<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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 Section240.14a-11(c) or
Section240.14a-12
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
<PAGE>
[LOGO]
NORTHWEST AIRLINES CORPORATION
2700 LONE OAK PARKWAY
EAGAN, MINNESOTA 55121
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 23, 1999
------------------------
To the Stockholders of Northwest Airlines Corporation:
The Annual Meeting of Stockholders of Northwest Airlines Corporation (the
"Corporation") will be held at the Equitable Life Building, 787 Seventh Avenue,
New York, New York 10019 on Friday, April 23, 1999, at 9:30 a.m., Eastern
Daylight Time, for the following purposes:
(1) To elect fifteen directors of the Corporation to serve terms of one year
and until their successors have been duly elected and qualified. Three of
the director nominees will be elected exclusively by the holders of the
Series C Preferred Stock of the Corporation in accordance with the
provisions of the Certificate of Designation with respect to the Series C
Preferred Stock.
(2) To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on February 26, 1999
as the record date for determination of the stockholders authorized to receive
notice of and to vote at the meeting. A complete list of such stockholders will
be open for examination by any stockholder for any purpose germane to the
meeting at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New
York, New York, during ordinary business hours for a period of ten days prior to
the meeting. The list will also be available on April 23, 1999 at the place of
the meeting. Your attention is directed to the accompanying proxy statement.
By Order of the Board of Directors,
Douglas M. Steenland
EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
March 22, 1999
Eagan, Minnesota
If you plan to attend the Annual Meeting, check the appropriate box on your
proxy card when you return it or respond appropriately if voting by telephone,
and bring to the Annual Meeting the admission ticket that is printed on the last
page of the proxy statement. You must have an admission ticket (printed on the
last page of the proxy statement) or other proof of share ownership (for
example, a recent statement of your broker). If you do not plan to attend the
Meeting, please vote your shares either by telephone (via the 1-800 number
indicated on the accompanying proxy card) or by mail. If you choose to vote by
mail, please sign the proxy card and return it in the envelope so that your
shares will be voted. The envelope requires no postage if mailed in the United
States.
<PAGE>
[LOGO]
NORTHWEST AIRLINES CORPORATION
2700 LONE OAK PARKWAY
EAGAN, MINNESOTA 55121
------------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 23, 1999
------------------------
GENERAL INFORMATION
SOLICITATION OF PROXIES
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Northwest Airlines Corporation (as defined
below, the "Corporation") for use at the Annual Meeting of Stockholders to be
held on Friday, April 23, 1999 at the Equitable Life Building, 787 Seventh
Avenue, New York, New York 10019 at 9:30 a.m. Eastern Daylight Time or at any
postponement or adjournment thereof (the "Annual Meeting"). This proxy statement
and the accompanying proxy card are being mailed to stockholders on or about
March 22, 1999.
The cost of this solicitation, including all expenses incurred in preparing,
printing and mailing this proxy statement, will be borne by the Corporation. In
addition to solicitation by mail, proxies may be solicited by certain directors,
officers and employees of the Corporation in person and by telephone. Such
directors, officers and employees will not be additionally compensated, but may
be reimbursed for out-of-pocket expenses in connection with such solicitation.
The Corporation also will request brokerage firms, nominees, custodians and
fiduciaries to forward proxy material to the beneficial owners of shares held of
record and will reimburse such persons for their expenses in connection
therewith.
On November 20, 1998, the Corporation effected a holding company
reorganization. As a result, Northwest Airlines Holdings Corporation (formerly
known as Northwest Airlines Corporation and prior to the reorganization the
publicly traded holding company, "Old NWA Corp.") became a direct wholly owned
subsidiary of a newly formed Delaware corporation, Northwest Airlines
Corporation (referred to herein as the "Corporation"). The Corporation is now
the publicly traded holding company. Pursuant to the reorganization, each share
of Common Stock and Series C Preferred Stock of Old NWA Corp. was converted into
one share of Common Stock and Series C Preferred Stock, respectively, of the
Corporation with the same rights and privileges as such shares of Old NWA Corp.
References in this proxy statement to Northwest Airlines Corporation or the
Corporation (as the case may be), Common Stock and Series C
1
<PAGE>
Preferred Stock for time periods prior to November 20, 1998 refer to Old NWA
Corp. and the Common Stock and Series C Preferred Stock of Old NWA Corp.,
respectively.
OUTSTANDING SHARES AND VOTING RIGHTS
OUTSTANDING SHARES
The Board of Directors has set February 26, 1999 as the record date (the
"Record Date") for the determination of stockholders entitled to notice of, and
to vote at, the Annual Meeting. On the Record Date, there were outstanding
84,034,905 shares of Common Stock, par value $.01 per share (the "Common
Stock"), and 5,566,502 shares of Series C Preferred Stock, par value $.01 per
share (the "Series C Preferred Stock"). These securities constitute the only
classes of securities entitled to vote at the Annual Meeting.
VOTING RIGHTS
COMMON STOCK
Each outstanding share of Common Stock entitles the holder thereof to one
vote on all matters to be voted on by the Corporation's stockholders other than
the election of directors to be elected by the holders of Series C Preferred
Stock (the "Series C Directors").
SERIES C PREFERRED STOCK
The Series C Preferred Stock is held by certain trusts established pursuant
to the Northwest Airlines Corporation Employee Stock Plan (the "Employee Stock
Plan") for the benefit of certain employees of Northwest Airlines, Inc.
("Northwest Airlines") and by certain former employees of Northwest Airlines to
whom such stock is distributed from the trusts and their spouses, children and
heirs (collectively, "Qualified Holders"). As part of an overall revised
compensation plan for the employees of Northwest Airlines provided by labor
agreements entered into in 1993, the Corporation issued to the trusts for the
benefit of participating employees 9,048,893 shares of Series C Preferred Stock
and 17,502,493 shares of Class A and Class B Common Stock. In April 1998, the
stockholders of the Corporation approved an amendment to the Corporation's
Second Amended and Restated Certificate of Incorporation (the "Charter") to
combine and reclassify the Corporation's Class A Common Stock and Class B Common
Stock into a single class of voting Common Stock. As amended, the Corporation's
Charter provides that each share of Series C Preferred Stock is convertible at
any time prior to redemption into 1.364 shares of Common Stock. The Series C
Preferred Stock votes with the Common Stock on all matters submitted to
stockholders for a vote, except with respect to the election of directors. Each
outstanding share of Series C Preferred Stock held by a Qualified Holder is
entitled to the number of votes equal to 1.364 votes per share at the Annual
Meeting. Shares of Series C Preferred Stock automatically convert into shares of
Common Stock upon their sale or transfer to a non-Qualified Holder.
With respect to the election of directors, the Series C Preferred Stock,
voting as a separate class, is entitled to elect three Series C Directors, one
of whom is nominated by the International Brotherhood of Teamsters (the "IBT"),
one by the International Association of Machinists and Aerospace Workers (the
"IAM") and one by the Northwest Master Executive Council ("Northwest MEC") of
the Air Line Pilots Association, International ("ALPA"). Until July 31, 2003,
the number of Series C Directors will be the greater of three or the number that
represents at least 15 percent of the Corporation's directors. Qualified Holders
of Series C Preferred Stock are entitled to vote for or against the three Series
C Director nominees as a slate and are not entitled to vote for or against any
single Series C Director nominee and are not entitled to vote for the election
of any other directors of the Corporation. The Corporation has agreed to extend
Northwest MEC's right to nominate a member of the Board of Directors until
September 13, 2005, which is three years after the date on which the current
collective bargaining agreement between Northwest Airlines and ALPA becomes
amendable.
2
<PAGE>
STOCKHOLDERS AGREEMENTS
In connection with the acquisition in 1989 of the Corporation's principal
indirect subsidiary, NWA Inc., which is the parent of Northwest Airlines, the
original investors in the Corporation (the "Original Investors") and the
Corporation entered into an agreement (as amended, the "Stockholders'
Agreement"). The parties to the Stockholders' Agreement (other than the
Corporation), presently consisting of Alfred A. Checchi and certain trusts
established for the benefit of Mr. Checchi's family, Gary L. Wilson and certain
members of Mr. Wilson's family, Frederic V. Malek and certain trusts established
for the benefit of Mr. Malek's family, and Richard C. Blum & Associates-NWA
Partners, L.P. ("Blum-NWA Partners"), who in the aggregate own as of February
26, 1999, 30.4 percent of the Corporation's outstanding Common Stock on a fully
diluted basis, have agreed to vote their shares of Common Stock for the election
to the Board of Directors of (i) three designees of Alfred A. Checchi and
certain trusts formed for the benefit of Mr. Checchi or members of his family
(collectively, the "Checchi Family"), (ii) three designees of Gary L. Wilson and
members of his family (collectively, the "Wilson Family") and (iii) one designee
of Blum-NWA Partners or its affiliates. The Stockholders' Agreement will expire
on July 21, 1999.
In connection with the Corporation's acquisition in November 1998 of
beneficial ownership of approximately 8.7 million shares of Class A Common Stock
of Continental Airlines, Inc. (the "Continental Shares"), the Corporation issued
2,631,784 shares of Common Stock to certain former partners of Air Partners,
L.P. (the "Partners") pursuant to an Investment Agreement dated as of January
25, 1998 (as amended, the "Investment Agreement"). Pursuant to the Investment
Agreement, an affiliate of one of the Partners or its permitted assignee has the
right to designate an individual for election to the Board of Directors. James
G. Coulter is the designee.
The Partners are also party to a Standstill Agreement dated as of November
20, 1998 (the "Standstill Agreement") between the Partners and the Corporation.
All 2,631,784 shares of Common Stock held by the Partners are subject to the
voting restrictions provided for in the Standstill Agreement. Pursuant to the
Standstill Agreement, the Partners are required to vote their shares of Common
Stock in favor of the election to the Board of Directors of the individuals
recommended by the Corporation's Board of Directors. The Standstill Agreement
also contains customary restrictions on the Partners' ability (i) to participate
or vote in proxy solicitations in opposition of a recommendation or proposal of
the Corporation's Board of Directors, (ii) to make stockholder proposals or seek
the removal of a member of the Corporation's Board of Directors, or (iii) to
seek to effect any control or influence over the management of the Corporation.
The Standstill Agreement has a term of five years subject to earlier termination
in certain events.
FOREIGN OWNERSHIP OF SHARES
The Federal Aviation Act prohibits non-United States citizens from owning
more than 25 percent of the voting interest of a company such as the
Corporation, which owns a United States air carrier. The Corporation's
certificate of incorporation provides that no share of the Corporation's voting
stock may be voted by or at the direction of persons who are not United States
citizens unless such shares are registered on a separate stock registry
maintained by the Corporation for non-United States holders (the "Foreign Stock
Registry"). The Corporation's Bylaws provide that no shares of the Corporation's
voting stock held by non-United States citizens will be registered on the
Foreign Stock Registry if the amount so registered would exceed foreign
ownership restrictions--currently 25 percent of the voting stock of the
Corporation.
As of the Record Date, shares representing less than one percent of the
total outstanding voting stock of the Corporation (on a fully diluted basis) are
registered on the Foreign Stock Registry. Any holder of Common Stock who is not
a United States citizen and has not registered its shares on the Foreign Stock
Registry maintained by the Corporation will not be permitted to vote its shares
at the Annual Meeting. The enclosed proxy card contains a certification that by
signing the proxy card or voting by telephone the stockholder certifies that
such stockholder is a United States citizen as that term is defined in the
Federal
3
<PAGE>
Aviation Act or that the shares represented by the proxy card have been
registered on the Corporation's Foreign Stock Registry.
Under Section 40102(a)(15) of the Federal Aviation Act, the term "citizen of
the United States" is defined as: (i) an individual who is a citizen of the
United States, (ii) a partnership each of whose partners is an individual who is
a citizen of the United States, and (iii) a corporation or association organized
under the laws of the United States or a state, the District of Columbia or a
territory or possession of the United States of which the president and at least
two-thirds of the board of directors and other managing officers are citizens of
the United States, and in which at least 75 percent of the voting interest is
owned or controlled by persons that are citizens of the United States.
VOTING PROCEDURES; QUORUM
Shares of stock represented by a proxy card that is returned properly signed
or which have been voted by telephone in accordance with the telephone voting
instructions set forth on the accompanying proxy card will be voted by the
persons named as proxies in accordance with the instructions provided. If a
proxy is given without instructions, the shares will be voted as recommended by
the Board of Directors.
A proxy given pursuant to this solicitation may be revoked by the
stockholder at any time prior to the voting of the proxy by written notice to
the Office of the Secretary of the Corporation, by delivery of a later-dated
proxy (either by mail or by telephone) prior to the voting of the proxy or by
voting in person at the Annual Meeting. Attendance at the Annual Meeting will
not, in itself, constitute revocation of a proxy.
The presence, in person or by proxy, of the holders of a majority of the
votes entitled to be cast by the holders of all shares of Common Stock and
Series C Preferred Stock that are outstanding and entitled to vote generally at
the Annual Meeting is necessary to constitute a quorum, except that (i) with
respect to the election of the Common Stock Directors (as defined below), the
presence in person or by proxy of a majority of the holders of all shares of
Common Stock is necessary to constitute a quorum and (ii) with respect to the
election of the Series C Directors, the presence in person or by proxy of a
majority of the holders of all shares of Series C Preferred Stock is necessary
to constitute a quorum. Abstentions and broker "non-votes" are counted as
present and entitled to vote for purposes of determining a quorum. A broker
"non-vote" occurs when a nominee holding shares for a beneficial owner does not
vote on a particular proposal because the nominee does not have discretionary
voting power with respect to that item and has not received instructions from
the beneficial owner.
The nominees for election to the Board of Directors (other than the nominees
for the Series C Directors) receiving the greatest number of the affirmative
votes cast by holders of Common Stock, up to the 12 directors to be elected,
will be elected as directors. Accordingly, so long as a quorum is present,
abstentions and broker non-votes will have no effect on the election of
directors. The election of the slate of nominees for the Series C Directors
requires the affirmative vote by the holders of the majority of the Series C
Preferred Stock present at the Annual Meeting and entitled to vote. Abstentions
will have the same effect as votes against the slate of Series C Directors; a
broker "non-vote" will be deemed shares not entitled to vote and will have no
effect on the election of Series C Directors.
VOTING SHARES HELD IN THE EMPLOYEE STOCK PLAN
Under certain of the trusts established under the Employee Stock Plan,
shares allocated to the accounts of participants in the Employee Stock Plan may
be voted as to certain matters by either returning the accompanying voting
instruction card or providing voting instructions to the trustee by telephone in
accordance with the instructions set forth on the voting instruction card. The
trustees of the Employee Stock Plan will vote the number of shares allocated to
a participant's account in accordance with the directions set forth on the
voting instruction card or provided by telephone if such directions are received
prior to 5:00 p.m. (EDT) on April 21, 1999. Allocated shares for which the
trustees receive no instructions will be voted by the trustees in their
discretion.
4
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
It is proposed that 15 directors be elected at the Annual Meeting to serve
until the next annual meeting of stockholders and until their successors have
been duly elected and qualified, or until the director's earlier resignation or
removal. Each nominee, except Messrs. Coulter and Benning, is presently a
director of the Corporation and also serves as a director of Northwest Airlines
Holdings Corporation, NWA Inc., and Northwest Airlines, which are direct and
indirect subsidiaries of the Corporation. The 12 nominees to the Board of
Directors to be elected by the holders of the Common Stock (the "Common Stock
Directors") were nominated by the Chairman of the Board of Directors pursuant to
the Corporation's Bylaws. Messrs. Kourpias and Ristow were nominated by the IAM
and Northwest MEC, respectively, for election by the holders of the Series C
Preferred Stock. Marvin L. Griswold is currently a Series C Director nominated
by the IBT. The IBT has nominated Mr. Benning for election as a Series C
Director at the Annual Meeting. Mr. Griswold's term of office as a director will
terminate at the Annual Meeting.
The persons named in the enclosed proxy intend to vote the shares covered by
proxies for the election of the director-nominees named below. If any nominee
shall, prior to the Annual Meeting, become unavailable for election as a
director, which is not anticipated, the shares covered by proxies will be voted
for such substitute nominee, if any, as may be recommended by the Chairman of
the Board of Directors with respect to any nominee to be a Common Stock Director
or as may be nominated by the IAM, IBT or Northwest MEC, as applicable, with
respect to any nominee to be a Series C Director.
INFORMATION CONCERNING DIRECTOR-NOMINEES
Information with respect to the business experience and affiliations of the
director-nominees follows:
COMMON STOCK DIRECTORS
RICHARD C. BLUM, age 63, has served as a director of the Corporation since
1989. Mr. Blum is Chairman and President of Richard C. Blum & Associates, Inc.,
which is the general partner of Richard C. Blum & Associates, L.P., a merchant
banking and equity investment management firm which acts as general partner for
various investment partnerships. Mr. Blum also serves as a director of the
Shaklee Corporation (nutritional, household and personal care products), URS
Corporation (architectural and engineering services), Glenborough Realty Trust
(a REIT), CB Richard Ellis, Inc. (real estate services), and Playtex Products,
Inc. (personal and household products). Mr. Blum is also Co-Chairman of
Newbridge Capital, an investment management firm that invests in Asia and Latin
America.
ELAINE L. CHAO, age 45, was elected a director of the Corporation in January
1999. Ms. Chao has served as a Distinguished Fellow at The Heritage Foundation
(research institute) since 1996. From 1992 to 1996, she was President and Chief
Executive Officer of United Way of America (charitable and volunteer
organization). Prior to joining United Way, Ms. Chao was director of the Peace
Corps (international volunteer organization), deputy secretary of the U.S.
Department of Transportation and chairman of the Federal Maritime Commission.
Ms. Chao also serves on the boards of directors of Dole Food Company, Inc. (food
products), Vencor, Inc. (nursing homes), Protective Life Corporation (life
insurance), Millipore (filtration technology) and Raymond James Financial
(financial services).
ALFRED A. CHECCHI, age 50, has served as a director of the Corporation since
1989. He was Co-Chairman of the Board of Directors from 1991 to 1997 and sole
Chairman of the Board of Directors from 1989 to 1991. Mr. Checchi is currently a
private investor. Between 1983 and 1987, he was a principal of Bass Brothers
Enterprises. Mr. Checchi began his business career at Marriott Corp. in 1975 and
over the next eight years held a variety of management positions, including Vice
President of Corporate Development and Treasurer.
5
<PAGE>
JAMES G. COULTER, age 39, was a founding partner and since 1992 has served
as a Managing Director of Texas Pacific Group, a private equity investment fund.
From 1986 to 1992, Mr. Coulter was Vice President of Robert M. Bass Group, Inc.,
a private investment firm now doing business as Keystone, Inc. From 1986 to
1988, he also was associated with SPO Partners, a private investment firm. Mr.
Coulter currently serves on the boards of directors of America West Holdings
Corp. (airline), Beringer Wine Estates (wine producer) and Oxford Health Plans,
Inc. (healthcare).
JOHN H. DASBURG, age 56, has served as President and Chief Executive Officer
and a director of the Corporation since 1990. Mr. Dasburg joined the Corporation
in November 1989 as Executive Vice President of Finance and Administration and
was named President and Chief Executive Officer in November 1990. From 1987 to
1989, Mr. Dasburg served as President of Marriott's Lodging Group and as an
Executive Vice President of Marriott Corp. From 1980 through 1987, he held
various senior executive positions at Marriott. Prior to 1980, he was a partner
of KPMG Peat Marwick. Mr. Dasburg serves on the boards of directors of Owens
Corning (building and construction products), The St. Paul Companies, Inc.
(insurance), and Koninklijke Luchtvaart Maatschappij N.V. ("KLM") (airline). He
also serves on the board of directors of the Mayo Foundation.
DORIS KEARNS GOODWIN, age 56, has served as a director of the Corporation
since November 1997. Ms. Goodwin is a historian and author and has received
numerous awards including the Pulitzer Prize in history in 1995. She is
currently a member of the Harvard University Board of Overseers and was a
Professor of Government at Harvard University from 1969 to 1977.
DENNIS F. HIGHTOWER, age 57, has served as a director of the Corporation
since November 1997. Since July 1996, Mr. Hightower has been Professor of
Management at the Harvard Business School. From March 1995 to June 1996 Mr.
Hightower was President of Walt Disney Television & Telecommunications and from
June 1987 to March 1995 he was President of Disney Consumer Products, Europe,
Middle East and Africa. Mr. Hightower is also a director of PanAmSat Corporation
(satellite communications), Phillips-Van Heusen Corporation (apparel
manufacturing), and The TJX Companies, Inc. (apparel retailing).
FREDERIC V. MALEK, age 62, has served as a director of the Corporation since
1989. Mr. Malek served as President of Northwest Airlines from late 1989 to
mid-1990 and was Vice Chairman of Northwest Airlines from 1990 through 1991. Mr.
Malek is Chairman of Thayer Capital Partners, a Washington, D.C.-based merchant
bank, which Mr. Malek formed in 1993. Mr. Malek is a director of American
Management Systems, Inc. (computer services and consulting), Automatic Data
Processing, Inc. (payroll data processing), CB Richard Ellis, Inc. (real estate
services), FPL Group, Inc. (electric utility), HCR Manor Care, Inc. (healthcare
facilities), Aegis Communications Group, Inc. (telecommunications-based
marketing services), Global Vacation Group (vacation packages), and various
mutual funds sponsored by PaineWebber Group Inc.
WALTER F. MONDALE, age 71, was elected as a director of the Corporation in
January 1997 and had previously served as a director of the Corporation from
1989 to 1993. He is currently a partner of the law firm of Dorsey & Whitney LLP.
Mr. Mondale served as the U.S. Ambassador to Japan from 1993 to 1996, served as
Vice President of the United States from 1977 to 1981 and served in the U.S.
Senate from 1964 through 1977. Mr. Mondale is on the board of directors of CNA
Financial Corp. (insurance), Dain Rauscher Corporation (financial services), St.
Jude Medical, Inc. (healthcare), UnitedHealth Group Corporation (healthcare),
and various mutual funds sponsored by BlackRock Financial Management L.P. He
also serves on the boards of directors of the Mayo Foundation and the University
of Minnesota Foundation.
V. A. RAVINDRAN, age 51, has served as a director of the Corporation since
1992. Since 1987, Mr. Ravindran has been the President of Paracor Finance Inc.
(formerly Elders Finance, Inc.), a United States merchant bank wholly owned by
Fosters Brewing Group Ltd. of Australia. From 1987 to 1992,
6
<PAGE>
Mr. Ravindran was an Executive Director of EFG Holdings (USA), the finance group
holding company of Fosters Brewing Group Ltd. of Australia.
LEO M. VAN WIJK, age 52, has served as a director of the Corporation since
November 1997 and previously served as a director of the Corporation from 1991
to 1996. Mr. van Wijk is President and Chief Executive Officer of KLM, a
position he has held since August 1997. He joined KLM in 1971 and has held
various positions with KLM; he was Managing Director from 1991 through 1996 and
was Chief Operating Officer from January 1997 through August 1997.
GARY L. WILSON, age 59, has served as a director of the Corporation since
1989. He has been Chairman of the Board of Directors since April 1997 and was
Co-Chairman of the Board of Directors from 1991 to 1997. Mr. Wilson also serves
as a director of CB Richard Ellis, Inc. (real estate services), On Command Corp.
(hotel movie distribution systems) and The Walt Disney Company (entertainment).
He joined Disney in 1985 as Executive Vice President and Chief Financial Officer
and a director. Before joining Disney, Mr. Wilson served for 11 years in
executive positions at Marriott Corp., including Executive Vice President and
Chief Financial Officer. Mr. Wilson serves on the board of trustees of Duke
University.
SERIES C DIRECTORS
RAY W. BENNING, JR., age 55, has been Director of the Airline Division of
the International Brotherhood of Teamsters since 1995. Mr. Benning served as
Assistant to the Director of the Teamsters Airline Division from 1993 to 1995
and as President of Teamsters Airline Local 2707 from 1985 to 1993.
GEORGE J. KOURPIAS, age 66, has served as a director of the Corporation
since July 1997. Mr. Kourpias is the retired International President of the IAM,
a position he held from 1989 to 1997.
MICHAEL G. RISTOW, age 53, was elected a director of the Corporation in
January 1999. Captain Ristow has been a Northwest Airlines pilot for over 30
years and has served as a Captain Representative of ALPA since 1993.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES LISTED
ABOVE.
DIRECTORS EMERITUS
Directors who have retired under the Corporation's retirement policy are
appointed as Directors Emeritus. Such individuals are entitled to attend and
participate in all Board of Directors meetings but are not entitled to vote at
such meetings. Currently, Thomas L. Kempner and Melvin R. Laird are the only
Directors Emeritus.
ATTENDANCE
During 1998, the Board of Directors held four regularly scheduled and six
special meetings. The Board of Directors will hold five regularly scheduled
meetings in 1999. During 1998, each of the incumbent directors attended 75
percent or more of the aggregate of the total number of meetings of the Board of
Directors and the committees on which he or she served with the exception of
Messrs. Blum and van Wijk.
COMMITTEES ESTABLISHED BY THE BOARD
The Board of Directors has established committees to assist it in the
discharge of its responsibilities. The principal committees, their current
members and the principal responsibilities of each are described below.
The Finance Committee is presently comprised of Messrs. Dasburg (Chairman),
Blum, Ristow and Wilson and nine members of the Corporation's senior management.
The committee reviews the Corporation's business and financial strategies, the
annual operating and capital budgets and proposed capital expenditures and sales
of the Corporation's assets and acquisitions in excess of $1 million. The
committee
7
<PAGE>
has the authority to approve proposed capital expenditures, acquisitions and
sales of the Corporation's assets not exceeding $10 million. The committee met
seven times during 1998.
The Audit, Safety and Environmental Committee is presently comprised of
Messrs. Griswold (Chairman) and Mondale. As a result of Mr. Griswold's departure
from the Board following the Annual Meeting, the Board of Directors will appoint
a new chairman of the committee. The committee provides assistance to the Board
of Directors in fulfilling its responsibility to stockholders and the investment
community relating to corporate accounting, reporting practices of the
Corporation, and the quality and integrity of the financial reports of the
Corporation. The committee also acts on behalf of the Board of Directors to
review management's actions to see that the Corporation's operations are
performed with the highest degree of safety and in compliance with all
environmental laws. The committee met three times during 1998.
The Compensation and Stock Option Committee is presently comprised of
Messrs. Malek (Chairman), Hightower, Kourpias and Ravindran. The committee
reviews and approves all general compensation, bonus and incentive programs and
plans for management employees of the Corporation and all employment contracts,
incentive programs or other financial arrangements between the Corporation and
the Chief Executive Officer and the executives who report directly to the Chief
Executive Officer. The committee participates in senior management succession
planning, the review and approval of management succession programs, career
development programs, senior management evaluation, and the development of
training programs. A subcommittee comprised of Messrs. Hightower and Ravindran
exercises all of the powers, duties and responsibilities with respect to the
Corporation's stock option plans. The committee met four times during 1998.
COMPENSATION OF DIRECTORS
The Corporation's current policy is to pay an annual retainer fee and
meeting fees to its non-employee directors who are not directly affiliated with
a present or past party to the Stockholders' Agreement. Currently, Messrs.
Coulter, Hightower, Mondale and Ravindran and Ms. Chao and Ms. Goodwin are the
only such directors. Each of these directors receives an annual retainer fee of
$25,000 and an attendance fee of $1,000 for each Board meeting and each
committee meeting attended. All directors of the Corporation are reimbursed for
ordinary expenses incurred in connection with their attendance at Board and
committee meetings. Directors and their spouses and dependent children are
eligible for complimentary travel privileges on Northwest Airlines. In addition,
each director is entitled to $25,000 per year of complimentary travel privileges
on Northwest Airlines that may be extended to other persons, provided that any
amount of such travel privileges utilized by those directors who receive an
annual retainer fee reduces dollar for dollar the amount of the annual fee paid
to such director.
All directors are reimbursed by the Corporation for income taxes resulting
from actual use of the complimentary travel privileges on Northwest Airlines.
The cost of the complimentary travel privileges in 1998, including the
reimbursement obligation for income tax liability, was as follows: Alfred A.
Checchi ($1,720); Doris Kearns Goodwin ($1,106); Marvin L. Griswold ($802);
Dennis F. Hightower ($1,388); and Walter F. Mondale ($3,721). Messrs. Dasburg,
Ristow and Wilson are considered employees of Northwest Airlines and as such are
not subject to income taxes from the use of employee pass privileges. The
Corporation does not maintain records with respect to the value of the personal
use of employee pass privileges.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1998, the members of the Compensation and Stock Option Committee were
Messrs. Malek (Chairman), Blum, Hightower and Ravindran and Duane E. Woerth. Mr.
Woerth resigned from the Board effective December 31, 1998.
8
<PAGE>
Mr. Malek served as President of the Corporation from late 1989 to mid-1990.
Mr. Woerth, a Northwest Airlines pilot for 15 years, served as First Vice
President of ALPA during 1998 and is entitled to return to Northwest Airlines as
an airline pilot.
The committee members have no interlocking relationships as defined by the
rules and regulations of the Securities and Exchange Commission.
RELATED PARTY TRANSACTIONS
Certain director-nominees are or have been executive officers of companies
that sell services or extend credit to the Corporation in the ordinary course of
business. Mr. Mondale is a partner of the law firm of Dorsey & Whitney LLP,
which provides legal services to the Corporation. Mr. van Wijk is President and
Chief Executive Officer of KLM. Northwest Airlines and KLM are parties to a
trans-atlantic joint venture. On May 1, 1998, the Corporation purchased from KLM
the remaining 18.2 million shares of the Corporation's Common Stock which the
Corporation had previously agreed to repurchase over a three year period ending
in September 2000. The purchase price of $780.4 million was paid with a
combination of $336.7 million of cash and three senior unsecured notes due over
three years for the remainder.
Mr. Coulter is a principal stockholder of 1992 Air, Inc., which is the
general partner of 1992 Air G.P., a Texas limited partnership. As described
above under "Stockholders Agreements," in connection with the Corporation's
acquisition of the Continental Shares in November 1998, the Corporation issued
approximately 2.6 million shares of Common Stock and paid approximately $399
million in cash to certain former partners of Air Partners, L.P., including 1992
Air G.P.
BENEFICIAL OWNERSHIP OF SECURITIES
The following table sets forth the holdings, as of February 26, 1999, of the
Corporation's capital stock of each current director and nominee for director of
the Corporation, each executive officer named in the Summary Compensation Table
included in this proxy statement, all directors and executive officers of the
Corporation as a group, and each person known to the Corporation to beneficially
own more than five percent of any class of the Corporation's voting securities.
Unless otherwise indicated, each named beneficial owner has sole voting and
investment power with respect to the shares listed.
<TABLE>
<CAPTION>
PERCENT
OF
PERCENT TOTAL
NUMBER OF OF VOTING
NAME OF BENEFICIAL OWNER CLASS OF SECURITY SHARES(1)(2) CLASS(1)(2) POWER(15)
- ------------------------------------------------------- ------------------------- ---------------- ------- -------
<S> <C> <C> <C> <C>
DIRECTORS
Gary L. Wilson(3)...................................... Common Stock 17,120,768 19.9 18.3
Ray W. Benning, Jr.(4)................................. -- -- -- --
Richard C. Blum(5)..................................... Common Stock 5,276,390 6.1 5.6
Elaine L. Chao......................................... -- -- -- --
Alfred A. Checchi(6)................................... Common Stock 11,400,117 13.3 12.2
James G. Coulter(7).................................... Common Stock 1,108,808 1.3 1.2
John H. Dasburg........................................ Common Stock 402,398 * *
Doris Kearns Goodwin................................... -- -- -- --
Marvin L. Griswold(8).................................. Common Stock 3,900 * *
Dennis F. Hightower.................................... Common Stock 1,000 * *
George J. Kourpias(9).................................. -- -- -- --
Frederic V. Malek(10).................................. Common Stock 633,752 * *
Walter F. Mondale...................................... Common Stock 1,900 * *
V. A. Ravindran........................................ Common Stock 2,000 * *
Michael G. Ristow(11).................................. Common Stock 3,148 * *
Leo M. van Wijk........................................ -- -- -- --
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
PERCENT
OF
PERCENT TOTAL
NUMBER OF OF VOTING
NAME OF BENEFICIAL OWNER CLASS OF SECURITY SHARES(1)(2) CLASS(1)(2) POWER(15)
- ------------------------------------------------------- ------------------------- ---------------- ------- -------
<S> <C> <C> <C> <C>
EXECUTIVE OFFICERS
Richard H. Anderson.................................... Common Stock 106,084 * *
Douglas M. Steenland................................... Common Stock 128,036 * *
Raymond J. Vecci....................................... Common Stock 20,000 * *
Michael E. Levine...................................... Common Stock 30,095 * *
All directors and executive officers as a group (25
persons)............................................. Common Stock 30,498,804 35.5 32.6
OTHER 5% HOLDERS
Richard C. Blum & Associates, L.P.(5).................. Common Stock 5,276,390 6.1 5.6
909 Montgomery Street, Suite 400
San Francisco, CA 84133
William S. Zoller, as Trustee of the Trusts for ALPA
employees............................................ Common Stock 8,551,431 10.0 9.1
c/o State Street Bank & Trust Company Series C Preferred 71 * *
200 Newport Avenue, Q3N
North Quincy, MA 02171
Thomas R. Roth, as Trustee of the Trust for IAM
employees............................................ Series C Preferred 4,171,138 74.9 6.1
c/o State Street Bank & Trust Company
200 Newport Avenue, Q3N
North Quincy, MA 02171
Steven L. Hester, as Trustee of the Trust for IBT
employees............................................ Series C Preferred 1,184,134 21.3 1.7
c/o State Street Bank & Trust Company
200 Newport Avenue, Q3N
North Quincy, MA 02171
State Street Bank & Trust Company, as Trustee of the
Trust for all other employees(12).................... Common Stock 1,675,500 2.0 1.8
200 Newport Avenue, Q3N Series C Preferred(13) 204,068 3.7 *
North Quincy, MA 02171
The Equitable Companies Incorporated(14)............... Common Stock 21,036,689 24.5 22.5
787 Seventh Avenue
New York, NY 10019
</TABLE>
- ------------------------------
* Less than 1%
(1) The figures shown include the following shares allocated as of January 31,
1999 to the accounts of participants under the Employee Stock Plan:
Dasburg--2,430 shares; Anderson--1,957 shares; Steenland--6,157 shares;
Levine--3,670 shares; and all directors and executive officers as a
group--29,891 shares.
(2) The Securities and Exchange Commission deems a person to have beneficial
ownership of all shares that such person has the right to acquire within 60
days. The figures shown include the following shares subject to stock
options granted under the 1990 Stock Option Plan and the 1994 Stock
Incentive Plan of the Corporation which the particular individual or group
has the right to acquire within 60 days of February 26, 1999: Wilson--80,000
shares; Dasburg--399,968 shares; Anderson--103,127 shares;
Steenland--121,879 shares; Vecci--20,000 shares; Levine--26,425 shares; and
all directors and executive officers as a group-- 936,281 shares.
(3) Includes 5,875,946 shares of Common Stock held by members of Mr. Wilson's
family as to which Mr. Wilson has sole voting power, and 5,940,651 shares of
Common Stock owned by trusts for Mr. Checchi's family, as to which Mr.
Checchi and Mr. Wilson, as trustee of such trusts, share voting and
investment power. Mr. Wilson disclaims beneficial ownership of the shares
held in such trusts. Mr. Wilson's address is Suite 350, 1455 Pennsylvania
Ave., Washington, DC 20004.
10
<PAGE>
(4) Mr. Benning is the Director of the Teamsters Airline Division. Mr. Benning
disclaims beneficial ownership of the shares beneficially owned by the trust
for IBT employees under the Employee Stock Plan.
(5) Includes (i) 538,502 shares beneficially owned by Richard C. Blum &
Associates, L.P., and (ii) 4,737,888 shares beneficially owned by Richard C.
Blum & Associates--NWA Partners, L.P., a limited partnership of which
Richard C. Blum & Associates, L.P. acts as general partner. Mr. Blum is a
partner of Richard C. Blum & Associates, L.P., and a controlling person and
chairman of Richard C. Blum & Associates, Inc., the general partner of
Richard C. Blum & Associates, L.P. Mr. Blum disclaims beneficial ownership
of the shares beneficially owned by Richard C. Blum & Associates, L.P. and
Richard C. Blum & Associates--NWA Partners, L.P. The address of Mr. Blum,
Richard C. Blum & Associates, L.P. and Richard C. Blum & Associates--NWA
Partners, L.P. is 909 Montgomery Street, Suite 400, San Francisco, CA 84133.
(6) Includes 5,940,651 shares of Common Stock beneficially owned by trusts for
Mr. Checchi's family, as to which Mr. Checchi shares voting and investment
power with Gary L. Wilson who is the trustee of such trusts. Mr. Checchi's
address is Northwest Airlines Corporation, 5101 Northwest Drive, St. Paul,
MN 55111-3034.
(7) The shares shown are beneficially owned by 1992 Air G.P., a Texas limited
partnership, which is a former partner of Air Partners, L.P. Mr. Coulter is
a principal stockholder of 1992 Air, Inc., which serves as the general
partner of 1992 Air G.P. Mr. Coulter disclaims beneficial ownership of the
shares held by 1992 Air G.P.
(8) Mr. Griswold is the retired International Director of the Teamsters Airline
Division. Mr. Griswold disclaims beneficial ownership of the shares
beneficially owned by the trust for IBT employees under the Employee Stock
Plan. Mr. Griswold's term of office as a director will terminate at the
Annual Meeting.
(9) Mr. Kourpias is the retired International President of the IAM. Mr. Kourpias
disclaims beneficial ownership of the shares beneficially owned by the trust
for IAM employees under the Employee Stock Plan.
(10) Includes 465,160 shares of Common Stock held by trusts for Mr. Malek's
family.
(11) Mr. Ristow is a Captain Representative of ALPA. Mr. Ristow disclaims
beneficial ownership of the shares beneficially owned by the trust for ALPA
employees under the Employee Stock Plan.
(12) State Street Bank & Trust Company filed a Schedule 13G with the Securities
and Exchange Commission indicating that at December 31, 1998 it beneficially
owned 1,843,093 shares of Common Stock and 204,683 shares of Series C
Preferred Stock. State Street Bank & Trust Company reported that it had sole
voting power over 657,885 of such shares (including Series C Preferred
Stock), shared voting power over 1,460,089 of such shares, sole dispositive
power over 153,057 of such shares, and shared dispositive power over
1,969,224 of such shares (including Series C Preferred Stock). State Street
Bank & Trust Company disclaims beneficial ownership of all such shares.
(13) Represents shares of Series C Preferred Stock held by State Street Bank &
Trust Company as trustee of the nonqualified trusts for the IAM and IBT
employees.
(14) Based on a Schedule 13G filed with the Securities and Exchange Commission
by The Equitable Companies Incorporated indicating that at December 31,
1998, The Equitable Companies Incorporated, through subsidiaries and
affiliates, had sole voting power over 9,423,512 of such shares, shared
voting power over 6,236,060 of such shares and sole dispositive power over
21,036,689 of such shares. AXA-UAP owns a majority interest in The Equitable
Companies Incorporated. Alpha Assurances Vie Mutuelle, AXA Assurances
I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle and AXA Courtage Assurances
Mutuelle (collectively, "Mutuelles AXA"), as a group, beneficially own a
majority interest in AXA-UAP. Mutuelles AXA and AXA-UAP are French
companies.
(15) The 5,566,502 shares of Series C Preferred Stock are convertible into
7,592,678 shares of Common Stock. Assumes conversion of the Series C
Preferred Stock and the issuance of Common Stock pursuant to stock options
that are exercisable within 60 days of February 26, 1999.
11
<PAGE>
EXECUTIVE COMPENSATION
REPORT OF COMPENSATION AND STOCK OPTION COMMITTEE ON EXECUTIVE COMPENSATION
POLICY
The goals of the Corporation's executive compensation programs are (i) to
attract and retain the best and most experienced executives, (ii) to integrate
executive and stockholder interests by means of equity, risk-based compensation,
and (iii) to compensate executives based on both corporate and individual
performances.
DISCUSSION
BASE SALARY. The Committee reviews on an annual basis the base salary of
Mr. Dasburg and each of the seven senior executives who report directly to Mr.
Dasburg. Adjustments in base salary are made on the basis of individual
performance, promotions or expansion of duties, scope of responsibilities and
corporate profitability. Also, on an ongoing basis, the Corporation surveys the
base salaries of executives at the other large United States airlines and at
other companies (such as large service or travel related companies) with whom
the Corporation competes for executives. This comparison group is broader than
the peer group included in the performance graph of total stockholder return
because the Corporation competes for executive talent with a broader group of
companies than is reflected in the performance graph peer group. From August 1,
1993 through September 30, 1996, the base salary of Mr. Dasburg and each of the
Corporation's executives who were employees on August 1, 1993 was reduced by
approximately 20 percent as part of the Corporation's overall employee wage
savings program.
INCENTIVE COMPENSATION PLAN. The Committee establishes annually an
incentive compensation plan. In 1998, the Corporation reported a net loss of
$286 million, primarily as a result of the 15-day pilot strike which occurred in
August and September 1998 and other labor-related disruptions during 1998. As a
result of the Corporation's 1998 financial results, Mr. Dasburg and each of his
direct reports requested that the Committee not approve any cash incentive
compensation to them for 1998. The Committee agreed to honor their request and
therefore no incentive payments will be made for 1998 to Mr. Dasburg or to the
seven senior executives (including those named in the Summary Compensation
table) who report directly to Mr. Dasburg, each of whom participates in the
Corporation's 1998 Key Employee Cash Incentive Plan (the "Cash Incentive Plan").
The objectives of the Cash Incentive Plan are: (i) the retention of key
employees by delivering total annual compensation that is comparable to the
compensation paid by airline and non-airline businesses with whom the
Corporation competes for executives; (ii) the encouragement of teamwork and
individual performance by providing rewards for achievement of corporate goals,
as well as individual performance objectives, and (iii) the establishment of a
diverse work force by providing rewards for achievement of affirmative action
goals and other diversity efforts.
The Cash Incentive Plan establishes for the senior executives who
participate in the Plan a target incentive payment equal to a percentage of base
salary as the award for 100 percent completion of corporate profitability,
individual and diversity goals, which are assigned weightings of 75 percent,
22.5 percent and 2.5 percent, respectively. The target incentive payment for the
senior executive participants, including the executive officers named in the
Summary Compensation Table who participate in the Cash Incentive Plan (all
except Mr. Dasburg), equaled 60 percent of base salary for 1998. For 120 percent
completion of the corporate profitability goal, the target incentive for that
portion of the incentive payment increases to a maximum of 125 percent of base
salary on a weighted basis. Completion of the individual and diversity goals
cannot on an aggregate basis for all employees participating in the Cash
Incentive Plan exceed 100 percent of such goals, although particular individual
employees may have a completion factor in excess of 100 percent.
12
<PAGE>
The corporate profitability component of the Cash Incentive Plan is based on
the extent to which the Corporation meets its income contribution target for the
year. The income contribution target is defined as operating income adjusted by
adding back aircraft ownership costs (aircraft rentals and depreciation). The
formula is designed to focus on the income and expense elements that management
employees have the ability to influence through their performance. A performance
formula is established annually based on the operating budget approved by the
Board of Directors for the year, subject to adjustment by the Committee. The
performance formula specifies levels of payment for specific levels of income
contribution, expressed as a percent of the target incentive amount. In 1998,
the income contribution necessary to attain 100 percent completion of the target
incentive payment was $1,929 million. The Corporation's financial performance
must equal at least 80 percent of the income contribution target in order for
there to be any payment under either the financial or individual components of
the Cash Incentive Plan, provided that the Committee has the discretion to make
adjustments to the formula to normalize for certain non-recurring or external
events during the year. As mentioned above, however, Mr. Dasburg and each of the
seven senior executives who report directly to Mr. Dasburg have elected not to
receive any incentive compensation for 1998.
The individual objective component of the Cash Incentive Plan is based on
the degree to which participants meet individual performance objectives that
have been established for the year as part of the Corporation's management by
objective system. The Chief Executive Officer establishes the performance
objectives for each of the executives reporting to him. These objectives
typically number between six and ten and are weighted to reflect their relative
priority.
Performance of diversity objectives is measured by the achievement of
affirmative action goals based on the hiring, development and promotion of
individuals in protected classes and other diversity initiatives.
STOCK OPTION AWARDS. Pursuant to the 1994 Northwest Airlines Corporation
Stock Incentive Plan, the Compensation Administration Subcommittee of the
Committee (the "Subcommittee") may grant stock options and other stock based
awards. The purpose of the stock incentive plan is to further the growth,
development and financial success of the Corporation by aligning the personal
interests of key employees through ownership of the Corporation's Common Stock
with those of the Corporation's stockholders.
Stock option awards generally are based on individual performance and
contribution. The Chief Executive Officer makes recommendations to the
Subcommittee with respect to stock option awards to the Corporation's
executives. The Subcommittee determines stock option awards for the Chief
Executive Officer.
In 1998, the Subcommittee granted stock options to certain of the
Corporation's director-level and above employees, including two of the executive
officers named in the Summary Compensation Table in connection with their
promotions. The number of stock options granted to an employee (including the
two named executive officers who were awarded options) was based on the
employee's management level, compensation and performance.
CEO COMPENSATION. Upon joining the Corporation in November 1989 as
Executive Vice President of Finance and Administration, Mr. Dasburg's base
salary was set at $500,000 per year with a target incentive payment of $500,000
per year. Mr. Dasburg was named President and Chief Executive Officer in
November 1990 and at his request received no increase in either his base salary
or target incentive payment at that time. Since November 1990, Mr. Dasburg has
requested that the Corporation not consider any increase in his base salary or
target incentive payment. In addition, as stated above, from August 1, 1993
through September 30, 1996 Mr. Dasburg's base salary was reduced by
approximately 20 percent as part of the Corporation's overall employee wage
savings program.
As the result of the Corporation's 1998 financial results, Mr. Dasburg did
not receive an incentive compensation payment for 1998. In December 1998, Mr.
Dasburg agreed to continue to serve as the
13
<PAGE>
Corporation's Chief Executive Officer and President for the foreseeable future
and to enter into discussions in 1999 with the Corporation regarding a long term
employment agreement. The parties have not yet concluded those discussions.
Pursuant to the Northwest Airlines Corporation 1996 Retention and Long Term
Incentive Compensation Plan (the "1996 Long Term Incentive Plan"), a specified
number of phantom stock units granted to Mr. Dasburg in January 1996 will vest
upon the satisfaction of performance standards which measure corporate
performance against preset quantifiable goals during two year performance
periods. The Board of Directors approved an amendment to the 1996 Long Term
Incentive Plan which established a fixed value of $53.37 for each unit vesting
on or after December 31, 1997. The Board of Directors determined that the
amendment was appropriate given the significant historical volatility in the
market price of airline stocks. Under the terms of the 1996 Long Term Incentive
Plan, the Plan Administrator will determine, prior to the July 1, 1999 payment
date, whether the performance standards have been satisfied for the two-year
performance period ending December 31, 1998. For the two-year performance period
ending December 31, 1997, the performance standards were satisfied and Mr.
Dasburg became entitled to 75,000 phantom stock units, 50,000 of which vested on
December 31, 1997 and became payable on July 1, 1998. The remaining 25,000 units
will be available for vesting in subsequent performance periods in the event the
performance standards are not satisfied in such periods.
In 1998, no stock options were granted to Mr. Dasburg.
COMPLIANCE WITH THE $1 MILLION LIMIT ON DEDUCTIBLE COMPENSATION. In 1993,
Section 162(m) of the Internal Revenue Code was enacted which denies a publicly
held corporation, such as the Corporation, a federal income tax deduction for
compensation in excess of $1 million in a taxable year paid to each of its chief
executive officer and four other most highly compensated executive officers.
Certain "performance based" compensation, such as stock options awarded at fair
market value, is not subject to the limitation on deductibility provided that
certain stockholder approval and independent director requirements are met.
To the extent consistent with the Corporation's compensation policies and
the Committee's assessment of the interests of stockholders, the Corporation
intends to comply with the requirements for the deductibility of executive
compensation under Section 162(m). However, the Committee will balance the costs
and burdens involved in compliance with Section 162(m) against the value of the
tax benefits to be obtained by the Corporation thereby, and will in certain
instances pay compensation that is not fully deductible if in its determination
such costs and burdens outweigh such benefits.
Compensation and Stock Option
Committee
Frederic V. Malek, Chairman
Dennis F. Hightower
George J. Kourpias
V. A. Ravindran
14
<PAGE>
SUMMARY COMPENSATION TABLE
The following table provides certain summary information concerning
compensation earned by the Corporation's President and Chief Executive Officer
and the four other most highly paid executive officers of the Corporation for
services rendered in all capacities to the Corporation during 1998:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------------- ----------------------------------
INCENTIVE RESTRICTED SHARES
COMPENSATION OTHER ANNUAL UNIT UNDERLYING LTIP
SALARY(1) (BONUS) COMPENSATION(2) AWARDS OPTIONS PAYMENTS
NAME AND PRINCIPAL POSITION $ $ $ $ # $
- -------------------------------------- ----------- ------------- --------------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
John H. Dasburg
President & Chief Executive Officer
1998.................................. 500,000 0 28,376 0 0 (4)
1997.................................. 500,000 490,000 28,422 0 0 2,668,500(5)
1996.................................. 427,813 455,938 27,499 3,703,750(6) 0 0
Richard H. Anderson
Executive Vice President &
Chief Operating Officer
1998.................................. 375,250 0 21,857 0 60,000 0
1997.................................. 348,186 209,235 25,671 0 50,000 0
1996.................................. 281,979 168,742 20,951 0 23,158 0
Douglas M. Steenland
Executive Vice President-
General Counsel & Alliances
1998.................................. 375,000 0 19,158 0 60,000 0
1997.................................. 348,358 246,755 17,488 0 50,000 0
1996.................................. 281,313 199,914 17,586 0 27,789 0
Raymond J. Vecci
Executive Vice President-
Customer Service & President,
Michigan Operations
1998.................................. 400,000 0 30,579 0 0 0
1997(8)............................... 166,667 107,909 34,170 0 100,000 0
Michael E. Levine
Executive Vice President-
Marketing & International(9)
1998.................................. 400,000 0 30,654 0 0 0
1997.................................. 400,000 282,006 30,914 0 100,000 0
1996.................................. 330,930 238,261 30,048 0 32,126 0
<CAPTION>
ALL OTHER
COMPENSATION(3)
NAME AND PRINCIPAL POSITION $
- -------------------------------------- ---------------
<S> <C>
John H. Dasburg
President & Chief Executive Officer
1998.................................. 50,223
1997.................................. 48,063
1996.................................. 137,154(7)
Richard H. Anderson
Executive Vice President &
Chief Operating Officer
1998.................................. 38,860
1997.................................. 36,109
1996.................................. 86,452(7)
Douglas M. Steenland
Executive Vice President-
General Counsel & Alliances
1998.................................. 34,151
1997.................................. 29,582
1996.................................. 92,378(7)
Raymond J. Vecci
Executive Vice President-
Customer Service & President,
Michigan Operations
1998.................................. 54,196
1997(8)............................... 59,575
Michael E. Levine
Executive Vice President-
Marketing & International(9)
1998.................................. 54,064
1997.................................. 53,314
1996.................................. 122,158(7)
</TABLE>
- ------------------------------
(1) Base salaries for each of the named executive officers for 1996 (until
October 1) reflect the wage reductions taken by management employees in
connection with the labor cost savings agreements entered into by the
Corporation and its unions during 1993. Base salaries shown for Mr. Levine
include amounts deferred under the Corporation's deferred compensation plan.
(2) Represents tax reimbursement payments.
(3) The amounts shown for 1998 include (a) the amount of premiums paid for
split-dollar life insurance policies ($45,540 for Mr. Dasburg, $34,678 for
Mr. Anderson, $27,748 for Mr. Steenland, $44,000 for Mr. Vecci, and $50,000
for Mr. Levine); (b) medical expense reimbursement payments ($3,933 for Mr.
Dasburg, $3,432 for Mr. Anderson, $5,303 for Mr. Steenland, $9,096 for Mr.
Vecci, and $2,964 for Mr. Levine); (c) $750 in contributions to the
Corporation's 401(k) retirement plan for each of the named executive
officers; and (d) $350 in premiums paid for personal excess liability
insurance for Messrs. Steenland, Vecci and Levine.
(4) On December 31, 1997, 25,000 phantom stock units granted in January 1996
pursuant to the 1996 Long Term Incentive Plan were designated as accrued
units based on the satisfaction of the applicable performance standards
during the two-year performance period ending December 31, 1997. Under the
terms of the Plan, the units will be available for vesting in subsequent
performance periods in the event the performance standards are not satisfied
in such periods. Under the terms of the 1996 Long Term Incentive Plan, the
Plan Administrator will determine, prior to the July 1, 1999 payment date,
whether the performance standards have been satisfied for the two-year
performance period ending December 31, 1998. As stated in footnote (5)
below, each unit has a fixed value of $53.37.
15
<PAGE>
(5) Represents the cash payment on July 1, 1998 in connection with the
settlement of 50,000 phantom stock units granted in January 1996 pursuant to
the 1996 Long Term Incentive Plan. The units vested on December 31, 1997
based on the satisfaction of certain established performance standards
during the two-year performance period ending December 31, 1997, and became
payable on July 1, 1998. The Board of Directors approved an amendment to the
1996 Long Term Incentive Plan which established a fixed value of $53.37 for
each unit vesting on or after December 31, 1997.
(6) Represents the cash payment on August 15, 1996 in connection with the
settlement of 100,000 phantom stock units granted in January 1996. The units
vested and became payable on August 15, 1996. Each unit represented the
right to receive a cash payment on the payment date equal to the average
closing price of a share of Common Stock reported on the Nasdaq National
Market for the ten trading day period ending on the trading day preceding
the payment date ($37.0375 per share for the applicable period for such
units).
(7) The amounts shown for 1996 include the fair market value of shares of Common
Stock of the Corporation allocated to the account of each named executive
officer under the Corporation's Employee Stock Plan on the date of the
contribution of such shares ($87,201 for Mr. Dasburg, $49,174 for Mr.
Anderson, $60,099 for Mr. Steenland, and $68,037 for Mr. Levine).
(8) Mr. Vecci commenced employment with the Corporation on July 21, 1997
(9) Mr. Levine retired from the Corporation effective February 28, 1999.
STOCK OPTION GRANTS IN 1998(1)
The following table provides information on stock option grants in 1998 to
the named executive officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------
PERCENT OF
NUMBER OF TOTAL
SHARES OPTIONS
UNDERLYING GRANTED TO GRANT
OPTIONS EMPLOYEES EXERCISE OR DATE
GRANTED IN BASE PRICE EXPIRATION PRESENT
NAME (#) 1998 ($/SH) DATE VALUE($)(2)
- ------------------------------------------ --------------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C>
John H. Dasburg........................... -- -- -- -- --
Richard H. Anderson....................... 60,000 13.0039 56.281 4/23/2008 1,385,826
Douglas M. Steenland...................... 60,000 13.0039 38.438 6/25/2008 937,170
Raymond J. Vecci.......................... -- -- -- -- --
Michael E. Levine......................... -- -- -- -- --
</TABLE>
- ------------------------------
(1) Each stock option has a term of 10 years. The options are generally
exercisable in increments of 20 percent per year over a five year period.
(2) The Black-Scholes model used to calculate the hypothetical values at date of
grant considers a number of factors to estimate the option's present value,
including the stock's projected volatility, the exercise period of the
option, interest rates and the vesting features of the option. The following
assumptions were used in determining the values under the Black-Scholes
model: (i) risk-free rate of return: 5.67 percent for the 4/23/98 grant, and
5.485% for the 6/25/98 grant, (ii) expected stock price volatility: 30.00
percent, (iii) exercise period: six years from the grant date, and (iv)
dividend yield: 0.00 percent.
STOCK OPTION EXERCISES IN 1998 AND DECEMBER 31, 1998 STOCK OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS HELD OPTIONS AT
SHARES AT DECEMBER 31, 1998 (#) DECEMBER 31, 1998(1)($)
ACQUIRED ON VALUE -------------------------- ------------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------- ------------ ------------ ----------- ------------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
John H. Dasburg............................ 322,000 16,781,302 399,968 0 5,024,598 --
Richard A. Anderson........................ 8,353 353,958 91,127 113,894 841,685 --
Douglas M. Steenland....................... 10,000 522,600 121,879 116,673 1,311,961 --
Raymond J. Vecci........................... -- -- 20,000 80,000 -- --
Michael E. Levine.......................... 243,813 11,101,452 26,425 99,275 -- --
</TABLE>
- ------------------------------
(1) Based on the per share closing price of Common Stock ($25.5625) on the
Nasdaq National Market on December 31, 1998 minus the exercise price of such
options.
16
<PAGE>
PENSION PLAN TABLE
<TABLE>
<CAPTION>
ANNUAL RETIREMENT BENEFITS
-----------------------------------------------------
15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
OF OF OF OF OF
FINAL AVERAGE ANNUAL COMPENSATION SERVICE SERVICE SERVICE SERVICE SERVICE
- --------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$ 200,000.................................... $ 57,802 $ 77,073 $ 96,333 $ 115,604 $ 115,604
$ 300,000.................................... 87,802 117,075 146,331 175,604 175,604
$ 400,000.................................... 117,802 157,077 196,329 235,604 235,604
$ 500,000.................................... 147,802 197,079 246,327 295,604 295,604
$ 600,000.................................... 177,802 237,081 296,325 355,604 355,604
$ 700,000.................................... 207,802 277,083 346,323 415,604 415,604
$ 800,000.................................... 237,802 317,085 396,321 475,604 475,604
$ 900,000.................................... 267,802 357,087 446,319 535,604 535,604
$1,000,000................................... 297,802 397,089 496,317 595,604 595,604
$1,100,000................................... 327,802 437,091 546,315 655,604 655,604
$1,200,000................................... 357,802 477,093 596,313 715,604 715,604
</TABLE>
The table above shows the estimated annual retirement benefit which would be
payable in the aggregate to the Corporation's named executive officers under the
Northwest Airlines, Inc. Retirement Plan for Management Employees (the
"Retirement Plan") and the Northwest Airlines, Inc. Officers Excess Benefit Plan
(the "Excess Benefit Plan"). The benefit levels in the table assume retirement
at age 65, the credited years of service shown and payment in the form of a
single life annuity.
The Retirement Plan is a non-contributory defined benefit retirement plan
which complies with the Employee Retirement Income Security Act of 1974
("ERISA") and qualifies for federal exemption under the Internal Revenue Code of
1986, as amended (the "Code"). The amount of the normal annual retirement
benefit payable under the Retirement Plan is generally determined by multiplying
the employee's final average annual compensation by 60 percent and reducing such
amount by an offset for Social Security benefits payable to the employee and for
service of less than 30 years. Final average compensation for purposes of
determining retirement benefits under the Retirement Plan is the average of the
employee's highest 60 consecutive months of total annual cash compensation
(including base salary and incentive compensation reported in the "Incentive
Compensation (Bonus)" column of the Summary Compensation Table) during the 120
calendar month period immediately preceding retirement. As of December 31, 1998,
the credited years of service under the Retirement Plan and the Excess Benefit
Plan for Messrs. Dasburg, Anderson, Steenland, Vecci and Levine are 9.2, 8.2,
7.5, 1.5 and 6.5, respectively.
The benefit levels shown in the table above do not reflect limitations
imposed by the Code on retirement benefits that may be paid under plans
qualified under the Code. The Excess Benefit Plan provides retirement benefits
to which officers of the Corporation would be entitled but for the limit on the
maximum annual benefit payable under ERISA and the Code and the limit on the
maximum amount of compensation which may be taken into account under the
Retirement Plan (currently $160,000). The Corporation has agreed to supplement
the retirement benefits of Messrs. Dasburg, Anderson, Steenland and Levine as
follows: in the case of Messrs. Anderson and Steenland, by agreeing to grant
each of them over a period of five years up to 10 years of additional credited
years of service; in the case of Mr. Dasburg, by agreeing to grant him up to 21
additional credited years of service during the 1994 to 1999 period and a
minimum annual pension benefit of $500,000 beginning at age 60; and in the case
of Mr. Levine, by agreeing to grant him over two separate five year periods up
to an aggregate of 20 additional credited years of service. In addition, the
Corporation has agreed to define final average compensation for purposes of
determining retirement benefits for Messrs. Dasburg, Anderson, Steenland and
Levine as the average of the executive's monthly earnings during the 36 months
(whether or not consecutive) in which the executive's monthly earnings were the
highest. The Corporation has agreed to replace certain retirement benefits that
Mr. Vecci is entitled to receive from a prior employer in the event those
benefits are not paid upon certain events.
17
<PAGE>
EMPLOYMENT AGREEMENTS
The Corporation has entered into agreements with Messrs. Anderson and
Steenland which entitle the executive to receive a base salary (subject to
Corporation-wide base wage reductions, including the one imposed by the
Corporation in 1993 in connection with the labor cost savings agreements entered
into with its unions) and to participate in the Corporation's Cash Incentive
Plan. The agreements have no set terms and the executive's employment under his
agreement is terminable by either party for any reason upon 30 days written
notice. In the event of a termination of the executive's employment by the
Corporation other than for "cause" (as defined in the agreement) or by the
executive for "good reason" (as defined in the agreement) or due to death or
disability, the executive will continue to receive certain specified health and
welfare benefits under the Corporation's benefit plans and programs for the life
of the executive, will receive a severance payment equal to two times the
executive's annual base salary and target incentive payment and will realize the
supplemental retirement benefits described above. If the executive's employment
is terminated by the Corporation for any reason other than cause within two
years after a "change in control" (as defined in the agreement) or by the
executive at any time within six months after such two year period, in either
case, the executive will be entitled to all payments and benefits otherwise due
for termination. In addition, the agreement provides that the vesting of options
held by the executive will accelerate in certain circumstances. The executive
also is entitled to lifetime travel privileges and a gross-up payment for any
excise taxes imposed under Section 4999 of the Code on any payment or
distribution made to him by the Corporation. The executive is subject to a one
year covenant not to compete in the event the executive terminates his
employment without good reason or is terminated by the Corporation for cause.
The Corporation has agreed to pay Mr. Vecci a severance payment equal to the
amount of his annual base salary in the event of a termination of his employment
by the Corporation other than for cause. Mr. Vecci is subject to a one year
covenant not to compete in the event he terminates his employment with the
Corporation or is terminated by the Corporation for cause.
Messrs. Dasburg, Anderson, Steenland and Vecci participate in the
Corporation's Executive Life Insurance Plan pursuant to which the Corporation
pays the premium with respect to a $1.0 million whole life insurance policy for
each executive. In certain circumstances, the Corporation will recover certain
of the premiums in the event of the executive's death. Each executive or a trust
designated by such executive is the owner of the policy and the Corporation
reimburses the executive for tax liabilities arising from such premium payments.
Messrs. Dasburg, Anderson, Steenland and Vecci are also entitled to receive
certain additional medical benefits.
Mr. Levine retired from the Corporation effective February 28, 1999. In
connection with his retirement, the Corporation entered into an agreement with
Mr. Levine pursuant to which he received a cash severance payment in the amount
of three times his base salary and target incentive payment for 1998 and will
continue to receive certain specified health and welfare benefits. Mr. Levine is
entitled to certain relocation benefits in the event he relocates his principal
residence on or before December 31, 1999, and will receive lifetime travel
privileges from the Corporation. The Corporation also entered into a four year
consulting agreement with Mr. Levine which commenced on March 1, 1999. During
the term of the consulting agreement, Mr. Levine is precluded from providing
consulting services to certain competitors of the Corporation. The consulting
agreement is terminable by Mr. Levine after February 28, 2000 upon two weeks
prior notice. During the term of the consulting agreement, Mr. Levine will be
paid a monthly retainer of $41,666 and will continue to accrue the supplemental
pension benefits described above. The Corporation will also continue to pay for
two years the premium for a $700,000 whole life insurance policy owned by Mr.
Levine and to provide Mr. Levine with certain supplemental medical benefits. In
addition, Mr. Levine's outstanding stock options will continue to vest in
accordance with their terms during the term of the consulting agreement and all
vested options remaining unexercised at the end of the term will terminate
automatically one year following the termination of the consulting agreement.
18
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Corporation's Common Stock for the period beginning March 18, 1994, when the
Corporation became a reporting company pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended, and ending December 31, 1998, with
the cumulative total return for the same period of the Standard & Poor's 500
Stock Index ("S&P 500") and the Standard & Poor's Airline Index ("S&P Airline
Index"). The graph assumes the investment of $100 in the Corporation's Common
Stock, the S&P 500 and the S&P Airline Index on March 18, 1994 and reinvestment
of all dividends.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CUMULATIVE TOTAL STOCKHOLDER
RETURN
<S> <C> <C> <C>
Northwest Airlines Corporation S&P 500 S&P Airline Index (1)
3/18/94 $100.00 $100.00 $100.00
12/30/94 $121.15 $97.50 $78.55
12/29/95 $392.31 $130.75 $114.72
12/31/96 $300.96 $157.25 $125.46
12/31/97 $368.27 $206.01 $210.95
12/31/98 $196.63 $260.95 $203.92
</TABLE>
<TABLE>
<CAPTION>
3/18/94 12/30/94 12/29/95 12/31/96 12/31/97 12/31/98
----------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Northwest Airlines
Corporation................. $ 100 $ 121.15 $ 392.31 $ 300.96 $ 368.27 $ 196.63
S&P 500....................... $ 100 $ 97.50 $ 130.75 $ 157.25 $ 206.01 $ 260.95
S&P Airline Index(1).......... $ 100 $ 78.55 $ 114.57 $ 125.46 $ 210.95 $ 203.92
</TABLE>
- ------------------------
(1) The S&P Airline Index consists of American Airlines, Delta Air Lines,
Southwest Airlines and US Airways.
AUDITORS
Following the recommendation of the Audit, Safety and Environmental
Committee, the Board of Directors has selected Ernst & Young LLP as the
independent auditors of the Corporation and its consolidated subsidiaries for
the fiscal year ending December 31, 1999. A representative of Ernst & Young LLP
is expected to be present at the Annual Meeting and will be given an opportunity
to make a statement if desired and will be available to respond to appropriate
questions.
19
<PAGE>
OTHER BUSINESS AND DIRECTOR NOMINATIONS
Management and the Board of Directors do not know of any matters other than
those set forth above that will be presented for consideration at the Annual
Meeting. However, execution of a proxy, unless otherwise indicated, confers on
the persons named as proxies discretionary authority to vote the shares
represented in accordance with their best judgment on other business, if any,
that may properly come before the Annual Meeting.
The Corporation's Bylaws require that, subject to the exclusive rights of
any class or series of stock having preference over the Common Stock to elect
Series C Directors or directors of the Corporation upon the happening of certain
events, nominations of candidates for election as directors of the Corporation
at any meeting of stockholders may be made by the Chairman of the Board of
Directors or by any stockholder entitled to vote at such meeting who complies
with the requirements of the Corporation's Bylaws. Among other things, not less
than 60 days prior to the date of the anniversary of the annual meeting of
stockholders held in the prior year, any stockholder who intends to make a
nomination at the annual meeting shall deliver to the Office of the Secretary of
the Corporation written notice which complies with the requirements of Section
1(c) of Article III of the Corporation's Bylaws.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors, executive officers and persons who beneficially own
more than ten percent of any class of the Corporation's equity securities
("Reporting Persons") to file reports of holdings and transactions in the
Corporation's equity securities. Based on the Corporation's records and other
information, the Corporation believes that all SEC filing requirements
applicable to its Reporting Persons during 1998 were complied with except that:
(i) a Form 4 of Gary L. Wilson was filed late; and (ii) KLM failed to report the
sale to the Corporation of 18.2 million shares of the Corporation's common stock
on May 1, 1998.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
In order for a stockholder proposal to be included in the Corporation's
proxy materials for the annual meeting of stockholders to be held in 2000, it
must be received by the Corporation on or before November 19, 1999. The
proposal, including any accompanying supporting statement, may not exceed 500
words.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE SIGN THE
ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED STAMPED ENVELOPE OR VOTE YOUR
SHARES BY TELEPHONE IN ACCORDANCE WITH THE INSTRUCTIONS SET FORTH ON THE
ACCOMPANYING PROXY CARD.
By Order of the Board of Directors,
Douglas M. Steenland
EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
March 22, 1999
20
<PAGE>
If you are planning to attend the Annual Meeting in person, please bring the
admission ticket printed on this page with you. If you do not have an admission
ticket, verification of share ownership will be necessary to obtain admission to
the Annual Meeting. See "Notice of Annual Meeting" for details.
- --------------------------------------------------------------------------------
NORTHWEST AIRLINES CORPORATION
1999 ANNUAL MEETING ADMISSION TICKET
The Annual Meeting of Stockholders will be held at 9:30 a.m. on
Friday, April 23, 1999 at the Equitable Life Building, 787
Seventh Avenue, New York, New York 10019.
TO ATTEND THIS MEETING YOU MUST PRESENT THIS TICKET OR OTHER
PROOF OF SHARE OWNERSHIP
Doors open at 9:00 a.m. Cameras, tape recorders or other similar
recording devices will not be allowed in the meeting room.
- --------------------------------------------------------------------------------
<PAGE>
[LOGO]
<PAGE>
PROXY CARD [LOGO]
NORTHWEST AIRLINES CORPORATION
2700 Lone Oak Parkway,
Eagan, MN 55121
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints as proxies, John H. Dasburg and Douglas
M. Steenland, each with power to act alone and to appoint his substitute, and
hereby authorizes them to represent and to vote as directed all shares of
stock of Northwest Airlines Corporation held of record by the undersigned on
February 26, 1999 at the Annual Meeting of Stockholders to be held at the
Equitable Life Building, 787 Seventh Avenue, New York, New York at 9:30 a.m.
(EDT) on April 23, 1999, and at any adjournments thereof. THIS PROXY
AUTHORIZES EACH OF THEM TO VOTE AT HIS DISCRETION ON ANY OTHER MATTER THAT
MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF. IF NO
SPECIFIC VOTING INSTRUCTIONS ARE GIVEN, THE SHARES WILL BE VOTED IN
ACCORDANCE WITH THE RECOMMENDATION OF THE BOARD OF DIRECTORS.
PLEASE VOTE BY TELEPHONE OR MARK, DATE, SIGN AND RETURN
THIS PROXY CARD PROMPTLY, USING THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
(CONTINUED, AND TO BE SIGNED AND DATED ON REVERSE SIDE)
<PAGE>
----------------
COMPANY #
CONTROL #
----------------
YOUR VOTE IS IMPORTANT
VOTE BY TELEPHONE
24 HOURS A DAY, 7 DAYS A WEEK
YOUR TELEPHONE VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES IN THE
SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED THE ATTACHED PROXY CARD.
WHEN YOU VOTE BY TELEPHONE YOU ARE MAKING THE CERTIFICATION SET FORTH
IMMEDIATELY ABOVE THE SIGNATURE BOX LOCATED ON THE BOTTOM RIGHT HAND CORNER
OF THIS PROXY CARD.
THANK YOU FOR VOTING.
VOTING BY PHONE--
1. USING A TOUCH-TONE TELEPHONE, DIAL 1-800-240-6326. YOU MAY DIAL THIS TOLL
FREE NUMBER AT YOUR CONVENIENCE 7 DAYS A WEEK, 24 HOURS A DAY.
2. WHEN PROMPTED, ENTER THE 3 DIGIT COMPANY NUMBER LOCATED IN THE BOX ON THE
UPPER RIGHT HAND CORNER OF THIS PROXY CARD.
3. WHEN PROMPTED, ENTER YOUR 7 DIGIT NUMERIC CONTROL NUMBER THAT FOLLOWS THE
COMPANY NUMBER.
OPTION A: To vote as the Board of Directors recommends on ALL items, press 1.
OPTION B: If you choose to vote on each item separately, press 0. You will
hear these instructions:
To vote FOR ALL nominees, press 1. To WITHHOLD AUTHORITY TO VOTE FOR ALL
nominees, press 9. To WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL nominee,
press 0 and listen to the instructions.
WHEN ASKED, PLEASE CONFIRM YOUR VOTE BY PRESSING 1.
PLEASE STAY ON THE LINE UNTIL YOU HAVE BEEN PROMPTED AND HAVE
RESPONDED REGARDING YOUR ATTENDANCE AT THE ANNUAL MEETING.
IF YOU VOTE BY TELEPHONE, PLEASE DO NOT MAIL BACK YOUR PROXY CARD.
THE TELEPHONE VOTING FACILITIES WILL CLOSE AT 5 PM (EDT) ON APRIL 22, 1999.
[DETACH PROXY CARD HERE IF YOU ARE NOT VOTING BY TELEPHONE]
- Please detach here -
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEM 1. PROXY CARD
1. ELECTION OF DIRECTORS:
Nominees: 01 Richard C. Blum 05 John H. Dasburg 09 Walter F. Mondale
02 Elaine L. Chao 06 Doris Kearns Goodwin 10 V.A. Ravindran
03 Alfred A. Checchi 07 Dennis F. Hightower 11 Leo M. van Wijk
04 James G. Coulter 08 Frederic V. Malek 12 Gary L. Wilson
/ / FOR all nominees
except as marked
/ / WITHHOLD AUTHORITY
to vote for all nominees listed
NOTE: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
MARK THE "FOR ALL EXCEPT" BOX AND WRITE THAT NOMINEE'S
NUMBER IN THE "EXCEPTIONS" BOX. YOUR SHARES WILL BE VOTED FOR
THE REMAINING NOMINEE(S)
-----------------------------------
Exceptions:
-----------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS MADE, IT WILL BE
VOTED "FOR" ITEM 1. DISCRETIONARY AUTHORITY IS HEREBY CONFERRED AS TO
ALL OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING.
/ / Address change? Mark box and indicate changes below.
/ / Check this box if you plan to attend the Annual Meeting.
IF YOU ARE VOTING BY MAIL, PLEASE SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
CERTIFICATION:
Pursuant to federal law and Northwest's Certificate of Incorporation,
Northwest's voting stock is subject to certain foreign ownership
restrictions. By signing below, the undersigned represents that it is a
United States citizen as that term is defined in the Federal Aviation Act or
that the shares of stock represented by this Proxy have been registered on
the Foreign Stock Registry of the Corporation.
PLEASE SIGN exactly as name or names appear on this proxy card. When signing
as attorney, executor, administrator, trustee, custodian, guardian or
corporate officer, so indicate when signing. If the stockholder is a
corporation, please give full title. If more than one trustee, all should
sign.
Dated: ___________________________________
-----------------------------------
-----------------------------------
<PAGE>
PROXY CARD NORTHWEST AIRLINES CORPORATION
2700 LONE OAK PARKWAY
EAGAN, MN 55121
This Proxy is Solicited on Behalf of the Board of Directors for the Annual
Meeting of Stockholders on April 23, 1999.
The undersigned hereby appoints as proxies, John H. Dasburg and Douglas
M. Steenland, each with power to act alone and to appoint his substitute, and
hereby authorizes them to represent and to vote as instructed on the reverse
side of this proxy card all shares of Series C Preferred Stock of Northwest
Airlines Corporation held of record by the undersigned on February 26, 1999
at the Annual Meeting of Stockholders to be held on April 23, 1999, and at
any adjournments thereof. This Proxy authorizes each of them to vote at his
discretion on any other matter that may properly come before the Meeting or
any adjournment thereof. If no specific voting instructions are given, the
shares will be voted in accordance with the recommendation of the Board of
Directors.
1. ELECTION OF SERIES C DIRECTORS
Nominees: RAY W. BENNING, JR., GEORGE J. KOURPIAS AND MICHAEL G. RISTOW
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(CONTINUED, AND TO BE SIGNED AND DATED ON REVERSE SIDE)
<PAGE>
(CONTINUED FROM OTHER SIDE)
THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED. IF NO DIRECTION IS MADE, IT WILL BE VOTED "FOR" THE DIRECTOR
NOMINEES. THE PROXIES ARE AUTHORIZED TO VOTE THIS PROXY IN THEIR DISCRETION
WITH RESPECT TO OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING.
[ ] CHECK THIS BOX IF YOU PLAN TO ATTEND THE ANNUAL MEETING.
CERTIFICATION: Pursuant to federal law and Northwest's Certificate of
Incorporation, Northwest's voting stock is subject to certain foreign
ownership restrictions. By signing below, the undersigned represents that it
is a United States citizen as that term is defined in the Federal Aviation
Act or that the shares of stock represented by this Proxy have been registered
on the Foreign Stock Registry of the Corporation.
PLEASE SIGN exactly as name or names appear on this proxy card. When signing as
attorney, executor, administrator, trustee, custodian, guardian or
corporate officer, please give full title. If shares are held by
joint tenants, both should sign.
_________________________________________
SIGNATURE OF STOCKHOLDER
_________________________________________
SIGNATURE IF SHARES ARE HELD JOINTLY
DATED: __________________________________
MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE. NO POSTAGE
IS REQUIRED IF MAILED IN THE UNITED STATES.
<PAGE>
NORTHWEST AIRLINES CORPORATION
2700 Lone Oak Parkway
Eagan, MN 55121
Dear Northwest Airlines Corporation Employee Stock Plan Participant:
The Annual Meeting of the Stockholders of Northwest Airlines Corporation will
be held on April 23, 1999.
As a participant in the Northwest Airlines Corporation Employee Stock Plan,
you are entitled to direct the Trustee to vote the shares of stock allocated
to your Employee Stock Plan account. The Trustee will vote, in its sole
discretion, shares for which no instructions have been received. The Trustee
will also vote in its sole discretion any shares allocated to your
Supplemental Retirement Plan account.
Because your voting rights are important, you are strongly encouraged to
direct the Trustee to vote your shares. You may provide voting directions by
telephone in accordance with the telephone voting instructions set forth on
the reverse side of this card or by mail. If you choose to provide voting
directions by mail, please mark the appropriate box on the direction card,
date, sign and detach the card and return it to the Trustee in the enclosed
postage paid envelope. All voting directions will be kept in strict
confidence by the Trustee.
Your voting directions must be received by 5:00 p.m., EDT, on April 21, 1999,
in order to be counted.
Sincerely,
Northwest Airlines Corporation
- -------------------------------------------------------------------------------
VOTING DIRECTION CARD [LOGO]
NORTHWEST AIRLINES CORPORATION
2700 Lone Oak Parkway, Eagan, MN 55121
DIRECTION TO TRUSTEE
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 23, 1999
As a participant in the Northwest Airlines Corporation Employee Stock Plan, I
hereby direct the Trustee to vote the shares of stock allocated to my
Employee Stock Plan account at the Annual Meeting of Stockholders which will
be held on April 23, 1999, and at any adjournments thereof, in accordance
with my instructions provided by telephone or as indicated on this card. I
understand that the Trustee will vote, in its sole discretion, shares for
which no directions have been received.
IF YOU SIGN AND RETURN YOUR DIRECTION CARD BUT DO NOT CHECK A BOX OR
OTHERWISE PROVIDE SPECIFIC DIRECTIONS WITH RESPECT TO THE PROPOSAL, THE
TRUSTEE WILL VOTE YOUR SHARES "FOR" THE PROPOSAL. IN ITS DISCRETION, THE
TRUSTEE IS AUTHORIZED TO VOTE UPON ANY OTHER BUSINESS THAT MAY PROPERLY COME
BEFORE THE MEETING.
PLEASE PROVIDE YOUR VOTING DIRECTIONS BY TELEPHONE OR MARK, DATE, SIGN
AND RETURN THIS CARD PROMPTLY, USING THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
(Continued, and to be signed and dated on reverse side)
<PAGE>
----------------
COMPANY #
CONTROL #
----------------
PROVIDE VOTING DIRECTIONS BY TELEPHONE
24 HOURS A DAY, 7 DAYS A WEEK
YOUR TELEPHONE VOTING DIRECTIONS TO THE TRUSTEE OF THE NORTHWEST AIRLINES
CORPORATION EMPLOYEE STOCK PLAN DIRECTS THE TRUSTEE TO VOTE THE SHARES OF
STOCK ALLOCATED TO YOUR EMPLOYEE STOCK PLAN ACCOUNT IN THE SAME MANNER AS IF
YOU MARKED, SIGNED AND RETURNED THE ATTACHED VOTING DIRECTION CARD. THE
DEADLINE FOR TELEPHONE VOTING IS 5:00 P.M. (EDT) ON APRIL 20, 1999. WHEN YOU
PROVIDE VOTING DIRECTIONS BY TELEPHONE, YOU ARE MAKING THE CERTIFICATION SET
FORTH IMMEDIATELY ABOVE THE SIGNATURE BOX LOCATED ON THE BOTTOM RIGHT HAND
CORNER OF THIS VOTING DIRECTION CARD.
PROVIDE VOTING DIRECTIONS BY PHONE--
1. USING A TOUCH-TONE TELEPHONE, DIAL 1-800-240-6326. YOU MAY DIAL THIS TOLL
FREE NUMBER AT YOUR CONVENIENCE 7 DAYS A WEEK, 24 HOURS A DAY.
2. WHEN PROMPTED, ENTER THE 3 DIGIT COMPANY NUMBER LOCATED IN THE BOX ON THE
UPPER RIGHT HAND CORNER OF THIS PROXY CARD.
3. WHEN PROMPTED, ENTER YOUR 7 DIGIT NUMERIC CONTROL NUMBER THAT FOLLOWS THE
COMPANY NUMBER.
OPTION A: To direct the Trustee to vote as the Northwest Airlines Corporation
Board of Directors recommends on ALL items, press 1.
OPTION B: If you choose to provide voting directions on each item separately,
press 0. You will hear these instructions:
To direct the Trustee to vote FOR ALL nominees, press 1. To direct the
Trustee to WITHHOLD AUTHORITY TO VOTE FOR ALL nominees, press 9. To
direct the Trustee to WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL
nominee, press 0 and listen to the instructions.
WHEN ASKED, PLEASE CONFIRM YOUR VOTING DIRECTIONS BY PRESSING 1. PLEASE STAY
ON THE LINE UNTIL YOU HAVE BEEN PROMPTED AND HAVE RESPONDED REGARDING YOUR
ATTENDANCE AT THE ANNUAL MEETING
IF YOU VOTE BY TELEPHONE, PLEASE DO NOT MAIL BACK YOUR VOTING DIRECTION CARD
[DETACH PROXY CARD HERE IF YOU ARE NOT VOTING BY TELEPHONE]
- Please detach here -
NORTHWEST AIRLINES CORPORATION
EMPLOYEE STOCK PLAN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEM 1. VOTING DIRECTION CARD
1. ELECTION OF DIRECTORS:
Nominees: 01 Richard C. Blum 05 John H. Dasburg 09 Walter F. Mondale
02 Elaine L. Chao 06 Doris Kearns Goodwin 10 V.A. Ravindran
03 Alfred A. Checchi 07 Dennis F. Hightower 11 Leo M. van Wijk
04 James G. Coulter 08 Frederic V. Malek 12 Gary L. Wilson
/ / FOR all nominees
except as marked
/ / WITHHOLD AUTHORITY
to vote for all nominees
listed
NOTE: If you do not wish your shares voted "FOR" a particular nominee, mark the
"FOR all except" box and write the number(s) of the nominee(s) in the
"Exceptions" box. Your shares will be voted for the remaining
nominee(s).
/ / CHECK THIS BOX IF YOU PLAN TO ATTEND THE ANNUAL MEETING.
/ / CHECK THIS BOX IF AN ADDRESS CHANGE OR COMMENT HAS BEEN NOTED BELOW.
-----------------------------------
Exceptions:
-----------------------------------
IF YOU ARE RESPONDING BY MAIL, PLEASE SIGN, DATE AND RETURN THIS VOTING
DIRECTION CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
CERTIFICATION: Pursuant to federal law and Northwest's Certificate of
Incorporation, Northwest's voting stock is subject to certain foreign
ownership restrictions. By signing below, the undersigned represents that he
or she is a United States citizen as that term is defined in the Federal
Aviation Act.
Date:_______________________________
- ------------------------------------
- ------------------------------------
Signature of Participant
