<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:
[X] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive proxy statement
[ ] 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] No fee required.
[ ] 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
<TABLE>
<S> <C>
LOGO GATX CORPORATION
500 WEST MONROE STREET
CHICAGO, IL 60661
312-621-6200
</TABLE>
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 24, 1998, at 9:00 A.M., for the
purposes of:
1. electing directors;
2. adopting an amendment to the Company's 1995 Long Term Incentive
Compensation Plan in order to modify the performance measures used in
certain performance awards under the plan;
3. adopting an amendment to the Company's Certificate of Incorporation
to increase the number of shares of Common Stock authorized for
issuance;
4. approving the appointment of independent auditors for the year 1998;
5. transacting such other business as may properly come before the
meeting.
Only holders of Common Stock and both series of $2.50 Cumulative
Convertible Preferred Stock of record at the close of business on March 6, 1998
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 B. Anderson
Secretary
March 17, 1998
<PAGE> 3
<TABLE>
<S> <C>
LOGO GATX CORPORATION
500 WEST MONROE STREET
CHICAGO, IL 60661
312-621-6200
</TABLE>
March 17, 1998
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 ChaseMellon Shareholder Services to solicit proxies on behalf of the
Board of Directors for a fee not to exceed $6,500, plus reasonable out-of-pocket
expenses and disbursements. ChaseMellon Shareholder Services may solicit proxies
by mail, facsimile, telegraph or personal call. In addition, officers, directors
and employees of the Company, who will receive no extra compensation for their
services, may solicit proxies by mail, facsimile, telephone, telegraph or
personal call. The Annual Report for the year 1997, including financial
statements, was first mailed to all shareholders together with this proxy
statement on or about March 17, 1998.
VOTING SECURITIES
Only holders of Common Stock and both series of $2.50 Cumulative
Convertible Preferred Stock of record at the close of business on March 6, 1998
will be entitled to vote at the meeting or any adjournment thereof. As of that
date there were shares of the Common Stock and shares of the
$2.50 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.
Assuming that a quorum is present, the election of directors will require a
plurality of the votes cast. Ratification of auditors and adoption of an
amendment to the Long Term Incentive Compensation Plan 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.
Adoption of an amendment to the Company's Certificate of Incorporation to
increase the number of shares of Common Stock authorized for issuance will
require a majority of the shares outstanding, with the result that shares not
represented at the meeting, shares which abstain from voting on this matter and
broker non-votes will have the effect of votes against this proposal.
1
<PAGE> 4
ELECTION OF DIRECTORS
Nine 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.
NOMINEES FOR DIRECTORS
<TABLE>
<CAPTION>
Shares of
Common Stock
Beneficially
Owned as of
Director March 6,
Name and Principal Occupation Age Since 1998(1)
----------------------------- --- -------- ------------
<S> <C> <C> <C>
James M. Denny.............................................. 65 1995 2,164
Managing Director, William Blair Capital Partners, LLC
Richard Fairbanks........................................... 57 1996 1,710
Managing Director of Domestic & International Issues,
Center for Strategic & International Studies
William C. Foote............................................ 46 1994 1,428
Chairman of the Board Chief Executive Officer, USG
Corporation
Deborah M. Fretz............................................ 49 1993 1,549
Senior Vice President, Lubricants and Logistics, Sun
Company, Inc.
Richard A. Giesen........................................... 68 1982 1,547
Chairman of the Board and Chief Executive Officer,
Continental Glass & Plastic, Inc.
Miles L. Marsh.............................................. 50 1995 1,962
Chairman of the Board and Chief Executive Officer, Fort
James Corporation
Charles Marshall............................................ 68 1989(2) 4,847
Retired; Former Vice Chairman of the Board, American
Telephone and Telegraph Company
Michael E. Murphy........................................... 61 1990 2,847
Retired; Former Vice Chairman, Chief Administrative
Officer, Sara Lee Corporation
Ronald H. Zech.............................................. 54 1994 155,981(3)
Chairman of the Board, President and Chief Executive
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. Also includes phantom units of Common Stock credited to each
director's account as described below in the section entitled "Compensation
of Directors."
(2) Mr. Marshall previously served as a director of the Company from 1978 to
1982.
(3) This includes 126,500 shares Mr. Zech has the right to acquire within 60
days of March 6, 1998, under outstanding stock options issued under the
Company's Long Term Incentive Compensation Plan.
2
<PAGE> 5
ADDITIONAL INFORMATION CONCERNING NOMINEES
Mr. Denny was elected Managing Director, William Blair Capital Partners,
LLC, a general partner of a private equity fund affiliated with William Blair
and Co., in August 1995. Mr. Denny previously served as Vice Chairman of Sears,
Roebuck and Co., a merchandising and financial services company, from February
1992 until August 1995 and as Senior Vice President and Chief Financial Officer
of Sears from February 1988 through January 1992. Mr. Denny is a director of
Allstate Corporation, Gilead Sciences, Inc., Astra AB and Choice Point Inc.
Mr. Fairbanks, a former U.S. Ambassador at Large, was named Managing
Director of Domestic & International Issues at the Center for Strategic &
International Studies, a nonprofit public policy research institution providing
analysis on and assessment of the public policy impact of U.S. domestic, foreign
and economic policy, international finance and national security issues, in
April, 1994. Mr. Fairbanks previously served as Senior Counsel at the law firm
of Paul, Hastings, Janofsky & Walker from February 1992 until April 1994 and as
Senior Counsel for the Center for Strategic & International Studies from
February 1992 until April 1994. Mr. Fairbanks is also a director of Hercules,
Inc. and SEACOR SMIT Inc.
Mr. Foote was elected Chairman of the Board of USG Corporation, formerly
known as United States Gypsum Company, an international manufacturer of building
materials and industrial products, in April 1996, having been previously named
Chief Executive Officer of USG Corporation in January 1996. He also served as
President and Chief Operating Officer from January 1994 to January 1996. He
previously served as President and Chief Executive Officer of USG Interiors from
January 1993 to December 1993 and President & Chief Executive Officer of L&W
Supply Corporation from September 1991 to December 1993, both subsidiaries or
divisions of USG Corporation. Mr. Foote is also a director of Walgreen Co. 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, Lubricants and Logistics of Sun
Company, Inc., an energy company, in January 1997, having served as Senior Vice
President of Logistics since 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. Ms. Fretz is also a director of Cooper
Tire & Rubber Company.
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. Marsh was named Chairman of the Board and Chief Executive Officer of
Fort James Corporation, a producer of consumer and commercial tissue products
and food and consumer packaging formed through the merger of James River
Corporation and Fort Howard Corporation in August 1997, having served as
Chairman of the Board and Chief Executive Officer of James River Corporation
from October 1995 until August 1997. Mr. Marsh previously served as Chairman of
the Board and Chief Executive Officer of Pet Incorporated, a branded food
company, from April 1991 until February 1995. Mr. Marsh is also a director of
Whirlpool Corporation and Morgan Stanley Dean Witter, Discover & Co.
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 and Sundstrand Corporation.
3
<PAGE> 6
Mr. Murphy retired as Vice Chairman, Chief Administrative Officer of Sara
Lee Corporation, a diversified manufacturer of packaged food and consumer
products, in October, 1997, having served in that position since July, 1993 and
as its Chief Financial Officer from July 1993 to November 1994. Mr. Murphy
previously served as Executive Vice President, Chief Financial and
Administrative Officer of Sara Lee Corporation since June 1979. Mr. Murphy is
also a director of American General Corporation, Bassett Furniture Industries,
Incorporated, True North Communications, Inc., Northern Funds and Payless
ShoeSource, Inc.
Mr. Zech was elected Chairman of the Board in April 1996, having been
previously named Chief Executive Officer of the Company in January 1996, and
President in July 1994. Mr. Zech served as Chief Operating Officer from July
1994 to January 1996. Mr. Zech previously served as President and Chief
Executive Officer of GATX Capital Corporation from 1984 to 1994. Mr. Zech is
also a director of McGrath RentCorp and two 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. Murphy (Chairman), Denny,
Fairbanks and Marsh. 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 ensure 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 1997, there were two
meetings of the Audit Committee.
The Company's Compensation Committee members are Messrs. Denny (Chairman),
Giesen, Marshall and Murphy. The committee's functions include (i) approving the
Company's total compensation philosophy and periodically evaluating compensation
practices relative to such philosophy; (ii) approving salary changes,
compensation programs and employment arrangements applicable to elected
officers, subsidiary presidents and other employees whose salaries exceed a
level established by the Committee and, when the timing and business
circumstances make a meeting of the full Committee impractical, granting the
chief executive officer the authority to act on these matters after having made
every effort to first consult with the Committee chair; (iii) reviewing the
compensation levels and programs applicable to other employees whose incentive
payments exceed a level periodically established by the Committee; (iv)
recommending to the Board of Directors compensation programs and employment
arrangements for the chief executive officer; (v) administering the Company's
Long Term Incentive Compensation Plan and other executive compensation programs;
(vi) reviewing and approving significant changes to the Company's benefit
programs; (vii) evaluating the performance of the chief executive officer;
(viii) reviewing annual salary increases and salary ranges for the Company; (ix)
reviewing the Company's depth of management and plans for management development
and succession; (x) reviewing staffing changes among elected officers (except
the chief executive officer for which Board approval would be required) and
operating presidents; (xi) reviewing the compensation program for non-management
board members and recommending changes to the Board of Directors as appropriate;
and (xii) approving the Compensation Committee Report on Executive Compensation
for inclusion in the Company's annual proxy statement. During 1997, there were
four meetings of the Compensation Committee.
4
<PAGE> 7
The Company's Nominating Committee members are Messrs. Marshall (Chairman),
Foote, Giesen and Ms. Fretz. Mr. Zech 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. The committee will consider nominees
recommended by shareholders of the Company. Such nominations should be submitted
to the Nominating Committee, c/o David B. Anderson, 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.
During 1997, the Nominating Committee held two meetings.
The Company's Retirement Funds Review Committee members are Messrs. Foote
(Chairman), Fairbanks and Marsh 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 1997, there were two
meetings of the Retirement Funds Review Committee.
During 1997, there were seven meetings of the Board of Directors of the
Company: the regular annual meeting and six special meetings. Each director
attended at least 75% of the meetings of the Board and Committees held while a
member during 1997.
COMPENSATION OF DIRECTORS
Each non-officer director receives an annual retainer of $24,000 (50% in
cash and 50% in phantom units of Common Stock) and an annual grant of 250
phantom units of Common Stock. In addition, each non-officer director receives a
Board meeting attendance fee of $1,000 and a committee meeting attendance fee of
$1,000 for each meeting of a committee of the Board of which the director is a
member. The chairman of each committee receives $1,500 for each meeting
attended.
The annual retainer is paid quarterly in arrears at the end of each July,
October, January and April. Half of each quarterly installment will be paid in
cash and the balance in phantom stock units credited to each director's account
in an amount determined by dividing the amount of such payment by the average of
the high and low price of the Company's stock on the last trading day of the
month in which the quarterly installment is paid. The annual grant of 250
phantom units is credited in quarterly installments in arrears. The director's
phantom stock account will be credited with additional phantom stock units
representing dividends declared on the Company's Common Stock based on the
average of the high and low price of the Company's Common Stock on the date such
dividend is paid. At the expiration of each director's service on the board,
settlement of the phantom stock units will be made as soon as is reasonably
practical in Common Stock equal in number to the number of phantom stock units
then credited to his or her account. Any fractional units will be paid in cash.
Non-officer directors may also elect to defer receipt of the cash portion
of the director's retainer, meeting fees, or both. The amount so deferred
accumulates interest at a rate equal to the 20-year U.S. government bond rate.
One director elected to participate in this plan for 1997.
Directors who previously participated in the Executive Deferred Income
Plans ("EDIPs"; see page ) 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 annual yield of 24% on the fees deferred,
5
<PAGE> 8
with the exact yield dependent upon the age of the director at the time of his
or her participation. 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 beginning on page ) 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 , 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 EDIP 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.
6
<PAGE> 9
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 four most highly
compensated executive officers for the years indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
----------------------
Awards Payouts
------------ -------
Annual Compensation Securities
------------------------------------ Restricted Underlying
Other Annual Stock Options/SARs LTIP All Other
Name and Bonus Compensation Award(s) (# of Payouts Compensation
Principal Position Year Salary ($) ($)(1) ($) ($) shares) ($) ($)(2)
------------------ ---- ---------- ------ ------------ ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ronald H. Zech -- 1997 537,500 361,463 27,664(3) 0 32,000 0 9,308
Chairman of the Board, 1996 500,000 309,270 32,735 0 60,000 152,279 8,298
President and Chief Executive 1995 400,008 247,493 136,972 0 20,000 179,011 5,972
Officer
David B. Anderson -- 1997 290,333 156,743(4) 4,375 0 9,000 0 4,750
Vice President, Corporate 1996 281,146 128,071 4,375 0 10,000 0 3,781
Development, General Counsel 1995 142,797 316,115 1,641 0 20,000 0 0
and Secretary
David M. Edwards -- 1997 261,667 175,000 13,945 223,000(6) 9,500 0 5,729
Vice President, Finance & Chief 1996 235,000 107,050 13,945 0 10,000 0 5,323
Financial Officer 1995 214,167 109,892 17,887 0 10,000 0 4,790
William L. Chambers -- 1997 233,333 113,373 3,875 0 6,500 0 4,750
Vice President, Human Resources 1996 225,000 92,245 3,625 0 8,000 112,934 4,500
1995 218,338 100,828 3,625 0 8,000 0 4,500
Brian A. Kenney -- 1997 179,167 92,672(5) 3,175 0 3,000 0 4,750
Vice President, Treasurer 1996 156,875 70,763 10,795 0 3,000 0 0
1995 22,356 50,000 4,599 0 4,000 0 0
</TABLE>
- ---------------
(1) Amounts reflect bonus payments earned for the years set forth opposite the
specified payments.
(2) Includes contributions made by the Company to the Company's Salaried
Employees Retirement Savings Plan (the "Savings Plan") for 1997 in the
amount of $4,750 for Messrs. Zech, Edwards, Anderson, Chambers and Kenney,
and above-market amounts earned, but not currently payable, on compensation
previously deferred under the Company's 1984 and 1985 Executive Deferred
Income Plan for Messrs. Zech and Edwards of $4,558 and $979, respectively.
(3) Includes $55,433 paid by the Company to Mr. Zech for relocation expenses.
(4) Mr. Anderson joined the Company on June 26, 1995. The amount shown for Mr.
Anderson in the bonus column for 1995 includes $175,000 to compensate him
for the loss of benefits he would have received from his former employer had
he not accepted employment with the Company.
(5) Mr. Kenney joined the Company on November 9, 1995. The amount shown for Mr.
Kenney in the bonus column for 1995 compensated him for the loss of benefits
he would have received from his former employer had he not accepted
employment with the Company.
(6) A restricted stock award of 4,000 shares was granted to Mr. Edwards on June
9, 1997. Dividends are paid on all restricted stock awarded by the Company.
The restrictions on the shares covered by this award lapse three years from
the date of grant. The value of this grant as of December 31, 1997 was
$290,240 based on a closing price of $72.56.
7
<PAGE> 10
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The table below sets forth information concerning stock options granted
during 1997 to each of the named executive officers.
<TABLE>
<CAPTION>
Potential Realizable
Value at
Individual Grants Assumed Annual
- -------------------------------------------------------------------------------------- Rates of
Number of Stock Price
Securities % of Total Appreciation
Underlying Options/SARs for Option
Options/SARs Granted to Exercise or Term(3)
Granted Employees in Base Price Expiration ---------------------
Name (#)(1) Fiscal Year ($/Share)(2) Date 5% ($) 10% ($)
---- ------------ ------------ ------------ ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Ronald H. Zech................ 32,000 10.4% 66.9375 10/24/2007 1,347,092 3,413,796
David B. Anderson............. 9,000 2.9% 66.9375 10/24/2007 378,870 960,130
David M. Edwards.............. 9,500 3.1% 66.9375 10/24/2007 399,918 1,013,472
William L. Chambers........... 6,500 2.1% 66.9375 10/24/2007 273,628 693,427
Brian A. Kenney............... 3,000 1.0% 66.9375 10/24/2007 126,290 320,043
</TABLE>
- ---------------
(1) Fifty percent of all options granted may be exercised commencing one year
from the date of grant, an additional 25% commencing two years from the date
of grant, and the remaining 25% commencing three years from the date of
grant.
(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.
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 1997 by each of the named executive officers, the number of
unexercised options and the 1997 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 ($72.56).
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-
Options/SARs at Fiscal the-Money Options/SARs at
Shares Year-End (#) Fiscal Year-End ($)
Acquired on Value --------------------------- ---------------------------
Name Exercise Realized ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ronald H. Zech................ 10,000 336,839 119,000 67,000 4,037,043 999,813
David B. Anderson............. 0 0 20,000 19,000 470,938 286,813
David M. Edwards.............. 2,000 59,060 39,000 17,000 1,342,558 235,125
William L. Chambers........... 0 0 30,000 12,500 905,750 182,188
Brian A. Kenney............... 0 0 4,500 5,500 109,781 77,156
</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.
8
<PAGE> 11
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 1997:
<TABLE>
<CAPTION>
Estimated Future Payouts
Number of Performance Under Non-Stock Price-
Shares, or Other Based Plans(1)
Units or Period Until ------------------------
Other Maturation or Target Maximum
Name Rights (#) Payout (#) (#)
---- ---------- ------------- ------ -------
<S> <C> <C> <C> <C>
Ronald H. Zech................................. 2,059 1997-1999 2,059 6,177
David B. Anderson.............................. 886 1997-1999 886 2,658
David M. Edwards............................... 726 1997-1999 726 2,178
Williams L. Chambers........................... 695 1997-1999 695 2,085
</TABLE>
- ---------------
(1) Payouts are based on the Company achieving pre-established levels of return
on common equity ("ROE") and are paid in Common Stock and cash following
completion of the three year performance period. No payout will be made
unless a target level of performance is achieved. The target amount, plus an
amount equal to additional units representing reinvested dividends during
the performance period, will be earned if 100% of target ROE is achieved;
the maximum amount plus an amount equal to 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. Zech, Anderson, Edwards,
Chambers and Kenney as of January 1, 1998, which provide certain benefits upon
termination of employment after a "change of control" or "disposition" of the
Company or one of its subsidiaries. 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" or "disposition" for any reason other than cause or the executive's
death, retirement or total disability, the executive will be entitled to: (A) a
lump sum payment equal to (a) two times the annual salary plus (b) one times 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, dental, disability and
life insurance plans for up to two years after termination; (C) financial
counseling and tax preparation services; (D) payment of 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 creates an
obligation to pay excise tax under section 4999 of the Internal Revenue Code of
1986 ("the Code"), an additional amount (the "Make-Whole Amount") equal to the
(aa) amount of the excise tax, (bb) interest, penalties, fines or additions to
any tax imposed in connection with the imposition of the excise tax, (cc) the
cost of compromising or contesting any claim concerning the Make-Whole Amount
brought by any taxing authority and (dd) all income
9
<PAGE> 12
taxes imposed on the executive by reason of payments required by (aa) - (dd).
"Cause" means a willful and material breach of employment obligations likely to
materially damage the Company; "a change of control" means a change in the
beneficial ownership or a change in the composition of GATX's Board of Directors
which occurs upon: (1) receipt by the Company of a Schedule 13D confirming that
a person (other than (aaa) a fiduciary of securities under an employee benefit
plan, (bbb) a corporation directly or indirectly owned by stockholders of GATX
in substantially the same proportions as their ownership of GATX or (ccc) a
corporation in which the executive has a substantial interest) owns beneficially
20% or more of the Company's stock; (2) any offer by a person, other than those
noted in (aaa) - (ccc) above, where the offeror owns 20% or more of the
Company's stock or three business days before the offer terminates could
beneficially own 50% of the Company's stock; (3) shareholder approval of any
merger in which the Company voting stock does not represent 70% of the surviving
corporation's voting stock or at least 50% of the Company's directors are not
directors of the surviving corporation; (4) a change in the majority of the
Board of Directors of the Company such that for any period of two consecutive
years new board members are not elected or nominated by at least a two-thirds
vote of directors who were either directors at the beginning of the period or
whose election or nomination for election was so approved; and (5) a
determination by the Board of Directors that the cumulative effect on the
Company of the sale or other disposition, either in a single transaction or a
series of related transactions, of all of the Company's Common Stock or
substantially all of the assets of one or more Company Units warrants the
conclusion that a change of control has occurred for purposes of this Agreement;
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, 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 or the failure of the
Company to obtain a satisfactory agreement from any successor to assume and
agree to perform under this agreement. In no event shall an executive be
entitled to termination payments following disposition of a subsidiary in which
the executive was primarily employed if the executive continues in employment
with the successor of the subsidiary for a two year period following
disposition. Mr. Chambers' agreement is supplemented by an agreement dated
August 17, 1993 which provides that if, prior to Mr. Chambers reaching age 65,
the Company terminates Mr. Chambers' employment other than for cause, death or
change in control, the Company shall pay Mr. Chambers, at the time of such
termination and in lieu of any other severance payment to which he would be
entitled under policies of the Company then in effect, a lump sum payment equal
to the lesser of (a) twice his then current annual salary or (b) the amount of
his then current monthly salary multiplied by the number of months then
remaining until he reaches age 65, plus, in either case, an amount equal to the
product of his then current salary multiplied by his target percentage under the
MIP. Mr. Anderson's agreement is supplemented by an agreement dated May 31, 1995
which provides that in the event of his death or termination for reasons other
than cause prior to his attaining five years of service, the Company will pay
Mr. Anderson or his spouse a payment equal to the benefit he or his spouse would
have been eligible to receive under the terms of the GATX Non-Contributory
Pension Plan for Salaried Employees had he attained five years of service prior
to the occurrence of such events. The agreement further provides that if during
the five year period beginning on Mr. Anderson's date of hire Mr. Zech is not
Chief Executive Officer and Mr. Anderson is terminated for reasons other than
cause, the Company will provide a termination payment equal to one year's base
salary and target bonus. 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. Zech ($1,775,579); Mr. Anderson ($967,043); Mr. Edwards
($736,855); Mr. Chambers ($857,416); Mr. Kenney ($501,430).
10
<PAGE> 13
Messrs. Zech, Anderson, Edwards, Chambers and Kenney also participate in
the Company's 1995 Long Term Incentive Compensation Plan ("LTICP" or "1995
Plan") 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
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 RETIREMENT PLANS
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
five 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 consecutive 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. Benefits are calculated on a straight life annuity basis, but the normal
form of
11
<PAGE> 14
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 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
APPLICABLE PERIOD ($) SERVICE ($) SERVICE ($) SERVICE ($) SERVICE ($) SERVICE ($) SERVICE ($)
- --------------------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
200,000 30,997 46,465 61,953 77,442 92,930 108,418
400,000 63,977 95,965 127,953 159,942 191,930 223,918
600,000 96,977 145,465 193,953 242,442 290,930 339,418
800,000 129,977 194,965 259,953 324,942 389,930 454,918
1,000,000 162,977 244,465 325,953 407,442 488,930 570,418
1,200,000 195,977 293,965 391,953 489,942 587,930 685,918
</TABLE>
Compensation covered by the Pension Plan is 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 and are included in the
above table.
The executive officers named in the Cash Compensation Table have the
following number of years of credited service: Mr. Zech, 20 years; Mr. Edwards,
16 years; Mr. Chambers, 4 years, Mr. Anderson, 3 years and Mr. Kenney, 2 years.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION POLICY AND OBJECTIVES
The Company's policy is to provide a competitive and balanced total
compensation program that is structured to attract, retain and motivate highly
qualified management personnel and to increasingly 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 goals. The Compensation Committee
annually reviews and approves executive 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 compensation data reported in nationally recognized compensation
surveys of companies of comparable size in a diversified group of industries.
The companies in the compensation surveys are hereinafter referred to as the
"Comparative Group." It is believed that the Comparative Group represents a
valid cross-section of executive talent for which the Company competes.
Moreover, comparison to companies that might be considered more direct
competitors in the businesses in which the Company engages is not feasible since
most of these companies are privately-held or subsidiaries of larger
organizations and therefore information on compensation levels is not publicly
available. The Compensation Committee believes that the Company's most direct
competitors for executive talent are not necessarily those companies that would
be included in the MidCap 400 (as defined in the section entitled "PERFORMANCE
GRAPH"); thus, the Comparative Group may include companies not included in the
MidCap 400. 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 Group. In any given year, the
compensation
12
<PAGE> 15
level for any executive officer of the Company may be more or less than the
corresponding compensation level paid by companies in the Comparative Group,
based upon Company and/or individual performance.
BASE SALARIES
The base salaries of the Company's named executive officers are targeted at
the median base salary levels of executives of the Comparative Group, giving
consideration to the comparability of responsibilities and experience. Salary
adjustments for executive officers of the Company and employees earning base
salaries of $200,000 or more are reviewed by the Compensation Committee every 18
months. In each case, salary adjustments are based on an assessment of the
individual performance and contribution of each officer over the review period
and an analysis of the salary practices of the Comparative Group for positions
of similar responsibilities. No specific weights are assigned to these factors.
Mr. Zech's base salary was increased effective July 1, 1997 from $500,000 to
$575,000 based on both his personal performance and the results achieved by the
Company. The salaries paid in 1997 to Mr. Zech and to the named executive
officers as a group were generally consistent with the median base salaries paid
to executives with similar experience and responsibilities by companies in the
Comparative Group.
ANNUAL INCENTIVE COMPENSATION
Executive officers and key managers of the Company are eligible to
participate in the MIP. The MIP reinforces the Company's pay for performance
policy by providing annual cash payments to executives based upon the
achievement of Company, subsidiary and individual performance goals. Target
incentive awards are paid only when financial or a combination of financial and
individual performance objectives are achieved.
Each year, the Compensation Committee establishes both 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 1997, financial objectives were expressed exclusively in terms
of budgeted net income. Target incentive awards for the Company's named
executive officers ranged from 40% to 65% of their base salaries, depending on
the level of the officer's position. For all participants, the maximum incentive
award was 150% of the target incentive award (subject to the Chief Executive's
discretionary authority to increase or decrease any participant's award, other
than his own, by 25%). The maximum incentive award was payable for achieving
120% or more of the target financial objective for the Company and four of its
five subsidiaries, and 115% of the target financial objective in the remaining
subsidiary. The threshold level was set at 80% of the target financial objective
for the Company and three of its five subsidiaries, and at 85% and 50% of the
target financial objectives in the remaining two subsidiaries. The MIP award for
Mr. Zech was based 100% on the consolidated results of the Company. The awards
for Messrs. Anderson, Edwards and Chambers were based 30% on the consolidated
results of the Company and 70% on the results of the Company's subsidiaries,
weighted in proportion to the budgeted contribution of each subsidiary to
consolidated net income. The award for Mr. Kenney was based 10% on the
consolidated results of the Company, 40% on the results of the Company's
subsidiaries weighted in proportion to the budgeted contribution of each
subsidiary to consolidated net income, and 50% on the achievement of individual
performance objectives, with the portion based on individual performance
objectives reduced to 30% if threshold financial levels are not achieved.
The MIP is intended to measure and reward annual operating performance.
Accordingly, performance against target objectives for 1997 was computed prior
to the asset write down. The Company met 103% of its consolidated net income
objective, entitling Mr. Zech to a cash payment of $361,463 under the MIP based
on the factors described above. This payment represents 67% of Mr. Zech's salary
and 103% of his target award.
13
<PAGE> 16
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.
Since 1988, LTICP awards have been provided to the Chief Executive Officer and
his direct reports primarily in the form of stock options and IPUs, and to other
key employees (currently 203 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 participant's
performance, the size of previous grants and competitive practices. In 1997,
LTICP awards to the Company's executive officers were below median competitive
long-term incentive opportunities provided by the companies in the Comparative
Group.
The purpose of IPUs is to focus attention on superior, sustained long-term
Company performance. The number of IPUs granted to each participant is
calculated by dividing a specified percentage of base salary by the market value
of the Company's Common Stock on the date of grant. Under the 1995 Plan as
currently in effect, IPUs are subject to redemption (in cash and Common Stock)
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 based primarily on the 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
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 divided by
the market value of the Company's Common Stock on such date. For the 1997-1999
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 25%. The amount of payment for
redeemed IPUs is equal to the market value of the Company's Common Stock on the
date of redemption.
In 1997, Mr. Zech received a grant of 2,059 IPUs covering the 1997-1999
Performance Period based on the considerations described above. With respect to
the 1995-1997 Performance Period, performance against targets was computed after
the writedown. As a result, neither Mr. Zech nor any other IPU recipient
received a payment for this Performance Period.
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 prevailing market rate and will have
value only if the Company's stock price increases. Each of the executive
officers named in the Compensation Table received an option grant in 1997 based
on the factors described above. Mr. Zech was granted an option to purchase
32,000 shares of the Company's Common Stock at a price equal to the market price
on the date of grant.
POLICY ON DEDUCTIBILITY OF COMPENSATION
The limitation on the tax deductibility of executive compensation in excess
of one million dollars set forth in Section 162(m) of the Code and the
regulations promulgated thereunder may impact the Company. Performance-based
compensation that has been approved by shareholders is excluded from the one
million dollar limitation if, among other things, it is payable only upon the
achievement of preestablished performance goals. While the tax impact of
employee compensation is one factor to be considered, such impact will be
evaluated in light of the Company's overall compensation philosophy. From time
to time, the Committee may award compensation which is not fully deductible
14
<PAGE> 17
if it determines that such award is consistent with its philosophy and in the
best interests of the Company's shareholders.
STOCK OWNERSHIP TARGETS
To underscore the importance of stock ownership by management, the Company
has established stock ownership targets. Approximately 100 of the key employees
eligible for awards under the LTICP have five years, beginning January 1996, to
reach ownership targets based on their salary and position in the Company. The
targets specify that the Chief Executive Officer, direct reports to the Chief
Executive Officer, other named executive officers and certain other participants
own GATX Common Stock with a minimum value equivalent to four, two and one-half,
three-fourths and one-half times base salary, respectively. The five-year time
period is extended for newly hired and promoted executives. All named executive
officers exceeded their interim ownership targets for 1997. The key employee
group in aggregate has also exceeded 1997 interim targets.
This report is submitted by the Compensation Committee of the Board of
Directors of GATX Corporation.
James M. Denny (Chairman)
Richard A. Giesen
Charles Marshall
Michael E. Murphy
15
<PAGE> 18
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, 1992 as the base)
with Standard & Poor's S&P 500 Composite Stock Price Index ("S&P 500"), Standard
& Poor's S&P MidCap 400 Index ("MidCap 400") 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 was 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 Santa Fe Corporation, Caliber System
Inc., Curtiss-Wright Corporation, Englehard Corporation, Ferro Corporation,
Household International, Inc., The Lubrizol Corporation, Nordson Corporation,
Overseas Shipholding Group, Inc., Rohm and Haas Company and Union Pacific
Corporation. As noted in the immediately following paragraph, the Company has
determined that it will no longer compare its total shareholder return to the
Peer Group. This determination was made because the capitalization of certain
members of the Peer Group had changed over time, causing its results to be
highly skewed by one member of the Peer Group, and because the nature of the
business of certain members of the Peer Group had changed so as to no longer be
comparable with that of the Company.
As the Company believes it cannot reasonably identify an acceptable
alternative peer group, the Company will compare its total shareholder return
with the total shareholder return of the MidCap 400 beginning in 1998. There are
several reasons for selecting the MidCap 400. The MidCap 400, in which GATX is
included, represents a comparison to companies with similar market
capitalizations. Most of GATX's direct competitors are either privately-held,
foreign or subsidiaries of much larger corporations; therefore, the company
believes that the most appropriate comparison of its performance is to companies
with similar market capitalizations. The MidCap 400 also has the advantage of
being a widely published index which provides a ready comparison for investors.
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, 1992.
TOTAL RETURN
GATX VS. S&P 500 VS. PEER GROUP VS. MIDCAP 400
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) GATX S&P 500 MIDCAP 400 PEER GROUP
<S> <C> <C> <C> <C>
1992 100 100 100 100
1993 127.52 110.08 113.95 114.30
1994 142.82 111.53 109.87 113.62
1995 163.16 153.45 143.86 147.09
1996 168.73 188.68 171.48 185.36
1997 260.24 251.63 226.79 228.96
</TABLE>
16
<PAGE> 19
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 and directors and executive officers as a group:
<TABLE>
<CAPTION>
Shares of Common Stock
Beneficially Owned
Name of Beneficial Owner as of March 6, 1998(1)
------------------------ ----------------------
<S> <C>
Ronald H. Zech.............................................. 155,981
David B. Anderson........................................... 23,495
David M. Edwards............................................ 46,649
William L. Chambers......................................... 33,684
Brian A. Kenney............................................. 5,103
Directors and Executive Officers as a group................. 308,757
</TABLE>
- ---------------
(1) Includes shares which may be obtained by exercise of previously granted
options within 60 days of March 6, 1998 by Mr. Zech (126,500), Mr. Anderson
(20,000), Mr. Edwards (39,000), Mr. Chambers (30,000), Mr. Kenney (4,500)
and directors and executive officers as a group (242,875). See page for
the beneficial ownership of Common Stock of each of the nominees for
election as a director. Each person has sole investment and voting power (or
shares such powers with his or her spouse). Each of the directors and
executive officers owned less than 1% of the Company's outstanding shares of
Common Stock. Directors and executive officers as a group beneficially owned
approximately % of the Company's outstanding shares of Common Stock. No
director or named executive officer owns any Preferred Stock.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following is the only person known to the Company to beneficially own
more than 5% of the Company's Common Stock:
<TABLE>
<CAPTION>
Percent of
Shares Common
Name and Address of Beneficial Owner Beneficially Owned Stock
------------------------------------ ------------------ ----------
<S> <C> <C>
State Farm Mutual Automobile Insurance Company(1)........... 2,945,300
One State Farm Plaza
Bloomington, IL
</TABLE>
- ---------------
(1) According to a Schedule 13G dated January 23, 1998, State Farm Mutual
Automobile Insurance Company ("State Farm") and certain affiliated entities,
each of which owned 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 2,945,300 shares of Common Stock. State Farm and each of the entities
disclaim that they are part of a group.
APPROVAL OF AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION TO INCREASE AUTHORIZED SHARES OF COMMON STOCK
On January 30, 1998, the Board of Directors unanimously approved, and now
recommends to the shareholders that they approve, an amendment to the Company's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock from 60,000,000 to 120,000,000 shares. The Company's Certificate of
Incorporation also presently authorizes 5,000,000 shares of preferred stock
which will not be changed by the proposed amendment. If the proposed amendment
is approved, the first sentence of Article THIRD of the Company's Certificate of
Incorporation will be amended to read as follows:
17
<PAGE> 20
THIRD: The aggregate number of shares which the corporation shall have
authority to issue is 120,000,000 shares of Common Stock, of the par value of
62 1/2c each, and 5,000,000 shares of Preferred Stock, of the par value of $1
each.
At its January 30, 1998 meeting, the Board of Directors also authorized a
distribution of one additional share of Common Stock for each share outstanding
or held in the corporate treasury which would in effect accomplish a two for one
stock split in the form of a stock dividend, conditioned on approval by the
shareholders of the increase in authorized shares of Common Stock. If approved,
the Board of Directors thinks that the increase in the number of outstanding
shares of Common Stock will be beneficial. Although the effect on the market
price of the shares of Common Stock cannot be predicted with certainty, it is
likely that the stock split would initially result in a reduction by one-half of
the market price of each share. The market value of all shares held by a
particular shareholder should remain approximately the same. The Board of
Directors expects the lower price per share resulting from the stock split to be
beneficial in that, among other things, it may cause a broader market for,
increased liquidity of and greater investor interest in the shares of Common
Stock. The stock split may also cause brokerage commissions (which may be
subject to negotiation) and other expenses associated with buying or selling
shares of stock to increase in most transactions involving the purchase or sale
of shares having a given dollar value. The additional authorized shares not so
distributed will be available for issuance in connection with further stock
splits, employee benefit plans, possible financings, acquisitions of other
companies or other corporate purposes, or any combination of the foregoing. The
newly authorized Common Stock would be available for issuance without further
action by shareholders except as required by law or applicable stock exchange
requirements. For example, the current rules of the New York Stock Exchange
would require approval by the shareholders of Common Stock if the number of
shares of Common Stock to be issued equaled or exceeded 20% of the number of
shares of Common Stock outstanding immediately prior to such issuance, with
certain exceptions.
The additional shares resulting from the stock split shall have rights
identical to existing shares of Common Stock. All outstanding shares of Common
Stock would continue to have one vote per share and would have no preemptive
rights to subscribe for additional shares. There will be no change in total
shareholders' equity. As a result of the proposed increase in the number of
shares of Common Stock outstanding in connection with the stock split, the
Company will transfer 62 1/2 cents per share from its additional capital account
to its Common Stock capital account. Of the shares of Common Stock presently
authorized, shares are outstanding, shares are held as
treasury stock and shares are reserved for future issuance with
respect to convertible preferred stock and employee and director benefit plans.
After giving effect to the proposed increase and two-for-one stock split, these
amounts would all be increased proportionately to shares,
shares and shares, respectively.
The Company intends to apply to the various stock exchanges on which the
shares of Common Stock are currently listed, for listing of the additional
shares to be issued and reserved for future issuance upon approval of this
amendment.
If approved, it is expected that the amendment to the Certificate of
Incorporation increasing the authorized Common Stock will be filed with the
Secretary of State of New York as soon as practicable following the annual
meeting of shareholders and the record date for the stock split will be May 5,
1998. Each holder of Common Stock at the close of business on the record date
for the stock split will be entitled to receive an additional share of Common
Stock, par value 62 1/2 cents per share, for each share held of record. Existing
certificates representing shares of Common Stock prior to the stock split will
continue to evidence the same number of shares of Common Stock after the stock
split. The new shares will be issued in "book-entry" form without certificates
and will be recorded on the shareholders behalf with the Company's transfer
agent, ChaseMellon Shareholder Services of New York, unless the shareholder
requests a certificate from ChaseMellon. Shareholders will be sent forms shortly
after the record date which they can use to request actual certificates.
SHAREHOLDERS SHOULD NOT SEND THEIR CERTIFICATES FOR SHARES OF COMMON
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<PAGE> 21
STOCK TO THE COMPANY FOR EXCHANGE. Certificates requested by any shareholder
representing additional shares to which a shareholder is entitled after the
stock split will be mailed commencing on or about June 2, 1998. The Company has
been advised that no taxable gain or loss under current federal income tax laws
would result from the stock split. Each additional share of Common Stock will
have a cost or other tax basis (for computing subsequent gain or loss) equal to
one half of the cost or other tax basis of the presently outstanding share. In
addition, the holding period of the additional share would be deemed under such
laws to be the same as the holding period for the original share.
An affirmative vote of holders of a majority of the shares outstanding and
entitled to vote is required for the adoption of this proposal to amend the
Certificate of Incorporation.
The Board of Directors recommends that the shareholders vote for this
proposal.
APPROVAL OF AMENDMENT TO THE GATX CORPORATION
1995 LONG TERM INCENTIVE COMPENSATION PLAN
There will be presented to the shareholders a proposal to amend the 1995
Plan for officers and key employees of the Company and its subsidiaries. On
March 6, 1998, the Board of Directors adopted, subject to shareholder approval,
an amendment to the 1995 Plan which changes the performance measure
("Performance Goal") used in certain performance awards made under the 1995 Plan
from return on common equity. Beginning in 1998, the Performance Goals for any
Performance Period shall be based on any one or more of the following, as
selected by the Compensation Committee; return on equity, total shareholder
return, accounting and value based earnings, return on capital, sales growth and
return on investment. The amendment to the 1995 Plan will not be put into effect
unless approved by the affirmative vote of the holders of a majority of the
shares voted on this proposal.
In addition, the 1995 Plan is being amended to revise the maximum award for
Individual Performance Units, expressed as a percentage of a Participant's base
salary. The 1995 Plan is being further amended to exclude from the calculation
of whether a Performance Goal has been achieved, all items of gain, loss or
expense for a fiscal year determined to be extraordinary or unusual in nature or
infrequent in occurrence or related to the disposal of a segment of a business
or other restructuring charges, as well as the effects of any capital
restructuring (such as a Common Stock repurchase program). The intent of the
amendment is to exclude from the calculation those matters which are
unrepresentative of the operating results of the Company.
Lastly, it is proposed to amend the 1995 Plan to provide that the Committee
may award Individual Performance Units pursuant to the 1995 Plan which may not
be exempt from the million dollar limit on deductible compensation and thus may
not be fully deductible if the Committee determines that such awards are
consistent with its compensation philosophy and in the best interests of the
shareholders.
To effect the foregoing, the Board of Directors recommends to the
shareholders that they approve amending the 1995 Long Term Incentive
Compensation Plan by deleting Sections VII(1), VII(2) and VII(3) of the Plan in
their entirety, and substituting therefor the following:
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 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 (disregarding annual base salary in excess
of $(1,200,000) 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
19
<PAGE> 22
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. The Committee, at the time
Individual Performance Units are granted to any Participant for any
Performance Period, shall designate whether the units are intended to
be "performance-based compensation" as that term is used in section
162(m) of the Code.
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, total shareholder return,
accounting and value based earnings, return on capital, sales growth
or return on investment applicable to the Company as a whole or to any
individual subsidiary. In determining the extent to which a
Performance Goal has been achieved, the calculation shall be made
without regard to any changes in the Federal tax law or in accounting
standards that may be required by the Financial Accounting Standards
Board after the goal is established. In addition, all items of gain,
loss or expense for a fiscal year that are extraordinary or unusual in
nature or infrequent in occurrence or related to the disposal of a
segment of a business or other restructuring charges shall also be
excluded in making such determination as shall the effects of any
capital restructuring (such as a Common Stock repurchase program). The
Committee may, in its discretion, include such items or effects in
making such determination, where in its judgment it is appropriate to
do so. Performance Goals may very among Participants.
The 1995 Plan allows grants of: Non-Qualified Stock Options, Incentive
Stock Options, Stock Appreciation Rights, Restricted Stock Rights, Restricted
Common Stock, Performance Awards and Individual Performance Units. The proposed
amendments relate only to Individual Performance Units.
The 1995 Plan is administered by the Compensation Committee of the Board of
Directors which consists of not less than three non-employee directors. The
Committee selects from time to time key employees of the Company and its
subsidiaries to receive awards (including the executive officers named in the
Summary Compensation Table). The Committee determines the amounts, type and
terms of such awards, and is authorized to interpret the 1995 Plan, establish
rules and regulations thereunder, and 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 make awards to non-officer participants in the 1995
Plan.
Approximately 250 current employees have received awards under the 1995
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 amendment to 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 were authorized under the
1985 Long Term Incentive Compensation Plan ("1985 Plan"), but unissued as of the
date of adoption of the 1995 Plan, and which were not
20
<PAGE> 23
subsequently issued pursuant to awards under the 1985 Plan that are outstanding
on that date. As of March 6, 1998, shares were available for grant
under the 1995 Plan, and an additional shares were reserved for
issuance pursuant to awards outstanding under the 1985 Plan and the 1995 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 amendment to the 1995 Plan will be effective as of the date of
shareholder approval. The 1995 Plan 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 as proposed to be amended
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 6, 1998 was $ .
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 Code. The Committee will determine the number of
shares subject to each Stock Option and the manner and time of exercise. Fifty
percent of all Stock Options will become exercisable commencing no sooner than
one year after the date of grant, an additional 25% commencing two years from
date of grant, and the remaining 25% commencing three years from the date of
grant in each case 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. All Stock Options will terminate on the
earlier of (a) the tenth anniversary of their date of grant or (b) subject to
the provisions of the following sentence, three months (or such other period of
time as may be determined by the Committee in its discretion) after the date on
which the optionee's employment terminates for any reason. That portion of a
Stock Option which is exercisable as of the date a participant's employment is
terminated by reason of death, disability (as determined by the Committee) or
retirement under a Company retirement plan 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
first became exercisable with respect to any participant 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.
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<PAGE> 24
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 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
22
<PAGE> 25
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 will be subject to redemption (in cash and Common Stock) only if
a combination of return on common equity, total shareholder return, accounting
and value based earnings, return on capital, sales growth or return on
investment as determined from time to time by the Committee 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 subsequent to the establishment of performance goals. In addition, all
terms of gain or loss or expense for a fiscal year that are extraordinary or
unusual in value or infrequent in occurrence or related to the disposal of a
segment of a business or other restructuring charges shall also be excluded as
shall the effect of any capital restructuring. The Committee may, in its
discretion include such items or effects in making such determination, where in
its judgment it is appropriate to do so. The inclusion of such items or effects
will result in a lower IPU payment to the participants. 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 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
The 1995 Plan provides for special acceleration of awards upon (i) receipt
by the Company of a Schedule 13D confirming that a person (other than (aaa) a
fiduciary of securities under an employee benefit plan, (bbb) a corporation
directly or indirectly owned by stockholders of GATX in substantially the same
proportions as their ownership of GATX or (ccc) a corporation in which the
executive has a substantial interest) owns beneficially 20% or more of the
Company's stock; (ii) any offer by a person, other than those noted in
(aaa) - (ccc) above, where the offeror owns 20% or more of the Company's stock
or three business days before the offer terminates could beneficially own 50% of
the Company's stock; (iii) shareholder approval of any merger in which the
Company voting stock does not represent 70% of the surviving corporation's
voting stock or at least 50% of the Company's directors are not directors of the
surviving corporation; or (iv) a change in the majority of the Board of
Directors of the Company such that for any period of two consecutive years new
board members are not elected or nominated by at least a two-thirds vote of
directors who were either directors at the beginning of the period or whose
election or nomination for election was so approved.
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
23
<PAGE> 26
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 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. If delivery of shares pursuant
to the exercise of an option is deferred for a period after exercise,
recognition of income will be deferred until the end of the deferral period.
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. 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 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
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<PAGE> 27
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 excess of the fair market value
of the shares at the time of exercise of an ISO over the exercise price is an
adjustment that is included in the calculation of the employee's alternative
minimum tax for the tax year in which the ISO is exercised.
An employee realizes no taxable income 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.
The Federal income tax rules limit the deductibility of certain
compensation for the Chief Executive Officer and certain other executive
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 amendment to the 1995 Plan is
required to conform certain aspects thereof to the requirements of "performance
based compensation."
NEW PLAN BENEFITS
Because awards under the 1995 Plan are with the discretion of the
Committee, benefits to any individual under the amended 1995 Plan are not
determinable. However, the following table contains information about IPU grants
made under the amended 1995 Plan on March 6, 1998 to executive
25
<PAGE> 28
officers and the groups indicated, subject to shareholder approval. No
nonofficer nominee for election as a director of the Company can receive a grant
under the 1995 Plan.
<TABLE>
<CAPTION>
ESTIMATED FUTURE
PAYOUTS UNDER NON-
NUMBER OF PERFORMANCE STOCK PRICE-BASED
SHARES, OR OTHER PLANS (1)
UNITS OR PERIOD UNTIL ------------------
OTHER MATURATION OR TARGET MAXIMUM
NAME RIGHTS (#) PAYOUT (#) (#)
---- ---------- ------------- ------ -------
<S> <C> <C> <C> <C>
Ronald H. Zech...................................
David B. Anderson................................
David M. Edwards.................................
Williams L. Chambers.............................
Brian A. Kenney..................................
All executive officers as a group................
All other employees (including all officers who
are not executive officers) as a group.........
</TABLE>
- ---------------
(1) Payouts are based on the Company achieving pre-established levels of return
on common equity ("ROE") and are paid in Common Stock and cash following
completion of the three year performance period. No payout will be made
unless a target level of performance is achieved. The target amount, plus an
amount equal to additional units representing reinvested dividends during
the performance period, will be earned if 100% of target ROE is achieved;
the maximum amount plus an amount equal to additional units representing
reinvested dividends will be earned if target ROE is exceeded by a specified
amount.
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.
The Board of Directors recommends that the shareholders vote for this
proposal.
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.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Shareholder proposals intended to be presented at the Company's 1999 Annual
Meeting must be received by the Company no later than November 17, 1998 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.
OTHER INFORMATION
On August 14, 1997 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") and continued the policy initially
procured in 1995 from Federal Insurance Co. ("Federal") that insures the Company
in the event the Company is required to indemnify a director or officer. The
Federal 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
26
<PAGE> 29
only for those instances in which they may not be indemnified by the Company.
The ACE and Federal policies expire on August 14, 1998. The CODA policy expires
on August 14, 2000. 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 1997, the Company paid premiums of $154,000 to CODA,
$92,000 to ACE and $341,000 to Federal.
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 B. Anderson
Secretary
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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.
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
<PAGE> 31
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.
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
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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 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 (a) the tenth anniversary of the Option Date or, (b)
subject to the provisions of the following sentence, three (3) months (or such
other period of time as may be determined by the Committee in its discretion)
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.
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 (a) the tenth anniversary of the Option Date
or, (b) subject to the provisions of the following sentence, three months (or
such other period of time as may be determined by the Committee in its
discretion) after the date the Participant's employment by the Company and its
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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.
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. Each Stock Appreciation Right granted to a Participant
shall terminate on the earlier of (a) the tenth anniversary of the Option Date
or, (b) subject to the provisions of the following sentence, three months (or
such other period of time as may be determined by the Committee in its
discretion) 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
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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 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 death,
the person or persons entitled thereto by will or
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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 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 (disregarding annual base salary in
excess of $1,200,000) 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. The Committee, at the time
Individual Performance Units are
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granted to any Participant for any Performance Period, shall designate whether
the units are intended to be "performance-based compensation" as that term is
used in section 162(m) of the Code. For Individual Performance Units designated
as "performance-based compensation," the grant of the units and the
establishment of the Performance Goals shall be made during the period required
with respect to "performance-based compensation."
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, total shareholder return, accounting and value based
earnings, return on capital, sales growth or return on investment applicable to
the Company as a whole or to any individual subsidiary. In determining the
extent to which a Performance Goal has been achieved, the calculation shall be
made without regard to any changes in the Federal tax law or in accounting
standards that may be required by the Financial Accounting Standards Board after
the goal is established. In addition, all items of gain, loss or expense for a
fiscal year that are extraordinary or unusual in nature or infrequent in
occurrence or related to the disposal of a segment of a business or other
restructuring charges shall also be excluded in making such determination as
shall the effects of any capital restructuring (such as a Common Stock
repurchase program). The Committee may, in its discretion include such items or
effects in making such determination, where in its judgment it is appropriate to
do so. 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 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
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any time when there is a change in the beneficial ownership of the Company's
voting stock or a change in the composition of the Company's Board of Directors
which occurs as follows:
(a) any "person" [as such term is used in Section 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934 (the "Exchange Act")] other than:
(i) a trustee or other ficuciary of securities held under an employee
benefit plan of the Company;
(ii) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their
ownership of the Company; or
(iii) any person in which the Executive has a substantial equity
interest;
is or becomes a beneficial owner (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of stock of the Company
representing 20% or more of the total voting power of the Company's then
outstanding stock;
(b) a tender offer is made for the stock of the Company by a person other
than a person described in subparagraph (1)(i), (ii) or (iii) and one of
the following occurs:
(i) the person making the offer owns or has accepted for payment stock
of the Company representing 20% or more of the total voting power
of the Company's stock; or
(ii) three business days before the offer is to terminate (unless the
offer is withdrawn first) such person could own, by the terms of
the offer plus any shares owned by such person, stock representing
50% or more of the total voting power of the Company's outstanding
stock when the offer terminates;
(c) during any period of two consecutive years there shall cease to be a
majority of the Company's Board of Directors comprised as follows:
inidividuals who at the beginning of such period constitute the Board of
Directors and any new director(s) whose election by the Board of
Directors or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds ( 2/3) of the directors then
still in office who either were directors at the beginning of the period
or whose election or nomination for election was previously so approved;
or
(d) the stockholders of the Company approve a merger or consolidation of
the Company with any other company other than:
(i) such a merger or consolidation which would result in the Company's
voting stock outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting stock of the surviving entity) more than 70% of the
combined voting power of the Company's or such surviving entity's
outstanding voting stock immediately after such merger or
consolidation; or
(ii) such a merger or consolidation which would result in the directors
of the Company who were directors immediately prior thereto
continuing to constitute at least 50% of the directors of the
surviving entity immediately after such merger or consolidation.
For purposes of this paragraph (d), "surviving entity" shall mean only
an entity in which all of the Company's stockholders become stockholders
by the terms of such merger or consolidation, and the phrase "directors
of the Company who were directors immediately prior thereto" shall not
include:
(i) any director of the Company who was designated by a person who has
entered into an agreement with the Company to effect a transaction
described in this paragraph or in paragraph (b) above; or
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(ii) any director who was not a director at the beginning of the
24-consecutive-month period preceding the date of such merger or
consolidation;
unless his election by the Board of Directors or nomination for election
by the Company's stockholders, was approved by a vote of at least
two-thirds ( 2/3) of the directors then still in office who were
directors before the beginning of such period.
With respect to any Participant with whom the Company has entered into
an Agreement for Continued Employment Following a Change of Control of
Disposition of a Subsidiary, a Special Acceleration of awards
outstanding under the Plan with the effect set forth in paragraph VIII-2
as to such Participant shall occur if such Participant's employment is
terminated or constructively terminated, and as a result thereof such
Participant becomes entitled to termination payments under such
agreement.
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 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
A-9
<PAGE> 39
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-10
<PAGE> 40
LOGO
<PAGE> 41
GATX CORPORATION
P PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
APRIL 24, 1998
R THIS PROXY IS SOLICITED ON BEHALF OF GATX CORPORATION'S BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Ronald H. Zech, David
O B. Anderson and David M. Edwards, 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
X to be held at the office of the Company, 500 West Monroe Street, Chicago,
Illinois, on Friday, April 24, 1998, at 9:00 A.M., and at any adjournment
thereof, on all matters coming before said meeting.
Y
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, 2, 3 and 4.
- --------------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE:PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
(Continued and to be signed on other side)
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
Please mark your votes as indicated in this example [X]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
Item 1 - ELECTION OF DIRECTORS FOR WITHHELD
ALL FOR ALL
[ ] [ ]
Nominees: James M. Denny, Richard Fairbanks,
William C. Foote, Deborah M. Fretz, Richard A. Giesen,
Miles L. Marsh, Charles Marshall,
Michael E. Murphy and Ronald H. Zech
WITHHELD FOR: (Write that nominee's name in the space provided below).
_______________________________________________________________________
Item 2 - APPROVAL OF AUDITORS FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Item 3 - AMENDMENT OF 1995 LONGTERM FOR AGAINST ABSTAIN
INCENTIVE COMPENSATION PLAN [ ] [ ] [ ]
Item 4 - AMENDMENT OF CERTIFICATE FOR AGAINST ABSTAIN
INCORPORATION [ ] [ ] [ ]
In their discretion, the Proxies are authorized to vote upon other matters as
may properly come before the meeting.
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_________________________SIGNATURE_________________________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.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE> 42
GATX CORPORATION
SALARIED EMPLOYEES RETIREMENT SAVINGS PLAN
P PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
APRIL 24, 1998
R THIS PROXY IS SOLICITED ON BEHALF OF GATX CORPORATION'S BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Ronald H. Zech, David
O B. Anderson and David M. Edwards, 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
X to be held at the office of the Company, 500 West Monroe Street, Chicago,
Illinois, on Friday, April 24, 1998, at 9:00 A.M., and at any adjournment
thereof, on all matters coming before said meeting.
Y
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, 2, 3 and 4.
- --------------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE:PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
(Continued and to be signed on other side)
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
Please mark your votes as indicated in this example [X]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3, and 4.
Item 1 - ELECTION OF DIRECTORS FOR WITHHELD
ALL FOR ALL
[ ] [ ]
Nominees: James M. Denny, Richard Fairbanks,
William C. Foote, Deborah M. Fretz, Richard A. Giesen,
Miles L. Marsh, Charles Marshall,
Michael E. Murphy and Ronald H. Zech
WITHHELD FOR: (Write that nominee's name in the space provided below).
_______________________________________________________________________
Item 2 - APPROVAL OF AUDITORS FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Item 3 - AMENDMENT OF 1995 LONGTERM FOR AGAINST ABSTAIN
INCENTIVE COMPENSATION PLAN [ ] [ ] [ ]
Item 4 - AMENDMENT OF CERTIFICATE FOR AGAINST ABSTAIN
INCORPORATION [ ] [ ] [ ]
In their discretion, the Proxies are authorized to vote upon other matters as
may properly come before the meeting.
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_________________________SIGNATURE_________________________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.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE> 43
GATX CORPORATION
LOGISTICS 401K PLAN
P PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
APRIL 24, 1998
R THIS PROXY IS SOLICITED ON BEHALF OF GATX CORPORATION'S BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Ronald H. Zech, David
O B. Anderson and David M. Edwards, 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
X to be held at the office of the Company, 500 West Monroe Street, Chicago,
Illinois, on Friday, April 24, 1998, at 9:00 A.M., and at any adjournment
thereof, on all matters coming before said meeting.
Y
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, 2, 3 and 4.
- --------------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE:PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
(Continued and to be signed on other side)
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
Please mark your votes as indicated in this example [X]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3 and 4.
Item 1 - ELECTION OF DIRECTORS FOR WITHHELD
ALL FOR ALL
[ ] [ ]
Nominees: James M. Denny, Richard Fairbanks,
William C. Foote, Deborah M. Fretz, Richard A. Giesen,
Miles L. Marsh, Charles Marshall,
Michael E. Murphy and Ronald H. Zech
WITHHELD FOR: (Write that nominee's name in the space provided below).
_______________________________________________________________________
Item 2 - APPROVAL OF AUDITORS FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Item 3 - AMENDMENT OF 1995 LONGTERM FOR AGAINST ABSTAIN
INCENTIVE COMPENSATION PLAN [ ] [ ] [ ]
Item 4 - AMENDMENT OF CERTIFICATE FOR AGAINST ABSTAIN
INCORPORATION [ ] [ ] [ ]
In their discretion, the Proxies are authorized to vote upon other matters as
may properly come before the meeting.
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_________________________SIGNATURE_________________________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.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
