<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
WORLDCORP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[WORLDCORP LOGO APPEARS HERE]
----------------------------------
1997
-----------------------------------
ANNUAL
------------------------------------
MEETING
--------------------------------------
<PAGE>
April 30, 1997
Dear Stockholder:
We cordially invite you to attend your Company's Annual Meeting of
Stockholders to be held on Friday, June 13, 1997. Enclosed are a proxy
statement and a form of proxy. Please note that the meeting will commence at
2:00 p.m. at the Company's headquarters, located at 13873 Park Center Road,
Suite 490, Herndon, Virginia 20171.
At this meeting we will ask the Stockholders: (i) to elect three Class I
Directors to serve until the 1999 Annual Meeting, and to elect one Class II
Director to serve until the 1998 Annual Meeting; and (ii) to ratify the
selection of KPMG Peat Marwick LLP as WorldCorp's independent public
accountants for the year ending December 31, 1997.
We value your participation by voting your shares on matters that come
before the meeting. Please follow the instructions on the enclosed proxy to
ensure representation of your shares at the meeting.
Sincerely,
T. Coleman Andrews, III
Chairman of the Board
<PAGE>
WORLDCORP, INC.
The Hallmark Building
13873 Park Center Road
Herndon, Virginia 20171
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 13, 1997
To the Stockholder Addressed:
WorldCorp, Inc. will hold its Annual Meeting of Stockholders at 2:00 p.m. at
the Company's headquarters located at 13873 Park Center Road, Suite 490,
Herndon, Virginia 20171 on Friday, June 13, 1997, for the following purposes:
1. To elect three Class I Directors to serve until the 1999 Annual Meeting
of Stockholders, and until their successors have been duly elected and
qualified, and to elect one Class II Director to serve until the 1998
Annual Meeting of Stockholders, and until his successor has been duly
elected and qualified;
2. To ratify the selection of KPMG Peat Marwick LLP as independent
certified public accountants for the Company for the year ending
December 31, 1997; and
3. To act upon such other matters as may properly come before the meeting.
The record date for the determination of stockholders entitled to vote at
the meeting is April 29, 1997, and only stockholders of record at the close of
business on that date will be entitled to vote at this meeting and any
adjournment thereof.
Whether or not you plan to attend the stockholders' meeting, please follow
the instructions on the enclosed proxy to ensure representation of your shares
at the meeting. You may revoke your proxy at any time prior to the time it is
voted.
By Order of the Board of Directors,
Andrew M. Paalborg
Vice President and General Counsel
Herndon, Virginia
April 30, 1997
<PAGE>
WORLDCORP, INC.
The Hallmark Building
13873 Park Center Road
Herndon, Virginia 20171
PROXY STATEMENT
This proxy statement is furnished to stockholders in connection with the
solicitation of proxies by the Board of Directors of WorldCorp, Inc.
("WorldCorp" or the "Company") for use at the Annual Meeting of Stockholders
to be held on Friday, June 13, 1997, and any adjournment thereof, for the
purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders and described in detail herein. The meeting will be held at 2:00
p.m. at the Company's headquarters located at 13873 Park Center Road, Herndon,
Virginia 20171.
All properly executed proxies will be voted in accordance with the
instructions contained thereon, and if no choice is specified, the proxies
will be voted for the election of all three Class I Directors and one Class II
Director in this proxy statement, and in favor of the appointment of KPMG Peat
Marwick LLP as independent auditors. Any proxy may be revoked by the
stockholder at any time before it is exercised by giving written notice to
that effect to the Secretary of the Company or by signing a later-dated proxy.
Stockholders who attend the meeting may revoke any proxy previously granted
and vote in person.
This proxy statement and the accompanying proxy are being mailed to the
stockholders on or about April 30, 1997.
PURPOSE OF MEETING
At the meeting, the Board of Directors will ask stockholders: (1) to elect
three Class I Directors to serve until the 1999 Annual Meeting of
Stockholders, and until their successors are duly elected and qualified, and
one Class II Director to serve until the 1998 Annual Meeting of Stockholders
and until his successor is duly elected and qualified; and (2) ratify the
selection of KPMG Peat Marwick LLP as independent certified public accountants
for the Company for the year ending December 31, 1997. In addition, the
stockholders will act upon such other matters as may properly come before the
meeting.
VOTING
GENERAL
Only holders of record of the Company's Common Stock, par value $1.00 per
share ("Common Stock"), at the close of business on April 29, 1997, will be
entitled to vote at the meeting. On March 31, 1997, 15,020,265 shares of
Common Stock were outstanding and entitled to vote. Each share of Common Stock
is entitled to one vote.
Shares of Common Stock represented by proxies received in the accompanying
form that are properly executed and returned to the Company will be voted at
the Annual Meeting of Stockholders
<PAGE>
in accordance with the stockholders' instructions contained in such proxies.
Where no such instructions are given, proxy holders will vote such shares in
accordance with the recommendations of the Board of Directors. The proxy
holders will also vote such shares at their discretion with respect to such
other matters as may properly come before the meeting.
A quorum at the Annual Meeting will consist of the presence, in person or by
proxy, of at least a majority of the shares of Common Stock outstanding on the
record date and entitled to vote at the Annual Meeting. Each stockholder may
cast one vote per share owned by such stockholder for each of three nominees
for Class I Director, and one nominee for Class II Director. The nominees in
each class receiving the greatest number of votes will be elected. In
calculating the vote, broker non-votes will be disregarded and will have no
effect on the outcome of the vote. The affirmative vote of a majority of
shares voting at the meeting is required to ratify the selection of KPMG Peat
Marwick LLP. In determining whether the selection of KPMG Peat Marwick LLP
have received the requisite number of affirmative votes, abstentions and
broker non-votes will be counted and will have the same effect as a vote
against KPMG Peat Marwick LLP. The Company does not know of any matters to be
acted upon at the meeting other than the two items described in this Proxy
Statement. Any stockholder has the power to revoke a proxy at any time before
it is voted.
THE COMPANY
As of December 31, 1996, WorldCorp owns 61.3% of World Airways, Inc. ("World
Airways") and 28.9% of InteliData Technologies Corporation ("InteliData").
World Airways is a leading provider of long-range passenger and cargo air
transportation outsourcing services to major international airlines under
fixed rate, multi-year contracts. World Airways also leads a contractor
teaming arrangement that is the largest single supplier of commercial airlift
to the United States Air Force's Air Mobility Command. InteliData concentrates
on three markets: (1) consumer telecommunications; (2) electronic commerce;
and (3) interactive services. In August 1996, US Order, Inc., then a
subsidiary of WorldCorp ("US Order"), and Colonial Data Technologies
Corporation ("Colonial Data"), entered into an Agreement and Plan of Merger
pursuant to which US Order and Colonial Data were each merged with and into
InteliData, a newly formed public company (Nasdaq: INTD). Pursuant to this
merger, on November 7, 1996, InteliData became the successor corporation to US
Order.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN PERSONS
PRINCIPAL STOCKHOLDERS
The following are the only persons known to the Company who are beneficial
owners of more than five percent of Common Stock as of December 31, 1996
(except as otherwise noted). With respect to the information set forth below,
the Company has relied upon Schedule 13D or Schedule 13G filings and
information received from the persons listed.
<TABLE>
<CAPTION>
NAME OF BENEFICIAL ADDRESS OF AMOUNT AND NATURE OF PERCENT
OWNER BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS(1)
------------------ ---------------- ------------------------- -------------
<S> <C> <C> <C>
Morgan Stanley Group, 1585 Broadway 1,931,700(2) 12.7%
Inc.
New York, NY 10036
Zesiger Capital Group 320 Park Avenue 1,762,273(3) 11.6%
30th Floor
New York, NY 10022
The Travelers Insurance One Tower Square 1,138,510(4) 7.5%
Group Hartford, CT 06183
T. Rowe Price 100 East Pratt Street 890,000(5) 5.8%
Associates, Inc. Baltimore, MD 21202
McCullough, Andrews 101 California Street 844,756(6) 5.0%
& Cappiello, Inc. Suite 4250
San Francisco, CA 94111
</TABLE>
- --------
Footnotes
(1) Beneficial ownership as reported in the table has been determined in
accordance with Securities and Exchange Commission ("SEC") regulations and
includes shares of Common Stock which may be acquired within 60 days of
December 31, 1996, upon the exercise of outstanding stock options and
warrants and the conversion of the Company's 7% Convertible Subordinated
Debentures due May 15, 2004 (the "Debentures"). In accordance with Rule
13d-3 of the Securities Exchange Act of 1934 (the "Exchange Act"), shares
of Common Stock issuable upon the exercise of such options and warrants
and upon conversion of such Debentures are deemed outstanding for purposes
of computing the percentage of Common Stock owned by the beneficial owner
thereof listed in the table, but are not deemed outstanding for purposes
of computing the percentage of outstanding Common Stock owned by any other
stockholder. Except as otherwise stated below, the named persons have sole
voting and investment power with regard to the shares shown as owned by
such person. Calculation of the Percent of Class is based on 15,216,946
shares of Common Stock outstanding as of December 31, 1996.
(2) As reported in Amendment No. 2 to Schedule 13G dated February 14, 1997
filed jointly by Morgan Stanley Group, Inc. and Morgan Stanley Asset
Management Ltd.
(3) As reported in a Schedule 13G filed by Zesiger Capital Group, LLC on
January 8, 1997. Zesiger Capital Group disclaims beneficial ownership of
all 1,762,273 shares of the Company's Common Stock. Such securities are
held in discretionary accounts which Zesiger Capital Group manages.
(4) As reported in a Schedule 13G filed by The Travelers Insurance Group on
February 12, 1997. The 1,138,510 figure reported in the Schedule 13G
includes certain convertible Debentures of the Company held by The
Travelers Group.
3
<PAGE>
(5) As reported in Amendment No. 1 to Schedule 13G dated February 14, 1997
filed, jointly by T. Rowe Price Associates, Inc. and T. Rowe Price New
Horizons Fund, Inc. These securities are owned by various individual and
institutional investors including the T. Rowe Price New Horizons Fund,
Inc., as to which T. Rowe Price Associates, Inc. ("Price Associates")
serves as investment adviser with power to direct investments and/or sole
power to vote the securities. For purposes of the reporting requirements
of the Exchange Act, Price Associates is deemed to be a beneficial owner
of such securities; however, Price Associates, expressly disclaims that it
is, in fact, the beneficial owner of such securities.
(6) As reported in Amendment No. 5 to Schedule 13G dated February 14, 1997,
filed jointly by (i) McCullough, Andrews & Cappiello, Inc., a registered
investment adviser, and (ii) Robert F. McCullough, David H. Andrews and
Frank A. Cappiello, Jr., the shareholders of McCullough, Andrews &
Cappiello, Inc. Beneficial ownership calculation is based on McCullough,
Andrews & Cappiello, Inc.'s beneficial ownership of $9,343,000 aggregate
principal amount of the Debentures at an initial conversion price of
$11.06.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information concerning the beneficial
ownership of WorldCorp's Common Stock ("WC C.S.") and World Airways' common
stock ("WA C.S.") as of March 31, 1997, for (a) each director and nominee for
director; (b) each named executive officer; and (c) directors and named
executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF TITLE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) CLASS CLASS(1)
------------------------ ------------------------- -------- ----------
<S> <C> <C> <C>
William F. Gorog 428,855(2) WC C.S. 2.8%
T. Coleman Andrews, III 561,544(3) WC C.S. 3.6%
10,000(4) WA C.S. *
James E. Colburn 63,455(5) WC C.S. *
3,000(6) WA C.S. *
Gideon Argov 25,331(7) WC C.S. *
Patrick F. Graham 38,455 WC C.S. *
John C. Backus 0 WC C.S. *
Walter M. Fiederowicz 0 WC C.S. *
Andrew M. Paalborg 163,363(9) WC C.S. 1.1%
Directors and Executive Officers
as a Group (8 persons) 1,464,382 WC C.S. 9.0%
268,000 WA C.S. 2.3%
</TABLE>
* Individual is the beneficial owner of less than one percent (1%) of
outstanding common stock.
- --------
Footnotes
(1) Beneficial ownership as reported in the table has been determined in
accordance with SEC regulations and includes shares of Common Stock and
World Airways common stock which may be acquired within 60 days of March
31, 1997, upon the exercise of outstanding stock options and warrants. In
accordance with Rule 13d-3 of the Exchange Act, shares of common stock
issuable upon the exercise of such options and warrants are deemed
outstanding for purposes of
4
<PAGE>
computing the percentage of common stock owned by the beneficial owner
thereof listed in the table, but are not deemed outstanding for purposes of
computing the percentage of outstanding common stock owned by any other
stockholder. Except as otherwise stated below, the named persons have sole
voting and dispositive power with regard to the shares shown as owned by
such person. The latest information available for the WorldCorp Employee
Savings and Stock Ownership Plan ("WorldCorp ESSOP") is as of the end of
the plan year, December 31, 1996. The WorldCorp ESSOP was converted into
the World Airways Employee Savings and Stock Ownership Plan ("ESSOP")
effective October 1, 1996. The ESSOP is the successor to the WorldCorp
ESSOP. Under the terms of the ESSOP, WorldCorp employees are entitled to
participate in the ESSOP. Calculation of the Percent of Class of Common
Stock is based on 15,020,265 shares of Common Stock outstanding as of March
31, 1997; and calculation of the Percent of Class of World Airways common
stock is based on 11,230,064 shares of World Airways common stock
outstanding as of March 31, 1997.
(2) Consists of (i) 200,000 shares of Common Stock issuable upon the exercise
of stock options granted to Mr. Gorog under the 1988 Stock Option Plan
and (ii) 228,855 shares of Common Stock held directly.
(3) Consists of (i) 535,000 shares of Common Stock issuable to Mr. Andrews
upon the exercise of stock options granted to Mr. Andrews under the 1988
Stock Option Plan, (ii) 4,139 shares of Common Stock owned directly by
Mr. Andrews, and (iii) 22,405 shares of Common Stock allocated to Mr.
Andrews' account under the ESSOP.
(4) Consists of 10,000 shares of World Airways common stock owned directly by
Mr. Andrews.
(5) Consists of (i) 50,000 shares of Common Stock issuable to Mr. Colburn
upon the exercise of stock options granted to Mr. Colburn under the 1988
Stock Option Plan; (ii) 10,000 shares of Common Stock held directly by
Mr. Colburn; and (iii) 3,455 shares of Common Stock paid to Mr. Colburn
as compensation for his services as a Board member through March 31,
1997, pursuant to the Company's 1996 Non-Employee Directors Stock
Retainer Plan (the "Directors Retainer Plan").
(6) Consists of 3,000 shares of World Airways common stock owned directly by
Mr. Colburn.
(7) Consists of (i) 21,875 shares of Common Stock issuable to Mr. Argov upon
the exercise of stock options granted to Mr. Argov under the 1988 Stock
Option Plan and (ii) 3,455 shares of Common Stock paid to Mr. Argov as
compensation for his services as a Board member through March 31, 1997,
pursuant to the Directors Retainer Plan.
(8) Consists of 35,000 shares of Common Stock issuable to Mr. Graham upon the
exercise of stock options granted to Mr. Graham under the 1988 Stock
Option Plan and (ii) 3,455 shares of Common Stock paid to Mr. Graham as
compensation for his services as a Board member through March 31, 1997,
pursuant to the Directors Retainer Plan.
(9) Consists of (i) 152,500 shares of Common Stock issuable to Mr. Paalborg
upon the exercise of stock options granted to him under the 1988 Stock
Option Plan and (ii) 10,863 shares of Common Stock allocated to Mr.
Paalborg's account under the ESSOP.
Section 16(a) of the Exchange Act ("Section 16(a)") requires the Company's
directors and executive officers, and persons who own more than 10% of its
Common Stock, to file with the SEC initial reports of ownership of the
Company's equity securities and to file subsequent reports when
5
<PAGE>
there are changes in such ownership. To the Company's knowledge, based solely
on review of the copies of such reports furnished to the Company, all Section
16(a) filing requirements applicable to its greater than 10% beneficial
owners, directors and executive officers were complied with in 1996.
BOARD OF DIRECTORS
The Board of Directors of the Company is responsible for establishing broad
corporate policies and for the overall performance of the Company. The Board
held a total of five meetings during the year ended December 31, 1996; each
director attended each meeting and each meeting of each committee of which
such director is a member. To manage the complex nature of the Company's
business effectively, the Board of Directors has delegated certain authority
to committees of the Board.
The Board has authorized its Executive Committee to exercise all of its
power and authority when the full Board is unable to meet, except for certain
fundamental responsibilities, such as the declaration of dividends, that are
reserved for the Board. The members of the Executive Committee are William F.
Gorog (Chairman), T. Coleman Andrews, III, and Patrick F. Graham. The
Executive Committee did not meet in 1996.
On April 8, 1997, the Company announced a long-planned transition in its
executive team. Walter M. Fiederowicz was appointed President and Chief
Executive Officer by the Board of Directors, succeeding Coleman Andrews. Mr.
Andrews was elected Chairman of the Company's Board, succeeding William F.
Gorog, who was elected Chairman of the Executive Committee of the Board. Mr.
Fiederowicz served as Chairman of the Board of Colonial Data, where he was
instrumental in managing the company's capital-raising efforts and in
consummating a number of acquisitions and strategic alliances, including an
alliance with US Order in 1995 which ultimately led to the merger with US
Order and the resulting formation of InteliData. Mr. Fiederowicz has been
nominated by the Board, for election by the Stockholders as a Class II
Director at the Company's 1997 Annual Stockholders' meeting.
The Audit Committee recommends to the Board of Directors the auditing firm
to be selected each year as independent auditors of the Company's financial
statements and to perform services related to the completion of such audit.
The Audit Committee also has responsibility for (i) reviewing the scope and
results of the audit with the independent auditors, (ii) reviewing the
Company's financial condition and results of operations with management and
the independent auditors, (iii) considering the adequacy of the internal
accounting and control procedures of the Company, and (iv) reviewing any non-
audit services and special engagements to be performed by the independent
auditors. The Audit Committee also reviews, at least once each year, the terms
of all material transactions and arrangements between the Company and its
affiliates. The current members of the Audit Committee, none of whom is an
employee of the Company, are James E. Colburn (Chairman) and Patrick F.
Graham. The Audit Committee met one time in 1996.
The Board has also assigned certain responsibilities relating to employee
compensation to the Compensation Committee. The principal duties of the
Compensation Committee are to review key employee compensation policies,
plans, and programs; to monitor performance and compensation of officers of
the Company and other key employees; to prepare recommendations and periodic
reports to the Board concerning such matters; and to administer the Company's
management incentive compensation plans, including its stock option plan. In
1996, the members of the Compensation Committee, none of whom is an employee
of the Company, were James E. Colburn (Chairman), Patrick F. Graham, and
Geoffrey S. Rehnert. The Compensation Committee met one time in 1996.
6
<PAGE>
Pursuant to the Amended and Restated WorldCorp, Inc. 1988 Stock Option Plan
(the "Option Plan"), each director of the Company who is not an executive of
the Company was granted options to purchase 25,000 shares of Common Stock upon
his election to the Board under the terms of the Option Plan. The Option Plan
was further amended by the Company's stockholders at a Special Meeting on
August 19, 1994, to provide that each non-employee Director upon election to
subsequent two-year terms on the Board would receive additional grants of
options for 25,000 shares of Common Stock upon each reelection. In 1995, the
full Board of Directors determined to amend the Option Plan to provide that
non-employee Directors will only be granted options under the Option Plan to
purchase 25,000 shares of Common Stock upon their initial election or
appointment to the Board of Directors, and an additional discretionary option
grant may be made of up to 25,000 options. Under the Option Plan, these
options vest in equal monthly installments over a two year period commencing
on the date of a director's election or appointment to the Board, and the
exercise price for these options is set at the average closing price on the
New York Stock Exchange for the Common Stock for the thirty trading day period
preceding the grant date of the option. Until June 30, 1996, each director who
is not an executive of the Company received an annual fee of $25,000 (payable
quarterly in advance) for serving as a director of the Company. Effective July
1, 1996, pursuant to the terms of the Directors Retainer Plan, each non-
employee director of the Company was paid his annual fee of $25,000 in
quarterly installments (payable in advance) of shares of Common Stock. The
number of shares of Common Stock to be received each quarter by the non-
employee directors is valued at the average closing price on the New York
Stock Exchange for the Common Stock, for the thirty trading day period
preceding the first day of the new quarter. Directors are compensated at a
daily rate of $750 for participating in committee meetings in excess of four
meetings per year.
7
<PAGE>
ITEM NO. 1--ELECTION OF DIRECTORS
Class I Directors will be elected to serve until the 1999 Annual Meeting and
until their successors are duly elected and qualified. The Class II Director
will be elected to serve until the 1998 Annual Meeting and until his successor
is duly elected and qualified. Unless directed to do otherwise, the proxy
holders intend to vote all shares for which they hold proxies for the nominees
set forth below. Although it is not contemplated that any nominee will decline
or be unable to serve, if either occurs prior to the Annual Meeting, the Board
will select a substitute nominee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE WITH AUTHORITY FOR THE PROXY
HOLDERS TO VOTE FOR THE NOMINEES NAMED BELOW OR THEIR SUBSTITUTES AS SET FORTH
HEREIN.
NOMINEES FOR ELECTION AS CLASS I DIRECTORS
TERM OF OFFICE EXPIRING AT THE 1999 ANNUAL MEETING
NAME AND AGE PAST FIVE YEARS' PRINCIPAL OCCUPATION(S)
------------ ----------------------------------------
AND OTHER DIRECTORSHIPS
-----------------------
T. Coleman Andrews, III, 42 Mr. T. Coleman Andrews, III was elected Chief
Executive Officer, President and a Director of the
Company in June 1987. He has served as Chairman of
the Board of World Airways since 1986. On April 8,
1997, Walter M. Fiederowicz was appointed President
and Chief Executive Officer of the Company,
succeeding Mr. Andrews. Mr. Andrews was elected
Chairman of the Board of the Company, succeeding
William F. Gorog, who was elected Chairman of the
Executive Committee of the Board. He has served as a
Director of InteliData since 1990. From 1978 through
1986, he was affiliated with Bain & Company, Inc. an
international strategy consulting firm. At Bain, he
was elected partner in 1982 and was a founding
general partner in 1984 of the Bain Capital Fund, a
private venture capital partnership. Prior to his
experience with Bain, Mr. Andrews served in several
appointed positions in the White House for the Ford
Administration.
William F. Gorog, 71 Mr. William F. Gorog has served as Chief Executive
Officer of InteliData (and its predecessor, US
Order) since May 1, 1990. He was elected a director
of WorldCorp in April 1989 and was elected Chairman
of the WorldCorp Board of Directors in May 1993. In
April 1997, Mr. Andrews replaced Mr. Gorog as
Chairman of the Board, and Mr. Gorog was elected
Chairman of the Executive Committee of the Board.
From October 1987 until founding US Order in May
1980, he served as Chairman of the Board of Arbor
International, an investment management firm. From
1982 to 1987, he served as President and Chief
Executive Officer of Magazine Publishers of America,
a trade association representing the principal
consumer publications in the United States. During
the Ford Administration, Mr. Gorog served as Deputy
Assistant to the President for Economic Affairs and
Executive
8
<PAGE>
NAME AND AGE PAST FIVE YEARS' PRINCIPAL OCCUPATION(S)
- ------------ ----------------------------------------
AND OTHER DIRECTORSHIPS
-----------------------
Director of the White House Council on International
Economic Policy. Prior to that time, he founded and
served as Chief Executive Officer of Data
Corporation, which developed the LEXIS and NEXIS
information systems for legal and media research and
which was subsequently sold to the Mead Corporation.
Patrick F. Graham, 57 Mr. Graham was appointed a director of WorldCorp in
October 1992 and elected as a Class I Director at the
1993 Annual Meeting. He was also appointed a director
of US Order in February 1993. Mr. Graham served as a
director of US Order until it merged with and into
InteliData in November 1996. Mr. Graham now serves as
a director of InteliData. Mr. Graham is a director of
Stericycle, Inc., a hospital service company and also
of Bain & Company, Inc., a management consulting firm
co-founded by Mr. Graham in 1973. In addition to his
primary responsibilities with Bain clients, he has
served as Bain's vice chairman and chief financial
officer. Prior to founding Bain, Mr. Graham was a
group vice president with the Boston Consulting
Group.
NOMINEE FOR ELECTION AS CLASS II DIRECTOR
TERM OF OFFICE EXPIRING AT THE 1998 ANNUAL MEETING
Walter M. Fiederowicz, 50 Mr. Fiederowicz has been President and Chief
Executive Officer of WorldCorp since April 1997. Mr.
Fiederowicz has been a director of InteliData since
November 1996. Mr. Fiederowicz was chairman of the
board of directors of Colonial Data from August 1994
until March 1996, a director of Colonial Data since
September 1989 until November 1996, and a director of
Colonial Technologies Corp. since 1985. From 1979 to
December 1988, Mr. Fiederowicz was a partner of the
law firm of Cummings & Lockwood and served as counsel
to that firm from December 1988 until September 1990.
From January 1991 until July 1994, he held various
positions, including chairman, and served as a
director of Conning Corporation, the parent company
of an investment firm. Mr. Fiederowicz was chairman
and director of Covenant Mutual Insurance Company
("Covenant"), a property and casualty insurance
company, from 1989 until December 1992. Covenant was
placed in rehabilitation by the Insurance
Commissioner of the State of Connecticut in 1993 and
subsequently liquidated as a result of losses in
connection with insurance claims relating to
Hurricane Andrew. Mr. Fiederowicz is a director of
Blau Marketing Technologies, Inc., a direct marketing
firm, First Albany Corporation, an investment banking
firm, and Photronics, Inc., a photomask manufacturer.
9
<PAGE>
INCUMBENT MEMBERS OF THE BOARD OF DIRECTORS
CLASS II DIRECTORS--TERMS OF OFFICE EXPIRING AT THE 1998 ANNUAL MEETING
NAME AND AGE PAST FIVE YEARS' PRINCIPAL OCCUPATION(S)
- ------------ ----------------------------------------
AND OTHER DIRECTORSHIPS
-----------------------
John C. Backus, Jr., 38 Mr. Backus worked at US Order since its inception in
1990 and served as its President and Chief Operating
Officer until US Order was merged into InteliData in
November 1996. Upon the effective date of the merger,
Mr. Backus became President and Chief Operating
Officer of InteliData. Mr. Backus was appointed a
Director of WorldCorp in August 1994. Prior to working
with US Order, Mr. Backus worked for six years at
WorldCorp and its subsidiaries holding a variety of
executive positions including Vice President of
Corporate Development, Vice President of Finance, and
Vice President of Sales and Marketing at World
Airways. Prior to joining WorldCorp, Mr. Backus worked
at Bain & Company, Inc., a worldwide strategy
consulting firm with approximately 1,200 employees, in
its consulting and venture capital groups where he
focused on consumer products and services. Mr. Backus
serves on the Board of Directors of InteliData, Visa
Interactive and Home Financial Network, Inc. He
received both his B.S. and M.B.A. from Stanford
University.
James E. Colburn, 73 Mr. Colburn served as a director of World Airways from
1985 to 1987 and has served as a director of WorldCorp
since 1987. Mr. Colburn served as President of
Aviation Consulting, Inc. from October 1982 to July
1986 and is currently retained by Aviation Consulting,
Inc. as a consultant. From 1979 to 1982 he was Vice
President--Operations and Maintenance of Wien Air
Alaska.
Gideon Argov, 40 Mr. Argov was elected President and CEO of Kollmorgen
Corporation, a diversified technology company, in May
1991, and was appointed a director of WorldCorp on
August 23, 1995. Prior to joining Kollmorgen, Mr.
Argov was President and CEO of High Voltage
Engineering Corporation. He currently serves as a
director of Kollmorgen and Transtechnology
Corporation.
10
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION REPORT
In 1996, the Compensation Committee of the Company was composed of three
independent, non-employee directors, Messrs. Colburn (Chairman), Graham and
Rehnert. The Committee administers the Company's executive incentive plans,
reviews its compensation plans, programs and policies, monitors the
performance and compensation of executive officers and other key employees,
and makes appropriate recommendations and reports to the Board concerning
matters of executive compensation.
COMPENSATION PHILOSOPHY
- -----------------------
The Compensation Committee maintains compensation programs designed to
attract, motivate, develop, and retain highly capable executive leaders. The
fundamental philosophy of the Company's executive compensation program is to
relate the executive's total compensation closely to superior individual,
departmental and corporate performance, and through this performance to
shareholder value. The Company's philosophy discourages automatic annual
salary increases and favors variable incentive compensation tied to measurable
results.
The Compensation Committee's executive compensation program consists of
three main components: (1) base salary; (2) the 1995 Management Incentive
Compensation Plan (the "Incentive Plan"); and (3) incentive stock options, all
of which are structured to encourage the achievement of superior results over
time and to link executive officer and shareholder interests. In addition, the
Company occasionally awards bonuses for extraordinary individual performance.
The decision to award bonuses for extraordinary individual performance is made
by the Compensation Committee upon the recommendation of the Company's Chief
Executive Officer.
The WorldCorp Compensation Committee makes recommendations to the full Board
of Directors concerning the compensation (including incentive bonuses and
stock option grants) of the Chairman of the Board and of the President and
Chief Executive Officer of the Company. The Board considers the Committees
recommendation, and then determines the compensation to be paid to the
Company's Chairman of the Board and President and Chief Executive Officer. A
similar procedure is used at World Airways to determine the compensation of
the Chairman of the Board and of the President and Chief Executive Officer of
World Airways. A portion of Messrs. Andrews and Paalborg's Salary is allocated
to World Airways. Compensation of other officers and management of WorldCorp
and World Airways is based on the Management Incentive Compensation Plan,
which was separately adopted in 1995 by the Board of Directors of World
Airways.
COMPONENTS OF COMPENSATION
- --------------------------
(1) Base Salary
Base salaries for new management employees are determined initially by
evaluating the responsibilities of the position held and the experience of the
individual, and by reference to the competitive marketplace for management
talent. The base salaries of executives may be adjusted from time to time if
the Compensation Committee determines (after reference to market data) that an
executive's base salary is not competitive with the marketplace, or if there
is a substantial change in the duties and responsibilities of the executive.
The full Boards of Directors of WorldCorp and World Airways are responsible
for setting the base salaries of the companies' Chairmen of the Board and of
their Presidents and Chief Executive Officers taking into account the
recommendations of the various Compensation Committees. The officers of
11
<PAGE>
WorldCorp and World Airways recuse themselves from these deliberations and
decisions. The WorldCorp Compensation Committee is responsible for setting Mr.
Paalborg's salary, based upon the recommendations of WorldCorp's President and
Chief Executive Officer.
(2) Management Incentive Plan
In 1995, the Board implemented at WorldCorp a Management Incentive Plan for
officers of WorldCorp which is based upon the Management Incentive Plan
adopted by World Airways. Employees below the level of manager continue to be
covered by the existing merit pay plan.
The Company's Incentive Plan is a quantitative matrix consisting of two
components: individual performance and corporate performance. The Committee
uses its discretion at the conclusion of each year to assess individuals on
corporate performance. Corporate performance is based upon the degree to which
the Company and its affiliates have achieved their strategic objectives in the
prior year, whether shareholder value has been increased, and the overall
financial performance of the Company and its affiliates.
In 1996, the WorldCorp Compensation Committee used the following
quantitative matrix to calculate whether incentive bonuses would be paid to
the Company's officers:
<TABLE>
<CAPTION>
INDIVIDUAL INDIVIDUAL &
RATING PERFORMANCE CORPORATE PERFORMANCE
------ ----------- ---------------------
<S> <C> <C>
5 50% Bonus 75% Bonus
4 25% Bonus 50% Bonus
3 12% Bonus 25% Bonus
2 0 0
1 0 0
</TABLE>
No bonuses were awarded to the Company's executives for individual or
corporate performance in 1996.
(3) Incentive Stock Options
The Compensation Committee determines appropriate incentive stock option
awards for new employees by evaluating the responsibilities of the position
held and the experience of the individual, and by reference to the competitive
marketplace for management talent. The Compensation Committee bases decisions
concerning subsequent incentive stock option awards on recommendations made by
the Chief Executive Officer. The Compensation Committee determines whether to
accept or modify the Chief Executive Officer's proposals by evaluating the
competitive marketplace, the performance of the Company, the performance of
the executive, and any change in the responsibilities of the individuals.
Individuals who receive a promotion or who have maintained a high level of
performance over a long period often receive stock option awards. To promote
mutual long-term interests between the Company's officers and managers and the
Company's stockholders, each incentive option agreement provides for options
which vest in equal monthly installments over a three to five-year period. The
Compensation Committee approves all stock option awards.
In 1994, in connection with the signing of their employment agreements,
grants of WorldCorp options were made to Mr. Andrews and to Mr. Gorog. In
1995, in connection with the signing of his employment agreement, a grant of
World Airways options was made to Mr. Pollard, the former
12
<PAGE>
President and Chief Executive Officer of World Airways. All of these options
became vested and exercisable upon Mr. Pollard's departure from World Airways
on March 14, 1997. Mr. Pollard has one year to exercise these options. After
March 14, 1998, those World Airways options which have not been exercised by
Mr. Pollard will be canceled.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
- -------------------------------------------
As part of its ongoing review of the compensation of the Chief Executive
Officer, the Compensation Committee determined it was appropriate for the
Chief Executive Officer to be eligible to participate in the Company's 1988
Stock Option Plan (as amended and restated through 1993, the "1988 Plan").
When the 1988 Plan was originally adopted in 1988 by the stockholders and
amended in 1992 by the stockholders, the Chief Executive Officer was not an
eligible participant because he had otherwise received equity incentive
compensation in the form of warrants from the Company; the warrants served as
the functional equivalent of stock options for the Chief Executive Officer.
The Compensation Committee was aware that the vast majority of the warrants
held by the Chief Executive Officer directly or beneficially would expire
worthless on May 24, 1994, and that he would no longer hold any warrants or
stock options of the Company.
The Compensation Committee believes that one important element of the
compensation of the Chief Executive Officer is incentive compensation. Upon
the expiration of the warrants, the Chief Executive Officer did not have, as
part of his compensation package, an incentive compensation component. The
Compensation Committee considered various alternative forms of incentive
compensation for the Chief Executive Officer, including warrants and stock
appreciation rights. The Compensation Committee considered the securities,
tax, financial accounting and other relevant issues presented by the different
alternatives. To assist it, the Compensation Committee retained the services
of an independent compensation consultant. The Compensation Committee reviewed
compensation data for the chief executive officers of other public companies.
Based on its review, the Compensation Committee determined that it would be
appropriate and in the stockholder's interest for the 1988 Plan to be amended
so that the Chief Executive Officer could participate under that plan. Through
this approach, the Compensation Committee believed the Chief Executive
Officer's interests and those of the stockholders would be aligned.
Pursuant to the recommendation of the Compensation Committee, on August 19,
1994, at a Special Meeting the stockholders of the Company approved amendments
to the Company's 1988 Stock Option Plan which permitted the Company's Chief
Executive Officer to participate in the Stock Option Plan as part of a new
compensation arrangement, concluded on August 19, 1994. For further
descriptions of the employment agreements, the Stock Option Agreement, and
related matters, please see "Contracts and Termination of Employment and
Change in Control Arrangements" below.
On February 14, 1996, the Board of Directors, upon the recommendation of the
Compensation Committee, approved increasing the salary of the Chairman of the
Board of the Company (effective January 1, 1996) from $50,000 to $100,000. The
Board and the Compensation Committee took into account the fact that Company's
previous Chairman had been paid $134,000 annually, and that the current
Chairman's time commitment as Chairman was as extensive as his predecessor's.
THE COMPENSATION COMMITTEE
--------------------------
James E. Colburn (Chairman)
Patrick F. Graham
Geoffrey S. Rehnert
13
<PAGE>
PERFORMANCE GRAPH INDEX
DEC. 1991 TO DEC. 1996
LOGO
STOCK PERFORMANCE GRAPH*
The following graph and chart compare the five year performance of the
Company's common stock to the Russell 2000 Index, the Dow Jones Airlines
Index, and the Dow Jones Air Freight/Couriers Index. Both the graph and the
chart assume that the value of the investment in the Company's common stock
and each index was $100 at December 31, 1991, and that all dividends were
reinvested.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG RUSSELL 2000 INDEX, THE DOW JONES AIRLINES INDEX,
AND THE DOW JONES AIR FREIGHT/COURIERS INDEX
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
DOW JONES DOW JONES
Measurement Period RUSSELL AIRLINES AIR FREIGHT/
(Fiscal Year Covered) WORLDCORP INC. 2000 INDEX COURIERS INDEX
- --------------------- --------------- --------------- --------- --------------
<S> <C> <C> <C> <C>
Measurement Pt-12/31/1991 $100.00 $100.00 $100.00 $100.00
FYE 12/31/1992 $ 62.00 $118.00 $ 98.00 $125.00
FYE 12/31/1993 $ 52.00 $141.00 $119.00 $163.00
FYE 12/31/1994 $ 67.00 $138.00 $ 83.00 $143.00
FYE 12/31/1995 $ 93.00 $178.00 $126.00 $174.00
FYE 12/31/1996 $ 43.00 $207.00 $145.00 $205.00
</TABLE>
- --------
* If, and to the extent that, air transportation services become a smaller
component of the Company's total operations in future years, different
industry peer group indices may be used by the Company at that time. The S&P
Conglomerates Index was not included this year, because the index was
discontinued by Standard & Poor's. The Dow Jones Airlines Index and Dow
Jones Air Freight/Couriers Index (collectively, the "Dow Jones Indices")
have been used by WorldCorp in previous years as industry peer group indices
because of the importance of its World Airways subsidiary to the Company's
consolidated financial results.
14
<PAGE>
WorldCorp owns 61.3% of World Airways, Inc. Each of the following tables
includes aggregate compensation information for each Named Executive Officer
received from WorldCorp and World Airways. Mr. Pollard departed as World
Airways' President and Chief Executive Officer on March 14, 1997. On April 8,
1997, Mr. Andrews was elected Chairman of the Board of WorldCorp, Mr.
Fiederowicz was named President and Chief Executive Officer and Mr. Gorog was
elected Chairman of the Executive Committee of WorldCorp.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------- ------------
AWARDS
------------
SECURITIES
UNDERLYING
OPTIONS/ ALL OTHER
NAME AND PRINCIPAL SALARY(2) BONUS(3) SARS(4) COMPENSATION(5)
POSITION(1) YEAR ($) ($) (#) ($)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
T. Coleman Andrews, III 1996 350,000 -- -- 438,000(6)
President/CEO 1995 350,000 225,000 -- 394,676(7)
WorldCorp 1994 350,000 70,000 800,000(8) 49,240
William F. Gorog 1996 100,000(9) -- -- --
Chairman 1995 50,000 50,000(1)(0) -- --
1994 50,000 -- 250,000(1)(1) --
Charles W. Pollard 1996 225,000 -- -- 11,434(1)(2)
President/CEO 1995 230,365 45,000 250,000(1)(3) 11,108
World Airways 1994 176,539 -- -- 8,134
Andrew M. Paalborg 1996 180,000 -- -- 9,500
VP & General Counsel 1995 177,923 115,000 -- 6,128
WorldCorp 1994 160,000 25,000 -- 3,080
</TABLE>
- --------
Footnotes
(1) The compensation of Messrs. Andrews and Paalborg is paid entirely by the
Company, including, where applicable, options to purchase common stock of
the Company. In 1996, a portion of their respective salaries, however,
were allocated to World Airways. Mr. Gorog's compensation as Chairman of
the Board of Directors of the Company was paid by the Company. Mr.
Gorog's long term compensation consists of options to purchase common
stock of WorldCorp. Mr. Pollard's annual compensation was paid entirely
by World Airways, but his long term compensation consisted of warrants to
purchase common stock of WorldCorp and options to purchase World Airways
common stock.
(2) Excludes compensation deferred under the ESSOP, which is also available
to employees of the Company. The Company's contributions to the ESSOP
accounts of the Named Executive Officers is included in the column titled
"All Other Compensation." See footnote 5.
(3) Bonuses are listed for the year in which the bonus was earned. Most
bonuses are paid early in the year following the year in which the bonus
was earned by the individual.
(4) Includes options granted in 1996, 1995, and 1994 under (i) WorldCorp's
Amended and Restated 1988 Stock Option Plan, and (ii) World Airways' 1995
Stock Option Plan. No warrants or SARs were granted under either of the
option plans in 1996, 1995, or 1994.
15
<PAGE>
(5) Amount includes value of WorldCorp contributions to the ESSOP accounts of
the Named Executive Officers. WorldCorp's contributions to the WorldCorp
ESSOP are made in WorldCorp Common Stock and are valued using closing
prices for the year in which the contributions were made. Due to the
small number of WorldCorp employees in the WorldCorp ESSOP, effective
October 1, 1996, a World Airways ESSOP was created by the ESSOP trust's
exchanging WorldCorp shares held by the trust for World Airways shares
owned by WorldCorp. The World Airways ESSOP then became the successor
plan to the WorldCorp ESSOP. WorldCorp employees are permitted to
participate in the World Airways ESSOP, but are allocated shares of World
Airways stock according to their contributions to the plan.
(6) Consists of (i) $9,500 of WorldCorp contributions to the WorldCorp ESSOP,
(ii) $8,504 of premiums paid for life insurance under the terms of the
August, 1994 Employment Agreement between Mr. Andrews and the Company,
and (iii) $420,000 paid in connection with the modification in 1993 of
Mr. Andrews' Supplemental Incentive Compensation Agreement. Please see
"Contracts and Termination of Employment and Change in Control
Arrangements" below.
(7) Consists of (i) $9,240 of WorldCorp contributions to the WorldCorp ESSOP,
(ii) $5,436 of premiums paid for life insurance under the terms of the
August 1994 Employment Agreement between Mr. Andrews and the Company, and
(iii) $380,000 paid in connection with the modification in 1993 of Mr.
Andrews' Supplemental Incentive Compensation Agreement. Please see
"Contracts and Termination of Employment and Change in Control
Arrangements."
(8) Mr. Andrews was granted options to purchase 800,000 shares of WorldCorp
common stock pursuant to the terms of his WorldCorp employment agreement
dated August 19, 1994. The terms and conditions of the employment
agreement and the stock option agreement are set forth below in detail;
please see "Contracts and Termination of Employment and Change in Control
Arrangements."
(9) This column consists of compensation paid to Mr. Gorog by WorldCorp from
1994 to 1996 for Mr. Gorog's services as Chairman of WorldCorp's Board of
Directors.
(10) Consists of a $50,000 bonus paid to Mr. Gorog by WorldCorp for Mr.
Gorog's services as Chairman of WorldCorp's Board.
(11) Mr. Gorog was granted options to purchase 250,000 shares of WorldCorp
common stock as partial compensation for his services as Chairman of the
Board of Directors of WorldCorp. The terms and conditions of the
employment agreement are set forth below in detail; please see "Contracts
and Termination of Employment and Change in Control Arrangements."
(12) Consists of (i) $2,780 of premiums paid for life insurance for Mr.
Pollard, and (ii) $8,654 representing the value of WorldCorp
contributions to Mr. Pollard's ESSOP account in 1996.
(13) Consists of options to purchase 250,000 shares of the common stock of
World Airways granted to Mr. Pollard in connection with the execution of
the January 1, 1995 employment agreement between Mr. Pollard and World
Airways. Please see, "Contracts and Termination of Employment and Change
in Control Arrangements" below.
(14) Consists of (i) $9,240 of WorldCorp contributions to the WorldCorp ESSOP
and (ii) $1,868 of premiums paid for life insurance under the terms of
the January 1, 1995 employment agreement between Mr. Pollard and World
Airways. Please see, "Contracts and Termination of Employment and Change
in Control Arrangements" below.
16
<PAGE>
No options were granted to the Company's Named Executive Officers in 1996.
The following table lists aggregate option exercises in 1996 and year-end
values for exercisable and unexercisable options. Messrs. Andrews, Gorog and
Paalborg hold options to purchase WorldCorp (NYSE: WOA) stock only. Mr.
Pollard holds warrants to purchase WorldCorp common stock and options to
purchase World Airways (Nasdaq: WLDA) common stock.
AGGREGATED OPTION EXERCISES IN 1996
AND YEAR-END OPTION VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES ACQUIRED FY-END (#) FY-END ($)
ON EXERCISE VALUE REALIZED (EXERCISABLE/ (EXERCISABLE/
NAME (#) ($)(2) UNEXERCISABLE) UNEXERCISABLE)
---- --------------- -------------- -------------------- -----------------
<S> <C> <C> <C> <C>
T. Coleman Andrews, III --WOA --WOA 535,002/200,000 WOA 68,875/25,000 WOA
William F. Gorog --WOA --WOA 200,000/50,000 WOA 25,000/6,250 WOA
Charles W. Pollard 20,000 WOA 73,950 WOA 130,000/0 WOA 0/0 WOA
--WLDA --WLDA 100,000/150,000 WLDA 0/0 WLDA
Andrew M. Paalborg 10,556 WOA 40,363 WOA 144,167/8,333 WOA 0/0 WOA
</TABLE>
- --------
(1) The information set forth in this table includes the aggregate amount of
all options granted to the Named Executive Officers by WorldCorp and one
or more of its subsidiaries. The calculations in this table are based upon
a December 31, 1996, closing price of $4.625 of WorldCorp's Common Stock
on the New York Stock Exchange, and a closing price of $8.125 for World
Airways on the Nasdaq National Market. WOA is the New York Stock Exchange
trading symbol for WorldCorp and WLDA is the Nasdaq trading symbol for
World Airways.
(2) Value based on market value of the common stock on the exercise date minus
the exercise price.
17
<PAGE>
CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE IN CONTROL ARRANGEMENTS
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with each of Messrs.
Andrews, Gorog, and Paalborg. The terms and conditions of each agreement are
more fully discussed below. World Airways entered into an employment agreement
with Mr. Pollard. Mr. Pollard departed as World Airways' President and Chief
Executive Officer on March 14, 1997. Please see "Charles W. Pollard" below.
Following the analysis and research completed by the Compensation Committee of
the Board of Directors in concluding its agreement with the Chief Executive
Officer of the Company, the principles included in that agreement have
generally been applied to the employment agreements of each of the other Named
Executive Officers.
T. Coleman Andrews, III
-----------------------
The Company and T. Coleman Andrews, III entered into an employment agreement
and a stock option agreement on August 19, 1994, upon obtaining stockholder
approval at a special meeting of amendments to the Company's 1988 Stock Option
Plan (the "Plan") permitting Mr. Andrews to participate in the Plan as part of
a new employment agreement with the Company.
The principal terms of Mr. Andrews' employment agreement are as follows: (i)
Mr. Andrews receives a minimum salary of $350,000 per year beginning on the
date of the executed contract; (ii) the term of the agreement expires on
December 31, 1997, subject to a renewal and extension provision described
below; (iii) Mr. Andrews is eligible to receive bonuses pursuant to the
Company's Management Incentive Compensation Plan; (iv) Mr. Andrews received a
grant of options to purchase 800,000 shares of Common Stock; (v) Mr. Andrews
agrees to hold a substantial number of shares of Common Stock and (vi) the
Company maintains a $5 million life insurance policy, the proceeds of which,
in the event of Mr. Andrews' death, are payable to Mr. Andrews' estate.
If, as of December 31, 1996, Mr. Andrews and WorldCorp have not executed a
new employment agreement, or neither party has given written notice to the
other that they intend to allow this agreement to expire at the end of its
term on December 31, 1997, then and in that event Mr. Andrews' employment
agreement will be automatically extended for an additional period of eighteen
(18) months through June 30, 1998, with all economic provisions extended on a
pro rata basis.
The following terms were retained from Mr. Andrews' previous employment
agreement. Mr. Andrews may terminate his employment in the event (i) the
Company relocates its headquarters outside of the Washington, D.C. area, (ii)
his duties are diminished in a manner materially altering his
responsibilities, (iii) the Board determines that the Company should be
liquidated or dissolved during the term of the employment agreement or (iv)
there is a Change of Control of WorldCorp. Under the terms of Mr. Andrews'
employment agreement, a change of control includes (i) any person, other than
WorldCorp, becoming the beneficial owner of more than 50% of the then
outstanding securities of WorldCorp, (ii) certain changes involving a majority
of the Board of Directors of WorldCorp, (iii) certain mergers or acquisitions
of WorldCorp with any other corporations and (iv) the liquidation or sale of
substantially all of WorldCorp's assets. In the event Mr. Andrews exercises
this termination right, or, in the event the Company terminates Mr. Andrews'
employment with the Company other than for Cause (as defined in the
Agreement), the Company is obligated to pay Mr. Andrews the undiscounted
remainder of his base salary then in effect, any deferred salary and/or bonus
compensation payable, and all granted but unexercisable stock options under
Mr. Andrews' stock option agreement shall become immediately exercisable for a
period of one year following the date of termination, and any
18
<PAGE>
federal or state taxes imposed upon this termination payment. WorldCorp may
terminate the agreement for Cause or if Andrews becomes disabled for a period
of 12 months.
To align Mr. Andrews' interests with those of the Company's stockholders,
Mr. Andrews has agreed to hold the following amounts of Common Stock for the
balance of the term of his employment agreement (and for any renewals or
extensions thereof), from the earlier to occur of: (1) Mr. Andrews' exercise
of options in the amounts set forth below; or (2) the dates indicated below.
For purposes of Mr. Andrews' employment agreement, any shares of Common Stock
owned by members of Mr. Andrews' immediate family (i.e., spouse, sons or
daughters) shall be counted toward Mr. Andrews' stock ownership holding
requirements.
<TABLE>
<CAPTION>
REQUIRED COMMON
OPTIONS EXERCISED DATE STOCK HOLDINGS
----------------- ------------- ---------------
<S> <C> <C>
300,000 April 1, 1995 20,000
400,000 April 1, 1996 30,000
500,000 April 1, 1997 40,000
</TABLE>
Mr. Andrews was granted options to purchase 800,000 shares of the Company's
common stock, 200,000 of which were immediately exercisable upon the grant on
August 19, 1994. The remaining 600,000 options become exercisable ten years
less 90 days from the original grant date of August 19, 1994, provided,
however, the exercise date will be accelerated with respect to these 600,000
shares if certain targets are achieved with respect to the Company's stock
price. Pursuant to this provision, Mr. Andrews will be entitled to exercise
options to purchase 100,000 shares of Common Stock, at the $4.50 exercise
price, each time that WorldCorp stock trades at a price that is an increase of
25% over the preceding eligibility level for 20 trading days, up to the
maximum of 600,000 shares. Thus, Mr. Andrews will be entitled to exercise
options for 100,000 shares, at the exercise price of $4.50 per share, if
WorldCorp stock trades at or above $5.63 for 20 trading days (that is, a 25%
increase in the price of the stock above the preceding option grant price of
$4.50). The same entitlement would arise for five additional grants of options
for 100,000 shares each, at the exercise price of $4.50 per share, if
WorldCorp stock trades at or above $7.03, $8.79, $10.99, $13.74, and $17.17,
for 20 trading days each (each of these trading prices is 25% above the price
of the stock at the earlier tier).
The options expire at the earlier of (i) the end of ten years, or (ii) one
year after Mr. Andrews ceases to provide any services, including services as a
member of the board of directors, to the Company, World Airways, InteliData,
the Company's other affiliates, or any other entity in which the Company has
both any equity or debt investment and representation on the board of
directors thereof. In the event Mr. Andrews is no longer employed as Chief
Executive Officer of the Company, options that have not become exercisable by
such time will not thereafter become exercisable.
The Company and Mr. Andrews in 1989 entered into a Supplemental Incentive
Compensation Agreement (the "Incentive Agreement") in lieu of the Company's
granting additional equity to Mr. Andrews. Under the Incentive Agreement, the
Company agreed to pay Mr. Andrews the amount of $1,300,000, plus interest, on
the expiration of his employment agreement if certain conditions were met,
including Mr. Andrews being an employee at that time. In December 1993, the
Company and Mr. Andrews agreed to modify the Incentive Agreement by
terminating it and entering into a new agreement. In connection with the new
agreement, the Company paid Mr. Andrews in December 1993, (approximately seven
months early) $200,830 due him under the Incentive Agreement. The new
agreement delays payment to Mr. Andrews of the balance due under the Incentive
Agreement and provides that the Company will make four annual installment
payments, of $420,000, including interest, between 1995 and 1998.
19
<PAGE>
In 1989, concurrent with execution of the Incentive Agreement, the Company
loaned Mr. Andrews $1,300,000 under a full recourse promissory note that bore
interest at the same rate as the interest rate set forth in the Incentive
Agreement. The Company and Mr. Andrews agreed, in December 1993, to cancel the
earlier note and to substitute a new, full recourse promissory note due in
installments between January 1994 and February 1998; the new note bears
interest at the same rate as in the amount of $1,763,000 set forth in the new
Incentive Agreement. Mr. Andrews reduced the principal balance of his
obligation to the Company to $667,490 as of March 31, 1997.
William F. Gorog
----------------
On February 14, 1996, the Company and Mr. Gorog entered into an agreement
pursuant to which Mr. Gorog has agreed to serve as Chairman of the Board
through December 31, 1996. Mr. Gorog's term as Chairman is extended
automatically through December 31, 1997, if the Company fails to give Mr.
Gorog written notice by September 30, 1996, of the Company's intention not to
renew Mr. Gorog's agreement. Pursuant to the terms of the new agreement with
Mr. Gorog, Mr. Gorog's salary as Chairman of the Board was increased from
$50,000 to $100,000 effective January 1, 1996. In April 1997, Mr. Gorog
stepped down as Chairman of the Board and became Chairman of the Executive
Committee of the Board.
Mr. Gorog has agreed to hold the following amounts of Common Stock for the
balance of the term of his employment agreement (and for any renewals or
extensions thereof), from the earlier to occur of: (1) Mr. Gorog's exercise of
options in the amounts set forth below, or (2) the dates indicated below. As
is the case with Mr. Andrews, for purposes of Mr. Gorog's employment
agreement, any shares of Common Stock owned by members of Mr. Gorog's
immediate family shall be counted toward Mr. Gorog's stock ownership and
holding requirements.
<TABLE>
<CAPTION>
REQUIRED COMMON
OPTIONS EXERCISED DATE STOCK HOLDINGS
----------------- ------------- ---------------
<S> <C> <C>
125,000 April 1, 1995 8,500
150,000 April 1, 1996 12,500
175,000 April 1, 1997 16,500
</TABLE>
As additional compensation to Mr. Gorog for serving as the Chairman of the
Board of Directors of the Company, Mr. Gorog was granted options to purchase
250,000 shares of Common Stock, 100,000 of which were immediately exercisable
upon the grant on August 1, 1994. The remaining 150,000 options become
exercisable ten years less 90 days from the original grant date of August 1,
1994; provided, however, the exercise date will be accelerated with respect to
these 150,000 shares if the same targets are achieved with respect to the
Company's stock price as are set forth in Mr. Andrews' stock option agreement.
Mr. Gorog's stock options expire under the same terms and conditions that
govern the expiration of Mr. Andrews' options.
Andrew M. Paalborg
------------------
On February 1, 1995, the Company and Mr. Paalborg entered into an employment
agreement. The principal terms of Mr. Paalborg's agreement are as follows: (i)
Mr. Paalborg receives a base salary of $180,000 per year effective February 1,
1995; (ii) the term of the agreement expires on February 1, 1998, subject to a
renewal and extension provision similar to that set forth in Mr. Andrews'
agreement; (iii) Mr. Paalborg is eligible to receive bonuses pursuant to the
Company's Management Incentive Compensation Plan; and (iv) Mr. Paalborg agrees
to hold the following amounts of Common Stock for the balance of the term of
his employment agreement (and for any renewals or extensions thereof),
20
<PAGE>
from the earlier to occur of: (1) Mr. Paalborg's exercise of options in the
amounts set forth below; or (2) the dates indicated below. As is the case with
Messrs. Andrews and Gorog, Common Stock owned by members of Mr. Paalborg's
immediate family shall be counted toward Mr. Paalborg's stock ownership and
holding requirements.
<TABLE>
<CAPTION>
REQUIRED COMMON
OPTIONS EXERCISED DATE STOCK HOLDINGS
----------------- ------------- ---------------
<S> <C> <C>
112,500 April 1, 1996 7,500
150,000 April 1, 1997 11,250
187,500 April 1, 1998 15,000
</TABLE>
Charles W. Pollard
------------------
Mr. Pollard departed as World Airways' President and Chief Executive Officer
on March 14, 1997. Pursuant to the terms of Mr. Pollard's employment
agreement, World Airways paid Mr. Pollard on March 24, 1997, the undiscounted
remainder of his base salary of $225,000 through December 31, 1997, the
expiration date of his agreement. Of Mr. Pollard's 250,000 stock options,
100,000 were previously exercisable. The remaining 100,000 of Mr. Pollard's
stock options became exercisable on March 14, 1997. These stock options are
exercisable at an exercise price of $11.00 per share for one year from March
14, 1997. Those options which Mr. Pollard has not exercised by March 14, 1998,
will be canceled. World Airways is also obligated to continue certain of Mr.
Pollard's medical, life and dental insurance benefits until he receives
comparable benefits from a new employer. World Airways is required to fully
fund and to vest Mr. Pollard's retirement benefit. The non-qualified
retirement benefit guarantees Mr. Pollard a retirement of at least $50,000 per
year, vesting at age 60.
CHANGE IN CONTROL AGREEMENTS
- ----------------------------
The Company has issued stock options to each of the Company's Named
Executive Officers. Certain of the options issued to executive officers under
the Company's 1988 Stock Option Plan prior to May 13, 1992, provided that upon
a Change of Control (as defined) the executive officer's option shall become
immediately exercisable as of the date of the Change of Control for up to
double the number of shares of Common Stock for which the option is otherwise
exercisable as of the date of the Change of Control (not to exceed the total
number of Option Shares, as defined). Other options issued to executive
officers under the 1988 Stock Option Plan prior to May 13, 1992, provided that
in the event of termination of the executive officer's employment by the
Company without Cause (as defined) or by the executive officer for Good Reason
(as defined) within two years after a Change of Control (as defined) the
executive officer's stock options shall become fully vested and exercisable.
In 1992, the Company amended and restated its 1988 Stock Option Plan. The
Company's stockholders approved the amended and restated 1988 Stock Option
Plan on May 13, 1992. Options issued to executive officers under the 1988
Stock Option Plan as amended and restated provide that in the event of
termination of the executive officer's employment by the Company without Cause
(as defined) or by the executive officer for Good Reason (as defined) within
two years after a Change of Control (as defined) the executive officer's stock
options shall become fully vested and exercisable.
Pursuant to the terms of the option agreements between the Company and
Messrs. Andrews, Gorog and Paalborg, in the event of the termination of their
employment by the Company without Cause (as defined) or by the executive
officer for Good Reason (as defined) within two years after a Change of
Control (as defined), the executive officer's stock options shall become
immediately exercisable.
21
<PAGE>
CERTAIN TRANSACTIONS
The Company and World Airways historically have utilized a single corporate
staff for administrative services, thus permitting World Airways to utilize
the Company's management personnel as needed. Effective January 1, 1995,
substantially all of the Company's management personnel became employees of
World Airways and since such date, World Airways has provided certain
administrative services to the Company. The Company and World Airways have
entered into a services agreement pursuant to which World Airways and the
Company will continue to provide services to each other at negotiated rates,
which the Company believes are comparable to those that could be obtained on
an arms-length basis.
22
<PAGE>
ITEM NO. 2 -- RATIFICATION OF SELECTION OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The firm of KPMG Peat Marwick LLP served as independent certified public
accountants for the Company in 1996 and is expected to be represented at the
Annual Meeting. A representative of KPMG Peat Marwick LLP will have an
opportunity to make a statement if the representative so desires and will be
available to respond to appropriate questions.
As of this date, the Board of Directors desires to have KPMG Peat Marwick
LLP continue as accountants for the Company for the year ending December 31,
1997. Accordingly, the Company is presenting a resolution to the meeting to
ratify the appointment by the Board of Directors. If the stockholders do not
approve the proposal, the Board of Directors will reconsider its action with
respect to the appointment of accountants. Approval of the resolution,
however, will in no way limit the Board's authority to terminate or otherwise
change the engagement of KPMG Peat Marwick LLP during the year ending December
31, 1997.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1998 Annual Meeting of
Stockholders must be received by the Company's Secretary no later than
December 1, 1997, to be included in the Company's 1998 proxy materials.
Proposals intended for inclusion in next year's proxy statement should be
sent to the Secretary of the Company at WorldCorp, Inc., The Hallmark
Building, 13873 Park Center Road, Herndon, Virginia 20171.
OTHER MATTERS TO COME BEFORE THE MEETING
In addition to the matters described above, there will be an address by the
Chief Executive Officer and a general discussion period during which
stockholders will have an opportunity to ask questions about the business.
The Company does not intend to bring any other matter before the meeting and
does not know of any other matter which is proposed to be brought before the
meeting. However, should any other matter properly come before the meeting,
the persons named in the enclosed proxy will have discretionary authority to
vote all proxies in accordance with their judgment on such matter.
ANNUAL REPORT
A copy of the Annual Report is being mailed to each stockholder entitled to
vote at the Annual Meeting of Stockholders. A copy of the Company's Form 10-K
is available at no charge to all stockholders. For a copy write to: Andrew M.
Paalborg, Vice President and General Counsel, WorldCorp, Inc., The Hallmark
Building, 13873 Park Center Road, Herndon, Virginia 20171.
23
<PAGE>
OTHER INFORMATION
This solicitation of proxies is made by the Board of Directors, and the
Company will bear the costs of solicitation. In addition to solicitation by
mail, proxies may also be solicited by directors, officers, and employees of
the Company, who will not receive additional compensation for such
solicitation. Brokerage firms and other custodians, nominees and fiduciaries
will be reimbursed by the Company for their reasonable expenses incurred in
sending proxy material to beneficial owners of the Common Stock. The address
of WorldCorp's principal executive offices is The Hallmark Building, 13873
Park Center Road, Herndon, Virginia 20171, and its telephone number is (703)
834-9200. The above notice and proxy statement are sent by order of the Board
of Directors.
Dated: April 30, 1997
By Order of the Board of Directors,
ANDREW M. PAALBORG
Vice President & General Counsel
24
<PAGE>
DETACH HERE
- --------------------------------------------------------------------------------
[_] Please mark votes as in this example.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTOED BY THE
STOCKHOLDER. IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS RETURNED,
SUCH SHARES WILL BE VOTED "FOR" AUTHORITY IN ITEM 1 AND "FOR" ITEM 2.
1. AUTHORITY TO VOTE FOR THE FOLLOWING NOMINEES AS DESCRIBED IN THE ACCOMPANYING
PROXY STATEMENT:
NOMINEES: CLASS I: T. Coleman Andrews, III, William F. Gorog, Patrick F. Graham
NOMINEES: CLASS II: Walter M. Fiederowicz
[_] FOR [_] WITHHELD
- --------------------------------------------------------------------------------
(INSTRUCTION: to withhold authority to vote for one individual nominee, write
such name in the space provided above)
2. PROPOSAL TO RATIFY THE SELECTION OF KPMG PEAT MARWICK LLP as independent
public accountants for the Company for the fiscal year ending December 31, 1997.
[_] FOR [_] AGAINST [_] ABSTAIN
[_] MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT
PLEASE MARK, DATE, SIGN AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Please sign exactly as name appears hereon. 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 person. If a
partnership, please sign in full partnership name by authorized person.
Signature: Date: Signature: Date:
-------------- ------------ ------------- -----------
<PAGE>
DETACH HERE
- --------------------------------------------------------------------------------
WORLDCORP, INC.
THIS PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS ON JUNE 13, 1997
IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P
The undersigned hereby appoints T. COLEMAN ANDREWS, III, WILLIAM F. GOROG
and ANDREW M. PAALBORG, and each of them, the proxy or proxies of the
undersigned, with full power of substitution, to vote all shares of Common
R Stock, par value $1 per share, of WorldCorp, Inc. (the "Company") which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held at the Company's headquarters located at 13873 Park
Center Road, Suite 490, Herndon, Virginia 20171 at 2:00 p.m. on June 13,
O 1997, and at any adjournments or postponements thereof, with the same force
and effect as the undersigned might or could do if personally present
thereat.
X UNLESS A CONTRARY INSTRUCTION IS INDICATED, THIS PROXY WILL BE VOTED FOR
THE ELECTION OF DIRECTORS AS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT,
AND IN FAVOR OF THE PROPOSAL TO RATIFY THE SELECTION OF THE INDEPENDENT
PUBLIC ACCOUNTANTS FOR 1997. THIS PROXY WILL ALSO BE VOTED AT THE DISCRETION
Y OF THE PROXY HOLDERS ON SUCH MATTERS OTHER THAN THE TWO SPECIFIC ITEMS AS
MAY COME BEFORE THE MEETING.
A majority of such proxies or their substitutes as shall be present and
acting at the meeting, or if only one be present and acting then that one,
shall have and may exercise all of the powers of all of said proxies
hereunder.
PLEASE MARK, DATE AND SIGN ON THE REVERSE SIDE
AND RETURN PROMPTLY
SEE REVERSE
SIDE
