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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)) Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
SKYWEST, INC.
------------------------------------------------
(Name of Registrant as Specified in its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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SKYWEST, INC.
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held August 10, 1999
------------------
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 10, 1999, 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, 2000.
(3) Such other matters as may properly come before the meeting.
The Board of Directors has fixed the close of business on June 30, 1999
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, 1999
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
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PROXY STATEMENT
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FOR ANNUAL MEETING OF SHAREHOLDERS
AUGUST 10, 1999
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
10, 1999, 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, 1999.
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 materials. 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, 1999
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 24,509,658 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, 2000 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 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.
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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. 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, 50, 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 each of (i) The Regence Group, a
medical insurance holding company, and its subsidiary, Regence Blue Cross Blue
Shield of Utah, a medical insurance company, and (ii) Zions Bancorporation, a
Utah bank holding company. Mr. Atkin has served as a director of the Company
since 1974.
J. RALPH ATKIN, 56, 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
an attorney and is currently engaged in the private practice of law in St.
George, Utah. Mr. Atkin has served as a director of the Company since 1972.
SIDNEY J. ATKIN, 64, was elected Vice Chairman in 1988. From 1984 to
1988, he served as Senior Vice President of the Company. For more than 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, 62, has been for more than 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, 58, is Chairman of Leucadia National Corporation, a
diversified financial services holding company principally engaged in personal
and commercial lines of property and casualty insurance, banking and
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lending and manufacturing. 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. He is Chairman of Barbados Light &
Power Co.
HENRY J. EYRING, 35, was appointed the director of the MBA Program at
Brigham Young University in 1998. From 1989 to 1998, he was employed by the
Monitor Company, an international management consulting firm based in Cambridge,
Massachusetts, and he continues to serve as a consultant to the Monitor Company.
He is also the Chief Financial Officer of the Huntsman Cancer Foundation in Salt
Lake City, Utah, a director of Assist Cornerstone Technologies, a software
development company, and a member of the Board of Trustees of Southern Utah
University. Mr. Eyring has served as a director of the Company since 1995.
STEVEN F. UDVAR-HAZY, 53, 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 34 years. He has served as a director of the Company
since 1986.
HYRUM W. SMITH, 55, is Vice Chairman of Franklin Covey Co., a public
company in business to help people gain control over their lives and increase
their productivity. Mr. Smith was the Chief Executive Officer of Franklin Covey
Co. from February 1997 to March 1998, a position he also held from April 1991 to
September 1996. Mr. Smith was Senior Vice President of Franklin Quest Co. 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, 1999 ("fiscal 1999"), the Board
of Directors held five 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 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, Steven F. Udvar-Hazy and Henry J.
Eyring. The Compensation Committee met three times during fiscal 1999. 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 1999. The Board of
Directors has a Nominating Committee which recommends to the Board of Directors
nominees for election, as well as Board fees. 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, Ian M. Cumming and Hyrum W. Smith. The Nominating Committee met once
during fiscal 1999.
RELATIONSHIPS. J. Ralph Atkin and Sidney J. Atkin are brothers. Jerry C.
Atkin is their nephew.
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, 45, has served in various capacities since joining the
Company in 1977. He is currently Executive Vice President of the Company and
Chief Operating Officer of SkyWest Airlines, Inc. 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, 38, 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,
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Chief Financial Officer and Treasurer with responsibility for financial
accounting, treasury, public reporting, investor relations, internal audit and
management information systems.
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 of the Company whose annual salary and bonus exceeded $100,000
(collectively the "Named Executive Officers").
<TABLE>
<CAPTION>
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 F99 $272,946 $436,000 $46,503 104,000 $3,950
Chairman, President and F98 242,431 325,652 26,921 105,000 3,221
Chief Executive Officer F97 217,689 100,000 21,138 70,000 3,496
Ron B. Reber F99 164,106 239,000 26,609 42,000 3,950
Executive Vice President F98 143,065 177,823 16,722 38,000 1,817
and Chief Operating Officer F97 130,193 70,000 11,923 25,000 1,795
of SkyWest Airlines, Inc.
Bradford R. Rich F99 153,336 222,000 24,565 42,000 3,950
Executive Vice President F98 132,117 162,826 15,332 38,000 1,660
and Chief Financial Officer F97 118,462 63,000 10,892 25,000 1,620
</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 1998
fiscal year.
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, 1999.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
PERCENT OF TOTAL FOR OPTION TERM
OPTIONS OPTIONS GRANTED EXERCISE EXPIRATION --------------------------
NAME GRANTED(1) IN FISCAL YEAR PRICE DATE 5% 10%
---- ---------- ---------------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Jerry C. Atkin........... 104,000 15.7% $20.25 03/31/08 $1,324,452 $3,356,421
Ron B. Reber............. 42,000 6.3 20.25 03/31/08 234,977 850,500
Bradford R. Rich......... 42,000 6.3 20.25 03/31/08 234,977 850,500
</TABLE>
- ----------------------
(1) All options were granted under the Company's Amended and Combined Incentive
and Nonstatutory Stock Option Plan and first become exercisable on April 1,
2001.
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR END OPTION VALUES
The following table sets forth the aggregate value of unexercised
options to acquire shares of the Common Stock held by the Named Executive
Officers on March 31, 1999 and the value realized upon the exercise of options
during the fiscal year ended March 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END(#) FY-END($)(3)
--------------- ---------------------
SHARES ACQUIRED VALUE EXERCISABLE(2)/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($)(1) UNEXERCISABLE UNEXERCISABLE
- ------------------------ --------------- -------------- --------------- ---------------------
<S> <C> <C> <C> <C>
Jerry C. Atkin.......... 156,000 $3,214,000 70,000/209,000 $1,509,375/$3,266,063
Ron B. Reber............ 39,000 512,000 25,000/80,000 539,063/1,219,625
Bradford R. Rich........ 39,000 494,750 25,000/80,000 539,063/1,219,625
</TABLE>
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(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 Common Stock on March 31, 1999. The price of the Common Stock
on March 31, 1999 was $28.875, as reported on the NASDAQ Stock
Market/National Market System.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
J. Ralph Atkin served as a Chairman of the Compensation Committee during
the fiscal year ended March 31, 1999. 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.
DIRECTOR'S COMPENSATION
All directors, except Jerry C. Atkin, receive a fee of $1,250 for each
Board meeting and $600 for each Committee meeting and $18,000 as an annual
retainer. The Vice Chairman and Committee Chairmen also receive an additional
$1,250 for each meeting. Steven F. Udvar-Hazy receives an additional $6,000
annually.
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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 9 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 four 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 four of its
independent, non-employee members to serve on the Compensation Committee and
empowered the committee to:
o Recommend to the Board CEO compensation;
o Approve all other officers' compensation;
o Approve Company-wide and officer incentive/bonus plans, and
profit sharing/retirement contributions;
o Review Company compensation packages as a whole; and
o Administer the Company's various stock option plans.
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:
o is competitive with compensation programs offered by the
Company's primary competitors and by other comparable companies;
o 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
o 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.
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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 1999, 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 six 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 1999, 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.
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 Sections 401(a) and (k) of the Internal
Revenue Code (the "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 $1,715,493 and a discretionary contribution of $2,084,279 was made for
fiscal year 1999. 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 14 types of investment funds, not including shares of Common
Stock.
All contributions to a participant's account under the Retirement Plan
are non-forfeitable. 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
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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 Company's 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 non-statutory stock options ("Non-statutory 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 3,000,000. Directors, managers, 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 Non-statutory 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 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 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 1999
Using the process and criteria discussed above, effective July 1, 1998
the Compensation Committee recommended and the Board established Jerry C.
Atkin's annual base salary at $270,000 and established guidelines for the
payment of an annual bonus award, based on the Company's net income and also
subject to achieving other non-financial objectives. After the end of fiscal
1999, the Compensation Committee awarded Mr. Atkin a $436,000 bonus based on the
Company's exceptional performance during the year. During fiscal 1999, the
Compensation Committee also awarded to Mr. Atkin options to purchase up to
104,000 shares of Common Stock, based on the criteria described above.
COMPENSATION COMMITTEE
J. Ralph Atkin
Steven F. Udvar-Hazy
Hyrum W. Smith
Henry J. Eyring
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PERFORMANCE GRAPH
Set forth below is a graph comparing the five-year cumulative
shareholder return on the Common Stock against the five year-cumulative total
return on the Index for NASDAQ Stock Market (US Companies) and an 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.
TOTAL RETURN TO STOCKHOLDERS
(Assumes $100 investment on 3/31/94)
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
TOTAL RETURN ANALYSIS
3/31/94 3/31/95 3/29/96 3/31/97 3/31/98 3/31/99
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SKYWEST INC. $100.00 $ 43.38 $ 38.82 $ 39.03 $110.57 $175.66
- ------------------------------------------------------------------------------------------
Peer Group $100.00 $106.93 $195.31 $137.95 $225.37 $351.96
- ------------------------------------------------------------------------------------------
Nasdaq Composite $100.00 $111.31 $151.07 $167.93 $254.87 $336.77
- ------------------------------------------------------------------------------------------
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The Company and Delta Air Lines, Inc. ("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 certain flights
in the automated airline reservation systems used throughout the industry. As of
March 31, 1999, Delta owned 3,107,798 shares of Common Stock, which represents
approximately 13 percent of the outstanding shares of Common Stock. 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
$8,409,000, $8,893,000 and $11,218,000 during the years ended March 31, 1999,
1998 and 1997, respectively. The Company had a net receivable from Delta of
$761,000 as of March 31, 1999 and a net payable to Delta of $65,000 as of March
31, 1998.
9
<PAGE> 12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of June 30, 1999, information with
respect to the shares of 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 shares of Common Stock. 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
OF BENEFICIAL PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNERS OWNERSHIP OF CLASS(1)
------------------------------------- ----------------- -----------
<S> <C> <C>
Delta Air Lines Holdings, Inc................................. 3,107,798 12.7%
Hartsfield Atlanta International Airport
Atlanta, Georgia 30320
Nicholas-Applegate Capital Management......................... 1,353,243 5.5%
600 West Broadway, 29th Floor
San Diego, California 92101
Jerry C. Atkin(2)............................................. 1,044,289(3) 4.2%
Sidney J. Atkin(2)............................................ 967,688(4)(5) 3.9%
Mervyn K. Cox(2).............................................. 356,000(4) 1.5%
Bradford R. Rich ............................................. 27,414(6) *
Ron B. Reber ................................................. 25,026 *
Ian M. Cumming(2) ............................................ 24,000(4) *
Steven Udvar-Hazy(2).......................................... 10,300(7) *
Ralph J. Atkin(2) 0 *
Hyrum W. Smith(2) ............................................ 0 *
Henry J. Eyring(2) ........................................... 4,800(8) *
All Officers and Directors, as a group (10 persons)(9)........ 2,458,717 10.0%
</TABLE>
- ----------------------
* Less than 1%.
(1) Based on total outstanding shares of 24,509,658 as of June 30, 1999.
(2) Director and nominee for director.
(3) Includes 414,470 shares held separately by Carolyn J. Atkin, his wife, and
70,000 shares issuable upon exercise of options.
(4) Includes 604,000 shares held by a family limited partnership of which Mr.
Atkin and his wife are the general partners, and 339,244 shares held by Mr.
Atkin as trustee of a trust for the benefit of his family.
(5) Includes 8,000 shares issuable upon exercise of options.
(6) Includes 25,000 shares issuable upon exercise of options.
(7) Includes 4,000 shares issuable upon exercise of options.
(8) Includes 3,000 shares issuable upon exercise of options.
(9) Includes 126,000 shares issuable upon exercise of options.
10
<PAGE> 13
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, 2000 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
2000.
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 2000 ANNUAL MEETING
Shareholders desiring to submit proposals for the Proxy Statement for
the 2000 Annual Meeting will be required to submit them to the Company in
writing on or before April 10, 2000. 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, 1999 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.
11
<PAGE> 14
PROXY SKYWEST, INC. THIS PROXY IS ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned legally 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, 1999 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 10, 1999, 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 and qualified.
[] FOR all nominees listed below (except [] WITHHOLD AUTHORITY to vote
as marked to the contrary below) 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)
JERRY C. ATKIN J. RALPH ATKIN STEVEN F. UDVAR-HAZY IAN M. CUMMING
HENRY J. EYRING MERVYN K. COOK SIDNEY J. ATKIN HYRUM W. SMITH
2. PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHER ANDERSON LLP, as the
independent auditors 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
AUDITORS OF THE COMPANY.
Please complete, sign and date this proxy where indicated and return it
promptly in the accompanying prepaid envelope.
Dated:_________, 1999 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 corporation name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.)
