Information about our Directors. In connection with the Merger and effective as of the Effective Time, the members of the board of directors of the Company
(the “Board”) were replaced with the sole member of the board of directors of Merger Sub. As of the Effective Time, the sole director of Merger Sub immediately before the Effective Time, Takayuki Sakakida, became the sole director of the Company
and will serve on the Board until his successor is duly elected and qualified or until his earlier death, resignation or removal. Following consummation of the Merger, Mr. Sakakida was also appointed as a member of the Investment Committee.
After the Effective Time, MHC and Parent, the sole shareholders of the Company increased the size of the Board to seven (7) directors (the “Directors”) and delegated to the Board the authority to
appoint Directors to fill the vacancies on the Board. After the Effective Time, the Board then appointed Douglas A. Hacker, Michael J. Inglese, Takashi Kurihara, Charles W. Pollard, Taro Kawabe and Noriyuki Yukawa as additional members to the
Board. Takashi Kurihara was appointed as chairman of the Board. Mr. Hacker was appointed as the chairman of the Audit Committee and the Investment Committee. Mr. Inglese was appointed as a member of the Compensation Committee and the Investment
Committee. Mr. Kurihara was appointed as a member of the Audit Committee, the Compensation Committee, the Risk and Governance Committee and the Investment Committee. Mr. Pollard was appointed as the chairman of the Compensation Committee and the
Risk and Governance Committee and as a member of the Investment Committee. Mr. Yukawa was appointed as a member of the Audit Committee and Investment Committee. Mr. Kawabe has not been appointed to any Board committees.
Douglas A. Hacker was appointed to our Board on March 27, 2020 following the consummation of the Merger and served on the prior Board of Aircastle Limited
from August 2, 2006 to the consummation of the Merger. Mr. Hacker is currently an independent business executive and formerly served from December 2002 to May 2006 as Executive Vice President, Strategy for UAL Corporation, an airline holding
company. Prior to this position, Mr. Hacker served with UAL Corporation as President, UAL Loyalty Services from September 2001 to December 2002 and as Executive Vice President and Chief Financial Officer from July 1999 to September 2001. Mr. Hacker
served as a director of Travelport Worldwide Limited from 2016 to 2019 and served as a director of SeaCube Container Leasing Ltd from 2010 until 2014. Mr. Hacker serves as a director or trustee of a series of open-end investment companies that are
part of the Columbia family of mutual funds and as a director of Spartan Nash. The Board has determined that Mr. Hacker is “financially literate” as defined by the New York Stock Exchange (“NYSE”) rules and is a “financial expert” as defined by SEC
regulations. Mr. Hacker’s extensive experience in financial and operating management, including his prior service as an Executive Vice President, Strategy and Chief Financial Officer of a major U.S. airline, in addition to his depth of knowledge in
executive compensation, provide to the Board excellent perspectives on airline financial and operational matters and on aircraft investing, leasing and finance matters, on strategic matters relevant to the Company and on executive compensation.
Michael J. Inglese was appointed a member of our Board on March 27, 2020 following the consummation of the Merger and served on the prior Board of Aircastle
Limited from June 2017 to the consummation of the Merger. He became our Chief Executive Officer in June 2017, having served as Aircastle’s Acting Chief Executive Officer from January 2017. He was previously our Chief Financial Officer from April
2007 to January 2017. Prior to joining the Company, Mr. Inglese served as Chief Financial Officer of PanAmSat Holding Corporation from June 2000 until the closing of PanAmSat’s sale to Intelsat in July 2006. Mr. Inglese joined PanAmSat in May 1998
as Vice President, Finance after serving as Chief Financial Officer for DIRECTV Japan, Inc. He is a Chartered Financial Analyst who holds a BS in Mechanical Engineering from Rutgers University College of Engineering and his MBA from Rutgers
Graduate School of Business Management.
Taro Kawabe was appointed to our Board on March 27, 2020 following the consummation of the Merger. Mr. Kawabe is currently an Executive Officer, Chief
Operating Officer of Finance and Leasing Business Division of Marubeni. Previously, he was Senior Operating Officer of Finance and Leasing Business Division of Marubeni from April 2019 to March 2020. Prior to that, Mr. Kawabe was the General
Manager of the Leasing Business Department of Marubeni from April 2016 to March 2019. Mr. Kawabe joined Marubeni in April 1990. Mr. Kawabe received his degree from Waseda University in 1990.
Takashi Kurihara was appointed to our Board on March 27, 2020 following the consummation of the Merger and served on the prior Board of Aircastle Limited
from May 2019 to the consummation of the Merger, and was nominated by Marubeni. Mr. Kurihara is the Advisor to the President of Marubeni America Corporation. From January 2017 to March 2019, Mr. Kurihara was a director of Agricultural Solutions
Business Division of Bridgestone. Prior to that, Mr. Kurihara was Deputy General Manager, Regional Coordination and Administration Department at Marubeni from April 2016 to September 2016. From July 2013, he was Vice President and a Board member of
Gavilon Agriculture Investment until April 2015, when Mr. Kurihara became Executive Vice President and a Board member of Gavilon Agriculture Investment. Mr. Kurihara received his MBA at Columbia Business School in New York and his bachelor degree
of political science at Keio University in Tokyo. Mr. Kurihara has over 30 years’ experience at Marubeni including the structured finance for Energy & Chemical plant projects in various countries, the management of the investment decision
making process by conducting the analysis and the recommendation to its CEO, various M&A activities including Gavilon and its post-merger integration, and brings to the Board extensive experience in operations, strategic planning and financial
matters.
Charles W. Pollard was appointed to our Board on March 27, 2020 following the consummation of the Merger and served on the prior Board of Aircastle Limited
from July 6, 2010 to the consummation of the Merger. In 1997, Mr. Pollard joined Omni Air International, Inc., a passenger charter carrier where he served variously as Managing Director, President and CEO, and Vice Chairman until 2009. Previously
he spent 10 years in senior management positions, including President and CEO, at World Airways, Inc. Prior to joining World Airways, Inc., he practiced corporate law at Skadden, Arps, Slate, Meagher & Flom. He currently serves on the board of
directors of Allegiant Travel Company. Mr. Pollard previously served as a director of Air Partner plc until 2014 and AeroMechanical Services Ltd. until 2011. Mr. Pollard brings to the Board extensive experience in operations, strategic planning and
financial matters relevant to the airline industry, and he provides valuable insight in these areas to the Board and to the Company’s management.
Takayuki Sakakida was appointed to our Board on March 27, 2020 upon the consummation of the Merger and served on the prior Board of Aircastle Limited from
June 9, 2017 to the consummation of the Merger, and was nominated by Marubeni. In April 2019, Mr. Sakakida was appointed as General Manager, Finance & Leasing Business Dept. – II, Marubeni. In April 2017, Mr. Sakakida was appointed as Vice
President and General Manager, Aerospace and Ship Unit, Marubeni America Corporation, which is a subsidiary of Marubeni, a general trading company, engaged as an intermediary, importer/exporter, facilitator or broker in various types of trade
between and among business enterprises and countries. In April 2016, Mr. Sakakida was appointed as Assistant General Manager, Aerospace and Defense Systems Department, Marubeni. From April 2015 to April 2016, he served as General Manager, Business
Administration Section, Aerospace and Defense Systems Department of Marubeni. From April 2011 to 2015, he seconded to MD Aviation Capital Pte Ltd (Singapore) as Managing Director. Mr. Sakakida has over 12 years’ experience in the aviation industry
and brings to the Board extensive experience in operations, strategic planning and financial matters relevant to the aviation industry. He maintains high-level contacts with major manufacturers in the aviation industry as well as Asian airlines
which may in the future be customers of the Company.
Noriyuki Yukawa was appointed to our Board on March 27, 2020 following the consummation of the Merger. Mr. Yukawa is currently an Advisor at Mizuho Leasing,
and from April 2013 until March 2020, he also held the title of Managing Executive Officer. From April 2017 to March 2020, he led the Aviation, Finance and Real Estate Departments, and from April 2013 to March 2017 he was in charge of Real Estate.
Prior to joining Mizuho Leasing in April 2009, Mr. Yukawa had a 28 year career at Mizuho Bank. His roles included General Manager of the M&A Advisory Division, Joint General Manager of the M&A Finance Division, and Deputy General Manager of
the Real Estate Finance Division, as well as an Executive Assistant for the Chairman of the Board. Mr. Yukawa received a Master of Comparative Laws from the University of Illinois, College of Law and a Bachelor of Law from the University of Tokyo.
Mr. Yukawa is also a member of the Board of Directors of PLM Fleet LLC.
Information about our Executive Officers. The names of the executive officers of the Company and their ages, titles and biographies immediately prior to the
consummation of the Merger appear in Part I, “Information about our Executive Officers,” of the Original Form 10-K. The executive officers of the Company immediately prior to the consummation of the Merger each hold the same position and title
following consummation of the Merger and as of the date of filing of this Form 10-K/A, other than Joseph Schreiner, the Chief Technical Officer, who previously held the title of Executive Vice President, Technical, and Roy Chandran, the Chief
Strategy Officer, who previously held the title of Executive Vice President, Finance and Strategy.
Code of Business Conduct and Ethics. To help ensure that the Company abides by applicable corporate governance standards, our
Board has adopted a Code of Business Conduct and Ethics and a Code of Ethics for Chief Executive and Senior Financial Officers, which are posted on our website at http://www.aircastle.com under “Investors—Governance Documents” and which are
available in print to any shareholder of the Company upon request. The Company intends to post on its website any material amendments to its ethics codes and the description of any waiver from a provision of the ethics codes granted by the Board to
any Director or executive officer of the Company within four business days after such amendment or waiver.
Audit Committee of the Board of Directors. Prior to the consummation of the Merger, the Company had a separately-designated standing Audit Committee. The
members of the Audit Committee immediately prior to the Merger were Ronald W. Allen, Michael J. Cave, Douglas A. Hacker and Ronald L. Merriman (Chairman). The Board determined that each member of the Audit Committee as of immediately prior to the
Merger was independent within the meaning of the NYSE and SEC standards of independence for directors and audit committee members. The Board also determined that each member of the Audit Committee as of immediately prior to the Merger qualified as
an “audit committee financial expert” as defined under SEC rules. After the Effective Time, Takashi Kurihara (Chairman), Noriyuki Yukawa and Douglas A. Hacker were designated as members of the Audit Committee.
Please refer to information included in “Item 13. Certain Relationships and Related Transactions, and Director Independence—Director Independence” for a discussion of the Audit Committee following
consummation of the Merger.
Compensation Discussion and Analysis
This Compensation Discussion and Analysis describes and analyzes our executive compensation philosophy and programs as in effect prior to the consummation of the Merger, the decisions made by the
Compensation Committee under those programs and the factors considered by the Compensation Committee in making those decisions. The Compensation Committee intends to review and make appropriate adjustments to its executive compensation philosophy
and programs for the period beginning at the time of the consummation of the Merger. This Compensation Discussion and Analysis focuses on the compensation paid for 2019 to our current Chief Executive Officer, Chief Financial Officer and the three
other most highly compensated executive officers, together referred to as our named executive officers, or NEOs. For 2019, our NEOs were:
Pay for Performance Philosophy
We believe executive compensation should be tied to Company performance weighted in favor of long-term performance, and our compensation program for 2019 rewarded executives and employees in three
areas:
We believe that our performance relative to these financial metrics would ultimately improve returns to our shareholders prior to the Merger, through greater dividend-paying capacity and stronger
fundamentals. We used these metrics to determine the compensation for many professionals in the Company, including all of our NEOs, and we discussed the Company’s progress against these financial metrics in quarterly employee meetings. By
establishing these financial performance goals, tying the Company’s compensation program to the goals and communicating regularly with our employees, we strived to better align the interests of our employees with driving returns for our
shareholders prior to the Merger.
For 2019, we made annual incentive compensation awards, comprised of a cash bonus and restricted cash award, the payment and vesting of which were based on a mix of corporate performance and
individual performance. For more highly compensated employees, including our NEOs, achievement of corporate financial metrics carried a greater weighting relative to individual performance, as illustrated in the table below:
2019 Corporate Financial Metrics. We based corporate performance targets on the 2019 business plan that our Board endorsed in February 2019. In addition, we
established a performance range for each metric. Results below the low end of each range would not yield any contribution to the Company’s incentive compensation pool for that metric. Conversely, performance above target would result in an enhanced
contribution to the Company’s incentive compensation pool, up to a 200% contribution at the upper end of the performance range for each metric. For 2019, we established the following targets, performance ranges and relative weightings for the three
financial metrics:
Individual and Functional Performance Goals and Compensation. We set individual performance goals for every employee at the beginning of each year and
measure each employee’s performance against those goals at the end of the year to determine incentive compensation levels. Also, we may set functional goals for certain departments which are measured at year end and factor into incentive
compensation levels. For 2019, we determined incentive pay for each employee by applying the weighted corporate, individual performance and, if applicable, functional scores against such employee’s targeted bonus amount. We set individual bonus
targets based on an employee’s function, role and seniority within the organization, among other factors. For 2019, for our more highly compensated employees, including our NEOs, annual incentive compensation was paid out in the form of cash and
restricted cash awards. For additional retention purposes, the restricted cash awards vest over three years, subject to continued service with us through such period (including following the consummation of the Merger).
For 2019, there were four primary elements of total direct compensation: base salary, annual cash bonus, annual restricted cash award and long-term incentive plan award.
Base Salary. Base salaries provide fixed compensation and allow us to attract and retain talented management. We set base salaries for our named executive
officers and review them periodically by taking into account the current market environment and the responsibilities, experience, value to the Company and demonstrated performance of our named executive officers.
Annual Incentive Compensation. As discussed below, we make incentive compensation awards based on the Company’s performance against corporate financial
metrics, performance against individual performance goals, and, if applicable, functional performance goals for each year. For 2019, our payment of incentive compensation was split between cash and restricted cash awards for our more highly
compensated employees, including our NEOs. We paid the cash and granted the restricted cash portion of 2019 incentive awards in February 2020. For additional retention purposes, the restricted cash awards for 2019 awarded in February 2020 will vest
in one-third increments on February 15, 2021, February 15, 2022 and February 15, 2023, subject to continued service with us through such period (including following the consummation of the Merger).
Long-Term Incentive Plan. As discussed in the section titled “Long-Term Incentive Plan” below, we introduced a long-term incentive plan (“LTIP”) in 2016
designed to align management with shareholders by rewarding exceptional performance over a three year period. All performance share unit awards granted during 2019 were scheduled to vest, and the applicable performance period were designed to end,
on December 31, 2021. Except as permitted by the terms of the Aircastle Limited Amended and Restated 2014 Omnibus Incentive Plan (the “Incentive Plan”) and provided in the Merger Agreement, the LTIP was designed to be 100% at risk with no payout if
performance thresholds were not met.
Other Compensation. Prior to the consummation of the Merger, we paid dividends on our unvested restricted shares, but not on our performance share unit
awards. We also offered NEOs severance payments and accelerated vesting of restricted shares in certain circumstances, as described in greater detail below in the section entitled “Potential Payments upon Termination or Change in Control.”
Severance and change in control benefits provide transitional assistance for separated employees and are essential to recruiting and retaining talented executives in a competitive market. In addition, our NEOs are also eligible to participate in
our employee benefit plans, including medical, dental, life insurance and 401(k) plans. These plans are available to all employees and do not discriminate in favor of our named executive officers.
Recoupment Policy. In January 2016, we adopted a clawback policy covering certain incentive compensation awarded to our executive officers. The policy
requires reimbursement of incentive payments awarded to an executive officer based upon financial results that were subsequently the subject of a restatement due to the Company’s material noncompliance with financial reporting requirements. The
amount of reimbursement would be to the extent that a lower payment would have been awarded to the executive based on the restated financial results. The policy applies to all incentive compensation awarded or paid to an executive officer in the
three years prior to the restatement, even if the executive officer did not engage in conduct which contributed to the restatement. In addition, we may seek to recover any portion of incentive compensation when we determine that an executive
officer engaged in a certain misconduct, namely involving: (i) material acts of fraud or dishonesty in connection with employment by the Company; (ii) willfully not complying with material policies or procedures of the Company; or (iii) the
commission of a felony or a crime involving material dishonesty.
Impact of the Merger. Upon the consummation of the Merger, each outstanding restricted share award and performance share award became fully vested, assuming
the achievement, if applicable, of performance metrics at the maximum level of performance, and was canceled in exchange for the right to receive a single lump sum cash payment, without interest, equal to the Merger Consideration. Each restricted
cash award granted in February 2020 remains outstanding following the consummation of the Merger and is subject to the same double-trigger termination protections applicable to the annual time-based equity awards granted by the Company prior to the
consummation of the Merger in the ordinary course of business consistent with past practice, as described in greater detail below. In addition, in connection with the Merger, the Company reserved the right to take certain actions to reduce the
amount of any potential “parachute payments” subject to the excise tax imposed under Section 4999 of the Internal Revenue Code (including amounts payable to our NEOs), including accelerating the vesting and payment of certain equity and restricted
cash awards and the payment of certain incentive compensation payments into 2019. Effective as of December 24, 2019, the Company accelerated the vesting and payment of certain performance share units (“PSUs”), the vesting of certain restricted
share awards, and the payment of the 2019 target annual cash bonuses, in each case as held by or payable to our NEOs, as described in greater detail below.
Summary. The primary goals of our compensation programs (as in effect prior to the consummation of the Merger) are to attract, motivate and retain the most
talented and dedicated employees and to align incentive compensation with enhancing shareholder value. Our compensation programs as in effect prior to the consummation of the Merger were intended to:
What We Don’t Pay or Provide
Performance versus Corporate Financial Metrics. In 2019, the Company’s performance against its corporate financial metrics resulted in an incentive
compensation pool equal to 104.2% of the total target, as shown in the table below.
Adjusted Return on Equity was slightly above target due to higher gains on sale and lower interest costs. Cash Flow per Share of $7.08 was modestly below target due to the timing of aircraft
acquisitions, combined with the impact of repossessions of aircraft from Jet Airways. New Investments of $1.24 billion were below target as we remained disciplined on new investments in a highly competitive market. 2019 Performance for Corporate
Financial Metrics excludes the impact of costs and expenses associated with the Merger.
Individual Incentive Compensation Actions for 2019
The Company’s overall performance in 2019 was strong, particularly given the difficulties the Company faced with repossessions involving Avianca Brazil and Jet Airways. The senior management team
was disciplined in gaining possession of those aircraft and quickly placing them on lease with other customers. The Company remained disciplined in sourcing new investments in a highly competitive marketplace and, as a result, the New Investment
metric was slightly below target. Given the timing of the new investments and the impact of our repossessions, Cash Flow per Share also was slightly below target. The following represent some of the Company’s most important accomplishments during
2019:
Total Shareholder Return versus our Peers
Our operating performance was strong in 2019 and, with the positive impact of the Merger, our total return to shareholders for the year ended December 31, 2019, was 95.8%, well
above the total shareholder return of the S&P MidCap 400 Index of 26.2%. Our total shareholder return for the three years ended December 31, 2019, was 77.1%; again, well above the total shareholder return of the S&P MidCap 400 Index of
29.6%. Over those periods, our total shareholder return exceeded that of our publicly traded direct competitors (AerCap, Air Lease and Fly Leasing), which had an average total return of 66.7% for 2019 and a three year return of 42.1%. Each of our
NEOs met or exceeded their individual performance goals for 2019.
Based on these factors, and the corporate performance achievement of 104.2%, the Compensation Committee took the following actions:
Our LTIP was intended to drive superior performance and enhance management retention by rewarding executives for exceptional performance over a three year performance period using two measures of
long term performance: adjusted return on equity relative to targets set by the Compensation Committee each year; and total shareholder return relative to the S&P 400 MidCap Index, which is a broad benchmark of public companies. Except as
permitted by the terms of the Incentive Plan and provided in the Merger Agreement, the LTIP was designed to provide no payout if certain performance thresholds aren’t met. In fact, the total stockholder return (“TSR”) component of our 2016 LTIP did
not pay out as the Company’s total shareholder return did not meet the threshold level of performance.
Prior to the consummation of the Merger, PSUs were granted to our NEOs and certain other senior executives under our LTIP. We established the overall value of PSUs for each executive based on their
position, market and compensation data, and advice from our independent compensation consultant. We believe the performance standards for earning the PSU awards were challenging.
The PSUs granted in 2019 were designed to vest at the end of a three year period, which runs from January 1, 2019, through December 31, 2021. Half of the PSUs were designed to vest on achieving
relative total stockholder return goals (the “TSR PSUs”) while the other half were designed to vest on attaining annual Adjusted Return on Equity goals (the “AROE PSUs”). We believe this approach provided a balanced mix of incentives. Adjusted
Return on Equity was an appropriate measurement of management’s effectiveness in deploying our shareholders’ capital and relative total shareholder return measured management’s ability to deliver superior long-term returns to our shareholders. The
PSUs were denominated in share units (without dividend rights), each of which was equivalent to one common share, and were subject to performance conditions and time-based vesting conditions. All PSUs outstanding immediately prior to the
consummation of the Merger vested upon consummation of the Merger assuming achievement of the performance metrics at the maximum level of performance and were canceled in exchange for the right to receive a single lump sum cash payment, without
interest, equal to the Merger Consideration.
The number of shares vesting from the TSR PSUs at the end of the three-year performance period depended on our ranking within the S&P 400 MidCap Index as set forth in the table below. The TSR
PSUs were designed to incentivize exceptional performance. For our 2019 LTIP Awards, the Company’s TSR ranking needed to be at the 55th percentile to vest at target and no shares would vest if the Company’s TSR ranking was below the 30th
percentile. Results between the points in the table would be interpolated on a linear basis.
TSR is the change in price of a share of our common shares plus its accumulated dividends over the three year measurement period. Comparing the Company’s TSR to the returns of a broad market index
over the same period provided an objective external measure of the Company’s effectiveness in generating returns for shareholders prior to the consummation of the Merger. We believe the S&P Mid-Cap 400 Index, which is comprised of a broad range
of companies with market capitalizations similar to the Company’s, was an appropriate benchmark for TSR performance. Our industry is highly specialized with few direct peers, only three of which are now publicly traded. Prior to the consummation of
the Merger, it was not possible to develop a robust group of relevant, publicly-traded peer companies against which to accurately benchmark performance.
The number of shares vesting from the AROE PSUs at the end of the three-year performance period depended on the Company’s Adjusted Return on Equity as measured against the targets set in the annual
business plan endorsed by the Board. Adjusted Return on Equity is calculated in the same manner as described in Appendix A of this Form 10-K/A. The score was designed to be calculated each year and then averaged over the three year performance
period. No shares underlying AROE PSUs would vest if the Company’s Adjusted Return on Equity was more than 2% below plan. Results between the points in the table would be interpolated on a linear basis.
The chart below shows the PSU awards made to our NEOs during 2019, including the number of common shares underlying the awards at the time of grant:
The following table shows the performance of the PSU awards outstanding as of December 31, 2019, as if the performance period ended on December 31, 2019. Actual performance was determined upon the
consummation of the Merger on March 27, 2020, when the PSUs were accelerated assuming achievement of the performance metrics at the maximum level of performance and were canceled in exchange for the right to receive a single lump sum cash payment,
without interest, equal to the Merger Consideration.
Annual AROE Performance Percentages:
ACTUAL PERFORMANCE OF OUR 2017 LTIP AWARDS
The Company’s LTIP awards made in March 2017 and June 2017 were designed to vest on December 31, 2019, and had an overall payout of 172% of the target number of shares.
Underscoring the pay for performance design of our LTIP program, the TSR PSUs were paid out at maximum given the strong relative TSR performance over the three year performance period ending on December 31, 2019. As shown above, the AROE PSUs were
paid out at 145% of target for the March 2017 awards and at 143% of target for the June 2017 awards. As a result, the NEOs and other certain senior executives earned 148,453 AROE and 193,997 TSR PSUs and forfeited 10,907 AROE PSUs.
Treatment of Equity and Restricted Cash Awards
Upon the consummation of the Merger, each outstanding restricted share award and PSU became fully vested, assuming the achievement, if applicable, of performance metrics at the maximum level of
performance, and was canceled in exchange for the right to receive a single lump sum cash payment, without interest, equal to the Merger Consideration. Each restricted cash award granted in February 2020 remains outstanding following the
consummation of the Merger and is subject to the same double-trigger termination protections applicable to the annual time-based equity awards granted by the Company prior to the consummation of the Merger in the ordinary course of business
consistent with past practice, as described in greater detail below.
In connection with the Merger, the Company reserved the right to take certain actions to reduce the amount of any potential “parachute payments” subject to the excise tax imposed under Section 4999
of the Internal Revenue Code (including amounts payable to our NEOs), including accelerating the vesting and payment of certain equity and restricted cash awards and the payment of certain incentive compensation payments into 2019.
Effective as of December 24, 2019, the Company accelerated the vesting and payment of certain PSUs and the vesting of certain restricted share awards held by our NEOs in the amounts set forth in
the table below, provided that if the NEO was terminated for cause or resigned without “good reason” (as defined in the NEO’s employment agreement) prior to the earlier of the consummation of the Merger or the termination of the Merger Agreement,
the NEO would be obligated to repay to the Company the gross amount of the accelerated awards. In addition, if the Merger Agreement had terminated and thereafter the NEO was terminated for cause or resigned without good reason prior to the
scheduled vesting date of such accelerated awards, the NEO would be obligated to repay to the Company the net amount of the accelerated awards that would not otherwise have vested in the ordinary course as of the NEO’s termination date. Finally, if
the Merger Agreement had terminated and the Compensation Committee determined following the completion of the original performance period that the number of accelerated PSUs exceed the number of such awards that would otherwise have vested in the
ordinary course based on actual performance through the last day of the applicable performance period, then the NEO would be obligated to repay the net amount of such excess over the number of awards that would have vested in the ordinary course
based on actual performance at the end of the applicable performance period. Effective as of December 24, 2019, the Company also accelerated the payment of the 2019 target annual cash bonuses payable to the NEOs in the amounts set forth in the
table below.
Risk. The Compensation Committee reviews the risks and rewards associated with the Company’s compensation programs. We believe that our compensation
programs encourage prudent business judgment and appropriate risk-taking, with the overall goal of building sustainable and profitable growth and enhancing shareholder value.
We believe none of our compensation programs create risks that are reasonably likely to have a material adverse impact on the Company. Base salary is a fixed amount that does not encourage risk
taking. The incentive compensation program for 2019, which delivered the majority of total compensation for our NEOs in 2019, contained elements that mitigate risk without detracting from the incentive nature of the program, including:
Role of Executive Officers and Compensation Consultant. For 2019, the Committee set the corporate financial metrics at the beginning of the year based on
the annual business plan endorsed by the Board. We set performance goals for the Chief Executive Officer, who in turn established individual performance goals for the other NEOs. Regularly during the year, the senior management team presented to us
the Company’s actual performance against the corporate performance metrics. We shared these discussions with the full Board on a regular basis.
In January, we begin developing our preliminary appraisal of our Chief Executive Officer’s performance against the Company’s corporate performance metrics and his
individual goals. In February, we make our final decision about the Chief Executive Officer’s incentive compensation. Other NEOs may assist in providing data but otherwise have no role in determining the Chief Executive Officer’s compensation. The
Chief Executive Officer makes recommendations to us concerning other NEOs’ incentive compensation based on corporate performance and each other NEO’s individual performance.
We have access to market data in evaluating the competitiveness of our overall compensation structure. We use such data to develop a general understanding of current compensation practices, but we
do not rely solely on such data for making compensation decisions.
For 2019, we retained the firm of Meridian Compensation Partners (“Meridian”), as an independent compensation consultant. Meridian advised us in connection with changes to executive compensation
and the review of the design of our annual incentive plan and LTIP. The services provided by Meridian were under the direction and authority of the Compensation Committee. Meridian had no other direct or indirect business relationship with the
Company or our senior management team. Representatives of Meridian attended select Compensation Committee meetings and provided objective third-party advice and compensation market perspective. We concluded that the advice we received from Meridian
is objective and does not raise any conflicts of interest.
Share Ownership Guidelines
Prior to the consummation of the Merger, Ownership Guidelines providing for the following levels of share ownership were applicable to our Chief Executive Officer, Chief Commercial Officer, Chief
Financial Officer and Chief Legal Officer (based on the aggregate value of this share ownership as of the date of determination):
The Ownership Guidelines provided for a phase-in period, according to which a relevant officer should satisfy the Ownership Guidelines by the fifth anniversary of his or her initial appointment or
promotion. As of immediately prior to the consummation of the Merger, each of the above officers complied with the Ownership Guidelines.
Tax Implications of Our Compensation
The Tax Cuts and Jobs Act, enacted on December 22, 2017, substantially modified Section 162(m) of the Internal Revenue Code and, among other things, eliminated the performance-based exception to
the $1 million deduction limit effective as of January 1, 2018. As a result, beginning in 2018, compensation paid to certain executive officers in excess of $1 million will generally be nondeductible, whether or not it is performance-based. In
addition, beginning in 2018, the executive officers subject to Section 162(m) (the “Covered Employees”) will include any individual who served as the CEO or Chief Financial Officer (“CFO”) at any time during the taxable year and the three other
most highly compensated officers (other than the CEO and CFO) for the taxable year, and once an individual becomes a Covered Employee for any taxable year beginning after December 31, 2016, that individual will remain a Covered Employee for all
future years.
The Tax Cuts and Jobs Act includes a transition rule under which the changes to Section 162(m) described above will not apply to compensation payable pursuant to a written binding contract that was
in effect on November 2, 2017, and is not materially modified after that date. To the extent applicable to our existing contracts and awards, the Compensation Committee may avail itself of this transition rule. However, to maintain flexibility in
compensating executive officers in a manner designed to promote varying corporate goals, the Compensation Committee does not limit its actions with respect to executive compensation to preserve deductibility under Section 162(m) if the Compensation
Committee determines that doing so is in the best interests of the Company.
Last Year’s Say-on-Pay Vote
At our 2019 Annual Meeting, our shareholders had the opportunity to cast an advisory vote on the compensation of our NEOs in 2018. The Company’s say-on-pay vote yielded a 63% approval.
Notwithstanding that a majority of shareholders approved the advisory say-on-pay vote, we sought input from our shareholders to understand and integrate their views with ours with respect to the Company’s approach to compensation, and in particular
in connection with our efforts to tie compensation to performance. As a result of the announcement of the Merger, we did not implement any changes to out compensation program based on our shareholder outreach.
Compensation Committee Interlocks and Insider Participation
During 2019, the Compensation Committee of the Board was composed of Charles W. Pollard (Chair), Douglas A. Hacker, Ronald L. Merriman and Agnes Mura. None of these persons had at any time been an
officer or employee of the Company or any of its subsidiaries.
In addition, as of December 31, 2019, there were no relationships among the Company’s executive officers, members of the Compensation Committee or entities
whose executives served on our Board or on the Compensation Committee that required disclosure under applicable SEC regulations.
The table below sets forth information regarding 2019, 2018 and 2017 compensation for each of our NEOs, presenting each cash bonus, equity award, restricted cash award and performance share award
for the service year with respect to which they were earned, even if the annual incentive awards (cash bonus and equity or restricted cash award) were actually granted in a different period. Note that the SEC-required Summary Compensation Table
(shown on page 13) requires disclosure of equity-based grants in the year they were awarded, even if they were awarded in respect of a prior year’s service. Similarly, the SEC-required Summary Compensation Table (shown on page 13) requires
disclosure of restricted cash awards in the year they were vested and paid out, even if they were awarded in respect of a prior year’s service. Therefore, if an incentive award was earned in respect of service in one fiscal year, but granted in the
subsequent fiscal year, it would be included as compensation in a subsequent fiscal year in the SEC-required Summary Compensation Table.
The presentation below reflects how we view year-over-year changes to the compensation for our NEOs. It is important to recognize that the way we present compensation for our NEOs in the table
below is different from the SEC-required disclosure in the Summary Compensation Table and is not a substitute for the information in that table. Rather, it is intended to show how we review total compensation for our NEOs across different periods
during our decision-making process.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board is currently comprised of three Directors and operates pursuant to a written charter, which is available at http://www.aircastle.com under
“Investors—Governance Documents.”
The Compensation Committee is primarily responsible for reviewing, approving and overseeing the Company’s compensation plans and practices and works with management to establish the Company’s
executive compensation philosophy and programs. Prior to the consummation of the Merger, the Compensation Committee was comprised of four independent Directors. The members of the Committee at the end of 2019 were Charles W. Pollard (Chair),
Douglas A. Hacker, Ronald L. Merriman and Agnes Mura.
The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management and, based on that review and discussion, has recommended to the Board that
it be included in this Form 10-K/A.
Respectfully submitted,
The Compensation Committee
Charles W. Pollard, Chair
Takashi Kurihara
Michael J. Inglese
Summary Compensation Table for 2019
The table below sets forth information regarding 2019, 2018 and 2017 compensation for each of our NEOs. It is important to recognize that the SEC-required disclosure in the Summary Compensation
Table (below) is different than the way the Compensation Committee considers compensation for our NEOs during its decision-making process, which is set forth in the “Compensation Overview” table beginning on page 11.
GRANTS OF PLAN-BASED AWARDS FOR 2019
The following table sets forth information regarding the cash portion of our incentive compensation program for 2019 and restricted share awards and PSUs (and the incremental cost of certain
material modifications thereto) made to our NEOs under the Incentive Plan during the year ending December 31, 2019:
Employment Agreements with NEOs
Through our subsidiary, Aircastle Advisor LLC, we have entered into an employment agreement (as amended) with each of our NEOs. These employment agreements generally provide for payment of an
annual base salary and the executives’ eligibility to receive an annual cash bonus with indicated target annual cash bonus and equity incentive award levels.
Each employment agreement provides that the NEO is employed “at-will” and may be terminated at any time and for whatever reason by either us or him. A summary of the payments and benefits to be
provided to the NEOs upon a termination of employment, along with a description of the restrictive covenants applicable to each NEO, is set forth below in the section entitled “Potential Payments upon Termination or Change in Control.”
Restricted Share and PSU Provisions under the Incentive Plan
The following summarizes the provisions of the equity awards granted under the Incentive Plan as in effect prior to the consummation of the Merger. Upon the consummation of the Merger, each
outstanding restricted share award and PSU became fully vested, assuming the achievement, if applicable, of performance metrics at the maximum level of performance, and was canceled in exchange for the right to receive a single lump sum cash
payment, without interest, equal to the Merger Consideration.
Rights of Participants. Participants with restricted shares generally have all of the rights of shareholders, including the right to vote the shares and
the right to receive dividends at the same rate paid to other holders of common shares. Participants with PSUs have none of the rights of shareholders until the PSUs are settled in common shares. Subject to the provisions of the Incentive Plan
and applicable award agreement, the Incentive Plan administrator has sole discretion to provide for the lapse of restrictions in installments or the acceleration or waiver of restrictions (in whole or part) under certain circumstances, including,
but not limited to, the attainment of certain performance goals or a participant’s termination of employment or service.
Adjustments. In the event of a merger, amalgamation, consolidation, reorganization, recapitalization, bonus issue, share dividend or other change in
corporate structure affecting the common shares, the Incentive Plan administrator may, subject to certain limitations, make an equitable substitution or proportionate adjustment in, among other things, the kind, number and purchase price of
common shares subject to outstanding awards of restricted shares or other share-based awards (including PSUs) granted under the Incentive Plan. In addition, the Incentive Plan administrator, in its discretion, may terminate all awards with the
payment of cash or in-kind consideration.
Repurchase of Shares for Withholding Taxes upon Vesting. The Incentive Plan gives the Incentive Plan administrator the authority to permit a participant
to satisfy any federal, state or local withholding taxes due upon vesting of restricted shares by electing to have the Company repurchase a sufficient number of common shares, at Fair Market Value (as defined in the Incentive Plan) on the day of
vesting. During 2019, our named executive officers and seven Directors, Ms. Mura and Messrs. Allen, Bisignani, Cave, Hacker, Merriman and Pollard, made such an election of a sufficient number of shares, and the Incentive Plan administrator
approved such elections.
Restricted Share Agreements. The restricted share agreements with each of our named executive officers provide that if his employment with the Company is
terminated by the Company without “cause” (as defined in his employment agreement or award agreement) or, if applicable, by the executive with “good reason” (as defined in his employment agreement or award agreement), then the shares, if any,
that are not vested as of the date of such termination will be paid out subject to the executive’s execution of a separation agreement which includes a general release of claims. Upon a participant’s death or disability, the vesting of that
participant’s unvested restricted shares will accelerate.
Performance Share Unit Agreements. The PSU agreements with each of our named executive officers provide that if his employment with the Company is
terminated by the Company without “cause” (as defined in the Incentive Plan) or, if applicable, by the executive with “good reason” (as defined in the Incentive Plan), then the Performance Period shall end as of the last day of the Company’s last
fiscal quarter and a number of PSUs shall immediately vest on the date based on achievement of Performance Goals. In the event that a Change of Control occurs prior to the vesting date, then the Performance Period shall end as of the date of the
Change in Control and the Performance Goals shall be deemed to be satisfied as of the date of such Change in Control at the greater of (x) the level of achievement resulting in vesting percentages of 75% of the Target PSUs and (y) the actual
level of achievement as of the date of such Change in Control. The resulting number of PSUs shall vest on the original vesting date based solely on the continued employment if the successor entity assumes the awards, provided that if the
executive’s employment is terminated by the Company without cause or by the executive for good reason, or the executive’s employment terminates due to his health or death or disability, in each case prior to the vesting date, the resulting PSUs
will vest immediately on the date of such termination of employment. If the successor entity does not assume the awards, then the resulting number of PSUs vest immediately. In the event that employment with the Company or a subsidiary or
affiliate is terminated as a result of the death or disability of the participant (other than following a change in control), then the performance period shall end as of the last day of the Company’s last fiscal quarter ending prior to the date
of such termination of employment, and the greater of (x) the Target PSUs and (y) the number of PSUs that would have vested based on achievement of the performance goals as of the last day of the performance period shall immediately vest.
We also have a PSU agreement that may be used with our named executive officers which provides that if such executive’s employment with the Company is terminated by the Company without “cause”
(as defined in his employment agreement or award agreement) or, if applicable, by the executive with “good reason” (as defined in his employment agreement or award agreement), then the shares, if any, that are not vested as of the date of such
termination will be paid out subject to the executive’s execution of a separation agreement which includes a general release of claims. Upon a participant’s death or disability, the vesting of that participant’s unvested restricted shares will
accelerate.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END FOR 2019
The following table summarizes the unvested portion of the restricted share awards and PSUs of our NEOs under the Incentive Plan, as of December 31, 2019:
STOCK VESTED FOR 2019
The following table summarizes restricted share awards and performance share units of our NEOs that vested during the year ending December 31, 2019:
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The following table and summary set forth potential amounts payable to our NEOs upon termination of employment or a change in control, as described below. The table below reflects amounts payable
to our NEOs assuming termination of employment on December 31, 2019, with equity-based amounts valued at US$32.01 per common share, the reported closing price for our common shares on the NYSE on December 31, 2019:
As described above in the section entitled “Employment Agreements with NEOs,” we, through our subsidiary, Aircastle Advisor LLC, have entered into employment agreements (as amended) with our
named executive officers which set forth certain terms and conditions of their employment relating to termination and termination payments.
Under the employment agreements for our named executive officers:
Each of the employment agreements were amended effective as of December 19, 2019 to provide that any grants of restricted cash awards in lieu of the annual PSU grants for 2020 and the
equity-based portion of the annual bonuses in respect of 2019 will not constitute a good reason event for purposes of the employment agreements or for any other purpose. In addition, the employment agreement amendments (other than for Mr. Winter)
provided for the accelerated vesting and payment in 2019 of certain equity awards and incentive compensation payments, subject to specified repayment provisions in the event of certain terminations of employment, as described in greater detail
above.
CEO Pay Ratio for 2019
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we determined that the 2019 total compensation of Michael J.
Inglese, our Chief Executive Officer, of US$10,759,541, as shown in the Summary Compensation Table above (the “CEO Compensation”), was approximately 48 times the total compensation of our median employee in 2019, calculated in the same manner, of
US$224,222.
We identified the median employee using the annual base salary and expected bonus, as of December 31, 2019, plus any long term incentive stock awards granted in 2019 for all individuals,
excluding our Chief Executive Officer, who were employed by us on December 31, 2019, the last day of our payroll year (whether employed on a full-time, part-time, seasonal or temporary basis). After identifying the median employee, we calculated
annual total compensation for such employee using the same methodology we use for our CEO Compensation.
If the 2019 annual compensation of Mr. Inglese was calculated based on the methodology used by the Compensation Committee to consider his compensation during its decision-making process and as
further described in the section titled “Compensation Overview” beginning on page 11, which reflects each compensation element for the service year with respect to which it was earned, Mr. Inglese’s total annual compensation for 2019 would be
US$4,711,974, resulting in a ratio to the total compensation of our median employee in 2019 of approximately 21 times.
Directors’ Compensation
Cash Compensation. During 2019, cash compensation to the independent Directors for service on our Board was set at the following levels:
Restricted Share Grants. On the first business day of 2019, our independent Directors received grants of restricted common shares, with the number of
shares for each such grant being equal to US$135,000 divided by the Fair Market Value, as defined in the Incentive Plan, of our common shares as of such date. These restricted shares fully vested on January 1, 2020, pursuant to the terms and
conditions of the Incentive Plan and the related award agreement.
Our affiliated and management Directors, Messrs. Inglese, Horie, Kurihara and Sakakida, were not separately compensated by us for their Board or committee service. All members of the Board were
reimbursed for reasonable costs and expenses incurred in attending meetings of the Board or otherwise incurred in connection with carrying out their duties as Directors.
The table below describes our compensation of Directors during 2019:
DIRECTOR COMPENSATION FOR 2019
Share Ownership Guidelines for Directors. Prior to the consummation of the Merger, each member of the Board who was paid a base annual cash fee for
service on the Board was subject to the share ownership guidelines, or Ownership Guidelines, previously adopted by the Company, pursuant to which each Director was expected to attain the following levels of share ownership while providing service
to the Company, based on the aggregate value of share ownership as of the date of determination:
The Ownership Guidelines provided for a phase-in period, according to which a Director should satisfy the Ownership Guidelines by the fifth anniversary of his or her initial appointment to the
Board. As of immediately prior to the consummation of the Merger, each member of the Board complied with the Ownership Guidelines.
Director Award Limits. During 2019, under the terms of the Incentive Plan, an annual limit of US$750,000 per calendar year applied to the combined cash
and equity-based compensation that could be granted to each of our non-employee Directors.
Equity Compensation Plan Information. The table below sets forth certain information as of December 31, 2019, the last day of the fiscal year, for (i) all
equity compensation plans previously approved by our shareholders and (ii) all equity compensation plans not previously approved by our shareholders.
Security Ownership of Certain Beneficial Owners and Management. The table below sets forth information as of April 22, 2020 as to the beneficial ownership
of our Common Shares.
Certain Relationships and Related Party Transactions
The following is a summary of material provisions of certain transactions we entered into with our executive officers, Directors or 5% or greater shareholders. We believe the terms and conditions
set forth in such agreements were reasonable and customary for transactions of this type.
Marubeni Corporation Shareholder Agreement Amendment and Limited Waiver
On February 18, 2015, the Company, Marubeni and a subsidiary of Marubeni entered into an amendment and restatement of the Shareholder Agreement, which (i) modified the terms of the Shareholder
Agreement to immediately permit acquisitions by Marubeni and its affiliates of voting securities of the Company in the secondary market pursuant to a Rule 10b5-1 plan that would result in Marubeni and its affiliates collectively holding more than
21.0%, but no more than 27.5% of the voting power of the Company and (ii) extended the term of the standstill provision of the Shareholder Agreement (the “Marubeni Standstill”) by eighteen months to January 2025. On September 23, 2016, the
Company, Marubeni and a subsidiary of Marubeni entered into an amendment increasing the Change of Control threshold from 30% to 35%. On October 23, 2019, the Company granted Marubeni a limited waiver of the Marubeni Standstill solely to allow
Marubeni, either alone or in concert with Mizuho Leasing, to make an offer or proposal to the Board or the Company’s senior management to acquire all of the outstanding Common Shares that Marubeni did not already own. The Shareholder Agreement
terminated upon completion of the Merger.
Merger Agreement with Affiliates of Marubeni and Mizuho Leasing
On March 27, 2020, the Company was acquired by a newly-formed entity controlled by affiliates of Marubeni and Mizuho Leasing pursuant to the terms of the previously announced Merger Agreement and
related Statutory Merger Agreement, by and among the Company, Parent and Merger Sub. Pursuant to the Merger, Merger Sub merged with and into the Company, with the Company as the surviving company in the Merger and becoming a privately-held
company whose only shareholders are Marubeni Aviation Holding Coöperatief U.A., which is an indirect subsidiary of Marubeni, and Parent. Parent is controlled by affiliates of Marubeni and Mizuho Leasing.
At the Effective Time, subject to the terms and conditions of the Merger Agreement, the Common Shares of the Company (other than (i) shares canceled or converted into shares of the surviving
company pursuant to the Merger Agreement and (ii) restricted shares canceled and exchanged pursuant to the Merger Agreement) were converted into the right to receive the Merger Consideration.
Policies and Procedures for Review, Approval or Ratification of Transactions with Related Persons
Our Board has adopted a Policy and Procedures with Respect to Related Person Transactions, our Related Person Policy. Pursuant to the terms of the Related Person Policy, the Audit Committee must
review and approve in advance any transaction involving an affiliate or related party (as defined under Accounting Standards Codification Topic 850), in which the amount involved exceeds $5,000,000, other than those that are pre-approved pursuant
to pre-approval guidelines or rules that may be established by the Audit Committee to cover specific categories of transactions, including the guidelines described below. All Related Persons, as defined below, are required to report to our legal
department any such related person transaction prior to its completion, and the legal department will determine whether it should be submitted to the Audit Committee for consideration.
Our Related Person Policy covers all transactions, arrangements or relationships (or any series of similar transactions, arrangements or relationships) in which the Company or any of its
subsidiaries was, is or will be a participant, in which the amount involved exceeds US$120,000, and in which any Related Person had, has or will have a direct or indirect material interest.
A Related Person is any person who is, or at any time since the beginning of the Company’s last fiscal year was, a Director or executive officer of the Company or a nominee to become a Director
of the Company; Marubeni and Mizuho Leasing or their affiliates; any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law of the Director, executive officer, nominee or Marubeni and Mizuho Leasing or their affiliates, and any person (other than a tenant or employee) sharing the household of such Director, executive
officer, nominee or Marubeni and Mizuho Leasing or their affiliates.
Director Independence
Prior to the consummation of the Merger, the Board was comprised of the following individuals: Ronald W. Allen, Giovanni Bisignani, Michael J. Cave, Douglas A. Hacker, Jun Horie, Michael J.
Inglese, Takashi Kurihara, Ronald L. Merriman, Agnes Mura, Charles W. Pollard, Takayuki Sakakida, and Peter V. Ueberroth. The Board determined that Messrs. Allen, Bisignani, Cave, Hacker, Merriman, Pollard and Ueberroth and Ms. Mura were
independent within the meaning of the NYSE director independence standards and SEC rules. In addition, the Board determined that all members of the Audit (Messrs. Allen, Cave, Hacker and Merriman), Compensation (Messrs. Hacker, Merriman, Pollard
and Ms. Mura) and Nominating and Corporate Governance Committees (Messrs. Bisignani, Pollard, Ueberroth and Ms. Mura) were independent within the meaning of the NYSE director independence standards and SEC rules. The Board previously determined,
under the NYSE standards and SEC rules, that former Directors Hajime Kawamura and Gentaro Toya were not independent because of their affiliation with Marubeni.
Although the Common Shares are no longer listed on NYSE or any other national securities exchange and we are therefore not required to have a majority of independent directors, the Board
continues to use the NYSE director independence standards for purpose of making its independence determinations. The Board determined, under these standards, that current Directors Messrs. Hacker and Pollard are independent and that Directors
Messrs. Inglese, Kawabe, Kurihara, Sakakida and Yukawa are not independent. As a non-listed company, we do not have a standing nominating committee and our Audit (Messrs. Kurihara and Yukawa) and Compensation Committees (Messrs. Inglese and
Kurihara) include non-independent Directors.
In making these determinations, the Board considered all relevant facts and circumstances, the applicable NYSE standards and SEC rules. The Board did not establish additional guidelines to assist
it in determining whether a Director has a material relationship with the Company under NYSE standards, but instead evaluated each Director under the tests set forth by the NYSE and through a broad consideration and evaluation of all relevant
facts and circumstances. The Board, when assessing the materiality of a Director’s relationship with the Company, also considered the issue not merely from the standpoint of the Director, but also from that of persons or organizations with which
the Director has an affiliation.
In addition, the Board considered transactions described above under “Item 13. Certain Relationships and Related Transactions, and Director Independence—Certain Relationships and Related Party
Transactions” in making the independence determinations.
Audit Fees, Audit Related Fees, Tax Fees and All Other Fees. In connection with the audit of the 2018 and 2019 financial statements, the Company entered
into an engagement letter with Ernst & Young LLP (“EY”) which set forth the terms by which EY has performed audit services for the Company. The following summarizes the fees paid by us to EY for professional services rendered in 2019 and
2018:
Audit Committee Pre-Approval Policies and Procedures
The Audit Committee has policies and procedures that require the pre-approval by the Audit Committee or one of its members of all services performed by the Company’s independent registered public
accounting firm and related fee arrangements. In the early part of each year, the Audit Committee approves the proposed services, including the nature, type and scope of services contemplated, and the related fees, to be rendered by these firms
during the year. In addition, pre-approval by the Audit Committee or one of its members is also required for those engagements that may arise during the course of the year that are outside the scope of the initial services and fees pre-approved
by the Audit Committee pursuant to the Sarbanes-Oxley Act. In accordance with this policy, the Audit Committee pre-approved all services to be performed by the Company’s independent registered accounting firm.
The exhibits filed herewith are listed on the Exhibit Index filed as part of this Form 10-K/A.
Pursuant to the requirements of Section 13 of the Exchange Act, Aircastle Limited has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: April 22, 2020
APPENDIX A
RECONCILIATION OF NON-GAAP MEASURES TO U.S. GAAP RESULTS
Adjusted Return on Equity
Cash Flow per Share
Net Cash Interest Margin
(Dollars in thousands)
A-1