<PAGE> 1
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2)
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
SKYWEST, INC.
- - -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
- - -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] 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:
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(2) Aggregate number of securities to which transactions applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule<ws>0<ho>-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:
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(5) Total fee paid:
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[ ] 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 registrations statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE> 2
SKYWEST, INC.
------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held August 12, 1997
------------------
To the Shareholders of SKYWEST, INC.:
The Annual Meeting of Shareholders of SkyWest, Inc. will be held at the
SkyWest Corporate Offices, 444 South River Road, St. George, Utah 84790, on
Tuesday, August 12, 1997, at 11:00 a.m. The purpose of the Annual Meeting is to
consider and vote upon the following matters, as more fully described in the
accompanying Proxy Statement:
(1) To elect eight members of the Board of Directors, each to
serve until the next Annual Meeting of Shareholders and until
their respective successors have been duly elected and
qualified.
(2) To ratify the appointment of Arthur Andersen LLP as
independent auditors for the fiscal year ending March 31,
1998.
(3) Such other matters as may properly come before the meeting.
The Board of Directors has fixed the close of business on June 30,
1997, as the record date for the determination of shareholders entitled to
receive notice of and to vote at the Annual Meeting or any adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Eric D. Christensen
Corporate Secretary
DATED: July 7, 1997
IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, TO
ASSURE THAT YOUR SHARES WILL BE REPRESENTED, PLEASE DATE, FILL IN, SIGN AND MAIL
THE ENCLOSED PROXY IN THE ACCOMPANYING POSTAGE PAID ENVELOPE. YOUR PROXY WILL
NOT BE USED IF YOU ARE PRESENT AT THE ANNUAL MEETING AND DESIRE TO VOTE YOUR
SHARES PERSONALLY.
<PAGE> 3
SKYWEST, INC.
444 South River Road
St. George, Utah 84790
------------------
PROXY STATEMENT
------------------
FOR ANNUAL MEETING OF SHAREHOLDERS
August 12, 1997
SOLICITATION OF PROXIES
This Proxy Statement is being furnished to the shareholders of SkyWest,
Inc., a Utah corporation (the "Company"), in connection with the solicitation by
the Board of Directors of the Company of proxies from holders of outstanding
shares of the Company's Common Stock, no par value (the "Common Stock"), for use
at the Annual Meeting of Shareholders of the Company to be held Tuesday, August
12, 1997, and at any adjournment or postponement thereof (the "Annual Meeting").
This Proxy Statement, the Notice of Annual Meeting of Shareholders and the
accompanying form of proxy are first being mailed to shareholders of the Company
on or about July 7, 1997.
The Company will bear all costs and expenses relating to the
solicitation of proxies, including the costs of preparing, printing and mailing
to shareholders this Proxy Statement and accompanying material. In addition to
the solicitation of proxies by use of the mails, the directors, officers and
employees of the Company, without receiving additional compensation therefor,
may solicit proxies personally or by telephone or telegram. Arrangements will be
made with brokerage firms and other custodians, nominees and fiduciaries for the
forwarding of solicitation materials to the beneficial owners of the shares of
Common Stock held by such persons, and the Company will reimburse such brokerage
firms, custodians, nominees and fiduciaries for reasonable out-of-pocket
expenses incurred by them in connection therewith.
VOTING
The Board of Directors has fixed the close of business on June 30,
1997, as the record date (the "Record Date") for determination of shareholders
entitled to notice of and to vote at the Annual Meeting. As of the Record Date,
there were issued and outstanding 10,150,211 shares of Common Stock. The holders
of record of the shares of Common Stock on the Record Date entitled to be voted
at the Annual Meeting are entitled to cast one vote per share on each matter
submitted to a vote at the Annual Meeting.
Proxies
Shares of the Common Stock which are entitled to be voted at the Annual
Meeting and which are represented by properly executed proxies will be voted in
accordance with the instructions indicated on such proxies. If no instructions
are indicated, such shares will be voted FOR the election of each of the eight
director nominees; FOR the ratification of the appointment by the Board of
Directors of Arthur Andersen LLP to be the independent auditor of the Company
for the fiscal year ending March 31, 1998, and, in the discretion of the proxy
holder, as to any other matters which may properly come before the Annual
Meeting. A shareholder who has executed and returned a proxy
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<PAGE> 4
may revoke it at any time prior to its exercise at the Annual Meeting by
executing and returning a proxy bearing a later date, by filing with the
Secretary of the Company, at the address set forth above, a written notice of
revocation bearing a later date than the proxy being revoked or by voting the
Common Stock covered thereby in person at the Annual Meeting.
Vote Required
The presence of a majority of the issued and outstanding shares of
Common Stock entitled to vote, represented in person or by proxy, is required
for a quorum at the Annual Meeting. Holders of shares of Common Stock are
entitled to one vote at the Annual Meeting for each share of Common Stock held
of record at the Record Date. In the election of directors, shareholders will
not be allowed to cumulate their votes. The eight (8) nominees receiving the
highest number of votes will be elected. Accordingly, abstentions and broker
non-votes will not affect the outcome of the election. The ratification of the
selection of an independent auditor, and any other matter presented for approval
by the shareholders will generally be approved, in accordance with Utah law, if
the votes cast in favor of a matter exceed the votes cast opposing such matter.
As a result, abstentions and broker non-votes will not affect the outcome of any
matter.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
The Board of Directors will consist of eight directors all of whom will
be elected at the Annual Meeting. On April 1, 1997, the Company received the
resignation of W. Martin Braham, the designee of Delta Air Lines Inc. ("Delta")
to the Board of Directors pursuant to a stock option agreement with Delta. See
"Certain Relationships and Related Party Transactions." The Company does not
intend to fill the vacancy resulting from Mr. Braham's resignation. Such
directors will serve until the next annual meeting of shareholders and until
their successors are duly elected and qualified. Shareholders do not have
cumulative voting rights in the election of directors (each shareholder is
entitled to cast one vote for each share held for each director). Unless
authority is withheld, it is the intention of the persons named in the enclosed
form of proxy to vote "FOR" the election as directors of the persons identified
as nominees for directors in the table below. Each of the nominees is currently
serving as a director. If the candidacy of any one or more of such nominees
should, for any reason, be withdrawn, the proxies will be voted "FOR" such other
person or persons, if any, as may be designated by the Board of Directors. The
Board has no reason to believe that any nominee herein named will be unable or
unwilling to serve.
Nominees for Director
The following table sets forth information about each nominee for
election as a director.
Nominees.
JERRY C. ATKIN, 48, joined the Company in July 1974 as
Director of Finance. In 1975, he assumed the office of President and Chief
Executive Officer. He was elected Chairman in 1991. Prior to employment by the
Company, Mr. Atkin was employed by a public accounting firm and is a certified
public accountant. Mr. Atkin is a board member of Blue Cross Blue Shield of
Utah, a medical insurance company. He is also a member of the Board of Zions
Bancorporation, a Utah bank holding company. Mr. Atkin has served as a director
of the Company since 1974.
J. RALPH ATKIN, 54, was the founder of the Company and served
as President and Chief Executive Officer from 1972 to 1975. He served as
Chairman of the Board of Directors from 1972 to 1991. From 1984 to 1988 he
served as Senior Vice President of the Company. From March 1991 to January 1993,
he was Director of Business and Economic Development for the State of Utah. He
served as Chief Executive Officer of EuroSky, a company organized to explore the
feasibility of a regional airline in Austria during 1994 and 1995. Mr. Atkin is
currently engaged in the private practice of law in St. George, Utah. Mr. Atkin
is also a director of Fairchild Aircraft Incorporated and Fairchild Aircraft
Services Incorporated. Mr. Atkin has served as a director of the Company since
1972.
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<PAGE> 5
SIDNEY J. ATKIN, 62, was elected Vice Chairman in 1988. For
more than the past five years, Mr. Atkin has been President of Sugarloaf Corp.,
a Utah corporation involved in the operation of restaurants and motels. Mr.
Atkin has served as a director of the Company since 1973.
MERVYN K. COX, 60, has been for more than the past five years
an orthodontist engaged in private practice and has also engaged in the
development and management of real estate. Mr. Cox has served as a director of
the Company since 1974.
IAN M. CUMMING, 56, is Chairman of Leucadia National
Corporation, a diversified financial services holding company principally
engaged in personal and commercial lines of property and casualty insurance,
life and health insurance, banking and lending, manufacturing and the trading
stamps business. He has served as a director of the Company since 1986. Mr.
Cumming is also a director of MK Gold Company and Allcity Insurance Company,
both of which are public companies.
HENRY J. EYRING, 33, has been employed since 1989 by Monitor
Company, an international management consulting firm based in Cambridge,
Massachusetts. At Monitor, he serves as President of Monitor Institute, the
subsidiary of the firm that consults in the public sector. He is also Chief
Operating Officer of the Huntsman Cancer Institute. He is a Director of Global
Microtechologies, a computer retailing company, and is Chairman-elect of
Artspace, a Salt Lake City-based non-profit real estate developer. Mr. Eyring
has served as a director of the Company since 1995.
STEVEN F. UDVAR-HAZY, 51, is currently President, Director and
Chief Executive Officer of International Lease Finance Corporation, a
wholly-owned subsidiary of American International Group, Inc., which leases
and finances commercial jet aircraft worldwide. Mr. Udvar-Hazy has been
engaged in aircraft leasing and finance for 32 years. He has served as a
director of the Company since 1986.
HYRUM W. SMITH, 53, is co-founder, Chief Executive Officer and
Chairman of Franklin Covey Co., a public company in business to help people
gain control over their lives and increase their productivity. Mr. Smith has
been the Chief Executive Officer of Franklin Covey Co. since February 1997, a
position he also held from April 1991 to September 1996. Mr. Smith was Senior
Vice President of Franklin Quest from December 1984 to April 1991. Franklin
Covey Co. was formerly known as Franklin Quest Co. prior to its merger with
Covey Leadership Center, Inc. in May 1997. Mr. Smith has served as a
director of the Company since 1995.
Meetings and Committees.
During the fiscal year ended March 31, 1997 ("fiscal 1997"),
the Board of Directors held seven meetings. All members attended at least 75% of
all board meetings and applicable committee meetings. The Board of Directors has
a Compensation Committee that approves board fees and the Company's officers'
compensation, except compensation for the CEO which is approved by the Board of
Directors upon recommendation of the Compensation Committee. The Compensation
Committee also approves the amount of contributions to the employees' retirement
plan and administers the Company's stock option plans. The members of the
Compensation Committee are J. Ralph Atkin, Hyrum W. Smith and Steven F.
Udvar-Hazy. The Compensation Committee met twice during fiscal 1997. The Board
of Directors has an Audit Committee that reviews the auditor's reports and
recommendations and interviews and makes recommendations to the Board of
Directors for the selection of the Company's independent auditor. The members of
the Audit Committee are Sidney J. Atkin, Ian M. Cumming, Mervyn K. Cox and Henry
J. Eyring. The Audit Committee met two times during fiscal 1997. The Board of
Directors has a Nominating Committee which recommends to the Board of Directors
nominees for election. The Nominating Committee will consider nominees
recommended by shareholders submitted in writing to the Committee. The members
of the Nominating Committee are Sidney J. Atkin, Mervyn K. Cox and Ian M.
Cumming. The Nominating Committee met once during fiscal 1997.
Relationships.
J. Ralph Atkin and Sidney J. Atkin are brothers. Jerry C.
Atkin is their nephew.
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EXECUTIVE OFFICERS
In addition to Jerry C. Atkin, certain information is furnished with
respect to the following executive officers of the Company:
RON B. REBER, 43, joined the Company in 1977 and has served in various
capacities, including Vice President-Sales and Market Planning for SkyWest
Airlines, Inc. and Senior Vice President-Customer Service and Marketing. He is
currently Executive Vice President and Chief Operating Officer with general
responsibility for flight operations, maintenance, customer service, market
planning, marketing, revenue control and pricing. He also serves as President of
National Parks Transportation, Inc., a wholly-owned subsidiary of the Company.
BRADFORD R. RICH, 36, joined the Company in 1987 as Corporate
Controller. He was previously employed with a public accounting firm and is a
certified public accountant. He is currently Executive Vice President, Chief
Financial Officer and Treasurer with responsibility for financial accounting,
treasury, public reporting, investor relations, internal audit and management
information systems.
CLIFFORD N. LANGNESS, 51, served as President of Scenic Airlines, a
wholly-owned subsidiary of the Company, from April 1992 to March 31, 1997, the
date of his resignation. Mr. Langness was the Vice President and General
Manager of Scenic Airlines from April 1985 until April 1992.
EXECUTIVE COMPENSATION
Compensation of Executive Officers
The following table provides certain summary information concerning the
compensation paid or accrued by the Company and its subsidiaries, to or on
behalf of the Company's Chief Executive Officer and each of the other executive
officers whose annual salary and bonus exceeded $100,000 (collectively the
"Named Executive Officers").
<TABLE>
<CAPTION>
Summmary Compensation Table
Long Term
Annual Compensation Compensation
---------------------------------------- -------------
Other Annual Options All Other
Name and Position Year Salary Bonus Compensation(1) Granted Compensation(2)
- - ------------------------------ ------ --------- -------- ------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Jerry C. Atkin F97 $217,689 $100,000 21,138 35,000 3,496
Chairman, President and F96 209,217 50,000 26,362 28,000 8,629
Chief Executive Officer F95 185,999 127,000 36,753 25,000 6,260
Ron B. Reber F97 130,193 70,000 11,923 12,500 1,795
Executive Vice President F96 126,818 20,000 13,504 11,500 3,656
and Chief Operating Officer F95 88,357 50,000 15,599 8,000 2,695
Bradford R. Rich F97 118,462 63,000 10,892 12,500 1,620
Executive Vice President F96 106,732 20,000 12,174 11,500 3,722
and Chief Financial Officer F95 88,822 50,000 15,882 8,000 2,777
Clifford N. Langness F97 104,677 0 9,272 0 1,220
President of F96 104,562 10,000 9,135 8,000 2,306
Scenic Airlines F95 100,915 18,638 9,839 8,000 2,801
</TABLE>
- - -----------------------
(1) Consists of deferred compensation payments made pursuant to the
Executive Deferred Compensation Plan (the "Plan"). See "Report of the
Compensation Committee--Executive Deferred Compensation Plan."
(2) Consists of the Company's contributions to the Company's 401(k) Plan
which were allocated to the account of the Named Executive Officers in
the 1997 fiscal year.
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Option Grants in Last Fiscal Year
The following table sets forth individual grants of stock options made
to the Named Executive Officers during the fiscal year ended March 31, 1997.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Percent of Total Annual Rates of Stock Price
Options Granted Appreciation for Option Term
Options to Employees Exercise Expiration ----------------------------
Name Granted(1) in Fiscal Year Price Date 5% 10%
- - --------------------- --------- ---------------- -------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Jerry C. Atkin......... 35,000 29.4% $14.63 03/31/06 $322,025 $816,076
Ron B. Reber........... 12,500 10.5 14.63 03/31/06 115,009 291,456
Bradford R. Rich....... 12,500 10.5 14.63 03/31/06 115,009 291,456
Clifford N. Langness... 9,000 7.6 14.63 03/31/06 82,806 209,848
</TABLE>
- - ----------------------
(1) All options were granted under the Company's Amended and Combined
Incentive and Nonstatutory Stock Option Plan and first become
exercisable on April 1, 1999.
Aggregated Option Exercises in Last Fiscal Year and Year End Option Values
The following table sets forth the aggregate value of unexercised
options to acquire shares of the Common Stock held by the Named Executive
Officers on March 31, 1997, and the value realized upon the exercise of options
during the fiscal year ended March 31, 1997.
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
FY-End(#) FY-End($)(3)
------------------- -------------------
Value
Realized($) Exercisable(2)/ Exercisable/
Name (1) Unexercisable Unexercisable
- - ------------------------------------- --------------- ------------ ------------------- -------------------
<S> <C> <C> <C> <C>
Jerry C. Atkin....................... 21,750 $163,125 50,000/63,000 $0/$0
Ron B. Reber......................... 7,500 85,313 15,000/24,000 $0/$0
Bradford R. Rich..................... 7,500 85,313 15,000/24,000 $0/$0
Clifford N. Langness................. 0 0 15,000/17,000 $0/$0
</TABLE>
- - ----------------------
(1) Calculated based on the difference between the exercise price and the
value of the shares as of the date acquired.
(2) Includes options exercisable within 60 days of the end of the Company's
fiscal year.
(3) Calculated based on the difference between the exercise price and the
price of a share of the Company's Common Stock on March 31, 1997. The
price of the Common Stock of the Company on March 31, 1997, was $13.00
as reported on the NASDAQ Stock Market/National Market System.
Compensation Committee Interlocks and Insider Participation
J. Ralph Atkin served as Chairman of the Compensation Committee during
the fiscal year ended March 31, 1997. Mr. Atkin was the founder of the
Company and served as President and Chief Executive Officer from 1972 to 1975.
From 1984 to 1988, Mr. Atkin also served as Senior Vice President of the
Company.
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Director's Compensation
All directors, except Jerry C. Atkin, receive a fee of $1,000 for each
Board meeting and $500 for each Committee meeting and $16,000 as an annual
retainer. The Vice Chairman and Committee Chairmen also receive an additional
$1,000 annually. Steven F. Udvar-Hazy receives an additional $14,400 annually.
REPORT OF THE COMPENSATION COMMITTEE
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that incorporate by reference, in
whole or in part, subsequent filings including, without limitation, this Proxy
Statement, the following Report of the Compensation Committee and the
Performance Graph set forth on page 10 hereof shall not be deemed to be
incorporated by reference into any such filings.
The Securities and Exchange Commission's ("SEC") rules addressing
disclosure of executive compensation in proxy statements 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, Jerry C. Atkin, and (c) any
relationship between such compensation and the Company's performance.
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors, which is responsible for
establishing the policies governing the Company's compensation program and the
amount of compensation for each of the Company's executive officers. The
Compensation Committee is currently composed of three of the Company's
independent directors and has oversight responsibility for all executive
compensation and executive benefit programs of the Company.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Company's Board of Directors
regularly reviews and approves decisions with respect to compensation of the
Company's officers and other employees. The Board of Directors has appointed
three of its independent, non-employee members to serve on the Compensation
Committee and empowered the Committee to:
- Recommend to the Board CEO compensation;
- Approve all other officers' compensation;
- Approve Company-wide and officer incentive/bonus plans, and
profit sharing/retirement contributions;
- Review Company compensation packages as a whole; and
- Administer the Company's various stock option plans.
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<PAGE> 9
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 executives who the Compensation Committee and
senior management believe are important to the Company's long-term financial
success. 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 comparable
companies;
- integrates certain compensation elements with the Company's
financial performance by linking an incentive plan to the
Company's net income as well as other corporate and
operational goals; and
- links certain compensation elements with an opportunity to own
the Company's Common Stock so that its executives will have a
personal interest in the increase in share value 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 success 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. 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.
Executive Compensation Program.
The components of the Company's current executive compensation
program include salary and annual cash incentive bonus awards and long-term
incentive plans in the form of stock option plans and deferred compensation
plans.
Salaries and Cash Incentive Bonus Awards.
The Compensation Committee establishes the salaries and bonus
awards for all officers, except the CEO, whose salary and annual bonus award it
recommends for approval by the full Board. The salary and bonus award levels are
established and adjusted annually based on factors such as competitive trends,
annual inflation rates, overall financial performance of the Company and
individual performance of the executives. The base salary for the executive
officers is generally fixed below industry average levels with the opportunity
to receive annual bonuses that would make total compensation comparable. The
Company's annual bonus awards to its executive officers, some of which are
reflected in the Summary Compensation Table, are based on the financial
performance of the Company together with subjective and objective performance
criteria.
At the beginning of each fiscal year, the Compensation
Committee establishes cash bonus award guidelines based on the Company's
earnings. For fiscal 1997, the Company adopted an incentive plan for all
officers, including executive officers, pursuant to which a bonus was paid to
the Company's President, two Executive Vice Presidents, and seven Vice
Presidents; subject, however, to discretionary authority of the Board of
Directors and the Compensation Committee to vary the amounts or percentages paid
based on extraordinary performance, achievement of (or failure to achieve)
objectives and other similar factors. For fiscal 1997, bonuses were paid based
on the incentive plan as adopted. A separate incentive bonus plan, paid
quarterly, was in effect for all other employees employed at least two years.
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<PAGE> 10
Employee Retirement Plan -- 401(k).
The Company maintains the SkyWest Airlines Employee Retirement
Plan (the "Retirement Plan") which is a defined contribution plan, for the
benefit of employees who have completed at least one year of service with the
Company. The Retirement Plan is qualified under Section 401(a) and (k) of the
Internal Revenue Code ("Code").
The Retirement Plan provides for pre-tax participant
contributions and matching contributions by the Company, subject to the
requirements of Section 401(k) of the Code. The Company may also make
discretionary contributions for participants without regard to participant
contributions. Matching contributions totaled $1,460,341 and a discretionary
contribution of $499,030 was made for fiscal year 1997. The Company's officers
are not eligible to participate in matching contributions made by the Company.
Separate accounts are maintained for all contributions and
directed by participants among nine types of investment funds, not including
Common Stock of the Company.
All contributions to a participant's account under the
Retirement Plan are nonforfeitable. The Retirement Plan permits certain
withdrawals and loans during service. Distributions from the Retirement Plan are
made upon termination either in a lump sum or in annual installments over a
period of up to ten years (but in no event over a period exceeding five years
following a participant's death).
Executive Deferred Compensation Plan.
The Company's Deferred Compensation Plan (the "Plan") was
adopted by the Compensation Committee of the Board of Directors on August 7,
1990, and became effective January 1, 1991. Under the terms of the Plan, the
Company contributes eight percent of the compensation paid to the officers of
the Company during the prior calendar year to the Plan. Under the Plan, the
Company maintains split dollar life insurance policies on the lives of
participants. The officer is the owner of such policies and the Company is
responsible for payment of premiums. The premiums are recoverable by the Company
and will be paid to each participant as deferred compensation following
termination of employment. The earnings under the policies and death proceeds of
policies will be paid to participants or to a designated beneficiary.
Participants in this Plan are not eligible for matching contributions under the
401(k) Plan.
Stock Option Plans.
The Company's Amended and Combined Incentive and Nonstatutory
Stock Option Plan (the "Plan") was adopted by the Board of Directors in April
1991 and approved by the Shareholders of the Company in August 1991. The Plan
provides for the grant of options to purchase shares of Common Stock which may
be either incentive stock options ("Incentive Stock Options") as that term is
defined in the Code or nonstatutory stock options ("Nonstatutory Options").
Options under the Plan are granted by the Compensation Committee. The maximum
number of shares of Common Stock available for issuance upon exercise of Options
under the Plan is 1,500,000. Directors, managers and key employees and others
who hold positions of significant responsibility or whose performance or
potential contribution, in the judgment of the Compensation Committee, would
benefit the Company, are eligible to receive Options under the Plan.
The Compensation Committee has complete authority to determine
the persons to whom and the time or times at which grants of Options will be
made, whether such Options will be Incentive Stock Options or Nonstatutory
Options, the exercise price, term, restrictions on exercise and transferability
and vesting schedules, all of which are set forth in a Stock Option Agreement.
In no event, however, shall the exercise price of an Incentive Stock Option be
less than the fair market value of a share of Common Stock on the date of grant
or exercisable after the expiration of ten years from the date of grant and no
Option shall be exercisable before six months have lapsed from the date of grant
(except in the case of death or disability). In considering the grant of Options
to executive officers, the Compensation Committee takes into consideration such
factors as the projected value of the Company's Common Stock in the future based
on the Company obtaining its performance goals, the executive officers' current
salary and the overall performance of the Company. The Compensation Committee
attempts to award Options in an
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<PAGE> 11
amount that will provide executive officers with Options that will have a value
in the future equal to a targeted percentage of the officers' base salary if the
Company's performance goals are met during the vesting period.
Chief Executive Officer Compensation for Fiscal Year 1997.
Using the process and criteria discussed above, effective July
1, 1996 the Compensation Committee recommended and the Board established Jerry
C. Atkin's base salary at $220,000 and set the range for his annual bonus award
at $53,000 to $230,000, based on Company net income and also subject to
achieving other non-financial objectives. After the end of fiscal 1997, the
Compensation Committee awarded Mr. Atkin a $100,000 bonus based on his
performance during the year. During fiscal 1997, the Compensation Committee also
awarded 35,000 stock options to Mr. Atkin based on the criteria described above.
COMPENSATION COMMITTEE
J. Ralph Atkin
Steven F. Udvar-Hazy
Hyrum W. Smith
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<PAGE> 12
PERFORMANCE GRAPH
Set forth below is a graph comparing the five-year cumulative
shareholder return on SkyWest's Common Stock against the five year-cumulative
total return on the CRSP Index for NASDAQ Stock Market (US Companies) and the
CRSP Index for NASDAQ Stocks (SIC 4510-4519) (an index composed of NASDAQ
companies engaged in air transportation, and includes regional airlines whose
stocks trade on NASDAQ) for the periods indicated. The graph assumes an initial
investment of $100.00 with dividends reinvested over the periods indicated.
Comparison of Five-Year Cumulative Total Returns
Performance Graph for
SkyWest, Inc.
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------------------
Symbol Index Description 03/31/92 03/31/93 03/31/94 03/31/95 03/29/96 03/31/97
- - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
______ SkyWest, Inc................................ 100.0 237.1 469.0 203.5 182.1 183.1
- - ----------------------------------------------------------------------------------------------------------------------------
NASDAQ Stocks (SIC 4510-4519
US Companies) Air
Transportation, Scheduled
_ _ _ _ and Air Courier Services.................... 100.0 165.9 155.7 166.4 303.9 214.7
- - ----------------------------------------------------------------------------------------------------------------------------
Nasdaq Stock Market
....... (US Companies)..............................
.. 100.0 115.0 124.1 138.0 187.4 208.3
- - ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes:
A. The lines represent yearly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on
the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100 on 03/31/92.
10
<PAGE> 13
Certain Relationships and Related Party Transactions
The Company and Delta operate under a joint marketing and code sharing
agreement under which the Company uses the Delta two letter designator code (DL)
in displaying its schedules on all flights in the automated airline reservation
systems used throughout the industry.
As of March 31, 1997, Delta owned 1,553,899 shares of Common Stock
which represented 15.3% of the outstanding Common Stock of the Company. The
Company leases various terminal facilities from Delta and Delta provides certain
services to the Company, including advertising, reservation and ground handling
services. Expenses paid to Delta under these agreements were approximately
$5,024,000, $9,181,000 and $11,217,736 during the years ended March 31, 1995,
1996, and 1997, respectively. The Company had a net receivable of $2,761,000 as
of March 31, 1996, and $779,662 as of March 31, 1997.
Effective April 1, 1997, W. Martin Braham, Delta's designated Board
member resigned from the Board, at Delta's request. All Delta designated board
members of other regional airlines with similar arrangements also resigned.
However, so long as Delta is the owner of 10% or more of the Company's
outstanding Common Stock, the Company is required to include a designee of Delta
reasonably acceptable to the Company on the slate of nominees for election of
directors nominated by the Company's Board of Directors and to use its best
efforts to assure the election of the designee to the Board of Directors. Delta
has not designated a nominee to replace Mr. Braham and the Company does not
otherwise intend to nominate a replacement for the vacancy created by Mr.
Braham's resignation.
11
<PAGE> 14
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of May 31, 1997, information with
respect to the Company's Common Stock owned beneficially by each Director or
nominee for Director, by the Named Executive Officers, by all Officers and
Directors as a group and by each person known by the Company to be a beneficial
owner of more than 5% of the outstanding Common Stock of the Company. Except as
otherwise indicated below, each person named has sole voting and investment
power with respect to the shares indicated.
<TABLE>
<CAPTION>
Amount and Nature Percentage
of Beneficial of
Name and Address of Beneficial Owners Ownership Class(1)
- - ------------------------------------------------------------------------------- ------------------- ------------
<S> <C> <C>
Delta Air Lines Holdings, Inc.................................................. 1,553,899 15.3%
Hartsfield Atlanta International Airport
Atlanta, Georgia 30320
Jerry C. Atkin(2).............................................................. 544,026(4) 5.3
c/o SkyWest, Inc.
444 South River Road
St. George, Utah 84790
Sidney J. Atkin(2)............................................................. 518,951(3)(5) 5.2
c/o SkyWest, Inc.
444 South River Road
St. George, Utah 84790
Mervyn K. Cox(2)............................................................... 285,000(5) 2.9
J. Ralph Atkin(2).............................................................. 11,000(5) *
Steven Udvar-Hazy(2)........................................................... 11,150(5) *
Ian M. Cumming(2) ............................................................. 11,150(5) *
Hyrum W. Smith(2) ............................................................. 11,000(5) *
Henry J. Eyring(2) ............................................................ 11,000(5) *
Ron B. Reber .................................................................. 15,013(6) *
Bradford R. Rich .............................................................. 16,906(6) *
All Officers and Directors, as a group (10 persons)(7)......................... 1,481,609 29.1
</TABLE>
- - ----------------------
** less than 1%.
(1) Based on total outstanding shares of 10,150,211 as of May 31, 1997.
(2) Director and nominee for director.
(3) Includes 307,500 shares held by a family limited partnership of which Mr.
Atkin and his wife are the general partners, and 187,790 shares held by
Mr. Atkin as trustee of a trust for the benefit of his family.
(4) Includes 209,555 shares held separately by Carolyn J. Atkin, his wife, and
50,000 shares issuable upon exercise of options.
(5) Includes 11,000 shares issuable upon exercise of options.
(6) Includes 15,000 shares issuable upon exercise of options.
(7) Includes 157,000 shares issuable upon exercise of options.
12
<PAGE> 15
PROPOSAL NO. 2 -- RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
Ratification of the appointment by the Board of Directors of the
independent public accountants for the Company for the current fiscal year
ending March 31, 1998 is to be voted upon at the Annual Meeting. The Board of
Directors recommends shareholder ratification of the appointment of Arthur
Andersen LLP, whose appointment has been approved, subject to shareholder
approval, by the Board of Directors. Representatives of Arthur Andersen LLP are
expected to be present at the Annual Meeting to answer any questions
shareholders may have and will be given the opportunity to make a statement if
they desire to do so.
The affirmative vote of a majority of the votes cast on this proposal
shall constitute ratification of the appointment of Arthur Andersen LLP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR FISCAL
1998.
OTHER MATTERS
OTHER BUSINESS
The Board of Directors does not know of any matter to be presented at the
Annual Meeting that is not listed in the Notice of Annual Meeting and discussed
above. If other matters should come before the Annual Meeting, however, the
proxyholders will vote in accordance with their best judgment.
PROPOSALS OF SECURITY HOLDERS FOR 1998 ANNUAL MEETING
Shareholders desiring to submit proposals for the Proxy Statement for the
1998 Annual Meeting will be required to submit them to the Company in writing on
or before April 10, 1998. Any shareholder proposal must also be proper in form
and substance, as determined in accordance with the Securities Exchange Act of
1934 and the rules and regulations promulgated thereunder.
ADDITIONAL INFORMATION
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1997 will be furnished without charge upon receipt of a written
request. The exhibits to that Report will also be provided upon request and
payment of copying charges. Requests should be directed to the Corporate
Secretary, SkyWest, Inc., 444 South River Road, St. George, Utah 84790.
13
<PAGE> 16
PROXY SKYWEST, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Jerry C. Atkin, Bradford R. Rich and Eric D.
Christensen, and each of them, as proxies, with full power of substitution, and
hereby authorizes them to represent and to vote, as designated below, all shares
of Common Stock of SkyWest, Inc., a Utah corporation (the "Company"), held of
record by the undersigned on June 30, 1997 at the Annual Meeting of Shareholders
(the "Annual Meeting") to be held at the Skywest Corporate Offices, 444 South
River Road, St. George, Utah 84790, on August 12, 1997, at 11:00 a.m., local
time, or at any adjournment thereof, upon the matters set forth below, all in
accordance with and as more fully described in the accompanying Notice of Annual
Meeting and Proxy Statement, receipt of which is hereby acknowledged.
1. ELECTION OF DIRECTORS, each to serve until the next annual meeting of
shareholders and until their respective successors shall have been duly elected
qualified.
|_| FOR all nominees listed below (except as marked to the contrary below)
|_| WITHHOLD AUTHORITY to vote for all nominees listed below
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW)
<TABLE>
<S> <C> <C> <C>
JERRY C. ATKIN J. RALPH ATKIN STEVEN F. UDVAR-HAZY IAN M. CUMMING
HENRY J. EYRING MERVYN K. COX SIDNEY J. ATKIN HYRUM W. SMITH
</TABLE>
2. PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP, as the
independent auditor of the Company.
|_| FOR |_| AGAINST |_| ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE DIRECTOR NOMINEES NAMED ABOVE AND FOR THE RATIFICATION
OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE INDEPENDENT AUDITOR OF THE
COMPANY.
Please complete, sign and date this proxy where indicated and return it
promptly in the accompanying prepaid envelope.
Dated:________________, 1997 Signature:___________________________________
Signature if held jointly: _______________________________
Please sign above exactly as the shares are issued. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by authorized
person.)
