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 (Amendment No. )
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The Greenbrier Companies, Inc.
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2019 The Greenbrier Companies Notice of Annual Meeting of Shareholders & Proxy Statement
LETTER TO OUR SHAREHOLDERS
2018 WAS AN EXCITING YEAR FOR GREENBRIER. WE DELIVERED STRONG PERFORMANCE AND MUCH WAS ACCOMPLISHED. LOOKING FORWARD, WE WILL CONTINUE TO FOCUS ON DELIVERING SHAREHOLDER VALUE, AND POSITIONING THE COMPANY FOR LONG-TERM GROWTH.
William A. Furman Chairman, Chief Executive Officer and President November 2018
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Letter to Our Shareholders |
To Our Shareholders:
On behalf of our Board of Directors, I am pleased to invite you to attend the 2019 Annual Meeting of Shareholders at 2:00 p.m. on Wednesday, January 9, 2019. The meeting will be held at the Benson Hotel located in Portland, Oregon. The annual meeting will include an update on our business operations and a discussion of other important matters. We hope you can attend and look forward to seeing you there.
Our values and culture are the foundation for our strong performance and transformative growth over the last five years
When we were a much smaller enterprise, I defined the core values to guide Greenbrier, including quality, integrity, respect for people, safety and customer commitment. As we have grown we strive to maintain these values that have long defined us. We believe an enduring commitment to these values is essential to Greenbriers long-term growth. Success in a manufacturing environment cannot be sustained without daily focus on keeping our employees safe and healthy. Serving our customers by designing and delivering high-quality products and services is another manifestation of our values.
Our Board is actively engaged in Greenbriers strategic direction
At Greenbrier, strong corporate governance is foundational to our success. A highly engaged Board of Directors helps Greenbrier test our understanding of our markets and industry trends. The Board meets annually to review the Companys strategic plan. This year, the Board traveled to several of our worldwide locations to deepen their understanding of our customers, markets, and the cultures where we operate. Active engagement by the Board enables Greenbrier to refine our strategic direction to optimize long-term growth while maximizing current opportunities.
Our growth continues to be guided by diversity of thought, expression and background
Diversity helps business, society and individuals meet our highest potential. Greenbrier maintains a culture of diversity and works with others who share this commitment. Greenbriers company-wide talent development initiative emphasizes the importance of workplace diversity. Diversity is not limited to people. While maintaining focus on our key North American market, we continue to pursue new opportunities in geographically and culturally diverse markets around the world. Our growing worldwide footprint and international operations requires heightened cultural awareness from our Board and management team. International diversity allows us to better serve our customers and shareholders in many ways: supplementing our product offerings, accessing new markets and introducing new ideas and viewpoints.
We are committed to continuing engagement with our stakeholders
Greenbriers pursuit of growth and innovation is the result of committed focus on what has guided our success until now. This includes unwavering dedication to our customers, shareholders, employees and communities. We regularly engage with customers, attend investor conferences, hold quarterly employee meetings, take an active leadership role in industry associations and contribute our time and resources to community improvement efforts. Greenbrier maintains a commitment to meaningful interactions with our stakeholders. Over time we have emerged as one of the most trusted and respected firms in the freight rail transportation industry. This respect has made us the second-largest freight railcar builder in North America and the largest in South America and Europe. We work to earn this respect and be worthy of it, each day of the year.
Your vote is important
Whether or not you can attend the annual meeting in person, and no matter how many shares you own, please vote your shares as soon as possible. Your vote is very important. You may vote via the internet, by mail or by telephone following the instructions provided in the proxy statement.
On behalf of our Board of Directors and the entire Greenbrier team, we thank you for your continued support.
Sincerely,
William A. Furman
Chairman, Chief Executive Officer and President
November 2018
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
2019 ANNUAL MEETING INFORMATION
Meeting Date: Wednesday January 9, 2019 |
Meeting Place: Benson Hotel 309 SW Broadway Portland, Oregon |
Meeting Time: 2:00 p.m. (Pacific Time) |
Record Date: November 7, 2018 |
PROXY VOTING
Your vote is very important. Whether or not you plan to attend the Annual Meeting in person, please promptly vote by telephone or over the Internet, or by completing, signing, dating and returning your proxy card or voting instruction form so that your shares will be represented at the Annual Meeting.
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IN PERSON
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ONLINE
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BY PHONE
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BY MAIL
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Our Notice of Annual Meeting, Proxy Statement and Annual Report for the fiscal year ended August 31, 2018 are available at www.edocumentview.com/GBX.
The Annual Meeting will be webcast live on our website at www.gbrx.com under InvestorsEvents beginning at 2:00 p.m. Pacific Time on January 9, 2019. The Annual Meeting is being held for the purpose of voting on the items set forth below and to transact such other business as may properly come before the meeting.
ITEMS TO BE VOTED ON
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Page 4
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Advisory Approval of Executive Compensation
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Page 16
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Approval of Amendment to 2014 Employee Stock Purchase Plan
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Page 40
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Ratification of Appointment of Independent Auditors
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Page 42
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As of the date of this notice, the Company has not received notice of any matters, other than those set forth above, that may properly be presented at the Annual Meeting. If any other matters are properly presented for consideration at the meeting, the persons named as proxies on the proxy card, or their duly constituted substitutes, are authorized to vote the shares represented by proxy or otherwise act on those matters in accordance with their judgment.
Holders of record of our Common Stock at the close of business on November 7, 2018 are entitled to notice of, and to vote at, the Annual Meeting and any adjournments or postponements thereof.
By Order of the Board of Directors,
Sherrill A. Corbett Secretary November 14, 2018 |
PROXY SUMMARY
This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information you should consider. Please read this entire proxy statement carefully before voting. This proxy is first being released to shareholders on November 14, 2018.
PROPOSAL 1 Election of Directors |
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The Board recommends a vote FOR all Director Nominees
Our Nominating and Corporate Governance Committee and our Board recommend that shareholders vote FOR all director nominees as they have determined that each of the nominees possesses the right experience and qualifications to effectively oversee Greenbriers business strategy and risk management. All of the nominees are independent and all of the nominees are nominated for a three-year term.
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See Proposal 1, Election of Directors beginning on page 4 of this Proxy Statement.
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DIRECTOR NOMINEES
Name
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Primary Occupation & Other Directorships
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Age
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Director Since
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Committee Memberships
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Thomas B. Fargo |
Retired Military Commander
Directorships: Huntington Ingalls Industries (Chairman), Hawaiian Electric Industries, Matson
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70 |
2015 |
C Chair G | ||||
Duane C. McDougall, Lead Director |
Retired Chairman & CEO
Directorships: Boise Cascade, LLC
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66 |
2003 |
A,F C G | ||||
Donald A. Washburn |
Private Investor and former Executive
Directorships: Amedisys, Inc. (Chairman), LaSalle Hotel Properties (Trustee)
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74 |
2004 |
A C G |
A Audit Committee | C Compensation Committee | G Governance Committee | F Audit Committee Financial Expert |
Director Nominee Highlights
Our Board is pleased at the high caliber of our director nominees. All nominees are independent according to our heightened standard of independence and two of the three nominees hold leadership positions on the Board. Mr. McDougall serves as Lead Director and Admiral Fargo as Chair of the Compensation Committee. Mr. Washburn is our most recent outgoing Chair of the Governance Committee. Together, the nominees have a complementary balance of skills and experience that add to the broad strengths of the Board, including:
| Public company CEO experience |
| Legal experience |
| Public company board service |
| Military leadership |
| Public policy experience |
| International business experience |
| Financial training and expertise |
| Audit committee financial expert |
| Risk management knowledge and experience |
THE GREENBRIER COMPANIES |
2019 Proxy Statement |
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Proxy Summary |
Corporate Governance Highlights
Our corporate governance policies reflect best practices.
Independent Oversight |
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Greenbriers Board is composed of eight independent directors and our CEO and co-founder Bill Furman |
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All eight independent directors meet the NYSE and SEC standards for independence |
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Seven of the eight independent directors, including all committee members, committee Chairs, and the Lead Director, meet a heightened standard of independence |
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Regular executive sessions of independent directors are held at Board and committee meetings |
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The Board actively oversees strategy and risk management
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Board Refreshment |
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Appointed four new directors since 2014 to replace outgoing directors
The Board promotes ongoing director education |
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Board succession planning is an ongoing process with a focus on diversity and mix of tenure of directors |
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There is an ongoing process to identify highly qualified candidates for Board service |
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Annual Board and committee self-assessments are conducted |
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Directors cannot stand for election after reaching age 77
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High Governance Standards |
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Committed to shareholder engagement
Our Code of Business Conduct and Ethics is applicable to all directors and executives |
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Average attendance of directors at Board and committee meetings exceeds 97% over the last five years |
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Director and executive stock ownership requirements are maintained |
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Annual review of all directors independence |
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Hedging of Company stock by directors and executives is prohibited |
PROPOSAL 2 Advisory
Approval |
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The Board recommends a vote FOR this proposal
Our Board recommends that shareholders vote FOR the advisory approval of the compensation of our named executive officers for fiscal year 2018.
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See Proposal 2, Advisory Approval of Executive Compensation beginning on page 16 of this Proxy Statement.
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Executive Compensation At-a-Glance
At our 2018 Annual Meeting, roughly 95% of shareholders who voted cast votes in favor of approving the compensation of our named executive officers. With shareholder feedback we have continued to modify our compensation practices by extending the measurement period for long-term incentives from 30 months to 36 months and by adding a relative performance metric.
2018 Performance Highlights
Greenbrier delivered strong performance in fiscal year 2018. Below are a few of the measures used in our executive incentive compensation programs.
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Annual Adjusted EBITDA (Pre-Bonus) $339 MILLION Goal: $305 million
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Return On Invested Capital (ROIC) 13.9% Goal: 11%
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30-Month Cumulative EBITDA $839 MILLION Goal: $650 million
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We also made significant progress against our strategic priorities included by the Board in our incentive compensation plan: the talent pipeline initiative and the integration of international operations in Europe and Brazil.
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2019 Proxy Statement |
THE GREENBRIER COMPANIES |
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Proxy Summary |
Compensation Highlights
The Companys strong results in fiscal year 2018 reflect the intended design of our pay-for-performance program. These results translated into payouts on incentive awards for named executive officers that were above goal targets for fiscal year 2018.
ANNUAL INCENTIVE | 2018 AWARD | PAYOUT (% above target) | ||||||||||||||
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1-year performance period |
Greenbrier achieved strong operating performance as we met or exceeded most of the financial goals we set for the year. | +30% |
AVERAGE FOR ALL NEOS | ||||||||||||
LONG-TERM INCENTIVE | 2018 PERFORMANCE AWARD VESTING | PAYOUT (% above target) | ||||||||||||||
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30 month performance period
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Greenbrier also performed above target performance levels over the 2016 - 2018 performance period resulting in payouts above goal targets. | +15% |
AVERAGE FOR ALL NEOS |
PROPOSAL 3 Approval of Amendment to 2014 Employee Stock Purchase Plan |
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The Board recommends a vote FOR this proposal
Our Board recommends that shareholders vote FOR approval of the Amendment to the 2014 Employee Stock Purchase Plan. This amendment extends the 2014 Employee Stock Purchase Plan for an additional five years.
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See Proposal 3, Approval of Amendment to 2014 Employee Stock Purchase Plan beginning on page 40 of this Proxy Statement.
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Highlights of Employee Stock Purchase Plan
Our Employee Stock Purchase Plan (ESPP) is a valuable incentive that allows employees to use payroll deductions to purchase shares of the Companys common stock. Matching contributions by the Company result in a 15% purchase price discount for employees.
NON-DILUTIVE IMPLEMENTATION
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SUPPORTS TALENT INITIATIVE
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Purchases of stock under our ESPP are made on the open market so as to avoid dilution.
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Our ESPP contributes to our employment goals in several ways: it is an employee recruitment and retention tool for the Company, and it aligns our employee interests with shareholder interests by encouraging employees to become shareholders.
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PROPOSAL 4 Ratification of Appointment of Auditors |
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The Board recommends a vote FOR this proposal
Our Board recommends that shareholders vote FOR ratification of the appointment of KPMG LLP as auditors for fiscal year 2019.
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See Proposal 4, Ratification of Appointment of Auditors beginning on page 42 of this Proxy Statement.
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THE GREENBRIER COMPANIES |
2019 Proxy Statement |
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ELECTION OF DIRECTORS
The three nominees recommended by our Nominating and Corporate Governance Committee and by the Board of Directors for election as Class I directors are Thomas B. Fargo, Duane C. McDougall and Donald A. Washburn. The nominees are nominated to serve until the Annual Meeting of Shareholders in 2022, or until their respective successors are elected and qualified. If a nominee is unable or unwilling to serve as a director at the date of the Annual Meeting or any adjournment or postponement thereof, the proxies may be voted for a substitute nominee, designated by the proxy holders or by the present Board of Directors to fill such vacancy, or for the other nominees named without nomination of a substitute, or the number of directors may be reduced accordingly. The Board of Directors has no reason to believe that any of the nominees will be unwilling or unable to serve if elected a director.
Under Oregon law, the directors who receive the greatest number of votes cast will be elected directors. Abstentions and broker non-votes will have no effect on the results of the vote.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ADMIRAL FARGO, MR. MCDOUGALL AND MR. WASHBURN. UNLESS MARKED OTHERWISE, PROXIES RECEIVED WILL BE VOTED FOR THE ELECTION OF THE THREE NOMINEES.
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Directors are divided into three classes, with an equal number of directors in each class. One class is elected each year for a three-year term. The following table sets forth certain information about each nominee for election to the Board and each continuing director.
Name |
Age | Independent | Positions | Director Since |
Committee Memberships |
Expiration of Term |
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Nominees / Class I Directors |
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Thomas B. Fargo |
70 | Director | 2015 | C Chair, G | 2019 | |||||||||||||||||||
Duane C. McDougall |
66 | Director and Lead Director | 2003 | A, C, F, G | 2019 | |||||||||||||||||||
Donald A. Washburn |
74 | Director | 2004 | A, C, G | 2019 | |||||||||||||||||||
Class II Directors |
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Wanda F. Felton |
60 | Director | 2017 | A, G | 2020 | |||||||||||||||||||
Graeme A. Jack |
67 | Director | 2006 | A Chair, C, F, G | 2020 | |||||||||||||||||||
David L. Starling |
68 | Director | 2017 | C, G | 2020 | |||||||||||||||||||
Class III Directors |
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William A. Furman |
74 | |
Chairman of the Board, Chief Executive Officer and President |
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1981 | 2021 | ||||||||||||||||||
Charles J. Swindells |
76 | Director | 2005 | 2021 | ||||||||||||||||||||
Kelly M. Williams
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54
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Director
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2015
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A, G Chair
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2021
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Independent A Audit Committee C Compensation Committee F Audit Committee Financial Expert G Nominating and Corporate Governance Committee
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2019 Proxy Statement |
THE GREENBRIER COMPANIES |
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Our Board is composed of eight independent directors and our CEO and co-founder, Bill Furman. Below we have highlighted key areas of experience that qualify each director to serve on the Board. The Board has determined it is in the best interests of the Company and its shareholders for each director to continue serving on the Board subject to shareholder approval of each nominee at the Annual Meeting.
Thomas B. Fargo |
AGE: 70 POSITION: Director and Chair of the Compensation Committee |
DIRECTOR SINCE: 2015
CURRENT TERM |
EXPERIENCE: Admiral Fargo has served as a member of the Board since 2015. Admiral Fargo is a retired military commander with subsequent private sector experience in maritime and other transportation industries. As commander of the U.S. Pacific Command from 2002 until 2005, Admiral Fargo led the worlds largest unified command while directing the joint operations of the Army, Navy, Marine Corps and Air Force. In this role Admiral Fargo acted as U.S. military representative for collective defense arrangements in the Pacific, ultimately responsible to the President and the Secretary of Defense through the chairman, Joint Chiefs of Staff. Admiral Fargos naval career included six tours in Washington, D.C. and extensive duties in the Pacific, Indian Ocean and Middle East including serving as Commander-in-Chief of the U.S. Pacific Fleet and Commander of the Naval Forces of the Central Command. Admiral Fargo serves as Chairman of Huntington Ingalls Industries, Americas largest military shipbuilder, and on the Boards of Directors for Hawaiian Electric Industries, Matson and United States Automobile Association. Previously, he served on the Boards of Northrop Grumman Corporation, Alexander & Baldwin, Inc. and Hawaiian Airlines.
QUALIFICATIONS: Admiral Fargo brings executive leadership, operational and international expertise to the Board.
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Wanda F. Felton |
AGE: 60 POSITION: Director |
DIRECTOR SINCE: 2017
CURRENT TERM EXPIRATION: 2020 |
EXPERIENCE: Ms. Felton has served as a member of the Board since 2017. Ms. Felton has over 30 years of financial industry experience in commercial and investment banking. Ms. Felton was a Presidential Appointee, twice confirmed by the U.S. Senate to serve on the board of the Export Import Bank of the United States as Vice Chair of the Board and First Vice President from June 2011 to November 2016. In that role, she was on a team of economic deputies that advised the National Security Staff and the Presidents Export Council. Ms. Felton was actively engaged in helping U.S. companies penetrate international markets and develop pragmatic financing solutions to win sales. Ms. Felton had oversight responsibility for the Office of the Chief Financial Officer and enterprise risk management functions, and served on the banks credit committee, which is responsible for approving debt financings over $10 million for a broad range of financing types across a range of industries. A significant portion of such financings supported the export of U.S.-manufactured transportation equipment, including rail equipment and aircraft, to emerging markets. Ms. Felton serves as a Trustee of The Cooper Union for the Advancement of Science and Art.
QUALIFICATIONS: Ms. Felton brings her significant prior experience with emerging markets business development and capital raising to the Board.
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William A. Furman |
AGE: 74 POSITIONS: Chairman of the Board of Directors, Chief Executive Officer and President |
DIRECTOR SINCE: 1981
CURRENT TERM EXPIRATION: 2021 |
EXPERIENCE: Mr. Furman has served as a member of the Board since 1981 and as the Companys Chief Executive Officer since 1994. He has served as the Chairman of the Board of Directors since January 2014. Mr. Furman has been associated with the Company and its predecessor companies since 1974. Prior to 1974, Mr. Furman was Group Vice President for the Leasing Group of TransPacific Financial Corporation. Earlier he was General Manager of the Finance Division of FMC Corporation. Mr. Furman formerly served as a director of Schnitzer Steel Industries, Inc., a steel recycling and manufacturing company.
QUALIFICATIONS: As a founder of the Company, Mr. Furman brings executive management and railcar industry experience to the Board as well as historical perspective on the Companys origins and evolution.
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THE GREENBRIER COMPANIES |
2019 Proxy Statement |
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Board Composition |
Graeme A. Jack |
AGE: 67 POSITION: Director and Chair of the Audit Committee |
DIRECTOR SINCE: 2006
CURRENT TERM EXPIRATION: 2020 |
EXPERIENCE: Mr. Jack has served as a member of the Board since 2006. He is a retired partner of PricewaterhouseCoopers LLP in Hong Kong. Mr. Jack is an independent non-executive director of COSCO Shipping Development Company Limited, the trustee manager of Hutchison Port Holdings Trust and Hutchison China Meditech Limited.
QUALIFICATIONS: Mr. Jack brings accounting and financial reporting expertise to the Board as well as extensive experience in international business transactions in Asia generally and in China in particular.
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Duane C. McDougall |
AGE: 66 POSITIONS: Director and Lead Director |
DIRECTOR SINCE: 2003
CURRENT TERM EXPIRATION: 2019 |
EXPERIENCE: Mr. McDougall has served as a member of the Board since 2003 and as Lead Director since 2014. Mr. McDougall served as Chairman and Chief Executive Officer of Boise Cascade, LLC, a privately held manufacturer of wood products, from December 2008 to August 2009. He was President and Chief Executive Officer of Willamette Industries, Inc., an international forest products company, from 1998 to 2002. Prior to becoming President and Chief Executive Officer, he served as Chief Accounting Officer during his 23-year tenure with Willamette Industries, Inc. He also served as Chairman of the Board of Boise Cascade until April 2015 and still serves as a director on the Board and also serves as a Director of StanCorp Financial Group, which was acquired in March 2016 by a Japanese company, Meiji Yasuda Life Insurance Company. Mr. McDougall has also served as a Director of West Coast Bancorp, a position from which he resigned effective December 31, 2011; as a Director of Cascade Corporation until its sale in 2013; and as a Director of several non-profit organizations.
QUALIFICATIONS: Mr. McDougall brings executive leadership and accounting and financial reporting expertise to the Board.
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David L. Starling |
AGE: 68 POSITION: Director |
DIRECTOR SINCE: 2017
CURRENT TERM EXPIRATION: 2020 |
EXPERIENCE: Mr. Starling has served as a member of the Greenbrier Board of Directors since 2017. Mr. Starling also serves as Chairman of the Board of Ports America, the largest port and terminal operator in the United States. Additionally, Mr. Starling is a Senior Advisor for Oaktree Infrastructure Fund, with nearly $2.5 billion assets under management, and a part of Oaktree Capital Management. The Fund invests in companies that provide products and services to support infrastructure assets. Previously, Mr. Starling served as Director, President and Chief Executive Officer of Kansas City Southern (KCS), a Class I railroad, from 2010 to 2016. He served as President and Chief Operating Officer of KCS from 2008 to 2010. Prior to that, he was Vice Chairman of the Board of Directors of Kansas City Southern de Mexico. Mr. Starling has served as Vice Chairman of the Board of Directors of Panama Canal Railway Company and Panarail. Before joining KCS, Mr. Starling served as President and Director General of Panama Canal Railway Company from 1999 through 2008.
QUALIFICATIONS: Mr. Starlings more than 40 years of operating experience provides Greenbriers Board with unique railroading expertise in both North America and international markets.
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2019 Proxy Statement |
THE GREENBRIER COMPANIES |
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Charles J. Swindells |
AGE: 76 POSITION: Director |
DIRECTOR SINCE: 2005
CURRENT TERM EXPIRATION: 2021 |
EXPERIENCE: Mr. Swindells has served as a member of the Board since 2005. He also provides consulting services to the Company on international projects. Mr. Swindells is currently engaged as an advisor to Bessemer Trust, an independent provider of investment management and wealth planning to families and individuals. Mr. Swindells served as the Vice Chairman, Western Region of U.S. Trust, Bank of America, Private Wealth Management from August 2005 to January 2009. Mr. Swindells served as United States Ambassador to New Zealand and Samoa from 2001 to 2005. Before becoming Ambassador, Mr. Swindells was Vice Chairman of US Trust Company, N.A.; Chairman and Chief Executive Officer of Capital Trust Management Corporation; and Managing Director/Founder of Capital Trust Company. He also served as Chairman of World Wide Value Fund, a closed-end investment company listed on the NYSE. Mr. Swindells was one of five members on the Oregon Investment Council overseeing the $20 billion Public Employee Retirement Fund Investment Portfolio and was a member of numerous non-profit boards of trustees, including serving as Chairman of the Board for Lewis & Clark College in Portland, Oregon.
QUALIFICATIONS: Mr. Swindells brings financial and global business expertise to the Board.
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Donald A. Washburn |
AGE: 74 POSITION: Director |
DIRECTOR SINCE: 2004
CURRENT TERM EXPIRATION: 2019 |
EXPERIENCE: Mr. Washburn has served as a member of the Board since 2004. Mr. Washburn is a private investor. Mr. Washburn served as Executive Vice President of Operations of Northwest Airlines, Inc., an international airline, from 1995 to 1998. Mr. Washburn also served as Chairman and President of Northwest Cargo from 1997 to 1998. Prior to becoming Executive Vice President, he served as Senior Vice President for Northwest Airlines, Inc. from 1990 to 1995. Mr. Washburn served in several positions from 1980 to 1990 for Marriott Corporation, an international hospitality company, most recently as Executive Vice President. He also serves as Chairman of the Board of Amedisys, Inc., and serves as a trustee of LaSalle Hotel Properties as well as privately held companies and non-profit corporations. Mr. Washburn received his BBA, cum laude, from Loyola University of Chicago, an MBA from Northwestern Universitys Kellogg School of Management and a J.D., cum laude, from Northwestern Universitys Pritzker School of Law. He has continued his professional education in business and law attending Harvard Business School, Stanford Law School, Kellogg School of Management, Wharton Business School at the University of Pennsylvania and industry seminars, including the Boardroom Summit and Stanford Directors College.
QUALIFICATIONS: Mr. Washburn brings executive management and operational expertise to the Board.
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Kelly M. Williams |
AGE: 54 POSITION: Director and Chair of the Nominating and Corporate Governance Committee |
DIRECTOR SINCE: 2015
CURRENT TERM EXPIRATION: 2021 |
EXPERIENCE: Ms. Williams has served as a member of the Board since 2015. Ms. Williams is a senior advisor of GCM Grosvenor Private Markets. Until June 1, 2015 Ms. Williams was President of GCM Grosvenor Private Markets, a member of its Management Committee and a member of its Investment Committee. Prior to joining GCM Grosvenor, Ms. Williams was a Managing Director, the Group Head and the chair of the compensation committee of the Customized Fund Investment Group of Credit Suisse Group AG from 2000 through 2013, after Credit Suisse acquired Donaldson, Lufkin and Jenrette, where Ms. Williams was Director of the Customized Fund Investment Group. While serving as Group Head of the Customized Fund Investment Group of Credit Suisse Group AG, she also chaired its Compensation Committee. She was with The Prudential Insurance Company of America from 1993 to 2000, where she was an Executive Director and a founder of the Customized Fund Investment Group in 1999. Prior to joining Prudential, Ms. Williams was an associate with Milbank, Tweed, Hadley & McCloy LLP, where she specialized in global project finance. She graduated magna cum laude from Union College in 1986 with a Bachelor of Arts degree in Political Science and Mathematics and received her Juris Doctor from New York University School of Law in 1989. Ms. Williams serves in leadership positions on the boards of several non-profits, and has won numerous awards for leadership and public service. In addition, Ms. Williams was named as one of The Most Powerful Women in Finance by American Banker Magazine from 2011- 2014. Ms. Williams also serves as a board member of a number of non-profit institutions, President of the Nantucket Historical Association, and as a board member of Union College.
QUALIFICATIONS: Ms. Williams brings executive management, financial and investment expertise to the Board.
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THE GREENBRIER COMPANIES |
2019 Proxy Statement |
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Board Composition |
Board Composition |
We believe our Board best serves the Company and its shareholders when there is a balance between fresh perspectives and longer serving directors who bring continuity in a cyclical business. To promote thoughtful board refreshment we have:
| Appointed four new directors since 2014 to replace outgoing directors |
| Appointed two of the four recently appointed directors to serve in committee leadership positions: Admiral Fargo as Chair of the Compensation Committee and Ms. Williams as Chair of the Nominating and Corporate Governance Committee (the Governance Committee) |
| Adopted a policy that directors cannot stand for election after reaching age 77 |
| Updated the process for annual Board and committee reviews |
| Required that directors must meet a heightened standard of independence to serve on a committee |
In accordance with our governing documents, the Company has determined that a total of nine members on our Board of Directors is the most appropriate size at this time. The Company may adjust the size of the Board in the future as necessary to respond to changes in the Companys scale, integration, size, capitalization and other factors.
The following are a few key metrics reflecting the balance of skills, qualifications and experience on our Board.
VARIED TENURE INTERNATIONAL EXPERIENCE MAJORITY INDEPENDENT |
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Our Board is keenly focused on diversity as part of our company-wide talent development initiative, including at the Board and executive levels. The following provides an overview of our Board demographics.
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2/9 WOMEN ON THE BOARD
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1/9 MINORITIES ON THE BOARD
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1/9 DIRECTORS BORN OUTSIDE THE U.S.
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1/4 WOMEN IN BOARD LEADERSHIP POSITIONS
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2019 Proxy Statement |
THE GREENBRIER COMPANIES |
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Board Composition |
Experience Contributions
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Thomas
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Wanda
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William
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Graeme
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Duane
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David
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Charles
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Donald
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Kelly
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Public Company |
🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | ||||||||||||
Financial Expertise |
🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | |||||||||||
Rail/Transport/Industrial |
🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | |||||||||||
Public Policy |
🌑 | 🌑 | 🌑 | 🌑 | ||||||||||||||
International |
🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | |||||||||
Diversity Initiatives |
🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | |||||||||
Legal Training |
🌑 | 🌑 | ||||||||||||||||
Risk Management |
🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | |||||||||
Talent Development |
🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | |||||||||
Government/Military |
🌑 | 🌑 | 🌑 | |||||||||||||||
CEO/President |
🌑 | 🌑 | 🌑 | 🌑 | 🌑 |
The Governance Committee considers diversity of gender, race, ethnicity, gender identity and expression, age, cultural background, geographical and professional experience in evaluating candidates for membership on the Board. The Governance Committee believes that the backgrounds and qualifications of the directors, considered as a group, should provide a diverse mix of skills, knowledge, attributes and experiences that cover the spectrum of areas that affect the Companys business. In general, the composition of the Board is diversified across financial, accounting, legal, operational and corporate governance expertise, as well as expertise within the Companys business and industry, including experience in global markets, manufacturing, finance and rail. Candidates for director nominees are considered in the context of current perceived needs of the Board as a whole and the Governance Committee regularly assesses whether the mix of skills, experience and background of our Board is appropriate for the Company.
THE GREENBRIER COMPANIES |
2019 Proxy Statement |
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Corporate Governance |
Board Committees, Meetings and Charters
The Board plays a critical enterprise-level oversight function. To effectively carry out this function, the Board maintains three standing committees: the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee. Each committee is composed entirely of independent directors in accordance with SEC and NYSE rules and standards. These directors serving on committees also satisfy our heightened standard of independence described above. Below is a general overview of the role each committee plays in overseeing the business and affairs of the Company.
Compensation Committee |
Audit Committee |
Nominating and Corporate
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The Compensation Committee is focused on increasing shareholder value by setting compensation for senior management and is responsible for:
1) Oversight of compensation strategy and plan design for Company executives
2) Evaluating CEO performance and recommending CEO compensation to the Board
3) Review of policies relating to director compensation and stock ownership guidelines
4) Assessing the independence of any compensation consultants
|
The Audit Committee safeguards our shareholders investment in the Company by overseeing:
1) The integrity of the Companys financial statements
2) Company compliance with legal and regulatory requirements
3) Performance of the Companys internal audit plan and functions and internal controls
4) Engagement and oversight of independent registered public accounting firm
|
The Nominating and Corporate Governance Committee works to ensure that shareholders are effectively represented by:
1) Guiding board refreshment including the identification of director nominees
2) Overseeing the development of process and protocols regarding CEO succession
3) Reviewing the structure and composition of Board committees
4) Overseeing annual evaluations of the Board and its committees |
During fiscal year 2018, the Board at large held five meetings, the Audit Committee held four meetings, the Nominating and Corporate Governance Committee held four meetings, and the Compensation Committee held five meetings. All directors are invited and encouraged to attend all committee meetings. In addition, our non-management independent Board members meet without management present in conjunction with committee meetings and at least once annually at a regularly scheduled executive session where the Lead Director presides. All of the incumbent directors attended at least 90% of the Board and committee meetings on which they served during the year. The Companys policy is to encourage Board members to attend the Companys Annual Meetings of Shareholders. All of the Companys directors attended the Annual Meeting of Shareholders held on January 5, 2018. The composition of each of the Board committees is set out below.
Name
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Independent
|
Audit Committee
|
Compensation
|
Nominating and Corporate Governance Committee
| ||||||||||||||||
William A. Furman
|
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Thomas B. Fargo
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Chair
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Wanda F. Felton
|
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Graeme A. Jack
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Chair, F
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Duane C. McDougall (Lead Director)
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, F
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David L. Starling
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Charles J. Swindells
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Donald A. Washburn
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Kelly M. Williams
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|
|
Chair
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Independent Member F Audit Committee Financial Expert
The Board of Directors has determined that Messrs. McDougall and Jack qualify as audit committee financial experts under federal securities laws. Each of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee maintains a charter. These charters, along with the Companys Corporate Governance Guidelines and Code of Business Conduct and Ethics, are available to shareholders on the Companys website at www.gbrx.com.
THE GREENBRIER COMPANIES |
2019 Proxy Statement |
11
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Corporate Governance |
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2019 Proxy Statement |
THE GREENBRIER COMPANIES |
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Corporate Governance |
THE GREENBRIER COMPANIES |
2019 Proxy Statement |
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Corporate Governance |
The following table summarizes the compensation of the non-employee Board members for fiscal year 2018.
Name |
Fees Earned ($) |
Stock Awards ($)(1) |
Change in ($) |
All Other ($)(2) |
Total ($) | |||||
Thomas B. Fargo
|
107,500
|
145,027
|
|
2,771
|
255,298
| |||||
Wanda F. Felton
|
94,375
|
145,027
|
|
2,771
|
242,173
| |||||
Graeme A. Jack
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121,250
|
145,027
|
|
2,771
|
269,048
| |||||
Duane C. McDougall
|
171,250
|
145,027
|
|
2,771
|
319,048
| |||||
David L. Starling
|
92,500
|
145,027
|
|
2,771
|
240,298
| |||||
Charles J. Swindells
|
81,875
|
145,027
|
|
122,771
|
349,673
| |||||
Donald A. Washburn
|
108,750
|
145,027
|
|
2,771
|
256,548
| |||||
Kelly M. Williams
|
101,875
|
145,027
|
|
2,771
|
249,673
|
(1) | Amounts shown in this column are calculated based upon the aggregate grant date fair value. Such amounts may not correspond to the actual value that will be realized by them if and when the restricted stock awards vest. Each director received 2,842 shares as stock awards during fiscal year 2018. |
(2) | Amounts in this column represent payment of dividends from the Company on shares of restricted stock during fiscal year 2018, and for Mr. Swindells also include $120,000 in consulting fees he received in fiscal year 2018 pursuant to a consulting agreement with the Company entered into in January 2016. |
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2019 Proxy Statement |
THE GREENBRIER COMPANIES |
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GOVERNANCE PRIORITIES
In fiscal year 2019 the Company continues its steady effort to increase transparency with respect to our environmental, social and governance (ESG) priorities. Our stakeholders trust us to act with integrity and to focus relentlessly on quality. We do this by ensuring that we practice responsible governance, maintain social accountability, respect people, particularly our workforce and promote sustainability. Below are some highlights of the Company current ESG priorities.
We remain committed to responsible governance, social accountability and sustainability. As we pursue growth and innovation, we will continue to focus on what has helped us succeed; dedication to serving our customers, shareholders, employees and communities.
THE GREENBRIER COMPANIES |
2019 Proxy Statement |
15
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Compensation Discussion and Analysis
This section discusses material information relating to our executive compensation program and plans for our named executive officers or NEOs for 2018:
Ms. Tekorius assumed the role of Chief Operating Officer in August 2018. Mr. Downes assumed the role of Acting Chief Financial Officer in August 2018. During this important leadership transition, Ms. Tekorius will retain the responsibility of the Principal Financial Officer.
Mr. Comstock was promoted to Executive Vice President in April 2018.
This Compensation Discussion and Analysis makes reference to financial data derived from our financial statements prepared in accordance with generally accepted accounting principles (GAAP) and certain other financial data prepared using non-GAAP components. For a reconciliation of these non-GAAP components to the most comparable GAAP components, see Reconciliation of Non-GAAP Financial Measures set forth in Appendix C.
THE GREENBRIER COMPANIES |
2019 Proxy Statement |
17
|
Executive Compensation |
| Defend and grow in our core North American markets |
| Expand in international railcar markets |
| Aggressively extend our talent base through the creation of a robust Talent Pipeline |
| Efficiently deploy capital to grow at scale in new and existing markets |
Our selected performance metrics and equity compensation vehicles discussed herein support this strategy by incentivizing executives based on various metrics that reflect progress on these goals including EBITDA, which promotes defending and growing our core market, and return on invested capital (ROIC), which promotes efficient deployment of capital.
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2019 Proxy Statement |
THE GREENBRIER COMPANIES |
|
Executive Compensation |
Chairman and CEO Pay-for-Performance Alignment
Over the last five years our CEO has led a period of significant expansion in our operations. At Greenbrier there is a direct link between CEO compensation and Company performance.
The Board of Directors evaluates Mr. Furmans performance and makes incentive pay decisions through assessment of his delivery of operating results and his progress against strategic priorities. In 2018, Mr. Furman led Greenbrier to meet or exceed most of its financial goals in a challenging competitive environment and Greenbrier continues to outperform its direct competitors in North America. At the same time, he made significant progress in positioning the company for the future by increasing our share of the international railcar manufacturing market. Mr. Furmans commitment to our Talent Pipeline initiative has led to meaningful progress toward our succession and leadership bench goals.
The Board recognized Mr. Furmans 2018 performance by awarding him an annual incentive award of $1.4 million and a 2018 Long-Term Incentive award with a grant date value of $4.8 million. At Mr. Furmans request his annual salary was not increased and remained at $950,000 along with his annual incentive target which remained at 115% of base salary for 2018.
The following table shows Mr. Furmans annual compensation relative to Total Shareholder Return.
CEO DIRECT COMPENSATION & TOTAL SHAREHOLDER RETURN
As seen in the table above, in 2015 there appeared to be a misalignment between our CEOs compensation and our Total Shareholder Return. During 2014 and 2015 rail industry stocks were trading with energy stocks which benefitted from high crude oil prices. The correlation with energy stocks was short-lived and based on market perceptions that crude transport demand would result in significant orders. See our Total Shareholder Return chart on the following page which demonstrates the market exuberance and subsequent correction. Railcars transport a variety of commodities and crude oil is not a major driver of railcar orders. In addition, a five year performance period more accurately reflects performance within our sector in our opinion. When accounting for this market noise, the five year trend of our CEOs compensation is consistent with our strong Total Shareholder Return discussed in more detail on the following page.
THE GREENBRIER COMPANIES |
2019 Proxy Statement |
19
|
Executive Compensation |
Total Shareholder Return Performance
Measured by Total Shareholder Return (TSR), the Company has outperformed the S&P 500 over the five year period from August 30, 2013 as demonstrated in the chart below.
Total Shareholder Return ($) 2.57X INCREASE stock price source: nasdaq
Metric Performance Against Direct Peers
The Compensation Committee and full Board regularly review our performance compared to our closest direct competitors in the railcar manufacturing industry. For the most recent five year period, we have outperformed the median of these peers on all financial metrics. For the most recent three year period, we have outperformed the median on all metrics while delivering strong financial results. The charts below provide comparisons of various performance metrics with our closest peers for the most recent three and five year periods.
3-Year Metrics
Ticker
|
Company Name
|
TSR
|
ROE
|
ROA
|
ROIC
|
Cash Flow Gr.
|
Revenue Gr.
|
EBITDA Gr. (3 Yr) (%)
| ||||||||
GBX
|
The Greenbrier Companies
|
14.2%
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16.0%
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8.2%
|
11.9%
|
243.1%
|
(0.2)%
|
(23.0)%
| ||||||||
ARII
|
American Railcar Industries, Inc.
|
7.6
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17.5
|
6.9
|
8.9
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(34.5)
|
(12.5)
|
(40.9)
| ||||||||
RAIL
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FreightCar America, Inc.
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(6.4)
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1.0
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(0.0)
|
0.4
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NM
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(25.6)
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(161.8)
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TRN
|
Trinity Industries
|
11.9
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12.1
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5.6
|
7.0
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(18.0)
|
(17.6)
|
(48.0)
| ||||||||
Peers Median
|
7.6%
|
12.1%
|
5.6%
|
7.0%
|
(26.2)%
|
(17.6)%
|
(48.0)%
|
5-Year Metrics
Ticker
|
Company Name
|
TSR
|
ROE
|
ROA
|
ROIC
|
Cash Flow Gr.
|
Revenue Gr. (5 Yr) (%)
|
EBITDA Gr. (5 Yr) (%)
| ||||||||
GBX
|
The Greenbrier Companies
|
22.8%
|
18.7%
|
8.4%
|
12.4%
|
251.8%
|
7.3%
|
102.9%
| ||||||||
ARII
|
American Railcar Industries, Inc.
|
9.0
|
19.6
|
8.3
|
9.9
|
14.1
|
(6.7)
|
(17.3)
| ||||||||
RAIL
|
FreightCar America, Inc.
|
0.1
|
0.4
|
(0.1)
|
(0.1)
|
NM
|
(6.1)
|
(371.0)
| ||||||||
TRN
|
Trinity Industries
|
12.9
|
15.5
|
6.6
|
7.7
|
136.5
|
(1.4)
|
(5.3)
| ||||||||
Peers Median
|
9.0%
|
15.5%
|
6.6%
|
7.7%
|
75.3%
|
(6.1)%
|
(17.3)%
|
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2019 Proxy Statement |
THE GREENBRIER COMPANIES |
|
Executive Compensation |
RATIONALE FOR SELECTION OF PERFORMANCE METRICS
The 2018 annual incentive plan performance metrics were weighted 85% to financial goals and 15% to strategic goals. The two financial goals, Adjusted EBITDA and ROIC measures were weighted 75% and 25% respectively as part of the financial goals in calculating our annual incentive compensation payouts. The Compensation Committee believes that these two measures struck an appropriate balance between achieving meaningful earnings relative to the business environment while holding a disciplined capital management strategy through business cycles. Our targets and focus on these measures will vary at different points in the business cycle. Our two strategic goals were selected because of their importance to the Companys strategic plan.
For long-term incentives, the Adjusted EBITDA and return on equity (ROE) measures were weighted equally in calculating our performance share results for the 2016-2018 period. The Compensation Committee believes that these two measures struck an appropriate balance between achieving meaningful earnings and maintaining a disciplined investment strategy in all businesses and jurisdictions while emphasizing balance sheet strength and profitability.
The Compensation Committee considers annual input from management taking into account the macro business environment, backlog of manufacturers orders in the sector and for the Company, expected delivery schedules and data related to the railroad industry that affects demand including velocity of the railroads, available railcar supply, railcar loading trends and forecasts by commodity and railcar type.
Payouts and Pay-for-Performance Alignment
Our compensation program is designed to reward our executives for contributing to the achievement of our annual and long-term objectives through the business cycles. We set robust financial and strategic goals in order to align executive awards with the creation of long-term value for our shareholders. The graphs in this section show our short and long-term compensation plan goals for fiscal year 2018, and our actual achievement for each of Adjusted EBITDA (Pre-Bonus), ROIC, Adjusted EBITDA and ROE. We use these metrics for determining our annual and long-term performance incentives.
ANNUAL SHORT-TERM INCENTIVE PLAN STRATEGIC GOALS
ANNUAL SHORT-TERM INCENTIVE PLAN PAYOUTS
In 2018, our Board of Directors added a specific set of strategic goals to the annual incentive plan of the NEOs. The two strategic goals were:
Strategic Goal |
(1) Execute Integration of New Businesses Recent expansion and investments in Europe and Brazil require integration of Greenbrier-Astra Rail and Greenbrier-Maxion into Greenbrier organization and culture.
Imprint our core values of safety, product quality, integrity and respect for people in all new businesses
Taking cultural differences and local business practices into consideration, implement our processes and controls and our integrated business model commercial strategy through training, consistent communication and management
Maximize utilization of various production locations for competitive advantage
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THE GREENBRIER COMPANIES |
2019 Proxy Statement |
21
|
Executive Compensation |
Strategic Goal |
(2) Talent Development and Succession Management In order to support and diversify our global business growth and ensure future sustainability, we need to develop and implement a talent strategy.
Identify critical and core positions across all businesses
Create development and succession plans to fill the identified positions with capable persons within specific time frames |
Under our annual incentive plan, Adjusted EBITDA before bonus for 2018 was $338.7 million and ROIC was 13.9%. The level of performance resulted in incentive payouts of 127.6% for Adjusted EBITDA and 158% for Corporate ROIC and 100% for Strategic Goals for a blended payout of 129.9% of the target award level to the NEOs. See page 25 for more details on our annual incentive plan.
LONG-TERM PERFORMANCE SHARE PLAN MEASURES
(30 MONTHS - MARCH 1, 2016 THROUGH AUGUST 31, 2018)
LONG-TERM INCENTIVE PLAN PAYOUTS
Under the terms of our 2016-2018 performance share restricted stock program, our actual results exceeded the target performance goal for Adjusted EBITDA only, which resulted in vesting of 115.4% of the performance-based restricted shares as of the determination date, October 23, 2018. This is lower than it would have been if results had exceeded the target goal for ROE as well. See page 33 for a description of our restricted stock unit (RSU) program.
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2019 Proxy Statement |
THE GREENBRIER COMPANIES |
|
Greenbriers Executive Compensation Practices
CHANGES WE MADE FOR FISCAL 2018 | ||||
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Measurement Period The measurement period for long-term incentives was extended from 30 to 36 months
| |||
|
Relative Metric A relative performance metric was introduced for our 2018 long-term incentive grant
| |||
WHAT WE DO | ||||
|
Pay-for-Performance More than 50% of our NEOs total possible direct compensation is performance-based
| |||
Robust Stock Ownership Guidelines We have stock ownership guidelines of 5x base salary for our CEO and either 2x or 2.5x base salary for other NEOs and 5x annual cash retainer for Directors
| ||||
Stock Retention Requirements Our NEOs are expected to retain 50% of the after-tax value of compensatory awards until stock ownership guidelines are met
| ||||
|
Annual Say-on-Pay Vote Our shareholders are given an annual advisory vote to approve our executive compensation programs
| |||
Clawback Policy Our policy provides for recovery of performance-based equity awards and incentive compensation paid to executive officers in the event of an accounting restatement due to material noncompliance with financial reporting requirements under federal securities laws
| ||||
Independent Compensation Consultant The Compensation Committee retains an independent compensation consultant and reassesses independence annually
| ||||
Annual Review of Compensation Program The Compensation Committee reviews all our compensation programs annually for best practices with input from our compensation consultant
| ||||
Annual Compensation Risk Assessment The Compensation Committee conducts an annual risk assessment of our compensation programs to ensure that they do not promote undue risk taking
| ||||
Limited Perquisites We maintain a moderate perquisite program of automobile allowances, club memberships and financial planning services as is the practice in our industry, as well as relocation costs when appropriate
| ||||
Grandfathered Employment Agreements We no longer enter into employment agreements with new executive officers. The legacy employment agreements with three NEOs (including our CEO) were originally entered into before 2010
| ||||
Minimum Vesting Requirements All awards under the plan have a minimum vesting period of at least one year
| ||||
Maximum Term of SARs Stock appreciation rights are subject to a maximum term of 10 years
| ||||
Responsible Share Usage The Compensation Committee reviews share usage for RSU awards annually with an independent consultant
| ||||
WHAT WE DONT DO | ||||
🌑 |
Hedging/Pledging of Company Stock We prohibit our officers and directors and insider employees from hedging and short selling our publicly traded stock. Our directors and executive officers are prohibited from margining our publicly traded stock and prohibited from pledging our publicly traded stock without advance clearance
| |||
🌑 |
Single-Trigger Change of Control Vesting We do not provide single-trigger acceleration of vesting for equity or cash severance payments upon a change of control. We require both a change of control and termination of an executives employment before vesting is accelerated or severance payments are made (double-trigger)
| |||
🌑
|
Tax Gross-Ups We do not provide tax gross-ups
| |||
🌑 |
Share Repricing We do not allow share repricing | |||
🌑 |
Dividends on Unvested Shares Commencing with 2018 grants, we do not pay dividends on unearned shares or RSUs | |||
🌑 |
Change of Control (COC) We no longer accelerate equity awards upon a COC so long as the acquiring company assumes or continues the awards. Performance-based awards vest only based on actual results measured against performance goals as of the COC. The COC definition excludes transactions with affiliates and corporate reorganizations |
THE GREENBRIER COMPANIES |
2019 Proxy Statement |
23
|
Executive Compensation |
To meet our objective to align the interests of our executives with the long-term interests of shareholders, our first compensation principle is to utilize performance-based compensation. In 2018, approximately 53% of actual total direct compensation for our CEO and 52% for our other NEOs was performance based and not guaranteed. The lightest and darkest green colors in the charts to the right denote performance-based compensation. The following table provides a snapshot of the elements of pay for named executive officers and explains why each element is provided. |
LONG-TERM EQUITY COMPENSATION 66%
|
LONG TERM EQUITY COMPENSATION 52%
|
Incentive Type | Compensation Element | What the Element Rewards | Key Features & Purpose | Form of Settlement | ||||
Fixed |
Base Salary | Individual performance while considering market pay levels, specific responsibilities and experience of each NEO
|
Attract and retain talent
Provide financial certainty |
Cash | ||||
Performance- Based |
Annual Performance Incentive | Achievement of specific financial and strategic goals | Drive achievement of key business results on an annual basis
|
Cash | ||||
Long-Term Equity Performance-Based Variable | Achievement of specific financial goals and, if appropriate, relative financial performance. We set long-term incentive targets to be competitive with the market | Reward achievement of long-term objectives over a 30/36 month performance period
Directly ties interests of our NEOs to those of our shareholders
|
GBX Shares | |||||
Time-Based |
Long-Term Equity Time-Based Variable |
Creation of long-term shareholder value | Retain talent
Vest ratably over a three-year period at then stock price
|
GBX Shares |
COMPENSATING FOR STABILITY AND SUCCESSION
In addition to working to align the interests of executives with shareholders, the Company designs executive compensation to promote stability and succession and ensure smooth transitions. During 2018, there were several such transitions: Lorie Tekorius was promoted to Chief Operating Officer; Brian Comstock was promoted to Executive Vice President, Sales and Marketing; and Adrian Downes was promoted to Acting CFO. These promotions were a product of the individuals hard work and the Companys focus on succession planning.
In 2018, our executive compensation program consisted of three elements: base salary, annual incentives and long-term equity compensation. We also provide various retirement and benefit programs. Further details on each element of compensation are discussed below.
24
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2019 Proxy Statement |
THE GREENBRIER COMPANIES |
|
Executive Compensation |
THE GREENBRIER COMPANIES |
2019 Proxy Statement |
25
|
Executive Compensation |
26
|
2019 Proxy Statement |
THE GREENBRIER COMPANIES |
|
Executive Compensation |
THE GREENBRIER COMPANIES |
2019 Proxy Statement |
27
|
Executive Compensation |
PEER GROUP
Our peer group referred to when developing our fiscal year 2018 compensation program included the 18 companies listed below. The Compensation Committee, together with Mercer, periodically reviews and, as appropriate, may approve changes to our peer group. For fiscal year 2019, the Compensation Committee made no changes to our peer group. Our 2019 peer group is:
|
Trinity Industries
Oshkosh Corp.
Terex
Hyster-Yale Materials Handling
REV Group
Wabash National |
Manitowoc
Schnitzer Steel Industries
Astec Industries
Crane
Timken
Meritor |
Wabtec
WABCO Holdings
Hub Group
GATX
H&E Equipment Services
Triton International |
28
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2019 Proxy Statement |
THE GREENBRIER COMPANIES |
|
Executive Compensation |
THE GREENBRIER COMPANIES |
2019 Proxy Statement |
29
|
Executive Compensation |
COMPENSATION COMMITTEE REPORT
As required by Item 407(e)(5) of Regulation S-K, the Compensation Committee reviewed and discussed with the Companys management the above section entitled Compensation Discussion and Analysis prepared by the Companys management as required by Item 402(b) of Regulation S-K. Based on the review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into the Companys Annual Report on Form 10-K for the year ended August 31, 2018.
October 23, 2018
Thomas B. Fargo, Chairman
Duane C. McDougall
Graeme A. Jack
David L. Starling
Donald A. Washburn
30
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2019 Proxy Statement |
THE GREENBRIER COMPANIES |
|
Executive Compensation |
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation of the NEOs for fiscal year 2018. The Company did not grant any stock options to NEOs in 2016, 2017 or 2018 and does not maintain any defined benefit or actuarial pension plan, and its nonqualified deferred compensation plan does not pay or provide for preferential or above-market earnings. Accordingly, columns for these elements of compensation are not included in the Summary Compensation Table.
Name and Principal Position |
Year | Salary ($) |
Bonus ($) |
Restricted Stock/RSU Awards(1) ($) |
Non-equity Incentive Plan Compensation(2) ($) |
All Other Compensation(3) ($) |
Total ($) |
|||||||||||||||||||
William A. Furman |
2018 | 950,000 | | 4,790,000 | 1,419,516 | 314,128 | 7,473,644 | |||||||||||||||||||
Chairman, Chief Executive Officer and President |
2017 | 950,000 | | 3,246,761 | 1,670,433 | 379,886 | 6,247,080 | |||||||||||||||||||
2016 | 950,000 | | 3,246,750 | 2,075,095 | 272,291 | 6,544,136 | ||||||||||||||||||||
Lorie L. Tekorius |
2018 | 479,400 | | 1,077,750 | 529,463 | 121,834 | 2,208,447 | |||||||||||||||||||
Executive Vice President Chief Operating Officer |
2017 | 430,003 | | 699,311 | 517,060 | 114,530 | 1,760,904 | |||||||||||||||||||
2016 | 343,338 | | 666,000 | 466,545 | 114,027 | 1,589,910 | ||||||||||||||||||||
Mark J. Rittenbaum |
2018 | 501,387 | | 958,000 | 586,319 | 237,319 | 2,283,025 | |||||||||||||||||||
Executive Vice President Commercial and Leasing |
2017 | 476,000 | | 761,626 | 655,024 | 218,700 | 2,111,350 | |||||||||||||||||||
2016 | 476,000 | | 832,500 | 776,031 | 197,382 | 2,281,913 | ||||||||||||||||||||
Alejandro Centurion |
2018 | 563,533 | | | 658,993 | 441,351 | 1,663,877 | |||||||||||||||||||
Executive Vice President and President of Global Manufacturing Operations |
2017 | 535,000 | | 856,028 | 736,214 | 347,942 | 2,475,184 | |||||||||||||||||||
2016 | 535,000 | | 832,500 | 948,440 | 353,326 | 2,669,266 | ||||||||||||||||||||
Brian J. Comstock |
2018 | 387,267 | | 718,500 | 402,549 | 109,753 | 1,618,069 | |||||||||||||||||||
Executive Vice President Sales and Marketing |
||||||||||||||||||||||||||
Adrian J. Downes |
2018 | 331,509 | | 359,250 | 279,981 | 70,076 | 1,040,816 | |||||||||||||||||||
Senior Vice President Chief Accounting Officer and Acting Chief Financial Officer |
(1) | Represents the aggregate grant date fair value of the shares or RSUs computed in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures. For purposes of valuation of restricted stock and RSU awards, we assume that no shares or RSUs will be forfeited and performance goals will be achieved at target levels. These amounts reflect the grant date fair value ($47.90 per share on the April 4, 2018 date of grant), and may not correspond to the actual value that will be recognized by the NEOs. One-half of each RSU award is time-vested and will vest in annual installments on the first, second and third anniversaries of the grant date, based on continued employment with the Company. One-half of each RSU award is performance-vested. For the performance-vested RSUs, the grant date fair value is calculated based on the target number of shares which, as of the grant date, was the estimated number of shares to be issued upon vesting of RSUs. If the Company achieves its stretch performance goals as of the end of the performance period, each NEO will receive additional fully vested shares equal to the number of performance-vested RSUs awarded during fiscal year 2018. Such additional shares, if issued, will be valued as of the date of issuance. If, for purposes of this footnote, the maximum number of shares issuable under the performance-vested RSU awards, including such additional shares that may be received if stretch performance is achieved (valued as of the date of the original award because the share value as of the date of issuance after the end of the performance period is not known at this time), had been used in this calculation in lieu of the target number of shares, the amounts in the table for fiscal year 2018 would have included two times the value of the performance-vested RSUs shown in the table, or $7,185,000 for Mr. Furman, $1,616,625 for Ms. Tekorius, $1,437,000 for Mr. Rittenbaum, $1,077,750 for Mr. Comstock and $538,875 for Mr. Downes. |
(2) | Represents short-term cash incentive bonuses earned by each NEO under the 2018 bonus plan for executive officers. See Compensation Discussion and AnalysisPayouts and Pay-for-Performance Alignment. |
(3) | See All Other Compensation Table for Fiscal Year 2018 below for detail on amounts included in this column, which include perquisites, the Companys contributions to the Nonqualified Deferred Compensation Plan, Company match on executive contributions to the 401(k) plan, executive life insurance program benefits and various other compensation amounts. |
THE GREENBRIER COMPANIES |
2019 Proxy Statement |
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Executive Compensation |
ALL OTHER COMPENSATION TABLE FOR FISCAL YEAR 2018
Name |
Perquisites |
NQ Deferred Compensation Plan Contributions ($)(2) |
401(k) Matching Contributions ($)(3) |
Dividends ($) |
Life Insurance ($) |
Other ($) |
Total ($) | |||||||
William A. Furman |
31,489 | 157,226 | | 125,413 | | | 314,128 | |||||||
Lorie L. Tekorius |
22,105 | 58,524 | 10,730 | 20,775 | 9,700 | | 121,834 | |||||||
Mark J. Rittenbaum |
13,200 | 160,894 | 11,362 | 36,713 | 15,150 | | 237,319 | |||||||
Alejandro Centurion |
103,556 | 254,491 | 11,228 | 35,726 | 36,350 | | 441,351 | |||||||
Brian J. Comstock |
25,634 | 49,643 | 10,800 | 23,676 | | | 109,753 | |||||||
Adrian J. Downes |
| 38,881 | 11,055 | 16,010 | 4,130 | | 70,076 |
(1) | Includes payments made on behalf of: Mr. Furman of $6,211 for use of a Company car, $17,500 for financial, investment and tax advisors and $7,778 for club dues; Ms. Tekorius of $11,100 for car allowance and $11,005 for club dues; Mr. Rittenbaum of $13,200 for car allowance; Mr. Centurion of $13,200 for car allowance, $5,456 for club dues, and $84,900 for medical expenses not covered by health insurance; and Mr. Comstock of $13,200 for car allowance and $12,434 for club dues. On occasion during fiscal year 2018, certain of the named executive officers were accompanied by a spouse or significant other on business trips using an aircraft chartered by the Company, but no amounts are included because there was no incremental cost to the Company. Employees of the Company, including our named executive officers, occasionally use Company-owned properties for personal use. No amounts with respect to any such use are included because there was no incremental cost to the Company. |
(2) | These amounts represent (i) the Companys contributions for Messrs. Rittenbaum and Centurion under the target benefit component of the Companys Nonqualified Deferred Compensation Plan made in January 2018 on behalf of the NEOs, with respect to the plan year ended December 31, 2017; and (ii) the Companys contributions for Messrs. Furman, Comstock and Downes and Ms. Tekorius to the non-qualified deferred compensation plan for executive officers who do not participate in the target benefit plan. |
(3) | These amounts represent the Companys matching contribution to each NEOs 401(k) plan account. |
GRANTS OF PLAN-BASED AWARDS IN FISCAL YEAR 2018
Grant Date(1) |
Possible Future Payouts Under |
Estimated Future Payouts Under Equity Incentive Plan Awards(3) |
All Other |
Grant Date Fair Value of Stock/RSU Awards ($)(5) | ||||||||||||||||
Name |
Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) | ||||||||||||||
William A. Furman |
4-4-18 | 819,375 | 1,092,500 | 2,021,125 | 25,000 | 50,000 | 100,000 | 50,000 | 4,790,000 | |||||||||||
Lorie L. Tekorius |
4-4-18 | 305,618 | 407,490 | 753,857 | 5,625 | 11,250 | 22,500 | 11,250 | 1,077,750 | |||||||||||
Mark J. Rittenbaum |
4-4-18 | 338,436 | 451,248 | 834,809 | 5,000 | 10,000 | 20,000 | 10,000 | 958,000 | |||||||||||
Alejandro Centurion |
4-4-18 | 380,385 | 507,180 | 938,282 | | | | | | |||||||||||
Brian J. Comstock |
4-4-18 | 232,360 | 309,814 | 573,155 | 3,750 | 7,500 | 15,000 | 7,500 | 718,500 | |||||||||||
Adrian J. Downes |
4-4-18 | 161,611 | 215,481 | 398,640 | 1,875 | 3,750 | 7,500 | 3,750 | 359,250 |
(1) | Dates in this column represent grant dates for equity incentive plan awards. |
(2) | All amounts reported in these columns represent potential short-term incentive award payout amounts under the fiscal year 2018 bonus plan for executive officers, if performance had been achieved at the threshold, target or stretch goal levels. Target amounts are set as a percentage of base salary; threshold amounts are equal to 75% of target amounts; and maximum amounts are equal to 200% of target amounts. Actual short-term incentive awards earned during fiscal year 2018 are reported in the Summary Compensation Table in the Non-Equity Incentive Plan Compensation column. |
(3) | All amounts reported in these columns represent the portion of RSU awards that are performance-vested. See Compensation Discussion and AnalysisLong-Term Equity Compensation Design. |
(4) | Represents time-vested RSUs, which vest ratably over three years, subject to continued employment. Vesting may be accelerated in certain circumstances, as described under Compensation Discussion and AnalysisPotential Post-Termination Payments. |
(5) | Represents the aggregate grant date fair value of RSU awards computed in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures. The grant date fair value of the performance-vested RSUs is based on the target under the award, estimated to be the probable outcome of the performance conditions as of the grant date, multiplied by the closing market price of the Companys Common Stock on the grant date. |
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THE GREENBRIER COMPANIES |
|
Executive Compensation |
THE GREENBRIER COMPANIES |
2019 Proxy Statement |
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Executive Compensation |
OUTSTANDING EQUITY AWARDS AT AUGUST 31, 2018
Stock Awards | ||||||||||||||||||||
Name |
Number of Shares of Stock or RSUs that Have Not Vested (#) |
Market Value of Shares of Stock or RSUs that Have Not Vested ($) |
Equity Incentive Plan Awards: Number of Unearned Shares, RSUs or Other Rights that Have Not Vested (#) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, RSUs or Other Rights that Have Not Vested ($) | ||||||||||||||||
William A. Furman |
19,500 | (1) | 1,131,000 | 53,952 | (2) | 3,129,216 | ||||||||||||||
26,173 | (3) | 1,518,034 | 56,325 | (4) | 3,266,850 | |||||||||||||||
50,000 | (5) | 2,900,000 | ||||||||||||||||||
Lorie L. Tekorius |
4,000 | (1) | 232,000 | 11,622 | (2) | 674,076 | ||||||||||||||
5,637 | (3) | 326,946 | 12,675 | (4) | 735,150 | |||||||||||||||
11,250 | (5) | 652,500 | ||||||||||||||||||
Mark J. Rittenbaum |
5,000 | (1) | 290,000 | 12,656 | (2) | 734,048 | ||||||||||||||
6,140 | (3) | 356,120 | 11,265 | (4) | 653,370 | |||||||||||||||
10,000 | (5) | 580,000 | ||||||||||||||||||
Alejandro Centurion |
5,000 | (1) | 290,000 | 14,226 | (2) | 825,108 | ||||||||||||||
6,900 | (3) | 400,200 | ||||||||||||||||||
Brian J. Comstock |
3,583 | (1) | 207,814 | 9,915 | (2) | 575,070 | ||||||||||||||
4,810 | (3) | 278,980 | 8,449 | (4) | 490,042 | |||||||||||||||
7,500 | (5) | 435,000 | ||||||||||||||||||
Adrian J. Downes |
2,083 | (1) | 120,814 | 4,987 | (2) | 289,246 | ||||||||||||||
2,418 | (3) | 140,244 | 4,226 | (4) | 245,108 | |||||||||||||||
3,750 | (5) | 217,500 |
(1) | Time-based RSU awards for each of Messrs. Furman, Rittenbaum, Centurion, Comstock and Downes and Ms. Tekorius granted on March 30, 2016 and vest over a period of three years in annual increments of 331⁄3 percent of each award beginning one year from grant date. |
(2) | Performance-based RSU awards for each of Messrs. Furman, Rittenbaum, Centurion, Comstock and Downes and Ms. Tekorius granted on March 27, 2017 and subject to vesting contingent on the achievement of performance targets as of August 31, 2019. The number of shares and payout value for these awards are calculated based on achieving target performance goals, which would result in 100% of the subject shares vesting. |
(3) | Time-based RSU awards for each of Messrs. Furman, Rittenbaum, Centurion, Comstock and Downes and Ms. Tekorius granted on March 27, 2017 vest over a period of three years in annual increments of 331⁄3 percent of each award beginning one year from grant date. |
(4) | Performance-based RSU awards for each of Messrs. Furman, Rittenbaum, Comstock and Downes and Ms. Tekorius granted on April 4, 2018 and subject to vesting contingent on the achievement of performance targets as of August 31, 2020. The number of shares and payout value for these awards are calculated based on achieving target performance goals, which would result in 100% of the subject shares vesting. |
(5) | Time-based RSU awards for each of Messrs. Rittenbaum, Comstock and Downes and Ms. Tekorius granted on April 4, 2018 vest over a period of three years in annual increments of 331⁄3 percent of each award beginning one year from grant date. Time-based RSU awards for Mr. Furman granted on April 4, 2018 vest in 331⁄3 percent increments on April 4, 2019, April 4, 2020, and October 4, 2020. |
STOCK VESTED DURING FISCAL YEAR 2018
Stock Awards | ||||||||||
Name |
Number of Shares (#) |
Value Realized On Vesting of Shares During ($) | ||||||||
William A. Furman |
110,067 | 6,109,960 | ||||||||
Lorie L. Tekorius |
22,077 | 1,227,080 | ||||||||
Mark J. Rittenbaum |
28,539 | 1,583,405 | ||||||||
Alejandro Centurion |
28,754 | 1,594,342 | ||||||||
Brian J. Comstock |
20,305 | 1,126,901 | ||||||||
Adrian J. Downes |
11,919 | 661,256 | (1) |
(1) | Mr. Downes elected to defer receipt of 10,709 shares that would have otherwise been issuable to him upon vesting, representing deferral of $599,001 |
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2019 Proxy Statement |
THE GREENBRIER COMPANIES |
|
Executive Compensation |
NONQUALIFIED DEFERRED COMPENSATION
Name |
Executive Contributions in Last Fiscal Year ($) |
Registrant Contributions in Last Fiscal Year(1) ($) |
Aggregate Earnings in Last Fiscal Year ($)(2) |
Aggregate Withdrawals/ Distributions ($) |
Aggregate Balance at Last FYE ($) | ||||||||||||||||||||
William A. Furman |
| 157,226 | 99,436 | | 886,104 | ||||||||||||||||||||
Lorie L. Tekorius |
| 58,524 | 20,953 | | 226,222 | ||||||||||||||||||||
Mark J. Rittenbaum |
262,009 | 160,894 | 93,247 | | 1,963,295 | ||||||||||||||||||||
Alejandro Centurion |
| 254,491 | 223,549 | | 1,799,274 | ||||||||||||||||||||
Brian J. Comstock |
295,311 | 49,643 | 61,036 | | 1,298,685 | ||||||||||||||||||||
Adrian J. Downes |
543,328 | (3) | 38,881 | 452,493 | | 2,083,150 |
(1) | All contribution amounts shown in this column are reported as fiscal year 2018 compensation in the Summary Compensation Table, under All Other Compensation. |
(2) | The Nonqualified Deferred Compensation Plan does not pay above-market or preferential earnings, therefore no earnings reported in this column are reported as fiscal year 2018 compensation in the Summary Compensation Table. |
(3) | Includes value of deferred shares otherwise issuable to Mr. Downes upon vesting. |
EQUITY COMPENSATION PLAN INFORMATION
The following table provides certain information as of August 31, 2018 with respect to our equity compensation plans under which our equity securities are authorized for issuance.
Plan Category |
Number of securities to be issued upon exercise of outstanding options, warrants and rights |
Weighted average exercise price of outstanding options, warrants, and rights |
Number of securities remaining available for future issuance under equity compensation plans | ||||||||||||
Equity compensation plans approved by security holders |
467,710 | (1) | N/A | 1,050,675 | (2) | ||||||||||
Equity compensation plans not approved by security holders |
None | N/A | None |
(1) | For performance-based awards, represents number of shares issuable at target levels of performance. |
(2) | Represents shares available for grant under the Stock Incentive Plan, in addition to 467,710 shares issuable upon exercise of outstanding RSUs. |
POTENTIAL POST-TERMINATION PAYMENTS
THE GREENBRIER COMPANIES |
2019 Proxy Statement |
35
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Executive Compensation |
The following table shows the estimated change of control benefits that would have been payable to the NEOs if a change of control (as defined in the applicable agreement) had occurred on August 31, 2018 and, except as noted, each officers employment had been terminated on that date either by us without cause or by the officer with good reason.
Name |
Cash Severance Benefit(1) ($) |
Annual Insurance Continuation(2) ($) |
Restricted Stock/RSU Acceleration(3) ($) |
Supplemental Retirement Benefits(4) ($) |
Other(5) ($) |
Total ($) |
280G Capped Amount(6) ($) | ||||||||||||||||||||||||||||
William A. Furman |
7,484,924 | 18,399 | 12,022,008 | | 26,400 | 19,551,731 | 16,470,481 | ||||||||||||||||||||||||||||
Lorie L. Tekorius |
1,662,392 | 20,645 | 2,637,202 | | | 4,320,239 | 3,241,189 | ||||||||||||||||||||||||||||
Mark J. Rittenbaum |
2,836,879 | 24,064 | 2,631,576 | 668,466 | 26,400 | 6,187,385 | 5,431,854 | ||||||||||||||||||||||||||||
Alejandro Centurion |
3,188,509 | 51,344 | 1,535,550 | 866,774 | 26,400 | 5,668,577 | 6,102,644 | ||||||||||||||||||||||||||||
Brian J. Comstock |
1,651,740 | 10,945 | 2,001,000 | | | 3,663,685 | 3,319,242 | ||||||||||||||||||||||||||||
Adrian J. Downes |
954,383 | 19,124 | 1,019,988 | | | 1,993,495 | 1,791,645 |
(1) | The employment agreement with Mr. Furman provides for a payment equal to three times the sum of his current base salary plus the average of the two most recent annual bonuses received by Mr. Furman. The employment agreements with Messrs. Rittenbaum and Centurion provide for a payment equal to two and one half times the sum of their current base salary plus the average of the two most recent annual bonuses received by the executive. The change of control agreement with Mr. Comstock provides for a payment equal to two times the sum of his current base salary plus the average of the two most recent annual bonuses received by him. The change of control agreements with Ms. Tekorius and Mr. Downes provide for a payment equal to one and one half times the sum of their current base salary plus the average of the two most recent annual bonuses received by them. All payments are to be made in a single lump sum within 30 days after the date of termination, unless a delay in payment is required in order to comply with the requirements of section 409A of the Internal Revenue Code. |
(2) | If cash severance benefits are triggered, the employment agreements with Messrs. Furman, Rittenbaum and Centurion also provide that the Company will pay the cost of life, accident and health insurance benefits paid for by the Company at the time of termination for up to 24 months following the termination of employment. Under the terms of his employment agreement, the Company is required to provide continued health insurance benefits at the Companys expense for Mr. Furman and his spouse until Mr. Furman reaches age 75. The change of control agreements with Ms. Tekorius, Mr. Comstock and Mr. Downes provide that the Company will pay the cost of all health and welfare benefits paid for by the Company at the time of termination for up to 18 months following the termination of employment. The amounts in the table above represent 12 months of life and health insurance premium payments at the rates paid by the Company for each of these executives as of August 31, 2018. |
(3) | For grants made prior to fiscal year 2018, under the terms of the applicable RSU agreement and each executives employment or change of control agreement, as applicable, in the event of the Companys termination of the executive other than for cause or, for those executives with change of control agreements, disability, or in the event of the executives termination of his or her employment for good reason, in each case during the two-year period following a change of control of the Company: (i) all unvested time-based shares and RSUs held by the executive will vest; (ii) all performance-based restricted stock awards will vest at the target performance level; and (iii) all performance-based RSUs will convert into time-based RSUs upon change of control, which as-converted time-based RSUs will become fully vested upon termination, and if the level of performance against performance goals through the date of the change of control exceeds target(goal) level, the executive will receive additional time-based RSUs based on achievement in excess of target(goal) as determined by the Compensation Committee, which as-converted time-based RSUs will become fully vested upon the executives termination. Commencing with 2018 grants, equity awards do not accelerate upon COC if they are assumed or continued by the acquiring company. Time-based equity awards that are not assumed or continued accelerate and become fully vested upon COC, and performance-based equity awards that are not assumed or continued accelerate and become vested based on actual results measured against performance goals as of the COC. Upon termination following COC, time-based awards that were assumed or continued accelerate and become fully vested, and performance-based awards that were assumed or continued accelerate and become vested at target pursuant to the terms of the executives employment agreement or change of control agreement, as applicable. The amounts in the table above assume that no equity awards are assumed or continued by the acquiring company and represent the number of shares of unvested restricted stock and RSUs and any additional RSUs issuable to the executive, if any, based on performance through August 31, 2018 multiplied by a stock price of $58.00 per share, which was the closing price of our Common Stock on August 31, 2018. The expense that the Company would record would differ from the amount above under FASB ASC Topic 718 because the amount of unamortized expense is based upon the stock price as of the date of grant, rather than as of the date of vesting. |
(4) | The Company provides supplemental retirement benefits under the terms of the target benefit program under the Companys Nonqualified Deferred Compensation Plan. Under the terms of the program, in the event that employment of a participant in the target benefit program is terminated within 24 months following a change of control of the Company by the Company other than for cause or by the executive for good reason, the Company is obligated to contribute to the program on behalf of each such terminated participant an amount equal to the discounted present value of the contributions that would have been required had the participant remained employed until age 65. The amount shown in the table above is the amount that would be required to be contributed to the program on behalf of each participating NEO, assuming that the executive terminated employment as of August 31, 2018 following a change of control. Such amounts are based on the discounted present value of the average amount of contributions made on behalf of each executive during the most recent three year period. |
(5) | Pursuant to their employment agreements, the Company will provide Messrs. Furman, Rittenbaum and Centurion with continuation of the Companys customary automobile benefit at the Companys expense, for a period of two years following termination of employment. For each of them, the amount above represents the cost of the post-termination automobile benefit for two years, based on the current or estimated future annual cost of the executives leased car or other automobile benefit. |
(6) | Under all of the change of control provisions described above, the amount of change of control benefits each officer will receive is capped at an amount that will prevent any payments being non-deductible under section 280G of the Internal Revenue Code of 1986, as amended (the Code) or subject to excise tax under Code section 4999. The amounts shown in this column are the capped amounts, which are equal to one dollar less than the product of three-times the amount of the officers base amount, which, as calculated under Code section 280G, is equal to the average of the officers W-2 wages over the five-year period preceding the change of control event (or such shorter period as the officer has been employed by the Company). |
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2019 Proxy Statement |
THE GREENBRIER COMPANIES |
|
Executive Compensation |
Benefits Triggered on Involuntary Termination of Employment without Cause
The following table shows the estimated benefits that would have been paid to each of Messrs. Furman, Rittenbaum and Centurion if the officers employment had been terminated on August 31, 2018, either by us other than for cause or by the officer with good reason, pursuant to the terms of such officers individual agreement with the Company. Messrs. Comstock and Downes and Ms. Tekorius do not have employment agreements with the Company.
Name |
Cash |
Annual |
Restricted |
Supplemental |
Other(5) |
Total |
||||||||||||||||||
William A. Furman |
|
4,989,949 |
|
|
18,399 |
|
|
11,945,100 |
|
|
|
|
|
39,600 |
|
|
16,993,048 |
| ||||||
Lorie L. Tekorius |
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
N/A |
| ||||||
Mark J. Rittenbaum |
|
2,193,343 |
|
|
24,064 |
|
|
2,613,538 |
|
|
321,788 |
|
|
26,400 |
|
|
5,179,133 |
| ||||||
Alejandro Centurion |
|
2,465,207 |
|
|
51,344 |
|
|
1,515,308 |
|
|
508,982 |
|
|
26,400 |
|
|
4,567,241 |
| ||||||
Brian J. Comstock |
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
N/A |
| ||||||
Adrian J. Downes |
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
(1) | Employment agreements with each of Messrs. Furman, Rittenbaum and Centurion, provide for lump sum cash severance payments equal to two times the sum of base salary plus the average bonus amount. Messrs. Furman, Rittenbaum and Centurion also are entitled to receive a pro-rated bonus for the year of termination, based on the greater of the average bonus amount or the executives target bonus amount, and the number of days worked during the year of termination. Since it is assumed that termination is on August 31, 2018, the cash severance benefit amount includes 100% of the average bonus amount, in addition to the multiples of salary and bonus described above. All payments are to be made in a single lump sum within 30 days after the executive signs a release of claims against the Company, subject to the potential application of the six-month delay requirement applicable to specified employees under IRC §409A. |
(2) | Employment agreements with each of Messrs. Furman, Centurion and Rittenbaum provide for continuation of life, accident and health insurance benefits paid by the Companyfor up to 24 months following the termination of employment by the Company other than for cause or by the executive for good reason, except to the extent similar benefits are provided by a subsequent employer. In addition, under the terms of his employment agreement, the Company is required to provide continued health insurance benefits at the Companys expense for Mr. Furman and his spouse until Mr. Furman reaches age 75. The amounts in the table above represent 12 months of life, accident and health insurance premium payments at the rates paid by the Company for each of these officers as of August 31, 2018. |
(3) | Under the terms of employment agreements with each of Messrs. Furman, Rittenbaum and Centurion, in the event of termination of the executives employment by the Company without cause or the executives termination of his employment for good reason, all unvested time-based shares and RSUs will vest; all performance-based restricted stock awards will vest at the target performance level, and all performance-based RSUs will continue to vest based on performance during the applicable performance period and the executive will become entitled to receive the number of shares issuable under the RSUs, if any, based upon the level of performance achieved during the entire performance period. Information regarding unvested restricted stock and RSUs held by the NEOs is set forth in the Outstanding Equity Awards table above. The amounts in the table above represent the number of shares of unvested restricted stock and RSUs multiplied by a stock price of $58.00 per share, which was the closing price of our Common Stock on August 31, 2018, and, with respect to performance-based RSUs held by each of Messrs. Furman, Rittenbaum and Centurion, vesting at currently forecasted levels as of the vesting date. The expense that the Company would record would differ from the amount above as, under FASB ASC Topic 718, the amount of unamortized expense is based upon the stock price as of the date of grant, rather than as of the date of vesting. |
(4) | The Company provides supplemental retirement benefits under the target benefit program under the Companys Nonqualified Deferred Compensation Plan. Under the terms of their employment agreements Messrs. Rittenbaum and Centurion will continue to be treated as participants in the supplemental retirement plan for two years following termination of employment. The amount shown in the table above for Messrs. Rittenbaum and Centurion is the estimated amount of two years additional contributions under the target benefit program for each participating executive, assuming that the executives employment was involuntarily terminated as of August 31, 2018. |
(5) | Pursuant to their employment agreements, the Company will provide Messrs. Rittenbaum and Centurion with continued participation in the Company auto program, at the Companys expense, for a period of two years following termination of employment. Pursuant to his employment agreement, Mr. Furman will continue to receive the Companys customary automobile benefit for three years following termination of employment. The amount above represents the current annual cost of the employees participation in the Companys automobile program for the applicable period, based on the current or estimated future annual cost of the executives leased car or other automobile benefit. |
The Companys obligation to pay severance benefits is, in all cases, contingent upon the officer executing a release of claims in favor of the Company. The Companys obligation to pay severance benefits to each of Messrs. Rittenbaum and Centurion is contingent upon the officers compliance with the terms of a covenant not to compete in favor of the Company for one year following termination of employment.
THE GREENBRIER COMPANIES |
2019 Proxy Statement |
37
|
Executive Compensation |
Benefits Triggered on Retirement
The following table shows estimated benefits that would have been payable by the Company to the NEOs if each officers employment terminated on August 31, 2018 by reason of retirement, excluding amounts payable under the Companys 401(k) Plan.
Name |
Annual |
Restricted |
Annual |
Total | ||||||||||||||||
William A. Furman |
|
18,399 |
|
|
8,515,514 |
|
|
N/A |
|
|
8,533,913 |
| ||||||||
Lorie L. Tekorius |
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
N/A |
| ||||||||
Mark J. Rittenbaum |
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
N/A |
| ||||||||
Alejandro Centurion |
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
N/A |
| ||||||||
Brian J. Comstock |
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
N/A |
| ||||||||
Adrian J. Downes |
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
(1) | Under the terms of his employment agreement, the Company is required to provide continued health insurance benefits at the Companys expense for Mr. Furman and his spouse until Mr. Furman reaches age 75. The amount in the table represents the annual premium payments at the rates paid by the Company for Mr. Furman as of August 31, 2018. |
(2) | Under the terms of the Companys standard forms of agreements for restricted shares and RSUs, all unvested time-based shares and RSUs become fully vested upon retirement. Performance-based RSUs will continue to vest based upon performance during the measurement period, and the recipient will be entitled to receive a prorated number of shares, at the end of the measurement period. Retirement age is 65 for purposes of restricted stock and RSU vesting on retirement, except as otherwise determined at the discretion of the CEO. Only Mr. Furman is eligible to retire. The amounts in the table above represent the number of unvested time-based shares and RSUs, multiplied by a stock price of $58.00 per share, which was the closing price of our Common Stock on August 31, 2018, plus the value of the pro rata portion of performance-based shares and RSUs that would have accelerated if the executive had retired on August 31, 2018, assuming that performance goals had been met at currently forecasted levels as of the vesting date. The expense that the Company would record would differ from the amount above as, under FASB ASC Topic 718, the amount of unamortized expense is based upon the stock price on the date of grant and not on the vesting date. |
Benefits Triggered on Disability or Death
The following table shows estimated benefits that would have been payable by the Company to the NEOs if each officers employment terminated on August 31, 2018 by reason of death or disability.
Name |
Estimated |
Annual |
Restricted |
Annual |
Total |
|||||||||||||||
William A. Furman |
|
1,544,975 |
|
|
18,399 |
|
|
10,726,056 |
|
|
N/A |
|
|
12,289,430 |
| |||||
Lorie L. Tekorius |
|
N/A |
|
|
N/A |
|
|
2,354,394 |
|
|
N/A |
|
|
2,354,394 |
| |||||
Mark J. Rittenbaum |
|
N/A |
|
|
N/A |
|
|
2,340,242 |
|
|
N/A |
|
|
2,340,242 |
| |||||
Alejandro Centurion |
|
N/A |
|
|
N/A |
|
|
1,290,558 |
|
|
N/A |
|
|
1,290,558 |
| |||||
Brian J. Comstock |
|
N/A |
|
|
N/A |
|
|
1,775,206 |
|
|
N/A |
|
|
1,775,206 |
| |||||
Adrian J. Downes |
|
N/A |
|
|
N/A |
|
|
906,482 |
|
|
N/A |
|
|
906,482 |
|
(1) | Under the terms of his employment agreement, in the event of termination due to death or disability, Mr. Furman (or his estate) is entitled to receive an amount equal to the prorated portion of the cash bonus which would have been payable to him for the portion of the fiscal year during which he was employed by the Company. Since it is assumed that the triggering event occurs on August 31, 2018, the amount of estimated cash benefit is equal to a full years cash bonus, estimated to be the amount of the average of the most recent two years cash bonuses actually paid to Mr. Furman. |
(2) | Under the terms of his employment agreement, in the event Mr. Furmans employment terminates for any reason, including death or disability, the Company is required to provide continued health insurance benefits at the Companys expense for Mr. Furman (in the case of disability) and his spouse until Mr. Furman reaches age 75 (or would have reached age 75, in the case of his death). The amount in the table represents the annual premium payments at the rates paid by us for Mr. Furman as of August 31, 2018. |
(3) | Under the terms of the Companys standard forms of agreements, all unvested shares of restricted stock and RSUs become fully vested upon termination due to death or disability, with performance-based shares and RSUs vesting at the target level. The amounts in the table above represent the number of shares of unvested restricted stock and RSUs (with performance shares and RSUs at target level) multiplied by a stock price of $58.00 per share, which was the closing price of our Common Stock on August 31, 2018. The expense that the Company would record would differ from the amount above as, under FASB ASC Topic 718, the amount of unamortized expense is based upon the stock price as of the date of grant rather than as of the vesting date. |
38
|
2019 Proxy Statement |
THE GREENBRIER COMPANIES |
|
Executive Compensation |
CEO PAY RATIO
Pay Ratio Disclosure
THE GREENBRIER COMPANIES |
2019 Proxy Statement |
39
|
Proposal 3 - Approval of Amendment to 2014 Employee Stock Purchase Plan |
|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO 2014 EMPLOYEE STOCK PURCHASE PLAN. UNLESS MARKED OTHERWISE, PROXIES RECEIVED WILL BE VOTED FOR THIS PROPOSAL.
|
THE GREENBRIER COMPANIES |
2019 Proxy Statement |
41
|
RATIFICATION OF APPOINTMENT OF AUDITORS
|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE COMPANYS INDEPENDENT AUDITORS FOR FISCAL YEAR 2019. UNLESS MARKED OTHERWISE, PROXIES RECEIVED WILL BE VOTED FOR THIS PROPOSAL.
|
42
|
2019 Proxy Statement |
THE GREENBRIER COMPANIES |
|
Proposal 4 - Ratification of Appointment of Auditors |
Board of Directors
The Greenbrier Companies, Inc.
The Audit Committee of the Board of Directors is established pursuant to the Companys Bylaws, as amended, and the Audit Committee Charter adopted by the Board of Directors. A copy of the Charter, as amended, is available to shareholders without charge upon request to: Investor Relations, The Greenbrier Companies, Inc., One Centerpointe Drive, Suite 200, Lake Oswego, Oregon 97035 or on the Companys website at www.gbrx.com.
Management is responsible for the Companys internal controls and the financial reporting process. The independent auditors are responsible for performing an independent audit of the Companys consolidated financial statements in accordance with auditing standards generally accepted in the United States of America and for issuing a report thereon. The Audit Committees responsibility is generally to monitor and oversee these processes, as described in the Charter.
For fiscal year 2018, the members of the Audit Committee of the Board of Directors were Graeme A. Jack (Chairman), Wanda F. Felton, Duane C. McDougall, Donald A. Washburn and Kelly M. Williams. Each member of the Audit Committee who served during fiscal year 2018 is, or during the time of their service was, an independent director as defined under the rules of the New York Stock Exchange (NYSE). The Board annually reviews applicable standards and definitions of independence for Audit Committee members and has determined that each member of the Audit Committee meets such standards.
With respect to the year ended August 31, 2018, in addition to its other work, the Audit Committee:
| Reviewed and discussed with the Companys management and independent auditors the effectiveness of the Companys internal controls and the audited financial statements of the Company as of August 31, 2018, and for the year then ended; |
| Discussed with the independent auditors the matters required to be discussed by Auditing Standard No. 1301, regarding Communications with Audit Committees as adopted by the Public Company Accounting Oversight Board; and |
| Received from the independent auditors written disclosures and a letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountants communications with the audit committee concerning independence and discussed with the auditors the firms independence. |
Based upon the review and discussions summarized above, together with the Committees other deliberations and Item 8 of SEC Form 10-K, and subject to the limitations on the Audit Committees role and responsibilities referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements of the Company, as of August 31, 2018 and for the year then ended, be included in the Companys Annual Report on Form 10-K for the year ended August 31, 2018 for filing with the SEC.
October 23, 2018
Graeme A. Jack, Chairman
Wanda F. Felton
Duane C. McDougall
Donald A. Washburn
Kelly M. Williams
The above shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.
THE GREENBRIER COMPANIES |
2019 Proxy Statement |
43
|
COMMON STOCK
Stock Ownership of Certain Beneficial Owners and Management
The following table sets forth information with respect to beneficial ownership of the Companys Common Stock (the only outstanding class of voting securities of the Company) by each of our directors or nominees for director, by each of our Named Executive Officers, by all of our current directors and executive officers as a group, and by each person who is known to the Company to be the beneficial owner of more than five percent of the Companys outstanding Common Stock. We believe the persons and entities named below hold sole voting and investment power with respect to the shares shown opposite their respective names, unless otherwise indicated in the footnotes. The information with respect to each person or entity specified is as supplied or confirmed by such person or entity, is based upon statements filed with the SEC or is based upon our knowledge, and is as of October 31, 2018, unless otherwise indicated in the footnotes.
Name and Address of Beneficial Owner |
Amount and Nature of Beneficial Ownership(1) |
Percent of Class(2) | |||||||||||||||
William A. Furman |
150,223 | (3) | |||||||||||||||
One Centerpointe Drive, Suite 200 Lake Oswego, Oregon 97035
|
|||||||||||||||||
Thomas B. Fargo
|
9,821 | (3) | |||||||||||||||
Wanda F. Felton
|
2,842 | (3) | |||||||||||||||
Graeme A. Jack
|
45,306 | (3) | |||||||||||||||
Duane C. McDougall
|
45,044 | (3) | |||||||||||||||
David L. Starling
|
3,442 | (3) | |||||||||||||||
Charles J. Swindells
|
29,868 | (3) | |||||||||||||||
Donald A. Washburn
|
38,617 | (3) | |||||||||||||||
Kelly M. Williams
|
9,821 | (3) | |||||||||||||||
Alejandro Centurion
|
20,694 | (3) | |||||||||||||||
Mark J. Rittenbaum
|
73,791 | (3) | |||||||||||||||
Lorie L. Tekorius
|
42,496 | (3) | |||||||||||||||
Brian J. Comstock
|
15,954 | (3) | |||||||||||||||
Adrian J. Downes
|
40,486 | (3) | |||||||||||||||
All directors and executive officers as a group (16 persons)(4)
|
569,506 | 1.76 | % | ||||||||||||||
BlackRock, Inc. |
3,901,950 | (5) | 12.06 | % | |||||||||||||
55 East 52nd Street New York, NY 10055
|
|||||||||||||||||
The Vanguard Group |
5,406,379 | (6) | 16.71 | % | |||||||||||||
100 Vanguard Blvd. Malvern, PA 19355
|
|||||||||||||||||
Dimensional Fund Advisors LP |
1,896,373 | (7) | 5.86 | % | |||||||||||||
Building One 6300 Bee Cave Road Austin, TX 78746
|
(1) | More than one person may be deemed to be a beneficial owner of the same securities as determined in accordance with the rules of the SEC. In certain cases, voting and investment power may be shared by spouses under applicable law. The inclusion of shares in this table shall not be deemed an admission of beneficial ownership of any of the reported shares for purposes of Sections 13(d) or 13(g) of the Exchange Act or for any other purpose. |
(2) | Calculated based on number of outstanding shares as of October 31, 2018, which is 32,350,212 plus the total number of shares of which the reporting persons have the right to acquire beneficial ownership within 60 days following October 31, 2018. |
(3) | Less than one percent. |
(4) | A portion of these shares for certain of the individuals is subject to certain vesting requirements. |
(5) | As reported in Amendment No. 2 to Schedule 13G dated December 31, 2017 and filed with the SEC on February 8, 2018. BlackRock has sole voting power over 3,828,386 shares reported and sole dispositive power over all 3,901,950 shares reported. BlackRock does not have shared voting power or shared dispositive power over any of the shares reported. |
(6) | As reported in Amendment No. 6 to Schedule 13G dated December 31, 2017 and filed with the SEC on February 9, 2018. The Vanguard Group has sole voting power with respect to 30,726 shares reported and sole dispositive power with respect to 5,373,789 shares reported. The Vanguard Group has shared power to vote or direct to vote 4,124 shares reported and shared dispositive power with respect to 32,590 shares reported. |
44
|
2019 Proxy Statement |
THE GREENBRIER COMPANIES |
|
Ownership of Greenbrier Common Stock |
(7) | As reported in Amendment No. 9 to Schedule 13G dated December 31, 2017 and filed with the SEC on February 9, 2018. Dimensional Fund Advisors LP (Dimensional) has sole voting power with respect to 1,831,113 shares reported and sole dispositive power with respect to all 1,896,373 reported. Dimensional, an investment advisor registered under Section 203 of the Investment Advisors Act of 1940, furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager or sub-adviser to certain other commingled funds, group trusts and separate accounts (such investment companies, trusts and accounts, collectively referred to as the Funds). In certain cases, subsidiaries of Dimensional may act as an adviser or sub-adviser to certain Funds. In its role as investment advisor, sub-advisor and/or manager, Dimensional or its subsidiaries may possess voting and/or investment power over the securities of the Company that are owned by the Funds, and may be deemed to be the beneficial owner of the shares of the Company held by the Funds. However, all securities reported in the Amendment No. 9 to Schedule 13G are owned by the Funds. Dimensional disclaims beneficial ownership of such securities. In addition, the filing of the Schedule 13G shall not be construed as an admission that the reporting person or any affiliate of the reporting person is the beneficial owner of any securities covered by the Schedule 13G for any other purposes than Section 13(d) of the Securities Exchange Act of 1934. |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our officers and directors, and persons who own more than 10% of a registered class of the Companys equity securities, to file reports of ownership and changes in ownership of the Companys securities with the SEC and the NYSE. Officers, directors and greater than 10% beneficial owners are required by Commission regulations to furnish us with copies of all forms they file pursuant to Section 16(a). Based solely on review of the copies of such reports furnished to us and written representations from reporting persons that no other reports were required, to our knowledge all of the Section 16(a) filing requirements applicable to such persons with respect to fiscal year 2018 were complied with except that the Form 4 filed by William A. Furman on November 17, 2017, reporting, among other sales, two sales made on November 10, 2017, was filed late with respect to the sales made on November 10, 2017.
THE GREENBRIER COMPANIES |
2019 Proxy Statement |
45
|
Annual Meeting Information |
THE GREENBRIER COMPANIES |
2019 Proxy Statement |
47
|
AMENDMENT TO 2014 EMPLOYEE STOCK PURCHASE PLAN
THE GREENBRIER COMPANIES, INC.
AMENDMENT
TO
2014 EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors of The Greenbrier Companies, Inc. (the Company) has adopted this Amendment to The Greenbrier Companies, Inc. 2014 Employee Stock Purchase Plan (the Plan), effective as of October 24, 2018.
1. | Termination Date of the Plan. The termination date of the Plan is extended from February 28, 2019 to February 29, 2024. |
2. | No Further Amendments. Except as amended hereby, the Plan remains in full force and effect. |
3. | Effectiveness of Amendment. Pursuant to Section 16 of the Plan, this Amendment shall become effective upon the approval of stockholders holding a majority of the outstanding shares of the Companys common stock within twelve months after its adoption by the Board of Directors. |
THE GREENBRIER COMPANIES, INC. |
By: |
| |
Name: |
| |
Title: |
|
THE GREENBRIER COMPANIES |
2019 Proxy Statement |
A-1
|
Appendix B - Policy Regarding the Approval of Audit and Non-Audit Services |
|
THE GREENBRIER COMPANIES |
2019 Proxy Statement |
B-2
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Reconciliation of Net Earnings to Adjusted EBITDA and Adjusted EBITDA (Pre-Bonus)
(in thousands)
Year Ended August 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Net earnings
|
$
|
172,063
|
|
$
|
160,462
|
|
$
|
284,824
|
| |||
Interest and foreign exchange
|
|
29,368
|
|
|
24,192
|
|
|
13,502
|
| |||
Income tax expense
|
|
32,893
|
|
|
64,014
|
|
|
112,322
|
| |||
Depreciation and amortization
|
|
74,356
|
|
|
65,129
|
|
|
63,345
|
| |||
GBW goodwill impairment
|
|
9,493
|
|
|
3,522
|
|
|
|
| |||
|