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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 (as permitted
/ / Definitive Additional Materials by Rule 14a-6(e)(2))
/ / Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
TRANS WORLD AIRLINES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) TITLE OF EACH CLASS OF SECURITIES TO WHICH TRANSACTION APPLIES:
- --------------------------------------------------------------------------------
(2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTION APPLIES:
- --------------------------------------------------------------------------------
(3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION COMPUTED
PURSUANT TO EXCHANGE ACT RULE 0-11 (SET FORTH THE AMOUNT ON WHICH THE FILING
FEE IS CALCULATED AND STATE HOW IT WAS DETERMINED):
- --------------------------------------------------------------------------------
(4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:
- --------------------------------------------------------------------------------
(5) TOTAL FEE PAID:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
- --------------------------------------------------------------------------------
(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 Hotel Monaco, 1101 Fourth
Avenue, Seattle, Washington 98101, on Tuesday, May 25, 1999, at 9:00
a.m. local time.
The subjects proposed for action at the meeting are: (i) the
election of fifteen directors and, (ii) the ratification of the
appointment of KPMG LLP as independent accountants for the fiscal
year ending December 31, 1999, 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 25, 1999
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 25, 1999,
at 9:00 a.m., local time, at the Hotel Monaco, 1101 Fourth Avenue,
Seattle, Washington 98101, for the purposes of considering and
acting upon the following:
(1) the election of fifteen directors of the Company for
terms ending with the Annual Meeting of Stockholders in 2000 and
until their successors are elected and qualified;
(2) the ratification of the appointment of KPMG LLP as
independent accountants for the fiscal year ending December 31,
1999; 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 the 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
31, 1999, 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 21, 1999
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 21, 1999,
FOR MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 25, 1999
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 25, 1999, at 9:00 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 21, 1999.
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 fifteen nominees for
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, brokerage houses and other custodians,
nominees and fiduciaries will forward soliciting
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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.
The Annual Report of the Company for the year ended December 31,
1998, 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 31, 1999 (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 58,254,805 shares of Common Stock
issued and outstanding and 7,162,973 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 24,400 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"). 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 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 Meeting. The holders of
Common Stock will be entitled to elect the other eleven 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
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elect (the "Labor 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 eleven non-Labor 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 eleven non-Labor 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. Labor 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
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 L. Cooper and Rocky Miller.
The ALPA Trust. Under the ALPA Trust, Thomas L. Brown, Howard L.
Coldwell, Jr. and Robert C. Stow, Sr., 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
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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, Vincent J. Lombardi and Marty
L. Zygmund.
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, Executive Vice President and Chief
Financial Officer, Kathleen A. Soled, Senior Vice President and
General Counsel and James F. Martin, Senior Vice President, Human
Resources of the Company.
AGENDA ITEM ONE
ELECTION OF DIRECTORS
DIRECTORS AND EXECUTIVE OFFICERS:
INFORMATION REGARDING DIRECTORS
The number of directors on the Board of Directors currently has
been fixed at fifteen. Each director serves until the next annual
meeting of stockholders and until his or her successor is elected
and qualified. 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 directors for a term expiring at the Annual
Meeting of Stockholders in 2000, unless authority to do so is
withheld. In the event any nominee is unable or 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.
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Biographical information furnished to the Company by each
director is set forth below:
NOMINEES FOR ELECTION AS DIRECTORS
John W. Bachmann, age 60, has been a director of TWA since April
1, 1996. Mr. Bachmann has been Managing Partner of Edward Jones (a
financial services company and broker-dealer) 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 1999.
William F. Compton, age 51, was elected President and Chief
Operating Officer of the Company on December 3, 1997 and has been
elected President and Chief Executive Officer, effective May 25,
1999. Prior to that he had served as Executive Vice
President--Operations since March 13, 1997 and 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. He is a member of the Board
of Directors of the St. Louis Regional Commerce and Growth
Association. Mr. Compton's term of office as a director expires with
the Annual Meeting of Stockholders in 1999. Mr. Compton serves as an
officer of the Company at the pleasure of the Board of Directors.
Eugene P. Conese, age 69, 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, a Board member
of the Conese Foundation and Jackson Memorial Foundation. Mr. Conese
is Chairman of World Air Lease, Inc., an aircraft engine sales and
leasing company and a consultant to General Electric Company's
Engine Services. Until its sale in September 1997, 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 1999.
Sherry L. Cooper, age 47, has been a director of TWA since May
19, 1998 and is 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 General Chairperson for TWA
flight attendants, IAM District Lodge #142, since August 1997. She
was President of IFFA from October 1995 to February 1997. Ms.
Cooper's term of office as a director expires with the Annual
Meeting of Stockholders in 1999.
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Gerald L. Gitner, age 54, 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. Effective May 25, 1999 he
will become Chairman of the Board and Chairman of the Executive
Committee of the Board and will no longer be Chief Executive
Officer. He was Chairman of Avalon Group, Ltd. from April 1992 until
September 1998, and Co-Chairman of Global Aircraft Leasing Ltd. from
1990 to March, 1999. 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., trustee of
Rochester Institute of Technology 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 1999.
Edgar M. House, age 66, 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. He is an IAM-designated
director. Mr. House's term of office as director expires with the
Annual Meeting of Stockholders in 1999.
Thomas H. Jacobsen, age 59, 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. (a bank
holding company) since 1989. Mr. Jacobsen's term of office as a
director expires with the Annual Meeting of Stockholders in 1999.
Myron Kaplan, age 54, 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 1999.
David M. Kennedy, age 60, 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 and is currently a consultant to the Company. 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 serves as a director
of CRH Plc, Jurys Hotel Group Plc., Lifetime Assurance Company
Limited, Bon Secours Health System and as Chairman of Drury
Communications Limited. He is a director of Global Aircraft Leasing
Ltd. 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.
General Merrill A. McPeak (USAF, Ret.), age 63, has been a
director of TWA since May 29, 1997. He is President of McPeak and
Associates (which provides technical and marketing consulting
services to the aerospace industry), and Chairman of the Board of
ECC International Corp. He is a director of Praegitzer Industries,
Tektronix, Inc., Thrustmaster, Inc. and Western Power and Equipment.
General McPeak was Chief of Staff, United States Air Force,
1990-1994, Commander-in-Chief, Pacific Air Forces, 1988-1990
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and Commander, 12th Air Force, 1987-1988. General McPeak's term of
office as a director expires with the Annual Meeting of Stockholders
in 1999.
Thomas F. Meagher, age 68, 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.
(manufacturer representative of heavy construction equipment) since
1980. He serves as Chairman of Professional Golf Cars of Florida and
is a member of the Advisory Board of Everen Securities. He is a
director of Private Bank of Chicago and the Edward Lowe Foundation.
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 1995. He is a retired director of
Lakeside Bank of Chicago, was a director of UNR Industries from 1987
to 1997 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.
William O'Driscoll, age 70, 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 1999.
Robert A. Pastore, age 56, has been nominated to be the
ALPA-designated director of TWA. Mr. Pastore has been a pilot for
the Company since 1967. He is Chief Executive Officer of the Avia
Group and a director of the Universal Pilot Application Service.
G. Joseph Reddington, age 57, has been a director of TWA since
November 3, 1993. He has been Chairman and Chief Executive Officer
and director of Breuners Home Furnishings Corp. (a retail home
furnishings chain) since February 1997. Mr. Reddington has been a
director of Loblaw Companies Ltd. since August 1994 where he is
Chairman of the Compensation and Governance Committees. 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 1988 to December 1989. Mr. Reddington's term of office as a
director expires with the Annual Meeting of Stockholders in 1999.
Blanche M. Touhill, age 67, 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 1999.
THE BOARD OF DIRECTORS RECOMMENDS THAT HOLDERS OF COMMON STOCK
VOTE "FOR" THE RE-ELECTION OF MESSRS. BACHMANN, COMPTON, CONESE,
GITNER, JACOBSEN, KAPLAN, KENNEDY, GENERAL MCPEAK, MEAGHER,
REDDINGTON AND MS. TOUHILL AS DIRECTORS; HOLDERS OF IAM PREFERRED
STOCK VOTE "FOR" THE RE-ELECTION OF MESSRS. HOUSE AND O'DRISCOLL;
HOLDERS OF THE FLIGHT ATTENDANT PREFERRED STOCK VOTE "FOR" THE RE-
ELECTION OF MS. COOPER; AND HOLDERS OF THE ALPA PREFERRED STOCK VOTE
"FOR" THE ELECTION OF MR. PASTORE.
7
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<PAGE>
EXECUTIVE OFFICERS IN ADDITION TO GERALD L. GITNER AND WILLIAM F.
COMPTON
Donald M. Casey, age 63, 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 R. Jensen, age 58, was elected Senior Vice President,
Maintenance and Engineering on July 28, 1998. Mr. Jensen was Senior
Vice President--Maintenance and Engineering at Valujet Airlines from
July 1996 to January 1998, Vice President--General Manager at
Douglas Aircraft Company from July 1994 to July 1996 and Vice
President--Douglas Aircraft Company from October 1992 to July 1994.
He was previously employed by TWA from 1966 to 1992. Mr. Jensen
serves as an officer of the Company at the pleasure of the Board of
Directors.
James F. Martin, age 49, was elected Senior Vice President,
Human Resources on October 29, 1997. Mr. Martin was Vice President
Human Resources, 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 52, has been Executive Vice President
and Chief Financial Officer of TWA since March 23, 1999. Mr. Palumbo
was formerly the Company's Senior Vice President and Chief Financial
Officer and 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 41, 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.
John J. Stelzer, age 53, was appointed Senior Vice
President--Planning on December 22, 1998. Mr. Stelzer had previously
served as Vice President, Airline Planning since May 1997. From 1983
until 1997 he operated his own airline consulting firm. Mr. Stelzer
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 1998 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. Outside Directors who served
as committee chairpersons were
8
<PAGE>
<PAGE>
entitled to receive an annual retainer of $1,500, prorated from the
date of such committee chairperson's appointment and payable
quarterly in arrears. Outside Directors 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 employees 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 reimbursed for expenses incurred in
attending Board and committee meetings. The Lead Outside Director
was entitled, during 1998, to receive an annual retainer of $30,000
and meeting fees fifty percent in excess of those paid to Outside
Directors.
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
$42,381 for 1998.
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
9
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<PAGE>
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.
CERTAIN 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 1998, the Company paid ICTS the
equivalent of approximately $779,652.
Myron Kaplan is a partner in the law firm of Kleinberg, Kaplan,
Wolff and Cohen, P.C. ("Kleinberg"). Kleinberg represents an
aircraft owner which has in the past negotiated 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 1998, the Board of Directors held six regular 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 1998 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, Edgar
M. House, 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
10
<PAGE>
<PAGE>
otherwise provided by the Delaware General Corporation Law. During
1998, the Executive Committee met four times.
AUDIT COMMITTEE. The current members of the Audit Committee are
Thomas H. Jacobsen (chairman), Merrill A. McPeak, Thomas F. Meagher,
Brent S. Miller, G. Joseph Reddington and Blanche M. Touhill. The
Audit Committee is responsible for (i) the oversight of the
Company's internal control structure, (ii) review of the internal
audit department, (iii) recommendation 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 1998, the Audit Committee met four times.
COMPENSATION COMMITTEE. The current members of the Compensation
Committee are Myron Kaplan (chairman), John W. Bachmann, Edgar M.
House, Thomas H. Jacobsen, David M. Kennedy 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 1998, the Compensation Committee met five
times.
FINANCE COMMITTEE. The current members of the Finance Committee
are David M. Kennedy (chairman), John W. Bachmann, William F.
Compton, Eugene P. Conese, Sherry L. Cooper, Gerald L. Gitner and
Myron Kaplan. 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 1998, the Finance Committee met seven times.
GOVERNANCE AND NOMINATING COMMITTEE. The current members of the
Governance and Nominating Committee are G. Joseph Reddington
(chairman), William F. Compton, Eugene P. Conese, Gerald L. Gitner,
Merrill A. McPeak, Thomas F. Meagher and William O'Driscoll. 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 two times in 1998.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. To
the best of TWA's knowledge, there was no instance in 1998 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>
<PAGE>
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 1998, (b) the four most
highly compensated executive officers (other than the Chief
Executive Officer) who were serving as executive officers at the end
of 1998 who earned more than $100,000 during 1998 and (c) any such
other individual who served as an executive officer during 1998 and
would be included in the table except for the fact that he was not
an executive officer at the end of 1998.
<TABLE>
SUMMARY COMPENSATION TABLE<F1>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------------- ------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION<F2> OPTIONS/SARS COMPENSATION
- --------------------------- ---- ------ ----- ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Gerald L. Gitner<F3> 1998 $520,140 $100,000<F4> $ 4,802<F5> 200,000<F6> $278,276<F7>
(Chairman and Chief 1997 $449,977 $150,000<F4> $ 2,972<F5> 800,000<F6> $193,388<F7>
Executive Officer) 1996 -- -- $34,670<F3> 4,776<F3> --
William F. Compton 1998 $335,882 -- $ 5,041<F5> -- $ 30,965<F7>
(President and Chief 1997 $214,675 -- $ 1,733<F5> 350,000<F6> $ 23,085<F7>
Operating Officer) 1996 $ 93,878 -- $ 5,481<F5> -- $ 13,542<F7>
Donald M. Casey 1998 $257,496 -- $ 5,398<F5> -- $ 4,312<F7>
(Executive Vice President, 1997 $150,250 -- $ 4,793<F5> 350,000<F6> $ 5,108<F7>
Marketing) 1996 -- -- -- -- --
Michael J. Palumbo 1998 $253,182 -- $ 4,758<F5> -- $ 4,450<F7>
(Executive Vice President 1997 $204,386 -- $ 2,567<F5> 160,000<F6> $ 10,283<F7>
and
Chief Financial Officer) 1996 $138,664 -- $ 5,616<F5> -- $ 5,473<F7>
James F. Martin 1998 $200,000 -- $ 9,728<F5> -- $ 85,319<F7>
(Senior Vice President, 1997 $ 28,173 -- -- 175,000<F6> $ 754<F7>
Human Resources) 1996 -- -- -- -- --
<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.
<F3> Mr. Gitner was elected acting Chief Executive Officer on December 14, 1996
and Chairman and Chief Executive Officer on February 12, 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.
<F4> Represents incentive payments made pursuant to the terms of Mr. Gitner's
employment contract described herein. The amounts shown were earned in or
during the corresponding year as set forth, although not paid until the
following calendar year.
<F5> Represents imputed amounts and contributions for personal travel (a) for
Mr. Gitner of $4,802 in 1998 and $2,972 in 1997, (b) for Mr. Compton of
$5,041 in 1998, $1,733 in 1997, $5,481 in 1996, (c) for Mr. Casey of
$5,398 in 1998 and $4,793 in 1997, (d) for Mr. Palumbo of $4,758 in 1998,
$2,567 in 1997 and $5,616 in 1996 and (e) for Mr. Martin of $9,728 in
1998.
<F6> Represents the grant of options to purchase shares of Common Stock under
the Company's Key Employee Stock Incentive Plan ("KESIP").
12
<PAGE>
<PAGE>
<F7> Represents the Company's contributions to the deferred contribution plans
in which a named officer participates: (a) for Mr. Gitner of $7,422 in
1998 and $5,877 in 1997; (b) for Mr. Compton of $22,897 in 1998, $22,897
in 1997 and $13,542 in 1996; (c) for Mr. Casey of $4,277 in 1998 and
$5,090 in 1997; (d) for Mr. Palumbo of $4,277 in 1998, $5,877 in 1997 and
$5,300 in 1996; and (e) for Mr. Martin of $4,277 in 1998 and $753 in 1997.
Also includes premiums for group term life insurance: (a) for Mr. Gitner
of $14 in 1998 and $11 in 1997, (b) for Mr. Compton of $198 in 1998 and
$188 in 1997, (c) for Mr. Casey of $35 in 1998 and $18 in 1997, (d) for
Mr. Palumbo of $173 in 1998, $173 in 1997 and $173 in 1996 and (e) for Mr.
Martin of $1 in 1997. Also includes: (a) for Mr. Gitner make-whole
payments of $270,840 in 1998 and $187,500 in 1997; for Mr. Compton refund
in 1998 of 1997 direct account plan excess payment of $7,870; for Mr.
Palumbo relocation expenses reimbursed of $4,233 in 1997; and for Mr.
Martin make-whole payments of $60,000 in 1998 and relocation expenses
reimbursed in 1998 of $21,042.
</TABLE>
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED ANNUAL RATES
SECURITIES PERCENT OF TOTAL OF STOCK PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED FOR OPTION TERM
OPTIONS GRANTED TO EMPLOYEES IN EXERCISE EXPIRATION -------------------------------
NAME <F1> FISCAL YEAR PRICE DATE<F3> 5% 10%
- ---- --------------- ---------------- -------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Gerald L. Gitner<F2> 200,000 36.7% $11.16 02/12/05 $725,400 $1,450,800
William F. Compton -- -- -- -- -- --
Donald M. Casey -- -- -- -- -- --
Michael J. Palumbo -- -- -- -- -- --
James F. Martin -- -- -- -- -- --
<FN>
- --------
<F1> Options granted under the KESIP.
<F2> Mr. Gitner's options vest 50% on the first anniversary of the award date
and 50% on the second anniversary.
<F3> Options generally expire 5 years from vesting. The date shown is the
expiration date for the last of these options.
</TABLE>
<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 650,000/ $ 0
(Chairman and -- -- 350,000 $ 0
Chief Executive Officer)
William F. Compton 119,000/ $ 0
(President and Chief -- -- 231,000 $ 0
Operating Officer)
Donald M. Casey 175,000/ $ 0
(Executive Vice -- -- 175,000 $ 0
President, Marketing)
Michael J. Palumbo 127,200/ $1,600
(Executive Vice President -- -- 52,800 $ 0
and Chief Financial
Officer)
James F. Martin 59,500/ $ 0
(Senior Vice President, -- -- 115,500 $ 0
Human Resources)
<FN>
- -------
<F1> Based on the average of the high and low price on the American Stock
Exchange on December 31, 1998 of $4.72.
</TABLE>
13
<PAGE>
<PAGE>
CERTAIN EMPLOYMENT AGREEMENTS AND OTHER ARRANGEMENTS
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 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 has 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 entered into an
agreement with the Company whereby he received an annual salary of
$225,000 and 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
14
<PAGE>
<PAGE>
price of $8.50, with the same vesting schedule and an increase in
annual salary to $350,000. 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 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 at an exercise price of $7.78, with 50%
vesting on the first anniversary of the grant, 25% on the second
anniversary and 25% 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.
A letter agreement dated as of November 11, 1997, was executed
by TWA and James F. Martin. The agreement provides for Mr. Martin's
employment at an annual salary of $200,000, subject to review and
adjustment from time to time. The agreement provided for the grant
of the 175,000 options at an exercise price of $7.34, with 34%
vesting on the first anniversary of the grant and 33% on the second
anniversary and 33% on the third anniversary. Mr. Martin 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.
Each named 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 31, 1999, 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>
Ryback Management Corp. and Lindner Investment Series
Trust<F1>................................................. 4,874,220 7.5%
<FN>
- -------
<F1> The address of Ryback Management Corp. and Lindner Investment Series Trust
is 7711 Carondelet Avenue, Box 16900, St. Louis, MO 63105.
</TABLE>
15
<PAGE>
<PAGE>
(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<F1> SECURITIES
- --------------------------------------------- ------------- -----------
<S> <C> <C>
John W. Bachmann<F2><F3><F4><F5>............................ 11,471 <F*>
William F. Compton<F6><F7><F23>............................. 211,686 <F*>
Eugene P. Conese<F2><F8><F9><F10><F11>...................... 18,734 <F*>
Sherry L. Cooper<F12>....................................... 36,387 <F*>
Gerald L. Gitner<F2><F5><F8><F13><F23>...................... 909,739 1.4%
Edgar M. House<F2>.......................................... 1,000 <F*>
Thomas H. Jacobsen<F2><F8><F9><F11>......................... 11,685 <F*>
Myron Kaplan<F2><F3><F8><F11><F14><F15><F16>................ 20,262 <F*>
David M. Kennedy<F2><F4><F5>................................ 4,512 <F*>
Merrill A. McPeak<F2>....................................... 1,514 <F*>
Thomas F. Meagher<F2><F11><F17><F18><F19>................... 15,173 <F*>
Brent S. Miller<F20>........................................ 725 <F*>
William O'Driscoll<F21>..................................... 129,766 <F*>
G. Joseph Reddington<F2><F3><F8><F11><F14><F17>............. 15,762 <F*>
Blanche M. Touhill<F2><F4><F22>............................. 7,062 <F*>
Donald M. Casey<F23><F24>................................... 267,434 <F*>
James R. Jensen<F23>........................................ 1,000 <F*>
Michael J. Palumbo<F23><F25><F26>........................... 944,425 1.4%
James F. Martin<F23><F25><F27>.............................. 819,465 1.3%
Kathleen A. Soled<F23><F25><F28>............................ 832,289 1.3%
John J. Stelzer<F23><F29>................................... 10,303 <F*>
Total Shares owned by Current Directors and Current
Executive Officers,
as a group (21 individuals)<F30>........................ 4,270,394 6.5%
<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, (iii) with respect to 1998, $9.94, the fair market
value of the Common Stock on January 2, 1998 and with respect to 1999,
$4.9375, the fair market value of Common Stock on January 4, 1999. 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
16
<PAGE>
<PAGE>
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).
<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> Includes 1,500 options granted pursuant to the Outside Directors Plan for
Messrs. Bachmann, Gitner and Kennedy.
<F6> Excludes approximately 780 shares of Employee Preferred Stock
attributable to Mr. Compton's beneficial interest in the TWA Air Line
Pilots Supplemental Stock Plan and approximately 172 in the ALPA ESOP
Trust. 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 1,186 shares of Common Stock.
<F7> Includes 210,500 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.
<F8> 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.
<F9> 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.
<F10> Includes warrants to purchase 49 shares of Common Stock at a price of
$14.40 per share.
<F11> Includes 3,000 options granted pursuant to the Outside Directors Plan for
Messrs. Conese, Jacobsen, Kaplan, Meagher and Reddington.
<F12> 36,379 shares of Common Stock are held by Ms. Cooper as a member of the
Trust Committee of the Flight Attendant Trust, along with Mr. O'Driscoll
and Rocky Miller. Ms. Cooper disclaims beneficial ownership of shares
held by the Flight Attendant Trust in all but 8 shares of Common Stock
held by the trust. Excludes 207 shares of Employee Preferred Stock
attributable to Ms. Cooper's beneficial interest in the Flight Attendant
Trust.
17
<PAGE>
<PAGE>
<F13> Includes 900,000 shares of Common Stock issuable upon the exercise of
vested options granted to Mr. Gitner pursuant to the KESIP.
<F14> 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.
<F15> Mr. Kaplan elected to defer 50% of his 1999 retainer amounts payable to
him in a deferred retainer account. Constitutes or includes 2,025 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.
<F16> 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.
<F17> 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.
<F18> 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.
<F19> Mr. Meagher elected to defer 50% of his 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.
<F20> Excludes approximately 1,092 shares of Employee Preferred Stock
attributable to Mr. Miller's beneficial interest in the TWA Airline
Pilots Supplemental Stock Plan and approximately 112 shares in the ALPA
ESOP Trust.
<F21> 93,387 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. 36,379
shares of Common Stock are held by Mr. O'Driscoll as a member of the
Trustee Committee of the Flight Attendant Trust, along with Ms. Cooper
and Rocky Miller. Mr. O'Driscoll disclaims beneficial ownership of the
shares held by the IAM Trust and the Flight Attendant Trust.
<F22> Ms. Touhill elected to defer all 1999 retainer amounts payable to her in
a deferred retainer account. Constitutes or includes 4,050 shares of
Common Stock issuable to such outside director pursuant to the Outside
Directors Plan in the event of her termination from service on the Board
within 60 days assuming such director elects to receive the entire
balance of her deferred retainer account in shares of Common Stock.
<F23> Does not include unvested options to purchase shares of Common Stock
pursuant to the KESIP.
<F24> Includes 262,500 shares of Common Stock issuable upon the exercise of
vested options or options vesting within 60 days granted to Mr. Casey
pursuant to the KESIP.
18
<PAGE>
<PAGE>
<F25> Approximately 1,761, 1,495 and 81 shares attributable to the respective
beneficial interests of Mr. Palumbo, Ms. Soled and Mr. Martin 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. Such trust holds 749,404 shares.
<F26> Includes 193,260 shares of Common Stock issuable upon the exercise of
vested options granted to Mr. Palumbo pursuant to the KESIP.
<F27> Includes 68,680 shares of Common Stock issuable upon the exercise of
vested options granted to Mr. Martin pursuant to the KESIP.
<F28> Includes 81,390 shares of Common Stock issuable upon the exercise of
vested options granted to Ms. Soled pursuant to the KESIP.
<F29> Includes 10,050 shares of Common Stock issuable upon the exercise of
vested options or options vesting within 60 days granted to Mr. Stelzer
pursuant to the KESIP.
<F30> When combined with shares of Employee Preferred Stock beneficially held
by current directors and current executive officers, as a group,
represents a total of 9,429,253 shares of the Company's Voting Stock.
</TABLE>
<TABLE>
PRINCIPAL HOLDERS OF EMPLOYEE PREFERRED STOCK
<CAPTION>
PERCENT OF
SERIES OF AMOUNT OF OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER EMPLOYEE BENEFICIAL SHARES OF
OR IDENTITY OF GROUP PREFERRED STOCK OWNERSHIP SERIES
- ------------------------------------ --------------- ---------- -----------
<S> <C> <C> <C>
TWA Air Line Pilots Supplemental
Stock Plan, Thomas L. Brown, Howard
L. Coldwell, Jr. and Robert C. Stow,
Sr. as trustees<F1> ALPA Preferred Stock 716,822 36%<F2>
TWA Air Line Pilots 1995 Employee
Stock Ownership Plan, American Stock
Transfer & Trust Company,
Trustee<F3> ALPA Preferred Stock 1,289,451 64%<F4>
IAM Trust<F5> IAM Preferred Stock 3,946,081 100%<F6>
Flight Attendant Trust<F7> Flight Attendant Preferred Stock 1,210,615 100%<F8>
Sherry L. Cooper<F9> Flight Attendant Preferred Stock 1,210,615 100%<F10>
William O'Driscoll<F11> IAM and Flight Attendant 5,156,696 100%<F12>
Preferred Stock
<FN>
- -------
<F1> The address of the ALPA Trust is c/o Thomas L. Brown, as co-trustee, TWA
Air Line Pilots Supplemental Stock Plan, 500 Northwest Plaza, Suite 1200,
St. Ann, Missouri 63074.
<F2> Constitutes 1.1% of the securities entitled to vote on all agenda matters
at meetings of stockholders other than the election of directors.
19
<PAGE>
<PAGE>
<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 2.0% 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 93,387 shares of Common Stock held by the IAM
Trust, constitutes 6.2% 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 36,379 shares of Common Stock held by the Flight
Attendant Trust, constitutes 1.9% of the securities entitled to vote on
all agenda matters at meetings of stockholders other than the election of
directors.
<F9> The address of Ms. Cooper is c/o AST, at the address set forth in
footnote 3.
<F10> Includes all shares of Flight Attendant Preferred Stock held by the
Flight Attendant Trust, Ms. Cooper disclaims beneficial ownership of all
but 207 of the Flight Attendant Preferred Stock held by the Flight
Attendant Trust.
<F11> The address of Mr. O'Driscoll is c/o Fleet National Bank, N.A., as set
forth in footnote 5.
<F12> 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>
<PAGE>
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 and the second table covers
participants hired on or after that date. 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>
<PAGE>
<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
named executive officer of the Company was vested in the TWA
Retirement Plan on that date.
22
<PAGE>
<PAGE>
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 other than himself. 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. The Chief Executive Officer's
compensation has been based on similar factors. 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 1997, has reviewed management objectives and has, from
time to time, retained the services of executive compensation
experts such as Towers, Perrin and, more recently, Frederick Cook
and Co. to benchmark management compensation versus the airline
industry and other companies similarly situated. In December 1998,
the Board approved annual and long term incentive compensation for
executives of the Company and directed the Compensation Committee to
develop a comprehensive management incentive compensation plan that
will tie executive compensation to established goals of the Company
to more closely align the interests of executive officers including
the CEO to those of employees and shareholders and to assist the
Company in attracting and maintaining talented management personnel.
Annual incentive awards will be based on the Company's attaining
certain operating targets and on individual performance.
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 1999, the Compensation Committee determined that two of the
objectives had been met for 1998 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 a direct incentive for increasing the value of
the Company's stock. In December 1998, the Board authorized the
Compensation Committee to make
23
<PAGE>
<PAGE>
annual grants of incentive stock options to executives of the
Company. The Committee made the first such annual grants in January
1999.
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 performance. The limitations of Section
162(m) were not applicable to compensation paid by the Company to
covered executives during 1998.
The members of the Compensation Committee in January, 1998 were:
Myron Kaplan, Chairman, John W. Bachmann, Eugene P. Conese, G.
Joseph Reddington and Blanche M. Touhill. Subsequent to the May 19,
1998 meeting, the Committee was reorganized to consist of: Myron
Kaplan, Chairman, John W. Bachmann, Edgar M. House, Thomas H.
Jacobsen, David M. Kennedy and Blanche M. Touhill.
The following individuals were members of the Compensation
Committee during some part of 1998 or are currently on the
Compensation Committee:
John W. Bachmann Myron Kaplan
Eugene P. Conese David M. Kennedy
Edgar M. House G. Joseph Reddington
Thomas H. Jacobsen Blanche M. Touhill
24
<PAGE>
<PAGE>
PERFORMANCE GRAPH
The following graph compares the percentage change in the
Company's cumulative total securityholder 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.
TOTAL SHAREHOLDERS RETURN
[GRAPH]
<TABLE>
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<CAPTION>
8/23/95 12/31/95 12/31/96 12/31/97 12/31/98
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<S> <C> <C> <C> <C> <C>
TRANS WORLD AIRLINES 100 207.50 131.25 201.25 97.50
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S&P 500 INDEX 100 111.05 136.55 182.11 234.15
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AIRLINES 100 95.51 104.98 176.88 171.57
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</TABLE>
25
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AGENDA ITEM TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
KPMG LLP, independent auditors, were the auditors of the Company
during the fiscal year ending December 31, 1998 and also have been
selected by the Board of Directors to serve as auditors for the
fiscal year ending December 31, 1999.
The Board of Directors recommends to the stockholders their
ratification of its selection of KPMG 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
LLP, independent auditors, to audit the accounts of the Company and
its subsidiaries for 1999 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 LLP AS INDEPENDENT
ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1999.
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, 1998, 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,
1998 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
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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 has not received notice of 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 the 2000 annual meeting is
released to the Company's stockholders on the anniversary of the
date on which this Proxy Statement and Form of Proxy are so
released, any proposal to be presented at the 2000 annual meeting
must be received at the principal executive offices of the Company
not later than December 22, 1999. 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.
Stockholders of record who do not submit a proposal for
inclusion in the Proxy Statement but who intend to submit a proposal
at the 2000 annual meeting including nominating an individual for
election as a director, must provide written notice to the Corporate
Secretary which must be received at the Company's corporate offices
not later than March 8, 2000, and must comply with certain
provisions of the Company's By-Laws. A stockholder of record who
wishes to raise such matters may obtain a copy of the Company's
By-Laws upon written request sent to the Corporate Secretary.
27
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TRANS WORLD AIRLINES, INC.
THIS PROXY/INSTRUCTION CARD IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
The undersigned hereby acknowledges receipt of the Notice of
Annual Meeting of Stockholders and Proxy Statement, each dated April
21, 1999, and does hereby appoint Thomas F. Meagher and G. Joseph
Reddington, 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 upon all matters described in the Proxy
Statement for the Meeting and any other matters that may come before
the Meeting upon 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 Hotel Monaco, 1101 Fourth
Avenue, Seattle, Washington 98101, at 9:00 a.m. local time, on May 25,
1999, and at any adjournment(s) thereof.
1. PROPOSAL 1: Election of Directors
FOR all nominees listed below WITHHOLD AUTHORITY to vote
(except as marked to the for all nominees listed below
contrary below)
/ / / /
NOMINEES: John W. Bachmann, William F. Compton, Eugene P. Conese,
Gerald L. Gitner, Thomas H. Jacobsen, Myron Kaplan, David M.
Kennedy, Merrill A. McPeak, Thomas F. Meagher, G. Joseph
Reddington 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 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: , 1999
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.
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APPENDIX
Page 25 of the printed Proxy contains a Performance Graph. The information
contained in the graph appears in the table immediately following the graph.
