<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
Atlantic Southeast Airlines, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)
Atlantic Southeast Airlines, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(j)(2).
/ / $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 Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[LOGO]
ATLANTIC SOUTHEAST AIRLINES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Atlantic Southeast Airlines, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Atlantic
Southeast Airlines, Inc. (the "COMPANY") will be held at the offices of The
Robinson-Humphrey Company, Inc., Atlanta Financial Center, 3333 Peachtree Road,
N.E., Atlanta, Georgia 30326, on Wednesday, May 25, 1994, at 11:00 a.m. Eastern
Daylight Savings Time, for the following purposes:
(1) To fix the number of Directors of the Company at eight (8) and
elect eight (8) Directors for the ensuing year; and
(2) To transact such other business as may properly come before the
meeting.
Holders of the Common Stock of record at the close of business on April 1,
1994, will be entitled to notice of and to vote at the meeting.
Whether or not you expect to be present in person at the meeting, please
sign and date the accompanying proxy and return it promptly in the enclosed
postage paid reply envelope. This will assist us in preparing for the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
John W. Beiser
Secretary
April 15, 1994
Atlanta, Georgia
<PAGE> 3
ATLANTIC SOUTHEAST AIRLINES, INC.
100 HARTSFIELD CENTRE PARKWAY
SUITE 800
ATLANTA, GEORGIA 30354-1356
(404)766-1400
------------------------
ANNUAL SHAREHOLDERS' MEETING
MAY 25, 1994
------------------------
This proxy statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Atlantic Southeast Airlines, Inc.
(the "COMPANY") to be voted at the Annual Meeting of the Shareholders of the
Company to be held on May 25, 1994, and any adjournment or adjournments thereof,
for the purpose set forth in the accompanying Notice of Annual Meeting of
Shareholders. The Annual Meeting of Shareholders will be held at the offices of
The Robinson-Humphrey Company, Inc., Atlanta Financial Center, 3333 Peachtree
Road, N.E., Atlanta, Georgia 30326, on Wednesday, May 25, 1994, at 11:00 a.m.
Eastern Daylight Savings Time. This proxy statement and accompanying form of
proxy were first sent or given to Shareholders on or about April 15, 1994. The
Company's Annual Report for the year ended December 31, 1993, is being sent,
concurrently herewith, to each Shareholder of record.
SOLICITATION OF PROXIES
Proxies will be solicited by mail. Proxies may also be solicited by
officers and regular employees of the Company personally or by telephone or
telegraph, but such persons will not be specially compensated for such services.
Banks, brokers, nominees and other custodians and fiduciaries will be reimbursed
for their reasonable out-of-pocket expenses in forwarding soliciting material to
beneficial owners of Common Stock of the Company. The expense of preparing,
assembling, printing, mailing and soliciting proxies will be borne by the
Company.
ACTION TO BE TAKEN UNDER THE PROXIES
When a proxy in the enclosed form is properly executed and timely returned,
the shares represented thereby will be voted at the meeting in the manner
specified therein.
Election of Directors. Unless instructed otherwise in the space provided
in the proxy form, all properly executed proxies received by the Company will be
voted "FOR" the fixing of the number of Directors at eight (8) and the election
of all the Directors and Director nominees set forth below under the heading
"Election of Directors".
Other Matters. The Company's management knows of no matter to be brought
before the meeting other than those mentioned herein. If, however, any other
matters properly come before the meeting, it is intended that the properly
executed proxies delivered to the Company will be voted in accordance with the
judgment of the person or persons voting such proxies. If a broker indicates on
a proxy that it does not have discretionary authority as to certain shares to
vote on a particular matter, those shares will not be voted on that matter.
Revocation of Proxies. Any Shareholder who properly executes and delivers
a proxy may revoke it at any time prior to it being exercised. Any proxy given
pursuant to this solicitation may be revoked by any Shareholder who attends the
meeting and gives oral notice of his or her election to vote in person, without
compliance with any other formalities. In addition, any proxy given pursuant to
this solicitation may be revoked prior to the meeting by delivering an
instrument revoking it or a duly executed proxy bearing a later date to the
Secretary of the Company.
<PAGE> 4
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
VOTING RIGHTS
The only class of securities entitled to vote at the meeting is the Common
Stock, $.10 par value per share, of the Company. The Board of Directors,
pursuant to the By-laws of the Company, has fixed April 1, 1994, at the close of
business, as the record date for the determination of Shareholders entitled to
notice of and to vote at the meeting or at any adjournment or adjournments
thereof. At April 1, 1994, there were 34,348,991 shares of Common Stock of the
Company outstanding and entitled to be voted at the meeting.
Each share of Common Stock is entitled to one vote at the meeting. A
majority of the outstanding shares of Common Stock represented at the meeting,
in person or by proxy, will constitute a quorum. Abstentions and broker
non-votes will be treated as shares that are present and entitled to vote for
purposes of determining if a quorum is present.
Election of Directors. In connection with the election of Directors at a
meeting at which a quorum is present, the persons receiving a plurality of the
votes cast by the shares of Common Stock entitled to vote in the election will
be elected as Directors. For such purposes, only shares that are voted (votes
cast for directors and votes withheld) will be counted. Any shares not voted
(whether by abstention, broker non-vote or otherwise) will have no impact on the
vote.
Other Matters. With respect to all other matters to be voted upon, if a
quorum is present, a proposal will pass if the votes cast favoring the action
exceed the votes cast opposing the action. Any shares not voted (whether by
abstention and broker non-vote or otherwise) will have no impact on the vote
because they will merely be treated as not having been voted. At this time the
Company's management does not know of any other matters to be presented for
action at the meeting.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information with respect to the
Company's Common Stock owned beneficially, as of January 24, 1994, by each
Director, by each nominee for election as a Director, by each of the persons
named in the Summary Compensation Table below, by all Executive Officers and
Directors as a group and by each person known by the Company to be beneficial
owner of more than 5% of the outstanding Common Stock of the Company:
<TABLE>
<CAPTION>
NUMBER OF SHARES OWNED PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIALLY(1) COMMON STOCK(1)
---------------------------------------------------------------- ---------------
<S> <C> <C>
Delta Air Lines Holdings, Inc.(2)......... 7,995,000 23.3%
George F. Pickett, Jr..................... 621,286(3)(4) 1.8%
John W. Beiser............................ 483,340(4)(5) 1.4%
Ronald V. Sapp............................ 16,316(4) *
Tilden M. Shanahan........................ 28,394(4)(6) *
Samuel J. Watts........................... 26,746 *
Julius P. Gwin............................ 500 *
Russell H. Heil........................... 25 *
Jean A. Mori.............................. -0- --
Parker H. Petit........................... -0- --
Alan M. Voorhees.......................... 661,056(7) 1.9%
Ralph W. Voorhees......................... 60,394(8) *
All Executive Officers and Directors as a
group (9 persons)....................... 1,842,917(3)(4)(5) 5.4%
(7)(8)
</TABLE>
- ---------------
* Less than 1%
2
<PAGE> 5
(1) Information with respect to beneficial ownership is based upon information
furnished by each owner. All of the share data in the table and the data
with respect to stock appreciation rights ("SARS") in the footnotes below
has been adjusted for the 2-for-1 stock split that occurred on February 18,
1993. As of January 24, 1994, there were 34,339,772 shares of Common Stock
outstanding.
(2) The address of this beneficial owner is Suite 1300, 1105 North Market
Street, Wilmington, Delaware 19801.
(3) Includes 118,650 shares (less than 1%) held by the wife of George F.
Pickett, Jr., with respect to which Mr. Pickett disclaims any beneficial
ownership interest.
(4) Includes shares that the individual named on the table has the right to
acquire, on or before March 25, 1994, through the exercise of SARs granted
under the Company's 1990 Stock Appreciation Rights Plan (see "Executive
Compensation -- Compensation Committee Report on Executive Compensation --
Stock Appreciation Rights" below) as follows: George F. Pickett,
Jr. -- 32,491 shares; John W. Beiser -- 31,730 shares; Ronald V.
Sapp -- 9,657 shares; Tilden M. Shanahan -- 8,229 shares; Samuel J.
Watts -- 11,008 shares; and all Executive Officers and Directors as a group
(9 persons) -- 73,878 shares (less than 1%). For purposes of calculating
the number of shares that would be acquired if the individual named in the
table exercised all of the SARs that could be exercised on or before March
25, 1994, the closing price per share for the Common Stock of $35.00 on
January 24, 1994 is assumed to be the closing price on the exercise date of
all such SARs, whether or not all such SARs were exercisable on that date.
(5) Includes 200,000 shares (less than 1%) held by the wife of John W. Beiser,
with respect to which Mr. Beiser disclaims any beneficial ownership
interest.
(6) Includes 800 shares (less than 1%) held by the wife of Tilden M. Shanahan,
with respect to which Mr. Shanahan disclaims any beneficial ownership
interest.
(7) Includes 636,056 shares, or 1.9% held by irrevocable trusts created for the
benefit of the adult children of Alan M. Voorhees, with respect to which
Mr. Alan Voorhees disclaims any beneficial ownership interest.
(8) Includes 30,500 shares (less than 1%) held by the wife of Ralph W. Voorhees,
with respect to which Mr. Ralph Voorhees disclaims any beneficial ownership
interest.
3
<PAGE> 6
ELECTION OF DIRECTORS
The entire Board of Directors of the Company will be elected for a term of
one year and until their successors are elected and qualified. The Company's
By-laws provide that there shall be not less than three (3), nor more than nine
(9) Directors and that the exact number may be fixed from time to time by the
Shareholders. The Board of Directors recommends that the Shareholders fix the
number of directors at eight (8) members for the ensuing year. It is the
intention of the persons named in the accompanying proxy to vote for setting the
number of Directors at eight (8) and for electing the nominees identified as a
Director or Director nominee below. If for any reason any such nominee is not a
candidate when the election occurs, which event is not anticipated, it is the
intention of the persons named in the accompanying proxy to vote for the
remaining nominees named and to vote in accordance with their best judgment if
any substitute nominees are named; provided, however, the proxies will not be
voted for a greater or lesser number of nominees than eight (8), unless the
Shareholders vote to set the number of Directors at a number other than eight
(8). All of the nominees are currently Directors except Jean A. Mori.
IDENTIFICATION OF EXECUTIVE OFFICERS AND DIRECTORS
The following information is furnished with respect to each Director, each
nominee for election as a Director and for each Executive Officer of the
Company:
<TABLE>
<CAPTION>
EXECUTIVE
EXECUTIVE OFFICERS, DIRECTORS AND DIRECTOR OFFICER
NOMINEES FOR DIRECTOR AGE SINCE SINCE
-------------------------------------------------------------------------- ---------
<S> <C> <C> <C>
George F. Pickett, Jr................................ 53 1979 1979
Director and Executive Officer (Chairman of the
Board and Chief Executive Officer)
John W. Beiser....................................... 53 1982 1979
Director and Executive Officer (President and
Secretary)
Ronald V. Sapp....................................... 49 -- 1985
Executive Officer (Vice President, Treasurer and
Chief Financial Officer)
Julius P. Gwin, Director............................. 55 1987 --
Russell H. Heil, Director............................ 51 1993 --
Jean A. Mori, Director nominee....................... 57 -- --
Parker H. Petit, Director............................ 54 1982 --
Alan M. Voorhees, Director........................... 71 1979 --
Ralph W. Voorhees, Director.......................... 67 1979 --
</TABLE>
Russell H. Heil and Julius P. Gwin have been designated as nominees to the
Board of Directors of the Company by Delta Air Lines, Inc. ("DELTA") pursuant to
the terms of a Stock Purchase Agreement dated May 28, 1986 (the "STOCK PURCHASE
AGREEMENT"). Robert W. Coggin served on the Board of Directors as a designee of
Delta during fiscal 1993 until May 20, 1993, at which time he resigned, at
Delta's instruction. He was replaced by Russell H. Heil at last year's annual
shareholders' meeting. Under the terms of the Stock Purchase Agreement, Delta
will continue to have the right to nominate two Directors to the Company's Board
of Directors so long as Delta continues to own (directly or indirectly) at least
10% of the outstanding Common Stock of the Company. As of April 1, 1994, Delta
(through a wholly owned subsidiary) owned approximately 23.3% of the outstanding
Common Stock of the Company. See "Voting Securities and Principal Holders
Thereof -- Security Ownership of Management and Certain Beneficial Owners."
John W. Beiser is the brother-in-law of Ralph W. Voorhees who is the
brother of Alan M. Voorhees. There are no other family relationships among any
of the Executive Officers, Directors and Director nominees listed above.
4
<PAGE> 7
George F. Pickett, Jr. was elected Chairman of the Board and Chief
Executive Officer in February 1994. He had been President, Chief Executive
Officer and a Director of the Company since its inception.
John W. Beiser was elected President in February 1994. He had been Vice
President and Secretary of the Company since its inception. In 1985, Mr. Beiser
was designated Senior Vice President -- Sales and Services of the Company.
Ronald V. Sapp has been Vice President -- Finance and Treasurer (Chief
Financial Officer) of the Company since 1985. From 1983 to 1985, Mr. Sapp served
as vice president -- finance and treasurer of Air Atlanta, Inc., a scheduled
passenger airline. From 1979 to 1983, Mr. Sapp served as vice president and
controller of Air California, Inc., a scheduled passenger airline.
Julius P. Gwin is the Vice President -- Finance of Delta Air Lines, Inc. In
such position, Mr. Gwin is responsible for all treasury, accounting, financial
planning and cost control functions. Mr. Gwin has been employed by Delta since
1967.
Russell H. Heil is the Senior Vice President -- Technical Operations for
Delta Air Lines, Inc. In such position, Mr. Heil is responsible for maintenance,
engineering, quality control, production scheduling and parts provisioning
activities. Mr. Heil has been employed by Delta since 1966.
Since it was founded in 1971, Jean A. Mori has been President of Mori
Luggage & Gifts, Inc., a retail chain of 24 stores throughout the Southeast
specializing in luggage, business cases, leather goods and gifts. Mr. Mori
served as the President of the National Luggage Dealers Association from 1986 to
1988 and served on its Board of Directors since 1980.
Parker H. Petit has been Chairman of the Board and Chief Executive Officer
of Healthdyne, Inc., a diversified health care technology and services company,
since he participated in its founding in 1970. Mr. Petit has also served as a
director of Home Nutritional Services, Inc. since 1983.
Alan M. Voorhees was Chairman of the Board of the Company from 1979 until
February 1994. Mr. Voorhees is Chairman of the Board of Summitt Enterprises,
Inc. of Virginia, an investment management firm organized by Mr. Voorhees in
1979. Mr. Voorhees has served as a director of Micros Systems, Inc., an
electronic cash register manufacturer for the hospitality industry, since 1982.
Ralph W. Voorhees has been Senior Vice President -- Investments with
PaineWebber Incorporated, an investment banking firm, since 1973.
5
<PAGE> 8
IDENTIFICATION OF OTHER SIGNIFICANT EMPLOYEES
The following information is furnished with respect to other significant
employees of the Company:
<TABLE>
<CAPTION>
EMPLOYEE
OTHER SIGNIFICANT EMPLOYEES AGE SINCE
------------------------------------------------------------------------------------
<S> <C> <C>
William H. Hinson.............................................. 48 1987
(Vice President)
Tilden M. Shanahan............................................. 61 1985
(Vice President)
Samuel J. Watts................................................ 46 1983
(Vice President)
</TABLE>
William H. Hinson has served as Vice President -- Technical Services since
1992. Mr. Hinson served as Director of Maintenance from 1987 until 1992.
Tilden M. Shanahan has been Vice President -- Flight Operations of the
Company since 1985. From 1984 to 1985, Mr. Shanahan served as vice president of
flight operations for Jet Express, Inc., a charter airline. From 1960 to 1984,
Mr. Shanahan served as a pilot, check pilot and vice president of flying for
Republic Airlines, Inc., a major airline.
Samuel J. Watts has been employed by the Company in customer service
positions since 1983. In 1985, Mr. Watts was elected Vice President -- Customer
Services of the Company. In 1994, he was elected Vice President -- Sales and
Customer Services. Mr. Watts was employed by Southeastern Airlines, a regional
airline, from 1982 to 1983 as its vice president-marketing. From 1972 to 1982,
Mr. Watts worked for Eastern Airlines, Inc., a major airline, in various line
and staff positions. Mr. Watts' last position at Eastern was as manager of
interline sales.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has two standing committees: an Audit Committee and a
Compensation Committee. The Company does not have a separate nominating
committee.
The Audit Committee consists of Julius P. Gwin and Parker H. Petit. Ralph
W. Voorhees served as a member of the Audit Committee during fiscal 1993 until
May 20, 1993, when he was appointed to the Compensation Committee. The Audit
Committee met one time during the 1993 fiscal year. The Audit Committee is
empowered to: (i) recommend the appointment or removal of the Company's
independent auditors; (ii) review and recommend approval of the scope and
results of the independent audit of the Company; (iii) review audit fees; and
(iv) review changes in accounting policies that have a significant effect on the
Company's financial reports.
The Compensation Committee consists of Alan M. Voorhees, Ralph W. Voorhees,
and Russell H. Heil. Robert W. Coggin, Senior Vice President -- Marketing of
Delta, served as a member of the Compensation Committee during fiscal 1993 until
May 20, 1993 on which date he resigned, at Delta's instruction, and was replaced
by Mr. Heil as a member of the Board of Directors and the Compensation
Committee. The Compensation Committee met two times during the 1993 fiscal year.
The Compensation Committee is empowered as described below under the caption
"Executive Compensation -- Compensation Committee Report on Executive
Compensation."
6
<PAGE> 9
ADDITIONAL INFORMATION WITH RESPECT TO THE COMPENSATION COMMITTEE
The members of the Compensation Committee during fiscal 1993 are identified
in the immediately preceding paragraph. No member of the Compensation Committee
was also an officer or employee of the Company during fiscal 1993. While Messrs.
Ralph Voorhees, Coggin and Heil do not have an employment relationship with the
Company, they do have certain other relationships with the Company.
The Company leases reservations equipment and certain terminal facilities
from Delta and Delta provides certain services to the Company, including
reservations and ground handling services at certain stations. Expenses paid
under these agreements during the 1993 fiscal year were approximately
$4,174,000. In addition, at December 31, 1993, Delta owed the Company
approximately $228,000 for traffic and other receivables generated in the
ordinary course of the Company's business and the Company owed Delta
approximately $2,092,000 for various services performed by Delta, as described
above. Russell H. Heil, a Director of the Company and a member of its
Compensation Committee, is the Senior Vice President -- Technical Operations for
Delta. Julius P. Gwin, a Director of the Company, is the Vice
President -- Finance for Delta. Messrs. Heil and Gwin each serve on the Board as
the designated nominees of Delta. Robert W. Coggin, Senior Vice
President -- Marketing of Delta, also served as a Director, as a designated
nominee of Delta, and as a member of the Compensation Committee of the Company
until May 20, 1993. See "Identification of Directors and Executive Officers"
above.
Mitchell Hutchins, a subsidiary of PaineWebber Incorporated,
("PAINEWEBBER") manages cash and short-term investments for ASA Investments,
Inc., the Company's wholly owned subsidiary. Ralph W. Voorhees, a Director of
the Company and a member of its Compensation Committee, is a Senior Vice
President -- Investments of PaineWebber. Mitchell Hutchins' compensation for
such services is based on the amount of assets invested on behalf of ASA
Investments, Inc. With respect to services rendered during fiscal 1993, ASA
incurred accrued fees payable to Mitchell Hutchins of approximately $104,000.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors met four times during the Company's 1993 fiscal
year. Each incumbent Director attended at least 75% of the aggregate of (1) the
total number of meetings of the Board of Directors during the period he served
as a Director, and (2) the total number of meetings held by all committees of
the Board (i.e., the Audit Committee and the Compensation Committee) on which he
served during the periods he served as a member thereof.
7
<PAGE> 10
EXECUTIVE COMPENSATION
GENERAL
In order to generally improve shareholders' understanding of all forms of
compensation paid to senior executives, the criteria used to reach such
compensation decisions, and any relationship between executive compensation and
corporate performance, the Securities and Exchange Commission (the "SEC")
adopted rules regarding the form and substance of the textural and tabular
disclosure of executive compensation by publicly-held corporations to their
shareholders. The Company hopes that the disclosure provides its shareholders
with an understanding of the Company's executive compensation structure and
insight into the policies that shaped it.
The Compensation Committee of the Company's Board of Directors regularly
reviews and approves decisions with respect to compensation of the Company's
executive employees. The Board of Directors appointed three of its independent,
non-employee members to serve on the Compensation Committee and empowered the
committee to:
- approve compensation levels and increases for: (a) each Executive Officer
who also serves as a member of the Board of Directors, and (b) any
officer or employee of the Company whose annual base salary is in excess
of $90,000;
- approve all incentive payments to Executive Officers and other employees
in excess of $5,000, paid in cash or property in any calendar year; and
- undertake administration, upon specific direction of the Board of
Directors, of employee benefit plans.
The full Board of Directors generally does not review the Compensation
Committee's decisions relating to executive compensation, except in the event
that such decisions require the adoption of documents relating to employee
benefit plans or programs or the delegation to the Compensation Committee of
administrative responsibilities with respect to such plans or programs.
Decisions about grants or awards under the Company's stock-based employee
benefit plans are made solely by the Compensation Committee where Rule 16b-3 of
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") requires
that such grants or awards be made by a "disinterested" committee.
The SEC's rules addressing disclosure of executive compensation in proxy
statements generally, require the Compensation Committee to include in this
Proxy Statement a report from the Compensation Committee addressing, with
respect to the most recently completed fiscal year, (a) the Company's policies
regarding executive compensation generally, (b) the factors and criteria
considered in setting the compensation of the Company's Chief Executive Officer,
George F. Pickett, Jr., and (c) any relationship between such compensation and
the Company's performance.
Accordingly, set forth below, for inclusion in this Proxy Statement, is the
report submitted by Messrs. Alan M. Voorhees, Ralph W. Voorhees, and Russell H.
Heil in their capacity as the Company's Compensation Committee:
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Executive Compensation Policies
The Company's executive compensation policies, as endorsed by the
Compensation Committee, have been designed to provide a balanced compensation
program that will assist the Company in its efforts to attract, motivate and
retain talented executive employees who the Compensation Committee and senior
management believe are important to the Company's long-term financial
performance. The Company seeks to accomplish this goal by providing a
compensation program that, in the judgment of the Compensation Committee and
senior management:
- is competitive with compensation programs offered by the Company's
primary competitors and by other comparably capitalized companies;
8
<PAGE> 11
- integrates certain compensation elements with individual contributions to
the Company's accomplishment of certain corporate and operational goals;
and
- links certain compensation elements with an opportunity to own the
Company's Common Stock so that its executive employees will have a
personal interest in the enhancement of share performance and, as a
result, have common interests with the Company's shareholders.
The Compensation Committee believes that each of these factors is
integrally important to the long-term financial performance of the Company. In
designing and implementing the individual components of the Company's executive
compensation program, the Company seeks a balance among these factors that will
vary depending on the level of policy making and operational responsibility of
the executive employee. The Compensation Committee and senior management
annually review the structure of the Company's executive compensation program to
ensure that these goals are being accomplished. The Compensation Committee
periodically reevaluates whether the Company offers a competitive compensation
program. This comparative analysis typically involves a review of compensation
programs offered by the Company's primary competitors and by other comparably
capitalized companies, to the extent such information is readily available to
the Compensation Committee. The Compensation Committee often includes in such a
review the compensation programs of comparably capitalized companies in the
airline industry such as the companies included in the Media General Airline
Index which is used as an index in the comparative analysis of ASA's cumulative
shareholder return under the caption "Executive Compensation -- Five-Year
Shareholder Return Comparison" below.
The components of the Company's executive compensation program are
comprised of salary, cash incentive bonus awards, and long-term incentive bonus
arrangements in the form of SARs and deferred compensation plans. The current
structure of the executive compensation program for the Company's senior
executives, Messrs. Pickett and Beiser (the "SENIOR EXECUTIVE OFFICERS") and
certain aspects of the compensation program for the other Executive Officers and
key executive employees, was approved by the Compensation Committee and ratified
by the Board of Directors in 1990. The Company's cash incentive bonus awards for
the Senior Executive Officers and the SAR Plan are designed to link compensation
to various performance factors. Accordingly, the Committee seeks to grant a
material portion of the total compensation package for the Senior Executive
Officers through performance driven incentives. The same basic approach is taken
with respect to determining compensation levels for the other executive
employees.
On December 15, 1993, the Internal Revenue Service and Department of
Treasury issued proposed regulations regarding compliance with Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "CODE"), which disallows a
public company's deduction for compensation in excess of $1 million for certain
executive officers. The Compensation Committee has determined that, while the $1
million compensation deduction cap would be applicable to the Executive Officers
listed in the Summary Compensation Table below, their compensation levels are
substantially below the cap. Nevertheless, the Compensation Committee intends to
take Section 162(m) of the Code into consideration when determining compensation
levels and to consider appropriate steps to mitigate any adverse impact this
limitation on the deductibility of executive compensation may have on executive
compensation levels and on the Company.
Salaries and Cash Incentive Bonus Awards
The Compensation Committee establishes the salaries and bonus awards for
the Senior Executive Officers and approves the salaries and bonus awards for the
other key executive employees, which are presented to the Committee by the
Senior Executive Officers. In both cases, salary and bonus award levels are
established and adjusted annually based on factors such as: competitive trends,
annual inflation rates, overall financial performance of the Company and
individual performance of the executives. The Company's annual bonus awards to
its Executive Officers and other key executive employees, some of which are
reflected in the Summary Compensation Table below, are based on various
subjective and objective performance criteria. The Compensation Committee has
established no specific mechanism by which these specific subjective and
objective factors are considered together for purposes of establishing salaries
and bonus awards, but rather considers all of such factors in making a final
determination of salary and bonus award levels.
9
<PAGE> 12
The Chief Executive Officer's Salary for Fiscal Year 1993. Using the
criteria discussed above, at the beginning of fiscal 1993, the Compensation
Committee set Mr. Pickett's salary at $240,420, an increase of six percent (6%)
from fiscal 1992, and set his annual bonus award maximum at fifty percent (50%)
of his base salary. Increases in Mr. Pickett's base salary have an impact on the
amount of his annual bonus and the size of his award under the SAR Plan.
Senior Executive Officer Bonus Awards. At the beginning of each fiscal
year, the Compensation Committee establishes individual maximum cash bonus award
levels for its Senior Executive Officers. These award levels are then evaluated
after the end of the fiscal year to determine what percentage of the bonus award
each Senior Executive Officer has earned based on the Company achieving certain
performance criteria. The bonus award is tied to the Compensation Committee's
subjective determination of the achievement by the Company of certain objectives
that are established annually. The factors evaluated in fiscal 1993 included the
Company maintaining or improving certain specific performance criteria,
including cost control and customer service, and successfully implementing the
expansion of the Dallas/Fort Worth hub. At the end of fiscal 1993, the
Compensation Committee subjectively determined in view of the performance
achieved that the Senior Executive Officers had earned their respective maximum
bonus.
Other Executive Officer and Key Executive Employee Salary and Bonus
Awards. After the end of each fiscal year the Compensation Committee, in
consultation with the Senior Executive Officers, approves the amount of the cash
bonus awards for the other Executive Officers and key executive employees for
the fiscal year just ended. While the criteria for such bonus awards are not
always as specific as those for the Senior Executive Officers, the same basic
analysis is applied by the Senior Executive Officers in determining the amount
of the awards for the other Executive Officers and key executive employees that
are recommended to the Compensation Committee for approval.
Long Term Incentive Plans -- Stock Appreciation Rights
The Company's 1990 Stock Appreciation Rights Plan (the "SAR PLAN") provides
the Company's Executive Officers and certain other key executive employees with
the opportunity to benefit from enhanced share performance. The SAR Plan was
approved by the Compensation Committee, adopted by the Board of Directors and
ratified by the shareholders of the Company during fiscal 1990.
The SAR Plan is administered by the Compensation Committee, which, in
accordance with the SAR Plan, has the authority to determine the persons who, in
their judgment, are key executive employees of the Company and are entitled to
receive SARs, the number of SARs to be granted to each, the grant price of each
SAR unit, the term within which the SARs may be exercised, and what portion of
the value of the SARs will be paid in Common Stock and what portion will be paid
in cash.
The grant price of the SARs is set by the Compensation Committee at the
closing price of the Common Stock on the NASDAQ National Market System (the
"MARKET VALUE") at the close of business on the last trading date prior to the
grant date.
The SAR Plan provides for the issuance of up to 900,000 shares of the
Company's Common Stock in connection with the exercise of SARs. As of April 1,
1994, 435,315 shares of Common Stock have been issued under the SAR Plan and
617,300 SARs are outstanding under the SAR Plan. Assuming that the outstanding
SARs were exercised on April 1, 1994, 76,776 additional shares of Common Stock
would be issued and 387,909 shares of Common Stock would be available for
subsequent issuance under the SAR Plan.
The long term incentive compensation sought to be awarded by the grant of
SARs is tied directly to the market performance of the Company's Common Stock.
The SAR award is determined by the grant of a certain number of SARs which, if
the Company's Common Stock actually appreciates in accordance with a current
market indicator, would result upon exercise of the SARs one year from the day
of grant in compensation approximately equal to a certain percentage of the
executive employee's base salary (50% for Senior Executive Officers and 35% for
other executive employees).
The value of each SAR award at the time of exercise is equal to (a) the
market value of one share of Common Stock at the close of business on the last
trading date prior to the date of exercise, less (b) the grant
10
<PAGE> 13
price of the SAR. To accomplish the Compensation Committee's intent to tie SAR
participant's awards to long term share performance, the SARs granted to date
provide that upon the exercise of SARs, the participant will receive 60% of the
value of the SARs in Common Stock and the balance in cash.
The SARs granted by the Compensation Committee to date are all exercisable
(a) generally, during the period beginning six months after the date of grant
and ending five years after the date of grant (the longest possible term), (b)
in the event of the termination of the participant's employment (other than upon
death), for a period ending four months from his or her termination date or upon
the earlier termination of the five year term of the SARs, or (c) in the event
of the employee's death, for a period ending one year from the date of his or
her death or upon the earlier termination of the five year term of the SARs. The
SARs will be automatically exercised on the expiration date, if not previously
exercised or terminated in the event of the employee's death or termination of
employment. The SARs granted to date also can be exercised only during the
"window period" beginning on the third business day after the Company's release
of its quarterly and annual earnings and ending on the twelfth business day
after the earnings release.
The Company receives no cash consideration upon the grant or exercise of
any SARs. SARs are not transferable by the holder, other than by will or by the
applicable laws of descent and distribution.
Deferred Compensation Plans
In order to provide compensation plans pursuant to which its Executive
Officers, certain key executive employees and other employees may defer income
for savings and retirement purposes, the Company has established a Thrift Plan
(the "THRIFT PLAN") and an Executive Deferred Compensation Plan (the "EXECUTIVE
DEFERRED COMPENSATION PLAN").
Thrift Plan. The Company's Thrift Plan, adopted in 1984, is intended to
qualify under Code Section 401(k). Any employee who has completed one year of
employment with the Company is generally eligible to participate in the Thrift
Plan. The Company's executive officers are permitted to participate in the
Thrift Plan on the same basic terms as non-executive employees, subject to
certain legal limitations on contributions or benefits to highly compensated
employees.
Employees participating in the Thrift Plan may contribute one percent (1%)
or more (in increments of 1%) of their compensation by way of salary reductions
not to exceed a maximum amount that varies annually in accordance with the Code
($8,994 in 1993 and $9,240 in 1994). The Company expects to contribute annually,
from its earnings, matching contributions of $.20 to $.50 (depending on the
number of years of his or her participation) to the participant's account for
every $1.00 of salary reduction by that participant, provided that the Company
will not make any matching contribution for salary reductions in excess of six
percent (6%) of a participant's compensation. Contributions to the accounts of
the persons listed in the Summary Compensation Table below are included in the
column headed "All Other Compensation." Participants' interests in the matching
contributions allocated to their accounts vest over a period of seven years
(excluding years prior to 1984).
The Company has made available to Thrift Plan participants the ability to
invest the participants' accounts in the Company Common Stock fund of the Thrift
Plan, thus giving them an opportunity to benefit from any enhancement in the
performance of the Company's Common Stock.
A participant's account is normally distributed when he or she retires,
dies or becomes disabled or otherwise terminates employment with the Company.
Benefits will be paid, at the participant's election, in a lump sum or in not
more than 10 installments. Distributions may be made, at the participant's
request, in Common Stock to the extent that his or her account was invested in
the Company's Common Stock fund. A participant may also withdraw his or her
salary reductions in the event of a hardship (as defined in the Thrift Plan).
Executive Deferred Compensation Plan. The Executive Deferred Compensation
Plan, adopted in 1990, is a non-qualified plan that is intended to provide
supplemental retirement income for certain key executive employees of the
Company selected by the Compensation Committee. The Executive Deferred
Compensation Plan provides tax deferred contributions by the Company that exceed
the contribution levels permitted under
11
<PAGE> 14
the Thrift Plan due to limits established in accordance with the Code with
respect to highly compensated employees. The Executive Deferred Compensation
Plan is intended to be an unfunded deferred compensation plan so that benefits
thereunder will be tax deferred. As a result, amounts deferred thereunder
represent unsecured liabilities of the Company subject to the claims of the
Company's creditors.
Under the Executive Deferred Compensation Plan, each year there is
allocated to each participant's account a specified percentage of his or her
base salary for the year (15% for the Senior Executive Officers or 10% for other
key executive employee participants). Contributions to the accounts of the
persons listed in the Summary Compensation Table below are included in the
column headed "All Other Compensation."
The amount of a participant's benefit from the Executive Deferred
Compensation Plan will be equal to the participant's vested interest in the
accrued benefit percentage of the contributions allocated to his or her account
plus any earnings on the balance. A participant's vested interest accrues
twenty-five percent (25%) after the expiration of five years' participation,
five percent (5%) per year for years six through ten, and ten percent (10%) per
year for years eleven through fifteen. A participant's accrued benefit
percentage is equal to his or her years of service divided by the number of
years of service he or she would have had at normal retirement age under the
Executive Deferred Compensation Plan (the later of age 65 or the completion of
15 years of service). The accrued benefit percentage becomes 100% if the
participant dies, becomes disabled or if the participant's employment is
terminated after a change in control. Certain participants, designated by the
Compensation Committee, will always have a 100% accrued benefit percentage.
If a participant otherwise terminates his or her employment, he or she will
not receive benefits under the Plan until the participant reaches age 55.
Benefits will be paid in a lump sum if less than $10,000 or, at the
participant's election, in the form of an annuity or in installments over not
less than 20 years. A participant's benefits are normally distributed as a
result of retirement, death, disability, a change in control or other
termination of employment.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE
COMPANY'S BOARD OF DIRECTORS:
Alan M. Voorhees Ralph W. Voorhees Russell H. Heil
12
<PAGE> 15
EXECUTIVE COMPENSATION SUMMARY
The following table summarizes the compensation paid by the Company to (a)
the Company's Chief Executive Officer and (b) to all of the Company's Executive
Officers (other than the CEO) whose total annual salary and bonus for the 1993
fiscal year equaled or exceeded $100,000 and who were serving as Executive
Officers during or at the end of the 1993 fiscal year. The table reflects all
compensation received by each such Executive Officer for services rendered in
all capacities to the Company and its subsidiary that was paid or accrued during
the Company's 1993, 1992 and 1991 fiscal years (except for data included under
the column headed "All Other Compensation" for which, in accordance with the
SEC's executive compensation disclosure rules, only the data for fiscal 1993 and
1992 must be disclosed).
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
-------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY($) BONUS($) SARS(#)(1) COMPENSATION($)
- ----------------------------- ----------- --------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
George F. Pickett, Jr. 1993 $240,420 $120,210 136,600 $40,560(2)
Chairman of the Board 1992 226,800 113,400 152,400 38,384
and Chief Executive Officer 1991 210,000 105,000 196,000
John W. Beiser 1993 234,720 117,360 133,400 39,705(3)
President and Secretary 1992 221,400 110,700 148,600 37,574
1991 205,000 102,500 191,400
Ronald V. Sapp 1993 102,300 32,000 40,600 14,727(4)
Vice President -- Finance 1992 97,428 30,000 45,800 13,234
and Treasurer 1991 91,908 30,000 60,000
Tilden M. Shanahan 1993(5) 87,120 27,000 34,600 13,209(6)
Vice President -- Flight 1992 82,956 20,000 39,000 10,914
Operations 1991 78,276 20,000 51,200
Samuel J. Watts 1993(5) 83,720 27,000 33,400 12,873(7)
Vice President -- Sales 1992 79,788 20,000 37,600 9,692
and Customer Service 1991 75,288 20,000 49,200
</TABLE>
- ---------------
(1) All of the data in this column has been adjusted for the 2-for-1 stock split
that occurred on February 18, 1993.
(2) Comprised of $36,063 of contributions by the Company to its Executive
Deferred Compensation Plan and $4,497 of contributions by the Company to
its Thrift Plan.
(3) Comprised of $35,208 of contributions by the Company to its Executive
Deferred Compensation Plan and $4,497 of contributions by the Company to
its Thrift Plan.
(4) Comprised of $10,230 of contributions by the Company to its Executive
Deferred Compensation Plan and $4,497 of contributions by the Company to
its Thrift Plan.
(5) At the annual meeting of the Company's Board of Directors in 1993, the Board
determined that Messrs. Shanahan and Watts inappropriately had been
designated as Executive Officers of the Company and did not designate them
as such beginning in May 1993. Accordingly, while Messrs. Shanahan's and
Watts' compensation is disclosed in this table because they were designated
as Executive Officers until May 1993, they have never been an "executive
officer" within the meaning of the SEC's executive compensation disclosure
rules other than as a result of the Board of Directors' designation.
(6) Comprised of $8,712 of contributions by the Company to its Executive
Deferred Compensation Plan and $4,497 of contributions by the Company to
its Thrift Plan.
(7) Comprised of $8,376 of contributions by the Company to its Executive
Deferred Compensation Plan and $4,497 of contributions by the Company to
its Thrift Plan.
13
<PAGE> 16
The following table sets forth with respect to each of the Executive
Officers named in the Summary Compensation Table above (a) the number of shares
of Company Common Stock and any other securities underlying all individual
grants of SARs made by the Company and its subsidiary during the 1993 fiscal
year, (b) the ratio that the number of SARs granted to each individual bears to
the total number of SARs granted to all employees of the Company during the 1993
fiscal year, (c) the per-share base price of such SARs (being equal to the
market price on the grant date), (d) the expiration date of such SARs, and (e)
the estimated potential realizable value of each grant of SARs assuming that
each SAR is exercised on its expiration date and that the market price per share
of the underlying Company Common Stock appreciates in value from the base price
on the date of the grant to the expiration date of the SAR at assumed annualized
rates of appreciation (compounded annually over the term) of five percent (5%)
and ten percent (10%), respectively. No grants of stock options, separately or
in tandem with SARs, were made by the Company in fiscal 1993.
SAR GRANTS IN THE 1993 FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZED
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR SAR
INDIVIDUAL GRANTS TERM(1)
----------------------------------------------------------- -----------------------
NUMBER OF % OF TOTAL
SECURITIES SARS
UNDERLYING GRANTED TO FIVE TEN
SARS GRANTED EMPLOYEES IN BASE PRICE EXPIRATION PERCENT PERCENT
NAME (#)(2)(3) FISCAL YEAR ($/SH)(3) DATE (5%)($) (10%)($)
- ------------------------------ ------------ ------------ ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
George F. Pickett, Jr.
Chairman of the Board and
Chief Executive Officer 136,600 31.2% $ 21.125 1/22/98 $797,259(4) $1,761,733(4)
John W. Beiser
President and Secretary 133,400 30.5% 21.125 1/22/98 778,582(5) 1,720,463(5)
Ronald V. Sapp
Vice President -- Finance
and Treasurer 40,600 9.3% 21.125 1/22/98 236,960(6) 523,619(6)
Tilden M. Shanahan
Vice President -- Flight
Operations 34,600 7.9% 21.125 1/22/98 201,941(7) 446,237(7)
Samuel J. Watts
Vice President -- Sales
and Customer Service 33,400 7.6% 21.125 1/22/98 194,937(8) 430,761(8)
</TABLE>
- ---------------
(1) The potential realizable value equals the assumed appreciated market price
per share less the $21.125 per share base price which is then multiplied by
the number of shares of the Company's Common Stock underlying the SAR. The
5% and 10% assumed rates of appreciation are specified by Securities and
Exchange Commission regulations which illustrate that the potential
realized value of the SARs granted is entirely dependent on appreciation in
the market price of the Company's Common Stock. If the per share price does
not increase, the Executive Officer will realize no gain because the grant
price is based on the then current market price. The 5% and 10% rates are
included for illustration only but not as a prediction of market
appreciation. The actual value realized will depend on the actual market
price on the exercise date of each SAR.
(2) The data in this column reflects the number of SAR units, each of which is
valued based on the appreciation of a single share of the Company's Common
Stock; however the number reported bears no relationship to the number of
shares of Common Stock that the executive will receive upon exercise of the
SARs, which cannot be calculated until the exercise date. All of the
reported SARs were granted on January 22, 1993. All of the SARs are
exercisable during the period from July 22, 1993 through January 22, 1998
and may be exercised only during a "window period" beginning on the third
business day after the Company's release of its quarterly and annual
earnings and ending on the twelfth business day after the earnings release.
The value of each SAR unit at the time of exercise is equal to the market
value of one (1) share of Common Stock at the close of business on the last
trading date prior to the date of
14
<PAGE> 17
exercise, less the base price of the SAR unit. Upon the exercise of a SAR
unit, the named individual will receive 60% of the value in Common Stock
(no fractional shares) and 40% in cash.
(3) All of the data in this column has been adjusted for the 2-for-1 stock split
that occurred on February 18, 1993.
(4) Five percent (5%) appreciation (compounded annually) to approximately $26.96
would result in an award of approximately 17,742 shares of Common Stock and
approximately $318,909 cash; and ten percent (10%) appreciation (compounded
annually) to approximately $34.02 would result in an award of approximately
31,069 shares of Common Stock and approximately $704,703 cash.
(5) Five percent (5%) appreciation (compounded annually) to approximately $26.96
would result in an award of approximately 17,326 shares of Common Stock and
approximately $311,448 cash; and ten percent (10%) appreciation (compounded
annually) to approximately $34.02 would result in an award of approximately
30,341 shares of Common Stock and approximately $688,201 cash.
(6) Five percent (5%) appreciation (compounded annually) to approximately $26.96
would result in an award of approximately 5,273 shares of Common Stock and
approximately $94,792 cash; and ten percent (10%) appreciation (compounded
annually) to approximately $34.02 would result in an award of approximately
9,234 shares of Common Stock and approximately $209,460 cash.
(7) Five percent (5%) appreciation (compounded annually) to approximately $26.96
would result in an award of approximately 4,493 shares of Common Stock and
approximately $80,803 cash; and ten percent (10%) appreciation (compounded
annually) to approximately $34.02 would result in an award of approximately
7,869 shares of Common Stock and approximately $178,518 cash.
(8) Five percent (5%) appreciation (compounded annually) to approximately $26.96
would result in an award of approximately 4,338 shares of Common Stock and
approximately $77,979 cash; and ten percent (10%) appreciation (compounded
annually) to approximately $34.02 would result in an award of approximately
7,596 shares of Common Stock and approximately $172,329 cash.
15
<PAGE> 18
The following table sets forth with respect to each of the Executive
Officers named in the Summary Compensation Table above (a) the number of shares
received upon the exercise of any SARs during the 1993 fiscal year, (b) the
aggregate dollar value realized upon the exercise of any SARs, (c) the total
number of shares of the Company's Common Stock and any other securities
underlying all outstanding, unexercised SARs held at the end of the 1993 fiscal
year, separately identifying the exercisable and unexercisable SARs and (d) the
aggregate dollar value of all such unexercised SARs that are in-the-money (i.e.,
when the fair market value of the underlying Company Common Stock exceeds the
base price of any SARs) separately identifying the exercisable and unexercisable
options and SARs. There were no options of the Company issued or outstanding
during fiscal 1993.
AGGREGATED SAR EXERCISES IN THE
1993 FISCAL YEAR AND FISCAL YEAR-END SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY(1)
SARS AT FY- SARS AT
END(#) FY-END($)
NUMBER OF SECURITIES ------------- ----------------
UNDERLYING SARS VALUE EXERCISABLE/ EXERCISABLE/
EXERCISED(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
NAME (2)(3) (4) (2)(3) (2)(5)
- -------------------------------- -------------------- ----------- ------------- ----------------
<S> <C> <C> <C> <C>
George F. Pickett, Jr.
Chairman of the Board and
Chief Executive Officer 152,400 $2,921,350 (6) 136,600(7)/-- $1,792,875(8)/--
John W. Beiser
President and Secretary 148,600 2,852,025 (9) 133,400(7)/-- 1,750,875(10)/--
Ronald V. Sapp
Vice President -- Finance
and Treasurer 45,800 440,825 (11) 40,600(7)/-- 532,875(12)/--
Tilden M. Shanahan
Vice President -- Flight
Operations 39,000 375,375 (13) 34,600(7)/-- 454,125(14)/--
Samuel J. Watts
Vice President -- Sales
and Customer Service 51,600 1,140,150 (15) 43,400(16)/-- 609,625(17)/--
</TABLE>
- ---------------
(1) The fair market value of the Company's Common Stock at the close of
business on December 31, 1993 was $34.25 per share based on the closing
price per share on the NASDAQ National Market System.
(2) All per share data, number of shares and number of SARs have been adjusted
for the 2-for-1 stock split that occurred on February 18, 1993.
(3) The data reflected in this column indicates the number of shares of Common
Stock underlying the SARs. The value of such shares is used to determine
the overall value of the SARs on the exercise date.
(4) The data reflected in this column indicates the number of shares of Common
Stock acquired upon the exercise of the SARs (60% of the SARs' value) plus
the amount of cash received upon the exercise of the SARs (40% of the SARs'
value). The footnotes in this column provide a breakdown of the number of
shares of Common Stock and the amount of cash received upon exercise of the
SARs. The base price for all of the SARs reported in this column was
$17.125, except for Samuel J. Watts' SARs, as indicated in footnote (15).
(5) The data reflected in this column indicates (a) the value of the SARs held
at fiscal year end, which is calculated by multiplying (i) the number of
SAR units by (ii) the amount of appreciation in the market price of the
Common Stock as of the end of the last trading day of the fiscal year (as
compared to the SAR base price), and (b) in a footnote, the number of
shares and the amount of cash that would have been received upon exercise
if the SARs had been exercised at fiscal year end.
16
<PAGE> 19
(6) Comprised of 48,208 shares of Common Stock (24,345 shares at $34.75 per
share and 23,863 shares at $38.00 per share) and approximately $1,168,567
cash.
(7) These SARs are exercisable during the period from July 22, 1993 through
January 22, 1998 and have a base price of $21.125, except for Samuel J.
Watts' SARs, as indicated in footnote (16).
(8) Comprised of 31,408 shares of Common Stock and approximately $717,151 cash.
(9) Comprised of 47,022 shares of Common Stock (three exercises: 15,000 shares
at $34.25 per share, 7,764 shares at $35.50 per share and 24,258 shares at
$38.00 per share) and approximately $1,140,849 cash.
(10) Comprised of 30,672 shares of Common Stock and approximately $700,359 cash.
(11) Comprised of 9,887 shares of Common Stock (at $26.75 per share) and
approximately $176,348 cash.
(12) Comprised of 9,335 shares of Common Stock and approximately $213,151 cash.
(13) Comprised of 8,419 shares of Common Stock (at $26.75 per share) and
approximately $150,167 cash.
(14) Comprised of 7,955 shares of Common Stock and approximately $181,666 cash.
(15) Comprised of two exercises: (a) SARs with a base price of $11.25 -- 9,738
shares of Common Stock and approximately $225,605 cash and (b) SARs with a
base price of $17.125 -- 9,097 shares of Common Stock and approximately
$230,464 cash.
(16) Of these SARs, 10,000 have a base price of $17.125 and are exercisable
during the period from July 29, 1992 through January 29, 1997 and 33,400
have a base price of $21.125 and are exercisable during the period from
July 22, 1993 through January 22, 1998.
(17) Comprised of SARs with two different grant prices: (a) 3,000 shares of
Common Stock (10,000 SARs with a base price of $17.125 and exercise price
of $34.25 per share) and approximately $68,500 cash; and (b) 7,679 shares
of Common Stock (33,400 SARs with a base price of $21.125 and exercise
price of $34.25 per share) and approximately $175,369 cash.
COMPENSATION OF NON-MANAGEMENT DIRECTORS
Effective, January 1, 1994 the compensation for each member of the
Company's Board of Directors who is not also an officer or employee of the
Company and its subsidiary has been set at $2,500 per quarter plus $1,000 for
each meeting of the Board of Directors and $500 for each meeting of Committees
that are attended. Previously, these amounts were $1,000 per quarter and $1,000
per day for Board meetings and Committee meetings. All members of the Board of
Directors are reimbursed for their expenses associated with attendance at formal
Board meetings. During fiscal 1993, as Chairman of the Board, Alan M. Voorhees
also received additional compensation of $24,000 per year.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
In 1990, the Company entered into Founding Officer Agreements with Messrs.
Pickett and Beiser pursuant to which severance compensation will be paid to each
officer if his employment terminates within two (2) years after a "change in
control." A "change in control" will be deemed to have occurred (a) if any
single entity or group, other than Delta Air Lines, Inc. or a subsidiary
thereof, acquires more than twenty-five percent (25%) of the Company's voting
stock; (b) if Delta Air Lines, Inc. or a subsidiary thereof owns more than fifty
percent (50%) of the Company's voting stock; (c) if the Company's Board of
Directors approves any tender offer for the Company's voting stock; or (d) upon
a change in a majority of the members of the Company's Board of Directors who
were directors as of March 12, 1990 (or the successors of any such directors who
resigned from the Board or declined to be nominated to the Board). The severance
compensation will generally equal two (2) times the officer's accrued
compensation for the preceding twelve (12) months.
The Company had previously entered into an agreement with Messrs. Pickett
and Beiser pursuant to which, upon the death of any such officer, his estate
would have been able to elect to have the Company purchase Common Stock owned by
him at his death at a price per share equal to the closing price for the Common
Stock as quoted on the National Market List of the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") on the day immediately
preceding such officer's death. These agreements were terminated during fiscal
1993. The Company maintained at least $1,000,000 of insurance on the life of
each of these officers to fund the purchase of his shares.
17
<PAGE> 20
FIVE-YEAR SHAREHOLDER RETURN COMPARISON
Set forth below is a line-graph presentation comparing on an indexed basis
for the five-year period (the "MEASUREMENT PERIOD") beginning at the market
close on the last trading day before the beginning of the Company's fifth
preceding fiscal year (i.e. fiscal 1988) through and including the end of the
Company's last completed fiscal year (i.e. December 31, 1993):
(a) the yearly percentage change in the Company's cumulative
shareholder return on the Company's Common Stock, which was measured by
dividing (i) the sum of (A) the cumulative amount of dividends during the
five-year period (assuming daily dividend reinvestment) and (B) the
difference between the share price of the Company's Common Stock at
December 31, 1993 and at the beginning of the Measurement Period, by (ii)
the share price at the beginning of the measurement period, with
(b) the cumulative total return (assuming daily dividend reinvestment)
of the NASDAQ Stock Market Index, and with
(c) the cumulative total return (assuming daily dividend reinvestment)
of the Media General Airline Index, an established market index which is
comprised of the following companies (the returns for which have been
market weighted annually, at the beginning of the year, within the group to
produce returns for the group) Airlease, Ltd., Airtran, Corp., Alaska Air
Group, American West Airlines, AMR Corp., Atlantic Southeast Airlines,
British Airways, Comair Holdings, Delta Air Lines, HAL, Inc., Japan
Airlines, KLM Royal Dutch, Mesa Airlines, PS Group, SkyWest, Southwest
Airlines, UAL Corp., USAir, and WorldCorp (the "PEER GROUP"):
18
<PAGE> 21
ATLANTIC SOUTHEAST AIRLINES, INC.
COMPARATIVE RETURN TO INVESTORS
<TABLE>
<CAPTION>
ATLANTIC MEDIA GEN-
MEASUREMENT PERIOD* SOUTHEAST ERAL AIRLINE NASDAQ STOCK
(FISCAL YEAR COVERED) AIRLINES INDEX MARKET INDEX
<S> <C> <C> <C>
1988 $ 100.00 $100.00 $100.00
1989 195.85 124.36 112.89
1990 207.82 89.04 91.57
1991 520.58 102.21 117.56
1992 811.84 77.63 118.71
1993 1282.77 95.43 142.40
</TABLE>
<TABLE>
<CAPTION>
ATLANTIC MEDIA GEN-
RETURN SOUTHEAST ERAL AIRLINE NASDAQ STOCK
AIRLINES INDEX MARKET INDEX
<S> <C> <C> <C>
1988 N/A N/A N/A
1989 95.85% 24.36% 12.89%
1990 6.11% (28.40%) (18.89%)
1991 150.50% 14.79% 28.38%
1992 55.95% (24.05%) 0.98%
1993 58.01% 22.93% 19.96%
</TABLE>
* Assumes $100 invested in the common stock of Atlantic Southeast Airlines,
Inc. on December 30, 1988, the last trading day of 1988. Pursuant to amended SEC
rules, the methodology for determining the market weighting of returns was
changed by moving the measurement point from the end of the fiscal year to the
beginning of the fiscal year. However, the Company made no change in the
composition of the Peer Group.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has entered into certain transactions with companies that have
business relationships with certain of its Directors, which relationships and
transactions are described above under the caption "Election of
Directors -- Additional Information with Respect to the Compensation Committee"
above.
RELATIONSHIP WITH INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young as the Company's
independent auditors for the ensuing fiscal year. Ernst & Young has served as
the Company's independent auditors since 1984. Representatives of Ernst & Young
are expected to be present at the Annual Meeting of the Shareholders with the
opportunity to make a statement if they desire to do so and to respond to
appropriate questions.
19
<PAGE> 22
OTHER MATTERS
SHAREHOLDERS' PROPOSALS FOR ANNUAL MEETING TO BE HELD IN 1995
The Company plans to hold its 1995 Annual Meeting of the Shareholders
during the month of May. Any proposal of a Shareholder intended to be presented
at said Annual Meeting of the Shareholders must be received by the Secretary of
the Company for inclusion in the proxy statement and form of proxy for that
meeting no later than December 15, 1994. Such proposals must meet the
requirements of the regulations promulgated by the SEC to be eligible for
inclusion in the Company's 1995 proxy materials.
ACTION ON OTHER MATTERS AT THE ANNUAL MEETING
At this time, the Company does not know of any other matters to be
presented for action at the Annual Meeting other than those mentioned in the
Notice of Annual Meeting of Shareholders and referred to in this proxy
statement. If any other matter comes before the meeting, it is intended that the
proxies will be voted in respect thereof in accordance with the judgment of the
persons voting the proxies.
REPORTS OF CHANGES IN BENEFICIAL OWNERSHIP
The Company is required to identify any beneficial owner of more than 10%
of the Company's Common Stock and any Director or Executive Officer who failed
to file on a timely basis with the SEC any report on Form 3 (relating to
beneficial ownership of Common Stock) or on Forms 4 or 5 (relating to changes in
beneficial ownership of Common Stock). Based solely on a review of material
furnished to the Company by such Directors, Executive Officers and more than 10%
beneficial owners who are required to file reports on Forms 3, 4 and 5 with the
SEC, no Director, Executive Officer or more than 10% beneficial owner was late
filing reports on Form 3, 4 or 5.
SHAREHOLDERS ARE URGED TO DATE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY
IN THE ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. YOUR COOPERATION WILL BE APPRECIATED. YOUR PROXY WILL BE VOTED, WITH
RESPECT TO THE MATTERS IDENTIFIED THEREON, IN ACCORDANCE WITH ANY SPECIFICATIONS
ON THE PROXY.
BY ORDER OF THE BOARD OF DIRECTORS,
JOHN W. BEISER
Secretary
20
<PAGE> 23
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 25, 1994
ATLANTIC SOUTHEAST AIRLINES, INC.
The undersigned hereby appoints John W. Beiser and George F. Pickett, Jr.,
or either of them, as Proxies, each with the power to appoint his substitute and
hereby authorizes them to represent and to vote, as designated below, all the
shares of common stock of Atlantic Southeast Airlines, Inc. held of record on
April 1, 1994, at the Annual Meeting of the Shareholders to be held on
Wednesday, May 25, 1994, at 11:00 A.M. at the offices of The Robinson-Humphrey
Company, Inc., Atlanta Financial Center, 3333 Peachtree Road, N.E., Atlanta,
Georgia, or any adjournment thereof.
1. ELECTION OF EIGHT DIRECTORS
(INSTRUCTION: TO FIX THE NUMBER OF DIRECTORS AT A NUMBER LESS THAN EIGHT, OR TO
WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW).
<TABLE>
<S> <C>
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY
(except as marked to the contrary below) for all nominees listed below
</TABLE>
John W. Beiser, Julius P. Gwin, Russell H. Heil, Jean A. Mori, Parker H. Petit,
George F. Pickett, Jr., Alan M. Voorhees, Ralph W. Voorhees
2. In their discretion, the Proxies are authorized to vote upon such other
business as may come before the meeting or adjournment thereof.
THIS PROXY, DULY EXECUTED, WILL BE VOTED AS SPECIFIED. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR FIXING THE NUMBER OF DIRECTORS AT EIGHT AND FOR THE
ELECTION OF ALL NOMINEES LISTED IN PROPOSAL 1.
The undersigned hereby acknowledges receipt of the Proxy Statement and
Notice of Annual Meeting to be held May 25, 1994.
Dated:_________________, 1994
_______________________(Seal)
_______________________(Seal)
(Please sign exactly as your
name appears hereon. If
shares are registered in more
than one name, each holder
should sign. When signing as
an attorney, administrator,
executor, guardian,
conservator, receiver or
trustee, please add your
title as such. If executed by
a corporation, the proxy
should be signed by a duly
authorized officer or agent.)
PLEASE SIGN, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
I PLAN TO ATTEND______
