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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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
/X/ Definitive Proxy Statement Commission Only
/ / Definitive Additional Materials (as permitted by Rule
/ / Soliciting Material Pursuant to 14a-6(e)(2))
Rule 14a-11(c) or Rule 14a-12
TRANS WORLD AIRLINES, INC.
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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(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:
COMMON STOCK, PAR VALUE $.01 PER SHARE AND
EMPLOYEE PREFERRED STOCK, PAR VALUE $.01 PER SHARE
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(2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTIONS APPLIES:
57,916,274 SHARES
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(3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION COMPUTED
PURSUANT TO EXCHANGE ACT RULE 0-11 (SET FORTH THE AMOUNT ON WHICH THE FILING
FEE IS CALCULATED AND STATE HOW IT WAS DETERMINED):
- ------------------------------------------------------------------------------
(4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:
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(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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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TRANS WORLD AIRLINES, INC.
To our Stockholders:
On behalf of the Board of Directors, it is our pleasure to invite you to
attend the Annual Meeting of Stockholders of Trans World Airlines, Inc. (the
"Company").
The meeting will be held at the Norfolk Airport Hilton, 1500 North Military
Highway at North Hampton Boulevard, Norfolk, Virginia 23502, on Tuesday, May
19, 1998, at 10:00 a.m. local time.
The subjects proposed for action at the meeting are: (i) the election of
five Class I directors and five Class II directors, (ii) the ratification of
the appointment of KPMG Peat Marwick LLP as independent accountants for the
fiscal year ending December 31, 1998, and (iii) the transaction of such other
business as may properly come before the meeting or any adjournment thereof.
To help us plan for the meeting, please mark the appropriate box on your
proxy card telling us if you will be attending in person.
It is important that your shares be represented at this meeting in order
that the presence of a quorum may be assured. WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING, YOU ARE URGED TO DATE, SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY
CARD IN THE ENVELOPE PROVIDED AND TO DO SO IN ADEQUATE TIME FOR YOUR DIRECTIONS
TO BE RECEIVED AND TABULATED PRIOR TO THE SCHEDULED MEETING.
Sincerely yours,
/s/ Gerald L. Gitner
GERALD L. GITNER
Chairman of the Board and
Chief Executive Officer
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TRANS WORLD AIRLINES, INC.
NOTICE OF MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 19, 1998
TO THE STOCKHOLDERS OF
TRANS WORLD AIRLINES, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Trans World Airlines, Inc., a Delaware corporation (the
"Company"), will be held on Tuesday, May 19, 1998, at 10:00 a.m., local time,
at the Norfolk Airport Hilton, 1500 North Military Highway at North Hampton
Boulevard, Norfolk, Virginia 23502, for the purposes of considering and acting
upon the following:
(1) the election of five Class I directors and five Class II directors
of the Company for terms ending with the 1999 Annual Meeting of
Stockholders and until their successors are elected and qualified;
(2) the ratification of the appointment of KPMG Peat Marwick LLP as
independent accountants for the fiscal year ending December 31, 1998; and
(3) the transaction of such other business as may properly come before
the Meeting or any adjournment thereof.
The Board of Directors recommends that you vote, according to your voting
rights, "FOR" the nominees for Class I and Class II directorships and further
recommends that Stockholders vote "FOR" agenda item 2 above.
Abstentions and "broker non-votes" are counted for purposes of
determining the presence or absence of a quorum for the transaction of
business.
Only stockholders of record at the close of business on March 26, 1998,
will be entitled to notice of and to vote at the Meeting or any adjournment
thereof. The Meeting may be adjourned from time to time without advance notice.
A list of stockholders entitled to vote at the Meeting will be available for
inspection by any stockholder for any purpose germane to the Meeting, during
ordinary business hours, during the ten days prior to the Meeting, at the
Company's headquarters located at One City Centre, 515 N. Sixth Street,
St. Louis, Missouri 63101.
By Order of the Board of Directors
/S/ Paul J M Rutterer
PAUL J. M. RUTTERER
Corporate Secretary
St. Louis, Missouri
April 15, 1998
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING, REGARDLESS
OF THE NUMBER OF SHARES YOU HOLD, IN ORDER THAT A QUORUM MAY BE ASSURED.
WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE MEETING IN PERSON, PLEASE
COMPLETE, SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE ACCOMPANYING RETURN
ENVELOPE TO WHICH NO POSTAGE NEED BE AFFIXED BY THE SENDER IF MAILED WITHIN THE
UNITED STATES. IF YOU RECEIVE MORE THAN ONE PROXY BECAUSE YOUR SHARES ARE
REGISTERED IN DIFFERENT NAMES OR ADDRESSES, EACH SUCH PROXY SHOULD BE SIGNED
AND RETURNED TO ASSURE THAT ALL OF YOUR SHARES WILL BE VOTED. THE PROXY SHOULD
BE SIGNED BY ALL REGISTERED HOLDERS EXACTLY AS THE STOCK IS REGISTERED.
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TRANS WORLD AIRLINES, INC.
ONE CITY CENTRE
515 N. SIXTH STREET
ST. LOUIS, MISSOURI 63101
PROXY STATEMENT, DATED APRIL 15, 1998,
FOR MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 19, 1998
INTRODUCTION
VOTE BY PROXY
This proxy statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of Trans World Airlines, Inc. (the
"Company" or "TWA") from the holders of the Company's common stock, $.01
par value per share (the "Common Stock"), and the Company's preferred stock
issued in three series to TWA union employees, $0.01 par value per share (the
"Employee Preferred Stock"), which are the series of capital stock of the
Company entitled to vote at the Meeting (the Common Stock and the Employee
Preferred Stock are sometimes referred to collectively herein as the "Voting
Stock"), for use at the Annual Meeting of Stockholders to be held on Tuesday,
May 19, 1998, at 10:00 a.m., local time, and any adjournment or postponement
thereof (the "Meeting"), for the purposes set forth in the accompanying
Notice of Meeting and described in detail herein. This Proxy Statement,
together with a form of proxy, is first being mailed to security holders on or
about April 15, 1998.
All properly executed proxies in the form enclosed received in time for the
Meeting will be voted, according to their voting rights and in accordance with
the instructions contained thereon and, if no choice is specified, proxies will
be voted, according to their voting rights, FOR the election of the five
nominees for Class I directors and the five nominees for Class II directors
named herein and FOR Agenda Item Two described herein.
Any person giving a proxy pursuant to this Proxy Statement may revoke it at
any time before it is exercised by filing with the Corporate Secretary of the
Company, at the address of the Company stated above, a written notice of such
revocation or a duly executed proxy bearing a later date. In addition, if a
person executing a proxy is present at the Meeting, such person may, but need
not, revoke his or her proxy, by notice of revocation to the Secretary of the
Meeting, and vote such person's shares in person. Proxies, if in the form
enclosed, duly signed and received in time for voting, and not revoked before
they are voted, will be voted at the Meeting in accordance with the
instructions specified therein.
Certain beneficial holders of Voting Stock will receive proxy materials
pursuant to the federal securities laws, even though, with respect to certain
matters, such beneficial holders do not have the right to vote the shares of
Voting Stock which they hold beneficially and do not have the right to direct
the registered holder of such shares with respect to the manner in which such
shares are to be voted. See "Outstanding Shares and Voting Rights."
COST OF PROXY SOLICITATION
The cost of soliciting proxies will be borne by the Company.
Proxies may be solicited by the Company's directors, officers and regular
employees, without separate remuneration, in person or by telephone, facsimile
transmission, telegram or mail. It is anticipated that banks,
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brokerage houses and other custodians, nominees and fiduciaries will forward
soliciting material to beneficial owners of Common Stock and such persons will
be reimbursed for out-of-pocket expenses incurred by them in connection
therewith in accordance with the regulations of the Securities and Exchange
Commission (the "SEC") for sending proxies and proxy materials to the
beneficial owners of shares of the Common Stock.
In connection with the Meeting, the Company has retained D.F. King & Co.
("D.F. King") 77 Water Street, Twentieth Floor, New York, New York 10005, to
assist the Company in the distribution and solicitation of proxies. D.F. King's
services may include the delivery of proxy materials to brokers, nominees,
fiduciaries and other custodians of the Common Stock for distribution to the
beneficial owners of such Common Stock, as well as the solicitation of proxies
from such beneficial owners. The Company has agreed to pay D.F. King a
solicitation fee of $7,500 plus $3.00 per telephone contact and to reimburse
D.F. King for all reasonable out-of-pocket expenses incurred by it in
connection with its activities on behalf of the Company.
The Annual Report of the Company for the year ended December 31, 1997,
including financial statements (the "Annual Report"), is being mailed prior
to or concurrently with this Proxy Statement to all holders of record of Voting
Stock as of March 26, 1998 (the "Record Date"), except for accounts where the
holder has filed a written request to eliminate duplicate reports. In addition,
the Company has provided brokers, dealers, banks, voting trustees and their
nominees, at Company expense, with additional copies of the Annual Report so
that such record holders could supply such material to beneficial owners as of
the Record Date.
OUTSTANDING SHARES AND VOTING RIGHTS
The Common Stock and the Employee Preferred Stock, which are together
referred to as the Voting Stock, are the only two classes of the Company's
securities with general voting rights, with each share of Voting Stock entitled
to vote on each matter properly coming before the Meeting other than for the
election of directors. The Common Stock and Employee Preferred Stock have
separate voting rights with respect to the election of directors. As of the
Record Date, the Company had a total of 51,896,129 shares of Common Stock
issued and outstanding and 6,020,145 shares of Employee Preferred Stock issued
and outstanding. Only holders of record as of the close of business on the
Record Date will be entitled to vote at the Meeting. As of the Record Date,
there were 21,606 holders of record of Common Stock and nine holders of record
of Employee Preferred Stock.
Pursuant to the terms of trusts established for the benefit of TWA
employees represented by the Air Line Pilots Association, International
("ALPA"), the International Association of Machinists and Aerospace Workers
(the "IAM"), as well as employees of the Company not represented by labor
unions, the participants of such trusts, as beneficial holders of the Voting
Stock, do not have the right to direct the manner in which such shares are
voted by the trustees of each trust with respect to any of the agenda items for
the Meeting. Such trusts are the TWA Air Line Pilots Supplemental Stock Plan
(the "ALPA Trust"), the TWA Air Line Pilots 1995 Employee Stock Ownership
Plan (the "ALPA ESOP Trust"), the IAM Trans World Airlines Employees' Stock
Ownership Plan (the "IAM Trust"), the IAM Trans World Airlines Employees'
Stock Ownership Plan for Flight Attendants (the "Flight Attendant Trust"),
and the Trans World Airlines, Inc. Employee Stock Ownership Plan (the "Other
Employee Trust"). The Independent Federation of Flight Attendants ("IFFA")
previously represented the Company's flight attendants. However, on March 6,
1997, the National Mediation Board certified the IAM as the bargaining
representative for TWA's flight attendants. The IAM has advised the Company
that it will exercise control of the Flight Attendant Trust. Only the trustees
of such trusts will receive proxy cards. Although each beneficial holder of the
Voting Stock held by such trusts will receive a copy of this Proxy Statement
and an Annual Report pursuant to rules promulgated by the SEC, none of such
beneficial holders will receive a proxy card since the trustees, as the record
holders, will cast the votes for such shares.
The Employee Preferred Stock is comprised of three series: the ALPA
Preferred Stock, the IAM Preferred Stock and the IFFA Preferred Stock (the
"Flight Attendant Preferred Stock"). The holders of ALPA Preferred
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Stock are entitled to elect one director to the Board of Directors of the
Company (the "Board of Directors" or the "Board"), the holders of IAM
Preferred Stock are entitled to elect two directors, and the holders of the
Flight Attendant Preferred Stock are entitled to elect one director. At the
Company's 1996 annual meeting of stockholders, the holder of the IAM Employee
Preferred Stock elected one Class III director for a term expiring in 1999.
Holders of ALPA Preferred Stock, IAM Preferred Stock and Flight Attendant
Preferred Stock each will be entitled to vote for the election of one Class II
director at the Meeting. The holders of Common Stock will be entitled to elect
all five members of Class I and the two other Class II directors.
Holders of the majority of the outstanding shares of each series of
Employee Preferred Stock, if present in person or represented by proxy, will
constitute a quorum at the Meeting for the purpose of electing each of the
respective directors which such respective Employee Preferred Stock is entitled
to elect (the "Employee Directors"). Holders of a majority of the outstanding
shares of the Common Stock, if present in person or represented by proxy, will
constitute a quorum at the Meeting for the purpose of electing the five Class I
and two Class II non-Employee Directors. Holders of a majority of the
outstanding shares of Voting Stock, if present in person or represented by
proxy, will constitute a quorum at the Meeting for the purpose of transacting
all other business to be conducted at the Meeting. Abstentions and broker
non-votes are counted for the purposes of determining the presence or absence
of a quorum for the transaction of business. For all other matters other than
the right to elect directors, shares of Employee Preferred Stock are equivalent
to shares of Common Stock for voting purposes. Therefore, the total vote
required to approve any matter other than the election of directors will be the
required percentage of Voting Stock.
The five Class I and the two Class II non-Employee Directors will be
elected by a plurality of the votes of the shares of Common Stock present in
person or represented by proxy and casting votes for the position on the Board
which that nominee represents. Employee Directors electable by the applicable
series of Employee Preferred Stock will be elected by a plurality of the votes
of the shares of such series of Employee Preferred Stock present in person or
represented by proxy casting votes for the position on the Board which that
nominee represents. Accordingly, abstentions and broker non-votes will have no
effect on the outcome of the election of directors. The ratification of
auditors must be approved by the affirmative vote of the holders of a majority
of the outstanding shares of Voting Stock entitled to vote thereon present or
represented by proxy at the Meeting and casting votes. Abstentions and broker
non-votes will have no effect on ratification of the selection of auditors.
The Certificate of Incorporation does not contemplate cumulative voting.
Accordingly, holders of a majority of the shares of Common Stock voting in an
election of directors can, if they choose to do so, elect one hundred percent
(100%) of these directors.
The IAM Trust and the Flight Attendant Trust. Pursuant to the terms of each
of the IAM Trust and the Flight Attendant Trust, for matters calling for the
approval of the holders of the Voting Stock, a plan trustee committee for each
trust will instruct Fleet National Bank, N.A., as trustee for the IAM Trust,
and the American Stock Transfer & Trust Company ("AST"), as trustee for the
Flight Attendant Trust, respectively, on how to vote the Voting Stock held in
the applicable trust. For this purpose, a plan trustee committee may, but is
not obligated to, instruct the plan trustee to vote such Voting Stock in a
given manner or to solicit proxies from each participant or beneficiary
designating the manner in which the shares of Voting Stock allocated to his or
her stock account shall be voted. The plan trustee committees for each of the
IAM Trust and the Flight Attendant Trust have informed the Company that they
have elected to instruct the respective plan trustee to vote the Voting Stock.
The plan trustee committee for the IAM Trust is composed of one or more
individuals selected by the IAM. The current members of such committee are
William O'Driscoll and Gary Poos. The plan trustee
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committee for the Flight Attendant Trust is composed of one or more members
selected by the IAM. The current members of such committee are William
O'Driscoll, Sherry Cooper and Rocky Miller.
The ALPA Trust. Under the ALPA Trust, Joseph A. Chronic, Howard L.
Coldwell, Jr. and Scott A. Schwartz, as co-trustees of the ALPA Trust, have the
power to determine, in their sole and absolute discretion, how to vote the
Voting Stock held in (or entitled to be received by) such trust. The trustees'
decision on the manner of voting the stock held by such trust shall be final
and binding on all employees, pilot retirees, beneficiaries, and any parties
covered by such trust.
The ALPA ESOP Trust. Pursuant to the terms of the ALPA ESOP Trust, for
matters calling for the approval of the holders of the Voting Stock, a plan
ESOP committee will instruct AST, as trustee for the ALPA ESOP Trust, on how to
vote the Voting Stock held in the trust. For this purpose, the plan ESOP
committee may, but is not obligated to, instruct the plan trustee to vote such
Voting Stock in a given manner or to solicit proxies from each participant or
beneficiary designating the manner in which the shares of Voting Stock
allocated to his or her stock account shall be voted. The plan ESOP committee
has informed the Company that they have elected to instruct the plan trustee to
vote the Voting Stock.
The plan ESOP committee for the ALPA ESOP Trust is composed of three or
more individuals selected by ALPA. The current members of such committee are
David F. LaRocque, Scott A. Schwartz and Robert C. Stow.
The Other Employee Trust. The voting rights of all shares of Common Stock
held in the Other Employee Trust are exercisable by Boston Safe Deposit and
Trust Company as trustee for such trust in accordance with the provisions of
the plan for such trust. Under the Other Employee Trust, the trustee upon
direction of a designated committee has the power to vote shares of Common
Stock held in the trust and exercise any other rights or privileges associated
with such Common Stock in accordance with the terms of the plan for such trust.
Such committee may authorize the trustee to exercise any power without specific
directions or other instructions from such committee with respect to which
direction from such committee is called for in the Other Employee Trust
Agreement. Such committee is composed of Michael J. Palumbo, Senior Vice
President and Chief Financial Officer, Kathleen A. Soled, Senior Vice President
and General Counsel of the Company, and James F. Martin, Senior Vice President,
Human Resources of the Company.
AGENDA ITEM ONE
ELECTION OF CLASS I AND CLASS II DIRECTORS
DIRECTORS AND EXECUTIVE OFFICERS:
INFORMATION REGARDING DIRECTORS
The number of directors on the Board of Directors currently has been fixed
at fifteen. Directors serve until that annual meeting of stockholders at which
their term of office expires. In the case of a vacancy, other than a vacancy in
a seat to which Employee Preferred Stockholders are entitled to fill, the Board
of Directors may elect another director as a replacement or leave the vacancy
unfilled.
Nominations by stockholders may be made in accordance with the Amended and
Restated By-laws of the Company (the "By-laws"), which require advance notice
be given to the Company and require that certain information be furnished for
stockholder nominations for directors.
Proxies received from holders of Common Stock and Employee Preferred Stock
will be voted for the election of the applicable nominees named below as Class
I and Class II directors for a term expiring at the 1999 Annual Meeting of
Stockholders, unless authority to do so is withheld. In the event any nominee
is unable or
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declines to serve as a director at the time of the Meeting, the persons named
as proxies therein will have discretionary authority to vote the proxies for
the election of such person or persons as may be nominated in substitution
therefor by the applicable management of the Company, the IAM or ALPA, as the
case may be. Management knows of no current circumstances which would render
any nominee named herein unable to accept nomination or election. The only
seats on the Board of Directors for which elections will be held this year are
the five Class I and the five Class II directorships.
Biographical information furnished to the Company by each director is set
forth below:
NOMINEES FOR ELECTION AND REELECTION AS CLASS I AND CLASS II DIRECTORS
John W. Bachmann, age 59, has been a director of TWA since April 1, 1996.
Mr. Bachmann has been Managing Principal of Edward Jones since January 1980.
Mr. Bachmann serves as Chairman of the St. Louis Regional Commerce and Growth
Association/Civic Progress panel studying airport expansion and modernization
in St. Louis. Mr. Bachmann served as a member of the U.S. Steering Committee
for the Group of 30 and chaired its securities settlement implementation task
force in 1989. He also served two consecutive terms as Chairman of the
Securities Industry Association from 1987 to 1989. Mr. Bachmann has served as a
member of the Board of Governors of the Chicago Stock Exchange and as a member
of the Regional Firms Advisory Board of the New York Stock Exchange. He is the
Chairman of the St. Louis Symphony Society and a Trustee of Washington
University and Wabash College. He is a member of the Board of Visitors of the
Peter F. Drucker Center. Mr. Bachmann's term of office as a director expires
with the annual meeting of stockholders in 1998.
William F. Compton, age 50, was elected President and Chief Operating
Officer of the Company on December 3, 1997. Prior to that he had served as
Executive Vice President--Operations since March 13, 1997. He had been acting
in such position since December 14, 1996. He was the ALPA-designated director
of TWA from November 3, 1993 until March, 1997, at which time he resigned and
was appointed a management-designated director. A pilot for TWA since September
13, 1968, Mr. Compton was an Executive Board Member and Master Chairman of the
TWA Master Executive Council ("MEC") of ALPA from September 1991 to September
11, 1995, Coordinator for the Company's Productivity Task Force until September
6, 1995, a member of the TWA Labor Advisory Committee from August 1992 until
September 1995. He was Chairman of the TWA MEC Negotiating Committee from March
1988 to September 1991, a member of the ALPA National Collective Bargaining
Committee from June 1988 to June 1990, and a member of the TWA MEC Negotiating
Committee from June 1986 to March 1988. Mr. Compton's term of office as a
director expires with the Annual Meeting of Stockholders in 1998. Mr. Compton
serves as an officer of the Company at the pleasure of the Board of Directors.
Eugene P. Conese, age 68, has been a director of TWA since November 3,
1993. Mr. Conese is a member of the Board of Directors of Renex Corporation,
where he is Chairman of the Compensation Committee. He is also on the Board of
Iona College and a Board member of the Conese Foundation. Mr. Conese is
Chairman and Chief Executive Officer of World Air Lease, Inc., since 1989, and
is a consultant to General Electric Company's Engine Services. Until its sale
in September 1997 to General Electric Company, Mr. Conese served as Chairman
and Chief Executive Officer of Greenwich Air Services, Inc. which he founded in
1987. He was a founder of The Greenwich Company Ltd. and served as Chairman of
the Board and Chief Executive Officer from August 1980 until 1995, when it was
merged with and into Greenwich Air Services. He also served as Chief Executive
Officer and Director of Irvin Industries, Inc. Mr. Conese's term of office as
director expires with the Annual Meeting of Stockholders in 1998.
Sherry L. Cooper, age 46, has been nominated to be the Flight Attendant
Preferred Stock designated director of TWA. Ms. Cooper has been a TWA flight
attendant since May, 1975. Ms. Cooper has been the
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General Chairperson for TWA flight attendants, IAM District Lodge #142, since
August 1997. She was President of IFFA from October 1995 to February 1997.
Gerald L. Gitner, age 53, has been Chairman and Chief Executive Officer of
TWA since February 12, 1997 (having been Vice Chairman and Acting Chief
Executive Officer since December 14, 1996) and a director of TWA since November
3, 1993. He has been Chairman of Avalon Group, Ltd. since April 1992, and Co-
Chairman of Global Aircraft Leasing Ltd. since 1990. Mr. Gitner was Vice
Chairman of Tribeca Corporation from February 1990 to December 1991, Chairman
of Tribeca Corporation from December 1991 to March 1992, and President and
Chief Executive Officer, ATASCO USA Inc. from September 1986 to December 1989.
Mr. Gitner was President of Texas Air Corp. from 1985 to 1986, Chairman and
Chief Executive Officer of Pan American World Services from 1983 to 1985 and
Vice Chairman of Pan American World Airways Inc. from 1983 to 1985. He was a
founder of People Express Airlines, Inc. and served as its President from 1980
to 1982. Mr. Gitner is a director of ICTS International, N.V. and was a trustee
of Boston University from 1984 to 1996. He is a member of the Chancellor's
Council of the University of Missouri - St. Louis and serves as a trustee of
The American College of Management in Dubrovnik, Croatia. Mr. Gitner's term of
office as a director expires with the Annual Meeting of Stockholders in 1998.
Mr. Gitner serves as an officer of the Company at the pleasure of the Board of
Directors.
Myron Kaplan, age 53, has been a director of TWA since November 3, 1993. He
has been a partner in the law firm of Kleinberg, Kaplan, Wolff & Cohen, P.C.
since 1972. Mr. Kaplan's term of office as a director expires with the Annual
Meeting of Stockholders in 1998.
General Merrill A. McPeak (USAF, Ret.), age 62, has been a director of TWA
since May 29, 1997. He is Chairman of the Board of ECC International Corp. and
a director of Praegitzer Industries, Tektronix, Inc., and Thrustmaster, Inc.
General McPeak was Chief of Staff, United States Air Force, 1990-1994,
Commander-in-Chief, Pacific Air Forces, 1988-1990 and Commander, 12th Air
Force, 1987-1988. He serves on the national boards of the Air Force
Association, the National Aeronautic Association and the International
Aerobatic Club. General McPeak's term of office as a director expires with the
Annual Meeting of Stockholders in 1998.
Brent S. Miller, age 54, has been nominated to be the ALPA-designated
director of TWA. Mr. Miller is a pilot for TWA and has been employed by the
Company in various pilot positions since October 1966.
William O'Driscoll, age 69, has been a director of TWA since November 3,
1993. Mr. O'Driscoll has been President and Directing General Chairman of IAM
District Lodge 142 since August 1990. He is an IAM-designated director. Mr.
O'Driscoll's term of office as a director expires with the Annual Meeting of
Stockholders in 1998.
Blanche M. Touhill, age 66, has been a director of TWA since May 29, 1997.
She is Chancellor, since 1991, and Professor of History and Education at the
University of Missouri-St. Louis. She was Interim Chancellor from 1990 to 1991
and Vice Chancellor for Academic Affairs from 1987-1991. Ms. Touhill is a
director of Delta Dental, Christian Health Services, the Missouri Botanical
Garden, the Urban League of Metropolitan St. Louis and the American Conference
for Irish Studies. Ms. Touhill's term of office as a director expires with the
Annual Meeting of Stockholders in 1998.
THE BOARD OF DIRECTORS RECOMMENDS THAT HOLDERS OF COMMON STOCK VOTE "FOR"
THE REELECTION OF MESSRS. BACHMANN, COMPTON, CONESE, GENERAL MCPEAK AND MS.
TOUHILL AS CLASS I DIRECTORS AND "FOR" THE REELECTION OF MESSRS. GITNER AND
KAPLAN AS CLASS II DIRECTORS; HOLDERS OF IAM PREFERRED STOCK VOTE "FOR" THE
REELECTION OF MR. O'DRISCOLL; HOLDERS OF THE FLIGHT ATTENDANT PREFERRED STOCK
VOTE "FOR" THE ELECTION OF MS. COOPER, AND HOLDERS OF THE ALPA PREFERRED
STOCK VOTE "FOR" THE ELECTION OF MR. MILLER.
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CONTINUING DIRECTORS
Edgar M. House, age 65, has been a director of TWA since January 28, 1998.
He was the former General Vice President of the International Association of
Machinists, serving in that capacity from 1989 until his retirement in July
1997 and holding numerous other union offices prior to that position. Mr.
House's term of office as director expires with the Annual Meeting of
Stockholders in 1999.
Thomas H. Jacobsen, age 58, has been a director of TWA since March 21,
1995. He has been President, Chief Executive Officer and Chairman of the Board
of Mercantile Bancorporation Inc. since 1989. Mercantile Bank National
Association, formerly known as Mercantile Bank of St. Louis National
Association, and a subsidiary of Mercantile Bancorporation Inc., has provided
in the past and from time to time hereafter may provide depository and/or other
banking products to the Company and the Company's affiliates. Mr. Jacobsen was
Vice Chairman and director of Barnett Banks, Inc. from 1984 to 1989. He is
President of the Federal Reserve System Federal Advisory Council, having
previously served as the representative for the Eighth Federal Reserve
District. He is Chairman of the St. Louis Area Council of the Boy Scouts of
America and is a member of the Executive Board, National Boy Scouts of America
and Life Trustee of the St. Louis Symphony Orchestra, having previously served
as its Chairman. Mr. Jacobsen's term of office as a director expires with the
Annual Meeting of Stockholders in 1999.
David M. Kennedy, age 59, has been a director of TWA since October 23,
1996. He was Acting Executive Vice President and Chief Operating Officer of the
Company from December 14, 1996 to June 4, 1997. Mr. Kennedy was Chief Executive
Officer of Aer Lingus from 1974 to 1988, and has held a variety of positions in
the airline industry, including as director of CSA, Czechoslovak Airlines, from
1993 to 1994, member of the International Advisory Committee of Air France from
1991 to 1994, and as Aviation Consultant to the European Bank for
Reconstruction and Development and the World Bank. Mr. Kennedy was a director
of the Bank of Ireland from 1984 to 1995, where he served as Deputy Governor
from 1989-1991. Mr. Kennedy is currently Chairman of the Bank of Ireland
Pension Fund, and serves as a director of CRH Plc, Jurys Hotel Group Plc. and
as Chairman of Drury Communications Limited. He is a director of Global
Aircraft Leasing Ltd. Mr. Kennedy is a part-time lecturer at the Graduate
School of Business of the University College Dublin. Mr. Kennedy is a citizen
of Ireland. Mr. Kennedy's term of office as a director expires with the Annual
Meeting of Stockholders in 1999.
Thomas F. Meagher, age 67, has been a director of TWA since November 3,
1993. He was Chairman of the Board from November 14, 1995 to February 12, 1997
and currently serves as Lead Outside Director of the Board. Mr. Meagher has
served as Chairman of the Board and Chief Executive Officer of Howell Tractor &
Equipment Co. since 1980. He serves as Chairman of Professional Golf Cars of
Florida and is a director of Everen Securities. Mr. Meagher was Chairman of
Continental Air Transport from 1983 until July 1, 1995 and was Chief Executive
Officer of Continental Air Transport from 1983 to 1993. He is a retired
director of Lakeside Bank of Chicago and is a former Chairman of the Airport
Ground Transportation Association. He was a director of the Greyhound Lines,
Inc. from 1991 to 1993 and a consultant from 1993 to 1997. He is a Trustee of
St. Mary's University and DePaul University. Mr. Meagher's term of office as a
director expires with the Annual Meeting of Stockholders in 1999.
G. Joseph Reddington, age 56, has been a director of TWA since November 3,
1993. He has been President and Chief Executive Officer and director of
Breuners Home Furnishings Corp. since February 1997. Mr. Reddington has been a
director of Loblaw Companies Ltd. since August 1994. Mr. Reddington was a
director of Sears Canada, Inc. from January 1985 to February 1994. He was
Chairman and Chief Executive Officer of The Signature Group from April 1994 to
February 1997, President and Chief Executive Officer of Sears Canada from 1989
to December 1993, and Chief Administrative Officer of Sears Merchandising Group
from December
7
<PAGE> 11
1988 to December 1989. Mr. Reddington's term of office as a director expires
with the Annual Meeting of Stockholders in 1999.
William M. Hoffman and Stephen M. Tumblin have not been nominated for
reelection by the IAM and ALPA, respectively.
EXECUTIVE OFFICERS IN ADDITION TO GERALD L. GITNER AND WILLIAM F. COMPTON
Donald M. Casey, age 62, has been Executive Vice President, Marketing since
May 29, 1997. Mr. Casey was formerly a principal with Deskey Luxon Carra, a
design consulting firm. In 1993, he formed Seabrook Consultants and was
President, leaving the firm in 1995. From 1983 to 1993 Mr. Casey worked with
Young and Rubicam in a number of executive positions. He previously worked for
TWA from 1968 until 1981, including serving as Senior Vice President, Marketing
from 1976 to 1981. Mr. Casey serves as an officer of the Company at the
pleasure of the Board of Directors.
James F. Martin, age 48, was elected Senior Vice President, Human Resources
on October 29, 1997. Mr. Martin was Vice President, Operations and Technology
of Coors Brewing Company from 1996-1997, Vice President, Human Resources of
Harcourt Brace & Company from 1992 to 1995 and Vice President, Human Resources
of Macmillan/McGraw-Hill School Publishing Company from 1989 to 1992. Mr.
Martin serves as an officer of the Company at the pleasure of the Board of
Directors.
Michael J. Palumbo, age 51, has been Senior Vice President and Chief
Financial Officer of TWA since December 20, 1996. Mr. Palumbo was formerly the
Company's Vice President and Treasurer and has been employed by TWA since 1994.
Before joining the Company, Mr. Palumbo was a partner in HPF Associates from
1988 to 1994 and Senior Vice President and Transportation Group Head for E.F.
Hutton from 1984 to 1988. Mr. Palumbo had previously served as Senior Vice
President, Finance and Treasurer of Western Airlines from 1983 to 1984 and
Assistant Treasurer of Pan American World Airways from 1977 to 1983. Mr.
Palumbo serves as an officer of the Company at the pleasure of the Board of
Directors.
Kathleen A. Soled, age 40, was elected Senior Vice President and General
Counsel of TWA on January 28, 1998. Ms. Soled was formerly the Company's Vice
President, Legal and Corporate Secretary and has been employed by TWA since
January, 1992. Prior to that, she was an attorney in private practice. Ms.
Soled serves as an officer of the Company at the pleasure of the Board of
Directors.
DIRECTORS' FEES AND COMPENSATION
The Board of Directors may establish the compensation for, and
reimbursement of the expenses of, directors for membership on the Board of
Directors and on committees of the Board of Directors, attendance at meetings
of the Board of Directors or committees of the Board of Directors, and for
other services rendered by directors to the Company or any of its
majority-owned subsidiaries.
Directors of TWA during 1997 who were not also regularly salaried employees
or active union representatives of TWA employees ("Outside Directors") were
entitled to receive an annual retainer of $20,000, payable quarterly in
advance. Committee chairpersons were entitled to receive an annual retainer of
$1,500, prorated from the date of the committee chairperson's appointment and
payable quarterly in arrears. Board members were also entitled to receive fees
of $2,000 for each regular meeting attended, $1,500 for each meeting attended
via telephone conference call and $1,000 for each special meeting of the Board
attended, whether in person or by telephone conference call, along with fees of
$500 for attending committee meetings held on a day of a Board meeting and
$1,000 for committee meetings held on a day other than the day of a Board
meeting. Regularly salaried executive officers of TWA or active union
representatives of TWA employees who are also Board members did not receive any
supplemental compensation for their services as directors. All directors are
8
<PAGE> 12
reimbursed for expenses incurred in attending Board and committee meetings. The
Lead Outside Director was entitled, during 1997, to receive an annual retainer
of $30,000 and meeting fees fifty percent in excess of those paid to Outside
Directors.
Outside Directors of TWA, their spouses and eligible dependent children
receive unlimited positive space pass privileges on TWA, with tax reimbursement
related to income imputed from pass usage to be paid in an amount not to exceed
$10,000 per year. Imputed income together with cash payments to such directors
aggregated approximately $47,809 for 1997.
The stockholders of TWA approved the Company's 1995 Outside Directors'
Stock Ownership and Stock Option Plan (the "Outside Directors' Plan") at the
Company's 1995 Annual Meeting of Stockholders. The Outside Directors' Plan as
amended, subject to any trading restrictions imposed by applicable securities
laws, requires Outside Directors to own one thousand (1,000) shares of Common
Stock (the "Required Shares") upon the date on which an individual is elected
an Outside Director. Outside Directors whose term of service on the board began
before the 1995 Annual Meeting of Stockholders are additionally entitled to
purchase two thousand (2,000) shares of Common Stock (the "Permissive
Shares") pursuant to the Outside Directors Plan, with no requirement that such
Outside Director continue to hold such shares. The purchase price for both
Required Shares and Permissive Shares is (x) $4.1875, the subscription price of
the Company's September 1995 equity rights offering, if the Outside Director's
current term of service on the Board began at or before the Company's 1995
Annual Meeting of Stockholders and (y) the Fair Market Value (as defined in the
Outside Directors' Plan) of the Common Stock on the date of purchase for all
other Outside Directors. Pursuant to the Outside Directors' Plan, each Outside
Director is permitted to make annual elections, with respect to some or all of
the retainer amounts payable to him or her in consideration for his or her
service on the Board, to (i) receive such retainer in shares of Common Stock
instead of cash; (ii) defer retainer amounts and participate in a "phantom
stock" program; (iii) receive some combination of cash and Common Stock for
all of his or her retainer; or (iv) receive some combination of cash and Common
Stock for some portion of his or her retainer and to defer the remainder.
Outside Directors electing to receive shares of Common Stock in lieu of some or
all of the cash retainer payment to which he or she would otherwise be entitled
would receive a number of shares of Common Stock calculated by dividing the
percentage of his or her retainer such Outside Director elected to receive in
shares of Common Stock times the Outside Director's retainer fee by the Fair
Market Value of the Common Stock on the date such retainer became payable.
Outside Directors electing to defer some or all of the retainer to which he or
she was entitled would be credited, through a "Deferred Retainer Account,"
with a number of shares of Common Stock calculated by dividing the percentage
of his or her retainer such Outside Director elected to defer times their
retainer by (x) $4.1875 for retainer amounts payable for 1996 to Outside
Directors whose term of service began at or before the Company's 1995 Annual
Meeting of Stockholders; and (y) the Fair Market Value of the Common Stock on
the date on which the retainer became payable for all other Outside Directors.
Upon the earlier to occur of (i) December 31, 2000, and (ii) the 60th day
following the last date of a participating Outside Director's service on the
Board, each participating Outside Director would be entitled to a payment
consisting of cash, Common Stock, or a combination of the two.
In addition, the Outside Directors' Plan provides for an annual grant of
1,500 stock options beginning on the later of January 1, 1997 or the first day
of January next following the first anniversary of qualification as an Outside
Director. Such options vest on the six-month anniversary of the grant. The per
share exercise price of options granted under the Outside Directors' Plan is
the Fair Market Value per share of the common stock on the date of grant.
9
<PAGE> 13
CERTAIN TRANSACTIONS
Stephen M. Tumblin, a current director who has not been nominated for
re-election, is a partner with the law firm of LeBoeuf, Lamb, Greene & MacRae
("LeBoeuf") which represents ALPA. Pursuant to certain agreements, the
Company is required to pay the fees of ALPA's legal counsel including LeBoeuf.
LeBoeuf has not been retained by the Company or done any work for the Company
in 1996 or 1997. In addition, LeBoeuf represents Pacific Aviation Holding
Company, an aircraft lessor from which the Company leases aircraft. Mr. Tumblin
did not participate in or give legal counsel regarding any such leasing
transactions.
Gerald L. Gitner is a director of ICTS International, N.V. ("ICTS") which
performs security services for the Company at Charles de Gaulle airport in
Paris. In 1997, the Company paid ICTS the equivalent of approximately $984,450.
Myron Kaplan is a partner in the law firm of Kleinberg, Kaplan, Wolff and
Cohen, P.C. ("Kleinberg"). Kleinberg represents an aircraft owner which is
currently in negotiations to sell certain aircraft to the Company. Mr. Kaplan
has not participated in or given legal counsel regarding the negotiations.
MEETINGS AND COMMITTEES OF THE BOARD
During 1997, the Board of Directors held six regular meetings and three
special meetings. All incumbent directors attended at least 75% of the total
number of meetings of the Board of Directors and any committee of the Board of
Directors on which they served.
GOVERNANCE OF THE COMPANY
In accordance with applicable Delaware state law, the business of the
Company is managed under the direction of the Board of Directors.
There are currently five standing committees of the Board of Directors.
Under the By-laws and pursuant to the Board's determination, a majority of
members of the Audit, Executive, Compensation and Finance Committee are
required to be non-employee Directors. The Board has also determined that union
representative directors shall serve one year terms and rotate from the
Compensation to Executive to Finance Committees. Committee Chairpersons shall
serve a minimum of one year and a maximum of three year terms. Outside
Directors serve a minimum of one year and a maximum of a four year term on any
Committee and rotate on a staggered basis to other Committees. Current
committee memberships, the number of committee meetings held during 1997 and
the functions of those committees are described below.
EXECUTIVE COMMITTEE. The current members of the Executive Committee are
Thomas F. Meagher (chairman), Gerald L. Gitner, William M. Hoffman, Thomas H.
Jacobsen, Myron Kaplan, David M. Kennedy and G. Joseph Reddington. Such
Executive Committee has and may exercise the powers of the Board of Directors
granted to it by the Board of Directors from time to time, except the power to
amend the By-laws or the Certificate of Incorporation (except, to the extent
authorized by a resolution of the whole Board (i.e., the total number of
directors that the Company would have if there were no vacancies on the Board
of Directors), to fix the designation, preferences and other terms of any
series of preferred stock), adopt an agreement of merger or consolidation,
authorize the issuance of stock, declare a dividend or recommend to the
stockholders the sale, lease or exchange of all or substantially all of the
Company's property and assets, a dissolution of the Company, or a revocation of
a dissolution, and except as otherwise provided by the Delaware General
Corporation Law. During 1997, the Executive Committee met seven times.
AUDIT COMMITTEE. The current members of the Audit Committee are Thomas H.
Jacobsen (chairman), David M. Kennedy, Gen. Merrill A. McPeak, Thomas F.
Meagher, Blanche M. Touhill and Stephen M.
10
<PAGE> 14
Tumblin. The Audit Committee is responsible for (i) the oversight of the
Company's internal control structure, (ii) review of the internal audit
department, (iii) selection of the Company's public accountants, (iv) review of
the fees of the Company's outside public accountants, and (v) oversight of the
Company's financial reporting. During 1997, the Audit Committee met three
times.
COMPENSATION COMMITTEE. The current members of the Compensation Committee
are Myron Kaplan (chairman), John W. Bachmann, Eugene P. Conese, G. Joseph
Reddington and Blanche M. Touhill. The Compensation Committee, administers the
bonus, incentive, compensation and stock option plans of the Company and
reviews and approves the salaries and other benefits of the executive officers
of the Company. During 1997, the Compensation Committee met nine times.
FINANCE COMMITTEE. The current members of the Finance Committee are David
M. Kennedy (chairman), John W. Bachmann, William F. Compton, Eugene P. Conese,
Gerald L. Gitner, Gen. Merrill A. McPeak, Thomas F. Meagher and William
O'Driscoll. The Finance Committee reviews, advises, and reports to the Board on
the Company's financial plans and policies and fund requirements, current and
projected capital requirements, short term investment policies, borrowing and
dividend policy, acquisition or disposition of aircraft, purchase or
disposition of non-aircraft assets, the opening of new stations, major route
changes and other similar such actions having financial implications for the
Company. During 1997, the Finance Committee met four times.
GOVERNANCE AND NOMINATING COMMITTEE. The current members of the Governance
and Nominating Committee are G. Joseph Reddington (chairman), Gerald L. Gitner,
Myron Kaplan, Thomas H. Jacobsen, Thomas F. Meagher and Stephen M. Tumblin. The
Governance and Nominating Committee reviews and makes recommendations in
connection with Board and Committee organization, structure and processes,
including director nominee recruitment, selection, tenure, orientation,
compensation, benefits and retirement; evaluates and reports on the performance
of the Board, oversees officer succession planning, and reviews shareholder
proposals and suggestions. The Governance and Nominating Committee met six
times in 1997.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. To the best of
TWA's knowledge, there was no instance in 1997 in which an executive officer of
TWA served as a director or member of a compensation committee of another
corporation in a situation where an executive officer of such other corporation
served as a director of TWA.
11
<PAGE> 15
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company for the
periods indicated to (a) the individual serving as the Company's Chief
Executive Officer during 1997, (b) the four most highly compensated executive
officers (other than the Chief Executive Officer) who were serving as executive
officers at the end of 1997 who earned more than $100,000 during 1997 and (c)
such other individual who served as an executive officer during 1997 and would
be included in the table except for the fact that he was not an executive
officer at the end of 1997.
<TABLE>
SUMMARY COMPENSATION TABLE<F1>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
--------------------------------------- COMPENSATION
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY<F2> BONUS COMPENSATION OPTIONS/SARs COMPENSATION
- --------------------------- ---- ---------- ----- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Gerald L. Gitner<F3> 1997 $459,477 $187,500 $ 3,941<F4> 800,000<F5> $21,923<F6>
(Chairman and Chief Executive Officer) 1996 -- -- 34,670<F3> 4,776<F3> --
1995 -- -- -- -- --
William F. Compton 1997 $216,723 -- $ 2,486 350,000<F5> $30,000<F6>
(President and Chief Operating Officer) 1996 101,939 -- 5,568 -- 13,542<F6>
1995 91,840 -- 3,303 -- 14,341<F6>
Richard P. Magurno<F*> 1997 $202,889 -- 1,712<F4> 7,763<F5> $ 7,106<F6>
(Senior Vice President and General 1996 182,416 -- 2,712<F4> -- 6,700<F6>
Counsel) 1995 177,360 $250,000<F7> 1,195<F4> 349,602<F5> 2,463<F6>
Michael J. Palumbo 1997 $204,386 -- $ 3,242<F4> 160,000<F5> $11,394<F6>
(Senior Vice President and Chief 1996 144,280 -- 6,127<F4> -- 5,300<F6>
Financial Officer) 1995 130,767 -- 4,933<F4> 20,000<F5> 1,790<F6>
Donald M. Casey 1997 $158,833 -- $ 5,159<F4> 350,000<F5> $ 5,090<F6>
(Executive Vice President, 1996 -- -- -- -- --
Marketing) 1995 -- -- -- -- --
Roden A. Brandt<F*> 1997 $184,852 -- $20,773<F4> -- $10,113<F6>
(Senior Vice President, Planning) 1996 59,760 -- 3,809<F4> 180,000<F5> 4,039<F6>
1995 -- -- -- -- --
<FN>
<F*> Mr. Magurno resigned from the Company on January 28, 1998. Mr. Brandt
resigned from the Company as an employee on December 31, 1997; he remains
as a consultant through April 30, 1998.
<FN>
- -----------------
<F1> All compensation rounded to whole dollars.
<F2> The amounts shown do not include indirect compensation, the value of which
for each executive officer did not exceed the lesser of $50,000 or 10% of
the aggregate compensation for such officer. The amounts shown reflect
income imputed to free or reduced rate air transportation used by
executive officers and eligible members of their families for purposes
other than TWA business, plus withholding payments made pursuant to a tax
reimbursement program established in 1986 for the benefit of active
executive officers as well as certain key employees.
<F3> Mr. Gitner was elected acting Chief Executive Officer on December 14, 1996
and Chairman and Chief Executive Officer on February 10, 1997. During
1996, he received compensation as a Director of the Company as described
above in "Directors' Fees and Compensation" of $34,670 in fees and
approximately 4,776 "phantom shares" of Common Stock in a deferred
retainer account in lieu of his $20,000 retainer. The Company entered into
a consulting agreement with D. G. Associates, Inc. as of December 16, 1996
for Mr. Gitner's services at the rate of $3,000 for each full working day.
As a result of such agreement, D. G. Associates received $114,750 for Mr.
Gitner's services between December 14, 1996 and February 12, 1997 and
$3,295 for his expenses during that period.
12
<PAGE> 16
<F4> Represents contributions to TWA's Pre-tax flexible medical plan (a) for
Mr. Gitner of $958 in 1997, (b) for Mr. Compton of $565 in 1997, $86 in
1996 and $86 in 1995, (c) for Mr. Magurno of $493 in 1997, $450 in 1996
and $442 in 1995, (d) for Mr. Palumbo of $502 in 1997, $338 in 1996 and
$315 in 1995, (e) for Mr. Casey of $348 in 1997 and (f) for Mr. Brandt of
$462 in 1997 and $114 in 1996; premiums for group term life insurance (a)
for Mr. Gitner of $11 in 1997, (b) for Mr. Compton of $188 in 1997, (c)
for Mr. Palumbo of $173 in 1997 and $173 in 1996, (d) for Mr. Casey of $18
in 1997 and (e) for Mr. Brandt of $4,610 in 1997 and $1,134 in 1996; and
imputed amounts and contributions for personal travel (a) for Mr. Gitner
of $2,972 in 1997, (b) for Mr. Compton of $1,733 in 1997, $5,481 in 1996
and $3,217 in 1995, (c) for Mr. Magurno of $1,219 in 1997, $2,262 in 1996
and $753 in 1995 (d) for Mr. Palumbo of $2,567 in 1997, $5,616 in 1996 and
$4,933 in 1995, (e) for Mr. Casey of $4,793 in 1997 and (f) for Mr. Brandt
of $15,701 in 1997 and $2,561 in 1996.
<F5> Represents the grant of options to purchase shares of Common Stock under
the Company's Key Employee Stock Incentive Plan ("KESIP").
<F6> Represents the Company's contributions to the deferred contribution plans
in which a named officer participates. Also includes, for Mr. Compton in
1995, trip expense payments of $899 and Equity Rights earnings of $3,161;
for Mr. Palumbo in 1997, relocation expenses reimbursed of $4,233; and for
Mr. Brandt relocation expenses reimbursed of $3,639 in 1997 and $1,750 in
1996.
<F7> Represents payments to Mr. Magurno pursuant to the Company's Restructuring
Incentive Compensation Plan in connection with the completion of the
Company's 1995 reorganization.
</TABLE>
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF
SECURITIES TOTAL STOCK PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED FOR OPTION TERM
OPTIONS GRANTED TO EMPLOYEES IN EXERCISE EXPIRATION ------------------------
NAME (#)<F1> FISCAL YEAR PRICE DATE<F2> 5% 10%
- ---- --------------- --------------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Gerald L. Gitner.................... 800,000 39.5% $5.84 02/12/04 $1,299,400 $2,598,800
William F. Compton.................. 200,000 9.9% $7.09 03/27/05 $ 495,591 $ 991,182
150,000 7.4% $8.50 12/03/05 $ 445,613 $ 891,226
Richard P. Magurno.................. 7,763 0.4% $6.47 10/14/98 $ 2,511 $ 5,022
Michael J. Palumbo.................. 160,000 7.9% $6.65 01/13/04 $ 318,668 $ 637,336
Donald M. Casey..................... 350,000 17.3% $7.78 05/29/05 $ 919,013 $1,838,026
Roden A Brandt...................... -- -- -- -- -- --
<FN>
- -------------
<F1> All options granted under the KESIP. Options generally vest at a rate of
34% upon the first anniversary of the award date, 33% upon the second
anniversary of the award date and 33% upon the third anniversary of the
award date.
<F2> Options generally expire 5 years from vesting. The date shown is the
expiration date for the last of these options.
</TABLE>
13
<PAGE> 17
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END VALUES
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY OPTIONS AT
UNDERLYING YEAR-END
SHARES ACQUIRED VALUE UNEXERCISED OPTIONS EXERCISABLE/
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE UNEXERCISABLE<F1>
- ---- --------------- -------- ------------------------- -----------------------
<S> <C> <C> <C> <C>
Gerald L. Gitner -- -- 500,000 $2,142,500
(Chairman and 300,000 $1,285,000
Chief Executive Officer)
William F. Compton -- -- -- --
(President and Chief 350,000 $ 850,750
Operating Officer)
Richard P. Magurno -- -- 357,365 $1,945,941
(Senior Vice President and -- --
General Counsel)
Michael J. Palumbo -- -- 67,800 $ 262,539
(Senior Vice President and 112,200 $ 403,161
Chief Financial Officer)
Donald M. Casey -- -- -- --
(Executive Vice President; 350,000 $ 820,750
Marketing)
Roden A. Brandt -- -- 120,600 $ 0
(Senior Vice President, -- --
Planning)
<FN>
- -------------
<F1> Based on the average of the high and low price on the American Stock
Exchange on December 31, 1997 of $10.125.
</TABLE>
CERTAIN EMPLOYMENT AGREEMENTS
A Consulting Agreement between D.G. Associates, Inc. and TWA was entered
into as of December 16, 1996 regarding the services of Gerald L. Gitner as
Acting Chief Executive Officer. TWA agreed to pay $3,000 for each full working
day for such consulting services. The agreement terminated upon Mr. Gitner's
election as Chairman and Chief Executive Officer on February 12, 1997. From
December 14, 1996 through February 12, 1997, D.G. Associates Inc. received
$114,750 from TWA for Mr. Gitner's services and $3,295 for his expenses.
An Employment Agreement with Mr. Gitner was entered into as of February 12,
1997. The terms of the agreement include (a) an annual salary of $500,000 (b)
the grant on February 12, 1997 of 800,000 stock options at an exercise price of
$5.84, 500,000 of which were immediately vested, 150,000 of which vested on the
first anniversary of the date of the agreement and 150,000 of which vest on the
second anniversary of the date of the agreement; (c) the grant of 200,000
additional stock options as of February 12, 1998, (50% of such additional
options vesting upon the first anniversary of the date of grant and 50% as of
the second anniversary of the date of grant); (d) make-whole payments (for
reducing his availability as Chairman of Avalon Group Ltd.) of $62,500 per
quarter during the first year of employment at TWA (notwithstanding any
termination of such employment) and payments of $20,834 per month in the second
year of employment (such monthly payments to terminate upon any termination of
employment); (e) the potential for a $250,000 annual incentive cash bonus based
on measures of performance improvement (such as, meeting business plan, cost
per available seat mile, revenue per available seat mile and cash flow); (f)
thirty days prior written notice for termination without cause and the payment
of $250,000 in the event of such termination, which payment shall be offset by
the realizable value (the
14
<PAGE> 18
difference between the Option Exercise Price and the closing market price of
the stock) of any vested stock option; (g) a "Change in Control" agreement;
(h) other standard executive officer benefits such as vacation, medical/dental
and flight privileges; and (i) that Mr. Gitner may continue to serve as
Executive Chairman of Avalon Group, Ltd. and in various other positions with
its affiliates, successors and/or assigns, provided that no such service may
interfere with his obligations to perform full-time services for TWA under the
agreement.
A Consulting Agreement between David M. Kennedy and TWA was entered into as
of December 16, 1996 regarding Mr. Kennedy's election as Acting Executive Vice
President and Chief Operating Officer. TWA agreed to pay Mr. Kennedy at the
rate of $2,725 for each full working day. The Agreement was terminated on June
4, 1997. From December 14, 1996 through its termination, Mr. Kennedy received
$259,615 from TWA for his services pursuant to the agreement and $13,477 for
his expenses. A new Consulting Agreement was entered into as of June 6, 1997
between Mr. Kennedy and the Company whereby Mr. Kennedy will receive $25,000
per quarter, payable in arrears for his services. This agreement may be
terminated by either Mr. Kennedy or the Company on one month's notice.
A Consulting Agreement between William F. Compton and TWA was entered into
as of December 16, 1996 regarding Mr. Compton's election as Acting Executive
Vice President--Operations. Mr. Compton agreed to serve at his then current
rate of pay as a Company employee. Mr. Compton agreed that he would not divulge
or communicate any confidential information which he obtained as an officer of
the Company other than as specified in the agreement. The Board, in approving
the agreement stated that, in connection with any services performed by Mr.
Compton under the agreement, Mr. Compton would not supervise personnel in
day-to-day labor relations matters and would not become involved in the
Company's labor negotiation strategies and would not supervise any Company
employee whose primary responsibility is the administration and interpretation
of the Company's labor contracts. At the time, Mr. Compton was still the
ALPA-designated director. The agreement terminated upon his election as
Executive Vice President--Operations on March 27, 1997. As of that date, Mr.
Compton received a salary of $225,000. Mr. Compton also received 200,000
options pursuant to the KESIP exercisable at a price of $7.09, 34% vesting on
the first anniversary of the grant, 33% on the second anniversary and 33% on
the third anniversary. Upon his election as President and Chief Operating
Officer on December 3, 1997, he received an additional 150,000 options at an
exercise price of $8.50, with the same vesting schedule. Mr. Compton serves as
an officer of the Company at the pleasure of the Board of Directors.
A letter agreement dated as of October 1, 1996 was executed by TWA and
Richard P. Magurno. The agreement provided for Mr. Magurno's continued
employment at his then current salary subject to review and adjustment from
time to time. Mr. Magurno resigned on January 28, 1998. Pursuant to a severance
agreement, he will receive his salary through April 12, 1999.
A letter agreement dated as of October 1, 1996 was executed by TWA and
Michael J. Palumbo. The agreement provides for Mr. Palumbo's continued
employment at his then current salary subject to review and adjustment from
time to time. In 1997 Mr. Palumbo received 160,000 options at an exercise price
of $6.65, 54,400 of which were immediately vested, 52,800 vesting in January,
1998 and 52,800 in January 1999. Mr. Palumbo serves as an officer of the
Company at the pleasure of the Board of Directors, subject to TWA's right of
termination without cause with one year's salary.
A letter agreement dated as of May 29, 1997 was executed by TWA and Donald
M. Casey. The agreement provides for Mr. Casey's employment at an annual salary
of $250,000, subject to review and adjustment from time to time. The agreement
also provides for the grant of 350,000 options (exercise price of $7.78), with
34% vesting on the first anniversary of the grant, 33% on the second
anniversary and 33% on the third anniversary. Mr. Casey serves as an officer of
the Company at the pleasure of the Board of Directors, subject to TWA's right
of termination without cause with payment of $250,000.
15
<PAGE> 19
Pursuant to a severance agreement dated as of February 12, 1998, Roden A.
Brandt will be paid his salary through December 31, 1998 and will be vested in
120,600 stock options with an exercise price of $12.31. The options expire on
May 30, 1998, but may be extended by the Company under certain circumstances.
Each executive officer has signed a Change in Control Agreement which
provides, inter alia, that if the named executive is terminated upon a change
in control, he or she will receive two years' salary.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth, as of March 26, 1998, certain information
concerning ownership of each class of voting securities of the Company by: (i)
each person who is known by the Company to own beneficially more than 5% of the
voting securities of the Company, (ii) each current director individually,
(iii) the chief executive officer and the five other senior executive officers
and (iv) all current directors and executive officers of the Company as a
group. The determinations of "beneficial ownership" of voting securities are
based upon Rule 13d-3 under the Exchange Act. Such rule provides that the
securities will be deemed "beneficially owned" where a person has, either
solely or in conjunction with others, the power to vote or to direct the voting
of securities and/or the power to dispose, or to direct the disposition of, the
securities or where a person has the right to acquire any such power within 60
days after the date such "beneficial ownership" is determined. Except as
described below, each of the persons and groups listed below has sole voting
and investment power with respect to the securities shown.
PRINCIPAL HOLDERS OF COMMON STOCK
(a) Security Ownership of Beneficial Owners holding more than 5% of the
Common Stock
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SHARES OF OUTSTANDING
COMMON STOCK VOTING
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED SECURITIES
------------------------------------ ------------ -----------
<S> <C> <C>
Nicholas-Appelgate Capital Management<F1>...................................... 4,067,900 7.0%
TCW Group, Inc. and Robert Day<F2>............................................. 2,780,400 5.0%
<FN>
- -------------
<F1> The address of Nicholas-Appelgate Management is 600 West Broadway, 29th
Floor, San Diego, CA 92101. Nicholas-Appelgate Capital Management has sole
voting power of 3,143,800 of such shares.
<F2> TCW Group, Inc.'s address is 865 South Figueroa Street, Los Angeles, CA
90017 and Robert Day's address is 200 Park Avenue, Suite 2200, New York,
NY 10166. Robert Day controls the TCW Group, Inc. TCW Group, Inc. has sole
voting control over 130,400 shares of Common Stock and Robert Day has sole
voting control over 2,780,400 shares of Common Stock.
</TABLE>
16
<PAGE> 20
(b) Security Ownership of Current Directors and Current Officers
<TABLE>
<CAPTION>
PERCENT OF
AMOUNT OF OUTSTANDING
BENEFICIAL VOTING
NAME OF BENEFICIAL OWNER OR IDENTITY OF GROUP OWNERSHIP<F2> SECURITIES<F1>
- --------------------------------------------- ------------- --------------
<S> <C> <C>
John W. Bachmann<F2><F3><F4>................................ 5,921 <F*>
William F. Compton<F5><F6><F19>............................. 68,932 <F*>
Eugene P. Conese<F2><F7><F8><F9><F10>....................... 12,185 <F*>
Gerald L. Gitner<F2><F7><F11><F19>.......................... 657,776 1.1%
William M. Hoffman<F12>..................................... 319 <F*>
Edgar M. House<F2>.......................................... 0 <F*>
Thomas H. Jacobsen<F2><F7><F8><F10>......................... 10,185 <F*>
Myron Kaplan<F2><F3><F7><F10><F13><F14>..................... 11,736 <F*>
David M. Kennedy<F2><F4>.................................... 3,012 <F*>
Merrill A. McPeak<F2>....................................... 1,514 <F*>
Thomas F. Meagher<F2><F10><F15><F16><F17>................... 13,673 <F*>
William O'Driscoll<F18>..................................... 162,717 <F*>
G. Joseph Reddington<F2><F3><F7><F10><F13><F15>............. 12,236 <F*>
Blanche M. Touhill<F2><F4>.................................. 3,012 <F*>
Stephen M. Tumblin<F2>...................................... 1,000 <F*>
Donald M. Casey<F19>........................................ 2,500 <F*>
Michael J. Palumbo<F19><F20><F21>........................... 853,814 1.5%
James F. Martin<F19>........................................ 0 <F*>
Kathleen A. Soled<F19><F20><F22>............................ 19,628 <F*>
Total Shares owned by Current Directors and
Current Executive Officers, as a
group (19 individuals)<F23> 1,840,160 3.1%
<FN>
- -------------
<F*>Less than 1%
<F1> Includes securities issuable pursuant to options exercisable within 60
days.
<F2> Pursuant to the Company's 1995 Outside Directors' Stock Ownership and
Stock Option Plan (the "Outside Directors Plan"), each outside director
may elect to defer some or all of his or her annual retainer by
participating in a Deferred Retainer Program (as defined in the Outside
Directors Plan). Participating directors are entitled to receive annual
credits to their deferred retainer accounts equaling the percentage of
his or her retainer to be received in shares of Common Stock times the
annual retainer amount payable to such outside director divided by (i)
with respect to 1996, $4.1875, the subscription price of the Company's
September 1995 equity rights offering (the "Subscription Price"), (ii)
with respect to 1997, $6.875, the fair market value of the Common Stock
on January 2, 1997 and (iii) with respect to 1998, $9.94, the fair market
value of the Common Stock on January 2, 1998. Upon the earlier to occur
of December 31, 2000 and the last date of a participating director's
service on the Board, such director is entitled to a payment equal to (i)
the total number of shares of Common Stock in the director's deferred
retainer account, (ii) cash equaling the number of shares of Common Stock
contained in the deferred retainer account times the Fair Market Value
(as defined in the Outside Directors Plan) of the Common Stock on the
date the retainer becomes payable or (iii) a combination of (i) and (ii).
17
<PAGE> 21
<F3> Messrs. Bachmann, Kaplan and Reddington each elected to defer 50% of 1997
retainer amounts payable to them in a deferred retainer account.
Constitutes or includes 1,455 shares of Common Stock issuable to such
outside director pursuant to the Outside Directors Plan in the event of
his termination from service on the Board within 60 days assuming such
director elects to receive the entire balance of his deferred retainer
account in shares of Common Stock.
<F4> Messrs. Bachmann and Kennedy and Ms. Touhill each elected to defer all
1998 retainer amounts payable to them in a deferred retainer account.
Constitutes or includes 2,012 shares of Common Stock issuable to such
outside director pursuant to the Outside Directors Plan in the event of
his or her termination from service on the Board within 60 days assuming
such director elects to receive the entire balance of his deferred
retainer account in shares of Common Stock.
<F5> Excludes approximately 931 shares of Employee Preferred Stock
attributable to Mr. Compton's beneficial interest in the TWA Air Line
Pilots Supplemental Stock Plan. Excludes shares owned by his wife
pursuant to her beneficial interest in the IAM Trans World Airlines
Employees' Stock Ownership Plan for Flight Attendants (the "Flight
Attendant Trust") and other shares as to which she is the record holder.
Mr. Compton disclaims beneficial ownership of all shares held by his
wife. Mr. Compton is the record holder of 932 shares of Common Stock.
<F6> Includes 68,000 shares of Common Stock issuable upon the exercise of
options granted to Mr. Compton pursuant to the KESIP and which will vest
within 60 days.
<F7> Messrs. Conese, Gitner, Jacobsen, Kaplan, and Reddington each elected to
defer all 1996 retainer amounts payable to them in a deferred retainer
account. Constitutes or includes 4,776 shares of Common Stock issuable to
such outside director pursuant to the Outside Directors Plan in the event
of his termination from service on the Board within 60 days, assuming
such director elects to receive the entire balance of his deferred
retainer account in shares of Common Stock.
<F8> Messrs. Conese and Jacobsen each elected to defer all 1997 retainer
amounts payable to them in a deferred retainer account. Constitutes or
includes 2,909 shares of Common Stock issuable to such outside director
pursuant to the Outside Directors Plan in the event of his termination
from service on the Board within 60 days, assuming such director elects
to receive the entire balance of his deferred retainer account in shares
of Common Stock.
<F9> Includes warrants to purchase 49 shares of Common Stock at a price of
$14.40 per share.
<F10> Includes 1,500 options granted pursuant to the Outside Directors Plan for
Messrs. Conese, Jacobsen, Kaplan, Meagher and Reddington.
<F11> Includes 650,000 shares of Common Stock issuable upon the exercise of
vested options granted to Mr. Gitner pursuant to the KESIP.
<F12> Includes approximately 16 shares of Common Stock held for Mr. Hoffman's
benefit as a TWA employee in the Flight Attendant Trust and warrants to
purchase 8 shares of Common Stock at a price of $14.40 per share. Mr.
Hoffman is also the beneficial owner of an undetermined amount of Common
Stock which has not yet been issued or allocated, which is to be
distributed to Mr. Hoffman as a TWA employee as a result of IFFA
litigation against TWA settled in the course of the '93 Reorganization.
Mr. Hoffman is the record holder of 295 shares of Common Stock.
<F13> Messrs. Kaplan and Reddington each elected to defer 50% of their 1998
retainer amounts payable to them in a deferred retainer account.
Constitutes or includes 1,006 shares of Common Stock issuable to such
outside director pursuant to the Outside Directors Plan in the event of
his termination from service on the Board within 60 days assuming such
director elects to receive the entire balance of his deferred retainer
account in shares of Common Stock.
18
<PAGE> 22
<F14> These shares are held by Mr. Kaplan for the benefit of the firm of
Kleinberg, Kaplan, Wolff & Cohen, P.C., of which Mr. Kaplan is a member.
<F15> Pursuant to the Outside Directors Plan, such outside director was granted
the right to purchase up to 3,000 shares of Common Stock at the
Subscription Price. Includes 3,000 shares of Common Stock issuable upon
exercise of this right.
<F16> Mr. Meagher elected to defer all 1996 retainer amounts payable to him in
a deferred retainer account. Constitutes 7,164 shares of Common Stock
issuable to Mr. Meagher pursuant to the Outside Directors Plan in the
event of his termination from service on the Board within 60 days,
assuming Mr. Meagher elects to receive the entire balance of his deferred
retainer account in shares of Common Stock.
<F17> Mr. Meagher elected to defer all 1998 retainer amounts payable to him in
a deferred retainer account. Constitutes 1,509 shares of Common Stock
issuable to Mr. Meagher pursuant to the Outside Directors Plan in the
event of his termination from service on the Board within 60 days,
assuming Mr. Meagher elects to receive the entire balance of his deferred
retainer account in shares of Common Stock.
<F18> 125,402 shares of Common Stock are held by Mr. O'Driscoll as a member of
the IAM Plan Trust Committee of the IAM Trans World Airlines Employees'
Stock Ownership Plan (the "IAM Trust"), along with Mr. Gary Poos.
37,315 shares of Common Stock are held by Mr. O'Driscoll as a member of
the Trustee Committee of the Flight Attendant Trust, along with Sherry
Cooper and Rocky Miller. Mr. O'Driscoll disclaims beneficial ownership of
the shares held by the IAM Trust and the Flight Attendant Trust.
<F19> Does not include unvested options to purchase shares of Common Stock
pursuant to the KESIP.
<F20> Approximately 1,298 and 1,128 shares attributable to the respective
beneficial interests of Mr. Palumbo and Ms. Soled are held by the
employee stock ownership trust established for the benefit of TWA's non-
contract employees (the "Non-Contract Employees Trust"). Except for
such shares, Mr. Palumbo, Ms. Soled and Mr. Martin disclaim beneficial
ownership of the shares held by the Non-Contract Employees Trust. Mr.
Palumbo, Ms. Soled and Mr. Martin serve as members of the committee
having the power to direct the vote of the shares of Common Stock held in
the Non-Contract Employees Trust, Ms. Soled and Mr. Martin having been
appointed trustees on March 31, 1998. Such trust holds 731,916 shares.
<F21> Includes 120,600 shares of Common Stock issuable upon the exercise of
vested options granted to Mr. Palumbo pursuant to the KESIP.
<F22> Includes 18,500 shares of Common Stock issuable upon the exercise of
vested options granted to Ms. Soled pursuant to the KESIP.
<F23> When combined with shares of Employee Preferred Stock beneficially held
by current directors and current executive officers, as a group,
represents a total of 5,994,811 shares of the Company's Voting Stock.
</TABLE>
19
<PAGE> 23
<TABLE>
PRINCIPAL HOLDERS OF EMPLOYEE PREFERRED STOCK
<CAPTION>
SERIES OF AMOUNT OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER EMPLOYEE BENEFICIAL OUTSTANDING
OR IDENTITY OF GROUP PREFERRED STOCK OWNERSHIP SHARES OF SERIES
- ------------------------------------ --------------- ---------- ----------------
<S> <C> <C> <C>
TWA Air Line Pilots Supplemental
Stock Plan, Joseph A. Chronic,
Howard L. Coldwell, Jr. and Scott
Schwartz as trustees<F1> ALPA Preferred Stock 986,064 52.9%<F2>
TWA Air Line Pilots 1995 Employee
Stock Ownership Plan, American
Stock Transfer & Trust Company,
Trustee<F3> ALPA Preferred Stock 879,428 47.1%<F4>
IAM Trust<F5> IAM Preferred Stock 3,191,759 100%<F6>
Flight Attendant Trust<F7> Flight Attendant Preferred Stock 962,892 100%<F8>
William O'Driscoll<F9> IAM and Flight Attendant Preferred Stock 4,154,651 100%<F10>
<FN>
- -------------
<F1> The address of the ALPA Trust is c/o Joseph A. Chronic, as co-trustee,
TWA Air Line Pilots Supplemental Stock Plan, 3221 McKelvey Road, Suite
200, Bridgeton, Missouri 63044.
<F2> Constitutes 1.7% of the securities entitled to vote on all agenda matters
at meetings of stockholders other than the election of directors.
<F3> The address of the TWA Air Line Pilots 1995 Employee Stock Ownership Plan
is c/o American Stock Transfer & Trust Company, as trustee ("AST"), 40
Wall Street, 46th Floor, New York, New York 10005.
<F4> Constitutes 1.5% of the securities entitled to vote on all agenda items
at meetings of stockholders other than the election of directors.
<F5> The address of the IAM Trust is c/o Fleet National Bank, N.A., as
trustee, One Federal Street, 31st Floor, Boston, Massachusetts 02211.
<F6> When combined with the 125,402 shares of Common Stock held by the IAM
Trust, constitutes 5.7% of the securities entitled to vote on all agenda
matters at meetings of stockholders other than the election of directors.
<F7> The address of the Flight Attendant Trust is c/o AST, at the address set
forth in footnote 3.
<F8> When combined with the 37,315 shares of Common Stock held by the Flight
Attendant Trust, constitutes 1.7% of the securities entitled to vote on
all agenda matters at meetings of stockholders other than the election of
directors.
<F9> The address of Mr. O'Driscoll is c/o Fleet National Bank, N.A., as
trustee, One Federal Street, 31st Floor, Boston, Massachusetts 02211.
<F10> Includes all shares of IAM Preferred Stock held by the IAM Trust and all
shares of the Flight Attendant Preferred Stock held by the Flight
Attendant Trust. Mr. O'Driscoll disclaims beneficial ownership of the
shares of IAM Preferred Stock held by the IAM Trust and all shares of the
Flight Attendant Preferred Stock held by the Flight Attendant Trust.
</TABLE>
20
<PAGE> 24
COMPENSATION PURSUANT TO PENSION PLANS
Retirement Plans. The TWA Retirement Pension Plan ("TWA Retirement Plan")
applicable to United States salaried employees was non-contributory. The TWA
Retirement Plan was assumed by Pichin Corp. and "frozen" effective January 1,
1993 and, accordingly, participants thereunder will not accrue additional
retirement benefits after such date. Participation in such plan is closed to
new employees. The following tables show the estimated annual retirement
benefits payable at the normal retirement age of 65 to TWA Retirement Plan
participants with the years of service and earnings classifications indicated,
assuming payment in the form of a single life annuity. The first table covers
participants who were hired by TWA prior to January 1, 1985. The payments shown
in such tables are subject to reduction by a percentage of the estimated social
security benefit and by the effect of excluding compensation over $228,860.
<TABLE>
ESTIMATED ANNUAL RETIREMENT BENEFITS PAYABLE TO PLAN PARTICIPANTS HIRED BEFORE
JANUARY 1, 1985
<CAPTION>
YEARS OF SERVICE
----------------------------------------------------------------------------
REMUNERATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000 $ 30,938 $ 41,250 $ 51,563 $ 61,875 $ 72,188
150,000 37,125 49,500 61,875 74,250 86,625
175,000 43,313 57,750 72,188 86,625 101,063
200,000 49,500 66,000 82,500 99,000 115,500
225,000 55,688 74,250 92,813 111,375 129,438
250,000 61,875 82,500 103,125 123,750 114,375
275,000 68,063 90,750 113,438 136,125 158,813
300,000 74,250 99,000 123,750 148,500 173,250
325,000 80,438 107,250 134,063 160,875 187,688
350,000 86,625 115,500 144,375 173,250 202,125
375,000 92,813 123,750 154,688 185,625 216,563
400,000 99,000 132,000 165,000 198,000 231,000
425,000 105,188 140,250 175,313 210,375 245,438
450,000 111,375 148,500 185,625 222,750 259,875
475,000 117,563 156,750 195,938 235,125 274,313
500,000 123,750 165,000 206,250 247,500 288,750
</TABLE>
21
<PAGE> 25
<TABLE>
ESTIMATED ANNUAL RETIREMENT BENEFITS PAYABLE TO PLAN PARTICIPANTS HIRED ON OR
AFTER JANUARY 1, 1985
<CAPTION>
YEARS OF SERVICE
----------------------------------------------------------------------------
REMUNERATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000 $ 28,125 $ 37,500 $ 46,875 $ 56,250 $ 65,625
150,000 33,750 45,000 56,250 67,500 78,750
175,000 39,375 52,500 65,625 78,750 91,875
200,000 45,000 60,000 75,000 90,000 105,000
225,000 50,625 67,500 84,375 101,250 118,125
250,000 56,250 75,000 93,750 112,500 131,250
275,000 61,875 82,500 103,125 123,750 144,375
300,000 67,500 90,000 112,500 135,000 157,500
325,000 73,125 97,500 121,875 146,250 170,625
350,000 78,750 105,000 131,250 157,500 183,750
375,000 84,375 112,500 140,625 168,750 196,875
400,000 90,000 120,000 150,000 180,000 210,000
425,000 95,625 127,500 159,375 191,250 223,125
450,000 101,250 135,000 168,750 202,500 236,250
475,000 106,875 142,500 178,125 213,750 249,375
500,000 112,500 150,000 187,500 225,000 262,500
</TABLE>
Earnings covered by this plan consist of total compensation before
withholding deductions, excluding overtime, premium pay, special allowances and
contributions to this or any other qualified benefit plan. Effective January 1,
1992, any compensation in excess of $228,860 per year will not be used in
computing a member's retirement benefit under the plan. A member's retirement
income at the normal retirement age, which is 65, is calculated as the greater
of (i) a percentage of final average monthly earnings (not taking into account
earnings after December 31, 1988), less a percentage of estimated social
security benefits, times year of plan service (as defined) or (ii) the accrued
benefit under the plan formula in effect immediately prior to March 1, 1986.
The retirement benefits will be reduced by the amounts of any retirement
benefits received by participants under provisions of TWA's retirement plans
applicable to the various union groups with respect to the same periods of
service.
As permitted by the Employee Retirement Income Security Act of 1974, as
amended, the TWA Retirement Plan applicable to salaried employees provides for
the payment out of general funds of TWA of any benefit calculated under
provisions of the applicable retirement plan that may be above the annual
maximum benefit limit under the U.S. Internal Revenue Code of 1986, as amended
(the "Code"). The annual limit as of December 31, 1992 was $112,221 at age
65, except that for those plan members whose accrued benefits exceeded $90,000
prior to December 31, 1983 the annual limit will be equal to the 1982 accrued
benefit.
The TWA Retirement Plan provides that members vest fully in their benefits
upon the completion of five years of service. The TWA Retirement Plan was
frozen effective January 1, 1993, and as such there have been no additional
accruals after such date. No current executive officer of the Company was
vested in the TWA Retirement Plan on that date.
22
<PAGE> 26
COMPENSATION COMMITTEE REPORT
Historically, the Company's policy regarding compensation for its executive
officers has been based on consideration of a variety of factors and the
exercise of the collective judgment of the Board of Directors. The Chief
Executive Officer has typically proposed to the Board of Directors the amount
and type of compensation for such officers. Factors considered by the CEO and
the Board of Directors in making recommendations and decisions with regard to
compensation included their subjective perception of an individual officer's
performance, significant milestones achieved by the officer and the Company,
gross margins, the nature of an officer's duties and responsibilities, the
compensation paid to officers of companies competing with the Company (to the
extent known) and a subjective assessment of the compensation the Company's
officers could obtain in the market. Prior to 1997 compensation had not been
formally tied to pre-established, fixed objective measures of Company
performance, nor was any objective rank or weight attributed to specific
measures of performance in setting compensation. However, the Compensation
Committee, beginning in January of 1997, has reviewed management objectives and
has, from time to time, retained the services of executive compensation experts
such as Towers Perrin to benchmark management compensation versus the airline
industry and other companies similarly situated. The Compensation Committee
has, and is continuing, to work with Towers Perrin and management to develop a
comprehensive management compensation and incentive plan that will tie
executive compensation to established goals of the Company to more closely
align the interests of executive officers to those of employees and
shareholders and to assist the Company in attracting and maintaining talented
management personnel.
As previously discussed herein, Mr. Gitner's employment agreement provides
for the potential for an annual incentive cash bonus of up to $250,000 based
upon the attainment by the Company during the calendar year of five objective
measures of performance improvement, for example, meeting business plan, cost
per available seat mile, revenue per available seat mile, operating performance
and cash flow. If the objectives are not achieved in any calendar year, no
bonus will be paid. Bonus payments are made on a pro rata basis, i.e. 20% for
each objective reached. At its meeting in January 1998, the Compensation
Committee agreed that three of the objectives had been met for 1997 and
authorized payment of a pro rata portion of the bonus.
The KESIP was approved by the requisite vote of the Company's stockholders
in November, 1995 and provided for the award of incentive and nonqualified
stock options for up to 7% of the Company's Common Stock and Employee Preferred
Stock as of December, 1995. In December, 1996, the Compensation Committee
recommend amending the KESIP (which amendment was adopted by the Board of
Directors) to provide the amount of options available under the KESIP to be
adjusted to 7% of the Company's Common Stock and Employee Preferred Stock
outstanding at the start of each fiscal year. Based on a report of Towers,
Perrin and input from others including executive search firms, comparing
industry-wide stock option plans and the need to have options available to
attract qualified senior management candidates, the KESIP was further amended
on March 27, 1997, to provide the amount of options available to be adjusted to
14% of the Company's Common Stock and Employee Preferred Stock outstanding at
the start of each fiscal year. The purpose of the KESIP is to promote the
success and enhance the value of the Company by linking the personal interests
of participants to those of the Company's stockholders and by providing the
participants with an incentive for outstanding performance.
Section 162(m) of the Code ("Section 162(m)"), generally limits the
Company's deduction to $1 million per year per executive for certain
compensation paid to each of its CEO and the four highest compensated
executives other than the CEO named in the applicable proxy statement (the
"covered executives"). The Code and current regulations issued under the Code
contain exclusions from this limitation. In general, the regulations exclude
from this limitation compensation that is calculated based on "objective"
performance criteria (as defined). The regulations do not exclude from this
limitation compensation that is calculated based on achievement of range of
quantitative and qualitative criteria with full discretion by the Committee to
evaluate
23
<PAGE> 27
performance. The limitations of Section 162(m) were not applicable to
compensation paid by the Company to covered executives during 1997.
The members of the Compensation Committee in January, 1997 were: Myron
Kaplan, Chairman, John W. Bachmann, Eugene P. Conese, Jewel
Lafontant-Mankarious, William Hoffman and G. Joseph Reddington. Subsequent to
the May 28, 1997 meeting, the Committee was reorganized to consist of: Myron
Kaplan, Chairman, John W. Bachmann, Eugene P. Conese, G. Joseph Reddington,
Blanche M. Touhill and William W. Winpisinger.
The following individuals were members of the Compensation Committee during
some part of 1997 or are currently on the Compensation Committee:
John W. Bachmann
Eugene P. Conese
William M. Hoffman
Thomas H. Jacobsen
Myron Kaplan
Jewel Lafontant-Mankarious
G. Joseph Reddington
Blanche M. Touhill
William W. Winpisinger
24
<PAGE> 28
PERFORMANCE GRAPH
The following graph compares the percentage change in the Company's
cumulative total security holder return on its Common Stock with the cumulative
total return, assuming reinvestment of dividends, of (i) the Standard & Poor's
500 Stock Index and (ii) the Standard & Poor's Airlines Group Index. The
initial price point for the Common Stock was calculated using the opening price
of $5.00 per share of Common Stock, traded on an "as issued" basis, on the
American Stock Exchange as furnished to the Company by such exchange. The
Common Stock was first issued on August 23, 1995.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
8/23/95 12/31/95 12/31/96 12/31/97
<S> <C> <C> <C> <C>
TRANS WORLD AIRLINES 100 207.50 131.26 201.25
S&P 500 INDEX 100 110.08 132.39 173.44
AIRLINES 100 95.96 105.08 176.69
</TABLE>
25
<PAGE> 29
AGENDA ITEM TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick LLP, independent auditors, were the auditors of the
Company during the fiscal year ending December 31, 1997 and also have been
selected by the Board of Directors to serve as auditors for the fiscal year
ending December 31, 1998.
The Board of Directors recommends to the stockholders their ratification of
its selection of KPMG Peat Marwick LLP to audit the accounts of the Company and
its subsidiaries for 1998. Accordingly, the following resolution will be
offered at the Meeting:
RESOLVED, that the appointment by the Board of Directors of KPMG Peat
Marwick LLP, independent auditors, to audit the accounts of the Company and its
subsidiaries for 1998 be, and hereby is, ratified and approved.
In the event the holders of Voting Stock fail to ratify the appointment,
the Board of Directors will consider it a direction to select other auditors
for the subsequent year. Even if the selection is ratified, the Board of
Directors, in its discretion, may direct the appointment of a new independent
accounting firm at any time during the year if the Board feels that such change
would be in the best interests of the Company and its stockholders.
The firm (as principal accountant for the current year and also the most
recently completed fiscal year) will be represented at the Meeting and
representatives will have the opportunity to make a statement, if they so
desire, and also will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT ACCOUNTANTS FOR THE FISCAL
YEAR ENDING DECEMBER 31, 1998.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 and the rules
thereunder require the Company's officers and directors and persons who own
more than 10% of the Company's Common Stock to file reports of ownership and
changes in the ownership with the SEC and to furnish the Company with copies.
Based upon its review of the copies of such forms received by it or written
representation from certain reporting persons, the Company believes that during
the last fiscal year all filing requirements applicable to its officers,
directors, and greater than 10% beneficial owners were complied with.
AVAILABILITY OF ANNUAL REPORT TO STOCKHOLDERS AND REPORT ON FORM 10-K
Copies of the Company's Annual Report to Stockholders for the year ended
December 31, 1997, which includes certain financial information about the
Company, are currently being mailed, together with this Proxy Statement to the
Company's stockholders. ADDITIONAL COPIES OF SUCH ANNUAL REPORT ALONG WITH
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1997 AS FILED WITH THE SEC (EXCLUSIVE OF EXHIBITS AND DOCUMENTS
INCORPORATED BY REFERENCE), ARE AVAILABLE TO STOCKHOLDERS WHO MAKE WRITTEN
REQUEST THEREFOR ADDRESSED TO: CORPORATE SECRETARY, ONE CITY CENTRE, 18TH
FLOOR, 515 N. SIXTH STREET, ST. LOUIS, MISSOURI 63101. COPIES OF THE ANNUAL
REPORT ON FORM 10-K ARE AVAILABLE WITHOUT CHARGE. COPIES OF EXHIBITS AND BASIC
DOCUMENTS FILED WITH THE ANNUAL REPORT ON FORM 10-K OR REFERENCED THEREIN WILL
BE FURNISHED TO STOCKHOLDERS UPON WRITTEN REQUEST AND PAYMENT OF THE COMPANY'S
EXPENSES IN FURNISHING SUCH DOCUMENTS.
26
<PAGE> 30
OTHER MATTERS
Management does not intend to present to the Meeting any business other
than the items stated in the "Notice of Meeting of Stockholders" and does not
know of any matters to be brought before the Meeting other than those referred
to above. If, however, any other matters properly come before the Meeting, the
persons designated as proxies will vote on each such matter in accordance with
their best judgment.
Whether or not you expect to be at the Meeting in person, please sign, date
and return promptly the enclosed proxy. No postage is necessary if the proxy is
mailed in the United States.
STOCKHOLDER PROPOSALS
If the proxy statement relating to next year's annual meeting is released
to the Company's security holders on the anniversary of the date on which this
Proxy Statement and Form of Proxy are so released, any proposal to be presented
at next year's annual meeting must be received at the principal executive
offices of the Company not later than December 21, 1998. Any such proposals
should be directed to the attention of the Corporate Secretary for
consideration for inclusion in the Company's proxy statement and form of proxy
relating to the next annual meeting. Any such proposals must comply in all
respects with the rules and regulations of the SEC and it is suggested that
proponents of any proposals submit such proposals to the Company sufficiently
in advance of the deadline by Certified Mail-Return Receipt Requested.
27
<PAGE> 31
TRANS WORLD AIRLINES, INC.
THIS PROXY/INSTRUCTION CARD IS SOLICITED ON BEHALF OF THE THE BOARD OF DIRECTORS
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Stockholders and Proxy Statement, each dated April 15, 1998, and does
hereby appoint Thomas H. Jacobsen and Thomas F. Meagher, and each of them, with
full power of substitution as proxies and attorneys-in-fact on behalf and in
the name of the undersigned to represent the undersigned and to vote all
shares of Trans World Airlines, Inc. Common Stock which the undersigned would be
entitled to vote if personally present at the Annual Meeting of Stockholders of
Trans World Airlines, Inc. to be held at the Norfolk Airport Hilton, 1500 North
Military Highway at North Hampton Boulevard, Norfolk, Virginia 23502, at 10:00
a.m. local time, on May 19, 1998, and at any adjournment(s) thereof.
1. PROPOSAL 1: Election of Class I and II Directors
FOR all nominees listed below WITHHOLD AUTHORITY to vote
(except as marked to the contrary below) for all nominees listed below
/ / / /
NOMINEES: John W. Bachmann, William F. Compton, Eugene P. Conese,
Gerald L. Gitner, Myron Kaplan, Gen. Merrill A. McPeak and Blanche
M. Touhill.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
2. PROPOSAL 2: Ratification of KPMG Peat Marwick LLP as Independent Accountants
FOR AGAINST ABSTAIN
/ / / / / /
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY PROMPTLY
This proxy/instruction card, when properly executed, will be voted in
accordance with the directions given by the undersigned stockholder. If no
direction is made, it will be voted in favor of Proposals 1 and 2.
Shares Common Stock
----------
Date: , 1998
PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR HEREON, AND WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, GIVE YOUR FULL
TITLE AS SUCH. IF THE SIGNATORY IS A CORPORATION, SIGN THE FULL
CORPORATION NAME BY A DULY AUTHORIZED OFFICER.
<PAGE> 32
Appendix
Page 25 of the printed Proxy contains a Stock Performance Graph. The
information contained in the graph is depicted in the table that follows the
graph.
