10-K/APeriod: FY2015

FTAI Aviation Ltd. Annual Report (Amendment), Year Ended Dec 31, 2015

Filed April 29, 2016For Securities:FTAIFTAIMFTAIN

Summary

FTAI Aviation Ltd. (FTAI) presented its 2016 Annual Report (10-K) detailing its corporate governance, executive compensation, and security ownership. A key aspect is the company's governance structure, featuring a five-member Board of Directors divided into three classes with staggered three-year terms. The board is overseen by a majority of independent directors, and its committees (Audit, Nominating and Corporate Governance, Compensation) are composed entirely of independent directors, aligning with NYSE listing rules. Executive compensation is notably structured through a management agreement with Fortress Investment Group LLC. FTAI officers are compensated by Fortress, not directly by FTAI, as their services are not exclusive to the company. FTAI may grant equity awards to Fortress, which can then be allocated to its employees, including FTAI officers, to align interests. The company also has a Nonqualified Stock Option and Incentive Award Plan designed to incentivize service providers, with a significant portion of shares reserved for potential grants.

Financial Highlights

45 data points
Beta

Revenue

$136.57M

Net Income

-$11.83M

-8.7% Net Margin

EPS (Diluted)

$-0.18

Total Assets

$1.64B

Cash & Equivalents

$403.31M

Free Cash Flow

-$72.50M

Financial Statements
Beta
Revenue$136.57M
Operating Expenses$161.68M
Interest Expense$19.31M
Net Income-$11.83M
EPS (Basic)$-0.18
EPS (Diluted)$-0.18
Shares Outstanding (Basic)67.04M
Shares Outstanding (Diluted)67.04M

Key Highlights

  • 1FTAI Aviation Ltd. operates with a five-member Board of Directors with staggered three-year terms, emphasizing a structured governance framework.
  • 2A majority of the Board of Directors and all members of its key committees (Audit, Nominating/Corporate Governance, Compensation) are independent, adhering to NYSE standards.
  • 3Executive officers are compensated by the affiliated Manager (Fortress Investment Group LLC) rather than directly by FTAI, with compensation tied to services rendered to multiple entities.
  • 4FTAI has adopted a Nonqualified Stock Option and Incentive Award Plan to grant equity awards (options, SARs, restricted stock) to service providers, aiming to align interests with shareholders.
  • 5The company has a Registration Rights Agreement with Fortress entities, granting them demand and piggyback registration rights for their common shares, subject to certain conditions and beneficial ownership thresholds.
  • 6Director compensation includes an annual fee of $150,000 for non-employee directors, with additional fees for committee chairs. Initial one-time option grants are also provided to non-employee directors.
  • 7Significant institutional investors include Arch Capital Holdings Ltd. (8.0%), The Washington State Investment Board (7.1%), and Harvard Management Company, Inc. (5.3%), indicating broad institutional interest.

Frequently Asked Questions

FTAI's executive officers are employees of its Manager, Fortress Investment Group LLC, or its affiliates. They are compensated by the Manager because their services are not exclusive to FTAI but are provided to multiple entities. This arrangement is governed by a Management Agreement. While FTAI does not directly pay cash compensation, it may grant equity awards to the Manager or its affiliates, which can then be allocated to officers and employees to incentivize performance and align interests with FTAI's shareholders.

The Board of Directors consists of five members and is divided into three classes with staggered three-year terms. FTAI emphasizes strong corporate governance, with a majority of its directors being independent. Furthermore, all members of its standing committees – the Audit Committee, Nominating and Corporate Governance Committee, and Compensation Committee – are independent directors, meeting the requirements of the NYSE listing rules.

The Nonqualified Stock Option and Incentive Award Plan, adopted in May 2015, is designed to provide long-term equity-based incentives to service providers. The plan allows for the grant of options, stock appreciation rights (SARs), restricted stock, and performance awards. FTAI has reserved 30,000,000 Common Shares for issuance under this plan. Notably, the company anticipates granting options to its Manager or its affiliates in connection with equity offerings, with these options typically vesting immediately and being exercisable over a specified period, intended to align the Manager's interests with those of shareholders.

The filing addresses potential conflicts of interest arising from the relationship with Fortress Investment Group LLC, the company's Manager. The LLC Agreement outlines that Fortress and its affiliates have the right to engage in similar businesses, do business with FTAI's clients, and employ FTAI's personnel, with no duty to offer such opportunities to FTAI. FTAI has renounced any interest in such corporate opportunities. The Registration Rights Agreement also grants Fortress entities the right to register their shares. These arrangements are subject to the review and approval of independent directors to ensure fairness to FTAI.