[LOGO] CIT
CIT GROUP INC.
1 CIT Drive
Livingston, New Jersey 07039
April 5, 2004
Dear Stockholder:
You are cordially invited to attend our Annual Meeting of Stockholders on
Wednesday, May 12, 2004, at 11:00 a.m., Eastern time at our offices at 1 CIT
Drive, Livingston, New Jersey 07039.
The notice of meeting and proxy statement following this letter describe
the business to be transacted. You are asked to elect your Board of Directors
for the upcoming year and to ratify the appointment of PricewaterhouseCoopers
LLP as our independent public accountants.
Whether or not you are personally able to attend the Annual Meeting,
please complete, sign and date the enclosed proxy card and return it in the
enclosed envelope as soon as possible, or follow the enclosed instructions to
vote electronically. Your vote is very important. This will not limit your right
to attend the meeting and vote in person.
Sincerely yours,
/s/ Albert R. Gamper, Jr.
Albert R. Gamper, Jr.
Chairman and
Chief Executive Officer
[LOGO] CIT
CIT GROUP INC.
1 CIT Drive
Livingston, New Jersey 07039
----------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 12, 2004
----------------------------------------
TO OUR STOCKHOLDERS:
The annual meeting of stockholders of CIT Group Inc. will be held at the
executive offices of CIT, 1 CIT Drive, Livingston, New Jersey 07039, on
Wednesday, May 12, 2004 at 11:00 a.m. Eastern time, for the following purposes:
1. to elect 11 directors to serve for one year or until the next
annual meeting of stockholders;
2. to ratify the appointment of PricewaterhouseCoopers LLP as CIT's
independent accountants for 2004; and
3. to transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The CIT Board of Directors has fixed the close of business on March 26,
2004 as the record date for determining holders of CIT Common Stock entitled to
notice of and to vote at the meeting.
You are cordially invited to attend the meeting. Whether or not you are
personally able to attend the meeting, please complete, sign, date and return
the accompanying proxy card, or cast your vote electronically, as soon as
possible.
By Order of the Board of Directors,
/s/ Robert J. Ingato
Robert J. Ingato
Executive Vice President,
General Counsel and Secretary
Livingston, New Jersey
April 5, 2004
YOUR VOTE IS IMPORTANT
PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD.
CIT GROUP INC.
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PROXY STATEMENT
---------------
We are mailing this proxy statement and the accompanying form of proxy
beginning on or about April 5, 2004 to holders of record on March 26, 2004 of
Common Stock (the "Common Stock") of CIT Group Inc.
We are furnishing this proxy statement and form of proxy in connection
with the solicitation of proxies by our Board of Directors (the "Board") for use
at the 2004 Annual Meeting of Stockholders. You may direct how your shares are
to be voted by submitting the enclosed proxy card or by following the enclosed
electronic voting instructions. We will bear the cost of soliciting proxies in
the accompanying form. We also may pay brokers, nominees, fiduciaries and other
custodians their reasonable fees and expenses for sending proxy materials to
beneficial owners and obtaining their instructions. In addition to solicitation
by mail, our directors, officers and other employees may solicit proxies in
person, by telephone, facsimile transmission or other means of electronic
communication.
All duly executed proxies received or submitted electronically prior to
the Annual Meeting will be voted in accordance with the choices specified. If
you submit a written or electronic proxy, but you do not specify a choice as to
any matter or any other business that may properly come before the meeting, the
proxy will be voted in the discretion of the persons named in the proxy. If you
grant a proxy, you may revoke it at any time before it is voted at the meeting
by filing an instrument revoking the proxy with the Secretary of CIT, at our
address shown, by delivering a duly executed proxy bearing a later date or by
appearing at the Annual Meeting and voting in person. However, if you instructed
a broker on how to vote your shares, you must contact your broker if you wish to
change your vote.
As of March 26, 2004, there were approximately 213,300,406 shares of
Common Stock outstanding. The Common Stock is listed on the New York Stock
Exchange ("NYSE"); accordingly, CIT is subject to its rules and regulations for
listed companies. Each holder of record of Common Stock is entitled to one vote
per share on each matter presented for a vote of stockholders. A quorum for
transaction of business at the Annual Meeting is a majority of the Common Stock
entitled to vote at an Annual Meeting, which may be present either in person or
by proxy.
In determining whether a quorum exists, we will include shares represented
by proxies that reflect abstentions and shares referred to as "broker non-votes"
(i.e., shares held by brokers or nominees for which instructions have not been
received from the beneficial owners or persons entitled to vote that the broker
or nominee does not have discretionary power to vote on a particular matter).
Brokers who are members of the National Association of Securities Dealers, Inc.
may vote shares held by them in nominee name if they are permitted to do so
under the rules of any national securities exchange to which they belong. Under
New York Stock Exchange rules, a member broker that has transmitted proxy
soliciting materials to a beneficial owner may not vote on matters that are not
routine if the beneficial owner has not provided the broker with voting
instructions. Broker non-votes and abstentions will have no effect on the
outcome of the proposals scheduled to be presented at the Annual Meeting.
The following table indicates the votes required to approve each of the
proposals to be presented at the Annual Meeting:
Proposal Approval Required
-------- -----------------
1. Election of Directors........................ a plurality of the votes cast at the Annual Meeting
2. Ratification of Independent Accountants...... a majority of the voting power represented and entitled to
vote at the Annual Meeting
We know of no other matter to be presented at the Annual Meeting. Under
our By-Laws, no business may be transacted at the Annual Meeting other than
business that is (a) stated in the Notice of Annual Meeting, (b) proposed at the
direction of our Board, or (c) proposed by any CIT stockholder who is entitled
to vote at the meeting and who has complied with the notice procedures in our
By-Laws. Unless you indicate contrary instructions to those set forth in the
proxy for the Annual Meeting, the persons named in the proxy have
indicated that they will cast the number of votes represented by the proxy for
the election of each of the nominees listed below as directors, in favor of
Proposal 2 and in their discretion upon such other business as may be properly
brought before the Annual Meeting.
Our Corporate Governance Guidelines provide that directors are expected to
attend the Annual Meeting. In addition, a Board meeting is scheduled immediately
following the Annual Meeting. At the 2003 Annual Meeting of Stockholders, 7
directors were present, out of the 8 directors on the Board at that time.
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PROPOSAL 1
ELECTION OF DIRECTORS
Our Board met 8 times during the year ended December 31, 2003. The Audit
Committee met 9 times and the Compensation and Governance Committee met 5 times
during the year ended December 31, 2003. All of the nominees listed below
attended at least 75% of the aggregate of the meetings of the Board and of any
committee on which he or she served (or for those directors who first joined the
Board in 2003, held during the periods that he or she served).
The directors elected at the Annual Meeting will each serve for a term of
one year, or until the next annual meeting of stockholders. Should any nominee
become unavailable for election, the Board may designate another nominee, in
which case the persons acting under duly executed proxies will vote for the
election of the replacement nominee. Management is not aware of any
circumstances likely to render any nominee unavailable. Election of directors
will be by a plurality of the votes cast.
Nominees
The following sets forth information concerning the eleven nominees for
election as directors at the Annual Meeting, including information as to each
nominee's age as of February 15, 2004 and business experience during the past
five years. This information was provided to CIT by the nominees. CIT knows of
no family relationship among the nominees. In addition to the information
reported below, certain directors are also directors or trustees of privately
held businesses or not-for-profit entities that are not referred to below.
Name Age Position
---- --- --------
Albert R. Gamper, Jr................ 61 Chairman and Chief Executive Officer of CIT
Gary C. Butler...................... 57 President and Chief Operating Officer of Automatic
Data Processing, Inc.
William A. Farlinger................ 74 Retired, Former Chairman of Ontario Power Generation Inc.
William M. Freeman.................. 51 Retired, Former President of the Public Communications
Group of Verizon Communications Inc.
Hon. Thomas H. Kean................. 68 President of Drew University and Former Governor of New Jersey
Edward J. Kelly, III................ 50 Chairman, President and Chief Executive Officer of
Mercantile Bankshares Corporation
Marianne Miller Parrs............... 59 Executive Vice President of International Paper Company
Jeffrey M. Peek..................... 56 President and Chief Operating Officer of CIT
John R. Ryan........................ 58 President of Maritime College, State University of New York
Peter J. Tobin...................... 59 Special Assistant to the President of St. John's University
Lois M. Van Deusen.................. 64 Managing Partner of McCarter & English, LLP
Albert R. Gamper, Jr. has served as Chief Executive Officer of CIT from
May 1987 to the present, and as President from May 1987 to September 2003. He
has also served as Chairman since July 1, 2002, as well as from January 2000 to
June 1, 2001, and from May 1987 to December 1989. Mr. Gamper has been a director
of CIT since May 1984. Prior to December 1989, Mr. Gamper held a number of
executive positions at Manufacturers Hanover Corporation, a prior owner of CIT,
where he had been employed since 1962. Mr. Gamper is a director of Public
Service Enterprise Group Incorporated, Chairman of the Board of Directors of
Saint Barnabas Health Care System and Vice Chairman of the Board of Governors of
Rutgers University. He also serves as a director of the New Jersey Performing
Arts Center and WNET/Channel 13, a trustee of New Jersey Network and a member of
the Finance Council of the Archdiocese of Newark.
Gary C. Butler has served as a director of CIT since February 2004. Mr.
Butler has served as President and Chief Operating Officer of Automatic Data
Processing, Inc. ("ADP") since 1998. Previously, Mr. Butler served as Group
President, Employer Services at ADP since 1995, as President of ADP's Dealer
Services Division since 1989, and in a number of other executive and management
positions at ADP since 1975. Mr. Butler is a director of ADP and Liberty Mutual
Corporation.
3
William A. Farlinger has served as a director of CIT since July 1, 2002,
and previously from November 1999 to June 1, 2001. Mr. Farlinger retired from
Ontario Power Generation Inc. (formerly Ontario Hydro) in December 2003.
Previously, Mr. Farlinger served as Chairman of Ontario Power Generation since
November 1995, including as Chairman, President and Chief Executive Officer from
August 1997 to March 1998. Prior to joining Ontario Hydro, Mr. Farlinger spent
his entire business career with the accounting and management consulting firm of
Ernst & Young, Canada, including serving as Chairman and Chief Executive Officer
from 1987 to 1994. Mr. Farlinger is also a member of the Order of Canada.
William M. Freeman has served as a director of CIT since July 2003. Mr.
Freeman retired from Verizon Communications Inc. in February 2004, where he
served as President and Chief Executive Officer of the Public Communications
Group since 2000. Previously, Mr. Freeman served as President and Chief
Executive Officer of Bell Atlantic-New Jersey from 1998 to 2000, President and
Chief Executive Officer of Bell Atlantic-Washington, D.C. from 1994 to 1998, and
in a number of other executive and management positions at Verizon since 1974.
Mr. Freeman serves on the Board of Trustees of Drew University, the Board of
Associates of Gallaudet University, the Board of Trustees for the Joint Center
for Political and Economic Studies, and the National Board of Directors of
Junior Achievement. Mr. Freeman is also a director of VAC Holding, Inc., a
privately held communications company.
Hon. Thomas H. Kean has served as a director of CIT since July 1, 2002,
and previously from November 1999 to June 1, 2001. Mr. Kean has served as
President of Drew University since February 1990, and is a former Governor of
the State of New Jersey. He is also a director of Amerada Hess Corporation,
ARAMARK Corporation, Franklin Resources, Inc., The Pepsi Bottling Group, and
UnitedHealth Group Incorporated. Mr. Kean is also a trustee of The Robert Wood
Johnson Foundation, a non-profit foundation.
Edward J. Kelly, III has served as a director of CIT since July 1, 2002.
Mr. Kelly has served as President and Chief Executive Officer and a director of
Mercantile Bankshares Corporation since March 2001, and additionally became
Chairman in March 2003. Mr. Kelly served as Managing Director of J.P. Morgan
Chase, and one of its predecessors, J.P. Morgan, from February 1996 to February
2001, as General Counsel and Secretary of J.P. Morgan from November 1994 to
January 1996, and is a former partner in the New York law firm of Davis Polk &
Wardwell. Mr. Kelly is also a director of Constellation Energy Group, CSX
Corporation, Hartford Financial Services Group, and Axis Capital Holdings
Limited.
Marianne Miller Parrs has served as a director of CIT since January 2003.
Ms. Parrs has served as Executive Vice President of International Paper Company
since 1999, with current responsibility for Information Technology, the global
supply chain, Investor Relations and IP Realty. From 1995 to 1999, Ms. Parrs
served as Senior Vice President and Chief Financial Officer of International
Paper Company. Previously, she served in a number of other executive and
management positions at International Paper Company since 1974, and was a
security analyst at a number of firms prior to joining International Paper
Company. Additionally, Ms. Parrs sits on the boards of various non-profit
organizations, such as the New York Women's Forum and the New York Council on
Economic Education. Ms. Parrs also serves on the board of Forest Express, a
private e-business company that streamlines and automates supply chain
transactions for the paper and forest products industry.
Jeffrey M. Peek has served as President and Chief Operating Officer and as
a director of CIT since September 2003. Prior to September 2003, Mr. Peek served
as Vice Chairman of Credit Suisse First Boston LLC and was responsible for the
firm's Financial Services Division, including Credit Suisse Asset Management and
Private Client Services. Immediately prior to joining Credit Suisse First Boston
in 2002, Mr. Peek was with Merrill Lynch since 1983, where he rose to the level
of Executive Vice President of Merrill Lynch & Co., Inc. and was President of
Merrill Lynch Investment Managers. He also served on the Executive Management
Committee of Merrill Lynch & Co. Mr. Peek is also a director of Travelers
Property Casualty Corp.
Vice Admiral John R. Ryan has served as a director of CIT since July 2003.
Mr. Ryan has served as President of the State University of New York Maritime
College since June 2002, and has also served as the Interim President of the
State University of New York at Albany since February 2004. From 1998 to 2002,
Mr. Ryan was Superintendent of the U.S. Naval Academy. Mr. Ryan served in the
U.S. Navy from 1967 to July 2002, including as Commander of the Fleet Air
Mediterranean in Naples, Italy from 1995 to 1998, Commander of the Patrol Wings
for the U.S. Pacific Fleet in Pearl Harbor from 1993 to 1995, and Director of
Logistics for the U.S. Pacific Command in Aiea, Hawaii from 1991 to 1993. Mr.
Ryan is also a director of Cablevision Systems Corp. and the Center for Creative
Leadership.
4
Peter J. Tobin has served as a director of CIT since July 1, 2002, and
previously from May 1984 to June 1, 2001. Mr. Tobin has been Special Assistant
in Corporate Relations and Development to the President of St. John's University
since September 2003, and previously was Dean of the Peter J. Tobin College of
Business at St. John's University since August 1998. From March 1996 to December
1997, Mr. Tobin was Chief Financial Officer of The Chase Manhattan Corporation.
From January 1992 to March 1996, Mr. Tobin served as Chief Financial Officer of
Chemical Banking Corporation, a predecessor of The Chase Manhattan Corporation,
and prior to that he served in a number of executive positions at Manufacturers
Hanover Corporation, a predecessor of Chemical Banking Corporation. He is also a
director of AXA Financial, Alliance Capital Management, L.P., a subsidiary of
AXA Financial that manages mutual funds, PA Consulting Group and H.W. Wilson, a
publishing company.
Lois M. Van Deusen has served as a director of CIT since January 2003. Ms.
Van Deusen is the Managing Partner of McCarter & English, LLP, a major law firm
located in Newark, New Jersey, and is a partner in the Real Estate Department.
Ms. Van Deusen joined McCarter & English in 1977 and was named a partner in
1986. Additionally, Ms. Van Deusen sits on the board of Habitat for Humanity
Newark, Inc.
Independence of Directors
Our Corporate Governance Guidelines require that a substantial majority of
the Board shall be composed of directors who meet the independence criteria
established by the New York Stock Exchange. The criteria set by the New York
Stock Exchange in order for a director to qualify as independent are:
o The director can have no material relationship with CIT (either
directly or as a partner, shareholder or officer of an organization
that has a relationship with CIT), including commercial, industrial,
banking, consulting, legal, accounting, charitable and familial
relationships, among others;
o The director cannot have been an employee, or have an immediate
family member who was an executive officer, of CIT during the
preceding three years;
o The director cannot receive, or have an immediate family member who
has received, more than $100,000 per year in direct compensation
from CIT, other than director and committee fees and pension or
other forms of deferred compensation for prior service (provided
such compensation is not contingent on continued service) during the
preceding three years;
o The director cannot be affiliated with or employed by, or have an
immediate family member who was affiliated with or employed in a
professional capacity by, a present or former internal or external
auditor of CIT during the preceding three years;
o The director cannot be employed, or have an immediate family member
who was employed, as an executive officer of another company if any
of CIT's executives have served on that company's compensation
committee during the preceding three years; and
o The director cannot be an executive officer or an employee, or have
an immediate family member who was an executive officer, of a
company that made payments to or received payments from CIT for
property or services in an amount per year in excess of the greater
of $1 million or 2% of such company's consolidated gross revenues
during the preceding three years.
On an annual basis, each director is asked to complete a questionnaire
regarding his or her compliance with the above independence criteria. For
purposes of determining the impact of payments to or from CIT for property or
services on director independence, we do not include payments made in the
ordinary course of business, such as for utilities, or payments for property or
services awarded as a result of a competitive bid. In addition to the above
criteria, the Nominating and Governance Committee reviews all of CIT's
charitable contributions in any calendar year that exceed the lesser of $25,000
or 2% of the charity's annual consolidated gross revenues to an organization
with which an independent director is affiliated to consider the impact on the
applicable director's independence.
Except for Messrs. Gamper and Peek, the Board has determined that all of
the directors are independent as defined by the New York Stock Exchange and
CIT's Corporate Governance Guidelines. The independent directors meet in
executive session during each regularly scheduled meeting of the Board. The
Board named Mr.
5
Tobin as Lead Director and, in such capacity, he presides at executive sessions
of the independent directors, reviews and provides input with respect to the
agenda for Board meetings and coordinates communications between the Board and
the Chief Executive Officer. A current copy of the Corporate Governance
Guidelines is available on our website at www.cit.com.
Board Committees
During 2003, our Board maintained an Audit Committee and a Compensation
and Governance Committee. Effective January 21, 2004, the Board split the
Compensation and Governance Committee into a Compensation Committee and a
Nominating and Governance Committee. The Audit Committee and the Nominating and
Governance Committee each are comprised of four directors and the Compensation
Committee is comprised of three directors. Each director serving on either the
Audit Committee, the Compensation Committee or the Nominating and Governance
Committee is independent as defined by the New York Stock Exchange and
applicable law. Current copies of the written charter of each committee are
available on our website at www.cit.com.
Audit Committee
The Audit Committee conducts its duties consistent with a written charter,
which includes:
o monitoring the integrity of our financial accounting and reporting
process and systems of internal controls, including reviewing our
quarterly and annual filings with the SEC;
o reviewing our corporate compliance policies and monitoring
compliance with our Code of Business Conduct and other compliance
policies, including reviewing any significant case of employee
conflict of interest or misconduct;
o reviewing the budget, plan and activities of the Internal Audit
Department and the performance of the Director of Internal Audit;
o monitoring the independence of the independent public accountants,
including approving in advance all audit and non-audit engagements;
o retaining and determining the compensation of the independent public
accountants; and
o reporting to our Board as appropriate.
Peter J. Tobin (Chairman), William A. Farlinger, Edward J. Kelly, III and
Marianne Miller Parrs serve as members of the Audit Committee. The charter for
our Audit Committee complies with New York Stock Exchange requirements and
applicable law. The Board of Directors has determined that Mr. Tobin, Mr.
Farlinger and Ms. Parrs each meets the standard of "Audit Committee Financial
Expert" as defined by the SEC, and that each member of the Audit Committee is
independent from management and financially literate.
Compensation Committee
The Compensation Committee conducts its duties consistent with a written
charter, which includes:
o recommending to the independent directors the annual salary, bonus
and stock-based compensation of the Chief Executive Officer;
o reviewing and approving salaries, bonuses and stock-based
compensation for other executive officers;
o facilitating the performance evaluation of the Chief Executive
Officer by the Board;
o approving compensation plans and programs for directors; and
o approving any equity compensation plans, and reviewing and approving
the aggregate equity awards that may be granted to all participants.
Hon. Thomas H. Kean (Chairman), William M. Freeman and Lois M. Van Deusen
serve as members of the Compensation Committee.
6
Nominating and Governance Committee
The Nominating and Governance Committee conducts its duties consistent
with a written charter, which includes:
o identifying and recommending qualified candidates to fill Board and
committee positions;
o overseeing the evaluation of the structure, duties, size, membership
and functions of the Board and its Committees, as appropriate;
o overseeing the evaluation of the Board and its committees and
members, including the self-evaluation of the Nominating and
Governance Committee; and
o overseeing corporate governance, including developing and
recommending corporate governance guidelines and policies.
John R. Ryan (Chairman), Gary C. Butler, William M. Freeman and Lois M.
Van Deusen serve as members of the Nominating and Governance Committee.
The Nominating and Governance Committee will consider and evaluate all
director candidates recommended by our shareholders in accordance with the
procedures set forth in our Corporate Governance Guidelines. Shareholders may
propose qualified nominees for consideration by the Nominating and Governance
Committee by submitting the names and supporting information in writing to:
Office of the General Counsel, CIT Group Inc., 1 CIT Drive, Livingston, New
Jersey 07039. Such supporting information shall include (1) a statement
containing the notarized signature of the nominee whereby such nominee consents
to being nominated to serve as a director of CIT and to serving as a director if
elected by the shareholders; (2) information in support of the nominee's
qualifications to serve on CIT's Board and the nominee's independence from
management; (3) the name or names of the stockholders who are submitting such
proposal, the number of shares of CIT's Common Stock held by each such
stockholder, and the length of time such shares have been beneficially owned by
such stockholders; and (4) such other information as the stockholder believes to
be pertinent. To be considered for nomination, any such nominees shall be
proposed as described above no later than December 15th of the calendar year
preceding the applicable annual shareholders meeting.
Our Corporate Governance Guidelines set forth the following general
criteria for nomination to our Board:
o directors should possess senior level management and decision-making
experience;
o directors should have a reputation for integrity and abiding by
exemplary standards of business and professional conduct;
o directors should have the commitment and ability to devote the time
and attention necessary to fulfill their duties and responsibilities
to CIT and its shareholders;
o directors should be highly accomplished in their respective field,
with leadership experience in corporations or other complex
organizations, including government, educational and military
institutions;
o in addition to satisfying the independence criteria described in our
Corporate Governance Guidelines, non-management directors should be
able to represent all shareholders of CIT;
o directors who are expected to serve on a board committee shall
satisfy the New York Stock Exchange and legal criteria for members
of the applicable committee;
o directors should have the ability to exercise sound business
judgment to provide advice and guidance to the Chief Executive
Officer with candor; and
o the Board's assessment of a director candidate's qualifications
includes consideration of diversity, age, skills and experience in
the context of the needs of the Board.
The foregoing general criteria apply equally to the evaluation of all potential,
non-management director nominees, including those individuals recommended by
stockholders.
7
Communicating with Directors
Any person who has a concern about CIT's governance, corporate conduct,
business ethics or financial practices may communicate that concern to the
non-management directors. In addition, CIT's stockholders may communicate with
the Board regarding any topic of current relevance to CIT's business. The
foregoing communications may be submitted in writing to the Lead Director, the
Audit Committee, or the non-management directors as a group in care of CIT's
General Counsel and Secretary, 1 CIT Drive, Livingston, New Jersey 07039, or by
email to directors@cit.com. Concerns and stockholder communications may also be
directed to the Board by calling the CIT Hotline in the U.S. or Canada at
1-877-530-5287. To place calls from other countries in which CIT has operations,
individuals may call 703-259-2284 collect. These concerns can be reported
confidentially or anonymously. Concerns and issues communicated to the Board
will be addressed through CIT's regular procedures:
o Depending on the nature of the concern or issue, it may be initially
referred to CIT's Director of Internal Audit, General Counsel, Head
of Human Resources or other appropriate officer for processing,
investigation, and follow-up action.
o Concerns relating to CIT's accounting, internal accounting controls
or auditing matters will be referred to the Audit Committee.
o All other concerns will be referred to either CIT's Lead Director or
to one or more non-management members of the Board.
o At its regular meetings (or more frequently if deemed appropriate by
management), the Board, or the appropriate committee of the Board,
will be provided with a summary and/or copies of the communications
described above.
Compensation Committee Interlocks and Insider Participation
There are no interlocking relationships between any member of our
Compensation Committee and any of our executive officers that would require
disclosure under the rules of the SEC.
Executive Officers
The following table sets forth information as of February 15, 2004
regarding our executive officers, other than Mr. Gamper and Mr. Peek, whose
information is provided above under "Nominees". The executive officers were
appointed by and hold office at the discretion of the Board. No family
relationship exists among CIT's executive officers or with any director. The
executive officers are subject to CIT's Code of Ethics, which is available on
our website at www.cit.com. In addition to the information reported below,
certain executive officers are also directors or trustees of privately held or
not-for-profit organizations that are not referred to below.
Name Age Position
---- --- --------
John F. Daly........................ 55 President, Commercial Services
Thomas B. Hallman................... 51 Vice Chairman - Specialty Finance
Robert J. Ingato.................... 43 Executive Vice President, General Counsel and Secretary
Roy W. Keller, Jr................... 55 President, Equipment Finance
Joseph M. Leone..................... 50 Vice Chairman and Chief Financial Officer
Lawrence A. Marsiello............... 53 Vice Chairman and Chief Credit Officer
David D. McKerroll.................. 44 Group Chief Executive Officer, Structured Finance
Victor D. Russo..................... 47 President, Business Credit
William J. Taylor................... 52 Executive Vice President, Controller and Chief Accounting Officer
Nikita Zdanow....................... 66 Group Chief Executive Officer, Capital Finance
John F. Daly has served as President of CIT's Commercial Services business
unit since December 1999. Previously, Mr. Daly served as Executive Vice
President and Senior Credit Officer of Commercial Services since January 1996,
and in a number of other executive and management positions with CIT and
Manufacturers Hanover Commercial Corporation, a predecessor of Commercial
Services, since 1973.
8
Thomas B. Hallman has served as CIT's Vice Chairman - Specialty Finance
since September 2003. Previously, Mr. Hallman served as Group Chief Executive
Officer of CIT's Specialty Finance Group since July 2001. Mr. Hallman served as
Chief Executive Officer of the Consumer Finance business unit, the home equity
unit of Specialty Finance, since joining CIT in 1995, and held a number of
executive and management positions with other financial services firms prior to
1995.
Robert J. Ingato has served as CIT's Executive Vice President and General
Counsel since June 2001, and additionally as Secretary since August 14, 2002.
Previously, Mr. Ingato served as Executive Vice President and Deputy General
Counsel since November 1999. Mr. Ingato served as Executive Vice President of
Newcourt Credit Group Inc., which was acquired by CIT, since January 1998, as
Executive Vice President and General Counsel of AT&T Capital Corporation, a
predecessor of Newcourt, since 1996, and in a number of other legal positions
with AT&T Capital since 1988.
Roy W. Keller, Jr. has served as President of CIT's Equipment Finance
Group since May 2002. Previously, Mr. Keller served as President of Equipment
Finance - U.S. division since July 2001, as Executive Vice President since March
2000, as Senior Vice President since April 1998, and in a number of other
management positions since joining CIT in 1978.
Joseph M. Leone has served as CIT's Vice Chairman and Chief Financial
Officer since September 2003. Previously, Mr. Leone served as Executive Vice
President and Chief Financial Officer since July 1995. Mr. Leone served as
Executive Vice President of Sales Financing, a business unit of CIT, from June
1991, Senior Vice President and Controller since March 1986, and in a number of
other executive positions with Manufacturers Hanover Corporation since May 1983.
Mr. Leone is a certified public accountant and a member of the American
Institute of Certified Public Accountants.
Lawrence A. Marsiello has served as Vice Chairman and Chief Credit Officer
of CIT since September 2003. Previously, Mr. Marsiello served as Group Chief
Executive Officer of CIT's Commercial Finance Group since August 1999. Mr.
Marsiello served as Chief Executive Officer of the Commercial Services business
unit, the factoring unit of Commercial Finance, since August 1990, and in a
number of other executive positions with CIT and Manufacturers Hanover
Corporation, since 1974.
David D. McKerroll has served as Group Chief Executive Officer of CIT's
Structured Finance Group since November 1999. Previously, Mr. McKerroll served
as President of Newcourt Capital, a division of Newcourt Credit Group Inc., and
was one of the founders of Newcourt Credit Group, which he joined in 1987. Mr.
McKerroll is also a director of Cossette Communications Group Inc.
Victor D. Russo has served as President of CIT's Business Credit business
unit since June 2000. Previously, Mr. Russo served as Executive Vice President
of Business Credit since 1992, as Group Head of Business Credit's Financial
Restructuring Group since 1989, and in a number of other executive and
management positions with Business Credit and Manufacturers Hanover Commercial
Corporation, a predecessor of Business Credit, since 1983.
William J. Taylor has served as Executive Vice President and Controller of
CIT since November 1999. Previously, Mr. Taylor served as Senior Vice President
and Controller since 1993, as Vice President and Controller since 1991, and
joined CIT as Vice President and Assistant Controller in 1989. Prior to joining
CIT, he served as Senior Vice President and Controller of Crossland Savings FSB
and as a Senior Audit Manager with KPMG specializing in financial services. Mr.
Taylor is a certified public accountant and a member of the American Institute
of Certified Public Accountants.
Nikita Zdanow has served as Group Chief Executive Officer of CIT's Capital
Finance Group since 1985, and served in a number of other executive positions
since joining CIT in 1960.
Section 16(a) Beneficial Ownership Reporting Compliance
Based on CIT's records and other information, CIT believes that its
directors and executive officers complied with the applicable SEC filing
requirements for reporting beneficial ownership of CIT's equity securities for
the year ended December 31, 2003.
9
2004 Audit Committee Report
The Board appointed the members of the Audit Committee. The Audit
Committee is governed by a written charter that was approved and adopted by the
Board and is periodically reviewed and reassessed by the Audit Committee. The
Audit Committee is comprised of four members, each of whom meets the
independence and experience requirements of the New York Stock Exchange and
applicable law.
The Audit Committee (i) monitors the integrity of CIT's financial
accounting and reporting process and systems of internal controls, (ii) reviews
CIT's corporate compliance policies and monitors the compliance by CIT with its
Code of Business Conduct and other compliance policies and with legal and
regulatory requirements, (iii) monitors the independence and performance of
CIT's internal and independent auditors, and (iv) retains and determines the
compensation of the independent public accountants. Management has primary
responsibility for the preparation and integrity of the financial statements and
the reporting process. CIT's independent auditors are responsible for expressing
an opinion on the conformity of the audited financial statements to accounting
principles generally accepted in the United States.
The Audit Committee reviewed CIT's audited financial statements and
related SEC filings for the year ended December 31, 2003 and met with management
and PricewaterhouseCoopers LLP ("PwC"), CIT's independent auditors, to discuss
those financial statements. Management and PwC have represented to the Audit
Committee that the financial statements were prepared in accordance with
generally accepted accounting principles.
The Audit Committee has discussed with PwC the matters required to be
discussed by Statement on Auditing Standards No. 61 (Communication with Audit
Committee), as amended. In addition, the Audit Committee has received from PwC
its written disclosures and letter regarding its independence from CIT as
required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees) and has discussed with PwC its independence
from CIT and management. The Audit Committee has also determined, based on such
disclosures, letter and discussions, that PwC's provision of other non-audit
services to CIT is compatible with the auditors' independence.
Based upon these reviews and discussions, the Audit Committee has
recommended to the Board that the audited financial statements be included in
CIT's Annual Report on Form 10-K for the fiscal year ended December 31, 2003.
February 25, 2004 Audit Committee
Peter J. Tobin, Chairman
William A. Farlinger
Edward J. Kelly, III
Marianne Miller Parrs
2004 Compensation Committee Report on Executive Compensation
The Compensation Committee, which consists solely of independent directors
as defined by New York Stock Exchange rules, oversees the development and
administration of the compensation and benefit programs for the Company's
executive officers and other key members of management. CIT's compensation
programs are designed to link compensation to CIT's strategic business
objectives and to attract, retain and motivate our executive talent. In
executing its compensation responsibilities, the Committee utilizes the
assistance of a compensation consulting firm to advise on market trends and best
practices. The consulting firm is also used by CIT for other purposes.
10
Compensation Philosophy and Strategy
CIT's compensation strategy emphasizes the belief that compensation should
vary with the Company's financial and operating performance so that executives
are well rewarded when performance meets or exceeds objectives and rewards are
commensurately lower when performance objectives are not met. Annual performance
is generally measured on the performance of the Company as a whole or a business
unit, or using both criteria, as the nature of an executive's responsibilities
may dictate. Stock options and restricted shares are used to provide management
with long-term incentives that are contingent on CIT's financial success. In a
continuing effort to align executive interests with that of our shareholders, a
performance-contingent share program was introduced in 2004.
In making senior level compensation decisions, the Committee reviews the
compensation paid for similar positions at companies in related businesses, such
as diversified financial services companies and banks, with asset levels similar
to that of CIT. The companies considered are not necessarily those represented
in the stock performance graph that follows this Report because the Committee
believes CIT's competitors for executive talent are a broader group of
companies. CIT periodically benchmarks its compensation practices and its
financial results against its peer group. CIT's compensation guidelines are
aligned with our competitive employment market to achieve on average a median
percentile position for base salary and a 65th percentile position for total
compensation, assuming certain performance objectives are met.
In conducting its performance assessment for compensation purposes, the
Committee evaluates the Chief Executive Officer's performance in light of
pre-determined goals and objectives and approves his compensation based on this
evaluation. For other executives and key management members, the Committee
evaluates and approves compensation after the Chief Executive Officer presents
to the Committee his assessment of the executives, their accomplishments and
individual and overall Company performance.
CIT's Compensation Program
Compensation paid to the executive officers for 2003 consisted primarily
of base salary, annual cash bonuses and awards of stock options and restricted
stock.
Base Salary. As described above, CIT's philosophy is to provide base
salaries to its executive team members within ranges where the midpoint
approximates the median of the peer group. The base salaries of individual
executives can and do vary from this salary benchmark based on such factors as
scope of responsibility and accountability, individual performance, potential
for future advancement, and length of time in their current position.
Annual Bonus Plan. CIT provides performance-related annual cash incentive
compensation to its executive officers. Under the CIT Annual Bonus Plan
incentive pools are funded based on the achievement of qualitative and
quantitative corporate objectives and business unit pre-tax income goals.
Individual bonuses are awarded based on the attainment of pre-established goals,
the executive's individual contribution toward these goals as well as individual
performance. For participants with overall Company responsibilities, 2003
bonuses were generally paid above target because CIT exceeded its overall
pre-tax income goals. 2003 bonuses for participants with business unit
responsibilities varied with some business units exceeding their goal and others
meeting or falling short of their goal. Under the Discretionary Bonus Plan,
executives are rewarded for the achievement of qualitative initiatives.
Long-Term Incentives. CIT maintains a stock-based incentive plan, the CIT
Group Inc. Long-Term Equity Compensation Plan (the "ECP") for directors and
employees of CIT and its subsidiaries. The Company's ECP rewards executives for
Company and individual performance over more than one year. The plan provides
for the grant of various forms of long-term incentives such as stock options,
restricted stock and performance shares or units. In 2003, the Company granted
stock options and restricted stock.
The Compensation Committee believes that stock option awards create a
strong link to long-term financial results. Members of executive management
received a grant of stock options in January 2003 and non-executives received an
additional grant in July 2003. These options vest pro rata over a three year
period of time.
11
In addition to the January 2003 grant of stock options described above,
members of executive management were awarded a grant of restricted stock in July
2003. The restricted stock awards to the executive team are subject to
three-year cliff vesting.
CEO Compensation
The Compensation Committee established Mr. Gamper's 2003 total
compensation package after reviewing his performance and compensation with the
independent directors of the full Board. The Committee considered the Company's
overall performance as well as initiatives to ensure appropriate executive
succession and to strengthen CIT's overall competitive position in the
marketplace.
Base Salary. The Committee did not change Mr. Gamper's base salary of
$900,000 in 2003.
Annual Bonus. The Committee awarded Mr. Gamper an annual bonus of
$2,200,000 for 2003. Mr. Gamper's award was based on the criteria set forth in
the Annual Bonus Plan that applied to all executive officers. The Committee
determined this award based on Mr. Gamper's annual incentive award target and
the Company's financial results against pre-tax income goals established for CIT
at the beginning of the year. Additional qualitative factors that the Committee
considered when determining Mr. Gamper's performance included his leadership,
the hiring of a President & COO to ensure executive succession, and strong
improvement in a variety of financial metrics including improved return on
tangible equity, repayment of bank debt and increased access to capital markets,
continued progress in corporate credit quality and the significant appreciation
in CIT share value in 2003.
Long-Term Incentives. Mr. Gamper was awarded 400,000 stock options with an
exercise price of $21.05 in 2003. In addition, Mr. Gamper was awarded 135,000
restricted shares. These awards were consistent with the Company's compensation
philosophy described above for all executive officers.
Policy on Deductibility
The Committee's policy is to provide performance-based compensation to its
executive officers that is tax deductible to the Company under current tax law.
To this end, the CIT Group Inc. Annual Bonus Plan (the "Annual Bonus Plan") and
the ECP are approved by our stockholders and administered in accordance with
Section 162(m) of the Internal Revenue Code. The Committee will deviate from
this policy only when it believes there are overriding objectives to be achieved
in our stockholder's interest.
To that end, CIT has established a the CIT Group Inc. Discretionary Bonus
Plan (the "Discretionary Bonus Plan") to reward individuals based upon
qualitative achievements. The Compensation Committee determines bonuses granted
under the Discretionary Bonus Plan for the CEO and other executive officers. The
Discretionary Bonus Plan is not intended to comply with Section 162(m). It
should also be noted that Jeffrey M. Peek, President and Chief Operating Officer
who was hired in September 2003, was granted an annual bonus governed by an
employment agreement that is described the Proxy Statement and is not intended
to comply with Section 162(m).
Looking Forward
In light of the current corporate governance environment and anticipated
accounting changes with respect to stock-based compensation, during 2003, the
Committee undertook an in-depth review of all aspects of CIT's executive
compensation program. This review was performed with the assistance of the
compensation consultant. As a result, the Company introduced a
performance-contingent share program in 2004 for executive officers and other
key members of management. The program serves as a replacement for awards of
service-based restricted stock granted in 2003. Awards under the program will be
earned at the end of a three-year period, depending on the achievement of
earnings growth and return on tangible equity goals that support the Company's
long-term targets.
This Report has been furnished on behalf of the Board of Directors by the
member of its Compensation Committee.
February 25, 2004 Honorable Thomas H. Kean, Chair
William M. Freeman
Lois M. Van Deusen
12
Stock Performance Graph
The following line graph compares the yearly percentage change in the
cumulative total stockholder return of our Common Stock to the cumulative total
return of the S&P Financial Index and the S&P 500 Index for the period
commencing with our IPO on July 2, 2002 and ending December 31, 2003. The
results are based on an assumed $100 invested on July 2, 2002, and reinvestment
of dividends.
[The following information was depicted as a bar chart in the printed material]
07/2/02 9/30/02 12/31/02 3/31/03 6/30/03 9/30/03 12/31/03
------- ------- -------- ------- ------- ------- --------
CIT 100.00 78.17 85.78 74.29 109.21 127.98 160.58
S&P Financials 100.00 84.53 91.66 88.77 102.44 105.15 117.95
S&P 500 100.00 84.31 90.59 85.96 101.84 106.14 118.70
Director Compensation
Directors who are also CIT employees do not receive any fees or other
compensation for service on the Board or its committees. Non-employee directors
of CIT currently are paid an annual retainer of $50,000, (which will increase to
$60,000 following the Annual Meeting), which they may elect to receive in one or
more of the following forms:
o Cash
o Stock Options
o Restricted Stock
The number of shares of Common Stock underlying options that a director
may elect to receive instead of cash remuneration is based on the Black-Scholes
option pricing model. Any options that directors elect to receive as part of
their annual retainer, are immediately vested, but are not exercisable until the
one year anniversary of the date of the grant. These options have a term of ten
years and an exercise price equal to the closing price of CIT Common Stock on
the date of the grant. Any amount that a director elects to receive in
restricted stock is converted into shares of Common Stock based upon a market
value equal to the closing price of Common Stock on the date awarded. The
restrictions on sale lapse on the first anniversary of the grant date.
In addition, each non-employee director is entitled to an annual grant of
stock options having a Black-Scholes value of $35,000 (which will increase to
$45,000 following the Annual Meeting), except that the committee chairmen are
entitled to grants with a $45,000 valuation (which will increase to $55,000
following the Annual Meeting). At the time of appointment to the Board,
non-employee directors are each awarded a grant of stock options to acquire
10,000 shares of Common Stock. The option component of director remuneration and
the options granted at the time of appointment become vested and exercisable in
three equal, annual installments. These options have a term of ten years and an
exercise price equal to the closing price of our Common Stock on the date of the
grant.
13
We reimburse all directors for reasonable out-of-pocket expenses incurred
in attending Board or committee meetings.
Executive Compensation
The table below sets forth the annual compensation, including bonuses and
deferred compensation, of Messrs. Gamper, Peek, Hallman, Leone and Marsiello
(the "Named Executive Officers") for services rendered in all capacities to CIT
during the year ended December 31, 2003, the transition period ended December
31, 2002, the twelve months ended September 30, 2002, the nine months ended
September 30, 2001, and the year ended December 31, 2000.
SUMMARY COMPENSATION TABLE
(U.S. DOLLARS)
Annual Compensation Long-Term Compensation
-------------------------------------- ---------------------------
Other Annual Restricted Securities All Other
Name and Compensa- Stock Underlying Compensa-
Principal Positions Period Salary(1) Bonus(2) tion(3) Awards(4) Options(5) tion(6)
------------------- ------ --------- ---------- ------------ ----------- ----------- ---------
Albert R. Gamper, Jr.... Jan - Dec 2003 $900,000 $2,200,000 $136,730 $ 3,744,900 400,000 $10,000
Chairman and Chief Oct 2002 - Dec 2002 $242,308 $ 500,000 $ 27,603 $ 0 0 $ 0
Executive Officer Oct 2001 - Sept 2002 $900,000 $1,668,832 $ 15,000 $ 0 1,519,560 $10,000
Jan - Sept 2001 $680,769 $3,120,434 $ 40,958 $16,949,070 717,360 $ 8,250
Jan - Dec 2000 $878,847 $ 800,000 $ 98,188 $ 2,946,500 185,805 $41,954
Jeffrey M. Peek......... Jan - Dec 2003 $230,769 $1,300,000 $ 18,000 $ 4,147,500 450,000 $ 0
President and Chief
Operating Officer
Thomas B. Hallman....... Jan - Dec 2003 $454,231 $ 675,000 $ 22,563 $ 1,664,400 125,000 $10,000
Vice Chairman - Oct 2002 - Dec 2002 $115,769 $ 275,000 $ 2,721 $ 0 0 $ 0
Specialty Finance Oct 2001 - Sept 2002 $430,000 $ 356,000 $ 1,209 $ 0 379,890 $ 9,197
Jan - Sept 2001 $288,846 $ 605,000 $ 8,475 $ 1,490,275 119,560 $ 8,500
Jan - Dec 2000 $333,076 $ 325,000 $ 16,692 $ 1,057,500 45,419 $20,123
Joseph M. Leone......... Jan - Dec 2003 $441,346 $ 675,000 $ 24,291 $ 1,664,400 160,000 $10,000
Vice Chairman and Oct 2002 - Dec 2002 $109,038 $ 155,000 $ 3,297 $ 0 0 $ 0
Chief Financial Officer Oct 2001 - Sept 2002 $405,000 $ 390,500 $ 1,346 $ 0 454,890 $ 9,237
Jan - Sept 2001 $302,308 $ 580,000 $ 8,886 $ 1,659,596 119,560 $ 8,500
Jan - Dec 2000 $358,088 $ 300,000 $ 21,168 $ 785,625 37,161 $21,124
Lawrence A. Marsiello... Jan - Dec 2003 $444,231 $ 775,000 $ 23,204 $ 1,664,400 125,000 $10,000
Vice Chairman and Oct 2002 - Dec 2002 $113,077 $ 275,000 $ 2,934 $ 0 0 $ 0
Chief Credit Officer Oct 2001 - Sept 2002 $420,000 $ 260,000 $ 1,465 $ 0 379,890 $ 9,246
Jan - Sept 2001 $313,846 $ 480,000 $ 8,857 $ 1,806,375 119,560 $ 8,500
Jan - Dec 2000 $369,230 $ 400,000 $ 24,108 $ 1,057,500 41,290 $21,569
----------
(1) The salary shown for Mr. Peek in 2003 is for the period from his start
date, September 3, 2003, through December 31, 2003.
(2) Bonus payments made under CIT's Annual Bonus Plan for the year ending
December 31, 2003 relate to performance during the twelve month period
from January 1, 2003 through December 31, 2003. The amounts shown
represent cash paid under CIT's Annual Bonus Plan and Discretionary Plan.
Bonus payments made under CIT's Annual Bonus Plan for the three months
ended December 31, 2002 related to performance during the six-month period
from July 1, 2002 through December 31, 2002. Bonus payments made under
CIT's Annual Bonus Plan for the twelve months ended September 30, 2002
related to performance during the nine-month period from October 1, 2001
through June 30, 2002.
Mr. Peek's 2003 Bonus of $1,300,000 is based on a guaranteed bonus amount
in his Employment Agreement.
For the period from October 2001 through June 2002, the Named Executive
Officers received a portion of their annual bonus as CIT restricted stock.
The amounts shown include the value of the restricted stock. The number of
shares was based on a price of $22.20, the closing price of CIT Common
Stock on August 13, 2002, the date of the grant. All shares were issued
with a one-year restriction. The number and value of shares awarded were
as follows: Mr. Gamper - 50,675 shares ($1,124,985), Mr. Hallman - 12,162
shares ($269,996), Mr. Leone - 15,765 shares ($349,983) and Mr. Marsiello
- 11,711 shares ($259,984). The balance of the listed bonus amounts relate
to cash bonuses paid under a quarterly corporate bonus plan of our former
parent, Tyco International Ltd. ("Tyco"), which was discontinued after our
IPO.
Of the $1,668,832 in annual bonus that Mr. Gamper received for the period
from October 2001 through September 2002, $918,832 was awarded for his
performance under the Tyco corporate bonus plan, of which $750,000 was
paid out in two quarterly payments consisting of $375,000 in cash and
$375,000 in CIT restricted stock as discussed above, and $168,832 was
awarded in unrestricted shares of Tyco common stock (3,521 shares at a
Tyco share price of $47.95). The additional $750,000 was awarded by CIT
for his performance from January 1 through June 30, 2002, of which
$749,985 was paid in CIT restricted stock as discussed above and $15 was
paid in cash to reflect a fractional share.
14
For the nine months ended September 2001, Mr. Gamper received a bonus of
$3,120,434, of which $2,002,040 was paid in cash and $1,118,394 was paid
as a grant of 25,020 shares of Tyco common stock, based on the closing
price of Tyco common stock of $44.70 per share on October 1, 2001, the
date of the grant.
The amounts shown in the Bonus column for 2001 and 2000 (other than for
Mr. Gamper as described above), represent the cash amounts paid under
CIT's Annual Bonus Plan.
(3) The payments set forth in each period under Other Annual Compensation
represent the dividends paid on restricted stock held in each of those
periods. Such dividends were payable at the same rate applicable to all
other issued and outstanding shares.
(4) Recipients of restricted stock have the right to vote such shares and
receive dividends.
On July 25, 2003, restricted stock grants were issued to Mr. Gamper, Mr.
Hallman, Mr. Leone and Mr. Marsiello under the Long Term Equity
Compensation Plan (ECP). The value of this grant is based on the fair
market price of CIT Common Stock on the grant date of $27.74 per share.
Awards were as follows: Mr. Gamper 135,000 shares; Mr. Hallman 60,000
shares; Mr. Leone 60,000 shares; and Mr. Marsiello 60,000 shares. These
grants vest 100% on the third anniversary date of the award.
On September 3, 2003, Mr. Peek received 150,000 shares of restricted stock
as part of his Employment Agreement. The value is based on the fair market
value on the grant date of $27.65 per share. This grant vests 100% on the
third anniversary of the award.
The number and value at December 31, 2003 of restricted stock holdings
based upon the closing market price of $35.95 per share of CIT Common
Stock was as follows: Mr. Gamper - 314,348 shares ($11,300,811), Mr. Peek
- 150,000 shares ($5,392,500), Mr. Hallman - 65,257 shares ($2,345,989),
Mr. Leone - 65,855 shares ($2,367,487), and Mr. Marsiello 66,372 shares
($2,386,073).
Restricted Stock Awards include grants of Performance Accelerated
Restricted Shares ("PARS") made in January 2000 under our former ECP and
grants of restricted stock made in June 2001 under the Tyco International
Ltd. 1994 Restricted Stock Ownership Plan for Key Employees in conjunction
with the acquisition of CIT by Tyco.
The PARS awarded under the our former ECP vested on June 1, 2001 due to
the change of control associated with the acquisition of CIT by Tyco. The
PARS were issued at a fair market value of $20.75. Awards were as follows:
Mr. Gamper - 142,000 shares; Mr. Hallman - 30,000 shares; Mr. Leone -
30,000 shares; and Mr. Marsiello - 30,000 shares.
The June 2001 grants, which were originally granted in Tyco restricted
shares, vest 100% on the third anniversary date of the grant for Mr.
Gamper and one-third on each anniversary for the others, subject to
earlier vesting under other conditions as described in the individual
award agreements. The value is based on the value of Tyco shares on the
grant date of $56.50 per share. Awards were as follows: Mr. Gamper -
300,000 shares; Mr. Hallman - 26,378 shares; Mr. Leone - 29,375 shares;
and Mr. Marsiello - 31,973 shares. The shares of Tyco restricted stock
were converted into CIT restricted stock based on our IPO offering price.
For the year 2000, Restricted Stock Awards also included grants made under
a Special Stock Award Program to Mr. Hallman, Mr. Leone and Mr. Marsiello.
Payments under this plan were based on the achievement of performance
measures for the year 2000. Awards were in the form of restricted stock
grants recommended and approved on January 24, 2001. The Awards vested 50%
on the date of grant, and the remaining 50% was subject to restriction
until January 24, 2002, except that these shares vested on June 1, 2001 in
conjunction with the acquisition of CIT by Tyco. The values of these
grants are included in the Restricted Stock Awards column based on the
share price on the January 24, 2001 grant date of $21.75 per share of CIT
Common Stock. Awards were as follows: Mr. Hallman - 20,000 shares; Mr.
Leone - 7,500 shares; and Mr. Marsiello - 20,000 shares.
(5) On January 21, 2003, option grants were issued under the ECP to Mr.
Gamper, Mr. Hallman, Mr. Leone and Mr. Marsiello. These grants have a
vesting schedule of one-third per year on each anniversary date.
As part of Mr. Peek's Employment Agreement, 450,000 options were granted
under the ECP effective September 3, 2003. These options vest one third
per year on each anniversary date.
During the three months ended December 31, 2002, no options were granted
to the Named Executive Officers.
Options that were originally granted to purchase Tyco common stock, or to
purchase CIT Common Stock prior to the acquisition of CIT by Tyco, are
reported in the table as current options to purchase CIT Common Stock.
Options to purchase CIT Common Stock prior to the acquisition of CIT by
Tyco were converted in June 2001, in connection with such acquisition,
into options to purchase shares of Tyco common stock based on a conversion
rate of .6907 of a share of Tyco common stock for each share of CIT Common
Stock. Except as set forth below, options to purchase Tyco common stock
were converted in July 2002, in connection with our IPO, into options to
purchase CIT Common Stock based on a conversion rate of .5978 of a share
of CIT Common Stock for each share of Tyco common stock.
Two new option awards were granted during the twelve months ended
September 30, 2002. The first grant was awarded on February 5, 2002 under
the Tyco International Ltd. Long Term Incentive Plan and the Tyco
International Ltd. Long Term Incentive Plan II. These options were
converted into options to purchase shares of CIT Common Stock at the time
of our IPO. The second grant was awarded under the ECP on July 2, 2002 to
coincide with our IPO.
15
Options granted between January and September 2001 were awarded under the
Tyco International Ltd. Long Term Incentive Plan and the Tyco
International Ltd. Long Term Incentive Plan II. The 2001 grants vested
one-third on each anniversary date for Mr. Gamper and 100% at the end of
three years for the others. At the time of our IPO, all unvested options
granted between January and September 2001 were cancelled.
For Mr. Gamper, 800,000 unvested Tyco options were cancelled and 8,994
vested options were forfeited. Additionally, Mr. Gamper retained 400,000
vested Tyco options that were awarded on June 1, 2001 and vested on June
1, 2002. These options did not convert to options to purchase shares of
CIT Common Stock and remained as options to purchase shares of Tyco common
stock. For each of Mr. Hallman, Mr. Leone and Mr. Marsiello, 200,000
unvested Tyco options were cancelled.
Options for 2000 were originally awarded under our former ECP and
represent CIT options that were converted in connection with the
acquisition of CIT by Tyco into options to purchase shares of Tyco common
stock, and then converted into options to purchase new shares of CIT
Common Stock in connection with our IPO.
(6) For the year ending December 31, 2003, the payments set forth under "All
Other Compensation" for Messrs. Gamper, Hallman, Leone and Marsiello
include the matching employer contribution to each participant's account
under the CIT Group Inc. Savings Incentive Plan (the "CIT Savings Plan").
The matching employer contribution was made pursuant to a compensation
deferral feature of the CIT Savings Plan under Section 401(k) of the
Internal Revenue Code of 1986. For the twelve-month period ending December
31, 2003, the matching contributions were: Mr. Gamper - $10,000, Mr.
Hallman - $10,000, Mr. Leone - $10,000, and Mr. Marsiello - $10,000.
For the three months ended December 31, 2002, no amounts required to be
disclosed under "All Other Compensation" were paid to any Named Executive
Officer.
For the twelve months ended September 30, 2002, nine months ended
September 30, 2001, and the year ended December 31, 2000, the payments set
forth under "All Other Compensation" for Messrs. Gamper, Hallman, Leone
and Marsiello include the matching employer contribution to each
participant's account and the employer flexible retirement account
contribution to each participant's flexible retirement account under the
CIT Savings Plan. The matching employer contribution was made pursuant to
a compensation deferral feature of the CIT Savings Plan under Section
401(k) of the Internal Revenue Code of 1986. For the period ending
September 2002, the matching contributions were: Mr. Gamper - $10,000, Mr.
Hallman - $9,197, Mr. Leone - $9,237 and Mr. Marsiello - $9,246. For
January through September 2001, the matching contributions were: Mr.
Gamper - $8,250, Mr. Hallman - $8,500, Mr. Leone - $8,500, and Mr.
Marsiello - $8,500. In 2000, Messrs. Gamper, Hallman, Leone, and Marsiello
each received a contribution of $6,800 under the employer match and a
contribution of $6,800 under the employer flexible retirement account. For
the year ended December 31, 2000, the payments set forth under "All Other
Compensation" also include contributions to the accounts of Messrs.
Gamper, Hallman, Leone, and Marsiello under The CIT Group Inc.
Supplemental Savings Plan, which is an unfunded non-qualified plan, as
follows: Mr. Gamper - $28,354, Mr. Hallman - $6,523, Mr. Leone - $7,524,
and Mr. Marsiello - $7,969.
16
Stock Option Awards During 2003
The following table sets out awards of stock options to the Named
Executive Officers during the year ended December 31, 2003. All stock options
awarded during year 2003 were awarded under the ECP and represent options to
acquire CIT Common Stock.
OPTION GRANTS IN 2003
Percent
Number of of Total
Securities Options/SARs
Underlying Granted to Exercise or Grant Date
Date of Options/SARs Employees in Base Price Expiration Present
Name Grant(1) Granted Fiscal Year(2) ($/Sh)(3) Date Value(4)
---- -------- ------------ -------------- ----------- ---------- ----------
Albert R. Gamper, Jr........ 01/21/2003 400,000 7.6% $21.05 01/21/2013 $1,977,333
Chairman and
Chief Executive Officer
Jeffrey M. Peek............. 09/03/2003 450,000 8.5% $27.65 09/03/2013 $2,965,500
President and
Chief Operating Officer
Thomas B. Hallman........... 01/21/2003 125,000 2.4% $21.05 01/21/2013 $617,917
Vice Chairman -
Specialty Finance
Joseph M. Leone............. 01/21/2003 160,000 3.0% $21.05 01/21/2013 $790,933
Vice Chairman and
Chief Financial Officer
Lawrence A. Marsiello....... 01/21/2003 125,000 2.4% $21.05 01/21/2013 $617,917
Vice Chairman and
Chief Credit Officer
----------
(1) The options reported above are for the year ended December 31, 2003. All
options listed represent options to purchase CIT Common Stock. These
grants vest one-third on each anniversary of the grant date, subject to
earlier vesting under conditions described in the individual award
agreements.
(2) Represents the percentage of all employee options granted in 2003 under
the ECP.
(3) Each option grant is issued with a strike price equal to the fair market
value of CIT Common Stock on the date of grant.
(4) The ultimate value of the options will depend on the future market price
of CIT Common Stock, which cannot be forecast with reasonable accuracy.
The actual value, if any, an optionee will realize upon exercise of an
option will depend on the excess of the market value of CIT Common Stock
over the exercise price on the date the option is exercised. The values
shown are based on the Black-Scholes option-pricing model, which is a
method of calculating a theoretical value of the options based upon a
mathematical formula using certain assumptions. For the calculation, the
following assumptions were used: an assumed life of three to five years;
interest rate of 2.1% to 3.6%, which represents the risk free rate with a
maturity date similar to the assumed exercise period; assumed annual
volatility of underlying shares of 29.3% to 33.4%, calculated based on a
historical share price movement analysis of peer organizations over
periods generally commensurate with the expected life of the option;
quarterly dividend payment of $0.12 per share; and the vesting schedule
indicated for the grant.
17
The following table gives additional information on option exercises by
the Named Executive Officers during the year ended December 31, 2003, and on the
number of options and value of in-the-money options held by the Named Executive
Officers on December 31, 2003.
AGGREGATED OPTION EXERCISES IN 2003
AND YEAR-END OPTION VALUES
(U.S. Dollars)
Number of
Securities Underlying Value of Unexercised
Unexercised In-the-Money
Options at 12/31/2003(1) Options at 12/31/2003
------------------------ ---------------------
Shares (#) ($)
Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized Unexercisable Unexercisable
---- ----------- -------- ------------------------ ---------------------
Albert R. Gamper, Jr............. 0 $0 728,102/1,529,706 $4,532,500/$19,557,500
Chairman and
Chief Executive Officer
Jeffrey M. Peek.................. 0 $0 0/450,000 $0/$3,735,000
President and
Chief Operating Officer
Thomas B. Hallman................ 0 $0 97,464/407,426 $1,133,125/$5,261,875
Vice Chairman -
Specialty Finance
Joseph M. Leone.................. 0 $0 204,822/498,676 $1,375,938/$6,511,813
Vice Chairman and
Chief Financial Officer
Lawrence Marsiello............... 0 $0 199,203/407,426 $1,133,125/$5,261,875
Vice Chairman and
Chief Credit Officer
----------
(1) The options reported are non-qualified stock options to purchase CIT
Common Stock awarded under the ECP, including all options converted from
Tyco options or prior CIT options. The exercise price of the options
ranges from $21.05 to $74.47 per share and the closing trading price on
the New York Stock Exchange of CIT Common Stock at December 31, 2003 was
$35.95.
Additional Information Regarding Equity Compensation Plans
The following table summarizes the options outstanding under equity
compensation plans as of December 31, 2003.
Number of securities
remaining available for
Number of securities future issuance under
to be issued upon Weighted average equity compensation plans
exercise of exercise price of (excluding securities
outstanding options outstanding options reflected in column (a))
--------------------- ------------------- -------------------------
(a) (b) (c)
Equity compensation plans
approved by security holders............. 18,766,824 $30.48 14,620,566
Options that are not exercised or whose value is used to exercise other
options may be regranted. All equity compensation plans were approved by our
sole stockholder prior to our IPO. We have no equity compensation plans that
were not approved by stockholders.
18
Employment Agreements
General
At its meeting on November 5, 2002, the Compensation and Governance
Committee of the Board approved revised employment agreements for the Named
Executive Officers, effective January 1, 2003.
Mr. Gamper's employment agreement extends until December 31, 2004 and
provides for him to serve as the Chief Executive Officer of CIT for an annual
base salary of not less than $900,000 and an annual cash bonus based on
performance targets (with a target bonus of at least 200% of his annual base
salary). Pursuant to his employment agreement, his base salary will be reviewed
when the salaries of all executive officers of CIT are reviewed.
Mr. Gamper's employment agreement provides for his participation in all
employee pension, welfare, perquisites, fringe benefit and other benefit plans
generally applicable to the most senior executives of CIT, and continued
participation in CIT's Executive Retirement Program and all other supplemental
and excess retirement plans during the term of the employment agreement on terms
no less favorable than provided immediately prior to the effective date of the
agreement. Mr. Gamper is eligible to receive benefits under the CIT retiree
medical and life insurance plan for the remainder of his life and the life of
his spouse. In addition, Mr. Gamper is entitled to be reimbursed for certain
expenses and to receive certain additional benefits during the term of his
employment.
Mr. Peek entered into an employment agreement effective September 3, 2003.
Mr. Peek's employment agreement extends until September 3, 2006 and
provides for him to serve as the President and Chief Operating Officer and as a
member of the Board. During the term of the employment agreement, it is expected
that Mr. Peek will be promoted to the position of Chief Executive Officer of
CIT. The employment agreement provides for an annual base salary of $750,000,
which will be increased to $800,000 on the first anniversary of his employment
and a guaranteed annual bonus of $1,300,000 for 2003. Mr. Peek's annual bonus
for 2004 shall be $2,200,000 if the Company achieves its pre-tax income goal for
2004 (with a target bonus of at least $1,600,000 or 200% of his salary).
Pursuant to his employment agreement, in 2003, CIT granted Mr. Peek
450,000 stock options and 150,000 shares of restricted stock, During 2004 and
prior to September 2004, the Company will grant to Mr. Peek options and
restricted stock having an aggregate fair market value of $2,500,000 each.
Messrs. Hallman, Leone, and Marsiello also have employment agreements that
extend until December 31, 2004. Their agreements provide for the payment of an
annual base salary of not less than the amount received prior to the effective
date of January 1, 2003, to be reviewed when the salaries of all executive
officers of CIT are reviewed. They are also entitled to an annual bonus
opportunity based on the performance of CIT and their business units, in
accordance with CIT's incentive plans and programs (with a target bonus of at
least 125% of annual base salary).
The employment agreements of Messrs. Hallman, Leone, Marsiello, and Peek
provide for their participation in all employee pension, welfare, perquisites,
fringe benefit and other benefit plans generally available to senior executives.
The employment agreements of Messrs. Hallman, Leone, and Marsiello provide for
continued participation in CIT's Executive Retirement Program and all other
supplemental and excess retirement plans on terms no less favorable than
provided immediately prior to the effective date of the agreement. They are also
eligible to receive benefits under the CIT retiree medical and life insurance
plan. Mr. Peek's employment agreement provides for participation in any
supplemental retirement plans available to similarly situated executives,
participation in the Company's Executive Retirement Plan and retiree medical and
life insurance at economic levels equal to senior executives of the Company. In
addition, Mr. Peek is entitled to be reimbursed for certain expenses and to
receive certain additional benefits during the term of his employment.
Termination and Change-In-Control Arrangements
If Mr. Gamper's employment is terminated by him for "good reason" or by
CIT without "cause" (in each case, as these terms are defined in his employment
agreement), then he would be entitled to a cash payment equal to (i) the sum of
his unpaid base salary through the date of termination and his "Severance Bonus"
pro
19
rated for the portion of the year he completed in the year of his termination,
(ii) three times the sum of his annual base salary plus his Severance Bonus,
paid over a period of three years, provided that he continues to comply with the
confidentiality and non-compete provisions of his employment agreement, and
(iii) a "Special Cash Bonus" (without regard to CIT's financial performance).
"Severance Bonus" means the greater of (i) Mr. Gamper's average annual bonus
over the two calendar years preceding the date of termination or (ii) Mr.
Gamper's target bonus. "Special Cash Bonus" means a payment in satisfaction of
obligations under Mr. Gamper's prior employment agreement, equal to $1.25
million. Also, in such event, any stock options then held by Mr. Gamper would
vest immediately and all restrictions on restricted stock held by Mr. Gamper
would lapse. In addition, Mr. Gamper would be paid or provided with any amounts
or benefits he is eligible to receive under any benefit plan of CIT, including
the retiree medical benefits described above, and to the extent permitted under
law he would be credited with three additional years of age and service credit
under the relevant retirement plans.
Mr. Gamper also would be entitled upon any such termination to
outplacement services, an office, attorney and accountant fee reimbursement up
to $25,000 per year, officer's and director's insurance and indemnification, and
a car and driver. Mr. Gamper would be entitled to each of the items described in
the previous sentence for two years following the date of termination, except
for the insurance, which would extend for five years. Upon retirement, Mr.
Gamper would be entitled to the benefits listed above for the stated time
period, with the exception of outplacement services.
In the event of a change of control (as defined in the employment
agreement) during the term of his employment agreement, Mr. Gamper may elect to
terminate his employment for any reason effective on the 90th day following such
event. If (i) Mr. Gamper elects to so terminate his employment or (ii) within
ninety days of the change of control his employment is terminated by CIT without
cause or by him for good reason, then Mr. Gamper is entitled to the severance
benefits applicable to a good reason termination. Termination payments following
a change of control are payable in a lump sum within 30 days of termination.
Mr. Gamper's employment agreement provides that he will not, during the
employment period and for two years after the date of termination (three years
in the case of termination by CIT without "cause" or by Mr. Gamper for "good
reason" (in each case, as these terms are defined in the employment agreement)),
without the written consent of the Board (i) engage or be interested in any
business in the U.S. which is in competition with any lines of business actively
being conducted by CIT on the date of termination, (ii) hire any person who was
employed by CIT or its affiliates within the six-month period preceding the date
of such hiring or solicit, entice, persuade or induce any person or entity doing
business with CIT or its affiliates to terminate such relationship or to refrain
from extending or renewing the same, or (iii) disparage or publicly criticize
CIT or any of its affiliates.
In July 2003, Mr. Gamper entered into an amendment to his employment
agreement which states that if the Company appoints or elects Mr. Peek to the
position of Chief Executive Officer of the Company on or after July 3, 2004, Mr.
Gamper may not terminate his employment for Good Reason because (i) he ceases to
be the Chief Executive Officer of the Company, (ii) in connection with or as a
result of the appointment or election of Mr. Peek to the position of Chief
Executive Officer, he is assigned duties materially inconsistent with the Chief
Executive Officer position, authority, duties or responsibilities, or (iii)
there is a material diminution in his authority, duties or responsibilities as a
result of Mr. Peek becoming Chief Executive Officer of the Company. Except as
noted above, the provisions of the employment agreement remain, including the
compensation provisions set forth in his employment agreement, and Mr. Gamper
shall continue to serve as Chairman of the Board of the Company, reporting
directly to the Board, and shall serve as a member of the Board.
The employment agreements of Messrs. Hallman, Leone, Marsiello, and Peek
provide that, under certain circumstances, if the executive's employment is
terminated by him for "good reason" or by CIT without "cause" (in each case, as
these terms are defined in his employment agreement), then he would be entitled
to receive: (i) the sum of (1) his unpaid annual base salary through the
termination date and (2) a pro-rated Severance Bonus based on the portion of the
fiscal year completed prior to termination; and (ii) the sum of (1) the greater
of (x) his annual base salary payable for the remainder of the employment
agreement, or (y) two times (2.5 times in the case of Mr. Peek) his annual base
salary, and (2) two times (2.5 times in the case of Mr. Peek) his Severance
Bonus. "Severance Bonus" means the greater of (i) the executive's average annual
bonus over the two calendar years preceding the date of termination, or (ii) the
executive's target bonus. If the Board fails to elect or appoint
20
Mr. Peek to the position of Chief Executive Officer on or before September 2,
2004, his Severance Bonus shall be $2,200,000. If Mr. Peek's employment is
terminated for "good reason" or without "cause" (as defined in his employment
agreement) during the term of the agreement, Mr. Peek shall also receive an
additional lump sum payment in the amount of the difference, if any, between
$2,200,000 and the actual annual bonus paid to him for 2004 if such bonus was
less than $2,200,000.
In addition, under certain circumstance, upon termination of employment,
all unvested stock options would vest immediately and all restrictions on
restricted stock held by Messrs. Hallman, Leone, Marsiello, and Peek would
lapse. Each of them would also receive life insurance and medical, dental and
disability benefits for up to two years (2.5 years in the case of Mr. Peek)
after termination, any other amounts or benefits required to be paid or provided
(to the extent not paid) and outplacement services. They also would be credited
with two additional years of age and service credit under all relevant CIT
retirement plans.
In the event of a change of control (as defined in his employment
agreement) during the term of the employment agreements of Messrs. Hallman,
Leone, Marsiello, and Peek, the term of each such agreement would be extended to
the second anniversary of the change of control. In addition, should the
employment of Messrs. Hallman, Leone, and Marsiello be terminated without cause
or by the executive for good reason during the two year extension period, the
executive would receive the compensation and benefits described under a good
reason termination, except that the executive would receive 2.5 times the sum of
his annual base salary and the Severance Bonus (instead of the greater of (i)
his annual base salary payable for the remainder of the retention agreement, or
(ii) two times his annual base salary, and two times the Severance Bonus). This
payment would be payable in a lump sum within 30 days of the termination. In the
event Mr. Peek's employment should be terminated without cause or by him for
good reason during the two year extension period in the event of a change of
control, he would receive the compensation and benefits described under a good
reason termination except that this payment would be payable in a lump sum
within 30 days of the termination.
The employment agreements of Messrs. Hallman, Leone, Marsiello, and Peek
also provide that each of them will not, while employed by CIT under the
employment agreement and for one year after termination (two years in the event
Mr. Peek terminates without good reason or the Company terminates for cause),
without the written consent of the Board, (i) engage or be interested in any
business in the United States which is in competition with any lines of business
actively being conducted by CIT on the date of termination, (ii) hire any person
who was employed by CIT within the six-month period preceding the date of such
hiring or solicit, entice, persuade or induce any person or entity doing
business with the Company to terminate such relationship or to refrain from
extending or renewing the same (two years in the case of Mr. Peek for
termination for any reason), or (iii) disparage or publicly criticize CIT or any
of its affiliates.
In the event that Mr. Gamper or the other Named Executive Officers become
subject to excise taxes under Section 4999 of the Internal Revenue Code, each
employment agreement provides for a gross up payment equal to the amount of such
excise taxes.
Retirement Plan and Supplemental Retirement Plan
The CIT Group Inc. Retirement Plan (the "Retirement Plan") covers all
officers and salaried employees in the United States who have one year of
service and have attained age 21. We also maintain a Supplemental Retirement
Plan for employees whose benefit in the Retirement Plan is subject to Internal
Revenue Code limitations.
The Retirement Plan was revised in 2000 with a new "cash balance" formula,
which became effective January 1, 2001. Under this new formula, each member's
accrued benefits as of December 31, 2000 were converted to a lump sum amount and
each year thereafter the balance is to be credited with a percentage of the
member's "Benefits Pay" (comprised of base salary, plus certain annual bonuses,
sales incentives and commissions) depending on the member's period of service as
follows:
Period of Service % of "Benefits Pay"
----------------- -------------------
1 - 9 years 5
10 - 19 years 6
20 - 29 years 7
30 years or more 8
21
These balances are also to receive annual interest credits, subject to
certain government limits. For 2003, the interest credit was 5.01% and for 2002
it was 5.76%. Upon termination after 5 years of employment or retirement, the
amount credited to a member is to be paid in a lump sum or converted into an
annuity. Certain eligible members had the option of remaining under the
Retirement Plan formula as in effect prior to January 1, 2001.
Messrs. Gamper, Hallman, Leone and Marsiello are earning benefits under
the "cash balance" formula effective January 1, 2001. Mr. Peek will begin
earning benefits under the "cash balance" plan after his first year anniversary
of employment, September 3, 2004. The following table shows the estimated annual
retirement benefits (including the benefits under the Supplemental Retirement
Plan) which would be payable to each individual if he retired at normal
retirement age (age 65) at his normalized 2003 "Benefits Pay". The projected
amounts include annual interest credits at 5.01%.
Year of Estimated
Name Normal Retirement Annual Benefit
---- ----------------- --------------
Albert R. Gamper, Jr............. 2007 $525,236
Jeffery M. Peek.................. 2012 $94,179
Thomas B. Hallman................ 2017 $139,550
Joseph M. Leone.................. 2018 $200,872
Lawrence A. Marsiello............ 2015 $209,401
Executive Retirement Plan
Messrs. Gamper, Peek, Hallman, Leone and Marsiello are entitled to
benefits under an Executive Retirement Plan, which provides a death benefit
equal to approximately three times base salary while being actively employed,
with a life annuity option payable monthly by CIT upon retirement. CIT purchases
life insurance to fund most of these benefits. The participant pays a portion of
the annual premium, which is calculated based on the death benefit provided by
our Executive Retirement Plan. We are entitled to recoup our payments from the
proceeds of any policy in excess of the death benefit. Upon the participant's
retirement, a life annuity will be payable out of CIT's general assets and we
anticipate recovering the cost of the life annuity out of the proceeds of any
insurance policy payable to CIT upon the death of the participant. CIT is
currently in the process of purchasing a life insurance policy on Mr. Peek.
In addition to the table of pension benefits shown above, we are
conditionally obligated to make annual payments under our Executive Retirement
Plan in the amounts indicated to the Named Executive Officers at retirement: Mr.
Gamper, $463,130; Mr. Peek, $318,321; Mr. Hallman, $187,589; Mr. Leone,
$240,592, and Mr. Marsiello, $241,608.
Other Employee Benefits
We maintain a defined contribution plan with a 401(k) feature. In
addition, we maintain a supplemental unfunded defined contribution plan for
employees in a grandfathered defined benefit plan. Retiree medical and dental
coverage is offered on a contributory basis to certain eligible employees who
meet specified age and service requirements.
Long-Term Equity Compensation Plan
The ECP allows for the granting of incentive stock options, non-qualified
stock options, stock appreciation rights, restricted stock, performance shares
and performance units (each, an "Award") to employees and directors of CIT and
its subsidiaries. The ECP is administered by the Compensation Committee of the
Board and by the full Board with respect to grants of awards to non-employee
directors (the "Administrator"). The Administrator has the discretion to select
the participants to whom Awards will be granted and the type, size and terms and
conditions applicable to each Award, and the authority to interpret, construe
and implement the provisions of the ECP.
22
Annual Incentive Compensation
Annual Bonus Plan. CIT has adopted the Annual Bonus Plan, under which cash
awards may be made to any employees of CIT and its subsidiaries. The Annual
Bonus Plan replaces the annual bonus provisions of the ECP. It is a
performance-based plan in which payments are based on the achievement of
performance goals in accordance with the requirements of Internal Revenue Code
Section 162(m).
Discretionary Bonus Plan. CIT has also adopted the Discretionary Bonus
Plan, under which awards may be made to any employees of CIT and its
subsidiaries. Bonuses under this plan are purely discretionary and are not
contingent upon the failure to attain performance goals under the Annual Bonus
Plan or other performance based arrangements of the Company. Bonuses under this
plan will be determined by the Compensation Committee; provided that the
Compensation Committee may delegate to the Chief Executive Officer the
discretion to determine bonuses for employees other than the Chief Executive
Officer and the executive officers named in this proxy statement or otherwise
designated by the Compensation Committee.
Employee Stock Purchase Plan
CIT's Employee Stock Purchase Plan (the "ESPP") covers United States and
Canadian employees of CIT and participating subsidiaries customarily employed at
least 20 hours per week. Under the ESPP, eligible employees can choose to have
between 1% and 10% of their base salary withheld to purchase shares of Common
Stock quarterly at a purchase price equal to 85% of the fair market value of our
Common Stock on either the first business day or the last business day of the
quarterly offering period, whichever is lower. The fair market value of a share
of Common Stock is the closing trading price on the New York Stock Exchange for
that day. The amount of Common Stock that may be purchased by a participant
through the plan is generally limited to $25,000 per year.
23
Security Ownership of Certain Beneficial Owners and Management
Security Ownership of Certain Beneficial Owners
The table below shows, as of the most recent practicable date, the name
and address of each person known to CIT that beneficially owns in excess of 5%
of any class of voting stock. Information in this table is as of December 31,
2003, based upon reports on Schedule 13G filed with the SEC on or before
February 15, 2004.
Percentage
of
Title of Class Name and Address of Amount and Nature of Common
of Stock Beneficial Owner Beneficial Ownership Stock
-------------- ------------------- -------------------- ----------
Common Stock................ Dodge & Cox(1) 27,910,300 13.1
One Sansome Street, 35th Floor
San Francisco, CA 94104
Common Stock................ Brandes Investment Partners, LLC(2) 20,267,295 9.6
11988 El Camino Real, Suite 500
San Diego, CA 92130
Common Stock................ FMR Corp. (3) 18,982,570 8.9
82 Devonshire Street
Boston, MA 02109
----------
(1) Dodge & Cox reports sole voting power over 26,097,800 shares, shared
voting power over 323,000 shares and sole dispositive power over
27,910,300 shares.
(2) Brandes Investment Partners, LLC, Brandes Investment Partners, Inc.,
Brandes Worldwide Holdings, L.P., Charles H. Brandes, Glenn R. Carlson and
Jeffrey A. Busby report shared voting power over 17,172,827 shares and
shared dispositive power over 21,571,483 shares. Each of such persons
disclaims any direct ownership of such shares except, with respect to
certain of such persons, for an amount that is substantially less than one
percent thereof.
(3) FMR Corp., Edward C. Johnson, 3d, and Abigail P. Johnson report sole
voting power over 3,980,940 shares.
Security Ownership of Directors and Executive Officers
The table below shows, as of February 15, 2004, the number of shares of
CIT Common Stock owned by each director, by the Named Executive Officers and by
the directors and executive officers as a group.
Amount and Nature
of Beneficial Ownership
(CIT Common Stock and Percentage
Name of Individual Exchangeable Shares)(1)(2)(3) of Class
------------------ ----------------------------- ----------
Albert R. Gamper, Jr................. 1,308,104 *
Gary C. Butler....................... 0 *
William A. Farlinger................. 12,923 *
William M. Freeman................... 0 *
Hon. Thomas H. Kean.................. 32,491 *
Edward J. Kelly, III................. 8,476 *
Marianne Miller Parrs................ 6,882 *
Jeffrey M. Peek...................... 150,805 *
John R. Ryan......................... 149 *
Peter J. Tobin....................... 12,611 *
Lois M. Van Deusen................... 5,545 *
Thomas B. Hallman.................... 242,014 *
Joseph M. Leone...................... 366,074 *
Lawrence A. Marsiello................ 340,430 *
All Directors and Executive
Officers as a group (21 persons)..... 3,576,546 1.68%
----------
* Represents less than 1% of the total outstanding Common Stock.
(1) Includes shares of Restricted Stock issued under the ECP, for which the
holders have voting rights, but for which ownership has not vested, in the
following amounts: Mr. Gamper - 314,348 shares, Mr. Farlinger - 1,735
shares, Mr. Kean - 1,735 shares, Ms. Parrs - 2,725 shares, Mr. Peek -
150,000 shares, Mr. Ryan - 149 shares, Ms. Van Deusen - 1,388 shares, Mr.
Hallman - 65,257 shares, Mr. Leone - 65,854 shares, and Mr. Marsiello -
66,372 shares.
(2) Includes shares of CIT Common Stock issuable pursuant to stock options
awarded under the ECP that have vested or will vest within 60 days after
February 15, 2004 in the following amounts: Mr. Gamper - 901,288 shares,
Mr. Farlinger - 10,188 shares, Mr. Kean - 20,756 shares, Mr. Kelly - 4,412
shares, Ms. Parrs - 4,157 shares, Mr. Tobin - 12,611 shares,
24
Ms. Van Deusen - 4,157 shares, Mr. Hallman - 149,093 shares, Mr. Leone -
268,118 shares, and Mr. Marsiello - 250,832 shares.
(3) Includes 852,981 shares of Restricted Stock issued under the ECP to all
executive officers and directors as a group for which they have voting
rights, but for which ownership has not vested, and 2,427,001 shares of
Common Stock issuable pursuant to stock options awarded under the ECP to
all executive officers and directors as a group that have vested or will
vest within 60 days after February 15, 2004.
Certain Relationships and Related Transactions
We have in the past and may in the future enter into certain transactions
with affiliates, other than directors and executive officers. Such transactions
have been, and it is anticipated that such transactions will continue to be,
entered into at a fair market value for the transaction.
Certain shareholders of CIT provide investment management services in
conjunction with employee benefit and retirement plans. These services are
provided in the normal course of business. The CIT Group Inc. Savings Incentive
Plan allows employees to select from among several investments, including
certain Fidelity mutual funds managed by FMR Corp. At December 31, 2003, CIT's
Savings Incentive Plan had total assets of $401.5 million, of which $133.4
million were invested in various Fidelity mutual funds at the election of
various employees. CIT paid an administrative fee of approximately $290 thousand
to FMR Corp. for their services in administering the Savings Incentive Plan
during 2003. In addition, FMR Corp. also received investment management fees
from each mutual fund based on a percentage of the asset balance, which is
affected by the individual investment decisions of CIT's employees. The CIT
Group Inc. Retirement Plan invests in certain funds managed by Dodge & Cox. At
December 31, 2003, CIT's Retirement Plan had total assets of $205.7 million, of
which $112.6 million were invested in two Dodge & Cox funds. Dodge & Cox charges
a fee for these investment management services based on a percentage of the
asset balance in the funds. This fee was approximately $410 thousand during
2003.
25
PROPOSAL 2
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Audit Committee has appointed the firm of PricewaterhouseCoopers LLP
("PwC"), 1177 Avenue of the Americas, New York, New York 10036, as independent
accountants to examine the financial statements of CIT and its subsidiaries for
the year ending December 31, 2004, and to perform appropriate auditing services.
A resolution will be presented at the meeting to ratify the appointment. The
affirmative vote of a majority of the number of votes entitled to be cast by the
Common Stock represented at the meeting is needed to ratify the appointment. If
the stockholders do not ratify the appointment of PwC, the Audit Committee will
reconsider the selection of independent accountants.
PwC has examined our financial statements since June 2001. A member of PwC
will be present at the meeting, will have the opportunity to make a statement if
he or she desires to do so, and will be available to respond to appropriate
questions by stockholders.
Fees for Professional Services
The table below shows the aggregate fees for professional services billed
by PwC during the year ended December 31, 2003, the transition period ended
December 31, 2002, and the twelve months ended September 30, 2002 (in millions):
Year ended Transition period ended Twelve months ended
December 31, 2003 December 31, 2002 September 30, 2002
----------------- ----------------------- -------------------
Audit fees (a)................................ $8.24 $1.68 $5.99
Audit related fees (b)........................ $1.10 -- $0.49
Tax fees (c).................................. $0.41 $0.09 $0.47
All other fees (d)............................ $0.01 -- --
----- ----- -----
Total Fees.................................... $9.76 $1.77 $6.95
----------
(a) Audit fees include fees for the audit of the consolidated financial
statements of the Company, including limited reviews of the Company's
unaudited interim financial statements, and as appropriate, statutory and
subsidiary audits, issuances of comfort letters, consents, income tax
provision procedures and assistance with review of documents filed with
the SEC.
(b) Audit related fees include fees for assurance and related services,
including audits of employee benefit plans, risk and controls assessments,
audits of our service centers, and guidance related to emerging accounting
standards.
(c) Tax fees include fees for tax services rendered for tax return
preparation.
(d) All other fees include fees for user licenses for access to a technical
reference library.
The Audit Committee has determined that CIT will not retain PwC for any
non-audit professional services without the prior approval of the Audit
Committee, except that the Audit Committee has delegated to the Audit Committee
Chairman the authority to authorize management to retain PwC for non-audit
professional services in which the aggregate fees are expected to be less than
$200,000 in any year. In general, CIT does not retain PwC to provide information
systems, tax consulting, or other consulting services. The Audit Committee has
determined that the professional services provided by PwC as described above are
compatible with maintaining the principal accountant's independence. The Audit
Committee gave prior approval to all audit and non-audit professional services
provided by PwC in 2003.
The Board of Directors recommends a vote "For" the ratification of
PricewaterhouseCoopers LLP as CIT's independent auditors for 2004.
26
OTHER BUSINESS
CIT's management does not intend to bring any business before the Annual
Meeting other than the matters referred to in this proxy statement. If, however,
any other matters properly come before the Annual Meeting, it is intended that
the persons named in the accompanying proxy will vote pursuant to the proxy in
accordance with their best judgment on such matters to the extent permitted by
applicable law and regulations. The discretionary authority of the persons named
in the accompanying proxy extends to matters which the Board does not know are
to be presented at the meeting by others and any proposals of stockholders
omitted from the proxy material pursuant to Rule 14a-8 of the SEC.
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR THE 2005
ANNUAL MEETING
Stockholder proposals to be included in the proxy statement for CIT's next
annual meeting must be received by the Secretary of CIT not later than December
7, 2004.
Also, under CIT's By-Laws, nominations for director or other business
proposals to be addressed at the meeting may be made by a stockholder entitled
to vote who has delivered a notice to the Secretary of CIT not later than the
close of business on February 12, 2005 and not earlier than January 13, 2005.
The notice must contain the information required by CIT's By-Laws.
These advance notice provisions are in addition to, and separate from, the
requirements which a stockholder must meet in order to have a proposal included
in the proxy statement under the rules of the SEC.
Copies of CIT's By-Laws may be obtained from the Secretary.
By Order of the Board of Directors
/s/ Robert J. Ingato
Robert J. Ingato
Executive Vice President
General Counsel and Secretary
April 5, 2004
27
CIT GROUP INC.
Proxy solicited by the Board of Directors for use at the Annual Meeting of
Stockholders of CIT Group Inc. on May 12, 2004.
The undersigned stockholder appoints each of Eric S. Mandelbaum and James P.
Shanahan attorney and proxy, with full power of substitution, on behalf of the
undersigned and with all powers the undersigned would possess if personally
present, to vote all shares of Common Stock of CIT Group Inc. that the
undersigned would be entitled to vote at the above Annual Meeting and any
adjournment thereof. The shares represented by this Proxy will be voted as
instructed by you and in the discretion of the proxies on all other matters. If
not otherwise specified, shares will be voted in accordance with the
recommendations of the Directors.
(Continued, and to be signed on reverse side)
To change your address, please mark this box.
|_|
To include any comments, please mark this box.
|_|
CIT Group Inc.
P. O. Box 11216
New York, NY
10203-0216
Will Attend Meeting
|_| Yes |_| No
|_| Please Vote, Sign, Date and |X|
Return Promptly in the
Enclosed Envelope.
The Board of Directors Recommends a Vote "for" Items 1, 2 and 3
1. Election of Directors
[_] FOR all nominees WITHHOLD AUTHORITY to vote [_] EXCEPTIONS* [_]
listed below for all nominees listed below
Nominees: Albert R. Gamper, Jr., Gary C. Butler, William A. Farlinger, William
M. Freeman, Hon. Thomas H. Kean, Edward J. Kelly, III, Marianne Miller Parrs,
Jeffrey M. Peek, John R. Ryan, Peter J. Tobin, Lois M. Van Deusen
(Instructions: To withhold authority to vote for one or more individual
nominees, mark the "Exceptions* box and write the name(s) of such nominee(s) in
the space provided below.)
Exception* _________________________________________
FOR AGAINST ABSTAIN
2. Ratification of PricewaterhouseCoopers LLP
as independent Accounts. [_] [_] [_]
3. To transact such other business that may
come before the meeting. [_] [_] [_]
Note: Please sign exactly as name appears to the left. When signing as attorney,
executor, administrator, trustee, guardian or as an authorized person on behalf
of a corporation or partnership, please give full title as such.
Date Share Owner sign here Co-owner sign here
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