Notably, the proxy advisory firm Glass Lewis has recommended that shareholders vote FOR Proposal
No. 4: Advisory Vote to Ratify Named Executive Officer Compensation this year. Glass Lewis recommended a vote AGAINST say-on-pay last year, primarily
due to concerns that our average named executive officer compensation outpaced the median Glass Lewis peer compensation. However, this year Glass Lewiss analysis acknowledged that the Companys business (purchasing and leasing aircraft),
does not fully align with its GICS industry classification used to determine Glass Lewis peers. As a result, Glass Lewis analyzed the Companys pay and performance against its self-disclosed benchmarking group and found that the Companys
three-year weighted average pay was not excessive relative to its self-disclosed benchmarking group and mostly aligned with its relative performance in TSR over the same period.
The Company disclosed legitimate reasons for reducing performance goals from prior year results without a corresponding reduction in payout. The
impact of the COVID-19 pandemic on the aviation industry was unprecedented. As previously disclosed in our filings with the Securities and Exchange Commission, we granted accommodations, in the form of lease
deferrals or restructurings, to more than two-thirds of our lessees. These accommodations directly impacted our financial results, and we provided robust disclosure in our Proxy Statement on the compensation
committees rationale for setting reduced performance goals for 2022 as compared to prior year actual results for our annual bonus plan.
The
compensation committee, which is entirely comprised of independent directors, does not believe that a reduction in performance goals for a particular year as compared to prior year actual results will, in every instance, necessitate a corresponding
reduction in bonus opportunity. In instances where the goals set for a particular year are comparatively as, or more, rigorous to achieve than the goals set in the prior year, the compensation committee will not necessarily reduce the bonus
opportunity. This analysis is complex and requires an in-depth review of the Companys industry, the status of the Companys fleet and lessees at the beginning of the performance period, as well as
macro-economic conditions that are likely to impact the Companys future results. The compensation committee did not make a corresponding reduction in bonus opportunity despite the reduction in 2022 performance goals from 2021 actual results
because it determined that the 2022 performance goals were more rigorous than the 2021 performance goals after giving consideration to the full impact that COVID-era lease restructurings, unknown industry
recovery timelines due to COVID-19 variants and travel restrictions, ongoing OEM delivery delays, and anticipated higher interest rates in 2022 were expected to have on the Companys actual 2022 results.
The compensation committee has designed our executive compensation program to attract, retain and motivate the highest caliber executives in the aircraft
leasing industry who can manage our aircraft fleet with a small team to drive profitability. The compensation committee does not believe that cyclical macro-economic changes or unprecedented events like the
COVID-19 pandemic, which may negatively impact actual year-over-year financial performance, should result in de facto reductions in bonus opportunity for our executives. For similar reasons, despite setting
the 2022 revenue goals above prior year actual performance, the compensation committee did not increase the bonus opportunity available to executives with respect to that metric.
The ISS analysis did not appropriately weigh mitigating factors in the Companys executive compensation program. While ISSs analysis
notes significant concerns regarding goal setting, we dont believe appropriate weight was given to the compensation committees decision to make no adjustments to the performance RSUs granted in 2020 for which the vesting cycle ended on
December 31, 2022. The performance goals for these awards were set in February 2020, prior the onset of the COVID-19 pandemic and Russias invasion of Ukraine, both of which significantly impacted
the Companys vesting-cycle performance. As a result, these awards were 100% forfeited. Allowing these awards to vest at 0% resulted in a significant decrease in compensation actually paid to our executives. For Mr. Plueger alone, the
grant date fair value of these awards was $3.2 million. The compensation committees determination not to make any adjustments to the performance goals underlying these awards underscores its commitment to setting rigorous targets and pay-for-performance philosophy.
In addition, the compensation committee reviews
performance goal outcomes annually to determine if it is appropriate to exercise discretion to reduce any award otherwise becoming payable. In 2022, the compensation committee exercised this discretion and reduced the total company performance
factor for awards under the Companys annual cash bonus plan from 142% to 130% to reflect the challenges associated with 2022, including the Companys net write-off of interests in its owned and
managed aircraft detained in Russia totaling approximately $771.5 million for the year ended December 31, 2022.
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