<PAGE>
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 [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14A-6(E)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
DELTA AIRLINES
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
Delta Air Lines, Inc.
General Offices
Hartsfield Atlanta
International Airport
Post Office Box 20706
Atlanta, Georgia 30320-6001
To Our Shareowners:
On behalf of the Board of Directors, it is our pleasure to invite you to
attend the 1999 Annual Meeting of Shareowners of Delta Air Lines, Inc. The
meeting will be held at the Boston Harbor Hotel, 70 Rowes Wharf on Atlantic
Avenue, Boston, Massachusetts 02110, on Thursday, October 28, 1999 at 9:00
a.m., local time. The purpose of the meeting is to act on the matters listed
in the attached Notice and to report to you on Delta's activities during
fiscal 1999. There will be an opportunity to discuss matters of interest to
you as a shareowner.
Please let us know whether you plan to attend the meeting by marking the
appropriate box on your proxy card. If you use our telephone or internet
voting system, please indicate your plans when prompted. If you are a
shareowner of record, you should bring the enclosed admission ticket to the
meeting. If you are planning to attend the meeting and your shares are held in
street name (by a bank or broker, for example), you should ask the record
owner for a legal proxy or bring your most recent account statement to the
meeting so that we can verify your ownership of Delta stock.
If you will need special assistance at the meeting because of a disability,
please contact Ms. Suzanne Rolon, Coordinator, Investor Relations, Department
829, Delta Air Lines, Inc., P.O. Box 20706, Atlanta, Georgia 30320-6001.
Your vote is important. We encourage you to sign and return your proxy card
in the enclosed envelope, or to use our telephone or internet voting system,
to ensure that your shares are represented at the meeting.
Cordially,
/s/ Gerald Grinstein
Gerald Grinstein
Chairman of the Board
/s/ Leo F. Mullin
Leo F. Mullin
President and Chief Executive
Officer
Atlanta, Georgia
September 24, 1999
<PAGE>
Delta Air Lines, Inc.
General Offices
Hartsfield Atlanta
International Airport
Post Office Box 20706
Atlanta, Georgia 30320-6001
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
To Be Held October 28, 1999
To the Shareowners of Delta Air Lines, Inc.:
The Annual Meeting of Shareowners of Delta Air Lines, Inc. will be held at
the Boston Harbor Hotel, 70 Rowes Wharf on Atlantic Avenue, Boston,
Massachusetts 02110, on Thursday, October 28, 1999 at 9:00 a.m., local time,
for the following purposes:
1. to elect directors;
2. to ratify the appointment of Arthur Andersen LLP as Delta's
independent auditors for fiscal year 2000;
3. to consider and vote on a shareowner proposal relating to
cumulative voting for directors;
4. to consider and vote on a shareowner proposal relating to executive
compensation matters;
5. to consider and vote on a shareowner proposal relating to executive
severance packages; and
6. to transact such other business as may properly come before the
meeting.
Your Board of Directors recommends that you vote (1) "FOR" the election of the
director-nominees listed in the accompanying proxy statement; (2) "FOR" the
ratification of the appointment of Arthur Andersen LLP as independent auditors
for fiscal year 2000; and (3) "AGAINST" each of the three shareowner proposals
described in the accompanying proxy statement.
Shareowners of record at the close of business on August 31, 1999, may vote
at the annual meeting or any adjournment of the meeting. During the ten-day
period prior to the meeting, a list of shareowners entitled to vote at the
meeting will be available during normal business hours at the offices of State
Street Bank, Corporate Trust Department, 2 LaFayette Corporate Center, Boston,
MA 02111. The shareowner list will also be available at the meeting. Your
attention is directed to the proxy statement accompanying this notice.
By Order of the Board of Directors,
/s/ Robert S. Harkey
Robert S. Harkey
Senior Vice President-General
Counsel
and Secretary
Atlanta, Georgia
September 24, 1999
<PAGE>
DELTA AIR LINES, INC.
General Offices
Hartsfield Atlanta International Airport
Post Office Box 20706
Atlanta, Georgia 30320-6001
PROXY STATEMENT
----------------
ANNUAL MEETING OF SHAREOWNERS
TO BE HELD OCTOBER 28, 1999
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Delta Air Lines, Inc. ("Delta" or
"Company") to be voted at the 1999 Annual Meeting of Shareowners. The annual
meeting will be held at the Boston Harbor Hotel, 70 Rowes Wharf on Atlantic
Avenue, Boston, Massachusetts 02110, on Thursday, October 28, 1999 at 9:00
a.m., local time. The proxies may also be voted at any adjournment of the
annual meeting. This proxy statement and the accompanying proxy card are being
mailed to shareowners beginning on or about September 24, 1999.
VOTING PROCEDURES
Voting Stock
The Board of Directors has set August 31, 1999 as the record date for the
determination of shareowners entitled to notice of, and to vote at, the annual
meeting. On the record date, there were outstanding 138,756,756 shares of
Delta's common stock, par value $1.50 per share ("Common Stock"), and
6,529,781 shares of Delta's Series B ESOP Convertible Preferred Stock, par
value $1 per share ("ESOP Preferred Stock"). These securities are the only
classes of securities entitled to vote at the annual meeting.
Effective November 2, 1998, Delta's Certificate of Incorporation was amended
to effect a two-for-one split of the Common Stock. All references in this
proxy statement to the number of shares of Common Stock and Delta's per share
Common Stock price have been restated to reflect the stock split.
Each outstanding share of Common Stock entitles its holder to one vote. Each
outstanding share of ESOP Preferred Stock entitles its holder to two votes,
subject to adjustment in certain circumstances. Holders of the Common Stock
and ESOP Preferred Stock will vote together as a single class on all matters
presented at the annual meeting.
The ESOP Preferred Stock is held of record by Fidelity Management Trust
Company, as trustee of the Delta Family-Care Savings Plan ("Savings Plan"),
and may not be sold or distributed outside the Savings Plan except for resale
to Delta.
Voting by Proxy
General Information
All properly executed written proxy cards, and all properly completed
proxies voted by telephone or the internet, which are delivered pursuant to
this solicitation (and not later revoked) will be voted at the annual meeting
in accordance with the instructions given in the proxy. If a written proxy
card is signed by a registered shareowner and returned without instructions,
the shares will be voted (1) "FOR" the election of the director-nominees
listed herein; (2) "FOR" the ratification of the appointment of Arthur
Andersen LLP as independent auditors for fiscal year 2000; and (3) "AGAINST"
each of the three shareowner proposals described on pages 26-29 of this proxy
statement.
<PAGE>
Voting your proxy by mail, telephone or the internet will not limit your
right to vote at the annual meeting if you later decide to attend in person.
If your shares are held in the name of a broker, bank or other record holder,
you must either direct the record holder as to how to vote your shares or
obtain a proxy from the record holder to vote at the annual meeting.
Voting by Written Proxy Card
If a shareowner is a corporation or partnership, the accompanying proxy card
must be signed in the full corporate or partnership name by a duly authorized
person. If the proxy card is signed pursuant to a power of attorney or by an
executor, administrator, trustee or guardian, the signer's full title must be
given and a certificate or other evidence of appointment must be furnished. If
shares are owned jointly, each joint owner must sign the proxy card.
Voting by Telephone or the Internet
Instructions for a shareowner of record to vote by telephone or the internet
are set forth on the enclosed admission ticket attached to the proxy card. The
telephone and internet voting procedures are designed to authenticate votes
cast by use of a personal identification number. These procedures, which
comply with Delaware law, enable shareowners to appoint a proxy to vote their
shares and to confirm that their instructions have been properly recorded.
Revoking a Proxy
A proxy given pursuant to this solicitation may be revoked by the shareowner
at any time prior to the voting of the proxy: (1) by written notice to Robert
S. Harkey, Delta's Secretary; (2) by a later-dated proxy, either signed and
returned by mail or by using the telephone or internet voting procedures; or
(3) by attending the annual meeting and voting in person. Attendance at the
meeting will not in and of itself revoke a proxy.
Quorum and Voting Requirements
A quorum at the annual meeting will consist of a majority of the votes
entitled to be cast by the holders of all shares of Common Stock and ESOP
Preferred Stock that are outstanding and entitled to vote.
A majority of the votes entitled to be cast by the holders of all shares of
Common Stock and ESOP Preferred Stock, voting together as a single class, that
are present, or represented, at the meeting and entitled to vote will be
necessary (1) to elect the director-nominees listed herein; (2) to ratify the
appointment of Arthur Andersen LLP as independent auditors for fiscal year
2000; and (3) to approve each of the three shareowner proposals described on
pages 26-29 of this proxy statement. Votes "withheld" from director-nominees,
as well as abstentions on these proposals, will have the same effect as
negative votes.
Under New York Stock Exchange rules, the proposals to elect directors and to
ratify the selection of auditors are considered "discretionary" items. This
means that brokerage firms may vote in their discretion on these matters on
behalf of clients who have not furnished voting instructions at least fifteen
days before the date of the annual meeting. In contrast, the shareowner
proposals described in this proxy statement are "non-discretionary" items.
This means that brokerage firms which have not received voting instructions
from their clients on these matters may not vote on the shareowner proposals.
Such "broker non-votes" will not be considered in determining the number of
votes necessary for approval.
2
<PAGE>
GENERAL INFORMATION
Board of Directors
The Board of Directors is responsible for establishing broad corporate
policies and for Delta's overall performance. Members of the Board receive
information about Delta's business through reports and documents given to them
on a regular basis, as well as by operating, financial and other reports made
at meetings of the Board of Directors and its committees. Regular Board
meetings are held six times per year and special meetings are scheduled when
required. The Board also meets informally from time to time. During fiscal
1999, the Board held a total of eight regular and special meetings, and five
informal meetings.
Committees Established by the Board
The committees established by the Board of Directors to assist it in
discharging its responsibilities are described below. The biographical
information concerning the directors, set forth elsewhere in this proxy
statement, identifies the committee memberships held by each director.
The Audit Committee reviews the scope, conduct and results of the audits
conducted by the independent auditors, the major non-audit services provided
to Delta by the independent auditors and the adequacy of Delta's system of
internal controls. It also recommends to the Board the engagement of
independent auditors for Delta. This committee, which consists of four non-
employee directors, met four times in fiscal 1999.
The Benefit Funds Investment Committee acts as the fiduciary for managing
the investment policies and assets of certain of Delta's benefit plans. This
committee, which consists of four non-employee directors, met four times in
fiscal 1999.
The Corporate Governance Committee reviews and makes recommendations to the
Board concerning its composition, organization and processes; the type,
function, size and membership of Board committees; qualifications and
eligibility requirements for Board members; evaluation of the Board; Board
compensation; and other corporate governance issues. This committee, which
consists of four non-employee directors, met four times in fiscal 1999.
The Corporate Governance Committee also recommends to the Board candidates
for election as directors, and will consider nominees recommended by
shareowners. Shareowner recommendations should be submitted in writing to
Delta's Secretary with a description of the proposed nominee's qualifications
and other relevant biographical information, and the nominee's consent to
serve as a director. See "Submission of Shareowner Proposals and Nominations"
on page 29 of this proxy statement.
The Corporate Strategy Committee reviews Delta's long-term strategic goals,
objectives and plans, and makes recommendations to management and the Board of
Directors on these subjects. This committee, which consists of four non-
employee directors, met three times in fiscal 1999.
The Executive Committee exercises certain powers of the Board of Directors
between Board meetings. This committee, which consists of the chairmen of each
of the Board's committees, did not meet in fiscal 1999.
The Finance Committee reviews Delta's financial planning and financial
structure, funds requirements, and borrowing and dividend policies. This
committee, which consists of four non-employee directors, met four times in
fiscal 1999.
The Personnel & Compensation Committee reviews and makes recommendations to
the Board concerning the election of Delta's officers, the compensation for
and evaluation of the Chief Executive Officer, management succession planning
and the overall policy of Delta's benefit plans for non-executive personnel.
It also sets the salaries for officers above the level of Senior Vice
President except the Chief Executive Officer, and administers Delta's
Incentive Compensation Plan and 1989 Stock Incentive Plan. This committee,
which consists of four non-employee directors, met five times in fiscal 1999.
3
<PAGE>
Corporate Governance Policies
The Board of Directors believes that sound corporate governance practices
provide an important framework to assist the Board in fulfilling its
responsibilities. Accordingly, the Board has formally adopted corporate
governance principles relating to its functions, structure and operations.
These principles, which the Board intends to review periodically, are set
forth below.
Board Functions
1. Chief Executive Officer Evaluation. The Board will evaluate the
performance of the Chief Executive Officer at least annually. Each outside
(non-management) director will complete an assessment, and the Chief Executive
Officer will complete a self-assessment, of the Chief Executive Officer's
performance in specified categories such as strategic planning, financial
matters and leadership. The outside directors will meet in executive session,
with and without the Chief Executive Officer, to discuss these assessments.
The evaluation will be based on objective criteria which shall include,
among other factors, corporate performance, development of management, and the
accomplishment of annual objectives and long-term strategic goals.
2. Approval of Major Strategies and Financial Objectives. Each year the
Board will review and approve Delta's one-year business plan, as well as its
long-term strategic plan, aircraft fleet plan and financial goals. The Board
will regularly monitor Delta's performance with respect to these plans and
goals.
3. Board Evaluation. The Board will annually evaluate the effectiveness of
the Board and its committees. Each director will complete a written assessment
of the Board's performance in specified categories such as fiduciary
oversight; Board governance and process; strategic planning and business
decisions; and financial matters. The Board will meet in executive session to
discuss these assessments. The purpose of this evaluation is to increase the
effectiveness of the Board as a whole, as well as its individual members.
4. Selection of Board Members. The Board has the responsibility for
nominating directors. In nominating a slate of directors, the Board's
objective is to select individuals with skills and experience which can be of
assistance to management in operating Delta's business. The Board will
consider business experience, diversity, skills, international background and
other matters which are relevant to this objective. Each director should
devote the time and attention necessary to fulfill the obligations of a
director.
5. Management Succession. The Board will review annually with the Chief
Executive Officer management succession planning and development. There should
also be available, on a continuing basis, the Chief Executive Officer's
recommendation as to his successor should he be unexpectedly disabled.
6. Executive Compensation. Delta's executive compensation program will be
designed and administered with clear and strong linkages to its business
strategy and long-term goals, particularly the creation of shareowner value,
to develop talented executives and motivate them to work for the long-term
advantage of Delta's primary stakeholder groups.
7. Director Compensation. The Board will periodically review director
compensation in comparison with companies that are similarly situated to
ensure that such compensation is reasonable and competitive.
8. Board Interaction with Institutional Investors, the Press, Customers,
etc. The Board believes that management speaks for Delta. Individual Board
members may, from time to time, meet or otherwise communicate with various
constituencies that are involved with Delta. However, it is expected that
Board members will speak for the Company only with the knowledge of management
and, in most instances, at the request of management.
4
<PAGE>
Board Structure
1. Number of Directors. The Board will normally consist of between nine and
eleven members, although the Board is willing to increase its size to
accommodate the availability of an outstanding candidate.
2. Independence. A substantial majority of the directors will be outside
directors who have no significant financial or personal tie to Delta, other
than Common Stock ownership and entitlement to directors' fees.
3. Board Leadership. The Board does not have a policy on whether the role of
the Chief Executive Officer and the Chairman should be separate. When the
Chief Executive Officer holds the position of Chairman of the Board, the Board
will consider the election of an outside director to chair the executive
sessions of the Board which are not attended by the Chief Executive Officer
and to have such other duties as the Board deems appropriate.
4. Committees of the Board. The Board, in consultation with the Chief
Executive Officer, will determine the responsibilities and membership of its
committees. Each committee, other than the Executive Committee, will consist
solely of outside directors. The committee chairman, in consultation with
committee members, will determine the frequency and length of the meetings of
the committee.
5. Retirement/Resignation and Term Limits. No director may stand for
reelection after age 72. A director is expected to offer to submit his or her
resignation when the director no longer holds the principal occupation he or
she held at the time of election to the Board. Directors who are full-time
employees of Delta shall resign from the Board coincident with their
retirement from full-time employment.
The Board does not believe it should establish term limits for directors.
While term limits could help ensure that there are fresh ideas and viewpoints
available to the Board, term limits have the disadvantage of losing the
contribution of directors who have been able to develop, over a period of
time, increasing insight into Delta and its operations, and who therefore
provide an increasing contribution to the Board.
6. Stock Ownership. Directors are encouraged to own a significant equity
interest in Delta within a reasonable period after initial election to the
Board. To more closely align the interests of directors and Delta's
shareowners, a portion of directors' fees will be paid in the form of Common
Stock.
Board Operations
1. Number of Meetings. The Board will meet as frequently as needed for
directors to discharge properly their responsibilities. Regular meetings of
the Board are held six times per year and special meetings are held as
required.
2. Conduct of Meetings. Board meetings will be conducted in a manner which
ensures open communication, meaningful participation and timely resolution of
issues. Whenever feasible, directors will receive materials concerning matters
to be acted upon well in advance of the applicable meeting.
3. Executive Sessions. The Board will hold executive sessions at least twice
a year without the Chief Executive Officer or any other inside directors.
4. Board Access to Senior Management. Board members have complete access to
Delta's senior management. It is assumed that Board members will use judgment
to be sure that contact with management is not distracting to Delta's business
operations and that the Chief Executive Officer is appropriately informed.
5. Senior Management Service on Outside Boards. Members of senior management
should review proposed outside Board memberships with the Corporate Governance
Committee, and outside Board memberships ordinarily should be limited to
three.
5
<PAGE>
Compensation of Directors
Non-employee members of the Board of Directors (i.e., directors who are not
employed by Delta on a full-time basis) receive an annual retainer fee of
$25,000, of which $5,000 is paid in shares of Common Stock, and a meeting fee
of $1,000 plus expenses for each Board and Committee meeting attended. The
chairmen of each of the Committees also receive an annual retainer fee of
$7,500. Full-time employees of Delta who serve as directors receive only
reimbursement of expenses incurred in attending meetings. Directors and their
spouses are eligible for complimentary transportation privileges on Delta.
Non-employee directors also receive an annual non-qualified stock option
grant which, at the time of grant, is intended to have a present value equal
to approximately twice the cash portion of the current annual retainer of
$20,000. These awards are made under the Non-employee Directors' Stock Option
Plan, which was adopted by the Board in fiscal 1999 and is administered by the
Corporate Governance Committee. During fiscal 1999, each non-employee director
received a non-qualified stock option to purchase 2,000 shares of Common Stock
at a price of $49.0938 per share, which was the closing price of the Common
Stock on the New York Stock Exchange on the grant date. These stock options
generally become exercisable with respect to 25% of the covered shares on each
of the first four anniversaries of the grant date, and may not be exercised on
or after the tenth anniversary of the grant date.
Directors may defer all or any part of their cash compensation earned as a
director until a date specified by the director (which date shall be at least
one year, but no more than ten years, following the end of the calendar year
in which the compensation was earned). A participating director may choose, on
a prospective basis, an investment return on the deferred amount from among
certain of the investment return choices available under the Savings Plan,
including a fund invested primarily in Common Stock (the "Delta Common Stock
Fund").
Directors who served on the Board on or before October 24, 1996, and who
retire from the Board may be elected advisory directors for a term which
varies depending upon the director's term of service and age at retirement.
Advisory directors receive an annual retainer equal to the annual retainer
paid to non-employee directors at the time of their retirement.
On October 24, 1996, the Board terminated the Advisory Director Program for
all future directors who were not members of the Board on that date. Non-
employee directors who join the Board after October 24, 1996, will receive, in
addition to their other fees, a deferred payment of $6,300 during each year in
which they serve as a director. The deferred payment will earn an investment
return equivalent to the investment return on the Delta Common Stock Fund
under the Savings Plan, and will be paid to the director after he completes
his service as a member of the Board.
Lifetime advisory directors, and directors who retire from the Board at
their mandatory retirement age, are eligible during their lifetime for
complimentary transportation privileges on Delta for themselves and their
spouses.
On September 24, 1998, the Board of Directors granted Mr. Grinstein 8,000
shares of Common Stock and related dividend equivalents which are reinvested
in additional shares of Common Stock at current market prices. This award was
in recognition of Mr. Grinstein's agreement to serve as non-executive Chairman
of the Board for an additional year, his outstanding contributions to Delta
and the large amount of time he devotes to Delta's affairs. The shares of
Common Stock will be issued to Mr. Grinstein after he completes his Board
service. On September 24, 1998, the closing price of the Common Stock on the
New York Stock Exchange was $51.6563. The Board granted Mr. Grinstein an award
of 7,000 shares of Common Stock on similar terms during fiscal 1998.
Charitable Award Program
Delta's charitable contribution program permits an eligible director to
recommend up to five tax-exempt organizations to receive donations totaling $1
million after the director's death. Recommended donations will be made by The
Delta Air Lines Foundation, a tax-exempt charitable foundation funded by
Delta. On July 28, 1994, the Board discontinued this program for all future
directors who were not members of the Board on that date.
6
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
A Board of ten directors is to be elected at the annual meeting, each
director so elected to hold office for a term of one year and until the
election and qualification of a successor. In the event any nominee for
director declines or is unable to serve, a substitute nominee or nominees may
be chosen by the persons authorized by the Board to vote the proxies. The
Board of Directors recommends a vote "FOR" the following nominees:
Edwin L. Artzt, James L. Broadhead, Edward H. Budd, R. Eugene Cartledge,
Mary Johnston Evans, George M.C. Fisher, David R. Goode, Gerald Grinstein,
Leo F. Mullin and Andrew J. Young.
All of the nominees were elected by the shareowners at the last annual
meeting of shareowners except Mr. Goode and Mr. Fisher. Mr. Goode was elected
to the Board of Directors effective April 22, 1999. Mr. Fisher is standing for
election at the annual meeting. During fiscal 1999, each director attended at
least 75% of the meetings of the Board of Directors and the committees on
which he or she served.
Mr. Henry A. Biedenharn, III has decided to retire from Delta's Board of
Directors at the end of his current term, and, therefore, will not stand for
re-election to the Board. Mr. Biedenharn has served on the Board since 1986.
He is member of the Audit Committee and the Benefit Funds Investment
Committee.
The members of the Board provide Delta with a wide and valuable range of
judgment and experience from such diverse fields as air and ground
transportation, banking, consumer products, government and international
affairs, insurance, international trade, utilities, and paper and paperboard
production.
Certain information about the nominees follows:
EDWIN L. ARTZT was Chairman of the Executive Committee of the Board of
Directors of The Procter & Gamble Company from July 1995 until his retirement
from that Board in September 1999. He was Chairman of the Board and Chief
Executive Officer of The Procter & Gamble Company from January 1990 until his
retirement as an executive of that company in July 1995. From June 1984 to
January 1990, Mr. Artzt served as Vice Chairman of The Procter & Gamble
Company and as President of Procter & Gamble International. He has been a
director of Delta since 1991, is Chairman of the Finance Committee, and is a
member of the Corporate Strategy Committee and the Executive Committee. Mr.
Artzt is also Chairman of the Board of Spalding Sports Worldwide, Inc., a
director of American Express Company, Evenflo Company, Inc. and GTE
Corporation, and a member of The Business Council. Age 69.
JAMES L. BROADHEAD has been Chairman of the Board and Chief Executive
Officer of FPL Group, Inc., and its principal subsidiary, Florida Power &
Light Company, since May 1990. From January 1989 to May 1990, he was President
and Chief Executive Officer of FPL Group, Inc. From 1986 to October 1988,
Mr. Broadhead served as President, Telephone Operating Group of GTE
Corporation. He has been a director of Delta since 1991, is Chairman of the
Audit Committee, and is a member of the Benefit Funds Investment Committee,
the Corporate Governance Committee and the Executive Committee. Mr. Broadhead
is also a director of New York Life Insurance Company and The Pittston
Company, a trustee of Cornell University, and a member of The Business Council
and The Business Roundtable. Age 63.
EDWARD H. BUDD was Chairman of the Board and Chief Executive Officer of The
Travelers Corporation from 1982 until his retirement in 1994, and was an
executive officer of that company from 1974 through 1993. He has been a
director of Delta since 1985, is Chairman of the Corporate Strategy Committee,
and is a member of the Executive Committee, the Finance Committee and the
Personnel & Compensation Committee. Mr. Budd is also a director of GTE
Corporation, a member of the American Academy of Actuaries and The Business
Council, and a Trustee of Tufts University. Age 66.
7
<PAGE>
R. EUGENE CARTLEDGE was Chairman of the Board of Savannah Foods &
Industries, Inc. from April 1996 until December 1997. He was Chairman of the
Board and Chief Executive Officer of Union Camp Corporation from January 1986
until his retirement in June 1994. Mr. Cartledge has been a director of Delta
since 1990, is Chairman of the Personnel & Compensation Committee, and is a
member of the Corporate Strategy Committee, the Executive Committee and the
Finance Committee. He is also Chairman of the Board for Generac Portable
Products, Inc., a director of Blount, Inc., Chase Brass Industries, Inc., Sun
Company, Inc. and UCAR International Inc. Age 70.
MARY JOHNSTON EVANS is a director of Baxter International Inc., Dun &
Bradstreet Corp., Household International, Inc., and Sunoco, Inc. She has been
a director of Delta since 1982, is Chairman of the Corporate Governance
Committee and the Executive Committee, and is a member of the Audit Committee
and the Personnel & Compensation Committee. She served as non-executive Acting
Chairman of Delta's Board of Directors from August 1, 1997 to August 14, 1997.
Mrs. Evans is also a senior member of The Conference Board. She was a director
of AMTRAK from 1974 to 1980, serving as Vice Chairman from 1974 until 1979.
Age 69.
GEORGE M.C. FISHER has been Chairman and Chief Executive Officer of Eastman
Kodak Company since 1993. He also held the position of President of Eastman
Kodak Company from December 1993 through December 1996. Before joining the
Eastman Kodak Company, Mr. Fisher served as Chairman and Chief Executive
Officer of Motorola, Inc. from 1990 to December 1993 and Chief Executive
Officer from 1988 to 1990. Mr. Fisher is also a director of AT&T Corp. and
General Motors Corporation and a member of The Business Council and The
Business Roundtable. Age 58.
DAVID R. GOODE has been Chairman, President and Chief Executive Officer of
Norfolk Southern Corporation since 1992, and an executive officer of that
company since 1985. He was elected to Delta's Board of Directors effective
April 22, 1999, and is a member of the Audit Committee and Benefit Funds
Investment Committee. Mr. Goode is also a director of Caterpillar, Inc.,
Georgia-Pacific Corporation and Texas Instruments, Incorporated, and a member
of The Business Council and The Business Roundtable. Age 58.
GERALD GRINSTEIN has been non-executive Chairman of Delta's Board of
Directors since August 14, 1997. He is also a principal of Madrona Investment
Group, L.L.C., a Seattle-based investment company, and non-executive Chairman
of the Board of Agilent Technologies, Inc. Mr. Grinstein was Chairman of
Burlington Northern Santa Fe Corporation (successor to Burlington Northern
Inc.) from September 1995 until his retirement in December 1995. He was an
executive officer of Burlington Northern Inc. and certain affiliated companies
from April 1987 through September 1995. Mr. Grinstein was Chief Executive
Officer of Western Air Lines, Inc. from 1985 through March 1987. He has been a
director of Delta since 1987, is a member of the Corporate Governance
Committee, the Corporate Strategy Committee, the Finance Committee and the
Personnel & Compensation Committee. He is also a director of Imperial Sugar
Corporation, PACCAR Inc., The Pittston Company and Vans, Inc. Age 67.
LEO F. MULLIN has been President and Chief Executive Officer of Delta since
August 14, 1997. Mr. Mullin was Vice Chairman of Unicom Corporation and its
principal subsidiary, Commonwealth Edison Company, from 1995 to August 13,
1997. He was an executive of First Chicago Corporation from 1981 to 1995,
serving as that company's President and Chief Operating Officer from 1993 to
1995, and as Chairman and Chief Executive Officer of American National Bank, a
subsidiary of First Chicago Corporation, from 1991 to 1993. He has been a
director of Delta since 1997. Mr. Mullin is a director of BellSouth
Corporation and Johnson & Johnson. He is a member of the board of the Air
Transport Association of America and a member of the board and Chairman-
designate of the International Air Transport Association. He is also a member
of The Business Council, The Business Roundtable and the President's Export
Council. Age 56.
8
<PAGE>
ANDREW J. YOUNG has been Co-Chairman and a senior partner of GoodWorks
International, Inc. since January 1997. He was Vice Chairman of Law Companies
Group, Inc. from 1993 through January 1997, and a director of that company
from August 1995 through January 1997. He was Chairman of Law Companies
International Group, Inc. (a former subsidiary of Law Companies Group, Inc.)
from 1990 to 1993. Mr. Young was Mayor of the City of Atlanta, Georgia from
1982 to 1990, United States Ambassador to the United Nations from 1977 to
1979, and a member of the House of Representatives of the United States
Congress from 1973 to 1977. He has been a director of Delta since 1994, is
Chairman of the Benefit Funds Investment Committee, and is a member of the
Corporate Governance Committee and the Executive Committee. Mr. Young is a
director of African Continental Telecommunications Holding Limited, Archer
Daniels Midland Company, Cox Communications, Inc., Film Fabricators, Inc.,
Host Marriott Corporation, The ARGUS Board (The International Advisory Board
of Independent Newspapers Holdings Limited) and Thomas Nelson, Inc. He is
Chairman of the Southern Africa Enterprise Development Fund, a member of the
Georgia Tech Advisory Board, and a director of the Martin Luther King, Jr.
Center. He was Co-Chairman of the Atlanta Committee for the Olympic Games and
a member of the Board of the United States Olympic Committee. Age 67.
9
<PAGE>
BENEFICIAL OWNERSHIP OF SECURITIES
Directors, Nominees for Director and Executive Officers
The following table sets forth the number of shares of Common Stock and, if
applicable, ESOP Preferred Stock beneficially owned as of August 31, 1999, by
each director and nominee for director of Delta, each person listed in the
Summary Compensation Table in this proxy statement, and all directors,
nominees for director and executive officers of Delta as a group. Unless
otherwise indicated by footnote, the owner exercises sole voting and
investment power over the shares.
<TABLE>
<CAPTION>
Shares
Beneficially
Name of Beneficial Owner Title of Securities Owned(1)
- ------------------------ ------------------- ------------
Directors and Nominees for Director
<S> <C> <C>
Edwin L. Artzt....................... Common Stock 2,832(2)
Henry A. Biedenharn, III............. Common Stock 43,411(2)(3)(4)
James L. Broadhead................... Common Stock 2,833(2)
Edward H. Budd....................... Common Stock 12,874(2)(4)
R. Eugene Cartledge.................. Common Stock 3,614(2)
Mary Johnston Evans.................. Common Stock 3,915(2)(4)
George M.C. Fisher................... Common Stock 5,000
David R. Goode....................... Common Stock 1,072(5)
Gerald Grinstein..................... Common Stock 5,451(2)(4)(6)
Leo F. Mullin........................ Common Stock 648,737(7)(8)
Andrew J. Young...................... Common Stock 2,147(2)
<CAPTION>
Executive Officers
<S> <C> <C>
Maurice W. Worth..................... Common Stock 158,590(7)(8)
ESOP Preferred Stock 175
Warren C. Jenson..................... Common Stock 174,259(7)(8)
Frederick W. Reid.................... Common Stock 55,300(7)(8)
Vicki B. Escarra..................... Common Stock 36,765(7)(8)
ESOP Preferred Stock 131
Directors and Executive Officers as a
Group (16 Persons).................. Common Stock 1,407,634(7)(8)
ESOP Preferred Stock 323
</TABLE>
- --------
(1) The directors and executive officers as a group beneficially owned 1.01%
of the outstanding shares of Common Stock. No person listed in the table
beneficially owned 1% or more of the outstanding shares of Common Stock or
ESOP Preferred Stock.
(2) Includes 500 shares of Common Stock which the director has the right to
acquire within 60 days upon the exercise of stock options.
(3) Includes 25,712 shares of Common Stock owned by the Emma Lou Biedenharn
Foundation, of which Mr. Biedenharn is a director and trustee; and 15,048
shares of Common Stock owned by Hudson, Inc., over which Mr. Biedenharn
has shared voting and investment power.
(4) Includes 463 shares, 3,630 shares, 1,092 shares and 868 shares of Common
Stock attributable to Mr. Biedenharn, Mr. Budd, Mrs. Evans and Mr.
Grinstein, respectively, due to their selection of the Delta Common Stock
Fund investment return choice under the directors' deferred compensation
arrangement, which permits directors to defer all or a portion of their
cash compensation earned as a director. See page 6 of this proxy statement
for information regarding this program.
(5) Excludes 94 shares of Common Stock attributable to Mr. Goode due to the
annual deferred payment of $6,300 under the deferred compensation
arrangement for directors who first join Delta's Board after October 24,
1996. The deferred amount earns an investment return equivalent to the
investment return on
10
<PAGE>
the Delta Common Stock Fund under the Savings Plan. Mr. Goode will not have
the power to dispose of these deferred amounts until after he completes his
Board service. See page 6 of this proxy statement for additional
information regarding this program.
(6) Excludes a total of 15,000 deferred shares of Common Stock which the Board
of Directors granted to Mr. Grinstein during fiscal 1998 and 1999, and 32
additional deferred shares earned through the reinvestment of dividend
equivalents on these shares. Mr. Grinstein will not have the power to vote
or dispose of these shares until they are issued to him after he completes
his Board service. See page 6 of this proxy statement for information
regarding these grants.
(7) Includes the following number of shares of Common Stock which the
following persons or group have the right to acquire upon the exercise of
stock options that were exercisable as of August 31, 1999, or that will
become exercisable within 60 days after that date: Mr. Mullin--629,550;
Mr. Worth--130,800; Mr. Jenson--102,900; Mr. Reid--50,000; Ms. Escarra--
27,200; and directors and executive officers as a group--1,160,200. Mr.
Jenson forfeited his stock options when he resigned from Delta on
September 7, 1999.
(8) Includes the following number of shares of unvested restricted stock over
which the following persons or group had voting, but not investment, power
as of August 31, 1999; Mr. Mullin--4,016; Mr. Worth--4,850; Mr. Jenson--
55,322; Mr. Reid--4,007; Ms. Escarra--1,616; and directors and executive
officers as a group--109,862. Mr. Jenson forfeited his shares when he
resigned from Delta on September 7, 1999.
Beneficial Owners of More Than 5% of Voting Stock
The following table sets forth the holdings of the only persons known to
Delta to beneficially own more than five percent of any class of Delta's
outstanding voting securities.
<TABLE>
<CAPTION>
Amount and Nature Percent of
Name and Address of Beneficial Class on
of Beneficial Owner Title of Class Ownership August 31, 1999
- ------------------- -------------- ----------------- ---------------
<S> <C> <C> <C>
Primecap Management
Co..................... Common Stock 11,416,000(1) 8.2%
225 South Lake Ave.,
Suite 400
Pasadena, CA 91101-3005
The Equitable Companies
Incorporated........... Common Stock 8,244,686(2) 5.9%
1290 Avenue of the
Americas
New York, NY 10104
Fidelity Management
Trust Company ......... ESOP Preferred Stock 6,529,781(3) 100.0%
82 Devonshire Street Common Stock 7,697,700(3) 5.6%
Boston, MA 02109
</TABLE>
- --------
(1) Based on a Schedule 13G dated January 31, 1999, in which Primecap
Management Co. reported that it had sole voting power over 2,927,000 of
such shares, shared voting power over none of such shares, sole
dispositive power over 2,927,000 of such shares and shared dispositive
power over 8,489,000 of such shares.
(2) Based on a Schedule 13F dated August 12, 1999, in which The Equitable
Companies Incorporated reported that it and certain of its affiliates had
sole voting power over 1,326,539 of such shares, shared voting power over
5,873,765 of such shares and sole dispositive power over 8,232,796 of such
shares.
(3) These shares are held by Fidelity Management Trust Company as the trustee
of the Delta Family-Care Savings Plan.
The Delta Family-Care Savings Plan
Fidelity Management Trust Company is the trustee of the Delta Family-Care
Savings Plan, a qualified defined contribution pension plan under which
eligible Delta personnel may contribute a portion of their earnings on a pre-
tax or after-tax basis to various investment funds, including the Delta Common
Stock Fund.
Subject to certain federal tax limitations, during fiscal 1999, Delta
contributed 50 cents to a participant's Savings Plan account for every $1
contributed by that participant, up to 2% of the participant's annual
earnings. The Savings Plan contains an employee stock ownership plan ("ESOP")
feature pursuant to which a specified
11
<PAGE>
amount of Delta's contributions to a participant's account during each Savings
Plan year is invested in ESOP Preferred Stock and Common Stock ("Preferred
Stock Fund"). At June 30, 1999, there were approximately 64,800 participants
in the Savings Plan.
The Savings Plan provides that shares of ESOP Preferred Stock and Common
Stock allocated to a participant's account in the Preferred Stock Fund
("Allocated Shares") will be voted by the trustee in accordance with the
participant's confidential voting instructions or, if no voting instructions
are received by the trustee prior to the deadline specified in the Voting
Instruction Form, these shares will be voted by the trustee in its discretion.
The Savings Plan further provides that shares of ESOP Preferred Stock not yet
allocated to any participant's account will be voted by the trustee in
proportion to the votes cast with respect to Allocated Shares for which voting
instructions are received.
The Savings Plan provides that shares of Common Stock attributable to a
participant's account in the Delta Common Stock Fund will be voted by the
trustee in accordance with the participant's confidential voting instructions
or, if no instructions are received by the trustee prior to the deadline
specified in the Voting Instruction Form, these shares will be voted by the
trustee in its discretion.
PERSONNEL & COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Personnel & Compensation Committee of the Board of Directors is pleased
to present this report on Delta's executive compensation program. This report
describes the executive compensation policies under which the Committee makes
decisions about executive pay and discusses each principal component of the
current program. It also explains the basis on which the Committee made fiscal
1999 compensation determinations for the Chief Executive Officer and other
executive officers of the Company, including those named in the Summary
Compensation Table shown elsewhere in this proxy statement.
Compensation Strategy and Overall Objectives of Executive Compensation Program
The Committee's foremost objective is to have an executive compensation
program that attracts, retains and motivates talented executives to work for
the long-term advantage of the Company's primary stakeholder groups--Delta
shareowners, Delta customers and the people employed by Delta. The Committee
believes that an executive compensation program designed and administered with
clear and strong linkages to the Company's business strategy and long-term
goals, particularly the creation of shareowner value, will accomplish this
objective.
Consistent with this philosophy, the Committee has structured the executive
compensation program to achieve the following:
. Enable Delta to attract and retain a group of highly qualified and
experienced executives by providing a competitive total compensation
package;
. Focus Delta's executives on achieving aggressive financial and operating
goals tied to the Company's near- and long-term business objectives;
. Emphasize at risk pay by having a substantial portion of total pay
consist of incentive pay components that tie executives' rewards to
performance results achieved; and
. Closely link the long-term interests of Delta's executives to those of
its shareowners by having stock-based compensation comprise a major
portion of total pay opportunities. To further support this goal, the
Committee has established specific stock ownership levels for Delta
executives.
These principles apply to compensation determinations for all executive
officers. In making decisions about actual compensation levels, the Committee
considers all elements of the executive compensation program in total, and not
any one element in isolation. The Committee works with independent
compensation consultants to
12
<PAGE>
assist it in evaluating and, as appropriate, revising the executive
compensation program to better support the Company's business strategy and
long-term goals.
The Committee believes it is important to consider pay levels and practices
of the companies with which Delta competes for executives to ensure that
salary levels and incentive opportunities are competitive and support the
objectives listed above. During fiscal 1999, the Committee compared Delta's
total pay opportunities and executive compensation components to the programs
in place at other major U.S. airlines and at a cross-section of well-regarded
companies in general industry. These comparisons reflect the fact that Delta's
competitors for executive talent extend beyond the Company's direct business
competitors. For this reason, the relevant market for pay comparisons is
broader than the airline peer companies who comprise the published industry
index in the Performance Graph shown elsewhere in this proxy statement.
As a result of its review of the executive compensation program during
fiscal 1999, the Committee revised specific elements of the Company's program
to improve its competitiveness and refine its focus on performance. These
changes are discussed in the separate description of each component below.
Principal Components of Executive Compensation
The primary components of Delta's executive compensation package are base
salary, incentive compensation and stock-based awards.
Base Salary
The Committee approves salaries for executives above the level of Senior
Vice President, and recommends the Chief Executive Officer's salary to the
Board for its approval. The Committee's objective during fiscal 1999 was to
set base salaries for Delta's executive officers at levels that are comparable
to similar executive positions at other major U.S. airlines and the broader
comparator group described above.
Actual salary levels are based on a combination of factors that includes the
executive's performance, responsibilities, and experience, as well as the
salaries of comparably-placed executives in the competitive market. Equity
considerations relative to base pay for other Company executives also are
considered. The Committee exercises its discretion in making salary
recommendations and decisions, and does not apply a specific formula or
weighting to the factors listed above. In this connection, the Committee
relies to a large extent on the Chief Executive Officer's evaluations of
individual executive officer performance, after reviewing such individual
performance with him. Salary increases for executives do not follow a preset
schedule.
During fiscal 1999, the Committee increased salary rates for selected
executives in light of the factors mentioned above. As a result of these
increases, the Committee believes the salary rates for Delta's executive
officers generally are in line with salaries for comparable positions at the
major U.S. airlines and the broader comparator group discussed above.
Incentive Compensation Plan
The purpose of the Incentive Compensation Plan is to provide additional cash
compensation for achieving annual levels of financial and operating
performance that support the Company's near- and long-term strategic
objectives. The plan emphasizes the link between pay and performance for
Delta's executives by providing rewards that can only be earned by meeting
pre-established performance goals.
Early in fiscal 1999, the Committee approved a compensation formula for
Executive Vice Presidents and above to determine the annual incentive awards
for those officers whose compensation may be subject to the deductibility
limitations of Section 162(m) of the Internal Revenue Code. Awards for these
officers, and for other participants in the plan, are based on the Company's
achieving specific financial goals (net income and return on investment), as
well as effectiveness and efficiency goals (safety, reliability, customer
satisfaction, revenue per
13
<PAGE>
available seat mile, and non-fuel costs per available seat mile). All
financial, effectiveness and efficiency goals were established in light of
Delta's fiscal 1998 performance, its fiscal 1999 business plan and the
performance of Delta's peer airlines. The awards also are based on key
initiative goals related to Delta's strategic objectives (for example, the
implementation of strategies related to business structure, airport master
plans, technology and human resources, including labor relations and employee
morale). The Chief Executive Officer and the Chief Operating Officer are
measured solely on overall corporate results. All other participants are
measured based on the achievement of individual performance goals as well as
the overall corporate results.
For fiscal 1999, awards to executive officers were based upon the Company's
results for all applicable performance categories and, for Executive Vice
Presidents, performance with respect to individual goals. For all
participants, targeted Company goals were exceeded in the aggregate and
payouts were determined accordingly. Variations in individual performance were
reflected in the final awards.
In determining final awards, the Committee notes that the Company's overall
performance for fiscal 1999 was strong, and that Delta improved its financial
condition and its operating statistics significantly over the prior year. As a
result of the significant efforts made by Delta people during the year, the
Company again achieved record financial results and enhanced its competitive
position in safety, reliability and customer satisfaction.
Stock-Based Awards
The potential value of long-term incentive opportunities comprises the
largest portion (60% or more) of the targeted total compensation package for
executive officers. The Committee believes this approach to total compensation
opportunities provides the appropriate focus for those executives who are
charged with the greatest responsibility for managing the Company and
achieving success for all of Delta's stakeholders. To reflect this emphasis on
equity-based compensation, long-term incentive awards for plan participants
are targeted between the 50th and 65th percentiles of the market pay
practices. Specific award guidelines vary by level of responsibility. Stock-
based compensation awards are made under the 1989 Stock Incentive Plan. This
plan provides that employees selected by the Committee can receive awards of
stock options, stock appreciation rights, restricted stock and other stock-
based awards; award types can vary from year to year at the Committee's
discretion. The plan has been approved by Delta's shareowners, initially in
1988 and most recently when the plan was amended in October 1997.
In September 1998, the Committee granted non-qualified stock options and
performance-based restricted stock to all executive officers (other than the
two executive officers hired during the fiscal year) and to selected officers
below the executive officer level. It also granted non-qualified stock options
to selected other employees. The long-term incentive award opportunity for
officers is delivered 70% in stock options and 30% in performance-based
restricted stock. Awards for non-officer participants are delivered solely in
the form of stock options.
Stock options granted in September 1998 gave executive officers and other
participants the right to purchase shares of Common Stock at its closing price
on the New York Stock Exchange on the date of grant, and have a term of ten
years. To enhance the retention element of these awards, the Committee
approved changes so that options become exercisable in 25% increments on each
of the first four anniversaries of the grant date rather than becoming
exercisable in full on the first anniversary of the grant. No stock options
granted under the plan have been repriced, nor does the Committee intend to
consider option repricing in the future.
The portion of the long-term award allocated to stock options is converted
to a number of stock options by using the Black-Scholes option pricing model.
The Committee may apply its judgment to adjust the formula award based on
individual performance, contribution to Company success, and equity relative
to other plan participants. The Committee may also consider other factors from
time to time in making stock option awards.
The performance-based restricted stock program provides rewards based on
Delta's financial and operational performance relative to peer domestic
airlines over three-year performance cycles. As with stock options, formula
14
<PAGE>
awards may be adjusted based on the factors listed above. At the end of each
three-year performance cycle (the first cycle ends on June 30, 2001),
participants may earn nothing, or a number of shares ranging from 40% to a
maximum of 200% of the target award. Performance goals measured include
Delta's ranking relative to its peer domestic airlines with respect to total
shareholder return and three key U.S. Department of Transportation measures
related to operations and customer satisfaction.
The Committee made additional non-qualified stock option and restricted
stock awards to selected executive officers. Two executive officers received
stock options and restricted stock in connection with their hiring; generally,
these stock options become exercisable over five years and the restricted
stock vests over three years. In June 1999, selected executive officers
received one-time grants of stock options as an additional incentive to focus
on enhancing Delta's shareowner value and to increase their ownership
potential relative to other executive officers.
Stock Ownership Guidelines
In keeping with the principles outlined earlier in this report, the
Committee advocates stock ownership by Delta's executives. The Committee
believes that the interests of executives and Delta's shareowners will be more
closely aligned if executives own meaningful amounts of Delta stock.
Accordingly, in fiscal 1999, the Committee amended the Company's stock
ownership guidelines to increase the amount of Delta stock executive officers
should own. Under the new policy, executive officers are expected to own Delta
stock worth three to five times base salary, based on their level of
responsibility, by a specified date. Stock in the form of unexercised options,
unvested restricted stock or unearned performance-based restricted shares do
not count for purposes of measuring compliance with the ownership guidelines.
Policy with Respect to the $1 Million Deduction Limit
Section 162(m) of the Internal Revenue Code generally limits to $1 million
the annual corporate federal income tax deduction for certain "non-performance
based" compensation paid to the chief executive officer or any of the four
other highest paid officers of a publicly-held corporation. The Committee has
carefully considered the Company's executive officer compensation program in
light of the applicable rules, and believes that compliance with those rules
generally is in the Company's best interests. Accordingly, the material terms
of both the Incentive Compensation Plan and the 1989 Stock Incentive Plan have
been approved by Delta's shareowners. The Committee reserves the right,
however, to make exceptions to this practice when it determines that doing so
will better support the Company's compensation policies or its business
strategy and long-term goals.
Fiscal Year 1999 Compensation of the Chief Executive Officer
Mr. Mullin's compensation is determined following a process similar to that
used for other executive officers. The terms of Mr. Mullin's employment
agreement are set forth in the section entitled "Employment Agreement with Mr.
Mullin" elsewhere in this proxy statement.
During fiscal 1999, the Committee recommended and the Board approved
increasing Mr. Mullin's base salary to $700,000. This decision was made after
reviewing his performance and competitive market data on the salaries of chief
executive officers of other major U.S. airlines as well as those of companies
in the peer group described earlier.
In addition to his base salary, Mr. Mullin received an incentive
compensation award of $1 million for performance during fiscal 1999. Mr.
Mullin's award reflects the Committee's belief that his leadership contributes
significantly to the Company's overall success and to the strong performance
reflected in Delta's financial and operating results for the year. In making
this determination, the Committee noted the Company's continued improvements
in customer service and operations, and its record financial performance
during Mr. Mullin's second year as President and Chief Executive Officer. The
Committee also noted that, under Mr. Mullin's leadership, Delta was recognized
as the "1998 Airline of the Year" and the "1999 Best-Managed Major Airline" by
industry publications, and received both FAA and industry awards related to
safety training programs and
15
<PAGE>
innovation in the technical operations area. Among other factors the Committee
considered are Delta's significant progress in strengthening its internal
organization and talent, enhanced information technology capabilities,
expanded relationships with other domestic and international carriers, and the
achievement of other key business initiatives that will ensure Delta's overall
competitiveness. No particular weighting was assigned to any of these factors.
Mr. Mullin also was awarded 118,200 stock options and 26,200 performance-based
restricted shares in September 1998 under the same programs applicable to
other executive officers. In determining the size of Mr. Mullin's awards, the
Committee considered the pay practices of other major U.S. airlines and the
general industry companies described earlier in this report, as well as Mr.
Mullin's performance during the prior year and his contributions to Delta's
overall results. The Committee's emphasis on performance in setting Mr.
Mullin's incentive compensation and stock-based awards resulted in over 85% of
his total pay opportunity for 1999 being based on performance.
Other Matters
During fiscal 1999, the Board of Directors continued the formal process
adopted during fiscal 1998 by which this Committee conducts an annual and
independent evaluation of the Chief Executive Officer's performance that
involves written feedback from all directors. The Committee reviewed the
results of this evaluation with the Board at its July 1999 meeting.
Respectfully submitted,
THE PERSONNEL & COMPENSATION COMMITTEE
R. Eugene Cartledge, Chairman
Edward H. Budd
Mary Johnston Evans
Gerald Grinstein
16
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
paid to Delta's Chief Executive Officer and its four other most highly
compensated executive officers at June 30, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
-------------------------------
Annual Compensation Awards Payouts
------------------------- ----------------------- -------
Other
Annual Restricted Securities All Other
Compen- Stock Underlying LTIP Compen-
Name and Salary Bonus sation Award(s) Options/SARs Payouts sation
Principal Position Year ($) ($)(1) ($)(2) ($)(3) (#)(4) ($)(5) ($)(6)
- ------------------ ---- ------- --------- ------- ---------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Leo F. Mullin........... 1999 695,833 1,000,000 46,237 0 118,200 0 154,448
President and Chief 1998 571,250 1,000,000 204,361 526,500 1,000,000 0 301,488
Executive Officer(7)
Maurice W. Worth........ 1999 541,250 621,158 8,657 0 63,200 0 12,943
Chief Operating Officer 1998 462,600 558,838 10,110 0 73,000 0 14,792
1997 333,333 205,743 8,639 0 42,000 0 13,700
Warren C. Jenson........ 1999 500,000 425,000 139,197 0 11,600 0 358,280
Executive Vice 1998 100,641 100,000 2,567 4,630,000 500,000 0 6,309
President and
Chief Financial
Officer(7)(8)
Frederick W. Reid....... 1999 500,000 425,000 132,158 0 125,000 0 207,275
Executive Vice 1998 0 0 0 376,500 250,000 0 0
President and
Chief Marketing
Officer(7)
Vicki B. Escarra........ 1999 335,000 285,000 2,664 0 233,000 0 6,199
Executive Vice
President--
Customer Service(9)
</TABLE>
- --------
(1) Represents the incentive compensation award, if any, for services rendered
during the specified fiscal year. Amounts earned in fiscal 1999 were paid
in the first quarter of fiscal 2000.
(2) Represents reimbursements during fiscal 1999 for taxes related to Delta's
payment of life insurance premiums and, as to Messrs. Mullin, Jenson and
Reid, relocation expenses. No person listed in the Summary Compensation
Table received compensation in the form of personal benefits in excess of
the lesser of $50,000 or 10% of the total of his or her annual salary and
bonus.
(3) The Personnel & Compensation Committee granted the following persons the
following number of shares of restricted stock on the dates indicated: Mr.
Mullin--12,000 shares on August 14, 1997; Mr. Jenson--80,000 shares on
March 23, 1998; and Mr. Reid--6,000 shares on June 9, 1998. The value of
these awards shown in the table is based on the closing price of the
Common Stock on the New York Stock Exchange on the applicable grant date.
Subject to earlier vesting or forfeiture in certain circumstances, (i) Mr.
Mullin's award vested or vests in three equal installments on July 1, 1998,
1999 and 2000; (ii) Mr. Jenson's award vested or vests as to 66,000 shares
in three equal installments on March 23, 1999, 2000 and 2001, and as to
14,000 shares in five equal installments on March 23, 1999, 2000, 2001,
2002 and 2003; and (iii) Mr. Reid's award vested or vests in three equal
installments on June 9, 1999, 2000 and 2001. Cash dividends on the
restricted stock are reinvested in additional shares of Common Stock which
are subject to the same restrictions as the original award.
At June 30, 1999, the number and value of the aggregate restricted stock
holdings of the persons named in the Summary Compensation Table was: Mr.
Mullin--8,025 shares valued at $462,441; Mr. Worth--4,850 shares valued at
$279,481; Mr. Jenson--55,322 shares valued at $3,187,930; Mr. Reid--
4,007 shares valued at $230,903; and Ms. Escarra--1,616 shares valued at
$93,122. The value of these awards on June 30, 1999 is based on the
$57.6250 closing price of the Common Stock on the New York Stock Exchange
on that date.
As a result of his resignation from Delta, Mr. Jenson forfeited all his
shares of restricted stock, other than those shares which vested on March
23, 1999.
17
<PAGE>
(4) Represents the number of shares of Common Stock subject to stock options.
As a result of his resignation from Delta, Mr. Jenson forfeited all his
stock options.
(5) See page 20 of this proxy statement for information regarding long-term
incentive awards granted during fiscal 1999.
(6) The fiscal 1999 amount for Mr. Mullin represents Delta's payments of
$12,525 for supplemental group life insurance premiums and $141,923 for
relocation expenses.
During fiscal 1999, Delta paid supplemental group life insurance premiums
and made contributions under the Savings Plan for Mr. Worth and Ms. Escarra
as follows: Mr. Worth--$9,743 and $3,200, respectively; and Ms. Escarra--
$2,999 and $3,200, respectively.
During fiscal 1999, Delta paid supplemental group life insurance premiums
and relocation expenses for Messrs. Jenson and Reid as follows: Mr. Jenson--
$4,475 and $353,805, respectively; and Mr. Reid--$4,475 and $118,158,
respectively. The fiscal 1999 amount for Mr. Reid also includes Delta's
payments of $63,000 for an individual life insurance premium and $21,642 for
his legal fees in connection with the preparation of his employment
agreement.
(7) Messrs. Mullin, Jenson and Reid joined Delta in August 1997, April 1998
and July 1998, respectively. Each of these executive officers received
stock options and restricted stock as of the date he entered into an
agreement with Delta regarding his employment with the Company.
(8) Mr. Jenson resigned from Delta on September 7, 1999 to accept a position
with another company. As a result of his resignation, Mr. Jenson forfeited
his unvested restricted stock and his stock options. See Notes 3 and 4 to
the Summary Compensation Table.
(9) Ms. Escarra became an executive officer of Delta in July 1998.
Accordingly, information regarding her compensation for fiscal 1997 and
1998 is not included.
The following table sets forth certain information regarding non-qualified
stock options granted during fiscal 1999 to the persons named in the Summary
Compensation Table. None of the grants made during fiscal 1999 included stock
appreciation rights.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Grant Date
Individual Grants(1) Value
-------------------------------------------------- -----------
Number of
Securities % of Total
Underlying Options Granted Exercise or Grant Date
Grant Options to Employees in Base Price Expiration Present
Name Date Granted (#) Fiscal Year ($/Sh)(1) Date Value($)(2)
- ---- --------- ---------- --------------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Leo F. Mullin........... 9/24/1998 118,200 0.60 51.6563 9/23/2008 2,478,359
Maurice W. Worth........ 9/24/1998 63,200 0.32 51.6563 9/23/2008 1,325,146
Warren C. Jenson(3)..... 9/24/1998 11,600 0.06 51.6563 9/23/2008 243,223
Frederick W. Reid....... 6/24/1999 125,000 0.64 56.5000 6/23/2009 3,120,000
Vicki B. Escarra........ 9/24/1998 40,800 0.21 51.6563 9/23/2008 855,474
6/24/1999 192,200 0.98 56.5000 6/23/2009 4,797,312
</TABLE>
- --------
(1) The exercise price for each grant is the closing price of the Common Stock
on the New York Stock Exchange on the grant date. These stock options
become exercisable with respect to 25% of the covered shares on each of
the first four anniversaries of the grant date.
18
<PAGE>
(2) The hypothetical grant date present value was determined using the Black-
Scholes option pricing model and, consistent with the Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," includes the following material assumptions and
adjustments:
<TABLE>
<CAPTION>
Date Option Granted
9/24/1998 Becomes Expected Interest Volatility Dividend
Exercisable Option Term Rate(%)(a) Rate(%)(b) Yield(%)(c)
------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
9/24/1999 6 years 4.69 26.22 0.19
9/24/2000 7 years 4.76 26.35 0.19
9/24/2001 8 years 4.78 26.98 0.19
9/24/2002 9 years 4.79 26.89 0.19
<CAPTION>
Date Option Granted
6/24/1999 Becomes
Exercisable
-------------------
<S> <C> <C> <C> <C>
6/24/2000 6 years 5.93 26.19 0.18
6/24/2001 7 years 6.05 26.54 0.18
6/24/2002 8 years 6.00 26.57 0.18
6/24/2003 9 years 5.95 27.38 0.18
</TABLE>
(a) The interest rate represents the interest rate on a U.S. Treasury
security on the grant date with a maturity date corresponding to
the expected option term.
(b) The volatility rate is calculated using monthly Common Stock
closing price and dividend information for the period equal to the
expected option term that ended on the grant date.
(c) The dividend yield represents the Common Stock's current $0.10 per
share annualized dividend divided by the fair market value of the
Common Stock on the grant date.
(3) As a result of his resignation from Delta, Mr. Jenson forfeited this stock
option grant.
The following table sets forth certain information regarding the number and
value of unexercised in-the-money stock options held at June 30, 1999 by the
persons named in the Summary Compensation Table. None of the persons named in
the Summary Compensation Table exercised any stock options during fiscal 1999,
nor do any of those persons hold any stock appreciation rights.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Options at FY-End(#) Options at FY-End($)(1)
Acquired on Value ------------------------- -------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Leo F. Mullin........... 0 0 400,000 718,200 5,387,480 8,786,720
Maurice W. Worth........ 0 0 115,000 63,200 690,375 377,222
Warren C. Jenson(2)..... 0 0 100,000 411,600 0 69,237
Frederick W. Reid....... 0 0 50,000 325,000 0 140,625
Vicki B. Escarra........ 0 0 17,000 233,000 0 459,748
</TABLE>
- --------
(1) Value of unexercised in-the-money stock options is based on the $57.625
closing price of the Common Stock on the New York Stock Exchange on June
30, 1999.
(2) As a result of his resignation from Delta, Mr. Jenson forfeited all of his
stock options.
19
<PAGE>
The following table sets forth certain information regarding performance-
based restricted stock awards granted during fiscal 1999 to the persons named
in the Summary Compensation Table.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Estimated Future Payouts under
Number of Shares, Performance or Other Non-Stock Price-Based Plans
Units or Other Period until ------------------------------------
Name Rights (#) Maturation or Payout Threshold (#) Target (#) Maximum (#)
- ---- ----------------- -------------------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Leo F. Mullin........... 26,200 3 years 10,480 26,200 52,400
Maurice W. Worth........ 14,000 3 years 5,600 14,000 28,000
Warren C. Jenson(1)..... 2,600 3 years 1,040 2,600 5,200
Frederick W. Reid....... 0 3 years 0 0 0
Vicki B. Escarra........ 8,800 3 years 3,520 8,800 17,600
</TABLE>
- --------
(1) As a result of his resignation from Delta, Mr. Jenson forfeited this
award.
The performance-based restricted stock program provides rewards based on
Delta's financial and operational performance relative to peer domestic
airlines over three-year performance cycles. At the end of each three-year
performance cycle (the first cycle ends on June 30, 2001), participants may
earn nothing, or a number of shares ranging from 40% to a maximum of 200% of
the target award. Performance goals measured are Delta's ranking relative to
its peer domestic airlines with respect to total shareholder return (share
price appreciation plus reinvested dividends) and three key U.S. Department of
Transportation measures related to operations and customer satisfaction (on-
time arrival performance, mishandled baggage rate and consumer complaint
record). Payouts will be made either 100% in Common Stock, or 60% in Common
Stock and 40% in cash (to cover taxes), at the election of the participant.
In the event of a change-in-control (as defined in Delta's 1989 Stock
Incentive Plan), each outstanding award of performance-based restricted stock
will be paid in an amount equal to the greater of (i) the actual award payable
to the participant for the applicable performance period, calculated as if the
performance period had ended on the date of the change-in-control, and (ii)
the target award payable to the participant for that performance period, in
each case prorated to reflect the portion of the performance period elapsed
through the date of the change-in-control.
RETIREMENT AND OTHER PLANS
The following table shows the estimated annual pension payable to a non-
pilot employee (before reduction for Social Security benefits and not
accounting for the limitations discussed below), including the persons named
in the Summary Compensation Table, under the Delta Family-Care Retirement Plan
("Pension Plan"), a non-contributory qualified defined benefit plan. The table
assumes that retirement occurs at the end of fiscal 1999 at the normal
retirement age of 65 after selected years of service. The benefits in the
table would be paid in the form of a joint and 50% survivor annuity.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
25 Years 30 or More
Final Average 10 Years of 15 Years of 20 Years of of Years of
Earnings Service Service Service Service Service
------------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 400,000 $ 80,000 $120,000 $160,000 $ 200,000 $ 240,000
800,000 160,000 240,000 320,000 400,000 480,000
1,200,000 240,000 360,000 480,000 600,000 720,000
1,600,000 320,000 480,000 640,000 800,000 960,000
2,000,000 400,000 600,000 800,000 1,000,000 1,200,000
2,400,000 480,000 720,000 960,000 1,200,000 1,440,000
</TABLE>
Final average earnings, for purposes of the Pension Plan, are the average of
an employee's annual earnings, based on the employee's salary and payments
received under Delta's Incentive Compensation Plan for the 36 consecutive
months in the 120-month period immediately preceding retirement which produces
the highest
20
<PAGE>
average earnings. The annual pension benefit is determined by multiplying
final average earnings by 60%, and then reducing that amount for service of
less than 30 years and by 50% of the participant's primary Social Security
benefit payable to the employee. The 50% Social Security offset is reduced for
service of less than 30 years with Delta. For purposes of pension benefits
under the Pension Plan and the supplemental non-qualified retirement plans
discussed below, the years of service at August 31, 1999, for the persons
named in the Summary Compensation Table are as follows: Mr. Mullin--2* years;
Mr. Worth--38 years; Mr. Jenson--1* year; Mr. Reid--1* year; and Ms. Escarra--
25 years. In addition, Ms. Escarra's salary at August 31, 1999 was $400,000,
which differs by more than 10% from her salary at June 30, 1999, as reported
in the Summary Compensation Table on page 17 of this proxy statement.
Employees designated by the Personnel & Compensation Committee, including
the persons named in the Summary Compensation Table, are eligible to
participate in supplemental, non-qualified retirement plans which provide for
benefits which may not be paid under the Pension Plan due to limits on the
amount of compensation and benefits for qualified plans established by the
Internal Revenue Code of 1986, as amended.
The Delta Family-Care Disability and Survivorship Plan ("Survivorship Plan")
for eligible non-pilot personnel provides monthly short-term disability and
survivorship benefits based on a participant's final average earnings and
years of service, and monthly long-term disability benefits based on a
participant's final average earnings. The Survivorship Plan also provides a
lump sum death benefit of up to $50,000. In general, final average earnings,
for purposes of the Survivorship Plan, are (1) for purposes of determining
benefits during the first six months of disability, the employee's monthly
earnings, based on the employee's salary at the time of disability; and (2)
for other purposes, the average of the employee's monthly earnings, based on
the employee's salary and payments received under Delta's Incentive
Compensation Plan over specified periods. In the event the employee dies while
employed by Delta, the employee's eligible family members are entitled to
receive an amount equal to 50%, 60% or 70% of final average earnings
(depending upon whether the employee has one, two, or three or more eligible
family members, respectively), subject to reduction for service of less than
30 years with Delta and certain benefits payable under Social Security, the
Pension Plan and other sources. Any benefits which may not be paid under the
Survivorship Plan due to Internal Revenue Code limits on the amount of
compensation and benefits for such plan, including a post-retirement lump sum
death benefit of up to $50,000, are provided under a supplemental plan for
employees designated by the Personnel & Compensation Committee, including the
persons named in the Summary Compensation Table.
OTHER MATTERS INVOLVING DIRECTORS AND EXECUTIVE OFFICERS
Compensation Committee Interlocks and Insider Participation
The members of the Personnel & Compensation Committee are Mr. Cartledge, who
serves as Chairman, Mr. Budd, Mrs. Evans and Mr. Grinstein.
Mr. Grinstein was an executive officer of Western Air Lines, Inc.
("Western") from 1985 through March 1987. Western became a wholly owned
subsidiary of Delta on December 18, 1986, and was merged into Delta on April
1, 1987.
- --------
* Pursuant to their employment agreements, described on pages 22-24 of this
proxy statement, under certain circumstances, Messrs. Mullin, Jenson and
Reid would receive retirement benefits equal to that which they would have
earned under Delta's defined benefit plans, calculated crediting Mr. Mullin
with 22 years of service, and each of Messrs. Jenson and Reid with 11 years
of service, plus, with respect to each of these persons, the number of
years of service attributable to their actual service with Delta. At August
31, 1999, Mr. Mullin had two years, and Messrs. Jenson and Reid each had
one year, of actual service. As a result of his resignation from Delta, Mr.
Jenson will not receive any pension benefits because he was not vested at
the time of his resignation.
21
<PAGE>
Retention Protection Agreements
Delta has entered into Retention Protection Agreements ("Retention
Agreements") with all of the persons named in the Summary Compensation Table
and certain other management personnel. These agreements provide certain
benefits that vary by participation level to covered individuals if there is a
Qualifying Event (as defined) during the term of the Retention Agreement. A
Qualifying Event occurs if, within a specified period after a Change in
Control (as defined), (1) there is an involuntary termination of the
individual's employment by Delta, other than for Cause (as defined) or due to
the individual's death or disability; or (2) the individual voluntarily
terminates his employment for Good Reason (as defined). A Qualifying Event
also occurs if there is a Change in Control within one year after a
termination under either circumstance described in the preceding sentence as a
result of actions taken by Delta in anticipation of a Change in Control.
A Change in Control is generally defined as (1) the acquisition of 20% or
more of the combined voting power of Delta stock; (2) a change in the
composition of the Board of Directors such that the persons who were directors
at the beginning of any two-year period (and any new director whose election
was approved by at least two-thirds of directors then still in office who
either were directors at the beginning of the period or whose election was so
approved) cease to constitute a majority of the Board; or (3) a
reorganization, merger or consolidation of Delta, or the approval by Delta's
shareowners of a sale of all or substantially all the assets of Delta, other
than in certain specified circumstances.
The benefits provided upon a Qualifying Event for executive officers include
a lump sum payment of either two or three times the sum of the individual's
annual base salary rate and target incentive compensation award; the present
value of the individual's non-qualified pension benefits (with certain
additional age and service credits); certain retiree medical and monthly
survivor coverage (or the present value equivalent, depending on the
individual's age) and life insurance coverage; certain flight benefits; and
payment of any compensation deferred under Delta's Executive Deferred
Compensation Plan. In addition, upon a Change in Control, pro rata target
incentive compensation awards will be paid under the Incentive Compensation
Plan, and all outstanding stock options, restricted stock and similar awards
granted under the 1989 Stock Incentive Plan will immediately vest and become
nonforfeitable and exercisable. The Retention Agreements also provide for
reimbursement to the individual for taxes on certain welfare benefits as well
as any excise taxes paid under Section 4999 of the Internal Revenue Code and
related taxes thereon.
Employment Agreement with Mr. Mullin
On August 14, 1997, Delta and Mr. Mullin entered into an agreement regarding
Mr. Mullin's employment with Delta as Delta's President and Chief Executive
Officer. The employment agreement provides for Mr. Mullin's employment through
the later of August 13, 2002, or the first anniversary of the date written
notice of intent to terminate is provided by Delta. It sets Mr. Mullin's
initial annual salary at $650,000; and provides Mr. Mullin with the
opportunity to receive an annual incentive award under Delta's Incentive
Compensation Plan, with a guaranteed award for fiscal 1998 equal to his
initial base salary. The employment agreement also provides (1) for Mr. Mullin
to participate in Delta's employee benefit programs, including insurance,
retirement and fringe benefits, on terms no less favorable than the terms
offered to other senior executives of Delta; (2) for Delta to pay certain
costs incurred by Mr. Mullin in connection with his relocation to the Atlanta
area as well as his reasonable legal fees in connection with the preparation
of his employment agreement; and (3) for Mr. Mullin to receive, if he
completes at least three years of actual service with Delta, 22 additional
years of service for vesting and benefit accrual purposes under Delta's
defined benefit retirement plans. Special provisions apply upon Mr. Mullin's
retirement prior to age 62 or death prior to commencement of benefits.
In the event of the termination of Mr. Mullin's employment during the term
of the employment agreement by Delta without Cause (as defined), or by Mr.
Mullin for Good Reason (as defined), the employment agreement generally
provides that Mr. Mullin will be entitled to a lump sum payment equal to two
times the sum of his final annual salary and the greater of his most recent
target or actual annual incentive award; to a prorated target incentive award;
and to continuation of medical and other benefits for two years after
termination. In addition,
22
<PAGE>
upon termination under these circumstances, Mr. Mullin will be credited with
two additional years of service for purposes of Delta's defined benefit
retirement plans. Mr. Mullin will also be entitled to immediate vesting of the
additional retirement benefit described in the preceding paragraph and the
stock options and restricted stock granted to him on August 14, 1997. For
these purposes, Cause and Good Reason are generally defined in a manner
similar to the definitions of these terms in the Retention Agreements
described above. In the event of a Change in Control of Delta, as defined in
the Retention Agreements, the employment agreement provides that Mr. Mullin
will be entitled to all of the benefits afforded to senior executives under
the Retention Agreements. In addition, in the event of a Change in Control,
the definition of Good Reason applicable to Mr. Mullin will include
Mr. Mullin's resignation from Delta during the sixty-day period commencing on
the first anniversary of the Change in Control.
On August 14, 1997, Delta granted to Mr. Mullin (1) non-qualified stock
options to purchase 1,000,000 shares of Common Stock at an exercise price of
$44.1563 per share, the opening price of the Common Stock on the New York
Stock Exchange on that date; and (2) 12,000 shares of restricted stock. The
stock options become exercisable as to 400,000 shares on August 14, 1998, and
as to an additional 200,000 shares on each of August 14, 1999, 2000 and 2001.
The restricted shares granted to Mr. Mullin vest in three equal installments
on July 1, 1998, 1999 and 2000.
Other Employment Agreements
Delta entered into employment agreements with Messrs. Jenson and Reid on
March 23, 1998 and June 9, 1998, respectively. These agreements set Messrs.
Jenson's and Reid's initial annual salary at $500,000 and provide them with
the opportunity to receive an annual incentive award under Delta's Incentive
Compensation Plan, with a guaranteed incentive award (1) for Mr. Jenson of
$100,000 for fiscal 1998 and $400,000 for fiscal 1999; and (2) for Mr. Reid of
$300,000 for fiscal 1999. These agreements further provide (1) for Messrs.
Jenson and Reid to participate in Delta's employee benefits programs,
including insurance, retirement and fringe benefits, as are provided to
Delta's Executive Vice Presidents; (2) for Delta to pay certain costs incurred
by Messrs. Jenson and Reid in connection with their relocation to the Atlanta
area as well as their reasonable legal fees in connection with the preparation
of their employment agreements; and (3) for Messrs. Jenson and Reid to
receive, if they complete at least three years of actual service with Delta,
11 additional years of service for vesting and benefit accrual purposes under
Delta's defined benefit retirement plans. Mr. Reid's employment agreement also
states that Delta will pay through April 30, 2002 premiums on an existing life
insurance policy for Mr. Reid and the taxes related to these premium payments.
On March 23, 1998, Delta granted to Mr. Jenson (1) non-qualified stock
options to purchase 500,000 shares of Common Stock at an exercise price of
$57.8750 per share, the opening price of the Common Stock on the New York
Stock Exchange on that date; and (2) 80,000 shares of restricted stock. These
stock options were to become exercisable with respect to 20% of the covered
shares on each of the first five anniversaries of the grant date. The
restricted stock vested or would have vested as to 66,000 shares in three
equal installments on each of the first three anniversaries of the grant date
and as to 14,000 shares in five equal installments on each of the first five
anniversaries of the grant date. Due to his resignation from Delta on
September 7, 1999, Mr. Jenson forfeited these stock options and restricted
stock awards in their entirety, except for the shares of restricted stock that
vested on March 23, 1999.
On April 14, 1998, Delta granted to Mr. Reid (1) non-qualified stock options
to purchase 250,000 shares of Common Stock at an exercise price of $62.7500
per share, the opening price of the Common Stock on the New York Stock
Exchange on that date; and (2) 6,000 shares of restricted stock. The stock
options become exercisable with respect to 20% of the covered shares on each
of the first five anniversaries of the grant date. The restricted stock vests
in three equal installments on each of the first three anniversaries of the
grant date.
Mr. Jenson's employment agreement also provides that, in the event of the
termination of his employment prior to March 23, 2001 by Delta without Cause
(as defined) or by Mr. Jenson for Good Reason (as defined), Mr. Jenson would
be entitled to a lump sum payment equal to the balance of his then current
base salary and then current target award under the Incentive Compensation
Plan through March 22, 2001 (subject to a minimum
23
<PAGE>
of 12 months of such salary and award); and to immediate vesting of the
retirement benefit and of the stock options and restricted stock granted under
the employment agreement. Mr. Reid's employment agreement contains
substantially similar terms and conditions if his employment is terminated
prior to June 1, 2001 by Delta without Cause or by Mr. Reid for Good Reason.
For these purposes, the definitions of Cause and Good Reason are the same as
the definitions of these terms in the Retention Agreements described above.
As discussed above, Mr. Jenson resigned from Delta on September 7, 1999 to
accept a position with another company. His resignation did not constitute
Good Reason under his employment agreement. Accordingly, Mr. Jenson did not
receive any severance benefits from Delta in connection with his resignation.
Mr. Jenson's employment with Delta required him to relocate to Atlanta.
Pursuant to Mr. Jenson's employment agreement, during fiscal 1999, a
relocation services firm retained by Delta purchased Mr. Jenson's house in
Connecticut for $2,150,000 and resold that house to a third party. The
relocation services firm's purchase price for Mr. Jenson's house was equal to
the average of its appraised value as determined by two real estate
professionals.
During fiscal 1999, Delta entered into an agreement with Robert L. Colman
under which Mr. Colman joined Delta as the Company's Executive Vice
President--Human Resources. Pursuant to Mr. Colman's employment agreement and
in connection with his relocation to Atlanta, a relocation services firm
retained by Delta purchased Mr. Colman's house in Ohio for $684,000 and resold
that house to a third party. The relocation services firm's purchase price for
Mr. Colman's house was equal to the average of its appraised value as
determined by two real estate professionals.
Section 16 Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires Delta's
directors, executive officers and persons who beneficially own more than 10%
of a registered class of Delta's equity securities to file certain reports
concerning their beneficial ownership of Delta's equity securities. Delta
believes that during fiscal 1999 all reporting persons complied with their
Section 16(a) filing obligations.
24
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Common Stock
with the cumulative total returns on two published indices, the Standard &
Poor's 500 Stock Index and the Standard & Poor's Airline Index, over the
preceding five fiscal years.
CUMULATIVE TOTAL RETURNS (1)
ON $100 INVESTED ON JUNE 30, 1994
<TABLE>
<CAPTION>
Cumulative Total Return
----------------------------------------------------------------
6/30/94 6/30/95 6/30/96 6/30/97 6/30/98 6/30/99
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DELTA AIR LINES, INC. 100 164 185 184 289 258
S & P 500 100 126 159 214 279 342
S & P AIRLINE(2) 100 121 146 152 271 248
</TABLE>
- --------
(1) Cumulative total return is defined as stock price appreciation plus
dividends paid, assuming reinvestment of all such dividends.
(2) The Standard & Poor's Airline Index consists of AMR Corporation, Delta,
Southwest Airlines and US Airways Group.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, upon recommendation of the Audit Committee, has
reappointed the firm of Arthur Andersen LLP as independent auditors for Delta
for fiscal 2000, subject to ratification by the shareowners. Arthur Andersen
LLP has served as Delta's independent auditors since 1949. A representative of
Arthur Andersen LLP is expected to be present at the Annual Meeting, and will
have an opportunity to make a statement if he or she so desires and to respond
to questions. If the shareowners do not ratify the selection of Arthur
Andersen LLP, the Board of Directors will reconsider the selection of
independent auditors.
The Board of Directors recommends a vote "FOR" this proposal.
25
<PAGE>
PROPOSAL 3
SHAREOWNER PROPOSAL
Mrs. Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Avenue, N.W.,
Suite 215, Washington, D.C. 20037, who is the beneficial owner of 100 shares
of Common Stock, has given notice that she will introduce the following
resolution at the annual meeting:
"RESOLVED: That the stockholders of Delta Air Lines, assembled in Annual
Meeting in person and by proxy, hereby request the Board of Directors to take
the necessary steps to provide for cumulative voting in the election of
directors, which means each stockholder shall be entitled to as many votes as
shall equal the number of shares he or she owns multiplied by the number of
directors to be elected, and he or she may cast all of such votes for a single
candidate, or any two or more of them as he or she may see fit.
REASONS: Many states have mandatory cumulative voting, so do National Banks.
In addition, many corporations have adopted cumulative voting. Last year
owners of 37,545,784 shares, representing approximately 29% of shares voting,
voted for this proposal.
If you AGREE, please mark your proxy FOR this resolution."
The Board of Directors OPPOSES this proposal for the following reasons:
Cumulative voting could facilitate the election of directors who represent
special interests. The Board of Directors opposes cumulative voting because it
believes each director has a duty to represent the interests of the
shareowners as a whole, rather than only a limited group of shareowners. The
Board believes the present method of voting, in which each director is elected
by a majority of the votes present and entitled to vote at the annual meeting
of shareowners, provides the best assurance that directors will represent all
shareowners. Accordingly, the Board recommends a vote "AGAINST" this proposal.
PROPOSAL 4
SHAREOWNER PROPOSAL
Mr. Dave A. Miller, Air Line Pilots Association, 100 Hartsfield Centre
Parkway, Suite 200, Atlanta, Georgia 30354, who is the beneficial owner of
1,000 shares of Common Stock and 130 shares of ESOP Preferred Stock, has given
notice that he will introduce the following resolution at the annual meeting:
"RESOLVED, that the stockholders of Delta Air Lines, Inc. (the "Company")
request that the Personnel and Compensation Committee of the Board of
Directors, in establishing and administering standards for use in awarding
performance-based compensation for senior executives (specifically, the Chief
Executive Officer, President, Chief Operating Officer, and all Executive Vice
Presidents of the Company), formally incorporate specific measures of employee
satisfaction, participation, and training, in addition to the traditional
financial measures of Company performance."
PROPONENT'S SUPPORTING STATEMENT
"A growing body of evidence links "high-performance workplace" practices,
which emphasize employee participation, feedback, training and job security,
with better overall management, higher productivity and, ultimately, greater
value for shareholders. In light of that evidence, companies such as Sears,
Avon and Eastman-Kodak have begun to implement compensation programs that
incorporate measures of employee satisfaction in the formula for determining
senior executive pay. UAL Corporation recently added employee satisfaction
related measures to the categories used in assessing company performance in
the context of senior executive compensation.
26
<PAGE>
We believe that Delta's ability to attract, develop and retain good
employees is critical to its success, and that senior executive compensation
should be based, in part, on the Company's progress toward attaining that
goal. We note that Delta used an employee questionnaire to cite improvements
in employee morale, among other factors, supporting an increased incentive
compensation award to current CEO Leo Mullin for fiscal 1998. (Proxy Statement
filed 9/16/98, at 17) The Company could use this same questionnaire-type
methodology in determining future employee morale. We request that the
Personnel and Compensation Committee of the Company's Board of Directors
formulate employee satisfaction related performance measures to be used in
future employment agreements between the Company and its senior executives,
and in bonus, stock option and long-term incentive plans in which they
participate.
Such criteria should include both affirmative and negative components. On
the affirmative side, an increase in measures of employee satisfaction should
result, all other factors remaining the same, in a higher overall performance
rating for senior executives and thus a larger amount of performance-based
compensation. Such measures can be obtained in a variety of ways, including
surveys, as mentioned above, and interviews. On the negative side, senior
executive performance rating would decline if measures of employee
satisfaction showed overall decreases. Examples of events which would affect
employee satisfaction, include significant downsizing, wage or benefit
reductions and material violations of workplace health and safety or anti-
discrimination laws."
The Board of Directors OPPOSES this proposal for the following reasons:
Strengthening the partnership between Delta and its people is a critical
component to achieving our vision of becoming the world's greatest airline.
The 1999 Annual Report to Shareowners discusses our efforts in this area.
In making executive compensation decisions, as well as other decisions
related to Delta's overall business and long-range strategy, the Board of
Directors and its Personnel & Compensation Committee consider and attach great
weight to employee satisfaction and related considerations. For example, as
discussed in the Personnel & Compensation Committee Report on Executive
Compensation included in this proxy statement, the incentive compensation
awards for fiscal 1999 are based in part on management performance with
respect to the implementation of strategies related to human resources, labor
relations and employee morale. The appropriateness of the Board's focus on
these and other business issues, as well as management's leadership, is
evidenced by the two awards Delta received during fiscal 1999 for its overall
management capabilities, namely the "1998 Airline of the Year" and the "1999
Best-Managed Major Airline" awards.
The Board and the Personnel & Compensation Committee believe that they must
have broad flexibility when making executive compensation decisions. For the
Board to deal with executive compensation matters effectively, it must reserve
the ability to choose those performance goals that best measure Delta's
business needs at any point, and to change those measures as it deems
appropriate given the circumstances. Accordingly, the Board recommends a vote
"AGAINST" this proposal.
PROPOSAL 5
SHAREOWNER PROPOSAL
Mr. Michael H. Messmore, c/o Dave Miller, Air Line Pilots Association, 100
Hartsfield Centre Parkway, Suite 200, Atlanta, Georgia 30354, who is the
beneficial owner of 1,200 shares of Common Stock and 130 shares of ESOP
Preferred Stock, has given notice that he will introduce the following
resolution at the annual meeting:
"RESOLVED: That the shareholders of Delta Air Lines, Inc. ("Delta" or the
"Company") urge the Board of Directors to seek prior shareholder approval for
all future severance agreements (including employment agreements containing
severance payment provisions) with senior executives (specifically, the Chief
Executive Officer, President, Chief Operating Officer, and all Executive Vice
Presidents of the Company) that provide benefits in an amount exceeding $2
million. For purposes of this proposal, "future severance agreements"
27
<PAGE>
include agreements renewing, modifying or extending existing severance
agreements or employment agreements containing severance payment provisions.
"Benefits" include lump-sum cash payments (including payments in lieu of
medical and other benefits) and the estimated present value of periodic
retirement payments, fringe benefits and consulting fees (including
reimbursable expenses) to be paid to the executive after the termination of
his or her employment with the Company."
PROPONENT'S SUPPORTING STATEMENT
"Upon the resignation of former CEO Ronald Allen in 1997, the Company agreed
to pay him:
. a lump sum severance amount of $4,501,000
. a lump sum payment of $85,515 in lieu of medical and dental benefits
. a total annual retirement payment of $765,000 per year
. an annual fee of $25,000 for service as an "Advisory Director"
. consulting fees of $500,000 per year for seven years, despite the fact
that Mr. Allen "shall not be called upon to devote a major portion of
his business time to the performance of services as consultant to the
corporation" and "shall only be required to perform his consulting
services at such times, and in such places and for such periods as will
result in the least inconvenience" to him
. office space, full-time secretarial support, country club membership and
dues for the Commerce Club of Atlanta--all for 10 years after his
resignation
According to a recent article, and confirmed in Delta's 1998 proxy
statement, the Company has also paid $408,776 to design, build and furnish
office space for Mr. Allen. (Adam Bryant, "A Little Icing on Top," Newsweek,
Apr. 12, 1999, at 54)
In addition, the Company's agreements with current CEO Leo Mullin and
certain other senior executives (the "Retention Protection Agreements"
discussed on page 24 of the Company's 1998 proxy statement) provide generous
severance arrangements, especially if employment is terminated in connection
with a change in control. Change in control is defined as the acquisition by
any person of beneficial ownership of 20% or more of the Company's voting
securities.
Severance agreements such as those Delta has entered into with Mr. Allen and
the Company's current senior executives may be appropriate in some
circumstances. However, given the magnitude of the benefits payable under such
agreements and the effect of those obligations in the event of a change in
control of the Company, we believe the Company should seek shareholder
approval before entering into any future such agreements. Institutional
investors such as the California Public Employees Retirement System have
recommended shareholder approval of these types of proposals in their proxy
voting guidelines. Also, the Council of Institutional Investors favor
shareholder approval if the amount payable exceeds 200% of the senior
executive's annual base salary."
The Board of Directors OPPOSES this proposal for the following reasons:
In order to attract and retain talented executives, Delta must have the
flexibility to design and execute employment agreements, including severance
provisions, which address the particular circumstances of each situation.
Many companies provide key executives with significant incentives to remain
in their employ. To compete for the best executive talent, Delta must be able
to provide incentives to executives to leave companies where they are highly
valued and compensated. In addition, Delta must be able to offer its
executives competitive employment packages or risk losing executives to other
companies.
28
<PAGE>
Severance provisions are typically included in employment packages for key
executives. The terms of a severance provision are based on market data and
consideration of what the executive would forfeit by leaving his or her
current employer. To arbitrarily limit what Delta may offer as a severance
payment, or to require prior shareowner approval of the terms of severance
provisions, would significantly limit Delta's ability to successfully attract
new executives by making it difficult for Delta to provide a new executive
with a competitive employment package in a timely manner. Moreover, a prior
shareowner approval requirement for severance provisions would also negatively
impact Delta's recruitment of key executives by requiring the premature public
disclosure of confidential employment negotiations.
In fiscal 1997, the Board of Directors approved Delta's Executive Retention
Protection Program. This program, which is described on page 22 of the proxy
statement, is intended to promote management objectivity and stability in a
change-in-control situation, and to establish a competitive level of severance
protection for covered executives. These programs remain prevalent among major
U.S. companies, and the Board continues to believe this program is in the best
interests of Delta and its shareowners.
In sum, an obligation either to limit the value of a severance provision or
to obtain prior shareowner approval of such provisions would severely inhibit
Delta's ability to develop and negotiate agreements that address the
competitive market, Delta's needs, and the individual nature of these
situations. Accordingly, the Board recommends a vote "AGAINST" this proposal.
EXPENSE OF SOLICITATION
The cost of this solicitation will be borne by Delta. In addition to
solicitation by mail, certain officers and employees of Delta, who will
receive no compensation for their services other than their regular salaries,
may solicit proxies in person, by telephone or by other means. Delta may also
make arrangements with brokerage houses, custodians, nominees and other
fiduciaries to send proxy material to their principals at Delta's expense.
Delta has retained Morrow & Co., Inc. to aid in the solicitation of proxies at
a fee of $9,500 plus certain expenses.
SUBMISSION OF SHAREOWNER PROPOSALS AND NOMINATIONS
To be considered for inclusion in the Delta's 2000 proxy materials under
Securities and Exchange Commission regulations, a shareowner proposal must be
directed to the Secretary of the Company at its principal executive office
address set forth on page one of this proxy statement; must be received by
Delta not later than May 27, 2000; and must comply in all respects with the
applicable Securities and Exchange Commission rules and regulations.
The following requirements apply to all shareowner proposals other than
those included in Delta's proxy materials pursuant to Securities and Exchange
Commission rules and regulations.
Delta's By-Laws require a shareowner proposing to nominate persons for
election to the Board of Directors, or to introduce other business, at the
annual meeting of shareowners to give timely written notice to Delta's
Secretary. To be timely, the notice must be received at Delta's principal
executive offices at least 90 days but not more than 120 days before the
anniversary date of the immediately preceding annual meeting. If, however, the
Board of Directors calls the annual meeting for a date that is not within 30
days before or after such anniversary date, notice by the shareowner will be
timely if received by Delta by the close of business on the 10th day following
the day on which the Board of Directors gave notice of the meeting date or
publicly disclosed the date of the annual meeting, whichever first occurs.
Delta's By-Laws further provide that a shareowner's notice proposing to
nominate persons for election to the Board of Directors must contain certain
information including, but not limited to, information relating to such
29
<PAGE>
persons that would be required to be disclosed in proxy solicitations for the
election of directors under Securities and Exchange Commission regulations. A
shareowner's notice proposing to bring other business before the annual
meeting must contain (1) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting; (2) the shareowner's name and address; (3) the class
and number of shares of Delta's capital stock beneficially owned by the
shareowner; and (4) any material interest of the shareowner in such business.
ANNUAL REPORT
This proxy statement is accompanied, or preceded, by Delta's Annual Report
to Shareowners for the fiscal year ended June 30, 1999. The annual report,
which contains financial and other information about Delta, is not
incorporated in the proxy statement and is not to be deemed a part of the
proxy soliciting material.
OTHER MATTERS
The Board of Directors knows of no other matters which may come before the
annual meeting. If any matters other than those referred to above should
properly come before the meeting, the persons designated by the Board to serve
as proxies will have discretionary authority to vote such proxies in
accordance with their best judgment.
30
<PAGE>
PROXY
[LOGO OF DELTA AIR LINES]
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF DELTA AIR LINES, INC.
The undersigned hereby appoints Mary Johnston Evans, Gerald Grinstein and Leo F.
Mullin, and each of them, as proxies with full power of substitution, for and in
the name of the undersigned, to vote all shares of Common Stock of Delta Air
Lines, Inc. which the undersigned would be entitled to vote on all matters which
may properly come before the Annual Meeting of Shareowners of Delta to be held
at the Boston Harbor Hotel, 70 Rowes Wharf on Atlantic Avenue, Boston,
Massachusetts 02110, on Thursday, October 28, 1999 at 9:00 a.m., local time, or
any adjournment of the meeting.
The proxies shall vote subject to the directions indicated on the reverse side
of this Proxy Card, and the proxies are authorized to vote in their discretion
upon other business as may properly come before the annual meeting or any
adjournment of the meeting. The proxies will vote as the Board of Directors
recommends where a choice is not specified. The proxies cannot vote your shares
unless you sign and return this Proxy Card or vote by telephone or the internet.
The undersigned acknowledges receipt of Delta's Notice of Annual Meeting of
Shareowners and Proxy Statement dated September 24, 1999.
NOMINEES FOR DIRECTOR:
(1) Edwin L. Artzt, (2) James L. Broadhead, (3) Edward H. Budd, (4) R. Eugene
Cartledge, (5) Mary Johnston Evans, (6) George M.C. Fisher, (7) David R. Goode,
(8) Gerald Grinstein, (9) Leo F. Mullin and (10) Andrew J. Young.
[See Reverse Side]
- --------------------------------------------------------------------------------
DETACH AND RETURN PROXY CARD; RETAIN ADMISSION TICKET
CONDUCT OF MEETING
In fairness to all shareowners attending the 1999 Annual Meeting of Shareowners
and in the interest of an orderly and constructive meeting, the following
procedures will apply:
1. Proposals will be presented in the order in which they appear in the Proxy
Statement. Presentations by proponents of shareowner proposals may not
exceed a total of five minutes. Questions or comments about any proposal
under consideration should be limited to two minutes.
2. Questions or comments concerning any issue raised during the shareowner
question and comment period should be relevant to matters of general
interest to shareowners and will be limited to two minutes.
3. The use of cameras, sound recording equipment, communication devices or any
other similar equipment is prohibited without Delta's prior permission.
<PAGE>
[X] Please mark your
votes as in this
example.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Delta's Board of Directors recommends a vote FOR all nominees and FOR Proposal 2. Delta's Board of Directors recommends a
- ---------------------------------------------------------------------------------------
vote AGAINST Proposals 3, 4 and 5.
<S> <C> <C>
1. Election of WITHHOLD FOR AGAINST ABSTAIN ------------------------------------------
Nominees for FOR ALL AUTHORITY 2. PROPOSAL to ratify the [_] [_] [_] 3. PROPOSAL by a FOR AGAINST ABSTAIN
Director. [_] [_] appointment of Arthur shareowner [_] [_] [_]
(see reverse) except as to vote Andersen LLP as relating to
indicated for all Independent auditors cumulative
below for fiscal year 2000. voting for
directors.
Instruction: To withhold authority to vote for any individual nominee, write that 4. PROPOSAL by a [_] [_] [_]
nominee's name below. shareowner
relating to
executive
compensation
_________________________________________________ matters.
- ---------------------------------------------------------------------------------------
5. PROPOSAL by a [_] [_] [_]
shareowner
relating to
executive
severance
packages.
------------------------------------------
I plan to
attend the
Annual
Meeting of
Shareowners [_]
YES
This proxy, if properly executed and
delivered, will revoke all prior proxies.
PLEASE DATE, SIGN AND MAIL THIS PROXY
CARD IN THE ACCOMPANYING ENVELOPE. NO
POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
SIGNATURE(S) ____________________________________________________________DATE ___________________
Please sign EXACTLY as your name(s) appears hereon. When signing as administrator, attorney, executor, guardian or trustee,
please give your full title. If the signer is a corporation or partnership, please sign full corporate or partnership name by
duly authorized person. If shares are held jointly, each owner should sign.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
DETACH AND RETURN PROXY CARD; RETAIN ADMISSION TICKET
TELEPHONE AND INTERNET VOTING INSTRUCTIONS
You may use the telephone or internet to vote your shares electronically, 24
hours a day, 7 days a week. To access the telephone or internet voting system,
you must use the control number printed in the box above.
1. To vote over the telephone; Using a touch-tone telephone, call
1-877-PRX-VOTE (1-877-779-8683).
2. To vote over the internet; Log on to the internet and go to the web site
http://www.eproxyvote.com/dal.
Your electronic vote authorizes the named proxies in the same manner as if you
marked, signed, dated and returned the proxy card. If you choose to vote your
shares electronically, there is no need for you to mail back your proxy card.
- --------------------------------------------------------------------------------
ADMISSION TICKET
- --------------------------------------------------------------------------------
Please indicate whether you plan to attend the 1999 Annual Meeting of
Shareowners by marking the appropriate box on the Proxy Card, or if you use the
telephone or internet system, when prompted. Only the shareowner(s) whose
name(s) appears on this ticket, or the proxy of that shareowner, will be
admitted. Due to space limitations, admission to the meeting will be on a
first-come, first-served basis. Registration will begin at 8:00 a.m.
DELTA AIR LINES, INC.
ANNUAL MEETING OF SHAREOWNERS
THURSDAY, OCTOBER 28, 1999, 9:00 A.M., LOCAL TIME
BOSTON HARBOR HOTEL
70 ROWES WHARF ON ATLANTIC AVENUE
BOSTON, MASSACHUSETTS 02110
<PAGE>
DELTA FAMILY-CARE SAVINGS PLAN
VOTING INSTRUCTION FORM
THIS VOTING INSTRUCTION FORM IS PROVIDED BY FIDELITY MANAGEMENT TRUST COMPANY,
AS TRUSTEE (TRUSTEE) FOR THE DELTA FAMILY-CARE SAVINGS PLAN (SAVINGS PLAN), for
the Annual Meeting of Shareowners of Delta Air Lines, Inc. (Delta) to be held at
the Boston Harbour Hotel, 70 Rowes Wharf on Atlantic Avenue, Boston,
Massachusetts, on Thursday, October 28, 1999 at 9:00 a.m., local time, or any
adjournment of the meeting.
I understand that, under the Savings Plan, I have the confidential right to
instruct the Trustee how to vote shares of Delta's Series B ESOP Convertible
Preferred Stock and Common Stock attributable to my Savings Plan account. I also
understand that page 12 of Delta's Proxy Statement dated September 24, 1999
describes how the Trustee will vote (1) such shares attributable to my Savings
Plan account if I do not provide voting instructions to the Trustee on or before
5:00 p.m. eastern daylight time on October 26, 1999: and (2) shares of Delta's
Series B ESOP Convertible Preferred Stock that were not allocated to any
participant's Savings Plan account on the August 31, 1999 record date for the
annual meeting.
Pursuant to the Savings Plan, I instruct the Trustee to vote the shares of
Delta's Series B ESOP Convertible Preferred Stock and Common Stock attributable
to my Savings Plan account at the annual meeting, as indicated on the reverse of
this form.
I acknowledge receipt of Delta's Notice of Annual Meeting of Shareowners and
Proxy Statement dated September 24, 1999.
NOMINEES FOR DIRECTOR:
(1) Edwin L. Artzt, (2) James L. Broadhead, (3) Edward H. Budd, (4) R. Eugene
Cartledge, (5) Mary Johnston Evans, (6) George M.C. Fisher, (7) David R. Goode,
(8) Gerald Grinstein, (9) Leo F. Mullin and (10) Andrew J. Young.
[See Reverse Side]
- --------------------------------------------------------------------------------
DETACH AND RETURN VOTING INSTRUCTION FORM; RETAIN ADMISSION TICKET
CONDUCT OF MEETING
In fairness to all shareowners attending the 1999 Annual Meeting of Shareowners
and in the interest of an orderly and constructive meeting, the following
procedures will apply:
1. Proposals will be presented in the order in which they appear in the Proxy
Statement. Presentations by proponents of shareowner proposals may not
exceed a total of five minutes. Questions or comments about any proposal
under consideration should be limited to two minutes.
2. Questions or comments concerning any issue raised during the shareowner
question and comment period should be relevant to matters of general
interest to shareowners and will be limited to two minutes.
3. The use of cameras, sound recording equipment, communication devices or any
other similar equipment is prohibited without Delta's prior permission.
<PAGE>
[X] Please make your
votes as in this
example.
<TABLE>
<CAPTION>
DELTA FAMILY-CARE SAVINGS PLAN VOTING INSTRUCTION FORM
- ----------------------------------------------------------------------------------------------------------------------------------
Delta's Board of Directors recommends a vote FOR all nominees and FOR Proposal 2. Delta's Board of Directors recommends a
- ---------------------------------------------------------------------------------------
<S> <C> <C>
vote AGAINST Proposals 3, 4 and 5.
1. Election of WITHHOLD FOR AGAINST ABSTAIN -------------------------------------------
Nominees for FOR ALL AUTHORITY 2. PROPOSAL to ratify the [_] [_] [_] 3. PROPOSAL by a FOR AGAINST ABSTAIN
Director. [_] [_] appointment of Arthur shareowner [_] [_] [_]
(see reverse) except as to vote Andersen LLP as relating to
indicated for all Independent auditors cumulative
below for fiscal year 2000. voting for
directors.
Instruction: To withhold authority to vote for any individual nominee, write that 4. PROPOSAL by a [_] [_] [_]
nominee's name below. shareowner
relating to
executive
compensation
_________________________________________________ matters.
- ---------------------------------------------------------------------------------------
5. PROPOSAL by a [_] [_] [_]
shareowner
relating to
executive
severance
packages.
-------------------------------------------
I plan to
attend the
Annual
Meeting of
Shareowners [_]
YES
This Voting Instruction Form, if properly
executed and delivered, will revoke all
prior instructions.
PLEASE DATE, SIGN AND MAIL THIS VOTING
INSTRUCTION FORM IN THE ACCOMPANYING
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES.
SIGNATURE(S) _______________________________________________________________________________________ DATE ___________________
Please sign EXACTLY as your name appears hereon. When signing as administrator, attorney, executor, guardian or trustee, please
give your full title.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
DETACH AND RETURN VOTING INSTRUCTION FORM; RETAIN ADMISSION TICKET
TELEPHONE AND INTERNET VOTING INSTRUCTIONS
You may use the telephone or the internet, 24 hours a day , 7 days a week, to
instruct the Trustee how to vote the Delta stock attributable to your Savings
Plan account. To access the telephone or internet voting instruction system, you
must use the control number printed in the box above.
1. To vote over the telephone: Using a touch-tone telephone, call
1-877-PRX-VOTE (1-877-779-8683).
2. To vote over the internet: Log on to the internet and go to the web site
http://www.eproxyvote.com/dal1.
Using the telephone or internet voting instruction system has the same effect as
giving the Trustee voting instructions by marking, signing, dating and returning
the Voting Instruction Form. If you use the telephone or internet voting
instruction system, there is no need for you to mail back your Voting
Instruction Form.
OTHER INSTRUCTIONS
To be effective, your voting instructions must be received by the Trustee on or
before 5:00 p.m. eastern daylight time on October 26, 1999. This deadline
applies whether you use the Voting Instruction Form, or the telephone or
internet voting instruction system.
- --------------------------------------------------------------------------------
ADMISSION TICKET
- --------------------------------------------------------------------------------
Please indicate whether you plan to attend the 1999 Annual Meeting of
Shareowners by marking the appropriate box on the Voting Instruction Form or, if
you use the telephone or internet voting instruction system, when prompted. You
should bring this Admission Ticket to the annual meeting to be admitted. Only
the person whose name appears on this ticket will be admitted. Due to space
limitations, admission to the meeting will be on a first-come, first-served
basis. Registration will begin at 8:00 a.m.
DELTA AIR LINES, INC.
ANNUAL MEETING OF SHAREOWNERS
THURSDAY, OCTOBER 28, 1999, 9:00 A.M., LOCAL TIME
BOSTON HARBOR HOTEL
70 ROWES WHARF ON ATLANTIC AVENUE
BOSTON, MASSACHUSETTS 02110
<PAGE>
Date: September 24, 1999
To: Participants in the Delta Family Care-Savings Plan
From: President and Chief Executive Officer
Subject: DELTA'S 1999 ANNUAL MEETING OF SHAREOWNERS
As a participant in the Delta Family-Care Savings Plan (Savings Plan), you have
the confidential right to instruct Fidelity Management Trust Company, the
Savings Plan trustee (Trustee), how to vote the Delta stock attributable to your
Savings Plan account at Delta's 1999 Annual Meeting of Shareowners. I strongly
encourage you to exercise this right because your vote is important.
To instruct the Trustee how to vote the Delta stock attributable to your Savings
Plan account, please complete and sign the enclosed Voting Instruction Form and
return it in the enclosed envelope. Alternatively, you may use the telephone or
internet voting instruction system which is discussed on the Voting Instruction
Form.
Attendance at the Annual Meeting will be limited to shareowners, persons holding
proxies from shareowners, Savings Plan participants and representatives of the
news media. Please indicate whether you plan to attend the Annual Meeting by
marking the appropriate box on the Voting Instruction Form or, if you use the
telephone or the Internet voting instruction system, by indicating so when
prompted.
Also enclosed is a copy of Delta's 1999 Notice of Annual Meeting of Shareowners,
Proxy Statement and, if you were not a registered owner of Delta stock on the
August 31, 1999 record date for the Annual Meeting, Delta's Annual Report to
Shareowners. If you were a registered owner of Delta stock on the record date,
the Annual Report to Shareowners was previously sent to you in a separate
package with the proxy materials for those shares. To obtain an additional copy
of the Annual Report to Shareowners, please contact Investor Relations at (404)
715-2170.
Delta's Board of Directors recommends a vote FOR the election of all 10 nominees
for Director, FOR Proposal 2 and AGAINST Proposals 3, 4 and 5, as set forth in
the Proxy Statement.
/s/ Leo F. Mullin
Leo F. Mullin
Enclosures
