<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:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
ATLANTIC SOUTHEAST AIRLINES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 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 Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 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 office of The
Robinson-Humphrey Company, Inc., Atlanta Financial Center, 3333 Peachtree Road,
N.E., Atlanta, Georgia 30326, on Wednesday, May 24, 1995, 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 4,
1995, 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 14, 1995
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 24, 1995
____________________________________________
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 24, 1995, 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 24, 1995, 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 14, 1995. The Company's Annual Report for the year ended December 31,
1994, 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 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 Bylaws of the Company, has fixed April 4, 1995, 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 4, 1995, there were 33,060,807 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 February 15, 1995, by each
Director, by each nominee for election as a Director, by each of the persons
named in the Summary Compensation Table on page 12, 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>
Percentage of
Number of Shares Common Stock
Name of Beneficial Owner Owned Beneficially (1) (1)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Delta Air Lines Holdings, Inc. (2) 7,995,000 24.2%
George F. Pickett 588,798 (3)(4) 1.8%
John W. Beiser 461,803 (4)(5) 1.4%
Ronald V. Sapp 6,659 (4) *
Julius P. Gwin 500 *
Russell H. Heil 25 *
Jean A. Mori 860 (6) *
Parker H. Petit 0 -
Alan M. Voorhees 505,630 (7) 1.5%
Ralph W. Voorhees 60,374 (8) *
All Executive Officers and Directors as a group 1,624,649 (3)(4)(5)(6)(7)(8) 4.9%
(9 persons)
- -----------------
*Less than 1%.
</TABLE>
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<PAGE> 5
(1) Information with respect to beneficial ownership is based upon information
furnished by each owner. As of February 15, 1995, there were 33,073,307 shares
of Common Stock outstanding.
(2) The address of this beneficial owner is Suite 1300, 1105 North Market
Street, Wilmington, DE 19801.
(3) Includes 118,650 shares (less than 1%) held by the wife of George F.
Pickett, 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 April 16, 1995, through the exercise of stock
appreciation rights ("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- 0 shares; John W. Beiser- 0 shares; Ronald V.
Sapp- 0 shares; and all Executive Officers and Directors as a group (9
persons)- 0 shares. 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 April 16, 1995, the closing price per
share for the Common Stock of $19.50 on February 15, 1995 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. However, none of these SARs could be
exercised because the grant price of either $21.125 or $36.75 is greater than
the assumed exercise price and, accordingly, no appreciation would be realized.
(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 130 shares (less than 1%) held by the wife of Jean A. Mori, with
respect to which Mr. Mori disclaims any beneficial ownership interest.
(7) Includes 480,630 shares (1.5%) 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 32,000 shares (less than 1%) held by the wife of Ralph W.
Voorhees, with respect to which Mr. Ralph Voorhees disclaims any beneficial
ownership interest.
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<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 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.
IDENTIFICATION OF EXECUTIVE OFFICERS AND DIRECTORS
The following information is furnished with respect to each Director
and for each Executive Officer of the Company:
<TABLE>
<CAPTION>
Executive
Executive Officers and Directors Age Director Since Officer Since
------------------------------------------------------- --- -------------- --------------
<S> <C> <C> <C>
George F. Pickett, Director and Executive Officer 54 1979 1979
John W. Beiser, Director and Executive Officer 54 1982 1979
Ronald V. Sapp, Executive Officer 50 -- 1985
Julius P. Gwin, Director 56 1987 --
Russell H. Heil, Director 52 1993 --
Jean A. Mori, Director 58 1994 --
Parker H. Petit, Director 55 1982 --
Alan M. Voorhees, Director 72 1979 --
Ralph W. Voorhees, Director 68 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"). 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
February 15, 1995, Delta (through a wholly owned subsidiary) owned
approximately 24.2% 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 Officer and Directors listed above.
George F. Pickett 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.
4
<PAGE> 7
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 has 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.
IDENTIFICATION OF OTHER SIGNIFICANT EMPLOYEES
The following information is furnished with respect to other significant
employees of the Company:
<TABLE>
<CAPTION>
Other Significant Employees Age Employee Since
--------------------------- --- --------------
<S> <C> <C>
William H. Hinson (Vice President) 49 1987
Tilden M. Shanahan (Vice President) 62 1985
Samuel J. Watts (Vice President) 47 1983
Renee H. Skinner (Controller) 38 1986
</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
5
<PAGE> 8
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.
Renee H. Skinner has served as Assistant Vice President-Controller since 1994.
Ms. Skinner served as Manager of Accounting from 1986 through 1994.
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, Jean A. Mori and Parker
H. Petit. The Audit Committee met one time during the 1994 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. The Compensation Committee met two times during
the 1994 fiscal year. The Compensation Committee is empowered as described
below under the caption "Executive Compensation -- Compensation Committee
Report on Executive Compensation."
COMPENSATION COMMITTEE INTERLOCKS AND ADDITIONAL INFORMATION WITH RESPECT TO
COMPENSATION DECISIONS
The members of the Compensation Committee during fiscal 1994 are
identified in the immediately preceding paragraph. No member of the
Compensation Committee was also an officer or employee of the Company during
fiscal 1994. While Messrs. Ralph Voorhees, Alan Voorhees and Heil do not have
an employment relationship with the Company, they do have certain other
relationships with the Company which are described below.
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 1994 fiscal year were
approximately $5,762,000. In addition, at December 31, 1994, Delta owed the
Company approximately $246,000 for traffic and other receivables generated in
the ordinary course of the Company's business and the Company owed Delta
approximately $1,096,000 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. See "Identification of Executive Officers
and Directors" above.
Mitchell Hutchins, a subsidiary of PaineWebber Incorporated,
("PAINEWEBBER") manages cash and short-term investments for ATLANTIC SOUTHEAST
AIRLINES, INC. 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 ATLANTIC SOUTHEAST AIRLINES, INC. Investments, Inc. With
respect to services rendered during fiscal 1994, ATLANTIC SOUTHEAST AIRLINES,
INC. incurred accrued fees payable to Mitchell Hutchins of approximately
$131,000.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors met four times during the Company's 1994 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
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<PAGE> 9
Committee and the Compensation Committee) on which he served during the periods
he served as a member thereof; provided; however, Parker H. Petit attended at
least 50% of such meetings.
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, 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
7
<PAGE> 10
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;
- 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 ATLANTIC
SOUTHEAST AIRLINES, INC.'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
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<PAGE> 11
based on factors such as: compensation programs offered by the Company's
primary competitors and by other comparably capitalized companies, 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.
THE CHIEF EXECUTIVE OFFICER'S SALARY FOR FISCAL YEAR 1994. Using the
criteria discussed above, at the beginning of fiscal 1994, the Compensation
Committee set Mr. Pickett's salary at $251,220, an increase of four and
one-half percent (4.5%) from fiscal 1993, 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 1994 included the Company maintaining or improving certain
specific performance criteria, including cost control and customer service,
development of forecasting techniques and long-term strategies for the Company,
and development of the Company's senior management structure and succession
plan. At the end of fiscal 1994 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.
9
<PAGE> 12
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 December
31, 1994, 450,031 shares of Common Stock had been issued under the SAR Plan and
529,700 SARs were outstanding under the SAR Plan. Assuming that the
outstanding SARs were exercised on December 31, 1994, no additional Shares of
Common Stock would be issued (the exercise price being lower than the grant
price) and 449,969 shares of Common Stock would be available for subsequent
issuance under the SAR Plan (taking into account stock splits on November 20,
1984, April 16, 1985, August 23, 1985, November 26, 1991 and February 18, 1993).
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). These factors used to determine the amount of
the SAR awards were applied when the SAR Plan was initially implemented and
have been applied by the Compensation Committee since that time.
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 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 as of
December 31, 1994 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 as of December 31, 1994
were 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, during fiscal 1994, the Company had in
effect 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 ($9,240 in 1994 and 1995). 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
10
<PAGE> 13
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 annual 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 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
11
<PAGE> 14
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 1994 fiscal year equaled or exceeded $100,000 and who were serving as
Executive Officers during or at the end of the 1994 fiscal year. The table
reflects all compensation received by each such Executive Officer for services
rendered in all capacities to the Company and its subsidiary that was paid or
accrued during the Company's 1994, 1993 and 1992 fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
------------
Annual Compensation Awards
----------------------------------------
Securities
Underlying All Other
Fiscal Salary Bonus SARs Compensation
Name and Principal Position Year ($) ($) (#)(1) ($)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
George F. Pickett 1994 $251,220 $125,600 78,600 $42,303 (2)
Chairman of the Board and 1993 240,420 120,210 136,600 40,560
Chief Executive Officer 1992 226,800 113,400 152,400 38,384
John W. Beiser 1994 245,280 122,600 76,800 41,412 (3)
President and Secretary 1993 234,720 117,360 133,400 39,705
1992 221,400 110,700 148,600 37,574
Ronald V. Sapp 1994 106,920 35,000 23,400 14,004 (4)
Vice President-Finance 1993 102,300 32,000 40,600 14,727
and Treasurer 1992 97,428 30,000 45,800 13,234
</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. The data reflected in this column
indicates the number of shares of Common Stock underlying the SARs, which is
equal to the actual number of SARs because the SARs are valued on a one-to-one
basis.
(2) Comprised of $37,683 of contributions by the Company to its Executive
Deferred Compensation Plan and $4,620 of contributions by the Company to its
Thrift Plan.
(3) Comprised of $36,792 of contributions by the Company to its Executive
Deferred Compensation Plan and $4,620 of contributions by the Company to its
Thrift Plan.
(4) Comprised of $10,692 of contributions by the Company to its Executive
Deferred Compensation Plan and $3,312 of contributions by the Company to its
Thrift Plan.
12
<PAGE> 15
[This page intentionally left blank]
13
<PAGE> 16
The following table sets forth with respect to each of the Executive
Officers named in the Summary Compensation Table above (a) the number of shares
of Company Common Stock and any other securities underlying all individual
grants of SARs made by the Company and its subsidiary during the 1994 fiscal
year, (b) the ratio that the number of SARs granted to each individual bears to
the total number of SARs granted to all employees of the Company during the
1994 fiscal year, (c) the per-share base price of such SARs (being equal to the
market price on the grant date), (d) the expiration date of such SARs, and (e)
the estimated potential realizable value of each grant of SARs assuming that
each SAR is exercised on its expiration date and that the market price per
share of the underlying Company Common Stock appreciates in value from the base
price on the date of the grant to the expiration date of the SAR at assumed
annualized rates of appreciation (compounded annually over the term) of five
percent (5%) and ten percent (10%), respectively. No grants of stock options,
separately or in tandem with SARs, were made by the Company in fiscal 1994.
SAR GRANTS IN THE 1994 FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realized Value
at Assumed Annual Rates of
Stock Price Appreciation
Individual Grants for SAR Term (1)
----------------------------------------------------------------------------------
Number of Percent of
Securities Total SARs
Underlying Granted to Five Ten
SARs Granted Employees in Base Price Expiration Percent Percent
Name (#) (2)(3) Fiscal Year ($/Sh) Date (5%)($) (10%)($)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
George F. Pickett
Chairman of the Board and
Chief Executive Officer 78,600 33.3% $36.75 2/2/99 $797,790 (3) $1,763,784 (3)
John W. Beiser
President and Secretary 76,800 32.6% $36.75 2/2/99 $779,520 (4) $1,723,392 (4)
Ronald V. Sapp
Vice President-Finance
and Treasurer 23,400 9.9% $36.75 2/2/99 $237,510 (5) $525,096 (5)
</TABLE>
(1) The potential realizable value equals the assumed appreciated market price
per share ($46.90 at 5%; $59.19 at 10%) less the $36.75 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. If all of the holders of the 33,130,807
shares of Common Stock outstanding as of February 2,1994 (the grant date of the
SARs) realized the same appreciation in the value of their shares over the
five-year term of the SARs, the aggregate increase in value of the outstanding
shares would be approximately $336,277,691 ($10.15 per share at 5%) and
approximately $743,455,309 ($22.44 per share at 10%).
(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 February 2, 1994. All of the SARs are exercisable during
the period from August 2, 1994 through February 2, 1999 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
exercise,
14
<PAGE> 17
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) Five percent (5%) appreciation (compounded annually) to approximately
$46.90 would result in an award of approximately 10,206 shares of Common Stock
and approximately $319,128 cash; and ten percent (10%) appreciation (compounded
annually) to approximately $59.19 would result in an award of approximately
17,879 shares of Common Stock and approximately $705,526 cash.
(4) Five percent (5%) appreciation (compounded annually) to approximately
$46.90 would result in an award of approximately 9,972 shares of Common Stock
and approximately $311,833 cash; and ten percent (10%) appreciation (compounded
annually) to approximately $59.19 would result in an award of approximately
17,469 shares of Common Stock and approximately $689,402 cash.
(5) Five percent (5%) appreciation (compounded annually) to approximately
$46.90 would result in an award of approximately 3,038 shares of Common Stock
and approximately $95,028 cash; and ten percent (10%) appreciation (compounded
annually) to approximately $59.19 would result in an award of approximately
5,322 shares of Common Stock and approximately $210,087 cash.
The following table sets forth with respect to each of the Executive
Officers named in the Summary Compensation Table above (a) the number of shares
received upon the exercise of any SARs during the 1994 fiscal year, (b) the
aggregate dollar value realized upon the exercise of any SARs, (c) the total
number of shares of the Company's Common Stock and any other securities
underlying all outstanding, unexercised SARs held at the end of the 1994 fiscal
year, separately identifying the exercisable and unexercisable SARs and (d) the
aggregate dollar value of all such unexercised SARs that are in-the-money
(i.e., when the fair market value of the underlying Company Common Stock
exceeds the base price of any SARs) separately identifying the exercisable and
unexercisable options and SARs. There were no options of the Company issued or
outstanding during fiscal 1994.
15
<PAGE> 18
AGGREGATED OPTION EXERCISES IN THE
1994 FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money (1)
Number of Options at Fiscal SARs at Fiscal
Securities Year-End (#) Year-End ($)
Underlying ----------------------------------------------
SARs Value Exercisable/ Exercisable/
Exercised Realized Unexercisable Unexercisable
Name (#) (2) ($) (3) (2) (4)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
George F. Pickett
Chairman of the Board and
Chief Executive Officer -- -- 215,200 (5)/-- $0.00/--
John W. Beiser
President and Secretary 60,000 $502,500 (6) 150,200 (7)/-- $0.00/--
Ronald V. Sapp
Vice President-Finance
and Treasurer -- -- 64,000 (8)/-- $0.00/--
</TABLE>
(1) The fair market value of the Company's Common Stock at the close of
business on December 31, 1994 was $15.50 per share based on the closing price
per share on the NASDAQ National Market System. Accordingly, none of the SARs
reported in this table as unexercised were in-the-money on that date.
(2) The data reflected in this column indicates the number of shares of Common
Stock underlying the SARs, which is equal to the actual number of SARs because
the SARs are valued on a one-to-one basis. The value of such shares is used to
determine the overall value of the SARs on the exercise date.
(3) 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 $21.125.
(4) The data reflected in this column indicates the value of the SARs held at
fiscal year end, which is calculated by multiplying (a) the number of SAR units
by (b) 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).
(5) Of these SARs, 136,600 have a base price of $21.125 and are exercisable
during the period from July 22, 1993 through January 22, 1998, and 78,600 have
a base price of $36.75 and are exercisable during the period from August 2,
1994 through February 2, 1999.
(6) Comprised of 10,220 shares of Common Stock and approximately $201,010 cash.
(7) Of these SARs, 73,400 have a base price of $21.125 and are exercisable
during the period from July 22, 1993 through January 22, 1998, and 76,800 have
a base price of $36.75 and are exercisable during the period from August 2,
1994 through February 2, 1999.
(8) Of these SARs, 40,600 have a base price of $21.125 and are exercisable
during the period from July 22, 1993 through January 22, 1998, and 23,400 have
a base price of $36.75 and are exercisable during the period from August 2,
1994 through February 2, 1999.
16
<PAGE> 19
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, Alan M. Voorhees also received
additional compensation of $24,000 per year consulting fee for consulting
services rendered to the Company.
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 the nominated to the
Board). The severance compensation will generally equal two (2) times the
officer's accrued compensation for the preceding twelve (12) months.
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 1989) through and including the end of
the Company's last completed fiscal year (i.e. December 31, 1994):
(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, 1994 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) Air Methods, Corp.;
Airlease, Ltd.; Airtran, Corp.; Alaska Air Group; American West
Airlines; AMR Corp.; Amtran, Inc.; Atlantic Coast Airlines; Atlantic
Southeast Airlines, Inc.; Baltic International USA, Inc.; British
Airways; CCAir, Inc.; CHC Helicopter Corp; Comair Holdings, Inc.;
Conquest Industries Corp.; Continental Airlines (Class A); Continental
Airlines (Class B); Crescent Airways Corp.; Delta Air Lines, Inc.;
Florida West Airlines; Frontier Airlines, Inc.; Great Lakes Aviation,
LTD.; Japan Airlines; KLM Royal Dutch Airlines; Lynton Group, Inc.; Mesa
Airlines, Inc.; Northwest Airlines (Class A); Offshore Logistics, Inc.;
Petroleum Helicopter, NV; Petroleum Helicopter, VTG; PS Group, Inc.;
Reno Air, Inc.; SkyWest, Inc.; Southwest Airlines, Co.; Tower Air, Inc.;
Trans World Airlines; UAL Corp.; USAir Group, Inc.; Valuejet Airlines,
Inc.; and WorldCorp, Inc. (the "PEER GROUP"). The composition of the
Peer Group has changed since the date of the
17
<PAGE> 20
Proxy Statement prepared in connection with the Annual Meeting of
Shareholders of the Company held on May 25, 1994, solely as a result of
a change in the Media General Airline Index by Media General. The
Company had no prior knowledge of this change in the index.
ATLANTIC SOUTHEAST AIRLINES, INC.
COMPARATIVE RETURN TO INVESTORS
(Graph)
<TABLE>
<CAPTION>
Last Day of Fiscal Year
--------------------------------------------------------------------
Value of Initial $100 Investment* 1989* 1990 1991 1992 1993 1994
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Atlantic Southeast Airlines, Inc. $100 $106.11 $265.80 $414.52 $654.97 $300.42
Media General Airline Index $100 $ 71.60 $ 82.19 $ 62.42 $ 76.74 $ 73.56
NASDAQ Stock Market Index $100 $ 81.12 $104.14 $105.16 $126.14 $132.44
</TABLE>
<TABLE>
<CAPTION>
Last Day of Fiscal Year
--------------------------------------------------------------------
Return 1989* 1990 1991 1992 1993 1994
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Atlantic Southeast Airlines, Inc. NA 6.11 % 150.49% 55.95 % 58.01% (54.13)%
Media General Airline Index NA (28.40)% 14.79% (24.05)% 22.94% (4.14)%
NASDAQ Stock Market Index NA (18.88)% 28.38% 0.98 % 19.95% 4.99 %
</TABLE>
____________
* Assumes $100 invested in the common stock of Atlantic Southeast Airlines,
Inc. on December 29, 1989, the last trading day of fiscal 1989.
18
<PAGE> 21
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
- -- Compensation Committee Interlocks and Additional Information with Respect to
Compensation Decisions" above.
RELATIONSHIP WITH INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP as the Company's
independent auditors for the ensuing fiscal year. Ernst & Young LLP has served
as the Company's independent auditors since 1984. Representatives of Ernst &
Young LLP 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.
OTHER MATTERS
SHAREHOLDERS' PROPOSALS FOR ANNUAL MEETING TO BE HELD IN 1996
The Company plans to hold its 1996 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 18, 1995. Such proposals must meet the
requirements of the regulations promulgated by the SEC to be eligible for
inclusion in the Company's 1996 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
19
<PAGE> 22
APPENDIX A
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 24, 1995
ATLANTIC SOUTHEAST AIRLINES, INC.
The undersigned hereby appoints John W. Beiser and George F. Pickett, 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 4, 1995, at the Annual Meeting of the Shareholders to be held on
Wednesday, May 24, 1995, 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, 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 24, 1995.
Dated: , 1995
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(Seal)
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(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
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