on the New York Stock Exchange (“NYSE”), and CIT is subject to the
NYSE’s rules and regulations. There is no cumulative voting.
How many votes must be present to hold the
Annual Meeting?
A quorum of a majority of the votes entitled to be cast, or
87,190,574 votes, must be present in person or represented by proxy to hold the Annual Meeting. We urge you to vote by proxy even if you plan to attend
the Annual Meeting. This will help us know as soon as possible that enough votes will be present to hold the Annual Meeting. In determining whether a
quorum exists, we will include in the count shares represented by proxies that reflect abstentions and “broker non-votes” (as further
described in this Proxy Statement under the heading “Questions and Answers About the Annual Meeting and Voting — What happens if I hold my
shares through a broker but do not give my broker specific voting instructions?”).
How do I vote?
You may vote by proxy or in person at the Annual
Meeting.
If you are a holder of record (that is, if your shares are
registered in your own name with our transfer agent), we have furnished you with the proxy materials, including a proxy card. You may vote by mail, by
telephone, on the Internet, or by attending the Annual Meeting and voting in person, as described below.
If you hold your shares in street name (that is, you hold
your shares through a broker, bank or other holder of record), please refer to the information on the voting instruction form forwarded to you by your
bank, broker or other holder of record to determine which voting options are available to you.
Vote by Mail
To vote by mail, simply mark, sign and date the proxy card and
return it in the postage-paid envelope provided. If you received an Access Notice, you can vote by mail by requesting paper copies of the Proxy
Statement, proxy card and other materials by calling 1-800-579-1639, or going to www.proxyvote.com or by sending an
email to sendmaterial@proxyvote.com and requesting a proxy card.
If you request a proxy card by e-mail, please send a blank e-mail
to sendmaterial@proxyvote.com with your Control Number in the subject line. Your Control Number can be found in the
Access Notice mailed to you on April 2, 2015. Upon receipt of your request, the proxy card and printed copies of the Annual Report and other proxy
materials will be mailed to you. Upon receipt, simply mark, sign and date your proxy card and return it in the enclosed postage pre-paid
envelope.
If you request printed copies, in future years, you will continue
to receive printed copies of the proxy card and other proxy materials automatically until such time as you may opt-out of receiving printed
copies.
If you wish to vote by mail, please make your request for paper
copies of the proxy card and other proxy materials on or before April 28, 2015. Votes by mailed proxy card must be received at CIT Group Inc., c/o Vote
Processing, Broadridge, 51 Mercedes Way, Edgewood, NY 11717 by 8:00 a.m. Eastern Daylight Saving Time on May 12, 2015, the day of the Annual
Meeting.
Vote by Telephone
You can vote by calling 1-800-690-6903. You will need your
Control Number, which can be found in the Access Notice mailed to you on April 2, 2015. Use any touch-tone telephone to transmit your voting
instructions up until 11:59 p.m., Eastern Daylight Saving Time, on May 11, 2015.
Vote on the Internet
You can also choose to vote on the Internet by going to www.proxyvote.com. You will need your Control Number, which can be found in the Access Notice mailed to you on April 2,
2015. Use the Internet to transmit your vote up until 11:59 p.m., Eastern Daylight Saving Time, on May 11, 2015.
Vote at the Annual Meeting
If you want to vote in person at the Annual Meeting and you are a
holder of record, you must register with the Inspector of Election at the Annual Meeting (“Inspector of Election”) and produce valid
photo identification. If you want to vote in person at the Annual Meeting and you hold your shares in street name, you must obtain an additional proxy
from your bank, broker or other holder of record authorizing you to vote. You must bring such proxy to the Annual Meeting, present it to the Inspector
of Election, and produce valid photo identification.
What does it mean to give a
proxy?
Your properly completed proxy card will appoint Robert J. Ingato,
Christopher H. Paul and James P. Shanahan, each of whom is an officer of CIT, as proxy holders or your representatives to vote your shares in the
manner directed by you. Your proxy card permits you to direct the proxy holders to vote “for” or “against,” or “abstain”
from voting, regarding each of the nominees for director and each of Proposals 2, 3, and 4. All of your shares entitled to vote and represented by a
properly completed proxy card received prior to the Annual Meeting and not revoked will be voted at the Annual Meeting in accordance with your
instructions.
How many votes will be required to elect
directors or to adopt the other proposals?
Because this election is not a contested election, to elect
directors to the Board, a majority of the votes cast “for” each nominee for director at the Annual Meeting is required. A nominee for
director shall be elected to the Board if the votes cast “for” such nominee’s election exceed the votes cast “against” such
nominee’s election. “Votes cast” exclude abstentions and “broker non-votes” (as further described
- 2 -
below under “What happens if I hold my shares through a broker but do not give
my broker specific voting instructions?”).
The affirmative vote of a majority of the shares present at the
Annual Meeting in person or by proxy and entitled to vote is required to: (a) ratify the appointment of CIT’s independent registered public
accounting firm (Proposal 2); (b) approve the non-binding advisory vote on executive compensation (Proposal 3), and (c) approve the CIT Group Inc. 2015
Executive Incentive Plan (Proposal 4). Abstentions will not be included in the affirmative vote and thus will have the same effect as a vote
“against” each of Proposals 2, 3, and 4. Although the advisory vote on Proposal 3 is non-binding, as provided by law, the Board will review
the result of the vote and may take it into account in considering executive compensation going forward.
Can a director be elected without receiving
votes from a majority of the shares outstanding?
No stockholder has nominated any candidates for our Board for
inclusion on the agenda for the Annual Meeting, and therefore, the election is uncontested.
If a stockholder has provided notice of an intention to nominate
one or more candidates to compete with the Board’s nominees, in accordance with the requirements of the By-Laws of CIT
(“By-Laws”), and such stockholder has not withdrawn such nomination by the tenth day before we mail our Notice of Annual Meeting, then
a director may be elected by a plurality of the votes cast. This means that the thirteen nominees who receive the most votes “for” would be
elected, even if it is less than a majority of the total shares outstanding, and stockholders would not be permitted to vote “against” a
nominee. However, under our By-Laws and corporate governance guidelines (“Corporate Governance Guidelines”), if the election of
directors is uncontested, meaning that the only nominees are those recommended by the Board (as is the case for this Annual Meeting), each nominee for
director must receive more votes “for” than “against” his or her election or re-election. Any nominee who fails to receive the
required vote “for” his or her election or re-election must promptly tender his or her resignation to the Chairman of the Board. If an
incumbent director fails to receive the required vote for re-election, the Nominating & Governance Committee of the Board (the “Governance
Committee”) will promptly consider the resignation submitted by such director and will recommend to the Board whether to accept such
resignation. The Board will act on the recommendation of the Governance Committee no later than 90 days following the date of the Annual Meeting. See
“Corporate Governance — Majority Voting for Directors” in this Proxy Statement.
Can I change or revoke my
proxy?
Yes, you may change your vote or revoke your proxy at any time
before it is exercised. To do so, you should:
• |
|
send in a new proxy card with a later date; |
• |
|
send a written revocation to the Corporate
Secretary; |
• |
|
cast a new vote by telephone or Internet; or |
• |
|
attend the Annual Meeting and vote in person. |
Written revocations of a prior vote must be sent by mail to
CIT’s Corporate Secretary at One CIT Drive, Livingston, NJ 07039, or by delivering a duly executed proxy bearing a later date. If you attend the
Annual Meeting and vote in person, your vote will revoke any previously submitted proxy. If you hold your shares in street name, you must contact your
broker if you wish to change your vote.
What if I do not return a signed proxy
card?
If you are a holder of record and you do not return a signed
proxy card to vote shares held in your name, those shares will not be voted.
What if I return a signed proxy card but do
not indicate my vote for one or more of the matters on my proxy card?
If you return a signed proxy card without indicating your vote,
your shares will be voted “for” each of the thirteen nominees named in “Proposal 1 — Election of Directors”, and
“for” Proposals 2, 3, and 4 (except in the case of a “broker non-vote” as described below under “What happens if I hold my
shares through a broker but do not give my broker specific voting instructions?”).
What happens if I hold my shares through a
broker but do not give my broker specific voting instructions?
If you hold your shares in street name with a broker who is a
member of the NYSE and do not instruct your broker as to how to vote your shares, your broker can vote your shares on the ratification of the selection
of our independent registered public accounting firm (Proposal 2), in your broker’s discretion; however, absent such specific voting instruction,
your broker cannot vote on the election of directors (Proposal 1), the non-binding advisory vote on executive compensation (Proposal 3), and the CIT
Group Inc. 2015 Executive Incentive Plan (Proposal 4) and your proxy would represent shares reflecting a “broker non-vote” with respect to
Proposals 1, 3, and 4.
A “broker non-vote” occurs when a nominee holding
shares for a beneficial owner has not received instructions from the beneficial owner, or person entitled to vote, and does not have discretionary
authority to vote the shares. This could occur on Proposals 1, 3, and 4, but not on Proposal 2.
Shares represented by proxies that reflect a broker non-vote
will, like abstentions, be counted for purposes of determining whether a quorum exists. However, with respect to Proposal 1, abstentions and broker
non-votes will not be considered votes cast, and therefore will have no effect on whether a director is elected. With respect to Proposals 3 and 4,
while abstentions will have the same effect as votes cast “against” such Proposals, broker non-votes will not be counted as entitled to vote
on Proposals 3 and 4 and thus will have no effect on the outcome of such votes.
- 3 -
Brokers who are members of the Financial Industry Regulatory
Authority may vote shares held by them in nominee name if they are permitted to do so under the rules of any national securities exchange to which they
belong. A member broker of the NYSE is prohibited, under NYSE rules, from voting on matters that are not routine if the beneficial owner has not
provided the broker with voting instructions.
Why haven’t I received a printed copy of
the Proxy Statement, proxy card or Annual Report?
We have elected to take advantage of the SEC’s rule that
allows us to furnish proxy materials to you online. We believe electronic delivery will expedite your receipt of materials, while lowering costs and
reducing the environmental impact of our Annual Meeting by reducing printing and mailing of full sets of proxy materials. On April 2, 2015, we mailed
to our stockholders an Access Notice containing instructions on how to access our Proxy Statement, proxy card and Annual Report online. If you received
such Access Notice by mail, you will not receive a printed copy of the proxy materials, unless you specifically request one no later than the date
specified in this Proxy Statement; however, the Access Notice contains instructions on how to receive a paper copy of the Annual Report, proxy card and
other proxy materials.
What if multiple stockholders share the same
address?
SEC rules permit CIT to deliver a single Access Notice or, if a
stockholder does not participate in electronic delivery of proxy materials, a single printed copy of the proxy materials, to stockholders who share the
same address unless CIT has received contrary instructions from any stockholder at that address. This procedure, known as “householding,” is
designed to reduce CIT’s printing costs and postage fees. Each stockholder who participates in householding retains a separate right to vote on
all matters presented at the Annual Meeting. If you participate in householding and wish to receive a separate copy of the Access Notice or proxy
materials, please call 1-800-542-1061 or mail your request to: CIT Group Inc., c/o Broadridge Householding Department, 51 Mercedes Way, Edgewood, NY
11717. A separate copy of the Access Notice or proxy materials, as applicable, will be delivered promptly upon request. Any such stockholder may also
opt out of householding and continue to receive separate copies of the Access Notice or proxy materials in the future by notifying CIT at the
above-referenced address or telephone number. Other stockholders who have multiple accounts in their names or who share an address with other
stockholders can request householding by notifying CIT at the above-referenced address or telephone number.
Is this Proxy Statement available on the
Internet?
Yes. You can also view this Proxy Statement on the Internet by
going to CIT’s website at www.CIT.com/2015proxy. You can elect to receive future proxy statements and annual
reports over the Internet instead of receiving paper copies by mail by following the instructions set forth in the Access Notice or as set forth above
under “Questions and Answers About the Annual Meeting and Voting — How do I vote?”
Will my vote be
confidential?
Yes. We have a policy of confidentiality in the voting of shares.
Individual stockholder votes are kept confidential, unless disclosure is: (i) necessary to meet legal requirements or to assert or defend claims for or
against CIT, or (ii) made during a contested proxy solicitation, tender offer, or other change of control situations.
What if there is voting on other
matters?
Our By-Laws provide that business may be transacted at the Annual
Meeting only if it is (a) stated in the Notice of Annual Meeting, (b) proposed at the direction of our Board or (c) proposed by any CIT stockholder who
is entitled to vote at the Annual Meeting and who has complied with the notice procedures in our By-Laws. We did not receive notice of any stockholder
proposals for the Annual Meeting.
What was the deadline for stockholders to
notify us of proposals for the Annual Meeting?
The deadline for submitting stockholder proposals for the Annual
Meeting for inclusion in the Proxy Statement was December 4, 2014. The deadline for submitting stockholder proposals for the Annual Meeting for
inclusion on the agenda was February 12, 2015.
What is the deadline for stockholders to
notify us of proposals for the 2016 Annual Meeting of Stockholders?
The deadline for submitting stockholder proposals for the 2016
annual meeting of stockholders (“2016 Annual Meeting”) for inclusion in the 2016 proxy statement is December 3, 2015. The deadline for
submitting stockholder proposals for the 2016 Annual Meeting for inclusion on the agenda is February 11, 2016.
Will a representative of CIT’s
independent registered public accounting firm be present at the Annual Meeting?
Yes, a representative of PricewaterhouseCoopers LLP will attend
the Annual Meeting and can answer questions that you may have. The representative will also have the opportunity to make a statement if
PricewaterhouseCoopers LLP desires to do so. The Audit Committee has approved the appointment of PricewaterhouseCoopers LLP as our independent
registered accounting firm and auditors for 2015.
How can I attend the Annual
Meeting?
Only stockholders as of the Record Date (or their proxy holders)
may attend the Annual Meeting. If you plan to attend the Annual Meeting or appoint someone to attend as your proxy, please check the appropriate box on
your proxy card. If you are voting by telephone or Internet, follow the instructions provided to indicate that you or your proxy
holder
- 4 -
plan to attend. You or your proxy holder will need to show
(a) photo identification, and (b) if you hold your shares in street name, proof of ownership as of the Record Date, such as a letter or account
statement from your broker or bank, at the reception desk to gain admittance to the Annual Meeting.
What happens if the Annual Meeting is
postponed or adjourned?
Your proxy remains valid and may be voted at the postponed or
adjourned meeting. You will still be able to change or revoke your proxy until it is voted.
Do any stockholders beneficially own more than
5% of our common stock?
According to public filings made on or before February 14, 2015,
there were five stockholders that beneficially owned more than 5% of our common stock as of December 31, 2014: BlackRock, Inc., Franklin Mutual
Advisers, LLC, The Vanguard Group, Epoch Investment Partners, Inc., and Capital Research Global Investors, a division of Capital Research and
Management Company. See “Security Ownership of Certain Beneficial Owners and Management — Security Ownership of Certain Beneficial
Owners” in this Proxy Statement.
How can I review the list of stockholders
eligible to vote?
A list of stockholders as of the Record Date will be available at
our offices at both 11 West 42nd Street, New York, New York 10036 and One CIT Drive, Livingston, NJ 07039 from May 2, 2015 to the date of the Annual
Meeting for inspection and review by any stockholder during regular business hours. We will also make the list available at the Annual
Meeting.
Where can I find the voting results of the
Annual Meeting?
The preliminary voting results will be announced at the Annual
Meeting. The final voting results will be tallied by the Inspector of Election and published in CIT’s Current Report on Form 8-K, which CIT is
required to file with the SEC within four business days after the date of the Annual Meeting.
Who will pay the expenses incurred in
connection with the solicitation of my vote?
CIT pays the cost of preparing proxy materials and of soliciting
your vote. Proxies may be solicited on our behalf by our directors, officers or employees by telephone, electronic or facsimile transmission or in
person.
We have retained D.F. King & Co., Inc. to assist us in this
proxy solicitation, and we anticipate that their fees will be approximately $18,000. We also may pay brokers, nominees, fiduciaries, and other
custodians their reasonable fees and expenses for sending proxy materials to beneficial owners and obtaining their instructions.
During 2014, our Board met nine times. The number of 2014
meetings for each committee of the Board (each, a “Board Committee”) is disclosed in “Corporate Governance — Board
Committees” in this Proxy Statement. All of the nominees listed below who were Board members during all of 2014 attended at least 75% of the
aggregate of the meetings of the Board and of any Board Committees on which he or she served. Our Corporate Governance Guidelines provide that
directors are expected to attend the Annual Meeting. At our 2014 annual meeting of stockholders (“2014 Annual Meeting”), each of the
nominees listed below who were standing for re-election, other than David M. Moffett and Laura S. Unger, attended the 2014 Annual
Meeting.
The Board consists of a diverse group of professionals in their
respective fields. Many of the current directors have senior leadership experience at banks, financial institutions and other business, academic and
governmental organizations. In these positions, they have gained expertise in strategic and financial planning, regulatory and banking matters,
financial reporting, corporate governance, risk management and leadership development. Many of the current directors also have a longstanding knowledge
and in-depth understanding of our businesses, products, and services. The biographies below describe the skills, qualifications, attributes and
experiences of each of the nominees that led the Board to determine that it is appropriate to nominate these directors.
The Governance Committee and the Board believe the skills,
qualities, and experience of our directors provide CIT with a diverse range of perspectives to engage each other and management to effectively address
CIT’s needs and represent the best interests of CIT’s stockholders.
- 5 -
The information below includes each nominee’s age as of
February 15, 2015 and business experience during at least the past five years. CIT knows of no family relationships among the nominees. Certain
directors may also be directors or trustees of privately held businesses or not-for-profit entities that may not be referred to below. With the
exception of Mr. Thain, all of the nominees are independent of management.
Name
|
|
|
|
Age
|
|
Principal Occupation
|
| |
|
|
|
|
|
|
Chairman of the Board and Chief Executive Officer |
|
|
|
|
|
|
Retired Chairman and Chief Executive Officer of Citizens Financial Group, Inc. and Head of RBS Americas |
|
|
|
|
|
|
Former Chief Investment Officer of Franklin Mutual Advisors LLC |
|
|
|
|
|
|
Executive Chairman of General Waters Inc. |
|
|
|
|
|
|
Consultant to Bridgewater Associates, LP and Former Chief Executive Officer of the Federal Home Loan Mortgage Corporation (Freddie
Mac) |
|
|
|
|
|
|
Chairman and Managing Partner of Stone Advisors, LP |
|
|
|
|
|
|
Retired Executive Vice President and Chief Financial Officer of International Paper Company |
|
|
|
|
|
|
Vice Chairman of Lazard Ltd. |
Vice Admiral John R. Ryan, USN (Ret.) |
|
|
|
|
|
President and Chief Executive Officer of the Center for Creative Leadership and Retired Vice Admiral of the U.S. Navy |
|
|
|
|
|
|
Retired Executive Vice President of Corporate Strategy and Investor Relations at Dreambuilder Investments, LLC. |
|
|
|
|
|
|
Retired Chairman of the Board and Chief Executive Officer of New York Life Insurance Company |
|
|
|
|
|
|
Retired Special Assistant to the President of St. John’s University and Retired Chief Financial Officer of The Chase Manhattan
Corporation |
|
|
|
|
|
|
Independent Consultant, Former Commissioner of the U.S. Securities and Exchange Commission |
|
|
Other
Public Directorships:
|
|
• |
|
• |
|
| |
|
|
|
|
|
Prior
Senior Leadership Positions:
|
|
|
|
• |
President of Global Banking, Securities and Wealth Management for Bank of America |
• |
Chief Executive Officer and Director of NYSE Euronext, Inc. |
| |
• |
Chairman and Chief Executive Officer of Merrill Lynch & Co., Inc. |
• |
Chief Executive Officer and Director of the New York Stock Exchange |
| |
|
|
• |
President and Chief Operating Officer of The Goldman Sachs Group,
Inc. |
Mr. Thain has served as
Chairman and Chief Executive Officer of CIT since February 2010. In January 2009, prior to joining CIT, Mr. Thain was President of Global Banking,
Securities and Wealth Management for Bank of America. From December 2007 to January 1, 2009, prior to its merger with Bank of America, Mr. Thain was
Chairman and Chief Executive Officer of Merrill Lynch & Co., Inc. From June 2006 to December 2007, Mr. Thain served as Chief Executive Officer and
a director of NYSE Euronext, Inc. following the NYSE Group and Euronext N.V. merger. Mr. Thain joined the New York Stock Exchange in January 2004,
serving as Chief Executive Officer and a director. From June 2003 through December 2003, Mr. Thain was the President and Chief Operating Officer of The
Goldman Sachs Group Inc., and from May 1999 through June 2003 he was President and Co-Chief Operating Officer of The Goldman Sachs Group, L.P. From
1994 to 1999, Mr. Thain served as Chief Financial Officer and Head of Operations, Technology and Finance, and from 1995 to 1997 he was also Co-Chief
Executive Officer for European operations for The Goldman Sachs Group, L.P. Mr. Thain currently serves as a member of the MIT Corporation Board, the
Dean’s Advisory Council of MIT/Sloan School of Management, the U.S. National Advisory Board of INSEAD, the Board of Managers of the New York
Botanical Garden and the Board of Directors of the French-American Foundation. Mr. Thain is a trustee of New York-Presbyterian Hospital, a Trustee and
Corporate Officer of The Antz Foundation, a private foundation, and a Director on the Lincoln Center Board of Directors.
Qualifications: Mr. Thain
provides the Board with extensive experience as a senior leader of large and diverse financial institutions, including experience in risk management,
finance, information technology, and operations and, as Chief Executive Officer, he provides in-depth knowledge of CIT’s business and affairs,
management’s perspective on those matters, and a transparent avenue of communication between the Board and management.
- 6 -
|
|
Other
Public Directorships:
|
|
• |
|
• |
Automatic Data Processing, Inc. |
| |
• |
|
• |
Fidelity National Information Services, Inc. |
| |
|
|
|
|
|
Prior
Senior Leadership Positions:
|
Senior
Leadership Positions:
|
|
• |
Chairman and Chief Executive Officer of Citizens Financial Group, Inc. |
• |
Director, The Center for Discovery |
| |
• |
Head of Americas at The Royal Bank of Scotland Group plc |
|
|
| |
• |
Chief Executive Officer for Global Transaction Services at Citigroup |
|
|
Ms. Alemany has served as a
director of CIT since January 2014 and is the retired Head of RBS Americas, the management structure that oversees The Royal Bank of Scotland’s
businesses in the Americas, and Chief Executive Officer of RBS Citizens Financial Group, Inc., an RBS subsidiary. Ms. Alemany retired from RBS in
September 2013. She joined RBS as the Head of RBS Americas in June 2007, and was named to the additional role of Chief Executive Officer of RBS
Citizens Financial Group, Inc., a bank holding company, in March 2008. She was also appointed the Chairman of RBS Citizens Financial Group, Inc. in
March 2009. Ms. Alemany joined RBS from Citigroup, where she served as the Chief Executive Officer for Global Transaction Services from February 2006
until April 2007. Ms. Alemany joined Citigroup in 1987, and held a number of senior positions during her tenure, including Executive Vice President for
the Commercial Business Group from March 2003 until January 2006, and also CitiCapital, where she served as President and Chief Executive Officer from
September 2001 until January 2006. Prior to being appointed Executive Vice President for the Commercial Business Group in 2003, Ms. Alemany also held a
number of executive positions in Citigroup’s Global Corporate Bank. Ms. Alemany has served on the Board of Directors of Automatic Data Processing,
Inc. since 2011 and the Board of Fidelity National Information Services, Inc. since July 2014, and also currently serves as a director of The Center
for Discovery.
Qualifications: Ms. Alemany
brings a wealth of managerial and operational expertise to our Board with over 35 years of management experience in banking and financial services,
including chief executive experience with a large, multi-national commercial bank, as well as global financial management and regulatory experience and
a proven track record of achievement and leadership.
|
|
Other
Public Directorships:
|
|
•
• |
Audit
Nominating & Governance |
•
• |
American Airlines Group, Inc.
NMI Holdings, Inc. |
| |
|
|
|
|
|
Prior
Senior Leadership Positions:
|
Senior
Leadership Positions:
|
|
• |
Director of Abovenet Inc. |
• |
Board of Trustees, Mohonk Preserve |
| |
• |
Director of Dynegy Inc./Dynegy Holdings Inc./Dynegy Holdings, LLC |
|
| |
• |
Chief
Investment Officer of Franklin Mutual Advisers LLC |
|
|
| |
• |
Director of Kindred Healthcare, Inc. |
|
|
Mr. Embler has served as a
director of CIT since December 2009. He formerly served as the Chief Investment Officer of Franklin Mutual Advisers LLC, an asset management subsidiary
of Franklin Resources, Inc. Mr. Embler joined Franklin Mutual Advisers in 2001 and, prior to becoming Chief Investment Officer in 2005, served as head
of its Distressed Investment Group. From 1992 until 2001, he worked at Nomura Holdings America, where he served as Managing Director managing a team
investing in a proprietary fund focused on distressed and other event-driven corporate investments. Mr. Embler currently serves on the Board of
Directors of American Airlines Group, Inc., and the Board of NMI Holdings, Inc., a mortgage insurance company, and on the Board of Trustees of Mohonk
Preserve, and has previously served on the Board of Directors of each of Abovenet Inc., Kindred Healthcare Inc., Dynegy Inc. and Dynegy Holdings
Inc./Dynegy Holdings, LLC, and on the Board of Trustees of Corlears School, a non-profit.
Qualifications: Mr. Embler
provides the Board with experience in finance, asset management and restructurings, expertise in capital markets and capital management, and experience
in the airline and healthcare industries, key markets for certain of CIT’s businesses. His experience as Chief Investment Officer of a major asset
management firm provides the Board with an analytical view from the perspective of an investor.
- 7 -
|
|
Other
Public Directorships:
|
|
• |
|
• |
|
| |
• |
Nominating
and Governance |
|
|
| |
|
|
|
|
Director
Since: July 2003 |
Prior
Senior Leadership Positions:
|
Senior
Leadership Positions:
|
| |
• |
Chairman of the Board of Arbinet- |
• |
Executive Chairman of General Waters
Inc. |
| |
|
thexchange, Inc. |
• |
Director, Value Added Holdings, Inc. |
| |
• |
Chief Executive Officer and Director
of Leap |
• |
Board
of Trustees of Drew University |
| |
|
Wireless International |
• |
Chairman of Celadon Global Inc. |
| |
• |
Chief Executive Officer of Bell Atlantic-Washington,
D.C. |
|
|
| |
• |
President of the Public Communications
Group of Verizon Communications Inc. |
|
|
| |
• |
President and Chief Executive Officer
of Bell Atlantic-New Jersey |
|
|
Mr. Freeman has served as a
director of CIT since July 2003. Mr. Freeman retired in February 2010 as Chairman of the Board of Arbinet-thexchange, Inc., in which capacity he had
served since November 2007. Previously, Mr. Freeman served as President and Chief Executive Officer and Director of Arbinet-thexchange, Inc. from
November 2007 until September 2008. Prior to joining Arbinet-thexchange, Mr. Freeman was elected to the Board of Motient Corp., now TerreStar
Corporation, in February 2007, and Chairman of Motient/TerreStar in March 2007. Mr. Freeman also served as Chief Executive Officer and Director of Leap
Wireless International, Inc. from May 2004 to February 2005 and as President of the Public Communications Group of Verizon Communications Inc. from
2000 to February 2004. Mr. Freeman served as President and Chief Executive Officer of Bell Atlantic-New Jersey from 1998 to 2000, President and Chief
Executive Officer of Bell Atlantic-Washington, D.C. from 1994 to 1998, and in a number of other executive and management positions at Verizon since
1974. Mr. Freeman was a founder and co-owner of Synthesis Security LLC, a closely held telecommunications company. Mr. Freeman currently serves, or
during the preceding five years served, on the Board of Directors of Terrestar Corporation, the Board of Trustees of Drew University, and as a director
of Value Added Holdings, Inc., a privately held communications company, is the Executive Chairman and shareholder of General Waters Inc. (formerly Oh
Daddy LLC), a privately held beverage marketing and distribution company, and Chairman of Celadon Global Inc., a privately held mergers and
acquisitions research firm.
Qualifications: Mr. Freeman
provides the Board with extensive experience in managing organizations of various sizes and extensive experience in the telecommunications industry, a
key market for CIT’s lending products.
|
|
Other
Public Directorships:
|
|
• |
|
•
• |
eBay Inc.
Genworth Financial, Inc. |
| |
|
|
|
|
Director Since: July 2010 |
Prior Senior Leadership Positions:
Senior
Leadership Positions: | |
|
• |
Chief
Executive Officer of Federal Home Loan Mortgage Corporation (Freddie Mac) |
•
• |
Trustee of University of Oklahoma Foundation Trustee of Columbia Atlantic Mutual Funds |
| |
• |
Senior Advisor with the Carlyle Group
LLC |
|
| |
• |
Vice Chairman and Chief Financial Officer of U.S. Bancorp |
|
|
| |
• |
Director of Building Materials Holding Corp. |
|
|
| |
• |
Director of MBIA Inc. |
|
|
| |
• |
Director of E.W. Scripps Company |
|
|
Mr. Moffett has served as a
director of CIT since July 2010. Mr. Moffett is the former Chief Executive Officer of Federal Home Loan Mortgage Corporation (Freddie Mac), in which
capacity he had served from September 2008 to March 2009. Prior to this position, Mr. Moffett served as a Senior Advisor with the Carlyle Group LLC.
Mr. Moffett also served as Vice Chairman and Chief Financial Officer of U.S. Bancorp from 2001 to 2007, and has held senior positions with a number of
other banking institutions, including Star Banc Corporation, Firstar Corporation, Bank of America, Security Pacific, Sooner Federal Bank & Trust
Co., and First National Bank & Trust Co. of Tulsa. Mr. Moffett has served on the Board of Directors of eBay Inc. since May 2007 and Genworth
Financial, Inc. since 2012, and previously served on the Board of Directors of each of MBIA Inc., E.W. Scripps Company and Building Materials Holding
Corp. Mr. Moffett is currently employed as a consultant to Bridgewater Associates, LP, a private hedge fund.
- 8 -
Qualifications: Mr. Moffett
provides the Board with more than 30 years of strategic finance, risk management and operational experience in commercial banking, and experience in
retail banking and management in a regulated environment. His experience as Chief Financial Officer of a major bank holding company provides the Board
with insight into the financial, accounting and risk management issues of, and communicating with investors in, a bank holding
company.
|
|
Other
Public Directorships:
|
|
• |
|
• |
|
| |
|
|
|
|
|
Prior
Senior Leadership Positions:
|
Senior
Leadership Positions:
|
|
• |
Chairman
of the Board of Directors of NFC Global, LLC |
• |
Chairman and Managing Partner of Stone Advisors, LP |
| |
• |
President and Chief Operating Officer of Bluebonnet Savings
Bank FSB |
•
|
Director of CIT Bank
|
| |
• |
Director of GearingStone, LLC |
|
|
| |
• |
Director of Neways Inc. |
|
|
Mr.
Oates has served as a director of CIT since December 2009. He currently serves as Chairman and Managing Partner of Stone Advisors, LP, a
strategic advisory firm specializing in distressed asset situations, which is currently engaged as a contractor by the Federal Deposit Insurance
Corporation (“FDIC”) to assist in resolving bank receiverships. Prior to joining Stone Advisors, Mr. Oates served from 1988 until 2003
as President and Chief Operating Officer of Bluebonnet Savings Bank FSB, responsible for bank operations and strategic planning in a bank turnaround
situation, and as Executive Vice President of Stone Holdings, Inc., the holding company for Bluebonnet Savings Bank and a private investment company
specializing in banking, information services, risk management and emerging technologies. Mr. Oates currently serves, or during the preceding five
years served, as Chairman of the Board of Directors of NFC Global, LLC, a privately owned provider of due diligence, risk consulting and compliance
services, and as a director of each of GearingStone, LLC, a special servicing company for distressed bank assets, and Neways Inc., a privately owned
dietary supplement and personal care products company.
Qualifications: Mr. Oates
provides the Board with in-depth experience in successfully managing the turnaround of troubled financial institutions and a strong background in
operating regulated commercial banks and strategic planning. His extensive experience in interacting with the FDIC and other bank regulators during his
career provides the Board with insight into bank regulatory matters and supervisory expectations and communications. He also has experience in
information technology and risk management.
|
|
Other Public Directorships:
|
|
• |
|
• |
Stanley Black & Decker, Inc. |
| |
• |
Regulatory Compliance |
• |
Signet Jewelers Limited |
| |
|
|
|
|
|
Prior Senior Leadership Positions:
|
Senior Leadership Positions:
|
|
• |
Executive Vice President and Chief Financial Officer of International Paper Company |
• |
Board Member, United Way of the Mid-South |
| |
|
• |
Board Member, Rise Foundation |
| |
|
• |
Board Member, New Memphis
Institute |
Ms. Parrs has served as a
director of CIT since January 2003. Ms. Parrs retired at the end of 2007 from International Paper Company where she had served as Executive Vice
President and Chief Financial Officer since November 2005 and as interim Chief Financial Officer from May 2005 to November 2005. Ms. Parrs also has
served as Executive Vice President with responsibility for Information Technology, Global Sourcing, Global Supply Chain — Delivery, a major supply
chain project, and Investor Relations since 1999. From 1995 to 1999, Ms. Parrs served as Senior Vice President and Chief Financial Officer of
International Paper Company. Previously, she served in a number of other executive and management positions at International Paper Company since 1974,
and was a security analyst at a number of firms prior to joining International Paper Company. Ms. Parrs currently serves, or during the preceding five
years served, on the Board of United Way of the Mid-South, the Board of Rise Foundation in Memphis, Tennessee, on the Board of the New Memphis
Institute, Memphis, on the Board of Stanley Black & Decker, Inc., and on the Board, Chair of the Audit Committee and member of the Social
Responsibility Committee of Signet Jewelers Limited.
Qualifications: Ms. Parrs
provides the Board with financial and operational expertise as a result of her significant experience in those roles in industry, particularly in her
roles as Chief Financial Officer and as the senior executive in charge of information technology and global supply chain management at a major
industrial company, which provide a valuable perspective on financial and accounting issues and on processes and technology. She also has extensive
audit committee experience and is an “Audit Committee Financial Expert,” as defined by the SEC.
- 9 -
|
|
Other
Public Directorships:
|
|
• |
|
• |
|
| |
|
|
|
|
|
Prior
Senior Leadership Positions:
|
Senior
Leadership Positions:
|
|
• |
Deputy Chairman of Rothschild North America |
• |
Vice Chairman of U.S. Investment Banking of Lazard Ltd. |
| |
• |
President of G Rosenfeld & Co LLC |
• |
Director of Continental Grain Company |
| |
• |
Head of Investment
Banking and a member of the Management Committee of Lazard Freres |
• |
Board of
Overseers, New York University Stern School of Business |
| |
|
• |
Board Member, American Academy of Arts and Sciences |
| |
|
|
• |
Board Member, Catalist
LLC |
| |
|
|
• |
Board of Trustees, City College of New York Foundation |
| |
|
|
• |
Trustee, New York University School of Law |
| |
|
|
• |
Director, Charles
H. Revson Foundation |
Mr. Rosenfeld has served as a
director of CIT since January 2010. Mr. Rosenfeld re-joined Lazard Ltd. as Vice Chairman of United States investment banking effective March 1, 2011.
He was Deputy Chairman of Rothschild North America from 2007 to 2011 and served as its Chief Executive Officer from 1999 to 2007. Prior to joining
Rothschild, he was President of G Rosenfeld & Co LLC, an investment banking firm. Prior to founding G Rosenfeld & Co LLC in 1998, he was Head
of Investment Banking and a member of the Management Committee of Lazard Freres & Co. LLC. Mr. Rosenfeld joined Lazard in 1992 after holding
significant management positions at Bankers Trust Company, Salomon Inc. and its Salomon Brothers subsidiary and McKinsey & Company. Prior to
joining McKinsey, Mr. Rosenfeld was a member of the faculty of the City College of New York, New York University and the University of Maryland. Mr.
Rosenfeld currently serves, or during the preceding five years served, as a member of the Board of Directors of Continental Grain Company, on the Board
of Overseers of New York University’s Stern School of Business, where he also serves as an Adjunct Professor of Finance, as a Board member of the
American Academy of Arts and Sciences, as a Board member of Catalist LLC, on the Board of Trustees of City College of New York Foundation, as a Trustee
of the New York University School of Law, where he is also a Professor of Practice, and as a Director of the Charles H. Revson
Foundation.
Qualifications: Mr. Rosenfeld
provides the Board with extensive experience and expertise in risk management and sophisticated financial matters gained by both practical experience
in a regulated environment and through research and teaching finance-related courses at several prominent universities. He also has management
experience as a senior executive in commercial banking, investment banking and capital markets.
|
|
Other
Public Directorships:
|
|
•
• |
Compensation
Nominating & Governance |
•
• |
Cablevision Systems Corporation
Barnes & Noble, Inc. |
| |
|
|
|
|
Director Since: July 2003
|
Prior
Senior Leadership Positions:
|
Senior
Leadership Positions:
|
Lead
Director Since: May 2008
|
• |
Chancellor of the State University of New York |
•
• |
President and Chief Executive Officer of the Center for Creative Leadership
Chairman of the Board of Directors of the
U.S. Naval Academy Foundation |
| • |
President of the State University of New York Maritime College |
|
| |
• |
Superintendent of the U.S. Naval Academy |
|
| |
• |
Commander of the Fleet Air Mediterranean, U.S. Navy |
|
|
| |
• |
Commander of the Patrol Wings
for the U.S. Pacific Fleet, U.S. Navy |
|
|
| |
• |
Director of Logistics for the U.S. Pacific Command, U.S. Navy |
|
|
Vice Admiral Ryan has served
as a director of CIT since July 2003 and was appointed lead director (“Lead Director”) by the Board in May 2008. Mr. Ryan has been
President and Chief Executive Officer of the Center for Creative Leadership in Greensboro, North Carolina since May 2007. Previously, Mr. Ryan served
as Chancellor of the State University of New York from June 2005 to June 2007. Mr. Ryan also served as President of the State University of New York
Maritime College from June 2002 until June 2005 while also serving as the Interim President of the State University of New York at Albany from February
2004 until February 2005. From
- 10 -
1998 to 2002, Mr. Ryan was Superintendent of the U.S. Naval Academy, Annapolis,
Maryland. Mr. Ryan served in the U.S. Navy from 1967 to July 2002, including as Commander of the Fleet Air Mediterranean in Naples, Italy from 1995 to
1998, Commander of the Patrol Wings for the U.S. Pacific Fleet in Pearl Harbor from 1993 to 1995, and Director of Logistics for the U.S. Pacific
Command in Aiea, Hawaii from 1991 to 1993. Mr. Ryan currently serves as a Director and member of the Audit Committee of Cablevision Systems
Corporation, as a Director and member of the Audit Committee and Compensation Committee of Barnes & Noble, Inc., and as Chairman of the Board of
the U.S. Naval Academy Foundation.
Qualifications: Vice Admiral
Ryan provides the Board with experienced leadership and an expertise in managing large complex organizations, primarily in academia and the military.
In addition, Mr. Ryan provides the Board with extensive experience in strategic planning, logistics, talent development and succession planning. His
tenure as a director, and more recently as Lead Director, of CIT enables him to provide the Board with valuable experience in overseeing CIT’s
business and providing leadership to the Board.
|
|
Other Public Directorships:
|
|
•
• |
Risk Management
Regulatory Compliance |
• |
|
| | | | | |
|
Prior Senior Leadership Positions:
|
Senior Leadership Positions:
|
|
• |
Executive
Vice President, Dreambuilder Investments, LLC |
•
• |
Board of Directors, IES Abroad
Commissioner, New York State Insurance Fund |
| |
• |
Director of Pension Investments and Cash Management at the
New York Common Retirement Fund (“NYSCR Fund”) |
|
| |
• |
Managing Director, FleetBoston Financial (nka Bank of America) |
|
|
| |
• |
Managing
Director & Head of European Asset-Backed Securitization, Bank One (nka J.P.Morgan Chase) |
|
|
Ms. Stamps currently serves
as a Commissioner on the Board of the New York State Insurance Fund, the largest worker’s compensation insurance provider in the state of New
York, and on the Board of Directors of IES Abroad. She previously served as Executive Vice President of Corporate Strategy and Investor Relations at
Dreambuilder Investments, LLC, a private mortgage investment company, from 2011 to 2012. She served from 2008 to 2011 as Director of Pension
Investments and Cash Management at the New York State Common Retirement Fund, and from 2004 to 2005 as a Fellow at the Weatherhead Center for
International Affairs at Harvard University. Prior to this, Ms. Stamps served as Managing Director and Head of Relationship Management, Financial
Institutions at FleetBoston Financial (now part of Bank of America). From 1982 to 2003, she held a number of executive positions with Bank One
Corporation (now part of J.P. Morgan Chase) and First Chicago Corporation including Managing Director and Head of European Asset-Backed Securitization
and Managing Director and Senior Originator of Asset-Backed Securitization. She holds an M.B.A. from the University of Chicago.
Qualifications: Ms. Stamps
provides the Board with in-depth knowledge of middle market commercial banking and capital markets in both the US and European markets. She is a senior
financial executive with strategy, risk and business development expertise, and also is an experienced banker to the financial services industry. Her
experience as a Director at the NYSCR Fund also enables her to provide the Board with an investor relations perspective and experience serving as a
fiduciary in a complex financial environment.
|
|
Other Public Directorships:
|
|
• |
|
• |
|
| |
|
|
|
|
|
Prior Senior Leadership Positions:
|
Senior Leadership Positions:
|
2005 |
• |
Chairman of the Board of Directors & CEO of New York Life Insurance Company |
•
• |
Board of Trustees, Hackley School
Chairman of Board of Trustees of |
| |
• |
Board of Directors, U.S. Chamber of
Commerce | | Northeastern University |
| |
|
• |
Board of
Trustees, New York-Presbyterian Hospital/Columbia University Medical Center |
Mr. Sternberg has served as a
director of CIT since December 2005. Mr. Sternberg served as Chairman of the Board of Directors & CEO of New York Life Insurance Company from April
1997 until June 2009. Mr. Sternberg joined New York Life as a Senior Vice President in 1989, and held positions of increasing responsibility, including
Executive Vice President, Vice Chairman, President, Chief Operating Officer and Chief Executive Officer. Mr. Sternberg serves on the Board of Directors
of Express Scripts, Inc., a pharmacy benefits manager. He is a member of the Council on Foreign Relations. Mr. Sternberg currently serves, or during
the
- 11 -
preceding five years served, on the boards of the U.S.
Chamber of Commerce, New York-Presbyterian Hospital/Columbia University Medical Center, Northeastern University, the Hackley School, Big Brothers/Big
Sisters, New York City Partnership, the New York City Leadership Academy, and the Kennedy Center Corporate Fund.
Qualifications: Mr. Sternberg
provides the Board with extensive experience in managing a large regulated institution from his experience in the insurance industry. Based on his
experience in multiple areas during his career, Mr. Sternberg provides the Board with insight into funding, financial management, risk management, and
operations issues.
|
|
Other
Public Directorships:
|
|
• |
Regulatory Compliance (Chair)
|
• |
|
| |
• |
Risk Management |
|
|
| |
|
|
|
|
Director Since: July 2002 |
Prior
Senior Leadership Positions:
|
|
|
|
• |
Director of AllianceBernstein Corporation (General Partner of AllianceBernstein Holding L.P.)
|
•
•
• |
Director of AXA Financial
Director of Rock Valley Tool
Chief Financial Officer of The Chase Manhattan
Corporation |
| |
• |
Interim Chief Executive
Officer of CIT Group Inc. |
|
|
|
• |
Dean of the Peter J. Tobin College of Business at St. John’s University
|
|
|
| |
• |
Director of H.W.
Wilson |
|
|
Mr. Tobin has served as a
director of CIT since July 1, 2002, and previously from May 1984 to June 1, 2001. Mr. Tobin served as CIT’s Interim Chief Executive Officer from
January 19, 2010 through February 7, 2010. He retired from St. John’s University in May 2005, after serving as Special Assistant in Corporate
Relations and Development to the President of St. John’s University since September 2003, and previously as Dean of the Peter J. Tobin College of
Business at St. John’s University since August 1998. From March 1996 to December 1997, Mr. Tobin was Chief Financial Officer of The Chase
Manhattan Corporation. From January 1992 to March 1996, Mr. Tobin served as Chief Financial Officer of Chemical Banking Corporation, a predecessor of
The Chase Manhattan Corporation, and prior to that he served in a number of executive positions at Manufacturers Hanover Corporation, a predecessor of
Chemical Banking Corporation. Mr. Tobin currently serves, or during the preceding five years served, as a director of AXA Financial, AllianceBernstein
Corporation, a subsidiary of AXA Financial that manages mutual funds, H.W. Wilson, a publishing company, and as an officer and director of Rock Valley
Tool.
Qualifications: Mr. Tobin
provides the Board with expertise and experience on various financial and accounting issues as a former Chief Financial Officer with several large and
diverse commercial banking institutions. He is also a certified public accountant. In addition, Mr. Tobin provides the Board with insight from a
customer’s perspective as an officer and/or director of two privately held companies.
|
|
Other
Public Directorships:
|
|
• |
Nominating & Governance (Chair)
|
• |
|
| |
• |
Audit |
• |
|
| |
|
Prior
Senior Leadership Positions:
|
|
|
|
•
• |
Director of Ambac Financial Group Inc.
Acting Chairperson of the U.S. Securities and Exchange Commission |
• |
Counsel to the United States Senate Committee on Banking, Housing and Urban Affairs |
| |
• |
Commissioner of the U.S. Securities and Exchange Commission |
• |
Director of MBNA Corporation |
| |
|
• |
Board Member, Children’s National Medical Center Foundation |
Ms. Unger has served as a
director of CIT since January 2010. She served as Commissioner of the SEC from November 1997 to February 2002, including Acting Chairperson of the SEC
from February to August 2001. Subsequently, she served as a Regulatory Expert for CNBC. Before being appointed to the SEC, Ms. Unger served as Counsel
to the United States Senate Committee on Banking, Housing and Urban Affairs. Prior to working on Capitol Hill, she was an attorney with the Enforcement
Division of the SEC. Ms. Unger currently serves, or during the preceding five years served, as a director of CA, Inc., Navient Corporation, certain
privately-held affiliates of Nomura Holding America Inc., Ambac Financial Group, Inc., the IQ Funds Complex, MBNA Corp. and Children’s National
Medical Center. She also has acted as Special Adviser to Promontory Financial Group and as an Independent Consultant to JP Morgan Chase for the Global
Analyst Conflict Settlement.
Qualifications: Ms. Unger
provides the Board with insight about regulatory policy as well as operating in a regulatory environment, based on her experience as both a former
Commissioner and a former enforcement attorney with the SEC. In addition, Ms. Unger provides the Board with insight into the political and legislative
process, based on her experience as a staff counsel in the U.S. Senate. She also has significant corporate governance expertise.
- 12 -
Director Qualifications and
Experience
The table below includes the qualifications and experience of
each director that assisted the Board in determining the directors are qualified to serve on the Board and that the Board is composed of directors with
diverse backgrounds and experiences.
Summary
of Director
Qualifications
and Experience |
John
Thain |
Ellen
Alemany |
Michael
Embler |
William
Freeman |
David
Moffett |
R.
Brad
Oates |
Marianne
Parrs |
Gerald
Rosenfeld |
John
Ryan |
Sheila
Stamps |
Seymour
Sternberg |
Peter
Tobin |
Laura
Unger |
Business Head/Administration experience is important as directors with such experience
typically possess strong leadership qualities and the ability to identify and develop
those qualities in others. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Operations experience gives directors a practical understanding of developing,
implementing and assessing our operating and business strategy. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Governance experience supports our goals of strong Board and management accountability,
transparency and protection of shareholder interests. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance/Capital Allocation experience is important in evaluating our financial statements
and capital structure. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Banking Expertise is important because it assists our directors in understanding and overseeing
our banking activities, regulatory requirements and environment and financial reporting
and internal controls. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Services Industry experience is important in understanding and reviewing our
business strategy and financial statements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Government/Public Policy experience is relevant to CIT as it operates in a regulated industry
that is directly affected by governmental actions. |
|
|
|
|
|
|
|
|
|
|
|
|
|
- 13 -
Summary
of Director
Qualifications
and Experience |
John
Thain |
Ellen
Alemany |
Michael
Embler |
William
Freeman |
David
Moffett |
R.
Brad
Oates |
Marianne
Parrs |
Gerald
Rosenfeld |
John
Ryan |
Sheila
Stamps |
Seymour
Sternberg |
Peter
Tobin |
Laura
Unger |
International experience is important in understanding and reviewing our international
businesses. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk Management experience is critical to the Board’s role in overseeing the risks
facing CIT. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing/Sales experience is relevant to CIT as it seeks to identify and develop new markets
for its products and services and new products and services for its customers. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology Systems experience is relevant to CIT as it looks for ways to enhance CIT’s
customer experience and retention and internal operating efficiencies and controls. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Academia/Education experience brings perspective regarding organizational management relevant
to our business. |
|
|
|
|
|
|
|
|
|
|
|
|
|
- 14 -
CIT is committed to the values of effective corporate governance
and high ethical standards. Our Board believes that these values promote long-term performance and reevaluates our governance policies on an ongoing
basis to ensure they sufficiently meet CIT’s needs and our stockholders’ interests. Listed below are some of the significant corporate
governance practices and policies we have adopted.
| |
Ö Majority Voting in Director Elections. If an election is uncontested, each of our director-nominees
has agreed to tender his or her irrevocable contingent resignation if he or she is not elected by a majority of the votes cast by stockholders. Our
Governance Committee will promptly consider the director’s resignation and recommend to our Board whether to accept or reject the resignation. Our
Board will act on the Governance Committee’s recommendation within 90 days of the applicable stockholder meeting and will then publicly disclose
its decision.
Ö Lead Director. Our Corporate Governance Guidelines establish the role of an
independent lead director who is elected annually by a majority vote of the independent directors. More information about the role of the lead director
and our Board structure may be found in this Proxy Statement under the heading “Board Leadership Structure”.
Ö Absence of a Stockholder Rights Plan. We do not have a stockholder rights plan and are not currently
considering adopting one. Ö Stock Ownership Requirements. Both our directors and senior executive
officers are required to own a minimum amount of CIT’s common stock at all times while they remain with CIT.
Ö Political Contributions. CIT believes that an important part of responsible corporate citizenship is
participation in the political and public policy process. However, even where legally permitted, CIT’s policy is not to use any company funds or
property for any candidate campaign funds including candidate campaign committees, political parties, caucuses, or independent expenditure committees
(superPACs). |
|
Ö Related Person Transactions Policy. Our Governance Committee is responsible for approving or
ratifying transactions involving CIT and related persons and determining if the transaction is in, or not inconsistent with, the best interests of CIT
and our stockholders. More information about our Related Person Transactions Policy may be found below under the heading “Related Person
Transactions Policy”.
Ö Executive Sessions. Our Board meets regularly in executive sessions
without the presence of management, including our Chairman. These sessions are led by our Lead Director.
Ö Limitations on Participation on Other Boards. To ensure that our directors have sufficient time to devote
proper attention to their responsibilities as directors of CIT, unless otherwise approved by the Governance Committee, employed directors are limited
to service on two boards of other publicly traded companies, while other directors may not serve on the boards of more than four other public
companies.
Ö Hedging, Margin Accounts and Pledged Securities. CIT’s directors and employees are
prohibited from entering into financial transactions to hedge their ownership interest in CIT’s securities, holding CIT’s securities in a
margin account, or otherwise pledging CIT’s securities as collateral for a loan.
Ö Board and Committee
Evaluations. Each year, each director completes a questionnaire reflecting his or her assessment of the effectiveness of the Board and the
committees on which he or she serves. The General Counsel confidentially summarizes the directors’ responses for review by the Nominating and
Governance Committee, the Board and committees. The Board and committees review the summary in executive session and considers what actions, if any, to
take as a result. |
Additional information is provided below regarding these and
certain other key corporate governance policies which we believe enable us to manage our business in accordance with the highest standards of business
practices and in the best interests of our stockholders. Investors can find a copy of CIT’s Corporate Governance Guidelines and other governance
policies on our website at http://www.cit.com/about-cit/corporate-governance/index.htm. Information contained on
the CIT website does not constitute part of this Proxy Statement.
Our Corporate Governance Guidelines require that a substantial
majority of the Board be composed of directors who meet the independence criteria established by the NYSE. For a director to be considered independent,
the Board must affirmatively determine that neither the director nor any of such director’s immediate family has a material relationship with CIT
(either directly, or as a partner, stockholder, or officer of an organization that has a relationship with CIT). In making its determination, the Board
considers all relevant facts and circumstances, both with respect to the director and with respect to any persons or organizations with which the
director has an affiliation, including immediate family members. The Board also considers the specific independence criteria for directors as defined
by the NYSE.
- 15 -
In furtherance of our Board’s commitment to maintain the
independence of our independent directors, the Board implemented a charitable contributions policy. The policy requires that if any charitable
contribution proposed to be made by CIT to an organization in which a director is affiliated exceeds the lesser of (i) $25,000 or (ii) 2% of the
charitable organization’s most recently reported annual consolidated gross revenues, such contribution is subject to the approval of the
Governance Committee. In determining whether to approve any such contribution, the Governance Committee considers whether the donation would impair the
director’s independence.
Based on the foregoing considerations, the Board has determined
that, except for Mr. Thain, our CEO, all of CIT’s directors are independent and each of the Board Committees are composed solely of independent
directors. In making this determination, the Board considered the transactions described below under the heading “Related Person Transactions
Policy”.
Michael J. Embler currently serves on the Board of Directors of
American Airlines Group, Inc. (“American Airlines”). CIT has had and continues to have various business dealings with American Airlines,
including aircraft loans and leases. At its July 15, 2013 meeting, the Nominating & Governance Committee of the CIT Board reviewed the existing
relationships between CIT and American Airlines for purposes of considering any potential impact on Mr. Embler’s independence and other governance
matters. The Nominating & Governance Committee determined that Mr. Embler’s independence would not be compromised, provided Mr. Embler recuses
himself from any CIT Board decisions that could reasonably have an impact on American Airlines.
Related Person Transactions
Policy
The Board has adopted a “Related Person Transactions
Policy” for the review and approval of “related person transactions,” which is defined under such policy as any transaction, arrangement
or relationship, or any series of similar transactions, arrangements or relationships, in which CIT was or is to be a participant, the amount involved
exceeds or is expected to exceed $120,000 in a single calendar year, and an executive officer, director, director nominee, or a 5% beneficial owner of
any class of CIT’s voting securities (or any of their respective immediate family members) had or will have a direct or indirect material
interest, other than the following:
• |
|
interests arising solely from the related person’s position
as a director or limited partner, or from the direct or indirect ownership by the related person, and all other related persons, in the aggregate of
less than a 10% equity interest in another corporation or organization that is a participant in the transaction; |
• |
|
amounts due from related persons to CIT for purchases of goods
and services subject to usual trade terms, for ordinary business travel and expense payments, and for other indebtedness transactions in the ordinary
course of business; |
• |
|
interests arising solely from the ownership of a class of
CIT’s equity securities, if all holders of that class of equity securities receive the same benefit on a pro rata basis; |
• |
|
transactions where price is determined by competitive bid, or
where the service is rendered as a common carrier or public utility at rates fixed pursuant to law; |
• |
|
transactions that involve compensation to a director, or
compensation to executive officers, approved by the Board; |
• |
|
interests arising solely from the related person’s position
as an executive officer or director of another entity that is a participant in the transaction, where (a) the related person and his or her immediate
family members own in the aggregate less than a 5% equity interest in such entity, (b) the related person and his or her immediate family members are
not involved in the negotiation of the terms of the transaction, and (c) the amount involved in the transaction equals less than 2% of the annual gross
revenues of each of CIT and the other entity that is a participant in the transaction. |
Under this written policy, any proposed related person
transaction will be considered at the next meeting of the Governance Committee, but if it is not desirable for CIT to wait until the next meeting, the
transaction will be submitted to the Chairperson of the Governance Committee for approval, subject to reporting any such approval at the next
Governance Committee meeting. In either case, the benefits to CIT, the availability of other sources of comparable products or services, the terms of
the transaction, the terms available to unrelated third parties, and whether the transaction was undertaken in the ordinary course of business, will be
considered. The Governance Committee will approve only those related person transactions that are in, or are not inconsistent with, the best interests
of CIT and its stockholders, as the Governance Committee determines in good faith. In certain circumstances, if the Chief Executive Officer, Chief
Financial Officer or General Counsel of CIT becomes aware of a related person transaction that has not been previously approved or ratified under the
policy, the Governance Committee will determine if rescission of the transaction is appropriate, and will request that the Chief Financial Officer
evaluate CIT’s controls and procedures to ascertain the reason the transaction was not submitted to the Governance Committee or its Chairperson
for prior approval.
We have in the past and may in the future enter into certain
transactions with affiliates, other than directors and executive officers. Such transactions have been, and it is anticipated that such transactions
will continue to be, entered into on an arm’s length basis at a fair market value for the transaction.
There were no transactions reviewed by the Governance Committee
in 2014 under the Related Person Transactions Policy.
- 16 -
Each of CIT’s thirteen nominees for director is a current
director of CIT.
Under our Corporate Governance Guidelines, the Board has adopted
a diversity policy and seeks diversity in its members with respect to background, skills and expertise, industry knowledge, and experience. Our
Corporate Governance Guidelines set forth general criteria for nomination and re-nomination to the Board, including:
• |
|
judgment, integrity, commitment, and candor; |
• |
|
leadership and decision-making experience in complex
organizations, including corporations, banking and financial institutions, and government, education, and military institutions; |
• |
|
expertise, knowledge, and skills useful for overseeing our
business; and |
• |
|
diversity of background, perspectives, skills and
experience. |
When considering directors for re-nomination, the Governance
Committee also considers attendance, preparedness, participation and candor.
The Governance Committee reviews with the Board the skills,
characteristics and diversity of background appropriate for CIT’s directors. When seeking to fill Board vacancies, the Governance Committee
evaluates the skills and characteristics of the existing directors, including the diversity of background, perspectives, and experience of the
directors, to identify any gaps that should be filled. The Governance Committee then utilizes that information to guide its search for new director
nominees.
Majority Voting for
Directors
Under our By-Laws and Corporate Governance Guidelines, if the
nominees are all nominated by CIT, a nominee for director is elected if the votes cast “for” such nominee’s election exceed the votes
cast “against” such nominee’s election; however, directors are elected by a plurality of the votes cast at any meeting of stockholders
for which (i) the Corporate Secretary of CIT receives a notice that a stockholder has nominated a person for election to the Board in compliance with
the advance notice requirements for stockholder nominees set forth in our By-Laws, and (ii) such nomination has not been withdrawn by such stockholder
on or before the tenth day before CIT first mails its notice of meeting for such meeting to the stockholders. If directors are to be elected by a
plurality of the votes cast, as permitted under Delaware law and our By-Laws, stockholders shall not be permitted to vote “against” a
nominee. Votes cast shall not include abstentions with respect to the election of directors. Under our Corporate Governance Guidelines, if a majority
vote is required, any nominee who fails to receive the required vote “for” his or her election or re-election must promptly tender his or her
resignation to the Chairman of the Board. If an incumbent director fails to receive the required vote for re-election, the Governance Committee will
promptly consider the resignation submitted by such director and will recommend to the full Board whether to accept such resignation. The Governance
Committee will consider all factors that it deems relevant in making its recommendation, including any stated reasons why stockholders voted
“against” the director, the length of service and qualifications of the director, the director’s contributions to CIT and CIT’s
Corporate Governance Guidelines.
The Board will act on the recommendation of the Governance
Committee no later than 90 days following the date of the stockholders’ meeting at which the election occurred. The Board will review the factors
considered by the Governance Committee and such other information and factors as the Board deems relevant. We will promptly disclose the Board’s
decision whether to accept the resignation as tendered, and provide a full explanation of the process by which the decision was reached and, if
applicable, the reasons the Board rejected the tendered resignation, in a Form 8-K filed with the SEC.
If one or more directors’ resignations are accepted by the
Board, the Governance Committee will recommend to the Board whether to fill such vacancy or vacancies or to reduce the size of the
Board.
Board Leadership
Structure
The positions of Chief Executive Officer and Chairman are
currently held by one person, John A. Thain. In deciding to continue CIT’s practice of combining the Chief Executive Officer and Chairman
positions, the primary factors considered by the Board were the importance of a unified strategic and operating focus, the benefits of clarity in the
management structure of the organization, and the need for consistent communications to stockholders, customers, regulators and other constituencies.
This structure also best assures that Mr. Thain is able to use his in-depth knowledge and perspective gained from running CIT to effectively and
efficiently guide our Board. By being closely connected with both CIT’s senior level managers and the Board, Mr. Thain is better able to
appreciate and balance the perspectives of both groups.
- 17 -
To establish a liaison between the non-management directors and
the Chairman and Chief Executive Officer and foster effective communication between them, the independent directors on CIT’s Board also appoint a
Lead Director who is independent of management. This position is currently held by Vice Admiral John R. Ryan. The Board has structured the role of our
independent Lead Director to strike an appropriate balance to the combined Chairman and Chief Executive Officer role and to fulfill the important
requirements of independent leadership on the Board. As Lead Director, Mr. Ryan:
• |
|
presides over all meetings of the Board at which the Chairman is
not present; |
• |
|
presides at executive sessions of the Board; |
• |
|
develops and approves meeting agendas for the Board to ensure
that management is addressing all matters of concern or interest to the Board and that sufficient time for discussion is allocated for each matter;
and |
• |
|
serves as a liaison between the Chairman and the independent
directors. |
The Board’s Role in Risk
Oversight
The Board believes that evaluating how CIT’s executive team
manages the various risks confronting CIT is one of the most important areas of its oversight responsibilities and that effectively balancing risk and
return is critical to the long-term success of CIT. CIT has a comprehensive enterprise risk management program that governs the policies and procedures
used by management to monitor, evaluate and manage the risks we assume in conducting our business activities. Our Board’s oversight of this risk
management process is conducted primarily by our Audit Committee and our Risk Management Committee; however, each of the other Board Committees also
considers risk within its area of responsibility.
Audit Committee
The duties of the Audit Committee include reviewing and
discussing with the appropriate members of management CIT’s major financial risk exposures, including interest rate, liquidity, foreign currency
exposure, cash investment, funding, swap-counterparty, and asset-liability management risks, as well as overseeing CIT’s internal controls over
financial reporting. In addition, the Audit Committee is responsible for the oversight of, and receives regular reports regarding, CIT’s internal
audit and compliance functions and risks related to litigation, compliance and legal matters as well as enterprise, operations and market risks. The
Audit Committee and Risk Management Committee meet together quarterly in joint sessions to ensure appropriate communications regarding areas of overlap
in overseeing risk.
Risk Management
Committee
The duties of the Risk Management Committee include overseeing
CIT’s risk management functions and processes, including (a) reviewing and recommending to the Board an annual risk appetite statement, and
reviewing management’s risk appetite limits report to confirm that CIT is operating within its risk appetite statement, (b) ensuring that
management has established processes and an enterprise risk management framework and governance structures designed to identify, bring to the
Board’s and/or the Risk Management Committee’s attention, and appropriately manage, monitor, control and report exposures to the major risks
affecting CIT, including risk management deficiencies and the timely implementation of corrective actions to address such deficiencies, (c) monitoring
the performance, quality and trends associated with CIT’s credit portfolio, (d) assessing, jointly with the Audit Committee, the adequacy of
CIT’s allowance for loan losses and management’s methodology for determining such allowance, (e) receiving, jointly with the Compensation
Committee, management’s assessment of the effectiveness of the design and operation of CIT’s incentive compensation programs, and (f)
overseeing CIT’s stress testing process. The Risk Management Committee also oversees CIT’s loan review function, information security
processes, business continuity planning, and the use of insurance to manage certain of CIT’s risks.
Compensation
Committee
The duties of the Compensation Committee include regularly
assessing risks related to our compensation programs, including our executive compensation practices. Management provides information on a regular
basis to the Compensation Committee regarding compensation elements and features that could mitigate or encourage excessive risk-taking. In assessing
compensation related risks, the Compensation Committee, together with the Risk Management Committee, considers the balance between annual and
longer-term performance incentives, performance measures that motivate sustained performance while prudently managing risk, stock ownership guidelines
that align executives’ interests with those of our stockholders, and our clawback policy to recoup compensation.
- 18 -
Nominating & Governance
Committee
The duties of the Nominating & Governance Committee include
reviewing and minimizing risks by ensuring appropriate policies and practices exist and are implemented to avoid or manage conflicts of interest by and
among CIT, its executive officers, directors, director nominees and stockholders, overseeing an effective succession planning process, overseeing
CIT’s Political Contributions Policy and lobbying practices, and adopting prudent governance policies. For more information, see Corporate
Governance section — list of significant corporate governance practices and policies in this Proxy Statement.
Regulatory Compliance
Committee
The duties of the Regulatory Compliance Committee include
monitoring and overseeing CIT’s relationships with regulators and its compliance with and resolution of any significant issues or matters
identified by any banking regulatory authority.
The Board is actively engaged and involved in talent management.
The Board reviews the Company’s human resources strategy in support of its business strategy at least annually. This process includes a detailed
discussion of the Company’s leadership bench strength and succession plans with a focus on key positions at the senior officer level. In addition,
the Board Committees regularly discuss the talent depth for specific critical roles. High potential leaders are given exposure and visibility to Board
members through formal presentations and informal events. For more information on CIT’s Board Committees, see “Corporate Governance —
Board Committees” below.
Director and Senior Executive Officer Stock
Ownership Policy
CIT believes that significant stock ownership by its directors
and senior executive officers further aligns their and CIT stockholders’ interests. Accordingly, under our Corporate Governance Guidelines, within
a specified period of time, directors are required to own shares of CIT’s common stock at least equal in value to five times the amount of the
directors’ annual retainer fee. “Value” is generally calculated as the number of shares owned multiplied by the greater of (i) the
current stock price or (ii) the 3-year average stock price of CIT’s common stock. This minimum stock ownership must be maintained for as long as
both (a) such director remains on the Board and (b) CIT’s common stock is publicly traded on a national securities exchange. Senior executive
officers of CIT are also required to own a minimum amount of CIT shares as further described in the “Compensation Discussion and Analysis”
portion of this Proxy Statement.
During 2014, our Board maintained an Audit Committee, a
Compensation Committee, a Governance Committee, a Risk Management Committee and a Regulatory Compliance Committee as standing committees. Each Board
Committee is currently comprised of four directors. Each director serving on the Audit Committee, the Compensation Committee, the Governance Committee,
the Risk Management Committee, and the Regulatory Compliance Committee is independent as defined by the NYSE and applicable law. Each Board Committee
has a separate chair and operates under a written charter. The current version of the written charter of each standing Board Committee is available on
our website at http://www.cit.com/about-cit/corporate-governance /board-committees/index.htm.
- 19 -
Board Committee
Assignments
| Director |
Audit
Committee |
Compensation
Committee |
Nominating
&
Governance
Committee |
Risk
Management
Committee |
Regulatory
Compliance
Committee |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vice Admiral John R. Ryan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Board Committee Duties,
Generally
• |
|
conducts its duties consistent with its written charter, which
it reviews and updates (if appropriate) at least annually; |
• |
|
conducts a self-evaluation annually; |
• |
|
cooperates and coordinates with the other Board Committees on
areas where the substance of their activities overlap; and |
• |
|
regularly reports to the Board. |
Audit Committee
The Audit Committee’s duties include:
• |
|
monitoring the quality and integrity of our financial reporting
process, financial statements and systems of internal controls regarding finance and accounting; |
• |
|
monitoring compliance with our “Code of Business
Conduct,” other compliance policies, and legal and regulatory requirements; |
• |
|
reviewing the budget, plan and activities of the Internal Audit
Department and the appointment, performance and replacement of the Chief Auditor; |
• |
|
reviewing the budget, plan and activities of the Compliance
Department and the appointment, performance, and replacement of the Chief Compliance Officer; |
• |
|
retaining, determining the compensation of, and monitoring the
qualifications, independence and performance of the independent auditors, including approving in advance all audit and non-audit
engagements; |
• |
|
overseeing the management of our financial, litigation and
compliance risks; and |
• |
|
approving the “Audit Committee Report” for inclusion
in our annual proxy statement. |
The Board has determined that Ms. Parrs meets the standard of
“Audit Committee Financial Expert,” as defined by the rules of the SEC, and that each member of the Audit Committee is independent from
management and financially literate, as defined by the NYSE listing standards.
- 20 -
Compensation
Committee
The Compensation Committee evaluates, oversees and approves the
compensation and benefits for our executive officers and other employees, and is responsible for the following:
• |
|
overseeing, reviewing and approving of the overall goals and
purposes of CIT’s incentive compensation programs for all employees, to ensure that such programs appropriately balance risk and financial results
and do not encourage excessive risk taking; |
• |
|
reviewing and recommending to the Board for approval the
corporate goals and objectives relevant to CEO compensation; |
• |
|
recommending to the Board the compensation and benefits for the
CEO considering CIT’s and his performance relative to financial, strategic and other goals and objectives approved by the Board and the value of
compensation granted to CEO’s at comparable or peer companies; |
• |
|
approving the compensation for our executive officers and
reviewing the compensation for all employees (other than our executive officers) whose annual compensation exceeds $1 million; |
• |
|
meeting at least annually to discuss and evaluate employee
compensation plans with CIT’s Chief Risk Officer in light of an assessment of any risk posed to CIT, to ensure that such plans do not encourage
employees to take unnecessary and excessive risks and to ensure that such plans do not encourage the manipulation of CIT’s reported earnings to
enhance the compensation of any of CIT’s employees; |
• |
|
receiving and reviewing, jointly with the Risk Management
Committee, management’s assessment of the effectiveness of the design and operation of CIT’s incentive compensation programs in providing
risk-taking incentives that are consistent with the safety and soundness of CIT; |
• |
|
maintaining compensation practices that are consistent with
applicable market standards and compliant with applicable regulatory requirements; |
• |
|
approving significant amendments to the retirement, severance
and other compensation and benefit plans in which our executive officers participate; |
• |
|
discussing, reviewing with management and approving the
disclosure regarding compensation and benefit matters and the “Compensation Discussion and Analysis” in CIT’s annual proxy statement;
and |
• |
|
approving the “Compensation Committee Report” for
inclusion in our annual proxy statement. |
The Compensation Committee may form and delegate authority to
subcommittees comprised of one or more members of the Compensation Committee. It may also delegate to CIT’s employee benefits committee the
responsibility to review and recommend material revisions to retirement plans, severance plans, plans permitting deferral of compensation, or any other
benefit plan in which the executive officers are participants. The Compensation Committee also has the authority to engage such consultants and
independent counsel as it determines is appropriate to assist it in the performance of its responsibilities.
In 2014, the Compensation Committee engaged the independent,
external consulting firm Pay Governance LLC (“Pay Governance”) to advise the Compensation Committee on all matters relating to the
compensation of our executive officers. The Compensation Committee directly retained Pay Governance independently from CIT management, and CIT does not
utilize Pay Governance for any other purpose. The Compensation Committee has assessed the independence of Pay Governance pursuant to SEC rules and
concluded that Pay Governance’s work for the Compensation Committee does not raise a conflict of interest.
Nominating & Governance
Committee
The Nominating & Governance Committee oversees CIT’s
governance policies and processes for nominating directors, which duties include:
• |
|
identifying and recommending qualified candidates to fill
positions on the Board and its Board Committees; |
• |
|
reviewing and recommending to the Board the compensation and
benefits for directors (other than directors who are also employees of CIT); |
• |
|
overseeing the evaluation of the structure, duties, size,
membership and functions of the Board and its Board Committees; |
• |
|
overseeing the self-evaluation of the Board and its Board
Committees; |
• |
|
overseeing CIT’s Corporate Governance Guidelines and
related policies; |
• |
|
overseeing the succession planning process for CIT’s Chief
Executive Officer, executive officers and senior managers; and |
- 21 -
• |
|
reviewing disclosures in CIT’s annual proxy statement
regarding the Nominating & Governance Committee and the director nominating process, as well as any stockholder proposals and statements in
opposition. |
The Nominating & Governance
Committee considers and evaluates all director candidates recommended by our stockholders in accordance with the procedures set forth in our Corporate
Governance Guidelines. Stockholders may propose qualified nominees for consideration by the Nominating & Governance Committee by submitting the
names and supporting information in writing to: Office of the General Counsel, CIT Group Inc., One CIT Drive, Livingston, New Jersey 07039. Such
supporting information shall include (1) a statement containing the notarized signature of the nominee whereby such nominee consents to being nominated
to serve as a director of CIT and to serving as a director if elected by the stockholders; (2) information in support of the nominee’s
qualifications to serve on the Board and the nominee’s independence from management; (3) the name or names of the stockholders who are submitting
such proposal, the number of shares of CIT common stock held by each such stockholder, and the length of time such shares have been beneficially owned
by such stockholders; and (4) any other information that the stockholder believes to be pertinent. To be considered for nomination, any such nominees
shall be proposed as described above no later than December 15th of the calendar year immediately preceding the applicable annual stockholders meeting.
Our Corporate Governance Guidelines provide that no person shall qualify for service as a director if he or she is a party to any compensatory, payment
or other financial agreement, arrangement or understanding with any person or entity other than CIT, or has received any such compensation or other
payment from any person or entity other than CIT, in each case in connection with candidacy or service as a director of CIT.
Regulatory Compliance
Committee
The Regulatory Compliance Committee oversees CIT’s
compliance with all significant bank regulatory matters, including:
• |
|
overseeing and monitoring CIT’s significant bank regulatory
matters, including CIT’s progress in addressing the action items noted by banking regulators in examination and similar reports, and in annual and
periodic assessment reports; and |
• |
|
overseeing and monitoring other regulatory oversight matters not
specifically handled by other Board committees or the Board itself. |
Risk Management
Committee
The Risk Management Committee oversees CIT’s risk management
functions and processes, which address many of the major risks inherent to CIT’s business, including credit risk, market risk, reputation risk,
business continuity, and operational risk and is responsible for the following:
• |
|
overseeing our enterprise risk management functions and
processes, including reviewing and recommending to the Board an annual risk appetite statement and reviewing management’s risk appetite limits
report to confirm that CIT is operating within its risk appetite statement, overseeing CIT’s risk monitoring programs and processes, monitoring
the performance and quality of CIT’s credit portfolio, reviewing and assessing CIT’s risk grading methodology, confirming that sufficient and
appropriate resources are dedicated to risk management, overseeing CIT’s stress testing process, and managing, monitoring, controlling and
reporting exposures to the major risks affecting CIT, including risk management deficiencies and the timely implementation of corrective actions to
address such deficiencies; |
• |
|
reviewing the plan, budget, activities, organizational
structure, staffing, scope of authority and qualifications of the loan review organization responsible for auditing compliance with CIT’s credit
policies and practices; |
• |
|
reviewing and ensuring the adequacy of CIT’s business
continuity and disaster recovery plans, training programs, and threat analysis; |
• |
|
reviewing and ensuring the adequacy of CIT’s information
security policies and technology risk management program; and |
• |
|
reviewing CIT’s corporate insurance program at least
annually. |
Stockholder Communications with the
Board
Any person who has a concern about CIT’s governance,
corporate conduct, business ethics or financial practices may communicate that concern to the non-management directors. In addition, CIT’s
stockholders may communicate with the Board regarding any topic of current relevance to CIT’s business. Any of the foregoing communications should
be submitted in writing to the Lead Director, the Audit Committee, or the non-management directors as a group by writing to them, c/o CIT’s
General Counsel and Secretary, One CIT Drive, Livingston, New Jersey 07039, or by email to directors@cit.com. Concerns and stockholder communications
may also be directed to the Board by calling the CIT Hotline in the U.S. or Canada at 1-877-530-5287. To place calls from other countries in which CIT
has operations, individuals may call the toll free numbers listed in our Code of Business Conduct, which is available on
- 22 -
our website at http://www.cit.com/about-cit/corporate-governance/index.htm. These concerns can be reported confidentially or
anonymously. Concerns and issues communicated to the Board will be addressed through CIT’s regular procedures:
• |
|
depending on the nature of the concern or issue, your
communication may be referred to CIT’s Chief Auditor, General Counsel, Head of Human Resources or other appropriate executive for processing,
investigation, and follow-up action; |
• |
|
concerns relating to CIT’s accounting, internal accounting
controls or auditing matters will be referred to the Audit Committee; and |
• |
|
other concerns may be referred to either CIT’s Lead
Director or to one or more non-management members or Board Committee. |
CIT’s General Counsel reserves the right not to forward to
Board members any abusive, threatening or otherwise inappropriate materials or any other communications intended solely to market services or products
to directors or CIT.
Compensation Committee Interlocks, Insider
Participation and Banking Interlocks
There are no interlocking relationships between any member of our
Compensation Committee and any of our executive officers that would require disclosure under SEC rules. No member of our Compensation Committee is a
current or former officer or employee of CIT. No member of our Board and none of our “senior executive officers” (as defined in 12 C.F.R.
§303.101) is a management official of an unaffiliated depository organization.
There are no known legal proceedings or events in the past ten
years that are material to an evaluation of any director, executive officer, or person nominated to become a director or executive officer of CIT,
other than CIT’s bankruptcy in 2009.
CIT Political Contributions
Policy
CIT believes that an important part of responsible corporate
citizenship is participation in the political and public policy process. The focus of these efforts is on issues that affect the company, our
operations, employees, customers, shareholders and local communities. Our business is subject to extensive laws and regulations at the federal, state
and local levels, and changes to these laws can significantly affect how we serve our customers and the costs we incur. It is important for CIT to
engage in the political dialogue to advance the interests of our company. The CIT Government Relations Department works closely with all of our lines
of business to manage our legislative and political activities in a manner consistent with good corporate governance practices and in compliance with
all legal requirements.
• |
|
Even where legally permitted, CIT’s policy is not to use
any company funds or property for any candidate campaign funds including candidate campaign committees, political parties, caucuses, or independent
expenditure committees (superPACs). |
• |
|
CIT may use its on-staff government relations professionals,
contract lobbyists, and trade associations to monitor and provide comments on proposed legislation and regulations that may affect how our customers
can be served. The Director of Government Relations must approve any lobbying activities by employees or the use of company funds for
lobbying. |
• |
|
CIT’s Political Action Committee (PAC) is a non-partisan
committee that provides an opportunity for company employees to participate in the political process. The PAC is funded entirely through voluntary
contributions from eligible CIT employees, and uses those funds to support candidates running for elective office, political parties, and other
political action committees that are supportive of CIT’s public policy goals. |
• |
|
CIT’s Code of Business Conduct encourages employees to
participate in civic and political activities on their own time based on their individual desires and political preferences, including making personal
contributions to political candidates or activities, as long as they do not express or imply that they are acting on behalf of CIT. |
Hedging, Margin Accounts and Pledged
Securities
CIT’s directors and employees are prohibited from entering
into financial transactions to hedge their ownership interest in CIT’s securities, including trading in publicly traded options, puts, calls,
collars or other derivative instruments related to CIT’s stock or debt. CIT’s directors and employees are also prohibited from holding
CIT’s securities in a margin account or otherwise pledging CIT securities as collateral for a loan.
- 23 -
The Nominating and Governance Committee recommends to the Board
the compensation and benefits for CIT’s non-employee directors. The objectives of the director compensation program are to attract highly
qualified individuals to serve on the Board and to align their interests with our stockholders. Employee directors do not receive compensation for
their services as a director.
CIT’s director compensation plan (the “Director
Compensation Plan”), which was effective as of May 11, 2011, is described below. Directors’ compensation is earned for each twelve-month
period beginning in May and ending in April, but is disclosed in the annual proxy statement on a fiscal year basis. Effective May 2011, CIT amended its
Director Compensation Plan to change its director equity-based awards from a uniform amount to a variable amount as described below under the heading
“Annual Compensation”.
Initial Equity Awards
A one-time grant of restricted stock units
(“RSUs”) valued at $100,000 at the time of grant is awarded to directors in connection with their appointment to the Board, subject to
applicable black-out periods and applicable vesting terms.
Annual Compensation
The following table outlines the elements of compensation paid
annually to directors for each twelve-month period beginning in May and ending in April of the following calendar year, and determined by each
director’s role on the Board, pursuant to the Director Compensation Plan.
|
|
Lead Director,
Board Committee
Chairs and
Directors
Serving on more than one
Board Committee
|
|
All
Other
Directors
|
|
|
|
|
|
$60,000 |
|
|
|
|
|
$95,000 |
|
|
|
|
|
$155,000 |
|
|
|
|
|
|
|
(1) |
|
CIT’s Director Compensation Plan provides for director
equity-based awards in the form of RSUs as follows: $25,000 for serving as Audit Committee Chair, $15,000 for serving as Risk Management, Compensation
or Special Compliance Committee Chair, $10,000 for serving as Governance Committee Chair, $15,000 for serving as Lead Director and $10,000 for serving
on more than one Board Committee. The range of compensation listed in the “Equity-Based Award” and “Total” rows of the table
represent the foregoing amounts. The maximum amounts in such ranges presume that a director serves as Audit Committee Chair and Lead Director and
serves on more than one Board Committee. |
Annual Cash Retainer
An annual cash retainer of $60,000 is payable semi-annually in
May and October of each year. Alternatively, directors may elect to receive their cash retainer in any combination of cash and RSUs that settle 100% in
shares of CIT stock. RSUs granted in lieu of cash as part of the annual retainer vest in full on the first anniversary of the grant
date.
Annual Equity Awards
Directors’ equity-based awards are granted in May of each
year in the form of RSUs that settle 50% in cash and 50% in shares and vest in three equal installments beginning on the first anniversary of the date
of the grant. Directors may elect to receive 100% of vested RSUs in shares of CIT stock.
Pro-Ration Upon Joining the
Board
Annual cash retainers and the value of annual equity-based awards
payable to directors with respect to the compensation year during which they are named to the Board are prorated, based on the number of months
remaining in the compensation year at the time they are appointed to the Board divided by twelve.
Meeting Fees
No additional fees are paid for attendance at Board or Board
Committee meetings.
Out-of-Pocket Expenses
Directors are reimbursed for reasonable out-of-pocket expenses
incurred in attending Board or Board Committee meetings and functions and for continuing education related to serving as a director of
CIT.
- 24 -
2014 DIRECTOR COMPENSATION
TABLE
Name
|
|
Fees Earned
or Paid in
Cash (2)
($)
|
|
Stock
Awards (3)(4)
($)
|
|
Total
($)
|
| (a) |
|
(b) |
|
(c) |
|
(h) |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
|
|
$ |
80,000 |
|
|
$ |
236,667 |
|
|
$ |
316,667 |
|
|
|
$ |
60,000 |
|
|
$ |
105,000 |
|
|
$ |
165,000 |
|
|
|
$ |
60,000 |
|
|
$ |
105,000 |
|
|
$ |
165,000 |
|
|
|
$ |
60,000 |
|
|
$ |
95,000 |
|
|
$ |
155,000 |
|
|
|
$ |
60,000 |
|
|
$ |
130,000 |
|
|
$ |
190,000 |
|
|
|
$ |
60,000 |
|
|
$ |
95,000 |
|
|
$ |
155,000 |
|
|
|
$ |
60,000 |
|
|
$ |
110,000 |
|
|
$ |
170,000 |
|
Vice Admiral John R. Ryan |
|
$ |
60,000 |
|
|
$ |
120,000 |
|
|
$ |
180,000 |
|
|
|
$ |
75,000 |
|
|
$ |
231,250 |
|
|
$ |
306,250 |
|
|
|
$ |
60,000 |
|
|
$ |
110,000 |
|
|
$ |
170,000 |
|
|
|
$ |
60,000 |
|
|
$ |
120,000 |
|
|
$ |
180,000 |
|
|
|
$ |
60,000 |
|
|
$ |
115,000 |
|
|
$ |
175,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Mr. Thain’s compensation during 2014 was based solely on
his role as CEO of CIT, as disclosed in the “Summary Compensation Table” and discussed in the “Compensation Discussion and
Analysis” section of this Proxy Statement. |
(2) |
|
During 2014, directors received an annual retainer of $60,000,
which was payable in cash or converted to a number of RSUs at each director’s election. In addition, Mses. Alemany and Stamps also received a
prorated retainer of $20,000 and $15,000, respectively based on when they became directors during 2014. The grant date fair value of RSUs received at
each director’s election did not exceed the value of the foregone cash retainer, and no amount related to such awards is therefore included in the
“Stock Awards” column. All of the directors, other than Ms. Alemany and Mr. Rosenfeld who elected to receive 100% of their retainer as RSUs,
received their retainers as cash. Ms. Alemany’s and Mr. Rosenfeld’s 2014 retainer, as well as a portion of Ms. Alemany’s prorated
retainer upon becoming a Director, was converted to a number of RSUs based on the closing price of CIT common stock on the respective grant dates, and
are scheduled to vest 100% on the first anniversary of the date of each award, respectively. The number of RSUs granted and the grant date fair value
of awards granted at Ms. Alemany’s and Mr. Rosenfeld’s election, are as follows: Ms. Alemany, 298 granted on 1/29/14 ($13,940); and each of
Ms. Alemany and Mr. Rosenfeld, 714 RSUs granted on 5/13/14 ($30,000), and 619 granted on 10/29/14 ($30,000). |
(3) |
|
Represents the aggregate grant date fair value of RSUs granted
during 2014 for each director, other than for RSUs granted as part of the annual retainer and described in footnote 2 above. These amounts do not
represent the actual value realized by each director. The grant date fair value is determined in accordance with FASB ASC Topic 718 (“ASC
718”) based on the closing price of CIT common stock on the date of grant. The number of RSUs granted during 2014 was determined based on the
closing price of CIT common stock on each grant date and are scheduled to vest in equal installments on the first, second, and third anniversaries of
the date of the award. The number of RSUs and grant date fair value of awards granted to each director are as follows: |
| |
|
Grant
Date
|
|
# RSUs
|
|
Grant Date
Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Messrs. Embler and Freeman |
|
|
|
|
|
|
|
|
|
|
|
|
|
Messrs. Moffett and Oates |
|
|
|
|
|
|
Messrs. Rosenfeld and Sternberg |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The RSUs listed above are scheduled to either settle 50% in cash
and 50% in shares, or 100% in shares based on director elections, other than initial grants for Mses. Alemany and Stamps which are scheduled to settle
100% in shares. |
- 25 -
(4) |
|
The following table sets forth the aggregate number of
equity-based awards outstanding at December 31, 2014: |
|
|
RSUs were the only form of equity-based awards granted to
directors during 2014. The use of stock options and restricted stock shares was discontinued in April 2010, and no restricted stock shares remained
unvested or outstanding as of December 31, 2014. The number of RSUs that are vested as of December 31, 2014 but deferred at the election of the
directors, included in the number of RSUs outstanding presented above, are as follows: Mr. Freeman — 1,769; Mr. Moffett — 4,683; Mr. Oates
— 717; Mr. Rosenfeld — 5,430 Mr. Ryan — 3,706; Mr. Tobin — 5,940; Ms. Unger — 3,009; Mses. Alemany, Stamps and Miller Parrs,
and Messrs. Embler and Sternberg — 0 (none). |
(5) |
|
Mr. Oates also serves as a director of CIT Bank and in 2014
received total compensation of $55,000 for his services, which was paid in cash, in addition to the compensation listed in the table above that he
received for his service as a Director of CIT. |
- 26 -
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
Security Ownership of Certain Beneficial
Owners
The following table shows the name and address of each person or
company known to CIT that beneficially owns more than 5% of any class of voting stock. Information in this table is as of December 31, 2014, based upon
reports on Schedule 13G filed with the SEC on or before February 14, 2015.
Title of Class of Stock
|
|
|
|
Name and Address of
Beneficial Owner
|
|
Amount and Nature of
Beneficial
Ownership
|
|
Percentage
of Common
Stock
|
| |
|
|
|
|
The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355 |
|
|
|
|
| |
|
|
|
|
Capital Research Global Investors, a division of
Capital Research and Management Company
333 South Hope Street
Los Angeles,
CA 90071 |
|
|
|
|
| |
|
|
|
|
Epoch Investment Partners, Inc.
399 Park Avenue
New York, New York 10022 |
|
|
|
|
| |
|
|
|
|
BlackRock, Inc.
55 East 52nd Street
New York, NY 10022 |
|
|
|
|
| |
|
|
|
|
Franklin Mutual Advisers, LLC
101 John F. Kennedy Parkway
Short Hills, NJ 07078-2789 |
|
|
|
|
(1) |
|
The Vanguard Group reports sole voting power over 182,209
shares, sole dispositive power over 11,816,149 shares and shared dispositive power over 164,164 shares. |
(2) |
|
Capital Research Global Investors, a division of Capital
Research and Management Company, reports sole voting power over 10,821,500 shares and sole dispositive power over 10,821,500 shares. |
(3) |
|
Epoch Investment Partners, Inc. reports sole voting power over
10,162,320 shares and sole dispositive power over 10,162,320 shares. |
(4) |
|
BlackRock, Inc. reports sole voting power over 8,030,697 shares
and sole dispositive power over 10,044,790 shares. |
(5) |
|
Franklin Mutual Advisers, LLC reports sole power to vote or
direct the vote over 9,541,622 shares and sole power to dispose or direct the disposition of 9,541,622 shares. |
- 27 -
Security Ownership of Directors and Executive
Officers
The table below shows, as of March 1, 2015, the number of shares
of CIT common stock owned by each director, by the named executive officers, and by the directors and executive officers as a group.
Name of Individual
|
|
Amount and Nature
of Beneficial Ownership
(CIT
Common Stock and
Exchangeable Shares)
(1)(2)(3)(4)(5)
|
|
Percentage
of Class
|
|
|
|
433,324 |
|
|
* |
|
|
|
1,238 |
|
|
* |
|
|
|
21,592 |
|
|
* |
|
|
|
8,765 |
|
|
* |
|
|
|
3,823 |
|
|
* |
|
|
|
15,204 |
|
|
* |
|
|
|
10,662 |
|
|
* |
|
|
|
16,218 |
|
|
* |
|
|
|
9,672 |
|
|
* |
|
|
|
789 |
|
|
* |
|
|
|
26,436 |
|
|
* |
|
|
|
8,261 |
|
|
* |
|
|
|
10,452 |
|
|
* |
|
|
|
112,634 |
|
|
* |
|
|
|
74,970 |
|
|
* |
|
|
|
96,616 |
|
|
* |
|
|
|
67,742 |
|
|
* |
All Directors and Executive Officers
as a group (21 persons) |
|
|
998,253 |
|
|
* |
* |
|
Represents less than 1% of our total outstanding Common
Stock. |
(1) |
|
Includes RSUs awarded under our equity compensation plans which
have voting rights due to the expiration of the holding period and their settlement in stock (less shares withheld to cover tax obligations), in the
following amounts: Mr. Thain — 209,282, Ms. Alemany — 1,238, Mr. Embler — 6,535, Mr. Freeman — 2,687, Mr. Moffett — 3,823, Mr.
Oates — 5,197, Ms. Parrs — 4,584, Mr. Rosenfeld — 5,824, Mr. Ryan — 3,594, Ms. Stamps — 789, Mr. Sternberg — 6,396, Mr.
Tobin — 1,360, Ms. Unger — 2,698, Mr. Chai — 96,807, Mr. Knittel — 66,204, Mr. Parker — 84,259, Ms. Polsky — 59,749 and
74,960 to all other executive officers as a group. |
(2) |
|
Includes PSUs awarded under our equity compensation plans which
have voting rights due to the certification of the performance measurements upon expiration of the holding period and their settlement in stock (less
shares withheld to cover tax obligations), in the following amounts: Mr. Thain — 35,170, Mr. Chai — 15,826, Mr. Knittel — 8,765, Mr.
Parker —12,357, Ms. Polsky — 7,993 and 6,132 to all other executive officers as a group. |
(3) |
|
Includes shares of CIT common stock issuable pursuant to stock
options awarded under our equity compensation plan that have vested or are scheduled to vest within 60 days after March 1, 2015 in the following
amounts: Mr. Embler — 7,506, Mr. Freeman — 4,558, Mr. Oates — 7,506, Ms. Parrs — 4,558, Mr. Rosenfeld — 7,870, Mr. Ryan —
4,558, Mr. Sternberg — 5,216, Mr. Tobin — 4,902, and Ms. Unger — 5,815. |
(4) |
|
Excludes RSUs issued under our equity compensation plans that
will settle 100% in stock, for which the holders do not have voting rights, and for which ownership has not vested, in the following amounts: Mr. Thain
— 248,765, Ms. Alemany — 2,499, Mr. Rosenfeld — 1,332, Ms. Stamps — 1,395, Mr. Chai — 91,091, Mr. Knittel — 63,715, Mr.
Parker — 65,837, Ms. Polsky — 51,490 and 126,696 to all other executive officers as a group. |
(5) |
|
Excludes RSUs issued under our equity compensation plans, for
which the holders do not have voting rights, for which ownership has not vested, and for which settlement shall be made 50% in cash and 50% in stock,
in the following amounts: Ms. Alemany — 3,213 (all of which Ms. Alemany elected to settle 100% in stock), Mr. Embler — 5,064 (all of which
Mr. Embler elected to settle 100% in stock), Mr. Freeman — 6,589 (2,653 of which Mr. Freeman elected to settle 100% in stock and to defer
settlement until he is no longer a member of the Board), Mr. Moffett — 9,264 (all of which Mr. Moffett elected to settle 100% in stock and to
defer settlement until he is no longer a member of the Board), Mr. Oates — 5,298 (all of which Mr. Oates elected to settle 100% in stock, and
2,152 of which Mr. Oates elected to defer settlement until he is no longer a member of the Board), |
- 28 -
|
|
Ms.
Parrs — 6,271, Mr. Rosenfeld — 10,735 (all of which Mr. Rosenfeld elected to settle 100% in stock and to defer settlement
until he is no longer a member of the Board), Mr. Ryan — 9,493 (all of which Mr. Ryan elected to settle 100% in stock, and
8,375 of which Mr. Ryan elected to defer settlement until he is no longer a member of the Board), Ms. Stamps — 2,865, Mr.
Sternberg — 5,305 (all of which Mr. Sternberg elected to settle 100% in stock), Mr. Tobin — 11,727 (all of which Mr.
Tobin elected to settle 100% in stock and to defer settlement until he is no longer a member of the Board), and Ms. Unger —
8,555 (all of which Ms. Unger elected to settle 100% in stock and to defer settlement until she is no longer a member of the Board). |
| |
|
|
(6) |
|
Includes 78,871 shares of CIT common stock held in a GRAT trust
for which Mr. Thain has disclaimed beneficial ownership. |
The following table sets forth certain information as of February
15, 2015 regarding CIT’s executive officers. The executive officers were appointed by and hold office at the discretion of the Board. No family
relationship exists among CIT’s executive officers or with any director. The executive officers, like all directors and employees, are subject to
CIT’s Code of Business Conduct, which is available on our website at http://www.cit.com/about-cit/corporate-governance/code-of-conduct/index.htm. Certain executive officers may also be
directors or trustees of privately held or not-for-profit organizations that are not referred to below.
| Name |
Age |
Position |
|
|
Chairman of the Board and Chief Executive Officer |
|
|
Executive Vice President and Chief Administrative Officer |
|
|
President of CIT Group Inc. and North American Commercial Finance, and Chairman and CEO of CIT Bank |
|
|
Executive Vice President and Controller |
|
|
Executive Vice President, General Counsel and Secretary |
|
|
President, Transportation and International Finance |
|
|
Executive Vice President and Chief Financial Officer |
|
|
Executive Vice President and Chief Risk Officer |
|
|
Executive Vice President, Communications and Government Relations |
(1) |
|
See “Directors — Nominees” in this Proxy
Statement for Mr. Thain’s biographical information. |
Andrew T. Brandman has served as Executive Vice President
and Chief Administrative Officer since April 2012. Previously, Mr. Brandman served as Chief Administrative Officer and Executive Vice President at NYSE
Euronext. Before this, he held a number of positions of increasing responsibility at NYSE Euronext since 2004, including Chief of Staff to the Chief
Executive Officer, Head of Financial Planning & Administration and Head of Business Controlling. Prior to NYSE Euronext, he was a Director at
Credit Suisse First Boston’s Infrastructure Group. Before this, Mr. Brandman was Chief of Staff for the Global Fixed Income and Treasury Division
at Banco Santander Central Hispano. From 1991 to 1997, he held various positions at Union Bank of Switzerland.
Nelson J. Chai has served as President of CIT since August
2011 and as both President of North American Commercial Finance and Chairman and Chief Executive Officer of CIT Bank since January 2014. Previously,
Mr. Chai served as Executive Vice President, Chief Administrative Officer and Head of Strategy from June 2010 to August 2011. Prior to joining CIT, Mr.
Chai served as President Asia-Pacific for Bank of America Inc. from December 2008 to February 2009, as a result of the merger between Bank of America
Inc. and Merrill Lynch & Co., Inc. From December 2007 to December 2008, Mr. Chai was Executive Vice President and Chief Financial Officer of
Merrill Lynch & Co., Inc. From January 2006 to December 2007, Mr. Chai was Executive Vice President and Chief Financial Officer of NYSE Euronext
and its predecessor company NYSE Group, Inc. and, from 2005, he was Chief Financial Officer of Archipelago Holdings, a predecessor to NYSE Group, Inc.,
where he was responsible for Finance, Strategy, Human Resources, and Marketing functions since first joining Archipelago in June 2000. Mr. Chai serves
as a director of Thermo Fisher Scientific since December 2010, serving on its audit and nominating & governance committees, and a director for the
US Fund for UNICEF since 2005, serving as chair of its finance committee and a member of its executive committee. Mr. Chai is also a member of the
Board of Overseers for the School of Arts and Sciences of the University of Pennsylvania.
Carol Hayles has served as Executive Vice President and
Controller since July 2010, prior to which she spent 24 years at Citigroup Inc., including serving as Deputy Controller of Citigroup, Inc. since
January 2008, leading the SEC and regulatory reporting functions. Before this, she held various leadership positions at Citigroup, including Chief
Operating Officer of Citigroup Commercial Business, Senior Analyst in Investor Relations, Chief Financial Officer of Citibank’s e-Business, CFO of
Citigroup’s Global Relationship Bank and CFO of Citibank Canada. Ms. Hayles began her career at PricewaterhouseCoopers LLP in Toronto,
Canada.
- 29 -
Robert J. Ingato has served as Executive Vice President
and General Counsel since June 2001, and as Secretary since August 14, 2002. Previously, Mr. Ingato served as Executive Vice President and Deputy
General Counsel since November 1999. Mr. Ingato also served as Executive Vice President of Newcourt Credit Group Inc., which was acquired by CIT, since
January 1998, as Executive Vice President, General Counsel and Secretary of AT&T Capital Corporation, which was acquired by Newcourt, since 1996,
and in a number of other legal positions with AT&T Capital since 1988.
C. Jeffrey Knittel has served as President of
Transportation and International Finance since January 2014. Previously, Mr. Knittel served as President of Transportation Finance since 2007 and CIT
Aerospace since 1997 and Executive Vice President of CIT Group/Capital Finance since 1992, and in several other senior management positions within CIT
Group/Capital Finance since 1986. Mr. Knittel also served in various senior management positions with Manufacturers Hanover Leasing Corporation since
1982 and Cessna Finance since 1980.
Scott T. Parker has served as Executive Vice President and
Chief Financial Officer since July 2010. Prior to joining CIT, Mr. Parker served as Chief Operating Officer and Chief Financial Officer of Cerberus
Operations and Advisory Company LLC, an affiliate of Cerberus Capital Management, L.P., from 2006 to 2010. Before joining Cerberus, he served as Chief
Financial Officer of GE Capital Solutions from 2005 to 2006, as Chief Financial Officer of GE Corporate Financial Services from 2003 to 2005, and in
various other financial roles within General Electric Company since 1989.
Lisa K. Polsky has served as Executive Vice President and
Chief Risk Officer since May 2010. Prior to joining CIT, from 2009 to May 2010, Ms. Polsky was at Jane Street Capital, a quantitative proprietary
trading firm. She joined Jane Street from Duff Capital Advisors, where she was a Partner and Head of Risk & Investment Solutions from 2008 to 2009.
Prior to joining Duff, from 2002 to 2008, Ms. Polsky managed her own consulting firm, specializing in portfolio solutions, risk management and
valuation policy. Before founding her consulting firm, Ms. Polsky served as Managing Director and Head of Client Financing Services with Merrill Lynch
& Co., Inc. from 2000 to 2002, and as Managing Director and Chief Risk Officer at Morgan Stanley from 1995 to 2000. Ms. Polsky also served as Head
of the Hedge Fund Business and Head of Derivatives in the US and Europe at Bankers Trust Company from 1990 to 1995. She began her career at Citibank NA
in 1980, where she started the FX Options business and later Co-Headed Citibank’s Derivative Business in North America. Since 2007, Ms. Polsky has
served on the board of directors of Piper Jaffray Companies, and since March, 2015, Ms. Polsky has served on the board of trustees of the Global
Association of Risk Professionals.
Margaret D. Tutwiler has served as Executive Vice
President and Head of Communications and Government Relations since August 2010. Prior to joining CIT, Ms. Tutwiler served as Senior Vice President and
Head of Global Communications and Public Affairs of Merrill Lynch and Bank of America Corporation from December 2007 to February 2009. Before that she
was Head of Global Communications and Government Relations of NYSE Euronext (NYSE: NYX) and its predecessor company NYSE Group, Inc. from 2004 to
December 2007. Ms. Tutwiler has also spent 16 years in government service, including various senior level positions in the Reagan and both Bush
Administrations.
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended
(“Exchange Act”), requires CIT’s directors, certain officers and persons who own more than 10% of a registered class of
CIT’s equity securities, to file reports of securities ownership and changes in such ownership with the SEC. Certain officers, directors and
greater than 10% stockholders also are required by SEC rules to furnish CIT with copies of all Section 16(a) forms they file.
Based solely upon a review of the copies of Forms 3, 4 and 5 and
any amendments thereto furnished to CIT and written representations made to CIT, CIT believes that all Section 16(a) filing requirements were timely
met during 2014.
- 30 -
COMPENSATION DISCUSSION AND
ANALYSIS
This Compensation Discussion and Analysis describes our 2014
financial and business results, how these results were reflected in earned short-term and long-term incentive compensation programs, and the changes we
are making to our 2015 program as a result of stakeholder feedback and our pay practices:
2014
Financial and Business Results
(page 32) |
|
n |
|
Pre-tax ROA met near-term target of 2.0%, with year-over-year double digit growth in commercial franchises offsetting losses from portfolio repositioning |
|
n |
|
Announced a definitive agreement to acquire OneWest Bank, which delivered on our strategic agenda and will create a commercial bank holding company with about $70 billion in assets |
| |
n |
|
Returned $870 million in capital to our shareholders in 2014, consisting of $95 million in dividends and $775 million in share repurchases |
|
|
|
|
|
|
|
2014
Compensation
(pages 33 to 39) |
|
n |
|
We reward performance based on pre-established goals that are fully-disclosed and with detailed metrics
|
| |
n |
|
Short-Term Incentive (“STI”): |
| |
|
|
– |
|
Earned
from 0-150% of target in the form of cash and deferred performance-based restricted stock units (“PBRSUs”) based on
performance against scorecard |
| |
|
|
– |
|
Goals reflect our continuing evolution, with
the highest weighted goals for our CEO being strategic vision (20%), pre-tax income (15%), funded new business volume (15%) and
risk / regulatory compliance (15%) |
| |
|
|
– |
|
Our CEO earned 105% of his annual incentive
target, of which 74% was awarded in the form of performance-based RSUs |
|
n |
|
Long-Term Incentive (“LTI”): |
| |
|
|
– |
|
Performance share units (“PSUs”) earned from 0-150% of target |
| |
|
|
– |
|
Based on fully diluted earnings per share (“EPS”), weighted 75%, and pre-tax return on assets
(“ROA”)*, weighted 25%, over 3 years |
|
|
|
|
|
|
|
Stakeholder
Feedback
(page 40) |
|
n |
|
Discussed our executive compensation program with close to 50% of our 50 largest shareholders this past year, as well as with proxy advisory firms Institutional Shareholder Services and Glass Lewis, while continuing to engage with our regulators |
| |
|
n |
|
Shareholders expressed support for our strategic and financial goals but questioned the following aspects of our compensation programs, which we have addressed during 2015: |
| |
|
|
|
– |
|
Transparency of performance goals and number of goals in annual scorecard |
| |
|
|
|
– |
|
Selection of performance measures |
| |
|
|
|
– |
|
Balance between short- and long-term
pay |
|
|
|
|
|
|
|
2015
Enhancements
(pages 40 to 41) |
|
n |
|
Beginning with this proxy statement, we have included:
|
| |
|
|
– |
|
Our CEO’s actual short-term incentive scorecard, as reviewed by the Compensation Committee |
| |
|
|
– |
|
Targets and actual performance for PSUs
vesting |
|
n |
|
Beginning with our 2015 executive compensation program, we have: |
| |
|
|
– |
|
Significantly decreased the portion represented by target short-term incentives |
| |
|
|
– |
|
Increased the portion represented by long-term incentives, which will be earned through two different forms of PSUs (one of which includes a pre-tax return on tangible common equity (“ROTCE”)* measure) over the 2015-2017 period. |
|
|
|
|
|
|
|
Our
Pay Practices
(page 44) |
|
n |
|
Continued refinement of our compensation program, taking into consideration stakeholder feedback, as well as corporate governance best practices, regulatory guidelines, and guidance regarding market design from the Compensation Committee’s independent compensation consultant |
| |
n |
|
Robust cancellation / recoupment provisions for equity awards |
| |
n |
|
Our named executives generally participate in the same severance plan as all other U.S. employees |
| |
n |
|
Required compliance with stock ownership and retention requirements, and no perquisites other than a car and driver for the CEO |
* |
|
This Compensation Discussion and Analysis contains non-GAAP
financial measures, which are identified with an asterisk in the first place in which they appear. For information about how these measures are
calculated, see “Non-GAAP Financial Measures and Other Definitions” at the end of this Compensation Discussion and Analysis. |
- 31 -
2014 FINANCIAL AND BUSINESS RESULTS
Over the past five years, we have made substantial progress in
positioning CIT for long-term success. During that time, we have returned to profitability, consistently grown our existing businesses while adding new
businesses, significantly improved our liability structure, enhanced our regulatory standing (including the lifting of the written agreement with the
Federal Reserve), expanded our bank platform and announced a definitive agreement to acquire OneWest Bank and transform CIT into a commercial bank
holding company with about $70 billion in assets.
We have continued to execute on our priorities to enhance return
on equity, position the Company for future growth and meet the needs of our small- and middle-market customers. We returned $870 million in capital to
our shareholders in 2014, consisting of $95 million in dividends and $775 million in share repurchases. We also have achieved approximately 12%
year-over-year growth in our commercial franchises and exited non-strategic portfolios as part of our portfolio repositioning to improve our return on
equity.
Our 2014 performance and business highlights also included the
following achievements:
|
|
n Year-over-year asset growth in our commercial franchises: 16% in
Transportation & International Finance and 8% in North American Commercial Finance |
| |
|
|
Expand Within Our Expertise |
|
n Completed acquisitions of Nacco, a European railcar leasing
company, and Direct Capital, a technology-based equipment leasing business
n Grew Commercial Real Estate and Maritime Finance divisions to a portfolio of $1.8 billion and $1.0 billion,
respectively |
| |
|
|
Enhance Risk Adjusted Returns |
|
n Continued to employ robust risk management practices: allowance
for loan losses at 1.8% of finance receivables and positive residual realization on air and rail equipment
n Exited non-strategic or underperforming portfolios |
| |
|
|
Build Commercial Banking Franchise |
|
n Announced a definitive agreement to acquire OneWest Bank to
create a commercial bank holding company with about $70 billion in assets |
| |
|
|
|
|
n Authorized $1.3 billion in share repurchases since May 2013
n Increased quarterly dividend by 50% to $0.15 per share in 3Q 2014
n Total payout ratios currently above industry norms |
(1) |
|
Includes Transportation & International Finance
(“TIF”) and North American Commercial Finance (“NACF”). |
(2) |
|
CIT Corporate excludes restructuring expenses and debt
restructuring. |
(3) |
|
Includes Non-Strategic Portfolios, Discontinued Operations,
restructuring expenses and debt restructuring. |
(4) |
|
Reflects 2Q Debt restructuring in our total return swap, which
impacted TIF’s and NACF’s net finance margin by $7 million and other income by $8 million. |
- 32 -
2014 Compensation
Components
In 2014, we used the following total direct compensation
(“TDC”) components:
Base Salary
n About 15% of target TDC (13% for CEO & 17% for President)
n Fixed
n Cash |
Base salary amounts are intended to provide a level of predictable income that reflects each executive’s level of responsibility, expertise
and experience. The Compensation Committee reviewed base salary recommendations in February 2014 and determined not to increase the base salaries of
any of our executive officers, including the NEOs, for 2014. |
Short-Term Incentive
n About 66% of target TDC (63% for CEO, and 67% for President)
n Performance-based
n Cash & deferred PBRSUs
n Granted after performance
year in Q1 2015 |
For 2014, short-term incentive awards were determined at year end based on annual performance, and paid partially in cash and partially in
deferred PBRSUs. No PBRSUs were awarded unless an individual earned a short-term incentive award, since the PBRSUs were not determined
independently.
Short-term incentives were earned only to the extent individual performance met or exceeded in aggregate the executive’s annual
goals and objectives, which were set at the beginning of the year. An individual’s short-term incentive award can be earned from 0% to 150% of
target based on a year-end assessment of performance against his or her annual scorecard, as described further below.
Annual short-term incentives
for all employees, including our executive officers, were subject to the same formulaic weighting between cash and PBRSUs, which allocates an
increasing portion to PBRSUs at higher annual short-term incentive values (after taking into account the target values of long-term equity awards
granted at the start of the year). Allocations were subject to a minimum deferral of 50% of overall incentive compensation for our executive officers,
which we established in anticipation of rules currently proposed under the Dodd-Frank Act. This weighting balances incentive compensation with prudent
risk management and aligns compensation over several years with value creation for shareholders. |
- 33 -
Funding of Company Pool Linked to Pre-Tax
Income
In February 2014, the Compensation Committee determined that
aggregate 2014 annual short term incentive pool funding for all employees globally would be calculated based on a specified percentage of Pre-Tax
Income:
|
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Performance
(as adjusted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Committee believes that the use of Pre-Tax Income provides an
objective measure that strengthens the link between the Company’s overall performance and overall employee compensation levels. Annual short-term
incentive pool funding covers all employees (including the NEOs), other than employees who participate in commission-based sales incentive plans (less
than 10% of total incentive expense), and includes both the cash incentive and deferred PBRSU elements. For performance below the threshold, the
Committee retains the discretion to award up to the threshold amount of STI funding, after consideration of relevant facts and
circumstances.
In January 2015, in accordance with the formula pre-established
in February 2014, the Compensation Committee made an initial determination and then confirmed in February 2015 that 2014 total short-term incentive
would be funded at 101% of target based on Pre-Tax Income results of 101% of target. In determining the short-term incentive payout, the Compensation
Committee decided to adjust Pre-Tax Income to include discontinued operations on a pre-tax basis (“Adjusted Pre-Tax Income”*), consistent
with the initial target set in February 2014. The final allocation of short-term incentives was based on individual performance assessments against
pre-determined goals and objectives, and approximated 95% of the amount authorized by the Compensation Committee.
Annual Scorecard Goals &
Determinations
| |
n Capped at 150% of target
n Earned based on achievement of pre-established goals |
|
|
|
In order to provide transparency to shareholders, the Compensation Committee continued to base a significant portion of the 2014 goals and
objectives for each executive officer on measurable, objective goals. Goals (and any sub-goals), whether quantitative or qualitative, were assigned a
weighting, and rated on a scale from “Does Not Meet” to “Significantly Exceeds,” with each rating corresponding to an associated
payout level for that goal (0% to a maximum of 150%, interpolated for quantitative goals). |
Our NEOs’ 2014 goals and objectives, along with associated
weightings, were set at the beginning of the year and directly align with the Company’s primary goals. After the end of the performance year
(initially in January 2015 and as reconfirmed in February 2015), the Compensation Committee (and its independent advisers) reviewed Mr. Thain’s
performance and in turn discussed its assessment with the full Board. For members of the Executive Management Committee (“EMC”), which
includes our other NEOs, the CEO reviewed the performance of each member of the EMC and his assessment of performance across each goal/objective
category was reviewed and approved by the Compensation Committee. The Compensation Committee’s assessment of performance against those goals and
objectives, as well as pay determinations, are provided below. In exercising discretion, the Compensation Committee (and the Board, in the case of Mr.
Thain) rounded the amount of the calculated short-term incentive (up or down) to the nearest $50,000.
- 34 -
Mr. Thain (Chairman and Chief Executive
Officer)
Mr. Thain’s 2014 short-term incentive target was $5,000,000,
which was unchanged from last year. His 2014 short-term incentive award was $5,250,000, representing 105% of target, and resulting in a total direct
compensation of $8,250,000, unchanged from 2013. Mr. Thain’s 2014 short-term incentive scorecard is shown below.
2014 CEO Performance Assessment & Compensation
Matrix
(Blue shading indicates achieved performance)
In determining the 2014 short-term incentive award for Mr. Thain,
the Committee noted the following 2014 key accomplishments:
Quantitative Criteria (60%)
n |
|
Performance results met or exceeded target for four out of six
pre-established goals: pre-tax income, liquidity, provision for credit losses and CIT Bank assets, resulting in target or above target payout (payouts
for both liquidity and provision for credit losses were capped at 100%). |
n |
|
Funded new business volume was somewhat below target, and
operating expense target was only partially met, resulting in below target payouts for these goals. |
n |
|
Overall payout for this category was approximately 93% of
target. |
1 |
|
Actual result represents Adjusted Pre-Tax Income. |
2 |
|
Payout for Liquidity caped at 100%. |
3 |
|
Payout for Provision for Credit Losses capped at
100%. |
- 35 -
Qualitative Criteria (40%)
n |
|
Risk / Regulatory / Compliance (15%): Received approval
for $1.1 billion of share repurchases and increased dividend to $0.15 per share; continued company-wide mandatory compliance training for employees and
developed new, comprehensive compliance plan (to be rolled out during the first quarter of 2015); resulted in a payout of 117% of target. |
n |
|
Strategic Vision (20%): key accomplishments in this
important category included the announcement of a definitive agreement to acquire OneWest Bank to diversify our deposits, improve our cost of funds and
return on equity, and the acquisition of a European Rail business (Nacco) and a new equipment financing and leasing business (Direct Capital
Corporation) which resulted in a payout of 125% of target, driven in large part by maximum payout on “plan to acquire core
deposits”. |
n |
|
Talent Management (5%): launched company-wide management
development programs, 360 degree performance assessment for over 100 leaders, and conducted second annual employee engagement survey with a favorable
sustainable engagement rating equal to an external benchmark of global financial services companies, and continued progress on diversity hiring and
promotions across the company; resulted in a payout of approximately 125% of target. |
n |
|
Overall payout for this category was approximately 122% of
target. |
Other Named Executive Officers
For our EMC members, which includes our NEOs other than the CEO,
shared, company-wide goals represented 25% of the overall weighting and the remaining 75% was determined individually based on achievement of financial
/ credit goals; strategic / business development / operational goals; risk, regulatory and governance goals; and talent goals.
The following table shows performance against the shared goals,
which resulted in a payout percentage of 82% for the shared, company-wide goals:
Shared, Company-Wide Goals
|
|
Weighting
(25%)
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Performance
|
|
|
|
|
|
$500M |
|
|
|
|
|
|
|
$737M |
|
Operating Expenses (as a % of AEA) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$8.0B |
|
|
|
|
|
|
|
$11.4B |
|
The table below summarizes the weighted payouts for each of the
other NEOs based on performance against their annual scorecard. Payouts all fall within a range of 84% to 150% of target, which generally aligns with
performance assessments on the rating scale between “Mostly Meets” and “Significantly Exceeds,” and are shown before and after
rounding by the Compensation Committee.
|
|
|
|
Weighting
|
|
Target
STI
|
|
Weighted %
Achieved
|
|
Calculated
STI Value
|
|
Actual
STI Value
|
|
|
|
|
|
|
$ |
3,000,000 |
|
|
|
|
|
|
$ |
3,250,000 |
|
|
|
|
|
|
|
$ |
1,050,000 |
|
|
|
|
|
|
|
|
|
|
|
B. Strategic/Bus. Develop. /Operational |
|
|
|
|
|
$ |
600,000 |
|
|
|
|
|
|
|
|
|
|
|
C. Risk/Regulatory/Governance |
|
|
|
|
|
$ |
450,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
150,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
750,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,250,000 |
|
|
|
|
|
|
$ |
2,750,000 |
|
|
|
|
|
|
|
$ |
1,237,500 |
|
|
|
|
|
|
|
|
|
|
|
B. Risk/Regulatory/Governance |
|
|
|
|
|
$ |
225,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
225,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
562,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,500,000 |
|
|
|
|
|
|
$ |
2,650,000 |
|
|
|
|
|
|
|
$ |
875,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
500,000 |
|
|
|
|
|
|
|
|
|
|
|
C. Risk/Regulatory/Governance |
|
|
|
|
|
$ |
250,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
250,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
625,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,050,000 |
|
|
|
|
|
|
$ |
2,200,000 |
|
|
|
|
|
|
|
$ |
410,000 |
|
|
|
|
|
|
|
|
|
|
|
B. Strategic/Bus. Develop. /Operational |
|
|
|
|
|
$ |
410,000 |
|
|
|
|
|
|
|
|
|
|
|
C. Risk/Regulatory/Governance |
|
|
|
|
|
$ |
410,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
307,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
512,500 |
|
|
|
|
|
|
|
|
|
|
|
- 36 -
In particular, the Committee considered the following 2014
accomplishments:
Mr. Chai
n |
|
Financial/Credit: performance targets for North American
Commercial Finance (“NACF”) were generally met, with Corporate Finance and Commercial Real Estate meeting or exceeding pre-tax income, net
revenue and operating expense targets, and Equipment Finance and Commercial Services generally underperforming on these measures; volume measures
(committed new business and factored) were mostly met, with Commercial Real Estate significantly exceeding target. |
n |
|
Strategic/Business Development/Operational: integrated
new equipment leasing business (Direct Capital Corporation); executed on strategy to acquire core deposits through acquisition of OneWest Bank,
including leading integration efforts; exceeded operational goals for CIT Bank. |
n |
|
Risk/Regulatory/Governance: led dialogue and maintained
constructive relationship with regulators of CIT Bank; strengthened compliance and control culture through targeted training and other compliance
initiatives, exceeding performance goals. |
n |
|
Talent: formed cross-functional NACF executive leadership
team to foster teamwork; continued to streamline organization; implemented management development initiatives for high potential employees and promoted
overall employee engagement, significantly exceeding talent management goals. |
Mr. Knittel
n |
|
Financial/Operational: Transportation & International
Finance (“TIF”) generally exceeded performance targets, with funded new business volume and finance income in Commercial Air and Rail
exceeding or significantly exceeding targets; funded new business volume target was exceeded in Maritime Finance and partially met in Business Air,
while both mostly met finance income targets; overall TIF operating expenses were better than plan. Significantly exceeded strategic and business
development goals through the acquisition of Nacco Rail in Europe (with new business volume and pre-tax income ahead of plan) and launching TC-CIT
Aviation joint venture; achieved $1 billion in assets in Maritime Finance; adopted new China strategy and exiting UK business. |
n |
|
Risk/Regulatory/Governance: implemented proactive
compliance approach to limit risk exposure successfully in multiple jurisdictions and supported overall audit and compliance initiatives, significantly
exceeding goals. |
n |
|
Talent: identified and promoted high potential employees
to participate in leadership development programs; increased employee engagement; designed employee skill assessment and development programs for TIF,
significantly exceeding goals. |
Mr. Parker
n |
|
Financial/Credit: met expense target and exceeded other
financial targets: sold, or signed agreements to sell, assets in non-strategic portfolios; achieved partial reversal of U.S. federal tax valuation
allowance; led review with Fitch Ratings, resulting in a BB+ credit rating; completed 2014 capital plan. |
n |
|
Operational: met or exceeded operational goals and
initiatives: recast financials to support new organizational reporting structure and discontinued operations; improved quarterly earnings presentation;
successfully negotiated acquisition of Direct Capital, integration of Nacco Rail and completion of wind-down of platforms in over 15 countries;
completed regulatory submission on OneWest acquisition; hosted successful Investor Day. |
n |
|
Risk/Regulatory/Governance: met goals with improved
regulatory reporting process; incorporated Nacco and Direct Capital into Sarbanes Oxley controls process. |
n |
|
Talent: met or exceeded goals: team recognized by IR
Magazine as best mid cap investor relations team; continued to enhance entry-level development program and promoted career mobility with quarterly
talent reviews; enhanced leadership through new job assignments, training and exposure to senior management. |
Ms. Polsky
n |
|
Financial/Credit: met or exceeded all portfolio target
performance metrics, including classified loan %, delinquencies, non-accruals, credit loss %, credit grade error rate, criticized loans and criticized
cash flow %; met expense target. |
n |
|
Strategic/Business Development/Operational: exceeded
goals: enhanced and expanded Risk Appetite framework; standardized company-wide new product process; partnered with Human Resources and other control
functions to enhance incentive compensation risk balancing framework and governance process; improved operational risk review; and improved reporting
capabilities in Information Risk and modeling. |
n |
|
Risk/Regulatory/Governance: exceeded goals: completed
Bank Secrecy Act/Anti-Money Laundering automation; enhanced control environment including satisfactory remediation of regulatory issues, enhanced
reporting and analysis, formation of Risk Control Committee and creation of enterprise-wide risk assessments. |
n |
|
Talent: met goals: launched Enterprise Risk Management
talent development program; encouraged internal mobility across risk organization; identified high potential employees to participate in talent
management programs. |
- 37 -
Deferred PBRSUs
n PBRSUs vest over 3 years subject to Adjusted Pre-Tax Income performance hurdle
n PBRSUs are subject to forfeiture and/orrecoupment |
74% of the 2014 annual short-term incentive was paid in PBRSUs for our CEO and 58% on average for our other NEOs. The PBRSUs are deferred over a
period of three years and will increase or decrease in value in connection with the movement of CIT’s common stock price, and accumulate the
equivalent value of dividends that may be declared and become issuable during the vesting period. The PBRSUs are scheduled to vest in three equal
installments over three years if the cumulative Adjusted Pre-Tax Income for the year immediately prior to each vesting date is positive. If cumulative
Adjusted Pre-Tax Income for the prior year is negative, the Compensation Committee may determine whether a portion, if any, of the PBRSUs will
vest.
In addition, all or a portion of the PBRSUs may be canceled, and PBRSUs that have vested within the prior 12 months may be recovered, as
described more fully below under “Our Pay Practices — Clawback Provisions.” |
Long-Term Incentive
n Performance-based
n PSUs
n Earned over 3 years
n Subject to forfeiture and/or recoupment |
As more time has passed since our emergence from bankruptcy and we have addressed regulatory concerns (culminating with the termination of the
written agreement with the Federal Reserve in 2013), we have shifted a greater proportion of our executive’s total direct compensation to
long-term incentives and refocused the performance metrics we use to align with our go-forward strategy and continued long-term growth.
In
particular, PSUs link executive compensation with the Company’s financial performance over a three-year period while maintaining a significant
portion of total compensation in equity ownership. PSUs complement our other compensation elements by incentivizing our NEOs to focus on growth and
profitability over the three-year period, with clawbacks designed to discourage inappropriate or excessive risk. Both our Chief Risk Officer
(“CRO”) and the Compensation Committee’s independent compensation consultant, Pay Governance LLC (“Pay Governance”), provided
direct input into the design of our PSUs. |
Grant of 2014 PSU Awards
n About 19% of target TDC (25% for CEO & 17% for President)
n Granted at beginning of performance year in Q1 2014
n Earned from 0-150% of target based on EPS (weighted 75%) and Pre-Tax ROA (weighted 25%) over 3
years |
As disclosed in last year’s Proxy Statement, for performance year 2014, the Compensation Committee granted PSUs for the 2014-2016 performance
period with the following grant date target values to our NEOs: Mr. Thain — $2,000,000, Mr. Chai — $750,000, Mr. Knittel — $750,000, Mr.
Parker — $600,000, and Ms. Polsky — $450,000. Compared to 2013, the Compensation Committee determined to increase Mr. Thain’s target
long-term incentive opportunity to emphasize the importance of delivering sustained financial performance results. The Compensation Committee also
determined to increase the target opportunity for Mr. Chai from $675,000 in 2013 in recognition of his expanded role as Chairman and CEO of CIT Bank,
for Mr. Knittel from $375,000 in 2013 in acknowledgement of his expanded role as President of Transportation and International Finance and for Mr.
Parker and Ms. Polsky from $500,000 and $375,000, respectively, in 2013, based on market considerations.
The awards become payable only if CIT
achieves profitability targets for the 2014-2016 performance period, while also managing risk. PSU share payouts may increase or decrease from the
target grant, with the actual number of shares ranging from 0% to a maximum of 150% of target. The number of PSUs that ultimately may vest is based on
performance against two pre-established performance measures: fully diluted EPS (weighted 75%) and pre-tax ROA (weighted 25%).
Both performance
measures have a minimum threshold level of performance that must be achieved to trigger any payout; if the threshold level of performance is not
achieved for either performance measure, then no portion of the PSU target will be payable. Achievement against each performance measure is calculated
independently, and when added together result in a maximum of 150% of target. |
All or a portion of PSUs may be canceled during the performance
period, and vested PSUs may be recovered for up to 24 months following the performance period, as described more fully below under “Our Pay
Practices — Clawback Provisions.”
- 38 -
Together with the PBRSUs, 81% of 2014 incentives were in the form
of deferred equity for our CEO (62% to 72% for our other NEOs). Performance targets and actual results will be disclosed at the end of the performance
period.
Earned 2012 PSU Awards
We first introduced PSUs as our vehicle for long-term incentives
in 2012. At the time, we were transitioning from a program focused on emerging from bankruptcy to a performance program with a long-term component. We
designed the 2012 PSUs to reward growth and profitability over a three-year period (2012-2014), with clawbacks designed to discourage excessive risk.
The performance metrics (Average Adjusted Net Finance Margin* weighted 50% and Aggregate Committed Lending Volume* weighted 50%) and targets were
established in 2012 consistent with the Company’s strategic plan and after direct input from both our CRO and Pay Governance:
Goal
|
|
Threshold
(50%)
|
|
Target
(100%)
|
|
Maximum
(200%)
|
|
Performance
|
Average Adjusted Net Finance Margin |
|
|
|
|
|
|
|
|
Aggregate Committed Lending Volume |
|
|
|
|
|
|
|
|
As disclosed in our 2011 Form 10-K filing, our Adjusted Net
Finance Margin (excluding FSA and debt prepayment penalties) for 2011 was 1.61% and our new business committed lending volume for 2011 was
approximately $9.4 billion. Since that time, we have more than doubled our net finance margin and significantly increased our committed lending volume.
The 2012 PSUs were earned at maximum based on these results.
As we begin to focus on future profitability instead of
stabilizing the business post-emergence from bankruptcy, we increased the portion of target compensation tied to long-term performance and revised the
performance goals. The 2012 PSUs represented 20% of Mr. Thain’s target 2012 direct compensation; in comparison, the 2014 PSUs represent 25% of his
target 2014 direct compensation and the 2015 PSUs will represent about 66% of his target 2015 direct compensation. Since the 2012 PSU awards, we have
also reduced the maximum leverage in our PSUs from 200% to 150% and strengthened the risk-based provisions.
2014 Total Direct
Compensation
We believe that the Total Direct Compensation values below, which
differ from the values in the 2014 Summary Compensation Table (due primarily to the inclusion of annual salary, timing of equity grants and exclusion
of change in pension value and other compensation), fairly represent the components of compensation awarded to each executive in respect of performance
during 2014. Additional information regarding compensation for each NEO for 2014 is further described in the footnotes and narrative accompanying the
2014 Summary Compensation Table and other required tables that follow.
| |
|
|
Awarded
Based on Annual Performance
|
|
|
|
|
|
%
of 2014
Total Direct
Compensation
|
($000s)
|
Annual
Salary
|
|
Cash
|
|
PBRSUs
|
|
Total
|
|
As % of
Target
|
|
Long-
Term
Incentive
(PSUs)
|
|
2014
Total
Direct
Comp.
|
|
Perf-
Based
|
|
Deferred
Equity
|
|
John A. Thain
Chairman of the Board and Chief Executive Officer |
$ |
1,000.0 |
|
|
$ |
1,362.5 |
|
|
$ |
3,887.5 |
|
|
$ |
5,250.0 |
|
|
|
105 |
% |
|
$ |
2,000.0 |
|
|
$ |
8,250.0 |
|
|
|
88 |
% |
|
|
71 |
% |
|
Nelson J. Chai
President of CIT Group Inc. & North American Commercial Finance, and Chairman and CEO of CIT Bank |
$ |
750.0 |
|
|
$ |
1,132.5 |
|
|
$ |
2,117.5 |
|
|
$ |
3,250.0 |
|
|
|
108 |
% |
|
$ |
750.0 |
|
|
$ |
4,750.0 |
|
|
|
84 |
% |
|
|
60 |
% |
|
C. Jeffrey Knittel
President, Transportation and International Finance |
$ |
500.0 |
|
|
$ |
1,210.0 |
|
|
$ |
1,540.0 |
|
|
$ |
2,750.0 |
|
|
|
122 |
% |
|
$ |
750.0 |
|
|
$ |
4,000.0 |
|
|
|
88 |
% |
|
|
57 |
% |
|
Scott T. Parker
EVP and Chief Financial Officer |
$ |
500.0 |
|
|
$ |
1,152.5 |
|
|
$ |
1,497.5 |
|
|
$ |
2,650.0 |
|
|
|
106 |
% |
|
$ |
600.0 |
|
|
$ |
3,750.0 |
|
|
|
87 |
% |
|
|
56 |
% |
|
Lisa K. Polsky
EVP and Chief Risk Officer |
$ |
500.0 |
|
|
$ |
1,014.5 |
|
|
$ |
1,185.5 |
|
|
$ |
2,200.0 |
|
|
|
107 |
% |
|
$ |
450.0 |
|
|
$ |
3,150.0 |
|
|
|
84 |
% |
|
|
52 |
% |
- 39 -
Although we received majority support from shareholders in 2014
for our say-on-pay vote (approximately 60% of the votes cast were in favor of our program), the result was significantly decreased from 2013. We
discussed our executive compensation program with close to 50% of our 50 largest shareholders this past year, as well as with proxy advisory firms
Institutional Shareholder Services and Glass Lewis and obtained additional feedback. We also continued to incorporate feedback from our regulators on
the design of our compensation structure and programs. In some cases, stakeholder engagement included the Chairman of our Compensation Committee, as
well as members of management.
Shareholders expressed support for our strategic and financial
goals and for the quality of our management team. However, based on our outreach, we received the following comments which we believe contributed to
the decreased say-on-pay vote result:
n |
|
Transparency of performance goals and number of goals in annual
scorecard. Shareholders making this comment noted that, although we disclosed performance metrics and percentage achievement for our short-term
incentive calculations, we did not expressly disclose target goals. These shareholders advised that they would benefit from additional disclosure
regarding target, as well as threshold and maximum goals. In addition, certain shareholders mentioned that they would prefer to see fewer goals in our
CEO’s annual scorecard. |
n |
|
Selection of performance measures. Shareholders making this
comment stated that they would like to see more standard metrics used in our compensation program, such as ROTCE. |
n |
|
Balance between short and long-term pay. Shareholders making this
comment expressed that short-term goals represented too large a proportion of our senior executives’ target total direct compensation (although a
significant portion of 2014 short-term incentive was paid in equity and deferred over three years). |
The Compensation Committee considered this feedback over a number
of meetings during 2014 and the beginning of 2015 and made changes to our 2015 executive compensation structure and practices, as outlined further
below.
CHANGES WE ARE IMPLEMENTING
2015 Disclosure
Enhancements
Beginning with this proxy statement, we have
included:
n |
|
Threshold, target and maximum goals, as well as the actual
result, for funding of our short-term incentive pool. |
n |
|
Our CEO’s complete short-term incentive scorecard, including
performance levels along each step of the rating scale, as well as actual results, for his quantitative goals and objectives. |
n |
|
Threshold, target and maximum goals, as well as actual results,
for PSUs with completed performance periods. |
- 40 -
2015 Program Enhancements
The Compensation Committee has revised our 2015 executive
compensation program by:
| |
n Changing our short-term incentive structure to reduce the target
opportunity to a maximum of 175% of annual base salary and providing that it will be entirely cash-based (rather than a combination of cash and PBRSUs)
but will continue to be determined based on results from an annual scorecard.
n Replacing the lost short-term incentive opportunity with long-term incentive opportunity
n Having long-term incentive opportunity earned through two different forms of PSUs: (1) 50% in
PSUs—ROA/EPS, based on fully diluted EPS and pre-tax ROA and (2) 50% in PSUs-ROTCE, based on pre-tax ROTCE, with a credit modifier to further
strengthen our risk balancing.
n As a result, 66% of target TDC for our
CEO (up from 25% in 2014) and 52% for our other NEOs (up from 17% in 2014) will be in long-term incentive, awarded in the form of
PSUs. |
|
2015 Target Total Direct
Compensation
The changes described above resulted in the following 2015 target
total direct compensation for our NEOs:
|
|
Target
|
|
Name and Position
|
|
Base
Salary
(% of total)
|
|
Short-Term
Incentive
(% of total)
|
|
Long-Term
Incentive
(% of total)
|
|
Total
Direct
|
|
% Change
from
2014
|
John A. Thain,
Chairman of the Board and Chief Executive Officer |
|
$ |
1,000,000
(13%) |
|
|
$ |
1,750,000
(22%) |
|
|
$ |
5,250,000
(66%) |
|
|
$ |
8,000,000 |
|
|
|
0 |
% |
Nelson J. Chai,
President of CIT Group Inc. and North American Commercial Finance, and Chairman and Chief Executive Officer of
CIT Bank |
|
$ |
800,000
(18%) |
|
|
$ |
1,400,000
(31%) |
|
|
$ |
2,300,000
(51%) |
|
|
$ |
4,500,000 |
|
|
|
0 |
% |
C. Jeffrey Knittel,
President, Transportation and International Finance |
|
$ |
600,000
(15%) |
|
|
$ |
1,050,000
(26%) |
|
|
$ |
2,300,000
(58%) |
|
|
$ |
4,000,000 |
|
|
|
14 |
% |
Scott T. Parker,
Executive Vice President & Chief Financial Officer |
|
$ |
600,000
(17%) |
|
|
$ |
1,050,000
(29%) |
|
|
$ |
1,950,000
(54%) |
|
|
$ |
3,600,000 |
|
|
|
0 |
% |
Lisa K. Polsky,
Executive Vice President and Chief Risk Officer |
|
$ |
600,000
(20%) |
|
|
$ |
1,050,000
(35%) |
|
|
$ |
1,350,000
(45%) |
|
|
$ |
3,000,000 |
|
|
|
0 |
% |
As part of approving 2015 total direct compensation targets in
February 2015, the Compensation Committee determined to increase Messrs. Chai, Parker and Knittel and Ms. Polsky’s base salary to balance current
compensation with the significant shift from short-term to deferred long-term incentives. The total compensation targets for all NEOs, except for Mr.
Knittel, whose target was adjusted based on market considerations, have remained the same year-over-year.
- 41 -
In connection with entering into the agreement to acquire OneWest
Bank, we also entered into a retention letter agreement with Mr. Chai, who will become Co-President of the Company upon the closing of the acquisition,
which we expect to occur in 2015. The letter agreement provides that, upon the closing, we will grant to Mr. Chai a retention award of PBRSUs that vest
in full on the third anniversary of grant, subject to a pre-tax income performance hurdle and Mr. Chai’s continued employment, with a grant date
fair market value of $5 million.
2015 CEO Short-Term Incentive
Scorecard
Our CEO’s 2015 short-term incentive goals and weightings are
shown below.
Goal
|
|
Weighting
|
|
|
|
|
|
|
B. Funded New Business Volume |
|
|
C. Provision for Credit Losses (% of AEA) |
|
|
|
|
|
|
|
|
A. Risk / Regulatory / Compliance |
|
– Maintain “tone at the top” focus on compliance |
|
|
– Maintain balance of growth and risk taking |
|
|
|
|
|
– Close and begin integration of OneWest Bank |
|
|
– Develop/acquire new lending/leasing products or businesses |
|
|
|
|
– Maintain employee engagement |
|
|
– Emphasize diversity in hiring, retention & promotion |
|
|
Similar to 2014, we continue to place strong emphasis on pre-tax
income and funded new business volume, as well as managing risk, and talent management, while at the same time reducing the overall number of goals,
consistent with feedback from stakeholders and the decreased proportion of total compensation represented by short-term incentive compensation.
However, we have increased the weighting of qualitative goals for 2015 (from 40% to 50%) to emphasize the importance of our strategic corporate
priorities, notably the acquisition and integration of OneWest Bank and our desire to continue to expand our lending and leasing
platforms.
PSUs — ROA/EPS
PSUs-ROA/EPS are broadly similar to the design of our 2014 PSU
awards, and will be earned at the end of the three-year performance period from 0% to a maximum of 150% of target based on performance against two
pre-established performance measures: fully diluted EPS (weighted 75%) and pre-tax ROA (weighted 25%). Like the PBRSUs, unvested PSUs beginning with
the 2015-2017 performance period will also be subject to forfeiture if the grantee retires from CIT to work for a competitor.
PSUs — ROTCE
PSUs-ROTCE were designed with direct input from both our CRO and
Pay Governance, and will be earned each year during the three-year performance period from 0% to a maximum of 150% of target based on pre-tax ROTCE, as
shown below, subject to a credit provision modifier which was included by the CRO to enhance risk-balancing:
Year 1:
1/3 earned based on
2015 pre-tax ROTCE
|
|
Year
2:
1/3 earned based on
average 2015 & 2016
pre-tax ROTCE |
|
Year
3:
1/3 earned based on
average, 2015, 2016 & 2017
pre-tax ROTCE |
If the minimum threshold level pre-tax ROTCE is not met, no
PSUs-ROTCE will be earned by their terms, although the Compensation Committee has the discretion to determine that a portion of the PSUs-ROTCE, not to
exceed 50% of target, are earned after taking into consideration relevant facts and circumstances. In addition, earnout of the PSUs-ROTCE will be
adjusted upwards or downwards by up to 25% based on a modifier that measures provision for credit losses as a percentage of average earning assets. We
believe that the new PSUs-ROTCE will complement our PSUs-ROA/EPS as we continue to grow and strengthen our pay-for-performance
program.
Due to SEC timing requirements for reporting equity-based pay,
the Summary Compensation Table in the 2016 Proxy Statement will show an increase in equity awards year-over-year even though we have generally not
increased total target direct compensation from 2014 to 2015. In February 2015, in addition to the new 2015 PSU awards granted as part of our 2015
compensation structure, we granted deferred equity in the form of STI PBRSUs as part of our 2014 executive compensation structure.
- 42 -
Compensation Program
Evolution
Our 2015 program enhancements build on the evolution of our
compensation program, as we continue to consider shareholder, regulatory and other stakeholder feedback, as well as corporate governance best practices
and market design guidance from Pay Governance. CIT and the Compensation Committee intend to continue to evaluate our executive compensation program
annually and to take into account shareholder feedback, and encourage shareholders to participate in this year’s say-on-pay vote. Shareholders and
other stakeholders may also communicate with the Board regarding any topic, as described above under “Corporate Governance — Stockholder
Communications with the Board.”
| Performance
Year |
|
Actions We Took
|
|
|
|
|
|
|
|
Began to implement performance-based compensation structure after emerging from bankruptcy
|
|
|
|
Established specific goals and weightings to measure Company and CEO performance
|
|
|
|
Identified a specific group of peer companies for comparison to the competitive market |
|
|
|
|
|
|
|
Established STI targets and a maximum leverage of 200%, and introduced a rating scale for assessment of pre-established goals under
the Annual Scorecard
|
|
|
|
Introduced PSUs as long-term incentive tool with a maximum leverage of 200%, earned over three years based on Committed Lending
Volume and Adjusted Net Finance Margin targets aligned to our strategic plan |
|
|
|
Added broad-based clawbacks to PBRSUs, the deferred equity piece of the STI award, and PSUs |
|
|
|
|
|
|
|
Increased CEO’s quantitative STI goals and objectives from 40% to 60%, and established weightings for all goals and sub-goals as
well as threshold, target and maximum levels for all quantitative goals
|
|
|
|
Subjected the STI component to funding based on Adjusted Pre-Tax Income formula
|
|
|
|
Added performance-based vesting hurdle for PBRSUs (if cumulative Adjusted Pre-Tax Income for the three years preceding each scheduled
vesting date is negative, the Compensation Committee may determine whether a portion, if any, of the PBRSUs will vest)
|
|
|
|
Reduced maximum leverage on go-forward PSUs from 200% to 150% of target |
|
|
|
|
|
|
|
Reduced maximum leverage on STI from 200% to 150% of target
|
|
|
|
Revised performance-based vesting hurdle for PBRSUs (if cumulative Adjusted Pre-Tax Income for the year preceding each scheduled
vesting date is negative, the Compensation Committee may determine whether a portion, if any, of the PBRSUs will vest)
|
|
|
|
Revised PSU metrics to be earned based on fully diluted EPS and pre-tax ROA to better align with forward strategy and external
reporting |
|
|
|
|
|
|
|
Reducing STI target to a maximum of 175% of base salary
|
|
|
|
Increasing LTI component of total compensation
|
|
|
|
Introducing new “PSUs-ROTCE” to be earned one-third each year based on pre-tax ROTCE (subject to a credit provision
modifier), complementing the original “PSUs-ROA/EPS” that vest at the end of the three-year performance period based on fully diluted EPS and
pre-tax ROA
|
|
|
|
Enhancing proxy disclosure to disclose (1) performance levels along each step of the rating scale, as well as actual results, for
CEO’s quantitative STI goals and objectives and (2) PSU target and actual performance at the end of the relevant performance
periods |
- 43 -
The evolution of our long-term incentive program design is
illustrated below:
The following principles guide our executive compensation
programs and compensation philosophy: attract, retain and motivate high quality executives and staff; pay for performance / meritocracy; reinforce
long-term view of CIT performance and value creation; and make compensation decisions in accordance with strong governance, oversight, and risk
management.
What
We Do:
| Ö | Short-term
incentives are performance-based and payable partially in cash and PBRSUs. No PBRSUs are awarded unless a short-term incentive
is earned. |
| Ö | Short-term
incentive pools are funded based on our Pre-Tax Income performance, and earned only if the individual attains minimum pre-established
goals. |
| Ö | A
significant portion of our NEOs’ short-term incentive is based on measurable, objective goals. |
| Ö | PBRSUs
(part of our short-term incentive) and PSUs (long-term incentive) are deferred over three years, vest based on performance against
pre-established goals, and are subject to clawback provisions that extend beyond vesting. |
| Ö | Executives
are required to comply with stock ownership and retention requirements. |
| Ö | Our
Compensation Committee receives input from an independent compensation consultant. |
What
We Don’t Do:
| ✗ | No
golden parachute tax gross-ups. |
| ✗ | No
new employment contracts. |
| ✗ | No
participation in executive pension arrangements for executives hired after 2006. |
| ✗ | No
perquisites other than car and driver for the CEO. |
| ✗ | No
repricing of underwater stock options. |
| ✗ | No
grants of discounted stock options. |
| ✗ | No
grants of stock options with reload provisions. |
| ✗ | No
single-trigger change of control provisions in our equity-based awards granted after 2010. |
| ✗ | No
hedging or monetization of CIT securities, including equity-based compensation awards, for our NEOs. |
- 44 -
Clawback Provisions
CIT has had cancellation / recoupment provisions on equity-based
awards in place since 2010. These provisions are broadly similar for each type of equity-based award and the provisions in the 2014 awards are
summarized below:
PBRSUs — Both unvested awards and awards that have
vested within the prior 12 months are subject to forfeiture/recoupment in the event of: (1) a material restatement of the Company’s financials;
(2) circumstances resulting from “detrimental conduct”; (3) materially inaccurate financials or other performance metrics; (4) violation of
CIT’s risk policies and practices; (5) failure to identify, raise or assess risks material to the Company or its business activities; and/or (6)
breach of non-compete, non-solicit, confidential information or inventions or proprietary property covenants in any agreement. Unvested PBRSUs are also
subject to forfeiture if the grantee retires from CIT but goes to work for a competitor.
PSUs — Both unvested awards and awards that have
vested but not yet been delivered are subject to forfeiture, as applicable, upon the occurrence of any of the (1) — (6) events applicable to
PBRSUs listed above. Beginning with the 2015 awards, unvested PSUs are also subject to forfeiture if the grantee retires from CIT but goes to work for
a competitor.
Additionally, vested PSUs-ROA/EPS awards may be recovered for two
years following the end of the three-year performance period in the event of the following: (1) the occurrence of any of the same (1) — (6) events
applicable to PBRSUs listed above; (2) the Company’s Total Classified Exposure exceeds a pre-determined threshold; and/or (3) a consolidated,
pre-tax GAAP loss occurs for either of the two years following the end of the performance period as a result of credit losses incurred with respect to
loan and lease transactions originated and booked during the performance period. Total Classified Exposure and pre-tax GAAP loss are described under
“Non-GAAP Financial Measures and Other Definitions.”
In each case, any determination will be made in the sole
discretion of the Compensation Committee or its designee based on the underlying facts and circumstances. For PBRSUs, “detrimental conduct”
generally includes conduct that constitutes “cause,” fraud, gross negligence or other wrongdoing or malfeasance. For PSUs, “detrimental
conduct” also generally includes a misdemeanor involving moral turpitude or a felony; any act or failure to act that may cause material injury to
the Company; or violation of banking laws or regulations.
No New Employment Agreements; Severance and
Change of Control Arrangements
None of our CEO or other executive officers (except for Mr.
Knittel) is party to an employment agreement with CIT, and as such their employment with the Company is “at will.” Mr. Knittel’s
employment agreement includes a provision that allows him to terminate his employment with CIT for “good reason,” including, but not limited
to, failure by CIT to offer to renew his employment agreement prior to its expiration. On December 8, 2014, the Compensation Committee approved the
extension of Mr. Knittel’s employment agreement until December 31, 2015 with no changes to any other provisions. Earlier in July 2014, the
Compensation Committee had amended his employment agreement to: (1) provide Mr. Knittel with severance benefits equivalent to those provided under the
CIT Employee Severance Plan following a change of control for similarly situated executives; and (2) align the definition of “good reason” in
the event of a change of control in his employment agreement with the definition under the CIT Employee Severance Plan. Both the CEO and Compensation
Committee intend to continue to review the employment agreement annually. The principal provisions of Mr. Knittel’s employment agreement are
described under “Narrative Information Relating to Potential Payments upon Termination or Change of Control.”
In the event of a qualifying termination of employment, our other
NEOs are eligible to receive severance under the CIT Employee Severance Plan. The CIT Employee Severance Plan was adopted in 2013 to better align CIT
with market practice, ensure continuity of management during mergers and acquisitions, and attract and retain highly valued employees. All of our U.S.
employees participate in the Plan. Under the Plan, members of our EMC, which includes the NEOs, are generally eligible to receive a cash severance
amount equal to 52 weeks of base salary, a prorated short-term incentive bonus, a payment equal to 102% of the cost of premiums for coverage in
accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), for 52 weeks, which COBRA amount will be
increased to cover applicable taxes, and certain outplacement services. In the event of a qualifying change of control termination, members of our EMC
are generally eligible to receive a cash severance amount equal to two times the sum of base salary plus short-term incentive bonus, a prorated
short-term incentive bonus, a payment equal to 102% of COBRA premiums for a maximum of 24 months (notwithstanding any statutory limitations on the
length of COBRA coverage), which COBRA amount will be increased to cover applicable taxes, and certain outplacement services. For more detail about the
CIT Employee Severance Plan, see “Narrative Information Relating to Potential Payments upon Termination or Change of Control”
below.
- 45 -
Other Benefits
Our benefits programs are comparable to the programs provided
generally by companies in our peer group and in the financial services industry. Executives participate on the same basis as other employees in
CIT’s benefits plans, including retirement arrangements, healthcare coverage, life and accident insurance and disability coverage. CIT’s
retirement arrangements are further described under “Narrative Information Relating to Retirement Arrangements for Named Executive Officers”
following the “Pension Benefits” table that appears later in this Proxy Statement. Mr. Knittel is the only 2014 NEO who participates in the
Executive Retirement Plan, which has been closed to new participants since 2006. Other than grandfathered benefits under the Executive Retirement Plan,
benefits payable under the CIT Retirement and Supplemental Retirement Plans were frozen as of December 31, 2012.
Since 2010, executive perquisites, such as financial planning,
executive physicals and benefits programs have not been made available to executives. Other than a company-provided car and driver for Mr. Thain, no
perquisites are provided to executives as part of the executive compensation program.
Role of the Compensation
Committee
The Compensation Committee is composed entirely of independent
directors, as determined under the criteria established by NYSE and CIT corporate governance guidelines. The Compensation Committee oversees
compensation and benefits policies for our executive officers and other employees, the performance and compensation of CIT’s executive officers,
and succession planning. A key function of Compensation Committee oversight is to ensure, together with the Risk Management Committee, that such
programs appropriately balance risk and financial results and do not encourage excessive risk taking. The Compensation Committee may determine to
exercise its discretion, as appropriate, in fulfilling its responsibilities as outlined in its charter, which can be found on CIT’s website at
http://www.cit.com/about-cit/corporate-governance/board-committees/index.htm.
Compensation recommendations for our NEOs, other than for the
CEO, are made by our CEO to the Compensation Committee. These recommendations reflect his assessment of each executive based on business or functional
results, as well as the achievement of strategic corporate priorities, overall company results and individual performance. The role of management in
supporting the CEO in making such recommendations is more fully described below under “Role of Senior Management.” The Compensation Committee
reviews our CEO’s recommendations, assesses the recommendations for reasonableness, and approves all compensation changes affecting our executive
officers in its sole discretion.
The Compensation Committee separately considers the performance
of our CEO, and following a review and discussion, submits a compensation recommendation to the full Board for approval.
Role of Independent Compensation
Advisers
The Compensation Committee engages Pay Governance, a compensation
consulting firm, to advise it on all matters relating to our executive officers’ compensation and benefits, including the determination of annual
NEO compensation described above. The Compensation Committee has determined that Pay Governance is independent in accordance with SEC rules and the
NYSE guidelines, after assessing its provision of services, fees, conflict of interest policies, relationship with Compensation Committee members,
company stock ownership and relationship with executive officers. The Compensation Committee directly retains Pay Governance independently from CIT
management, and CIT does not utilize Pay Governance or any of its affiliates for any other purpose. No specific instructions or directions were
provided to Pay Governance by CIT regarding the performance of their duties. Representatives from Pay Governance attend the Compensation Committee
meetings regularly and conduct studies of compensation issues related to the design of our executive officer compensation programs at the request of
the Compensation Committee. Pay Governance and the Compensation Committee rely on data from multiple sources to provide a frame of reference for
compensation decisions, such as: multiple third-party competitive market surveys (which may include Equilar, McLagan, ERI, Mercer and Towers Watson);
publicly available information (peer group proxy statements); and historical compensation data for executive officers.
The Compensation Committee has authorized Pay Governance to
interact with CIT’s management to obtain or confirm information, as needed, on behalf of the Compensation Committee. During 2014, CIT did not
engage any consulting firm to support management in generating data and analysis for its presentations and recommendations to the Compensation
Committee related to compensation decisions for our executive officers.
- 46 -
Role of Senior Management
The recommendation for overall 2014 annual short-term incentive
funding was made by our senior management team, including our CEO, President, Chief Financial Officer (“CFO”), Chief Administrative Officer,
Chief Human Resources Officer, and CRO. Business segment and corporate function pool allocations were recommended based on management’s assessment
of performance against pre-established 2014 goals and objectives, an overall risk assessment, as well as market competitiveness. Company-wide incentive
funding and final pool allocations were approved by the Compensation Committee and reviewed by the CRO. Members of the EMC, as well as other senior
managers, are responsible for making incentive recommendations for eligible employees. The annual recommendation process is coordinated by Corporate
Human Resources personnel.
Role of Risk Management
Our CRO and other senior members of the Risk Management Group are
fully integrated in the overall design and operation of the Company’s incentive compensation arrangements. In addition, Risk Management partners
with Human Resources to coordinate regular joint interaction with the Compensation Committee and the Risk Management Committee to support strong
governance and oversight regarding issues related to risk balancing within our incentive compensation practices. Risk Management and Human Resources
work closely to maintain and evolve our approach to balancing risk and incentives. Our key areas of focus include:
n |
|
Executive Management Goals — reviewing incentive
compensation design and identifying specific risk goals for our senior executives, including our NEOs, and “covered employees” (as defined
below under “Our Pay Practices—Identification of Covered Employees”); |
n |
|
Overall Short-Term Incentive Funding — identifying
credit/risk metrics and other qualitative risk factors to be evaluated with financial performance, and to be used to determine overall incentive
funding and allocation to businesses; |
n |
|
Executive Management Compensation — developing and
enhancing the design of our equity awards, including appropriate revisions to performance measures, clawback triggers, leverage and vesting
provisions; |
n |
|
Compensation Policies and Procedures — developing
compensation policies and procedures supporting our business objectives that are consistent with our risk appetite and framework, and regulatory
requirements; |
n |
|
Covered Employees — developing and maintaining a
framework for identifying individuals and groups of “covered employees” who may expose the Company to material risks, and foster strong
awareness of risk balancing for incentive arrangements; and |
n |
|
Annual Assessment — reviewing and proactively
identifying and/or assessing risks associated with the Company’s incentive compensation arrangements. |
Since 2009, CIT has conducted an annual assessment of the risks
associated with our incentive compensation arrangements. In 2014, monitoring and validation of incentive compensation arrangements was a key theme with
our regulators. As a result, we established a governing body within CIT management to oversee incentive compensation monitoring and validation (the
Incentive Compensation Review Committee) and we also considered this theme when developing our 2015 compensation structure. During 2014, Risk
Management, together with Internal Audit, evaluated each business unit focusing on outlier behaviors and performance across four broad categories:
outsized losses, transparency, risk balancing, and support for risk initiatives. Overall rankings for each business unit were determined based on the
rating scale, with input solicited from across the risk and audit organizations, including: Credit Risk, Operational Risk, Credit Review, Problem Loan
Management, Model Risk, Insurance Risk, Vendor Risk, Information Risk, Business Continuity and Disaster Recovery, Compliance and Internal Audit. Based
on this assessment and other analysis, as well as ongoing coordination with Human Resources in monitoring risk balancing activities, our CRO and the
Head of Enterprise Risk Management independently determined that none of CIT’s incentive compensation plans encourage imprudent or excessive risk
and presented their findings at two joint meetings of the Compensation and Risk Management Committees, prior to both the determination of initial
short-term incentive pools and the finalization of the short-term incentive pools. Prior to finalizing incentive recommendations as described above,
risks were assessed to determine if any employees: (1) failed to show due regard for the risk inherent in their business activity; (2) failed to
balance risk with financial results; or (3) exposed the firm to imprudent risks.
CIT, the Compensation Committee and the Risk Management Committee
have reviewed CIT’s compensation policies and plans as they apply to all employees across our business units to determine whether they encourage
imprudent or excessive risk-taking that may expose CIT to material business risks. In addition to reviewing the annual short-term incentive structure
funding and process, including CIT’s equity-based award design, they reviewed our long-term incentive structure and business unit sales incentive
plans. Based on a discussion of the review, the Compensation and Risk Management Committees concluded that CIT’s compensation plans for employees
do not encourage risk-taking that is reasonably likely to have a material adverse effect on CIT.
- 47 -
Peer Companies and
Benchmarking
With the assistance of Pay Governance, in 2013 the Compensation
Committee identified a group of 19 peer companies to use for benchmarking purposes. During 2014, the Compensation Committee reviewed the peer group
again with Pay Governance, and no changes were made. This group of 19 companies, listed below, represents a cross section of U.S.-based, publicly
traded financial services companies with a generally non-proprietary focus, i.e., whose primary business is to serve institutional and/or retail
clients.
|
|
Huntington Bancshares Inc. |
|
People’s United Financial, Inc. |
|
|
|
|
|
|
|
|
|
|
Discover Financial Services |
|
|
|
|
|
|
New York Community Bancorp |
|
|
|
|
|
|
|
|
|
|
|
|
In particular, the peer group was used in our decision-making for
2014 actual and 2015 target total compensation levels for our CEO, President, and CFO (roles for which public information is readily
available).
Due to the varied nature of CIT’s businesses, certain of the
peer companies are classified differently from CIT under the Global Industry Classification Standard, which is broadly used in the financial community
to group similar companies. To assess the competitiveness of our executive compensation program, we analyze compensation data for peer companies as it
is presented in annual proxy materials, as well as multiple third-party competitive market surveys provided by compensation consulting firms such as
McLagan, Mercer, ERI and Towers Watson (which we refer to as “market data”).
While the Compensation Committee considers external market data,
it does not target a specific market position when determining executive compensation levels. In addition to referencing market data, as described
above, the Compensation Committee considered current year performance and overall incentive pool funding, prior year compensation history and
compensation levels of other Company executives to provide context for 2014 and 2015 compensation recommendations.
Use of Discretion
Our compensation philosophy incorporates a strong link between
incentive pay and a combination of short-term and long-term Company, business unit and individual performance. Discretion plays a major role in many
aspects of our incentive compensation arrangements, including pool funding and pool allocations. However, the use of discretion is not arbitrary, and
generally should be supported by a clear link to performance and risk management. We maintain a Use of Discretion policy that covers the requirements
governing the consistent use of discretion for incentive compensation, and related procedures applicable to all employees.
Identification of Covered
Employees
We are subject to regulatory guidance and rules that focus on
both the design and transparency of incentive compensation arrangements. It is important that incentive compensation be risk-sensitive and not
encourage imprudent or excessive risk-taking. The primary objectives of CIT’s Covered Employee Identification Framework (the
“Framework”) are to provide a systematic methodology to identify: (1) risks inherent in job functions and roles; (2) individuals or groups of
non-executive employees who have the potential to expose the firm to a material amount of risk (collectively, “covered employees”); and (3)
duration of risks. The Framework is based on an assessment of six categories of inherent risk (i.e., market risk; liquidity risk; credit risk;
operational risk; legal/compliance risk; and reputational risk), which align to the regulatory guidance on sound incentive compensation policies and
appropriately categorize risks for the Company.
Equity Ownership and
Retention
Our Executive Equity Ownership and Retention Policy requires
executives to own a minimum level of CIT stock equal to the greater of: (1) a specific multiple of base salary (i.e., 6x for the CEO, 3x
for other NEOs, and 1x for other executives), or (2) 50% of the shares received on vesting or exercise of CIT equity-based awards for the duration of
his/her employment with CIT, after any shares withheld to cover income tax withholding obligations. The value of stock owned is calculated using the
greater of: (1) the closing price of CIT common stock, or (2) a calculated per-share value based on the 3-year average closing price of CIT common
stock (or the average stock price for such shorter period of time that CIT’s common stock has been continuously publicly traded on a national
securities exchange) on any given measurement date.
The policy applies to a broad group of senior executives,
including all of our executive officers. Executives have five years to meet the minimum ownership requirement. Each of our NEOs meets the requirements
of this policy.
- 48 -
Timing of Annual Equity Incentive
Grants
Since 2006, CIT has maintained a written Equity Compensation
Award Policy that governs the timing for granting all equity-based awards, which may be approved at any regularly scheduled meeting of the Compensation
Committee or the Board. Grants approved at any meeting of the Compensation Committee or the Board that coincides with a quarterly earnings release will
be granted effective as of the close of trading on the NYSE on the second trading day after CIT publicly announces such earnings.
Equity-based awards may also be granted in connection with hiring
an employee. Such grants are generally made on the first day that the recipient is employed by us provided such date does not occur during a securities
trading black-out period; in such case, the grant will be made on the day on which the applicable black-out period expires.
Tax Deductibility of Compensation
Expense
Section 162(m) of the U.S. Internal Revenue Code of 1986, as
amended (the “Tax Code”), limits the tax deduction for compensation in excess of $1 million paid to the Company’s CEO and to each of the
other three highest paid executive officers, other than the Company’s CFO. The $1 million deduction limit generally does not apply, however, to
compensation that is “performance-based” and provided under a shareholder-approved plan. The Compensation Committee considers the tax
deductibility of compensation in our plan design, as appropriate. While we do not currently operate a stand-alone 162(m) compliant plan covering
executive officer incentive compensation, Proposal 4 seeks shareholder approval of a new plan that permits the grant of cash- and equity-based awards
intended to meet the deductibility requirements of Section 162(m). In addition, the Company maintains the Amended and Restated CIT Group Inc. Long-Term
Incentive Plan, under which “performance-based” equity-based awards may be granted.
NON-GAAP FINANCIAL MEASURES AND OTHER DEFINITIONS
Adjusted Net Finance Margin is calculated as Adjusted Net
Finance Revenue as a percentage of AEA. Adjusted Net Finance Revenue and AEA are non-GAAP measures. The following table presents the reconciliation of
Net Finance Revenue and Margin to Adjusted Net Finance Revenue and Margin4.
(dollars in millions)
|
Years Ended December 31,
|
|
|
2014
|
|
2013
|
|
2012
|
|
|
$ |
1,420.8 |
|
|
|
4.25 |
% |
|
$ |
1,388.0 |
|
|
|
4.61 |
% |
|
$ |
(23.5 |
) |
|
|
(0.09 |
%) |
|
Accelerated FSA Net Discount/(Premium) on Debt Extinguishments and Repurchases |
|
34.7 |
|
|
|
0.10 |
% |
|
|
34.6 |
|
|
|
0.12 |
% |
|
|
1,294.9 |
|
|
|
4.69 |
% |
|
Adjusted Net Finance Revenue |
$ |
1,455.5 |
|
|
|
4.35 |
% |
|
$ |
1,422.6 |
|
|
|
4.73 |
% |
|
$ |
1,271.4 |
|
|
|
4.60 |
% |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Pre-Tax Income is calculated as Pre-Tax Income
including discontinued operations. The following table presents the reconciliation of reported Pre-Tax Income to Adjusted Pre-Tax Income for
2014.
(dollars in millions)
|
Year Ended
December 31, 2014
|
|
Pre-tax Income from continuing operations |
$ |
680.8 |
|
Pre-tax Income from discontinued operation |
|
55.9 |
|
|
$ |
736.7 |
|
| |
|
|
|
AEA is computed using month end balances and is the
average of finance receivables, operating lease equipment and financing and leasing assets held for sale less the credit balances of factoring
clients.
Classified Assets means the Credit Exposure for all assets
with a regulatory rating of “substandard” or worse, as determined by the Company under the Regulatory Credit Classifications
process.
Committed Lending Volume represents the dollar amount of
funding CIT is committed to lend under the terms of an agreement, including amounts that may be drawn down or due to be contractually funded in the
future.
Credit Exposure means the sum of the book balance of loans
and capital leases, any off balance sheet exposure, unused commitments to extend credit, scheduled lease term depreciation for operating leases, the
carrying value of any equity investments and the carrying value of repossessed assets or off lease equipment.
4 |
|
Adjusted Net Finance
Revenue and Margin used for compensation purposes differ from Adjusted Net Finance Revenue and Margin as disclosed in our
Annual Report on Form 10-K in that the impact of accelerated original issue discount on debt extinguishments related to the
GSI facility was not included at the time performance targets for the 2012 PSUs were established. |
- 49 -
Fully Diluted EPS is computed by dividing net income by
the weighted average number of common shares outstanding, increased by the weighted average potential impact of dilutive securities. The Company’s
potential dilutive instruments include unvested RSU and PBRSU grants, PSU grants and stock options.
Pre-tax GAAP losses, for the clawback provisions under our
PSUs, are determined after excluding the impact of (1) adjustments to or impairment of goodwill or other intangible assets; (2) changes in accounting
principles during the performance period; (3) Fresh Start Accounting charges and prepayment charges related to the prepayment or early extinguishment
of CIT’s debt; (4) restructuring or business recharacterization activities, including, but not limited to, terminations of office leases, or
reductions in force, that are reported by CIT; and (5) any other extraordinary or unusual items as determined by the Compensation
Committee.
Pre-Tax ROA is computed by dividing pre-tax income for the
period by AEA for the same period.
Pre-Tax ROTCE is computed by dividing pre-tax income for
the period by average tangible common equity for the same period.
Total Classified Exposure means consolidated credit
exposure for all Classified Assets as a percentage of the Company’s total Consolidated Credit Exposure excluding the Student Lending
Portfolio.
- 50 -
EXECUTIVE COMPENSATION
TABLES
The following tables, accompanying footnotes and narrative
provide information about compensation paid to our NEOs as described in the Compensation Discussion and Analysis.
2014 SUMMARY COMPENSATION
TABLE
The table below sets forth compensation information for our NEOs
relating to 2014, 2013, and 2012, as applicable, in accordance with SEC rules. Pursuant to these rules, NEOs may vary from year to
year.
Our practice, generally, is to pay the cash component and grant
the equity-based component of our short-term incentives shortly after year-end. SEC rules require the Summary Compensation Table to include the cash
component for the year earned (even if paid after year-end), but only includes equity-based awards granted during the year (rather than for the year
earned). As a result, the total compensation values shown below, excluding columns (h) and (i), differ from the determination of total direct
compensation for our NEOs by our Compensation Committee and Board of Directors as described in the Compensation Discussion and
Analysis.
Name
and
Principal Position
| |
Year
| |
Salary
(1)
($)
| |
Bonus
(2)
($)
| |
Stock
Awards (3)
($)
| |
Non-Equity
Incentive Plan
Compensation (4)
($)
| |
Change
in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings (5)(6)
($)
| |
All
Other
Compen-
sation (7)
($)
| |
Total
($)
|
| (a) | |
| (b) | | |
| (c) | | |
| (d) | | |
| (e) | | |
| (g) | | |
| (h) | | |
| (i) | | |
| (j) | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| John A. Thain (8) | |
| 2014 | | |
$ | 1,003,846 | | |
$ | | | |
$ | 6,387,500 | | |
$ | 1,362,500 | | |
$ | 9,075 | | |
$ | 73,302 | | |
$ | 8,836,223 | |
| Chairman of the Board and | |
| 2013 | | |
$ | 1,003,847 | | |
$ | | | |
$ | 5,727,500 | | |
$ | 1,362,500 | | |
$ | 4,789 | | |
$ | 68,263 | | |
$ | 8,166,899 | |
| Chief Executive Officer | |
| 2012 | | |
$ | 971,154 | | |
$ | 1,522,500 | | |
$ | 1,500,000 | | |
$ | | | |
$ | 134,085 | | |
$ | 65,135 | | |
$ | 4,192,874 | |
| Nelson J. Chai | |
| 2014 | | |
$ | 752,885 | | |
$ | | | |
$ | 2,750,000 | | |
$ | 1,132,500 | | |
$ | 5,174 | | |
$ | 19,051 | | |
$ | 4,659,609 | |
| President of CIT Group Inc. & North | |
| 2013 | | |
$ | 752,885 | | |
$ | | | |
$ | 2,590,000 | | |
$ | 1,075,000 | | |
$ | 2,999 | | |
$ | 21,360 | | |
$ | 4,442,244 | |
| American Commercial Finance, and | |
| 2012 | | |
$ | 736,538 | | |
$ | 1,160,000 | | |
$ | 3,008,333 | | |
$ | | | |
$ | 79,530 | | |
$ | 8,460 | | |
$ | 4,992,861 | |
| Chairman and CEO of CIT Bank | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Scott T. Parker | |
| 2014 | | |
$ | 501,923 | | |
$ | | | |
$ | 2,082,000 | | |
$ | 1,152,500 | | |
$ | 3,843 | | |
$ | 19,051 | | |
$ | 3,759,317 | |
| Executive Vice President | |
| 2013 | | |
$ | 501,923 | | |
$ | | | |
$ | 1,915,000 | | |
$ | 1,118,000 | | |
$ | 2,316 | | |
$ | 21,360 | | |
$ | 3,558,599 | |
| & Chief Financial Officer | |
| 2012 | | |
$ | 501,923 | | |
$ | 1,185,000 | | |
$ | 2,366,667 | | |
$ | | | |
$ | 58,953 | | |
$ | 13,460 | | |
$ | 4,126,003 | |
| C. Jeffrey Knittel | |
| 2014 | | |
$ | 501,923 | | |
$ | | | |
$ | 2,087,500 | | |
$ | 1,210,000 | | |
$ | 982,832 | | |
$ | 19,051 | | |
$ | 4,801,306 | |
| President, Transportation | |
| 2013 | | |
$ | 501,923 | | |
$ | | | |
$ | 1,652,500 | | |
$ | 1,037,500 | | |
$ | | | |
$ | 21,360 | | |
$ | 3,213,283 | |
| & International Finance | |
| 2012 | | |
$ | 501,923 | | |
$ | 1,097,500 | | |
$ | 1,875,000 | | |
$ | | | |
$ | 857,545 | | |
$ | 13,460 | | |
$ | 4,345,428 | |
| Lisa K. Polsky | |
| 2014 | | |
$ | 501,923 | | |
$ | | | |
$ | 1,595,000 | | |
$ | 1,014,500 | | |
$ | 3,728 | | |
$ | 19,051 | | |
$ | 3,134,202 | |
| Executive Vice President | |
| 2013 | | |
$ | 501,923 | | |
$ | | | |
$ | 1,465,000 | | |
$ | 980,000 | | |
$ | 2,627 | | |
$ | 21,360 | | |
$ | 2,970,910 | |
| and Chief Risk Officer | |
| 2012 | | |
$ | 501,923 | | |
$ | 1,035,000 | | |
$ | 1,875,000 | | |
$ | | | |
$ | 58,150 | | |
$ | 13,460 | | |
$ | 3,483,533 | |
(1) |
|
Messrs. Thain and Chai receive annual base salaries of
$1,000,000 and $750,000, respectively. Messrs. Parker and Knittel, and Ms. Polsky each receive an annual base salary of $500,000. The amounts shown
represent the salaries earned through December 31 of each year. |
(2) |
|
The cash component of the 2014 short-term incentive, as more
fully described in the Compensation Discussion and Analysis, awarded to each of our NEOs is reported in the “non-equity” incentive column of
this table. No separate cash incentive awards, that would otherwise have been reportable in the bonus column, were awarded in 2014 to our
NEOs. |
(3) |
|
Represents the aggregate grant date fair value of stock awards
(PBRSUs and PSUs at target, as applicable) granted during 2014, 2013 and 2012 and computed in accordance with ASC 718. These amounts do not represent
the actual value realized by each named executive officer in each year. The number of PBRSUs and target number of PSUs awarded to each NEO was
determined by dividing the dollar amount of each award by the closing price of CIT common stock on the respective date of grant. If performance against
pre-established EPS and Pre-Tax ROA targets result in the maximum number of PSUs vesting, as more fully described in the Compensation Discussion and
Analysis, the NEOs would be entitled to a maximum award at 150% of target, with grant date fair values as follows: Mr. Thain — $3,000,000; Mr.
Chai — $1,125,000; Mr. Parker — $900,000; Mr. Knittel — $1,125,000; and Ms. Polsky — $675,000. |
(4) |
|
2014 amounts shown represent the cash component of the 2014
short-term incentive, described in the Compensation Discussion and Analysis. |
- 51 -
(5) |
|
2014 amounts shown represent the difference between the
cumulative actuarial present value of accumulated pension benefits on December 31, 2014 and December 31, 2013 under three retirement arrangements
maintained by CIT: the New Executive Retirement Plan of CIT Group Inc. (the “Executive Retirement Plan”, which has been closed to new
participants since 2006), of which Mr. Knittel is the only named executive officer to participate, the CIT Group Inc. Supplemental Retirement Plan (the
“Supplemental Retirement Plan”), and the CIT Group Inc. Retirement Plan (the “Retirement Plan”). The Executive
Retirement Plan and the Supplemental Retirement Plan are nonqualified plans. The Retirement Plan is a tax-qualified defined benefit pension plan that
covers eligible salaried employees in the United States. Effective December 31, 2012, participation in and employer contributions to the Retirement
Plan and Supplemental Retirement Plan was frozen for all employees, including the NEOs. These retirement arrangements are discussed in further detail
under the heading “Narrative Information Relating to Retirement Arrangements for Named Executive Officers” that follows the 2014 Pension
Benefits Table in this Proxy Statement. |
(6) |
|
None of our NEOs participated in the CIT Group Inc. Deferred
Compensation Plan (the “DCP”) in 2014, 2013 and 2012, nor did any receive any above-market or preferential earnings in respect of any
plan or benefit provided by the Company. The amount shown for Mr. Knittel includes $154 of earnings in the CIT Supplemental Savings Plan
(“SSP”) , as disclosed and further described in the 2013 Nonqualified Deferred Compensation Table and accompanying footnotes that
appear later in this Proxy Statement. The amount shown for Mr. Thain does not include the value of vested RSUs that remain subject to transfer
restrictions. |
(7) |
|
The following supplemental table sets forth for 2014 the
components of income reported as All Other Compensation above, based on the incremental cost to CIT of providing the benefit: |
Name
|
|
Car and
Driver
|
|
401(k) Match
Supplemental
Employer
Contribution
|
|
Life
Insurance
|
|
Total
|
|
|
$ |
54,251 |
|
|
$ |
18,200 |
|
|
$ |
851 |
|
|
$ |
73,302 |
|
|
|
$ |
— |
|
|
$ |
18,200 |
|
|
$ |
851 |
|
|
$ |
19,051 |
|
|
|
$ |
— |
|
|
$ |
18,200 |
|
|
$ |
851 |
|
|
$ |
19,051 |
|
|
|
$ |
— |
|
|
$ |
18,200 |
|
|
$ |
851 |
|
|
$ |
19,051 |
|
|
|
$ |
— |
|
|
$ |
18,200 |
|
|
$ |
851 |
|
|
$ |
19,051 |
|
Car and Driver
|
|
The amount shown above for Car and Driver represent the
proportional cost to CIT associated with the personal usage of a company-provided car and driver. For income tax purposes, income is imputed without
any tax gross-up reimbursement. |
|
|
401(k) Match / Supplemental Employer
Contribution |
|
|
Matching employer contributions under the CIT Group, Inc.
Savings Incentive Plan, our 401(k) plan (the “Savings Incentive Plan”), consist of up to a 6% match of pre-tax and Roth contributions
by each executive, up to the annual limits established by the Internal Revenue Service, as well as a supplemental employer contribution feature. The
supplemental contribution for 2014 is equal to 1% of eligible compensation (generally including base and cash-based incentive awards paid during 2014),
up to the Internal Revenue Service wage limit of $260,000 — a maximum of $2,600. The amounts shown for each NEO include $15,600 as a matching
contribution. |
|
|
Amounts shown above represent company-paid life insurance
premiums on behalf of each named executive officer. The named executive officers are covered by life insurance policies under the same terms as other
full-time and part-time U.S. employees working at least 20 hours per week. The life insurance benefit for covered employees is equal to one times
annual benefits pay up to a maximum benefit of $500,000. Benefits pay is generally equal to a covered employee’s base salary plus an average of
other pay during the preceding 36 months. |
(8) |
|
Mr. Thain’s compensation was based solely on his role as
CEO of CIT. Mr. Thain did not receive additional compensation for serving as a director of CIT. |
- 52 -
2014 GRANTS OF PLAN BASED
AWARDS
The table below sets forth equity and non-equity compensation
awards granted to our named executive officers during the year ended December 31, 2014. In accordance with SEC rules, the table does not include awards
granted during 2015.
|
|
|
|
|
|
Estimated Future Payouts Under
Non-Equity Incentive
Plan Awards (2)
|
|
Estimated Future Payouts
Under Equity Incentive
Plan Awards (3)
|
|
All Other
Stock
Awards:
Number
of
Shares
of Stock or
Units (4)
(#)
|
|
Grant Date
Fair Value
of Stock
and
Option
Awards (5)
($)
|
Name
|
|
Grant Date
|
|
Award
Approval
Date (1)
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Maximum
(#)
|
|
| (a) |
|
(b) |
|
|
|
(c) |
|
(d) |
|
(e) |
|
(f) |
|
(g) |
|
(h) |
|
(i) |
|
(l) |
|
|
|
2/20/14 |
|
|
|
2/20/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
91,846 |
|
|
$ |
4,387,500 |
|
|
|
|
2/20/14 |
|
|
|
2/20/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,467 |
|
|
|
41,867 |
|
|
|
62,801 |
|
|
|
|
|
|
$ |
2,000,000 |
|
|
|
|
2/20/14 |
|
|
|
2/20/14 |
|
|
|
|
|
|
$ |
5,000,000 |
|
|
$ |
7,500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/20/14 |
|
|
|
2/19/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,867 |
|
|
$ |
2,000,000 |
|
|
|
|
2/20/14 |
|
|
|
2/19/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,925 |
|
|
|
15,700 |
|
|
|
23,550 |
|
|
|
|
|
|
$ |
750,000 |
|
|
|
|
2/19/14 |
|
|
|
2/19/14 |
|
|
|
|
|
|
$ |
3,000,000 |
|
|
$ |
4,500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/20/14 |
|
|
|
2/19/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,024 |
|
|
$ |
1,482,000 |
|
|
|
|
2/20/14 |
|
|
|
2/19/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,140 |
|
|
|
12,560 |
|
|
|
18,840 |
|
|
|
|
|
|
$ |
600,000 |
|
|
|
|
2/19/14 |
|
|
|
2/19/14 |
|
|
|
|
|
|
$ |
2,500,000 |
|
|
$ |
3,750,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/20/14 |
|
|
|
2/19/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,999 |
|
|
$ |
1,337,500 |
|
|
|
|
2/20/14 |
|
|
|
2/19/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,925 |
|
|
|
15,700 |
|
|
|
23,550 |
|
|
|
|
|
|
$ |
750,000 |
|
|
|
|
2/19/14 |
|
|
|
2/19/14 |
|
|
|
|
|
|
$ |
2,250,000 |
|
|
$ |
3,375,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/20/14 |
|
|
|
2/19/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,969 |
|
|
$ |
1,145,000 |
|
|
|
|
2/20/14 |
|
|
|
2/19/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,355 |
|
|
|
9,420 |
|
|
|
14,130 |
|
|
|
|
|
|
$ |
450,000 |
|
|
|
|
2/19/14 |
|
|
|
2/19/14 |
|
|
|
|
|
|
$ |
2,050,000 |
|
|
$ |
3,075,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Plan-based compensation awards are granted by action of the
Compensation Committee and/or the full Board of Directors. During 2014, approvals for 2014 target short-term incentive, 2013 PBRSU and 2014 PSU awards
and the associated grant dates are shown in the table above. |
(2) |
|
Represents target 2014 short-term incentive awards. As discussed
in the Compensation Discussion and Analysis, short-term incentive targets are payable partially in cash and partially in deferred PBRSUs, and may
increase or decrease from the target value with actual payouts ranging from 0% to 150%. Actual amounts paid in cash for 2014 performance are included
in the Non-Equity Incentive Plan Compensation column of the 2014 Summary Compensation Table. PBRSUs granted during 2015 in respect of 2014 performance
are not included in the table above in accordance with SEC rules. |
(3) |
|
Represents PSUs granted in 2014 for the 2014-2016 performance
period. PSU payouts may increase or decrease from the target grant, with actual payouts ranging from 0% to 150% of the target grant based on
performance against pre-established EPS and Pre-Tax ROA targets. The threshold amount shown assumes the lowest thresholds attainable are met, resulting
in a payout of 25% of the target number of PSUs granted. If either of the EPS or Pre-Tax ROA performance thresholds is not met, then the payout would
be 0% of the PSUs granted. |
(4) |
|
Represents the portion of 2013 annual short-term incentives in
the form of PBRSUs, granted during 2014. These PBRSUs are scheduled to vest one-third per year over three years subject to an additional performance
hurdle (if cumulative Adjusted Pre-Tax Income for the prior three years is negative, the Compensation Committee will determine whether a portion, if
any, of the PBRSUs will vest). PBRSUs granted during 2015 in respect of 2014 performance are not included in the table above in accordance with SEC
rules. |
(5) |
|
Stock awards are valued in accordance with ASC 718, based on the
closing price of CIT common stock on each respective date of grant. |
- 53 -
NARRATIVE DISCLOSURE TO 2014 SUMMARY
COMPENSATION TABLE AND 2014 GRANTS OF PLAN-BASED EQUITY AWARDS TABLE
Total Compensation
Total Compensation values shown in the 2014 Summary Compensation
Table are presented in accordance with SEC rules. The Total Direct Compensation amounts approved by the Compensation Committee, and/or Board of
Directors, and awarded to our NEOs for 2014 performance, regardless of when paid or granted, are presented in and further described in the Compensation
Discussion and Analysis.
Performance-Based Restricted Stock Units
Each of our NEOs received a grant of RSUs on February 20, 2014 in
respect of performance during 2013. Unvested awards are forfeited on termination of employment, except in certain circumstances, such as death,
disability, following a qualifying termination within two years of a Change of Control, or if employment is terminated by Mr. Knittel for “Good
Reason” or by CIT “Without Cause” (in each case, as defined in Mr. Knittel’s employment agreement and more fully described below
under the heading, “Employment Agreements, Non-Competition, Non-Solicitation and Confidentiality Agreements and Double Trigger Change of
Control”), in which case awards will immediately vest in full. For employees who resign and meet “retirement” criteria, or who are
terminated involuntarily without cause, awards continue to vest over time on their original schedules.
Each PBRSU includes a dividend equivalent right, pursuant to
which the holder of the award is entitled to receive a cumulative amount upon vesting/settlement equal to any dividends paid to the holder of a share
of CIT common stock during the vesting period. PBRSU awards are also subject to forfeiture during the vesting period and to a clawback for a period of
12 months following vesting. Such forfeiture and clawback provisions are further described in the Compensation Discussion and
Analysis.
Performance Share Units
Each of the named executive officers received a target grant of
PSUs on February 20, 2014 for the 2014 — 2016 performance period. PSUs are not earned or vested until the end of the performance period and only
if certain quantitative performance metrics are met. Actual payouts will range from 0% to 150% of target. Unvested awards are forfeited on termination
of employment, except in certain circumstances, such as death, disability, or following a qualifying termination within two years of a Change of
Control, in which case the target number of awards will immediately vest in full.
PSU awards for 2014 — 2016 are subject to forfeiture during
the performance period and to clawback for a period of two years following the end of the performance period. Such forfeiture and clawback provisions
are further described in the Compensation Discussion and Analysis.
2014 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR
END
The following table summarizes information on equity-based awards
that were unvested and outstanding for each NEO at December 31, 2014.
|
|
|
|
Stock Awards
|
Name
|
|
|
|
Number of Shares
or Units of Stock
That Have
Not
Vested
(#)
|
|
Market Value of
Shares or Units
of Stock
That
Have Not Vested
(1)
($)
|
|
Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested (2)
(#)
|
|
Equity Incentive
Plan Awards:
Market or
Payout
Value of Unearned
Shares, Units or
Other Rights That
Have Not Vested (1)
($)
|
| (a) |
|
|
|
(g) |
|
(h) |
|
(i) |
|
(j) |
|
|
|
|
|
157,834 |
(3) |
|
$ |
7,549,201 |
|
|
|
113,431 |
(4) |
|
$ |
5,425,393 |
|
|
|
|
|
|
91,667 |
(5) |
|
$ |
4,384,923 |
|
|
|
47,904 |
(6) |
|
$ |
2,291,238 |
|
|
|
|
|
|
69,046 |
(7) |
|
$ |
3,302,450 |
|
|
|
36,415 |
(8) |
|
$ |
1,741,714 |
|
|
|
|
|
|
60,744 |
(9) |
|
$ |
2,905,372 |
|
|
|
33,591 |
(10) |
|
$ |
1,606,662 |
|
|
|
|
|
|
53,787 |
(11) |
|
$ |
2,572,646 |
|
|
|
27,311 |
(12) |
|
$ |
1,306,285 |
|
(1) |
|
Shares are valued based on a $47.83 share price, the closing
price of CIT common stock on December 31, 2014. |
(2) |
|
The amounts shown represent PSU awards, assuming a payout at
100% of target. Actual payouts will be determined at such time that the Compensation Committee certifies, following the end of each respective
performance period, that the relevant |
- 54 -
|
|
performance measures were achieved. PSU awards are generally
expected to be reviewed by the Committee in January or February of the year immediately following the end of the respective performance
period. |
(3) |
|
The amount shown includes 91,846 PBRSUs granted on February 20,
2014 that are scheduled to vest in three equal installments on February 1 in 2015, 2016 and 2017, and 65,988 PBRSUs representing two unvested
installments granted on January 30, 2013 that are scheduled to vest in equal installments in 2015 and 2016. Installments are scheduled to vest on
February 1 in each respective year. |
(4) |
|
The amount shown includes 41,867 PSUs granted during 2014 and
linked with the 2014-2016 performance period, 35,253 PSUs granted during 2013 and linked with the 2013-2015 performance period, and 36,311 PSUs granted
during 2012 and linked with the 2012-2014 performance period. |
(5) |
|
The amount shown includes 41,867 RSUs granted on February 20,
2014 that are scheduled to vest in three equal installments in 2015, 2016 and 2017, 29,892 RSUs representing two unvested installments granted on
January 30, 2013 that are scheduled to vest in equal installments in 2015 and 2016, and 19,918 RSUs representing the final installment granted on
February 1, 2012 that is scheduled to vest on February 1, 2015. Installments are scheduled to vest on February 1 in each respective year. |
(6) |
|
The amount shown includes 15,700 PSUs granted during 2014 and
linked with the 2014-2016 performance period, 15,864 PSUs granted during 2013 and linked with the 2013-2015 performance period, and 16,340 PSUs granted
during 2012 and linked with the 2012-2014 performance period. |
(7) |
|
The amount shown includes 31,024 RSUs granted on February 20,
2014 that are scheduled to vest in three equal installments in 2015, 2016 and 2017, 22,087 RSUs representing two unvested installments granted on
January 30, 2013 that are scheduled to vest in equal installments in 2015 and 2016, and 15,935 RSUs representing the final installment granted on
February 1, 2012 that is scheduled to vest on February 1, 2015. Installments are scheduled to vest on February 1 in each respective year. |
(8) |
|
The amount shown includes 12,560 PSUs granted during 2014 and
linked with the 2014-2016 performance period, 11,751 PSUs granted during 2013 and linked with the 2013-2015 performance period, and 12,104 PSUs granted
during 2012 and linked with the 2012-2014 performance period. |
(9) |
|
The amount shown includes 27,999 RSUs granted on February 20,
2014 that are scheduled to vest in three equal installments in 2015, 2016 and 2017, 19,941 RSUs representing two unvested installments granted on
January 30, 2013 that are scheduled to vest in equal installments in 2015 and 2016, and 12,804 RSUs representing the final installment granted on
February 1, 2012 that is scheduled to vest on February 1, 2015. Installments are scheduled to vest on February 1 in each respective year. |
(10) |
|
The amount shown includes 15,700 PSUs granted during 2014 and
linked with the 2014-2016 performance period, 8,813 PSUs granted during 2013 and linked with the 2013-2015 performance period, and 9,078 PSUs granted
during 2012 and linked with the 2012-2014 performance period. |
(11) |
|
The amount shown includes 23,969 RSUs granted on February 20,
2014 that are scheduled to vest in three equal installments in 2015, 2016 and 2017, 17,014 RSUs representing two unvested installments granted on
January 30, 2013 that are scheduled to vest in equal installments in 2015 and 2016, and 12,804 RSUs representing the final installment granted on
February 1, 2012 that is scheduled to vest on February 1, 2015. Installments are scheduled to vest on February 1 in each respective year. |
(12) |
|
The amount shown includes 9,420 PSUs granted during 2014 and
linked with the 2014-2016 performance period, 8,813 PSUs granted during 2013 and linked with the 2013-2015 performance period, and 9,078 PSUs granted
during 2012 and linked with the 2012-2014 performance period. |
- 55 -
2014 OPTION EXERCISES AND STOCK VESTED
(1)
The following table provides information about stock options that
were exercised and stock units and/or awards that vested during 2014.
Name
|
|
|
|
Number of
Shares Acquired
on Vesting (1)
(#)
|
|
Value Realized
On Vesting
($) (2)
|
| (a) |
|
|
|
(d) |
|
(e) |
|
|
|
|
|
74,295 |
(3) |
|
$ |
3,512,518 |
(4) |
|
|
|
|
|
34,863 |
(5) |
|
$ |
1,622,861 |
(6) |
|
|
|
|
|
28,836 |
(7) |
|
$ |
1,344,753 |
(4) |
|
|
|
|
|
32,706 |
(8) |
|
$ |
1,535,479 |
(4) |
|
|
|
|
|
23,170 |
(9) |
|
$ |
1,080,978 |
(4) |
(1) |
|
None of the NEOs have outstanding stock options, and no stock
options were exercised by any of the named executive officers during 2014. |
(2) |
|
The value shown was determined by multiplying the aggregate
number of RSUs on each specific vesting date by the closing price of CIT common stock on that date, or the last trading date immediately preceding the
vesting date in the event the vesting date occurred on a non-trading date. |
(3) |
|
Represents 41,301 RSUs that vested on February 16, 2014 and
32,994 that vested on February 1, 2014. |
(4) |
|
Reflects the closing price of CIT common stock of $47.86 and
$46.55 on February 14, 2014, and January 31, 2014, respectively. |
(5) |
|
Represents 34,863 RSUs that vested on February 1,
2014. |
(6) |
|
Reflects the closing price of CIT common stock of $46.55 on
January 31, 2014. |
(7) |
|
Includes 1,859 RSUs that vested on February 16, 2014 and 26,977
RSUs that vested on February 1, 2014. |
(8) |
|
Includes 9,932 RSUs that vested on February 16, 2014 and 22,774
RSUs that vested on February 1, 2014. |
(9) |
|
Includes 1,859 RSUs that vested on February 16, 2014 and 21,311
RSUs that vested on February 1, 2014. |
- 56 -
Name
|
|
|
|
Plan Name
|
|
Number of
Years
Credited
Service
(#)
|
|
Present
Value of
Accumulated
Benefit (1)
($)
|
| (a) |
|
|
|
(b) |
|
(c) |
|
(d)
|
|
|
|
|
CIT Group Inc. Retirement Plan (2) |
|
|
|
$ |
24,937 |
|
|
|
|
Supplemental Retirement Plan (3) |
|
|
|
$ |
143,148 |
|
|
|
|
Executive Retirement Plan (4) |
|
|
|
$ |
n/a |
|
|
|
|
|
|
|
|
$ |
168,085 |
|
|
|
|
CIT Group Inc. Retirement Plan (2) |
|
|
|
$ |
22,068 |
|
|
|
|
Supplemental Retirement Plan (3) |
|
|
|
$ |
77,209 |
|
|
|
|
Executive Retirement Plan (4) |
|
|
|
$ |
n/a |
|
|
|
|
|
|
|
|
$ |
99,277 |
|
|
|
|
CIT Group Inc. Retirement Plan (2) |
|
|
|
$ |
21,605 |
|
|
|
|
Supplemental Retirement Plan (3) |
|
|
|
$ |
53,307 |
|
|
|
|
Executive Retirement Plan (4) |
|
|
|
$ |
n/a |
|
|
|
|
|
|
|
|
$ |
74,912 |
|
|
|
|
CIT Group Inc. Retirement Plan (2) |
|
|
|
$ |
375,338 |
|
|
|
|
Supplemental Retirement Plan (3) |
|
|
|
$ |
655,745 |
|
|
|
|
Executive Retirement Plan (4) |
|
|
|
$ |
4,966,599 |
|
|
|
|
|
|
|
|
$ |
5,997,682 |
|
|
|
|
CIT Group Inc. Retirement Plan (2) |
|
|
|
$ |
24,637 |
|
|
|
|
Supplemental Retirement Plan (3) |
|
|
|
$ |
53,619 |
|
|
|
|
Executive Retirement Plan (4) |
|
|
|
$ |
n/a |
|
|
|
|
|
|
|
|
$ |
78,256 |
(1) |
|
The actuarial present value of accumulated benefits was computed
on the basis of the same actuarial assumptions, with the exception of turnover, retirement, and pre-retirement mortality, as used to compute the
accumulated benefit obligation as of December 31, 2014 and as stated in our Annual Report on Form 10-K filed with the SEC on February 20, 2015, in
“Note 20 — Retirement, Other Postretirement and Other Benefit Plans” to the consolidated financial statements. With regard to turnover,
retirement, and pre-retirement mortality, the present values of the accumulated benefits payable under the Retirement Plan and the Supplemental
Retirement Plan have been computed based on the assumption that the executive would remain employed by CIT until age 65 (the normal retirement age as
defined in both plans) and then retire and collect the accumulated benefit. The present values of the accumulated benefits payable under the Executive
Retirement Plan (which has been closed to new participants since 2006) assumes Mr. Knittel would remain employed by CIT through age 60 (the youngest
age at which benefits can be received without any reduction) or the youngest age of benefit eligibility, and then retire and collect the accumulated
benefit. Eligibility to receive early retirement benefits are more fully described under the heading, “Narrative Information Relating to
Retirement Arrangements for Named Executive Officers” in this Proxy Statement. |
(2) |
|
The Retirement Plan is a tax-qualified plan and is further
described under the heading “Narrative Information Related to Retirement Arrangements for Named Executive Officers” in this Proxy
Statement. |
(3) |
|
The Supplemental Retirement Plan is a nonqualified plan and is
further described under “Narrative Information Related to Retirement Arrangements for Named Executive Officers” in this Proxy
Statement. |
(4) |
|
The Executive Retirement Plan is a nonqualified plan and is
further described under “Narrative Information Relating to Retirement Arrangements for Named Executive Officers” in this Proxy Statement.
Messrs. Thain, Chai and Parker, and Ms. Polsky are not participants in the Executive Retirement Plan. |
NARRATIVE INFORMATION RELATING TO RETIREMENT
ARRANGEMENTS FOR NAMED EXECUTIVE OFFICERS
In addition to the Savings Incentive
Plan, we maintained two retirement arrangements during 2014 under which our NEOs are eligible to receive benefits: the Retirement Plan and the
Supplemental Retirement Plan. Effective December 31, 2012, participation in and employer contributions to the Retirement Plan and Supplemental
Retirement Plan were frozen for all employees, including the NEOs. We also maintain a third retirement arrangement, the Executive Retirement Plan,
which has been closed to new participants since 2006. Mr. Knittel is the only NEO eligible to participate in the Executive Retirement Plan. The
Retirement Plan is a tax-qualified defined benefit pension plan that covers eligible employees in the United States. The Executive Retirement Plan and
the Supplemental Retirement Plan are nonqualified plans.
- 57 -
Each of the NEOs vested in his or her
retirement benefits, that were accumulated through December 31, 2012, under the Retirement and Supplemental plans as follows: Mr. Thain — February
8, 2013; Mr. Chai — June 1, 2013; Mr. Parker — July 2, 2013; Mr. Knittel — upon conversion of his accrued benefit effective January 1,
2001; and Ms. Polsky — May 17, 2013.
Under the Executive Retirement Plan,
participating named executive officers will be eligible for early retirement benefits upon reaching 55 years of age with ten years of benefit service.
Mr. Knittel became eligible on September 6, 2013.
Retirement Plan
Through December 31, 2012, when participation was frozen, the
Retirement Plan covered all officers and employees in the United States who had one year of service and were 21 years of age or older. The Retirement
Plan was revised in 2000 to convert to a “cash balance” formula, which became effective January 1, 2001. Under the cash balance formula,
except for certain grandfathered participants, each participant’s accrued benefit as of December 31, 2000 was converted to a lump sum amount and
each year thereafter, through December 31, 2012, the participant’s account balance was credited with a percentage of the participant’s annual
benefits pay depending on the participant’s period of service as follows:
Period of Service
|
|
|
|
% of Annual Benefits Pay
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For purposes of the Retirement Plan, annual benefits pay
generally means annual base salary, certain annual incentive awards, sales incentives and commissions, subject to certain limits under the plan and
imposed under the Tax Code. Account balances under the cash balance portion of the Retirement Plan also continue to receive annual interest credits
which continue after December 31, 2012 when participation was frozen and until cumulative benefits are paid, subject to certain government limits. For
2014, the interest crediting rate was 2.5%. Upon termination after three years of employment or upon retirement, a participant’s benefit under the
Retirement Plan is generally payable, at the election of the participant, in an annuity or lump sum.
Mr. Knittel began earning benefits under the cash balance formula
effective January 1, 2001. Each of Messrs. Thain, Chai and Parker, and Ms. Polsky began earning benefits under the cash balance formula in
2011.
Prior to the conversion to a “cash balance” formula,
certain participants elected in 2000 not to participate in the Retirement Plan cash balance program. Such participants are eligible instead to receive
grandfathered benefits under the Traditional Retirement Formula, determined as 1.25% of final average annual compensation, multiplied by final years of
benefit service up to a maximum of 40 years. Final average annual compensation is determined to be the annual compensation (generally, base salary) for
the 60 consecutive months (five years) during which annual compensation is highest within the last 120 months (ten years) of benefit service. Benefits
may be reduced by 1/2% for each month (6% per year) in the event a grandfathered participant elects to retire and start receiving payments before age
60, but after attaining age 55. None of our executive officers are eligible to receive benefits under the Traditional Retirement
Formula.
Effective December 31, 2012, participation in and contributions
based on eligible annual benefits pay to the Retirement Plan were frozen.
Supplemental Retirement Plan
Through December 31, 2012, when participation was frozen, the
Supplemental Retirement Plan covered employees of CIT whose benefits under the Retirement Plan are limited by operation of the Tax Code. Each of the
NEOs participates in the Supplemental Retirement Plan. Any benefits under the Supplemental Retirement Plan are paid in a lump sum following a
participant’s termination of employment with CIT. However, in order to comply with Section 409A of the Tax Code (“Section 409A”),
benefits accrued under the Supplemental Retirement Plan through December 31, 2008 for active participants in the Executive Retirement Plan will be
“frozen” and remain payable, according to the operation of the plan, as a lump-sum payment upon separation from service. Supplemental
Retirement Plan benefits will continue to accrue after December 31, 2008, according to the operation of the plan, but the portion earned after 2008
will be payable in the form of an annuity.
Effective December 31, 2012, participation and contributions
based on eligible annual benefits pay to the Supplemental Retirement Plan were frozen.
Mr. Knittel generally is entitled to receive an additional two
years of age and service credit under the Supplemental Retirement Plan, in the event Mr. Knittel’s employment is terminated by him for “Good
Reason” or by CIT “Without Cause” (in each case, as defined in his employment agreement and as further described under the heading,
“Potential Payments Upon Termination or Change of Control” in this Proxy Statement).
- 58 -
Executive Retirement Plan
The Executive Retirement Plan has been closed to new participants
since 2006. Mr. Knittel participates in the Executive Retirement Plan; our other NEOs do not participate in the Executive Retirement Plan. The
Executive Retirement Plan provides for an annual retirement benefit based upon a formula that takes into account the executive’s final base
compensation and years of benefit service with CIT. The annual retirement benefit under the Executive Retirement Plan formula is determined as final
base compensation multiplied by the sum of 50% for the first 10 years of benefit service, plus 2% for each of the following years of benefit service up
to maximum of 20 years. Final base compensation is defined as the highest base compensation for any consecutive twelve-month period in the five years
prior to retirement. Benefit service generally means service taken into account for purposes of the Retirement Plan. The benefit under the Executive
Retirement Plan formula is reduced by the actuarial equivalent value of the benefits payable under the Supplemental Retirement Plan, the Retirement
Plan, the Supplemental Savings Plan, the Flexible Retirement Contribution Account under the Savings Incentive Plan, and certain predecessor plans of
CIT.
Benefits under the Executive Retirement Plan are paid in the form
of an annuity for life beginning at an executive’s normal retirement date. Normal retirement date is defined as age 65 with at least ten years of
benefit service. An executive who is age 55 and who has at least ten years of benefit service may also elect to retire early with a benefit determined
under the Executive Retirement Plan formula that is reduced by 1/2% for each month that payments begin before reaching age 60. Executives may elect to
have benefits under the Executive Retirement Plan paid in the form of a joint and survivor annuity over the combined lives of the executive and the
executive’s beneficiary, or as a life annuity.
No benefits are payable under the Executive Retirement Plan if an
executive terminates employment prior to attaining ten years of benefit service, except in situations where the Board elects to terminate the plan or a
Change of Control has occurred. Under certain circumstances, if an executive terminates employment with ten years of service and prior to attaining age
55, the benefit under the plan is paid in a lump sum.
The Executive Retirement Plan also provides a death benefit for
participating executives in the event he/she dies while actively employed by CIT. The amount of this benefit is generally equal to three times base
salary. CIT has purchased corporate-owned life insurance to fund this benefit and the retirement benefits payable under the Executive Retirement Plan.
Mr. Knittel remains eligible to receive a death benefit under the Executive Retirement Plan.
Mr. Knittel generally is entitled to receive an additional two
years of age and service credit under the Executive Retirement Plan, in the event Mr. Knittel’s employment is terminated by him for “Good
Reason” or by CIT “Without Cause” (in each case, as defined in his employment agreement and as further described under the heading,
“Potential Payments Upon Termination or Change of Control” in this Proxy Statement).
Other Plans
The Savings Incentive Plan covers all officers and employees in
the United States who are 18 years of age or older. Under this plan, CIT matches 100% of a participant’s own pre-tax and Roth contributions to the
plan up to the first 6% of eligible pay. Additionally, certain participants who were eligible and elected to remain covered under the Retirement
Plan’s Traditional Retirement Formula receive Flexible Retirement Contributions by CIT under the Savings Incentive Plan. Flexible Retirement
Contributions of up to 3% of eligible pay are made as of December 31 each year, provided the participant is employed by CIT on December 31, left the
company at or after age 55, or died or became disabled during the year. The excess of any Flexible Retirement Contributions limited by operation of the
Tax Code are contributed under the SSP, further described under the heading, “Narrative Information Relating to Nonqualified Deferred
Compensation.” In addition to the company match, an annual discretionary supplemental employer contribution was introduced to the Savings
Incentive Plan effective January 1, 2013. Annual contributions, which will range from 0% to 3% of eligible pay (including base salary and most
cash-based incentive awards), are fully funded by CIT. Eligible employees who were hired on or before September 30 of the plan year and are employed on
the last day of the plan year (December 31) will be eligible to receive a discretionary supplemental employer contribution. The discretionary
supplemental employer contribution for 2014 was 1%. All contributions are subject to Internal Revenue Service wage limits.
Section 409A of the Tax Code requires the payment of the portion
of benefits earned after December 31, 2004 for executive officers under the Executive Retirement Plan, the Supplemental Retirement Plan and the
Supplemental Savings Plan (including potentially each of the named executive officers) to be delayed for six months if the officer’s employment
ends for any reason other than death or disability. Payments that are delayed because of this tax law earn interest at a short-term rate until paid to
the officer.
- 59 -
2014 NONQUALIFIED DEFERRED
COMPENSATION
Name
|
|
Registrant
Contributions
in Last FY
($)
|
|
Aggregate
Earnings
in Last FY
($)
| |
Aggregate
Withdrawals /
Distributions
($)
| |
Aggregate
Balance
at Last FYE
($)
|
| (a) |
|
(c) |
|
(d)
| |
(e)
| |
(f)
|
|
|
|
|
$ |
(2,474 |
)(1) |
|
$ |
163,959 |
(2) |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
$ |
154 |
(3) |
|
|
— |
|
|
$ |
6,405 |
(3) |
|
|
|
|
|
— |
|
|
|
