UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
_____________
Filed by the Registrant S Filed
by a Party other than the Registrant
Check the appropriate box:
| |
Preliminary Proxy Statement |
| |
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
S | |
Definitive
Proxy Statement |
| |
Definitive Additional Materials |
| |
Soliciting Material Pursuant to Section 240.14a-12 |
_____________
CIT
Group Inc.
(Name of Registrant as Specified In Its Charter)
_____________
Payment of Filing Fee (Check the appropriate box):
S | |
No
fee required. |
| |
|
| |
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
| 1) | Title of each class of securities to which transaction applies: |
| | |
| 2) | Aggregate number of securities to which transaction applies: |
| | |
| 3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule
0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
| | |
| 4) | Proposed maximum aggregate value of transaction: |
| | |
| | Fee paid previously with preliminary materials: |
| | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and
the date of its filing. |
| 1) | Amount previously paid: |
| | |
|
2) | Form, Schedule or Registration Statement No.: |
|
| |
CIT GROUP INC.
11 West 42nd Street
New York, NY 10036
Dear Stockholder:
You are cordially invited to attend our
Annual Meeting of Stockholders on Tuesday, May 9, 2017, at 11:00 a.m., Eastern Daylight Saving Time, at our corporate offices at One CIT Drive,
Livingston, New Jersey 07039. Internet and telephone voting are available until 11:59 p.m., Eastern Daylight Saving Time, the day prior to the
meeting.
In connection with our Annual Meeting,
we have provided our stockholders with our Notice of Annual Meeting, Proxy Statement, proxy card and 2016 Annual Report. These documents provide
detailed information related to the matters to be addressed during the Annual Meeting, as well as our business activities and operating performance. On
March 30, 2017, we mailed to our stockholders a notice of the Internet availability of proxy materials (Access Notice) containing
instructions on how to access these materials online. Electronic delivery expedites your receipt of proxy materials, while lowering expenses and
reducing the environmental impact of our Annual Meeting. If you received an Access Notice by mail, you will not receive printed copies of the materials
unless you request them by following the instructions in the Access Notice.
In addition to the formal items of
business to be brought before the Annual Meeting, we will respond to stockholder questions. Whether or not you are personally able to attend the
Annual Meeting, please complete, sign and date the enclosed proxy card and return it in the enclosed postage paid envelope as soon as possible, or
follow the instructions to vote online or by telephone. Your vote is very important. Submitting your vote by proxy will not limit your right to
attend the Annual Meeting.
On behalf of the entire Board of
Directors, we thank you for your support of CIT and hope to see you at our Annual Meeting.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ellen R. Alemany Chairwoman and Chief Executive Officer |
CIT GROUP INC.
One CIT Drive
Livingston, NJ 07039
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
ON MAY 9, 2017
TO THE STOCKHOLDERS OF CIT GROUP INC.:
Notice is hereby given that the 2017
Annual Meeting of Stockholders (the Annual Meeting) of CIT Group Inc., a Delaware corporation (CIT), will be held
at CITs offices at One CIT Drive, Livingston, New Jersey 07039, on Tuesday, May 9, 2017 at 11:00 a.m., Eastern Daylight Saving Time, for the
following purposes, as more fully described in the accompanying proxy statement (the Proxy Statement):
1. |
|
to elect CITs Board of Directors to serve until the next
annual meeting of stockholders the Board has nominated for election the following twelve nominees: Ellen R. Alemany, Michael L. Brosnan, Michael
A. Carpenter, Dorene C. Dominguez, Alan Frank, William M. Freeman, R. Brad Oates, Marianne Miller Parrs, Gerald Rosenfeld, Vice Admiral John R. Ryan,
USN (Ret.), Sheila A. Stamps and Laura S. Unger; |
2. |
|
to ratify the appointment of PricewaterhouseCoopers LLP as
CITs independent registered public accounting firm for 2017; |
3. |
|
to hold a non-binding advisory vote on executive
compensation; |
4. |
|
to hold a non-binding advisory vote on the frequency of the
advisory vote on executive compensation; and |
5. |
|
to transact such other business as may properly come before the
Annual Meeting. |
Only stockholders of record as of the
close of business on March 13, 2017, are entitled to receive notice of, to attend, and to vote at the Annual Meeting. Internet and telephone voting are
available until 11:59 p.m., Eastern Daylight Saving Time, the day immediately prior to the Annual Meeting. To ensure that your vote is counted at the
Annual Meeting, please vote your proxy as soon as possible.
Instructions to vote online, by
telephone or by mail are in the Question and Answer section of the Proxy Statement included with this notice of Annual Meeting (Notice of
Annual Meeting) and can also be found in the notice of the Internet availability of proxy materials mailed to you on March 30, 2017
(Access Notice). To vote online, by telephone or by mail, you need your personal Control Number, which is included in the Access
Notice. There is no charge for requesting printed proxy materials. Stockholders who request printed proxy materials for 2017 will continue to
receive printed proxy materials in future years until such time as they may opt out of paper delivery. To facilitate timely delivery of the proxy
materials for the Annual Meeting, please make your request on or before April 25, 2017.
Go to www.cit.com to be connected to CITs website.
|
|
|
|
By Order of the Board of Directors,
|
|
|
|
|
|
|
|
|
|
|
|
Stuart Alderoty Executive Vice President, General Counsel and Secretary |
Livingston, New Jersey
March 30, 2017
GENERAL INFORMATION |
|
1 |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING |
|
1 |
DIRECTORS |
|
6 |
General Information |
|
6 |
Board Evaluation |
|
6 |
Director Qualifications and Experience |
|
20 |
CORPORATE GOVERNANCE |
|
21 |
Director Independence |
|
22 |
Related Person Transactions Policy |
|
22 |
Appointment of Directors |
|
23 |
Diversity of Directors |
|
23 |
Majority Voting for Directors |
|
23 |
Board Leadership Structure |
|
24 |
The Boards Role in Risk Oversight |
|
24 |
Succession Planning |
|
25 |
Director and Senior Executive Officer Stock Ownership Policy |
|
25 |
Board Committees |
|
25 |
Stockholder Communications with the Board |
|
28 |
Compensation Committee Interlocks, Insider Participation and Banking Interlocks |
|
29 |
Legal Proceedings |
|
29 |
CIT Political Contributions Policy |
|
29 |
Hedging, Margin Accounts and Pledged Securities |
|
29 |
DIRECTOR COMPENSATION |
|
30 |
Director Compensation Table |
|
31 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
|
33 |
Security Ownership of Certain Beneficial Owners |
|
33 |
Security Ownership of Directors and Executive Officers |
|
34 |
EXECUTIVE OFFICERS |
|
35 |
Section 16(a) Beneficial Ownership Reporting Compliance |
|
38 |
EXECUTIVE COMPENSATION |
|
39 |
Compensation Discussion and Analysis |
|
39 |
Summary Compensation Table |
|
60 |
Grants of Plan-Based Awards |
|
62 |
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table |
|
63 |
Outstanding Equity Awards at Fiscal Year-End |
|
64 |
Option Exercises and Stock Vested |
|
65 |
Pension Benefits |
|
66 |
Narrative Information Relating to Retirement Arrangements for Named Executive Officers |
|
67 |
Nonqualified Deferred Compensation |
|
69 |
Narrative Information Relating to Nonqualified Deferred Compensation |
|
69 |
Narrative Information Relating to Potential Payments Upon Termination or Change of Control |
|
69 |
Potential Payments Upon Termination or Change of Control |
|
72 |
2017 COMPENSATION COMMITTEE REPORT |
|
73 |
2017 AUDIT COMMITTEE REPORT |
|
74 |
OVERVIEW OF PROPOSALS |
|
75 |
PROPOSAL 1: ELECTION OF DIRECTORS |
|
75 |
PROPOSAL 2: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
|
75 |
PROPOSAL 3: ADVISORY VOTE ON EXECUTIVE COMPENSATION |
|
77 |
PROPOSAL 4: ADVISORY VOTE ON THE FREQUENCY OF THE ADVISORY VOTE ON EXECUTIVE COMPENSATION |
|
78 |
OTHER BUSINESS |
|
79 |
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR THE 2018 ANNUAL MEETING |
|
79 |
ATTENDANCE AT THE ANNUAL MEETING |
|
79 |
YOUR VOTE IS IMPORTANT.
PLEASE VOTE YOUR PROXY.
CIT GROUP INC.
PROXY STATEMENT
Our Board of Directors (the Board) is
soliciting proxies from our stockholders in connection with our annual meeting of stockholders (Annual Meeting) to be held on May 9,
2017, and any adjournment of such meeting. No business can be conducted at the Annual Meeting unless a majority of all outstanding shares entitled to
vote are either present in person or represented by proxy at the Annual Meeting. The only matters to be brought before the Annual Meeting are those
referred to in this proxy statement (Proxy Statement). If any additional matters are properly presented at the Annual Meeting, the
persons named as proxies may vote your shares in their discretion.
As permitted by rules adopted by the U.S. Securities and Exchange
Commission (SEC), we have elected to provide access to this Proxy Statement, proxy card and our 2016 Annual Report (Annual
Report) to you electronically via the Internet at www.proxyvote.com, beginning on March 30, 2017. We
believe that these rules allow CIT Group Inc. (CIT or the Company) to provide you with the information you need
while reducing the environmental impact of the Annual Meeting and reducing expenses. If you are a holder of record, you will also receive this Proxy
Statement, proxy card and our Annual Report by mail.
If you received a notice of the Internet availability of proxy
materials (Access Notice) by mail, you will not receive a printed copy of the proxy materials in the mail. The Access Notice
instructs you how to access and review all of the important information contained in the Proxy Statement, proxy card and Annual Report. The Access
Notice also instructs you how to submit your vote over the Internet, by telephone or by mail. If you received an Access Notice and would like to
receive a printed copy of our proxy materials, please follow the instructions for requesting such materials included in the Access Notice or as set
forth below under How do I vote? Vote by Mail.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING |
|
|
|
When and where is the Annual
Meeting?
When: Tuesday, May 9, 2017, at 11:00 a.m., Eastern
Daylight Saving Time.
Where: One CIT Drive, Livingston, New Jersey
07039.
Who is soliciting my
vote?
CITs Board of Directors is soliciting your vote for our
Annual Meeting.
What will I vote on?
You are being asked to vote:
|
|
to elect the directors to serve on CITs Board until the
next annual meeting of stockholders the Board has nominated for election the following twelve nominees: Ellen R. Alemany, Michael L. Brosnan,
Michael A. Carpenter, Dorene C. Dominguez, Alan Frank, William M. Freeman, R. Brad Oates, Marianne Miller Parrs, Gerald Rosenfeld, Vice Admiral John R.
Ryan, USN (Ret.), Sheila A. Stamps and Laura S. Unger (Proposal 1); |
|
|
to ratify the appointment of PricewaterhouseCoopers LLP as
CITs independent registered public accounting firm for 2017 (Proposal 2); |
|
|
to approve executive compensation on an advisory basis (Proposal
3); and |
|
|
to approve the frequency of the advisory vote on executive
compensation on an advisory basis (Proposal 4). |
You may also vote on any other business that properly comes
before the Annual Meeting.
What is the record date for the Annual
Meeting?
The record date for the Annual Meeting is the close of business
on March 13, 2017 (Record Date). The Record Date is used to determine those stockholders who are entitled to vote at the Annual
Meeting and at any adjournment or postponement thereof.
How many votes can be cast by all
stockholders?
A total of 202,659,166 votes may be cast on each matter
presented, consisting of one vote for each share of CIT common stock, par value $0.01 per share, which was outstanding on the Record Date. CITs
common stock is listed on the New York Stock Exchange (NYSE), and CIT is subject to the NYSEs 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
101,329,584 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 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 March 30, 2017. 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, then 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 25, 2017. 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 9, 2017, 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 March 30, 2017. Use any touch-tone telephone to transmit your voting
instructions up until 11:59 p.m., Eastern Daylight Saving Time, on May 8, 2017.
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 March 30,
2017. Use the Internet to transmit your vote up until 11:59 p.m., Eastern Daylight Saving Time, on May 8, 2017.
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.
- 2 -
What does it mean to give a
proxy?
Your properly completed proxy card will appoint Stuart Alderoty,
Eric S. Mandelbaum 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 and 3 and permits you to vote for 1 Year, 2 Years,
or 3 Years, or abstain from voting, regarding Proposal 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 nominees election exceed the votes cast against such
nominees election. Votes cast exclude abstentions and broker non-votes (as further described 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 CITs independent registered public
accounting firm (Proposal 2); and (b) approve the non-binding advisory vote on executive compensation (Proposal 3). Abstentions will not be included in
the affirmative vote and thus will have the same effect as a vote against each of Proposals 2 and 3.
The non-binding vote on the frequency of the advisory vote on
executive compensation (Proposal 4) receiving the greatest number of votes (i.e., every 1, 2 or 3 years) will be considered the frequency
recommended by stockholders. Abstentions will have no effect on the outcome of such vote.
Although the advisory votes on Proposals 3 and 4 are 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 pursuant to the By-Laws of CIT
(By-Laws) 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 Boards nominees, in accordance with the requirements of the 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 twelve 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 Chairwoman 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 and Corporate Governance Appointment of 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
CITs 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.
- 3 -
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 twelve nominees named in Proposal 1 Election of Directors, and for
Proposals 2 and 3 and for the resolution and the Boards recommendation of 1 Year with respect to Proposal 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 brokers 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) or the
non-binding advisory vote on the frequency of the advisory vote on executive compensation (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 Proposal 3, while
abstentions will have the same effect as votes cast against such Proposal, broker non-votes will not be counted as entitled to vote on
Proposal 3 and thus will have no effect on the outcome of such votes. With respect to Proposal 4, abstentions and broker non-votes will have no effect
on the outcome of such vote.
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 havent I received a printed copy of
the Proxy Statement, proxy card or Annual Report?
We have elected to take advantage of the SECs 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 March 30, 2017, 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 CITs 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.
- 4 -
Is this Proxy Statement available on the
Internet?
Yes. You can also view this Proxy Statement on the Internet by
going to CITs website at www.cit.com/2017proxy. 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 12, 2016. The deadline for submitting stockholder proposals for the Annual Meeting for
inclusion on the agenda was February 9, 2017.
What is the deadline for stockholders to
notify us of proposals for the 2018 Annual Meeting of Stockholders?
The deadline for submitting stockholder proposals for the 2018
annual meeting of stockholders (2018 Annual Meeting) for inclusion in the 2018 proxy statement is November 30, 2017. The deadline
for submitting stockholder proposals for the 2018 Annual Meeting for inclusion on the agenda is February 8, 2018.
Will a representative of CITs
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 2017.
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 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 with the SEC on or before
February 14, 2017, there were six stockholders that beneficially owned more than 5% of our common stock as of December 31, 2016: The Vanguard Group,
Capital Research Global Investors, First Pacific Advisors, LLC, Franklin Mutual Advisers, LLC, FMR LLC and Blackrock, Inc. 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, NY 10036 and One CIT Drive, Livingston, NJ 07039 from April 29, 2017, 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.
- 5 -
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 CITs 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.
General Information
During 2016, our Board met sixteen times. The number of 2016
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 or a portion of 2016 attended at least 75%
of the aggregate of the meetings of the Board and of any Board Committees on which he or she served that were held during his or her period of service
on the Board. Our Corporate Governance Guidelines provide that directors are expected to attend the Annual Meeting. Each of the nominees listed below
who are standing for re-election attended our 2016 annual meeting of stockholders.
The Board consists of a diverse group of professionals in their
respective fields. Many of the current directors have or have had 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. Several 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 were considered by the Board in determining that it was 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 and backgrounds to engage each other and management to
effectively address CITs needs and represent the best interests of CITs stockholders.
Board Evaluation
Regular self-evaluation to ensure an effective Board is another
important responsibility of the directors. The Corporate Governance Guidelines provide that the Board undertake a performance evaluation every year,
overseen by the Governance Committee. In practice, each year, each director completes a questionnaire reflecting his or her assessment of the
effectiveness of the Board and the Board Committees on which he or she serves. Although the specific questions may vary from year to year, the topics
generally include the substance and efficiency of Board and Board Committee meetings and materials, utilization of skills and committee appointments,
skills and experience needed for the Board, and Board engagement and interaction. The General Counsel confidentially summarizes the directors
responses for review by the Governance Committee, the Board and the Board Committees. The Board and Board Committees review the summary in executive
session and consider what actions, if any, to take as a result.
- 6 -
The information below includes each nominees age as of
February 22, 2017, 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 Ms. Alemany, all of the nominees are independent of management.
Name |
Age |
Principal Occupation |
|
|
Chairwoman and Chief Executive Officer of CIT and President and Chief Executive Officer of CIT Bank, N.A. |
|
|
Former Examiner-in-Charge for Midsize Bank Supervision Office of the Comptroller of the Currency |
|
|
Former Chief Executive Officer of Ally Financial, Inc. |
|
|
Chairwoman and Chief Executive Officer of Vanir Group of Companies, Inc. |
|
|
Retired Partner of Deloitte & Touche LLP |
|
|
Executive Chairman of General Waters Inc. |
|
|
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 |
|
|
Former Executive Vice President, Dreambuilder Investments, LLC and Senior Banking Executive |
|
|
Independent Consultant, Former Commissioner of the U.S. Securities and Exchange Commission |
- 7 -
|
|
Ellen R. Alemany
Age: 61
|
Other Public Directorships:
• Fidelity National Information Services, Inc. |
|
Board Committees:
• N/A
Director Since:
January 2014
Chief Executive Officer Since:
April 2016
Chairwoman Since:
May 2016 |
Prior Senior Leadership Positions:
• Chairman and Chief Executive Officer of RBS Citizens
Financial Group, Inc.
• Head of Americas at The Royal Bank of Scotland Group
plc
• Chief Executive Officer for Global Transaction Services
at Citigroup
• First District Representative — Federal Advisory
Council
• Board Member — Financial Services Roundtable
• Board Member — The Clearing House Payments Company |
Ms. Alemany has served as a
director of CIT since January 2014, was named Chief Executive Officer in April 2016 and became Chairwoman a month later in May 2016. She has led the
principal bank subsidiary, CIT Bank N.A., since December 2015 when she was named Chief Executive Officer and President. Ms. Alemany became Chairwoman
of CIT Bank in April 2016. She served as Vice Chairman of CIT beginning in October 2015.
Prior to joining CIT, Ms. Alemany was the Head of RBS Americas,
the management structure that oversees The Royal Bank of Scotlands businesses in the Americas, and Chief Executive Officer of RBS Citizens
Financial Group, Inc., an RBS subsidiary until she retired in 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 2001until 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 Citigroups Global Corporate Bank.
Ms. Alemany served on the Board of Directors of Automatic Data Processing, Inc. from 2011 until 2016 and has served on the Board of Directors of
Fidelity National Information Services, Inc. since July 2014, and also currently serves as a director of The Center for Discovery and on the board of
Operation HOPE.
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, multinational commercial bank, as well as global financial management and regulatory experience and
a proven track record of achievement and leadership.
- 8 -
|
|
Michael L. Brosnan
Age: 58
|
Other Public Directorships:
• None |
|
Board Committees:
• Audit
• Regulatory Compliance
|
Senior Leadership Positions:
• Director of CIT Bank, N.A. |
|
Director Since:
November 2016 |
Prior Senior Leadership Positions:
• Examiner-in-Charge for Midsize Bank Supervision
in the Office of the Comptroller of the Currency
• Senior Deputy Comptroller for Large Bank Supervision
in the Office of the Comptroller of the Currency |
Mr. Brosnan served as
Examiner-In-Charge for Midsize Bank Supervision at the Office of the Comptroller of the Currency (OCC) from May 2013 to May 2016. Prior to
that he was Senior Deputy Comptroller for Large Bank Supervision from December 2010 to April 2013. In addition, he served as a member of the OCCs
Executive Committee and the Committee on Bank Supervision. From 2004 to 2008, Mr. Brosnan served in executive management roles at MBNA and Bank of
America, including Enterprise Operational Risk Executive responsible for risk management of the Global Technology and Operations, Chief Administrative
Office, and Supplier Risk Management organizations of the bank. Mr. Brosnan previously served as Compliance Executive for Bank of America Card
Services, and he oversaw the Operational Risk Management Division of MBNA America. Prior to his tenure with MBNA and Bank of America, Mr. Brosnan spent
21 years with the OCC. In 2003, he was named Senior National Bank Examiner, the highest honor and designation available to bank
examiners.
Mr. Brosnan received a bachelor of science degree and an MBA from
Lynchburg College in Virginia. He also earned the Chartered Financial Analyst designation. Mr. Brosnan also serves as a director of CIT Bank,
N.A.
Qualifications: Mr. Brosnan
provides the Board with experience in executive management, finance, commercial banking, and enterprise risk management, key areas for certain of
CITs businesses. His experience as Examiner-In-Charge and Senior Deputy Comptroller at the OCC provides the Board with invaluable regulatory and
executive management experience.
- 9 -
|
|
Michael A. Carpenter
Age: 69 |
Other Public Directorships:
• Autobytel Inc. |
|
Board Committees:
• Compensation
• Risk Management |
Senior Leadership Positions:
• Chairman and Chief Executive Officer, Southgate
Holdings Inc.
• Director of CIT Bank, N.A.
|
|
Director Since:
May 2016 |
Prior Senior Leadership Positions:
• Chief Executive Officer of Ally Financial, Inc.
• Chairman and Chief Executive Officer of Citigroup Alternative
Investments
• Chairman and Chief Executive Officer of Citigroup Global
Corporate and Investment Bank
• Chief Executive Officer of Salomon Smith Barney Inc.
• Vice Chairman of Travelers Group Inc.
• Chairman, President and CEO of Kidder Peabody Group
Inc.
• Vice President and Director, Boston Consulting Group |
Mr. Carpenter served as Chief
Executive Officer of Ally Financial, Inc. from November 2009 to February 2014 and as a member of its Board of Directors from May 2009 to February 2014.
Mr. Carpenter previously served on the CIT Board in 2009, a position he left to become Chief Executive Officer of Ally Financial, Inc. In 2007, he
founded Southgate Alternative Investments. From 2002 to 2006, he was chairman and chief executive officer of Citigroup Alternative Investments
overseeing $60 billion of proprietary capital and customer funds globally. From 1998 to 2002, Mr. Carpenter was chairman and chief executive officer of
Citigroups Global Corporate & Investment Bank with responsibility for Salomon Smith Barney Inc. and Citibanks corporate banking
activities globally. Prior to Citigroup, he was chairman and CEO of Travelers Life & Annuity and vice chairman of Travelers Group Inc. From 1989 to
1994, he was chairman of the board, president, and CEO of Kidder Peabody Group Inc., a wholly owned subsidiary of General Electric Company. From 1986
to 1989, he was executive vice president of GE Capital Corporation and he joined GE in 1983 as vice president of Corporate Business Development and
Planning. Earlier in his career, Mr. Carpenter spent nine years as vice president and director of the Boston Consulting Group and three years with
Imperial Chemical Industries of the United Kingdom. Mr. Carpenter received a bachelor of science degree from the University of Nottingham, England, and
an MBA from Harvard Business School. He also holds an honorary degree of Doctor of Laws from the University of Nottingham. He serves on the boards of
Autobytel Inc., U.S. Retirement Partners, and the New York City Investment Fund. Mr. Carpenter has previously served as a board member of the New York
Stock Exchange, General Signal, Loews Cineplex, and various other private and public companies. Mr. Carpenter is also a director of CIT Bank,
N.A.
Qualifications: Mr. Carpenter
provides the Board with experience in executive management, finance, asset management and restructurings, expertise in capital markets and capital
management, key areas for certain of CITs businesses. His experience as Chief Executive Officer of major financial services companies provides
the Board with invaluable executive management experience.
- 10 -
|
|
Dorene C. Dominguez
Age: 54 |
Other Public Directorships:
• None |
|
Board Committees:
• Regulatory Compliance |
Senior Leadership Positions:
• Chairwoman and Chief Executive Officer, Vanir
Group of Companies, Inc.
• Director of CIT Bank, N.A. |
|
Director Since:
February 2017 |
Prior Senior Leadership Positions:
• Director, American River Bank |
Ms. Dominguez currently
serves as the Chairwoman and Chief Executive Officer of Vanir Group of Companies, Inc., and its subsidiaries Vanir Construction Management, Inc. and
Vanir Development Company, Inc. Having a national presence in program, project, and construction management services, Vanir Construction Management is
ranked #26 in revenue by Engineering News & Review. Ms. Dominguez is an active member of various community improvement projects, boards and
commissions, including chair of The Dominguez Dream, which serves elementary schools in underserved communities by providing academic enrichment
programs in math, science, language arts and engineering. She is a current member of the Latino Studies Board of Notre Dame University in South Bend
Indiana, Pride Industries Board of Directors, Coca-Cola Hispanic Advisory Council and Cal Chamber Board, and sits on the Board of the University of
Southern California, Lusk Center for Real Estate. Ms. Dominguez formerly served as a member of the American River Bank Board of Directors, the New
America Alliance and the National Council of La Raza. Ms. Dominguez graduated from the University of Notre Dame and holds a bachelors degree in
business finance. She also earned a Certificate for Corporate Governance from the Center for Business and Government, John F. Kennedy School of
Government, Harvard University. Ms. Dominguez is also a director of CIT Bank, N.A.
Qualifications: Ms. Dominguez
provides the Board with extensive experience in executive management, finance, asset management and corporate governance.
- 11 -
|
|
Alan Frank
Age: 65 |
Other Public Directorships:
• None |
|
Board Committees:
• Audit |
Senior Leadership Positions:
• Director of CIT Bank, N.A. |
|
Director Since:
August 2015 |
Prior Senior Leadership Positions:
• Director of OneWest Bank N.A.
• Partner of Deloitte & Touche LLP
• Director of IMB Holdco LLC |
Mr. Frank has served as a
director of CIT since August 2015 and as a director of OneWest Bank N.A. from 2014 to 2015. Mr. Frank spent 40 years with Deloitte & Touche LLP and
retired in December 2012. With Deloitte & Touche, he led audit service teams from 1983 to 2012 and he led the Southern California consumer business
and middle market audit practices from 1986 through 2010. Mr. Frank has significant experience with mergers and acquisitions, financial reporting
matters, initial public offerings, and high growth companies. Mr. Frank graduated from the University of Southern California with a Bachelor of Science
Degree.
Qualifications: Mr. Frank
provides the Board with over 40 years of experience in external audit matters as a partner of a nationally recognized accounting firm.
- 12 -
|
|
William M. Freeman
Age: 64 |
Other Public Directorships:
• None |
|
Board Committees:
• Nominating & Governance (Chair)
• Compensation |
Senior Leadership Positions:
• Executive Chairman of General Waters Inc.
• Director, Value Added Holdings, Inc.
• Board of Trustees of Drew University
• Chairman of Celadon Global Inc. |
|
Director Since:
July 2003 |
Prior Senior Leadership Positions:
• Director of TerreStar Corporation
• Chairman of the Board of Arbinet-thexchange, Inc.
• Chief Executive Officer and Director of Leap Wireless
International
• 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., (predecessor to
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 on the Board of Directors of Summit Bancorp from 1999 to 2002. 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., 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 CITs lending products.
- 13 -
|
|
R. Brad Oates
Age: 63 |
Other Public Directorships:
• None |
|
Board Committees:
• Compensation (Chair)
• Risk Management |
Senior Leadership Positions:
• Chairman and Managing Partner of Stone Advisors,
LP
• Director of CIT Bank, N.A. |
|
Director Since:
December 2009 |
Prior Senior Leadership Positions:
• Chairman of the Board of Directors of NFC Global,
LLC
• President and Chief Operating Officer of Bluebonnet
Savings Bank FSB
• 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 Stone Advisory Holdings, LLC and 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. Mr. Oates has been involved in the financial services industry for approximately 30 years, principally as a senior
executive officer and director, with a particular expertise in bank risk management.
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.
- 14 -
|
|
Marianne Miller Parrs
Age: 72 |
Other Public Directorships:
• Stanley Black & Decker, Inc.
• Signet Jewelers Limited |
|
Board Committees:
• Audit (Chair)
• Regulatory Compliance |
Senior Leadership Positions:
• Board Member, United Way of the Mid-South
• Board Member, Rise Foundation
• Board Member, New Memphis Institute
• Director of CIT Bank, N.A. |
|
Director Since:
January 2003 |
Prior Senior Leadership Positions:
• Executive Vice President and Chief Financial Officer
of International Paper Company |
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, on the Board of Rise Foundation in Memphis, Tennessee, on the board of the New Memphis
Institute, Memphis, on the Board of Directors and the Audit and Compensation Committee of Stanley Black & Decker, Inc., and on the Board of
Directors, the Audit Committee and 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.
- 15 -
|
|
Gerald Rosenfeld
Age: 70 |
Other Public Directorships:
• None |
|
Board Committees:
• Risk Management (Chair)
Director Since:
January 2010 |
Senior Leadership Positions:
• Strategic Advisor and Vice Chairman of U.S. Investment
Banking of Lazard Ltd.
• Director of Continental Grain Company
• Board of Trustees, City College of New York Foundation
• Trustee, New York University School of Law
• Director of CIT Bank, N.A. |
|
|
Prior Senior Leadership Positions:
• Deputy Chairman of Rothschild North America
• President of G Rosenfeld & Co LLC
• Head of Investment Banking and a member of the Management
Committee of Lazard Freres |
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 Universitys 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.
- 16 -
|
|
Vice Admiral John R. Ryan, USN (Ret.)
Age: 71 |
Other Public Directorships:
• Barnes & Noble Education, Inc. |
|
Board Committees:
• Nominating & Governance
• Regulatory Compliance |
Senior Leadership Positions:
• President and Chief Executive Officer of the Center
for Creative Leadership |
|
Director Since:
July 2003
Lead Director Since:
May 2008 |
Prior Senior Leadership Positions:
• Director of Cablevision Systems Corporation
• Chancellor of the State University of New York
• 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 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 Lead Director and member of the Compensation Committee and Chair of the Corporate Governance & Nominating Committee of
Barnes & Noble Education, Inc., and has previously served as a Director and member of the Audit Committee of Cablevision Systems
Corporation.
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 as Lead Director, of CIT enables him to provide the Board with valuable experience in overseeing CITs business and
providing leadership to the Board.
- 17 -
|
|
Sheila A. Stamps
Age: 59 |
Other Public Directorships:
• None |
|
Board Committees:
• Regulatory Compliance (Chair)
• Risk Management
Director Since:
February 2014 |
Senior Leadership Positions:
• Director of CIT Bank, N.A.
• Board of Directors, IES Abroad
• Commissioner, New York State Insurance Fund
• Faculty Member, National Association of Corporate Directors
Board Advisory Services |
|
|
Prior Senior Leadership Positions:
• Executive Vice President, Dreambuilder Investments,
LLC
• Director of Pension Investments and Cash Management
at the New York State Common Retirement Fund
• Managing Director, Bank of America Corporation (formerly
FleetBoston Financial Corporation)
• Managing Director & Head of European Asset-Backed
Securitization, Bank One Corporation (now, JPMorgan Chase & Co.) |
Ms. Stamps currently serves
as a Commissioner and Audit Committee Chair on the board of the New York State Insurance Fund, the largest workers 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 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 a Managing Director and Head of Relationship Management, Financial Institutions at Bank of
America (formerly FleetBoston Financial Corporation). From 1982 to 2003, she held a number of executive positions with Bank One Corporation (now,
JPMorgan Chase & Co.), including Managing Director and Head of European Asset-Backed Securitization and Managing Director and Senior Originator of
Asset-Backed Securitization. She holds an MBA 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 New York State Common Retirement Fund also enables her to provide the Board with an investor relations perspective and
experience serving as a fiduciary in a complex financial environment.
- 18 -
|
|
Laura S. Unger
Age: 56 |
Other Public Directorships:
• CA, Inc.
• Navient Corporation |
|
Board Committees:
• Audit
• Nominating & Governance |
Senior Leadership Positions:
• Director of CIT Bank, N.A. |
|
Director Since:
January 2010 |
Prior Senior Leadership Positions:
• Director of Ambac Financial Group Inc.
• Acting Chairperson, Securities and Exchange Commission
• Commissioner, Securities and Exchange Commission
• Counsel to the United States Senate Committee on Banking,
Housing and Urban Affairs
• 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 Childrens 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. Ms. Unger is also a director of CIT Bank, N.A.
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.
- 19 -
Retiring CIT Directors
At the time of our Annual Meeting, Peter J. Tobin, age 72, who
has served as a director since July 2002, and as CITs Interim Chief Executive Officer from January 19, 2010 through February 7, 2010, is retiring
from the Board and will not stand for re-election. We thank Mr. Tobin for his dedicated leadership and service to CIT.
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 |
Ellen Alemany |
Michael Brosnan |
Michael Carpenter |
Dorene Dominguez |
Alan Frank |
William Freeman |
R. Brad Oates |
Marianne Parrs |
Gerald Rosenfeld |
John Ryan |
Sheila Stamps |
Laura Unger |
Leadership / Business Management |
|
|
|
|
|
|
|
|
|
|
|
|
Accounting / Finance & Capital Allocation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor / Shareholder Perspective |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regional Expertise in Relevant Geographic Markets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 20 -
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 CITs 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 directors resignation and recommend
to our Board whether to accept or reject the resignation. Our Board will act on the Governance
Committees 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, within a specified period of time of becoming a director or senior executive
officer to own a minimum amount of CITs common stock and to retain such ownership
at all times thereafter 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, CITs 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 also maintains a non-partisan political action committee for our
employees to participate in the political process, which is funded entirely through voluntary contributions from eligible CIT
employees, and uses those funds to support candidates, political parties, and other political action committees that are
supportive of CITs public policy goals. |
|
|
|
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 Chairwoman. 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 one board of another
publicly traded company, while other directors may not serve on the boards of more than four other public companies.
Ö Hedging,
Margin Accounts and Pledged Securities. CITs directors and employees are
prohibited from entering into financial transactions to hedge their ownership interest
in CITs securities, holding CITs securities in a margin account, or otherwise
pledging CITs securities as collateral for a loan.
Ö Board and Board 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 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.
Ö Proxy
Access. CIT believes that it is appropriate for certain stockholders to be able
to use our proxy statement and proxy card to nominate one or more director candidates.
In 2016, we amended our By-Laws to generally allow stockholders owning 3% or more of
the Companys total voting stock for three years to use the Companys proxy
statement to nominate the greater of two or 20% of the director positions subject to
vote at an annual meeting. |
- 21 -
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 CITs Corporate Governance Guidelines and other governance policies on our website
at https://www.cit.com/about‑us/corporate‑governance/.
Information contained on the CIT website does not constitute part of this Proxy Statement.
Director Independence
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 directors 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.
In furtherance of our Boards 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 organizations 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
directors independence.
Based on the foregoing considerations, the Board has determined
that, except for Ms. Alemany, our Chairwoman and CEO, all of CITs 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.
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 CITs 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 persons 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
CITs 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 persons 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
- 22 -
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 CITs 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 arms length basis at a fair market value for the transaction.
There were no transactions reviewed by the Governance Committee
in 2016 under the Related Person Transactions Policy.
Appointment of Directors
Ten of CITs twelve nominees for director are standing for
re-election. Mr. Brosnan was appointed as a director in November 2016 and Ms. Dominguez was appointed as a director in February 2017. Both Mr. Brosnan
and Ms. Dominguez are standing for election as a director for the first time at the 2017 Annual Meeting. For more information, see Directors
Nominees.
Diversity of Directors
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 CITs 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 nominees election exceed the votes
cast against such nominees 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 Chairwoman 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 directors contributions to CIT and CITs
Corporate Governance Guidelines.
The Board will act on the recommendation of the Governance
Committee no later than 90 days following the date of the meeting of stockholders 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 Boards
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 Current Report on 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.
- 23 -
Board Leadership
Structure
Until March 31, 2016, the positions of Chief Executive Officer
and Chairman were held by one person, John A. Thain. Effective April 1, 2016, Ellen R. Alemany assumed the role of Chief Executive Officer and Mr.
Thain continued to serve as Chairman until the conclusion of the 2016 annual meeting of stockholders held on May 10, 2016, at which time Ms. Alemany
assumed the role of Chairwoman. Therefore, as of and since May 10, 2016, the positions of Chief Executive Officer and Chairwoman were held by one
person, Ellen R. Alemany. In deciding to continue CITs practice of combining the Chief Executive Officer and Chairwoman 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 Ms. Alemany will be able to use her in-depth knowledge and perspective gained from running CIT to effectively and efficiently guide our
Board. By being closely connected with both CITs senior level managers and the Board, Ms. Alemany is better able to appreciate and balance the
perspectives of both groups.
To establish a liaison between the non-management directors and
the Chairwoman and Chief Executive Officer and foster effective communication between them, the independent directors on CITs Board also appoint
a Lead Director who is independent of management. This position is currently held by Vice Admiral John R. Ryan, USN (Ret.). The Board has structured
the role of our independent Lead Director to strike an appropriate balance with the combined Chairwoman 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 Chairwoman
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 Chairwoman and the independent
directors. |
The Boards Role in Risk
Oversight
The Board believes that evaluating how CITs 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 Boards 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 CITs 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 CITs internal controls over
financial reporting. In addition, the Audit Committee is responsible for the oversight of, and receives regular reports regarding, CITs 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
CITs risk management functions and processes, including (a) reviewing and recommending to the Board an annual risk appetite statement, and
reviewing managements 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
Boards and/or the Risk Management Committees 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 CITs credit portfolio, (d) assessing, jointly with the Audit Committee, the adequacy of
CITs allowance for loan losses and managements methodology for determining such allowance, (e) receiving, jointly with the Compensation
Committee, managements assessment of the effectiveness of the design and operation of CITs incentive compensation programs, and (f)
overseeing CITs stress testing process. The Risk Management Committee also oversees CITs loan review function, information security
processes, business continuity planning, and the use of insurance to manage certain of CITs risks.
- 24 -
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.
Nominating & Governance
Committee
The duties of the 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 CITs
Political Contributions Policy and lobbying practices, and adopting prudent governance policies. For more information, see Corporate
Governance above for a list of significant corporate governance practices and policies.
Regulatory Compliance
Committee
The duties of the Regulatory Compliance Committee include
overseeing CITs relationships with its principal regulators and monitoring its compliance with and resolution of any significant issues or
matters identified by any banking regulatory authority.
Succession Planning
The Board is actively engaged and involved in talent management.
The Board reviews the Companys human resources strategy in support of its business strategy at least annually. This process includes a detailed
discussion of the Companys 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 CITs 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 CITs 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 CITs common stock. This minimum stock ownership must be maintained for as long as
both (a) such director remains on the Board and (b) CITs 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.
Board Committees
During 2016, 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 of the Audit Committee, the Compensation Committee and the Risk
Management Committees are currently comprised of four directors. The Governance Committee is currently comprised
of three directors and the Regulatory Compliance Committee is currently comprised of six 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://cit.com/about‑us/corporate‑governance/board‑of‑directors/.
- 25 -
Board Committee
Assignments
Director |
Audit
Committee |
Compensation
Committee |
Nominating
& Governance
Committee |
Risk
Management
Committee |
Regulatory
Compliance
Committee |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vice Admiral John R. Ryan, USN (Ret.) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Became a director in November 2016. |
(2) |
|
Became a director in February 2017. |
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 Committees 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. |
- 26 -
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.
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 the overall goals and
purposes of CITs 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 CITs and our CEOs performance relative to financial, strategic and other goals and objectives approved by the Board and the
value of compensation granted to the CEO 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 CITs 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 CITs reported earnings to
enhance the compensation of any of CITs employees; |
|
|
receiving and reviewing, jointly with the Risk Management
Committee, managements assessment of the effectiveness of the design and operation of CITs 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 CITs 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 CITs 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 2016, 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 Governances work for the Compensation Committee does not raise a conflict of interest.
Nominating & Governance
Committee
The Governance Committee oversees CITs 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; |
- 27 -
|
|
overseeing CITs Corporate Governance Guidelines and
related policies; |
|
|
overseeing the succession planning process for CITs Chief
Executive Officer, executive officers and senior managers; and |
|
|
reviewing disclosures in CITs annual proxy statement
regarding the Governance Committee and the director nominating process, as well as any stockholder proposals and statements in opposition. |
The 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 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 nominees qualifications to serve on the Board and the nominees 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 meeting of stockholders. 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 CITs
compliance with all significant bank regulatory matters, including:
|
|
overseeing and monitoring CITs significant bank regulatory
matters, including CITs 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 CITs risk management
functions and processes, which address many of the major risks inherent to CITs 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 managements risk appetite limits
report to confirm that CIT is operating within its risk appetite statement, overseeing CITs risk monitoring programs and processes, monitoring
the performance and quality of CITs credit portfolio, reviewing and assessing CITs risk grading methodology, confirming that sufficient and
appropriate resources are dedicated to risk management, overseeing CITs 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 CITs credit
policies and practices; |
|
|
reviewing and ensuring the adequacy of CITs business
continuity and disaster recovery plans, training programs, and threat analysis; |
|
|
reviewing and ensuring the adequacy of CITs information
security policies and technology risk management program; and |
|
|
reviewing CITs corporate insurance program at least
annually. |
Stockholder Communications with the
Board
Any person who has a concern about CITs governance,
corporate conduct, business ethics or financial practices may communicate that concern to the non-management directors. In addition, CITs
stockholders may communicate with the Board regarding any topic of current relevance to CITs 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 CITs
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
- 28 -
which CIT has operations, individuals may call the toll free
numbers listed in our Code of Business Conduct, which is available on our website at https://www.cit.com/about-us/corporate-governance/. These concerns can be reported confidentially or anonymously.
Concerns and issues communicated to the Board will be addressed through CITs regular procedures:
|
|
depending on the nature of the concern or issue, your
communication may be referred to CITs Chief Auditor, General Counsel, Chief Human Resources Officer or other appropriate executive for
processing, investigation, and follow-up action; |
|
|
concerns relating to CITs accounting, internal accounting
controls or auditing matters will be referred to the Audit Committee; and |
|
|
other concerns may be referred to either CITs Lead
Director or to one or more non-management members or Board Committee. |
CITs 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.
Legal Proceedings
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 CITs 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.
|
|
Even where legally permitted, CITs policy is to not 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 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 General Counsel must approve any
lobbying activities by employees or the use of company funds for lobbying. |
|
|
CITs 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 CITs public policy goals. |
|
|
CITs 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
CITs directors and employees are prohibited from entering
into financial transactions to hedge their ownership interest in CITs securities, including trading in publicly traded options, puts, calls,
collars or other derivative instruments related to CITs stock or debt. CITs directors and employees are also prohibited from holding
CITs securities in a margin account or otherwise pledging CIT securities as collateral for a loan.
- 29 -
The Governance Committee recommends to the Board the compensation
and benefits for CITs 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.
CITs director compensation plan (the Director
Compensation Plan) 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. During 2016, CIT amended its Director Compensation Plan to increase the
annual retainer payable to independent directors from $60,000 to $85,000, as described below under the heading Annual Cash
Retainer.
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
directors 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
|
|
|
|
|
$ |
85,000 |
|
|
$ |
85,000 |
|
|
|
|
|
$ |
105,000 to
$155,000 |
|
|
$ |
95,000 |
|
|
|
|
|
$ |
190,000 to
$240,000 |
|
|
$ |
180,000 |
|
(1) |
|
CITs Director Compensation Plan provides for supplemental
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, Special Compliance, or Governance Committee Chair, $25,000 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 $85,000 (increased from $60,000 during
2016), 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
CIT Group directors who also serve on the Board of Directors of
CIT Bank (the CIT Bank Board) receive $1,000 for each meeting of the CIT Bank Board in which they participate in person, and $500 for each
meeting of the CIT Bank Board in which they participate by telephone. Such fees are payable quarterly in arrears, in cash. No additional fees are paid
for attendance at Board or Board Committee meetings.
- 30 -
Out-of-Pocket Expenses
Directors are reimbursed for reasonable out-of-pocket expenses
incurred in attending Board or Board Committee meetings and functions and for continuing education related to serving as a director of
CIT.
2016 DIRECTOR COMPENSATION TABLE
Name
|
|
Fees Earned or Paid in Cash (6) ($)
|
|
Stock Awards (7)(8) ($)
|
|
All Other Compensation (9) ($)
|
|
Total ($)
|
|
(a) |
|
(b) |
|
(c) |
|
(g) |
|
(h) |
|
Ellen R. Alemany (1) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Michael L. Brosnan |
|
$ |
42,500 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
42,500 |
|
Michael A. Carpenter |
|
$ |
88,000 |
|
|
$ |
205,000 |
|
|
$ |
|
|
|
$ |
293,000 |
|
Dorene C. Dominguez |
|
$ |
n/a |
|
|
$ |
n/a |
|
|
$ |
n/a |
|
|
$ |
n/a |
|
Michael J. Embler (2) |
|
$ |
4,500 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
4,500 |
|
Alan L. Frank |
|
$ |
95,500 |
|
|
$ |
95,000 |
|
|
$ |
|
|
|
$ |
190,500 |
|
William M. Freeman |
|
$ |
85,000 |
|
|
$ |
120,000 |
|
|
$ |
|
|
|
$ |
205,000 |
|
David M. Moffett (2) |
|
$ |
4,000 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
4,000 |
|
Marianne Miller Parrs |
|
$ |
94,500 |
|
|
$ |
130,000 |
|
|
$ |
|
|
|
$ |
224,500 |
|
Steven T. Mnuchin (3) |
|
$ |
|
|
|
$ |
|
|
|
$ |
11,235,080 |
|
|
$ |
11,235,080 |
|
R. Brad Oates |
|
$ |
95,500 |
|
|
$ |
120,000 |
|
|
$ |
|
|
|
$ |
215,500 |
|
John J. Oros (4) |
|
$ |
88,000 |
|
|
$ |
205,000 |
|
|
$ |
|
|
|
$ |
293,000 |
|
Gerald Rosenfeld |
|
$ |
95,000 |
|
|
$ |
110,000 |
|
|
$ |
|
|
|
$ |
205,000 |
|
Vice Admiral John R. Ryan |
|
$ |
85,000 |
|
|
$ |
130,000 |
|
|
$ |
|
|
|
$ |
215,000 |
|
Sheila A. Stamps |
|
$ |
95,500 |
|
|
$ |
135,000 |
|
|
$ |
|
|
|
$ |
230,500 |
|
Seymour Sternberg (2) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
John A. Thain (5) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Peter J. Tobin |
|
$ |
85,000 |
|
|
$ |
105,000 |
|
|
$ |
|
|
|
$ |
190,000 |
|
Laura S. Unger |
|
$ |
87,000 |
|
|
$ |
110,000 |
|
|
$ |
|
|
|
$ |
197,000 |
|
(1) |
|
Ms. Alemanys compensation for 2016 was based solely on her
role as Vice Chairman of CIT and CEO and President of CIT Bank, and subsequently CEO of CIT, during 2016, as disclosed in the Summary
Compensation Table and discussed in the Compensation Discussion and Analysis section in this Proxy Statement. |
(2) |
|
Messrs. Embler, Moffett and Sternberg received retainer payments
during 2015 that covered their services through their retirement from the Board in May 2016. |
(3) |
|
Mr. Mnuchins compensation during 2016 was based on his
role as Vice Chairman of CIT and continued employment through March 31, 2016. |
(4) |
|
Mr. Oros resigned as a director, effective November 9, 2016, due
to the demands and requirements of his position with J.C. Flowers & Co. The value of the RSU awards granted to Mr. Oros in May 2016 upon his
joining the Board are reported in the Stock Awards column in accordance with SEC disclosure rules. These awards were cancelled without any
value upon Mr. Oros resignation from the Board. |
(5) |
|
Mr. Thains compensation during 2016 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. |
(6) |
|
During 2016, non-employee directors received an annual retainer
of $85,000, which was payable in cash or converted to a number of RSUs at each directors election. Mr. Brosnan received a prorated retainer based
on when he became a director during 2016. The grant date fair value of RSUs received at each directors 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 non-employee
directors, other than Mr. Rosenfeld who elected to receive 100% of his retainer as RSUs, received their retainers as cash. Mr. Rosenfelds 2016
retainer 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 Mr.
Rosenfelds election, are as follows: Mr. Rosenfeld, 900 RSUs granted on 5/10/16 ($30,000) and 1,524 granted on 10/26/16 ($55,000). |
- 31 -
|
|
The amounts shown for each non-employee director include meeting
fees received during 2016, as set forth in the table below: |
|
|
|
|
Meeting Fees
|
|
Messrs. Frank and Oates and Ms. Stamps |
|
|
|
$ |
10,500 |
|
Mr. Rosenfeld |
|
|
|
$ |
10,000 |
|
Ms. Miller Parrs |
|
|
|
$ |
9,500 |
|
Mr. Embler |
|
|
|
$ |
4,500 |
|
Mr. Moffett |
|
|
|
$ |
4,000 |
|
Messrs. Carpenter and Oros |
|
|
|
$ |
3,000 |
|
Ms. Unger |
|
|
|
$ |
2,000 |
|
(7) |
|
Represents the aggregate grant date fair value of RSUs granted
during 2016 for each non-employee director, other than for RSUs granted as part of the annual retainer and described in footnote 5 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 718 based on the
closing price of CIT common stock on the date of grant. The number of RSUs granted during 2016 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 non-employee director are as follows: |
|
|
|
|
Grant Date
|
|
# RSUs
|
|
Grant Date Fair Value
|
|
Messrs. Carpenter and Oros |
|
|
|
5/10/16 |
|
3,148 |
|
$ |
105,000 |
|
|
|
|
|
5/10/16 |
|
2,999 |
|
$ |
100,000 |
|
Mr. Frank |
|
|
|
5/10/16 |
|
2,849 |
|
$ |
95,000 |
|
Ms. Miller Parrs and Vice Admiral Ryan |
|
|
|
5/10/16 |
|
3,898 |
|
$ |
130,000 |
|
Messrs. Freeman and Oates |
|
|
|
5/10/16 |
|
3,598 |
|
$ |
120,000 |
|
Mr. Rosenfeld |
|
|
|
5/10/16 |
|
3,298 |
|
$ |
110,000 |
|
Ms. Stamps |
|
|
|
2/3/16 |
|
552 |
|
$ |
15,000 |
|
|
|
|
|
5/10/16 |
|
3,598 |
|
$ |
120,000 |
|
Mr. Tobin |
|
|
|
5/10/16 |
|
3,148 |
|
$ |
105,000 |
|
|
|
|
|
5/10/16 |
|
3,148 |
|
$ |
105,000 |
|
Ms. Unger |
|
|
|
5/24/16 |
|
150 |
|
$ |
5,000 |
|
|
|
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 the initial grants for Messrs. Carpenter and Oros which are scheduled to
settle 100% in shares. |
(8) |
|
The following table sets forth the aggregate number of
equity-based awards to each non-employee director outstanding at December 31, 2016: |
|
|
|
|
Stock Options
|
|
RSUs
|
|
Mr. Carpenter |
|
|
|
|
|
6,147 |
|
Mr. Embler |
|
|
|
|
|
|
|
Mr. Frank |
|
|
|
|
|
5,274 |
|
Mr. Freeman |
|
|
|
|
|
8,598 |
|
Ms. Miller Parrs |
|
|
|
|
|
6,803 |
|
Mr. Moffett |
|
|
|
|
|
|
|
Mr. Oates |
|
|
|
|
|
7,873 |
|
Mr. Oros |
|
|
|
|
|
|
|
Mr. Rosenfeld |
|
|
|
1,757 |
|
18,834 |
|
Mr. Ryan |
|
|
|
|
|
14,149 |
|
Ms. Stamps |
|
|
|
|
|
7,377 |
|
Mr. Sternberg |
|
|
|
310 |
|
|
|
Mr. Tobin |
|
|
|
4,902 |
|
17,469 |
|
Ms. Unger |
|
|
|
|
|
14,339 |
|
|
|
The use of stock options was discontinued in April 2010, and
RSUs were the only form of equity-based awards granted to directors during 2016. The number of RSUs that are vested as of December 31, 2016, but
deferred at the election of the directors, included in the number of RSUs outstanding presented above, are as follows: Mr. Carpenter 3,148; Mr.
Freeman 2,654; Mr. Oates 2,152; Mr. Rosenfeld 16,411; Mr. Ryan 8,375; Mr. Tobin 17,469; Ms. Unger 14,339;
Mses. Stamps and Miller Parrs, and Messrs. Embler, Frank, Moffett and Sternberg 0 (none). |
- 32 -
(9) |
|
Pursuant to the Agreement and Plan of Merger entered into on
July 21, 2014, as amended, by and among CIT, IMB HoldCo LLC, Carbon Merger Sub LLC, a wholly owned subsidiary of CIT and JCF III HoldCo I L.P., in its
capacity as the holders representative, CIT entered into a retention letter agreement with Mr. Mnuchin, which provided for a total target annual
compensation opportunity in the amount of $4.5 million for each of 2015, 2016 and 2017 (including base salary at an annual rate of $800,000, short-term
incentive of $1.4 million and long-term incentive of $2.3 million). Pursuant to Mr. Mnuchins employment agreement, in the event of the
termination of his employment without cause or for good reason prior to the third anniversary of the closing of the acquisition, subject to the
execution of a release of claims, Mr. Mnuchin would be entitled to a lump sum severance payment approximately equal to the remaining total target
annual compensation opportunity, plus 102% of COBRA medical premiums, for the three-year period following the closing of the acquisition, or such
greater amount as would be payable to senior executives under CITs Employee Severance Plan. Mr. Mnuchins employment was terminated
effective March 31, 2016. |
|
|
The amount shown in the All Other Compensation column above
includes: (1) $200,000 of base salary earned for service to CIT through March 31, 2016; (2) $10,906,654, representing the severance payment described
above; (3) $107,692 of accumulated, unused vacation entitlement; (4) $10,000 representing accumulated, unused personal time entitlement; and (5)
$10,600 and $134 representing matching employer contributions under the CIT Group Inc., Savings Incentive Plan, and company-paid life insurance
premiums, respectively, which are described more fully in footnote 7 of the Summary Compensation Table. Mr. Mnuchin did not receive any short-term or
long-term incentive awards for the 2016 performance year. |
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, 2016, based upon
reports on Schedule 13G filed with the SEC on or before February 14, 2017.
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 333 South Hope Street Los Angeles, CA 90071 |
|
|
|
|
|
|
|
|
|
First Pacific Advisors, LLC On behalf of itself and FPA Funds Trust FPA Crescent Fund, J. Richard Atwood and Steven T.
Romick 11601 Wilshire Blvd., Suite 1200 Los Angeles, CA 90025 |
|
|
|
|
|
|
|
|
|
Franklin Mutual Advisers, LLC 101 John F. Kennedy Parkway Short Hills, NJ 07078-2789 |
|
|
|
|
|
|
|
|
|
FMR LLC 245 Summer Street Boston, MA 02210 |
|
|
|
|
|
|
|
|
|
BlackRock, Inc. 55 East 52nd Street New York, NY 10055 |
|
|
|
|
(1) |
|
The Vanguard Group reports sole voting power over 171,253
shares, shared power to vote over 31,542 shares, sole dispositive power over 15,286,322 shares and shared dispositive power over 199,369
shares. |
(2) |
|
Capital Research Global Investors reports on behalf of itself
sole voting power over 15,243,600 shares and sole dispositive power over 15,243,600 shares. |
- 33 -
(3) |
|
First Pacific Advisors, LLC reports shared voting power over
2,417,058 shares and shared dispositive power over 13,642,498 shares (including, on behalf of FPA Funds Trust FPA Crescent Fund, sole voting
power over 11,225,440 shares and shared dispositive power over 11,225,440 shares; on behalf of J. Richard Atwood, shared voting power over 2,417,058
shares and shared dispositive power over 13,642,498; and on behalf of Steven T. Romick, shared voting power over 2,417,058 shares and shared
dispositive power over 13,642,498 shares). |
(4) |
|
Franklin Mutual Advisers, LLC reports sole power to vote or
direct the vote over 13,516,439 shares and sole power to dispose or direct the disposition of 13,516,439 shares. |
(5) |
|
FMR LLC reports sole power to vote or direct the vote over
972,347 shares and sole power to dispose or direct the disposition of 11,807,349 shares. |
(6) |
|
BlackRock, Inc. reports sole voting power over 10,105,444 shares
and sole dispositive power over 11,517,335 shares. |
Security Ownership of Directors and Executive
Officers
The table below shows, as of February 28, 2017, 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)(6)
|
|
Percentage of Class
|
|
John A. Thain (7) |
|
|
|
|
541,503 |
|
|
|
* |
|
|
Ellen R. Alemany (7) |
|
|
|
|
38,259 |
|
|
|
* |
|
|
Michael L. Brosnan |
|
|
|
|
0 |
|
|
|
* |
|
|
Michael A. Carpenter |
|
|
|
|
0 |
|
|
|
* |
|
|
Dorene C. Dominguez |
|
|
|
|
100 |
|
|
|
* |
|
|
Alan L. Frank (7) |
|
|
|
|
14,608 |
|
|
|
* |
|
|
William M. Freeman |
|
|
|
|
6,929 |
|
|
|
* |
|
|
R. Brad Oates |
|
|
|
|
6,131 |
|
|
|
* |
|
|
Marianne Miller Parrs |
|
|
|
|
10,075 |
|
|
|
* |
|
|
Gerald Rosenfeld |
|
|
|
|
12,399 |
|
|
|
* |
|
|
John R. Ryan |
|
|
|
|
6,701 |
|
|
|
* |
|
|
Sheila A. Stamps |
|
|
|
|
3,960 |
|
|
|
* |
|
|
Peter J. Tobin |
|
|
|
|
4,539 |
|
|
|
* |
|
|
Laura S. Unger |
|
|
|
|
5,677 |
|
|
|
* |
|
|
John Erickson |
|
|
|
|
0 |
|
|
|
* |
|
|
E. Carol Hayles |
|
|
|
|
41,845 |
|
|
|
* |
|
|
C. Jeffrey Knittel |
|
|
|
|
116,673 |
|
|
|
* |
|
|
Denise M. Menelly |
|
|
|
|
0 |
|
|
|
* |
|
|
All Directors and Executive Officers as a group (28 persons) |
|
|
|
|
957,374 |
|
|
|
* |
% |
|
* |
|
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 259,162, Ms. Alemany 19,260, Ms. Dominguez 100, Mr. Frank 960, Mr. Freeman 4,617, Mr.
Oates 1,243, Ms. Parrs 7,672, Mr. Rosenfeld 7,806, Mr. Ryan 4,711, Ms. Stamps 3,957, Mr. Tobin 1,360, Ms.
Unger 2,698, Ms. Hayles 40,825, Mr. Knittel 98,659 and 137,715 to all other executive officers as a group. |
(2) |
|
Includes Performance Share Units 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 65,206, Ms. Hayles 1,020, Mr.
Knittel 18,013 and 7,693 to all other executive officers as a group. |
(3) |
|
Includes shares of CIT common stock issued pursuant to the
exercise of vested stock options awarded under our equity compensation plan, net of shares withheld to cover the option cost in the following amounts:
Mr. Freeman 792, Mr. Oates 2,387, Ms. Parrs 883, Mr. Ryan 789, Mr. Rosenfeld 537, Mr. Tobin 1,180, and Ms.
Unger 1,040. |
(4) |
|
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 February 28, 2017, in the following
amounts: Mr. Rosenfeld 824. |
(5) |
|
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: Ms.
Alemany 111,701, Mr. Brosnan 3,744, Mr. Carpenter2,998, Mr. Frank 1,416, Mr. Rosenfeld 2,423, Ms. Stamps 368,
Ms. Hayles 23,189, Mr. Knittel 47,825, Ms. Menelly 47,892, and 182,737 to all other executive officers as a group. |
- 34 -
(6) |
|
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 2,345 (all of which Ms. Alemany elected to settle 100% in stock), Mr. Carpenter3,148, Mr. Frank
3,857, Mr. Freeman 8,597 (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. Oates 7,873 (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), Ms. Parrs 6,803, Mr. Rosenfeld 16,411 (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 14,148 (8,375 of which Mr. Ryan elected to
settle 100% in stock and to defer settlement until he is no longer a member of the Board), Ms. Stamps 5,944 (1,512 of which Ms. Stamps elected
to settle 100% in stock), Mr. Tobin 17,469 (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 14,339 (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). |
(7) |
|
Includes shares of CIT common stock held in various trusts for
which the director or officer has disclaimed beneficial ownership, in the following amounts: Ms. Alemany 36,311, Mr. Thain 57,135, and
Mr. Frank 9,097. |
The following table sets forth certain information, as of
February 22, 2016, regarding CITs executive officers. The executive officers were appointed by and hold office at the discretion of the Board. No
family relationship exists among CITs executive officers or with any director. The executive officers, like all directors and employees, are
subject to CITs 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 |
|
|
Chairwoman and Chief Executive Officer of CIT and CEO and President of CIT Bank, N.A. |
|
|
Executive Vice President, General Counsel and Secretary |
|
|
|
|
|
Executive Vice President and Chief Human Resources Officer |
|
|
President, Real Estate Finance |
|
|
Executive Vice President and Chief Financial Officer |
|
|
President, Commercial Finance |
|
|
President, Transportation Finance |
|
|
Executive Vice President and Head of Technology and Operations |
|
|
Executive Vice President and Chief Strategy Officer |
|
|
Executive Vice President and Chief Marketing and Communications Officer |
|
|
Executive Vice President and Chief Risk Officer |
|
|
President of Consumer Banking, President, California and President, Business Capital |
|
|
Executive Vice President & Corporate Controller |
(1) |
|
See Directors Nominees in this Proxy
Statement for Ms. Alemanys biographical information. |
Stuart Alderoty has served as Executive Vice President and
General Counsel and Secretary since October 2016. He is the Chief Legal Officer, responsible for overseeing all legal, corporate governance and
insurance risk management matters for CIT and its operating groups. Mr. Alderoty joined CIT from HSBC North America Holdings, Inc., where he served as
General Counsel for six years. Prior to joining HSBC, Mr. Alderoty was Managing Counsel at American Express, and before that he was a partner with the
law firm of LeBouef, Lamb, Green and MacRae, specializing in litigation. Mr. Alderoty serves on the board and executive committee of the Minority
Corporate Counsel Association, a not-for-profit association that advocates for the expanded hiring, retention and promotion of minority attorneys in
corporate law departments and the law firms that serve them. He also serves on the board and executive committee of the Count Basie Theatre, a
not-for-profit community arts center in Red Bank, New Jersey. Mr. Alderoty is also a member of the advisory committee of the Corporate Law Center at
Rutgers University Law School. Mr. Alderoty has a BA from Rutgers University and a JD from Rutgers University Law School
Newark.
- 35 -
George D. Cashman has served as President of CIT Rail
since August 2006. He joined CIT in January 2000 as Senior Vice President and was promoted to Executive Vice President in July 2001. He was
subsequently promoted to his current position in August 2006. His areas of expertise include rail and shipping industry trends and railcar types and
leasing. Prior to joining CIT, he was Senior Vice President of PSE&G Energy Services, responsible for developing a captive finance company for this
unregulated energy services subsidiary of PSE&G. Before PSE&G, Mr. Cashman was President and Co-Founder of Glenshaw Capital, an investment
advisory company. He spent the majority of his career with Westinghouse Financial Services, where he served in a variety of management positions,
including most recently as Executive Vice President and Group Manager Major Industries Finance. In this role, he developed industry verticals in
the Transportation, Energy and Media markets. Prior to joining Westinghouse in 1984, Mr. Cashman held a number of positions with GTE Corporation,
including co-founding its captive finance company. He received a BS degree in Finance and Economics from Susquehanna University and an MBA from the
College of William and Mary.
James J. Duffy has served as Executive Vice President and
Chief Human Resources Officer at CIT since August 2016. He is responsible for overseeing the human resources function, including the development and
implementation of the companys global employee talent programs, employment policies, compensation and benefits. Mr. Duffy was previously Chief
Human Resources Officer at Ally Financial Inc., where he was responsible for HR, including compensation, staffing, leadership development, talent
management, and acquisition, employee relations and organizational development. Prior to Ally, Mr. Duffy was the chief human resources officer at CIT.
Prior to joining CIT in 2006, he served as Senior Vice President of Human Resources for Citigroups Global Consumer Group, a $13 billion business
offering a full range of consumer products with more than 200,000 employees in 50 countries. Before joining Citigroup, Mr. Duffy held senior HR
positions at other major banking and manufacturing companies, including AlliedSignal, Ingersoll-Rand, Bankers Trust and GE. Mr. Duffy earned a BS in
Industrial and Labor Relations from Cornell University.
Matthew Galligan has served as President of Real Estate
Finance since December 2015. Prior to that, Mr. Galligan was Executive Vice President of Real Estate Finance since November 2011. Previously, Mr.
Galligan served as Managing Director and Head of U.S. Property Finance for Bank of Ireland where, under his leadership, his team negotiated and closed
more than 30 transactions totaling $2 billion. Before joining Bank of Ireland, he served as Executive Vice President for Real Estate Capital Markets at
DebtX. He has also worked for Fleet Boston Financial, Bank of Boston and Chase Manhattan in executive level positions in credit, real estate lending,
debt distribution and capital markets. Mr. Galligan sits on the Commercial Real Estate Board of Governors for the Mortgage Bankers Association. Mr.
Galligan received a BA in Economics/Accounting from the College of the Holy Cross and an MBA in Finance from the New York University Graduate School of
Business Administration.
E. Carol Hayles has served as Executive Vice President and
Chief Financial Officer since November 2015. Prior to that, she was Executive Vice President and Corporate Controller since July 2010. Prior to that,
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 that, she held various leadership positions at Citigroup, including Senior Analyst in Investor Relations, Chief Financial
Officer of Citibanks e-Business, CFO of Citigroups Global Relationship Bank and CFO of Citibank Canada. Ms. Hayles began her career at
PricewaterhouseCoopers LLP in Toronto, Canada. Ms. Hayles received her BBA from York University.
James L. Hudak has served as President of CIT Commercial
Finance since December 2015. Prior to that, he served as President and Co-Head of Corporate Finance since October 2008. Previously, Mr. Hudak was
President of CITs Communications, Media and Entertainment business since 2001. In 1994, he co-founded the Telecom Financing Group at AT&T
Capital, a predecessor of CIT. Mr. Hudak originally joined AT&T Capital in 1991 in its Capital Markets Division, focusing on large project
financings and leveraged leases. He started his career at Philadelphia National Bank, completing a formal bank training program and initially
concentrated on commercial real estate projects, and thereafter had roles at both Merrill Lynch and Citibank, where he worked in the Leveraged Finance
division. Mr. Hudak received a BA from Bucknell University and an MBA from Cornell University. He is a former officer in the U.S. Army and Army
Reserves.
C. Jeffrey Knittel has served as President of
Transportation 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. Mr. Knittel received a BS in Aviation Management from Embry-Riddle Aeronautical University. He also attended the University of
Pennsylvanias Wharton School of Business Advanced Management Program.
Denise M. Menelly has served as Executive Vice President
and Head of Technology and Operations since June 2016. Previously, Ms. Menelly spent six years with Bank of America Merrill Lynch, most recently as
Head of Enterprise Shared Services, where she managed and transformed functions shared by the banks corporate, commercial and consumer business
lines. She joined Bank of America in 2010 as the chief operating officer for Corporate Banking and then became the global head of Commercial and
Corporate Bank Operations, managing functions in more than 28 countries. Prior to joining Bank of America, Ms. Menelly served as the head of operations
for RBS Citizens and vice chairman of Citizens Bank. In these roles her responsibilities included the U.S.-based banking operations for Consumer
Banking, Commercial Banking and Global Transaction Services. From 1996 to 2008, Ms. Menelly worked
- 36 -
at Citigroup, implementing technology and process changes
while increasing her responsibilities in various Operations and Technology roles. These included Global Head of Securities & Fund Services (SFS)
Operations and Client Delivery, Head of Operations for the Commercial Business Group, Head of CitiCapital Operations, Head of Global Transaction
Services Client Delivery and Head of Domestic Cash Management Operations. Ms. Menelly began her career with Bankers Trust Company in 1983 and spent the
next 13 years managing various operations and technology functions. When she left in 1996, she was the director of Operations and the head of Global
Treasury and Trade Operations. Ms. Menelly holds a BS from Manhattan College.
Kelley Morrell has served as Executive Vice President and
Chief Strategy Officer since December 2015. She is responsible for leading the evaluation and execution of a wide range of strategic initiatives,
including large-scale strategic mergers and acquisitions, as well as partnering with senior leaders across the organization to develop the
Companys strategy and execute its strategic priorities. Prior to joining CIT, Ms. Morrell served as a Senior Director of the U.S. Treasurys
Automotive Industry Financing Program, the Federal governments $81 billion portfolio of investments in the American automotive industry, which
originated during the 2008 Financial Crisis. She oversaw the Governments investments in Chrysler Financial, and in Chrysler Group following its
emergence from bankruptcy, and through its restructuring and successful exit from government ownership. Ms. Morrell also led the development of
strategic alternatives for Ally Financial, and was part of the team that executed the initial public offering of General Motors after its emergence
from bankruptcy. Previously, Ms. Morrell was an investment professional at Hellman & Friedman, the San Francisco-based private equity firm. She
began her career as an investment banker at Goldman Sachs in its Financial Institutions Group. Ms. Morrell graduated magna cum laude from Harvard
College and received her MBA with distinction from Harvard Business School.
Gina M. Proia has served as Executive Vice President and
Chief Marketing and Communications Officer since December 2016. She is responsible for overseeing the companys branding, marketing, advertising,
communications and corporate citizenship strategies as well as ensuring they support CITs strategic priorities. She is also responsible for
advancing strategies and programs to help promote a corporate culture that aligns employees with CITs business goals, facilitates sustained
growth, and complies with regulatory requirements. Ms. Proia joins CIT following 10 years at Ally Financial, where she served most recently as Chief
Communications Officer. She has served as a board member of Jump$tart Coalition, a national nonprofit organization advancing financial education for
young people. She is also a member of the Arthur W. Page Society. In 2010, Ms. Proia was recognized on PR Weeks 40 Under 40 List, and in 2015 she
received the Aiming High Award from Legal Momentum, the Womens Legal Defense and Education Fund, which recognizes the accomplishments of women in
business. Prior to joining Ally, Ms. Proia held various positions at General Motors in the areas of financial communications, marketing communications,
and product publicity.
Robert C. Rowe has served as Executive Vice President and
Chief Risk Officer since December 2015. He is responsible for overseeing the transaction approval process across CIT operating segments, setting credit
policy and overseeing the Companys workout/special assets function. He is also responsible for ensuring the regular review, adherence to and
effective communication of credit policy and procedures across all levels of CIT. Mr. Rowe previously served as Executive Vice President and Chief
Credit Officer of CIT since June 2010. Prior to that, Mr. Rowe served as Senior Credit Officer Commercial Banking of FirstMerit Bank until May
2010. Prior to that, Mr. Rowe also served as Chief Credit Officer of National City Bank after spending 20 years in various roles of increasing
responsibility in its Corporate Banking and Credit departments. While at National City, he also served as Division Head of the Equity Sponsor Group and
had transaction approval responsibility for various segments that included Leveraged Finance and Asset-Based Lending. Before National City, Mr. Rowe
served as Account Officer and Assistant Treasurer of Irving Trust (now Bank of New York Mellon). He received a BA degree in Economics from Boston
College and an MBA in Finance from Indiana University.
Steven Solk has served as President of CIT Business
Capital since December 2015 and as President of Consumer Banking and, President, California since November 2016. He is responsible for CITs
Direct Capital, Capital Equipment Finance, Equipment Finance, Lender Finance, Consumer Banking and Commercial Services businesses. Previously, Mr. Solk
was an Executive Vice President of Commercial Finance at RBS Citizens Bank and a member of Citizens Executive Leadership Group. In this role, he
was responsible for executing growth strategies for four commercial banking specialty businesses, which included Franchise Finance, Business Capital,
Asset Finance and Commercial Real Estate. Prior to RBS, Mr. Solk served in several executive roles in the financial sector, including more than 20
years at Citigroup. At Citigroup, he managed multiple lending and leasing specialty businesses and attained leading market positions in core target
markets. Mr. Solk began his career at Bank of America, where he underwrote and managed corporate relationships. Mr. Solk earned a BA in Finance from
Arizona State University.
Edward K. Sperling has served as Executive Vice President
and Corporate Controller since November 2015. Prior to being named to this position, Mr. Sperling was Senior Vice President and Deputy Controller since
2011. Mr. Sperling has held numerous leadership roles at CIT in Corporate Accounting, Internal Audit, Credit, Financial Planning and Analysis, Investor
Relations, Technology and Treasury. Mr. Sperling holds a BS in Accounting from Rutgers University and an MBA in Finance from Seton Hall
University.
- 37 -
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended
(Exchange Act), requires CITs directors, certain officers and persons who own more than 10% of a registered class of
CITs 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.
Mr. Rosenfeld filed one late Form 4 in 2016 with respect to one
transaction regarding the acquisition of CIT common stock pursuant to a grant of RSUs vesting in 2017. This late filing resulted from an administrative
error by CIT. 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 other Section 16(a) filing requirements were timely met during 2016.
- 38 -
COMPENSATION DISCUSSION AND ANALYSIS1
This Compensation Discussion and Analysis (CD&A)
describes our executive compensation program for 2016, how our compensation decisions align with our 2016 financial2 and strategic achievements and the changes we are making to our 2017 program as a result of stakeholder feedback and
to further align with our 2017 strategic initiatives. This Compensation Discussion & Analysis is divided into five sections:
n |
|
2016 Performance and Strategic Highlights |
n |
|
2016 and 2017 Program Evolution |
2016
Compensation Program Highlights |
|
At the end of the first quarter of 2016, we announced the results of our comprehensive strategic review and our vision for creating a leading
national bank for specialty lending to the middle market and small businesses. Our 2016 executive compensation programs were designed around achieving
this vision and leading market practices, as follows:
n Compensation structures
for new leaders and new peer group both aligned with focused business mix and asset size
n Short-term Incentive (STI) for our CEO 50% based on quantitative financial factors, 30% directly based on
achievement of key strategic objectives (including successful separation of CIT Commercial Air) and 20% based on other qualitative factors; for our
other NEOs, at least 50% of STI is based on quantitative financial factors with the remainder based on key strategic objectives and other qualitative
factors
n Long-term Incentive (LTI) 100% performance-based, half of
which is in the form of performance share units based on 3-year average adjusted after-tax ROATCE (PSUs-ROATCE) aligned with achieving our
10% target in 2018; the other 50% in performance-based RSUs (PBRSUs) with minimum Common Equity Tier 1 performance hurdle
n All long-term incentives subject to clawbacks that extend post-vesting
n All change-of-control benefits are double-trigger
n Robust equity holding requirements and prohibition on hedging |
|
|
|
|
|
2017
Compensation Program Changes |
|
Our executive compensation program has been continually adjusted and refined to reflect each next step of our business evolution. Accordingly, and
in direct response to shareholder feedback, for 2017 we will:
n 2017 STI:
Keep our rigorous scorecard approach but increase the weighting of quantitative financial factors to 70% for our CEO and other business segment heads
while simplifying the goal structure
n 2017 LTI: Add a factor based on
relative total shareholder return (TSR) to our performance share units, which will continue to be based on 3-year average adjusted
after-tax ROATCE and aligned with achieving our 10% target in 2018
n Clawback: Expand our clawback policy to cover cash payments under our STI program |
1 |
|
This CD&A 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 beginning on page 56. |
2 |
|
This CD&A makes reference to (i) post-revision
financial measures, which reflect certain revisions to the Companys financial statements reported in Note 30 Revision of Previously
Reported Annual Financial Statements of its Form 10-K filed with the SEC on March 16, 2017, for the year ended December 31, 2016 to correct for
immaterial errors for the years ended December 31, 2015 and 2014; and (ii) pre-revision financial measures, which do not reflect such
revisions. |
- 39 -
The following principles guide our executive compensation
programs and compensation philosophy:
Attract,
retain and motivate high-quality executives and staff |
n Target pay levels designed to be competitive with market practice.
n Differentiate compensation by individual, reflecting his or her role, experience,
performance and expected contributions.
|
Pay
for performance / meritocracy |
n Our program includes short-term and long-term performance-based elements,
encompassing both objective and subjective goals, and considers corporate, business segment, individual, and performance relative to our peers.
n Total compensation is expected to vary each year and may evolve over the long term
to reflect our strategic objectives and performance. |
Reinforce
long-term view of CIT performance and value creation |
n A significant portion of incentive compensation is stock-based and long-term
in focus.
n Robust equity holding requirements and prohibition on
hedging. |
Make
compensation decisions in accordance with strong governance, oversight, and risk management |
n Retain an independent compensation consultant to advise the Compensation
Committee.
n Maintain robust clawback provisions.
n Risk Management Group fully integrated in the overall program design and
operation. |
|
What We Do:
Ö Significant emphasis on performance-based compensation, with
majority of incentive compensation dependent on long-term performance
Ö Balanced
portfolio of metrics that drive annual, long-term, financial and strategic goals
Ö All long-term incentives subject to clawbacks that extend post-vesting, with clawback extended to short-term
incentive in 2017
Ö LTI is 100% performance based, with 50% of LTI value in PSUs
and 50% in PBRSUs
Ö Stock ownership and retention requirements that reinforce
alignment between shareholders and executive officers
Ö Independent compensation
consultant advising the Compensation Committee |
|
|
What We Dont Do:
r No golden parachute tax gross-ups for our NEOs
r No participation in executive pension arrangements for executives hired after 2006
r No
perquisites other than car and driver for the CEO
r No repricing of underwater stock options, grants of discounted
stock options or grants of stock options with reload provisions
r No single-trigger change of control provisions in
our equity-based awards
r No hedging of CIT securities, including equity-based compensation awards, for all
employees, including our NEOs |
- 40 -
2016 PERFORMANCE AND STRATEGIC HIGHLIGHTS
2016 was a pivotal year for CIT. We established our vision for
creating a leading national bank for specialty lending to the middle market and small businesses and launched a three-year strategic plan to drive
shareholder value. In 2016, we made substantial progress against our plan and our continuing focus to improve shareholder value.
Executing on Our 2016 Priorities to Simplify & Strengthen CIT |
Focus
on Our Core Businesses |
n Announced definitive agreement to sell CIT Commercial Air to Avolon
Holdings
n Stable core operating trends
n Completed sale of UK Equipment Finance and Canada Equipment and Corporate Finance businesses
n Completed the integration of OneWest Bank |
Improve Profitability and Return Capital |
n Completed a third of the annual expense save target
n Deposits increased to approximately 68% of total funding; weighted average deposit
coupon decreased 7 bps from the prior year
n CIT Bank financing and leasing
assets to deposit ratio of 98%
n Approval to return up to $3.3 billion of common
equity to shareholders in conjunction with CIT Commercial Air Sale(1) |
Maintain Strong Risk Management |
n Commercial credit reserve(2) 2.0% of finance receivables
n Non-accruals 0.9% of finance
receivables
n 10.8% coverage(3) on energy loans
n Common Equity Tier 1 ratio(4) 13.8% up ˜120 bps from the prior year
|
(1) |
|
Amended capital plan approval authorizes CIT to return $2.975
billion of common equity from the net proceeds of the CIT Commercial Air sale; additional $0.325 billion contingent upon the issuance of a similar
amount of Tier 1 qualifying preferred stock. |
(2) |
|
Commercial allowance for loan losses plus principal loss discount
as % of commercial finance receivables (before the principal loss discount). |
(3) |
|
Reflects the purchase accounting discount for loans acquired from
OneWest Bank and the allowance for loan losses. |
(4) |
|
Capital ratios as of 12/31/16 and based on fully phased-in Basel
III estimates. |
Selected
Financial Highlights |
Commercial
Banking |
Commercial
Finance
|
n Positioning
of business towards more strategic customer base to drive deeper relationships and additional revenue opportunities nearly
complete
n Lead
roles in 60% of new business in 2016, up from 40% in 2015
n #10
in US Middle Market Sponsored Bookrunner league table in 2016, up from #21 in 2015 |
Direct
Capital |
n Digital
small business lending platform experiencing strong growth due to disruption in industry and strategic account wins
n Record
year with a 14% increase in volume from 2015
n Customer
satisfaction at an all-time high based on Net Promoter Score |
Treasury
Management |
n Treasury Management products and services sold to 73 new and existing clients in 2016 across all our Commercial Businesses |
Capital
Markets |
n Led
67 transactions for over $11 billion in financings in 2016 across all our industry verticals, compared to 50 transactions
for $8 billion in 2015 |
Consumer
Banking |
Consumer
Banking |
n OneWest
Bank named Best Regional Bank in California by Money Magazine
n Investments
in technology aimed to enhance customer experience
n Continued
progress on transitioning deposit base and reducing overall cost of funds |
- 41 -
2016 AND 2017 PROGRAM EVOLUTION
2016 Transition Actions
During 2016, we took a number of steps designed to align our
executive compensation program with the results of our strategic review and our vision for creating a leading national bank for specialty lending to
the middle market and small businesses. In particular, we revised our compensation peer group to align with our business mix and asset size,
established the target compensation structure for our new Chief Executive Officer and Chief Financial Officer, introduced the Executive Incentive Plan
(STI for executive officers under the shareholder-approved 2015 Executive Incentive Plan) and changed the mix of LTI to better align with peer
practices.
New Peer Group
The Compensation Committee regularly reviews peer and industry
information in regard to level and structure of compensation as a competitive frame of reference. The Compensation Committee uses this information and
analysis as a reference for setting pay opportunities and making pay decisions, such as changes to base salaries, annual short-term and long-term
incentive awards. A key source of information is a peer group of institutions similar to CIT.
With input from their independent compensation consultant, Pay
Governance LLC (Pay Governance), and management, the Compensation Committee re-evaluated and updated the peer group in 2016 in light of
strategic initiatives. The process began with a selection of U.S. based publicly traded regional banks and financial companies considering asset size
and business/deposit strategy, and level of business complexity. In line with our strategy to become a leading national bank, the new peer group
establishes a greater focus on regional banking and is generally within a range of 0.5 times to 2.5 times the total asset size of CIT. The table below
lists the peer companies approved by the Compensation Committee for 2016.
|
|
|
|
Citizens Financial Group, Inc. |
Peoples United Financial, Inc. |
|
Regions Financial Corporation |
Discover Financial Services |
|
|
|
|
|
Huntington Bancshares Inc. |
|
At the time the Compensation Committee selected the peer group,
CIT represented the 38th percentile of the peer group in assets and the 54th percentile of
the peer group in revenues.
The Compensation Committee also uses multiple third-party
competitive market surveys provided by compensation consulting firms such as McLagan, Mercer and other firms as necessary (which we refer to as
market data).
While the Compensation Committee considers peer and 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 compensation determinations.
CEO Transition
Ms. Alemany became CEO of CIT Group effective April 1, 2016 upon
Mr. Thains retirement on March 31 and became Chairwoman of the Board of Directors upon Mr. Thains retirement as Chairman following the 2016
Annual Meeting of Stockholders. Ms. Alemanys 2016 target total compensation was established in light of our business strategy, with 87% of her
target total compensation comprised of variable compensation subject to achievement of performance goals. Her 2016 target total compensation of $6.75
million, consisting of base salary of $900,000, short-term incentive target equal to 150% of base salary and long-term incentive target equal to 500%
of base salary, was 15% below that of her predecessor and below the median CEO compensation market data for our new peer group.
- 42 -
2016 Program
Changes
Since becoming a bank holding company, our compensation program
has been continually adjusted and refined to reflect the next step on our business evolution.
As previously disclosed, for 2016 the Compensation Committee has
revised our executive compensation program by:
| n | Introducing
a 2016 STI formula for executive officers set at a maximum of 2% of adjusted pre-tax income under our shareholder approved 2015
Executive Incentive Plan, intended to maximize corporate tax deductibility of executive compensation under Section 162(m) of the
U.S. Tax Code. |
| n | Changing
the mix of our 2016 LTI to include 50% performance share units based on adjusted after-tax return on average tangible common equity
and 50% performance-based RSUs to better align with our peer groups pay practices and take into account our go-forward
strategic initiatives: |
| | PSUs-ROATCE
based on 3-year average adjusted after-tax return on average tangible common equity (ROATCE) with 3-year cliff vesting and earned
at the end of the three-year performance period from 0% to a maximum of 150% of target, subject to a credit provision modifier
to enhance risk balancing; and |
| | PBRSUs
vesting ratably 1/3 per year over 3 years, subject to a performance hurdle (minimum Common Equity Tier 1 for well-capitalized
banks). |
2017 Program
Changes
We received significant support from shareholders in 2016 for our
Say-on-Pay vote (about 89% of the votes cast were in favor of our program and about the same as in 2015).
In an effort to improve our Say-on-Pay vote for 2017, in addition
to taking into account feedback from shareholders and other stakeholders, the Compensation Committee engaged Pay Governance to compare our executive
compensation program against market best practices to determine the changes to our 2017 executive compensation structure, as outlined in more detail
below. CIT and the Compensation Committee intend to continue to evaluate our executive compensation program annually.
For 2017, and in direct response to shareholder feedback and
recommendations from Pay Governance, we will:
| n | Keep
our rigorous scorecard approach but increase the weighting of quantitative financial factors to 70% for our CEO (increased from
50%) and heads of our business segments, and simplify the goal structure |
| n | Add
a factor based on 3-year cumulative relative TSR to our PSUs, which will continue to be based on 3-year average adjusted after-tax
ROATCE and aligned with achieving our 10% target in 2018 |
| n | Expand
our clawback policy to cover cash payments under our STI program |
2017 CEO Short-Term Incentive Scorecard
Changes
Since 2015, we have incrementally simplified our short-term
incentive goals and increased the weighting of quantitative goals. For 2017, we have continued this process, increasing the weighting of quantitative
financial factors to 70%, reducing the number of financial factors to 3 and eliminating the specific weighting of sub-factors for qualitative goal
categories, while continuing to ensure that goals are aligned with our strategic objectives and priorities. Our CEOs 2017 short-term incentive
goal categories and weightings are shown below:
Goal
|
Weighting
|
|
|
Financing and Leasing Assets |
|
|
|
|
|
Qualitative (Strategic/Operational; Risk/Regulatory/Compliance; Talent Management) |
|
- 43 -
2017 Target Total Direct Compensation
Change for CEO
As part of approving 2017 total direct compensation targets in
February 2017, the Compensation Committee reviewed total compensation targets for the Companys new proxy peer group (for the CEO and CFO), as
well as competitive market compensation surveys from McLagan and other publicly available information. Upon advice from Pay Governance, the Committee
recommended to the Board of Directors and the Board of Directors approved an increase in the total compensation target for Ms. Alemany to
$7 million, approximately the median of the new proxy peer group by increasing her annual base salary to $1,000,000 while keeping her short-term
incentive compensation target at 150% and long-term incentive compensation target unchanged. 2017 target total direct compensation remains unchanged
for the other NEOs.
2017 PSUs ROATCE with Relative TSR
Adjustment Factor
For 2017, we are adding a TSR adjustment factor to our
PSUs-ROATCE under which earnout may be increased or decreased by up to 20% depending on the Companys 3-year cumulative TSR results relative to
the component companies of the KBW Nasdaq Bank Index for the performance period (with no increase permitted if the Companys TSR for the
performance period is negative). As in our prior structure, overall payout, including the TSR adjustment factor, may range from 0% to a maximum of 150%
of target; in addition, if the minimum threshold level after-tax ROATCE is not met, no PSUs-ROATCE will be earned by their terms. 2017 PSUs-ROATCE do
not include a separate credit modifier.
Enhanced Clawback
Provisions
CIT has had cancellation / recoupment provisions on equity-based
awards in place since 2010.
n |
|
PBRSUs Both unvested PBRSUs and PBRSUs that have
vested within the prior 12 months are subject to forfeiture/recoupment in the event of: (1) a material restatement of the Companys financial
statements; (2) materially inaccurate financials or other performance metrics; (3) the executive improperly or with gross negligence fails to properly
identify, raise or assess, in a timely manner and as reasonably expected, risks and/or concerns with respect to risks material to the Company or its
business activities; (4) the executive violates the Companys risk policies or standards; (5) the executives detrimental conduct or
violation of Company policies; and/or (6) the executives breach of any applicable provisions relating to non-competition, non-solicitation,
confidential information, inventions, developments or proprietary property. Unvested PBRSUs are also subject to forfeiture if the executive retires
from CIT to work for a competitor. |
n |
|
PSUs Unvested PSUs and PSUs that have vested but
not yet been delivered are subject to forfeiture, as applicable, for each of the same (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 to work for a competitor. Additionally,
vested PSU awards (other than 2015 PSUs-ROTCE) may be recovered for two years following the end of the three-year performance period in the event of
the following: (1) the same (1) (6) events applicable to PBRSUs listed above; (2) the Companys Total Classified Exposure exceeds a
pre-determined threshold (other than 2016 PSUs-ROATCE); 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 under Non-GAAP Financial Measures and Other Definitions. Vested
2015 PSUs-ROATCE may be recovered for 12 months following vesting in the event of (1) (6) listed above. |
For 2017, we are adding cancellation / recoupment provisions to
cash STI awards, consistent with the provisions applicable to PBRSUs.
n |
|
Cash STI Awards Cash STI paid within the prior 12
months is subject to recoupment in the event of: (1) a material restatement of the Companys financial statements; (2) materially inaccurate
financials or other performance metrics; (3) the executive improperly or with gross negligence fails to properly identify, raise or assess, in a timely
manner and as reasonably expected, risks and/or concerns with respect to risks material to the Company or its business activities; (4) the executive
violates the Companys risk policies or standards; (5) the executives detrimental conduct or violation of Company policies; and/or (6) the
executives breach of any applicable provisions relating to non-competition, non-solicitation, confidential information, inventions, developments
or proprietary property. |
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.
- 44 -
2016 Named Executive
Officers
The compensation of our 2016 named executive officers (our
NEOs) is described in this CD&A. Our 2016 NEOs are:
n |
|
Ellen Alemany: Chairwoman and CEO of CIT Group and Chairwoman,
CEO and President of CIT Bank |
n |
|
E. Carol Hayles: Executive Vice President and Chief Financial
Officer |
n |
|
C. Jeffrey Knittel: President, CIT Transportation |
n |
|
John Erickson: President of Consumer Banking and President,
California (through December 31, 2016) |
n |
|
Denise Menelly: Executive Vice President and Head of Technology
and Operations |
n |
|
John A. Thain: Former Chairman and Chief Executive
Officer |
Summary of Compensation Components and 2016
Program Detail
Our executive compensation program is comprised of three primary
components:
Primary
Components of Executive Compensation |
|
n Set within a competitive range of market to attract and retain top talent
n Reflects responsibility, expertise and experience
n Foundation from which incentives and other benefits are determined
|
Short-Term Incentive (Executive Incentive Plan) |
n Motivate and reward for achieving or exceeding annual financial, strategic
and operational goals that ultimately support sustained long-term profitable growth and value creation
n Each Named Executive has a target opportunity expressed as a percentage of base salary reflective of the NEOs role
(capped at 175%, with CEO at 150%)
n Tied directly to performance in year for
which reported and granted in first quarter following end of performance year
|
Long-Term Incentive (Equity Awards) |
n Motivate and reward for delivering long-term sustained performance aligned
with shareholder interests
n Awards are 100% performance based and comprised of
50% PSUs-ROATCE and 50% PBRSUs
n PSUs based on 3-year average adjusted after-tax
ROATCE aligned with achieving our 10% target in 2018 and, for 2017, include a factor based on 3-year cumulative TSR relative to the component companies
of the KBW Nasdaq Bank Index; PBRSUs include a performance vesting hurdle (minimum Common Equity Tier 1 for well-capitalized
banks) |
Base Salary
n About 13% to 26% of target total direct compensation
n Fixed
n Cash |
|
Base salary amounts are intended to provide a level of predictable income that reflects each executives level of responsibility, expertise
and experience. As discussed in last years proxy, in February 2016, the Compensation Committee reviewed total compensation targets for the
companys proxy peer group (for the CEO and CFO), as well as competitive market compensation surveys and other publicly available information and
determined to increase Ms. Alemanys base salary to $900,000 (from the $800,000 base salary set forth in her offer letter). In November 2015, Ms.
Hayles base salary was increased to $600,000 in recognition of her promotion to CFO. Mr. Knittels 2016 base salary remained unchanged. Mr.
Ericksons and Ms. Menellys 2016 base salaries of $600,000 and $500,000, respectively, were set forth in their March 2016 offer
letters. |
- 45 -
Short-Term Incentive
n About 20% to 35% of target total direct compensation
n Performance-based
n Cash
n Granted after performance year in Q1
2017 |
|
Short-term incentive awards are determined at year end based on annual performance and paid in cash.
The 2016 STI pool for all executive
officers was determined under the 2015 Executive Incentive Plan, with funding based on 2% of 2016 Adjusted Pre-Tax Income*, as adjusted as described below under the heading Tax Deductibility of Compensation Expense. An individuals
short-term incentive award can be earned between 0% to 150% of target based on a year-end assessment of performance against his or her annual
scorecard, as described further below. Under the terms of his new employment agreement, Mr. Knittel was entitled to receive a 2016 STI award equal to
no less than his 2015 short-term incentive. |
Long-Term Incentive
n Performance-based
n PSUs earned based on ROATCE performance for 2016-2018 performance period
n Earned over 3 years
n Subject to forfeiture and/or
recoupment |
|
2016 LTI awards were granted 50% in PSUs based on achievement of 3-year average adjusted after-tax ROATCE and 50% in PBRSUs with a performance
vesting hurdle (minimum Common Equity Tier 1 for well-capitalized banks).
PSUs link executive compensation with the Companys financial
performance over a three-year period while maintaining a significant portion of total compensation in equity-based awards. PSUs also 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 independent compensation consultant, Pay Governance,
provided direct input into the design of our PSUs. |
Grant of 2016 PSU Awards
For 2016, the Compensation Committee granted PSUs-ROATCE for the
2016-2018 performance period with the following grant date target values to our named executives: Ms. Alemany ($4,500,000), Ms. Hayles ($1,100,000),
Mr. Knittel ($2,350,000), Mr. Erickson ($1,100,000), and Ms. Menelly ($800,000).
The 2016 PSUs-ROATCE become payable only if CIT achieves the
applicable performance targets for the 2016-2018 performance period. PSU share payouts may increase or decrease from the target grant, with the actual
number of shares payable ranging from 0% to a maximum of 150% of target. The number of PSUs that ultimately may vest is based on 3-year average
adjusted after-tax return on average tangible common equity, subject to 3-year cliff vesting. The performance measure has a minimum threshold level of
performance that must be achieved to trigger any payout; if the threshold level of performance is not achieved, then no portion of the PSUs will be
payable.
All or a portion of the PSUs may be canceled during the
performance period, and vested PSUs may be recovered for a two-year period following the performance period, as described more fully above under
Enhanced Clawback Provisions.
2016 Performance
Determinations
Short-Term Incentive Annual Scorecard Goals
& Determinations For 2016 Named Executive Officers
n Capped at 150% of target for the CEO and other NEOs
n Earned based on level of 2016 pre-tax income, as adjusted, and achievement of
pre-established goals |
|
In order to provide transparency to shareholders, the Compensation Committee continued to base a significant portion of the 2016 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 2016 goals and objectives, along with
associated weightings, were set at the beginning of the year or upon joining the Company and directly align with the Companys primary goals.
After the end of the performance year (in February 2017), the Compensation Committee (and Pay Governance, its independent adviser) reviewed Ms.
Alemanys performance and in turn discussed its assessment with the full Board. |
For members of the Executive Management Committee
(EMC), which includes our other NEOs, Ms. Alemany reviewed the performance of each EMC member, and her respective assessment of performance
across each goal/objective category was reviewed and approved by the Compensation Committee. The CEOs and Compensation Committees
assessment of performance against those goals and objectives, as well as pay determinations, is provided below. In exercising discretion to determine
the actual amount of each NEOs 2016 STI, the Compensation Committee rounded the amount of the calculated short-term incentive to the nearest
$5,000 (other than with respect to Mr. Knittels 2016 STI, as described further below).
- 46 -
Ms. Alemany (Chairwoman and
Chief Executive Officer)
Ms. Alemanys 2016 short-term incentive target was
$1,350,000, and her 2016 short-term incentive award was $1,600,000, representing 119% of target. As a result, her 2016 total direct compensation was
$7,000,000, 104% of target.
Ms. Alemanys short-term incentive scorecard is shown
below.
2016 CEO Performance Assessment & Compensation
Scorecard
(Blue shading indicates achieved performance, with adjustments as
noted; percentages may not total due to rounding)
|
|
|
Rating
Scale (vs. Expectations) |
|
|
|
|
Multiplier |
|
Goal & Weighting |
Target |
Performance
(as adjusted) |
Does
Not Meet |
Partially
Meets |
Mostly
Meets |
Meets |
Exceeds |
Signifi-
cantly
Exceeds |
Weighted
% Achieved |
|
|
|
0.0x |
0.5x |
0.75x |
1.0x |
1.25x |
1.5x |
|
|
|
|
|
|
|
|
|
|
|
Quantitative
[50%] |
|
|
|
|
|
|
|
|
48% |
A. Pre-Tax Income*
[10%] |
$742 |
$774(1) |
<$538 |
$592 |
$645 |
$742 |
$807 |
$861 |
11% |
B.
Total Net Revenue* [10%] |
$2,473 |
$2,582(1) |
<$1,705 |
$1,705 |
$2,132 |
$2,473 |
$2,771 |
$3,070 |
11% |
C. Operating
Expenses* [10%] |
$1,291 |
$1,448(1) |
>$1,614 |
$1,497 |
$1,404 |
$1,291 |
$1,123 |
$1,029 |
6% |
D.
CIT Bank Deposits [10%] |
$33,142 |
$32,304 |
<$25,278 |
$28,087 |
$30,895 |
$33,142 |
$35,108 |
$37,917 |
9% |
E.
Provision for Credit Losses
(% of AEA) [10%] |
0.41% |
0.36% |
>1.2% |
1.0% |
0.8% |
0.4% |
n/a |
10% |
|
|
|
|
|
|
|
|
|
|
Qualitative
[50%] |
|
|
|
|
|
|
|
|
71% |
A.
Strategic/Operational [30%] |
|
|
|
|
|
|
44% |
̶ Achieve successful separation of CIT Commercial Air [15%] |
|
|
|
|
|
ü |
23% |
̶ Develop and communicate strategic plan and execute operating plan to enhance returns [10%] |
|
|
|
|
|
ü |
15% |
̶ Institute cross-selling initiative [2.5%] |
|
|
|
|
|
ü |
4% |
̶ Achieve Community Reinvestment Act goals [2.5%] |
|
|
|
ü |
|
|
3% |
B.
Risk/Regulatory/Compliance [10%] |
|
|
|
|
|
|
14% |
̶ Maintain “tone at the top” focus on compliance and strong regulatory relations [3.3%] |
|
|
|
|
|
ü |
5% |
̶ Ensure no outsized losses and achieve leveraged loan portfolio risk tolerance levels [3.3%] |
|
|
|
|
ü |
|
4% |
̶ Ensure timely and responsive regulatory submissions [3.3%] |
|
|
|
|
|
ü |
5% |
C.
Talent Management [10%] |
|
|
|
|
|
|
13% |
̶ Maintain employee engagement and retain top talent [3.3%] |
|
|
|
|
ü |
|
4% |
̶ Emphasize diversity in hiring, retention & promotion [3.3%] |
|
|
|
|
ü |
|
4% |
̶ Complete OneWest integration (culture, values, leadership appointments) [3.3%] |
|
|
|
|
|
ü |
5% |
|
|
|
|
|
|
|
|
Total Short
Term Incentive |
|
|
|
|
|
|
119% |
(1) |
|
The figures shown above reflect pre-revision results
used by the Committee to determine annual performance and resulting STI awards at the time of its annual scorecard review for all executives. The
Committee determined to base its decision on these figures, rather than post-revision financials which would have resulted in higher STI
payouts. For information about how these measures were calculated, see Non-GAAP Financial Measures and Other Definitions beginning on page
56. |
- 47 -
In determining Ms. Alemanys 2016 STI award, in addition to
the companys financial and operating performance, the Committee noted the following 2016 key accomplishments:
Quantitative Criteria (50%)
n |
|
Performance results were between meets and
exceeds for adjusted pre-tax income and net revenue; between mostly meets and meets for CIT Bank deposits; and
between partially meets and mostly meets for operating expenses (as adjusted). |
n |
|
While the goal for provision for credit losses was exceeded,
payout was capped at 100% (as in prior years). |
n |
|
Overall payout for this category was approximately
48%. |
Qualitative Criteria (50%)
n |
|
Strategic/Operational (30%): managed dual-track strategic
process and reached definitive agreement to sell CIT Commercial Air at an implied price of 1.2x book; designed and launched a three-year Strategic Plan
to improve returns, reduce $150 million of annual expenses and establish CIT as a leading national bank for specialty lending to the middle market and
small businesses; and actively engaged with CITs Community Board and revised CRA plan. |
n |
|
Risk / Regulatory / Compliance (10%): enhanced working
relationships with regulators and gained regulatory approval to return up to $3.3 billion of capital to shareholders. |
n |
|
Talent Management (10%): implemented enhanced performance
management program, talent review and executive succession; rolled out Core Behaviors and launched Chairwomans award to promote employee
engagement; held Employee Town Hall forums to drive culture and communication; completed OneWest integration and established executive
team. |
n |
|
Overall payout for this category was approximately
71%. |
- 48 -
Other 2016 Named Executive Officers
For our other NEOs, goals were grouped into a quantitative goal
category (financial/credit), weighted from 50% (Corporate Functions) to 70% (for Business Segments); and a qualitative goal category
(strategic/operational, risk/regulatory/compliance, and talent management), weighted 30% (Business Segments) to 50% (Corporate
Functions).
Within the financial/credit goal category, Company-wide goals
(CIT adjusted pre-tax income, net revenue, operating expenses, provision for credit losses) represented 40% of the total for Ms. Hayles and Ms. Menelly
(and heads of other Corporate Functions); financial and credit goals for the Business Segment heads were aligned directly with their
businesses.
The table below summarizes the weighted payouts for each of these
NEOs based on performance against their annual scorecard. Percentages may not total due to rounding.
|
|
|
|
Weighting
|
|
Target STI
|
|
Weighted %
Achieved
|
|
Calculated
STI Value
|
|
Actual
STI Value
|
|
Mr. Knittel(1) |
|
|
|
|
|
$ |
1,050,000 |
|
113% |
|
$ |
1,190,975 |
|
$ |
1,090,000 |
|
A. Financial/Credit |
|
|
|
70% |
|
$ |
735,000 |
|
87% |
|
|
|
|
|
B. Strategic/Operational |
|
|
|
10% |
|
$ |
105,000 |
|
10% |
|
|
|
|
|
C. Risk/Regulatory/Compliance |
|
|
|
10% |
|
$ |
105,000 |
|
7% |
|
|
|
|
|
D. Talent Management |
|
|
|
10% |
|
$ |
105,000 |
|
10% |
|
|
|
|
|
Ms. Hayles |
|
|
|
|
|
$ |
800,000 |
|
90% |
|
$ |
720,463 |
|
$ |
720,000 |
|
A. Financial/Credit (incl. Company) |
|
|
|
50% |
|
$ |
400,000 |
|
48% |
|
|
|
|
|
B. Strategic/Operational |
|
|
|
30% |
|
$ |
240,000 |
|
30% |
|
|
|
|
|
C. Risk/Regulatory/Compliance |
|
|
|
10% |
|
$ |
80,000 |
|
5% |
|
|
|
|
|
D. Talent Management |
|
|
|
10% |
|
$ |
80,000 |
|
7% |
|
|
|
|
|
Mr. Erickson(2) |
|
|
|
|
|
$ |
900,000 |
|
83% |
|
$ |
750,862 |
|
$ |
750,000 |
|
A. Financial/Credit |
|
|
|
70% |
|
$ |
630,000 |
|
59% |
|
|
|
|
|
B. Strategic/Operational |
|
|
|
10% |
|
$ |
90,000 |
|
7% |
|
|
|
|
|
C. Risk/Regulatory/Compliance |
|
|
|
10% |
|
$ |
90,000 |
|
8% |
|
|
|
|
|
D. Talent Management |
|
|
|
10% |
|
$ |
90,000 |
|
9% |
|
|
|
|
|
Ms. Menelly |
|
|
|
|
|
$ |
600,000 |
|
100% |
|
$ |
602,495 |
|
$ |
600,000 |
|
A. Financial/Credit (incl. Company) |
|
|
|
50% |
|
$ |
300,000 |
|
49% |
|
|
|
|
|
B. Strategic/Operational |
|
|
|
20% |
|
$ |
120,000 |
|
22% |
|
|
|
|
|
C. Risk/Regulatory/Compliance |
|
|
|
20% |
|
$ |
120,000 |
|
18% |
|
|
|
|
|
D. Talent Management |
|
|
|
10% |
|
$ |
60,000 |
|
12% |
|
|
|
|
|
(1) |
|
As described below, under Mr. Knittels new employment agreement, in connection with the
sale of CIT Commercial Air, his 2016 STI was determined at no less than his 2015 STI of $1,090,000. |
(2) |
|
As described below, Mr. Erickson received a transition payment under the Transition
Agreement and General Release he entered into with CIT in connection with his resignation, which was effective December 31,
2016, which was in lieu of any other STI. While Mr. Ericksons agreement established a minimum and maximum transition
payment amount, the Committee still reviewed his performance as part of its review of executive scorecards. The amount in
the table above for Mr. Erickson under Actual STI Value equals the amount of his transition payment, based on
this assessment of his performance. |
In determining actual 2016 short-term incentive payouts, the
Committee noted the following 2016 accomplishments:
Mr. Knittel
n |
|
Financial/Credit: Performance targets for CIT
Transportation were exceeded, with pre-tax income, net revenue and operating expenses achieved at better than plan, and provision for credit losses (as
a % of average earning assets) also achieved at better than plan (but capped at 100% of target). Overall payout for this category was 87%. |
n |
|
Strategic/Operational: supported dual track spin vs. sale
process, resulting in the announcement of the pending sale of CIT Commercial Air at an implied price of 1.2x book value and successfully transitioned
Transportation segment leadership to successor. As a result, payout for this category was 10%. |
n |
|
Risk/Regulatory/Compliance: Maintained focus on
compliance while ensuring appropriate balancing of business development and risk-taking; supported overall audit and compliance initiatives. Payout for
this category was 7%. |
n |
|
Talent Management: Maintained employee engagement through
Town Halls, extensive communication and regular office visits; continued practice of succession planning and enhanced review of employee performance
and led business consistent with One CIT behaviors. Payout for this category was 10%. |
|
|
At the recommendation of the CEO, in recognition of the
transactional payout due to the sale of CIT Commercial Air and to better align his 2016 incentive compensation with that business, the Compensation
Committee decided to keep Mr. Knittels 2016 STI ($1,090,000) equal to the minimum set forth in his agreement, and overall 2016 total direct
compensation ($4,040,000) unchanged from 2015. |
- 49 -
Ms. Hayles
n |
|
Financial/Credit (including Shared/Company): CIT pre-tax
income and net revenue exceeded plan, and operating expenses were worse than plan; provision for credit losses was better than plan, however the payout
was capped at 100% (as in prior years); expenses for Finance were slightly worse than plan. Payout for this category was 48%. |
n |
|
Strategic/Operational: Enhanced rating agency
relationships resulting in Holding Company and Bank upgrades; supported dual-track strategic process and reached definitive agreement to sell CIT
Commercial Air at an implied price of 1.2x book value; received non-objection to Amended Capital Plan enabling up to $3.3 billion capital return;
completed sale of UK Equipment, Canada Equipment and Corporate Finance businesses; significant progress on plan to exit China business and to
consolidate and streamline legal entity structures. Payout for this category was 30%. |
n |
|
Risk/Regulatory/Compliance: Submitted CCAR plan but did
not meet qualitative standards required to receive a non-objection from regulators; staffed a CCAR office and developed plans to remediate, however
additional work required. Payout for this category was 5%. |
n |
|
Talent Management: Completed the integration of the
OneWest finance teams and re-aligned financial analysis and controllership teams with new business segments; filled most key gaps in staffing and made
progress on management succession plans. Payout for this category was 7%. |
Mr. Erickson
n |
|
Financial/Credit (including Shared/Company): Performance
results for Consumer Banking were mixed, with fee income significantly exceeding targets, while net revenue, operating expenses and commercial deposits
were approximately at plan, and pre-tax income and provision for credit losses were worse than plan (primarily related to the legacy reverse mortgage
portfolio). Overall payout for this category was 59%. |
n |
|
Strategic/Operational: Developed a deposit strategy to
improve cost of funds and mix stability; exited Wealth Management business; began to grow residential mortgage portfolio and made progress on CRA plan.
Payout for this category was 7%. |
n |
|
Risk/Regulatory/Compliance: managed forward mortgage
portfolio within risk appetite; made progress in addressing legacy issues related to the reverse mortgage portfolio; executed on plan to remediate
audit and regulatory findings. Payout for this category was 8%. |
n |
|
Talent Management: began rationalization of staff and
infrastructure support and full integration of OneWest teams; filled certain key gaps in staffing and made progress on management succession plans.
Payout for this category was 9%. |
Ms. Menelly
n |
|
Financial/Credit (including Shared/Company): CIT pre-tax
income and net revenue exceeded plan, and operating expenses were worse than plan; provision for credit losses was better than plan, however the payout
was capped at 100% (as in prior years); expenses for Technology and Operations were slightly better than plan. Payout for this category was
49%. |
n |
|
Strategic/Operational: Successfully implemented IT
portfolio and data center migrations; provided IT and operational support for sales of the UK Equipment, Canada Equipment and Corporate Finance
businesses; launched transformation strategy and implemented digital strategy for CIT Bank. Payout for this category was 22%. |
n |
|
Risk/Regulatory/Compliance: Made progress on enhancing
core controls to meet industry-wide heightened expectations; developed plan to remediate audit and regulatory findings. Payout for this category was
18%. |
n |
|
Talent Management: Successfully developed new operating
model and management succession plan; hired and retained key talent; led cultural change, improving accountability across technology and operations,
and resulting in a payout for this category of 12%. |
- 50 -
Earned 2014 PSU Awards
We first introduced PSUs in 2012 at a time when we remained
focused on returning to profitability, following our emergence from bankruptcy. Our PSU design has continued to evolve over time, and now comprises a
larger part of total compensation. The 2014 PSUs were designed to continue to reward growth and profitability over a three-year period (2014-2016),
with clawbacks for discouraging excessive risk-taking. The performance metrics (Pre-Tax Return on Assets (ROA), weighted 25% and Fully Diluted EPS,
weighted 75%) and targets were established in 2014 consistent with the Companys strategic plan at the time and after direct input from both our
CRO and Pay Governance. The performance targets were adjusted to reflect targets and results for the first nine months of 2015 for standalone CIT, as
described in the Companys 2016 Proxy Statement. The 2014 PSUs were earned at 69% of target based on these three-year post revision
results. The Committee determined to use these post-revision results, rather than pre-revision financials which would have
resulted in higher PSU payouts.
Goal (Payout)
|
|
|
|
Threshold (0%)
|
|
Target (100%)
|
|
Maximum (150%)
|
|
Performance (as adjusted)
|
|
Fully Diluted EPS* (three-year average) |
|
|
|
$2.44 |
|
$2.80 |
|
$2.91 |
|
$2.68 |
|
Pre-Tax Return on Assets* (three-year average) |
|
|
|
1.31% |
|
1.57% |
|
1.63% |
|
1.50% |
|
Earned 2015 PSUs-ROTCE (2nd
Tranche)
In 2015, the Compensation Committee granted PSUs to executives
(of our NEOs, Ms. Hayles, Mr. Knittel and Mr. Thain were awarded 2015 PSUs), 50% of which vest based on achievement of EPS/ROA targets and 50% of which
vest based on achievement of pre-tax ROTCE performance goals. The PSUs-EPS/ROA cliff vest at the end of the three-year performance period and the
PSUs-ROTCE vest one-third at the end of each year of the three-year performance period.
The 2015 PSUs-ROTCE will be earned each year during the 2015-2017
performance period between 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:
2015:
1/3 earned based on
2015 pre-tax ROTCE |
|
2016:
1/3 earned based on average
2015 & 2016 pre-tax ROTCE |
|
2017:
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, earn-out 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 (but
not below 50% if threshold ROTCE is achieved and not above 150% in any case).
The second installment of our 2015 PSUs-ROTCE vested at the end
of 2016. For the three-year performance period, the Committee established a target pre-tax ROTCE range of 7.5%-9.5%, a threshold of 4.0% and a maximum
of 13.0%. A target range was implemented to enhance risk balancing, based on input from our CRO and feedback from our regulators, in part by
eliminating the leverage up or down for potential payouts around an appropriate range above and below the companys 3-year plan target. The
adjusted post revision two-year average ROTCE for the second installment of the 2015 PSUs-ROTCE was 7.46%, below the target range,
resulting in 99.6% of target payout for 2016. The Committee determined to use these post-revision results, rather than
pre-revision financials which would have resulted in higher PSU payouts. In addition, the Committee determined not to give effect to the
credit provision modifier, in light of the current economic and credit environment. The credit provision was favorable relative to target and would
have otherwise resulted in a payout of approximately 110% absent the Compensation Committees adjustment.
Goal
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Performance (as adjusted)
|
|
Adjusted Pre-Tax ROTCE* (two-year average) |
|
4.0% (50% earned) |
|
7.5%-9.5% (100% earned) |
|
13.0% (150% earned) |
|
7.46% |
|
Credit Provision (modifier)* |
|
≥136bps (-25%) |
|
68bps-45bps (+0%) |
|
22.6bps (+25%) |
|
36 bps |
|
- 51 -
Clawback Provisions
As described in more detail above under 2017 Program
Changes Enhanced Clawback Provisions, CIT has had cancellation / recoupment provisions on equity-based awards in place since 2010, and for
2017, we are adding provisions similar to those applicable to PBRSUs to cash STI awards.
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 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 continuing NEOs meets the
requirements of this policy.
Severance and Change of Control
Arrangements
Agreement with Ms. Alemany. In connection with Ms.
Alemanys appointment as Vice Chairman of the Company and her designation as successor to Mr. Thain as Chief Executive Officer of the Company and
Chairman of the Board of Directors of CIT Bank, effective April 1, 2016, the Company entered into a letter agreement with Ms. Alemany. Her agreement
provides for severance in the event the Company terminates her employment without cause or she terminates her employment for Good
Reason (in each case, as defined in the letter agreement) in the amount of one times her base salary, plus a pro-rata severance bonus for the
year of termination (based on her short-term and long-term incentive targets the latter to the extent the long-term incentive award for the year
has not been awarded at the time of termination). If Ms. Alemanys severance under the Companys broad-based severance plan as amended and
described below were greater than the severance benefit under her letter agreement, Ms. Alemany would receive the severance plan benefit. The principal
provisions of Ms. Alemanys letter agreement are described under Narrative Information Relating to Potential Payments upon Termination or
Change of Control.
Agreement with Mr. Knittel.
On July 5, 2016, CIT Aerospace LLC, a wholly owned subsidiary of the Company, entered into a new employment
agreement with Mr. Knittel in connection with the contemplated sale or spinoff of CIT Commercial Air. Mr. Knittels
new employment agreement includes a provision that allows him to terminate his employment for Good Reason,
including, but not limited to, due to a material diminution in base pay, a material diminution of his duties and
responsibilities following a Change of Control and reassignment to a work location more than 50 miles from his
prior work location. Mr. Knittels employment agreement provides for severance in the event CIT Aerospace
LLC terminates his employment without cause (as defined in the employment agreement) or he terminates
his employment for Good Reason in the amount of one times his base salary and target STI for the year of termination,
plus any additional benefits provided under the Companys broad-based severance plan described below. In
the event such a termination were to occur in connection with a Change of Control of CIT prior to completion of
the proposed transaction, Mr. Knittel would be entitled to the EMC member severance benefits as amended and described
below under the Companys broad-based severance plan. The principal provisions of Mr. Knittels employment
agreement are described under Narrative Information Relating to Potential Payments upon Termination or Change
of Control.
Agreement with Mr. Erickson.
In connection with Mr. Ericksons resignation, which was effective December 31, 2016, he and CIT
entered into a Transition Agreement and General Release. Mr. Ericksons transition agreement did not provide
for any severance payments but it did provide for a transition payment in an amount between $750,000 and $900,000,
as determined by Ms. Alemany based on her assessment of Mr. Ericksons performance prior to and during the
transition period ending on the date of his resignation (December 31, 2016). The transition payment is in lieu
of any 2016 STI award. A summary of the key provisions of Mr. Ericksons transition agreement are described
under Narrative Information Relating to Potential Payments upon Termination or Change of Control.
Ms. Menellys Offer Letter.
On March 18, 2016, Ms. Menelly and CIT entered into an offer letter in connection with her employment
with CIT. Ms. Menellys offer letter sets forth her base salary rate of $500,000 and a 2016 target annual
incentive award (comprised of both short-term and long-term components) of $1,400,000. Under the terms of her
offer letter, on her employment commencement date, Ms. Menelly was eligible to receive a one-time PBRSU award
with a grant date value equal to the greater of $1,200,000 (estimated value of her equity awards to be forfeited
at the time of valuation, prior to a notice period required by her former employer) and the then current value
of the equity awards she forfeited upon termination of her employment with her former employer. The one-time PBRSUs
will vest in equal installments on each of the first three anniversaries of the grant date.
- 52 -
Broad-Based Employee Severance
Plan. 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, during 2016, members
of our EMC, which includes the NEOs, were generally eligible to receive a cash severance amount equal to 52 weeks
of base salary, a prorated severance 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. Under the Plan,
members of our EMC are generally eligible to receive written notice of termination for a minimum period of 12
weeks or, like other eligible participants and at the Companys discretion, pay in lieu of written notice.
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 severance bonus, a prorated severance 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. Effective January 1, 2017, the CIT Employee Severance Plan was amended and restated to
cover the employer portion of the cost of health insurance premiums for 52 weeks, in lieu of 102% of COBRA premiums
described above. The severance plan was further amended effective March 11, 2017 to change the definition of STI
to exclude any prior year STI for any period shorter than a year, with any participant being treated as ineligible
for STI for such period and replacing it with a target STI, as applicable. For more detail about the CIT Employee
Severance Plan, see Narrative Information Relating to Potential Payments upon Termination or Change of Control
below.
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
CITs benefits plans, including retirement arrangements, healthcare coverage, life and accident insurance and disability coverage. CITs
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 2016 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. The only perquisite provided in 2016 was a car and driver for Ms.
Alemany.
COMPENSATION COMMITTEE ROLE AND PROCESS
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 CITs 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 responsibilities of the Compensation
Committee are outlined in its charter, which can be found on CITs 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 her 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 CEOs 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, after assessing its provision of
services, fees, conflict of interest policies, relationship with Compensation Committee members, company stock ownership and relationship with
executive
- 53 -
officers in accordance with SEC rules and the NYSE
guidelines. 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 (such as McLagan, Mercer and other firms as necessary); publicly available information (peer group proxy statements); and historical
compensation data for executive officers.
The Compensation Committee has authorized Pay Governance to
interact with CITs management to obtain or confirm information, as needed, on behalf of the Compensation Committee.
Role of Senior Management
The funding of the 2016 annual short-term incentive pool and
assessment of our NEOs performance was determined as described above. Annual short-term incentives for other employees were recommended based on
managements assessment of performance against pre-established 2016 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 Companys 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 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 individual 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 Companys incentive compensation arrangements. |
Since 2009, CIT has conducted an annual assessment of the risks
associated with our incentive compensation arrangements. In 2014, 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 2016
compensation structure. During 2016, Risk Management, together with Internal Audit, evaluated each business segment focusing on outlier behaviors and
performance across four broad categories: outsized losses, transparency, risk balancing, and support for risk initiatives. Overall ratings for each
segment were determined 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, 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 CITs incentive compensation arrangements encourage imprudent or excessive risk
and presented their findings at a joint meeting of the Compensation and Risk Management Committees, prior to the finalization of the short-term
incentive pools. Prior to finalizing incentive recommendations, 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.
- 54 -
CIT, the Compensation Committee and the Risk Management Committee
have reviewed CITs incentive compensation policies and arrangements for significant risks as they apply to all employees across our business
segments 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 CITs equity-based award design, they reviewed our long-term
incentive structure and business segment sales incentive plans. Based on a discussion of the review, the Compensation and Risk Management Committees
concluded that CITs compensation plans for employees do not encourage risk-taking that is reasonably likely to have a material adverse effect on
CIT.
Peer Companies and
Benchmarking
As described above under 2016 Transition Actions New
Peer Group, with the assistance of Pay Governance, in 2016 the Compensation Committee revised its list of compensation peer group companies and
identified a group of 16 companies to use for benchmarking purposes. In particular, the new peer group was used in our decision-making for 2016 actual
and 2017 target total compensation levels for our CEO and CFO (roles for which public information is readily available).
Due to the varied nature of CITs businesses, three of the
new 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 and other firms as necessary.
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 2016 and 2017 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 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 CITs Covered Employee Identification Framework (the
Framework) are to provide a systematic methodology to identify: (1) risks inherent in job families and sub-families; (2) individual or
groups of 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.
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 of employment, 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 U.S. Tax Code), limits the tax deduction for compensation in excess of $1 million paid to the Companys CEO and to each
of the other three highest paid executive officers, other than the Companys 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
- 55 -
of compensation in our plan design, as appropriate. In 2015,
our shareholders approved the CIT Group Inc. 2015 Executive Incentive Plan, which is intended to permit the Company to grant of cash- and equity-based
awards intended to meet the deductibility requirements of Section 162(m). We expect annual incentive awards granted under the Executive Incentive Plan
to qualify as performance-based compensation under Section 162(m), but the Compensation Committee may determine to pay incentive compensation that is
not deductible. In 2016, our shareholders approved the CIT Group Inc. 2016 Omnibus Incentive Plan, which replaced the Amended and Restated CIT Group
Inc. Long-Term Incentive Plan for grants beginning on the effective date of the new plan, under which performance-based equity-based and
cash-based awards may be granted. The Company retains the discretion to award or pay non-deductible compensation if it deems it in the best interests
of the Company.
In early 2016, the Committee established 2% of 2016 Company
pre-tax income from continuing operations (as adjusted for certain noteworthy items and to include CIT Aerospace), which was intended to be Section
162(m) compliant and used to fund the maximum STI pool and payouts for all executive officers under the 2015 Executive Incentive Plan. At that time,
the Committee also allocated a percentage of the STI pool to each of our NEOs (other than Mr. Erickson and Ms. Menelly, who joined the Company after
March 31, 2016, and Mr. Thain who retired on March 31, 2016) representing the maximum STI payable to each of them under the plan, and each NEO had a
pre-established STI target for 2016. In February 2017, the Compensation Committee (the Board, in the case of Ms. Alemany) assessed each NEOs
performance against annual quantitative and qualitative scorecard measures pre-established at the beginning of 2016 consistent with our scorecard
approach (as described above) to determine the actual amount of 2016 short-term incentive awards paid, which could not exceed the maximum amount
payable to each NEO under the plan.
NON-GAAP FINANCIAL MEASURES AND OTHER DEFINITIONS
Certain of the performance measurements referred to in the
CD&A are non-GAAP financial measures under SEC rules and regulations. The disclosure below reflects how those non-GAAP financial
measures were calculated. The results in the tables in this section may not total due to rounding.
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
CIT.
$ millions |
|
Year Ended 2016
|
|
Nine Months Ended September 30 2015 (CIT standalone)
|
|
Year Ended 2014
|
|
Pre-Tax Income Continuing Operations (post-revision) |
|
$ |
20.9 |
|
|
$ |
136.8 |
|
|
$ |
244.5 |
|
|
Discontinued operations/OneWest transaction(1) |
|
|
353.3 |
|
|
|
232.8 |
|
|
|
474.8 |
|
|
Goodwill Impairment(2) |
|
|
333.7 |
|
|
|
|
|
|
|
|
|
|
Canadian total return swap facility (TRS) Impact(2) |
|
|
241.9 |
|
|
|
|
|
|
|
|
|
|
Other Adjustments(3) |
|
|
(151.9 |
) |
|
|
56.2 |
|
|
|
|
|
|
Adjusted Pre-Tax Income (post- revision)(4) |
|
$ |
797.8 |
|
|
$ |
425.8 |
|
|
$ |
719.3 |
|
|
Adjustment for revision |
|
$ |
(23.3 |
) |
|
$ |
18.7 |
|
|
$ |
17.4 |
|
|
Adjusted Pre-Tax Income (pre-revision)(5) |
|
$ |
774.5 |
|
|
$ |
444.5 |
|
|
$ |
736.7 |
|
|
(1) |
For 2016, represents CIT Aerospace discontinued operations
reported pre-tax income of $459.3 million, offset by $106.1 million benefit from suspended depreciation on operating lease equipment; for 2015,
includes $282.0 million for CIT Aerospace discontinued operations, and ($49.2) million estimated impact of OneWest transaction; for 2014, includes
pre-tax income of $418.9 million and $55.9 million for CIT Aerospace and Student Loan Xpress discontinued operations, respectively. |
(2) |
The amounts shown above for Goodwill Impairment and Canadian TRS Impact reflect results used by the Compensation Committee to determine annual performance and resulting STI awards at the time of its annual scorecard review for all executives, and differ from those disclosed either in the Form 8-K filed with the SEC on January 31, 2017 ($243 million for Canadian TRS), or Form 10-K filed with the SEC on March 16, 2017 ($354.2 million for Goodwill Impairment in the Form 10-K, and $243 million for Canadian TRS). The Committee determined to base its decision on these figures, rather than post-revision financials which would have resulted in higher STI payouts. |
(3) |
For 2016, represents adjustments for benefits from restructuring charges and debt extinguishment charges better than plan, as well as gain on sale of Canada businesses; for 2015, represents one-time losses for OneWest transaction costs, international portfolio impairment, impairment on certain assets held for sale and currency translation adjustment on UK and Mexico portfolio sales. |
- 56 -
(4) |
The post-revision amounts shown above for each year were used to determine PSU payouts during 2017, as described above under the headings, Earned 2014 PSU Awards, and Earned 2015 PSUs-ROTCE (2nd Tranche) in this Proxy Statement. PSU payouts would have been higher had pre-revision results been used. |
(5) |
|
The pre-revision amount shown above for 2016 was used by the Compensation Committee to determine annual performance and resulting STI awards during its annual scorecard review for all executives. STI awards would have been higher had post-revision results been used. |
Adjusted Pre-Tax Return on Assets is defined as Adjusted
Pre-Tax Income as a percentage of AEA.
$ millions (unless otherwise indicated) |
|
Year Ended 2016
|
|
Nine Months Ended September 30 (CIT standalone) 2015 (% annualized)
|
|
Year Ended 2014
|
|
Adjusted Pre-Tax Income (post-revision) |
|
$ |
797.8 |
|
|
$ |
425.8 |
|
|
$ |
719.3 |
|
|
AEA (including discontinued operations)(1) |
|
|
58,915 |
|
|
|
40,899 |
|
|
|
40,693 |
|
|
Adjusted Pre-Tax Return on Assets (post-revision)(2) |
|
|
1.35% |
|
|
|
1.39% |
|
|
|
1.77% |
|
|
(1) |
|
Includes AEA related to CIT Aerospace discontinued operations in all three years shown, and Student Loan Xpress in 2014; for 2015, excludes impact of OneWest transaction. |
(2) |
|
The post-revision amounts shown above for each year were used to determine PSU payouts during 2017, as described above under the heading, Earned 2014 PSU Awards in this Proxy Statement. PSU payouts would have been higher had pre-revision results been used. |
Adjusted Pre-Tax ROTCE is computed by dividing Adjusted
Pre-Tax Income for the period by average tangible common equity for the same period.
$ millions
(unless otherwise indicated) |
|
Year Ended December 31, 2016 (% annualized)
|
|
Nine Months Ended September 30 (CIT standalone) 2015 (% annualized)
|
|
Adjusted Pre-Tax Income (post-revision) |
|
$ |
797.8 |
|
|
$ |
425.8 |
|
|
Average Tangible Common Equity |
|
$ |
9,936 |
|
|
$ |
8,230 |
|
|
Adjusted Pre-Tax ROTCE (post-revision)(1) |
|
|
8.0% |
|
|
|
6.9% |
|
|
(1) |
|
The post-revision amounts shown above for each year were used to determine PSU payouts during 2017, as described above under the heading, Earned 2015 PSUs-ROTCE (2nd Tranche) in this Proxy Statement. PSU payouts would have been higher had pre-revision results been used. |
- 57 -
Adjusted Total Net Revenue is a non-GAAP measure that
represents the combination of net finance revenue and other income and is an aggregation of all sources of revenue for the Company. The source of the
data is various statement of income line items for continuing operations and CIT Aerospace discontinued operations, arranged in a different order, and
with different subtotals than included in the statement of income, therefore considered non-GAAP.
$
millions |
|
Year Ended December 31, 2016
|
|
|
|
CIT
Continuing
Operations
|
|
CIT Aerospace
Discontinued
Operations
|
|
Total
|
|
Interest income |
|
$ |
1,911.5 |
|
|
$ |
72.8 |
|
|
$ |
1,984.3 |
|
|
Rental income on operating leases |
|
|
1,031.6 |
|
|
|
1,236.8 |
|
|
|
2,268.4 |
|
|
Finance revenue |
|
$ |
2,943.1 |
|
|
$ |
1,309.6 |
|
|
$ |
4,252.7 |
|
|
Interest expense |
|
|
(753.2 |
) |
|
|
(369.3 |
) |
|
|
(1,122.5 |
) |
|
Depreciation on operating lease equipment(1) |
|
|
(261.1 |
) |
|
|
(451.7 |
) |
|
|
(712.8 |
) |
|
Maintenance and other operating lease expenses |
|
|
(213.6 |
) |
|
|
(32.1 |
) |
|
|
(245.7 |
) |
|
Net finance revenue |
|
$ |
1,715.2 |
|
|
$ |
456.5 |
|
|
$ |
2,171.7 |
|
|
Other income |
|
|
150.6 |
|
|
|
22.5 |
|
|
|
173.1 |
|
|
Adjusted Total net revenue |
|
$ |
1,865.8 |
|
|
$ |
479.0 |
|
|
$ |
2,344.8 |
|
|
Canadian TRS Impact |
|
|
241.9 |
|
|
|
n/a |
|
|
|
241.9 |
|
|
Adjusted total net revenue (post-revision) |
|
$ |
2,107.7 |
|
|
$ |
479.0 |
|
|
$ |
2,586.7 |
|
|
Adjustment for revision |
|
|
(5.1 |
) |
|
|
n/a |
|
|
|
(5.1 |
) |
|
Adjusted total net revenue (pre-revision)(2) |
|
$ |
2,102.6 |
|
|
$ |
479.0 |
|
|
$ |
2,581.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
For purposes of calculating adjusted total net revenue, depreciation on operating lease equipment for CIT Aerospace discontinued operations was increased by $106.1 million, the amount by which total net revenue benefited due to suspended depreciation related to operating lease equipment to be sold to Avolon. |
(2) |
|
The pre-revision amount shown above for 2016 was used by the Compensation Committee to determine annual performance and resulting STI awards during its annual scorecard review for all executives. STI awards would have been higher had post-revision results been used. |
AEA is computed using month end balances and is the
average of earning assets (defined below). We use this average for certain key profitability ratios, including return on AEA, Net Finance Revenue as a
percentage of AEA and operating expenses as a percentage of AEA for the respective period.
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.
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.
Credit Provision (provision for credit losses as % of AEA)
reflects loss adjustments related to loans recorded at amortized cost, off-balance sheet commitments, and indemnification agreements as a percentage of
AEA. AEA is a non-GAAP measure.
$
millions |
|
Year Ended December 31, 2016 (% annualized) |
|
Nine Months Ended September 30 (CIT standalone) 2015 (% annualized) |
|
Provision for Credit Losses (Reported) |
|
$ |
194.7 |
|
|
|
0.33 |
% |
|
$ |
102.9 |
|
|
|
0.34 |
% |
Discontinued operations/OneWest transaction(1) |
|
|
15.6 |
|
|
|
0.03 |
% |
|
|
(20.7 |
) |
|
|
(0.07 |
%) |
Provision for Credit Losses (Adjusted) |
|
$ |
210.3 |
|
|
|
0.36 |
% |
|
$ |
82.2 |
|
|
|
0.27 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
For 2016, represents CIT Aerospace discontinued operations; for 2015, represents estimated impact of OneWest transaction. |
Earning Assets is the sum of finance receivables (defined
below), operating lease equipment, financing and leasing assets held for sale, interest-bearing cash, investment securities and securities purchased
under agreements to resell less the credit balances of factoring clients as of a specific date.
- 58 -
Finance Receivables include loans, capital lease
receivables, factoring receivables and rent receivable on operating lease equipment, and does not include amounts contained within Assets Held for Sale
(AHFS).
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 Companys
potential dilutive instruments include unvested RSU and PBRSU grants, PSU grants and stock options. In periods when there is a net loss, these shares
would not be included in the EPS computation as the result would have an anti-dilutive effect.
|
|
Year Ended
2016 |
|
Nine Months Ended
September 30
(CIT standalone)
2015 (% annualized) |
|
Year Ended 2014 |
|
Fully Diluted EPS (“post-revision”) |
|
$ |
(4.20 |
) |
|
$ |
1.20 |
|
|
$ |
5.91 |
|
|
Adjustments(1) |
|
|
6.98 |
|
|
|
0.53 |
|
|
|
(2.37 |
) |
|
Adjusted Fully Diluted EPS (post-revision)(2) |
|
$ |
2.78 |
|
|
$ |
1.73 |
|
|
$ |
3.53 |
|
|
(1) |
|
For 2016, includes adjustments for discrete tax items, benefit from restructuring charges and debt extinguishment charges better than plan, one-time gain from sale of Canada business, Goodwill and other impairments and Canadian TRS impact; for 2015, includes one-time losses for OneWest transaction costs, international portfolio impairment, impairment on certain assets held for sale and currency translation adjustment on UK and Mexico portfolio sales; for 2014, includes adjustments for VA tax reversal and other discrete tax items. |
(2) |
|
The post-revision amounts shown above for each year were used to determine PSU payouts during 2017, as described above under the heading, Earned 2014 PSU Awards in this Proxy Statement. PSU payouts would have been higher had pre-revision results been used. |
Net Finance Revenue (NFR) is defined as Net
Interest Revenue (defined below) plus net operating lease revenue (rental income on operating leases less depreciation on operating lease equipment and
maintenance and other operating lease expenses). When divided by AEA, the product is defined as Net Finance Margin
(NFM).
Net Interest Revenue reflects interest and fees on finance
receivables, interest on interest-bearing cash, and interest/dividends on investments less interest expense on deposits and
borrowings.
Operating Expenses excludes restructuring costs and
intangible asset amortization.
$
millions |
|
Year Ended December 31, 2016 |
Operating Expenses from Continuing Operations (Reported) |
|
$ |
1,221.7 |
|
Operating Expenses from CIT Aerospace Discontinued Operations |
|
|
101.9 |
|
Total Operating Expenses (“pre-revision”) |
|
$ |
1,323.5 |
|
Benefit from loss on debt extinguishment better than plan and revision |
|
|
124.7 |
|
Adjusted Total Operating Expenses (pre-revision)(1) |
|
$ |
1,448.2 |
|
|
|
|
|
|
(1) |
|
The pre-revision amount shown above for 2016 was used by the Compensation Committee to determine annual performance and resulting STI awards during its annual scorecard review for all executives. PSU payouts would have been higher had post-revision results been used. |
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 CITs 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.
Total Classified Exposure means consolidated credit
exposure for all Classified Assets as a percentage of the Companys total Consolidated Credit Exposure excluding loss share assets, i.e., OneWest
acquired mortgages and reverse mortgages.
- 59 -
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.
2016 SUMMARY COMPENSATION
TABLE
The table below sets forth compensation information for our NEOs
relating to 2016, 2015, and 2014, as applicable, in accordance with SEC rules. Pursuant to these rules, NEOs may vary from year to
year.
Name
and Principal Position | |
Year | |
Salary (1) ($) | |
Stock Awards (2) ($) | |
Non-Equity Incentive Plan Compensation (3) ($) | |
Change in Pension Value and Nonqualified Deferred Compensation Earnings (4)(5) ($) | |
All Other Compensation (6) ($) | |
Total ($) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Ellen R. Alemany (7) | |
| 2016 | | |
$ | 883,333 | | |
$ | 4,500,000 | | |
$ | 1,600,000 | | |
$ | — | | |
$ | 55,095 | | |
$ | 7,038,428 | |
Chairwoman of the Board and | |
| 2015 | | |
$ | 161,795 | | |
$ | 2,805,000 | | |
$ | 300,000 | | |
$ | — | | |
$ | 4,757 | | |
$ | 3,271,552 | |
Chief Executive Officer | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
E. Carol Hayles | |
| 2016 | | |
$ | 600,000 | | |
$ | 1,197,500 | | |
$ | 720,000 | | |
$ | 2,161 | | |
$ | 11,002 | | |
$ | 2,530,663 | |
Executive
Vice President and
Chief Financial Officer | |
| 2015 | | |
$ | 520,000 | | |
$ | 1,129,000 | | |
$ | 697,500 | | |
$ | 2,061 | | |
$ | 16,365 | | |
$ | 2,364,926 | |
John Erickson (8) | |
| 2016 | | |
$ | 411,158 | | |
$ | 1,100,000 | | |
$ | 750,000 | | |
$ | — | | |
$ | 10,802 | | |
$ | 2,271,960 | |
President, Consumer Banking and | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
President, California | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
C. Jeffrey Knittel | |
| 2016 | | |
$ | 600,000 | | |
$ | 2,350,000 | | |
$ | 1,090,000 | | |
$ | 391,712 | | |
$ | 11,002 | | |
$ | 4,442,714 | |
President, | |
| 2015 | | |
$ | 590,385 | | |
$ | 3,890,000 | | |
$ | 1,090,000 | | |
$ | 1,191,107 | | |
$ | 16,751 | | |
$ | 6,778,243 | |
CIT Transportation | |
| 2014 | | |
$ | 501,923 | | |
$ | 2,087,500 | | |
$ | 1,210,000 | | |
$ | 982,832 | | |
$ | 19,051 | | |
$ | 4,801,306 | |
Denise Menelly | |
| 2016 | | |
$ | 253,846 | | |
$ | 2,055,163 | | |
$ | 600,000 | | |
$ | — | | |
$ | 5,860 | | |
$ | 2,914,869 | |
Executive Vice President and | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Head of Technology & Operations | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
John A. Thain (9) | |
| 2016 | | |
$ | 250,000 | | |
$ | — | | |
$ | — | | |
$ | 8,964 | | |
$ | 21,223 | | |
$ | 280,187 | |
Former Chairman of the Board and | |
| 2015 | | |
$ | 1,007,051 | | |
$ | 9,137,500 | | |
$ | 1,225,000 | | |
$ | 5,729 | | |
$ | 64,840 | | |
$ | 11,440,120 | |
Chief Executive Officer | |
| 2014 | | |
$ | 1,003,846 | | |
$ | 6,387,500 | | |
$ | 1,362,500 | | |
$ | 9,075 | | |
$ | 73,302 | | |
$ | 8,836,223 | |
(1) |
|
Ms. Alemany received an increase resulting in an annual base
salary rate of $900,000 effective March 1, 2016. Ms. Hayles and Mr. Knittel each received 2016 annual base salaries at the rate of $600,000, and Ms.
Menelly received a 2016 annual base salary at the rate of $500,000. Mr. Thain and Mr. Erickson received a 2016 annual base salary at the rate of
$1,000,000 and $600,000, respectively. The amounts shown represent the salaries earned through December 31 of each year. |
(2) |
|
Amounts in this column represent the aggregate grant date fair
value of stock awards (PBRSUs, RSUs and PSUs at target, as applicable) granted during 2016, 2015 and 2014 and computed in accordance with ASC 718. The
amount shown for Ms. Menelly for 2016 includes a one-time grant of PBRSUs with a grant date value of $1,200,000 to compensate her for equity awards she
forfeited from her prior employer. The amount shown for Ms. Hayles includes PBRSUs with a grant date value of $97,500, granted during 2016 as part of
her 2015 STI in order to achieve at least 50% deferral of her total incentive awarded for 2015. Due to his retirement, Mr. Thain did not receive a 2016
equity-based award. The amounts shown 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, other than the one-time grant of PBRSUs for Ms. Menelly, which was determined using the 10 consecutive trading day average
price of CIT common stock through the last day of her employment with her prior employer. If performance against pre-established after-tax ROATCE
targets result in the maximum number of PSUs vesting, as more fully described in the Compensation Discussion and Analysis, for 2016 awards, the NEOs
would be entitled to a maximum award at 150% of target, with grant date fair values as follows: Ms. Alemany $3,375,000; Ms. Hayles
$825,000; Mr. Erickson $825,000; Mr. Knittel $1,762,500; and Ms. Menelly $600,000. The amount shown for Ms. Alemany for 2015
reflects a one-time grant of RSUs with a grant date value of $2,700,000 to compensate her for equity awards she forfeited from her prior employer and
RSUs with a grant date value of $105,000 in connection with her service as a director of CIT prior to becoming an executive officer. |
- 60 -
(3) |
|
2016 amounts shown represent the 2016 short-term incentive
payable in cash, described in the Compensation Discussion and Analysis. |
(4) |
|
2016 amounts shown represent the difference between the
cumulative actuarial present value of accumulated pension benefits on December 31, 2016 and December 31, 2015 under three defined benefit 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), in 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 were 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
2016 Pension Benefits Table in this Proxy Statement. |
(5) |
|
None of our NEOs received any above-market or preferential
earnings in respect of any plan or benefit provided by the Company. |
(6) |
|
The following supplemental table sets forth for 2016 the
components of compensation 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
|
|
|
|
|
$ |
49,360 |
|
|
$ |
5,333 |
|
|
$ |
402 |
|
|
$ |
55,095 |
|
|
|
|
|
$ |
|
|
|
$ |
10,600 |
|
|
$ |
402 |
|
|
$ |
11,002 |
|
|
|
|
|
$ |
|
|
|
$ |
10,500 |
|
|
$ |
302 |
|
|
$ |
10,802 |
|
|
|
|
|
$ |
|
|
|
$ |
10,600 |
|
|
$ |
402 |
|
|
$ |
11,002 |
|
|
|
|
|
$ |
|
|
|
$ |
5,625 |
|
|
$ |
235 |
|
|
$ |
5,860 |
|
|
|
|
|
$ |
10,522 |
|
|
$ |
10,600 |
|
|
$ |
101 |
|
|
$ |
21,223 |
|
Car and Driver
|
|
The amounts 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
|
|
Employer contributions under the CIT Group, Inc. Savings
Incentive Plan, our 401(k) plan (the Savings Incentive Plan), consist of a 100% match of a participants own pre-tax and Roth
contributions to the plan up to the first 4% of eligible pay (reduced from 6% in 2015), up to the annual limits established by the Internal Revenue
Service, as well as a supplemental employer contribution feature. The amounts shown represent matching contributions only, as no supplemental
contribution was made for 2016. |
Life Insurance
|
|
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 $500,000. Benefits pay is generally equal to a covered employees base salary plus an average of
other pay during the preceding 36 months. |
(7) |
|
Ms. Alemanys compensation for 2016 was based solely on her
role as CEO of CIT; Ms. Alemany did not receive additional compensation for serving as a director of CIT during 2016. Ms. Alemanys compensation
for 2015 reflects her roles as a director of CIT, Vice Chairwoman of CIT and CEO and President of CIT Bank, pursuant to SEC disclosure
rules. |
(8) |
|
Mr. Erickson was an executive officer through December 31,
2016. |
(9) |
|
Mr. Thain retired from CIT effective March 31, 2016. |
- 61 -
2016 GRANTS OF PLAN BASED
AWARDS
The table below sets forth equity and non-equity compensation
awards granted to our named executive officers during the year ended December 31, 2016. In accordance with SEC rules, the table does not include awards
granted during 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under Non-Equity Incentive
Plan Awards (2) |
|
Estimated Future Payouts Under Equity Incentive
Plan Awards (3) |
|
|
|
|
|
|
|
|
Name |
|
|
|
Grant Date |
|
Award Approval Date (1) |
|
Threshold ($) |
|
Target ($) |
|
Maximum ($) |
|
Threshold (#) |
|
Target (#) |
|
Maximum (#) |
|
All Other Stock Awards: Number of Shares
of Stock or Units |
|
Grant Date Fair Value of Stock and Option
Awards (7) ($) |
|
|
|
|
|
3/15/16 |
|
|
|
3/15/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,913 (4 |
) |
|
$ |
2,250,000 |
|
|
|
|
|
|
3/15/16 |
|
|
|
3/15/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,594 |
|
|
|
69,188 |
|
|
|
103,782 |
|
|
|
|
|
|
$ |
2,250,000 |
|
|
|
|
|
|
3/15/16 |
|
|
|
3/15/16 |
|
|
$ |
|
|
|
$ |
1,350,000 |
|
|
$ |
2,041,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/15/16 |
|
|
|
2/17/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,913 (4 |
) |
|
$ |
550,000 |
|
|
|
|
|
|
3/15/16 |
|
|
|
2/17/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,457 |
|
|
|
16,913 |
|
|
|
25,370 |
|
|
|
|
|
|
$ |
550,000 |
|
|
|
|
|
|
2/18/16 |
|
|
|
2/17/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,389 (5 |
) |
|
$ |
97,500 |
|
|
|
|
|
|
2/17/16 |
|
|
|
2/17/16 |
|
|
$ |
|
|
|
$ |
800,000 |
|
|
$ |
1,373,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/29/16 |
|
|
|
4/8/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,910 (4 |
) |
|
$ |
550,000 |
|
|
|
|
|
|
4/29/16 |
|
|
|
4/8/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,955 |
|
|
|
15,910 |
|
|
|
23,865 |
|
|
|
|
|
|
$ |
550,000 |
|
|
|
|
|
|
4/25/16 |
|
|
|
4/8/16 |
|
|
$ |
|
|
|
$ |
900,000 |
|
|
$ |
1,350,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/15/16 |
|
|
|
2/17/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,132 (4 |
) |
|
$ |
1,175,000 |
|
|
|
|
|
|
3/15/16 |
|
|
|
2/17/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,066 |
|
|
|
36,132 |
|
|
|
54,198 |
|
|
|
|
|
|
$ |
1,175,000 |
|
|
|
|
|
|
2/17/16 |
|
|
|
2/17/16 |
|
|
$ |
|
|
|
$ |
1,050,000 |
|
|
$ |
1,595,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/29/16 |
|
|
|
3/14/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,574 (4 |
) |
|
$ |
400,000 |
|
|
|
|
|
|
7/29/16 |
|
|
|
3/14/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,318 (6 |
) |
|
$ |
1,255,163 |
|
|
|
|
|
|
7/29/16 |
|
|
|
3/14/16 |
|
|
|
|
|
|
|