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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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:
[x] Preliminary Proxy Statement
[ ] Confidential, Use of the Commission Only (as permitted by Rule
14a-6(e)(2))Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
SKY WEST, INC.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the 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)(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 8, 2000
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To the Shareholders of SKYWEST, INC.:
The Annual Meeting of Shareholders of SkyWest, Inc. (the "Company") will
be held at the SkyWest Corporate Offices, 444 South River Road, St. George, Utah
84790, on Tuesday, August 8, 2000, at 11:00 a.m (the "Annual Meeting"). 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 nine 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 amend the Company's Articles of Incorporation to increase the
number of shares of the Common Stock of the Company, which the
Company is authorized to issue, from 40,000,000 shares to
120,000,000 shares.
(3) To approve and adopt the SkyWest, Inc. Executive Stock Incentive
Plan.
(4) To approve and adopt the SkyWest, Inc. 2001 Allshare Stock
Option Plan.
(5) To ratify the appointment of Arthur Andersen LLP as independent
auditors for the fiscal year ending March 31, 2001.
(6) Such other matters as may properly come before the meeting.
The Board of Directors has fixed the close of business on June 30, 2000
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, 2000
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 8, 2000
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
8, 2000, 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, 2000.
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, 2000
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 24,784,497 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 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 nine
director nominees; FOR amendment of the Company's Articles of Incorporation to
increase the number of authorized shares of Common Stock to 120,000,000 shares;
FOR the adoption of the SkyWest, Inc. Executive Stock Incentive Plan (the
"Executive Plan"); FOR the adoption of the SkyWest, Inc. 2001 Allshare Stock
Option Plan (the "2001 Allshare Plan"); FOR the ratification of the appointment
by the Board of Directors of Arthur Andersen LLP to be the independent auditors
of the Company for the fiscal year ending March 31, 2001; 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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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 nine 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 amendment of the Articles of
Incorporation to increase the number of authorized shares of Common Stock, the
adoption of the Executive Plan, the adoption of the 2001 Allshare Plan, 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 such matter.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
The Board of Directors will consist of nine 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 paragraphs set forth information about each nominee for
election as a director.
JERRY C. ATKIN, 51, 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 (ii) Zions Bancorporation, a Utah bank
holding company. Mr. Atkin has served as a director of the Company since 1974.
J. RALPH ATKIN, 57, 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 has been engaged in the private practice of law in St. George,
Utah since 1970. Mr. Atkin has served as a director of the Company since 1972.
SIDNEY J. ATKIN, 65, 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.
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MERVYN K. COX, 63, 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, 59, 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 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, 36, 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 a director of Layton Construction, a construction 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, 54, 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 35 years. He has served as a director of the Company
since 1986.
HYRUM W. SMITH, 56, is Vice Chairman of Franklin Covey Co., a
publicly-held learning and performance solutions company dedicated to increasing
the effectiveness of individuals and organizations. 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.
ROBERT G. SARVER, 38, is Chairman of the Board and Chief Executive
Officer of California Bank and Trust, and Executive Vice President of Zions
Bancorporation. Mr. Sarver also serves as an executive director of Southwest
Value Partners and is a director of Zions Bancorporation, a bank holding
company.
MEETINGS AND COMMITTEES.
During the fiscal year ended March 31, 2000 ("fiscal 2000"), 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 (the "Compensation Committee") that approves the
Company's officers' compensation, except compensation for the Chief Executive
Officer, 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 twice during fiscal 2000. The Board of Directors has
a Finance and 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 Finance and Audit Committee are Sidney J. Atkin, Ian M. Cumming, Mervyn K.
Cox and Robert G. Sarver. The Finance and Audit Committee met twice during
fiscal 2000. 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 2000.
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, 46, 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, 39, 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.
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 F00 $289,510 $377,000 $104,277 104,000 $6,749
Chairman, President and F99 272,946 436,000 46,503 104,000 3,950
Chief Executive Officer F98 242,431 325,652 26,921 105,000 3,221
Ron B. Reber F00 180,537 231,000 56,167 42,000 6,749
Executive Vice President F99 164,106 239,000 26,609 42,000 3,950
and Chief Operating Office F98 143,065 177,823 16,722 38,000 1,817
of SkyWest Airlines, Inc.
Bradford R. Rich F00 169,526 219,000 51,833 42,000 6,749
Executive Vice President F99 153,336 222,000 24,565 42,000 3,950
and Chief Financial Office F98 132,117 162,826 15,332 38,000 1,660
</TABLE>
-----------------------
(1) Consists of deferred compensation payments made pursuant to the Executive
Deferred Compensation 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 accounts of the Named Executive Officers in the 1999
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, 2000.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Percent of Annual Rates of Stock
Total Price Appreciation
Options for Option Term
Options Granted in Exercise Expiration -----------------------
Name Granted(1) Fiscal Year Price Date 5% 10%
---------------------- --------- ------------ ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Jerry C. Atkin........ 104,000 30.6% $26.188 03/31/09 $1,712,827 $4,340,640
Ron B. Reber.......... 42,000 12.4 26.188 03/31/09 691,719 1,752,950
Bradford R. Rich...... 42,000 12.4 26.188 03/31/09 691,719 1,752,950
</TABLE>
----------------------
(1) All options were granted under the Company's Amended and Combined Incentive
and Nonstatutory Stock Option Plan and first become exercisable on April 1,
2002.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR END OPTION VALUES
The following table sets forth the aggregate value of unexercised
options to acquire shares of the Common Stock held by the Named Executive
Officers on March 31, 2000, and the value realized upon the exercise of options
during the fiscal year ended March 31, 2000.
<TABLE>
<CAPTION>
Number of
Unexercised Value of Unexercised
Options at In-the-Money Options
FY-End(#) at FY-End($)(3)
Shares ----------------- ----------------------
Acquired on Value Exercisable(2)/ Exercisable/
Name Exercise(#) Realized($)(1) Unexercisable Unexercisable
----------------------- -------------- ------------- ----------------- ----------------------
<S> <C> <C> <C> <C>
Jerry C. Atkin......... 70,000 $1,666,875 105,000/208,000 $3,445,313/$3,308,448
Ron B. Reber........... 25,000 406,863 38,000/84,000 1,246,875/1,336,104
Bradford R. Rich....... 0 0 63,000/84,000 2,042,188/1,336,104
</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 Common Stock on March 31, 2000. The price of the Common Stock
on March 31, 2000 was $39.125, 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, 2000. 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, 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 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-based incentive 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
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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<PAGE> 9
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 2000, 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 2000, 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 $2,448,700 and a discretionary contribution of $2,885,000 was made for
fiscal 2000. 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 16 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).
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<PAGE> 10
EXECUTIVE DEFERRED COMPENSATION PLAN
The Company's Executive Deferred Compensation Plan (the "Plan") was
adopted by the Compensation Committee on August 7, 1990 and became effective
January 1, 1991. Under the terms of the Plan, the Company contributes twelve
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 Company's 401(k) Plan.
STOCK OPTION PLANS
The Company's Amended and Combined Incentive and Nonstatutory Stock
Option Plan was adopted by the Board of Directors in April 1991 (the "1991
Plan") 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 1991 Plan are granted by the Compensation Committee. The
maximum number of shares of Common Stock available for issuance upon exercise of
Options under the 1991 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 1991 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.
As discussed in Proposal No. 3 herein, on May 9, 2000, the Board of
Directors adopted the Executive Plan, subject to shareholder approval. If
approved by the shareholders at the Annual Meeting, the Executive Plan would
replace the 1991 Plan effective January 1, 2001.
CHIEF EXECUTIVE OFFICER COMPENSATION FOR FISCAL YEAR 2000
Using the process and criteria discussed above, effective July 1, 1999
the Compensation Committee recommended and the Board established Jerry C.
Atkin's annual base salary at $280,000 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
2000, the Compensation Committee awarded Mr. Atkin a $377,000 bonus based on the
Company's exceptional performance during the year. During fiscal 2000, 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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<PAGE> 11
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 Composite 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.
[PERFORMANCE GRAPH]
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, 2000, Delta owned 3,107,798 shares of Common Stock, which represents
approximately 12.6% 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
$6,475,000, $8,409,000 and $8,893,000 during the years ended March 31, 2000,
1999 and 1998, respectively. The Company had a net payable to Delta of
$1,546,000 as of March 31, 2000 and a net receivable from Delta of $761,000 as
of March 31, 1999.
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<PAGE> 12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of June 30, 2000, 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>
MOUNT AND NATURE
OF BENEFICIAL PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNERS A OWNERSHIP OF CLASS(1)
----------------------------------------------------------------- ---------------- ---------
<S> <C> <C>
Delta Air Lines Holdings, Inc.................................... 3,107,798 12.5%
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)................................................ 1,029,828(3) 4.1%
Sidney J. Atkin(2)............................................... 888,464(4) 3.6%
Mervyn K. Cox(2)................................................. 332,500(5) 1.3%
Bradford R. Rich ................................................ 64,401(6) *
Ron B. Reber .................................................... 63,026(7) *
Ian M. Cumming(2) ............................................... 34,000(5) *
Steven Udvar-Hazy(2)............................................. 16,500(8) *
Hyrum W. Smith(2) ............................................... 16,000(5) *
Robert J. Sarver(2) ............................................. 8,500 *
Henry J. Eyring(2) .............................................. 8,100(8) *
Ralph J. Atkin(2) 4,000(8) *
All Officers and Directors, as a group (11persons)............... 2,461,319(9) 9.8%
</TABLE>
----------------------
* Represents less than 1% of total outstanding shares
(1) Based on total outstanding shares of 24,784,497 as of June 30, 2000.
(2) Director and nominee for director.
(3) Includes 414,470 shares held separately by Carolyn J. Atkin, his wife, and
105,000 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, 265,744 shares held by Mr.
Atkin as trustee of a trust for the benefit of his family, 10,720 shares
held by his wife and 8,000 shares issuable upon exercise of options.
(5) Includes 16,000 shares issuable upon exercise of options.
(6) Includes 63,000 shares issuable upon exercise of options.
(7) Includes 38,000 shares issuable upon exercise of options.
(8) Includes 4,000 shares issuable upon exercise of options.
(9) Includes 274,000 shares issuable upon exercise of options.
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<PAGE> 13
PROPOSAL NO. 2 - AMENDMENT OF ARTICLES OF INCORPORATION TO INCREASE THE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors has proposed to amend the Articles of
Incorporation of the Company for the purpose of increasing the number of shares
of Common Stock authorized for issuance by the Company from 40,000,000 shares to
120,000,000 shares. As of June 30, 2000, 24,787,497 shares of Common Stock were
issued and outstanding, and 15,200,000 shares remained unissued. In addition,
there are 1,689,250 shares of Common Stock reserved for issuance upon the
exercise of outstanding options, warrants and other convertible securities. If
the proposal to increase the number of shares of Common Stock is adopted, an
additional 80,000,000 shares of Common Stock would be available for future
issuance. The purpose of the proposal to increase the authorized number of
shares of Common Stock is to provide additional shares of Common Stock that
could be issued for corporate purposes without further shareholder approval
unless required by applicable law or regulation. Uses for the newly authorized
shares could include effecting acquisitions of other businesses or assets
through the issuance of shares of Common Stock, securing additional financing
for the operations of the Company, use in connection with the Company's employee
benefit plans, or subdividing outstanding shares of Common Stock through stock
splits or dividends.
The Board does not intend to issue the Common Stock authorized upon the
adoption of this proposal except upon terms that the Board of Directors deems to
be in the best interests of the Company and its shareholders. If the proposal to
amend the Articles of Incorporation of the Company for the purpose of increasing
the number of authorized shares of Common Stock is approved, the Board of
Directors will possess, generally without the necessity of further shareholder
approval, the ability to issue additional authorized shares of Common Stock in
its discretion. Future issuances of shares of Common Stock may have the effect
of delaying or preventing a change in control of the Company without further
action by the shareholders of the Company. The proposal to increase the number
of authorized shares of Common Stock has not been submitted by the Board of
Directors in response to the perception that the Company may be subject to the
threat of an attempt to effect a change in control of the Company. In addition,
the issuance of additional shares of Common Stock may, among other things,
dilute earnings per share and the equity of the present holders of Common Stock
and their voting rights. Holders of the Common Stock have no preemptive rights.
If the proposal to amend the Articles of Incorporation of the Company
for the purpose of increasing the number of authorized shares of Common Stock is
adopted, the additional shares will be authorized upon filing of the proper
amending documents with the Utah Division of Corporations. The Company also
intends to apply for listing on The NASDAQ Stock Market of any additional shares
of Common Stock if and when such shares are issued.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR AMENDMENT OF THE ARTICLES
OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK.
PROPOSAL NO. 3 -
APPROVAL OF THE EXECUTIVE STOCK INCENTIVE PLAN
BACKGROUND
On May 9, 2000, the Board of Directors adopted the Executive Plan,
subject to shareholder approval. If approved by the shareholders at the Annual
Meeting, the Executive Plan will become effective on January 1, 2001 and replace
the 1991 Plan. Upon the effective date of the Executive Plan, all outstanding
options under the 1991 Plan will remain outstanding but no further grants will
be made under the 1991 Plan. As of June 13, 2000, there were options outstanding
under the 1991 Plan for approximately 1,378,000 shares of Common Stock. The
Board of Directors has decided to seek shareholder approval of the Executive
Plan so that the compensation paid under the plan can qualify for tax
deductibility under Section 162(m) of the Internal Revenue Code of 1986 (the
"Code") and so that the Company may continue to grant incentive stock options
which qualify under Code Section 422 to executive employees after April 15,
2001, the latest date on which incentive stock options can be granted under the
1991 Plan.
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<PAGE> 14
The following summary of the material terms of the Executive Plan does
not purport to be complete and is qualified in its entirety by the terms of the
Executive Plan. THE BOARD OF DIRECTORS RECOMMENDS THAT THE EXECUTIVE PLAN BE
ADOPTED.
PURPOSE OF THE EXECUTIVE PLAN
The purpose of the Executive Plan is to promote the interests of the
Company and its shareholders by providing officers, directors and other key
management employees of the Company and its controlled subsidiaries with
appropriate incentives and rewards to encourage them to enter into and remain in
the employ of the Company and to acquire a proprietary interest in the long-term
success of the Company, thereby aligning their interests more closely to the
interests of the Company's shareholders. To achieve that purpose, the Executive
Plan permits the grant of options to purchase Common Stock (the "Options"),
stock appreciation rights with respect to Common Stock ("SARs"), shares of
Common Stock subject to restriction and forfeiture to the Company based upon
continuing employment and/or attainment of designated performance goals (the
"Restricted Shares"), and units representing the future right to receive cash
and/or shares of Common Stock upon the achievement of designated performance
goals (the "Performance Units")(collectively such Options, rights, shares and
units are referred to as "Awards").
ADMINISTRATION OF THE EXECUTIVE PLAN
The Compensation Committee will administer the Executive Plan. The
Compensation Committee is composed of "non-employee directors" within the
meaning of the Securities and Exchange Act of 1934, as amended (the "Act") and
"outside directors" within the meaning of Section 162(m) of the Code. The
Compensation Committee will have the power in its discretion to grant Awards
under the Executive Plan, to select the individuals to whom Awards are granted,
to determine the terms thereof, to interpret the provisions of the Executive
Plan and to otherwise administer the plan. All Awards will be evidenced by a
written agreement between the Company and the grantee setting forth the terms of
the Award. The Executive Plan provides that no member of the Compensation
Committee will be liable for any action or determination made in good faith with
respect to the Executive Plan and that the Company will indemnify and hold
harmless each Compensation Committee member with respect to actions and
determinations taken or made in good faith.
SHARES SUBJECT TO THE EXECUTIVE PLAN
The maximum number of shares of Common Stock that may be delivered
during the term of the Executive Plan under all Awards is 2,000,000 shares, plus
any shares of Common Stock which are subject to options issued under the 1991
Plan to the extent that those options are forfeited, expire, or are canceled
without delivery of shares of Common Stock after December 31, 2000.
The number of shares of Common Stock with respect to which Awards may be
granted in any calendar year (the "Annual Limit") will not exceed the sum of:
(a) one percent (1%) of the total issued and outstanding shares of Common Stock
at the beginning of the year (the "Annual One Percent Limit"), subject to
adjustment as described below; plus (b) such additional number of shares of
Common Stock as the Compensation Committee determines, not to exceed, on a
cumulative basis for all calendar years, four percent (4%) of the outstanding
shares of Common Stock on January 1 of the calendar year in question. To the
extent that Awards granted with respect to shares of Common Stock in any
calendar year beginning with 2001 are less than the Annual One Percent Limit for
that calendar year, the unused portion of the Annual One Percent Limit
(expressed in terms of percentage points, not number of shares) shall be carried
forward and added to the Annual One Percent Limit for each succeeding calendar
year until fully utilized.
No employee may be granted in any calendar year Awards covering more
than 250,000 shares of Common Stock or Performance Units providing for cash
payments in excess of $500,000.
The number and class of shares available under the Executive Plan
(including the aggregate, annual and individual limits described above) and/or
the number, class and exercise price of shares subject to outstanding Awards may
be adjusted in such manner as the Compensation Committee determines to prevent
dilution or enlargement of rights in the event of various changes in the
capitalization of the Company, including reorganizations, mergers,
recapitalizations, consolidations, spin-offs, stock splits, stock dividends, or
other events resulting in the consolidation
12
<PAGE> 15
or subdivision of shares. Shares of the Common Stock attributable to: (a)
unexercised Options which expire or are terminated, surrendered or canceled
(other than in connection with the exercise of Tandem SARs); (b) Restricted
Shares which are forfeited to the Company; (c) Performance Units which are not
earned and paid; and (d) Awards settled in cash in lieu of shares of Common
Stock, will be available for subsequent Award under the Executive Plan.
ELIGIBILITY AND PARTICIPATION
Eligibility to participate in the Executive Plan is limited to those
officers, directors and executive and key management employees of the Company
and its controlled subsidiaries who are selected by the Compensation Committee.
Currently, approximately 20 employees and non-employee directors of the Company
and its subsidiaries are within the class eligible to participate in the
Executive Plan.
OPTIONS AND SARS
The Compensation Committee may grant Incentive Stock Options ("ISOs")
and Non-statutory Options ("NSOs") to eligible employees, and may grant NSOs to
non-employee directors. SARs may be granted to both employees and non-employee
directors. The Compensation Committee will have complete discretion, subject to
the terms of the Executive Plan, to determine the persons to whom Options and/or
SARs will be awarded, the time or times of grant, and the other terms and
conditions of the Award. SARs may be awarded either in tandem with Options
("Tandem SARs") or on a stand-alone basis ("Nontandem SARs"). The Compensation
Committee may award Tandem SARs at the time the related Option is granted or, in
the case of NSOs, at any later time prior to the exercise, termination or
expiration of the related Option.
OPTION AND SAR EXERCISE PRICE AND VESTING
The Compensation Committee will determine the exercise price with
respect to each Option at the time of grant. The exercise price applicable to an
Option shall also apply in determining the base price per share for any Tandem
SAR granted with respect to the Option. At the time of grant of a Nontandem SAR,
the Compensation Committee will specify the base price per share to be used in
determining the amount of cash or number of shares of Common Stock paid upon the
exercise of the SAR. Neither the Option exercise price per share of Common Stock
nor the base price of any SAR will be less than 100% of the fair market value
per share of the Common Stock underlying the Award on the date of grant. The
Compensation Committee may determine at the time of grant and any time
thereafter the terms under which Options and SARs shall vest and become
exercisable.
SPECIAL LIMITATIONS ON ISOS
No ISO may be granted to an employee who owns at the time of the grant
stock representing more than 10% of the total combined voting power of all
classes of stock of the Company or its subsidiaries (a "10% Shareholder") unless
the exercise price for each share of Common Stock subject to such ISO is at
least 110% of the fair market value per share of the Common Stock on the date of
grant and such ISO award is not exercisable more than five years after its date
of grant. In addition, the total fair market value of shares of Common Stock
subject to ISOs which are exercisable for the first time by an employee in a
given calendar year shall not exceed $100,000, valued as of the date of the
ISOs' grant. ISOs may not be granted more than ten years after the date of
adoption of the Executive Plan by the Board of Directors.
EXERCISE OF OPTIONS AND SARS
An Option may be exercised by written notice to the Secretary of the
Company at its corporate headquarters stating the number of shares of Common
Stock with respect to which the Option is being exercised. Notice of exercise
must be accompanied by payment in cash of the applicable Option exercise price
plus all withholding taxes due. The Compensation Committee may, in its
discretion, accept payment of the exercise price through the alternative means
of: (a) the tender of previously owned shares of the Common Stock (valued at
their fair market value on the date of exercise), (b) the contemporaneous sale
by a third party broker of shares of Common Stock acquired upon exercise
yielding a net sales price equal to the exercise price due and the remission of
those sale proceeds to the Company, or (c) the retention by the Company of
shares otherwise deliverable upon exercise having a fair market value at the
time of exercise equal to the exercise price due.
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<PAGE> 16
The Compensation Committee may also provide at the time of grant of an
Option that the grantee is entitled to a reload option ("Reload Option") in the
event that he or she surrenders other shares of Common Stock which have been
held for more than six months to pay all or any portion of the exercise price or
applicable withholding taxes. Any such Reload Option will: (a) be for a number
of shares of Common Stock equal to the number of shares of Common Stock
surrendered as part or all of the exercise price of the original Option; (b)
have an expiration date that is the same as the expiration date of the original
Option; and (c) have an exercise price that is equal to 100% of the fair market
value of the Common Stock subject to the Reload Option on the date of exercise
of the original Option.
EXERCISE OF SARS
SARs may be exercised in the same manner as Options. Tandem SARs are
exercisable only to the extent that the related Option is exercisable and only
for the period determined by the Compensation Committee (which period may expire
prior to the expiration date of the related Option). Upon the surrender of a
Tandem SAR and cancellation of the related unexercised Option, the employee will
be entitled to receive shares of Common Stock having an aggregate fair market
value equal to (a) the excess of (i) the fair market value of one share of
Common Stock as of the date the Tandem SAR is exercised over (ii) the exercise
price per share specified in such Option; multiplied by (b) the number of shares
of Common Stock subject to the Option, or portion thereof, which is surrendered.
Upon surrender of a Nontandem SAR, the employee will be entitled to receive
shares of Common Stock having an aggregate fair market value equal to (a) the
excess of (i) the fair market value of one share of Common Stock as of the date
on which the Nontandem SAR is exercised over (ii) the base price of the shares
covered by the Nontandem SAR; multiplied by (b) the number of shares of Common
Stock covered by the Nontandem SAR, or the portion thereof being exercised. The
Compensation Committee, in its discretion, may cause all or any portion of the
Company's obligation to a grantee in respect of the exercise of a SAR to be
satisfied in cash in lieu of shares of Common Stock. Any fractional shares
resulting from the exercise of an SAR will be paid in cash.
TRANSFERABILITY OF OPTIONS AND SARS
Options and SARs may not be transferred except by will or applicable
laws of descent and distribution; provided, however, that the Compensation
Committee in its discretion may permit a grantee to sell or make gifts of NSOs
to certain family members.
TERMINATION OF OPTIONS AND SARS
Except as the applicable Award agreement may otherwise provide, Options
and SARs that have become exercisable may be exercised not later than three
months after the termination of the grantee's employment or non-employee
directorship (other than by death or total disability). Unless otherwise
provided in the Award agreement, upon the death or total disability of an
employee or non-employee director while engaged by the Company or its
subsidiaries (or upon death within three months after termination), Options and
SARs, to the extent then exercisable, shall remain exercisable for one year
following the date of death or beginning of total disability. In no event,
however, may any ISO be exercised more than ten years from the date of grant,
and an ISO that is held by a 10% Shareholder may not be exercised more than five
years from the date of grant. To the extent not exercised by the applicable
deadline the Option or SAR will terminate.
RESTRICTED SHARES
The Compensation Committee may award Restricted Shares to employees.
Restricted Shares granted may not be sold, transferred, pledged or otherwise
encumbered or disposed of, and will not vest, during the restricted period
established by the Compensation Committee. To the extent provided by the
Committee at the time of grant, Restricted Shares also may not be sold,
transferred, pledged or otherwise encumbered, and will not vest, until the
satisfaction of specified performance objectives intended to satisfy the
requirements of Code Section 162(m) for performance based compensation
("Performance Goals"). All Restricted Shares may be held in escrow in accordance
with the terms of the Award agreement until vested. The Compensation Committee
may determine at the time of grant whether dividends declared with respect to
Restricted Shares will be paid to the grantee or held in escrow for his or her
account until the underlying shares vest. Dividends deferred will be paid to the
grantee when the Restricted Shares vest or will be forfeited if the Restricted
Shares lapse.
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<PAGE> 17
Performance Goals, if any, will be determined by the Plan Committee and
will be based on any one or more of the following factors, measured at the
Company or, if so designated, subsidiary or divisional level: price of Common
Stock, total shareholder return, return on equity, return on investment, return
on capital, economic profit, net income or profit, operating income, operating
income margin, net income margin, sales, sales growth, net sales, cash flow,
earnings before interest and taxes ("EBIT"), earnings before interest, taxes,
depreciation and amortization ("EBITDA"), earnings per share, operating
expenses, and market share. Any Performance Goals designated by the Compensation
Committee will have a minimum performance standard below which no payments will
be made and a maximum performance standard above which no additional payments
will be made. Achievement of Performance Goals shall be measured over a
specified performance period set forth in the Award agreement. The Performance
Goals may be based on an analysis of historical performance and growth
expectations for the business, financial results of other comparable businesses,
and progress towards achieving the long-range strategic plan for the business.
The Performance Goals and determination of results will be based entirely on
financial measures.
PERFORMANCE UNITS
The Compensation Committee may award Performance Units to employees.
Performance Units will have a specified formula value and will vest based on the
attainment of designated Performance Goals over a specified performance period.
Such formula value may, but need not be, denominated in or based on the value of
a designated number of shares of Common Stock. Performance Units will be
credited to an account established and maintained for the employee. The
Compensation Committee will determine performance periods and Performance Goals
in connection with each grant of Performance Units. Payment with respect to
vested Performance Units may be made in cash, shares of Common Stock, or any
combination thereof, as determined by the Compensation Committee. Except as the
Plan Committee may provide at the time of grant, holders of Performance Units
will not have the rights of a shareholder, such as the right to vote the shares
or receive dividends and other distributions. Performance Units may not be
transferred in any manner and will lapse if the designated Performance Goals are
not attained within the applicable performance period.
DIVIDEND EQUIVALENT RIGHTS
In conjunction with any Option or SAR that is payable in shares of
Common Stock, the Compensation Committee may provide in the applicable Award
agreement for "dividend equivalent rights." Dividend equivalent rights will
entitle the grantee to receive in cash or shares, as determined by the
Committee, upon exercise of the Award or at such other time as the Compensation
Committee specifies, an additional amount based on the dividends that would have
been received on the underlying shares had they been issued at the time of
grant.
CHANGE IN CONTROL
In the event of a Change in Control (as defined below), all Awards
outstanding on the date immediately preceding such Change in Control, including
Awards subject to Performance Goals that have not yet been met, will become
fully vested, free of restriction and exercisable unless otherwise expressly
provided in the applicable Award agreement. The Compensation Committee may
require that any Options remaining unexercised at the time of the Change in
Control be cashed out at their then fair market value or, in the case of a
merger, consolidation or share exchange, converted into fully vested Options to
acquire shares of the acquiring corporation ("Acquiror Options") provided the
Acquiror Options have a value immediately after the Change in Control equal to
the value of the converted Options immediately prior to the Change in Control.
A "Change in Control" is deemed to occur under the Executive Plan: (a)
any person or group obtains shares possessing 50% or more of the voting rights
of all shares of the Company; (b) the incumbent members of the Board of
Directors at the beginning of any two year period (plus any additional directors
who have been nominated by at least two-thirds of those incumbent directors and
elected during the two year period) no longer constitute a majority of the Board
at any time during the two-year period; (c) the shareholders of the Company
approve the merger or consolidation of the Company with another entity, the sale
of all or substantially all of the Company's assets to another entity or the
recapitalization of the Company, unless a majority of the equity voting
interests in the surviving or acquiring entity after such business transactions
are held by the same persons who held Common Stock immediately prior to the
transfer; or (d) the shareholders approve the liquidation of the Company.
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<PAGE> 18
TAX WITHHOLDING
The Compensation Committee may require payment, or withhold from
payments made under the Executive Plan, in order to satisfy all applicable
withholding tax requirements. All withholding taxes must be satisfied in cash
unless the Compensation Committee permits withholding taxes to be paid in
another manner.
TERM OF THE EXECUTIVE PLAN
Unless earlier terminated by the Board of Directors, the Executive Plan
will terminate on May 8, 2010.
AMENDMENT AND TERMINATION
The Board of Directors may suspend, amend, modify or terminate the
Executive Plan at any time; provided, however, that the approval of the
Company's shareholders is required with respect to any amendment that would
increase the aggregate number of shares of Common Stock that may be issued under
the Executive Plan.
Awards granted prior to a termination of the Executive Plan shall continue in
accordance with their terms following such termination. No amendment, suspension
or termination of the Executive Plan shall adversely affect outstanding Awards
without the grantee's consent.
FEDERAL INCOME TAX CONSEQUENCES
OPTIONS
Grant of Options. There will be no federal income tax consequences to
the grantee of an Option or the Company upon the grant of either an ISO or an
NSO under the Executive Plan.
Exercise of NSOs. Upon exercise of an NSO, the grantee generally will
recognize ordinary compensation income, subject to withholding and employment
taxes, in an amount equal to: (a) the fair market value, on the date of
exercise, of the acquired shares of Common Stock, less (b) the exercise price
paid for those shares. Subject to Section 162(m) of the Code and the Company
satisfying applicable reporting requirements, the Company will be entitled to a
tax deduction in the same amount. Gains or losses recognized by the grantee on a
subsequent disposition of the shares will be treated as long term capital gain
or loss if the shares are held more than a year from the date of exercise or
short term gain or loss if held one year or less. For purposes of computing such
gain or loss the grantee's basis in his shares will be the exercise price paid
for those shares.
A grantee's gift of a NSO to a family member will have no immediate
income tax consequences to the Company, the grantee or the family member. Upon
the subsequent exercise of the transferred NSO by the family member, the grantee
will realize ordinary compensation income in an amount measured by the
difference between the option exercise price and the fair market value of the
shares on the date of exercise, and the Company will be entitled to a deduction
in the same amount. Any difference between such fair market value and the price
at which the family member may subsequently sell the shares will be treated as
capital gain or loss to the family member, long-term or short-term depending on
the length of time the shares have been held by the family member.
Exercise of ISOs. Upon the exercise of an ISO, the grantee will
recognize no immediate taxable income for regular income tax purposes provided
the grantee was continuously employed by the Company or a subsidiary from the
date of grant through the date which is three months prior to the date of
exercise (or through the date which is one year prior to the exercise date in
the case of death or total disability).
The exercise of an ISO will, however, result in an alternative minimum
tax adjustment for the year of exercise in an amount equal to the excess of the
exercise price paid over the fair market value of the shares received. That
adjustment may result in alternative minimum tax liability to the grantee upon
exercise of the ISO. Alternative
16
<PAGE> 19
minimum tax paid in one year generally can be carried forward and credited
against regular federal income tax liability for subsequent years.
If the grantee retains the shares acquired by exercise of the ISO for
more than both two years from the date of grant and one year from the date of
exercise, the gain on any later sale of the shares will be treated as long-term
capital gain and the Company will not be entitled to any tax deduction with
respect to the ISO. If the grantee sells or transfers by gift (other than on
account of death) shares of Common Stock received upon exercise of an ISO before
expiration of both of the holding periods outlined above, the grantee will have
ordinary compensation income, and the Company will have a corresponding
deduction, at the time of such disposition (a "Disqualifying Disposition"). The
amount of ordinary income and deduction will equal to the lesser of: (a) the
fair market value of the shares of Common Stock on the date of exercise minus
the option price; or (b) if the disposition is a sale or other transfer in which
taxable income or loss is otherwise recognized (i.e., not a gift), the amount
realized on disposition minus the exercise price. If the amount realized on
disposition exceeds the value of the shares on the date of exercise, that
additional amount will be capital gain. If the amount realized on the subsequent
sale is less than the value of the shares on the exercise date, the shortfall
will be capital loss. The Company's entitlement to a deduction upon a
Disqualifying Disposition is subject to the limits of Section 162(m) of the Code
and the requirement that the Company satisfy applicable reporting requirements.
STOCK APPRECIATION RIGHTS
There will be no federal income tax consequences to either the grantee
or the Company upon the grant of an SAR. However, the grantee generally will
recognize ordinary compensation income upon the exercise of an SAR in an amount
equal to the aggregate amount of cash and the fair market value of the shares of
the Common Stock received upon exercise. Subject to Section 162(m) of the Code
and the Company satisfying applicable reporting requirements, the Company will
be entitled to a deduction equal to the amount included in the grantee's taxable
income. Any shares of Common Stock received by the grantee upon exercise of a
SAR will take a tax basis equal to their fair market value on the date of
exercise. Upon a subsequent sale of those shares any gain or loss realized will
be capital gain or loss, long term or short term depending upon whether held for
more than one year from the date of exercise.
RESTRICTED SHARES
There will be no federal income tax consequences to either the grantee
or the Company upon the grant of Restricted Shares until expiration of the
restricted period and the satisfaction of any Performance Goals or other
conditions applicable to the Restricted Shares. At that time, the grantee
generally will recognize ordinary income, taxable as compensation, equal to the
then fair market value for the shares of Common Stock and, subject to Section
162(m) of the Code and the Company satisfying applicable reporting requirements,
the Company will be entitled to a corresponding deduction. The grantee, however,
may elect under Code Section 83(b) by written notice to the Internal Revenue
Service and the Company given within thirty days after the date of grant, to
recognize ordinary compensation income as of the date of grant, in which case
the Company generally will be entitled to a corresponding deduction at that
time. If the Code Section 83(b) election is not made, cash dividends paid to the
grantee will be taxable dividend income to him or her when paid, but the Company
will not be entitled to any corresponding deduction; and if such election has
not been made, the grantee will have taxable compensation income and the Company
will generally have a corresponding deduction when the dividends are paid.
Upon a subsequent sale of Restricted Shares, any gain or loss realized
by the grantee will be capital gain or loss, long term or short term depending
upon whether held for more than one year from the date of grant. The basis of
the Restricted Shares sold for purposes of calculating gain or loss will be fair
market value of those shares at the time of grant if an effective Code Section
83(b) election is made or at the time of vesting if such an election is not
made.
PERFORMANCE UNITS
There will be no federal income tax consequences to the grantee or the
Company upon the grant of Performance Units. Grantees generally will recognize
ordinary income, taxable as compensation, at the time payment for the
Performance Units is received in an amount equal to the aggregate amount of cash
and the fair market value of shares of Common Stock received. Subject to Section
162(m) of the Code and the Company satisfying applicable,
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reporting requirements, the Company will be entitled to a deduction equal to the
amount included in the grantee's income at that time.
SECTION 162(M) LIMITATION
Section 162(m) of the Code places a limitation of $1,000,000 on the
amount of compensation payable to each of the Named Executive Officers that the
Company may deduct for federal income tax purposes. The limit does not apply to
certain performance-based compensation paid under a plan that meets the
requirements of the Code and regulations promulgated thereunder. The Company
believes that the Options and SARs to be granted under the Executive Plan will
qualify for the performance-based compensation exception to the deduction limit
because the compensation is based solely on an increase in value of the stock
after the date of the Award. Grants of Restricted Shares, Performance Units
should also qualify for this exception provided the compensation is determined
solely by increases in the value of the Common Stock or is contingent on
attaining one or more Performance Goals.
GOLDEN PARACHUTE TAX
If an Award is accelerated as a result of a Change in Control, all or a
portion of the value of the Award at that time may be a parachute payment for
purposes of the Code's provisions relating to excess parachute payments. Those
provisions generally provide that if parachute payments equal or exceed three
times an Award holder's average W-2 compensation for the five tax years
preceding the year of the Change in Control, the Company will lose its deduction
and the recipient will be subject to a 20% excise tax with respect to that
portion of the parachute payments in excess of such historical average
compensation.
VALUE OF BENEFITS
Because the Compensation Committee has complete discretion to determine
the number and selection of Award recipients as well as the number, types,
vesting requirements and other terms of all Awards, and because the future value
of Common Stock is uncertain, it is not possible to determine the benefits or
amounts, if any, that will be received by or allocated to any person under the
Executive Plan.
CERTAIN INTERESTS OF DIRECTORS
In considering the recommendation of the Board of Directors with respect
to the Executive Plan, shareholders should be aware that members of the Board of
Directors have certain interests that may present them with conflicts of
interest in connection with the proposal to approve the Executive Plan. As
discussed above, directors will be eligible for the grant of Awards under the
Executive Plan. Nevertheless, the Board of Directors believes that approval of
the Executive Plan will advance the interests of the Company and its
shareholders by encouraging officers, key employees and directors to make
significant contributions to the long term success of the Company.
REQUIRED VOTE
Approval of the Executive Plan requires the affirmative vote of a
majority of the total voting power represented by the outstanding shares of the
Common Stock present or represented at the Annual Meeting and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE EXECUTIVE PLAN
PROPOSAL NO. 4 -
APPROVAL OF THE 2001 ALLSHARE STOCK OPTION PLAN
BACKGROUND
On May 9, 2000, the Board of Directors adopted the 2001 Allshare Plan,
subject to shareholder approval. If approved by the shareholders at the Annual
Meeting, the 2001 Allshare Plan will become effective on January 1,
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2001 and replace the Company's Allshare Incentive Stock Option Plan that was
adopted by the Company in 1995 (the "1995 Plan"). Upon the effective date of the
2001 Allshare Plan, any options then outstanding under the 1995 Plan will remain
outstanding but no further options will be granted under the 1995 Plan. As of
June 13, 2000 there were options for approximately 311,250 shares of Common
Stock outstanding under the 1995 Plan. The Board of Directors has decided to
seek shareholder approval of the 2001 Allshare Plan so that the compensation
paid under the plan can qualify for tax deductibility under Section 162(m) of
the Internal Revenue Code of 1986 (the "Code") and so that the Company may
continue to grant options under the 2001 Allshare Plan to employees which
qualify under Code Section 422 as incentive stock options.
The following summary of the material terms of the 2001 Allshare Plan
does not purport to be complete and is qualified in its entirety by the terms of
the 2001 Allshare Plan. THE BOARD OF DIRECTORS RECOMMENDS THAT THE 2001 ALLSHARE
PLAN BE ADOPTED.
PURPOSE OF THE 2001 ALLSHARE PLAN
The purpose of the 2001 Allshare Plan is to promote the interests of the
Company and its shareholders by providing Company employees and employees of the
Company's controlled subsidiaries with appropriate incentives and rewards to
encourage them to enter into and remain in the employ of the Company and to
acquire a proprietary interest in the long-term success of the Company, thereby
aligning their interests more closely to the interests of the Company's
shareholders. To achieve that purpose, the 2001 Allshare Plan permits the grant
of options to purchase Common Stock ("Allshare Options" or "Allshare Awards").
ADMINISTRATION OF THE 2001 ALLSHARE PLAN
Except as noted below, the Compensation Committee will administer the
2001 Allshare Plan. The Compensation Committee is composed of "non-employee
directors" within the meaning of the Act and "outside directors" within the
meaning of Section 162(m) of the Code. The Compensation Committee will have the
power in its discretion to grant Allshare Awards under the 2001 Allshare Plan,
to select the individuals to whom Allshare Awards will be granted, to determine
the terms thereof, to interpret the provisions of the 2001 Allshare Plan and to
otherwise administer the 2001 Allshare Plan.
To facilitate and expedite the granting a limited number of Allshare
Options to newly hired employees (other than executive officers, "insiders"
within the meaning of Section 16 of the '34 Act and "covered employees" within
the meaning of Code Section 162(m)), the Board of Directors may delegate a
portion of the Compensation Committee's authority with respect to the 2001
Allshare Plan to a separate subcommittee (the "Subcommittee") consisting of two
or more directors, at least one of whom will be a member of the Compensation
Committee. The delegation of Allshare Option granting authority to such a
Subcommittee will be within such limitations and subject to such Compensation
Committee oversight as the Board of Directors prescribes.
All Allshare Awards will be evidenced by a written agreement between the
Company and the grantee setting forth the terms of the Allshare Award. The 2001
Allshare Plan provides that no member of the Board of Directors will be liable
for any action or determination made in good faith with respect to the 2001
Allshare Plan and provides that the Company will indemnify and hold harmless
each Board member with respect to actions and determinations taken or made in
good faith with respect to the 2001 Allshare Plan.
SHARES SUBJECT TO THE 2001 ALLSHARE PLAN
The maximum number of shares of Common Stock that may be delivered in
the aggregate during the term of the 2001 Allshare Plan upon the grant and/or
exercise of all Allshare Awards is 2,000,000 shares, plus any shares of Common
Stock which are subject to options issued under the 1995 Plan to the extent that
those options are forfeited, expire, or are canceled without delivery of shares
of Common Stock after December 31, 2000.
The aggregate number of shares with respect to which Allshare Options
may be issued under the 2001 Allshare Plan in any calendar year is limited to
the Annual One Percent Limit, subject to adjustment as described below. To the
extent that Allshare Options granted with respect to shares of Common Stock in
any calendar year beginning with 2001 are less than the Annual One Percent Limit
for that calendar year, the unused portion of the
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Annual One Percent Limit (expressed in terms of percentage points, not number of
shares) shall be carried forward and added to the Annual One Percent Limit for
each succeeding calendar years until fully utilized. No employee may be granted
in any calendar year and in the aggregate Allshare Options covering more than
200,000 shares of the Common Stock under the 2001 Allshare Plan.
The number and class of shares available under the 2001 Allshare Plan
(including aggregate, annual and individual limits) and/or the number, class and
exercise price of shares subject to outstanding Allshare Options may be adjusted
by the Compensation Committee in such manner as it determines to prevent
dilution or enlargement of rights in the event of various changes in the
capitalization of the Company, including reorganizations, mergers,
recapitalizations, consolidations, spin-offs, stock splits, stock dividends, or
other events resulting in the consolidation or subdivision of shares. Shares of
the Common Stock attributable to unexercised Allshare Options that expire or are
terminated, surrendered or canceled will be available for subsequent award under
the 2001 Allshare Plan.
ELIGIBILITY AND PARTICIPATION
Eligibility to participate in the 2001 Allshare Plan is limited to all
employees of the Company and its controlled subsidiaries. An employee may be a
participant in both the 2001 Allshare Plan and the Executive Plan. The
Compensation Committee (or Subcommittee, if applicable) will select the
employees who are eligible for grants under the 2001 Allshare Plan. Currently,
approximately 3,500 employees are within the class eligible to participate in
the Executive Plan.
OPTIONS
The Compensation Committee (or Subcommittee, if applicable) may grant
ISOs and NSOs to eligible employees. The Compensation Committee (or
Subcommittee, if applicable) will have complete discretion, subject to the terms
of the 2001 Allshare Plan, to determine the persons to whom Allshare Options
will be awarded, the time or times of grant, and the other terms and conditions
of the Allshare Awards.
The Compensation Committee (or Subcommittee, if applicable) will
determine the exercise price with respect to each Allshare Option at the time of
grant. The exercise price per share of Common Stock under any Allshare Option
will not be less than 100% of the fair market value per share of the Common
Stock underlying the Allshare Award on the date of grant. The Compensation
Committee (or Subcommittee, if applicable )will also determine at the time of
grant the terms under which Allshare Options shall vest and become exercisable.
No ISO may be granted to an employee who owns at the time of the grant
stock representing more than 10% of the total combined voting power of all
classes of stock of the Company or its subsidiaries (a "10% Shareholder") unless
the exercise price for each share of Common Stock subject to such ISO is at
least 110% of the fair market value per share of the Common Stock on the date of
grant and such ISO award is not exercisable more than five years after its date
of grant. In addition, the total fair market value of shares of Common Stock
subject to ISOs which are exercisable for the first time by an employee in a
given calendar year shall not exceed $100,000, valued as of the date of the
ISOs' grant. ISOs may not be granted more than ten years after the date of
adoption of the 2001 Allshare Plan by the Board of Directors.
An Allshare Option may be exercised by written notice to the Secretary
of the Company at its corporate headquarters stating the number of shares of
Common Stock with respect to which the Allshare Option is being exercised.
Notice of exercise must be accompanied by payment in cash of the applicable
Allshare Option exercise price plus all withholding taxes due. The Compensation
Committee may, in its discretion, accept payment of the exercise price through
the alternative means of: (a) the tender of previously owned shares of the
Common Stock (valued at their fair market value on the date of exercise), (b)
the contemporaneous sale by a third party broker of shares of Common Stock
acquired upon exercise yielding a net sales price equal to the exercise price
due and the remission of those sale proceeds to the Company, or (c) the
retention by the Company of shares otherwise deliverable upon exercise having a
fair market value at the time of exercise equal to the exercise price due.
Allshare Options may not be transferred except by will or applicable laws of
descent and distribution.
Except as may otherwise be provide in the applicable Allshare Award
agreement, Allshare Options may be exercised not later than three months after
the termination of the grantee's employment (other than by death or total
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disability) to the extent then exercisable. Unless otherwise provided in the
Allshare Award agreement, upon the death or total disability of an employee
while engaged by the Company or its subsidiaries (or upon death within three
months after termination), Allshare Options, to the extent then exercisable,
shall remain exercisable for one year following the date of death or beginning
of total disability. In no event, however, may any ISO be exercised more than
ten years from the date of grant, and an ISO that is held by a 10% Shareholder
may not be exercised more than five years from the date of grant.
CHANGE IN CONTROL
To the extent provided in the applicable Allshare Award agreement, upon
a Change in Control, any Allshare Options outstanding on the date immediately
preceding such Change in Control shall become fully vested and exercisable. The
Compensation Committee may require that any Allshare Options remaining
unexercised upon a Change in Control, whether or not otherwise vested, be cashed
out at their then fair market value or, in the case of a merger, consolidation
or share exchange, converted into Acquiror Options provided the Acquiror Options
have a value immediately after the Change in Control equal to the value of the
converted Allshare Options immediately prior to the Change in Control.
TAX WITHHOLDING
The Compensation Committee may require payment, or withhold from
payments made under the 2001 Allshare Plan, in order to satisfy all applicable
withholding tax requirements. All withholding taxes must be satisfied in cash
unless the Compensation Committee permits withholding taxes to be paid in
another manner.
TERM OF THE 2001 ALLSHARE PLAN
Unless earlier terminated by the Board of Directors, the 2001 Allshare
Plan will terminate on May 8, 2010.
AMENDMENT AND TERMINATION
The Board of Directors may suspend, amend, modify or terminate the
Executive Plan at any time; provided, however, that the Company's shareholders
shall be required to approve any amendment that would increase the aggregate
number of shares that may be issued under the 2001 Allshare Plan.
Allshare Awards granted prior to a termination of the 2001 Allshare Plan
shall continue in accordance with their terms following such termination. No
amendment, suspension or termination of the 2001 Allshare Plan shall adversely
affect outstanding Allshare Awards without the grantee's consent.
FEDERAL INCOME TAX CONSEQUENCES
OPTIONS
Grant of Options. There will be no federal income tax consequences to
the grantee of an Allshare Option or the Company upon the grant of either an ISO
or an NSO under the 2001 Allshare Plan.
Exercise of NSOs. Upon exercise of an NSO, the grantee generally will
recognize ordinary compensation income, subject to withholding and employment
taxes, in an amount equal to: (i) the fair market value, on the date of
exercise, of the acquired shares of Common Stock, less (ii) the exercise price
paid for those shares. Subject to Section 162(m) of the Code and the Company
satisfying applicable reporting requirements, the Company will be entitled to a
tax deduction in the same amount. Gains or losses recognized by the grantee on a
subsequent disposition of the shares will be treated as long term capital gain
or loss if the shares are held more than a year from the date of
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exercise or short term gain or loss if held one year or less. For purposes of
computing such gain or loss the grantee's basis in his shares will be the
exercise price paid for those shares.
Exercise of ISOs. Upon the exercise of an ISO, the grantee will
recognize no immediate taxable income for regular income tax purposes provided
the grantee was continuously employed by the Company or a subsidiary from the
date of grant through the date which is three months prior to the date of
exercise (or through the date which is one year prior to the exercise date in
the case of death or total disability).
The exercise of an ISO will, however, result in an alternative minimum
tax adjustment for the year of exercise in an amount equal to the excess of the
exercise price paid over the fair market value of the shares received. That
adjustment may result in alternative minimum tax liability to the grantee upon
exercise of the ISO. Alternative minimum tax paid in one year generally can be
carried forward and credited against regular federal income tax liability for
subsequent years.
If the grantee retains the shares acquired by exercise of the ISO for
more than both two years from the date of grant and one year from the date of
exercise, the gain on any later sale of the shares will be treated as long- term
capital gain and the Company will not be entitled to any tax deduction with
respect to the ISO. If the grantee sells of transfers by gift (other than on
account of death) shares of Common Stock received upon exercise of an ISO before
expiration of both of the holding periods outlined above, the grantee will have
ordinary compensation income, and the Company will have a corresponding
deduction, at the time of such disposition (a "Disqualifying Disposition"). The
amount of ordinary income and deduction will equal to the lesser of: (a) the
fair market value of the shares of Common Stock on the date of exercise minus
the option price; or (b) if the disposition is a sale or other transfer in which
taxable income or loss is otherwise recognized (i.e., not a gift), the amount
realized on disposition minus the exercise price. If the amount realized on
disposition exceeds the value of the shares on the date of exercise, that
additional amount will be capital gain. If the amount realized on the subsequent
sale is less than the value of the shares on the exercise date, the shortfall
will be capital loss. The Company's entitlement to a deduction upon a
Disqualifying Disposition is subject to the limits of Section 162(m) of the Code
and the requirement that the Company satisfy applicable reporting requirements.
SECTION 162(M) LIMITATION
Section 162(m) of the Code places a limitation of $1,000,000 on the
amount of compensation payable to each of the Named Executive Officers that the
Company may deduct for federal income tax purposes. The limit does not apply to
certain performance-based compensation paid under a plan that meets the
requirements of the Code and regulations promulgated thereunder. The Company
believes that the Allshare Options granted under the 2001Allshare Plan will
qualify for the performance-based compensation exception to the deduction limit
because the compensation is based solely on an increase in value of the stock
after the date of the Allshare Award.
GOLDEN PARACHUTE TAX
If an Allshare Award is accelerated as a result of a Change in Control,
all or a portion of the value of the Allshare Award at that time may be a
parachute payment for purposes of the Code's provisions relating to excess
parachute payments. Those provisions generally provide that if parachute
payments equal or exceed three times an Allshare Award holder's average W-2
compensation for the five tax years preceding the year of the Change in Control,
the Company will lose its deduction and the recipient will be subject to a 20%
excise tax with respect to that portion of the parachute payments in excess of
such historical average compensation.
VALUE OF BENEFITS
Because the Compensation Committee (and Subcommittee, if appointed) will
have complete discretion to determine the number and selection of Allshare Award
recipients as well as the number, types, vesting requirements and other terms of
all Allshare Awards, and because the future value of Common Stock is uncertain,
it is not possible to determine the benefits or amounts, if any, that will be
received by or allocated to any person under the 2001 Allshare Plan.
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CERTAIN INTERESTS OF DIRECTORS
In considering the recommendation of the Board of Directors with respect
to the 2001Allshare Plan, shareholders should be aware that Jerry C. Atkin, the
only member of the Board of Directors who is also an employee has certain
interests that may present him with conflicts of interest in connection with the
proposal to approve the 2001 Allshare Plan. As discussed above, directors who
are also employees will be eligible for the grant of Allshare Awards under the
2001 Allshare Plan. Nevertheless, the Board of Directors believes that approval
of the 2001 Allshare Plan will advance the interests of the Company and its
shareholders by encouraging officers, key employees and directors to make
significant contributions to the long term success of the Company.
REQUIRED VOTE
Approval of the 2001 Allshare Plan requires the affirmative vote of a
majority of the total voting power represented by the outstanding shares of the
Common Stock present or represented at the Annual Meeting and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE 2001
ALLSHARE PLAN
PROPOSAL NO. 5 -- 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, 2001 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 THE
CURRENT FISCAL YEAR ENDING MARCH 31, 2001.
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 2001 ANNUAL MEETING
Shareholders desiring to submit proposals for the Proxy Statement for
the 2001 Annual Meeting will be required to submit them to the Company in
writing on or before April 8, 2001. 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.
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ADDITIONAL INFORMATION
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 2000 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.
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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 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, 2000 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 Tuesday,
August 8, 2000, at 11:00 a.m., local time, or at any adjournment or postponement
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 of the Company and until their respective successors shall
have been duly elected and shall qualify.
[ ] FOR all nominees listed below(except as marked to the contrary).
[ ] WITHOUT 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.)
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
ROBERT G. SARVER
2. PROPOSAL TO APPROVE an amendment to the Company's Articles of
Incorporation to increase the number of shares of the Common Stock of
the Company, which the Company is authorized to issue, from 40,000,000
shares to 120,000,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO APPROVE AND ADOPT the SkyWest, Inc. Executive Stock
Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. PROPOSAL TO APPROVE AND ADOPT the SkyWest, Inc. 2001 Allshare Stock
Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. PROPOSAL TO RATIFY the appointment of Arthur Andersen LLP as independent
auditors of the Company for the fiscal year ending March 31, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. 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
PROPOSAL TO APPROVE AND RATIFY THE AMENDMENT TO THE SENTO CORPORATION 1996
EMPLOYEE STOCK PURCHASE PLAN DESCRIBED ABOVE.
Please complete, sign and date this proxy where indicated and return it
promptly in the accompanying prepaid envelope.
DATED:_____________________, 2000
__________________________________________
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.)
