), the Board of Directors of the Company may amend the 2014 Stock Plan as it determines appropriate to conform to the requirements of Code Section 409A and applicable guidance of general applicability issued thereunder.
2005 Management Omnibus Incentive Plan.
The Company has frozen the 2005 Management Omnibus Incentive Plan and will not issue any additional grants under this plan. We established our 2005 Management Omnibus Incentive Plan so that we and our subsidiaries could attract and retain certain employees, motivate eligible participants to achieve long-range goals and to provide incentive compensation opportunities to eligible participants that are competitive with those of similar companies. The omnibus incentive plan is administered by the Compensation Committee of our Board of Directors, which has the power to determine the ability of an eligible individual to receive awards, the types and number of shares of stock subject to the awards, the price and timing of awards and to establish the terms, conditions, performance criteria and restrictions on the awards. Any of our employees, consultants, directors or any other person providing services to us or our subsidiaries, as determined by the Committee, were eligible to be selected to participate in the 2005 Management Omnibus Incentive Plan. The plan provides for one or more of the following awards:
Stock Options.
Stock options granted under our 2005 Management Omnibus Incentive Plan, included incentive stock options, as defined under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), and nonqualified stock options. The exercise price of all stock options granted under the omnibus incentive plan was determined by the Committee, except that the exercise price could not be less than 100% of the fair market value on the date of the grant (or not less than 110% of fair market value in the case of incentive stock options granted to a participant who, immediately after such grant, owns more than 5% of the total combined voting power or value of all classes of our capital stock).
Upon the exercise of a stock option, the purchase price must be paid in full in either cash or its equivalent by tendering previously acquired shares of our Common Stock with a fair market value at the time of exercise equal to the exercise price, provided such shares have been held for at least six months prior to tender. The Committee may also allow a broker‑assisted cashless exercise, the retention by the Company of shares otherwise to be delivered upon the exercise of the stock options, exercise by the delivery of a promissory note containing terms established by the Committee or exercise by any other means that it determines to be consistent with the purpose of the omnibus incentive plan and as permitted under applicable law.
No stock options under the 2005 Management Omnibus Incentive Plan were granted to the Named Executive Officers or other management employees during
2015
. The options granted from the 2005 Management Omnibus Incentive Plan expired on October 17, 2015.
Stock Appreciation Rights (SAR).
A SAR entitles a participant to receive a payment equal in value to the difference between the fair market value of a share of stock on the date of exercise of the SAR over the exercise price of the SAR, which shall be payable in shares of our Common Stock. The grant price in respect of a SAR shall equal the fair market value of the stock on the date of the grant. The terms and conditions of any SAR would be determined by the Committee at the time of the grant of the award and reflected in the award agreement.
No stock appreciation rights were granted to the Named Executive Officers or other management employees under the 2005 Management Omnibus Incentive Plan during
2015
.
Restricted Stock.
A restricted stock award is the grant of shares of our Common Stock on a date determined by the Committee, and is subject to such conditions, restrictions and contingencies as the Committee shall determine, including risk of forfeiture.
Shares reserved for issuance.
The maximum number of shares of Common Stock with respect to which awards may be granted under this Omnibus Incentive Plan was
2,500,000
. As of December 31,
2015
,
1,167,071
shares of Common Stock were outstanding under this omnibus incentive plan. The Company has frozen the 2005 Management Omnibus Incentive Plan and will not issue any additional grants under this plan.
Vesting upon a change of control.
If, while any award granted under this Omnibus Incentive Plan remains outstanding, a change of control occurs, then all of the stock options and SARs outstanding at the time of such change of control will become immediately exercisable in full and all restrictions with respect to restricted stock awards shall lapse.
Amendment and termination.
The Board of Directors may terminate, amend or modify the 2005 Management Omnibus Incentive Plan at any time; however, the approval of any affected participant must be obtained to amend or terminate the stock option plan to the extent the proposed amendment or termination would adversely affect the rights of any participant or any beneficiary of any award granted under the plan.