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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Aircastle Limited | NYSE:AYR | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 32.01 | 0 | 01:00:00 |
☑
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Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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☐ |
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Bermuda
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98-0444035
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(State or other Jurisdiction of Incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
Title of Each Class
|
|
Trading Symbol
|
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Name of Each Exchange on Which Registered
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Common Shares, par value $0.01 per share
|
|
N/A
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N/A
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Large accelerated filer
|
☐
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Accelerated filer
|
☐
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Non-accelerated filer
|
☑ |
Smaller reporting company
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☐
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Emerging growth company
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☐
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Page
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1
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1
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3
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20
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21 | |
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23
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23
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23
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24
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Name
|
|
Age
|
Douglas A. Hacker
|
|
64
|
Michael J. Inglese
|
|
59
|
Taro Kawabe
|
|
52
|
Takashi Kurihara
|
|
59
|
Charles W. Pollard
|
|
62
|
Takayuki Sakakida
|
|
48
|
Noriyuki Yukawa
|
|
61
|
Name
|
|
Title
|
Michael J. Inglese
|
|
Chief Executive Officer
|
Aaron A. Dahlke
|
|
Chief Financial Officer
|
Douglas C. Winter
|
|
Chief Commercial Officer
|
Christopher L. Beers
|
|
Chief Legal Officer & Secretary
|
Roy Chandran
|
|
Chief Strategy Officer
|
|
• |
Annual Corporate Performance: Achievement of internal corporate financial metrics focused on: (i) adjusted return on equity; (ii) cash flow per share; and (iii) growth through new investments;
|
|
• |
Individual Performance: Achievement of individual performance goals set at the beginning of each year; and
|
|
• |
Long-Term Corporate Performance: Longer term adjusted return on equity and total shareholder return relative to a broad index of relevant publicly listed companies.
|
Position
|
Corporate
Performance
|
Individual
Performance
|
||||||
CEO
|
85
|
%
|
15
|
%
|
||||
Other NEOs
|
80
|
%
|
20
|
%
|
Metric
|
2019 Target
|
Performance Range
|
Weighted Score
|
|||||||||
Adjusted Return on Equity(1)
|
8.43
|
%
|
25-150
|
%
|
25
|
%
|
||||||
Cash Flow per Share(2)
|
$
|
7.14
|
85-115
|
%
|
50
|
%
|
||||||
New Investments(3) (in billions)
|
$
|
1.40
|
50-150
|
%
|
25
|
%
|
(1) |
Adjusted Return on Equity is Adjusted Net Income divided by the average shareholders’ equity. Adjusted Net Income, or ANI, is net income before certain expenses related to our financings and interest rate derivative accounting,
share-based compensation expense and other items we have deemed unusual when viewed in the context of our ongoing business. Our presentation of ANI may not be comparable to similarly-titled measures used by other companies. A reconciliation
between non-GAAP performance metrics and U.S. GAAP results is included as Appendix A to this Form 10-K/A.
|
(2) |
Cash Flow per Share for a period is Cash Flow from Operations before changes in working capital plus principal payments from our finance leases and distributions from our joint venture investment divided by the total weighted average
number of shares outstanding plus contingently issuable shares related to the Company’s PSUs, for that period. A reconciliation between non-GAAP performance metrics and U.S. GAAP results is included as Appendix A to this Form 10-K/A.
|
(3) |
New Investments measures the total annual amount invested in aviation assets.
|
|
• |
motivate our NEOs by providing the large majority of their overall compensation through an incentive compensation program that tied awards to corporate financial metrics and individual performance goals which we believed would build
shareholder value; and
|
|
• |
align each NEO’s incentives with those of shareholders by delivering a substantial portion of their incentive compensation in the form of restricted share grants and performance based equity awards.
|
|
• |
Individual contractual rights to change in control benefits based on a single trigger;
|
|
• |
Deferred compensation plans;
|
|
• |
Company cars or aircraft;
|
|
• |
Individual contractual rights to income tax gross-ups; and
|
|
• |
Special or enhanced pension or retirement programs.
|
Metric
|
2019
Target
|
Weighting
|
2019
Performance
|
Performance
Range
|
Performance
|
Weighted
Score
|
||||||||||||||||||
Adjusted Return on Equity(1)
|
8.43
|
%
|
25
|
%
|
9.68
|
%
|
25-150
|
%
|
114.8
|
%
|
32.4
|
%
|
||||||||||||
Cash Flow per Share(1)
|
$
|
7.14
|
50
|
%
|
$
|
7.08
|
85-115
|
%
|
99.1
|
%
|
49.6
|
%
|
||||||||||||
New Investments (in billions)
|
$
|
1.40
|
25
|
%
|
$
|
1.24
|
50-150
|
%
|
88.8
|
%
|
22.2
|
%
|
||||||||||||
Total
|
104.2
|
%
|
(1) |
A reconciliation between non-GAAP performance metrics and U.S. GAAP results is included as Appendix A to this Form 10-K/A.
|
|
• |
Announced the acquisition of the Company by affiliates of Marubeni and Mizuho Leasing at $32 per share.
|
|
• |
Acquired 49 aircraft in 2019 for $1.24 billion, all narrow-body aircraft. We believe these investments improved the quality of the Company’s portfolio and its earnings base.
|
|
• |
Sold 20 aircraft for proceeds of $361.7 million with a gain on sale of $45.5 million, including two wide-bodies, further improving the quality of our portfolio.
|
|
• |
Successfully repossessed and transitioned 18 aircraft formerly on lease to Avianca Brazil and Jet Airways.
|
|
• |
Signed leases to place 11 of our Embraer E2 aircraft with KLM.
|
|
• |
Despite repossessions with Avianca Brazil and Jet Airways, we still achieved solid aircraft utilization with our aircraft being on lease 96.4% of the time(1)
and a net cash interest margin of 8.1%(2).
|
(1) |
Aircraft on-lease days as a percent of total days in period weighted by net book value.
|
(2) |
A reconciliation between non-GAAP performance metrics and U.S. GAAP results is included as Appendix A to this Form 10-K/A.
|
Named Executive Officer
|
|
Incentive Compensation(1)
|
Michael J. Inglese
|
|
$717,930 cash and $717,930 restricted cash grant
|
Aaron A. Dahlke
|
|
$425,440 cash and $212,720 restricted cash grant
|
Douglas C. Winter
|
|
$531,800 cash and $265,900 restricted cash grant
|
Christopher L. Beers
|
|
$531,800 cash and $265,900 restricted cash grant
|
Roy Chandran
|
|
$425,440 cash and $212,720 restricted cash grant
|
(1) |
All restricted cash awards were granted in early 2020 and vest in equal installments on February 15, 2021, 2022 and 2023, subject to the terms and conditions of the Incentive Plan.
|
Relative Percentile
|
|
Vesting Percentage
|
80th or higher
|
|
200%
|
55th
|
|
100%
|
30th
|
|
50%
|
below 30th
|
|
0%
|
Actual AROE Performance
|
|
Applicable Percentage
|
Annual AROE Target plus 2%
|
|
200%
|
Annual AROE Target
|
|
100%
|
Annual AROE Target less 2%
|
|
50%
|
Below Annual AROE Target less 2%
|
|
0%
|
Name
|
|
Target/Maximum
Number of PSUs(1)
|
Target/Maximum
Number of TSR PSUs
|
Target/Maximum
Number of AROE PSUs
|
||||||||
Michael J. Inglese
|
|
124,748/249,496
|
62,374/124,748
|
62,374/124,748
|
||||||||
Aaron A. Dahlke
|
|
30,242/60,484
|
15,121/30,242
|
15,121/30,242
|
||||||||
Douglas C. Winter
|
|
50,403/100,806
|
25,202/50,404
|
25,201/50,402
|
||||||||
Christopher L. Beers
|
|
50,403/100,806
|
25,202/50,404
|
25,201/50,402
|
||||||||
Roy Chandran
|
|
30,242/60,484
|
15,121/30,242
|
15,121/30,242
|
(1) |
All awards were made in February 2019 and April 2019.
|
PSU Award
|
|
TSR Payout Tracking(1)
|
|
AROE Payout Tracking(2)
|
March 2017
|
|
200%
|
|
145.0%
|
June 2017
|
|
169%
|
|
143.0%
|
February 2018
|
|
200%
|
|
183.0%
|
February 2019
|
|
200%
|
|
165.0%
|
(1) |
Our TSR from the beginning of the performance period through December 31, 2019, relative to the S&P MidCap 400 Index, was as follows: March 2017 PSU TSR Awards were in the 80th percentile which would have resulted in a payout of 200%
of the target award; June 2017 PSU TSR Awards were in the 76th percentile which would have resulted in a payout of 169% of the target award; February 2018 PSU TSR Awards were in the 86th percentile which would have resulted in a payout of
200% of the target award; and February 2019 PSU TSR Awards were in the 99th percentile which would have resulted in a payout of 200% of the target award.
|
(2) |
Actual AROE for 2017 was 9.1% versus a target of 10.3% resulting in a payout for that component equal to 70% of target. Actual AROE for April 1, 2017, to December 31, 2017, which only applied to the June 2017 PSU Awards was 6.7% versus a
target of 8.1%, resulting in a payout for that component equal to 65% of target. Actual AROE for 2018 was 13.2% versus a target of 8.8%, resulting in a payout equal to 200% of target. Actual AROE for 2019 was 9.7% versus a target of 8.4%,
resulting in a payout equal to 165% of target. See the following table for a calculation of AROE payout tracking percentages as of December 31, 2019.
|
Grant Date
|
As of
December 31, 2017
|
As of
December 31, 2018
|
As of
December 31, 2019
|
Average at
December 31, 2019
|
||||||||||||
March 2017
|
70.0
|
%
|
200.0
|
%
|
165.0
|
%
|
145.0
|
%
|
||||||||
June 2017
|
65.0
|
%
|
200.0
|
%
|
165.0
|
%
|
143.0
|
%
|
||||||||
February 2018
|
—
|
200.0
|
%
|
165.0
|
%
|
183.0
|
%
|
|||||||||
February 2019
|
—
|
—
|
165.0
|
%
|
165.0
|
%
|
Name
|
Aggregate Number of
Unvested Equity Awards
Accelerated (#)(1)
|
Aggregate Value of
Unvested Equity Awards
Accelerated ($)
|
Accelerated 2019 Target
Annual Cash Bonuses
($)(2)
|
|||||||||
Michael J. Inglese
|
564,592
|
$
|
18,055,652
|
$
|
675,000
|
|||||||
Aaron A. Dahlke
|
127,926
|
$
|
4,091,073
|
$
|
400,000
|
|||||||
Douglas C. Winter
|
16,800
|
$
|
537,264
|
$
|
500,000
|
|||||||
Christopher L. Beers
|
189,959
|
$
|
6,074,889
|
$
|
500,000
|
|||||||
Roy Chandran
|
101,167
|
$
|
3,235,321
|
$
|
400,000
|
(1) |
With respect to the 2017 PSUs, which were accelerated and paid based on estimated performance as of the payment date, any difference between the amounts accelerated and paid in 2019 and the amounts earned based on actual performance for
the applicable performance period were trued-up and paid to the executive officer (or repaid by the executive officer, if applicable) on the normal payment date for such PSUs in 2020.
|
(2) |
With respect to the 2019 annual cash bonuses, which were accelerated and paid based on the target level of performance, any difference between the amounts accelerated and paid in 2019 and the amounts earned based on actual performance
for 2019 were trued-up and paid to the executive officer (or repaid by the executive officer, if applicable) on the normal payment date for annual cash bonuses in 2020.
|
|
• |
the use of multiple corporate financial performance metrics, rather than relying on a single measure;
|
|
• |
the use of ranges for these financial performance metrics, so that the earning of the awards is not an “all or nothing” proposition;
|
|
• |
the use of performance-based and time-based equity awards vesting over a three-year period, increasing the focus on longer-term performance and shareholder value growth;
|
|
• |
greater weighting on performance-based equity versus time-based equity; and
|
|
• |
the adoption of robust share ownership guidelines and a recoupment policy.
|
Position
|
|
Multiple of Base Salary
|
Chief Executive Officer
|
|
6x
|
Chief Financial Officer
|
|
2x
|
Chief Commercial Officer
|
|
2x
|
Chief Legal Officer
|
|
2x
|
|
|
|
|
|
|
|
|
|
|
Stock Awards (US$)(1)
|
|
|||||||||||||||||||
Name and Principal Position
|
Fiscal
Year
|
Salary
(US$)
|
Cash Bonus
(US$)
|
Restricted
Cash
Award
|
Annual
Equity
Award
|
Long Term
Incentive
Plan
|
All Other
Compensation
(US$)(2)
|
Total (US$)
|
||||||||||||||||||||||
Michael J. Inglese
|
2019
|
675,000
|
717,930
|
717,930
|
—
|
2,475,000
|
126,114
|
4,711,974
|
||||||||||||||||||||||
Chief Executive Officer
|
2018
|
675,000
|
935,550
|
—
|
935,555
|
2,850,000
|
110,288
|
5,506,393
|
||||||||||||||||||||||
(formerly Chief Financial Officer)(3)
|
2017
|
673,077
|
716,580
|
—
|
1,591,574
|
2,475,000
|
87,388
|
5,543,619
|
||||||||||||||||||||||
Aaron A. Dahlke
|
2019
|
400,000
|
425,440
|
212,720
|
—
|
600,000
|
42,543
|
1,680,703
|
||||||||||||||||||||||
Chief Financial Officer
|
2018
|
400,000
|
554,400
|
—
|
277,204
|
700,000
|
32,874
|
1,964,478
|
||||||||||||||||||||||
(formerly Chief Accounting Officer(3)
|
2017
|
362,901
|
424,640
|
—
|
312,330
|
425,956
|
19,871
|
1,545,698
|
||||||||||||||||||||||
Douglas C. Winter
|
2019
|
337,180
|
531,800
|
265,900
|
—
|
1,000,000
|
44,767
|
2,179,647
|
||||||||||||||||||||||
Chief Commercial Officer
|
||||||||||||||||||||||||||||||
Christopher L. Beers
|
2019
|
500,000
|
531,800
|
265,900
|
—
|
1,000,000
|
65,010
|
2,362,710
|
||||||||||||||||||||||
Chief Legal Officer & Secretary
|
2018
|
500,000
|
693,000
|
—
|
346,506
|
1,150,000
|
71,564
|
2,761,070
|
||||||||||||||||||||||
|
2017 |
454,167
|
540,800
|
—
|
420,396
|
900,000
|
67,829
|
2,383,192
|
||||||||||||||||||||||
Roy Chandran(3)
|
2019
|
400,000
|
425,440
|
212,720
|
—
|
600,000
|
43,279
|
1,681,439
|
||||||||||||||||||||||
Chief Strategy Officer
|
2018
|
400,000
|
562,400
|
—
|
281,192
|
700,000
|
34,944
|
1,978,536
|
||||||||||||||||||||||
(formerly EVP Corporate Finance & Strategy and EVP Capital Markets)(3)
|
2017
|
395,833
|
424,640
|
—
|
312,330
|
350,844
|
24,386
|
1,508,033
|
(1) |
The amounts reported in the “Restricted Cash Award” column for 2019 reflect the amount of the restricted cash awards granted to our NEOs that were in respect of service in 2019. The amounts reported in the “Annual Equity Award” column of
the table above for 2018 and 2017 reflect the aggregate fair value on the grant date of the restricted share awards granted to our NEOs determined in accordance with FASB ASC Topic 718. The amounts reported in the “Long Term Incentive Plan”
column of the table above for 2019, 2018 and 2017 reflect the target value of the award. The fair value on the grant date of the award is reported on page 13. The incremental fair value of certain restricted share awards and PSUs that were
materially modified in December 2019 as a result of their accelerated vesting in connection with the 280G mitigation actions taken in connection with the Merger is not included in this table, but is reported on page 13.
|
(2) |
The amounts reported in the “All Other Compensation” column represent dividends paid on unvested shares, company contributions made during 2019 to each named executive officer’s 401(k) plan account, and certain insurance premiums paid by
the Company.
|
(3) |
On June 9, 2017, Messrs. Inglese, Dahlke and Chandran were promoted to Chief Executive Officer, Chief Financial Officer and EVP Corporate Finance & Strategy. In March 2020, Mr. Chandran was promoted to Chief Strategy Officer.
|
Stock Awards (US$)(1)
|
||||||||||||||||||||||||||
Name and Principal Position
|
Fiscal
Year
|
Salary (US$)
|
Non-Equity
Incentive Plan
Compensation
(US$)
|
Annual
Equity Award
|
Long Term
Incentive Plan
|
All Other
Compensation
(US$)(2)
|
Total (US$)
|
|||||||||||||||||||
Michael J. Inglese
|
2019
|
675,000
|
717,930
|
1,522,966
|
(3)
|
7,717,531
|
126,114
|
10,759,541
|
||||||||||||||||||
Chief Executive Officer
|
2018
|
675,000
|
935,550
|
1,091,583
|
3,442,058
|
110,288
|
6,254,479
|
|||||||||||||||||||
(formerly Chief Financial Officer)(4)
|
2017
|
673,077
|
716,580
|
797,762
|
1,672,656
|
87,388
|
3,947,463
|
|||||||||||||||||||
Aaron A. Dahlke
|
2019
|
400,000
|
425,440
|
449,194
|
(3)
|
1,860,818
|
42,543
|
3,177,995
|
||||||||||||||||||
Chief Financial Officer
|
2018
|
400,000
|
554,400
|
312,330
|
755,710
|
32,874
|
2,055,314
|
|||||||||||||||||||
(formerly Chief Accounting Officer(4)
|
2017
|
362,901
|
424,640
|
47,474
|
285,656
|
19,871
|
1,140,542
|
|||||||||||||||||||
Douglas C. Winter
|
2019
|
337,180
|
531,800
|
696,850
|
1,090,700
|
44,767
|
2,701,297
|
|||||||||||||||||||
Chief Commercial Officer
|
||||||||||||||||||||||||||
Christopher L. Beers
|
2019
|
500,000
|
531,800
|
567,047
|
(3)
|
3,155,948
|
65,010
|
4,819,805
|
||||||||||||||||||
Chief Legal Officer & Secretary
|
2018
|
500,000
|
693,000
|
420,396
|
1,444,308
|
71,564
|
3,129,268
|
|||||||||||||||||||
|
2017 |
454,167
|
540,800
|
197,621
|
680,332
|
67,829
|
1,940,749
|
|||||||||||||||||||
Roy Chandran(4)
|
2019
|
400,000
|
425,440
|
454,826
|
(3)
|
1,880,591
|
43,279
|
3,204,136
|
||||||||||||||||||
Chief Strategy Officer
|
2018
|
400,000
|
562,400
|
312,330
|
761,238
|
34,944
|
2,070,912
|
|||||||||||||||||||
(formerly EVP Corporate Finance & Strategy and EVP Capital Markets)(4)
|
2017
|
395,833
|
424,640
|
74,426
|
256,941
|
24,386
|
1,176,226
|
(1) |
The amounts reported in the Annual Equity Award column for 2019, 2018 and 2017 reflect, in part, the aggregate fair value on the grant date of the restricted share awards granted to our NEOs determined in accordance with FASB ASC Topic
718. The amounts reported in the Long-Term Incentive Plan column for 2019, 2018 and 2017 reflect, in part, the aggregate fair value on the grant date of the AROE PSUs and the TSR PSUs granted to our NEOs determined in accordance with FASB
ASC Topic 718 based on the probable achievement of the applicable AROE and TSR performance conditions as of the grant date. The aggregate fair value on the grant date that would have been included for the AROE PSUs and TSR PSUs, assuming
that the highest level of the performance conditions would be achieved, is as follows: Mr. Inglese US$2,475,000; Mr. Winter US$1,000,000; Mr. Dahlke US$600,000; Mr. Beers US$1,000,000; and Mr. Chandran US$600,000. For a summary of the
assumptions made in the valuation of these awards, please see Note 8 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2019. Pursuant to SEC guidance, the amounts included in
both of these columns also include the incremental fair value of certain restricted share awards and PSUs that were materially modified in December 2019 as a result of their accelerated vesting in connection with the 280G mitigation actions
taken in connection with the Merger, as described in greater detail above. See “Grants of Plan-Based Awards for 2019” below for additional information regarding (i) the restricted share awards and PSUs made to our NEOs in 2019, 2018 and
2017 and (ii) the incremental fair value attributable to the awards that were materially modified in December 2019.
|
(2) |
The amounts reported in this column consist of: (i) the following dividend payments made by the Company on unvested restricted common shares for each named executive officer in 2019: Mr. Inglese US$113,275; Mr. Dahlke US$29,703; Mr.
Winter US$32,200; Mr. Beers US$51,760; and Mr. Chandran US$30,439 and (ii) Company contributions made during 2019 to each named executive officer’s 401(k) plan account and certain insurance premiums paid by the Company.
|
(3) |
Represents restricted share awards granted in 2019 in respect of performance for fiscal year 2018 and the incremental fair value of certain restricted share awards that were materially modified in December 2019 as a result of their
accelerated vesting in connection with the 280G mitigation actions taking in connection with the Merger, as described in greater detail above. Restricted cash awards in respect of performance for fiscal year 2019 were approved by the
Compensation Committee and communicated to the NEOs in February 2020. The amounts of the restricted cash awards granted in respect of performance in fiscal year 2019, which vest over three years and were communicated in February 2020 are as
follows: Mr. Inglese US$717,930; Mr. Dahlke US$212,720; Mr. Winter US$265,900; Mr. Beers US$265,900; and Mr. Chandran US$212,720
|
(4) |
On June 9, 2017, Messrs. Inglese, Dahlke and Chandran were promoted to Chief Executive Officer, Chief Financial Officer and EVP Corporate Finance & Strategy. In March 2020, Mr. Chandran was promoted to Chief Strategy Officer.
|
Estimated Future Payouts Under Non-
Equity Incentive Plan Awards
|
Estimated Future Payouts Under Equity
Incentive Plan Awards (2)(3)
|
||||||||||||||||||||||||||||||||||
Name and Grant Type
|
Grant Date(1)
|
Threshold (US$)
|
Target (US$)
|
Maximum
US$)
|
Threshold
(#)
|
Target
(#)
|
Maximum
(#)
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units (#)(1)
|
Grant Date
Per Share
Fair Value
(US$)(1)
|
Grant Date
Fair Value
of Stock
Awards
(US$)(1)
|
|||||||||||||||||||||||||
Michael J. Inglese
|
8,000,000
|
||||||||||||||||||||||||||||||||||
RSA
|
2/8/2019
|
47,155
|
20.06
|
945,929
|
|||||||||||||||||||||||||||||||
PSU TSR
|
various
|
31,187
|
62,374
|
124,748
|
23.38 - 31.98
|
2,642,497
|
|||||||||||||||||||||||||||||
PSU AROE
|
various
|
82,990
|
165,980
|
19.30 - 31.98
|
5,075,034
|
||||||||||||||||||||||||||||||
Incremental Repriced RSA
|
12/20/2019
|
92,848
|
31.98
|
576,070
|
|||||||||||||||||||||||||||||||
Aaron A. Dahlke
|
3,000,000
|
||||||||||||||||||||||||||||||||||
RSA
|
2/8/2019
|
13,972
|
20.06
|
280,278
|
|||||||||||||||||||||||||||||||
PSU TSR
|
various
|
7,561
|
15,121
|
30,242
|
23.38 - 31.98
|
644,386
|
|||||||||||||||||||||||||||||
PSU AROE
|
various
|
18,979
|
37,958
|
19.30 - 31.98
|
1,216,432
|
||||||||||||||||||||||||||||||
Incremental Repriced RSA
|
12/20/2019
|
24,347
|
31.98
|
168,632
|
|||||||||||||||||||||||||||||||
Douglas C. Winter
|
3,000,000
|
||||||||||||||||||||||||||||||||||
RSA
|
2/8/2019
|
35,000
|
19.91
|
696,850
|
|||||||||||||||||||||||||||||||
PSU TSR
|
2/8/2019
|
12,601
|
25,202
|
50,404
|
21.96
|
553,436
|
|||||||||||||||||||||||||||||
PSU AROE
|
various
|
8,400
|
16,800
|
19.30 - 31.98
|
537,264
|
||||||||||||||||||||||||||||||
Christopher L. Beers
|
3,000,000
|
||||||||||||||||||||||||||||||||||
RSA
|
2/8/2019
|
17,465
|
20.06
|
350,348
|
|||||||||||||||||||||||||||||||
PSU TSR
|
2/8/2019
|
12,601
|
25,202
|
50,404
|
23.38
|
589,223
|
|||||||||||||||||||||||||||||
PSU AROE
|
various
|
40,910
|
81,820
|
19.30 - 31.98
|
2,566,725
|
||||||||||||||||||||||||||||||
Incremental Repriced RSA
|
12/20/2019
|
42,426
|
31.98
|
216,336
|
|||||||||||||||||||||||||||||||
Roy Chandran
|
3,000,000
|
||||||||||||||||||||||||||||||||||
RSA
|
2/8/2019
|
14,173
|
20.06
|
284,310
|
|||||||||||||||||||||||||||||||
PSU TSR
|
2/8/2019
|
7,561
|
15,121
|
30,242
|
23.38
|
353,529
|
|||||||||||||||||||||||||||||
PSU AROE
|
various
|
23,409
|
46,818
|
19.30 - 31.98
|
1,527,062
|
||||||||||||||||||||||||||||||
Incremental Repriced RSA
|
12/20/2019
|
24,950
|
31.98
|
170,230
|
(1) |
Represents (i) restricted share awards granted in 2019 in respect of performance for fiscal year 2018 and (ii) the incremental fair value of certain restricted share awards that were materially modified in December 2019 as a result of
their accelerated vesting in connection with the 280G mitigation actions taken in connection with Merger, as described in greater detail above. Restricted cash awards in respect of performance for fiscal year 2019 were approved by the
Compensation Committee and communicated to the named executive officers in February 2020. The aggregate grant date fair value of restricted cash awards in respect of performance in fiscal year 2019, which vest over three years and were
communicated in February 2020 are as follows: Mr. Inglese US$717,930; Mr. Dahlke US$212,720; Mr. Winter US$265,900; Mr. Beers US$265,900; and Mr. Chandran US$212,720.
|
(2) |
Represents (i) PSUs granted in 2019 which were designed to align management with shareholders by rewarding exceptional performance over a three year period while enhancing retention for executives and certain senior professionals and
(ii) the incremental fair value of certain PSUs that were materially modified in December 2019 as a result of their accelerated vesting in connection with the 280G mitigation actions taken in connection with Merger, as described in
greater detail above. All PSUs granted during 2019 were scheduled to vest, and the applicable performance period was scheduled to end, on December 31, 2021. The amounts that relate to the PSUs granted in 2019 reflect the aggregate fair
value on the grant date of such PSUs, as determined in accordance with FASB ASC Topic 718. For a summary of the assumptions made in the valuation of these awards, please see Note 8 to our Consolidated Financial Statements included in our
Annual Report on Form 10-K for the year ended December 31, 2019.
|
(3) |
The maximum AROE PSUs represent 200% of target based on actual performance against the February 2019 AROE target. The remaining 81,905 of target AROE PSUs would have been considered granted upon the Compensation Committee’s setting the
target AROE for the respective period.
|
Stock Awards
|
||||||||||||||||
Name
|
Number of Shares
or Units of Stock
that Have Not
Vested (#)
|
Market Value of
Shares or Units of
Stock that Have
Not Vested (US$) (1)
|
Equity Incentive
Plan Awards;
Number of
Unearned Shares,
Units or Other
Rights that Have
Not Vested (#) (3)
|
Equity Incentive
Plan Awards;
Market or Payout
Value of Unearned
Shares, Units or
Other Rights that
Have Not Vested
(US$) (1)
|
||||||||||||
Michael J. Inglese
|
0
|
0
|
62,374
|
1,996,592
|
||||||||||||
Aaron A. Dahlke
|
0
|
0
|
15,121
|
484,023
|
||||||||||||
Douglas C. Winter
|
35,000
|
(2)
|
1,120,350
|
25,202
|
806,716
|
|||||||||||
Christopher L. Beers
|
0
|
0
|
51,897
|
1,661,223
|
||||||||||||
Roy Chandran
|
—
|
—
|
31,370
|
1,004,154
|
(1) |
Valued at a common share price of US$32.01, the reported closing price for our common shares on the NYSE on December 31, 2019, the last trading day of 2019. PSUs were valued assuming achievement of the applicable performance metrics as
described below in footnote 3.
|
(2) |
These 35,000 restricted shares were scheduled to vest in increments of 7,000 each January 1, commencing on January 1, 2020.
|
(3) |
Represents the TSR PSUs at target and the AROE PSUs at maximum for AROE PSUs deemed granted in 2019, 2018 and 2017, as determined in accordance with FASB ASC Topic 718. See “Grants of Plan-Based Awards for 2019” above for additional
information regarding PSUs granted to our named executive officers in 2019. The remaining 81,905 of target AROE PSUs would only be considered granted upon the Compensation Committee’s setting the target AROE for the respective period. For
a summary of the assumptions made in the valuation of these awards, please see Note 8 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2019. All performance share unit
awards granted during 2017 were scheduled to vest, and their performance period ended, on December 31, 2019, and all performance share unit awards granted during 2018 were scheduled to vest, and the applicable performance period was
scheduled to end, on December 31, 2020, and all performance share unit awards granted during 2019 were scheduled to vest, and the applicable performance period was scheduled to end, on December 31, 2021.
|
Stock Awards
|
||||||||
Name
|
Number of
Shares Acquired
on Vesting (#)
|
Value Realized
on Vesting
(US$)(1)
|
||||||
Michael J. Inglese
|
616,128
|
19,117,496
|
||||||
Aaron A. Dahlke
|
137,311
|
4,282,996
|
||||||
Douglas C. Winter
|
16,800
|
537,264
|
||||||
Christopher L. Beers
|
221,124
|
6,684,047
|
||||||
Roy Chandran
|
111,752
|
3,444,725
|
(1) |
The aggregate dollar value realized is calculated based on (i) the US$17.24 per share price of our common shares for certain restricted share awards on December 31, 2018, the last business day preceding the vesting date, which was
January 1, 2019, (ii) the US$31.98 per share price of our common shares on December 23, 2019, the last business day preceding the accelerated vesting and delivery dates of certain restricted share awards and PSUs that were materially
modified as a result of their accelerated vesting in connection with the 280G mitigation actions taken in connection with the Merger, which was December 24, 2019, and (iii) on the US$32.22 per share price of our common shares on February
13, 2020, the last business day preceding the applicable delivery date of the 2017 LTIP awards, which was February 14, 2020.
|
Circumstances of Termination
|
||||||||||||||||||||||||||||
Name/Benefit
|
Voluntary
resignation by
executive (US$)
|
Termination by
us for cause
(US$)
|
Termination
by us without
cause (US$)
|
Termination by
us without cause
or by executive
for good reason
following
change in
control (US$)(1)
|
Termination by
executive
for good
reason (US$)
|
Normal
retirement (US$
|
Death or
Disability (US$)
|
|||||||||||||||||||||
Michael J. Inglese
|
||||||||||||||||||||||||||||
Cash Severance
|
—
|
—
|
1,350,000
|
2,700,000
|
1,350,000
|
—
|
—
|
|||||||||||||||||||||
COBRA Reimbursement
|
—
|
—
|
56,972
|
56,972
|
56,972
|
—
|
56,972
|
|||||||||||||||||||||
Vacation
|
72,692
|
72,692
|
72,692
|
72,692
|
72,692
|
72,692
|
72,692
|
|||||||||||||||||||||
Market Value of Accelerated Vesting of Performance Share Units
|
—
|
—
|
2,720,050
|
5,049,401
|
2,720,050
|
—
|
6,713,233
|
|||||||||||||||||||||
Aaron A. Dahlke
|
||||||||||||||||||||||||||||
Cash Severance
|
—
|
—
|
800,000
|
1,600,000
|
800,000
|
—
|
—
|
|||||||||||||||||||||
COBRA Reimbursement
|
—
|
—
|
56,972
|
56,972
|
56,972
|
—
|
56,972
|
|||||||||||||||||||||
Vacation
|
43,077
|
43,077
|
43,077
|
43,077
|
43,077
|
43,077
|
43,077
|
|||||||||||||||||||||
Market Value of Accelerated Vesting of Performance Share Units
|
—
|
—
|
655,309
|
1,258,353
|
655,309
|
—
|
1,677,804
|
|||||||||||||||||||||
Douglas C. Winter
|
||||||||||||||||||||||||||||
Cash Severance
|
—
|
—
|
1,000,000
|
2,000,000
|
1,000,000
|
—
|
—
|
|||||||||||||||||||||
COBRA Reimbursement
|
—
|
—
|
56,972
|
56,972
|
56,972
|
—
|
56,972
|
|||||||||||||||||||||
Vacation
|
53,846
|
53,846
|
53,846
|
53,846
|
53,846
|
53,846
|
53,846
|
|||||||||||||||||||||
Market Value of Accelerated Vesting of Restricted Shares
|
—
|
—
|
1,120,000
|
1,120,000
|
1,120,000
|
—
|
1,120,000
|
|||||||||||||||||||||
Market Value of Accelerated Vesting of Performance Share Units
|
—
|
—
|
1,075,600
|
2,016,774
|
1,075,600
|
—
|
2,689,032
|
|||||||||||||||||||||
Christopher L. Beers
|
||||||||||||||||||||||||||||
Cash Severance
|
—
|
—
|
1,000,000
|
2,000,000
|
1,000,000
|
—
|
—
|
|||||||||||||||||||||
COBRA Reimbursement
|
—
|
—
|
56,972
|
56,972
|
56,972
|
—
|
56,972
|
|||||||||||||||||||||
Vacation
|
53,846
|
53,846
|
53,846
|
53,846
|
53,846
|
53,846
|
53,846
|
|||||||||||||||||||||
Market Value of Accelerated Vesting of Performance Share Units
|
—
|
—
|
557,966
|
3,010,348
|
557,966
|
—
|
4,013,798
|
|||||||||||||||||||||
Roy Chandran
|
||||||||||||||||||||||||||||
Cash Severance
|
—
|
—
|
800,000
|
1,600,000
|
800,000
|
—
|
—
|
|||||||||||||||||||||
COBRA Reimbursement
|
—
|
—
|
56,972
|
56,972
|
56,972
|
—
|
56,972
|
|||||||||||||||||||||
Vacation
|
43,077
|
43,077
|
43,077
|
43,077
|
43,077
|
43,077
|
43,077
|
|||||||||||||||||||||
Market Value of Accelerated Vesting of Performance Share Units
|
—
|
—
|
330,663
|
1,791,368
|
330,663
|
—
|
2,388,490
|
(1) |
As described below, the total amount of payments for each named executive officer may be subject to reduction to the extent necessary to avoid an excise tax under Section 4999 of the Internal Revenue Code.
|
|
• |
if the employment of such named executive officer is terminated without “cause” or with “good reason” (as defined in such employment agreement), and if he signs a general release of claims and complies with the covenants described
below, then he will be entitled to receive: (i) an amount equal to the sum of the base salary and target annual cash bonus for the year of termination, payable over a one-year period (two times such amount and payable in a lump sum if the
termination occurs within 120 days prior to or within two years following a “change in control” as defined in such employment agreement); (ii) a pro-rata annual bonus for the year of termination; (iii) reimbursement of COBRA premiums for
up to twelve months; and (iv) accelerated vesting of all outstanding restricted share awards;
|
|
• |
if any amounts to be paid to such named executive officer would constitute “excess parachute payments” subject to the excise tax imposed under Section 4999 of the Internal Revenue Code, the amount will be reduced to the extent
necessary to avoid the excise tax, but only if such reduction results in a higher after-tax payment to him; and
|
|
• |
such named executive officer covenants not to compete with Aircastle for six months following termination of his employment for any reason and will not solicit the employees of Aircastle or the clients or customers of Aircastle for
competing business, in each case, for a period of twelve months following termination.
|
|
• |
Directors were paid an annual cash fee of US$80,000.
|
|
• |
The Chairman of the Board was paid an additional annual cash fee of US$50,000.
|
|
• |
Each of the chairs of the Audit Committee and Investment Committee was paid an annual cash fee of US$35,000 and each other such committee member was paid an annual cash fee of US$20,000.
|
|
• |
The Compensation Committee Chair was paid an annual cash fee of US$25,000 and Compensation Committee members were paid an annual cash fee of US$10,000.
|
|
• |
The Nominating and Corporate Governance Committee chair was paid an annual cash fee of US$20,000 and Nominating and Corporate Governance Committee members were paid an annual cash fee of US$10,000.
|
Name
|
Fees Earned or
Paid in Cash (US$)
|
Stock Awards
(US$)(1)
|
All Other
Compensation
(US$)(2)
|
Total (US$)
|
||||||||||||
Ronald W. Allen
|
105,356
|
135,006
|
9,554
|
249,916
|
||||||||||||
Giovanni Bisignani
|
90,000
|
135,006
|
9,554
|
234,560
|
||||||||||||
Michael J. Cave
|
120,000
|
135,006
|
9,554
|
264,560
|
||||||||||||
Douglas A. Hacker
|
145,000
|
135,006
|
9,554
|
289,560
|
||||||||||||
Jun Horie(3)
|
—
|
—
|
—
|
—
|
||||||||||||
Takashi Kurihara(3)
|
—
|
—
|
—
|
—
|
||||||||||||
Ronald L. Merriman
|
125,000
|
135,006
|
9,554
|
269,560
|
||||||||||||
Agnes Mura
|
110,000
|
135,006
|
9,554
|
254,560
|
||||||||||||
Charles W. Pollard
|
135,000
|
135,006
|
9,554
|
279,560
|
||||||||||||
Takayuki Sakakida(3)
|
—
|
—
|
—
|
—
|
||||||||||||
Peter V. Ueberroth
|
215,000
|
135,006
|
9,554
|
359,560
|
||||||||||||
Michael J. Inglese(3)
|
—
|
—
|
—
|
—
|
(1) |
The reported amounts reflect the aggregate fair value on the grant date of the restricted shares granted to our Directors during 2019 determined in accordance with FASB ASC Topic 718. For a summary of the assumptions made in the
valuation of these awards, please see Note 8 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2019. The grant date fair value of each restricted share was US$17.24. The
number of unvested restricted shares granted to each Director in 2019 and held by each Director as of December 31, 2019 was: Mr. Allen 7,831, Mr. Bisignani 7,831, Mr. Cave 7,831, Mr. Hacker 7,831, Mr. Merriman 7,831, Ms. Mura 7,831, Mr.
Pollard 7,831 and Mr. Ueberroth 7,831.
|
(2) |
The reported amounts consist of dividend payments made by the Company on restricted common shares granted to each Director in 2019.
|
(3) |
Our affiliated and management Directors, Messrs. Inglese, Horie, Kurihara and Sakakida were not separately compensated by us for their Board or committee service.
|
Position
|
Multiple of Base Annual Cash Board Service Fee
|
|
Relevant Director
|
3x
|
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
(excluding securities
reflected in column (a))
|
|||||||||
(a)
|
(b)
|
(c)
|
||||||||||
Equity compensation plans approved by security holders
|
798,001
|
(1)
|
$
|
—
|
3,948,503
|
|||||||
Equity compensation plans not approved by security holders
|
—
|
—
|
—
|
|||||||||
Total
|
3,948,503
|
(1) |
Represents 798,001 common shares subject to outstanding PSU awards (assuming payout at maximum).
|
Name and Address of Beneficial Owner
|
Common Shares Held
|
Percent of Class
|
||||||
Marubeni Corporation (1)
7-1 Nihonbashi 2-chome
Chuo-ku, Tokyo, 103-6060 Japan
|
7,024
|
50
|
%
|
|||||
MM Air Limited (2)
c/o Compass Administration Services Ltd.
Crawford House
50 Cedar Avenue
Hamilton, HM11, Bermuda
|
7,024
|
50
|
%
|
(1) |
Marubeni beneficially owns 7,024 Common Shares through its wholly owned subsidiary MHC. On March 27, 2020, Aircastle consummated the Merger. At the Effective Time, each Common Share issued and outstanding immediately prior to the
Effective Time (other than (i) shares canceled or converted into shares of the surviving company pursuant to the Merger Agreement and (ii) restricted shares canceled and exchanged pursuant to the Merger Agreement) was canceled and
converted into the right to receive the Merger Consideration. The shares that were owned by MHC immediately prior to the Effective Time were converted into the same percentage of shares of the surviving company in the Merger. As a
result, immediately following the Effective Time, MHC beneficially owned 28.8% of the outstanding common shares of the surviving company in the Merger, and MM Air Limited beneficially owned the remaining 71.2%. On March 27, 2020, MM Air
Limited transferred 2,976 Common Shares to MHC, resulting in MHC owning 7,024 Common Shares.
|
(2) |
MM Air Limited beneficially owns 7,024 Common Shares. MM Air Limited is controlled by affiliates of Marubeni and Mizuho Leasing. On March 27, 2020, Aircastle consummated the Merger. At the Effective Time, each Common Share issued and
outstanding immediately prior to the Effective Time (other than (i) shares canceled or converted into shares of the surviving company pursuant to the Merger Agreement (as described in footnote (1) above) and (ii) restricted shares
canceled and exchanged pursuant to the Merger Agreement) was canceled and converted into the right to receive the Merger Consideration. The shares that were owned by MHC immediately prior to the Effective Time were converted into the
same percentage of shares of the surviving company in the Merger. As a result, immediately following the Effective Time, MHC beneficially owned 28.8% of the outstanding common shares of the surviving company in the Merger, and MM Air
Limited beneficially owned the remaining 71.2%. On March 27, 2020, MM Air Limited transferred 2,976 Common Shares to MHC, resulting in MM Air Limited owning 7,024 Common Shares.
|
ITEM 13. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
2019 (US$)
|
2018 (US$)
|
|||||||
Audit Fees (1)
|
2,168,500
|
2,015,000
|
||||||
Audit-Related Fees
|
—
|
—
|
||||||
Tax Fees (2)
|
707,000
|
646,000
|
||||||
All Other Fees
|
5,200
|
3,600
|
(1) |
Represents fees for the audit of the Company’s consolidated financial statements and internal control over financial reporting, the reviews of interim financial statements included in the Company’s Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q, certain Current Reports on Form 8-K, audits of IBJ Air joint venture, consultations concerning financial accounting and reporting standards, statutory audits and services rendered relating to the Company’s
registration statements.
|
(2) |
Represents fees related primarily to assistance with tax compliance matters, including international, federal and state tax return preparation, and consultations regarding tax matters.
|
(A)
|
3.
|
Exhibits.
|
(B)
|
EXHIBIT INDEX
|
Exhibit No.
|
Description of Exhibit
|
|
Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002 *
|
||
Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002 *
|
||
104
|
Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.
|
* |
Filed herewith.
|
Aircastle Limited
|
|||
By: |
/s/ Michael J. Inglese
|
||
Michael J. Inglese
|
|||
Chief Executive Officer
|
(Dollars in thousands)
|
Year Ended
December 31, 2019
|
|||
Net income
|
$
|
156,575
|
||
Gain on mark-to-market of interest rate derivative contracts
|
4,771
|
|||
Loan termination payment
|
7,577
|
|||
Write-off of deferred financing fees
|
172
|
|||
Merger related expenses
|
11,622
|
|||
Stock compensation expense
|
15,830
|
|||
Adjusted net income
|
$
|
196,547
|
||
2019 Average shareholders’ equity
|
$
|
2,031,359
|
||
Adjusted return on equity
|
9.68
|
%
|
(Dollars and weighted average shares in thousands)
|
Year Ended
December 31, 2019
|
|||
Net cash provided by operating activities
|
$
|
536,418
|
||
Add back:
|
||||
Changes on certain assets and liabilities:
|
||||
Accounts receivable
|
13,162
|
|||
Other assets
|
(2,594
|
)
|
||
Accounts payable, accrued expenses and other liabilities
|
5,483
|
|||
Lease rentals received in advance
|
(19,954
|
)
|
||
Merger related costs
|
7,886
|
|||
Cash flow from operations before working capital
|
540,401
|
|||
Cash flow per share
|
$
|
7.08
|
||
Weighted average shares
|
76,360
|
Quarter
|
Lease Rental
Revenue
|
Cash Interest
Expense
|
Net Cash
Interest
Margin
|
Average
NBV of
Flight
Equipment
|
Annualized
Lease Rental
Yield(1)
|
Annualized
Cash Interest
/Average
NBV of
Flight
Equipment
|
Annualized
Net Cash
Interest
Margin(2)
|
|||||||||||||||||||||||
Q4 2019
|
$
|
216,225
|
$
|
59,552
|
$
|
156,673
|
$
|
7,753,309
|
11.2
|
%
|
3.1
|
%
|
8.1
|
%
|
(1) |
Lease rental yield is defined as operating and finance and sales-type lease rental revenue plus finance and sales-type lease collections divided by average monthly net book value (including finance and sales-type leases) for the period
calculated on a quarterly basis, annualized
|
(2) |
Net cash interest margin is defined as lease rentals from operating leases, interest income and cash collections from finance and sales-type leases minus interest on borrowings, net settlements on interest rate derivatives and other
liabilities adjusted for loan termination payments divided by the average net book of flight equipment (which includes net investment on finance and sales-type leases) for the period calculated on a quarterly and annualized basis.
|
1 Year Aircastle Chart |
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