THE CIT GROUP, INC.
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
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THE CIT GROUP, INC.
(Name of Registrant as Specified In Its Charter)
_________________________________________________________________________
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the form or schedule and the date of its filing.
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<PAGE>
[LOGO] CIT
THE CIT GROUP, INC.
1211 Avenue of the Americas
New York, New York 10036
March 30, 2000
Dear Stockholder:
You are cordially invited to attend our Annual Meeting of Stockholders on
Wednesday, May 24, 2000, at 2:00 p.m., Eastern time at our offices at 650 CIT
Drive, Livingston, New Jersey 07039.
Last year was one of the great milestone years in our long history. Not
only did we continue our 9 year string of achieving record earnings, we acquired
Newcourt Credit Group, making us the largest publicly held commercial financing
company in North America. The Newcourt acquisition broadens our market presence
in terms of both geographical coverage and entry into the technology based
leasing business. I look forward to discussing our progress in integrating
Newcourt and our opportunities for 2000 and beyond with you at our Annual
Meeting.
The notice of meeting and proxy statement following this letter describes
the business to be transacted. On the enclosed proxy card you are asked to elect
your Board of Directors for the upcoming year and ratify the appointment of KPMG
LLP as our independent public accountants.
Whether or not you are personally able to attend the special meeting,
please complete, sign and date the enclosed proxy card and return it in the
enclosed envelope as soon as possible. Your vote is very important. This will
not limit your right to attend the special meeting and vote in person.
Sincerely yours,
/s/ Albert R. Gamper, Jr.
Albert R. Gamper, Jr.
Chairman, President and Chief
Executive Officer
<PAGE>
[LOGO] CIT
THE CIT GROUP, INC.
1211 Avenue of the Americas
New York, New York 10036
----------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON May 24, 2000
-----------------------------------------------
TO OUR STOCKHOLDERS:
The annual meeting of stockholders of The CIT Group, Inc. will be held at
the offices of CIT, 650 CIT Drive, Livingston, New Jersey 07039, on May 24, 2000
at 2:00 p.m. (Eastern time), for the following purposes:
1. To elect 15 directors to serve for one year or until the next
annual meeting of stockholders;
2. To ratify the appointment of KPMG LLP as CIT's independent
accountants for 2000; and
3. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The CIT Board of Directors has fixed the close of business on March 27,
2000 as the record date for determining holders of CIT Common Stock and special
voting stock entitled to notice of and to vote at the meeting.
You are cordially invited to attend the meeting; however, you are
requested to mark, sign, date and return the accompanying proxy as soon as
possible.
By Order of the Board of Directors,
/s/ ERNEST D. STEIN
----------------------------------
Ernest D. Stein
Executive Vice President, General Counsel
and Secretary
New York, New York
March 30, 2000
YOUR VOTE IS IMPORTANT
PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD.
<PAGE>
THE CIT GROUP, INC.
----------
Proxy Statement
----------
We are mailing this proxy statement and the accompanying form of proxy
beginning on or about March 31, 2000 to holders of record on March 27, 2000 of
CIT Common Stock (the "Common Stock") and to Montreal Trust Company of Canada
(the "Trustee"), as Trustee on behalf of holders of record on March 27, 2000 of
exchangeable shares (the "Exchangeable Shares") of an indirect subsidiary of CIT
under a voting and exchange trust agreement. The Trustee, in turn, will be
mailing this proxy statement to holders of record of Exchangeable Shares.
The proxy statement and form of proxy are furnished in connection with the
solicitation of proxies by our Board of Directors for use at the 2000 Annual
Meeting of Stockholders. We will bear the cost of soliciting proxies in the
accompanying form. We do not expect to pay any fees for any proxy solicitation,
but may pay brokers, nominees, fiduciaries and other custodians their reasonable
fees and expenses for sending proxy materials to beneficial owners and obtaining
their instructions. In addition to solicitation by mail, our directors, officers
and other employees may solicit proxies in person, by telephone, facsimile
transmission or other means of electronic communication.
All duly executed proxies received prior to the Annual Meeting will be
voted in accordance with the choices specified. If no choice has been specified
in a duly executed proxy as to any matter or any other business that may
properly come before the meeting, the proxy will be voted in favor of such
matter in the discretion of the persons named in the proxy. If you grant a
proxy, you may revoke it at any time before it is voted at the meeting by filing
an instrument revoking the proxy with the Secretary of CIT, at our address
shown, by delivering a duly executed proxy bearing a later date or by appearing
at the Annual Meeting and voting in person. However, if you instructed a broker
on how to vote your shares, you must follow directions received from your broker
to change your vote.
As of March 27, 2000, there were approximately 247,757,250 shares of
Common Stock outstanding and 15,750,542 Exchangeable Shares outstanding. Each
holder of record of Common Stock is entitled to one vote per share on each
matter presented for a vote of stockholders. Each holder of Exchangeable Shares
is entitled to instruct the Trustee (or act as proxy of the Trustee at the
Annual Meeting) as to the voting of the number of votes attached to the special
voting stock held by the Trustee equal to the number of Exchangeable Shares held
by such holder. The Common Stock and the special voting stock vote together as a
single class. A quorum for transaction of business at the Annual Meeting is a
majority of the voting power entitled to vote at an Annual Meeting, present in
person or by proxy. Shares represented by proxies that reflect abstentions and
shares referred to as "broker non-votes" (i.e., shares held by brokers or
nominees for which instructions have not been received from the beneficial
owners or persons entitled to vote that the broker or nominee does not have
discretionary power to vote on a particular matter) are included in the
computation of a quorum.
Broker non-votes and abstentions will have no effect on the outcome of the
election of directors or the ratification of the appointment of KPMG LLP as
CIT's independent accountants for 2000.
The following table indicates the votes required to approve each of the
proposals to be presented at the Annual Meeting:
Proposal Approval Required
-------- -----------------
Election of Directors ...................... a plurality of the votes cast at
the Annual Meeting
Ratification of Independent Accountants .... a majority of the voting power
represented and entitled to vote
at the Annual Meeting
We know of no other matter to be presented at the Annual Meeting. Under
our By-Laws, no business may be transacted at the Annual Meeting other than
business that is (a) stated in the Notice of Annual Meeting, (b) proposed at the
direction of our Board of Directors, or (c) proposed by any CIT stockholder or
holder of Exchangeable Shares who is entitled to vote at the meeting and who has
complied with the notice procedures in our By-Laws.
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Unless you indicate contrary instructions to those set forth in the proxy
for the Annual Meeting, the persons named in the proxy have indicated that they
will cast the number of votes represented by the proxy for the election of each
of the nominees listed below as directors.
Our Board of Directors met 12 times during 1999. All of the nominees
listed below who served as directors during 1999 attended at least 75% of the
meetings of the Board of Directors held during the period of 1999 in which they
served as directors.
The directors elected at the Annual Meeting will each serve for a term of
one year, or until the next annual meeting of stockholders. Should any nominee
become unavailable for election, the Board of Directors may designate another
nominee, in which case the persons acting under duly executed proxies will vote
for the election of the replacement nominee. Management is not aware of any
circumstances likely to render any nominee unavailable. Election of directors
will be by a plurality of the votes cast. Broker non-votes and abstentions will
have no effect on the outcome of the election.
Nominees
The following sets forth information concerning the 15 nominees for
election as directors at the meeting, including information as to each nominee's
age as of March 1, 2000 and business experience during the past five years. This
information was provided to CIT by the nominees. CIT knows of no family
relationship among the nominees. Certain directors are also directors or
trustees of privately held businesses or not-for-profit entities that are not
referred to below.
Name Age Current Position/Offices
- ---- --- ------------------------
Albert R. Gamper, Jr. (1) ........... 58 Chairman of the Board of Directors,
President & Chief Executive Officer
of CIT
Daniel P. Amos ...................... 48 President and Chief Executive
Officer of AFLAC Incorporated and
American Family Life Assurance
Company of Columbus
Anthea Disney ....................... 53 Executive Vice President for Content
of News Corporation Ltd.
William A. Farlinger ................ 70 Chairman of Ontario Power Generation
Inc.
Guy Hands ........................... 40 Managing Director, Principal Finance
Group, Nomura International plc
Hon. Thomas H. Kean ................. 64 President, Drew University and
Former Governor of New Jersey
Paul Morton ......................... 61 President, Security Investment
Corporation
Takatsugu Murai ..................... 56 Senior Managing Director and General
Manager of Asia and President of the
International Banking Company, The
Dai-Ichi Kangyo Bank, Limited
("DKB")
William M. O'Grady (1) .............. 60 Executive Vice President & Chief
Administrative Officer of CIT
Joseph A. Pollicino (1) ............. 60 Vice Chairman and Chief Risk Officer
of CIT
Paul N. Roth ........................ 60 Partner, Schulte Roth & Zabel LLP
Peter J. Tobin ...................... 55 Dean, College of Business
Administration, St. John's
University
Keiji Torii ......................... 52 Director, Regional Head of the
Americas and General Manager, New
York Branch, DKB
Theodore V. Wells, Jr. .............. 49 Partner, Paul, Weiss, Rifkind,
Wharton & Garrison
Alan F. White ....................... 62 Senior Associate Dean, Massachusetts
Institute of Technology, Alfred P.
Sloan School of Management
- ----------
(1) Messrs. Gamper, O'Grady and Pollicino, who are listed above as Nominees,
are also Executive Officers of CIT.
2
<PAGE>
Albert R. Gamper, Jr. has served as Chairman of the Board since January
2000, as President and Chief Executive Officer since December 1989 and as a
Director since May 1984. From May 1987 to December 1989, Mr. Gamper served as
Chairman and Chief Executive Officer. Prior to December 1989, Mr. Gamper also
held a number of executive positions at Manufacturers Hanover Corporation, a
prior owner of CIT, where he had been employed since 1962.
Daniel P. Amos has served as a Director of CIT since January 1998. Mr.
Amos has served as President and Chief Executive Officer of AFLAC Incorporated,
a life insurance company, and of its principal subsidiary, American Family Life
Assurance Company of Columbus, since August 1990. Mr. Amos is a director of
AFLAC Incorporated.
Anthea Disney has served as Director of CIT since December 1998. Ms.
Disney has served as Executive Vice President for Content of News Corporation
Ltd. since June 1999. Prior to June 1999, Ms. Disney was Chairman and Chief
Executive Officer of News America Publishing Group, a division of News
Corporation, since October 1997. Ms. Disney has held a number of other positions
with News Corporation since 1973, including President and Chief Executive
Officer of Harper Collins Publishers and Editor-in-Chief of I-Guide.
William A. Farlinger has served as Director of CIT since November 1999.
Prior to the acquisition by CIT of Newcourt, Mr. Farlinger served as a director
of Newcourt. Mr. Farlinger has served as Chairman of Ontario Power Generation
Inc. (formerly Ontario Hydro) since November 1995, including as Chairman,
President and Chief Executive Officer from August 1997 to March 1998. Prior to
joining Ontario Hydro, Mr. Farlinger spent his entire business career with the
accounting and management consulting firm of Ernst & Young, Canada, including
serving as Chairman and Chief Executive Officer from 1987 to 1994.
Guy Hands has served as Director of CIT since November 1999. Prior to the
acquisition by CIT of Newcourt, Mr. Hands served as a director of Newcourt. Mr.
Hands has served as Managing Director of Nomura International plc's Principal
Finance Group since 1994. From 1982 to 1994, Mr. Hands worked at Goldman Sachs
International in various capacities, including as the Head of Global Asset
Structuring.
Hon. Thomas H. Kean has served as Director of CIT since November 1999. Mr.
Kean has served as President of Drew University since February 1990, and is the
former Governor of the State of New Jersey. He is the Chairman and a member of
the Board of Directors of Carnegie Corporation of New York. He is also a
director of Amerada Hess Corporation, ARAMARK Corporation, Bell Atlantic
Corporation, Fiduciary Trust Co. International, Robert Wood Johnson Foundation,
The Pepsi Bottling Group, and United HealthCare Corporation.
Paul G. Morton has served as Director of CIT since November 1999. Prior to
the acquisition by CIT of Newcourt, Mr. Morton served as a director of Newcourt.
Mr. Morton has been the President of Security Investment Corporation since 1961.
He is also a former President of Global Communications Limited and a former
Chairman of the Stadium Corporation of Ontario. Mr. Morton also served as a
member of the Board of Directors of Canada Deposit Insurance Corporation from
1988 to 1994.
Takatsugu Murai has served as Director of CIT since February 2000. Mr.
Murai has been Senior Managing Director and General Manager of Asia and
President of the International Banking Company at DKB since April 1999. Prior to
April 1999, Mr. Murai served as Senior Managing Director of DKB since May 1998,
as Managing Director since May 1997 and as Director and General Manager of the
London Branch of DKB since June 1995. Prior to June 1995, Mr. Murai held a
number of executive positions at DKB, where he has been employed since 1967.
William M. O'Grady has served as a Director of CIT since April 1999 and as
CIT's Executive Vice President and Chief Administrative Officer since January
1986. Previously he served in a number of other executive positions with CIT and
with RCA Corporation, a prior owner of CIT, since July 1965.
Joseph A. Pollicino has served as a Director of CIT since August 1986 and
as Vice Chairman of its Board of Directors and Chief Risk Officer since December
1989. Prior to December 1989, Mr. Pollicino held a number of executive positions
at CIT and at Manufacturers Hanover Corporation, where he had been employed
since 1957.
Paul N. Roth has served as a Director of CIT since December 1989. Mr. Roth
has been a partner in the New York law firm of Schulte Roth & Zabel LLP since it
was founded in 1969.
3
<PAGE>
Peter J. Tobin has served as a Director of CIT since May 1984. Mr. Tobin
has been Dean of the College of Business Administration at St. John's University
since August 1998. From April 1996 to December 1997, Mr. Tobin was Chief
Financial Officer of The Chase Manhattan Corporation. From January 1992 to April
1996, Mr. Tobin served as Chief Financial Officer of both Chemical Bank and
Chemical Banking Corporation, a predecessor of The Chase Manhattan Corporation,
and prior to that he served in a number of executive positions at Manufacturers
Hanover Corporation, a predecessor of Chemical Banking Corporation. He is a
Director of AXA Financial (formerly The Equitable Companies Incorporated).
Keiji Torii has served as a Director of CIT since April 1999. He also was
a Director and Senior Executive Vice President of CIT from April 1996 to April
1997 and a Director and Executive Vice President of CIT from May 1993 to April
1996. Mr. Torii has been Director, Regional Head of the Americas and General
Manager of the New York Branch of DKB since June 1999. Prior to June 1999, Mr.
Torii served as General Manager of the New York branch of DKB since April 1999
and as General Manager of International Planning and Coordination Division since
May 1997.
Theodore V. Wells, Jr. has served as Director of CIT since November 1999.
Mr. Wells has been a partner in the New York law firm Paul, Weiss, Rifkind,
Wharton & Garrison since January 3, 2000, and prior to that date from 1982 was a
partner in the New Jersey law firm Lowenstein Sandler PC.
Alan F. White has served as a Director of CIT since March 1998. Mr. White
has served as Senior Associate Dean of the Alfred P. Sloan School of Management,
Massachusetts Institute of Technology, since 1991. Mr. White has held a number
of other positions with the Sloan School of Management since 1973, including
responsibility for MIT programs in Asia, Europe, and Latin America and Director
of Executive Education at MIT. He is a director of SBS Technologies, Inc.
The Board of Directors recommends a vote "For" each of the nominees for
Director.
Board Organization and Committees
Organization. CIT acquired Newcourt Credit Group Inc. on November 15,
1999. Pursuant to the agreement relating to the acquisition, CIT agreed to cause
the Board of Directors, as of November 15, 1999, to be increased to sixteen
members, consisting of twelve members designated by CIT and four members
designated by Newcourt, one of whom may be designated by Canadian Imperial Bank
of Commerce ("CIBC") and one of whom may be designated by Hercules Holdings (UK)
Limited ("Hercules"). David F. Banks, William A. Farlinger, Guy Hands, and Paul
Morton were designated by Newcourt pursuant to the acquisition agreement, and
Messrs. Farlinger and Hands were the designees of CIBC and Hercules,
respectively. From the date of the acquisition through November 15, 2001, if any
Newcourt designee ceases to serve as a director, or either or both of CIBC or
Hercules ceases to have the right to designate a director, then the remaining
Newcourt designees then serving on the Board of Directors will designate a
successor director, subject to CIT's concurrence. Effective March 27, 2000,
David Banks resigned from the Board of Directors to pursue other interests. No
designation has yet been made to fill the vacancy created by Mr. Banks'
resignation.
Committees. The Audit Committee of the Board of Directors is comprised of
four independent members and met 5 times during 1999. The Compensation Committee
of the Board of Directors is comprised of three independent members and met 5
times during 1999. Each member of the Audit Committee and the Compensation
Committee attended at least 75% of the meetings of the applicable Committee
during 1999, except for Ms. Disney, who attended 60% of the meetings, and
Messrs. Farlinger, Wells and Kean, who were appointed by the Board of Directors
in November 1999. The Nominating Committee of the Board of Directors is
comprised of four members. The Nominating Committee was established on March 29,
2000 and has not yet convened.
4
<PAGE>
The following discussion summarizes certain matters concerning current
committees of the Board of Directors:
Audit Committee
Number of Members ............... 4
Members ......................... Peter J. Tobin (Chairman)
William A. Farlinger
Theodore V. Wells, Jr.
Alan F. White
Functions ....................... o Recommends independent public accountants
to the CIT Board of Directors for
selection, subject to ratification by
stockholders;
o Monitors the integrity of CIT's financial
accounting and reporting process and
systems of internal controls;
o Monitors the independence and performance
of CIT's independent auditors and
internal audit department; and
o Reports to the CIT Board of Directors as
appropriate.
Compensation Committee
Number of Members ............... 3
Members ......................... Daniel P. Amos (Chairman)
Anthea Disney
Thomas H. Kean
Functions ....................... o Considers and approves salaries, bonuses
and stock-based compensation for the
Named Executive Officers, for whom
compensation is reported under "Executive
Compensation";
o Administers and makes awards under the
Long-Term Equity Compensation Plan; o
Administers the Transition Option Plan;
and
o Reports to the CIT Board of Directors as
appropriate.
Nominating Committee
Number of Members ............... 4
Members ......................... Thomas H. Kean (Chairman)
William A. Farlinger
Paul N. Roth
Alan F. White
Functions ....................... o Identifies qualified candidates to fill
CIT Board of Directors positions;
o Considers director nominees proposed by
stockholders; and
o Reports to the CIT Board of Directors as
appropriate.
The Nominating Committee will consider nominees recommended by
stockholders. Stockholder recommendations must be in writing and addressed to
the Chairman of the Nominating Committee, c/o Secretary, The CIT Group.
Consideration of a candidate by the Nominating Committee does not mean the
candidate will be nominated at next year's Annual Meeting. See "Stockholder
Proposals and Nominations for the 2001 Annual Meeting" on page 21 of this Proxy
Statement for the procedures to follow if you would like to nominate a candidate
to be a director.
5
<PAGE>
Executive Officers
The following table lists the names and ages, followed by a biographical
summary, of CIT's executive officers as of March 1, 2000, other than Messrs.
Gamper, O'Grady, and Pollicino, who are listed above as Nominees. No family
relationship exists among CIT's executive officers or with any Director. The
executive officers were appointed by and hold office at the discretion of the
Board of Directors.
Name Age Current Position/Offices(1)
- ---- --- ---------------------------
Joseph M. Leone .... 46 Executive Vice President and Chief Financial Officer
Ernest D. Stein .... 60 Executive Vice President, General Counsel, and
Secretary
- ----------
(1) Certain executive officers are also directors or trustees of privately
held or not-for-profit organizations that are not referred to below.
Joseph M. Leone has served as CIT's Executive Vice President and Chief
Financial Officer since July 1995. Previously, Mr. Leone served as Executive
Vice President of Sales Financing, a business unit of CIT, from June 1991,
Senior Vice President and Controller since 1987, and in a number of other
executive positions with Manufacturers Hanover Corporation since May 1982.
Ernest D. Stein has served as CIT's Executive Vice President, General
Counsel and Secretary since February 1994. Previously, Mr. Stein served as
Senior Vice President and Deputy General Counsel since April 1993, as Senior
Vice President and Assistant General Counsel since March 1992, and in a number
of executive positions with Manufacturers Hanover Corporation, including
Executive Vice President and General Counsel since December 1985.
PRINCIPAL STOCKHOLDERS
Security Ownership of Certain Beneficial Owners
The table below shows, as of the most recent practicable date, the name
and address of each person known to CIT that beneficially owns in excess of 5%
of any class of voting stock. Information in this table is as of March 27, 2000
for the Dai-Ichi Kangyo Bank and as of December 31, 1999 for AXA.
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership
-----------------------------------------------------
Sole Shared Percentage Percentage of
Voting and Voting and of Outstanding
Title of Class Name and Address of Investment Investment Common Voting
of Stock Beneficial Owner Power Power Stock Securities*
-------- ---------------- ----- ----- ----- -----------
<S> <C> <C> <C> <C>
Common Stock The Dai-Ichi Kangyo Bank, Limited 71,000,000 0 28.7% 26.8%
1-5, Uchisaiwaicho, 1-chome
Chiyoda-ku, Tokyo 100-0011
Japan
Common Stock AXA Financial Inc., AXA, 9,074,824 20,171,960 12.2% 11.1%
The Mutuelles AXA
1290 Avenue of the Americas
New York, NY 10104
</TABLE>
- ----------
* Percentage of Outstanding Voting Securities is calculated on the basis of
shares of Common Stock outstanding, including Exchangeable Shares, which
have voting rights that are functionally equivalent to Common Stock.
6
<PAGE>
Security Ownership of Directors and Executive Officers
The table below shows, as of February 15, 2000, the number of shares of
CIT Common Stock and Exchangeable Shares owned by each nominee, by Messrs.
Gamper, Pollicino, Leone, O'Grady, and Stein (the "Named Executive Officers"),
and by the nominees and Named Executive Officers as a group.
Amount and Nature
of Beneficial Ownership
(CIT Common Stock and
Exchangeable Shares) Percentage
Name of Individual (1)(2)(3)(4)(5) of Class
------------------ --------------- --------
Albert R. Gamper, Jr ...................... 512,525 *
Daniel P. Amos ............................ 63,232 *
Anthea Disney ............................. 3,016 *
William A. Farlinger ...................... 6,451 *
Guy Hands ................................. 0 *
Thomas H. Kean ............................ 2,000 *
Paul Morton ............................... 69,921 *
Takatsugu Murai ........................... 0 *
William M. O'Grady ........................ 107,770 *
Joseph A. Pollicino ....................... 265,282 *
Paul N. Roth .............................. 9,500 *
Peter J. Tobin ............................ 10,000 *
Keiji Torii ............................... 0 *
Theodore V. Wells, Jr ..................... 3,185 *
Alan F. White ............................. 4,032 *
Joseph M. Leone ........................... 117,128 *
Ernest D. Stein ........................... 72,656 *
All Directors and Named Executive
Officers as a group (17 persons) ......... 1,246,698 *
- ----------
* Represents less than 1% of the total outstanding Common Stock and
Exchangeable Shares.
(1) Includes shares of Restricted Stock issued in January 1999 under the
Long-Term Equity Compensation Plan in lieu of cash awards under the CIT
Bonus Plan, for which the holders have voting rights, but for which
ownership has not vested, in the following amounts: Mr. Gamper - 12,011
shares, Mr. Pollicino - 8,029 shares, Mr. Leone - 3,084 shares, Mr.
O'Grady - 2,570 shares, and Mr. Stein - 1,928 shares.
(2) Includes shares of stock units issued in January 2000 under the Long-Term
Equity Compensation Plan in lieu of cash awards under the CIT Bonus Plan,
for which the holders have voting rights, but for which ownership has not
vested, in the following amounts: Mr. Gamper - 35,032 shares, Mr.
Pollicino - 11,545 shares, Mr. Leone - 8,408 shares, Mr. O'Grady - 11,943
shares and Mr. Stein - 3,663 shares.
(3) Includes shares of Restricted Stock issued in January 2000 under the
Long-Term Equity Compensation Plan in lieu of cash payment of all or part
of the annual fee payable to directors, for which the holders have voting
rights, but for which ownership has not vested, in the following amounts:
Mr. Farlinger - 3,185 shares, Mr. Morton - 796 shares and Mr. Wells -
3,185 shares.
(4) Includes shares of Restricted Stock awarded under the Long-Term Equity
Compensation Plan for which the holders have voting rights, but for which
ownership has not vested, in the following amounts: Mr. Gamper - 125,926
shares, Mr. Pollicino - 77,778 shares, Mr. Roth - 5,000 shares, Mr. Tobin
- 5,000 shares, Mr. Leone - 26,043 shares, Mr. O'Grady - 23,502 shares,
and Mr. Stein - 17,150 shares.
(5) Includes shares of stock issuable pursuant to stock options awarded under
the Long-Term Equity Compensation Plan that have vested or will vest
within 60 days after March 27, 2000 in the following amounts: Mr. Gamper -
302,533 shares, Mr. Pollicino - 162,000 shares, Mr. Amos - 3,332 shares,
Ms. Disney - 1,666 shares, Mr. O'Grady - 61,067 shares, Mr. White - 3,332
shares, Mr. Leone - 72,000 shares, and Mr. Stein - 37,933 shares.
7
<PAGE>
Compliance with Section 16(a) of the Securities Exchange Act
Based on CIT's records and other information, CIT believes that its
Directors and officers complied with all applicable SEC filing requirements for
reporting beneficial ownership of CIT's equity securities for 1999, except that
Keiji Torii inadvertently failed to file a Form 3 in May 1999 when he was
elected a director of CIT on April 27, 1999 and Anthea Disney inadvertently
failed to file a Form 4 in November 1999 to report that she purchased 350 shares
on October 27, 1999. Mr. Torii filed a Form 3 on September 29, 1999 to report
that he did not beneficially own any equity securities of CIT and Ms. Disney
filed a Form 4 on March 22, 2000 to report that she had purchased shares in
October 1999. In both instances, the director provided the information to CIT on
a timely basis, but CIT filed the reports late as a result of clerical errors.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Compensation Committee Report on Executive Compensation
The Compensation Committee is composed of three outside directors of the
Board who are not employees or former employees of CIT. The committee's primary
responsibility is to ensure that the Chief Executive Officer, other executive
officers and key management are compensated in a manner consistent with:
o Shareholder interests and the stated compensation strategy of CIT;
and
o Competitive practices and internal equity considerations.
Because of CIT's significant acquisitions in 1999, a major consideration
for CIT and the Committee was the integration of the compensation designs of
these various entities into one fundamentally sound compensation program. To
that end, the Committee requested information from independent compensation
consultants, William M. Mercer Incorporated, Inc., to ensure that the
compensation program remains competitive and able to meet its objectives. The
Compensation Committee reviewed CIT's compensation strategy and refined it to
ensure its continuing appropriateness. The compensation strategy provides the
link between CIT's business strategy and the compensation program.
The competitive employment market for senior level positions is defined as
companies in a related business, such as diversified financials and banks, with
assets similar to or greater than that of CIT. CIT will use this peer group of
comparable financial institutions to validate pay for performance relationships.
The companies used for comparison purposes for compensation analysis may be
different from the companies included in the peer group comparison for the Stock
Performance Graph. CIT has adopted a compensation strategy that emphasizes
competitive and performance leveraged annual incentives and substantial
long-term incentives based on financial success.
Executive Compensation Plans
CIT's executive compensation plans are designed to serve the best
interests of CIT and its shareholders. The plans are also designed to qualify as
performance based compensation plans under Section 162(m) of the Internal
Revenue Code of 1986, which governs the tax deductibility of pay for the
executive officers named in the annual proxy statement. In making its decisions,
the Compensation Committee considers, but is not limited in its decision making
by, the impact of Section 162(m).
Base Salaries. CIT's philosophy is to provide salaries to its executive
team members within ranges in which the midpoint approximates the median of
appropriate peer groups of financial services organizations in each of the
markets and businesses in which CIT competes. Based upon an extensive survey of
competitor financial services companies and after consideration of CIT's new
organization structure stemming from its various acquisitions, the Committee
reviewed and approved salary adjustments to the named executive officers.
Annual Incentives. CIT's annual incentive plan was reviewed during the
year to determine its overall effectiveness. Adjustments were made to modify the
funding opportunities for the annual incentive plan in accordance with the
survey results for the financial services competitor companies.
Annual incentive pools are funded based on performance against individual
business unit net income targets and the growth of net income over the prior
year for CIT as a whole. Executives are rewarded for their individual
contributions to attainment of business unit targets and the growth of CIT
overall. After considering
8
<PAGE>
the performance of CIT in 1999, the Compensation Committee awarded bonuses to
the named executives that reflected their individual contribution to the
attainment of CIT's net income and growth goals and their significant role in
CIT's acquisitions.
Under a program to encourage stock ownership approved by the Compensation
Committee, CIT's executives were permitted to elect to receive between 10% and
50% of their 1999 annual bonus award in CIT stock units. The cash portion
deferred is converted to common stock units with a market value equal to 125% of
the deferred amount. The number of shares reflected by the premium element is
subject to forfeiture, under certain conditions, upon termination of employment
with CIT prior to three years from the date of the award.
Long-Term Incentives. CIT maintains a stock-based incentive plan, The CIT
Group, Inc. Long-Term Equity Compensation Plan (the "ECP"), covering directors
and employees of CIT and its subsidiaries. The plan provides for the grant of
various forms of long-term incentives such as stock options, restricted stock
and performance shares or units. Option grants were made to executive officers
in November of 1997, when the Company went public, and again in March and
October of 1999. The first option grant in 1999 was made in recognition of the
fact that stock options were not granted in 1998. The second option grant in
1999 was intended to be consistent with the adopted compensation strategy.
In connection with the Newcourt acquisition, CIT adopted a stock option
plan for the purpose of converting Newcourt options into options for the
purchase of Common Stock (the "Transition Option Plan"). No additional options
can be awarded under the Transition Option Plan.
CEO Compensation. During 1999 the Committee reviewed the compensation of
Mr. Gamper based upon:
o Comparative compensation data provided by the independent consultant
as to the compensation of the chief executive officers of other
financial services companies
o Its assessment of the performance contribution of the CEO in terms
of CIT's strategic business plans, operating performance results and
acquisitions
o CIT's previously described compensation strategy
Mr. Gamper received a salary increase to $875,000 per year. This salary
adjustment places him slightly below the market median of peer group companies.
With respect to annual bonuses, funding is based upon financial results
against planned net income within the business units and net income growth at
the corporate level. CIT's 1999 net income increased by 15% over 1998 thus
meeting its previously targeted net income goal. As a consequence, the Committee
awarded Mr. Gamper a bonus of $1.1 million for 1999. When coupled with his
salary, his total cash compensation placed him just slightly below the market
median on a total cash compensation basis.
With respect to stock options, the Committee made two grants to the CEO in
1999. This was due in part because 1) no stock option grant had been made in
1998 and 2) the annualized value of stock options and other forms of equity
awards to the CEO were found to be below those provided to the chief executive
officers of peer group companies. Thus, Mr. Gamper was awarded a stock option
grant of 200,000 shares in March, 1999 with an exercise price of $30.75 and a
stock option grant of 300,000 shares in November, 1999 at an exercise price of
$21.4375.
Other Considerations. Because the Committee believes that executives who
have a material ownership interest in the Company are more likely to identify
with shareholder interest and diligently work to enhance Total Shareholder
Returns, in 1999 it adopted the following guideline for ownership of Common
Stock:
Executive Level Ownership Obligation
--------------- --------------------
CEO 5x base salary
Group CEOs and Named Executive Officers 3x base salary
Selected Executive Officers 1x base salary
Executives will have three years to meet this minimum obligation.
9
<PAGE>
The Committee also reviewed the levels and forms of remuneration provided
to the outside directors of the Board of Directors. In doing so, it looked at
published survey sources and at proxy reported data for financial services
companies used in making its executive compensation comparisons. As a result,
the Committee recommended and the full Board of Directors adopted the following:
o Increase the annual retainer to $50,000
o Eliminate all meeting and committee fees
o Provide for annual grants of stock options having a present
Black-Scholes value of $25,000 for directors generally, except that
committee chairmen are entitled to grants with a $35,000 valuation
Directors are able to make an annual election as to the form of payment
relating to the annual retainer. Their choices are cash, CIT stock options and
restricted stock. These changes are consistent with the surveyed trends and
amounts being paid to outside directors.
With the adoption of the changes described in this report, the Committee
believes that a sound executive compensation strategy has been developed which
is marketplace competitive and meets the needs of our executives as well as the
objectives of our shareholders.
March 29, 2000 Compensation Committee
Daniel P. Amos, Chairman
Anthea Disney, Director
Thomas Kean, Director
10
<PAGE>
Comparative Stock Performance
SEC rules require proxy statements to contain a performance graph that
compares the performance of our Common Stock against Standard & Poor's 500 Stock
Index and a published industry or line of business index or group of "peer
issuers," covering a five-year period. We selected the S&P Financials Index and
the Russell 1,000 Financial Services Index, in which CIT is included, as the
appropriate line of business indices for purposes of this comparison. Because
our Common Stock was priced in the initial public offering on November 12, 1997
and began trading on the New York Stock Exchange on November 13, 1997, the graph
compares performance from November 12, 1997 through December 31, 1999. The graph
assumes an investment of US$100 at the beginning of the period at the initial
public offering price of US$27.00 per share of Common Stock and reinvestment of
dividends.
CIT'S PERFORMANCE VS S&P FINANCIAL, RUSSELL 1000 FINANCIAL, AND S&P 500 INDICES
November 12, 1997 through December 31, 1999
[The following information was depicted as a line chart in the printed material]
November 12, 1997 = 100
<TABLE>
<CAPTION>
11/12/97 12/31/97 3/31/98 6/30/98 9/30/98 12/31/98 3/31/99 6/30/99 9/30/99 12/31/99
------- ------- ------ ------ ------ ------- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
100 119 121 139 96 119 115 109 78 80
100 111 125 130 102 124 134 140 119 129
100 107 122 126 114 138 145 155 145 167
100 111 124 126 100 120 128 135 114 124
</TABLE>
Source: Bloomberg L.P.; CIT
11
<PAGE>
Compensation of Directors
Our directors who are not employees or officers of DKB or CIT or of any
subsidiary of either of them are paid an annual Board membership retainer of
$50,000, but receive no additional payments for attendance at meetings or for
service on any committee. Pursuant to the ECP, outside directors may elect to
receive some or all of the annual retainer in the form of stock options (having
a Black-Scholes calculation equal to the amount of the retainer that is taken in
the form of options) or restricted stock, which will each vest in three equal,
annual installments, rather than cash. Any retainer amount elected to be
received as restricted stock will be converted to shares of Common Stock with a
market value equal to 125% of the elected award amount, in recognition of the
election to forgo cash compensation. Such directors are also eligible for grants
under the ECP and presently receive annual grants of stock options having a
present value of $25,000, or $35,000 for each committee chairman.
Executive Compensation
The table below sets forth the annual and long-term compensation,
including bonuses and deferred compensation, of the Named Executive Officers for
services rendered in all capacities to CIT during the fiscal years ended
December 31, 1999, 1998 and 1997.
SUMMARY COMPENSATION TABLE
(U.S. Dollars)
<TABLE>
<CAPTION>
Long-Term Compensation
-------------------------------------------
Annual Compensation Awards Payouts
--------------------------------------- ----------- ---------------------------------
Other Annual Restricted Securities All Other
Name and Compensa- Stock Underlying LTIP Compensa-
Principal Positions Year Salary Bonus(1) tion(2) Awards(1)(3) Options(4) Payouts(5) tion(6)
- --------------------- ---- -------- -------- --------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Albert R. Gamper, Jr., ...... 1999 $761,534 $550,000 $57,577 $ 687,503 500,000 0 $36,861
Chairman, President 1998 $663,471 $467,500 $37,778 $ 584,394 0 0 $32,939
and Chief Executive 1997 $632,320 $845,000 $79,531 $3,400,000 619,200 $4,122,261 $79,697
Officer
Joseph A. Pollicino, ........ 1999 $540,195 $543,750 $35,928 $ 226,571 200,000 0 $28,008
Vice Chairman and 1998 $482,127 $312,500 $23,333 $ 390,645 0 0 $25,685
Chief Risk Officer 1997 $461,560 $580,000 $47,720 $2,100,000 337,800 $2,533,400 $24,795
Joseph M. Leone, ............ 1999 $299,695 $268,000 $12,267 $ 165,007 180,000 0 $18,388
Executive 1998 $237,000 $120,000 $ 7,813 $ 150,023 0 0 $15,880
Vice President 1997 $212,962 $200,000 $18,579 $ 703,150 114,600 $ 829,486 $14,851
and Chief Financial
Officer
William M. O'Grady, ......... 1999 $292,697 $187,500 $10,942 $ 234,381 155,000 0 $18,108
Executive Vice 1998 $240,000 $100,000 $ 7,051 $ 125,014 0 0 $16,000
President and Chief 1997 $220,769 $175,000 $16,826 $ 634,550 108,700 $ 742,900 $15,164
Administrative Officer
Ernest D. Stein, ............ 1999 $251,924 $172,500 $ 8,016 $ 71,886 70,000 0 $16,477
Executive Vice President, 1998 $220,000 $ 75,000 $ 5,145 $ 93,777 0 0 $15,200
General Counsel, and 1997 $200,769 $130,000 $12,461 $ 463,050 79,200 $ 538,895 $14,364
Secretary
</TABLE>
- ----------
(1) The amounts shown in the bonus column for 1998 and 1999 represent the cash
amounts paid under CIT's annual bonus plan. Pursuant to the ECP, executive
officers may elect to receive between 10% and 50% of their 1998 and 1999
annual bonus awards in Common Stock or common stock units, respectively,
rather than cash. The cash portion deferred is converted to shares of
Common Stock or common stock units with a market value equal to 125% of
the deferred amount. The premium element is subject to forfeiture, under
certain conditions, upon termination of employment with CIT prior to three
years from the date of the award. CIT pays dividends on the shares of
Common Stock or common stock units awarded to each Named Executive Officer
to the extent and on the same basis as paid to all other stockholders. For
all Named Executive Officers, the amounts shown in the Restricted Stock
Awards column for 1998 represent the fair market value on January 29, 1999
(the date of grant) of the shares of Common Stock awarded at $32.4375 per
share. The amounts shown in the Restricted Stock Awards column for 1999
represent the fair market value on January 26, 2000 (the date of grant) of
the common stock units awarded at $19.625 per share.
(2) The payments set forth in 1999 and 1998 under Other Annual Compensation
represent the dividends paid on restricted stock held in each of those
years. Such dividends were payable at the same rate applicable to all
other issued and outstanding shares. Compensation reported for 1997
includes dividends paid under The CIT Group, Inc. Career Incentive Plan
(the "CIT Career Incentive Plan"). We terminated the CIT Career Incentive
Plan in conjunction with our initial public offering in 1997.
12
<PAGE>
(3) The restricted stock awards issued at the time of our initial public
offering in 1997 (at the IPO price of $27 per share) were as follows: Mr.
Gamper - 125,926 shares; Mr. Pollicino - 77,778 shares; Mr. Leone - 26,043
shares; Mr. O'Grady - 23,502 shares; and Mr. Stein - 17,150 shares. The
number and value at December 31, 1999 of restricted stock holdings based
upon the closing market price of $21.125 per share for Common Stock was as
follows: Mr. Gamper - 143,942 shares ($3,040,775); Mr. Pollicino - 89,821
shares ($1,897,469); Mr. Leone - 30,668 shares ($647,862); Mr. O'Grady -
27,356 ($577,896); and Mr. Stein - 20,041 ($423,366). Dividends are
payable on Restricted Stock at the same rate applicable to all other
issued and outstanding shares.
(4) Stock options to purchase Common Stock awarded under the ECP.
(5) The payments set forth under LTIP Payouts represent the payout of shares
vested under the CIT Career Incentive Plan. The payouts in 1997 were for
shares awarded for the performance period 1993 - 1995. Also included under
LTIP Payouts for 1997 is the one-time cash payout related to the
termination of the CIT Career Incentive Plan for the 1996 - 1998
performance period.
(6) The payments set forth under "All Other Compensation" include the matching
employer contribution to each participant's account and the employer
flexible retirement contribution to each participant's flexible retirement
account under The CIT Group, Inc. Savings Incentive Plan (the "CIT Savings
Plan"). We made the matching employer contribution pursuant to a
compensation deferral feature of the CIT Savings Plan under Section 401(k)
of the Internal Revenue Code of 1986. Each of the Named Executive Officers
received a contribution of $6,400 under the employer match and a
contribution of $6,400 under the employer flexible retirement account. The
payments set forth under "All Other Compensation" also included
contributions to each participant's account under The CIT Group, Inc.
Supplemental Savings Plan (the "CIT Supplemental Savings Plan"), which is
an unfunded non-qualified plan. For 1999, they are as follows: Mr. Gamper
- $24,061, Mr. Pollicino - $15,208, Mr. Leone - $5,588, Mr. O'Grady -
$5,308 and Mr. Stein - $3,677. In 1997, Mr. Gamper received payments
designed to cover the 1.45% Medicare tax liability created by vesting in
his deferred retirement benefits.
Stock Option Awards During 1999
Stock options and other rights related to Common Stock may be awarded to
executives under the ECP. The following table sets out awards of stock options
to Named Executive Officers in 1999.
<TABLE>
<CAPTION>
Number of Percent of
Securities Total Options/SARs
Underlying Granted to Exercise of Grant Date
Date of Options/SARs Employees in Base Price Expiration Present Value $
Name Grant Granted(1) Fiscal Year ($/Sh) Date (2)(3)(4)
------ -------- ------------ ----------------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Albert R. Gamper, Jr ......... 11/18/99 300,000 6.61% 21.4375 11/18/09 $2,529,000
Chairman, President, and 3/5/99 200,000 30.75 3/5/09 $2,308,000
Chief Executive Officer -------
Total 500,000
Joseph A. Pollicino .......... 11/18/99 100,000 2.64% 21.4375 11/18/09 $ 843,000
Vice Chairman and 3/5/99 100,000 30.75 3/5/09 $1,154,000
Chief Risk Officer -------
Total 200,000
Joseph M. Leone .............. 11/18/99 80,000 2.38% 21.4375 11/18/09 $ 674,400
Executive Vice President 3/5/99 100,000 30.75 3/5/09 $1,154,000
and Chief Financial -------
Officer Total 180,000
William M. O'Grady ........... 11/18/99 80,000 2.05% 21.4375 11/18/09 $ 674,400
Executive Vice President 3/5/99 75,000 30.75 3/5/09 $ 865,500
and Chief Administrative -------
Officer Total 155,000
Ernest D. Stein .............. 11/18/99 35,000 .926% 21.4375 11/18/09 $ 295,050
Executive Vice President, 3/5/99 35,000 30.75 3/5/09 $ 403,900
General Counsel, and -------
Secretary Total 70,000
</TABLE>
- ----------
(1) One-third of the stock options vest on each of the first, second, and
third anniversary of the date of grant.
(2) For the November 1999 option grant, the estimated grant date present value
reflected in the above table is determined using the Black-Scholes model.
The material assumptions and adjustments incorporated in the Black-Scholes
model in estimating the value of the options reflected in the above table
are identified below.
o Exercise price on the options of $21.4375, equal to the fair market
value of the underlying stock on the dates of grant.
o An option term of ten years.
13
<PAGE>
o Interest rate of 6.039 percent that represents the interest rate on
U.S. Treasury securities on the date of grant with a maturity date
corresponding to that of the option term.
o Volatility of 41.72 percent calculated using daily stock prices for
the 12 months prior to the date of grant.
o A dividend yield of 1.87 percent reflecting an annual dividend on
Common Stock of $0.40 per share.
o Reductions of approximately 8.54 percent to reflect the probability
of forfeiture due to termination prior to vesting, and approximately
11.65 percent to reflect the probability of a shortened option term
due to termination of employment prior to the option expiration
date.
(3) For the March 1999 option grant, the estimated grant date present value
reflected in the above table is determined using the Black-Scholes model.
The material assumptions and adjustments incorporated in the Black-Scholes
model in estimating the value of the options reflected in the above table
are identified below.
o Exercise price on the options of $30.75, equal to the fair market
value of the underlying stock on the dates of grant.
o An option term of ten years.
o Interest rate of 5.23 percent that represents the interest rate on
U.S. Treasury securities on the date of grant with a maturity date
corresponding to that of the option term.
o Volatility of 36.36 percent calculated using daily stock prices for
the 12 months prior to the date of grant.
o A dividend yield of 1.30 percent reflecting an annual dividend on
Common Stock of $0.40 per share.
o Reductions of approximately 8.54 percent to reflect the probability
of forfeiture due to termination prior to vesting, and approximately
13.03 percent to reflect the probability of a shortened option term
due to termination of employment prior to the option expiration
date.
(4) The ultimate value of the options will depend on the future market price
of CIT's stock, which cannot be forecast with reasonable accuracy. The
actual value, if any, an optionee will realize upon exercise of an option
will depend on the excess of the market value of CIT's Common Stock over
the exercise price on the date the option is exercised.
The following table gives additional information on options exercised in
1999 by the Named Executive Officers and on the number and value of options held
by the Named Executive Officers at December 31, 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
(U.S. Dollars)
<TABLE>
<CAPTION>
Number of
Securities Underlying Value Unexercised
Unexercised In-the-Money
Options at 12/31/99 Options at 12/31/99
------------------ ---------------------
Shares
Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized Unexercisable Unexercisable
---- ----------- -------- ------------- -------------
<S> <C> <C> <C> <C>
Albert R. Gamper, Jr. ............. 0 $0 235,867/883,333 $0/$0
Chairman, President, and Chief
Executive Officer
Joseph A. Pollicino ............... 0 $0 128,667/409,133 $0/$0
Vice Chairman and
Chief Risk Officer
Joseph M. Leone ................... 0 $0 38,667/255,933 $0/$0
Executive Vice President
and Chief Financial Officer
William M. O'Grady ................ 0 $0 36,067/227,633 $0/$0
Executive Vice President and
Chief Administrative Officer
Ernest D. Stein ................... 0 $0 26,267/122,933 $0/$0
Executive Vice President, General
Counsel, and Secretary
</TABLE>
The options reported are non-qualified stock options to purchase shares of
Common Stock awarded under the ECP. The exercise price of the options ranges
from $21.4375 to $30.75 per share and the closing trading price on the New York
Stock Exchange of Common Stock at December 31, 1999 was $21.125.
14
<PAGE>
Retirement Plans
Effective January 1, 1990, The CIT Group, Inc. Retirement Plan (the "CIT
Retirement Plan") was established. Assets necessary to fund the CIT Retirement
Plan were transferred from the MHC Retirement Plan, Inc. (the "MHC Retirement
Plan"), the predecessor plan in which our employees participated. Accumulated
years of benefit service under the MHC Retirement Plan are included in the
benefits formula of the CIT Retirement Plan, which covers officers and salaried
employees who have one year of service and have attained age 21.
The Plan was revised in 1999, with a revised formula to become effective
April 1, 2000. Under this formula, at the normal retirement age of 65, an
employee's pension is 1.25% of final average salary for each of the first 40
years of benefit service as a participant. "Final average salary" is the highest
average salary received in any five consecutive years in the last ten years.
"Salary" includes all wages paid by CIT, including before-tax contributions made
to the CIT Savings Plan and salary reduction contributions pursuant to any
Section 125 Plan, but excluding commissions, bonuses, incentive compensation,
overtime, reimbursement of expenses, directors' fees, severance pay and deferred
compensation. This salary is comparable to the "Salary" shown in the Summary
Compensation Table. After completing five years of service, an employee whose
employment with CIT has terminated is entitled to a benefit, as of the
employee's normal retirement date, equal to the benefit earned to the date of
termination of employment, or an actuarially reduced benefit commencing at any
time after age 55 if the participant is eligible for early retirement under the
CIT Retirement Plan. Certain death benefits are available to eligible surviving
spouses of participants.
Because various laws and regulations set limits on the amounts allocable
to a participant under the CIT Savings Plan and benefits under the CIT
Retirement Plan, we have established the CIT Supplemental Retirement Plan. The
CIT Supplemental Retirement Plan provides retirement benefits on an unfunded
basis to participants who retire from CIT (whose benefits under the CIT
Retirement Plan would be restricted by the limits) of an amount equal to the
difference between the annual retirement benefits permitted and the amount that
would have been paid but for the limitations imposed.
The amounts set forth in the table are the amounts which would be paid to
employees pursuant to the CIT Retirement Plan and the CIT Supplemental
Retirement Plan at a participants' normal retirement age (age 65) assuming the
indicated final average salary and the indicated years of benefit service and
assuming that the straight life annuity form of benefit will be elected and that
CIT Supplemental Retirement Plan benefits will be paid in the form of an
annuity. However, benefits for retirement before age 65 would be less than those
shown in the following table. Upon retirement, certain employees may receive a
benefit frozen under a prior plan formula if such benefit is greater than the
benefit payable under the formula represented in the following table.
15
<PAGE>
PENSION PLAN TABLE
(in U.S. dollars)
Annual Benefits Based on Years of Credited Service (1)
<TABLE>
<CAPTION>
Final
Average
Salary of
Employee 15 20 25 30 35 40
--------- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
250,000 46,875 62,500 78,125 93,750 109,375 125,000
300,000 56,250 75,000 93,750 112,500 131,250 150,000
350,000 65,625 87,500 109,375 131,250 153,125 175,000
400,000 75,000 100,000 125,000 150,000 175,000 200,000
450,000 84,375 112,500 140,625 168,750 196,875 225,000
500,000 93,750 125,000 156,250 187,500 218,750 250,000
550,000 103,125 137,500 171,875 206,250 240,625 275,000
600,000 112,500 150,000 187,500 225,000 262,500 300,000
650,000 121,875 162,500 203,125 243,750 284,375 325,000
700,000 131,250 175,000 218,750 262,500 306,250 350,000
750,000 140,625 187,500 234,375 281,250 328,125 375,000
800,000 150,000 200,000 250,000 300,000 350,000 400,000
850,000 159,375 212,500 265,625 318,750 371,875 425,000
900,000 168,750 225,000 281,250 337,500 393,750 450,000
950,000 178,125 237,500 296,875 356,250 415,625 475,000
1,000,000 187,500 250,000 312,500 375,000 437,500 500,000
1,050,000 196,875 262,500 328,125 393,750 459,375 525,000
</TABLE>
- ----------
(1) At December 31, 1999, Messrs. Gamper, Pollicino, Leone, O'Grady, and Stein
had 32, 35, 15, 30, and 6 years of benefit service respectively.
Executive Retirement Plan
The Named Executive Officers are participants under the Executive
Retirement Plan. The benefit provided is life insurance equal to approximately
three times salary during such participant's employment, with a life annuity
option payable monthly by us upon retirement. The participant pays a portion of
the annual premium and we pay the balance on behalf of the participant. We are
entitled to recoup our payments from the proceeds of the policy in excess of the
death benefit. Upon the participant's retirement, a life annuity will be payable
out of our current income and we anticipate recovering the cost of the life
annuity out of the proceeds of the life insurance policy payable upon the death
of the participant.
In addition to the table of pension benefits shown above, we are
conditionally obligated to make annual payments under the Executive Retirement
Plan in the amounts indicated to the Named Executive Officers at retirement: Mr.
Gamper, $443,130, Mr. Pollicino, $273,642, Mr. Leone, $200,592, Mr. O'Grady,
$165,460, and Mr. Stein, $91,807.
Compensation Committee Interlocks and Insider Participation
There are no interlocking relationships between any member of the
Compensation Committee and any of our executive officers that would require
disclosure under the rules of the SEC. The Compensation Committee consists
entirely of independent, non-employee directors.
Employment Agreements
Mr. Gamper has an employment agreement with CIT that extends until
December 31, 2002. Mr. Pollicino has an employment agreement with CIT that
extends until December 31, 2001. Mr. Gamper's agreement provides that he will
serve as the Chief Executive Officer and President. Mr. Pollicino's agreement
provides that he will serve as the Vice Chairman. Each will serve as a member of
our Board of Directors. The agreements provide for the payment of an annual base
salary of not less than the amount that each received prior to the date of his
last extension on November 1, 1999. Pursuant to their employment agreements,
each individual's base salary and performance is reviewed by the CIT Board of
Directors during the term of the agreement pursuant to our normal practices,
subject to increases but not to decreases. The employment agreements provide for
participation in all executive bonus and incentive compensation plans.
16
<PAGE>
Mr. Leone, Mr. O'Grady, and Mr. Stein also have employment agreements with
CIT that extend until December 31, 2000. Mr. Leone's, Mr. O'Grady's, and Mr.
Stein's respective agreements provide for the payment of an annual base salary
of not less than the amount received prior to the date of their last extension
on November 1, 1998, to be reviewed by the Chief Executive Officer or his
designee pursuant to our normal practices, subject to increases but not to
decreases. The employment agreements also provide for participation in all
executive bonus and incentive compensation plans.
Termination And Change-In-Control Arrangements
Each of the employment agreements of the Named Executives provide that
under certain circumstances, upon a termination of employment, he will be
entitled to receive severance payments equal to three times, with respect to
Messrs. Gamper and Pollicino, or two times, with respect to Messrs. Leone,
O'Grady and Stein, his total cash compensation (as defined in his agreement),
reduced by any "special payment" received. Further, in the event of a
termination qualifying a Named Executive for severance, he will be entitled to
all previously earned and accrued entitlements and benefits, continued employee
welfare benefit coverage for 36 months with respect to Messrs. Gamper and
Pollicino and 24 months with respect to Messrs. Leone, O'Grady and Stein, three
years' benefit service and age credit with respect to Messrs. Gamper and
Pollicino and two years' benefit service and age credit with respect to Messrs.
Leone, O'Grady and Stein for purposes of calculating benefits under CIT's
Retirement Plan and Executive Retirement Plan (as defined in his agreement),
outplacement services, any awards due under the ECP, and all benefits payable
under our Executive Retirement Plan. If the termination does not qualify the
Named Executive for severence, he will be entitled to all previously earned and
accrued entitlements and benefits of CIT. Mr. Gamper's employment agreement also
provides that he will have immediate vesting in each outstanding equity award.
In the event any of the Named Executives become subject to excise taxes under
Section 4999 of the Internal Revenue Code, their employment agreements provide a
gross up payment equal to the amount of such excise taxes.
If, during the term of Messrs. Gamper's, Pollicino's, Leone's, O'Grady's
and Stein's employment agreements, a "Change of Control" (as defined in his
agreement) occurs, they each will be entitled to receive, in certain
circumstances, a "special payment." With respect to Mr. Gamper, the amount of
such a special payment shall equal the sum of his prior four years' annual
bonuses. With respect to Mr. Pollicino, the amount of such a special payment
shall equal the sum of his prior three years' annual bonuses. With respect to
each of Mr. Leone, Mr. O'Grady, and Mr. Stein, the amount of each individual's
special payment shall equal the sum of his respective prior two years' annual
bonuses.
In the event of a Change of Control during the term of employment, each of
Mr. Gamper and Mr. Pollicino may elect, on 90 days' notice, to terminate his
employment and have such termination deemed "Good Reason" upon the anniversary
of the Change of Control. In the event the first anniversary of such a Change of
Control occurs after the end of the term, the term shall be extended to the
earlier of 90 days after the end of the term or the first anniversary of the
Change of Control.
Under the ECP, if a participant's employment is terminated by CIT, or a
successor to CIT, on or after a Change of Control (as defined in the ECP) and
prior to the first anniversary of such Change of Control: (i) all options and
SARs, other than options granted in consideration of the termination of the CIT
Career Incentive Plan or otherwise granted in connection with the initial public
offering, held by the participant, if any, shall become immediately exercisable;
(ii) all restrictions and limitations imposed on restricted stock, other than
restricted stock granted in consideration of the termination of the CIT Career
Incentive Plan or otherwise granted in connection with the initial public
offering, held by the participant, if any, shall lapse. The vesting of all
Options and restricted stock granted in consideration of the termination of the
CIT Career Incentive Plan or otherwise granted in connection with the initial
public offering would be accelerated in the event the participant is terminated
on or after the Change of Control and during the five-year period following the
initial public offering.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We have in the past and may in the future enter into certain transactions
with affiliates. Such transactions have been, and it is anticipated that such
transactions will continue to be, entered into at a fair market value for the
transaction.
Relationship with DKB
DKB beneficially owns 71,000,000 shares of Common Stock, which represents
approximately 26.8% of the outstanding Common Stock, including Exchangeable
Shares. DKB is our largest stockholder and may be able to exercise significant
influence over the election of the members of the Board of Directors and over
its business and affairs, including any determinations with respect to (i)
mergers or other business combinations involving CIT, (ii) the acquisition or
disposition of assets by CIT, (iii) the incurrence of indebtedness by CIT, (iv)
the issuance of any additional Common Stock or other equity securities, and (v)
the payment of dividends with respect to the Common Stock.
Set forth below are descriptions of certain agreements, relationships and
transactions between CIT and DKB.
Regulatory Compliance Agreement
DKB is subject to U.S. and Japanese banking laws, regulations, guidelines,
and orders that affect our permissible activities. DKB and CIT have entered into
a regulatory compliance agreement (the "Regulatory Compliance Agreement") in
order to facilitate DKB's compliance with applicable U.S. and Japanese banking
laws, or the regulations, interpretations, policies, guidelines, requests,
directives, and orders of the applicable regulatory authorities or the staffs
thereof or a court (collectively, the "Banking Laws"). The Regulatory Compliance
Agreement prohibits us from engaging in any new activity or entering into any
transaction for which prior approval, notice or filing is required under Banking
Laws without the required prior approval having been obtained, prior notice
having been given or made by DKB and accepted, or such filings having been made.
We are also prohibited from engaging in any activity that would cause DKB, CIT
or any affiliate of DKB or CIT to violate any Banking Laws. If, at any time, it
is determined by DKB that any activity then conducted by us is prohibited by any
Banking Law, we are required to take all reasonable steps to cease such
activity.
Under the terms of the Regulatory Compliance Agreement, DKB is responsible
for making all determinations as to compliance with applicable Banking Laws.
The Regulatory Compliance Agreement expires upon the earlier of the date
on which DKB owns no shares of Common Stock or DKB, in its sole discretion,
requests and obtains an opinion of counsel that (i) DKB will not be required to
receive prior approval from or give notice to or make filings with applicable
regulatory authorities under the Banking Laws as a result of CIT or any of its
subsidiaries engaging in any activity and (ii) DKB and CIT are no longer subject
to the jurisdiction of the Banking Laws with respect to the activities or
transactions in which CIT may engage.
Registration Rights Agreement
DKB and CIT have entered into a registration rights agreement (the
"Registration Rights Agreement"), which provides that, upon the request of DKB,
its subsidiaries or certain transferees of Common Stock from DKB or its
subsidiaries (each, a "Qualified Transferee"), we will use our best efforts to
effect the registration under the applicable federal and state securities laws
of any of the shares of Common Stock that DKB may hold or that are issued or
issuable upon conversion of any other security that DKB may hold and of any
other securities issued or issuable in respect of the Common Stock, in each case
for sale in accordance with the intended method of disposition of the holder or
holders making such demand for registration, and we will take such other actions
as may be necessary to permit the sale thereof in other jurisdictions, subject
to certain specified limitations. DKB, any of its subsidiaries, or any Qualified
Transferee also has the right, which it may exercise at any time and from time
to time, subject to certain limitations, to include any such shares and other
securities in other registrations of equity securities of CIT initiated by CIT
on its own behalf or on behalf of its other stockholders. CIT will pay all costs
and expenses in connection with each such registration which DKB,
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any subsidiary thereof or any Qualified Transferee initiates or in which any of
them participates. The Registration Rights Agreement contains indemnification
and contribution provisions: (i) by DKB and its permitted assigns for CIT's
benefit; and (ii) by CIT for the benefit of DKB and other persons entitled to
effect registrations of CIT Common Stock (and other securities) pursuant to its
terms, and related persons. In November 1998, DKB sold 55 million shares of
Common Stock in a public offering effected as a demand registration right under
the Registration Rights Agreement.
Other Transactions
At December 31, 1999, our credit line coverage with 70 banks totaled $8.4
billion of committed facilities. At December 31, 1999, DKB was a committed bank
under a $1.7 billion revolving credit facility and a $3.7 billion revolving
credit facility, with commitments of $93.0 million and $210.0 million,
respectively.
We have entered into interest rate swap and cross currency interest rate
swap agreements with financial institutions acting as principal counterparties,
including affiliates of DKB. At December 31, 1999, the notional principal amount
outstanding on interest rate swap agreements with DKB and its affiliates totaled
$220.0 million. The notional principal amount outstanding on foreign currency
swaps totaled $168.6 million with DKB at year-end 1999.
We have entered into leveraged leasing arrangements with third party loan
participants, including affiliates of DKB. Leveraged lease receivables, which
are included in lease receivables on CIT's financial statements, exclude the
portion of lease receivables offset by related nonrecourse debt payable to third
party lenders, including amounts owed to affiliates of DKB that totaled $398.3
million at year-end 1999.
At December 31, 1999, our credit-related commitments with DKB in the form
of letters of credit totalled $13.4 million, equal to the amount of the single
lump sum premium necessary to provide group life insurance coverage to certain
eligible retired employees and an amount to fund certain overseas finance
receivables.
We have entered into cash collateral loan agreements with DKB pursuant to
which DKB made loans to four separate cash collateral trusts in order to provide
additional security for payments on the certificates of the related contract
trusts. These contract trusts were formed for the purpose of securitizing
certain recreational vehicle and recreational marine finance receivables. At
December 31, 1999, the principal amount outstanding on the cash collateral loans
was $15.7 million.
Paul Morton
The family of Paul Morton, a director of CIT, owns 100% of a private
company, Cinitel Corp., which owns 24% of Radiont, the sole shareholder of
Affinity Radio Group, Inc., ("Affinity"), also a private company. Paul Morton is
the Chairman of Cinitel and his son, Henry Morton, is the President and
Secretary of Cinitel and the President of Radiont.
Prior to CIT's acquisition of Newcourt, Newcourt Capital (a subsidiary of
Newcourt) loaned an aggregate amount of Canadian $12,000,000 (approximately
US$8,250,000) to Affinity. Pursuant to the related credit facility, Newcourt
Capital (i) took a security interest in a debt service reserve to be funded by
Radiont and its owners, including Cinitel, and (ii) obtained limited recourse
guarantees from Radiont and its owners, including Cinitel.
Newcourt Capital advised Affinity on February 4, 2000, that a payment
default had occurred, due to the failure of the funding of the debt service
reserve. In March 2000, Newcourt thereafter entered into a forbearance agreement
with Affinity whereby Affinity agreed to certain amendments to the provisions of
the Affinity loans in favor of Newcourt Capital as well as the curing of the
payment default described above.
Counsel Relationships
Paul N. Roth, a director of CIT, is a partner of Schulte Roth & Zabel LLP,
which provides legal services to CIT. Schulte Roth & Zabel LLP also serves as
outside counsel for DKB. Theodore V. Wells, Jr., a director of CIT, was a
partner prior to January 2000 of Lowenstein, Sandler PC, which provides legal
services from time to time to CIT.
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PROPOSAL 2
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed the firm of KPMG LLP, 150 John F.
Kennedy Parkway, Short Hills, New Jersey 07078 as independent accountants to
examine the financial statements of CIT and its subsidiaries for the year ending
December 31, 2000, and to perform other appropriate accounting services. This
appointment was recommended by the Audit Committee of the Board of Directors. A
resolution will be presented to the meeting to ratify the appointment. The
affirmative vote of a majority of the number of votes entitled to be cast by the
Common Stock represented at the meeting is needed to ratify the appointment. If
the stockholders do not ratify the appointment of KPMG LLP, the selection of
independent accountants will be reconsidered by the Board of Directors.
KPMG LLP has examined our financial statements since 1984. A member of
KPMG LLP will be present at the meeting and will be available to respond to
appropriate questions by stockholders.
The Board of Directors recommends a vote "For" the ratification of KPMG
LLP as CIT's independent auditors for 2000.
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OTHER BUSINESS
CIT's management does not intend to bring any business before the Annual
Meeting other than the matters referred to in this proxy statement. If, however,
any other matters properly come before the Annual Meeting, it is intended that
the persons named in the accompanying proxy will vote pursuant to the proxy in
accordance with their best judgment on such matters to the extent permitted by
applicable law and regulations. The discretionary authority of the persons named
in the accompanying proxy extends to matters which the Board of Directors does
not know are to be presented at the meeting by others and any proposals of
stockholders omitted from the proxy material pursuant to Rule 14a-8 of the SEC.
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR THE 2001
ANNUAL MEETING
Stockholder proposals to be included in the proxy statement for CIT's next
annual meeting must be received by the Secretary of CIT not later than December
2, 2000.
Also, under CIT's By-Laws, nominations for director or other business
proposals to be addressed at the meeting may be made by a stockholder or holder
of Exchangeable Shares entitled to vote who has delivered a notice to the
Secretary of CIT no later than the close of business on March 23, 2001 and not
earlier than February 23, 2001. The notice must contain the information required
by the CIT By-Laws.
These advance notice provisions are in addition to, and separate from, the
requirements which a stockholder must meet in order to have a proposal included
in the proxy statement under the rules of the SEC.
Copies of CIT's By-Laws may be obtained from the Secretary.
By Order of the Board of Directors
/s/ ERNEST D. STEIN
---------------------------------
Ernest D. Stein
Secretary
March 30, 2000
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THE CIT GROUP, INC.
Proxy solicited by the Board of Directors for use at the Annual Meeting of
Stockholders of The CIT Group, Inc. on May 24, 2000.
The undersigned stockholder appoints each of Anne Beroza, Robert J. Ingato
and James P. Shanahan attorney and proxy, with full power of substitution, on
behalf of the undersigned and with all powers the undersigned would possess if
personally present, to vote all shares of Common Stock of The CIT Group, Inc.
that the undersigned would be entitled to vote at the above Stockholders Meeting
and any adjournment thereof. The shares represented by this Proxy will be voted
as instructed by you and in the discretion of the proxies on all other matters.
If not otherwise specified, shares will be voted in accordance with the
recommendations of the Directors.
(Continued, and to be signed on reverse side)
THE CIT GROUP, INC.
P.O. BOX 11216
NEW YORK, N.Y. 10203-0216
<PAGE>
The Board of Directors Recommends a Vote for Items 1 and 2.
1. Election of Directors
FOR |_| WITHHOLD |_| *EXCEPTIONS |_|
all nominees AUTHORITY
listed below to vote for
all nominees
listed below
Nominees: Albert R. Gamper, Jr., Daniel P. Amos, Anthea Disney, William A.
Farlinger, Guy Hands, Hon. Thomas H. Kean, Paul Morton, Takatsugu Murai, William
M. O'Grady, Joseph A. Pollicino, Paul N. Roth, Peter J. Tobin, Keiji Torii,
Theodore V. Wells, Jr., Alan F. White
(Instructions: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided below.)
*Exceptions____________________________________________________________________
2. Ratification of KPMG LLP as Independent Accountants.
FOR |_| AGAINST |_| ABSTAIN |_|
Will Attend Meeting
YES |_| NO |_|
Change of Address and or Comments Mark Here |_|
Voting by Mail: If you wish to vote by mailing this proxy, please sign your name
exactly as it appears on this proxy and mark, date and return it in the enclosed
envelope. When signing as attorney, executor, administrator, trustee, guardian
or as an authorized person on behalf of a corporation or partnership, please
give your full title as such.
NOTE: Please sign exactly as name appears to the left. When signing as attorney,
executor, administrator, trustee, guardian or as an authorized person on behalf
of a corporation or partnership, please give full title as such.
Dated ___________________________________, 2000
_______________________________________________
Signature
_______________________________________________
Signature
Votes must be indicated
(x) in Black or Blue ink. |_|
(Please sign, date and return this proxy in the enclosed postage paid envelope.)
