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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
SABRE HOLDINGS CORPORATION
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(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction
applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
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(1) Amount Previously Paid:
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(4) Date Filed:
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SABRE HOLDINGS CORPORATION
P.O. BOX 619615, DALLAS/FORT WORTH INTERNATIONAL AIRPORT, TX 75261-9615
April 17, 2000
TO OUR STOCKHOLDERS,
You are cordially invited to attend the annual meeting of stockholders of
Sabre Holdings Corporation, which will be held in the Trinity Ballroom at the
Dallas/Fort Worth Airport Marriott South, 4151 Centreport Drive, Fort Worth,
Texas 76155, on Wednesday, May 17, 2000, at 1:00 P.M., Central Daylight Saving
Time. An Official Notice of the Meeting, Proxy Statement and form of proxy are
enclosed with this letter.
We hope that those of you who plan to attend the annual meeting will join us
beforehand for refreshments. If you cannot be present, you may vote over the
Internet, as well as by telephone or by mailing a traditional proxy card. Voting
over the Internet, by telephone or by written proxy will ensure your
representation at the annual meeting if you choose not to attend in person.
Please review the instructions on the proxy card or the information forwarded by
your bank, broker or other holder of record concerning each of these voting
options. If you plan to attend the annual meeting, please make certain that you
so indicate when voting and bring the admission ticket that is printed on the
last page of the proxy statement.
Sincerely,
/s/ WILLIAM J. HANNIGAN
William J. Hannigan
CHAIRMAN OF THE BOARD
<PAGE>
SABRE HOLDINGS CORPORATION
P.O. BOX 619615, DALLAS/FORT WORTH INTERNATIONAL AIRPORT, TX 75261-9615
------------------------
OFFICIAL NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------------
The annual meeting of stockholders of Sabre Holdings Corporation, will be
held in the Trinity Ballroom at the Dallas/Fort Worth Airport Marriott
South, 4151 Centreport Drive, Fort Worth, Texas 76155, on Wednesday, May 17,
2000, at 1:00 P.M., Central Daylight Saving Time, for the purpose of considering
and acting upon the following:
(1) election of a director;
(2) amendment to the Corporation's Restated Certificate of Incorporation;
(3) approval of amendments to the Employee Stock Purchase Plan;
(4) ratification of the selection of Ernst & Young LLP as independent
auditors for the year 2000;
and such other matters as may properly come before the meeting or any
adjournments thereof.
Only stockholders of record at the close of business on April 10, 2000 will
be entitled to attend or to vote at the meeting.
By Order of the Board of Directors,
/s/ JAMES F. BRASHEAR
James F. Brashear
CORPORATE SECRETARY
April 17, 2000
IF YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU MUST HAVE AN ADMISSION TICKET
(PRINTED ON THE LAST PAGE OF THE PROXY STATEMENT) OR OTHER PROOF OF SHARE
OWNERSHIP. IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE VOTE
(1) OVER THE INTERNET, (2) BY TOLL-FREE TELEPHONE NUMBER, OR (3) BY COMPLETING
THE ENCLOSED PROXY CARD AND RETURNING IT IN THE ACCOMPANYING ENVELOPE (THE
ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES). PLEASE REFER TO
THE VOTING INSTRUCTIONS INCLUDED ON YOUR PROXY CARD OR, FOR SHARES HELD IN
STREET NAME, THE VOTING INSTRUCTIONS FORWARDED BY YOUR BANK, BROKER OR NOMINEE.
<PAGE>
SABRE HOLDINGS CORPORATION
P.O. BOX 619615, DALLAS/FORT WORTH INTERNATIONAL AIRPORT, TX 75261-9615
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 17, 2000
This proxy statement and the form of proxy are being mailed to stockholders
on or around April 17, 2000, in connection with a solicitation of proxies by the
Board of Directors of Sabre Holdings Corporation (the "Corporation" or "Sabre")
for use at the annual meeting of stockholders to be held on May 17, 2000. Most
stockholders have a choice of voting over the Internet, by using a toll-free
telephone number or by completing a proxy card and mailing it in the
postage-paid envelope provided. Check your proxy card or the information
forwarded by your bank, broker or other holder of record to determine which
options are available to you. Please be aware that if you vote over the
Internet, you may incur costs such as telecommunication and Internet access
charges for which you will be responsible. The Internet voting facilities for
stockholders of record will close at 5:00 P.M. Central Daylight Saving Time on
the evening before the annual meeting. The telephone voting facilities for
stockholders of record will be available until the annual meeting begins at
1:00 P.M. Central Daylight Saving Time. The Internet and telephone voting
procedures are designed to authenticate stockholders by use of a control number
and to allow stockholders to confirm that their instructions have been properly
recorded.
If the enclosed form of proxy is signed and returned, it will be voted as
specified in the proxy, or if no vote is specified, it will be voted FOR each of
the matters described in this proxy statement. You may revoke your proxy at any
time before it is exercised by writing to the Corporate Secretary, by timely
delivery of a properly executed, later-dated proxy (including an Internet or
telephone vote) or by voting by ballot at the annual meeting. The method by
which you vote will not limit your right to vote at the annual meeting if you
later decide to attend in person. If your shares are held in the name of a bank,
broker or other holder of record, you must obtain a proxy, executed in your
favor, from the holder of record, to be able to vote at the annual meeting.
The Corporation will bear the entire cost of this solicitation, including
the preparation, assembly, printing and mailing of this proxy statement, the
proxy and any additional information furnished to stockholders. In addition to
using the mails, proxies may be solicited by directors, officers and regular
employees of the Corporation or its subsidiaries, in person or by telephone. No
additional compensation will be paid to directors, officers or other regular
employees for their services. The Corporation will also request banks, brokers
and nominees who hold common stock
<PAGE>
in their names to forward proxy material at the Corporation's expense to the
beneficial owners of such stock. The Corporation has retained D.F. King &
Co., Inc., a firm of professional proxy solicitors, to aid in the solicitation
at an estimated fee of $11,000 plus reimbursement of normal expenses.
OUTSTANDING STOCK AND VOTING RIGHTS
The holders of record of the Corporation's common stock at the close of
business on April 10, 2000 will be entitled to vote at the meeting. On that
date, the Corporation had outstanding [ ] shares of Class A Common
Stock. Each holder of Class A Common Stock will be entitled to one vote in
person or by proxy for each share of Class A Common Stock held.
Proposal 1. Directors of the Corporation who are standing for election are
elected by a plurality of the affirmative votes cast at the annual meeting.
Abstentions from voting and broker non-votes will have no effect on the outcome
of such vote, because elections of directors are determined on the basis of
votes cast, and abstentions and broker non-votes are not counted as votes cast.
Proposal 2. Approval of the amendments to the Corporation's Restated
Certificate of Incorporation requires the affirmative vote of a majority of the
voting power of the outstanding shares entitled to vote at the meeting.
Abstentions and broker non-votes will have the same effect as votes against the
proposal.
Proposal 3. Approval of the amendments to the Employee Stock Purchase Plan
requires the affirmative vote of a majority of the voting power of the
outstanding shares present in person or represented by proxy and entitled to
vote at the annual meeting. Abstentions will be counted as votes against the
proposal, while broker non-votes will not be counted in determining whether the
proposal has been approved.
Proposal 4. Ratification of the appointment of auditors requires the
affirmative vote of the holders of a majority of the voting power of the shares
present in person or represented by proxy and entitled to vote at the annual
meeting. Abstentions will be counted as votes against the proposal, while broker
non-votes will not be counted in determining whether the proposal has been
approved.
DIRECTOR NOMINATIONS AND STOCKHOLDER PROPOSALS
The Compensation/Nominating Committee of the Board of Directors will
consider recommendations by stockholders for nominees for election as directors.
Such recommendations must be submitted in writing to the Corporate Secretary of
the Corporation together with (i) the name and address (as they appear on the
Corporation's books) and stockholdings of the
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stockholder submitting the nomination and the beneficial owner, if any, on whose
behalf the nomination is made and (ii) all information relating to such nominee
that is required to be disclosed in solicitations of proxies for election of
directors or is otherwise required pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
Rule 14a-11 thereunder (including such person's written consent to being named
in the proxy statement as a nominee and to serving as a director, if elected).
Under the Corporation's Bylaws, nominations for director generally may be made
only by the Board of Directors, the Chairman of the Board, or a stockholder
entitled to vote who delivers notice to the Corporation (containing the
information specified above) not less than 90 days nor more than 120 days prior
to the first anniversary of the preceding year's annual meeting. For the
Corporation's meeting in the year 2001, the Corporation must receive this notice
on or after January 16, 2001, and on or before February 15, 2001.
The Corporation's Bylaws also provide that no business may be brought before
an annual meeting except as specified in the notice of the meeting or as
otherwise brought before the meeting by the Board of Directors, the Chairman of
the Board or by a stockholder entitled to vote who has delivered notice to the
Corporation (containing certain information specified in the Bylaws) within the
time limits described above for delivering notice of a nomination for the
election of a director. These requirements apply to any matter that a
stockholder wishes to raise at an annual meeting other than pursuant to the
procedures set forth in Rule 14a-8 under the Exchange Act. Pursuant to
Rule 14a-8, any stockholder proposal must be received by the Corporation no
later than December 18, 2000 to be included in the 2001 proxy statement.
A copy of the full text of the Bylaw provisions discussed above may be
obtained by writing to the Corporate Secretary of the Corporation, P.O. Box
619615, Dallas/Fort Worth International Airport, TX 75261-9615.
PROPOSAL 1--ELECTION OF A DIRECTOR
There are currently seven directors on the Corporation's Board of Directors.
The Board of Directors is divided into three classes of directors with staggered
terms. Directors are elected to terms which expire on the annual meeting date
three years following the annual meeting at which they are elected.
Mr. Carty, Mr. Arpey, and Mrs. McNamara resigned from the Board of Directors
on March 15, 2000. The terms of two directors, Mr. Brennan and Mr. Kelly, will
expire at the annual meeting in 2000. Mr. Kelly has stated his intention to not
seek re-election and to resign as a director on May 17, 2000. It is proposed
that Mr. Brennan be re-elected at the annual meeting for a three-year term that
will expire at the annual meeting in 2003. In addition, the Corporation, in
3
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conjunction with the Board's Compensation/Nominating Committee, is actively
searching for suitable candidates to replace Mr. Carty, Mr. Arpey,
Mrs. McNamara and Mr. Kelly, as directors.
Unless otherwise indicated, all proxies that authorize the proxy holder to
vote for the election of directors will be voted FOR the election of the nominee
listed below. If the nominee becomes unavailable for election as a result of
unforeseen circumstances, it is the intention of the proxy holder to vote for
the election of such substitute nominee, if any, as the Board of Directors may
propose. As of the date of this proxy statement, the Board of Directors is not
aware that the nominee is unable or will decline to serve as director.
NOMINEE FOR ELECTION AS A DIRECTOR
The nominee for election as a director has furnished to the Corporation the
following information with respect to his principal occupation or employment and
principal business directorships.
BUSINESS AFFILIATIONS
EDWARD A. BRENNAN, Retired Chairman, President and Chief Executive Officer,
Sears, Roebuck and Co., Chicago, Illinois; merchandising. He is also a director
of The Allstate Corporation; AMR Corporation ("AMR"); American Airlines, Inc.;
Dean Foods Company; Morgan Stanley Dean Witter & Co.; Minnesota Mining and
Manufacturing Company; and Unicom Corporation.
Mr. Brennan is 66. He became a director in November 1996, and was re-elected
to a term expiring at the annual meeting in 2000. He is Chairman of the
Compensation/Nominating Committee and Special Committee on Performance-Based
Compensation.
VOTE REQUIRED FOR APPROVAL
A plurality of the votes cast is necessary for the election of a director.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEE LISTED
ABOVE.
CONTINUING DIRECTORS
PAUL C. ELY, JR., President of Santa Cruz Yachts, Santa Cruz, California;
yacht manufacturing; former General Partner of Alpha Partners, Menlo Park,
California; venture capital; former Chief Executive Officer of Convergent Inc;
computer workstations; former Executive Vice President and director,
Hewlett-Packard Company; computers. He is also a director of Parker Hannifin
Corporation, Tektronix, Inc. and Travelocity.com Inc.
4
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Mr. Ely is 68. He became a director in January 1997, and was re-elected to a
term expiring at the annual meeting in 2001. He is a member of the Audit
Committee, Compensation/Nominating Committee, and Special Committee on
Performance-Based Compensation, and was a member of the Special Committee on the
Spin-Off.
GLENN W. MARSCHEL, JR., Chief Executive Officer and Co-Chairman of the Board
of Faroudja, Inc., Sunnyvale, California; video processing technology; Chairman
of the Board of Additech, Inc., Houston, Texas; petrochemicals; former President
and CEO of Paging Network, Inc.; telecommunications; former Vice Chairman of
First Financial Management Corporation; credit card processing; former Group
President of Automatic Data Processing; information systems. He is also a
director of Travelocity.com Inc.
Mr. Marschel is 53. He became a director in November 1996, and was
re-elected to a term expiring at the annual meeting in 2001. He is a member of
the Audit Committee, Compensation/ Nominating Committee, and Special Committee
on Performance-Based Compensation, and was a member of the Special Committee on
the Spin-Off.
WILLIAM J. HANNIGAN, Chairman, President and Chief Executive Officer of
Sabre Holdings Corporation, Fort Worth, Texas; information systems; formerly
President of SBC Global Markets; telecommunications. He is also a director and
Chairman of the Board of Travelocity.com Inc.
Mr. Hannigan is 40. He became a director in December 1999, with a term
expiring at the annual meeting in 2002. He is a member of the Executive
Committee.
BOB L. MARTIN, Retired President and Chief Executive Officer, Wal-Mart
International, Inc.; retailing.
Mr. Martin is 51. He became a director in January 1997, and was re-elected
to a term expiring at the annual meeting in 2002. He is a member of the Audit
Committee, Compensation/ Nominating Committee, and Special Committee on
Performance-Based Compensation and was Chairman of the Special Committee on the
Spin-Off.
RICHARD L. THOMAS, Retired Chairman of First Chicago NBD Corporation;
financial services. He is also a director of IMC Global, Inc.; PMI Group, Inc.;
Sara Lee Corporation and Unicom Corporation.
Mr. Thomas is 69. He became a director in November 1996, and was re-elected
to a term expiring at the annual meeting in 2002. He is Chairman of the Audit
Committee and a member of the Compensation/Nominating Committee, and Special
Committee on Performance-Based Compensation, and was a member of the Special
Committee on the Spin-Off.
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BOARD COMMITTEES
The Corporation has a standing Audit Committee, Compensation/Nominating
Committee, Special Committee on Performance-Based Compensation and Executive
Committee that perform the functions described below. The Board of Directors met
eleven times in 1999. All of the Corporation's directors attended at least 75%
of the meetings of the Board of Directors and committees held during the periods
in which they served on the Board of Directors or such committees.
The Audit Committee, which is composed entirely of directors who are not
employees or officers of the Corporation, met three times during 1999 with the
Corporation's independent auditors, representatives of management, and the
internal audit staff. The Audit Committee during 1999 consisted of Messrs. Ely,
Marschel, Martin and Thomas. The Audit Committee recommends the selection of
independent auditors, reviews the scope and results of the annual audit, reviews
the Corporation's consolidated financial statements, reviews the scope of
non-audit services provided by the independent auditors, reviews reports of the
independent auditors, and oversees the Corporation's compliance with legal
requirements.
The Compensation/Nominating Committee, which is composed entirely of
directors who are not employees or officers of the Corporation, met nine times
during 1999. The Compensation/ Nominating Committee during 1999 consisted of
Messrs. Brennan, Ely, Kelly, Marschel, Martin and Thomas. The
Compensation/Nominating Committee makes recommendations with respect to
compensation and benefit programs for the officers and directors of the
Corporation and its subsidiaries. It also makes recommendations with respect to
assignments to committees of the Board of Directors and promotions, changes and
succession among the senior management of the Corporation and its subsidiaries,
and recommends suitable candidates for election to the Board of Directors.
The Special Committee on Performance-Based Compensation, which is composed
entirely of outside directors who are not employees or officers of the
Corporation and do not receive directly or indirectly compensation from the
Corporation other than compensation as a director, met six times during 1999.
The Special Committee on Performance-Based Compensation during 1999 consisted of
Messrs. Brennan, Ely, Marschel, Martin and Thomas. The Special Committee on
Performance-Based Compensation makes recommendations with respect to
compensation and benefit programs for the officers and directors of the
Corporation and its subsidiaries.
The Executive Committee met three times during 1999. The Executive Committee
during 1999 consisted of Messrs. Arpey, Carty, Durham, Hannigan and Kelly. The
Executive Committee may exercise all the power and authority of the Board in the
management of the business and
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affairs of the Corporation, with the exception of such powers and authority as
are specifically reserved to the Board of Directors.
In 1999, the Board of Directors created a Special Committee on the Spin-Off,
which was composed entirely of directors who were not employees or officers of
the Corporation to represent the interests of the stockholders of the
Corporation, particularly the holders of the Corporation's Class A Common Stock,
in connection with the Spin-Off as defined on page 30. The Special Committee on
the Spin-Off during 1999 consisted of Messrs. Ely, Marschel, Martin and Thomas.
The Special Committee on the Spin-Off met seven times during 1999. This
committee completed its work in March 2000 following the Spin-Off.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation/Nominating Committee is a current or former
employee or officer of the Corporation or any of its affiliates nor has any
interlocking relationship with any other corporation that requires specific
disclosure under this heading.
COMPENSATION OF DIRECTORS
Outside directors of the Corporation receive a semi-annual retainer of
$12,500 for service on the Board of Directors and $1,000 for each day of Board
or Committee meetings attended. Directors may defer payment of all or any part
of these fees pursuant to two deferral plans. Under the first of these deferral
plans, the Corporation will pay interest on the amount deferred using the
six-month London Interbank Offered Rate ("LIBOR") plus 1%. Under the second
deferral plan, compensation deferred during any calendar month is converted into
stock equivalent units by dividing the total amount of deferred compensation by
the fair market value of the Corporation's Class A Common Stock for such month.
At the end of the deferral period, the Corporation will pay to the director an
amount in cash equal to the number of accumulated stock equivalent units
multiplied by the fair market value of the Corporation's Class A Common Stock
for the month in which the deferral period terminates.
On the first business day after the annual meeting of stockholders, each
outside director will receive options for 4,000 shares of the Corporation's
Class A Common Stock under the Amended and Restated 1996 Long-Term Incentive
Plan (the "Amended and Restated 1996 LTIP"). In addition, each new outside
director, when elected to the Board of Directors, will receive a one-time award
of options for 10,000 shares of the Corporation's Class A Common Stock under the
Amended and Restated 1996 LTIP. Options will have an exercise price equal to the
fair market value of the Corporation's Class A Common Stock on the date of
grant, will generally vest one year from grant date and will have a ten-year
term.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth the compensation for the
past three years paid to: (i) the individuals who, as of December 31, 1999, were
the four most highly compensated executive officers of the Corporation (other
than the Chief Executive Officer) whose aggregate current renumeration exceeded
$100,000; and (ii) those individuals who served as Chief Executive Officer of
the Corporation during the 1999 fiscal year, (collectively, the "Named Executive
Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
--------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION -------------------------- ----------
------------------------------ SECURITIES
NAME AND OTHER RESTRICTED UNDERLYING
PRINCIPAL ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
POSITION YEAR SALARY BONUS(1) COMPENSATION(2) AWARDS(3) SARS(4) PAYOUTS(5) COMPENSATIONS(6)
- -------- -------- -------- -------- ---------------- ---------- ------------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
W.J. Hannigan 1999 $ 30,645 $ 0 $ 0 $8,331,125 350,000 $ 0 $ 0
1998 0 0 0 0 0 0 0
1997 0 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
M.J. Durham 1999 449,651 282,965 159,460 0 65,000 782,297 889,400
1998 543,333 460,697 0 0 75,000 664,498 6,946
1997 459,325 255,000 0 0 0 636,199 6,946
- ------------------------------------------------------------------------------------------------------------------------------
J.M. Jackson 1999 313,750 160,000 0 0 125,000 527,578 3,572
1998 115,323 60,000 0 321,250 136,000 679,978 3,572
1997 0 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
B.J. Boston 1999 312,500 160,000 0 0 145,000 307,453 31,837
1998 263,000 130,000 0 0 30,000 349,389 26,116
1997 238,125 80,000 0 0 0 250,042 24,973
- ------------------------------------------------------------------------------------------------------------------------------
T.B. Jones 1999 308,750 160,000 0 0 317,600 349,688 9,574
1998 293,708 140,000 0 0 17,600 326,398 10,011
1997 276,175 80,000 0 0 1,750 215,886 8,920
- ------------------------------------------------------------------------------------------------------------------------------
E.J. Speck 1999 290,000 150,000 0 0 142,000 315,516 8,214
1998 236,667 120,000 0 0 26,000 78,767 8,214
1997 185,870 60,000 0 0 57,420 160,596 24,318
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
W.J. Hannigan = William J. Hannigan, President and Chief Executive Officer
(Effective December 13, 1999)
M.J. Durham = Michael J. Durham, President and Chief Executive Officer
(Effective October 12, 1999, he ceased to be the President
and Chief Executive Officer)
J.M. Jackson = Jeffery M. Jackson, Executive Vice President, Chief
Financial Officer & Treasurer
B.J. Boston = Bradford J. Boston, Executive Vice President-Product
Development & Delivery
T.B. Jones = Terrell B. Jones, Executive Vice President and President
Travelocity.com Inc.
E.J. Speck = Eric J. Speck, Executive Vice President-Marketing & Sales
</TABLE>
- ------------------------------
(1) The amounts shown for 1999 represent payments made in 2000 pursuant to the
Corporation's Variable Compensation Plan for 1999 services. The amounts
shown for 1998 represent payments made in 1999 pursuant to the Corporation's
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Variable Compensation Plan for 1998 services. The amounts shown for 1997
represent payments made in 1998 pursuant to the Corporation's Variable
Compensation Plan for 1997 services (see discussion on page 19 of this proxy
statement).
(2) The other annual compensation shown for Mr. Durham for 1999 includes the
following costs incurred by the Corporation; weighted average cost for
personal travel--$15,345; country club memberships--$119,707; financial
planning--$7,150; automobile lease--$12,371; stock exercise fees--$4,887.
(3) The value of the 1999 restricted stock award to Mr. Hannigan is based on an
average market price of $50.1875 for the Corporation's Class A Common Stock
on the New York Stock Exchange ("NYSE") on the date of grant (December 13,
1999). The value of the 1998 restricted stock award to Mr. Jackson is based
on an average market price of $40.1563 for the Corporation's Class A Common
Stock on the NYSE on the date of grant (August 13, 1998). The following
table sets forth certain information concerning restricted stock awards held
on December 31, 1999:
RESTRICTED STOCK; TOTAL SHARES AND VALUE
<TABLE>
<CAPTION>
TOTAL NUMBER OF AGGREGATE MARKET VALUE
NAME RESTRICTED SHARES(A) OF RESTRICTED SHARES(B)
- -------------- -------------------- -----------------------
<S> <C> <C>
W.J. Hannigan 166,000 $8,600,875
M.J. Durham 0 0
J.M. Jackson 8,000 414,500
B.J. Boston 0 0
T.B. Jones 0 0
E.J. Speck 0 0
- --------------------------------------------------------------
</TABLE>
(A) Restricted shares are shares of the Corporation's Class A Common Stock
that are subject to restrictions on disposition until vesting and that
are subject to forfeiture if the employee leaves the Corporation
("Restricted Shares"). Mr. Jackson holds Restricted Shares that vest in
2001 and Mr. Hannigan holds Restricted Shares that vest in 2000 through
2004. Of Mr. Hannigan's 166,000 Restricted Shares, restrictions lapse on
26,400 shares one year from grant, 26,400 shares two years from grant and
13,200 shares three years from grant. With respect to Mr. Hannigan's
remaining 100,000 Restricted Shares, restrictions lapse on such 100,000
shares 20% each year beginning one year from grant.
(B) Based on an average market price of $51.8125 for the Corporation's Class
A Common Stock on the NYSE on December 31, 1999.
(4) The 1999 amounts represent options granted in 1999 for shares of the
Corporation's Class A Common Stock except for Mr. Jones, who received shares
of the Corporation's Class A Common Stock and shares of Travelocity.com Inc.
common stock. See page 27 for further discussion of Travelocity.com Inc. No
option grants were received by Messrs. Durham and Boston in 1997. Mr. Jones
was awarded an option grant during 1997, pursuant to his employment
agreement. The amount shown for Mr. Speck for 1997 includes an annual option
grant and an option grant received upon the cancellation of the phantom
stock appreciation rights.
(5) The following information is concerning LTIP payouts: payments for 1997
represent payments made in 1998 under the Sabre 1995-1997 performance share
program for AMR performance shares that were granted in 1995 (except for
Messrs. Boston and Speck who received a grant in 1996), and vested over a
three-year performance period, which were exchanged for Performance Shares.
Payments for 1998 represent payments made in 1999 under the Sabre 1996-1998
performance share program for Sabre Performance Shares that were granted in
1996. Payments for 1999 represent payments made in 2000 under the Sabre
1997-1999 performance share program for Sabre Performance Shares that were
granted in 1997.
(6) The information shown for 1999 includes: the above-market portion of
interest (defined as a rate of interest exceeding 120% of the applicable
federal long-term rate, with compounding) on deferred compensation that was
credited but not paid in the current fiscal year ("Interest Differential");
employer contributions to a plan under Section 401(k) of the Internal
Revenue Code of 1986 (the "Code") that is sponsored by the Corporation
("Contributions to Defined Contribution Plan"); employer contributions to a
Supplemental Executive Retirement Plan that provides pension benefits to
officers who earned compensation in excess of qualified plan limits
(currently $160,000) ("Contributions to SERP"); the full amount of premiums
paid under a split-dollar life insurance arrangement whereby the Corporation
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will recover certain premiums paid ("Insurance Premiums"). The Named
Executive Officers were credited with the following: Interest Differential:
Mr. Jones--$3,496; Contributions to Defined Contribution Plan:
Mr. Boston--$9,200; Contributions to SERP: Mr. Boston--$16,244; Insurance
Premiums: Mr. Jackson--$3,572, Mr. Boston--$6,393, Mr. Jones--$6,078,
Mr. Speck--$8,214,; Mr. Durham received a severance payment of $889,400.
STOCK OPTIONS GRANTED
The following table sets forth information concerning stock options granted
during 1999 by the Corporation to the Named Executive Officers. The hypothetical
present values of stock options granted in 1999 are calculated under a modified
Black-Scholes model, a mathematical formula used to value options. The actual
amount, if any, realized upon the exercise of stock options will depend upon the
amount by which the market price of the Corporation's Class A Common Stock on
the date of exercise exceeds the exercise price. The actual amount realized may
be higher or lower than the hypothetical present values of stock options
presented in this table.
IF THE HYPOTHETICAL PRESENT VALUES PRESENTED IN THIS TABLE WERE ACTUALLY
REALIZED UPON EXERCISE OF THE OPTIONS, THE CORRESPONDING INCREASE IN TOTAL
STOCKHOLDER VALUE WOULD BE OVER $1 BILLION.
<TABLE>
OPTION/SARS GRANTS IN LAST FISCAL YEAR
- --------------------------------------------------------------------------------
INDIVIDUAL GRANTS
- --------------------------------------------------------------------------------
% OF TOTAL
OPTIONS/SARS EXERCISE
NUMBER OF GRANTED TO OR
SECURITIES EMPLOYEES BASE
UNDERLYING IN PRICE GRANT DATE
OPTIONS/SARS FISCAL PER EXPIRATION PRESENT
NAME GRANTED(1) YEAR SHARE DATE(2) VALUE(3)
- ----------------- ---------- ---------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
W.J. Hannigan 350,000 14.2 $50.1875 12/13/09 $7,304,500
M.J. Durham 65,000 2.6 46.6563 1/25/09 1,188,850
T.B. Jones 17,600 0.7 60.3125 4/26/09 424,864
300,000(4) 40.4 23.0000 10/01/09 4,339,410(5)
B.J. Boston 25,000 1.0 46.6563 1/25/09 457,250
20,000 0.8 60.3125 4/26/09 482,800
100,000 4.1 50.1875 12/13/09 2,087,000
E.J. Speck 22,000 0.9 46.6563 1/25/09 402,380
20,000 0.8 60.3125 4/26/09 482,800
100,000 4.1 50.1875 12/13/09 2,087,000
J.M. Jackson 25,000 1.0 46.6563 1/25/09 457,250
100,000 4.1 50.1875 12/13/09 2,087,000
</TABLE>
- ------------------------------
(1) The amount shown for Mr. Hannigan represents a one-time grant made in
connection with his new position as Chief Executive Officer. A portion of
the 100,000 options granted to each of Messrs. Jackson, Boston, and Speck
represent an acceleration of grants that would have otherwise been made in
2000. The amounts shown for Mr. Jones represent an annual grant of 17,600
Sabre options, pursuant to his employment agreement, and an award of 300,000
options for common stock in Travelocity.com Inc. See page 27 for further
discussion of Travelocity.com Inc.
10
<PAGE>
(2) Options have a term of ten years and have an exercise price equal to the
average market price of the Corporation's Class A Common Stock on the NYSE
on the date of grant. Twenty percent of the options become exercisable each
year over a five-year period.
(3) The modified Black-Scholes model used to calculate the hypothetical values
at date of grant considers a number of factors to estimate the option's
present value, including the volatility factor of the expected market price
of the Corporation's Class A Common Stock, the weighted average expected
life of the option, and interest rates. The assumptions used in the
valuation of the options granted on January 25, 1999, were: stock price
volatility--39%, expected life--4.5 years, interest rate--4.65%, and
dividend yield--0%. The assumptions used in the valuation of the options
granted on April 26, 1999, were: stock price volatility--39%, expected
life--4.5 years, interest rate--5.19%, and dividend yield--0%. The
assumptions used in the valuation of the options granted on December 13,
1999, were: stock price volatility--39%, expected life--4.5 years, interest
rate--6.22%, and dividend yield--0%.
(4) Represents option to purchase 300,000 shares of Travelocity.com Inc. common
stock. Twenty five percent of the options will vest on the first anniversary
of the date of grant, and the remainder will vest in equal increments over
the following 36 months until fully vested on the fourth anniversary of
grant. The options have a ten-year term.
(5) The value reflected in the table for the Travelocity.com Inc. common stock
granted to Mr. Jones is calculated using a growth model. The calculation is
based on a compounded 5% and 10% growth per year. The amount reflected is
using the compounded 5% growth rate. Using a compounded 10% growth rate, the
amount would be $10,996,530. The Securities and Exchange Commission ("SEC")
mandates the 5% and 10% assumed annual rates of compounded stock price
appreciation.
11
<PAGE>
STOCK OPTION EXERCISES AND
DECEMBER 31, 1999 STOCK OPTION VALUE
The following table sets forth certain information concerning stock options
exercised during 1999 by the Named Executive Officers and the number and value
of unexercised in-the-money options for the Corporation's Class A Common Stock
at December 31, 1999. The actual amount, if any, realized upon exercise of stock
options will depend upon the amount by which the market price of the
Corporation's Class A Common Stock on the date of exercise exceeds the exercise
price. The actual value realized upon the exercise of unexercised in-the-money
stock options (whether exercisable or unexercisable) may be higher or lower than
the values reflected in this table.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTIONS/SAR VALUE
- -------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
SHARES OPTIONS/SARS AT FY-END AT FY-END(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
W.J. Hannigan 0 $ 0 0 350,000 $ 0 $ 568,750
M.J. Durham 306,720 6,941,219 0 102,460 0 2,302,270
J.M. Jackson 10,400 205,999 16,800 233,800 195,825 1,559,599
B.J. Boston 25,500 467,694 9,050 188,500 235,691 1,364,287
T.B. Jones 15,210 587,976 78,000 382,240 1,956,111 9,993,716(2)
E.J. Speck 1,900 79,788 38,140 182,530 1,029,983 1,301,203
</TABLE>
- ------------------------------
(1) Based on an average market price of $51.8125 for the Corporation's Class A
Common Stock on the NYSE on December 31, 1999.
(2) Includes options to purchase 300,000 shares of Travelocity.com Inc. common
stock with a fiscal year-end value of $8,512,500. The value of the
unexercised in-the-money options to purchase shares of Travelocity.com Inc.
common stock was based on the closing price of Preview Travel, Inc. common
stock on December 31, 1999.
12
<PAGE>
LONG-TERM INCENTIVE PLAN AWARDS
Under the Corporation's Amended and Restated 1996 Long-Term Incentive Plan
("LTIP"), deferred shares of the Corporation's Class A Common Stock
("Performance Shares") may be awarded to officers and other key employees,
including the Named Executive Officers. Further information concerning
Performance Shares can be found on page 21 of this proxy statement.
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLAN-AWARDS IN LAST FISCAL YEAR
- ----------------------------------------------------------------------------------------
PERFORMANCE OR ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF OTHER PERIOD NON-STOCK PRICE BASED PLANS
SHARES, UNITS OR UNTIL MATURATION -------------------------------
NAME OTHER RIGHTS(1) OR PAYOUT THRESHOLD TARGET MAXIMUM
- ----------------- ---------------- ---------------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
W.J. Hannigan 0 N/A 0 0 0
M.J. Durham 11,000 12/31/01 0 11,000 22,000
J.M. Jackson 3,200 12/31/01 0 3,200 6,400
B.J. Boston 3,200 12/31/01 0 3,200 6,400
T.B. Jones 6,960 12/31/01 0 6,960 13,920
E.J. Speck 2,900 12/31/01 0 2,900 5,800
</TABLE>
- ------------------------------
(1) All awards were grants of Performance Shares.
13
<PAGE>
PENSION PLAN
Effective January 1, 1997, the Corporation established The SABRE Group
Retirement Plan (the "SGRP"), a defined contribution plan qualified under the
Code. Upon establishment, substantially all employees of the Corporation under
the age of 40 at December 31, 1996 began participating in the SGRP.
The Corporation contributes 2.75% of each participating employee's base pay
to the SGRP. Employees fully vest in the Corporation's contributions after three
years of service, including any prior service with AMR affiliates. In addition,
the Corporation matches 50 cents of each dollar contributed by participating
employees, limited to the first 6% of the employee's base pay contribution,
subject to IRS limitations. Employees are immediately vested in their own
contributions and the Corporation's matching contributions.
The obligation for benefits previously earned by employees under the age of
40 under the tax-qualified defined benefit pension plan (the "American Plan") of
American Airlines, Inc. ("American") are now the responsibility of the Legacy
Pension Plan (the "LPP"), a defined benefit plan sponsored by the Corporation
which offers benefits substantially similar to those offered by the American
Plan. These benefits are based on the credited years of service earned as of
December 31, 1996 or date of transfer to the Corporation from American or its
affiliates, if later. However, these employees will continue to earn years of
service for purposes of determining vesting and early retirement eligibility
under the LPP based on future service to the Corporation. Additionally, future
increases in compensation levels will be considered in the calculation of
retirement benefits to be paid from the LPP to these employees upon their
retirement.
Employees age 40 or over as of December 31, 1996, who were participants in
the American Plan at that date, were given the option of participating in the
SGRP or the LPP. Benefits provided by the LPP to retirees of the Corporation are
based on years of credited service and the employee's base pay for the highest
consecutive five years of the ten years preceding retirement. With the exception
noted below, the obligation for benefits previously earned by these employees
under the American Plan is now the responsibility of the LPP.
Certain employees of the Corporation meeting specified criteria have elected
to remain in the American Plan for service through December 31, 1996, and are in
the LPP for service and increases in compensation levels after that date. The
obligation for benefits earned by these employees as of December 31, 1996 under
the American Plan remained with the American Plan. Mr. Jones elected to remain
in the American Plan for service through December 31, 1996.
14
<PAGE>
Officers and certain employees of the Corporation are eligible for
additional retirement benefits, to be paid by the Corporation under the
Supplemental Executive Retirement Plan (the "SERP") as an operating expense. The
SERP provides pension benefits (calculated upon the basis of final average base
salary, incentive compensation payments and performance returns) to which
officers and certain employees of the Corporation would be entitled, but for the
limit of $130,000 on the maximum annual benefit payable under the Employee
Retirement Income Security Act of 1974 ("ERISA") and the Code, and the limit on
the maximum amount of compensation which may be taken into account under the
Corporation's retirement program ($160,000 for 1999).
The following table shows typical annual benefits payable under the LPP and
the SERP, based upon retirement in 1999 at age 65, to persons in specified
remuneration and credited years-of-service classifications. Annual retirement
benefits set forth below are subject to reduction for Social Security benefits
and benefits under other qualified and non-qualified plans provided by the
Corporation and American.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
ANNUAL RETIREMENT BENEFITS
FINAL ----------------------------------------------------
AVERAGE CREDITED YEARS OF SERVICE
EARNINGS 15 20 25 30 35
- --------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 250,000 $ 75,000 $100,000 $125,000 $150,000 $175,000
300,000 90,000 120,000 150,000 180,000 210,000
400,000 120,000 160,000 200,000 240,000 280,000
500,000 150,000 200,000 250,000 300,000 350,000
600,000 180,000 240,000 300,000 360,000 420,000
700,000 210,000 280,000 350,000 420,000 490,000
800,000 240,000 320,000 400,000 480,000 560,000
900,000 270,000 360,000 450,000 540,000 630,000
1,000,000 300,000 400,000 500,000 600,000 700,000
1,100,000 330,000 440,000 550,000 660,000 770,000
</TABLE>
As of December 31, 1999, the Named Executive Officers had the following
credited years of service: Mr. Hannigan--0; Mr. Jackson--14.5; Mr. Boston--2.6;
Mr. Jones--20.7; Mr. Speck--18.5; Benefits are shown in the table using a
straight-life annuity basis. Effective October 12, 1999, Mr. Durham ceased to be
an officer or director of the Corporation. As of October 12, 1999, Mr. Durham
had 19.3 years of credited service. Pursuant to his separation agreement,
Mr. Durham will receive 20.0 years of credited service.
15
<PAGE>
EXECUTIVE TERMINATION BENEFITS AGREEMENTS/
EMPLOYMENT AGREEMENTS
The Corporation has executive termination benefits agreements ("Agreements")
with its officers. The benefits provided by the Agreements are triggered by the
termination of an officer: (i) within two years following a change in control of
the Corporation if the Corporation terminates the officer or if the officer
terminates his or her employment with "good reason"; (ii) within a 30 day period
immediately following the first anniversary of a change in control if the
officer terminates his or her employment for any or no reason; or (iii) within
six months prior to a change in control of the Corporation. If the officer's
employment is terminated for cause or as a consequence of death, disability, or
retirement, benefits under the Agreement are not triggered.
A change in control of the Corporation occurs: (i) if a person other than
the Corporation or a subsidiary acquires 15% or more of the combined voting
power of the Corporation's then outstanding securities; (ii) if the individuals
who constitute the Board of Directors cease for any reason to constitute at
least a majority of the Board of Directors, unless those individuals becoming
new directors are approved by a vote of at least a majority of the incumbent
Board of Directors; (iii) upon the consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Corporation or the acquisition of assets of another corporation;
or (iv) approval by the stockholders of the Corporation of a complete
liquidation or dissolution of the Corporation.
The Agreements provide that upon such termination, the officer will receive,
in a lump sum payment: (i) three times the greater of: (A) the officer's annual
base salary at the termination date or (B) the officer's annual base salary
immediately prior to the change in control, plus; (ii) three times the greater
of: (x) the median annual bonus awarded to the executive under the LTIP or any
other bonus plan or (y) 50% of the highest median target bonus rate applicable
to the executive for any period during such prior three-year period, multiplied
by the annual applicable base salary determined under (i) above, and certain
other miscellaneous benefits. In addition, upon a change in control, the vesting
and exercisability of stock awards will be accelerated (for example, deferred
and restricted stock will immediately vest, and all stock options will become
immediately exercisable). Finally, the individual will be reimbursed for excise
taxes, if any, paid pursuant to Section 280G of the Code (or its successor
provision) and for federal income tax paid on such excise tax reimbursement.
Mr. Durham served as CEO through October 11, 1999. He resigned from his
positions as President and CEO of Sabre Holdings Corporation, as a director of
Sabre Holdings Corporation, as an officer and director of each subsidiary of
Sabre Holdings Corporation and of each other
16
<PAGE>
company or entity for which he had acted as an officer or director representing
the interests of Sabre. As part of his separation agreement, Mr. Durham received
a severance payment equal to $889,400 (which represents one year base salary
plus bonus) and continued vesting on stock options through October 11, 2000. Any
performance shares held by Mr. Durham vest on a pro rata basis through
October 11, 2000 and will be paid in accordance with their terms. Mr. Durham was
fully vested in his pension benefit, is eligible to receive retiree medical upon
retirement and is entitled to receive travel privileges on American Airlines and
American Eagle upon retirement. Mr. Durham will also be entitled to receive
other benefits through December 31, 2000, including up to $40,000 in
outplacement services and up to $5,000 for financial planning expenses.
The Corporation had an executive termination agreement with Mr. Durham. This
Agreement provided that Mr. Durham would be employed with the Corporation for a
term of three years beginning October 11, 1996 (the date of the Corporation's
IPO). If the Corporation were to terminate Mr. Durham's employment during the
term of the Agreement without cause, Mr. Durham would receive a severance
payment equal to the greater of (i) one year's salary and target incentive
compensation, or (ii) the total amount of salary and target incentive
compensation remaining for the term of the Agreement, and all outstanding stock
awards would continue vesting through the greater of one year or the remainder
of the term of the Agreement.
Per Mr. Hannigan's letter of employment, if the Corporation terminates his
employment not for cause, Mr. Hannigan would receive a termination payment equal
to two times the sum of his base salary plus target incentive compensation. In
addition, all outstanding stock options that would have otherwise vested within
one year of the termination date will become immediately vested on the
termination date and the restrictions on the 66,000 restricted shares granted to
Mr. Hannigan in December 1999 will immediately lapse.
The Corporation has an agreement with Mr. Jones. Mr. Jones' agreement
provides that the Corporation will employ him as an officer until April 18,
2000, subject to extension by the Corporation to no later than April 18, 2004.
Pursuant to the agreement, the Corporation reserves the right to remove
Mr. Jones as an officer and to retain him as an employee for consulting services
during the remainder of the term of the applicable agreement. Such officer's
base salary as a consultant would be the rate in effect at the time of his
removal as an officer, and such salary would continue for the remainder of the
term of the applicable agreement. Pursuant to the agreement, Mr. Jones is
entitled to receive a specified amount of incentive compensation under the LTIP,
along with other specified benefits customarily provided to officers of the
Corporation. Effective March 8, 2000, Mr. Jones ceased to be an Executive Vice
President of the Corporation and became President and Chief Executive Officer of
Travelocity.com Inc.
17
<PAGE>
COMPENSATION/NOMINATING COMMITTEE REPORT
COMMITTEE ROLE IN OVERSEEING EXECUTIVE COMPENSATION POLICY
A primary role of the Compensation/Nominating Committee (the "Committee") is
to determine and oversee the administration of compensation for the executive
officers of the Corporation. In this capacity, the Committee is dedicated to
ensuring that the Corporation's compensation policies and practices are used
effectively to support the achievement of the Corporation's short-term and
long-term business objectives.
It is the Committee's overall goal to develop executive compensation
policies that are consistent with, and linked to, strategic business objectives
and the Corporation's values. The Committee approves the design of, assesses the
effectiveness of, and administers executive compensation programs in support of
compensation policies. The Committee also reviews and approves all salary
arrangements and other remuneration for executives, evaluates executive
performance, and considers related matters.
COMPENSATION PHILOSOPHY
The Corporation's primary business objective is to maximize stockholder
value over the long-term. The Corporation's strategy is to maintain its
leadership positions and to pursue growth in revenue and earnings by expanding
its product offerings in electronic travel distribution and technology
solutions. The Corporation's compensation policies are intended to facilitate
the achievement of its business strategy.
Compensation opportunities should enhance the Corporation's ability to
attract, retain, and encourage the development of exceptionally knowledgeable
and experienced executive officers upon whom, in large part, the successful
operation and management of the Corporation depends. An integrated total
compensation program should be structured to appropriately balance short-term
and long-term business and financial strategic goals. A significant amount of
pay for executive officers should be comprised of long-term, at-risk pay to
align executive interests with stockholder interests. Salary and annual
incentive should be sufficient to be competitive for retention purposes.
As part of its overall compensation philosophy, the Committee has determined
appropriate target levels for base salary, annual incentives, long-term
compensation, and total compensation. In general, the Committee has determined
that total compensation should be targeted at the 50th percentile of the market
but individual pay determinations will be based on individual responsibilities
and contributions. To the extent the Committee determines that individual
18
<PAGE>
compensation levels fall below the targeted levels, the Committee will adjust
these compensation levels as appropriate.
Competitive market data is provided by an independent compensation
consultant. The data provided compares the Corporation's compensation practices
to a group of comparator companies. The Corporation's market, for compensation
comparison purposes, is comprised of a group of companies who tend to have
national and international business operations and similar sales volumes, market
capitalizations, employment levels, and lines of business. The Committee reviews
and approves the selection of companies used for compensation comparison
purposes.
The companies chosen for the comparator group used for compensation purposes
generally are not the same companies which comprise the peer group index in the
Performance Graph included in this proxy statement. The Committee believes that
the Corporation's most direct competitors for executive talent are not
necessarily the same companies that would be included in a peer group
established for comparing stockholder returns.
The key elements of the Corporation's executive compensation are base
salary, annual incentives, long-term compensation, and benefits. These key
elements are addressed separately below. In determining compensation, the
Committee considers all elements of an executive officer's total compensation
package, including severance plans, insurance, and other benefits.
BASE SALARIES
The Committee regularly reviews each executive officer's base salary. Base
salaries for executive officers are initially determined by evaluating
executives' levels of responsibility, prior experience, breadth of knowledge,
internal equity issues, and external pay practices. Base salaries offer security
to executives and allow the Corporation to attract competent executive talent
and maintain a stable management team.
VARIABLE COMPENSATION PLAN
The Corporation has an annual incentive compensation plan (the "Variable
Compensation Plan") which provides that participants, including each of the
Named Executive Officers, will be eligible to receive annual cash bonus awards
only if specified financial performance goals are met by the Corporation. Annual
bonus opportunities allow the Corporation to communicate specific goals that are
of primary importance during the coming year and motivate executives to achieve
these goals.
19
<PAGE>
Each year, the Committee will establish specific goals relating to each
named executive's bonus opportunity. While target bonus payments to a
participant under the Variable Compensation Plan are based upon an individual's
job classification level at the Corporation relative to similar levels at the
comparator group, the actual amount of the award is based on a subjective
evaluation of each individual's performance. In recognition of superior
performance, the Committee may award additional amounts in excess of the funded
award as calculated.
The Committee has determined that bonus opportunities will be based on a
combination of performance measures reflecting the performance of the
Corporation and individual performance. The weightings of each of these measures
will vary depending upon each individual's position and responsibilities. For
1999, the Corporation measures were based on revenue growth and operating margin
of the Corporation.
LONG-TERM INCENTIVES
In keeping with the Corporation's desire to provide a total compensation
package which favors at-risk components of pay, long-term incentives comprise
the largest portion of a Named Executive Officer's total compensation package.
The Committee's objective is to provide executives with long-term incentive
award opportunities that are competitive with the market.
When awarding long-term incentives, the Committee considers executives'
levels of responsibility, prior experience, historical award data, various
performance criteria, and compensation practices at comparator companies.
Long-term incentives are provided pursuant to the Amended and Restated 1996
LTIP. Under the Amended and Restated 1996 LTIP, stock-based compensation (which
may include stock options, stock appreciation rights, restricted stock, deferred
stock, stock purchase rights, performance awards, and other stock-based awards)
may be granted to non-employee directors, officers, managers, and key employees
of the Corporation, its subsidiaries, and its affiliates. The purpose of equity
participation is to align the interests of the Corporation's executive officers
with the interests of the Corporation's stockholders and the Corporation's
growth in real value over the long term.
STOCK OPTIONS
Options to purchase the Corporation's Class A Common Stock are exercisable
for ten years from the date of grant, have an exercise price equal to the
average market price on the NYSE of the Corporation's Class A Common Stock on
the date of grant and generally vest in 20%
20
<PAGE>
increments over five years. This approach is designed to provide an incentive to
create stockholder value over the long-term, because the full benefit of the
stock option compensation package cannot be realized unless stock appreciation
occurs over a number of years.
The Committee determines the number of options to be granted based upon a
subjective evaluation of the executive's: (i) current performance;
(ii) retention value; and (iii) compensation relative to comparator companies.
The number of stock options awarded, if any, depends upon the executive's rating
with respect to these factors.
RESTRICTED STOCK
Restricted stock awards are grants of the Corporation's Class A Common Stock
which carry full stockholder privileges, including the right to vote and the
right to receive any declared dividends in respect of such shares. The shares
are held by the Corporation with vesting based on the satisfaction of future
service requirements. The shares are nontransferable and are subject to risk of
forfeiture. Restricted stock awards are designed to retain the services of key
executives and, except for Mr. Hannigan's restricted stock awards, generally do
not vest until a minimum of two years has passed since the date of grant. See
Compensation for the Chief Executive Officer section below for further details
regarding Mr. Hannigan's restricted stock awards.
PERFORMANCE SHARES
Under the Corporation's 1999-2001 Performance Share Program, the Corporation
may grant performance shares to key employees of the Corporation, which awards
consist of deferred shares of the Corporation's Class A Common Stock issued
pursuant to the LTIP (the "Performance Shares"). These shares are granted
contingent upon the Corporation's increase in the share price plus dividends
over the measurement period expressed as a percentage of the beginning share
price (total stockholder return or "TSR") performance relative to the TSR of S&P
500 companies over a three-year "performance period." The percentage of the
conditional shares granted which will vest ranges from 0% to 200%, based upon
the Corporation's TSR ranking relative to the S&P 500 companies over the
performance period. If the Corporation fails to achieve a certain level of TSR
relative to S&P 500 companies, no Performance Shares will be earned.
Performance share grants are based on the subjective evaluation of the
executive's: (i) current performance; (ii) retention value; and
(iii) compensation relative to comparator companies.
21
<PAGE>
BENEFITS
Benefits offered to key executives serve a different purpose than other
elements of compensation. In general, they provide a safety net of protection
against financial catastrophes that can result from illness, disability, or
death. Benefits offered to key executives are generally those offered to the
general employee population with some variation to promote tax efficiency and
replacement of benefit opportunities lost due to regulatory limits.
COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER (CEO)
THERE WERE TWO CEOS DURING 1999: MICHAEL J. DURHAM AND WILLIAM J. HANNIGAN
Mr. Durham served as CEO through October 11, 1999. He resigned from his
positions as President and CEO of Sabre Holdings Corporation, as a director of
Sabre Holdings Corporation, as an officer and director of each subsidiary of
Sabre Holdings Corporation and of each other company or entity for which he had
acted as an officer or director representing the interests of Sabre. As part of
his separation agreement, Mr. Durham received a severance payment equal to
$889,400 (which represents one year base salary plus bonus) and continued
vesting on stock options and performance shares through October 11, 2000. All
unvested options as of October 12, 2000 will be canceled and vested performance
shares will be paid out according to the terms of the agreements.
Mr. Durham's base salary was increased in February 1999 from $550,000 to
$580,000. This increase was intended to recognize (i) Mr. Durham's individual
performance and strategic contributions; (ii) the Corporation's favorable
financial results; and (iii) the amount of Mr. Durham's compensation relative to
the chief executive officers of comparator companies. In 1999, Mr. Durham
actually received base salary payments of $449,651 through October 1999 (see
Summary Compensation Table for further details).
In recognition of the Corporation's performance and Mr. Durham's
performance, the Committee awarded a 1999 Variable Compensation Plan payment to
Mr. Durham of $282,965 representing 63% of his base salary as reflected in the
Summary Compensation Table
On January 25, 1999, the Committee granted Mr. Durham options to purchase
65,000 shares of the Corporation's Class A Common Stock at an exercise price of
$46.6563, which represents the average market price on the NYSE of the
Corporation's Class A Common Stock on the date of grant. These options become
exercisable at the rate of 20% per year over a five-year period. This grant was
based on the Committee's subjective evaluation of: (i) Mr. Durham's service and
22
<PAGE>
strategic contributions; (ii) the Corporation's favorable financial results; and
(iii) the amount of Mr. Durham's compensation relative to chief executive of
comparator companies.
On March 22, 1999, the Corporation granted Mr. Durham 11,000 Performance
Shares. The grant was based on the Board's subjective evaluation of
(i) Mr. Durham's service and strategic contributions; (ii) the Corporation's
favorable financial results; and (iii) the amount of Mr. Durham's compensation
relative to chief executives of comparator companies. Mr. Durham's total
compensation was below the 50th percentile of the market for 1999.
In accordance with the terms of Mr. Durham's agreement, stock options and
performance shares received in 1999 will continue to vest through October 11,
2000. All unvested options as of October 12, 2000 will be canceled and vested
performance shares will be paid out according to the terms of the agreements.
In December 1999, Mr. Hannigan became President and CEO. The Committee
approved an annual base salary of $600,000 and a target annual bonus for 2000 of
100% of salary, guaranteed for the first year. This cash compensation was based
on the Committee's evaluation of Mr. Hannigan's potential contribution to the
Corporation as well as the amount of his compensation relative to chief
executives of comparator companies. For replacement of Mr. Hannigan's lost
compensation from his previous employer, the Corporation awarded him a cash
bonus of $530,000 and 66,000 restricted shares with restrictions lapsing on
26,400 shares one year from grant, 26,400 shares two years from grant and 13,200
shares three years from grant. As part of his agreement to join Sabre,
Mr. Hannigan also received a long-term incentive award of 350,000 stock options
vesting 20% each year beginning one year from grant date and 100,000 restricted
shares with restrictions lapsing 20% each year beginning one year from grant.
The grant was based on the Committee's evaluation of Mr. Hannigan's potential
contribution to the Corporation as well as the amount of his compensation
relative to chief executives of comparator companies.
INTERNAL REVENUE CODE 162(m) CONSIDERATIONS
Section 162(m) of the Code provides that executive compensation in excess of
$1 million will not be deductible for purposes of corporate income taxes unless
it is performance-based compensation and is paid pursuant to a plan meeting
certain requirements of the Code. To satisfy these requirements, and to preserve
objectivity, a separate committee composed of independent, non-employee
directors approves such plans. The Committee intends to continue reliance on
performance-based compensation programs. Such programs will be designed to
fulfill, in the best possible manner, future corporate business objectives. To
the extent consistent with this goal, the
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Committee currently anticipates that such programs will also be designed to
satisfy the requirements of Section 162m of the Code with respect to the
deductibility of compensation paid.
CONCLUSION
The Committee believes these executive compensation policies and programs
serve the interests of stockholders and the Corporation effectively. The various
pay vehicles offered are appropriately balanced to provide increased motivation
for executives to contribute to the Corporation's overall future successes,
thereby enhancing the value of the Corporation for the stockholders' benefit.
The Committee will continue to monitor the effectiveness of the
Corporation's total compensation program to meet the current needs of the
Corporation.
COMPENSATION/NOMINATING COMMITTEE FOR 1999
<TABLE>
<S> <C> <C>
Edward A. Brennan, Chairman Dee J. Kelly Bob L. Martin
Paul C. Ely, Jr. Glenn W. Marschel, Jr. Richard L. Thomas
</TABLE>
24
<PAGE>
CORPORATE PERFORMANCE
The following graph compares the change in the Corporation's cumulative
total stockholder return on its Class A Common Stock with the cumulative total
return on the published Standard & Poor's 500 Stock Index and the cumulative
total return on an index of peer companies calculated by the Corporation, in
each case over the period from October 11, 1996 to December 31, 1999. The
Corporation believes that although total stockholder return is an INDICATOR of
corporate performance, it is subject to the vagaries of the market.
CUMULATIVE TOTAL RETURN*
ON $100 INVESTMENT MADE IN OCTOBER 11, 1996
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SABRE PEER** S&P 500 NEW PEER***
<S> <C> <C> <C> <C>
October 11, 1996 $100.00 $100.00 $100.00 $100.00
December 31, 1996 $103.24 $86.81 $106.26 $86.77
December 31, 1997 $106.95 $93.82 $133.32 $94.15
December 31, 1998 $164.81 $117.80 $171.34 $117.40
December 31, 1999 $189.81 $149.92 $207.34 $156.90
</TABLE>
- ------------------------
* Defined as stock price appreciation plus dividends paid, assuming
reinvestment of dividends.
** The peer group is made up of publicly held companies in the electronic data
processing and/or information technology business. The list of companies
includes: American Management Systems, Inc.; Automatic Data Processing,
Inc.; Ceridian Corporation; Computer Sciences Corporation; Electronic Data
Systems, Inc.; Equifax, Inc.; First Data Corporation; Fiserv, Inc. and
Galileo International Inc.
*** The new peer group includes Amadeus Global Travel Distribution after the
initial public offering of its stock on October 19, 1999. American
Management Systems, Inc. has been excluded because the Corporation no longer
believes it represents a good comparison.
25
<PAGE>
OWNERSHIP OF SECURITIES
SECURITIES OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
As of April 10, 2000, each director and nominee for director, the executive
officers named in the Summary Compensation Table, and all directors and
executive officers, as a group, owned, or had been granted, securities or rights
equivalent to the shares of Class A Common Stock of the Corporation or common
stock of Travelocity.com Inc. indicated in the table below:
<TABLE>
<CAPTION>
SABRE CLASS A PERCENT OF TRAVELOCITY.COM PERCENT OF
NAME OF BENEFICIAL OWNER COMMON STOCK(1) CLASS INC. COMMON STOCK(2) CLASS
- ------------------------ --------------- ----------------------- -------------------- ----------
<S> <C> <C> <C> <C>
William J. Hannigan(3) 586,761 * 0 *
Edward A. Brennan(4) 30,414 * 0 *
Paul C. Ely, Jr.(4) 24,761 * 20,000 *
Dee J. Kelly(4) 28,404 * 0 *
Glenn W. Marschel, Jr.(4) 41,287 * 20,000 *
Bob L. Martin(4) 27,953 * 0 *
Richard L. Thomas(4) 45,730 * 0 *
Michael J. Durham(5) 122,644 * 0 *
Jeffery M. Jackson(6) 303,655 * 0 *
Bradford J. Boston(7) 220,010 * 0 *
Terrell B. Jones(8) 123,582 * 517,360 *
Eric J. Speck(9) 266,705 * 0 *
Directors and Executive Officers
as a group (13 persons) 1,926,605 * 557,360 *
</TABLE>
* Percentage does not exceed 1% of the total outstanding class.
- ------------------------------
(1) On February 18, 2000, Sabre paid a one time cash dividend of $675 million
($5.203031 per share). Because this was an extraordinary one-time cash
dividend, employee and director options were adjusted. Stock options were
adjusted on February 22, 2000, using the cash dividend paid of $5.203031 per
share, the close price of Sabre stock on February 18, 2000 ($43.5625)
("Option Dividend Adjustment"). Using the Option Dividend Adjustment, the
option price decreased and the number of options increased.
Target performance shares were adjusted upwards to reflect the impact of the
cash dividend paid, using the cash dividend amount per share of $5.203031,
the fair market value on February 22, 2000 (the ex-dividend date) of
$37.0937 and the number of target shares held ("Performance Share Dividend
Adjustment").
Stock Equivalent Units under the Director fee deferral plan ("SEU") were
adjusted upwards to reflect the impact of the cash dividend paid, using the
cash dividend amount per share of $5.203031, the fair market value on
February 22, 2000 (the ex-dividend date) of $37.0937 and the number of
shares held ("SEU Dividend Adjustment").
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<PAGE>
(2) On March 7, 2000, the Corporation completed the merger of
Travelocity.com Inc. ("Travelocity.com") and Preview Travel, Inc.
("Preview"), an independent publicly traded company engaged in consumer
direct travel distribution over the Internet. Under the terms of the merger
agreement, shareholders of Preview received one share of Travelocity.com for
each share of Preview held, and Preview was merged into Travelocity.com. In
connection with the merger, the Corporation contributed the existing assets
and businesses of its Travelocity.com division, including its
Travelocity.com Web site and approximately $100 million in cash to
Travelocity.com LP, a Delaware limited partnership (the "Partnership").
Immediately following the merger, Travelocity.com contributed to the
Partnership the Preview assets and businesses, including the
Previewtravel.com online travel site. As a result of the merger, the
Corporation owns an economic interest of approximately 70% in the combined
businesses, composed of a 62% direct interest in the Partnership and a 22%
interest in Travelocity.com, which holds a 38% interest in the Partnership.
Shares of Travelocity.com common stock now trade under the symbol "TVLY" on
the Nasdaq National Market System ("Nasdaq").
(3) Sabre amount includes Sabre stock options for 397,474 of the Corporation's
Class A Common Stock and 189,285 shares of Sabre restricted stock, all
granted under the Amended and Restated 1996 LTIP. The 397,474 shares of the
Corporation's Class A Common Stock will vest during the period from
December 2000 through December 2004. Restrictions lapse on 75,258 shares as
follows: 30,103 shares one year from grant; 30,103 shares two years from
grant; 15,052 shares three years from grant. Restrictions lapse on
114,027 shares at 20% per year beginning one year from grant. All amounts
reflect the Option Dividend Adjustment.
(4) Sabre amount includes 4,254, 1,046, 4,572, 5,038, and 4,515 Sabre stock
equivalent units, increased due to SEU Dividend Adjustment (which are the
economic equivalent of a share of stock) granted to Messrs. Brennan, Ely,
Marschel, Martin and Thomas, respectively, which are deferred pursuant to
the fee deferral plan (see Compensation of Directors on page 7. Sabre amount
also includes grants to each of Messrs. Brennan, Ely, Kelly, Marschel,
Martin and Thomas of Sabre stock options for 14,764 shares in 1997, 3,407
shares in 1998 and 4,543 shares in 1999, of the Corporation's Class A Common
Stock (adjusted for the Option Dividend Adjustment). For each of
Messrs. Brennan, Ely, Kelly, Marschel, Martin and Thomas, 6,586 shares of
the Corporation's Class A Common Stock is vested and currently exercisable
and 8,177 shares of the Corporation's Class A Common Stock will vest and
become exercisable in May 2000. The remaining Sabre options for each of
Messrs. Brennan, Ely, Kelly, Marschel, Martin and Thomas will vest during
the period from May 2001 through May 2003. Sabre amount also includes 3,446,
1,001, 5,690, 14,001, 201 and 18,501 shares of Sabre common stock owned by
Messrs. Brennan, Ely, Kelly, Marschel, Martin and Thomas, respectively.
(5) Sabre amount includes Sabre stock options for 99,326 shares of the
Corporation's Class A Common Stock and 21,127 shares of Sabre deferred
stock, all granted under the LTIP except for 14,764 stock options and 26,795
shares of deferred stock granted under the Amended and Restated 1996 LTIP.
All stock option amounts increased due to Option Dividend Adjustment and all
deferred shares increased due to Performance Share Dividend Adjustment.
Stock options representing 14,764 shares of common stock are vested and
currently exercisable. The remaining stock options will vest through
October 2000. The deferred shares are Sabre Performance Shares that are
scheduled to vest (subject to the attainment of specified performance
criteria) during the period 2000 through 2001. Sabre amount also includes
2,191 shares of Sabre common stock.
(6) Sabre amount includes Sabre stock options for 284,593 shares of the
Corporation's Class A Common Stock, 11,061 shares of Sabre deferred stock
and 8,000 shares of Sabre restricted stock, all granted under the LTIP
except for 141,955 stock options and 7,640 shares of deferred stock granted
under the Amended and Restated 1996 LTIP. All
27
<PAGE>
stock option amounts increased due to Option Dividend Adjustment and all
deferred shares increased due to Performance Share Dividend Adjustment.
Stock options representing 24,756 shares of the Corporation's Class A Common
Stock are vested and currently exercisable with no shares vesting within the
next sixty days. The remaining stock options will vest during the period
from August 2000 through December 2004. Restrictions lapse on Sabre
restricted stock in 2001.
(7) Sabre amount includes Sabre stock options for 207,257 shares of the
Corporation's Class A Common Stock and 13,341 shares of Sabre deferred
stock, all granted under the LTIP except for 164,668 stock options and 7,640
shares of deferred stock granted under the Amended and Restated 1996 LTIP.
All stock option amounts increased due to Option Dividend Adjustment and all
deferred shares increased due to Performance Share Dividend Adjustment.
Stock options representing 5,678 shares of the Corporation's Class A Common
Stock are vested and currently exercisable and an additional 7,063 shares of
the Corporation's Class A Common Stock will vest within the next sixty days.
The remaining stock options will vest during the period from October 2000
through December 2004. Sabre deferred shares are Sabre Performance Shares
that are scheduled to vest (subject to the attainment of specified
performance criteria) during the period 2000 through 2002.
(8) Sabre amount includes Sabre stock options for 89,488 shares of the
Corporation's Class A Common Stock and 15,872 shares of Sabre deferred
stock, all granted under the LTIP except for 19,988 stock options and 7,936
shares of deferred stock granted under the Amended and Restated 1996 LTIP.
All stock option amounts increased due to Option Dividend Adjustment and all
deferred shares increased due to Performance Share Dividend Adjustment.
Stock options representing 89,488 shares of the Corporation's Class A Common
Stock are vested and currently exercisable. Sabre deferred shares are Sabre
Performance Shares that are scheduled to vest (subject to the attainment of
specified performance criteria) during the period 2000 through 2001. Sabre
amount also includes 1,073 shares of Sabre common stock and 529 shares of
stock purchased under Sabre Employee Stock Purchase Plan.
In connection with the Travelocity.com and Preview merger, Mr. Jones elected
to convert all of his unvested options to purchase shares of Sabre Class A
Common Stock to options to purchase shares of common stock of
Travelocity.com. The number of options issued on conversion for Mr. Jones
was 92,360. The converted options will keep their original vesting schedule,
which provides for vesting in annual 20% increments over the original five
year period. The converted options will have their original ten year term.
In addition, Mr. Jones received 300,000 options to purchase Travelocity.com
common stock in October 1999 and 125,000 options to purchase Travelocity.com
common stock in March 2000.
(9) Sabre amount includes Sabre stock options for 250,606 shares of the
Corporation's Class A Common Stock and 12,429 shares of Sabre deferred
stock, all granted under the LTIP except for 161,262 stock options and 7,298
shares of deferred stock granted under the Amended and Restated 1996 LTIP.
All stock option amounts increased due to Option Dividend Adjustment and all
deferred shares increased due to Performance Share Dividend Adjustment.
Stock options representing 54,215 shares of the Corporation's Class A Common
Stock are vested and currently exercisable and an additional 7,188 shares of
the Corporation's Class A Common Stock will vest within the next sixty days.
The remaining stock options will vest during the period from October 2000
through December 2004. The deferred shares are Sabre Performance Shares that
are scheduled to vest (subject to the attainment of specified performance
criteria) during the period 2000 through 2002.
28
<PAGE>
SECURITIES OWNED BY CERTAIN BENEFICIAL OWNERS
As of March 24, 2000, the following firm has informed the Corporation it was
the beneficial owner of more than 5% of the Corporation's outstanding Class A
Common Stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER AMOUNT HELD PERCENT OF CLASS
- ------------------------------------ ----------- ----------------
<S> <C> <C>
Investors Group Inc. ...................................... 8,255,250(1) 6.34%
One Canada Centre
447 Portage Avenue
Winnipeg, Manitoba
R3C 3B6
Canada
</TABLE>
- ------------------------------
(1) Based on Schedule 13G filed on March 27, 2000 relating to stock held on
March 17, 2000 the Corporation has learned that Investors Group Inc. ("IGI")
beneficially owns, has shared voting power and shared dispositive power over
1,651,050 shares of the Corporation's Class A Common Stock ("shares");
Investors Group Trustco Inc. ("Trustco") beneficially owns, has shared
voting power and shared dispositive power over 1,651,050 shares; Investors
Group Trust Co. Ltd. (the "Trustee") beneficially owns, has shared voting
power and shared dispositive power over 1,651,050 shares; I.G. Investment
Management, Ltd. (the "Management Company") beneficially owns, has shared
voting power and shared dispositive power over 1,651,050 shares; Investors
Global Science & Technology Fund beneficially owns, has shared voting power
and shared dispositive power over 638,950 shares; Investors Retirement
Mutual Fund beneficially owns, has shared voting power and shared
dispositive power over 210,250 shares; Investors Summa Fund beneficially
owns, has shared voting power and shared dispositive power over
623,250 shares; Investors Special Fund beneficially owns, has shared voting
power and shared dispositive power over 178,600 shares. Investors Global
Science & Technology Fund, Investors Retirement Mutual Fund, Investors Summa
Fund and Investors Special Fund (collectively the "Funds") are open-end
mutual fund trusts. IGI is a diversified financial services holding company.
Trustco is a holding company. The Management Company provides management
services to the Funds. The Trustee is the trustee for the unitholders of the
Funds and serves as the trustee for other open-end mutual fund trusts
organized and affiliated with IGI. IGI owns Trustco; Trustco owns the
Management Company and the Trustee. Trustco, the Management Company, the
Trustee and the Funds are ultimately controlled by the IGI through its
ownership of Trustco.
29
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE
EXCHANGE ACT
Section 16(a) of the Exchange Act ("Section 16(a)") requires the
Corporation's directors and executive officers, and persons who own more than
ten percent of a registered class of the Corporation's equity securities, to
file with the SEC initial reports of ownership and reports of changes in
ownership of common stock and other security interests of the Corporation.
Officers, directors and greater than ten percent stockholders are required by
the Commission's regulations to furnish the Corporation with copies of all
Section 16(a) forms they file.
To the Corporation's knowledge, based solely on a review of the copies of
such reports furnished to the Corporation and written representations that no
other reports were required, during the fiscal year ended December 31, 1999, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with.
RELATIONSHIPS WITH AMR CORPORATION AND AFFILIATES
On July 2, 1996, AMR completed a reorganization (the "Reorganization"),
pursuant to which the Corporation became the successor to the businesses of The
SABRE Group which were formerly operated as divisions or subsidiaries of AMR or
American.
On March 15, 2000, AMR distributed its entire 83% ownership stake in the
Corporation to AMR's stockholders (the "Spin-Off"). Prior to the Spin-Off, AMR
exchanged all 107,374,000 shares of the Class B Common Stock it owned for an
equal number of shares of Class A Common Stock. Each AMR stockholder received
approximately 0.7 shares of the Corporation's Class A Common Stock for each
share of AMR stock. Previously, and in connection with the Spin-Off, the
Corporation paid on February 18, 2000 a one-time cash dividend of $675 million
(approximately $5.20 per share) to its stockholders of record on February 15,
2000 (the "Dividend"). AMR received approximately $558.7 million of the
Dividend.
AFFILIATE AGREEMENTS
In connection with the Reorganization, the Corporation or its principal
operating subsidiary, Sabre Inc. (the "Operating Company") entered into certain
agreements with AMR and its affiliates (the "Affiliate Agreements"), which are
discussed below. On March 15, 2000, pursuant to the Spin-Off, AMR ceased to be a
related party to the Corporation.
INFORMATION TECHNOLOGY SERVICES AGREEMENT WITH AMERICAN. The Operating
Company is party to the Information Technology Services Agreement with American
dated July 1, 1996 (the "Technology Services Agreement"), to provide American
with certain information technology
30
<PAGE>
services. The parties agreed to apply the financial terms of the Technology
Services Agreement as of January 1, 1996. The base term of the Technology
Services Agreement expires June 30, 2006. The terms of the services to be
provided by the Operating Company to American, however, vary. For example, the
Operating Company will provide: (i) Data Center services, application
development and existing application maintenance enhancement services until
June 30, 2006; (ii) services relating to existing client server operations until
June 30, 2001; (iii) distributed systems services until June 30, 2002; and
(iv) data and voice network services until June 30, 2001. In 1999, the Operating
Company earned approximately $425 million for services rendered under the
Technology Services Agreement.
The Technology Services Agreement provides for annual price adjustments. For
certain prices, adjustments are made according to formulas which are reset every
two years and which may take into account the market for similar services
provided by other companies. The resulting rates may reflect an increase or
decrease over the previous rates.
With limited exceptions, under the Technology Services Agreement the
Operating Company will continue to be the exclusive provider of all information
technology services provided by the Operating Company to American immediately
prior to the execution of the Technology Services Agreement. Any new information
technology services, including most new application development services,
requested by American can be outsourced pursuant to competitive bidding by
American or performed by American on its own behalf. With limited exceptions,
the Operating Company has the right to bid on all new services for which
American solicits bids. Additionally, American may continue to perform
development and enhancement work that it is currently performing on its own
behalf.
After July 1, 2000, American may terminate the Technology Services Agreement
for convenience. If it does so, American will be required to pay a termination
fee equal to the sum of all amounts then due under the Technology Services
Agreement, including wind-down costs, net book value of dedicated assets and a
significant percentage of estimated lost profits. American may also terminate
the Technology Services Agreement without penalty, in whole or in part depending
upon circumstances, for egregious breach by the Operating Company of its
obligations or for serious failure to perform critical or significant services.
If the Operating Company is acquired by another corporation (other than AMR or
American) with more than $1 billion in annual airline transportation revenue,
then American may terminate the Technology Services Agreement without paying any
termination fee. If American (i) is acquired by an unaffiliated third party,
(ii) merges with an unaffiliated third party and the persons who were
shareholders of American immediately prior to the merger own less than 50% of
the outstanding stock of American immediately after the merger, or
(iii) acquires another air carrier with more than
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<PAGE>
$1 billion in annual revenues, then American may terminate the Technology
Services Agreement without paying any termination fee; except that if American
terminates the agreement for convenience during the first four years of the term
of the Technology Services Agreement in accordance with clause (iii) above,
American would be required to pay the Operating Company a termination fee of
$25 million plus wind-down costs. Additionally, if American were to dispose of
any portion of its businesses or any affiliate accounting for more than 10% of
the Operating Company's fees from American, then American must either cause such
divested business or affiliate to be obligated to use the Operating Company's
services in accordance with the Technology Services Agreement or pay a
proportionate termination fee.
In connection with the Spin-Off, the Operating Company and American agreed
to certain amendments to the Technology Services Agreement. These amendments
include the following: (i) the Operating Company will provide services relating
to AMR's real time environment until June 30, 2008, (ii) the Operating Company
will provide services relating to AMR's client server operations until June 30,
2002, (iii) American will have the right to hire up to 25 of the Operating
Company's Operations Research personnel, (iv) the Operating Company's
obligations to pay certain ongoing royalty payments to American are terminated
in exchange for a one time payment of $10 million, (v) the intellectual property
rights of the Operating Company and American are modified to provide American
additional rights in certain software applications, and (vi) American is granted
access to the Operating Company's commercial portfolio of software on a license
fee free basis. The Operating Company and American have also agreed to negotiate
market-based pricing and market-based terms and conditions during calendar year
2000. The Operating Company has agreed to offer similar contract changes to US
Airways.
In addition, Airline Management Services, Inc., a subsidiary of AMR, and
Canadian Airlines International Ltd. ("Canadian") have an agreement pursuant to
which AMR and American supply to Canadian various services, including technology
services. The Operating Company is a principal provider of data processing and
network distributed systems services to Canadian under the terms of the Canadian
Technical Services Subcontract (the "Canadian Subcontract") with American which
expires in 2006. The services contract was signed in conjunction with AMR
acquiring a significant ownership stake in Canadian. On January 5, 2000,
Canadian was acquired by Air Canada, and AMR no longer owns an interest in the
airline. It is uncertain what impact this change in ownership may have on the
services provided to Canadian by the Operating Company.
MANAGEMENT SERVICES AGREEMENT. The Operating Company and American are
parties to a Management Services Agreement dated July 1, 1996 (the "Management
Services Agreement"), pursuant to which American performs various management
services for the Operating Company that American has historically provided to
the Operating Company. American also manages the
32
<PAGE>
Operating Company's cash balances under the terms of the Management Services
Agreement. Transactions with American are settled through monthly billings, with
payment due in 30 days. Amounts charged to the Operating Company under this
agreement approximate American's costs of providing the services plus a margin.
The Management Services Agreement provided that it would expire on June 30,
2000, unless terminated earlier if American and the Operating Company are no
longer under common control or if the Technology Services Agreement is
terminated early. In connection with the Spin-Off, the Operating Company and
American agreed to the early termination of certain services effective as of
March, 2000 and the continuation of certain services with termination dates
through June 30, 2001. The Operating Company and American also negotiated
certain new separate agreements for payroll-related services and workers
compensation administration.
MARKETING COOPERATION AGREEMENT. The Operating Company and American are
parties to the Marketing Cooperation Agreement dated July 1, 1996 (the
"Marketing Cooperation Agreement"), pursuant to which American provides
marketing support for ten years for the Operating Company's professional Sabre
products targeted to travel agencies and for five years for SABRE BUSINESS
TRAVEL SOLUTIONS system ("SABRE BTS")and the Travelocity.com Web site. The
Marketing Cooperation Agreement may be terminated by either party prior to
June 30, 2006 only if the other party fails to perform its obligations
thereunder.
Under the Marketing Cooperation Agreement, American's marketing efforts
include ongoing promotional programs to assist in the sale of those SABRE
products, development with the Operating Company of an annual sales plan,
sponsorship of sales/promotional events and the targeting of potential
customers. Under the terms of the Marketing Cooperation Agreement, the Operating
Company pays American a fee for its marketing support for professional Sabre
products, the amount of which may increase or decrease, depending on total Sabre
system booking volumes generated by certain subscribers in the U.S., the
Caribbean and elsewhere and on Sabre's market share of travel agency bookings in
those areas. As payment for American's support of the Operating Company's
promotion of SABRE BTS and the Travelocity.com Web site, the Operating Company
pays American a marketing fee based upon booking volume. The total fee was
approximately $18 million, $17 million and $22 million in 1999, 1998 and 1997,
respectively. Additionally, the Operating Company had guaranteed to American
certain cost savings in the fifth year of the Marketing Cooperation Agreement.
If American did not achieve those savings, the Operating Company would have been
required to pay American any shortfall, up to a maximum of $50 million. As of
December 31, 1998, the Operating Company had recorded a liability of
approximately $7 million for this guarantee. This liability was reversed during
the fourth quarter of 1999 based on projections of cost savings in the fifth
year of the Marketing Cooperation
33
<PAGE>
Agreement. In connection with the Spin-Off, the Operating Company and American
agreed to terminate the Operating Company's obligations to guarantee those cost
savings.
NON-COMPETITION AGREEMENT. The Corporation, Operating Company, AMR and
American have a Non-Competition Agreement dated July 1, 1996 (the
"Non-Competition Agreement"), pursuant to which AMR and American, on behalf of
themselves and certain of their subsidiaries, agreed to limit their competition
with the Operating Company's businesses of: (i) electronic travel distribution;
(ii) development, maintenance, marketing and licensing of software for travel
agency, travel, transportation and logistics management; (iii) computer systems
integration; (iv) development, maintenance and operation of a data processing
center providing data processing services to third parties; and (v) travel
industry, transportation and logistics consulting services relating primarily to
computer technology and automation. The Non-Competition Agreement expires on
December 31, 2001. American may terminate the Non-Competition Agreement,
however, as to the activities described in clauses (ii) though (v) of this
paragraph upon 90 days notice to the Operating Company if the Technology
Services Agreement is terminated as a result of an egregious breach thereof by
the Operating Company.
TRAVEL AGREEMENTS. The Operating Company and American are parties to a
Travel Privileges Agreement dated July 1, 1996 (the "Travel Privileges
Agreement"), pursuant to which the Operating Company is entitled to purchase
personal travel on American Airlines and American Eagle flights for its
employees and retirees at reduced fares. The Travel Privileges Agreement will
expire on June 30, 2008. To pay for the provision of flight privileges to
certain of its future retired employees, the Operating Company makes a lump sum
payment to American each year, beginning in 1997, for each employee retiring in
that year. The payment per retiree is based on the number of years of service
with the Operating Company and AMR over the prior ten years of service. Service
years accrue for the Operating Company beginning on January 1, 1993. AMR will
retain the obligation for the portion of benefits attributable to service years
prior to January 1, 1993. The cost of providing this privilege is accrued over
the estimated service lives of the employees eligible for the privilege.
The Operating Company and American agreed to certain amendments to the
Travel Privileges Agreement in connection with the Spin-Off. These amendments
allow American to provide certain of its employees with additional limited
travel privileges and require the Operating Company to indemnify American for
costs related to the Operating Company's continued use of the Travel Privileges.
Effective upon the Spin-Off, the Corporation can no longer offer to new
employees personal travel privileges on American Airlines or American Eagle.
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<PAGE>
The Operating Company and American were also parties to a Corporate Travel
Agreement dated July 1, 1998 and ending June 30, 2001 (the "Corporate Travel
Agreement"), pursuant to which the Operating Company received discounts for
certain flights purchased on American Airlines or American Eagle. In exchange,
the Operating Company agreed to fly a certain percentage of its travel on
American Airlines and American Eagle as compared to all other air carriers
combined. If the Operating Company failed to meet the applicable percentage on
an average basis over any calendar quarter, American had the right to terminate
the agreement upon 60 days' notice.
In 1998, the Operating Company and American entered into a new corporate
travel agreement (the "Revised Corporate Travel Agreement") commencing July 1,
1998 and ending June 30, 2001. The terms and conditions of the Revised Corporate
Travel Agreement are substantially the same as the Corporate Travel Agreement.
CREDIT AGREEMENT. On July 1, 1996, the Corporation and American entered
into a Credit Agreement pursuant to which the Corporation was required to borrow
from American, and American was required to lend to the Corporation, amounts
required by the Corporation to fund its daily cash requirements. In addition,
American could, but was not required to, borrow from the Corporation to fund its
daily cash requirements. The maximum amount the Corporation could borrow at any
time from American under the Credit Agreement was $300 million. The maximum
amount that American could borrow at any time from the Corporation under the
Credit Agreement was $100 million. Loans under the Credit Agreement are not
intended as long-term financing. If the Corporation's credit rating is better
than "B" on the Standard & Poor's Rating Service Scale (or an equivalent
thereof) or American has excess cash, as defined, to lend the Corporation, the
interest rate to be charged to the corporation is the sum of (a) the higher of
(i) American's average rate of return on short-term investments for the month in
which the borrowing occurred or (ii) the actual rate of interest paid by
American to borrow funds to make the loan to the Corporation under the Credit
Agreement, plus (b) an additional spread based upon the Corporation's credit
risk. If the Corporation's credit rating is "B" or below on the Standard &
Poor's Rating Service Scale (or an equivalent thereof) and American does not
have excess cash to lend to the Corporation, the interest rate to be charged to
the Corporation is the lower of (a) the sum of (i) the borrowing cost incurred
by American to draw on its revolving credit facility to make the advance, plus
(ii) an additional spread based on the Corporation's credit risk, or (b) the sum
of (i) the cost at which the Corporation could borrow funds from an independent
party plus (ii) one-half of the margin American pays to borrow under its
revolving credit facility. The Corporation believes that the interest rate it
will be charged by American could, at times, be slightly above the rate at which
the Corporation could borrow externally; however, no standby fees
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for the line of credit will be required to be paid by either party. The interest
rate to be charged to American is the Corporation's average portfolio rate for
the months in which borrowing occurred plus an additional spread based upon
American's credit risk. At the end of each quarter, American must pay all
amounts owing under the Credit Agreement to the Corporation. No borrowings have
occurred by either the Corporation or American under this Agreement. In
connection with the Spin-Off, American notified the Corporation that the Credit
Agreement would be terminated on April 14, 2000.
DEBENTURE PAYABLE TO AMR. On July 2, 1996, in connection with the
Reorganization, the Corporation issued to American a floating rate, subordinated
debenture due September 30, 2004 with a principal amount of $850 million (the
"Debenture"). In 1996, the Corporation used approximately $532 million of the
net proceeds from the Corporation's initial public offering to repay a portion
of the Debenture. The principal balance was approximately $318 million at
December 31, 1998. During 1999, in connection with the Omnibus Financing
Agreement discussed below, the Corporation prepaid the remaining principal
balance and all outstanding accrued interest under the Debenture. The average
interest rate on the Debenture was 5.6%, 6.1% and 6.2% for 1999, 1998 and 1997,
respectively.
OMNIBUS FINANCING AGREEMENT. On March 17, 1999, the Corporation and
American entered into a short-term credit agreement pursuant to which American
could borrow from the Corporation up to a maximum of $300 million. During the
first half of 1999, American borrowed $300 million under the short-term credit
agreement. As part of this agreement, the original Credit Agreement between the
Corporation and American entered into on July 1, 1996 was modified to terminate
American's ability to borrow additional funds under that agreement.
Subsequently, in June 1999, the Corporation, AMR and American entered into the
Omnibus Financing Agreement pursuant to which (a) the $300 million outstanding
from American under the short-term credit agreement was applied against the
$318 million remaining under the Debenture payable from the Corporation to AMR;
(b) the Corporation paid the remaining principal balance of approximately
$18 million and all outstanding accrued interest under the Debenture; and
(c) the Corporation and American renewed, extended and reinstated American's
ability to borrow funds under the original Credit Agreement for an additional
year to June 30, 2000. The Credit Agreement allows the Corporation to borrow up
to $300 million from American and American to borrow up to $100 million from the
Corporation to meet short-term working capital requirements. In connection with
the Spin-Off, American plans to terminate the original Credit Agreement
effective 30 days after the Spin-Off.
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INDEMNIFICATION AGREEMENT. In connection with the Reorganization, the
Corporation, the Operating Company AMR, and American entered into an
intercompany agreement (the "Indemnification Agreement") pursuant to which each
party indemnified the other for certain obligations relating to the
Reorganization. Pursuant to the Indemnification Agreement, the Operating Company
indemnified American for liabilities assumed in the Reorganization, against
third party claims asserted against American as a result of American's prior
ownership of assets or operation of businesses contributed to the Operating
Company and for losses arising from or in connection with the Operating
Company's lease of property from American. In exchange, American indemnified the
Operating Company for specified liabilities retained by it in the
Reorganization, against third party claims against the Operating Company
relating to American's businesses and asserted against the Operating Company as
a result of the ownership or possession by American prior to the Reorganization
of any asset contributed to the Operating Company in the Reorganization and for
losses arising from or in connection with American's lease of property from the
Operating Company.
In connection with the Spin-Off, the Corporation, the Operating Company, AMR
and American agreed to terminate the Indemnification Agreement as of July 1,
2003.
AGREEMENT ON SPIN-OFF TAXES. Effective on March 15, 2000, the Corporation
and AMR entered into an indemnity agreement (the "Agreement on Spin-Off Taxes")
pursuant to which the Corporation will be responsible for Spin-Off related
taxes, in certain circumstances, if the Spin-Off is deemed to be taxable as a
result of certain factual representations and assumptions relating to the
Corporation being inaccurate or as a result of the Corporation's subsequent
actions. The IRS has issued a Tax Ruling to the effect that the Spin-Off will be
tax-free to the Corporation, AMR and AMR shareholders under Section 355 of the
Code (except to the extent that cash is received in lieu of fractional shares).
The Tax Ruling is based upon factual representations and assumptions and upon
commitments on behalf of AMR and the Corporation with respect to future
operations made in the request for the Tax Ruling. If (i) the factual
representations and assumptions were materially incomplete or untrue, (ii) the
facts upon which the Tax Ruling is based are materially different from the facts
at the time of the Spin-Off, or (iii) AMR and the Corporation do not meet
certain commitments made, the IRS could modify or revoke the Tax Ruling
retroactively. If the Spin-Off failed to qualify under Section 355 of the Code,
corporate tax would be payable by the consolidated group of which AMR is the
common parent based upon the difference between AMR's proportional share
(approximately 82%) of the aggregate fair market value of the Corporation at the
time of the Spin-Off and AMR's adjusted tax basis in the shares of the stock of
the Corporation it owned prior to the Spin-Off. Under the terms of the Agreement
on Spin-Off Taxes, the Corporation has agreed to indemnify AMR for the corporate
level tax and other tax
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liabilities if they result from certain actions taken by the Corporation,
including (i) the incompleteness or inaccuracy of factual representations made
in the request for the Tax Ruling or in the Agreement on Spin-Off Taxes,
(ii) issuance of options (other than compensatory options), (iii) sale of all or
substantially all of the assets of the Corporation, (iv) merger of the
Corporation or the Operating Company, (v) issuance of stock of the Corporation,
and (vi) discontinuance of the active business of the Corporation or the
Operating Company. Under the terms of the Agreement on Spin-Off Taxes, the
Corporation has also agreed to comply with certain restrictions with respect to
a third party's acquisition of shares of the Corporation's stock and the
Corporation's issuance of stock. If the Corporation fails to comply with these
restrictions and, as a result, the Spin-Off fails to qualify under Section 355
of the Code as a tax-free spin-off, the Corporation will be obligated to
indemnify AMR for any resulting tax liability.
REVENUES FROM AFFILIATES
Revenues from American and other subsidiaries of AMR were $590 million,
$574 million and $526 million in 1999, 1998 and 1997, respectively. On
March 15, 2000, AMR distributed to its shareholders its entire ownership
interest in the Corporation and ceased to be an affiliate of the Corporation.
OPERATING EXPENSES
Operating expenses are charged to the Corporation by American and other
subsidiaries of AMR to cover certain employee benefits, facilities rental,
marketing services, management services, legal fees and certain other
administrative costs based on employee headcount or actual usage of facilities
and services. The Corporation believes amounts charged to the Corporation for
these expenses approximate the cost of such services provided by third parties.
Travel service costs for business and personal travel by the Corporation's
employees on American Airlines and American Eagle are charged to the Corporation
based on rates negotiated with American. Effective upon the Spin-Off, the
Corporation can no longer offer to new employees personal travel privileges on
American Airlines or American Eagle. The rates negotiated with American for
1999, 1998 and 1997 under the Corporate Travel Agreement approximate corporate
travel rates
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offered by American to similar companies. Expenses charged to the Corporation by
affiliates are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Employee benefits.............................. $ 45,471 $ 41,348 $ 55,872
Facilities rental.............................. 2,814 2,706 3,526
Marketing cooperation.......................... 10,793 24,044 21,779
Management services............................ 5,719 10,069 11,276
Other administrative costs..................... 2,816 12,732 6,799
Travel services................................ 45,190 45,433 47,638
-------- -------- --------
Total expenses................................. $112,803 $136,332 $146,890
======== ======== ========
</TABLE>
PROPOSAL 2--AMENDMENTS TO THE CORPORATION'S
RESTATED CERTIFICATE OF INCORPORATION
The Board of Directors has determined that it is in the best interest of the
Corporation and its stockholders to amend the Corporation's Restated Certificate
of Incorporation to remove provisions relating to the Class B Common Stock and
the Corporation's status as a controlled subsidiary of AMR. In addition, the
Board is asking the stockholders to approve an amendment to the Corporation's
Restated Certificate of Incorporation to provide that any vacancies on the Board
of Directors resulting from death, resignation, retirement, disqualification,
removal from office or other cause, or newly created directorships resulting
from any increase in the authorized number of directors, be filled only by a
majority of the directors then in office, though less than a quorum, and not by
the stockholders.
Accordingly, the Board has approved the proposed Second Restated Certificate
of Incorporation, in the form attached hereto as EXHIBIT A (the "Second Restated
Certificate of Incorporation"), and hereby solicits the approval of the
Corporation's stockholders for the Second Restated Certificate of Incorporation.
If the stockholders approve the amendments reflected in the Second Restated
Certificate of Incorporation, the Board of Directors currently intends to file
the Second Restated Certificate of Incorporation with the Secretary of State of
the State of Delaware as soon as practicable following such stockholder
approval. If the Second Restated Certificate of Incorporation is not approved by
the stockholders, the existing Restated Certificate of Incorporation will
continue in effect.
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BACKGROUND
In 1996, prior to the initial public offering of the Corporation's Class A
Common Stock, the Corporation revised its Certificate of Incorporation
principally to address issues arising out of AMR's controlling interest in the
Corporation and AMR officers serving as directors of the Corporation. Provisions
were included to address, for instance, the rights, duties and liabilities of
the Corporation or its officers, directors and stockholders in connection with
the conduct of certain affairs involving AMR or its officers and directors.
In light of AMR's divesting its entire ownership interest in the Corporation
pursuant to the Spin-Off, and the Corporation and AMR no longer having common
officers and directors effective after the annual meeting (other than a sole
common outside director), the Board believes these provisions are no longer
necessary and that it is in the best interests of the stockholders to delete
these provisions from the Restated Certificate of Incorporation.
REMOVAL OF PROVISIONS RELATING TO CLASS B COMMON STOCK
As of the date of this proxy statement, there are no outstanding shares of
Class B Common Stock and no future plans to issue shares of Class B Common
Stock. Accordingly, the Board believes it to be in the best interests of the
Corporation to simplify the Corporation's capital structure and eliminate the
provisions relating to the Class B Common Stock from the Restated Certificate of
Incorporation. In general, these provisions relate to the voting rights of the
Class B Common Stock relative to the Class A Common Stock, the payment of
dividends in respect of the Class B Common Stock and the right to convert, or
the conditions for the automatic conversion of, shares of Class B Common Stock
into shares of Class A Common Stock. The Corporation proposes to remove these
provisions from the Restated Certificate of the Corporation.
REMOVAL OF PROVISIONS RELATING TO CORPORATE OPPORTUNITY POLICY
The Restated Certificate of Incorporation provides that, except as AMR may
otherwise agree in writing, AMR will have the right to: (i) engage in the same
or similar business activities or lines of business as the Corporation; (ii) do
business with any potential or actual client, customer or supplier of the
Corporation; and (iii) employ or engage any of the Corporation's officers or
employees.
The Restated Certificate of Incorporation states that neither AMR nor any of
its officers or directors will be liable to the Corporation or the Corporation's
stockholders for any breach of fiduciary duty by reason of these activities. In
addition, the Restated Certificate of Incorporation states that if AMR learns of
a potential transaction or matter that may be a corporate opportunity
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for both AMR and the Corporation, AMR will have no duty to communicate that
opportunity to the Corporation. The Restated Certificate of Incorporation states
that AMR will not be liable to the Corporation or the Corporation's stockholders
because AMR pursues or acquires that corporate opportunity for itself, directs
that corporate opportunity to another person or entity or does not present that
corporate opportunity to the Corporation.
If one of the Corporation's directors or officers who is also a director or
officer of AMR learns of a potential transaction or matter that may be a
corporate opportunity for both the Corporation and AMR, the Corporation's
Restated Certificate of Incorporation requires that the Corporation's director
or officer act in good faith under the following three-part policy: (i) a
corporate opportunity offered to any person who is a director but not an officer
of the Corporation and who is also an officer (whether or not a director) of AMR
will belong to AMR, unless the opportunity is expressly offered to that person
primarily in his or her capacity as a director of the Corporation; in that case,
the opportunity will belong to the Corporation; (ii) a corporate opportunity
offered to any person who is an officer (whether or not a director) of the
Corporation and who is also a director but not an officer of AMR will belong to
the Corporation, unless the opportunity is expressly offered to that person
primarily in his or her capacity as a director of AMR; in that case the
opportunity will belong to AMR; and (iii) a corporate opportunity offered to any
other person who is either an officer of both the Corporation and AMR or a
director of both the Corporation and AMR will belong to AMR or to the
Corporation, as applicable, if the opportunity is expressly offered to the
person primarily in his or her capacity as an officer or director of AMR or of
the Corporation, respectively. Otherwise, the opportunity will belong to AMR.
Under the Corporation's Restated Certificate of Incorporation, neither the
Corporation nor AMR can pursue (or direct to another person or entity) any
corporate opportunity that belongs to the other until the party to whom the
opportunity belongs determines not to pursue the opportunity. However, the
Corporation's Restated Certificate of Incorporation states that if the party to
whom the corporate opportunity belongs does not within a reasonable period of
time begin to pursue, or thereafter continue to pursue, the opportunity
diligently and in good faith, the other party may pursue the opportunity (or
direct it to another person or entity).
A director or officer of the Corporation who follows the three-part policy
above will be considered to have acted reasonably and in good faith and fully to
have satisfied his or her duties of loyalty and fiduciary duties to the
Corporation and the Corporation's stockholders with respect to that opportunity.
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Under the Corporation's Restated Certificate of Incorporation, "corporate
opportunities" potentially allocable to the Corporation consist of business
opportunities which: (i) the Corporation is financially able to undertake;
(ii) are, from their nature, in the Corporation's line or lines of business and
are of practical advantage to the Corporation; and (iii) are ones in which the
Corporation has an interest or reasonable expectancy. In addition, under the
Corporation's Restated Certificate of Incorporation "corporate opportunities" do
not include transactions that the Corporation or AMR may participate in under
any agreement between the Corporation and AMR when any of the Corporation's
equity is held of record by any person other than AMR or subsequently entered
into with the approval of the Corporation's disinterested directors. For
purposes of these corporate opportunity provisions, the Corporation's Chairman
of the Board or Chief Executive Officer will not be considered an officer of the
Corporation by reason of holding that position, unless that person is one of the
Corporation's full-time employees.
In light of AMR's divesting its entire ownership interest in the Corporation
pursuant to the Spin-Off, and the Corporation and AMR no longer having common
officers and directors effective after the annual meeting (other than a sole
common outside director), the Board of Directors believes these corporate
opportunity provisions are no longer necessary and proposes to delete these
provisions from the Restated Certificate of Incorporation.
REMOVAL OF PROVISIONS RELATING TO CONFLICT OF INTERESTS POLICY
The Corporation's Restated Certificate of Incorporation provides that, if
one of the four requirements in the next sentence are met, no contract,
agreement, arrangement or transaction between: (i) the Corporation and AMR,
(ii) the Corporation and any customer or supplier or any entity in which one of
the Corporation's directors has a financial interest (a "Related Entity"), or
(iii) the Corporation and one or more of the directors or officers of the
Corporation, AMR or any Related Entity, or any amendment, modification or
termination of that contract, agreement, arrangement or transaction, will be
voidable solely because: (i) AMR or that customer or supplier, any Related
Entity, or any one or more of the officers or directors of the Corporation, AMR
or any Related Entity are parties to it, or (ii) any of those directors or
officers are present at or participate in the meeting of the Corporation's Board
of Directors or committee of the Board which authorizes the contract, agreement,
arrangement, transaction, amendment, modification or termination (each, a
"Transaction") or (iii) solely because their votes are counted for that purpose.
Under the Corporation's Restated Certificate of Incorporation, the Transaction
must meet one of the following four requirements: (i) the material facts as to
the Transaction are disclosed or known to the Corporation's Board of Directors
or the committee of the Corporation's Board that authorizes the Transaction, and
the Board of Directors or that committee in good faith approves
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the Transaction by a majority of the disinterested directors on the
Corporation's Board or that committee, even if the disinterested directors are
less than a quorum; (ii) the material facts as to the Transaction are disclosed
or known to the holders of the voting stock entitled to vote on the Transaction,
and the Transaction is specifically approved by vote of the holders of a
majority of the then outstanding voting stock not owned by AMR or the Related
Entity, voting together as a single class; (iii) the Transaction is effected
under guidelines which are in good faith approved by a majority of the
disinterested directors on the Corporation's Board of Directors or the
applicable committee of the Board or by vote of the holders of a majority of the
then outstanding voting stock not owned by AMR or the Related Entity, voting
together as a single class; or (iv) the Transaction is fair to the Corporation
as of the time it is approved by the Corporation's Board of Directors, a
committee of the Corporation's Board or the Corporation's stockholders.
The Corporation's Restated Certificate of Incorporation also provides that
any Transaction authorized, approved or effected, and each of the guidelines so
authorized or approved, as described in the first three items of the immediately
preceding list, will be deemed to be entirely fair to the Corporation and the
Corporation's stockholders; provided that, if that authorization or approval is
not obtained, or the Transaction is not so effected, no presumption shall arise
that the Transaction or guideline is not fair to the Corporation and the
Corporation's stockholders.
In light of AMR's divesting its entire ownership interest in the Corporation
pursuant to the Spin-Off, and the Corporation and AMR no longer having common
officers and directors effective after the annual meeting (other than a sole
common outside director), the Board of Directors believes these conflict of
interests provisions are no longer necessary and proposes to remove these
provisions from the Restated Certificate of Incorporation.
FILLING VACANCIES ON THE BOARD OF DIRECTORS
The Board is asking the stockholders to approve an amendment to the
Corporation's Restated Certificate of Incorporation to provide that any
vacancies on the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause, or newly
created directorships resulting from any increase in the authorized number of
directors, be filled only by a majority of the directors then in office, though
less than a quorum, and not by the stockholders. Directors so chosen shall hold
office for a term expiring at the annual meeting of stockholders at which the
term of office of the class to which they have been chosen expires. No decrease
in the authorized number of directors shall shorten the term of any incumbent
director.
As a result of the Spin-Off and the resignation and retirement of certain
directors, the Board of Directors is in the process of finding suitable
candidates to fill the vacancies that exist on the Board of Directors. This
amendment is intended to permit the Board of Directors to fill a vacancy
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in the event a suitable candidate is identified and is willing to serve on the
Board. The Board of Directors also believes that this proposed amendment will
help prevent sudden changes in the composition of the Board of Directors that
are not in the best interests of all stockholders and will strengthen the
negotiating leverage of the Board of Directors in seeking to maximize
stockholder value in takeover situations.
The Corporation's Bylaws currently provide that a vacancy on the Board,
including a vacancy created by an increase in the authorized number of
directors, may be filled by the affirmative vote of a majority of the remaining
directors, though less than a quorum, and that the newly-elected director shall
hold office for a term expiring at the annual meeting of stockholders at which
the term of office of the class to which such director has been elected expires
and until such director's successor has been duly elected and qualified. If this
proposed amendment is approved by the stockholders, the Board of Directors will
amend the Corporation's Bylaws to conform them to the revised Certificate of
Incorporation.
VOTE REQUIRED FOR APPROVAL
The Restated Certificate of Incorporation provides that the affirmative vote
of more than 80% of the Corporation's outstanding voting stock is required to
alter, amend or repeal in a manner adverse to the interest's of AMR these
provisions of the Restated Certificate of Incorporation. AMR has agreed in
writing to waive its right to assert that the proposed changes are adverse to
its interests and agreed not to assert that the removal of these provisions from
the Restated Certificate of Incorporation are adverse to its interests. As a
result, the affirmative vote of a majority of the outstanding shares of the
Class A Common Stock is required for approval of these amendments to the
Restated Certificate of Incorporation and approval of the Second Restated
Certificate of Incorporation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THIS PROPOSAL.
PROPOSAL 3--APPROVAL OF AMENDMENTS TO THE
EMPLOYEE STOCK PURCHASE PLAN
At the annual meeting, the stockholders will be requested to approve
amendments to the Employee Stock Purchase Plan (the "Purchase Plan"). The
purpose of the Purchase Plan is to allow the Corporation to offer its and
certain of its subsidiaries' employees the ability to invest in the
Corporation's Class A Common Stock at a discounted price, thereby giving them an
incentive for individual creativity and contribution to ensure the future growth
of the Corporation. It is intended to be an "employee stock purchase plan"
within the meaning of Section 423 of the Code.
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The amendments are requested in order to make the Purchase Plan competitive with
similar plans offered by other information technology companies so that the
Corporation and its subsidiaries may attract and retain employees. The
amendments consist of (1) an increase in the maximum amount of base pay an
eligible employee may apply toward the purchase of shares from 2% to 10% during
each purchase period, (2) an increase in the number of available shares from
1,000,000 to 2,000,000, and (3) an extension of the purchase period from one
month to six months. A summary of the Purchase Plan follows, but this summary is
qualified in its entirety by reference to the full text of the Purchase Plan,
which is attached hereto as EXHIBIT B to this proxy statement.
DESCRIPTION OF THE PLAN
The Purchase Plan will allow all employees of the Corporation and designated
subsidiaries to authorize payroll deductions at a maximum rate of 10% of base
pay to be applied during each purchase period toward the purchase of shares of
the Class A Common Stock at a discount. The number of employees participating in
the Purchase Plan will vary from year to year. In 1999, 2,476 employees
participated in the Employee Stock Purchase Plan and 186,000 shares were
purchased under the Purchase Plan. Two million (2,000,000) shares of Class A
Common Stock will be reserved for issuance under the Purchase Plan (subject to
adjustment in the event of certain capital events affecting the Class A Common
Stock). Shares subject to the Purchase Plan may be shares now or hereafter
authorized but unissued, or reacquired shares. The Purchase Plan will continue
to be administered by the Compensation/Nominating Committee. Subject to the
express provisions of the Purchase Plan, the Compensation/Nominating Committee
will continue to have authority to interpret the Purchase Plan, to prescribe,
amend and rescind rules and regulations relating to it, and to make all other
determinations necessary or advisable in administering the Purchase Plan, all of
which determinations shall be final and binding upon all persons. The Purchase
Plan will terminate in the event all shares reserved under the Purchase Plan
have been purchased, or earlier, at the discretion of the Board of Directors.
On the last business day of a six-month purchase period (one beginning on
January 1 and the other beginning on July 1 each year), each participating
employee shall, without further action on his or her part, purchase a number of
whole and fractional shares of the Class A Common Stock determined by dividing
that employee's amount of payroll deductions not already invested under the
Purchase Plan by 85% of the lesser of the Fair Market Value (as defined below)
of such stock on the first business day of such six-month period and the Fair
Market Value of such stock on the last business day of such six-month period. To
purchase stock on the last business day of a six-month period, an employee must
authorize payroll deductions prior to the first day of that six-month period,
and such deductions shall begin as the first day of such six-month period. The
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maximum number of shares of the Class A Common Stock that a participating
employee may purchase during any purchase period shall not exceed 600 shares.
"Fair Market Value" is the mean of the high and low sales prices of the Class A
Common Stock on the NYSE or Nasdaq on the applicable date or, if the Class A
Common Stock shall not have been traded on either the NYSE or Nasdaq on such
date, the mean of the high and low sales prices on such exchange or automated
quotation system on the first day prior thereto on which the stock was so
traded.
An employee may withdraw from participation in the Purchase Plan at any
time. The amount of the employee's account balance at that time will be applied
to the purchase of shares at the end of the six-month purchase period. An
employee who has so withdrawn may again participate in the Purchase Plan during
any later purchase period.
No employee shall be permitted to purchase any shares under the Purchase
Plan if such employee, immediately after such purchase, owns shares possessing
5% or more of the total combined voting power or value of all classes of stock
of the Corporation or its parent or subsidiary corporations. No employee shall
be permitted to purchase any shares under the Purchase Plan (and any other
employee stock purchase plans of the Corporation or any of its subsidiaries) at
a rate in excess of $25,000 of Fair Market Value for any calendar year.
Benefits under the Purchase Plan are based on voluntary participation. The
number of participants can vary each six-month period. The Board of Directors
may at any time amend or terminate the Purchase Plan, provided that the Purchase
Plan may not be amended in any way that will cause rights issued under it to
fail to meet the requirements for employee stock purchase plans as defined in
Section 423 of the Code. The rights to purchase shares under the Purchase Plan
may not be assigned or transferred.
FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE PURCHASE PLAN
The following discussion is a general summary of the federal income tax
rules that would continue to be applicable to the Purchase Plan if it were
approved by the Corporation's stockholders. Employees should consult their own
tax advisors since a taxpayer's particular situation may be such that some
variation of the rules described below will apply.
The Purchase Plan and the right of participants to make purchases thereunder
are intended to qualify under the provisions of Sections 421 and 423 of the
Code. Under those provisions, no income will be recognized by a participant at
the time of grant of the option to purchase shares or the purchase of shares. A
participant may become liable for tax upon the disposition of shares acquired
under the Purchase Plan (or if he or she dies owing such shares), and the tax
consequences will depend on how long a participant has held the shares prior to
disposition.
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If the employee holds shares acquired under the Purchase Plan until a date
that is more than two years from the first day of the month in which the shares
were purchased, or dies owning shares, the employee must report as ordinary
income in the year of disposition (or death) the lesser of (a) the excess of the
Fair Market Value of the shares at the time of such disposition (or death) over
the purchase prices of the shares, and (b) 15% of the Fair Market Value of the
shares on the first day of the month in which the shares were purchased. The
excess, if any, of the sales price over the sum of the purchase prices for the
shares and the amount of ordinary income recognized is treated as long-term
capital gain. If the sales price of the shares is less than the purchase prices,
there is no ordinary income and the participant has a long-term capital loss
equal to the difference. If an employee holds the shares for this period, the
Corporation is not entitled to any deduction for federal income tax purposes.
If the employee does not meet the holding period requirements, the employee
recognizes at the time of disposition of the shares ordinary income equal to the
difference between the price paid for the shares and their Fair Market Value on
the date of purchase. The excess, if any, of the sales price over the Fair
Market Value of the shares on the purchase date will be treated as capital gain
and will qualify for long-term capital gain treatment if the shares have been
held for more than one year. If the shares are sold for less than their Fair
Market Value on the date of purchase, the same amount of ordinary income is
included by a participant, and a capital loss is allowed equal to the difference
between the sales price and the Fair Market Value of the shares on the purchase
date. Such loss will be a long-term loss if the shares were held for more than
one year. In the event of an early disposition, the Corporation generally will
be allowed a deduction for federal income tax purposes equal to the ordinary
income realized by the employee.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the shares represented at the meeting
and entitled to vote is required to approve the amended Employee Stock Purchase
Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THIS
PROPOSAL.
PROPOSAL 4--SELECTION OF AUDITORS
Based upon the recommendation of the Audit Committee, the Board of Directors
has selected Ernst & Young LLP to serve as the Corporation's independent
auditors for the year ending December 31, 2000. The stockholders will be
requested to ratify the Board's selection. Representatives of Ernst & Young LLP
will be present at the annual meeting, will have the
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opportunity to make a statement, if they desire to do so, and will be available
to answer appropriate questions.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the shares represented and entitled to
vote is required to approve the Board's selection of auditors. If the
stockholders do not ratify the selection of Ernst & Young LLP, the selection of
independent auditors will be reconsidered by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THIS
PROPOSAL.
OTHER MATTERS
The Board of Directors knows of no other matters to be acted upon at the
meeting, but if any such matters properly come before the meeting that are not
specifically set forth on the proxy card and in this proxy statement, it is
intended that the persons voting the proxies will vote in accordance with their
best judgments.
By Order of the Board of Directors,
/s/ JAMES F. BRASHEAR
James F. Brashear
CORPORATE SECRETARY
April 17, 2000
Sabre, the Sabre logo design, Travelocity.com, and Sabre Business Travel
Solutions are trademarks and/or service marks of an affiliate of Sabre Holdings
Corporation. All other names are trademarks, trade names, and/or service marks
of their respective company(s).
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EXHIBIT A
SECOND RESTATED CERTIFICATE OF INCORPORATION
OF
SABRE HOLDINGS CORPORATION
1. The name of the corporation (which is hereinafter referred to as the
"Corporation") is "Sabre Holdings Corporation".
2. The original Certificate of Incorporation was filed with the Secretary
of State of the State of Delaware on June 25, 1996, under the name "TSG
Corporation".
3. This Second Restated Certificate of Incorporation of the Corporation has
been duly adopted in accordance with the provisions of Sections 103, 222, 242
and 245 of the General Corporation Law of the State of Delaware, and shall, as
it may thereafter be amended or supplemented in accordance with its terms and
applicable law, be the Certificate of Incorporation of the Corporation.
4. The text of the Restated Certificate of Incorporation of the Corporation
is hereby amended and restated to read in its entirety as follows:
ARTICLE I
The name of the corporation (which is hereinafter referred to as the
"Corporation") is:
Sabre Holdings Corporation
ARTICLE II
The address of the Corporation's registered office in the State of Delaware
is The Corporation Trust Center, 1209 Orange Street in the City of Wilmington,
County of New Castle 19801. The name of the Corporation's registered agent at
such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation shall be to engage in any lawful act or
activity for which corporations may be organized and incorporated under the
General Corporation Law of the State of Delaware (the "GCL").
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ARTICLE IV
(A) Authorized Stock. The total number of shares of stock which the
Corporation shall have authority to issue is Two Hundred Seventy Million
(270,000,000) shares, divided into two classes, consisting of (i) Two Hundred
Fifty Million (250,000,000) shares of Class A Common Stock, par value $.01 per
share (hereinafter referred to as "Class A Common Stock"), and (ii) Twenty
Million (20,000,000) shares of Preferred Stock, par value $.01 per share
(hereinafter referred to as "Preferred Stock").
(B) Class A Common Stock. The following is a statement of the relative
powers, preferences and participating, optional or other special rights, and the
qualifications, limitations and restrictions of the Class A Common Stock:
(i) Subject to the rights of holders of Preferred Stock, and subject to
any other provisions of this Certificate of Incorporation, holders of
Class A Common Stock shall be entitled to receive such dividends and other
distributions in cash, stock or property of the Corporation as may be
declared thereon by the Board of Directors from time to time out of assets
or funds of the Corporation legally available therefor.
(ii) At each meeting of the stockholders of the Corporation, each
holder of Class A Common Stock shall be entitled to one vote in person or by
proxy for each share of Class A Common Stock standing in his or her name on
the transfer books of the Corporation, in connection with the election of
directors and all other matters submitted to a vote of stockholders. Except
as may be otherwise required by law or by this Article IV, and, subject to
any voting rights which may be granted to holders of Preferred Stock, the
holders of Class A Common Stock shall have the exclusive right to vote on
all matters submitted to a vote of stockholders of the Corporation.
(iii) In the event of any dissolution, liquidation or winding up of the
affairs of the Corporation, whether voluntary or involuntary, after payment
in full of the amounts required to be paid to the holders of Preferred
Stock, the remaining assets and funds of the Corporation shall be
distributed pro rata to the holders of Class A Common Stock.
(iv) Except as otherwise required by law, holders of Class A Common
Stock, as such, shall not be entitled to vote on any amendment to this
Second Restated Certificate of Incorporation (including a Preferred Stock
Designation) that alters or changes the powers, preferences, rights or other
terms of one or more outstanding series of Preferred Stock if the holders of
such affected series are entitled to vote on such amendment pursuant to this
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Second Restated Certificate of Incorporation (including a Preferred Stock
Designation) or pursuant to the Delaware General Corporation Law.
(v) No stockholder shall be entitled to exercise any right of
cumulative voting.
(C) Preferred Stock. The Preferred Stock may be issued from time to time in
one or more series. The Board of Directors is hereby expressly authorized to
provide by resolution or resolutions from time to time for the issuance of
shares of Preferred Stock in one or more series and, by filing a certificate
pursuant to the applicable law of the State of Delaware (hereinafter, along with
any similar designation relating to any other series of stock which may
hereafter be authorized, referred to as a "Preferred Stock Designation," each of
which shall be part of this Second Restated Certificate of Incorporation), to
establish from time to time the number of shares to be included in each such
series, and to fix the designation, powers, preferences and rights of the shares
of each such series and the qualifications, limitations and restrictions thereof
to the fullest extent permitted by law. The authority of the Board of Directors
with respect to each series shall include, but not be limited to, determination
of the following:
(i) The designation of the series, which may be by distinguishing
number, letter or title.
(ii) The number of shares of the series, which number the Board of
Directors may thereafter (except where otherwise provided in the Preferred
Stock Designation) increase or decrease (but not below the number of shares
thereof then outstanding).
(iii) Whether dividends, if any, shall be cumulative or noncumulative
and the dividend rate of the series.
(iv) The conditions upon which and dates at which dividends, if any,
shall be payable, and the relation which such dividends, if any, shall bear
to the dividends payable on any other class or classes of stock.
(v) The redemption rights and price or prices, if any, for shares of
the series.
(vi) The terms and amount of any sinking fund provided for the purchase
or redemption of shares of the series.
(vii) The amounts payable on and the preferences, if any, of shares of
the series in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation.
(viii) Whether the shares of the series shall be convertible into
shares of any class or series, or any other security, of the Corporation or
any other corporation, and, if so, the
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specification of such other class or series of such other security, the
conversion price or prices or rate or rates, any adjustments thereof, the
date or dates at which such shares shall be convertible and all other terms
and conditions upon which such conversion may be made.
(ix) Restrictions on the issuance (or reissuance) of shares of the same
series or of any other class or series.
(x) The voting rights and powers, if any, of the holders of shares of
the series.
(D) Record Holders. The Corporation shall be entitled to treat the Person
(as defined in Article IX) in whose name any share of its stock is registered as
the owner thereof for all purposes and shall not be bound to recognize any
equitable or other claim to, or interest in, such share on the part of any other
Person, whether or not the Corporation shall have notice thereof, except as
expressly provided by applicable law.
(E) No Preemptive Rights. No stockholder of the Corporation shall have any
preemptive or preferential right, nor be entitled as such as a matter of right,
to subscribe for or purchase any part of any new or additional issue of stock of
the Corporation of any class or series, whether now or hereafter authorized, and
whether issued for money or for consideration other than money, or of any issue
of securities convertible into stock of the Corporation.
ARTICLE V
The Board of Directors is hereby authorized to create and issue, whether or
not in connection with the issuance and sale of any of its stock or other
securities or property, rights entitling the holders thereof to purchase from
the Corporation shares of stock or other securities or property of the
Corporation or any other corporation. The times at which and the terms upon
which such rights are to be issued will be determined by the Board of Directors
and set forth in the contracts or instruments that evidence such rights. The
authority of the Board of Directors with respect to such rights shall include,
but not be limited to, determination of the following:
(A) The initial purchase price per share or other unit of the stock or
other securities or property to be purchased upon exercise of such rights.
(B) Provisions relating to the times at which and the circumstances under
which such rights may be exercised or sold or otherwise transferred, either
together with or separately from, any other stock or other securities of the
Corporation.
(C) Provisions which adjust the number or exercise price of such rights or
amount or nature of the stock or other securities or property receivable upon
exercise of such rights following the
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occurrence of specified events, including without limitation a combination,
split or recapitalization of any stock of the Corporation, a change in ownership
of the Corporation's stock or other securities or a reorganization, merger,
consolidation, sale of assets or other occurrence relating to the Corporation or
any stock of the Corporation, and provisions restricting the ability of the
Corporation to enter into any such transaction absent an assumption by the other
party or parties thereto of the obligations of the Corporation under such
rights.
(D) Provisions which deny the holder of a specified percentage of the
outstanding stock or other securities of the Corporation the right to exercise
such rights and cause the rights held by such holder to become void.
(E) Provisions which permit the Corporation to redeem or exchange such
rights.
(F) The appointment of a rights agent with respect to such rights.
ARTICLE VI
(A) In furtherance of, and not in limitation of, the powers conferred by
law, the Board of Directors is expressly authorized and empowered:
(i) to adopt, amend or repeal the Bylaws of the Corporation; provided,
however, that the Bylaws adopted by the Board of Directors under the powers
hereby conferred may be amended or repealed by the Board of Directors or by
the stockholders having voting power with respect thereto; provided,
further, that in the case of amendments by stockholders, the affirmative
vote of the holders of at least 80 percent of the voting power of the then
outstanding Voting Stock, voting together as a single class, shall be
required to alter, amend or repeal any provision of the Bylaws or adopt any
provision of the Bylaws inconsistent with any other provision of the Bylaws;
and
(ii) from time to time to determine whether and to what extent, and at
what times and places, and under what conditions and regulations, the
accounts and books of the Corporation, or any of them, shall be open to
inspection of stockholders; and, except as so determined, or as expressly
provided in this Second Restated Certificate of Incorporation or in any
Preferred Stock Designation, no stockholder shall have any right to inspect
any account, book or document of the Corporation other than such rights as
may be conferred by applicable law.
(B) The Corporation may in its Bylaws confer powers upon the Board of
Directors in addition to the foregoing and in addition to the powers and
authorities expressly conferred upon
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the Board of Directors by applicable law. Notwithstanding anything contained in
this Second Restated Certificate of Incorporation to the contrary, the
affirmative vote of the holders of at least 80 percent of the voting power of
the then outstanding Voting Stock, voting together as a single class, shall be
required to amend or repeal, or adopt any provision inconsistent with,
paragraph (A)(i) of this Article VI. For the purposes of this Second Restated
Certificate of Incorporation, "Voting Stock" shall mean the outstanding shares
of stock of the Corporation entitled to vote generally in the election of
directors.
ARTICLE VII
Subject to the rights of the holders of any series of Preferred Stock or any
other series or class of stock as set forth in this Second Restated Certificate
of Incorporation to elect additional directors under specified circumstances,
any action required or permitted to be taken by the stockholders of the
Corporation must be effected at a duly called annual or special meeting of
stockholders of the Corporation and may not be effected by any consent in
writing in lieu of a meeting of such stockholders. Except as otherwise required
by law, and subject to the rights of the holders of any series of Preferred
Stock or any other series or class of stock as set forth in this Second Restated
Certificate of Incorporation to elect additional directors under specified
circumstances, special meetings of the stockholders of the Corporation may be
called only by the Board of Directors pursuant to a resolution adopted by a
majority of the total number of Directors which the Corporation would have if
there were no vacancies or by the Chairman of the Board. Except as expressly
provided in the immediately preceding sentence, any power of stockholders to
call a special meeting is specifically denied. Only such business as shall have
been brought before the special meeting of stockholders pursuant to the
Corporation's notice of meeting shall be conducted at such meeting.
Notwithstanding anything contained in this Second Restated Certificate of
Incorporation to the contrary, the affirmative vote of at least 80 percent of
the voting power of the then outstanding Voting Stock, voting together as a
single class, shall be required to amend or repeal, or adopt any provision
inconsistent with, this Article VII.
ARTICLE VIII
(A) The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors except as otherwise provided
herein or required by law.
(B) Subject to the rights of the holders of any series of Preferred Stock
or any other series or class of stock as set forth in this Second Restated
Certificate of Incorporation to elect additional directors under specified
circumstances, the number of directors of the Corporation
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shall be fixed by the Bylaws of the Corporation and may be increased or
decreased from time to time in such a manner as may be prescribed by the Bylaws.
(C) Unless and except to the extent that the Bylaws of the Corporation
shall so require, the election of directors of the Corporation need not be by
written ballot.
(D) The directors, other than those who may be elected by the holders of
any series of Preferred Stock or any other series or class of stock as set forth
in this Second Restated Certificate of Incorporation, shall be divided into
three classes, as nearly equal in number as possible. One class of directors
shall be initially elected for a term expiring at the annual meeting of
stockholders to be held in 1997, another class shall be initially elected for a
term expiring at the annual meeting of stockholders to be held in 1998, and
another class shall be initially elected for a term expiring at the annual
meeting of stockholders to be held in 1999. Members of each class shall hold
office until their successors are elected and qualified. At each annual meeting
of the stockholders of the Corporation, commencing with the 1997 annual meeting,
the successors of the class of directors whose term expires at that meeting
shall be elected by a plurality vote of all votes cast at such meeting to hold
office for a term expiring at the annual meeting of stockholders held in the
third year following the year of their election.
(E) Subject to the rights of the holders of any series of Preferred Stock
or any other series or class of stock, as set forth in this Second Restated
Certificate of Incorporation, to elect additional directors under specified
circumstances, any director may be removed from office, at any time, but only
for cause and only by the affirmative vote of the holders of at least
80 percent of the voting power of the then outstanding Voting Stock, voting
together as a single class.
(F) Notwithstanding anything contained in this Second Restated Certificate
of Incorporation to the contrary, and in addition to any vote of the Board of
Directors required by applicable law or this Second Restated Certificate of
Incorporation, the affirmative vote of the holders of at least 80 percent of the
voting power of the then outstanding Voting Stock, voting together as a single
class, shall be required to alter, amend or repeal, or adopt any provision
inconsistent with, this Article VIII.
(G) Subject to the rights of the holders of any series of Preferred Stock
then outstanding, newly created directorships resulting from any increase in the
authorized number of directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office or other cause shall, unless otherwise provided by law or by resolution
of the Board of Directors, be filled only by a majority vote of the directors
then in office, though less than a quorum, and not by the stockholders.
Directors so chosen shall hold
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office for a term expiring at the annual meeting of stockholders at which the
term of office of the class to which they have been chosen expires. No decrease
in the authorized number of directors shall shorten the term of any incumbent
directors.
ARTICLE IX
For purposes of this Second Restated Certificate of Incorporation:
(A) "Person" shall mean any individual, firm, corporation or other entity.
(B) "Beneficial Owner," "Beneficially Own," "Beneficially Owned,"
"Beneficial Ownership," and words of similar import shall have the meaning
ascribed to such term in Rule 13d-3 of the General Rules and Regulations of the
Securities Exchange Act of 1934, as in effect on September 15, 1996.
(C) "Subsidiary" shall mean any corporation of which a majority of any
series or class of equity security is owned, directly or indirectly, by a
different corporation.
ARTICLE X
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (A) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (B) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (C) under Section 174 of the General Corporation Law of the
State of Delaware, or (D) for any transaction from which the director derived an
improper personal benefit. Notwithstanding anything contained in this Second
Restated Certificate of Incorporation to the contrary, any alteration, amendment
or repeal of, or adoption of any provision inconsistent with, this Article X
shall not adversely affect any right or protection of a director of the
Corporation existing hereunder in respect of any act or omission occurring prior
to such alteration, amendment, repeal or adoption.
ARTICLE XI
Except as may be expressly provided in this Second Restated Certificate of
Incorporation, the Corporation reserves the right at any time and from time to
time to alter, amend, or repeal any provision contained in this Second Restated
Certificate of Incorporation, and any other provisions authorized by the laws of
the State of Delaware at the time in force may be added or inserted, in the
manner now or hereafter prescribed herein or by applicable law, and all rights,
preferences
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and privileges of whatsoever nature conferred upon stockholders, directors or
any other Persons whomsoever by and pursuant to this Second Restated Certificate
of Incorporation (in its present form or as hereafter amended) are granted
subject to the right reserved in this Article XI.
IN WITNESS WHEREOF, the Corporation has caused this Second Restated
Certificate of Incorporation to be signed by its President this day of
, 2000.
SABRE HOLDINGS CORPORATION
By:
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President
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EXHIBIT B
SABRE HOLDINGS CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
WHEREAS, the Board of Directors of The SABRE Group Holdings, Inc. ("TSGH")
established the Employee Stock Purchase Plan dated January 1, 1997 as a plan for
the employees of The SABRE Group, Inc. and certain of its Subsidiaries to
purchase at a discount under the requirements of Section 423 of the Internal
Revenue Code shares of Class A Common Stock. $.01par value,
WHEREAS, effective July 1, 2000 the Board of Directors of Sabre Holdings
Corporation ("Holdings") hereby amends, superscedes and replaces in its entirety
the plan dated January 1, 1997 with this Employee Stock Purchase Plan,
NOW, THEREFORE, effective as of July 1, 2000, the Holdings Board of
Directors adopts and establishes this Employee Stock Purchase Plan.
ARTICLE I
INTRODUCTION
1.1 PURPOSE OF PLAN. The purpose of the Plan is to provide employees of
Sabre Inc., a Delaware Corporation ("Sabre"), and certain of its Subsidiaries
(collectively, the "Company") with an incentive for individual contribution to
ensure the future growth of the Company by enabling such employees to acquire
shares of Class A Common Stock, $.01 par value per share of Holdings (the
"Holdings Stock"), in the manner contemplated by the Plan. Rights to purchase
Holdings Stock offered pursuant to the Plan are a matter of separate inducement
and not in lieu of any salary or other compensation for the services of any
employee. The Plan is intended to qualify as an employee stock purchase plan
within the meaning of Section 423 of the Internal Revenue Code of 1986, as
amended (the "Code"). The Plan shall be submitted for approval of the
stockholders of Holdings within twelve (12) months of the date this Plan
restatement is adopted.
1.2 SHARES RESERVED FOR THE PLAN. There shall be reserved for issuance and
purchase by Eligible Employees under the Plan an aggregate of two million
(2,000,000) shares of Holdings Stock. Holdings Stock subject to the Plan may be
shares now or hereafter authorized but unissued, or shares that were once issued
and subsequently reacquired by Holdings. If and to the extent that any right to
purchase reserved shares shall not be exercised by any Eligible Employee for any
reason or if such right to purchase shall terminate as provided herein, shares
that have not been so
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purchased hereunder shall again become available for the purposes of the Plan
unless the Plan shall have been terminated, but such unpurchased shares shall
not be deemed to increase the aggregate number of shares specified above to be
reserved for purposes of the Plan (subject to adjustment as provided in Section
4.6).
ARTICLE II
DEFINITIONS
2.1 "Account" means a Plan account.
2.2 "Board" means the Holdings Board of Directors.
2.3 "Code" means the Internal Revenue Code of 1986, as amended.
2.4 "Committee" means the Compensation/Nominating Committee of the Board.
2.5 "Company" means collectively Holdings, Sabre, and every Subsidiary.
2.6 "Current Eligible Compensation" means for any pay period the gross
amount of Eligible Compensation with respect to which net amounts are actually
paid in such pay period.
2.7 "Eligible Compensation" means for any Eligible Employee his or her base
pay, or other pay as determined by the Committee.
2.8 "Eligible Employee" means those individuals described in Sections 3.1
and 3.2.
2.9 "Fair Market Value" means the mean of the high and low sales prices of a
share of Holdings Stock on either the New York Stock Exchange ("NYSE") or the
National Association of Securities Dealers Automated Quotation System ("NASDAQ")
on the date in question or, if Holdings Stock shall not have been traded on such
exchange on such date, the mean of the high and low sales prices on such
exchange on the first day prior thereto on which Holdings Stock was so traded or
such other amount as may be determined by the Committee by any fair and
reasonable means.
2.10 "Holdings" means Sabre Holdings Corporation.
2.11 "Holdings Stock" means the Class A Common Stock, $.01 par value, of
Holdings.
2.12 "Investment Date" means the last business day of each six-month period
during which the Plan is in existence.
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2.13 "Participating Employee" means an Eligible Employee (i) for whom
payroll deductions are currently being made or (ii) for whom payroll deductions
are not currently being made because he or she has reached the limitation set
forth in Section 3.5.
2.14 "Plan" means this Sabre Holdings Corporation Employee Stock Purchase
Plan.
2.15 "Plan Entry Date" means the first day of each six-month period,
beginning January 1 or July 1 of each Plan Year.
2.16 "Plan Year" means the calendar year.
2.17 "Sabre" means Sabre Inc.
2.18 "Subsidiary" means Sabre and any corporation designated by the Board
for participation into this Plan in which Holdings or a subsidiary owns not less
than 50% of the total combined voting power of all classes of stock.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY. All employees of Sabre and each Subsidiary, provided that
such employee:
(a) is not in a group of key employees that, pursuant to Section
423(b)(4)(D) of the Code, the Committee determines to be ineligible to
participate in the Plan: and
(b) does not own, immediately after the right is granted, stock
possessing five percent (5%) or more of the total combined voting power or
value of all classes of capital stock of Holdings, Sabre, or of a
Subsidiary.
In determining stock ownership under this Section 3.1, the rules of Section
424(d) of the Code shall apply and Holdings Stock that the employee may purchase
under outstanding options shall be treated as Holdings Stock owned by the
employee.
3.2 CESSATION OF ELIGIBILITY. An individual's status as an Eligible
Employee will cease on the earliest to occur of the following events: (a) the
individual's termination of employment from the Company (b) the individual's
death; or (c) the date the individual ceases to satisfy any of the eligibility
criteria of Section 3.1 of the Plan.
3.3 ELECTION TO PARTICIPATE. Each Eligible Employee may elect to
participate in the Plan by completing and providing to Sabre an enrollment
application. The enrollment will be effective as of the first Plan Entry Date
subsequent thereto. Each Eligible Employee may elect a payroll
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deduction of up to ten percent (10%) of such Eligible Employee's Current
Eligible Compensation. Elections under this Section 3.3 are subject to the
limitations contained in Section 3.5. All payroll deductions shall be credited
as promptly as practicable to an Account in the name of the Participating
Employee and may be used by Holdings until so credited for any corporate
purpose. Unless he or she elects otherwise during the six-month period, an
Eligible Employee who is a Participating Employee will be deemed (i) to have
elected to participate in the Plan and (ii) to have authorized payroll
deductions as in effect for such Eligible Employee on the day before the Plan
Entry Date. Once an election of a payroll deduction has been made, the
Participating Employee may not change that election until the next Plan Entry
Date except as provided in Section 3.4.
3.4 CESSATION OF PARTICIPATION. A Participating Employee may at any time
cease participation in the Plan by filing with the Committee or its designee a
form specified by the Committee or its designee. The cessation will be effective
as soon as practicable, whereupon no further payroll deductions will be made,
and any payroll deductions made on the Participating Employee's behalf during
the six-month period of cessation shall be invested in Holdings Stock pursuant
to the Plan on the next following Investment Date. Any Participating Employee
who ceases being a Participating Employee may elect to participate before the
next or any subsequent Plan Entry Date, if he or she is then an Eligible
Employee. A Participating Employee ceases being a Participating Employee if he
or she ceases being an Eligible Employee.
3.5 DOLLAR AMOUNT LIMIT ON PARTICIPATION. No right to purchase shares
under this Plan shall permit an employee to purchase Holdings Stock under all
employee stock purchase plans (as defined in Section 423 of the Code) of the
Company or any parent or Subsidiary of the Company, which in the aggregate
exceeds $25,000 (or such other dollar limit as may be specified from time to
time under Section 423 of the Code) of Fair Market Value of such stock
(determined at the time the right is granted, which, in the case of this Plan,
is each Plan Entry Date) for each calendar year in which the right is
outstanding at any time. Subject to the foregoing, no Participating Employee
shall be allowed to purchase more than 600 shares of Holdings Stock on any
Investment Date.
ARTICLE IV
PURCHASE OF HOLDINGS STOCK AND ACCOUNTS
4.1 PURCHASE PRICE. The purchase price for each share of Holdings Stock
shall be eighty-five percent (85%) of the lower of the Fair Market Value of such
a share on the first business day of a six-month period in which shares are
purchased and the Fair Market Value of such a share on the last business day of
any such six-month period.
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4.2 METHOD OF PURCHASE AND INVESTMENT ACCOUNTS. As of each Investment
Date, each Participating Employee shall be deemed without further action, to
have purchased, the number of whole and fractional shares of Holdings Stock
determined by dividing the amount of his or her payroll deductions not
theretofore invested by the purchase price as determined in Section 4.1. Records
of such shares shall be maintained in separate Accounts for each Participating
Employee. All cash dividends paid with respect to such shares shall be credited
to each Participating Employee's Account and will automatically be reinvested in
whole or fractional shares of Holdings Stock, unless the Participating Employee
elects not to have such dividends reinvested.
4.3 TITLE OF ACCOUNTS. Each Account may be in the name of the
Participating Employee or, if he or she so indicates on the appropriate form, in
his or her name jointly with another person, with right of survivorship. A
Participating Employee who is a resident of a jurisdiction that does not
recognize such a joint tenancy may have an Account in his or her name as tenant
in common with another person, with right of survivorship.
4.4 RIGHTS AS A STOCKHOLDER. At the time funds from a Participating
Employee's payroll deduction are used to purchase Holdings Stock, he or she
shall have all of the rights and privileges of a stockholder of Holdings with
respect to whole shares purchased under the Plan whether or not certificates
representing full shares have been issued. A Participating Employee shall not
have any of the rights and privileges of a stockholder of Holdings with respect
to fractional shares purchased under the Plan.
4.5 RIGHTS NOT TRANSFERABLE. Rights granted under the Plan are not
transferable by a Participating Employee and are exercisable during his or her
lifetime only by him or her.
4.6 ADJUSTMENT IN THE CASE OF CHANGES AFFECTING HOLDINGS STOCK. In the
event of a subdivision of outstanding shares of Holdings Stock, or the payment
of a stock dividend thereon, the number of shares reserved or authorized to be
reserved under this Plan shall be increased proportionately, and such other
adjustment shall be made as may be deemed necessary or equitable by the Board of
Directors. In the event of any other change affecting Holdings Stock, such
adjustment shall be made as deemed equitable by the Board of Directors to give
proper effect to such event, subject to the limitations of Section 424 of the
Code.
ARTICLE V
AMENDMENT AND TERMINATION OF THE PLAN
5.1 AMENDMENT OF THE PLAN. The Board of Directors, or its designate, may
at any time, or from time to time, amend the Plan in any respect provided,
however, that the Plan may not be
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<PAGE>
amended in any way that will cause rights issued under it to fail to meet the
requirements for employee stock purchase plans as defined in Section 423 of the
Code, including stockholder approval if required.
5.2 TERMINATION OF THE PLAN. The Plan and all rights of employees
hereunder shall terminate: (a) on the Investment Date that Participating
Employees become entitled to purchase a number of shares greater than the number
of reserved shares remaining available for purchase or (b) at any time, at the
discretion of the Board of Directors. If the Plan terminates under circumstances
described in (a) above, reserved shares remaining as of the termination date
shall be sold to Participating Employees pro rata based on the balances in the
payroll deduction accounts. Any payroll deductions remaining after termination
of the Plan and after the purchase of shares as described in the preceding
sentence shall be refunded to the Participating Employees making such payroll
deductions.
ARTICLE VI
MISCELLANEOUS
6.1 ADMINISTRATION OF THE PLAN. The Plan shall be administered at the
expense of Holdings, by the Committee. The Committee may request advice or
assistance or employ such other persons as are necessary for proper
administration of the Plan. Subject to the express provisions of the Plan, the
Committee shall have authority to interpret the Plan, to prescribe, amend, and
rescind rules and regulations relating to it, and to make all other
determinations necessary or advisable in administering the Plan, all of which
determinations shall be final and binding upon all persons.
6.2 GOVERNMENTAL REGULATIONS. The Plan, and the grant and exercise of the
rights to purchase shares hereunder, and Holdings' obligations to sell and
deliver shares upon exercise of rights to purchase shares shall be subject to
all applicable federal, state and foreign laws, rules and regulations, and to
such approvals by any regulatory or governmental agency as may in the opinion of
counsel for Holdings be required.
6.3 INDEMNIFICATION OF COMMITTEE. Service on the Committee shall
constitute service as a Director of Holdings so that members of the Committee
shall be entitled to indemnification and reimbursement as Directors of Holdings
pursuant to its Certificate of Incorporation, Bylaws, or resolutions of its
Board of Directors or stockholders.
6.4 THIRD PARTY BENEFICIARIES. None of the provisions of the Plan shall be
for the benefit of or enforceable by any creditor of a Participating Employee. A
Participating Employee may not create a lien on any portion of the cash balance
accumulated in such Participating Employee's
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<PAGE>
payroll deduction account or on any shares covered by a right to purchase before
a stock certificate for such shares is issued for such Participating Employee's
benefit.
6.5 GENERAL PROVISIONS. The Plan shall neither impose any obligation on
Sabre or on any Subsidiary to continue the employment of any Employee
Eligibility, nor impose any obligation on any Employee Eligibility to remain in
the employ of Sabre or of any Subsidiary. For purposes of the Plan, an
employment relationship shall be deemed to exist between an individual and a
corporation if, at the time of the determination, the individual was an
"employee" of such corporation within the meaning of Section 423(a)(2) of the
Code and the regulations and rulings interpreting such section. For purposes of
the Plan, the transfer of an employee from employment with Sabre to employment
with a Subsidiary, or vice versa, shall not be deemed a termination of
employment of the employee. Subject to the specific terms of the Plan, all
employees granted rights to purchase shares hereunder shall have the same rights
and privileges.
By Order of the Board of Directors
-------------------------------------------------------------------
James F. Brashear
Corporate Secretary
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<PAGE>
DIRECTIONS TO THE
DALLAS/FORT WORTH AIRPORT MARRIOTT SOUTH
4151 CENTREPORT DRIVE
FORT WORTH, TEXAS 76155
[MAP GRAPHIC]
<PAGE>
Back Cover
[Sabre Logo]
<PAGE>
If you are planning to attend the annual meeting in person, you must bring
with you the admission ticket printed on this page. You will be asked for this
ticket at the stockholder registration desk at the annual meeting. If you do not
have an admission ticket, other evidence of share ownership will be necessary to
obtain admission to the annual meeting. See "Official Notice of Annual Meeting"
for details.
(PLEASE CUT ALONG THIS LINE)
................................................................................
SABRE HOLDINGS CORPORATION
2000 ANNUAL MEETING ADMISSION TICKET
The Annual Meeting of Stockholders of Sabre Holdings Corporation
will be held at 1:00 P.M., Central Daylight Saving Time, on Wednesday, May 17,
2000,
in the Trinity Ballroom at the Dallas/Fort Worth Airport Marriott South,
4151 Centreport Drive, Fort Worth, Texas 76155.
TO ATTEND THIS MEETING YOU MUST PRESENT
THIS TICKET OR OTHER PROOF OF SHARE OWNERSHIP
(Doors will open at 12:00 noon. NOTE: Cameras, tape recorders or other recording
devices will not be allowed in the meeting room.)
<PAGE>
SABRE HOLDINGS CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF SABRE HOLDINGS CORPORATION
P The undersigned hereby appoints William J. Hannigan, Glenn W. Marschel,
R Jr., and Richard L. Thomas, or any of them, proxies, each with full power
O of substitution, to vote the shares of the undersigned at the Annual
X Meeting of Stockholders of Sabre Holdings Corporation on May 17, 2000,
Y and any adjournments thereof, upon all matters as may properly come before
the meeting. Without otherwise limiting the foregoing general
authorization, the proxies are instructed to vote as indicated herein.
ELECTION OF A DIRECTOR, NOMINEE:
Edward A. Brennan
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES.
SEE REVERSE SIDE. YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR
SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE SIDE
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE>
2406
/X/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
This proxy, when properly signed, will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR the Board
of Directors' nominee listed; and FOR Proposals 2, 3 and 4.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1, PROPOSAL 2, PROPOSAL 3
AND PROPOSAL 4.
FOR WITHHELD
1. Election of a Director / / / /
(see reverse).
FOR AGAINST ABSTAIN
2. Amendment to the / / / / / /
Corporation's Restated
Certificate of Incorporation.
FOR AGAINST ABSTAIN
3. Approval of amendments to the / / / / / /
Employee Stock Purchase Plan.
FOR AGAINST ABSTAIN
4. Ratification of the selection of / / / / / /
Ernst & Young LLP as independent
auditors for the year 2000.
Transact such other matters as may properly come before the meeting.
If you plan to attend the Annual / / Will Attend
Meeting, please mark this box.
SIGNATURE(S) DATE
--------------------------- -----------------------
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR VOTED PROXY CARD BY MAIL -
<PAGE>
NAME & ADDRESS
PRINT HERE
#
Dear Stockholder:
Sabre Holdings Corporation encourages you to take advantage of convenient
ways by which you can vote your shares. You can vote your shares
electronically through the Internet or by telephone. This eliminates the need
for you to return the proxy card.
To vote your shares electronically you must use the control number printed
above, just below the perforation. The series of numbers that appear above
must be used to access the system.
1. To vote over the Internet:
- Log on to the Internet and go to the web site
http://www.eproxyvote.com/tsg.
The web site should be accessible 24 hours a day, 7 days a week. Polls
will close Tuesday, May 16, 2000 at 5:00 P.M. Central Daylight Saving Time.
2. To vote over the telephone:
On a touch-tone telephone call 1-877-779-8683. This is a toll-free number.
The system should be accessible 24 hours a day, 7 days a week. Polls will
close Wednesday, May 17, 2000 at 1:00 P.M. Central Daylight Saving Time.
Your electronic vote authorizes the named proxies in the same manner as
if you marked, signed, dated and returned the proxy card.
THANK YOU FOR VOTING
