<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
AIRBORNE FREIGHT CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
---------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------------
(3) Filing Party:
---------------------------------------------------------------------
(4) Date Filed:
---------------------------------------------------------------------
<PAGE> 2
AIRBORNE FREIGHT CORPORATION
3101 WESTERN AVENUE, P.O. BOX 662
SEATTLE, WASHINGTON 98111
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD APRIL 23, 1996
Notice is hereby given that the Annual Meeting of the Shareholders of
Airborne Freight Corporation, a Delaware corporation (the "Company"), has been
called and will be held on April 23, 1996, at 10:00 a.m., Seattle time, at the
Westin Hotel, 1900 Fifth Avenue, Seattle, Washington for the following purposes:
1. To elect three directors for terms of three years.
2. To consider and act upon a proposal to approve the selection of Deloitte
& Touche LLP as independent auditors.
3. To hear and consider reports from officers of the Company.
4. To transact such other business as may properly come before the meeting
or any adjournments thereof.
The foregoing matters are described in more detail in the Proxy Statement
that is attached to this notice.
Only holders of record, as of the close of business on February 26, 1996,
of shares of Common Stock of the Company will be entitled to notice of and to
vote at the meeting and any adjournments thereof. The stock transfer books will
not be closed.
By order of the Board of Directors
[SIGNATURE]
DAVID C. ANDERSON,
Corporate Secretary/Counsel
SHAREHOLDERS ARE URGED TO FILL IN, SIGN AND RETURN THE ENCLOSED PROXY IN
THE ENCLOSED ENVELOPE WHETHER OR NOT THEY PLAN TO ATTEND THE MEETING.
<PAGE> 3
PROXY STATEMENT
AIRBORNE FREIGHT CORPORATION
3101 WESTERN AVENUE, P.O. BOX 662, SEATTLE, WASHINGTON 98111
ANNUAL MEETING OF SHAREHOLDERS, APRIL 23, 1996
DATE OF MAILING: MARCH 11, 1996
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of Airborne Freight Corporation,
a Delaware corporation ("Airborne" or the "Company"), for use at the annual
meeting of shareholders to be held at the Westin Hotel, 1900 Fifth Avenue,
Seattle, Washington at 10:00 a.m., Seattle time, on Tuesday, April 23, 1996, and
at any adjournments thereof. Georgeson & Co. of New York City has been employed
to solicit proxies (through approximately 50 of its employees) by mail,
telephone, or personal solicitation, for a fee to be paid by the Company of not
more than $8,000. Officers and regular employees of the Company may solicit
proxies by telephone, telegram, and personal calls, the cost of which will be
borne by the Company.
At the annual meeting, the holders of shares of Common Stock of the Company
will (1) elect three directors for terms of three years and until their
successors have been elected and have qualified, (2) consider and act upon a
proposal to approve the selection of Deloitte & Touche LLP as independent
auditors, (3) hear and consider reports from officers of the Company, and (4)
transact such other business as may properly come before the meeting or any
adjournments thereof.
VOTING AT THE MEETING
Only holders of record, as of the close of business on February 26, 1996,
of shares of Common Stock of the Company will be entitled to notice of and to
vote at the meeting and any adjournments thereof. The Common Stock is the only
class of voting securities of the Company currently outstanding. On February 26,
1996, there were 21,124,239 shares of Common Stock outstanding (exclusive of
315,150 treasury shares), all of which will be entitled to vote at the annual
meeting on April 23, 1996. At the meeting, the presence in person or by proxy of
more than 50% of all of the outstanding shares is required for a quorum.
In deciding all matters at the meeting, other than the election of
directors, each shareholder will be entitled to one vote for each share of stock
held on the record date. For the election of directors, cumulative voting
applies, so that each shareholder will have the right to vote the number of
shares owned on the record date for as many persons as there are directors to be
elected; to cumulate such shares and give one nominee as many votes as the
number of directors to be elected (three) multiplied by the number of shares
held; or to distribute such number of votes among as many nominees and in such
amounts as the
1
<PAGE> 4
holder shall determine. For shareholders voting by proxy, provision is made on
the proxy card for instructions as to the manner of allocating votes.
Election of the persons nominated to serve as directors requires a
plurality of all the votes cast for directors. This means that the individuals
who receive the largest number of votes cast are elected as directors, up to the
number of directors (three) to be chosen at the meeting.
Shareholders may withhold their vote from one or more of the nominees for
director. Votes that are withheld in the election of directors will be excluded
in determining whether a nominee has received a plurality of the votes cast.
Brokerage firms holding shares in street name for customers are required to
vote such shares in the manner directed by their customers. In the absence of
timely directions, firms who are members of the New York Stock Exchange will
have discretion to vote their customers' shares.
All shares represented by the enclosed proxy, if it is returned prior to
the meeting, will be voted in the manner specified by the shareholder. Unless a
shareholder provides specific instructions to withhold votes from, or to
allocate them to, one or more nominees for director, the persons named in the
proxy will be authorized to vote the shares represented thereby FOR the election
of the nominees for director and in their discretion to cumulate votes and
allocate them among the nominees to the extent and the manner necessary to
assure the election of all of the nominees. If any listed nominee becomes
unavailable, the persons named in the proxy may vote for any substitute
designated by the Nominating Committee of the Board; however, management at this
time has no reason to anticipate that this will occur. If no specific
instruction is given with respect to approval of the selection of auditors, the
shares represented by the proxy will be voted FOR approval of the selection of
Deloitte & Touche LLP.
You may revoke your proxy at any time before it has been voted by voting in
person at the meeting, by giving written notice of revocation to the Secretary
of the Company, or by giving a later dated proxy at any time before the voting.
2
<PAGE> 5
To the best of the Company's knowledge, as of February 26, 1996,
shareholders owning over 5% of the outstanding Common Stock of the Company were
as follows:
HOLDERS OF COMMON STOCK
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF COMMON COMMON STOCK
NAME AND ADDRESS SHARES OUTSTANDING
--------------------------------------------------- ---------------- --------------
<S> <C> <C>
FMR Corp.(1) 2,181,814 10.33%
82 Devonshire Street
Boston, MA 02109
The Crabbe Huson Group, Inc.(2) 1,305,500 6.18%
121 SW Morrison, Suite 1400
Portland, OR 97204
</TABLE>
- ---------------
(1) The information regarding shares beneficially owned by FMR Corp. is based on
an amendment to Schedule 13G filed with the Securities and Exchange
Commission ("SEC") on or about January 10, 1996.
(2) The information regarding shares beneficially owned by The Crabbe Huson
Group, Inc. is based on a Schedule 13G filed with the SEC on or about
February 13, 1996.
ELECTION OF DIRECTORS
The Company's Bylaws provide for no fewer than eight and no more than
twelve directors, as determined from time to time by the Board. The Company's
Board currently consists of nine members, divided into three classes with terms
expiring at the April annual meeting as follows:
CLASS A (THREE POSITIONS WITH TERMS EXPIRING IN 1998):
Andrew F. Brimmer
Harold M. Messmer, Jr.
Andrew V. Smith
CLASS B (THREE POSITIONS WITH TERMS EXPIRING IN 1996):
Robert G. Brazier
James H. Carey
Andrew B. Kim
CLASS C (THREE POSITIONS WITH TERMS EXPIRING IN 1997):
Robert S. Cline
Richard M. Rosenberg
William Swindells
At the annual meeting, three persons will be elected to fill the Class B
positions, generally for terms of three years, to hold office until the annual
meeting of shareholders in the year their terms expire (1999) and until their
respective successors have been elected and shall have qualified as provided by
the Bylaws. Messrs. Brazier, Carey, and Kim are present directors of the Company
and have been nominated to continue as directors.
3
<PAGE> 6
NOMINEES FOR DIRECTORS TO SERVE A THREE-YEAR TERM
CLASS B (TERMS TO EXPIRE IN 1999)
ROBERT G. BRAZIER, age 58, President and Chief Operating Officer of the Company.
Mr. Brazier has served as President of the Company since 1978 and as
Chief Operating Officer of the Company since 1973. Prior to that time he
was Senior Vice President-Operations of the Company and Vice President of
Sales and Operations of Pacific Air Freight, Inc. Mr. Brazier has been a
director of the Company since 1974 and is a member of the Executive
Committee.
JAMES H. CAREY, age 63, Managing Director, Briarcliff Financial Associates
(private financial advisory firm).
Mr. Carey has been Managing Director of Briarcliff Financial
Associates since 1991. He served as Chief Executive Officer of National
Capital Benefits Corporation, a viatical settlement company, from March
1994 to December 1995. Mr. Carey served from 1989 until 1991 as President
and Chief Executive Officer of the Berkshire Bank. Mr. Carey is a director
of the Midland Company; Cowen Standby Reserve Fund, Inc.; Cowen Standby
Tax-Exempt Reserve Fund, Inc.; Cowen Income and Growth Fund, Inc.; Cowen
Intermediate Fixed Income Fund, Inc.; Cowen Tradition Fixed Income Fund,
Inc.; and Cowen Opportunity Fund, Inc. He has been a director of the
Company since 1978 and is a member of the Compensation Committee.
ANDREW B. KIM, age 59, President, Sit/Kim International Investment Associates,
Inc. (investment company).
Mr. Kim has served as President of Sit/Kim International Investment
Associates, Inc. since 1989. Prior to that time, he was Executive Vice
President and Chairman of the Investment Policy Committee of Eberstadt
Fleming, Inc. (investment bank). Mr. Kim is a director of Peregrine
Indonesia Fund of Jakarta, Indonesia; Hyundai Dragon Fund of Dublin,
Ireland; Ilshin Investment Corp. and Dong-A Venture Investment in Korea;
and the Vertical Group of New York. Mr. Kim has been a director of the
Company since 1994 and is a member of the Audit Committee.
CONTINUING DIRECTORS -- NOT STANDING FOR ELECTION THIS YEAR
CLASS C (TERMS TO EXPIRE IN 1997)
ROBERT S. CLINE, age 58, Chairman and Chief Executive Officer of the Company.
Mr. Cline has served as Chairman and Chief Executive Officer of the
Company since 1984. Prior to that time, he served as Vice Chairman,
Executive Vice President, Chief Financial Officer, Senior Vice
President-Finance and Vice President-Finance. He serves as a director of
Safeco Corporation; Seattle-First National Bank; and Metricom, Inc. Mr.
Cline, a director of the Company since 1973, is Chairman of the Executive
Committee.
4
<PAGE> 7
RICHARD M. ROSENBERG, age 65, Chairman of the Board, Bank of America.
Mr. Rosenberg served as Chairman, President, and Chief Executive
Officer of Bank of America from 1990 to 1996, when he assumed his present
position. From 1987 to 1990, he served as Vice Chairman. Mr. Rosenberg
serves as a director of BankAmerica Corporation; Northrop Corporation;
Pacific Telesis Corporation; Pacific Mutual Life Insurance Company; and
Potlatch Corporation. Mr. Rosenberg, a director of the Company since 1988,
is Chairman of the Compensation Committee.
WILLIAM SWINDELLS, age 65, Chairman, Willamette Industries, Inc. (forest
products).
Mr. Swindells is Chairman of Willamette Industries, Inc. and served as
its Chairman and Chief Executive Officer from 1985 to 1996. He is a
director of Standard Insurance Co. and Oregon Steel Mills. Mr. Swindells
has been a director of the Company since 1994 and is a member of the Audit
Committee.
CLASS A (TERMS TO EXPIRE IN 1998)
ANDREW F. BRIMMER, age 69, President, Brimmer & Company, Inc. (economic and
financial consulting).
Mr. Brimmer heads Brimmer & Company, Inc., an economic and financial
consulting firm which he established in 1976. He is a director of
BankAmerica Corporation; BlackRock Investment Income Trust and other
BlackRock Funds; Carr Realty Corp.; College Retirement Equity Fund; E.I.
duPont de Nemours and Company; Gannett Company, Inc.; Navistar
International Corporation; and PHH Corporation. Mr. Brimmer has been a
director of the Company since 1994 and is a member of the Nominating
Committee.
HAROLD M. MESSMER, JR., age 50, Chairman and Chief Executive Officer, Robert
Half International, Inc. (personnel services).
Mr. Messmer has been Chairman and Chief Executive Officer of Robert
Half International Inc., since 1987. Mr. Messmer is also a director of
First Interstate Bancorp.; Pacific Enterprises; Health Care Property
Investors, Inc.; and Spieker Properties, Inc. Mr. Messmer, a director of
the Company since 1989, serves as Chairman of the Nominating Committee and
a member of the Compensation Committee.
ANDREW V. SMITH, age 71, Retired President, U S WEST Communications.
Mr. Smith served as President and a director of U S WEST
Communications (formerly Pacific Northwest Bell Telephone Company) from
1978 to December 1988. From January 1989 to July 1989, he was Executive
Vice President of U S WEST, Inc. He is a director of Cascade Natural Gas
Corp.; Prime Source Corp.; and Univar Corporation. Mr. Smith has been a
director of the Company since 1983 and serves as Chairman of the Audit
Committee and a member of the Nominating Committee and the Executive
Committee.
5
<PAGE> 8
BOARD OF DIRECTORS AND COMMITTEES
The full Board of Directors met four times during 1995. No incumbent member
attended fewer than 75% of the meetings of the Board of Directors and Board
committees of which he was a member during 1995, except Mr. Rosenberg, who
attended more than 70% of such meetings.
BOARD COMMITTEES
The Board has a standing Audit Committee, Compensation Committee,
Nominating Committee and Executive Committee. Each committee, other than the
Executive Committee, consists exclusively of non-employee directors.
AUDIT COMMITTEE. The Audit Committee is currently composed of Mr. Smith,
Chairman, Mr. Kim, and Mr. Swindells. The committee is charged with reviewing
and approving the scope of the audit of the books and accounts of the Company
and its subsidiaries, recommending the employment and retention of a firm of
independent auditors to conduct such audit, reviewing the Company's financial
reporting and control systems and reporting to the Board thereon. The committee
met twice during 1995.
COMPENSATION COMMITTEE. The Compensation Committee is currently composed of
Mr. Rosenberg, Chairman, Mr. Carey, and Mr. Messmer. It is charged with the
review of and recommendation to the full Board on matters relating to salaries
of officers and all other forms of executive and key employee compensation and
benefits, as well as the level and form of compensation for non-employee
directors. The committee met three times during 1995.
NOMINATING COMMITTEE. The Nominating Committee is currently composed of Mr.
Messmer, Chairman, Mr. Brimmer, and Mr. Smith. It is charged with searching for
and recommending to the Board potential nominees for Board positions; evaluating
the performance of the Chief Executive Officer; and recommending, when
appropriate, the appointment of a new Chief Executive Officer and candidates for
appointment to other offices. The committee met twice during 1995.
Any shareholder recommendations for nominations to the Board of Directors
for consideration by the Nominating Committee for the 1997 Annual Meeting should
be forwarded to Mr. Harold M. Messmer, Jr., Chairman, Nominating Committee,
Airborne Freight Corporation, P.O. Box 662, Seattle, Washington 98111, so as to
be received no later than November 30, 1996.
EXECUTIVE COMMITTEE. The Executive Committee currently consists of Mr.
Cline, Chairman, Mr. Brazier, and Mr. Smith. It is authorized to act in lieu of
the full Board on various matters between Board meetings.
DIRECTOR COMPENSATION
Non-employee directors received an annual fee of $22,000 in 1995 plus
$1,000 for each Board and Committee meeting attended.
6
<PAGE> 9
The Company has a Directors Stock Option Plan, which provides for automatic
grants of stock options to certain non-employee directors of the Company. The
grants occur on the first Tuesday in February of each year, with the final grant
to occur on February 2, 1999. The exercise price per share is the closing sales
price of a share of the Company's Common Stock on the New York Stock Exchange on
the grant date. The shares of Common Stock issuable upon exercise of options
granted under the Plan will be issued from treasury shares.
In order to be eligible for a grant on the specified grant date in a
particular year, an individual must be a member of the Company's Board on that
date, and, in addition, the individual must not have been an employee of or
consultant to the Company or any of its direct or indirect subsidiaries at any
time during the preceding calendar year. If both of these conditions are met,
the individual will receive a grant of an option to acquire 1,000 shares of the
Company's Common Stock. The Plan permits "stock-for-stock" exercise of options,
whereby an option holder tenders Airborne stock, valued at the current market
price, in lieu of cash, in order to exercise an option.
7
<PAGE> 10
STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth information as to the shares of Common Stock
beneficially owned (or deemed to be beneficially owned pursuant to the rules of
the SEC) by each director of the Company, by the Chief Executive Officer and the
five other most highly compensated executive officers of the Company at December
31, 1995 (the "named executive officers") and by all directors and executive
officers as a group:
<TABLE>
<CAPTION>
COMMON STOCK OF
THE COMPANY PERCENTAGE OF
BENEFICIALLY OWNED COMMON STOCK
NAME AS OF 2/26/96 OUTSTANDING
------------------------------------------- ---------------------- ----------------
<S> <C> <C>
DIRECTORS
Andrew F. Brimmer 1,100(1) *
James H. Carey 5,700(1) *
Andrew B. Kim 24,586(1) *
Harold M. Messmer, Jr. 7,000(1) *
Richard M. Rosenberg 7,000(1) *
Andrew V. Smith 5,000(1) *
William Swindells 3,500(1) *
NAMED EXECUTIVE OFFICERS
Robert S. Cline(2) 241,471(3) 1.14%
Robert G. Brazier(2) 324,401(3) 1.53%
John J. Cella 53,174(3) *
Kent W. Freudenberger 56,060(3) *
Roy C. Liljebeck 119,731(3) *
Raymond T. Van Bruwaene 55,116(3) *
All Directors and Executive Officers as a
Group (16 Persons) 936,158(4) 4.34%
</TABLE>
- ---------------
* Less than 1% of Common Stock outstanding.
(1) Includes shares subject to options granted under the Directors Stock Option
Plan as follows: Mr. Brimmer, 1,000; Mr. Carey, 5,000; Mr. Kim, 1,000; Mr.
Messmer, 5,000; Mr. Rosenberg, 5,000; Mr. Smith, 2,000; and Mr. Swindells,
1,000.
(2) Mr. Cline and Mr. Brazier also serve as directors.
(3) Includes shares subject to options granted under the Airborne Key Employee
Stock Option and Stock Appreciation Rights Plan as follows: Mr. Cline,
119,730; Mr. Brazier, 106,193; Mr. Cella, 30,465; Mr. Freudenberger, 39,725;
Mr. Liljebeck, 39,725; and Mr. Van Bruwaene, 39,725.
(4) Includes 424,097 shares subject to options.
8
<PAGE> 11
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning annual and long-term
compensation paid or accrued during calendar years 1995, 1994 and 1993 for
services in all capacities to the Company by the named executive officers:
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
AWARDS:
ANNUAL ------------
COMPENSATION SECURITIES
------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) OPTIONS(2) COMPENSATION(3)
- -------------------------------------- ---- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Robert S. Cline 1995 $486,538 -- 15,400 $ 4,800
Chairman, Chief Executive 1994 453,462 $121,890 10,370 6,036
Officer and Director 1993 418,846 294,993 15,390 9,289
Robert G. Brazier 1995 420,615 -- 13,300 1,650
President, Chief Operating 1994 391,692 92,048 8,965 2,886
Officer and Director 1993 362,000 254,956 13,300 6,141
Roy C. Liljebeck 1995 266,000 -- 5,625 4,800
Executive Vice President 1994 250,308 46,157 4,810 6,036
and Chief Financial Officer 1993 232,846 124,642 6,750 9,211
Raymond T. Van Bruwaene 1995 266,000 -- 5,625 4,800
Executive Vice President, 1994 250,308 46,157 4,810 6,036
Field Services Division 1993 232,846 124,642 6,750 9,211
Kent W. Freudenberger 1995 266,000 -- 5,625 4,800
Executive Vice President, 1994 250,308 46,157 4,810 6,036
Marketing Division 1993 232,846 124,642 6,750 9,211
John J. Cella 1995 266,000 -- 5,625 4,800
Executive Vice President, 1994 250,308 46,157 4,810 6,036
International Division 1993 232,846 124,642 6,750 9,211
</TABLE>
- ---------------
(1) Amounts awarded under the Executive Incentive Compensation Plan for the
respective calendar years.
(2) Number of shares of Common Stock underlying options awarded under the
Airborne Key Employee Stock Option and Stock Appreciation Rights Plan.
Although this Plan permits grants of stock appreciation rights, no grant of
such rights has been made.
(3) All Other Compensation represents contributions by the Company to the
accounts of the named executive officers under the Company's defined
contribution plan, including 401(k) matching contributions.
9
<PAGE> 12
OPTION GRANTS IN 1995
The following table shows information concerning stock options granted to
the named executive officers during calendar year 1995 under the Airborne Key
Employee Stock Option and Stock Appreciation Rights Plan:
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE AT
------------------------------------------------- ASSUMED ANNUAL
NUMBER PERCENT OF RATES OF
OF TOTAL STOCK PRICE
SECURITIES OPTIONS EXERCISE APPRECIATION FOR
UNDERLYING GRANTED TO PRICE OPTION TERM(2)
OPTIONS EMPLOYEES IN (PER EXPIRATION -------------------
NAME GRANTED(1) FISCAL YEAR SHARE) DATE 5% 10%
---------- ------------ -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Robert S. Cline 15,400 8.27% $23.125 2/7/05 $223,965 $567,572
Robert G. Brazier 13,300 7.14% $23.125 2/7/05 193,424 490,175
Roy C. Liljebeck 5,625 3.02% $23.125 2/7/05 81,805 207,311
Raymond T. Van Bruwaene 5,625 3.02% $23.125 2/7/05 81,805 207,311
Kent W. Freudenberger 5,625 3.02% $23.125 2/7/05 81,805 207,311
John J. Cella 5,625 3.02% $23.125 2/7/05 81,805 207,311
</TABLE>
- ---------------
(1) Options for the named executive officers were granted on February 7, 1995.
Fifty percent of the options will become exercisable on February 7, 1997,
and the remaining options will become exercisable on February 7, 1998,
subject to certain contractual provisions that will apply in the event of a
change in control (see Employment Contracts). The exercise price of the
options was the fair market value of the Company's Common Stock on the date
of grant.
(2) Based upon the $23.125 per share market price on the date of grant and
assumed appreciation over the term of the options at the respective annual
rates of stock appreciation shown. These amounts are not intended to
forecast possible future appreciation, if any, in the Company's stock price.
The named executive officers will realize no value from these options if the
stock price does not increase.
10
<PAGE> 13
AGGREGATE OPTION EXERCISES IN 1995 AND YEAR-END OPTION VALUES
The following table shows information concerning stock options exercised
during calendar year 1995 by the named executive officers and the value of
unexercised options at the end of that year:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END(2)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert S. Cline 23,038 $298,272 115,774 33,465 $ 1,331,020 $85,642
Robert G. Brazier 17,700 202,453 111,420 28,915 1,352,748 73,981
Roy C. Liljebeck 24,450 482,650 33,945 13,810 241,638 33,609
Raymond T. Van Bruwaene -- -- 33,945 13,810 241,638 33,609
Kent W. Freudenberger -- -- 33,945 13,810 241,638 33,609
John J. Cella -- -- 24,685 13,810 113,156 33,609
</TABLE>
- ---------------
(1) Represents the aggregate fair market value, on the respective dates of
exercise, of the shares of the Common Stock received on exercise of options,
less the aggregate exercise price of the options.
(2) Represents the aggregate fair market value on December 29, 1995 (based on
the closing price of $26.625 for the Company's Common Stock on the New York
Stock Exchange on that date), of the shares of Common Stock subject to
outstanding options, less the aggregate exercise price of the options.
11
<PAGE> 14
COMPARATIVE PERFORMANCE GRAPH
Set forth below is a graph comparing the cumulative total shareholder
return on the Company's Common Stock with the cumulative total return of the
Standard & Poor's Composite-500 Stock Index and the Standard & Poor's
Transportation Index for the five-year period ended December 31, 1995.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN(1)
AMONG AIRBORNE FREIGHT CORPORATION COMMON STOCK,
THE S&P COMPOSITE-500 INDEX, AND THE S&P TRANSPORTATION INDEX
<TABLE>
<S> <C> <C> <C> <C>
AIRBORNE S&P COM- S&P TRANS-
FREIGHT POSITE-500 PORTATION
DECEMBER 31 CORPORATION INDEX INDEX
1990 100 100 100
1991 144 130 149
1992 113 140 162
1993 214 155 192
1994 127 157 161
1995 167 215 225
</TABLE>
(1) The total return on the Company's Common Stock and each index assumes the
value of each investment was $100 on December 31, 1990, and that all
dividends were reinvested.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
It is the responsibility of the Compensation Committee to set policies
governing compensation of the Company's executive officers and to make
recommendations to the Board as appropriate. These policies cover base salaries,
incentive compensation, stock options, and any other forms of remuneration. In
addition, the Committee evaluates performance of management, considers
management succession, and deals with other personnel matters related to senior
management.
12
<PAGE> 15
The Company has designed pay programs for executive officers that provide a
strong link between the Company's performance and executive compensation. Each
component of executive pay is weighted and valued so that, in total, highly
talented executives can be attracted, retained and motivated to consistently
improve the financial performance of the Company.
The Committee periodically reviews the total compensation for the Chief
Executive Officer and the other executive officers. The Committee also monitors
general compensation practices for all other officers of the Company and its
subsidiaries. The Compensation Committee may retain the services of a
compensation consulting firm to assist in the performance of these duties. The
role of such a consulting firm is to provide information to the Committee with
respect to the competitiveness of compensation paid to executive officers of the
Company, taking into account how the Company's compensation compares to that of
other companies of similar size and scope.
A consulting firm was retained to obtain such information in 1993 and to
provide updated information in 1994 and in 1995. The comparison companies were
selected from those in general industry, in transportation, and in the Northwest
United States. Annual revenues of the comparison companies were approximately
$1.5 billion in 1993 and $2.0 billion in 1994 and in 1995. They were selected
without regard to whether they are included in the S & P Transportation Index.
In 1995, executive officers earned cash compensation solely through base
salaries. Executive officers had the potential to receive incentive awards under
the Company's 1995-1999 Executive Incentive Compensation Plan (the "EICP"), but
no incentive awards were paid for 1995. The committee considers how the mix of
base salaries and awards under the EICP compares to the median compensation
level of the comparison companies, but does not target such compensation at,
above, or below the median paid by the comparison companies. The Company
believes that total cash compensation potentially available to Company executive
officers was competitive and provided the incentive necessary to motivate them
to meet or exceed goals set by the Board.
In connection with the EICP, the Committee approved an annual operating
plan at the beginning of 1995 that established targets for pre-tax net profits
and revenue growth. Based on a weighting of 75% to pre-tax net profits and 25%
to revenue growth, these targets served as the yardstick for determining any
eventual payout for 1995 under the EICP. However, regardless of revenue growth,
no payout was to be made for 1995 under the EICP unless the Company earned at
least 80% of the targeted level of pre-tax net profits.
13
<PAGE> 16
EICP payouts are calculated as a percentage of base salary. The threshold
for EICP awards is attainment of 80% of the targets and the maximum payout is
available at 150% target attainment. The payout percentages for the executive
officers are as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF BASE SALARY
--------------------------------
THRESHOLD TARGET MAXIMUM
--------- ------ -------
<S> <C> <C> <C>
Chief Executive Officer 10% 60% 133%
Chief Operating Officer 10% 50% 111%
Other Executive Officers 10% 35% 75%
</TABLE>
The Chief Executive Officer's base salary was increased to $500,000 as of
July, 1995. The base salaries of other executive officers also were raised at
that time. Base salaries were raised to keep compensation competitive with those
of comparison companies. The Company exceeded the threshold for revenue growth
in 1995 but did not exceed the threshold for pre-tax net profits and,
accordingly, no incentive awards were paid under the EICP for 1995.
During each fiscal year, the Committee considers the desirability of
granting longer-term incentive awards to the Company's officers, including the
executive officers, under the Airborne Key Employee Stock Option and Stock
Appreciation Rights Plan. In 1995, stock options were granted to the executive
officers at an exercise price equal to the fair market value of the Company's
stock on the date of grant. The grants to the executive officers were based in
part on a formula recommended by a compensation consulting firm, which relates
the number of options granted to the respective base salaries of the executive
officers. The number of shares for each executive officer is determined
initially by taking a percentage of base salary and dividing that amount by the
fair market value per share on the date of grant. In deciding the actual number
of options to grant, the Committee considered the results of the formula,
together with the number of options previously granted and the aggregate size of
current awards. The Committee believes that these awards will have the desired
effect of focusing the Company's senior management on building consistent
profitability and shareholder value, since the awards directly ally the
interests of management with an increase in the market price of the Company
stock. The Committee did not grant any stock appreciation rights.
Under the Omnibus Budget Reconciliation Act of 1993, the Federal income tax
deduction for certain types of compensation paid to the Chief Executive Officer
and four other most highly compensated officers of publicly held companies is
limited to $1 million per employee. In certain circumstances, performance based
compensation is exempt from the $1 million limit. The Committee believes all
compensation earned by such employees in 1996 will be deductible.
Richard M. Rosenberg, Chairman
James H. Carey
Harold M. Messmer, Jr.
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<PAGE> 17
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is currently composed of Mr. Rosenberg,
Chairman, Mr. Carey and Mr. Messmer. Mr. Rosenberg is a director of BankAmerica
Corporation, the parent of Bank of America National Trust and Savings
Association ("Bank of America") and Seattle-First National Bank, N.A.
("Seafirst"), and Chairman of the Board of Bank of America. The Company has
various demand deposit accounts, and participates in one or more credit
agreements, with each of Bank of America and Seafirst.
RETIREMENT PLANS
The Company maintains two qualified retirement plans that cover the named
executive officers and all other employees (other than certain union employees)
who satisfy certain eligibility requirements relating to minimum age, length of
service and hours worked. One of the plans is a defined contribution plan and
the other is a defined benefit pension plan. The Company also maintains a
nonqualified supplemental plan for its officers, including the named executive
officers.
DEFINED CONTRIBUTION PLAN. The Company's defined contribution plan
includes a profit sharing plan that provides for an annual discretionary
contribution which, pursuant to resolutions of the Board, is currently equal to
7% of pre-tax profits up to a predetermined level, plus 14% of pre-tax profits
in excess of that level. Each participant's account under the plan is credited
with a portion of such contribution based on the ratio of his or her salary to
the total salaries of all participating employees. At retirement, a
participant's targeted annual pension benefit under the Company's defined
benefit pension plan will be offset based on the amount in the participant's
profit sharing account (see "Defined Benefit Pension Plan"). The defined
contribution plan also includes a voluntary 401(k) salary deferral plan.
DEFINED BENEFIT PENSION PLAN. Subject to the offset described below and
statutory limits on benefits that may be provided under such a plan, the defined
benefit pension plan provides each participant with a targeted annual pension
benefit at retirement equal to (i) the number of years of service of a
participant (up to a maximum of 25 years), times (ii) the sum of 1.6% of the
participant's final average earnings up to the average covered Social Security
earnings level, plus 2% of the portion of the final average earnings that
exceeds that level.
A participant's benefit under the Company's defined benefit pension plan is
subject to an offset based on the amount in his or her profit sharing account
under the defined contribution plan. This is done as follows: At retirement, the
Company calculates how much of a participant's targeted annual pension benefit
can be provided by the amount that has accumulated in his or her profit sharing
plan account. This calculation is based on an interest rate factor as described
in the pension plan. The defined benefit pension plan then provides the portion
of the targeted annual pension benefit, if any, that the amount in the profit
sharing account is insufficient to provide.
SUPPLEMENTAL PLAN. The Company also maintains a Supplemental Executive
Retirement Plan (the "SERP") for the benefit of officers of the Company and its
eligible subsidiaries. The SERP is a nonqualified plan that is designed to
provide a retirement
15
<PAGE> 18
benefit equal to approximately 65% of an officer's final average earnings (the
SERP also provides for benefit payments upon the occurrence of other events,
including in certain cases a change in control of the Company). The benefit
accrues in equal annual increments over a period of 15 years. The SERP provides
for normal retirement at or after age 62; however, the benefits will be subject
to offset based on retirement benefits the officer will receive under the
Company's qualified retirement plans and Social Security (the offset is
calculated based on normal retirement at age 65) and under the retirement plans
of any prior employer. The SERP is unfunded, although the Company maintains
commingled investment fund assets and insurance on the lives of certain officers
that could be used to fund eventual benefit payments.
The following table sets forth the targeted annual pension benefits
(calculated on the basis of a straight life annuity) payable upon retirement at
age 65 to the Company's officers (including the named executive officers) based
on specified years of service and levels of compensation. The amounts shown take
into account Social Security offsets based on the career average Social Security
wage base in effect in 1995. The amounts shown do not reflect any offsets that
may apply in individual cases on account of benefits under the retirement plans
of an officer's prior employer.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------------------------------------------------
REMUNERATION 5 10 15 20 25 30 35
- ------------ -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$150,000 $ 18,112 $ 50,612 $ 83,112 $ 83,112 $ 83,112 $ 83,112 $ 83,112
200,000 28,945 72,279 115,612 115,612 115,612 115,612 115,612
250,000 39,779 93,945 148,112 148,112 148,112 148,112 148,112
300,000 50,612 115,612 180,612 180,612 180,612 180,612 180,612
400,000 72,279 158,945 245,612 245,612 245,612 245,612 245,612
500,000 93,945 202,279 310,612 310,612 310,612 310,612 310,612
600,000 115,612 245,612 375,612 375,612 375,612 375,612 375,612
700,000 137,279 288,945 440,612 440,612 440,612 440,612 440,612
</TABLE>
Remuneration is calculated based on average annual compensation in the five
highest consecutive years of the ten years prior to retirement. Based on
compensation through December 31, 1995, the final average earnings of the named
executive officers were as follows: Mr. Cline, $629,915; Mr. Brazier, $544,990;
Mr. Liljebeck, $301,607; Mr. Van Bruwaene, $301,607; Mr. Freudenberger,
$301,607; and Mr. Cella, $301,607. All of the named executive officers have
accrued at least 20 years of service.
EMPLOYMENT CONTRACTS
Each of the named executive officers is elected annually and serves at the
pleasure of the Board, subject, however, to agreements with the Company that
generally assure that, in the event of a change in control of the Company, all
of the officers will have the right to
16
<PAGE> 19
remain employed, at not less than the respective rates of compensation in effect
as of the date of the change in control, for at least three years thereafter.
The agreements with the named executive officers generally provide that, if
an officer is terminated without "cause" (defined as willful and continued
failure to perform duties after demand from the Board, or willful and gross
misconduct) within three years after a change in control, the Company must pay
the officer, in addition to all accrued compensation, the equivalent of
three-years' salary, bonus and other benefits. Also under the agreements, an
officer terminated after a change in control may elect to receive cash equal to
the difference between the exercise price of all stock options held by the
officer (whether or not then exercisable) and the market value of the stock on
the date of termination, or the highest price per share actually paid in
connection with any change in control of the Company, whichever is higher. In
the absence of this provision, under the Company's stock option plans, an
employee terminated other than for cause has three months to exercise any
options exercisable on the date of termination but any options not then
exercisable are canceled. The 1994 Airborne Key Employee Stock Option and Stock
Appreciation Rights Plan provides that all outstanding options become
exercisable upon retirement and expire 18 months after the date of retirement
unless their terms expire sooner. The Company is required to provide the same
additional compensation and benefits described above in the event a named
executive officer resigns due to failure of the Company, after a change in
control, to provide the salary, other specific benefits and terms of employment
required by the agreement.
In return for the benefits under the agreements described above, each of
the named executive officers has agreed, among other things, not to serve as an
executive officer, director or consultant to any competitor of the Company for
at least one year after termination of employment with the Company. While these
contracts were designed to encourage these officers to stay with the Company,
and not to deter changes in control, it is possible that a party wishing to
obtain control of the Company with the intention of replacing incumbent
management could be influenced by the additional cost that the Company would
incur under these contracts.
The Company maintains an unfunded plan under which a death benefit is
provided to the beneficiary of any officer who dies while employed by the
Company. The benefit will be an amount equal to 260% of base salary for the
Chief Executive Officer and President and 250% of base salary for the other
officers. The Company maintains insurance on the lives of certain officers that
could be used to fund eventual benefit payments.
SELECTION OF AUDITORS
The firm of Deloitte & Touche LLP, independent auditors, has examined the
financial statements of the Company for the three years ended December 31, 1995,
and has been recommended by the Audit Committee of the Board and by the full
Board for reappointment. Deloitte & Touche has no financial interest in the
Company, nor does it have any connection with the Company in the capacity of
promoter, underwriter, voting trustee, director, officer or employee.
Representatives of Deloitte & Touche are expected to be present at the annual
meeting, will have the opportunity to make a statement if they desire
17
<PAGE> 20
to do so, and will be available to respond to appropriate questions from
shareholders. Unless a contrary vote is indicated thereon, the proxy solicited
hereby will be voted for the selection of Deloitte & Touche as such auditors for
the ensuing year.
EXCHANGE ACT COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934, as amended,
requires that certain of the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities, file reports of ownership and changes of ownership with the
Securities and Exchange Commission and the New York Stock Exchange. Officers,
directors and greater than ten percent shareholders are required by SEC
regulation to furnish the Company with copies of all such forms they file.
Based solely on its review of the copies of such forms received by the
Company, and on written representations by the Company's officers and directors
regarding their compliance with the filing requirements, the Company believes
that, in 1995, all filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the Company's 1997
Annual Meeting of Shareholders must be received by the Company on or prior to
November 30, 1996, to be eligible for inclusion in the Company's Proxy Statement
and form of proxy to be used in connection with the 1997 Annual Meeting.
OTHER MATTERS
Management is not aware at this time that any other matters are to be
presented for action at this meeting. If other matters come before the meeting,
the persons named in the enclosed proxy form will vote all proxies in accordance
with their best judgment unless the shareholder has indicated on the proxy card
that the shares represented thereby are not to be voted on such other matters.
No action will be required of shareholders regarding reports of officers.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY AND THAT YOUR SHARES BE
REPRESENTED. SHAREHOLDERS ARE URGED TO FILL IN, SIGN AND PROMPTLY RETURN THE
ACCOMPANYING FORM OF PROXY IN THE ENCLOSED ENVELOPE.
March 11, 1996
Seattle, Washington
18
<PAGE> 21
PROXY AIRBORNE FREIGHT CORPORATION PROXY
3101 WESTERN AVENUE P.O. BOX 662 SEATTLE, WA 98111
-------------------------------------------------------------------------
ANNUAL MEETING OF SHAREHOLDERS -- APRIL 23, 1996
-------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Richard M. Rosenberg, William Swindells, and
Robert S. Cline as Proxies, each with the power to appoint a substitute, and
hereby authorizes them to represent and to vote, in such manner as in their
discretion shall be deemed appropriate to carry out the authority as designated
below, all the shares of Common Stock of Airborne Freight Corporation (the
"Company") held of record by the undersigned on February 26, 1996, at the annual
meeting of shareholders to be held April 23, 1996, or any adjournments thereof.
1. Election of Directors -- Class B (Term to expire in 1999)
/ / For all nominees listed below (except as
marked to the contrary below)
/ / Withhold authority to vote
for all nominees listed below
Robert G. Brazier; James H. Carey; Andrew B. Kim __________________________
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL, STRIKE OUT
THE NOMINEE'S NAME BELOW. IF YOU DESIRE TO CUMULATE YOUR VOTES FOR ANY
INDIVIDUAL NOMINEE(S), WRITE YOUR INSTRUCTION, AS TO NUMBER OF VOTES CAST
FOR EACH, ON THE SPACE PROVIDED BELOW. THE TOTAL MUST NOT EXCEED THREE
TIMES THE NUMBER OF SHARES YOU HOLD.)
2. To approve the selection of DELOITTE & TOUCHE LLP as independent auditors of
the Company.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournments
thereof. (Over)
<PAGE> 22
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. EXCEPT AS OTHERWISE DIRECTED, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE NOMINEES NAMED ON THE REVERSE SIDE AND FOR
THE SELECTION OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as an attorney, executor, administrator,
trustee, or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If
partnership, please sign in partnership name by authorized person.
-------------------------
PLEASE MARK, SIGN, DATE
AND RETURN
THE PROXY CARD PROMPTLY
USING THE ENCLOSED
ENVELOPE.
-------------------------
DATED:______________, 1996
__________________________
Signature
__________________________
Signature, if held
jointly
<PAGE> 23
PROXY
AIRBORNE FREIGHT CORPORATION
3101 WESTERN AVENUE P.O. BOX 662 SEATTLE, WA 98111
---------------------------------------------------
ANNUAL MEETING OF SHAREHOLDERS -- APRIL 23, 1996
---------------------------------------------------
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Richard M. Rosenberg, William
Swindells, and Robert S. Cline as Proxies, each with the power to appoint a
substitute, and hereby authorizes them to represent and to vote, in such manner
as in their discretion shall be deemed appropriate to carry out the authority
as designated below, all the shares of Common Stock of Airborne Freight
Corporation (the "Company") held of record by the undersigned on February 26,
1996, at the annual meeting of shareholders to be held April 23, 1996, or any
adjournments thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. EXCEPT AS OTHERWISE DIRECTED,
THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES NAMED ON THE REVERSE
SIDE AND FOR THE SELECTION OF DELOITTE & TOUCHE LLP AS THE COMPANY'S
INDEPENDENT AUDITORS.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
- -------------------------------------------------------------------------------
-- FOLD AND DETACH HERE --
<PAGE> 24
PLEASE MARK YOUR VOTES AS INDICATED IN THIS EXAMPLE. /X/
1. ELECTION OF DIRECTORS -- Class B (Term to expire 1999)
(Instructions: To withhold authority to vote for any individual, strike out the
nominee's name below. If you desire to cumulate your votes for any individual
nominee(s), write your instruction, as to number of votes cast for each, on the
space provided below. The total must not exceed three times the number of
shares you hold.)
FOR WITHHOLD AUTHORITY
all nominees listed below to vote for all nominees
(except as marked to the contrary below) listed below
/ / / /
Nominees: Robert G. Brazier, James H. Carey; Andrew B. Kim
------------------------------------------------------------
2. To approve the selection of DELOITTE & TOUCHE LLP as independent auditors of
the Company.
FOR AGAINST ABSTAIN
/ / / / / /
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournments thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
Signature(s) ________________________________ Dated ________________, 1996
Please sign exactly as name appears above. When shares are held by joint
tenants, both should sign. When signing as an attorney, executor,
administrator, trustee, or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other
authorized officer. If partnership, please sign in partnership name by
authorized person.
- --------------------------------------------------------------------------------
-- FOLD AND DETACH HERE --
