AIR TRANSPORTATION HOLDING COMPANY, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 13, 1998
To Our Stockholders:
The annual meeting of stockholders of Air Transportation Holding Company,
Inc. (the "Company") will be held at 1900 Independence Center, 101 North Tryon
Street, Charlotte, North Carolina on Thursday, August 13, 1998 at 10:00 a.m.
local time, for the purpose of considering and acting on the following matters:
1. To elect ten directors to serve until their successors are duly
elected and qualified;
2. To approve the Air Transportation Holding Company, Inc. 1998
Omnibus Securities Award Plan;
3. To ratify the appointment of Deloitte & Touche LLP as the
independent auditors of the Company for the current fiscal year; and
4. To transact such other business as may properly come before the
meeting, or any adjournment or adjournments thereof.
Only stockholders of record as of the close of business on July 1, 1998 are
entitled to notice of and to vote at the annual meeting and adjournments
thereof.
Because of the expense involved in collecting proxies, the Company is not
soliciting proxies. Accordingly, to vote on matters that will be considered at
the Annual Meeting you must either attend the meeting or deliver a valid proxy
to a person who attends the meeting. WE ARE NOT ASKING YOU FOR A PROXY AND YOU
ARE REQUESTED NOT TO SEND US A PROXY.
The annual report of the Company also accompanies this notice.
By Order of the Board of Directors
John J. Gioffre
Secretary
July 15, 1998
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AIR TRANSPORTATION HOLDING COMPANY, INC.
3524 Airport Road
Maiden, North Carolina 28650
Telephone (704) 377-2109
INFORMATION STATEMENT
INTRODUCTION
This information statement is furnished to the stockholders
of Air Transportation Holding Company, Inc. (hereinafter
sometimes referred to as the "Company") by the Board of Directors
in connection with the annual meeting of stockholders of the
Company to be held on Thursday, August 13, 1998 at 10:00 a.m. at
1900 Independence Center, 101 North Tryon Street, Charlotte,
North Carolina. Action will be taken at the annual meeting for
the election of directors, the ratification of the appointment of
independent auditors, and any other business that properly comes
before the meeting. As provided in the Company's bylaws, up to
ten directors may be elected.
Because of the expense involved in collecting proxies, the
Company is not soliciting proxies. Accordingly, to vote on
matters that will be considered at the Annual Meeting you must
either attend the meeting or deliver a valid proxy to a person
who attends the meeting. WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
This information statement is being mailed to stockholders
on or about July 15, 1998. The Company's 1998 Annual Report to
Stockholders accompanies this information statement.
VOTING SECURITIES
Only stockholders of record at the close of business on July
1, 1998 will be entitled to vote at the annual meeting or any
adjournment or adjournments thereof. The number of outstanding
shares entitled to vote at the stockholders meeting is 2,711,653.
The presence of a majority of the outstanding shares of the
Company's Common Stock, par value $.25 per share (the "Common
Stock"), represented in person or by proxy at the meeting will
constitute a quorum. Directors will be elected by a plurality of
the votes cast. Cumulative voting is not allowed. Accordingly,
abstentions and broker non-votes will not effect the outcome of
the election of directors. The approval of the 1998 Omnibus
Securities Award Plan and the ratification of independent
auditors and any other business coming before the meeting
requires the affirmative vote of a majority of the shares present
or represented at the meeting and entitled to vote. On such
matters, an abstention will have the same effect as a negative
vote but, because shares held by brokers will not be considered
entitled to vote on matters as to which the brokers withhold
authority, a broker non-vote will have no effect on votes on
these matters.
<PAGE>
CERTAIN BENEFICIAL OWNERS
The following table sets forth information regarding the
beneficial ownership of shares of Common Stock (determined in
accordance with Rule 13d-3 of the Securities and Exchange
Commission) of the Company as of May 1, 1998 by each person that
beneficially owns five percent or more of the shares of Common
Stock. Each person named in the table has sole voting and
investment power with respect to all shares of Common Stock shown
as beneficially owned, except as otherwise set forth in the
notes to the table.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Amount of
Title of Beneficial
Class Name and Address of Ownership
Beneficial Owner as of May 1, Percent
1998 of Class
Common Walter Clark and Caroline 1,283,716(1) 47.3%
Stock, par Clark, Executors
value $.25 P.O. Box 488
per share Denver, North Carolina 28650
William H. Simpson 261,980(2) 9.5%
P.O. Box 488
Denver, North Carolina 28650
Kennedy Capital Management, 145,864 5.4%
Inc.(3)
425 North Ballas Road
St. Louis, Missouri 63141
_____________________________
(1) Includes 1,279,272 shares beneficially owned by such
individuals as the executors of the estate of David Clark
who passed away on April 18, 1997, 2,222 shares owned by
Walter Clark and 2,222 shares owned by Caroline Clark.
(2) Includes 1,200 shares held jointly with J. Hugh Bingham and
52,000 shares under options granted by the Company.
(3) Information regarding Kennedy Capital Management, Inc. is
based upon information provided by Kennedy Capital
Management Inc. to the Company on June 16, 1998.
ELECTION OF DIRECTORS
Under the Company's Certificate of Incorporation and bylaws,
directors are elected at each annual meeting and hold office
until their respective successors are elected and have qualified.
All of the incumbent directors were elected by the stockholders
at the last annual meeting, other than Mr. Herman A. Moore who
was elected by the Board of Directors on June 22, 1998 to fill a
vacancy. As provided in the Company's bylaws, up to ten
directors may be elected.
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
J. Hugh Bingham, age 52, has served as President and Chief
Operating Officer of the Company since April 1997, as Senior Vice
President of the Company from June 1990 until April 1997, as
Executive Vice President from June 1983 to June 1990, and as a
director since March 1987. Mr. Bingham also serves as Chief
Executive Officer and a director of MAC, as Chief Executive
Officer of MAS and as an Executive Vice President and a director
of CSA.
Walter Clark, age 41, has served as Chairman of the Board of
Directors of the Company and Chief Executive Officer since April
1997. Mr. Clark also serves as a director of MAC and CSA. Mr.
Clark was elected a director of the Company in April 1996. Mr.
Clark was self-employed in the real estate development business
from 1985 until April 1997.
John J. Gioffre, age 54, has served as Vice President-
Finance and Chief Financial Officer of the Company since
April 1984 and as Secretary/Treasurer of the Company since
June 1983. He has served as a director of the Company since
March 1987. Mr. Gioffre also serves as Vice-President,
Secretary/Treasurer and a director of MAC and CSA and as Vice
President-Finance, Treasurer and Secretary of MAS.
J. Leonard Martin, age 61, joined the Company as a Vice
President in April 1997 and was elected a director in August
1994. Mr. Martin is currently an independent aviation
consultant. From April 1994 to June 1995, Mr. Martin has served
as Chief Operating Officer of Musgrave Machine & Tool, Inc., a
machining company. From January 1989 to April 1994, Mr. Martin
served as a consultant to the North Carolina Air Cargo Authority
in connection with the establishment of the Global TransPark air
cargo facility in Kinston, North Carolina. From 1955 through
1988 Mr. Martin was employed by Piedmont Airlines, a commercial
passenger airline, in various capacities, ultimately serving as
Senior Vice President-Passenger Services.
H. Wayne Ross, age 53, has served as President of CSA since
October 1988.
William H. Simpson, age 50, has served as Executive Vice
President of the Company since June 1990, as Vice President from
June 1983 to June 1990, and as a director of the Company since
June, 1985. Mr. Simpson is also the President and a director of
MAC, the Chief Executive Officer and a director of CSA and
Executive Vice President of MAS.
Menda J. Street, age 46, has served as Vice President of MAC
since 1984.
Claude S. Abernethy, Jr., age 71, was elected as director of
the Company in June 1990. For the past five years, Mr. Abernethy
has served as a Senior Vice President of Interstate/Johnson Lane
Corporation, a securities brokerage and investment banking firm.
Mr. Abernethy is also a director of Interstate/Johnson Lane
Incorporated, Carolina Mills, Inc. and Ridgeview Incorporated.
Sam Chesnutt, age 64, was elected a director of the Company
in August 1994. Mr. Chesnutt serves as President of Sam Chesnutt
<PAGE>
and Associates, an agribusiness consulting firm. From November
1988 to December 1994, Mr. Chesnutt served as Executive Vice
President of AgriGeneral Company, L.P., an agribusiness firm.
Allison T. Clark, age 42, has served as a director of the
Company since May 1997. Mr. Clark has been self-employed in the
real estate development business since 1987.
Herman A. Moore, age 68, was elected a director of the
Company by the Board of Directors on June 22, 1998 to fill a
vacancy. Mr. Moore is the president of Herman A. Moore & Assoc.,
Inc., a real estate development company.
George C. Prill, age 75, has served as a director of the
Company since June 1982, as Chief Executive Officer and Chairman
of the Board of Directors from August 1982 until June 1983, and
as President from August 1982 until spring 1984. Mr. Prill has
served as an Editorial Director for General Publications, Inc., a
publisher of magazines devoted to the air transportation
industry, since November 1992 and was retired from 1990 until
that time. From 1979 to 1990, Mr. Prill served as President of
George C. Prill & Associates, Inc., of Charlottesville, Virginia,
which performed consulting services for the aerospace and airline
industry. Mr. Prill has served as President of Lockheed
International Company, as Assistant Administrator of the FAA, as
a Senior Vice President of the National Aeronautic Association
and Chairman of the Aerospace Industry Trade Advisory Committee.
The officers of the Company and its subsidiaries each serve
at the pleasure of the Board of Directors. Walter Clark and
Allison Clark are brothers.
The Board of Directors has two standing committees: the
Audit Committee and the Compensation Committee. During the
fiscal year ended March 31, 1998, the Audit Committee consisted
of Messrs. Abernethy, Chesnutt and Terry Sanford (a director of
the Company who died subsequent to fiscal year end), both of whom
were then non-employee directors. The Audit Committee met twice
during the fiscal year. The functions of the Audit Committee are
to recommend to the Board of Directors the firm of independent
auditors to serve the Company each fiscal year, to review the
scope, fees and results of the audit performed by the independent
auditors and to review the adequacy of the Company's system of
internal accounting controls and the scope and results of
internal auditing procedures. Currently, Messrs. Abernethy and
Chesnutt serve on the Audit Committee.
The Compensation Committee, which met three times during the
most recent fiscal year, consisted of Messrs. Abernethy, Chesnutt
and Prill, all of whom are non-employee directors. The functions
of the Compensation Committee include establishing policies for
the compensation of the Company's executive officers and
determining the types and amounts of remuneration to be paid to
the Company's executive officers. Currently, Messrs. Abernethy,
Chesnutt and Prill serve on the Compensation Committee.
During the fiscal year ended March 31, 1998, the Board of
Directors met four times. Each of the directors attended at
least 75 percent of the total of the meetings of the Board of
Directors and committees thereof on which such director served
during such period. Each director receives a director's fee of
$500 per month and an attendance fee of $500 is paid to outside
directors for each meeting of the board of directors, or a
committee thereof, attended.
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The following table sets forth information regarding the
beneficial ownership of shares of Common Stock of the Company by
each director of the Company and by all directors and executive
officers of the Company as a group as of May 1, 1998. Each
person named in the table has sole voting and investment power
with respect to all shares of Common Stock shown as beneficially
owned, except as otherwise set forth in the notes to the table.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
Shares and Percent of Common Stock
Beneficially Owned as of
May 1, 1998
Name Position with Company No. of Shares Percent
J. Hugh Bingham Senior Vice President, 116,080(1)(2) 4.2%
Director
Walter Clark Chairman of the Board 1,281,494(3) 47.3%
of Directors and Chief
Executive Officer
John J. Gioffre Vice President-Finance, 57,980(4) 2.1%
Secretary and
Treasurer, Director
J. Leonard Martin Vice President, 100(5) *
Director
William H.Simpson Executive Vice 261,580(1)(6) 9.5%
President, Director
Claude S.
Abernethy, Jr. Director 22,611 *
Sam Chesnutt Director 3,600 *
Allison T. Clark Director 2,222 *
Herman A. Moore Director - *
George C. Prill Director 45,966 1.7%
All directors N/A 1,804,833(7) 64.0%
and executive
officers as a
group (12
persons)
__________________________________________
* Less than one percent.
(1) Includes 1,200 shares jointly held by Messrs. Simpson and
Bingham.
(2) Includes 38,000 shares under options granted by the Company
to Mr. Bingham.
(3) Includes 1,279,272 shares held by the estate of David Clark,
of which Mr. Walter Clark is a co-executor.
(4) Includes 20,000 shares under options granted by the Company
to Mr. Gioffre.
(5) Such 100 shares are held by Mr. Martin's spouse of which
shares Mr. Martin disclaims beneficial ownership.
<PAGE>
(6) Includes 52,000 shares under options granted by the Company
to Mr. Simpson.
(7) Includes an aggregate of 110,000 shares of Common Stock
members of such group have the right to acquire within 60
days.
EXECUTIVE COMPENSATION
The following table sets forth a summary of the compensation
paid during each of the three most recent fiscal years to each
individual who served as the Company's Chief Executive Officer at
any time during the most recent fiscal year and each of the other
individuals who were executive officers on March 31, 1998 with
total compensation of $100,000 or more. During this period,
David Clark served as the Company's Chief Executive Officer until
he passed away on April 18, 1997. Walter Clark was appointed the
Company's Chief Executive Officer in April, 1997.
SUMMARY COMPENSATION TABLE
Annual Compensation
Other Annual
Name and Principal Year Salary Bonus Compensation
Position ($) ($) ($)
Walter Clark (1) 1998 76,236 10,000 -
Chief Executive Officer 1997 - - -
1996 - - -
David Clark (2) 1998 28,429 - 43,750(3)
Former Chief Executive 1997 171,391 50,222 -
Officer
1996 155,749 59,583 -
J. Hugh Bingham 1998 184,445 70,721 -
Senior Vice President 1997 148,289 50,222 -
1996 126,441 67,583 -
John J. Gioffre 1998 127,142 52,641 -
Vice President 1997 121,208 37,667 -
1996 101,250 49,937 -
J. Leonard Martin (4) 1998 117,751 15,953 -
Vice President 1997 - - -
1996 - - -
William H. Simpson 1998 195,809 70,721 -
Executive Vice President 1997 186,299 50,222 -
1996 155,364 73,583 -
__________________________________________
(1) Mr. Walter Clark commenced his employment in April 1997.
<PAGE>
(2) Mr. David Clark served as the Company's Chief Executive
Officer until he passed away on April 18, 1997.
(3) Represents annual benefit paid by the Company to Mr. David
Clark's estate upon his death.
(4) Mr. Martin commenced his employment in April 1997.
The following table sets forth the number of shares of
Common Stock underlying unexercised options at March 31, 1998
held by each of the executive officers listed in the Summary
Compensation Table. The table also includes the value of such
options at March 31, 1998 based upon the closing bid price of the
Company's Common Stock in the over-the-counter market on that
date ($13.50 per share) and the exercise price of the options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
Shares Number of Securities Value of Unexercised
Acquired Underlying Unexercised In-The_Money Options
On Value Options at FY-End(#) At FY-End ($)
Name Exer- Realized Exercis- Unexerci- Exercis- Unexerci-
cise # ($) able sable able sable
Walter Clark - - - - - -
David Clark - - - - - -
J. Hugh Bingham 20,000 71,000 38,000 - 470,500 -
John J. Gioffre 13,000 46,125 20,000 - 247,000 -
J. Leonard Martin - - - - - -
William H. Simpson 28,000 99,500 52,000 - 644,000 -
EMPLOYMENT AGREEMENTS
Effective January 1, 1996, the Company and each of its
subsidiaries entered into an Employment Agreement with David
Clark, then the Company's Chief Executive Officer. The
employment agreement provided for an annual base salary of
$150,000, subject to increase upon annual review by the
Compensation Committee of the Company's Board of Directors. In
addition, the agreement provided for the payment to Mr. Clark of
annual incentive bonus compensation equal to two percent of the
Company's consolidated earnings before income taxes and
extraordinary items as reported by the Company in its Annual
Report on Form 10-K. By its terms, the initial term of the
employment agreement would have expired on December 31, 1998.
Mr. Clark passed away in April 1997. The agreement provided that
upon Mr. Clark's retirement, he would have been entitled to
receive an annual benefit equal to $75,000 for up to ten years
following termination of employment. The agreement further
provided that in the event Mr. Clark died prior to the expiration
<PAGE>
of such ten-year period, the amount of such benefit would be paid
to his estate. Such amount will be paid to Mr. Clark's estate
over a ten-year period commencing April 18, 1997.
Effective January 1, 1996, the Company and each of its
subsidiaries entered into employment agreements with J. Hugh
Bingham, John J. Gioffre and William H. Simpson, each of
substantially similar form. Each of such employment agreements
provides for an annual base salary ($130,000, $103,443 and
$165,537 for Messrs. Bingham, Gioffre and Simpson, respectively)
which may be increased upon annual review by the Compensation
Committee of the Company's Board of Directors. In addition, each
such agreement provides for the payment of annual incentive bonus
compensation equal to a percentage (2.0%, 1.5% and 2.0% for
Messrs. Bingham, Gioffre and Simpson, respectively) of the
Company's consolidated earnings before income taxes and
extraordinary items as reported by the Company in its Annual
Report on Form 10-K. Payment of such bonus is to be made within
15 days after the Company files its Annual Report on Form 10-K
with the Securities and Exchange Commission.
The current term of each such employment agreement expires
on March 31, 2000, and the term is automatically extended each
March 31 for an additional year unless either such executive
officer or the Company's Board of Directors gives notice to
terminate automatic extensions which must be given by December 1
of each year.
Each such agreement provides that upon the executive
officer's retirement, he shall be entitled to receive an annual
benefit equal to $75,000 ($60,000 for Mr. Gioffre), reduced by
three percent for each full year that the termination of his
employment precedes the date he reaches age 65. The retirement
benefits under such agreements may be paid at the executive
officer's election in the form of a single life annuity or a
joint and survivor annuity or a life annuity with a ten-year
period certain. In addition, such executive officer may elect to
receive the entire retirement benefit in a lump sum payment equal
to the present value of the benefit based on standard insurance
annuity mortality tables and an interest rate equal to the 90-day
average of the yield on ten-year U.S. Treasury Notes.
Retirement benefits shall be paid commencing on such
executive officer's 65th birthday, provided that such executive
officer may elect to receive benefits on the later of his 62nd
birthday, in which case benefits will be reduced as described
above, or the date on which his employment terminates, provided
that notice of his termination of employment is given at least
one year prior to the termination of employment. Any retirement
benefits due under the employment agreement shall be offset by
any other retirement benefits that such executive officer
receives under any plan maintained by the Company. In the event
such executive officer becomes totally disabled prior to
retirement, he will be entitled to receive retirement benefits
calculated as described above.
In the event of such executive officer's death before
retirement, the agreement provides that the Company shall be
required to pay an annual death benefit to such officer's estate
equal to the single life annuity benefit such executive officer
would have received if he had terminated employment on the later
of his 65th birthday or the date of his death, payable over ten
years; provided that such amount would be reduced by five percent
for each year such executive officer's death occurs prior to age
65, but in no event more than 50 percent.
<PAGE>
Each of the employment agreements provides that if the
Company terminates such executive officer's employment other than
for "cause" (as defined in the agreement), such executive officer
be entitled to receive a lump sum cash payment equal to the
amount of base salary payable for the remaining term of the
agreement (at the then current rate) plus one-half of the maximum
incentive bonus compensation that would be payable if such
executive officer continued employment through the date of the
expiration of the agreement(assuming for such purposes that the
amount of incentive bonus compensation would be the same in each
of the years remaining under the agreement as was paid for the
most recent year prior to termination of employment). Each of
the agreements further provides that if any payment on
termination of employment would not be deductible by the Company
under Section 280G(b)(2) of the Internal Revenue Code, the amount
of such payment would be reduced to the largest amount that would
be fully deductible by the Company.
CERTAIN TRANSACTIONS
The Company leases its corporate and operating facilities at
the Little Mountain, North Carolina airport from Little Mountain
Airport Associates, Inc. ("Airport Associates"), a corporation
whose stock is owned by J. Hugh Bingham, William H. Simpson, John
J. Gioffre, the estate of David Clark and three unaffiliated
third parties. On May 30, 1996, the Company renewed its lease
for this facility, scheduled to expire on that date, for an
additional five-year term, and adjusted the rent to account for
increases in the consumer price index. The lease may be extended
for an additional five-year term, with rental payments to be
adjusted to reflect changes in the consumer price index. Upon
the renewal, the monthly rental payment was increased from $7,000
to $8,073. The Company paid aggregate rental payments of $96,876
to Airport Associates pursuant to such lease during the fiscal
year ended March 31, 1998.
The Company believes that the terms of such lease are no
less favorable to the Company than would be available from an
independent third party.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors
establishes the compensation paid to the Company's executive
officers, including the individuals named in the Summary
Compensation Table. The Compensation Committee met three times
during the fiscal year and also communicated informally by
telephone conferences between certain members of the Committee
and the distribution of memoranda to all members of the
Committee.
Policies
The Compensation Committee seeks to establish compensation
policies that provide appropriate rewards to the Company's
executive officers commensurate with their service with the
Company and to provide incentives for superior performance.
Executive compensation is comprised of two components: base
salary and annual cash bonuses. In setting an executive
officer's base salary, the Compensation Committee engages in a
<PAGE>
subjective evaluation, examining the officer's level of
responsibility in the Company and previous base compensation, the
officer's performance over both the short and longer terms, the
Company's performance over those periods and the length of the
officer's service with the Company, assigning no particular
weight to any of these factors. The Company has entered into
employment agreements with certain of its executive officers
establishing a minimum base annual salary and providing for an
annual cash bonus equal to an established percentage of the
Company's earnings before income taxes and extraordinary items.
Accordingly, the Committee believes that a substantial portion of
compensation of executive officers will be tied directly to the
Company's overall financial performance.
Although no stock options were granted to the Company's
executive officers during the five most recent fiscal years,
stock options have been granted in previous years. Such awards
have been made on a discretionary basis. The Compensation
Committee believes that options are performance-based
compensation and serve as an incentive to management to remain
with the Company. Stock options and other equity-based
performance compensation may be awarded in the future.
Compensation of Chief Executive Officer
Mr. David Clark's compensation was set in recognition of the
effort and financial commitments Mr. Clark has made in directing
the Company prior to his death. Mr. David Clark's employment
agreement provided for a salary of at least $150,000 per year and
an annual bonus equal to two percent of the Company's annual
earnings before income taxes and extraordinary items.
Upon Mr. Walter Clark's appointment as Chief Executive
Officer in April 1997, the Committee established his initial
annual salary at $60,000. The Committee authorized an increase
in Mr. Walter Clark's annual salary to $120,000 in January 1998.
In setting Mr. Walter Clark's salary, the Committee deferred in
part to Mr. Walter Clark's request that his compensation be kept
relatively low. In determining salary and bonus for Mr. Walter
Clark, the Committee has used its subjective evaluation of
Mr. Walter Clark's performance and responsibilities, the
Company's overall performance and his request that his
compensation be relatively low. Since his appointment as Chief
Executive Officer in April 1997, Mr. Walter Clark led the Company
in the acquisition and integration of Global Ground Support,
which has added significant revenue and profitability and,
perhaps more importantly, broadened the Company's customer base
and reduced the Company's reliance on the air cargo services
segment. Due in part to the addition of Global Ground Support,
the Company recorded record results in the last fiscal year. The
Committee believes that the Company's performance during
Mr. Walter Clark's tenure as Chief Executive Officer, and the
scope and his performance of his responsibilities, would justify
a higher level of compensation.
Compensation Committee
Claude S. Abernethy, Jr.
Sam Chesnutt
George C. Prill
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
The following graph compares the Company's cumulative total
shareholder return for the five most recent fiscal years,
assuming an investment on March 31, 1993 of $100 in Common Stock
and reinvestment of all dividends in Common Stock, along with the
cumulative total returns determined on the same basis of a broad-
based equity market index -- The Center for Research in
Securities Prices (CRSP) Total Return Index for the Nasdaq Stock
Market (U.S. Companies) -- and a peer index including all U.S.
companies with stock registered with the Securities and Exchange
Commission having the same standard industrial classification
code as the Company.
(no graph)
March 31,
1993 1994 1995 1996 1997 1998
Company 100.0 180.5 149.2 164.6 137.1 550.5
Nasdaq 100.0 107.9 120.1 163.0 181.2 275.0
Peer (1) 100.0 128.2 128.1 142.3 193.0 287.8
__________________
(1) The peer issuers index is an index constructed by the
Company and is comprised of all U.S. companies with stock
registered with the Securities and Exchange Commission having the
same standard industrial classification code as the Company:
<PAGE>
Airborne Freight Corporation, Federal Express Corporation and
Pittston Services Group, Inc., which operates Emery Air Freight.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Company's knowledge, based solely on review of the
copies of reports under Section 16(a) of the Securities Exchange
Act of 1934 that have been furnished to the Company and written
representations that no other reports were required, during the
fiscal year ended March 31, 1997 all executive officers,
directors and greater than ten-percent beneficial owners have
complied with all applicable Section 16(a) filing requirements,
except that Mr. Walter Clark was late in filing a report on Form
5 with respect to the receipt of a gift of 2,222 shares, Mr.
Allison Clark was late in filing his initial report on Form 3,
and Mrs. Street was late in filing a report on Form 4 with
respect to her exercise of stock options in September 1997 and a
report on Form 4 with respect to two sale transactions in March
1998.
ADOPTION OF 1998 OMNIBUS SECURITIES AWARD PLAN
On June 22, 1998, the Board of Directors adopted, subject to
the approval of the stockholders, the Air Transportation Holding
Company, Inc. 1998 Omnibus Securities Award Plan (the "Plan").
The Plan is intended to allow the Company (including its
subsidiaries) to attract and retain key employees, to stimulate
the efforts of such employees, and to strengthen their desire to
remain with the Company. In addition, the Plan is intended to
aid the Company in attracting superior individuals to serve as
directors and in providing appropriate compensation to non-
employee directors for their service.
Material Features of the Plan
The Plan is designed to give the Board of Directors, acting
through a committee of non-employee directors (the "Committee"),
flexibility to adapt the long-term incentive compensation of key
employees to changing business conditions through a variety of
long-term incentive arrangements. Under the Plan, the Committee
may grant stock options (both non-qualified and incentive), stock
appreciation rights, performance restricted stock awards,
performance awards and performance units to employees of the
Company holding positions of responsibility in managerial,
administrative, operational or professional capacities ("Key
Employees"). The Plan also provides for the grant of options to
non-employee directors ("Nonemployee Directors") upon their
election to the Board at the Annual Meeting or upon their initial
election to the Board thereafter and allows the Nonemployee
Directors to elect to take their remaining compensation in the
form of stock options instead of cash. In addition to the
enumerated incentive compensation awards, the Committee may
establish other types of Key Employee Awards it determines are
consistent with the Plan's purposes.
Key Employee Stock Options. Under the Plan, the Committee
may grant awards in the form of options to purchase shares of the
Company's Common Stock. The Committee will determine the number
of shares subject to the option, the manner and time of the
option's exercise and the exercise price per share of stock
subject to the option. In no event may the exercise price of a
stock option be less than 100% of the fair market value of the
<PAGE>
Common Stock on the date of the grant. The last sale of the
Common Stock on June 23, 1998 was at $10.00 per share. All stock
options under the Plan will expire no later than ten years from
the date of the grant, and the exercise price of outstanding
options may not be altered by the Committee. The Plan provides
for the grant to Key Employees of incentive stock options within
the meaning of Section 422 of the Internal Revenue Code, as
amended (the "Code").
Stock Appreciation Rights. The Plan authorizes the
Committee to grant stock appreciation rights ("SARs") to Key
Employees. A SAR consists of the right to receive a payment
equal to appreciation in market value of the stated number of
shares of Common Stock from the SAR exercise price to the market
value on the date of its exercise.
The Committee determines the number of shares of the
Company's Common Stock subject to the SARs, the manner and time
of the SAR's exercise and exercise price of the SAR, which
exercise price may in no event be less than 100% of the fair-
market value of the Common Stock on the date of grant of the SAR.
SARs may be granted either in tandem with Key Employee stock
options or independent of the grant of such options.
Performance Restricted Stock Program. The performance
restricted stock program provides Key Employee participants the
opportunity to earn shares of the Company's Common Stock based
upon the achievement of objective goals determined by the
Committee. Under this program, the Committee may establish for
any Key Employee a target award for a performance cycle, which
target is expressed as a fixed number of shares of restricted
Common Stock.
Each performance cycle will be one year or longer as set by
the Committee, and performance cycles can be of varying and
overlapping durations. Within the first 90 days of a performance
cycle, the Committee will establish written performance goals
based on objective business criteria enumerated in the Plan,
which are limited to return on net assets, return on
stockholders' equity, return on assets, return on capital,
stockholder returns, profit margin, earnings per share, net
earnings, operating earnings, Common Stock price per share, and
sales or market share (the "Performance Criteria"). Awards are
paid for the performance cycle only if the performance goals are
attained. At the same time, the Committee will establish a
performance formula that will determine, assuming the performance
goals for the performance cycle are achieved, what percentage of
the participant's target award for the performance cycle has been
earned.
After the close of each performance cycle, the Committee
will calculate, based upon application of the performance formula
to the performance goals, what percentage of the target award has
been earned for the period, although the Committee will have the
authority to reduce or eliminate an award based on any other
objective or subjective criteria it deems appropriate.
Awards under this program will be paid in restricted Common
Stock. Such stock may not be sold, transferred or encumbered by
the participant during the restriction period established by the
Committee, which restriction period will be at least three years.
<PAGE>
Except in the case of a "change in control" of the Company
(as defined in the Plan), in the event a participant's employment
is terminated prior to completion of a performance cycle for any
reason other than death, disability, retirement or another reason
approved by the Committee (an "Approved Reason"), all of the
awards granted to the participant for such cycle shall be
forfeited. In addition, any such termination (whether or not it
occurs during a performance cycle) will cause the participant to
forfeit any restricted Common Stock that is subject to an
unexpired restriction period. In the event a participant's
employment is terminated due to death, disability, retirement or
an Approved Reason prior to the completion of such cycle, he or
she shall receive, assuming Awards are earned for such cycle, a
pro rata award based upon his or her employment during the cycle
prior to termination of employment and the participant will be
entitled to keep restricted Common Stock subject to an unexpired
restriction period in a pro rata amount based on the elapsed
portion of the restriction period prior to termination.
Performance Awards Program. The Performance Award Program
is structured similarly to the Performance Restricted Stock
Program, and provides participants the opportunity to earn awards
in the form of cash or Common Stock, subject to such restrictions
as the Committee determines.
Performance Awards will be based on written objective
performance goals for a performance period (which must be at
least one year, but it can be of varying and overlapping
durations) established by the Committee. Awards will be
determined by applying a performance formula to the performance
goals (which must be based only on one or more of the Performance
Criteria) attained in the performance period to determine an
award expressed as a percentage of the participant's base salary.
The Committee will have the authority to reduce or eliminate
Performance Awards in the same manner as under the Performance
Restricted Stock Program. The termination of a participant
during a performance period will be treated in an equivalent
manner as under the Performance Restricted Stock Program.
Performance Units. The Plan allows the Committee to grant
Awards in the form of Performance Units which are units valued by
reference to criteria selected by the Committee, which are not
limited to the Performance Criteria specified in the Plan.
Performance Units are similar to Performance Restricted Stock
Program Awards in that they are contingently awarded based on the
attainment of certain performance objectives over a fixed period;
however, Performance Units shall not be payable in Common Stock.
The length of such period, the performance objectives to be
achieved during the period and the measure of whether and to what
degree such objectives have been achieved will be determined by
the Committee.
Limitation on Awards. The maximum number of shares of
Common Stock for which stock options may be granted to any Key
Employee in a calendar year is 50,000. The maximum number of
shares of Common Stock for which stock appreciation rights may be
granted to any Key Employee in a calendar year is 50,000. The
maximum number of shares of Common Stock for which an Award may
be made under the Performance Restricted Stock Program in any
performance cycle is 5,000. The maximum Award that may be
granted under the Performance Award Program for any performance
period is $100,000 or, in the event the Performance Award is paid
in shares of Common Stock, the Common Stock equivalent thereof as
of date of payment.
<PAGE>
Director Formula Options and Deferral Options. The Plan
provides for the grant, upon a Nonemployee Director's election at
the Annual Meeting or upon his or her subsequent initial election
or appointment as Director, of a Formula Option to purchase 1,000
shares of the Company's Common Stock at an exercise price of no
less than 100% of the fair-market value of the Company's Common
Stock on the date of grant. The formula for the grant of Formula
Options may not be altered by the Committee more often than once
every six months except as necessary to comply with the Code or
the Employee Retirement Income Security Act. Formula options may
not be exercised sooner than six months from (i) the date of
grant or (ii) the date of shareholder approval of the Plan,
whichever is later. Formula Options become immediately
exercisable upon a Director's death, disability or retirement or
upon a Change in Control of the Company (as defined in the Plan).
The Plan also provides that Nonemployee Directors may elect
annually to receive their compensation for service as a Director
for the following year (not including reimbursement of expenses)
in the form of Deferral Options. Deferral Options are granted at
the commencement of the 12-month period for which the election
has been made. The number of Deferral Options granted to an
electing Nonemployee Director in any year shall be an amount
whose value, as determined by any generally accepted option
pricing model, is equivalent on the date of grant to the cash
compensation which the Nonemployee Director would otherwise have
been entitled to receive for the year.
In general, Deferral Options become exercisable one year
after the date of grant and are exercisable at a price equal to
the market price of the Company's Common Stock at the close of
business on the day of grant, or next preceding trading day if
the date of grant is not a trading day. Deferral Options become
immediately exercisable upon a Director's death, disability or
retirement or upon a Change in Control of the Company. If a
Director's tenure ends for a reason other than death, disability,
retirement or change in control, then the number of Deferral
Options granted for the year in which the tenure ends shall be
reduced to reflect the amount of compensation actually earned by
the Director in that year.
Available Shares. The maximum amount of Common Stock
reserved and available for issuance under the Plan is 165,000
shares, which number may be adjusted by the Committee for to
reflect future stock splits, stock dividends and other changes in
the capital structure of the Company. Shares of Common Stock
related to Awards which terminate by expiration, forfeiture,
cancellation or otherwise without the issuance of shares, or are
settled in cash in lieu of Common Stock, will not again be
available for grant under the Plan.
Eligibility for Participation. The selection of Key
Employees to participate in the Plan is within the discretion of
the Committee. The Committee has not determined how many Key
Employees will ultimately participate in the Plan. However, the
Committee intends to grant awards under the Plan to Employees who
the Committee believes can have a significant effect on the
growth, profitability and success of the Company. There are
approximately 40 employees of the Company in this category. Only
<PAGE>
Nonemployee Directors are eligible to receive Formula Options and
Deferral Options. There are currently six Nonemployee Directors.
If each of the six Nonemployee Directors is elected a director at
the Annual Meeting, each will receive a Formula Option for 1,000
shares of Common Stock. Other benefits to potential participants
under the Plan are not presently determinable.
Change in Ownership or Control. For all awards (other than
Formula Options and Deferral Options, the treatment of which has
been discussed above) in the event of a Change In Control
(defined as a change in a majority of directors resulting from a
tender offer, merger or similar transaction), a participant whose
employment is terminated for a reason other than death,
disability, cause, voluntary resignation other than for "Good
Reason" (as described below) or retirement, within two years of
the date of such event will be entitled to the following
treatment under the Plan: (i) all of the terms, conditions,
restrictions and limitations in effect on any of the
participant's outstanding awards will immediately lapse, (ii) all
of the participant's outstanding awards will automatically become
100% vested, (iii) all of the participant's outstanding stock
options, SARs, Common Stock awards, unpaid Performance Restricted
Stock and Performance Awards and other stock-based awards will be
immediately paid and (iv) all of the participant's outstanding
performance units will be paid.
As provided in the Plan, during such two-year period
following a Change in Control, a participant voluntarily resigns,
the participant's awards under the Plan will be treated as
described in the immediately preceding paragraph if the
participant resigns for "Good Reason," which is defined in the
Plan to include the assignment to the participant of duties
inconsistent with the participant's position, duties or
responsibilities immediately prior to the Change in Control, a
reduction in the participant's base salary or in benefits under
any benefit or incentive plan in which the participant
participated at the time of the Change in Control, relocation to
a place more than 30 miles from the participant's workplace at
the time of the Change in Control or reduction in paid vacation
time.
The Plan also provides that if the Company's Common Stock
ceases to be actively traded on the exchange or quotation system
on which it is then traded, then all participants, regardless of
whether their employment is terminated, will automatically
receive the same treatment afforded to a participant terminated
without cause upon a Change In Control.
Plan Administration and Termination. The Committee that
administers the Plan may be comprised of either the Compensation
Committee of the Board or other committee designated by the
Board, provided, that each of the members of the Committee must
be both a "disinterested director" and an "outside director" as
defined under applicable law. No member of the Committee is
eligible to be selected to participate in the Plan except through
Formula Options and Deferral Options. Among the powers granted
to the Committee are the authority to interpret the Plan,
establish rules and regulations for its operation, select key
employees of the Company and its subsidiaries to receive Awards
and determine the form and amount and other terms and conditions
of such Awards.
The Plan authorizes the Committee to grant Common Stock
Awards to Key Employees during the period from August 13, 1998
through August 13, 2001; except that the Committee may grant
Awards under the Performance Award Program and Performance
Restricted Stock Program after such date in recognition of
performance for Performance Cycles and Performance Periods
commencing prior to such date. The Committee may suspend or
terminate the Plan at any time, with or without prior notice. In
<PAGE>
general, the Committee may not make substantive amendments to the
Plan without stockholder approval.
Plan Benefits
No Awards have been made to date under the Plan. The
Company has no existing stock option plans. Since the grant of
Awards under the Plan is entirely within the Committee's
discretion, subject to the limitations set forth in the Plan, it
is not possible to determine the amount of Awards that would have
been granted for the last fiscal year had the Plan been in
effect.
Federal Income Tax Consequences
The following is a brief summary of the principal United
States federal income tax consequences under current federal
income tax laws related to Awards under the Plan. This summary
is not intended to be exhaustive and, among other things, does
not describe state or local tax consequences.
Stock Options. A participant who is granted an incentive
stock option within the meaning of Section 422 of the Code should
not realize any taxable income at the time of the grant or at the
time of exercise. Similarly, the Company is not entitled to any
deduction at the time of grant or at the time of exercise. If
the participant makes no disposition of the shares acquired
pursuant to an incentive stock option before the latter of two
years from the date of grant of such option and one year from the
exercise of such option, any gain or loss realized on a
subsequent disposition of the shares will be treated as a long-
term capital gain or loss. Under such circumstances, the Company
will not be entitled to any deduction for Federal income tax
purposes.
Upon a sale or other disposition of shares acquired upon the
exercise of an incentive stock option within one year after the
transfer of the shares to the participant or within two years
after the date of grant of the incentive stock option (including
the delivery of such shares in payment of the exercise price of
another incentive stock option within such period), any excess of
(a) the lesser of (i) the fair market value of the shares at the
time of exercise of the option and (ii) the amount realized on
such disqualifying sale or other disposition of the shares over
(b) the exercise price of such shares, should constitute ordinary
income to the participant and the Company should be entitled to a
deduction in the amount of such income. The excess, if any, of
the amount realized on a disqualifying sale over the fair market
value of the shares at the time of the exercise of the option
generally will constitute short-term or long-term capital gain
and will not be deductible by the Company.
A participant who is granted a non-qualified stock option
will not have taxable income at the time of grant, but will have
taxable income at the time of exercise equal to the difference
between the exercise price of the shares and the market value of
the shares on the date of exercise. The Company will be entitled
to a corresponding deduction for the same amount.
Other Awards. The grant of an SAR has no Federal tax
consequences for the participant or the Company. The exercise of
<PAGE>
an SAR results in taxable income to the participant equal to the
difference between the exercise price of the shares and the
market price of such shares of the date of exercise and a
corresponding deduction by the Company.
A participant who has been granted either Performance Awards
or Performance Units will not realize taxable income at the time
of grant, and the Company will not be entitled to a deduction at
such time. A participant will realize ordinary income at the
time the Award is paid, and the Company will have a corresponding
deduction. If an Award is paid in the form of Common Stock, the
participant will be treated as having received taxable
compensation in an amount equal to the then fair market value of
the Common Stock distributed to him or her and the Company will
receive a corresponding deduction for the same amount.
A participant who has been granted an Award of restricted
shares of Common Stock will not realize taxable income at the
time of grant, and the Company will not be entitled to a
deduction at the time of grant, assuming that the restrictions
constitute a substantial risk of forfeiture for Federal income
tax purposes. When such restrictions lapse, the participant will
receive taxable income in an amount equal to the excess of the
fair-market value of the shares at such time over the amount, if
any, paid for such shares. The Company will be entitled to a
corresponding deduction.
Limitation on Income Tax Deduction. The Plan has been
designed to enable any Award granted by the Committee under the
Plan to a Key Employee to qualify as "performance-based
compensation" under Section 162(m) of the Code. Through such
qualification, the Company can preserve the deductibility of
certain compensation in the event that the annual compensation of
a Key Employee exceeds $1,000,000.
Under certain circumstances the accelerated vesting or
exercise of options or other awards under the Plan in connection
with a change of control of the Company might be deemed an
"excess parachute payment" for purposes of the golden parachute
tax provisions of section 280G of the Code. To the extent it is
so considered, the participant may be subject to a 20% excise tax
and the Company may be denied a tax deduction.
Other Information
The Plan shall become effective as of August 13, 1998,
subject to its approval by the stockholders. Approval of the
Plan requires the affirmative vote of a majority of the shares of
Common Stock present or represented by proxy and entitled to vote
at the Meeting.
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors recommends that the stockholders
ratify the appointment of Deloitte & Touche LLP to serve as the
independent auditors for the Company and its subsidiary
corporations for the fiscal year ending March 31, 1999. This
firm has served as the independent auditors for the Company since
1983. Representatives of Deloitte & Touche LLP are expected to
be present at the annual meeting and will have an opportunity to
make a statement and will be available to respond to appropriate
questions.
<PAGE>
ADDITIONAL INFORMATION
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER
OF THE COMPANY, AND TO EACH PERSON REPRESENTING THAT AS OF THE
RECORD DATE FOR THE MEETING HE OR SHE WAS A BENEFICIAL OWNER OF
SHARES ENTITLED TO BE VOTED AT THE MEETING, IF SOLICITED BY
WRITTEN REQUEST, A COPY OF THE COMPANY'S 1998 ANNUAL REPORT ON
FORM 10-K TO THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING
THE FINANCIAL STATEMENTS. SUCH WRITTEN REQUESTS SHOULD BE
DIRECTED TO AIR TRANSPORTATION HOLDING COMPANY, INC., 3524
AIRPORT ROAD, MAIDEN, NORTH CAROLINA 28650, ATTENTION: MR. JOHN
J. GIOFFRE, SECRETARY.
OTHER MATTERS
The Board of Directors knows of no other matters that may be
presented at the meeting.
<PAGE>
AIR TRANSPORTATION HOLDING COMPANY, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 13, 1998
AND
INFORMATION STATEMENT
<PAGE>
JULY 15, 1998
