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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:
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(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:
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(4) Date Filed:
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TRANS WORLD AIRLINES, INC.
To our Stockholders:
On behalf of the Board of Directors, it is our pleasure to
invite you to attend the Annual Meeting of Stockholders of Trans
World Airlines, Inc. (the "Company").
The meeting will be held at the Wyndham El San Juan Hotel, 6063
Isla Verde Avenue, San Juan, Puerto Rico 00979, on Tuesday, May 23,
2000, 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, 2000, 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
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TRANS WORLD AIRLINES, INC.
NOTICE OF MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 23, 2000
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 23, 2000,
at 9:00 a.m., local time, at the Wyndham El San Juan Hotel, 6063
Isla Verde Avenue, San Juan, Puerto Rico 00979, 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 2001 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,
2000; 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, 2000, 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 19, 2000
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 19, 2000,
FOR MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 23, 2000
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 23, 2000, 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 19, 2000.
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 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.
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The Annual Report of the Company for the year ended December 31,
1999, 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, 2000 (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 63,042,994 shares of Common Stock
issued and outstanding and 6,338,684 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 34,126 holders of record
of Common Stock and seven 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 are 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 elect (the "Employee Elected
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-Employee Elected 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.
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The eleven non-Employee Elected Directors will be elected by a
plurality of the votes of the shares of Common Stock present in
person or represented by proxy and casting votes for the position on
the Board which that nominee represents. Employee Elected 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 eleven 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, Howard L. Coldwell, Jr.,
M. David Ratcliff 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 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
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J. Palumbo, Executive Vice President and Chief Financial Officer and
Kathleen A. Soled, Senior Vice President and General Counsel 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. Directors serve until the next annual meeting
of stockholders and until their, 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 2001, 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 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.
Biographical information furnished to the Company by each
director is set forth below:
NOMINEES FOR ELECTION AS DIRECTORS
John W. Bachmann, age 61, 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 2000.
William F. Compton, age 52, has been President and Chief
Executive Officer since May 25, 1999. Prior to that he had served as
President and Chief Operating Officer of the Company since December
3, 1997 and 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 1995. He was Chairman of the TWA MEC
Negotiating Committee from March 1988 to September 1991. He is a
member of the Board of Directors of the St. Louis Regional Commerce
and Growth Association and a trustee of Webster University.
Mr. Compton's term of office as a director expires with the Annual
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Meeting of Stockholders in 2000. Mr. Compton serves as an officer of
the Company at the pleasure of the Board of Directors.
Eugene P. Conese, age 70, has been a director of TWA since
November 3, 1993. Mr. Conese has been Chairman and Chief Executive
Officer of World Air Lease, Inc., since 1989, an aircraft engine
sales and leasing company. 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. He is 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 2000.
Sherry L. Cooper, age 48, 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 2000.
Gerald L. Gitner, age 55, has been Chairman of the Board and
Chairman of the Executive Committee of the Board since May 25, 1999.
Prior to that he had served as Chairman and Chief Executive Officer
of TWA since February 12, 1997 (having been Vice Chairman and Acting
Chief Executive Officer since December 14, 1996) and a director of
TWA since November 3, 1993. He 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
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 2000.
Edgar M. House, age 67, 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 2000.
Thomas H. Jacobsen, age 60, has been a director of TWA since
March 21, 1995. He has been Chairman of the Board of Firstar
Corporation since September 1999. Prior to that he served as
President, Chief Executive Officer and Chairman of the Board of
Mercantile Bancorporation, Inc. Mr. Jacobsen was Vice Chairman and
director of Barnett Banks, Inc. from 1984 to 1989. Mr. Jacobsen's
term of office as a director expires with the Annual Meeting of
Stockholders in 2000.
Myron Kaplan, age 55, 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 2000.
David M. Kennedy, age 61, has been a director of TWA since
October 23, 1996. He was Acting Executive Vice President and Chief
Operating Officer of the Company from December 14, 1996 to June 4,
1997. Mr. Kennedy was Chief Executive Officer of Aer Lingus from
1974 to 1988, and has held a variety of positions in the airline
industry, including as director of CSA, Czechoslovak Airlines, from
1993 to 1994, member of the International Advisory Committee of Air
France from 1991 to 1994, and as Aviation Consultant to the European
Bank for Reconstruction and Development and the World Bank. Mr.
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Kennedy was a director of the Bank of Ireland from 1984 to 1995,
where he served as Deputy Governor from 1989-1991. Mr. Kennedy is
currently Chairman of the Bank of Ireland Pension Fund, and serves
as a director of CRH Plc, Jurys Hotel Group Plc., Lifetime Assurance
Company Limited, Bon Secours Health System, Drury Sports Management
International Ltd., PIMCO Funds: Global Investors Series Plc,
Gonterra Food Packaging International Ltd. and as Chairman of Drury
Communications Limited. Mr. Kennedy is a citizen of Ireland. Mr.
Kennedy's term of office as a director expires with the Annual
Meeting of Stockholders in 2000.
General Merrill A. McPeak (USAF, Ret.), age 64, 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 Tektronix, Inc., ECC,
Int'l. and Centerspan Communications (NASDAE) CSCC. General McPeak
was Chief of Staff, United States Air Force, 1990-1994,
Commander-in-Chief, Pacific Air Forces, 1988-1990 and Commander,
12th Air Force, 1987-1988. General McPeak's term of office as a
director expires with the Annual Meeting of Stockholders in 2000.
Thomas F. Meagher, age 69, 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 Lead Outside Director of the Board
from February 12, 1997 until May 25, 1999. Mr. Meagher has served as
Chairman of the Board and Chief Executive Officer of Howell Tractor
& Equipment Co. (manufacturer representative of construction
equipment) since 1980. He also serves as Chairman and CEO of
Professional Golf Cars of Florida and is also a director of Private
Bank Corp. 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
1993. 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 2000.
William O'Driscoll, age 71, 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 2000.
Robert A. Pastore, age 57, has been a director since May 25,
1999. He is the Air Line Pilots Association's designated director.
Captain Pastore is a Boeing 767 pilot flying both domestic and
international routes. Since 1997 he has been a member of the TWA
Flight Operations System Standards Committee which sets the
company's flight procedures and a member of TWA's Pilot Training
Board since 1992 which oversees pilot training. Captain Pastore is
chairman of the TWA Master Executive Council Training and Standards
Committee since 1997 as well as chairman of ALPA's Pilot Training
Services Committee since 1992. He is President of AVIA Research,
L.P., an aviation research company that develops air traffic control
procedures. Captain Pastore's term of office as a director expires
with the Annual Meeting of Stockholders in 2000.
G. Joseph Reddington, age 58, 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 Committee. 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 2000.
Blanche M. Touhill, age 68, 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
6
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<PAGE>
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
2000.
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 RE-ELECTION OF MR. PASTORE.
EXECUTIVE OFFICERS IN ADDITION TO WILLIAM F. COMPTON
Donald M. Casey, age 64, has been Executive Vice President,
Marketing since May 29, 1997. Mr. Casey was formerly a principal
with Deskey Luxon Carra, a design consulting firm from 1995 to 1997.
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.
R. Stan Henderson, age 55, has been Senior Vice President,
Operations Development since December 7, 1999. Mr. Henderson had
previously served as TWA's Vice President, Financial Analysis and
has been employed by TWA since 1965. Mr. Henderson serves as an
officer of the Company at the pleasure of the Board of Directors.
James R. Jensen, age 59, 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.
Michael J. Palumbo, age 53, 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 42, 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 54, 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.
7
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<PAGE>
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 1999 who were not also regularly
salaried employees or active union representatives of TWA employees
("Outside Directors") were entitled to receive an annual retainer of
$20,000, payable quarterly in advance. Committee chairpersons were
entitled to receive an annual retainer of $1,500, prorated from the
date of the committee chairperson's appointment and payable
quarterly in arrears. Board members were also entitled to receive
fees of $2,000 for each regular meeting attended, $1,500 for each
meeting attended via telephone conference call and $1,000 for each
special meeting of the Board attended, whether in person or by
telephone conference call, along with fees of $500 for attending
committee meetings held on a day of a Board meeting and $1,000 for
committee meetings held on a day other than the day of a Board
meeting. Regularly salaried executive officers of TWA or active
union representatives of TWA employees who are also Board members
did not receive any supplemental compensation for their services as
directors. All directors are reimbursed for expenses incurred in
attending Board and committee meetings. The Lead Outside Director,
if any, is entitled to receive an annual retainer of $30,000 and the
Lead Outside Director or the non-executive Chairman of the Board, as
applicable, was entitled to receive meeting fees fifty percent in
excess of those paid to Outside Directors in 1999.
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
$43,225.01 for 1999.
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
8
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<PAGE>
Common Stock on the date on which the retainer became payable for
all other Outside Directors. Upon the earlier to occur of (i)
December 31, 2000, and (ii) the 60th day following the last date of
a participating Outside Director's service on the Board, each
participating Outside Director would be entitled to a payment
consisting of cash, Common Stock, or a combination of the two.
In addition, the Outside Directors' Plan provides for an annual
grant of 1,500 stock options beginning on the later of January 1,
1997 or the first day of January next following the first
anniversary of qualification as an Outside Director. Such options
vest on the six-month anniversary of the grant. The per share
exercise price of options granted under the Outside Directors' Plan
is the Fair Market Value per share of the common stock on the date
of grant.
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 1999, the Company paid ICTS the
equivalent of approximately $620,789.
Eugene P. Conese is Chairman of World Air Lease, Inc., ("WAL")
an aircraft engine sales and leasing company which is wholly owned
by Mr. Conese and members of his immediate family. During 1999, WAL
acquired an aircraft engine which was on lease to the Company. In
accordance with the lease terms, the Company paid rent of
approximately $109,000. The lease agreement expired in October 1999.
MEETINGS AND COMMITTEES OF THE BOARD
During 1999, the Board of Directors held six regular and four
special meetings. All incumbent directors attended at least 75% of
the total number of meetings of the Board of Directors and any
committee of the Board of Directors on which they served.
GOVERNANCE OF THE COMPANY
In accordance with applicable Delaware state law, the business
of the Company is managed under the direction of the Board of
Directors.
There are currently five standing committees of the Board of
Directors. Under the By-laws and pursuant to the Board's
determination, a majority of members of the Audit, Executive,
Compensation and Finance Committee are required to be non-employee
Directors. The Board has also determined that union representative
directors shall serve one year terms and rotate from the
Compensation to Executive to the Finance to the Governance and
Nominating Committees. Committee Chairpersons shall serve a minimum
of one year and a maximum of three year terms. Current committee
memberships, the number of committee meetings held during 1999 and
the functions of those committees are described below.
EXECUTIVE COMMITTEE. The current members of the Executive
Committee are Gerald L. Gitner (chairman), John W. Bachmann, William
F. Compton, David M. Kennedy, Merrill A. McPeak, Robert A. Pastore
and G. Joseph Reddington. Such Executive Committee has and may
exercise the powers of the Board of Directors granted to it by the
Board of Directors from time to time, except the power to amend the
By-laws or the Certificate of Incorporation (except, to the extent
authorized by a resolution of the whole Board (i.e., the total
number of directors that the Company would have if there were no
vacancies on the Board of Directors), to fix the designation,
preferences and other terms of any series of preferred stock), adopt
an agreement of merger or consolidation, authorize the issuance of
stock, declare a dividend or recommend to the stockholders the sale,
lease or exchange of all or substantially all of the Company's
property and assets, a dissolution of the Company, or a revocation
of a dissolution, and except as otherwise provided by the Delaware
General Corporation Law or resolution of the Board of Directors.
During 1999, the Executive Committee met eight times.
AUDIT COMMITTEE. The current members of the Audit Committee are
Merrill A. McPeak (chairman), Thomas H. Jacobsen, Thomas F. Meagher,
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
9
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<PAGE>
the internal audit department, (iii) selection of the Company's
public accountants, (iv) review of the fees of the Company's outside
public accountants, and (v) oversight of the Company's financial
reporting. During 1999, the Audit Committee met two times.
COMPENSATION COMMITTEE. The current members of the Compensation
Committee are John W. Bachmann (chairman), Thomas H. Jacobsen, Myron
Kaplan, David M. Kennedy, William O'Driscoll and Blanche M. Touhill.
The Compensation Committee, administers the bonus, incentive,
compensation and stock option plans of the Company and reviews and
recommends the salaries and other benefits of the executive officers
of the Company. During 1999, 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, Gerald L. Gitner, Edgar M. House 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 significant new stations, major route changes
and other similar such actions having financial implications for the
Company. During 1999, 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, Sherry L. Cooper,
Gerald L. Gitner, Merrill A. McPeak and Thomas F. Meagher. 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 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. To
the best of TWA's knowledge, there was no instance in 1999 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. Mr. Kennedy, a member of TWA's Compensation Committee in
1999, served as Acting Executive Vice President and Chief Operating
Officer of TWA from December 14, 1996 to June 4, 1997 and is
currently a consultant to the Company. A description of the
Consulting Agreement between Mr. Kennedy and TWA is set forth in
"Certain Employment Agreements and Other Arrangements."
10
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<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 1999, (b) the four most
highly compensated executive officers (other than the Chief
Executive Officer) who were serving as executive officers at the end
of 1999 who earned more than $100,000 during 1999 and (c) any such
other individual who served as an executive officer during 1999 and
would be included in the table except for the fact that he was not
an executive officer at the end of 1999.
<TABLE>
SUMMARY COMPENSATION TABLE<F1>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------- ------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY<F2> BONUS COMPENSATION OPTIONS/SARS COMPENSATION
- --------------------------- ---- ---------- ----- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Gerald L. Gitner<F3> 1999 $206,750 -- -- 170,000<F6> $178,279<F7>
(Chairman and Chief 1998 $520,140 $100,000<F4> $ 4,802<F5> 200,000<F6> $278,276<F7>
Executive Officer) 1997 $449,977 $150,000<F4> $ 2,972<F5> 800,000<F6> $193,388<F7>
William F. Compton<F8> 1999 $428,341 -- $ 3,249<F5> 110,000<F6> $ 32,900<F7>
(President and Chief 1998 $335,882 -- $ 5,041<F5> -- $ 30,965<F7>
Executive Officer) 1997 $214,675 -- $ 1,733<F5> 350,000<F6> $ 23,085<F7>
Michael J. Palumbo 1999 $328,073 -- $ 1,897<F5> 39,000<F6> $ 9,158<F7>
(Executive Vice President 1998 $253,182 -- $ 4,758<F5> -- $ 4,450<F7>
and Chief Financial Officer) 1997 $204,386 -- $ 2,567<F5> 160,000<F6> $ 10,283<F7>
Donald M. Casey 1999 $257,496 -- $ 6,723<F5> 24,000<F6> $ 9,241<F7>
(Executive Vice President, 1998 $257,496 -- $ 5,398<F5> -- $ 4,312<F7>
Marketing) 1997 $150,250 -- $ 4,793<F5> 350,000<F6> $ 5,108<F7>
Kathleen A. Soled 1999 $216,921 -- $ 2,060<F5> 36,000<F6> $ 8,116<F7>
(Senior Vice President 1998 $176,412 -- $ 9,858<F5> 115,000<F6> $ 4,282<F7>
and General Counsel) 1997 $126,690 -- $19,678<F5> 15,000<F6> $ 5,942<F7>
John J. Stelzer 1999 $203,553 -- $ 6,658<F5> 160,000<F6> $ 19,495<F7>
(Senior Vice President, 1998 $128,748 -- $ 8,646<F5> 10,000<F6> $ 16,542<F7>
Planning) 1997 $ 75,125 -- $ 5,256<F5> 15,000<F6> $ 15,511<F7>
<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 10, 1997. 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. Mr. Gitner served
as Chairman and Chief Executive Officer until May 25, 1999 when he became
Chairman of the Board and entered into a Consulting Agreement with the
Company as described herein under "Certain Employment Agreements and Other
Agreements." Pursuant to that agreement Mr. Gitner received $494,863 in
1999. Dollar amounts in this table reflect the amounts Mr. Gitner received
as an executive officer through May 25, 1999.
<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.
<F6> Represents the grant of options to purchase shares of Common Stock under
the Company's Key Employee Stock Incentive Plan ("KESIP"). Options
generally vest 34% on the first anniversary of a grant, and 33% on each
the second and third anniversary of a grant. Options generally expire five
years after the vesting date.
11
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<PAGE>
<F7> Represents the Company's contributions to the deferred contribution plans
in which a named officer participates: (a) for Mr. Gitner of $4,277 in
1999, $7,422 in 1998 and $5,877 in 1997, (b) for Mr. Compton $22,897 in
1999, $22,897 in 1998 and $22,897 in 1997, (c) for Mr. Palumbo of $4,277
in 1999, $4,277 in 1998 and $5,877 in 1997, (d) for Mr. Casey of $4,277 in
1999, $4,277 in 1998 and $5,090 in 1997, (e) for Ms. Soled of $4,277 in
1999, $4,277 in 1998 and $4,437 in 1997, (f) for Mr. Stelzer of $3,776 in
1998 and $2,879 in 1997; premiums for group term life insurance (a) for
Mr. Gitner of $5 in 1999, $14 in 1998 and $11 in 1997, (b) for Mr. Compton
of $99 in 1999, $198 in 1998 and $188 in 1997, (c) for Mr. Palumbo of $86
in 1999, $173 in 1998 and $173 in 1997, (d) for Mr. Casey of $26 in 1999,
$35 in 1998 and $18 in 1997, (e) for Ms. Soled of $4 in 1999, $5 in 1998
and $5 in 1997, (f) for Mr. Stelzer of $218 in 1999, $266 in 1998 and $132
in 1997; and vacation sell back to the Company in 1999 (a) for Mr. Gitner
of $9,975, (b) for Mr. Compton of $6,273, (c) for Mr. Palumbo of $4,795,
(d) for Mr. Casey of $4,938 and (e) for Ms. Soled $3,835. Also includes:
(a) for Mr. Gitner make-whole payments of $104,170 in 1999, $270,840 in
1998 and $187,500 in 1997 and (b) for Mr. Stelzer of $15,000 in 1999,
$12,500 in 1998 and $12,500 in 1997; for Mr. Gitner final vacation payment
of $59,852 in 1999; for Mr. Compton refund in 1998 of 1997 direct account
plan excess payment of $7,870 and in 1999 pilot stock options of $2,123
and a Rabbi Trust distribution of $1,508; and for Mr. Palumbo relocation
expenses reimbursed of $4,233 in 1997; and for Ms. Soled's relocation
expenses reimbursed of $1,500 in 1997.
<F8> Elected President and Chief Executive Officer effective May 25, 1999.
Previously, President and Chief Operating Officer.
</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<F2> 5% 10%
- ---- --------------- ---------------- -------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Gerald L. Gitner 170,000 19.37% $4.84 01/25/07 $287,569 $575,137
William F. Compton 75,000 8.55% $4.84 01/25/06 $108,719 $217,438
35,000 3.99% $5.47 03/22/07 $ 66,912 $133,824
Michael J. Palumbo 39,000 4.44% $4.84 01/25/06 $ 56,534 $113,068
Donald M. Casey 24,000 2.73% $4.84 01/25/07 $ 40,598 $ 81,196
Kathleen A. Soled 36,000 4.10% $4.84 01/25/06 $ 52,185 $104,370
John J. Stelzer 160,000 18.23% $4.84 01/25/07 $270,653 $541,306
<FN>
- --------
<F1> Options granted under the KESIP.
<F2> Options generally expire 5 years from vesting. The date shown is the
expiration date for the last of these options.
</TABLE>
12
<PAGE>
<PAGE>
<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<F2> 1,057,800 $0
(Chairman and -- -- 112,200 $0
Chief Executive Officer)
William F. Compton<F3> 284,750 $0
(President and Chief -- -- 175,250 $0
Executive Officer)
Michael J. Palumbo 206,130 $0
(Executive Vice President -- -- 12,870 $0
and Chief Financial
Officer)
Donald M. Casey 270,660 $0
(Executive Vice -- -- 103,340 $0
President, Marketing)
Kathleen A. Soled 136,170 $0
(Senior Vice President -- -- 49,830 $0
and General Counsel)
John J. Stelzer 67,850 $0
(Senior Vice President, -- -- 117,150 $0
Planning)
<FN>
- -------
<F1> Based on the average of the high and low price on the American Stock
Exchange on December 31, 1999 of $2.91.
<F2> Resigned as Chief Executive Officer effective May 25, 1999.
<F3> Elected Chief Executive Officer effective May 25, 1999.
</TABLE>
CERTAIN EMPLOYMENT AGREEMENTS
A Consulting Agreement between D.G. Associates, Inc. and TWA was
entered into as of December 16, 1996 regarding the services of
Gerald L. Gitner as Acting Chief Executive Officer. TWA agreed to
pay $3,000 for each full working day for such consulting services.
The agreement terminated upon Mr. Gitner's election as Chairman and
Chief Executive Officer on February 12, 1997. From December 14, 1996
through February 12, 1997, D.G. Associates Inc. received $114,750
from TWA for Mr. Gitner's services and $3,295 for his expenses.
An Employment Agreement with Mr. Gitner was entered into as of
February 12, 1997. The terms of the agreement included (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; (c) the grant of
200,000 additional stock options as of February 12, 1998; (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); and (f) other standard executive
officer benefits. The agreement terminated upon Mr. Gitner's
resignation as Chief Executive Officer effective May 25, 1999.
A Consulting Agreement with Mr. Gitner effective as of May 25,
1999 was entered into as of May 19, 1999. The terms of this
agreement included (a) retention as a consultant until May 24, 2002;
(b) the payment of a total of $770,000 in monthly installments
between May 25, 1999 and May 24, 2000; (c) after May 24, 2000, the
payment of consulting fees at a rate equal to $3,500 for each full
working day on which consulting services are provided at the request
of the Board of Directors or the CEO; and (d) an annual
13
<PAGE>
<PAGE>
retainer of $75,000 for performing the duties of Chairman of the
Board of Directors and Chairman of the Executive Committee for so
long as he acts in such capacity. Pursuant to this agreement,
Mr. Gitner was paid $494,863 in 1999.
A Consulting Agreement between David M. Kennedy and TWA was
entered into as of December 16, 1996 regarding Mr. Kennedy's
election as Acting Executive Vice President and Chief Operating
Officer. TWA agreed to pay Mr. Kennedy at the rate of $2,725 for
each full working day. The Agreement was terminated on June 4, 1997.
From December 14, 1996 through its termination, Mr. Kennedy received
$259,615 from TWA for his services pursuant to the agreement and
$13,477 for his expenses. A new Consulting Agreement was entered
into as of June 6, 1997 between Mr. Kennedy and the Company whereby
Mr. Kennedy receives $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. 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 a letter agreement which provided for an
annual salary of $225,000 and 200,000 options pursuant to the KESIP,
exercisable at the fair market price of $7.09. Upon his election as
President and Chief Operating Officer on December 3, 1997, he
received an additional 150,000 options at an exercise price of
$8.50, with the same vesting schedule and an increase in annual
salary to $350,000. A new Employment Agreement was entered into as
of May 25, 1999 upon Mr. Compton's election as President and Chief
Executive Officer which provided an increase in salary to $500,000,
and 35,000 options at an exercise price of $5.47 in addition to the
75,000 options previously granted in January 1999 at an exercise
price of $4.84. The agreement will continue until May 24, 2002
subject to TWA's right of termination without cause upon
thirty-days' notice and payment of one year's salary. 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. 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. An
Amendment Agreement to the letter agreement, dated as of May 24,
1999 was entered by Mr. Palumbo and TWA and which amended the letter
agreement to provide, inter alia, for an increase in salary to
$350,000 and the right of termination with payment of one year's
salary in the event that Mr. Compton ceases to be Chief Executive
Officer of the Company.
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. The Company has also agreed to pay Mr. Casey's apartment
rental expenses in St. Louis during his employment.
A letter agreement dated as of October 1, 1996 was executed by
TWA and Kathleen A. Soled. The agreement provides for Ms. Soled's
continued employment at her then current salary subject to review
and adjustment from time to time. Ms. Soled 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 one year's
salary.
A letter agreement dated as of May 29, 1997 was executed by TWA
and John J. Stelzer. The agreement provides for Mr. Stelzer's
employment at an annual salary of $125,000, subject to review and
adjustment from time to time, and 15,000 options under the KESIP
exercisable at fair market value which
14
<PAGE>
<PAGE>
is $7.78 per share. Mr. Stelzer 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 $125,000.
Most named executive officers have 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. Each named executive officer is also a participant
in the Company's KESIP and the Management Annual Incentive Plan as
described in the "Compensation Committee Report."
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth, as of March 31, 2000, 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 7.0%
Taunus Corporation and Deutsche Bank Securities Inc.<F2>......... 4,249,133 6.1%
<FN>
- -------
<F1> The address of Ryback Management Corp. and Lindner Investment Series Trust
is 7711 Carondelet Avenue, Box 16900, St. Louis, MO 63105.
<F2> The address of Taunus Corporation and Deutsche Bank Securities Inc. is 31
West 52nd Street, New York, NY 10019.
</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><F6>............................... 22,823 <F*>
William F. Compton<F7><F8><F9>..................................... 365,114 <F*>
Eugene P. Conese<F2><F10><F11><F12><F13>........................... 20,234 <F*>
Sherry L. Cooper<F14>.............................................. 35,520 <F*>
Gerald L. Gitner<F2><F9><F11><F15><F16>............................ 1,067,539 1.5%
Edgar M. House<F2>................................................. 1,000 <F*>
Thomas H. Jacobsen<F2><F10><F11><F12>.............................. 13,185 <F*>
Myron Kaplan<F2><F3><F6><F10><F11><F17><F18><F19>.................. 25,240 <F*>
David M. Kennedy<F2><F4><F5>....................................... 6,012 <F*>
Merrill A. McPeak<F2><F15>......................................... 3,014 <F*>
Thomas F. Meagher<F2><F10><F20><F21><F22>.......................... 17,888 <F*>
William O'Driscoll<F23>............................................ 123,617 <F*>
Robert A. Pastore<F24>............................................. 11,987 <F*>
G. Joseph Reddington<F2><F3><F10><F11><F17><F20>................... 17,262 <F*>
Blanche M. Touhill<F2><F4><F15><F25><F26>.......................... 15,519 <F*>
Donald M. Casey<F9><F27>........................................... 363,095 <F*>
R. Stan Henderson<F9><F28>......................................... 23,916 <F*>
James R. Jensen<F9><F29>........................................... 13,240 <F*>
Michael J. Palumbo<F9><F30><F31>................................... 898,868 1.3%
Kathleen A. Soled<F9><F30><F32>.................................... 828,645 1.2%
John J. Stelzer<F9><F33>........................................... 73,053 <F*>
Total Shares owned by Current Directors and Current Executive
Officers, as a group (21 individuals)<F34>...................... 3,946,771 5.7%
<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, with respect to 1999,
$4.9375, the fair market value of Common Stock on January 4, 1999 and
with respect to 2000, $2.875, the fair market value of the Common Stock
on January 3, 2000. Upon the earlier to occur of December 31, 2000 and
the last date of a participating director's service on the Board, such
director is entitled to a payment equal to (i) the total number of shares
of Common Stock in the director's deferred retainer account, (ii) cash
equaling the number of shares of Common Stock contained in the deferred
retainer account times the Fair Market Value (as defined in the Outside
Directors Plan) of the Common Stock on the date the retainer becomes
payable or (iii) a combination of (i) and (ii).
16
<PAGE>
<PAGE>
<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 3,000 options granted pursuant to the Outside Directors Plan for
Messrs. Bachmann and Kennedy.
<F6> Messrs. Bachmann and Kaplan elected to defer 50% of their 2000 retainer
amounts payable to them in a deferred retainer account. Constitutes or
includes 3,478 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.
<F7> Excludes approximately 527 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 2,464 shares of Common Stock.
<F8> Includes 362,650 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.
<F9> Does not include unvested options to purchase shares of Common Stock
pursuant to the KESIP.
<F10> Includes 4,500 options granted pursuant to the Outside Directors Plan for
Messrs. Conese, Jacobsen, Kaplan, Meagher and Reddington.
<F11> 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.
<F12> 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.
<F13> Includes warrants to purchase 49 shares of Common Stock at a price of
$14.40 per share.
<F14> Excludes 213 shares of Employee Preferred Stock attributable to Ms.
Cooper's beneficial interest in the Flight Attendant Trust. Ms. Cooper
holds 35,520 shares of Common Stock as a member of the Trustee Committee
of the Flight Attendant Trust, along with Mr. O'Driscoll and Rocky
Miller. Ms. Cooper disclaims beneficial ownership in all but seven shares
held by the trust.
<F15> Includes 1,500 options granted pursuant to the Outside Directors Plan for
Messrs. Gitner, McPeak and Ms. Touhill.
<F16> Includes 1,057,800 shares of Common Stock issuable upon the exercise of
vested options granted to Mr. Gitner pursuant to the KESIP.
<F17> 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
17
<PAGE>
<PAGE>
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.
<F18> 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.
<F19> 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.
<F20> 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.
<F21> 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.
<F22> Mr. Meagher elected to defer all 1998 retainer amounts payable to him in
a deferred retainer account. Constitutes 1,509 shares of Common Stock
issuable to Mr. Meagher pursuant to the Outside Directors Plan in the
event of his termination from service on the Board within 60 days,
assuming Mr. Meagher elects to receive the entire balance of his deferred
retainer account in shares of Common Stock.
<F23> 88,097 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. 35,520
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.
<F24> Excludes approximately 299 shares of Employee Preferred Stock
attributable to Mr. Pastore's beneficial interest in the TWA Airline
Pilots Supplemental Stock Plan and approximately 336 shares in the ALPA
ESOP Trust.
<F25> 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.
<F26> Ms. Touhill elected to defer all 2000 retainer amounts payable to her in
a deferred retainer account. Constitutes or includes 6,957 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.
<F27> Includes 358,160 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.
<F28> Includes 22,420 shares of Common Stock issuable upon the exercise of
vested options or options vesting within 60 days granted to Mr. Henderson
pursuant to the KESIP.
<F29> Includes 12,240 shares of Common Stock issuable upon the exercise of
vested options or options vesting within 60 days granted to Mr. Jensen
pursuant to the KESIP.
<F30> Approximately 1,758 and 1,495 shares attributable to the respective
beneficial interests of Mr. Palumbo and Ms. Soled are held by the
employee stock ownership trust established for the benefit of
18
<PAGE>
<PAGE>
TWA's non-contract employees (the "Non-Contract Employees Trust"). Except
for such shares, Mr. Palumbo and Ms. Soled disclaim beneficial ownership
of the shares held by the Non-Contract Employees Trust. Mr. Palumbo and
Ms. Soled 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 690,980 shares.
<F31> Includes 206,130 shares of Common Stock issuable upon the exercise of
vested options granted to Mr. Palumbo pursuant to the KESIP.
<F32> Includes 136,170 shares of Common Stock issuable upon the exercise of
vested options granted to Ms. Soled pursuant to the KESIP.
<F33> Includes 72,800 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.
<F34> When combined with shares of Employee Preferred Stock beneficially held
by current directors and current executive officers, as a group,
represents a total of 8,679,778 shares of the Company's Voting Stock.
</TABLE>
PRINCIPAL HOLDERS OF EMPLOYEE PREFERRED STOCK
<TABLE>
<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, M. David Ratcliff,
Howard L. Coldwell, Jr. and Robert
C. Stow, Sr. as trustees<F1> ALPA Preferred Stock 388,773 24%<F2>
TWA Air Line Pilots 1995 Employee
Stock Ownership Plan, American Stock
Transfer & Trust Company,
Trustee<F3> ALPA Preferred Stock 1,216,902 76%<F4>
IAM Trust<F5> IAM Preferred Stock 3,545,907 100%<F6>
Flight Attendant Trust<F7> Flight Attendant Preferred Stock 1,187,100 100%<F8>
Sherry L. Cooper<F9> Flight Attendant Preferred Stock 1,187,100 100%<F10>
William O'Driscoll<F11> IAM and Flight Attendant 4,733,007 100%<F12>
Preferred Stock
<FN>
- -------
<F1> The address of the ALPA Trust is c/o Howard L. Coldwell, as co-trustee,
TWA Air Line Pilots Supplemental Stock Plan, 500 Northwest Plaza, Suite
1200, St. Ann, Missouri 63074.
<F2> Constitutes 0.6% of the securities entitled to vote on all agenda matters
at meetings of stockholders other than the election of directors.
<F3> The address of the TWA Air Line Pilots 1995 Employee Stock Ownership Plan
is c/o American Stock Transfer & Trust Company, as trustee ("AST"), 40
Wall Street, 46th Floor, New York, New York 10005.
<F4> Constitutes 1.8% 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 88,097 shares of Common Stock held by the IAM
Trust, constitutes 5.2% 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.
19
<PAGE>
<PAGE>
<F8> When combined with the 35,520 shares of Common Stock held by the Flight
Attendant Trust, constitutes 1.8% 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 approximately 213 shares 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
trustee, One Federal Street, 31st Floor, Boston, Massachusetts 02211.
<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>
COMPENSATION PURSUANT TO PENSION PLANS
Retirement Plans. The TWA Retirement Pension Plan ("TWA
Retirement Plan") applicable to United States salaried employees was
non-contributory. The TWA Retirement Plan was assumed by Pichin
Corp. and "frozen" effective January 1, 1993 and, accordingly,
participants thereunder will not accrue additional retirement
benefits after such date. Participation in such plan is closed to
new employees. The following tables show the estimated annual
retirement benefits payable at the normal retirement age of 65 to
TWA Retirement Plan participants with the years of service and
earnings classifications indicated, assuming payment in the form of
a single life annuity. The first table covers participants who were
hired by TWA prior to January 1, 1985. The payments shown in such
tables are subject to reduction by a percentage of the estimated
social security benefit and by the effect of excluding compensation
over $228,860.
ESTIMATED ANNUAL RETIREMENT BENEFITS PAYABLE TO PLAN PARTICIPANTS
HIRED BEFORE JANUARY 1, 1985
<TABLE>
<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>
20
<PAGE>
<PAGE>
ESTIMATED ANNUAL RETIREMENT BENEFITS PAYABLE TO PLAN PARTICIPANTS
HIRED ON OR AFTER JANUARY 1, 1985
<TABLE>
<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. As of
December 31, 1999, Messrs. Casey, Henderson and Jensen were members
of the TWA Retirement Plan and had completed 12 5/6 years, 23 1/2
years, and 22 1/4 years of service respecitvely as plan
participants. Mr. Compton is a member of a similar Pilots Retirement
Plan and had completed 23 1/12 years of service as a participant of
that plan. The TWA Retirement Plan and Pilots Retirement Plan were
frozen effective January 1, 1993, and as such there have been no
additional accruals after such date.
21
<PAGE>
<PAGE>
COMPENSATION COMMITTEE REPORT
The Company's policy regarding compensation for its executive
officers is based on consideration of a variety of factors and the
exercise of the collective judgment of the Board of Directors. As a
result of an amendment to the By-Laws adopted in September 1999, all
wages and benefits for executive officers including the Chief
Executive Officer must be approved by the Board of Directors upon
the recommendation of the Compensation Committee. The Chief
Executive Officer has typically proposed to the Compensation
Committee and the Board of Directors the amount and type of
compensation for such officers. Factors considered by the CEO and
the Board of Directors in making recommendations and decisions with
regard to compensation included their subjective perception of an
individual officer's performance, significant milestones achieved by
the officer and the Company, gross margins, the nature of an
officer's duties and responsibilities, the compensation paid to
officers of companies competing with the Company (to the extent
known) and a subjective assessment of the compensation the Company's
officers could obtain in the market. Prior to 1997 compensation had
not been formally tied to pre-established, fixed objective measures
of Company performance, nor was any objective rank or weight
attributed to specific measures of performance in setting
compensation. However, the Compensation Committee, beginning in
January 1997, has reviewed management objectives and has, from time
to time, retained the services of executive compensation experts
such as Frederick Cook and Co. to benchmark management compensation
versus the airline industry and other companies similarly situated.
In December 1998, the Board approved the creation of the Management
Annual Incentive Plan ("MAIP") for executives of the Company,
including the CEO, and directed the Compensation Committee to
develop and administer such plan. The payment of incentive awards
under the plan will depend upon the achievement of established
financial and individual performance goals during a plan year. These
goals will tie executive compensation to established goals of the
Company to more closely align the interests of executive officers to
those of employees and shareholders and to assist the Company in
attracting and maintaining talented management personnel. In January
1999 the Committee finalized the plan and set 1999 financial
performance targets. No incentive awards were made under the plan
for plan year 1999.
As previously discussed herein, Mr. Gitner's employment
agreement provided 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. To the extent 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 agreed that two of the
objectives had been met for 1998 and authorized payment of a pro
rata portion of the bonus. Mr. Gitner resigned as CEO effective in
May 1999 and no award was made for 1999.
Mr. Compton was elected to the office of President and CEO in
May 1999. His salary is set forth in his employment agreement, as
previously discussed herein. The CEO establishes goals with the
Compensation Committee in connection with the MAIP each fiscal year
based on various financial, strategic, operational and leadership
objectives. The Executive Committee is charged with evaluating the
performance of the CEO each year on the basis of the performance of
the Company, the attainment of the established goals and various
other factors.
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 recommended
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
22
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enhance the value of the Company by linking the personal interests
of participants to those of the Company's stockholders and by
providing the participants with an incentive for outstanding
performance. In December 1998, the Board approved the annual grant
of incentive stock options to executives of the Company by the
Compensation Committee. Prior to that an initial award had been made
under the KESIP in 1995 with additional awards thereafter made to
new hire officers, upon promotion and in several cases on an ad hoc
incentive basis. The Committee made the first annual grants under
the KESIP in January 1999 and made additional grants in January
2000.
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 1999.
The members of the Compensation Committee in January 1999 were:
Myron Kaplan, Chairman, John W. Bachmann, Edgar M. House, Thomas H.
Jacobsen, David M. Kennedy and Blanche M. Touhill. Subsequent to the
May 25, 1999 meeting, in accordance with the Company's corporate
governance guidelines, the Committee was reorganized to consist of:
John W. Bachmann, Chairman, Thomas H. Jacobsen, Myron Kaplan, David
M. Kennedy, William O'Driscoll and Blanche M. Touhill.
The following individuals were members of the Compensation
Committee during some part of 1999 or are currently on the
Compensation Committee:
John W. Bachmann Edgar M. House
Thomas H. Jacobsen Myron Kaplan
David M. Kennedy William O'Driscoll
Blanche M. Touhill
23
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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 SHAREHOLDER RETURN
[GRAPH]
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
8/23/95 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TRANS WORLD AIRLINES 100 207.50 131.25 201.25 97.50 55.00
- ---------------------------------------------------------------------------------------------------------------
S&P 500 INDEX 100 111.05 136.55 182.11 234.15 262.59
- ---------------------------------------------------------------------------------------------------------------
AIRLINES 100 95.51 104.98 176.88 171.57 169.25
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
24
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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, 1999 and also have been
selected by the Board of Directors to serve as auditors for the
fiscal year ending December 31, 2000.
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 2000. 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 2000 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, 2000.
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. R. Stan Henderson was elected an
executive officer on December 7, 1999 and he filed a Form 3 within
the required ten days of his election. Subsequently, the plan
administrator of the Other Employee Trust advised that no shares
were held in the trust. However, 324 shares had been reported. In
addition, 1,116 shares were held in the Non-Contract 401(K) Plan. A
Form 5 was filed reflecting these changes.
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 other filing
requirements applicable to its officers, directors, and greater than
10% beneficial owners were complied with.
25
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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, 1999, 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,
1999 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.
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 next year's annual meeting is
released to the Company's security holders on the anniversary of the
date on which this Proxy Statement and Form of Proxy are so
released, any proposal to be presented at next year's annual meeting
must be received at the principal executive offices of the Company
not later than December 17, 2000. 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.
26
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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 19, 2000, and
does hereby appoint Merrill A. McPeak 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 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 Wyndham El San Juan Hotel,
6063 Isla Verde Avenue, San Juan, Puerto Rico 00979, at 9:00 a.m. local time,
on May 23, 2000, 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 contrary below) for all nominees listed 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: , 2000
PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR HEREON, AND WHEN SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, GIVE YOUR FULL TITLE AS SUCH. IF
THE SIGNATORY IS A CORPORATION, SIGN THE FULL CORPORATION NAME BY A DULY
AUTHORIZED OFFICER.
<PAGE>
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APPENDIX
Page 24 of the printed Proxy contains a Performance Graph. The information
contained in the graph appears in the table immediately following the graph.
