<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
HAWAIIAN AIRLINES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
HAWAIIAN AIRLINES, INC.
3375 KOAPAKA STREET, SUITE G-350
HONOLULU, HAWAII 96819
Dear Fellow Shareholder:
On behalf of the Board of Directors of Hawaiian Airlines, Inc. (the
"Company"), it is our pleasure to invite you to attend the Company's 1998 Annual
Meeting of Shareholders.
The meeting will be held at the Royal Hawaiian Hotel, 2259 Kalakaua
Avenue, Honolulu, Hawaii, in the Regency Room, on Monday, June 29, 1998 at 10:00
a.m., Hawaii standard time. At the meeting, in addition to acting on the
matters described in the attached Proxy Statement, we will report on the
Company's activities during fiscal year 1997. There will also be an opportunity
to discuss matters of interest to you as a shareholder.
It is important that your shares be represented and voted at the
Annual Meeting. Please sign and date the enclosed proxy card and return it in
the enclosed, self-addressed envelope. The proxy card should be returned even
if you plan to attend the meeting in person. Returning your executed proxy card
will not affect your right to attend the meeting and vote your shares in person.
We urge you to take a moment now to sign, date and mail your proxy.
If you will need special assistance at the Annual Meeting because of a
disability, please contact Ms. Audrey Yuh, Investor Relations, Hawaiian
Airlines, Inc., P.O. Box 30008, Honolulu, Hawaii 96820.
Members of your Board of Directors and management look forward to
greeting those shareholders who are able to attend the Company's Annual Meeting.
For additional information about the Company, we are pleased to provide to you
the enclosed 1997 Annual Report. We invite you to visit the Company's updated
interactive website at < www.hawaiianair.com >.
On behalf of the Board of Directors, thank you for your support and
continued interest in the Company.
John W. Adams Paul J. Casey
Chairman of the Board President and Chief Executive Officer
Honolulu, Hawaii
May 22, 1998
<PAGE>
HAWAIIAN AIRLINES, INC.
3375 KOAPAKA STREET, SUITE G-350
HONOLULU, HAWAII 96819
-------------------------------
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD JUNE 29, 1998
-------------------------------
TO THE SHAREHOLDERS OF HAWAIIAN AIRLINES, INC.:
Notice is hereby given that the 1998 Annual Meeting of Shareholders of
Hawaiian Airlines, Inc. (the "Company") will be held at the Royal Hawaiian
Hotel, 2259 Kalakaua Avenue, Honolulu, Hawaii, in the Regency Room, on Monday,
June 29, 1998 at 10:00 a.m., Hawaii standard time, for the following purposes:
1. To elect eleven directors;
2. To ratify an amendment to the Company's 1996 Stock Incentive
Plan, As Amended; and
3. To transact such other business as may properly come before the
Annual Meeting or any adjournments or postponements thereof.
Only holders of record of the Company's Common Stock and Special
Preferred Stock at the close of business on April 30, 1998 will be entitled to
notice of and to vote at the Annual Meeting and any adjournments or
postponements thereof.
By Order of the Board of Directors
Lyn Flanigan Anzai
Vice President, General Counsel
and Corporate Secretary
Honolulu, Hawaii
May 22, 1998
YOUR VOTE IS IMPORTANT. ACCORDINGLY, PLEASE COMPLETE, SIGN, DATE AND RETURN THE
ACCOMPANYING PROXY CARD IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES.
YOUR ATTENTION IS DIRECTED TO THE PROXY STATEMENT
WHICH APPEARS ON THE FOLLOWING PAGES.
2
<PAGE>
HAWAIIAN AIRLINES, INC.
3375 KOAPAKA STREET, SUITE G-350
HONOLULU, HAWAII 96819
----------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
JUNE 29, 1998
----------------------------
This Proxy Statement and the accompanying Notice of Annual Meeting of
Shareholders and proxy card are being mailed on or about May 22, 1998 in
connection with the solicitation of proxies by the Board of Directors of
Hawaiian Airlines, Inc., a Hawaii corporation ("HAWAIIAN AIRLINES" or the
"COMPANY"), for use at the 1998 Annual Meeting of Shareholders of the Company
(the "ANNUAL MEETING") to be held at the Royal Hawaiian Hotel, 2259 Kalakaua
Avenue, Honolulu, Hawaii, in the Regency Room, on Monday, June 29, 1998 at 10:00
a.m., Hawaii standard time, and at any adjournment or postponement thereof.
The cost of soliciting proxies will be borne by the Company, including
the expense of preparing, assembling, printing and mailing this Proxy Statement
and the material used in this solicitation of Proxies. It is contemplated that
Proxies will be solicited principally through the mails, but directors, officers
and regular employees of the Company may solicit Proxies personally or by
telephone. Although there is no formal agreement to do so, the Company may
reimburse banks, brokerage houses and other custodians, nominees and fiduciaries
for their reasonable expenses in forwarding these proxy materials to their
principals.
VOTING RIGHTS AND PROCEDURES
VOTING STOCK
The Board of Directors has set April 30, 1998, as the record date for
the determination of shareholders entitled to notice of, and to vote at, the
Annual Meeting. Holders of record at the close of business on April 30, 1998
(the "RECORD DATE") of Common Stock and of Series B Special Preferred Stock,
Series C Special Preferred Stock, Series D Special Preferred Stock and Series E
Special Preferred Stock (collectively the "SPECIAL PREFERRED STOCK") are
entitled to notice of and to vote as a single class at the Annual Meeting and
any adjournment or postponement thereof. On the Record Date, 40,651,047 shares
of Common Stock, four shares of Series B Special Preferred Stock, one share of
Series C Special Preferred Stock, one share of Series D Special Preferred Stock
and one share of Series E Special Preferred Stock were issued and outstanding
and entitled to vote. Each outstanding share of Common Stock and Special
Preferred Stock entitles the holder thereof to one vote.
VOTING BY PROXY
A proxy card ("PROXY") for use at the Annual Meeting is enclosed. Any
shareholder who executes and delivers a Proxy has the right to revoke it at any
time before it is voted by filing an instrument revoking it or a duly executed
Proxy bearing a later date with the Corporate Secretary of the Company. It also
may be revoked by attending the Annual Meeting and voting in person. Subject to
such revocation, all shares represented by a properly executed Proxy received
prior to or at the Annual Meeting will be voted by the proxy holders whose names
are set forth in the
3
<PAGE>
accompanying Proxy (the "PROXY HOLDERS") in accordance with the instructions on
the Proxy. If no instruction is specified with respect to a Proposal, the
shares represented by the Proxy will be voted FOR such Proposal (and, in the
case of Proposal 1, FOR the nominees for director identified in this Proxy
Statement). It is not anticipated that any matters will be presented at the
Annual Meeting other than as set forth in the accompanying Notice of Annual
Meeting of Shareholders. If, however, any other matters properly are presented
at the Meeting, the Proxy will be voted in accordance with the best judgment and
in the discretion of the Proxy Holders.
QUORUM AND VOTING REQUIREMENTS
The presence, in person or by proxy, at the Annual Meeting of the
holders of a majority of the shares of Common Stock and Special Preferred Stock
issued and outstanding as of the Record Date, counted as a single class, will
constitute a quorum for transacting business. The election of each director
requires the vote of the majority of the shares of Common Stock and Special
Preferred Stock represented in person or by proxy at the Annual Meeting, voting
as a single class. Approval of the amendment to the 1996 Stock Incentive Plan,
As Amended requires the vote of the majority of shares of Common Stock and
Special Preferred Stock issued and outstanding on the Record Date, voting as a
single class. Abstentions and broker non-votes are each included in the
determination of the number of shares present and voting, for purposes of
determining the presence or absence of a quorum for the transaction of business.
Neither abstentions nor broker non-votes are counted as voted either for or
against a proposal. Except as otherwise stated herein, provided a quorum is
present, the affirmative vote of the holders of a majority of the shares
entitled to vote on, and voted for or against, the matter is required to approve
any vote.
GENERAL INFORMATION
CONTROL OF THE COMPANY
Airline Investors Partnership, L.P. ("AIP") beneficially owns
18,181,818 shares of the Company's Common Stock and four shares of the Company's
Series B Special Preferred Stock. As of April 30, 1998, AIP beneficially owned
44.7% of the Company's outstanding Common Stock on a fully diluted basis.
Pursuant to the Company's Amended Bylaws (the "BYLAWS"), AIP has the right to
nominate six nominees for election to the Board of Directors so long as it is
the holder of one or more shares of Series B Special Preferred Stock and at
least 35% of the outstanding Common Stock on a fully diluted basis.(1)
Pursuant to the Bylaws and the collective bargaining agreements with
the Company's principal labor unions, each of the Association of Flight
Attendants ("AFA"), the International Association of Machinists and Aerospace
Workers (AFL-CIO) ("IAM") and the Air Line Pilots Association International
("ALPA") has the right to nominate one nominee for election to the Board so long
as it is the holder of record of one share of the Series C, Series D and Series
E Special Preferred Stock, respectively. Of the two remaining directors, one is
required to be an outside director and one is required to be a senior management
official of the Company. AIP has agreed with each of the labor unions that so
long as the right to nominate one nominee for election to the Board is in the
labor union's collective bargaining agreement, AIP will vote its shares in favor
of such union's nominee for the Board of Directors.
- --------------------
(1) AIP's right to nominate directors will be reduced to five so long as it
retains 25% of such Common Stock, reduced to four so long as it retains 10%
of such Common Stock, and reduced to three so long as it retains 5% of such
Common Stock. Thereafter, AIP will not have the right to nominate any
individuals to the Board unless it reacquires at least 5% of such Common
Stock within 365 days. To the extent Board members are not required to be
nominated by AIP because of the reductions in its stock holdings, such Board
members are to be outside directors, defined as directors who are not
employed by the Company and not affiliated with the Company's labor unions,
AIP or American Airlines, Inc.
4
<PAGE>
SECURITIES OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information relating to the beneficial
ownership, as of April 30, 1998, of the Company's voting stock of each person
known to the Company to be the beneficial owner of more than five percent of the
outstanding shares of Common Stock, Series B Special Preferred Stock, Series C
Special Preferred Stock, Series D Special Preferred Stock and Series E Special
Preferred Stock. This table also lists the beneficial ownership, as of April
30, 1998, of the Company's Common Stock by each of the directors, by each of the
Named Executive Officers (see "Executive Compensation"), and by all directors
and executive officers as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES(1) PERCENT AND CLASS OF STOCK
- ------------------------------------------------------ ------------------------------- ----------------------------------------
<S> <C> <C>
AIP General Partner, Inc. 18,181,818(2) 44.7% of Common Stock
885 Avenue of the Americas
34th Floor 4(2) 100% of Series B Special Preferred Stock
New York, New York 10022
Airline Investors Partnership, L.P. 18,181,818(2) 44.7% of Common Stock
885 Avenue of the Americas
34th Floor 4(2) 100% of Series B Special Preferred Stock
New York, New York 10022
Association of Flight Attendants 1 100% of Series C Special Preferred Stock
1625 Massachusetts Avenue, N.W.
Washington, DC 20036-2212
Attn.: David Borer, Esq.
International Association of Machinists and 1 100% of Series D Special Preferred Stock
Aerospace Workers
P.O. Box 3141
South San Francisco, California 94083
Attn.: Ken Thiede
Hawaiian Master Executive Council 1 100% of Series E Special Preferred Stock
c/o Air Line Pilots Association
5959 West Century Boulevard, Suite 576
Los Angeles, California 90045
Attn.: Master Chairman, Hawaiian MEC
Amber Arbitrage LDC(13) 4,667,672 11.5% of Common Stock
c/o Customer House Fund Management
Limited
31 Kildare Street, Dublin 2,
Ireland
John W. Adams 18,262,643(2) 44.9% of Common Stock
4(2) 100% of Series B Special Preferred Stock
Paul J. Casey 450,000(3) Common Stock*
Todd G. Cole 22,000(4)(5) Common Stock*
Robert G. Coo 22,765(4)(5) Common Stock*
William Boyce Lum 116,000(4)(5) Common Stock*
Reno F. Morella 5,731(6)(7) Common Stock*
Arthur J. Pasmas 45,300(5) Common Stock*
Samson Poomaihealani 16,000(4)(5) Common Stock*
Edward Z. Safady 34,000(4)(5) Common Stock*
Sharon L. Soper 1,165(6)(8) Common Stock*
Thomas J. Trzanowski 9,000(5)(9) Common Stock*
John L. Garibaldi 365,000(10) Common Stock*
Peter W. Jenkins 80,000(11) Common Stock*
Michael J. McQuay 51,000(12) Common Stock*
All directors and executive officers as a group 20,134,611 47.7% of Common Stock
including those named above (23 persons)
</TABLE>
5
<PAGE>
(1) Each executive officer and director has sole voting and investment power
with respect to the shares listed after his or her name except for shares
issued to the Hawaiian Airlines, Inc. 401(k) Savings Plan (the "SAVINGS
PLAN"), the Hawaiian Airlines, Inc. 401(k) Plan for Flight Attendants (the
"FLIGHT ATTENDANTS 401(K) PLAN") and the Hawaiian Airlines, Inc. Pilots'
401(k) Plan (the "PILOTS' PLAN") or as otherwise indicated below. The
Savings Plan, the Flight Attendants 401(k) Plan and the Pilots' Plan are
collectively referred to as the "Plans". The shares owned by each person,
or by the group, and the shares included in the total number of shares
outstanding have been adjusted, and the percentages owned (where the
percentage exceeds 1%) have been computed in accordance with Rule
13d-3(d)(1) under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"). Shares of the Common Stock allocated to participants'
accounts in each of the Plans are voted by the Vanguard Group, Inc. as
Trustee for each of the respective Plans ("Trustee"), pursuant to written
directions of the participants, on matters presented at meetings of
shareholders; shares with respect to which no participant directions are
received are voted according to the direction of the majority of number of
shares for which the Trustee receives written directions; and unallocated
shares are voted by fiduciaries designated by the respective Plans.
(2) The shares reported as owned by Airline Investors Partnership, L.P., of
which AIP General Partner, Inc. is its general partner and John W. Adams
is the sole shareholder of AIP General Partner, Inc., include the shares
reported as beneficially owned by AIP General Partner, Inc. and by John
W. Adams. According to their Schedule 13D dated January 31, 1996,
Airline Investors Partnership, L.P., AIP General Partner, Inc. and John
W. Adams exercise sole voting and dispositive power with respect to all
18,181,818 shares of Common Stock and all four shares of Series B
Special Preferred Stock. The shares reported as owned by Mr. Adams
include options to purchase 25,000 shares granted on November 1, 1996
under the Company's 1996 Nonemployee Director Stock Option Plan, which
options were fully vested and exercisable on May 1, 1997, and 25,000
shares granted on February 27, 1998 under the 1996 Stock Incentive Plan,
As Amended which options will be fully vested and will mature on August
27, 1998 and expire on February 27, 2008.
(3) Includes a) options to purchase 150,000 shares of Common Stock granted as
of February 28, 1997, of which 50,000 options vested on April 14, 1998 and
50,000 options will vest on each of April 14, 1999 and April 14, 2000 and
expire pro rata on April 14 of each of 2003, 2004, and 2005, and b)
options to purchase 300,000 shares of the Company's Common Stock granted on
February 27, 1998, which options will be fully vested and mature pro rata
on February 27 of each of 1999, 2000, 2001, and 2002 and will expire on
February 27, 2008. All such options are granted pursuant to the Company's
1996 Stock Incentive Plan, As Amended.
(4) Includes options to purchase 8,000 shares of Common Stock under the 1996
Nonemployee Director Stock Option Plan which options were fully vested and
exercisable on May 1, 1997.
(5) Includes the February 27, 1998 grant of options to purchase 8,000 shares
under the 1996 Nonemployee Director Stock Option Plan which options will be
fully vested and exercisable on August 28, 1998 and will expire on February
27, 2008.
(6) An investment in the Flight Attendants 401(k) Plan, the Pilots' Plan or
Savings Plan using a unit value accounting method, similar to a mutual
fund. To determine the equivalent number of whole shares represented by
the fund units, the market value of the shareholder's balance in the
Pilots' Plan, the Flight Attendants 401(k) Plan, or the Savings Plan was
divided by the share price of the Company's Common Stock.
(7) Includes 4,255 shares issued to Mr. Morella's account in the Pilots' Plan.
(8) Consists entirely of Ms. Soper's account in the Flight Attendants 401(k)
Plan.
(9) Includes 1,000 shares beneficially owned by Mr. Trzanowski's wife.
(10) Consists entirely of a) fully vested and exercisable options to purchase
7,500 shares of Common Stock granted on May 1, 1996 under the 1994 Stock
Option Plan, as amended (the "1994 Stock Option Plan"), and expiring on May
1, 2006; b) 57,500 shares of Common Stock acquired pursuant to the exercise
of options granted under the 1996 Stock Incentive Plan, As Amended in
connection with the Rights Offering; c) the August 12, 1996 grant of
options to purchase 100,000 shares of Common Stock under the 1996 Stock
Incentive Plan, As Amended of which 28,000 options vested on August 12,
1997, 28,000 will vest on each of August 12, 1998 and August 12, 1999 and
the remaining 16,000 will vest on August 12, 2000 and which options will
expire on August 12 of each of 2001, 2002, 2003, and 2004; and d) the
February 27, 1998 grant of options to purchase 200,000 shares of Common
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<PAGE>
Stock under the 1996 Stock Incentive Plan, As Amended which will be fully
vested and will mature pro rata on February 27 of each of 1999, 2000, 2001,
and 2002 and will expire on February 27, 2008.
(11) Consists entirely of a) fully vested and exercisable options to purchase
40,000 shares of Common Stock granted on February 2, 1995 under the 1994
Stock Option Plan which expire on June 12, 1998, the date six months after
Mr. Jenkins' resignation from the Company; and b) 40,000 shares of Common
Stock acquired pursuant to the exercise of options granted under the 1996
Stock Incentive Plan, As Amended in connection with the Rights Offering.
(12) Includes 50,000 shares of Common Stock acquired pursuant to the exercise of
options granted under the 1996 Stock Incentive Plan, As Amended in
connection with the Rights Offering. Due to Mr. McQuay's resignation from
the Company, effective November 30, 1997, certain options previously
granted to Mr. McQuay failed to vest and were forfeited.
(13) On May 13, 1998, the Company received a Schedule 13G filed with the
Securities and Exchange Commission on May 4, 1998 in respect of
ownership of an aggregate of 4,667,672 shares of Common Stock by Amber
Arbitrage LDC ("Amber"). Amber reported sole voting power and sole
dispositive power with respect to all such shares. The Company has not
attempted to verify independently any of the information contained in
the Schedule 13G.
*less than 1%
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<PAGE>
OTHER MATTERS INVOLVING DIRECTORS AND EXECUTIVE
OFFICERS
All officers are appointed annually by the Board of Directors at the
Board of Directors' first meeting after the annual meeting of the shareholders
at which the Board of Directors is elected. No executive officer or director of
the Company bears any relationship by blood, marriage or adoption to any other
executive officer or director, except that Mr. Adams is related to Mr. Coo and
Mr. Lum, each through marriage.
COMPENSATION OF DIRECTORS
For their service as directors of the Company for fiscal year 1997,
the outside, nonemployee directors were entitled to a $12,000 retainer fee. Mr.
Adams, Mr. Casey, Mr. Morella and Mr. Nobles received only reimbursement for
expenses incurred in attending meetings due to their employee status.
In addition to the $12,000 annual retainer fee, outside Directors of
the Company were entitled to receive a fee of $1,250 for each meeting of the
Board of Directors attended (decreased to $625 for each telephonic meeting) and
a fee of $500 for each committee meeting attended. The Company provided travel
to and from Board meetings, as well as hotel accommodations for one night, meals
and ground transportation, as needed.
In February 1997, in light of the services that Mr. Adams, as an
executive officer and Chairman of the Board of Directors, has been and is
providing to the Company, the Compensation Committee approved an annual salary
of $200,000 beginning with the 1997 calendar year.
Nonemployee directors of the Company are also eligible to receive
stock options under the terms of the 1996 Nonemployee Director Stock Option
Plan. At its discretion, the Board of Directors can grant stock options to
nonemployee directors under the terms of such plan. No such options were
granted to nonemployee directors during 1997. In February of 1998, the Board of
Directors granted to each nonemployee director of the Company options to
purchase 8,000 shares of Common Stock at an exercise price of $3.50 per share.
8
<PAGE>
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth certain
information regarding compensation paid for the last three fiscal years to the
Company's Chief Executive Officer and its four other most highly compensated
executive officers ("Named Executive Officers") whose salary and bonus exceeded
$100,000 in the 1997 fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
--------------
Securities
Name and Principal Salary Bonus Other Annual Underlying
Position Year ($) ($) Compensation Options
--------------- -------- -------- -------- -------------- ------------
<S> <C> <C> <C> <C> <C>
John W. Adams 1997 200,000 -- -- --
Chairman of the Board 1996 -- -- -- --
1995 -- -- -- --
Paul J. Casey(1) 1997 214,773(4) 70,000 (5) 150,000
President and CEO 1996 -- -- -- --
1995 -- -- -- --
John L. Garibaldi 1997 230,000 -- (5) --
Executive Vice President 1996 145,492(4) 30,000 (5) 165,000(6)(7)
and Chief Financial Officer 1995 -- -- -- --
Michael J. McQuay 1997 210,833(4) -- (5) --
Executive Vice President 1996 124,583(4) 30,000 (5) 150,000(6)(8)
and Chief Operating Officer 1995 -- -- -- --
Peter W. Jenkins 1997 180,000 -- (5) --
Senior Vice President-Sales 1996 180,000 -- (5) 40,000(2)
1995 177,500 -- (5) 40,000(3)
</TABLE>
(1) Paul J. Casey became President and Chief Executive Officer effective April
14, 1997, at an annual salary of $300,000 with a $70,000 signing bonus, and
a grant of options to purchase 150,000 shares of Common Stock at $4.063 per
share, vesting ratably on each of the first three anniversaries of April
14, 1997.
(2) In connection with the Rights Offering, Mr. Jenkins exercised options to
purchase 40,000 shares which are being held by the Company as collateral
for the payment of a promissory note. See "1996 Stock Incentive Plan"
below.
(3) The options are fully vested and exercisable. They were granted pursuant
to the 1994 Stock Option Plan. See "1994 Employee Stock Option Plan"
below. These options will expire if not exercised on or before June 12,
1998, six months after Mr. Jenkins resigned from the Company.
(4) These salaries represent the actual amounts paid to the Named Executive
Officer as the Named Executive Officer was not employed by the Company for
the entire calendar year. Mr. Casey's reported compensation for 1997 is
for the period beginning April 14, 1997 through December 31, 1997.
Mr. Garibaldi's reported compensation for 1996 is for the period beginning
May 1, 1996 through December 31, 1996. Mr. McQuay's reported compensation
is for the period beginning June 15, 1996 through November 30, 1997.
9
<PAGE>
(5) The Company provides various perquisites to its executives which are not
disclosed in accordance with SEC regulations because the value of such
perquisites is less than 10% of the Named Executive Officer's total salary
and bonus.
(6) The Company granted options to purchase 100,000 shares of Common Stock on
August 12, 1996 to each of Mr. Garibaldi and Mr. McQuay, but these options
are not fully vested or exercisable. The exercise price of these options
is $3.5625 per share. On August 12 of each of 1997, 1998, 1999, options to
purchase 28,000 shares vest, and on August 12, 2000, options to purchase
16,000 shares vest. On August 12 of each of 2001, 2002 and 2003, options
to purchase 28,000 shares expire, and on August 12, 2004, options to
purchase 16,000 shares expire. Mr. McQuay's option to purchase 28,000
shares which vested on August 12, 1997 expired unexercised on March 1,
1998, the date three months after his resignation; options not vested at
the date of Mr. McQuay's resignation were forfeited.
(7) In connection with the Rights Offering, Mr. Garibaldi exercised options to
purchase 57,500 shares which are being held by the Company as collateral
for his payment of a promissory note. See "1996 Stock Incentive Plan"
below.
(8) In connection with the Rights Offering, Mr. McQuay exercised options to
purchase 50,000 shares which are being held by the Company as collateral
for his payment of a promissory note. See "1996 Stock Incentive Plan"
below.
EMPLOYMENT CONTRACTS; TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company has entered into employment contracts with all of its
officers, which generally provide for a rolling contract period and standard
benefits and termination provisions. Except for those executive and senior
officers discussed below, the contracts provide for a twelve (12) month rolling
contract.
The Company entered a rolling eighteen-month employment contract with
President and Chief Executive Officer Paul J. Casey, effective as of April 14,
1997. The contract provides for an annual base salary of $300,000, a signing
bonus of $70,000, a grant of options to purchase 150,000 shares of Common Stock
effective as of February 28, 1997 and additional insurance and other benefits.
In addition to other standard termination provisions, the employment contract is
terminable by Mr. Casey within ninety days after the occurrence of a change of
control of the Company in which a majority of the directors of the Company fail
to constitute a majority of the board of directors of the surviving company.
The Company entered a rolling twelve-month employment contract with
John B. Happ as Senior Vice President - Marketing and Sales, effective as of
December 15, 1997. The contract provides for an annual base salary of $210,000,
a relocation allowance of up to $50,000, and additional insurance and other
benefits.
The Company entered a rolling twelve-month employment contract with
Ruthann S. Yamanaka as Senior Vice President - People Services (previously Human
Resources), effective as of March 1, 1998. The contract provides for an annual
base salary of $150,000, a signing bonus of $10,000, and additional insurance
and other benefits.
On March 13, 1998, the Board of Directors amended the employment
contracts with Messrs. Casey, Garibaldi and Happ and Ms. Yamanaka to extend the
period of employment under their respective employment contracts as follows:
Paul J. Casey from 18 months to 3 years
John L. Garibaldi from 18 months to 2 years
John B. Happ from 12 months to 18 months
Ruthann S. Yamanaka from 12 months to 18 months
10
<PAGE>
INDEMNIFICATION AGREEMENTS
At the 1995 Annual Meeting of Shareholders, the shareholders approved
and authorized the Company to enter into Indemnification Agreements. The
Company has entered Indemnification Agreements with all of its officers and
directors.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16 of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of a registered class of
the Company's equity securities to file with the Securities and Exchange
Commission (the "SEC"), and with the Company, initial reports of ownership and
reports of changes in ownership of common stock and other equity securities of
the Company. Based upon the information supplied to it by such persons, the
Company is required to report any known failure to file these reports within the
period specified by the instructions to the reporting forms. To the knowledge
of the Company, based upon a review of the Section 16(a) reports furnished to
the Company and the written representations of officers and directors, all these
filing requirements were satisfied by the Company's directors and executive
officers with respect to 1997.
CERTAIN TRANSACTIONS
In connection with the Company's Rights Offering to its shareholders
in September 1996 (the "RIGHTS OFFERING"), the Company granted options to
certain persons who held options under the Company's 1994 Stock Option Plan and
to the Company's Chief Operating Officer. These new options had substantially
the same terms as the rights issued to shareholders in the Rights Offering,
thereby enabling the option holders to participate in the Rights Offering on the
same basis as the shareholders. Under the terms of these new options, certain
executive officers of the Company exercised the options and paid the Company the
exercise price of the options in the form of a promissory note (the "NOTE").
Each executive officer also pledged his shares to the Company as security for
the Note. In the fall of 1997, the Notes were amended to allow partial payment
of principal and interest upon the sale of a portion of the shares pledged as
security. Each Note, including accrued interest, is due and payable in full on
the earlier of the date the executive officer sells or disposes of all of the
shares or on FEBRUARY 2, 2005. Interest accrues on the Notes at a variable rate
equal to the PRIME RATE as reported in THE WALL STREET JOURNAL. As of April 30,
1998, the following executive officer is indebted to the Company in the
following amounts (and such amounts also represent the largest aggregate amount
of indebtedness outstanding at any time since September 1996): John L.
Garibaldi, $218,630 including principal and interest.
On March 31, 1998, pursuant to a resolution approved by the
Compensation Committee on February 27, 1998, the Company made a loan of $28,500
to Mr. Casey, evidenced by a promissory note. The note bears interest at the
prime rate as reported in the Wall Street Journal and, so long as Mr. Casey
remains employed with the Company, will be forgiven $10,000 plus accrued
interest on each of the first and second anniversary of the loan, with the
balance of principal and interest forgiven on the third anniversary of the loan.
BOARD COMMITTEES
During 1997, the Board of Directors had Audit, Compensation, Executive
and Nominating Committees.
The AUDIT COMMITTEE, which was comprised of Mr. Robert G. Coo,
Mr. Todd G. Cole and Mr. Edward Z. Safady, met four times during 1997. The
responsibilities of the Audit Committee include recommending to the Board the
selection of the Company's independent auditor and reviewing the Company's
internal accounting controls. The Audit Committee is authorized to conduct such
reviews and examinations as it deems necessary or desirable with respect to the
Company's accounting and
11
<PAGE>
internal control practices and policies and the relationship between the Company
and its independent auditors.
The COMPENSATION COMMITTEE, which from January 31, 1996 until February
27, 1998 was comprised of Mr. Richard K. Matros, Mr. Richard F. Conway and
Mr. Samson Poomaihealani, met four times during 1997. The Compensation Committee
focuses on executive compensation, the administration of the Company's stock
option and stock purchase plans and the granting of discretionary bonuses.
Due to the resignations of Mr. Matros and Mr. Conway from the Board of Directors
and the Compensation Committee and the appointment of Mr. Adams and Mr. Safady
to join Mr. Poomaihealani on the Compensation Committee, it was necessary to
create a committee of "disinterested" directors to administer the Company's
stock option and stock purchase plans. By Unanimous Consent effective as of
February 15, 1998, the Board of Directors established an OPTION COMMITTEE and
appointed Mr. Safady and Mr. Poomaihealani to this committee.
The NOMINATING COMMITTEE was comprised of Mr. Richard F. Conway, Mr.
Robert G. Coo and Ms. Carol A. Fukunaga during 1997. Mr. Conway and Ms.
Fukunaga resigned from the Board and the Nominating Committee in February of
1998 and the Board has not yet replaced them on the Committee. The Nominating
Committee met once during 1997. The responsibilities of the Nominating
Committee include recommending to the Board of Directors candidates for election
to directorships at annual meetings of shareholders. AIP, AFA, IAM and ALPA
currently have the right under the Company's Bylaws to identify nine of the
eleven (11) nominees for directors.
The EXECUTIVE COMMITTEE, from March of 1996 until April 14, 1997, was
comprised of Mr. John W. Adams, Mr. William Boyce Lum, Mr. Richard K. Matros,
Mr. Reno F. Morella and Mr. Bruce R. Nobles (former President & Chief Executive
Officer of the Company). On April 14, 1997, Mr. Nobles was replaced by Mr. Paul
J. Casey. The committee met three times during 1997. The Executive Committee
has the authority to act for the Board of Directors on most matters during the
intervals between Board meetings.
During 1997, each director attended at least 75% of the total
committee meetings which he or she was obligated to attend.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors is charged with
making compensation recommendations to the full Board of Directors for the
Company's executive officers at the vice president level and higher along with
recommendations for bonuses, deferred compensation and stock option plans.
Until February 27, 1998, the Compensation Committee granted awards under and
administered the 1994 Stock Option Plan, the 1996 Stock Incentive Plan, As
Amended and the 1996 Nonemployee Director Stock Option Plan (the "STOCK PLANS").
As of February 15, 1998, the Option Committee was formed to grant awards under
and administer said Stock Plans.
Regarding the hiring of Mr. Happ and Ms. Yamanaka, Mr. Casey
recommended to the Committee that their salaries be set at $210,000 and
$150,000, respectively, for their services as Senior Vice Presidents. The
Compensation Committee approved these salaries for Mr. Happ and Ms. Yamanaka
based on the importance of these key executive officers to the Company's daily
operation and the comparison of such salaries to other senior vice president
salaries at other airlines in the Company's peer group, which consists of other
airlines similar in size to the Company (see "Performance Graph" below).
THE ABOVE REPORT OF THE COMPENSATION COMMITTEE WILL NOT BE DEEMED TO BE
INCORPORATED BY REFERENCE INTO ANY FILING BY THE COMPANY UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE EXCHANGE ACT, EXCEPT TO THE EXTENT THAT THE
COMPANY SPECIFICALLY INCORPORATES THE SAME BY REFERENCE.
12
<PAGE>
OPTION COMMITTEE REPORT
Pursuant to the Stock Plans (as defined in the Compensation Committee
Report), a committee comprised of disinterested directors is charged with
granting and administering awards under said Stock Plans. During 1997, the
Compensation Committee assumed these responsibilities. After February 15,
1998, these responsibilities were assumed by the Option Committee.
On February 27, 1998, the Option Committee reviewed the status of the
Company and the economic and competitive environment and recognized the efforts
and continued commitment of the Company's officers by taking the following
actions:
1) Grant of options for 1,035,000 shares of Common Stock (at the fair
market value on the grant date of $3.50 per share) under the 1996 Stock
Incentive Plan, As Amended, as follows:
a) To Mr. Casey 300,000 shares, Mr. Garibaldi 200,000 shares and
the other officers of the Company an aggregate of 835,000 shares, all of
which will vest 25% on each of the next four anniversaries of the grant
date and all of which will expire on February 27, 2008.
b) To Mr. Adams, 25,000 options which will vest on August 28,
1998 and will expire on February 27, 2008.
2) Recommend to the Board of Directors and the stockholders at the
1998 Annual Meeting approval of an Amendment to the 1996 Stock Incentive Plan,
As Amended to increase the number of shares of Common Stock available for grant
thereunder by 2,500,000 shares.
3) Subject to the approval of said amendment to the 1996 Stock
Incentive Plan, As Amended to increase the number of shares thereunder, grant to
members of the Company's senior management team, as designated by the Option
Committee at that time, options to acquire up to 2,500,000 shares of Common
Stock at an exercise price per share equal to the then fair market value. Such
options shall have a term of ten years and shall vest ratably over a ten year
period subject to the employee's continued employment with the Company and
further subject to potential accelerated vesting based upon the Company's
achievement of performance objectives to be established by the Option Committee.
4) Grant of options for 8,000 shares of Common Stock (at the fair
market value on the grant date of $3.50 per share) under the 1996 Nonemployee
Director Stock Option Plan to each of the following nonemployee directors on
said date, which will vest on August 28, 1998 and which will expire on February
27, 2008:
Todd G. Cole
Robert G. Coo
William Boyce Lum
Arthur J. Pasmas
Samson Poomaihealani
Edward Z. Safady
Thomas J. Trzanowski
THE ABOVE REPORT OF THE OPTION COMMITTEE WILL NOT BE DEEMED TO BE INCORPORATED
BY REFERENCE INTO ANY FILING BY THE COMPANY UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE EXCHANGE ACT, EXCEPT TO THE EXTENT THAT THE COMPANY SPECIFICALLY
INCORPORATES THE SAME BY REFERENCE.
13
<PAGE>
1994 EMPLOYEE STOCK OPTION PLAN
The 1994 Stock Option Plan provides for issuance of options to
officers and key employees of the Company, with the terms and the recipients of
such options to be determined by a committee of disinterested directors as
established under the plan. In February 1995, the Compensation Committee of the
Board of Directors approved a form of nonqualified stock option agreement and
granted options to the then officers of the Company under such agreements
covering substantially all of the 600,000 shares reserved for issuance under the
plan. The Compensation Committee established the exercise price of the options
granted as equal to 25% of the average of the closing prices of the Common Stock
as reported on the American Stock Exchange (the "AMEX") for the ten consecutive
days of trading beginning on June 26, 1995. The initial distribution of Common
Stock occurred on June 19, 1995. Trading during the succeeding days was so
volatile that the AMEX suspended trading on June 23, 1995. Trading was resumed
on June 26, 1995. The application of the aforementioned formula resulted in an
option exercise price of $1.62 per share. At the 1995 Annual Meeting of
Shareholders, the shareholders ratified the prior approval of the 1994 Stock
Option Plan. The Company has registered these 600,000 shares of Common Stock
with the SEC.
1996 STOCK INCENTIVE PLAN, AS AMENDED
The 1996 Stock Incentive Plan, As Amended, approved by the Board of
Directors in May 1996 and the shareholders in June 1996, provides for issuance
of options to officers and key employees of the Company, with the terms and the
recipients of such options to be determined by a committee of disinterested
directors as established under said plan. In July 1996, the Compensation
Committee granted 600,000 of the 2,000,000 options reserved for issuance under
the plan to persons who held options under the 1994 Stock Option Plan and the
Company's Chief Operating Officer. The Compensation Committee established the
exercise price of the options granted as $3.25 per share, the price set for
shares under the Rights Offering. On August 12, 1996, the Compensation
Committee granted each of Mr. Garibaldi and Mr. McQuay 100,000 options with an
exercise price of $3.5625 per share under the plan. In 1997, the Compensation
Committee granted 150,000 options with an exercise price of $4.0631 per share
under the plan to the Company's new President and Chief Executive Officer. As
further discussed herein, in February 1998, the Option Committee granted
1,035,000 options under the plan to the Chairman of the Board and the Company's
officers, with an exercise price of $3.50 per share. Each of these grants was
ratified by the then Board of Directors. Of the 2,000,000 shares reserved under
said plan, options for 1,877,500 have been granted and 122,500 shares remain.
At the Annual Meeting, on May 22, 1997, the shareholders voted to
amend the 1996 Stock Incentive Plan, As Amended: a) to increase the number of
shares of Common Stock which could be granted to an individual under the plan in
any 12-month period from 200,000 to 300,000 and b) to include a former employee
as a recipient of options under the plan. At respective meetings on February
27, 1998, the Option Committee and the Board of Directors recommended that an
amendment to the plan to increase by 2,500,000 the number of shares of Common
Stock reserved thereunder be submitted to the shareholders for approval. (See
Proposal 1) The Company has registered 2,000,000 shares of Common Stock
reserved for issuance under said plan with the SEC.
1996 NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
The 1996 Nonemployee Director Stock Option Plan, approved by the Board
of Directors in November 1996 and by the shareholders in May 1997, provides for
issuance of options to nonemployee directors of the Company, with the terms and
the recipients of such options to be determined by a committee as determined
under the plan. In November 1996, the Compensation Committee of the Board of
Directors approved a form of nonqualified stock option agreement and granted
options under such agreements covering 89,000 of the 500,000 shares reserved for
issuance under said plan, at an exercise price of $3.69 per share, the fair
market value of the shares trading on the AMEX on November 1, 1996. On February
27, 1998, the Option Committee granted options under such agreements concerning
56,000 shares, at an exercise price of $3.50 per share, the fair market
14
<PAGE>
value of the shares trading on the AMEX on February 27, 1998. Of the 500,000
shares reserved under said plan, options for 145,000 have been granted and
355,000 shares remain. The Company has registered the 500,000 shares of Common
Stock reserved for issuance under said plan with the SEC.
15
<PAGE>
The following table sets forth the options granted pursuant to the
1996 Stock Incentive Plan, As Amended to a Named Executive Officer in fiscal
year 1997. During 1997, no options were granted pursuant to the 1994 Stock
Option Plan.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
Potential Realizable Value
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS OF STOCK PRICE
UNDERLYING GRANTED TO EXERCISE APPRECIATION FOR OPTION
OPTIONS EMPLOYEES OR BASE TERM(2)
GRANTED IN FISCAL PRICE EXPIRATION
NAME (#)(1) YEAR ($/SH) DATE 5% ($) 10%($)
- ------------------------- -------------- ---------------- ------------- ------------- --------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Paul J. Casey 150,000 100 4.063 4/14/2003-5 104,534 389,564
</TABLE>
- ---------------
(1) Of these 150,000 shares, 50,000 options vest on each of April 14, 1998,
April 14, 1999 and April 14, 2000 and expire on each of April 14, 2003,
April 14, 2004, and April 14, 2005, respectively.
(2) There can be no assurance provided to any executive officer or other holder
of the Company's securities that the actual stock price will appreciate at
the assumed 5% and 10% levels or at any other defined level.
16
<PAGE>
The following table sets forth the (i) aggregated options exercised in
the last fiscal year and (ii) fiscal year-end option value for each of the Named
Executive Officers in 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR ("FY"), AND FY-END OPTION VALUE
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised In-the-
Underlying Unexercised Money Options at
Options at FY-End (#) FY-End ($)
------------------------------ ----------------------------------
Shares
Acquired Value
on Exercise Realized
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------------- ------------- ----------- ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
John W. Adams 0 0 0 0 0 0
John L. Garibaldi 0 0 35,500 72,000 21,225(1)(2) 13,500
Michael J. McQuay 0 0 28,000 72,000* 5,250 (2) 0
Peter W. Jenkins 0 0 40,000 0 85,200(1) 0
Paul J. Casey 0 0 0 150,000 0 0
- ----------------
</TABLE>
(1) Based on the market value of the Common Stock of $3.75 on the close of
business on December 31, 1997, less the exercise price of $1.62.
(2) Based on the market value of the Common Stock of $3.75 on the close of
business on December 31, 1997, less the exercise price of $3.5625.
*Options were forfeited after Mr. McQuay's resignation from the Company.
17
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares cumulative total return of the
Company, the S&P 500 Index and the Company's selected Peer Issuer Index from
June 21, 1995, the first day of trading of the Common Stock on the AMEX, to
December 31, 1997. The Peer Issuers the Company selected consist of AirTran
Holdings Inc. (formerly Valujet Inc.), Alaska Airgroup Inc., America West
Holding Corporation, Amtran, Inc., Atlantic Coast Airlines, Inc., ASA
Holdings Inc., Comair Holdings Inc., Great Lakes Aviation Ltd., Mesa Air
Group, Inc., Reno Air Inc. and Southwest Airlines. The S&P 500 Index and the
Company's selected Peer Issuer Index for the month of June 1995 have been
prorated to arrive at the beginning index used in this graph. The comparison
assumes $100 was invested on June 21, 1995 in the Common Stock and each of
the foregoing indices and assumes reinvestment of dividends before
consideration of income taxes.
COMPARISON OF 30 MONTH CUMULATIVE TOTAL RETURN*
AMONG HAWAIIAN AIRLINES, INC., THE S & P 500 INDEX AND A PEER GROUP
200 ------------------------------------------------------------------------
- 188
D -
O 141
150 ------------------------------------------------------------------------
L *
/ 135
L - 115 114 = 129
* =
A /
100 ------------------------------------------------------------------------
R 104
/
S - 91
=
62
50 ------------------------------------------------------------------------
-
0 ------------------------------------------------------------------------
8/21/95 12/95 12/96 12/97
---------------------------------------------------
HAWAIIAN AIRLINES, INC. PEER GROUP S & P 500
--=-- --/-- --*--
---------------------------------------------------
* $100 INVESTED ON 8/21/95 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
The stock performance depicted in the graph above is not necessarily
indicative of future performance. The Stock Performance Graph shall not be
deemed to be "soliciting material" or to be "filed" with the SEC or subject to
Regulations 14A or 14C or to the liabilities of Section 18 of the Exchange Act,
except to the extent that the Company specifically requests that such
information be treated as soliciting material or specifically incorporates it by
reference into a filing under the Securities Act or Exchange Act.
18
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP was the Company's certified public accountant
during 1997. In 1995 the Audit Committee solicited bids for its outside
accountant and accepted a three-year bid from KPMG Peat Marwick for the audit
years 1995, 1996 and 1997, subject to annual negotiation of the audit fees and
approval by the Board of Directors. The Audit Committee will recommend
appointment of auditors for the 1998 fiscal year to the Board of Directors in
mid-1998. A representative of KPMG Peat Marwick LLP will be present at the
Annual Meeting and will be given an opportunity to make a statement if he or she
desires to do so and will be available to respond to questions from
shareholders.
SUBMISSION OF SHAREHOLDER PROPOSALS
To be considered for inclusion in the Company's 1999 proxy material
under SEC regulations, a shareholder proposal to be considered for presentation
at the 1999 Annual Meeting of Shareholders must be received by the Corporate
Secretary of the Company at its principal offices at 3375 Koapaka Street, Suite
G-350, Honolulu, Hawaii 96819 on or before January 22, 1999.
ANNUAL REPORT
This Proxy Statement is accompanied by the Company's Annual Report to
Shareholders for the fiscal year ended December 31, 1997. The Annual Report,
which contains financial and other information regarding the Company, is not
incorporated in the Proxy Statement and is not to be deemed a part of the proxy
soliciting material.
MISCELLANEOUS
Except for the matters referred to in the accompanying Notice of
Annual Meeting, the Board of Directors does not intend to present any matter for
action at the Annual Meeting and knows of no matter to be presented at the
Annual Meeting that is a proper subject for action by the shareholders.
However, if any other matters should properly come before the Annual Meeting or
any postponements or adjournments thereof, it is intended that votes will be
cast pursuant to the authority granted by the enclosed Proxy in accordance with
the best judgment of the Proxy Holders.
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING, YOU ARE
URGED TO COMPLETE, SIGN AND RETURN YOUR PROXY PROMPTLY. PROXY CARDS SHOULD BE
RETURNED BY MAIL IN THE ENCLOSED, SELF-ADDRESSED ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS
LYN FLANIGAN ANZAI
VICE PRESIDENT, GENERAL COUNSEL
AND CORPORATE SECRETARY
Honolulu, Hawaii
May 22, 1998
19
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, eleven (11) directors are to be elected to
serve until the next annual election and until his or her successor shall have
been elected and shall qualify at the Company's 1999 Annual Meeting of
Shareholders or until he or she shall resign or shall have been removed as
provided in the Bylaws. Provided a quorum is present at the Annual Meeting, the
affirmative vote of the holders of a majority of the shares of Common Stock and
Special Preferred Stock represented in person or by proxy and entitled to vote
at the Annual Meeting, voting as a single class, is required to elect each
director nominee. Shareholders do not have the right to cumulate their votes in
the election of directors. The Company has no reason to believe that any of
those persons nominated will not be available to serve as a director. However,
if such a situation should arise, the accompanying Proxy Card will be voted for
the election of such other person as the Board of Directors may recommend.
The Board of Directors has responsibility for establishing broad
corporate policies for the overall performance of the Company, although it is
not involved in day-to-day operations. The Company keeps members of the Board
informed by providing them various reports and documents at meetings of the
Board of Directors and its Committees and at other times during the year.
Regular meetings of the Board of Directors are held six times per year and
special meetings are held when required. In 1997, the Board of Directors held
seven (7) meetings and otherwise acted by unanimous consent. During 1997, each
director attended at least 75% of the total Board meetings which he or she was
obligated to attend.
On February 27, 1998, the Board accepted the resignations of Richard F.
Conway, Richard K. Matros, and Carol A. Fukunaga as Directors and elected Arthur
J. Pasmas, Sharon L. Soper, and Thomas J. Trzanowski to serve as Directors until
they or their successors were duly elected by the shareholders.
NOMINEES FOR ELECTION AS DIRECTORS
The Board of Directors has recommended and approved the nomination of
the following eleven (11) nominees for election as directors of the Company:
John W. Adams, Paul J. Casey, Todd G. Cole, Robert G. Coo,
William Boyce Lum, Reno F. Morella, Arthur J. Pasmas, Samson
Poomaihealani, Edward Z. Safady, Sharon L. Soper and Thomas J.
Trzanowski.
The nominees have a wide and valuable range of judgment and experience
from such diverse fields as air transportation, banking, real property
development, investment banking and law. Certain information about the nominees
follows:
JOHN W. ADAMS, 54, has been Chairman of the Board of Directors of Hawaiian
Airlines since February 2, 1996. He is also Chairman of the Executive Committee
and the Compensation Committee and has been a director of the Company since
January 31, 1996. He has been the President of Smith Management Company since
1984. He is also Chairman of the Board and Chief Executive Officer of Harvard
Industries, Inc. He was Chairman of the Board of both Servico, Inc. and Regency
Health Services, Inc. until 1997. He was identified for nomination to the Board
by AIP.
PAUL J. CASEY, 52, has been President and Chief Executive Officer of
Hawaiian Airlines since April 14, 1997. He has also been a director and a
member of the Executive Committee of Hawaiian Airlines since April 14, 1997. He
was the President and Chief Executive Officer of the Hawaii Visitors and
Convention Bureau from 1995 until March 1997. He was Managing
Director-Asia/Pacific of the Thomas Cook Group during 1994. He was Vice
President-International Division of Continental Airlines from 1991 until 1994,
and Vice President-Asia/Pacific of Continental Airlines from 1985 until 1991.
20
<PAGE>
TODD G. COLE, 77, was Chairman and Chief Executive Officer of CIT Financial
Corporation from 1982 until his retirement in 1986. He served as President and
Chief Executive Officer of Frontier Airlines, Inc. [D.I.P.] from 1986 until
1990; as Vice Chairman of Eastern Airlines, Inc. [D.I.P.] from 1989 until 1991;
and as Managing Director of SH&E, Inc., a consulting firm specializing in
aviation from 1992 until 1995. He is a Director of Kaiser Ventures, Inc., NAC
Re Corporation and several private companies and has been a director of Hawaiian
Airlines since 1994. He is a member of the Audit Committee.
ROBERT G. COO, 56, is Vice President, Finance and Administration, and
Secretary of Camstar Systems, Inc., a Campbell, California-based developer of
manufacturing execution system (MES) software. From 1995 to 1997 he was an
independent financial consultant. He was Vice President and Chief Financial
Officer of Pengo Industries, Inc., an investment holding company, from 1990
until 1995, and a director of Regency Health Services, Inc. from 1991 to 1997
and of First National Bank, San Diego from 1995 to 1997. Mr. Coo has been a
director of Hawaiian Airlines since January 31, 1996. He is the Chairman of the
Audit Committee and a member of the Nominating Committee. He was identified to
the Board of Directors by AIP.
WILLIAM BOYCE LUM, 60, is a psychologist and an attorney. He has been on
the faculty of and a training analyst with the Institute for Psychoanalysis and
Psychotherapy of New Jersey since 1988. He has been Of Counsel with the law
firm of Lum, Danzis, Drasco, Positan & Kleinberg in Roseland, New Jersey since
1981. He was a director of The Chatham Trust Company from 1971 until 1981 and
The Summit Bancorporation from 1981 until 1996. Mr. Lum has been a director of
Hawaiian Airlines since January 31, 1996. He is a member of the Executive
Committee. He was identified for nomination to the Board of Directors by AIP.
RENO F. MORELLA, 49, has been a pilot for Hawaiian Airlines since 1978; he
is currently a Captain flying the DC-10 aircraft. He has been Chairman of the
Hawaiian Master Executive Council of ALPA since 1994. He was the First Officer
Category Representative for Council 102 of ALPA from 1993 until 1994. Mr.
Morella has been a director of Hawaiian Airlines since March 1, 1996. He is a
member of the Executive Committee. He was identified for nomination to the
Board of Directors by ALPA.
ARTHUR J. PASMAS, 63, has been Vice President of Smith Management Company
since 1987. Prior thereto, he was the founder in 1968 and served as President
and Chief Executive Officer of Resources Investment Corporation until it was
acquired by Smith Management in 1987. He currently manages various oil and gas
investments for Smith Management Company from offices in Houston, Texas and also
serves as Chairman of the Board of GOEX International, Inc., Cleburne, Texas,
and as a director of Inland Resources, Inc., Denver, Colorado. Mr. Pasmas has
been a director of Hawaiian Airlines since February 27, 1998. He was identified
for nomination to the Board of Directors by AIP.
SAMSON POOMAIHEALANI, 57, has been the Assistant General Chairman of the
Airline Machinists District 141 of the IAM since 1987. He is a ramp serviceman
for United Airlines, Inc. who has been on a leave of absence since 1987. Mr.
Poomaihealani has been a director of Hawaiian Airlines since 1990. He is a
member of the Compensation Committee and the Option Committee. He was
identified for nomination to the Board of Directors by IAM.
EDWARD Z. SAFADY, 40, was President and Chief Executive Officer of
Liberty National Bank in Austin, Texas from March 1988 to October 1995. He
then joined Smith Management Company as Vice President, where he served until
the acquisition of Life Savings Bank (now known as Liberty Bank, SSB) in
Austin, Texas, in May 1997. He currently holds the positions of Chairman of
the Board, President and Chief Executive Officer of Liberty Bank, SSB. Mr.
Safady has been a director of Hawaiian Airlines since January 31, 1996. He
is Chairman of the Reengineering Task Force and a member of the Audit
Committee, the Compensation Committee and the Option Committee. He was
identified for nomination to the Board of Directors by AIP.
SHARON L. SOPER, 52, has been a flight attendant for the Company since
1965. She has worked in both the Inter-Island and International operations.
She has been the President of the Hawaiian Airlines Association of Flight
Attendants Master Executive Council since 1987. Ms. Soper has been a
21
<PAGE>
director of Hawaiian Airlines since February 27, 1998. She was identified for
nomination to the Board of Directors by AFA.
THOMAS J. TRZANOWSKI, 59, has served as President and Director of Pengo
Realty Group, Inc., New York, New York, a private real estate holding company
engaged in real estate investments, since June 1994. He has also served as
President and Director of Spire Realty Group, Inc., Houston, Texas, a private
property management company, since July 1989. Both companies are wholly-owned
subsidiaries of Smith Management Company. Mr. Trzanowski also served as
Treasurer of Smith Management Company from November 1983 through December 1994.
He currently serves as a Director of Inland Resources, Inc., Denver, Colorado, a
publicly traded oil and gas company and Liberty Bank, SSB, a privately owned
bank in Austin, Texas. Mr. Trzanowski has been a director of Hawaiian Airlines
since February 27, 1998. He was identified for nomination to the Board of
Directors by AIP.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR THE SLATE OF DIRECTOR NOMINEES SET FORTH ABOVE.
22
<PAGE>
PROPOSAL 2
RATIFICATION OF AMENDMENT TO THE
1996 STOCK INCENTIVE PLAN, AS AMENDED
The Board of Directors recommends for shareholder ratification
an amendment to the 1996 Stock Incentive Plan, As Amended (the "Stock Plan").
The Stock Plan was originally approved by the shareholders at the 1996
Annual Meeting of Shareholders and amended by the shareholders at the 1997
Annual Meeting of Shareholders. The proposed amendment (the "Stock Plan
Amendment") reflects an increase of 2,500,000 shares in the number of shares
of Common Stock which may be issued under said Stock Plan, thereby increasing
the shares issuable thereunder from 2,000,000 to 4,500,000. The Stock Plan
Amendment also amends the definition of "committee" in Section 6(a) of the
Stock Plan to conform to recent changes made to Rule 16b-3 promulgated under
the Exchange Act. The Board of Directors has approved the Stock Plan
Amendment.
DESCRIPTION OF THE STOCK PLAN
Under the Stock Plan, employees of the Company are eligible to receive
options to purchase Common Stock or other awards. The term "employees" in the
following discussion is used to refer to officers and directors (other than
non-employee directors) and other employees of the Company.
The purpose of the Stock Plan is to enable the Company to attract, retain
and motivate employees by providing for or increasing their proprietary
interests in the Company. The Company believes that the stock options and other
awards issuable under the Stock Plan constitute a form of compensation that it
would not otherwise be able to pay employees. Eligible employees of the Company
will be considered for the grant of awards under the Stock Plan at the
discretion of the Committee (as defined below).
The maximum number of shares of Common Stock that may be issued pursuant to
awards granted under the Stock Plan, without giving effect to the Stock Plan
Amendment, is 2,000,000. Under the original Stock Plan, the maximum number of
shares of Common Stock with respect to which options may be issued during any
12-month period was 200,000. The Stock Plan was amended in 1997 to increase to
300,000 the maximum number of shares of Common Stock with respect to which
options may be issued during any 12-month period. In each case such maximum is
subject to adjustments to prevent dilution.
The Stock Plan is administered by a committee of disinterested directors
appointed by the Board of Directors of the Company (the "Committee").(1)The
Committee consists of two or more non-employee directors of the Company. The
Committee has full and final authority to select the employees to receive awards
and to grant such awards. Subject to the provisions of the Stock Plan, the
Committee has a wide degree of flexibility in determining the terms and
conditions of awards and the number of shares to be issued pursuant thereto,
including conditioning the receipt or vesting of awards upon achievement by the
Company of specified performance criteria. The expenses of administering the
Stock Plan are borne by the Company.
The Stock Plan authorizes the Committee to enter into any type of
arrangement with an eligible employee that, by its terms, involves or might
involve the issuance of Common Stock or any other security or benefit with a
value derived from the value of Common Stock. Awards are not restricted to any
specified form or structure and may include, without limitation, sales or
bonuses of stock, restricted stock, stock options, reload stock options, stock
purchase warrants, other rights to acquire stock, securities convertible into or
redeemable for stock appreciation rights, limited stock appreciation rights,
phantom stock, dividend equivalents, performance units or performance shares.
An
- ------------------
(1) During 1997, the Compensation Committee administered the Stock Plan. As of
February 15, 1998, the Board of Directors established the Option Committee to
administer the Stock Plan.
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award may consist of one such security or benefit or two or more of them in
tandem or in the alternative. The Stock Plan does not provide for a minimum
amount that employees will be required to pay to acquire benefits in connection
with an award. Any such amount will be established by the Committee and set
forth in the agreement evidencing the award. For federal income tax purposes,
the maximum compensation payable to employees pursuant to the Stock Plan, during
the term of the Stock Plan and awards granted thereunder, is equal to the number
of shares of Common Stock with respect to which awards may be issued thereunder,
multiplied by the value of such shares on the date such compensation is measured
(which, in the case of Nonqualified Options (as defined below), will generally
be the date of exercise of the options).
An award granted under the Stock Plan may include a provision
accelerating the receipt of benefits upon the occurrence of specified events,
such as a change of control of the Company or a dissolution, liquidation,
merger, reclassification, sale of all or substantially all of the property and
assets of the Company or other significant corporate transaction. Any stock
option granted to an employee may be a tax-benefited incentive stock option or a
non-qualified stock option that is not tax-benefited.
An award may permit the employee to pay all or part of the purchase price
of the shares or other property issuable pursuant thereto, and/or to pay all or
part of such employee's tax withholding obligation with respect to such
issuance, by (i) delivering previously owned shares of capital stock of the
Company or other property, (ii) reducing the amount of shares or other property
otherwise issuable pursuant to the award or (iii) delivering a promissory note,
the terms and conditions of which will be determined by the Committee. If an
option granted to an employee permitted the employee to pay for the shares
issuable pursuant thereto with previously owned shares, the employee would be
able to exercise the option in successive transactions, starting with a
relatively small number of shares and, by a series of exercises using shares
acquired from each such transaction to pay the purchase price of the shares
acquired in the following transaction, to exercise an option for a large number
of shares with no more investment than the original share or shares delivered.
Pursuant to Section 16(b) of the Exchange Act, directors, certain officers
and 10% shareholders of the Company are generally liable to the Company for
repayment of any "short-swing" profits realized from any non-exempt purchase and
sale of Common Stock occurring within a six-month period. Rule 16b-3,
promulgated under the Exchange Act, provides an exemption from Section 16(b)
liability for certain transactions by an officer or director pursuant to an
employee benefit plan that complies with such Rule. Specifically, the grant of
an option under an employee benefit plan that complies with Rule 16b-3 will be
an exempt purchase of a security for Section 16(b) purposes provided that (i)
the recipient of the option holds the option or the underlying shares for at
least six months from the date of grant, (ii) the option grant is approved in
advance by the Company's Board of Directors or a committee composed solely of
two or more non-employee directors or (iii) the option grant is approved in
advance or subsequently ratified by the Company's shareholders no later than the
next annual shareholders meeting. The Stock Plan is designed to comply with
Rule 16b-3.
The Stock Plan became effective May 1, 1996, the date it was approved by
the Board of Directors, subject to shareholder approval. The Stock Plan was
approved by the shareholders at the 1996 Annual Meeting on June 6, 1996. Awards
may not be granted under the Stock Plan after April 30, 2006, the tenth
anniversary of the adoption of the Stock Plan. Although any award that was duly
granted on or prior to such date may thereafter be exercised or settled in
accordance with its terms, no shares of Common Stock may be issued pursuant to
any award after the twentieth anniversary of the adoption of the Stock Plan.
Subject to limitations imposed by law, the Board of Directors of the
Company may amend or terminate the Stock Plan at any time and in any manner.
However, no such amendment or termination may deprive the recipient of an award
previously granted under the Stock Plan of any rights thereunder without his or
her consent.
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FEDERAL INCOME TAX TREATMENT
The following is a brief description of the federal income tax treatment
which will generally apply to options issued under the Stock Plan, based on
federal income tax laws in effect on the date hereof. The exact federal
income tax treatment of awards will depend on the specific nature of the
award. Such an award may, depending on the conditions applicable to the
award, be taxable as an option, as restricted or unrestricted stock, as a
cash payment, or otherwise. Recipients of options or other awards should not
rely on this discussion for individual tax advice, as each recipient's
situation and the tax consequences of any particular award will vary
depending upon the specific facts and circumstances involved. Each recipient
is advised to consult with his or her own tax advisor for particular federal,
as well as state and local, income and any other tax advice.
INCENTIVE OPTIONS. Pursuant to the Stock Plan, employees may be granted
options that are intended to qualify as incentive stock options ("Incentive
Options") under the provisions of Section 422 of the Internal Revenue Code (the
"Code"). Generally, the optionee is not taxed on the grant or the exercise of
an Incentive Option. However, the optionee's "alternative minimum taxable
income" for the year of exercise will be increased by the excess of the fair
market value of the shares acquired upon the exercise of an Incentive Option
("ISO Shares") over the exercise price, and thus exercise of an Incentive Option
may subject the optionee to the "alternative minimum tax" in the year of
exercise.
If the optionee sells the ISO Shares at any time within (a) one year after
the date of transfer of ISO Shares to the optionee pursuant to the exercise of
the Incentive Option or (b) two years after the date of grant of the Incentive
Option (a "Disqualifying Disposition"), then, at the time of such Disqualifying
Disposition (1) the optionee will recognize capital gain equal to the excess, if
any, of the sales price over the fair market value of the ISO Shares on the date
of exercise, (2) the optionee will recognize ordinary income equal to the
excess, if any, of the lesser of the sales price or the fair market value of the
ISO Shares on the date of exercise, over the exercise price of such Incentive
Option, and (3) the optionee will recognize capital loss equal to the excess, if
any, of the exercise price of such Incentive Option over the sales price of the
ISO Shares. If the optionee sells the ISO Shares at any time after the one-year
and two-year periods described above, then the optionee will recognize capital
gain or loss equal to the difference between the sales price and the exercise
price of such Incentive Option, and the Company will not be entitled to any
deduction.
NONQUALIFIED OPTIONS. The grant of an option or other similar right to
acquire stock which does not qualify for treatment as an Incentive Option (a
"Nonqualified Option') is generally not a taxable event for the optionee. Upon
exercise of the option, the optionee will generally recognize ordinary income
equal to the excess of the fair market value of the stock acquired upon exercise
(determined as of the date of the exercise) over the exercise price of such
option. See "SPECIAL RULES FOR AWARDS GRANTED TO INSIDERS," BELOW.
SPECIAL RULES FOR AWARDS GRANTED TO INSIDERS. Pursuant to currently
applicable rules under Section 16(b) of the Exchange Act, the grant of an option
(and not its exercise) to a person who is subject to the reporting and
short-swing profit provisions under Section 16 of the Exchange Act (a "Section
16 Person") begins the six-month period of potential short-swing liability. The
taxable event for the exercise of an option that has been outstanding at least
six months ordinarily will be the date of exercise. If an option is exercised
by a Section 16 Person within six months after the date of grant, however,
taxation ordinarily will be deferred until the date which is six months after
the date of grant, unless the person has filed a timely election pursuant to
Section 83(b) of the Code to be taxed on the date of exercise. Pursuant to a
recent amendment to the rules under Section 16(b) of the Exchange Act, the six
month period of potential short-swing liability may be eliminated if the option
grant (i) is approved in advance by the Company's board of directors (or a
committee composed solely of two or more non-employee directors) or (ii)
approved in advance, or subsequently ratified by the Company's shareholders no
later than the next annual meeting of shareholders. Consequently, the taxable
event for the exercise of an option that satisfies either of the conditions
described in clauses (i) or (ii) above will be the date of exercise.
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MISCELLANEOUS TAX ISSUES. Awards may be granted under the Stock Plan which
do not fall clearly into the categories described above. The federal income tax
treatment of these awards will depend upon the specific terms of such awards.
Generally, the Company will be required to make arrangements for withholding
applicable taxes with respect to any ordinary income recognized by a participant
in connection with awards made under the Stock Plan.
A holder's tax basis in Common Stock acquired pursuant to the Stock Plan
generally will equal the amount paid for the Common Stock (including the
exercise price of an option) plus any amount recognized as ordinary income with
respect to such stock. Other than ordinary income recognized with respect to
the Common Stock and included in basis, any subsequent gain or loss upon the
disposition of such stock generally will be capital gain or loss (long-term or
short-term, depending on the holder's holding period).
Special rules will apply in cases where a recipient of an award pays the
exercise or purchase price of the award or applicable withholding tax
obligations under the Stock Plan by delivering previously owned shares of Common
Stock or by reducing the amount of shares otherwise issuable pursuant to the
award. The surrender or withholding of such shares will in certain
circumstances result in the recognition of income with respect to such shares or
a carryover basis in the shares acquired, and may constitute a Disqualifying
Disposition with respect to ISO Shares.
The terms of the agreements pursuant to which specific awards are made
under the Stock Plan may provide for accelerated vesting or payment of an award
in connection with a change in ownership or control of the Company. In that
event and depending upon the individual circumstances of the recipient, certain
amounts with respect to such awards may constitute "excess parachute payments"
under the "golden parachute" provisions of the Code. Pursuant to these
provisions, a recipient will be subject to a 20% excise tax on any "excess
parachute payments" and the Company will be denied any deduction with respect to
such payments. Recipients of awards should consult their tax advisors as to
whether accelerated vesting of an award in connection with a change of ownership
or control of the Company would give rise to an excess parachute payment.
With certain exceptions, an individual may not deduct investment interest
to the extent such interest exceeds the individual's net investment income for
the year. Investment interest generally includes interest paid on indebtedness
incurred to purchase shares of Common Stock. Interest disallowed under this
rule may be carried forward to and deducted in later years, subject to the same
limitations.
The Company generally obtains a deduction equal to the ordinary income
recognized by the recipient of an award. However, the Company's deduction for
such amounts (including amounts attributable to the ordinary income recognized
with respect to options) may be limited to $1,000,000 (per person) annually.
PROPOSED AMENDMENT
The complete text of the Stock Plan, as amended by the Stock Plan
Amendment, is attached as Appendix A to this Proxy Statement. The following
description of the Stock Plan Amendment of the Stock Plan does not purport to be
complete and is qualified in its entirety by reference to Appendix A.
Prior to the effectiveness of the Stock Plan Amendment, the maximum
number of shares of Common Stock which may be issued pursuant to said Stock Plan
is 2,000,000. In connection with the Company's Rights Offering to its
shareholders in September 1996, the Company granted 485,000 options under the
Stock Plan to persons who held options under the Company's 1994 Stock Option
Plan. In 1996, an aggregate of 207,500 options were granted to Mr. McQuay and
Mr. Garibaldi upon joining the Company and certain forfeited options previously
granted were granted to other officers. In February of 1997, the Company
granted 150,000 options to Paul J. Casey when he assumed the position of
President and Chief Executive Officer for the Company. In February of 1998, the
Company
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granted 1,035,000 options to the Company's officers. Of the 2,000,000 shares
reserved for issuance under the Stock Plan, 1,877,500 have been issued and
122,500 remain to be issued. An increase in the shares reserved under the Stock
Plan of an additional 2,500,00 shares would enable the Option Committee and the
Board of Directors to grant further incentive options.
In early 1997, revisions to Rule 16 promulgated by the Exchange Act
were implemented in order to replace the "disinterested persons" concept with a
"non-employee director" standard. In addition, since the Stock Plan is designed
to comply with Section 162(m) of the Code, reference to the "outside director"
standard is appropriate. Amendments to Section 6(a) of the Stock Plan
incorporate these revisions.
The Option Committee has recommended, and the Board of Directors has
approved, the Stock Plan Amendment and they now seek shareholder ratification
of the Stock Plan Amendment.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THIS PROPOSAL 2.
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APPENDIX A
HAWAIIAN AIRLINES, INC.
1996 STOCK INCENTIVE PLAN, AS AMENDED [1998]
SECTION 1. PURPOSE OF PLAN. The purpose of this 1996 Stock Incentive
Plan, as amended (this "Plan") of Hawaiian Airlines, Inc., a Hawaii corporation
(the "Company"), is to enable the Company to attract, retain and motivate its
employees by providing for or increasing the proprietary interests of such
employees in the Company.
SECTION 2. PERSONS ELIGIBLE UNDER PLAN. Any person, including any
director of the Company, who is an employee of the Company (an "Employee") shall
be eligible to be considered for the grant of Awards (as hereinafter defined)
hereunder. In addition, C.J. David Davies shall be eligible to be considered
for the grant of Awards hereunder.
SECTION 3. AWARDS.
(a)The Committee (as hereinafter defined), on behalf of the Company,
is authorized under this Plan to enter into any type of arrangement with an
Employee that is not inconsistent with the provisions of this Plan and that, by
its terms, involves or might involve the issuance of (i) shares of Common Stock,
par value $.01 per share, of the Company ("Common Shares") or (ii) a Derivative
Security (as such term is defined in Rule 16a-1 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as such Rule may be
amended from time to time) with an exercise or conversion privilege at a price
related to the Common Shares or with a value derived from the value of the
Common Shares. The entering into of any such arrangement is referred to herein
as the "grant" of an "Award." If the Company's Amended and Restated Articles of
Incorporation are amended to eliminate the Company's Class B Common Stock and
designate the Common Stock as "Common Stock," following such amendment all
references herein to Common Stock shall be deemed to refer to Common Stock.
(b)Awards are not restricted to any specified form or structure and
may include, without limitation, sales or bonuses of stock, restricted stock,
stock options, reload stock options, stock purchase warrants, other rights to
acquire stock, securities convertible into or redeemable for stock, stock
appreciation rights, limited stock appreciation rights, phantom stock, dividend
equivalents, performance units or performance shares, and an Award may consist
of one such security or benefit, or two or more of them in tandem or in the
alternative.
(c)Common Shares may be issued pursuant to an Award for any lawful
consideration as determined by the Committee, including, without limitation,
services rendered by the recipient of such Award.
(d)Subject to the provisions of this Plan, the Committee, in its sole
and absolute discretion, shall determine all of the terms and conditions of each
Award granted under this Plan, which terms and conditions may include, among
other things:
(i) a provision permitting the recipient of such Award,
including any recipient who is a director or officer of the Company, to pay
the purchase price of the Common Shares or other property issuable pursuant
to such Award, or such recipient's tax withholding obligation with respect
to such issuance, in whole or in part, by any one or more of the following:
(A) the delivery of previously owned shares of capital
stock of the Company (including "pyramiding") or other property,
provided that the Company is not then prohibited from purchasing or
acquiring shares of its capital stock or such other property,
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(B) a reduction in the amount of Common Shares or other
property otherwise issuable pursuant to such Award, or
(C) the delivery of a promissory note, the terms and
conditions of which shall be determined by the Committee;
(ii) a provision conditioning or accelerating the receipt of
benefits pursuant to such Award, either automatically or in the discretion
of the Committee, upon the occurrence of specified events, including,
without limitation, a change of control of the Company, an acquisition of a
specified percentage of the voting power of the Company, the dissolution or
liquidation of the Company, a sale of all or substantially all of the
property and assets of the Company or an event of the type described in
Section 7 hereof; or
(iii) a provision required in order for such Award to
qualify as an incentive stock option (an "Incentive Stock Option") under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
provided that the recipient of such Award is eligible under the Code to
receive an Incentive Stock Option.
(e) Notwithstanding any other provision of this Plan, no Employee
shall be granted options for in excess of 300,000 shares of Common Stock
during any 12-month period. This limitation is intended to satisfy the
requirements of Section 162(m) of the Code so that compensation attributable
to Awards hereunder qualify as performance-based compensation under Section
162(m) of the Code. The limitation under this Section 3(e) shall be subject
to adjustment under Section 7 hereof, but only to the extent permitted under
Section 162(m) of the Code.
SECTION 4. STOCK SUBJECT TO PLAN.
(a) The aggregate number of Common Shares that may be issued pursuant
to all Incentive Stock Options granted under this Plan shall not exceed
4,500,000, subject to adjustment as provided in Section 7 hereof; provided,
however, that adjustments pursuant to Section 7 shall be limited to those that
will not adversely affect the status of options as Incentive Stock Options under
Section 422 of the Code.
(b) The aggregate number of Common Shares issued and issuable
pursuant to all Awards (including Incentive Stock Options) granted under this
Plan shall not exceed 4,500,000 subject to adjustment as provided in Section 7
hereof.
(c) For purposes of Section 4(b) hereof, the aggregate number of
Common Shares issued and issuable pursuant to all Awards granted under this Plan
shall at any time be deemed to be equal to the sum of the following:
(i) the number of Common Shares that were issued prior to such
time pursuant to Awards granted under this Plan, other than Common Shares
that were subsequently reacquired by the Company pursuant to the terms and
conditions of such Awards and with respect to which the holder thereof
received no benefits of ownership such as dividends; plus
(ii) the number of Common Shares that were otherwise issuable
prior to such time pursuant to Awards granted under this Plan, but that
were withheld by the Company as payment of the purchase price of the Common
Shares issued pursuant to such Awards or as payment of the recipient's tax
withholding obligation with respect to such issuance; plus
(iii) the maximum number of Common Shares issuable at or
after such time pursuant to Awards granted under this Plan prior to such
time.
SECTION 5. DURATION OF PLAN. Awards shall not be granted under this
Plan after April 30, 2006. Although Common Shares may be issued after April 30,
2006 pursuant to Awards granted prior to such date, no Common Shares shall be
issued under this Plan after April 30, 2016.
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SECTION 6. ADMINISTRATION OF PLAN.
(a) This Plan shall be administered by a committee of the Board (the
"Committee") consisting of two or more directors, each of whom is a Non-Employee
Director (as defined in Rule 16b-3 promulgated under the Exchange Act, as such
Rule may be amended from time to time) and an "outside director" (within the
meaning of Code section 162(m)).
(b) Subject to the provisions of this Plan, the Committee shall be
authorized and empowered to do all things necessary or desirable in connection
with the administration of this Plan, including, without limitation, the
following:
(i) adopt, amend and rescind rules and regulations relating to
this Plan;
(ii) determine which persons are Employees and to which of such
Employees, if any, Awards shall be granted hereunder;
(iii) grant Awards to Employees and determine the terms and
conditions thereof, including the number of Common Shares issuable pursuant
thereto;
(iv) determine whether, and the extent to which, adjustments are
required pursuant to Section 7 hereof; and
(v) interpret and construe this Plan and the terms and
conditions of all Awards granted hereunder.
SECTION 7. ADJUSTMENTS. If the outstanding securities of the class
then subject to this Plan are increased, decreased or exchanged for or converted
into cash, property or a different number or kind of securities, or if cash,
property or securities are distributed in respect of such outstanding
securities, in either case as a result of a reorganization, merger,
consolidation, recapitalization, restructuring, reclassification, dividend
(other than a regular, quarterly cash dividend) or other distribution, stock
split, reverse stock split or the like, or if substantially all of the property
and assets of the Company are sold, then, unless the terms of such transaction
or this Plan shall provide otherwise, the Committee shall make appropriate and
proportionate adjustments in (a) the number and type of shares or other
securities or cash or other property that may be acquired pursuant to Incentive
Stock Options and other Awards theretofore granted under this Plan, (b) the
maximum number and type of shares or other securities that may be issued
pursuant to Incentive Stock Options and other Awards thereafter granted under
this Plan as provided in Section 4 hereof, and (c) the maximum number of Common
Shares for which options may be granted during any one calendar year, as
provided in Section 3(e) hereof. Notwithstanding the foregoing, no such
adjustment shall be made in connection with a distribution of rights to purchase
shares of the Company's common stock if such distribution is being made pursuant
to Section 6.9 of that certain Stock Purchase Agreement dated as of December 8,
1995 between the Company and Airline Investors Partnership, L.P.
SECTION 8. AMENDMENT AND TERMINATION OF PLAN. The Board may amend or
terminate this Plan at any time and in any manner, provided that no such
amendment or termination shall deprive the recipient of any Award theretofore
granted under this Plan, without the consent of such recipient, of any of his or
her rights thereunder or with respect thereto.
SECTION 9. EFFECTIVE DATE OF PLAN. This Plan shall be effective as
of May 1, 1996, the date upon which it was approved by the Board; provided,
however, that no Common Shares may be issued under this Plan until it has been
approved, directly or indirectly, by the affirmative votes of the holders of a
majority of the outstanding voting securities of the Company at a meeting duly
held in accordance with the laws of the State of Hawaii.
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PROXY
HAWAIIAN AIRLINES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE JUNE 29, 1998
ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby constitutes and appoints Paul J. Casey, John L.
Garibaldi, Clarence K. Lyman and Lyn Flanigan Anzai, and each or any of them,
attorneys and proxies with full power of substitution, to represent the
undersigned and to vote all shares of Common Stock, $.01 par value, of Hawaiian
Airlines, Inc. (the "Company") held of record by the undersigned on April 30,
1998, at the 1998 Annual Meeting of Shareholders of the Company to be held on
June 29, 1998 at the Royal Hawaiian Hotel, 2259 Kalakaua Avenue, Honolulu,
Hawaii, in the Regency Room at 10:00 a.m. Hawaii standard time, and at any and
all adjournments or postponements thereof, as herein specified upon the
proposals listed herein and described in the Proxy Statement for the meeting and
in his or her discretion upon any other matter that may properly come before the
meeting. The Board of Directors has proposed the matters set forth below for
the vote of the shareholders of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 AND 2
1. Election of Directors
FOR WITHHOLD AUTHORITY
all nominees listed below for all nominees listed below
(except as marked to the contrary below)
Election of the following nominees as directors: John W. Adams, Paul J.
Casey, Todd G. Cole, Robert G. Coo, William Boyce Lum, Reno F. Morella,
Arthur J. Pasmas, Samson Poomaihealani, Edward Z. Safady, Sharon L. Soper,
and Thomas J. Trzanowski.
(INSTRUCTIONS: To withhold authority to vote for any nominee, strike a line
through the nominee's name in the list above.)
2. Ratification of amendments to the
1996 Stock Incentive Plan, As Amended FOR AGAINST ABSTAIN
3. In their discretion, on such other business as may properly come before the
meeting or any adjournment thereof.
THE SHARES VOTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER INSTRUCTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO INSTRUCTIONS ARE
GIVEN, THIS PROXY WILL BE VOTED FOR ITEMS 1 AND 2 LISTED ABOVE AND IN THE
DISCRETION OF THE PROXY HOLDER ON MATTERS DESCRIBED IN ITEM 3.
IMPORTANT: Please sign your name or
names exactly as stenciled on this
Proxy. When signing as attorney,
executor or administrator, trustee or
guardian, please give your full title as
such. If shares are held jointly, EACH
holder should sign.
----------------------------------------
Signature
----------------------------------------
Signature
DATE: , 1998
----------------------------
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE
URGED TO SIGN AND RETURN THIS PROXY, WHICH MAY BE
REVOKED AT ANY TIME PRIOR TO ITS USE.
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