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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 Pursuant to Rule 14a-12
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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1)
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Title of each class of securities to which transaction applies:
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2)
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Aggregate number of securities to which transaction applies:
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3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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4)
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Proposed maximum aggregate value of transaction:
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5)
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Total fee paid:
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☐
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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1)
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Amount Previously Paid:
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2)
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Form, Schedule or Registration Statement No.:
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3)
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Filing Party:
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4)
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Date Filed
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Sincerely,
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Joseph P. Adams, Jr.
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Chairman of the Board of Directors
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(i)
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a proposal to elect two Class III directors to serve until the 2024 annual meeting of shareholders and until their successors are duly elected or appointed and qualified;
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(ii)
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a proposal to approve the appointment of Ernst & Young LLP as independent registered public accounting firm for the Company for fiscal year 2021; and
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(iii)
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any other business properly presented at the Annual Meeting.
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By Order of the Board of Directors,
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/s/ Kevin P. Krieger
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Kevin P. Krieger
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Secretary
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(i)
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a proposal to elect two Class III directors to serve until the 2024 annual meeting of shareholders and until their successors are duly elected or appointed and qualified;
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(ii)
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a proposal to approve the appointment of Ernst & Young LLP as independent registered public accounting firm for the Company for fiscal year 2021; and
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(iii)
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any other business that may properly come before the annual meeting of shareholders or any adjournment of the annual meeting.
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(i)
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FOR the election of the nominees to our Board of Directors;
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(ii)
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FOR the approval of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021; and
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(iii)
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in the discretion of the proxy holder on any other business that properly comes before the Annual Meeting or any adjournment or postponement thereof.
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send written notice of revocation, prior to the Annual Meeting, to our Secretary, Mr. Kevin P. Krieger, at Fortress Transportation and Infrastructure Investors LLC, 1345 Avenue of the Americas, 45th Floor, New York, New York 10105;
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sign, date and mail a new proxy card to our Secretary;
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dial the number provided on the proxy card and vote again;
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log onto the Internet site provided on the proxy card and vote again; or
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attend the Annual Meeting and vote your shares in person.
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(i)
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FOR the election of the nominees to our Board of Directors; and
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(ii)
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FOR the approval of the appointment of Ernst & Young LLP as independent registered public accounting firm for the Company for fiscal year 2021.
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Class
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Term Expiration
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Director
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Age
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Class I
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2022
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Paul R. Goodwin
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78
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Ray M. Robinson
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73
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Class II
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2023
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Joseph P. Adams, Jr.
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63
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Judith A. Hannaway
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69
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Martin Tuchman
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80
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Class III
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2021
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A. Andrew Levison
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64
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Kenneth J. Nicholson
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50
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Joseph P. Adams, Jr.
Chief Executive Officer and
Director since May 2015;
Chairman since May 2016
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Mr. Adams has served as our Chief Executive Officer and on our Board of Directors since May 2015, and he became the Chairman of our Board of Directors in May 2016. He is a member of the Management Committee of Fortress Investment Group LLC (“Fortress”) and is a Managing Director at Fortress within the Private Equity Group. He has served as a member of the board of directors of Seacastle, Inc., SeaCube Container Leasing Ltd., Aircastle Limited and RailAmerica Inc. Previously, Mr. Adams was a partner at Brera Capital Partners and at Donaldson, Lufkin & Jenrette where he was in the transportation industry group. In 2002, Mr. Adams served as the first Executive Director of the Air Transportation Stabilization Board. Mr. Adams received a B.S. in Engineering from the University of Cincinnati and an M.B.A. from Harvard Business School. Mr. Adams’ experience, including his role serving as Deputy Chairman on a number of boards for portfolio companies of Fortress, provides the Board with valuable insights into how boards at other companies address issues similar to those faced by the Company. In addition, his experience as a private equity investor and investment and merchant banker provides the Board with valuable guidance on financial, strategic planning and investor relations matters, particularly as it relates to transportation related industries.
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Paul R. Goodwin
Director since May 2015
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Mr. Goodwin has served on our Board of Directors since May 2015. Mr. Goodwin also served on the board of directors of SeaCube Container Leasing Ltd (which went private in 2013) from 2009 through 2017, on the board of directors of RailAmerica, Inc. from October 2009 through October 2012, on the board of directors of Manhattan Associates, Inc. from April 2003 through May 2011, and on the board of directors of the National Railroad Retirement Investment Trust from 2003 through 2006. From June 2003 through 2004, Mr. Goodwin served as a consultant to CSX Corporation, which, through its subsidiaries, operates the largest rail network in the eastern United States. From April 2000 until June 2003, Mr. Goodwin served as vice-chairman and chief financial officer of CSX Corporation. Mr. Goodwin started with CSX Corporation in 1965 and held various senior management positions with entities affiliated with CSX Corporation group, including executive vice president and chief financial officer, senior vice president finance and planning and executive vice president of finance and administration. Mr. Goodwin graduated from Cornell University with a B.S. in Civil Engineering and received an M.B.A. from George Washington University. Mr. Goodwin’s approximately fifty years of experience, including serving as vice-chairman and chief financial officer of CSX Corporation, is highly relevant to the Company. His experience provides the board of directors with a deep understanding of the freight railroad business and also provides financial expertise to the board of directors, including an understanding of financial accounting and reporting, including internal controls, and corporate finance and capital markets.
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Name
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Fees Earned or
Paid in Cash
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Share Awards
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Option
Awards(3)
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Total
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Paul R. Goodwin(1)
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$85,000
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$75,000
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—
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$160,000
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Judith A. Hannaway
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$150,000
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—
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—
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$150,000
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A. Andrew Levison
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$150,000
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—
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—
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$150,000
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Ray M. Robinson(1)
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$75,000
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$75,000
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—
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$150,000
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Martin Tuchman(2)
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—
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$150,000
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—
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$150,000
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(1)
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In 2020, Messrs. Goodwin and Robinson each elected to receive $75,000 of their compensation for services as a director in the form of Common Shares in lieu of cash.
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(2)
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In 2020, Mr. Tuchman elected to receive all $150,000 of the compensation for his services as a director in the form of Common Shares in lieu of cash.
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(3)
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As of December 31, 2020, each of our non-employee directors held a fully vested option to purchase 5,000 Common Shares.
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(a)
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within the preceding three years: (i) the director was employed by the Company or its Manager; (ii) an immediate family member of the director was employed by the Company or its Manager as an executive officer; (iii) the director or an immediate family member of the director received more than $120,000 per year in direct compensation from the Company, its Manager or any controlled affiliate of its Manager (other than director or committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent on continued service)); (iv) the director was employed by or affiliated with the independent registered public accounting firm of the Company or its Manager; (v) an immediate family member of the director was employed by the independent registered public accounting firm of the Company or its Manager as a partner, principal or manager; or (vi) an executive officer of the Company or its Manager was on the compensation committee of a company which employed the director, or which employed an immediate family member of the director as an executive officer; or
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(b)
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he or she is an executive officer of another company that does business with the Company and the annual sales to, or purchases from, the Company is the greater of $1 million, or two percent of such other company’s consolidated gross annual revenues.
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Name
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Age
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Position
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Joseph P. Adams, Jr.
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63
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Chief Executive Officer and Chairman of the Board of Directors
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Scott Christopher
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48
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Chief Financial Officer
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Eun Nam
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39
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Chief Accounting Officer
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Base Salary — Our Manager paid each of Mr. Christopher and Ms. Nam a base salary of $200,000 in 2020 to assist each with paying basic living expenses during the calendar year;
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Bonus — Our Manager paid Mr. Christopher a discretionary bonus of $700,000 and Ms. Nam a discretionary bonus of $455,000 in early 2021 based on its subjective review of their respective performances in 2020; and
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Other Compensation — Our Manager also provides Mr. Christopher and Ms. Nam with 401(k) matching contributions and company-paid life insurance premiums, which the Manager believes are reasonable, competitive and consistent with the Manager’s overall executive compensation objectives to reward and retain talented and experienced individuals.
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Name and Principal Position
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Year
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Salary ($)
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Bonus ($)
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Stock Awards ($)
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All Other
Compensation ($)
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Total ($)
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Scott Christopher, Chief Financial Officer
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2020
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200,000
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700,000
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8,868(1)
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908,868
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2019
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200,000
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700,000
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8,796
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908,796
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2018
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200,000
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600,000
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8,496
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808,496
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Eun Nam, Chief Accounting Officer
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2020
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200,000
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455,000
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8,868(1)
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663,868
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(1)
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This amount consists of (i) $8,400 of 401(k) matching contributions made by the Manager and (ii) $468 of life insurance premiums paid by the Manager.
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Name
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Number of Securities
Underlying
Exercisable Options (#)
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Number of Securities
Underlying Not-Yet
Exercisable Options (#)(1)
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Option Exercise
Price ($)
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Option Expiration
Date(2)
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Joseph P. Adams, Jr.
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—
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57,538
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14.99
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9/12/2029
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—
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68,698
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16.74
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11/27/2029
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—
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70,000
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18.65
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1/16/2028
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—
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12,634
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15.83
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12/6/2028
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(1)
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Upon the grant of options to the Manager (or an affiliate), such options are fully vested and become exercisable over a 30-month period (the “Total Exercisability Period”) in monthly installments beginning on the first of each month following the month in which the options were granted. When Tandem Options are granted, the Manager options become exercisable in monthly installments over a portion of the Total Exercisability Period equal to 30 months, minus the product of (i) the ratio of Manager options not subject to corresponding Tandem Options to the total number of Manager options (including Manager options subject to corresponding Tandem Awards) multiplied by (ii) 30 (such period, the “Manager Exercisability Period”). Following the Manager Exercisability Period, the Tandem Options vest in generally monthly installments over the remainder of the Total Exercisability Period and become exercisable only at the end of the Total Exercisability Period.
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(2)
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Represents the expiration date of the option held by the Manager (or an affiliate) that is the basis for the Tandem Options held by the officer. In general, the expiration date of the Tandem Options occurs prior to the expiration date of the underlying Manager options.
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(i)
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voting power, which includes the power to vote, or to direct the voting of, our Common Shares; and/or
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(ii)
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investment power, which includes the power to dispose of, or to direct the disposition of, our Common Shares.
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Name and Address of Beneficial Owner(1)
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Amount and
Nature of
Beneficial
Ownership
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Percent of
Class(2)
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The Washington State Investment Board(3)
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11,785,779
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13.9%
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Morgan Stanley(4)
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7,812,440
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9.1%
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Fortress Investment Group LLC and certain affiliates(5)
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2,291,477
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2.6%
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Paul R. Goodwin(6)
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101,635
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*
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Judith A. Hannaway(6)
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5,000
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*
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A. Andrew Levison(5)
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5,000
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*
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Kenneth J. Nicholson(6)
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139,600
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*
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Ray M. Robinson(6)
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36,640
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*
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Martin Tuchman(6)
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532,734
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*
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Joseph P. Adams, Jr. (6)
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257,462
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*
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Scott Christopher(6)
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10,300
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*
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Eun Nam(6)
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2,500
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*
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All directors, nominees and executive officers as a group (9 persons)
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1,090,871
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1.3%
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*
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Denotes less than 1%.
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(1)
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The address of all officers and directors listed above, and of Fortress and certain affiliates, is in the care of Fortress Investment Group LLC, 1345 Avenue of the Americas, 45th Floor, New York, NY 10105.
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(2)
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Percentages shown assume the exercise by such persons of all options to acquire Common Shares that are exercisable within 60 days of April 15, 2021, and no exercise by any other person.
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(3)
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Sole voting and dispositive power in respect of 11,785,779 shares, based on a Schedule 13G/A filed with the SEC on April 29, 2020. The Washington State Investment Board’s address is 2100 Evergreen Park Drive SW, P.O. Box 40916, Olympia, WA 98504.
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(4)
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Shared voting power of in respect of 7,606,235 shares; shared dispositive power in respect of 7,812,440 shares, as stated in a Schedule 13G/A filed with the SEC on February 11, 2021. Morgan Stanley’s address is 1585 Broadway, New York, NY 10036.
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(5)
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Includes 713,694 shares held by Fortress Worldwide Transportation and Infrastructure Investors LP, 34,950 shares held by FTAI Offshore Holdings L.P. and 1,542,833 options held by the Manager that are exercisable within 60 days of April 15, 2021.
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(6)
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Includes with respect to each of these individuals the following number of shares issuable upon the exercise of options that are currently exercisable or exercisable within 60 days of April 15, 2021: Goodwin—5,000; Hannaway—5,000; Levison—5,000; Nicholson—82,634; Robinson—5,000; Tuchman—5,000; Adams—82,634; Christopher—0; and Nam—0.
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•
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enlarge the obligations of any shareholder without such shareholder’s consent, unless approved by at least a majority of the type or class of shares so affected;
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•
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provide that we are not dissolved upon an election to dissolve our limited liability company by our Board of Directors that is approved by holders of a majority of the Common Shares;
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•
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change the term of existence of the Company; or
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•
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give any person the right to dissolve our limited liability company other than our Board of Directors’ right to dissolve our limited liability company with the approval of holders of a majority of the total combined voting power of our Common Shares.
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•
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a change in our name, the location of our principal place of our business, our registered agent or our registered office;
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•
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the admission, substitution, withdrawal or removal of shareholders in accordance with our LLC Agreement;
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the merger of the Company or any of its subsidiaries into, or the conveyance of all of our assets to, a newly-formed entity if the sole purpose of that merger or conveyance is to effect a mere change in our legal form into another limited liability entity;
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•
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a change that our Board of Directors determines to be necessary or appropriate for us to qualify or continue our qualification as a company in which our members have limited liability under the laws of any state or to ensure that we will not be treated as an association taxable as a corporation or otherwise taxed as an entity for U.S. federal income tax purposes other than as we specifically so designate;
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•
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an amendment that our Board of Directors determines, based upon the advice of counsel, to be necessary or appropriate to prevent us, members of our board, or our officers, agents or trustees from in any manner being subjected to the provisions of the Investment Company Act of 1940 (the “1940 Act”), the Investment Advisers Act of 1940, or “plan asset” regulations adopted under the Employee Retirement Income Security Act of 1974, or ERISA, whether or not substantially similar to plan asset regulations currently applied or proposed;
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•
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an amendment or issuance that our Board of Directors determines to be necessary or appropriate for the authorization of additional securities;
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any amendment expressly permitted in our LLC Agreement to be made by our Board of Directors acting alone;
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•
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an amendment effected, necessitated or contemplated by a merger agreement that has been approved under the terms of our LLC Agreement;
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•
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any amendment that our Board of Directors determines to be necessary or appropriate for the formation by us of, or our investment in, any corporation, partnership or other entity, as otherwise permitted by our LLC Agreement;
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•
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a change in our fiscal year or taxable year and related changes; and
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•
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any other amendments substantially similar to any of the matters described in the clauses above.
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•
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do not adversely affect the shareholders in any material respect;
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•
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are necessary or appropriate to satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any federal or state agency or judicial authority or contained in any federal or state statute;
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•
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are necessary or appropriate to facilitate the trading of shares or to comply with any rule, regulation, guideline or requirement of any securities exchange on which the shares are or will be listed for trading, compliance with any of which our Board of Directors deems to be in the best interests of us and our shareholders;
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•
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are necessary or appropriate for any action taken by our Board of Directors relating to splits or combinations of shares under the provisions of our LLC Agreement; or
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•
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are required to effect the intent expressed in the registration statement for our initial public offering or the intent of the provisions of our LLC Agreement or are otherwise contemplated by our LLC Agreement.
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•
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Fortress and its respective affiliates, including the Manager and Fortress Transportation and Infrastructure Master GP LLC (the “General Partner” and the general partner of the Company’s subsidiary, Fortress Transportation and Infrastructure General Partnership (the “Partnership”)), have the right to, and have no duty to abstain from, exercising such right to, engage or invest in the same or similar business as us, do business with any of our clients, customers or vendors or employ or otherwise engage any of our officers, directors or employees;
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•
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if Fortress and its respective affiliates, including the Manager and General Partner, or any of their officers, directors or employees acquire knowledge of a potential transaction that could be a corporate opportunity, it has no duty to offer such corporate opportunity to us, our shareholders or affiliates;
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•
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we have renounced any interest or expectancy in, or in being offered an opportunity to participate in, such corporate opportunities; and
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•
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in the event that any of our directors and officers who is also a director, officer or employee of Fortress and their respective affiliates, including the Manager and General Partner, acquire knowledge of a corporate opportunity or is offered a corporate opportunity, provided that this knowledge was not acquired solely in such person’s capacity as our director or officer and such person acted in good faith, then such person is deemed to have fully satisfied such person’s fiduciary duty and is not liable to us if Fortress and their respective affiliates, including the Manager and General Partner, pursues or acquires the corporate opportunity or if such person did not present the corporate opportunity to us.
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2020
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Management Fee(1)
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$18,519
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Incentive Allocations
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$—
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Expense Reimbursements(2)
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$11,633
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(1)
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We pay our Manager a management fee, which is determined by taking the average value of total equity (excluding non-controlling interests) determined on a consolidated basis in accordance with GAAP at the end of the two most recently completed months multiplied by an annual rate of 1.50%, and is payable monthly in arrears in cash. Manager uses the proceeds from its management fee in part to pay compensation to its officers and employees who, notwithstanding that certain of them also are our officers and directors, receive no cash compensation directly from us.
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(2)
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The Management Agreement provides that we will pay or reimburse our Manager and its affiliates for performing certain legal, accounting, due diligence tasks and other services that outside professionals or outside consultants otherwise would perform, provided that such costs and reimbursements are no greater than those which would be paid to outside professionals or consultants. The Manager is responsible for all of its other costs incident to the performance of its duties under the Management Agreement, including compensation of the Manager’s employees, rent for facilities and other “overhead” expenses; the Company will not reimburse the Manager for these expenses.
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Year
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Audit Fees
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Audit-Related Fees
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Tax Fees
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All Other Fees
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2020
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$3,166
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$—
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| |
$209
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$38
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2019
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| |
$3,143
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$56
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$61
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$42
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By Order of the Board of Directors,
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/s/ Kevin P. Krieger
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Kevin P. Krieger
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Secretary
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