Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
(Address of principal executive offices) | (Zip Code) |
Title of Each Class | Trading Symbol | Name of exchange on which registered | ||
Large Accelerated Filer | ☐ | ☒ | |
Non-Accelerated Filer | ☐ | Smaller Reporting Company | |
Emerging Growth Company |
Page | ||
• | 31.3 Rule 13a-14(a)/15d-15(a) certification of the Chief Executive Officer; and |
• | 31.4 Rule 13a-14(a)/15d-15(a) certification of the Chief Financial Officer. |
Biographical Information | ||
Director Since | Age | |
Class I Director: | ||
Robert T. Morris | 2006 | 71 |
Class II Directors: | ||
Robert J. Keady | 2015 | 69 |
Austin C. Willis | 2008 | 39 |
Class III Directors: | ||
Charles F. Willis, IV | 1985 | 71 |
Hans Joerg Hunziker | 2006 | 70 |
Director Since: 2006 Independent | Robert T. Morris was elected to the Board in October 2006. He is currently President of Robert Morris & Company, a company he founded in 1992. Mr. Morris joined Union Bank of California Leasing in 2004 to establish an innovative equipment leasing group, and served as its President through March 2007. Prior to joining Union Bank of California Leasing, he was a consultant to more than 25 commercial banks for their equipment leasing operations over a 12 year period. He has also worked for Bank of San Francisco, Bank of Montreal and GATX Leasing Corporation. Mr. Morris holds a master’s degree from the American Graduate School of International Management and a Bachelor of Arts Degree from the University of Denver with majors in Economics, Political Science and History. Mr. Morris brings to the Board considerable expertise in the aviation equipment leasing industry, with a focus on finance and risk evaluation. |
Director Since: 2015 Independent | Robert J. Keady was elected to the Board in February 2015. Mr. Keady founded and currently serves as the President of Eastern Aviation Consulting Group, LLC, a company that provides consulting services for several aerospace and aviation firms. Prior to Eastern Aviation Consulting Group, LLC, Mr. Keady spent 33 years at Pratt & Whitney Commercial Engines, where he served as Vice President, Business Development & Marketing, as well as in numerous other senior management positions. Eastern Aviation Consulting Group’s client list has included major aviation manufacturers as well as a diverse client base of maintenance, repair and operations companies and services providers. Mr. Keady received his BA in Sociology from the University of Notre Dame and a Master of Science in Management from Purdue University. Mr. Keady brings to the Board an in-depth understanding of and experience in the engine, airline, lessor and MRO industries. |
Director Since: 2008 Senior Vice President, Corporate Development | Austin C. Willis was elected to the Board in December 2008. Mr. Willis was the founder of J.T. Power LLC, a privately held company engaged in the business of selling commercial jet turbine engine parts and leasing commercial aircraft. He served as J.T. Power’s President from its founding in 2004 until 2012, when day-to-day management as President of J.T. Power was transitioned to another individual, with Mr. Willis continuing as Chief Executive Officer. This transition was implemented to facilitate Mr. Willis’ enlistment in the U.S. armed forces in 2012, which enlistment the Board fully supported. In addition to his duties with J.T. Power and the U.S. armed forces, Mr. Willis has invested in commercial real estate in south Florida since 2013. Since 2006, Mr. Willis also owned and served as Chief Executive Officer of Aviation Management LLC, an aviation consulting firm, which Mr. Willis sold in 2014. From February 2016 until his deployment by the Special Forces of the U.S. Army in July 2016, Mr. Willis served as the Company’s Senior Vice President, Corporate Development, a position he resumed upon his return in April 2017. Mr. Willis holds a bachelor’s degree from the London School of Economics and Political Science, where he studied finance and industrial relations. He is the son of Charles F. Willis, IV. Mr. Willis brings to the Board familiarity with the aviation industry generally, with a focus on the after‑market disposition of the aircraft engines and parts that comprise the Company’s engine portfolio. |
Director Since: 1985 CEO and Chairman of the Board | Charles F. Willis, IV is the founder of Willis Lease, has served as Chief Executive Officer and a Director since our incorporation in 1985, served as President until July 2011, and has served as Chairman of the Board of Directors since 1996. Mr. Willis has over 45 years of experience in the aviation industry. From 1975 to 1985, Mr. Willis served as President of Willis Lease’s predecessor, Charles F. Willis Company, which purchased, financed and sold a variety of large commercial transport aircraft and provided consulting services to the aviation industry. During 1974, Mr. Willis operated a small business not involved in the aviation industry. From 1972 through 1973, Mr. Willis was Assistant Vice President of Sales at Seaboard World Airlines, a freight carrier. From 1965 through 1972, he held various positions at Alaska Airlines, including positions in the flight operations, sales and marketing departments. As our founder and Chief Executive Officer, Mr. Willis brings to the Board significant senior leadership, sales and marketing, industry, technical and global experience, as well as a deep institutional knowledge of the Company, its operations and customer relations. |
Director Since: 2006 Independent | Hans Joerg Hunziker previously served as one of our Directors from November 2000 until July 1, 2003. He was elected a Class II Director at the 2006 Annual Meeting. Since 2002, Mr. Hunziker has been the owner and CEO of AllJets AG (formerly known as HLF Aviation GmbH and Hunziker Lease & Finance), a company he founded in Switzerland that offers independent business consulting services to the aviation industry. From 1998 to 2002, he was the President and Chief Executive Officer of Flightlease AG Ltd., a public company involved in aircraft leasing as a subsidiary of SAirGroup whose headquarters are in Zurich, Switzerland. From 1996 to 1998, he was the Chief Financial Officer of SAirServices Ltd., a group of companies including aircraft maintenance and overhaul, ground handling services, information technology and real estate. From 1991 to 1996, he was Chief Financial Officer of Swissair Associated Companies Ltd., a group of 150 companies, primarily in the hotel, catering (Gate Gourmet) and trading business. Mr. Hunziker holds a master’s degree in Economics and Business Administration from the University of Zurich. He also received the equivalent of a doctoral degree from the University of Zurich, after successful completion of his thesis on Strategic Planning in the Airline Industry. In addition to previously serving as a Director of Willis Lease, he was Member and later Chairman of the Board of SRTechnics Group AG, Zürich. Mr. Hunziker brings to the Board a high level of financial sophistication, broad international exposure and significant experience in commercial aviation and the aviation equipment leasing industry. |
Name | Age | Positions and Offices | |||
Charles F. Willis, IV* | 71 | Chief Executive Officer | |||
Brian R. Hole | 42 | President | |||
Scott B. Flaherty | 54 | Senior Vice President and Chief Financial Officer | |||
Dean M. Poulakidas | 51 | Senior Vice President, General Counsel and Corporate Secretary | |||
Austin C. Willis* | 39 | Senior Vice President, Corporate Development | |||
*See business experience background under “Board of Directors -- Principal Occupations, Background and Qualifications of Directors” above. |
President | Brian R. Hole joined Willis Lease in August 2014 and was promoted to President on April 1, 2016. Prior to his appointment as President, he served as Senior Vice President & Chief Investment Officer. Formerly, Mr. Hole was Owner and President of Aviation Opportunity Management LLC, where he advised bank, private equity and alternative investment funds regarding investment in large commercial aircraft and engines. Prior to starting his own business, from 2008 to 2012, Mr. Hole served as an attorney for United Technologies Corporation, Pratt & Whitney Division, where he worked with the Commercial Engines Group in assisting with the next generation product family of engines, and specifically, on the partnership for the PW1100G engine on the Airbus A320neo family of aircraft and at IAE International Aero Engines, where he structured and negotiated engine sales and aftermarket programs as well as spare engine and aircraft financings. Mr. Hole earned his undergraduate degree from Georgetown University and a law degree, with high honors, from the University of Connecticut School of Law. |
Senior Vice President, Chief Financial Officer | Scott B. Flaherty joined Willis Lease in June 2016 and serves as our Senior Vice President and Chief Financial Officer. Prior to joining Willis Lease, Mr. Flaherty was Senior Vice President of Finance and Chief Financial Officer at Colt Defense LLC from 2009 until April of 2016. Prior to Colt Defense LLC, Mr. Flaherty was a Managing Director at Banc of America Securities LLC where he ran the origination effort, within the equity capital markets group, for various industries. Mr. Flaherty also was an investment banker at Credit Suisse First Boston. He worked as an engineer at the Pratt and Whitney division of the United Technologies Corporation for eight years. Mr. Flaherty earned his undergraduate degree from Worcester Polytechnic Institute and an MBA from the Leonard N. Stern School of Business at New York University. |
Senior Vice President, General Counsel and Corporate Secretary | Dean M. Poulakidas joined Willis Lease in September 2011 and currently serves as our Senior Vice President, General Counsel and Corporate Secretary. Prior to his appointment as General Counsel, he served as Senior Counsel until March 31, 2013. Formerly, Mr. Poulakidas was Vice President and Corporate Counsel with International Lease Finance Corporation (ILFC), where he managed a wide variety of aviation transactions working with airlines, manufacturers, purchasers, financiers, service providers and aviation authorities in many jurisdictions. Prior to ILFC, he was a corporate attorney at Pillsbury Madison & Sutro, where his transactional experience included international and domestic joint ventures, mergers and acquisitions. Mr. Poulakidas earned his undergraduate degree from the University of California at Los Angeles, his masters degree from Columbia University and his law degree from the University of California’s Hastings College of the Law. |
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Grants ($) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total ($) | |||
Charles F. Willis, IV Chief Executive Officer | 2019 | 1,050,000 | — | 5,794,620 | — | 3,580,231 | 259,287 (2) | 10,684,138 | |||
2018 | 1,050,000 | — | 4,113,600 | — | 2,478,252 | 390,082 | 8,031,934 | ||||
Brian R. Hole President | 2019 | 435,750 | — | 1,070,745 | — | 1,262,926 | 19,556 (3) | 2,788,977 | |||
2018 | 435,750 | — | 822,720 | — | 874,203 | 15,344 | 2,148,017 | ||||
Scott B. Flaherty Senior Vice President and Chief Financial Officer | 2019 | 391,125 | — | 755,820 | — | 666,818 | 164,214(4) | 1,977,977 | |||
2018 | 391,125 | — | 908,420 | — | 461,574 | 391,478 | 2,152,597 |
(1) | The amounts in this column represent the grant date fair value of awards computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 as discussed in Note 13 - Stock-Based Compensation Plans - in our annual report on Form 10-K for the fiscal year 2019 filed with the SEC. Such amounts reflect equity awards granted in 2019 with respect to achievement of 2018 performance goals. This column does not include the grant date fair value of $2,850,000, $560,625 and $397,500 for restricted stock awards granted in April 2020 to Messrs. Willis, Hole and Flaherty, respectively, subject to time-based vesting conditions, due to achievement of 2019 performance goals. See "2020 Equity Awards” below for more information about those awards. |
(2) | Includes (i) a 401(k) matching contribution in the amount of $12,500, (ii) $3,168 for the allocated cost of Mr. Charles Willis’ participation in a group life, disability and accidental death and dismemberment policy that covers certain of the Company’s executive officers, and the following perquisites: |
• | $20,734 for spousal travel. This amount is based on the actual cost to the Company |
• | $162 for personal use of a company car. This amount was calculated as a proration of total fuel costs and highway tolls (based on personal use as a percentage of total use). |
• | $113,361 moving reimbursements benefits paid to or on behalf of Mr. Charles Willis in connection with his relocation to the United Kingdom. |
• | $109,362 for tax reimbursements with respect to the items listed above. |
• | In addition, Mr. Charles Willis had guests accompany him on the Company’s plane on business trips during 2019, with no or de minimis incremental costs. |
(3) | Includes (i) a 401(k) matching contribution in the amount of $9,500, (ii) $2,511 for the allocated cost of Mr. Hole’s participation in a group life, disability, and accidental death and dismemberment policy that covers certain of the Company’s executive officers, (iii) $5,174 for personal use of a company car which was calculated as a proration of total fuel costs and highway tolls (based on personal use as a percentage of total use), and (iv) $2,371 for personal use of a Company club membership (based on personal usage). |
(4) | Includes (i) a 401(k) matching contribution in the amount of $12,500, (ii) $2,258 for the allocated cost of Mr. Flaherty’s participation in a group life, disability, and accidental death and dismemberment policy that covers certain of the Company’s executive officers, (iii) $5,445 for personal use of a company car which was calculated as a proration of total fuel costs and highway tolls (based on personal use as a percentage of total use), and (iv) $144,011 for the one-time costs associated with a club membership and personal use of such membership. |
Executive | Restricted Stock | Target Performance Shares | Earned Performance Shares | Total Restricted Shares Granted on April 1, 2019 | ||||||||
Charles F. Willis, IV | 66,000 | 36,000 | 72,000 | 138,000 | ||||||||
Brian R. Hole | 8,500 | 8,500 | 17,000 | 25,500 | ||||||||
Scott B. Flaherty | 6,000 | 6,000 | 12,000 | 18,000 |
Executive | Restricted Stock | Target Performance Shares | Earned Performance Shares | Total Restricted Shares Granted on April 1, 2020 | ||||||||
Charles F. Willis, IV | 44,000 | 54,000 | 108,000 | 152,000 | ||||||||
Brian R. Hole | 7,500 | 11,200 | 22,400 | 29,900 | ||||||||
Scott B. Flaherty | 5,200 | 8,000 | 16,000 | 21,200 |
Option Awards | Stock Awards | ||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Option Exercise Price ($) | Option Expiration Date | Award Grant Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | |||||||||||||
Charles F. Willis, IV | — | — | — | 3/17/2017 | 32,666 | (1) | $ | 1,904,754 | |||||||||||
— | — | — | 4/1/2018 | 80,000 | (1) | $ | 4,664,800 | ||||||||||||
— | — | — | 4/1/2019 | 138,000 | (1) | $ | 8,046,780 | ||||||||||||
Brian R. Hole | — | — | — | 3/17/2017 | 7,500 | (1) | $ | 437,325 | |||||||||||
— | — | — | 4/1/2018 | 15,999 | (1) | $ | 932,302 | ||||||||||||
4/1/2019 | 25,500 | (1) | $ | 1,486,905 | |||||||||||||||
Scott B. Flaherty | — | — | — | 3/17/2017 | 5,000 | (1) | $ | 291,550 | |||||||||||
— | — | — | 3/30/2018 | 6,666 | (1) | $ | 388,694 | ||||||||||||
— | — | — | 4/1/2018 | 10,999 | (1) | $ | 641,352 | ||||||||||||
— | — | — | 4/1/2019 | 18,000 | (1) | $ | 1,049,580 |
(1) | Shares of restricted stock vest in three equal annual installments on each anniversary of the grant date. The number listed reflects the remaining number of shares to vest over the remaining period. |
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Option Awards ($) | All Other Compensation ($) | Total ($) | ||||||||||||
Hans Joerg Hunziker(3) | $ | 205,054 | $ | 157,980 | — | — | $ | 363,034 | |||||||||
Robert J. Keady | 148,582 | 157,980 | — | — | 306,562 | ||||||||||||
Robert T. Morris | 148,582 | 157,980 | — | — | 306,562 |
(1) | Each Director received quarterly payments of $21,271 ($85,082 for the year). For services as chair of the Audit Committee and Compensation Committee, respectfully, Mr. Morris and Mr. Hunziker receive an additional $4,375 quarterly payment ($17,500 for the year). Mr. Keady also receives an additional $4,375 quarterly payment ($17,500 for the year) for his services as chair of independent committees of the Board. Each Director also received an additional payment of $46,000 for service on an independent committee established by the Board of Directors to review and negotiate a proposal from our Chief Executive Officer and other parties to acquire the Company pursuant to a merger. |
(2) | The amounts in this column represent the grant date fair value of awards computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. |
(3) | The Compensation Committee agreed to allow the compensation of European Directors to be adjusted based on the rate in effect on their first election to the Board, effective January 1, 2008. This adjustment is paid in cash. Effective January 1, 2020, the restricted stock portion of the compensation of European Directors will no longer be adjusted and the cash portion of their compensation will be adjusted based on the U.S. dollar exchange rate as of December 31st for the prior year. |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
Common stock(1) | |||||||
Name and Address of Beneficial Owner | Number of Shares | Percentage of Class | |||||
Charles F. Willis, IV | 3,066,230 | (2) | 46.67 | % | |||
Austin C. Willis | 526,276 | (3) | 8.01 | % | |||
Brian R. Hole | 94,799 | 1.44 | % | ||||
Scott B. Flaherty | 89,243 | 1.36 | % | ||||
Robert J. Keady | 23,529 | * | |||||
Hans Joerg Hunziker | 20,444 | * | |||||
Robert T. Morris | 7,688 | * | |||||
All Directors and Executive Officers as a group (8 persons) | 3,400,429 | 51.76 | % | ||||
Dimensional Fund Advisors LP | 517,210 | (4) | 7.87 | % | |||
Renaissance Technologies LLC | 463,232 | (5) | 7.05 | % |
* | Less than one percent of our outstanding common stock. |
(1) | Except as indicated in the footnotes to this table, the stockholders named in the table are known to us to have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable. With respect to restricted stock, individuals have voting power or are expected to have voting power within 60 days of April 15, 2020, but not investment power before such restricted stock vests. Of the shares listed above for Messrs. Charles Willis, Austin Willis, Hole, Flaherty, Keady, Hunziker and Morris, 284,000 shares, 38,699 shares, 54,898 shares, 42,032 shares, 3,000 shares, 3,000 shares, and 3,000 shares, respectively, are unvested shares of restricted stock over which the respective stockholder has voting power but not investment power. |
(2) | Includes 2,134,148 shares held by CFW Partners, L.P., a California limited partnership (“CFW Partners”), of which Charles F. Willis, IV, holds a one percent (1%) interest as sole general partner and an eighty percent (80%) interest as a limited partner. Austin C. Willis holds the remaining nineteen percent (19%) interest as a limited partner. Also includes (i) 4,318 shares held under an account in the name of Charlotte Montressor Willis, (ii) 584 shares held under an account in the name of Wylder Grace Willis 2016 Trust, and (iii) 817,402 shares held by Mr. Charles Willis in his individual capacity. (Pursuant to the Military Durable Power of Attorney dated August 24, 2012 and further discussed in Item 6 of the amendment to the 13D filed on August 28, 2013, Mr. Charles Willis has shared voting power and shared dispositive power with regard to the 109,778 shares held by Mr. Austin Willis and shared voting power with respect to the shares attributable to the 19% limited partnership interest in CFW Partners held by Mr. Austin Willis). |
(3) | Consists of (i) 405,488 shares held by CFW Partners of which Mr. Austin Willis has a 19% interest as a limited partner, (ii) 109,778 shares held by Mr. Willis in his individual capacity, of which 50,000 shares are pledged, and (iii) the following shares held by trusts over which Mr. Austin Willis is a trustee: (a) 8,692 shares held under an account in the name of Charles F. Willis V 2016 Trust, (b) 250 shares held under an account in the name of Charles F. Willis V 2019 Trust, (c) 250 shares held under an account in the name of Wylder Grace Willis 2019 Trust, (d) 250 shares held under an account in the name of Rooster A. Willis 2019 Trust, (e) 584 shares held under an account in the name of Justin Y. Brown 2014 Trust, (f) 484 shares held under an account in the name of Phoebe W. Brown 2014 Trust, (g) 250 shares held under an account in the name of Justin Y. Brown 2019 Trust, and (h) 250 shares held under an account in the name of Phoebe W. Brown 2019 Trust. Of the total number of shares of which Mr. Austin Willis is deemed to have beneficial ownership, he has (i) sole voting and dispositive power over 11,010 shares, (ii) shared voting power over 515,266 shares, and (iii) shared dispositive power over 71,079 shares. |
(4) | Based on Schedule 13G/A filed by Dimensional Fund Advisors LP with the SEC on February 12, 2020. According to its Schedule 13G/A, Dimensional Fund Advisors LP reported having sole voting power over 515,113 shares and sole dispositive power over 517,210 shares. Dimensional Fund Advisors LP’s mailing address is Building One, 6300 Bee Cave Rd., Austin, TX 78746. |
(5) | Based on Schedule 13G/A filed by Renaissance Technologies LLC (“RTC”) with the SEC on February 13, 2020. According to its Schedule 13G/A, RTC reported having sole voting power over 438,438 shares, sole dispositive power over 462,708 shares, and shared dispositive power over 524 shares and Renaissance Technologies Holding Corporation, as majority owner of RTC, has beneficial ownership of 463,232 shares beneficially owned by RTC. RTC's mailing address is 800 Third Avenue, New York, NY 10022. |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
• | Transactions involving competitive bids; |
• | Any transaction with another company at which a related person's only relationship is as an employee (other than an executive officer), director or beneficial owner of less than 10% of that company's shares, if the aggregate amount involved does not exceed the greater of $1,000,000 and 2% of that company's total annual revenues;. |
• | Any charitable contribution, grant or endowment by the Company to a charitable organization, foundation or university at which a related party’s only relationship is as an employee or director if the aggregate does not exceed the greater of $100,000 and 2% of the charitable organizations’ total annual receipts; |
• | Any transaction involving a related party made on the same or similar terms available to all Company employees; |
• | Any transaction where the related person's interest arises solely from the ownership of the Company's common stock and all holders of the Company's common stock received the same benefit on a pro rata basis, such as the receipt of dividends. |
• | Any employment by the Company of an executive officer of the Company if: |
• | The related compensation is required to be reported in the Company's proxy statement under Item 402 of the Securities and Exchange Commission's (“SEC's”) compensation disclosure requirements (generally applicable to “named executive officers”) and the compensation has been approved by the Compensation Committee or Board or if the executive officer is not an immediate family member of another executive officer or director of the Company, the related compensation would be reported in the Company's proxy statement under Item 402 of the SEC's compensation disclosure requirements if the executive officer was a “named executive officer”, and the Company's Compensation Committee or Board approved such compensation; or |
• | Any compensation paid to a director if the compensation is required to be reported in the Company's proxy statement under Item 402 of the SEC's compensation disclosure requirements and the compensation is approved by the Board or Audit Committee. |
2019 | 2018 | ||||||||
Audit Fees (1) | $ | 1,557,511 | $ | 1,657,672 | |||||
Audit Related Fees | — | 160,000 | |||||||
Tax Fees (2) | 69,300 | 43,697 | |||||||
$ | 1,626,811 | $ | 1,861,369 |
(1) | Audit fees billed to us by KPMG during the 2019 and 2018 fiscal years include the audit of our annual financial statements and quarterly reviews of financial statements included in our quarterly reports on Form 10-Q and our statutory audits. |
(2) | Fees billed to us by KPMG during 2019 and 2018 for professional services rendered in providing international tax consulting services and tax compliance services. |
Exhibit Number | Description |
31.3 | |
31.4 | |
104 | The cover page from this Amendment No. 1 on Form 10-K/A, formatted in Inline XBRL. |
Dated: | April 29, 2020 | ||
Willis Lease Finance Corporation | |||
By: | /s/ CHARLES F. WILLIS, IV | ||
Charles F. Willis, IV | |||
Chairman of the Board and | |||
Chief Executive Officer |