<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:
[_]Confidential, for Use of the
[_]Preliminary Proxy Statement Commission Only (as Permitted by
Rule 14a-6(e)(2))
[X]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
US AIRWAYS GROUP, 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):
[_]$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_]$500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange ActRule 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:
Notes:
<PAGE>
US Airways Group, Inc.
2345 Crystal Drive
Arlington, Virginia 22227
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 19, 1999
Charlotte, North Carolina
----------------
March 31, 1999
To the Stockholders of
US Airways Group, Inc.
The 1999 annual meeting of stockholders of US Airways Group, Inc. (the
"Company") will be held at the Hilton Charlotte, 222 East Third Street,
Charlotte, North Carolina on May 19, 1999 at 9:30 a.m. local time, to consider
and act on the following matters:
1. The election of 12 directors to hold office for one year or until
their successors are elected and qualified (Item No. 1).
2. Ratification of the selection of auditors of the Company for fiscal
year 1999 (Item No. 2).
3. Approval of the Company's Long Term Incentive Plan (Item No. 3).
4. Approval of the Company's Nonemployee Directors Stock Purchase Plan
(Item No. 4).
5. Consideration of one stockholder proposal as described in the
accompanying Proxy Statement (Item No. 5).
6. The transaction of such other business as may properly come before the
meeting.
Eligible stockholders of record at the close of business on March 25, 1999
will be entitled to vote at the meeting. A list of stockholders entitled to
vote at the meeting may be examined at the executive offices of the Company at
2345 Crystal Drive, Arlington, Virginia.
By Order of the Board of Directors
Jennifer C. McGarey
Secretary
If you do not expect to attend the meeting in person, please sign and date
the accompanying proxy and return it promptly in the enclosed envelope, which
requires no postage if mailed in the United States.
<PAGE>
US Airways Group, Inc.
2345 Crystal Drive
Arlington, Virginia 22227
----------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 19, 1999
----------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors (the "Board of Directors") of US Airways Group, Inc. (the
"Company") of proxies to be voted at the annual meeting of stockholders in
Charlotte, North Carolina on May 19, 1999. Enclosed with this Proxy Statement
is a notice of the meeting, together with a proxy for your signature if you
are unable to attend. Stockholders who execute proxies may revoke them at any
time before they are voted. Any proxy may be revoked by the person giving it
any time before it is voted by delivering to the Secretary of the Company at
2345 Crystal Drive, Arlington, Virginia 22227, on or before the business day
prior to the meeting or at the meeting itself, a subsequent written notice of
revocation or a subsequent proxy relating to the same shares or by attending
the meeting and voting in person. The approximate date on which this Proxy
Statement and the accompanying form of proxy will first be sent to the
Company's stockholders is March 31, 1999.
Shares of the Company's common stock, par value $1.00 per share ("Common
Stock"), represented by properly executed proxies received prior to or at the
meeting, unless such proxies have been revoked, will be voted in accordance
with the instructions indicated in the proxies. If no instructions are
indicated on a properly executed proxy of the Company, the shares will be
voted in accordance with the recommendations of the Board of Directors.
Stockholders of record at the close of business on March 25, 1999 (the
"Record Date") are entitled to vote at the meeting. On March 25, 1999 the
Company had outstanding 77,697,645 shares of Common Stock. Each share of
Common Stock is entitled to one vote, except as set forth below. From time to
time, the voting power of the Common Stock may be limited by then applicable
U.S. statutory and U.S. Department of Transportation regulatory foreign
ownership restrictions ("Foreign Ownership Restrictions") the breach of which
could result in the loss of any operating certificate or authority of the
Company or certain of its subsidiaries. As of the date hereof, the Company
does not believe that Foreign Ownership Restrictions limit the voting power of
any Common Stock and the Company expects that the holders thereof will be
entitled to their full voting power at the annual meeting.
Required Votes
The vote of the holders of a plurality of the votes cast by holders of
shares of Common Stock will elect candidates for director (Item No. 1 on your
proxy). Abstentions or broker non-votes as to the election of directors will
not affect the election of the candidates receiving the plurality of votes.
The vote of the holders of at least a majority of the shares of Common Stock
present in person or represented by proxy at the meeting and entitled to vote
is required (i) to ratify the Board of Directors' appointment of KPMG LLP as
the Company's independent
<PAGE>
public accountants for 1999 (Item No. 2), (ii) to approve the Company's Long
Term Incentive Plan (Item No. 3), (iii) to approve the Company's Nonemployee
Directors Stock Purchase Plan (Item No. 4) and (iv) to approve the stockholder
proposal (Item No. 5). Therefore, abstentions as to these particular proposals
will have the same effect as votes against such proposals. With respect to
Items No. 2, No. 3 and No. 4, broker non-votes will be treated as votes
against the proposal. With respect to Item No. 5, however, broker non-votes
will be deemed shares of stock not entitled to vote on such proposal and will
not be counted as votes for or against such proposal, and will not be included
in calculating the number of votes necessary for approval of such proposal.
BENEFICIAL SECURITY OWNERSHIP
The following information pertains to Common Stock beneficially owned by all
directors, nominees for director and executive officers of the Company (or its
principal operating subsidiary US Airways, Inc. ("US Airways")) as of January
31, 1999. Unless indicated otherwise by footnote, the owner exercises sole
voting and investment power over the securities (other than unissued
securities, the ownership of which has been imputed to such owner).
<TABLE>
<CAPTION>
Number of Percent of
Owner Shares Class(1)
----- --------- ----------
<S> <C> <C>
Directors and Nominees for Director
Mathias J. DeVito............................ 5,000(2)
Rakesh Gangwal............................... 1,134,886(3) 1.4%
Peter M. George.............................. 0
George J. W. Goodman......................... 3,498(2)
John W. Harris............................... 3,900(2)
Edward A. Horrigan, Jr....................... 4,500(2)
Robert L. Johnson............................ 0
Robert LeBuhn................................ 11,000(2)
John G. Medlin, Jr........................... 5,000(2)
Hanne M. Merriman............................ 4,500(2)
Thomas H. O'Brien............................ 0
Hilda Ochoa-Brillembourg..................... 0
Richard B. Priory............................ 0
Raymond W. Smith............................. 3,500(2)
Stephen M. Wolf.............................. 1,870,125(4) 2.3%
Executive Officers
John R. Long III............................. 35,230(5)
Lawrence M. Nagin............................ 248,000(6)
N. Bruce Ashby............................... 32,888(7)
21 directors, nominees for director and
executive officers of the Company as a
group........................................ 3,438,140(8) 4.3%
</TABLE>
- --------
(1) Percentages are shown only where they exceed one percent of the number of
shares outstanding and are based on shares of Common Stock outstanding on
January 31, 1999.
(2) These holdings include 3,000 shares of Common Stock issuable within 60
days of January 31, 1999 upon exercise of stock options.
(3) Mr. Gangwal's holding includes 337,450 shares of Common Stock which are
subject to certain restrictions ("Restricted Stock") and 680,000 shares
of Common Stock issuable within 60 days of January 31, 1999 upon exercise
of stock options.
(4) Mr. Wolf's holding includes 339,871 shares of Restricted Stock and
1,305,000 shares of Common Stock issuable within 60 days of January 31,
1999 upon exercise of stock options.
(5) Mr. Long's holdings includes 9,000 shares of Common Stock issuable within
60 days of January 31, 1999 upon exercise of stock options.
(6) Mr. Nagin's holding includes 27,831 shares of Restricted Stock and
198,000 shares of Common Stock issuable within 60 days of January 31,
1999 upon exercise of stock options.
(7) Mr. Ashby's holding includes 4,000 shares of Restricted Stock and 25,000
shares of Common Stock issuable within 60 days of January 31, 1999 upon
exercise of stock options.
(8) All directors', nominees' and officers' holdings includes 731,735 shares
of Restricted Stock and 2,260,968 shares of Common Stock issuable within
60 days of January 31, 1999 upon exercise of stock options.
2
<PAGE>
Set forth below are the number of options and units of phantom stock of the
Company ("Deferred Stock Units") held by each director and nominee for
director pursuant to the director compensation programs. See "Compensation of
Directors" below. Although each Deferred Stock Unit represents the economic
equivalent of a share of Common Stock, no voting rights are attached thereto
and the Deferred Stock Units lack certain other attributes of Common Stock.
<TABLE>
<CAPTION>
Number of Number of Director
Owner Deferred Stock Units Stock Options(1)
----- -------------------- ------------------
<S> <C> <C>
Directors and Nominees for Director
Mathias J. DeVito................ 9,569.29 4,500
Rakesh Gangwal................... -0- -0-
Peter M. George.................. -0- -0-
George J. W. Goodman............. 9,569.29 4,500
John W. Harris................... 2,825.49 4,500
Edward A. Horrigan, Jr........... 10,140.53 4,500
Robert L. Johnson................ 500.00 1,500
Robert LeBuhn.................... 8,611.38 4,500
John G. Medlin, Jr. ............. 8,685.42 4,500
Hanne M. Merriman................ 5,739.13 4,500
Thomas H. O'Brien................ -0- -0-
Hilda Ochoa-Brillembourg......... -0- -0-
Richard B. Priory................ -0- -0-
Raymond W. Smith................. 4,194.78 4,500
Stephen M. Wolf.................. -0- -0-
</TABLE>
- --------
(1) The holding for each director and nominee for director (other than Messrs.
Gangwal, George, Johnson, O'Brien, Priory and Wolf and Ms. Ochoa-
Brillembourg) includes 3,000 shares of Common Stock issuable within 60
days of January 31, 1999 upon the exercise of stock options. These options
are also reflected in the Beneficial Security Ownership table on page 2.
The only persons known to the Company (from Company records and reports on
Schedules 13D and 13G filed with the Securities and Exchange Commission (the
"SEC")) which owned, as of December 31, 1998, more than 5% of its Common Stock
are listed below:
<TABLE>
<CAPTION>
Percent
Name and address Amount and nature of
Title of Class of beneficial owner of beneficial ownership Class(1)
-------------- ------------------- ----------------------- --------
<C> <S> <C> <C>
Common Stock Morgan Stanley 4,447,459(2) 5.31%
Dean Witter &
Co.
1585 Broadway
New York, New
York 10036
Common Stock Tiger Management 16,512,700(3) 19.7%
LLC
Tiger
Performance LLC
101 Park Avenue
New York, New
York 10178
</TABLE>
- --------
(1) Represents percent of class of stock or holdings reported as of December
31, 1998 based upon shares outstanding on that date. Assuming that Morgan
Stanley Dean Witter & Co., and Tiger Management LLC/ Tiger Performance LLC
continued to hold the same number of shares on March 25, 1999 that each
held on December 31, 1998, the percentage of outstanding common stock
owned by Morgan Stanley Dean Witter & Co., and Tiger Management LLC/Tiger
Performance LLC as of March 25, 1999 would be 5.72% and 21.25%,
respectively,
(2) As set forth in a Schedule 13G, dated February 5, 1999, as of December 31,
1998.
(3) As set forth in a Schedule 13G, dated February 12, 1999, as of December 31,
1998.
3
<PAGE>
ELECTION OF DIRECTORS (Item No. 1)
Pursuant to the by-laws of the Company, the Board of Directors consists of
12 members. Messrs. DeVito, Gangwal, Johnson, LeBuhn, Medlin, Smith and Wolf
and Ms. Merriman were elected in May, 1998 by the stockholders of the Company.
Mr. George was elected by the Board of Directors in November, 1998. Messrs.
O'Brien and Priory and Ms. Ochoa-Brillembourg are nominated for election to
the Board of Directors for the first time. Each director of the Company is
also a director of the Company's principal operating subsidiary, US Airways.
Directors will be elected to hold office for one year or until the election
and qualification of their successors. Proxies will be voted only for the
nominees named below. Except as noted otherwise, the following biographies
describe the business experience of each nominee for at least the past five
years.
<TABLE>
<CAPTION>
Served as
director
since
---------
<S> <C> <C>
Mathias J. DeVito, 68... Mr. DeVito is Chairman Emeritus of the Board and 1981
Chairman of the Executive Committee of The Rouse
Company (real estate development and manage-
ment). He also serves as a Director of First
Maryland Bancorp, Mars Supermarkets, Inc. and
subsidiaries of The Rouse Company. He is a mem-
ber of the Board of the Maryland Institute, Col-
lege of Art, and former Chairman of the Greater
Baltimore Committee. Mr. DeVito is Chairman of
the Human Resources Committee and a member of
the Executive and Nominating Committees of the
Board of Directors.
Rakesh Gangwal, 45...... Mr. Gangwal became President and Chief Executive 1996
Officer of the Company on November 18, 1998 and
President and Chief Executive Officer of US Air-
ways on May 20, 1998. Mr. Gangwal had been Pres-
ident and Chief Operating Officer of the Company
and US Airways since February 19, 1996. Prior
thereto, Mr. Gangwal had served as Executive
Vice President--Planning and Development of Air
France since November 1994. Mr. Gangwal previ-
ously served in a variety of management roles at
United Air Lines over an eleven-year period,
culminating in the role of Senior Vice Presi-
dent--Planning. Mr. Gangwal is a Director of
Boise Cascade Corporation.
Peter M. George, 55..... Mr. George is Vice Chairman and Chief Executive 1998
Officer of Ladbroke Group PLC and Chairman of
Hilton International (hotel and gaming indus-
tries) and has held such positions since 1994.
Mr. George also serves as a Director of the Hil-
ton Hotels Corporation.
Robert L. Johnson, 52... Mr. Johnson is the Chairman and Chief Executive 1998
Officer of BET Holdings, Inc. (media-entertain-
ment holding company). Mr. Johnson also serves
as a Director of the Hilton Hotels Corporation,
The United Negro College Fund, the National Ca-
ble Television Association--Academy of Cable
Programming, the American Film Institute, and
the Advertising Council. He is a member of the
Audit and Nominating Committees of the Board of
Directors.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Served as
director
since
---------
<S> <C> <C>
Robert LeBuhn, 66....... Mr. LeBuhn was the Chairman of Investor Interna- 1966
tional (U.S.), Inc. (investments) until his re-
tirement in December 1994. He is now a private
investor and is a Director of Acceptance Insur-
ance Companies, Cambrex Corporation and Enzon,
Inc. He is Trustee and President of the Geral-
dine R. Dodge Foundation, Morristown, New Jersey
and is a member of the New York Society of Secu-
rity Analysts. He is a member of the Audit, Ex-
ecutive and Nominating Committees of the Board
of Directors.
John G. Medlin, Jr., Mr. Medlin is Chairman Emeritus of the Board 1987
65..................... and, until April, 1998, was Chairman of the
Board of Wachovia Corporation (bank holding com-
pany), a position he had held since 1988. Mr.
Medlin also served as Chief Executive Officer of
Wachovia Corporation from 1977 until December
31, 1993. Mr. Medlin serves as Chairman of the
Commission for the Future of Justice and Courts
in North Carolina, as a trustee of The Duke En-
dowment, the Kenan Institute for the Arts, the
National Humanities Center, Wake Forest Univer-
sity Baptist Medical Center, the Research Trian-
gle Foundation and the Winston-Salem Foundation.
Mr. Medlin also serves as a Director of
BellSouth Corporation, Burlington Industries,
Inc., Media General, Inc., National Service In-
dustries, Inc. and Wachovia Corporation. He is
Chairman of the Nominating Committee and a mem-
ber of the Executive and Human Resources Commit-
tees of the Board of Directors.
Hanne M. Merriman, 57... Mrs. Merriman is the Principal in Hanne Merriman 1985
Associates (retail business consultants). Mrs.
Merriman is a Director of Ameren Corporation,
Central Illinois Public Service Company, State
Farm Mutual Automobile Insurance Company, The
Rouse Company, Ann Taylor Stores Corporation,
T. Rowe Price Mutual Funds, and Finlay
Enterprises, Inc. She is a member of the
National Women's Forum and a Director of
Children's Hospital. She was a member of the
Board of Directors of the Federal Reserve Bank
of Richmond, Virginia from 1984-1990 and served
as Chairman in 1989-1990. Mrs. Merriman is
Chairman of the Audit Committee and is a member
of the Executive and Safety Committees of the
Board of Directors.
Thomas H. O'Brien, 62... Mr. O'Brien is Chairman and Chief Executive Of- --
ficer of PNC Bank Corp. (diversified financial
services) and has held those combined titles
since June, 1988. Mr. O'Brien serves as a Direc-
tor of Bell Atlantic Corporation and Hilb, Rogal
& Hamilton Company. He also is a board member of
the Extra Mile Education Foundation, the Car-
negie Museums of Pittsburgh, Pittsburgh Opera,
University of Pittsburgh, and the Board of Visi-
tors, University of Pittsburgh's Graduate School
of Business. He is also a member of The Bankers
Roundtable.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Served as
director
since
---------
<S> <C> <C>
Hilda Ochoa- Ms. Ochoa-Brillembourg is President and CEO of --
Brillembourg, 54....... Strategic Investment Management and Managing Di-
rector of Emerging Markets Management (invest-
ment management), and has held such position
since 1987. Prior to that, she was the Chief In-
vestment Officer of the Pension Investment Divi-
sion at the World Bank. Ms. Ochoa-Brillenbourg
serves as a Director of World Bank/ Interna-
tional Monetary Fund Credit Union and also the
Harvard Management Company. She also is a member
of the Pension Advisory Board of the ARCO In-
vestment Management Company. Ms. Ochoa-
Brillembourg is also a trustee of the Washington
Opera, the Rockefeller Center for Latin American
Studies at Harvard University and the Meridian
International Center.
Richard B. Priory, 52... Mr. Priory is Chairman of the Board, President --
and Chief Executive Officer of the Duke Energy
Corporation (global energy services). Prior to
that, he was President and Chief Operating Offi-
cer of Duke Power Company from 1994 until its
merger with Pan Energy Corporation in 1997. Mr.
Priory joined Duke Power Company in 1976. He is
a member of the Board of Directors of the Dana
Corporation, J.A. Jones Applied Research Compa-
ny, and the Foundation of the University of
North Carolina at Charlotte.
Raymond W. Smith, 61.... Mr. Smith is Chairman of Rothschild North Ameri- 1990
ca, Inc. (international investment banking).
Prior to that he was Chairman of the Board and
Chief Executive Officer of Bell Atlantic Corpo-
ration from 1989 until December 1998. Previous-
ly, Mr. Smith had served as Vice Chairman and
President of Bell Atlantic and Chairman of The
Bell Telephone Company of Pennsylvania. Mr.
Smith currently holds the position of Chairman
of the Bell Atlantic Venture Fund, Inc. He is a
member of the Board of Directors of CBS Corpora-
tion, a trustee of Carnegie Mellon University
and the Lincoln Center Theater and is active in
many civic and cultural organizations. He is a
member of the Human Resources and Nominating
Committees of the Board of Directors.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Served as
director
since
---------
<S> <C> <C>
Stephen M. Wolf, Mr. Wolf is Chairman of the Board of Directors 1996
57................. of the Company and US Airways and was first
elected to this position in 1996. Mr. Wolf also
served as Chief Executive Officer of the Company
from January 1996 until November 1998, and as
the Chief Executive Officer of US Airways from
January 1996 until May 1998. Immediately prior
to joining US Airways, Mr. Wolf was a senior ad-
visor to the investment bank Lazard Freres & Co.
Mr. Wolf was Chairman and Chief Executive Officer
of UAL Corporation and United Air Lines, Inc.
from December 1987 until July 1994. Mr. Wolf is a
Director of Philip Morris Companies, R.R.
Donnelley & Sons Co., The Brookings Institution,
Georgetown University and the Alzheimer's Disease
and Re-lated Disorders Association. Mr. Wolf is
also Chairman of the Executive Committee.
</TABLE>
Committees and Meetings of the Board of Directors
The Board of Directors of the Company held 10 meetings in 1998. The Board of
Directors has established the following standing committees: Audit Committee,
Executive Committee, Human Resources Committee, Nominating Committee and
Safety Committee. During 1998, the Audit Committee held six meetings, the
Executive Committee held no meetings, the Human Resources Committee held nine
meetings, the Nominating Committee held four meetings, and the Safety
Committee held two meetings.
The Audit Committee, in consultation with financial officers of the Company
and the independent public accountants, assists in establishing the scope of
the annual audit. The Audit Committee (1) reviews annual and quarterly
financial statements and periodic reports filed with the SEC, (2) recommends
to the Board of Directors the appointment of independent public accountants,
(3) reviews the annual programs of the internal audit staff and (4) reviews
programs designed to protect and maintain the assets of the Company, including
insurance and internal security programs.
The Human Resources Committee determines the salaries, incentive
compensation, stock option and restricted stock grants, retirement and other
benefits which accrue to officers of the Company and its subsidiaries. The
Human Resources Committee makes recommendations to the Board of Directors
concerning the levels of compensation and benefits for the Chairman and the
Chief Executive Officer.
The Nominating Committee is responsible for making recommendations regarding
the nomination of individuals for election to the Board of Directors. The
Nominating Committee will consider individuals recommended by stockholders.
Any such recommendation must be submitted in writing prior to January 1 of
each year, accompanied by a description of the proposed nominee's
qualifications and other relevant biographical information, and should be
addressed to the Nominating Committee, in care of the Secretary of the
Company.
During 1998, each of the incumbent directors (other than Mr. George) seeking
reelection attended 75 percent or more of the meetings of the Board of
Directors and of the committees on which the director served. Mr. George
attended all meetings of the Board of Directors after his election to the
Board.
7
<PAGE>
Compensation of Directors
The annual retainer and meeting fee payable to non-employee directors in
1998 were $22,000 and $1,000, respectively. Mr. DeVito, Chairman of the Human
Resources Committee, Mrs. Merriman, Chairman of the Audit Committee, Mr.
Medlin, Chairman of the Nominating Committee, and Mr. Harris, Chairman of the
Safety Committee, each receives an additional fee of $2,000 per year for
serving in those respective capacities. Messrs. Wolf and Gangwal receive
salaries in their capacities as officers of US Airways and receive no
additional compensation as directors of the Company and US Airways.
Effective in May 1996, the compensation for non-employee directors was
changed from cash compensation plus retirement income to cash and stock
compensation. Each year active directors receive a grant of 1,500 stock
options and 500 Deferred Stock Units, both of which vest on the earlier of the
completion of their term of office or one year after grant. Using stock based
compensation for directors is intended to more closely align directors'
financial interests with that of shareholders of the Company. Additionally,
effective December 31, 1995 the Retirement Plan for Outside Directors of USAir
Group, Inc. was terminated and the value of the accrued benefits for past
service was converted into Deferred Stock Units based on the average price of
the stock in the month of December 1995.
Each director, director's spouse and the director's dependent children are
provided transportation on US Airways and reimbursement for federal income
taxes incurred thereon. Additionally, these benefits are provided for retired
directors if the director has attained certain age and service requirements.
During 1998, non-employee directors received the following benefits under this
program:
<TABLE>
<CAPTION>
Value of
Transportation
Director Benefits
- -------- --------------
<S> <C>
Mathias J. DeVito................................................ $ 960
Peter M. George.................................................. $ 0
George J. W. Goodman............................................. $ 8,530
John W. Harris................................................... $18,095
Edward A. Horrigan, Jr. ......................................... $11,477
Robert L. Johnson................................................ $10,130
Robert LeBuhn.................................................... $35,752
John G. Medlin, Jr. ............................................. $ 7,662
Hanne M. Merriman................................................ $10,964
Raymond W. Smith................................................. $ 3,882
</TABLE>
Executive Officers
The named executive officers of the Company are: Stephen M. Wolf, Chairman
of the Company and US Airways; Rakesh Gangwal, President and Chief Executive
Officer of the Company and US Airways; Lawrence M. Nagin, Executive Vice
President--Corporate Affairs and General Counsel of the Company and US
Airways; N. Bruce Ashby, Senior Vice President--Planning of US Airways;
Michelle V. Bryan--Senior Vice President--Human Resources of US Airways,
Christopher Doan, Senior Vice President--Maintenance of US Airways and Thomas
A. Mutryn, Senior Vice President--Finance and Chief Financial Officer of the
Company and US Airways. Messrs. Wolf, Gangwal and Nagin joined the Company and
US Airways in early 1996. Ms. Bryan joined US Airways in 1983 and was promoted
to Senior Vice President, Human Resources of
8
<PAGE>
US Airways in January, 1999. Mr. Doan joined US Airways in March, 1997. Mr.
Ashby joined US Airways in 1997 and was promoted to Senior Vice President--
Planning in February, 1998. Mr. Mutryn joined the Company and US Airways in
November, 1998. John R. Long, III, former Executive Vice President--Human
Resources of US Airways, resigned from US Airways in January of 1999.
Compensation of Executive Officers
The Summary Compensation Table below sets forth the compensation paid during
the years indicated to the individual who served as the Chief Executive
Officer as of the last day of the last fiscal year and the four remaining most
highly compensated executive officers of the Company as of the last day of the
last fiscal year.
Summary Compensation Table
<TABLE>
<CAPTION>
Other Restricted
Name and Principal Annual Stock All Other
Position Year Salary Bonus(A) Compensation Awards(G) Options(#) Compensation(K)
------------------ ---- -------- --------- ------------ ----------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Stephen M. Wolf......... 1998 $580,000 $ 580,000 $4,236,052(B) $10,883,964(H) 525,000 $198,900
Chairman 1997 $500,000 $ 500,000 $ 176,188(B) $ 1,920,000(H) 0 $323,857
1996 $451,923 $500,000 $ 145,962(B) $ 5,118,750(H) 1,300,000 $ 74,337
Rakesh Gangwal.......... 1998 $566,538 $ 566,538 $2,900,620(C) $10,946,813(I) 625,000 $162,660
President and Chief 1997 $428,846 $ 429,000 $ 26,087(C) $ 1,200,000(I) 0 $ 77,445
Executive 1996 $330,769 $ 400,000 $1,948,882(C) $ 4,281,250(I) 850,000 $ 89,704
Officer
Lawrence M. Nagin....... 1998 $373,846 $432,000 $ 558,081(D) $ 499,226(J) 30,000 $132,046
Executive Vice 1997 $351,538 $ 387,000 $ 17,418(D) $ 0 45,000 $ 95,442
President-- 1996 $292,923 $ 513,000 $ 2,400(D) $ 787,500(J) 225,000 $ 89,265
Corporate Affairs and
General Counsel
John R. Long, III....... 1998 $353,077 -- $ 18,732(E) $ 0 30,000 $100,815
Former Executive Vice 1997 $340,000 $ 340,000 $ 12,654(E) $ 0 45,000 $ 78,227
President--Human 1996 $329,654 $ 238,000 $ 6,687(E) $ 0 0 $255,914(L)
Resources
N. Bruce Ashby.......... 1998 $254,904 $222,375 $ 4,584(F) $ 0 35,000 $ 45,919
Senior Vice President-- 1997 -- -- -- -- -- --
Planning 1996 -- -- -- -- -- --
</TABLE>
- --------
(A) Incentive awards reflected for the years 1998, 1997 and 1996 were earned
in 1998, 1997 and 1996 but paid in 1999, 1998 and 1997, respectively. The
1996 incentive award reflected for Mr. Nagin includes a $275,000 signing
bonus paid in 1996.
(B) Amount disclosed for 1998 includes $75,000 in living expenses reimbursed
for 1998 and $60,191 paid for tax liability on such amount, $21,500 paid
for tax and financial planning services for 1998, $18,000 paid for
automobile expenses, and $2,219 in income and tax liability payments
related to personal travel on US Airways. The amount disclosed also
includes $4,059,141 for income tax liabilities incurred to permit the
retention of Restricted Stock vesting pursuant to Mr. Wolf's Restricted
Stock agreements with US Airways. Amount disclosed for 1997 includes
$75,000 in living expenses reimbursed for 1997 and $62,975 paid for tax
liability on such amount, $25,000 paid for tax and financial planning
services for 1997, $12,000 paid for automobile expenses, and $1,213 in
income and tax liability payments related to personal travel on US
Airways. Amount disclosed for 1996 includes $70,902 in living expenses
reimbursed for 1996, $59,535 paid for tax liability on such amount, and
$15,525 paid for tax and financial planning services for 1996.
(C) Amount disclosed for 1998 includes $18,000 paid for automobile expenses,
$1,509 in income and tax liability payments related to personal travel on
US Airways, and $40,934 paid for tax liability related to moving expenses.
The amount disclosed also includes $2,840,177 for income tax liabilities
incurred to permit the retention of Restricted Stock vesting pursuant to
Mr. Gangwal's Restricted Stock agreement with US Airways. Amount disclosed
for 1997 includes $18,799 paid for automobile expenses and $7,288 in
income and tax liability payments related to personal travel on US
Airways. Amount disclosed for 1996 includes $13,752 paid for automobile
expenses and $1,935,130 paid to establish a $1 million (after-tax)
deferred annuity, payable to Mr. Gangwal at retirement or severance.
(D) Amount disclosed for 1998 includes $9,000 paid for automobile expenses,
$300 paid for tax and financial planning service, and $1,982 in income and
tax liability payments related to 1998 personal travel on US Airways. The
amount disclosed also includes $546,799 for income tax liabilities
incurred to permit the retention of Restricted Stock vesting pursuant to
Mr. Nagin's Restricted Stock agreement with US Airways. Amount disclosed
for 1997 includes $6,000 in automobile expenses, $4,200 paid for tax and
financial planning services, and $7,218 in income and tax liability
payments related to personal travel on US Airways (paid in 1998 for 1997).
Amount disclosed for 1996 was paid for tax and financial planning
services.
9
<PAGE>
(E) Amount disclosed for 1998 includes $9,000 for automobile expenses, and
$9,732 in income and tax liability payments related to personal travel on
US Airways. Amount disclosed for 1997 includes $6,000 for automobile
expenses, and $6,654 in income and tax liability payments related to
personal travel on US Airways. Amount disclosed for 1996 was income and
tax liability payments related to personal travel on US Airways.
(F) Amount disclosed reflects income and tax liability payments related to
personal travel on US Airways.
(G) The aggregate number of shares of Restricted Stock held by each of Messrs.
Wolf, Gangwal, Nagin, and Ashby on December 31, 1998, and the respective
value of such shares based on the fair market value of the stock on such
date ($53.3125) were, respectively: Mr. Wolf-421,121 shares, $22,451,013;
Mr. Gangwal-337,450 shares, $17,990,303; Mr. Nagin-27,831 shares,
$1,483,741; and Mr. Ashby-4,000 shares, $213,250. Mr. Long held no shares
of Restricted Stock on December 31, 1998. The Restricted Stock is entitled
to the same dividends payable on outstanding shares of Common Stock.
(H) Amount disclosed for 1998 reflects an award of 28,621 shares of Restricted
Stock effective January 21, 1998, vesting on January 20, 2001, based on
the closing price ($63.75) on the grant date; and an award of 15,625
shares of Restricted Stock effective May 11, 1998, vesting immediately,
based on the closing price ($64.00) on the grant date. In addition, in
connection with a new long term employment arrangement between US Airways
and Mr. Wolf, Mr. Wolf received an award of 150,000 shares effective
November 16, 1998, vesting ratably on each of the four anniversaries of
the grant date, based on the closing price ($47.0625) on the grant date.
The amount disclosed for 1998 also includes an award of 18,735.363 shares
of Restricted Stock effective March 16, 1999, vesting immediately, based
on the closing price ($53.375) on the grant date. Amount disclosed for
1997 reflects an award of 80,000 shares of Restricted Stock effective
April 1, 1997, vesting on April 1, 2001, based on the closing price
($24.00) on the grant date. Amount disclosed for 1996 reflects an award of
325,000 shares of Restricted Stock, effective January 22, 1996, vesting
ratably on each of the four anniversaries of the grant date, based on the
closing price of ($15.75) on the grant date.
(I) Amount disclosed for 1998 reflects an award of 37,450 shares of Restricted
Stock effective January 21, 1998, vesting on January 20, 2001, based on
the closing price ($63.75) on the grant date; and an award of 7,812.5
shares of Restricted Stock effective May 11, 1998, vesting immediately,
based on the closing price ($64.00) on the grant date. In addition, in
connection with a new long term employment arrangement between US Airways
and Mr. Gangwal, Mr. Gangwal received an award of 150,000 shares of
Restricted Stock effective November 16, 1998, with 30,000 shares vesting
on November 16, 2000 and November 16, 2001, respectively, and 45,000
shares vesting on November 16, 2002 and November 16, 2003, respectively
based on the closing price ($47.0625) on the grant date. The amount
disclosed for 1998 also includes an award of 18,735.363 shares of
Restricted Stock effective March 16, 1999, vesting immediately, based on
the closing price ($53.375) on the grant date. Amount disclosed for 1997
reflects an award of 50,000 shares of Restricted Stock effective April 1,
1997, vesting on April 1, 2001, based on the closing price ($24.00) on the
grant date. Amount disclosed for 1996 reflects an award of 250,000 shares
of Restricted Stock, effective February 19, 1996, vesting 20% on each of
February 19, 1996 and the four succeeding anniversaries of the grant date,
based on the closing price ($17.125) on the grant date.
(J) Amount disclosed for 1998 reflects on award of 7,831 shares of Restricted
Stock, effective January 21, 1998, vesting on January 20, 2001, based on
the closing price ($63.75) on the grant date. Amount disclosed for 1996
reflects an award of 50,000 shares of Restricted Stock, effective February
6, 1996, vesting 20% on each of February 6, 1996 and the four succeeding
anniversaries of the grant date, based on the closing price ($15.75) on
the grant date.
(K) As further described herein, amounts disclosed include the value of
benefits under the US Airways officer split dollar life insurance program,
contributions to the defined contribution pension plans, and moving
expense payments. Under the split dollar life insurance plan of US
Airways, individual life insurance coverage is available to executive
officers, with US Airways paying the premium associated with this
coverage. Based on life expectancy and other assumptions, US Airways
expects to recover the premiums it pays with respect to the whole life
component of the coverage. The following amounts reflect the value of the
benefits accrued in 1998, calculated on an actuarial basis, ascribed to
the insurance policies purchased on the lives of the executives, plus the
dollar value of premiums paid by US Airways with respect to the insurance:
Mr. Wolf--$49,648; Mr. Gangwal--$26,452; Mr. Nagin--$40,021; Mr. Long--
$28,886; and Mr. Ashby--$12,413. During 1998, US Airways made
contributions to the accounts of Messrs. Wolf, Gangwal, Nagin, Long, and
Ashby, in certain defined contribution pension plans, in the following
amounts, respectively: $135,385, 87,592, $92,025, 71,929, $33,506. During
1998, US Airways paid $13,867 in moving expenses for Mr. Wolf, and $48,616
in moving expenses for Mr. Gangwal.
(L) Amount includes profit sharing payment of $81,754 for fiscal year 1996
attributable to pay reductions in 1991 and 1992.
10
<PAGE>
Stock Option Grants in Last Fiscal Year
The following table provides information on stock option grants in 1998 to
the named executive officers.
<TABLE>
<CAPTION>
Percent of Total
Number of Shares Options Granted Exercise Grant Date
Underlying to Employees or Base Expiration Present Value(1)
Name Option Granted in 1998 Price Date $
---- ---------------- ---------------- -------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Stephen M. Wolf......... 125,000 2.8% $65.625 6/19/08 5,448,750
400,000 9.1% $47.219 12/16/08 12,320,000
Rakesh Gangwal.......... 125,000 2.8% $65.625 6/19/08 5,448,750
500,000 11.3% $47.219 12/16/08 15,400,000
Lawrence M. Nagin....... 30,000 0.7% $75.031 8/21/08 1,496,100
John R. Long III........ 30,000 0.7% $75.031 8/21/08 1,496,100
N. Bruce Ashby.......... 15,000 0.3% $61.688 3/1/08 612,000
20,000 0.5% $75.031 8/21/08 997,400
</TABLE>
- --------
(1) The Black-Scholes model used to estimate the present value of the options
at date of grant considers a number of factors, including the stock's
projected volatility, the expected exercise period of the option, interest
rates and the vesting features of the option. The following assumptions
were used in determining the values under the Black-Scholes model: (i)
risk-free rate of return: 5.21%, (ii) expected stock price volatility:
51.34%, (iii) exercise period of 9 years, and (iv) dividend yield: 0.00%.
The actual value, if any, realized upon the exercise of a stock option
will depend on the excess of the market value of the Common Stock on the
date the option is exercised over the exercise price.
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
The following table provides information on the number of options held by
the named executive officers at fiscal year-end 1998. A portion of the
unexercised options held by the officers were in-the-money based on the fair
market value of the Common Stock on December 31, 1998 ($53.3125).
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SAR's at Options/SAR's at
Year End (#) Year-End ($)
Shares Acquired Value Realized ------------------------- -------------------------
Name on Exercise (#) $ Exercisable Unexercisable Exercisable Unexercisable
---- --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stephen M. Wolf......... 0 $ 0 1,230,000 595,000 $47,781,250 $ 8,118,750
Rakesh Gangwal.......... 0 $ 0 510,000 965,000 19,603,125 16,115,625
Lawrence M. Nagin....... 0 $ 0 144,000 156,000 5,440,501 4,465,125
John R. Long III........ 60,000 $ 2,700,825 9,000 66,000 251,438 1,005,750
N. Bruce Ashby.......... 0 $ 0 19,000 71,000 662,813 1,203,750
</TABLE>
Retirement Benefits
Currently, US Airways maintains a defined contribution plan retirement
program comprised of (i) a money purchase pension plan where contributions are
based on a percentage of compensation and is age-weighted, (ii) a 401(k)
savings plan with a Company match, and (iii) a profit sharing plan. This
retirement program is an individual account program and amounts contributed to
each named executive's account are included in the Summary Compensation Table
above.
Prior to 1992, US Airways' retirement plan (the "Retirement Plan") for its
salaried employees was comprised of two qualified plans--(1) the primary plan,
a defined benefit plan; and (2) the secondary plan, a target benefit defined
contribution plan. The Retirement Plan was designed so that the two plans,
when aggregated, would provide noncontributory benefits based upon both years
of service and the employee's highest three-year
11
<PAGE>
average annual compensation during the last ten calendar years of service. The
primary plan is integrated with the Social Security program so that the
benefits provided thereunder are reduced by a portion of the employee's
benefits from Social Security. US Airways' contributions to the primary plan
are not allocated to the account of any particular employee. Under the
secondary plan, contributions are made to individual employee accounts to the
extent allowable under the limits of the Internal Revenue Code ("Code") when
such employee's benefit produced under the formula in the primary plan exceeds
the benefit payable under the primary plan due to the limits on defined
benefit plans under the Code. US Airway's contributions to the secondary plan
are allocated to individual employees' accounts. During 1998, no contributions
were made to any executive officer's account.
Under the Retirement Plan, benefits usually begin at the normal retirement
age of 65, however, the Retirement Plan also provides benefits for employees
electing early retirement from ages 55 through 64. If such an election is
made, the benefits may be reduced to reflect the longer interval over which
the benefits will be paid. Executive officers hired prior to December 31, 1991
participated in the Retirement Plan on the same basis as other employees of US
Airways. The Retirement Plan was frozen on December 31, 1991, and there have
been no benefit accruals under the primary or secondary plan since that date.
Contributions to and benefits payable under the Retirement Plan must be in
compliance with the applicable guidelines or maximums established by the Code.
US Airways has adopted an unfunded supplemental plan which will provide those
benefits which would otherwise be payable to officers under the Retirement
Plan, but which, under the Code, are not permitted to be funded or paid
through the qualified plans maintained by US Airways. Benefit accruals under
the supplemental plan also ceased upon the freezing of the Retirement Plan on
December 31, 1991. Such supplemental plan provides that any benefits under the
unfunded supplemental plan will be paid in the form of a single, lump sum
payment. Such supplemental plans are specifically provided for under
applicable law and have been adopted by many corporations under similar
circumstances. As of December 31, 1998, Mr. Long was the only executive
officer entitled to receive retirement benefits under this supplemental plan.
The following table presents the noncontributory benefits payable per year
for life to employees under the frozen Retirement Plan and the unfunded
supplemental plan described above, assuming normal retirement in the current
year. The table also assumes the retiree would be entitled to the maximum
Social Security benefit in addition to the amounts shown.
<TABLE>
<CAPTION>
Noncontributory Pension Based on Years of
Final Earnings Service
as defined in --------------------------------------------
the Plan 10 Years 15 Years 20 Years 25 Years 30 Years
- --------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 100,000......................... $ 19,057 $ 28,586 $ 38,114 $ 47,643 $ 52,643
200,000......................... $ 43,057 $ 64,586 $ 86,114 $107,643 $117,643
300,000......................... $ 67,057 $100,586 $134,114 $167,643 $182,643
400,000......................... $ 91,057 $136,586 $182,114 $227,643 $247,643
500,000......................... $115,057 $172,586 $230,114 $287,643 $312,643
600,000......................... $139,057 $208,586 $278,114 $347,643 $377,643
700,000......................... $163,057 $244,586 $326,114 $407,643 $442,643
800,000......................... $187,057 $280,586 $374,114 $467,643 $507,643
900,000......................... $211,057 $316,586 $422,114 $527,643 $572,643
1,000,000......................... $235,057 $352,586 $470,114 $587,643 $637,643
1,100,000......................... $259,057 $388,586 $518,114 $647,643 $702,643
1,200,000......................... $283,057 $424,586 $566,114 $707,643 $767,643
1,300,000......................... $307,057 $460,586 $614,114 $767,643 $832,643
1,400,000......................... $331,057 $496,586 $662,114 $827,643 $897,643
1,500,000......................... $355,057 $532,586 $710,114 $887,643 $962,643
</TABLE>
12
<PAGE>
The values reflected in the above chart represent the application of the
Retirement Plan formula to the specified amounts of compensation and years of
service. The compensation covered by the Retirement Plan is salary and bonus,
as reported in the Summary Compensation Table. The credited years of service
under the Retirement Plan through the date of freezing of the plan (December
31, 1991) for each of the individuals included in the Summary Compensation
Table are as follows: Messrs. Wolf, Gangwal, Nagin, and Ashby--none, and
Mr. Long--16 years.
Messrs. Wolf, Gangwal, Nagin, Ashby and Long have entered into agreements
which provide for a supplement to their accrued retirement benefits under the
Retirement Plan. The supplements are designed to provide such persons with the
benefits they would have received had they been employed by US Airways for the
number of years to be entitled to full retirement benefits under the
Retirement Plan (as if the Retirement Plan had not been frozen). The benefits
under the supplemental retirement arrangements are based on the greater of
$1,000,000 or actual salary and bonus for Mr. Wolf, the greater of actual
salary and bonus or base salary and assumed maximum bonus for Mr. Gangwal,
base salary and assumed bonus for Messrs. Nagin and Ashby, and base salary and
actual bonus paid for Mr. Long. These benefits are subject to an offset for
benefits payable under the tax-qualified and non-qualified defined
contribution plan retirement program. The credited years of service under
these supplemental arrangements for each of the individuals included in the
Summary Compensation Table are as follows: Mr. Wolf-30 years,
Mr. Gangwal-15 years, Mr. Nagin-12 years, Mr. Ashby- 2 years, and Mr. Long-16
years.
Employment Arrangements
Under his employment arrangements with the Company and US Airways, Mr. Wolf
is entitled to an annual base salary of not less than $600,000. In addition,
Mr. Wolf is eligible for an annual bonus pursuant to the terms of the
Company's Incentive Compensation Plan. Under the plan, Mr. Wolf may receive a
bonus of 100% of annual base salary for target results, which may be increased
for results in excess of the target up to a maximum bonus of 200% of base
salary. Subject to approval by the shareholder's at this meeting of the
Company's Long Term Incentive Plan ("LTIP"), Mr. Wolf is also eligible for a
bonus of 220% of his average annual base salary from the LTIP if certain
target results are achieved during the performance period, which may be
increased to a maximum bonus of 440% for results exceeding the target.
Under his employment agreement with the Company and US Airways, Mr. Gangwal
is entitled to an annual base salary of not less than $675,000. In addition,
Mr. Gangwal is eligible for an annual bonus pursuant to the terms of the
Company's Incentive Compensation Plan. If the Company achieves its target
objectives, Mr. Gangwal may receive a bonus of 100% of his annual base salary,
which may be increased for results in excess of the target up to a maximum
bonus of 200% of his base salary. Mr. Gangwal also may receive a bonus of 220%
of his average annual base salary if the Company achieves its target
objectives during the performance period under the LTIP, which may be
increased up to a maximum of 440% of his average annual base salary for
results exceeding the target.
Under their employment arrangements with US Airways, Messrs. Nagin, and
Ashby are entitled to annual base salaries of not less than $360,000 and
$250,000, respectively. Messrs. Nagin and Ashby are eligible for an annual
bonus pursuant to the terms of the Company's Incentive Compensation Plan. If
the Company achieves its target objectives, Mr. Nagin may receive a bonus of
60% of his annual base salary, which may be increased for results in excess of
the target up to a maximum bonus of 120% of his base salary. Mr. Nagin is also
eligible for a bonus under the LTIP of 80% of his average annual base salary
if the Company achieves its target objectives which may be increased up to a
maximum of 160% for results exceeding target.
13
<PAGE>
Under the Incentive Compensation Plan, Mr. Ashby may receive a bonus of 50%
of his annual base salary if the Company achieves its target objectives which
may be increased up to a maximum bonus of 100% of his base salary for results
exceeding the target. Mr. Ashby is also eligible for a bonus under the LTIP
ranging from 70% of his average annual base salary if the Company achieves the
target results to a maximum bonus of 140% for results that are in excess of
the target for the performance period.
In connection with their employment arrangements, each of Messrs. Wolf,
Gangwal and Nagin are entitled to reimbursement of fees for certain tax and
financial planning advice.
Mr. Long's employment arrangement terminated pursuant to its terms effective
with his resignation in January of 1999.
Arrangements Concerning Termination of Employment and Change of Control
US Airways currently has employment contracts (the "Employment Contracts")
with Messrs. Wolf, Gangwal and Nagin (the "Executives"). The terms of the
Employment Contracts extend until the earlier of the fourth anniversary
thereof for Mr. Wolf, and the third anniversary thereof for Messrs. Gangwal,
and Nagin, or the Executive's normal retirement date, and are subject to
automatic one-year annual extensions on each anniversary date unless advance
written notice is given by US Airways. In exchange for each Executive's
commitment to devote his full business efforts to US Airways, the agreements
provide that each Executive will be re-elected to his current position and
will receive (1) an annual base salary at a rate not less than that in effect
during the previous year, (2) incentive compensation as provided in the
contract and (3) insurance, disability, medical and other benefits generally
granted to other officers. In the event of a change of control, as defined in
each Employment Contract, the term of each Employment Contract is
automatically extended until the earlier of the fourth or third anniversary,
as applicable, of the change of control date or the Executive's normal
retirement date.
The Employment Contracts provide that, should US Airways or any successor
fail to re-elect the Executive to his or her position, assign the Executive to
inappropriate duties which result in a diminution in the Executive's position,
duties, authority or responsibilities, fail to compensate the Executive as
provided in the Employment Contract, transfer the Executive in violation of
the Employment Contract, fail to require any successor to US Airways to comply
with the Employment Contract or otherwise terminate the Executive's employment
in violation of the Employment Contract, the Executive may elect to treat such
failure as a breach of the Employment Contract if the Executive then
terminates employment. As liquidated damages as the result of an event not
following a change of control that is deemed to be a breach of the Employment
Contracts, US Airways or its successor would be required to pay the Executive
a lump sum equal to (i) his annual base salary for the then remaining term of
the Employment Contract, in the case of Mr. Wolf, or (ii) three years' base
salary in the case of Messrs. Gangwal and Nagin, and to continue granting
certain employee benefits for the then remaining term of the Executive's
Employment Contract. If the breach follows a change of control, the Executive
would be entitled to receive (i) an amount equal to the product of three times
the sum of the Executive's annual base salary plus an annual bonus, and (ii)
additional pension, health insurance, travel and certain other benefits. In
addition, in the case of the Executives during the 30-day period immediately
following the first anniversary of a change of control, the Executive may
elect to terminate his Employment Contracts for any reason and receive the
liquidated damages described in the immediately preceding sentence. Each
Employment Contract provides that the Executive shall be entitled to recover
from US Airways reasonable attorney's fees in connection with enforcement of
such Executive's rights under the Employment Contract. Each Employment
Contract also provides that any payments the Executive receives in the event
of a termination after a change of control shall be increased, if necessary,
such that, after taking into account all taxes he would incur as a result of
such payments, the Executive would receive the same after-tax amount he would
have received had no excise tax been imposed under Section 4999 of the Code.
14
<PAGE>
Messrs. Wolf's, Gangwal's and Nagin's restricted stock and benefits under
the supplemental retirement agreement will vest immediately upon a change-of-
control, a termination of employment without cause or upon resignation for
good reason. All of Messrs. Wolf's, Gangwal's and Nagin's stock options will
vest immediately upon a change of control. In addition, certain of Messrs.
Wolf's, Gangwal's and Nagin's stock options will vest immediately upon a
termination without cause or upon resignation for good reason.
The Company has also entered into a severance agreement ("Severance
Agreement") with Mr. Ashby. The Severance Agreement extends until the earlier
of the severance of Mr. Ashby's employment, or Mr. Ashby's retirement date.
Pursuant to the terms of his Severance Agreement, if US Airways should fail to
elect Mr. Ashby to his position, assign Mr. Ashby to duties which are
inconsistent with his position, authorities, duties or responsibilities, fail
to compensate Mr. Ashby in accordance with the terms of the Severance
Agreement, require relocation under certain circumstances, fail to require any
successor to US Airways to comply with the Severance Agreement or otherwise
terminate Mr. Ashby's employment in violation of the Severance Agreement, Mr.
Ashby may elect to treat such failure as a breach of the Severance Agreement
if Mr. Ashby then terminates his employment. As a result of such breach of the
Severance Agreement, US Airways shall pay Mr. Ashby a lump sum payment equal
to one year's base salary.
If such breach of Severance Agreement occurs following a change of control,
Mr. Ashby will be entitled to receive (i) a lump sum payment equal to the
product of three times the sum of Mr. Ashby's annual salary plus annual bonus,
(ii) health insurance benefits until such time as Mr. Ashby qualifies for
group health insurance benefits from another employer, (iii) travel benefits
for Mr. Ashby's life; and (iv) continuation of certain other benefits during
the remainder of the three year period following the change of control. The
Severance Agreement provides that Mr. Ashby shall be entitled to recover from
US Airways reasonable attorney's fees in connection with enforcement of Mr.
Ashby's rights under the Severance Agreement. The Severance Agreement further
provides that any payments Mr. Ashby receives in the event of termination
after a change of control shall be increased, if necessary, such that, after
taking into account all taxes he would incur as a result of such payments, Mr.
Ashby would receive the same after-tax amount he would have received had no
excise tax been imposed under Section 4999 of the Code.
Mr. Ashby's benefits under the supplemental retirement agreement will vest
immediately upon a change of control, or upon resignation for good reason. Mr.
Ashby's restricted stock will vest immediately upon a change of control or his
death or disability, and his stock options will vest immediately upon a change
of control.
Currently, under the Company's 1996 Stock Incentive Plan (the "1996 Plan"),
pursuant to which employees of the Company and its subsidiaries have been
awarded stock options with respect to Common Stock and shares of restricted
stock, the occurrence of a change of control, as defined, would make all
granted options immediately exercisable without regard to the vesting
provisions thereof, and under certain circumstances, would cause shares of
restricted stock to vest. In addition, grantees would be able, during the 60-
day period immediately following a change of control, to surrender all
unexercised stock options under the 1996 Plan to the Company for a cash
payment equal to, in the case of options not issued in tandem with stock
appreciation rights, the excess, if any, of the fair market value of the
Common Stock over the exercise prices of such stock options or, in the case of
options issued in tandem with stock appreciation rights, the positive value of
such stock appreciation rights.
Notwithstanding anything to the contrary set forth in any of the Company's
or US Airways' filings under the Securities Act of 1933, or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), that incorporates by
reference this Proxy Statement, in whole or in part, the following Report and
Performance Graph shall not be incorporated by reference into any such
filings.
15
<PAGE>
HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Human Resources Committee (the "Committee") is responsible for
determining the annual salary, short-term and long-term cash and stock
incentive compensation, and other compensation of the executive officers,
including the executive officers named in the Summary Compensation Table. This
report describes the policies and approach of the Committee in establishing
executive compensation during 1998.
Committee Approach to Compensation
In determining the principal components of executive compensation, the
Committee, in consultation with an independent compensation consultant,
considers the following factors: (a) Company performance, both year over year
and in comparison to other companies within the airline industry; (b) the
individual performance of the executive; (c) comparative compensation studies;
(d) historical compensation levels at the Company; and (e) the overall
competitive environment in executive compensation needed to attract, retain
and motivate talented and experienced senior management.
The Committee reviews the compensation levels for peer-level positions of
premier companies of similar size to the Company, as well as at other major
domestic passenger airlines, including, but not limited to, American Airlines
("American"), Delta Air Lines, Inc. ("Delta"), Northwest Airlines, Inc.
("Northwest") and United Air Lines ("United"). Two of these airlines are
included in the S & P Airline Index used in the Performance Graph.
Generally, the Committee reviews airline compensation survey data and base
salary is targeted to be at or below median levels for the named executive
officers. However, stock awards and long-term incentive compensation, and
consequently total compensation, are targeted to link a significant portion of
each executive officer's compensation to the performance of the Company's
stock, thereby increasing shareholder value.
Components of Executive Compensation
Base Salary. Base salaries are reviewed annually, and in connection with
promotions and when responsibilities for the position are changed. The
Committee's executive compensation approach is to maintain base salaries below
the industry median.
Annual Cash Incentive Compensation. The Committee adopted and administers
the Incentive Compensation Plan (the "ICP plan"). All officers, including the
named executive officers, and certain other key management employees of the
Company are eligible to participate in the ICP plan. The ICP plan provides for
the payment of both incentive and discretionary awards. The incentive awards
are based upon the Company achieving a pre-established performance objective
which is set by the Committee annually. The Committee also
establishes target percentages for each executive. For the 1997 fiscal year,
the Company's results exceeded the objective and in 1998 the Committee awarded
incentive payments to the executive officers ranging from their target
percentage up to the maximum percentage.
During 1998 the Company's compensation consultant conducted a survey of
incentive compensation ranges for comparable airline companies as well as
general industry companies of comparable revenue size. Based on this survey,
the Committee revised the incentive target percentages for executives. The
target awards for the executive officers range from 50% of base salary for
Senior Vice Presidents to 60% for Executive Vice Presidents, and 100% of base
salary for the Chief Executive Officer and for the Chairman. If the Company's
objective is exceeded, then the incentive award may also be increased up to a
maximum amount of double the
16
<PAGE>
target percentage, or 100% to 200% of base salary. The Committee retains the
discretion to adjust any award based on individual performance. The Committee
also retains the discretion to pay a discretionary award in a year when the
Company did not achieve its objective or to pay an award in addition to the
maximum incentive award when circumstances are appropriate for such
discretionary awards.
For fiscal year 1998, the ICP plan set as the Company's target objective a
stated percentage "Operating Margin." The Company achieved its maximum
financial objective for 1998 and the Committee awarded payments commensurate
with this performance.
Long Term Cash Incentive Compensation. During 1998, the Board of Directors
adopted a long-term cash incentive compensation plan ("LTIP"), subject to
stockholder approval at this meeting. The details of the LTIP are described
more fully in the Company proposal to approve the LTIP beginning on page 20 of
this proxy statement. The LTIP was deemed necessary to hire and retain high
performance executives. The purpose of the addition of the LTIP is to tie a
portion of total compensation to operating results over a longer time period.
With this overall compensation approach, the Committee believes it will more
closely align executive compensation with Company performance while enabling
the Company to recruit and retain talented executives with attractive total
compensation packages.
In the first two performance periods ending with fiscal years 1999 and 2000,
the Committee has set as the Company's objective to achieve the weighted
average of pre-tax adjusted income margins of selected competitors. The target
percentages for executive officers under the LTIP are 70% of average annual
base salary for Senior Vice Presidents, 80% of average annual base salary for
Executive Vice Presidents and 220% of average annual base salary for the Chief
Executive Officer and the Chairman.
Stock Options. The executive officers of the Company participate in the
Company's 1996 Stock Incentive Plan (the "1996 Plan") which is administered by
the Committee. The Committee is authorized to grant options under the 1996
Plan at an exercise price equal to the fair market value of a share of Common
Stock on the effective date of the grant. The Committee is also authorized
under the terms of the 1996 Plan to grant awards of restricted stock. The
Committee set the long-term incentive compensation for its executive officers
at the high end of the comparison range. The Committee believes that granting
stock options and restricted stock to executive officers aligns the
executive's interests more closely with those of the stockholders of the
Company by tying a meaningful portion of compensation to the performance of
the Company's stock. The Committee considers the individual performance of
each executive officer, historical stock grants made by the Company to the
individual and the recommendations of the consultant based on survey data.
Historically, stock options have generally been granted annually, although
this practice was interrupted during 1993 through 1996. In 1996 when Mr. Wolf,
as Chairman and Chief Executive Officer, and other executive officers joined
the Company, the Committee awarded them sizable grants of stock options and
restricted stock in part to induce them to join the Company and also as an
incentive to build shareholder value. These grants had vesting schedules over
a four-year period. Based on the significant improvement in the performance of
the Company during 1997 and 1998, the Committee granted Messrs. Wolf, Gangwal
and Nagin
additional shares of restricted stock in 1998 (with cliff vesting in the year
2001), while the executive officers also received additional grants of stock
options (ratably vesting over a five-year period). Options and restricted
stock were also granted to Messrs. Wolf and Gangwal in 1998 in connection with
the CEO succession, as described below under "CEO Compensation."
The Committee supports and encourages stock ownership in the Company by its
executive officers and in 1998 it promulgated standards regarding levels of
ownership by officers. The stock ownership requirement is based on a multiple
of base salary and ranges from 200% of base salary for Senior Vice Presidents
to 300% of base salary for Executive Vice Presidents and 500% of base salary
for the Chief Executive Officer and the
17
<PAGE>
Chairman. Options and unvested restricted stock holdings are not included in
the executive's holdings for purposes of meeting this standard.
CEO Compensation
During 1998, the Company and US Airways implemented their plan for Chief
Executive Officer succession. Stephen M. Wolf served as Chairman and Chief
Executive Officer for US Airways through May 1998 and of the Company through
November 1998. During this time period, consistent with the Committee's
executive compensation approach, Mr. Wolf's base salary was set well below the
industry median. In May of 1998, the President and Chief Operating Officer,
Rakesh Gangwal, succeeded to the position of President and CEO for US Airways
and assumed that role for the Company in November of 1998. Mr. Wolf remains
Chairman, continuing in an executive capacity at both US Airways and the
Company. In setting the compensation packages for these new positions, it was
the Committee's intent to incent and retain Mr. Wolf to remain as an active
executive for at least five years while ensuring Mr. Gangwal's retention and
succession to the CEO role. In this regard, Mr. Wolf's salary and cash
incentive compensation targets were not changed but he was awarded restricted
stock and stock option grants with a graduated vesting schedule designed for
retention. For the new CEO, the Committee increased Mr. Gangwal's base salary
but, consistent with the overall philosophy, the salary remains below industry
median and lower than that of the CEO at major competitors such as American,
Continental, Northwest and United. The Committee also granted Mr. Gangwal
restricted stock and stock option awards, with a delayed vesting schedule
designed to make this total compensation package at the high-end of the
industry comparison range if the Company's stock price performance is
favorable.
Deductibility of Executive Compensation
Section 162(m) of the Code limits the tax deduction of a publicly-held
company allowed for compensation paid to the Chief Executive Officer and to
the four most highly compensated executive officers other than the Chief
Executive Officer. Generally, the Committee desires to maintain the tax
deductibility of compensation for executive officers to the extent it is
feasible and consistent with the objectives of the Company's compensation
programs. Some, but not all, of the compensation programs established for
executive officers comply with the deductibility requirements under Section
162(m). The Committee continues to consider ways to maximize the deductibility
of executive compensation, but intends to retain the discretion the Committee
deems necessary to compensate executive officers in a manner commensurate with
performance and the competitive environment for executive talent.
This report has been approved by all members of the Committee.
Mathias J. DeVito, Chairman
George J. W. Goodman
John W. Harris
John G. Medlin, Jr.
Raymond W. Smith
18
<PAGE>
The above graph compares the performance of the Company's Common Stock
during the period December 31, 1993 to December 31, 1998 with the S&P 500
Index and the S&P Airline Index during the relevant time period. The graph
depicts the results of investing $100 in the Company's Common Stock, the S&P
500 Index and the S&P Airline Index, at closing prices on December 31, 1993.
The stock price performance shown on the graph above is not necessarily
indicative of future price performance. The S&P Airline Index consists of AMR,
Delta, Southwest Airlines, Inc. and the Company.
19
<PAGE>
SELECTION OF AUDITORS (Item No. 2)
The Board of Directors has named KPMG LLP as independent public accountants
to examine the consolidated financial statements of the Company for fiscal
year 1999, subject to ratification by the stockholders. KPMG LLP acted in the
same capacity during 1998. A representative from that firm is expected to be
present at the annual meeting of stockholders and will be afforded an
opportunity to make a statement if the representative desires to do so and to
respond to appropriate questions.
PROPOSAL TO APPROVE THE LONG TERM INCENTIVE PLAN (Item No. 3)
On September 24, 1998, the Board of Directors adopted, subject to
stockholder approval, the US Airways Group, Inc. Long Term Incentive Plan (the
"LTIP"). The purpose of the LTIP is to encourage behaviors that create
superior financial performance and to strengthen the commonality of interests
between LTIP participants and owners in creating superior stockholder value.
The following is a description of the material terms of the LTIP, and as such
is qualified in its entirety by the actual terms of the LTIP, a copy of which
is on file with the SEC. The LTIP is designed and intended to comply, to the
extent applicable, with Section 162(m) of the Internal Revenue Code of 1986,
as amended (the "Code").
Awards may be granted to officers and other employees of the Company in the
sole discretion of the Human Resources Committee ("Committee"), taking into
account such factors as the Committee deems relevant in connection with
accomplishing the purposes of the LTIP. There are currently 30 officers
eligible to participate in the LTIP. No awards have been granted to any other
employee.
The LTIP will be administered by the Human Resources Committee (the
"Committee"), which will consist of two or more persons, each of whom is an
"outside director" within the meaning of Section 162(m) of the Code. The Board
of Directors or the Committee may at any time alter, amend, suspend or
terminate the LTIP; provided, however, that (a) no amendment that requires
shareholder approval in order for the LTIP to continue to comply with Section
162(m) of the Code will be effective unless it is approved by the requisite
vote of the Company's stockholders and (b) no amendment may affect adversely
any of the rights of a participant under any award following the end of the
Performance Period (as defined below) to which such award relates.
The LTIP provides for the granting of awards with respect to the three-year
period commencing on January 1, 1997 and each three-year period commencing on
each January 1 thereafter or such other period as the Committee may determine
(each such period, a "Performance Period"). The receipt of each award will be
subject to the achievement of such performance factor or factors (the
"Performance Factors") as the Committee may determine. Performance Factors may
include any or all of the following: stock price; total shareholder return,
earnings per share; revenue; net sales; operating income or margin; earnings
before all or any of interest, taxes, depreciation and/or amortization; cash
flow; working capital; return on equity; return on assets; market share; sales
(net or gross) measured by product line, territory, customer(s), or other
category; earnings from continuing operations; net worth; levels of expense,
cost or liability by category, operating unit or any other delineation; any
increase or decrease of one or more of the foregoing over a specified period
or the performance relative to one or more of the foregoing relative to other
peer companies over a specified period. Such Performance Factors may relate to
the performance of the Company, a business unit, product line, territory, or
any combination thereof. Except with
20
<PAGE>
respect to any LTIP participant who is an "executive officer" (within the
meaning of Rule 3b-7 promulgated under the Exchange Act), Performance Factors
may also include such objective or subjective performance goals as the
Committee may from time to time establish. Performance Factors may include a
level of performance below which no payment will be made, a target performance
level at which the full amount of the award will be made, and a maximum
performance level at which the maximum amount will be paid. Unless otherwise
provided by the Committee in connection with specified terminations of
employment, payment in respect of awards will be made only if and to the
extent that the Performance Factors with respect to such Performance Period
are attained.
In no event will payment in respect of an award be made in an amount that
exceeds 500% of the participant's Average Annual Base Salary for the
Performance Period to which such award relates. "Average Annual Base Salary"
is defined as the average of the participant's annual rate of base salary as
in effect on the last day of each year of such Performance Period (but in no
event more than 133% of the participant's annual rate of base salary as in
effect on the first day of such Performance Period). The Committee may reduce
or eliminate any award earned under the LTIP but in no event may the Committee
increase at its discretion the amount of an award payable to a Covered
Employee (as defined in Section 162(m) (3) of the Code).
Unless otherwise determined by the Committee, all payments in respect of
awards granted under the LTIP will be made, in cash, within a reasonable
period after the end of the Performance Period. In the case of participants
who are Covered Employees, unless otherwise determined by the Committee, such
payments will be made only after achievement of the Performance Factors has
been certified by the Committee. Notwithstanding any other provision of the
LTIP, no later than three days following the occurrence of a Change in Control
(as defined in the LTIP), the Company will pay to each participant an amount
with respect to each Performance Period that had not been completed as of the
date of such Change of Control equal to the amount that would have been paid
with respect to such Performance Period had the Performance Factors for such
Performance Period been achieved at the target level.
Awards will not be transferable by a participant except upon the
participant's death following the end of the Performance Period but prior to
the date payment is made, in which case the award will be transferable by will
or the laws of descent and distribution.
New Plan Benefits
Subject to stockholder approval of the LTIP, the Board of Directors has
granted the following awards thereunder:
<TABLE>
<CAPTION>
US Airways Group, Inc. Long Term Incentive Plan
------------------------------------------------------------
Target Award (%) (1) Target Award (%)(1) Target Award (%)(1)
Name and Position 1997-1999 1998-2000 1999-2001
----------------- -------------------- ------------------- -------------------
<S> <C> <C> <C>
Stephen M.
Wolf...... 220 220 220
Rakesh
Gangwal... 220 220 220
Lawrence M.
Nagin..... 80 80 80
John R.
Long,
III....... 80(2) -- --
N. Bruce
Ashby..... 70 70 70
Executive
Officer
Group..... 116(3) 116(3) 116(3)
Non-
Executive
Officer
Group..... 43(4) 43(4) 43(4)
</TABLE>
(1) Awards are stated as a percentage of the officer's base annual salary.
(2) Mr. Long resigned from US Airways, Inc. in January 1999. Accordingly he
forfeited any right to a benefit under the LTIP.
(3) Average target award percentage for the executive officer group.
(4) Average target award percentage for the non-executive officer group.
The Board recommends that stockholders vote FOR the adoption of the LTIP.
21
<PAGE>
PROPOSAL TO APPROVE THE NONEMPLOYEE DIRECTORS STOCK PURCHASE PLAN (Item No. 4)
On January 19, 1999, the Board of Directors adopted, subject to stockholder
approval, the US Airways Group, Inc. Nonemployee Directors Stock Purchase Plan
(the "Director Plan"). The plan shall be effective July 1, 1999. The purpose
of the Director Plan is to encourage members of the Board who are not also
employees of the Company or any of its subsidiaries and who receive fees for
their services (each such director is referred to as an "Outside Director") to
acquire additional stock ownership interests in the Company. The following is
a description of the material terms of the Director Plan, and as such is
qualified in its entirety by the actual terms of the Director Plan, a copy of
which is on file with the SEC.
Under the Director Plan, a maximum of 100,000 shares of the Company's common
stock (the "Common Stock") may be distributed to Outside Directors. Only
Outside Directors are eligible to participate in the Director Plan. Currently,
10 Outside Directors serve on the Board of Directors. The Director Plan will
be administered by the Human Resources Committee of the Board of Directors,
which may at any time alter, amend, suspend or terminate the Director Plan.
Each Outside Director may elect that a specified percentage of his or her
future compensation as a director be paid in shares of Common Stock rather
than in cash. Shares of Common Stock issuable to an Outside Director under the
Director Plan will be transferred to such Outside Director as soon as
practicable following the end of each calendar quarter. The total number of
shares of Common Stock to be so transferred on each such date will be
determined by dividing (a) the product of (i) the percentage of compensation
elected by the Outside Director and (ii) the Outside Director's compensation
payable for services rendered in the calendar quarter with respect to which
such transfer is being made, by (b) the Fair Market Value (as defined in the
Director Plan) of a share of Common Stock on the last day of such calendar
quarter. Cash shall be paid in lieu of any fractional shares of Common Stock.
Awards under the Director Plan will not be transferable by an Outside Director
other than by the laws of descent and distribution or pursuant to a qualified
domestic relations order.
New Plan Benefit
As awards under the Director Plan are dependent upon elections by Outside
Directors, and as no such elections have yet been made, neither the awards to
be made in 1999 nor the awards that would have been made in 1998 had the
Director Plan been in effect are reasonably ascertainable.
The Board recommends that stockholders vote FOR the adoption of the Director
Plan.
STOCKHOLDER PROPOSAL CONCERNING CONFIDENTIAL VOTING (Item No. 5)
The New York City Police Pension Fund, One Centre Street, New York, New York
10007-2341, which owns 37,455 shares of Common Stock, has advised the Company
of its intention to introduce the following resolution at the annual meeting.
To be adopted, this resolution, which is opposed by the Board of Directors,
would require the affirmative vote of the holders of at least a majority of
the shares of Common Stock, present in person or represented by proxy at the
meeting and entitled to vote.
"RESOLVED, that the shareholders of the Company request that the board of
directors adopt and implement a policy requiring all proxies, ballots and
voting tabulations that identify how shareholders voted be kept
confidential, except when disclosure is mandated by law, such disclosure is
expressly requested by a shareholder or during a contested election for the
board of directors, and that the tabulators and the inspectors of election
be independent and not the employees of the Company."
22
<PAGE>
Supporting Statement of the Proponent
The confidential ballot is fundamental to the American political system. The
reason for this protection is to ensure that voters are not subjected to
actual or perceived coercive pressure. We believe that it is time that this
fundamental principle of the confidential ballot be applied to public
corporations.
Many excellent companies use confidential voting. None have reported any
difficulty reaching quorums or meeting supermajority vote requirements and
those surveyed reported that the added cost of implementing confidentiality
was negligible.
Strong support was shown at the last annual meeting when 34.9% of the votes
were cast in favor of this proposal.
It is our belief that all shareholders need the protection of a confidential
ballot no less than voters in political elections. While we make no imputation
that our Company's management has acted coercively, the existence of this
possibility is sufficient to justify confidentiality.
This resolution would permit shareholders to voluntarily disclose their vote
to management by expressly requesting such disclosure on their proxy cards.
Additionally, shareholders may disclose their vote to any other person they
choose. This resolution would merely restrict the ability of the Company to
have access to the vote of its shareholders without their specific consent.
Many shareholders believe confidentiality of ownership is ensured when
shares are held in street or nominee name. This is not always the case.
Management has various means of determining actual (beneficial) ownership. For
instance, proxy solicitors have elaborate databases that can match account
numbers with the identity of some owners. Moreover, why should shareholders
have to transfer their shares to nominees in an attempt to maintain
confidentiality? In our opinion, this resolution is the only way to ensure a
secret ballot for all shareholders irrespective of how they choose to hold
their shares.
We believe that confidential voting is one of the most basic reforms needed
in the proxy voting system and that the system must be free of the possibility
of pressure and the appearance of retaliation.
We hope that you would agree and vote FOR this proposal.
Statement of the Company in Opposition to the Stockholder Proposal
The Board of Directors believes that approval of the stockholder resolution
would limit the Company's ability to communicate with its stockholders and
urges stockholders to vote against the resolution.
For more than twenty years the Company has used an independent tabulator and
inspectors of election and has no plans to discontinue this practice. The
proponent's resolution would have no effect on the Company's practice in this
regard. However, the Company is opposed to a requirement that balloting be
confidential.
In recent years the SEC has amended its proxy rules to improve
communications between corporations and beneficial owners. In the interest of
promoting an open dialogue with its stockholders, the Company believes it
should be able to communicate with its stockholders as permitted under the
proxy rules without the impediments that confidential voting would impose.
23
<PAGE>
The Company also believes that cutting off its access to voting results
would interfere with the vote gathering and tabulation process. The Company is
responsible for, among other things, soliciting votes to obtain a quorum,
pursuing proxies that are missing in the mails and helping to resolve voting
ambiguities. Currently, almost 90% of the Common Stock is held in the names of
nominees. The tabulating process has become increasingly cumbersome as
ownership has been layered through the use of depositories, nominees and
"street names." The addition of a further layer of secrecy would, in the
Company's view, only make the process more cumbersome and costly. To the
extent the Company cannot participate and clarify voting ambiguities, shares
may not be voted and stockholders may be disenfranchised.
In summary, the Company believes that confidential voting would impair
stockholder communications and would not serve any useful purpose.
This proposal was rejected by the shareholders last year by a vote of 64.6%
against.
Accordingly, the Board of Directors urges you to vote AGAINST the
stockholder resolution (Item No. 5).
OTHER BUSINESS WHICH MAY PROPERLY COME BEFORE THE MEETING
The Board of Directors knows of no business which may come before the
meeting except that indicated above. However, if other business is brought
before the meeting, the persons acting under the enclosed form of proxy may
vote thereunder in accordance with their best judgment.
COST AND METHOD OF PROXY SOLICITATION
Proxies will be solicited by mail. The expense of such solicitation will be
borne by the Company. Directors, officers, or regular employees of the Company
and US Airways may solicit proxies by telephone or in person. The cost of such
solicitation will be nominal. In addition, D.F. King & Co., Inc. has been
retained by the Company to assist in soliciting proxies from brokerage firms,
bank nominees and other institutional holders to assure a timely vote by the
beneficial owners of stock held of record by such firms, banks and
institutions. This firm will receive a fee not to exceed $17,500 for its
services.
24
<PAGE>
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
The Company's By-Laws require stockholders who intend to nominate directors
or propose new business at any Annual Meeting to provide advance notice of
such intended action as well as certain additional information. This By-Laws
provision requires stockholders to provide the Company with notice of their
intent to nominate directors or propose new business at an Annual Meeting not
less than 30 days nor more than 60 days prior to such Annual Meeting; provided
however, that in the event that less than 40 days prior written notice or
prior public disclosure of the date of the meeting is given or made to the
stockholder, such notices by the stockholder shall be received by the Company
not later than close of business on the 10th day following the day on which
such notice of the date of the Annual Meeting was mailed or such public
disclosure was made.
Assuming the 1999 Annual Meeting is held as scheduled, notice of intent to
nominate directors or propose new business to be brought before the 1999
Annual Meeting must have been received in proper form on or after March 20,
1999, and on or prior to April 19, 1999.
In accordance with federal securities laws, proposals to be submitted by
stockholders for consideration at the Company's next Annual Meeting and
inclusion in the Company's 2000 Proxy Statement must be received by the
Company at its executive offices in Arlington, Virginia, not later than
December 2, 1999.
By Order of the Board of Directors,
Jennifer C. McGarey
Secretary
March 31, 1999
25
<PAGE>
APPENDIX A
US AIRWAYS GROUP, INC.
NONEMPLOYEE DIRECTORS STOCK PURCHASE PLAN
1. Purpose.
--------
The US Airways Group, Inc. Nonemployee Directors Stock Purchase Plan is
intended to encourage members of the board of directors of US Airways Group,
Inc., a Delaware corporation, who are not also employees of the Company or any
of its subsidiaries and who receive fees for their services, to acquire
additional stock ownership interests in the Company.
2. Definitions.
------------
"Accounting Date" means the first day of each calendar quarter.
"Board" means the Board of Directors of the Company.
"Committee" means the Human Resources Committee of the Board.
"Common Stock" means the common stock, par value $1.00 per share, of
the Company.
"Company" means US Airways Group, Inc.
"Compensation" means the aggregate amount payable to a Director for
such Director's services on the Board, including any amounts payable with
respect to service on or serving as Chairman of a committee of the Board or for
attendance at Board or committee meetings.
"Director" means a member of the Board who is not also an employee of
the Company or any of it subsidiaries and who receives fees for his or her
services on the Board.
"Effective Date" means July 1, 1999.
"Fair Market Value" on any given date means the average of the high and
low prices of the Common Stock as reported on the New York Stock Exchange
Composite Tape on the date as of which such value is being determined or, if
there shall be no sale on that date, then on the last previous day on which a
sale was reported.
A-1
<PAGE>
"Plan" means the US Airways Group, Inc. Nonemployee Directors Stock
Purchase Plan.
3. Administration of the Plan.
---------------------------
The Plan shall be administered by the Committee. The Committee shall
adopt such rules as it may deem appropriate in order to carry out the purpose of
the Plan. All questions of interpretation, administration, and application of
the Plan shall be determined by the Committee, except that the Committee may
authorize any one or more of its members, or any officer of the Company, to
execute and deliver documents on behalf of the Committee. The determination by
the Committee shall be final and binding in all matters relating to the Plan.
4. Common Stock Reserved for the Plan.
-----------------------------------
The number of shares of Common Stock authorized for issuance under the
Plan is 100,000, subject to adjustment pursuant to Section 6 hereof. Shares of
Common Stock delivered hereunder may be either authorized but unissued shares or
previously issued shares reacquired and held by the Company.
5. Terms and Conditions of Grants.
-------------------------------
(a) Elections. Each Director may elect that a specified percentage
----------
(in increments of 10%) of his or her future Compensation be paid in shares of
Common Stock. Such shares of Common Stock (including fractional shares) shall
be received in lieu of the payment of cash in respect of the specified
percentage of future Compensation. Such shares of Common Stock shall be
transferred in accordance with Section 5(b) hereof. An election hereunder shall
be in the form of a document executed and filed with the Secretary of the
Company and shall remain in effect until the effectiveness of any modification
or revocation.
(b) Transfer of Shares. Shares of Common Stock issuable to a Director
-------------------
under Section 5(a) hereof shall be transferred to such Director as soon as
practicable following each Accounting Date. The total number of shares of Common
Stock to be so transferred on each such date shall be determined by dividing (x)
the product of (1) the percentage specified by the Director pursuant to Section
5(a) hereof and (2) the Director's Compensation payable during the preceding
calendar quarter after the preceding Accounting Date up to and including
Compensation payable on the Accounting Date with respect to which such transfer
is being made, by (y) the Fair Market Value of a share of Common Stock on the
Accounting Date with respect to which such transfer is
A-2
<PAGE>
being made. The Company shall deliver a stock certificate representing the
number of whole such shares acquired plus cash in lieu of any fractional shares.
6. Effect of Certain Changes in Capitalization.
In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, or a similar corporate
transaction, the maximum number or class of shares available under the Plan, and
the number or class of shares of Common Stock to be delivered hereunder shall be
proportionately adjusted to reflect any such transaction.
7. Term of Plan.
This Plan shall become effective as of the Effective Date, provided
that the Plan shall have been approved by the stockholders of the Company at the
1999 annual meeting of stockholders. This Plan shall remain in effect until all
authorized shares have been issued, unless sooner terminated by the Board. No
transfer of shares of Common Stock may be made to any Director under the Plan
unless stockholder approval of the Plan has previously been obtained pursuant to
this Section 7.
8. Amendment; Termination.
The Committee may at any time and from time to time alter, amend,
suspend, or terminate the Plan in whole or in part.
9. Rights of Directors.
Nothing contained in the Plan or with respect to any grant shall
interfere with or limit in any way the right of the stockholders of the Company
to remove any Director from the Board, nor confer upon any Director any right to
continue in the service of the Company as a director.
10. General Restrictions.
(a) Investment Representations. The Company may require any Director
---------------------------
to whom Common Stock is issued, as a condition of receiving such Common Stock,
to give written assurances in substance and form satisfactory to the Company and
its counsel to the effect that such person is acquiring the Common Stock for his
own account for investment and not with any present intention of selling or
otherwise distributing the same, and to such other effects as the Company deems
necessary or appropriate in order to comply with Federal and applicable state
securities laws.
A-3
<PAGE>
(b) Compliance with Securities Laws. Each issuance shall be subject
--------------------------------
to the requirement that, if at any time counsel to the Company shall determine
that the listing, registration or qualification of the shares upon any
securities exchange or under any state or Federal law, or the consent or
approval of any governmental or regulatory body, is necessary as a condition of,
or in connection with, the issuance of shares hereunder, such issuance may not
be accepted or exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained on
conditions acceptable to the Committee. Nothing herein shall be deemed to
require the Company to apply for or to obtain such listing, registration or
qualification.
(c) Nontransferability. Awards under this Plan shall not be
-------------------
transferable by a Director other than by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined in the Internal
Revenue Code of 1986, as amended, or Title I of the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder.
11. Governing Law.
This Plan and all rights hereunder shall be construed in accordance
with and governed by the laws of the State of Delaware.
12. Headings.
The headings of sections and subsections herein are included solely for
convenience of reference and shall not affect the meaning of any of the
provisions of the Plan.
A-4
<PAGE>
APPENDIX B
US AIRWAYS GROUP, INC.
LONG TERM INCENTIVE PLAN
1. Purpose.
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The purpose of the US Airways Group, Inc. Long Term Incentive Plan is
to encourage behaviors that create superior financial performance and to
strengthen the commonality of interests between Plan Participants and owners in
creating superior shareholder value.
2. Definitions.
-----------
The following terms, as used herein, shall have the following
meanings:
(a) "Average Annual Base Salary" shall mean, with respect to a Performance
Period, the average of the Participant's annual rate of base salary as
in effect on the last day of each year of such Performance Period,
provided, however, that in no event shall Average Annual Base Salary
-------- -------
with respect to any Performance Period exceed 133% of the
Participant's annual rate of base salary as in effect on the first day
of such Performance Period.
(b) "Award" shall mean an incentive compensation award, granted pursuant
to the Plan, which is contingent upon the attainment of Performance
Factors with respect to a Performance Period.
(c) "Board" shall mean the Board of Directors of Group.
(d) "Change in Control" shall mean:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either (A)
the then outstanding shares of common stock of Group (the
"Outstanding Group Common Stock") or (B) the combined voting
power of the then outstanding voting securities of Group
entitled to vote generally in the election of directors (the
"Outstanding Group Voting Securities"); provided, however, that
the following acquisitions shall not constitute a Change of
Control: (w) any acquisition directly from the Company, (x) any
acquisition by the Company, (y) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the
Company, or (z) any acquisition by any corporation with respect
to which, following such acquisition, more than 85% of,
respectively, the then outstanding shares of common stock of
such corporation and the combined
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<PAGE>
voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding
Group Common Stock and Outstanding Group Voting Securities
immediately prior to such acquisition, in substantially the same
proportions as their ownership, immediately prior to such
acquisition, of the Outstanding Group Common Stock and
Outstanding Group Voting Securities, as the case may be; or
(ii) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof
whose election, or nomination for election by Group's
shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result
of either an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) or other actual or threatened
solicitation of proxies or consents; or
(iii) Approval by the shareholders of Group of a reorganization,
merger or consolidation, in each case, with respect to which all
or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Group
Common Stock and Outstanding Group Voting Securities immediately
prior to such reorganization, merger or consolidation do not
following such reorganization, merger or consolidation,
beneficially own, directly or indirectly, more than 85% of,
respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from
such reorganization, merger or consolidation in substantially
the same proportions as their ownership, immediately prior to
such reorganization, merger or consolidation of the outstanding
Group Common Stock and Outstanding Group Voting Securities, as
the case may be; or
(iv) Approval by the shareholders of Group of (x) a complete
liquidation or dissolution of Group or (y) the sale or other
disposition of all or substantially all of the assets of Group,
other than to a corporation, with respect to which following
such sale or other disposition, more than 85%
B-2
<PAGE>
of, respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of
the Outstanding Group Common Stock and Outstanding Group Voting
Securities immediately prior to such sale or other disposition
in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the
Outstanding Group Common Stock and Outstanding Group Voting
Securities, as the case may be; or
(v) The acquisition by an individual, entity or group of beneficial
ownership of 20% or more of the then outstanding securities of
Group, including both voting and non-voting securities,
provided, however, that such acquisition shall only constitute a
change of control in the event that such individual, entity or
group also obtains the power to elect by class vote, cumulative
voting or otherwise to appoint 20% or more of the total number
of directors to the Board.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(f) "Committee" shall mean the Human Resources Committee of the Board.
(g) "Company" shall mean, collectively, Group and its subsidiaries.
(h) "Covered Employee" shall have the meaning set forth in Section
162(m)(3) of the Code.
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(j) "Executive Officer" shall mean an officer of the Company who is an
"executive officer" within the meaning of Rule 3b-7 promulgated under
the Exchange Act.
(k) "Group" shall mean US Airways Group, Inc.
(l) "Participant" shall mean an officer or other employee of the Company
who is, pursuant to Section 4 of the Plan, selected to participate
herein.
(m) "Performance Factors" shall mean the criteria and objectives,
determined by the Committee, which must be met during the applicable
Performance Period as a condition of the Participant's receipt of
payment with respect to an Award. Performance Factors may include any
or all of the following: stock price, total
B-3
<PAGE>
shareholder return, earnings per share; revenue; net sales; operating
income or margin; earnings before all or any of interest, taxes,
depreciation and/or amortization ("EBIT", "EBITA" or "EBITDA"); cash
flow; working capital; return on equity; return on assets; market
share; sales (net or gross) measured by product line, territory,
customer(s), or other category; earnings from continuing operations;
net worth; levels of expense, cost or liability by category, operating
unit or any other delineation; any increase or decrease of one or more
of the foregoing over a specified period or the performance relative
to one or more of the foregoing relative to other peer companies over
a specified period. Such Performance Factors may relate to the
performance of the Company, a business unit, product line, territory,
or any combination thereof. With respect to Participants who are not
Executive Officers, Performance Factors may also include such
objective or subjective performance goals as the Committee may, from
time to time, establish. Subject to Section 5(c) hereof, the Committee
shall have the sole discretion to determine whether, or to what
extent, Performance Factors are achieved.
(n) "Performance Period" shall mean the three-year period commencing on
January 1, 1997 and each three-year period commencing on each January
1 thereafter, or such other periods as the Committee may determine.
(o) "Plan" shall mean the US Airways Group, Inc. Long Term Incentive Plan.
3. Administration.
--------------
The Plan shall be administered by the Committee. The Committee shall
have the authority in its sole discretion, subject to and not inconsistent with
the express provisions of the Plan, to administer the Plan and to exercise all
the powers and authorities either specifically granted to it under the Plan or
necessary or advisable in the administration of the Plan, including, without
limitation, the authority to grant Awards; to determine the persons to whom and
the time or times at which Awards shall be granted; to determine the terms,
conditions, restrictions and performance criteria, including Performance
Factors, relating to any Award; to determine whether, to what extent, and under
what circumstances an Award may be settled, cancelled, forfeited, or
surrendered; to make adjustments in the Performance Factors in recognition of
unusual or non-recurring events affecting the Company or the financial
statements of the Company, or in response to changes in applicable laws,
regulations, or accounting principles; to construe and interpret the Plan and
any Award; to prescribe, amend and rescind rules and regulations relating to the
Plan; to determine the terms and provisions of Awards; and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
The Committee shall consist of two or more persons each of whom shall
be an "outside director" within the meaning of Section 162(m) of the Code. All
decisions, determina-
B-4
<PAGE>
tions and interpretations of the Committee shall be final and binding on all
persons, including the Company and the Participant (or any person claiming any
rights under the Plan from or through any Participant).
No member of the Board or the Committee shall be liable for any action
taken or determination made in good faith with respect to the Plan or any Award
granted hereunder.
4. Eligibility.
-----------
Awards may be granted to officers and other employees of the Company
in the sole discretion of the Committee. Subject to Section 5(b) below, in
determining the persons to whom Awards shall be granted and the Performance
Factors relating to each Award, the Committee shall take into account such
factors as the Committee shall deem relevant in connection with accomplishing
the purposes of the Plan.
5. Terms of Awards.
---------------
Awards granted pursuant to the Plan shall be communicated to
Participants in such form as the Committee shall from time to time approve and
the terms and conditions of such Awards shall be set forth therein.
(a) In General. The Committee shall specify with respect to a
----------
Performance Period the Performance Factors applicable to each Award, the
weighting factors applicable to such Performance Factors and the amounts that
the Participant is eligible to earn upon achievement of the Performance Factors
for such Performance Period. Performance Factors may include a level of
performance below which no payment shall be made, a performance level at which
the full amount of the Award shall be made (the "Target Level"), and a
performance level at which the maximum amount in respect of the Award shall be
made, and the Committee may specify other performance levels at which specified
percentages of the Award shall be paid. Unless otherwise provided by the
Committee in connection with specified terminations of employment, payment in
respect of Awards shall be made only if and to the extent the Performance
Factors with respect to such Performance Period are attained.
(b) Special Provisions Regarding Awards. Notwithstanding anything to
-----------------------------------
the contrary contained in this Section 5, in no event shall payment in respect
of Awards granted for a Performance Period be made to a Participant in an amount
that exceeds 500% of the Participant's Average Annual Base Salary for such
Performance Period. The Committee may reduce or eliminate any Award earned
under the Plan but in no event may the Committee increase at its discretion the
amount of an Award payable to a Covered Employee upon attainment of the
specified Performance Factors.
B-5
<PAGE>
(c) Time and Form of Payment. Unless otherwise determined by the
------------------------
Committee, all payments in respect of Awards granted under this Plan shall be
made, in cash, within a reasonable period after the end of the Performance
Period. In the case of Participants who are Covered Employees, unless otherwise
determined by the Committee, such payments shall be made only after achievement
of the Performance Factors has been certified by the Committee.
(d) Change of Control. Notwithstanding anything in this Plan to the
------------------
contrary, no later than 3 days following the occurrence of a Change in Control,
the Company shall pay to each Participant an amount with respect to each
Performance Period that had not been completed as of the date of such Change in
Control equal to the amount that would have been paid with respect to such
Performance Period had the Performance Factors for such Performance Period been
achieved at the Target Level.
6. General Provisions.
------------------
(a) Compliance with Legal Requirements. The Plan and the granting and
----------------------------------
payment of Awards, and the other obligations of the Company under the Plan shall
be subject to all applicable federal and state laws, rules and regulations, and
to such approvals by any regulatory or governmental agency as may be required.
(b) Nontransferability. Awards shall not be transferable by a
------------------
Participant except upon the Participant's death following the end of the
Performance Period but prior to the date payment is made, in which case the
Award shall be transferable by will or the laws of descent and distribution.
(c) No Right To Continued Employment. Nothing in the Plan or in any
--------------------------------
Award granted pursuant hereto shall confer upon any Participant the right to
continue in the employ of the Company or to be entitled to any remuneration or
benefits not set forth in the Plan or to interfere with or limit in any way the
right of the Company to terminate such Participant's employment.
(d) Withholding Taxes. Where a Participant or other person is
-----------------
entitled to receive a payment pursuant to an Award hereunder, the Company shall
have the right to require the Participant or such other person to pay to the
Company the amount of any taxes that the Company may be required to withhold
before delivery to such Participant or other person of such payment.
(e) Amendment, Termination and Duration of the Plan. The Board or the
-----------------------------------------------
Committee may at any time and from time to time alter, amend, suspend, or
terminate the Plan in whole or in part; provided that, no amendment that
-------- ----
requires shareholder approval in order for the
B-6
<PAGE>
Plan to continue to comply with Code Section 162(m) shall be effective unless
the same shall be approved by the requisite vote of the shareholders of the
Company. Notwithstanding the foregoing, no amendment shall affect adversely any
of the rights of any Participant under any Award following the end of the
Performance Period to which such Award relates.
(f) Participant Rights. No Participant shall have any claim to be
------------------
granted any Award under the Plan, and there is no obligation for uniformity of
treatment for Participants.
(g) Termination of Employment. Unless otherwise provided by the
-------------------------
Committee in connection with specified terminations of employment and except as
otherwise provided in Section 5(d) above, if a Participant's employment
terminates for any reason prior to the payment of an Award with respect to a
Performance Period, no Award shall be payable to such Participant for that
Performance Period. However, should a Participant retire, die or become
disabled at any time during a Performance Period, a pro rata award may be paid
based upon the Participant's number of full months of active service during the
Performance Period. The Committee shall have the authority to specify the
manner, if any, in which Awards will be deemed earned in the event of specified
terminations of employment during a Performance Period. A Participant who is
terminated for gross misconduct after the end of the Performance Period shall
forfeit participation in the Plan, and no Award shall be payable to such a
Participant.
(h) Unfunded Status of Awards. The Plan is intended to constitute an
-------------------------
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a Participant pursuant to an Award, nothing contained
in the Plan or any Award shall give any such Participant any rights that are
greater than those of a general creditor of the Company.
(i) Governing Law. The Plan and all determinations made and actions
-------------
taken pursuant hereto shall be governed by the laws of the Commonwealth of
Virginia without giving effect to the conflict of laws principles thereof.
(j) Effective Date. The Plan shall take effect upon its adoption by
--------------
the Board; provided, however, that the Plan shall be subject to the requisite
-------- -------
approval of the shareholders of the Company in order to comply with Section
162(m) of the Code. In the absence of such approval, the Plan (and any Awards
made pursuant to the Plan prior to the date of such approval) shall be null and
void.
(k) Beneficiary. A Participant may file with the Committee a written
-----------
designation of a beneficiary on such form as may be prescribed by the Committee
and may, from time to time, amend or revoke such designation. If no designated
beneficiary survives the Participant and an Award is payable to the
Participant's beneficiary pursuant to Section 6(b), the executor or
administrator of the Participant's estate shall be deemed to be the grantee's
beneficiary.
B-7
<PAGE>
(l) Interpretation. The Plan is designed and intended to comply, to
--------------
the extent applicable, with Section 162(m) of the Code, and all provisions
hereof shall be construed in a manner to so comply.
B-8
<PAGE>
Detach Proxy Card Here
- -------------------------------------------------------------------------------
US AIRWAYS GROUP, INC.
PROXY
Proxy Solicited on Behalf of The Board of Directors for
Annual Meeting of Stockholders
on May 19, 1999
The undersigned hereby appoints J.C. McGarey and L.M. Nagin, and each of them,
proxies (each with power of substitution) of the undersigned to attend the above
annual meeting of stockholders of US Airways Group, Inc. and any adjournment
thereof and thereat to vote all shares of stock held by the undersigned, as
specified on the reverse side, and on any other matters that may properly come
before said meeting.
For those participants who may hold shares in the US Airways, Inc. Employee
Stock Ownership Plan, the US Airways, Inc. Employee Savings Plan, the US
Airways, Inc. 401(k) Savings Plan or the Supplemental Retirement Plan of
Piedmont Aviation, Inc. (collectively, the "Plans"), please fill in and sign
this card and mail it in time to be received no later than May 13, 1999, in
order to be voted in a timely manner by the administrator of the Plans, Fidelity
Management Trust Company (the "Administrator"). After May 13, 1999, the
instructions cannot be revoked and, in accordance with the Plans, you may not
vote these shares in person at the meeting. The Administrator is authorized to
vote the Plan shares for which instructions have been given upon such other
business as may come before the meeting. The Bank of New York will tally the
vote on behalf of the Administrator.
THIS PROXY CARD IS CONTINUED ON THE REVERSE SIDE.
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY.
US AIRWAYS GROUP, INC.
P.O. BOX 11130
NEW YORK, N.Y. 10203-0130
Comments: __________________________________________
____________________________________________________
<PAGE>
Please Detach Here
You Must Detach This Portion of the Proxy Card
Before Returning it in the Enclosed Envelope
- --------------------------------------------------------------------------------
Detach Proxy Card Here
- --------------------------------------------------------------------------------
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3 AND 4.
1. Election of Directors Nominees: M.J. DeVito, R. Gangwal, P.M. George,
R.L. Johnson, R. LeBuhn, J.G. Medlin, Jr., H.M. Merriman, T.H. O'Brien,
H. Ochoa-Brillembourg, R.B. Priory, R.W. Smith, S.M. Wolf.
FOR all nominees WITHHOLD AUTHORITY to vote *EXCEPTIONS
listed above [X] for all nominees listed above [X] [X]
(INSTRUCTIONS: To vote for all nominees other than certain specified nominees,
mark the "Exceptions" box and write the nominee's name in the space provided
below.)
*Exceptions_____________________________________________________________________
2. Ratification of the selection of KPMG LLP as auditors.
FOR [X] AGAINST [X] ABSTAIN [X]
3. Approval of the US Airways Group, Inc. Long Term Incentive Plan.
FOR [X] AGAINST [X] ABSTAIN [X]
4. Approval of the US Airways Group, Inc. Nonemployee Directors Stock Purchase
Plan.
FOR [X] AGAINST [X] ABSTAIN [X]
________________________________________________________________________________
BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEM 5
5. Stockholder proposal concerning confidential voting.
FOR [X] AGAINST [X] ABSTAIN [X]
Change of Address and/ [X]
of Comments Mark Here
NOTE: Please sign as name appears hereon. Joint owners
should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full
title as such.
______________________________________________________
Signature
______________________________________________________
Signature
Dated: ________________________________________, 1999
Votes MUST be indicated
(x) in black or blue ink. [X]
(Please sign, date and return this proxy card in the enclosed envelope.)
