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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General Finance Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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GENERAL FINANCE CORPORATION
39 East Union Street
Pasadena, CA 91103
October 19, 200915, 2010
Dear Stockholders:
We cordially invite you to attend the 20092010 Annual Meeting of Stockholders. The meeting will be held on Thursday, December 10, 20099, 2010 at 10:00 a.m. Pacific Standard Time at the offices of General Finance Corporation located at 39 East Union Street, Pasadena, California.
The accompanying Notice of the 20092010 Annual Meeting of Stockholders and Proxy Statement, which includes our Form 10-K for the fiscal year ended June 30, 20092010 as filed with the Securities and Exchange Commission, describe the items to be considered and acted upon by stockholders.
At the meeting you will be asked to elect two Class CA Directors approve the General Finance Corporation 2009 Stock Incentive Plan and ratify the selection of Crowe Horwath LLP as our independent auditors for the fiscal year ending June 30, 2010.2011.
Whether or not you plan to attend the meeting, it is important that your shares be represented and voted at the meeting. Therefore, we urge you to complete, sign, date and return the enclosed proxy card, even if you plan to attend the meeting.
We look forward to seeing you at the meeting.
 | ||
Sincerely,  Ronald F. Valenta Chief Executive Officer and President |
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 10, 20099, 2010
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 10, 20099, 2010 at 10:00 a.m. Pacific Standard Time at the offices of General Finance Corporation located at 39 East Union Street, Pasadena, California.
At the Annual Meeting we will ask you to:
| 1. | Election of Directors. Elect two Class | ||
| 2. | |||
Ratification of Appointment of the Independent Registered Public Accounting Firm. Ratify the selection of Crowe Horwath LLP as our independent auditors for the fiscal year ending June 30, | |||
Other Business. Transact any other business that may properly be presented at the Annual Meeting. |
If you owned common stock of General Finance Corporation on October 9, 2009,13, 2010, 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 November 30, 200929, 2010 and at the Annual Meeting.
The proxy statement that accompanies this Notice contains additional information regarding the proposals to be considered at the Annual Meeting, and stockholders are encouraged to read it in its entirety. Under rules adopted by the Securities and Exchange Commission ("SEC"), we have elected to provide access to our proxy materials both by sending you the accompanying proxy statement and proxy card and by notifying you of the availability of our proxy statement and our 20092010 annual report to stockholders at the website www.cstproxy.com/generalfinance/20092010. Web access to our proxy materials does not identify visitors to the website.
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. 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 statement or on the proxy card. Any stockholder attending the meeting may vote in person even if he or she previously has returned a proxy.
 | ||
By Order of the Board of Directors,
Christopher A. Wilson
General Counsel, Vice President & Secretary
October 19, 200915, 2010
Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Stockholders to be Held on December 10, 2009:9, 2010:
Our proxy statement and our 20092010 annual report to stockholders are
available at http://www.cstproxy.com/generalfinance/20092010
GENERAL FINANCE CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To be held on Thursday, December 10, 20099, 2010
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
Why did you send me this Proxy Statement and proxy card?
We sent you this Proxy Statement and the enclosed proxy card because you own shares of common stock of General Finance Corporation, which we refer to herein as "we" or the "Company." This Proxy Statement, which is furnished by the Board of Directors of the Company, provides you with information that will help you cast your vote at the Annual Meeting. You do not need to attend the Annual Meeting to vote your shares. Instead, you may simply complete, sign, date and return the enclosed proxy card.
When you complete, sign, date and return the proxy card, you appoint the proxy holders named therein (your proxies), as your representatives at the Annual Meeting. The proxy holders will vote your shares at the Annual Meeting as you have instructed them on your proxy card(s). If an issue that is not on the proxy card comes up for vote at the Annual Meeting, that is not on the proxy card, the proxy holders will vote your shares, under your proxy, in accordance with their best judgment.
We began sending this Proxy Statement, the attached Notice of Annual Meeting and the enclosed proxy card on October 26, 200922, 2010 to all stockholders entitled to vote. Stockholders who owned Common Stock on October 9, 200913, 2010 (the record date) are entitled to vote. On the record date, there were 17,826,05221,956,633 shares of Common Stock outstanding. The Common Stock is our only class of voting stock outstanding.
We have enclosed our Annual Report to Stockholders, which includes our Form 10-K for the fiscal year ended June 30, 20092010 as filed with the SEC. The Annual Report is not to be considered part of the soliciting materials.
What am I voting on?
We ask you to vote on the election of two Class CA directors the approval of the General Finance Corporation 2009 Stock Incentive Plan and the ratification of the selection of Crowe Horwath LLP as our independent auditors for the fiscal year endedending June 30, 2010.2011. The sections entitled “Election of Directors,” "Approval of 2009 Stock Incentive Plan"Directors” and “Ratification of Selection of Independent Auditors” give you more information on these proposals.
At the time this Proxy Statement was printed, we knew of no other matters to be acted on by the stockholders at the Annual Meeting.
How many votes do I have?
You have one vote for each share of our Common Stock you own.
How are abstentions and broker non-votes treated?
Abstentions and broker non-votes will be included in the number of shares present at the Annual Meeting for purposes of determining the presence of a quorum. Abstentions and broker non-votes will not be counted either as a vote cast for or against in the election of directors or the ratification of selection of independent auditors.
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How can I vote?
You may vote by Internet
You can vote via the Internet by following the instructions in your enclosed proxy card, notice and/or voting instructions form.
You may vote by telephone
You can vote by telephone by following the instructions in your enclosed proxy card, notice and/or voting instruction form.
You may vote by mail
You can vote by mail by completing, signing and dating the enclosed proxy card and returning it promptly in the envelope provided. If you mark your voting instructions on the proxy card, your shares will be voted as you instruct. If you return a signed proxy card but do not provide voting instructions, your shares will be voted FOR the election of the nominees for directors FOR approval of the 2009 Stock Incentive Plan and FOR the ratification of the selection of independent auditors identified in this Proxy Statement.
You may vote in person at the Annual Meeting
You may attend the Annual Meeting and vote in person. If you hold your shares in street name, you must request a legal proxy from your stockbroker in order to vote at the Annual Meeting. Otherwise, we cannot count your votes.
Please see the notice or voting instruction form your bank, broker or other holder of record provided you for more information on these options.
May I revoke my proxy?
Yes, you can change or revoke your proxy by Internet, telephone or mail, by notifying our Secretary in writing at our corporate headquarters before the Annual Meeting that you have revoked your proxy or by attending the Annual Meeting and voting in person.
How will shares I hold in street name be voted?
If your shares are held in street name, your brokerage firm, under certain circumstances, may not vote your shares without specific voting instructions under rules of The NASDAQ Stock Market, Inc. ("NASDAQ"). If you do not vote your proxy, your brokerage firm will leave your shares unvoted.
We encourage you to provide instructions to your brokerage firm by voting your proxy. This ensures your shares will be voted at the Annual Meeting.
What does it mean if I receive more than one proxy card?
If you have more than one account at the transfer agent and/or with stockbrokers, you will receive separate proxy cards for each account. Please sign and return all proxy cards to ensure that all your shares are voted.
How many votes may be cast at the Annual Meeting?
Based on the number of shares of Common Stock outstanding on the record date, up to 17,826,05221,956,633 votes may be cast on any matter.
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How many shares do you need to hold the Annual Meeting (what are the quorum requirements)?
Shares representing a majority of our outstanding votes on the record date of October 9, 200913, 2010 must be present at the Annual Meeting in order to hold the Annual Meeting and conduct business. This is called a quorum. Accordingly, a quorum will be 8,913,02710,978,317 shares.
Shares are counted as present at the Annual Meeting if the stockholder either:
| • | is present at the Annual Meeting; or | ||
| • | has properly submitted a proxy card. |
Who nominates individuals for election to the Board of Directors?
Nominations for the election of individuals to the Board of Directors may be made by the Board of Directors or by any holder of our voting stock.
How many votes must the director nominees have to be elected?
The two nominees receiving the highest number of votes will be elected as directors. This number is called a plurality. If you do not vote for a particular nominee, or you withhold authority to vote for a particular nominee on your proxy card, your vote will not count either “for” or “against” the nominee.
How many votes are required to ratify the selection of auditors?
The selection of Crowe Horwath LLP will be ratified if a majority of the votes cast on the selection are in favor of ratification.
Who pays the costs of soliciting these proxies?
The Company pays for distributing and soliciting proxies and reimburse the reasonable fees and expenses of brokers, nominees, fiduciaries and other custodians in forwarding proxy materials to stockholders. The directors, officers and regular employees of the Company may solicit proxies in person, through mail, telephone or other means. We do not pay those individuals additional compensation for soliciting proxies.
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PROPOSAL 1:
ELECTION OF DIRECTORS
Pursuant to our Amended and Restated Certificate of Incorporation, the Board of Directors must consist of no less than three members, the exact number of which is determined from time to time by the Board of Directors, divided into three classes designated Class A, Class B and Class C, respectively. The Board of Directors has presently fixed the number of directors at seven.six.
The terms of the Class A directors will expire as of the annual meeting of stockholders in 2010, the terms of Class B Directors will expire as of the annual meeting of stockholders in 2011 and the term of the Class C DirectorsDirector will expire as of the 20092012 Annual Meeting. Upon expiration of the terms of the Directors of each class as set forth above, the terms of their successors in that class will continue until the end of their terms and until their successors are duly elected and qualified.
The Board of Directors has nominated the two current Class CA directors for re-election by the stockholders. Each nominee has indicated that he is willing to serve as a director. If any nominee is unable to serve or for good cause will not serve, your proxy holders may vote for another nominee proposed by the Board of Directors. If any director resigns, dies or is otherwise unable to serve out his or her term, the Board of Directors may fill the vacancy until the next annual meeting.
Information About the Nominees and Continuing Directors
The following information is provided regarding the nominees and the continuing directors:
| Term to | ||||||||||||
| Name | Age | Director Since | Expire | |||||||||
| Nominees—Class A Directors: | ||||||||||||
| David M. Connell | 66 | 2005 | 2010 | |||||||||
| Manuel Marrero | 52 | 2005 | 2010 | |||||||||
| Class B Directors: | ||||||||||||
| Lawrence Glascott (Chairman) | 76 | 2005 | 2011 | |||||||||
| James B. Roszak | 67 | 2005 | 2011 | |||||||||
| Susan Harris | 53 | 2008 | 2011 | |||||||||
| Class C Directors: | ||||||||||||
| Ronald F. Valenta | 51 | 2005 | 2012 | |||||||||
Nominees
Both of the nominees are current directors and have consented to serve as directors. The Board of Directors has no reason to believe that either of the nominees will be unable to serve as a director. If a nominee is unable to serve or should a vacancy occur before the annual meeting, Board may reduce its size or 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.
David M. Connell has been a director since November 2005. In 1999 Mr. Connell founded Cornerstone Corporate Partners, LLC, a consulting and advisory firm. Prior to establishing Cornerstone Corporate Partners in 1999, Mr. Connell served as President and a member of the Board of Directors for Data Processing Resources Corporation, or DPRC, from 1992 to 1999. DPRC was a NASDAQ-listed provider of information technology consulting services to Fortune 500 companies. Prior to his services with DPRC, from 1988 to 1993, Mr. Connell was engaged by Welsh, Carson, Anderson & Stowe, a New York private equity firm, to manage a group of portfolio companies. From 1990 to 1993, Mr. Connell served as Chairman and Chief Executive Officer of Specialized Mortgage Service, Inc., an information technology company serving the real estate, banking, and credit rating industries. From 1988 to 1990, he served as Chairman and Chief Executive Officer of Wold Communications, Inc., which later merged and became Keystone Communications, a leading satellite communications service provider. Mr. Connell brings to the Board business experiences which include the management of a publicly listed company, strategic planning and the structuring of incentive plans for businesses in diverse industries.
| Term to | ||||||||||||
| Name | Age | Director Since | Expire | |||||||||
| Nominees—Class C Directors: | ||||||||||||
| Ronald F. Valenta | 50 | 2005 | 2009 | |||||||||
| Ronald L. Havner, Jr. | 51 | 2008 | 2009 | |||||||||
| Class A Directors: | ||||||||||||
| David M. Connell | 65 | 2005 | 2010 | |||||||||
| Manuel Marrero | 51 | 2005 | 2010 | |||||||||
| Class B Directors: | ||||||||||||
| Lawrence Glascott (Chairman) | 75 | 2005 | 2011 | |||||||||
| James B. Roszak | 68 | 2005 | 2011 | |||||||||
| Susan Harris | 52 | 2008 | 2011 | |||||||||
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Manuel Marrero has been a director since November 2005. 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. From January 2004 to March 2009, Mr. Marrero worked as a financial and operations management consultant with several companies, principally focused in consumer products brand management. From May 2002 until January 2004, Mr. Marrero served as the Chief Financial Officer of Mossimo, Inc., a designer and licensor of apparel and related products. From 1999 to 2001, Mr. Marrero was the Chief Operating Officer and Chief Financial Officer of Interplay Entertainment Corp., a developer, publisher and distributor of interacti ve entertainment software, and the Chief Financial Officer of Precision Specialty Metals, Inc. from 1996 to 1999, a light gauge conversion mill for flat rolled stainless steel and high performance alloy. He has served on the boards of Interplay OEM, Inc., Shiney Entertainment, Inc., Seed Internet Ventures, Inc., L.A. Top Producers, LLC, Friends of Rancho San Pedro and Tree People. Mr. Marrero’s business experiences and entrepreneurial accomplishments have assisted the Board in shaping the Company’s strategy and growth.
Continuing Directors
Lawrence Glascott has been our Chairman of the Board of Directors since November 2005. Mr. Glascott has served as a director of 99¢ Only Stores since 1996 where he currently serves on its Audit, Compensation and Nominating and Corporate Governance Committees. From 1991 to 1996 he was the Vice President — Finance of Waste Management International, an environmental services company. Prior thereto, Mr. Glascott was a partner at Arthur Andersen LLP and was in charge of the Los Angeles-based Arthur Andersen LLP Enterprise Group practice for over 15 years. Mr. Glascott’s experience in public accounting for companies in multiple industries provides the Board with key perspectives and insight.
Susan L. Harris has been a director since 2008. Ms. Harris served as a director of Mobile Services Group, Inc. and Mobile Storage Group, Inc., portable storage companies from May 2004 to August 2006 and from May 2002 to August 2006, respectively. Ms. Harris retired from SunAmerica Inc., a NYSE listed financial services company, where she served in a variety of positions between 1985 and 2000, including her most recent position as Senior Vice President, General Counsel and Corporate Secretary. Prior to joining SunAmerica, Ms. Harris worked for the law firm of Lillick, McHose and Charles, specializing in corporate and securities law. Ms. Harris brings to our Board broad legal experience and knowledge of the portable storage industry that provide key perspectives in corporate governance and legal matters.
James B. Roszak has been a director since November 2005. Mr. Roszak was employed by the Life Insurance Division of Transamerica Corporation, a financial services organization engaged in life insurance, commercial lending, equipment leasing and real estate services, from 1962 until his retirement in 1997. From 1978 to 1988 Mr. Roszak was based in Toronto, Canada and during that time served as the President and Chief Executive Officer of Transamerica's life insurance operations in Canada. In 1988 Mr. Roszak returned to the U. S. Life insurance operations as the Chief Marketing Officer and was subsequently named President the capacity in which he served until his retirement. Mr. Roszak also served on the board of directors of buy.com, an Internet retailer and NASDAQ liste d company and also served as its interim CEO from February 2001 to August 2001 when it was taken private. He was also a director of National RV Holdings from June 2003 until July 2008. He is currently a member of the Board of Trustees of Chapman University where he is the Chairman of the Finance Committee and he is also a member of the Board of Regents of Brandman University where he is the board secretary. Our board benefits from Mr. Roszak's management and board experience and deep knowledge of finance, accounting, international business, operations and risk management.
Ronald F. Valenta has served as a director and as our Chief Executive Officer since our inception. He served as our Chief Financial Officer from inception through September 2006 and as our Secretary from inception through December 2007. Mr. Valenta has been the Chairman of General Finance Group, Inc. since 2008. From 1988 to 2003 Mr. Valenta served as the President and Chief Executive Officer of Mobile Services Group, Inc., a portable storage company he founded. From 2003 to 2006 Mr. Valenta was a director of the National Portable Storage Association, a storage industry non-profit organization. From 1985 to 1989, Mr. Valenta was a Senior Vice President of Public Storage, Inc. From 1980 to 1985, Mr. Valenta was with the accounting firm of Arthur A ndersen & Co. in Los Angeles. Mr. Valenta’s experience in the portable storage industry, his financial and accounting background and the knowledge he acquired in managing diverse businesses provide the Board with key insights.
General Oversight
The business of the Vice-Chairman, Chief Executive OfficerCompany is managed under the direction of the Company’s Board of Directors. The Board of Directors’ general oversight responsibility is conferred by the Delaware General Corporation Law, the Company’s Amended and a memberRestated Certificate of Incorporation and the Company’s Bylaws. The leadership structure of the Board of Public Storage, Inc. since November 2002Directors and President since July 1, 2005. Mr. Havner joinedits committees assist the Public Storage, Inc.Board of Directors in 1986 and held a variety of senior management positions until his appointmentexercising its fiduciary duties as Vice-Chairman andit oversees the Company’s business affairs, Chief Executive Officer in 2002. Mr. Havner has been Chairman of the Public Storage’s affiliate, PS Business Parks, Inc. (PSB), since March 1998performance and was Chief Executive Officer of PSB from March 1998 until August 2003. He is also a member of the Board of Governorssuccession, internal controls over financial reporting and the Executive Committee of the National Association of Real Estate Investment Trusts, Inc. (NAREIT).Company’s long-term strategy.
Risk Oversight
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’ 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 the steps taken by management to maintain a directorstrong internal controls environment. In addition, representatives of buy.com, an Internet retailer, from February 2001 through August 2001. He is a memberthe 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 pri vate 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 Code of Ethics, committee charters and other policies approved by the Board of Trustees of Chapman University.Directors.
Director Independence
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 a 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 under The NASDAQ Stock Market rules and listing standards. 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 directo r’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 directors.”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.
Lead Independent Director
The Company does not have a lead independent director.
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Board and Committee Meetings
The Board of Directors held nine meetings during the fiscal year ended June 30, 2009,2010, or fiscal year 2009. 2010. Six of the nine meetings were regular meetings, and the remaining three 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 2009.2010.
Board Committees
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 2010 the independent directors met in executive session five times, and the Audit Committee met in executive session during each of its regularly scheduled meetings.
Audit Committee. The Audit Committee consists of Mr. Roszak, as Chairman, Mr. Connell and Mr. Glascott. The Board of Directors has determined that each member of the Audit Committee qualifies as “independent” within the meaning of The NASDAQ Stock Market rules and listing standards and Section 10A of the Securities Exchange Act of 1934, as amended. Our Board has determined Mr. Roszak, Mr. Connell and Mr. Glascott each qualify as an “audit committee financial expert,” as defined in the rules and regulations of the Securities and Exchange Commission.SEC. In addition, we have certified to NASDAQ that the committee has, and will continue to have, at least one member who has past employment experience in finance or accounting,a ccounting, requisite professional certification in accounting, or other comparable experience or background that results in the individual’s financial sophistication. Each member of the Audit Committee is an independent director under NASDAQ listing standards.
The functions of the Audit Committee and its activities during fiscal year 20092010 are described below under the heading “Report of the Audit Committee.”
The Board of Directors has adopted a written charter for the Audit Committee and the Audit Committee within the past year has reviewed and assessed the adequacy of the charter.charter, which was amended in February 2010. A copy of the Audit Committee Charter is available free of charge on the “Corporate Governance” section in our website at www.generalfinance.com or by written request addressed to our Secretary.
The Audit Committee met eightseven times in fiscal year 2009.2010.
Compensation Committee. The Compensation Committee consists of Mr. Connell, as Chairman, Ms. Harris and Mr. Roszak, each of whom is an independent director under NASDAQ rules and listing standards.
The purposes of the Compensation Committee are: (i) to determine and approve the goals, objectives and compensation structure for our executive officers; (ii) to review the performance of our executive officers; and (iii) to review the Company’s management resources, succession planning and development activities.
The Board of Directors established the Compensation Committee in May 2006, and the Compensation Committee adopted its charter in February 2007 and amended its charter in September 2009. A copy of the Compensation Committee Charter is available free of charge on the “Corporate Governance” section in our website at www.generalfinance.com or by written request addressed to our Secretary.
The Compensation Committee met fourfive times in fiscal year 2009.2010.
Nominating and Governance Committee. The Nominating and Governance Committee consists of Ms. Harris, as Chairwoman, Mr. Connell and Mr. Roszak.
The Nominating and Governance Committee is responsible for certain matters which include reviewing the size and composition of the Board of Directors, overseeing the selection of persons to be nominated to serve on our Board of Directors and maintaining and overseeing the corporate governance of the Company.
The Board of Directors adopted a written charter for the Nominating and Governance Committee in January 2006 and amended its charter in September 2009. A copy of the Nominating and Governance Committee Charter is available free of charge on the “Corporate Governance” section in our website at www.generalfinance.com or by written request addressed to our Secretary.
The Nominating and Governance Committee met twicefive times in fiscal year 2009.2010.
| Composition of the Board of Directors and Review of Director Nominees |
The Nominating and Governance Committee periodically assesses the size and composition of the Board of Directors. The Nominating and Governance Committee seeks to achieve a balance of knowledge, experience and capability on the Board of Directors. The committee is responsible for identifying and assessing potential director candidates and recommending qualified candidates to the Board of Directors. When considering candidates for director, the Nominating and Governance Committee takes into account a number of factors, including the following:
| • | Ethics and integrity; | ||
| • | Ability to attend regular and special board and committee meetings and willingness to perform the duties of a director; | ||
| • | Excellent moral character and reputation; | ||
| • | Industry knowledge, contacts and network of potential clients in industries served by the Company; | ||
| • | Ability to be responsible and fair-minded; | ||
| • | Prior experience on boards of directors; | ||
| • | Senior-level management experience; and | ||
| • | Possession of specific skills in auditing, accounting, personnel and finance. |
Candidates need not possess all of these characteristics, nor are all of these factors weighed equally.
The Nominating and Governance Committee periodically assesses the appropriate size of the Board of Directors anddetermines whether any vacancies on the Board of Directors are expected due to retirement or otherwise.expected. If vacancies are anticipated or arise, or the size of the Board of Directors expands, the Nominating and Governance Committee will consider various potential candidates for director. Candidates may come to the attention of the Board of Directors through current Board of Directors members or management, stockholders or other persons. These candidates will be evaluated at regular or special meetings of the Nominating and Governance Committee and may be considered at any point during the year.
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 5, 2009.October 25, 2010. The recommendation must by in writing addressed to the Corporate Secretary and must include the following: (i) statement that the writer is a stockholder and is proposing a candidate for consideration by the Nominating Committee; (ii) name and contact information for the candidate; (iii) 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) 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) 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 20092010 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 by writing to us at 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
The Company’s Code of Ethics applies to all our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer. The Code of Ethics sets forth the guiding principles by which the Board of Directors, officers and employees operate the Company’s businesses. The Code of Ethics is posted on our Internet website at www.generalfinance.com under the “Corporate Governance” section.
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
We currently have sixfive non-employee directors that qualify for compensation.
The following table provides information concerning the compensation of the directors for fiscal year 2009:2010:
Director Compensation
| Fees Earned | ||||||||
| or Paid in | ||||||||
| Name | Cash ($) | Total ($) | ||||||
| Lawrence Glascott | $ | 54,000 | $ | 54,000 | ||||
| David M. Connell | 50,000 | 50,000 | ||||||
| Manuel Marrero | 36,500 | 36,500 | ||||||
| James B. Roszak | 51,250 | 51,250 | ||||||
| Susan Harris | 44,000 | 44,000 | ||||||
| Ronald F. Valenta | — | — | ||||||
9
| Fees Earned | ||||||||
| or Paid in | ||||||||
| Name | Cash ($) | Total ($) | ||||||
| Lawrence Glascott | $ | 64,000 | $ | 64,000 | ||||
| David M. Connell | $ | 60,250 | $ | 60,250 | ||||
| Manuel Marrero | $ | 50,250 | $ | 50,250 | ||||
| James B. Roszak | $ | 61,500 | $ | 61,500 | ||||
| Ronald L. Havner, Jr. | $ | 22,500 | $ | 22,500 | ||||
| Susan Harris | $ | 43,774 | $ | 43,774 | ||||
| Ronald F. Valenta | $ | — | $ | — | ||||
In September 2007, our Board of Directors2009, the Compensation Committee approved a new schedule of compensation of our non-employee directors effective upon completion ofJanuary 1, 2010 which, as reflected by the acquisition of Royal Wolf.table below, reduced by ten percent the annual retainer payable to directors and established that if multiple committee meetings were held on the same day, the highest fee payable to a committee member for any meeting on such day would constitute the entire fee payable to such committee member for all meetings attended on a single day. These reductions do not apply to the fees payable to the committee chairs. 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.
| Annual Retainer—Chairman of the Board | $ | 40,000 | $ | 36,000 | ||||
| Annual Retainer—Other Directors | $ | 30,000 | 27,000 | |||||
| Additional Annual Retainer — Audit Committee Chair | $ | 10,000 | 10,000 | |||||
| Additional Annual Retainer — Compensation Committee Chair | $ | 7,500 | 7,500 | |||||
| Additional Annual Retainer — Nominating Committee Chair | $ | 3,000 | ||||||
| Additional Annual Retainer — Nominating and Governance Committee Chair | 3,000 | |||||||
| Board Meeting Attendance Fee—Chairman of the Board | $ | 2,000 | 2,000 | |||||
| Board Meeting Attendance Fee—Other Directors | $ | 1,500 | 1,500 | |||||
| Committee Meeting Attendance Fee | $ | 750 | 750 | |||||
| Telephonic Meeting Attendance Fee | $ | 500 | 500 | |||||
The annual retainers are payable in advance in semiannual increments on June 30 and December 31.
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 NOMINEES.
10
PROPOSAL 3:2:
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
On January 19, 2009, the Audit Committee approved the engagement of Crowe Horwarth LLP, or Crowe, as our new independent registered public accounting firm. The approval was pursuant to the personnel of Grobstein Horwath & Company LLP, or GHC, joining Crowe and subsequently notifying us that the GHC legal entity will no longer serve as our independent registered public accounting firm.
The Audit Committee has selected Crowe as our independent auditors for fiscal year 2010.ending June 30, 2011, or fiscal year 2011. We are asking the stockholders to ratify this selection. We expect a representative from Crowe to be present at 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 and GHC for professional services rendered with respect to our fiscal year ended June 30, 2009, or fiscal year 2009, and aggregate fees billed to us by GHC for professional services rendered with respect to our fiscal year 20082010 were as follows:
GHC | Crowe and GHC | |||||||||||||||
| 2008 | 2009 | 2009 | 2010 | |||||||||||||
| Audit Fees | $ | 433,846 | $ | 343,391 | $ | 383,691 | $ | 429,397 | ||||||||
| Audit-Related Fees | 28,224 | 22,857 | 22,857 | 101,011 | ||||||||||||
| Tax Fees | 13,669 | 50,247 | 61,947 | 82,804 | ||||||||||||
| All Other Fees | — | — | — | — | ||||||||||||
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 2009.2010.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE SELECTION OF CROWE AS OUR INDEPENDENT AUDITORS FOR FISCAL YEAR 2010.2011.
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 2010.2011. 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 20102011 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 following Report of the Audit Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent the Company specifically incorporates this Report by reference therein.
The Audit Committee oversees the financial reporting process on behalf of the Board of Directors. 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, 2009.2010.
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’smanagement& #8217;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.”
| Respectfully Submitted, | ||||
| James B. Roszak, Chairman | ||||
| Lawrence Glascott | ||||
| David M. Connell |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership of our common stock as of October 15, 2009,11, 2010, by (i) each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock; (ii) each of our executive officers and directors; and (iii) all of our executive officers and directors as a group. Unless otherwise noted, we believe that each beneficial owner named in the table has sole voting and investment power with respect to the shares shown, subject to community property laws where applicable. An asterisk (*) denotes beneficial ownership of less than one percent.
| Beneficial Ownership | Beneficial Ownership | |||||||||||||||
| Number of | Percent of | Number of | Percent of | |||||||||||||
| Name | Shares(1) | Class(1) | Shares(1) | Class(1) | ||||||||||||
| Ronald F. Valenta(2)(3) | 3,776,805 | 21.2 | % | 4,387,667 | 20. | 0% | ||||||||||
| James B. Roszak(2)(4) | 31,500 | (* | ) | 55,875 | (* | ) | ||||||||||
| Lawrence Glascott(2)(5) | 36,200 | (* | ) | 97,850 | (* | ) | ||||||||||
| Manuel Marrero(2)(6) | 50,500 | (* | ) | 89,125 | (* | ) | ||||||||||
| David M. Connell(2)(7) | 27,500 | (* | ) | 55,499 | (* | ) | ||||||||||
| Susan Harris(2)(8) | 3,000 | (* | ) | 7,500 | (* | ) | ||||||||||
| Ronald L. Havner, Jr.(9) | 2,562,175 | 14.4 | % | |||||||||||||
| Charles E. Barrantes(2)(9) | 213,250 | 1.0 | % | |||||||||||||
| Christopher Wilson(2)(10) | 132,450 | (* | ) | |||||||||||||
| Robert Allan(11)(12) | 93,297 | (* | ) | |||||||||||||
| Theodore M. Mourouzis(13)(14) | 406,330 | 1.9 | % | |||||||||||||
| Gilder, Gagnon, Howe & Co. LLC(15) | 909,736 | 4.1 | % | |||||||||||||
| Olowalu Holdings, LLC(16) | 2,370,498 | 10.8 | % | |||||||||||||
2863 S. Western Avenue Palos Verdes, California 90275 | ||||||||||||||||
| Jonathan Gallen(17) | 250,000 | 1.1 | % | |||||||||||||
299 Park Avenue, 17th Floor New York, New York 10171 | ||||||||||||||||
| Neil Gagnon(18) | 4,662,991 | 21.2 | % | |||||||||||||
1370 Avenue of the Americas, Suite 2400 New York, New York 10019 | ||||||||||||||||
| Jack Silver(19) | 765,000 | 3.5 | % | |||||||||||||
SIAR Capital LLC 660 Madison Avenue New York, New York 10021 | ||||||||||||||||
| Brencourt Advisors, LLC(20) | 231,117 | 1.0 | % | |||||||||||||
600 Lexington Avenue 8 th Floor New York, NY 10022 | ||||||||||||||||
Halcyon Asset Management LLC Halcyon Offshore Asset Management LLC (21) | 875,842 | 4.0 | % | |||||||||||||
477 Madison Avenue New York, NY 10022 | ||||||||||||||||
| Ronald L. Havner, Jr.(22) | 2,479,675 | 11.3 | % | |||||||||||||
LeeAnn R. Havner The Havner Family Trust c/o Karl Swaidan Hahn & Hahn LLP 301 East Colorado Boulevard, Suite 900 Pasadena, California 91101 | ||||||||||||||||
| Charles E. Barrantes(2)(10) | 154,000 | (* | ) | |||||||||||||
| Christopher Wilson(2)(11) | 114,000 | (* | ) | |||||||||||||
| Robert Allan(12)(13) | 69,170 | (* | ) | |||||||||||||
| Theodore M. Mourouzis(14)(15) | 262,463 | 1.5 | % | |||||||||||||
| Gilder, Gagnon, Howe & Co. LLC(16) | 961,720 | 5.4 | % | |||||||||||||
| Olowalu Holdings, LLC(17) | 1,354,571 | 7.6 | % | |||||||||||||
2863 S. Western Avenue Palos Verdes, California 90275 | ||||||||||||||||
| Jonathan Gallen(18) | 1,578,000 | 8.9 | % | |||||||||||||
299 Park Avenue, 17th Floor New York, New York 10171 | ||||||||||||||||
| Neil Gagnon(19) | 2,423,544 | 13.6 | % | |||||||||||||
1370 Avenue of the Americas, Suite 2400 New York, New York 10019 | ||||||||||||||||
| Jack Silver(20) | 2,613,900 | 14.7 | % | |||||||||||||
SIAR Capital LLC 660 Madison Avenue New York, New York 10021 | ||||||||||||||||
| Brencourt Advisors, LLC(21) | 231,117 | 1.3 | % | |||||||||||||
600 Lexington Avenue 8 th Floor New York, NY 10022 | ||||||||||||||||
Halcyon Asset Management LLC Halcyon Offshore Asset Management LLC (22) | 875,842 | 4.9 | % | |||||||||||||
477 Madison Avenue New York, NY 10022 | ||||||||||||||||
| All executive officers and directors as a group (eleven persons) | 7,056,313 | 39.6 | % | |||||||||||||
| Kaiser Investments Limited(23) | 887,878 | 4.0 | % | |||||||||||||
Second Floor Windsor Place 22 Queen Street Hamilton, HM HX Bermuda | ||||||||||||||||
| All executive officers and directors as a group (ten persons) | 5,538,843 | 25.2 | % | |||||||||||||