American Railcar Industries, Inc.
American Railcar Industries, Inc. (Form: DEF 14A, Received: 04/27/2017 16:51:46)

 
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 (Amendment No.__)


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ý Definitive Proxy Statement.
¨ Definitive Additional Materials.
¨ Soliciting Material Pursuant to §240.14a-12.

AMERICAN RAILCAR INDUSTRIES, INC.
(Name of Registrant as Specified in its Charter)

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

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SEC 1913 (02-02)
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100 Clark Street, St. Charles, Missouri 63301
americanrailcar.com
_______________

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On June 6, 2017
_______________

To Our Shareholders:

The Annual Meeting of Shareholders (the Annual Meeting) of American Railcar Industries, Inc. (the Company) will be held beginning at 1:00 p.m., local time, on June 6, 2017 at Embassy Suites, 2 Convention Center Plaza, St. Charles, Missouri 63303 for the following purposes:

1.
To elect six directors to serve for the ensuing year and until their successors are duly elected and qualified.
2.
To vote on a nonbinding advisory resolution to approve our executive compensation.
3.
To vote on a nonbinding advisory resolution regarding the frequency of holding a nonbinding advisory vote on our executive compensation.
4.
To transact such other business as may properly come before the meeting or any adjournment or postponement thereof.

These items are more fully described in the proxy statement. Only shareholders of record at the close of business on the record date, April 17, 2017 , are entitled to notice of, and to vote at, the Annual Meeting and any adjournment or postponement thereof. A list of shareholders will be open for inspection by any shareholder at the Company's principal executive office, 100 Clark Street, St. Charles, Missouri 63301, for the purpose of communicating with other shareholders concerning the Annual Meeting beginning two business days after this proxy is made available to shareholders and continuing through the Annual Meeting. Such list will also be available for inspection at the Annual Meeting.

This booklet includes the formal notice of the meeting and the proxy statement. Pursuant to the rules adopted by the Securities and Exchange Commission, we have elected to provide access to our proxy materials over the Internet. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials (the Notice) to our shareholders. All shareholders will have the ability to access the proxy materials on a website referenced in the Notice or request a printed or digital set of the proxy materials. Instructions regarding how to access the proxy materials over the Internet or to request a printed or digital copy may be found in the Notice. In addition, shareholders may request proxy materials in printed or digital form by mail, telephone or electronically by email on an ongoing basis.

All shareholders are cordially invited to attend the Annual Meeting. However, to assure your representation at the Annual Meeting, you are urged to cast your vote as promptly as possible by proxy over the Internet by following the instructions provided in the Notice, by telephone or by requesting a paper proxy card to sign, date and return by mail. Shareholders who attend the Annual Meeting may revoke their proxies and vote in person, if they so desire.


By Order of the Board of Directors

/s/ Jeffrey S. Hollister            

Jeffrey S. Hollister
President and Chief Executive Officer


April 27, 2017
St. Charles, Missouri



YOUR VOTE IS IMPORTANT!

Whether or not you expect to attend the Annual Meeting, please vote as promptly as possible. Even if you have given your proxy, the proxy may be revoked at any time prior to exercise by filing with the Secretary of the Company a written revocation, by executing a proxy with a later date, or by attending and voting at the meeting.
IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE COMPANY'S ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 6, 2017 : This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. We encourage you to access and review all of the important information contained in the proxy materials before voting. The Notice of Internet Availability of Proxy Materials, the Proxy Statement, the Company's Annual Report for the fiscal year ended December 31, 2016 and the Proxy Card are available for viewing, printing, and downloading at proxyvote.com .
If you want to receive a paper or email copy of these documents, you must request one. There is no charge to you for requesting a copy. Please make your request for a copy as instructed below on or before May 23, 2017 to facilitate timely delivery.



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American Railcar Industries, Inc.

Proxy Statement

TABLE OF CONTENTS




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_______________

PROXY STATEMENT
2017 ANNUAL MEETING OF SHAREHOLDERS
To Be Held On June 6, 2017
_______________
General
This proxy is solicited on behalf of the board of directors of American Railcar Industries, Inc. (the Company, ARI, we, us or our) for use at the Annual Meeting of Shareholders to be held on June 6, 2017 (the Annual Meeting), or at any adjournment or postponement thereof, for the purposes set forth herein and in the accompanying Notice of Annual Meeting of Shareholders. The Annual Meeting will be held at Embassy Suites, 2 Convention Center Plaza, St. Charles, Missouri 63303. This proxy statement, the Notice of Internet Availability of Proxy Materials, the Notice of Annual Meeting, the proxy card and the Annual Report to shareholders first will be made available to you on or about April 27, 2017 .
Record Date, Stock Ownership and Voting
Only shareholders of record at the close of business on April 17, 2017 will be entitled to notice of and to vote at the Annual Meeting and any adjournment or postponement thereof. As of that date, there were outstanding and entitled to vote 19,083,878 shares of our common stock, par value $0.01 per share (Common Stock). Each shareholder is entitled to one vote for each share of Common Stock on each matter properly brought before the Annual Meeting. Shares represented by a proxy, if properly executed and received by the Company prior to the Annual Meeting, will be voted at the Annual Meeting and at any adjournment or postponement thereof in the manner specified, or, if not specified, "FOR" the election of the six nominees for director, "FOR" the advisory resolution to approve our executive compensation, and "FOR" the option of once every year as the frequency with which shareholders are provided a nonbinding advisory vote on executive compensation. If any other matters shall properly come before the Annual Meeting, the proxy will be voted by the proxies in accordance with their best judgment.
The presence, in person or by proxy, of the holders of record of a majority of the shares of Common Stock outstanding and entitled to vote is necessary to constitute a quorum for the transaction of business at the Annual Meeting. A majority of the votes properly cast will adjourn the Annual Meeting, whether or not a quorum is present.
The proxy card provides space for a shareholder to vote "FOR" or "AGAINST", or to "ABSTAIN" with respect to (i) each candidate for election to the Company's board of directors and (ii) the advisory resolution to approve our executive compensation. To be elected, a candidate must receive the affirmative vote (i.e., a "FOR" vote) of at least a majority of the total votes cast "FOR" and "AGAINST" the candidate's election. Similarly, to be approved, the advisory resolution on executive compensation must receive the affirmative vote of at least a majority of the total votes cast "FOR" and "AGAINST" such proposal. The option of one year, two years or three years that receives the highest number of votes cast by shareholders will be the frequency for the non-binding advisory vote on executive compensation that has been selected by shareholders.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by an inspector of elections appointed by the Company for the Annual Meeting. The inspector of elections will treat abstentions as shares of Common Stock that are present and entitled to vote for purposes of determining a quorum. However, abstentions will have no effect on the outcome of the vote for the election of directors, the vote to approve our executive compensation on an advisory basis or the vote regarding the frequency of holding a nonbinding advisory vote on our executive compensation. Broker non-votes (shares held by a broker or nominee that does not have the authority, either express or discretionary, to vote on the matter) are not considered in determining a quorum, as shares voting or as votes cast with respect to any matter presented at the Annual Meeting and will have no effect on the outcome of any matter.
Revocability of Proxies
Any proxy may be revoked at any time before it is exercised by filing with the Secretary of the Company a written revocation, by executing a proxy bearing a later date or by attending the Annual Meeting and voting in person. Our executive office is located at 100 Clark Street, St. Charles, Missouri 63301.


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Costs of Solicitation
All costs of our solicitation of proxies will be borne by the Company. The Company may reimburse brokerage firms and other persons representing beneficial owners of shares for their reasonable expenses incurred in forwarding solicitation materials to such beneficial owners. Original solicitation of proxies may be supplemented by telephone, telegram, or personal solicitations by directors, officers or employees of the Company. No compensation beyond the compensation provided to such director, officer or employee in connection with that position and unrelated to solicitations will be paid for any such services.
PROPOSAL NO. 1 
ELECTION OF DIRECTORS

At the Annual Meeting six directors are to be elected who shall hold office until the next Annual Meeting of Shareholders. We list below certain biographical and other information concerning each of our nominees for director. Our full board of directors has nominated each of our current directors for re-election as directors.

The size of our board of directors is currently set at nine although there are currently three existing vacancies. Our board of directors has not nominated candidates to fill these vacancies, as it continues to consider whether to fill such vacancies, to reduce the size of the board, or to take other action with respect to the size of the board. As a result, there are six nominees for election as directors at the Annual Meeting. Proxies cannot be voted for a greater number of persons than the six named in this proxy statement.

Unless otherwise instructed, the proxy holders will vote the proxies received by them "FOR" the election of each of the six nominees listed below. All nominees have consented to serve as directors if elected, but if any of them should decline or be unable to serve as a director at the time of the Annual Meeting, the proxies will be voted for the nominee, if any, who shall be designated by the present board of directors to fill the vacancy. The term of office of each person elected as a director will continue until our next Annual Meeting of Shareholders or until a successor has been duly elected and qualified.

The Board of Directors unanimously recommends you vote "FOR" the election of each
of the six nominees to the Board of Directors set forth below.

Set forth below is certain biographical information regarding the nominees as of April 27, 2017 .
Name
 
Age
Position
Director Since
SungHwan Cho
 
43
Chairman of the Board
2011
James C. Pontious (1)
 
78
Director
2006
J. Mike Laisure (1)
 
65
Director
2006
Harold First (2)
 
80
Director
2007
Jonathan Frates (3)
 
34
Director
2016
Michael Nevin (4)
 
33
Director
2017

(1)    Member of the Audit Committee
(2)    Chair of the Audit Committee
(3)    Member of the Compensation Committee
(4)    Chair of the Compensation Committee

Director Qualification Standards 

We will only consider as candidates for director individuals who possess the highest personal and professional ethics, integrity and values, and who are committed to representing the long-term interests of our shareholders.  In evaluating candidates for nomination as a director, our board of directors may consider all factors it deems relevant, including current or recent experience as a leader of another major complex organization; business and financial expertise; experience as a director of a public company; current or prior railcar and/or manufacturing industry experience; independence; diversity and the extent to which the candidate would fill a present need on the board of directors.  In addition, in composing a well-rounded board of directors, we look for those individuals who would bring a variety of complementary skills to allow formation of a board of directors that possesses the appropriate skills and experience to oversee our management team and our business.  Listed below are our director nominees and their biographies and, for each director, we summarize why that director has been chosen to serve on our board of directors.


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Directors and Nominees

SungHwan Cho. Mr. Cho has served on our board of directors since June 2011 and as chairman of the board since July 2014. Mr. Cho has served as Chief Financial Officer of Icahn Enterprises L.P. (IELP), a diversified holding company engaged in a variety of businesses, including investment, automotive, energy, gaming, railcar, food packaging, metals, mining, real estate and home fashion since March 2012. Prior to that time, he was Senior Vice President and previously Portfolio Company Associate at IELP since October 2006.

Mr. Cho has been a director of: Ferrous Resources Limited (Ferrous Resources), an iron ore mining company with operations in Brazil, since June 2015; CVR Refining, LP (CVR Refining), an independent downstream energy limited partnership, since January 2013; IELP, since September 2012, CVR Energy, Inc. (CVR Energy), a diversified holding company primarily engaged in the petroleum refining and nitrogen fertilizer manufacturing industries, since May 2012. Mr. Cho has also been nominated to be elected as a director of Hertz Global Holdings, Inc. (Hertz Holdings), a company engaged in the car rental business, at its 2017 annual meeting of stockholders.

In addition, Mr. Cho serves as a director of certain wholly-owned subsidiaries of IELP, including: Federal-Mogul Holdings LLC (formerly known as Federal-Mogul Holdings Corporation) (Federal-Mogul), a supplier of automotive powertrain and safety components; Icahn Automotive Group LLC (Icahn Automotive), an automotive parts installer, retailer and distributor; PSC Metals Inc. (PSC Metals), a metal recycling company; and WestPoint Home LLC (WestPoint Home), a home textiles manufacturer. Mr. Cho has also been a member of the Executive Committee of American Railcar Leasing LLC (ARL), a lessor and seller of specialized railroad tank and coverage hopper railcars, since September 2013. Mr. Cho was previously a director of: CVR Partners LP (CVR Partners), a nitrogen fertilizer company, from May 2012 to April 2017; Viskase Companies, Inc. (Viskase Companies), a meat casing company, from November 2006 to April 2017; and Take-Two Interactive Software Inc. (Take Two Interactive Software), a publisher of interactive entertainment products, from April 2010 to November 2013. Ferrous Resources, ARL, CVR Refining, IELP, CVR Energy, Federal-Mogul, Icahn Automotive, WestPoint Home, PSC Metals, and Viskase Companies each are indirectly controlled by Carl C. Icahn. Mr. Icahn also has or previously had a non-controlling interest in each of Hertz Holdings and Take-Two Interactive Software through the ownership of securities. Mr. Cho received a B.S. in Computer Science from Stanford University and an M.B.A from New York University, Stern School of Business.

The board of directors has concluded that Mr. Cho should serve as a director and as chairman of our board of directors because of his significant experience in leadership roles as an officer and/or director of various companies, as discussed above. In particular, his service as the Chief Financial Officer of IELP and IEHLP enables him to understand the complex business and financial issues that ARI may face.

James C. Pontious.   Mr. Pontious has served on our board of directors and as a member of our audit committee since January 2006. Since May 2005, Mr. Pontious has been a railroad industry consultant in the areas of business development, acquisition and investment for various clients focused on the rail industry. Mr. Pontious served Westinghouse Airbrake Technology Corporation (Wabtec), a public company that supplies air brakes and other equipment for locomotives, freight railcars and passenger transit vehicles, as a business development consultant from May 2005 through May 2006, as Vice President of Special Projects for Business Development from January 2003 through April 2005 and as Vice President of Sales and Marketing from April 1990 to January 2003. Mr. Pontious also served as Vice President of Sales and Marketing at New York Air Brake Company, a unit of General Signal Corporation, from 1977 to 1990 and was a trustee/director of the Watertown Savings Bank from 1979 to 1990. Prior to this, Mr. Pontious served the Pullman-Standard division of Pullman, Inc., a freight and passenger railcar manufacturer, from 1961 to 1977 in various management positions in the areas of sales, marketing and operations. Mr. Pontious has served as a director of the Intermodal Transportation Institute at the University of Denver and as chairman of the Passenger Transportation Committee of the Railway Progress Institute in Washington DC. Mr. Pontious holds a B.B.A. from the University of Minnesota. Mr. Pontious also served in the United States Marine Corps.

The board of directors has concluded that Mr. Pontious should serve as a director and a member of our audit committee because of his significant experience in the rail industry and his business development and financial background. Mr. Pontious' experience with a rail industry supplier provides a unique perspective and insight to us as a railcar manufacturer. Mr. Pontious also has significant business experience and has held leadership roles in various companies, as discussed above, that provide an insight beyond that of the rail industry.

J. Mike Laisure.   Mr. Laisure has served on our board of directors and as a member of our audit committee since January 2006. Since March 2016, Mr. Laisure has served as Chief Executive Officer of API Heat Transfer, an industrial company that designs, manufactures and distributes heat transfer products in highly engineered applications. Prior to this, Mr. Laisure served as Chief Executive Officer of Fluid Routing Solutions (FRS), an automotive supplier that designs and manufactures fluid and fuel handling systems, which was formerly known as Mark IV Industries.  FRS filed for bankruptcy protection under Chapter 11 in February


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2009 and emerged from Chapter 11 in March 2009.  In March 2012, Mr. Laisure sold all of his interests in FRS to ParkOhio Industries, Inc. From December 2006 through July 2007, Mr. Laisure served as President of Delco Remy, Inc., a manufacturer of starters, alternators and rotating electrics for the automotive, commercial vehicle and off-highway markets. Since May 2005, Mr. Laisure has been consulting as an independent contractor for the automotive and industrial manufacturing space. Prior to this, he spent 32 years in various corporate accounting, sales, engineering and operational positions with Dana Holding Corporation (Dana), a publicly held corporation that designs, manufactures and supplies vehicle components and technology, and its predecessors. Mr. Laisure served as President of Dana's Automotive Systems Group from March 2004 to May 2005. From December 2001 to February 2004, Mr. Laisure served as President of Dana's Engine and Fluid Management Group and, from December 1999 to November 2001, he served as President of Dana's Fluid Management Group. In addition, he served on the board of directors of various Dana joint ventures, including joint ventures in Germany, Indonesia, Mexico and Turkey. Mr. Laisure served as director of finance of P.T. Spicer Indonesia, a manufacturer of axles and driveshafts, from 1982 to 1984. He served as accountant, internal auditor and controller at Perfect Circle, a manufacturer of automotive engine components, from 1973 to 1981. Also, Mr. Laisure has been a director of Federal-Mogul, a supplier of automotive powertrain and safety components, since February 2008. Mr. Carl Icahn holds a controlling interest in Federal-Mogul. Mr. Laisure received a B.A. in Accounting from Ball State University and an M.B.A. from Miami (Ohio) University, and has completed the Harvard University Advanced Management Program.

The board of directors has concluded that Mr. Laisure should serve as a director and a member of our audit committee because of his significant business experience and leadership roles in the manufacturing industry, as discussed above. Mr. Laisure also has extensive accounting and finance experience, as well as experience with joint ventures in the manufacturing industry.

Harold First. Mr. First has served on our board of directors and as chair of our audit committee since January 2007. Mr. First has been an independent financial consultant since January 1993. Since November 2007, Mr. First has been a director of Lexington Realty Trust, a New York Stock Exchange (NYSE) traded real estate investment trust that merged with Newkirk Realty Trust, Inc. (Newkirk), another NYSE traded real estate investment trust, on December 31, 2006. Mr. First was a director of Newkirk from March 2006 to December 2006. Mr. First was a director of WestPoint Home, a home textiles manufacturer, from November 2005 to December 2011, XO Holdings, a competitive provider of telecom services, from April 2010 to July 2011, GB Holdings, Inc. (GB Holdings), which owned an interest in Atlantic Coast Holdings, Inc., the former owner and operator of The Sands Hotel and Casino in Atlantic City, from January 2006 to December 2006, and PANACO Inc., an oil and gas-drilling firm, from September 1997 to December 2003. With respect to WestPoint Home, XO Holdings, and GB Holdings, Mr. Carl Icahn, directly or indirectly, either (i) at such time controlled such company or (ii) at such time had an interest in such company through the ownership of securities. Mr. First is a Certified Public Accountant and holds a B.S. from Brooklyn College.

The board of directors has concluded that Mr. First should serve as a director and as chair of our audit committee because of his significant business experience as well as his experience as a director in various companies, as discussed above. In particular, Mr. First's financial and accounting experience provides leadership and insight to our audit committee.

Jonathan Frates . Mr. Frates has served on our board of directors since March 2016 and has served as a portfolio company associate at IELP, a diversified holding company engaged in a variety of businesses, including investment, automotive, energy, gaming, railcar, food packaging, metals, mining, real estate and home fashion, since November 2015. Prior to joining IELP, Mr. Frates served as a senior business analyst at First Acceptance Corporation and as an associate at its holding company, Diamond A Ford Corporation. Mr. Frates began his career as an investment banking analyst at Wachovia Securities LLC. Mr. Frates has served as a director of: Ferrous Resources, an iron ore mining company with operations in Brazil, since December 2016; CVR Partners, a nitrogen fertilizer company, since April 2016; Viskase Companies, a meat casing company, since March 2016; CVR Energy, a diversified holding company primarily engaged in petroleum refining and nitrogen fertilizer manufacturing industries, since March 2016; and CVR Refining, an independent downstream energy limited partnership, since March 2016. Ferrous Resources, Viskase Companies, CVR Energy, CVR Refining and CVR Partners are each indirectly controlled by Mr. Carl Icahn. Mr. Frates received a B.B.A from Southern Methodist University and an M.B.A from Columbia Business School.

The board of directors has concluded that Mr. Frates should serve as a director because of his financial acumen and experience in various companies, as discussed above. His service on the boards of other companies provides the board of directors with additional perspective on the Company’s operations.

Michael Nevin. Mr. Nevin has served on our board of directors since February 2017 and has been employed as a Financial Analyst at IELP, a diversified holding company engaged in a variety of businesses, including investment, automotive, energy, gaming, railcar, food packaging, metals, mining, real estate and home fashion, since July 2015.  Mr. Nevin is responsible for analyzing and monitoring portfolio companies for IELP. Prior to that time, Mr. Nevin was employed by Jefferies LLC as a Research Analyst from April 2014 to July 2015 covering the utilities sector. Mr. Nevin was also employed by JP Morgan Investment Bank in various roles from March 2009 to April 2015. Mr. Nevin has been a director of: Viskase Companies, a meat casing company, since April 2017; Conduent Incorporated (Conduent), a provider of business process outsourcing services, since December 2016; Ferrous


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Resources Limited, an iron ore mining company with operations in Brazil, since December 2016; and Federal-Mogul, a supplier of automotive powertrain and safety components, since February 2016. Viskase Companies, Ferrous Resources, and Federal-Mogul are each indirectly controlled by Mr. Carl C. Icahn. Mr. Icahn also has a non-controlling interest in Conduent through the ownership of securities. Mr. Nevin received his B.S. from Drexel University.

The board of directors has concluded that Mr. Nevin should serve as a director because of his financial acumen and experience in various companies, as discussed above. His service on the boards of other companies provides the board of directors with additional perspective on the Company’s operations.
CORPORATE GOVERNANCE
Board of Directors' Meetings and Committees

Our board of directors held seven meetings during the fiscal year ended December 31, 2016 .

All of our directors are informed of the Annual Meeting and are encouraged to attend. No member of our board of directors attended our 2016 Annual Meeting of Shareholders.

Our board of directors has a standing audit committee and a standing compensation committee. We have established in the past, and may establish in the future, special committees of the board of directors when necessary to address specific issues.

During 2016 , each director attended at least 75% of the meetings of the board of directors and each committee on which he served.

Director Independence and Controlled Company Status

Our Common Stock is listed on the Global Select Market of the NASDAQ Stock Market LLC (NASDAQ) and NASDAQ's requirements relating to director independence apply to us. Our board of directors has determined that three of our current directors, Messrs. First, Pontious and Laisure, each of whom is also a nominee for director at the Annual Meeting, are independent under NASDAQ rules. Messrs. Cho, Frates and Nevin are, and Messrs. Jonathan Christodoro and Courtney Mather, who previously served on our board for all or part of the fiscal year ended December 31, 2016 , were at the time of their board service, employed by and/or otherwise affiliated with Mr. Carl Icahn, our principal beneficial shareholder through IELP, or entities controlled by Mr. Carl Icahn.

Our board of directors considered several factors in determining that Messrs. First, Pontious and Laisure are independent. As to Mr. First, the directors' analysis included consideration of (i) his past employment, from November 1990 to January 1993, as Chief Financial Officer of Icahn Holding Corporation, an affiliate of Mr. Carl Icahn and (ii) his past directorships of various public and private companies affiliated with Mr. Carl Icahn. As to Mr. Laisure, the directors' analysis included consideration of his directorship of Federal-Mogul, which is an affiliate of Mr. Carl Icahn, from 2008 to the present. Our board of directors did not assign any particular weight or importance to any one of these factors but considered them as a whole. After considering all relevant factors, our board of directors concluded that none of Messrs. First, Pontious and Laisure had any relationship that would interfere with their exercise of independent judgment in carrying out the responsibilities of a director, and that each of them satisfied NASDAQ's independence requirements.

During 2016 and through the date of this proxy statement, Mr. Carl Icahn, our principal beneficial shareholder through IELP, controlled more than 60% of the voting power of our Common Stock. See "Security Ownership of Certain Beneficial Owners and Management," below, for further details regarding Mr. Carl Icahn's beneficial ownership of, and control over, shares of our Common Stock. Consequently, we are a "controlled company" under applicable NASDAQ rules. Under these rules, a controlled company may elect not to comply with certain NASDAQ corporate governance requirements, including requirements that: (i) a majority of the board of directors consist of independent directors; (ii) director nominees be selected or recommended for selection by a majority of the independent directors or by a nominating committee composed solely of independent directors; and (iii) compensation of officers be determined or recommended to the board of directors by a majority of its independent directors or by a compensation committee that is composed entirely of independent directors.

We have elected to use these exemptions and we currently intend to continue to take advantage of these exemptions for so long as we continue to be a controlled company. As a result, (i) we do not have a majority of independent directors on our board, (ii) we do not have a nominating committee or a nominating committee charter, and (iii) our compensation committee does not satisfy NASDAQ's corporate governance requirements applicable to compensation committees of non-controlled companies and does not have a charter.


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Board of Directors Leadership Structure

Our leadership structure and bylaws separate the positions of chairman of the board of directors and Chief Executive Officer. Mr. SungHwan Cho serves as the chairman of our board of directors and Mr. Jeffrey S. Hollister serves as our President and Chief Executive Officer. Mr. SungHwan Cho is responsible for organizing the board of directors and setting its agenda and priorities. Mr. Hollister reports to our board of directors, including Mr. SungHwan Cho, and is responsible for our day-to-day operations including, but not limited to, oversight of our business operations and management team. We believe that this leadership structure is appropriate as it enhances our corporate governance and company oversight by separating responsibilities between the chairman of our board of directors and our Chief Executive Officer.

Board of Directors Role in Risk Oversight

Our board of directors oversees our risk management practices.  The risk oversight function is administered principally through the division of responsibility within the board of directors' committee structure, with each committee of the board being responsible for overseeing risk within its area of responsibility. Our management, together with management representatives of the relevant functional areas (for example, internal audit, operational management, human resources, etc.), reviews and assesses the operations of our business as well as operating management's identification, assessment and mitigation of the material risks affecting our operations. These risks include strategic, financial, competitive, operational and compliance risks. Our Chief Executive Officer and Chief Financial Officer each provide reports concerning these risks directly to the board of directors or its committees, as appropriate.

Director Nominations

Other than the qualities noted under "Director Qualification Standards" above, we do not maintain a formal policy with respect to the review of potential nominees to our board of directors. All of the members of our board of directors participate in the review of potential nominees to our board of directors for the qualities noted under "Director Qualification Standards" above. Our board of directors has determined that, given the importance of the director nomination process, the entire board of directors should participate in the evaluation of potential board members. As a result of his control of a majority of our outstanding Common Stock, Mr. Carl Icahn may control the election of all of the members of our board of directors. Our board of directors has therefore deemed it appropriate not to form a standing nominating committee because the influence exercisable by Mr. Carl Icahn in the nomination and election process would make a separate process superfluous in light of Mr. Carl Icahn's and our board of directors' review of potential nominees.

Our board of directors may consider candidates recommended by shareholders as well as from other sources such as other directors or officers, third party search firms or other appropriate sources. In general, persons recommended by shareholders will be considered on the same basis as candidates from other sources as further described in "Director Qualification Standards" above. If a shareholder wishes to recommend a candidate for director for election at the 2018 Annual Meeting of Shareholders, it must follow the procedures described below in "Shareholder Proposals and Nominations for Director."

Shareholder Communications with Directors

Shareholders may contact the Company's board of directors by writing to: c/o Investor Relations, American Railcar Industries, Inc., 100 Clark Street, St. Charles, Missouri 63301. All communications addressed to the board of directors will be delivered to each member of the Company's board of directors. If shareholders desire, they may contact individual members of our board of directors, our independent directors as a group, or a particular committee of our board of directors by appropriately addressing their correspondence to the same address. In each case, such correspondence will be delivered to the appropriate director(s).

Audit Committee

Our audit committee meets formally at least once every quarter and more often if necessary. Our board of directors has adopted a written charter for our audit committee. That charter conforms to applicable rules and regulations of the Securities and Exchange Commission (SEC) and NASDAQ. A copy of the audit committee charter is publicly available on our website at americanrailcar.com under the heading "Investor Relations - Corporate Governance - Corporate Governance Overview."

Messrs. First, Pontious and Laisure are currently the members of our audit committee, with Mr. First serving as chairman of the committee. Our board of directors has determined that Mr. First qualifies as an audit committee financial expert, as that term is defined by applicable SEC rules, and that he satisfies NASDAQ's financial sophistication standards. Our board of directors has also determined that Messrs. First, Laisure and Pontious are independent under applicable SEC and NASDAQ rules.


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Our audit committee held thirteen meetings during the fiscal year ended December 31, 2016 , including nine special committee meetings.

Our audit committee is responsible for oversight of the qualifications, independence, appointment, retention, compensation and performance of the Company's independent registered public accounting firm and for assisting our board of directors in monitoring the Company's financial reporting process, accounting functions and internal controls. It also is responsible for oversight of whistle-blowing procedures, approving transactions with related persons and certain other compliance matters.
Independent Registered Public Accounting Firm

We engaged Grant Thornton LLP (Grant Thornton) as our independent registered public accounting firm during the fiscal years ended December 31, 2016 and 2015. The decision to engage Grant Thornton during those years was unanimously approved by our audit committee. The audit committee intends to appoint Grant Thornton to audit our consolidated financial statements for the fiscal year ended December 31, 2017 , subject to satisfactory negotiations regarding fees and services. A representative of Grant Thornton is expected to be present, in person or telephonically, at our Annual Meeting, and he or she will have the opportunity to make a statement, if he or she desires, and will be available to respond to appropriate questions.
Fees Billed by Independent Registered Public Accounting Firm

Audit Fees.   We incurred $1,211,293 and $1,202,317 in audit fees and expenses for the fiscal years ended December 31, 2016 and 2015 , respectively, from Grant Thornton. We include in the category of audit fees those fees billed by our independent registered public accounting firm for professional services rendered for the audit of our annual consolidated financial statements and internal controls, reviews of quarterly financial statements, and other related services that are normally provided in connection with such statutory and regulatory filings.

Audit-Related Fees.   We did not incur any fees from Grant Thornton for audit-related services for the fiscal year ended December 31, 2016 . We incurred $30,408 in audit-related fees for the fiscal year ended December 31, 2015 from Grant Thornton relating to due diligence services provided.

Tax Fees.   We did not incur any fees from Grant Thornton for tax compliance, tax advice or tax planning services in the fiscal years ended December 31, 2016 and 2015 .

All Other Fees.   We did not incur any other fees from Grant Thornton in the fiscal years ended December 31, 2016 and 2015 .

The audit committee has considered whether the provision of audit-related services by its independent registered public accounting firm is compatible with maintaining auditor independence and has determined that the provision of such services is compatible.
Audit Committee Policy on Pre-Approval of Services

In accordance with our audit committee charter, the audit committee is required to approve in advance any and all audit services and permitted non-audit services provided to us by our independent auditors (subject to the de minimis exception of Section 10A (i) (1) (B) of the Exchange Act), as required by applicable law or listing standards. All of the fees in 2016 and 2015 were pre-approved by the audit committee.
Audit Committee Report

In connection with the issuance of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016 , the audit committee:

1.
Reviewed and discussed with management the Company's audited financial statements as of December 31, 2016 and 2015 and for the years ended December 31, 2016 , 2015 and 2014 ;

2.
Discussed with Grant Thornton the matters required to be discussed by the Auditing Standards Board Statement of Auditing Standards No. 61, Communications with Audit Committees , as amended (AICPA, Professional Standards, Vol. 1. AU Section 380), as adopted by the Public Company Accounting Oversight Board (PCAOB) in Rule 3200T; and

3.
Received from Grant Thornton the written disclosures and letter regarding Grant Thornton's independence required by


10


PCAOB Ethics and Independence Rule 3526, Communication with Audit Committees Concerning Independence , and has discussed with Grant Thornton its independence.

Based on the review and discussions referred to in paragraphs numbered (1) - (3) above, the audit committee recommended to our board of directors that the audited financial statements as of December 31, 2016 and 2015 and for the years ended December 31, 2016 , 2015 and 2014 be included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016 , for filing with the Securities and Exchange Commission.

Respectfully submitted by the Audit Committee,

Harold First, Chairman
James C. Pontious
J. Mike Laisure
Compensation Committee

We established our compensation committee to review and approve our compensation policies and arrangements. Messrs. Frates and Nevin are the current members of our compensation committee. Mr. Frates was appointed by our board of directors to replace Mr. Mather on the compensation committee, effective March 14, 2016 following Mr. Mather's resignation. Mr. Nevin was appointed by our board of directors to replace Mr. Christodoro who, prior to his resignation on February 17, 2017, served as chairman of the compensation committee. Mr. Nevin now serves as chairman of our compensation committee. Our compensation committee held three meetings during the fiscal year ended December 31, 2016 . As discussed above under "Corporate Governance-Director Independence and Controlled Company Status," as a controlled company, we are exempt from NASDAQ's corporate governance requirements applicable to compensation committees of non-controlled companies. Our compensation committee is not comprised of independent directors and does not have a charter.

For further information about our processes and procedures for the consideration and determination of executive and director compensation, please see "Executive Compensation-Compensation Discussion and Analysis," below.

Compensation Committee Interlocks and Insider Participation

During fiscal year 2016 , Messrs. Christodoro, Frates and Mather served as members of the compensation committee. None of these individuals is, or has ever been, an executive officer or employee of the Company (or any of its subsidiaries), and no "compensation committee interlocks", as described in Item 407(e) of Regulation S-K, existed during the fiscal year ended December 31, 2016 .


11


SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information, as of April 27, 2017 , with respect to the beneficial ownership of our Common Stock by (i) each of our current directors, (ii) each nominee for director, (iii) our named executive officers for the fiscal year ended December 31, 2016 , (iv) all of our current directors and executive officers as a group and (v) each person who is known to us to be the beneficial owner of more than five percent of our Common Stock. This information is based upon information received from or on behalf of the named individuals or from publicly available information and filings by or on behalf of those persons with the SEC. Applicable percentage ownership as of April 27, 2017 is based upon 19,083,878 shares of our Common Stock outstanding. Beneficial ownership is determined in accordance with rules promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act) and generally includes voting and/or investment power with respect to securities. Unless otherwise indicated, each person has sole voting power and sole investment power with respect to the shares listed. Unless otherwise indicated, the address of each of the following is: c/o American Railcar Industries, Inc., 100 Clark Street, St. Charles, Missouri 63301.
 
Shares of Common Stock
Beneficially Owned
 
Name
Number
Percent of
Class
Directors:
 
 
SungHwan Cho
James C. Pontious
2,500
*
J. Mike Laisure
Harold First (1)
1,500
*
Jonathan Frates
Michael Nevin
Named Executive Officers:
 
 
Jeffrey S. Hollister
Luke M. Williams
51
*
Yevgeny Fundler
All executive officers and directors as a group (10 persons)
4,051
*
Other 5% Beneficial Owners:
 
 
Carl C. Icahn (2)
11,895,068
62.3%
Dimensional Fund Advisors LP (3)
1,391,294
7.3%
The Vanguard Group (4)
1,074,116
5.6%
  *     Less than one percent
(1) All 1,500 shares beneficially owned by Mr. First are held by the Harold First Pension Plan.
(2) The following information is based on a Form 4 filed with the SEC on June 4, 2012 and Schedule 13D/A filed on February 27, 2017 by Mr. Carl Icahn, as well as additional correspondence from representatives of Mr. Carl Icahn: Mr. Carl Icahn may be deemed to beneficially own 11,895,068 shares. These shares are owned as follows: (i) 11,871,268 shares are owned by IEH ARI Holdings LLC (ARI Holdings), a Delaware limited liability company; and (ii) 23,800 shares are owned by Ms. Gail Golden, Mr. Carl Icahn's wife. IEHLP, a Delaware limited partnership is the sole member of Icahn Building LLC (Icahn Building), a Nevada limited liability company. Icahn Building is the sole shareholder of American Entertainment Properties Corp. (AEP Corp.), a Delaware corporation. AEP Corp. is the sole member of ARI Holdings. Icahn Enterprises GP, a Delaware corporation, is the general partner of IEHLP and is wholly-owned by Beckton Corp. (Beckton), a Delaware corporation. Beckton is wholly-owned by Mr. Carl Icahn who is also the indirect majority owner of IELP. Icahn Enterprises GP is the general partner of IELP, which is the sole limited partner of IEHLP. Mr. Carl Icahn, by virtue of his relationship to ARI Holdings, AEP Corp., Icahn Building, IEHLP, Icahn Enterprises GP, Beckton, IELP and Ms. Golden, may be deemed to beneficially own (as that term is defined in Rule 13d-3 under the Exchange Act) the shares directly owned by ARI Holdings and Ms. Golden. Mr. Carl Icahn disclaims beneficial ownership of such shares for all other purposes.
(3) The amount and nature of ownership listed is based solely upon information contained in Dimensional Fund Advisors LP's (Dimensional) Schedule 13G/A, filed with the SEC on February 9, 2017. As of December 31, 2016 , Dimensional had the sole power to vote 1,373,988 shares and the sole dispositive power over 1,391,294 shares. Dimensional disclaimed beneficial ownership of the 1,391,294 shares. The address for Dimensional is Building One, 6300 Bee Cave Road, Austin, Texas 78746.


12


(4) The amount and nature of ownership listed is based solely upon information contained in The Vanguard Group's (Vanguard) Schedule 13G, filed with the SEC on February 9, 2017. As of December 31, 2016 , Vanguard had the sole power to vote 9,525 shares; the shared power to vote 781 shares; the sole dispositive power over 1,064,461 shares; and the shared dispositive power over 9,655 shares. Vanguard disclaimed beneficial ownership of the 1,074,116 shares. The address for Vanugard is 100 Vanguard Blvd., Malvern, Pennsylvania 19355.
Code of Ethics
Pursuant to Section 406 of the Sarbanes-Oxley Act of 2002, we have, as a part of our Code of Business Conduct, adopted a Code of Ethics for Senior Financial Officers that applies to our principal executive officer, principal financial officer, principal accounting officer or controller and other persons performing similar functions. Our Code of Ethics for Senior Financial Officers is publicly available on our website at americanrailcar.com under the heading "Investor Relations-Corporate Governance-Corporate Governance Overview." We may satisfy the disclosure requirement of Item 5.05 of Current Report on Form 8-K regarding an amendment to, or waiver from, a provision of our Code of Ethics for Senior Financial Officers by either disclosing such information in a Current Report on Form 8-K or by posting such information on our website, at the Internet address specified above.
Executive Officers

The names of the Company's executive officers and certain biographical information regarding them as of April 27, 2017 are set forth below. Executive officers are chosen by and serve at the discretion of our board of directors.

Name
Age
Position
Jeffrey S. Hollister
48
President and Chief Executive Officer
Luke M. Williams
38
Senior Vice President, Chief Financial Officer and Treasurer
Yevgeny Fundler
47
Senior Vice President, General Counsel and Secretary

Jeffrey S. Hollister.   Mr. Hollister was appointed as our President and Chief Executive Officer on September 24, 2014 after serving as our President and Interim Chief Executive Officer since October 9, 2013. Mr. Hollister has over 26 years of experience in manufacturing operations and financial management. Mr. Hollister has been with the Company since December 2005 and has served in various senior financial and operations roles. Prior to his appointment as our President and Interim Chief Executive Officer, he oversaw the Company's railcar manufacturing group, which includes the Marmaduke and Paragould railcar assembly plants as well as the component/sub-assembly plants. Prior to that, Mr. Hollister had various financial and accounting management roles within the Company. Prior to joining ARI, Mr. Hollister spent 16 years in various financial, operations and management roles at Douglas Quikut Divisions, The Scott Fetzer Company, Inc., a company that manufactures a wide variety of retail and industrial products. Mr. Hollister has a B.S. in Accounting and an M.B.A from Arkansas State University.

Luke M. Williams. Mr. Williams was appointed as our Senior Vice President, Chief Financial Officer and Treasurer on February 2, 2017 after serving in those same roles on an interim basis since January 1, 2016. Mr. Williams has been with the Company since June 2006 and served as Vice President Finance and Chief Accounting Officer from March 2015 to December 2015; Director of Financial Reporting from June 2008 to March 2015 and Manager of Financial Reporting from June 2006 to June 2008. In these roles, Mr. Williams has overseen or been responsible for various matters including financing/treasury functions, financial planning and analysis, investor relations, SEC reporting and compliance, plant accounting operations and other accounting matters. Prior to joining the Company, Mr. Williams was employed by Ernst & Young LLP, an international accounting firm, where he held various audit roles over a period of five years. Mr. Williams has an M.S. and B.S. in Accounting from the University of Illinois and is a Certified Public Accountant.
 
Yevgeny Fundler.   Mr. Fundler joined ARI as our Senior Vice President, General Counsel and Secretary on March 3, 2014. From March 2014 through March 2016, he also served as General Counsel of ARL. Mr. Fundler continues to provide legal services to ARL pursuant to a consulting services agreement the Company entered into with ARL effective March 1, 2016. Mr. Fundler served as General Counsel of WestPoint Home from November 2009 until February 2014. From March 2010 to February 2014, he also served as a Vice President of WestPoint Home. In addition, since March 2010, he has consulted for Insight Portfolio Group as its general counsel. From September 2006 through February 2010, Mr. Fundler served as Assistant General Counsel of IELP. From March 2000 to September 2006, Mr. Fundler served as Counsel with Icahn Associates and affiliates. With respect to each aforementioned company, Mr. Carl Icahn, directly or indirectly, either (i) controls, or at such time controlled, such company or (ii) has, or at such time had, an interest in such company through the ownership of securities. Prior to Icahn Associates, Mr. Fundler worked for Gordon Altman Weitzen Shalov & Wein, a law firm representing the interests of various corporate and institutional clients in a broad range of corporate, mergers and acquisitions and other transactions, including certain transactions of Mr. Carl


13


Icahn and his affiliates. Prior to joining the corporate group at Gordon Altman Weitzen Shalov & Wein, Mr. Fundler had his own law practice in Silicon Valley and San Francisco, with an emphasis on representing start-up entrepreneurs. Mr. Fundler received a B.A. in International Business in 1993 from San Diego State University and a J.D. in 1996 from the University of California, San Francisco, Hastings College of Law.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis

Our compensation committee has the ongoing responsibility for establishing, implementing and monitoring our executive compensation programs. The compensation committee consists of two members, Mr. Nevin and Mr. Frates, both of whom are employees of companies controlled by Mr. Carl Icahn, our principal beneficial shareholder through IELP.

The compensation committee, at its discretion, has consulted and expects to continue to consult with Mr. Carl Icahn and members of the staff of various entities controlled by Mr. Carl Icahn, including staff at IELP and Insight Portfolio Group LLC, with expertise in compensation and benefits. These staff members research compensation standards and practices in a range of businesses including businesses comparable to ours. The compensation committee also consults with our Chief Executive Officer regarding the compensation of our other executive officers.

The following Compensation Discussion and Analysis describes the material elements of compensation for our named executive officers. Our named executive officers are determined in accordance with SEC rules. Under these rules, Messrs. Hollister, Williams and Fundler were our named executive officers for the fiscal year ended December 31, 2016 .

Executive Compensation Philosophy.   The compensation committee believes that compensation paid to our named executive officers should assist the Company in attracting, motivating and retaining superior talent. Our compensation programs are intended to motivate the named executive officers to achieve our business objectives and to align their financial interests with those of our shareholders. Based on this philosophy, the compensation of our named executive officers has included a combination of salary, cash incentive compensation, stock-based compensation and other benefits. In addition, we have in the past, and may in the future, enter into employment agreements with our named executive officers.

Base Salary.   The compensation committee determines and reviews base salaries for our executive officers, subject to the terms of applicable employment agreements. In order to attract and retain qualified executives, from time to time we have entered into employment agreements with our named executive officers. Currently, we only have an employment agreement with our Chief Executive Officer, Jeffrey S. Hollister. Our other named executive officers do not have employment agreements. For additional information about our employment agreements, see "Employment Agreements" below. Our compensation committee believes that the annual salaries presented in the table below, which were in effect in 2016 , represent reasonable and fair salaries for the positions and responsibilities for each of our named executive officers.

Named Executive Officer
Annual Base Salary ($)
 
Jeffrey S. Hollister
350,000
(1)
Luke M. Williams
170,000
(2)
Yevgeny Fundler
290,000
(3)

(1)
As of the date hereof, Mr. Hollister's annual base salary is $375,000 pursuant to the terms of his employment agreement entered into on September 24, 2014, as noted in "Employment Agreements" below.

(2)
As of the date hereof, Mr. Williams' annual base salary is $230,000. This increase from the annual base salary referenced above was provided in connection with his appointment as Senior Vice President, Chief Financial Officer and Treasurer on February 2, 2017.

(3)
Effective March 1, 2016, Mr. Fundler's annual base salary increased to $290,000 from $200,000 in connection with the Company's entering into the consulting services agreement with ARL related to the provision of legal services, currently provided by Mr. Fundler. For additional information about this agreement, see "Transactions with Related Persons" below. As of the date hereof, Mr. Fundler's annual base salary is $296,000.



14


Management Incentive Plan.    We have established a management incentive plan, administered pursuant to our amended and restated 2005 Equity Incentive Plan, for certain employees, including our named executive officers, under which targets are determined on an annual basis, or pursuant to the terms of an existing employment agreement, equal to a percentage of the employee's base salary. This plan was established to provide additional incentive-based compensation to eligible participants for their contribution to the achievement of our objectives, to encourage and stimulate superior performance and to assist in attracting and retaining highly qualified key employees. The table below presents the applicable target percentages of each named executive officer's annual base salary for 2016 .

Named Executive Officer
Target % of annual base salary
 
Jeffrey S. Hollister
80%
 
Luke M. Williams
50%
(1)
Yevgeny Fundler
50%
 

(1)
As of the date hereof, Mr. Williams' applicable target percentage is 60%. This increase from the target percentage referenced above was provided in connection with his appointment as Senior Vice President, Chief Financial Officer and Treasurer on February 2, 2017.

Under our management incentive plan, achievement of individual and Company goals based on the Company's annual business plan, including financial, strategic, corporate, divisional and other goals is taken into account in determining the amount of any incentive compensation. For 2016 , the actual incentive compensation that could be earned by each of our named executive officers was based on a combination of factors, including each employee's base salary and the percentage targets described above, as well as financial and individual performance factors.

The financial performance target and payout ranges used for 2016 were based on a set of goals approved by the compensation committee, including goals for the Company's financial performance as measured against its annual budget, operational goals and administrative goals. The Company's budget-based goals included, among other factors, an adjusted EBITDA target and goals related to growth of the Company's lease fleet. During 2016 , the Company achieved adjusted EBITDA of $188.0 million compared to the adjusted EBITDA target of $193.0 million, or 97.4%, which converted to a financial performance factor of 81.3% based on the scale that was approved by the compensation committee. If our adjusted EBITDA for the fiscal year would have been less than 92.5% of the target adjusted EBITDA, no incentive compensation would have been granted under our management incentive plan. Operational goals included safety and performance goals as well as plant efficiency and expansion goals. Administrative goals included balance sheet management as well as control and reduction of operating expenses. Individual performance factors were based on the attainment of goals and other performance criteria including, among others, development of staff; improvement in efficiencies and capabilities; and business process improvements.

Based on the Company's 2016 financial and operational results, including the Company's 2016 adjusted EBITDA in respect to the targeted amount, as well as Mr. Hollister's review of the other named executive officers' individual performance in light of their individual goals, Mr. Hollister recommended a financial factor and individual performance factors for each such officer.

At any time prior to the final determination of awards, the compensation committee may, in its sole discretion, increase, decrease, or otherwise adjust performance measures, targets, and payout ranges used under our management incentive plan, as a result of extraordinary or non-recurring events, changes in applicable accounting rules or principles, changes in the Company's methods of accounting, changes in applicable law, changes due to consolidations, acquisitions, or reorganizations affecting the Company and its subsidiaries and affiliates, or other similar changes in the Company's business. The compensation committee did not make any adjustments for 2016 awards. Each year, the compensation committee may also determine, in its sole discretion, whether to offer a management incentive plan for the upcoming year and the formula, targets and performance measures to apply if such a plan is offered.

The compensation committee reviewed Mr. Hollister's recommendations as well as Mr. Hollister's individual performance and determined the financial and individual performance factors for the purposes of awarding 2016 incentive compensation.  As a result of this process, the compensation committee awarded incentive compensation to our named executive officers in the following amounts for 2016 :


15



Named Executive Officer
2016 Incentive Compensation ($)
Jeffrey S. Hollister
159,328
Luke M. Williams
89,825
Yevgeny Fundler
147,338

The incentive compensation listed above is included under "Non-Equity Incentive Plan Compensation" in the Summary Compensation Table below.

Stock-Based Compensation. The compensation committee believes that stock-based compensation causes our named executive officers to have an ongoing stake in our long-term success. Our amended and restated 2005 Equity Incentive Plan was designed, in part, to optimize our profitability and growth over a longer term. These long-term grants to named executive officers are based on job responsibilities and potential for individual contribution. When it makes grants, the compensation committee exercises judgment and discretion in view of its general policies. Stock-based compensation grants have generally been made after our board of directors' approval of the annual budget, after finalization of the prior year's financial results and in conjunction with the determination of employee and named executive officer incentive compensation targets for the upcoming year. Our board of directors and compensation committee prefer this timing so that compensation may be aligned with individual and financial performance. The combination of annual cash incentive compensation and stock-based compensation is intended to benefit shareholders by enabling us to better attract and retain top talent in a marketplace where such incentives are prevalent.

Stock appreciation rights (SARs) provide for financial gain derived from the potential appreciation in our stock price from the date that SARs are granted until the date that SARs are exercised. The grants of SARs to our named executive officers are intended to provide long-term incentive to reward those officers for appreciation in the price of our Common Stock and to further align the interests of our named executive officers with those of our shareholders. All SARs we have granted have a seven year term, settle in cash, were approved by our compensation committee and have an exercise price equal to the closing price of our Common Stock on the date of grant.

SARs with a three year vesting period vest in three equal installments on the first, second and third anniversaries of the grant date. Each holder must remain employed by the Company through each such date in order to vest in the corresponding number of SARs. Prior to 2014, various awards also had either market or performance conditions and, with the exception of the 2008 grants, those special conditions were achieved.

GRANTS OF PLAN-BASED AWARDS
Name
Grant Date
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1)
 
All Other SARs Grants (#)
Exercise Price of SARs Awards ($/Sh)
Grant Date Fair Value of SARs Awards ($) (2)
 
 
Threshold ($)(3)
Target ($)(4)
Maximum ($)(5)
 
 
 
 
Jeffrey S. Hollister
3/22/2016
 
 
 
 
32,750
$44.83
524,997
 
 
0
280,000
630,000
 
 
 
 
Luke M. Williams
3/22/2016
 
 
 
 
8,484
$44.83
136,002
 
 
0
85,000
191,250
 
 
 
 
Yevgeny Fundler
3/22/2016
 
 
 
 
13,568
$44.83
217,501
 
 
0
145,000
326,250
 
 
 
 
(1)
These potential performance-based awards were estimated under the management incentive plan, as discussed in detail above. The amounts do not represent the actual payments made to the named executive officers. The payments made for actual performance in 2016 are reflected in the column labeled "Non-Equity Incentive Plan Compensation" in the Summary Compensation Table.

(2)
Amounts shown do not reflect compensation actually received by the named executive officers nor do they necessarily reflect the actual value that will be recognized by the named executive officers. Instead, the amounts shown are the aggregate grant date fair value of SARs granted to the named executive officers. The aggregate grant date fair value for SARs awarded is expensed over the number of months of service required for the grant to become non-forfeitable and


16


is adjusted every period until settlement, cancellation or expiration occurs. See Note 15 - Share-based Compensation to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 for a discussion of assumptions used to calculate the aggregate fair value of SARs.

(3)
The "Threshold" column represents the smallest total bonus that would have been paid for 2016 to each named executive officer if we had achieved less than 92.5% of the Adjusted EBITDA target, which would have resulted in a financial performance factor of 0%, or if the individual had received an individual performance rating of 0%.

(4)
The "Target" column represents the amount that would have been paid to each named executive officer for 2016 if we had achieved 100% of the Adjusted EBITDA target, which would have resulted in a financial performance factor of 100%, and if the individual had received an individual performance rating of 100%.

(5)
The "Maximum" column represents the largest total bonus that could have been paid to each named executive officer for 2016 if we had achieved 125% or more of the Adjusted EBITDA target, which would have resulted in a financial performance factor of 150%, and if the individual had received a maximum individual performance rating of 150%.

Other Employment Benefits.   From time to time, our named executive officers may be provided with a limited number of perquisites to help achieve our business objectives. In 2015 and 2014, the Company paid relocation expenses to Messrs. Hollister and Fundler when each was asked to move his permanent residence within 50 miles of our headquarters. Other employment benefits include 401(k) employer plan contributions, which are generally offered to all salaried employees of the Company who satisfy certain length of service requirements. These benefits are quantified below in the "All Other Compensation Table."

Our named executive officers have been and will continue to be entitled to various other forms of compensation.
 
Section 162(m).   Section 162(m) of the Internal Revenue Code of 1986, as amended (the Code), provides that compensation in excess of $1,000,000 paid to the Chief Executive Officer or to any of the other four most highly compensated executive officers of a publicly held corporation will not be deductible for federal income tax purposes unless such compensation is paid pursuant to one of the enumerated exceptions set forth in Section 162(m). Although the Company generally structures executive compensation arrangements with the goal of maximizing the tax deductibility of executive compensation, we may pay compensation that is not deductible under Section 162(m) from time to time, based upon business needs. The compensation committee intends to review periodically the potential impacts of Section 162(m) on structuring and administering our compensation programs.

Results of Shareholder Advisory Votes on Executive Compensation . In reviewing our 2016 compensation decisions and policies, we considered the results of our shareholders' advisory vote to approve our executive compensation, which was conducted at our Annual Meeting of Shareholders in June 2016 . In the proxy statement provided to shareholders in connection with our 2016 Annual Meeting, the Company's board of directors recommended that shareholders vote in favor of this proposal. The affirmative vote of the majority of the votes properly cast, in person or represented by proxy, on such proposal at the 2016 Annual Meeting was required for advisory approval of this proposal. Over 98% of such shares were voted to approve, on an advisory basis, our executive compensation. The compensation committee considered this vote as supportive of our compensation decisions and policies and took this support into account when making 2016 compensation decisions.
Compensation Committee Report

The compensation committee reviewed and discussed the above Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management. Based on such review and discussions, the compensation committee recommended to the board of directors that the Compensation Discussion and Analysis be included in this proxy statement.

Respectfully submitted by the Compensation Committee,

Michael Nevin, Chairman
Jonathan Frates


17


SUMMARY COMPENSATION TABLE

The following table summarizes the compensation of our named executive officers for the fiscal years ended December 31, 2016 , 2015 and 2014 . Our named executive officers for 2016 are Messrs. Hollister, Williams and Fundler.
Name and Principal Position
Year
Salary($)
 
SARs Awards ($)(1)
Non-Equity Incentive Plan Compensation ($)
All Other Compensation ($)(2)
Total ($)
Jeffrey S. Hollister
2016
350,000
(3)
524,997
159,328
7,950
1,042,275
 
President and Chief Executive Officer
2015
325,000
(4)
487,566
300,000
32,950
1,145,516
 
 
2014
288,462
 
389,897
377,348
32,800
1,088,507
Luke M. Williams
2016
170,000
(5)
136,002
89,825
5,471
401,298
 
Senior Vice President, Chief Financial Officer and Treasurer (6)
 
 
 
 
 
 
 
Yevgeny Fundler
2016
275,000
(7)
217,501
147,338
7,950
647,789
 
Senior Vice President, General Counsel and Secretary
2015
200,000

150,029
131,600
5,000
486,629
 
 
2014
166,667
(8)
75,634
109,920
59,755
411,976

(1)
Amounts shown do not reflect compensation actually received by the named executive officers nor do they necessarily reflect the actual value that will be recognized by the named executive officers. Instead, the amounts shown are the aggregate grant date fair value of SARs granted to the named executive officers. The aggregate grant date fair value for SARs awarded is expensed over the number of months of service required for the grant to become non-forfeitable and is adjusted every period until settlement, cancellation or expiration occurs. See Note 15 - Share-based Compensation to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 for a discussion of assumptions used to calculate the aggregate fair value of SARs.

(2)
See "All Other Compensation Table" below for a breakdown of specific amounts included in this category, which include perquisites and personal benefits, 401(k) employer plan contributions and cash payments in lieu of paid time off.

(3)
As of the date hereof, Mr. Hollister's annual base salary is $375,000 pursuant to the terms of his employment agreement entered into on September 24, 2014, as noted in "Employment Agreements" below.

(4)
Mr. Hollister was appointed President and Chief Executive Officer on September 24, 2014 after serving as our President and Interim Chief Executive Officer since October 9, 2013. As discussed below, Mr. Hollister's base salary was increased to $325,000 from $275,000, pursuant to an employment agreement entered into on such date.

(5)
As of the date hereof, Mr. Williams' annual base salary is $230,000. This increase from the annual base salary referenced above was provided in connection with his appointment as Senior Vice President, Chief Financial Officer and Treasurer on February 2, 2017.

(6)
Mr. Williams was appointed Senior Vice President, Chief Financial Officer and Treasurer on February 2, 2017 after serving in those same roles on an interim basis since January 1, 2016. Prior to January 1, 2016, Mr. Williams was not considered a named executive officer of the Company.

(7)
Effective March 1, 2016, Mr. Fundler's annual base salary increased to $290,000 in connection with the Company's entering into the consulting services agreement with ARL related to the provision of legal services, currently provided by Mr. Fundler. For additional information about this agreement, see "Transactions with Related Persons" below. As of the date hereof, Mr. Fundler's annual base salary is $296,000.

(8)
Mr. Fundler was appointed Senior Vice President, General Counsel and Secretary on March 3, 2014.


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ALL OTHER COMPENSATION TABLE

Name
Year
Perquisites and Personal Benefits ($)
 
401(k) Employer Contributions ($)(1)
 
Cash Payments in Lieu of Paid Time Off ($)(2)
Total ($)
Jeffrey S. Hollister
2016

 
7,950

 

7,950

 
2015
25,000

(3)
7,950

 

32,950

 
2014
25,000

(3)
7,800

 

32,800

Luke M. Williams
2016

 
2,593

 
2,878

5,471

Yevgeny Fundler
2016

 
7,950

 

7,950

 
2015

 
5,000

 

5,000

 
2014
53,755

(4)
6,000

(5)

59,755


(1)
These amounts represent our employer contributions to each named executive officer's 401(k) plan account equal to 50% of deferrals up to a maximum of 6% of covered compensation and are consistent with 401(k) employer plan contributions that we generally offer to all salaried employees of the Company who satisfy certain length of service requirements.

(2)
These amounts represent cash payments in lieu of paid time off that we generally offer to all salaried employees of the Company upon meeting certain requirements.

(3)
Mr. Hollister was appointed President and Chief Executive Officer on September 24, 2014 after serving as our President and Interim Chief Executive Officer since October 9, 2013. Pursuant to the employment agreement entered into on September 24, 2014, these amounts represent a $50,000 relocation bonus paid to Mr. Hollister in two separate payments for establishing and maintaining full time permanent residency within 50 miles of the Company's offices in St. Charles, Missouri.

(4)
Represents relocation and moving expenses reimbursed by the Company for expenses incurred by Mr. Fundler while establishing a full time permanent residency within 50 miles of the Company's offices in St. Charles, Missouri.

(5)
Represents payment made to Mr. Fundler for missed employer 401(k) contributions as he was not eligible for an employer contribution from ARI to his account until his one-year service anniversary in March 2015.

Employment Agreements. In order to attract and retain qualified executives, from time to time we have entered into employment agreements with our named executive officers.

Jeffrey S. Hollister. Effective September 24, 2014, we entered into an employment agreement with Mr. Hollister to serve as our President and Chief Executive Officer through December 31, 2017, unless earlier terminated pursuant to the agreement. Prior to September 24, 2014, Mr. Hollister served as our President and Interim Chief Executive Officer since October 9, 2013 on an at-will basis with a base salary at an annual rate of $275,000.

Upon entering into the employment agreement during 2014, Mr. Hollister's base salary increased to $325,000 through the end of 2015, with scheduled increases to $350,000 and $375,000, respectively, for calendar years 2016 and 2017. Mr. Hollister is also eligible for annual incentive compensation for each completed calendar year of employment through December 31, 2017 equal to 80% of his then applicable base salary if certain performance targets established by our compensation committee are achieved.

Mr. Hollister's employment agreement provides that he is eligible to participate in healthcare, group term life insurance, group long-term disability insurance, 401(k), paid time off and other similar employee benefits we generally provide to our senior executives. Subject to the terms of the agreement, Mr. Hollister is also eligible for long-term performance-based cash incentive awards with a target award value equal to 150% of his base salary. Any such award that is granted to Mr. Hollister will be subject to our amended and restated 2005 Equity Incentive Plan and the applicable award or grant agreement.
Mr. Hollister was also required to relocate his permanent residence to within 50 miles of St. Charles, Missouri, where our headquarters is located. In association with this relocation, Mr. Hollister received a $50,000 relocation bonus, with the first $25,000 paid as soon as practicable after the effective date of his employment agreement and the remaining $25,000 paid after the relocation had been deemed complete pursuant to the terms of the agreement.
The agreement will terminate and Mr. Hollister's employment with us will end upon the earlier of December 31, 2017 unless extended by mutual agreement, his death or disability (as defined in the agreement), if we discharge Mr. Hollister with or without


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cause (as defined in the agreement), or the voluntary resignation of Mr. Hollister with or without good reason (as defined in the agreement). We may discharge Mr. Hollister at any time with or without cause (as defined in the agreement).
If Mr. Hollister's employment is terminated due to the expiration of the agreement, or due to his death or disability, he is entitled to receive (i) earned and accrued base salary, paid time off and unreimbursed business expenses due and unpaid as of the date of his termination and (ii) bonus compensation earned and due with respect to a completed calendar year but not paid as of the date of termination.
If Mr. Hollister is terminated without cause (as defined in the agreement) or if he terminates the agreement for good reason (as defined in the agreement), he is entitled to receive (i) earned and accrued base salary, paid time off and unreimbursed business expenses due and unpaid as of the date of his termination, (ii) bonus compensation earned and due with respect to a completed calendar year but not paid as of the date of termination, and (iii) a continuation of the payment of his then applicable base salary for the lesser of six months or the remainder of his term of employment.
If Mr. Hollister is terminated for cause (as defined in the agreement) or if he resigns without good reason (as defined in the agreement), he is entitled to receive earned and accrued base salary, paid time off and unreimbursed business expenses due and unpaid as of the date of his termination.
The agreement contains non-competition provisions that prohibit Mr. Hollister from directly or indirectly competing with us during the term of his employment and for a six month period thereafter, extendable for up to an additional six months in exchange for severance pay in the amount of the base salary he would have earned through such extended period and a pro-rated portion of his target bonus through such period. The agreement also contains non-solicitation provisions covering the period of Mr. Hollister's employment and the one-year period thereafter, as well as non-disclosure and non-disparagement provisions and provisions requiring him to protect confidential information during his employment and at all times thereafter.

Luke M. Williams.    Between January 1, 2016 and February 1, 2017, Mr. Williams served as our Interim Senior Vice President, Interim Chief Financial Officer and Interim Treasurer on an at-will basis with a base salary at an annual rate of $170,000. Since February 2, 2017, we employed Mr. Williams as Senior Vice President, Chief Financial Officer and Treasurer on an at-will basis with a base salary at an annual rate of $230,000.

Yevgeny Fundler.    Since March 3, 2014, we have employed Mr. Fundler as Senior Vice President, General Counsel and Secretary on an at-will basis.
OUTSTANDING EQUITY AWARDS AT 2016 FISCAL YEAR END
 
Option Awards
Name
Number of Securities Underlying Unexercised Options (#) Exercisable
Number of Securities Underlying Unexercised Options (#) Unexercisable
 
Option Award Exercise Price ($)
Option Grant Date (1)
Option Expiration Date
Jeffrey S. Hollister
32,750
 
$44.83
3/22/2016
3/22/2023
 
8,321
16,644
 
$50.27
3/9/2015
3/9/2022
 
13,415
6,707
 
$48.13
2/6/2014
2/6/2021
Luke M. Williams
8,484
 
$44.83
3/22/2016
3/22/2023
 
1,920
3,841
(2)
$50.27
3/9/2015
3/9/2022
 
2,114
1,057
(2)
$48.13
2/6/2014
2/6/2021
 
1,700
(2)
$29.31
2/24/2012
2/24/2019
Yevgeny Fundler
13,568
 
$44.83
3/22/2016
3/22/2023
 
2,560
5,122
 
$50.27
3/9/2015
3/9/2022
 
1,824
913
 
$70.23
3/3/2014
3/3/2021
(1)
These SARs vest in three equal installments on the first, second and third anniversaries of the respective grant date.
(2)
Mr. Williams did not become an executive officer until January 1, 2016 when he was appointed Interim Senior Vice President, Interim Chief Financial Officer and Interim Treasurer. These SARs were granted to him prior to January 1, 2016 as compensation for his previous roles within the Company.


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2016 OPTION EXERCISES AND STOCK VESTED

None of our named executive officers exercised any securities during the fiscal year ended December 31, 2016.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

We describe the triggering events that may result in payments of compensation and other benefits to any of our named executive officers upon termination without cause under "Employment Agreements" above. The table below quantifies the payments, other than accrued liabilities and benefits described above, that would have been payable to our named executive officers if they had been terminated on December 31, 2016 .

Executive
Termination Payment ($)
 
Jeffrey S. Hollister
334,328
(1)
Luke M. Williams
(2)
Yevgeny Fundler
(2)
(1)
This amount represents a continuation of base salary (as in effect as of December 31, 2016 ) of $350,000 per year through the period ending on the 180 th day following his termination, pursuant to the terms of Mr. Hollister's employment agreement, payable upon termination without cause or resignation for good reason. This amount also includes Mr. Hollister's management incentive plan compensation for the calendar year ended December 31, 2016 . Pursuant to this employment agreement, Mr. Hollister would be entitled to receive incentive compensation, if any, that is earned and unpaid at the time of termination of employment without cause or for good reason. For 2016, we awarded payment under our management incentive plan of $159,328 to Mr. Hollister. This incentive compensation was determined by our compensation committee in March 2017.
(2)
We do not currently have an employment agreement or other arrangement for payments on termination or change in control with Messrs. Williams or Fundler.
DIRECTOR COMPENSATION

Each director is entitled to reimbursement for out-of-pocket expenses incurred for each meeting of the full board or a committee of the board that he attended. The annual compensation for our independent directors, Messrs. First, Pontious, and Laisure, is $30,000. In addition, each independent director is entitled to receive $1,000 for each board, committee and independent director meeting that he attended and an annual stipend of $5,000 if he is a chairperson of a committee or serves on a special committee. Mr. Cho and the other directors affiliated with Mr. Carl Icahn, Messrs. Mather, Christodoro and Frates were not paid any compensation for serving on our board of directors in 2016 .

The following table discloses the fees earned by or paid to each of our independent directors in 2016 .
Name
Fees earned or paid in cash ($)
Harold First
57,000
James C. Pontious
52,000
J. Mike Laisure
55,000


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SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLAN

The following table discloses the securities authorized for issuance under the Company's equity compensation plan as of December 31, 2016 and April 27, 2017 . Our SARs, which are also issued under our amended and restated 2005 Equity Incentive Plan, settle only in cash and are not reflected below.

 
 
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))
Plan Category
(a)
(b)
(c)
Equity compensation plan approved by security holders
855,476
Equity compensation plan not approved by security holders
Total
855,476
TRANSACTIONS WITH RELATED PERSONS

Other than the transactions described below, for the fiscal year ended December 31, 2016 there has not been, nor is there currently proposed, any transaction, as defined by the SEC:

to which we are or will be a participant;
in which the amount involved exceeded or will exceed $120,000; and
in which any related person, as defined by the SEC, had or will have a direct or indirect material interest.

Although we do not have a separate conflicts policy, we intend to comply with applicable law with respect to transactions involving potential conflicts. Our by-laws provide that transactions between us and any of our directors or officers are subject to full disclosure and approval in good faith by the majority of the disinterested members of our board of directors or a committee thereof, approval of shareholders holding two-thirds of the voting power of the shares entitled to vote, other than shares held by the interested director(s), approval by the unanimous affirmative vote of the holders of all outstanding shares, whether or not entitled to vote, or the determination that the contract or agreement, and the person asserting the validity of the contract or agreement, is fair and reasonable to us as of the time it is authorized, approved or ratified, or as otherwise provided by law. Interested directors are not counted in determining the existence of a quorum at any meeting of our board of directors which shall authorize or ratify any such transaction.
TRANSACTIONS WITH MR. CARL ICAHN AND ENTITIES AFFILIATED WITH MR. CARL ICAHN
 
Overview

Our company was formed in 1988 as a company beneficially owned by Mr. Carl Icahn, our current principal beneficial shareholder through IELP. We grew our company through the transfer of certain assets to us from ACF Industries, Incorporated (ACF, now known as ACF Industries LLC), a company also beneficially owned by Mr. Carl Icahn. Since our formation, we have entered into agreements relating to the acquisition of assets from and disposition of assets to entities controlled by Mr. Carl Icahn, the provision of goods and services to us by entities controlled by Mr. Carl Icahn, the provision of goods and services by us to entities affiliated with Mr. Carl Icahn and other matters involving entities controlled by Mr. Carl Icahn. We have received substantial benefit from these agreements and we expect that in the future we will continue to conduct our business in a manner that will utilize entities affiliated with or controlled by Mr. Carl Icahn. In addition, we receive other benefits from our affiliation with Mr. Carl Icahn and companies controlled by Mr. Carl Icahn, such as our participation in buying groups and other arrangements with entities controlled by Mr. Carl Icahn.

We describe below the material arrangements and other relationships that we are, or have been, a party to/with Mr. Carl Icahn and entities affiliated with Mr. Carl Icahn since January 1, 2016. All of the arrangements and relationships described below that are required to be disclosed pursuant to Item 404 of Regulation S-K and that took effect since our January 2006 initial public offering


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and our admission to NASDAQ have been approved by the independent members of our audit committee, in accordance with applicable listing standards of NASDAQ and our audit committee charter.
CERTAIN TRANSACTIONS WITH ACF INDUSTRIES LLC

1994 ACF Asset Transfer

On October 1, 1994, under an asset transfer agreement with ACF, we acquired properties and assets used in ACF's railcar components manufacturing business and its railcar servicing business at specified locations, and certain intellectual property rights associated with the transferred assets and businesses, as well as specified assets used in the manufacture and sale of industrial size mixing bowls. We refer to this transaction as the 1994 ACF asset transfer.

Pursuant to the 1994 ACF asset transfer, ACF retained and agreed to indemnify us for certain liabilities and obligations relating to ACF's conduct of business and ownership of the assets at these locations prior to their transfer to us, including liabilities relating to employee benefit plans, workers compensation, environmental contamination and third-party litigation. See Note 19 - Related Party Transactions to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2007.

Also in connection with the 1994 ACF asset transfer, we entered into several administrative and operating agreements with ACF, effective as of October 1, 1994. Those that remained in effect as of January 1, 2016 are described below.

Component Purchases.  We have from time to time purchased components from ACF under a long-term agreement, as well as on a purchase order basis. Under the manufacturing services agreement entered into in 1994 and amended in 2005, ACF agreed to manufacture and distribute, at our instruction, various railcar components. In consideration for these services, we agreed to pay ACF agreed-upon rates. This agreement automatically renews on an annual basis unless we provide written notice of termination. There is no right of termination for ACF under this agreement.

Also in April 2015, we entered into a parts purchasing and sale agreement with ACF. The agreement was unanimously approved by the independent directors of ARI's audit committee. Under this agreement, ARI and ACF may, from time to time, purchase and sell to each other certain parts for railcars (Parts). We also provide a non-exclusive and non-assignable license of certain intellectual property to ACF related to the manufacture and sale of Parts to us. The buyer under the agreement must pay the market price of the parts as determined in the agreement or as stated on a public website for all ARI buyers. We may provide designs, engineering and purchasing support, including all materials and components to ACF. Subject to certain early termination events, the agreement terminates on December 31, 2020.

For the fiscal year ended December 31, 2016 , we purchased $6.8 million of railcar components from ACF.

License Agreement from ACF . Under a license agreement, ACF granted us a non-exclusive, perpetual, royalty-free license to the patents and other intellectual property owned by it, which could be used by us in the conduct of our business, but did not exclusively relate to our business, including the 13 patents listed in that agreement, which primarily relate to railcar components. In 1997, ACF transferred the patents covered by this license to us. All of these patents have now expired. This license is not assignable by either party, without the prior consent of the other, except in connection with the sale of substantially all of either party's business.

License Agreement to ACF.  Under another license agreement, we granted ACF a non-exclusive, perpetual, royalty-free license to the intellectual property exclusively relating to our business that was transferred to us in the 1994 ACF asset transfer. There are no restrictions on ACF's use of the information licensed under this agreement. This license is not assignable by either party, without the prior consent of the other, except in connection with the sale of substantially all of either party's business.

2013 Purchasing and Engineering Services Agreement

In January 2013, we entered into a purchasing and engineering services agreement and license with ACF. The agreement was unanimously approved by the independent directors of our audit committee. Under this agreement, we provide purchasing support and engineering services to ACF in connection with ACF's manufacture and sale of tank railcars at its facility in Milton, Pennsylvania. Additionally, we granted ACF a non-exclusive, non-assignable license to certain of our intellectual property, including certain designs, specifications, processes and manufacturing know-how required to manufacture and sell tank railcars during the term of the agreement. In December 2016, we amended this agreement to, among other provisions, extend the termination date to December 31, 2017 from December 31, 2016, subject to certain early termination events.


23


In consideration of the services and license provided by us to ACF in conjunction with the agreement, ACF pays us a royalty and, if any, a share of the net profits (the Profits) earned on each railcar manufactured and sold by ACF under the agreement, in an aggregate amount equal to 30% of such Profits, as calculated under the agreement. Under the agreement, Profits are net of certain of ACF's start-up and shutdown expenses and certain maintenance capital expenditures. If no Profits are realized on a railcar manufactured and sold by ACF pursuant to the agreement, we will still be entitled to the royalty for such railcar, and we will not share in any losses incurred by ACF in connection therewith. In addition, any railcar components supplied by us to ACF for the manufacture of these railcars are provided at fair market value.

Under the agreement, ACF had the exclusive right to manufacture and sell tank railcars for any new orders scheduled for delivery to customers on or before January 31, 2014. We have the exclusive right to any sales opportunities for tank railcars for any new orders scheduled for delivery after that date and through termination of the agreement. We also have the right to assign any sales opportunity to ACF, and ACF has the right, but not the obligation, to accept such sales opportunity. Any sales opportunity accepted by ACF will not be reflected in our orders or backlog.

Revenues of $0.7 million for the year ended December 31, 2016 were recorded under this agreement for sales of railcar components to ACF and for royalties and profits on railcars sold by ACF.

2015 Repair Services Agreement

In April 2015, we entered into a repair services and support agreement with ACF. Under this agreement, we provide certain sales and administrative and technical services, materials and purchasing support and engineering services to ACF to provide repair and retrofit services (Repair Services). Additionally, we provide a non-exclusive and non-assignable license of certain intellectual property related to the Repair Services for railcars. We receive 30% of the net profits (as defined in the agreement) for Repair Services related to all railcars not owned by ARL or its subsidiaries and 20% of the net profits for Repair Services related to all railcars owned by ARL or its subsidiaries, if any, but will not absorb any losses incurred by ACF. Under the agreement, we have the exclusive right to sales opportunities related to Repair Services, except for any sales opportunity related to Repair Services presented to ACF by ARL with respect to ARL-owned railcars. We also have the right to assign any sales opportunities related to Repair Services to ACF, and ACF has the right, but not the obligation, to accept such sales opportunity. Subject to certain early termination events, the agreement terminates on December 31, 2020. For the year ended December 31, 2016 revenues of less than $0.1 million were recorded under this agreement.
CERTAIN TRANSACTIONS WITH ARL

From time to time, we have entered into various agreements with ARL. Those agreements are described below.

Railcar Management Agreements

From time to time, we or our wholly-owned subsidiaries have entered into railcar management agreements with ARL, pursuant to which we or our wholly-owned subsidiaries engaged ARL to manage, sell, operate, market, store, lease, re-lease, sublease and service our railcars, subject to the terms and conditions of the agreement. These agreements provide that ARL will manage the leased railcars (as identified in the respective agreement) including arranging for services, such as repairs or maintenance, as deemed necessary. Each of these agreements was unanimously approved by the independent directors of our audit committee.

On February 29, 2012, we entered into a railcar management agreement with ARL (the ARI railcar management agreement). The agreement, as amended was effective as of January 1, 2011, will continue through December 31, 2018 and thereafter it automatically renews for additional one-year periods unless written notice is received from either party at least six months prior to the expected renewal. In December 2012, our wholly-owned subsidiary, Longtrain Leasing I, LLC (LLI) entered into a similar agreement with ARL (the LLI railcar management agreement). In January 2014, LLI and ARL amended the LLI railcar management agreement to, among other provisions, extend the termination date to January 15, 2020. On October 16, 2014, our wholly-owned subsidiary Longtrain Leasing II, LLC (LLII) entered into a railcar management agreement with ARL (the LLII railcar management agreement).

In January 2015 in connection with a refinancing, the LLI and LLII railcar management agreements were terminated and our wholly-owned subsidiary Longtrain Leasing III, LLC (LLIII) entered into a similar railcar management agreement with ARL. This agreement extends through the final maturity date of LLIII's notes of January 17, 2045, unless terminated earlier pursuant to its terms (together with the railcar management agreements discussed above, collectively the Railcar Management Agreements).

Subject to the terms and conditions of each agreement, ARL receives, in respect of leased railcars, a management fee based on the lease revenues. Under the ARI railcar management agreement, in addition to the management fee, ARL receives a fee consisting


24


of a lease origination fee, and, in respect of railcars sold by ARL, sales commissions. As discussed below, the RMTA provides for the termination of the Railcar Management Agreements pursuant to and at the times set forth therein.

In 2016 , total fees incurred by ARI related to the Railcar Management Agreements were $7.8 million.

Railcar Management Transition Agreement

On December 16, 2016, ARI entered into a railcar management transition agreement (the RMTA) with ARL. In anticipation of the expected sale of ARL (the ARL Sale) to SMBC Rail Services LLC (the Buyer), ARI and ARL entered into the RMTA to manage the transition, from ARL to ARI, of the management of our railcar leasing business, including the railcars owned by the Company (the ARI Railcars) and its subsidiary, LLIII (the LLIII Railcars). As described above, pursuant to Railcar Management Agreements, ARL, as manager, currently markets ARI Railcars for sale or lease and LLIII Railcars for lease, and arranges for the operation, storage, re-lease, sublease, service, repair, overhaul, replacement and maintenance of the ARI Railcars and the LLIII Railcars (collectively, the Leased Railcars). As discussed below, certain affiliates of ARI and the Buyer are also parties to the Agreement for limited purposes.

The RMTA, among other provisions, (i) permits ARI to assume the management of the Leased Railcars following the consummation of the ARL Sale; (ii) requires ARI to use commercially reasonable efforts to obtain noteholder consent for ARI to replace ARL as manager of the LLIII Railcars under the LLIII indenture, and certain related documents; and (iii) requires ARL to transfer to ARI certain books and records and electronic data with respect to the Leased Railcars and the Company’s and LLIII's leasing businesses and otherwise assist in the transfer of the management of the leasing businesses to ARI, provided that if ARI does not obtain the noteholder consent, ARL will remain the manager of the LLIII Railcars under the LLIII indenture. The Company has no obligation to pay any consent or similar fees in connection with obtaining the Noteholder Consent.

Pursuant to the terms and conditions of the RMTA, ARL provides ARI an irrevocable, fully paid, non-transferrable (except as set forth therein), royalty-free license to certain software and databases owned and used by ARL to manage its railcars and the Leased Railcars. The RMTA also provides for the termination, as of the consummation of the ARL Sale, of the Trademark License Agreement, dated as of June 30, 2005, between ARI and ARL (the Trademark License), pursuant to which ARI granted to ARL a license to use ARI’s trademarks “American Railcar” and the “diamond shape” of its logo, and provides for the wind-down of ARL’s use of such trademarks.

Pursuant to the terms and conditions of the RMTA, ARI has agreed not to solicit or hire ARL employees until 24 months after the consummation of the ARL Sale, subject to certain exceptions.

The RMTA, subject to its terms, also provides for the termination of, and the discharge and release of obligations under, certain other agreements that ARI and its subsidiaries are party to on the one hand, and ARL is party to on the other hand, including (i) the Railcar Management Agreement, dated February 29, 2012 (as amended), between ARI and ARL, pursuant to which ARI engaged ARL to manage ARI’s railcars; (ii) subject to receiving noteholder consent (and the terms and conditions thereof), the Railcar Management Agreement, dated January 29, 2015, between LLIII and ARL, pursuant to which LLIII engaged ARL to manage LLIII Railcars; (iii) the Railcar Services Agreement, dated April 15, 2011 (as amended), between ARI and ARL, pursuant to which ARI provides ARL railcar repair, engineering, administrative and other services on an as needed basis; (iv) the Consulting Services Agreement, dated as of March 1, 2016, between ARI and ARL, pursuant to which ARI agreed to provide legal services to ARL; and (v) the Trademark License described above.

Pursuant to the terms and conditions of the RMTA, American Entertainment Properties Corporation (AEPC) has agreed to (i) undertake certain payment and performance obligations of ARL to ARI and (ii) pay or reimburse, as applicable, certain costs and expenses of ARI incurred in connection with the ARL Sale and the RMTA. In addition, pursuant to the terms and conditions of the RMTA, Buyer and an affiliate of Buyer have agreed to undertake certain payment and performance obligations of ARL to ARI following the closing of the ARL Sale.

In addition to ARL, AEPC is controlled by Mr. Carl Icahn, ARI’s principal beneficial stockholder, through IELP. The independent directors of the Company’s Audit Committee reviewed the terms and conditions of the RMTA and received advice from independent legal counsel in connection therewith. The Audit Committee unanimously approved the terms and conditions of, and the Company’s entry into, the RMTA.

Railcar Services Agreement

Effective April 15, 2011, we entered into a railcar services agreement with ARL. Under the agreement, we provide railcar repair, engineering, administrative and other services, on an as needed basis, for ARL's lease fleet at mutually agreed-upon prices. The


25


agreement had an initial term of three years and automatically renews for additional one-year periods unless either party provides at least sixty days written prior notice of termination. The agreement automatically renewed on April 16, 2016. There is no termination fee if we elect to terminate the agreement prior to the end of the term. In 2016 , our revenues from railcar services included $26.8 million from transactions with ARL. As discussed above, the RMTA provides for the termination of the railcar services agreement pursuant to and at the times set forth therein.

Consulting Services Agreement

On February 15, 2017, ARI entered into a Consulting Services Agreement with ARL. The Consulting Services Agreement was unanimously approved by the independent directors of ARI’s audit committee.

Pursuant to the terms and conditions of the Consulting Services Agreement, ARI will provide customer service and engineering services (collectively referred to as “Services”) to ARL upon ARL’s request. In order to provide the Services, ARI may designate and cause one or more of its employees to provide the Services to ARL as provided in the Consulting Services Agreement. In exchange for the Services to be performed under the Consulting Services Agreement, ARL will pay to ARI a total weekly fee calculated based on the hours worked multiplied by an agreed rate for each of the Services performed. In addition, ARL will reimburse ARI for all reasonable and documented costs and expenses incurred in accordance with the Consulting Services Agreement.

This agreement is terminable by ARI or ARL upon five business days’ prior written notice with respect to any or all of the Services. Unless previously terminated prior thereto, this agreement will automatically terminate on the date that the ARL Sale occurs.
CERTAIN TRANSACTIONS INVOLVING MR. CARL ICAHN AND OTHER RELATED ENTITIES

Registration Rights

We entered into a registration rights agreement, effective upon the completion of our initial public offering, with certain of our existing shareholders, including shareholders controlled by Mr. Carl Icahn. The shareholders that are party to the registration rights agreement have the right to require us, subject to certain terms and conditions, to register their shares of our Common Stock under the Securities Act of 1933. These shareholders collectively have an aggregate of five demand registration rights, three of which relate solely to registration on a short-form registration statement, such as a Form S-3. In addition, if we propose to register any additional shares of our Common stock under the Securities Act, these shareholders will be entitled to customary "piggyback" registration rights, which will entitle them to include their shares of capital stock in a registration of our securities for sale by us or by other security holders. The registration rights granted under the registration rights agreement are subject to customary exceptions and qualifications and compliance with certain registration procedures. Approximately 11.2 million shares of our Common Stock are entitled to the benefits of these registration rights.

Railcar leases

Beginning in 2016, the Company has leased railcars to certain of entities controlled by Mr. Carl Icahn (the IELP Entities) under an operating lease arrangement. Any related party railcar lease agreements have been and will be subject to the approval or review by the independent directors of the Company's audit committee. Revenues from railcars leased to certain of the IELP Entities were $0.3 million for the year ended December 31, 2016.

Transactions with Insight Portfolio Group LLC

Insight Portfolio Group LLC (Insight Portfolio Group) is an entity formed and controlled by Mr. Carl Icahn in order to maximize the potential buying power of a group of entities with which Mr. Carl Icahn has a relationship in negotiating with a wide range of suppliers of goods, services and tangible and intangible property at negotiated rates. ARI, and a number of other entities with which Mr. Carl Icahn has a relationship, have minority equity interests in Insight Portfolio Group and pay fees as part of being a member of Insight Portfolio Group. In 2016 , total fees paid to Insight Portfolio Group were $0.2 million.

Transactions with M. W. Recycling
We are party to a scrap agreement with M. W. Recycling (MWR), a company controlled by Mr. Carl Icahn. Under the agreement, we sell and MWR purchases scrap metal from several of our plant locations. This agreement had an initial term through November 2015 and was renewed in September 2016, with an effective date in December 2015, to among other provisions, extend the term through May 2019, after which the agreement continues until terminated by either party, in accordance with the provisions of the


26


agreement. This agreement was approved by the independent directors of our audit committee. For the fiscal year ended December 31, 2016 , MWR collected our scrap material and paid us $2.2 million.
General Counsel
Mr. Yevgeny Fundler joined ARI as our Senior Vice President, General Counsel and Secretary in March 2014. From March 2014 through March 2016, he also served as General Counsel of ARL. Mr. Fundler continues to provide legal services to ARL pursuant to a consulting services agreement the Company entered into with ARL effective March 1, 2016. This consulting services agreement is expected to terminate pursuant to the RMTA upon the effectiveness of the ARL Sale. Pursuant to the consulting services agreement, the Company reserved the right to refuse to provide for any legal services to ARL if we believe that the associated legal services would present an actual, potential or apparent conflict between us (including any lawyer providing the services) and ARL. As consideration for Mr. Fundler's provision of legal services to ARL under the consulting services agreement, ARL has agreed to pay us on a quarterly basis a fee equal to the pro-rata portion of Mr. Fundler's salary for time spent on ARL matters. In addition, ARL directly paid Mr. Fundler a bonus during 2016 for work performed in connection with the ARL Sale and ARL has notified Mr. Fundler of its intent to directly pay an additional bonus upon consummation of the ARL Sale for work performed in connection therewith. Since March 2010, Mr. Fundler has also consulted for Insight Portfolio Group as its general counsel. In connection with this service, Insight Portfolio Group directly pays Mr. Fundler a salary. With respect to each aforementioned company, Mr. Carl Icahn, directly or indirectly, either (i) controls such company or (ii) has an interest in such company through the ownership of securities. The independent directors of our audit committee considered Mr. Fundler's provision of services to, and receipt of funds either directly or indirectly from, ARL and Insight Portfolio Group in connection with their review and approval of Mr. Fundler's employment by ARI.
REVIEW, APPROVAL OR RATIFICATION OF TRANSACTIONS WITH RELATED PERSONS

Our audit committee, which is comprised solely of independent members of our board of directors, is responsible under its charter for reviewing and approving "related person transactions," as those terms are defined by the SEC, for potential conflict of interest situations on an ongoing basis, unless such duty has been delegated to another committee of our board of directors consisting solely of independent directors.

At each audit committee meeting, management reports any related person transactions under consideration. After review, the audit committee approves or disapproves such transactions. In reviewing, approving or ratifying related person transactions, the audit committee is responsible for obtaining the material facts of the related person transaction and considering such factors as it deems appropriate.
PROPOSAL NO. 2

ADVISORY VOTE ON EXECUTIVE COMPENSATION

Section 14A of the Securities Exchange Act of 1934 (Section 14A), as amended, and the related rules of the SEC, as well as the North Dakota Publicly Traded Corporations Act (NDPTCA) afford our shareholders the right to vote to approve, on an advisory (nonbinding) basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with applicable rules.

Our executive compensation programs are designed to help us attract and retain superior executive talent, while providing competitive and differentiated levels of pay based on corporate and individual performance that reinforce the alignment of the interests of the members of our executive management team with those of our shareholders. Please read the "Compensation Discussion and Analysis" section above for details about our executive compensation programs, including information about the 2016 compensation of our named executive officers and the compensation committee report.
 
We are asking our shareholders to indicate their support for our named executive officer compensation as described in this proxy statement. This proposal, commonly known as a "say-on-pay" proposal, gives you as a shareholder the opportunity to express your views on our named executive officers' compensation. This vote is not intended to address any specific element of our compensation programs, but rather to address our overall approach to the compensation of our named executive officers described in this proxy statement. To that end we will ask our shareholders to vote "FOR" the following resolution at the Annual Meeting:  

"RESOLVED, that the Company's shareholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company's Proxy Statement for the 2017 Annual Meeting of Shareholders pursuant to the compensation


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disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables, narrative disclosure and the report of the compensation committee of the board of directors."
 


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Vote Required
 
The affirmative vote of a majority of votes properly cast, in person or represented by proxy, on this proposal is required to approve on an advisory basis, the executive compensation as disclosed in this proxy statement. Abstentions and broker "non-votes" will not have any effect on this proposal.

Your vote will not directly affect or otherwise limit any existing compensation or award arrangement of any of our named executive officers. Because your vote is advisory, it will not be binding upon the Company, the compensation committee or our board of directors. Our board of directors and the compensation committee will, however, take into account the outcome of the say-on-pay vote when considering future compensation arrangements. The Company provides shareholders with an opportunity to approve, on a nonbinding advisory basis, the compensation of the named executive officers each year at the Annual Meeting of shareholders, as required by the NDPTCA. The next such vote will occur at the 2018 annual meeting of shareholders.

The Board of Directors unanimously recommends that you vote "FOR" this proposal.
PROPOSAL NO. 3

ADVISORY VOTE ON THE FREQUENCY OF HOLDING AN ADVISORY VOTE ON EXECUTIVE COMPENSATION

Section 14A also enables our shareholders to indicate how frequently we should seek an advisory (nonbinding) vote regarding the compensation of our named executive officers, as disclosed pursuant to the SEC’s compensation disclosure rules, and as described in Proposal No. 2 above. By voting on this Proposal No. 3, shareholders may indicate whether they would prefer an advisory vote on named executive officer compensation every one, two, or three years. You may cast your vote on your preferred voting frequency by choosing the option of one year, two years or three years or you may abstain from voting when you submit a proxy in response to this proposal.

Your vote on this Proposal is advisory and will not be binding upon the Company, the compensation committee or our board of directors. We understand that our shareholders may have different views as to what is the best approach for the Company, and we look forward to hearing from our shareholders on this Proposal. However, the NDPCTA requires us to hold an advisory vote on executive compensation every year and, as long as we remain subject to the NDPCTA, we intend to hold an advisory vote on executive compensation on an annual basis.

Vote Required

The option of one year, two years or three years that receives the highest number of votes cast by shareholders will be the frequency for the advisory vote on executive compensation that has been selected by shareholders. Abstentions and broker “non-votes” are included in the number of shares present or represented for purposes of quorum, but are not considered as shares voting or as votes cast with respect to any matter presented at the Annual Meeting. As a result, abstentions and broker “non-votes” will not have any effect on the proposal regarding the frequency of holding an advisory vote on executive compensation.

The Board of Directors unanimously recommends that you vote “FOR” the option of once every year as the
frequency with which shareholders are provided an advisory vote on executive compensation.
OTHER MATTERS

Shareholder Proposals and Nominations for Director

A request by a shareholder that the Company, pursuant to Rule 14a-8 of the Exchange Act, include in its proxy materials for its 2018 Annual Meeting of Shareholders such shareholder's proposal of business to be brought before the 2018 annual meeting must be received by the Company at its principal executive offices no later than December 28, 2017 . Such proposals must also meet the other requirements of the rules of the SEC.
    
A shareholder who wishes to nominate a candidate for election to the Company's board of directors or make a proposal for other business to be brought before the Company's 2018 Annual Meeting of Shareholders without requiring the Company to include such nomination or proposal in its proxy materials, must give timely notice in accordance with the Company's by-laws and the NDPTCA to: c/o Secretary, American Railcar Industries, Inc., 100 Clark Street, St. Charles, Missouri 63301.

To be timely, a shareholder's notice must be delivered to or mailed and received at the principal executive offices of the Company


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no earlier than February 6, 2018 and no later than the later of (i) March 8, 2018 or (ii) twenty-five days after the Company has made a public announcement of the date of its 2018 Annual Meeting of Shareholders in accordance with the NDPTCA. If the date of the Company's 2018 Annual Meeting is changed by more than five (5) days from the anniversary date of the 2017 Annual Meeting, then, to be timely, a shareholder's notice must be received no later than the later of (i) ninety (90) days prior to the date of the 2018 Annual Meeting of Shareholders or (ii) twenty-five (25) days after the Company has made a public announcement of the date of its 2018 Annual Meeting of Shareholders in accordance with the NDPTCA. If a shareholder who wishes to make a nomination or present a proposal fails to timely notify the Company in accordance with the Company's by-laws, the proxies that management solicits for the meeting will have discretionary authority to vote on the shareholder's nomination or proposal if it is properly brought before the Annual Meeting. If a shareholder makes a timely notification, the proxies may still exercise discretionary voting authority under circumstances consistent with the proxy rules of the SEC.

If a "qualified shareholder" (as defined under the NDPTCA) provides timely notice of an intention to nominate one or more candidates for election to the board of directors at the 2018 Annual Meeting of Shareholders and otherwise complies with the applicable provisions of the NDPTCA and the Company's by-laws, the Company will include such nomination(s) in the Company's proxy materials for its 2018 annual meeting.

All shareholder nominations and proposals must satisfy any applicable requirements of the Company's by-laws, rules of the SEC and North Dakota corporate law, including the NDPTCA. The Company's board of directors may refuse to acknowledge any nomination or proposal not made in compliance with applicable laws and regulations and the Company's by-laws.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our executive officers, directors and persons who own more than 10% of our Common Stock to file initial reports of their ownership and report changes in ownership of our Common Stock with the SEC. To the best of our knowledge, based solely on a review of reports furnished to us and written representations from reporting persons, each person who was required to file such reports complied with the applicable filing requirements during 2016 , except for the Form 4 filed with the SEC on March 22, 2016 reporting the sale of common stock by Mr. Pontious on March 17, 2016.

Shareholders Sharing an Address

Only one Notice and if applicable, a single set of our proxy materials, including the proxy statement, the proxy card, our annual report and the Notice, is being delivered to multiple shareholders sharing an address, unless we have received contrary instructions from one or more of the shareholders. We will undertake to deliver promptly upon written or oral request a separate copy of the materials to a shareholder at a shared address to which a single copy of the materials was delivered. You may make a written or oral request by sending a written notification to the Secretary, American Railcar Industries, Inc., 100 Clark Street, St. Charles, Missouri 63301, stating your name, your shared address, and the address to which we should direct the additional copy of the materials, or by calling our executive office at (636) 940-6000. If multiple shareholders sharing an address have received one copy of these materials and would prefer us to mail each shareholder a separate copy of future mailings, you may send notification to or call our executive office. Additionally, if current shareholders with a shared address received multiple copies of these materials and would prefer us to mail one copy of future mailings to shareholders at the shared address, notification of that request may also be made by mail or telephone call to our executive office.

Report on Form 10-K

The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016 , as filed with the SEC, including financial statements, is included with the Annual Report made available to each shareholder in accordance with the instructions provided in the Notice mailed to each shareholder. Shareholders may obtain without charge a copy of the Form 10-K, excluding certain exhibits, by writing to the Secretary, American Railcar Industries, Inc., 100 Clark Street, St. Charles, Missouri 63301.

Incorporation by Reference

To the extent that this proxy statement has been or will be specifically incorporated by reference into any filing by the Company under the Securities Act or the Exchange Act, the section of the proxy statement entitled "Audit Committee Report" shall not be deemed to be so incorporated, unless specifically otherwise provided in any such filing.

Other Business

Management knows of no other matters that will be presented for action at the Annual Meeting. However, the enclosed proxy gives discretionary authority to the persons named in the proxy in the event that any other matters should be properly presented


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to the meeting.

It is important that proxies be received promptly. Therefore, shareholders are urged, regardless of the number of shares owned, to promptly vote in accordance with the instructions provided in the Notice.



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