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AIR LEASE CORP DEF 14A 2016

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Table of Contents

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

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Check the appropriate box:

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Preliminary Proxy Statement

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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material under §240.14a-12

 

Air Lease Corporation

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GRAPHIC


Air Lease Corporation
2000 Avenue of the Stars, Suite 1000N
Los Angeles, California 90067
(310) 553-0555

March 17, 2016

Dear Fellow Stockholder:

Your officers and directors join me in inviting you to attend the 2016 Annual Meeting of Stockholders at 7:30 a.m., Pacific time, on Wednesday, May 4, 2016, at Century Plaza Towers, 2029 Century Park East, Concourse Level, Conference Room A, Los Angeles, California 90067.

The expected items of business for the meeting are described in detail in the attached Notice of 2016 Annual Meeting of Stockholders and Proxy Statement.

We look forward to seeing you on May 4th.

Sincerely,

GRAPHIC

Steven F. Udvar-Házy
Chairman and Chief Executive Officer


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GRAPHIC

Notice of 2016 Annual Meeting of Stockholders

Time and Date:   7:30 a.m., Pacific time, on Wednesday, May 4, 2016

Location:

 

Century Plaza Towers, 2029 Century Park East, Concourse Level, Conference Room A, Los Angeles, California 90067

Agenda:

 

(1)

 

Elect eight directors, each to serve for a one-year term;

 

 

(2)

 

Ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2016;

 

 

(3)

 

Advisory vote to approve named executive officer compensation; and

 

 

(4)

 

Act upon such other matters as may properly come before the meeting or any postponement or adjournment.

Record Date:

 

You can vote at the meeting and at any postponement or adjournment of the meeting if you were a stockholder of record on March 14, 2016.

Voting:

 

Please vote as soon as possible, even if you plan to attend the meeting, to ensure that your shares will be represented. You do not need to attend the meeting to vote if you vote your shares before the meeting. If you are a record holder, you may vote your shares by mail, telephone or the Internet. If your shares are held by a broker or other nominee, you must follow the instructions of your broker or nominee to vote your shares.

Annual Report:

 

Copies of our 2015 Annual Report to Stockholders (the "Annual Report"), including our 2015 Annual Report on Form 10-K, are being made available to stockholders concurrently with the accompanying proxy statement. We anticipate that these materials will first be made available to stockholders on or about March 30, 2016. You may also access our 2015 Annual Report on Form 10-K, which we have filed with the Securities and Exchange Commission, on our website at http://www.airleasecorp.com.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be Held on May 4, 2016: Our Proxy Statement and Annual Report are available online at http://www.proxyvote.com

By Order of the Board of Directors,

Carol H. Forsyte
Executive Vice President, General Counsel, Corporate
Secretary and Chief Compliance Officer
Los Angeles, California
March 17, 2016


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Table of Contents

 
  Page
PROXY STATEMENT SUMMARY   i
GENERAL INFORMATION   1
CORPORATE GOVERNANCE AND BOARD MATTERS   4

Board of Directors

  4

Director Independence

  4

Executive Sessions of Non-Employee Directors

  4

Committees of the Board of Directors

  4

The Board of Directors' Role in Risk Oversight and Board Leadership Structure

  6

Compensation Committee Interlocks and Insider Participation

  6

Corporate Governance Guidelines and Code of Business Conduct

  7

Certain Relationships and Related Person Transactions

  7

Consideration of Director Candidates

  8

Communications with the Board of Directors

  9

Director Compensation

  9

Director Compensation Summary

  10

Director Stock Ownership Guidelines

  11
ITEMS OF BUSINESS   12

Proposal 1: Election of Directors

  12

Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm

  21

Proposal 3: Advisory Vote to Approve Named Executive Officer Compensation

  22
EXECUTIVE COMPENSATION   23

Compensation Discussion and Analysis ("CD&A")

  23

2016 Executive Compensation Program

  40

Tax and Accounting Considerations

  42

Compensation Committee Report

  43

Executive Compensation Tables

  44

Employment Agreements and Arrangements and Potential Payments upon Termination or Change in Control

  48
AUDIT-RELATED MATTERS   58

Audit Committee Report

  58

Independent Auditor Fees and Services

  58

Auditor Services Pre-Approval Policy

  58
OTHER MATTERS   59

Ownership Of Air Lease Corporation Class A Common Stock

  59

Section 16(a) Beneficial Ownership Reporting Compliance

  62

Stockholder Proposals and Director Nominations for our 2017 Annual Meeting of Stockholders

  62

Householding of Proxy Materials

  62
APPENDIX A   A-1

Non-GAAP Financial Measures

  A-1
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Proxy Statement Summary

This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement and our Annual Report on Form 10-K before voting.

2015 Financial Highlights

GRAPHIC

*
For reconciliation to GAAP, see Appendix A
2016 Proxy Statement   |   Air Lease Corporation   |  i

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2015 Business Highlights

GRAPHIC

Aircraft Activity.    During 2015, we purchased and took delivery of 51 aircraft and sold 24 aircraft, ending the year with a total of 240 owned aircraft, all of which were leased, with a net book value of $10.8 billion. We leased and managed aircraft to a globally diversified customer base comprised of 90 airlines in 50 countries. As of December 31, 2015, the weighted average lease term remaining of our operating lease portfolio was 7.2 years and the weighted average of our fleet was 3.6 years.

Signed Leases, Lease Extensions and Letters of Intent.    During 2015, we signed 120 aircraft lease agreements, lease extensions and letters of intent to lease aircraft with 46 customers across 35 countries. As a result, the minimum future rental payments that our airline customers have committed to us have increased to $20.9 billion from $16.5 billion in the prior year. This includes $8.9 billion in contracted minimum rental payments on the 240 aircraft in our existing fleet and $12.0 billion in minimum future rental payments on the 127 aircraft that we have ordered from the manufacturers which will deliver between 2016 and 2021.

Aircraft Sales.    We profitably sold 24 aircraft from our operating lease portfolio for proceeds of $784.7 million, recording gains of $33.9 million, exceeding our 2015 goal. In addition, in December 2015, we entered into an agreement to sell our fleet of 25 ATR turboprop aircraft, comprised of 20 delivered aircraft and five undelivered aircraft, to Nordic Aviation Capital A/S ("NAC"). As of December 31, 2015, one aircraft had been transferred to NAC and the remaining 19 delivered aircraft were held for sale. We expect the sale of the 19 aircraft held for sale and the five undelivered aircraft to be completed in 2016.

Increased New Order Pipeline.    We entered into commitments to acquire 70 additional aircraft from Airbus and Boeing. We now have 389 aircraft on order from Airbus, Boeing and ATR through 2023, making us one of the world's largest customers for new commercial jet aircraft.

Productivity.    In 2015, our revenue per employee was approximately $16.5 million and our adjusted net income per employee was approximately $6.9 million.

Expanded Our Management Business.    We expanded the number of aircraft under management by 71% in 2015 to 29 aircraft compared to 17 aircraft in the prior year.

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Executive Compensation Highlights

Our executive compensation program is designed to attract, retain and motivate the highest caliber executives in the aircraft leasing industry by offering a comprehensive compensation program that is attractive enough to entice and retain successful senior executives. We also believe it is important that our compensation program attract the most talented of executive who is experienced and capable of managing our aircraft fleet with a small team to help drive our profitability. At the end of 2015, we had total assets of $12.4 billion and we had 74 total employees. We believe that the ratio of employees to total assets compares favorably to other companies in capital-intensive businesses.

Our executive compensation program also is designed to reward our executives for contributing to the achievement of our annual and long-term objectives. We set robust goals to align performance based compensation with the creation of long-term value for our stockholders. We also believe that our directors and employees ownership of our stock is critical to alignment with our stockholders. Our 74 employees along with our independent directors collectively own 10% of the Company.

    In an effort to better understand our investors' perspective regarding our executive compensation program, we engaged in stockholder outreach in late 2015 and early 2016. While we regularly communicate with our stockholders, we contacted our large stockholders to specifically discuss our compensation philosophy and program. The compensation committee considered our stockholders views when making decisions about 2015 compensation and in structuring the 2016 compensation program.

    We continued to enhance our executive compensation program in response to evolving compensation practices and feedback from our stockholder engagement efforts. In response to comments regarding the levels of cash compensation paid to our named executive officers, we reduced the amount of our senior officers' cash compensation by replacing long-term cash deferred bonuses with time-vesting restricted stock units beginning in 2016. Our Chairman and Chief Executive Officer and our President and Chief Operating Officer waived their contractual right to receive the new 2016 cash deferred bonuses and instead received time-vesting restricted stock units.

    Beginning in 2015 and continuing in 2016, the compensation committee reset the beginning per share book value for the 2015 and 2016 Book Value RSUs grants to the actual book value per share on December 31, 2014 for the 2015 grant and December 31, 2015 for the 2016 grant. The Company's per share book value must steadily increase from December 31st for the shares to vest.

    The compensation committee also exercised its discretion and reduced the amount payable under the 2015 annual cash performance bonuses to reflect the impact of a litigation settlement by the Company. Absent the reduction, the weighted payout would have resulted in a Company Performance Factor of 200% instead of 130%. The Company Performance Factor of 130% was used to calculate all of our officers' bonuses. Notably, the bonuses for our named executive officers were reduced by $3.6 million as a result of the reduction.

    We also continued to expand our disclosure regarding the Company's compensation program to provide greater transparency.
2016 Proxy Statement   |   Air Lease Corporation   |  iii

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Proposals to be Voted On

The following proposals will be voted on at the Annual Meeting of Stockholders.

      For more Information   Board Recommendation
Proposal 1: Election of eight directors   Pages 12 to 20   ü For Each Nominee
Matthew J. Hart   John L. Plueger    
Cheryl Gordon Krongard   Ian M. Saines    
Marshall O. Larsen   Ronald D. Sugar    
Robert A. Milton   Steven F. Udvar-Házy    

Proposal 2:
Ratification of appointment of independent registered public accounting firm

 

Page 21

 

ü For

Proposal 3:
Advisory vote to approve named executive officer compensation


 

Page 22

 

ü For
     
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GRAPHIC

Air Lease Corporation
2000 Avenue of the Stars, Suite 1000N
Los Angeles, California 90067
(310) 553-0555

Proxy Statement for the
2016 Annual Meeting of Stockholders

General Information

When and where is the Annual Meeting being held?

The Annual Meeting will be held on Wednesday, May 4, 2016, at 7:30 a.m., Pacific time, at Century Plaza Towers, 2029 Century Park East, Concourse Level, Conference Room A, Los Angeles, California 90067.

What is the purpose of this Proxy Statement?

The Board of Directors is providing you with this Proxy Statement to solicit your voting proxy for the Annual Meeting. It provides you with information to help you decide how you want your shares to be voted at the Annual Meeting. This Proxy Statement, the Notice of Annual Meeting and a form of proxy are first being made available to stockholders on or about March 30, 2016.

Who can vote at the Annual Meeting?

Holders of record of the 102,829,369 shares of our Class A Common Stock outstanding on March 14, 2016, which is the "record date" for the Annual Meeting, are entitled to one vote for each share held. There is no cumulative voting.

Who is a "holder of record"?

If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, you are considered a "holder of record". If your shares are held in a brokerage account, by a financial institution or by another holder of record, you are considered the "beneficial owner" of the shares, and they are considered held in "street name".

What is the quorum requirement for the Annual Meeting?

For stockholders to take action at the Annual Meeting, a majority of the shares of our Class A Common Stock outstanding on the record date must be present or represented at the Annual Meeting. Abstentions and broker non-votes are counted for this purpose.

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What is a broker non-vote?

A broker non-vote occurs when a broker does not receive voting instructions from a beneficial owner and does not have discretionary authority under applicable rules to vote on a proposal. At the Annual Meeting, we understand that brokers have discretionary authority to vote only on the proposal to ratify the appointment of our independent registered public accounting firm.

How do I cast my vote?

Holders of record may vote by mail, telephone or the Internet. Holders of record may also vote in person at the Annual Meeting. If you are a beneficial owner, your broker should send you voting instructions. Beneficial owners who want to attend and vote in person at the Annual Meeting will need to obtain a legal proxy from their broker and present it with their ballot.

How can I change my vote?

Holders of record can revoke a prior proxy vote by submitting a later-dated proxy, by voting in person at the Annual Meeting, or by sending a letter to our Secretary at the address for our principal executive office listed on the cover page of this Proxy Statement so that it arrives no later than the close of business on May 3, 2016. If you are a beneficial owner, you will need to contact your broker to obtain instructions on how to change your vote.

Who are the proxies?

The named proxies for the Annual Meeting are Steven F. Udvar-Házy and Carol H. Forsyte, and they will follow all properly submitted voting instructions. They will vote as the Board of Directors recommends as to any submitted instructions that do not direct how to vote on any item of business, and will vote in their judgment on any other matters properly presented at the Annual Meeting.

What are the votes required to approve the proposals?

Election of Directors.    The Company's Bylaws provide that to be elected, a director nominee will be elected to the Board of Directors if the votes cast for such nominee's election exceed the votes cast against such nominee's election at the Annual Meeting. Abstentions and broker non votes will have no effect on the outcome of the director election.

Ratification of Appointment of KPMG as our Independent Registered Public Accounting Firm.    The affirmative vote of the holders of a majority of the shares present in person or by proxy and entitled to vote at the Annual Meeting will be required to ratify the selection of KPMG LLP. Abstentions will have the same effect as a vote "Against" the proposal.

Advisory Vote to Approve Named Executive Officer Compensation.    With regard to the stockholder advisory vote on executive compensation, the affirmative vote of the holders of a majority of the shares present in person or by proxy and entitled to vote at the Annual Meeting will be required for the advisory approval. Abstentions will have the same effect as a vote "Against" the proposal. Broker non-votes will have no effect on the outcome of the advisory vote. The results of this vote are not binding on the Board of Directors.

Are there any dissenters' rights available?

There are no rights of appraisal or other rights of dissenters with respect to any matter to be acted upon at the Annual Meeting.

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Who is paying the costs of soliciting proxies?

The Company is paying the costs of soliciting proxies on behalf of the Board of Directors. In addition to this Proxy Statement, our officers, directors and other employees may solicit proxies personally or in writing or by telephone for no additional compensation. We will, if requested, reimburse banks, brokers and other custodians and nominees for their reasonable expenses in providing these materials to their beneficial holders. We have hired D.F. King & Co., Inc., a professional advisory firm, to assist us in proxy solicitation. We will pay D.F. King & Co., Inc. $11,000 plus reimbursement of out-of-pocket expenses.

Who will serve as the inspector of the election?

We have engaged First Coast Results, Inc. to count the votes and act as an independent inspector of the election.

How can I obtain directions to be able to attend the meeting and vote in person?

You may request directions to the location of the Annual Meeting by sending a letter to our Secretary at the address for our principal executive office listed on the cover page of this Proxy Statement.

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Corporate Governance and Board Matters

Board of Directors

Our Board of Directors is currently composed of eight members: Matthew J. Hart, Cheryl Gordon Krongard, Marshall O. Larsen, Robert A. Milton, John L. Plueger, Ian M. Saines, Ronald D. Sugar and Steven F. Udvar-Házy. Our directors serve until their successors are duly elected and qualified at the stockholders' annual meeting each year. Certain information regarding our directors is set forth below in Proposal 1: Election of Directors. There are no family relationships among any of our directors or executive officers.

Our Board of Directors held five meetings in 2015. Each of the directors standing for re-election at the Annual Meeting attended at least 75% of the meetings of the Board of Directors and the committees of the Board of Directors on which he or she served. We expect but do not require our directors to attend the annual meeting of stockholders each year. All of our directors who stood for election at the 2015 annual meeting other than Mr. Saines attended that meeting.

Director Independence

Each director will qualify as "independent" pursuant to the New York Stock Exchange (the "NYSE") listing standards only if our Board of Directors affirmatively determines that he or she has no material relationship with us, either directly or as a partner, stockholder or officer of an organization that has a relationship with us. Accordingly, our Board of Directors has affirmatively determined that six of our eight current directors, Mr. Hart, Ms. Krongard, Mr. Larsen, Mr. Milton, Mr. Saines and Dr. Sugar, were independent in accordance with the NYSE rules during the periods in 2015 and 2016 that they served as directors of our Board of Directors. Mr. Milton serves as our lead independent director. Messrs. Udvar-Házy and Plueger are not independent because they are employees of the Company.

Executive Sessions of Non-Employee Directors

As part of the Board of Directors' regularly scheduled meetings, the non-employee directors meet in executive session. Any non-employee director can request additional executive sessions. Mr. Milton, as lead independent director, schedules and chairs the executive sessions.

Committees of the Board of Directors

Our Board of Directors has three standing committees: an audit committee, a compensation committee and a nominating and corporate governance committee. Our Board of Directors has determined that each of these committees is composed solely of independent directors under the applicable NYSE rules. Our Board of Directors has adopted a charter for each committee that is available on our website at www.airleasecorp.com.

Audit Committee

Our audit committee consists of Messrs. Hart, Milton and Saines. Mr. Hart is the Chairman of the audit committee. Our audit committee's duties include, but are not limited to, monitoring (1) the integrity of the financial statements of the Company, (2) the independent registered public

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accounting firm's qualifications and independence, (3) the performance of our internal audit function and independent registered public accounting firm, (4) our compliance with legal and regulatory requirements and (5) our overall risk profile. Our audit committee is a separately designated standing audit committee as defined in Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended.

Our audit committee must at all times be composed exclusively of directors who are "financially literate" as defined under the NYSE listing standards. The audit committee also must have at least one member who has past employment experience in finance or accounting, requisite professional certification in accounting or other comparable experience or background that results in the individual's financial sophistication, and who qualifies as an "audit committee financial expert," as defined under the rules and regulations of the Securities and Exchange Commission ("SEC"). Our Board of Directors has determined that each member of our audit committee is financially literate and is an "audit committee financial expert. In addition to being "independent" under NYSE rules, each member of our audit committee also meets the independence requirements of the SEC for purposes of serving on an audit committee.

Our audit committee held four meetings in 2015.

Nominating and Corporate Governance Committee

Our nominating and corporate governance committee consists of Messrs. Milton, Hart, and Larsen and Dr. Sugar. Mr. Milton is the Chairman of the nominating and corporate governance committee. Our nominating and corporate governance committee monitors the implementation of sound corporate governance principles, practices and risks and will, among other things: (1) identify individuals believed to be qualified to become a member of our Board of Directors and select or recommend candidates for all directorships to be filled, (2) annually review and recommend changes, as appropriate, to our corporate governance guidelines and (3) oversee the evaluation of our Board of Directors. Our nominating and corporate governance committee also reviews and approves all related party transactions in accordance with our policies with respect to such matters.

Our nominating and corporate governance committee held four meetings in 2015.

Compensation Committee

Our compensation committee consists of Dr. Sugar, Ms. Krongard and Mr. Milton. Dr. Sugar is the Chairman of the compensation committee. Our compensation committee has overall responsibility for evaluating, and approving or recommending, all of our compensation plans, policies and programs as they affect the executive officers, including the Chief Executive Officer, as well as overseeing the evaluation of management and succession planning for executive officer positions and to review risk exposures related to its areas of responsibility. The compensation committee also oversees preparation of the compensation discussion and analysis to be included in our annual proxy statement, recommends to the Board of Directors whether to so include the compensation discussion and analysis and provides an accompanying report to be included in our annual proxy statement.

The compensation committee has engaged Exequity LLP ("Exequity"), a nationally recognized independent compensation consultant, to provide advice with respect to compensation decisions for the non-employee directors of our Board of Directors and our executive officers.

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In addition to being "independent" under NYSE rules, each member of our compensation committee also qualifies as a "non-employee director" under SEC rules and as an "outside director" under Section 162(m) of the Internal Revenue Code for purposes of serving on a compensation committee.

Our compensation committee held five meetings in 2015.

The Board of Directors' Role in Risk Oversight and Board Leadership Structure

The Board of Directors has delegated risk oversight responsibilities to the audit committee, except for risks relating to executive compensation. In accordance with its charter, the audit committee is responsible for monitoring the Company's policies and practices with respect to risk assessment and risk management. The audit committee periodically meets with our senior executives to discuss, among other things, material risks to our business. The audit committee also periodically meets with representatives of our independent registered public accounting firm. The Chairman of the audit committee reports to the full Board of Directors regarding material risks as deemed appropriate.

The compensation committee provides oversight with respect to risks that may arise from our compensation arrangements and policies. This is accomplished on an ongoing basis through the compensation committee's review and approval of specific arrangements and policies to ensure that they are consistent with our overall compensation philosophy and our business goals. The compensation committee periodically discusses any risk-related concerns with senior management and with its independent compensation consultant. The Chairman of the compensation committee will report to the full Board of Directors regarding any material risks as deemed appropriate. In view of this oversight and based on our ongoing assessment, we do not believe that our present employee compensation arrangements, plans, programs or policies are likely to have a material adverse effect on the Company.

The Board of Directors believes that its governance structure supports the Board's role in risk oversight. Independent directors chair each of the Board committees responsible for risk oversight. The Company has a lead independent director who facilitates communication between management and directors, and all directors are involved in the review of key enterprise risks. Our Board of Directors has determined that the combined role of Chairman and Chief Executive Officer provides strong and unambiguous leadership in our relationship-driven industry, appropriately balanced by independent oversight of management through the presence of our lead independent director and the governance structure of our Board of Directors described above.

Compensation Committee Interlocks and Insider Participation

None of the members of our compensation committee has at any time been one of our officers or employees. None of our executive officers serves, or in the past year has served, as a member of the board of directors or the compensation committee of any entity that has one or more executive officers who serve on our Board of Directors or compensation committee.

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Corporate Governance Guidelines and Code of Business Conduct

Corporate Governance Guidelines

Our Board of Directors has adopted Corporate Governance Guidelines to assist the Board of Directors in the exercise of its duties and responsibilities and to serve the best interests of the Company and our stockholders. The Guidelines are intended to serve as a flexible framework for the conduct of the Board of Directors' business and not as a set of legally binding obligations. The Guidelines describe the Board of Directors' responsibilities, the qualification criteria for serving as a director, and standards for the conduct of meetings and establishing and maintaining committees. The Guidelines also confirm that the directors will have full and free access to officers and employees of the Company and have authority to retain independent advisors as necessary and appropriate in carrying out their activities. In addition, the Guidelines establish frameworks for director compensation, director orientation and continuing education, and an annual evaluation of the Board and its committees and of the Guidelines. Finally, the Guidelines charge the compensation committee with oversight of management evaluation and succession, and detail the Company's policies regarding confidentiality and communications between our Board of Directors and the press and media on matters pertaining to the Company. Our Corporate Governance Guidelines are available on our website at www.airleasecorp.com.

Code of Business Conduct and Ethics

Our Board of Directors has adopted a Code of Business Conduct and Ethics that applies to all of our directors, employees and officers. Among other things, the Code of Business Conduct and Ethics is intended to ensure fair and accurate financial reporting, to promote ethical conduct and compliance with applicable laws and regulations, to provide guidance with respect to the handling of ethical issues, to foster a culture of honesty and accountability and to deter wrongdoing. It also requires disclosure to us of any situation, transaction or relationship that may give rise to any actual or potential conflict of interest. Such conflicts must be avoided unless approved by our nominating and corporate governance committee. The Code of Business Conduct and Ethics prohibits our employees, officers and directors from taking, or directing a third party to take, a business opportunity that is discovered through the use of our property. A copy of our Code of Business Conduct and Ethics is available on our website at www.airleasecorp.com.

Certain Relationships and Related Person Transactions

In accordance with our written Related Person Transaction Policy, the nominating and corporate governance committee must review and approve or ratify any transaction in which the amount involved exceeds $120,000 if any of our directors, director nominees, executive officers, beneficial owners of more than 5% of our Class A Common Stock, or any of their respective immediate family members, has a direct or indirect material interest. Certain limited types of related person transactions are deemed to be pre-approved by the nominating and corporate governance committee even if the amount involved exceeds $120,000. In addition, the Chairman of the nominating and corporate governance committee has been delegated the authority to approve or ratify any related person transaction if the amount involved is expected to be less than $1 million. Out of an abundance of caution, the nominating and corporate governance committee will sometimes review and approve or ratify transactions with a related person or an entity affiliated with a related person, even if the related person does not have a direct or indirect material interest in the transaction.

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From January 1, 2015 to May 30, 2015, Commonwealth Bank of Australia beneficially owned more than 5% of our Class A Common Stock. During that time the Company had a Master Servicing Agreement dated October 25, 2013 ("Master Servicing Agreement") with Commonwealth Bank of Australia and/or its subsidiaries (collectively "Commonwealth Bank").

Under the Master Servicing Agreement during the period from January 1, 2015 to May 30, 2015, we managed on behalf of Commonwealth Bank the leasing and remarketing of aircraft for subsequent leases or for sale. For these services Commonwealth Bank paid us a percentage of the rent for the aircraft and a percentage of the proceeds if the aircraft was sold. During the period from January 1, 2015 to May 30, 2015, we managed 12 aircraft for Commonwealth Bank consisting of various Airbus and Boeing aircraft types and Commonwealth Bank paid approximately $400,000 in fees for our services. All of the services that we provided under the Master Servicing Agreement with Commonwealth Bank had been approved or ratified in accordance with our Related Person Transaction Policy.

Consideration of Director Candidates

Our nominating and corporate governance committee is responsible for identifying and evaluating director candidates based on the perceived needs of the Board of Directors at the time. Among other attributes, our nominating and corporate governance committee will consider a director candidate's diversity of background and personal experience. In this context, diversity may encompass a candidate's educational and professional history, community or public service, expertise or knowledge base and certain unique personal characteristics, as well as the candidate's race, ethnicity, national origin and gender. The nominating and corporate governance committee does not have a formal policy specifying how diversity of background and personal experience should be applied in identifying or evaluating director candidates, and a candidate's background and personal experience, while important, does not necessarily outweigh other attributes or factors the nominating and corporate governance committee considers in evaluating candidates.

The most important characteristic of any director candidate is his or her ability to faithfully represent the interests of our stockholders. Other important qualities include the candidate's integrity, judgment and independence of thought; an absence of conflicting time commitments; financial literacy; leadership experience; and a fit of abilities and personality that helps build an effective, collegial and responsive Board of Directors. Any stockholder may recommend a director candidate for our nominating and corporate governance committee to consider by submitting the candidate's name and qualifications to us in care of the Secretary at the address for our principal executive office listed on the cover page of this Proxy Statement. Director candidates recommended by a stockholder are considered in the same manner as any other candidates, although the nominating and corporate governance committee may prefer candidates who are personally known to the existing directors and whose reputations are highly regarded. Our nominating and corporate governance committee has not retained professional search firms to assist it in recruiting potential director candidates.

Our bylaws provide that stockholders of record seeking to nominate candidates for election as directors at our annual meeting of stockholders (or to bring other business before our annual meeting of stockholders) may do so by providing timely notice of their intent in writing. To be timely, the notice from the stockholder of record must be delivered to the Secretary at our principal executive office not less than 90 days nor more than 120 days prior to the first anniversary of the prior year's annual meeting. Our bylaws also specify certain requirements as to the form and content of the necessary notice. For more information, see the section below titled Stockholder Proposals and Director Nominations for our 2017 Annual Meeting of Stockholders.

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Communications with the Board of Directors

Stockholders and any other interested parties who wish to communicate with the Board of Directors or an individual director, including our lead independent director, may send a letter to the Secretary at the address for our principal executive office listed on the cover page of this Proxy Statement. The mailing envelope must contain a clear notation indicating that the enclosed letter is a "Board Communication" or "Director Communication". All such letters must clearly state the author's interest in the Company and whether the intended recipients are all members of the Board of Directors or just certain specified individual directors. The Secretary will make copies of all such letters and circulate them to the appropriate director or directors.

Director Compensation

Our Board of Directors sets non-employee director compensation based on recommendations from the compensation committee. Messrs. Udvar-Házy and Plueger do not receive separate compensation for their service on our Board of Directors. The compensation committee's independent compensation consultant assists in obtaining market information and designing various aspects of our compensation program for the directors.

With respect to 2015, we provided the non-employee members of our Board of Directors with an annual retainer in the amount of $80,000 payable in quarterly installments. In addition, the Chairmen of our compensation committee and nominating and corporate governance committee each received an additional annual retainer of $20,000, while the other members of our compensation committee and nominating and corporate governance committee each received an additional annual retainer of $10,000. The Chairman of our audit committee received an additional annual retainer of $35,000, while the other members of the audit committee each received an additional annual retainer of $15,000. Our lead independent director received an additional annual retainer of $50,000. As a matter of policy each director could elect to have his or her retainer paid in cash or shares of our Class A Common Stock, or a combination thereof. During 2015 two of our directors elected to have one or more quarterly retainer fees paid in shares of our Class A common stock. We reimbursed directors for travel and lodging expenses incurred in connection with their attendance at meetings. We also have entered into agreements with each of our non-employee directors to provide them with indemnification and advancement of expenses to supplement that provided under our certificate of incorporation and bylaws, subject to certain requirements and limitations.

Each non-employee director who joins our Board of Directors receives an initial grant of restricted stock units ("RSUs") to be settled in shares of our Class A Common Stock ("Initial Director Grant") with an aggregate value of $180,000. Thereafter, each year our non-employee directors receive an annual RSU award to be settled in shares of Class A Common Stock (the "Annual Director Grant") with an aggregate value of $120,000.

The value of all grants of RSUs is based on the closing price of our Class A Common Stock on the date of grant. All RSUs awarded to our non-employee directors vest in full on the first anniversary of the grant date, and if the Board of Directors service of such a director terminates for any reason, other than a change in control, the RSUs will vest on a daily prorated basis according to the number of days between the grant date and the termination of service, divided by 365. If the service terminates following a change in control, the RSUs will vest in full. Effective May 7, 2014, the Initial Director Grants and the Annual Director Grants were, or will be, made pursuant to the Air Lease Corporation 2014 Equity Incentive Plan or any successor plan.

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Effective January 1, 2015, each director may defer the receipt of his or her Annual Director Grant shares beyond the one year vesting period. Annually directors may elect to defer his or her shares until separation from service. A director may also elect a deferral period of five years or ten years from the date of grant, provided that shares will be distributed upon a separation from service, a change of control or at death, if earlier than the elected deferral date.

On May 6, 2015, each non-employee director received an Annual Director Grant.

Director Compensation Summary

The following table sets forth compensation paid to or earned by the individuals who served as non-employee directors of our Company during 2015.

Name



Fees earned or
paid in cash
($)(1)





Stock Awards
($)(2)



Total
($)
 
Mr. Hart   $ 125,000   $ 120,000   $ 245,000  
Ms. Krongard(3)   $ 90,000   $ 120,000   $ 210,000  
Mr. Larsen   $ 90,000   $ 120,000   $ 210,000  
Mr. Milton   $ 175,000   $ 120,000   $ 295,000  
Mr. Saines(4)   $ 95,000   $ 120,000   $ 215,000  
Dr. Sugar   $ 110,000   $ 120,000   $ 230,000  
(1)
Fees Earned or Paid in Cash: The amount shown for each non-employee director is composed of his or her annual retainer fees and committee and/or Chairmanship fees. During 2015, Ms. Krongard and Mr. Saines elected to receive all or a portion of their annual cash retainer or other cash fees in the form of shares of Class A Common Stock, rounded down to the nearest whole share. See footnotes 3 and 4 below, respectively.

(2)
Stock Awards: On May 6, 2015, each of the non-employee directors was granted an Annual Director Grant of RSUs covering 3,076 shares. There were no other outstanding equity awards for our non-employee directors on December 31, 2015.

The dollar amounts shown for these stock awards reflect $39.00 per share which is the grant date fair value of one share of Class A Common Stock computed in accordance with GAAP. Each RSU represents a contingent right to receive one share of our Class A Common Stock.

(3)
Ms. Krongard elected to receive shares of Class A Common Stock in lieu of her annual cash retainer or other cash fees as follows: 575 shares at $39.07 per share on February 26, 2015 and 576 shares at $39.00 per share on May 6, 2015.

(4)
Mr. Saines elected to receive shares of Class A Common Stock in lieu of his annual cash retainer or other cash fees as follows: 607 shares at $39.07 per share on February 26, 2015; 608 shares at $39.00 per share on May 6, 2015 and 714 shares at $33.26 per share on November 4, 2015.
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Director Stock Ownership Guidelines

Our Board of Directors has adopted stock ownership guidelines for all non-employee directors. Each non-employee director has five years from the time he or she becomes subject to these guidelines to achieve ownership of Class A Common Stock equivalents with an aggregate market value equal to three times the amount of the then current cash retainer fee for service on our Board of Directors. For a non-employee director, Class A Common Stock equivalents are shares of Class A Common Stock personally owned by the director, shares of Class A Common Stock underlying vested RSUs awarded to a director and shares of Class A Common Stock underlying unvested RSUs awarded to a director that are subject to time-vesting only. All directors have met or exceeded the guidelines as set forth in the table below.

Target Ownership
Actual Ownership
                        
Current Outside Director
Annual Cash Retainer Fee


Multiple of Annual
Retainer


Multiple
Expressed in
Dollars



Director
Multiple of Annual
Retainer


Value of Shares
held by Director*
                        
$  80,000   3x   $  240,000   Mr. Hart   11x   $   848,109
            Ms. Krongard   7x   $   572,561
      Mr. Larsen   4x   $   335,121
            Mr. Milton   22x   $1,793,709
      Mr. Saines   8x   $   677,365
            Dr. Sugar   26x   $2,108,909
*
Based on the closing price of the Company's Class A Common Stock on March 14, 2016.
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Items of Business

Proposal 1: Election of Directors

At the Annual Meeting, the Board of Directors is recommending to stockholders that Mr. Matthew J. Hart, Ms. Cheryl Gordon Krongard, Mr. Marshall O. Larsen, Mr. Robert A. Milton, Mr. John L. Plueger, Mr. Ian M. Saines, Dr. Ronald D. Sugar and Mr. Steven F. Udvar-Házy each be elected as a director to serve for a one-year term ending at the 2017 annual meeting of stockholders. Each of the nominees named below is currently a director and was elected at the Annual Meeting held on May 6, 2015. Each nominee has consented to be nominated and has agreed to serve as a director if elected. Should any of these individuals become unable to serve as a director prior to the Annual Meeting, the proxies for the Annual Meeting will, unless otherwise directed, vote for the election of such other individual as the Board of Directors may recommend, unless the Board in its discretion reduces the number of directors.

Under our Bylaws, a director nominee will be elected to the Board of Directors if the votes cast for such nominee's election exceed the votes cast against such nominee's election at the Annual Meeting. Abstentions and broker non-votes will have no effect on the outcome of the director election.

The Board of Directors recommends that you vote "FOR" the election to the Board of Directors of each of the eight nominees.

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A summary of each nominee's principal occupation, recent professional experience, directorships at other public companies for at least the past five years, and certain other qualifications, is provided below:

             

 

 


PHOTO


 

 

 

Matthew J. Hart

Retired President and Chief Operating Officer of Hilton Hotels Corporation

Age: 63

Director since May 2010

Board Committees

    Audit

    Nominating and Corporate Governance

Other Public Company Directorships

    American Airlines Group Inc.

    Trustee, American Homes 4 Rent

Mr. Hart served as President and Chief Operating Officer of Hilton Hotels Corporation, a global hospitality company, from May 2004 until the buyout of Hilton by a private equity firm in October 2007. Mr. Hart also served as Executive Vice President and Chief Financial Officer of Hilton from 1996 to 2004. Prior to joining Hilton, Mr. Hart served as the Senior Vice President and Treasurer of The Walt Disney Company and Executive Vice President and Chief Financial Officer for Host Marriott Corp. He was a director of US Airways Group, Inc. from 2006 until its December 2013 merger with American Airlines Group Inc. (formerly AMR Corporation) and of B. Riley Financial, Inc. from July 2009 until October 2015.

Qualifications:

Mr. Hart possesses significant executive experience in the hotel industry and currently serves on the board of directors of a major U.S. airline. Mr. Hart provides our Board of Directors with an important combination of management, airline industry and financial expertise. His past experience as the chief financial officer of two Fortune 500 companies, and his current service on the audit committees of two other public companies, make him instrumental in helping our Board of Directors implement business and financial strategy.

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PHOTO


 

 

 

Cheryl Gordon Krongard

Private Investor

Age: 60

Director since December 2013

Board Committee

    Compensation

Other Public Company Directorships

    Legg Mason, Inc.

Ms. Krongard is engaged in private investment activities. Ms. Krongard was a senior partner of Apollo Management, L.P., a private investment company, from January 2002 to December 2004. From 1994 to 2000, she served as the Chief Executive Officer of Rothschild Asset Management and as Senior Managing Director for Rothschild North America. Additionally, she served as a director of Rothschild North America, Rothschild Asset Management, Rothschild Asset Management BV, and Rothschild Realty Inc. and as Managing Member of Rothschild Recovery Fund. Ms. Krongard also served as a director of US Airways Group, Inc. from 2003 until its December 2013 merger with American Airlines Group Inc. (formerly AMR Corporation). Ms. Krongard was elected a lifetime governor of the Iowa State University Foundation in 1997 and has served as Chairperson of its Investment Committee. She also is a member of the Deans Advisory Council, Iowa State University College of Business.

Qualifications:

Ms. Krongard brings substantial asset management expertise and leadership experience serving as a senior executive at large, complex asset management organizations. Her strategic planning experience and airline experience gained as a director of a public company is a key resource to our Board of Directors for financial investments and business strategy.

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PHOTO


 

 

 

Marshall O. Larsen

Former Chairman, President and Chief Executive Officer of Goodrich Corporation

Age: 67

Director since May 2014

Board Committee

    Nominating and Corporate Governance

Other Public Company Directorships

    Becton, Dickinson and Company

    Lowe's Companies, Inc.

    United Technologies Corporation

Mr. Larsen served as Chairman, President and Chief Executive Officer of Goodrich Corporation, a supplier of systems and services to the aerospace and defense industry, from 2003 until his retirement in July 2012 when the company was acquired by United Technologies Corporation. He was elected as President and Chief Operating Officer of Goodrich in February 2002, and as a director in April 2002. From 1995 through January 2002, Mr. Larsen served as Executive Vice President of Goodrich and President and Chief Operating Officer of Goodrich Aerospace division of Goodrich. Mr. Larsen joined Goodrich in 1977. Mr. Larsen is a former director of the Federal Reserve Bank of Richmond and former Chairman of the U.S. Aerospace Industries Association. He is active in numerous community activities and is a member of the Krannert School of Management Advisory Board, Purdue University.

Qualifications:

Mr. Larsen brings substantial business and leadership experience as the chairman and chief executive officer of a publicly-traded company for nine years including insights in governance, regulatory and management issues facing public companies. His in-depth knowledge of the aerospace industry and the conditions that affect the industry significantly benefits the discussions of our Board of Directors.

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PHOTO


 

 

 

Robert A. Milton

Former Chairman and Chief Executive Officer of ACE Aviation Holdings, Inc.

Age: 55

Director since April 2010

Board Committees

    Audit

    Compensation

    Nominating and Corporate Governance

Other Public Company Directorships

    United Continental Holdings, Inc.

Mr. Milton was the Chairman and Chief Executive Officer of ACE Aviation Holdings, Inc., a holding company for Air Canada and other aviation interests ("ACE") from 2004 until June 2012. He also was the President of ACE from 2004 until 2011. Mr. Milton was also the Chairman of Air Canada until December 2007. He held the position of President and Chief Executive Officer of Air Canada from August 1999 until December 2004 and was a director of AirAsia Berhad from June 2013 to June 2015. Mr. Milton is a former director of US Airways Group, Inc. He is a member of the board of directors of the Smithsonian National Air & Space Museum. Mr. Milton served as Chair of the International Air Transport Association's Board of Governors from 2005 to 2006. He is one of the past Chairmen of the Georgia Tech Advisory Board and currently serves as a Trustee of the Georgia Tech Foundation.

Qualifications:

Mr. Milton's extensive experience in the aviation industry, including his many years with Air Canada, provides our Board of Directors with deep industry experience. Our Board of Directors has benefited from Mr. Milton's many relationships in the aircraft manufacturing, aircraft leasing and airline industries. Mr. Milton's management experience and understanding of the aircraft leasing industry make him an ideal choice to act as our lead independent director.

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PHOTO


 

 

 

John L. Plueger

President and Chief Operating Officer of Air Lease Corporation

Age: 61

Director since April 2010

Other Public Company Directorships

    Spirit AeroSystems Holdings, Inc.

Mr. Plueger has served as our President and Chief Operating Officer since March 2010. Mr. Plueger has more than 28 years of aviation industry and aircraft leasing experience, 23 of which were with International Lease Finance Corporation ("ILFC") where he served as acting Chief Executive Officer from February 2010 to March 2010, as President and Chief Operating Officer from 2002 to February 2010 and on its board of directors from 2002 to 2010. Mr. Plueger's professional experience also includes testifying before the U.S. House of Representatives as an aircraft leasing industry expert witness as well as responding to European Commission formal inquiries concerning aerospace industry related mergers and acquisitions. Mr. Plueger is a Certified Public Accountant and is an FAA Airline Transport Pilot with type ratings on multiple jet aircraft and single/multi engine and instrument instructor ratings. Mr. Plueger is a member of the board of directors of the Smithsonian National Air and Space Museum, a member of the Pepperdine University Board of Regents and also serves on the board of directors of the Wings Club.

Qualifications:

Mr. Plueger has more than 28 years of aviation industry and aircraft leasing experience, providing our Board of Directors with an in-depth understanding of our business. His many years of business, financial, accounting, managerial and executive experience in our industry make him an invaluable member of our Board of Directors.

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PHOTO


 

 

 

Ian M. Saines

Chief Executive, Funds Management Challenger Limited

Age: 53

Director since June 2010

Board Committee

    Audit

Other Public Company Directorships

    None

Mr. Saines is Chief Executive, Funds Management of Challenger Limited, an Australian investment management firm. From December 2013 to March 2, 2015 he was engaged in private investment activities. From December 2008 to December 2013, Mr. Saines was employed by Commonwealth Bank of Australia in the role of Group Executive of the Institutional Banking and Markets Division. At Commonwealth Bank of Australia as a member of the bank's senior executive committee, Mr. Saines was responsible for managing Commonwealth Bank's relationships with major corporate, government and investor clients and providing a full range of capital raising, transactional and risk management products and services. Prior to joining Commonwealth Bank of Australia in May 2004, Mr. Saines was a Management Committee member of Zurich Capital Markets Asia, the investment banking arm of the Zurich Financial Services Group. He previously held various senior roles with Bankers Trust Australia Limited and was also employed by the Reserve Bank of Australia. He is currently a director of the American Australian Association Limited. Mr. Saines is a Fellow of the Australian Institute of Company Directors (FAICD).

Qualifications:

Mr. Saines brings to our Board of Directors a wealth of experience in commercial banking and deep knowledge of financial risk management. He provides our Board of Directors with key insights with respect to financial products, the financial markets, capital raising activities and the management of a large, complex business.

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PHOTO


 

 

 

Ronald D. Sugar

Retired Chairman of the Board and Chief Executive Officer of Northrop Grumman Corporation

Age: 67

Director since April 2010

Board Committees

    Compensation

    Nominating and Corporate Governance

Other Public Company Directorships

    Amgen Inc.

    Apple Inc.

    Chevron Corporation

Dr. Sugar was Chairman of the Board and Chief Executive Officer of Northrop Grumman Corporation, a global aerospace and defense company, from 2003 until 2010 and President and Chief Operating Officer from 2001 until 2003. He was President and Chief Operating Officer of Litton Industries, Inc. from 2000 until the company was acquired by Northrop Grumman in 2001. He was earlier Chief Financial Officer of TRW Inc. He is also a senior adviser to Ares Management LLC, Bain & Company and Northrop Grumman Corporation. He is a trustee of the University of Southern California, board of visitors member of the University of California, Los Angeles Anderson School of Management, past Chairman of the Aerospace Industries Association, and a member of the National Academy of Engineering.

Qualifications:

Dr. Sugar has significant executive experience in the global aerospace business. In addition to drawing on Dr. Sugar's in-depth executive and financial experience in related industries, our Board of Directors also benefits from Dr. Sugar's current experience as a board member of three Fortune 500 companies. He has particularly useful experience with risk oversight, advanced technology, and a deep understanding of legislative and regulatory processes.

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PHOTO


 

 

 

Steven F. Udvar-Házy

Chairman and Chief Executive Officer of Air Lease Corporation

Age: 70

Director since February 2010

Other Public Company Directorships

    SkyWest, Inc. (Lead Director)

Mr. Udvar-Házy has served as our Chairman and Chief Executive Officer since our launch in February 2010. In 1973, Mr. Udvar-Házy co-founded the aircraft leasing business that became ILFC and from 1973 to February 2010 served as Chairman and Chief Executive Officer of ILFC. ILFC became a subsidiary of American International Group, Inc. in 1990. Mr. Udvar-Házy is an FAA Airline Transport Pilot with type ratings on multiple jet aircraft and has over 30 years of experience flying jet aircraft.

Qualifications:

Mr. Udvar-Házy brings extensive industry, managerial and leadership experience to our Board of Directors. With more than 40 years of aviation industry experience, Mr. Udvar-Házy provides our Board of Directors with a critical understanding and appreciation of our business and the know-how to craft and execute on our business and strategic plans. He is the founder, and a substantial stockholder, of our Company.

The Board of Directors recommends a vote FOR election of all the Directors set forth above.

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Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm

Our audit committee has appointed KPMG LLP as our independent registered public accounting firm to audit our financial statements for 2016. During 2015, KPMG served as our independent public accounting firm and provided certain other audit-related services. Representatives of KPMG are expected to attend the Annual Meeting, be available to respond to appropriate questions and, if they desire, make a statement.

This is a non-binding vote. If KPMG's appointment is not ratified, the audit committee will reconsider whether to retain KPMG, but still may retain KPMG. Even if the appointment is ratified, the audit committee, in its discretion, may change the appointment at any time during the year if it determines that such a change would be appropriate.

Approval of the ratification of KPMG as our independent registered public accounting firm for 2016 requires the affirmative vote of a majority of shares of Class A Common Stock present or represented, and entitled to vote thereon, at the Annual Meeting. Abstentions will have the same effect as a vote "Against" the proposal.

The Board of Directors recommends that you vote FOR the ratification of KPMG LLP as our independent registered public accounting firm for 2016.

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Proposal 3: Advisory Vote to Approve Named Executive Officer Compensation

We are seeking an advisory vote from our stockholders to approve our named executive officer compensation as disclosed in the section below titled Executive Compensation. Notwithstanding the majority of votes in favor of holding the advisory vote on named executive officer compensation every three years at the 2012 annual meeting of stockholders, the Board of Directors decided to hold the advisory vote every year in response to the significant number of shares voted in favor of an annual vote and a desire to adopt what is now perceived to be a governance best practice. Our named executive officers include Mr. Udvar-Házy, our Chairman and Chief Executive Officer, and Mr. John Plueger, our President and Chief Operating Officer and the three other executive officers named in the tables that appear in the Executive Compensation section below.

Our executive compensation program is designed to attract, motivate and retain the most talented individuals in the aircraft leasing business and to create long-term value for our stockholders. The compensation committee and our Board of Directors believe that the program has been successful in accomplishing these objectives as reflected by our strong financial performance in 2015.

The combination of a competitive base salary and bonus, and the potential for even greater rewards as a stockholder, has helped us assemble and retain a formidable management team and focus them on growing the value of the Company over the long term. We believe having a small, but highly experienced and motivated senior management team is essential to the success of the Company and provides us with an important competitive advantage.

Stockholders are urged to read the section titled Executive Compensation—Compensation Discussion and Analysis set forth below, which contains a detailed description of how our compensation program implements our compensation philosophy.

We are asking our stockholders to vote FOR the following advisory resolution:

    RESOLVED, that the stockholders of Air Lease Corporation approve, on an advisory basis, the compensation paid to its named executive officers, as disclosed pursuant to Item 402 of Regulation S-K under the Securities Exchange Act of 1934, as amended, including the Compensation Discussion and Analysis, compensation tables and narrative discussion set forth below in the section titled Executive Compensation.

This is a non-binding vote and is being provided as required pursuant to Section 14A of the Securities Exchange Act. The compensation committee and our Board of Directors will continue to review the voting results in connection with their regular evaluation of our compensation program. They also will continue to consider any input from our major stockholders throughout the year in connection with their annual evaluation.

Approval of this advisory vote requires the affirmative vote of a majority of shares of Class A Common Stock present or represented, and entitled to vote thereon, at the Annual Meeting. Abstentions will have the same effect as a vote "Against" the proposal. Broker non-votes will have no effect on the outcome of the advisory vote.

The Board of Directors recommends that you vote FOR the advisory resolution to approve our named executive officer compensation.

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Executive Compensation

Compensation Discussion and Analysis ("CD&A")

Executive Summary

Air Lease Corporation is a leading aircraft leasing company that was founded by aircraft leasing pioneer Steven F. Udvar-Házy in February 2010. In April 2011 we completed our initial public offering. Our executive compensation program is designed to address some of the unique challenges associated with being a company that requires a small number of extraordinary and talented individuals with industry experience to manage and lead a capital-intensive business. We do this by tying compensation to the achievement of performance goals that promote the creation of stockholder value and by designing compensation to retain our high-caliber executives in a competitive market. In addition, our 74 employees along with our independent directors collectively own 10% of the Company. We believe that this significant ownership by our employees and directors also helps ensure that we are aligned with the interests of our stockholders and that our compensation program drives sustainable growth.

Financial Highlights

Our strategy of purchasing new commercial jet aircraft directly from the aircraft manufacturers and leasing those aircraft to airlines throughout the world has led to consistent growth of our Company and strong financial results. We experienced another year of record asset, revenue and profitability growth as reflected in our key operating metrics.

REVENUES   ADJ. NET INCOME(1)


GRAPHIC

 


GRAPHIC

ASSETS

 

ADJ. DILUTED EPS(1)


GRAPHIC

 


GRAPHIC

(1)
For reconciliation to GAAP, see Appendix A
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Revenues.    In 2015, total revenues increased by 16.4% to $1.22 billion, compared to 2014. Our total revenues were comprised of rental revenues on our operating lease portfolio of $1.17 billion and aircraft sales, trading and other revenue of $48.3 million.

Assets.    During the year ended December 31, 2015, total assets increased by 15.6% to $12.4 billion, compared to 2014.

Adjusted Net Income.    Excluding the effects of certain non-cash items, one-time or non-recurring items that are not expected to continue in the future and certain other items including litigation expenses, net of recoveries, we generated adjusted net income of $508.0 million for the year ended December 31, 2015 compared to $438.6 million for the year ended December 31, 2014, an increase of $69.4 million or 15.8%. Adjusted net income is a measure of financial and operational performance that is not defined by GAAP.

In our Proxy Statement Summary and this CD&A we refer to Adjusted Net Income and Adjusted Diluted EPS (earnings per share), which are non-GAAP financial measures. Adjusted Net Income and Adjusted Diluted EPS have been adjusted to exclude the effect of certain non-cash items, one-time or non-recurring items, such as litigation expenses, that are not expected to continue in the future and certain other items. Appendix A to this Proxy Statement contains a reconciliation of these non-GAAP measures to our audited GAAP financial statements.

Operational Highlights

Aircraft Activity.    During 2015, we purchased and took delivery of 51 aircraft and sold 24 aircraft, ending the year with a total of 240 owned aircraft, all of which were leased, with a net book value of $10.8 billion. We leased and managed aircraft to a globally diversified customer base comprised of 90 airlines in 50 countries. As of December 31, 2015, the weighted average lease term remaining of our operating lease portfolio was 7.2 years and the weighted average of our fleet was 3.6 years.

Signed Leases, Lease Extensions and Letters of Intent.    During 2015, we signed 120 aircraft lease agreements, lease extensions and letters of intent to lease aircraft with 46 customers across 35 countries. As a result, the minimum future rental payments that our airline customers have committed to us have increased to $20.9 billion from $16.5 billion in the prior year. This includes $8.9 billion in contracted minimum rental payments on the 240 aircraft in our existing fleet and $12.0 billion in minimum future rental payments on the 127 aircraft that we have ordered from the manufacturers which will deliver between 2016 and 2021.

Aircraft Sales.    We profitably sold 24 aircraft from our operating lease portfolio for proceeds of $784.7 million, recording gains of $33.9 million, exceeding our 2015 goal. In addition, in December 2015, we entered into an agreement to sell our fleet of 25 ATR turboprop aircraft, comprised of 20 delivered aircraft and five undelivered aircraft, to Nordic Aviation Capital A/S ("NAC"). As of December 31, 2015, one aircraft had been transferred to NAC and the remaining 19 delivered aircraft were held for sale. We expect the sale of the 19 aircraft held for sale and the five undelivered aircraft to be completed in 2016.

Increased New Order Pipeline.    We entered into commitments to acquire 70 additional aircraft from Airbus and Boeing. We now have 389 aircraft on order from Airbus, Boeing and ATR through 2023, making us one of the world's largest customers for new commercial jet aircraft.

Expanded Our Management Business.    We expanded the number of aircraft under management by 71% in 2015 to 29 aircraft compared to 17 aircraft in the prior year.

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For a comprehensive discussion of our financial results, please review our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which was filed with the SEC on February 25, 2016.

Return to Stockholders

CUMULATIVE STOCKHOLDER RETURN
AIR LEASE vs S&P 400 MIDCAP

The chart below illustrates the returns we delivered to our stockholders from 2013 through 2015 as compared to the S&P 400 MidCap index over the same time frame. Since 2013, the S&P 400 MidCap index increased by 43.2%, a compound annual growth rate ("CAGR") of approximately 12.7%, while our Total Shareholder Return increased 57.6%, a compound annual growth rate of approximately 16.4%. Air Lease outperformed the S&P 400 MidCap index for this period.

GRAPHIC

The chart below illustrates the returns we delivered to our stockholders from 2013 through 2015 as compared to our Chief Executive Officer's compensation (as reported in the Total column of the Summary Compensation Table) over the same time frame. Since 2013, total compensation for our CEO has increased by 29.9%, a compound annual growth rate of approximately 9.1%, while Total Stockholder Return increased 57.6%, a compound annual growth rate of approximately 16.4%.

CUMULATIVE STOCKHOLDER RETURN
AND CEO COMPENSATION

GRAPHIC

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Air Lease's Executive Compensation Practices

Another important objective of our executive compensation program is to incorporate pay and governance best practices, as highlighted below.

What We Do

Compensation Practice   Air Lease Policy
Pay for Performance   Pay more than 72% of our named executive officers' total direct 2015 compensation in performance based compensation
        
Double-Trigger Change in Control   Implemented double-trigger change in control provisions for all equity awards granted since February 2014 requiring a qualifying termination event for accelerated vesting
        
Severance Benefits   Provide moderate and reasonable severance benefits no greater than three times base salary and target annual bonus
        
Use of Equity Incentives   Manage the use of equity incentives conservatively with a net equity burn rate over the last year of less than 0.4%
        
Tally Sheets   Review tally sheets when making executive compensation decisions
        
Stock Ownership Guidelines   Require all executive officers to hold Company stock equal to multiplier of annual salary (6x for CEO, 3x for President and 1x for other executive officers) and require our executive officers to retain 50% of the after-tax profits realized for Company equity incentive awards until stock ownership guidelines are met
        
Mitigate undue risk   Assess annually our incentive programs and practices for material risk
        
Independent Compensation Consultant   Use a compensation consultant engaged by our compensation committee who does not provide any other services to the Company
        
Clawback Policy   Voluntarily adopted a clawback policy to permit recoupment of incentive pay in the event of certain restatement of financial statements
        
Annual "Say-on-Pay"   Elected to seek annual advisory vote on named executive officer compensation despite stockholder support for a vote every three years
        
Engage with Investors about Compensation   Conducted stockholder outreach to better understand our investors views on our executive compensation program
        
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What We Don't Do

Compensation Practice   Air Lease Policy
Hedging   Don't allow our executive officers or directors to hedge Company securities or otherwise engage in short-term speculative transactions
        
Pledging   Don't allow our executive officers or directors to pledge Company securities
        
Tax Gross-ups   Don't provide 280G or other tax gross-ups
        
Dividend or Dividend Equivalents on Performance Awards   Don't pay dividends or accrue dividend equivalents on unearned equity awards
        
Re-price Stock Options   Don't allow re-pricing or exchanging stock options without stockholder approval
        
Pension Benefits   Don't provide pension benefits

Highlights of our 2015 CEO Compensation

CEO Target Cash Pay

Retain key talent

Provide a degree of financial certainty

  No change in CEO annual salary since 2010

No change in CEO annual incentive bonus targets since 2011

        
Annual Cash Incentives

Drive the achievement of key business results on an annual basis

  Ambitious performance tied to operating performance measures

Performance measures for 2015 are higher as compared to 2014

        
Equity Incentive Awards

Directly tie CEO compensation to the interests of our stockholders

Reward achievement of long-term objectives

Attract and retain key talent

  100% of our CEO's equity incentive awards are performance based

Performance measure for 50% of the 2015 award is based on our total stockholder return compared to that of the S&P 400 for a 3-year period

Performance measure for 50% of the 2015 award is based on our annual book value increases

        
Pay For Performance   75% of our CEO's 2015 direct compensation was performance based
        
Robust Share Ownership Requirement   6 times CEO annual salary
        
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Highlights of Stockholder Outreach and Compensation Program Changes

Stockholder Outreach   We contacted our large stockholders to specifically discuss our compensation philosophy and program

The compensation committee considered our stockholders' views when making decisions about 2015 compensation and in structuring the 2016 compensation program

        
Reduced the Amount of Senior Officers' Cash Compensation   We reduced the amount of our senior officers' cash compensation by replacing long-term cash deferred bonuses with time-vesting restricted stock units beginning in 2016

Our Chairman and Chief Executive Officer and our President and Chief Operating Officer waived their contractual right to receive the new 2016 cash deferred bonuses and instead received time-vesting restricted stock units

        
Reset Book Value RSU   We reset the beginning per share book value for the 2015 and 2016 Book Value RSU grants to the actual book value per share on December 31, 2014 for the 2015 grant and December 31, 2015 for the 2016 grant
        
Reduced 2015 Annual Bonuses   The compensation committee exercised its discretion and reduced the amount payable under the 2015 annual cash performance bonuses

The Company Performance Factor was reduced to 130% from 200%

        
Enhanced Disclosure   We continued to expand our disclosure regarding the Company's compensation program to provide greater transparency
        
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Stockholder Outreach on Executive Compensation

In an effort to better understand our investors' perspective regarding our executive compensation program, we engaged in stockholder outreach in late 2015 and early 2016. While we regularly communicate with our stockholders, we contacted our large stockholders to specifically discuss our compensation philosophy and program. We asked for feedback on our compensation program and disclosure about the program in our proxy statement. In some cases, we clarified how our program worked or explained certain elements of our program, including explaining why the Company does not have a peer group to benchmark compensation. We discussed that the Company operates in a highly specialized industry with a small number of companies, most of which are foreign, private or are subsidiaries of large companies. As a result of these companies' status, benchmarking information is very limited. Over the past two years, the Company also has discussed its executive compensation program with each of the primary proxy advisory firms.

We then discussed the feedback with our compensation committee and the committee's independent compensation consultant as the committee prepared to make decisions about 2015 compensation and the 2016 compensation program. The compensation committee also discussed the feedback with its independent compensation consultant outside the presence of any Company management.

We regularly review and refine our compensation program so that it reflects practices and policies that align executive and stockholder interest and sound corporate governance practices, and we incorporated our stockholder feedback into this review. We discuss in this CD&A some of the recent changes and enhancements to our compensation program based in part on these discussions.

Stockholder Advisory Vote Approving Executive Compensation

Notwithstanding the majority of votes in favor of holding the advisory vote on named executive officer compensation every three years at the 2012 annual meeting of stockholders, the Board of Directors has decided to hold the advisory vote every year in response to the significant number of shares voted in favor of an annual vote and a desire to adopt what is now perceived to be a governance best practice. At the upcoming 2016 annual meeting, we again will provide our stockholders with the opportunity to approve, by a non-binding vote, executive compensation.

In May 2015 the advisory vote to approve named executive officer compensation ("compensation proposal") received the affirmative support of 70.5% of our stockholders represented at the meeting and entitled to vote on the matter. In evaluating our executive compensation program, our compensation committee considered the voting results for the compensation proposal, our stockholder outreach and other factors as discussed in this CD&A.

Compensation Program Overview and Objectives

Our executive compensation program is designed to attract, retain and motivate the highest caliber executives in the aircraft leasing industry by offering a comprehensive compensation program that is attractive enough to entice and retain successful senior executives. We also believe it is important that our compensation program attracts the highly talented executive who is experienced and capable of managing our aircraft fleet with a small team to help drive our profitability. At the end of 2015, we had total assets of $12.4 billion and we had 74 total employees. We believe that the ratio of employees to total assets compares favorably to other companies in capital-intensive businesses.

Our executive compensation program also is designed to reward our executives for contributing to achievement of our annual and long-term objectives. We set robust goals to align performance based compensation with the creation of long-term value for our stockholders. We also believe that

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ownership of our stock is critical to alignment with our stockholders and our 74 employees along with our independent directors collectively own 10% of the Company.

Our compensation program includes fixed compensation elements that are very competitive in the marketplace, combined with performance-based elements that are designed to reward our executive officers named in the Summary Compensation Table on page 44 of this proxy statement (our "named executive officers" or "NEOs") for achieving results that derive value for our stockholders. In accordance with the rules of the SEC, our NEOs are Steven F. Udvar-Házy (our principal executive officer); Gregory B. Willis (our principal financial and accounting officer); and John L. Plueger, Jie Chen and Grant A. Levy, the three other most highly compensated executive officers who were serving as executive officers at the end of 2015.

This Compensation Discussion and Analysis should be read together with the executive compensation tables that follow, which disclose the compensation awarded to, earned by or paid to our NEOs with respect to 2015.

How We Determine Compensation

Role of the compensation committee.    The compensation committee is composed of Dr. Sugar, who serves as Chairman of the committee, Ms. Krongard, and Mr. Milton. The compensation committee oversees the design, administration and evaluation of our overall executive compensation program and recommends to the independent directors of the Board of Directors the total compensation for our Chairman and Chief Executive Officer and our President and Chief Operating Officer. It also approves the total compensation for the other NEOs. Each member of the compensation committee must be an independent, non-employee director, as those terms are defined in SEC, NYSE and Internal Revenue Service rules. Among other things, the compensation committee will at least annually:

    Review and adjust (or recommend adjustments to) each NEO's compensation in order to ensure an appropriate mix of cash and equity, and an appropriate balance of fixed and at-risk compensation, in light of, among other factors, each individual's particular role and responsibilities, personal motivations, stock ownership exposure and wealth accumulation.

    Consult with the compensation committee's independent consultant to help ensure that the total compensation paid to each NEO is appropriate in light of our compensation objectives, tax and accounting considerations and compensation best practices.

    Consider specific input from stockholders on our executive compensation programs in the design of the next year's executive compensation program.

    Design annual incentive awards with quantitative factors and qualitative milestones applicable to all our officers that further our overall business objectives, and approve award payouts based on performance actually achieved.

Role of Stockholder Input on Executive Compensation.    The compensation committee seeks stockholder input and considers it in making compensation decisions. For example, in response to comments regarding the levels of cash compensation paid to our named executive officers, we reduced the amount of their cash compensation by replacing long-term cash deferred bonuses with time vesting restricted stock units beginning in 2016. Our Chairman and Chief Executive Officer and our President and Chief Operating Officer waived their contractual right to receive 2016 cash deferred bonus grants and instead received time-vesting restricted stock units.

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Role of Management.    The compensation committee formulates its recommendation for the overall compensation of our Chairman and Chief Executive Officer without management participation. In addition, the committee recommends to the Board of Directors the overall compensation of our President and Chief Operating Officer with input from our Chief Executive Officer. Finally, the committee determines the overall compensation of our other NEOs with input from our Chief Executive Officer and Chief Operating Officer. None of our NEOs is present when his compensation is discussed by the committee. Our management administers all compensation and benefits programs, subject to the oversight of the committee. This delegation to management is strictly limited to implementation of the programs, and does not include any discretion to make material decisions regarding the overall executive compensation program.

Role of Independent Consultant.    The compensation committee has engaged Exequity as an independent consultant to provide advice with respect to compensation decisions for our executive officers. The independent consultant assists in evaluating our compensation objectives, obtaining market information, and designing various aspects of our compensation program. The independent consultant attends meetings of the committee by invitation, and committee members have direct access to the independent consultant without management involvement. The independent consultant will also consult with our senior executives as directed by the committee. The committee has the sole authority to hire and fire the independent consultant. In order to help ensure impartiality and objectivity, the committee requires that the independent consultant provide services only to the committee and not to management, absent specific committee approval. In 2015, Exequity did not perform any services unrelated to its committee engagement, including any separate work for our management or employees. The independence of Exequity has been evaluated in accordance with SEC and NYSE rules, and it has been determined that its work did not raise any conflicts of interest.

Peer Group and Benchmarking.    We operate in a highly specialized industry with a small number of other companies, most of which are foreign, private or are subsidiaries of other large companies. For that reason, the compensation committee believes it is not possible to develop a robust group of relevant peer companies against which to accurately benchmark our performance. The compensation committee has reconsidered this decision each year after carefully considering possible companies for a peer group.

Since 2012, the compensation committee's independent consultant has collected compensation information about similarly sized U.S.-based employers, including aircraft leasing companies and financial services firms. In 2015, the compensation committee expanded its review of such information when considering 2015 compensation decisions by purchasing additional industry specific compensation data. We use such information to supplement the collective knowledge and experience of our Board of Directors, senior executives and the consultant. Our compensation committee does not, however, make decisions primarily based on how our compensation practices compare to those of other companies. Our compensation decisions will continue to be guided by what we consider to be the amount and form of compensation that will best enable us to attract, motivate and retain the most talented executives and to focus them on the growth and long-term success of our business.

Risk Management

We believe that the best way to ensure our NEOs' and other employees' personal commitment to our long-term goals is to ensure that their financial rewards as stockholders will, over the long term, far outweigh any cash compensation they earn as employees. In this regard, the interests of our NEOs and our stockholders are strongly aligned. Our NEOs as a group beneficially own approximately 8.7% of our Class A Common Stock, and each NEO has made a meaningful personal investment in our stock.

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In addition, our executive compensation program has been designed to discourage executives from taking unnecessary risks that could threaten the long-term interests of our company. As described in more detail in this CD&A, a significant portion of our incentive-based compensation has been tied to an increase in our book value, and not to metrics that may encourage risk-taking behavior focused on short-term results. Similarly, we have mitigated potential risk by subjecting regular annual equity awards granted since 2012 to performance-based vesting conditions. If the respective performance measures are achieved, awards tied to an increase in book value vest annually over three years and awards tied to total stockholder returns vest at the end of three years.

We have also capped our short and long-term incentive opportunities; there is no upside associated with performance-based RSUs that vest based on book value and the total stockholder return (TSR) RSUs are capped at 200% of target to limit potential payouts even in instances of superior performance. In addition, the annual bonuses of our Chief Executive Officer and our Chief Operating Officer are capped at 200% of target as set forth in their employment agreements. We also base executive rewards on a variety of internal performance measures (as explained below) so as to avoid an over reliance on any singular indicator of performance. Additionally, since 2012 half of our long-term incentive awards were based on stockholder returns relative to a broad index. We believe that these design safeguards align our executive incentives and corresponding payouts with stockholder value creation. Also annually, the compensation committee's independent consultant performs a compensation risk analysis. Our Board of Directors also adopted a clawback policy relating to incentive compensation, as described below as an additional safeguard.

Stock Ownership Guidelines.    We also believe that our executives' significant equity ownership in our Company aligns their long-term interests with those of our stockholders. Our Board of Directors has adopted stock ownership guidelines for our executive officers at the level of Executive Vice President or higher. Our Chief Executive Officer is required to own Class A Common Stock equivalents with an aggregate market value equal to six times his annual rate of salary. Our Chief Operating Officer is required to own Class A Common Stock equivalents with an aggregate market value equal to three times his annual rate of salary. As shown in the table below, both Mr. Udvar-Házy and Mr. Plueger beneficially own shares of our Class A Common Stock that far exceed their ownership requirements.

  Target Ownership
Actual Ownership
       
    Multiple of Base
Salary


Multiple
Expressed in
Dollars



Multiple of Base
Salary(1)


Value of Shares
Held by Executive
in Dollars(2)
Steven Udvar-Házy   6x   $10,800,000   91x   $164,327,660
John L. Plueger   3x   $  4,500,000   15x   $  22,001,338
1.
Based on 2016 Salary
2.
Based on the closing price of the Company's Class A Common Stock on March 14, 2016

Each of our other executive officers subject to these guidelines is required to own Class A Common Stock equivalents with an aggregate market value equal to at least his or her annual rate of salary. Messrs. Chen, Levy and Willis each own shares of our Class A Common Stock that exceed this requirement. In addition, our guidelines require executive officers to retain 50% of after tax profits realized from Company equity incentive awards until ownership guidelines are met. Class A Common Stock equivalents are shares of Class A Common Stock owned personally by an executive officer and shares of Class A Common Stock underlying unvested RSUs that are subject to time-vesting only. Each executive officer subject to these guidelines has five years from the time he or she becomes subject to the guidelines to achieve the required level of ownership.

No Hedging or Pledging.    The Company has an anti-hedging and pledging policy applicable to our directors and executive officers. These individuals are prohibited from engaging in hedging

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transactions such as short-term or speculative transactions in the Company's securities, including our Class A Common Stock. They also may not pledge their Company securities as collateral for a loan or in similar transactions.

Clawback Policy.    In February 2014 our Board of Directors adopted a clawback policy. The policy provides that we will require reimbursement of any incentive payments to an executive officer which was predicated upon achieving certain financial results that were subsequently the subject of a substantial restatement of Company financial statements filed with the SEC, if our Board of Directors determines that the executive engaged in intentional misconduct that caused or substantially caused the need for a substantial restatement of financial results and a lower payment would have been made to the executive based on the restated financial results. In each such instance, we will to the extent practicable, seek to recover from the individual executive the amount by which the individual executive's incentive payments for the relevant period exceeded the lower payment that would have been made based on the restated financial results.

Elements of the Executive Compensation Program

We have four primary elements of our executive compensation program: annual compensation consisting of base salary, annual performance-based cash incentive bonuses, long-term equity incentive awards and long-term cash bonuses. In 2015, approximately 75% of our CEO's total compensation for these elements was performance-based and not guaranteed. His significant performance-based compensation coupled with his significant ownership of the Company's equity aligns his interests with the interests of our stockholders.

Annual Compensation

Annual compensation is delivered in cash with a substantial variable portion at risk and contingent on the successful accomplishment of pre-established performance measures.

Base Salary.    Base salary is the main "fixed" component of our executive compensation program, and it is aimed primarily at attracting and retaining the best possible executive talent. The relative levels of base salary for our NEOs are based on the particular responsibilities and expectations associated with each executive's position. Another factor that we consider extremely important is the experience of each NEO in our industry. We review salaries annually and consider possible merit increases, increases in connection with promotions and changes in responsibilities and market competitive factors.

None of our NEOs are guaranteed an annual salary increase. The base salaries of Messrs. Udvar-Házy and Plueger have remained unchanged since 2010 and are determined in accordance with their employment agreements. The base salaries of the other NEOs are determined by the compensation committee, with the input of Messrs. Udvar-Házy and Plueger and taking into consideration the objectives and philosophies of our overall executive compensation program, including market information.

2015 base salary percentage increases compared to 2014 are as follows:

Title
Increase % compared to 2014    
Chairman and CEO   0%
President and COO   0%
Executive Vice President & Managing Director, Asia   <1%
Executive Vice President   <1%
Senior Vice President & Chief Financial Officer   11%
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In determining Mr. Wills' base salary, the compensation committee took into account his performance in 2014 and market information.

Performance-Based Annual Cash Incentives.    We pay annual cash bonuses to drive the achievement of key business results for the year and to recognize individuals based on their contributions to those results. Each year the compensation committee establishes performance guidelines for bonus payments ("performance measures"). These performance measures are developed taking into account the Company's applicable fiscal year plan and its long-term strategy. These performance measures also take into account expectations regarding probability of achieving certain performance goals and include "stretch" goals that are supported by the business plan. Performance measures are set at the beginning of the performance period.

For 2015, the compensation committee developed the following performance measures for the payment of annual incentive awards to our NEOs:

Performance Measures
Component Weighting
Overall Revenue   20%
Pre-Tax Operating Margin   20%
Pre-Tax Return on Equity   20%
Dollar Value of Aircraft Added to our Fleet   20%
Strategic Objectives   20%

The 2015 strategic objectives required our NEOs to:

    Execute on aircraft sales plan
    Expand our aircraft management business
    Add new airline customers
    Continue to optimize specified internal processes

2015 Operating Performance Measures Compared to 2014.    The compensation committee also continued its practice of establishing more rigorous goals tied to increasingly ambitious operating performance measures. The table below shows the increase of 2015 goals at 'Target' and at 'Maximum' over 2014 performance goals.

Performance
Measures



2015 Target

2014 Target

Increase

% Increase
Target
 
Overall Revenue   $ 1,178   $ 1,003   $ 175   17.4%  
Pre-Tax Operating Margin     34.8%     34.0%     0.8%     2.4%  
Pre-Tax Return on Equity   14.1%   12.9%   1.2%   9.3%  
Dollar Value of Aircraft Added to our Fleet   $ 2,749   $ 2,098   $ 651     31.0%  
Average     15.0%  

 

Performance
Measures




2015
Maximum




2014
Maximum



Increase

% Increase
Maximum
 
Overall Revenue   $ 1,213   $ 1,030   $ 183   17.8%  
Pre-Tax Operating Margin     36.6%     34.8%     1.8%     5.2%  
Pre-Tax Return on Equity   15.2%   14.0%   1.2%   8.6%  
Dollar Value of Aircraft Added to our Fleet   $ 2,937   $ 2,240   $ 697     31.1%  
Average     15.7%  
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Measuring Performance at the End of the Year—Individual Opportunities.    Each NEO had the opportunity to earn his target award (a percentage of base salary) based on Company performance, as modified by an individual performance factor (determined by the Committee for 2015 to be between 0% and 120%), based on the achievement relative to individual performance goals. In the case of our Chief Executive Officer and our Chief Operating Officer, in no event can the award be in excess of 200% of target.

Measuring Performance at the End of the Year—Company Performance Factor.    In February 2015 when the compensation committee established the performance measures, it decided for this purpose to exclude the impact of resolving certain litigation pending at the time in determining if the pre-tax operating margin and pre-tax return on equity measures were met for 2015. At the time, the compensation committee did not know if or when the litigation might be resolved or the impact on the Company's 2015 performance of resolving the litigation. However, the compensation committee retained its discretion to reduce bonuses by reflecting the impact of a resolution of such litigation on those performance measures at the end of 2015. In April 2015, the Company settled the litigation for $72 million. In February 2016 the compensation committee exercised its discretion to take into account the full impact of the litigation settlement, less insurance recoveries, which, as discussed below, reduced the Company Performance Factor from 200% to 130%, reducing the amount of the annual cash bonuses.

Below is the formula for determining annual performance based cash bonuses:

Target Award × Company Performance Factor × Individual Performance Factor

2015 Performance Results.    The weighted earned payout based on company performance for 2015 (Company Performance Factor) was 130%, after reduction by the compensation committee. A summary of these performance measures as well as the related fiscal 2015 results are as follows (dollars in millions):

       
2015

 
Fiscal 2015


Reduced

     
  Performance Measure

           
Result


Interpolated


Component


Weighted

 
               
     
Minimum


Target


Maximum


(Actual)


Payout


Weighting


Payout
 
  Overall Revenues   $ 1,142   $ 1,178   $ 1,213   $ 1,223   200 % 20 % 40 %  
  Pre-tax Operating Margin     33.0%     34.8%     36.6%     32.1%     0 %   20 %   0 %  
  Pre-tax Return on Equity   13.0%   14.1%   15.2%   13.6%   49 % 20 % 10 %  
  Dollar Value of Acquired Aircraft   $ 2,562   $ 2,749   $ 2,937   $ 3,008     200 %   20 %   40 %  
  Strategic Goals         200%   200 % 20 % 40 %  
  Total (Company Performance Factor)                       130 %  

As discussed above, the compensation committee exercised its discretion and included the impact of a $72 million litigation settlement paid by the Company in determining if the pre-tax operating margin and pre-tax return on equity measures were met. If the compensation committee had not exercised its discretion, the Company's adjusted Pre-tax Operating Margin and adjusted Pre-tax Return on Equity would have exceeded the maximum goals. As a result, the weighted payout for all of the measures in the table above would have resulted in a Company Performance Factor of 200%. By including the impact of the litigation settlement, the Pre-tax Operating Margin minimum goal was not met and its weighted payout was zero and Pre-tax Return on Equity was slightly over the minimum goal resulting in a weighted payout of 10% and a Company Performance Factor of 130%.

The weighted earned payout of 130% reflects the Company's strong performance in 2015. Compared to 2014, the key drivers of our 2015 performance were overall revenues, which increased 16.4% and the dollar value of acquired aircraft, which increased 31.0%. Moreover, despite settling litigation, our pre-tax return on equity of 13.6% slightly exceeds our minimum goal of 13.0%.

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With respect to our strategic objectives, the compensation committee quantitatively, and as applicable, qualitatively, assesses the Company's performance of its strategic objectives. Each quarter the Company reports to the compensation committee and the full Board of Directors on its progress with a full assessment by the compensation committee after year end. This year, the compensation committee determined that we exceeded all of our strategic goals.

  Strategic Goal

Performance to Strategic Goal
 
  Execute on aircraft sales plan   We exceeded our aircraft sales plan by profitably selling 24 aircraft during the year    

 

Expand our aircraft management business

 

We expanded our fee-based aircraft management business and currently provide fee-based management services for 12 additional aircraft for a total of 29

 

 

 

Add new airline customers

 

We added 13 new airline customers

 

 

 

Continue to optimize specified internal processes

 

We continued to optimize internal processes, including launching phase 2 of our contracts management system and expanding the user base for record retentions systems

 

 

Individual 2015 Performance.    The compensation committee also considered the individual performance of each of the NEOs. It considered, among other things, their individual contributions to our strong financial results in 2015, contributions to longer-term growth in 2016 and beyond and leadership within the Company, including their ability to motivate and leverage a very small team of professionals.

After evaluating the Company's strong performance relative to the guidelines established at the beginning of 2015 and taking into account individual contributions in 2015, our compensation committee awarded Messrs. Chen, Levy and Willis annual cash performance bonuses in the amounts set forth below and our compensation committee recommended, and our independent Board of Directors approved, annual cash performance bonuses for Messrs. Udvar-Házy and Plueger in the amounts set forth below.

  Name



Target
Bonus




Corporate
Factor




Individual
Factor




Actual
Bonus


 
  Mr. Udvar-Házy   $ 1,800,000   130 % 100 % $ 2,340,000    
  Mr. Plueger   $ 1,500,000     130 %   100 % $ 1,950,000    
  Mr. Chen   $ 915,000   130 % 105 % $ 1,248,975    
  Mr. Levy   $ 803,250     130 %   105 % $ 1,096,436    
  Mr. Willis   $ 375,000   130 % 120 % $ 585,000    

Plans Applicable to our Annual Incentive Bonuses.    The 2013 Cash Bonus Plan provides for annual cash awards to our NEOs, other than our Senior Vice President and Chief Financial Officer, that recognize and reward the achievement of corporate performance goals and that are designed to qualify as performance-based compensation within the meaning of Section 162(m). Incentive awards are payable under the plan only if the Company has positive income before taxes for the period, and this requirement was met for the 2015 performance period. The total bonus pool cannot exceed 5% of the Company's total revenues, and in 2015 the bonus pool far exceeded actual payments.

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The annual cash bonuses for the Senior Vice President and Chief Financial Officer and other executive officers who are not NEOs are determined in accordance with the Company's other annual bonus plan.

Long-Term Equity Incentive Awards

Performance Awards—Book Value and TSR RSUs.    Consistent with our executive compensation objectives, the compensation committee believes that an important aspect of attracting and retaining exceptionally talented executives and aligning their interests with those of our stockholders is to provide performance-based equity incentive compensation. In determining the value of annual performance-based equity grants, the Committee considers the executive's total compensation, target cash, mix of long-term and short-term compensation and internal guidelines.

On February 24, 2015, we made long-term performance-based equity incentive awards to all of our NEOs as part of our planned equity grant cycle. Our compensation committee established an overall value for each executive officer, and applied a mix of 50% RSUs that vest based on attainment of book value goals (the "Book Value RSUs") and 50% RSUs that vest based on attainment of total stockholder return goals (the "TSR RSUs"). The compensation committee believes this mix creates a balanced incentive because the RSUs provide executives with the incentive to steadily increase the book value of the Company while seeking an overall increase in total stockholder return over a three-year period. Unlike grants in previous years, the compensation committee reset the beginning per share book value for the 2015 Book Value RSUs grants to the actual book value per share on December 31, 2014. The Company's per share book value must steadily increase from December 31, 2014 for the shares to vest. These awards were made under our 2014 Equity Incentive Plan. All RSUs awarded in 2015 are denominated in share units, each of which is equivalent to one share of Class A Common Stock, and are subject to performance conditions and time-vesting.

The degree to which TSR RSUs vest depends on performance over a three-year measurement period. The number of shares to be received at the end of the three-year performance period, which runs from January 1, 2015 through December 31, 2017, will depend on our ranking within the S&P 400 Mid-Cap Index as set forth in the table below. Results between the points in the table will be interpolated on a linear basis.

  Actual TSR Percentile Ranking



Applicable
Percentage


 
  85th or higher   200 %  
  70th     150 %  
  55th   100 %  
  40th     50 %  
  below 25th   0 %  

Total stockholder return (TSR) is the change in price of a share of Class A Common Stock plus accumulated dividends over a specified period of time and is an indicator of management's achievement of long-term growth in stockholder value. Comparing the Company's TSR over a specified period of time to index companies' returns over the same period of time is an objective external measure of the Company's effectiveness in translating its results into stockholder returns. The compensation committee uses the TSR goals against the S&P 400 Mid-Cap Index as the compensation committee believes it represents a broad range of investment alternatives with similar market capitalization as our Company. The compensation committee also believes that tying a portion of our executive compensation to the stockholder returns of similarly capitalized companies emphasizes our pay-for-performance philosophy. As previously discussed, we operate in a highly

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specialized industry with a finite number of other direct comparator companies, many of which are foreign, private or are subsidiaries of other companies. For that reason, the compensation committee believes it is not possible to develop a robust group of relevant peer companies against which to accurately benchmark our performance.

The chart below shows the February 24, 2015, long-term equity incentive awards to our NEOs in the form of Book Value RSUs and TSR RSUs, including the number of shares of Class A Common Stock underlying the awards at the time of grant:

     

Number of Book
Value RSUs





Target / Maximum
Number of
TSR RSUs



 
  Mr. Udvar-Házy   46,902   46,901/93,802    
  Mr. Plueger     33,613     33,612/67,224    
  Mr. Chen   11,704   11,704/23,408    
  Mr. Levy     10,275     10,274/20,548    
  Mr. Willis   4,975   4,974/9,948    

The Book Value RSUs generally vest in three equal installments over a three-year performance period, but only if the Company has met certain per share book value targets, as determined in accordance with GAAP, as of December 31, 2015, 2016 and 2017. The per share book value targets for the February 24, 2015 awards are $28.43 in the first year, $29.85 in the second year and $31.34 in the third year. If a specified target is not attained as of December 31 of the applicable year, the installment for such year will not vest and will expire as of such date.

The Company's December 31, 2015 per share book value was $29.44 and one-third of each of the February 24, 2015, February 25, 2014 and February 25, 2013 Book Value RSUs vested. The underlying shares were released and issued in accordance with their terms on February 25, 2016.

On February 25, 2016, vesting of 119% of TSR RSUs that were granted on February 23, 2013 occurred as the percentile ranking within the S&P 400 Mid-Cap Index at the end of the three year performance period on December 31, 2015 was 61%. If the Company's actual TSR was 85% or higher, the NEOs as a group had an opportunity to acquire 99,167 shares with a value of $2.9 million. Last year, the TSR RSUs had a partial vesting of 55% because the TSR ranking was 42%, and the NEOs as a group forfeited the opportunity to acquire 181,775 shares with a value on February 26, 2015 of $7.1 million.

Time-Vesting RSUs—Bonus Awards.    On March 4, 2015, we made long-term equity incentive awards to two of our NEOs consisting of time-vesting RSUs that vest annually in three equal installments from the date of grant. Mr. Chen received 4,000 time-vesting RSUs and Mr. Willis received 8,000 time-vesting RSUs. The grants were made to recognize their contributions for certain major transactions in 2014. All awards were made under our 2014 Equity Incentive Plan. On March 4, 2016, one third of each NEO's time-vesting RSUs vested.

Long-Term Equity Cash Bonuses

Retention Bonuses.    Because we believe the Company's continued success depends on each of Messrs. Udvar-Házy and Plueger remaining with the Company for the term of their employment agreements, each of them is eligible for a retention bonus for service completion upon completion of the three year term of their employment agreements, ending on June 30, 2016. A description of the employment agreements is set forth in the section titled Executive Compensation—Employment Agreements and Arrangements and Potential Payments upon Termination or Change in Control.

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Deferred Bonuses.    Since our inception we have paid cash bonuses to our employees under our Amended and Restated Deferred Bonus Plan. The purpose of the plan is to provide retention incentives that are time-vesting and based on amounts already earned, thereby providing a balance against our incentives that are tied to uncertain, future performance. Under the plan, our employees have an opportunity to receive a cash bonus in an amount equal to a percentage of the aggregate amount of base salary and annual and other short-term cash bonus compensation paid with respect to a particular year. The deferred bonus will generally vest upon the second anniversary of the end of the year with respect to which the award was made, provided that the employee is still employed by us on a full-time basis on that date.

Until February 2016, our executive officers participated in our Amended and Restated Deferred Bonus Plan. Each executive received a cash payout in the amount set forth below for deferred bonuses granted in February 2014 and vested on December 31, 2015. In February 2015, we granted deferred bonuses in the amounts set forth in the table below, which will vest on December 31, 2016.

     


Amount Paid—
Vested Award
2014-2015(2)





2015-2016
Grant


 
  Mr. Udvar-Házy   $ 456,840 (1) $ 469,800    
  Mr. Plueger   $ 380,700 (1) $ 391,500    
  Mr. Chen   $ 246,881   $ 259,003    
  Mr. Levy   $ 185,626   $ 196,439    
  Mr. Willis   $ 67,085   $ 83,875    
1.
Under their employment agreements, Messrs. Udvar-Házy and Plueger have a right to receive a deferred cash bonus in an amount equal to 9% of his aggregate amount of base salary and annual and other short term cash bonus compensation paid with respect to a particular year.
2.
Vested on December 31, 2015 and paid in January 2016.

In February 2016, in response to evolving compensation practices and stockholder comments regarding the levels of cash compensation paid to our named executive officers, the compensation committee reduced the amount of our executive officer's cash compensation opportunities, including for each of our NEOs, by replacing cash deferred bonuses with long-term equity incentives consisting of time vesting RSUs.

Other Compensation

Retirement Programs.    We maintain a 401(k) savings plan for our employees and, under the terms of the plan, will make matching contributions in amounts equal to 116% of up to 6% of the contributions made by each of Messrs. Udvar-Házy, Plueger, Chen, and Levy and equal to 75% of up to 6% of the contributions made by Mr. Willis.

Benefits and Perquisites.    Our NEOs generally receive the same healthcare benefits as our other employees. Mr. Udvar-Házy has additional benefits under his employment agreement, including our payment of premiums for a $5.0 million term life insurance policy payable to his beneficiaries. Similarly, we pay Mr. Plueger's premiums for a $2.0 million term life insurance policy payable to his beneficiaries. In addition, we pay the premiums for Messrs. Udvar-Házy, Plueger, Chen, Levy and Willis under our group term life insurance program, in which all of our employees participate.

Personal Use of Company Aircraft.    The Board of Directors adopted a travel policy that requires the Chairman and Chief Executive Officer and the President and Chief Operating Officer to use, to the maximum extent practicable, Company-owned aircraft for personal use as well as business travel. In

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2015, the incremental cost of Mr. Udvar-Házy's and Mr. Plueger's personal use of Company aircraft was approximately $98,218 and $51,391, respectively.

2016 Executive Compensation Program

The same key elements of our executive compensation program are applicable in 2016 other than deferred cash bonuses. In determining 2016 targeted compensation, the compensation committee considered, among other things, its compensation survey results and compared the proposed 2016 compensation to 2015 targeted compensation for each NEO.

Annual Compensation

Base Salary.    Messrs. Udvar-Házy's and Plueger's base salary did not change. In 2016, the compensation committee increased base salaries for our other NEOs as follows: Mr. Chen, $7,000 to $922,000, Mr. Levy $6,750 to $810,000 and Mr. Willis $35,000 to $535,000. In determining Mr. Wills' base salary, the compensation committee took into account his performance in 2015 and market information.

Annual Cash Incentives.    Subject to the achievement of key business results for 2016, we plan to pay annual cash incentives for 2016 to recognize individuals based on their contributions to those results. Similar to last year, the compensation committee developed the following 2016 performance-based guidelines for the payment of annual incentive awards to our NEOs:

  Performance Measures



Component
Weighting


 
  Overall Revenue   20 %  
  Pre-Tax Operating Margin     20 %  
  Pre-Tax Return on Equity   20 %  
  Dollar Value of Aircraft Added to our Fleet     20 %  
  Strategic Objectives   20 %  

Long-Term Equity Incentive Awards

In February 2016, we made long-term equity incentive awards to each of our NEOs consistent with the process and similar to formulation used in 2015 (the "February 2016 Awards"). The grant-date value of the February 2016 Award to our Chairman and CEO had the same grant-date value as the annual equity award made to him in 2015. These long-term equity incentive awards were in the form of Book Value RSUs and TSR RSUs. The compensation committee continues to believe that this mix of Book Value RSUs and TSR RSUs creates a balanced incentive because the RSUs provide the executives the incentive to steadily increase the book value of the Company while seeking an overall increase in TSR over a three-year period. The compensation committee, as it did with last year's grant, reset the beginning per share book value for the 2016 Book Value RSUs grants to the actual book value per share on December 31, 2015. The Company's per share book value must steadily increase from December 31, 2015 for the shares to vest. Because the Company is a capital-intensive business (acquiring and leasing commercial aircraft), the book value, which is the Company's assets minus its liabilities, is an important measure of the Company's value. All awards were made under our 2014 Equity Incentive Plan.

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The chart below shows the number of shares of Class A Common Stock underlying the February 2016 Awards at the time of grant:

     

Number of Book
Value RSUs





Target / Maximum
Number of
TSR RSUs



 
  Mr. Udvar-Házy   59,438   59,438/118,876    
  Mr. Plueger     42,597     42,597/85,194    
  Mr. Chen   15,180   15,180/30,360    
  Mr. Levy     13,131     13,130/26,260    
  Mr. Willis   6,980   6,980/13,960    

Long-Term Cash Bonuses Changed to Long-Term Equity Incentives

Since our inception, all of our employees were eligible to participate in our Amended and Restated Deferred Bonus Plan and receive long-term cash bonuses. The purpose of the plan is to provide retention incentives that are time-vested and based on amounts already earned, thereby providing a balance against our incentives that are tied to uncertain, future performance. Under the plan, our employees have an opportunity to receive a cash bonus in an amount equal to a percentage of the aggregate amount of base salary and annual and other short-term cash bonus compensation paid with respect to a particular year. The deferred bonus will generally vest upon the second anniversary of the end of the year with respect to which the award was made, provided that the employee is still employed by us on a full-time basis on that date.

In response to evolving compensation practices and stockholder comments regarding the levels of cash compensation paid to our named executive officers, the compensation committee reduced the amount of their cash compensation opportunities, including for each of our NEOs, by replacing cash deferred bonuses with long-term equity incentives consisting of time-vesting restricted stock units. Beginning in 2016, instead of a long-term cash bonus, we made long-term equity incentive awards to our executive officers consisting of time-vesting RSUs that cliff vest (100%) on December 31, 2017, if the executive officer is still employed by the Company. We determined the value of the time-vesting RSUs using the same criteria used to determine long-term cash bonuses. Under their employment agreements, Messrs. Udvar-Házy and Plueger have a right to receive a deferred cash bonus in an amount equal to 9% of his aggregate amount of base salary and annual and other short-term cash bonus compensation paid ("annual cash compensation") with respect to a particular year. They agreed to waive this right and received time-vesting RSUs with a grant date value of 9% of their respective 2015 annual cash compensation.

The 2016 time-vesting RSU grants are set forth below:

     
Number of RSUs Granted(1)
 
  Mr. Udvar-Házy   13,073    
  Mr. Plueger     10,894    
  Mr. Chen   6,340    
  Mr. Levy     5,663    
  Mr. Willis   2,833    
1.
Time-vesting RSUs were made under our 2014 Equity Incentive Plan on February 24, 2016 and vest on December 31, 2017.
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Tax and Accounting Considerations

Section 162(m) of the U.S. Internal Revenue Code of 1986, as amended (the "Code"), generally disallows a federal income tax deduction for public companies for compensation in excess of $1.0 million paid for any fiscal year to the chief executive officer and the three other most highly compensated executive officers (other than the chief financial officer) unless the compensation qualifies as performance-based. Certain qualified performance-based compensation is not subject to the deduction limit. The Book Value RSUs, the TSR RSUs and the annual cash bonuses granted in 2015 to executive officers subject to Section 162(m) are expected to be tax deductible. Although tax consequences are considered in its compensation decisions, the compensation committee has not adopted a policy that all compensation must be deductible. Rather, the compensation committee gives priority to the overall compensation objectives discussed above.

Section 409A of the Code imposes an excise tax on the recipient of certain non-qualified deferred compensation. The compensation committee attempts to structure all executive compensation to comply with, or be exempt from, Section 409A.

The Company accounts for stock-based compensation in accordance with FASB ASC Topic 718, which requires the Company to recognize compensation expense for share-based payments (including stock options and other forms of equity compensation). FASB ASC Topic 718 is taken into account by the compensation committee when determining equity based compensation awards.

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Compensation Committee Report

Management has prepared the Compensation Discussion and Analysis set forth above. The compensation committee of the Board of Directors has reviewed and discussed the Compensation Discussion and Analysis with the Company's management. Based on this review and discussion, the compensation committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

Compensation Committee

Dr. Ronald D. Sugar, Chairman
Cheryl Gordon Krongard
Robert A. Milton

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Executive Compensation Tables

Summary Compensation Table

The following table summarizes compensation paid to or earned by our NEOs during the fiscal years ended December 31, 2015, 2014 and 2013.

Name and principal position

Year


Salary
($)




Bonus
($)(1)





Stock
awards*
($)(2)







Non-Equity
Incentive Plan
Compensation
($)(3)







All other
compensation
($)(4)




Total
($)
 
Steven F. Udvar-Házy   2015   1,800,000   456,840   4,316,339   2,340,000   166,754   9,079,933  
Chairman and Chief   2014   1,800,000   347,328   3,897,384   3,420,000   209,717   9,674,429  
Executive Officer   2013   1,800,000   526,291   3,376,861   3,276,000   142,934   9,122,086  
John L. Plueger     2015     1,500,000     380,700     3,093,352     1,950,000     88,890     7,012,942  
President and Chief     2014     1,500,000     258,552     2,793,105     2,850,000     80,373     7,482,030  
Operating Officer     2013     1,500,000     410,561     2,412,042     2,730,000     70,242     7,122,845  
Jie Chen   2015   914,167   246,881   1,229,799   1,248,975   31,261   3,671,083  
Executive Vice President &   2014   905,596   228,500   1,063,983   2,141,502   30,191   4,369,772  
Managing Director, Asia   2013   876,563   303,148   930,018   2,027,917   25,470   4,163,116  
Grant A. Levy     2015     802,417     185,626     945,556     1,096,436     31,261     3,061,296  
Executive Vice President     2014     794,375     139,148     933,331     1,516,675     30,191     3,413,720  
      2013     773,333     226,930     841,188     1,410,500     31,850     3,283,801  
Gregory B. Willis   2015   491,667   67,085   763,157   585,000   16,726   1,923,635  
Senior Vice President and   2014   443,333   43,969   409,224   641,250   16,441   1,554,217  
Chief Financial Officer   2013   401,969   25,886   306,571   492,492   50,449   1,277,367  
*
Stock awards consist of RSUs relating to shares of our Class A Common Stock.

(1)
Bonus:    The 2015 bonus amounts are the payout of deferred bonuses vested on December 31, 2015.

(2)
Stock Awards:    These amounts represent the aggregate grant date fair value of awards of RSUs granted to our NEOs, computed in accordance with GAAP. Assumptions used in the calculations of these amounts, which do not correspond to the actual value that may be realized by the NEO, are included in Note 11 "Stock Based Compensation" to the financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015. The value of the full award for each of Messrs. Udvar-Házy, Plueger, Chen, Levy and Willis at 200% is $6,780,986, $4,859,662, $1,844,844, $1,485,454 and $1,024,540 respectively.

(3)
Non-Equity Incentive Plan Compensation.    The amount set forth for each of Messrs. Udvar-Házy, Plueger, Chen, Levy and Willis represents his annual incentive award for 2015.

(4)
Premium Payments:    In 2015, we paid premiums on term life insurance policies for Messrs. Udvar-Házy, Plueger, Chen, Levy, and Willis, in the aggregate amounts of $40,696, $9,659, $3,421, $3,421, and $3,226, respectively.


401(k) Employer Matching Contributions:    In 2015, we made matching contributions to a 401(k) savings plan that we maintain for our employees of $27,840 for each of Messrs. Udvar-Házy, Plueger, Chen, and Levy and $13,500 for Willis, in accordance with our policy.


Personal Aircraft Usage:    In 2015, the incremental cost of the personal use of the Company aircraft for Mr. Udvar-Házy was $98,218 and for Mr. Plueger was $51,391 and as described above under Compensation Discussion and Analysis—Elements of the Executive Compensation Program—Personal Use of Company Aircraft.
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Grants of Plan-Based Awards

The following table sets forth information concerning grants of plan-based awards made to our NEOs during the fiscal year ended December 31, 2015.

           



Estimated future
payouts under
Non-equity incentive
plan awards







All Other
Stock
Awards






Estimated future payouts
under Equity incentive
plan awards









Grant
date
fair
value of
stock
and
 
                 
Name


Grant
date(s)(1)


Type of award


Target
($)




Maximum
($)


 

Threshold
(#)(2)




Target
(#)




Maximum
(#)(3)



option
awards(4)
 
Mr. Udvar-Házy                                      
    Annual Bonus   $ 1,800,000   $ 3,600,000   $   $   $   $   $  
  2/24/2015   Book Value RSU           46,902     1,851,691  
  2/24/2015   TSR RSU         11,725   46,901   93,802   2,464,648  
Mr. Plueger                                                      
          Annual Bonus     1,500,000     3,000,000                      
      2/24/2015   Book Value RSU                     33,613         1,327,041  
      2/24/2015   TSR RSU                 8,403     33,612     67,224     1,766,311  
Mr. Chen                                      
    Annual Bonus   915,000   1,830,000            
  2/24/2015   Book Value RSU           11,704     462,074  
  2/24/2015   TSR RSU         2,926   11,704   23,408   615,045  
  3/04/2015   Time Vesting RSU       4,000         152,680  
Mr. Levy                                                      
          Annual Bonus     803,250     1,606,500                      
      2/24/2015   Book Value RSU                     10,275         405,657  
      2/24/2015   TSR RSU                 2,569     10,274     20,548     539,899  
Mr. Willis                                      
    Annual Bonus   375,000   750,000            
  2/24/2015   Book Value RSU           4,975     196,413  
  2/24/2015   TSR RSU         1,244   4,974   9,948   261,384  
  3/04/2015   Time Vesting RSU       8,000         305,360  
                 
(1)
Grant Date:    The grant date for the RSU award is the effective date of grant approved by the compensation committee of our Board of Directors.

(2)
Estimated future payouts under Equity incentive plan awards Threshold:    Represents the number of shares issuable under total stockholder return (TSR) RSUs if the company's ranking within the S&P 400 Mid-Cap Index is at the 25th percentile as of December 31, 2017.

(3)
Estimated future payouts under Equity incentive plan Maximum:    Represents the number of shares issuable under TSR RSUs if the company's ranking within the S&P 400 Mid-Cap Index is at 85th percentile or higher as of December 31, 2017.

(4)
Grant date fair value of stock and option awards:    The grant date fair value for each award is computed in accordance with GAAP. Assumptions used in the calculations of these amounts, which do not correspond to the actual value that may be realized by the NEOs, are included in Note 11 "Stock Based Compensation" to the financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.
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Outstanding Equity Awards at Fiscal Year-End

The following table sets forth information concerning option awards and stock awards for our NEOs outstanding as of the end of the fiscal year ended December 31, 2015.

   
Option awards*

Stock awards  
               
Name



Grant
date









Number of
securities
underlying
unexercised
options
(#)(1)
Exercisable











Option
exercise
price
($)







Option
expiration
date









Number
of Units
that
have
not
vested












Value of
Units
that
have
not
vested














Equity incentive
plan awards:
number of
unearned
shares, units or
other rights
that have not
vested (#)
















Equity incentive
plan awards:
market value or
payout value of
unearned
shares, units or
other rights
that have not
vested ($)(2)
 
Mr. Udvar-Házy   6/4/2010   1,738,500   $ 20.00   6/4/2020         $  
  8/11/2010   1,352   20.00   8/11/2020          
  2/25/2013             17,519 (3) 586,536  
  2/25/2013             62,537 (4) 2,093,735  
  2/25/2014             31,144 (5) 1,042,701  
  2/25/2014             46,714 (6) 1,563,985  
  2/24/2015             46,902 (7) 1,570,279  
  2/24/2015             46,901 (8) 1,570,245  
Mr. Plueger     6/4/2010     700,000     20.00     6/4/2020                  
      8/11/2010     10,806     20.00     8/11/2020                  
      2/25/2013                         12,514 (3)   418,969  
      2/25/2013                         44,669 (4)   1,495,519  
      2/25/2014                         22,320 (5)   747,274  
      2/25/2014                         33,478 (6)   1,120,843  
      2/24/2015                         33,613 (7)   1,125,363  
      2/24/2015                         33,612 (8)   1,125,330  
Mr. Chen   8/11/2010   140,000   20.00   8/11/2020          
  4/25/2011   150,000   28.80   4/25/2021          
  2/25/2013             4,826 (3) 161,574  
  2/25/2013             17,223 (4) 576,622  
  2/25/2014             8,502 (5) 284,647