<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/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(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 22, 1997
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 22, 1997, 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 24, 1997,
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
/s/ David C. Anderson
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 22, 1997
DATE OF MAILING: MARCH 14, 1997
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 22, 1997, 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 24, 1997,
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 24,
1997, there were 21,308,812 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 22, 1997. 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 24, 1997,
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. 2,878,000 13.51%
82 Devonshire Street
Boston, MA 02109
R. B. Haave Associates, Inc. 1,581,600 7.42%
36 Grove Street
New Canaan, CT 06840
Vanguard/PRIMECAP Fund, Inc. 1,580,000 7.41%
PO Box 2600
Valley Forge, PA 19482
Westport Asset Management, Inc. 1,251,350 5.87%
253 Riverside Avenue
Westport, CT 06880
The Crabbe Huson Group, Inc. 1,214,600 5.70%
121 SW Morrison, Suite 1400
Portland, OR 97204
</TABLE>
Information in this table is based on reports on Schedule 13G, or amendments
thereto, filed with the Securities and Exchange Commission.
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. Subsequent to
the 1996 Annual Meeting of Shareholders, the size of the Board was increased by
one member and Ms. Mary Agnes Wilderotter was elected to fill the resulting
vacancy. Accordingly, the Company's Board currently consists of ten members,
divided into three classes with terms expiring at the April annual meeting as
follows:
CLASS A (FOUR POSITIONS WITH TERMS EXPIRING IN 1998):
Andrew F. Brimmer
Harold M. Messmer, Jr.
Andrew V. Smith
Mary Agnes Wilderotter
CLASS B (THREE POSITIONS WITH TERMS EXPIRING IN 1999):
Robert G. Brazier
James H. Carey
Andrew B. Kim
3
<PAGE> 6
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 C
positions, generally for terms of three years, to hold office until the annual
meeting of shareholders in the year their terms expire (2000) and until their
respective successors have been elected and shall have qualified as provided by
the Bylaws. Messrs. Cline, Rosenberg, and Swindells are present directors of the
Company and have been nominated to continue as directors. Mr. Andrew V. Smith, a
Class A director whose term expires in 1998, will retire from the Board
following the annual meeting in April, because he has reached the age of 72.
There are no immediate plans to fill the resulting vacancy on the Board.
NOMINEES FOR DIRECTORS TO SERVE A THREE-YEAR TERM
CLASS C (TERMS TO EXPIRE IN 2000)
ROBERT S. CLINE, age 59, 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 and Metricom, Inc., and as a member of the advisory
board of Seafirst Bank. Mr. Cline, a director of the Company since 1973, is
Chairman of the Executive Committee.
RICHARD M. ROSENBERG, age 66, Chairman of the Executive Committee and Chairman
and Chief Executive Officer (Retired) of BankAmerica Corporation and Bank of
America, NT&SA.
Mr. Rosenberg served as Chairman, President, and Chief Executive
Officer of Bank of America from 1990 to 1996 when he retired. From 1987 to
1990, he served as Vice Chairman. Mr. Rosenberg serves as a director of
BankAmerica Corporation; Northrop Grumman Corporation; Pacific Telesis
Group; Potlatch Corporation; and K-2 Incorporated. Mr. Rosenberg, a
director of the Company since 1988, is Chairman of the Compensation
Committee.
WILLIAM SWINDELLS, age 66, Chairman, Willamette Industries, Inc. (forest
products).
Mr. Swindells is Chairman of the Board of Directors 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.
4
<PAGE> 7
CONTINUING DIRECTORS -- NOT STANDING FOR ELECTION THIS YEAR
CLASS A (TERMS TO EXPIRE IN 1998)
ANDREW F. BRIMMER, age 70, 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; CarrAmerica Realty Corp.; 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 51, 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
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 72, Retired President, U S WEST Communications.
Mr. Smith served as President 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 Prime Source Corp. 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.
MARY AGNES WILDEROTTER, age 42, President and Chief Executive Officer, Wink
Communications (telecommunications).
Ms. Wilderotter has been President, Chief Executive Officer, and a
director of Wink Communications since January 1997. From August 1995 to
January 1997, she was Executive Vice President, National Operations of AT&T
Wireless Services and Chief Executive Officer of Claircom, its aviation
communications division. From October 1991 to August 1995, Ms. Wilderotter
was President of the California/Nevada/Hawaii Region for McCaw Cellular
Communications, Inc. She is a director of ANTEC. Ms. Wilderotter has been a
director of the Company since August 1996.
CLASS B (TERMS TO EXPIRE IN 1999)
ROBERT G. BRAZIER, age 59, 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
5
<PAGE> 8
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 64, 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
TaxExempt 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 60, 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 Korea 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.
BOARD OF DIRECTORS AND COMMITTEES
The full Board of Directors met four times during 1996. No incumbent member
attended fewer than 75% of the meetings of the Board of Directors and Board
committees of which he or she was a member during 1996, except Mr. Swindells and
Ms. Wilderotter.
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 1996.
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
6
<PAGE> 9
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 1996.
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 1996.
Any shareholder recommendations for nominations to the Board of Directors
for consideration by the Nominating Committee for the 1998 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, 1997.
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 1996 plus
$1,000 for each Board and Committee meeting attended.
The Company has a Directors Stock Option Plan ("Option Plan") and Director
Stock Bonus Plan ("Bonus Plan") for nonemployee directors of the Company. The
Option Plan provides each such director annual grants of options to acquire
1,000 shares of the Company's Common Stock at an exercise price equal to the
closing sales price on the New York Stock Exchange on the date of grant. Under
the Bonus Plan, each director receives an annual award of shares of the
Company's Common Stock having a value of $3,000 on the award date. The issuance
of shares is deferred until the director retires or otherwise ceases to be a
director of the Company.
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, 1996 (the "named executive officers") and by all directors and executive
officers as a group:
<TABLE>
<CAPTION>
COMMON STOCK OF PERCENTAGE
THE COMPANY OF
BENEFICIALLY OWNED COMMON STOCK
NAME AS OF 2/24/97 OUTSTANDING
------------------------------------------------------ ------------------ ------------
<S> <C> <C>
DIRECTORS
Andrew F. Brimmer 2,211(1,2) *
James H. Carey 6,811(1,2) *
Andrew B. Kim 25,697(1,2) *
Harold M. Messmer, Jr. 8,111(1,2) *
Richard M. Rosenberg 8,111(1,2) *
Andrew V. Smith 6,111(1,2) *
William Swindells 4,611(1,2) *
Mary A. Wilderotter -- *
NAMED EXECUTIVE OFFICERS
Robert S. Cline(3) 253,053(4) 1.18%
Robert G. Brazier(3) 335,582(4) 1.57%
John J. Cella 58,421(4) *
Kent W. Freudenberger 61,311(4) *
Roy C. Liljebeck 124,987(4) *
Raymond T. Van Bruwaene 60,360(4) *
All Directors and Executive Officers as a Group (17
Persons) 995,936(5) 4.57%
</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, 2,000; Mr. Carey, 6,000; Mr. Kim, 2,000; Mr.
Messmer, 6,000; Mr. Rosenberg, 6,000; Mr. Smith, 3,000; and Mr. Swindells,
2,000.
(2) Includes 111 shares issuable under the Director Stock Bonus Plan.
(3) Mr. Brazier and Mr. Cline also serve as directors.
(4) Includes shares subject to options granted under the Airborne Key Employee
Stock Option and Stock Appreciation Rights Plan as follows: Mr. Cline,
127,845; Mr. Brazier, 117,325; Mr. Cella, 35,683; Mr. Freudenberger,
44,943; Mr. Liljebeck, 44,943; and Mr. Van Bruwaene, 44,943.
(5) Includes 479,087 shares subject to options or issuable under the Director
Stock Bonus Plan.
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<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 1996, 1995 and 1994 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 1996 $513,846 -- 28,000 $10,668
Chairman, Chief Executive 1995 486,538 -- 15,400 4,800
Officer and Director 1994 453,462 $121,890 10,370 6,036
Robert G. Brazier 1996 443,154 -- 19,000 6,719
President, Chief Operating 1995 420,615 -- 13,300 1,650
Officer and Director 1994 391,692 92,048 8,965 2,886
Roy C. Liljebeck 1996 279,000 -- 8,000 7,871
Executive Vice President 1995 266,000 -- 5,625 4,800
and Chief Financial Officer 1994 250,308 46,157 4,810 6,036
Raymond T. Van Bruwaene 1996 279,000 -- 8,000 7,871
Executive Vice President, 1995 266,000 -- 5,625 4,800
Field Services Division 1994 250,308 46,157 4,810 6,036
Kent W. Freudenberger 1996 279,000 -- 8,000 7,871
Executive Vice President, 1995 266,000 -- 5,625 4,800
Marketing Division 1994 250,308 46,157 4,810 6,036
John J. Cella 1996 279,000 -- 8,000 7,871
Executive Vice President, 1995 266,000 -- 5,625 4,800
International Division 1994 250,308 46,157 4,810 6,036
</TABLE>
- ---------------
(1) Amounts awarded under the Executive Incentive Compensation Plan.
(2) Number of shares of Common Stock underlying options awarded under the
Airborne Key Employee Stock Option and Stock Appreciation Rights Plan.
(3) A portion of the amounts shown as All Other Compensation for 1996 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 ($1,643 for Mr. Brazier and $4,793 for each of the other named
executive officers). The balance of the amounts shown in this column for
1996 represents premiums paid on term life insurance for the named executive
officers.
9
<PAGE> 12
OPTION GRANTS IN 1996
The following table shows information concerning stock options granted to
the named executive officers during calendar year 1996 under the Airborne Key
Employee Stock Option and Stock Appreciation Rights Plan:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS 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 28,000 13.24% $26.00 2/6/06 $457,835 $1,160,245
Robert G. Brazier 19,000 8.99% $26.00 2/6/06 310,674 787,309
Roy C. Liljebeck 8,000 3.78% $26.00 2/6/06 130,810 331,498
Raymond T. Van Bruwaene 8,000 3.78% $26.00 2/6/06 130,810 331,498
Kent W. Freudenberger 8,000 3.78% $26.00 2/6/06 130,810 331,498
John J. Cella 8,000 3.78% $26.00 2/6/06 130,810 331,498
</TABLE>
- ---------------
(1) Options for the named executive officers were granted on February 6, 1996.
Fifty percent of the options will become exercisable on February 6, 1998,
and the remaining options will become exercisable on February 6, 1999,
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 $26.00 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 options if the stock
price does not increase following their grant.
10
<PAGE> 13
AGGREGATE OPTION EXERCISES IN 1996 AND YEAR-END OPTION VALUES
The following table shows information concerning stock options exercised
during calendar year 1996 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 13,694 $ 244,992 114,960 48,585 $ 801,629 $ 3,850
Robert G. Brazier 16,360 286,300 106,193 36,782 806,523 3,325
Roy C. Liljebeck -- -- 39,725 16,030 153,510 1,406
Raymond T. Van Bruwaene -- -- 39,725 16,030 153,510 1,406
Kent W. Freudenberger -- -- 39,725 16,030 153,510 1,406
John J. Cella -- -- 30,465 16,030 55,123 1,406
</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 31, 1996 (based on
the closing price of $23.375 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, 1996.
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>
<CAPTION>
AIRBORNE S&P S&P
MEASUREMENT PERIOD FREIGHT COMPOSITE-500 TRANSPORTATION
(FISCAL YEAR COVERED) CORPORATION INDEX INDEX
<S> <C> <C> <C>
1991 $100 $100 $100
1992 78 108 109
1993 148 118 129
1994 88 120 106
1995 115 165 151
1996 103 203 173
</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, 1991, 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
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<PAGE> 15
performance of management, considers management succession, and deals with other
personnel matters related to senior management.
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 of the Chief
Executive Officer and the other executive officers. The Committee also monitors
general compensation practices of all other officers of the Company and its
subsidiaries. The Compensation Committee may retain the services of a qualified
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 compared to that of other companies of similar size and scope.
A consulting firm was retained to obtain such information in 1996. The firm
provided data on cash compensation paid by comparison companies selected from
general industry, transportation, and the Northwest United States. Annual
revenues of the comparison companies were approximately $2.6 billion. They were
selected without regard to whether they are included in the S & P Transportation
Index. The firm also provided survey information on option grants by a broad
index of publicly traded companies.
Executive officers have the potential to receive annual incentive awards
under the Company's 1995-1999 Executive Incentive Compensation Plan (the
"EICP"). 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 the median level. The Company believes
that total cash compensation potentially available to Company executive officers
is competitive and provides the incentive necessary to motivate them to meet or
exceed goals set by the Board.
In 1996, executive officers earned cash compensation solely through base
salaries. The Chief Executive Officer's base salary was increased to $530,000 as
of July, 1996. 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.
In connection with the EICP, the Committee approved an annual operating
plan at the beginning of 1996 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 1996 under the EICP.
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<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 Company did not achieve the thresholds for pre-tax net profits or
revenue growth in 1996 and, accordingly, no incentive awards were earned.
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 1996, 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. In deciding the number of options to grant, the
Committee considered the anticipated value of the options, the number of options
outstanding or previously granted to the executives, and the aggregate number of
grants to all employees of the Company. 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 Federal income tax rules, the 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 1997 will be deductible.
Richard M. Rosenberg, Chairman
James H. Carey
Harold M. Messmer, Jr.
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"). 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
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<PAGE> 17
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 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.
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<PAGE> 18
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 1996. 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 $ 17,524 $ 50,024 $ 82,524 $ 82,524 $ 82,524 $ 82,524 $ 82,524
200,000 28,357 71,691 115,024 115,024 115,024 115,024 115,024
250,000 39,191 93,357 147,524 147,524 147,524 147,524 147,524
300,000 50,024 115,024 180,024 180,024 180,024 180,024 180,024
400,000 71,691 158,357 245,024 245,024 245,024 245,024 245,024
500,000 93,357 201,691 310,024 310,024 310,024 310,024 310,024
600,000 115,024 245,024 375,024 375,024 375,024 375,024 375,024
700,000 136,691 288,357 440,024 440,024 440,024 440,024 440,024
</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, 1996, the final average earnings of the named
executive officers were as follows: Mr. Cline, $629,915; Mr. Brazier, $544,990;
and Messrs. Liljebeck, Van Bruwaene, Freudenberger, and 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 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
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<PAGE> 19
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.
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, 1996,
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 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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING 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 1996, all filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with.
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<PAGE> 20
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the Company's 1998
Annual Meeting of Shareholders must be received by the Company on or prior to
November 30, 1997, to be eligible for inclusion in the Company's Proxy Statement
and form of proxy to be used in connection with the 1998 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 14, 1997
Seattle, Washington
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<PAGE> 21
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------
AIRBORNE FREIGHT CORPORATION
3101 WESTERN AVENUE, P.O. BOX 662, SEATTLE, WA 88111
P R O X Y
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Harold M. Messmer, Jr., Andrew F. Brimmer and Robert S.
Cline as Proxies, each with the power to appoint a substitute, and hereby authorizes them to rep-
resent 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 24, 1997, at the annual meeting of
shareholders to be held April 22, 1997, 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 and dated, on reverse side.
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
[ ]
1. ELECTION OF DIRECTORS- FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ] EXCEPTIONS [ ]
Class C (Term to expire 2000) listed below. for all nominees listed below.
Nominees: Robert S. Cline, Richard M. Rosenberg, William Swindells
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "EXCEPTIONS" BOX AND STRIKE OUT THE
NOMINEE'S NAME ABOVE. 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 3. In their discretion, the Proxies are authorized to vote
independent auditors of the Company. upon such other business as may properly come before
the meeting, or any adjournments thereof.
Change of Address and/
FOR [ ] AGAINST [ ] ABSTAIN [ ] or Comments Mark Here [ ]
Please sign exactly as the name appears hereon.
When shares are held by joint tenants, both
should sign. When signing as 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
partnership name by authorized person.
Dated:_____________________________________, 1997
_________________________________________________
Signature
| _________________________________________________
| Signature if held jointly
________|
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY VOTES MUST BE INDICATED
USING THE ENCLOSED ENVELOPE. (X) IN BLACK OR BLUE INK. [X]
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
