GULFSTREAM AEROSPACE CORP, DEF 14A, 1998-03-27

GULFSTREAM AEROSPACE CORP
DEF 14A, 1998-03-27
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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

<TABLE>
<S> <C>
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 240.14a-11(c) or 240.14a-12
/ / Confidential, for Use of the Commission Only (as Permitted by Rule 14a-6(e)(2))

Gulfstream Aerospace Corporation
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than Registrant)

Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i) 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 transaction computed pursuant to Exchange Act
Rule 0-11:
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 was paid previously. Identify the
previous filing by registration statement number, or the Form of Schedule and the date
of its filing:

1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
</TABLE>
<PAGE>
[LOGO]

March 25, 1998

Dear Fellow Stockholder:

You are cordially invited to attend the 1998 Annual Meeting of Stockholders
of Gulfstream Aerospace Corporation, to be held on Thursday, May 14, 1998, at
9:30 a.m., local time, at the Iridium Room, located on the lower lobby level of
the St. Regis Hotel, Two East 55th Street (at Fifth Avenue), New York, New York
10022.

At the meeting, we will review Gulfstream's activities over the past year,
as well as the outlook for 1998. The Secretary's formal notice of the meeting
and the Proxy Statement appear on the following pages and describe the matters
to be acted upon at the meeting.

We hope that you will be able to attend the meeting in person. However,
whether or not you plan to be present, please sign and return your proxy as soon
as possible so that your vote will be counted.

Sincerely,

[SIGNATURE]

THEODORE J. FORSTMANN
CHAIRMAN OF THE BOARD

[LOGO]
<PAGE>
GULFSTREAM AEROSPACE CORPORATION

------------------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

------------------------

The 1998 Annual Meeting of Stockholders of Gulfstream Aerospace Corporation,
a Delaware corporation (the "Company"), will be held at the Iridium Room,
located on the lower lobby level of the St. Regis Hotel, Two East 55th Street
(at Fifth Avenue), New York, New York 10022 on Thursday, May 14, 1998, at 9:30
a.m., local time, for the following purposes:

1. To elect seven Class II directors for terms ending at the 2001 Annual
Meeting of Stockholders;

2. To ratify the appointment by the Board of Directors of Deloitte &
Touche LLP, independent public accountants, as independent auditors for the
Company for the fiscal year ending December 31, 1998; and

3. To transact such other business as may properly come before the
meeting.

Stockholders of record as of the close of business on March 20, 1998 will be
entitled to vote at the meeting.

Whether or not you plan to attend the meeting, please complete, sign and
date the enclosed proxy card and promptly return it in the accompanying
envelope, which requires no postage if mailed in the United States. You may
revoke your proxy at any time before it is voted by delivery to the Company of a
subsequently executed proxy or a written notice of revocation or by voting in
person at the meeting.

By order of the Board of Directors,

[SIGNATURE]

Chris A. Davis
Secretary

March 25, 1998
<PAGE>
GULFSTREAM AEROSPACE CORPORATION
500 GULFSTREAM ROAD
SAVANNAH, GEORGIA 31408

------------------------

PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 14, 1998

------------------------

This proxy statement is furnished to stockholders of Gulfstream Aerospace
Corporation, a Delaware corporation ("Gulfstream" or the "Company"), in
connection with the solicitation of proxies by the Board of Directors of the
Company (the "Board" or "Board of Directors") for use at the 1998 Annual Meeting
of Stockholders to be held at 9:30 a.m., local time, on Thursday, May 14, 1998,
at the Iridium Room, located on the lower lobby level of the St. Regis Hotel,
Two East 55th Street (at Fifth Avenue), New York, New York 10022, and any
adjournments thereof.

Stockholders of record as of the close of business on March 20, 1998 will be
entitled to vote at the meeting or any adjournments thereof. As of the record
date, March 20, 1998, the Company had outstanding 72,667,265 shares of Common
Stock, par value $.01 per share ("Common Stock"), each entitled to one vote on
all matters to be voted upon. This proxy statement, the accompanying form of
proxy and the Company's annual report to stockholders for the fiscal year ended
December 31, 1997 are being mailed on or about March 30, 1998 to each
stockholder entitled to vote at the meeting.
<PAGE>
VOTING AND REVOCATION OF PROXIES

VOTING

If the enclosed proxy is executed and returned in time and not revoked, all
shares represented by the proxy will be voted. Each proxy will be voted in
accordance with the stockholder's instructions. If no instructions are
specified, signed proxies will be voted FOR the election of each person
nominated for election as a director and FOR the ratification of the appointment
by the Board of Directors of Deloitte & Touche LLP as independent auditors for
the Company for the fiscal year ending December 31, 1998.

The holders of a majority of the shares of Common Stock entitled to vote at
the meeting, present in person or by proxy, constitutes a quorum. If a quorum is
present, the affirmative vote of the holders of a plurality of the votes cast at
the meeting will be required for the election of directors; and the affirmative
vote of holders of a majority of the shares present in person or by proxy at the
meeting and entitled to vote thereon will be required to act on all other
matters to come before the meeting, including the ratification of the
appointment by the Board of Directors of Deloitte & Touche LLP as independent
auditors for the Company. An automated system administered by the Company's
transfer agent tabulates the votes. For purposes of determining the number of
votes cast with respect to any voting matter, only those cast "for" or "against"
are included; abstentions and broker non-votes are excluded. Accordingly, with
respect to the election of directors, abstentions and broker non-votes will have
no effect on the outcome. For purposes of determining whether the affirmative
vote of a majority of the shares present at the meeting and entitled to vote has
been obtained, abstentions will be included in, and broker non-votes will be
excluded from, the number of shares present and entitled to vote. Accordingly,
with respect to any matter other than the election of directors, abstentions
will have the effect of a vote "against" the matter and broker non-votes will
have the effect of reducing the number of affirmative votes required to achieve
the majority vote.

REVOCATION

A stockholder giving a proxy may revoke it at any time before it is voted by
delivery to the Company's Secretary of a subsequently executed proxy or a
written notice of revocation. In addition, returning your completed proxy will
not prevent you from voting in person at the meeting should you be present and
wish to do so.

ELECTION OF DIRECTORS

The Board of Directors consists of 22 directors divided into three classes:
7 Class I directors, 7 Class II directors and 8 Class III directors. Directors
hold office for staggered terms of three years and until their successors have
been duly elected and qualified. One of the three classes will be elected each
year at the Annual Meeting of Stockholders to succeed the directors whose terms
are ending.

Seven directors in Class II are to be elected at the 1998 Annual Meeting and
proxies cannot be voted for more than seven nominees. The directors so elected
will hold office as directors until the 2001 Annual Meeting of Stockholders and
until their respective successors have been duly elected and qualified. The
directors in Class III and Class I are serving terms ending at the Annual
Meeting of Stockholders in 1999 and 2000, respectively.

Information concerning nominees for election to terms ending at the 2001
Annual Meeting of Stockholders is set forth below, followed by information
concerning directors in Class III and Class I. Unless otherwise directed,
proxies will be voted FOR the nominees listed below. If any one or more of the
nominees is unable to serve for any reason or withdraws from nomination, proxies
will be voted for the substitute nominee or nominees, if any, proposed by the
Board of Directors. The Board has no knowledge that any nominee will or may be
unable to serve or will or may withdraw from nomination. All of the nominees are
presently serving as directors of the Company.

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NOMINEES FOR ELECTION TO TERMS ENDING AT THE 2001 ANNUAL MEETING OF STOCKHOLDERS

W.W. Boisture, Jr., age 53, has served as Executive Vice President of the
Company since February 1994 and as a director since February 1995 and is a
member of the Company's Management Committee. Mr. Boisture has principal
responsibility for the Company's sales, marketing and aircraft services
activities. He is also President and Chief Operating Officer of the Company's
sales and marketing subsidiary, Gulfstream Aircraft Incorporated. Prior to
joining the Company, he was President and Chief Executive Officer of British
Aerospace Corporate Jets from October 1992 through 1993 where he was responsible
for the "Hawker" business jet product line and its worldwide marketing, sales
and support organization. From early 1990 to 1992, Mr. Boisture was Chairman,
President and Chief Executive Officer of Butler Aviation, a nationwide aviation
services company.

Sandra J. Horbach, age 37, has been a director of the Company since
September 1994. She has been a general partner of FLC Partnership, L.P. since
January 1993. She joined Forstmann Little & Co. in August 1987. She is also a
director of Department 56, Inc.

Henry A. Kissinger, age 74, has been a director of the Company since
December 1997. Dr. Kissinger is Chairman of Kissinger Associates, Inc., an
international consulting firm. He was United States Secretary of State from 1973
to 1977 and Assistant to the President for National Security Affairs from 1969
to 1975. Dr. Kissinger has been awarded the Nobel Peace Prize, the Presidential
Medal of Freedom and the Medal of Liberty. Dr. Kissinger is also a director of
Continental Grain Company, Revlon, Inc., Freeport & McMoran Copper and Gold,
Inc. and Hollinger International Inc.

Michael S. Ovitz, age 51, has been a director of the Company since March
1997. He is an independent businessman and investor. From October 1995 to
December 1996, Mr. Ovitz was President of The Walt Disney Company. From 1975 to
1995, Mr. Ovitz served as chairman of Creative Artists Agency, which he
co-founded.

Allen E. Paulson, age 75, has been a director of the Company since March
1990. He served as Chairman, Chief Executive Officer and a director of
Gulfstream Aerospace Corporation (a Georgia corporation and wholly owned
indirect subsidiary of the Company) and its predecessors from 1978, when he
purchased the corporate jet division of Grumman Aerospace and began Gulfstream
American (a predecessor of the Company), until 1992. He also served as Chairman
of the Company from March 1990 and Chief Executive Officer of the Company from
January 1992 to August 1992. He is also a director of CardioDynamics
International Corp. and Full House Resorts, Inc.

Colin L. Powell, age 60, has been a director of the Company since May 1996.
General Powell is Chairman of America's Promise--The Alliance for Youth. He
served as the Chairman of the Joint Chiefs of Staff from October 1989 to
September 1993, and as National Security Advisor from December 1987 to January
1989.

George P. Shultz, age 77, has been a director of the Company since November
1991. Mr. Shultz served as the United States Secretary of State from July 1982
to January 1989 and is a Distinguished Fellow of the Hoover Institute. Mr.
Shultz is also a director of AirTouch Communications, Inc. and Gilead Sciences,
Inc.

DIRECTORS WHOSE TERMS END AT THE 1999 ANNUAL MEETING OF STOCKHOLDERS

Robert Anderson, age 77, has been a director of the Company since March
1990. He has served as Chairman Emeritus of Rockwell Corporation since February
1990. Mr. Anderson is also a director of Optical Data Networks, Inc., the Timken
Company, Aftermarket Technology Corp., and Motor Cargo Industries.

Lynn Forester, age 43, has been a director of the Company since March 1997.
She has been President and Chief Executive Officer of FirstMark Holdings, Inc.,
since 1984. From 1989 to December 1994, she was Chairman and Chief Executive
Officer of TPI Communications International, Inc. She is a director of

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General Instrument Corporation and Vice Chairman of the Corporate Commission on
Educational Technology.

Theodore J. Forstmann, age 58, has served as Chairman of the Board of the
Company since November 1993 and is Chairman of the Company's Management
Committee. Mr. Forstmann has been a general partner of FLC Partnership, L.P.
since he co-founded Forstmann Little & Co. in 1978. He is also a director of
General Instrument Corporation. Theodore J. Forstmann and Nicholas C. Forstmann
are brothers.

James T. Johnson, age 55, has served as President, Chief Operating Officer
and a director of the Company since August 1997 and is a member of the Company's
Management Committee. Mr. Johnson was President of GE Capital Aviation Services
from 1993 to July 1997. He was Executive Vice President of United Technologies
and President of the Large Commercial Engines Business of its Pratt & Whitney
subsidiary in 1993. Prior to 1993, Mr. Johnson served in increasingly senior
positions during a 28-year career at The Boeing Company, most recently as Vice
President and General Manager of its Everett Division.

Drew Lewis, age 66, has been a director of the Company since March 1990. He
served as Chairman and Chief Executive Officer of Union Pacific Corporation from
October 1987 to December 1996. He is also a director of Union Pacific Resources
Group, Inc., American Express Company, Lucent Technologies, FPL Group, Inc.,
Gannett Co., Inc. and AmTec Communications.

Mark H. McCormack, age 67, has been a director of the Company since May
1997. Mr. McCormack has served as President, Chief Executive Officer and a
director of International Management Group since 1965. He also serves as a
director of Fruit of the Loom, Inc. and Planet Hollywood International, Inc.

Gerard R. Roche, age 66, has been a director of the Company since January
1993. Mr. Roche has been Chairman of Heidrick & Struggles, Inc. since 1981.

Robert S. Strauss, age 79, has been a director of the Company since April
1993. Mr. Strauss is a founder of and partner in the law firm of Akin, Gump,
Strauss, Hauer & Feld, L.L.P. ("Akin Gump") and served as U.S. Ambassador to the
Soviet Union, and upon its dissolution, to the Russian Federation, from August
1991 to November 1992. In November 1992, Mr. Strauss returned to Akin Gump. Mr.
Strauss is also a director of Archer-Daniels-Midland Co. and Hollinger
International Inc.

DIRECTORS WHOSE TERMS END AT THE 2000 ANNUAL MEETING OF STOCKHOLDERS

Charlotte L. Beers, age 62, has been a director of the Company since July
1993. She has been Chairman Emeritus of Ogilvy & Mather Worldwide, Inc. ("Ogilvy
& Mather") since April 1997. She was Chairman of Ogilvy & Mather from April 1992
to April 1997 and Chief Executive Officer from April 1992 to September 1996.

Thomas D. Bell, Jr., age 48, has been a director of the Company since April
1994. Mr. Bell has been President and Chief Executive Officer of
Burson-Marsteller, a division of Young & Rubicam Inc., since May 1995. Mr. Bell
was Vice Chairman of the Company from April 1994 to April 1995. From 1991 to
1994, Mr. Bell served as Vice Chairman and Chief Operating Officer of
Burson-Marsteller. Mr. Bell is also a director of Lincoln National Corporation.

Chris A. Davis, age 47, has served as Executive Vice President and Chief
Financial Officer of the Company since July 1993, Secretary since August 1996
and a director since March 1997, and is a member of the Company's Management
Committee. Ms. Davis is also President and Chief Operating Officer of the
Company's financing subsidiary, Gulfstream Financial Services Corporation. Ms.
Davis served in increasingly senior financial management positions at General
Electric Company from 1978 to 1993, most recently as chief financial officer of
its Electronic Systems Division. Ms. Davis is also a director of Wolverine Tube,
Inc.

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Nicholas C. Forstmann, age 51, has been a director of the Company since
March 1990. He has been a general partner of FLC Partnership, L.P. since he
co-founded Forstmann Little & Co. in 1978. He is also a director of CommScope,
Inc.

Bryan T. Moss, age 58, has served as Vice Chairman and a director of the
Company and Chief Executive Officer of the Company's sales and marketing
subsidiary, Gulfstream Aircraft Incorporated, since March 1995 and is a member
of the Company's Management Committee. Prior to joining the Company, he was
President of Bombardier Business Aircraft Division where he was responsible for
the Challenger and Global Express business jet programs from 1989 to March 1995.

Roger S. Penske, age 61, has been a director of the Company since December
1993. Mr. Penske has been Chairman and a director of Penske Corporation since
1969 and Chairman, Chief Executive Officer and a director of Detroit Diesel
Corporation since 1987. Mr. Penske is also a director of Penske Motorsports,
Inc., Philip Morris Companies Inc. and General Electric Co.

Donald H. Rumsfeld, age 65, has served as a director of the Company since
April 1993. Mr. Rumsfeld has been in private business since August 1993. From
October 1990 to August 1993, Mr. Rumsfeld served as Chairman and CEO of General
Instrument Corporation. Previously, he had served as Chairman and CEO of G.D.
Searle. Mr. Rumsfeld is currently Chairman of the Board of Directors of Gilead
Sciences, Inc., and a member of the Boards of ABB AB, Kellogg Company, Sears
Roebuck and Co., and Tribune Company. From 1962 to 1977, Mr. Rumsfeld served in
a variety of U.S. Government posts, including U.S. Congressman, Ambassador to
NATO, White House Chief of Staff and Secretary of Defense.

FURTHER INFORMATION CONCERNING THE BOARD
OF DIRECTORS AND COMMITTEES

The Board of Directors of the Company directs the management of the business
and affairs of the Company, as provided by Delaware law, and conducts its
business through meetings of the Board and four standing committees: Executive,
Audit, Compensation and Employee Benefit Plan. In addition, from time to time,
special committees may be established under the direction of the Board when
necessary to address specific issues. The Company has no nominating or similar
committee.

COMMITTEES OF THE BOARD; BOARD MEETINGS

The Board of Directors of the Company held six meetings in 1997. Each
director attended 75% or more of the aggregate of (i) meetings of the Board held
during the period for which he or she served as a director and (ii) meetings of
all committees held during the period for which he or she served on those
committees, except that Drew Lewis and George P. Shultz each attended 67% of
such meetings.

The EXECUTIVE COMMITTEE of the Board has the authority to exercise all
powers and authority of the Board in the management of the business and affairs
of the Company that may be lawfully delegated to it under Delaware law. The
members of the Executive Committee are Theodore J. Forstmann, James T. Johnson,
W.W. Boisture, Jr. and Sandra J. Horbach. The Executive Committee held two
meetings in 1997.

The AUDIT COMMITTEE's principal functions are to review the scope of the
annual audit of the Company by its independent public accountants, review the
annual financial statements of the Company and the related audit report of the
Company as prepared by the independent public accountants, review management's
selection of an independent public accounting firm each year and review audit
and any non-audit fees paid to the Company's independent public accountants. The
Company's Chief Financial Officer generally attends Audit Committee meetings and
gives reports to and answers inquiries from the Audit Committee. The Audit
Committee reports its findings and recommendations to the Board. The Audit
Committee is composed of three non-employee directors: Robert Anderson, Roger S.
Penske and Donald H. Rumsfeld. The Audit Committee held three meetings in 1997.

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The COMPENSATION COMMITTEE is responsible for developing and making
recommendations to the Board of Directors with respect to the Company's
compensation policies and also determines the cash portion of the Company's
compensation program, including the cash compensation to be paid to the
Company's executive officers. The members of the Compensation Committee are
Sandra J. Horbach, Gerard R. Roche and Robert S. Strauss. The Compensation
Committee held two meetings in 1997.

The EMPLOYEE BENEFIT PLAN COMMITTEE is responsible for administering the
Company's employee benefit plans, including the Amended and Restated 1990 Stock
Option Plan. The Employee Benefit Plan Committee is composed of three
non-employee directors: Nicholas C. Forstmann, Gerard R. Roche and Robert S.
Strauss. The Employee Benefit Plan Committee held four meetings in 1997.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee, comprised of Sandra J. Horbach, Gerard R. Roche
and Robert S. Strauss, administers the cash portion of the Company's
compensation program. The Employee Benefit Plan Committee, comprised of Nicholas
C. Forstmann, Gerard R. Roche and Robert S. Strauss, administers the Company's
employee benefit plans. Sandra J. Horbach and Nicholas C. Forstmann are general
partners of FLC Partnership, L.P. Robert S. Strauss is a member of an advisory
committee to FLC Partnership, L.P.

During 1997, Gulfstream purchased approximately $2.9 million in inventory
items relating to lighting from Grimes Aerospace Corp., which was an affiliate
of FLC Partnership, L.P. during a portion of 1997. From time to time the Company
provides maintenance and support services, all on standard commercial terms, to
FL Aviation Corp., an affiliate of FLC Partnership, L.P. that operates
Gulfstream aircraft. For providing such services Gulfstream was paid
approximately $0.1 million in 1997. In September 1996, the Company entered into
an aircraft services agreement with FL Aviation Corp. with a term of
approximately ten years, pursuant to which FL Aviation Corp. provides to
Gulfstream aircraft operation, maintenance and administration services. During
1997, Gulfstream paid FL Aviation Corp. approximately $2.1 million for services
under this agreement. Moran Printing, a company owned by relatives of Theodore
J. Forstmann and Nicholas C. Forstmann, has a three-year contract (which
commenced in November 1995) to provide printing services on standard commercial
terms to the Company. In 1997, the Company received services and paid
approximately $1.8 million under that contract. The Company believes the terms
of the transactions described in this paragraph are at least as favorable to the
Company as those which could be obtained from an unrelated third party.

Mr. Roche is a stockholder, employee, director and the Chairman of Heidrick
& Struggles, Inc., a corporation engaged in the business of executive searches.
In 1997, the Company paid Heidrick & Struggles, Inc. approximately $0.4 million
in fees and expenses for executive search services.

DIRECTOR COMPENSATION

Directors who are neither executive officers of the Company nor general
partners in FLC Partnership, L.P. have been granted options to purchase Common
Stock in connection with their election to the Board. During 1997, options were
granted to newly elected non-executive directors as follows: Lynn Forester,
40,000 shares; Michael S. Ovitz, 40,000 shares; Mark H. McCormack, 40,000
shares; and Henry A. Kissinger, 140,000 shares. The exercise price for all of
these options is equal to the fair market value at the date of grant. Directors
do not receive any fees for serving on the Company's Board, but are reimbursed
for their out-of-pocket expenses arising from attendance at meetings of the
Board and Committees thereof.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT

The following table sets forth certain information known by the Company
regarding the beneficial ownership of the Company's Common Stock, as of March
20, 1998, by each beneficial owner of more than five percent of the outstanding
Common Stock, by each of the Company's directors, by each of the executives (and
one former executive) named in the Summary Compensation Table and by all
directors and executive officers of the Company as a group. Except as otherwise
indicated, the persons or entities listed below have sole voting and investment
power with respect to all shares of Common Stock beneficially owned by them,
except to the extent such power may be shared with a spouse.

<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE
BENEFICIALLY OF
NAME OWNED(1) CLASS(2)
- ---------------------------------------------------------- -------------------- ------------
<S> <C> <C>
MBO-IV (3)................................................ 19,467,013 26.8%
Gulfstream Partners (3)................................... 5,071,259 7.0
Gulfstream Partners II, L.P. (3).......................... 6,853,399 9.4
FMR Corp. (4)............................................. 8,390,100 11.5
Wellington Management Company, LLP (5).................... 3,871,900 5.3
Robert Anderson........................................... 61,335 *
Charlotte L. Beers........................................ 30,889 *
Thomas D. Bell, Jr........................................ 123,555 *
W.W. Boisture, Jr......................................... 354,481 *
Fred A. Breidenbach....................................... 279,814 *
Chris A. Davis............................................ 184,610 *
Lynn Forester............................................. 13,333 *
Nicholas C. Forstmann (3)................................. 31,391,671 43.2
Theodore J. Forstmann (3)................................. 31,766,671 43.5
Sandra J. Horbach (3)..................................... 6,928,399 9.5
James T. Johnson.......................................... -- --
Henry A. Kissinger........................................ -- --
Drew Lewis (3)............................................ 30,447 *
Mark H. McCormack......................................... 13,333 *
Bryan T. Moss............................................. 370,666 *
Michael S. Ovitz.......................................... 13,333 *
Allen E. Paulson.......................................... -- --
Roger S. Penske........................................... 61,778 *
Colin L. Powell........................................... 37,500 *
Gerard Roche.............................................. 30,889 *
Donald H. Rumsfeld(6)..................................... 61,778 *
George P. Shultz.......................................... 61,335 *
Robert S. Strauss......................................... 61,335 *
All directors and executive officers of the Company as a
group (22 persons)(3)(7)................................ 33,352,268 44.8
</TABLE>

- ------------------------

* The percentage of shares of Common Stock beneficially owned does not exceed
one percent of the outstanding shares of Common Stock.

(1) For purposes of this table, a person or group of persons is deemed to have
"beneficial ownership" of any shares of Common Stock which such person has
the right to acquire within 60 days following March 20, 1998. For purposes
of computing the percentage of outstanding shares of Common Stock held by
each person or group of persons named above, any shares which such person or
persons has or have the right to acquire within 60 days following March 20,
1998 is deemed to be outstanding, but is

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not deemed to be outstanding for the purpose of computing the percentage
ownership of any other person.

(2) Based on 72,667,265 shares outstanding at March 20, 1998.

(3) MBO-IV is Forstmann Little & Co. Subordinated Debt and Equity Management
Buyout Partnership-IV. The address of MBO-IV, Gulfstream Partners and
Gulfstream Partners II, L.P., each a New York limited partnership, is c/o
Forstmann Little & Co., 767 Fifth Avenue, New York, New York 10153. The
general partner of MBO-IV is FLC Partnership, L.P., a limited partnership of
which Theodore J. Forstmann, Nicholas C. Forstmann, Steven B. Klinsky,
Sandra J. Horbach, Winston W. Hutchins and Thomas H. Lister are general
partners. The general partner of Gulfstream Partners is FLC XXI Partnership,
a general partnership of which Wm. Brian Little, Nicholas C. Forstmann,
Steven B. Klinsky, Winston W. Hutchins, John A. Sprague, Wm. Brian Little
IRA, Winston W. Hutchins IRA, John A. Sprague IRA and TJ/JA L.P., a Delaware
limited partnership, are general partners. The general partner of TJ/JA L.P.
is Theodore J. Forstmann. The general partner of Gulfstream Partners II,
L.P. is FLC XXIV Partnership, a general partnership of which Theodore J.
Forstmann, Nicholas C. Forstmann, Wm. Brian Little, John A. Sprague, Steven
B. Klinsky, Sandra J. Horbach and Winston W. Hutchins are general partners.
Accordingly, each of such individuals and partnerships may be deemed the
beneficial owners of shares owned by MBO-IV, Gulfstream Partners and/or
Gulfstream Partners II, L.P. in which such individual or partnership is a
partner. For the purposes of this table, such beneficial ownership is
included. Ms. Horbach and Mr. Lister do not have any voting or investment
power with respect to, or any economic interest in, the shares of Common
Stock held by MBO-IV, and accordingly, Ms. Horbach and Mr. Lister are not
deemed to be the beneficial owner thereof. Drew Lewis and Roger S. Penske
are limited partners in Gulfstream Partners. Roger S. Penske is a limited
partner in Gulfstream Partners II, L.P. There are other limited partners in
each of MBO-IV, Gulfstream Partners and Gulfstream Partners II, L.P., none
of which is otherwise affiliated with the Company or FLC Partnership, L.P.

(4) Based on information contained in Schedule 13G, dated February 14, 1998,
filed with the Securities and Exchange Commission by FMR Corp., Edward C.
Johnson 3d, and Abigail P. Johnson. The address of FMR Corp. is 82
Devonshire Street, Boston, Massachusetts 02109. Includes 7,805,400 shares
beneficially owned by Fidelity Management & Research Company, a wholly owned
subsidiary of FMR Corp. and a registered investment adviser, as a result of
acting as investment adviser to various investment companies registered
under Section 8 of the Investment Company Act of 1940. Edward C. Johnson 3d,
FMR Corp. and such investment companies each has sole power to dispose of
the 7,805,400 shares owned by the investment companies. The investment
companies' Board of Trustees have sole power to vote such shares. Includes
509,200 shares beneficially owned by Fidelity Management Trust Company, a
wholly owned subsidiary of FMR Corp. and a bank, as a result of serving as
investment manager of certain institutional accounts. Edward C. Johnson 3d
and FMR Corp. each has sole power to dispose of the 509,200 shares, sole
power to vote 413,100 of such shares and no power to vote 96,100 of such
shares. Includes 75,500 shares beneficially owned by Fidelity International
Limited, which provides investment advisory and management services to
non-U.S. investment companies. The Schedule 13G states that Edward C.
Johnson 3d, Chairman of FMR Corp., Abigail P. Johnson, a director of FMR
Corp., and members of the Johnson family may be deemed to be a controlling
group with respect to FMR Corp. The Schedule 13G also states that FMR Corp.
and Fidelity International Limited do not believe they are acting as a
group.

(5) Based on information contained in Schedule 13G, dated January 20, 1998 and
filed with the Securities and Exchange Commission by Wellington Management
Company, LLP ("Wellington"). The address of Wellington is 75 State Street,
Boston, Massachusetts 02109. Wellington, in its capacity as investment
adviser, may be deemed to beneficially own the shares included in the table,
which are held of record by clients of Wellington. Wellington shares power
to dispose or to direct disposition of all the shares included in the table
and shares power to vote or to direct the vote of 915,900 shares.

8
<PAGE>
(6) Shares are beneficially owned by an irrevocable trust for the benefit of
certain members of Mr. Rumsfeld's family. Mr. Rumsfeld disclaims beneficial
ownership of such shares.

(7) Except as discussed in note 3 and except for Mr. Bell and Mr. Breidenbach,
who own the number of shares of Common Stock listed next to their names in
the table above, all shares beneficially owned by directors and executive
officers are attributable to options exercisable currently or within 60 days
of March 20, 1998. Not included in the table are shares of Common Stock
issuable upon the exercise of options that are not exercisable within 60
days after March 20, 1998 in the following amounts: W.W. Boisture, Jr.,
50,000 shares; Chris A. Davis, 62,500 shares; Lynn Forester, 26,667 shares;
James T. Johnson, 1,000,000 shares; Henry A. Kissinger, 140,000 shares; Mark
H. McCormack, 26,667 shares; Michael S. Ovitz, 26,667 shares; and Colin L.
Powell, 18,750 shares.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities and Exchange Act of 1934, as amended,
requires the Company's directors and executive officers and holders of more than
10% of the Company's outstanding Common Stock to file with the Securities and
Exchange Commission reports of ownership and changes in ownership of Common
Stock and other equity securities of the Company on Forms 3, 4 and 5. Based on
written representations of reporting persons and a review of those reports, the
Company believes that during the fiscal year ended December 31, 1997, all its
officers and directors and holders of more than 10% of the Company's Common
Stock complied with all applicable Section 16(a) filing requirements. In
February 1998, Drew Lewis, Donald H. Rumsfeld, George P. Shultz and Robert S.
Strauss each reported on Form 5 one transaction relating to the Company's
initial public offering of Common Stock in October 1996 that was not included on
a Form 4 for that month and also reported beneficial ownership of securities
that were not included on their Form 3 filings. The Forms 5 indicate that they
were filed as a precautionary measure. It is uncertain whether reporting of
these securities and transactions is required by applicable Securities and
Exchange Commission regulations.

COMPENSATION OF EXECUTIVE OFFICERS

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE. The following table sets forth the compensation
for 1997, 1996 and 1995 of each of the members of the Company's Management
Committee (who constitute all of the Company's executive officers) and for one
additional individual who would have otherwise been included but for the fact
that he no longer served as an executive officer of the Company at December 31,
1997 (collectively, the "named executive officers").

9
<PAGE>
SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
NUMBER OF
ANNUAL COMPENSATION SECURITIES
------------------------------------------ UNDERLYING
OTHER STOCK
NAME AND PRINCIPAL BASE ANNUAL OPTION ALL OTHER
POSITION YEAR SALARY BONUS* COMPENSATION AWARDS COMPENSATION
- ---------------------------------------- ---- -------- -------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Theodore J. Forstmann
Chairman of the Board................. 1997 -- -- -- -- --
1996 -- -- -- 375,000 --
1995 -- -- -- -- --
Bryan T. Moss
Vice Chairman of the Board............ 1997 $635,543(1) $200,000 -- $3,000 (3)
1996 875,361(1) 250,000 -- -- 3,000 (3)
1995 619,432(1) 638,100(2) -- 675,000 440,375 (4)
James T. Johnson(5)
President and COO..................... 1997 201,928 130,219 1,000,000 1,517,500 (6)

Chris A. Davis
Executive Vice President
and CFO............................... 1997 353,848 206,500 -- -- 3,000 (3)
1996 275,018 171,875 -- -- 3,000 (3)
1995 274,056 171,875 -- 187,500 3,000 (3)
W.W. Boisture, Jr.
Executive Vice President.............. 1997 353,848 200,000 -- -- 3,000 (3)
1996 275,018 171,875 -- 75,000 3,000 (3)
1995 274,056 171,875 -- 225,000 2,433 (3)
Fred A. Breidenbach(7)
Former President and COO.............. 1997 509,627 200,000 -- -- 19,029 (9)
1996 500,011 281,250 282,055(8) -- 19,224 (9)
1995 500,011 312,500 236,521(8) -- 19,304 (9)
</TABLE>

- ------------------------

* Bonuses were paid in February 1998 in respect of fiscal 1997, March 1997 in
respect of fiscal 1996, and January 1996 in respect of fiscal 1995, under a
Management Incentive Plan.

(1) Represents base salary, plus commissions paid for sales of aircraft.

(2) Includes a signing bonus of $325,600.

(3) Represents the Company's contribution to the 401(k) plan.

(4) Represents a nonrecurring payment in respect of the value of vested stock
options with previous employer ($437,375) and the Company's contribution to
the 401(k) plan ($3,000).

(5) Mr. Johnson joined the Company as President and Chief Operating Officer on
August 4, 1997.

(6) Represents nonrecurring payments of $600,000 in 1997 and $917,500 in 1998 to
compensate Mr. Johnson for the value of lost benefits with previous
employer.

(7) Mr. Breidenbach resigned as President and Chief Operating Officer and as a
director effective July 31, 1997. Salary and bonus were paid for full year
1997 by agreement.

(8) Represents tax gross-up relating to vesting of annuity contract purchased by
the Company for Mr. Breidenbach in 1993.

(9) Represents the Company's contribution to an executive life insurance plan
($16,304 for 1995, $16,224 for 1996 and $16,029 for 1997) and the 401(k)
plan ($3,000 for each of 1995, 1996 and 1997).

10
<PAGE>
STOCK OPTION GRANTS IN LAST FISCAL YEAR. The following table sets forth the
stock option grants to each of the named executive officers for fiscal 1997.

OPTION GRANTS IN THE FISCAL YEAR ENDED DECEMBER 31, 1997

<TABLE>
<CAPTION>
% OF TOTAL POTENTIAL REALIZABLE VALUE
NUMBER OF OPTIONS AT ASSUMED ANNUAL RATES OF
SECURITIES GRANTED TO EXERCISE/ MARKET STOCK PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES BASE PRICE AT OPTION TERM(1)
OPTIONS IN FISCAL PRICE GRANT EXPIRATION -------------------------------------
NAME GRANTED(#) YEAR ($/SH) ($/SH) DATE 0% 5% 10%
- -------------------------- ----------- --------------- --------- --------- ----------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Theodore J. Forstmann..... -- -- -- -- -- -- -- --
Bryan T. Moss............. -- -- -- -- -- -- -- --
James T. Johnson.......... 800,000(2) 61% $ 26.9375 $ 26.9375 8/4/07 -- $ 13,552,679 $ 34,345,150
200,000(3) 15% $ 26.9375 $ 28.75 11/24/07 $ 362,500 3,978,644 9,526,519
Chris A. Davis............ -- -- -- -- -- -- -- --
W. W. Boisture, Jr........ -- -- -- -- -- -- -- --
Fred A. Breidenbach....... -- -- -- -- -- -- -- --
</TABLE>

- ------------------------

(1) Sets forth potential option gains based on assumed annualized rates of stock
price appreciation from the market price at the date of grant at the
percentages specified (compounded annually) over the full term of the grant
with appreciation determined as of the expiration date. The 0%, 5% and 10%
assumed rates of appreciation are mandated by the rules of the Securities
and Exchange Commission, and do not represent the Company's estimate or
projection of future Common Stock prices.

(2) This grant was effective August 4, 1997. One third of the total number of
options granted becomes exercisable on each of the first, second and third
anniversaries of the effective date. Options with respect to 500,000 shares
were granted pursuant to the Company's Amended and Restated 1990 Stock
Option Plan (the "Option Plan"). Options with respect to 300,000 shares were
granted outside the Option Plan but on the same terms as under the Option
Plan.

(3) This grant was made on November 24, 1997. One third of the total number of
options granted becomes exercisable on each of the first, second and third
anniversaries of the date of grant. These options were granted outside the
Option Plan but on the same terms as under the Option Plan.

11
<PAGE>
AGGREGATED OPTION EXERCISES AND VALUES. The following table sets forth
stock option values as of December 31, 1997 for each of the named executive
officers. None of the named executive officers exercised any stock options in
1997.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND OPTION VALUES AS OF DECEMBER 31, 1997

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES FISCAL YEAR-END FISCAL YEAR-END
ACQUIRED ON VALUE (#) ($)(1)
EXERCISE REALIZED -------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------ ----------- --------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Theodore J. Forstmann..................... -- -- 375,000 -- $ 9,431,250 --
Bryan T. Moss............................. -- -- 201,916 168,750 5,078,187 $ 4,244,063
James T. Johnson.......................... -- -- -- 1,000,000 -- 2,312,500
Chris A. Davis............................ -- -- 184,610 62,500 4,785,172 1,571,875
W.W. Boisture, Jr......................... -- -- 279,481 125,000 7,028,947 3,143,750
Fred A. Breidenbach....................... -- -- 514,814 -- 13,455,539 --
</TABLE>

- ------------------------

(1) Represents the positive spread between the respective exercise price of
outstanding stock options and the closing price of $29.25 per share on
December 31, 1997, as reported on the New York Stock Exchange Composite
Tape.

GULFSTREAM PENSION PLAN. The Gulfstream Aerospace Corporation Pension Plan
(the "Pension Plan") was amended and restated effective January 1, 1989. The
Pension Plan is a defined benefit plan maintained by Gulfstream Aerospace
Corporation (a Georgia corporation and wholly owned indirect subsidiary of the
Company) ("Gulfstream Georgia"), for the benefit of the employees of Gulfstream
Georgia and certain of its affiliates that have adopted the Pension Plan (each,
a "Participating Employer"). The Pension Plan covers full time employees who
have attained age 21 and have completed at least one year of service. Pension
costs are borne by the Participating Employer and determined from time to time
on an actuarial basis, with contributions made accordingly.

Participants' benefit accruals under the Pension Plan are based on their
gross amount of earnings, but exclude items such as overtime pay, bonuses and
commissions. Generally, a participant's accrued annual retirement benefit,
assuming retirement at or after age 65 and a minimum of five years of service,
is equal to the total of the benefit accrued for each year of benefit service,
which for each of the named executive officers will be determined for each such
year under the following benefit formula: the sum of (x) 2.65% of the first
$17,000 of the participant's wage base earnings as adjusted by the rate used to
increase the taxable wage base for old age, survivors and disability insurance
(currently at $21,000 for such year and (y) 3% of the participant's earnings in
excess of such adjusted wage base earnings. Payments made under the Pension Plan
are not subject to any deduction for Social Security or other offset amounts.
Participants who have attained age 60 with at least five years of service or age
50 with at least 20 years of service may retire early with an actuarially
reduced retirement benefit. No benefits are payable under the Pension Plan with
respect to a participant who dies prior to commencement of his or her benefits
thereunder subject to certain specified exceptions. Benefits are paid, absent a
contrary election, in the form of a single life annuity or qualified joint and
survivor annuity depending on the marital status of the participant.
Participants vest 100% in their accrued benefits after five years of service.
Each participant in the Pension Plan is subject to the maximum benefit
limitations provided for under the Internal Revenue Code of 1986, as amended,
and pursuant to the Pension Plan.

12
<PAGE>
As of December 31, 1997, the estimated annual benefits payable upon
retirement for W.W. Boisture, Jr., Chris A. Davis, James T. Johnson and Bryan T.
Moss are $70,264, $101,390, $47,230, and $43,106, respectively, assuming
retirement at age 65 and the retiree's lifetime annuity payout option without
available modifications. Mr. Breidenbach has no vested pension benefits.

COMMITTEE REPORTS ON EXECUTIVE COMPENSATION

REPORT OF THE COMPENSATION COMMITTEE

The Compensation Committee is composed solely of non-employee directors. The
Committee is responsible for developing and making recommendations to the Board
of Directors with respect to the Company's compensation policies and also
determines the cash portion of the compensation to be paid to the executive
officers of the Company. The objectives of the Committee in determining the
amount and type of compensation for each executive officer are to (i) provide a
level of base compensation that would allow the Company to attract, retain and
reward superior talent, (ii) link the executive officers' interest with the
success of the Company through the payment of a bonus based on the Company's
performance and (iii) provide the executive officers with an opportunity to
build a significant ownership interest in the Company through participation in a
stock option plan and thereby align the executive officers' interests with those
of the stockholders. The Committee addresses the mix of compensation forms
(salary, bonus, stock options) to foster long-term management motivation and
stability.

The Committee believes that the Company's recent success has been
attributable in large measure to the performance and leadership of senior
management. The Company and the Committee believe that compensation that links
executive performance to the Company's success (such as bonus programs and stock
options) is the most effective means of compensating its executive officers.

The Company does not have a chief executive officer, but has a five-person
Management Committee chaired by Mr. Theodore J. Forstmann, who receives no cash
compensation for his services to the Company, and including W.W. Boisture, Jr.,
Chris A. Davis, James T. Johnson and Bryan T. Moss. No executive officer has an
employment agreement with the Company or any of its subsidiaries.

BASE SALARY. The Committee's policy as to base salaries is subjective, and
not dependent upon the application of a specific formula. The Committee
periodically reviews the base salary of executive officers and takes action from
time to time based on a subjective assessment of individual performance, the
nature of the executive's responsibilities, and the executive's contribution to
the Company, as well as competitive conditions and the nature and extent of the
executive's other forms of compensation.

BONUSES. The Company has adopted a Management Incentive Plan to reward
certain members of management, including the executive officers, and key
individuals by comparing Company, functional and personal performance against
annual goals and objectives. At the beginning of the year, operating and
financial goals are established for the Company and for each participant. If the
goals are attained, each executive officer participant is paid a bonus targeted
at 50% of base compensation. If the corporate goals are exceeded and
functional/personal goals are also attained, the payment can be increased to a
maximum of 62.5% at the discretion of the Committee. If the corporate goals are
not satisfied, the payment to each executive officer participant is
proportionately reduced below 50% at the discretion of the Committee. For 1997,
the Company met its operating and financial goals.

Mr. Bryan T. Moss also participates in an annual Sales Commission Plan,
under which he earned $178,800 with respect to 1997 sales.

Section 162(m) of the Internal Revenue Code of 1986, as amended, provides
that compensation in excess of $1,000,000 paid to the chief executive officer or
any of the other four most highly paid executive officers of a company will not
be deductible unless the compensation is paid pursuant to one of the exceptions
under Section 162(m). The Company's policy is to design and administer
compensation plans that support the achievement of long-term strategic
objectives and enhance shareholder value. When

13
<PAGE>
consistent with this compensation philosophy, the Committee will also attempt to
structure compensation programs that are tax-deductible by the Company.
Compensation attributable to stock options granted pursuant to the Company's
Amended and Restated 1990 Stock Option Plan is intended to qualify under the
performance-based compensation exception under Section 162(m). Options granted
outside the plan will not qualify for the performance-based compensation
exception under Section 162(m).

COMPENSATION COMMITTEE

Sandra J. Horbach, Gerard R. Roche and Robert S. Strauss

REPORT OF THE EMPLOYEE BENEFIT PLAN COMMITTEE

The Employee Benefit Plan Committee is composed solely of non-employee
directors. The Committee is responsible for administering the Company's employee
benefit plans. The Company's philosophy is that stock options are a particularly
important part of compensation that inherently correlates long-term individual
motivation and reward to Company performance. To encourage key employees to
remain in the employ of the Company, options generally vest and become
exercisable over a three or four year period.

The Committee's approach is subjective. The Committee does not use specific
criteria or formulae to calculate the aggregate number of options granted or the
grants to each individual. As part of its general discussion, the Committee
considers the past and potential contribution to the Company of its executive
officers, the amount of options awarded in prior years, the option grants
awarded by other aerospace companies as disclosed in publicly available
materials, the recent financial performance of the Company and the Company's
long-term compensation goals. Options to purchase an aggregate of 1,566,000
shares of Common Stock were granted in 1997.

EMPLOYEE BENEFIT PLAN COMMITTEE

Nicholas C. Forstmann, Gerard R. Roche and Robert S. Strauss

14
<PAGE>
PERFORMANCE GRAPH

The following graph compares the cumulative total return of $100 invested on
October 10, 1996, in each of the Common Stock of the Company, Standard & Poor's
500 Index and Standard & Poor's Aerospace / Defense Index. The returns of the
Standard and Poor's indices are calculated assuming reinvestment of dividends.
The Company has not paid any dividends. The graph covers a period commencing
October 10, 1996, when the Company's Common Stock was first publicly traded,
through December 31, 1997. The stock price performance shown on the graph below
is not necessarily indicative of future price performance.

COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
GULFSTREAM AEROSPACE CORPORATION,
S&P 500 INDEX AND S&P AEROSPACE/DEFENSE INDEX

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C> <C>
GAC = GULFSTREAM AEROSPACE CORPORATION
ADI = STANDARD & POOR'S AEROSPACE / DEFENSE INDEX
S&P 500 = STANDARD & POOR'S 500 INDEX
</TABLE>

15
<PAGE>
RELATED PARTY TRANSACTIONS

In August 1996, the Company entered into agreements with Mr. Theodore J.
Forstmann pursuant to which the Company will provide Mr. Forstmann with the use
of a Gulfstream V for a period of ten years. Until this Gulfstream V becomes
available, the Company has made and will make available to Mr. Forstmann a
Gulfstream IV, which the Company received through an assumption of a lease from
an affiliate of FLC Partnership, L.P. In January 1997, the Company exercised its
early buy-out option under the lease and purchased the aircraft from the lessor,
an international financial institution. Mr. Forstmann has agreed to pay the
Company up to $1.0 million annually (and paid $0.8 million in 1997) for non-
Company use of the aircraft. If Mr. Forstmann is no longer serving as a director
or official of the Company, he has agreed to reimburse the Company $1,800 per
hour for all use of the aircraft, or other such rate required so as to not
exceed Federal Aviation Administration ("FAA") regulatory limitations.

Thomas D. Bell, a director and former Vice Chairman of the Company, is
President and Chief Executive Officer of Burson-Marsteller, an advertising and
public relations services firm. Gulfstream paid to Burson-Marsteller
approximately $0.4 million in 1997 for advertising and public relations services
and has engaged Burson-Marsteller to provide additional services in 1998. The
Company believes the terms of these transactions are at least as favorable to
the Company as those which could have been obtained from an unrelated third
party.

In June 1997, the Company and Allen E. Paulson, a director and Chairman
Emeritus of the Company, entered into an agreement pursuant to which the Company
will sell to Mr. Paulson a Gulfstream V previously utilized by the Company as a
flight test aircraft, for a purchase price equal to the estimated fair market
value of the aircraft. Outfitted delivery is scheduled on or about September 30,
1998. A portion of the purchase price equal to $12 million will be paid over a
period of four years and is secured by a letter of credit. In August 1997, the
Company purchased a Gulfstream IV then owned by Mr. Paulson, for a purchase
price equal to the estimated fair market value of the aircraft. The Company
believes that the purchase prices for the Gulfstream V and the Gulfstream IV are
at least as favorable to the Company as could have been obtained from an
unrelated third party.

The Company and Mr. Paulson have also entered into a Marketing Services
Agreement under which Mr. Paulson will provide services relating to marketing
and new product development for a period of four years. Under this agreement,
Mr. Paulson will receive commissions on sales of Gulfstream Vs for which he
performs services and will receive fees in the event that certain product
development activities result in commercially viable products. The Company and
Mr. Paulson have also agreed that the Company may use the Gulfstream V purchased
by Mr. Paulson for demonstration purposes for a fee in accordance with FAA
regulations. The Company believes that the terms of these transactions are at
least as favorable to the Company as those that could have been obtained from an
unrelated third party.

Penske Jet, Inc., an affiliate of Roger Penske, a director of the Company,
operates a Gulfstream aircraft. Allen E. Paulson, a director of the Company,
also operated a Gulfstream aircraft during 1997. As Gulfstream operators they
from time to time purchase parts, maintenance and similar services from the
Company in the ordinary course of business and on the same terms as an unrelated
third party.

Henry A. Kissinger, Drew Lewis, Colin L. Powell, Donald H. Rumsfeld, George
P. Shultz and Robert S. Strauss, directors of the Company, are members of an
advisory committee to FLC Partnership, L.P.

See also "Further Information Concerning the Board of Directors and
Committees--Compensation Committee Interlocks and Insider Participation".

16
<PAGE>
APPOINTMENT OF AUDITORS

Upon recommendation of the Audit Committee, the Board of Directors has
appointed Deloitte & Touche LLP, independent public accountants, to audit and
report on the consolidated financial statements of the Company for the fiscal
year ending December 31, 1998 and to perform such other services as may be
required of them. Deloitte & Touche LLP has served as auditors for the Company
since 1990. The Board of Directors has directed that management submit the
appointment of independent auditors for ratification by the stockholders at the
Annual Meeting. Representatives of Deloitte & Touche LLP are expected to be
present at the meeting, will have the opportunity to make a statement if they
desire to do so and will be available to respond to appropriate stockholder
questions.

Proxies will be voted FOR ratification of the appointment of Deloitte &
Touche LLP as independent auditors for the Company for the fiscal year ending
December 31, 1998, unless otherwise specified in the proxy. The Board of
Directors recommends a vote FOR ratification of the appointment of Deloitte &
Touche LLP as independent auditors.

EXPENSES OF SOLICITATION

The cost of soliciting proxies will be borne by the Company. In addition to
the solicitation of proxies by use of the mails, some of the officers,
directors, and regular employees of the Company and its subsidiaries, none of
whom will receive additional compensation therefor, may solicit proxies in
person or by telephone or other means. As is customary, the Company will, upon
request, reimburse brokerage firms, banks, trustees, nominees and other persons
for their out-of-pocket expenses in forwarding proxy materials to their
principals.

STOCKHOLDER PROPOSALS FOR THE 1998
ANNUAL MEETING OF STOCKHOLDERS

Stockholders may present proposals which may be proper subjects for
inclusion in the proxy statement and for consideration at an Annual Meeting. To
be considered, proposals must be submitted on a timely basis. Proposals for the
1999 Annual Meeting must be received by the Company no later than December 1,
1998. Proposals, as well as any questions related thereto, should be submitted
in writing to the Secretary of the Company. Proposals may be included in the
proxy statement for the 1999 Annual Meeting if they comply with certain rules
and regulations promulgated by the Securities and Exchange Commission.

OTHER MATTERS

The Company knows of no other matter to be brought before the 1998 Annual
Meeting. If any other matter requiring a vote of the stockholders should come
before the meeting, it is the intention of the persons named in the proxy to
vote with respect to any such matter in accordance with their best judgment.

The Company will furnish, without charge, to each person whose proxy is
being solicited, upon written request, a copy of its Annual Report on Form 10-K
for the fiscal year ended December 31, 1997, as filed with the Securities and
Exchange Commission (excluding exhibits). Copies of any exhibits thereto also
will be furnished upon the payment of a reasonable duplicating charge. Requests
in writing for copies of any such materials should be directed to Gulfstream
Aerospace Corporation, 500 Gulfstream Road, Savannah, Georgia 31408, Attention:
Secretary.

By order of the Board of Directors,

[SIGNATURE]

Chris A. Davis
Secretary

Savannah, Georgia
March 25, 1998

17
<PAGE>

GULFSTREAM AEROSPACE CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 14, 1998

THIS PROXY IS SOLICITED ON BEHALF OF GULFSTREAM AEROSPACE CORPORATION'S
BOARD OF DIRECTORS.

The undersigned hereby appoints Chris A. Davis and James T. Johnson
and each of them, Proxies for the undersigned, with full power of
substitution, to represent and to vote all shares of Gulfstream Aerospace
Corporation Common Stock which the undersigned may be entitled to vote
at the 1998 Annual Meeting of Stockholders of Gulfstream Aerospace
Corporation to be held in New York, New York on Thursday, May 14, 1998 at
9:30 a.m., or at any adjournment thereof, upon the matters set forth on the
reverse side and described in the accompanying Proxy Statement and upon such
other business as may properly come before the meeting or any adjournment
thereof.

PLEASE MARK THIS PROXY AS INDICATED ON THE REVERSE SIDE TO VOTE ON ANY
ITEM. IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS, PLEASE SIGN THE REVERSE SIDE; NO BOXES NEED TO BE CHECKED.
IF THIS PROXY IS SIGNED BUT NO SPECIFICATION IS MADE, THE PROXY WILL BE VOTED
FOR ALL NOMINEES FOR DIRECTOR LISTED IN ITEM 1 AND FOR ITEM 2. IN THEIR
- --- ---
DISCRETION, THE APPOINTED PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.

- ---------------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENTS IN
THE SPACE BELOW AND ADDRESS CHANGES ON REVERSE SIDE

(Continued and to be signed on other side.)

----------------
SEE REVERSE SIDE
----------------

- --------------------------------------------------------------------------------
FOLD AND DETACH HERE

<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Please mark
your votes as /X/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2. indicated in
this example
<S> <C>
FOR ALL WITHHOLD AUTHORITY TO To withhold authority to vote for any individual
ITEM 1. ELECTION OF DIRECTORS NOMINEES VOTE FOR ALL NOMINEES nominee(s), write the nominee(s) on the line provided:
Nominees:
W.W. Boisture, Jr. Allen E. Paulson / / / / ------------------------------------------------------
Sandra J. Horbach Colin L. Powell
Henry A. Kissinger George P. Shultz
Michael S. Ovitz
I PLAN TO ATTEND MEETING. / /

FOR AGAINST ABSTAIN ADDRESS CHANGE
ITEM 2. APPROVAL OF AUDITORS / / / / / / Please mark this box if you have made an / /
address change.

RECEIPT IS HEREBY ACKNOWLEDGED OF THE GULFSTREAM
AEROSPACE CORPORATION NOTICE OF MEETING AND PROXY
STATEMENT.

PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE

Dated:_____________________________________________, 1998

_________________________________________________________
Signature

Note: Please sign exactly as name appears hereon. Joint
owners should each sign. When signing as an attorney,
executor, administrator, trustee, or guardian, please
give full title as such. Corporate and partnership
proxies should be signed by an authorized person
indicating the person's title.
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FOLD AND DETACH HERE
</TABLE>