<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive proxy statement
/X/ Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
GATX CORPORATION
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - --------------------------------------------------------------------------------
(5) Total fee paid:
- - --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- - --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- - --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- - --------------------------------------------------------------------------------
(3) Filing party:
- - --------------------------------------------------------------------------------
(4) Date filed:
- - --------------------------------------------------------------------------------
<PAGE> 2
GATX CORPORATION
500 WEST MONROE STREET
CHICAGO, IL 60661
312-621-6200
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
------------------
To our Shareholders:
The Annual Meeting of the Shareholders of GATX Corporation will be held at
the Company's principal office on the 42nd Floor, 500 West Monroe Street,
Chicago, Illinois 60661, on Friday, April 28, 1995, at 9:00 A.M., for the
purposes of:
1. electing directors;
2. adopting the 1995 Long Term Incentive Compensation Plan;
3. approving the appointment of independent auditors for the year 1995;
and
4. transacting such other business as may properly come before the
meeting.
Only holders of Common Stock, both series of $2.50 Cumulative Convertible
Preferred Stock and $3.875 Cumulative Convertible Preferred Stock of record at
the close of business on March 10, 1995 will be entitled to vote at this meeting
or any adjournment thereof.
If you do not expect to attend in person, it will be appreciated if you
will promptly vote, sign, date and return the enclosed proxy.
David M. Edwards
Secretary
March 15, 1995
<PAGE> 3
[LOGO]
GATX CORPORATION
500 WEST MONROE STREET
CHICAGO, IL 60661
312-621-6200
March 15, 1995
PROXY STATEMENT
------------------
GENERAL
The enclosed proxy is solicited by the Board of Directors of GATX
Corporation (the "Company") and may be revoked at any time prior to its exercise
by any shareholder giving such proxy. A proxy may be revoked by duly executing a
subsequent proxy relating to the same shares or by attending the Annual Meeting
and voting in person. All shares represented by the proxies received and not
revoked will be voted at the meeting.
All expenses in connection with the solicitation of this proxy will be paid
for by the Company. In addition to solicitation by mail, the Company has
retained Chemical Bank to solicit proxies on behalf of the Board of Directors
for a fee not to exceed $7,500 plus reasonable out-of-pocket expenses and
disbursements. Chemical Bank may solicit proxies by mail, telex, telegraph or
personal call. In addition, officers, directors and regular employees of the
Company, who will receive no extra compensation for their services, may solicit
proxies by mail, telex, telephone, telegraph or personal call. The Annual Report
for the year 1994, including financial statements, was mailed to all
shareholders together with this proxy statement on or about March 17, 1995.
VOTING SECURITIES
Only holders of Common Stock, both series of $2.50 Cumulative Convertible
Preferred Stock and $3.875 Cumulative Convertible Preferred Stock of record at
the close of business on March 10, 1995 will be entitled to vote at the meeting
or any adjournment thereof. As of that date there were 19,935,798 shares of the
Common Stock, 42,050 shares of the $2.50 Cumulative Convertible Preferred Stock
and 3,395,000 shares of the $3.875 Cumulative Convertible Preferred Stock of the
Company issued and outstanding. Each share is entitled to one vote. New York law
and the Company's bylaws require the presence in person or by proxy of shares
representing a majority of the votes entitled to be cast at the annual meeting
in order to constitute a quorum for the annual meeting. Shares represented at
the meeting but as to which votes are withheld from director nominees or which
abstain as to other matters, and shares held by brokers for their customers and
represented at the meeting but as to which the brokers have received no voting
instructions from their customers and thus do not have discretion to vote on
certain matters ("Broker Non-Votes"), will be counted in determining whether a
quorum has been attained.
1
<PAGE> 4
Assuming that a quorum is present, the election of directors will require a
plurality of the votes cast and ratification of auditors will require a majority
of the votes cast, with the result that shares as to which votes are withheld or
which abstain from voting on these matters and Broker Non-Votes will not be
counted and thus will not affect the outcome with respect to these matters.
An affirmative vote of the holders of a majority of the shares outstanding
and entitled to vote is required for the adoption of the 1995 Long Term
Incentive Compensation Plan, with the result that shares which abstain from
voting and Broker Non-Votes will have the effect of votes against the adoption
of such plan.
ELECTION OF DIRECTORS
Eleven directors are to be elected, each for a term of one year, to serve
until the next annual meeting of shareholders or until their successors are
elected and qualified. Unless specified to be voted otherwise, each proxy will
be voted for the election of the nominees named below. All of the nominees have
consented to serve as directors if elected. If at the time of the Annual
Meeting, any nominee is unable or declines to serve, the proxies may be voted
for any other person who shall be nominated by the present Board of Directors to
fill the vacancy, or the Board may be reduced accordingly. Shareholders do not
have cumulative voting rights with respect to the election of directors.
NOMINEES FOR DIRECTORS
<TABLE>
<CAPTION>
Shares of
Common Stock
Beneficially
Owned as of
Director March 14,
Name and Principal Occupation Age Since 1995(1)
- - -------------------------------------------------------- --- ----- ------------
<S> <C> <C> <C>
Franklin A. Cole........................................ 68 1984 2,000
Chairman of the Board, Croesus Corporation
James W. Cozad.......................................... 68 1976 400
Retired; Former Chairman of the Board and Chief
Executive Officer, Whitman Corporation
James M. Denny.......................................... 62 1995 1,000
Vice Chairman, Sears, Roebuck and Co.
William C. Foote........................................ 44 1994 400
President and Chief Operating Officer, USG Corporation
Deborah M. Fretz........................................ 46 1993 200
Senior Vice President -- Logistics, Sun Company, Inc.
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
Shares of
Common Stock
Beneficially
Owned as of
Director March 14,
Name and Principal Occupation Age Since 1995(1)
- - -------------------------------------------------------- --- ----- ------------
<S> <C> <C> <C>
Richard A. Giesen....................................... 65 1982 700
Chairman of the Board and Chief Executive Officer,
Continental Glass & Plastic, Inc.
James J. Glasser........................................ 60 1974 310,422(2)
Chairman of the Board and Chief Executive
Officer of the Company
Miles L. Marsh.......................................... 47 (3) 1,000
Former Chairman of the Board and Chief Executive
Officer, Pet Incorporated
Charles Marshall........................................ 65 1989(4) 4,000
Retired; Former Vice Chairman of the Board, American
Telephone and Telegraph Company
Michael E. Murphy....................................... 58 1990 1,000
Vice Chairman, Chief Administrative Officer, Sara Lee
Corporation
Ronald H. Zech.......................................... 51 1994 83,812(5)
President and Chief Operating Officer of the Company
</TABLE>
- - ---------------
(1) Unless otherwise indicated, each nominee either possesses sole voting and
investment power with respect to this stock or shares such powers with a
spouse. No nominee except Mr. Glasser beneficially owned directly or
indirectly more than 1% of the Company's outstanding Common Stock. Mr. Day,
who has been a director since 1984, and Mr. Dutt, who has been a director
since 1980, are not standing for re-election as they have reached the age of
mandatory retirement. Mr. Day and Mr. Dutt each own 400 shares of the
Company's Common Stock. Mr. Christopherson, who had been a director since
1977, is deceased. The Company's nominees for election for director and its
executive officers as a group beneficially own 499,138 shares (2.50%) of the
Company's outstanding Common Stock, including 309,000 shares which may be
obtained by exercise of previously granted options within 60 days of March
14, 1995, and no preferred shares.
(2) This includes 165,000 shares Mr. Glasser has the right to acquire within 60
days of March 14, 1995, under outstanding stock options issued under the
Company's Long Term Incentive Compensation Plan. This also includes 2,304
shares held by Mr. Glasser as trustee under revocable trusts with respect to
which Mr. Glasser disclaims any beneficial ownership. Subject to the
foregoing, Mr. Glasser beneficially owned 1.56% of the Company's outstanding
shares of Common Stock.
3
<PAGE> 6
(3) Mr. Marsh has not previously served as a director of the Company.
(4) Mr. Marshall previously served as a director of the Company from 1978 to
1982.
(5) This includes 64,000 shares Mr. Zech has the right to acquire within 60 days
of March 14, 1995, under outstanding stock options issued under the
Company's Long Term Incentive Compensation Plan. This also includes 200
shares owned by adult children with respect to which Mr. Zech disclaims any
beneficial ownership.
ADDITIONAL INFORMATION CONCERNING NOMINEES
Mr. Cole was elected Chairman of the Board of Croesus Corporation, a
private investment and investment management company, in November, 1984. Mr.
Cole is also a director of American National Bank & Trust Company of Chicago,
American National Corporation, Aon Corporation, CNA Income Shares, Inc., Peoples
Energy Corporation, Duff & Phelps Utilities Income Inc. and Local Initiatives
Support Corporation.
Mr. Cozad retired in May, 1992 as Chairman of the Board and Chief Executive
Officer of Whitman Corporation, a diversified consumer and commercial products
company, having served in that position since January, 1990. Mr. Cozad is a
director of Whitman Corporation, Sears, Roebuck and Co., Inland Steel
Industries, Inc. and its subsidiary, Inland Steel Company, and Eli Lilly & Co.
Mr. Denny was elected Vice Chairman of Sears, Roebuck and Co., a
merchandising and insurance company, on February 1, 1992. He previously served
as Senior Vice President and Chief Financial Officer of Sears from February,
1988 through January 31, 1992. Mr. Denny is a director of General Binding
Corporation and Allstate Corporation.
Mr. Foote was named President and Chief Operating Officer of USG
Corporation, formerly known as United States Gypsum Company, an international
manufacturer of building materials and industrial products, in January 1994. He
previously served as President and Chief Executive Officer of USG Interiors from
January 1993 to December 1993, President & Chief Executive Officer of L&W Supply
Corporation from September 1991 to December 1993, Executive Vice President and
Chief Operating Officer of L&W Supply Corporation from December 1990 to August
1991, and Senior Vice President and General Manager, Central Construction
Products Region of United States Gypsum Company from April 1989 to November
1990, all of which are subsidiaries or divisions of USG Corporation or its
predecessor. Mr. Foote is a director of USG Corporation. USG Corporation emerged
from bankruptcy in May of 1993 having filed a voluntary petition for
reorganization in March, 1993.
Ms. Fretz was named Senior Vice President-Logistics of Sun Company, Inc.,
an energy company, in August, 1994. Ms. Fretz previously served as President of
Sun Pipe Line Company and Sun Marine Terminals, which transport and store crude
oil and refined petroleum products for Sun Company and other energy companies,
from October 1991 to 1994 and
4
<PAGE> 7
as Director of Wholesale Fuels Marketing and Distribution of Sun Company from
September 1988 to October 1991. Ms. Fretz is a director of Suncor Inc. Section
16(a) of the Securities Exchange Act of 1934 requires the Company's directors,
executive officers and certain shareholders to file with the Securities and
Exchange Commission an initial statement of beneficial ownership and certain
statements of changes in beneficial ownership of equity securities of the
Company. In March of 1995, a statement of a change of beneficial ownership was
inadvertently filed four days late on behalf of Ms. Fretz.
Mr. Giesen was elected Chairman of the Board and Chief Executive Officer of
Continental Glass and Plastic, Inc., a packaging distribution company, in
August, 1988. Since 1988, he has served also as Chairman and Chief Executive
Officer of Continental's parent, Continere Corporation. Mr. Giesen previously
served as Chairman of the Board and Chief Executive Officer of American
Appraisal Associates, Inc., a valuation consulting firm, from October 1984 to
April, 1993. From 1983 until April 1993, Mr. Giesen also served as Chairman of
the Board and Chief Executive Officer of American Appraisal's parent, RLM
Investments, Inc. Mr. Giesen is also a director of Stone Container Corporation.
Mr. Glasser was elected Chairman of the Board and Chief Executive Officer
of the Company in August, 1978. Mr. Glasser is also a director of B. F. Goodrich
Company, Stone Container Corporation, Bank of Montreal and its subsidiaries,
Harris Bankcorp, Inc. and Harris Trust and Savings Bank, and two of the
Company's subsidiaries, General American Transportation Corporation and GATX
Capital Corporation.
Mr. Marsh served as Chairman of the Board and Chief Executive Officer of
Pet Incorporated, a branded food company, from April 1991 until February 1995.
He previously served as President and Chief Operating Officer of Whitman
Corporation from September 1989 until March 1991. Mr. Marsh is also a director
of Whirlpool Corporation, Hartmarx Corporation and Bank of America, Illinois.
Mr. Marshall retired as Vice Chairman of the Board of American Telephone
and Telegraph Company in June, 1989. Mr. Marshall is a director of Hartmarx
Corporation, Sonat, Inc., Ceridian Corporation, formerly known as Control Data
Corporation, Sundstrand Corporation and Zenith Electronics Corporation.
Mr. Murphy has served as Vice Chairman, Chief Administrative Officer of
Sara Lee Corporation, a diversified manufacturer of packaged food and consumer
products, since July, 1993 and as its Chief Financial Officer from July 1993 to
October 1994. Mr. Murphy previously served as Executive Vice President, Chief
Financial and Administrative Officer of Sara Lee Corporation since 1979. Mr.
Murphy is also a director of Sara Lee Corporation.
Mr. Zech was named President and Chief Operating Officer of the Company in
September, 1994. Mr. Zech previously served as President and Chief Executive
Officer of GATX Capital Corporation since October of 1984. Mr. Zech is also a
director of McGrath RentCorp and two
5
<PAGE> 8
of the Company's subsidiaries, General American Transportation Corporation and
GATX Capital Corporation.
COMMITTEES OF THE BOARD
The Company's Audit Committee members are Messrs. Marshall (Chairman),
Denny, Foote and Murphy, and Ms. Fretz. The committee's functions include: (i)
recommending to the Board of Directors the appointment of the Company's
independent auditors; (ii) reviewing and approving in advance of each year the
audit and non-audit services and fees of such auditors; (iii) meeting separately
and privately with the independent auditors and the Company's internal auditors
to insure that the scope of their activities has not been restricted, and to
consider other matters generally pertaining to their audits; (iv) reviewing the
adequacy of internal financial and accounting controls and the results of the
independent and internal auditors' audits thereof; (v) reviewing matters
relating to corporate financial reporting and accounting policies and
procedures; (vi) ensuring that management and independent accountants perform a
proper review of quarterly results prior to public release; and (vii) reporting
its findings on any of the above to the Board of Directors, as appropriate.
During 1994, there were two meetings of the Audit Committee.
The Company's Compensation Committee members are Messrs. Cole (Chairman),
Cozad, Day, Dutt and Giesen. The committee's functions include reviewing and
approving for or recommending to the Board of Directors the compensation of
elected officers, subsidiary presidents and other key management personnel of
the Company and reviewing and approving management proposals regarding key
personnel incentive plans and stock option and/or stock equivalent plans. During
1994, there were five meetings of the Compensation Committee.
The Company's Nominating Committee members are Messrs. Cozad (Chairman),
Cole, Giesen and Marshall. Mr. Glasser is an ex-officio member of the committee.
The committee's functions include: (i) recommending to the Board of Directors
nominees for election as Director; (ii) reviewing the performance of all members
of the Board of Directors in their capacities as Directors, including attendance
and contributions to the Board of Directors deliberations, and making such
recommendations to the Board of Directors as may be appropriate; (iii)
recommending appointments to all Board Committees; (iv) reviewing and approving
acceptance of any outside directorship or trusteeship by senior Company
officers; and (v) making such recommendations to the Board of Directors as it
may deem appropriate from time to time with respect to the size and makeup of
the Board of Directors and related matters. During 1994, the Nominating
Committee held three meetings. The committee will consider nominees recommended
by shareholders of the Company. Such nominations should be submitted to the
Nominating Committee, c/o David M. Edwards, 500 West Monroe Street, Chicago,
Illinois 60661, with a complete resume of the candidate's qualifications and
background as well as a written statement from the candidate consenting to be a
nominee and, if nominated and elected, to serve as director.
6
<PAGE> 9
The Company's Retirement Funds Review Committee members are Messrs. Murphy
(Chairman), Day, Dutt and Foote, and Ms. Fretz. The committee's functions
include: (i) monitoring overall investment performance and receiving reports
from the Company's Retirement Funds Investment Committee pertaining thereto;
(ii) approving recommended changes in broad asset allocation; (iii) approving
recommended changes of investment managers; and (iv) approving recommended
selections of trustees for the retirement plans. During 1994, there were two
meetings of the Retirement Funds Review Committee.
During 1994, there were seven meetings of the Board of Directors of the
Company: the regular annual meeting and six special meetings.
COMPENSATION OF DIRECTORS
Each non-officer director receives an annual retainer of $24,000, which is
prorated quarterly for a term of less than one year, a Board meeting attendance
fee of $750 and a committee meeting attendance fee of $750 for each meeting of a
committee of the Board of which the director is a member. The chairman of each
committee receives $1,250 for each meeting attended. The Company maintains a
Deferred Fee Plan whereby each non-officer director may elect to defer receipt
of the director's retainer, meeting fee, or both. The amount so deferred
accumulates interest at a rate equal to the 20-year U.S. government bond rate.
One director has elected to participate in this plan for 1994.
Directors who participated in the Executive Deferred Income Plans ("EDIPs";
see page 14) who remain on the Board of directors until age 65 will be entitled
to payments in amounts which will provide the participant with a maximum yield
of 24% on the fees deferred, with the exact yield dependent upon the age of the
director at the time of his or her participation. Participants who resign their
directorships before age 65 will receive a single payment in the amount of the
fees deferred, plus interest at 10%. If (a) a participant terminates his or her
membership on the Board during the two year period following a "change in
control" of the Company (as described below) other than by reason of retirement,
death, disability or a violation of certain provisions of the EDIPs, or (b)
prior to such event the director has (i) terminated his or her membership on the
board and (ii) reached age 65, the Compensation Committee may, if the director
has executed the amendment to the EDIPs referred to on page 14, direct that the
participant receive a single payment in the amount of the fees deferred, plus
interest, less any amount previously paid under the EDIPs, in lieu of the
scheduled annual payments. The Company has purchased, and is the sole owner and
beneficiary of, life insurance on the lives of participants in amounts that, in
the aggregate, are expected to cover all of the Company's liabilities under the
EDIPs, absent a change in the federal tax laws. During 1994, pursuant to fee
deferrals previously made under the 1984, 1985 and 1987 EDIPs and applicable
interest thereon, Mr. Cozad received $41,899.
7
<PAGE> 10
Non-employee directors of the Company are eligible to participate in the
Director Retirement Program adopted by the Company during 1992. Under the terms
of the program, a non-employee director who has a minimum service of five years
on the Board is entitled to receive annual payments equal to the amount of the
director's retainer payable at the time of the director's retirement from the
Board. The number of payments are equal to the number of years the director
served on the board, to a maximum of ten years. Payments begin the later of age
70 or the date on which the director retires, and will be made to the director's
surviving spouse should the director die prior to the expiration of the payment
term.
8
<PAGE> 11
COMPENSATION OF EXECUTIVE OFFICERS
The Company's executive officers participate in various incentive
compensation programs more fully described below under the caption "Compensation
Committee Report on Executive Compensation". The table below sets forth the
annual and long-term compensation paid or deferred by the Company to or for the
account of the chief executive officer and each of the other named four most
highly compensated executive officers and one former executive officer for the
years indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
--------------
Annual Compensation Awards
---------------------------------- --------------
Other Securities
Annual Underlying All Other
Name and Salary Bonus Compensation Options/SARs Compensation
Principal Position Year ($) ($)(1) ($) (# of shares) ($)(2)
------------------ ----- -------- -------- -------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
James J. Glasser -- 1994 610,008 443,689 116,430 30,000 4,500
Chairman of the Board and Chief 1993 610,008 313,697 65,338 30,000 41,559
Executive Officer 1992 587,508 0 65,338 30,000 34,743
Ronald H. Zech -- 1994 326,672 303,058 252,175(6) 20,000 4,500
President and
Chief Operating Officer(3)
Paul A. Heinen -- 1994 322,500 171,673 62,896 0 4,500
Vice President, General Counsel and 1993 322,500 138,713 34,998 12,000 26,909
Secretary(4) 1992 309,375 67,479 33,631 12,000 22,585
David M. Edwards -- 1994 196,668 129,475 51,092 10,000 4,500
Vice President, Finance & Chief
Financial Officer and Secretary(3)
William L. Chambers 1994 215,004 103,006 3,625 8,000 4,500
Vice President, Human Resources 1993 71,668 30,826 0 12,000 0
John F. Chlebowski, Jr. -- 1994 254,004 137,639 14,716 10,000 4,500
President, GATX Terminals 1993 245,000 105,381 14,716 10,000 4,497
Corporation(3)(5) 1992 236,004 51,476 15,862 10,000 4,364
</TABLE>
- - ---------------
(1) Amounts reflect bonus payments earned in the years set forth opposite the
specified payments.
(2) Amounts for 1994 are contributions made by the Company to the Company's
Salaried Employees Retirement Savings Plan (the "Savings Plan").
(3) Includes compensation earned as an executive officer of a subsidiary of the
Company.
(4) Mr. Heinen retired effective February 1, 1995.
(5) Mr. Chlebowski was Vice President, Finance & Chief Financial Officer of the
Company until May 1994.
(6) Includes $102,240 paid by the Company to Mr. Zech for relocation and
temporary living expenses and $96,602 for tax payments related to
relocation.
9
<PAGE> 12
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The table below sets forth information concerning individual grants of
stock options made during 1994 to each of the named executive officers.
<TABLE>
<CAPTION>
Potential Realizable
Value at
Individual Grants Assumed Annual
- - ----------------------------------------------------------------------------- Rates of
Number of Stock Price
Securities % of Total Appreciation
Underlying Options/SARs for Option
Options/SARs Granted to Exercise or Term(3)
Granted Employees in Base Price Expiration ----------------------
Name (#)(1) Fiscal Year ($/Share)(2) Date 5% ($) 10% ($)
---- ------------ ------------ ------------ ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
James J. Glasser........ 30,000 10.2% 41.8125 10/28/04 788,870 1,999,151
Ronald H. Zech.......... 20,000 6.8% 41.8125 10/28/04 525,913 1,332,767
David M. Edwards........ 10,000 3.4% 41.8125 10/28/04 262,957 666,384
William L. Chambers..... 8,000 2.7% 41.8125 10/28/04 210,365 533,107
John F. Chlebowski,
Jr.................... 10,000 3.4% 41.8125 10/28/04 262,957 666,384
</TABLE>
- - ---------------
(1) No options were granted in 1994 to Mr. Heinen. All stock options may be
exercised in full commencing on October 28, 1995.
(2) The exercise price is equal to the average of the high and low price of the
Company's Common Stock on the New York Stock Exchange on the date of grant.
(3) The dollar amounts under these columns are the result of calculations at
assumed annual rates of appreciation of 5% and 10% as prescribed by the
proxy rules of the Securities and Exchange Commission for the ten year term
of the stock options and, therefore, are not intended to forecast possible
future appreciation, if any, of the Company's stock price. No gain to the
optionees is possible without an increase in the price of the Common Stock,
which will benefit all shareholders commensurately. A zero percent gain in
the price of the stock will result in no gain for the optionee.
10
<PAGE> 13
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The table below sets forth certain information concerning the exercise of
stock options during 1994 by each of the named executive officers, the number of
unexercised options and the 1994 year-end value of such unexercised options
computed on the basis of the difference between the exercise price of the stock
option and the closing price of the Company's Common Stock at year-end ($44.00).
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-
Shares Options/SARs at Fiscal the-Money Options/SARs at
Acquired on Year-End (#) Fiscal Year-End ($)
Exercise Value ---------------------------- ----------------------------
Name (#) Realized ($)(1) Exercisable Unexercisable Exercisable Unexercisable
----- ----------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James J. Glasser........ 35,000 786,668 165,000 30,000 2,557,500 65,525
Ronald H. Zech.......... 3,000 69,096 64,000 20,000 1,006,305 43,750
Paul A. Heinen.......... 0 0 36,000 0 489,750 0
David M. Edwards........ 0 0 19,500 10,000 339,304 21,875
William L. Chambers..... 0 0 12,000 8,000 75,750 17,500
John F. Chlebowski, Jr.. 0 0 30,000 10,000 408,125 21,875
</TABLE>
- - ---------------
(1) Amounts represent the aggregate before-tax dollar value realized upon the
exercise of stock options as measured by the difference between the exercise
price of the stock option and the market value of the Company's Common Stock
on the date of exercise of such option.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
The table below sets forth certain information regarding long-term
incentive plan awards (expressed in number of units each representing a share or
share equivalent of Common Stock) made to certain named executive officers
during 1994:
<TABLE>
<CAPTION>
Estimated Future
Payouts Under
Number of Performance Non-Stock Price- Based
Shares, or Other Plans(1)
Units or Period Until ----------------------
Other Rights Maturation or Target Maximum
Name (#) Payout (#) (#)
---- ------------ ------------- ------ -------
<S> <C> <C> <C> <C>
James J. Glasser.......................... 2,931 1994-6 2,931 8,793
Ronald H. Zech............................ 1,045 1994-6 1,045 3,135
Paul A. Heinen............................ 1,162 1994-6 1,162 3,486
William L. Chambers....................... 775 1994-6 775 2,325
John F. Chlebowski, Jr.................... 915 1994-6 915 2,745
</TABLE>
- - ---------------
(1) Payouts are based on the Company achieving preestablished levels of return
on common equity ("ROE") and are paid in Common Stock and cash following
completion of the performance period. No payout will be made unless a target
level of performance is achieved. The target amount, plus an amount equal to
reinvested dividends, will be earned if 100% of target ROE is achieved; the
maximum amount plus an amount equal to
11
<PAGE> 14
additional units representing reinvested dividends, will be earned if target
ROE is exceeded by a specified amount.
TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
The Company entered into agreements with Messrs. Glasser, Zech, Edwards,
Chambers and Chlebowski as of January 1, 1995, which provide certain benefits
upon termination of employment after a "change of control" of the Company. All
agreements provide for employment with the Company at salaries to be determined
from time to time by the Board of Directors and with incentive compensation and
employee benefits commensurate with the executives' salaries and positions. Each
agreement provides that the executive's employment may be terminated at will by
the Company but, if terminated or "constructively terminated" within two years
following a "change of control" for any reason other than cause or the
executive's death, retirement or disability, the executive will be entitled to:
(A) a lump sum payment equal to (a) twice his annual salary plus (b) the bonus
that would have been payable for the year in which termination or constructive
termination occurs (assuming a bonus of 100% of target under the Management
Incentive Plan ("MIP") or any comparable successor thereto), less other payments
made in accordance with the Company's standard severance policy; (B) continued
participation in the Company's medical, disability and life insurance plans for
up to two years after termination; (C) financial counseling and tax preparation
services; (D) reimbursement for outplacement services; (E) retirement income
benefit equal to the difference between (i) the monthly retirement benefits the
executive would have received if employment had terminated two years after
actual termination and accordingly the executive had accumulated two additional
years of credited service under the Company's retirement plans at the same
compensation (including an amount equal to the average of the bonuses paid
during the five year period preceding termination which may be considered for
purposes of calculating the pension benefit) in effect on the date of
termination, and (ii) any monthly retirement benefits actually received,
commencing no sooner than two years after termination and payable at the same
time and in the same manner as the executive's other retirement benefits; and
(F) if any payment made under the agreements constitutes an "excess parachute
payment" under section 280G of the Internal Revenue Code of 1986, an additional
amount (the "Gross-Up Amount") which, after payment of all Federal and state
income taxes thereon and payment of the excise tax on the Gross-Up Amount, will
be equal to the excise tax payable by the executive on such excess parachute
payment. "Cause" means a willful and material breach of employment obligations
likely to materially damage the Company; "a change of control" occurs upon: (1)
receipt by the Company of a Schedule 13D confirming that a person or group owns
beneficially 20% or more of the Company's stock; (2) any purchase under a
non-Company tender or exchange offer following which the offeror owns
beneficially 20% or more of the Company's stock; (3) shareholder approval of any
merger in which the Company is not the surviving corporation or survives only as
a subsidiary of another
12
<PAGE> 15
corporation, consolidation or sale of all, or substantially all, of the
Company's assets; and (4) a change in the majority of the Board of Directors of
the Company not recommended by the incumbent directors; and "constructive
termination" includes, unless otherwise agreed to by the executive, a
significant reduction in the nature or scope of authority, duties or
responsibilities, a material change in location, a reduction in perquisites or
compensation, the imposition of unreasonable travel requirements, a diminution
in employee welfare plans, a diminution in eligibility to participate at the
same level in bonus, stock option and other similar plans or a reasonable
determination by the executive that a change in circumstances affecting the
Company or its management prevents the executive from effectively exercising his
authorities, duties, functions and responsibilities. Mr. Zech's agreement was
supplemented by an agreement dated July 29, 1994 to provide that termination of
employment shall include the termination (except because of death or disability)
of his employment -- whether initiated by Mr. Zech or the Company -- within two
years following the failure of the Board of Directors to elect him to the
position of Chief Executive Officer on the first to occur of (a) December 31,
1995 or (b) the retirement of Mr. Glasser from that position. Should Mr. Zech's
employment terminate prior to the first to occur of his election as Chief
Executive Officer or December 31, 1997, such termination will be treated for
purposes of the various benefit plans in which he participates as if he had been
employed by the Company for fifteen years and had attained age 55, except that
payments under such plans will be based upon his actual years of service,
actuarialy discounted to his actual age on the date of such termination or age
55, whichever is the first to occur. The appropriate maximum amount that would
be payable under each of the foregoing agreements (excluding the Gross-Up
Amount, if any, payable thereunder, which is not determinable at this time) on
the date hereof, is as follows: Mr. Glasser ($1,407,032); Mr. Zech ($1,156,468);
Mr. Edwards ($575,720); Mr. Chambers ($640,296); Mr. Chlebowski ($695,806).
Messrs. Glasser, Zech, Edwards, Chambers and Chlebowski also participate in
the Company's Long Term Incentive Compensation Plan ("LTICP") under which the
Company's executive officers and certain key employees may receive Stock
Options, Stock Appreciation Rights ("SARs"), Restricted Stock Rights, Restricted
Common Stock, Performance Awards and Individual Performance Units ("IPUs"). The
LTICP provides for a special acceleration of awards upon a "change of control"
as described above. Upon the occurrence of such event, (i) all outstanding Stock
Options and SARs held by executive officers for a period of six months become
immediately exercisable; (ii) optionees will have the right for a period of
thirty days following such event to have the Company purchase or to exercise for
cash (a) Non-Qualified Stock Options (granted without SARs) and SARs (granted in
tandem with Non-Qualified Stock Options) at a per share price (the "Acceleration
Price") equal to the excess over the option price of the highest of (1) the
highest reported price of the Company's Common Stock in the prior sixty days,
(2) the highest price included in any report on Schedule 13D referred to above
paid within the prior sixty days, (3) the highest tender offer
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<PAGE> 16
price paid and (4) the fixed formula per share price in any merger,
consolidation or sale of all or substantially all of the Company's assets, and
(b) incentive stock options granted without SARs and SARs granted in tandem with
incentive stock options at a per share price equal to the difference between the
then fair market value of the Common Stock and the option price, provided,
however, that during such thirty day period the Company may purchase any such
incentive stock option or SAR at the Acceleration Price; (iii) all Restricted
Stock Rights which have been outstanding for at least six months will be
immediately exchanged for Common Stock and all Restricted Common Stock held by
the Company for participants will be distributed free of any further
restrictions, together with all accumulated interest, dividends and dividend
equivalents, and all earned Performance Awards; and (iv) all IPUs shall be
immediately redeemed on the same basis as if the performance goals (as
hereinafter described) had been achieved, and for purposes of calculating the
redemption value, the fair market value of the Company's Common Stock will be
equal to the average price of the Common Stock during the five business days
immediately preceding such event.
The Company adopted Executive Deferred Income Plans effective September 1,
1984 (the "1984 EDIP"), July 1, 1985 (the "1985 EDIP") and December 1, 1987 (the
"1987 EDIP") (collectively the "EDIPs"). The EDIPs permitted directors to defer
receipt of their fees and certain employees (including executive officers of the
Company) to defer receipt of up to 20% of their annual base salaries from
compensation earned during the year following the effective date of the EDIP
pursuant to participation agreements entered into between the Company and each
participant. EDIP participants were offered an opportunity to amend their
participation agreements to provide for a determination by the Compensation
Committee, within ten days following a "change of control" as described above,
whether agreements with participants who accepted the amendment will either (a)
continue to provide for the payment of benefits thereunder in installments as
described in the agreement or (b) terminate and provide a single lump sum
payment to participants. Participants are no longer making deferrals for EDIPs.
EMPLOYEE BENEFIT PLANS
NON-CONTRIBUTORY PENSION PLAN FOR SALARIED EMPLOYEES
The Company's Non-Contributory Pension Plan for Salaried Employees (the
"Pension Plan") covers salaried employees of the Company and most of its
domestic subsidiaries. Subject to certain limitations imposed by law, pensions
are based on years of service and average monthly compensation during (i) the 5
consecutive calendar years of highest compensation during the last 15 calendar
years preceding retirement or the date on which the employee terminates
employment or (ii) the 60 calendar months preceding retirement or the date on
which the employee terminates employment, whichever is greater. Illustrated
below are estimated annual benefits payable upon retirement to salaried
employees, including executive officers, assuming normal retirement at age 65,
without giving effect to the limitations set forth below. Benefits are
calculated on a straight life annuity basis but the normal form of
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<PAGE> 17
payment is a qualified joint and survivor pension. Benefits under the Pension
Plan are not subject to any deduction for Social Security or other offset
amounts.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL PENSION BENEFITS
AVERAGE ANNUAL -------------------------------------------------------------------------------------------
COMPENSATION FOR 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS
APPLICABLE PERIOD ($) SERVICE ($) SERVICE ($) SERVICE ($) SERVICE ($) SERVICE ($) SERVICE ($)
- - --------------------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
$ 200,000 46,972 62,630 78,288 93,945 109,603 119,603
400,000 96,472 128,630 160,788 192,945 225,103 245,103
600,000 145,972 194,630 243,288 291,945 340,603 370,603
800,000 195,472 260,630 325,788 390,945 456,103 496,103
1,000,000 244,972 326,630 408,288 489,945 571,603 621,603
1,200,000 294,472 392,630 490,788 588,945 687,103 747,103
1,400,000 343,972 458,630 573,288 687,945 802,603 872,603
</TABLE>
Compensation covered by the Pension Plan will be the amounts shown in the salary
and bonus columns in the Summary Compensation Table. Annual benefits in excess
of certain limits imposed by the Employee Retirement Income Security Act of 1974
("ERISA") or the Code on payments from the Pension Plan will be paid by the
Company under its Excess Benefit Plan and Supplemental Retirement Plan. Such
amounts are included in the above table.
While normal retirement age is 65, employees with at least 15 years of
service may retire as early as age 55, but retirement prior to age 62 may result
in an actuarially reduced pension and retirement prior to age 65 may result in
an adjustment to benefits as required by applicable federal regulations. An
employee with at least 5 years of service credit, whose employment is terminated
prior to retirement for any reason, is entitled to a deferred vested pension or,
in the event of death prior to commencement of such benefit, a qualified
survivor benefit payable to the employee's spouse. If an employee with at least
15 years of service credit dies prior to retirement, the employee's spouse is
entitled to an immediate pension equal to 50% of the amount of the employee's
accrued benefit.
The executive officers named in the Cash Compensation Table have the
following credited years of service: Mr. Glasser, 33 years; Mr. Zech, 17 years;
Mr. Edwards, 13 years; Mr. Chambers, 1 year and Mr. Chlebowski, 12 years.
EXCESS BENEFIT PLAN
The Company's Excess Benefit Plan covers salaried employees of the Company
and employees of most of its domestic subsidiaries whose benefits under the
Pension Plan and/or Savings Plan are subject to reduction because of the limits
imposed by ERISA or the Internal Revenue Code, and provides that the Company
will pay an employee the difference between the benefits the employee receives
from the Pension Plan and the Savings Plan and the benefits the employee would
have received in the absence of these limitations. Amounts payable under the
Excess Benefit Plan are included in the above table.
15
<PAGE> 18
SUPPLEMENTAL RETIREMENT PLAN
The Supplemental Retirement Plan covers all participants in the EDIPs whose
benefits were subject to reduction because their deferred compensation was not
included in compensation for purposes of the Pension Plan, and provides that the
Company will pay a participant the difference between certain of the benefits
the participant receives under the Pension and Excess Benefit Plans and the
benefits the participant would have received under such plans absent
participation in the EDIPs. ERISA imposes limits on the level of compensation
(currently $150,000) that may be considered in computing benefits under the
Pension Plan. As a result of this limitation, certain executive officers will
not receive the level of benefits under the Pension Plan to which they otherwise
would have been entitled. In order to offset the reduction in benefits, the
Supplemental Retirement Plan provides benefits in amounts equal to the
difference between the benefits that the executive would have received absent
the imposed limitation and the benefits the executive will actually receive
under the Pension Plan. Amounts payable under the Supplemental Retirement Plan
are included in the above table.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION POLICY AND OBJECTIVES
The Company's policy is to provide a competitive and balanced total
compensation program which is structured to attract, retain and motivate highly
qualified management personnel and to align management interests with those of
the Company's shareholders. This policy has been developed under the supervision
of the Compensation Committee of the Board of Directors which periodically
reviews the policy and oversees its implementation.
The principal components of the total compensation program for executive
officers of the Company are base salary, annual incentive awards provided under
the MIP, and long-term incentive awards provided under the LTICP. As described
herein, annual and long-term incentive awards are contingent upon the
achievement by the Company of specific financial goals. The Compensation
Committee annually reviews and approves the Company's salary levels and the
design of the MIP and LTICP, and regularly evaluates the Company's total
compensation program to assure that it adequately reflects the manner and level
of compensation deemed appropriate for the executive officers of the Company.
Competitive compensation levels are determined based on analyses of annual
and long-term pay data reported in: (i) nationally recognized compensation
surveys of companies of comparable revenue size in a diversified group of
industries and (ii) the proxy statements of the companies in the Peer Group
performance graph, adjusted through regression analysis for the Company's
revenue and asset size. The Peer Group and the groups of companies in the
compensation surveys are hereinafter collectively referred to as the
"Comparative Groups." It is believed that the Comparative Groups represent a
good cross-section of executive talent, and that a review of the compensation
practices of these companies is more relevant than a review of such practices in
either sample alone. Moreover, comparison to companies that
16
<PAGE> 19
might be considered more direct competitors of the Company is not feasible since
most of these companies are privately-held or subsidiaries of larger
organizations and therefore do not furnish information on compensation levels.
The level of compensation of each component of the compensation program
described in the preceding paragraph is targeted at the middle range of
compensation paid by companies in the Comparative Groups. In any given year, the
compensation level for any executive officer of the Company may be greater or
less than the corresponding compensation level paid by companies in the
Comparative Groups, based upon Company and/or individual performance.
BASE SALARIES
The base salaries of the Company's executive officers are targeted at the
average base salary levels of executives of the Comparative Groups, giving
consideration to the comparability of responsibilities. Salary adjustments for
executive officers of the Company earning base salaries of $150,000 or more are
considered by the Compensation Committee every 18 months, and salary adjustments
for other executive officers are considered every 12 months. In each case,
salary adjustments are based on an assessment of the individual performance and
contribution of each executive officer over the review period and an analysis of
the salary practices of the Comparative Groups for positions of similar
responsibilities. No specific weights are assigned to these factors. Mr. Glasser
was paid a base salary of $610,008 in 1994. The salaries paid in 1994 to Mr.
Glasser and to the executive officers as a group were consistent with the
average salaries paid to executives by companies in the Comparative Groups.
ANNUAL INCENTIVE COMPENSATION
Executive officers and key managers of the Company are eligible to
participate in the MIP. The MIP promotes the Company's pay for performance
policy by providing annual cash payments to executives based upon achieving
Company and individual performance goals. Target incentive awards are paid when
financial or a combination of financial and individual performance objectives
are achieved. Awards for the Chief Executive Officer and each other named
executive officer are based solely on financial performance objectives.
Each year, the Compensation Committee establishes target financial
objectives for the Company and each of its subsidiaries, and a schedule
specifying the percentage, if any, of target incentive awards payable for actual
performance. In 1994, financial objectives were expressed exclusively in terms
of budgeted net income. Target incentive awards for the Company's executive
officers ranged from 45% to 65% of their base salaries, depending on the level
of the executive officer's position. For all participants, the maximum incentive
award is 150% of the target incentive award. The maximum incentive award is
payable for achieving 120% or more of the target financial objective for the
Company and four of its five subsidiaries,
17
<PAGE> 20
and 115% or more of the target financial objective in the remaining subsidiary.
No incentive awards are payable to the Company's executive officers unless
threshold financial levels are achieved. The threshold level is 80% of the
target financial objective for the Company and four of its five subsidiaries,
and 85% of the target financial objective in the remaining subsidiary. The MIP
award for Mr. Glasser is based 100% on the consolidated results of the Company.
The awards for Messrs. Zech, Heinen, Edwards and Chambers are based 30% on the
consolidated results of the Company and 70% on the results of the Company's
subsidiaries, weighted in proportion to the contribution of each subsidiary to
consolidated net income.
In 1994, the Company exceeded its consolidated net income objective by 7%,
resulting in a cash payment to Mr. Glasser of $443,689 under the MIP based on
the above described factors. This payment represented 73% of Mr. Glasser's
salary and 112% of his target award.
The limitation on the tax deductibility of executive compensation in excess
of one million dollars under the Omnibus Budget Reconciliation Act of 1993 may
impact the Company. Accordingly, if the taxable compensation of any named
individual during 1995 is reasonably anticipated to exceed one million dollars,
the MIP payment (or the incremental portion thereof anticipated to exceed the
one million dollar threshold) otherwise payable to that individual will be
deferred until the earlier to occur of (a) the first year in which the payment
of the deferred amount (or any portion thereof) would be deductible by the
company (viz., the year in which the million dollar threshold applicable to the
individual would not be exceeded) or (b) the year following the individual's
retirement.
LONG-TERM INCENTIVE COMPENSATION
Long-term incentive compensation opportunities are provided pursuant to the
LTICP to attract and retain qualified executive personnel, to encourage
ownership of the Company's stock by key executives, and to promote a close
identity of interests between the Company's management and its shareholders. The
LTICP provides that the Compensation Committee may award the Company's executive
officers and key employees Stock Options, Stock Appreciation Rights, Restricted
Stock Rights, Restricted Common Stock, Performance Awards and Individual
Performance Units ("IPUs"). Since 1988, LTICP awards have been provided to the
Chief Executive Officer and his direct reports in the form of stock options and
IPUs, and to other key employees (currently 171 in number) in the form of stock
options. The size of IPU awards expressed as a percentage of salary is based on
the scope of the participant's responsibilities. The size of stock option awards
is based on qualitative factors considered appropriate by the Compensation
Committee, taking into account the scope of the participant's responsibilities,
the size of previous grants and competitive practices. In 1994, LTICP awards to
the Company's executive officers were on par with the average competitive
long-term incentive opportunities provided by the companies in the Comparative
Groups.
18
<PAGE> 21
The Chief Executive Officer and his direct reports as of the date of grant
(eight in number) received IPU grants in 1994. The purpose of IPUs is to focus
attention on superior, sustained long-term Company performance. The number of
IPUs granted is calculated by dividing a specified percentage of a participant's
salary (20% in the case of the Chief Executive Officer and 15% for all other
participants) by the fair market value of the Company's Common Stock on the date
of grant. IPUs are subject to redemption (in cash and Common Stock) only if the
Company's return on common equity over a three year period (the "Performance
Period") reaches a target level established by the Compensation Committee. The
target level is set above the average, multi-year return on equity achieved by a
broad range of major U.S. companies included in indices compiled by Forbes,
Standard and Poor's and Value Line. The number of IPUs redeemed is based on the
extent to which the Company's return on equity has met or exceeded the target.
The maximum number of IPUs which may be redeemed is equal to three times the
number granted plus an amount representing reinvested dividends. On each
dividend payment date during the Performance Period, participants are credited
with additional IPUs equal in amount to the dividend paid on a share of Common
Stock divided by the market value of the Company's Common Stock on such date.
For the 1994-1996 Performance Period, such maximum number is redeemable (60% in
stock and 40% in cash) only if the Company's return on common equity over the
Performance Period exceeds the preestablished target by more than 30%. The
amount of payment for each redeemed IPU is equal to the market value of the
Company's Common Stock on the date of redemption.
In 1994, Mr. Glasser received a grant of 2,931 IPUs covering the 1994-1996
Performance Period based on the considerations described above. Neither Mr.
Glasser nor any other participating executive received an IPU payment for the
three-year Performance Period ending in 1994, as the Company did not achieve its
return on equity target.
Stock options are granted as an incentive to encourage and enhance positive
performance and to align the interest of the Company's employees with its
shareholders. Options are granted at the fair market value (the average of the
high and low market price on the date of grant) and will have value only if the
Company's stock price increases. With the exception of Mr. Heinen, who retired
on February 1, 1995, each of the executive officers named in the Compensation
Table received an option grant in 1994 based on the factors described above. Mr.
Glasser was granted an option to purchase 30,000 shares of the Company's Common
Stock at a price equal to the fair market price on the date of grant, and the
other executive officers listed in the compensation table were granted options
to purchase an aggregate of 48,000 shares of the Company's Common Stock at the
same price.
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<PAGE> 22
This report is submitted by the Compensation Committee of the Board of
Directors of GATX Corporation.
Franklin A. Cole (Chairman)
James W. Cozad
Robert J. Day
James L. Dutt
Richard A. Giesen
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<PAGE> 23
PERFORMANCE GRAPH
The following performance graph compares the yearly percentage change in
the Company's cumulative total shareholder return on its Common Stock (on a
dividend reinvested basis utilizing the closing price on December 31, 1989 as
the base) with Standard & Poor's Corporation S&P 500 Composite Stock Price Index
("S&P 500") and a group of comparable companies ("Peer Group") selected by the
Company and an external investment banking advisor.
Companies included in the Peer Group were selected on the basis of a number
of criteria. The selection is intended to provide a cross-section of companies
which are subject to the same economic and investment variables that are likely
to impact the Company's total return and which have investment characteristics
that closely correspond to those of the Company. The Peer Group consists of
Alexander and Baldwin, Inc., Allied-Signal Inc., American Express Company, Amoco
Corporation, Ashland Oil, Inc., Atlantic Richfield Company, A. Schulman, Inc.,
Beneficial Corporation, Burlington Northern, Inc., Curtiss-Wright Corporation,
Englehard Corporation, Ferro Corporation, Goulds Pumps, Incorporated, Household
International, Inc., The Lubrizol Corporation, Nordson Corporation, Overseas
Shipping Group, Inc., Roadway Services, Inc., Rohm and Haas Company, Total
Petroleum (North America) Ltd., and Union Pacific Corporation.
The performance graph reflects a weighted average comparison based upon the
market capitalization of each company and assumes $100.00 was invested on
December 31, 1989.
TOTAL RETURN
GATX VS. S&P 500 VS. PEER GROUP
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) GATX CORP S&P 500 PEER GROUP
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 79.31 96.89 93.16
1991 91.38 126.42 105.15
1992 110.26 136.05 119.33
1993 140.61 149.76 136.51
1994 157.48 151.74 135.73
</TABLE>
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<PAGE> 24
APPROVAL OF GATX CORPORATION
1995 LONG TERM INCENTIVE COMPENSATION PLAN
There will be presented to the shareholders a proposal to approve a new
incentive plan entitled "GATX Corporation 1995 Long Term Incentive Compensation
Plan" (the "1995 Plan") for officers and key employees of the Company and its
subsidiaries. On January 27, 1995, the Board of Directors adopted the 1995 Plan
subject to shareholder approval. The 1995 Plan will not be put into effect
unless approved by the affirmative vote of the holders of a majority of the
shares entitled to vote at the Annual Meeting.
The 1995 Plan will succeed the 1985 Long Term Incentive Compensation Plan
(the "1985 Plan") and will continue the major features of the 1985 Plan:
Non-Qualified Stock Options, Incentive Stock Options, Stock Appreciation Rights,
Restricted Stock Rights, Restricted Common Stock, Performance Awards and
Individual Performance Units. If the 1995 Plan is approved, grants and awards
will no longer be made under the 1985 Plan.
If approved by a majority of the shareholders, the 1995 Plan will be
administered by the Compensation Committee of the Board of Directors which
consists of not less than three non-employee directors. The Committee will
select from time to time key employees of the Company and its subsidiaries to
receive awards (which could include the executive officers named and included in
the Summary Compensation Table) and the amounts, type and terms of such awards,
and is authorized to interpret the 1995 Plan, to establish rules and regulations
thereunder, and to make all other determinations necessary or advisable for
administration of the 1995 Plan.
The Committee may delegate to officers of the Company, who are also
directors, authority to grant Stock Options, Stock Appreciation Rights,
Restricted Stock Rights, Restricted Common Stock, Performance Awards and
Individual Performance Units to non-officer participants in the 1995 Plan.
Approximately 171 current employees have received awards under the 1985
Plan. Estimates of benefits which would have been paid under the 1995 Plan in
the past or will be payable in the future if the 1995 Plan is approved cannot be
made since such benefits will depend upon, among other things, future
implementation of the 1995 Plan at the discretion of the Committee, performance
achieved against goals to be established and the future market value of the
Company's Common Stock.
The 1995 Plan provides that the aggregate number of shares of Common Stock
which may be issued pursuant to all grants thereunder may not exceed 1,500,000
shares together with any shares of Common Stock which are authorized under the
1985 Plan, but unissued as of the date of adoption of the 1995 Plan, and which
are not subsequently issued pursuant to awards under the 1985 Plan that are
outstanding on that date. As of March 10, 1995, 176,142 shares
22
<PAGE> 25
were available for grant under the 1985 Plan, and an additional 1,276,625 shares
were reserved for issuance pursuant to awards outstanding under the 1985 Plan
and would become available for issuance under the 1995 Plan if those awards
lapse. The Common Stock delivered under the 1995 Plan may be authorized and
unissued stock or treasury shares or, at the discretion of the Committee, may be
as purchased on the open market. Any shares subject to a grant or award which
terminates by expiration, cancellation or otherwise prior to the issuance of
such shares (including those which terminate because of the exercise of a
related Stock Appreciation Right except to the extent Common Stock is issued
upon exercise of the Stock Appreciation Right) or, in the case of the grant of
Restricted Common Stock, prior to vesting shall again be available for future
grants under the 1995 Plan. Appropriate adjustment shall be made with respect to
the number and kind of shares optioned or awarded or subject to being optioned
or awarded in the event of a merger, consolidation, reorganization,
recapitalization, stock split, stock dividend, spin-off or other change in the
corporate structure or capitalization affecting the Common Stock.
The 1995 Plan will be effective as of the date of shareholder approval and
will terminate at such time as the Board of Directors determines, although
termination will not affect the rights of participants under any awards
outstanding at that time. The Board of Directors may also amend the 1995 Plan
from time to time except that, without shareholder approval, the Board of
Directors may not increase the number of shares of Common Stock which may be
issued under the 1995 Plan to participants. The following summary of the
principal provisions of the 1995 Plan is qualified in its entirety by reference
to the full text of the 1995 Plan annexed as Exhibit A to this Proxy Statement.
The Closing price of the Company's Common Stock as reported for New York Stock
Exchange composite transactions on March 10, 1995 was $46.125.
The Board of Directors recommends that the shareholders vote for this
proposal.
NON-QUALIFIED STOCK OPTIONS AND INCENTIVE STOCK OPTIONS
The 1995 Plan permits the Committee to grant both Non-Qualified Stock
Options and Incentive Stock Options ("ISOs") (collectively "Stock Options")
within the meaning of the Internal Revenue Code of 1986, as amended. The
Committee will determine the number of shares subject to each Stock Option and
the manner and time of exercise. All Stock Options will become exercisable
commencing no sooner than one year after the date of grant, subject to the
Committee's discretionary authority to accelerate the date on which all or any
part of an option may be first exercised. The exercise price of Stock Options
shall not be less than the fair market value at the date of grant or par value
of the Common Stock, whichever is higher. All Stock Options will terminate on
the earlier of the tenth anniversary of their date of grant or, to the extent
exercisable as of the date of termination of employment, three months after the
date on which the optionee's employment terminates, except that, on termination
by death, disability or retirement under a Company retirement plan (including
early retirement with
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<PAGE> 26
Company approval), Stock Options will remain exercisable, to the extent they are
exercisable at the date of termination, for one year after termination caused by
death or disability or five years after termination by reason of retirement, but
in no event later than ten years from the date of grant. Stock Options are
exercisable only upon payment of the full purchase price in cash or in Common
Stock or a combination thereof at the time of exercise (or by such other method
as may be satisfactory to the Committee). The aggregate fair market value
(determined on the date of grant) of ISOs which any participant may exercise
during any calendar year shall not exceed $100,000. The aggregate number of
Stock Options granted in any calendar year to a participant shall not exceed
75,000.
STOCK APPRECIATION RIGHTS
Stock Appreciation Rights ("SARs") may be granted to participants under the
1995 Plan in conjunction with a Stock Option then being granted or, in the case
of Non-Qualified Stock Options, in conjunction with a previously granted Stock
Option. SARs will become exercisable commencing on a date no earlier than the
later of six months from the date of grant or one year from the Option Date,
except that SARs granted with respect to Stock Options will be exercisable only
to the extent the underlying Stock Options are exercisable. The Committee may
accelerate these exercise dates and may at the time of grant or subsequent
thereto add such additional conditions and limitations as it deems advisable.
SARs entitle the optionee to elect to surrender the related Stock Option and to
receive an amount equal to the excess of the fair market value of the Common
Stock on that date over and above the option price under the surrendered Stock
Option, without the payment of cash (except for withholding taxes). The
Committee, in its discretion, may allow the Company to satisfy this obligation
in Common Stock, cash or a combination thereof. SARs will terminate on the
earlier of ten years from the date of grant, termination of the related Stock
Option or the termination of a participant's employment with the Company, with
the exceptions of death, disability or retirement identical to those relating to
Stock Options under the 1995 Plan.
RESTRICTED STOCK RIGHTS AND RESTRICTED COMMON STOCK
The Committee may award Restricted Stock Rights and Restricted Common Stock
to selected employees. Restricted Stock Rights entitle participants to receive a
specified number of shares of Restricted Common Stock not less than six months
from the date of grant of the Restricted Stock Rights which in turn are subject
to certain restrictions. In addition, the holder of Restricted Stock Rights is
entitled to receive cash equivalent to the dividend paid on the Company's
outstanding Common Stock during the intervening period for the number of
Restricted Stock Rights so awarded, and the holder of Restricted Common Stock is
entitled to receive dividends, with interest thereon, at such time or times as
the Committee determines. The Restricted Common Stock awarded is represented by
a stock certificate in the name of the employee. Such employee is entitled to
vote the Restricted Common Stock and to exercise
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<PAGE> 27
other shareholder rights with respect to the Restricted Common Stock, except
that (1) the Company may retain custody of the stock certificate during the
restriction period, (2) the employee may not sell, transfer, pledge, exchange or
otherwise dispose of the shares during the restriction period, and (3) any
dividend that may be payable on the shares may be withheld by the Company until
the restrictions lapse. If the employee has satisfied all of the conditions of
the Restricted Common Stock award established by the Committee, upon the end of
the restriction period the Company will distribute the stock certificates
representing the shares, free of all restrictions, in such number of equal or
substantially equal annual installments measured from the last day of the
restriction period as the Committee shall determine. The restriction period may
vary among participants. Except as otherwise determined by the Committee, if a
participant leaves the employ of the Company, he shall forfeit any undistributed
Restricted Common Stock previously awarded to him and any undistributed cash and
dividends will revert to the Company, except that upon death or retirement of a
participant, any remaining restrictions will lapse. The Committee may accelerate
the date on which restrictions will lapse as to any shares of Restricted Common
Stock and undistributed cash and dividends.
PERFORMANCE AWARDS
The Committee may also grant Performance Awards to participants who have
been granted Restricted Stock Rights or Restricted Common Stock. These awards
may not exceed the market value of the Restricted Common Stock when the
restrictions lapse. The awards provide cash payments to participants if certain
threshold criteria established by the Committee and certain Company earnings
goals (the "Performance Goals"), also established by the Committee and approved
by the Board of Directors, are met over a predetermined performance period.
Except as otherwise determined by the Committee, if employment terminates prior
to the distribution of any installment, all rights to further payments
terminate. Performance Goals may vary among participants.
INDIVIDUAL PERFORMANCE UNITS
The Committee may also grant Individual Performance Units ("IPUs") to
officers and other key employees of the Company. The number of IPUs granted will
be determined by dividing a specified percentage (not to exceed 100%) of the
participant's base salary by the fair market value of the Company's Common Stock
on the date of grant. On each dividend payment date during the Performance
Period, participants are credited with additional IPUs equal in amount to the
dividend paid divided by the fair market value of the Company's Common Stock on
such date. IPUs are subject to redemption (in cash and Common Stock) only if the
Company's return on equity over a specified period (the "Performance Period")
reaches a target level (the "Performance Goal") specified by the Committee. The
Committee shall exclude the effect, if any, on the Company's income or equity,
of changes in generally accepted accounting principles or Federal income tax
laws or regulations adopted or effective
25
<PAGE> 28
subsequent to the establishment of performance goals as it deems appropriate. If
the Performance Goal is achieved or exceeded, participants receive an amount
(the "Redemption Amount") equal to not more than three times the number of IPUs
credited to the participant (including reinvested dividends) multiplied by the
fair market value of the Company's Common Stock on the date of payment. Except
as provided immediately below, upon termination of the employment, a participant
forfeits all unredeemed IPUs. If employment terminates by reason of a
participant's death, disability or retirement under a Company or subsidiary
retirement plan prior to the completion of a Performance Period, the participant
(or in the case of death those entitled by will or laws of decent and
distribution) shall, if the Performance Goal is attained, receive the Redemption
Amount at the time of payment to other participants. In the event of retirement,
the Redemption Amount is prorated to the date of retirement.
SPECIAL ACCELERATION OF AWARDS
As in the case of the 1985 Plan, the 1995 Plan provides for special
acceleration of awards upon (i) the receipt by the Company of a report on
Schedule 13D reporting the beneficial ownership by any person (other than a
participant in the 1995 Plan) of 20% or more of the Company's Common Stock; (ii)
the conclusion of a tender or exchange offer for the Company's shares, other
than by the Company, a subsidiary or a 1995 Plan participant, following which
the offeror owns beneficially 20% or more of the Company's outstanding Common
Stock; (iii) shareholder approval of certain mergers, consolidations or sales of
all, or substantially all, of the Company's assets; or (iv) a change in the
majority of the Board of Directors within a twelve-month period not recommended
by two-thirds of the incumbent directors.
Upon the occurrence of any such event: (i) all outstanding Stock Options
and SARs will become exercisable for the remainder of their terms (Stock Options
and SARs granted to officers must have been held for at least six months); (ii)
optionees will have the right for a period of thirty days following such event
to have the Company purchase or to exercise for cash (A) Non-Qualified Stock
Options (granted without SARs) and SARs (granted in tandem with Non-Qualified
Stock Options) at a per share "Acceleration Price" defined below, or (B) ISOs
(granted without SARs) and SARs (granted in tandem with ISOs) at a per share
price equal to the difference between the then fair market value of the Common
Stock and the option price, provided, however, that during such thirty-day
period the Company may purchase any such ISO or associated SAR at the
Acceleration Price; (iii) all Restricted Stock Rights which have been
outstanding for at least six months will be immediately exchanged for Common
Stock and all Restricted Common Stock held by the Company for participants will
be distributed free of any further restrictions, together with all accumulated
interest, dividends and dividend equivalents, and all earned Performance Awards;
and (iv) all previously granted IPUs will be immediately redeemed and in
calculating the Redemption Amount it shall be assumed that the Performance Goal
has been achieved and that the fair market value of the Company's
26
<PAGE> 29
Common Stock is equal to the average price of the Company's Common Stock during
the five business days preceding the occurrence of a special acceleration. The
"Acceleration Price" is the excess over the option price of the highest of (i)
the highest reported sales price of the Company's Common Stock in the prior
sixty days, (ii) the highest price included in any report on Schedule 13D
referred to above paid within the prior sixty days, (iii) the highest tender
offer price paid, and (iv) the fixed per share price in any merger,
consolidation or sale of all or substantially all of the Company's assets.
The Board of Directors does not consider the special acceleration
provisions of the 1995 Plan to have any significant deterrent effect on a
potential change in control of the Company; however, if a change in control
occurs, such provisions will result in an acceleration of the dates on which the
Company will incur certain costs and participants will receive certain benefits
under the Plan and in this respect may be considered to have an anti-takeover
effect.
FEDERAL INCOME TAX EFFECTS
Under present federal income tax laws, awards granted under the Plan will
have the following tax consequences.
The granting of a Non-Qualified Stock Option will not result in taxable
income at the time it is granted. At the time of exercise, the employee will
realize taxable ordinary income in an amount equal to the excess of the fair
market value of the shares acquired over the option price for those shares and
the Company will be entitled to a corresponding deduction. Gains or losses
realized by the employee upon disposition of such shares will be treated as
long-term or short-term capital gains and losses, with the basis for purposes of
computing such gain or loss equal to the amount paid for the shares plus the
amount of ordinary income previously recognized.
The holder of an Incentive Stock Option ("ISO") realizes no taxable income
either at the time of grant or exercise and the Company is entitled to no
deduction either at the time of grant or exercise of an ISO, if the optionee
was, at all times, an employee of the Company or a subsidiary during the period
beginning on the date of the granting of the option and ending on the date three
months prior to the date of exercise (within one year if the optionee is
disabled) and does not sell or otherwise dispose of the stock either (i) within
two years from the date of grant of the ISO or (ii) within one year after the
transfer of such stock to him. After the death of an optionee, such employment
and holding periods are inapplicable. Upon ultimate sale of the stock, any gain
will be taxed as long-term capital gain if the optionee did not dispose of the
stock either (i) within two years from the date of grant of the ISO or (ii)
within one year after the transfer of such stock to him. Under these
circumstances, the Company will not be entitled to a deduction either upon
exercise of the ISO or sale of the option stock. If the holding period
requirements are not met, any gain realized upon disposition will be taxed as
ordinary income to the extent of the excess of fair market value of the shares
at the time of exercise over the
27
<PAGE> 30
exercise price (the "spread") and the Company will be entitled to a
corresponding deduction. Any additional gain over and above the fair market
value of the stock on the date of exercise will be taxed as a short-term or
long-term capital gain depending upon the holding period for the stock.
Under current federal income tax law, the spread at the time of exercise of
an ISO will be considered an item of tax preference to the optionee and will
have to be considered when making the alternative minimum tax calculation for
the tax year in which the ISO is exercised.
An employee will not be subject to tax at the time a Stock Appreciation
Right ("SAR") or an Individual Performance Unit ("IPU") is granted. The amount
of cash or the fair market value of shares received upon exercise of a SAR or
redemption of an IPU will be taxable to the employee at ordinary income tax
rates. A corresponding deduction will be allowed to the Company.
An employee will not be taxed at the date of grant of Restricted Stock
Rights or the transfer of Restricted Common Stock, but will be taxed at ordinary
income rates on the fair market value of any Restricted Common Stock as of the
date that the restrictions lapse, unless the employee elected under Section
83(b) to include in income the fair market value of the Restricted Common Stock
within thirty days of transfer of the Restricted Common Stock. The Company will
be entitled to a corresponding deduction. Any disposition of shares after
restrictions lapse will be subject to the regular rules governing long-term and
short-term capital gains and losses, with the basis for this purpose equal to
the fair market value of the shares at the end of the restricted period (or the
date of transfer, if the employee elects to be taxed on the fair market value of
the Restricted Common Stock upon transfer). Amounts equivalent to dividends
received by an employee on Restricted Stock Rights and dividends received by an
employee during the restricted period will be taxable to the employee at
ordinary income tax rates and will be deductible by the Company unless the
employee has elected to be taxed on the fair market value of the Restricted
Common Stock upon transfer, in which case they will thereafter be taxable to the
employee as dividends and will not be deductible by the Company. If an employee
elects to include the value of the Restricted Common Stock in income at the time
of transfer and subsequently forfeits the Restricted Common Stock, no deduction
or loss for the amount included in income as a result of the election will be
allowed to the employee and the Company will be required to include as ordinary
income any deduction which it originally claimed for the Restricted Common
Stock.
Performance Awards will not be taxable at the time of grant but will
instead be taxable to the employee at ordinary income tax rates when received. A
corresponding deduction will be allowed the Company.
For tax years beginning after January 1, 1994, the Federal income tax
rules limit the deductibility of certain compensation for the Chief Executive
Officer and certain other executive
28
<PAGE> 31
officers who are employed at the end of the year to $1 million per year.
However, the tax rules also provide that "performance-based compensation" paid
under a plan approved by shareholders is generally not subject to this limit on
deductibility. Shareholder approval of the 1995 Plan is required to conform
certain aspects thereof to the requirements of "performance based compensation."
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding the security
ownership of each class of equity securities of the Company owned by each of the
named executive officers:
<TABLE>
<CAPTION>
Shares of Common Stock
Beneficially Owned
as of March 14,
Name of Beneficial Owner 1995(1)
- - ------------------------------------------------------------------ ----------------------
<S> <C>
James J. Glasser.................................................. 310,422
Ronald H. Zech.................................................... 83,812
David M. Edwards.................................................. 21,640
William L. Chambers............................................... 12,000
John F. Chlebowski, Jr............................................ 39,372
</TABLE>
- - ---------------
(1) Includes shares which may be obtained by exercise of previously granted
options within 60 days of March 14, 1995 by Mr. Glasser (165,000), Mr. Zech
(64,000), Mr. Edwards (19,500), Mr. Chambers (12,000) and Mr. Chlebowski
(30,000). Each person has sole investment and voting power (or shares such
powers with his spouse). Mr. Glasser beneficially owned 1.56% of the
Company's outstanding shares of Common Stock. Each of the other named
executive officers owned less than 1% of the Company's outstanding shares
of Common Stock.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following is the only person known to the Company or its management who
beneficially owned as of March 14, 1995 more than 5% of the Company's Common
Stock:
<TABLE>
<CAPTION>
Percent
Shares of
Beneficially Common
Name and Address of Beneficial Owner Owned Stock
- - ------------------------------------------------------------ --------- ------
<S> <C> <C>
State Farm Mutual Automobile Insurance Company(1)........... 3,172,800 15.92
One State Farm Plaza
Bloomington, IL
</TABLE>
- - ---------------
(1) According to the Schedule 13G dated January 28, 1995 furnished to the
Company, State Farm Mutual Automobile Insurance Company ("State Farm") and
certain affiliated
29
<PAGE> 32
entities, each of which owns shares of Common Stock with sole voting and
investment power, may be deemed to constitute a "group" under the
regulations of the Securities and Exchange Commission with regard to the
beneficial ownership of 3,172,800 shares of Common Stock. State Farm and
each of the entities disclaim that they are part of a group.
APPROVAL OF APPOINTMENT OF AUDITORS
The Board of Directors has appointed the firm of Ernst & Young LLP to audit
the Company's financial statements, subject to approval by the shareholders.
Ernst & Young LLP, or a predecessor thereof, has served in this capacity since
1916. The Board proposes that the shareholders approve such appointment.
However, if not approved, the Board will reconsider the selection of independent
auditors.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting, will have the opportunity to make a statement if they so desire,
and will be available to respond to appropriate questions by shareholders.
The Board of Directors recommends that the shareholders vote for this
proposal.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the Company's 1996 Annual
Meeting must be received by the Company no later than November 18, 1995 and must
otherwise comply with the requirements of the Securities and Exchange Commission
to be considered for inclusion in the Company's proxy statement and form of
proxy relating to that meeting.
30
<PAGE> 33
OTHER INFORMATION
On August 14, 1994 the Company continued the liability policies initially
procured in 1986 from Corporate Officers and Directors Assurance Ltd. ("CODA")
and A.C.E. Insurance Company Ltd. ("ACE"). On August 14, 1994, the Company
purchased a policy from Illinois National Insurance Co. ("Illinois National")
that insures the Company in the event the Company is required to indemnify a
director or officer. The Illinois National policy also insures directors and
officers for those instances in which they may not be indemnified by the
Company. Both the CODA and ACE policies insure only directors and officers and
only for those instances in which they may not be indemnified by the Company.
The ACE and Illinois National policies expire on August 14, 1995. The CODA
policy expires on August 14, 1997. At the inception of the CODA policy, the
Company prepaid the premium for a three year period. On each anniversary date
thereafter, a renewal premium is paid and upon payment of such premium, the CODA
policy is automatically continued to a date one year beyond its previously
stated expiration date. During 1994, the Company paid premiums of $154,000 to
CODA, $96,400 to ACE and $340,000 to Illinois National.
The Board of Directors does not know of any matters to be presented at the
meeting other than those mentioned above. If any other matters do come before
the meeting, the holders of the proxy will exercise their discretion in voting
thereon.
By order of the Board of Directors
David M. Edwards
Secretary
31
<PAGE> 34
EXHIBIT A
GATX CORPORATION
1995 LONG TERM INCENTIVE COMPENSATION PLAN
I. GENERAL
1. Purpose. The purpose of the 1995 Long Term Incentive Compensation Plan
(the "Plan") is to promote the long term financial interests of the Company by
(i) attracting and retaining executive personnel possessing outstanding ability;
(ii) further motivating such individuals by means of growth-related incentives
to achieve long-range goals; (iii) providing incentive compensation
opportunities, in the form of Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Restricted Stock Rights, Restricted Common
Stock, Performance Awards and Individual Performance Units (each as described
below) which are competitive with those of other major corporations; and (iv)
furthering the identity of interests of participating employees with those of
the Company's shareholders through opportunities for increased stock ownership.
2. Administration. The Plan shall be administered by the Compensation
Committee of the Board of Directors of the Company (the "Committee"). The
Committee shall have such powers to administer the Plan as are delegated to it
by the Plan or the Board of Directors, including full authority to: (i)
interpret the Plan; (ii) prescribe, amend and rescind rules and regulations
pertaining to the Plan; (iii) determine the terms and provisions of each Stock
Option and Stock Appreciation Right, and Restricted Common Stock agreement
between the Company and a Participant, and the number of Individual Performance
Units to be granted to a Participant; (iv) establish Company performance goals
for purposes of the Plan; and (v) make all other determinations deemed necessary
or advisable for the administration of the Plan. To the extent necessary to
conform the Plan, and the awards under the Plan, to Rule 16b-3 of the Securities
and Exchange Commission, no member of the Committee shall be eligible, or within
one year prior to appointment to the Committee shall have been eligible, to
participate in the Plan or in any other plan of the Company or any affiliate of
the Company under which stock, stock options or stock appreciation rights may be
granted.
3. Participants. Except as otherwise specifically provided, Participants in
the Plan shall consist of such key employees of the Company and its subsidiaries
as the Committee in its sole discretion may select from time to time to receive
Stock Options, Stock Appreciation Rights, Restricted Stock Rights, Restricted
Common Stock, Performance Awards or Individual Performance Units. The Committee
may delegate to appropriate officers of the Company who are also directors of
the Company authority to determine participation in the Plan by other than
officers of the Company, and the extent of participation by each non-officer
employee of the Company or any subsidiary.
<PAGE> 35
4. Shares. One million five hundred thousand (1,500,000) shares of Common
Stock, together with any shares of Common Stock authorized under the 1985 Long
Term Incentive Compensation Plan (the "1985 Plan") which are unissued as of the
date of adoption hereof, and which are not subsequently issued pursuant to
awards under the 1985 Plan that are outstanding on that date, with such
adjustment in such number of shares as may be made pursuant to the last sentence
of this paragraph I-4, shall be available for issue upon the exercise of Stock
Options, Stock Appreciation Rights and Restricted Stock Rights granted under the
Plan, for award in the form of Restricted Common Stock and for redemption of
Individual Performance Units. Such shares may be authorized and unissued shares
or treasury shares (including, in the discretion of the Board of Directors of
the Company, shares purchased in the open market) of Common Stock. If a Stock
Option granted under the Plan expires or is terminated for any reason without
having been exercised in full for Common Stock (including those which terminate
by reason of the exercise of a Stock Appreciation Right in accordance with the
provisions of Part IV below) or if a Restricted Stock Right, Restricted Common
Stock or Individual Performance Unit awarded under the Plan is forfeited for any
reason, the shares not acquired or forfeited shares, as the case may be, shall
(unless the Plan shall have terminated) again become available for purposes of
the Plan. In the event of a merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, spin-off or other change in
corporate structure or capitalization affecting the Common Stock, appropriate
adjustment shall be made with respect to the number and kind of shares (or other
securities) optioned or awarded or subject to being optioned or awarded under
the Plan and in the sole discretion of the Board of Directors such adjustments
in price and other adjustments as it deems equitable may be made.
5. Amendment. The Board of Directors of the Company may amend the Plan from
time to time, except that without the approval of the holders of a majority of
the outstanding shares of Common Stock entitled to vote at a duly held meeting
of the shareholders, the number of shares of Common Stock which may be issued
under the Plan may not be increased except as provided in paragraph I-4. No
amendment of the Plan, however, may, without the consent of a Participant, make
any changes in any outstanding Stock Options, Stock Appreciation Rights,
Restricted Stock Rights, Restricted Common Stock, Performance Award or
Individual Performance Units theretofore granted the Participant which would
adversely affect the Participant's rights under the Plan.
6. Termination. The Board of Directors of the Company may terminate the
Plan at any time. No Stock Option or Stock Appreciation Right shall be granted
and no restricted Stock Right, Restricted Common Stock, Performance Award or
Individual Performance Unit shall be awarded after the Plan is terminated for
any reason. However, termination of the Plan shall not affect the validity of
any Stock Option or Stock Appreciation Right theretofore granted under the Plan
or any award of Restricted Stock Rights, Restricted Common Stock, Performance
Award or Individual Performance Units theretofore made under the Plan.
A-2
<PAGE> 36
7. No Employment Right. Participation in the Plan does not confer upon any
employee any right with respect to continued employment by the Company or any
subsidiary, or limit in any way the right of the Company or any subsidiary to
terminate an employee's services, responsibilities, duties and authority to
represent the Company or any subsidiary at any time for any reason.
II. INCENTIVE STOCK OPTIONS
1. Grants. The Committee shall designate the Participants to whom Incentive
Stock Options, as described in the Internal Revenue Code of 1986, as amended
(the "Code"), are to be granted under this Part II and determine the number of
shares to be offered to each of them. Each Incentive Stock Option shall be
evidenced by an agreement between the Participant and the Company. The aggregate
fair market value of shares of Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by any individual during any
calendar year under this Plan and each other stock option plan of the Company
and any parent or subsidiary thereof shall not exceed $100,000. Subject to any
adjustment made under the last sentence of paragraph I-4, the aggregate number
of Incentive Stock Options and Non-Qualified Stock Options granted to any
Participant during any calendar year, regardless of when first exercisable,
shall not exceed seventy-five thousand (75,000). For all purposes of the Plan,
the term "fair market value" of a share of Common Stock means the average of the
highest and lowest prices at which a share of Common Stock is traded on the date
as of which the determination is being made as quoted on the New York Stock
Exchange Composite Transactions or other principal market quotation selected by
the Committee or, if Common Stock is not traded on that date, the average of the
highest and lowest prices on the next preceding day on which such stock is
traded.
2. Price. The purchase price of each Incentive Stock Option shall be
determined by the Committee; provided, however, that in no instance shall such
price be less than one hundred percent of the fair market value of a share of
Common Stock on the date the option is granted (the "Option Date") or par value,
whichever is higher. The full purchase price of each share purchased upon the
exercise of any Incentive Stock Option shall be paid in cash or shares of Common
Stock, or both, at the time of such exercise (or by such other method as may be
satisfactory to the Committee) and, as soon as practicable thereafter, a
certificate representing the shares so purchased shall be delivered to the
person entitled thereto. A Participant shall not have any rights of a
shareholder with respect to the shares of Common Stock subject to an option
granted the Participant until such shares are purchased upon exercise of the
option.
3. Exercise. Subject to the following provisions of this paragraph and the
following provisions of paragraph II-4, unless sooner terminated, all Incentive
Stock Options granted to a Participant on an Option Date may be exercised
commencing on a date no earlier than one
A-3
<PAGE> 37
year from the Option Date as determined by the Committee. The Committee may, in
its discretion, accelerate the date on which all, or any portion, of the
Incentive Stock Options granted to a Participant may be exercised.
4. Termination. Each Incentive Stock Option granted to a Participant shall
terminate on the earlier of the tenth anniversary of the Option Date or, subject
to the provisions of the following sentence, three months after the date the
Participant's employment by the Company and its subsidiaries is terminated for
any reason. That portion of an Incentive Stock Option which is exercisable as of
the date on which a Participant's employment is terminated by reason of his
death, disability (as determined by the Committee) or retirement under a Company
or subsidiary retirement plan shall terminate on the earlier of the tenth
anniversary of the Option Date on which it was granted or one year after the
date of termination of employment by reason of death or disability (as
determined by the Committee) or five years after the date of retirement, as the
case may be.
5. Transferability. An Incentive Stock Option, by its terms, may not be
transferred by a Participant other than by will or the laws of descent and
distribution and during the lifetime of a Participant shall be exercisable only
by the Participant.
III. NON-QUALIFIED STOCK OPTIONS
1. Grants. The Committee shall designate the Participants to whom
Non-Qualified Stock Options are to be granted under this Part III and determine
the number of shares to be offered to each of them. Each Non-Qualified Stock
Option shall be evidenced by an agreement between the Participant and the
Company. Subject to any adjustment made under the last sentence of paragraph
I-4, the aggregate number of Non-Qualified Stock Options and Incentive Stock
Options granted to any Participant during any calendar year shall not exceed
seventy-five thousand (75,000).
2. Price. The purchase price of each Non-Qualified Stock Option shall be
determined by the Committee; provided, however, that in no instance shall such
price be less than one hundred percent of the fair market value of a share of
Common Stock of the Company on the date the option is granted (the "Option
Date") or par value, whichever is higher. The full purchase price of each share
purchased upon the exercise of any Non-Qualified Stock Option shall be paid in
cash or shares of Common Stock, or both, at the time of such exercise (or by
such other method as may be satisfactory to the Committee) and, as soon as
practicable thereafter, a certificate representing the shares so purchased shall
be delivered to the person entitled thereto. A Participant shall not have any
rights of a shareholder with respect to the shares of Common Stock of the
Company subject to an option granted the Participant until such shares are
purchased upon exercise of the option.
A-4
<PAGE> 38
3. Exercise. Subject to the provisions of this paragraph and the provisions
of paragraph III-4, unless sooner terminated, all Non-Qualified Stock Options
granted to a Participant on an Option Date may be exercised commencing on a date
no earlier than one year from the Option Date as determined by the Committee.
The Committee may, in its discretion, accelerate the date on which all, or any
portion, of the Non-Qualified Stock Options granted to a participant may be
exercised.
4. Termination. Each Non-Qualified Stock Option granted to a Participant
shall terminate on the earlier of the tenth anniversary of the Option Date or,
subject to the provisions of the following sentence, three months after the date
the Participant's employment by the Company and its subsidiaries is terminated
for any reason. That portion of a Non-Qualified Stock Option which is
exercisable as of the date on which a Participant's employment is terminated by
reason of the Participant's death, disability (as determined by the Committee)
or retirement under a Company or subsidiary retirement plan shall terminate on
the earlier of the tenth anniversary of the Option Date on which it was granted
or one year after the date of termination by reason of death or disability (as
determined by the Committee) or five years after the Participant's retirement,
as the case may be.
5. Transferability. A Non-Qualified Stock Option granted to a Participant
may not be transferred by the Participant other than by will or the laws of
descent and distribution and during the lifetime of a Participant shall be
exercisable only by the Participant.
IV. STOCK APPRECIATION RIGHTS
1. Grantees. The Committee shall designate the Participants to whom Stock
Appreciation Rights are to be granted under this Part IV and determine the
number to be granted to each of them. Each Stock Appreciation Right shall be
evidenced by an agreement between the Participant and the Company. If a
Participant to whom a Stock Appreciation Right has been granted is subject to
Sections 16(a) and 16(b) of the Securities Exchange Act of 1934, the Committee
may, at any time, impose such conditions and limitations to the exercise of such
Stock Appreciation Right as the Committee deems necessary or desirable in order
to comply with the requirements of Sections 16(a) and 16(b) and the rules and
regulations issued thereunder, or to obtain exemption therefrom.
2. Grants. Stock Appreciation Rights may be granted in tandem with a
related Stock Option, in which event the Participant may elect to exercise
either the Stock Appreciation Right or the Stock Option but not both, as to any
of the same shares subject to the Stock Option and the Stock Appreciation Right.
A Stock Appreciation Right granted to a Participant may be granted on the Option
Date of such option or in the case of Non-Qualified Stock Options as of that
Option Date or at any time thereafter.
A-5
<PAGE> 39
3. Exercise. Subject to the following provisions of this paragraph and the
provisions of paragraph IV-5, unless sooner terminated, all Stock Appreciation
Rights granted to a Participant may be exercised commencing on a date no earlier
than the later of six (6) months from the date of grant or one year from the
Option Date as determined by the Committee; provided, however, that a Stock
Appreciation Right may be exercised only to the extent a related Stock Option is
surrendered. The Committee may, in its discretion, accelerate the date on which
all, or any portion, of the Stock Appreciation Rights granted to a Participant
may be exercised to the date to which a related Stock Option has been
accelerated in accordance with the provisions of either paragraph II-3 or III-3.
4. Payment. A Participant to whom a Stock Appreciation Right has been
granted may elect, during any period that such Stock Appreciation Right is
exercisable and subject to such limitations as the Committee may have imposed,
to receive from the Company in exchange therefor an amount (net of applicable
employee withholding taxes) equal to the product of (i) the excess, if any, of
the fair market value of a share of Common Stock on the date of the exchange
over the option price of the related Stock Option and (ii) the number of shares
of Common Stock covered by the related Stock Option, or portion thereof,
surrendered. Payment of the Company's obligations arising out of the exchange of
a Stock Appreciation Right may be made in cash, Common Stock (valued at its fair
market value at date of exchange) or partly in each, as the Committee shall
decide.
5. Termination. Subject to the following sentence, each Stock Appreciation
Right shall terminate on the earlier of the tenth anniversary of the Option Date
or, subject to the provisions of the following sentence, three months after the
date the Participant's employment by the Company and its subsidiaries is
terminated for any reason. Any Stock Appreciation Right which is exercisable as
of the date on which a Participant's employment is terminated by reason of the
Participant's death, disability (as determined by the Committee) or retirement
under a Company or subsidiary retirement plan shall terminate on the earlier of
the tenth anniversary of the Option Date on which it was granted or one year
after the date of termination by reason of death or disability (as determined by
the Committee) or five years after the Participant's retirement, as the case may
be.
6. Transferability. A Stock Appreciation Right granted to a Participant may
not be transferred by the Participant other than by will or the laws of descent
and distribution and during the lifetime of a Participant shall be exercisable
only by the Participant.
V. RESTRICTED STOCK AWARDS
1. Grants. Grants of Restricted Common Stock or Restricted Stock Rights may
be made from time to time to such officers and key employees of the Company and
its subsidiaries as may be selected by the Committee. On each Common Stock
dividend payment date, each Participant shall be credited with an amount equal
to the dividend paid on that date on a share
A-6
<PAGE> 40
of Common Stock, multiplied by the Participant's number of shares of Restricted
Common Stock or Restricted Stock Rights that have not been terminated in
accordance with the following provisions of this Part V. Such amounts together
with interest thereon shall be paid to the Participant at such time or times as
the Committee shall decide.
2. Awards. Such grant of Restricted Common Stock or Restricted Stock Rights
shall be contingent upon the Participant's continuing employment with the
Company or its subsidiaries for a period to be specified by the Committee (the
"Performance Period") and shall be subject to such additional terms and
conditions as the Committee in its sole discretion deems appropriate, including,
but not by way of limitation, restrictions on the sale or other disposition of
such shares during the Performance Period or for a period of time thereafter.
The length of Performance Periods may vary among Participants.
At the end of such period of employment by the Company and its subsidiaries
as shall be determined by the Committee (but not less than six months and not
extending beyond the last day of the Performance Period), the Restricted Stock
Right granted to a Participant shall be automatically exchanged for a number of
shares of Restricted Common Stock equal to the number of Restricted Stock Rights
exchanged.
Each stock certificate issued in respect of shares of Restricted Common
Stock shall be registered in the name of the Participant and deposited with the
Company.
Subject to the foregoing restrictions, and unless and until the shares are
forfeited, a Participant shall have all of the rights of a holder of Common
Stock with respect to the shares of Restricted Common Stock awarded the
Participant in accordance with the provisions of this Part V; provided, however,
that as provided in paragraph 1 of this Part V, any dividends paid on a share of
such stock, together with interest thereon, shall be accrued and paid to the
Participant at such time or times as the Committee shall decide.
3. Distribution. The shares of Restricted Common Stock awarded to a
Participant with respect to a Performance Period shall be distributed to the
Participant, free of all restrictions, in such number (usually three) of equal,
or substantially equal, annual installments, measured from the last day of that
Performance Period, as the Committee shall determine.
4. Forfeitures. Except as provided below, or except as otherwise determined
by the Committee, if a Participant's employment with the Company and its
subsidiaries is terminated for any reason, the Participant shall forfeit all
Restricted Stock Rights, any undistributed Restricted Common Stock previously
awarded to the Participant with respect to any Performance Period, any
undistributed dividends accrued for the Participant and any undistributed
dividend equivalents credited to the Participant, together with any interest
accrued thereon. If a Participant's employment with the Company and its
subsidiaries is terminated by reason of a Participant's death, disability (as
determined by the Committee) or retirement under a Company or subsidiary
retirement plan, the Participant or, in the event of the Participant's
A-7
<PAGE> 41
death, the person or persons entitled thereto by will or the laws of descent and
distribution, shall be entitled to receive, free of restrictions, a distribution
of the undistributed shares of Restricted Common Stock, if any, previously
awarded to the Participant, all Performance Awards under Part VI for which
Performance Goals have been met and, together with interest thereon, any
undistributed dividends accrued for the Participant and any undistributed
dividend equivalents credited to the Participant.
VI. PERFORMANCE AWARDS
1. Awards. Any Participant designated by the Committee to participate in
Part V of the Plan may be designated as a Participant under this Part VI.
2. Performance Goal. For each Performance Period the Committee may
establish Performance Goals. In establishing any Performance Goal the Committee
may use such measures of the performance of the Company over the Performance
Period as the Committee deems appropriate. Performance Goals may vary among
Participants. For each Performance Period, the Committee shall also establish
appropriate criteria to determine the basis upon which a Performance Award shall
be made under the Plan with respect to that period.
3. Payment and Amount. If the criteria for payment established by the
Committee relating to a Performance Goal established for any Performance Period
is met, a Participant receiving an installment distribution of Restricted Common
Stock in accordance with the provisions of paragraph V-3 with respect to that
Performance Period, who has also been designated as a Participant under this
Part VI, shall also be paid a Performance Award at the time the distribution is
made to the Participant. The amount of a Participant's Performance Award shall
not in any event exceed the aggregate fair market value of the installment
distribution of shares of Restricted Common Stock.
4. Forfeiture. Except as provided below, and except as otherwise determined
by the Committee, if a Participant's employment with the Company and its
subsidiaries is terminated for any reason prior to the payment of any portion of
a Performance Award, the Participant shall forfeit all rights to receive any
portion of the Performance Award remaining unpaid at such termination. If a
Participant's employment with the Company and its subsidiaries is terminated by
reason of the Participant's death, disability (as determined by the Committee)
or retirement under a Company or subsidiary retirement plan, the Participant or,
in the event of the Participant's death, the person or persons entitled thereto
by will or the laws of descent and distribution, shall be entitled to receive,
free of restrictions, a distribution of all Performance Awards under Part VI for
which Performance Goals have been met.
VII. INDIVIDUAL PERFORMANCE UNITS
1. Grant. For each Performance Period, the Committee may, from time to
time, grant Individual Performance Units to such officers and other key
employees of the Company and its
A-8
<PAGE> 42
subsidiaries as it may select. The number of Individual Performance Units
granted will be determined by dividing a specified percentage (as determined by
the Committee and not exceeding one hundred percent (100%)) of the Participant's
base salary by the fair market value of the Company's Common Stock on the date
of grant. On each Common Stock dividend payment date, each Individual
Performance Unit (including additional Individual Performance Units previously
credited to it) shall be increased by an amount equal to the dividend paid on
that date on a share of the Company's Common Stock, reinvested in additional
Individual Performance Units in an amount equivalent to an investment of such
dividend in shares of the Company's Common Stock at its fair market value on
such date.
2. Award. Except as provided in paragraph VII-5, awards of Individual
Performance Units shall be contingent upon the Participant's continuing
employment with the Company or its subsidiaries throughout the specified
Performance Period, and shall be subject to such additional terms and conditions
as the Committee in its sole discretion deems appropriate. The length of
Performance Periods may vary among Participants.
3. Performance Goals. For each Performance Period the Committee may
establish Performance Goals which shall be based upon achievement of specific
levels of return on equity. In determining the extent to which a Performance
Goal has been achieved, the Committee shall exclude the effect, if any, on the
Company's income or equity, of changes in generally accepted accounting
principles or Federal income tax laws or regulations, adopted or effective
subsequent to the establishment of such Performance Goal as it deems
appropriate. Performance Goals may vary among Participants.
4. Payment and Amount. If the Performance Goal established by the Committee
for a Performance Period has been achieved, the Company shall redeem the
Individual Performance Units and pay to the Participant an amount (the
"Redemption Amount") equal to not more than three (3) times -- depending upon
the extent to which the Performance Goal has been achieved or exceeded -- the
product of (i) the number of Individual Performance Units credited to the
Participant's account at the end of a Performance Period (including reinvested
dividends), and (ii) the fair market value of the Company's Common Stock on the
date of payment. Payment of the Redemption Amount to the Participant may, in the
discretion of the Committee, be made in cash and in Common Stock of the Company,
and will be made as soon as practicable following expiration of the applicable
Performance Period and certification by the Committee of the Redemption Amount.
The cash payment shall in no event exceed fifty percent (50%) of the Redemption
Amount.
5. Forfeitures. Except as provided below, or except as otherwise determined
by the Committee, if a Participant's employment with the Company and its
subsidiaries is terminated for any reason, the Participant shall forfeit all
unredeemed Individual Performance Units previously granted to the Participant
with respect to any Performance Period and any undistributed dividends allocable
thereto. To the extent the Performance Goals are not
A-9
<PAGE> 43
achieved, Individual Performance Units not redeemed shall be forfeited. If,
prior to completion of a Performance Period, a Participant's employment with the
Company and its subsidiaries is terminated by reason of the Participant's death,
disability (as determined by the Committee) or retirement under a Company or
subsidiary retirement plan, the Participant, or in the event of the
Participant's death, the person(s) entitled thereto by will or the laws of
descent and distribution, shall, if the applicable Performance Goal is attained,
receive the Redemption Amount at the time of payment to other Participants. In
the event of a Participant's retirement, the Redemption Amount shall be prorated
to the date of such Participant's retirement. Individual Performance Units shall
be forfeited to the extent not redeemed.
VII. SPECIAL ACCELERATION IN CERTAIN EVENTS
1. Special Acceleration. Notwithstanding any other provisions of the Plan,
a Special Acceleration of awards outstanding under the Plan shall occur with the
effect set forth in paragraph VIII-2 at any time when any one of the following
events has taken place:
(a) The Company receives a report on Schedule 13D reporting the beneficial
ownership by any person (other than a Participant in the Plan) of 20% or
more of the Company's outstanding Common Stock, except that if such
receipt shall occur during a tender offer or exchange offer by any
person other than the Company or a wholly owned subsidiary of the
Company, or a Participant in the Plan, Special Acceleration shall not
take place until the conclusion of such offer;
(b) If, upon conclusion of a tender or exchange offer, any person other
than the Company or a wholly owned subsidiary of the Company, or a
Participant in the Plan; announces that it has accepted for purchase a
sufficient number of shares of Common Stock pursuant to such tender
offer or exchange offer which will result in such person becoming
directly or indirectly the beneficial owner of 20% or more of the
Company's outstanding Common Stock;
(c) Holders of the necessary number of shares of Common Stock authorize or
approve any merger in which the Company is not the surviving corporation
or survives only as a subsidiary of another corporation, or
consolidation or sale of all or substantially all of the assets of the
Company; or
(d) During any period of twelve months or less individuals who at the
beginning of such period constituted a majority of the Board of
Directors cease for any reason to constitute a majority thereof unless
the nomination or election of such new directors was approved by a vote
of at least two-thirds of the directors then still in office who were
directors at the beginning of such period.
A-10
<PAGE> 44
The terms used in this Part VIII and not defined elsewhere in the Plan
shall have the same meaning as such terms have in the Securities Exchange
Act of 1934, as amended, and the rules and regulations adopted thereunder.
2. Effect on Outstanding Awards. Upon a Special Acceleration pursuant to
paragraph VIII-I:
(a) All Stock Options then outstanding under Parts II and III shall
immediately become exercisable in full for the remainder of their terms,
provided that no Stock Option may be exercised by an officer of the
Company within six months of its date of grant; and each optionee shall
have the right during a period of thirty days following a Special
Acceleration to have the Company purchase any Non-Qualified Stock
Options which are then exercisable and as to which no Stock Appreciation
Rights have been granted at a cash purchase price computed in accordance
with paragraph (e) below and any Incentive Stock Options which are then
exercisable and as to which no Stock Appreciation Rights have been
granted at a cash purchase price equal to the product of (i) the excess,
if any, of the fair market value of a share of Common Stock computed in
accordance with paragraph II-I over the option price and (ii) the number
of shares of Common Stock covered by the Incentive Stock Option or
portion thereof surrendered, provided that the Company shall have the
right during such period to purchase any Incentive Stock Option as to
which no Stock Appreciation Rights have been granted at the purchase
price computed in accordance with paragraph (e) below;
(b) All Stock Appreciation Rights outstanding under Part IV shall
immediately become exercisable in full for a period of thirty days
following a Special Acceleration, subject to the provisions of paragraph
IV-5, with payment to be made solely in cash upon any exercise during
such period of a Stock Appreciation Right granted with respect to a
Non-Qualified Stock Option in an amount computed in accordance with
paragraph (e) below and in cash upon exercise during such period of a
Stock Appreciation Right granted with respect to an Incentive Stock
Option in an amount equal to the product of (i) the excess, if any, of
the fair market value of a share of Common Stock computed in accordance
with paragraph II-I over the exercise price of the related Stock Option
and (ii) the number of shares of Common Stock covered by the related
Stock Option, provided that the Company shall have the right during such
period to purchase any Stock Appreciation Right granted with respect to
an Incentive Stock Option (and cancel the related option) at the
purchase price computed in accordance with paragraph (e) below, provided
further that no Stock Appreciation Right may be exercised by an officer
within six months of its date of grant;
(c) All Restricted Stock Rights under Part V outstanding for at least six
months from the date of grant shall immediately be exchanged for a
number of shares of Common
A-11
<PAGE> 45
Stock equal to the number of Restricted Stock Rights so exchanged, and
all such shares of Common Stock, all other shares of Common Stock and
all interest, dividends or dividend equivalents then held by the Company
for Participants under Part V and all Performance Awards under Part VI
for which Performance Goals have been met shall then be immediately
distributed to Participants, free of all restrictions;
(d) The Company shall immediately redeem all Individual Performance Units
granted under Part VII. For purposes of calculation of the Redemption
Amount, it shall be assumed that the Performance Goal has been achieved,
and the Fair Market Value of the Company's Common Stock shall be
calculated in accord with paragraph (e) below; and
(e) Except as otherwise specified in paragraphs (a) and (b) above, the
purchase price for a Stock Option or a Stock Appreciation Right and the
amount to be paid upon exercise of a Stock Appreciation Right shall be
an amount equal to the product of (i) the excess, if any, of the highest
of (A) the highest reported sales price during the sixty days preceding
such exercise, (B) the highest purchase price shown in any Schedule 13D
referred to in paragraph VIII-I (a) as paid within the sixty days prior
to the date of such report, (C) the highest price paid in any tender
offer referred to in paragraph VIII-I (b) during the sixty days
preceding such exercise, or (D) the fixed formula cash price per share
specified in any transaction referred to in paragraph VIII-I (c) if such
price is determined on the date of such exercise, over the option price,
and (ii) the number of shares of Common Stock covered by the Stock
Option or Stock Appreciation Right, or portions thereof, surrendered.
The fair market value to be used in the calculation of the Redemption
Amount shall be equal to the average price of the Common Stock during
the five business days preceding the occurrence of a Special
Acceleration.
A-12
<PAGE> 46
[Logo]
<PAGE> 47
DIFFERENCE LETTER
1. The Notice of Annual Meeting page has a logo printed in the upper
left-hand corner.
2. Page 1 has a logo printed in the upper left hand corner.
3. The back cover of the Proxy Statement has a logo printed above the
Company's name.
4. There are 4 forms of proxy. Three versions are on a stock size of 7 1/2
X 4 5/8 and are printed in 2 colors, black and orange inks. The fourth
version is on a stock size of 7 3/8 X 3 1/4 and printed in black ink.
<PAGE> 48
- - --------------------------------------------------------------------------------
GATX CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR THE 1995 ANNUAL MEETING
The undersigned hereby constitutes and appoints James J.
Glasser, Ronald H. Zech, and David M. Edwards, and each of
them, his true and lawful agents and proxies with full
P power of substitution in each, to represent the
R
O undersigned at the Annual Meeting of Shareholders of GATX
X CORPORATION to be held at the office of the Company, 500
Y West Monroe Street, Chicago, Illinois, on Friday, April
28, 1995, at 9:00 A.M., and at any adjournment thereof, on
all matters coming before said meeting.
Dated: , 1995
------------------------
------------------------
Signature of Shareholder
This Proxy must be
signed exactly as name
appears hereon.
Executors,
administrators,
trustees, etc., should
give full title as such.
If the signer is a
corporation, please sign
full corporate name by
duly authorized officer.
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
(continued from other side)
This proxy when properly executed will be voted in the
manner directed herein by the undersigned shareholder. IF
NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3.
1. ELECTION OF DIRECTORS.
Nominees: Franklin A. Cole, James W. Cozad, James M.
Denny, William C. Foote, Deborah M. Fretz,
Richard A. Giesen, James J. Glasser, Miles L.
Marsh, Charles Marshall, Michael E. Murphy and
Ronald H. Zech.
/ / VOTE FOR all nominees listed, except as marked to
the contrary below (if any). (To withhold your vote
for any individual nominee print that
nominee's name on the line following.)
/ / VOTE WITHHELD FROM ALL NOMINEES.
2. ADOPTION OF 1995 LONG TERM INCENTIVE COMPENSATION PLAN
FOR / / AGAINST / / ABSTAIN / /
3. APPROVAL OF AUDITORS.
FOR / / AGAINST / / ABSTAIN / /
In their discretion, the Proxies are authorized to vote
upon other matters as may properly come before the
meeting.
------------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
------------------------------------------------
- - --------------------------------------------------------------------------------
<PAGE> 49
GATX CORPORATION
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
APRIL 22, 1994
P This Proxy is Solicited on Behalf of GATX Corporation's Board of Directors
R
O The undersigned hereby constitutes and appoints James J. Glasser, Paul A.
X Heinen, and John F. Chlebowski Jr., and each of them, his true and lawful
Y agents and proxies with full power of substitution in each, to represent the
undersigned at the Annual Meeting of Shareholders of GATX CORPORATION to be
held at the office of the Company, 500 West Monroe Street, Chicago, Illinois,
on Friday, April 22, 1994, at 9:00 A.M., and at any adjournment thereof, on
all matters coming before said meeting.
Please mark this proxy as indicated on the reverse side to vote on any
item. This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholders. If you wish to vote in accordance with
the Board of Directors' recommendations, please sign the reverse side; no boxes
need to be checked. If no direction is made, this proxy will be voted for
Proposals 1 and 2.
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE.
(Continued and to be signed on other side)
Please mark
/X/ your votes
------------------------------------------ as this
SALARIED EMPLOYEES RETIREMENT SAVINGS PLAN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR ITEMS 1 AND 2.
FOR WITHHELD
Item 1 - ELECTION OF DIRECTORS ALL FOR ALL
/ / / /
Nominees: Weston R. Christopherson, Franklin A. In their discretion,
Cole, James W. Cozad, Robert J. Day, James L. Dutt, the Proxies are
Deborah M. Fretz, Richard A. Giesen, James J. authorized to vote
Glasser, Charles Marshall and Michael E. Murphy. upon other matters as
may properly come
WITHHELD FOR: (Write that nominee's name in the before the meeting.
space provided below).
- - ---------------------------------------------------
Item 2 - APPROVAL OF AUDITORS. FOR AGAINST ABSTAIN
/ / / / / /
COMMENTS/ADDRESS CHANGE
Please mark this box if you have / /
written comments/address change
on the reverse side.
RECEIPT IS HEREBY ACKNOWLEDGED OF THE GATX CORPORATION NOTICE OF MEETING AND
PROXY STATEMENT.
Signature(s) _________________________________________ Date ____________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
<PAGE> 50
/ X / Please mark
your votes
as this
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
---------------- --------------- --------------- -------------
COMMON D. R. S. $2.50 PFD $3.875 PFD
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR ITEMS 1 AND 2 FOR WITHHELD
ALL FOR ALL
Item 1 - ELECTION OF DIRECTORS / / / /
Nominees: Weston R. Christopherson, Franklin A.
Cole, James W. Cozad, Robert J. Day, James L. Dutt,
Deborah M. Fretz, Richard A. Giesen, James J. In their discretion, the Proxies are authorized to vote
Glasser, Charles Marshall and Michael E. Murphy. upon other matters as may properly come before the meeting.
WITHHELD FOR: (Write that nominee's name in the
space provided below).
______________________________________________________________________________
Item 2 - APPROVAL OF AUDITORS. FOR AGAINST ABSTAIN
/ / / / / /
COMMENTS/ADDRESS CHANGE / /
Please mark this box if you have
written comments/address change
on the reverse side.
RECEIPT IS HEREBY ACKNOWLEDGED OF THE GATX CORPORATION
NOTICE OF MEETING AND PROXY STATEMENT.
Signature(s) ______________________________________________________ Date ___________________________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
</TABLE>
- - -------------------------------------------------------------------------------
GATX CORPORATION
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
APRIL 22, 1994
THIS PROXY IS SOLICITED ON BEHALF OF GATX CORPORATION'S BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints James J. Glasser, Paul
A. Heinen, and John F. Chlebowski Jr., and each of them, his true and lawful
agents and proxies with full power of substitution in each, to represent the
undersigned at the Annual Meeting of Shareholders of GATX CORPORATION to be
held at the office of the Company, 500 West Monroe Street, Chicago, Illinois,
on Friday, April 22, 1994, at 9:00 A.M., and at any adjournment thereof, on all
matters coming before said meeting.
PLEASE MARK THIS PROXY AS INDICATED ON THE REVERSE SIDE TO VOTE ON ANY
ITEM. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDERS. IF YOU WISH TO VOTE IN ACCORDANCE WITH
THE BOARD OF DIRECTORS' RECOMMENDATIONS, PLEASE SIGN THE REVERSE SIDE; NO BOXES
NEED TO BE CHECKED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 AND 2.
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
(Continued and to be signed on other side)
