<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / 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 G350
HONOLULU, HAWAII 96819
Dear Fellow Shareholder:
On behalf of the Board of Directors, we are pleased to invite you to the
Company's 1999 Annual Meeting of Shareholders, to be held:
FRIDAY, MAY 21, 1999, 10:00 A.M.
THE ROYAL HAWAIIAN HOTEL
REGENCY ROOM
HONOLULU, HAWAII
At the meeting, we will act on the matters presented in the attached
Proxy Statement and report on the Company's activities during fiscal year 1998.
We will provide an opportunity for you to ask questions on matters of interest
to you as a shareholder.
We encourage you to vote your shares. Even if you plan to attend the
meeting in person, please sign and date the enclosed Proxy and return it in the
prepaid envelope. Returning your executed proxy will not affect your right to
attend the meeting and, if you wish to do so, to vote your shares in person.
If you need special assistance at the meeting because of a disability,
please contact Ms. Audrey Yuh, Investor Relations, Hawaiian Airlines, Inc., P.O.
Box 30008, Honolulu, Hawaii 96820.
Your Board of Directors and management look forward to greeting those of
you who are able to attend the Annual Meeting. For additional information about
the Company, please see the enclosed 1998 Annual Report. We also invite you to
visit the Company's interactive website at www.hawaiianair.com.
Thank you for your continued support and interest in the Company.
John W. Adams Paul J. Casey
Chairman of the Board President and
Chief Executive Officer
Honolulu, Hawaii
April 16, 1999
<PAGE>
HAWAIIAN AIRLINES, INC.
3375 KOAPAKA STREET, SUITE G350
HONOLULU, HAWAII 96819
----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 21, 1999
----------------------------------------
TO THE SHAREHOLDERS OF HAWAIIAN AIRLINES, INC.:
On Friday, May 21, 1999, we will hold our 1999 Annual Meeting of
Shareholders at 10:00 a.m. in the Regency Room at the Royal Hawaiian Hotel, 2259
Kalakaua Avenue, Honolulu, Hawaii. Parking in the Sheraton Waikiki facility will
be validated.
Shareholders of record at the close of business on March 26, 1999 are
entitled to vote at the Annual Meeting or any adjournments or postponements of
the meeting. In order to be admitted to the meeting, shareholders holding stock
in brokerage accounts ("street name" holders) will need to bring a copy of a
brokerage statement reflecting stock ownership as of March 26, 1999.
At the meeting, we will
1. Elect eleven directors; and
2. Conduct any other business which may properly come before the meeting.
It is important that you vote your shares. Accordingly, please read the
Proxy Statement appearing on the following pages and then complete, sign, date
and return the Proxy in the enclosed prepaid envelope.
By Order of the Board of Directors
Lyn Flanigan Anzai
Vice President, General Counsel
and Corporate Secretary
Honolulu, Hawaii
April 16, 1999
<PAGE>
HAWAIIAN AIRLINES, INC.
----------------------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 21, 1999
----------------------------------------
This Proxy Statement is being first mailed to shareholders on or about
April 16, 1999 in connection with the solicitation by the Board of Directors of
Hawaiian Airlines, Inc., ("HAWAIIAN AIRLINES" or the "COMPANY"), of proxies to
be voted at the 1999 Annual Meeting of Shareholders and at any adjournment or
postponement thereof.
The Company will pay for the solicitation of proxies, including the
preparation, assembly, printing and mailing of this Proxy Statement and the
material used in this solicitation of Proxies. Proxies will be solicited
principally through the mail, but directors, officers and regular employees of
the Company may solicit Proxies personally or by telephone without additional
compensation. The Company may reimburse banks, brokerage houses and other
custodians, nominees and fiduciaries for their reasonable expenses in forwarding
these proxy materials to beneficial owners.
The principal executive offices of the Company are located at 3375
Koapaka Street, Suite G-350, Honolulu, Hawaii 96819.
VOTING RIGHTS AND PROCEDURES
VOTING SHARES
WHO CAN VOTE?
All persons who are record holders of any shares of the Common Stock or
any series of the Special Preferred Stock of the Company on March 26, 1999 (the
"Record Date") are entitled to cast one vote per share.
HOW MANY SHARES WERE OUTSTANDING ON THE RECORD DATE?
On the Record Date, 40,997,335 shares of Common Stock, four shares of
Series B Special Preferred Stock and one share each of Series C, Series D and
Series E Special Preferred Stock, for a total of 40,997,342 shares, were
outstanding.
VOTING BY PROXY
HOW CAN I VOTE?
If you are a shareholder holding shares in your own name as shareholder of
record on the Record Date, you may vote the shares so held:
1. By executing and mailing (in the envelope provided) the enclosed
Proxy, or by granting a written proxy to another person authorizing such person
to attend the meeting and vote your shares, or
2. By attending the Annual Meeting and voting in person.
If you are the beneficial owner of shares held of record in street name,
such as in a stock brokerage account or by a bank or other nominee, you have the
right to instruct the holder of record how to vote your shares.
1
<PAGE>
CAN I REVOKE MY PROXY IF MAILED?
Yes, you may revoke your Proxy before it is voted by:
1. Notifying the Corporate Secretary in writing signed by you that
you revoke the Proxy:
2. By submitting a later-dated proxy; or
3. By voting in person at the Annual Meeting.
HOW WILL PROXIES BE VOTED?
Proxies that are properly executed will be voted as instructed unless
the Proxy is revoked before it is voted at the Annual Meeting. If the Proxy does
not contain instructions, it will be voted FOR the nominated directors and, on
other matters that properly come before the meeting, it will be voted in the
discretion of the Proxy Holders.
QUORUM AND VOTING REQUIREMENTS
WHAT IS A QUORUM FOR THE MEETING?
The presence in person or by proxy of holders of a majority of the
shares of Common Stock and Special Preferred Stock outstanding on the Record
Date, counted as a single class, constitutes a quorum. Abstentions and broker
nonvotes are counted in determining whether there is a quorum but are not
counted as voting for or against a proposal.
HOW MANY VOTES ARE REQUIRED TO ELECT EACH DIRECTOR?
Each nominee must receive the affirmative vote of a majority of the
shares represented at the meeting, voting as a single class.
HOW MANY VOTES ARE REQUIRED FOR OTHER MATTERS?
Unless otherwise required by Hawaii law or by the Company's Articles of
Incorporation or Bylaws, other matters voted upon at a meeting at which a quorum
is present require the affirmative vote of the majority of the shares
represented at the meeting and entitled to vote on the matter.
CONTROL OF THE COMPANY
On the Record Date, Airline Investors Partnership, L.P. ("AIP") held
44.35% of the outstanding Common Stock and all shares of the Series B Special
Preferred Stock. Pursuant to the Company's Bylaws, AIP thus has the right to
identify for nomination six of the eleven directors.
Also, the Company's Bylaws and its existing collective bargaining
agreements provide that each of the Company's three major unions (the AFA, the
IAM and the ALPA) has the right to identify for nomination one director. AIP has
agreed to vote its shares in favor of the nominees identified by the unions.
The Bylaws further specify that one director is to be a senior executive
of the Company (the "Company director") and one director is to be an "outside"
director (defined as an individual who is not affiliated with the Company, AIP,
or any of the Company's unions).
2
<PAGE>
SECURITIES OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of the Record Date,
relating to the beneficial ownership of the Company's voting stock by each
person known to the Company to be the beneficial owner of more than five percent
of the outstanding shares of Common Stock and Special Preferred Stock. This
table also lists the beneficial ownership of the Company's Common Stock, as of
the Record Date, by each of the directors and nominees, by each of the Named
Executive Officers (see "Executive Compensation"), and by all directors and
executive officers as a group. The table includes shares not yet owned by
directors and executive officers but which could be purchased by exercising
options which have vested or will vest within 60 days after the Record Date.
<TABLE>
<CAPTION>
Name and Address Number of Shares(1) Percent and Class of Stock
- --------------------------------------------------- --------------------- -------------------------------
<S> <C> <C>
Airline Investors Partnership, L.P. 18,181,818(2) 44.35% of Common Stock
AIP General Partner, Inc. 4(2) 100% of Series B Special
885 Avenue of the Americas Preferred Stock
34th Floor
New York, New York 10022
John W. Adams 18,262,643(2) 44.49% of Common Stock
4(2) 100% of Series B Special
Preferred Stock
Amber Arbitrage LDC 4,667,672(3) 11.39% of Common Stock
c/o Custom House Fund Management Ltd.
31 Kildare Street, Dublin 2, Ireland
Association of Flight Attendants 1 100% of Series C Special
1625 Massachusetts Avenue, N.W. Preferred Stock
Washington, DC 20036-2212
Attn.: David Borer, Esq.
International Association of Machinists and
Aerospace Workers 1 100% of Series D Special
P.O. Box 3141 Preferred Stock
South San Francisco, California 94083
Attn.: Ken Thiede
Hawaiian Master Executive Council 1 100% of Series E Special
c/o Air Line Pilots Association Preferred Stock
5959 West Century Boulevard, Suite 576
Los Angeles, California 90045
Attn.: Master Chairman, Hawaiian MEC
Paul J. Casey 185,000(4) Common Stock*
Todd G. Cole 22,000(5) Common Stock*
Robert G. Coo 22,765(5) Common Stock*
Joseph P. Hoar -- --
William Boyce Lum 116,000(5)(6) Common Stock*
Reno F. Morella 6,741(7)(8) Common Stock*
Arthur J. Pasmas 45,300(9) Common Stock*
Samson Poomaihealani 16,000(5) Common Stock*
Edward Z. Safady 34,000(5) Common Stock*
Sharon L. Soper 1,165(7) Common Stock*
Thomas J. Trzanowski 9,000(10) Common Stock*
John L. Garibaldi 189,000(11) Common Stock*
John B. Happ 37,500(12) Common Stock*
Ruthann S. Yamanaka 37,500(12) Common Stock*
All directors, nominees and executive officers
as a group including those named above (25
persons) 19,178,012 46.08% of Common Stock
</TABLE>
3
<PAGE>
* Less than 1%
(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 in the footnotes
that follow. (The Savings Plan, the Flight Attendants 401(k) Plan and the
Pilots' Plan are collectively referred to as the "Plans".) Shares of the
Common Stock allocated to participants' accounts in each of the Plans are
voted on matters presented at shareholders meetings by the Vanguard Group,
Inc. as Trustee for each of the respective Plans ("Trustee"), pursuant to
written directions of the participants. Shares held by each Plan with
respect to which no participant directions are received are voted according
to the direction of the majority of the shares held by each of the Plans
for which the Trustee receives written directions. Unallocated shares are
voted by fiduciaries designated by the respective Plans.
(2) According to their Schedule 13D filing with the Securities and Exchange
Commission 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 18,181,818 shares of Common Stock and all
four shares of Series B Special Preferred Stock. Mr. Adams is the sole
shareholder of AIP General Partner, Inc. and AIP General Partner, Inc. is
the general partner of Airline Investors Partnership, L.P. The shares shown
as owned by Mr. Adams include options to purchase 50,000 shares of Common
Stock, all of which have vested.
(3) On May 14, 1998, Amber Arbitrage LDC ("Amber") filed a Schedule 13G with
the Securities and Exchange Commission in respect of ownership of an
aggregate of 4,667,672 shares of Common Stock. Amber reported sole voting
power and sole dispositive power with respect to all such shares. No
subsequent filing has been made by Amber. The Company has attempted to
verify independently Amber's current holdings but has not received
verification.
(4) Includes options to purchase 175,000 shares of Common Stock that have
vested or will vest within 60 days after the Record Date, but not options
to purchase 275,000 shares that will not vest within 60 days after the
Record Date.
(5) Includes options to purchase 16,000 shares of Common Stock, all of which
have vested.
(6) Mr. Lum is not standing for re-election.
(7) Includes 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.
(8) Includes 4,255 shares issued to Mr. Morella's account in the Pilots' Plan.
(9) Includes options to purchase 8,000 shares of Common Stock, all of which
have vested.
(10) Includes options to purchase 8,000 shares of Common Stock, all of which
have vested, and 1,000 shares beneficially owned by Mr. Trzanowski's wife.
Mr. Trzanowski disclaims beneficial ownership of the shares owned by his
wife.
(11) Includes options to purchase 106,000 shares of Common Stock which have
vested or will vest within 60 days of the Record Date, but not options to
purchase 194,000 shares that will not vest within 60 days after the Record
Date. Also includes 2,000 shares held in a custodial account established by
Mr. Garibaldi's father-in-law for the benefit of Mr. Garibaldi's children.
Mr. Garibaldi is neither the custodian or the beneficiary of the account
and he disclaims beneficial ownership of the shares held in the account.
(12) Consists of options to purchase 37,500 shares of Common Stock which have
vested or will vest within 60 days after the Record Date, but not options
to purchase 112,500 shares that will not vest within 60 days after the
Record Date.
4
<PAGE>
ITEM 1
ELECTION OF DIRECTORS
At the Annual Meeting, eleven (11) directors are to be elected to serve
until the next annual meeting or until his or her successor is elected and
qualified. If a quorum is present at the Annual Meeting, the affirmative vote of
the holders of record of a majority of the shares of Common Stock and Series B,
C, D and E 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 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 1998, the Board of Directors held
ten (10) meetings, and also acted by unanimous written consent. During 1998,
each director attended at least 75% of the total number of meetings of the Board
and Committees on which he or she served.
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, Joseph P.
Hoar, Reno F. Morella, Arthur J. Pasmas, Samson Poomaihealani, Edward Z.
Safady, Sharon L. Soper and Thomas J. Trzanowski.
The nominees have been identified as nominees in accordance with the
provisions of the Company's Bylaws described above under "General Information --
Control of the Company," as follows:
<TABLE>
<S> <C>
AIP IDENTIFIED DIRECTORS: Messrs. Adams, Coo, Hoar, Pasmas, Safady and Trzanowski
IAM IDENTIFIED DIRECTOR: Mr. Poomaihealani
AFA IDENTIFIED DIRECTOR: Ms. Soper
ALPA IDENTIFIED DIRECTOR: Mr. Morella
NOMINATED COMPANY DIRECTOR: Mr. Casey
NOMINATED OUTSIDE DIRECTOR: Mr. Cole
</TABLE>
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, international strategic planning and business
development and law. Certain information about the nominees follows:
JOHN W. ADAMS, 55, has been the President since 1984 of Smith Management
LLC, a private investment firm. He was a member of the Board of Directors of
Harvard Industries, Inc. from October 1994 until November 1998, and was Chairman
of the Board and Chief Executive Officer of Harvard Industries from February
1997 until November 1998. He served on the Board of Directors of Servico, Inc.,
a lodging ownership and management company, from April 1994 until August 1997,
being Chairman of the Board from December 1995 until he resigned from the Board.
Mr. Adams was Chairman of the Board of Directors of Regency Health Services,
Inc., a health care services company, from July 1994 until October 1997.
Director since 1996.
PAUL J. CASEY, 52, has been President and Chief Executive Officer of the
Company since April 14, 1997. He has also been Vice Chairman of the Executive
Committee of the Company since June 29, 1998. 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, an
international travel services company, 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.
Director since 1997.
5
<PAGE>
TODD G. COLE, 78, 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. Director since 1994.
ROBERT G. COO, 57, 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, a director of Regency Health Services, Inc. from 1991 to 1997 and of
First National Bank, San Diego from 1995 to 1997. Director since 1996.
JOSEPH P. HOAR, 64, served in the Marine Corps for 37 years, retiring as a
four-star general in 1994. His last active-duty assignment was
Commander-in-Chief, U.S. Central Command. In 1994, he established a consulting
firm, J.P. Hoar & Associates, that engages in international strategic planning
and business development in the Middle East and Africa. He is a director of
several nonprofit and privately owned corporations. Nominated for election as a
director beginning in 1999.
RENO F. MORELLA, 50, has been a pilot for the Company since 1978. He is
currently a Captain flying DC-10 aircraft. He was Chairman of the Hawaiian
Master Executive Council of ALPA from 1994 until 1998. He was the First Officer
Category Representative for Council 102 of ALPA from 1993 until 1994. Director
since 1996.
ARTHUR J. PASMAS, 64, has been Vice President of Smith Management LLC since
1987. He was the founder in 1968 and served as President and Chief Executive
Officer of Resources Investment Corporation, a company engaged in the business
of oil and gas exploration and production, until it was acquired by Smith
Management LLC in 1987. He currently manages various oil and gas investments for
Smith Management LLC from offices in Houston, Texas, and also serves as
Co-Chairman of the Board and Co-Chief Executive Officer of Inland Resources,
Inc., Denver, Colorado, a publicly traded oil and gas company. Director since
1998.
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.
Director since 1990.
EDWARD Z. SAFADY, 41, was President and Chief Executive Officer of Liberty
National Bank in Austin, Texas from March 1988 to October 1995. He then joined
Smith Management LLC 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. Director since 1996.
SHARON L. SOPER, 53, has been a flight attendant for the Company since
1965. She has worked in both the inter-island and international operations. She
has been President of the AFA Master Executive Council since 1987. Director
since 1998.
THOMAS J. TRZANOWSKI, 60, 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. Mr. Trzanowski also served as
Treasurer of Smith Management LLC 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. Director since 1998.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE SLATE OF DIRECTOR NOMINEES SET FORTH ABOVE.
6
<PAGE>
CERTAIN MATTERS INVOLVING DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION OF DIRECTORS
During fiscal year 1998, nonemployee directors were paid a $12,000
retainer fee, prorated on a monthly basis. In addition to the $12,000 annual
retainer fee, nonemployee directors received a fee of $1,250 for each meeting of
the Board of Directors attended (decreased to $625 for telephonic attendance)
and a fee of $500 for each committee meeting attended. The Company provided
travel to and from Board meetings, as well as hotel accommodations, meals and
ground transportation, as needed, for all directors. Mr. Adams, Mr. Casey, Mr.
Morella and Ms. Soper, as employee directors, received only reimbursement for
expenses incurred in attending meetings.
Nonemployee directors of the Company are 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 the plan. 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,
which was the market price of the Common Stock on the date of grant. All such
options vested on August 28, 1998 and will expire on February 27, 2008.
RELATIONSHIPS AMONG DIRECTORS AND OFFICERS
The Directors appoint all officers annually at their first meeting after
the annual meeting of shareholders. No executive officer or director nominee of
the Company bears any relationship by blood, marriage or adoption to any other
executive officer or director nominee, except that Mr. Coo is Mr. Adams'
brother-in-law.
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 directors and officers,
including all of the Named Executive Officers. The agreements provide for
mandatory indemnification of the director or officer (the "indemnitee") against
expenses (including attorney's fees), judgments, fines, penalties and settlement
amounts to the fullest extent permitted by law, subject to certain specified
limitations and subject to the indemnitee meeting the applicable standard of
conduct. To be entitled to indemnification in proceedings other than proceedings
by or in the right of the Company, the indemnitee must have acted in good faith
and in a manner reasonably believed to be in or not opposed to the best
interests of the Company. For criminal proceedings, the director or officer must
have had no reasonable cause to believe that the conduct in question was
unlawful and, if the director or officer is found guilty, a disinterested
majority of the directors must find that (a) the indemnitee did not receive a
pecuniary benefit to the detriment of the Company and, (b) under the
circumstances, the indemnitee is entitled to indemnification. To be entitled to
indemnification in proceedings by or in the right of the Company, the indemnitee
must have acted in good faith and in a manner he or she believed to be in or not
opposed to the best interests of the Company and its shareholders, but no such
indemnification may be made if the indemnitee is adjudged liable for negligence
or misconduct in the performance of his or her duties unless and to the extent
that the court in which the proceeding was pending finds the indemnitee to be
fairly and reasonably entitled to indemnity. The Indemnification Agreements also
provide that the Company will use its best efforts to maintain in force
directors' and officers' liability insurance.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934 (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 in this Proxy Statement
any known failure to file these reports within the specified period. 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 the Company's
officers and directors, all these filing requirements were satisfied by the
Company's directors and executive officers for fiscal year 1998 with the
exception of Mr. Garibaldi. Mr. Garibaldi became aware in February of 1999 that
in the fall of 1997 his father-in-law had established a custodial account for
his children which included 2,000 shares
7
<PAGE>
of Company stock. Mr. Garibaldi is not the custodian of the account and
disclaims beneficial ownership thereof. When Mr. Garibaldi became aware of this
account, the required report was filed.
BOARD COMMITTEES
During 1998, the Board of Directors had Audit, Compensation, Executive,
Nominating, and Option Committees.
The AUDIT COMMITTEE met five times during 1998. 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 internal control practices and policies and the relationship
between the Company and its independent auditors.
The COMPENSATION COMMITTEE met twice during 1998. 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.
On February 15, 1998, due to certain resignations from the Board and the
Committee, it was necessary to create a committee of "disinterested directors"
to administer the Company's stock option and stock purchase plans. On February
15, 1998, the Board of Directors established an OPTION COMMITTEE and appointed
Mr. Safady and Mr. Poomaihealani to this committee. The Option Committee met
once during 1998. After June 26, 1998, the Compensation Committee was once again
comprised of disinterested directors and the Option Committee was discontinued.
The EXECUTIVE COMMITTEE met twice during 1998. The Executive Committee
has the authority to act for the Board of Directors on most matters during the
intervals between Board meetings.
The NOMINATING COMMITTEE recommends to the Board of Directors candidates
for election to directorships at annual meetings of shareholders. AIP, AFA, IAM
and ALPA collectively currently have the right under the Company's Bylaws to
identify nine of the eleven (11) nominees for directors. The other two
directors, Mr. Cole as the outside director and Mr. Casey as the Company
director, did not change during 1998 and are nominated for reelection at the
Annual Meeting. Accordingly, the Nominating Committee did not meet during 1998.
The Nominating Committee will consider nominees for director recommended by
shareholders of the Company, subject to the applicable provisions of the
Company's Bylaws described above. To make such a recommendation for
consideration in connection with the 2000 Annual Meeting, a shareholder should
submit the name of the proposed nominee and the proposed nominee's business
background to the Corporate Secretary, at the principal executive office of the
Company noted above, by no later than December 1, 1999.
1998 BOARD COMMITTEE MEMBERSHIP ROSTER
The following chart displays committee composition from June 26, 1998 to
April 16, 1999:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
DIRECTOR AUDIT COMPENSATION EXECUTIVE NOMINATING
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Adams, John W. X*
-------------------------------------------------------------------------------------
Casey, Paul J. X
-------------------------------------------------------------------------------------
Cole, Todd G. X
-------------------------------------------------------------------------------------
Coo, Robert G. X* X*
-------------------------------------------------------------------------------------
Lum, William Boyce X
-------------------------------------------------------------------------------------
Morella, Reno F. X
-------------------------------------------------------------------------------------
Pasmas, Arthur J. X* X
-------------------------------------------------------------------------------------
Poomaihealani, Samson X
-------------------------------------------------------------------------------------
Safady, Edward Z. X
-------------------------------------------------------------------------------------
Soper, Sharon L. X
-------------------------------------------------------------------------------------
Trzanowski, Thomas J. X X
-------------------------------------------------------------------------------------
</TABLE>
*Chairperson
8
<PAGE>
Effective February 10, 1998, Richard F. Conway, Carol A. Fukunaga and
Richard K. Matros resigned from the Board and were replaced by Mr. Pasmas, Ms.
Soper and Mr. Trzanowski for the remainder of their terms, and these replacement
directors were subsequently elected by shareholders at the 1998 Annual Meeting.
Due to these resignations, the composition of the Executive and Compensation
Committees changed and an Option Committee was established. Following is a
listing of these committees showing their composition between January 1, 1998
and June 26, 1998:
<TABLE>
<CAPTION>
Committee Members
--------------------------------------------------
Committee 1/1/98 to 2/15/98 2/15/98 to 6/26/98
- --------- ----------------- ------------------
<S> <C> <C>
Executive Adams, John W.* Adams, John W.*
Casey, Paul J. Casey, Paul J.
Lum, William Boyce Lum, William Boyce
Matros, Richard K. Morella, Reno F.
Morella, Reno F.
Compensation Matros, Richard K.* Adams, John W.*
Conway, Richard F. Poomaihealani, Samson
Poomaihealani, Samson Safady, Edward Z.
Option N/A Safady, Edward Z.*
Poomaihealani, Samson
</TABLE>
*Chairperson
9
<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
"Named Executive Officers", who are the Chief Executive Officer and the four
other most highly compensated executive officers of the Company whose salary and
bonus exceeded $100,000 in the 1998 fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
--------------------------------------------------------------------- --------------
Shares of
Common Stock
Name and Principal Salary Bonus Other Annual Underlying
Position Year ($) ($) Compensation ($)(1) Options (#)
- ------------------------------- --------- ---------------- ---------- ------------------- --------------
<S> <C> <C> <C> <C> <C>
John W. Adams 1998 200,000 -- -- 25,000
Chairman of the Board 1997 200,000 -- -- --
1996 -- -- -- 25,000
Paul J. Casey 1998 300,000 -- 28,500(2) 300,000
President and CEO 1997 214,773(3) 70,000 -- 150,000
1996 -- -- -- --
John L. Garibaldi 1998 230,000 -- -- 200,000
Executive Vice President 1997 230,000 -- -- --
and Chief Financial Officer 1996 145,492(3) 30,000 -- 165,000
John B. Happ 1998 210,000 -- 50,000(4) 150,000
Senior Vice President - 1997 8,750(3) -- -- --
Marketing and Sales 1996 -- -- -- --
Ruthann S. Yamanaka 1998 113,000(3) 10,000 -- 150,000
Senior Vice President - 1997 -- -- -- --
People Services 1996 -- -- -- --
</TABLE>
(1) The Company provides various perquisites to its executives. The value of
such perquisites was in each case less than 10% of the Named Executive
Officer's total salary and bonus.
(2) On March 31, 1998, the Company made a loan of $28,500 to Mr. Casey. See
"Certain Transactions" below.
(3) These salaries represent the amounts earned by the Named Executive Officer
when the Named Executive Officer was employed by the Company for less than
an 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. Happ's reported compensation for
1997 is for the period beginning December 15, 1997 through December 31,
1997. Ms. Yamanaka's reported compensation for 1998 is for the period
beginning March 1, 1998 through December 31, 1998.
(4) Pursuant to his Employment Agreement, Mr. Happ was provided moving and
relocation expenses of $50,000, which were incurred in 1998.
10
<PAGE>
OPTION GRANTS
The following table sets forth information about the options
granted to the Named Executive Officers in fiscal year 1998 pursuant to the 1996
Stock Incentive Plan, As Amended. During 1998, no options were granted pursuant
to the 1994 Stock Option Plan.
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
<TABLE>
<CAPTION>
Shares of % of Total Potential Realizable Value at
Common Options Assumed Annual Rates of Stock
Stock Granted to Price Appreciation for Option
Underlying Employees in Exercise Term(3)
Options Fiscal Price Expiration
Name Granted (#) Year ($/Sh) Date 5% ($) 10%($)
- -------------------- ------------ ------------ ----------- ---------- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
John W. Adams 25,000(1) 2 3.50 2/27/2008 55,000 129,250
Paul J. Casey 300,000(2) 29 3.50 2/27/2008 660,000 1,551,000
John L. Garibaldi 200,000(2) 19 3.50 2/27/2008 440,000 1,034,000
John B. Happ 150,000(2) 14 3.50 2/27/2008 330,000 775,500
Ruthann S. 150,000(2) 14 3.50 2/27/2008 330,000 775,500
Yamanaka
</TABLE>
- ---------------
(1) Options granted 2/27/98; 100% vested on 8/28/98.
(2) Options granted 2/27/98; 25% vesting on each of the next four anniversaries
of the grant date.
(3) There can be no assurance that the actual stock price will appreciate at
the assumed 5% and 10% levels or at any other level.
OPTION EXERCISES AND OPTION VALUES
The following table sets forth the (i) aggregated options exercised in
the last fiscal year and (ii) 1998 fiscal year-end option value for each of the
Named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR ("FY"), AND FY-END OPTION VALUE
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised In-the-Money
Underlying Unexercised Options at
Options at FY-End (#) FY-End ($)(1)
---------------------------- -----------------------------------
Shares
Acquired on Value
Exercise Realized
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- --------------------- ----------- --------- ---------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John W. Adams 0 0 25,000 0 -- --
Paul J. Casey 0 0 50,000 400,000 -- --
John L. Garibaldi 7,500 8,475 56,000 244,000 -- --
John B. Happ 0 0 0 150,000 -- --
Ruthann S. Yamanaka 0 0 0 150,000 -- --
</TABLE>
- ---------------
(1) The value of all unexercised options on 12/31/98 was less than the exercise
price.
11
<PAGE>
EMPLOYMENT CONTRACTS; TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company has entered into employment contracts with each of the Named
Executive Officers other than Mr. Adams. Except as described below, the
agreements for the Named Executive Officers, as amended to date, have
substantially the same terms.
Each of the agreements specifies the officer's title and general duties
and provides for a specified term of employment, which term varies as set forth
in the table below and rolls forward on a monthly basis -- i.e., on the first
day of each month, the term of the agreement is extended for an additional month
unless either party has given written notice to the other party that it does not
wish the term to be extended. Each agreement sets forth (a) the executive
officer's base salary (which is subject to annual review and may be increased in
the sole discretion of the Board of Directors), (b) the amount of any "signing
bonus" or other special benefits, (c) the eligibility of the officer to receive
annual performance bonuses in the sole discretion of the Compensation Committee
and/or Board of Directors, (d) the right of the executive officer to participate
in fringe benefit programs and benefit plans (such as stock option, pension,
disability and life insurance and medical coverages) in accordance with the
terms of those programs and benefits, (e) the right of the officer, and the
officer's spouse and dependents, to travel benefits on Company flights, (f) the
right to be included in the Company's executive long-term disability insurance
plan, (g) the right to be reimbursed for business expenses in accordance with
Company policies, (h) the right to receive an automobile allowance and
reimbursement for club dues (which rights vary among the four Named Executive
Officers) and (i) the obligations of the officer to maintain the confidentiality
of the Company's information and to observe certain noncompetition requirements.
Certain of the contractual provisions that vary in the employment
contracts of the four Named Executive Officers are shown in the following table:
<TABLE>
<CAPTION>
Effective Other
Date Base Initial Special
Named Executive Officer of Contract Salary Bonus ($) Term Features
- ----------------------- ----------- ------ --------- ---- --------
<S> <C> <C> <C> <C> <C>
Paul J. Casey 4/14/97 $300,000 $70,000 36 months (2)
John L. Garibaldi 5/1/96 $230,000 $30,000 24 months (3)
John B. Happ 12/15/97 $210,000 -- 18 months $50,000(4)
Ruthann S. Yamanaka 3/1/98 $150,000 $10,000 18 months --
</TABLE>
There are also certain differences in the termination provisions in the
employment agreements of the Named Executive Officers. All of the agreements
provide that they terminate (a) immediately upon the officer's death, (b) at the
Company's election, if the officer is unable to perform his or her duties as a
result of a medical or physical incapacity for 120 days in any consecutive
7-month period ("Disability"), (c) at any time by the Company for "Cause" (as
defined in the agreements) and (d) at any time by the Company without cause. In
addition, the employment agreements with Mr. Casey and Mr. Garibaldi provide
that they may be terminated upon the officer's retirement or by the officer for
"good reason" (which includes certain transactions that involve changes in
control, a material change in the officer's duties, a material breach by the
Company of the agreement, the failure by the Company to provide incentive
compensation and benefit plans comparable to those in effect at the time the
agreement was entered into and the relocation of the Company's principal
executive offices outside the Honolulu area). If the Officer's employment is
terminated by death or by reason of disability, the officer (or his or
- --------------
(2) Mr. Casey's agreement required the grant as of February 28, 1997 of an
option to purchase 150,000 shares of the Company's Common Stock at an
exercise price equal to the closing price of the Company's stock on that
date.
(3) Mr. Garibaldi's agreement required the grant of 100,000 options under the
Company's 1996 Stock Incentive Plan, with the exercise price, vesting and
other terms to be set at the time of the grant.
(4) Relocation allowance.
12
<PAGE>
her beneficiaries) is entitled to benefits in accordance with the Company's
retirement, insurance and other programs and plans then in effect. If the
officer's employment is terminated (a) by act of the Company other than for
cause, (b) in the case of Mr. Happ and Ms. Yamanaka, at the end of the Term
without the Company offering to renew the contract on the same terms and
conditions or (c) in the case of Mr. Casey and Mr. Garibaldi, by such officer
for good reason, then such officer is entitled to receive:
- any base salary accrued but unpaid prior to the termination
date,
- the continued payment of the officer's base salary and fringe
benefits for a period after the termination date that is equal
to the term of the officer's employment agreement (i.e., 36
months for Mr. Casey, 24 months for Mr. Garibaldi and 18 months
for Mr. Happ and Ms. Yamanaka), and
- in the case of Mr. Casey and Mr. Garibaldi, full vesting of all
rights to benefits (such as stock options) granted to such
officer (which rights remain exercisable for one year after the
termination date).
Finally, the agreements provide that an officer terminated for cause is not
entitled to continuation of such officer's base salary or other benefits after
the termination date.
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").
These executive officers also pledged their 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 the Record Date, the following executive officers were indebted to the
Company under this arrangement for the following amounts, which include
principal and interest:
John L. Garibaldi $233,023
Clarence K. Lyman $202,628
Such amount was the largest aggregate amount of indebtedness outstanding at any
time since September 1996 for each of these executive officers.
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 in the amount of $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.
On March 31, 1999, $10,000 of the principal amount of the note plus accrued
interest until that date was forgiven.
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. The
Compensation Committee also has authority to grant awards under and administers
the 1994 Stock Option Plan, the 1996 Stock Incentive Plan, As Amended and the
1996 Nonemployee Director Stock Option Plan (the "STOCK PLANS"), except that
from February 15, 1998 until June 26, 1998, the Option Committee had this
responsibility.
13
<PAGE>
By Board resolution passed on August 28, 1998 in conjunction with an
amendment of the Company's Bylaws which authorized such delegation, the Board of
Directors (1) delegated to the Compensation Committee the authority to set
compensation for the President and Chief Executive Officer, all Executive and
Senior Vice Presidents and the Corporate Secretary, subject to periodic review
by the Board and (2) delegated to the President and Chief Executive Officer the
authority to retain, terminate and set compensation for all other vice
presidents and all subordinate officers and agents of the Company, subject to
periodic review by the Compensation Committee and the Board.
As described in this Proxy Statement under the caption "Employment
Contracts; Termination of Employment and Change-in-Control Arrangements," all of
the executive officers of the Company, including the Named Executive Officers,
have employment contracts which set forth their base salaries and other
compensation arrangements and provide that their compensation levels are subject
to annual review and possible increases in the sole discretion of the Board of
Directors. Mr. Casey's current base salary level is at the same level that was
established when his employment contract was first entered into in 1997. That
salary level was determined as a result of negotiation with Mr. Casey. Taking
into account that Mr. Casey's employment agreement had been in effect only since
April of 1997 and that he has been granted options to purchase a total of
450,000 shares (including options for 300,000 shares granted by the Option
Committee in February of 1998), no further adjustments were made to Mr. Casey's
base salary or other compensation arrangement, or to the base salaries or other
compensation arrangements of the other Named Executive Officers during 1998.
SUBMITTED BY THE COMPENSATION COMMITTEE
ARTHUR J. PASMAS, CHAIRPERSON
SAMSON POOMAIHEALANI
THOMAS J. TRZANOWSKI
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 (THE "SECURITIES ACT"), OR THE EXCHANGE ACT, EXCEPT TO
THE EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES THE SAME BY REFERENCE, NOR
SHALL IT 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.
14
<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. When comprised of
disinterested directors, the Compensation Committee has these responsibilities.
From February 15, 1998 until June 26, 1998, these responsibilities were assigned
to an 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) It granted 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, to Mr. Garibaldi 200,000 shares,
to Mr. Happ and Ms. Yamanaka 150,000 shares each, and to 7 other
officers of the Company 30,000 shares each, for an aggregate for all
officers (other than Mr. Adams) of 1,010,000 shares, all of which are to
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 shares which vested on August 28, 1998
and will expire on February 27, 2008.
2) It recommended to the Board of Directors and the shareholders 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, which proposal was approved at the 1998 Annual
Meeting.
3) It granted 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 options vested on August 28, 1998 and will expire on February
27, 2008: Todd G. Cole, Robert G. Coo, William Boyce Lum, Arthur J. Pasmas,
Samson Poomaihealani, Edward Z. Safady and Thomas J. Trzanowski.
SUBMITTED BY THE OPTION COMMITTEE
EDWARD Z. SAFADY, CHAIRPERSON
SAMSON POOMAIHEALANI
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 OR THE
EXCHANGE ACT, EXCEPT TO THE EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES
THE SAME BY REFERENCE, NOR SHALL IT 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.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Company's Compensation Committee (or of the Option
Committee during its existence) is (or was) a current or former officer or
employee of the Company and no executive officer of the Company was a member of
the compensation (or equivalent) committee of any corporation of which a member
of the Company's Compensation Committee is an executive officer.
15
<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 Company's Common Stock on the American Stock
Exchange, to December 31, 1998. The Peer Issuers the Company has selected are
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. [The Company has paid no dividends on its Common Stock.]
COMPARISON OF 42 MONTH CUMULATIVE TOTAL RETURN*
AMONG HAWAIIAN AIRLINES, INC., THE S & P 500 INDEX
AND A PEER GROUP
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
6/21/95 12/95 12/96 12/97 12/98
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
HAWAIIAN AIRLINES, INC. 100 62 114 129 110
PEER GROUP 100 104 91 135 178
S & P 500 100 115 141 188 242
</TABLE>
* $100 INVESTED ON 6/21/95 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
The stock performance depicted in the graph above is not to be relied
upon as indicative of future performance. The Stock Performance Graph shall not
be deemed to be incorporated by reference into any filing by the Company under
the Securities Act or the Exchange Act, except to the extent that the Company
specifically incorporates the same by reference, nor shall it 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.
16
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
KPMG LLP was the Company's certified public accountant during 1998. A
representative of KPMG 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 appropriate questions from shareholders.
SUBMISSION OF SHAREHOLDER PROPOSALS
Shareholder proposals may be included in the Company's proxy materials
if they comply with SEC regulations. To be considered for inclusion in the
Company's proxy materials for the Company's 2000 Annual Meeting, a shareholder
proposal 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 DECEMBER 17, 1999. See also the discussion of the Company's
advance-notice Bylaw provision under "Other Matters."
ANNUAL REPORT
This Proxy Statement is accompanied by the Company's Annual Report to
Shareholders for the fiscal year ended December 31, 1998. 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
Company's proxy soliciting material.
OTHER MATTERS
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. Under the
Company's Bylaws, a shareholder may not present any proposed business at an
annual meeting unless the shareholder shall have given written notice of the
proposed business not more than 60 nor less than 30 days before the meeting,
which in the case of the Annual Meeting would be by APRIL 21, 1999. As of the
date of this Proxy Statement, no such notice had been received by the Company.
If any other matters should properly come before the Annual Meeting or any
postponements or adjournments thereof, votes will be cast pursuant to the
authority granted by the enclosed Proxy in the discretion 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 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
April 16, 1999
17
<PAGE>
PROXY
HAWAIIAN AIRLINES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE MAY 21, 1999
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 March 26,
1999, at the 1999 Annual Meeting of Shareholders of the Company to be held on
May 21, 1999 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 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" ITEM 1
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, Joseph P. Hoar, Reno F. Morella,
Arthur J. Pasmas, Samson Poomaihealani, Edward Z. Safady, Sharon L.
Soper and Thomas J. Trzanowski.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, STRIKE A LINE
THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.)
2. 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 ITEM 1 LISTED ABOVE AND IN THE
DISCRETION OF THE PROXY HOLDER ON MATTERS DESCRIBED IN ITEM 2.
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: , 1999
-------------------------------------------
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.
