GATX CORPGATX
GATX CORP Stock Compensation Disclosure
Share-Based Compensation
We provide equity awards to our employees under the GATX Corporation Amended and Restated 2012 Incentive Award Plan (the "2012 Plan"), including grants of non-qualified employee stock options, restricted stock units, performance shares, and phantom stock units and restricted stock units to non-employee directors. As of December 31, 2025, 4.6 million shares were authorized under the 2012 Plan and 1.5 million shares were available for future issuance. We recognize compensation expense for our equity awards in selling, general and administrative expenses over the applicable service period of each award. Share-based compensation expense was $25.0 million for 2025, $23.0 million for 2024, and $18.3 million for 2023, and the related tax benefits were $6.1 million for 2025, $5.8 million for 2024, and $4.6 million for 2023.
Stock Options
Stock options entitle the holder to purchase shares of common stock for periods up to seven years from the grant date. Stock options entitle the holder to purchase shares of our common stock at a specified exercise price. The dividends that accrue on all stock options are paid upon vesting and continue to be paid until the stock options are exercised, canceled, or expire. The exercise price for stock options is equal to the average of the high and low trading prices of our common stock on the date of grant. We recognize compensation expense on a straight-line basis over the vesting period of the award, which is generally three years.
The estimated fair value of a stock option is the sum of the value we derive using the Black-Scholes option pricing model and the present value of dividends we expect to pay over the expected term of the award. The Black-Scholes valuation incorporates various assumptions, including expected term, expected volatility, and risk free interest rates. We base the expected term on historical exercise patterns and post-vesting terminations, and we base the expected volatility on the historical volatility of our stock price over a period equal to the expected term. We use risk-free interest rates that are based on the implied yield on recently-issued U.S. Treasury zero-coupon bonds with a term comparable to the expected term.
The following table shows the weighted-average fair value for our stock options and the assumptions we used to estimate fair value:
| 2025 | 2024 | 2023 | |||||||||||||||
| Weighted-average estimated fair value | $ | 49.30 | $ | 45.22 | $ | 41.06 | |||||||||||
| Quarterly dividend rate | $ | 0.61 | $ | 0.58 | $ | 0.55 | |||||||||||
| Expected term of stock options, in years | 4.1 | 4.2 | 4.2 | ||||||||||||||
| Risk-free interest rate | 4.3 | % | 4.0 | % | 3.7 | % | |||||||||||
| Dividend yield | 1.5 | % | 1.8 | % | 1.9 | % | |||||||||||
| Expected stock price volatility | 25.9 | % | 34.7 | % | 35.4 | % | |||||||||||
Present value of dividends | $ | 9.20 | $ | 8.87 | $ | 8.57 | |||||||||||
The following table shows information about outstanding stock options for the year ended December 31, 2025:
| Number of Stock Options (in thousands) | Weighted-Average Exercise Price | |||||||||||||
| Outstanding at beginning of the year | 948 | $ | 100.13 | |||||||||||
| Granted | 198 | 166.19 | ||||||||||||
| Exercised | (205) | 83.40 | ||||||||||||
| Forfeited/Cancelled | (9) | 139.96 | ||||||||||||
| Outstanding at end of the year | 932 | 117.49 | ||||||||||||
| Vested and exercisable at end of the year | 551 | 98.72 | ||||||||||||
The following table shows the aggregate intrinsic value of stock options exercised in 2025, 2024, and 2023, and the weighted-average remaining contractual term and aggregate intrinsic value of stock options outstanding and vested as of December 31, 2025:
| Stock Options | Weighted-Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (in millions) | ||||||||||||
| Exercised in 2023 | $ | 9.0 | ||||||||||||
| Exercised in 2024 | 13.6 | |||||||||||||
| Exercised in 2025 | 16.1 | |||||||||||||
| Outstanding at December 31, 2025 (a) | 3.8 | 48.6 | ||||||||||||
| Vested and exercisable at December 31, 2025 | 2.7 | 39.1 | ||||||||||||
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(a) As of December 31, 2025, 932,172 stock options were outstanding.
Total cash received from employees for exercises of stock options during the years ended December 31, 2025, 2024, and 2023 was $31.1 million, $32.1 million, and $22.3 million, respectively. As of December 31, 2025, we had $9.8 million of unrecognized compensation expense related to unvested stock options, which we expect to recognize over a weighted-average period of 1.7 years.
Restricted Stock Units and Performance Shares
Restricted stock units entitle the recipient to receive a specified number of restricted shares of common stock upon vesting. Restricted stock units do not carry voting rights and are not transferable prior to the expiration of a specified restriction period, which is generally three years, as determined by the Compensation Committee of the Board (the "Compensation Committee"). We accrue dividends on all restricted stock units and pay those dividends when the awards vest. We recognize compensation expense for these awards over the applicable vesting period.
Performance shares are restricted shares that we grant to key employees for achieving certain strategic objectives. The shares convert to common stock at the end of a specified performance period if predetermined performance goals are achieved, as determined by the Compensation Committee. We estimate the number of shares we expect will vest as a result of actual performance against the performance criteria at the time of grant to determine total compensation expense to be recognized. We reevaluate the estimate annually and adjust total compensation expense for any changes to the estimate of the number of shares we expect to vest. The performance shares granted include an option to settle shares earned in cash upon vesting for certain eligible employees. As a result, these awards are accounted for as liability awards and recorded in other liabilities. The liability and related compensation expense is adjusted to reflect the fair value of the underlying shares at the end of each reporting period. We recognize compensation expense for these awards over the applicable vesting period, which is generally three years.
We value our restricted stock units and performance share awards using the average of the high and low values of our common stock on the grant date of the awards. As of December 31, 2025, there was $12.6 million of unrecognized compensation expense related to these awards, which we expect to be recognized over a weighted-average period of 1.7 years.
The following table shows information about restricted stock units and performance shares for the year ended December 31, 2025:
| Number of Share Units Outstanding (in thousands) | Weighted-Average Grant-Date Fair Value | ||||||||||
| Restricted Stock Units: | |||||||||||
| Unvested at beginning of the year | 102 | $ | 113.79 | ||||||||
| Granted | 26 | 166.19 | |||||||||
| Vested | (39) | 103.89 | |||||||||
| Forfeited | (4) | 132.13 | |||||||||
| Unvested at end of the year | 85 | 133.17 | |||||||||
| Performance Shares: | |||||||||||
| Unvested at beginning of the year | 89 | $ | 119.39 | ||||||||
| Granted | 33 | 166.19 | |||||||||
| Net increase due to estimated performance | 28 | 142.72 | |||||||||
| Vested | (51) | 113.28 | |||||||||
| Unvested at end of the year | 99 | 144.65 | |||||||||
The total fair value of restricted stock units and performance shares that vested during the year was $14.8 million in 2025, $11.9 million in 2024, and $9.7 million in 2023. Cash paid to settle performance share awards was $8.1 million in 2025, $4.7 million in 2024, and $4.1 million in 2023.
Non-Employee Director Awards
We grant awards to non-employee directors as a component of their compensation for service on our Board. Currently, these awards are in the form of restricted stock units. Previously, these awards were in the form of phantom stock units, which are units that equate to, but are not common shares. Restricted stock unit awards and phantom stock awards are both dividend participating and, for awards that are deferred, dividends are reinvested in additional units at the average of the high and low trading prices of our stock on the dividend payment date. At the expiration of each director’s service on the Board, or in accordance with the deferral election, whole units of both restricted stock units and phantom stock units will be settled with shares of common stock, and fractional units will be paid in cash. In 2025, we granted 12,204 units of restricted stock and there was a total of 247,317 restricted stock units and phantom stock units outstanding as of December 31, 2025.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 19, 2025 | |
| 2023 | Feb 16, 2024 | |
| 2022 | Feb 16, 2023 | |
| 2021 | Feb 17, 2022 | |
| 2020 | Feb 18, 2021 | |
| 2019 | Feb 19, 2020 | |
| 2018 | Feb 25, 2019 | |
| 2017 | Feb 21, 2018 | |
| 2016 | Feb 22, 2017 | |
| 2015 | Feb 24, 2016 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.