<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
AIRBORNE FREIGHT CORPORATION
3101 Western Avenue, P.O. Box 662
Seattle, Washington 98111
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD APRIL 27, 1999
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 27, 1999, 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 vote on a shareholder proposal concerning the annual
election of the entire Board of Directors.
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 22, 1999, of
shares of Common Stock of the Company will be entitled to notice of and to
vote at the meeting and any adjournments thereof.
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>
PROXY STATEMENT
AIRBORNE FREIGHT CORPORATION
3101 Western Avenue, P.O. Box 662, Seattle, Washington 98111
ANNUAL MEETING OF SHAREHOLDERS, APRIL 27, 1999
Date of Mailing: March 12, 1999
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 27,
1999, 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 vote on a
shareholder proposal concerning the annual election of the entire Board of
Directors, (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 22, 1999, 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
22, 1999, there were 48,534,065 shares of Common Stock outstanding (exclusive
of 2,497,078 treasury shares), all of which will be entitled to vote at the
annual meeting on April 27, 1999. At the meeting, the presence in person or by
proxy of a majority 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 holder shall determine. For shareholders
voting by proxy, provision is made on the proxy card for instructions as to
the manner of allocating votes.
1
<PAGE>
Election of the persons nominated to serve as directors requires a plurality
of all the votes cast for directors. This means that the three individuals who
receive the largest number of votes cast are elected as directors. Approval of
the shareholder proposal requires the affirmative vote of a majority of the
shares represented in person or by proxy at the meeting and entitled to vote
on the proposal.
Shareholders may withhold their vote from one or more of the nominees for
director and may abstain from voting on the shareholder proposal. 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. If a shareholder
abstains from voting on the shareholder proposal, the abstention will have the
effect of a vote cast against the proposal.
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 on election of directors.
However, the shareholder proposal is non-discretionary, and brokers who
receive no instructions from their customers will not be able to vote those
customers' shares on it. Under applicable Delaware law, such broker non-votes
will have no effect on the shareholder proposal.
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. To
the extent specific instructions are not given with respect to the shareholder
proposal, the shares represented by the proxy will be voted AGAINST the
proposal.
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>
To the best of the Company's knowledge, as of February 22, 1999,
shareholders owning over 5% of the outstanding Common Stock of the Company
were as follows:
Holders of Common Stock
<TABLE>
<CAPTION>
Percentage of
Common
Number of Stock
Name and Address Shares Outstanding
---------------- --------- -------------
<S> <C> <C>
Vanguard/PRIMECAP Fund, Inc. 3,400,000 7.0%
P. O. Box 2600
Valley Forge, PA 19482
Westport Asset Management, Inc. 3,239,134 6.7%
253 Riverside Avenue
Westport, CT 06880
</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. 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 2001):
Andrew F. Brimmer
Harold M. Messmer, Jr.
Mary Agnes Wilderotter
Class B (three positions with terms expiring in 1999):
Robert G. Brazier
James H. Carey
Andrew B. Kim
Class C (three positions with terms expiring in 2000):
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 (2002) 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. Mr. Andrew F.
Brimmer, a Class A director whose term expires in 2001, will retire from the
Board following the annual meeting in April, because he has reached the age of
72.
3
<PAGE>
Nominees for Directors to Serve a Three-Year Term
Class B (Terms to Expire in 2002)
Robert G. Brazier, age 61, 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 66, 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 is a director of the Cowen Group of Mutual Funds;
the Midland Company; and Nantucket Industries, Inc. He has been a director
of the Company since 1978 and is a member of the Compensation Committee.
Andrew B. Kim, age 62, President, Sit/Kim International Investment Associates,
Inc. (investment company).
Mr. Kim has served as President of Sit/Kim International Investment
Associates, Inc., since 1989. Mr. Kim is a director of Hyundai Dragon Fund
of Dublin, Ireland; Ilshin Investment Corp. and Dong-A Venture Investment
in Seoul, Korea; Asia Foods in Shanghai, China; and the Vertical Group of
New York. Mr. Kim has been a director of the Company since 1994 and serves
as Chairman of the Audit Committee.
Continuing Directors--Not Standing for Election This Year
Class C (Terms to Expire in 2000)
Robert S. Cline, age 61, 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 68, 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. Mr. Rosenberg serves
as a director of BankAmerica Corporation; Northrop Grumman Corporation;
Potlatch Corporation; and SBC
4
<PAGE>
Communications. Mr. Rosenberg, a director of the Company since 1988, is
Chairman of the Compensation Committee and a member of the Executive
Committee.
William Swindells, age 68, Chairman, Willamette Industries, Inc. (forest
products).
Mr. Swindells has served as Chairman of the Board of Directors of
Willamette Industries, Inc., since 1985 and as its Chief Executive Officer
from 1985 to 1996 and from November 1997 to December 1998. 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 2001)
Andrew F. Brimmer, age 72, 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 BlackRock
Investment Income Trust and other BlackRock Funds; Borg-Warner Automotive,
Inc.; and CarrAmerica Corporation. Mr. Brimmer has been a director of the
Company since 1994 and is a member of the Audit Committee and the
Nominating Committee.
Harold M. Messmer, Jr., age 53, 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.
Mary Agnes Wilderotter, age 44, 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 Electric Lightwave Co.; Gaylord
Communications; JCOR Communications; and American Tower Corporation. Ms.
Wilderotter has been a director of the Company since 1996 and is a member
of the Nominating Committee.
BOARD OF DIRECTORS AND COMMITTEES
The full Board of Directors met four times during 1998. 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 1998, except Mr. Brimmer,
who attended more than 60% of such meetings.
5
<PAGE>
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. Kim,
Chairman; Mr. Brimmer; 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 1998.
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 twice during 1998.
Nominating Committee. The Nominating Committee is currently composed of
Mr. Messmer, Chairman; Mr. Brimmer; and Ms. Wilderotter. 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 1998.
Any shareholder recommendations for nominations to the Board of Directors
for consideration by the Nominating Committee for the 1999 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 13, 1999.
Executive Committee. The Executive Committee currently consists of Mr.
Cline, Chairman; Mr. Brazier; and Mr. Rosenberg. 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 1998 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 non-employee directors of the Company. The
Option Plan provides each such director annual grants of options to acquire
2,000 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. The
last grant under the Option Plan was made on February 2, 1999. Under the Bonus
Plan, each director receives an annual award of shares of the Company's Common
Stock having a value of $6,000 on the award date. The issuance of shares is
deferred until the director retires or otherwise ceases to be a director of
the Company.
6
<PAGE>
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 six other most highly compensated executive officers of the Company at
December 31, 1998 (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 2/22/99 Outstanding
---- ------------------ ------------
<S> <C> <C>
Directors
Andrew F. Brimmer.......................... 8,750/1/,/2/ *
James H. Carey............................. 9,950/1/,/2/ *
Andrew B. Kim.............................. 35,722/1/,/2/ *
Harold M. Messmer, Jr...................... 20,550/1/,/2/ *
Richard M. Rosenberg....................... 20,550/1/,/2/ *
William Swindells.......................... 15,400/1/,/2/ *
Mary A. Wilderotter........................ 4,525/1/,/2/ *
Named Executive Officers
Robert S. Cline/3/ ........................ 580,726/4/ 1.2%
Robert G. Brazier/3/ ...................... 764,274/4/ 1.6%
John J. Cella.............................. 58,856/4/ *
Carl D. Donaway............................ 50,325/4/ *
Kent W. Freudenberger...................... 98,004/4/ *
Roy C. Liljebeck........................... 279,875/4/ *
Raymond T. Van Bruwaene.................... 67,795/4/ *
All Directors and Executive Officers as a
Group
(16 persons).............................. 2,049,123/5/ 4.1%
</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, 8,000; Mr. Carey, 8,000; Mr. Kim, 10,000; Mr.
Messmer, 16,000; Mr. Rosenberg, 16,000; Mr. Swindells, 2,000; and Ms.
Wilderotter, 4,000.
/2/Includes 550 shares (325 shares for Ms. Wilderotter) 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 Plans as follows: Mr. Cline, 318,950; Mr. Brazier, 279,450;
Mr. Cella, 24,262; Mr. Donaway, 44,670; Mr. Freudenberger, 54,376; Mr.
Liljebeck, 116,990; and Mr. Van Bruwaene, 32,000.
/5/Includes 967,503 shares (inclusive of the shares mentioned in Notes 1, 2
and 4, above) subject to options or issuable under the Director Stock Bonus
Plan.
7
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning annual and long-term
compensation paid or accrued during calendar years 1998, 1997 and 1996 for
services in all capacities to the Company by the named executive officers:
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards:
Annual ------------
Compensation Securities
Name and Principal ------------------ Underlying All Other
Position Year Salary/1/ Bonus/2/ Options/3/ Compensation/4/
- ------------------ ---- --------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Robert S. Cline 1998 $590,346 $531,311 150,000 $20,931
Chairman, Chief Executive 1997 541,538 866,461 56,000 24,258
Officer and Director 1996 513,846 -- 56,000 10,668
Robert G. Brazier 1998 510,462 401,988 92,000 17,800
President, Chief 1997 466,538 653,153 38,000 19,670
Operating 1996 443,154 -- 38,000 6,719
Officer and Director
John J. Cella 1998 319,039 166,697 40,000 17,366
Executive Vice President, 1997 292,461 283,697 16,000 19,852
International Division 1996 279,000 -- 16,000 7,871
Carl D. Donaway 1998 319,039 189,030 40,000 17,366
President & Chief 1997 292,461 339,255 16,000 19,852
Executive 1996 269,846 -- 16,000 7,663
Officer, ABX Air, Inc.
Kent W. Freudenberger 1998 319,039 198,601 40,000 17,245
Executive Vice President, 1997 292,461 324,632 16,000 19,852
Marketing Division 1996 279,000 -- 16,000 7,871
Roy C. Liljebeck 1998 319,039 224,539 40,000 17,366
Executive Vice President 1997 292,461 336,330 16,000 19,852
and Chief Financial 1996 279,000 -- 16,000 7,871
Officer
Raymond T. Van Bruwaene 1998 319,039 189,030 40,000 17,245
Executive Vice President, 1997 292,461 350,953 16,000 19,852
Field Services Division 1996 279,000 -- 16,000 7,871
</TABLE>
- --------
/1/The named executive officers are paid their annual base salary on a
biweekly basis. Total salary paid in different calendar years may vary
depending on the number of pay periods that fall in each year. The specific
amounts shown here reflect the fact that 1998 had one more pay period than
1997 or 1996.
/2/Amounts awarded under the Executive Incentive Compensation Plan or the
Executive Group Incentive Compensation Plan.
/3/Number of shares of Common Stock underlying options awarded under the 1998
Airborne Freight Corporation Key Employee Stock Option Plan.
/4/A portion of the amounts shown as All Other Compensation for 1998
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 ($8,277 for Mr. Brazier, $9,957 for Mr.
Cline, $11,516 for Messrs. Freudenberger and Van Bruwaene and $11,637 for
each of the other named executive officers). The balance of the amounts
shown in this column for 1998 represents premiums paid on term life
insurance for the named executive officers.
8
<PAGE>
Option Grants in 1998
The following table shows information concerning stock options granted to
the named executive officers during calendar year 1998 under the Airborne
Freight Corporation 1998 Key Employee Stock Option Plan:
<TABLE>
<CAPTION>
Individual Grants Potential Realizable
---------------------------------------------- Value at Assumed
Number Percent of Annual Rates of
of Total Stock Price
Securities Options Appreciation for
Underlying Granted to Exercise Option Term/4/
Options Employees in Price Expiration ---------------------
Name Granted/3/ Fiscal Year (per share) Date 5% 10%
- ---- ---------- ------------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert S. Cline 94,000/1/ 12.46% $31.063 1/1/08 $1,836,294 $4,653,529
56,000/2/ 7.42% $36.970 2/3/08 1,302,013 3,299,557
Robert G. Brazier 54,000/1/ 7.16% $31.063 1/1/08 1,054,892 2,673,304
38,000/2/ 5.04% $36.970 2/3/08 883,509 2,238,985
John J. Cella 24,000/1/ 3.18% $31.063 1/1/08 468,841 1,188,135
16,000/2/ 2.12% $36.970 2/3/08 372,004 942,731
Carl D. Donaway 24,000/1/ 3.18% $31.063 1/1/08 468,841 1,188,135
16,000/2/ 2.12% $36.970 2/3/08 372,004 942,731
Kent W. Freudenberger 24,000/1/ 3.18% $31.063 1/1/08 468,841 1,188,135
16,000/2/ 2.12% $36.970 2/3/08 372,004 942,731
Roy C. Liljebeck 24,000/1/ 3.18% $31.063 1/1/08 468,841 1,188,135
16,000/2/ 2.12% $36.970 2/3/08 372,004 942,731
Raymond Van Bruwaene 24,000/1/ 3.18% $31.063 1/1/08 468,841 1,188,135
16,000/2/ 2.12% $36.970 2/3/08 372,004 942,731
</TABLE>
- --------
/1/These options were granted on January 1, 1998 and will vest in four equal
installments based upon attainment of specified stock price increases over
the exercise price, which was the fair market value of the Company's Common
Stock on the date of grant. If the stock price equals or exceeds an
installment target for 10 of 20 consecutive trading days, the installment
vests. If the stock price target is not achieved, that installment lapses.
However, the Board may elect to vest an installment, even if the stock
price target is not met, if the Company's stock price performance equals or
exceeds the 75th percentile of the Dow Jones Transportation Index during
the installment period. The installment targets and deadlines are as
follows:
<TABLE>
<CAPTION>
Stock Price Targets
------------------------------------ Deadline for
% Increase Price Attainment
---------- ------- ---------------
<S> <C> <C>
20% $37.275* January 1, 2000
30% $40.381* January 1, 2001
40% $43.488 January 1, 2002
50% $46.594 January 1, 2003
</TABLE>
--------
* These stock price targets were achieved in 1998.
/2/These options were granted on February 3, 1998 and will become exercisable
in four equal installments on February 3, 1999, February 3, 2000, February
3, 2001, and February 3, 2002. The exercise price of the options was the
fair market value of the Company's Common Stock on the date of grant.
/3/Exercise provisions are subject to contractual agreement that will apply in
the event of a change in control (see Employment Contracts).
/4/Based upon the $31.063 and $36.97 per share market price, on the respective
dates of grant and assumed appreciation over the term of the options at the
annual rates of stock appreciation shown. The named executive officers will
realize no value from these options if the stock price does not increase
following their grant.
9
<PAGE>
Aggregate Option Exercises in 1998 and Year-End Option Values
The following table shows information concerning stock options exercised
during calendar year 1998 by the named executive officers and the value of
unexercised options at the end of that year:
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal Year- In-the-Money Options
Shares 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 32,068 $ 880,869 289,630 187,000 $6,226,752 $2,137,250
Robert G. Brazier 62,000 1,945,250 231,950 122,000 5,208,994 1,425,813
John J. Cella 46,144 883,135 20,066 52,000 230,891 603,500
Carl D. Donaway 1,000 31,609 27,130 52,000 431,946 603,500
Kent W. Freudenberger 2,974 52,417 63,236 52,000 1,204,905 603,500
Roy C. Liljebeck -- -- 96,990 52,000 2,078,176 603,500
Raymond T. Van Bruwaene 34,367 714,220 31,843 52,000 511,965 603,500
</TABLE>
- --------
/1/Represents the aggregate fair market value, on the respective dates of
exercise, of the shares of 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, 1998 (based on
the closing price of $36.063 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.
10
<PAGE>
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, 1998.
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
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
AIRBORNE S&P S&P
Measurement Period FREIGHT COMPOSITE TRANSPORTATION
(Fiscal Year Covered) CORPORATION 500 INDEX INDEX
- --------------------- --------------- --------- ----------
<S> <C> <C> <C>
Measurement Pt-12/31/1993 $100 $100 $100
FYE 12/31/1994 $ 59 $101 $ 84
FYE 12/31/1995 $ 78 $139 $117
FYE 12/31/1996 $ 69 $171 $134
FYE 12/31/1997 $185 $229 $173
FYE 12/31/1998 $215 $294 $170
</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, 1993 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.
11
<PAGE>
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 performance of the Company.
Each year, the Committee 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. To assist in these duties, the Committee periodically
retains the services of a compensation consulting firm to provide information
on 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 1997 and 1998.
The firm reviewed compensation paid by comparison companies engaged in
national transportation and general industry, which were selected without
regard to whether they are included in the S & P Transportation Index. Annual
revenues of the comparison companies were approximately $2.7 billion. The firm
provided data on cash compensation paid by comparison companies which
indicated that the Company's cash compensation is generally competitive. In
addition, the firm determined that the number of stock options the Company
historically granted to executive officers was significantly below the level
of option grants by comparable companies.
Executive officers have the potential to receive annual incentive awards
under the Company's Executive Incentive Compensation Plan (the "EICP") (Chief
Executive Officer and President) and the Executive Group Incentive
Compensation Plan (the "EGICP") (remaining executive officers). The Committee
considers how the mix of base salaries and awards under the EICP and EGICP
compares to the median compensation level of the comparison companies, but
does not target such compensation at, above, or below 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 1998, executive officers earned cash compensation through a combination
of base salaries and incentive awards. As of July 1998, the Chief Executive
Officer's base salary was increased to $583,000 and the base salaries of other
executive officers were raised. Base salaries were raised to keep compensation
competitive with those of comparison companies and in recognition of the
performance and responsibilities of the executive officers.
In connection with the EICP and EGICP, the Committee approved an annual
operating plan at the beginning of 1998 that established targets for pre-tax
net profits and revenue growth. 1998 payouts under the EICP were based on a
weighting of 75% to pre-tax net profits and 25% to revenue growth. EGICP
payouts were weighted 63.75% to net profit, 21.25% to revenue growth, and 15%
to individual objectives for the Chief Financial Officer and 52.5% to net
profit, 17.5% to revenue growth, and 30% to individual objectives for the
remaining executive officers.
EICP and EGICP payouts are calculated as a percentage of base salary. The
threshold for awards is attainment of 80% of the targets and the maximum
payout is available at 150% target attainment. However, regardless of revenue
growth and individual objectives, no awards are made
12
<PAGE>
unless the Company earns at least 80% of the targeted level of pre-tax net
profit. 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 30% 80% 160%
Chief Operating Officer 30% 70% 140%
Other Executive Officers 25% 60% 120%
</TABLE>
In 1998 the Company exceeded target attainment for pre-tax net profits but
did not achieve the threshold for revenue growth. Accordingly, reduced
incentive awards were paid under the EICP and EGICP.
The Committee considers the desirability of granting longer-term incentive
awards to the Company's officers, including the executive officers, under the
Company's stock option program. In 1998, two separate stock option grants were
made to each of the executive officers. The first was a special grant of non-
qualified stock options. These options will vest in four equal installments
based upon attainment of specified stock price increases over the fair market
value grant price. If the stock price target is not achieved by the deadline,
the installment lapses unless the Company's stock price performance equals or
exceeds the 75th percentile of the Dow Jones Transportation Index during the
installment period and the Board elects to vest the installment.
The second grant followed historical practices. 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. All stock options were granted at an exercise price equal to the fair
market value of the Company's stock on the date of grant. 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.
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 1999 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 and NationsBank N.A., which conduct business
13
<PAGE>
as Bank of America, NationsBank, and Seafirst Bank. The Company has various
demand deposit accounts, and participates in one or more credit agreements,
with each of Bank of America, NationsBank, and Seafirst Bank.
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, in
conjunction with the Company's qualified retirement plans and Social Security,
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
14
<PAGE>
any prior employer. The SERP is unfunded, although the Company maintains
commingled investment fund assets 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 1998. 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>
$ 200,000 $ 27,229 $ 70,563 $113,896 $113,896 $113,896 $113,896 $113,896
300,000 48,896 113,896 178,896 178,896 178,896 178,896 178,896
400,000 70,563 157,229 243,896 243,896 243,896 243,896 243,896
500,000 92,229 200,563 308,896 308,896 308,896 308,896 308,896
600,000 113,896 243,896 373,896 373,896 373,896 373,896 373,896
700,000 135,563 287,229 438,896 438,896 438,896 438,896 438,896
800,000 157,229 330,563 503,896 503,896 503,896 503,896 503,896
900,000 178,896 373,896 568,896 568,896 568,896 568,896 568,896
1,000,000 200,563 417,229 633,896 633,896 633,896 633,896 633,896
</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, 1998, the final average earnings of the
named executive officers were as follows: Mr. Cline, $773,815; Mr. Brazier,
$646,524; Mr. Van Bruwaene, $385,712; Mr. Liljebeck, $382,787; Mr.
Freudenberger, $380,448; Mr. Cella, $372,259 and Mr. Donaway, $357,055. 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
15
<PAGE>
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
Airborne Freight Corporation 1998 Key Employee Stock Option Plan provides that
all outstanding options become exercisable upon retirement and expire three
years 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.
PROPOSAL 2
SHAREHOLDER PROPOSAL ON ANNUAL ELECTION
OF THE ENTIRE BOARD OF DIRECTORS
John Chevedden, 2215 Nelson Ave. #205, Redondo Beach, CA 90278, owner of 200
shares, submitted this proposal. In accordance with applicable proxy
regulations, the proposed resolution and supporting statement, for which the
Board of Directors and the Company accept no responsibility, are set forth
below.
Shareholder Resolution
RESOLVED: ELECT THE ENTIRE BOARD OF DIRECTORS EACH YEAR.
Airborne shareholders request the Board of Directors to take all necessary
steps to enact this resolution today. This includes the requirement that less
frequent than annual election of all directors can be made only by a majority
shareholder vote as a separate issue (not bundled together with other issues).
Proponent's Supporting Statement
It is intuitive that directors, accountable through annual election, perform
better. The current piecemeal director election gives Airborne directors 3
years of isolation from the impact of their performance.
What incentive is there for good corporate governance--highlighted by annual
election of all directors?
Fifty institutional shareholders, managing $840 million, told McKinsey & Co.
they would pay an 11% average premium for a company with good governance
practices. Why the big jump? Some investors said good governance will boost
performance. Others felt good governance decreases the risk of bad news--and
when trouble occurs, they rebound faster. (Business Week, Sept. 15, 1997)
16
<PAGE>
Good corporate governance can counter-balance recent events:
Airborne stock price dipped 50% since June. (Value Line, Sept. 18, 1998)
We expect a negative comparison with 1997's 3rd quarter. There is concern
at Airborne unless cost improvements continue. (Value Line, Sept. 18, 1998)
Earnings per share restrained by absence of 50-cent per share gain from
1997's UPS strike. (Standard & Poor, Aug. 15, 1998)
The 1997 stock option plan had a high 22% potential stock dilution. This
dilution is more than double that of similar companies. (Investor
Responsibility Research Center, March 1997)
Airborne pilots stage Wall Street protest. The union said management
pressures pilots to fly when pilots say it is not safe. (Reuters, Nov. 19,
1998)
Airborne pilots will limit overtime to protest pilot's dismissal for not
making an unsafe flight. (Reuters, Nov. 9, 1998)
Safety is particularly sensitive after six Airborne employees are killed
in a test flight crash. (Reuters, Oct. 30, 1998)
Only 33% of the Airborne board is independent. The overwhelming 66% of
directors are not independent through additional links to Airborne, long
Airborne tenure, or over-commitments elsewhere. For example:
Brazier--Employee.
Cline--Employee plus 5 board seats.
Brimmer--Demanding full time job plus 6 board seats.
Kim--Demanding full time job plus 6 board seats.
Rosenberg--Rosenberg is a director for Airborne's banker. Rosenberg heads
the committee that decides CEO pay.
Carey--21-year director term.
Additional changes can make Airborne Freight more competitive in corporate
governance. For instance:
1. Appoint independent directors to the key Audit, Compensation, and
Nomination committees.
. Institutional Shareholder Services, Bethesda, MD (www.cda.com/iss)
recommends independent directors on key board committees.
2. "To allow fresh ideas" the National Association of Corporate Directors
guidelines said: Consider 10-15 years limit on director service.
3. Adopt ratification of auditors by shareholders.
4. Adopt a secret ballot.
The best boards continue to raise the bar, said Business Week.
Place the entire board up for election every year.
YES ON 2
17
<PAGE>
BOARD OF DIRECTORS' RECOMMENDATION--THE BOARD OF DIRECTORS
RECOMMENDS THAT THE SHAREHOLDERS VOTE AGAINST PROPOSAL 2
The Board believes the claims in the supporting statement are largely
irrelevant to the issue of how frequently directors should stand for election.
In the opinion of the Board, directors of a classified board are just as
accountable to shareholders as those on a board elected annually. Under the
Company's Bylaws, the Board is divided into three classes with directors
elected to staggered three-year terms. The shareholders have the opportunity
annually to vote against one-third of the directors as a way of expressing any
dissatisfaction with the Board or management. The entire Board can be replaced
in the course of three annual meetings, all held within approximately two
years. The Board disagrees with any suggestion that the timing of elections
affects its attention to the issues facing the Company.
The classified board also ensures continuity in the composition and long-
range planning of the Board. A classified board ensures that a majority of the
Board will have prior experience as directors of the Company. This enables the
directors to build on past experience and plan for a reasonable period in the
future.
The Board also believes that a classified board reduces the ability of a
third party to effect a sudden, unsolicited change in the Company's direction.
It allows the Board to fulfill its duties to the shareholders by providing an
opportunity to negotiate with the proponent of change, consider alternatives
and seek the best results for all shareholders.
Approval of this proposal would require the affirmative vote of a majority
of the shares represented in person or by proxy at the meeting and entitled to
vote. However, approval of the proposal would not automatically eliminate the
classified board, as this proposal is only a recommendation. Eliminating the
classified board would require action by the Board to amend Article IV,
Section 1 of the Company's Bylaws, which provides for a classified board.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE AGAINST PROPOSAL 2.
18
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities 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 1998, all filing requirements applicable to its officers,
directors and greater than ten percent beneficial owners were complied with,
except that a report on sale of shares of director William Swindells was filed
ten days late.
SHAREHOLDER PROPOSALS
The Company's 2000 Annual Meeting of Shareholders is scheduled to be held on
April 25, 2000. Proposals of shareholders intended to be presented at the 2000
Annual Meeting must be received by the Company on or prior to November 13,
1999, to be eligible for inclusion in the Company's Proxy Statement and form
of proxy to be used in connection with the 2000 Annual Meeting.
A shareholder of record who intends to submit a proposal at the 2000 Annual
Meeting that is not eligible for inclusion in the Proxy Statement, or who
intends to submit one or more nominations for directors at the meeting, must
provide prior written notice to the Company. The notice should be addressed to
the Secretary and received at the Company's principal executive offices not
later than January 25, 2000. The written notice must satisfy certain
requirements specified in the Company's Bylaws. A copy of the Bylaws will be
sent to any shareholder upon written request to the Company's Secretary.
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 12, 1999
Seattle, Washington
19
<PAGE>
AIRBORNE FREIGHT CORPORATION
3101 WESTERN AVENUE, P.O. BOX 662, SEATTLE, WA 98111
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Richard M. Rosenberg, William Swindolls 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 22, 1999, at the annual
meeting of shareholders to be held April 27, 1999, 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
against approval of the shareholder proposal to request the board of directors
to take all necessary steps to elect the entire board of directors each year.
Continued, and to be signed and dated, on reverse side.
AIRBORNE FREIGHT CORPORATION
P.O. BOX 11249
NEW YORK, N.Y. 10203-0249
- --------------------------------------------------------------------------------
<PAGE>
. PLEASE DETACH PROXY CARD HERE .
- --------------------------------------------------------------------------------
1. ELECTION OF DIRECTORS-Class B (Term to expire 2002)
FOR all nominees listed below. [ ]
WITHHOLD AUTHORITY to vote for all nominees listed below. [ ]
EXCEPTIONS [ ]
Nominees: Robert G. Brazier, James H. Carey, Andrew B. Kim
(INSTRUCTIONS: To withhold authority in 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 shareholder proposal to request the board of directors to take
all necessary steps to elect the entire board of directors each year.
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.
Change of Address and/
or Comments Mark Here [ ]
Please sign as the name appears hereon. 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 principal or other authorized officer. If partnership,
please sign in partnership name by authorized person.
Dated: , 1999
--------------------
------------------------------
Signature
------------------------------
Signature if held jointly
Please Mark, Sign, Date and Return the Proxy Card Promptly Using the
Enclosed Envelope.
Votes must be indicated
(x) in Black or Blue Ink [ ]
- --------------------------------------------------------------------------------
. PLEASE DETACH HERE .
You Must Detach This Portion of the Proxy Card Before Returning it in the
Enclosed Envelope
