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

 

 

Check the appropriate box:

GENERAL FINANCE CORPORATION

 

 

 

Payment of Filing Fee (Check the appropriate box):

 

 

 

GENERAL FINANCE CORPORATION

 39 East Union Street

 Pasadena, CA 91103

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

AND

NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS

To be held on December 13, 20125, 2013

 

TO OUR STOCKHOLDERS:

 

Notice is hereby given to the holders of common stock of General Finance Corporation that the Annual Meeting of Stockholders ("Annual Meeting") will be held on Thursday, December 13, 20125, 2013 at 10:00 a.m. Pacific Standard Time at the offices of General Finance Corporation located at 39 East Union Street, Pasadena, California.

 

 

If you owned common stock of General Finance Corporation on October 17, 2012,9, 2013, the record date, you are entitled to attend and vote at the Annual Meeting. A complete list of stockholders entitled to vote at the Annual Meeting will be available at the principal executive offices of General Finance Corporation located at 39 East Union Street, Pasadena, California beginning December 3, 2012November 25, 2013 and at the Annual Meeting.

 

 

If you submit a proxy, you are entitled to revoke your proxy at any time before it is exercised by attending the Annual Meeting and voting in person, duly executing and delivering a proxy bearing a later date or sending written notice of revocation to our Secretary at the Company’s address.39 East Union Street, Pasadena, California 91103. Whether or not you plan to be present at the Annual Meeting, we encourage you to vote your proxy by following the instructions provided in this proxy statementProxy Statement or on the proxy card. Any stockholder attending the meeting may vote in person even if he or shethe stockholder previously has returned a proxy.

 

 

The nominee is anominees are current directordirectors and hashave consented to serve as a director.directors. The Board of Directors has no reason to believe that the nomineenominees will be unable to serve as a director.directors. If either of the nominee isnominees are unable to serve or should a vacancy occur before the annual meeting, the Board may designate a substitute nominee. If a substitute nominee is named, your shares will be voted in favor of the election of the substitute nominee designated by the Board.

 

 

 

 

 

 

Board of Directors

 

 

The business of the Company is managed under the direction of the Company’s Board of Directors.Board. The Board of Directors’Board’s general oversight responsibility is conferred by the Delaware General Corporation Law, the Company’s Amended and Restated Certificate of Incorporation and the Company’s Bylaws. The leadership structure of the Board of Directors and its committees assist the Board of Directors in exercising its fiduciary duties as it oversees the Company’s business affairs, Chief Executive Officer performance and succession, internal controls over financial reporting and long-term strategy.

 

 

The Company does not have a formal policy concerning whether the same individual may serve as the Chief Executive Officer and Chairman of the Board. The Company currently has one individual serving as the Chief Executive Officer and another individual serving as the Chairman of the Board.

 

 

The identification, evaluation and mitigation of risks arising in connection with the Company’s businesses are the responsibility of the Company’s senior management. The Board of Directors’Board’s responsibility is to understand the risks related to the Company’s businesses and to oversee senior management’s mitigation of those risks.

 

The Board of Directors and the Audit Committee receive regular reports from senior management concerning the risks related to the Company’s businesses.

 

The Audit Committee and the Nominating and Governance Committee have certain risk management oversight responsibilities and regularly report to the Board concerning risk management. These reports include the risks considered by each committee and the direction given to management to mitigate these risks. The Audit Committee oversees compliance by the Company with legal requirements and regularly receives reports concerning the Company’s significant internal controls and steps taken by management to maintain a strong internal controls environment. In addition, representatives of the Company’s independent auditors attend Audit Committee meetings, deliver presentations to the Audit Committee and meet with the Audit Committee in private session. The Company’s Chief Financial Officer and General Counsel also meet in private session with the Audit Committee.  The Nominating and Governance Committee develops corporate governance principles and oversees management’s evaluation and mitigation of risk relating to the Company’s Code of Ethics and business practices.

 

Corporate Governance

 

Our corporate governance reflects the practices and principles that guide the Company. Our corporate governance framework specifies the duties, responsibilities and rights of our stockholders, Board of Directors and management. Our corporate governance principles are found in the Company’s charter documents, the Company’s Corporate Governance Guidelines, Company’s Code of Ethics, committee charters and other policies approved by the Board of Directors.Board.

 

The Corporate Governance Guidelines were adopted by the Board of Directors in December 2009.2010.  The Corporate Governance Guidelines are reviewed at least annually to guide our corporate governance in response to changing regulatory requirements and as circumstances warrant.

 

 

 

NASDAQ requires that a majority of the members of the Board of Directors be “independent directors,” which is defined generally as a person other than an officer or employee of the Company or its subsidiaries or any other individual having ano relationship, which, in the opinion of the Company’s Board, of Directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. All members of the Board’s Audit, Compensation and Nominating and Governance Committees are independent“independent” within the meaning of The NASDAQ Stock Market Rules and Rule 10A-3(b)(i) under the Securities Exchange Act of 1934, as amended.

 

In making these determinations, the Board of Directors was presented with a report from the Company’s General Counsel and discussed information provided by the directors and the Company with regard to each director’s business and personal activities as they relate to the Company. Each director and executive officer is required to complete a director and officer questionnaire each year which requires disclosure of transactions with the Company in which the director or officer, or any members of his or her family, have a direct or indirect material interest.

 

The Board of Directors has determined that Ms. Harris and Messrs. Connell, Glascott and Roszak are independent under The NASDAQ Stock Market rules and listing standards and have no relationship with the Company except as a director and stockholder. The Board determined that Mr. Valenta is not independent because he is the President and Chief Executive Officer of the Company. The Board determined that Mr. Marrero is not independent because he serves as the Chief Executive Officer of General Finance Group, Inc., a specialty finance company controlled by Mr. Valenta.

 

 

The Company’s corporate governance guidelines require independent directors to meet, without management, at regularly scheduled executive sessions which generally may take place after regularly scheduled meetings of the entire board of directors.Board.  The Chairman of the Board or any two independent directors may call a special executive session of the independent directors at any time.  Such special executive sessions may take place after a regular or special meeting of the entire board of directorsBoard or at such other time deemed appropriate.

 

 

The Company does not have a lead independent director.

 

 

The Board of Directors held fiveseven meetings during the fiscal year ended June 30, 2012,2013, or fiscal year 2012.  All2013, and acted by written consent five times.  Five of the meetings were regular meetings, and nonetwo of the meetings were special meetings.  The Board of Directors holds meetings each fiscal year according to a pre-arranged schedule, but the Board of Directors also holds special meetings and acts by written consent from time to time as needed.

 

Each director attended more than 75% of all meetings of the Board of Directors and board committees on which he or she served during the period he or she was a director in fiscal year 2012.2013.

 

 

The Board of Directors has an Audit Committee, a Compensation Committee and a Nominating and Governance Committee. Each committee regularly delivers reports to the full Board of Directors concerning its meetings and actions. In fiscal year 20122013 the independent directors met in executive session fiveseven times, and the Audit Committee met in executive session during each of its six regularly scheduled meetings.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Nominating and Governance Committee periodically assesses the size and composition of the Board of Directors.Board. The Nominating and Governance Committee seeks to achieve a balance of knowledge, experience and capability on the Board of Directors.Board. The committee is responsible for identifying and assessing potential director candidates and recommending qualified candidates to the Board of Directors.Board. When considering candidates for director, the Nominating and Governance Committee takes into account a number of factors, including the following:

 

Candidates need not possess all of these characteristics, nor are all of these factors weighed equally.

 

 

The Nominating Committee will consider candidates for directors recommended by stockholders who follow the proper procedures in submitting the recommendation. The Board of Directors will consider candidates recommended by stockholders using the same criteria it applies to candidates recommended by directors. To be considered for election at an annual meeting, the recommendation must be submitted no later than November 8, 2012.10, 2013. The recommendation must by in writing addressed to the Secretary and must include the following: (i) a statement that the writer is a stockholder and is proposing a candidate for consideration by the Nominating Committee; (ii) the name and contact information for the candidate; (iii) a statement of the candidate’s business and educational experience; (iv) information regarding each of the factors listed above (other than the factor regarding board size and composition) sufficient to enable the Nominating Committee to evaluate the candidate; (v) a statement detailing any relationship between the candidate and any competitor of the Company; (vi) detailed information about any relationship or understanding between the writer and the candidate; and (vii) a statement that the candidate is willing to be considered and is willing to serve as a director if nominated and elected.

 

Compensation Committee Interlocks and Insider Participation

 

No person who served on the Compensation Committee in fiscal year 20122013 was, during the year or previously, an officer or employee of the Company or had a relationship with the Company requiring disclosure under Item 404 of Regulation S-K.  Since March 2009 Mr. Marrero has served as the Chief Executive Officer of the specialty finance companies of General Finance Group, Inc., a company controlled by Ronald Valenta.  Mr. Valenta has the power to set Mr. Marrero's incentive compensation. No other interlocking relationship exists between any member of the Board of Directors and any member of any other company’s board of directors or compensation committee.

 

Review and Approval of Transactions with Related Persons

 

The Company has not adopted a formal written policy regarding transactions with related persons. The Company’s Code of Ethics for Directors, Officers and Employees (“Code of Ethics”) requires the disclosure of all potential conflicts of interest. Delaware law in turn requires that each director or officer disclose to the Board of Directors all material facts relating to such director’s or officer’s relationship or interest in a proposed contract or transaction and that a majority of the Board, of Directors, with any interested director abstaining, approve the contract or transaction in good faith.

 

The Company’s Board of Directors is responsible for reviewing any proposed transaction with related persons. The Board of Directors considers all relevant information in deciding whether to approve or reject a transaction with a related person.

 

Information relating to transactions between the Company and related persons is set forth in “Transactions with Related Parties.”

 

Communication with the Board Directors

 

Stockholders may communicate with the Board of Directors in writing by mail delivered to the following address: General Finance Corporation, 39 East Union Street, Pasadena, California 91103, Attention: Secretary. All notices and communications received in writing will be distributed to the Chairman of the Board or the chairman of the appropriate Board committee.

 

Code of Ethics

 

 

We will provide a copy of the Code of Ethics upon written request delivered to General Finance Corporation, 39 East Union Street, Pasadena, California 91103, Attention: Secretary.

 

Compensation of Directors

 

 

 

Director Compensation

 

In October 2011, the Compensation Committee approved a new schedule of compensation of our non-employee directors effective January 1, 2012 which, as reflected by the table below, established that if a single committee meeting or multiple committee meetings are held on the same day, a director will receive a fee of $1,500. The following table summarizes the schedule of compensation of our non-employee directors (directors who also serve as officers currently receive no additional compensation for their services as directors). In addition to the compensation set forth below, each director is also eligible for reimbursement of reasonable expenses incurred in connection with the director’s services.

 

The annual retainers are payable in advance in quarterly installments, and committee fees are paid at the end of each quarter. The Chairman of the Board shall have the discretion to pay additional fees to directors for meetings other than regular meetings of the board of directors.Board. Upon reelection to the board of directors,Board, each non-employee director will receive a stock option grant to acquire 9,000 shares of common stock with an exercise price determined based upon the closing price of the Company’s common stock on the date of grant, subject to a vesting schedule in which one-third of the options granted will vest on each of the first three anniversaries of the grant date.

 

Director Attendance at Annual Meetings

 

We have scheduled a board meeting in conjunction with our Annual Meeting and expect that our directors will attend, absent a valid business or personal reason not to attend.

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF THE BOARD NOMINEE.NOMINEES.

 

 

PROPOSAL 2:

 

RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS

 

On November 8, 2011, the Audit Committee approved the engagement of Crowe Horwarth LLP, or Crowe, as our independent registered public accounting firm.

 

The Audit Committee has selected Crowe as our independent auditors for fiscal year ending June 30, 2013,2014, or fiscal year 2013.2014. We are asking the stockholders to ratify this selection. We expect a representative from Crowe to participate in the Annual Meeting and the representative will have the opportunity to make a statement if desired and to respond to appropriate questions by stockholders.

 

Aggregate fees billed to us by Crowe for professional services rendered with respect to our fiscal year ended June 30, 2011,2012, or fiscal year 2011,2012, and fiscal year 20122013 were as follows:

 

In the above table, in accordance with the SEC's definitions and rules, “audit fees” are fees we paid for professional services for the audit of our consolidated financial statements, including those in our Annual Report on Form 10-K and local statutory audit requirements and reviews of our Quarterly Reports on Form 10-Q. “Audit-related fees” are fees for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements. “Tax fees” are fees for tax compliance, tax advice and tax planning.

 

The policy of the Audit Committee is that it must approve in advance all services (audit and non-audit) to be rendered by the Company’s independent auditors. The Audit Committee approved in advance the engagement of Crowe for services in fiscal year 20112012 and fiscal year 2012.2013.

 

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE SELECTION OF CROWE AS OUR INDEPENDENT AUDITORS FOR FISCAL YEAR 2013.2014.

 

The ratification of the selection of Crowe requires the affirmative vote of the holders of a majority of the number of shares voting on this matter. If the stockholders do not ratify the selection, the adverse vote will be deemed to be an indication to the Audit Committee that it should consider selecting other independent auditors for fiscal year 2013.2014. Because of the difficulty and expense of substituting accounting firms, it is the intention of the Audit Committee that the appointment of Crowe for fiscal year 20132014 will stand unless, for a reason other than the adverse vote of the stockholders, the Audit Committee deems it necessary or appropriate to make a change. The Audit Committee also retains the power to appoint another independent auditor at any time or from time to time if it determines it is in our best interests.

 

 

REPORT OF THE AUDIT COMMITTEE

 

 

The Audit Committee oversees the financial reporting process on behalf of the Board of Directors.Board. In fulfilling its oversight responsibilities the Audit Committee reviewed and discussed the audited financial statements included in the Annual Report on Form 10-K filed with the SEC and the unaudited financial statements included with Quarterly Reports on Form 10-Q filed with the SEC.

 

The Audit Committee met and discussed with management and the independent auditors the matters required to be discussed by Statements on Accounting Standards (SAS) No. 61. These discussions included the clarity of the disclosures made therein, the underlying estimates and assumptions used in the financial reporting and the reasonableness of the significant judgments and management decisions made in developing the financial statements. In addition, the Audit Committee has discussed with the independent auditors their independence from the Company and has received the written letter from the independent auditors required by Independence Standards Board Standard No. 1.

 

The Audit Committee also met and discussed with the independent auditors the overall scope and objectives of the audit, the Company’s internal controls and critical accounting policies and the specific results of the audit. Management was present at all or some part of each of these meetings.

 

Pursuant to the reviews and discussions described above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2012.2013.

 

Management is responsible for the Company’s financial reporting process, including its system of internal controls, and for the preparation of consolidated financial statements in accordance with generally accepted accounting principles. The Company’s independent auditors are responsible for auditing those financial statements. The Audit Committee’s responsibility is to monitor and review these processes. It is neither the Committee’s duty nor responsibility to conduct auditing or accounting reviews or procedures. Members of the Audit Committee are not employees of the Company and may not be, and do not represent themselves to be or to serve as, accountants or auditors by profession or experts in the fields of accounting or auditing. Therefore, members have relied, without independent verification, on management’s representation that the financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States of America and on the representations of the independent auditors included in their report on the Company’s financial statements. The Audit Committee’s oversight does not provide it with an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or policies, or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, consultations and discussions with management and the independent auditors do not assure that the Company’s financial statements are presented in accordance with generally accepted accounting principles, that the audit of the Company’s financial statements has been carried out in accordance with generally accepted auditing standards or that the Company’s independent accountants are in fact “independent.”

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

 

COMPLIANCE WITH SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers and 10% stockholders to file reports with the SEC on changes in their beneficial ownership of common stock and to provide us with copies of the reports. WeA Form 4 was filed late on May 22, 2013 for 500 shares of common stock acquired by Susan Harris on April 8, 2013 upon the exercise of warrants.  Except for this late filing referenced in the preceding sentence, we believe that all of these persons filed all required reports on a timely basis in fiscal year 2012.2013.

 

 

EXECUTIVE COMPENSATION

 

COMPENSATION COMMITTEEE REPORT

 

     The following report of the Compensation Committee shall not be deemed to be incorporated by reference into any previous filing by the Company under either the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that incorporates future Securities Act or Exchange Act filings in whole or in part by reference.

 

 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

 

The Company’s compensation program aligns the interests of our executive officers with the interests of our stockholders. The Company's compensation programs align executive officers' and stockholders' interestsdo so by establishing long-term and strategic goals intended to increase stockholder value and rewarding the achievement by executive officers of those goals.  We therefore structure the compensation of our executive officers to reward the achievement of the strategic goals that drive stockholder value.

 

 

As a smaller reporting company, as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, at our 2013 annual meeting of stockholders we will hold our first advisory vote on executive compensation atand our 2013 annual meetingfirst advisory vote on the frequency of stockholders.future advisory votes on executive compensation.

 

 

The Compensation Committee of the Board of Directors is responsible for the establishment and development of the Company’s compensation philosophy. The Compensation Committee establishes, implements and monitors the structure of the Company’s executive compensation program.

 

The Compensation Committee designs the executive compensation program to achieve the following key goals:

 

 

 

 

 

 

 

 

 

For the fiscal year 2012,2013, the principal components of compensation for the principal executive officer, the principal financial officer and the other three most highly compensated executive officers, or collectively the Named Executive Officers, were:

 

In fiscal year 2012,2013, the Compensation Committee did not retain or rely upon information provided by any third-party compensation consultant inretained Semler Brossy to advise it with respect to setting compensation levels and awards for our Named Executive Officers. Semler Brossy provided the Compensation Committee with an analysis of the compensation program of the Company and a benchmarking analysis which compared each element of the Company's compensation program with the compensation program of industry competitors and other comparable companies. Our Compensation Committee made all final compensation decisions for our Named Executive Officers for fiscal year 2012,2013, except for Mr. Allan for whom all final compensation decisions are made by the Nomination and Remuneration Committee of Royal Wolf Holdings Limited.

 

 

 

 

The Committee’s decision to pay a portion of the annual cash bonuses for fiscal year 20122013 performance was based upon the achievement of some of the Company’s strategic goals the Named Executive Officers and other officers. The Compensation Committee predetermined strategic goals for each Named Executive Officer, assessed the achievement of those goals and determined actual bonus amounts based upon the recommendations of Mr. Valenta and their collective business judgment. The Compensation Committee sets these goals after considering a variety of factors. The Compensation Committee does not believe that the structure of the bonuses or equity based compensation will require the executive officers to operate the Company’s businesses in ways or using methods that will expose the Company to risks that are reasonably likely to have a material adverse effect on the Company.

 

 

 

Stock option grantsGrants of stock options and restricted stock to all of our executive officers and other employees, including the Named Executive Officers, must be approved by the Compensation Committee of the Board, which consists entirely of independent directors. Grants occur only at meetings of the Compensation Committee and such grants are made effective as of the date of the meeting or a future date, as in the case of the hiring of a new employee. Stock option awardsAwards of stock options and restricted stock are not timed in coordination with the release of material non-public information. The exercise price of all stock options and restricted stock granted is equal to the closing market price of our common shares on the date of grant.

 

Stock options and restricted stock are granted with an exercise price of not less than 100% of the fair market value of our common shares on the date of grant, so that the executive officer may not profit from the option unless the price of our common shares increases.

 

The Compensation Committee determines stock option and restricted stock award levels in their discretion, primarily based on the recommendations of Mr. Valenta, consideration of the importance of an individual’s responsibilities and performance within the Company and equity awards at comparable companies.

 

Options and restricted stock granted by the Compensation Committee also are designed to help us retain executive officers in that options and restricted stock are not exercisable at the time of grant, and achieve their maximum value only if performance criteria are met or if the executive remains in the Company’s employ for a period of years. All options granted to Named Executive Officers in fiscal year 20122013 vest ratably over fourthree years subject to achieving a three-year cumulative EBITDA target, subject to adjustment for U.S. Dollar to Australian currency exchange rates and debt levels over established thresholds.based on continued employment. The Compensation Committee believes that thisthese vesting arrangement alignsarrangements align the interests of option holders with stockholders by emphasizing a long-term view of building shareholder value.  The Compensation Committee also believes that multi-year vesting reduces the risks that could arise from undertaking initiatives to realize annual EBITDA goals, such as through acquisitions or capital expenditures, that could attain short-term goals while adversely effecting long-term shareholder value.

 

Grants of stock options and restricted stock under the Company’s 2009 Stock Incentive Plan are subject to the Plan’s recoupment provisions which require each optionholder to forfeit all or any portion of an option grant and to reimburse the Company for all proceeds received from exercising stock options and restricted stock if (i) payment, grant or vesting was predicated on the achievement of financial results that were subsequently the subject of a material financial misstatement, (ii) the Board determines the optionholder or holder of restricted stock engaged in fraud or misconduct that caused or partially caused the material financial restatement of the Company or any affiliate and (iii) a lower payment, award or besting would have occurred based on the financial results.

 

 

In general, Mr. Valenta attends all meetings of the Compensation Committee at which compensation of the other Named Executive Officers or compensation policy is reviewed.reviewed other than when his compensation is being discussed. Mr. Valenta does not vote on items before the Compensation Committee. The Compensation Committee and the Board of Directors solicit Mr. Valenta’s views on the performance of the executive officers who report to him.

 

 

Each component of compensation we pay to our Named Executive Officers—salary, cash bonuses, stock options and stock options—restricted stock—is based generally on the Committee’s subjective assessment of each individual’s role and responsibilities. Consideration of market rates is an additional factor reviewed by the Committee in determining compensation levels; we do not “benchmark” or specifically target certain levels of compensation. For our executive officers, generally, we determine marketlevels. The Compensation Committee engaged Semler Brossy as its compensation rates by reviewing public disclosures ofconsultants to analyze the Company's compensation paidprogram, to senior executive officers by other companies of comparable sizeprovide a benchmarking analysis which compared the Company's compensation program to industry peers and market capitalization. In fiscal year 2012 the comparable companies reviewed were:

 

The Compensation Committee also bases its payment of base salary and annual bonuses for Named Executive Officers, other than the chief executive officer, on the attainment of objectives established by the Compensation Committee, based upon recommendations from Mr. Valenta. In establishing individual bonuses for senior executives, the Compensation Committee considers growth in the enterprise value, common stock price, EBITDA and other financial and corporate objectives, together with the executive officer’s contribution to the Company’s growth and profitability.

 

 

The Compensation Committee sets the base salaries, bonus and equity compensation for the Named Executive Officers after consideration of the recommendations prepared by Mr. Valenta with respect to the appropriate amounts to reward and incentivize each Named Executive Officer. Mr. Valenta used information relating to each executive officer’s responsibilities and achievements in accomplishing the corporate objectives set by the Compensation Committee for the previous year, his assessment of the individual performance of each Named Executive Officer and to recommend to the Compensation Committee the annual incentive bonuses for each of the other Named Executive Officers.

 

In June 2012,2013, the Compensation Committee considered the achievement of the Company’s fiscal year 20122013 revenues and EBITDA and the recommendations of Mr. Valenta with respect to the individual performance of the other Named Executive Officers and the payment of bonuses for fiscal year 2012.2013. The Compensation Committee considered the completion by the Named Executive Officers of certain strategic and operational initiatives during fiscal year 2012,2013, such as General Finance Corporation exceeding its EBITDA targets Royal Wolf exceeding its EBITDA targets and completing its initial public offering and Pac-Van operating results exceeding its EBITDA targets for fiscal year 2012.2013.

 

Based on the review of the Compensation Committee and the consideration of Mr. Valenta’s recommendations, Mr. Valenta’s received a bonus of $146,250$225,000 for fiscal year 2012,2013, and Mr. Valenta’s annual base salary and target bonus amount for fiscal year 20132014 will be $325,000$400,000 and $175,000,$225,000, respectively.  Mr. Barrantes, Mr. Wilson, Mr. Mourouzis and Mr. Allan received bonuses for the achievement of specific individual objectives, and bonuses based on EBITDA targets were awarded to Messrs. Barrantes, Wilson and Allan.  Mr. Barrantes received his bonus based on his management of taxes, investing of cash, improving back-office productivity and capital markets initiatives. The specific objectives for the payment of a portion of Mr. Wilson's bonus included the management of legal counsel, timely and accurate legal filings and development of his staff. The specific objectives of Mr. Allan's bonus included an EBITDA target, EBITDA margin goals, capital expenditures goals and sales program improvements, while Mr. Mourouzis’ specific objectives included an EBITDA target, the introduction of best practices, debt covenant compliance and storage customer goals. Following its assessment of their completion of strategic and operational initiatives, the Compensation Committee awarded cash bonuses for fiscal year 20122013 to Mr. Barrantes of $100,000,$125,000, to Mr. Wilson of $98,500,$121,250, to Mr. Allan of AUD $128,000$129,873 and to Mr. Mourouzis of $51,730.$77,600.

 

The implementation of the executive compensation program also underlined our commitment to pay for performance.  Executives who achieved annual, long-term and strategic goals received compensation in accordance with their compensation plans, while executives who failed to achieve their goals received compensation corresponding to their performance. The Company's chief executive officer received 97.5%129% of his target bonus based on the successful refinancingcompletion of one credit facility, progress with initiatives to refinanceinvestor relations objectives, the Pac-Van credit facilityintroduction of new product lines, growth in specific markets, the completion of acquisitions and prepaycontinued development of the Company's subordinated debt and the attainment of operating metrics.strategic plan. The president of Royal Wolf Holdings received 85%92.6% of this target bonus afterbased on Royal Wolf Holdings exceeded its capital expenditures budget, while the bonus of the chief financial officer of Royal Wolf Holdings equaled 105% of the target bonus because Royal Wolf Holdings exceeded its EBITDA goals and the attainment of individual goals. The president and vice president of finance of Pac-Van received bonusesa bonus equal to approximately 101%97% of his target bonus based on Pac-Van EBITDA and 95%, respectively of their target bonuses because Pac-Van exceeded its budget andachieving other goals.  The chief financial officer and general counsel of General Finance Corporation received 100%125% and 98%121%, respectively, of their target bonus amounts due to achievement of General Finance Corporation EBITDA and other individual goals.

 

The executive compensation program therefore reflected the Company’s compensation philosophies by reducing executive compensation when the Company’s business goals were not met.

 

In June 2012,2013, after consultation with Mr. Valenta, the Compensation Committee set fiscal year 20132014 annual base salaries and corporate performance targets for fiscal year 20132014 annual cash bonuses for the Named Executive Officers other than Mr. Valenta. The fiscal year 20132014 annual base salaries of Mr. Barrantes, Mr. Wilson, Mr. Allan and Mr. Mourouzis were increased by $25,000,$10,000, $20,000, AUD$25,00076,365 and $25,000, respectively, while the fiscal year 2013 annual base salaries of Mr. Wilson remained unchanged from fiscal year 2012 at $200,000.$22,961, respectively. The Compensation Committee determined that the corporate performance targets for annual cash bonuses for fiscal year 20132014 performance for each of the Named Executive Officers would be if the Company achieves specific EBITDA goals. The Committee believes that the goals, while challenging, particularly in the current economic environment, are achievable.  Neither the Committee nor Mr. Valenta believe that the fiscal year 20132014 goals will require the Named Executive Officers to take risks to achieve their EBITDA goals that are reasonably likely to have a material adverse effect on the Company.

 

 

Pursuant to separate employment agreements with Mr. Valenta, Mr. Barrantes and Mr. Wilson, we will make a severance payment equal to one year’s salary if such person's employment is terminated by General Finance without cause or by the employee for good cause, each as defined in their respective employment agreements.

 

Each of these three employment agreements provide that each executive may be terminated for cause, and General Finance would therefore not be required to pay severance equal to one year's salary, if such executive breaches his employment agreement, commits any act of personal dishonesty, fraud or breach of fiduciary duty or trust, is convicted of or pleads guilty or no contest to any theft, fraud, breach of fiduciary duty or crime involving moral turpitude or felony, committed acts which give rise to liability for discrimination or harassment, violates directions from the board of directorsBoard or chief executive officer, acts in a manner that harms the reputation of General Finance, is found liable of violating securities or other laws, fails to advance or cooperate with any investigation by General Finance or misrepresents his experience or employment history.

 

Each of Mr. Valenta, Mr. Barrantes and Mr. Wilson may terminate their employment for good reason and receive severance equal to one year's salary if General Finance reduces their base salary, permanently relocates their place of employment more than 40 miles from their current residence, hires a person to perform the job functions currently performed by such executive or assigns such executive duties beneath the duties they ordinarily perform.

 

We may also elect to pay six months’ compensation to Mr. Allan in lieu of providing six months prior notice of termination of his employment. The employment agreement of Mr. Mourouzis does not provide for the payment of severance if his employment is terminated without cause, as defined in his employment agreement.

 

 

The Compensation Committee will adopt a clawback policy once the SEC has adopted rules to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and all fiscal 2013 bonus and equity compensation awards are subject to the clawback policy to be adopted.

 

We do not have programs in place to provide personal perquisites for our executive officers. The Company reimburses Mr. Valenta for up to $2,500 per month for a car allowance, health, dental, vision and/or supplement disability premiums.  Mr. Barrantes and Mr. Wilson participate in the medical and dental insurance of Pac-Van at the expense of the Company. Messrs. Valenta, Barrantes and Wilson are also eligible to participate in the 401(k) retirement plan of Pac-Van, Inc. Mr. Mourouzis is eligible to participate in the medical and dental insurance of Pac-Van. Mr. Allan participates in medical and dental insurance of Royal Wolf and Royal Wolf contributes to Mr. Allan’s retirement plan as required by Australian law. We do not have any other retirement plans under which our executive officers may participate.

 

 

 

 

 

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with management. Based on the Compensation Committee’s review of and the discussions with management with respect to the Compensation Discussion and Analysis, the Compensation Committee recommended to the board of directorsBoard that the Compensation Discussion and Analysis be included in this Proxy Statement.

 

 

Summary Compensation Table

 

The following table contains summary compensation information of the following executive officers, or our “Named Executive Officers,” for fiscal years 2013, 2012 2011 and 2010.2011.

 

Summary Compensation Table

 

We have two equity compensation plans, our 2006 Stock Option Plan and our 2009 Stock Incentive Plan. Subsequent to December 2009, grants of stock options will be made only from the 2009 Stock Incentive Plan. The following table provides information concerning each grant of an award made to the Named Executive Officers in fiscal year 2012.2013 under the 2009 Stock Incentive Plan.