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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

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WILLIS LEASE FINANCE CORPORATION

NOTICE OF 20132014 ANNUAL MEETING OF STOCKHOLDERS

To our Stockholders:

        You are cordially invited to attend the 20132014 Annual Meeting of Stockholders of WILLIS LEASE FINANCE CORPORATION, which will be held at our executive offices, 773 San Marin Drive, Suite 2215, Novato, California, 94998 at 2:00 p.m. local time on Tuesday,Thursday, May 28, 2013.29, 2014. Directions to attend the Annual Meeting where you may vote in person can be found on our website:www.willislease.com (see "Investor""Investors").

        In addition to any other business that may properly come before the meeting or any adjournment or postponement thereof, the following proposals are to be voted on at the Annual Meeting:

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To elect two Class IIII Directors to serve until the 20162017 Annual Meeting of Stockholders: Charles F. Willis, IVRobert T. Morris and Hans Joerg Hunziker.W. William Coon, Jr. The Board of Directors recommends that you vote FOR this proposal.



•

An advisory vote on executive compensation as disclosed in this proxy statement. The Board of Directors recommends that you vote FOR approval of such executive compensation.



•

To ratify the appointment of KPMG LLP as the Company's independent registered public accounting firm. The Board of Directors recommends that you vote FOR this proposal.

        The Board of Directors has fixed the close of business on April 1, 20132014 as the record date for determining those stockholders who will be entitled to notice of and to vote at the meeting. The stock transfer books will not be closed between the record date and the date of the meeting. A quorum comprising the holders of the majority of the outstanding shares of our common stock on the record date must be present or represented for the transaction of business at the 20132014 Annual Meeting of Stockholders. Accordingly, it is important that your shares be represented at the meeting.WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE AS PROMPTLY AS POSSIBLE, to ensure that your shares will be voted at the 20132014 Annual Meeting of Stockholders. You may revoke your proxy at any time prior to the time it is voted.

        The proxy material is being mailed to you on or about April 26, 2013.28, 2014. Please read the proxy material carefully. Your vote is important, and we appreciate your cooperation in considering and acting on the matters presented.

		By Order of the Board of Directors,
		Charles F. Willis, IVDean M. Poulakidas Chairman of the BoardSenior Vice President, General Counsel and Secretary

April 26, 201325, 2014

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WILLIS LEASE FINANCE CORPORATION

PROXY STATEMENT

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You should read the entire proxy
statement carefully prior to returning your proxy

PROXY STATEMENT
FOR
20132014 ANNUAL MEETING OF STOCKHOLDERS
OF
WILLIS LEASE FINANCE CORPORATION

To Be Held on May 28, 201329, 2014

SOLICITATION AND VOTING OF PROXIES

General

        This proxy statement is furnished in connection with the solicitation by the Board of Directors (also referred to as the "Board") of WILLIS LEASE FINANCE CORPORATION ("we," "us," "our," "Willis Lease" or the "Company") of proxies to be voted at the 20132014 Annual Meeting of Stockholders, which will be held at 2:00 p.m. local time on Tuesday,Thursday, May 28, 201329, 2014 at our executive offices, located at 773 San Marin Drive, Suite 2215, Novato, California 94998, or at any adjournments or postponements thereof, for the purposes set forth in the accompanying Notice of 20132014 Annual Meeting of Stockholders.

        This proxy statement is being mailed to stockholders on or about April 26, 2013.28, 2014. Our 20122013 Annual Report is being mailed to stockholders concurrently with this proxy statement. You should not regard the 20122013 Annual Report as proxy soliciting material or as a communication by means of which any solicitation of proxies is to be made.

Important Notice Regarding the Availability of Proxy Materials for
the Annual Meeting to be held on May 28, 2013:29, 2014:
The Proxy Statement and the 20122013 Annual Report are also available at
https://materials.proxyvote.com/970646.

Voting

        The close of business on April 1, 20132014 is the record date for determining whether you in your capacity as a stockholder are entitled to notice of and to vote at the 20132014 Annual Meeting of Stockholders. As of that date, we had 8,685,2808,436,028 shares of common stock, $0.01 par value, issued and outstanding. All of the shares of our common stock outstanding on the record date are entitled to vote at the 20132014 Annual Meeting of Stockholders. If you are entitled to vote at the meeting, you will have one vote for each share of common stock you hold with regard to each matter to be voted upon.

        The required quorum for the meeting is a majority of the outstanding shares of common stock eligible to be voted on the matters to be considered at the meeting.

        Shares of our common stock represented by proxies which are properly executed and returned to us on the accompanying proxy card will be voted at the 20132014 Annual Meeting of Stockholders in accordance with the instructions you mark on the proxy card. If you do not mark any instructions on the proxy card, your shares represented by the proxy card will be voted for the election of the Board's nominees as Class IIII Directors, and in favor of Proposal 2.Proposals 2 and 3. In the election for directorsDirectors (Proposal 1), the nominees for Class IIII Directors receiving the highest number of affirmative votes will be elected.

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be elected. The affirmative vote of a majority of the shares voted in person or by proxy at the 20132014 Annual Meeting is required for the adoption of Proposal 2.Proposals 2 and 3.

        If a properly signed proxy or ballot indicates that you abstain from voting or that your shares are not to be voted on a particular proposal, your shares will not be counted as having been voted on that proposal, although your shares will be counted as being in attendance at the meeting for purposes of determining the presence of a quorum. Broker non-votes (i.e., shares held by brokers or nominees, as to which instructions have not been received from beneficial owners or persons entitled to vote, that the broker or nominee does not have discretionary power to vote on a particular matter) are counted towards a quorum, but are not counted for purposes of the proposals in determining whether a matter has been approved by a majority of the shares represented in person or by proxy and entitled to vote.

        Our management does not know of any matters to be presented at the 20132014 Annual Meeting of Stockholders other than those set forth in this proxy statement and in the Notice accompanying this proxy statement. If other matters should properly come before the meeting, the proxy holders will vote on such matters in accordance with their best judgment.

Revocability of Proxies

        If you give a proxy in the form accompanying this proxy statement, you have the right to revoke it at any time before it is voted at the meeting. You may revoke your proxy by:

•

filing an instrument of revocation with our Corporate Secretary;



•

presenting at or prior to the meeting of a duly executed proxy bearing a later date; or



•

attending the meeting and electing to vote in person.

Solicitation

        This solicitation is made by our Board of Directors on our behalf. The entire cost of preparing, assembling and mailing the Notice of 20132014 Annual Meeting of Stockholders, this proxy statement and the enclosed proxy card, and of soliciting proxies, will be paid by us. Proxies will be solicited principally through the use of the mails,mail, but we may solicit proxies personally or by telephone, electronic mail or special letter by our officers and our regular employees for no additional compensation. We have retained American Stock Transfer & Trust and Broadridge to aid in the solicitation at an estimated cost to us of approximately $12,900$9,900 plus out-of-pocket expenses.

INFORMATION ABOUT THE BOARD OF DIRECTORS
AND THE COMMITTEES OF THE BOARD

Board of Directors

        Our Bylaws authorize us to have sixfive Directors. At the present time, the Board consists of sixfive Directors who are divided into three classes of two directors each:Directors in each of Class I Class II and Class III.III and one Director in Class II. One class is elected each year for a three-year term. Gérard Laviec, W. William Coon, Jr., Hans Joerg Hunziker, and Robert T. Morris are independent directors,Directors, as defined in the NASDAQ listing standard. Gérard Laviec, previously a Class II Director, resigned from the Board as of May 31, 2013.

        Our business, property and affairs are managed under the direction of the Board. Directors are kept informed of our business through discussions with our Chairman and Chief Executive Officer and our other officers, by reviewing materials provided to them and by participating in meetings of the Board and its committees. The Board held a total of fourseven meetings during the fiscal year ended December 31, 2012.2013. Each incumbent directorDirector attended at least 75% of the aggregate of:of (i) the total number of meetings of the Board;Board, and (ii) the total number of meetings held by all Committees of the Board on which he served,served; other than Mr. Austin Willis, who was unable to attend two of the fourseven

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Board meetings during 20122013 partly as a result of scheduling conflicts with his military commitment (described

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in more detail under "Principal Occupations, Background and Qualifications of Director Nominees and Continuing Directors."Directors").

Communications with the Board

        You may communicate with the Board of Directors by sending a letter to: Board of Directors, Willis Lease Finance Corporation, c/o Office of the Corporate Secretary, 773 San Marin Drive, Suite 2215, Novato, California 94998. Our Office of the Corporate Secretary will receive your correspondence and forward it to the Board of Directors or to any individual directorDirector or directorsDirectors to whom your communication is directed, unless the communication is unduly hostile, threatening, illegal, does not reasonably relate to us or our business, or is similarly inappropriate. The Office of the Corporate Secretary has the authority to discard any inappropriate communications or to take other appropriate actions with respect to any such inappropriate communications.

Attendance at the Annual Meeting of Stockholders

        DirectorsDirector Charles F. Willis IV and Robert T. Morris attended the 20122013 Annual Meeting of Stockholders; our other directorsDirectors did not attend. We have no policy requiring Board members to attend our annual meeting.

Committees of the Board

        The Board of Directors has an Audit Committee and a Compensation Committee, both currently comprised solely of independent directors,Directors, as defined by the NASDAQ listing standard.standards.

        The Board does not have a nominating committee or committee performing the functions of such a committee. The Board has determined that the function of a nominating committee is adequately fulfilled by the independent directors.Directors. It has not established such a committee and therefore has no nominating committee charter. The full Board of Directors participates in the consideration of any directorDirector nominee.

        Although we have not formally set any specific minimum qualifications that directorDirector nominees must possess, we look for candidates with the appropriate experience in aviation and leasing, a strong professional background, and a general understanding of marketing, finance and other disciplines related to the success of a company in our industry. And although not part of any formal policy, our goal is a balanced and diverse Board, with members whose skills, background and experience are complimentarycomplementary and, together, cover the spectrum of areas that impact our business. Our directorsDirectors are generally nominated by our management or other directors,Directors, and each nominee is evaluated based on the above qualifications and in the context of the Board as a whole. While we do not normally engage professional search firms or other third parties in connection with our Board nomination process, we may do so in the future.

        SinceAs we do not have a history of stockholder nominations of directors,Directors, we do not have a formal policy regarding stockholder nominees to the Board. Under our Bylaws, stockholders wishing to nominate a candidate for directorDirector must give notice to our Corporate Secretary no later than the close of business on the 90th day prior to the first anniversary of our preceding year's annual meeting. If the annual meeting is more than 30 days before or 60 days after such anniversary date, the notice must be delivered no later than the 90th day prior to such annual meeting or the 10th day following the day on which we publicly announce the annual meeting date. The notice should set forth: (i) the name, age, business address and residence address of the nominee; (ii) the principal occupation or employment of the nominee; (iii) the class and number of our shares beneficially owned by the nominee; (iv) a description of all arrangements or understandings between the stockholder and the nominee and any other person(s) pursuant to which the nomination is made by the stockholder; and (v) any other information relating to the nominee that is required to be disclosed in proxy statements for the election

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of directorsDirectors pursuant to Regulation 14A under the Securities Exchange Act of 1934. Nominees proposed by stockholders will be evaluated in the same manner as those proposed by management or existing directors.Directors.

        The Audit Committee oversees our accounting function, internal controls and financial reporting process on behalf of the Board. The NASDAQ's listing rules require that our Audit Committee be composed of at least three independent directors.Directors. The Audit Committee meets with our financial management and our independent registered public accounting firm to review our financial statements and filings, the audit and matters arising from them, and financial reporting procedures, including any significant judgments made in preparation of the financial statements. The Audit Committee currently consists of Directors Robert T. Morris (Chair), Gérard Laviec, W. William Coon, Jr. and Hans Joerg Hunziker. All members of the Audit Committee are able to read and understand financial statements. Mr. Morris also qualifies as an audit committee financial expert, as defined by the SEC, and is financially sophisticated as required by the NASDAQ listing standards. The Committee held fivefour meetings during the 20122013 fiscal year. The Audit Committee's charter is available on the Company's web site (www.willislease.com).

        The Compensation Committee reviews and approves our compensation arrangements for executive officers and administers the 2007 Stock Incentive Plan. The Compensation Committee currently consists of Directors Hans Joerg Hunziker (Chair), Gérard Laviec, W. William Coon, Jr., and Robert T. Morris. The Compensation Committee held fourseven meetings during the 20122013 fiscal year. For additional details, see "Compensation of Executive Officers—Compensation Discussion and Analysis" elsewhere in this proxy statement. The Compensation Committee's charter is available on the Company's web site (www.willislease.com).

        The Board of Directors may also establish a committee of independent Directors, as defined by the NASDAQ listing standards, to address specific issues from time to time. In 2013, such a committee was established to review the transaction with J.T. Power described in more detail under "Certain Relationships and Related Transactions."

Board Leadership Structure

        Our company is led by Charles F. Willis, IV, the founder of the Company, who serves as our Chairman and Chief Executive Officer. This approach is commonly utilized by public companies in the United States and we believe it has been effective for our company as well. Serving in both these roles since the Company was founded has allowed Mr. Willis to be seen by participants in the aviation industry and by our customers, business partners, investors and the other stakeholders as providing strong leadership for our company and in our industry. The Board believes that his combined role is the optimal structure for us and our stockholders because it enables decisive leadership, ensures clear accountability and enhances our ability to consistently communicate our message and strategy to all of our stakeholders. Moreover, Mr. Willis possesses detailed and in-depth knowledge of the issues, opportunities and challenges facing us and our business and, therefore, is best positioned to develop agendas that focus the Board's time and attention on the most critical matters, while minimizing the potential for confusion or duplication of efforts. We recognize that different board leadership structures may be appropriate for companies in different situations and believe that no one structure is suitable for all companies. We believe that our current Board leadership structure is optimal for us because it demonstrates to our employees, suppliers, customers and other stakeholders that Willis Lease is under strong leadership, with a single person setting the tone and having primary responsibility for managing our operations.

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        We have not appointed an independent boardBoard chairman or lead independent director,Director, as we believe that the members of our Board and the two standing Board Committees consisting of independent directorsDirectors provide an appropriate level of oversight. In this regard, the Audit Committee oversees the accounting and financial reporting processes, as well as risk, legal and compliance matters. The Compensation Committee oversees the compensation of our Chairman and Chief Executive Officer, and upon the recommendation of the Chief Executive Officer, the compensation of the other Named Executive Officers. Each of these Committees is led by a chairperson other than the Chairman and Chief Executive Officer and, as discussed in more detail in this proxy, the entire Board of

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Directors is actively involved in overseeing our risk management. The entire Board, or, as appropriate, the independent directors,Directors, monitors matters such as the composition of the Board and its committees, boardBoard performance and "best practices" in corporate governance. Our independent directorsDirectors also conduct meetings in executive session. These meetings are typically held in conjunction with every Board meeting and in 2012 eachmeetings. In 2013 one Board meeting included an independent directors'Directors' session. This allows directorsDirectors to speak candidly on any matters of interest without the Chief Executive Officer or other managers present. We believe this framework strikes a sound balance with appropriate oversight and that appointing an independent boardBoard chairman would not improve the performance of the Board in a material way.

The Board's Role in Risk Oversight

        It is management's responsibility to manage risk and bring to the Board's attention the most material risks to the Company. Our Board, including through the Audit Committee and Compensation Committee, each of which are comprised solely of independent directors,Directors, regularly reviews various areas of significant risk to the Company, and advises and directs management on the scope and implementation of policies, strategic initiatives and other actions designed to mitigate various types of risks. Specific examples of risks primarily overseen by the full boardBoard include competition risks, industry risks, economic risks, liquidity risks, business operations risks and risks related to acquisitions and dispositions. Our Audit Committee regularly reviews with management and the independent auditors significant financial risk exposures and the processes management has implemented to monitor, control and report such exposures. Specific examples of risks primarily overseen by the Audit Committee include risks related to the preparation of Willis Lease's financial statements, disclosure controls and procedures, internal controls and procedures required by the Sarbanes-Oxley Act and the Dodd-Frank Act, accounting, financial and auditing risks, treasury risks (insurance, credit and debt), risks posed by significant litigation matters, risks associated with proposed affiliate transactions, and compliance with the Company's Code of Ethics and other applicable laws and regulations. The Compensation Committee reviews and evaluates risks related to the attraction and retention of talent, risks associated with management succession planning, and risks related to the design of compensation programs established by the Compensation Committee for our executive officers. The Compensation Committee has determined in its reasonable business judgment that our compensation policies and practices for all employees, including executive officers, do not create risks that are reasonably likely to have a material adverse effect on the Company.

Director Compensation

        For details regarding directorDirector compensation, see "Compensation of Executive Officers—Compensation Discussion and Analysis—Director Compensation" elsewhere in this proxy statement.

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Biographical Information

Principal Occupations, Background and Qualifications of Director Nominees and Continuing Directors

        Charles F. Willis, IV is the founder of Willis Lease, has served as Chief Executive Officer and a Director since our incorporation in 1985, served as President until July 2011 (when Donald A. Nunemaker was promoted to that position), and has served as Chairman of the Board of Directors since 1996. Mr. Willis has over 40 years of experience in the aviation industry. From 1975 to 1985, Mr. Willis served as president of Willis Lease's predecessor, Charles F. Willis Company, which purchased, financed and sold a variety of large commercial transport aircraft and provided consulting services to the aviation industry. During 1974, Mr. Willis operated a small business not involved in the aviation industry. From 1972 through 1973, Mr. Willis was Assistant Vice President of Sales at Seaboard World Airlines, a freight carrier. From 1965 through 1972, he held various positions at Alaska Airlines, including positions in the flight operations, sales and marketing departments. As our founder and Chief Executive Officer, Mr. Willis brings to the Board significant senior leadership, sales and marketing, industry, technical and global experience, and a deep institutional knowledge of the Company, its operations and customer relations.

        Hans Joerg Hunziker previously served as one of our Directors from November 2000 until July 1, 2003. He was elected a Class II Director at the 2006 Annual Meeting. Since 2002, Mr. Hunziker has been the owner and CEO of HLF Aviation GmbH (formerly known as Hunziker Lease & Finance), a company he founded in Switzerland which offers independent business consulting services to the aviation industry. From 1998 to 2002, he was the President and Chief Executive Officer of Flightlease AG Ltd., a public company involved in aircraft leasing as a subsidiary of SAirGroup whose headquarters are in Zurich, Switzerland. From 1998 to 2001, he was also co-CEO of GATX Flightlease Management GmbH, an asset management and commercial aircraft leasing company. From 1996 to 1998, he was the Chief Financial Officer of SAirServices Ltd., a group of companies including aircraft maintenance and overhaul, ground handling services, information technology and real estate, and Managing Director of SAirServices Invest Ltd. From 1991 to 1996, he was Chief Financial Officer of Swissair Associated Companies Ltd., a group of 150 companies, primarily in the hotel, catering (Gate Gourmet) and trading business. Mr. Hunziker holds a master's degree in Economics and Business Administration from the University of Zurich. He also received the equivalent of a doctoral degree from the University of Zurich, after successful completion of his thesis on Strategic Planning in the Airline Industry. In addition to previously serving as a directorDirector of Willis Lease, he was Chairman of the Board of Flightlease Holdings (Guernsey) Limited (and a directorDirector of several of its subsidiaries in Guernsey and Bermuda), as well as Chairman of the Board of Flightlease (Netherlands) B.V., SRTechnics Group AG, SRTechnics Switzerland AG, Swisscargo AG and SAirServices Invest AG. He

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was a member of the Board of Directors of Jetbird AG from 2006-2009, and was also previously a

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member of the Board of Directors of each of FlightTechnics LLC, Delaware, Swissport Brazil Ltd., Polygon Insurance Company Ltd. and Gotland Shipping AG. Mr. Hunziker brings to the Board a high level of financial sophistication, broad international exposure and significant experience in commercial aviation and the aviation equipment leasing industry.

Gérard Laviec joined our Board of Directors in February 2002. In 2001, Mr. Laviec retired from his position as President and Chief Executive Officer of CFM International, a partnership between General Electric Company and SNECMA and a major supplier of engines for commercial jets. Mr. Laviec joined the CFM-56 Program in 1976 in its incipient phase. From 1983 to 1995, he served as General Manager in product support engineering, business operations, sales and marketing, and was named President and Chief Executive Officer of CFM International in 1995. Mr. Laviec also served as the Chairman of the Board of Shannon Engine Support, a wholly-owned CFM International subsidiary in Ireland, from 1995 until 2001. Mr. Laviec is a graduate of INSA Lyon, France with a degree in Mechanical Engineering. He served in the French Air Force as a Flight Officer in Search and Rescue teams prior to joining SNECMA. He is a Knight for the French National Order of Merit. Mr. Laviec brings to the Board intimate knowledge about a key aviation industry player and an important supplier of engines to the Company, broad international exposure and insight into challenges associated with managing a global organization, expertise in aviation and engineering generally, and expertise in the engine leasing industry in particular.

        W. William Coon, Jr. spent 34 years at GE Aircraft Engines ("GEAE"), a division of General Electric Company (NYSE:GE), where he served in numerous management positions. Prior to retiring from GEAE in 2000, Mr. Coon was General Manager for Small Commercial Aircraft Services. From 1984 to 1998 he served as Director of Product Support, where he was responsible for supplying global services to the company's regional airline customers. In addition to those executive positions, Mr. Coon was a directorDirector of each of T Group America and Flight Technics from 2003 through 2007. Mr. Coon holds a Bachelor of Science Degree in Aeronautical Engineering from the University of Michigan and a Master of Business Administration from Xavier University. Mr. Coon brings to the Board a valuable technical literacy, knowledge of an important manufacturer and supplier of engines to the Company, and familiarity with the needs of the Company's commercial airline customer base.

        Robert T. Morris is currently President of Robert Morris & Company, a company he founded in 1992. He joined Union Bank of California Leasing in 2004 to establish an innovative equipment leasing group, and served as its President through March 2007. Prior to joining Union Bank of California Leasing, he was a consultant to more than 25 commercial banks for their equipment leasing operations over a 12 year period. He has also worked for Bank of San Francisco, Bank of Montreal and GATX Leasing Corporation. Mr. Morris holds a master's degree from the American Graduate School of International Management and a Bachelor of Arts Degree from the University of Denver with majors in Economics, Political Science and History. Mr. Morris brings to the Board considerable expertise in the aviation equipment leasing industry with a focus on finance and risk evaluation.

        Austin C. Willis was elected to the Board in December 2008. Mr. Willis iswas the founder of J.T. Power LLC, a privately held company engaged in the business of selling commercial jet turbine engine parts and leasing commercial aircraft. HeIn 2013, the Company purchased certain assets and hired employees from J.T. Power, as part of our launching of Willis Aeronautical Services, Inc. Mr. Willis served as J.T. Power's president from its founding in 2004 until 2012, when day-to-day management as president of J.T. Power was transitioned to another individual with Mr. Willis continuing as Chief Executive Officer. This transition was implemented to facilitate Mr. Willis' enlistment in the U.S. armed forces in 2012. He has completed his basic training and is undergoing the selection process to determine his duties in the immediate future. The Board is fully supportive of Mr. Willis' decision to enter into military service and his efforts to continue fulfilling his duties as a member of the Board while undergoing his military training. In addition to his duties with J.T. Power and the U.S. armed forces, since 2006 Mr. Willis has also owned and served as Chief Executive Officer of Aviation Management LLC, an aviation consulting firm. Mr. Willis holds a bachelor's degree from the London School of Economics and Political Science, where he studied finance

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and industrial relations. He is the son of Charles F. Willis, IV. Mr. Willis brings to the Board familiarity with the aviation industry generally with a focus on the after-market disposition of the aircraft engines and parts which comprise the Company's engine portfolio.

PROPOSAL 1
ELECTION OF TWO CLASS IIII DIRECTORS

        Our Board is divided into three classes, each class having a three-year term that expires in successive years. At the 20132014 Annual Meeting of Stockholders, two Directors will be elected in Class III,I, to serve a three-year term expiring at the 20162017 Annual Meeting of Stockholders or until succeeded by another qualified directorDirector who has been duly elected.

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        The nominees for Director in Class IIII are Charles F. Willis, IVRobert T. Morris and Hans Joerg Hunziker.W. William Coon, Jr.

        The proxy holders intend to vote all proxies received by them for the foregoing nominees, unless instructions to the contrary are marked on the proxy. In the event that any nominee is unable or declines to serve as a Director at the time of the 20132014 Annual Meeting of Stockholders, the proxies will be voted for any nominee who shall be designated by the present Board to fill the vacancy. As of the date of this proxy statement, the Board is not aware of any nominee who is unable or will decline to serve as a director.Director.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"THE ELECTION OF THE NOMINEES AS CLASS IIII DIRECTORS.

EXECUTIVE OFFICERS OF WILLIS LEASE FINANCE CORPORATION

        Our executive officers are as follows:

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        Donald A. Nunemaker has been with us since July 1997 and currently serves as our President. Prior to his appointment as President, he served as General Manager—Leasing until July 2011, as Chief Operating Officer until September of 2006, and prior to that as Chief Administrative Officer until March 2001. Mr. Nunemaker also served on our Board of Directors from June to November 2000. Mr. Nunemaker is responsible for managing our day-to-day operation and has been extensively involved in the equipment leasing industry since 1973. From 1995 to 1996, Mr. Nunemaker was President and CEO of LeasePartners, Inc., a leasing company based in Burlingame, California, which was acquired in 1996 by Newcourt Credit Group. From 1990 to 1994, Mr. Nunemaker was Executive Vice President of Concord Asset Management, Inc., an aircraft and computer leasing subsidiary of Concord Leasing, Inc., which was owned by the HSBC Group. Before joining Concord in 1990, Mr. Nunemaker was President and CEO of Banc One Leasing Corporation of New Jersey. Prior to that he spent thirteen years with Chase Manhattan Leasing Company in a variety of senior line and staff positions. Mr. Nunemaker has a Master of Business Administration Degreedegree from Indiana University.

        Bradley S. Forsyth, who currently serves as our Senior Vice President and Chief Financial Officer, joined us in January 2007, bringing more than 14 years of experience in the finance and aviation industries. Mr. Forsyth is responsible for the capital markets, finance, treasury, accounting, risk management and systems functions of the Company. Prior to joining Willis Lease from 1994 to 2006, he served as Vice President of Finance for Standard Aero, an international aviation maintenance, repair and overhaul services provider, providing financial management support to nine business units with $800 million in annual sales. Prior to that, he was with PriceWaterhouse (now PricewaterhouseCoopers) practicing in their audit and tax departments. He is a Chartered Accountant and graduated from the University of Manitoba with a Bachelor of Commerce Degree.degree.

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        Thomas C. NordDean M. Poulakidas has servedjoined Willis Lease in September 2011 and currently serves as our Senior Vice President, and General Counsel, managing our legal affairs since July 2003 through March 31, 2013, when those duties were formally transferred to his successor, Dean M. Poulakidas. Since April 1, 2013, Mr. Nord has continued to work for the Company on a retainer basis to facilitate the transition from him to Mr. Poulakidas. From May 1977 to March 2003, he was an attorney with GATX. While at GATX, among other positions, he served from January 1981 until March 2003 as the Managing Director, General Counsel and Secretary for various GATX subsidiaries specializing in financeSecretary. Prior to his appointment as General Counsel, he served as Senior Counsel until March 31, 2013. Formerly, Mr. Poulakidas was Vice President and leasing. From February 1974 until May 1977, Mr. Nord wasCorporate Counsel to Irving Trust Company in New York, New York. From June 1969 to February 1974 Mr. Nord was associated with the New York City law firm of Seward & Kissel. Mr. Nord holds a Juris Doctor Degree from the University of North Carolina.

Paul D. "Dave" Johnson joined us in May 2011, bringing a wealth of aviation expertise and a unique combination of experience over the past 26 years as an aircraft leasing marketing executive and lawyer and as a commercial airline and military pilot. From 1998 to 2011, Mr. Johnson was with International Lease Finance Corporation a major aircraft leasing company,(ILFC), where he served inmanaged a wide variety of legal, salesaviation transactions working with airlines, manufacturers, purchasers, financiers, service providers and marketing positions including Vice President of Marketing and Corporate Counsel.aviation authorities in many jurisdictions. Prior to joining ILFC, he was a commercial airline pilot with American Airlines for 11 yearscorporate attorney at Pillsbury Madison & Sutro, where his transactional experience included international and earlier served as a B-52 combat crew commander in the United States Air Force for six years, rising to the rank of captain. He is also a Director of the Heritage Flight Museum, a 501(C)(3) organization dedicated to the preservationdomestic joint ventures, mergers and operation of historic military aircraft.acquisitions. Mr. Johnson holds a Bachelor of Science in Aeronautical Engineering Degree from the United States Air Force Academy, a Master of Business Administration Degree from Louisiana Tech University, and a Juris Doctor DegreePoulakidas earned his undergraduate degree from the University of California—California at Los Angeles.Angeles, his masters from Columbia University and his law degree from the University of California's Hastings College of Law in San Francisco.

Judith M. Webber, our Senior Vice President, Technical Services, has been with us since 1996. Immediately prior to joining us, she was Powerplant Technical Services Manager at Hawaiian Airlines for 9 years. Ms. Webber also worked for a number of years in the Canadian high arctic and northern Canada. Additionally Ms. Webber spent time working in the Caribbean as Chief Engineer for a local airline and also served for 2 years as an Airworthiness Inspector for Transport Canada. Ms. Webber currently has more than 46 years' experience in aircraft and engine maintenance, ranging from widebody aircraft and engines to small turbo props. She holds an FAA Airframe and Powerplant certificate and previously held both Transport Canada and British CAA Aircraft Maintenance Engineer licenses. Ms. Webber started her aviation career by serving as an Aircraft Propulsion Technician in the Royal Air Force.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT

        The following table sets forth information regarding the beneficial ownership of our common stock as of April 1, 201315, 2014 by: (i) each person who is known to us to own beneficially more than five percent of the outstanding shares of our common stock; (ii) each Director; (iii) each officer (including a former officer) listed in the

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Summary Compensation Table; and (iv) all Directors and Executive Officers (including a former officer) as a group. Unless specified below, the mailing address for each individual, officer or director is c/o Willis Lease Finance Corporation, 773 San Marin Drive, Suite 2215, Novato, CA 94998.

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        As of April 1, 201315, 2014, we had 8,685,2808,431,708 shares of common stock, $0.01 par value, issued and outstanding.

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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

        Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our Directors and executive officers, and persons who own more than ten percent of a registered class of our equity securities, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of common stock and our other equity securities. Directors, executive officers and holders of more than ten percent of our common stock are required by Securities and Exchange Commission regulation to furnish us with copies of all Section 16(a) reports they file.

        Based solely upon review of the copies of such reports furnished to us and written representations from our officers and Directors for the fiscal year ended December 31, 2013, we believe that during the fiscal year ended December 31, 2012, our Directors,2013 and through April 15, 2014, that the following executive officers filed the following late reports: Mr. Willis—seven late reports (three reports with respect to three 2013 transactions and holdersfour reports with respect to six 2012 transactions); Mr. Nunemaker—fourteen late reports (twelve reports with respect to thirty-six 2013 transactions and two reports with respect to sixteen 2012 transactions); Mr. Forsyth—seven late reports with respect to ten 2013 transactions; Mr. Poulakidas—one late report with respect to one 2013 transaction; Ms. Webber—two late reports with respect to two 2013 transactions; Mr. Johnson—one late report with respect to one 2013 transaction; and Mr. Thomas Nord, our former General Counsel—one late report with respect to one 2013 transaction.

        In March 2014, the staff of more than ten percentthe Securities and Exchange Commission ("SEC"), the Company and three of our commonits current executive officers (Messrs. Willis, Forsyth, and Nunemaker) entered into an agreement in principle to settle an administrative proceeding alleging that in certain instances they had failed to timely file public reports of the officers' stock compliedownership. The officers had the understanding that the reports were being timely filed by its legal department, and the Company has since hired a new General Counsel and taken remedial steps to ensure ongoing compliance with filing deadlines. The Company understands that this is part of a broad SEC review of purportedly late filings by multiple public companies and certain of their officers and directors. The Company agreed to pay a civil penalty of $150,000, and the individuals have agreed to pay $75,500, $25,000, and $25,000, respectively, all applicable Section 16(a) filing requirements.without admitting or denying the allegations. The settlements are subject to approval by the SEC. The Company does not expect this matter to materially impact its business or operations.

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COMPENSATION OF EXECUTIVE OFFICERS
COMPENSATION DISCUSSION &AND ANALYSIS

        This Compensation discussionDiscussion and analysisAnalysis describes the material elements of our compensation program for Named Executive Officers. The Compensation Committee of the Board of Directors (the "Compensation Committee") oversees the design and administration of our executive compensation programs. The Compensation Committee is comprised of fourthree independent directors:Directors: Hans Joerg Hunziker (Chair), Gérard Laviec, W. William Coon, Jr., and Robert T. Morris. The Compensation Committee meets formally twice per year, and more often if needed. Each meeting includes an executive session with no member of management present. The Compensation Committee's charter is available on the Company's web site(www.willislease.com).

2013 Performance Overview

        The Compensation Committee retains compensation consultantsCompany took a variety of steps in expanding and developing its business and positioning the Company for future growth. The Company performed well in 2013, significantly increasing profitability from time2012, and executing on a number of strategies to timecapitalize on future growth opportunities. Set forth below are some of our more notable accomplishments for 2013:

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Grew the lease portfolio to evaluate executive compensation levels$1.03 billion, an increase of 7.4% from last year



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Increased the size of the engine lease portfolio of the Willis Mitsui joint venture by more than $100 million



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Launched Willis Aeronautical Services, Inc. to provide end-of-life solutions for aviation materials and advise on specific programs;services related to aircraft engines



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Integrated the consultants report directlyassets and personnel of J.T. Power into the newly formed Willis Aeronautical Services, Inc.



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Increased our portfolio utilization to 86% by year-end as compared to an average 83% for 2012



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Expanded the Company's revolving credit facility to $450 million to support growth in the lease portfolio



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Following the sale of aircraft and engines to Hawaii Island Air, the Company booked a $1.9 million profit in the third quarter bringing the Company's long-term investment in these assets to a successful conclusion



•

Increased the Company's share price more than 21% in the year ending December 31, 2013 and at an annualized rate of over 13% per year over the past five years ending December 31, 2013.

        2013 was a positive year for the Company in that both its portfolio size and utilization increased compared to the Compensation Committee. Forprior year. The Company, together with its joint venture with Mitsui & Co., Ltd., Willis Mitsui & Co Engine Support Limited, also closed the past six years,largest sale-leaseback transaction in its history, purchasing nineteen spare engines of varied model types, all on long-term leases with Scandinavian Airlines. The Company also continued to help grow Willis Mitsui & Co Engine Support Limited to more than $239 million of assets by March 2014. Additionally, the Compensation Committee has retained Smith Compensation ConsultingCompany purchased certain assets and hired the employees of J.T. Power, in launching the Company's wholly-owned subsidiary, Willis Aeronautical Services, Inc., which will focus on after-market solutions to advise on various compensation issues. Smith Compensation Consulting has provided the Compensation Committee information regarding its independence as an advisor, including the fact that it has no other contract or business relationship with Willis Lease,Company's and the Compensation Committee took that information into account in concluding that there was no conflict of interest within the meaning of Section 10C-1 of the Securities Exchange Act of 1934 affecting Smith Compensation Consulting's independence.third party assets.

Results from Our Shareholder Advisory Vote

        The Compensation Committee also carefully considers feedback from the Company's stockholders regarding the Company's executive compensation program, including the results of the stockholders' advisory vote on executive compensation at the 2011 annual meeting which was approved by more than

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99% of the votes cast. In accordance with the preference which received the most votes cast among the alternatives regarding the frequency of future advisory votes on executive compensation, the Board decided that future advisory votes on executive compensation would be submitted to stockholders every three years. Accordingly, Proposal 2 of this proxy statement sets forth the advisory vote on executive compensation. Stockholders will next have an advisory vote on executive compensation would occuras well as a vote on the preferred frequency of future advisory votes on executive compensation at the 20142017 annual meeting of stockholders. Stockholders are invited to express their views to the Board regarding executive compensation as well as other matters as described in this Proxy Statementproxy statement under the heading "Communications with the Board".

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Compensation Philosophy and Objectives

        The objectives of our compensation programs are to attract and retain high performing executives, to provide a substantial link between the company's performance and executive pay, and to provide stockholders with a superior rate of return. It is the Compensation Committee's philosophy to link the named executive officers'Named Executive Officers' compensation to corporate performance. The individual elements of compensation are targeted at different areas.areas addressed differently. Base salaries should be sufficiently competitive to attract and retain highly capable executives; annual incentive bonuses are intended to reward meeting budgeted earnings and other established goals each year; long-term incentives, now primarily in the form of grants of restricted stock, are intended to align executive and stockholder interest, reward long term growth of revenues and earnings, and provide an incentive for key executives to stay with the organization over the long term.

        The charts below show that a significant portion of our CEO's and nearly half of our other Named Executive Officers' ("NEOs") target total direct compensation (salary, annual cash incentives, and long-term equity awards) is variable or "at-risk" or focused on long-term results. "At-risk" pay is tied to the achievement of corporate and individual performance or share price performance.

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Compensation Committee Process for Establishing Pay

        The Compensation Committee retains compensation consultants from time to time to evaluate executive compensation levels and advise on specific programs. Those compensation consultants report directly to the Compensation Committee. During 2013, the Compensation Committee retained Smith Compensation Consulting to advise on various compensation issues. For 2014, the Compensation Committee retained Pearl Meyer & Partners ("Pearl Meyer") to advise on various compensation issues. Pearl Meyer has provided the Compensation Committee information regarding its independence as an advisor, including the fact that it has no other contract or business relationship with Willis Lease, and the Compensation Committee took that information into account in concluding that there was no conflict of interest within the meaning of Section 10C-1 of the Securities Exchange Act of 1934 affecting Pearl Meyer's independence.

        The base salary, annual incentive compensation and long-term incentive compensation of the named executive officersNamed Executive Officers are determined in part by the Compensation Committee reviewing data on prevailing compensation practices of comparable companies with whom we compete for executive talent and evaluating such information in connection with our corporate goals and compensation practices. The Compensation Committee considers various sources of data when determining executive compensation levels, including compensation data from a sampling of public companies and public compensation surveys.

        However, it is difficult to determine a precise peer group of publicly-held companies because the vast majority of the Company's direct competitors are business units within much larger corporations, such as General Electric, United Technologies and Bank of Tokyo Mitsubishi, such that the heads of the leasing divisions do not appear in proxy statements as Named Executive Officers—therefore,Officers. Therefore, the Compensation Committee makes its decisions based primarily on its understanding of compensation practices in the aviation services and leasing markets, generally, and for companies of comparable size. Accordingly, withWith the help of its prior compensation consultant, Smith Compensation Consulting, the Company haspreviously developed information on executive pay practices in (i) public financial services and leasing companies and (ii) other public companies that are generally representative of the market in which the Company competes for talent. For fiscal year 2011,2013, the sample of companies consisted of the following companies:

        In selecting the public companies for inclusion in the sample, the following factors were considered: industry, geographic location, net revenues, market capitalization, and whether the company may compete against us for executive talent. For fiscal year 2012, these companies ranged in annual revenue from approximately $58$56 million to $1.2$1.42 billion (median of $317$282 million) and market capitalization from approximately $53less than $1 million to $3.5$2.8 billion (median of $550$444 million) with four companies having been acquired or merged into other organizations during 2012. For 2012, the Company generally increased executive salaries based on the factor used for salary increases in the annual budget. In Mr. Nunemaker's case, his increase reflected his greater responsibilities as President.

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        Our general guideline is to provide a total compensation opportunity that is reasonable in the prevailing market.reasonable. The Compensation Committee does not seek to specifically benchmark compensation based upon the sample companies reviewed nor does the Compensation Committee employ any other formulaic process in making compensation decisions. Rather the Compensation Committee uses its subjective judgment based upon a review of all information, including an annual review for each officer of his or her level of responsibility, contributions to our financial results and our overall performance. The

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Compensation Committee makes a generalized assessment of these factors and this information is not weighted in any specific manner. Actual compensation packages may vary based on the Compensation Committee's and Mr. Willis' subjective evaluation of each executive's performance and potential andas well as the Company's overall financial position and performance.

Governance of Compensation Programs

        Our Chief Executive Officer, in conjunction with human resources, develops recommended annual salaries, incentive targets and long-term incentive compensation for the Named Executive Officers. After reviewing the survey and peer group information described above under "Compensation Philosophy and Objectives" and the market information provided by the Compensation Committee's outside consultant, the Compensation Committee determines in its subjective judgment the annual salaries, incentive targets and long-term incentive compensation for the Named Executive Officers.

Elements of Compensation

        Each element of compensation has a different purpose, although in combination they are intended to make sure that Willis Lease has a competitive compensation package that attracts top talent and provides incentives that encourage a high level of short- and long-term performance for the benefit of stockholders. The Compensation Committee looks at these elements both individually (to ensure that each element is achieving its objective) and collectively (to ensure that the total compensation package is competitive). Components of the total executive compensation package, the details of which are discussed below, generally include (i) base salary, (ii) annual incentive compensation in the form of cash bonuses, (iii) long-term incentive compensation in the form of restricted stock, (iv) participation in the Company's employee stock purchase plan and other employee benefit plans and programs, and (v) in some cases, severance payments to be made upon an employment termination or change of control of the Company.

        2012 was a challenging year for the Company in that the short-term costs associated with the complex refinancing of the indebtedness under the Company's Willis Engine Securitization Trust ("WEST") through a new vehicle, Willis Engine Securitization Trust II ("WEST II), had an immediate negative impact on Company's performance when examined through traditional measures of financial performance. Specifically, after absorbing $18.3 million in charges related to this refinancing and the redemption of its Preferred Stock (which included a write-off of $8.1 million related to issuance costs paid in prior periods), the Company lost $3.8 million, or $0.43 per diluted share, in 2012, compared to earnings of $11.4 million, or $1.28 per diluted share, in 2011. Nevertheless, the Compensation Committee (and the Board as a whole) felt that the incurrence of these short-term costs was an important strategic move for the Company in the long-term for various reasons. Among other things, the WEST II refinancing allowed the Company to lock in historically low interest rates for the long-term, matching long term debt to the Company's long-term assets. The WEST II transaction also released approximately $150 million of capital that the Company could deploy to pay off other higher fixed interest obligations, including repurchasing the Company's Series A Preferred Stock, saving the Company over $3 million in dividends annually. This additional capital also allowed the Company to invest in other strategic growth opportunities, such as the Company's joint venture with Mitsui & Co., Ltd., Willis Mitsui & Co Engine Support Limited, a joint venture which the Company has been able to help grow to more than $190 million of assets by March 2013. Because of this unusual

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situation in which the Company's decision to undertake actions with a long-term benefit but with a comparatively high short-term cost, the Compensation Committee's subjective determinations for 20122013 compensation took special note of Named Executive Officers' contribution to the WEST II refinancingtransactions and other strategic initiatives.initiatives set forth in the "2013 Performance Overview" above.

        Base Salary:    Each officer's base salary is set on the basis of the Compensation Committee's assessment of salary levels in effect for comparable positions in the labor market, the officer's personal performance, and considerations of any special internal responsibilities. Specifically, sinceas the Company is different in some respects from the other industrial and financial companies in the survey samples, and sinceas to some degree responsibilities of the Company's executive officers differ from those in typical companies, (for example our Chief Legal Counsel is also responsible for Human Resources), the Compensation Committee gives some consideration to internal responsibilities when determining salaries, annual incentive bonus targets, and long term incentive grants.salaries. The weight given to these various factors may vary from individual to individual.

        Base salaries are reviewed annually each year after updated peer company salary information becomes available, and adjustments are made in accordance with the factors described above. Base salary increases depend in part on market competitiveness, time in position, individual performance and growth during the year, and expected future performance. For 2012, each of2013, Mr. Willis Mr. Nunemaker and Mr. Forsyth received increases to theirhis annual salary to reflect both modest customary annual increases, and increases to reflect theirhis ongoing excellent performance and efforts in furtherance of certain key transactions undertaken by the Company during 20122013 with a view towards placing the Company in an improved strategic position in the coming years. Mr. Nord'sPoulakidas' salary was not increased in 2012 on accountupon his assumption of his anticipated retirement, with his contribution to the Company's key transactions in 2012 being reflected in the acceleration of certain of his restricted stock grants pursuant to the "Transition Agreement" described in "Employment AgreementsGeneral Counsel role and Severance Payments" below. Mr. Johnson's baseresponsibilities. No other executive officer's salary was established later in 2011 and thus was not increased during 2012.increased.

        Annual Incentive Compensation:    InTarget bonus percentages for each of the past,Named Executive Officers started with the target bonus percentage set forth in their respective employment agreements, which percentages were determined in part by compensation negotiations at hire and in part by evaluating target incentive levels in the prevailing market. (See "Compensation Philosophy and

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Objectives".) The employment agreement for Messrs. Willis, Forsyth, and Poulakidas provide for target bonus percentages of 100%, 60%, and 50%, respectively. Mr. Nunemaker's target bonus percentage has fluctuated over the course of his employment with the Company has paid bonusesdepending on his position at the time. It is currently 75% based on his promotion to all employees pursuant toPresident in July 2011. Ms. Webber's target bonus percentage is 30%. No bonus was considered for Mr. Johnson since his employment terminated before the end of the year.

        The Company established a company-wide bonus plans established each year. However,plan for 2013 based on an aggressive overall return on equity goal. The 2013 bonus pool was to be determined based on return on equity and then 50% of such pool was to be allocated in 2012proportion to target bonuses and the other 50% of the pool was to be allocated based on individual contributions. No bonuses became payable under the plan for 2013 since the plan's threshold pre-tax return on equity of 12.7% was not achieved.

        Because of the performance of the Company as reflected above, the Compensation Committee decideddetermined to move towards a policy of awarding annual incentiveprovide bonuses to specific individualsfor the 2013 year based on their subjective judgment after receiving input regarding executive performance and recommendations from the Chief Executive Officer with respect to executives other than the Chief Executive Officer. Based upon the Chief Executive Officer's recommendations and other reports from management about each such individual's personal contribution to the Company's performance overduring 2013, the prior year.Compensation Committee made the ultimate determination in their subjective judgment as to the recipients and the amounts of such annual incentive bonuses. The Compensation Committee did not determine any specific formula by which such bonuses are to be calculated, instead considered numerous quantitative and qualitative factors in a subjective manner, including:

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The Company's growth and financial performance,



•

General economic and marketplace conditions,



•

Long-term strategy development and other specific accomplishments that are important to the long-term health of the Company, including the WEST II refinancing,SAS sale-leaseback transaction and the launching of Willis Aeronautical Services, Inc.,



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Innovation in the products and services that the Company can offer its customers,



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Maintenance and development of customer and vendor relationships,



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Future company leader development, and



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Effectiveness of the executive team as a group.

        Any awardHistorically, bonus payments have been moderate as a percent of salary. Since 2010, no current Named Executive Officer has received a subjective bonus based on individual performance also takes into account the individual's own target bonus percentagewhich was more than 100% of hissalary in any given year, and annual incentives or her base salary. The determinationbonuses have averaged approximately 30% of the target bonus percentagessalary for each of the Named Executive Officers started with the target bonus percentage set forth in their respective employment agreements or offer letters, which percentages were determined in part by compensation negotiations at hire and in part by evaluating target incentive

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levels in the prevailing market. (See "Compensation Philosophy and Objectives".) The employment agreement for Messrs. Willis, Forsyth, and Nord provided for target bonus percentages of 100%, 60%, and 50%, respectively. Mr. Nunemaker's target bonus percentage has fluctuated over the course of his employment with the Company depending on his position at the time. It is currently 75% based on his promotion to President in July 2011. Mr. Johnson's offer letter provides that his target bonus percentage has been set at 50% of his base salary consisting of two components: 70% of his target bonus based upon company performance and 30% of his target bonus based upon individual performance.

        For 2012, the Chief Executive Officer submitted recommendations for bonuses for certain employees of the Company. Based upon his recommendations and other reports from management about such individuals' contribution to the Company's performance during 2012, and further input from the compensation consultants, the Compensation Committee made the ultimate determination in their subjective judgment as to the recipients and the amounts of such annual incentive bonuses. For 2012, approximately one quarter of the Company's employees were awarded these subjective bonuses, including three of the five Named Executive Officers. In addition, Messrs. Willis, Nunemaker and Forsyth were recognized for their contribution to the WEST II refinancing through restricted stock awards. Mr. Nord's contribution would be recognized partly through the accelerated vesting of certain grants of his restricted stock (see "Employment Agreements and Severance Payments" below).overall.

        Long-term Incentive Compensation:    To reward executives for the long termlong-term growth in the value of the Company's shares, the Compensation Committee also makes annual long-term incentive grants. Grants of restricted stock awarded to officers, including all Named Executive Officers, are based primarily on competitive grant practices in industry as described above.determined by the Compensation Committee. Also, as explained above, each element of compensation is determined separately and therefore other forms of compensation paid to the Named Executive Officers do not directly influence the amount of long-term incentive compensation that the Company awards.

        Prior to June 2006, stock options (non-qualified and incentive stock options) were the primary form of long-term incentives for our executives. Because the 1996 Stock Option Plan expired in June 2006, no option grants were made after that date.        The 2007 Incentive Plan, approved by the stockholders, in 2007 provides the flexibility to grant a variety of types of equity awards to provide long-term incentives to employees rather than being limited to options as the prior plan required. In conjunction with the approval of the new incentive plan, the Compensation Committee shifted its primary type of long-term incentive grants from options to restricted stock. The Compensation Committee, after consulting with its compensation consultant,consultants, has determined that the restricted stock is the best vehicle for long-term executive incentives, instead of the