<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
AMERICA WEST HOLDINGS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2. Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
4. Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
5. Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
6. Amount Previously Paid:
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7. Form, Schedule or Registration Statement No.:
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8. Filing Party:
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9. Date Filed:
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<PAGE> 2
[America West Holdings Letterhead]
April 30, 1999
To Our Stockholders:
On behalf of the Board of Directors, it is our pleasure to invite you to
attend the Annual Meeting of Stockholders of America West Holdings Corporation
to be held at The Regency at 540 Park Avenue, New York, New York 10021, on
Thursday May 20, 1999 at 8:30 a.m. (Eastern Daylight Time). A notice of the
meeting, proxy statement and form of proxy are enclosed with this letter.
We hope that you will be able to attend the meeting. If you are unable to
attend the meeting in person, it is very important that your shares be
represented and we request that you complete, date, sign and return the enclosed
proxy at your earliest convenience. If you choose to attend the Annual Meeting
in person, you may, of course, revoke your proxy and cast your votes personally
at the meeting.
If your shares are not registered in your own name and you would like to
attend the meeting, please ask the broker, trust, bank or other nominee that
holds the shares to provide you with evidence of your share ownership. We look
forward to seeing you at the meeting.
Sincerely,
/s/ William A. Franke
William A. Franke
Chairman of the Board, President
and Chief Executive Officer
<PAGE> 3
AMERICA WEST HOLDINGS CORPORATION
111 West Rio Salado Parkway
Tempe, Arizona 85281
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 20, 1999
TO THE STOCKHOLDERS OF AMERICA WEST HOLDINGS CORPORATION:
The Annual Meeting of Stockholders of America West Holdings Corporation,
a Delaware corporation, will be held at The Regency at 540 Park Avenue, New
York, New York 10021 on Thursday, May 20, 1999 at 8:30 a.m. (Eastern Daylight
Time) for the following purposes:
1. To elect five directors, one to hold office until the annual
stockholders' meeting in 2000, and four to hold office until the
annual stockholders' meeting in 2002.
2. To approve an amendment to the America West 1994 Incentive Equity Plan
(the "Incentive Plan") to increase the aggregate number of shares of
the company's Class B Common Stock authorized for issuance under the
Incentive Plan by 1.5 million shares.
The Board of Directors recommends a vote FOR each of the nominated
directors and FOR the proposed amendment to the Incentive Plan.
The Board of Directors knows of no other matters that will be presented
at the Annual Meeting. If any other matters are properly brought before the
meeting, the persons named in the accompanying proxy will vote on those matters
using their best judgment.
You must have been a stockholder of record at the close of business on
March 26, 1999 to vote at the meeting. If you do not expect to attend the
meeting in person, please sign, date and complete the enclosed proxy and return
it without delay in the enclosed envelope, which requires no postage stamp if
mailed in the United States. Mailing your completed proxy will not prevent you
from later revoking that proxy and voting in person at the meeting. If you want
to vote at the meeting but your shares are held by an intermediary, such as a
broker or bank, you will need to obtain proof of ownership as of March 26, 1999
from the intermediary.
By Order of the Board of Directors
/s/ Patricia Penwell
Patricia A. Penwell
Corporate Secretary
Tempe, Arizona
April 30, 1999
<PAGE> 4
AMERICA WEST HOLDINGS CORPORATION
111 West Rio Salado Parkway
Tempe, Arizona 85281
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1999
INTRODUCTION
This proxy is solicited on behalf of the Board of Directors of
America West Holdings Corporation ("Holdings" or the "Company"),
for use at the Annual Meeting of Stockholders to be held on
Thursday May 20, 1999, at 8:30 a.m. (Eastern Daylight Time) at
The Regency at 540 Park Avenue, New York, New York 10021, or at
any adjournment thereof (the "Annual Meeting").
"AWA" and "TLC" refer to America West Airlines, Inc. and The
Leisure Company, respectively, both of which are wholly-owned
subsidiaries of the Company.
<TABLE>
<CAPTION>
TABLE OF Item Page Number
CONTENTS ---- -----------
<S> <C> <C>
Proposal 1: Election of Directors 2
Proposal 2: Amendment to America West 1994 Incentive Equity
Plan 6
Information Concerning Solicitation and Voting 8
Information About the Company's Board of Directors 10
Security Ownership of Certain Beneficial Owners and
Management 13
Executive Compensation 16
Performance Graphs 20
Report of the Compensation Committee of the Board of
Directors 21
Employment Agreement 25
Certain Transactions 27
Appendix A A-1
</TABLE>
1.
<PAGE> 5
PROPOSAL 1
ELECTION OF DIRECTORS
ELECTION OF
DIRECTORS
The nominees for election as directors are listed below. The
Board of Directors currently consists of 10 members. If each of
the nominees for election as directors is elected, the Board will
consist of 11 members and will be divided among three classes as
follows: four in Class I (term expiring in 2002), three in Class
II (term expiring in 2000) and four in Class III (term expiring
in 2001). The Class I nominees will serve until the Annual
Meeting in 2002 (and until their successors are elected and
qualify) and the Class II nominee will serve until the Annual
Meeting in 2000 (and until his successor is elected and
qualifies). Unless you tell us on your proxy card to vote
differently, we will vote signed, returned proxies FOR the
election of such nominees. If for any reason any nominee cannot
or will not serve as a director, we may vote such proxies for the
election of a substitute nominee designated by the Board of
Directors. Each person nominated for election has agreed to serve
if elected and management has no reason to believe that any
nominee will be unable to serve.
NOMINEES A nominee must receive a plurality of the votes cast at the
Annual Meeting. Abstentions and broker non-votes will therefore
have no effect on the election of directors.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
<TABLE>
<CAPTION>
NOMINEE,
CLASS AND 1998 PRINCIPAL OCCUPATION,
COMMITTEE BUSINESS EXPERIENCE, DIRECTOR
SERVICE OTHER DIRECTORSHIPS HELD, AGE SINCE
------- ----------------------------- -----
<S> <C> <C>
JOHN F. TIERNEY Mr. Tierney is Managing Director of Castletown Financial 1993
(Class I) Services, an investment and consulting firm. He was
(Audit Assistant Chief Executive and Finance Director of GPA
Committee) Group plc (since renamed AerFi Group plc), from 1993 until
1997. Mr. Tierney is Chairman of Datalex Communications
Limited and FM Systems Limited and also serves as a
director of Caterpillar International Bank, Apax Capital
Limited and NS Financial Services (Holdings) Limited. Age
53.
ROBERT J. MILLER Mr. Miller served as governor of the State of Nevada from --
(Class I) 1989 until January 1999. He is currently a Senior Partner
at the Nevada law firm of Jones Vargas. Mr. Miller
currently serves as a director of the Newmont Mining
Corporation, Paging Network, Inc. (PageNet) and Zenith
National Insurance Corp. He is also a director of the
American Cancer Society Foundation, a member of the Las
Vegas Chamber of Commerce Board of Trustees and serves on
the U.S. Secretary of Energy Advisory Board. Age 54.
</TABLE>
2.
<PAGE> 6
<TABLE>
<CAPTION>
NOMINEE,
CLASS AND 1998 PRINCIPAL OCCUPATION,
COMMITTEE BUSINESS EXPERIENCE, DIRECTOR
SERVICE OTHER DIRECTORSHIPS HELD, AGE SINCE
------- ----------------------------- -----
<S> <C> <C>
W. DOUGLAS PARKER Mr. Parker is Executive Vice President of the Company and 1999
(Class I) Executive Vice President, Corporate Group of AWA. From
1991 to June 1995, Mr. Parker worked at Northwest
Airlines, most recently as Vice President-Assistant
Treasurer and Vice-President Financial Planning and
Analysis. Mr. Parker joined the Company as Senior Vice
President and Chief Financial Officer in June 1995. In
September 1997, Mr. Parker's duties were expanded to
include responsibility for AWA's planning, scheduling and
revenue management. He was elected to his present
positions in April 1999 and oversees all of AWA's finance,
scheduling and revenue management, sales and marketing,
informational systems and corporate and legal affairs. Age
37.
JEFFREY A. SHAW Mr. Shaw is a Managing Director of Texas Pacific Group, an --
(Class I) investment firm, having joined at its inception in 1993.
From 1990 to 1993, Mr. Shaw was a principal of Acadia
Partners/ Oak Hill Partners, an affiliate of Keystone,
Inc. (formerly the Robert M. Bass Group). Mr. Shaw
currently serves as a director of Ducati S.p.A, Ducati
North America, Inc., Del Monte Foods Company, Favorite
Brands International, Inc., and Ryanair Holdings plc. Age
34.
GILBERT D. MOOK Mr. Mook is Executive Vice President and Chief Operating 1999
(Class II) Officer of AWA. From 1983 through 1998, Mr. Mook was
employed with Federal Express Corporation, where he served
as Senior Vice President - Air Operations Division from
1996 to 1998. Age 56.
</TABLE>
CONTINUING
DIRECTORS
The six directors whose terms will continue after the Annual
Meeting and will expire at the 2000 Annual Meeting (Class II) or
the 2001 Annual Meeting (Class III) are listed below.
<TABLE>
<CAPTION>
DIRECTOR,
CLASS AND 1998 PRINCIPAL OCCUPATION,
COMMITTEE BUSINESS EXPERIENCE, DIRECTOR
SERVICE OTHER DIRECTORSHIPS HELD, AGE SINCE
------- ----------------------------- -----
<S> <C> <C>
JOHN L. GOOLSBY Mr. Goolsby is a private investor. Until retiring in 1998, 1994
(Class II) he served as the President and Chief Executive Officer of
(Audit Committee The Howard Hughes Corporation, a subsidiary of The Rouse
and Special Company. Mr. Goolsby serves as a director of Nevada Power
Committee) Company. Age 57.
RICHARD P. SCHIFTER Mr. Schifter has been a Managing Director of Texas Pacific 1994
(Class II) Group since July 1994. Mr. Schifter also is a Managing
(Compensation Partner of Newbridge Latin America Fund, L.P., a private
Committee) equity fund. Mr. Schifter serves as a director of TPG
Communications, Inc., Mtel Latin America, Inc.,
Controladora Milano, S.A. de C.V., Ryanair Holdings,
L.L.C., Alpargatas S.A.I.C., Productora de Papel, S.A. de
C.V., and Bristol Group. Age 46.
</TABLE>
3.
<PAGE> 7
<TABLE>
<CAPTION>
DIRECTOR,
CLASS AND 1998 PRINCIPAL OCCUPATION,
COMMITTEE BUSINESS EXPERIENCE, DIRECTOR
SERVICE OTHER DIRECTORSHIPS HELD, AGE SINCE
------- ----------------------------- -----
<S> <C> <C>
WILLIAM A. FRANKE Mr. Franke is Chairman of the Board, President and Chief 1992
(Class III) Executive Officer of the Company and of AWA. Mr. Franke
(Executive has served as Chairman of the Board of AWA since September
Committee) 1992 and as Chairman of the Board and Chief Executive
Officer of the Company since its formation in December
1996. Mr. Franke served as AWA's Chief Executive Officer
from January 1994 to February 1997 and as AWA's President
from May 1996 to February 1997. In April 1999, Mr. Franke
was elected as President of the Company and as Chief
Executive Officer and President of AWA. In addition to his
responsibilities at the Company, Mr. Franke serves as
President of Franke & Company, Inc., a financial services
company he has owned since May 1987, and also is a
Managing Partner of Newbridge. Mr. Franke serves as a
director of Phelps Dodge Corp., Central Newspapers Inc.,
the Air Transport Association of America, Beringer Wine
Estates, Inc., Mtel Latin America, Inc., AerFi Group plc
and Alpargatas S.A.I.C. Age 62.
WALTER T. KLENZ Mr. Klenz has been President and Chief Executive Officer 1998
(Class III) of Beringer Wine Estates, Inc. since November 1990 and was
(Compensation named Chairman of the Board of Beringer in August 1997.
Committee) Mr. Klenz joined Beringer in 1976 and served as marketing
director and Senior Vice President of finance/operations
before being elected to his present positions. He is past
Chairman of the California Wine Institute and past
President of the Napa Valley Vintners Association. Age 53.
RICHARD C. Mr. Kraemer is president of Chartwell Capital, Inc., a 1992
KRAEMER private investment company. He served as Chief Executive
(Class III) Officer and President of UDC Homes, Inc., a Phoenix-based
(Compensation homebuilding company ("UDC"), from October 1994 until
Committee and March 1996. Mr. Kraemer was President and Chief Operating
Special Officer of UDC from 1985 until October 1994. He was also
Committee) director of UDC from 1980 until March 1996. UDC filed for
protection under Chapter 11 of the U.S. Bankruptcy Code in
May 1995. The plan for the reorganization of UDC was
confirmed by the bankruptcy court on October 3, 1995 and
consummated on November 14, 1995. Age 55.
DENISE M. O'LEARY Ms. O'Leary has been a private investor of capital in 1998
(Class III) early stage companies since 1996. From 1983 until 1996,
(Audit she worked at Menlo Ventures, a venture capital firm,
Committee) first as an associate and then as a general partner. Ms.
O'Leary presently serves as a director of ALZA Corporation
and Del Monte Foods Company. Additionally, she is a member
of the Board of Trustees of Stanford University and a
member of the Board of Directors and Executive Committee
of UCSF Stanford Health Care. Age 41.
</TABLE>
4.
<PAGE> 8
DEPARTING
DIRECTORS
Frederick W. Bradley, a Class I director in 1998, is retiring
from the Company's Board of Directors effective upon the election
of directors at the Annual Meeting. Mr. Bradley has served on the
Company's Board of Directors since 1992. Mr. Bradley served as a
member of the Compensation Committee, Executive Committee and
Special Committee in 1998. James G. Coulter, a Class I director
in 1998 and a director since 1994, resigned from the Board of
Directors in 1999. Mr. Coulter served on the Executive Committee
in 1998. Richard R. Goodmanson, a Class II director in 1998,
resigned from the Board of Directors in April 1999.
5.
<PAGE> 9
PROPOSAL 2
APPROVAL OF AMENDMENT TO THE AMERICA WEST 1994 INCENTIVE EQUITY PLAN
AMENDMENT OF
THE INCENTIVE
PLAN
The Board of Directors recommends approval of an amendment to the
America West 1994 Incentive Equity Plan (the "Incentive Plan").
The Incentive Plan is a long-term compensation plan under which
executives and other key employees may be awarded stock options,
restricted stock and other stock based compensation. There
currently remain approximately one million shares available for
awards under the Incentive Plan. If this Proposal is approved by
the stockholders, the sum of the unexercised options granted plus
those shares available for future awards ("Incentive Plan
Shares") will total approximately 7.7 million or approximately
19.8 percent of the shares of common stock outstanding as of
March 31, 1999.
As explained below, the Company continues to pursue an active
share repurchase program. Continued purchasing of outstanding
Class B common stock under that program will result in the
reduction of the total number of shares outstanding and,
therefore, an increase in the percentage of common stock
outstanding represented by the 7.7 million Incentive Plan Shares.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED AND RECOMMENDS A
VOTE FOR PROPOSAL 2.
As explained in more detail in the "Report of the Compensation
Committee of the Board of Directors on Executive Compensation"
beginning on page 21 of this proxy statement, the Company's
strategy for key employees is designed to reduce the emphasis on
fixed and cash compensation by positioning base salaries and
annual incentive bonuses below industry average levels. Greater
emphasis is placed on stock-based compensation as a means of
attracting, compensating and retaining key employees. The
Incentive Plan, which is the Company's stock based compensation
program, is designed to compensate participants in a way that
provides a long term incentive for future performance, thus
closely linking the interests of those executives with the long
term interests of the Company's stockholders.
The continuing availability of the Incentive Plan is critical to
that strategy. The share allotment remaining available for grant
under the Incentive Plan may be exhausted prior to the Company's
Annual Meeting in 2000. In order to continue to utilize the
Incentive Plan for stock-based compensation, the number of
available shares must be increased.
The Board of Directors believes that 1.5 million additional
shares are needed for awards under the Incentive Plan to allow
the Company to continue to pursue its compensation strategy and
to have the flexibility to provide appropriate incentive awards
to key employees over the next two to three years. In determining
the appropriate increase and the number of shares available, the
Board considered a variety of factors including:
- The Company's compensation strategy and philosophy, which
relies on stock-based compensation and reduces emphasis on
fixed salaries and annual bonuses.
- The need to continue to provide attractive and competitive
compensation packages to continue to attract and retain
high quality and results-oriented key employees.
6.
<PAGE> 10
- The Board of Directors' action in late 1998 to broaden the
coverage of the Incentive Plan from the Company's 75 most
senior employees to an employee group of approximately
125.
- At approximately 19.8 percent of shares outstanding, the
allocation of shares to the Incentive Plan is consistent
with allocations of shares to similar plans maintained by
other major U.S. airlines.
- The shares covered by options granted under the Incentive
Plan will be subject to exercise over a period of years
due to vesting requirements.
The Board also considered the mitigation of the dilutive affect of
allocations of shares to the Incentive Plan through the Company's
share repurchase program. Since implementation of the share
repurchase program in 1995 through March 31, 1999, the Company has
repurchased more than 7.5 million shares of the Company's Class B
common stock and more than 7 million of the Company's publicly
traded warrants and thereby returned more than $190 million to its
equity holders.
The Board also considered that certain initiatives and practices
that enhance shareholder value and link the interests of the
Company's key executives with stockholder interests tend to
inflate the percentage of Incentive Plan Shares outstanding.
First, purchases under the Company's stock repurchase program
have, over time, resulted in a significant reduction of the number
of shares outstanding and, therefore, an increase in the
percentage of shares outstanding represented by the absolute
number of Incentive Plan Shares.
Second, stock ownership requirements imposed on the Company's
officers to assure that each maintains a significant equity stake
in the Company (described in detail in the "Report of the
Compensation Committee") result in fewer option exercises and,
therefore, a larger percentage of Incentive Plan Shares. Moreover,
the practice of certain of the Company's most senior officers,
including the Chairman and Chief Executive Officer, to refrain
from exercising vested stock options, while demonstrating loyalty
to the stockholders, has also resulted in a larger percentage of
Incentive Plan Shares. The extent to which senior officers have
refrained from exercising vested stock options is described in
"Stock Option Grants and Exercises" beginning on page 18 of this
Proxy Statement. The Board of Directors believes that these
factors should be considered when comparing the Company's proposed
allocation of Incentive Plan Shares to allocations maintained by
other companies and, in general, in considering this Proposal.
The Company's compensation strategy and this Proposal were
developed with the assistance of an independent
nationally-recognized consulting firm. In determining the
appropriate action to be recommended with respect to the Incentive
Plan and this Proposal, the Board of Directors has considered the
advice of that firm, including information concerning the
practices of other major airlines with respect to stock-based
compensation.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED AND URGES YOU TO
VOTE FOR THE PROPOSED AMENDMENT TO THE INCENTIVE PLAN.
A summary included in Appendix A describes the principal features
of the Incentive Plan and is qualified in its entirety by
reference to the full text of the Incentive Plan, as amended. A
copy of the Incentive Plan will be provided at no charge upon
request made to Patricia A. Penwell, Corporate Secretary, America
West Holdings Corporation, 111 West Rio Salado Parkway, Tempe, AZ
85281. Ms. Penwell's telephone number is 480-693-5839.
7.
<PAGE> 11
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
This proxy is solicited on behalf of the Board of Directors of the
Company for use at the Annual Meeting to be held on Thursday May
20, 1999, at 8:30 a.m. (Eastern Daylight Time), or at any
adjournment thereof. The Annual Meeting will be held at The
Regency at 540 Park Avenue, New York, New York 10021. The Company
intends to mail this proxy statement and accompanying proxy card
on or about April 30, 1999, to all stockholders entitled to vote
at the Annual Meeting.
RECORD DATE
Only those persons that held shares of the Company's Common Stock
on March 26, 1999 will be allowed to vote.
VOTING RIGHTS
The Company has two classes of Common Stock:
- Class A Common Stock is entitled to 50 votes per share
- Class B Common Stock is entitled to one vote per share
The shares of Common Stock are the Company's only outstanding
voting securities. The Class A Common Stock and Class B Common
Stock vote together on all matters submitted to a vote of the
stockholders.
OUTSTANDING
SHARES
At the close of business on March 26, 1999, 1,100,000 shares of
Class A Common Stock were outstanding and entitled to vote, and
approximately 37,820,902 shares of Class B Common Stock were
outstanding and entitled to vote. If all holders of the Company's
Common Stock vote at the Annual Meeting, either in person or by
proxy, the aggregate voting power will be 92,820,902 votes, which
is the sum of:
- 37,820,902 votes for holders of Class B Common Stock, and
- 55,000,000 votes for holders of Class A Common Stock
(1,100,000 shares multiplied by 50 votes per share)
QUORUM AND
APPROVAL
REQUIREMENTS
A majority of the aggregate voting power, either in person or by
proxy, is required for there to be a quorum at the Annual Meeting.
A quorum is needed in order for any business to be transacted at
the Annual Meeting. Any proxy that is properly completed will be
counted for the purposes of determining if a quorum is present,
even if the stockholder abstains from voting or an intermediary or
broker who is entitled to vote for the beneficial owner abstains
from voting (a "broker non-vote").
The Proposal relating to the election of directors will require a
plurality of the votes cast at the Annual Meeting. Therefore, any
abstentions or broker non-votes will not affect the outcome of the
election of directors. Any other matters to properly come before
the meeting will require the affirmative vote of a majority of the
shares present at the Annual Meeting, in person or by proxy.
Therefore, abstentions will have the same effect as a vote against
any other proposal. Broker non-votes will not count in determining
whether a matter has been approved.
VOTING OF
PROXIES
A proxy will be voted in the manner specified on the proxy, or if
no manner is specified, it will be voted in favor of the election
of directors. Any additional business to properly come before the
meeting will be voted in accordance with the best judgment of the
person voting the proxy.
REVOCABILITY OF
PROXIES
Stockholders can revoke their proxies at any time before they are
voted by notifying Patricia A. Penwell, Corporate Secretary of the
Company, in writing, at the following address: America West
Holdings Corporation, 111 West Rio Salado Parkway, Tempe, Arizona
85281. Stockholders can also revoke their proxies by submitting a
subsequent proxy to the Corporate Secretary or by attending the
Annual Meeting in person and notifying either inspector of
elections.
8.
<PAGE> 12
SOLICITATION OF
PROXIES
The Company will bear the entire cost of solicitation of proxies.
The Company has retained The Altman Group, Inc. ("Altman Group")
to assist in the solicitation of proxies for a fee estimated at
$5,000 plus reimbursement of out-of-pocket expenses. Copies of
solicitation materials will be sent to stockholders as well as to
intermediaries, such as banks and brokers, that hold shares for
the beneficial owners of the shares. Those intermediaries will
then forward the solicitation materials to the beneficial owners.
The Company may reimburse the intermediaries for the costs of
forwarding solicitation materials to the beneficial owners. In
addition to this solicitation by mail, employees and directors of
the Company, or Altman Group may also solicit proxies over the
telephone, by facsimile or in person. Employees and directors will
not receive any additional compensation for doing so, but Altman
Group will be paid a fee for such solicitation.
INSPECTORS OF
ELECTION
All votes at the Annual Meeting will be counted by two inspectors
of elections appointed by the Board of Directors: Michael R.
Carreon, Vice President and Controller of AWA, and Kathleen M.
Doyle, Vice President and General Counsel of AWA. The inspectors
of elections will separately tabulate affirmative and negative
votes, abstentions and broker non-votes.
STOCKHOLDER
PROPOSALS
Under applicable proxy rules, proposals of stockholders that are
intended to be presented at the Company's Annual Meeting of
Stockholders in 2000 must be received by the Company not later
than December 31, 1999 in order to be included in the proxy
statement and proxy relating to that annual meeting. Pursuant to
the Company's Bylaws, in order for a proposal to be brought before
an annual meeting by a stockholder, the stockholder must deliver
proper notice to the Company not less than 60 days nor more than
90 days prior to the scheduled annual meeting. Stockholders are
advised to review the Company's Bylaws, which contain additional
requirements with respect to advance notice of stockholder
proposals.
ANNUAL REPORT
AND AVAILABLE
INFORMATION
The annual report to stockholders, including financial statements,
accompanies this Proxy Statement but does not constitute a part of
the proxy soliciting materials. THE COMPANY WILL FURNISH A COPY
WITHOUT CHARGE OF ITS ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED DECEMBER 31, 1998, INCLUDING FINANCIAL STATEMENTS BUT
WITHOUT EXHIBITS, TO EACH PERSON WHOSE VOTE IS SOLICITED BY THIS
PROXY STATEMENT, UPON WRITTEN REQUEST TO PATRICIA PENWELL,
CORPORATE SECRETARY, AMERICA WEST HOLDINGS CORPORATION, 111 WEST
RIO SALADO PARKWAY, TEMPE, ARIZONA 85281. Upon request and payment
of the Company's reasonable expense of furnishing the exhibit
requested, the Company will furnish any exhibit to the Form 10-K
to any person whose vote is solicited by this Proxy Statement.
9.
<PAGE> 13
INFORMATION ABOUT THE COMPANY'S BOARD OF DIRECTORS
BOARD PURPOSE
AND STRUCTUREThe Board of Directors establishes the broad policies of the
Company and is responsible for the overall performance of the
Company. The Board of Directors currently consists of 10 members.
If each of the nominees for election as directors is elected, the
Board will consist of 11 members and will be divided among three
classes as follows: four in Class I (term expiring in 2002), three
in Class II (term expiring in 2000) and four in Class III (term
expiring in 2001). Each member of the Board of Directors of the
Company is also a member of the Board of Directors of AWA and
Messrs. Franke, Klenz, Kraemer and Parker are members of the Board
of Directors of TLC.
BOARD
MEETINGSDuring 1998, the Board held 9 meetings. Each incumbent director
attended at least 75% of the meetings of the Board and of the
committees on which such director served.
BOARD
COMMITTEES The Company has four standing committees: a Compensation/Human
Resources Committee (the "Compensation Committee"), the Audit
Committee, the Executive Committee and the Special Committee. The
Company does not have a standing nominating committee. Upon the
election of directors at the Annual Meeting, the Board will
nominate members to serve on the Company's committees until the
annual meeting in 2000.
THE COMPENSATION COMMITTEE is comprised of four non-employee
directors, including Messrs. Kraemer (Chair), Klenz, Bradley and
Schifter, and met seven times in 1998. The Compensation Committee
reviews all aspects of compensation and promotion of officers of
the Company and also reviews matters relating to employee
compensation generally, including the America West 1994 Incentive
Equity Plan (the "Incentive Plan").
THE AUDIT COMMITTEE is comprised of three non-employee directors,
including Messrs. Goolsby (Chair) and Tierney and Ms. O'Leary, and
met five times in 1998. The Audit Committee recommends the
Company's independent auditors, reviews the Company's financial
statements and considers other matters relating to the financial
affairs of the Company.
THE EXECUTIVE COMMITTEE was comprised of two non-employee
directors in 1998, including Messrs. Bradley and Coulter, and Mr.
Franke (Chair). The Executive Committee, which met five times in
1998, has all of the powers of the Board of Directors in the
management of the business of the Company between meetings of the
full Board, subject to certain limitations.
THE SPECIAL COMMITTEE is comprised of three non-employee
directors, including Messrs. Bradley (Chair), Goolsby and Kraemer,
and met five times in 1998. The Special Committee considers, when
asked by senior management or the Board, potential acquisition or
investment transactions outside the ordinary course of the
Company's business. The Special Committee is not authorized to
initiate or approve any transaction on behalf of the Company.
10.
<PAGE> 14
COMPENSATION
COMMITTEE
INTERLOCKS
In 1998, the members of the Company's Compensation Committee were
Messrs. Kraemer (Chair), Klenz, Bradley and Schifter. Mr. Franke,
the Company's Chairman, President and Chief Executive Officer, and
Mr. Schifter both serve as managing partners of Newbridge Latin
America Fund, L.P., an investment fund. Mr. Franke and certain
third parties control Newbridge. Mr. Franke serves as a member of
the Compensation Committee of Beringer Wine Estates, Inc. Mr.
Klenz is Chairman, President and Chief Executive Officer of
Beringer and is a member of the Compensation Committee of the
Company.
COMPENSATION
OF DIRECTORS
Directors that are not salaried employees of the Company
("non-employee directors") receive the following annual
compensation for their Board service:
<TABLE>
<C> <C> <S>
ANNUAL $10,000.
RETAINER:
ATTENDANCE $1,000 for each Board or Committee meeting attended.
FEES:
OPTION GRANT: A grant of options (made on the day after each Annual
Meeting of stockholders) to purchase 3,000 shares of
Class B Common Stock at the closing market price per
share on the date of grant. These options are granted
pursuant to the Incentive Plan. Such options vest in
full six months after the date of grant. Ordinarily,
such options expire ten years from the date of grant,
but expire earlier if the individual ceases to be a
director of the Company.
RESTRICTED An automatic distribution (pursuant to the Incentive
STOCK: Plan) on December 31 of each year of a certain number of
unrestricted shares of Class B Common Stock. The number
of shares of unrestricted stock each non-employee
director receives is determined by dividing $13,000 by
the closing market price per share on December 31 of the
preceding year. On December 31, 1998, each non-employee
director was granted 698 shares of Class B Common Stock.
TRAVEL BENEFITS: The Company's non-employee directors, their spouses and
their dependent children are provided transportation on
AWA and reimbursement for federal and state income taxes
incurred thereon. In 1998, three current non-employee
directors or their spouses or dependent children
utilized these transportation benefits, resulting in an
aggregate value to such non-employee directors of
approximately $18,753 (including reimbursement of taxes
incurred in connection with such travel). The three
non-employee directors who received such travel
benefits, and the aggregate amount of such benefits,
were Mr. Kraemer ($11,277), Mr. Goolsby ($6,964) and Mr.
Klenz ($512).
</TABLE>
11.
<PAGE> 15
<TABLE>
<C> <C> <S>
ADDITIONAL BOARD NEW DIRECTORS: Any new non-employee director will automatically receive
POLICIES on the date of initial election or appointment an option
to purchase 3,000 shares of Class B Common Stock at the
closing market price per share on the date of grant. The
option grants are made pursuant to the Incentive Plan
and the terms are the same as the terms of the annual
option grants to non-employee directors, as described
above.
STOCK To align the interests of non-employee directors with
OWNERSHIP: the interests of stockholders, the Company established a
stock ownership goal, attainable over a five-year
period, of $115,000 for each non-employee director. For
purposes of such goal, shares of Class B Common Stock
owned by the non-employee directors are valued at the
current market value and vested options are valued at
50% of the exercise price.
RETIREMENT The Board has adopted a mandatory retirement age of 72
POLICY: for all non-employee directors.
</TABLE>
12.
<PAGE> 16
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
ownership of the Company's Class A and Class B Common Stock as of February 28,
1999 (the "Most Recent Practicable Date") by: (i) all those known by the Company
to be beneficial owners of more than 5% of its Common Stock; (ii) each director
and nominee for director; (iii) each of the executive officers named in the
Summary Compensation Table; and (iv) all executive officers and directors of the
Company as a group.
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS A AND B
BENEFICIALLY OWNED BENEFICIALLY OWNED COMBINED
-------------------------------------------------------------- VOTING POWER
BENEFICIAL OWNER (1) NUMBER PERCENTAGE NUMBER PERCENTAGE PERCENTAGE
- -------------------- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
TPG Partners, L.P. ("TPG")(2)........... 941,431(3) 85.6% 1,396(4) * 50.7%
201 Main Street, Suite 2420
Fort Worth, TX 76102
Continental Airlines, Inc. ............. 158,569(5) 14.4% -- -- 8.5%
2929 Allen Parkway
Houston, TX 77019
Vanguard/Windsor Funds, Inc. ........... -- -- 4,476,100(6) 11.8% 4.8%
Post Office Box 2600
Valley Forge, PA 09482-2600
Wellington Management Company........... -- -- 4,447,800(7) 11.7% 4.8%
75 State Street
Boston, MA 02109
The Equitable Companies Incorporated.... -- -- 3,958,996(8) 10.4% 4.3%
1290 Avenue of the Americas
New York, New York 10104
Capital Guardian Trust Company.......... 2,255,000(9) 5.9% 2.4%
11100 Santa Monica Boulevard,
Suite 1500
Los Angeles, CA 90025
William A. Franke....................... -- -- 1,237,401(10) 3.2% 1.3%
Richard R. Goodmanson................... -- -- 406,667(11) 1.1% *
W. Douglas Parker....................... -- -- 175,667(12) * *
John R. Garel........................... -- -- 104,667(13) * *
Stephen L. Johnson...................... -- -- 157,334(14) * *
John L. Goolsby......................... -- -- 26,517(15) * *
Richard C. Kraemer...................... -- -- 26,517(15) * *
Richard P. Schifter(17)................. 941,341 85.6% 16,396(15) * 50.7%
John F. Tierney......................... -- -- 16,517(15) * *
Walter T. Klenz......................... -- -- 6,431(16) * *
Denise M. O'Leary....................... -- -- 6,431(16) * *
Jeffrey A. Shaw(17)(18)................. 941,341 85.6% 1,396 * 50.7%
Robert J. Miller(19).................... -- -- -- -- --
Gilbert D. Mook(20)..................... -- -- -- -- --
All executive officers and directors as
a group (persons)(21)................. 941,341 85.6% 2,385,214 6.3% 53.3%
</TABLE>
* Less than 1%
(1) Information with respect to each beneficial owner of 5% or more of a
class of the Company's Common Stock is based on Schedules 13D or 13G
filed by such beneficial owners with the Securities and Exchange
Commission (the "SEC"). Unless otherwise indicated in the footnotes to
this table and subject to community property laws where applicable,
the Company believes that each of the stockholders named in this table
has sole voting power and investment power with respect to the shares
indicated as beneficially owned. Applicable percentages are based on
1,100,000 shares of Class A Common Stock outstanding as of February
28, 1999 and 37,911,729 shares of Class B Common Stock outstanding as
of February 28, 1999. Pursuant to rules
13.
<PAGE> 17
promulgated by the SEC, shares subject to options that are currently
exercisable or exercisable within 60 days of the Most Recent
Practicable Date are deemed to be outstanding and to be beneficially
owned by the person holding such options for the purpose of computing
the percentage ownership of such person but are not treated as
outstanding for the purpose of computing the percentage ownership of
any other person.
(2) TPG is a Delaware limited partnership whose general partner is TPG
GenPar, L.P., a Delaware limited partnership ("TPG GenPar"). The
general partner of TPG GenPar is TPG Advisors, Inc., a Delaware
corporation ("TPG Advisors"). The following individuals are executive
officers and directors of TPG Advisors: James G. Coulter (director and
vice president), Richard P. Schifter (Vice President) and Jeffrey A.
Shaw (vice president). Mr. Coulter and Mr. Schifter are presently
directors of the Company. Mr. Coulter is not standing for re-election
at the Annual Meeting and Mr. Shaw is a nominee for the Board of
Directors at the Annual Meeting. The general partner of each of TPG,
TPG Parallel I, L.P., a Delaware limited partnership ("TPG Parallel"),
and Air Partners II, L.P., a Texas limited partnership ("Air Partners
II"; Air Partners II, TPG and TPG Parallel being hereinafter referred
to as the "TPG Filing Parties"), is TPG GenPar.
(3) Includes 780,473 shares owned by TPG, 78,644 shares owned by TPG
Parallel and 82,314 shares owned by Air Partners II. Excludes 158,569
shares held by Continental Airlines, Inc. ("Continental"). Certain
affiliates of the TPG Filing Parties are also affiliated with
Continental. As a result of such relationships, the TPG Filing Parties
and Continental may comprise a group within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and each may be deemed to beneficially own the
securities of the Company owned by the others under Rule 13d-3 of the
Exchange Act.
(4) Includes 698 shares of Class B Common Stock that were initially
granted to each of Mr. Schifter and Mr. Coulter on December 31, 1998
as non-employee directors that were subsequently transferred to TPG
GenPar. Excludes 15,000 shares of Class B Common Stock underlying
stock options held by Mr. Schifter.
(5) Excludes 941,431 shares held by the TPG Filing Parties. See footnote
(3) above regarding group beneficial ownership of securities of the
Company.
(6) Vanguard/Windsor Funds, Inc. is an investment company registered under
Section 8 of the Investment Company Act.
(7) Includes shares owned by numerous investment advisory clients of
Wellington Trust Company, NA, a wholly owned subsidiary of Wellington
Management Company, LLP ("Wellington"). Wellington, in its capacity as
investment advisor, may be deemed to beneficially own such shares.
(8) The Equitable Companies Incorporated ("Equitable") is the parent
holding company of various subsidiaries (the "Equitable Subsidiaries")
that directly own the securities listed in the table above (the
"Equitable Securities"). Although each of the Equitable Subsidiaries
operates under independent management and makes independent voting and
investment decisions, Equitable is deemed to beneficially own the
Equitable Securities under Rule 13d-3 of the Exchange Act. AXA
(formerly AXA-UAP) is the parent holding company of Equitable. AXA
Conseil Vie Assurance Mutuelle (formerly Alpha Assurances Vie
Mutuelle), AXA Assurances I.A.R.D. Mutuelle, AXA Assurances Vie
Mutuelle and AXA Courtage Assurance Mutuelle (collectively, "Mutuelles
AXA") act, as a group, as a parent holding company with respect to the
holdings of AXA. Each of the Mutuelles AXA and AXA are deemed to
beneficially own the Equitable Securities under Rule 13d-3 of the
Exchange Act, although each of the Mutuelles AXA and AXA disclaim such
beneficial ownership of the Equitable Securities pursuant to Rule
13d-4 of the Exchange Act.
(9) Includes shares owned by various institutional accounts (primarily
pension funds) managed by Capital Guardian Trust Company ("Capital").
Capital, in its capacity as investment manager, may be deemed to
beneficially own such shares. Capital disclaims beneficial ownership
of such shares pursuant to Rule 13d-4 of the Exchange Act.
(10) Excludes 375,933 shares (including 100,000 unvested options that were
granted to Mr. Franke on January 15, 1999) underlying stock options
that are not exercisable within 60 days of the Most Recent Practicable
Date.
(11) Excludes 103,333 shares underlying stock options that lapsed upon Mr.
Goodmanson's resignation from the Company and its subsidiaries in April
1999.
14.
<PAGE> 18
(12) Excludes 94,333 shares underlying stock options that are not
exercisable within 60 days of the Most Recent Practicable Date. Also
excludes 65,000 options granted to Mr. Parker on April 9, 1999 that are
not exercisable within 60 days of the Most Recent Practicable Date.
(13) Excludes 64,333 shares underlying stock options that are not
exercisable within 60 days of the Most Recent Practicable Date.
(14) Excludes 77,666 shares underlying stock options that are not
exercisable within 60 days of the Most Recent Practicable Date.
(15) Includes 15,000 shares of Class B Common Stock that may be acquired
upon exercise of stock options. Except for Mr. Schifter, includes 698
shares of unrestricted stock allocated to each of the non-employee
directors on December 31, 1998.
(16) Includes 6,000 shares of Class B Common Stock that may be acquired upon
exercise of stock options.
(17) Includes shares of Class A Common Stock and Class B Common Stock
beneficially owned by the TPG Filing Parties. In connection with the
positions described in footnote (2) above for Messrs. Schifter and
Shaw, they may be deemed to beneficially own such shares. Messrs.
Schifter and Shaw disclaim beneficial ownership of such shares pursuant
to Rule 13d-4 of the Exchange Act.
(18) Excludes 3,000 shares that the Board of Directors will grant to Mr.
Shaw if he is elected to the Board that will not be exercisable within
60 days of the Most Recent Practicable Date.
(19) Excludes 3,000 shares that the Board of Directors will grant to Mr.
Miller if he is elected to the Board that will not be exercisable
within 60 days of the Most Recent Practicable Date.
(20) Excludes 150,000 shares underlying stock options granted to Mr. Mook on
April 9, 1999 that are not exercisable within 60 days of the Most
Recent Practicable Date.
(21) See footnotes (1) through (20) above, as applicable.
15.
<PAGE> 19
EXECUTIVE COMPENSATION
COMPENSATION
OF EXECUTIVE
OFFICERS
The Company has two subsidiaries which together employ all the
Company's employees and conduct substantially all the Company's
operations: America West Airlines, Inc. ("AWA") and The Leisure
Company ("TLC"). The following table shows, for the years 1996,
1997 and 1998, the compensation awarded to (i) the Company's
Chief Executive Officer and (ii) the other four most highly
compensated executive officers among the Company, AWA and TLC
(collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
--------------------------------------- -------------------------
Awards
-------------------------
Securities
Restricted Underlying
Name and Principal Other Annual Stock Options/ All Other
Position Year Salary Bonus Compensation(6) Awards SARs Compensation
------------------ ---- -------- -------- ----------------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
William A. Franke(1) 1998 $208,333 $250,000 $90,220 $1,567,875(7) 350,000 $16,758(9)
Chairman, President
and Chief Executive 1997 $375,000 -- $87,350 -- -- $16,542
Officer of Holdings;
Chairman, President 1996 $500,000 -- $84,504 $1,849,500(7) 71,000 $8,465
and Chief Executive
Officer of AWA;
Chairman of TLC
Richard Goodmanson(2) 1998 $516,667 $340,550 -- -- 110,000 $38,189(10)
Former President of
Holdings and Former 1997 $500,000 $75,000 -- -- -- $233,951
President and Chief
Executive Officer of 1996 $216,667 -- -- $981,250(8) 350,000 $175,807
AWA
W. Douglas Parker(3) 1998 $264,583 $156,792 -- -- 70,000 $629(11)
Executive Vice President
of Holdings; Executive 1997 $233,333 $40,000 -- -- -- $600
Vice President,
Corporate Group of AWA 1996 $211,667 -- -- -- 85,000 $95,940
John R. Garel(4) 1998 $240,875 $135,863 -- -- 35,000 $21,085(12)
President and Chief
Executive Officer of TLC 1997 $226,317 $35,000 -- -- -- $11,424
1996 $216,667 -- -- -- 85,000 $1,050
Stephen L. Johnson(5) 1998 $220,375 $129,379 -- -- 50,000 $5,429(13)
Senior Vice President of
Holdings and Senior 1997 $208,750 $37,500 -- -- -- $5,350
Vice President
and Chief Administrative 1996 $175,075 -- -- -- 85,000 $525
Officer of AWA
</TABLE>
(1) Prior to February 1997, Mr. Franke served as Chief Executive Officer
and President of AWA and as President of Holdings. From February 1997
to April 1999, Mr. Franke served as Chairman and Chief Executive
Officer of Holdings and as Chairman of AWA. In April 1999, Mr. Franke
was elected to the additional offices of President of Holdings and
President and Chief Executive Officer of AWA.
16.
<PAGE> 20
(2) Mr. Goodmanson joined the Company in June 1996. On February 4, 1997,
Mr. Goodmanson was elected Chief Executive Officer and President of AWA
and President of Holdings. Mr. Goodmanson resigned from his positions
at the Company and its subsidiaries in April 1999.
(3) Mr. Parker joined the Company as Senior Vice President and Chief
Financial Officer in June 1995. In September 1997, Mr. Parker's duties
were expanded to include responsibility for AWA's planning, scheduling
and revenue management. Mr. Parker was elected to his present positions
in April 1999.
(4) Mr. Garel joined the Company in April 1995 as Senior Vice
President - Marketing and Sales and served in that capacity until July
1996, at which time he was elected as President and Chief Executive
Officer of TLC.
(5) Mr. Johnson joined the Company in February 1995 as Vice
President - Legal Affairs. In December 1995, he was appointed Senior
Vice President - Legal Affairs and was elected Senior Vice
President - Corporate Affairs in December 1997. He was elected to his
present positions in April 1999.
(6) For 1998, of the listed officers, only Mr. Franke received perquisites
or other personal benefits in an aggregate amount in excess of the
lesser of $50,000 or 10% of his annual salary. In 1998, Mr. Franke's
other compensation included a premium paid by the Company for whole
life insurance of $80,620 and an automobile allowance of $9,600. In
1998, each of the Named Executive Officers also received an automobile
allowance of $9,600 per the Company's policy for executive perquisites.
The Company also provides up to $15,000 in positive space pleasure
travel benefits each year to the Named Executive Officers.
(7) Reflects restricted grants made pursuant to the Incentive Plan of
113,000 shares in September 1998 and 108,000 shares in January 1996. As
of December 31, 1998, Mr. Franke held a total of 262,334 shares of
restricted stock, which were granted pursuant to Mr. Franke's
employment agreements. The aggregate market value of Mr. Franke's
restricted stock holdings on December 31, 1998 was $4,459,678.
(8) As of December 31, 1998, Mr. Goodmanson held a total of 50,000 shares
of restricted stock, granted pursuant to the Incentive Plan in May
1996. The aggregate market value of Mr. Goodmanson's restricted stock
holdings on December 31, 1998 was $850,000.
(9) Reflects premium paid by the Company for term life insurance for Mr.
Franke of $11,958 and matching contributions made by the Company under
its 401(k) plan of $4,800.
(10) Reflects premium paid by the Company for term life insurance for Mr.
Goodmanson of $629. Also reflects benefits under a split dollar life
insurance policy for Mr. Goodmanson. In 1998, the premium paid for the
term portion under that policy was $1,215 and the value of benefits
accrued during 1998 with respect to the whole life component of the
coverage, calculated on an actuarial basis, was approximately $31,545.
Additionally, includes matching contributions made by the Company under
its 401(k) plan of $4,800.
(11) Reflects premium paid by the Company for term life insurance for Mr.
Parker of $629.
(12) Reflects premium paid by the Company for term life insurance for Mr.
Garel of $629. Also reflects benefits under a split dollar life
insurance policy for Mr. Garel. In 1998, the premium paid for the term
portion under that policy was $618 and the value of benefits accrued
during 1998 with respect to the whole life component of the coverage,
calculated on an actuarial basis, was approximately $15,038.
Additionally, the figure includes matching contributions made by the
Company under its 401(k) plan of $4,800. Does not include $1,201,721.25
that was realized upon exercise of options in 1998.
(13) Reflects premium paid by the Company for term life insurance for Mr.
Johnson of $629 and matching contributions made by the Company under
its 401(k) plan of $4,800.
17.
<PAGE> 21
STOCK OPTION
GRANTS AND
EXERCISES
The Company grants options to its executive officers under the
America West 1994 Incentive Equity Plan (the "Incentive Plan"). As
of February 28, 1999, options to purchase a total of 4,977,500
shares of the Company's Class B Common Stock were held by all
participants under the Incentive Plan and options to purchase
1,202,449 remained available for grant. In 1998, the Compensation
Committee adopted a policy of considering annual grants of stock
options in December. As a result, there were two grants of stock
options made to employees in 1998 for an aggregate of 1,867,000
shares. Under the new policy, the Compensation Committee will not
consider annual grants again until December 1999.
The following table shows certain information regarding each grant
of stock options to the Named Executive Officers during the fiscal
year ended December 31, 1998:
<TABLE>
<CAPTION>
NUMBER OF POTENTIAL REALIZABLE VALUE
SECURITIES % OF TOTAL AT ASSUMED ANNUAL RATES
UNDERLYING OPTIONS EXERCISE OF STOCK PRICE
OPTIONS GRANTED IN PRICE PER EXPIRATION APPRECIATION
NAME GRANTED(1) 1998 SHARE DATE FOR OPTION TERM
---- ---------- ---------- --------- ---------- -----------------------------
5% 10%
-----------------------------
<S> <C> <C> <C> <C> <C> <C>
William A. Franke(2)....... 350,000 18.75% $24.19 2/17/08 $1,232,875 $6,944,875
Richard R. Goodmanson...... 110,000 5.89 24.88 3/2/08 311,850 2,107,050
W. Douglas Parker(3)....... 35,000 1.87 24.88 3/2/08 99,225 670,425
35,000 1.87 13.44 12/15/08 499,538 1,070,738
John R. Garel.............. 20,000 1.07 24.88 3/2/08 56,700 383,100
15,000 0.80 13.44 12/15/08 214,088 458,888
Stephen L. Johnson......... 25,000 1.34 24.88 3/2/08 70,875 478,875
25,000 1.34 13.44 12/15/08 356,813 764,813
</TABLE>
(1) Each of Messrs. Parker, Garel and Johnson received two grants of stock
options in 1998.
(2) Excludes 150,000 shares underlying options that were granted to Mr.
Franke on January 15, 1999.
(3) Excludes 65,000 shares underlying options that were granted to Mr.
Parker on April 9, 1999.
OPTION
EXERCISES AND
YEAR END
OPTION VALUES The following table shows certain information regarding option
exercises and the number and value of unexercised options at
December 31, 1998:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED AT YEAR END 1998 AT YEAR END(1)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William A. Franke......... 683,400 392,600 $3,764,500 $213,000
Richard R. Goodmanson..... 206,666 253,334 200,000 300,000
W. Douglas Parker......... 155,666 114,334 870,625 304,688
John R. Garel............. 66,000 $1,201,721 89,666 79,334 400,500 233,437
Stephen L. Johnson........ 140,666 94,334 429,375 269,063
</TABLE>
(1) Based on the value obtained by subtracting the option exercise prices
from the closing sales price of the Class B Common Stock on the New York
Stock Exchange on December 31, 1998 ($17.00 per share).
(2) The value realized represents the difference between the fair market
value of the Company's Class B Common Stock on the date of exercise and
the exercise price.
18.
<PAGE> 22
SECTION 16(a)
BENEFICIAL
OWNERSHIP
REPORTING
COMPLIANCE Section 16(a) of the Exchange Act requires the Company's directors
and executive officers, and persons who own more than ten percent
of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission ("SEC") initial
reports of ownership and reports of changes in ownership of Common
Stock and other equity securities of the Company. Officers,
directors and greater than ten percent stockholders are required
by SEC regulation to furnish the Company with copies of all
Section 16(a) forms they file.
To our knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that
no other reports were required, during the fiscal year ended
December 31, 1998, all of its officers, directors and greater than
ten percent beneficial owners complied with all such Section 16(a)
filing requirements.
19.
<PAGE> 23
PERFORMANCE GRAPHS
The following performance graphs compare the Company's cumulative total
stockholder return on its Class B Common Stock with the cumulative total return
of the S&P 500 Index and the S&P Airlines Index since, respectively:
- August 26, 1994, the date on which the Company's Class B Common
Stock was issued in connection with the Company's emergence from
bankruptcy and the commencement of trading on the New York Stock
Exchange
- December 30, 1994.
These performance graphs shall not be deemed incorporated by reference by
any general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933, as amended (the "Securities Act"), or
the Exchange Act, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
Monthly Comparison of Cum Total Stkhldrs Returns
<TABLE>
<CAPTION>
AM. WEST S&P AIRLINES** S&P 500**
-------- -------------- ---------
<S> <C> <C> <C>
'8/26/94' 100.00 100.00 100.00
'12/31/94' 52.90 83.50 96.90
'12/29/95' 112.40 121.90 130.00
'12/31/96' 105.00 133.50 156.30
'12/31/97' 123.10 224.40 204.80
'12/31/98' 112.40 217.03 259.44
'3/31/99' 126.03 250.62 271.50
</TABLE>
Monthly Comparison of Cum Total Stkhldrs Returns
<TABLE>
<CAPTION>
AM. WEST S&P AIRLINES** S&P 500**
-------- -------------- ---------
<S> <C> <C> <C>
'12/30/94' 100.00 100.00 100.00
'12/29/95' 212.50 143.27 134.11
'12/31/96' 198.44 160.49 161.29
'12/31/97' 232.81 268.56 211.30
'12/31/98' 212.50 259.61 267.65
'3/31/99' 238.28 299.79 280.09
</TABLE>
* Assumes $100 invested on August 26, 1994 in each of the Class B Common
Stock of the Company, the S&P Airlines Index and the S&P 500 Index
(dividends reinvested).
** Prepared by Standard & Poor's Composite, a division of McGraw Hill.
*** Assumes $100 invested on December 30, 1994 in each of the Class B Common
Stock of the Company, the S&P Airlines Index and the S&P 500 Index
(dividends reinvested).
20.
<PAGE> 24
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
THE COMMITTEE
The Compensation Committee (the "Committee") meets regularly
throughout the year to review general compensation issues and
also determines the compensation of all officers and reviews
matters relating to employee compensation generally. The
Company's compensation program for all executive officers,
including the Named Executive Officers, is administered by the
Committee.
Annually, in consultation with an independent consultant, the
Committee evaluates executive compensation to ensure consistency
and program effectiveness. An independent consultant is retained
from time to time to analyze the competitiveness of executive
compensation at the Company relative to other major airlines and
other selected public companies of comparable size. The Committee
also periodically conducts a comprehensive review of the
Company's compensation program.
The Committee currently consists of three members, none of whom
is a current or former employee or officer of the Company. One of
the Committee members is affiliated with TPG, which is a
principal stockholder of the Company.
COMPENSATION
PHILOSOPHY AND
OBJECTIVES
The principal objectives of the Company's executive compensation
program are to maximize stockholder value over time by:
- attracting and retaining high quality, results-oriented
executives
- aligning interests of employees and stockholders through
stock-based compensation and annual performance bonuses
- motivating executives to achieve strategic, operating and
financial goals consistent with stockholder interests
- increasing the relative amount of compensation at risk as
management responsibilities increase
- providing a compensation package that recognizes both
individual and corporate contributions
The program is designed to be competitive with other major U.S.
airlines and other companies having comparable revenues while
placing more emphasis on incentive and performance-related
compensation and less emphasis on fixed base salaries and
employee benefits.
GENERAL
The Company's executive compensation program consists of:
- Base salaries
- Annual incentive bonuses
- The America West 1994 Incentive Equity Plan (the
"Incentive Plan")
The Incentive Plan is a long-term compensation plan under which
executives and other key salaried employees may be awarded stock
options, restricted stock and other stock-based compensation.
Each element of the compensation program focuses on rewarding
performance in a different way.
21.
<PAGE> 25
BASE SALARY
Base salaries are focused on rewarding individual performance and
competence. Base salary adjustments are based on several factors,
including:
- the employee's level of responsibility and job
classification
- general levels of market salary increases
- the Committee's evaluation of the performance of the
individual over time
The Company's strategy with respect to base salaries for its key
salaried employees is (i) to avoid dramatic changes other than to
make adjustments to reflect market movements and promotions,
significant changes in responsibility and individual performance
and (ii) to reduce the emphasis on fixed compensation by
positioning base salaries below industry levels. For such
purposes, the Committee gathers data from nationally recognized
compensation surveys and proxy statements of certain airlines and
other companies having comparable revenues.
ANNUAL INCENTIVE
COMPENSATION
Executives and other key salaried employees can earn additional
cash compensation under the Company's annual incentive bonus
plan. Bonuses are intended to reward the achievement of annual
corporate goals.
The amount of any annual bonus is based on targets set for each
job classification and formulae and certain subjective criteria
established by the Committee at the beginning of each year and is
determined by the Committee at the end of that year (or early the
following year). Ordinarily, the Company's financial performance
must meet certain threshold levels (determined annually by the
Committee and the Board of Directors) before any bonus is
awarded. Bonuses are based principally on job classification (in
general, bonus targets are higher for individuals having greater
management responsibility), the Company's financial performance
for the year and on individual performance. The Committee
administers the incentive bonus plan, recommends to the Board of
Directors the aggregate amount of annual incentive compensation
and approves individual awards. In evaluating an individual's
performance, the Committee relies on the recommendation of the
Chairman and other members of senior management. The Board of
Directors approves the aggregate amount of the incentive
compensation awards to all participants.
STOCK-BASED
COMPENSATION
PURPOSE OF STOCK-BASED AWARDS: The primary purpose of stock-based
awards is to focus key employees on the performance of the
Company over time and to provide key employees with incentives
for future performance to link the interests of recipients and
stockholders. The Committee believes that stock-based awards are
an appropriate incentive to employees to meet the Company's long
term goal of maximizing shareholder value.
In pursuit of these objectives, the Company has adopted stock
ownership guidelines providing for ownership of common stock by
executive officers at multiples of annual salary. The guidelines
are set forth in the following table:
<TABLE>
<CAPTION>
Title of Executive Multiple of Annual Salary
------------------ -------------------------
<S> <C>
Chairman of the Board 5 times
President 3 times
Executive Vice President 2 times
Senior Vice President 1.5 times
Vice President 0.75 times
</TABLE>
For purposes of the guidelines, shares of unrestricted stock and
shares of restricted stock (regardless of vesting status) are
valued at the current market price. Vested stock options are
valued at 50% of the exercise price. An executive has three years
from joining the Company to achieve the applicable ownership
guideline. The guidelines are subject to periodic review by the
Committee and the Board of Directors.
22.
<PAGE> 26
RESTRICTED STOCK AWARDS: Restricted stock awards are grants of
shares of Class B Common Stock which carry full stockholder
privileges, including the right to vote and, subject to
limitations (if any) established by the Committee, the right to
receive dividends. No restricted stock awards were made by the
Committee in 1998 except to Mr. Franke in accordance with the
terms of his employment agreement.
STOCK OPTIONS: Traditionally, the Committee awarded stock
options to continuing eligible employees annually during the
first quarter of the year. In 1998, the Committee adopted a
policy of considering annual grants of stock options in December.
As a result, there were two annual grants of stock options made
in 1998. Under the new policy, the Committee will not consider
annual grants again until December 1999.
The Committee determines the number of options to be granted to
an individual based upon a variety of factors, including:
- level of responsibility and job classification level
- job performance
- longevity in position
- retention value
- the results of compensation surveys described above
The Incentive Plan permits the Committee, in awarding a stock
option to an employee, to specify the number of shares covered by
options and the vesting schedule of such options. The Committee
has generally imposed a three-year vesting schedule for all
grants. The vesting schedules are designed to provide an
incentive to create stockholder value over time, since the full
benefit of the stock option cannot be realized unless stock
appreciation occurs over a number of years. All stock options
granted under the Incentive Plan are exercisable at or above fair
market value on the date of grant.
Under the Incentive Plan, each option will become fully
exercisable in the event of the optionee's termination of
employment by reason of death, disability or retirement and may
become fully exercisable in the event of a "change in control."
No option may be exercised after the tenth anniversary of the
date of grant or the earlier termination of the option.
In 1998, options to purchase an aggregate of 1,867,000 shares of
Class B Common Stock were granted under these awards. The Company
granted 440,000 non-qualified stock options to key salaried
employees in 1997 and 1,041,000 non-qualified stock options to
key salaried employees in 1996.
OTHER BENEFITS
EMPLOYEE-BENEFIT PLANS: The Company has certain broad-based
employee benefit plans in which all employees, including the
executives, participate, such as life and health insurance plans
and a 401(k) plan and certain flight benefits. Additionally,
officers of the Company are provided director/officer liability
insurance coverage. The incremental cost to the Company of the
benefits provided under these plans is not material to the
Company. Benefits under these plans are not directly or
indirectly tied to Company or individual performance.
SEVERANCE POLICY: Pursuant to the Company's current severance
payment policy for executives, its executive officers (including
the Named Executive Officers) are entitled to receive an amount
equal to 200% of the executive officer's base salary and target
incentive bonus if, within two years of a "change of control" (as
defined in the Incentive Plan), the executive officer or senior
director (i) is asked to resign, (ii) is terminated without cause
or (iii) resigns as the result of constructive termination. These
"change of control" provisions also apply to Mr. Franke. See
"Employment Agreements."
23.
<PAGE> 27
COMPENSATION
TO THE CHIEF
EXECUTIVE OFFICER
Mr. Franke's Employment Agreement, dated March 3, 1998, provides
for a minimum base salary of $200,000, based on the expectation
that Mr. Franke would devote a substantial part, but not all, of
his business time to the Company, and that his work for the
Company would be focused on chairing the Board of Directors and
on long-term strategic issues and not on the day-to-day
management of the Company. Beginning in June 1998, the Board
requested that Mr. Franke take on a series of additional duties
including overseeing AWA's relations with its principal regulator
and the negotiations of initial collective bargaining agreements
with the unions representing AWA's maintenance technicians and
flight attendants and, ultimately, direct oversight of AWA's
operations. In recognition of these additional responsibilities,
the Committee and the Board of Directors increased Mr. Franke's
annual base salary to $500,000 effective January 1, 1999.
In accordance with his employment agreement and pursuant to the
Incentive Plan, Mr. Franke received options to purchase 350,000
shares of Class B Common Stock in February 1998 and options to
purchase 150,000 shares of such stock in January 1999. Further,
Mr. Franke was granted 113,000 shares of restricted stock in
April 1998.
In approving the stock-based compensation awards, the Committee
considered a variety of factors, including:
- Mr. Franke's base compensation, level of responsibility
and retention value
- Mr. Franke's performance, including the substantial
turnaround of the Company's financial and operating
results since the commencement of Mr. Franke's employment
with the Company in September 1992 and the Company's
record financial performance in 1997 and 1998
- Mr. Franke's ability to lead the Company in formulating
and implementing its long-term business plan
- Mr. Franke's ability to enhance the Company's stock value
- Mr. Franke's standing within the Company, in the
communities served by the Company and with the Company's
investors and suppliers
- A review of compensation for similarly situated
individuals both in the airline and travel industries and
in companies of comparable size
ADDITIONAL
INFORMATION
The foregoing report of the Compensation Committee shall not be
deemed incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filing
under the Securities Act or under the Exchange Act, except to the
extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed
under such Acts.
Respectfully submitted,
COMPENSATION/HUMAN RESOURCES COMMITTEE
Richard C. Kraemer, Chairman, Frederick W. Bradley,
Jr., Richard P. Schifter, Walter T. Klenz
24.
<PAGE> 28
EMPLOYMENT AGREEMENT
<TABLE>
<S> <C> <C>
WILLIAM A. BACKGROUND: The Company entered into an employment agreement with
FRANKE William A. Franke, dated as of March 3, 1998, which was
amended as of January 15, 1999.
</TABLE>
POSITIONS:
Chairman of the Board, President and Chief Executive
Officer of Holdings Chairman of the Board, President
and Chief Executive Officer of AWA Chairman of the
Board of TLC.
TERM:
Through December 31, 2000. The termination date will
be automatically extended one additional year,
commencing on January 1, 2000 and on each January 1
thereafter, unless either party gives notice that the
agreement will not be so extended.
COMPENSATION
AND BENEFITS:
- A minimum annual cash base salary in the amount
of $200,000, effective from and after January 1,
1998, which amount may be increased by the Board
at any time. Effective January 1, 1999, Mr.
Franke's salary was increased by the Board to
$500,000.
- A $2 million term life insurance policy for
beneficiaries designated by Mr. Franke
- Registration rights for all equity securities
acquired by Mr. Franke as compensation, including
equity securities he obtains upon exercise of
options
- A severance payment of $1.5 million payable if
the agreement is terminated for certain reasons
(see "Severance Payment" below)
- Other benefits that are ordinarily offered to
senior executives
OPTIONS:
Pursuant to the employment agreement, Mr. Franke was
granted 350,000 options on February 17, 1998, and
150,000 options on January 15, 1999, which options
have an exercise price per share equal to the closing
price on the respective day of the grant. Mr. Franke
has also been granted certain options under earlier
employment agreements.
Upon a Change in Control (as defined in the
employment agreement), all stock options granted
under the employment agreement will automatically
vest and become immediately fully excisable.
RESTRICTED
STOCK GRANT:
Pursuant to the employment agreement, Mr. Franke was
granted 113,000 shares of restricted stock in
September 1998. Mr. Franke has also been granted
shares of restricted stock under earlier
arrangements.
Restricted stock granted to Mr. Franke pursuant to
his employment agreement are subject to forfeiture in
the event Mr. Franke leaves the employ of the
Company. The forfeiture provision will lapse monthly
in respect of a fraction of the shares over the term
of the agreement, and will lapse in full upon the
occurrence of a Change in Control.
25.
<PAGE> 29
LOANS:
The chart below sets forth information about loans
made by the Company to Mr. Franke. All loans were
made pursuant to the employment agreement and earlier
employment agreements to enable Mr. Franke to pay
income taxes on stock grants. Each loan is secured by
a portion of the shares included in the related stock
grant but is otherwise nonrecourse to Mr. Franke, is
to be repaid in two installments on the dates shown
below and accrues interest at a rate of 10% per annum
if not repaid at maturity.
Under these various loans, the largest aggregate
amount of indebtedness outstanding was $2,155,754 on
November 30, 1998, and the amount of indebtedness
outstanding as of February 28, 1999 was $2,137,434.
<TABLE>
<CAPTION>
DATE OF AMOUNT
LOAN OF LOAN DUE DATE INTEREST RATE
------- ------- -------- -------------
<S> <C> <C> <C>
1995 $203,136 9/26/00 and 9/26/01 6.02%
1996 $40,000 9/26/00 and 9/26/01 6.02%
1996 $644,704 9/26/00 and 9/26/01 5.65%
1997 $194,072 9/26/00 and 9/26/01 6.39%
1998 $549,540 10/15/03 and 5.06%
10/15/04
</TABLE>
SEVERANCE
PAYMENT:
Mr. Franke is covered by the Company's current
severance payment policy for executives. See
"Compensation Committee Report -- Other Benefits."
The amount of any severance payment made to Mr.
Franke under his employment agreement will be
automatically deducted from the amount of any payment
due under the Company's severance payment policy for
executives.
26.
<PAGE> 30
CERTAIN TRANSACTIONS
CONTINENTAL
AIRLINES, INC.
AWA entered into agreements with Continental, a principal
stockholder of the Company, in 1994. Such agreements related to
code-sharing arrangements, ground handling operations and other
services. AWA paid Continental approximately $27.8 million and
received approximately $20.5 million from Continental for such
services in 1998.
AERFI GROUP
PLC AND ITS
U.S.
SUBSIDIARIES
John F. Tierney, a director of the Company and a member of the
Audit Committee, retired as assistant chief executive and finance
director of AerFi Group plc (formerly GPA Group plc), an Irish
aircraft leasing concern ("AerFi") in September 1997. William A.
Franke, the Company's Chairman, President and Chief Executive
Officer, is a director and, indirectly, a minor shareholder of
AerFi. An affiliate of TPG, a principal stockholder of the Company,
purchased a large minority stake in AerFi in November 1998 and has
three representatives serving on AerFi's five-member Board of
Directors.
Prior to Mr. Franke joining the Company or the Board of AerFi, AWA
entered into various aircraft acquisition and leasing arrangements
with AerFi on terms comparable to those obtained from third parties
for similar transactions. AWA currently leases four aircraft from
AerFi and the rental payments for such leases amounted to $19.2
million for the twelve months ended December 31, 1998. As of
December 31, 1998, AWA was obligated to pay approximately $260
million under the AerFi leases which expire at various dates
through the year 2013.
In June 1997, America West Airlines 1997-1 Pass Through Trusts
issued $93.9 million of Pass Through Trust Certificates in
connection with the refinancing of four Airbus A320 aircraft. The
combined effective interest rate on the financing is 7.41%. The
proceeds of the transaction were used to refinance the indebtedness
incurred by the owners of the aircraft leased to AWA. Under the
arrangements, the financial benefits of the transactions are shared
among AWA, the equity investors in leverage leases covering the
aircraft and U.S. subsidiaries of AerFi ("AerFi Subs"), the
original lessees under the restructured leases. Benefits to AWA
include a reduction in rental expense approximating $250,000 per
year through 2013.
Also as a result of the refinancing, AerFi, the AerFi Subs and AWA
entered into a Put Termination Agreement which terminated
arrangements with AerFi pursuant to which AerFi could cause AWA to
lease up to four additional aircraft prior to June 30, 1999.
Pursuant to the Put Termination Agreement, AWA is obligated to make
certain payments to the AerFi Subs. For the year 1998, the payments
due to the AerFi Subs under the Put Termination Agreement were
$584,000. As compared to the payments AWA was obligated to make
under the prior subleases, the combined payments by AWA (i) under
the Put Termination Agreement to the AerFi Subs and (ii) under the
restated leases to the owners of the equipment, represent net
savings to AWA of approximately $7.0 million over the remaining
15-year term of the leases. For the period from January 1, 1998, to
December 31, 1998, payments from AWA to the AerFi Subs under the
subleases totaled approximately $16 million.
BERINGER WINE
ESTATES, INC.
Mr. Klenz, a director of the Company and a member of the
Compensation Committee, has been President and Chief Executive
Officer of Beringer Wine Estates, Inc. since November 1997 and was
named Chairman of the Board of Beringer in August 1997. William A.
Franke, the Company's Chairman, President and Chief Executive
Officer, is a director of Beringer. During fiscal 1998, the Company
purchased several hundred cases of wine from Beringer at an
aggregate cost of $157,620 for use in the Company's in-flight
beverage and meal services.
27.
<PAGE> 31
AMERICA WEST
COMMUNITY
FOUNDATION
In March 1995, the Board of Directors and stockholders of AWA
approved the creation of the America West Community Foundation (the
"Foundation") to enhance the Company's ability to fund charitable
and civic activities. AWA granted 50,000 shares of its Class B
Common Stock on February 28, 1996 and the Company granted an
additional 50,000 shares of its Class B Common Stock on March 3,
1998. In addition, the Foundation has also received cash
contributions from the Company in the amount of $250,000 in each of
1995, 1996, 1997 and 1998. Four members of the Board of Directors
of the Company serve on the six-member Board of Directors of the
Foundation, including the Company's chairman who is also the
chairman of the Foundation. The two remaining members of the Board
of Directors of the Foundation are executive officers of the
Company who hold the positions of Senior Vice President -- Human
Resources of AWA and Senior Vice President -- Public Affairs of
Holdings and AWA. The president of the Foundation is the Senior
Vice President -- Public Affairs of Holdings and AWA.
LOANS TO
EXECUTIVE
OFFICERS
The Company has made certain loans to Mr. Franke. If requested to
do so, the Company will make additional loans to Mr. Franke. See
"Employment Agreement."
INDEMNITY
AGREEMENTS
The Company has entered into indemnity agreements with Mr. Franke
as part of his employment agreement. The Company has also entered
into an indemnity agreement with each of the Company's directors
which provides, among other things, that the Company will indemnify
such director, under the circumstances and to the extent provided
for therein, for expenses, damages, judgments, fines and
settlements such director may be required to pay in actions or
proceedings by reason of his or her position as a director of the
Company or AWA. Additionally, TLC and Holdings have entered into an
indemnity agreement with each of TLC's directors which provides,
among other things, that TLC and Holdings will indemnify such
director, under the circumstances and to the extent provided
therein, for expenses, damages, judgments, fines and settlements
such director may be required to pay by reason of his position as a
director of TLC.
28.
<PAGE> 32
APPENDIX A
PRINCIPAL FEATURES OF THE AMERICA WEST 1994 INCENTIVE EQUITY PLAN
GENERALThe Incentive Plan provides for the grant of incentive stock
options, nonstatutory stock options, stock appreciation rights,
stock bonuses, restricted stock, unrestricted stock, director
options, phantom shares and cash tax rights (collectively
"awards"). Incentive stock options granted under the Incentive
Plan are intended to qualify as "incentive stock options" within
the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"). Nonstatutory stock options granted under
the Incentive Plan are not intended to qualify as incentive stock
options under the Code. Stock appreciation rights granted under
the Incentive Plan may be tandem rights, concurrent rights or
independent rights. See "Federal Income Tax Information" for a
discussion of the tax treatment of awards. To date, the Company
has granted only stock options and restricted stock under the
Incentive Plan.
ADMINISTRATION
The Compensation Committee administers the Incentive Plan. Under
the terms of the Incentive Plan, the Compensation Committee must
consist entirely of "non-employee directors" within the meaning of
Rule 16b-3 of the Exchange Act and "outside directors" within the
meaning of Section 162(m) of the Code. The Compensation Committee
has the power to construe and interpret the Incentive Plan and to
determine the persons to whom and the dates on which awards will
be granted, the number of shares of Common Stock to be subject to
each award, the time or times during the term of each award within
which all or a portion of such award may be exercised, the
exercise price, the type of consideration and other terms of the
award.
ELIGIBILITY FOR
PARTICIPATION
All officers and employees of the Company or any subsidiary of the
Company and all non-employee directors of the Company will be
eligible for participation in certain awards under the Incentive
Plan. Currently, the Company has approximately 125 employees and
non-employee directors eligible to participate in the Incentive
Plan.
AMENDMENTAND
TERMINATIONThe Board of Directors may terminate or amend the Incentive Plan
without stockholder approval, except to the extent that
stockholder approval is required to satisfy the requirements of
Rule 16b-3 of the Exchange Act, Section 422 of the Code or any
securities exchange.
TERM OF THE
INCENTIVE PLAN
Unless sooner terminated, the Incentive Plan will terminate on
November 30, 2004, after which time no additional awards may be
made.
STOCK OPTIONSStock options granted under the Incentive Plan are subject to the
terms and conditions determined by the Compensation Committee,
except that: (i) no stock options may be granted after the
termination of the Incentive Plan; (ii) the option exercise price
cannot be less than the market value per share of Class B Common
Stock at the date of grant; (iii) no employee may be granted stock
options to purchase more than 350,000 shares of Class B Common
Stock in any calendar year; and (iv) no stock option may be
exercised more than 10 years after it is granted. Stock options
may be granted as incentive stock options ("ISOs") under Section
422 of the Code, non-qualified stock options or a combination
thereof.
The Compensation Committee determines the form in which payment of
the exercise price may be made, including cash, shares of Class B
Common Stock or any combination thereof, having a fair market
value on the exercise date equal to the relevant exercise price.
Each non-employee director automatically receives on the day after
each annual stockholders' meeting an option to purchase 3,000
shares of Class B Common Stock at an exercise price per share
equal to the fair market value of the Class B Common Stock on the
date of grant. Each new non-employee director will receive an
initial option award to
A-1
<PAGE> 33
purchase 3,000 shares of Class B Common Stock on the date of
election at an exercise price per share equal to the fair market
value of the Class B Common Stock on the date of grant. Neither
the Compensation Committee nor the Board of Directors has any
discretion with respect to non-employee director stock options.
Each such option shall become exercisable six months from the date
of grant and have a term of 10 years subject to earlier
termination depending upon continuity of service on the Board. For
information on options granted in 1998 under the Incentive Plan,
see "Executive Compensation -- Stock Option Grants and Exercises."
STOCK GRANTSThe Compensation Committee may also authorize grants of restricted
stock. Restricted stock may not be disposed of by the participant
until the restrictions specified in the award expire. The
participant will have, with respect to restricted stock, the right
to vote the shares and, subject to limitations (if any)
established by the Compensation Committee, receive any cash
dividends. Except as otherwise determined by the Compensation
Committee, upon termination of a participant's employment for any
reason during the restriction period, all restricted stock will be
forfeited by the participant. The maximum number of shares of
restricted stock that may be granted to an employee in a calendar
year is 150,000 shares. The Compensation Committee may deliver
unrestricted awards of Class B Common Stock to eligible employees
as additional compensation for the employee's services to the
Company.
Subject to certain limitations, each non-employee director
automatically receives on each December 31 while in office
(commencing December 31, 1997) that number of unrestricted shares
of Class B Common Stock determined by dividing $13,000 by the
closing market price per share on December 31 of the preceding
year. Neither the Compensation Committee nor the Board of
Directors has any discretion with respect to the non-employee
director awards.
STOCK
APPRECIATION
RIGHTS
An SAR may be granted in tandem with stock options or separate and
apart from a grant of option rights. The grant price of an SAR
shall not be less than the fair market value per share of Class B
Common Stock on the date of grant.
PHANTOM
SHARES
The Compensation Committee may grant awards of phantom shares,
payable in cash, shares of Class B Common Stock or a combination
thereof, in consideration of the fulfillment of such conditions as
the Compensation Committee may specify. The maximum number of
phantom shares that may be granted to an employee in any calendar
year is 150,000 phantom shares.
PERFORMANCE
UNITS
Performance units are units equivalent to $100 (or such other
value as the Compensation Committee determines) and may consist of
payments in cash, shares of Class B Common Stock or a combination
thereof, payable upon the achievement of certain performance
goals. The Compensation Committee shall determine the performance
goals to be achieved during any performance period and the length
of any performance period. The maximum amount of compensation that
may be subject to any performance unit grant made to any one
employee in a calendar year is $1.5 million.
CASH TAX
RIGHTS
The Compensation Committee may grant cash tax rights in tandem
with any award payable in shares of Class B Common Stock. A cash
tax right is a right to receive cash upon receipt of the shares of
Class B Common Stock pursuant to the tandem award.
RE-LOAD
OPTIONS
The Compensation Committee may include as part of an option grant
a provision entitling a participant to a further option grant if
the participant surrenders Class B Common Stock to exercise the
option. The number of shares subject to such a re-load option
shall equal the number of shares surrendered upon exercise.
STOCK
OPTION GAIN
DEFERRAL
A participant who is a member of a select group of management or
highly compensated employees and is designated by the Compensation
Committee will be eligible to elect to defer non-qualified stock
option gain in connection with stock option exercises accomplished
through the surrender of Class B Common Stock. Stock option gain
so
A-2
<PAGE> 34
deferred is credited to a Company bookkeeping account, whose value
fluctuates with the value of Class B Common Stock. Payment of the
value of a deferral account will occur on a future date specified
by the participant and will be made in the form of shares of Class
B Common Stock. Payments are made in a lump sum or in installments
over five (5), ten (10) or fifteen (15) years, as elected by the
participant.
PERFORMANCE
GOALS
The Compensation Committee may, but is not required to, subject
any award to the attainment of certain performance goals. Such
performance goals, which may be described in terms of Company-wide
objectives, in terms of objectives that are related to performance
of the division, department or function within the Company or a
subsidiary in which the employee receiving the award is employed
or in individual or other terms, and which will relate to a period
of time determined by the Compensation Committee. The performance
goals intended to qualify under Sections 162(m) of the Code shall
be with respect to one or more of the following: (i) earnings
before interest, taxes, depreciation and amortization expenses
("EBITDA"); (ii) earnings before interest and taxes ("EBIT");
(iii) EBITDA, EBIT or earnings before taxes and unusual or
nonrecurring items as measured either against the annual budget or
as a ratio to revenue; return on total capital; (iv) total
stockholder return; (v) stock price performance; (vi) average
revenue per available seat mile; (vii) average cost per available
seat mile; and (viii) surveys of airline customer satisfaction.
Which objectives to use with respect to an award, the weighting of
the objectives if more than one is used, and whether the objective
is to be measured against a Company-established budget or target,
an index or a peer group of airlines, shall be determined by the
Compensation Committee in its discretion at the time of grant of
the award. A performance goal need not be based on an increase or
a positive result and may include, for example, maintaining the
status quo or limiting economic losses. With respect to an award
that is subject to performance goals, the Compensation Committee
must first certify that the performance goals have been achieved
before the award may be paid.
TRANSFERABILITY
No award under the Incentive Plan that has not become payable or
earned is transferable other than by will or the laws of descent
and distribution. However, the Compensation Committee in
authorized to adopt rules and guidelines whereby awards could be
transferred to family members, trusts and certain other entities
for estate planning purposes.
ADJUSTMENTSThe Compensation Committee may provide for adjustment of awards
under the Incentive Plan if it determines such adjustment is
required to prevent dilution or enlargement of the rights of
participants in the Incentive Plan that would otherwise result
from a stock dividend, stock split, combination of shares,
recapitalization, merger, consolidation, reorganization or other
similar corporate transaction.
FEDERAL
INCOME TAX
INFORMATION
The following is a brief summary of certain of the federal income
tax consequences of certain transactions under the Incentive Plan
based on federal income tax laws in effect on January 1, 1999.
This summary is not intended to be exhaustive and does not
describe state or local tax consequences. Additional or different
federal income tax consequences to the employee or the Company
may result depending upon other considerations not described
below.
TAX CONSEQUENCES TO PARTICIPANTS
Non-qualified Stock Options. In general: (i) no income will be
recognized by an optionee at the time a non-qualified stock
option (an option not qualified under Section 422 of the Code)
("NQO") is granted, (ii) at the time of exercise of a NQO,
ordinary income will be recognized by the optionee in an amount
equal to the difference between the option price paid for the
shares and the fair market value of the shares if they are
nonrestricted on the date of exercise; and (iii) at the time of
sale of shares acquired pursuant to the exercise of a NQO, any
appreciation (or depreciation) in the value of the shares after
the date of exercise will be treated as either short term or long
term capital gain (or loss) depending on how long the shares have
been held.
A-3
<PAGE> 35
Incentive Stock Options. No income generally will be recognized
by an optionee upon the grant or exercise of an Incentive Stock
Option ("ISO"), although the excess of the fair market value on
the date of exercise over the option price is included in
alternative minimum taxable income for alternative minimum tax
purposes. If shares of Class B Common Stock are issued to an
optionee pursuant to the exercise of an ISO and no disqualifying
disposition of the shares is made by the optionee within two
years after the date of grant or within one year after the
transfer of the shares to the optionee, then, upon the sale of
the shares, any amount realized in excess of the option price
will be taxed to the optionee as long term capital gain and any
loss sustained will be a long term capital loss.
If shares of Class B Common Stock acquired upon the exercise of
an ISO are disposed of prior to the expiration of either holding
period described above, the optionee generally will recognize
ordinary income in the year of disposition in an amount equal to
any excess of the fair market value of the shares at the time of
exercise (or, if less, the amount realized on the disposition of
the shares in a sale or exchange) over the option price paid for
the shares. Any further gain (or loss) realized by the optionee
generally will be taxed as short term or long term capital gain
(or loss) depending on the holding period.
Restricted Stock. A recipient of restricted stock generally will
be subject to tax at ordinary income rates on the fair market
value of the restricted stock reduced by any amount paid by the
recipient at such time as the shares are no longer subject to a
risk of forfeiture or restrictions on transfer for purposes of
Section 83 of the Code. However, a recipient who so elects under
Section 83(b) of the Code within 30 days of the date of transfer
of shares will have taxable ordinary income on the date of
transfer of the shares equal to the excess of the fair market
value of the shares (determined without regard to the risk of
forfeiture or restrictions on transfer) over any purchase price
paid for the shares. If a Section 83(b) election has not been
made, any dividends received with respect to restricted stock
that are subject at that time to a risk of forfeiture or
restrictions on transfer generally will be treated as
compensation that is taxable as ordinary income to the recipient.
Unrestricted Stock. The recipient of unrestricted stock
generally will be subject to tax at ordinary income rates on the
fair market value of unrestricted shares of Class B Common Stock
on the date that such shares are transferred to the recipient,
reduced by any amount paid by the recipient, and the capital gain
or loss holding period for such shares will also commence on that
date.
Stock Appreciation Rights. No income will be recognized by a
participant in connection with the grant of an SAR. When the SAR
is exercised, the participant normally will be required to
include as taxable ordinary income in the year of exercise an
amount equal to the amount of any cash and the fair market value
of any nonrestricted shares of Class B Common Stock received
pursuant to the exercise.
Performance Units. No income generally will be recognized upon
the grant of performance units. Upon payment in respect of earned
performance units, the recipient generally will be required to
include as taxable ordinary income in the year of receipt an
amount equal to the amount of cash received and the fair market
value of any nonrestricted shares of Class B Common Stock
received less any amount paid for such award at the time of
payment or transfer pursuant to the achievement of the
performance goals.
Cash Tax Rights. No income will be recognized upon the grant of
a cash tax right. The recipient of a cash tax right will be
subject to tax at ordinary income rates on the cash received
pursuant to the award.
Re-Load Options. Re-load options are either non-qualified stock
options or incentive stock options, and the above-described tax
consequences for those types of options apply.
A-4
<PAGE> 36
Stock Option Gain Deferral. A participant who defers
non-qualified stock option gain pursuant to the Plan will be
taxable with respect to such gain, as adjusted to reflect
fluctuations in the fair market value of Class B Common Stock
during the period of deferral, upon future distribution of shares
of Class B Common Stock in settlement of the deferral account.
Such distributions will be taxable as ordinary income. For
purposes of FICA taxes, however, the participant will be subject
to such taxes at the time of deferral of non-qualified stock
option gain.
Special Rules Applicable to Officers and Directors. Where the
sale of stock that is received as the result of a grant of an
award could subject an officer or director to suit under Section
16(b) of the Exchange Act, the tax consequences to the officer or
director may differ from the tax consequences described above. In
these circumstances, the principal difference usually will be to
postpone the taxation (and valuation) of the stock received so
long as the sale of the stock received could subject the officer
or director to suit under Section 16(b) of the Exchange Act, but
not longer than six months.
TAX CONSEQUENCE TO THE COMPANY
To the extent that a participant recognizes ordinary income in
the circumstances described above, the Company or subsidiary for
which the participant performs services will be entitled to a
corresponding deduction for federal income tax purposes provided
that, among other things, (i) the income meets the test of
reasonableness, is an ordinary and necessary business expense and
is not an "excess parachute payment" within the meaning of
Section 280G of the Code and (ii) the $1 million limitation of
Section 162(m) of the Code is not exceeded.
INCENTIVE
PLAN BENEFITS
Other than the automatic annual option grants to non-employee
directors described under "Appendix A -- Non-Employee Director
Stock Options" (which are subject to the limitation of the number
of shares of Common Stock available under the Incentive Plan), it
is not possible to determine at this time the number of shares of
Common Stock covered by awards under the Incentive Plan that may
be granted in the future to any executive officer, director,
employee, or group thereof.
RECENT MARKET
VALUE OF
COMMON STOCK On March 31, 1999, the last reported sale price of the Class B
Common Stock on the New York Stock Exchange was $19.0625 per
share.
A-5
<PAGE> 37
AMERICA WEST HOLDINGS CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 20, 1999
The undersigned hereby appoints William A. Franke and Stephen L. Johnson
and each of them as proxies, with full power of substitution, to vote all shares
of Class A Common Stock and Class B Common Stock of America West Holdings
Corporation that the undersigned is entitled to vote at the 1999 Annual Meeting
of Stockholders to be held on May 20, 1999, or at any adjournment or
postponement thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINATED DIRECTORS AND
FOR THE AMENDMENT TO THE INCENTIVE PLAN. YOUR PROXY WILL BE VOTED ACCORDINGLY
IF YOU DO NOT STATE OTHERWISE. ANY ADDITIONAL BUSINESS TO PROPERLY COME BEFORE
THE MEETING WILL BE VOTED IN ACCORDANCE WITH THE BEST JUDGMENT OF THE PERSON
VOTING THE PROXY.
PROPOSAL 1: ELECTION OF DIRECTORS
Nominees to hold office until the 2001 Annual Meeting: Gilbert D. Mook
Nominees to hold office until the 2002 Annual Meeting: John F. Tierney
Robert J. Miller
W. Douglas Parker
Jeffrey A. Shaw
/ / FOR all nominees listed above / / WITHHOLD All
/ / FOR All: Except those whose name(s) appear below:
--------------------------------------------------------------
PROPOSAL 2: AMENDMENT TO INCENTIVE PLAN
To approve the amendment to the America West 1994 Incentive Equity Plan.
/ / FOR / / AGAINST / / ABSTAIN
YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO COMMENCEMENT OF VOTING AT THE
MEETING.
Please check the following box if you plan to attend the Annual Meeting of
Stockholders in person. / /
Dated: , 1999
---------------------
SIGNATURE(s):
---------------------------------------------
---------------------------------------------
Please sign exactly as your name appears on this card.
Joint owners should each sign. Executors,
administrators, trustees, etc., should add their full
titles. If signer is a corporation, please give full
corporate name and have a duly authorized officer sign,
stating title. If signer is a partnership, please sign
in partnership name by authorized person.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE
WHICH IS POSTAGE PREPAID IF MAILED IN THE UNTIED STATES. FAILURE TO SIGN AND
DATE THIS PROXY MAY RESULT IN IT BEING DECLARED INVALID.
<PAGE> 38
AMERICA WEST 1994 INCENTIVE EQUITY PLAN
AMENDED AND RESTATED EFFECTIVE JANUARY 15, 1999
(INCORPORATES FIRST, SECOND, THIRD AND FOURTH AMENDMENTS)
America West Airlines, Inc., a Delaware corporation ("AWA"), established
the America West Airlines, Inc. 1994 Incentive Equity Plan (this "Plan"),
effective as of December 1, 1994. Pursuant to that certain Agreement and Plan of
Merger, dated as of December 19, 1996, among AWA, America West Holdings
Corporation, a Delaware corporation and a wholly-owned subsidiary of AWA
("Holdings"), and AWA Merger, Inc., a Delaware corporation and a wholly-owned
subsidiary of Holdings ("Merger Sub"), Merger Sub has merged with and into AWA
(the "Merger"), as a result of which AWA has become a wholly-owned subsidiary of
Holdings (the "Reorganization"). In connection with the Reorganization, (a) AWA
has assigned this Plan to Holdings and Holdings has assumed the obligations of
AWA under this Plan (such assignment and assumption becoming effective
immediately prior to the effectiveness of the Merger) and (b) this Plan is
amended and restated in its entirety as hereinafter provided (such amendment and
restatement becoming effective immediately prior to the effective of the
Merger), to provide, among other things, that (i) effective immediately prior to
the effectiveness of the Merger, Holdings shall replace AWA as the "Company"
under this Plan, and (ii) effective as of the effectiveness of the Merger, all
Awards outstanding immediately prior to the effectiveness of the Merger shall
automatically became Awards with respect to the Class B common stock, par value
$0.01 per share, of Holdings, without any other change in the terms of such
Awards (as defined in Paragraph 2).
1. PURPOSE. The purpose of the Plan is to promote the interests of the
Company by encouraging employees of the Company and its Subsidiaries (as defined
in Paragraph 2) and the Nonemployee Directors (as defined in Paragraph 2) of the
Company to acquire or increase their equity interests in the Company and to
provide a means whereby employees may develop a sense of proprietorship and
personal involvement in the development and financial success of the Company,
and to encourage them to remain with and devote their best efforts to the
business of the Company, thereby advancing the interests of the Company and its
stockholders. The Plan is also contemplated to enhance the ability of the
Company and its Subsidiaries to attract and retain the services of individuals
who are essential for the growth and profitability of the Company.
2. DEFINITIONS. As used in this Plan:
(a) "Appreciation Right" means a right granted pursuant to Paragraph
5.
(b) "Award" means an Appreciation Right, an Option Right, a Director
Option, Phantom Shares, a Performance Unit, Bonus Stock, Restricted Stock, or a
Cash Tax Right (each as defined in this paragraph).
(c) "Board" means the board of directors of the Company.
(d) "Bonus Stock" means unrestricted shares of Common Stock granted
pursuant to Paragraph 9.
1.
<PAGE> 39
(e) "Cash Tax Right" means a right granted pursuant to Paragraph 10.
(f) "Change in Control" shall occur if:
(i) the individuals who, upon consummation of the Reorganization,
constitute the Board (the "Incumbent Board"), cease for any reason to constitute
at least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the Reorganization whose election, or
nomination for election by the Company's stockholders, was approved by a vote of
at least two-thirds of the directors then comprising the Incumbent Board shall
be considered as though such an individual were a member of the Incumbent Board;
or
(ii) any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended)
acquires (directly or indirectly) the beneficial ownership (within the meaning
of Rule 13d-3 promulgated under such Act) of more than 50% of the combined
voting power of the then outstanding voting securities of AWA or Holdings
entitled to vote generally in the election of directors ("Voting Power"); or
(iii) any share of Common Stock or any other voting securities of
the Company shall be purchased pursuant to a tender or exchange offer (other
than a tender or exchange offer made by the Company); or
(iv) the Company's stockholders shall approve a merger or
consolidation, sale or disposition of all or substantially all of the Company's
assets or a plan of liquidation or dissolution of the Company, other than (A) a
merger or consolidation in which the voting securities of the Company
outstanding immediately prior thereto will become (by operation of law), or are
to be converted into, voting securities of the surviving corporation or its
parent corporation immediately after such merger or consolidation that are owned
by the same person or entity or persons or entities as immediately prior thereto
and possess at least 75% of the Voting Power held by the voting securities of
the surviving corporation or its parent corporation, or (B) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no person acquires more than 50% of the Voting
Power; or
(v) the stockholders of the Company shall approve a merger,
consolidation, reorganization, disposition of assets, liquidation or other
transaction (or series of related transactions) in which neither the Company nor
AWA will survive as a publicly-owned corporation whose common stock is
registered under the Exchange Act; or
(vi) Holdings or AWA shall sell or otherwise dispose of, or shall
enter into a transaction or series of related transactions providing for the
sale or other disposition of, or the stockholders of Holdings or AWA shall
approve a transaction or series of related transactions providing for the sale
or other disposition of, all or substantially all of the stock or assets of AWA.
(g) "Code" means the Internal Revenue Code of 1986, as in effect from
time to time.
2.
<PAGE> 40
(h) "Committee" means the Compensation/Human Resources Committee of
the Board.
(i) "Common Stock" means the Class B Common Stock, $0.01 par value, of
the Company or any security into which such Common Stock may be changed by
reason of any transaction or event of the type described in Paragraph 13.
(j) "Company" means (i) immediately prior to the effectiveness of the
Merger, Holdings, and (ii) at all times prior to such time, AWA.
(k) "Date of Grant" means (i) with respect to an Award other than a
Director Option or an automatic grant of Common Stock pursuant to Paragraph
11(d), the date specified by the Committee on which such Award will become
effective (which date will not be earlier than the date on which the Committee
takes action with respect thereto), (ii) with respect to a Director Option, the
automatic grant date as provided in Paragraph 11(a) or 11(b) and (iii) with
respect to a grant of Common Stock to a Nonemployee Director pursuant to
Paragraph 11(d), the automatic grant date as provided in Paragraph 11(d).
(l) "Deferral Account" means the account established and maintained by
the Company for deferral of Stock Option Gain by a Deferral Participant.
Deferral Accounts will be maintained solely as bookkeeping entries to evidence
unfunded obligations of the Company.
(m) "Deferral Participant" means any Participant who is a member of a
select group of management or highly compensated employees of the Company or any
Subsidiary, who is designated by the Committee as a Deferral Participant and who
makes a Stock Option Gain deferral election pursuant to Paragraph 15.
(n) "Director Option" means the right to purchase a share of Common
Stock upon exercise of an option granted pursuant to Paragraph 11.
(o) "Dividend Equivalent" means, with respect to a Phantom Share, an
amount equal to the amount of any dividends that are declared and become payable
after the Date of Grant for such Award and on or before the date such Award is
paid or forfeited, as the case may be.
(p) "Grant Price" means the price per share of Common Stock at which
an Appreciation Right not granted in tandem with an Option Right is granted.
(q) "Management Objectives" means the objectives, if any, established
by the Committee that are to be achieved with respect to an Award granted under
this Plan, which may be described in terms of Company-wide objectives, in terms
of objectives that are related to performance of the division, Subsidiary,
department or function within the Company or a Subsidiary in which the
Participant receiving the Award is employed or in individual or other terms, and
which will relate to the period of time determined by the Committee. The
Management Objectives intended to qualify under Section 162(m) of the Code shall
be with respect to one or more of the following: (i) earnings before interest,
taxes, depreciation and amortization expenses ("EBITDA"); (ii) earnings before
interest and taxes ("EBIT"); (iii) EBITDA, EBIT or earnings before taxes and
unusual or nonrecurring items as measured
3.
<PAGE> 41
either against the annual budget or as a ratio to revenue or return on total
capital; (iv) total stockholder return; (v) stock price performance; (vi)
revenue per available seat mile; (vii) costs per available seat mile; and (viii)
customer satisfaction rating using the PLOG survey. Which objectives to use with
respect to an Award, the weighting of the objectives if more than one is used,
and whether the objective is to be measured against a Company-established budget
or target, an index or a peer group of airlines, shall be determined by the
Committee in its discretion at the time of grant of the Award. A Management
Objective need not be based on an increase or a positive result and may include,
for example, maintaining the status quo or limiting economic losses. The
Committee, in its sole discretion and without the consent of the Participant,
may amend an Award to reflect (1) a change in corporate capitalization, such as
a stock split or dividend, (2) a corporate transaction, such as a corporate
merger, a corporate consolidation, any corporate separation (including a spinoff
or other distribution of stock or property by a corporation), any corporate
reorganization (whether or not such reorganization comes within the definition
of such term in Section 368 of the Code), or (3) any partial or complete
corporate liquidation. With respect to an Award that is subject to Management
Objectives, the Committee must first certify that the Management Objectives have
been achieved before the Award may be paid.
(r) "Market Value per Share" means, at any date, the closing sale
price per share of the Common Stock on that date (or, if there are no sales on
that date, the last preceding date on which there was a sale) in the principal
market in which the Common Stock is traded.
(s) "Nonemployee Director" means a director of the Company who is not
also an employee of the Company or a Subsidiary.
(t) "Option Price" means the purchase price per share payable on
exercise of an Option Right or Director Option.
(u) "Option Right" means the right to purchase a share of Common Stock
upon exercise of an option granted pursuant to Paragraph 4.
(v) "Participant" means an employee of the Company or any of its
Subsidiaries who is selected by the Committee to receive an Award under any of
Paragraphs 4 through 10 and 14, and shall also include a Nonemployee Director
who has received an automatic grant of Director Options pursuant to Paragraph
11(a) or 11(b) or an automatic grant of Common Stock pursuant to Paragraph
11(d).
(w) "Performance Unit" means a unit equivalent to $100 (or such other
value as the Committee determines) awarded pursuant to Paragraph 8.
(x) "Phantom Shares" means notional shares of Common Stock awarded
pursuant to Paragraph 7.
(y) "Restricted Stock" means shares of Common Stock granted or sold
pursuant to Paragraph 6 as to which neither the ownership restrictions nor the
restriction on transfers referred to therein has expired.
4.
<PAGE> 42
(z) "Rule 16b-3" means Rule 16b-3 of the Securities and Exchange
Commission (or any successor rule to the same effect) as in effect from time to
time.
(aa) "Spread" means the amount determined by multiplying (a) the
excess of the Market Value per Share on the date when an Appreciation Right is
exercised over the Option Price provided for in the related Option Right, or if
there is no tandem Option Right, the Grant Price provided for in the
Appreciation Right by (b) the number of shares of Common Stock in respect of
which the Appreciation Right is exercised.
(bb) "Stock Option Gain" means, pursuant to the exercise of an Option
Right not intended to qualify as an incentive stock option under Section 422 of
the Code, the shares of Common Stock representing the difference between the
aggregate Market Value per Share of shares of Common Stock subject to the Option
Right on the date of exercise less the aggregate Option Price, if, and only if,
the aggregate Option Price is paid with shares of Common Stock already owned by
the Deferral Participant, as described in Paragraph 4(c)(ii) and in Revenue
Ruling 80-244, 1980-2 C.B. 234.
(cc) "Subsidiary" means, at any time, any corporation in which at the
time the Company then owns or controls, directly or indirectly, not less than
50% of the total combined voting power represented by all classes of stock
issued by such corporation.
3. SHARES AVAILABLE UNDER PLAN. Subject to adjustments as provided in
Paragraph 13, (i) 9,000,000 is the maximum number of shares of Common Stock
which may be issued or transferred and covered by all outstanding Awards under
this Plan, of which number no more than 1,500,000 shares will be issued or
transferred as Restricted Stock or Bonus Stock and (ii) 350,000 is the maximum
number of shares of Common Stock which may be issued pursuant to or covered by
Option Rights and Appreciation Rights granted under this Plan to any one
Participant during any calendar year. Such shares may be shares of original
issue or any combination of the foregoing. Upon the exercise of an Option Right
pursuant to which Stock Option Gain is deferred under Paragraph 15, the number
of shares representing Stock Option Gain will be deemed to have been issued
under this Plan for purposes of this Paragraph 3; and transfer of shares in
respect of the settlement of a Deferral Account pursuant to Paragraph 15 shall
not be deemed to be the transfer of additional shares under this Paragraph 3.
Upon exercise of any Appreciation Rights or the payment of any Phantom Shares,
there will be deemed to have been delivered under this Plan for purposes of this
Paragraph 3 the number of shares of Common Stock covered by the Appreciation
Rights or equal to the Phantom Shares, as applicable, regardless of whether such
Appreciation Rights or Phantom shares were paid in cash or shares of Common
Stock. Subject to the provisions of the preceding sentence, any shares of Common
Stock which are subject to Option Rights, Appreciation Rights, or Phantom Shares
awarded or sold as Restricted Stock that are terminated, unexercised, forfeited
or surrendered or which expire for any reason will again be available for
issuance under this Plan, unless, with respect to Restricted Stock, the
Participant has received benefits of ownership with respect to such shares, such
as dividends, but not including voting rights.
4. OPTION RIGHTS. The Committee may from time to time authorize grants to
any Participant of options to purchase shares of Common Stock upon such terms
and conditions as it may determine in accordance with the following provisions:
5.
<PAGE> 43
(a) Each grant will specify the number of shares of Common Stock to
which it pertains.
(b) Each grant will specify its Option Price, which may not be less
than 100% of the Market Value per Share on the Date of Grant.
(c) Each grant will specify that the Option Price will be payable (i)
in cash by check acceptable to the Company, (ii) by the transfer to the Company
of shares of Common Stock already owned by the optionee having an aggregate
Market Value per Share at the date of exercise equal to the aggregate Option
Price, (iii) from the proceeds of a sale through a broker of some or all of the
shares to which such exercise relates, or (iv) by a combination of such methods
of payment.
(d) Successive grants may be made to the same Participant whether or
not any Option Rights previously granted to such Participant remain unexercised.
(e) Each grant will specify the required period or periods of
continuous service by the Participant with the Company and/or any Subsidiary
and/or the Management Objectives (if any) to be achieved before the Option
Rights or installments thereof will become exercisable, and any grant may
provide for the earlier exercise of the Option Rights in the event of a Change
in Control or other corporate transaction or event or upon termination of the
Participant's employment due to death, disability, retirement or otherwise.
(f) Each grant the exercise of which, or the timing of the exercise of
which, is dependent, in whole or in part, on the achievement of Management
Objectives may specify a minimum level of achievement in respect of the
specified Management Objectives below which no Options Rights will be
exercisable and may set forth a formula or other method for determining the
number of Option Rights that will be exercisable if performance is at or above
such minimum but short of full achievement of the Management Objectives.
(g) Option Rights granted under this Plan may be (i) options which are
intended to qualify as incentive stock options under Section 422 of the Code,
(ii) options which are not intended to so qualify or (iii) combinations of the
foregoing.
(h) Each grant shall specify the period during which the Option Right
may be exercised, but no Option Right will be exercisable more than ten years
from the Date of Grant.
(i) Each grant of Option Rights will be evidenced by an agreement
executed on behalf of the Company by any officer and delivered to the
Participant and containing such terms and provisions, consistent with this Plan,
as the Committee may approve.
5. APPRECIATION RIGHTS. The Committee may also from time to time authorize
grants to any Participant of Appreciation Rights upon such terms and conditions
as it may determine in accordance with this Paragraph. Appreciation Rights may
be granted in tandem with Option Rights or separate and apart from a grant of
Option Rights. An Appreciation Right will be a right of the Participant granted
such Award to receive from the Company, upon exercise, an amount which will be
determined by the Committee at the Date of Grant and will be expressed as a
percentage of the Spread (not exceeding 100%) at the time of exercise. An
6.
<PAGE> 44
Appreciation Right granted in tandem with an Option Right may be exercise only
by surrender of the related Option Right. Each grant of an Appreciation Right
may utilize any or all of the authorizations, and will be subject to all of the
limitations, contained in the following provisions:
(a) Each grant will state whether it is made in tandem with Option
Rights and, if not made in tandem with any Option Rights, will specify the
number of shares of Common Stock in respect of which it is made.
(b) Each grant made in tandem with Option Rights will specify the
Option Price and each grant not made in tandem with Option Rights will specify
the Grant Price, which in either case will not be less than 100% of the Market
Value per Share on the Date of Grant.
(c) Any grant may specify that the amount payable on exercise of an
Appreciation Right may be paid by the Company in (i) cash, (ii) shares of Common
Stock having an aggregate Market Value per Share equal to the Spread or a
percentage of the Spread, or (iii) any combination thereof, as determined by the
Committee in its sole discretion.
(d) Any grant may specify that the amount payable on exercise of an
Appreciation Right may not exceed a maximum specified by the Committee at the
Date of Grant (valuing shares of Common Stock for this purpose at their Market
Value per Share at the date of exercise).
(e) Each grant will specify the required period or periods of
continuous service by the Participant with the Company and/or any Subsidiary
and/or Management Objectives to be achieved before the Appreciation Rights or
installments thereof will become exercisable, and will provide that no
Appreciation Right may be exercised except at a time when the Spread is
positive, and with respect to any grant made in tandem with Option Rights, when
the related Option Right is also exercisable. Any grant may provide for the
earlier exercise of the Appreciation Rights in the event of a Change in Control
or other corporate transaction or event or upon the Participant's termination
due to death, disability or retirement.
(f) Each grant the exercise of which, or the timing of the exercise of
which, is dependent, in whole or in part, on the achievement of Management
Objectives may specify a minimum level of achievement in respect of the
specified Management Objectives below which no Appreciation Rights will be
exercisable and may set forth a formula or other method for determining the
number of Appreciation Rights that will be exercisable if performance is at or
above such minimum but short of full achievement of the Management Objectives.
(g) Each grant of an Appreciation Right will be evidenced by an
agreement executed on behalf of the Company by any officer and delivered to and
accepted by the Participant receiving the grant, which agreement will describe
such Appreciation Right, identify any Option Right granted in tandem with such
Appreciation Right, state that such Appreciation Right is subject to all the
terms and conditions of this Plan and contain such other terms and provisions,
consistent with this Plan, as the Committee may approve.
6. RESTRICTED STOCK. The Committee may also from time to time authorize
grants or sales to any Participant of Restricted Stock upon such terms and
conditions as it may determine in accordance with the following provisions:
7.
<PAGE> 45
(a) Each grant or sale will constitute an immediate transfer of the
ownership of shares of Common Stock to the Participant in consideration of the
performance of services, entitling such Participant to voting and other
ownership rights, but subject to the restrictions hereinafter referred to. Each
grant or sale may limit the Participant's dividend rights during the period in
which the shares of Restricted Stock are subject to any such restrictions.
(b) Each grant or sale will specify the Management Objectives, if any,
that are to be achieved in order for the ownership restrictions to lapse. Each
grant or sale that is subject to the achievement of Management Objectives will
specify a minimum acceptable level of achievement in respect of the specified
Management Objectives below which the shares of Restricted Stock will be
forfeited and may set forth a formula or other method for determining the number
of shares of Restricted Stock with respect to which restrictions will lapse if
performance is at or above such minimum but short of full achievement of the
Management Objectives.
(c) Each such grant or sale may be made without additional
consideration or in consideration of a payment by such Participant that is less
than the Market Value per Share at the Date of Grant.
(d) Each such grant or sale will provide that the shares of Restricted
Stock covered by such grant or sale will be subject, for a period to be
determined by the Committee at the Date of Grant, to one or more restrictions,
including, without limitation, a restriction that constitutes a "substantial
risk of forfeiture" within the meaning of Section 83 of the Code and the
regulations thereunder, and any grant or sale may provide for the earlier
termination of such period in the event of a Change in Control or other
corporate transaction or event or upon termination of the Participant's
employment due to death, disability, retirement or otherwise.
(e) Each such grant or sale will provide that during the period for
which such restriction or restrictions are to continue, the transferability of
the Restricted Stock will be prohibited or restricted in a manner and to the
extent prescribed by the Committee at the Date of Grant (which restrictions may
include, without limitation, rights of repurchase or first refusal in the
Company or provisions subjecting the Restricted Stock to continuing restrictions
in the hands of any transferee).
(f) Each grant or sale of Restricted Stock will be evidenced by an
agreement executed on behalf of the Company by any officer and delivered to and
accepted by the Participant and containing such terms and provisions, consistent
with this Plan, as the Committee may approve.
(g) Unless otherwise approved by the Committee, certificates
representing shares of Common Stock transferred pursuant to a grant of
Restricted Stock will be held in escrow pursuant to an agreement satisfactory to
the Committee until such time as the restrictions on transfer have expired or
the shares have been forfeited.
(h) The maximum number of shares of Restricted Stock that may be
granted or sold to any one Participant in any calendar year is 150,000 shares.
8.
<PAGE> 46
7. PHANTOM SHARES. The Committee may also from time to time authorize
grants to any Participant of Phantom Shares upon such terms and conditions as it
may determine in accordance with the following provisions:
(a) Each grant will specify the number of Phantom Shares to which it
pertains and the payment or crediting of any Dividend Equivalents with respect
to such Phantom Shares.
(b) Each grant will specify the Management Objectives, if any, that
are to be achieved in order for the Phantom Shares to be earned. Each grant that
is subject to the achievement of Management Objectives will specify a minimum
acceptable level of achievement in respect of the specified Management
Objections below which the Phantom Shares will be forfeited and may set forth a
formula or other method for determining the number of Phantom Shares to be
earned if performance is at or above such minimum but short of full achievement
of the Management Objectives.
(c) Each grant will specify the time and manner of payment of Phantom
Shares which have been earned, which payment may be made in (i) cash, (ii)
shares of Common Stock or (iii) any combination thereof, as determined by the
Committee in its sole discretion.
(d) Each grant of Phantom Shares will be evidenced by an agreement
executed on behalf of the Company by any officer and delivered to and accepted
by the Participant and containing such terms and provisions, consistent with
this Plan, as the Committee may approve, including provisions relating to a
Change in Control or other corporate transaction or event or upon the
Participant's termination due to death, disability or retirement.
(e) The maximum number of Phantom Shares that may be granted to any
one Participant in any calendar year is 150,000 shares.
8. PERFORMANCE UNITS. The Committee may also from time to time authorize
grants to any Participant of Performance Units upon such terms and conditions as
it may determine in accordance with the following provisions:
(a) Each grant will specify the number of Performance Units to which
it pertains.
(b) Each grant will specify the Management Objectives that are to be
achieved in order for the Performance Units to be earned. Each grant will
specify a minimum acceptable level of achievement in respect of the specified
Management Objectives below which no payment will be made and may set forth a
formula or other method for determining the amount of payment to be made if
performance is at or above such minimum but short of full achievement of the
Management Objective.
(c) Each grant will specify the time and manner of payment of
Performance Units which have become payable, which payment may be made in (i)
cash, (ii) shares of Common Stock having an aggregate Market Value per Share
equal to the aggregate value of the Performance Units which have become payable
or (iii) any combination thereof, as determined by the Committee in its sole
discretion at the time of payment.
9.
<PAGE> 47
(d) Each grant of a Performance Unit will be evidenced by an agreement
executed on behalf of the Company by any officer and delivered to and accepted
by the Participant and containing such terms and provisions, consistent with
this Plan, as the Committee may approve, including provisions relating to a
Change in Control or other corporate transaction or event or upon the
Participant's termination of employment due to death, disability, retirement or
otherwise.
(e) The maximum amount of compensation that may be subject to any
Performance Unit grant made to any one Participant in any calendar year is $1.5
million.
9. BONUS STOCK. The Committee may also from time to time authorize grants
to any Participant of Bonus Stock, which shall constitute a transfer of shares
of Common Stock, without other payment therefor, as additional compensation for
the Participant's services to the Company or its Subsidiaries.
10. CASH TAX RIGHTS.
(a) The Committee may also from time to time authorize grants to any
Participant of Cash Tax Rights upon such terms and conditions as it may
determine in accordance with this Paragraph. Cash Tax Rights may be granted in
tandem with any Award that is payable in shares of Common Stock. A Cash Tax
Right will be the right of the Participant granted such Award to receive from
the Company, upon receipt of shares of Common Stock pursuant to the tandem
Award, an amount of cash, which will be determined by the Committee at the Date
of Grant and will be expressed as a percentage of the Market Value per Share
(not exceeding 100%) of each share of Common Stock received upon payment of the
tandem Award.
(b) Each grant of a Cash Tax Right will (i) state the Award it is made
in tandem with and will specify the percentage of the Market Value per Share
that shall be payable in cash and (ii) be evidenced by an agreement extended on
behalf of the Company by any officer and delivered to and accepted by the
Participant and containing such terms and provisions, consistent with this Plan,
as the Committee may approve, including provisions relating to a Change in
Control or other corporate transaction or event or upon the Participant's
termination of employment due to death, disability, retirement or otherwise.
11. DIRECTOR OPTIONS, ETC.
(a) Each Nonemployee Director who serves in such capacity on December
31, 1994 shall automatically receive, on such date, a Director Option for 3,000
shares of Common Stock. Each Nonemployee Director who is elected or appointed to
the Board for the first time after the effective date of this Plan shall
automatically receive, on the date of his or her election or appointment, a
Director Option for 3,000 shares of Common Stock.
(b) On the date following the regular meeting of the stockholders of
the Company in each year that this Plan is in effect (commencing with the 1995
annual meeting of stockholders), each Nonemployee Director who is in office on
that day and who was not elected for the first time at such annual meeting shall
automatically receive a Director Option of 3,000 shares of Common Stock.
10.
<PAGE> 48
(c) Each Director Option will be subject to all of the limitations
contained in the following provisions:
(i) Each Director Option shall become exercisable (vested) on the
first day that is more than six months following its Date of Grant; provided
that in no event shall any Director Option be excisable prior the approval of
this Plan by the Company's stockholders.
(ii) The Option Price of each Director Option shall be the Market
Value per Share on its Date of Grant.
(iii) Each Director Option that is vested may be exercised in
full at one time or in part from time to time by giving written notice to the
Company, stating the number of shares of Common Stock with respect to which the
Director Option is being exercised, accompanied by payment in full of the Option
Price for such shares, which payment may be (A) in cash by check acceptable to
the Company, (B) by the transfer to the Company of shares of Common Stock
already owned by the optionee having an aggregate Market Value per Share at the
date of exercise equal to the aggregate Option Price, (C) from the proceeds of a
sale through a broker of some or all of the shares to which such exercise
relates or (D) by a combination of such methods of payment.
(iv) Each Director Option shall expire ten years from the Date of
Grant thereof, but shall be subject to early termination as follows: Director
Options, to the extent exercisable as of the date a Nonemployee Director ceases
to be a director of the Company, must be exercised within three months of such
date; provided that if such termination from the Board results from the
Nonemployee Director's death, disability or retirement, then case the Director
Options must be exercised within three years from the date of such termination;
provided further that if within such three month period the Nonemployee Director
is appointed to serve on the Advisory Committee established by the Board of
Directors of May 20, 1998, then the Director Options must be exercised within
three months following the date on which he or she ceases to serve on such
Advisory Committee; but provided further, however, that in no event shall the
normal ten year expiration date of such Director Options be extended.
(v) In the event that the number of shares of Common Stock
available for grants under this Plan is insufficient at any time to make all
automatic grants of Director Options provided for at such time in Paragraphs
11(a) and 11(b) and all automatic grants of Common Stock provided for at such
time in Paragraph 11(d), then Paragraph 11(d) shall take precedence over
Paragraphs 11(a) and 11(b) so that all automatic grants of Common Stock then
required to be made under Paragraph 11(d) shall be made in full before any
automatic grants of Director Options are made at such time under Paragraphs
11(a) and 11(b). In the event that the number of shares of Common Stock
available for grants under this Plan is insufficient at any time to make all
automatic grants of Director Options provided for in Paragraphs 11(a) and 11(b)
at such time, then all Nonemployee Directors who are entitled to an automatic
grant of Director Options at such time shall share ratably in the number of
shares then available for grant under this Plan and shall have no right to
receive a grant with respect to the deficiencies in the number of available
shares.
11.
<PAGE> 49
(d) On December 31 in each year that this Plan is in effect
(commencing on December 31, 1997), each Nonemployee Director who is in office on
that day shall automatically receive, without additional consideration, a grant
for that number of shares of Common Stock (rounded to the nearest whole number)
determined by dividing 13,000 by the Market Value per Share on the December 31
immediately preceding the Date of Grant; provided, however, that the annual
grant to any Nonemployee Director who has not been in office at all times during
the 12-month period immediately prior to the Date of Grant shall be prorated
based on the number of whole months that such Nonemployee Director has been in
office during such 12-month period. Each such grant of Common Stock shall be
subject to the following terms and conditions:
(i) Each grant will constitute an immediate and nonforfeitable
transfer of the ownership of shares covered thereby to the Nonemployee Director
in consideration for services rendered by such Nonemployee Director, entitling
such Nonemployee Director to voting and other ownership rights.
(ii) In the event that the number of shares of Common Stock
available for grants under this Plan is insufficient at any time to make all
automatic grants of Common Stock provided for at such time in this Paragraph
11(d) and all automatic grants of Director Options provided for at such time in
Paragraphs 11(a) and 11(b), then this Paragraph 11(d) shall take precedence over
Paragraphs 11(a) and 11(b) so that all automatic grants of Common Stock then
required to be made under this Paragraph 11(d) shall be made in full before any
automatic grants of Director Options are made at such time under Paragraphs
11(a) and 11(b). In the event that the number of shares of Common Stock
available for grants under this Plan is insufficient at any time to make all
automatic grants of Common Stock provided for in this Paragraph 11(d) at such
time, then all Nonemployee Directors who are entitled to an automatic grant of
Common Stock under this Paragraph 11(d) at such time shall share ratably in the
number of shares then available for grant under this Plan and shall have no
right to receive a grant with respect to the deficiencies in the number of
available shares.
12. TRANSFERABILITY.
(a) Except as provided in subparagraph (b) below, no Award that has
not become payable or earned will be transferable by a Participant other than by
will or the laws of descent and distribution and Director Options, Option Rights
or Appreciation Rights will be exercisable during the Participant's lifetime
only by the Participant or by the Participant's guardian or legal
representative.
(b) The Committee may, in its discretion, adopt rules or guidelines
under which any Award previously granted or to be granted to a Participant
(other than an incentive stock option) may be transferred (in whole or in part)
by the Participant to (i) the spouse, children or grandchildren of the
Participant ("Immediate Family Members"), (ii) a trust or trusts for the
exclusive benefit of the Immediate Family Members and, if applicable, the
Participant, (iii) a partnership in which such Immediate Family Members and, if
applicable, the Participant are the only partners or (iv) section 501(c)(3)
organizations. Following transfer, any such Awards shall continue to be subject
to the same terms and conditions as were applicable to the Award immediately
prior to transfer; provided, however, that no transferred Award shall be
exercisable or payable, as the case may be, unless arrangements satisfactory to
the Company
12.
<PAGE> 50
have been made to satisfy any tax withholding obligations the Company may have
with respect to the Award. Effective January 1, 1999, transfers pursuant to this
paragraph are permitted for all senior vice presidents, presidents, the Chairman
of the Board and all non-employee members of the Board.
13. ADJUSTMENTS. The Board shall make or provide for such adjustments in
the maximum number of shares specified in Paragraph 3, in the numbers of shares
of Common Stock covered by outstanding Director Options, Option Rights,
Appreciation Rights and Phantom Shares granted hereunder, in the Option Price or
Grant Price applicable to any such Director Options, Option Rights and
Appreciation Rights, in the value of Deferral Accounts and the deemed investment
thereof, and/or in the kind of shares covered thereby (including shares of
another issuer), as is equitably required to prevent dilution or enlargement of
the rights of Participants that otherwise would result from any stock dividend,
stock split, combination of shares, recapitalization or other change in the
capital structure of the Company, merger, consolidation, reorganization, partial
or complete liquidation, issuance of writs or warrants to purchase securities or
any other corporation transaction or event having an effect similar to any of
the foregoing.
14. RE-LOAD OPTIONS.
(a) Without in any way limiting the authority of the Committee to make
or not to make grants of options hereunder, the Committee shall have the
authority (but not an obligation) to include as part of any option grant a
provision entitling the Participant to a further option (a "Re-Load Option") if
the Participant exercises the option, in whole or in part, by surrendering other
shares of Common Stock in accordance with this Plan and the terms and conditions
of the option grant, provided that the Participant has held such surrendered
shares of Common Stock for at least six (6) months. Only 50% of an option grant
or 100,000 shares, whichever is less, may be exercised in any year subject to
Re-Load Option pursuant to the provisions of this Paragraph 14. Any Re-Load
Option shall (i) provide for a number of shares equal to the number of shares
surrendered as part or all of the exercise price of an Option Right; (ii) have
an exercise price equal to the aggregate Market Value per Share on the date of
exercise of the Option Right, the exercise of which gave rise to such Re-Load
Option (the "Original Option Right"); (iii) have an expiration date which is ten
(10) years from the Date of Grant of the Original Option Right; (iv) have a
vesting schedule equal to one third (1/3) of the Re-Load Option grant for each
year following the date of such grant, assuming continued active employment
during such period, provided that the Re-Load Option shall be one hundred
percent (100%) vested upon the Participant's retirement or disability, assuming
continued active employment through the date of such retirement or disability,
and such retired or disabled Participant shall have three (3) years from the
date of termination of employment (but not beyond the Re-Load Option's
expiration date) to exercise such Re-Load Option; (v) be exercisable upon three
(3) months' written notice to the Committee made prior to exercise; and (vii) be
exercisable not more than once per year with the approval of the Committee.
Re-Load Options shall be subject to the same terms and conditions of the
Original Option Right unless otherwise stated in this Paragraph 14(a).
(b) Any Re-Load option may be an option intended to qualify as an
incentive stock option under Section 422 of the Code or an option not intended
to so qualify, as the
13.
<PAGE> 51
Committee may designate at the time of the grant of the Original Option Right;
provided, however, that the designation of any Re-Load Option as an incentive
stock option shall be subject to the one hundred thousand dollars ($100,000)
annual limitation on exercisability of incentive stock options described in
Section 422(d) of the Code. There shall be no Re-Load Options on Re-Load
Options. Any Re-Load Option shall be subject to the availability of sufficient
shares under Paragraph 3 and the limitations on individual Participants' option
grants under Paragraph 3 and shall be subject to such other terms and conditions
as the Committee may determine which are not inconsistent with the express
provisions of the Plan regarding the terms of options.
15. STOCK OPTION GAIN DEFERRAL.
(a) Participation. Only Deferral Participants are eligible to make an
election pursuant to this Paragraph 15.
(b) Deferrals. A Deferral Participant may elect to defer Stock Option
Gain pursuant to one or more Option Rights. All of the gain inherent in an
Option Right must be deferred, although the Option Right may be exercised in
parts.
(i) Elections. Once an election form, properly completed, is
received by the Committee, the election of the Deferral Participant shall be
irrevocable; provided, however, that the Committee may, in its discretion,
permit a Deferral Participant to elect a further deferral of amounts credited to
his or her Deferral Account by filing a later election form; provided further,
however, that, unless otherwise approved by the Committee, any election to defer
further amounts credited to a Deferral Account must be made at least one (1)
year prior to the date such amounts would otherwise be payable in the absence of
such later election and shall be void in the event of a Deferral Participant's
earlier termination of employment.
(ii) Date of Election. An election to defer Stock Option Gain
shall be made at least six (6) months prior to the exercise of an Option Right.
Accordingly, once a Deferral Participant has made such an election, the Deferral
Participant may not exercise the Option Right covered by the election for at
least six (6) months thereafter.
(c) Deferral Accounts.
(i) Establishment; Crediting of Amounts Deferred. A Deferral
Account shall be established for each Deferral Participant, as directed by the
Committee. The amount of Stock Option Gain deferred with respect each Deferral
Account will be credited to such Deferral Account as of the date on which such
amount would have been paid to the Deferral Participant but for the Deferral
Participant's election to defer receipt hereunder. Amounts credited to a
Deferral Account shall be deemed invested in Common Stock, and the Deferral
Account accordingly shall fluctuate in value in accordance with the Market Value
per Share of Common Stock.
(ii) Adjustments. Amounts credited to a Deferral Account shall be
adjusted pursuant to the terms of Paragraph 13.
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(d) Settlement of Deferral Accounts.
(i) Form of Payment. The Company shall settle a Deferral
Participant's Deferral Account, and discharge all of its obligations to pay
deferred compensation under this Paragraph 15 with respect to such Deferral
Account, by transferring to the Deferral Participant (or the Deferral
Participant's beneficiary or estate in the case of death) shares of Common Stock
equal in number (both whole and fractional) to the deemed Common Stock
investment of the Deferral Account.
(ii) Timing of Transfers. Transfers in settlement of a Deferral
Account shall be made as soon as practicable after the date specified by the
Deferral Participant in his or her election relating to such Deferral Account,
or earlier in the event of termination of employment, in the following
circumstances:
(1) A single lump sum transfer or installment transfers in
settlement of any Deferral Account shall be made or commence, as the case may
be, as promptly as practicable following the Deferral Participant's attainment
of age 55, 60, or 65, in accordance with the Deferral Participant's election
made pursuant to Paragraph 15(b); provided, however, that a single lump sum
transfer shall be made in the event of the Deferral Participant's termination of
active employment, regardless of cause, prior to the transfer date specified in
such election. Installment transfers shall be made in substantially equal
amounts (i.e., substantially equal in terms of the number of shares of Common
Stock transferred) over five (5), ten (10) or fifteen (15) years pursuant to the
Deferral Participant's election made pursuant to Paragraph 15(b).
(2) In the event of a Change in Control, a single transfer
in settlement of a Deferral Participant's entire Deferral Account shall be made
within fifteen (15) business days following the effective date such Change in
Control.
(3) In the event of a Deferral Participant's death prior to
receiving all transfers to which he or she is entitled, the beneficiary of the
Deferral Participant, as last designated in writing on a form provided by the
Committee, or the Deferral Participant's estate (in the absence of such a
designation) shall receive the remaining transfers in accordance with the single
lump sum or installment method of transfer specified in the Deferral
Participant's election made pursuant to Paragraph 15(b); provided, however, that
such transfer shall be made or commence, as the case may be, within sixty (60)
business days following the date of the Deferral Participant's death and that a
single lump sum transfer shall be made in all cases in which transfers to the
Deferral Participant have not commenced prior to death.
(iii) Financial Hardship Transfers. Other provisions of the Plan
notwithstanding, if, upon the written application of a Participant, the
Committee determines that the Deferral Participant has a financial hardship of
such a substantial nature and beyond the individual's control that settlement of
amounts previously deferred under the Plan is warranted, the Committee may
direct the settlement of all or a portion of the balance of a Deferral Account
and the time and manner of such transfer. Financial hardship shall mean a severe
financial hardship to the Deferral Participant resulting from a sudden and
unexpected illness or accident of the Deferral Participant or his or her
dependent, loss of the Deferral Participant's property due to
15.
<PAGE> 53
casualty, or other similar extraordinary and unforeseeable circumstances arising
as a result of events beyond the control of the Deferral Participant.
(e) Statements. The Committee will furnish statements to each Deferral
Participant reflecting the amount credited to a Deferral Participant's Account
and transactions therein not less frequently than once each calendar year.
(f) Claims Procedure.
(i) Any application or request for the settlement of a Deferral
Account, inquiries about this Paragraph 15 or inquiries about present or future
rights under this Paragraph 15 (a "Claim") must be submitted to the Committee
at:
Compensation/Human Resources Committee
America West Airlines, Inc.
4000 E. Sky Harbor Boulevard
Phoenix, Arizona 85034-3899
or such other address as the Committee may from time to time specify.
(ii) If a Claim is denied in whole or in part, the Committee must
notify the applicant, in writing, of the denial of the application and of the
applicant's right to review the denial. The written notice of denial will be set
forth in a manner designed to be understood by the individual and will include
specific reasons for the denial, specific references to the provisions of Plan
upon which the denial is based, a description of any information or material
that the Committee needs to complete the review and an explanation of the claims
procedure of Paragraph 15(f).
(iii) This written notice will be given to the individual within
90 days after the Committee receives the application, unless special
circumstances require an extension of time, in which case, the Committee shall
have up to an additional 90 days for processing the application. If an extension
of time for processing is required, written notice of the extension will be
furnished to the applicant before the end of the initial 90-day period.
(1) This notice of extension will describe the special
circumstances necessitating the additional time and the date by which the
Committee is to render its decision on the application. If written notice of
denial of the Claim is not furnished within the specified time, the application
shall be deemed to be denied. The applicant will then be permitted to appeal the
denial in accordance with the review procedure described below.
(iv) Any person (or that person's authorized representative) for
whom a Claim is denied (or deemed denied), in whole or in part, may appeal the
denial by submitting a request for a review to the Committee within 60 days
after the application is denied (or deemed denied). The Committee will give the
applicant (or his or her representative) an opportunity to review pertinent
documents in preparing a request for a review. A request for a review shall be
in writing and shall be addressed to the Committee at:
16.
<PAGE> 54
Compensation/Human Resources Committee
America West Airlines, Inc.
4000 E. Sky Harbor Boulevard
Phoenix, Arizona 85034-3899
or such other address as the Committee may from time to time specify.
(v) A request for review must set forth all of the grounds on
which it is based, all facts in support of the request and any other matters
that the applicant feels are pertinent. The Committee may require the applicant
to submit additional facts, documents or other material as it may find necessary
or appropriate in making its review.
(vi) The Committee will act on each request for review within 60
days after receipt of the request, unless special circumstances require an
extension of time (not to exceed an additional 60 days) for processing the
request for a review. If an extension for review is required, written notice of
the extension will be furnished to the applicant within the initial 60-day
period. The Committee will give prompt, written notice of its decision to the
applicant. If the Committee defers denial of a Claim in whole or in part, the
notice will outline, in a manner calculated to be understood by the applicant,
the specific provisions of this plan upon which the decision is based. If
written notice of the Committee's decision is not given to the applicant within
the time prescribed in this subparagraph (vi), the application will be deemed
denied on review.
(vii) The Committee will establish rules and procedures,
consistent with the Plan, this Paragraph 15 and Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), as necessary and
appropriate in carrying out its responsibilities in reviewing Claims. The
Committee may require an applicant who wishes to submit additional information
in connection with an appeal from the denial (or deemed denial) of a Claim to do
so at the applicant's own expense.
(viii) No legal action in respect of a Claim under this Paragraph
15 may be brought until the claimant (i) has submitted a written Claim in
accordance with Paragraph 15(f)(i) above, (ii) has been notified by the
Committee that the application is denied (or the application is deemed denied
due to the Committee's failure to act on it within the established time period),
(iii) has filed a written request for a review of the application in accordance
with the appeal procedure described in Paragraph 15(f)(iii) above, and (iv) has
been notified in writing that the Committee has denied the appeal (or the appeal
is deemed to be denied due to the Committee's failure to take any action on the
claim within the time prescribed by Paragraph 15(f)(iv) above).
(g) General Provisions.
(i) Limits on Transfers. Other than by will or the laws of
descent and distribution, no right, title or interest of any kind in a Deferral
Account shall be transferable or assignable by a Deferral Participant or his or
her Beneficiary, be subject to alienation, anticipation, encumbrance,
garnishment, attachment, levy, execution or other legal or equitable process, or
be subject to the debts, contracts, liabilities or engagements, or torts of any
Deferral
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<PAGE> 55
Participant or his or her Beneficiary. Any attempt to alienate, sell, transfer,
assign, pledge, garnish, attach or take any other action subject to legal or
equitable process or encumber or dispose of any interest in a Deferral Account
shall be void.
(ii) Receipt and Release. A transfer to any Deferral Participant
or Beneficiary in accordance with the provisions of this Paragraph 15 shall, to
the extent thereof, be in full satisfaction of all claims for the compensation
or awards deferred pursuant to the Deferral Account to which the transfer
relates against the Company or any Subsidiary, and the Committee may require
such Deferral Participant or Beneficiary, as a condition to such transfer, to
execute a receipt and release to such effect.
(iii) Unfunded Status; Creation of Trusts. This Paragraph 15 is
intended to constitute an "unfunded" plan for deferred compensation, and
Deferral Participants shall rely solely on the unsecured promise of the Company
for transfers hereunder with respect to any transfer not yet made to a Deferral
Participant. Nothing contained in this Paragraph 15 shall give a Deferral
Participant any rights that are greater than those of a general unsecured
creditor of the Company; provided, however, that the Committee may authorize the
creation of a trust or make other arrangements to meet the Company's obligations
under this Paragraph 15, which trust or other arrangements shall be consistent
with the "unfunded" status of such deferred compensation plan unless the
Committee otherwise determines with the consent of each affected Deferral
Participant.
(iv) Compliance. A Deferral Participant shall have no right to
receive any payment or transfer with respect to his or her Deferral Account
until legal and contractual obligations of the Company relating to this
Paragraph 15 and the making of such payment or transfer shall have been complied
with in full. In addition, the Company shall impose such restrictions on Common
Stock delivered to a Participant hereunder and any other interest constituting a
security as it may deem advisable in order to comply with the Securities Act of
1933, as amended, the requirements of the New York Stock Exchange or any other
stock exchange or automated quotation system upon which the Common Stock is then
listed or quoted, any state securities laws applicable to such a transfer, any
provision of the Company's Certificate of Incorporation or Bylaws, or any other
law, regulation, or binding contract to which the Company is a party.
(v) Other Participant Rights. No Deferral Participant shall have
any of the rights or privileges of a stockholder of the Company under this
Paragraph 15, including as a result of the deemed investment of a Deferral
Account in Common Stock or the creation of any trust and deposit of Common Stock
therein, except at such time as Common Stock may be actually delivered in
settlement of a Deferral Account. Subject to the limitations set forth in
Paragraph 15(g)(i) above, the terms and conditions of this Paragraph 15 shall
inure to the benefit of, and be binding upon, the parties hereto and their
successors and assigns.
(vi) Limitation. A Deferral Participant and his or her
Beneficiary shall assume all risk in connection with any decrease in value of
the Deferral Account, and neither the Company, any Subsidiary nor the Committee
shall be liable or responsible therefor.
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(vii) Effect on Cash Tax Rights. If an election under this
Paragraph 15 is made to defer the receipt of Stock Option Gain upon the exercise
of an Option Right pursuant to which a Cash Tax Right was awarded at the time of
grant according to the terms of Paragraph 10 above, such Cash Tax Right shall be
terminated upon the election to defer Stock Option Gain.
16. FRACTIONAL SHARES. Except as otherwise provided in Paragraph 15(d)(i)
above, the Company will not be required to issue any fractional share of Common
Stock pursuant to this Plan. The Committee may provide for the elimination of
fractions or the settlement of fractions in cash.
17. WITHHOLDING OF TAXES. To the extent that the Company is required to
withhold federal, state, local or foreign taxes in connection with any grant or
payment made to a Participant or any other person under this Plan, or is
requested by a Participant to withhold additional amounts with respect to such
taxes, and the amounts available to the Company for such withholding are
insufficient, it will be a condition to the receipt of such grant or payment
that the Participant or such other person make arrangements satisfactory to the
Company for the payment of the balance of such taxes required or requested to be
withheld, which arrangements in the discretion the Committee may include
relinquishment of a portion of such Award or payment. With respect to any
Participant who is subject to Rule 16b-3 at the time withholding is required
with respect to an Award payable in Common Stock, to the extent such withholding
is not satisfied by a tandem Cash Tax Right, if any, the Participant may direct
the Company to withhold a number of shares of Common Stock having an aggregate
Market Value per Share equal to the amount of taxes required to be withheld by
the Company.
18. PARACHUTE TAX GROSS-UP. If option acceleration or any payment,
distribution or other benefit by or from the Company to or for the benefit of a
Participant (whether actually or deemed paid or payable, distributed or
distributable or received or receivable pursuant to the terms of the Plan or
otherwise, but determined without regard to any additional payment required
under this gross-up provision) (collectively, the "Payment") would be subject to
the excise tax imposed by Section 4999 of the Code or any interest or penalties
are incurred by the with respect to such excise tax (such excise tax, together
with any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then the Participant shall be entitled to receive from the
Company an additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Participant of all taxes (including, without limitation,
any income and employment taxes and any interest and penalties imposed with
respect thereto) and the Excise Tax imposed upon the Gross-Up Payment, the
Participant retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payment. All calculations required by this excise tax gross-up
provision shall be performed by the independent auditors retained by the Company
most recently prior to the Change in Control (the "Auditors"), based on
information supplied by the Company and the Participant. All fees and expenses
of the Auditors shall be paid by the Company.
19. ADMINISTRATION OF THE PLAN.
(a) This Plan will be administered by the Committee, which at all
times will consist of not less than three directors appointed by the Board, each
of whom will be a "non-employee director" within the
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meaning of Rule 16b-3 and an "outside director" within the meaning of Section
162(m) of the Code. A majority of the Committee will constitute a quorum, and
the action of the members the Committee present at any meeting at which a quorum
is present, or acts unanimously approved writing, will be the acts of the
Committee.
(b) The interpretation and construction by the Committee of any
provision of this Plan or of any agreement, notification or document evidencing
the grant of an Award and any determination by the Committee pursuant to any
provision of this Plan or of any such agreement, notification or documentation
will be final and conclusive. No member of the Committee will be liable for any
such action or determination made in good faith or in the absence of gross
negligence or willful misconduct on the part of such member.
20. AMENDMENTS, ETC.
(a) This Plan may be amended from time to time by the Board.
(b) The Committee may, in its sole discretion, take any action it
deems to be equitable under the circumstances or in the best interests of the
Company with respect to any Award, unless such Award is intended to qualify as
"performance based" compensation under Section 162(m) of the Code and such
action would cause the Award to fail to so qualify.
(c) This Plan will not confer upon any Participant any right with
respect to continuance of employment or other service with the Company or any
Subsidiary, nor will it interfere in any way with any right the Company or any
Subsidiary would otherwise have to terminate such Participant's employment or
other service at any time.
21. TERM. This Plan became effective as of December 1, 1994. Unless sooner
terminated, this Plan shall terminate on November 30, 2004, and no further
Awards shall be made, but all outstanding Awards and Deferral Accounts on such
date shall remain effective in accordance with their terms and the terms of this
Plan.
This AMERICA WEST 1994 INCENTIVE EQUITY PLAN, amended and restated
effective January 15, 1999, is hereby executed by a duly authorized officer of
America West Holdings Corporation.
AMERICA WEST HOLDINGS CORPORATION
By: /s/ William A. Franke
__________________________________________
William A. Franke
Its: Chief Executive Officer
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