<PAGE>
SCHEDULE 14C INFORMATION
Information Statement Pursuant
to Section 14(c) of the
Securities Exchange Act of 1934
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for use of the Commission
only (as permitted by Rule 14c 5(d)(2))
[ ] Definitive Information Statement
AIR TRANSPORTATION HOLDING COMPANY, INC.
(Name of Registrant As Specified In Charter)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules
14c-5(g) 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:
________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________
(5) Total fee paid:
________________________________________________________________________
[ ] Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the
offsetting fee was paid previously.
Identify the previous filing by
registration statement number, or the form
or schedule and the date of its filing.
(1) Amount Previously Paid:
_________________________________________
(2) Form, Schedule or Registration Statement
No.:
_________________________________________
(3) Filing Party:
_________________________________________
(4) Date Filed:
_________________________________________
</page>
<PAGE>
AIR TRANSPORTATION HOLDING COMPANY, INC. NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD AUGUST 11, 1999
To Our Stockholders:
The annual meeting of stockholders of Air Transportation Holding Company,
Inc. (the "Company") will be held at One IndependenceCenter, 101
North Tryon Street, Suite 1900, Charlotte, North Carolina on Wednesday,
August 11, 1999 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 an amendment to the Air Transportation Holding
Company, Inc. 1998 Omnibus Securities Award Plan to increase
by 200,000 the number of shares authorized to be issued under
such plan;
3.To approve an amendment to the Company's Certificate of
Incorporation to change the Company's name to "AirT, Inc."
4.To ratify the appointment of Deloitte & Touche LLP as the
independent auditors of the Company for the current fiscal
year; and
5.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,
1999 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 14, 1999
</page>
<PAGE>
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 Wednesday, August 11, 1999 at 10:00 a.m. at One Independence
Center, 101 North Tryon Street, Suite 1900, Charlotte, North Carolina.
Action will be taken at the annual meeting for the election of
directors, increase in the number of shares authorized under the
Company's 1998 Omnibus Securities Award Plan, approval of an amendment
to the Company's Certificate of Incorporation to change the Company's
name to "AirT, Inc.", 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 14, 1999. The Company's 1999 Annual Report to Stockholders
accompanies this information statement.
VOTING SECURITIES
Only stockholders of record at the close of business on July 1, 1999
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 2,764,653. 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 amendment to the
Company's Certificate of Incorporation to change the Company's name
requires the affirmative vote of a majority of the shares of Common Stock
outstanding. Accordingly, an abstention and a broker non-vote will
have the same effect as a negative vote on this matter. The approval of
the amendment to the 1998 Omnibus Securities Award Plan, 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
</page>
<PAGE>
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.
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, 1999 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 Percent
Title of Name and address of Beneficial Owners of
Class Beneficial Owners as of May 1, 1999 Class
Common Stock,
par value $.25
per share Walter Clark and Caroline Clark,
Executors(1) P.O. Box 488
Denver, North Carolina 28650 1,288,716(1) 46.6%
William H. Simpson
P.O. Box 488
Denver, North Carolina 28650 261,580(2) 9.4%
_____________________________
(1) Includes 1,279,272 shares controlled by such individuals as
the executors of the estate of David Clark, 7,222 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 24,000
shares under options granted by the Company.
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. As provided in the Company's bylaws, up to ten directors may be
elected.
</page>
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
J. Hugh Bingham, age 53, 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 director of CSA.
Walter Clark, age 42, 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 55, has served as Vice PresidentFinance
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 62, was elected a director in August 1994
and joined the Company as a Vice President in April 1997. From June
1995 until April 1997, Mr. Martin was 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.
William H. Simpson, age 51, 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 20,
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 47, has served as Vice President of MAC since
1984, and in various other capacities at MAC since 1979.
Claude S. Abernethy, Jr., age 72, 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 IJL Wachovia Securities, a securities
brokerage and investment banking firm, and its predecessor. Mr.
Abernethy is also a director of Carolina Mills, Inc. and Ridgeview
Incorporated.
Sam Chesnutt, age 65, was elected a director of the Company in
August 1994. Mr. Chesnutt serves as President of Sam Chesnutt and
Associates, an agribusiness </page><PAGE>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 43, has served as a director of the Company
since May 1997. Mr. Clark is self-employed in the real estate
development business since 1987.
Herman A. Moore, age 69, was elected a director of the Company
on June 22, 1998. Mr. Moore is the president of Herman A. Moore &
Assoc., Inc., a real estate development company.
George C. Prill, age 76, 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. Allison Clark and Walter Clark are
brothers.
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. Pursuant to the Company's
1998 Omnibus Securities Award Plan (the "Plan"), upon approval of the Plan
by the Company's stockholders, each director who is not an employee of
the Company received an option to purchase 1,000 shares of Common Stock
at an exercise price of $6.375 per share (the closing bid price per share
on the date of stockholder approval of the Plan.) The Plan provides for a
similar option award to any director first elected to the board after the
date the stockholders approved the Plan. Such options expire ten years
after the date they were granted.
The Board of Directors has two standing committees: the
Audit Committee and the Compensation Committee. The Audit
Committee consists of Messrs. Abernethy, Chesnutt and Moore each of whom
is not an employee of the Company. The Audit Committee met once 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.
The Compensation Committee, which met four times during the most
recent fiscal year, consists 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.
</page>
<PAGE>
During the fiscal year ended March 31, 1999, 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,
except for Messrs. Abernethy and Moore.
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, 1999. 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, 1999
Name Position with Company No. of Shares Percent
J. Hugh Bingham President, Chief Operating
Officer, Director 119,080(1)(2) 4.3%
Walter Clark Chairman of the Board
of Directors and Chief
Executive Office 1,286,494(3) 46.5%
John J. Gioffre Vice President-Finance,
Secretary and Treasurer,
Director 57,580(4) 2.1%
J. Leonard Martin Vice President,
Director 100(5) *
William H. Simpson Executive Vice
President, Director 261,580(1)(6) 9.4%
Claude S.
Abernethy, Jr. Director 23,611(7) *
Sam Chesnutt Director 9,600(7) *
Allison T. Clark Director 3,222(7) *
Herman A. Moore Director 31,000(7) 1.1%
George C. Prill Director 46,966(7) 1.7%
All directors and
executive officers
as a group (11
persons) N/A 1,853,033(8) 66.1%
__________________________________________
* Less than one percent.
(1) Includes 1,200 shares jointly held by Messrs. Simpson and
Bingham.
(2) Includes 6,000 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 4,000 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.
(6) Includes 24,000 shares under options granted by the Company
to Mr. Simpson.
(7) Includes 1,000 shares under options granted by the Company.
(8) Includes an aggregate of 39,000 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 the Company's Chief Executive
Officer and to the four other executive officers on March 31, 1999 with total
compensation of $100,000 or more.
</page>
<PAGE>
SUMMARY COMPENSATION TABLE
Long-term
Annual Compensation Awards
Name and principal Compensation Securities underlying
Position Year Options(#)
Salary($) Bonus($)
Walter Clark (1) 1999 132,527 20,900 -
Chief Executive Officer 1998 76,236 10,000 -
1997 - - -
J. Hugh Bingham 1999 203,774 20,900 9,000
Senior Vice President 1998 184,445 70,721 -
1997 148,289 50,222 -
John J. Gioffre 1999 128,297 15,675 9,000
Vice President 1998 127,142 52,641 -
1997 121,208 37,667 -
J. Leonard Martin (2) 1999 129,955 4,000 9,000
Vice President 1998 117,751 15,953 -
1997 - - -
William H. Simpson 1999 204,008 20,900 -
Executive Vice President 1998 195,809 70,721 -
1997 186,299 50,222 -
______________________________________
(1) Mr. Walter Clark commenced his employment in April 1997.
(2) Mr. Martin commenced his employment in April 1997.
The following table sets forth, for each of the executive officers
listed in the Summary Compensation Table information with respect to
grants of options to purchase Common Stock made by the Company to such
executive officers during the fiscal year ended March 31, 1999, as well as a
calculation of the potential realizable value based upon assumed annual
rates of stock price appreciation of five and ten percent per year.
</page>
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Potential
Grants Realizable value at
Number Percent of Assumed
Of Total Annual rates
Securities Options Price of stock price
Underlying Employees or Appreciation
Options in Base for Option
Granted Fiscal Price Expiration Term (1)
Name (#) Year ($/SH) Date 5%($) 10%($)
Walter Clark - - - - - -
J. Hugh Bingham 9,000 5.73 2.75 3/19/03 5,334 11,487
John J. Gioffre 9,000 5.73 2.75 3/19/03 5,334 11,487
J. Leonard Martin 9,000 5.73 2.75 3/19/03 5,334 11,487
William H. Simpson - - - - - -
_________________
(1)The options were granted pursuant to the Company's 1998 Omnibus
Securities Award Plan (the "Plan"). Options become exercisable with
respect to one-third of the total number of
shares each year beginning on the first anniversary of the date of
grant. In addition, upon a "change in control" of
the Company, as defined in the Plan, the options become
immediately exercisable. The options expire four years after the
date of grant. In addition, the options expire
immediately upon the termination of employment, other than
termination by the Company without cause or as a result of death,
permanent disability or retirement after age 55 with the consent of
the Company. Options expire three months after termination of
employment without cause, one year after death, permanent disability or
retirement after age 55 with the consent of the Company.
</page>
<PAGE>
(2) These amounts, based on the assumed 5% and 10%
appreciation rates prescribed by the Securities and Exchange
Commission rules, are not intended to forecast possible future
appreciation, if any, of the price of the Common Stock and may not
reflect the actual value ultimately realized by recipients of the
options.
The following table sets forth, for each of the executive officers
listed in the Summary Compensation Table who exercised options to purchase
shares of Common Stock during the most recent fiscal year, the number
of shares purchased and the value realized upon exercise, which is
determined based on the
aggregate fair market value of the shares at the time of the exercise
minus the aggregate exercise price. The table also sets forth the number
of shares of Common Stock underlying unexercised options at March 31, 1999
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, 1999 based upon the closing bid price of the Company's
Common Stock in the overthe-counter market on that date ($3.625 per
share) and the exercise price of the options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
Shares Number of Securities Value of Unexercised
Acquired Value UnderlyingUnexercised In-the-MoneyOptions
On Realized Options at FY-End (#) at FY-End ($)
Name Exercise ($) Exer- Unexer- Exer- Unexer-
# Cisable cisable cisable cisable
Walter Clark - - - - - -
J. Hugh Bingham 32,000 35,000 6,000 9,000 14,250 7,875
John J. Gioffre 16,000 18,000 4,000 9,000 9,500 7,875
J. Leonard Martin - - - 9,000 - 7,875
William H. Simpson 28,000 30,000 24,000 - 61,000 -
EMPLOYMENT AGREEMENTS
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
</page>
<PAGE>
15 days after the Company files its Annual Report on Form 10-K with
the Securities and Exchange Commission.
The initial term of each such employment agreement expires on March
31, 1999, and the term is automatically extended for additional one-year
terms unless either such executive officer or the Company's Board of
Directors gives notice to terminate automatic extensions which must be
givenby December 1 of each year (commencing with December 1, 1996).
Each such agreement provides that upon the executive officer's
retirement, he shall be entitled to receive an annual benefit equal
$75,000 ($60,000 for Mr. Gioffre), reduced by three percentfor 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 ofthe 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.
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
</page>
<PAGE>
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 four 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
three components: base salary, annual cash
bonuses and stock option awards. In setting an
executive officer's base salary, the Compensation
Committee engages in a 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.
</page>
<PAGE>
In addition, during the most recent fiscal year, the
Company awarded executive officers and other
employees bonuses
under the Company's 1998 Omnibus Securities Award
Plan. Because the Company has not awarded stock
options to its employees in the several years, and
then awarded options only to executive officers,
option awards were fairly uniformly distributed
among the key employees of the Company, with each
executive officer (other than the Chief Executive
Officer and the Executive Vice President) receiving
9,000 options. These options vest in equal one-
third increments over three years and expire four
years after they were awarded. No options were
awarded to the Company's Chief Executive Officer
in light of his substantial existing beneficial
ownership. 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
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. The Committee
believes that the scope and his performance of his
responsibilities, would justify a higher level of
compensation to Mr. Walter Clark.
Compensation Committee
Claude S. Abernethy,
Jr. Sam Chesnutt
George C. Prill
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
The following graph compares the Company's
cumulative total shareholder return at the end of
the five most recent fiscal years, assuming an
investment on March 31, 1994 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 two peer indices. The
Company has historically presented in its stockholder
communications a selfconstructed peer index that
includes all U.S. companies with stock registered
with the Securities and Exchange Commission that list
the code for overnight package delivery as their
primary standard industrial classification code.
The Company is presenting a second, more
diversified, peer index this year-the CRSP Nasdaq
Trucking & Transportation Index-in light of the
increasing significance of the Company's aviation
ground support equipment and aviation
</page>
<PAGE>
related parts brokerage and overhaul services
businesses. The Company intends to present a
comparison to the Nasdaq Trucking &
Transportation Index in future years.
(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: 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. Moore was
late in filing a Form 4 report with respect to
his acquisition of shares in February 1999.
ADOPTION OF 1998 OMNIBUS SECURITIES AWARD PLAN
On June 21, 1999, the Board of Directors
adopted, subject to the approval of the
stockholders, an amendment to the Air
Transportation Holding Company, Inc. 1998 Omnibus
Securities Award Plan (the "Plan"). The Plan
was adopted by the stockholders at the Company's
1998 annual meeting. The amendment approved by the
Board will increase the number of shares that may be
issued under the Plan from 165,000 to 365,000.
Options for all 165,000 shares authorized under the
Plan have been awarded. By increasing the number of
shares available under the Plan, the Company can
continue to use the Plan to allow it 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.
The following discussion describes the Plan as it is
proposed to be amended by the Board of Directors.
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-
</page>
<PAGE>
employee directors ("Nonemployee Directors") upon
the initial approval of the Plan in 1998 or
upon a director's initial election to the Board
thereafter. The Plan also Nonemployee Directors to
elect to take their 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 Common Stock on
the date of the grant. The last sale of the
Common Stock on June 18, 1999 was at $5.125 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
fairmarket 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.
</page>
<PAGE>
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.
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.
</page>
<PAGE>
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.
Director Formula Options and Deferral Options.
The Plan
provides for the grant, upon a Nonemployee Director's
election at the 1998 annual meeting of
stockholders 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 365,000 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.
</page>
<PAGE>
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 Nonemployee Directors are eligible to
receive Formula Options and Deferral Options.
There are currently five Nonemployee Directors,
each of whom received a Formula Option for 1,000
shares of Common Stock upon initial stockholder
approval of the Plan at the 1998 annual meeting of
stockholders. 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
</page>
<PAGE>
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 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 longterm 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
</page>
<PAGE>
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 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
Approval of the proposed amendment to 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.</page>
<PAGE>
APPROVAL OF AMENDMENT TO COMPANY'S
CERTIFICATE OF INCORPORATION TO CHANGE NAME
On April 30, 1999, the Board of Directors
adopted a resolution to amend the Company's
Certificate of Incorporation to change the Company's
name to "AirT, Inc." Although the Company has used
its current name for over 15 years, the November
1997 name change by a company formerly known as
ValuJet, Inc. to
"AirTran Holdings, Inc." and the similarity
in business
operations of the two companies-AirTran Holdings,
Inc. operates a passenger airlines--has resulted
in substantial confusion. Almost daily, the
Company receives multiple telephone calls and
correspondence intended to be directed to AirTran
Holdings, Inc. Although the Company has requested
that AirTran Holdings, Inc. change its name to
eliminate this confusion, AirTran Holdings, Inc.
appears unwilling to do so voluntarily. Because the
Company does not operate any consumer business
using the "Air
Transportation Holding Company" name and is known by
many simply as "AirT," the Board of Directors
believes that changing the Company's name to
"AirT," rather than pursuing any legal remedy the
Company may have, is the most cost-appropriate
means of
eliminating this confusion.
Accordingly, the Board of Directors
recommends that the stockholders approve the
following resolution:
"RESOLVED, that the Certificate of
Incorporation
of Air Transportation Holding Company, Inc. be amended
to change the name of the Company to `AirT, Inc.' and
that Article 1 of the Certificate of Incorporation be
amended to read in its entirety as follows: `The name
of the Corporation is AirT, Inc.'"
Approval of this amendment requires the affirmative vote of a
majority of the outstanding shares of Common Stock of the
Company.
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, 2000. 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.
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 </page><PAGE>TO BE VOTED AT THE MEETING, IF
SOLICITED BY WRITTEN REQUEST, A COPY OF THE COMPANY'S 1999 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>
<PAGE>
AIR TRANSPORTATION HOLDING COMPANY, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
AUGUST 11, 1999
AND INFORMATON STATEMENT
JULY 14, 1999
</page>
