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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
DELTA AIR LINES, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment of Filing Fee (Check the appropriate box):
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/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction
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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
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/ / Fee paid previously with preliminary materials.
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Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
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[LOGO]
Delta Air Lines, Inc.
Post Office Box 20706
Atlanta, Georgia 30320-6001
To Our Shareowners:
On behalf of the Board of Directors, it is my pleasure to invite you to
attend the 2000 Annual Meeting of Shareowners of Delta Air Lines, Inc. The
meeting will be held at the Omni Netherland Plaza Hotel, 35 West Fifth Street,
Cincinnati, Ohio 45202, on Wednesday, October 25, 2000 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 2000. 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.
I am pleased to announce that Delta will broadcast the 2000 Annual Meeting
live online (listen only) at WWW.DELTA.COM/INSIDE/INVESTORS/INDEX.JSP for
shareowners unable to attend in person. To vote your shares, you will need to
sign and return your proxy card, or use our telephone or Internet voting system.
The replay of the Web cast will be available through December 31, 2000.
Your vote is important. We encourage you to sign and return your proxy card
in the enclosed envelope, or use our telephone or Internet voting system, to
ensure that your shares are represented at the meeting.
Cordially,
/s/ Leo F. Mullin
Leo F. Mullin
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
Atlanta, Georgia
September 15, 2000
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[LOGO]
Delta Air Lines, Inc.
Post Office Box 20706
Atlanta, Georgia 30320-6001
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
TO BE HELD OCTOBER 25, 2000
To the Shareowners of Delta Air Lines, Inc.:
The Annual Meeting of Shareowners of Delta Air Lines, Inc. will be held at
the Omni Netherland Plaza Hotel, 35 West Fifth Street, Cincinnati, Ohio 45202,
on Wednesday, October 25, 2000 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 the calendar year ending December 31, 2000;
3. to approve the Delta 2000 Performance Compensation Plan;
4. to consider and vote on the four shareowner proposals described in the
accompanying proxy statement, if those proposals are presented at the
meeting; and
5. 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 the calendar year ending December 31, 2000; (3) "FOR" the approval of the
Delta 2000 Performance Compensation Plan; and (4) "AGAINST" each of the four
shareowner proposals described in the accompanying proxy statement.
Shareowners of record at the close of business on August 27, 2000 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 Delta's Investor
Relations Department, 1030 Delta Boulevard, Atlanta, Georgia 30320. 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 15, 2000
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TABLE OF CONTENTS
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General Information......................................... 1
Voting Rights and Proxy Information......................... 1
Classes of Stock Eligible to Vote......................... 1
Voting by Proxy........................................... 1
Quorum and Voting Requirements............................ 2
Proposal 1--Election of Directors........................... 3
Certain Information About Nominees........................ 3
The Board of Directors and Board Committees............... 5
Compensation of Directors................................. 6
Compensation Committee Interlocks and Insider
Participation........................................... 7
Corporate Governance Policies............................. 7
Beneficial Ownership of Securities.......................... 10
Beneficial Owners of More Than 5% of Voting Stock......... 10
The Delta Family-Care Savings Plan........................ 10
Directors, Nominees for Director and Executive Officers... 11
Section 16 Beneficial Ownership Reporting Compliance...... 12
Executive Compensation...................................... 12
Personnel & Compensation Committee Report on Executive
Compensation............................................ 12
Summary Compensation Table................................ 17
Option Grants in Last Fiscal Year......................... 18
Aggregated Option Exercises in Last Fiscal Year and FY-End
Option Values........................................... 19
Long-Term Incentive Plans--Awards in Last Fiscal Year..... 20
Retirement Plans and Other Agreements..................... 20
Five-Year Stock Performance Graph......................... 24
Proposal 2--Ratification of the Appointment of Independent
Auditors.................................................. 25
Proposal 3--Approval of the Delta 2000 Performance
Compensation Plan......................................... 25
Proposals 4, 5, 6 and 7--Shareowner Proposals............... 30
Submission of Shareowner Proposals and Nominations.......... 35
Annual Report............................................... 35
Appendix A--Delta 2000 Performance Compensation Plan........ A-1
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DELTA AIR LINES, INC.
POST OFFICE BOX 20706
ATLANTA, GEORGIA 30320-6001
PROXY STATEMENT
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ANNUAL MEETING OF SHAREOWNERS
TO BE HELD OCTOBER 25, 2000
GENERAL INFORMATION
This proxy statement is being provided to you in connection with the
solicitation of proxies, by the Board of Directors of Delta Air Lines, Inc., to
be voted at the 2000 Annual Meeting of Shareowners. The annual meeting will be
held at the Omni Netherland Plaza Hotel, 35 West Fifth Street, Cincinnati, Ohio,
45202, on Wednesday, October 25, 2000 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 enclosed proxy card are being sent to shareowners beginning on or about
September 15, 2000.
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
$17,500 plus certain expenses.
VOTING RIGHTS AND PROXY INFORMATION
CLASSES OF STOCK ELIGIBLE TO VOTE
August 27, 2000 is the record date for determining the shareowners entitled
to notice of and to vote at the annual meeting. On that date, there were
outstanding 122,974,870 shares of Delta's common stock, par value $1.50 per
share, and 6,432,322 shares of Delta's Series B ESOP Convertible Preferred
Stock, par value $1 per share ("ESOP Preferred Stock"). The common stock and
ESOP Preferred Stock are the only classes of securities entitled to vote at the
annual meeting.
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 trustee of the Delta Family-Care Savings
Plan is the holder of record of all the outstanding shares of ESOP Preferred
Stock (see pages 10-11 of this proxy statement).
On November 2, 1998, Delta's two-for-one split of the common stock became
effective. All references in this proxy statement to the number of shares of
common stock and Delta's per share common stock price reflect the stock split.
VOTING BY PROXY
GENERAL INFORMATION
All properly executed proxies, whether returned by mail or submitted by
telephone or the Internet, will be voted at the annual meeting according to 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 named on page 3 of this
proxy statement; (2) "FOR" the ratification of the appointment of Arthur
Andersen LLP as independent auditors for the calendar year ending December 31,
2000; (3) "FOR" the approval of the Delta 2000 Performance Compensation Plan, as
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described on pages 25-30 of this proxy statement; and (4) "AGAINST" each of the
four shareowner proposals described on pages 30-35 of this proxy statement.
Submitting 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 provide voting instructions to the record holder or obtain a proxy
from the record holder permitting you to vote in person at the annual meeting.
Delta has not received proper notice, and is not aware, of any business to
be transacted at the annual meeting other than as described in this proxy
statement. If any other item or proposal properly comes before the meeting, the
proxies received will be voted in accordance with the discretion of the proxy
holders.
VOTING BY WRITTEN PROXY CARD
You must sign the proxy card exactly as your name appears on the card. If
shares are owned jointly, each joint owner must sign the proxy card. If a
shareowner is a corporation or partnership, the 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 proof of appointment must be provided. All written proxy cards must be
dated.
VOTING BY TELEPHONE OR THE INTERNET
Instructions for a shareowner of record to vote by telephone or the Internet
are set forth on the 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 may be revoked by the shareowner at any time prior to the voting of
the proxy: (1) by written notice to Delta's Secretary, Robert S. Harkey; (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; (2) to ratify the appointment of Arthur
Andersen LLP as independent auditors for the calendar year ending December 31,
2000; (3) to approve the Delta 2000 Performance Compensation Plan, provided that
the total votes cast on such proposal represent over 50% in interest of all
securities entitled to vote on such proposal; and (4) to approve each of the
four shareowner proposals described in 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 proposal to approve
the Delta 2000 Performance Compensation Plan and 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 these proposals. These "broker non-votes" will
not be considered in determining the number of votes necessary for approval.
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PROPOSAL 1
ELECTION OF DIRECTORS
A Board of eleven 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, John F. Smith, Jr. and Andrew J. Young.
All of the nominees were elected by the shareowners at the last annual
meeting of shareowners except Mr. Smith, who is standing for election at the
annual meeting. During fiscal 2000, each director attended at least 75% of the
meetings of the Board of Directors and the committees on which he or she served
except Mr. Artzt, who, due to unavoidable conflicts, attended 70% of such
meetings.
The members of the Board provide Delta with a wide and valuable range of
judgment and experience from areas such as air and ground transportation,
banking, consumer products, digital technology, government and international
affairs, insurance, investments, international trade, utilities, and paper and
manufacturing.
CERTAIN INFORMATION ABOUT NOMINEES
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 Holdings Corporation, a director of American
Express Company and Evenflo Company, Inc., and a member of The Business Council.
Age 70.
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, the Corporate Strategy Committee and the Executive
Committee. Mr. Broadhead is also a director of New York Life Insurance Company
and The Pittston Company, and a member of The Business Council and The Business
Roundtable. Age 64.
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 Personnel & Compensation Committee, and
is a member of the Corporate Strategy Committee, the Executive Committee and the
Finance Committee. Mr. Budd is also a director of Verizon Communications, a
member of the American Academy of Actuaries and The Business Council, and a
Trustee of Tufts University. Age 67.
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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 Corporate Strategy Committee, and is a member of
the Executive Committee, the Finance Committee and the Personnel & Compensation
Committee. He is also Chairman of the Board for Generac Portable
Products, Inc., a director of Blount, Inc., Chase Brass Industries, Inc.,
Sunoco, Inc. and UCAR International Inc. Age 71.
MARY JOHNSTON EVANS is a director of Baxter International Inc., Household
International, Inc., Sunoco, Inc. and The Dun & Bradstreet Corporation. She has
been a director of Delta since 1982, is Chairman of the Corporate Governance
Committee, and is a member of the Audit Committee, the Benefit Funds Investment
Committee and the Executive 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 70.
GEORGE M.C. FISHER has been Chairman of the Board of Eastman Kodak Company
since 1993, and served as its Chief Executive Officer from 1993 until
December 1999. He was also President of Eastman Kodak Company from
December 1993 through December 1996. Before joining Eastman Kodak Company,
Mr. Fisher was an executive officer of Motorola, Inc., serving as Chairman and
Chief Executive Officer from 1990 to December 1993, and Chief Executive Officer
from 1988 to 1990. He has been a director of Delta since 1999, and is a member
of the Audit Committee and the Benefit Funds Investment Committee. Mr. Fisher is
also a director of AT&T Corporation, Eli Lilly & Company, and General Motors
Corporation. He is Chairman of the National Academy of Engineering, a member of
the President's Advisory Committee for Trade Policy & Negotiations, and a member
of The Business Council. Age 59.
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 has been a director of Delta since 1999, and is a member
of the Finance Committee and the Personnel & Compensation 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 59.
GERALD GRINSTEIN has been non-executive Chairman of the Board of Agilent
Technologies, Inc. since August 1999. He is also a principal of Madrona
Investment Group, L.L.C., a Seattle-based investment company. He served as
non-executive Chairman of Delta's Board of Directors from August 1997 until
October 1999. Mr. Grinstein was Chairman of Burlington Northern Santa Fe
Corporation (successor to Burlington Northern Inc.) from September 1995 until
his retirement in December 1995; an executive officer of Burlington
Northern Inc. and certain affiliated companies from April 1987 through
September 1995; and Chief Executive Officer of Western Air Lines, Inc. from 1985
through March 1987. He has been a director of Delta since 1987, is Chairman of
the Executive Committee, and 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 Expedia, Inc., Imperial Sugar
Corporation, PACCAR Inc., The Pittston Company and Vans, Inc. Age 68.
LEO F. MULLIN has been Chairman of the Delta's Board of Directors since
October 28, 1999, and has served as Delta's Chief Executive Officer since
August 1997. Mr. Mullin was Vice Chairman of Unicom Corporation and its
principal subsidiary, Commonwealth Edison Company, from 1995 to August 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. 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 Chairman 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 57.
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JOHN F. SMITH, JR. has been Chairman of the Board of Directors of General
Motors Corporation since 1996, and served as its Chief Executive Officer from
November 1992 until June 2000. He was also President of General Motors
Corporation from April 1992 until October 1998, and President and Chief
Operating Officer from April 1992 until November 1992. Mr. Smith is a director
of Hughes Electronics Corporation and The Procter & Gamble Company. He is
Chairman of Catalyst, and a member of the Board of The Nature Conservancy.
Mr. Smith is also a member of The Business Council and the U.S.-Japan Business
Council. Age 62.
ANDREW J. YOUNG has been Chairman and a senior partner of GoodWorks
International, Inc. since January 1997. He was Vice Chairman of Law Companies
Group, Inc. from 1993 to January 1997, and a director of that company from
August 1995 to 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 Audit Committee, the Corporate
Governance Committee and the Executive Committee. Mr. Young is a director of
Archer Daniels Midland Company, Cox Communications, Inc. and Thomas
Nelson, Inc. He is Chairman of the Southern Africa Enterprise Development Fund,
and a director of the Atlanta Market Center and 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 68.
THE BOARD OF DIRECTORS AND BOARD COMMITTEES
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 four times per year and special meetings are scheduled when required.
The Board also meets informally from time to time. During fiscal 2000, the Board
held a total of twelve regular and special meetings, and five informal meetings.
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 assists the Board of Directors (1) in its oversight of
Delta's accounting and financial reporting principles and policies and internal
controls and procedures; (2) in its oversight of Delta's financial statements
and the independent audit of those financial statements; (3) in selecting,
evaluating and, if appropriate, replacing the independent auditors; and (4) in
evaluating the independence of the independent auditors. This committee, which
consists of four non-employee directors, met four times in fiscal 2000.
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 2000.
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 2000.
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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, Robert S. Harkey, 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 35 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 five non-employee
directors, met three times in fiscal 2000.
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 2000.
The Finance Committee reviews Delta's financial planning and financial
structure, funds requirements, and borrowing and dividend policies. This
committee, which consists of five non-employee directors, met five times in
fiscal 2000.
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 six times in fiscal 2000.
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 cash retainer of
$20,000. These awards are made under the Non-employee Directors' Stock Option
Plan, which is administered by the Corporate Governance Committee. During fiscal
2000, each non-employee director received a non-qualified stock option to
purchase 2,000 shares of common stock at a price of $52.1250 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. In
the event of a Change in Control, as defined, all stock options outstanding
under the Non-employee Directors' Stock Option Plan become immediately vested,
exercisable and nonforfeitable for their remaining terms.
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 Delta Family-Care
Savings Plan, including a fund invested primarily in common stock (the "Delta
Common Stock Fund").
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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, and
will be paid to directors after they complete their Board service.
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 October 27, 1999, 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
consideration of Mr. Grinstein's agreement to serve as Chairman of the Executive
Committee and to assume certain additional responsibilities in that role. The
shares of common stock will be issued to Mr. Grinstein after he completes his
Board service. On October 27, 1999, the closing price of the common stock on the
New York Stock Exchange was $49.9375.
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.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Personnel & Compensation Committee are Mr. Budd, who
serves as Chairman, Mr. Cartledge, Mr. Goode and Mr. Grinstein.
Mr. Grinstein was an executive officer of Western Air Lines, Inc. 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.
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.
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<PAGE>
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 Delta only with the knowledge of management and, in most
instances, at the request of management.
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.
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<PAGE>
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 four 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.
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BENEFICIAL OWNERSHIP OF SECURITIES
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 27, 2000
------------------- -------------------- ----------------- ---------------
<S> <C> <C> <C>
PRIMECAP Management Company............. common stock 17,965,300(1) 14.6%
225 South Lake Ave., Suite 400
Pasadena, CA 91101-3005
Vanguard Primecap Fund.................. common stock 10,000,000(2) 8.1%
Post Office Box 2600
Valley Forge, PA 19482-2600
AXA Financial, Inc...................... common stock 8,482,136(3) 6.9%
1290 Avenue of the Americas
New York, NY 10104
Fidelity Management Trust Company....... ESOP Preferred Stock 6,432,322(4) 100.0%
82 Devonshire Street common stock 8,233,351(4) 6.7%
Boston, MA 02109
</TABLE>
------------------------
(1) Based on Amendment No. 9 to Schedule 13G dated May 31, 2000, in which
PRIMECAP Management Company reported that it had sole voting power over
3,379,500 of such shares, shared voting power over none of such shares, and
sole dispositive power over all 17,965,300 of such shares.
(2) Based on a Schedule 13G dated February 8, 2000, in which the Vanguard
Primecap Fund reported that it had sole voting power, and shared dispositive
power, over all 10,000,000 of such shares.
(3) Based on Amendment No. 1 to Schedule 13G dated February 10, 2000, in which
AXA Financial, Inc. reported that it and certain of its affiliates had sole
voting power over 1,633,576 of such shares, shared voting power over
5,255,645 of such shares, sole dispositive power over 8,356,391 of such
shares, and shared dispositive power over 125,745 of such shares.
(4) These shares are held by Fidelity Management Trust Company as the trustee of
the Delta Family-Care Savings Plan. The ESOP Preferred Stock may not be sold
or distributed outside the Savings Plan except for resale to Delta.
THE DELTA FAMILY-CARE SAVINGS PLAN
Fidelity Management Trust Company is the trustee of the Delta Family-Care
Savings Plan ("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, Delta contributes 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 feature pursuant to which a specified 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, 2000, there were approximately 69,700 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
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<PAGE>
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.
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 27, 2000, by
each director, each director-nominee, each person listed in the Summary
Compensation Table in this proxy statement, and all directors 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)
------------------------ -------------------- ------------
<S> <C> <C>
DIRECTORS AND NOMINEES FOR DIRECTOR
Edwin L. Artzt.................................... common stock 3,437(2)
James L. Broadhead................................ common stock 3,739(2)(3)
Edward H. Budd.................................... common stock 14,531(2)(3)
R. Eugene Cartledge............................... common stock 4,489(2)
Mary Johnston Evans............................... common stock 4,520(2)(3)
George M.C. Fisher................................ common stock 5,185(4)
David R. Goode.................................... common stock 1,172(4)
Gerald Grinstein.................................. common stock 5,615(2)(3)(5)
Leo F. Mullin..................................... common stock 914,368(6)
John F. Smith, Jr................................. common stock 2,000
Andrew J. Young................................... common stock 3,294(2)
EXECUTIVE OFFICERS
Frederick W. Reid................................. common stock 144,501(6)(7)
ESOP Preferred Stock 15
Robert L. Colman.................................. common stock 256,502(6)(7)
Vicki B. Escarra.................................. common stock 101,955(6)
ESOP Preferred Stock 152
Edward H. West.................................... common stock 2,503(6)(7)
ESOP Preferred Stock 68
Directors and Executive Officers as a Group (16 common stock 1,606,556(6)(7)
Persons)........................................
ESOP Preferred Stock 270
</TABLE>
------------------------
(1) The directors and executive officers as a group beneficially owned 1.3% 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 1,000 shares of common stock which the director has the right to
acquire upon the exercise of stock options that were exercisable as of
August 27, 2000, or that will become exercisable within 60 days after that
date.
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<PAGE>
(3) Includes 301 shares, 4,677 shares, 1,096 shares and 427 shares of common
stock attributable to Mr. Broadhead, Mr. Budd, Mrs. Evans and
Mr. Grinstein, respectively, due to their selection of the Delta Common
Stock Fund investment return choice for deferred cash compensation earned as
a director. See page 6 of this proxy statement for additional information
regarding this program.
(4) Excludes 121 shares and 215 shares of common stock attributable to
Mr. Fisher and Mr. Goode, respectively, 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 the Delta Common
Stock Fund. Messrs. Fisher and Goode may not dispose of these deferred
amounts until they complete their Board service. See page 7 of this proxy
statement for additional information regarding this program.
(5) Excludes a total of 23,000 deferred shares of common stock which the Board
of Directors granted to Mr. Grinstein in recognition of his service to the
Board and Delta as a director, and 75 additional deferred shares earned
through the reinvestment of dividend equivalents on these shares.
Mr. Grinstein may not vote or dispose of these shares until they are issued
to him after he completes his Board service.
(6) 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 27, 2000, or that will become
exercisable within 60 days after that date: Mr. Mullin--896,600;
Mr. Reid--139,900; Mr. Colman--221,125; Ms. Escarra--92,975; Mr. West--0;
and directors and executive officers as a group--1,474,917. Mr. West
forfeited his stock options when he resigned from Delta on August 8, 2000.
(7) 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 27, 2000: Mr. Reid--2,010; Mr. Colman--26,755; and directors
and executive officers as a group--51,904. Mr. West forfeited his restricted
stock when he resigned from Delta on August 8, 2000.
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 2000 all reporting persons complied with their
Section 16(a) filing obligations.
EXECUTIVE COMPENSATION
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
2000 compensation determinations for the Chief Executive Officer and other
executive officers of Delta, 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 Delta's primary stakeholder groups--shareowners,
customers and employees. The Committee believes that an executive compensation
program designed and administered with clear and strong linkages to the
company's
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<PAGE>
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 assist it in evaluating and, as appropriate, revising the
executive compensation program to better support Delta'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 2000, 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.
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 is 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.
Specifically, salaries for executives are now targeted at the median (50th
percentile) of the comparative marketplace.
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. 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 2000, 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
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<PAGE>
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 Delta'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. Delta's target for cash compensation (salary plus incentive compensation)
is at the 55th percentile, which is slightly above the median of the market.
Early in fiscal 2000, 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 Delta's achieving
specific financial goals (net income and return on investment), as well as
effectiveness and efficiency goals (safety, reliability, customer satisfaction,
revenue per 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 1999 performance, its fiscal 2000 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 customer service, airport master plans,
technology and human resources, including labor relations). The Chief Executive
Officer is measured on overall corporate financial and operational results. All
other participants are rewarded based on an incentive pool that is generated
based on overall corporate results, but that is allocated among participants
based on individual performance.
For fiscal 2000, awards to executive officers were based upon Delta's
results for all applicable performance categories. Targeted 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 noted Delta's strong financial
and operational performance in fiscal 2000. As a result of the significant
efforts made by its employees during the year, Delta again achieved record
financial results and enhanced its competitive position in safety, reliability
and customer satisfaction. The Committee believes these results are particularly
impressive in light of the results achieved by several of Delta's key
competitors.
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 Delta and achieving
success for all of Delta's stakeholders. To reflect this emphasis on
equity-based compensation, long-term incentive awards for Delta's executives are
now targeted at the 60th percentile of the market. 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.
In July 1999, the Committee granted non-qualified stock options and target
awards of performance-based restricted stock to officers, and 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.
14
<PAGE>
Stock options granted in July 1999 gave executive officers and other
participants the right to purchase shares of Delta 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 options become exercisable
in 25% increments on each of the first four anniversaries of the grant date. 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 Delta's 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 awards may be
adjusted based on the factors listed above. At the end of each three-year
performance cycle, 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 shareowner return and three key U.S. Department of Transportation measures
related to operations and customer satisfaction.
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 shareowner 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 amended policy, executive officers are expected, over time, to acquire
Delta stock worth three to five times base salary, based on their level of
responsibility. Unexercised options, unvested restricted stock and unearned
performance-based restricted shares do not count for purposes of measuring
compliance with the ownership guidelines.
DELTA 2000 PERFORMANCE COMPENSATION PLAN
The Committee has reviewed and approved the new Delta 2000 Performance
Compensation Plan being submitted to shareowners for approval. The Committee
believes the new plan is consistent with the strategy and overall objectives of
Delta's executive compensation program, and will enable Delta to attract and
retain highly qualified executives.
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 Delta's executive compensation program in light of the
applicable rules, and believes that compliance with those rules generally is in
Delta'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
Delta's compensation policies or its business strategy and long-term goals.
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<PAGE>
FISCAL YEAR 2000 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 described elsewhere in this proxy statement.
During fiscal 2000, the Committee recommended and the Board approved
increasing Mr. Mullin's base salary to $750,000. 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 $1.4 million for performance during fiscal 2000.
Mr. Mullin's award reflects the Committee's belief that his leadership
contributes significantly to Delta'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 Delta's record financial
results and its continued improvements in customer service and operations during
Mr. Mullin's third year as Chief Executive Officer. The Committee also
considered, among other things, Delta's impressive financial and operational
performance compared to its key competitors; launching of the SkyTeam global
alliance; acquisition of Comair; realization of gains on the sale of
priceline.com stock; benefits achieved through Delta's fuel hedging program;
extension of its strategic partnership with American Express; and other key
business programs that have strengthened Delta's overall competitiveness. No
particular weighting was assigned to any of these factors.
In July 1999, the Committee awarded Mr. Mullin non-qualified stock options
covering 150,000 shares of Delta stock and a target award of 26,000 shares of
performance-based restricted stock under the same programs applicable to other
executive officers. Mr. Mullin also received stock options covering 500,000
shares of Delta stock in October 1999 when he was elected Chairman of the Board;
this award is generally not exercisable until the fifth anniversary of the grant
date. 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
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 regular annual pay opportunity for fiscal
2000 being based on performance.
OTHER MATTERS
During fiscal 2000, 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 June 2000 meeting.
Respectfully submitted,
THE PERSONNEL & COMPENSATION COMMITTEE
Edward H. Budd, CHAIRMAN
R. Eugene Cartledge
David R. Goode
Gerald Grinstein
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SUMMARY COMPENSATION TABLE
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, 2000.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------ -------------------------- --------
OTHER RESTRICTED SECURITIES ALL OTHER
ANNUAL STOCK UNDERLYING LTIP COMPEN-
SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS PAYOUTS SATION
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) ($)(2) ($)(3) (#)(4) ($)(5) ($)(6)
--------------------------- -------- -------- --------- ------------- ---------- ------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Leo F. Mullin.............. 2000 745,833 1,400,000 66,629 0 650,000 0 8,592
Chairman of the Board and 1999 695,833 1,000,000 46,237 0 118,200 0 154,448
Chief Executive Officer 1998 571,250 1,000,000 204,361 526,500 1,000,000 0 301,488
Frederick W. Reid.......... 2000 536,667 570,000 117,848 0 34,600 0 70,629
Executive Vice President 1999 500,000 425,000 132,158 0 125,000 0 207,275
and Chief Marketing 1998 0 0 0 376,500 250,000 0 0
Officer
Robert L. Colman........... 2000 415,000 430,000 4,248 0 30,100 0 4,781
Executive Vice 1999 298,718 970,759 68,061 1,935,000 300,000 0 158,947
President--
Human Resources(7)
Vicki B. Escarra........... 2000 394,583 420,000 4,039 0 30,100 0 7,746
Executive Vice 1999 335,000 285,000 2,664 0 233,000 0 6,199
President--
Customer Service(8)
Edward H. West............. 2000 340,000 440,000 3,472 0 210,000 0 7,107
Executive Vice President
and Chief Financial
Officer(9)
</TABLE>
------------------------------
(1) Represents the incentive compensation award, if any, for services rendered
during the specified fiscal year. Pursuant to his employment agreement,
Mr. Colman's fiscal 1999 amount includes a signing bonus of $718,885.
Amounts earned in fiscal 2000 were paid in August 2000.
(2) Fiscal 2000 amounts represent (i) reimbursements for taxes related to
Delta's payment of life insurance premiums; and (ii) the value of certain
personal benefits paid or provided by Delta to Messrs. Mullin and Reid.
These personal benefits include financial planning services valued at
$41,684 for Mr. Mullin and $37,504 for Mr. Reid. No other 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,
pursuant to their employment agreements: Mr. Mullin--12,000 shares on
August 14, 1997; Mr. Reid--6,000 shares on June 9, 1998; and
Mr. Colman--40,000 shares on October 2, 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.
Mr. Mullin's award vested in three equal installments on July 1, 1998, 1999
and 2000. Subject to earlier vesting or forfeiture in certain circumstances,
(i) Mr. Reid's award vested or vests in three equal installments on June 9,
1999, 2000 and 2001; and (ii) Mr. Colman's award vested or vests in three
equal installments on October 2, 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, 2000, the number and value of the aggregate restricted stock
holdings of the persons named in the Summary Compensation Table was:
Mr. Mullin--4,024 shares valued at $203,464; Mr. Reid--2,010 shares valued
at $101,631; Mr. Colman--26,755 shares valued at $1,352,800; and
Mr. West--4,009 shares valued at $202,705. The value of these awards on
June 30, 2000 is based on the $50.5625 closing price of the common stock on
the New York Stock Exchange on that date. As a result of his resignation
from Delta, Mr. West forfeited all of his shares of restricted stock.
(4) Represents the number of shares of common stock subject to stock options,
some of which were granted pursuant to employment agreements. As a result of
his resignation from Delta, Mr. West forfeited all of his stock options.
(5) See page 20 of this proxy statement for information regarding long-term
incentive awards granted during fiscal 2000.
(6) During fiscal 2000, Delta paid supplemental group life insurance premiums
and made contributions under the Savings Plan as follows:
Mr. Mullin--$8,592 and $0, respectively; Mr. Reid--$6,182 and $1,447,
respectively; Mr. Colman--$4,781 and $0, respectively; Ms. Escarra--$4,546
and $3,200, respectively; and Mr. West--$3,907 and $3,200, respectively.
Pursuant to his
17
<PAGE>
employment agreement, the fiscal 2000 amount for Mr. Reid also includes
Delta's payments of $63,000 for an individual life insurance premium.
(7) Mr. Colman joined Delta as an executive officer in fiscal 1999. Accordingly,
he received no compensation from Delta during fiscal 1998.
(8) Ms. Escarra became an executive officer of Delta in fiscal 1999.
Accordingly, information regarding her compensation for fiscal 1998 is not
included.
(9) Mr. West became an executive officer of Delta in fiscal 2000. Accordingly,
information regarding his compensation for fiscal 1998 and 1999 is not
included. Mr. West resigned from Delta on August 8, 2000 to accept a
position with another company. As a result of his resignation, Mr. West
forfeited all of his restricted stock and stock options. See Notes 3 and 4
to this Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding non-qualified
stock options granted during fiscal 2000 to the persons named in the Summary
Compensation Table. None of the grants made during fiscal 2000 included stock
appreciation rights.
<TABLE>
<CAPTION>
GRANT DATE
INDIVIDUAL GRANTS(1) VALUE
-------------------------------------------------------- -----------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS GRANTED EXERCISE OR GRANT DATE
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANT DATE GRANTED (#) FISCAL YEAR ($/SH)(1) DATE VALUE($)(2)
---- ---------- ----------- --------------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Leo F. Mullin................ 7/22/1999 150,000 5.05 62.6250 7/21/2009 4,122,375
10/27/1999 500,000 16.83 49.9375 10/26/2009 13,090,000
Frederick W. Reid............ 7/22/1999 34,600 1.16 62.6250 7/21/2009 950,895
Robert L. Colman............. 7/22/1999 30,100 1.01 62.6250 7/21/2009 827,223
Vicki B. Escarra............. 7/22/1999 30,100 1.01 62.6250 7/21/2009 827,223
Edward H. West (3)........... 7/22/1999 20,000 0.67 62.6250 7/21/2009 549,650
9/23/1999 190,000 6.40 47.3125 9/22/2009 3,981,450
</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. Subject to certain
exceptions, the stock options granted on July 22, 1999 and September 23,
1999 become exercisable with respect to 25% of the covered shares on each of
the first four anniversaries of the grant date. The stock option granted on
October 27, 1999 generally becomes exercisable on October 27, 2004.
(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 OPTIONS GRANTED
7/22/99 BECOME EXPECTED INTEREST Volatility Dividend
EXERCISABLE OPTION TERM RATE(%)(a) Rate(%)(b) Yield(%)(c)
--------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
7/22/2000 6 years 5.81 26.18 0.16
7/22/2001 7 years 5.94 26.55 0.16
7/22/2002 8 years 5.89 26.44 0.16
7/22/2003 9 years 5.84 27.02 0.16
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
DATE OPTION GRANTED
9/23/99 BECOMES EXPECTED INTEREST Volatility Dividend
EXERCISABLE OPTION TERM RATE(%)(a) Rate(%)(b) Yield(%)(c)
--------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
9/23/2000 6 years 5.96 26.99 0.21
9/23/2001 7 years 6.12 26.74 0.21
9/23/2002 8 years 6.05 26.78 0.21
9/23/2003 9 years 5.99 27.29 0.21
DATE OPTION GRANTED
10/27/99 BECOMES
EXERCISABLE
----------
10/27/2004 10 years 6.11 27.16 0.20
</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 $0.10 per share
annualized dividend divided by the fair market value of the common stock
on the grant date.
(3) As a result of his resignation from Delta, Mr. West forfeited these stock
option grants.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
The following table sets forth certain information regarding the number and
value of unexercised in-the-money stock options held at June 30, 2000 by the
persons named in the Summary Compensation Table. None of the persons named in
the Summary Compensation Table exercised any stock options during fiscal 2000,
nor do any of those persons hold any stock appreciation rights.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT FY-END(#) OPTIONS AT FY-END($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Leo F. Mullin.................... 0 0 629,550 1,138,650 3,843,720 2,874,980
Frederick W. Reid................ 0 0 131,250 278,350 0 0
Robert L. Colman................. 0 0 184,800 145,300 404,250 252,000
Vicki B. Escarra................. 0 0 75,250 204,850 0 0
Edward H. West(2)................ 0 0 18,850 231,750 0 617,500
</TABLE>
------------------------
(1) Value of unexercised in-the-money stock options is based on the $50.5625
closing price of the common stock on the New York Stock Exchange on
June 30, 2000.
(2) As a result of his resignation from Delta, Mr. West forfeited all of his
stock options.
19
<PAGE>
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
The following table sets forth certain information regarding target awards
of performance-based restricted stock granted during fiscal 2000 to the persons
named in the Summary Compensation Table.
<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................ 26,000 3 years 10,400 26,000 52,000
Frederick W. Reid............ 9,000 3 years 3,600 9,000 18,000
Robert L. Colman............. 7,900 3 years 3,160 7,900 15,800
Vicki B. Escarra............. 7,900 3 years 3,160 7,900 15,800
Edward H. West(1)............ 3,700 3 years 1,480 3,700 7,400
</TABLE>
------------------------
(1) As a result of his resignation from Delta, Mr. West 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, 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 nine of its peer domestic airlines with respect to total
shareowner 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 may be made either 100% in common stock, or
60% in common stock and 40% in cash (to cover taxes).
In the event of a Change in Control, as defined, each outstanding target
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 PLANS AND OTHER AGREEMENTS
PENSION PLAN TABLE
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 2000 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.
<TABLE>
<CAPTION>
30 OR MORE
FINAL AVERAGE 10 YEARS OF 15 YEARS OF 20 YEARS OF 25 YEARS 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>
20
<PAGE>
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 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 27, 2000, for the persons
named in the Summary Compensation Table are as follows: Mr. Mullin--25* years;
Mr. Reid--2* years; Mr. Colman--1* year; Ms. Escarra--26 years; and
Mr. West--6 years. Ms. Escarra's annual salary at August 27, 2000 was $455,000,
which differs by more than 10% from her salary at June 30, 2000, 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.
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,
------------------------
* Pursuant to their employment agreements, described on pages 22-23 of this
proxy statement, under certain circumstances, Messrs. Mullin, Reid and
Colman 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, Mr. Reid with 11 years of service, and Mr. Colman
with 18 years of service, plus, with respect to each of these persons, the
number of years of their actual service with Delta. Mr. Mullin's additional
years of service vested on August 14, 2000. Messrs. Reid and Colman will
become entitled to their additional years of service on June 9, 2001 and
October 2, 2000, respectively.
21
<PAGE>
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. For purposes of these agreements, the definition of Change in Control
is substantially similar to the definition of that term in the Delta 2000
Performance Compensation Plan, as described on page 27 of this proxy statement.
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 AGREEMENTS WITH EXECUTIVE OFFICERS
MR. MULLIN
Mr. Mullin's employment agreement with Delta 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. 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;
and (2) for Mr. Mullin to receive, upon completion of 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, 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 stock options 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.
22
<PAGE>
OTHER EMPLOYMENT AGREEMENTS
Messrs. Reid and Colman have employment agreements with Delta which provide
for them to participate in Delta's employee benefits programs, including
insurance, retirement and fringe benefits, as are provided to Delta's Executive
Vice Presidents. If Messrs. Reid and Colman complete at least three years and
two years, respectively, of actual service with Delta, they will receive an
additional 11 years and 18 years, respectively, of service for vesting and
benefit accrual purposes under Delta's defined benefit retirement plans.
Mr. Colman's benefit under Delta's nonqualified defined benefit plan will be
reduced by the amount of any retirement benefits he receives under the defined
benefit plans of his former employer. 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.
Mr. Reid's employment agreement also provides that, in the event of the
termination of his employment prior to July 1, 2001 by Delta without Cause (as
defined) or by Mr. Reid for Good Reason (as defined), Mr. Reid 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 July 1,
2001 (subject to a minimum of 12 months of such salary and award); to immediate
vesting of the retirement benefit; and to immediate vesting of the stock options
and restricted stock granted on June 9, 1998. 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.
Mr. Colman's employment agreement also provides that, in the event of the
termination of his employment prior to October 2, 2001 by Delta without Cause
(as defined) or by Mr. Colman for Good Reason (as defined), Mr. Colman 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 October 31, 2001 (subject to a minimum of 12 months of such salary and
award); to immediate vesting of the retirement benefit; and to immediate vesting
of the stock options and restricted stock granted on October 2, 1998.
Mr. Colman's employment agreement also provides that, if Mr. Colman's
employment is terminated prior to June 1, 2005 by Delta without Cause or by
Mr. Colman for Good Reason, or for any reason after May 31, 2005, Mr. Colman
will be treated as a retiree for purposes of Delta's Family-Care benefit plans.
In certain circumstances, Mr. Colman may also receive an additional lump sum
payment. That payment ranges from $185,000, had termination occurred between
October 2, 1998 and September 30, 1999, to $81,000 if termination occurs between
October 1, 2009 and September 30, 2010. Thereafter, no lump sum payment would be
required. For purposes of Mr. Colman's employment agreement, the definitions of,
Cause and Good Reason are the same as the definitions of these terms in the
Retention Agreements described above.
23
<PAGE>
FIVE-YEAR STOCK 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)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
6/30/95 6/30/96 6/30/97 6/30/98 6/30/99 6/30/00
<S> <C> <C> <C> <C> <C> <C>
DELTA $100 $112.85 $112.62 $176.51 $157.63 $138.57
S&P 500 $100 $126.00 $169.73 $220.92 $271.19 $290.85
S&P AIRLINE (2) $100 $121.09 $125.33 $224.36 $205.38 $186.15
</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.
24
<PAGE>
PROPOSAL 2
RATIFICATION OF THE 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 the calendar year ending December 31, 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 desires to do so, and will be available 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.
PROPOSAL 3
APPROVAL OF THE DELTA 2000 PERFORMANCE COMPENSATION PLAN
The Board of Directors has unanimously adopted, subject to shareowner
approval, a new executive compensation plan. The new plan, called the Delta 2000
Performance Compensation Plan ("New Plan"), is designed to enable Delta to
attract and retain a highly qualified management team, and to motivate these
executives to achieve Delta's overall business and financial goals.
The New Plan will amend and restate as one plan Delta's two existing
shareowner approved executive compensation plans--the Incentive Compensation
Plan ("ICP") and the 1989 Stock Incentive Plan ("1989 Plan"). The ICP
strengthens Delta's pay-for-performance practices by providing management with
the opportunity to receive cash awards when pre-established performance goals
are achieved. The 1989 Plan reinforces management's focus on shareowner value by
directly tying long-term compensation opportunities to the value of the common
stock. The Board of Directors believes it is desirable to combine these two
plans because cash and stock-based compensation are key and related elements of
Delta's executive compensation program.
The New Plan modifies the ICP and the 1989 Plan to enhance Delta's ability
to compete for executive talent in a highly competitive labor market, to retain
those individuals whose contributions are critical to Delta's long-term success
and to align their interests more closely with those of Delta's shareowners. The
New Plan will (1) increase the number of shares of common stock that could
otherwise be issued under the 1989 Plan; (2) raise the annual limit on the
number of stock options and the size of ICP awards that may be granted to a
participant under the existing plans; and (3) permit ICP awards to be paid in
cash or common stock. As discussed below, the New Plan also contains various
features which the Board of Directors believes are consistent with shareowner
protection and sound corporate governance practices.
The New Plan is being submitted to shareowners for approval so that certain
awards granted under the New Plan may qualify as "performance-based"
compensation under Section 162(m) of the Internal Revenue Code
("Section 162(m)"), and to comply with certain New York Stock Exchange
requirements. As discussed on page 15 of this proxy statement, Section 162(m)
generally limits to $1 million the annual corporate federal income tax deduction
for "non-performance based" compensation paid to the chief executive officer or
any of the four other highest paid officers of a publicly-held corporation.
A. SUMMARY OF THE NEW PLAN
The following summary description of the New Plan is qualified in its
entirety by reference to the full text of the New Plan, which is attached to
this proxy statement as Appendix A. The parenthetical article and section
references that follow refer to articles and sections of the New Plan that
relate to the summary description provided.
ADMINISTRATION. The New Plan will be administered by the Personnel &
Compensation Committee or another committee of the Board of Directors designated
by the Board ("Committee"). Subject to the
25
<PAGE>
terms of the New Plan, the Committee may grant awards under the New Plan;
establish the terms and conditions of those awards; and take all other actions
it deems necessary for the proper operation or administration of the New Plan.
The Committee may delegate its authority, subject to certain limitations.
(Section 2.1.5 and Article 3)
ELIGIBILITY. Awards may be granted to employees of Delta and its
subsidiaries, as determined by the Committee. The New Plan does not limit the
number of employees who may receive awards. (Sections 2.1.9 and 3.2(c))
NUMBER OF SHARES. The New Plan provides for the issuance of up to
16 million shares of common stock for awards granted on or after October 25,
2000. The common stock issued may be authorized but unissued shares, or treasury
shares. (Section 4.1)
Shares of common stock issued, or reserved for issuance, for awards granted
on or after October 25, 2000 will be subtracted from the number of shares
available for issuance. Shares of common stock obtained from the following
sources will be added to the total number of shares available for issuance:
(1) shares tendered to exercise an award; (2) shares withheld for taxes in
connection with an award; (3) shares which are settled in cash; and (4) shares
relating to an award that is forfeited. The preceding sentence also applies to
shares of common stock that are tendered, withheld, settled in cash or forfeited
with respect to awards granted under the 1989 Plan which are outstanding on
October 25, 2000. (Section 4.2)
TYPES OF AWARDS. The Committee may grant the following four types of awards
under the New Plan: incentive awards; stock options; restricted stock; and other
equity-based awards. (Article 5)
INCENTIVE AWARDS. Incentive awards reward participants for achieving goals,
for an annual or other performance period, that are considered key to Delta's
success. These awards may be paid in cash or common stock. (Section 5.1)
The incentive award paid to any participant for a calendar year may not
exceed $3 million, multiplied by the number of years in the performance period
relating to the incentive award paid in that calendar year. (Section 4.6.1(a))
STOCK OPTIONS. A stock option is the right to purchase one share of common
stock at a specified price, which may not be less than the fair market value of
a share of common stock on the date the stock option is granted. The Committee
may grant non-qualified stock options and incentive stock options. (Sections
5.2.1 and 5.2.1.1)
A stock option is exercisable at such times and subject to such terms and
conditions as the Committee may determine. No stock option is exercisable
earlier than one year (except in the case of (1) a participant's death or
termination of employment; or (2) a change in control of Delta), or later than
ten years, after the date the stock option is granted. (Section 5.2.1.2)
No more than one million shares of common stock subject to stock options may
be granted to any participant in a calendar year. (Section 4.6.1(b))
RESTRICTED STOCK. Restricted stock is an award of common stock which is
subject to restrictions and such other terms and conditions as the Committee may
determine. No restricted stock award may vest less than one year from its date
of grant, except in the case of (1) a participant's death or termination of
employment; or (2) a change in control of Delta. (Sections 2.1.32 and 5.3)
No more than 400,000 shares of common stock in the form of restricted stock
may be granted to any participant in a calendar year. (Section 4.6.1(c))
OTHER EQUITY-BASED AWARDS. The Committee may also grant other types of
awards that are valued in whole or in part by reference to, or are otherwise
based on, the common stock. These awards are subject to such terms and
conditions as the Committee may determine. (Sections 2.1.23 and 5.4)
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No more than 400,000 shares of common stock subject to other equity-based
awards may be granted to any participant in a calendar year. (Section 4.6.1(d))
PERFORMANCE MEASURES. The New Plan lists the performance measures the
Committee may use to make performance-based awards under Section 162(m). These
performance measures include (1) financial measures such as total shareowner
return; return on equity, assets, capital or investment; operating, pre-tax or
after-tax profit levels; the market price of the common stock; economic or cash
value added; capitalization; and profit margin, revenues, net income, expenses,
cash flow and liquidity; (2) the results of employee or customer satisfaction
surveys; and (3) other measures of quality, safety, productivity or process
improvement. The performance measures may be determined by reference to (1) the
performance of Delta; one or more of its subsidiaries; or a division or unit of
Delta or one or more of its subsidiaries; or (2) comparisons of any of the
performance measures relative to other companies or indices. (Section 2.1.25)
AMENDMENT AND TERMINATION. The Committee or the Board of Directors may
amend or terminate the New Plan at any time, but no such amendment or
termination may impair the rights of a participant with respect to an
outstanding award without that participant's consent. No incentive stock options
may be granted after October 23, 2010. As discussed below, in "Shareowner
Protection and Corporate Governance Practices," shareowner approval is required
for certain amendments to the New Plan. (Article 6)
ADJUSTMENTS. In the event of a change in the outstanding shares of common
stock due to a stock split, extraordinary cash dividend, recapitalization,
merger, consolidation, spin-off, reorganization, repurchase or exchange of
common stock or other securities, the issuance of warrants or other rights to
purchase common stock or other securities, or other similar corporate
transaction or event, the Committee may take certain actions to prevent the
dilution or enlargement of benefits under the New Plan. These actions include
adjusting (1) the number of shares of common stock that may be issued under the
New Plan (including the share limitations in Section 4.6); (2) the number of
shares subject to an outstanding award; (3) the exercise price of a stock
option; and (4) the consideration to be paid upon the grant or exercise of any
other award. (Section 4.4)
CHANGE IN CONTROL. Upon the occurrence of a change in control of Delta,
(1) all outstanding Stock Options, non-performance based restricted stock and
non-performance based other equity-based awards will become immediately
exercisable, vested and nonforfeitable (Sections 5.2.1.2(b), 5.3 and 5.4); and
(2) target incentive awards and outstanding performance-based restricted stock
and performance-based other equity-based awards will be paid on a prorated basis
as specified in the New Plan. (Sections 2.1.15, 2.1.16, 5.1, 5.3 and 5.4)
Change in control is generally defined as (1) the acquisition by any person
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 prior to October 25, 2000 (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 of
Directors; (3) a reorganization, merger or consolidation of Delta, other than in
certain circumstances; or (4) the approval by Delta's shareowners of a complete
liquidation or dissolution of Delta, or a sale of all or substantially all the
assets of Delta other than in certain circumstances. (Section 7.3) This
definition is substantially similar to the definition of change in control in
the ICP and the 1989 Plan.
B. SHAREOWNER PROTECTION AND CORPORATE GOVERNANCE PRACTICES
The New Plan contains the following features which the Board of Directors
believes are consistent with shareowner protection and sound corporate
governance practices.
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LIMITATION ON SHARES ISSUED OTHER THAN FOR STOCK OPTIONS. The New Plan
limits to three million the number of shares of common stock that may be issued
for awards, other than stock options, granted on or after October 25, 2000.
(Section 4.6.3)
NO DISCOUNT STOCK OPTIONS. The New Plan prohibits the grant of a stock
option with an exercise price less than the fair market value of the common
stock on the date the stock option is granted. This restriction may not be
changed without shareowner approval. (Section 6.3.2(a))
NO STOCK OPTION REPRICINGS. The New Plan prohibits stock option repricings
absent shareowner approval. This restriction applies to both direct
repricings--lowering the exercise price of an outstanding stock option--and
indirect repricings--canceling an outstanding stock option and granting a
replacement stock option with a lower exercise price. (Section 6.3.2(b)). Delta
has never repriced a stock option granted under the 1989 Plan.
NO STOCK OPTION EXERCISE EXTENSIONS. The New Plan prohibits, absent
shareowner approval, the extension of the regular expiration date for the
exercise of a stock option. (Sections 2.1.30 and 6.3.2(c))
NO EVERGREEN PROVISION. The New Plan does not contain an "evergreen
provision"--there is no automatic provision to replenish the 16 million shares
of common stock authorized for issuance under the New Plan based on the number
or percentage of shares of common stock outstanding. See "Summary of the
Plan--Number of Shares." (Sections 4.1 and 4.2)
C. ENHANCING SHAREOWNER VALUE
Delta's 2000 Annual Report to Shareowners discusses Delta's actions to
enhance shareowner value. The Board of Directors believes that shareowners
should consider these actions, particularly Delta's common stock repurchase
activities, when deciding how to vote on the New Plan.
During fiscal 1999 and fiscal 2000, Delta repurchased a total of
31.5 million shares of common stock for $1.67 billion under now completed common
stock repurchase programs. In addition, as discussed below, Delta has an ongoing
common stock repurchase program under which Delta has repurchased, since
April 1996, 21.4 million shares of common stock for $962 million.
In April 1996, the Board of Directors adopted, subject to shareowner
approval, broad-based pilot and nonpilot employee stock option plans
("SkyShares"). Under these two plans, which were approved by shareowners on
October 24, 1996, Delta granted eligible employees non-qualified stock options
to purchase a total of 49.4 million shares of common stock in three
approximately equal installments on October 30, 1996, 1997 and 1998.* The
SkyShares program is intended to provide Delta employees with an increased stake
in Delta's financial performance and to align their interests with those of
Delta's shareowners. In addition, the pilot plan (which covers 20 million of the
49.4 million shares) is an integral part of the 1996 collective bargaining
agreement between Delta and its pilots which strengthened Delta's competitive
position by (1) reducing pilot costs; and (2) giving Delta flexibility to
initiate strategic initiatives such as Delta Express, Delta's low-fare leisure
product. To date, 11.2 million shares of common stock have been issued, stock
options covering 300,000 shares have been forfeited, and stock options covering
37.9 million shares remain outstanding, under SkyShares.
In April 1996, the Board of Directors also authorized Delta to repurchase up
to 49.4 million shares of common stock, the maximum number of shares that may be
issued under SkyShares. Under this authorization, Delta repurchased
12.4 million shares before October 30, 1997--the date the initial SkyShares
stock options became exercisable--and may repurchase the remaining shares as
employees exercise their stock options under that program. Repurchases are
subject to market conditions, and may be
------------------------
* These stock options (1) have an exercise price equal to the fair market
value of the common stock on the grant date; (2) are generally exercisable
beginning one year, and ending ten years, after the grant date; (3) are
forfeited upon termination of employment in certain circumstances; and
(4) are not transferable other than due to an employee's death.
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made on the open market or in privately negotiated transactions. To date, Delta
has repurchased a total of 21.4 million shares of common stock under this
authorization, compared to 11.2 million shares issued under SkyShares.
D. FEDERAL INCOME TAX ASPECTS OF THE NEW PLAN
The following is a brief summary of the federal income tax aspects of awards
that may be made under the New Plan based on existing U.S. federal income tax
laws. This summary is not complete, and does not describe a number of special
tax rules, including the alternative minimum tax and various elections which may
be applicable under certain circumstances.
A participant who receives a cash incentive award will realize ordinary
income equal to the amount of the incentive award in the year of receipt, and
Delta will generally be entitled to a corresponding deduction.
A participant who has been granted a stock option or restricted stock will
not realize taxable income at the date of grant, and Delta will not be entitled
to a deduction at that time.
A participant who exercises a non-qualified stock option will realize
ordinary income in an amount measured by the excess of the fair market value of
the shares on the date of exercise over the exercise price. Delta generally will
be entitled to a corresponding deduction for federal income tax purposes.
A participant who exercises an incentive stock option will not be subject to
taxation at the time of exercise, nor will Delta be entitled to a deduction. The
difference between the exercise price and the fair market value of shares on the
date of exercise is a tax preference item for purposes of determining a
participant's alternative minimum tax. A disposition of the purchased shares
after the expiration of the required holding periods will subject the
participant to taxation at long-term capital gains rates in the year of
disposition in an amount determined under the Internal Revenue Code, and Delta
will not be entitled to a deduction for federal income tax purposes. A
disposition of the purchased shares prior to the expiration of the applicable
holding periods will subject the participant to taxation at ordinary income
rates in the year of disposition in an amount determined under the Internal
Revenue Code, and Delta generally will be entitled to a corresponding deduction.
A participant holding restricted stock will, at the time the shares vest,
realize ordinary income in an amount equal to the fair market value of the
shares and any cash received at the time of vesting. Delta generally will be
entitled to a corresponding deduction for federal income tax purposes.
The federal income tax consequences of other equity-based awards will depend
on the form of such awards.
As discussed elsewhere in this proxy statement, Section 162(m) limits the
corporate federal income tax deduction for pay to executives in certain
circumstances.
E. OTHER MATTERS
The Committee has discretion to determine the type, terms and conditions and
recipients of awards granted under the New Plan. Accordingly, it is not possible
to determine the awards that may be granted to any officer or other employee of
Delta.
The "Bonus" column in the Summary Compensation Table on page 17 of this
proxy statement sets forth the awards paid under the ICP for fiscal 2000 to each
of the named executive officers. All executive officers as a group (six persons)
received $3.6 million under the ICP for fiscal 2000. A total of 169 officers and
key employees received ICP awards for that year.
The Option Grants In Last Fiscal Year table on page 18, and the Long-Term
Incentive Plans--Awards In Last Fiscal Year table on page 20, of this proxy
statement contain information concerning the non-qualified stock option awards
and target awards of performance-based restricted stock, respectively, granted
under the 1989 Plan during fiscal 2000 to each of the named executive officers.
All executive officers as a group received non-qualified stock options covering
984,900 shares of common stock and
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target awards for 62,400 shares of performance-based restricted stock under the
1989 Plan during fiscal 2000. A total of 560 officers and key employees received
awards under the 1989 Plan in fiscal 2000. On September 8, 2000, the closing
price of the common stock on the New York Stock Exchange was $49.00.
The Board of Directors adopted the New Plan subject to shareowner approval.
Absent such approval, the New Plan will not become effective; no awards will be
made under the New Plan; and the ICP and the 1989 Plan will not be amended as
described in this proxy statement. In these circumstances, the Board of
Directors intends to review and reconsider Delta's executive compensation
program in light of such vote, its need to retain key management talent and the
other principles described in the Personnel & Compensation Committee Report on
Executive Compensation included elsewhere in this proxy statement. Approximately
86,000 shares of common stock are available for issuance for new awards under
the 1989 Plan.
F. BOARD RECOMMENDATION
The Board of Directors believes the New Plan is in the best interests of
Delta and its shareowners because the New Plan will enable Delta to attract and
retain a highly qualified management team; enhance Delta's pay for performance
practices; and reinforce management's focus on shareowner value. ACCORDINGLY,
THE BOARD RECOMMENDS A VOTE "FOR" APPROVAL OF THE NEW PLAN.
PROPOSALS 4, 5, 6 AND 7--SHAREOWNER PROPOSALS
The following four proposals have been submitted by individual shareowners.
If the shareowner, or a representative who is qualified under state law, is
present and submits his or her proposal for a vote, then the proposal will be
voted on at the annual meeting. In accordance with Federal securities
regulations, we include the shareowner proposals and the related supporting
statements as submitted by the proponents. To easily distinguish between
material provided by the proponents, and material the Board of Directors would
like you to consider about the proposals, we have put a box around material
provided by each of the proponents.
PROPOSAL 4
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 intends to introduce the following
resolution at the annual meeting:
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"RESOLVED: That the stockholders of Delta Airlines, 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 the
owners of 35.7% of shares voting, voted FOR this proposal. The number of shares
voting FOR was 43,481,122.
If you AGREE, please mark your proxy FOR this resolution."
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THE BOARD OF DIRECTORS OPPOSES THIS PROPOSAL FOR THE FOLLOWING REASONS:
The Board of Directors, like many institutional investors and corporate
governance experts, opposes cumulative voting because it may facilitate the
election of directors who represent a limited group of shareowners rather than
shareowners as a whole. Special interest directors may have difficulty
fulfilling their fiduciary duty of loyalty to the company and its shareowners
due to inherent conflicts between the company's interests, on the one hand, and
the director and his or her constituency, on the other. The Board of Directors
believes that these potential conflicts may, in turn, create factionalism and
undermine the effectiveness of the board.
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Delta recently surveyed the top 100 of the Fortune 500 companies, finding
that only seven of these companies provide for cumulative voting. We also
reviewed the law in all 50 states, finding that only four states mandate
cumulative voting.
The Board of Directors believes cumulative voting is not in the best
interest of Delta and its shareowners. ACCORDINGLY, THE BOARD RECOMMENDS A VOTE
"AGAINST" THIS PROPOSAL.
PROPOSAL 5
Mr. Dave A. Miller, Air Line Pilots Association, 100 Hartsfield Centre
Parkway, Suite 200, Atlanta, Georgia 30354, who is the beneficial owner of 1,050
shares of common stock and 130 shares of ESOP Preferred Stock, has given notice
that he intends to introduce the following resolution at the annual meeting:
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"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. A 1999 study by Watson Wyatt Worldwide found that a
significant improvement in 30 key human resources practices is associated with a
30% increase in total return to shareholders. In light of that evidence,
companies such as Sears 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.
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 in developing its human
capital. 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
that would affect employee satisfaction, include significant downsizing, wage or
benefit reductions and material violations of workplace health and safety or
anti-discrimination laws.
For these reasons we urge shareholders to vote FOR this proposal."
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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 goal of becoming the world's best airline. The 2000
Annual Report to Shareowners discusses our work in building a highly skilled,
motivated and globally diverse workforce dedicated to reaching this goal.
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In making decisions relating to Delta's overall business and long-range
strategy (including decisions relating to executive compensation), the Board of
Directors and its Personnel & Compensation Committee consider and attach great
weight to employee satisfaction and related subjects. For example, as discussed
in the Personnel & Compensation Committee Report on Executive Compensation
included in this proxy statement, the incentive compensation awards for fiscal
2000 (and for 1999 as well) are based in part on management performance in
implementing strategies relating to human resources and labor relations.
Similarly, the new Delta 2000 Performance Compensation Plan, which is being
submitted to shareowners for approval, includes employee satisfaction as one of
the criteria on which performance-based awards may be based.
The Board understands and appreciates the key role of Delta employees in
providing our customers with a distinctive travel experience, and achieving
Delta's long-term business goals. However, no single factor, including employee
satisfaction, can be used to establish executive compensation without
considering other relevant factors and overall competitive pay levels. The Board
and the Personnel & Compensation Committee believe that they must have broad
flexibility when making executive compensation decisions to respond to changing
circumstances. The Board, therefore, must reserve the ability to choose those
performance goals that best measure Delta's business needs at any particular
time, and to change those measures as it deems appropriate under the
circumstances. The Board believes this approach will balance competing
objectives and ensure that the factors considered in evaluating performance and
determining pay are those that are most important and valid for the relevant
time specified. ACCORDINGLY, THE BOARD RECOMMENDS A VOTE "AGAINST" THIS
PROPOSAL.
PROPOSAL 6
Mr. John S. Blonsick, c/o Dave Miller, Air Line Pilots Association, 100
Hartsfield Centre Parkway, Suite 200, Atlanta, Georgia 30354, who is the
beneficial owner of 110 shares of common stock and 75 shares of ESOP Preferred
Stock, has given notice that he intends to introduce the following resolution at
the annual meeting:
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"RESOLVED: That the shareholders of Delta Air Lines, Inc. ("the "Company")
urge the Board of Directors to seek shareholder approval for 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. "Future
severance agreements" include agreements renewing, modifying or extending
existing severance agreements or employment agreements containing severance
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), and, for 10 years after his resignation, office space,
full-time secretarial support, country club membership and dues for the Commerce
Club of Atlanta. The Company has also paid $408,776 to design, build and furnish
office space for Mr. Allen.
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In addition, the Company's agreements with current CEO Leo Mullin and
certain other senior executives provide generous severance benefits, especially
if employment is terminated in connection with a change in control. We recognize
that severance agreements such as those the Company has entered into with
Mr. Allen and 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
of any future such agreements. We believe that requiring shareholder approval of
such agreements may also have the beneficial effect of insulating the Board of
Directors from manipulation. Because it is not always practical to obtain prior
shareholder approval, the Company would have the option, if it implemented this
proposal, of seeking approval after the material terms of the agreement were
agreed upon.
Institutional investors such as the California Public Employees Retirement
System have recommended shareholder approval of these types of agreements in
their proxy voting guidelines. Also, the Council of Institutional Investors
favors shareholder approval if the amount payable exceeds 200% of the senior
executive's annual base salary.
For these reasons we urge shareholders to vote FOR this proposal."
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THE BOARD OF DIRECTORS OPPOSES THIS PROPOSAL FOR THE FOLLOWING REASONS:
Delta's executive compensation program is designed to attract and retain
highly-qualified executives, and to motivate those executives to achieve Delta's
overall business and financial goals. This is especially critical in today's
highly competitive labor market. The overall strategy of Delta's program, as
outlined elsewhere in this proxy statement, supports these goals.
To compete for the best executive talent, many companies provide key
executives with significant incentives. Delta believes it must respond to this
competitive practice by providing incentives to executives to leave companies
where they are highly valued and compensated, and by offering its executives
competitive employment packages to minimize the risk of losing them to other
companies.
Severance provisions may be included in these packages based on the
competitive market and the unique circumstances of each employment situation. To
arbitrarily limit what Delta may offer as a severance payment, or to require
shareowner approval of the terms of a severance provision, 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 shareowner approval requirement for a
severance provision would also negatively impact Delta's recruitment of key
executives by requiring the premature public disclosure of confidential
employment negotiations.
In sum, an obligation to limit the value or to obtain shareowner approval of
a severance provision would severely inhibit Delta's ability to recruit and
retain talented executives by impeding 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.
PROPOSAL 7
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 1200 shares of common stock and 130 shares of ESOP Preferred
Stock, has given notice that he intends to introduce the following resolution at
the annual meeting:
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"RESOLVED: That the shareholders of Delta Air Lines (the "Company") urge the
Board of Directors to adopt a policy that some portion of future stock option
grants to senior executives shall be performance-based. Performance-based stock
options are defined as 1) indexed options, whose exercise price is linked to an
industry index; 2) premium-priced stock options, whose exercise price is above
the market price on the grant date; or 3) performance-vesting options, which
vest when the market price of the stock exceeds a specific target."
PROPONENT'S SUPPORTING STATEMENT
"As Company shareholders, we support compensation policies for senior
executives that provide challenging performance objectives and serve to motivate
executives to achieve long-term shareholder value. We believe that the Company's
current policies are deficient in that respect.
CEO Leo Mullin has been granted options to purchase 1,118,200 shares of
Company stock since he joined the Company in 1997. Options to purchase 1,000,000
of those shares will be vested on August 14, 2001. Mr. Mullin stands to gain
$11,843,700 if the Company's stock price is $56 when the 1,000,000 options are
exercised. This represents an approximate annual return to shareholders of only
6.12% from the market price of approximately $44.16 on August 14, 1997, the date
on which the options were granted. He stands to realize that amount even if the
Company's stock underperforms all of its competitors.
Standard stock options give windfalls to executives who are lucky enough to
hold them during a bull market, and penalize executives who hold them during a
bear market. Investors and market observers including Warren Buffett, Alan
Greenspan and Al Rappaport have criticized standard options on the ground that
they inappropriately reward mediocre or poor performance--Buffet has stated that
standard stock option plans are "really a royalty on the passage of time"--and
all three favor the use of indexed options.
Standard stock options may also be more expensive than performance-based
options. Two Georgetown University professors have estimated that for the top
100 NYSE-listed firms, a grant of an at-the-money option with a five-year
maturity would be on average 41% more expensive than necessary to reward the
same amount of relative CEO performance. Angel & McCabe, "Market-Adjusted
Options for Executive Compensation," Oct. 28, 1997.
Performance-based options tie compensation more closely to company--rather
than stock market--performance. Premium-priced and performance-vesting options
encourage senior executives to set and meet ambitious but realistic performance
targets. Indexed options may have the added benefit of discouraging repricing in
the event of an industry downturn.
Recently, leading companies such as Monsanto, Capital One Financial
Corporation and Level 3 Communications have adopted performance-based plans.
According to Level 3's 1999 proxy statement, the company's "outperform stock
option" program "aligns directly management's and stockholders' interests by
basing stock option value on Level 3's ability to outperform the market."
For these reasons we urge shareholders to vote FOR this proposal."
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THE BOARD OF DIRECTORS OPPOSES THIS PROPOSAL FOR THE FOLLOWING REASONS:
Delta's executive compensation program is intended to attract, retain and
motivate talented executives. The Personnel & Compensation Committee of Delta's
Board of Directors works with independent compensation consultants to design an
executive compensation program that supports Delta's short-term and long-term
strategies, and to evaluate Delta's program relative to the competitive market.
The Board believes that Delta's current practice of granting stock options
provides the appropriate link between company performance and executive pay. It
aligns the interests of executives with those of Delta's shareowners because the
stock price must increase before shareowners or executives will benefit. At the
same time, the stock option program's design matches typical competitive
practice, which enhances
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Delta's ability to attract and retain executives. Delta's program is comparable
to the stock option plans used by most U.S. public corporations, including the
companies with which Delta competes for executive talent. Relatively few
companies use indexed, premium-priced or performance-vesting stock options.
In addition, as discussed elsewhere in this proxy statement, Delta's
executive compensation program divides stock-based awards between stock options
and performance-based restricted stock. While stock options reflect stock price
performance, performance-based restricted stock provides compensation
opportunities based on both stock market and operational performance. This plan
measures Delta's results relative to nine peer domestic airlines with respect to
total shareowner return and three key U.S. Department of Transportation customer
service measures: on-time arrival performance, customer complaints and
mishandled baggage. The Board believes this combination of stock options and
performance-based restricted stock provides a strong performance component while
also enabling Delta to offer competitive compensation opportunities to its key
executives.
In sum, the Board believes that Delta's executive pay program is
appropriately designed, and that compensation for Delta's executives is strongly
linked to Delta's performance. ACCORDINGLY, THE BOARD RECOMMENDS A VOTE
"AGAINST" THIS PROPOSAL.
SUBMISSION OF SHAREOWNER PROPOSALS AND NOMINATIONS
To be considered for inclusion in the Delta's 2001 proxy materials under
Securities and Exchange Commission regulations, shareowner proposals must be
submitted in writing by November 8, 2000; and must comply in all respects with
the applicable Securities and Exchange Commission regulations. Shareowner
proposals may be directed to Delta's Secretary, Robert S. Harkey, at Delta Air
Lines, Inc., Post Office Box 20706, Atlanta, Georgia 30320-6001.
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 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, 2000. The annual report, which
contains audited financial statements, along with other information about Delta,
is not incorporated in the proxy statement and is not to be deemed a part of the
proxy soliciting material.
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APPENDIX A
[LOGO]
2000 PERFORMANCE COMPENSATION PLAN
ARTICLE 1
ESTABLISHMENT AND OBJECTIVES
1.1 ESTABLISHMENT OF THE PLAN. The Board of Directors and its Personnel &
Compensation Committee adopted the Plan, subject to approval by the shareowners
at the annual meeting of shareowners held October 25, 2000.
1.2 OBJECTIVES OF THE PLAN. The objectives of the Plan are to facilitate
Delta's achievement of superior financial and operational performance by:
a. providing incentives and rewards to Employees who are in a position
to contribute materially to Delta's success and the achievement of Delta's
short-term and long-term objectives;
b. aiding in the recruitment and retention of Employees of outstanding
ability;
c. promoting teamwork among Employees and excellence in individual
performance; and
d. increasing Employees' proprietary interest in Delta's success
through increased direct ownership of Delta Common Stock and other incentives
related to the value of Delta Common Stock.
ARTICLE 2
DEFINITIONS AND CONSTRUCTION
2.1 DEFINED WORDS. In the Plan, the following words shall be defined as set
forth below:
2.1.1 "AWARD" means an Incentive Award, Stock Option, Restricted Stock or
Other Equity-Based Award.
2.1.2 "AWARD AGREEMENT" means the written or electronic document issued to
the Participant evidencing the grant of an Award.
2.1.3 "CHANGE IN CONTROL" is defined in Section 7.3.
2.1.4 "CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
2.1.5 "COMMITTEE" means the Personnel & Compensation Committee of the
Board of Directors, or such other committee of the Board of Directors designated
by the Board of Directors to administer the Plan.
2.1.6 "DELTA" means Delta Air Lines, Inc., a Delaware corporation.
2.1.7 "DELTA GROUP" means Delta and/or a Subsidiary, as the context may
indicate.
2.1.8 "DISABILITY" means disability as determined under the disability
plan of Delta or a Subsidiary applicable to the Participant.
2.1.9 "EMPLOYEE" means any individual who performs services as a common
law employee for any member of the Delta Group.
2.1.10 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time.
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2.1.11 "FAIR MARKET VALUE" means, on a given date, the opening or closing
price of Delta Common Stock, as determined by the Committee, on the New York
Stock Exchange on that date, if the date is a trading day, and, if not, on the
previous trading day.
2.1.12 "INCENTIVE AWARD" means an Award granted to a Participant under
Section 5.1.
2.1.13 "INCENTIVE AWARD OPPORTUNITY" means the various levels of Incentive
Award payouts that a Participant may earn under the Plan.
2.1.14 "INCENTIVE AWARD FINAL AMOUNT" means the actual Incentive Award
earned during a Performance Period by a Participant, as determined by the
Committee.
2.1.15 "INCENTIVE AWARD REFERENCE AMOUNT" means the greater of the
Incentive Award Target Amount for (a) Delta's most recently completed fiscal
year (or other period corresponding to the applicable Performance Period) prior
to a Change In Control, or (b) Delta's fiscal year (or other period
corresponding to the applicable Performance Period) that includes a Change In
Control. For purposes of the foregoing sentence, in calculating the amount of
the Incentive Award Target Amount for a Participant, the following process shall
apply: the target salary percentage applicable to the Participant for such
fiscal year (or other period corresponding to the applicable Performance Period)
shall be multiplied by the regular annual rate of pay which such Participant was
receiving as annual salary immediately prior to a Change In Control.
2.1.16 "INCENTIVE AWARD TARGET AMOUNT" means the Incentive Award that may
be paid to a Participant when "targeted" performance results, as established by
the Committee, are attained.
2.1.17 "INCENTIVE STOCK OPTION" means a Stock Option granted under
Section 5.2.2 that (a) meets the requirements of Section 422 of the Code and any
regulations or rules promulgated thereunder, and (b) is designated by the
Committee in the Award Agreement to be an Incentive Stock Option.
2.1.18 "NON-QUALIFIED STOCK OPTION" means any Stock Option granted under
Section 5.2 that is not an Incentive Stock Option.
2.1.19 "162(M) AWARD" means an Award designated by the Committee at the
time of grant as being intended to qualify for deduction pursuant to Code
Section 162(m).
2.1.20 "162(M) AWARD PROCESS" means the process described in Section 8.8.
2.1.21 "162(M) PARTICIPANT" means an officer of Delta who is at or above
the level of Executive Vice President or other Participant who the Committee
believes may become subject to Section 162(m) of the Code during the relevant
Performance Period.
2.1.22 "OPTION EXERCISE PRICE" means the price that must be paid to
receive one share of Delta Common Stock upon exercise of a Stock Option.
2.1.23 "OTHER EQUITY-BASED AWARD" means an Award granted under
Section 5.4, which is valued in whole or in part by reference to, or is
otherwise based on, Delta Common Stock.
2.1.24 "PARTICIPANT" means a person who has been granted an Award.
2.1.25 "PERFORMANCE MEASURE" means any one or more of the following
measures, which the Committee may designate as performance measures regarding
162(m) Awards:
a. any of the following financial measures: total shareowner return;
return on equity, assets, capital or investment; operating, pre-tax or after-tax
profit levels expressed in either absolute dollars, earnings per share, or
increases of the same; the market price of Delta Common Stock; economic or cash
value added; capitalization; net or operating profit margin; revenues or revenue
growth; pre-tax income or net income; expenses; cash flow, operating cash flow
or liquidity;
b. the results of employee satisfaction surveys;
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c. the results of customer satisfaction surveys; and/or
d. other measures of quality, safety, productivity or process
improvement.
At the time the Committee determines the Performance Measures, it will specify
whether the Performance Measures will be determined by reference to (i) the
performance of Delta, a Subsidiary, and/or a division or unit of any of the
foregoing, and/or (ii) comparisons of any of the Performance Measures relative
to other companies or indices.
2.1.26 "PERFORMANCE PERIOD" means the performance period specified by the
Committee for measuring any performance criteria upon which an Award is
conditioned.
2.1.27 "PERFORMANCE SHARE" means an Award of the type described in
Section 5.4.1.
2.1.28 "PERFORMANCE UNIT" means an Award of the type described in
Section 5.4.1.
2.1.29 "PLAN" means this Delta 2000 Performance Compensation Plan as it
may be amended from time to time.
2.1.30 "REGULAR EXPIRATION DATE" means the date a Stock Option would
expire as specified in the Award Agreement, absent special events such as death,
demotion, termination of employment or other similar events.
2.1.31 "REPORTING PERSON" means an Employee who is subject to the
reporting requirements of Section 16 of the Exchange Act.
2.1.32 "RESTRICTED STOCK" means an Award of shares of Delta Common Stock
granted under Section 5.3, which is subject to the restrictions specified in the
Award Agreement.
2.1.33 "RETIREMENT" means retirement from active employment with Delta or
any of its Subsidiaries pursuant to the qualified defined benefit plan of such
entity applicable to the Participant. If any Subsidiary shall not have in effect
a qualified defined benefit plan at the time the Participant ceases active
employment with such Subsidiary (other than cessation of active employment due
to death, Disability, or transfer to any other member of the Delta Group) then,
with respect to such Participant, Retirement shall mean the cessation of active
employment at or after age 55.
2.1.34 "STOCK OPTION" means an Award granted under Section 5.2.
2.1.35 "SUBSIDIARY" means any entity of which Delta owns or otherwise
controls, directly or indirectly, stock or other ownership interests having the
voting power to elect a majority of the board of directors, or other governing
group having functions similar to a board of directors.
2.2 CONSTRUCTION.
2.2.1 CONSTRUCTION. Words defined in the Plan in the singular shall be
deemed to include the plural and vice versa. Headings of Articles and Sections
are provided for convenience and shall have no interpretative meaning.
2.2.2 RULE 16B-3 COMPLIANCE. To the extent possible, all transactions
under the Plan are intended to satisfy the requirements for exempt transactions
under Rule 16b-3 (and any successor provision) under the Exchange Act for each
Reporting Person. Such transactions include, without limitation, the grant of
any Award, the exercise of a Stock Option and the acquisition of Delta Common
Stock upon such exercise, the delivery (actually or by attestation) of Delta
Common Stock in payment of the Option Exercise Price, and withholding or
delivering (actually or by attestation) of Delta Common Stock in satisfaction of
tax obligations. If any provision of the Plan or of any terms of an Award would
otherwise frustrate or conflict with such intent, the provision shall be
interpreted and deemed amended so as to avoid such conflict.
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ARTICLE 3
ADMINISTRATION
3.1 THE COMMITTEE. The Plan shall be administered by the Committee.
3.2 AUTHORITY OF THE COMMITTEE. The Committee shall have authority, in its
sole and absolute discretion and subject to the terms of the Plan, to do all of
the following:
a. interpret the Plan;
b. prescribe such rules and regulations as it deems necessary for the
proper operation and administration of the Plan, and amend or rescind any
existing rules or regulations relating to the Plan;
c. select Employees to receive Awards under the Plan;
d. determine the form of an Award;
e. for Awards that will be paid in Delta Common Stock, determine the
number of shares of Delta Common Stock subject to an Award, all the terms,
conditions, restrictions and/or limitations, if any, of an Award including,
without limitation, the timing or conditions of exercise or vesting, and the
terms of any Award Agreement (including, without limitation, providing for the
issuance of new Stock Options (i) equal in number to the sum of the number of
shares of Delta Common Stock delivered in payment of the Option Exercise Price
and the number of shares of Delta Common Stock withheld to satisfy tax
withholding requirements resulting from the Stock Option exercise, (ii) having
an Option Exercise Price of Fair Market Value, determined on the date of
issuance of the additional Stock Options, and (iii) subject to such other
restrictions and conditions as the Committee may prescribe);
f. for 162(m) Awards, establish and administer Performance Measures and
related performance goals and certify the level of performance attainment for
such Performance Measures and related performance goals;
g. prescribe rules or conditions applicable to all Awards, all Awards
of a specific type and/or specific Awards including, without limitation,
rules (i) about the impact of Retirement, Disability or termination of
employment upon the terms of an Award, or (ii) that require the forfeiture or
return of Awards upon (x) breach of covenants not to compete during or after
employment, (y) demotion, and (z) breach of any confidentiality obligation owed
to a member of the Delta Group;
h. waive or amend any terms, conditions, restrictions or limitations of
an Award;
i. in accordance with Article 4, adjust the number of shares of Delta
Common Stock available under the Plan or any Award;
j. accelerate the vesting, exercise or payment of an Award when such
actions would be in the best interest of Delta;
k. provide for the deferred payment of Awards (in cash or Delta Common
Stock) and the extent to which such payment shall be credited with interest,
dividend equivalents, etc.;
l. establish such subplans as the Committee may determine to be
necessary in order to implement and administer the Plan in foreign countries;
m. delegate its authorities and duties under the Plan to such other
individual(s) or committee(s) as the Committee may deem advisable, under such
conditions and subject to such limitations as the Committee may establish;
provided that (i) only the Committee shall have the authority to make grants to
162(m) Participants and Reporting Persons or to take any other actions regarding
Awards granted to, or held by, 162(m) Participants or Reporting Persons;
(ii) only the Committee shall have the authority to make grants to any Employee
who is a delegate under this Section 3.2(m) or to take any other actions
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regarding Awards granted to, or held by, any Employee or former Employee who is
a delegate under this Section 3.2(m); (iii) only the Committee may specify
Performance Measures and certify the degree to which Performance Measures and
related goals have been achieved by 162(m) Participants and Reporting Persons;
and (iv) any delegation that includes the authority to grant Awards that involve
the issuance of Delta Common Stock shall include limitations as to the dollar
value and/or numbers of shares of Delta Common Stock to be issued; and
n. take any and all other action it deems necessary or advisable for
the proper operation or administration of the Plan.
3.3 EFFECT OF DETERMINATIONS. All determinations of the Committee shall be
final, binding and conclusive on all persons having an interest in the Plan or
in any Award.
3.4 NO LIABILITY. No member of the Committee, and no other person acting as a
delegate of the Committee in respect of the Plan, shall be liable for any losses
incurred by any Participant (or his or her estate or beneficiary) resulting from
any action, interpretation or construction made with respect to the Plan or any
Award.
3.5 INDEMNIFICATION OF COMMITTEE. Delta shall indemnify, to the full extent
permitted by law, each person made or threatened to be made a party to any civil
or criminal action or proceeding by reason of the fact that such person is or
was a member of the Committee or a delegate of the Committee so acting.
ARTICLE 4
SHARES AVAILABLE FOR ISSUANCE UNDER PLAN, ADJUSTMENTS AND
MAXIMUM AWARDS
4.1 SHARES AVAILABLE. The total number of shares of Delta Common Stock
reserved and available for distribution under the Plan pursuant to Awards made
on or after October 25, 2000 shall be 16,000,000, subject to adjustment as
provided in this Article 4. Delta Common Stock issued under the Plan may be
authorized but unissued shares or treasury shares. The Plan also amends and
restates the Incentive Compensation Plan and the 1989 Stock Incentive Plan of
Delta Air Lines, Inc., each in its entirety (it being noted that awards issued
under such plans prior to adoption of this amendment shall not be impacted by
this amendment), and any Award to be granted on or after October 25, 2000 will
be granted under this Plan and, if paid in Delta Common Stock, counted against
the 16,000,000 share limit mentioned in the foregoing sentence.
4.2 COUNTING RULES. Shares of Delta Common Stock issued, or reserved for
issuance, under the Plan pursuant to an Award granted on or after October 25,
2000, shall be subtracted from the number of shares available for issuance under
the Plan. Shares of Delta Common Stock obtained from the following sources shall
be added to the total number of shares available for issuance under the Plan:
a. shares tendered (actually or by attestation) in payment of the
Option Exercise Price upon exercise of a Stock Option or otherwise to exercise
an Award;
b. shares withheld or tendered (actually or by attestation) for taxes
upon exercise of a Stock Option, lapse of restrictions on Restricted Stock, or
otherwise in connection with an Award;
c. if all or part of an Award is settled in cash rather than in shares
of Delta Common Stock, then the number of shares that had been subtracted but
are not issued pursuant to such Award, shall be added back; and
d. shares relating to an Award that is forfeited or becomes void,
including, without limitation, shares that were subject to a Stock Option that
is forfeited before it is exercised, or Restricted Stock or an Other
Equity-Based Award that is forfeited.
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The preceding sentence shall also apply to shares that on or after October 25,
2000 are tendered, withheld, settled in cash or forfeited in respect of awards
granted under the 1989 Stock Incentive Plan, which are outstanding on
October 25, 2000.
4.3 MERGERS AND SIMILAR TRANSACTIONS. Upon the occurrence of any of the
following events:
a. a merger, consolidation, acquisition of property or stock,
reorganization or otherwise involving Delta in which Delta is not to be the
surviving corporation;
b. a merger, consolidation, acquisition of property or stock,
reorganization or otherwise involving Delta in which Delta is the surviving
corporation but holders of Delta Common Stock receive securities of another
corporation; or
c. a sale of all or substantially all of Delta's assets (as an
entirety) or capital stock to another person,
then any Award shall be deemed to apply to the securities, cash or other
property (subject to adjustment by cash payment in lieu of fractional interests)
to which a holder of the number of shares equal to the number of shares of Delta
Common Stock the Participant would have been entitled in connection with any
outstanding Award, and proper provisions shall be made to ensure that this
clause is a condition to any such transaction.
4.4 ADJUSTMENTS. In the event of a change in the outstanding shares of Delta
Common Stock by reason of any stock split, reverse stock split, dividend or
other distribution (whether in the form of cash, stock, other securities or
other property), extraordinary cash dividend, recapitalization, merger,
consolidation, split-up, spin-off, reorganization, combination, repurchase or
exchange of Delta Common Stock or other securities, the issuance of warrants or
other rights to purchase Delta Common Stock or other securities, or other
similar corporate transaction or event, if the Committee shall determine, in its
sole discretion, that, in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan,
such transaction or event equitably requires an adjustment in the number of
shares of Delta Common Stock that may be issued under the Plan (including,
without limitation, the share limitations specified in Section 4.6), in the
number of shares subject to an outstanding Award, or in the Option Exercise
Price of a Stock Option, or the consideration to be paid upon the grant,
exercise, etc., of any other Award, such adjustment shall be made by the
Committee and shall be conclusive and binding for all purposes under the Plan.
4.5 NO FRACTIONAL SHARES. No fractional share of Delta Common Stock shall be
issued under the Plan.
4.6 MAXIMUM AWARDS; AWARD LIMITATIONS. Applicable limitations for each type
Award are as follows:
4.6.1 GENERAL LIMITATIONS BY AWARD TYPE. Applicable limitations for each
type Award are as follows:
a. Incentive Award Final Amount(s) paid to any one Participant per
calendar year may not exceed $3 million, multiplied by the number of years
included in the Performance Period(s) (and any applicable fraction for any
Performance Period(s) of less than one year) relating to Incentive Award(s) that
are paid in such calendar year.
b. no more than 1 million shares of Delta Common Stock subject to Stock
Options may be granted to any one Participant per calendar year;
c. no more than 400,000 shares of Delta Common Stock in the form of
Restricted Stock may be granted to any one Participant per calendar year; and
d. no more than 400,000 shares of Delta Common Stock subject to Other
Equity-Based Awards may be granted to any one Participant per calendar year.
4.6.2 SPECIAL LIMITATION FOR INCENTIVE STOCK OPTIONS. In addition, for any
Incentive Stock Options that become exerciseable for the first time during any
calendar year, the aggregate Fair Market Value on
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the date of grant of the underlying Delta Common Stock may not exceed $100,000
for any Participant. For purposes of this $100,000 limit, the Participant's
Incentive Stock Options under this Plan and all other plans maintained by Delta
and Subsidiaries shall be aggregated. To the extent any Incentive Stock Option
becomes exerciseable for the first time in a calendar year and such limit would
be exceeded, such Incentive Stock Option shall thereafter be treated as a
Non-Qualified Stock Option for all purposes.
4.6.3 ADDITIONAL AGGREGATE LIMIT FOR AWARDS THAT ARE PAID IN DELTA COMMON
STOCK OTHER THAN STOCK OPTIONS. No more than 3 million shares of Delta Common
Stock may be issued under the Plan pursuant to Awards, other than Stock Options,
granted on or after October 25, 2000.
ARTICLE 5
TYPES OF AWARDS
5.1 INCENTIVE AWARDS. The Committee will specify annual or other Performance
Periods for the purpose of incentivizing Participants to achieve goals for such
Performance Period that are within group and/or individual influence and are
considered key to Delta's success. If at the time of specification, the
Committee determines that the potential Incentive Award will be a 162(m) Award,
then the Committee will follow the 162(m) Award Process in establishing and
paying that Incentive Award. The Committee may pay Incentive Awards in cash or
Delta Common Stock. If the Incentive Awards are paid in Delta Common Stock, the
number of shares shall be based upon the Fair Market Value.
Upon a Change In Control while a Participant is employed by a member of the
Delta Group, the applicable member of the Delta Group shall promptly thereafter
pay in cash to each such Participant his Incentive Award Reference Amount,
prorated to reflect the portion of the Performance Period elapsed through the
date of the Change In Control.
5.2 STOCK OPTIONS.
5.2.1 STOCK OPTIONS GENERALLY. A Stock Option is an option to purchase one
share of Delta Common Stock. Stock Options granted under the Plan shall, at the
discretion of the Committee, be in the form of either Non-Qualified Stock
Options, Incentive Stock Options or a combination of the two. Where both a
Non-Qualified Stock Option and an Incentive Stock Option are granted to a
Participant at the same time, such Awards shall be deemed to have been awarded
in separate grants, shall be clearly identified, and in no event shall the
exercise of one such Award affect the right to exercise the other Award. The
Committee shall designate Stock Options as Non-Qualified or Incentive at the
time of grant and such designation shall be specified in the Award Agreement.
Stock Options shall be subject to the following terms and conditions:
5.2.1.1 OPTION EXERCISE PRICE. The Committee shall determine the
Option Exercise Price of a Stock Option, and the Option Exercise Price shall be
set forth in the Award Agreement. However, in no event may the Option Exercise
Price of a Stock Option be less than the Fair Market Value on the date of grant.
5.2.1.2 TERM AND TIMING OF EXERCISE. Each Stock Option granted under
the Plan shall be exerciseable subject to the following:
a. no Stock Option may be exercisable earlier than one year (except in
the case of a Participant's death or termination of employment or a Change In
Control), or later than 10 years, from the date of grant;
b. all outstanding Stock Options shall become immediately exercisable,
vested and nonforfeitable upon a Change In Control; and
c. other provisions about the exercisability of Stock Options as shall
be specified in the Award Agreement or rules of the Committee.
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5.2.1.3 PAYMENT OF OPTION EXERCISE PRICE. The Option Exercise Price
shall be paid in full at or before the time of settlement of a Stock Option
exercise. Stock certificates or book-entry shares shall be registered in the
Participant's name and delivered only upon receipt of such payment. Payment of
the Option Exercise Price may be made in cash (using certified check, bank
draft, wire transfer, or other means specified by Delta or its agent at the time
of exercise). In addition, payment of all or a portion of the Option Exercise
Price may be made by any of the following methods or any other means allowed by
the Committee:
a. delivering a properly executed exercise notice to Delta, or its
agent, together with irrevocable instructions to a broker to deliver promptly to
Delta in cash the amount of sale or loan proceeds with respect to the portion of
the Delta Common Stock to be acquired upon exercise equal to the Option Exercise
Price being so paid; or
b. tendering to Delta or its agent previously acquired Delta Common
Stock that has been held by the Participant for at least six months (or if
permitted by the Committee purchased in the open market) having a Fair Market
Value on the date of exercise equal to the Option Exercise Price being so paid
(such tendering may be made actually or by attestation and using such process as
required at the time by Delta or its agent); or
c. any combination of cash and/or the foregoing methods.
5.2.2 INCENTIVE STOCK OPTIONS. Incentive Stock Options granted under the
Plan shall be subject to the following additional conditions, limitations and
restrictions:
5.2.2.1 ELIGIBILITY. Incentive Stock Options may only be granted to
Employees of Delta or a Subsidiary that meets the definition of "subsidiary" or
"parent corporation" under Code Section 424. In no event may an Incentive Stock
Option be granted to an Employee who owns stock possessing more than 10% of the
total combined voting power of all classes of stock of Delta or such Subsidiary.
5.2.2.2 TIMING OF GRANT. No Incentive Stock Option shall be granted
under the Plan after October 24, 2010.
5.2.2.3 TIMING OF EXERCISE. In the event that the Committee exercises
its discretion to permit an Incentive Stock Option to be exercised by a
Participant more than 30 days after the Participant's termination of employment
and such exercise occurs more than three months after such Participant has
ceased being an Employee (or no more than 12 months after the Participant is
"disabled" as such term is defined under Section 22(e)(3) of the Code), such
Incentive Stock Option shall thereafter be treated as a Non-Qualified Stock
Option.
5.2.2.4 TRANSFER RESTRICTIONS. In no event shall the Committee permit
an Incentive Stock Option to be transferred by a Participant, other than after
the Participant's death by will or the laws of descent and distribution. Any
Incentive Stock Option shall be exerciseable only by the Participant during the
Participant's lifetime.
5.3 RESTRICTED STOCK. At the time of grant, the Committee shall specify the
following:
a. the number of shares of Restricted Stock to be awarded;
b. the price (if any) to be paid by the recipient of Restricted Stock;
c. the time(s) within which the Restricted Stock may be subject to
forfeiture and may not be sold, transferred, pledged, assigned, etc., which may
not be less than one year from the date of grant (except in the case of a
Participant's death or termination of employment or a Change In Control);
d. whether the Restricted Stock is subject to performance-based
conditions; and if so, whether it will be a 162(m) Award, in which case the
Committee shall follow the 162(m) Award Process;
A-8
<PAGE>
e. whether dividends will be paid to Participants, or accrued and/or
reinvested, until the Restricted Stock is no longer subject to forfeiture;
f. whether Participants shall have the right to vote the Restricted
Stock until it is no longer subject to forfeiture;
g. the process, if any, for issuing certificates with legends or book
entry shares subject to stop transfer orders or other safeguarding until the
Restricted Stock is no longer subject to forfeiture; and
h. all other terms and conditions of the Restricted Stock Awards.
Outstanding Awards of Restricted Stock that are not performance-based Awards
shall become immediately exercisable, vested and nonforfeitable upon a Change In
Control. Upon a Change In Control, outstanding Awards of Restricted Stock that
are performance-based Awards shall be paid in an amount equal to the greater of
(a) 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 (b) 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. The
applicable amount shall be paid in the form of cash or Delta Common Stock, in
accordance with the terms of the applicable Award Agreement, promptly after the
Change In Control.
5.4 OTHER EQUITY-BASED AWARDS. The Committee has the discretion to grant Other
Equity-Based Awards. The forms of Other Equity-Based Awards include, without
limitation, (a) performance units, dividend equivalents, and phantom or
hypothetical shares related to the value of Delta Common Stock and (b) other
instruments that are paid in Delta Common Stock, convertible into Delta Common
Stock, derive their value from the performance of Delta Common Stock or derive
their value from the achievement of factors that the Committee deems relevant to
the performance of Delta Common Stock. Such Awards shall be subject to the terms
and conditions specified in the Award Agreement.
Upon a Change In Control, Other Equity-Based Awards that are not
performance-based Awards shall become immediately exercisable, vested and
nonforfeitable.
5.4.1 OTHER EQUITY-BASED AWARDS THAT ARE PERFORMANCE-BASED. Other
Equity-Based Awards that are performance-based may be issued in the form of
Performance Units, Performance Shares or otherwise as prescribed by the
Committee. If any Other Equity-Based Award is designated by the Committee as a
162(m) Award, it shall be issued in accordance with the 162(m) Award Process.
A Performance Unit is a right, denominated in cash or cash units, to receive, at
a specified future date, payment in cash or Delta Common Stock of an amount
which is to be determined based on the extent to which specified performance
goals are satisfied.
A Performance Share is a right, granted in the form of Delta Common Stock (or
phantom stock units) to receive, at a specified future date, payment in cash or
Delta Common Stock, as determined by the Committee, of an amount which is to be
determined based on the extent to which specified performance goals are
satisfied.
Upon a Change In Control for an Other Equity-Based Award that is a
performance-based Award, each outstanding Other Equity-Based Award shall be paid
in an amount equal to the greater of (a) 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 (b) 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. The applicable amount shall be paid in the
form of cash or Delta Common Stock, in accordance with the terms of the
applicable Award Agreement, promptly after the Change In Control.
A-9
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ARTICLE 6
DURATION, TERMINATION AND AMENDMENT
6.1 DURATION OF PLAN. The Plan became effective when approved by the
shareowners on October 25, 2000. The Plan shall continue in effect until
terminated by the Committee or the Board of Directors, provided that no
Incentive Stock Option may be granted on or after October 24, 2010.
6.2 EFFECT OF TERMINATION OF PLAN. No Awards shall be granted under the Plan
after it has been terminated. However, termination of the Plan shall not alter
or impair any of the rights of any Participant, without his or her consent,
under any outstanding Award granted prior to termination of the Plan. Awards
granted prior to termination of the Plan shall remain in effect after
termination of the Plan and shall continue to be governed by the terms of the
Plan (including any applicable rules established by the Committee) and any
applicable Award Agreement.
6.3 AMENDMENT.
6.3.1 GENERALLY. The Committee or the Board of Directors may amend the
Plan at any time and from time to time, except as provided in Sections 6.3.2 and
6.3.3. However, any amendment must be consistent with Section 2.2.2 regarding
Rule 16b-3 compliance.
6.3.2 SHAREOWNER APPROVAL REQUIRED FOR CERTAIN AMENDMENTS. Shareowner
approval will be required for any amendment of the Plan that does any of the
following:
a. permits the grant of any Stock Option with an Option Exercise Price
less than Fair Market Value on the date of grant;
b. reduces the Option Exercise Price of an outstanding Stock Option,
either by lowering the Option Exercise Price or by canceling an outstanding
Stock Option and granting a replacement Stock Option with a lower Option
Exercise Price; or
c. extends the Regular Expiration Date for exercise of any Stock
Option.
6.3.3 PARTICIPANT CONSENT REQUIRED FOR CERTAIN AMENDMENTS. No amendment of
the Plan shall impact any outstanding Award in a manner adverse to the
Participant to whom the Award was granted without such Participant's written
consent.
ARTICLE 7
TRANSFERABILITY OF AWARDS; CHANGE IN CONTROL
7.1 NONTRANSFERABILITY OF AWARDS. Except as otherwise provided in
Section 7.2, or in an Award Agreement or in Plan rules adopted by the Committee,
no Awards under the Plan shall be subject in any manner to alienation,
anticipation, sale, assignment, pledge, encumbrance or transfer, and no other
persons shall otherwise acquire any rights therein.
7.2 EXCEPTIONS TO NON-TRANSFERABILITY OF AWARDS.
7.2.1 TRANSFER UPON DEATH. Awards may be transferred by will or by the
laws of descent or distribution or beneficiary designation at death as provided
in Section 8.5.
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7.3 CHANGE IN CONTROL. "Change in Control" means, and shall be deemed to have
occurred upon, the first to occur of any of the following events:
a. Any Person(1) (other than an Excluded Person(2)) acquires, together
with all Affiliates(3) and Associates(4) of such Person, Beneficial Ownership(5)
of securities representing 20% or more of the combined voting power of the
Voting Stock(6) then outstanding, unless such Person acquires Beneficial
Ownership of 20% or more of the combined voting power of the Voting Stock then
outstanding solely as a result of an acquisition of Voting Stock by Delta which,
by reducing the Voting Stock outstanding, increases the proportionate Voting
Stock beneficially owned by such Person (together with all Affiliates and
Associates of such Person) to 20% or more of the combined voting power of the
Voting Stock then outstanding; PROVIDED, that if a Person shall become the
Beneficial Owner of 20% or more of the combined voting power of the Voting Stock
then outstanding by reason of such Voting Stock acquisition by Delta and shall
thereafter become the Beneficial Owner of any additional Voting Stock which
causes the proportionate voting power of Voting Stock beneficially owned by such
Person to increase to 20% or more of the combined voting power of the Voting
Stock then outstanding, such Person shall, upon becoming the Beneficial Owner of
such additional Voting Stock, be deemed to have become the Beneficial Owner of
20% or more of the combined voting power of the Voting Stock then outstanding
other than solely as a result of such Voting Stock acquisition by Delta;
b. During any period of two consecutive years (not including any period
prior to October 25, 2000) individuals who at the beginning of such period
constitute the Board of Directors (and any new member of the Board of Directors,
whose election by the Board of Directors or nomination for election by Delta's
shareowners was approved by a vote of at least two-thirds of the members of the
Board of Directors then still in office who either were members of the Board of
Directors at the beginning of the period or whose election or nomination for
election was so approved), cease for any reason to constitute a majority of
members then constituting the Board of Directors;
c. A reorganization, merger or consolidation of Delta is consummated,
in each case, unless, immediately following such reorganization, merger or
consolidation, (i) more than 50% of, respectively, the then outstanding shares
of common stock of the corporation resulting from such reorganization, merger or
consolidation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial owners
of the Voting Stock outstanding immediately prior to such reorganization, merger
or consolidation, (ii) no Person (but excluding for this purpose any Excluded
Person and any Person beneficially owning, immediately prior to such
reorganization, merger or consolidation, directly or indirectly, 20% or more of
the voting power of the outstanding Voting Stock) beneficially owns, directly or
indirectly, 20% or more of, respectively, the
------------------------
(1) "PERSON" in Section 7.3 means an individual, corporation, partnership,
association, trust or any other entity or organization.
(2) "EXCLUDED PERSON" in Section 7.3 means (i) Delta; (ii) a Subsidiary;
(iii) any Holding Company; (iv) any employee benefit plan of Delta, a Subsidiary
or a Holding Company; or (v) any Person organized, appointed or established by
Delta, a Subsidiary or a Holding Company for, or pursuant to the terms of, any
plan described in clause (iv).
(3) "AFFILIATES" in Section 7.3 has the meaning provided in Rule 12b-2 under
the Exchange Act as in effect on October 25, 2000.
(4) "ASSOCIATES" in Section 7.3 has the meaning provided in Rule 12b-2 under
the Exchange Act as in effect on October 25, 2000.
(5) "BENEFICIAL OWNERSHIP." As used in Section 7.3, a Person shall be deemed
the "BENEFICIAL OWNER" of, and shall be deemed to "beneficially own", securities
pursuant to Rule 13d-3 under the Exchange Act as in effect on October 25, 2000.
(6) "VOTING STOCK" in Section 7.3 means securities of Delta entitled to vote
generally in the election of members of the Board of Directors.
A-11
<PAGE>
then outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation or the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors and (iii) at least a majority of the members of the
board of directors of the corporation resulting from such reorganization, merger
or consolidation were members of the Board of Directors at the time of the
execution of the initial agreement providing for such reorganization, merger or
consolidation; or
d. The shareowners of Delta approve (i) a complete liquidation or
dissolution of Delta or (ii) the sale or other disposition of all or
substantially all of the assets of Delta, other than to any corporation with
respect to which, immediately following such sale or other disposition,
(A) more than 50% of, respectively, the then outstanding shares of common stock
of such corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial owners
of the Voting Stock outstanding immediately prior to such sale or other
disposition of assets, (B) no Person (but excluding for this purpose any
Excluded Person and any Person beneficially owning, immediately prior to such
sale or other disposition, directly or indirectly, 20% or more of the voting
power of the outstanding Voting Stock) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding shares of common
stock of such corporation or the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the election
of directors and (C) at least a majority of the members of the board of
directors of such corporation were members of the Board of Directors at the time
of the execution of the initial agreement or action of the Board of Directors
providing for such sale or other disposition of assets of Delta.
Notwithstanding the foregoing, in no event shall a Change In Control be deemed
to have occurred (i) as a result of the formation of a Holding Company(7), or
(ii) with respect to a Participant, if the Participant is part of a "group,"
within the meaning of Section 13(d)(3) of the Exchange Act as in effect on
October 25, 2000, which consummates the Change In Control transaction. In
addition, for purposes of the definition of Change In Control, a Person engaged
in business as an underwriter of securities shall not be deemed to be the
"Beneficial Owner" of, or to "beneficially own" any securities acquired through
such Person's participation in good faith in a firm commitment underwriting
until the expiration of forty days after the date of such acquisition.
ARTICLE 8
GENERAL PROVISIONS
8.1 WITHHOLDING OF TAXES. Federal, state, local and/or foreign withholding for
tax obligations may apply to various events involving Awards (or awards granted
under the 1989 Stock Incentive Plan prior to the effective date of this Plan,
which awards were still outstanding on the effective date of this Plan)--for
------------------------
(7) "HOLDING COMPANY" in Section 7.3 means an entity that becomes a holding
company for Delta or its businesses as a part of any reorganization, merger,
consolidation or other transaction, provided that the outstanding shares of
common stock of such entity and the combined voting power of the then
outstanding voting securities of such entity entitled to vote generally in the
election of directors is, immediately after such reorganization, merger,
consolidation or other transaction, beneficially owned, directly or indirectly,
by all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Voting Stock outstanding immediately
prior to such reorganization, merger, consolidation or other transaction in
substantially the same proportions as their ownership, immediately prior to such
reorganization, merger, consolidation or other transaction, of such outstanding
Voting Stock.
A-12
<PAGE>
example, upon the exercise of Stock Options or the lapse of restrictions on
Restricted Stock Awards. To satisfy the tax withholding obligations, the
Committee may require any of the following:
a. the Participant to pay Delta or its agent the tax withholding in
cash (using certified check, bank draft, wire transfer, or other means specified
by Delta or its agent at the time of exercise) as a condition to any event
involving an Award where withholding obligations apply;
b. deduction, of the amount needed to satisfy the withholding
obligations, from any cash amount payable to a Participant under the Plan, or
from his or her salary, or from any other cash owed or due to the Participant
from any member of the Delta Group for any reason including, without limitation,
under any other plan or program maintained by any member of the Delta Group; or
c. satisfaction of tax withholding obligations by Participants
(i) upon exercise of a Stock Option, by any of the Option Exercise Price payment
methods described in Section 5.2.1.3, (ii) upon the lapse of restrictions on
Restricted Stock, by withholding shares from those to be released from
restriction, or (iii) by tendering (actually or by attestation) shares of Delta
Common Stock. In any of the foregoing, the number of shares to be withheld or
tendered shall be calculated using the Fair Market Value of Delta Common Stock
at the time of withholding or tender. However, in no event may any amount
greater than the minimum statutory withholding obligation be satisfied by
tendering or withholding shares of Delta Common Stock.
8.2 NO IMPLIED RIGHTS.
8.2.1. NO RIGHTS TO CONTINUED EMPLOYMENT; PLAN MATTERS HAVE NO IMPACT ON
EMPLOYMENT. The establishment and subsequent operation of the Plan, including
eligibility as a Participant, shall not be construed as conferring any legal or
other right upon any Employee for the continuation of his or her employment for
any period. Each member of the Delta Group expressly reserves the right (which
may be exercised at any time and without regard to a Performance Period, vesting
of Awards or other timing relating to Awards) to discharge any individual and/or
treat him or her without regard to the effect which such treatment might have
upon him or her as a Participant in the Plan.
8.2.2 NO RIGHTS TO RECEIVE AWARDS. No Employee shall have any right or
entitlement to be selected to receive a grant of any Award, or to participate in
the Incentive Award for any Performance Period, for any reason (including
without limitation (a) that such Employee may have received grants or Awards in
the past under the Plan or any other plan maintained by any member of the Delta
Group or (b) that any grants or Awards have been made to any other Employee or
group of Employees).
8.3 NO RIGHTS AS SHAREOWNERS. A Participant granted an Award shall have no
rights as a shareowner of Delta with respect to such Award unless and until such
time as certificates or book-entry shares for the Delta Common Stock underlying
the Award are registered in such Participant's name in Delta's stock records.
The right of any Participant to receive payment with respect to an Award by
virtue of participation in the Plan shall be no greater than the right of any of
Delta's unsecured general creditors.
8.4 UNSECURED INTEREST. No Participant or any other party claiming an interest
in amounts earned under the Plan shall have any interest whatsoever in any
specific asset of Delta. To the extent that any party acquires a right to
receive payments under the Plan, such right shall be equivalent to that of an
unsecured general creditor of Delta.
8.5 BENEFICIARY DESIGNATION. Each Participant under the Plan may, from time to
time, name any beneficiary or beneficiaries (who may be named as a contingent or
successor beneficiary) to whom any benefit under the Plan is to be paid in case
of his or her death before he or she receives any or all of such benefit (except
for Incentive Stock Options which shall be governed by Section 5.2.2.4). Each
designation will revoke all prior designations by the same Participant, shall be
in a form prescribed by the Committee, and will be effective only when filed by
the Participant in writing with the Committee during his or her lifetime.
Beneficiary designations filed with respect to predecessor plans prior to the
adoption of this Plan
A-13
<PAGE>
shall be effective with respect to this Plan. In the absence of any such
designation, benefits remaining unpaid at the Participant's death shall be paid
to the Participant's estate.
8.6 VOLUNTARY DEFERRAL OF FINAL AWARD PAYOUTS. Pursuant to any terms and
conditions that the Committee may from time to time establish, a Participant may
defer receipt of some or all payments otherwise due under the Plan pursuant to
the terms of Delta's Executive Deferred Compensation Plan.
8.7 GOVERNING LAW; SEVERABILITY. The Plan and all determinations made and
actions taken thereunder shall be governed by the internal substantive laws, and
not the choice of law rules, of the State of Georgia and construed accordingly,
to the extent not superseded by applicable federal law. If any provision of the
Plan shall be held unlawful or otherwise invalid or unenforceable in whole or in
part, the unlawfulness, invalidity or unenforceability shall not affect any
other provision of the Plan or part thereof, each of which shall remain in full
force and effect.
8.8 162(M) AWARD PROCESS. The following process will be followed for a 162(m)
Award:
a. DESIGNATION OF AWARDS. Within 90 days of the beginning of the
Performance Period (or if the Performance Period is less than 12 months, then
within the number of days that is not more than 25% of the total days in the
Performance Period), the Committee will
(i) designate the Employees eligible to receive the 162(m) Award,
(ii) designate the applicable Performance Period, which shall not exceed
5 years, and
(iii) select Performance Measures and establish in writing the related
performance goals for that Performance Period, with ranges that
will correspond to various levels of the 162(m) Award, with
additional detail as follows for the particular Awards noted in
paragraphs A, B, C and and D below:
(A) for Incentive Awards, specifying
- the level of performance at which 100% of the Incentive Award
Target Amount may be earned,
- the levels of performance above and below the 100% performance
level at which a greater or lesser percent of the Incentive
Award Target Amount may be earned,
- the alignment of the level of achievement of the
pre-established Performance Measures and related performance
goals at the end of the Performance Period that will correspond
to the Incentive Award Final Amounts,
(B) for Performance Units, specifying the base value of each
Performance Unit and aligning the level of achievement of the
pre-established Performance Measures and related performance
goals for the Performance Period that will correspond to the
ultimate payout value for the Performance Units,
(C) for Performance Shares, which shall have an initial value equal
to the Fair Market Value of a share of Delta Common Stock on the
date of grant, aligning the level of achievement of the
pre-established Performance Measures and related performance
goals for the Performance Period that will correspond to the
ultimate number of Performance Shares to be earned, and
(D) for Restricted Stock that is a 162(m) Award or other 162(m)
Awards, aligning the level of achievement of the pre-established
Performance Measures and related performance goals for the
Performance Period that correspond to the portion of the Award
that would be forfeited, earned or exceeded.
A-14
<PAGE>
b. ADJUSTMENT OF PERFORMANCE MEASURES AND RELATED PERFORMANCE GOALS
DURING PERFORMANCE PERIOD. Once established, Performance Measures and related
performance goals normally shall not be changed during the Performance Period.
However, except as provided in the next paragraph, if the Committee determines
in its sole discretion that external changes or other unanticipated business
conditions have materially affected the fairness of the goals, then the
Committee may approve appropriate adjustments to the performance goals (either
up or down) during the Performance Period as such goals apply to the Award
opportunities of specified Participants.
Notwithstanding the above paragraph, the Committee may not use any discretion
regarding any Award held by a 162(m) Participant, except negative discretion
which would result in a reduction of the amount of the Award.
c. CERTIFICATION OF ACHIEVEMENT OF PERFORMANCE MEASURES AND RELATED
PERFORMANCE GOALS AND AMOUNT OF FINAL 162(M) AWARDS. Following the completion
of a Performance Period, the Committee shall certify in writing whether the
Performance Measures and related performance goals were met, prior to the
determination of the amount and the payment and/or release of any restrictions
on the 162(m) Award. As soon as practicable after the end of each Performance
Period, the Award shall be computed for each Participant as determined by the
Committee. Such amounts may vary above or below the Target Incentive Award
Target Amounts, for Incentive Awards, and above or below specified limits for
other 162(m) Awards based on the level of achievement of the pre-established
corporate, divisional, and/or individual performance goals. The Committee shall
have discretion to increase, reduce or eliminate part or all of any 162(m) Award
that otherwise would be paid to any participant who is not a 162(m) Participant.
With respect to any 162(m) Participant, the Committee's discretion may be used
only to reduce or eliminate part or all of any 162(m) Award that would otherwise
be paid. The Committee may announce at any time during the Performance Period
that it will not exercise such discretion.
d. FORM AND TIMING OF PAYMENT. Unless a deferral election is made by a
Participant pursuant to Section 8.6, or deferral of all or a portion of a
Participant's Award is otherwise required by the Committee, each Participant's
Award shall be paid or delivered (and any related restrictions released), within
seventy-five (75) days after the end of each Performance Period.
A-15
<PAGE>
[DELTA LOGO]
P R O X Y
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 Omni Netherland Plaza Hotel, 35 West Fifth Street,
Cincinnati, Ohio 45202, on Wednesday, October 25, 2000 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, Proxy Statement dated September 15, 2000, and Annual Report.
NOMINEES FOR DIRECTOR:
(01) Edwin L. Artzt, (02) James L. Broadhead, (03) Edward H. Budd, (04) R.
Eugene Cartledge, (05) Mary Johnston Evans, (06) George M.C. Fisher, (07)
David R. Goode, (08) Gerald Grinstein, (09) Leo F. Mullin, (10) John F.
Smith, Jr. and (11) Andrew J. Young.
[See Reverse Side]
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DETACH AND RETURN PROXY CARD; RETAIN ADMISSION TICKET
CONDUCT OF MEETING
In fairness to all shareowners attending the 2000 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.
-------------------------------------------------------------------------------
Delta's Annual Meeting of Shareowners will be broadcast live (listen only)
at www.delta.com/inside/investors/index.jsp. The live Web cast will begin
at 9:00 a.m. EDT on Wednesday, October 25, 2000. The replay will be
available through December 31, 2000.
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<PAGE>
/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE
-------------------------------------------------------------------------------
Delta's Board of Directors recommends a vote FOR all nominees and FOR
Proposals 2 and 3.
-------------------------------------------------------------------------------
1. Election of Nominees for Director. (see reverse)
FOR ALL WITHHOLD AUTHORITY
/ / / /
except as indicated below to vote for all
For all, except vote withheld from the following nominee(s):
------------------------------------------------------------
2. PROPOSAL to ratify the appointment of Arthur Andersen LLP as independent
auditors for the calendar year ending December 31, 2000.
FOR AGAINST ABSTAIN
/ / / / / /
3. PROPOSAL to approve the Delta 2000 Performance Compensation Plan.
FOR AGAINST ABSTAIN
/ / / / / /
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Delta's Board of Directors recommends a vote AGAINST Proposals 4, 5, 6 and 7.
-------------------------------------------------------------------------------
4. PROPOSAL by a shareowner relating to cumulative voting for directors.
FOR AGAINST ABSTAIN
/ / / / / /
5. PROPOSAL by a shareowner linking executive compensation to employee
satisfaction.
FOR AGAINST ABSTAIN
/ / / / / /
6. PROPOSAL by a shareowner relating to executive severance agreements.
FOR AGAINST ABSTAIN
/ / / / / /
7. PROPOSAL by a shareowner relating to executive stock option grants.
FOR AGAINST ABSTAIN
/ / / / / /
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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 shareowner is a corporation or partnership, please sign the
full corporate partnership name by a duly authorized person. If shares are
held jointly, each joint owner should sign.
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DETACH AND RETURN PROXY CARD; RETAIN ADMISSION TICKET
TELEPHONE AND INTERNET VOTING INSTRUCTIONS
You may use the telephone or the 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 authorized the named proxies in the same manner as if
you marked, signed, dated and returned the proxy card. If you choose to vote
you shares electronically, there is no need for you to mail back your proxy
card.
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ADMISSION TICKET
-------------------------------------------------------------------------------
Please indicate whether you plan to attend the 2000 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) appear(s) 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
WEDNESDAY, OCTOBER 25, 2000, 9:00 A.M., LOCAL TIME
OMNI NETHERLAND PLAZA HOTEL
35 WEST FIFTH STREET
CINCINNATI, OHIO 45202
<PAGE>
(LOGO) DELTA
INTERNAL MEMORANDUM
DATE: September 15, 2000
TO: Participants in the Delta Family Care-Savings Plan
FROM: Chairman and Chief Executive Officer
SUBJECT: DELTA'S 2000 ANNUAL MEETING OF SHAREOWNERS
As a participant in the Delta Family-Care Savings Plan (Savings Plan), you
have the right to confidentially 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 2000 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
described 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 Internet voting instruction system, by
indicating so when prompted.
I am pleased to announce that Delta will broadcast the Annual Meeting live
online (listen only) at WWW.DELTA.COM/INSIDE/INVESTORS/INDEX.JSP. The replay
of the Web cast will be available through December 31, 2000.
Enclosed is a copy of Delta's Notice of Annual Meeting of Shareowners, Proxy
Statement and Annual Report. If you were also a registered owner of Delta
common stock on the record date, you will receive a separate package with the
proxy materials, but excluding the Annual Report, for those shares. If you
would like an additional copy of the Annual Report, please contact Investor
Relations at (404) 715-2170.
Delta's Board of Directors recommends a vote FOR the election of all 11
nominees for Director, FOR Proposals 2 and 3, and AGAINST Proposals 4, 5, 6
and 7, as set forth in the Proxy Statement.
/s/ Leo
Leo F. Mullin
Enclosures
<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 Omni Netherland Plaza Hotel, 35 West Fifth Street,
Cincinnati, Ohio 45202, on Wednesday, October 25, 2000, at 9:00 a.m., local
time, or any adjournment of the meeting.
I understand that, under the Savings Plan, I have the right to confidentially
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 pages 10-11 of Delta's Proxy Statement dated September
15, 2000 describe 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 (EDT) on October 23,
2000; 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 27, 2000 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,
Proxy Statement dated September 15, 2000, and Annual Report.
NOMINEES FOR DIRECTOR:
(01) Edwin L. Artzt, (02) James L. Broadhead, (03) Edward H. Budd, (04) R.
Eugene Cartledge, (05) Mary Johnston Evans, (06) George M.C. Fisher, (07)
David R. Goode, (08) Gerald Grinstein, (09) Leo F. Mullin, (10) John F.
Smith, Jr. and (11) Andrew J. Young.
[See Reverse Side]
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DETACH AND RETURN VOTING INSTRUCTION FORM; RETAIN ADMISSION TICKET
CONDUCT OF MEETING
In fairness to all shareowners attending the 2000 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.
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Delta's Annual Meeting of Shareowners will be broadcast live (listen only)
at www.delta.com/inside/investors/index.jsp. The live Web cast will begin
at 9:00 a.m. EDT on Wednesday, October 25, 2000. The replay will be
available through December 31, 2000.
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<PAGE>
/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE
DELTA FAMILY-CARE SAVINGS PLAN VOTING INSTRUCTION FORM
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Delta's Board of Directors recommends a vote FOR all nominees and FOR
Proposals 2 and 3.
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1. Election of Nominees for Director. (see reverse)
FOR ALL WITHHOLD AUTHORITY
/ / / /
except as indicated below to vote for all
For all, except vote withheld from the following nominee(s):
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2. PROPOSAL to ratify the appointment of Arthur Andersen LLP as independent
auditors for the calendar year ending December 31, 2000.
FOR AGAINST ABSTAIN
/ / / / / /
3. PROPOSAL to approve the Delta 2000 Performance Compensation Plan.
FOR AGAINST ABSTAIN
/ / / / / /
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Delta's Board of Directors recommends a vote AGAINST Proposals 4, 5, 6 and 7.
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4. PROPOSAL by a shareowner relating to cumulative voting for directors.
FOR AGAINST ABSTAIN
/ / / / / /
5. PROPOSAL by a shareowner linking executive compensation to employee
satisfaction.
FOR AGAINST ABSTAIN
/ / / / / /
6. PROPOSAL by a shareowner relating to executive severance agreements.
FOR AGAINST ABSTAIN
/ / / / / /
7. PROPOSAL by a shareowner relating to executive stock option grants.
FOR AGAINST ABSTAIN
/ / / / / /
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I plan to attend the Annual Meeting of Shareowners / /
YES
These instructions, 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.
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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 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 23, 2000. This deadline
applies whether you use the Voting Instruction Form, or the telephone or
Internet voting instruction system.
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ADMISSION TICKET
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Please indicate whether you plan to attend the 2000 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 pserson 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
WEDNESDAY, OCTOBER 25, 2000, 9:00 A.M., LOCAL TIME
OMNI NETHERLAND PLAZA HOTEL
35 WEST FIFTH STREET
CINCINNATI, OHIO 45202
