Aircastle Limited
Aircastle LTD (Form: DEF 14A, Received: 04/05/2017 16:59:55)



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]
Check the appropriate box:

[ ]
Preliminary Proxy Statement

[ ]
Confidential, for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

[ X ]
Definitive Proxy Statement

[ ]
Definitive Additional Materials

[ ]
Soliciting Material Pursuant to §240.14a-12

AIRCASTLE LIMITED


(Name of Registrant as Specified in Its Charter)


(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X]
No fee required.

[ ]
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1)
Title of each class of securities to which transaction applies:

(2)
Aggregate number of securities to which transaction applies:

(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):

(4)
Proposed maximum aggregate value of transaction:

(5)
Total fee paid:





[ ]
Fee paid previously with preliminary materials.

[ ]
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

(1)
Amount Previously Paid:

(2)
Form, Schedule or Registration Statement No.:

(3)
Filing Party:

(4)
Date Filed:








AIRCASTLELOGOA01.JPG
Aircastle Limited
c/o Aircastle Advisor LLC
300 First Stamford Place, 5 th Floor
Stamford, CT 06902

April 5, 2017

Dear Fellow Shareholders:

On behalf of your Board of Directors, we are pleased to invite you to attend the 2017 Annual General Meeting of Shareholders of Aircastle Limited. This meeting will be held on May 19, 2017, at 10:00 a.m. Eastern Daylight Time, at the Delamar Hotel, located at 500 Steamboat Road , Greenwich, Connecticut, USA, 06830.
This year, we will again utilize the U.S. Securities and Exchange Commission, or SEC, rule allowing companies to furnish proxy materials to their shareholders electronically. We believe that this e-proxy process expedites shareholders’ receipt of proxy materials, while lowering the costs and reducing the environmental impact of our annual general meeting. In accordance with applicable SEC rules, on April 5, 2017, the Company began mailing to certain of our shareholders a Notice of Internet Availability of Proxy Materials, or Internet Notice, containing instructions on how to access electronically our proxy statement and annual report and how to vote. Shareholders who did not receive this Internet Notice will receive the annual general meeting materials by mail, including our proxy statement, proxy card and annual report.
Our proxy statement contains detailed information about the business to be conducted at the annual general meeting. To assure that your shares are represented at the annual general meeting, we urge you to exercise your vote by Internet, telephone or mail by following the instructions included on page 2 of the proxy statement and in the Internet Notice or proxy card that you received. If you are able to attend the annual general meeting and wish to vote your shares personally, you may do so at any time before the proxy is voted at the annual general meeting.
If you plan to attend the annual general meeting, please follow the instructions on pages 2-3 of the proxy statement.

Sincerely,
 
BEERSA01.JPG
 
Christopher L. Beers
 
General Counsel






AIRCASTLELOGOA01.JPG
Aircastle Limited
c/o Aircastle Advisor LLC
300 First Stamford Place, 5th Floor
Stamford, CT 06902


Notice of the 2017 Annual General Meeting of Shareholders



To Our Shareholders:

Aircastle Limited will hold its 2017 Annual General Meeting of Shareholders, or the Annual Meeting, at the Delamar Hotel, located at 500 Steamboat Road , Greenwich, Connecticut, USA, 06830 on May 19, 2017 at 10:00 a.m. Eastern Daylight Time. The matters to be considered and acted upon at the Annual Meeting, which are described in detail in the accompanying materials, are:

1.
the election of four Class II Directors to serve until the 2020 annual general meeting of Aircastle Limited or until their office shall otherwise be vacated pursuant to our Bye-laws;
2.
the appointment of Ernst & Young LLP as independent registered public accounting firm for Aircastle Limited for fiscal year 2017 and the authorization of the Directors of Aircastle Limited, acting by the Audit Committee, to determine the independent registered public accounting firm’s fees;
3.
approval of the Aircastle Limited Amended and Restated 2014 Omnibus Incentive Plan, including the performance goals established under the plan for purposes of compliance with Section 162(m) of the Internal Revenue Code;
4.
an advisory vote on executive compensation;
5.
an advisory vote on the frequency of the advisory vote on executive compensation; and
6.
any other business properly presented at the Annual Meeting and any adjournment(s) or postponement(s) of the Annual Meeting.
Your Board of Directors recommends that you vote in favor of proposals 1, 2, 3 and 4 and vote in favor of every "Three Years" for proposal 5, which are set forth in the accompanying proxy statement.

We will also present at the Annual Meeting the consolidated financial statements and independent registered public accounting firm's report for the fiscal year ended December 31, 2016, copies of which can be found in our 2016 Annual Report that accompanies this Notice or which was previously circulated to shareholders.

Shareholders of record at the close of business on March 23, 2017 are entitled to notice of, and to vote at, the Annual Meeting. Our stock transfer books will remain open for the transfer of our common shares. A list of all shareholders entitled to vote at the Annual Meeting will be available for examination at our principal executive office located at c/o Aircastle Advisor LLC, 300 First Stamford Place, 5 th Floor, Stamford, CT 06902, for the ten days before the Annual Meeting between 9:00 a.m. and 5:00 p.m., Eastern Daylight Time, and at the place of the Annual Meeting during the Annual Meeting for any purpose germane to the Annual Meeting.

By Order of the Board of Directors,
AAGSIGNATUREA02.JPG
Alexander A. Green
Secretary
Stamford, CT
April 5, 2017





Important Notice Regarding the Internet Availability of Proxy Materials for the Shareholder Meeting to be held on May 19, 2017. The proxy statement and annual report are available at www.aircastle.com/investors.

REGARDLESS OF WHETHER YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE VOTE AS PROMPTLY AS POSSIBLE BY USING THE INTERNET OR TELEPHONE, OR IF YOU RECEIVED A PAPER COPY OF THE PROXY MATERIALS, BY SIGNING, DATING AND RETURNING THE PROXY CARD INCLUDED THEREWITH.







TABLE OF CONTENTS

 
Page
GENERAL INFORMATION ABOUT THE MEETING
Date, Time and Place of Annual General Meeting
Matters to be Considered at the Annual General Meeting
Quorum and Voting Requirements
Voting of Proxy
Revocability of Proxy
Persons Making the Solicitation
Recommendations of the Board of Directors
Attendance at the Meeting
CORPORATE GOVERNANCE
Legal Proceedings Involving Directors, Officers or Affiliates
Director Independence
Policies and Practices
Corporate Governance Guidelines
Code of Business Conduct and Ethics
Communications with the Board
Meetings of the Board
Board Leadership Structure and Executive Sessions
Board Oversight of Risk Management
Committees of the Board
DIRECTORS' COMPENSATION
Cash Compensation
Restricted Share Grants
Stock Ownership Guidelines for Directors
Director Award Limits
OWNERSHIP OF THE COMPANY’S COMMON SHARES
Security Ownership of Certain Beneficial Owners and Management
Section 16(a) Beneficial Ownership Reporting Compliance
Insider Trading Policy
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Pay for Performance Philosophy
What We Pay
What We Don’t Pay
2016 Compensation
Long-Term Incentive Plan
How We Make Decisions
Share Ownership Guidelines
Tax Implications of Our Compensation
Last Year’s Say on Pay Vote
Compensation Committee Interlocks and Insider Participation
Compensation Overview
COMPENSATION COMMITTEE REPORT
Summary Compensation Table for 2016
Grants of Plan-Based Awards for 2016
Employment Agreements with Named Executive Officers
Restricted Share and PSU Provisions under the Incentive Plan
Outstanding Equity Awards at Fiscal Year-End for 2016
Stock Vested for 2016
Potential Payments upon Termination or Change in Control
Equity Compensation Plan Information
AUDIT COMMITTEE REPORT
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Marubeni Corporation Shareholder Agreement Amendment
Joint Venture with Ontario Teachers’ Pension Plan




Policies and Procedures For Review, Approval or Ratification of Transactions with Related Persons
PROPOSAL NO. 1 – ELECTION OF DIRECTORS
PROPOSAL NO. 2 – APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Audit Fees, Audit Related Fees, Tax Fees and All Other Fees
Audit Committee Pre-Approval Policies and Procedures
PROPOSAL NO. 3 – APPROVAL OF THE AIRCASTLE AMENDED AND RESTATED 2014 OMNIBUS INCENTIVE PLAN, INCLUDING THE PERFORMANCE GOALS ESTABLISHED UNDER THE PLAN FOR PURPOSES OF COMPLIANCE WITH SECTION 162(m) OF THE INTERNAL REVENUE CODE
PROPOSAL NO. 4 – ADVISORY VOTE ON EXECUTIVE COMPENSATION
PROPOSAL NO. 5 – ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION
OTHER MATTERS
CONFIDENTIALITY OF PROXIES
SHAREHOLDER PROPOSALS
ADDITIONAL INFORMATION
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 19, 2017
GENERAL
APPENDIX A - RECONCILIATION OF NONGAAPMEASURES TO U.S. GAAP RESULTS
APPENDIX B - AIRCASTLE LIMITED AMENDED AND RESTATED 2014 OMNIBUS INCENTIVE PLAN





Aircastle Limited
c/o Aircastle Advisor LLC
300 First Stamford Place, 5 th Floor
Stamford, CT 06902

April 5, 2017

PROXY STATEMENT

For the 2017 Annual General Meeting of Shareholders To Be Held On
May 19, 2017

GENERAL INFORMATION ABOUT THE MEETING


Date, Time and Place of Annual General Meeting. The Board of Directors, or the Board, of Aircastle Limited, an exempted Bermuda company, or the Company or Aircastle, is soliciting proxies to be voted at the 2017 Annual General Meeting of Shareholders, or the Annual Meeting, to be held at 10:00 a.m. Eastern Daylight Time, on May 19, 2017, at the Delamar Hotel located at 500 Steamboat Road, Greenwich, Connecticut, USA, 06830, for the purposes set forth in the accompanying Notice of 2017 Annual Meeting of Shareholders, and at any adjournment or postponement of the Annual Meeting. We are sending this proxy statement in connection with the proxy solicitation.
On or about April 5, 2017, the Company began mailing to certain of our shareholders a Notice of Internet Availability of Proxy Materials. This Notice contains instructions on how to access the proxy statement and our annual report for the year ended December 31, 2016, or the 2016 Annual Report, and how to vote. By furnishing this Notice, we are lowering the costs and reducing the environmental impact of our Annual Meeting. Shareholders who did not receive this Notice will continue to receive paper copies of our proxy statement, proxy card and 2016 Annual Report, which we began mailing on or about April 5, 2017.
Matters to be Considered at the Annual Meeting. At the Annual Meeting, shareholders will vote upon the following matters:

1.
the election of four Class II Directors to serve until the 2020 annual general meeting of Aircastle or until their office shall otherwise be vacated pursuant to our Bye-laws;

2.
the appointment of Ernst & Young LLP as independent registered public accounting firm for the Company for fiscal year 2017 and the authorization of the Directors of Aircastle, acting by the Audit Committee, to determine the independent registered public accounting firm’s fees;

3.
approval of the Aircastle Limited Amended and Restated 2014 Omnibus Incentive Plan, including the performance goals established under the plan for purposes of compliance with Section 162(m) of the Internal Revenue Code;

4.    an advisory vote on executive compensation;

5.    an advisory vote on the frequency of the advisory vote on executive compensation; and

6.
any other business properly presented at the Annual Meeting and any adjournment(s) or postponement(s) of the Annual Meeting.

Quorum and Voting Requirements. Our Board has fixed the close of business on March 23, 2017 as the record date, or the Record Date, for determination of the shareholders entitled to notice of and to vote at the Annual Meeting. Only shareholders of record as of the close of business on the Record Date are entitled to vote at the Annual Meeting. The presence of two or more persons at the start of the Annual Meeting and representing in person, or by proxy entitling the holder to vote at the Annual Meeting, in excess of 50% of all votes attaching to all shares of the Company in issue, shall form a quorum for the transaction of business. If a quorum is not present, the Annual Meeting may be adjourned by the chairman of the meeting until a quorum has been obtained.
If a quorum is present, the following voting requirements apply for approval:
The affirmative vote of a plurality of the votes cast at the Annual Meeting is sufficient to elect each of the nominees to our Board (Proposal No. 1).




The affirmative vote of a majority of the votes cast at the Annual Meeting is required:
(i)
to appoint Ernst & Young LLP for fiscal year 2017 and to authorize the Board, acting by the Audit Committee, to determine the independent registered public accounting firm’s fees (Proposal No. 2);
(ii)
to approve the Aircastle Limited Amended and Restated 2014 Omnibus Incentive Plan, including the performance goals established under the plan for purposes of compliance with Section 162(m) of the Internal Revenue Code (Proposal No. 3);
(iii)
to approve, on an advisory basis, executive compensation (Proposal No. 4); and
(iv)
to approve any other business properly presented at the Annual Meeting.
The option (one, two or three years) with the most votes will be viewed as the advisory vote on the frequency of the advisory vote on executive compensation (Proposal No. 5).
A shareholder voting for the election of Directors may withhold authority to vote for all or certain nominees. A shareholder may also abstain from voting on the other matters presented for shareholder vote. Votes withheld from the election of any nominee for Director and abstentions from Proposal Nos. 2, 4 and 5 will be treated as shares that are present and entitled to vote for purposes of determining the presence of a quorum, but will not be counted in the number of votes cast on the matter. Abstentions will be counted as votes cast on Proposal No. 3 and therefore have the effect of a vote against the proposal.
If a shareholder holds shares through a broker, bank or other nominee, generally that holder may vote its shares in accordance with instructions received. If a shareholder does not give instructions to the holder, the holder can vote its shares with respect to “discretionary” or routine proposals under the rules of the New York Stock Exchange, or NYSE. Such a holder cannot vote shares with respect to “non-discretionary” proposals for which a shareholder has not given instruction. The appointment of Ernst &Young LLP is considered a “discretionary” proposal and therefore may be voted upon by such a holder even in the absence of instructions from the shareholder. The election of Directors, the advisory vote on executive compensation, the advisory vote on the frequency of the advisory vote on executive compensation and any other business properly presented at the Annual Meeting are considered “non-discretionary” items, and such a holder may not vote on these items in the absence of instructions from the shareholder.
As of the Record Date, there were 78,717,915 common shares of the Company, par value US$0.01 per share, referred to herein as common shares, outstanding and entitled to vote. Each common share entitles the holder to one vote on each matter presented at the Annual Meeting.
Voting of Proxy. You may submit your proxy with voting instructions by any one of the following means:
By Internet or Telephone
To submit your proxy on the Internet, go to www.proxyvote.com. You will need the 12-digit number included on your proxy card, voter instruction form or Notice of Internet Availability of Proxy Materials.

To submit your proxy by telephone, registered shareholders should dial 1-800-690-6903 and follow the instructions. Beneficial holders should dial the phone number listed on your voter instruction form. You will need the 12-digit number included on your proxy card, voter instruction form or Notice of Internet Availability of Proxy Materials.
Telephone and Internet voting facilities for shareholders of record will be available 24 hours a day, and will close at 11:59 p.m. Eastern Daylight Time on May 18, 2017. The availability of telephone and Internet voting for beneficial owners will depend on the voting processes of your broker, bank or other holder of record. Therefore, we recommend that you follow the voting instructions in the materials you receive. If you submit your proxy by telephone or on the Internet, you do not have to return your proxy card, voter instruction form or Notice of Internet Availability of Proxy Materials.
By Mail
If you are a holder of record and received your Annual Meeting materials by mail, you can vote by signing, dating and completing the proxy card included therewith and returning it by mail in the enclosed self-addressed envelope. If you received a Notice of Internet Availability of Proxy Materials and wish to vote by traditional proxy card, you may receive a full set of the annual meeting materials at no charge through one of the following methods:
By internet at www.proxyvote.com;

2



By telephone at 1-800-690-6903; or
By email at sendmaterial@proxyvote.com.
Once you receive the Annual Meeting materials, please sign, date and complete the proxy card included therewith and return it in the enclosed self-addressed envelope. No postage is necessary if the proxy card is mailed in the United States. If you hold your shares through a bank, broker or other nominee, the proxy card will give you separate instructions for voting your shares.
In Person, at the Annual Meeting
All shareholders may vote in person at the Annual Meeting. You may also be represented by another person at the Annual Meeting by executing a proper proxy designating that person. If you are a beneficial owner of shares, you must obtain a legal proxy from your broker, bank or other holder of record and present it to the inspectors of election with your ballot to be able to vote at the Annual Meeting.
Proxies, if received in time for voting, properly executed and not revoked, will be voted at the Annual Meeting in accordance with the instructions contained therein. If no instructions are indicated, the common shares represented by the proxy will be voted as recommended by the Board, as described below, or in accordance with the judgment of the proxy holders as to any other matter that may be properly brought before the Annual Meeting, including any adjournments and postponements thereof.
Revocability of Proxy. Any shareholder returning a proxy may revoke it at any time before the proxy is exercised by filing with the Secretary of the Company either a notice of revocation or a duly executed proxy bearing a later date. The powers of the proxy holders will be suspended if you attend the Annual Meeting in person and so request, although attendance at the Annual Meeting will not by itself revoke a previously granted proxy. Any proxy not revoked will be voted as specified by the shareholder. If no choice is indicated, a proxy will be voted in accordance with the Board’s recommendations described below.
Persons Making the Solicitation. This proxy statement is sent on behalf of, and the proxies are being solicited by, the Board. We will bear all costs of this solicitation of proxies. In addition to solicitations by mail, our Directors, officers and regular employees, without additional remuneration, may solicit proxies by telephone, telecopy, e-mail and personal interviews. We will request brokers, custodians and other fiduciaries to forward proxy-soliciting materials to the beneficial owners of common shares they hold of record. We will reimburse them for their reasonable out-of-pocket expenses incurred in connection with the distribution of the proxy materials. We have also engaged Georgeson, Inc. to assist the Company in the solicitation of proxies for an anticipated fee of $5,000, and have agreed to reimburse Georgeson, Inc. for reasonable out-of-pocket expenses incurred in connection with the proxy solicitation and to indemnify Georgeson, Inc. against certain losses, costs and expenses.
Recommendations of the Board . The Board recommends that shareholders vote:
FOR the election of the Director nominees named herein;
FOR the appointment of Ernst & Young LLP as independent registered public accounting firm for the Company for fiscal year 2017 and the authorization of the Directors of Aircastle, acting by the Audit Committee, to determine the independent registered public accounting firm’s fees;
FOR the approval of the Aircastle Limited Amended and Restated 2014 Omnibus Incentive Plan , including the performance goals established under the plan for purposes of compliance with Section 162(m) of the Internal Revenue Code;
FOR an advisory vote on executive compensation; and
THREE YEARS as the frequency of the advisory vote on executive compensation.
Attendance at the Meeting. Shareholders will be admitted to the Annual Meeting upon verification of ownership at the admissions desk. Please note that a beneficial owner holding his or her shares in “street name” who plans to attend the Annual Meeting must also send a written request with proof of ownership (such as a bank or brokerage firm account statement) to the Company’s transfer agent, American Stock Transfer & Trust Company, located at 59 Maiden Lane, New York, NY 10038. Admittance to the Annual Meeting will be based upon availability of seating. For directions to the Annual Meeting, please call (203) 504-1020.

3



CORPORATE GOVERNANCE

The role of our Board is to ensure that Aircastle is managed for the long-term benefit of our shareholders. To fulfill this role, the Board has adopted corporate governance principles designed to assure compliance with all applicable corporate governance standards, including those provided by the SEC and the NYSE. In addition, the Board is informed regarding Aircastle’s activities and periodically reviews, and advises management with respect to, Aircastle’s annual operating plans and strategic initiatives.
The following Directors currently serve on our Board:
Name
Age
Position
Ronald W. Allen
75
Class I Director
Giovanni Bisignani
70
Class III Director
Michael J. Cave
56
Class II Director
Douglas A. Hacker
61
Class I Director
Ryusuke Konto
61
Class III Director
Yukihiko Matsumura
60
Class I Director
Ronald L. Merriman
72
Class II Director
Agnes Mura
67
Class II Director
Charles W. Pollard
59
Class II Director
Gentaro Toya
57
Class III Director
Peter V. Ueberroth
79
Class III Director
Ron Wainshal
53
Class I Director
Ronald W. Allen was appointed to our Board on August 2, 2006. Mr. Allen served as interim President and Chief Executive Officer of Aaron’s, Inc. from November 2011 to February 2012 and then as President until April 2014 and as Chief Executive Officer until his retirement in August 2014. Mr. Allen also served as a Director of Aaron’s, Inc. from 1997 until August 2014 and as Chairman of the Board from November 2012 until April 2014. Mr. Allen retired as the Chairman of the Board, President and Chief Executive Officer of Delta Air Lines, Inc., one of the world’s largest global airlines, in July 1997 after 34 years with the company. From July 1997 through July 2005, Mr. Allen was a consultant to and Advisory Director of Delta Air Lines, Inc. He previously served as a Director of Interstate Hotels & Resorts, Inc. from 2006 to 2010, Forward Air Corporation from 2011 to 2013 and Guided Therapeutics, Inc. from 2008 to January 2014. He was elected a Director of Forward Air Corporation in November 2014 and serves as the Chair of the Corporate Governance and Nominating Committee. He is also a Director of Coca-Cola Company and serves as Chair of the Audit Committee. The Board has determined that Mr. Allen is “financially literate” as defined by NYSE rules and is a “financial expert” as defined by SEC regulations. Mr. Allen brings to the Board extensive airline experience and aerospace market relationships around the world while also providing valuable perspectives on industry strategy, management and human resources.
Giovanni Bisignani was appointed to our Board on May 24, 2012. Mr. Bisignani was the Director General and CEO of the International Air Transport Association, or IATA, from 2002 to 2011. In 2001, he launched the European travel portal Opodo and served as its Chief Executive Officer. From 1998 to 2001 he served as CEO & Managing Director of SM Logistics, a group of logistics and freight forwarding companies partially owned by General Electric. From 1994 to 1998, Mr. Bisignani served as President of Tirrenia di Navigazione, the largest Italian ferry company. He spent five years as CEO and Managing Director of Alitalia from 1989 to 1994. During this time he also served on the IATA Board of Governors. He has been a Member of Pratt & Whitney Advisory Board and Chairman of Galileo International. Mr. Bisignani studied both in Italy (Sapienza University, Rome) and the United States (Harvard Business School). Mr. Bisignani is a member of the Board and Strategic, Remunerations and Nominating committees of SAFRAN Group, a holding company encompassing aircraft engine manufacturing, aerospace, defense and security activities. Designated by Etihad in January 2015, he became a Board member of Alitalia - Società Aerea Italiana and the Chairman of the Nomination & Remuneration Committee; he is also a member of the Related Party Committee and the Audit Committee. Mr. Bisignani is a member of the World Economic Forum Global Agenda Council on Aviation, Travel & Tourism and is a Visiting Professor, at Cranfield University. Mr. Bisignani brings to the Board strong leadership skills, extensive experience in operations, strategic planning and financial matters relevant to the airline and travel industry and extensive, high-level contacts with airlines.
Michael J. Cave was appointed to our Board on May 22, 2014. Previously, he served as a Senior Vice President of The Boeing Company, the world's leading aerospace company and the largest manufacturer of commercial jetliners and military aircraft from 2007 through his retirement in 2014. Mr. Cave served as President and Principal Executive Officer and as a Director of the Boeing Capital Corporation from 2010 to 2014. Mr. Cave served as a Director of Private Export Funding Corporation from 2010 until 2014. Mr. Cave served as senior vice president of business development and strategy for The Boeing Company, as senior vice president/chief financial officer of Boeing Commercial Airplanes and as vice president, finance for Boeing Information, Space & Defense Systems from 1998

4



through 2006. Prior to 1998, Mr. Cave held a variety of other assignments across Boeing's defense and commercial businesses. He was named one of the 100 Most Important Hispanics in Technology and Business for 2006 by Hispanic Engineer and Information Technology magazine. He holds a bachelor's degree in engineering from Purdue University. Mr. Cave is a Director of Harley-Davidson, Inc., Ball Corporation and Esterline Technologies Corporation. The Board has determined that Mr. Cave is “financially literate” as defined by NYSE rules and is a “financial expert” as defined by SEC regulations. Mr. Cave's skills, expertise and experience in engineering and financial services make him an extremely valuable member of the Board, particularly in light of his insights into the various products under development and entering production at both Boeing and its competitors and in light of the many high-level customer relationships that he developed in his time at Boeing Commercial Airplanes and at Boeing Capital Corp., its financing arm.
Douglas A. Hacker was appointed to our Board on August 2, 2006. Mr. Hacker is currently an independent business executive and formerly served from December 2002 to May 2006 as Executive Vice President, Strategy for UAL Corporation, an airline holding company. Prior to this position, Mr. Hacker served with UAL Corporation as President, UAL Loyalty Services from September 2001 to December 2002 and as Executive Vice President and Chief Financial Officer from July 1999 to September 2001. Mr. Hacker serves as the Chair of the Board of Trustees of the Columbia Atlantic Funds, a series of open-end investment companies that are part of the Columbia family of mutual funds.  Mr. Hacker serves as a Director of Travelport Worldwide Limited and SpartanNash Company as well as having served as a Director of SeaCube Container Leasing Ltd from 2010 until 2014. The Board has determined that Mr. Hacker is “financially literate” as defined by NYSE rules and is a “financial expert” as defined by SEC regulations. Mr. Hacker’s extensive experience in financial and operating management, including his prior service as an Executive Vice President, Strategy, of a major U.S. airline and his service as Chief Financial Officer of a major U.S. airline, in addition to his depth of knowledge in executive compensation, provide to the Board excellent perspectives on airline financial and operational matters and on aircraft investing, leasing and finance matters, on strategic matters relevant to the Company and on executive compensation.
Ryusuke Konto was appointed to our Board on August 2, 2013 by Marubeni Corporation. In April 2013, Mr. Konto was appointed as Chairman of Marubeni Aerospace Corporation which specializes in import and supply of foreign products and parts for the aerospace and defense sectors in Japan. Mr. Konto served as an Executive Officer of Marubeni Corporation from 2009 to 2011 and in Dubai as Marubeni's Regional CEO for the Middle East and North Africa in 2009 and in Los Angeles as Senior Executive Vice President and COO of Marubeni America Corporation from 2010 to 2011. From 2007 to 2008, he served as Senior Operating Officer, Transportation Machinery Division and from 2003 to 2006, as Director, Aerospace & Defense Systems Unit of Marubeni Corporation. Mr. Konto brings to the Board extensive experience in international business. He has over 25 years experience in the aviation industry and maintains high-level contacts with major manufacturers in the aviation industry as well as Asian airlines which may in the future be customers of the Company. Mr. Konto was designated to the Board by Marubeni pursuant to the Shareholder Agreement between the Company and Marubeni, dated June 6, 2013, as described in “Certain Relationships and Related Party Transactions – Shareholder Agreement for Sale of Common Shares to Marubeni Corporation.”
Yukihiko Matsumura was appointed to our Board on May 26, 2016 by Marubeni Corporation . Mr. Matsumura is the President and CEO of Marubeni America Corporation. From April 2015 to April 2016, Mr. Matsumura was the Chief Financial Officer and Chief Operating Officer of Investor Relations and Credit Ratings, Marubeni Corporation. From 2012 to 2015, he served as Chief Financial Officer and Chief Operating Officer, Corporate Accounting and Finance Department. Mr. Matsumura has over 25 years experience in the finance industry and brings to the Board extensive experience in operations, strategic planning and financial matters.
Ronald L. Merriman was appointed to our Board on August 2, 2006. Mr. Merriman serves as the Chair of the Audit Committee. He also served as Executive Vice President of Ambassador International, Inc., a publicly traded travel services business, from 1997 to 1999; Executive Vice President of Carlson Wagonlit Travel, a global travel management firm, from 1999 to 2000; and Managing Director of O’Melveny & Myers LLP, a global law firm, from 2000 to 2003. He is also a Director of Pentair, Ltd., (formerly Pentair, Inc.), Realty Income Corporation, and Haemonetics Corporation. The Board has determined that Mr. Merriman is “financially literate” as defined by NYSE rules and is a “financial expert” as defined by SEC regulations. Mr. Merriman brings an extensive accounting and financial background to the Board, with a particular emphasis on accounting and financial matters relevant to the airline and travel industries and transportation companies generally and provides valuable insight on the cross-border nature of our business.
Agnes Mura was appointed to our Board on February 18, 2013. Ms. Mura has been the President of Agnes Mura, Inc., ("AMI") since 1997. AMI is a leadership development firm, specializing in global executive coaching and organizational behavior for senior teams in Global 1,000 companies. Prior to AMI, Ms. Mura was Vice President and IPB California Representative of Bankers Trust Co. from 1993 to 1996. From 1985 to 1993, she was Assistant Vice President, and then Vice President for First Interstate Bank Ltd. Ms. Mura was the Foreign Relations Manager for the Los Angeles Olympic Organizing Committee from 1983 to 1985. She holds a BA from Edinburgh University and an MA from the University of Cologne, Germany. Ms. Mura brings to the Board strong leadership and leadership development skills and extensive experience in international business and provides valuable insight in those areas to the Board and to the Company’s management.


5



Charles W. Pollard was appointed to our Board on July 6, 2010. In 1997, Mr. Pollard joined Omni Air International, Inc., a passenger charter carrier where he served variously as Managing Director, President and CEO, and Vice Chairman until 2009. Previously he spent 10 years in senior management positions, including President and CEO, at World Airways, Inc., the oldest U.S. charter airline. Prior to joining World Airways, Inc., he practiced corporate law at Skadden, Arps, Slate, Meagher & Flom. He currently serves on the board of Directors of Allegiant Travel Company. Mr. Pollard previously served as a Director of Air Partner plc until 2014 and AeroMechanical Services Ltd. until 2011. Mr. Pollard brings to the Board extensive experience in operations, strategic planning and financial matters relevant to the airline industry, and he provides valuable insight in these areas to the Board and to the Company’s management.
Gentaro Toya was appointed to our Board on August 2, 2013 by Marubeni Corporation . In August 2013, Mr. Toya was appointed as Executive Vice President of Marubeni America Corporation which is a general trading company, engaged as an intermediary, importer/exporter, facilitator or broker in various types of trade between and among business enterprises and countries. From 2010 to 2012, he served as Senior Operating Officer, Transportation Machinery Division and from 2007 to 2009, as Director, Aerospace & Defense Systems Unit of Marubeni Corporation. Mr. Toya has over 25 years experience in the aviation industry and brings to the Board extensive experience in operations, strategic planning and financial matters relevant to the aviation industry. He maintains high-level contacts with major manufacturers in the aviation industry as well as Asian airlines which may in the future be customers of the Company. Mr. Toya was designated to the Board by Marubeni pursuant to the Shareholder Agreement between the Company and Marubeni, dated June 6, 2013, as described in “Certain Relationships and Related Party Transactions – Shareholder Agreement for Sale of Common Shares to Marubeni Corporation.”
Peter V. Ueberroth was appointed to our Board on August 2, 2006 and became Chairman of the Board in August 2012. Mr. Ueberroth is an investor in and has served as Chairman of the Contrarian Group, Inc., a business management company, since 1989. He is the co-chairman of Pebble Beach Company and a Director of Bell Riddell Giro, formerly known as Easton Bell Sports. He also served as Director of Adecco SA, an international, publicly traded employment services company; Ambassadors International, Inc., a publicly traded travel services business; Coca-Cola Company and Hilton Hotels Corporation during the past five years. Mr. Ueberroth brings strong leadership skills and extensive experience in the airline and travel industries to the Board. From his leadership roles in other global businesses and from in his past role as Chairman of the United States Olympic Committee, Mr. Ueberroth provides to the Board valuable understanding and perspective of international trends and strategies, particularly with respect to China.
Ron Wainshal was appointed to our Board on May 25, 2010. Mr. Wainshal became our Chief Executive Officer in May 2005. Prior to joining Aircastle, Mr. Wainshal was in charge of the Asset Management group of General Electric Capital Aviation Services, or “GECAS,” from 2003 to 2005. After joining GECAS in 1998, he also led many of GECAS’s U.S. airline restructuring efforts and its bond market activities and played a major role in marketing and structured finance for GECAS in the Americas. Before joining GECAS, he was a principal and co-owner of a financial advisory company specializing in transportation infrastructure from 1994 to 1998 and prior to that held positions at Capstar Partners, The Transportation Group in New York and Ryder System in Miami. He received a BS in Economics from the University of Pennsylvania’s Wharton School and an MBA from the University of Chicago’s Booth Graduate School of Business . Mr. Wainshal brings to the Board deep and varied experience in aircraft finance and leasing in particular and asset-based financing generally. He also has strong leadership skills, extensive managerial experience and a deep understanding of the Company and our industry.
Legal Proceedings Involving Directors, Officers or Affiliates. There are no material legal proceedings in which any Director, officer or affiliate of the Company, any owner of record or beneficial owner of more than five percent of any class of voting securities of the Company, or any associate of any such Director, officer, affiliate of the Company, or security holder, is a party adverse to us or any of our subsidiaries or has a material interest adverse to us or any of our affiliates.
Director Independence. In March 2017 , the Board evaluated the independence of each member of the Board in accordance with the applicable NYSE and SEC rules. The Board affirmatively determined, under these rules, that Ronald W. Allen, Giovanni Bisignani, Michael J. Cave, Douglas A. Hacker, Ronald L. Merriman, Agnes Mura, Charles W. Pollard and Peter V. Ueberroth are independent. We refer to these Directors in this proxy statement as Independent Directors. In making this determination, our Board considered all relevant facts and circumstances, as required by applicable NYSE listing standards.
NYSE rules require that the Board consist of a majority of “independent Directors” and that the Nominating and Corporate Governance Committee, the Compensation Committee and the Audit Committee of the Board consist entirely of “independent Directors.” Under NYSE listing standards, whether a Director is an “independent Director” is a subjective determination to be made by the Board, and a Director of Aircastle only qualifies as “independent” if the Board affirmatively determines that the Director has no material relationship with Aircastle (either directly or as a partner, shareholder or officer of an organization that has a relationship with Aircastle). While the test for independence is a subjective one, NYSE rules also contain objective criteria that preclude Directors from being considered independent in certain situations. Specifically, persons meeting the following objective criteria under the NYSE rules are deemed to not be independent:

6



a Director who is or has been within the last three years an employee, or whose immediate family member is or has been within the last three years an executive officer, of Aircastle (including any consolidated subsidiary);
a Director who has received, or whose immediate family member has received, during any twelve-month period within the last three years, more than US$120,000 in direct compensation from Aircastle (including any consolidated subsidiary), other than Director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service);
a Director who (i) is, or whose immediate family is, a current partner of a firm that is the internal or external auditor of Aircastle; (ii) is a current employee of such a firm; (iii) has an immediate family member who is a current employee of such a firm and who personally works on Aircastle’s audit; or (iv) was, or whose immediate family member was, within the last three years a partner or employee of such a firm and personally worked on Aircastle’s audit within that time;
a Director who is or has been within the last three years employed, or whose immediate family member is or has been within the last three years employed as an executive officer of another company where any of Aircastle’s present executive officers at the same time serves or served on that Company’s compensation committee; and
a Director who is a current employee, or whose immediate family member is an executive officer, of a company (or a consolidated subsidiary of such company) that has made payments to, or has received payments from, Aircastle for property or services in an amount which, in any single fiscal year within the last three years, exceeds the greater of US$1,000,000 or 2% of such other company’s consolidated gross revenues.
Ownership of a significant amount of common shares, by itself, does not constitute a material relationship.
In addition, in determining the independence of any Director who will serve on the Compensation Committee, the Board considers all factors specifically relevant to determining whether that Director has a relationship to Aircastle which is material to the Director’s ability to be independent from management in connection with the duties of a Compensation Committee member including, but not limited to:
the source of compensation of such Director, including any consulting, advisory or other compensatory fee paid by Aircastle to such Director; and
whether such Director is affiliated with Aircastle, a subsidiary of Aircastle or an affiliate of a subsidiary of Aircastle.
The Board has not established additional guidelines to assist it in determining whether a Director has a material relationship with Aircastle under NYSE rules, but instead evaluates each Director or nominee for Director under the tests set forth by the NYSE and through a broad consideration and evaluation of all relevant facts and circumstances. The Board, when assessing the materiality of a Director’s relationship with Aircastle, also considers the issue not merely from the standpoint of the Director, but also from that of persons or organizations with which the Director has an affiliation.
Policies and Practices. We review our corporate governance policies and practices on an ongoing basis and compare them to those suggested by various authorities in corporate governance and to the practices of other public companies. We have also continued to review the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, and the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, the existing and proposed rules of the SEC and the existing and proposed listing standards of the NYSE.
Corporate Governance Guidelines. Our Board has adopted Corporate Governance Guidelines. The Corporate Governance Guidelines are posted on our website at http://www.aircastle.com under “Investors—Governance Documents” and are available in print to any shareholder of the Company upon request.
Code of Business Conduct and Ethics. To help ensure that Aircastle abides by applicable corporate governance standards, our Board has adopted a Code of Business Conduct and Ethics, which is posted on our website at http://www.aircastle.com under “Investors—Governance Documents,” and a Code of Ethics for Chief Executive and Senior Financial Officers, which is available in print to any shareholder of the Company upon request. The Company intends to post on its website any material amendments to its ethics codes and the description of any waiver from a provision of the ethics codes granted by the Board to any Director or executive officer of the Company within four business days after such amendment or waiver.

7



Communications with the Board. Shareholders and other interested parties who wish to communicate directly with any of the Company’s Directors, including our Chairman, who is also our lead Independent Director or Presiding Director, or the Independent Directors as a group, may do so by writing to the Board, Aircastle Limited, c/o Aircastle Advisor LLC, 300 First Stamford Place, 5 th Floor, Stamford, CT 06902 Attention: General Counsel. All communications will be received, sorted and summarized by the General Counsel, as agent for the relevant Directors. Communications relating to the Company’s accounting, internal accounting controls or auditing matters will be referred to the Chair of the Audit Committee. Other communications will be referred to such other Director as may be appropriate. Communications may be submitted anonymously or confidentially.
Meetings of the Board. Regular attendance at Board Meetings is required of each Director. During 2016, Aircastle’s Board held six meetings. Each incumbent Director attended 75% or more of the aggregate of all meetings of the Board and committees on which the Director served during 2016. Directors are invited and encouraged to attend the Company’s annual meeting of shareholders in person, by telephone or video conference, but the Company recognizes that such attendance may be impractical as a result of personal or business circumstances. Eleven Directors and one Director nominee attended our annual general meeting in 2016.
Board Leadership Structure and Executive Sessions. The Board understands that there is no single, generally accepted approach to providing Board leadership and that given the dynamic and competitive environment in which we operate, the right Board leadership structure may vary as circumstances warrant. To this end, the Board has no policy mandating the combination or separation of the roles of Chairman and CEO and believes the matter should be discussed and considered from time to time as circumstances change. Currently, the Company maintains a separate Chairman and CEO. This leadership structure is appropriate for the Company at this time as it permits our CEO Ron Wainshal to focus primarily on management of the Company’s strategic direction and day-to-day operations, while allowing our Chairman Peter Ueberroth, to lead the Board in its fundamental role of providing advice to and independent oversight of management. Mr. Ueberroth is an Independent Director and our Chairman and, accordingly, he also serves as the lead Independent Director or Presiding Director.
The Board is comprised of eight non-management Directors, three Directors designated by Marubeni Corporation, or Marubeni, and one management Director. In accordance with the Company’s Corporate Governance Guidelines and rules of the NYSE, the non-management Directors are required to meet regularly in executive session and the independent Directors must meet in executive session at least once each year. As such, the Board’s meetings regularly include executive sessions in which only Independent Directors are present. Any Independent Director can request that an executive session be scheduled.
Board Oversight of Risk Management. Senior management is responsible for assessing and managing the Company’s various exposures to risk on a day-to-day basis, including the creation of appropriate risk management programs and policies. The Company has developed a consistent, systemic and integrated approach to risk management to help determine how best to identify, manage and mitigate significant risks throughout the Company.
The Board is responsible for overseeing management in the execution of its responsibilities, including assessing the Company’s approach to risk management. The Board exercises these responsibilities periodically as part of its meetings and also through three of its committees, each of which examines various components of enterprise risk as part of its responsibilities. The Audit Committee has primary responsibility for addressing risks relating to financial matters, particularly financial reporting, accounting practices and policies, disclosure controls and procedures and internal control over financial reporting. The Nominating and Corporate Governance Committee oversees risks associated with the independence of the Board and succession planning. The Compensation Committee has primary responsibility for risks and exposures associated with the Company’s compensation policies, plans and practices, regarding both executive compensation and the compensation structure generally, including whether it provides appropriate incentives that do not encourage excessive risk taking.
An overall review of risk is inherent in the Board’s evaluation of the Company’s long-term strategies and other matters presented to the Board. The Board’s role in risk oversight of the Company is consistent with the Company’s leadership structure; the CEO and other members of senior management are responsible for assessing and managing the Company’s risk exposure, and the Board and its committees provide oversight in connection with those efforts.

8



Committees of the Board. The Board has four standing Committees: Audit, Compensation, Nominating and Corporate Governance, and Investment. The table below indicates the members of each committee. All members of the Audit, Compensation and Nominating and Corporate Governance Committees are Independent Directors.
Name
 
Audit
 
Compensation
 
Nominating and
Corporate Governance
 
Investment
Ronald W. Allen*
 
X
 
 
 
 
 
 
Giovanni Bisignani
 
 
 
 
 
X
 
 
Michael J. Cave*
 
X
 
 
 
 
 
X
Douglas A. Hacker*
 
X
 
X
 
 
 
Chair
Ryusuke Konto
 
 
 
 
 
 
 
 
Yukihiko Matsumura
 
 
 
 
 
 
 
 
Ronald L. Merriman*
 
Chair
 
X
 
 
 
 
Agnes Mura
 
 
 
X
 
X
 
 
Charles W. Pollard
 
 
 
Chair
 
X
 
X
Gentaro Toya
 
 
 
 
 
 
 
 
Peter V. Ueberroth
 
 
 
 
 
Chair
 
 
Ron Wainshal
 
 
 
 
 
 
 
X
*
 
Messrs. Allen, Cave, Hacker and Merriman serve as financial experts on our Audit Committee.

The Audit, Compensation and Nominating and Corporate Governance Committees act under written charters that have been approved by the Board and comply with NYSE corporate governance rules and any applicable SEC rules and regulations. A copy of each charter is posted on the Company’s website at http://www.aircastle.com under “Investors—Governance Documents” and is available in print to any shareholder of the Company upon request.
The Audit Committee. Our Audit Committee’s functions include:
reviewing (i) the audit plans and findings of the independent certified public accountants and our internal audit and risk review staff and (ii) the results of regulatory examinations and monitoring management’s corrective action plans with respect to such plans, findings and results where necessary;
reviewing our financial statements, including any significant financial items and/or changes in accounting policies, with our senior management and independent certified public accountants;
reviewing our accounting and internal control policies and procedures, compliance programs and significant tax and legal matters;
reviewing related party transactions;
making recommendations to our shareholders regarding the annual appointment by our shareholders of the independent certified public accountants (which constitutes the auditor for purposes of Bermuda law) considering their reputation and qualifications and evaluating their independence and performance, as well as setting clear hiring policies for employees or former employees of our independent certified public accounting firm;
overseeing the independent certified public accountants (which constitutes the auditor for purposes of Bermuda law) and evaluating their compensation; and
reviewing the process by which we assess and manage exposure to financial and legal risk.
The Board has determined that each member of the Audit Committee is “financially literate” as defined by NYSE rules and that Messrs. Allen, Cave, Hacker and Merriman are qualified to serve as the Audit Committee’s “financial experts” as defined by SEC regulations. A brief description of the work experience of our Audit Committee members is included on pages 4-6 above. The Board also determined that although Mr. Merriman currently sits on the audit committees of more than three public companies, such simultaneous service would not impair his ability to serve effectively on the Company’s Audit Committee. During 2016, the Audit Committee held six meetings. Audit Committee meetings include, where appropriate, executive sessions in which the Audit Committee meets: (i) only with

9



Committee members present; (ii) separately with the Company’s independent registered public accountants; (iii) separately with the Company’s internal auditor; or (iv) with the Company’s Chief Executive Officer, Chief Financial Officer and General Counsel.
The Compensation Committee. Our Compensation Committee’s functions include:
reviewing the salaries, benefits and share-based grants for executive officers;
reviewing corporate goals and objectives relevant to Chief Executive Officer compensation, evaluating the Chief Executive Officer’s performance in light of those goals and objectives, and determining the Chief Executive Officer’s compensation based on that evaluation;
acting as administrator of the Amended and Restated 2005 Aircastle Limited Equity Incentive Plan, or the 2005 Plan and the Aircastle Limited 2014 Omnibus Incentive Plan, or the 2014 Plan (the 2005 Plan and the 2014 Plan together referred to as the Incentive Plan); and
reviewing risks relating to the Company’s employment practices and the Company’s compensation and benefits practices.
The Compensation Committee held eight meetings during 2016. Compensation Committee meetings include, where appropriate, executive sessions, in which the Compensation Committee meets only with Committee members present, and/or sessions with the Company’s Chief Executive Officer.
The Nominating and Corporate Governance Committee . Our Nominating and Corporate Governance Committee’s functions include:
reviewing the performance of the Board and incumbent Directors and making recommendations to our Board regarding the selection of candidates, qualification and competency requirements for service on the Board and the suitability of proposed nominees;
advising the Board with respect to the corporate governance principles applicable to the Company;
reviewing risks associated with the Company’s management and Director succession planning; and
overseeing the evaluation of the Board and the Company’s management.
The Nominating and Corporate Governance Committee held four meetings during 2016.
The Nominating and Corporate Governance Committee works with the Board to determine the appropriate and necessary characteristics, skills and experience of the Board, both as a whole and with respect to its individual members. The committee evaluates biographical and background information relating to potential candidates and interviews candidates selected by members of the committee and by the Board in making its decisions as to prospective candidates to the Board. While the committee does not specifically set forth any minimum skills that a candidate must have prior to consideration, the committee thoroughly examines a candidate’s understanding of marketing, finance and other elements relevant to the success of a publicly traded company in today’s business environment; understanding of the Company’s business; and educational and professional background. In determining whether to recommend a Director for re-election, the Nominating and Corporate Governance Committee also considers the Director’s past attendance at meetings and participation in and contributions to the activities of the Board. The Nominating and Corporate Governance Committee identifies potential nominees by asking current Directors and executive officers to notify the Nominating and Corporate Governance Committee if they become aware of suitable candidates. We have not paid any third party a fee to assist in the process of identifying or evaluating candidates; however, the Nominating and Corporate Governance Committee may elect in the future to engage firms that specialize in identifying Director candidates. As described below, the Nominating and Corporate Governance Committee will also consider candidates recommended by shareholders.
All Director candidates, including those recommended by shareholders, are evaluated on the same basis. Candidates for Director must possess the level of education, experience, sophistication and expertise required to perform the duties of a member of a board of Directors of a public company of the Company’s size and scope. At a minimum, the committee will consider whether the recommended candidate is subject to a disqualifying factor as described under Section 303A.02(b) of the NYSE listing standards and the number of other boards and committees on which the individual serves. The committee may also consider, among other qualifications, a candidate’s: (i) ethics, integrity and values; (ii) stature, reputation and credibility; (iii) experience and capability to set policy and oversee management’s execution of the business plan; (iv) knowledge of relevant industries; (v) contacts within the global aircraft leasing, aircraft financing, airline, cargo, manufacturing or other similar businesses; (vi) current or recent senior executive experience and leadership; and (vii) ethnic, gender, professional, geographic and philosophical diversity within the overall composition of the Board. While the Nominating and Governance Committee has not adopted a formal diversity policy with regard to the selection of Director nominees, diversity is one of the factors that the committee considers in identifying Director candidates. As part of this process, the committee evaluates how a

10



particular candidate would strengthen and increase the diversity of the Board and contribute to the Board’s overall balance of perspectives, backgrounds, knowledge, experience and expertise in areas relevant to the Company’s business. The committee assesses its achievement of diversity through review of Board composition as part of the Board’s annual self-assessment process.
While the Corporate Governance Guidelines provide that the Nominating and Corporate Governance Committee may, if it deems appropriate, establish procedures to be followed by shareholders in submitting recommendations for Board candidates, the Committee has not, at this time, put in place a formal policy with regard to such procedures. This is because procedures are set forth in our Bye-laws which permit shareholders to submit recommendations for Board candidates. The Board believes that it is appropriate for Aircastle not to have a specific policy since shareholders are always free to submit recommendations for Board candidates, simply by following the procedures set forth in our Bye-laws, as described below.
Shareholders wishing to recommend a Director candidate to the Chairman of the Nominating and Corporate Governance Committee for its consideration should write to the Secretary, Aircastle Limited, c/o Aircastle Advisor LLC, 300 First Stamford Place, 5 th Floor, Stamford, CT 06902. Recommendations must be received no less than 90 days nor more than 120 days before the anniversary of the prior year’s annual general meeting of shareholders to be considered for inclusion in the proxy statement for the 2017 Annual General Meeting of Shareholders. All recommendations meeting the minimum requirements set forth in the Corporate Governance Guidelines will be referred to the Chairperson of the Nominating and Corporate Governance Committee. Such letters of recommendation must include the address and number of shares owned by the nominating shareholder, the recommended individual’s name and address, and a description of the recommended individual’s background and qualifications. A signed statement from the recommended individual must accompany the letter of recommendation indicating that he or she consents to being considered as a candidate and that, if nominated by the Board and elected by the shareholders, he or she will serve as a Director of the Company. In addition, the notice must also include any other information relating to the shareholder or to the recommended individual that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of Directors under Section 14 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the rules and regulations thereunder.
In addition, our Bye-laws allow shareholders to propose or nominate a candidate for election as a Director. Such proposal or nomination must be made in accordance with the procedures and time limits set out in the Bye-laws of the Company as described above.
A person must own common shares on the date that he or she sends the notice to Aircastle under the procedures above for the nomination to be valid under our Bye-laws. Provided that the required biographical and background material described above is provided for candidates properly recommended by shareholders, the Nominating and Corporate Governance Committee will evaluate those candidates by following substantially the same process, and applying substantially the same criteria, as for candidates submitted by members of the Board. If the Chairman of the Board determines that a nomination was not made in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.
The Investment Committee . The Board established and designated an Investment Committee pursuant to resolutions adopted on August 2, 2006, and since that date the Board regularly re-authorizes the Investment Committee. The Board authorized the Investment Committee to approve, within certain limitations, aircraft acquisition, lease, sale, financing and interest rate hedging transactions, and other transactions, by the Company. The Investment Committee held thirteen meetings during 2016.

11



DIRECTORS’ COMPENSATION

Cash Compensation. During 2016, cash compensation to the Independent Directors for service on our Board was set at the following levels:
Directors are paid an annual cash fee of US$80,000.
The Chairman of the Board is paid an additional annual cash fee of US$50,000.
Each of the chairs of the Audit Committee and Investment Committee is paid an annual cash fee of US$35,000 and each other such committee member is paid an annual cash fee of US$20,000.
The Compensation Committee Chair is paid an annual cash fee of US$25,000 and Compensation Committee members are paid an annual cash fee of US$10,000.
The Nominating and Corporate Governance Committee chair is paid an annual cash fee of US$20,000 and Nominating and Corporate Governance Committee members are paid an annual cash fee of US$10,000.
Restricted Share Grants. On the first business day of each calendar year beginning in 2016, our Independent Directors receive grants of restricted common shares, with the number of shares for each such grant being equal to US$135,000 divided by the Fair Market Value, as defined in the Incentive Plan, of our common shares as of such date. In 2015, the Board authorized a special award to Mr. Ueberroth which increased his annual award from 10,000 to 20,000 restricted common shares during his current term as Chairman of the Board in recognition of his significant experience, service to the Company and guidance to the Board. Such restricted shares fully vest on January 1 of the following calendar year, pursuant to the terms and conditions of the Incentive Plan and the related award agreement.
Our affiliated and management Directors, Messrs. Konto, Matsumura, Toya and Wainshal, are not separately compensated by us for their Board or committee service. All members of the Board were reimbursed for reasonable costs and expenses incurred in attending meetings of the Board or otherwise incurred in connection with carrying out their duties as Directors.
The table below describes our compensation of Directors:
DIRECTOR COMPENSATION FOR 2016
 
 
 
 
 
 
 
 
 
 
 
Fees Earned or
 
 
 
All Other
 
 
 
 
Paid in Cash
 
Stock Awards
 
Compensation
 
Total
Name
 
(US$)
 
(US$) (1)
 
(US$) (2)
 
(US$)
 
 
 
 
 
 
 
 
 
Ronald W. Allen
 
100,000
 
134,991
 
6,333
 
241,324
 
 
 
 
 
 
 
 
 
Giovanni Bisignani
 
90,000
 
134,991
 
7,344
 
232,335
 
 
 
 
 
 
 
 
 
Michael J. Cave
 
120,000
 
134,991
 
6,333
 
261,324
 
 
 
 
 
 
 
 
 
Douglas A. Hacker
 
145,000
 
134,991
 
6,333
 
286,324
 
 
 
 
 
 
 
 
 
Ryusuke Konto (3)
 

 

 

 

 
 
 
 
 
 
 
 
 
Yukihiko Matsumura (3)
 

 

 

 

 
 
 
 
 
 
 
 
 
Ronald L. Merriman
 
125,000
 
134,991
 
6,333
 
266,324
 
 
 
 
 
 
 
 
 
Agnes Mura
 
100,000
 
134,991
 
6,333
 
241,324
 
 
 
 
 
 
 
 
 
Charles W. Pollard
 
135,000
 
134,991
 
6,333
 
276,324
 
 
 
 
 
 
 
 
 
Gentaro Toya (3)
 

 

 

 

 
 
 
 
 
 
 
 
 
Peter V. Ueberroth
 
150,000
 
552,791
 
25,933
 
728,724
 
 
 
 
 
 
 
 
 
Ron Wainshal (3)
 

 

 

 

_______________
(1)
The reported amounts reflect the aggregate fair value on the grant date of the restricted shares granted to our Directors during 2016 determined in accordance with FASB ASC Topic 718. For a summary of the assumptions made in the valuation of these awards, please see Note 8 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2016. The grant date fair value of each restricted share was US$20.89. The number of restricted shares granted to each Director in 2016 was: Mr. Allen 6,462, Mr. Bisignani 6,462, Mr. Cave 6,462, Mr. Hacker 6,462, Mr. Merriman 6,462, Ms. Mura 6,462, Mr. Pollard 6,462 and Mr. Ueberroth 26,462.

12



(2)
The reported amounts consist of dividend payments made by the Company on restricted common shares granted to each Director in 2016.
(3)
Our affiliated and management Directors, Messrs. Konto, Matsumura, Toya and Wainshal, are not separately compensated by us for their Board or committee service.
Share Ownership Guidelines for Directors. The Board believes that significant common share ownership by members of the Board increases the alignment of interests between the Board and the shareholders. Accordingly, the Company has adopted share ownership guidelines, or Ownership Guidelines, pursuant to which each member of the Board who is paid a base annual cash fee for service on the Board is expected to attain the following levels of share ownership while providing service to the Company, based on the aggregate value of share ownership as of the date of determination:
Position
 
Multiple of Base Annual Cash Board Service Fee
Relevant Director
 
3x


The Ownership Guidelines provide for a phase-in period, according to which a Director should satisfy the Ownership Guidelines by the fifth anniversary of his or her initial appointment to the Board. As of March 23, 2017, each member of the Board complied with the Ownership Guidelines.
Director Award Limits . As part of the terms of the proposed Aircastle Limited Amended and Restated 2014 Omnibus Incentive Plan, our Board approved a limit on the combined cash and equity-based compensation that may be paid to each of our non-employee directors each calendar year. Under the terms of the proposed Aircastle Limited Amended and Restated 2014 Omnibus Incentive Plan, an annual limit of $750,000 per calendar year applies to the combined cash and equity-based compensation that may be granted to each of our non-employee directors. We are seeking shareholder approval of the Aircastle Limited Amended and Restated 2014 Omnibus Incentive Plan at the Annual Meeting. See “Proposal No. 3: Approval of the Aircastle Limited Amended and Restated 2014 Omnibus Incentive Plan, Including the Performance Goals Established Under the Plan for Purposes of Compliance with Section 162(m) of the Internal Revenue Code” on page 40 for more information regarding this and other terms of the proposed Aircastle Limited Amended and Restated 2014 Omnibus Incentive Plan.

13



OWNERSHIP OF THE COMPANY’S COMMON SHARES

Security Ownership of Certain Beneficial Owners and Management. The table below describes common share ownership information by our Directors, named executive officers, all Directors and executive officers as a group and shareholders known to us to hold more than five percent of our common shares, as of March 23, 2017:
Name of Beneficial Owner
 
Amount and Nature of Beneficial Ownership (1) (2)
 
Percent (3)
Named Executive Officers and Directors (4)
 
 
 
 
Ron Wainshal (5)
 
809,683

 
1.0%
Michael Inglese
 
279,330

 
*
Michael Kriedberg
 
189,099

 
*
Christopher Beers
 
68,315

 
*
Aaron Dahlke
 
17,814

 
*
Ronald W. Allen
 
99,105

 
*
Giovanni Bisignani
 
29,172

 
*
Michael J. Cave
 
16,999

 
*
Douglas A. Hacker
 
102,245

 
*
Ryusuke Konto (6)
 

 
*
Yukihiko Matsumura (6)
 

 
*
Ronald L. Merriman (7)
 
44,984

 
*
Agnes Mura
 
21,156

 
*
Charles W. Pollard (8)
 
41,391

 
*
Gentaro Toya (7)
 

 
*
Peter V. Ueberroth (9)
 
404,390

 
*
All Directors and executive officers as a group (16 persons)
 
2,123,683

 
2.7%
5% Shareholders
 
 
 
 
Marubeni Corporation (10)
 
21,605,347

 
27.4%
Ontario Teachers’ Pension Plan (11)
 
7,887,029

 
10.0%
The Vanguard Group (12)
 
5,452,167

 
6.9%
Dimensional Fund Advisors L.P. (13)
 
4,331,755

 
5.5%
_______________
 
 
 
 
* Less than 1%
 
 
 
 
(1)
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Common shares subject to options or warrants currently exercisable or exercisable within 60 days of the date hereof, are deemed outstanding for computing the percentage of the person holding such options or warrants but are not deemed outstanding for computing the percentage of any other person.
(2)
Consists of common shares held, including restricted shares, shares underlying share options exercisable within 60 days and shares underlying warrants exercisable within 60 days.
(3)
Percentage amount assumes the exercise by such persons of all options and warrants exercisable within 60 days to acquire common shares and no exercise of options or warrants by any other person.
(4)
The address of each officer or Director listed in the table below is: c/o Aircastle Advisor LLC, 300 First Stamford Place, 5th Floor, Stamford, CT 06902.
(5)
Includes 2,400 common shares held indirectly as Custodian for Sarah Wainshal.
(6)
Our affiliated and management Directors, Messrs Konto, Matsumura, Toya and Wainshal, are not separately compensated by us for their Board or committee service. Common shares of Aircastle are directly held by Marubeni Aviation Holding Cooperatief, U.A. and indirectly held by Marubeni and Marubeni Aviation Corporation.
(7)
Includes 19,757 common shares held indirectly by the Merriman Family Trust.
(8)
Includes 26,973 common shares held indirectly by the Pollard Family Trust.
(9)
Includes 220,000 common shares held indirectly by the Ueberroth Family Trust.

14



(10)
Information for Marubeni is based solely upon a Schedule 13D filed by Marubeni with the SEC on February 23, 2016, which indicates that Marubeni beneficially held an aggregate of 21,605,347 common shares. The address of Marubeni is 4-2 Ohtemachi 1-Chome Chiyoda-Ku, Tokyo 100-8088, Japan.
(11)
Information regarding Ontario Teachers’ Pension Plan is based solely upon a Schedule 13G filed by Teachers’ with the SEC on March 4, 2016, which indicates that Teachers’ beneficially held an aggregate of 7,887,029 common shares. The address of Teachers’ is 5650 Yonge Street, 3rd Floor Toronto, Ontario, Canada M2M 4H5.
(12)
Information regarding The Vanguard Group is based solely upon a Schedule 13G filed by The Vanguard Group with the SEC on February 9, 2017, which indicates that The Vanguard Group beneficially held an aggregate of 5,452,167 common shares. The address of The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355.
(13)
Information regarding Dimensional Fund Advisors L.P. ("Dimensional") is based solely upon a Schedule 13G filed by Dimensional with the SEC on February 9, 2017, which indicates that Dimensional beneficially held an aggregate of 4,331,755 common shares. The address of Dimensional is Building One, 6300 Bee Cave Road, Austin,TX 78746.
Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of the Exchange Act requires the Company’s Directors, executive officers and persons who own more than ten percent of a registered class of our equity securities to file with the SEC reports of ownership on Form 3 and changes in ownership on Forms 4 and 5. Such officers, Directors and greater-than-ten percent shareholders are also required by the SEC to furnish the Company with copies of all forms they file under this regulation. To the Company’s knowledge, based solely on a review of the copies of such reports furnished to the Company, no officers, Directors or greater-than-ten percent shareholders failed to submit such filings on a timely basis during the fiscal year ended December 31, 2016.
Insider Trading Policy. Our Directors, officers and employees are required to comply with a policy that is designed to prevent insider trading violations. The policy includes mandatory trading black-out periods and prohibits certain transactions. Hedging or pledging of our shares by Directors, officers or employees is prohibited unless an exception to the policy is specifically pre-approved by the General Counsel. No such exception has ever been requested or approved.

15



EXECUTIVE COMPENSATION

Compensation Discussion and Analysis
This Compensation Discussion and Analysis describes and analyzes our executive compensation philosophy and programs, the decisions made by the Compensation Committee under those programs and the factors considered by the Compensation Committee in making those decisions. This Compensation Discussion and Analysis focuses on the compensation paid to our Chief Executive Officer, Chief Financial Officer and the three other most highly compensated executive officers, together referred to as our named executive officers, or NEOs. For 2016, our NEOs were:
Name
 
Title
Ron Wainshal
 
Chief Executive Officer
Michael Inglese
 
Chief Financial Officer
Michael Kriedberg
 
Chief Commercial Officer
Christopher Beers
 
General Counsel
Aaron Dahlke
 
Chief Accounting Officer

Pay for Performance Philosophy
We believe executive compensation should be tied to Company performance, and our compensation program rewards executives and employees in three areas:
Annual Corporate Performance : Achievement of internal corporate financial metrics focused on: (i) adjusted return on equity; (ii) cash flow per share; and (iii) growth through new investments;
Individual Performance : Achievement of individual performance goals set at the beginning of each year; and
Long-Term Corporate Performance : Longer term adjusted return on equity and total shareholder return relative to a broad index of relevant publicly listed companies.
In 2016 with the introduction of long-term incentive awards to our compensation program, we reduced the target for annual restricted share grants for our NEOs, which weighted our compensation mix more heavily in favor of at risk awards based on long-term performance.
A2017PROXYCOMPENSATIONCHARTC.JPG

16



We believe performance relative to these financial metrics will ultimately improve returns to shareholders, through greater dividend-paying capacity and stronger fundamentals. We use these metrics to determine the compensation for many professionals in the Company, including all of our NEOs, and we discuss the Company’s progress against these financial metrics in quarterly employee meetings. By establishing these financial performance goals, tying the Company’s compensation program to the goals and communicating regularly with our employees, we strive to better align the interests of our employees and our shareholders and thereby improve shareholder returns.
We make annual incentive compensation awards, comprised of a cash bonus and equity award, based on a mix of corporate performance and individual performance. For more highly compensated employees, achievement of corporate financial metrics carries a greater weighting relative to individual performance, as illustrated in the table below:
 
Corporate Performance
 
Individual
Performance
CEO
85%
 
15%
Certain NEOs
80%
 
20%
Senior Professionals
60%
 
40%
Staff
50%
 
50%
To ensure executive compensation is aligned with long-term performance for our shareholders, in 2016 we implemented a long-term incentive plan that rewards executives for exceptional performance over a three year period. This program uses two measures of long term performance: adjusted return on equity relative to targets set by the Board each year in our annual business plan; and total shareholder return relative to a broad benchmark of public companies.
2016 Corporate Financial Metrics . We based corporate performance targets on the 2016 business plan that our board adopted in October, 2015. In addition, we established a performance range for each metric. Results below the low end of each range will not yield any contribution to the Company’s incentive compensation pool for that metric. Conversely, performance above the top end of a range will result in an enhanced contribution to the Company’s incentive compensation pool, to encourage exceptional performance. For 2016, we established the following targets, performance range and relative weighting for the three financial metrics for 2016:
Metric
 
2016 Target
 
Performance
Range
 
Weighted Score
Adjusted Return on Equity (1)
 
8.37%
 
50-150%
 
25%
Cash Flow per Share (2)
 
$6.09
 
85-115%
 
50%
New Investments (3)
 
$1.60 billion
 
60-125%
 
25%
_______________
(1)
Adjusted Return on Equity is Adjusted Net Income divided by the average shareholders’ equity, excluding the fair market value of derivatives. Adjusted Net Income, or ANI, is net income before certain expenses related to our financings and interest rate derivative accounting, share-based compensation expense and other items we have deemed unusual when viewed in the context of our ongoing business. Our presentation of ANI may not be comparable to similarly-titled measures used by other companies. A reconciliation between non-GAAP performance metrics and U.S. GAAP results is included as Appendix A to this proxy statement.
(2)
Cash Flow per Share for a period is Cash Flow from Operations before changes in working capital plus principal payments from our finance leases and distributions from our joint venture investment divided by the weighted average number of shares outstanding for that period. A reconciliation between non-GAAP performance metrics and U.S. GAAP results is included as Appendix A to this proxy statement.
(3)
New Investments measures the total amount invested in aviation assets.
Individual Performance Goals and Compensation
We set individual performance goals for every employee at the beginning of each year and measure each employee’s performance against those goals at the end of the year to determine incentive compensation levels. We determine incentive pay for each employee by applying the weighted corporate and individual performance scores against such employee’s targeted bonus amount. We set individual bonus targets based on an employee’s function, role and seniority within the organization, among other factors. For more highly compensated employees, annual incentive compensation includes cash and equity awards. For additional retention purposes, equity awards vest over three years, subject to continued service with us through such period. For a discussion of deductibility of our incentive compensation awards under Section 162(m) of the Internal Revenue Code of 1986 as amended, referred to herein as the Internal Revenue Code, see the section below entitled “Tax Implications of Our Compensation.”

17



What We Pay
As shown in the diagrams below, there are now four primary elements of total direct compensation: base salary, annual cash bonus, annual equity award and long-term incentive plan award.
A2017COMPENSATIONCHARTV4.JPG
Base Salary. Base salaries provide fixed compensation and allow us to attract and retain talented management by taking into account the current market environment and the responsibilities, experience, value to the Company and demonstrated performance of our named executive officers. We set base salaries for our named executive officers and review them periodically. In 2016, we increased base salaries for Mr. Wainshal and Mr. Inglese to $675,000 and $550,000, respectively, reflecting our view that an adjustment to their base salaries was appropriate to reflect market conditions. In addition, we reduced Mr. Kriedberg’s base salary to $440,000 in 2016 due to changes in his work schedule. We did not make other changes to the base salaries of our NEOs during 2016.
Annual Incentive Compensation. As described above, we make incentive compensation awards based on the Company’s performance against corporate financial metrics and performance against individual performance goals for each year, with payment of the incentive compensation split between cash and restricted share grants. We paid the cash portion of 2016 incentive awards in March 2017. For additional retention purposes, the restricted share grants for 2016 will vest in one-third increments on January 1, 2018, January 1, 2019 and January 1, 2020, subject to continued service with us through such period. In limited instances, we may also issue special restricted share grants to reward exceptional performance, special situations or retention purposes. For 2016, the Compensation Committee made no special restricted share grants to any of our NEOs.
Long-Term Incentive Plan. During 2016, we introduced a long-term incentive plan, which is designed to align management with shareholders by rewarding exceptional performance over a three year period. All performance share unit awards granted during 2016 are scheduled to vest and their performance period ends on December 31, 2018. With the introduction of the long-term incentive plan in 2016, we reduced the prior target annual award of restricted shares by 50%, further leveraging our compensation toward long-term performance based compensation.
Other Compensation. We pay dividends on unvested restricted shares but not on our performance shares unit awards. We also offer certain NEOs severance payments and accelerated vesting of restricted shares in certain circumstances, as described in greater detail below in the section entitled “Potential Payments upon Termination or Change in Control.” Severance and change in control benefits provide transitional assistance for separated employees and are essential to recruiting and retaining talented executives in a competitive market. In addition, our NEOs are also eligible to participate in our employee benefit plans, including medical, dental, life insurance and

18



401(k) plans. These plans are available to all employees and do not discriminate in favor of our named executive officers.
Recoupment Policy. In advance of the final SEC rules implementing Section 954 of the Dodd-Frank Act, in January 2016, we adopted a clawback policy covering certain incentive compensation awarded to our executive officers. The policy requires reimbursement of incentive payments awarded to an executive officer based upon financial results that were subsequently the subject of a restatement due to the Company’s material noncompliance with financial reporting requirements. The amount of reimbursement would be to the extent that a lower payment would have been awarded to the executive based on the restated financial results. The policy applies to all incentive compensation awarded or paid to an executive officer in the three years prior to the restatement, even if the executive officer did not engage in conduct which contributed to the restatement. In addition, we may seek to recover any portion of incentive compensation when we determine that an executive officer engaged in a certain misconduct, namely involving: (i) material acts of fraud or dishonesty in connection with employment by the Company; (ii) willfully not complying with material policies or procedures of the Company; or (iii) the commission of a felony or a crime involving material dishonesty. We may need to amend the policy following adoption of the final SEC rule mentioned above.
Summary. The primary goals of our compensation programs are to attract, motivate and retain the most talented and dedicated employees and to align incentive compensation with enhancing shareholder value. Our compensation programs are intended to:
motivate our NEOs by providing the large majority of their overall compensation through an incentive compensation program that ties awards to corporate financial metrics and individual performance goals which we believe will build shareholder value; and
align each NEO's incentives with those of shareholders by delivering a substantial portion of their incentive compensation in the form of restricted share grants and performance based equity awards.
What We Don’t Pay
Change in control benefits based on a single trigger;
Deferred compensation plans;
Company cars or aircraft;
Federal income tax gross-ups; and
Special or enhanced pension or retirement programs.
2016 Compensation
Performance Versus Corporate Financial Metrics. In 2016, the Company’s performance against its corporate financial metrics resulted in an incentive compensation pool equal to 104.1% of the total target, as shown in the table below.
Metric
 
2016
Target
 
2016 Performance
 
Performance Range
 
Performance
 
Weighted Score
Adjusted Return on Equity (1)
 
8.37%
 
9.41%
 
50-150%
 
112.5%
 
28.2
%
Cash Flow per Share (1)
 
$6.09
 
$6.19
 
85-115%
 
101.7%
 
50.8
%
New Investments
 
$1.60 billion
 
$1.609 billion
 
60-125%
 
100.6%
 
25.1
%
 
 
 
 
 
 
 
 
 
Total
104.1
%
_______________
(1)
A reconciliation between non-GAAP performance metrics and U.S. GAAP results is included as Appendix A to this proxy statement.
Adjusted Return on Equity was above target primarily due to gains on sale of aircraft assets. Cash Flow per Share and New Investments were both in line with target reflecting management’s success in executing the 2016 business plan. The Company's performance for New Investments was particularly noteworthy in light of the highly competitive environment for aircraft investments in 2016.
Individual Incentive Compensation Actions for 2016
The Company’s overall performance in 2016 was strong, with adjusted return on equity above target and cash flow per share and new investments at target. In addition, the senior management team sought to better position the Company in light of increasing

19



macro-economic risks and market volatility by selling risky assets and upgrading the portfolio. The following represent some of the Company’s most important accomplishments during the 2016:
Acquired 60 aircraft in 2016 for $1.6 billion, including 57 narrow-body aircraft. We believe these investments improved the quality of the Company’s portfolio and its earnings base.
Sold 30 aircraft for a gain on sale of $39.1 million, including seven wide-body and three freighter aircraft, further improving the quality of our portfolio.
Increased the share of current generation narrow-body aircraft in our portfolio from 45% to 55% of net book value, while reducing the Company’s exposure to out-of-production aircraft and freighter aircraft from 11% to 9% of net book value.
Proactively addressed our lease placements while market conditions were favorable. As a result, we have just two aircraft left to place on lease in 2017.
Achieved excellent aircraft utilization with our aircraft being on lease 98.9% of the time (1) and a net cash interest margin of 8.7% (2) .
Raised $1.3 billion in new financing during 2016 from funding sources worldwide. These actions and others provided us with significant liquidity to continue to grow the Company and improved the quality of our capital structure.
Our total return to shareholders for the year ended December 31, 2016 was 4.5%, below the total shareholder return of the S&P MidCap 400 of 20.7%, and our total return for the three years ended December 31, 2016 was 23.9%, slightly below the total shareholder return of the S&P MidCap 400 of 29.6%. Over those periods, we outperformed our publicly traded direct peers (AerCap, Air Lease and Fly Leasing), which had an average total return (loss) of (1.0)% for 2016 and a three year return of 5.4%. Each of our NEOs met or exceeded their individual performance goals for 2016.
_______________

(1) Aircraft on-lease days as a percent of total days in period weighted by net book value.
(2) A reconciliation between non-GAAP performance metrics and U.S. GAAP results is included as Appendix A to this proxy statement.

20



Based on these factors, and the corporate performance achievement of 104.1% , the Compensation Committee took the following actions:
Named Executive Officer

Incentive Compensation (1)


Rationale
 
 
 
Ron Wainshal
$723,836 cash and $723,827 restricted share grant
Mr. Wainshal provided strong overall leadership, both shaping and driving the Company’s strategy while also leading its efforts to upgrade the portfolio and de-risk the business. He worked closely with our key stakeholders and led the Company’s approach to the financial markets.
 
 
 
Michael Inglese
$595,540 cash and $297,762 restricted share grant
Mr. Inglese led the Company’s financing, investor relations and corporate planning efforts. He was also responsible for the IT department. His work resulted in the Company completing several important debt financing transactions, which significantly reduced our debt costs while enhancing our financial flexibility. He also made significant contributions towards the Company’s strategic plan.
 
 
 
Michael Kriedberg
$535,986 cash and $267,976 restricted share grant
Mr. Kriedberg led the Company’s aircraft acquisitions, placements and sales efforts. In this regard, he played a key role in directing the Company’s considerable investment, sales and placement activity, including completing $1.6 billion in aircraft acquisitions in a highly competitive environment, selling 30 aircraft and placing aircraft on lease throughout the year. These efforts improved the quality of our portfolio considerably.
 
 
 
Christopher Beers
$395,222 cash and $197,621 restricted share grant
Mr. Beers led the Company’s legal organization and was also responsible for the human resources function. His efforts were critical in completing the Company’s transaction activity in 2016. He was also instrumental in designing and implementing our long-term incentive program and improving operational and governance processes.
 
 
 
Aaron Dahlke
$242,428 cash and $47,474 restricted share grant
Mr. Dahlke led the Company’s accounting department and played a key role in several internal processes, including the annual fleet review and enterprise risk analysis. He also helped improved internal processes, enabling the Company to complete its 2016 annual financial results nearly two weeks earlier than previously.

_______________
(1)
All restricted share awards were granted in early 2017 and grants vest in equal installments on January 1, 2018, 2019 and 2020, subject to the terms and conditions of the Incentive Plan.

Long-Term Incentive Plan
In 2016 we introduced a long-term equity incentive award program in the form of performance share units (“PSUs”) for NEOs and certain other senior executives. These PSUs are intended to drive superior performance and enhance management retention.
We established the overall value of PSUs for each executive based on their position, market and compensation data, and advice from an independent compensation consultant. In conjunction with implementing PSUs, we reduced a portion of the annual restricted share awards we would have granted to each executive officer under our previous compensation program, resulting in an higher portion of the overall compensation mix being at-risk. We believe the performance standards for earning the PSU awards are challenging.
The PSUs granted in 2016 vest at the end of a three year period, which runs from January 1, 2016 through December 31, 2018 although Mr. Wainshal received a supplemental PSU award in September 2016 with a performance period which runs from July1, 2016 through December 31, 2018. Half of the PSUs vest on achieving relative total stockholder return goals (the "TSR PSUs") while the other half vest on attaining annual Adjusted Return on Equity goals (the "AROE PSUs"). We believe this approach provides a balanced mix of incentives. Adjusted Return on Equity is an appropriate measurement of management’s effectiveness in deploying our shareholders’ capital and relative total shareholder return measures management’s ability to deliver superior long-term returns to our shareholders. We made these awards under our 2014 Plan. The PSUs are denominated in share units (without dividend rights), each of which is equivalent to one share of common stock, and are subject to performance conditions and time-based vesting conditions.


21



TSR PSUs
The number of shares vesting from the TSR PSUs at the end of the three-year performance period will depend on our ranking within the S&P 400 MidCap Index as set forth in the table below. The TSR PSUs are designed to incentivize exceptional performance. To vest at target level, the Company’s TSR ranking will need to be at the 60th percentile, and no shares will vest if the Company’s TSR ranking is below the 40th percentile. Results between the points in the table will be interpolated on a linear basis.
Actual TSR Percentile Ranking
Applicable Percentage
80 th  or higher
200%
60 th
100%
40 th
50%
below 40 th
—%
Total stockholder return ("TSR") is the change in price of a share of our common shares plus its accumulated dividends over the three year measurement period. Comparing the Company’s TSR to the returns of a broad market index over the same period provides an objective external measure of the Company's effectiveness in generating returns for shareholders. We believe the S&P Mid-Cap 400 Index, which is comprised of a broad range of companies with market capitalizations similar to the Company’s, is an appropriate benchmark for TSR performance. Our industry is highly specialized with few direct peers, only three of which are now publicly traded. It is not possible to develop a robust group of relevant peer companies against which to accurately benchmark performance.
AROE PSUs
The number of shares vesting from the AROE PSUs at the end of the three-year performance period will depend on the Company’s Adjusted Return on Equity as measured against the targets set in the annual business plan approved by the Board. Adjusted Return on Equity is calculated in the same manner as described in Appendix A of this Proxy. The score is calculated each year and then averaged over the three year performance period. No shares underlying AROE PSUs will vest if the Company’s Adjusted Return on Equity is more than 2% below plan. Results between the points in the table will be interpolated on a linear basis.
Actual AROE Performance
Applicable Percentage
Annual AROE Target plus 2%
200%
Annual AROE Target
100%
Annual AROE Target less 2%
50%
Below Annual AROE Target less 2%
—%
The chart below shows the PSU awards to our NEOs during 2016, including the number of common shares underlying the awards at the time of grant:
 
 
Target/Maximum
Number of PSUs
 
Target/Maximum
Number of
TSR PSUs
 
Target/Maximum
Number of
AROE PSUs
Mr. Wainshal (1)
 
101,796/203,592
 
50,899/101,798
 
50,897/101,794
Mr. Inglese
 
52,682/105,364
 
26,341/52,682
 
26,341/52,682
Mr. Kriedberg (1)
 
47,414/94,828
 
23,707/47,414
 
23,707/47,414
Mr. Beers
 
34,962/69,924
 
17,481/34,962
 
17,481/34,962
Mr. Dahlke
 
7,663/15,326
 
3,832/7,664
 
3,831/7,662
_______________
(1)
In connection with compensation actions taken during 2016, Mr. Wainshal received a supplemental PSU award on September 1, 2016 with a target of 15,589 PSUs (maximum of 31,178 PSUs) with a performance period from July 1, 2016 to December 31, 2018 and on July 1, 2016, Mr. Kriedberg’s target PSUs were adjusted to 47,414 PSUs (maximum of 94,828 PSUs).


22



How We Make Decisions
Risk . The Compensation Committee reviews the risks and rewards associated with the Company’s compensation programs. We believe that our compensation programs encourage prudent business judgment and appropriate risk-taking, with the overall goal of building sustainable and profitable growth and enhancing shareholder value.
We believe none of our compensation programs create risks that are reasonably likely to have a material adverse impact on the Company. Base salary is a fixed amount that does not encourage risk taking. The incentive compensation program, which delivers the majority of total compensation for our NEOs, contains elements that mitigate risk without detracting from the incentive nature of the program, including:
the use of multiple corporate financial performance metrics, rather than relying on a single measure;
the use of ranges for these financial performance metrics, so that the earning of the awards is not an “all or nothing” proposition;
the use of performance-based and time-based equity awards vesting over a three-year period, increasing the focus on longer-term performance and shareholder value growth;
greater weighting on performance-based equity versus time-based equity; and
the adoption of robust share ownership guidelines and a recoupment policy.
Role of Executive Officers and Compensation Consultant. We set the corporate financial metrics at the beginning of the year based on the annual business plan approved by the Board. The Chief Executive Officer, after consultation with us, establishes individual performance goals for the other NEOs. Regularly during the year, the senior management team presents to us the Company’s actual performance against the corporate performance metrics. We share these discussions with the full Board on a regular basis
In January, we begin developing our preliminary appraisal of our Chief Executive Officer’s performance against the Company’s corporate performance metrics and his individual goals. In February, after consulting with the Chairman of the Board, we make our final decision about the Chief Executive Officer’s incentive compensation. Other NEOs may assist in providing data but otherwise have no role in determining the Chief Executive Officer’s compensation. The Chief Executive Officer makes recommendations to us concerning other NEOs’ incentive compensation based on corporate performance and each other NEO’s individual performance.
We have access market data in evaluating the competitiveness of our overall compensation structure. We use such data to develop a general understanding of current compensation practices, but we do not rely solely on such data for making compensation decisions.
For 2016, we retained the firm of McLagan, an AON Hewitt company, as an independent compensation consultant. McLagan advised us in connection with changes to executive compensation and the design of, and granting of awards under, our long-term incentive plan. McLagan did not assist us in making any other decisions in 2016. The services provided by McLagan are under the direction and authority of the Compensation Committee. McLagan has no other direct or indirect business relationship with the company or our senior management team other than certain insurance brokerage arrangements provided by an affiliate of McLagan and the Company's participation in a broad industry compensation survey directed by McLagan. Total fees paid to McLagan for advice with respect to compensation matters totaled $129,853 in 2016, and total fees paid to AON for insurance brokerage services for our aviation assets totaled $177,919 in 2016. McLagan does not provide any services to management and had no relationship with management prior to the engagement and, although the decision to engage AON for insurance brokerage services was made by members of our management, the decision to engage AON for insurance brokerage services was made prior to engaging McLagan. Representatives of McLagan attended select Compensation Committee meetings and provided objective third-party advice and compensation market perspective. We concluded that the advice we received from McLagan is objective and does not raise any conflicts of interest.

23



Share Ownership Guidelines
We believe common share ownership by management aligns the interests of management with those of the shareholders. Accordingly, we have adopted Ownership Guidelines providing for the following levels of share ownership applicable to our Chief Executive Officer, Chief Commercial Officer, Chief Financial Officer and General Counsel (based on the aggregate value of this share ownership as of the date of determination).
Position
 
Multiple of Base Salary
Chief Executive Officer
 
6x
Chief Financial Officer
 
2x
Chief Commercial Officer
 
2x
General Counsel
 
2x

The Ownership Guidelines provide for a phase-in period, according to which a relevant officer should satisfy the Ownership Guidelines, by the fifth anniversary of his or her initial appointment or promotion. As of March 23, 2017, each of the above officers complied with the Ownership Guidelines.
Tax Implications of Our Compensation
We consider the tax implications of our compensation programs, including the implications of Section 162(m) of the Internal Revenue Code, which limits the deductibility of certain compensation to US$1,000,000 per year for our Chief Executive Officer and for each of the other three most highly compensated named executive officers (other than our Chief Financial Officer) who are employed at year-end. Performance-based compensation may be excluded from this limitation. In May of 2014, our shareholders approved the adoption of the 2014 Plan which, among other things, allows our annual incentive compensation awards to our named executive officers to be excluded from the limitations of Section 162(m) and therefore be deductible.
In order for our annual incentive compensation awards for 2016 to be considered “performance-based compensation” for purposes of Section 162(m) of the Internal Revenue Code and therefore be fully deductible, the we approved an incentive compensation plan for 2016.  That plan limits the total amount of incentive compensation that could be awarded to our named executive officers in 2016 to 4% of Cash Flow from Operations before Working Capital, but not in excess of $20,000,000.  Our Chief Executive Officer was eligible to receive up to 40% of such amount and our other named executive officers were eligible to receive an aggregate amount up to 60%.  The Compensation Committee may grant awards in lesser amounts but not in excess of the plan limits.  In addition, any reduction in the amount of one named executive officer’s compensation would not result in an increase in any other named executive officer’s compensation.  As determined and certified by the Compensation Committee for 2016, the maximum amount payable to our named executive officers based on our performance was equal to the maximum of $19,524,000. We granted incentive compensation awards for 2016 to our named executive officers in lesser amounts than the plan limits, based on the corporate financial metrics and individual performance goals described in greater detail above in the sections entitled “Pay for Performance” and “2016 Compensation.” The awards granted to our Chief Executive Officer and other named executive officers for 2016 were $4,027,672, only 20.6% of the maximum amount permitted under the plan.
Last Year’s Say-on-Pay Vote
At our 2016 Annual Meeting, our shareholders had the opportunity to cast an advisory vote on the compensation of our NEOs in 2015. The Company's say-on-pay vote yielded a 98% approval. Notwithstanding this favorable vote, we continue to seek input from our shareholders to understand their views with respect to the Company's approach to compensation, and in particular in connection with the our efforts to tie compensation to performance.
Compensation Committee Interlocks and Insider Participation
During 2016, the Compensation Committee of the Board was composed of Messrs. Hacker, Merriman and Pollard and Ms. Mura. None of these persons has at any time been an officer or employee of the Company or any of its subsidiaries. In addition, there are no relationships among the Company’s executive officers, members of the Compensation Committee or entities whose executives serve on our Board or on the Compensation Committee that require disclosure under applicable SEC regulations.

24



Compensation Overview
The table below sets forth information regarding 2016, 2015 and 2014 compensation for each of our NEOs, presenting each cash bonus, equity award and performance share award for the service year with respect to which they were earned, even if the annual incentive awards (cash bonus and equity award) were actually granted in a different period. Note that the SEC-required Summary Compensation Table (shown on page 27) requires disclosure of equity-based grants in the year they were awarded, even if they were awarded in respect of a prior year's service. Therefore, if an incentive award was earned in respect of service in one fiscal year, but paid in the subsequent fiscal year, it would be included as compensation in the subsequent fiscal year in the Summary Compensation Table.
The presentation below reflects how we view year-over-year changes to the compensation for our NEOs. It is important to recognize that the way we present compensation for our NEOs in the table below is different from the SEC-required disclosure in the Summary Compensation Table and is not a substitute for the information in that table. Rather, it is intended to show how we review total compensation for our NEOs across different periods during our decision-making process.
 
 
 
 
 
 
 
 
Stock Awards (US$) (1)
 
 
 
 
Name and Principal Position
 
Fiscal   Year
 
Salary (US$)
 
Cash Bonus(US$)
 
Annual Equity Award
 
Long Term Incentive Plan
 
All Other   Compensation (US$) (2)
 
Total
(US$)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ron Wainshal
 
2016
 
$
637,500

 
$
723,836

 
$
723,827

 
2,137,500

 
$
177,712

 
$
4,400,375

Chief Executive Officer
 
2015
 
600,000

 
609,150

 
1,218,299

 

 
168,872

 
2,596,321

 
 
2014
 
600,000

 
735,100

 
1,914,897

 

 
146,712

 
3,396,709

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Michael Inglese
 
2016
 
$
541,667

 
$
595,540

 
$
297,762

 
1,100,000

 
$
80,179

 
$
2,615,148

Chief Financial Officer
 
2015
 
500,000

 
516,000

 
516,004

 

 
73,812

 
1,605,816

 
 
2014
 
491,667

 
614,800

 
814,793

 

 
60,008

 
1,981,268

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Michael Kriedberg
 
2016
 
$
486,667

 
$
535,986

 
$
267,976

 
990,000

 
$
149,952

 
$
2,430,581

Chief Commercial Officer
 
2015
 
500,000

 
516,000

 
516,004

 

 
161,026

 
1,693,030

 
 
2014
 
500,000

 
614,800

 
814,793

 

 
153,496

 
2,083,089

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Christopher Beers (3)
 
2016
 
$
400,000

 
$
395,222

 
$
197,621

 
730,000

 
$
71,898

 
$
1,794,741

General Counsel
 
2015
 
400,000

 
365,730

 
365,726

 

 
55,224

 
1,186,680

 
 
2014
 
66,667

 
365,000

 
25,001

 

 
10,413

 
467,081

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aaron Dahlke
 
2016
 
$
300,000

 
$
242,428

 
$
47,474

 
160,000

 
$
21,230

 
$
771,132

Chief Accounting Officer
 
2015
 
295,833

 
227,020

 
84,678

 

 
19,118

 
626,649

 
 
2014
 
270,833

 
235,900

 
90,604

 

 
17,888

 
615,225

_______________
(1)
The amounts reported in the “Annual Equity Awards” column of the table above for 2016, 2015 and 2014 reflect the aggregate fair value on the grant date of the stock awards granted to our named executive officers determined in accordance with FASB ASC Topic 718. The amounts reported in the "Long Term Incentive Plan" column of the table above for 2016 reflect the target value of the award. The fair value on the grant date of the award is reported on page 28.
(2)
The amounts reported in “All Other Compensation” column represent dividends paid on unvested shares, company contributions made during 2016 to each named executive officer’s 401(k) plan account, and certain insurance premiums paid by the Company.
(3)
Mr. Beers was appointed as our General Counsel in November 2014.

25



COMPENSATION COMMITTEE REPORT

The Compensation Committee of the Board is comprised of four Independent Directors and operates pursuant to a written charter, which is available at http://www.aircastle.com under “Investors—Governance Documents.”

The Compensation Committee is primarily responsible for reviewing, approving and overseeing the Company’s compensation plans and practices and works with management to establish the Company’s executive compensation philosophy and programs. The members of the Committee at the end of 2016 were Charles W. Pollard (Chair), Douglas A. Hacker, Ronald L. Merriman and Agnes Mura.

The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management and, based on that review and discussion, has recommended to the Board that it be included in this proxy statement.


Respectfully submitted,
The Compensation Committee

Charles W. Pollard, Chair
Douglas A. Hacker
Ronald L. Merriman
Agnes Mura


26



Summary Compensation Table for 2016
The table below sets forth information regarding 2016, 2015 and 2014 compensation for each of our NEOs. It is important to recognize that the SEC-required disclosure in the Summary Compensation Table (below) is different than the way the Compensation Committee considers compensation for our NEOs during its decision-making process, which is set forth in the “Compensation Overview” table on page 26.
 
 
 
 
 
 
 
 
Stock Awards (US$) (1)
 
 
 
 
Name and Principal Position
 
Fiscal   Year
 
Salary (US$)
 
Non-Equity Incentive Plan Compensation (US$)
 
Annual Equity Award
 
Long Term Incentive Plan
 
All Other Compensation (US$) (2)
 
Total (US$)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ron Wainshal
 
2016
 
637,500

 
723,836

 
1,218,299

(3
)
1,671,267

 
177,712

 
4,428,614

Chief Executive Officer
 
2015
 
600,000

 
609,150

 
1,914,897

 

 
168,872

 
3,292,919

 
 
2014
 
600,000

 
735,100

 
1,699,998

 

 
146,712

 
3,181,810

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Michael Inglese
 
2016
 
541,667

 
595,540

 
516,004

(3
)
874,074

 
80,179

 
2,607,464

Chief Financial Officer
 
2015
 
500,000

 
516,000

 
814,793

 

 
73,812

 
1,904,605

 
 
2014
 
491,667

 
614,800

 
575,025

 

 
60,008

 
1,741,500

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Michael Kriedberg
 
2016
 
486,667

 
535,986

 
516,004

(3
)
786,678

 
149,952

 
2,475,287

Chief Commercial Officer
 
2015
 
500,000

 
516,000

 
814,793

 

 
161,026

 
1,991,819

 
 
2014
 
500,000

 
614,800

 
529,977

 

 
153,496

 
1,798,273

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Christopher Beers
 
2016
 
400,000

 
395,222

 
365,726

(3
)
580,082

 
71,898

 
1,812,928

General Counsel
 
2015
 
400,000

 
365,730

 
25,001

 

 
55,224

 
845,955

 
 
2014
 
66,667

 
365,000

 
863,100

(4
)

 
10,413

 
1,305,180

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aaron Dahlke
 
2016
 
300,000

 
242,428

 
84,678

(3
)
127,145

 
21,230

 
775,481

Chief Accounting Officer
 
2015
 
295,833

 
227,020

 
90,604

 

 
19,118

 
632,575

 
 
2014
 
270,833

 
235,900

 
71,976

 

 
17,888

 
596,597

_______________
(1)
The amounts reported in the Annual Equity Award column for 2016, 2015 and 2014 reflect the aggregate fair value on the grant date of the restricted share awards granted to our NEOs determined in accordance with FASB ASC Topic 718. The amounts reported in the Long-Term Incentive Plan column for 2016 reflect the aggregate fair value on the grant date of the AROE PSUs and the TSR PSUs granted to our NEOs determined in accordance with FASB ASC Topic 718 based on the probable achievement of the applicable AROE and TSR performance conditions as of the grant date. The aggregate fair value on the grant date that would have been included for the AROE PSUs and TSR PSUs, assuming that the highest level of the performance conditions would be achieved, is as follows: Mr. Wainshal US$4,275,000; Mr. Inglese US$2,200,000; Mr. Kriedberg US$1,980,000; Mr. Beers US$1,460,000; and Mr. Dahlke US$320,000. For a summary of the assumptions made in the valuation of these awards, please see Note 8 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2016. See “Grants of Plan-Based Awards” below for additional information regarding restricted share awards and PSUs made to our NEOs in 2016.
(2)
The amounts reported in this column consist of: (i) the following dividend payments made by the Company on unvested restricted common shares for each named executive officer in 2016: Mr. Wainshal US$165,472; Mr. Inglese US$67,666; Mr. Kriedberg US$137,439; Mr. Beers US$59,299; and Mr. Dahlke US$9,400; and (ii) Company contributions made during 2016 to each named executive officer’s 401(k) plan account and certain insurance premiums paid by the Company.
(3)
Represents restricted share awards granted in 2016 in respect of performance for fiscal year 2015. Stock awards in respect of performance for fiscal year 2016 were approved by the Compensation Committee and communicated to the named executive officers in February 2017. The aggregate grant date fair value of restricted share awards in respect of performance in fiscal year 2016, which vest over three years and were communicated in February 2017 are as follows: Mr. Wainshal US$723,827; Mr. Inglese US$297,762; Mr. Kriedberg US$267,976; Mr. Beers US$197,621; and Mr. Dahlke US$47,474.
(4)
In connection with his appointment as our General Counsel in November 2014, Mr. Beers received a grant of 45,000 restricted common shares, vesting in one-fifth increments each January 1, commencing January 1, 2016.

27



GRANTS OF PLAN-BASED AWARDS FOR 2016
The following table sets forth information regarding the cash portion of our incentive compensation program for 2016 and restricted share awards and PSUs made to our named executive officers under the Incentive Plan during the year ending December 31, 2016:
Name
Grant Date (1)
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (2)
Estimated Future Payouts Under Equity Incentive Plan Awards (3)
 
All Other Stock Awards:
Number of   Shares of Stock or Units (#) (1)

Grant Date Per Share Fair Value (US$) (1)
Grant Date Fair Value   of Stock Awards
(US$) (1)
Threshold
(US$)
Target
(US$)
Maximum
(US$)
Threshold
(#)
Target
(#)
Maximum
(#)
 
Ron Wainshal

 
 
6,000,000

 
 
 
 
 
 
 
 
2/9/2016

 
 
 
 
 
 
79,059

15.41

1,218,299

 
3/11/2016
 
 
 
21,552

43,104

86,208

 
 
25.20

1,086,221

 
3/11/2016
 
 
 
 
14,368

17,960

(4
)
 
19.16

344,114

 
9/1/2016
 
 
 
3,898

7,795

15,590

 
 
22.80

177,726

 
9/1/2016
 
 
 
 
2,598

3,248

(4
)
 
19.46

63,206

 
 
 
 
 
 
 
 
 
 
 
 
Michael Inglese

 
 
2,250,000

 
 
 
 
 
 
 
 
2/9/2016

 
 
 
 
 
 
33,485

15.41

516,004

 
3/11/2016
 
 
 
13,171

26,341

52,682

 
 
25.20

663,793

 
3/11/2016
 
 
 
 
8,780

10,975

(4
)
 
19.16

210,281

 
 
 
 
 
 
 
 
 
 
 
 
Michael Kriedberg

 
 
2,250,000

 
 
 
 
 
 
 
 
2/9/2016

 
 
 
 
 
 
33,485

15.41

516,004

 
3/11/2016
 
 
 
11,854

23,707

47,414

 
 
25.20

597,416

 
3/11/2016
 
 
 
 
7,902

9,878

(4
)
 
19.16

189,262

 
 
 
 
 
 
 
 
 
 
 
 
Christopher Beers

 
 
2,250,000

 
 
 
 
 
 
 
 
2/9/2016

 
 
 
 
 
 
23,733

15.41

365,726

 
3/11/2016
 
 
 
8,741

17,481

34,962

 
 
25.20

440,521

 
3/11/2016
 
 
 
 
5,827

7,284

(4
)
 
19.16

139,561

 
 
 
 
 
 
 
 
 
 
 
 
Aaron Dahlke

 
 
2,250,000

 
 
 
 
 
 
 
 
2/9/2016

 
 
 
 
 
 
5,495

15.41

84,678

 
3/11/2016
 
 
 
1,916

3,832

7,664

 
 
25.20

96,566

 
3/11/2016
 
 
 
 
1,277

1,596

(4
)
 
19.16

30,579

_______________
(1)
Represents restricted share awards granted in 2016 in respect of performance for fiscal year 2015 and AROE PSUs and TSR PSUs granted in 2016 for performance through December 31, 2018. The amounts reflect the aggregate fair value on the grant date of the stock awards granted to our named executive officers determined in accordance with FASB ASC Topic 718. Restricted share awards in respect of performance for fiscal year 2016 were approved by the Compensation Committee and communicated to the named executive officers in February 2017. The aggregate grant date fair value of restricted share awards in respect of performance for fiscal year 2016, which vest over three years and were communicated in February 2017 are as follows: Mr. Wainshal US$723,827; Mr. Inglese US$297,762; Mr. Kriedberg US$267,976; Mr. Beers US$197,621; and Mr. Dahlke US$47,474.
(2)
The maximum represents the highest possible amount of cash incentive compensation that could be paid to our named executive officers under our incentive compensation program described above in the section entitled "Tax Implications of Our Compensation." The maximum amount could then be allocated as follows: up to 40% to our CEO and up to 60% among the other named executive officers. Under this program, the Compensation Committee is free to grant awards up to the maximum amount, or grant no awards at all even if performance metrics are achieved. Thus, there is no minimum amount payable. The actual amount of cash incentive compensation paid to our named executive officers with respect to performance in 2016 is reported in the "Non-Equity Incentive Compensation Plan" column of the Summary Compensation Table for 2016" and described in greater detail above in the section entitled "2016 Compensation.”
(3)
Represents PSUs granted in 2016 which were designed to align management with shareholders by rewarding exceptional performance over a three year period while enhancing retention for executives and certain senior professionals. All PSUs granted during 2016 vest and their performance period ends on December 31, 2018. The amounts reflect the aggregate fair value on the grant date of the PSUs granted to our named executive officers determined in accordance with FASB ASC Topic 718. For a summary of the assumptions made in the valuation of these awards, please see Note 8 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2016.

28



(4)
The maximum AROE PSUs represent 125% of target based on actual performance against the 2016 AROE target. The remaining 95,607 of target AROE PSUs will be considered granted upon the Compensation Committee’s setting the target AROE for the respective period.

Employment Agreements with Named Executive Officers
Through our subsidiary, Aircastle Advisor LLC, we have entered into an employment agreement or employment letter with each of our named executive officers other than Mr. Dahlke. These employment agreements or letters generally provide for payment of an annual base salary and the executives’ eligibility to receive an annual cash bonus with indicated target annual cash bonus and equity incentive award levels. In addition, the employment letters provide that each executive is entitled to receive the same employee benefits as we provide to our employees generally. Mr Dahlke is party to a severance letter described in more detail below.
Each employment letter provides that the named executive officer is employed “at-will” and may be terminated at any time and for whatever reason by either us or him. A summary of the payments and benefits to be provided to the named executive officers upon a termination of employment, along with a description of the restrictive covenants applicable to each executive, is set forth below in the section entitled “Potential Payments upon Termination or Change in Control.”
Restricted Share and PSU Provisions under the Incentive Plan
Rights of Participants. Participants with restricted shares generally have all of the rights of shareholders, including the right to vote the shares and the right to receive dividends at the same rate paid to other holders of common shares. Participants with PSUs have none of the rights of shareholders until the PSUs are settled in common shares. Subject to the provisions of the Incentive Plan and applicable award agreement, the Incentive Plan administrator has sole discretion to provide for the lapse of restrictions in installments or the acceleration or waiver of restrictions (in whole or part) under certain circumstances, including, but not limited to, the attainment of certain performance goals or a participant’s termination of employment or service.
Adjustments. In the event of a merger, amalgamation, consolidation, reorganization, recapitalization, bonus issue, share dividend or other change in corporate structure affecting the common shares, the Incentive Plan administrator may, subject to certain limitations, make an equitable substitution or proportionate adjustment in, among other things, the kind, number and purchase price of common shares subject to outstanding awards of restricted shares or other share-based awards (including PSUs) granted under the Incentive Plan. In addition, the Incentive Plan administrator, in its discretion, may terminate all awards with the payment of cash or in-kind consideration.
Repurchase of Shares for Withholding Taxes upon Vesting. The Incentive Plan gives the Incentive Plan administrator the authority to permit a participant to satisfy any federal, state or local withholding taxes due upon vesting of restricted shares by electing to have the Company repurchase a sufficient number of common shares, at Fair Market Value (as defined in the Incentive Plan) on the day of vesting. During 2016, our named executive officers and seven Directors, Ms. Mura and Messrs. Allen, Bisignani, Cave, Hacker, Merriman and Pollard, made such an election of a sufficient number of shares, and the Incentive Plan administrator approved such elections.
Restricted Share Agreements. The restricted share agreements with each of Messrs. Wainshal, Inglese, Kriedberg, Beers and Dahlke provide that if his employment with the Company is terminated by the Company without ”cause” (as defined in his employment agreement or award agreement) or, if applicable, by the executive with ”good reason” (as defined in his employment agreement or award agreement), then the shares, if any, that are not vested as of the date of such termination will be paid out according to the original vesting schedule subject to the executive’s execution of a separation agreement which includes a general release of claims. In the event that the executive’s employment is terminated by the Company without cause or by the executive for good reason, in each case within 120 days prior to or within twelve months following a Change of Control, then 100% of the shares, if any, that are not vested as of the date of such termination shall immediately vest. Upon a participant’s death or disability, the vesting of that participant’s unvested restricted shares will accelerate.
Performance Share Unit Agreements. The PSU agreements with each of Messrs. Wainshal, Inglese, Kriedberg, Beers and Dahlke provide that if his employment with the Company is terminated by the Company without ”cause” (as defined in the 2014 Plan) or, if applicable, by the executive with ”good reason” (as defined in the 2014 Plan), then the Performance Period shall end as of the last day of the Company's last fiscal quarter and a number of PSUs shall immediately vest on the date based on achievement of Performance Goals. In the event that a Change of Control occurs prior to the vesting date, then the the Performance Period shall end as of the date of the Change in Control and the Performance Goals shall be deemed to be satisfied as of the date of such Change in Control at the greater of (x) the level of achievement resulting in vesting percentages of 75% of the Target PSUs and (y) the actual level of achievement as of the date of such Change in Control. The resulting number of PSUs shall vest on the original vesting date based solely on the continued employment if the successor entity assumes the awards, provided that if the executive's employment is terminated by the Company without cause or by the executive for good reason, or the executive's employment terminates due to his health or death or disability, in each case prior to the vesting date, the resulting PSUs will vest immediately on the date of such termination of employment. If the successor entity does not assume the awards, then the resulting number of PSUs vest immediately. In the event that employment with

29



the Company or a Subsidiary or Affiliate is terminated as a result of the death or Disability of the Participant (other than following a Change in Control), then the Performance Period shall end as of the last day of the Company's last fiscal quarter ending prior to the date of such termination of employment, and the greater of (x) the Target PSUs and (y) the number of PSUs that would have vested based on achievement of the Performance Goals as of the last day of the Performance Period shall immediately vest.

30



OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END FOR 2016
The following table summarizes the unvested portion of the restricted share awards and PSUs of our named executive officers under the Incentive Plan, as of December 31, 2016:
 
 
Stock Awards
Name
 
Number of Shares   or Units of Stock   that Have   Not Vested (#)
 
Market Value of   Shares or Units of   Stock that Have   Not Vested (US$)  (1)
 
Equity Incentive Plan Awards; Number of Unearned Shares, Units or Other Rights that have Not Vested (#)  (7)
 
Equity Incentive Plan Awards; Market or Payout Value of Unearned Shares, Units or Other Rights that have Not Vested (US$)  (1)
Ron Wainshal
 
168,849
(2)  
3,520,502
 
72,107

 
1,503,431

Michael Inglese
 
69,047
(3)  
1,439,630
 
37,316

 
778,039

Michael Kriedberg
 
140,244
(4)  
2,924,087
 
33,585

 
700,247

Christopher Beers
 
60,509
(5)  
1,261,613
 
24,765

 
516,350

Aaron Dahlke
 
9,592
(6)  
199,993
 
5,428

 
113,174

_______________
(1)
Valued at a common share price of US$20.85, the reported closing price for our common shares on the NYSE on December 30, 2016, the last trading day of 2016. PSUs were valued assuming achievement of the applicable performance metrics as described below in footnote 7.
(2)
These 168,849 restricted shares vest in increments of 86,399, 56,097 and 26,353 each January 1, commencing January 1, 2017.
(3)
These 69,047 restricted shares vest in increments of 34,068, 23,817 and 11,162 each January 1, commencing January 1, 2017.
(4)
These 140,244 restricted shares vest in increments of 69,265, 59,817 and 11,162 each January 1, commencing January 1, 2017.
(5)
In connection with his appointment as our General Counsel in November 2014, Mr. Beers received a grant of 45,000 restricted common shares, vesting in one-fifth increments each January 1, commencing January 1, 2016. His total of 60,509 restricted shares vest in increments of 17,299, 17,299, 16,911, and 9,000 each January 1, commencing January 1, 2017.
(6)
These 9,592 restricted shares vest in increments of 4,522, 3,238 and 1,832 each January 1, commencing January 1, 2017.
(7)
Represents the TSR PSUs at target and the AROE PSUs at maximum for AROE PSUs deemed granted in 2016 determined in accordance with FASB ASC Topic 718. See “Grants of Plan-Based Awards for 2016” above for additional information regarding PSUs granted to our named executive officers in 2016. The remaining 95,607 of target AROE PSUs will be considered granted upon the Compensation Committee’s setting the target AROE for the respective period. For a summary of the assumptions made in the valuation of these awards, please see Note 8 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2016. All performance share unit awards granted during 2016 vest and their performance period ends on December 31, 2018.
STOCK VESTED FOR 2016
The following table summarizes restricted share grants of our named executive officers that vested during the year ending December 31, 2016:
 
Stock Awards
Name
Number of Shares   Acquired on Vesting (#)
Value Realized
on Vesting
(US$) (1)
Ron Wainshal
84,246

1,759,899

Michael Inglese
32,396

676,752

Michael Kriedberg
58,103

1,213,772

Christopher Beers
9,389

196,136

Aaron Dahlke
4,020

83,978

_______________
(1)
The aggregate dollar value realized is calculated based on the US$20.89 per share price of our common shares on December 31, 2015, the last business day preceding the vesting date, which was January 1, 2016.

31



POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The following table and summary set forth potential amounts payable to our named executive officers upon termination of employment or a change in control, as described below. The table below reflects amounts payable to our named executive officers assuming termination of employment on December 31, 2016, with equity-based amounts valued US$20.85 per common share, the reported closing price for our common shares on the NYSE on December 30, 2016:
Circumstances of Termination
Name/Benefit
Voluntary   resignation   by   executive (US$)
Termination by us for   cause (US$)
Termination   by us   without   cause (US$)
Termination by us   without   cause or by executive for good reason following   change in   control (US$) (1)
Termination   by   executive   for good   reason (US$)
Normal   retirement (US$)


Death or
Disability (US$)
 
 
 
 
 
 
 
 
Ron Wainshal
 
 
 
 
 
 
 
Cash Severance


1,350,000

2,700,000

1,350,000



Pro-rata Bonus


675,000

675,000

675,000


675,000

COBRA Reimbursement


29,655

29,655

29,655



Vacation
72,692

72,692

72,692

72,692

72,692

72,692

72,692

Market Value of Accelerated Vesting of Restricted Shares.


3,520,502

3,520,502

3,520,502


3,520,502

Market Value of Accelerated Vesting of Performance Share Units


742,842

1,591,835

742,842


2,122,447

 
 
 
 
 
 
 
 
Michael Inglese
 
 
 
 
 
 
 
Cash Severance


1,100,000

2,200,000

1,100,000



Pro-rata Bonus


550,000

550,000

550,000


550,000

COBRA Reimbursement


29,655

29,655

29,655



Vacation
59,231

59,231

59,231

59,231

59,231

59,231

59,231

Market Value of Accelerated Vesting of Restricted Shares


1,439,630

1,439,630

1,439,630


1,439,630

Market Value of Accelerated Vesting of Performance Share Units


384,447

823,815

384,447


1,098,420

 
 
 
 
 
 
 
 
Michael Kriedberg
 
 
 
 
 
 
 
Cash Severance


880,000

1,760,000

880,000



Pro-rata Bonus


440,000

440,000

440,000


440,000

COBRA Reimbursement


29,655

29,655

29,655



Vacation
33,846

33,846

33,846

33,846

33,846

33,846

33,846

Market Value of Accelerated Vesting of Restricted Shares.


2,924,087

2,924,087

2,924,087


2,924,087

Market Value of Accelerated Vesting of Performance Share Units


346,004

741,436

346,004


988,582

 
 
 
 
 
 
 
 
Christopher Beers
 
 
 
 
 
 
 
Cash Severance


765,000

1,530,000

765,000



Pro-rata Bonus


365,000

365,000

365,000


365,000

COBRA Reimbursement


29,655

29,655

29,655



Vacation
43,077

43,077

43,077

43,077

43,077

43,077

43,077

Market Value of Accelerated Vesting of Restricted Shares.


1,261,613

1,261,613

1,261,613


1,261,613

Market Value of Accelerated Vesting of Performance Share Units


255,135

546,718

255,135


728,958

 
 
 
 
 
 
 
 
Aaron Dahlke
 
 
 
 
 
 
 
Cash Severance



600,000




Pro-rata Bonus



300,000




COBRA Reimbursement



29,655




Vacation
32,308

32,308

32,308

32,308

32,308

32,308

32,308

Market Value of Accelerated Vesting of Restricted Shares.


199,993

199,993



199,993

Market Value of Accelerated Vesting of Performance Share Units


55,913

119,830

55,913


159,774

_______________

32



(1)
As described below, the total amount of payments for each named executive officer may be subject to reduction to the extent necessary to avoid an excise tax under Section 4999 of the Internal Revenue Code.
As described above in the section entitled “Employment Agreements with Named Executive Officers,” we, through our subsidiary, Aircastle Advisor LLC, have entered into employment letters with our named executive officers which set forth certain terms and conditions of their employment relating to termination and termination payments.
Under the employment agreements for Messrs. Wainshal, Inglese, Kriedberg and Beers:
if the employment of such named executive officer is terminated without “cause” or with “good reason” (as defined in such employment agreement), and if he signs a general release of claims and complies with the covenants described below, then he will be entitled to receive: (i) an amount equal to the sum of the base salary and target annual cash bonus for the year of termination, payable over a one-year period (two times such amount and payable in a lump sum if the termination occurs within 120 days prior to or within one year following a “change in control” as defined in such employment agreement); (ii) a pro-rata annual bonus for the year of termination; (iii) reimbursement of COBRA premiums for up to twelve months; and (iv) continued vesting of all outstanding restricted share awards pursuant to their original vesting schedule (immediate vesting and payment of all outstanding equity awards in the event of a termination occurring in connection with a “change in control”);
if any amounts to be paid to such named executive officer would constitute “excess parachute payments” subject to the excise tax imposed under Section 4999 of the Internal Revenue Code, the amount will be reduced to the extent necessary to avoid the excise tax; however, in the case of Mr. Wainshal and, in certain cases Mr. Kriedberg, only if such reduction results in a higher after-tax payment to him; and
such named executive officer covenants not to compete with Aircastle for six months following termination of his employment for any reason and will not solicit the employees of Aircastle or the clients or customers of Aircastle for competing business, in each case, for a period of twelve months following termination.
Under the severance letter with Mr. Dahlke, if his employment is terminated within 120 days prior to or within one year following a “change in control” without “cause” or with “good reason” (as defined in such agreement), and if he signs a general release of claims and complies with the covenants described above, then he will be entitled to receive: (i) an amount equal to the sum of the base salary and target annual cash bonus for the year of termination, payable over a one-year period; (ii) a pro-rata annual bonus for the year of termination; and (iii) reimbursement of COBRA premiums for up to twelve months.
Equity Compensation Plan Information
The table below sets forth certain information as of December 31, 2016, the last day of the fiscal year, for (i) all equity compensation plans previously approved by our shareholders and (ii) all equity compensation plans not previously approved by our shareholders.
Plan Category
 
Number of securities   to be issued upon   exercise of outstanding   options, warrants   and rights
 
Weighted-average   exercise price of   outstanding options,   warrants and rights
 
Number of securities   remaining available for   future issuance under   equity compensation plans (excluding securities   reflected in column (a))
 
 
(a)
 
(b)
 
(c)
Equity compensation plans approved by security holders
 
537,794

(1)
$

 
1,806,126

Equity compensation plans not approved by security holders
 

 

 

Total
 
 
 
 
 
1,806,126

(1)
Represents 537,794 common shares subject to outstanding PSU awards (assuming payout at maximum, noting that the maximum payout for the 2016 AROE PSU performance was established at 125% of target).
On March 14, 2014, the Board of Directors adopted the Aircastle Limited 2014 Omnibus Incentive Plan (or the 20