<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] 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 23, 1999, at 9:00 A.M., for the
purposes of:
1. electing directors;
2. approving an amendment to the Company's 1995 Long Term Incentive
Compensation Plan to authorize participation by non-employee
directors;
3. approving an amendment to the Company's 1995 Long Term Incentive
Compensation Plan to authorize the use of additional shares of Common
Stock thereunder;
4. approving the adoption of the Company's Employee Stock Purchase Plan;
5. approving the appointment of independent auditors for the year 1999;
and
6. 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 5, 1999
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. Alternatively, you
may vote by telephone by following the instructions in the enclosed proxy.
David B. Anderson
Secretary
March 17, 1999
<PAGE> 3
<TABLE>
<S> <C>
LOGO GATX CORPORATION
500 WEST MONROE STREET
CHICAGO, IL 60661
312-621-6200
</TABLE>
March 17, 1999
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 1998, including financial
statements, was first mailed to all shareholders together with this proxy
statement on or about March 17, 1999.
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 5, 1999
will be entitled to vote at the meeting or any adjournment thereof. As of that
date, there were 49,433,437 shares of the Common Stock and 25,965 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, approval of the
amendments to the 1995 Long Term Incentive Compensation Plan and adoption of the
Employee Stock Purchase 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.
All share related information presented in this proxy statement has been
adjusted to reflect the two for one stock split in the form of a stock dividend
which became effective on June 1, 1998.
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. Mr. Charles Marshall, who
was a director from 1978 to 1982 and since 1989, is not standing for re-election
because of mandatory retirement. 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>
Director
Name and Principal Occupation Age Since
----------------------------- --- --------
<S> <C> <C>
James M. Denny.............................................. 66 1995
Managing Director, William Blair Capital Partners, LLC
Richard Fairbanks........................................... 58 1996
Managing Director for Domestic & International Issues,
Center for Strategic & International Studies
William C. Foote............................................ 47 1994
Chairman of the Board and Chief Executive Officer, USG
Corporation
Deborah M. Fretz............................................ 50 1993
Senior Vice President, Lubricants and Logistics, Sunoco,
Inc.
Richard A. Giesen........................................... 69 1982
Chairman of the Board and Chief Executive Officer,
Continental Glass & Plastic, Inc.
Miles L. Marsh.............................................. 51 1995
Chairman of the Board and Chief Executive Officer, Fort
James Corporation
Michael E. Murphy........................................... 62 1990
Retired; Former Vice Chairman, Chief Administrative
Officer, Sara Lee Corporation
John W. Rogers, Jr. ........................................ 39 1998(1)
President & Co-Chief Investment Officer, Ariel Capital
Management, Inc.
Ronald H. Zech.............................................. 55 1994
Chairman of the Board, President and Chief Executive
Officer of the Company
</TABLE>
- ---------------
(1) Mr. Rogers was elected to the Board on July 24, 1998 and will be standing
for election by shareholders for the first time this year.
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. Mr. Denny is a director of Allstate Corporation, Gilead
Sciences, Inc., Astra AB and ChoicePoint Inc.
Mr. Fairbanks, a former U.S. Ambassador at Large, was named Managing
Director for 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
2
<PAGE> 5
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. Mr.
Foote is also a director of Walgreen Co.
Ms. Fretz was named Senior Vice President, Lubricants and Logistics, of
Sunoco, 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 Sunoco, Inc. 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 also served as Chairman and Chief Executive Officer of
Continental's parent, Continere Corporation. Mr. Giesen is also a director of
Smurfit-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. Mr. Marsh previously
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 & Co.
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 is
also a director of American General Corporation, Bassett Furniture Industries,
Incorporated, True North Communications, Inc., Northern Funds and Payless
ShoeSource, Inc.
Mr. Rogers is President & Co-Chief Investment Officer of Ariel Capital
Management Inc., an institutional money management firm specializing in
equities, having founded the firm in January 1993. In addition, Ariel Capital
serves as the investment advisor, administrator and distributor of Ariel Mutual
Funds. Mr. Rogers is also a director of Bank One Corporation, Aon Corporation
and Burrell Communications Group.
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 PMI Group, Inc. 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
3
<PAGE> 6
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 auditors 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 1998, 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, operating company 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 salary changes, 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 increase budgets 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 company 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 1998, there were five meetings of the Compensation
Committee.
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 deliberations of the Board, 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 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 1998, there
were two meetings of the Nominating Committee.
The Company's Retirement Funds Review Committee members are Messrs. Foote
(Chairman), Fairbanks, Marsh and Rogers 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; (iv) approving recommended changes
in actuarial assumptions; and (v) approving recommended
4
<PAGE> 7
selections of trustees for the retirement plans. During 1998, there were two
meetings of the Retirement Funds Review Committee.
During 1998, 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 1998.
COMPENSATION OF DIRECTORS
Each non-officer director receives an annual retainer of $24,000 and an
annual grant of 500 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
January, April, July and October. Half of each quarterly installment is paid in
cash and the balance in phantom units of Common Stock 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 prices of the Company's Common Stock
on the last trading day of the month in which the quarterly installment is paid.
The annual grant is also credited in quarterly installments in arrears. Each
director's phantom Common Stock account is credited with additional phantom
units of Common Stock representing dividends declared on the Company's Common
Stock based on the average of the high and low prices 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 units of Common Stock will be
made as soon as is reasonably practical in Common Stock equal in number to the
number of phantom units of Common Stock then credited to his or her account. Any
fractional units will be paid in cash.
Non-officer directors may also defer receipt of the cash portion of their
retainer, meeting fees or both in the form of either cash or phantom units of
Common Stock. If the deferral is in cash, the deferred amount accumulates
interest at a rate equal to the 20-year U.S. government bond rate. If the
deferral is in phantom units of Common Stock, the units are credited to an
account for each participating director along with dividends in the same manner
as the quarterly retainer that is paid in phantom units of Common Stock
described above. Two directors elected to participate in this plan in 1998.
One director who previously participated in the Executive Deferred Income
Plans ("EDIPs"; see page 10) who remains on the Board of Directors will be
entitled to payments in amounts which will provide him with a maximum annual
yield of 24% on the fees deferred, with the exact yield dependent upon the age
of the director at the time of his participation. If (i) such director
terminates his membership on the Board during the two year period following a
"change in control" of the Company (as described beginning on page 8) other than
by reason of retirement, death, disability or a violation of certain provisions
of the EDIPs, or (ii) prior to such event the director has terminated his
membership on the board, the Compensation Committee may direct that he 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 substantially all of the Company's liabilities
under the EDIPs, absent a change in the federal tax laws.
5
<PAGE> 8
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
-----------------------------------
Annual Compensation Awards Payouts
------------------------------------ ------------------------- -------
Securities
Restricted Underlying
Other Annual Stock Options/SARs LTIP All Other
Name and Bonus Compensation Award(s) (# of Payouts Compensation
Principal Position Year Salary ($) ($)(1) ($) ($)(3) shares) ($) ($)(2)
------------------ ---- ---------- ------ ------------ ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ronald H. Zech -- 1998 587,500 485,557 4,625 0 52,000 358,613 14,865
Chairman of the Board, 1997 537,500 361,463 27,664 0 64,000 0 9,308
President and Chief Executive 1996 500,000 309,270 32,735 0 120,000 152,279 8,298
Officer
David B. Anderson -- 1998 307,000 196,460 4,375 0 12,000 147,762 4,800
Vice President, Corporate 1997 290,333 156,743 4,375 0 18,000 0 4,750
Development, General Counsel 1996 281,146 128,071 4,375 0 20,000 0 3,781
and Secretary
David M. Edwards -- 1998 283,333 210,000 3,875 0 15,000 126,345 6,844
Senior Vice President & Chief 1997 261,667 175,000 13,945 223,000 19,000 0 5,729
Financial Officer 1996 235,000 107,050 13,945 0 20,000 0 5,323
William L. Chambers -- 1998 235,000 135,346 4,625 0 8,000 120,866 4,800
Vice President, Human Resources 1997 233,333 113,373 3,875 0 13,000 0 4,750
1996 225,000 92,245 3,625 0 16,000 112,934 4,500
Brian A. Kenney -- 1998 193,333 97,822 3,175 25,134 6,000 0 4,800
Vice President, Finance 1997 179,167 92,672 3,175 0 6,000 0 4,750
1996 156,875 70,763 10,795 0 6,000 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 1998 in the
amount of $4,800 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, 1985 and 1987 Executive
Deferred Income Plans for Messrs. Zech and Edwards of $10,065 and $2,084,
respectively.
(3) Dividends are paid on all restricted stock awarded by the Company. The
number and value of restricted stock held as of December 31, 1998 were 8,000
shares valued at $303,040 for Mr. Edwards and 700 shares valued at $26,516
for Mr. Kenney in each case based on a closing price of $37.88.
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<PAGE> 9
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The table below sets forth information concerning stock options granted
during 1998 to each of the named executive officers.
<TABLE>
<CAPTION>
Potential Realizable
Value at
Individual Grants Assumed Annual
- ---------------------------------------------------------------------------------- Rates of
Number of Stock Price
Securities % of Total Appreciation
Underlying Options/SARs for Option
Options/SARs Granted to Exercise or Term(3)
Granted Employees in Base Price Expiration -----------------------
Name (#)(1) Fiscal Year ($/Share)(2) Date 5% ($) 10% ($)
---- ------------ ------------ ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Ronald H. Zech........... 52,000 9.57% 39.72 7/24/2008 1,298,905 3,291,680
David B. Anderson........ 12,000 2.21% 39.72 7/24/2008 299,747 759,618
David M. Edwards......... 15,000 2.76% 39.72 7/24/2008 374,684 949,523
William L. Chambers...... 8,000 1.47% 39.72 7/24/2008 199,832 506,412
Brian A. Kenney.......... 6,000 1.10% 39.72 7/24/2008 149,874 379,809
</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 prices 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% for the ten year term of
the stock options as prescribed by the proxy rules of the Securities and
Exchange Commission and, therefore, are not intended to forecast possible
future appreciation, if any, of the Company's Common 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 1998 by each of the named executive officers, the number of
unexercised options and the 1998 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 ($37.88).
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-
Options/SARs at Fiscal the-Money Options/SARs
Shares Year-End (#) at Fiscal Year-End ($)
Acquired on Value --------------------------- ---------------------------
Name Exercise Realized ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ronald H. Zech.................. 28,000 685,316 282,000 114,000 4,451,672 544,901
David B. Anderson............... 7,000 108,938 57,000 26,000 694,595 109,413
David M. Edwards................ 8,000 207,940 89,500 29,500 1,467,265 111,619
William L. Chambers............. 0 0 74,500 18,500 1,150,010 84,443
Brian A. Kenney................. 0 0 15,500 10,500 187,264 34,147
</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.
7
<PAGE> 10
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 1998:
<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................................. 9,192 1998-2000 9,192 27,576
David B. Anderson.............................. 2,132 1998-2000 2,132 6,396
David M. Edwards............................... 2,930 1998-2000 2,930 8,790
Williams L. Chambers........................... 1,332 1998-2000 1,332 3,996
Brian A. Kenney................................ 800 1998-2000 800 2,400
</TABLE>
- ---------------
(1) Payouts are based 50% on the Company achieving pre-established levels of
return on common equity ("ROE") and 50% on the Company's percentile ranking
in the MidCap 400 on total shareholder return ("TSR"), and are paid in
Common Stock and cash following completion of a three year performance
period. No payout will be made unless the threshold performance level of one
or both of the performance measures is achieved. The target amounts, plus an
amount equal to additional units representing reinvested dividends during
the performance period, will be earned if target ROE and target TSR are
achieved or if the target is exceeded on one performance measure and not
achieved on the other; the maximum amount plus an amount equal to additional
units representing reinvested dividends will be earned if target ROE and
target TSR are 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 for 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 of the Company or one of its subsidiaries 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
8
<PAGE> 11
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 taxes imposed on the executive by reason of
payments required by (aa) - (cc). "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 the Company'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 the Company in substantially the
same proportions as their ownership of the Company 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's 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 subsidiaries 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 Company's 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
9
<PAGE> 12
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 ($2,003,859); Mr. Anderson ($1,081,103); Mr. Edwards
($886,598); Mr. Chambers ($710,235); Mr. Kenney ($577,515).
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 or 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 or more 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
hereinabove 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
10
<PAGE> 13
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 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 30,852 46,272 61,704 77,124 92,556 107,976
400,000 63,852 95,772 127,704 159,624 191,556 223,476
600,000 96,852 145,272 193,704 242,124 290,556 338,976
800,000 129,852 194,772 259,704 324,624 389,556 454,476
1,000,000 162,852 244,272 325,704 407,124 488,556 569,976
1,200,000 195,852 293,772 391,704 489,624 587,556 685,476
1,400,000 228,852 343,272 457,704 572,124 686,556 800,976
</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, 21 years; Mr. Edwards,
17 years; Mr. Chambers, 5 years, Mr. Anderson, 4 years and Mr. Kenney, 3 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 of specific goals by the Company and its subsidiaries. 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 and its subsidiaries engage
is not feasible since most of these companies are either privately-held or
subsidiaries of larger companies, 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 S&P 500 index, the MidCap 400 index or
the DJTA (as referred to in the section entitled "Performance Graph"); thus, the
Comparative Group may include companies not included in those
11
<PAGE> 14
indices. 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 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 companies in the Comparative
Group, giving consideration to the comparability of responsibilities and
experience. Salary adjustments for executive officers of the Company and other
senior level employees 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 employee 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 November 1, 1998 from $575,000 to
$650,000 based on both his personal performance and the results achieved by the
Company. The salaries paid in 1998 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 1998, 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. The maximum incentive award was 200% 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 of the Company and four of its five subsidiaries, and 115%
or more 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 four of its five subsidiaries, and at 85% of the target financial objective
in the remaining subsidiary. 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 50% on the consolidated results of the Company and 50%
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 25% on the consolidated results of the Company, 25% 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.
In 1998, the Company met 105.4% of its consolidated net income objective,
entitling Mr. Zech to a cash payment of $485,557 under the MIP based on the
factors described above. This payment represents 83% of Mr. Zech's salary and
127% of his target award.
12
<PAGE> 15
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.
LTICP awards are provided to the Chief Executive Officer and selected members of
senior management primarily in the form of stock options and IPUs. LTICP awards
are provided to other key employees primarily in the form of stock options. In
1998, 240 employees received awards under the LTICP. The size of awards made
under the LTICP 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 1998, LTICP awards to the Company's executive officers
were on par with median long-term incentive opportunities provided by the
companies in the Comparative Group.
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 average of the high and low market
price of the Common Stock as of the date of grant, 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 1998 based on the factors
described above. Mr. Zech was granted an option to purchase 52,000 shares of the
Company's Common Stock at a price equal to the average of the high and low
market price on the date of grant.
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. IPUs are subject to
redemption in cash and Common Stock if the Company's performance over a three
year period (the "Performance Period") reaches target levels established by the
Compensation Committee. For Performance Periods beginning in years prior to
1998, performance was measured in terms of return on common equity. For the
Performance Period beginning in 1998, performance will be measured in terms of
both the Company's TSR relative to the TSR of companies in the MidCap 400, and
return on common equity. The number of IPUs redeemed may be more or less than
the number granted based on the extent to which performance exceeds or falls
short of target levels. 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 1998-2000
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 a specified level and the TSR of the Company is at or above a specified
percentile TSR level in the MidCap 400. 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 1998, Mr. Zech received a grant of 9,192 IPUs covering the
1998-2000 Performance Period based on the considerations described above. Mr.
Zech received a payment of $358,613 for the Performance Period ending in 1998.
POLICY ON DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Internal Revenue Code limits the deductibility to the
Company of compensation in excess of one million dollars paid to the Chief
Executive Officer or any of the named executive officers during any taxable
year. Compensation that meets the requirements to qualify as performance-based
compensation is excluded from the one million dollar limit. Appropriate steps
have been taken to qualify certain awards made under the Company's LTICP as
performance-based. In addition, if it is determined that any compensation
payable in excess of one million dollars is not performance-based, the Committee
may require, as it has in the past, that such excess be deferred until it
becomes deductible. While the tax impact of compensation arrangements is an
important factor to be considered, such impact will be evaluated in light of the
13
<PAGE> 16
Company's overall compensation philosophy and objectives. The Committee believes
there may be circumstances in which its ability to exercise discretion outweighs
the advantages of qualifying compensation under Section 162(m), and may, from
time to time, provide compensation that is not fully deductible if it determines
that doing so is 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 employees eligible
for awards under the LTICP had 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 have exceeded their interim ownership targets for 1998. The group in
the aggregate has also exceeded 1998 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
14
<PAGE> 17
PERFORMANCE GRAPH
The following performance graph sets forth a comparison of the yearly
percentage change in the cumulative total shareholder return on the Company's
Common Stock (on a dividend reinvested basis utilizing the closing price on
December 31, 1993 as the base) with the cumulative total shareholder return of
the companies within the Standard & Poor's 500 Composite Stock Price Index ("S&P
500"), the Standard & Poor's MidCap 400 Index ("MidCap 400") and the Dow Jones
Transportation Average ("DJTA").
There are a number of reasons why comparing total shareholder return with
the MidCap 400 is appropriate. The MidCap 400, in which the Company is included,
represents a comparison to companies with similar market capitalizations. Most
of the Company'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 that provides a ready comparison for investors. In March 1998,
the Company was included in the DJTA and has, therefore, also included the DJTA
for comparison purposes.
The performance graph reflects a weighted average comparison based upon the
market capitalization of each company and assumes $100.00 was invested in GATX
Common Stock and each of the indices on December 31, 1993, and that all
dividends were reinvested.
TOTAL RETURN
GATX VS. S&P 500 VS. MIDCAP 400 V. DJTA
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
GATX S&P 500 MIDCAP 400 DJ TRANSPORTATION
---- ------- ---------- -----------------
<S> <C> <C> <C> <C>
'1993' 100.00 100.00 100.00 100.00
'1994' 112.00 101.32 96.41 83.64
'1995' 127.95 139.34 126.22 115.37
'1996' 132.32 171.32 150.47 132.97
'1997' 204.08 228.46 198.98 193.95
'1998' 218.70 293.74 236.96 189.16
</TABLE>
15
<PAGE> 18
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 as of
March 5, 1999:
<TABLE>
<CAPTION>
Shares of Common Stock
Beneficially Owned
Name of Beneficial Owner as of March 5, 1999(1)(2)
------------------------ -------------------------
<S> <C>
David B. Anderson........................................... 73,580
William L. Chambers......................................... 84,084
James M. Denny.............................................. 5,203
David M. Edwards............................................ 107,220
Richard Fairbanks........................................... 4,287
William C. Foote............................................ 6,975
Deborah M. Fretz............................................ 3,272
Richard A. Giesen........................................... 6,874
Brian A. Kenney............................................. 16,505
Miles L. Marsh.............................................. 4,799
Charles Marshall............................................ 10,569
Michael E. Murphy........................................... 6,569
John W. Rogers, Jr. ........................................ 1,520
Ronald H. Zech.............................................. 354,800
Directors and Executive Officers as a group................. 757,125
</TABLE>
- ---------------
(1) Includes phantom units of Common Stock credited to the accounts of the
non-employee directors as follows: Mr. Denny (2,569); Mr. Fairbanks (2,287);
Mr. Foote (5,813); Ms. Fretz (2,569); Mr. Giesen (5,474); Mr. Marsh (2,569);
Mr. Marshall (2,569); Mr. Murphy (2,569); Mr. Rogers (520) and directors and
executive officers as a group (26,939). Also includes shares which may be
obtained by exercise of previously granted options within 60 days of March
5, 1999 by Mr. Zech (289,000), Mr. Anderson (57,000), Mr. Edwards (89,500),
Mr. Chambers (74,500), Mr. Kenney (15,500) and directors and executive
officers as a group (583,425).
(2) Each person has sole investment and voting power (or shares such powers with
his or her spouse), except with respect to phantom units of Common Stock and
option grants. 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 1.53% of the
Company's outstanding shares of Common Stock. No director or executive
officer owns any Preferred Stock.
16
<PAGE> 19
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission and the New York Stock Exchange reports of ownership and
changes in ownership of common stock and other equity securities of the Company.
Officers, directors and greater than 10% shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms filed.
Based solely on review of the copies of such reports furnished to the
Company or written representations that no other reports were required, the
Company believes that, during the 1998 fiscal year, all filing requirements
applicable to its officers, directors and greater than 10% beneficial owners
were complied with.
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)........... 5,890,600 11.92
One State Farm Plaza
Bloomington, IL
</TABLE>
- ---------------
(1) According to a Schedule 13G dated February 6, 1999, State Farm Mutual
Automobile Insurance Company ("State Farm") and certain of its 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 5,890,600 shares of Common Stock. State Farm and
each of the entities disclaim that they are part of a group.
APPROVAL OF AMENDMENTS TO THE GATX CORPORATION
1995 LONG TERM INCENTIVE COMPENSATION PLAN
There will be presented to the shareholders the following separate
proposals to amend the 1995 Plan for officers and key employees of the Company
and its subsidiaries to make certain awards available to non-employee directors
of the Company and to provide for additional shares of Common Stock for use
under the 1995 Plan.
The proposed amendments 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. The amendments to the 1995 Plan will be effective as of the date of
shareholder approval. Estimates of benefits which would have been paid under the
1995 Plan in the past or will be payable in the future if the amendments to the
1995 Plan are approved cannot be made since such benefits will depend upon,
among other things, future awards under 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 Closing price of the Company's Common Stock as reported for New York
Stock Exchange composite transactions on March 5, 1999 was $35.31.
17
<PAGE> 20
APPROVAL OF DIRECTOR STOCK OPTIONS
On January 29, 1999, the Board of Directors adopted, subject to shareholder
approval, an amendment to the 1995 Plan which would allow each non-employee
director to receive non-qualified stock options in an amount determined from
time to time by the Compensation Committee but not to exceed 5,000 shares during
any calendar year. This amendment is designed to attract and retain qualified
non-employee directors and to aid in compensating non-employee directors for
their services to the Company. Therefore, it is proposed that the 1995 Plan be
amended to provide that non-employee directors receive such awards of
non-qualified stock options.
The Board of Directors recommends a vote for this proposal.
APPROVAL OF ADDITIONAL SHARES FOR USE UNDER THE PLAN
On March 5, 1999, the Board of Directors adopted, subject to shareholder
approval, an amendment to the 1995 Plan which provides for the issuance of
2,000,000 additional shares of Common Stock for use in the 1995 Plan. The Board
of Directors continues to believe that incentive programs such as the 1995 Plan
are important factors in retaining and rewarding executives and other key
employees, and the authorization to issue additional shares facilitates the
continuance of the 1995 Plan. Therefore, it is proposed to amend the 1995 Plan
to provide for the issuance of 2,000,000 additional shares of Common Stock for
use under the 1995 Plan.
The Board of Directors recommends a vote for this proposal.
DESCRIPTION OF THE 1995 PLAN
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 IPUs.
As of March 5, 1999, 943,366 shares were available for grant under the 1995
Plan, and an additional 3,277,350 shares were reserved for issuance pursuant to
awards previously granted and outstanding under the 1985 Long Term Incentive
Compensation Plan ("1985 Plan") and the 1995 Plan and would again become
available for issuance under the 1995 Plan if those awards lapse. The 1995 Plan
initially provided that the aggregate number of shares of Common Stock which may
be issued pursuant to all grants thereunder may not exceed 3,000,000 shares
together with any shares of Common Stock which were authorized but unissued
under the 1985 Plan.
The Common Stock delivered under the 1995 Plan may be authorized and
unissued stock, treasury shares or, at the discretion of the Committee, may be
purchased on the open market. Any shares subject to a grant or award which
terminates by expiration, cancellation or otherwise prior to the issuance of
such shares (including those which terminate because of the exercise of a
related Stock Appreciation Right except to the extent Common Stock is issued
upon exercise of the Stock Appreciation Right) or, in the case of the grant of
Restricted Common Stock, prior to vesting shall again be available for future
grants under the 1995 Plan. Appropriate adjustment shall be made with respect to
the number and kind of shares optioned or awarded or subject to being optioned
or awarded in the event of a merger, consolidation, reorganization,
recapitalization, stock split, stock dividend, spin-off or other change in the
corporate structure or capitalization affecting the Common Stock.
The 1995 Plan 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 (including the executive officers named in the Summary Compensation
Table) to receive awards. Approximately 320 employees have received awards under
the 1995 Plan. 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
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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.
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.
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. Stock
Options will become exercisable commencing no sooner than one year after the
date of grant, subject to the Committee's discretionary authority to accelerate
the date on which all or any part of an option may be first exercised. The
exercise price of Stock Options shall not be less than the fair market value at
the date of grant. 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 it is
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 become 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 any
employee participant shall not exceed 150,000 and, if shareholders authorize
participation by non-employee directors, the number of Stock Options granted to
any non-employee director shall not exceed 5,000.
STOCK APPRECIATION RIGHTS
Stock Appreciation Rights ("SARs") may be granted in conjunction with a
Stock Option then being granted or in conjunction with a previously granted
Non-Qualified Stock Option. SARs become exercisable no earlier than the later of
six months from the date of grant or one year from the Option Date, but 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 the excess of the fair market value of the Common Stock on that date
over the option price. 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 or termination
of the related Stock Option or employment with the Company, with exceptions for
death, disability or retirement identical to those relating to Stock Options.
RESTRICTED STOCK RIGHTS AND RESTRICTED COMMON STOCK
Restricted Stock Rights entitle participants to receive shares of
Restricted Common Stock not less than six months from the date of grant of the
Restricted Stock Rights, subject to certain
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restrictions. The holder of Restricted Stock Rights receives cash equivalent to
the dividend paid on the Company's outstanding Common Stock and the holder of
Restricted Common Stock is entitled to receive dividends, with interest thereon,
as the Committee determines. The holder may vote the Restricted Common Stock and
exercise other shareholder rights, except that the Company retains the stock
certificate, the employee may not dispose of the shares during the restriction
period, which shall not be less than three years, and dividends may be withheld
by the Company until the restrictions lapse. If conditions of the award are
satisfied, upon the end of the restriction period the Company will distribute
the stock certificates, free of all restrictions, in installments. Any
undistributed Restricted Common Stock and cash and dividends will be forfeited
if employment terminates, except upon death or retirement or as the Committee
otherwise determines. 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
Performance Awards may be granted to participants who have been granted
Restricted Stock Rights or Restricted Common Stock which provide cash payments
to participants not exceeding the market value of the Restricted Common Stock
when the restrictions lapse if certain criteria and Performance Goals
established by the Committee and approved by the Board of Directors are met.
Except as otherwise determined by the Committee, if employment terminates prior
to the distribution of any installment, all rights to further payments
terminate.
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 (disregarding salary in excess of $1,000,000) 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 return on common equity, total
shareholder return, accounting and value based earnings, return on capital,
sales growth or return on investment or any combination of the above measures 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. If the Performance Goal is
achieved or exceeded, participants will 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 in the
immediately following sentence, upon termination of employment, a participant
will forfeit 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 (a) a
fiduciary of securities under an employee benefit plan, (b) a corporation
directly or indirectly owned by shareholders of the Company in
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substantially the same proportions as their ownership of the Company or (c) 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 (a) - (c) 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 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 1995 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 1995 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 optionee 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 optionee 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.
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The holder of an ISO will realize 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 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 SAR or an 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.
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APPROVAL OF THE GATX CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
There will be presented to the shareholders a proposal to approve a new
plan entitled the "GATX Corporation Employee Stock Purchase Plan" (the "ESPP").
On January 29, 1999, the Board of Directors adopted the ESPP subject to
shareholder approval. The ESPP will not be put into effect unless approved by an
affirmative vote of the majority of the shares voting on the proposal. The ESPP
provides a systematic method for the purchase of the Company's Common Stock by
employees of the Company and certain of its subsidiaries, and will further align
the interest of employees with the interests of the Company. The Board of
Directors believes that, in concert with the Company's other compensation and
benefit programs, the ESPP will be an important factor in attracting and
retaining qualified employees essential to the continued success of the Company.
Thus, the Board believes that approval of the ESPP is in the best interests of
the Company and its shareholders.
The Board of Directors recommends a vote for this proposal.
The ESPP is intended to qualify as an "employee stock purchase plan" under
Section 423 of the Code. Shares of Common Stock will be offered under the ESPP
through consecutive offering periods ("Offering Period") until the earlier of
the stated termination date of the ESPP (December 31, 2014) or the earlier
termination of the ESPP. The first Offering Period is anticipated to begin on
June 1, 1999 and will end on December 31, 1999. Subsequent Offering Periods
shall be from January 1 to December 31. However, the Administrator (or to the
extent required (i) by the New York Business Corporation Law or (ii) to maintain
the exemption provided in SEC Rule 16b-3, the Compensation Committee of the
Board of Directors) has the authority to establish or change the duration of any
Offering Period. The purchase price of shares of Common Stock acquired in any
Offering Period will be 85% of the lesser of (a) the Fair Market Value of the
shares on the first day of the Offering Period or (b) the Fair Market Value of
the shares on the last day of the Offering Period. Fair Market Value is the
average of the highest and lowest quoted sales prices on a share of Common Stock
on the New York Stock Exchange Composite Transaction Report.
Employees of the Company and certain of its subsidiaries as are from time
to time designated by the Company will be eligible to participate in the ESPP,
as long as the employees customarily work at least 20 hours per week and for
more than five months per calendar year. No employee may participate who owns or
holds options to purchase or who, as a result of participation in the ESPP,
would own or hold options to purchase 5% or more of the outstanding shares of
Common Stock. As of March 5, 1999, approximately 6,400 employees, including all
of the Company's executive officers, would have been eligible to participate in
the ESPP.
Eligible employees who desire to participate must authorize payroll
deductions prior to the start of the Offering Period. A participating employee's
payroll deductions must be at a rate of not less than $25.00 per month nor more
than $833.00 per month, so as not to exceed $10,000 per calendar year. In
addition, no participant may purchase shares with a Fair Market Value
(determined on the first day of the Offering Period) exceeding $25,000. A
participant may withdraw from the ESPP at any time prior to the last 15 days of
each Offering Period by delivering a discontinuance notice, whereupon their
accrued payroll deductions will be refunded to them and the Participant's right
to purchase shares under the ESPP will immediately terminate. A participant will
be deemed to have elected to participate in each subsequent period unless the
participant gives such written notice of discontinuance.
The ESPP will be administered and interpreted by the Vice-President of
Human Resources of the Company (the "Administrator") and the Compensation
Committee of the Board of Directors. The Compensation Committee will take such
action as may be required to assure that purchases and sales of Common Stock
under the ESPP meet the exemption requirement of Rule 16-3 under the Securities
Exchange Act of 1934.
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A maximum of 0.5% of the outstanding shares of Common Stock as of the date
of adoption of the ESPP shall be available for purchase during any calendar
year. If the ESPP had been adopted on March 5, 1999, 247,167 shares would be
available for each calendar year, or 3,707,505 shares over the life of the ESPP.
The shares of Common Stock sold to participants under the ESPP may be authorized
and unissued Common Stock or treasury shares, including shares purchased in the
open market or a private transaction. The Company can make proportionate and
appropriate adjustments in the number of shares available under the ESPP to
reflect any stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar change in the Company's capital
structure.
Estimates of benefits which would have been paid under the ESPP in the past
or will be payable in the future if the ESPP is approved cannot be made since
such benefits will depend upon, among other things, the decision by an eligible
employee to participate and the price of Common Stock on the first and last day
of the Offering Period.
The ESPP authorizes the Compensation Committee to terminate or amend the
ESPP from time to time. No amendment will become effective without shareholder
approval if such is required under the New York Business Corporation Law or
Section 423 of the Code.
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 a 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 2000 ANNUAL MEETING
Any shareholder proposal intended for inclusion in the Company's proxy
material in connection with the Company's 2000 Annual Meeting must be received
by the Company no later than November 18, 1999, and otherwise comply with the
requirements of the Securities and Exchange Commission. Any shareholder who
intends to present a proposal at the Company's 2000 Annual Meeting without
inclusion in the Company's proxy material must send to the Company a notice of
such proposal which must be received no earlier than December 24, 1999 and no
later than January 24, 2000, and must otherwise comply with the requirements of
the Company's By-laws.
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"). Both the Federal and
ACE policies insure the Company in the event the Company is required to
indemnify a director or officer. The Federal and ACE policies also insure
directors and officers for those instances in which they may not be indemnified
by the Company. The CODA policy insures only directors and officers and only for
those instances in which they may not be indemnified by the Company. The ACE and
Federal policies expire on August 14, 2001. The CODA policy expires on August
14, 2000. During 1998, the Company paid premiums of $325,000 to ACE and $169,600
to
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Federal. An adjustment was made to the CODA premium which was prepaid in 1997;
the net cost of the CODA premium for 1998 is $147,500.
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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APPENDIX
GATX CORPORATION
1995 LONG TERM INCENTIVE COMPENSATION PLAN
(AS PROPOSED TO BE AMENDED AT THE 1999 ANNUAL MEETING)
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 (i) 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 and (ii) members of the Board of Directors who are not employees of the
Company or its subsidiaries, who may only receive Non-Qualified Stock Options
under the Plan. The Committee may delegate to a committee consisting of one or
more 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. Five million shares of Common Stock, 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. The shares
authorized hereunder include the 3,000,000 shares of Common Stock (adjusted to
reflect the two for one split effective June 1, 1998) initially made available
under the Plan together with any shares of Common Stock authorized under the
1985 Long Term Incentive Compensation Plan (the "1985 Plan") which were unissued
as of the date of adoption hereof, and which are not subsequently issued
pursuant to awards under the 1985 Plan
<PAGE> 29
that are outstanding on that date. If a Stock Option granted under the Plan
expires or is terminated for any reason without having been exercised in full
for Common Stock (including those which terminate by reason of the exercise of a
Stock Appreciation Right in accordance with the provisions of Part IV below) or
if a Restricted Stock Right, Restricted Common Stock or Individual Performance
Unit awarded under the Plan is forfeited for any reason, the shares not acquired
or forfeited shares, as the case may be, shall (unless the Plan shall have
terminated) again become available for purposes of the Plan. In the event of a
merger, consolidation, reorganization, recapitalization, stock dividend, stock
split, spin-off or other change in corporate structure or capitalization
affecting the Common Stock, appropriate adjustment shall be made with respect to
the number and kind of shares (or other securities) optioned or awarded or
subject to being optioned or awarded under the Plan and in the sole discretion
of the Board of Directors such adjustments in price and other adjustments as it
deems equitable may be made.
5. Amendment. The Board of Directors of the Company may amend the Plan from
time to time, except that without the approval of the holders of a majority of
the outstanding shares of Common Stock entitled to vote at a duly held meeting
of the shareholders, the number of shares of Common Stock which may be issued
under the Plan may not be increased except as provided in the last sentence of
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 Awards or Individual Performance Units theretofore granted a
Participant which would adversely affect such 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 one hundred fifty thousand (150,000). 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.
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2. Price. The purchase price of each Incentive Stock Option shall be
determined by the Committee; provided, however, that in no instance shall such
price be less than one hundred percent of the fair market value of a share of
Common Stock on the date the option is granted (the "Option Date") or par value,
whichever is higher. The full purchase price of each share purchased upon the
exercise of any Incentive Stock Option shall be paid in cash or shares of Common
Stock, or both, at the time of such exercise (or by such other method as may be
satisfactory to the Committee) and, as soon as practicable thereafter, a
certificate representing the shares so purchased shall be delivered to the
person entitled thereto. A Participant shall not have any rights of a
shareholder with respect to the shares of Common Stock subject to an option
granted the Participant until such shares are purchased upon exercise of the
option.
3. Exercise. Subject to the following provisions of this paragraph and the
following provisions of paragraph II-4, unless sooner terminated, all Incentive
Stock Options granted to a Participant on an Option Date may be exercised
commencing on a date no earlier than one 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 employee Participant during any calendar year shall not
exceed one hundred fifty thousand (150,000) and the number of Non-Qualified
Stock Options granted to any non-employee director shall not exceed five
thousand (5,000).
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
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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
subsidiaries (or in the case of non-employee members of the Board of Directors,
membership on the Board) 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 (or Board membership) 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
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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 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 such 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, not less than three (3) years, 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.
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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 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 $1,000,000) 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
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Individual Performance Units previously credited to it) shall be increased by an
amount equal to the dividend paid on that date on a share of the Company's
Common Stock, reinvested in additional Individual Performance Units in an amount
equivalent to an investment of such dividend in shares of the Company's Common
Stock at its fair market value on such date.
2. Award. Except as provided in paragraph VII-5, awards of Individual
Performance Units shall be contingent upon the Participant's continuing
employment with the Company or its subsidiaries throughout the specified
Performance Period, and shall be subject to such additional terms and conditions
as the Committee in its sole discretion deems appropriate. The length of
Performance Periods may vary among Participants.
3. Performance Goals. For each Performance Period, the Committee may
establish Performance Goals which shall be based upon achievement of specific
levels of one or more of the following measures applicable to the Company as a
whole or to any individual subsidiary: return on equity, total shareholder
return, accounting and value based earnings, return on capital, sales growth or
return on investment. 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. 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.
VIII. 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 fiduciary 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)(a)(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:
individuals 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 or
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 or director
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
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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.
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GATX CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
1. Purpose. The GATX Corporation Employee Stock Purchase Plan provides
employees of GATX Corporation and employees of certain Subsidiaries which are
designated by the Company as participating in the Plan with an opportunity to
become owners of the Company through the purchase of shares of GATX common
stock. The Plan is intended to qualify as an Employee Stock Purchase Plan under
Section 423 of the Internal Revenue Code of 1986, as amended, and its terms
should be construed accordingly.
2. Definitions.
a. "Administrator" means the Vice President of Human Resources of the
Company.
b. "Code" means the Internal Revenue Code of 1986, as amended.
c. "Committee" means the Compensation Committee of the Company's Board
of Directors.
d. "Common Stock" means the common stock of the Company, with a par
value of $0.625 per share.
e. "Company" means GATX Corporation.
f. "Compensation" means all base straight time gross earnings paid by
the Employer during an Offering Period, exclusive of payments for
commissions, incentive compensation, incentive payments, bonuses and other
compensation.
g. "Employee" means any person who is an employee of an Employer whose
customary employment with an Employer is at least 20 hours per week and
more than five months in any calendar year.
h. "Employer" means the Company or any Subsidiary designated by the
Company to participate in the Plan.
i. "Enrollment Date" means the first day of each Offering Period.
j. "Exercise Date" means the last day of each Offering Period.
k. "Fair Market Value" as of any date means the value of Common Stock
determined as the average of the highest and lowest quoted sales prices of
a share of Common Stock on the New York Stock Exchange Composite
Transaction Report or, in the event there was no such sale reported on such
date, on the last preceding date on which such a sale was reported.
l. "Offering Period" means the period of 12 months starting on January
1 of each year and ending on December 31 of each year, with the exception
of the first Offering Period which shall begin on June 1, 1999 and end on
December 31, 1999.
m. "Participant" means for any Offering Period an eligible Employee
who has properly completed and submitted the appropriate forms authorizing
payroll deductions pursuant to Section 6 of this Plan.
n. "Plan" means the GATX Corporation Employee Stock Purchase Plan.
o. "Plan Agent" means a company or any affiliated entity which has
been selected by the Company to perform administrative and record keeping
services for the Company and the Plan Participants.
p. "Purchase Price" for any Offering Period means an amount equal to
85% of the Fair Market Value of a share of Common Stock on the Enrollment
Date or on the Exercise Date of such Offering Period, whichever is lower,
provided, however, that the Purchase Price may be
B-1
<PAGE> 39
adjusted by the Committee pursuant to Section 18, but in no case shall the
Purchase Price be less than the par value.
q. "Subsidiary" means a corporation, domestic or foreign, during any
period in which 50% or more of the voting shares are owned, directly or
indirectly, by the Company, or by any successor to the Company.
3. Eligibility. Any Employee who is employed by an Employer as of the first
day of an Offering Period is eligible to participate in the Plan for that
Offering Period, excluding however, members of a collective bargaining unit
which unit has rejected the opportunity to participate in the Plan or which has
been presented with the opportunity to participate but which has not yet
accepted.
4. Administration. The Administrator has full authority and discretion to
make, administer, and interpret such rules and regulations as it deems necessary
to administer the Plan (including rules and regulations deemed necessary in
order to comply with the requirements of Section 423 of the Code). The
Administrator will have final and binding authority to: (i) establish and or
change the duration of any Offering Period: (ii) limit or increase the frequency
and/or number of changes in the amounts withheld during an Offering Period;
(iii) establish the commercially reasonable exchange ratio applicable to amounts
withheld in a currency other than U.S. dollars; (iv) establish reasonable
waiting and adjustment periods and/or accounting and crediting procedures to
ensure that amounts applied toward the purchase of Common Stock for each
Participant properly correspond with amounts withheld from the Participant's
Compensation; (v) delegate its functions to officers or employees of the Company
or other persons including, but not limited to, the Plan Agent; (vi) establish
additional terms and conditions with respect to the purchase of shares under the
Plan; and (vii) establish such other limitations or procedures as it determines
in its sole discretion advisable and consistent with the administration of the
Plan. To the extent that any of the above actions are required to be performed
by the Committee in order to assure the exemption provided in Securities and
Exchange Commission Rule 16b-3, or to comply with the New York Business
Corporation Law, such actions shall be taken by the Committee.
5. Stock Subject to Plan. The shares of common stock that the Company will
sell to Participants under the Plan will be shares of authorized but unissued
Common Stock or shares currently held or subsequently acquired by the Company as
treasury shares, including shares purchased in the open market or in a private
transaction. The maximum number of shares made available for sale under the Plan
for any one calendar year shall not exceed one half of one percent (0.5%) of the
outstanding shares of Common Stock as of the date the Plan was approved by the
shareholders. If the total number of shares for which options are to be
exercised in an Offering Period exceeds the number of shares then available
under the Plan, the Company will make, so far as is practicable, a pro rata
allocation of the shares available. A Participant will have no interest in stock
covered by the Participant's option until such option has been exercised.
6. Participation. An eligible Employee may become a Participant for an
Offering Period by completing a payroll deduction authorization agreement form
and delivering it to the Administrator at such time and in such form as the
Administrator may require. All Participants receiving options under the Plan
will have the same rights and privileges.
7. Payroll Deductions. A Participant may contribute to the Plan only
through payroll deductions, as follows:
a. A Participant must complete an authorization agreement form through
the Administrator directing the Employer to have deductions made from the
Participant's compensation for each payroll period during the Offering
Period at a rate of not less than $25.00 per month and not more than
$833.00 per month, such that no more than $10,000 (U.S. dollars, based on
the exchange rate in effect as of the first day of the applicable Offering
Period as determined by the Administrator) may be deducted in any one
calendar year. Subject to the immediately preceding sentence, payroll
deductions for the following Offering Period will be renewed at the rate in
B-2
<PAGE> 40
effect as of the date of the immediately preceding Exercise Date, unless
changed or discontinued by the Participant as provided in Section 15.
b. All payroll deductions will be credited to the Participant's
account under the Plan. A Participant may not make any additional payments
into such account.
c. Payroll deductions will begin on the first payday coinciding with
or following the first day of each Offering Period and will end with the
last payday preceding or coinciding with the end of that Offering Period,
unless the Participant sooner withdraws as authorized under Section 15
below. All payroll deductions so withheld by an Employer will be remitted
to the Company at or near the end of each Offering Period, and such amounts
shall be converted into U.S. currency as of the date of such remittance.
d. A Participant may discontinue participation in the Plan as stated
in Section 15, or, subject to such uniform rules or regulations as the
Administrator may from time to time establish, may increase or decrease the
rate of payroll deductions during an Offering Period.
e. In order to comply with the preceding paragraphs, and Section 8
below, the Company may decrease a Participant's payroll deduction at any
time during an Offering Period.
f. No interest will accrue to the Participant on the payroll
deductions of a Participant in the Plan.
8. Granting of Options. On the Enrollment Date of each Offering Period, the
Company shall grant to a Participant an option to purchase a number of shares of
Common Stock with funds withheld from the Participant's compensation. The number
of shares will be determined at the end of the Offering Period and shall be
equal to the quotient of (a) the total amount of payroll deductions withheld
from the Participant's Compensation since the beginning of the Offering Period
for the purpose of the Plan, divided by (b) the Purchase Price for such Offering
Period. No Participant shall receive an option: (i) if, immediately after the
grant, that Participant would own shares, or hold outstanding options to
purchase shares, or both, possessing 5% or more of the total combined voting
power or value of all classes of shares of the Company; or (ii) that permits an
employee to purchase, during any Offering Period, a number of shares that
exceeds the quotient of $25,000 (U.S. dollars, based on the exchange rate in
effect as of the first day of the applicable Offering Period) divided by the
Fair Market Value of a share of Common Stock on the Enrollment Date (subject to
any adjustments under Section 18). For purposes of determining an individual's
amount of stock ownership, any options to acquire shares of Common Stock are
counted as shares of stock, and the attribution rules of Section 424(d) of the
Code shall apply.
9. Exercise of Option. Unless a Participant's account has been previously
withdrawn under the terms of this Plan, the Participant's option for the
purchase of shares of Common Stock during an Offering Period will be
automatically exercised as of the last day of the Offering Period for the
purchase of the maximum number of shares that the sum of the payroll deductions
credited to the Participant's account during such Offering Period can purchase
pursuant to the formula specified in Section 8.
10. Fractional Shares. Fractional shares will be credited to a
Participant's account if the amount of payroll deductions accumulated during any
given Offering Period is not equally divisible by the exercise price for that
Offering Period. However, fractional shares will not be distributed to a
Participant in the event that the Participant requests that shares be certified
and distributed. Upon a request for distribution of shares in certificate form
from a Participant's account, the distributee shall receive a certificate for
the whole shares and a check for the fractional share in an amount equal to the
proportionate value of a share of Common Stock on the date the distribution is
made from the Participant's account.
11. Delivery of Common Stock. As soon as administratively feasible after
the options are used to purchase Common Stock, the Company will deliver to the
Plan Agent the shares of Common
B-3
<PAGE> 41
Stock the Participant purchased upon the exercise of the option. The
Participant's shares may be held by the Plan Agent in nominee name for the
account of the Participant and the shares may be commingled with other shares
held in the Plan Agent's custody in a single account or stock certificate
without identification as to individual Participants. Upon request of the
Participant, the Plan Agent shall have delivered to the Participant a
certificate for whole shares and a check as payment for any fractional share
from the Participant's account. In the event that a Participant requests that
shares in his or her account be sold, the Plan Agent shall have the requested
shares transferred to a registered securities broker to execute such sale on
behalf of the applicable Participant. Where applicable, the shares may be sold
through an affiliate of the Plan Agent.
12. Dividends On Shares Held. In the event that dividends are declared and
paid by the Company, all such dividends paid with respect to shares held in the
custody of the Plan Agent or its nominee shall be subject to reinvestment in
Common Stock. All such dividends reinvested in Common Stock shall be reflected
in each Participant's respective account.
13. Account Statements. The Plan Agent will maintain individual accounts
for each Participant. Statements of account will be given to Participants at
least annually, and those statements will set forth the amount of payroll
deductions, the exercise price, dividends credited and the number of shares
purchased.
14. Subsequent Offerings. A Participant will be deemed to have elected to
participate in each subsequent Offering Period following the Participant's
initial election to participate in the Plan, unless the Participant files a
discontinuance notice with the Administrator or Plan Agent at least 15 days
before the beginning of the Offering Period as of which the Participant desires
to withdraw from the Plan.
15. Withdrawal From the Plan.
a. A Participant may withdraw all, but not less than all, payroll
deductions credited to the Participant's account for an Offering Period
before the end of such Offering Period by delivering a discontinuance
notice to the Administrator or Plan Agent at least 15 days before the end
of such Offering Period.
b. Upon the withdrawal of a Participant from the Plan, the
Participant's outstanding option under the Plan will immediately terminate.
c. If a Participant withdraws from the Plan for any reason, the
Company will pay to the Participant all payroll deductions credited to the
Participant's account as soon as practicable after the date of such
withdrawal and no further deductions will be made from the Participant's
Compensation.
d. A Participant who has elected to withdraw from the Plan may resume
participation in the same manner and pursuant to the same rules as any
Employee making an initial election to participate in the Plan, i.e., the
Participant may elect to participate in the next following Offering Period
so long as the Participant files the authorization form by the deadline for
that Offering Period.
16. Termination of Employment. Upon termination of the Participant's
employment for any reason, including disability, and other than death or
retirement, before the Exercise Date for any Offering Period, the payroll
deductions credited to the Participant's account will be deemed to have been
withdrawn from the Plan as of the date of such termination and will be returned
as soon as practicable to the Participant and all whole shares of Common Stock
held by the Plan Agent in the Participant's account shall be distributed in
certificate form, together with a check in lieu of any fractional share, unless
within a period of 30 days from the date of termination the Participant provides
notice to the Administrator that the Participant elects to have the shares sold
and the proceeds so distributed. For purposes of this Section, the term
disability shall have the same
B-4
<PAGE> 42
meaning as provided in Section 3.1 of the Company's Salaried Pension Plan, as of
the date in question.
17. Termination of Employment Due to Death or Retirement. Upon termination
of the Participant's employment due to the Participant's death, the payroll
deductions credited to the Participant's account will be deemed to have been
withdrawn from the Plan as of the date of such termination and will be paid as
soon as practicable to the Participant's personal representative or to the
Participant's designated beneficiary properly designated in accordance with the
Employer's local business practice and legal requirements and all whole shares
of Common Stock held by the Plan Agent in the Participant's account shall be
similarly distributed in certificate form, together with a check in lieu of any
fractional share, unless within a period of 30 days from the date of such
termination the Participant's personal representative provides notice to the
Administrator that the he or she elects to have the shares sold and the proceeds
so distributed.
Upon termination of the Participant's employment due to the Participant's
retirement, unless otherwise requested by the Participant under paragraph 15, as
of the Exercise Date of the Offering Period within which the Participant's
termination due to retirement occurs, the Participant shall be treated as
withdrawing from the plan after the purchase of shares on such Exercise Date and
all whole shares of Common Stock held by the Plan Agent in the Participant's
account shall be distributed in certificate form, together with a check in lieu
of any fractional share, unless within a period of 30 days from the Exercise
Date the Participant provides notice to the Administrator that the Participant
elects to have the shares sold and the proceeds so distributed.
18. Adjustments Upon Changes in Capital Stock.
a. Subject to any required action by the Company (which it shall
promptly take) or its stockholders, and subject to the provisions of
applicable corporate law, if, during an Offering Period, the outstanding
shares of Common Stock increase or decrease or change into or are exchanged
for a different number or kind of security or are otherwise affected by
reason of any recapitalization, reclassification, stock split, reverse
stock split, combination of shares, exchange of shares, stock dividend, or
other distribution payable in capital stock, or some other increase or
decrease in such Common Stock occurs without the Company's receiving
consideration, the Committee will make a proportionate and appropriate
adjustment in the number and kind of securities underlying the options, so
that the proportionate interest of each Participant immediately following
such event will, to the extent practicable, be the same as immediately
before such event. Any such adjustment to the options will not change the
total price with respect to shares of Common Stock or other securities
underlying the Participant's election but will include a corresponding
proportionate adjustment in the price of the Common Stock, to the extent
consistent with Section 424 of the Code.
b. The Committee will make a commensurate change to the maximum number
and kind of shares provided in Section 5.
c. Any issue by the Company of Common Stock or any class of preferred
stock, or securities convertible into shares of common or preferred stock
of any class, will not affect, and no adjustment by reason thereof will be
made with respect to, the number of shares of Common Stock subject to any
options or the price to be paid for stock except as this Section 18
specifically provides. The grant of an option under the Plan will not
affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure, or to merge or to consolidate, or to dissolve, liquidate, sell,
or transfer all or any part of its business or assets.
d. In the event of a proposed sale of all or substantially all of the
assets of the Company, or the consolidation or merger of the Company with
or into another corporation, each outstanding option shall be assumed or an
equivalent option substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor
corporation
B-5
<PAGE> 43
refuses to assume or substitute for the option, the Offering Period then in
progress shall be shortened by setting a new Exercise Date (the "New
Exercise Date"). The New Exercise Date shall be before the date of the
Company's proposed sale or merger. The Board shall notify each participant
in writing, at least ten business days prior to the New Exercise Date, that
the Exercise Date for the participant's option has been changed to the New
Exercise Date and that the participant's option shall be exercised
automatically on the New Exercise Date, unless prior to such date the
participant has withdrawn from the Offering Period as provided in Section
15 hereof.
19. Transfers, Assignments and Pledges. A Participant may not, voluntarily
or involuntarily, assign, pledge or otherwise dispose of payroll deductions
credited to the Participant's account or any rights to exercise an option or to
receive shares of Common Stock under the Plan except, to the extent not
inconsistent with other provisions of this Plan, by will or the laws of descent
and distribution. Any other attempted assignment, pledge or other disposition
will be without effect, except that the Company may treat such act as an
election to withdraw under Section 15.
20. Amendment or Termination of Plan. The Committee may at any time
terminate or amend the Plan without shareholder approval. In the event of Plan
termination during an Offering Period, all payroll contributions for that
Offering Period shall be distributed as soon as practicable after the
termination. Any amendment of the Plan must be approved by the shareholders of
the Company to take effect if such approval is required under the New York
Business Corporation Law or Section 423 of the Code. The Company shall refund to
each Participant the amount of payroll deductions credited to their account as
of the date of termination as soon as administratively feasible following the
effective date of the termination of the Plan.
21. General Assets. Any amounts the Company invests or otherwise sets aside
or segregates to satisfy its obligations under this Plan will be solely the
Company's property (except as otherwise required by Federal or state wage laws),
and the Participant's claim against the Company under the Plan, if any, will be
only as a general creditor. The Participant will have no right, title or
interest whatever in or to any investments that the Company may make to assist
it in meeting its obligations under the Plan. Nothing contained in the Plan, and
no action taken pursuant to its provisions, will create or be construed to
create an implied or constructive trust of any kind or a fiduciary relationship
between the Company and any Employee, Participant, former Employee or former
Participant.
22. Governing Law. The internal laws of the State of Illinois shall govern
all matters relating to this Plan, without regard to the conflict of law
provisions of any state or other jurisdiction. The Committee may adopt
additional terms and conditions to the extent required to comply with local laws
and regulations.
23. Tax Withholding. To the extent that a Participant realizes ordinary
income in connection with a sale or other transfer of any shares of Common Stock
purchased under the Plan or the crediting of dividends to an account, the
Company may withhold amounts needed to cover such taxes from any payments due to
the Participant under this Plan or otherwise.
24. No Employment Contract. This Plan constitutes a voluntary act on the
part of the Company and nothing contained herein shall be regarded as a
permanent increase in salary or compensation, and therefore can be terminated
under Section 20 hereof. Nothing contained in this Plan constitutes an
employment contract between the Company (or any Subsidiary) and any Employee.
The Plan does not directly or indirectly give an Employee or class of Employees
any right to be retained in the Company's employ, nor does it enlarge or
diminish the Company's right to terminate or otherwise modify the Employee's
employment at any time. Participation in the Plan shall afford the Participant
no additional rights to compensation or damages in consequence of the
termination of the Participant's employment for any reason, including, without
limitation, damages for Plan benefits which may have accrued during any period
of reasonable notice to which the employee may be entitled. The Plan shall not
confer upon any Employee any legal or equitable rights (other than those
B-6
<PAGE> 44
constituting the options themselves) against an Employer or give rise to any
cause of action at law or in equity against any Employer or related company.
25. Personnel Data.
a. The Participant shall be advised by GATX that personnel data (as
shall be specified in a Schedule of Data which shall be attached to the
Authorization Agreement, as may be deemed necessary under local law) is
being obtained and processed for the purpose of performing all obligations
under the Plan.
b. These obligations include but are not limited to the disclosure of
the personnel data to GATX, the appointed Plan Agent and all relevant
authorities who are entitled to the disclosure of the personnel data to
give effect to the option granted under the Plan and the exercise of the
option under the Plan.
c. By completing the authorization agreement form the Participant
shall acknowledge and consent that the disclosure of personnel data will
include the disclosure to GATX and the appointed Plan Agent and all
relevant authorities whose principal place of business is the United States
of America and consent to the transfer of the personal data for this
purpose to the United States of America.
26. Legal Compliance. The Company will not issue any shares of Common Stock
under the Plan until the issuance satisfies all applicable requirements imposed
by Federal and state securities and other laws, rules, and regulations, and by
any applicable regulatory agencies or stock exchanges. To that end, the Company
may require the Participant to take any reasonable action to comply with such
requirements before issuing such shares. No provision in the Plan or action
taken under it authorizes any action that Federal, state or other applicable
laws otherwise prohibit.
27. Duration of Plan. No Offering Period shall begin after or extend beyond
December 31, 2014.
28. Effective Date. The Plan shall become effective as of June 1, 1999
subject to approval by a majority of the votes cast by the holders of shares
entitled to vote thereon at a special or annual meeting of the shareholders held
on or before May 31, 1999. If the Plan is not so approved, the Plan shall not
become effective.
B-7
<PAGE> 45
[LOGO]
<PAGE> 46
GATX CORPORATION
P PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
APRIL 23, 1999
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, the undersigned's,
true and lawful agents and proxies with full power of substitution in
each, to represent the undersigned at the Annual Meeting of Shareholders
X of GATX CORPORATION to be held at the office of the Company, 500 West
Monroe Street, Chicago, Illinois, on Friday, April 23, 1999, 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 SHAREHOLDER(S). 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, 4 and 5.
- --------------------------------------------------------------------------------
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, 4 and 5.
Item 1 - ELECTION OF DIRECTORS FOR WITHHELD WITHHELD AS
ALL FOR ALL INDICATED BELOW*
[ ] [ ] [ ]
Nominees: James M. Denny, Richard Fairbanks,
William C. Foote, Deborah M. Fretz, Richard A. Giesen,
Miles L. Marsh, Michael E. Murphy,
John W. Rogers, Jr. and Ronald H. Zech
*WITHHELD FOR: (Write that nominee's name in the space provided below).
_______________________________________________________________________
Item 2 - APPROVAL OF AMENDMENT FOR AGAINST ABSTAIN
OF 1995 LONG TERM INCENTIVE [ ] [ ] [ ]
COMPENSATION PLAN TO
AUTHORIZE PARTICIPATION
BY NON-EMPLOYEE DIRECTORS
Item 3 - APPROVAL OF ADDITIONAL FOR AGAINST ABSTAIN
SHARES FOR THE 1995 LONG [ ] [ ] [ ]
TERM INCENTIVE COMPENSATION
PLAN
Item 4 - APPROVAL OF EMPLOYEE FOR AGAINST ABSTAIN
STOCK PURCHASE PLAN [ ] [ ] [ ]
Item 5 - APPROVAL OF AUDITORS FOR AGAINST ABSTAIN
[ ] [ ] [ ]
In their discretion, the Proxies are authorized to vote upon other matters as
may properly come before the meeting.
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> 47
GATX CORPORATION
SALARIED EMPLOYEES RETIREMENT SAVINGS PLAN
P PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
APRIL 23, 1999
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, the undersigned's 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
X CORPORATION to be held at the office of the Company, 500 West Monroe
Street, Chicago, Illinois, on Friday, April 23, 1999, 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 SHAREHOLDER(S). 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, 4 and 5.
- --------------------------------------------------------------------------------
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, 4 and 5.
Item 1 - ELECTION OF DIRECTORS FOR WITHHELD WITHHELD
ALL FOR ALL AS INDICATED BELOW*
[ ] [ ] [ ]
Nominees: James M. Denny, Richard Fairbanks,
William C. Foote, Deborah M. Fretz, Richard A. Giesen,
Miles L. Marsh, Michael E. Murphy,
John W. Rogers and Jr. Ronald H. Zech
*WITHHELD FOR: (Write that nominee's name in the space provided below).
_______________________________________________________________________
Item 2 - APPROVAL OF AMENDMENT OF FOR AGAINST ABSTAIN
1995 LONG TERM INCENTIVE [ ] [ ] [ ]
COMPENSATION PLAN TO
AUTHORIZE PARTICIPATION
BY NON-EMPLOYEE DIRECTORS
Item 3 - APPROVAL OF ADDITIONAL FOR AGAINST ABSTAIN
SHARES FOR THE 1995 LONG [ ] [ ] [ ]
TERM INCENTIVE COMPENSATION
PLAN
Item 4 - APPROVAL OF EMPLOYEE FOR AGAINST ABSTAIN
STOCK PURCHASE PLAN [ ] [ ] [ ]
Item 5 - APPROVAL OF AUDITORS FOR AGAINST ABSTAIN
[ ] [ ] [ ]
In their discretion, the Proxies are authorized to vote upon other matters as
may properly come before the meeting.
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> 48
GATX CORPORATION
LOGISTICS 401K PLAN
P PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
APRIL 23, 1999
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, the undersigned's 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
X CORPORATION to be held at the office of the Company, 500 West Monroe
Street, Chicago, Illinois, on Friday, April 23, 1999, 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 SHAREHOLDER(S). 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, 4 and 5.
- --------------------------------------------------------------------------------
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, 4 and 5.
Item 1 - ELECTION OF DIRECTORS FOR WITHHELD WITHHELD AS
ALL FOR ALL INDICATED BELOW*
[ ] [ ] [ ]
Nominees: James M. Denny, Richard Fairbanks,
William C. Foote, Deborah M. Fretz, Richard A. Giesen,
Miles L. Marsh, Michael E. Murphy,
John W. Rogers, Jr. and Ronald H. Zech
*WITHHELD FOR: (Write that nominee's name in the space provided below).
_______________________________________________________________________
Item 2 - APPROVAL OF AMENDMENT OF FOR AGAINST ABSTAIN
1995 LONG TERM INCENTIVE [ ] [ ] [ ]
COMPENSATION PLAN TO
AUTHORIZE PARTICIPATION
BY NON EMPLOYEE DIRECTORS
Item 3 - APPROVAL OF ADDITIONAL FOR AGAINST ABSTAIN
SHARES FOR THE 1995 LONG [ ] [ ] [ ]
TERM INCENTIVE COMPENSATION
PLAN
Item 4 - APPROVAL OF EMPLOYEE STOCK FOR AGAINST ABSTAIN
PURCHASE PLAN [ ] [ ] [ ]
Item 5 - APPROVAL OF AUDITORS FOR AGAINST ABSTAIN
[ ] [ ] [ ]
In their discretion, the Proxies are authorized to vote upon other matters as
may properly come before the meeting.
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.
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- FOLD AND DETACH HERE -
